In California, a Windfall for Nursing Homes Produces Cutbacks

Even though a California law gave nursing homes an additional $880 million to increase salaries and hire additional staff, 232 facilities cut their workforces, decreased salaries or allowed caregiver staffing to slip below state minimums, according to an analysis by California Watch, a nonprofit, independent investigative news project.

As a result, most of the state’s nursing homes whose data were analyzed experienced a windfall, California Watch reported.

The Nursing Home Quality Care Act of 2004 was enacted because state rates paid to California nursing homes were among the lowest in the country, California Watch said. The news project noted that among 131 nursing homes that had reduced staffs by 2008, the median profit was 35 percent higher than for other nursing homes that were examined during the six-month investigation.

California has roughly 1,100 nursing homes caring for an estimated 100,000 people.

“It seemed like a natural story to go back and look at how effective the law was that gave [nursing homes] a windfall of money, and to see if the money was being effectively spent,” says California Watch editorial director Mark Katches. “In many cases, nursing homes appeared to be doing just as they said they would do. A couple of hundred were doing the exact opposite.”

But Jim Gomez, CEO of the California Association of Health Facilities, takes issue with the investigation’s findings, saying that it relied heavily on “manipulated data.” While Gomez says that the nursing home industry isn’t perfect, he contends that the aggregate numbers point in the right direction.

“We have about a 96 percent compliance rate in terms of meeting our staffing, or exceeding it. When you look at baseline data, wages have gone up 27 percent from 2004 until 2008, turnover has gone down 11 percent,” Gomez says.

However, in the wake of the story, Gov. Arnold Schwarzenegger’s administration has suggested a series of reforms that include establishing a fund that takes money from all nursing homes and returns funds to those facilities that meet quality standards.

“In 2004, California was spending a little bit under $3 billion for free-standing nursing facilities,” says Michael Connors, a long-term care advocate for California Advocates for Nursing Home Reform. “Now it’s spending a little bit over $4 billion, so there’s been a massive public investment in nursing home care, and much of it has been wasted. The underlying law that provides the payment system for nursing homes in California is pretty much a blank-check system.”

Blair S. Walker is a writer in Miami.