For-profit nursing home owners in New York may soon be required to publicly disclose when they hire certain companies to perform services at their facilities. 

The contracts coming under scrutiny, defined by the state as ‘non-arms length’ agreements, include those where a facility operator does business with an organization that has common ownership or control, where there is a family relationship between the operators and the other organization, or where the operators and other organizations are involved in any other business together. Their practice is legal and widespread, but New York State’s Health Department has said recently that it will soon issue guidelines to implement a new law requiring facilities to more clearly disclose this information publicly, according to a Buffalo News report.

Owners of nursing homes complain that state funding for their facilities is inadequate, and that doing business with related companies allows them to create economies of scale that eliminate redundancies and reduce costs at individual nursing homes. Yet consumer advocates claim that these types of business arrangements provide owners with a way to misdirect funds intended for resident improvements.

The new law will “hold these operators more accountable,” Health Department spokesman Jeffrey Hammond was quoted as saying in the news report. He said implementation of the transparency law showing ownership connections is “forthcoming” but he did not elaborate on a date. Owner information would be shared publicly, he added.

Earlier this month, New York Gov. Kathy Hochul (D) delayed a new state law that requires nursing homes to spend a minimum of 70% of revenue on direct patient care and at least 40% of that on resident staffing.

Many stakeholders have been calling for more transparency regarding nursing home ownership and how profits are spent. Additional reforms will be needed if the industry wants to successfully move forward from the COVID-19 pandemic, they say.

“These issues, if we’re not transparent with them, if we don’t see them,are going to continue to eat away at the potential success of the nursing home industry,” geriatrician Michael Wasserman, M.D. said in September.