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

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First. Our Nation and our Federal and State governments have no
consistent, coherent policy with respect to treatment of the <strong>in</strong>firm
elderly.
Second. Physicians avoid nurs<strong>in</strong>g homes; their visits are few and
far between.
Third. Nurses <strong>in</strong> nurs<strong>in</strong>g homes are few-only 56,000 for all 23,000
homes-which means that 80 to 90 percent of the care is given by
untra<strong>in</strong>ed aides and orderlies.
Fourth. The present reimbursement formulas employed by the States
<strong>in</strong> their medicaid programs conta<strong>in</strong> built-<strong>in</strong> f<strong>in</strong>ancial <strong>in</strong>centives <strong>in</strong>
favor of poor care; and f<strong>in</strong>ally,
Fifth. The <strong>in</strong>spection and enforcement system is a national farce.
These last two po<strong>in</strong>ts provide the major focus of today's hear<strong>in</strong>g.
I am <strong>in</strong>terested to learn more about New York's unusual cost-plus
reimbursement formula for nurs<strong>in</strong>g homes; frankly, it is enough to
make defense contractors drool with envy. It appears to me that almost
everyth<strong>in</strong>g is covered; even legal fees to fight the health department
are reimbursable.
I can't imag<strong>in</strong>e a formula which is better tailored to the <strong>in</strong>dustry's
self-<strong>in</strong>terest. The message your legislature has given the operators is
clear: Spend, spend, and spend. For whatever you spend, you will be
reimbursed with a profit.
This leads to the unwholesome situation of nurs<strong>in</strong>g home after
nurs<strong>in</strong>g home runn<strong>in</strong>g <strong>in</strong> the red and even show<strong>in</strong>g what is called
negative equity computation, while pay<strong>in</strong>g vast sums <strong>in</strong> salaries or
rent very often to friends and relatives.
Also of <strong>in</strong>terest is the process which sees nurs<strong>in</strong>g home after nurs<strong>in</strong>g
home cont<strong>in</strong>ually sold and repurchased among <strong>in</strong>terconnected
corporations. The purpose of such "boomerang purchases" apparently
is solely to <strong>in</strong>crease the sell<strong>in</strong>g price and hence the value of
the property. S<strong>in</strong>ce cost-plus <strong>in</strong> New York means 10 percent profit
computed on the operators' value or equity, the operators are tempted
to <strong>in</strong>flate that equity.
I have also been told that the State of New York has only 16 auditors
for 16,000 health care facilities. Furthermore, if a nurs<strong>in</strong>g home's
books are so jumbled that they are un<strong>in</strong>telligible, the penalty is only
that it is paid the average reimbursement paid by the States to nurs<strong>in</strong>g
homes <strong>in</strong> its size and geographical area. Some penalty.
The questions I have raised highlight the importance of today's
hear<strong>in</strong>gs. By act of Congress, all States must have cost-related reimbursement
for their medicaid nurs<strong>in</strong>g homes <strong>in</strong> effect not later than
January 1977. What we have already learned is that New York may
demonstrate that we are mov<strong>in</strong>g 180 degrees <strong>in</strong> the wrong direction.
There are of course other issues which should merit our attention:
The fragmentation of responsibility for <strong>in</strong>spections so that everyone
and no one is responsible; the fact that <strong>in</strong>spectors are too few or
untra<strong>in</strong>ed or that their recommendations are too often ignored.
To what extent does political <strong>in</strong>fluence serve to keep substandard
homes open?
Who owns New York's homes, and what are the consequences?
Is organized crime <strong>in</strong>volved?
To date the subcommittee has issued some 4.5 subpeiuis for this
hear<strong>in</strong>g <strong>in</strong> an effort to answer some of these questions. lVitneses will