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How the nursing home industry, organized labor, John Burton, and Arnold Schwarzenegger are cooperating to guarantee giant health care corporations huge profits -- using billions of your dollars

Wednesday, Aug 25 2004
On Wednesday, Aug. 11, life at Alta Vista Healthcare, a nursing home in Riverside, started with a break from the usual monotony. That morning, a twentysomething woman in a pantsuit and a young man in shirt sleeves arrived, saying they represented a group called California United for Nursing Home Care. At 10 a.m., one of the young visitors told an Alta Vista supervisor, "It's time to start rolling them out and getting them ready."

For about an hour, orderlies hustled from room to room, rousting patients and pushing them outside until they had gathered two dozen old and disabled people in front of some signs planted in the grass. During the next 45 minutes, people who'd driven to Alta Vista that morning spoke about a looming financial crisis among California nursing homes. Meanwhile, several of the patients' chins drooped to their chests; they seemed to fall asleep in the heat. Some who remained awake complained that they felt parched. Others asked when they would be allowed back inside.

"It was in the low 90s. We're in the high desert, and it's too hot to be outside. Even in the shade, it's warm," says James Bennington, 52, admitted to Alta Vista four years ago to recover from the combined effects of a leg injury, kidney cancer, and skin cancer. "Everybody started getting restless and wanted to go in. Everybody wanted water."

This scene -- in which lobbyists called local TV and newspaper reporters, commanded orderlies to push nursing home residents into the summer heat for two hours, and handed out scripts to allies whom they'd trucked in to speak at a prefab "rally" -- repeated itself more than 100 times around California that Wednesday. Organizers called the events "nursing home funding crisis drills."

This was the first step in a carefully orchestrated lobbying blitzkrieg designed to coincide with the last two weeks of the state legislative session, a period when the cynicism and ingenuity of interest groups become unusually acute. In this case, the corporate owners of nursing home chains and the Service Employees International Union were the ingenious, acute ones.

In the days before Aug. 31 -- the deadline by which the year's bills must be voted on -- legislation favored by interest groups, Democratic and Republican alike, is rushed through the Senate and Assembly with very little public scrutiny.

One method for accomplishing this surreptitious lawmaking is called "gut and amend." The process is just as brutal as it sounds. Lawmakers take a bill that has already passed committee and other public reviews and erase its contents, then insert entirely new legislation in its empty shell. In this sleazy way, legislative leaders are able to ram bills favored by the state's most lavish campaign contributors into law before noxious elements come to light. This legerdemain is accomplished under the pretext of urgency; there's just no time for the democratic trappings of public hearings during the Legislature's hectic final hours, gut-and-amend practitioners say.

The gutted, amended bill related to the 100 bogus nursing home rallies staged earlier this month is a particularly vile example of this gambit.

The bill was written by an alliance between California's for-profit nursing home industry and the Service Employees International Union; the alliance describes the legislation as a way to raise state reimbursements paid to nursing homes that increase staffing and improve care. Nursing homes currently receive $118 per patient from the state Medi-Cal system, regardless of patient need or the quality of care given at a particular facility. Under Assembly Bill 1629, state payments would be based on facilities' actual expenses, rather than a mere head count, according to its backers. State and federal payments to homes could increase by $138,400,000 this year under the plan. The bill also permits Medi-Cal rates to climb by 10 percent in fiscal year 2005-2006 and then an additional 7 percent each year for the next three years. The bill would require the state to pay nursing homes for improving their facilities.

The bill would fundamentally transform the Medi-Cal payment system from one that pays for care on a per-patient basis to one that would estimate nursing homes' expenses, then add a profit of 5 percent, along the lines of systems used to set rates for public utilities such as PG&E, or to pay military contractors such as Halliburton. In this way, AB 1629 would make California the first state in the nation guaranteeing nursing home profits.

But because the bill has been rammed through the Legislature in a matter of days, without time for official analysis, it is unclear how much it would actually cost, or how effective it would be in inducing nursing homes to improve staffing, care, or facilities. Experts who have analyzed the bill say it appears specifically geared to avoid language that would require staffing increases, or that would ensure facilities receiving extra funds actually comply with state laws governing standards of care.

To help fund the bill's provisions, nursing homes would be required to make a per-bed payment to the state. Thanks to the per-bed fee and additional federal funding the bill asks the state to apply for, the nursing home industry claims the bill would be "revenue neutral" -- that's to say, free of charge to state taxpayers. But a researcher who specializes in nursing homes and who has analyzed the bill told me it's actually a California budget buster. It could cost an additional 3 billion tax dollars, just over the next five years, without any requirement that the money be used to provide better care for patients, she said.

"It doesn't require any changes by the industry as far as meeting staffing requirements or other state laws," says Charlene Harrington, a University of California at San Francisco researcher who has studied nursing home finance for 15 years. "We could be spending $3 billion over five years and get nothing."

Harrington spent hours studying the bill's text to identify its flaws, but outward signs that there might be surprises in the fine print were easy to spot:

About The Author

Matt Smith


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