Examiners see the churn and corporate SNF operators feel the burn

James M. Berklan
James M. Berklan

I imagined nursing home chain executives wincing two days ago at the sight of yet another study apparently finding that they're doing a poor job. “Corporate ownership changes linked to poor nursing home quality,” the McKnight's Daily Update headline said with a menacing overtone.

It's a story that I'm sure was skimmed quickly by many, leaving a slightly off-target impression. Corporate? Nursing homes? Poor quality? Oh yeah, we've heard that one before.

No, you haven't.

This article pertains to a deep look by researchers from Harvard, the University of Michigan and a handful of other esteemed colleges. Even providers might be surprised to hear how non-judgmental some of the findings were.

Even though the study unequivocally found that poor nursing homes churned through repeated sales more frequently than good-performing ones, researchers were NOT tsk-tsking and pointing fingers at class of owners — for-profits or nonprofit included. Rather, it was the nature of these deals researchers have found unsavory.

“We haven't said chains provide lower quality care,” lead study author David Grabowski of Harvard Medical School emphasized to me Tuesday. “And we don't want to suggest some chains are doing better or worse. That's not the focus here.”

Grabowski's focus is to get expanded oversight and accountability of deals that involve the churning of poor quality facilities. Period.

You see Grabowski and his team are not in this for me or even you, dear provider. They're in it for the consumer, which when you think about it, is how it should be. In the end, Grabowski is hoping that more is revealed about the facilities and owners buying and selling them.

This doesn't mean more layers of bureaucracy for providers throughout the land.

“I don't know that the answer is more regulation,” Grabowski told me, “but I do know the answer is more transparency. They [owners] might not like that or want to provide the information. But the data are pretty clear that these nursing homes are changing hands quite a bit and have lower quality.”

Grabowski's federally funded grant paid for an in-depth study that took several years to complete. It involved numerous research assistants coding providers' self-reported ownership responses from CASPER submissions. Literally every chain in the country was noted in some way — whether it was a two- , three- , 50- , or 300-facility operation. And whether its name was spelled right or not, Grabowski added wryly to indicate how painstakingly the decades of information was pored over. If a provider said it was said it was part of a chain, so be it. That could mean two facilities or many, many more.

The examination of transactions clearly found that poor performers would be that way for at least a year before a sale — and then remain poor long after the sale. And then could be sold relatively quickly again.

Why this is happening is not really known, Grabowski acknowledged. Like all good researchers, he pointed to an opportunity for further study and research. Is this cycle occurring due to poor due diligence by the acquiring companies and their lenders? Because of over confidence in the SNF market? Because some misaligned business bonus is manifest among government regulations? It's not clear.

But, he emphasized, he doesn't think there's some secret payoff that sharp investors have decoded and exploited. The consistency of the churning of poor-performing facilities during recent decades has taken place among dozens and dozens of providers who have nothing to do with each other, yet alone a shared strategy.

“I would be reluctant to say the chains, in general, are doing worse,” Grabowski added. “It's really about these transactions."

His goal is to get such deals noted on Nursing Home Compare so that potential nursing home users can see if a facility has changed hands often, a bad indicator. His home state of Massachusetts mandates that nursing home sales or pending sales be brought out in the open so consumers can consider them in a new light.

It is something solid, high-quality nursing facilities should want, too, Grabowski feels.

“The data are pretty clear that these nursing homes changing hands quite a bit have lower quality,” he reminds.

“As a consumer, I wouldn't rule out a place that's just been sold. I just might scrutinize it more.”

Shining a light on any issue is going to bring more clarity, and that shouldn't be a bad thing for anyone involved.

And to anticipate a question from well-intended investors hoping to turn around troubled facilities, Grabowski has a conciliatory answer. As an owner gains some time and stability after a deal, the impact of a recent transaction should be "down weighted."

In the grand scheme of things, he reminds, this ownership information would be merely a small part of many indicators on Nursing Home Compare — which itself should be just one point in an intricate matrix that consumers use to judge a facility. 

Sounds like a good deal to me.

Follow James M. Berklan @JimBerklan.

Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

    ALL MCKNIGHT'S BLOGS