Lexington Herald Leader reported the guilty pleas of Moses Young, assistant director with the Office of Inspector General, and Sharon Harris, a state-employed nurse who covered up the inappropriate relationship and unethical behavior they had with at least one nursing home operator.  Kentucky investigators learned they each lived in Lexington homes owned by Ralph Stacey Jr.  At the time, Stacey owned Garrard Convalescent Home in Covington.

An April 1 indictment against Young alleged that Young lived rent-free from July 2005 to March 2008 in a condominium owned by a third party in violation of state ethics rules, identified in documents only as "R.S."  A plea agreement said Young admitted that he and others made bogus rent receipts and presented them to a federal grand jury. sIn exchange, the indictment alleged, Young provided R.S. with inside agency information and instructions that would assist R.S. in passing inspections and obtaining favorable treatment with regard to administrative actions of the Cabinet for Health and Family Services. In exchange for the guilty plea, prosecutors said they would drop the charge related to Young allegedly providing inside information.

In her plea agreement, Harris admitted that she had "watched as others fabricated the receipts to thwart a criminal investigation." Her plea agreement said she told an FBI agent in April 2009 that she knew the rent receipts Young provided were genuine because she had personally delivered the receipts over time to the landlord.

Why didn’t they arrest Ralph Stacey for bribery or something?

 Maybe this article from the Kentucky Lexington Herald Leader explains why. The Herald-Leader examined the industry’s campaign donations following stories earlier this summer that revealed systemic gaps in the state’s handling of abuse and neglect cases at nursing homes.  The nursing home industry gave at least $1.8 million to Kentucky politicians over the last decade while lobbying against bills that would require them to hire more direct-care employees, face higher fines for violations and abide by stronger precautions against elder abuse, among others.

Nursing home reform bills usually are assigned to the House Health and Welfare Committee, where they perish.  Committee chairman Tom Burch is invested in a real estate trust that includes nursing homes. Burch’s former House aide, Eric Clark, now is chief lobbyist for the Kentucky Association of Health Care Facilities, the group representing for-profit nursing homes, and runs its political action committee, which has given at least $90,750 in campaign donations since 2005.  U.S. Senate Republican Leader Mitch McConnell gets more of the industry’s money than any other Kentucky politician, at least $266,350 over the last decade. McConnell does not support nursing home reform.

The Kentucky Association of Health Care Facilities gives annual awards to nursing homes that raise the most money for its political action committee, with special emphasis on companies that use payroll deduction to collect the money from employees.

In 2008, for instance, Barren County Health Center in Glasgow won an award from KAHCF for "most contributions raised overall per bed" for its region. That same year, the same nursing home received a Type A citation — the most serious — from the state after a resident choked to death on a fried chicken dinner.

Overall, KAHCF honored four nursing homes and consultants Wells Health Systems that year for their political fund-raising, according to the group’s 2009-10 Membership Directory and Buyer’s Guide.

The majority of the industry’s campaign money goes to Kentucky’s congressional delegation. The industry’s national group, the American Health Care Association, reports spending more than $1.1 million so far this year lobbying Congress on Medicaid payments and rules that would require public disclosure of the size of nursing homes’ direct-care staffs and how much they are paid, among other items.

Also, the Herald-Leader in July reported that Type A citations issued against nursing homes by the state sometimes sit in Conway’s office or with local prosecutors for more than 18 months while officials decide whether to pursue criminal charges.


New Jersey Newsroom had an article about nursing home operator Victor Napenas pleading guilty to Medicaid Fraud.  Napenas owned Valley Rest Nursing Home in New Jersey.  A state investigation discovered that he billed the Medicaid program for $302,877 in improper and unsubstantiated costs, including more than $100,000 in personal expenses.  The investigation began when state Department of Health and Senior Services (DHSS) surveyors noted severe deficiencies in the care delivered to residents.  The investigation discovered that the cost report included at least $302,877 in improper charges, including personal expenses and other amounts Napenas could not document or prove were spent for patient care.  Napenas issued business credit cards to himself and his wife through the nursing home, which they used for personal purchases, including trips to the Philippines, dance lessons and large family dinners. Napenas had those credit card charges and other personal expenses totaling more than $100,000 inserted into the cost report, resulting in reimbursement from Medicaid.

In pleading guilty, Napenas admitted that he fraudulently obtained payment from Medicaid for personal expenses unrelated to patient care. Prosecutors will recommend that Napenas be sentenced to only 90 days in a county jail as a condition of three years of probation. He must pay $302,877 in restitution to the Medicaid program, $45,263 in penalties, and $31,859 in provider taxes owed to the state. He will be prohibited from acting as a Medicaid provider for eight years.   Why should he ever be allowed to be a health care provider?


The Society of Actuaries is an educational, research and professional organization dedicated to serving the public, its members and its candidates. The SOA’s mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems. The SOA’s vision is for actuaries to be the leading professionals in the measurement and management of risk.

Findings from a new study released by the SOA estimate that measurable medical errors cost the U.S. economy $19.5 billion in 2008.  The study shows how 1.5 million medical errors compromise quality of American healthcare and cause unnecessary waste in the system

Commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., the report used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, around 25 percent were the result of avoidable medical errors.

Jim Toole, managing director of MBA Actuaries, Inc., said  "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. While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare."

Medical errors are a significant source of lost healthcare funds every year. For example, the study found that $1.1 billion was from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors. According to a recent SOA survey, which identified ways to bend the national healthcare cost curve, 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population, and 88 percent believe this to be true for the Medicare population.

"We used a conservative methodology and still found 1.5 million measureable medical errors occurred in 2008," says Jonathan Shreve, FSA, MAAA, consulting actuary for Milliman and co-author of the report. "This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported."

Key findings from the study include:

There were 6.3 million measureable medical injuries in the U.S. in 2008; of the 6.3 million injuries, the SOA and Milliman estimate that 1.5 million were associated with a medical error.
The average total cost per error was approximately $13,000.  
In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury. The measurable medical errors resulted in more than 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.

The study also identifies the 10 medical errors that are most costly to the U.S. economy each year. Approximately 55 percent of the total error costs were the result of five common errors:

Pressure ulcers
Postoperative infections
Mechanical complications of devices, implants, or grafts
Postlaminectomy syndrome
Hemorrhages complicating a procedure

The SOA and Milliman findings were based upon an analysis of an extensive claims database. Measureable costs of medical errors included increased medical costs, costs related to increased mortality rates, and costs related to lost productivity of an error.



The Boston Globe had an article about how new technological advancements have helped people with disabilities regain independence and maintain a quality of life.  The author discusses the plight of Steve Saling who suffers from ALS, also known as Lou Gehrig’s disease, a progressive nerve disorder that slowly paralyzes patients while leaving their mind intact. They eventually lose the ability to even breathe.

Through a chance encounter shortly after his diagnosis, he teamed up with Barry Berman, chief executive of the Chelsea Jewish Foundation, and helped to design the nation’s first residence for ALS patients needing nursing care. The Leonard Florence Center for Living’s Steve Saling Residence officially opened recently in Chelsea.  Using customized infrared technology, patients have far more independence than in a typical nursing home.  Saling uses a computer to communicate and activate assistance. His “voice’’ is the monotone of a computer, activated by an infrared beam he moves with almost imperceptible twitches of his head.  Tiny infrared transmitters in the ceilings connect to a master computer in the basement. This allows its residents to use small computers on their wheelchairs to summon an elevator, open and close doors, turn lights, televisions, and DVDs on and off, control the heat and air conditioning, even order meals from the cafe downstairs.

Using a teeny dot on his glasses that reflects an invisible infrared beam from a small sensor/transmitter on his wheelchair, he can control the “mouse’’ on his computer. He guides that mouse with subtle shakes of his head, and suddenly the shades come down in his bedroom, the lights go off, music comes on, and the door closes.

“I even have a remote-controlled bidet to wash and dry my bum, so that I maintain that independence,’’ he said, using the infrared beam to tap letters on the screen, telling his computer voice what to say.

The Chelsea project “will show everyone that a vented life can be a quality life,’’ Saling said. “It is the honor of a lifetime to be involved with this paradigm-shifting venture.’’

“There is promising technology that will allow the computer to be controlled by thought alone,’’ he said. “I am considering participating in a trial that hopes to make that a reality.’’

“Until medicine proves otherwise, technology is the cure,’’ Saling said. “Thanks, and remember, life is good.’’


Huffington Post had a great article about the Bounce-Back Effect and how acute care hospitals and nursing homes manipulate Medicare policy to increase profits.  There is a new phenomenon that has the interest of both the government and hospitals. Patients who bounce back. This refers to patients who are discharged from an acute care hospital and are readmitted within 30 days.

Patient re-admissions or bounce back is a serious financial and quality issue. A 2009 study published in the New England Journal of Medicine analyzed almost 12 million Medicare beneficiaries and found that approximately one-fifth were readmitted within 30 days of discharge and an even more alarming 34 percent were admitted in 90 days. If we look a year out from discharge they reported 67.1 percent who had been discharged for a medical condition had been readmitted or had died.

This revolving door is expensive and cost Medicare $17.4 billion dollars in 2004.  As a result, Medicare has already started to collect data on all hospitals and will keep a three-year running average of their readmission rates. Those hospitals having high rates will be financially penalized.  Some studies calculate 75 percent of re-admissions are preventable.   A study in the Journal of the American Geriatric Society noted a "greater risk of multiple complicated transitions (bounce back) in patients initially discharged to skilled nursing facilities" and "a lower risk of multiple complicated transitions for patients initially discharged to rehabilitation facilities."

Communication, or the lack thereof, appears to be the major factor for patient bounce back. One study interviewed acute care hospitals and the Skilled Nursing Facilities (SNFs) where they sent patients. Each blamed the other for not providing adequate information. Complete lists of medications were missing. Follow-up appointments were never made or communicated. Wound care or other instructions were confusing or never received. There was no official hand-off from one physician to another.

Certain patients are at a particularly high risk to end up back in the hospital within 30 days. You are more likely to end up in the hospital if you:

-Are older
-Are African American
-Are on Medicaid
-Are discharged to a Skilled Nursing Facility (SNF)

The data suggests that the first three have less access to follow-up and primary care. Discharge to a Skilled Nursing Facility — what used to be called a nursing home — is particularly worrisome. Medicare spent $21 billion dollars on Skilled Nursing Facilities, approximately one half of all of the dollars spent on post-acute care ( SNF, home health, rehabilitation facilities, skilled nursing facilities and long-term care).


The Des Moines Register reported the investigation and charges filed against Emeritus (one of the nation’s largest senior living companies) for operating an unlicensed assisted living facility and misrepresenting their licensure status to the public.  Emeritus at Silver Pines is a Cedar Rapids home licensed as a residential care facility that can provide personal assistance and supervision, but no nursing care.  Over the past 30 months, the owners of the 72-bed facility have allegedly promoted the home as an assisted living center that is authorized, equipped and staffed to provide residents with a relatively high level of medical assistance and care. The Iowa Department of Inspections and Appeals has temporarily barred the home from accepting new residents, imposed a $13,000 fine and ordered the owners to hire a new administrator.

Emeritus is the nation’s largest assisted-living company, with annual revenue of $900 million. It operates 308 senior-living communities in 36 states, with a total potential capacity for 32,300 residents. The chain recently purchased an additional 140 homes from the bankrupt Sun West chain of care facilities.

Emeritus could face criminal charges for falsely claiming to be a state-licensed assisted living center.  It’s a crime in Iowa for a company to falsely claim that it’s a state-licensed assisted living facility, h, and the Iowa Department of Inspections and Appeals plans to refer the matter to county prosecutors for consideration of criminal charges.

Disabled Iowans – some near death and in need of constant supervision or skilled nursing care – signed contracts with the home that specifically described the facility as "licensed by the state of Iowa as an assisted-living facility." In some cases, residents were referred to Emeritus by physicians who were led to believe that the home was licensed to provide skilled nursing care.

Company records indicate the home has been charging each of the residents up to $3,800 per month in fees. In at least one instance, it allegedly charged a resident $10,000 as a nonrefundable "move-in fee."

The company’s false claims should have been uncovered in March when inspectors visited the home.  Emeritus was cited for having two residents whose medical needs could be met only by an assisted living center or a nursing home. The home promised that in the future it would only admit people who were suitable for a residential care facility. In July, inspectors revisited the home in response to a complaint and saw the problem was much larger in scope than they had previously believed. For at least 30 months, the home had been holding itself out as an assisted living center. Some of the residents were being treated for cancer, kidney failure and severe dementia. Some were receiving hospice care.  In all, 17 residents were judged to be in need of care above and beyond what could be legally provided by the home.

State inspectors determined the home’s new administrator, hired just a few weeks before, had no education or experience pertaining to the management of a residential care facility and didn’t meet the minimum legal requirements to run such a facility.

The home’s website and automated telephone system continued to promote the home as "the assisted living community of choice."

Emeritus Senior Living owns two other Iowa care facilities: Northpark Place Senior Living Community in Sioux City, a residential care facility the company purchased on Aug. 5, and Emeritus of Urbandale, a fully licensed assisted living facility that has faced numerous sanctions from the state in the past 18 months.  At one point, the Urbandale facility’s on-call registered nurse was a company official who lived in Urbana, Ill., a six-hour drive away.

One employee of the Urbandale facility allegedly admitted to inspectors that she had destroyed a patient’s medical records and then created new, fictional reports to conceal the fact that a dying resident’s children had to administer medication to their parent on several occasions because no nurse was available in the facility.

The Urbandale home has also been cited for housing a violent individual who assaulted and sexually fondled other residents over a period of several days until police were called and he was escorted from the building.


Dale Russakoff wrote an interesting article online at The New York Times blog called The New Old Age.  He discusses how he chose a nursing home for his mother including talking to CNAs who provide the vast majority of care in nursing homes.  "After all, these were the women — and they were all women — who would spend the most time with my mother, who would notice small changes that raised big questions, who would make her feel cared for. Or not."  Most nursing homes would not allow him to talk to the CNAs.

High turnover rate is a major problem.  More than 70 percent of nurses’ aides, or certified nursing assistants, change jobs in a given year.  The reasons for the high turnover rate among nurses’ aides are the same as they were then: low wages ($10.48 an hour on average), poor benefits, high injury rates and lack of respect on the job.  Researchers have found that high turnover in a facility corresponds with poor quality of care — more bedsores and more use of restraints, catheters and mood-altering drugs. That is, more reliance on medicine and technology, less on relationships.

“Cycling in aides who don’t know you is very disorienting and upsetting, and the resident is the one who suffers on the quality end,” said Peggy Powell, a senior staffer at PHI, formerly known as the Paraprofessional Healthcare Institute, a nonprofit group focused on improving the front-line work force in long-term care.

In nursing homes with high turnover rates, certified nursing assistants tend to leave within three months, often because of inadequate training and support to juggle multiple frail, ailing residents at a time, according to Robyn Stone, senior vice president for research at the American Association of Homes and Services for the Aging. Once aides leave, everyone else must pick up their caseloads, and the stress of the job rises.He decided on the facility where they allowed him to talk to the CNAs.  "These women used the word “we” when talking about the nursing home, making clear that they felt a sense of ownership. And it seemed significant that the marketing director asked their permission before allowing me to impose on their break time. Moreover, he trusted them enough to leave me alone with them in the break room."



Health Leaders Media and the blog Free Market Mojo wrote interesting articles about how Medicare policies increase hospice stays.  The Medicare hospice benefit is designed to provide visits by an interdisciplinary care team to better manage pain and other end of life issues and to provide psychosocial and spiritual support in the nursing home setting for residents and their families.

However, the length of an average Medicare-certified hospice stay in a nursing home has doubled during the last decade, researchers at Brown University have found.  Published in the August Journal of the American Geriatrics Society, their study finds that standard treatment time in nursing homes between 1999 and 2006 has increased from 46 to 93 days.   The study proves that nursing homes make more money by placing a resident on hospice because the standard daily payment rate for most Medicare hospice enrollment acts as an incentive for extended stays.

The study also found that the doubling of Medicare services in nursing homes is related to a 50% growth rate in the number of hospices—primarily for profit hospices.  Stays were longest in states with the greatest provider growth.  At the current time, a third of Medicare beneficiaries who die in nursing homes are accessing hospice services, and the study predicts that this number is expected to increase.

In addition to changing the rates of payment to reflect the proper timing of the more intense care needs, the researchers agree with a Medicare Payment Advisory Commission’s recommendation that procedures for determining hospice eligibility recertification should be strengthened.

These changes would help the Medicare system avoid the possible scrutiny of nursing home residents who live beyond the physician certified six month prognosis—a Medicare requirement for hospice eligibility—and would permit patients to access the hospice care when they actually need it. 

Several media outlets have reported the $16 million settlement between Maryland and the nursing home industry including Consumer Affairs, The Baltimore Sun and the Washington Post.  Nursing homes sued Maryland for more money.  The average monthyl rate Medicaid pays for nursing home care is over $6,000.  The class action lawsuit, filed in August 2005, claimed that the state’s Department of Health and Mental Hygiene erroneously concluded that nursing home residents could afford co-payments for their care. That determination failed to take into account the debt that patients accrued while waiting to be approved for Medicaid coverage, according to the suit. Federal and state law requires states to consider patients’ debt when calculating their income.

Maryland taxpayers will provide $8 million of the settlement funds, with the federal government paying the other half. Nursing homes claimed that the state owed $64 million for incorrect calculations made since 2002.

The settlement could serve as precedent for other states that fail to take patients’ old debt into account when determining their Medicaid eligibility. In order to qualify for Medicaid, the federal-state program for the poor, an individual must deplete his or her assets to reach a $2,000 threshold. Often, that patient needs care before reaching that limit and can accumulate thousands of dollars in nursing home bills.

Consumers can obtain information at the official settlement website



Levin and Associates had an interesting article in The Senior Care Investor discussing the bankruptcy and sale of IHS to THI and eventually Fundamental long Term Care Holdings LLc, owned and operated by Murray Forman and Leonard Grunstein.  Below are excerpts from the article:

Very few people remember what happened a little more than seven years ago, but in early
2003, an unknown entity (at least to the senior care world) stepped in at the last minute and snatched the remaining assets of a bankrupt Integrated Health Services (IHS) from the presumed
buyer, literally on the steps of the court house. Trans Healthcare Inc. (THI) thought it had the deal wrapped up for $97.5 million, but an entity called Abe Briarwood, backed by Cammeby’s
International, swooped in for $114 million in cash and was willing to assume the post-petition Medicaid and Medicare billing liabilities, something that made the court very happy.

We are certain that the founder of Cammeby’s, one Rubin Schron, had no idea where this initial acquisition would take him in the rough and tumble skilled nursing industry….  And, most certainly, he never thought he would now be in court pitted against a man he trusted with everything. After Cammeby’s made the winning bid at the 11th hour, THI at first tried to fight it, but then the two sides settled their differences when Cammeby’s hired THI to run the newly acquired IHS assets.  Then, in May 2004, we caught wind of an acquisition offer that was brewing for the former Mariner Health Care from none other than Cammeby’s, but under the name National Senior Care, and separate from its Integrated Health.  The purchase price for Mariner was just under $1.0 billion, and when you capitalized the lease payments, the total transaction value increased to about $1.25 billion. This resulted in a price per bed of $38,800 and a 9.2x multiple of annualized EBITDAR.  The
deal closed at the end of 2004, but perhaps the most longlasting impact on the target entity, which some time later had a name change to Sava SeniorCare, was the role that Mr. Schron’s attorney, Leonard Grunstein, came to play.
There were really two sets of problems that began to emerge. One was what transpired with the original acquisition of the Integrated Health assets and the role of Trans Healthcare, which eventually came to be known as Fundamental Long Term Care when Fundamental purchased the assets of THI, the sale of which some claim was under duress and fraudulent.  There is a separatelawsuit filed on July 1, 2010, against Leonard Grunstein, his brother Harry, Murray
Forman alleging, among other things, fraudulent conveyance, unjust enrichment, legal malpractice, fraud, breach of fiduciary duty, breach of lease agreements, tortious interference and aiding and abetting fraud. The lawsuit was filed by Allen Bodner and DMV Funding LLC and is seeking no less than $150 million in damages and no less than $300 million in punitive damages.
According to the complaint, Bodner owned 100% of DMV which purchased Cammeby’s loan to the Abe Briarwood/IHS deal, and there are 30 more pages as to what transpired among the various parties. The long and short of the complaint was that the plaintiffs believe they got screwed, to
put it bluntly, by people who were partnering with them and advising them
The more interesting lawsuit, but sort of related, was filed on June 22, 2010, with Rubin Schron and his various holdings as the plaintiffs against a similar cast of characters including Leonard Grunstein, Murray Forman, the law firm Troutman Sanders, and the various Sava and Mariner
affiliates. To fully appreciate how unusual this lawsuit is, one must always keep in mind that Leonard Grunstein was Rubin Schron’s attorney. ….Mr. Grunstein did much of the legal work involved in the Mariner acquisition and subsequent Opco and Propco set-ups that evolved over time.
The relationship between Mr. Schron and Mr. Grunstein dates back to the 1980s, and according to the complaint, he apparently has referred to himself as Mr. Schron’s “general counsel.” According to the complaint, Mr Schron relied on legal advice from his attorney who began to organize things to the benefit of the attorney, and on financial advisory services from Mr. Forman, who was allegedly in cahoots with Mr. Grunstein. Mr. Schron never wanted to have anything to do with operating the nursing facilities; he just wanted a steady, but increasing, rental stream from the
real estate. In the case of the Mariner acquisition, according to the complaint, Mr. Schron put all the money up and ended up owning the real estate in Propco, while Grunstein/Forman retained ownership of the operating entity created to run the facilities, and all the excess cash flow, plus they received a small share of Propco—all without investing any of their own money.  In addition, according to the complaint filed, Mr. Schron was charged $14 million for financial advice in the Mariner deal by MetCap Advisory Services, which was 25% owned by Mr. Grunstein and 25% owned by Mr. Forman.   Other allegations in the nearly 100-page complaint include loans made to Opco that were never paid back to Mr. Schron, distributions taken by the Grunstein/Forman group
totaling more than $70 million, Grunstein billing Schron for non-existent legal work, and for allegedly not giving Schron the final closing documents for the original Mariner acquisition.
One also needs to remember that all of this recent legal action is on top of several issues earlier this year, when Mr. Grunstein and Mr. Forman sued Mr. Schron for more than $100 million for allegedly misappropriating significant sums of money from various partnerships in which they all had a stake.

And don’t forget that all three of them were defendants together when the Department of Justice charged them all with accepting kickbacks from Omnicare in return for pharmacy contracts. Without admitting guilt, they settled and agreed to pay the federal government $7.8 million
and $6.1 million to certain states.

Over the past two years the owners of Sava (Mariner) have been trying to sell off various pieces of the company (or the whole thing), notably the portfolio of mostly leased assets in California, but with little success. The obvious problems were pricing and financing.  Currently, Sava is the seventh largest skilled nursing company in the country with 184 facilities and 21,279 skilled
beds, and it is larger than half of the publicly traded skilled nursing companies.   Still, we believe that selling the assets is a real outcome, especially for Mr. Schron who we assume wants to be done with his relationship with his former attorney and financial advisor, and may even want to be out of the skilled nursing real estate business altogether. The other side, however, may
still not want to give up their cash cow, but the courts and the credit markets may make the decision for them.