Profit Margin
Hiding Profits
Experts recently met to discuss potential solutions and regulations for the nursing home industry. Experts and consumer advocates want to increase transparency, quality, and accountability in the industry. The journal Health Affairs published the discussion. Profit margin and diversion of funds to related entities were major topics. Corporate chains often siphon funds to related entities. This hurts quality of care by often cutting corners.
The experts agreed that the web of interrelated companies involved in nursing home ownership and management prevent accountability by hiding related entities.
Because nursing homes can hide profits through their own related-party companies, however, it is not possible to know what the actual [profit] margins are without improved cost reporting and accountability.
Financial Transparency
The experts wrote:
Quality issues persist as policy makers are unable to oversee how nursing homes spend Medicare and Medicaid payments. The growth in complex nursing-home ownership structures has limited financial transparency by allowing nursing homes to hide public payments and stint on direct resident care.
The group wants a federal task force to audit operational data. This would include CMS’s Provider Enrollment, Chain, and Ownership System (PECOS) database and Payroll-Based Journal (PBJ). PECOS should include all related-party entities operating each nursing facility.
By not establishing and enforcing ownership and management screening requirements, CMS also allows unsuitable persons or companies to acquire and operate facilities.
Obviously, regulatory supervision is necessary to make sure resources increase quality of care. Taxpayer funds should not line the pockets of corporate masters.