Nevada nursing homes have nation’s highest bankruptcy rate
CARSON CITY, Nev. – Just two days before Christmas, 95-year-old Lily Coffman had to pack up her belongings and move to a new nursing home because her old one was closing abruptly.
It had gone broke.
”It was awful, just awful,” Coffman says. ”We thought they were joking, you know, and they said, ‘No, you’ve got to be out by the 23rd of December.’ I had to get a new place in a hurry.”
Last December’s move by Coffman and about 60 fellow nursing home residents is one that’s repeating itself around the nation.
More than 1,600 homes have filed for bankruptcy since last fall as they struggle with federal funding cuts, a lack of local or state money, increased insurance costs, tougher quality-care standards – and, for some, bad business decisions, heavy debt loads and claims of defrauding government health care programs.
Most of the troubled homes have remained open, despite plummeting stock prices for corporate properties, while they try to get their finances in order, and the federal Health Care Financing Administration says residents are safe. But many other homes have closed or laid off employees.
In Nevada and New Mexico, nearly half the homes owned by big chains and affiliated with the American Health Care Association filed for bankruptcy protection – the highest rates in the nation.
”The system is crashing around us,” says Michael Clark, head of the Nevada Health Care Association. ”With all the bankruptcies we’re facing, it’s a disaster right now.”
The future isn’t much better without some funding improvements, adds Linda Sechovec, Clark’s counterpart in New Mexico.
”Long-term care is something nobody wants to deal with until they have to,” Sechovec says. ”We are headed for a real catastrophe.”
”If the baby-boom population hits the age that they need this care and we still have a reduced pool of workers, the system will fall under its own weight,” she adds.
To head off the crisis, they’re joining in a national effort to restore federal Medicare funding that was slashed for a wide range of health care programs when Congress approved the Balanced Budget Act of 1997.
A nationwide television and print campaign was launched last week by the AHCA, which represents nearly two-thirds of the 17,000 nursing homes that house 1.2 million elderly and disabled people in the United States.
How far the effort will get is uncertain. Sen. Charles Grassley, R-Iowa, chairman of the Senate Special Committee on Aging, says what’s needed is a General Accounting Office analysis of the industry’s finances.
”The taxpayers spend $39 billion a year on the nation’s nursing homes. Is that enough to buy good care? It seems that it should be,” Grassley says. ”But we don’t know enough about how nursing homes spend that money to know for sure.”
The AHCA says Medicare funding cuts in 1997 could total $15 billion over several years, even though Congress last year restored $2.7 billion for patients needing skilled nursing care.
”Balancing the budget is an important national priority,” says Dr. Charles Roadman II, AHCA president and CEO. ”But we should not achieve that priority on the backs of frail, vulnerable seniors who need quality skilled nursing care.”
Roadman says the Medicare cuts have figured in decisions by 1,651 skilled nursing providers to file for bankruptcy protection since last fall – facilities that care for about 175,000 elderly and disabled patients.
But Elma Holder of the consumer-oriented National Citizens’ Coalition for Nursing Home Reform says, ”Much more is happening than just the (Medicare) reimbursement system changing, and it relates to a lot of the big mergers over the last few years … and it relates to corporate greediness and management.”
There have been nearly 400 bankruptcies in the West, including 38 of 81 AHCA affiliates in New Mexico and 22 of 47 Nevada homes – giving the two states the nation’s worst rates of 47 percent. The average for the West is 14.6 percent.
Sechovec says corporate ownership is more common in the West and the South than in areas like the Midwest, where there are many independent or small-chain homes. So when big chains filed for bankruptcy, she says that caused the West’s rate to spike.
The AHCA’s late-1999 survey of its affiliates showed more bankruptcies occurred in the South – 788 – but at a slightly lower rate of 13.9 percent. There were 195 bankruptcies in the Northeast, for a 6.6 percent rate, and 272 in the Midwest, for a 4.8 percent rate.
In Nevada, Clark says some local or state-level support might be needed if increases in federal reimbursements are slow in coming. Sechovec said her association sought a state appropriation last year but was turned down. She’ll try again next year.
Other solutions might be to move some nursing home residents who require the least amount of care into group care or assisted living arrangements, Clark said.
But a lower level of care won’t work for many – including Lily Coffman, a widow bedridden for six years due to a bad knee.
She’s now living in a Carson City nursing home that has an uncertain future. It’s owned by a major nursing home chain that accounts for many of the recent Chapter 11 bankruptcy filings.
Nevada’s high rate was due mainly to the early February filing by Integrated Health Services Inc. The Sparks, Md.-based company owns 15 of the 22 Nevada homes now involved in Chapter 11 proceedings. In all, IHS has 400 homes around the nation.
IHS is one of four corporations that together account for more than 1,400 of the homes that have come under bankruptcy court protection in recent months.
Others include Atlanta-based Mariner Post-Acute Network, with more than 400 homes; Louisville, Ky.-based Vencor, with 303 homes; and Albuquerque, N.M.-based Sun Healthcare Group, with 369 homes.
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