------------------------------------------------------------------------------ NewsBank, inc. - The Commercial Appeal - 1998 - Article with Citation ------------------------------------------------------------------------------ Headline: Industry annually invests thousands in political donations Headline: Loopholes in enforcement incense critics Headline: Changes in funding, new competitors add stress to care industry Date: October 26, 1998 Section: METRO Page: B 1 Edition: Final Dateline: MEMPHIS Author: The Commercial Appeal Index Terms: NURSING HOMES MEMPHIS DISABLED Text: Headline: Industry annually invests thousands in political donations The nursing home industry contributes generously to political campaigns, giving hundreds of thousands of dollars to state and federal candidates. Just what donors receive for those $500, $1,000, $7,500, $10,000 and even $100,000 gifts depends on who's talking. Reform advocates say dollar-driven political activity has compromised state enforcement efforts. Industry spokesmen say they're exercising their right to participate in the political process. Nationally, the billion-dollar stakes involve a 16-year battle that started in 1982 when President Ronald Reagan tried to relax nursing home regulations. A congressional backlash gave rise in 1987 to the Nursing Home Reform Act, which ushered in tough standards for care quality and resident rights, counteracting the horrible conditions reported in many nursing homes. But a series of regulatory changes have weakened the reform, critics charge. In Washington, concerns arose last year when Massachusetts nursing home owner Alan Solomont, a Democratic fund-raiser, helped win enforcement concessions from the Clinton administration. Solomont, who occasionally jogs with Clinton, gave the Democratic Party $160,000 and helped raise $1.1 million more from nursing home owners, Time magazine reported. Following meetings between Solomont and the administration, guidelines were released suggesting fines were "most appropriate" for life-threatening offenses, the magazine said. "The message is out at the Washington, D.C., level: We'll give you a green light," said Gordon Bonnyman, attorney for the Tennessee Coalition for Nursing Home Reform. "For the past three or four years, it's been very clear the feds have been looking the other way." Richard Sadler, director of the Tennessee Health Care Association, called Bonnyman's assessment "bunk." "There's absolutely no evidence whatsoever that there's any `looking the other way.' "We're under the same regulatory environment, and it's even been enhanced," Sadler said, referring to the Clinton administration's push for tough new legislation and administrative actions. "I think that's irresponsible of Gordon to make statements that are not substantiated," Sadler said. "I wish there were some relief (from government oversight). I think there's probably some creativity and ability within this industry that - if it were not as regulated and dominated by government control - that some good could grow out of it." But Bonnyman and other critics say a U.S. Health Care Financing Administration policy of "substantial compliance" demonstrates how the federal government created a climate for ignoring nursing home problems. Substantial compliance tolerates some deviation from rules, following an enforcement principle that holds that unless a violation causes harm to a resident or severely threatens others, it should not be considered a major violation. Critics say that puts pressure on state inspectors to ignore violations that don'tcause immediate harm but could if not corrected. Tennessee's 1995 decision to stop levying state nursing home fines also has drawn criticism. State officials say they stopped assessing fines because HCFA mandated a series of federal fines that year. The number of fines against the state's 350 nursing homes has dropped considerably since. Gov. Don Sundquist's administration is working on a plan to levy both state and federal fines, but critics say both fines could have been collected all along. In the past four years, one of Sundquist's biggest contributors has been nursing home mogul James W. Ayers. Until recently, the Parsons, Tenn., businessman had been a dominant force behind American Health Centers Inc., which owns 33 Tennessee nursing homes. Three are in Shelby County: Applingwood Health Care Center, a 64-bed home at 1536 Appling Care Lane; Bright Glade Convalescent Center, an 85-bed home at 5070 Sanderlin; and Court Manor Nursing Home, a 98-bed home at 1414 Court. Ayers and his wife, Sharon, have given Sundquist $60,250 since 1993, making them the Republican governor's seventh-largest contributors in the period, records show. Through a series of transactions that concluded last month, Ayers has divested himself of his American Health Centers holdings, said Jerry Ivey, the firm's president. Ivey said he's not aware that Ayers's contributions helped American Health Centers buy influence with the state. The firm's officers generally make campaign donations through the Tennessee Health Care Association's political action committee (PAC), he said. "Anyone in a business . . . facing regulation wants to have input," Ivey said. "Our PAC enables us to have input. It gives us a voice." Records maintained by the Tennessee Registry of Election Finance and a separate database compiled by The Commercial Appeal indicate how strong that voice has become. Since 1995, the Tennessee Health Care Association has given more than $72,000 to Gov. Don Sundquist and candidates for the General Assembly. In addition, National Healthcare Corp. (NHC) of Murfreesboro, which has nursing homes and home-care agencies in nine states, gave more than $83,000 in similar gifts through its own PAC. The combined $155,000 puts the nursing home industry near the top of the state PAC list, just behind the Tennessee Education Association, $249,000; Tennessee Trial Lawyers Association, $224,000; and Tennessee Medical Association, $188,700. The Commercial Appeal's own campaign finance database, which goes back to 1993, shows that over a five-year period, Sundquist received at least $117,750 from nursing home interests, including the Ayerses. In that period, the nursing home PAC gave the governor $32,500, starting with a $10,000 gift when he was preparing his first gubernatorial campaign. Sundquist spokesman Beth Fortune said campaign contributions do not influence how Sundquist makes decisions. "The governor receives literally thousands of contributions, and he appreciates all of them, but they don't sway his decisions on matters of public policy. They never have, they never will," Fortune said. People give to various candidates because they believe in the work they're doing. If they expect to get something from that contribution, that's their mistake, she said. Other large gifts from the PAC have gone to Sen. John Ford, the Memphis Democrat who heads the Senate's General Welfare, Health and Human Resources Committee, which oversees legislation related to the industry. The PAC has given Ford $9,500 - $7,000 toward two Senate races, $1,500 that went into his unsuccessful county mayoral race in 1994 and $1,000 toward his unsuccessful 1996 re-election campaign for General Sessions Court clerk. Sadler, spokesman for the state nursing home industry, doesn't know if the gifts give the industry an edge. "I know if you're going to participate in something, you have a better chance if you participate fully," he said. "I literally beg people to participate." Jerry Earle III, director of government relations for NHC in Murfreesboro, gave a similar response about that PAC, which has given Sundquist a total of $25,000 since 1993. NHC's political-action contributions come from employees who work at the company's 112 long-term health centers, 16 assisted-living facilities, six retirement apartments and 35 home-care agencies across the Southeast. By Anna Byrd Davis and Marc Perrusquia To reach reporter Marc Perrusquia, call 529-2545. His E-mail address is perrusquia@gomemphis.com To reach reporter Anna Byrd Davis, call 529-2570. Her E-mail address is davis@gomemphis.com Headline: Loopholes in enforcement incense critics Kirby Pines Manor was fined $6,150 last year after a November inspection found problems treating and preventing pressure sores for four patients. But the fine had nothing to do with nursing care at the 120-bed home at 3535 Kirby Road. It involved privacy curtains that were too short. The fine, reduced from its recommended amount, illustrates nursing home enforcement quirks that have critics irate. Inspectors cited Kirby Pines for substandard care, contending improper treatment contributed to the development of sores on the feet of two residents and on the buttock areas of two others. For 11 days, staff neglected to treat one sore, allowing the wound to progress, according to an inspection report. On another resident, a sore progressed on her heel after shoes had been put on too tightly, despite the patient's complaints "when they were putting her shoes on that it hurts," the report said. Yet the fine had nothing to do with pressure sores, said Charles S. Trammell Jr., president of Retirement Communities of America, the for-profit firm that manages the home. The fine stemmed from privacy curtains in patient rooms that lacked enough mesh on top to allow fire sprinklers to work properly. The fine resulted because the problem wasn't fixed before inspectors returned, Trammell said. Problems with pressure sore treatment have been corrected, he said. The home was not fined on that count thanks to a federal regulation that gives nursing homes a chance to correct problems to avoid sanctions. Meanwhile, the fine assessed for the privacy curtains was reduced. Assessed at $50 a day over 123 days of noncompliance, the fine was reduced from a proposed $500-a-day fine, said Dot Elder, the state's certification manager for health care facilities, which sees that nursing homes follow federal regulations. "I would really like to know why it was reduced," Sandy Smegelsky said. Smegelsky, an ombudsman who by law resolves complaints about nursing home care, questions why authorities aren't levying more fines in Tennessee. Elder and Trammell said they didn't know why the fine was reduced. Elder said fines routinely are discounted by 35 percent if the nursing home doesn't appeal. Kirby Pines Manor is situated on a 40-acre development, which includes the Kirby Pines Estates retirement community. Nonprofit Psalms Inc. owns both. Kirby Manor's 1997 inspection followed earlier violations there in 1996 involving staff treatment of residents, nursing services, kitchen conditions and administration. No fine was given that year. In both years, inspections revealed problems with walls designed to resist the spread of fire and smoke, but no fines were assessed for those problems either, reports showed. By Marc Perrusquia Headline: Changes in funding, new competitors add stress to care industry This may not be the best time to make money in the nursing home business. Medicare, in its current cost-cutting mode, is moving to a new reimbursement system that will cut average payments to nursing homes by 17 percent. Funding from Medicaid, which pays for three-fourths of nursing home care in Tennessee, typically increases each year but always uncertainly. Swanky new assisted-living complexes, not required to meet nursing homes' rigorous standards, are competing for residents. Federal investigations into billing and other practices are hurting some publicly traded nursing home companies, scaring off investors and crippling stock prices. These are the issues faced by the owners of Shelby County's 34 nursing homes. The list of homes is nearly evenly split between nonprofit and for-profit owners. The nation's largest nursing home operators are represented in Shelby County - Beverly Enterprises, with Allenbrooke Health Care Center and American Transitional; and Vencor Inc., with Primacy Healthcare, Shelby Pines and Cordova Rehab and Nursing Center. And Tennessee's largest nursing home company, Parsons-based American Health Centers, has three local facilities - Court Manor, Applingwood and Bright Glade. American Health Centers, owned by its employees through an employee stock plan, has 32 nursing homes in Tennessee and four in Massachusetts. "There is a limitation on what you can make today, but when you have a little volume, that can help the profits," said Mark Davis, director of operations for American Health Centers. "The limitation on any kind of government-funded program is always a challenge." Medicare, the federal medical insurance program for the elderly and disabled, will pay for short-term nursing home stays after a patient is released from the hospital. Under new rules this year, Medicare will reimburse nursing homes at fixed rates. The average daily rates will be $248 per patient in urban areas and $257 in rural districts. Rates are higher for sicker patients. Nationwide, Medicare pays for only about 10 percent of nursing home patients. Medicaid, the federal-state health insurance program for the poor, pays for more than half of the nation's nursing home residents. That percentage may be higher in Tennessee because of a law unique to the state - nursing homes are not allowed to designate some beds for Medicaid patients and others for private-pay patients. "We are the only state in the union that requires all beds be certified Medicaid if any are," said Richard Sadler, executive director of the Tennessee Health Care Association, an organization of long-term care facility owners. Medicaid reimbursement rates are based on cost reports filed by the nursing homes and vary according to facility. The cap is $90.53 a day for intermediate care. Medicaid reimburses Mid-South Christian Nursing Home $85.57 per patient per day. About two-thirds of the nonprofit facility's 150 beds are filled with Medicaid patients. The other third, private-pay patients, are charged $93 a day. "We are self-sustaining. We usually break even every year," said Charles D. Fuller, recently retired administrator of Mid-South Christian, owned by Churches of Christ. "Less than 1 percent of our operating budget comes from the churches." Memphian Scott Martin said he and his partner are lucky to break even on the nursing home they own, Seniorcare. With 24 beds, it is the smallest in Shelby County. "We need to sell or expand, which is what we want to do," Martin said. "We can't continue to operate at the size we are." It takes state approval from the Tennessee Health Commission to build or expand nursing homes. The commission turned down Seniorcare's request for 36 new beds, but Martin plans to apply again. The state legislature set a one-year moratorium on new nursing home beds, effective until June. THCA's Sadler hopes the freeze will be renewed. "Statewide, nursing home occupancy is at 92 to 93 percent," Sadler said. "We don't need more nursing homes." By Laurel Campbell Copyright 1998 The Commercial Appeal, Memphis, TN Accession Number: 9811260146 ------------------------------------------------------------------------------