Nursing home owners would face greater public scrutiny when purchasing facilities in New Jersey under a plan lawmakers backed as part of the state’s ongoing efforts to reform aspects of long-term care, where the pandemic took a heavy toll on residents and staff.
The New Jersey Senate and Assembly both unanimously passed the bipartisan measure Thursday that would significantly strengthen state oversight of nursing home ownership changes, including a public hearing requirement if the buyer involves an out-of-state entity. The bill — part of a package of reforms that grew out of a consultant’s report issued last June — now goes to Gov. Phil Murphy, who is expected to sign it into law.
Elder advocates said the ownership bill does a lot to expand transparency of what has historically been a closed process in which New Jersey nursing homes can change hands quicky, sometimes leaving staff, residents and family members reeling and state regulators in the dark. Union leaders said the changes can force them to renegotiate employee salary and benefit agreements multiple times a year.
“Residents, families, staff and the public have a right to know who is applying for ownership of a facility and confidence that a public and thorough review process will be completed,” said Evelyn Liebman, director of advocacy for AARP New Jersey. “We look forward to enactment by the governor and believe this is a critical step forward to addressing needed reforms in long-term care in our state.”
Assessing impact of COVID-19
New Jersey officials launched their reform efforts last spring following the deadly impact of the initial COVID-19 surge, which spread quickly inside long-term care facilities, and have already committed millions in additional resources to support frontline workers. By June 2020, deaths at these sites accounted for half the state’s fatalities. Today nearly 54,000 COVID-19 cases and 8,000 deaths — just over a third of the state total — have been linked to long-term care.
In May 2020 the state Department of Health hired consultants from Manatt Health to examine the industry’s response, resulting in a detailed report with nearly a dozen recommendations — including a call for greater scrutiny of ownership changes, given that the state’s current process “falls short.”
Three out of four of the state’s 370 nursing homes are now owned by for-profit organizations, Manatt found, noting that their sometimes-complex corporate structure can make public accountability challenging. More than 60% of the revenue at these for-profit sites comes from Medicaid, which is taxpayer funded.
Legislative hearings followed, then legislation, some of which is still under consideration. Murphy has already signed a number of these bills, creating an advisory task force and requiring certain safety equipment be kept stocked, as well as more controversial reforms, like measures to establish a direct-care ratio, which forces operators to spend a certain percentage of their revenue on resident care and services, and require certain levels of frontline staff.
The ownership measure proved more complex, but the final version sailed through both the Senate and the Assembly Thursday with no debate and full support in both houses. “In New Jersey and across the nation, we have seen a scrambling of changing ownership at many for-profit long-term facilities,” read a statement from the lead Assembly sponsors, Nicholas Chiaravalloti (D-Hudson), Joann Downey (D-Monmouth) and Dr. Herb Conaway, who chairs the health committee.
Putting shareholders first
“These troubling patterns call into question the intentions of for-profit facility owners, who may be putting the expectations of shareholders over the needs of elderly, disabled and vulnerable long-term care residents. No resident should ever receive poor care because of a facility’s financial mismanagement,” they said.
While some have chafed under the blame heaped upon long-term care providers during the pandemic, industry leaders have worked with lawmakers on many of the reforms and in most cases backed the final legislation. The ownership bill, for example, was amended multiple times in committee hearings to address some of the industry’s concerns.
“We support transparency of ownership,” said John Indyk, vice president of the Health Care Association of New Jersey, which represents many of the state’s long-term-care providers. “I think the focus ought to be on identifying the unknown potential bad actors. If you ask the (state health) department to do too much, too broadly, things slip through the cracks,” he added. “We know who the good players are — we know who provides quality care, and they should not be subjected to the same security as the unknown.”
The Manatt report raised concern about the DOH’s capacity to carry out certain oversight duties, noting the complaint investigation group “has been historically under-resourced and understaffed.” By way of example, the report noted the DOH had some 4,000 backlogged complaints related to long-term care, including some considered high priority. DOH has said all complaints that involved immediate risk were addressed within the appropriate two-day window.
The final version would establish a tiered review process within the DOH for the purchase of New Jersey nursing homes or groups of additional licensed beds, which operators can sell among themselves. Individuals and organizations that already run a licensed nursing home in New Jersey would be subject to new disclosure and reporting requirements, while those coming in from out of state would face a more stringent review, including a public hearing. It would also allow the DOH to ask the state auditor to help review financial statements.
The Senate also advanced a related measure Thursday — sponsored by Senate President Steve Sweeney (D-Gloucester) and health committee chairman Joe Vitale (D-Middlesex) — that calls on the DOH to conduct a physical assessment of all the state’s nursing homes and implement an infection-control plan to help prevent disease spread in the future. A version is pending in the Assembly.
Manatt also found that many of New Jersey’s nursing homes are older structures with outdated physical systems and designs, like rooms with multiple beds, that exacerbate contamination. About one-third of the homes were found to have infection-control deficiencies in 2017, the consultants said.