Country’s worst performing nursing homes get billions in federal loans

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I found this story on the NBC News website.  They noted that this story was originally published by the Center for Public Integrity (CPI) which is a nonprofit investigative news organization in Washington, D.C.  I have to admit that I was not surprised at the findings.  For profit nursing homes, are looking for profits.  So if they can cut a corner or get a free handout to make some money, don’t be surprised if they do it.

CPI reports that since 2009, hundreds of nursing homes nationwide have received a combined total of nearly $2 billion in low-cost mortgages guaranteed by the Department of Housing and Urban Development even after receiving the lowest possible quality rating from the federal government.   In all, 240 poorly-rated nursing homes in 38 states and Washington, D.C. were granted these HUD-backed loans. Ohio, with 30, had the largest number of these homes given just one star in the federal rating system. Illinois, with 20 homes, was second. California was third.  HUD spokesman Brian Sullivan wrote in an email that the average overall quality rating of newly-insured nursing homes has improved every year since 2011, and Dr. David Gifford, senior vice president of quality and regulatory affairs at the American Health Care Association, the leading for-profit nursing home advocacy organization, pointed to the higher percentages of all skilled nursing facilities that have earned the top score, a five-star rating, from the federal government, from 2009 to 2013.

History

Part of the National Housing Act of 1959, the nursing home mortgage program was created because Congress believed that for-profit nursing homes were having trouble securing loans on reasonable terms.

In 1964 the program expanded to include nonprofit nursing homes.   HUD officials and lenders generally viewed nursing homes as risky ventures prior to 1965, a government report said, but the inception of the Medicaid program that year provided a more reliable income stream for nursing homes.  Because HUD guarantees the mortgages, the public pays when one of these nursing home defaults. Costs include the original loan amount, premium payment requirements and recoveries from the sale of notes and properties, according to a 1995 report by the GAO ( Government Accountability Office.)    The report said that HUD data showed that losses of about $187 million, had been incurred since the nursing home program’s creation.   The program  insures mortgages for nursing-home   acquisition, construction, refinancing, and improvement. HUD has granted mortgage insurance to more than 7,000 nursing facilities since the mortgage program began.   As of August 2014 more than 2,000, or about 13 percent, of all nursing homes held HUD-insured mortgages. The mortgages HUD backed had an average interest rate of 4.2 percent and a combined worth of more than $16 billion.

Ongoing problems

The Department of Health and Human Services ranks nursing homes on an overall five-star quality scale in an effort to assist consumers trying to choose a home for a family member. The overall quality mark is determined by rankings on health inspections and staffing levels, among other metrics. A one –star rating, HHS says, indicates that the care provided is “much below average.” For-profit corporations were over-represented among the ranks of one-star homes with the low-cost mortgage loans guaranteed by HUD.  Corporations owned a little more than half of all nursing homes, but more than two-thirds of poorly-rated HUD-guaranteed mortgage recipients.

Some experts  think [the HUD-guaranteed mortgages] should be restricted to only doing nonprofits.  There’s certainly no reason the government should be financing for-profit corporations.

For dozens of facilities, the poor quality of care was also not limited to a single inspection cycle, either.

More than 30 of the one-star mortgage recipients were among the 564, or about 5 percent, of facilities USA Today identified in 2012 as having earned the lowest possible rating from the federal government for seven consecutive ratings cycles.   The nursing home industry has argued that the federal five-star rating system is inaccurate and excessively punitive, but HUD-guaranteed mortgage recipients also fared poorly on home safety, according to a 2009 GAO report.   About two dozen were on a list of 580 nursing homes that the watchdog agency said should get extra regulatory attention.   And nearly 30 percent of the one-star nursing homes received at least two HUD-backed mortgages since 2001.  A 2011 report by  by HUD’s inspector general’s office criticized the low priority HUD officials placed on regulatory enforcement.

If you or a loved one has been injured at a nursing home here in northeast Florida, please don’t hesitate to contact us at Edwards & Ragatz for a free consultation. 904-399-1609 or info@edwardsragatz.com.

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