NUHW research helps lead to nursing home transparency law

September 22nd, 2018

California Gov. Jerry Brown signed legislation this month requiring nursing home owners to provide more information about “insider” companies that may siphon scarce resources away from residents through nursing homes’ inflated payments for supplies, rents, and services.

NUHW first raised concerns over the potential for nursing home operators to funnel profits into other companies in a report last year on Brius Healthcare, California’s largest nursing home operator.

Our research found that in 2015 Brius nursing homes had purchased $67 million in goods and services from 65 companies owned by Brius owner Shlomo Rechnitz or his relatives.

Assemblyman Jim Wood and State Sen. Mike McGuire referenced NUHW’s research in successfully requesting a state audit looking at Brius’ finances and other issues of nursing home oversight. The audit report, published in May 2018, found that the California Department of Public Health had failed to perform necessary inspections or issue timely citations for substandard care.

In addition, California State Auditor Elaine Howle found that the reporting rules for nursing homes failed to show whether operators are profiting from business deals with “insider” companies owned by nursing home executives.

Assemblymember Wood, D-Healdsburg, who drafted the legislation to better document these related-party transactions, praised NUHW for its role in showing why the new law was needed.

“One group very active in bringing the issues around Brius business operations to light was the National Union of Healthcare Workers,” Wood said. “That’s what really got us started. Their members should know that the research they provided was very helpful in getting AB 1953 to the Governor’s desk.”

To improve transparency of these related-party transactions, Wood’s bill (Assembly Bill 1953) requires nursing home owners to disclose whether they have “an ownership or control interest of 5% or more in a related party … that provides any service to the skilled nursing facility.”

Under those circumstances, the nursing home must disclose all of the services provided by the related-party company, the number of people who provide the service, and any other information requested by state officials.

If the nursing home receives goods, fees, and services worth $10,000 or more per year from a related-party company, then this “insider” company must give state officials a copy of its profit and loss statement as well as data on caregiver staffing levels inside the nursing home.

The bill “will now ensure transparency and reporting that will allow us to make sure that these companies are not being used to generate excessive profits for the owners of these facilities on the backs of the residents,” Wood told Skilled Nursing News.

“We commend Assemblymember Wood on authoring this important piece of legislation, we appreciate his commitment safeguarding the lives of nursing home patients,” NUHW President Sal Rosselli said.

Sen. McGuire, D-Healdsburg also praised the new law.

“AB 1953 ensures that accurate data is collected regarding skilled nursing facility third-party transactions, such as what services are provided, for how much money, and how those costs potentially affect facility staffing rates,” he told the Eureka Times-Standard.

The law will take effect January 1, 2020.