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Bed-Panning for Gold 

As welfare queens go, the nursing home lobby is on a throne by itself.

Six nursing homes in Cuyahoga County provide substandard care, according to state health inspectors. But if any of the six were sued for neglect or abuse, a new law allows the homes to suppress inspection results as evidence.

The law also shortens the statute of limitations, dictates who can bring a suit on behalf of a resident, and requires juries to consider homes' ability to pay punitive damages. Ohio lawmakers, in other words, made suing a nursing home a big pain in the ass.

The bill's supporters say precious resources go to waste on frivolous lawsuits and liability insurance. Patients suffer. It's an argument not everyone is buying. "We don't think limiting residents' rights is a way to improve care," Ohio AARP spokeswoman Kathy Keller says.

The law could have been worse, according to Columbus attorney Andy List, who reviews legislation for the Ohio Academy of Trial Lawyers. As introduced, the bill freed nursing homes from liability if their employees broke house rules. "You could envision 5,000-page manuals that said, 'Don't do anything wrong, ever,'" List says.

Even without the Employee Gone Bad provision, the bill's quiet passage marked yet another victory for the nursing home lobby. Arguably no industry in Ohio better plays the government game.

Last year, nursing homes received $2.5 billion -- that's billion -- in state Medicaid to care for 60,000 frail Ohioans who've depleted their assets. The Department of Job & Family Services projects that total Medicaid spending will double in nine years, largely because of nursing home care and prescribed drugs.

But while state nursing home subsidies have grown by 6.5 percent a year, occupancy has actually decreased. The state covers homes so well that taxpayers pay for empty rooms. Of the 91,000 licensed beds in Ohio, 12,700 go unused. "We're artificially inflating the demand for nursing homes," says state Medicaid director Barbara Edwards.

What's more, the state pays nursing homes unlike any other Medicaid provider. This year's payments are based on costs nursing homes report from the previous year, plus inflation. Such a scheme is rare in health care, public or private. With most plans, rates for services are negotiated in advance. Nursing homes, by contrast, are almost like the carefree college kid who just sends his bills home.

Nursing homes are a most-favored government contractor, thanks much to the Ohio Health Care Association, a trade group representing 800 facilities, most of them for-profit. Since 1998, the association has spent $336,000 to influence state elections. It is money well spent. Government sources now pay 70 percent of all nursing home care in Ohio -- a ratio that defense contractors might envy. "The Ohio Health Care Association is the most powerful nursing home trade association in America," says Donald Greenberg of Families for Improved Care, a consumer group in Columbus.

To hear the Ohio Health Care Association's president tell it, nursing homes barely manage. Peter Van Runkle says facilities are paid between 93 and 95 cents on the Medicaid dollar for their costs, and any budget cuts would diminish care. "One question to the state is 'If you're not going to pay us, who are we going to fire?'"

Yet when Van Runkle's clients speak to investors, a much bouncier tune is sung. Take Toledo-based Manor Care Inc., which operates 300 nursing homes in five states. Flush with cash, the company is buying back $200 million of its own stock; earnings are up 28 percent from last year. "Strong cash flow generation is expected to be a continuing trend," reads a recent company press release.

(Manor Care's facility in Collinwood, incidentally, is one of the six homes in the county listed as providing substandard care, though Manor Care spokesman Rick Rump says all problems have been corrected.)

Nursing home subsidies have grown so obscene, Ohio's normally meek governor stood up to the industry. In the last budget go-round, Bob Taft tried to check spending and create modest incentives to reduce capacity.

Statehouse Republicans reacted as if Taft had suggested the state leave its elderly out in the woods. Where nursing homes are concerned, Republican lawmakers' hearts bleed.

Senator Lynn Wachtmann of Napoleon, chair of the Human Services Committee, calls Taft's recommendations a "scorched-earth policy." He adds, "We basically stopped it."

Representative Bill Seitz of Cincinnati, who introduced the lawsuit-deterrence bill, says Ohio may pay more for nursing homes than other states, but it's still less than a hospital stay. "Call up the Cleveland Clinic and ask how much they charge for a room," he says.

It's not exactly a fair comparison: One employs minimum-wage aides; the other employs doctors and $500,000 machines. Seitz's point is that hospitals today discharge sicker patients faster, and nursing homes pick up the slack.

But even so, Medicare -- the health insurance program for older Americans -- pays for the first 100 days of nursing home care after hospitalization. And when nursing homes bill Medicaid, they are allowed to count sicker Medicare patients in their case mix, which ends up inflating their reimbursement rates -- another quirk the Taft administration would like to fix.

Alas, their funding formulas set by state law, nursing homes have managed to maintain the status quo. The current system is not only expensive, but unresponsive to consumers. While nursing home occupancy is decreasing, a program that uses Medicaid waivers to allow the elderly to stay at home is quite popular. Usually there is a waiting list.

State Senator Eric Fingerhut, a Cleveland Democrat, introduced a bill that extends waivers to assisted-living facilities. He believes many nursing home residents would opt for assisted living if they had a choice. "It's stupid," Fingerhut says, "because we end up paying twice as much" for a nursing home.

Don't expect a vote on the bill anytime soon. It is opposed by the Ohio Health Care Association.

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More by David W. Martin

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