The Wall Street Journal recently reported that property developers are switching from commercial investments to long term care facilities.  "Assisted-living housing is growing into a bigger business in the New York region. While development is slow of most commercial property types—like office buildings and retail centers—a number of developers are moving ahead with plans to provide facilities that occupy a middle ground between standard apartment buildings and nursing homes.  Assisted-living facilities provide services like nurses, aides, dining and memory care. The New York metro area has the second lowest number of available assisted-living units in the country with 2.6 units for every 100 households with seniors aged 75 years and older, according to the National Investment Center for the Seniors Housing & Care Industry. The number of units has grown only 3% in the last five years in the region compared to 7.4% nationally, according to the center."

"The regional activity reflects a national trend. The biggest real-estate mergers so far this year involved national health- care landlords seeking to expand their senior housing exposure including Ventas’s $5.8 billion acquisition of Nationwide Health Properties in February several months after it acquired Atria Senior Living, one the biggest regional operators in the New York region. In addition, Health Care REIT recently enters a partnership with Benchmark Senior Living involving 34 assisted living facilities in New England."

 See article from Florida’s Herald-Tribune about investment in real estate renting to nursing homes.

 

Boston.com had an article about the arrest of a Vermont nursing home employee named Jodi LaClaire.  Authorities state she exploited a resident and is charged with 16 counts of financial exploitation of a vulnerable adult and attempted financial exploitation of a vulnerable adult.

Assistant Attorney General Linda Purdy says LaClaire made cash withdrawals and attempted other withdrawals using the credit card of a resident at the Thompson House Nursing Facility in Brattleboro, where she worked as a licensed nursing assistant. The credit card was used to withdraw several thousand dollars over a 10-day period.

 

 

The Senior Journal had an article about the rapidly increasing cost of long term care based on the John Hancock survey.  The annual cost of a private room in a nursing home has climbed to $85,775. The national average annual cost of other LTC is; $75,555 for a semi-private room in a nursing home and $39,240 for an assisted living facility. The average cost of care received at home is approximately $20 per hour.

An estimated 10 million have enough trouble performing acts of daily living – like bathing, dressing and eating – that they require assistance

John Hancock Financial released its 2011 cost of care study that was conducted by by LifePlans Inc. The company surveyed more than 11,000 providers, including nursing homes, assisted living facilities, and home health care agencies, in key cities across the country.

Specifically:

● The 2011 average cost of a private nursing home room ($235 a day/ $85,775 annually) has risen an average 3.5 percent per year

● The 2011 average cost of a semi-private nursing home room ($207 a day/ $75,555 annually) has risen an average 3.2 percent per year

● The 2011 average cost for a month in an assisted living facility ($3,270 a month/ $39,240 annually) has risen an average 3.4 percent per year

● The 2011 average cost for a home health aide ($20 hourly/$37,440 annually) has risen an average 1.3 percent per year

 

Levin & Associates reported the nursing home industry was profitable in 2010 as stock prices performed well, occupancy levels in seniors housing rose and Medicare reimbursement increased.  More money is flowing into nursing homes as demand for quality increased.

In 2010, the average price paid for skilled nursing facilities jumped to a new record of $62,500 per bed, besting the previous record set in 2007 by 13% and surging by more than 31% over the average price paid in 2009.

When looking at the industry over the past several years, there has always been a preponderance of sales of old, smaller, low occupancy, high Medicaid, low margin (and no margin) nursing facilities in secondary, rural or inner-city markets. "The prices of these were often between $15,000 and $25,000 per bed, and the likelihood of increasing the private pay, let alone Medicare, census was always quite small. In 2010, these sales didn’t disappear, but their volume declined, and the best bet is that buyers didn’t want to take the risk with low quality Medicaid mills (sorry) that they might have in the past, and lenders, or those that were still around, only wanted strong nursing facilities that could survive a 10% state Medicaid reimbursement cut."

The average operating margin of skilled nursing facilities sold increased, as did the average EBITDA per bed (also a new record) and the average occupancy level.

Maybe they can use all that money to increase staffing and training.
 

Approximately 1.5 million medical errors (out of a total 6.3 million measurable medical injuries) cost $19.5 billion from the American economy in 2008, representing an average total cost per error of $13,000, according to an objective analysis of insurance claims data completed by the consulting firm Milliman for the Society of Actuaries (SOA). "Of the $19.5 billion in total costs, approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors, said Jim Toole, FSA, CERA, MAAA and managing director of MBA Actuaries.

Medical errors caused more than 2,500 avoidable deaths and more than 10 million missed workdays. Five common medical errors accounted for 55 percent of total medical error costs in 2008:

Pressure ulcers, $3.86 billion ($10,288 total cost per error);
Postoperative infections, $3.66 billion ($14,548 per error);
Mechanical complications of devices, implants, or grafts, $1.13 billion ($18,771 per error);
Postlaminectomy syndrome, $1.12 billion ($9,863 per error)
Hemorrhages complicating a procedure, $960 million (12,272 per error).

I think that the number is much greater since this study was based on insurance data but it clearly shows how better care will save money in the long run.  Nursing homes should understand that if they spent a little more money on qualified, competent, and compassionate staff then these medical errors would be prevented.

 

Twenty years ago, The National Consumer Voice for Quality Long-Term Care released a compendium of research that proved the axiom "an ounce of prevention is worth a pound of cure." The High Cost of Poor Care-The Cost Effectiveness of Good Care Practices (1991) showed how good nursing practices and routine assistance with activities of daily living could prevent billions of dollars in medical expenditures.

 

This week the Consumer Voice publishes a new version of that report, The High Cost of Poor Care: The Financial Case for Prevention in American Nursing Homes. The new report summarizes studies showing the extraordinary cost of treating preventable medical problems in persons over 65-$19 billion for falls; $11 billion to treat pressure sores; and $5 billion in hospital charges for dehydration. It also reports research on the cost-effectiveness of preventive measures. Nursing home residents account for only part of the costs cited above, but rates of avoidable medical conditions and hospitalization are particularly high among the nursing home population. One study quoted in the report concluded 20 to 30 percent of nursing home falls are preventable and that the best fall prevention method is exercise. This is "a relatively simple intervention," says The High Cost of Poor Care, "with the potential to dramatically lower costs."

 

The Christian Post had a great article by Ken Connor that I wanted to share on this Easter Sunday. 

“Our society must make it right and possible for old people not to fear the young or be deserted by them, for the test of a civilization is the way that it cares for its helpless members.” Pearl S. Buck, My Several Worlds.

In an economy that is increasingly calibrated for a two-person income, millions of parents across the country rely on some form of professional child care in order to meet the demands of their busy lives. Choosing the right childcare has become one of the primary challenges new parents face when Mom decides to re-enter the workforce. Parents want the best for their children. They want them to be cared for by high-caliber, qualified individuals that they can trust completely.

As might be expected, then, the childcare industry is heavily-regulated. After all, children need to be protected from those who might exploit or abuse them. While the licensing requirements vary from state-to-state, most include some form of professional training or certification for select employees, and virtually all mandate across-the-board criminal background checks. Few parents would have it any other way! Children are weak, vulnerable, and helpless. Better to eliminate potential problems by denying or restricting those with a criminal history the option of employment in a childcare setting.

Sadly, however, the same pains are not taken to protect a class of individuals that is just as weak, vulnerable, and helpless as children. According to a recent report issued by the Department of Health and Human Services, more than 90% of nursing homes employ at least one ex-convict. The very same people who go out of their way to ensure that their children are safe and protected while at daycare may have a grandparent in a nursing home who is suffering at the hands of poorly qualified, sometimes criminally-abusive staff members.

Why is this happening? Why would those in the business of caring for America’s elderly turn a blind eye to such behavior? As with so many other instances of reprehensible human conduct, the culprit lurking behind the curtain is Greed. Because the largest expense of a nursing home’s budget is “labor,” corporate executives at these companies have learned that one surefire way to increase the profitability of their homes is to reduce costs by cutting back on staff and hiring individuals who are willing to accept lower wages. The end result? Profits up! Patient welfare down, forgotten, ignored, and suffering.

Undoubtedly, most Americans with family members in nursing homes have no idea that this is happening, and truly believe that their loved ones are being treated well. They have no idea that behind the reassuring advertisements and sophisticated marketing are profit-driven enterprises who often care more about the bottom line than they do about the welfare of seniors. They are unaware that these business often take advantage of programs like the Work Opportunity Tax Credit, which incentivizes the hiring of certain “target groups,” including convicted felons. By hiring hard to employ ex-cons, nursing home operators get a “two-fer”: tax credits that improve the bottom line, and lower paid employees (which produces the same result).

One possible reason for such widespread ignorance is that, quite simply, there is very little media coverage of elder abuse (the New York Times being a notable exception). Aside from the occasional headline-grabbing report like the one recently issued, the subject is largely ignored. Perhaps that’s because much of it goes on behind the closed doors of nursing homes. Perhaps it’s because our culture is obsessed with youth and no one wants to contemplate getting old. Or perhaps it’s because we simply devalue the elderly―after all, many of them have substantially degraded mental and physical abilities.

It’s not difficult to feel concern for the welfare of our children. They represent the next generation, and are full of potential for the future, and we’ll stop at nothing to ensure that these children and grandchildren are protected and provided for. Meanwhile, America’s Greatest Generation has been largely forgotten, and is often being left unwittingly in the hands of predators who abuse or exploit them.

If compassion for the plight of our elderly loved ones is not enough to spur us to action, then perhaps the thought of our own elder-years might prompt a call for change. It’s high time that the American people wake up to the implications of what it means to become a mass geriatric society, which is where what we are rapidly becoming. Individuals need to prepare now for the years when they will live in decline. Families must prepare to assume a greater role in caring for their aging loved ones, and our churches must acknowledge that the elderly are part of the “least among us” and reach out to lend a helping hand. On the legal side of the equation, government needs to begin protecting our elderly citizens by instituting the same safeguards afforded to children and ensuring that predatory nursing homes are not selling out the care of the elderly to the lowest bidder.

We can, and must, do better.

 

Ken Connor is the Chairman of the Center for a Just Society in Washington, DC, the former President of the Family Research Council, and a nationally recognized trial lawyer.

The Milwaukee-Wisconsin Journal Sentinel reported that Laurie Bebo, the president and chief executive of Assisted Living Concepts Inc., received total compensation of $1.36 million in 2010–an increase of 32%.  Her pay consisted of a salary of $500,000, stock awards valued at $384,560, non-equity incentive plan compensation of $374,063 and other compensation of $101,249. Bebo’s total compensation in 2009 was $1.03 million.

Assisted Living Concepts posted net income of $16.5 million in 2010, compared with a loss of $155,00 in 2009. Its stock price closed the year at $32.53 after finishing at $26.37 in 2009.

 

AOL Health reported the largest study of locked-in syndrome which concluded a surprising number of patients with the condition say they are happy, despite being paralyzed and having to communicate mainly by moving their eyes. The patients responded to questions largely by blinking.  Most cases are caused by major brain damage, often sustained in traumatic accidents.

As part of the study, Dr. Steven Laureys of the Coma Science Group at the University Hospital of Liege in Belgium and colleagues sent questionnaires to 168 members of the French Association for Locked-in Syndrome, asking them about their medical history, their emotional state and views on euthanasia.

Sixty-five patients used a scale to indicate their sense of well-being, with 47 saying they were happy and 18 unhappy. They were also asked a variety of questions about their lives, including their ability to get around or participate in social functions, or if they had ever considered euthanasia.

They said if patients with locked-in syndrome are properly cared for, they can live for decades. With rehabilitation, many patients can regain some control of their head, fingers, and feet and may be able to talk a little.

Previous research shows people with extreme disabilities can be happy in what is known as "the disability paradox," meaning that even people who have a very limited daily existence, report being happy, contrary to what many experts had assumed.

 

The New York Times ran an interesting article on how the government places a monetary value on life.  The answer determines how much spending the government should require to prevent a single death.

The Environmental Protection Agency set the value of a life at $9.1 million last year in proposing tighter restrictions on air pollution. The agency used numbers as low as $6.8 million during the George W. Bush administration.  The Food and Drug Administration declared that life was worth $7.9 million last year, up from $5 million in 2008.  The Transportation Department has used values of around $6 million to justify recent decisions to impose regulations that the Bush administration had rejected as too expensive, like requiring stronger roofs on cars.

Most independent experts agree that the increases were long overdue, noting that some agencies had been using the same values for more than a decade without adjusting for inflation.   Corporations and Industry representatives argue that assigning a value to life was inherently subjective.  The business community historically has pushed for regulators to put a dollar value on life, part of a broader campaign to make agencies prove that the benefits of proposed regulations exceed the costs.

The current rise in the value of life is based on the work of Professor Viscusi, who wrote his first paper on cost-benefit analysis as a Harvard undergraduate in the early 1970s. He won a prize and found a career.  Professor Viscusi’s work pegs it at around $8.7 million in current dollars.

The Office of Management and Budget told agencies in 2004 that they should pick a number between $1 million and $10 million. That guidance remains in effect, although the office has more recently warned agencies that it would be difficult to justify the use of numbers under $5 million.