Facilities News Spotlight

2023-06-12 Spotlight: Virginia’s Failed Regulation of Law-Avoiding Nursing Home Owners

Scandal in Plain Sight – Virginia’s Failed Regulation of Law-Avoiding Nursing Home Owners

Bacon’s Rebellion
June 10, 2023
by James C. Sherlock

Scandal in Plain Sight – Virginia’s Failed Regulation of Law-Avoiding Nursing Home Owners

One of the most important and heart-wrenching decisions families make for their elderly loved ones is whether they are able to keep them in their homes as they get older and sicker. . .

We should be able to expect patients to receive at least basic standards of care. A high percentage in Virginia has not .

In a five-star system, the Centers for Medicare and Medicaid Services (CMS) rates 98 of Virginia’s 289 nursing homes at one star – defined as much below average. More than a third.

Nationwide, only the worst 20 percent receive a one-star rating.

The last time I reported, in October of 2021, those figures were 54 one-star facilities out of 288. Nineteen percent. So, our nursing homes have gotten precipitously worse over time.

By definition of the way that Medicare compiles records and assigns scores, they have been bad for a long time. The ratings are backward-looking a couple of years, so the measured declines discussed here did not start recently.

People have suffered and died from the lack of effective oversight. And I have encountered nothing to indicate that this situation has improved.

Ownership of many nursing facilities, especially the worst ones, has become a shell game subject to high-frequency shifts of ownership and changing facility names. . .
on the financial performance of medical facilities in the state.

A nursing home that routinely loses money, assuming the financial reporting is accurate, which is a known problem in facilities owned by some private equity firms, is a risk regardless of the latest CMS star ratings.

But, for whatever reason, the financial data published by are preposterously out of date. The data posted on February 28 of this year are from fiscal year 2021. They are better than nothing.

Facility name and ownership problems. A search of federal and state nursing home records available to the public shows a significant pattern of discrepancies of facility names and ownerships among:

  • for the state;
  • CMS Medicare Compare data for the federal government; and
  • the current actual ownership and names of facilities.

My research shows a large majority of Virginia nursing homes caught up in that specific form of chaos.

CMS and don’t even agree on how many nursing homes there are in Virginia. They clearly use different criteria. We just don’t know what the differences are. . .

Rapid assembly of large Virginia chains. Eastern Healthcare Group suddenly owns 14 nursing homes in Virginia, primarily from buying out Portopiccolo Group’s Virginia facilities.

Flushing, New York’s Hill Valley Healthcare, equally suddenly, owns 18 nursing homes in Virginia, closing the purchases on most of them in January.

Eastern and Hill Valley each recently bought portfolios containing some of the worst nursing homes in the state as rated by CMS. That can be a good thing if each has the resources and the will to invest in upgrading staffing and facilities.

Question for government. We must question whether the government agencies themselves know who owns the facilities in a timely manner.

  • How soon are they notified after a sale?
  • Is the state notified before a sale?
  • If so, does the state have any authority to vet new buyers?
  • What happens when a new owner takes over a one-star rated facility? How does that affect regulation activities?

We ask those questions because there are ownership groups, some of whom have  operated in Virginia, notorious for:

  • buying nursing homes;
  • stripping staff to far below CMS-required levels regardless of the effects on Medicare Compare star ratings;
  • pocketing the profits; and
  • within a couple of years reselling facilities at a higher price based on the higher cash flows.

That has been done widely in the Commonwealth.

Bottom line. Government agencies which we count on for both nursing home information and regulation appear unable to reliably provide either.

Recommendations. If current laws have been broken, Commonwealth’s Attorneys should prosecute. If regulations have been broken, pursue the owners who broke them.
Regardless, a thorough review and report by the Department of Health and the Department of Medical Assistance Services (DMAS) of their nursing home regulatory, oversight and public information programs is necessary prior to the next General Assembly session to determine how to improve them.

Virginia needs mechanisms to:

  • track and report nursing home ownership and facility names in near-real time;
  • stop Medicaid reimbursement of nursing homes in violation of health regulations; and
  • block Virginia acquisitions by ownerships with bad track records or insufficient assets.

The VDH already has the authority to remove the licenses from operators who disregard regulations as a business model.

If legislation or regulation changes are necessary, propose them.
In the meantime, Virginia’s elected constitutional officers and General Assembly members may wish to examine campaign donations and stop taking/refund money from Virginia’s worst nursing home operators.

This is the first in a series on this issue.