Some companies things are just so obvious.
McDonald’s is in the selling hamburgers business, right? Similarly, nursing homes exist to take care of seniors.
Then again, perhaps it might be more accurate to say McDonald’s and long-term care operators do those things, too.
In the case of McDonald’s, yes the company has sold more than a billion burgers over the years. But most facilities are owned by franchisees. They pay to use the brand name, its processes and so on. Moreover, the stores are built on property franchisees do not own. As it happens, McDonald’s actually makes a lot more money from that land.
A hamburger company? A real estate firm is more like it.
It’s becoming apparent that things are not quite what they used to be for quite a few nursing homes as well. Sure, they offer care. But in many settings, the real earnings are driven by other, ahem, arrangements.
Arrangements like linked real estate, staffing and management tie-ins, for starters. Turns out these non-traditional spigots often release far more profits for nursing home owners than the old fashioned funding streams.
By the way, the new arrangements are completely legal.
That is of course, unless the companies’ owners happen to be paying themselves far above market rates. Or to put it less delicately, engaging in fraud. Which, by the way, was exactly what a recent analysis by Kaiser Health News alleged is happening.
I’m not here to judge whether such accusations are legit. That is for others way above my pay grade to decide.
But given the structural and other fiscal-arrangement changes taking place in our field, I do think it’s fair to ask whether many facilities are really in what we used to call the nursing home business, or whether caregiving is simply part of a larger purpose.
If it is increasingly the latter, that’s not necessarily an indictment. But if the shift is real — and there are plenty of examples to indicate it is well underway – a simple question is begged: What business are nursing home operators really in? The real estate business? The management business? The referral business? Something else?
There’s also a more subtle question we may want to consider: What business are nursing homes going to be in a decade from now?
Perhaps that answer will never be obvious.
John O’Connor is editorial director for McKnight’s.
Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.
