As Regulators Mull New Rules, Nursing Homes Must Embrace Ownership Transparency

Before COVID-19, the last major nursing home story to break into national headlines was the case of Skyline Healthcare.

The New Jersey operator emerged from obscurity to amass more than 100 buildings from the Northeast to the Midwest, before collapsing under the weight of unpaid bills and operational problems. Court-appointed receivers and state officials spent years cleaning up the wreckage, and some of its buildings were forced to close.

For the press, it was a story tailor-made to generate clicks and criticism: A largely unknown company, allegedly operating from a tiny office above a North Jersey pizza shop, somehow convinced officials in multiple states that it could handle the complex task of caring for vulnerable elders, even as some of its buildings struggled elsewhere.

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But while the industry at large, as it so often does, may have taken its lumps over the behavior of one company, the Skyline affair led to actual policy change in states such as Kansas and Ohio, which have moved to implement stricter vetting of people who want to purchase or assume control of nursing home operations.

Even the most hardcore industry partisans — the ones that like to cite the old saw that only nuclear plants are regulated more closely than nursing homes in the U.S. — can likely see the positive impulse behind such rules. States and families have a right to know that the people who run nursing facilities don’t have outstanding issues elsewhere in their portfolios, and that they have the money and the financial plan in place to provide uninterrupted care.

And if, as so many leaders have noted, that a few bad apples are spoiling the whole bunch of nursing home operators, there’s no clearer way to help us all root them out.

As I’ve written before, my top fear about the future of post-acute and long-term care is that the lessons learned from COVID-19 won’t lead to meaningful policy and structural change — that after the federal and state governments hand down fines, and maybe even arrest some truly negligent parties, the spotlight will move on, and the same old problems will carry into the next local or national crisis.

Stakeholders in the industry must accept that new regulations and requirements are coming, regardless of whether they feel they’re justified or not. As policymakers, politicians, and advocates call for change, embracing national ownership and transfer rules would be a major step toward showing the country that nursing homes are taking the imperative for reform seriously — while also ensuring that the post-COVID oversight push has deeper aims than just Monday-morning quarterbacking.

Even as an editor who covers the industry for the industry itself, the often tangled web of nursing home ownership, both real estate and operations, has been deeply frustrating. The simple task of tracking a given building’s ownership history, or figuring out which properties fall under the same operational group, is time-consuming at best or impossible at worst.

And for me, it’s part of the job I’m paid to do every day — I can’t imagine what a prospective resident and their family might think when faced with the question of who runs their town’s nursing home.

I understand the reasoning behind it. Years of attention from plaintiff’s attorneys has necessitated the development of legal entities for operators and building owners; such arrangements are common in plenty of other industries with a real estate component, from multi-family housing to stadium operations.

But only the nursing home industry cares for the most vulnerable residents in our society. I’m not a lawyer or a programmer, but I certainly don’t think it’s impossible to design a system in which operators can seek standard liability protection while also maintaining an easy-to-use database of which chains and ownership groups run which buildings.

The federal government’s Nursing Home Compare tool has some of that information already, but it’s not easy to cross-reference — and it often reveals nothing more than ownership by an LLC with the same name as the property, along with the names of a few investors.

It’s definitely not impossible to roll out standard vetting procedures for all ownership and management transfers on the federal level.

Kansas has already provided a blueprint: Potential owners of nursing home real estate or operations must submit a list of every other building, in Kansas or elsewhere, in which they have an ownership stake. They must also provide a 12-month operating budget and proof that they have the finances to see it through; anyone with a history of receivership actions is banned from receiving a license for 10 years.

It’s true that the rule might place some logistical strains on smaller operators. But Kansas Health Care Association CEO Cindy Luxem told SNN last year that most of the group’s members believed the regulation was necessary because the industry had “gotten burned so bad” by the Skyline situation.

Amid a staggering COVID-19 death toll, the current media narratives reflect a deep distrust of the nursing home industry. At national and local outlets, reporters will have carte blanche to dig through nursing home ownership records — and some already have, leading to an NBC News report that revealed a connection between Skyline and a facility in New Jersey that has been at the center of the national narrative after a wave of deaths.

There will be more stories like that in the months to come. Whether an individual owner or operator deliberately tried to cover his or her tracks for nefarious reasons, or was just following standard liability practice, is irrelevant in the court of public opinion — just the appearance of subterfuge will be enough to cast the entire space in a negative light.

That’s why the industry itself must embrace greater transparency, even if it might go against its natural instinct or cause some short-term paperwork hurdles.

Operators in Kansas were burned by a scandal that made the national news, so they made the decision to embrace meaningful reform. It’s time for leaders across the country to join together and do the same.