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This article is related to AB 1502, Sponsored by CANHR

By JW August, Times of San Diego, January 27 2022

If you want to drive a car in California you need a driver’s license. In San Diego County all dogs must be licensed.  But if you own a nursing home, you can buy another home or chain of facilities, and no license is required. 

Unlike a driver who is in multiple accidents or an animal that’s attacked someone, there are no rules when it comes to the purchase or sale of nursing homes, no matter how ugly the track record of the firm buying or selling a nursing home.

Even if a chain operator has a history of poorly managed homes, it can add to its portfolio and can do so without first obtaining a license, as long as it submits a license application. The trouble is, such applications can take years to process.

The California Department of Public Health, which is charged with providing oversight of the nursing home industry, says it has no authority to disqualify owners and operators who are already in operation in the state. The agency says this is allowed to happen under what they call a Management Operations Transfer Agreement.

This is what Tony Chicotel, attorney for California Advocates for Nursing Home Reform, calls “zombie licenses.” He explains it’s “the essence of license-evasion.”  

Critics like Chicotel of CANHR say given the hands-off approach of the Department of Public Health, it appears the agency prefers a bad operator to no operator. 

“DPH may be convinced that bad operators are the best we can do but it’s not true,” said Chicotel. “There are good operators and there is plenty of money to be made while providing good care. The good operators are unfortunately squeezed out by the operators willing to cut staffing, defy the rules, and put profits over people.”

Assembly Bill 1502 by Al Muratsuchi of Torrance and Jim Wood of Santa Rosa, the CANHR-sponsored bill to reform nursing home ownership in California, is the solution to the problem, say supporters. 

The bill would empower the agency to disqualify unfit operators and owners, requiring them to meet certain qualifications and bar them from buying or operating a home without state approval. Additionally, the buyers couldn’t create businesses to get around the licensing requirements. And finally, the public would be able to be part of the takeover discussion. 

Previous efforts to create suitability requirements for owners in 2016 and 2019 went nowhere, but this time advocates appear to have momentum. The full Assembly is expected to vote on moving this latest legislation to the state Senate next week, possibly as early as Monday.

Patricia McGinnis, executive director of CANHR, told state legislators the bill “addresses one of the gravest threats to the health and safety of nursing home residents: the proliferation of unsuitable, unapproved and unaccountable persons and entities owning and operating skilled nursing facilities in California.”

McGinnis founded CANHR in 1983 and has been an industry watchdog responsible for a number of previous bills that became law. The new legislation is needed because, McGinnis said, the Department of Health is not getting the job done.

“They’re supposed to be protecting the residents of skilled nursing facilities and health care facilities in California. And they don’t,” she said.

The Department of Public Health did not respond to requests for comment regarding the allegations about nursing home licensing and the proposed legislation.

Eight out of 10 nursing homes in the state are owned by large corporate chains. The two largest chain operators in the state are Providence Group and Bruis Health, which both have connections to the San Diego region. 

They are capitalizing on the $10 billion spent by Medicare and Medicaid for nursing home operations. In 2020, the estimated average cost per patient day for a skilled nursing facility in California was $304, according to the Genworth Cost of Care Survey.

And yet, said McGinnis, “We’ve got nursing homes in California that are operating without licenses without approval from the department and they’re the biggest chains in California.”

The Assembly bill notes that a national study of nursing home transactions shows a “tremendous churn in chain ownership, the dominance in chain ownership is growing, chains targeted the worst-quality nursing homes for acquisition, poor quality of care persisted in these facilities after they were acquired, and nursing homes owned by chains had much worse records than other facilities.”

For a consumer or an advocate, “it’s very hard to tell who owns what,” said McGinnis. CANHR has found “these larger chains will separate all their individual facilities into limited liability corporations which makes it hard to track ownership.” 

Muratsuchi, one of the bill’s two sponsors, the law is in response to a real need. “We need to do more to protect seniors living in nursing homes and other residential care facilities,” he said. “Tragically, the pandemic has magnified the dangers of living in nursing homes when operated by unfit owners.”

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