During the ‘70s, Soviet workers had a saying that revealed a fundamental flaw in their economic system: “We pretend to work and they pretend to pay.”
I was reminded of the phrase while reading coverage from a Thursday House hearing. The tone and purpose of the session was abundantly clear: To describe why private-equity owned nursing homes are harmful to the commonweal.
The speakers were intelligent. The talking points were memorable. The generally poor job that many private-equity owned nursing facilities perform was plainly evident. It was compelling stuff.
It also sidestepped a fundamental policy issue.
Private-equity ownership in and of itself is not the underlying problem. If it were, why would this approach be prevalent in so many other facets of our nation’s economy? Moreover, there are plenty of other nonprofit and for-profit facilities that are doing a substandard job.
So what is the real problem, then? It’s simple, really. Most nursing facilities – including those falling under the umbrella of private-equity ownership – must survive on welfare payments. Medicaid and Medicare cover most of the bills. And frankly, even the most efficiently run long-term care organization imaginable is likely to struggle under such circumstances.
To be clear, there are plenty of operators of all kinds who engage in upcoding, false billings and other shameful acts of profiteering. Those folks, frankly, should be prosecuted to the fullest extent of the law.
But let’s get back to the real issue: inadequate reimbursement. It leads to services being provided as cheaply as possible, many corners being cut – and poverty-level wages for frontline employees. The inevitable result? Care that could and should be better.
Want to fix what ails long-term care? The answer is not to shame private-equity owners into submission (although they absolutely must be held accountable). Far better to address the real albatross: underpayments and the half-hearted efforts they inspire.
Otherwise, long-term care operators and the government will simply continue the charade. It’s one that many old Soviets will instantly recognize.
John O’Connor is Editorial Director for McKnight’s.