St. Louis Today had an editorial about the recent NY Times report on the outsourcing of management and “back office”support services to companies owned and operated by the owners of the nursing home. These business dealings, known as related-party transactions.  In the nursing home industry, however, with its reliance on taxpayer dollars, related-party transactions can also encourage insider dealing, maximizing profits for the outside vendors while siphoning off funds needed for patient care and staffing.

“So the question of who’s profiting from meeting — or not meeting — their needs is a matter of great public import. People’s lives can and do hang in the balance.”

In a remarkable story published Dec. 31, Kaiser Health Newsreported that the owners of nearly three-quarters of the 15,600 nursing homes in the United States buy a wide variety of goods and services from companies in which they have a financial interest or control. Nursing home owners can rent the land to themselves at above-market rates, or own the staffing company that provides nursing care and management.

 Relative to homes that don’t have related-party transactions, Kaiser reported, nursing homes that do deal with related parties have an average of 8 percent fewer aides and nurses on staff and are 9 percent more likely to have injured a resident or put him at risk. They have 35 percent more complaints and are fined 22 percent more frequently by government regulators.

For nursing home owners, a complex web of related-party transactions can offer a shield against lawsuits or governments seeking restitution for Medicaid overpayments.

This is outrageous. America’s vulnerable elderly shouldn’t be a profit center. Government should protect people and tax dollars, not profits.

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