One likely group likely to voice its preference that it does not need the state to change its fiscal policy towards the group’s industry as a result of greater-than-anticipated revenues is the nursing home industry. It would be a mistake for such a cheeky move to be allowed to succeed.
This has been the strategy of the nursing home industry in Louisiana, that despite all of the demonstrated need to reform and of the special treatment the industry has received, to keep talking about how cuts would be so catastrophic to the industry and its clients. The letter from Denny “Kit” Gamble (the kinds of violations documented at one of the nursing homes his company owns can be seen here) is illustrative.
In this article Cristina Rodriguez reports:
The nursing home industry was given $90 million last year to start building outpatient services or adult day health care centers, said [Gov. Kathleen] Blanco's spokeswoman, Denise Bottcher."The diversification was intended to give the nursing homes the opportunity to get in other areas of that business, so any future loss of dollars would not be so hard," she said. "It's an effort to get the industry to providing just more choice."
But Gamble writes:
Nursing homes were never given $90 million to develop home and community-based services, including adult day health care. David Hood of the state Department of Health and Hospitals told us to do it as advice to keep from losing future business due to "out-of-court settlements," made by the DHH several years ago.
If one didn’t know the history behind this, Gamble might sound credible. But the fact is, the federal Olmstead and state Barthelemy decisions require Louisiana to diversify its provision of health care services in this area. What Hood (Gamble said) said is perfectly consistent with what Bottcher said: the state gave $90 million extra to nursing homes in order to show the courts it was trying to comply with these decisions, depending upon nursing homes to expand provision of community-based services.
Gamble writes, “I am not saying that Denise Bottcher of Gov. Kathleen Blanco's office was being dishonest, but someone definitely misinformed Bottcher” – when much closer to the truth is Gamble and the rest of the industry deliberately paid no heed to the state’s directive and did what they pleased with the extra funds. That seems to be where the dishonesty is here.
In fact, it used the money to keep building more overcapacity – already among the nation’s most overbuilt. From the article:
The expected cuts would hit many nursing homes in the middle of renovations that they started with the extra money they received. Gamble, with eight properties, has a $12.5 million line of credit on which he's already committed to spending $5 million for improvements.
Why would they do this when already they knew they were so overbuilt and governments everywhere we saying they were going to reduce Medicaid allocations to nursing homes? Because the strategy of the nursing homes has been to build up as much overcapacity as they could, and then to cry how reduced reimbursement levels and totals were going to destroy the industry. The other part of the strategy has been to say the burden will fall on the clients:
While $60 million may represent around a 10 percent cut, that is not what we make -- it is our gross income. Average profit margins are less than 8 percent in Louisiana. We lose money on Medicaid (an average of more than $3 per patient day). Quality of care in Louisiana has improved, according to some studies. How can you cut deeply into our budget and expect patient care not to suffer?
The reason why they “lose” money is because they built up so much debt thinking the state or hoping to push the state into forever reimbursing them for vacant beds (incidentally, health care costs are among the lowest in the nation for nursing homes in Louisiana, which is why the rate is among the lowest, and the gross income is closer now to $800 million). What they need to do is stop any expansion where there already is overcapacity, and sell off facilities in part or whole, or convert some of their capital assets into providing the types of services the $90 million was supposed to encourage them to get into.
Gamble in the article seems to admit as such, but couches it in terms of how patients, not owners’ pocketbooks, are going to be affected:
"We can't keep our level of care up like we need to keep it up if we're going to have to lay off people…. I don't think there would be a drastic decline in patient care, but (because of layoffs) it would be hard for us to answer call bells as quickly as we should," Gamble said. "I think a lot of the renovations to buildings would stop. The first thing you do is cut back in areas that don't affect patient care."
The remark about declining staff response is, well, remarkable, for Louisiana is well below the nation in terms of staff per patient already. There wouldn’t be any service problems if nursing homes would staff to the appropriate level.
Just because these people are poor or disingenuous businessmen does not give them any special claim on the taxpayers’ resources. Having over 80 percent of their revenues coming from government, nursing homes in Louisiana have grown fat and happy off the taxpayer and want the gravy train to continue. They don’t want to change their ways when studies have made it clear they must become more efficient. This state cannot afford to subsidize any longer such arrogance.
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