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California’s Nursing Homes Operate on Deceptive Business Practices

Posted by Freeman & Freeman | Oct 22, 2023 | 0 Comments

When one woman's mother passed away due in part to a care facility's choice to administer powerful drugs, she decided to begin researching the facility. Who actually owned the company? It was a valid question and surprisingly, one that was far from easily answered.

After months of crawling the internet to find any information she could, the woman unknowingly happened upon one of the biggest care facility giants in California. This man, the owner of the facility where her mother died, currently owns the most nursing homes of anyone in the state, totaling nearly 100 and counting.

You would think that with so many facilities tied to his name, it would be fairly easy to find out who he is and what he's all about. Not so fast. The ownership web is just as tangled as the web of care standards for these nursing homes, maybe even more so.

CONFUSION PERSISTS IN THE MAZE OF OWNERSHIP

The aforementioned ‘giant' oversees facilities that when compared against one another, experience more complaints and deficiencies than most others in California. And his inability to actually be linked to his nursing homes is merely a sampling of the confusion that exists in other facilities throughout the state.

The question remains – who owns what? And how is the average consumer supposed to make any headway in answering this question?

One of the most maddening aspects of the puzzle is that the confusion appears to be intentional. By consistently muddying the waters, owners are afforded the chance to stay hidden when problems and lawsuits emerge over their care facilities. Blame shifting clearly abounds.

Although the Affordable Care Act was modified in an effort to create new reporting requirements for facility owners, progress in this arena has been slow. It could realistically take years, even decades, to untangle what has evolved through the ages.

THE MONEY IS WHAT MATTERS

From the actions of the owners of these nursing home chains, it is clear that one thing is in their thoughts-money. Months of research by the Sacramento Bee uncovered knowledge that is hard to swallow.

It is not uncommon for nursing home owners to set up separate corporations and names for each facility, even though they're all attached to the same owner. It's no wonder that consumers have a hard time trying to figure out who owns each facility. The Sacramento Bee compared the business model to a wheel, with dozens of different spokes connected to one sole individual.

Advocates for the owners of these facilities insist that this is the only way to do business. Nursing homes depend on Medicare reimbursements and funding and a hit to one facility could damage every single one in the wheel. Essentially, separate entities help to minimize risks as whole, say the legal teams of nursing homes.

Sure, nursing home owners may benefit, but consumers and patients certainly don't. Creating separate entities isn't the only illicit business practice – many large chains produce self-generated management companies to “oversee” their facilities, all while siphoning money out of the nursing homes.

These chains use made-up companies to offer the nursing home various services and then take that money from the nursing home for investors. In the end, care facilities are left without proper funding by the very individuals who bought them in the first place.

One woman interviewed by the Sacramento Bee plainly said that these corporations are paying themselves and “they have every incentive to pay as much as possible to their related companies, rather than to keep costs low.” When your related company is actually your own people, why wouldn't you shell out the big bucks?

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