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

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I have here under liabilities, one of the homes, this is C, has accrued
taxes and other expenses relat<strong>in</strong>g to payroll of $227,631.
Unless that money is <strong>in</strong> a bank somewhere, the U.S. Government
which had paid this nurs<strong>in</strong>g home, will not get the payroll taxes. This
is a clear <strong>in</strong>dication.
We have one home which has $250,000 of accrued taxes and other
expenses. That <strong>in</strong>cidentally is a catchall.
Mr. HALAINAN-DARIs. What you are suggest<strong>in</strong>g is that you have a
large amount of rent that is given away, that is a large amount of
salaries, taxes, or loans to related parties, so much so, that you w<strong>in</strong>d
up with a negative equity?
Mr. LEE. Yes, sir.
Mr. HALAMANTDARIS. And are there no controls <strong>in</strong> the State of New
York?
Mr. LEE. I believe there is some control, but I believe they are <strong>in</strong>adequately
monitored or policed. I don't believe that is the fault of
the auditors. I th<strong>in</strong>k it is the fault of the system, which does not provide
sufficient audit<strong>in</strong>g.
Senator Moss. Would not the State department of health be concerned
about homes that are go<strong>in</strong>g to be broke and suddenly they have
no place for their patients?
Mr. LEE. Senator Moss, they have not gone broke.
Senator Moss. They are not go<strong>in</strong>g broke?
Mr. LEE. They are always-broke, but they are not go<strong>in</strong>g out of
bus<strong>in</strong>ess.
Mr. HALA]tANDARIS. Do you have another chart.?
Mr. LEE. Yes, sir; I do. You asked me if there are problems here
<strong>in</strong>herent <strong>in</strong> this type of th<strong>in</strong>g, and you asked me, why would somebody
buy a bus<strong>in</strong>ess of this sort.
This chart represents the housekeep<strong>in</strong>g costs per bed per week for
a variety of nurs<strong>in</strong>g homes.
There are 15 homes <strong>in</strong> this particular sample, and we have grouped
them <strong>in</strong>to 3 homes <strong>in</strong> the 50- to 100-bed category, 3 homes <strong>in</strong> the
100- to 150-bed category, three <strong>in</strong> the 1550 to 200, and so forth.
You would th<strong>in</strong>k <strong>in</strong> terms of housekeep<strong>in</strong>g costs per bed per week,
there would be some economv of scale between a 40-bed home and a
250- or 350-bed home.
By economy of scale, I simply mean it should cost less per bed per
week, on a per-bed, per-week basis, to do the housekeep<strong>in</strong>g and ma<strong>in</strong>tenance
around a home that has 300 beds, <strong>in</strong>stead of around a home
that has 50 beds.
However. <strong>in</strong> this case we found <strong>in</strong> the 50- to 100-bed group. one home
has a cost of per bed per week of $19.50, and another one has a cost
of per bed per week of $3.50. a variation of roughly 400 percent.
We f<strong>in</strong>d <strong>in</strong> the 100- to 150-bed home, one home has a cost of $23 per
bed per week. a second home, at the bottom end of the spectrum, has a
cost of approximately $6.75 per week, aga<strong>in</strong>, a 300- to 400-percent variation.
all with<strong>in</strong> the same group<strong>in</strong>g.
We f<strong>in</strong>d <strong>in</strong> a group of 150 to 200 beds, a cost of $21.50 per bed per
wveek, versus a cost of $12 and change, roughly only a 90-percent difference.
That is not too serious, of course.