Connecticut Attorney General Richard Blumenthal wrote an editorial about the nursing home industry. We have included it below.
Recent revelations of shameless self-dealing, massive mismanagement and substandard care at one of the state’s largest nursing home chains, Haven Healthcare, have rightly shocked the public. Haven, which operates 15 nursing homes in the state, received tens of millions in taxpayer dollars, but often failed to pay its medical and other suppliers, even at times its utility bills.
When it came to patient care, managers constantly cut corners, endangering residents’ health and well-being. Adding insult to injury, Haven CEO Ray Termini improperly diverted money to fund his fantasy of becoming a country music mogul. Termini’s name for his failed label — Category Five —proved prescient: His mismanagement devastated Haven like a Category 5 hurricane.
After The Courant broke this story, causing Haven to seek bankruptcy protection, my office successfully sought appointment of a chief restructuring officer who is currently supervising the chain’s operations until a responsible buyer is found and a patient care officer has stabilized and improved care at the facilities. This remedy required a Herculean legal battle, which took tremendous time and determination from my office, as well as the court. In addition to wasting state tax dollars and endangering residents, this abysmal episode exposed severe deficiencies in state oversight of nursing homes.
Haven’s secret self-serving diversion of scarce resources exemplifies the dark side of nursing home consolidation, leading to a fiscal debacle and endangering patient well-being. As nursing homes are swallowed by corporate chains and conglomerates such as Haven, state supervision becomes more difficult. Byzantine corporate constellations — like the 45 interlocking entities established by Haven’s owners — conceal and confuse, frustrating accountability and oversight. Such improper practices must be prevented, not just punished.
The state must demand more financial disclosure and transparency to prevent plunder of nursing home assets. To forestall future bankruptcies or insolvencies — as happened to Haven — the state should impose expanded auditing and reporting requirements, prohibitions on bleeding or abuse of resources, accountability of landlords and other measures that safeguard public dollars and cents — the lifeblood of patient care.
Symptoms of fiscal crisis should immediately land nursing homes on a watch list with the same stringent monitoring and scrutiny as a patient in intensive care, and with prompt state intervention when necessary. I have proposed a package of reforms to guard against abuses, better protect patients and ensure that state tax dollars are properly spent.
My proposals include:
• Empower the state comptroller to monitor and review nursing home finances through regular forensic financial audits of nursing homes and their owners. The comptroller could subpoena records, compel testimony and review financial information of nursing home operators and their affiliates.
• Provide for a court-appointed receiver upon a finding of gross financial mismanagement. Currently, a receiver may only be appointed if financial mismanagement threatens patient care — a higher bar that hindered our ability to obtain a receiver for Haven sooner.
• Cap management fees and rental payments that nursing homes pay to related entities at the amount allowed under Medicaid reimbursement rates and prohibit use of nursing home assets as collateral for loans unrelated to operations. This step will prevent nursing home affiliates from soaking taxpayers through sweetheart contracts with related management or landlord companies.
• Require a minimum level of malpractice and liability insurance coverage for nursing home owners and management companies.
• Clarify and strengthen the state Department of Public Health’s authority to regulate and approve nursing ownership structures and agreements. As happened with Haven, nursing home operators too often disperse ownership among numerous limited liability corporations, affiliates, subsidiaries and wholly owned partnerships — hindering efforts to identify, evaluate and hold accountable a home’s real owner.
• Make landlords legally responsible for nursing home repairs and maintenance. The health department should also be authorized to seek appointment of a building monitor to do repairs and divert rent to pay for the work if the home’s owner fails or refuses to do it.
Massive nursing home conglomerates like Haven Healthcare are leaving mountains of financial ruin after squandering massive public funding, imperiling patient care and safety. The regulatory landscape of nursing homes in Connecticut must be reformed to halt these abuses.