AMENDED IN SENIOR ASSEMBLY OCTOBER 20,2008

SENIOR ASSEMBLY PROPOSAL NO. 24

INTRODUCED BY SENIOR ASSEMBLY MEMBER WEINTRAUB

LEGISLATIVE COUNSEL'S DIGEST

AP 24: NURSING HOMES: CORPORATE OWNERSHIP

UNDER EXISTING LAW, LONG-TERM HEALTH CARE FACILITIES ARE REQUIRED TO DISPLAY THE FOLLOWING NOTICE ON ALL CONTRACTS OF ADMISSION: “FOR MORE INFORMATION ABOUT OUR FACILITY, YOU MAY CALL THE STATE OMBUDSMAN’S OFFICE AT (INSERT TOLL-FREE NUMBER).”

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD REQUIRE ANY CORPORATION THAT OWNS MORE THAN A NURSING HOME TO DISCLOSE THEIR OWNERSHIP OF A FACILITY AND TO IDENTIFY A SINGLE ENTITY THAT IS FULLY ACCOUNTABLE FOR ALL ASPECTS
OF PATIENT CARE AND OPERATION AT THE FACILITY IN ITS CONTRACT OF ADMISSION.

VOTE: MAJORITY.

AP 24: RELATING TO NURSING HOMES

WHEREAS, THE GRAYING OF AMERICA HAS PRESENTED FINANCIAL OPPORTUNITIES FOR ALL KINDS OF BUSINESSES, INCLUDING NURSING HOMES, WHICH OFFER SOME OF THE BIGGEST REWARDS, RECEIVING MORE THAN $75,000,000,000 LAST YEAR FROM TAXPAYER PROGRAMS LIKE MEDICARE AND MEDICAID; AND

WHEREAS, THE NEW YORK TIMES PUBLISHED AN ARTICLE ON SUNDAY, SEPTEMBER 23, 2007, BY FEATURE ARTICLE STAFF WRITER CHARLIE DUHIGG ENTITLED “MORE PROFIT AND LESS NURSING AT MANY HOMES”; AND

WHEREAS, THE AUTHOR ANALYZED TRENDS IN NURSING HOMES PURCHASED BY PRIVATE INVESTMENT GROUPS BY EXAMINING DATA AVAILABLE FROM THE CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS), A FEDERAL AGENCY WITHIN THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES (DHHS); AND

WHEREAS, THE NEWSPAPER EXAMINED MORE THAN 1,200 NURSING HOMES PURCHASED BY LARGE PRIVATE INVESTMENT GROUPS SINCE 2000, AND MORE THAN 1,400 OTHER HOMES. IT COMPARED INVESTOR OWNED HOMES AGAINST NATIONAL AVERAGES IN MULTIPLE CATEGORIES, INCLUDING COMPLAINTS RECEIVED BY REGULATORS, HEALTH AND SAFETY VIOLATIONS CITED BY REGULATORS, FINES LEVIED BY STATE AND FEDERAL AUTHORITIES, THE PERFORMANCE OF HOMES AS REPORTED IN A NATIONAL DATABASE KNOWN AS THE MINIMUM DATA SET (MDS) REPOSITORY, AND THE PERFORMANCE OF HOMES AS REPORTED IN THE ONLINE SURVEY, CERTIFICATION AND REPORTING DATABASE; AND

WHEREAS, IT FOUND THAT AFTER INVESTORS HAVE ACQUIRED NURSING HOMES THEY HAVE OFTEN REDUCED COSTS, INCREASED PROFITS, AND QUICKLY RESOLD FACILITIES FOR SIGNIFICANT GAINS, BUT, BY REGULATORY BENCHMARKS, RESIDENTS AT THESE FACILITIES ARE WORSE OFF, ON AVERAGE, THAN THEY WERE UNDER PREVIOUS OWNERS, ACCORDING TO DATA COLLECTED BY FEDERAL GOVERNMENT AGENCIES FROM 2000 TO 2006; AND

WHEREAS, THE ANALYSIS SHOWS THAT MANAGERS AT MANY NURSING HOMES ACQUIRED BY LARGE PRIVATE INVESTORS HAVE CUT EXPENSES AND STAFF, SOMETIMES BELOW LEGAL REQUIREMENTS; AND

WHEREAS, REGULATORS SAY THAT RESIDENTS HAVE SUFFERED AT FACILITIES OWNED BY PRIVATE INVESTMENT FIRMS, AND, ON AVERAGE, HAVE FAIRED MORE POORLY THAN OCCUPANTS AT OTHER HOMES WHO HAVE COMMON PROBLEMS LIKE DEPRESSION, LOST OF MOBILITY, AND LOSS OF ABILITY TO DRESS AND BATHE THEMSELVES, ACCORDING TO DATA COLLECTED BY THE CMS; AND

WHEREAS, THE TYPICAL NURSING HOME ACQUIRED BY A LARGE INVESTMENT COMPANY BEFORE 2006 SCORED WORSE THAN NATIONAL RATES IN 12 OF 14 INDICATORS THAT REGULATORS USE TO TRACK AILMENTS OF LONG-TERM RESIDENTS, INCLUDING BEDSORES AND EASILY PREVENTABLE INFECTIONS, AS WELL AS THE NEED TO BE RESTRAINED. BEFORE THEY WERE ACQUIRED BY PRIVATE INVESTORS, MANY OF THOSE HOMES SCORED AT OR ABOVE NATIONAL AVERAGES IN SIMILAR MEASUREMENTS; AND

WHEREAS, IN THE PAST, RESIDENTS’ FAMILIES OFTEN RESPONDED TO DECLINES IN CARE BY BRINGING LAWSUITS AGAINST THE FACILITY, AND REGULATORS LEVIED HEAVY FINES AGAINST NURSING HOME CHAINS IN WHICH UNDERSTAFFING LED TO LAPSES IN CARE, NOW INVESTMENT COMPANIES HAVE MADE IT VERY DIFFICULT FOR PLAINTIFFS TO SUCCEED IN COURT AND FOR REGULATORS TO LEVY CHAIN-WIDE FINES BY CREATING COMPLEX CORPORATE STRUCTURES THAT OBSCURE WHO ACTUALLY CONTROLS EACH NURSING HOME; AND

WHEREAS, IN RECENT YEARS, LARGE PRIVATE INVESTMENT GROUPS HAVE AGREED TO BUY 6 OF THE NATION’S 10 LARGEST NURSING HOME CHAINS, CONTAINING OVER 141,000 BEDS, OR 9 PERCENT OF THE NATION’S TOTAL NURSING HOME PATIENTS AND PRIVATE INVESTMENT GROUPS OWN AT LEAST ANOTHER 60,000 BEDS AT SMALLER CHAINS AND ARE EXPECTED TO ACQUIRE MANY MORE COMPANIES AS FIRMS COME UNDER SHAREHOLDER PRESSURE TO SELL; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR ASSEMBLY AND THE SENIOR SENATE, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2008 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT ANY CORPORATION THAT OWNS MORE THAN A NURSING HOME BE REQUIRED TO DISCLOSE THEIR OWNERSHIP OF A FACILITY AND TO IDENTIFY A SINGLE ENTITY THAT IS FULLY ACCOUNTABLE FOR ALL ASPECTS OF PATIENT CARE AND OPERATION AT THE FACILITY IN ITS CONTRACT OF ADMISSION; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE SPEAKER OF THE ASSEMBLY, THE PRESIDENT PRO TEMPORE OF THE SENATE, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.

RN 08 22166

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