Nursing homes should get ready for another image battering
James M. Berklan
Long-term care providers are sitting anxiously on the sidelines as members of Congress tussle with what to do before the end of the month about certain healthcare payment formulas. What will actually be done — or not done — with regard to Medicare doctors' pay and rehab therapy caps is a great unknown.
But providers can be certain there will be at least one political arena where they're going to take a beating soon, and it's going to stretch out through the November elections.
It's centered on the Illinois gubernatorial race, which might not sound like such a big deal to the rest of the country. But given the way the gloves came off in the primary, the vitriol is certain to flow well past the state's borders.
That's because the Republican nominee, political newcomer and multimillionaire Bruce Rauner, once chaired a private equity firm that invested significantly in the nursing home business. That business, Trans Healthcare Inc., has multiple awards still in play for alleged wrongful death and patient neglect.
At one time, the awards against THI totaled more than $2.3 billion, though there was no defense mounted in many of the cases because the company no longer exists after sliding into receivership.
Rauner left GTCR in October 2012 to begin his run for governor and is not personally named in any of the lawsuits. But the firm he powerfully maneuvered into the long-term care playing field still is. Among the complaints filed by plaintiffs' attorneys are claims of underfunding care and then attempting to hide assets to avoid paying huge damage awards.
In the primary, Rauner spent more than $14 million, $6 million of it his own money. He aired commercials that started many months before the governor's race was even on 99% of the population's minds. As a result, he built up name and face recognition that was remarkable for a first-time candidate.
Then, however, came the sad faces and blown up headlines in negative commercials funded by his opponents. Nursing home abuse. Deaths. Malfeasance.
The barrage undoubtedly put a dent in Rauner's final vote total. Though he still won handily in a four-candidate race with 327,000 votes to runner-up Kirk Dilliard's 304,000 (a 40% to 37% ledger), it was a far, far cry from the massive double-digit lead that he held before the nursing home attack ads were mashed into the public's consciousness.
Rauner didn't lose, but nursing homes did. And they will again.
Politics ain't for sissies, and that's especially true in Illinois. It's a place where residents figure if a politician isn't under suspicion of being bought off, he (or she) probably has just been out of the area on vacation.
Two of its last three governors — the post for which Rauner is running — have wound up in federal prison. The more recent, Rod Blagojevich, started a 14-year term two years ago this month. He was found guilty on 18 counts of trying to sell or trade President Barack Obama's former U.S. Senate seat.
Dig a little deeper and four of the last seven Illinois governors have wound up in prison. But that's getting away from the main story, and not doing, um, justice to all of the other senators, representatives and other elected officials who have run afoul of the law while in office.
Rauner's race against incumbent Pat Quinn is expected to be ugly, even by Illinois standards. Rauner is a classic conservative capitalist — vowing to reduce the minimum wage and take on career politicians and unions, for example — while Quinn is just the opposite in the long-time heavily Democratic state.
The airwaves are certain to be flooded with negative ads, as usual. There is no way Rauner's nursing home experiences will not be brought up.
The tangled mess of damage awards has a variety of legal pleadings underway, with a trial date currently set for September. Bankruptcy proceedings are complicating matters.
One of the awards is a $1.1 billion judgment handed down in July 2013 in a case involving the death of a Florida woman. Another whopper, a $900 million award, was handed down in a 2012 case that alleged neglect at a Gainesville, FL, nursing home. An appeals court sent it back to trial court, however, after ruling a trial judge had committed procedural errors.
At what might have been its highpoint in 2003, Trans Healthcare announced the the acquisition of seven long-term care firms would bring its total to 274 facilities in 21 states. In all, THI was to have more than 25,000 beds and 48,000 employees under wing. By 2005, after numerous lawsuits had begun to damage the bottom line, THI was down to just 185 facilities and 13,000 employees, according to published reports. The company went into receivership in 2009.
The Illinois situation will remind long-term care veterans of a similar scenario with one of its southern neighbors, Kentucky. That's where a founder of what is now the Kindred Healthcare company and the Ventas healthcare REIT faced bruising political battles, due in large part to his long-term care experiences.
Bruce Lunsford and two other partners established Vencare in 1985, which became Vencor in 1989. Nine years later, the company split into Ventas, which was created to own all the properties, and Vencor, which remained as the operating company for them.
In September 1999, in response to Balanced Budget Act reimbursement cuts, Vencor filed for bankruptcy protection. Lunsford was CEO of both companies until he resigned in 1999; he stayed on as Ventas board chairman until 2003.
That was also the momentous year when he ran for the Democratic nomination for governor of Kentucky. Just days before the hotly contested primary election was to take place, Lunsford dropped out of the race. He blamed attack ads from then-Attorney General Ben Chandler, who blared allegations of abuse and neglect at nursing homes connected to Lunsford.
Lunsford ran again for governor in 2007, but his 74,000 votes (21%) were nearly doubled in the Democratic primary by eventual governor Steve Beshear's 142,000 (41%).
The next year, Lunsford won the Democratic nomination for a U.S. Senate seat. Buoyed by a flagging economy that weakened incumbent Mitch McConnell's popularity, and stump support from former President Bill Clinton and other heavy hitters, Lunsford nonetheless lost 53% to 47%.
Did the original barrage of negative nursing home ads taint Lunsford's appeal throughout his political career? Some swear they did.
(The state, as it turns out, has had a checkered past between the governor's mansion and the nursing home profession. In 2002, then-Gov. Paul Patton finally gave up a stonewall façade and admitted having a two-year extramarital affair with Tina Boyd Conner. She wound up suing him for allegedly ruining her nursing home business after she cut off their relationship. The funding poured in while they were an item, but then increased inspections led to Medicare and Medicaid funding cutoffs and subsequent bankruptcy, she alleged. A web search Tuesday showed that a judge dropped all but one of her charges against Patton, while Conner was ultimately indicted for mail fraud in an unrelated federal case.)
In Illinois, when the inflammatory ads start again in the Rauner-Quinn race, few will think twice about the guaranteed loser: the nursing home profession.
Rauner's proponents will again assert he had no hand in the day-to-day management when the bad acts occurred at his nursing home businesses. Attack. Defend.
And the remaining impression will simply be that, whether or not this guy is a greedy shark investor, nursing homes are terrible places where horrible things inevitably happen.
They might be trying to put Rauner on trial, but the skilled nursing profession will already have been convicted in the public's mind, no matter the November vote totals show.
James M. Berklan is McKnight's Editor. Follow him @LTCEditorsDesk.