At nursing homes, less costs more

Times Staff Writer

California nursing homes bolstered their bottom lines with much of the $590 million that state lawmakers provided them to better tend to the poor, while patient care declined by several key measures, according to a study to be released today.

A law boosting reimbursements from Medi-Cal, the state’s healthcare program for the poor, passed in 2004. By 2006, the first full year the higher rates were in place, average nursing home revenues from Medi-Cal had increased from $124 a day to $152 per day, according to the study by a team of researchers at UC San Francisco -- but few of the promised improvements for patients or staff had come to pass.

Nursing attention for patients grew, on average, by 3%. But the study also found that 144 homes, or 16%, did not meet the state’s minimum staffing standard.


The average wage for nursing assistants increased from $10.61 an hour to $11.32, not quite enough to keep pace with inflation, the study said. And turnover among nurses increased slightly, with nearly 7 in 10 leaving their jobs that year.

The amount nursing homes spent on direct patient care actually decreased by 3.6%, according to the study. And substantiated complaints of patient mistreatment increased by 38%. State and federal regulators cited homes for 6% more violations.

“They got so much money, they should have been able to do something,” said the study’s lead author, Charlene Harrington, a UCSF professor and nationally recognized authority on nursing homes.

“The fact that they let the nursing assistant wages actually decline with inflation, I think there’s no excuse for that,” Harrington said. “They’re the bulk of the workers and they’re the lowest-paid.”

The higher reimbursement rates were pushed through the Legislature in the final two weeks of its 2004 session by a powerful alliance between the nursing home industry and Service Employees International Union, which represents many healthcare workers. Several nursing home advocates objected at the time that the measure lacked sufficient safeguards to ensure that the money went to patient care.

Along with more money, the new law changed the way facilities were reimbursed: from a flat fee for each patient to one based on how much homes spent on workers, patients and facilities. Supporters pledged that the change would reward homes that hired more nurses and paid them better.


The nursing home industry, a service employees union lobbyist and the bill’s author, former Assembly Majority Leader Dario Frommer, all said the study was premature. The higher reimbursement rates did not fully kick in until the 2005-06 fiscal year. And the homes had to wait between 18 and 24 months before receiving their reimbursements, which added to fears that the money might never materialize.

“It’s too early for us to have an analysis of a system that is this complex and came from such significant legislation,” said Betsy Hite, a spokeswoman for the California Assn. of Health Facilities. She said a true accounting would have to wait until closer to 2009, when the law will expire if not renewed by lawmakers.

She said the law had helped stabilize the industry, which had been beset by bankruptcies. “We’ve gone from significantly in the red to marginally in the black,” she said.

Service employees lobbyist Beth Capell said the union was disappointed that wages and staffing had not increased more.

But she was not surprised the homes were reluctant to spend money until they had it all in hand, given a past experience in which the Legislature never delivered funds it had pledged for nursing homes.

“They had the rug pulled out from them,” she said.

Health officials in the administration of Gov. Arnold Schwarzenegger, who signed the law, said they had not had a chance to review the report. Schwarzenegger has recommended to lawmakers that nursing homes be among the few items in the state budget exempt from cuts next year.

He proposed a 3.3% increase in reimbursements for the homes.

The average nursing home netted $248,047 in 2006, a 233% increase from 2004, the study said.

The study noted that the number of nursing home closures dropped significantly after 2004.

“The intent was the stabilize the industry a little bit, and they did get their bump,” said Frommer, a Los Angeles Democrat.

The study found some areas in which nursing home spending did increase substantially. Administrators’ wages rose by 13%, and the pay for licensed nurses -- who have more training than assistants -- grew by 9%.

Nonprofit nursing homes raised their wages more than for-profit homes. At sub-acute care homes, devoted to people recovering from illnesses or surgery, nurse staffing increased by 7.5% and staff turnover dropped.

Still, said Michael Connors of California Advocates for Nursing Home Reform, a patient watchdog group, “to a great degree, no one knows where the money went and how it was used. What’s clear is it hasn’t been used for beneficial effects on residents, which is appalling.”