Trends in Long-Term Care - U.S. Senate Special Committee on Aging

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to perhaps crowd more patients <strong>in</strong>to a room; however, now that there
is no longer a bed shortage, the conditions are no longer to be tolerated.
Senator Moss. I th<strong>in</strong>k we had better turn to Mr. Hal Lee now, and
if you would be available, we mighlt turn back to you.
Mr. Lee, would you like to proceed?
STATEMENT OF HAL LEE, RESEARCH CONSULTANT, TEMPORARY
COMMISSION ON LIVING COSTS AND THE ECONOMY
Mr. LEE. I was asked to dig <strong>in</strong>to the research, to see what I could
come up with <strong>in</strong> terms of vigilance, or <strong>in</strong> terms of variations on the
standard, where costs were <strong>in</strong>volved, and I, too, will present some
charts.
Senator Moss. All right.
Mr. LEE. Senator, this is a graphic presentation of the 25 nurs<strong>in</strong>g
homes, selected at random from with<strong>in</strong> the universe of study, as opposed
from the entire nurs<strong>in</strong>g home <strong>in</strong>dustry, which <strong>in</strong>dicates that
they are broke.
It is that simple. As I said a moment ago, there are 25 nurs<strong>in</strong>g homes
here. Of the 25, 22 show total current assets of about one-tenth of
the current total liabilities.
In a word, they are broke. It is as simple as that, at that po<strong>in</strong>t <strong>in</strong>
time, but Terry made a po<strong>in</strong>t a moment ago which <strong>in</strong>terests me even
more.
Apparently some lady paid $260,000 last year to buy <strong>in</strong>to a nurs<strong>in</strong>g
home. I wonder what they showed her to get her to buy it.
I am sure it was not these figures. In any event, technically speak<strong>in</strong>g,
22 out of 25 of these homes are <strong>in</strong>solvent, they are not able to meet
their bills as of December 31, 1973.
Two of them actually have negative net assets, they have no money
<strong>in</strong> the bank, is what this says, they have no money <strong>in</strong> the bank, they
have no assets at all, and as a matter of fact, if their credit is questioned,
as you know I am sure, they would be bankrupt.
Senator Moss. This is taken from their own books?
Mr. LEE. This is taken from their statements to the New York State
Department of Health, made as of December 31, 1973. It was made
<strong>in</strong> May or June of 1974. These are impossible situations.
Senator Moss. Is there any way to reconcile that?
Mr. LEE. Undoubtedly they do it by volume.
Senator Moss. Well, did the health department comment on these
situations ?
Mr. LEE. I am not sure if the health department would become
<strong>in</strong>volved <strong>in</strong> it, for the reason that their balance sheet is not important.
This is miy own judgment. I do not th<strong>in</strong>k the balance sheet is important
to the New York State Health Department, as are the operat<strong>in</strong>g
statements.
I th<strong>in</strong>k if the operat<strong>in</strong>g statements are the key, quite frankly, to the
possible manipulation, possible kickback, possible fraud, possible
anyth<strong>in</strong>g.
What I would like to show you is a second chart which sort of <strong>in</strong>dicates
what I am try<strong>in</strong>g to say <strong>in</strong> that regard; I th<strong>in</strong>k the operat<strong>in</strong>g
statements are equally as important.