By Thomas Goldsmith

After a staff member at an Arden nursing home registered positive for COVID on Sept. 16, 2020, the Oaks at Sweeten Creek waited for eight days to test its 84 residents for COVID as required according to state records.

During the next four weeks, 53 residents of Oaks at Sweeten Creek and 18 staff tested positive for COVID-19. By the week of Oct. 18, federal records say, five residents had died from the disease caused by the SARS CoV2 virus that was sweeping the world.

Investigators eventually concluded that the specific lapse at the Arden center resulted in one death, according to state documents on the case. Federal regulators handed the facility a maximum, immediate-jeopardy penalty. That means that the home’s lapses in following required guidelines were so grave that they had caused or were likely “to cause serious injury, harm, impairment, or death to a resident.”

“The Medical Director indicated the delay in testing and isolating positive residents may have contributed to the facility’s outbreak of COVID-19,” state investigators wrote in their report.

But consumers could not easily find this incident in the facility’s publicly available descriptions. This knowledge would only be revealed after a search that would require persistence and data-mining skills by people who know where to look.

Experts say greater transparency and full information on nursing homes’ events and ownership would provide a clearer picture to people concerned about what happened at a facility. This type of information could help someone selecting the best living situation for a loved one. But this type of transparency is in short supply in an industry where ownership and accountability are increasingly shielded by multiple, overlapping corporate entities that protect the people reaping the profits generated by caring for some of society’s most vulnerable.

That’s why greater transparency appears among the moves toward positive change suggested in a comprehensive new report, “National Imperative to Improve Nursing Home Quality” from the National Academy of Sciences, Engineering, and Medicine. 

‘It’s a basic issue of society’

A panel of highly qualified academic, policy and industry experts assembled the report, commissioned by several foundations that fund research on aging, including the John A. Hartford Foundation, the Commonwealth Fund and the Jewish Healthcare Foundation. The conclusions and recommendations reached by the commission have been the object of significant attention from government, nonprofit and long-term-care industry figures. 

“The issue is that nursing homes have been really invisible in our society,” said committee chair Betty Ferrell, a professor and director of nursing research and education at the City of Hope National Medical Center, in Duarte, California 

“It’s a basic issue of society and it’s shameful that we haven’t done a better job of it,” Ferrell said in a phone interview from California.

Given the case of Oaks at Sweeten Creek, a concerned caregiver or friend who wanted to research it, or another facility like it, would quickly run into the paperwork and the structural walls that surround many long-term care companies. 

On the widely used Nursing Home Compare maintained by the federal Centers for Medicare and Medicaid Services information website, the Oaks at Sweeten Creek has a three-star or average rating. An interested party would have to venture four or five clicks into the site before seeing penalties levied against the facility for the maximum-level violation.

When a complaint is filed against a facility, that sets in motion a chain of events that begins with local agencies sending in inspectors to investigate. Those investigations result in an official “statement of deficiencies and plan of correction” that are filed with state regulatory agencies. In the case of the Oaks at Sweeten Creek, the official North Carolina Department of Health and Human Services report recounts a timeline of errors, failures and oversights that eventually lead to tragedy. 

A sign in front of the Oaks at Sweeten Creek. The facility was cited by regulators for not following up by testing staff after their first staff member tested positive for COVID-19 in fall 2020. Eventually 53 residents tested positive for the virus and five residents died. Photo credit: Thomas Goldsmith

The report also contained a written response from representatives of the nursing home’s owners, Consulate Health Care. That response noted that family members learned of the outbreak on Sept. 28 through a call from an automated system. That was 10 days after the first staffer’s positive test came back, a period that constituted a violation. The response said that the home’s administrator had been “re-educated” by the regional director of clinical services.

Adam Sholar, president of the nursing home industry group the North Carolina Health Care Facilities Association, said that the levels of COVID infection in the greater community were in part responsible for the problems encountered by nursing homes during the pandemic.

“To the extent that people feel nursing homes are responsible for COVID outbreaks and deaths, several academic studies have shown that the spread of COVID in nursing homes was largely the result of community spread,” Sholar said. “In other words, when COVID was prevalent in a local community, nearby nursing homes had worse outcomes.”

Watching the stars

In regard to the star rating system that many consumers rely on, Kody Kinsley, North Carolina’s DHHS secretary, says he’s keeping an eye on the actions of federal officials that produce the five-star designation. 

“I know the federal government is looking at the star rating process right now and trying to understand how that could be different,” Kinsley said in an interview. “I think that we need to think about how we tie payment and quality together to really make that more visible for folks.”

The state’s role in long-term care is complicated by its simultaneous roles in regulating nursing homes, assisted living centers and the rapidly expanding home-based care sector, Kinsley said. 

Too little, or too much information?

Ferrell, the leader of the committee behind the national report, said that residents and family members who pay an average of $7,483 per month for a semi-private nursing home room in North Carolina deserve detailed information about the way the funds are spent. 

Sholar’s take on the report is that the blue-ribbon panel with its hundreds of pages of analysis is off base in some of its findings, including the charge that information is too hard to find and understand.

“We support transparency and believe that current reporting requirements to the federal and state governments provide that,” Sholar said in a statement to North Carolina Health News. “Policymakers and members of the public have access to an incredible amount of detailed information about North Carolina’s skilled nursing facilities today.”

Bill Lamb, a veteran advocate for older North Carolinians and board member of the nonprofit Friends of Residents in Long Term Care, or FOR, said people seeking a nursing home for a relative can get bogged down in the multiplicity of sources. In addition to government and nonprofit sites, a number of for-profit websites present information that often lacks context.

‘The only true asset’

Raleigh lawyer Steve Gugenheim, commenting generally, said a  “fragmentation of entities” often obscures business relationships at nursing homes. 

“One entity holds the license, another owns the real estate, and another is the management company,” Gugenheim, who has often litigated suits against long-term care facilities, said in an email exchange. “Usually, the entities are LLCs (limited liability companies), a corporate entity that shields its member-managers from individual liability.”

LLCs are defined by the Legal Information Institute as “a type of business organization that offers the limited liability of a corporation and the tax benefits of a partnership.” 

“The only true asset is the real estate,” Gugenheim said.

Mark Parkinson, president of the national nursing-home trade group American Health Care Association, called recent questioning about ownership by private equity firms a “red herring.”

According to Sholar, the industry supplies information about ownership as well as cost reports that detail where funding goes. 

Advocates say that’s not enough. 

“I think we need oversight and we need timely data,” said Nancy Ruffner, founder and CEO of Navigate NC, a patient advocacy firm. “And for underperforming facilities, they need to ride them like a horse.”

Ruffner notes out-of-state companies are increasing their share of nursing homes ownership in North Carolina. She added that those that were cited for deficiencies should be tagged with larger penalties.

“Then they will make the changes because some of us don’t change until we’re in enough pain,” she said.

She also pointed out the issue of lack of transparency exists across the country. 

Where does the buck stop?

The federal listing for Oaks at Sweeten Creek shows seven people and one company in managerial control, while 13 companies, all LLCs, are listed as owners. Each company owns more than 5 percent of the nursing home, the database says, without listing specific figures. 

The NASEM report calls that type of information from the Centers for Medicare and Medicaid Services, including Nursing Home Compare, hard to use and less than complete. 

The report’s authors say more, better and clearer information is needed about the financing, ongoing operations, and owners of nursing homes. Among other interested parties are state and national taxpayers who collectively shell out billions to support Medicare and Medicaid, Ferrell said.

In North Carolina alone, Medicaid pumped close to $1.7 billion into nursing home care in 2021.

How much does NC spend annually on Medicaid in skilled nursing facilities?

FY 2018-19$1,304,733,154
FY 2019-20$1,495,331,546
FY 2020-21$2,125,559,783
FY 2021-22*$1,693,988,937
*Through April

Notes:

  • The amounts come from the State’s accounting system (certified BD-701s).
  • FY 2020-21 includes $69.6 million for nursing home staff COVID-19 testing; FY 2021-22 includes $1.1 million for this purpose.

Source: NC Fiscal Research division

According to a recent report by the nonprofit Long Term Care Community Coalition, “Policymakers and advocates at both the federal and state levels are increasingly focusing on transparency – the availability of high-quality, complete, interoperable, and accessible data on nursing home ownership, management, and financing – as a critical tool for assuring quality care.”

Cost reports beyond bureaucratic wall 

Detailed information about nursing-home spending appears only in the cost reports that owners supply to the state Medicaid agency. Consumers cannot readily gain online access to these reports and must submit a request under public records law to see their content. DHHS supplied North Carolina Health News with three years of cost reports for three nursing homes within eight days.

“At this time, NC Medicaid cost reports for various provider types are filed individually by providers pursuant to the North Carolina State Plan for analysis and rate determination,” DHHS press assistant Summer Tonizzo said via email. “They may be requested by the public under the State Public Records Act.”

The federal data.medicare.gov database offers information on ownership as one of 20 different spreadsheets to research. The database also lists as many as 20 parties as owners of the Oaks at Sweeten Creek. But cost reports for the Oaks at Sweeten Creek make clear the home is owned by a chain, CMC II LLC, a Florida company that is a component of Consulate Health Care. According to the annual report of business entities in North Carolina on the NC Secretary of State’s website, Consulate Health Care is represented in the state by a registered agent at  Corporation Service Company

In short, the owner is a limited liability company represented by a service company whose business is to protect LLCs from being sued or even having a summons served to anyone involved.  

Detailing the inner workings of nursing homes

A recent report from the National Academies, “The National Imperative to Improve Nursing Home Quality,” takes in-depth looks at numerous aspects of long-term care. It contains this section on inadequate financial reporting and accountability:

“The Affordable Care Act required detailed Medicare nursing home cost reports, including expenditures for staff wages and benefits and separated costs for direct and indirect care, capital costs, and administrative costs that include owners’ profits. 

“But Medicare cost report data are seldom audited, and penalties are not issued for failure to report. The Medicare prospective payment system allocates funds for expected costs but does not impose audit requirements to ensure that funds are spent as allocated. 

“The Government Accountability Office recommended that CMS take steps to ensure that cost data are reliable and made readily accessible to public stakeholders.”

“Dependable registered agent service is your company’s first defense against legal action,” the Corporation Service Company website declares. “And you can depend on us to keep complete records of all your entity transactions, litigation, and SOP histories with the accuracy and security you deserve.”

A consumer hunting information will find that many nursing homes are organized in similar Byzantine ways, at least on paper. Many homes are split into legal pieces so that one LLC, or limited liability corporation, owns the land on which the center rests. That company leases the land to the person who holds the license for the nursing home. The licensee can and often does hire a management company to run the place and/or create small companies as vendors to cover needs such as pharmacy, laundry, housekeeping and more.

That arrangement not only makes it difficult for a consumer to find out who’s running the show at a nursing home where a loved one lives, but it also makes suing for any wrongdoing harder because each of the units for a specific function are shell entities with few or no assets, Gugenheim said. 

In many places at once

A consumer who succeeds in obtaining a cost report could eventually learn more about the related companies.

But as the records on data.Medicare.gov show, the listings can say, for instance, that a specific person could be in “operational/managerial control” of a nursing home, when the facts may be more uncertain.

Who was actually in charge at the Oaks at Sweeten Creek when the deficiencies were imposed? Based on federal records, it appears that the person at the wheel was Kenneth Ussery, listed as both an officer and a person in “operational/managerial control.” 

However, Ussery also appears in identical roles for more than 100 nursing homes owned by the Atlanta-based Consulate Health Care chain.

Rose Hoban contributed reporting to this article

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Thomas Goldsmith

Thomas Goldsmith worked in daily newspapers for 33 years before joining North Carolina Health News. Goldsmith is a native Tar Heel who attended the UNC-Chapel Hill, and worked at newspapers in Tennessee...