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For-Profit vs. Non-Profit Nursing Homes

When choosing a nursing home for yourself or a loved one, many factors must be taken into consideration. Without a doubt you want to choose the best-quality facility with skilled and experienced staff. We examine the differences between for-profit and non-profit nursing homes and how operators affect resident care.

The type of ownership of a nursing home affects the quality of care much more than a hospital. The majority of nursing homes in the U.S. are for-profit (around 68%), a trend that only continues to grow. Some states have far more for-profit nursing homes than others: Texas, California, Oregon, Louisiana, and Oklahoma have among the highest rates of for-profit facilities. States in the upper Midwest, such as Minnesota, Wyoming, North and South Dakota, have more non-profit nursing homes.

Nursing home providers that operate for-profit prioritize shareholders first and foremost. Their goal is to provide as much money to their owners and shareholders as possible, while non-profits have no responsibility to shareholders and can thus prioritize patients and quality of care.

One measure of quality care is particularly telling: the amount of money nursing homes overbill Medicare. Overbilling is illegal but nonetheless a common practice in healthcare. Essentially, it means a nursing home or hospital bills the government - Medicare or Medicaid - for treatments patients do not need or never receive. In other words, the nursing home gets paid for doing nothing, in a form of fraud.

The nursing home industry overbills Medicare in the amount of about $1.5 billion per year. According to federal health inspectors, 30% of billings from for-profit homes were deemed improper, while only 12% of non-profit homes had improper billings.

Countless research shows that for-profits are more likely to engage in fraud and pursue money in various means than non-profits. For-profit facilities earn 20% profit on Medicare patients, while non-profits earn about 9% profit on the same patients.

Overbilling, Understaffing, and Still Expanding

The most important aspect of any nursing home is its staff. The ten biggest for-profit nursing home chains employed 37% fewer registered nurses than nonprofits - and received 59% more deficiency notices from inspectors in recent years.

The entire staff at a Life Care Centers of America facility publically stated that they were encouraged to maximize reimbursement even when clinically inappropriate. Life Care is the third-largest U.S. nursing home chain with 230 homes and more than 30,000 beds. This means extremely elderly and severely sick patients are being forced to undergo lengthy therapy sessions just so the facility can be reimbursed.

An egregious example of how this harms patients occurred at a Life Care nursing home in South Carolina. An 80-year-old resident who was unable to control her head or eye movements was put in a standing from for more than an hour and a half, forced to undergo physical and occupational therapy. She died two days later. Another Life Center in Florida forced a 92-year-old man with lung cancer to complete two hours of physical, speech and occupational therapy on the same day he was spitting up blood. He also died two days later.

Falls, bedsores, and overmedication are also more common in for-profit nursing homes simply because there are fewer nurses. Understaffing leads to resident neglect and abuse, including malnutrition and dehydration, fraud, and wrongful death.

For-profits suffer from an omnipresent tension between what is best for patients and what is best for profit margins. Facility managers are expected to watch labor and overtime hours vigorously while pushing for Medicare reimbursements and longer patient stays.

Our Chicago nursing home abuse attorneys fight on behalf of injured residents and their families. We accept clients from all 50 states, and we never charge any attorneys' fees unless we win you a settlement or verdict. Contact our firm today for a free case review.