HEALTH CARE BRIEFING: Investor-Owned Nursing Homes Draw Scrutiny

Congressional Democrats are using their new majority to resurrect an old grievance: whether private equity ownership of nursing homes—and their investors’ laser focus on profits—are hurting the quality of care.

Medicare patients were 10% more likely to die at private-equity owned nursing homes in the first 90 days, implying more than 20,000 Medicare patient deaths “due to PE ownership” over a 17-year study period, according to a February research paper published by the National Bureau of Economic Research (NBER).

Additional scrutiny could complicate the nursing home industry’s push for an extra $15 billion a year in Medicaid funding to shore up longstanding quality, infection-control, and financial problems at their facilities. Those problems were magnified by Covid-19, which has killed more than 181,000 residents in long-term care facilities, according to the Kaiser Family Foundation.

The research and renewed congressional interest comes after years of double-digit acquisitions and buyouts of long-term care facilities by private equity firms, a trend that accelerated last year as the financially challenged nursing home industry struggled through the Covid-19 pandemic.

“It’s past time for a bright light to be shined on how private equity ownership in our health-care system affects patient safety, cost and jobs,” said Rep. Bill Pascrell, (D-N.J.), who chairs the House Ways and Means Committee’s oversight subcommittee.

“Private equity’s business model involves buying companies, saddling them with mountains of debt, and then squeezing them like oranges for every dollar,” he said at a recent subcommittee hearing.

“This trend towards more private equity looks to me like something that the Finance Committee should be digging into,” Senate Finance Committee Chairman Ron Wyden(D-Ore.) said at a March hearing. “This is an area that has not gotten the oversight and the accountability that is needed.” Read more from Tony Pugh.

The Coronavirus Pandemic

AstraZeneca Gets Biden Help with New Plant: President Joe Biden’s administration is working with AstraZeneca to find new manufacturing capacity in the U.S. after the company agreed to abandon a Baltimore Covid-19 vaccine plant that will focus exclusively on making doses for Johnson & Johnson. The talks are the latest development after an error at the Emergent BioSolutions facility—in which ingredients for the two companies’ vaccines were mixed up—led to a batch of 15 million doses worth of drug substance being spoiled. Read more from Josh Wingrove and Jordan Fabian.

Biden Taps Smith as Virus Coordinator: The Biden Administration tapped Gayle Smith, the president and CEO of The ONE Campaign and former administrator of USAID, to be coordinator for Global COVID Response & Health Security at the State Department, Nick Wadhams reports. After an introduction by Secretary of State Antony Blinken, Smith said the goal is to slow the speed of the virus. Blinken said the U.S. is “exploring options to share” more of the vaccine internationally, adding that it will do so without demanding political favors.

N.J. to Open Vaccines to Residents Over 16 Sooner: New Jersey will open Covid-19 vaccinations to people 16 and older starting April 19, Governor Phil Murphy announced yesterday, saying the move was “our most aggressive push yet.” The state had said all adults would be eligible for the shot by May 1, in line with a goal set by Biden for universal adult eligibility. But other states, including neighboring New York and Connecticut, announced earlier eligibility dates as vaccine supply began ramping up. Read more from Elise Young.

  • New York administered a record 100,669 vaccines on Friday, helping to push the weekly total above the city’s goal of 500,000, Mayor Bill de Blasio said. “It shows what is possible,” the mayor said at his daily briefing, adding that the city will be receiving 77,000 new doses from Johnson & Johnson, whose vaccine requires only one shot. New York is also stepping up its use of mobile units and taking vaccines to housing complexes and community centers for pop-up sites. Read the latest virus updates from Bloomberg News.

Mobile Vaccine Squad’s Mission for the Neediest: To reach the goal of protecting as much as 85% of the population, health-care workers must reach the homebound, the homeless and the hesitant. Health departments across the U.S. have deployed mobile units to eliminate challenges like waking up early to schedule appointments, navigating online portals and standing in line, all of which can deter the elderly, disabled or immune-compromised. Read more from Sarah Holder.

More Headlines:

What Else to Know

Biden Tax Plan Seen Hitting Technology, Pharmaceutical Companies: The tax plan Biden laid out last week will likely hit technology and pharmaceutical companies particularly hard, although the challenge for legislators will be to minimize loopholes that could diminish the impact, tax experts said. Much of the most valuable assets at pharmaceutical and tech companies is intellectual property, like patents and algorithms — intangibles that make it easier for them to structure global operations in a way to minimize tax costs. Sectors like retail or agriculture have lots of physical assets that can’t easily be moved to lower-tax countries.

Both Republicans and Democrats have sought to bolster the U.S. tax take from companies’ overseas operations, and President Donald Trump’s 2017 overhaul did have measures to do that. Biden’s plan takes a tougher approach, with a 21% minimum tax on foreign profits and a 15% minimum levy on profits reported on financial statements. It limits companies from using credits for research and development costs and deductions for paying employees in stock. The provisions — part of the administration’s plan to finance a $2.25 trillion infrastructure package — mean that tech and pharmaceutical companies could lose many of the tax-planning tools that allowed them to pay low rates for years. Read more from Laura Davison.

Nonprofit Hospitals’ Charity Care Is Limited Despite Tax Status: Nonprofit and government hospitals are providing relatively low levels of charity care for financially disadvantaged patients in comparison to for-profit hospitals, which have no legal obligation to do so, new research suggests. The findings, published yesterdau in Health Affairs journal, raise questions about whether nonprofit and government hospitals are meeting the spirit of their mission to provide care for the indigent in exchange for their preferred tax status. Read more from Tony Pugh.

Dispute Over Medicaid Work Rules Still on Hold: The dispute over whether states can force Medicaid beneficiaries to work, go to school, or volunteer in order to stay in the program is still in limbo. The Supreme Court said in an order yesterday that the cases over work rules for beneficiaries in Arkansas and New Hampshire “are held in abeyance pending further order of the Court.”

The justices had already canceled arguments that were scheduled for March 29 after the Biden administration told the court it was rolling back the Trump administration’s prior approval of the work rules. Read more from Lydia Wheeler.

Denial of Louisiana Medicaid Plan for Drug Costs OK’d: The Department of Health and Human Services properly denied Louisiana’s proposed 2012 state plan amendment for reimbursing pharmacists’ Medicaid costs because the agency reasonably concluded that the proposal would overpay most pharmacists, the Fifth Circuit said yesterday.

The state also failed to meet its burden of showing that its reimbursement formula represented the “closest, best estimate of the price pharmacists generally and currently pay for” some specific drugs, the U.S. Court of Appeals for the Fifth Circuit said. Read more from Mary Anne Pazanowski.

More Headlines:

To contact the reporter on this story: Giuseppe Macri in Washington at gmacri@bgov.com

To contact the editor responsible for this story: Michaela Ross at mross@bgov.com

Top