Bill would make nation's first "guarantee" of profits for nursing home operators

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Nursing homes might see their first assured profits if a bill under consideration in California passes by the end of session on Aug. 31.

The bill would add a tax to secure additional federal funding for nursing homes, assuring annual nursing home profits of 5%, according to the Sacramento Business Journal. Assembly Bill 1629 would be the first of its kind in California, and the U.S.

The nursing home community, including some of the big chains in the state and groups representing the elderly, has formed a coalition with the Service Employees International Union to lobby state lawmakers to pass the bill. Under this new legislation, nursing homes would pay a fee to the state treasury, and the proceeds would be used to draw matching federal funds for the industry. Instead of being paid per patient, nursing homes would be paid under a system based on the cost of care, with guaranteed profits.

Opponents are quickly mobilizing to stop the bill's passage, saying lawmakers should work some more on the rate portion and examine more closely potential ramifications.

Backers of the legislation say the idea is to stabilize nursing homes so that they can ensure proper resident care and improve their facilities. California currently pays one of the lowest Medicaid nursing home rates in the country.