Immorality of Greed and Its Impact on Healthcare – Opinion Piece
Greed Is Immoral. Health Care Greed Is Abominable.
– by Jim Hightower
America has endured a long panorama of corporate greed — from the East India Trading Company to the Robber Barons, Gordon Gecko Wall Streeters to Elon Musk. But down at the bottom of raw greediness today, you’ll find the insatiable profiteers of the private nursing home industry.
Of course, many providers deliver honest, truly caring service (especially nonprofit and publicly owned community centers). But as a whole, this essential service has fallen into the clutches of money-hustling corporate chains and Wall Street speculators. Their goal is not to maximize grandma’s care but to minimalize her cost to faraway rich shareholders.
Their most common profiteering ploy is to understaff their facilities, leaving vulnerable residents unattended . . . and often, dead. Federal law, though, lets corporate owners define “sufficient” staff levels, which is why so many are grossly insufficient. One profit-padding tactic is called “tunneling” — the chain sets up a dummy staffing agency to provide employees for the chain’s nursing homes. That agency then charges greatly inflated to provide employees. But the chain doesn’t complain, since it owns the agency . . . and since unknowing customers end up paying the jacked-up tab.
President Joe Biden has proposed new rules to stop the gouging and improve care, including a requirement that each “nursing” home actually keep at least one nurse on staff. One! But, oh, the squeals by billionaire owners! “Cost prohibitive,” they howl! So, instead of hiring nurses, they’re hiring high-dollar lobbyists and lawyers to kill this little bit of health care fairness for people who are near the end of life.
These multimillionaire executives and billionaire investors are not only gouging families but profiteering on the health of people’s loved ones. In case they care, that is why the public despises them.
How are monopolistic corporations able to gain their economic dominance? By getting politicians to give it to them.
Consider the old robber barons. They weren’t brilliant investors or managers but ruthless exploiters of government giveaways and bribers of officials who permitted their monopolistic thievery.
Likewise, today’s monopoly players have captured local, state and national markets — not through honest competition but by getting public officials to subsidize their expansion and to rig the rules against small competitors. Monopolizers buy this favoritism with the legalized bribes of campaign donations they lavish on compliant lawmakers.
Investigative digger Stacy Mitchell recently documented how this corrupt political favoritism has allowed massive retail chains like Walmart, Kroger and Dollar Tree to crush thousands of local grocers. This has left millions of Americans living in “food deserts” — poor and rural communities with no food store.
What happened? As grocery chains spread from local to regional to national, they demanded that food manufacturers give them big discounts, giving them a dramatic monopoly pricing advantage over independent rivals. So, hometown grocers began hemorrhaging customers … and going broke.
This raw, anti-competitive price discrimination was a flagrant violation of America’s anti-monopoly law — but here came Big Money to protect the monopolists. In 1980, as President Ronald Reagan was railing against “silly” consumer protection laws, supermarket lobbyists poured campaign cash into top officials of both parties. What they bought was bipartisan agreement to simply stop enforcing the “fusty” old antitrust law that had protected a competitive grocery economy for nearly 50 years.
But good news! That useful, highly effective law is still on the books, so let’s build a long-term grassroots campaign to rejuvenate it and re-outlaw monopolization, redlining and price gouging by food giants. For more information, go to Institute for Local Self Reliance: ilsr.org.
Not relevant to this post John. You are off topic. If you wish to write a post on the issue you are discussing, I will post it. I will be deleting these comments otherwise.
I read AB because I want to read liberal (progressive or whatever stereotyped word that you would like to substitute), well founded, data driven opinions and solutions to counter the current right wing (conservative or whatever stereotyped word that you would like to substitute) narrative. However this article is just preaching to the choir and will not convert (or change anyone’s thinking) with the tone, attitude, and lack of facts.
I have quite a lot of experience with nursing homes, both my mother and father died in them. It takes a lot of effort, time, and money to make certain that your loved one is treated properly in the nursing home and I used the best local facilities available.
That said, let’s look at some of the statements.
“understaff their facilities”. This is basically true. Staff is the largest operating expenditure in a nursing home. However the lower the patient to staff ratio, the higher the operating expenses. People tend to choose a nursing home at least partly on affordability, which is price. Wages are typically rock bottom for the job classification so turnover is high, especially for any employee that is good and can get a job elsewhere. The best and most caring employees are usually offered positions at an individual patient’s home where conditions and pay are better. State law can supersede federal law on staffing (it does in California) but it all comes down to costs. If costs are too high then no one will be able to afford it.
I hadn’t heard of the “tunneling” before but it wouldn’t surprise me. However this “method” would only make sense in a “cost plus” arrangement and private pay is very sensitive to costs. And Medicaid payments to nursing homes are bare minimum and not cost plus. No one would want to go to a Medicaid nursing home unless there was no other option. They aren’t good. My wife (who is an RN) investigated some for her mother and only about one out of five were even tolerable.
“These multimillionaire executives and billionaire investors” – Yes there a lot of corporations in this business. There are basically two sectors, the first is the building owner, which is a REIT. The biggest REITs in this business are Ventas and Welltower. There is also Sabra and Omega. VTR has a yield of 3.09% and its stock price is up 2.17% over 5 years (which is pre-Covid). WELL has a yield of 2.13% and its stock price is up 54% over 5 years. SBRA has a yield of 6.95% and its stock price is down 18% over 5 years. There aren’t a lot of multi-millionaire/billionaire investors in these. For WELL the top owners are Vanguard (15%) and Blackrock (10%) which are holding these shares in ETFs owned by small retail investors. The big investors that you mention have their holdings directly and these senior housing REITs are too slow growing given that the S&P has returned over 20% for each of the last two years.
The next part of the nursing home business is the nursing home operator. This is actually an even worse business than owning the building. Many are defaulting on their rent contracts. The REITs mentioned above monitor the EBITDARM (earnings before interest, taxes, depreciation, amortization, and management fees) of the nursing home operator. EBITDARM averages around 1.2 to 1.7 of the lease payments for the building facility. That means that they can barely cover their rent. Typical nursing home operators are companies like Brookdale. BKD pays no dividend and its stock price is down 29% in the last five years.
If the nursing home business is so profitable then it should be easy for communities to open and operate their own facilities, especially if they just broke even. They could afford to pay higher wages, charge lower rates, or a combination of both. Well it isn’t easy and no one wants to invest without at least being able to make some profit.
I agree that the health care system in this country sucks. The elder care system is in even worse shape. But it all comes down to what people can afford. And most people can’t afford $5-$10k per month for assisted living or $7-$12k per month for a nursing home. Medicaid is paying on average $230 per day at a nursing home which is $6900 per month. There aren’t many private pay nursing homes at this rate.
Estimates of Medicaid Nursing Facility Payments Relative to Costs
I would rather read about a reasonable solution instead of an ill-informed rant. Nursing homes sounds like a good investment opportunity for you. Go for it.
Pre:
This is an opinion piece in which the author offers an opinion, right, wrong, or indifferent. It is ok to be critical. A few questions for you:
Do you have a LTC policy to care for yourself? If not, why not? Maybe you are wealthy or have other means to cover such an event if you do not die first? Would you go on Medicaid if needed and which Repubs hope to diminish? Voters who believe that those on Medicaid are slackers seem to forget Medicaid also covers LTC and at a lower cost to the patient whether low income or not. Cut that out and they shoot themselves in the foot.
Yep, there are a lot of places which are not so great. The Gov should be monitoring them. I worked in maintenance at one in Illinois which was one of the better ones from what I could see and know at the time.
Why not you write a piece on the issue PreCambrian and I will put it up for you on Angry Bear as a guest post? People are always after me to write on this or that. My time is limited also. I invite you to write a nice piece. If you need pics, I can help with such.
I do carry a LTC policy for my wife and I. It is good for four years. Usually, one disappears before then.
Yes I do have a LTC contract, for both my wife and me, which is for a maximum of $6876 for 72 months. It is a maximum benefit of $495,000. That will cover about 50% of my estimated costs. The benefit increases 5% a year and I first purchased it in 2008. The price was constant until about three years ago when the price doubled.
I guess that I would go on Medicaid if I had no other choice. Based upon my assets, that would be unlikely. By coincidence, the reference to my wife checking out SNF in my comment did occur in Illinois, near Chicago.
Long term healthcare is a difficult problem. I don’t have any real good solutions. I have some solutions (that would help but not completely solve the issue) to start with on many other problems but not this one.
My main point is that the major problem isn’t a bunch of greedy multimillionaires, although I am sure there is some greed somewhere. SNFs are labor intensive, the work isn’t fun, and the patients rarely recover (there are a few patients in them for short term). I have been in them on the ground level and I have looked at them from an investment standpoint (publicly traded stocks) and they aren’t good investments.
I am not advocating for a cut in Medicaid although it looks like one might happen. I will skip the writing of an article for now although if I get inspired perhaps an article either on housing or healthcare in general. I have ideas for those.
PreCambrian:
I am sure Medicaid would gladly accept your LTC in exchange for room and board. Most people do not have such. We have a 4-year LTC which grows in value the same as the month rate to pay into it. It is relatively reasonable at this point. The value is ~$400,000 right now.I think we will be ok. Most people do not have such. I thought it best to have at least something.
We also have Trust to protect our assets.
Back to my original question. I need more writers. It isn’t like I need daily commentary. I just need someone who can write an occasional commentary. I would help get you set up and guide you through how to do it. It is relatively easy once you get the experience doing a couple. I am the fall back and can fix most anything here.
Care to give it a try?