In the worst economic crisis since the Great Depression, skilled nursing facilities -- those quasi-medical institutions for old or severely disabled folks more commonly called "nursing homes" -- are one of the few booming businesses going. On any given day, 1.5 million Americans reside in the nation's nursing homes. More than 3 million annually rely on their services at some point during the year.
Take, for example, the case of Skilled Healthcare Group, which owns five of Humboldt County's six skilled nursing facilities and all but eight of the available beds.
"We are pleased to report another record quarter of earnings," stated Boyd Hendrickson, chairman and chief executive officer of Skilled Healthcare Group, in a press release aimed at investors released early last month. The occasion was the company's quarterly earnings report, and the news was fantastic: first-quarter profits of $10.9 million, up almost 30 percent from the first quarter of 2008.
Skilled Healthcare is one of the giants of the nursing home industry. As of March 31, the firm, based in Foothill Ranch, California, owned or leased 76 skilled nursing homes and 21 assisted living facilities in California, Texas, Kansas, Mississippi, Nevada, New Mexico and Iowa. And it has a virtual monopoly on the Humboldt County market, owning Granada, Seaview, Pacific and Eureka Healthcare and Rehabilitation (all in Eureka) and St. Luke Healthcare Rehabilitation Center in Fortuna.
But while the bottom line may appear rosy enough for the $350 million company, state regulators and attorneys representing patients are charging that the care provided at many Skilled Healthcare facilities, including those in Humboldt County, is anything but. Skilled Healthcare Group and all five of its local skilled nursing facilities are embroiled in a large class action lawsuit set for trial Nov. 2. If that weren't troubling enough, as many as three of the five appear to be targets of an investigation by the California Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse.
On April 13, the California Department of Justice received a warrant to serve on Eureka Healthcare and Skilled Healthcare, LLC, the administrative services provider for Eureka Healthcare. The search warrant required production of myriad staffing records, payroll records, time cards, time sheets, staffing formulas, e-mails, census documentation and computer hard drives, laptops and storage devices. The search warrant covered the period from Jan. 1, 2007 to the date of the search and specifically focused on information pertaining to 13 residents.
"The full scope of the DOJ's investigation is currently unknown, but is likely to expand beyond one defendant facility," wrote Kippy Wroten, attorney for Skilled Healthcare Group, in a motion to halt discovery in the pending civil lawsuit. Judge Bruce Watson heard Wroten's motion May 11 in the Humboldt County Courthouse. (It was later denied.)
In his footnotes, Wroten identified Granada Healthcare and Rehabilitation Center in Eureka and St. Luke Healthcare Rehabilitation Center in Fortuna as additional targets of what "definitely appears to be a criminal investigation."
The Eureka firm of Janssen, Malloy, Needham, Morrison, Reinholtsen, Crowley & Griego is lead counsel in the class action complaint against Skilled Healthcare Group, Skilled Healthcare, LLC, and 22 of its skilled nursing facilities throughout California. Four plaintiffs filed the civil suit May 4, 2006. They claim the facilities failed to comply with a minimum requirement of 3.2 nursing hours per day per patient required by California Health and Safety Code Section 1276.5 and falsely advertised the quality of care available from Sept. 1, 2003 to present. Humboldt County District Attorney Paul Gallegos joined the lawsuit a few weeks later, alleging unfair business practices.
The plaintiffs seek restitution of money paid for services not provided, an array of damages, pre-judgment interest, and attorneys' fees and costs.
Skilled Healthcare Group contends none of the four relied on advertising in their decision to enroll; that staffing needs are unique to each facility based on the daily assessment of the acuity of residents; that it did what might reasonably be expected of others in the situation; and that the 3.2 hours is not a mandate.
Wroten & Associates claims there are 34,000 potential class members, all of which had until May 21 to request exclusion from any judgment.
In its May 5 Q-10 filing with the Securities and Exchange Commission, Skilled Healthcare called the "significant number" of litigation claims against it "typical" in the health care industry.
"A legal judgment or adverse governmental investigation could have a material negative effect," the SEC filing stated. "The Company cannot provide any assurances regarding the outcome of any litigation, investigation or claim."
But if the investors are thus warned, what is a consumer to make of all of it, particularly with regard to what it means in terms of quality of care for the frail and the elderly?
To find the answer, the Journal went to nursing homes, checked California Public Health records, talked to families and visited with the community volunteers who serve as liaisons between residents and staff. Nursing homes are far from heaven, sometimes hell, and always dependent on a dedicated staff, which can be hard to attract and retain.
We found very serious cause for concern. This includes a series of awful stories involving medical mistreatment of the elderly. More importantly, though, we found a cadre of very dedicated and committed health care workers who -- despite record quarters of earnings -- simply may not have the resources to do the job they are being asked to do.
Though the Department of Justice investigation is still in its initial stages, and the class action suit has yet to go to trial, a couple of things about the care provided at Humboldt County Skilled Healthcare facilities can be said with certainty.
For one, the federal government officially takes a dim view of the level of service provided at the facilities. The company may be in what it calls "substantial compliance with regulatory requirements," but a check of the Center for Medicare and Medicaid Services Nursing Home Compare Web site doesn't ease fears about quality.
Eureka, Granada and St. Luke all have one star out of five. Seaview Healthcare and Rehabilitation and Pacific Healthcare and Rehabilitation show up with two. The only other facility in Humboldt County -- an eight-bed unit in Garberville's Jerold Phelps Community Hospital -- gets a four-star rating from the Medicare site.
A facility's star rating is determined by public health inspection surveys, fire safety inspections, numbers of deficiencies accumulated in inspections, staffing levels, and performance on quality measures such as whether residents are in pain, have gotten flu shots or lose weight. Five stars is much above average and given only to the top 11.9 percent of 1,247 California nursing homes, CMS spokesperson Jack Cheevers reported. One star is much below average, a ranking held by the bottom 21.8 percent. Eleven of the 22 Skilled Healthcare facilities named in the civil lawsuit received one star. Another eight received two.
The CMS star system has its critics. They argue that data is misused in arriving at the ratings, that time lags make the ratings out-of-date, and that the system fails to take patient and family satisfaction into account.
But it's a bit more difficult to take issue with specific stories gathered and investigated by the California Department of Public Health, which oversees quality of care and specific violations in state nursing homes. Locally, the department sends a team of four people from the Santa Rosa office to conduct annual surveys and certification, the results of which are required by law to be available at each nursing home. In addition, the department regularly investigates specific troubling incidents that have been brought to its attention through complaints. Every complaint is investigated by the state, and fines can be issued for the flagged deficiencies and citations.
Some deficiencies carry fines of $500 to $5,000 per day. Citations result in additional state enforcement actions of up to $1,000 for "B"-level citations, reflecting substandard policy and procedures; up to $25,000 for "A"-level citations, reflecting potential harm to residents; and up to $250,000 for "AA"-level citations, designated for cases in which residents have actually come to harm.
This year, Eureka Healthcare -- probably the most troubled of Skilled Healthcare's Humboldt County homes -- received an $18,000 "A"-level fine in January for a May 21, 2008, finding and three additional "B"-level fines totaling $6,000 for July violations. It is appealing the three "B"-level fines.
In addition, the institution paid fines of $5,000 per day for six days last November (the fifth through the tenth) after inspectors responding to two complaints found resident health and safety to be in "immediate jeopardy."
Inspectors lifted "immediate jeopardy" on Nov. 10 when care improved. But the state continued to monitor the facility, which installed a new administrator and director of nurses on Nov. 11, and fined it $500 per day fine from Nov. 11 to Jan. 6.
Eureka Healthcare is forbidden to serve as a training site for certified nursing assistants until Oct. 23, 2010.
Few people argue that state inspection reports produce a full, well-rounded picture of nursing home operations. "What they look for are negatives, and it's a snapshot in time," said Cynthia Ross, the part-time director of the Long-Term Care Ombudsman Program, which is run out of the Humboldt Senior Resource Center. "You won't read about the positives."
Ross and two other interviewees said that "immediate jeopardy" has been called for serving unpasteurized soft-boiled eggs -- even at a resident's request. But the Nov. 5-10 survey of Eureka Healthcare paints a picture of a week with far more problems than breakfast food. Thirteen residents were found to have received substandard quality of care.
"Staff did not provide necessary nursing care for nine of 14 sampled residents," states the 60-page report. It goes on to site poor wound care and skin assessment; failure to promptly clean, shower and turn two survey residents and other randomly noted residents; slow response to calls; and poor supervision that resulted in falls for three of the 14. Other problems: incomplete, inaccurate or false treatment records.
A review of last year's inspection records at Eureka Healthcare gives a glimpse of the problems that led to the "immediate jeopardy" declaration.
Resident 8, incontinent of bowel and bladder, was found on Nov. 6 at 9:20 a.m. on "top of his covers, with a pair of sweat pants pulled down to his knees, and an incontinence brief exposed to the room and soiled with urine." The resident was partially visible from the hallway. No one knew when he had last been checked.
Resident 2, soiled with a "walnut-sized ball of feces that he did not appear to be aware was present," had an open area on his buttock that a certified nursing assistant (CNA) had noticed "a couple of weeks ago." She claimed to have told the charge nurse, but surveyors noted no one had applied any dressing to the sore since she reported it.
As for showers, one resident asked about the frequency of showers said he would like to have them. His Activity of Daily Living Record reflected no showers in the previous nine days and three days of no documentation of any kind of bath.
Resident 10, an Alzheimer's patient, had a note from a dietitian to have finger foods. She was to be supervised during meals as a result of a choking incident almost five months earlier. Instead, the surveyor noted a hot dog on a bun, pears in syrup, and a fork and spoon on her tray. One of the four CNAs helping others to eat handed her the spoon and told her to use it. After she tried and the hot dog fell on the tray, she opted for her hands, only to have pears slide out of them and a second CNA tell her not to put her hand in the pears.
An 80-year-old resident admitted to Eureka Healthcare May 21, 2008, with a wound in her arm from a compound fracture has no documentation the wound was treated or evaluated despite physician orders to dress it twice daily. Nine days later, on an office visit to the surgeon, the resident was immediately taken into the exam room because of "offensive odor" from a swollen arm wrapped in a dressing saturated with pus. The stitches couldn't be removed.
Perhaps most troubling is the case of Resident 11, a diabetic who entered Eureka Healthcare on July 22 with an infection of the skin and tissue on the posterior part of the right foot. She developed a pressure sore from improper turning and positioning while in B Wing. The sore became gangrenous and required a surgical amputation of the fifth toe of the right foot. The surveyor checked the staffing for the weeks ending Aug. 31 and Sept. 7 -- the two weeks prior to identification of Resident 11's wound -- and found the facility short of the goal for nursing hours worked per resident on 10 of 14 days.
Eureka Healthcare's troubles with the state prompted Skilled Healthcare to take action. It hired a new administrator and a new director of nurses, both of whom have long experience working in managed care institutions. But certain systemic problems -- like the staff shortages that seem to have played a part in Resident 11's gangrene -- are harder to address. Some people have dedicated their lives to caring for the elderly, but given the pay scale and other factors, those people seem to be a scarce commodity throughout the country. Some national numbers put turnover among CNAs at 70 percent annually.
Chester Williams is the training coordinator at St. Luke. Tall and lean, he started in skilled nursing care as an orderly in 1964.
"I've worked my butt of for many years and I resent it when people talk about poor quality of care," Willams said recently. "You ask any of us who have been in it for years. We do it because we can make a difference. That's how all the CNAs feel, especially those that stay more than six months."
"They don't get combat pay, but they are in a combat zone," said Cynthia Ross, the county ombudsman director, speaking about CNAs. "The odds are against them because the work is so difficult. If you have six patients and they all have dementia of some sort, it's more than hard. It's dangerous. You can be bitten and hit. You almost have to put blinders on at the end of a shift to get through it."
In one of last year's state inspection reports, one CNA stated that staffing had been "very short" for a long time and described having to frequently care for up to 38 residents on the night shift with only one other CNA. He said 14 residents in B Wing were "totally dependent" for care and said it was "frequently very hard to complete the necessary care." A CNA with 20 years of experience described the staffing as "bad," especially on weekends. She echoed another CNA in describing times with two CNAs on duty and 28 to 30 residents each to care for. Another staff member said she had complained of inadequate staffing for several weeks.
Eventually, both Eureka Healthcare and Seaview Healthcare decided to close down entire wings of their facilities last year due to a lack of staff available to care for the residents. Eureka Healthcare's wing is expected to open back up within a month.
The company has since taken certain steps to permanently put staffing back in line with what is required by law. It brought in traveling CNAs and nurses from outside of the area to fill in gaps. The company brought in a local recruiter who has teamed with Eureka Adult School and Fortuna Adult School to offer training courses for new CNAs -- a move that takes the cost of employer training off of Skilled Healthcare's books, which might theoretically free up funds for other uses. There are also outreach efforts at College of the Redwoods and Humboldt State.
Still, despite the parent company's record profits, there are some who believe that society is simply not paying enough for long-term care for its most vulnerable citizens.
For the three months ending March 31, Medicaid (Medi-Cal in California) accounted for 57.8 percent of all of Skilled Health Group's long-term care services mix but only 30.9 percent of its revenues.
Melody Chatelle, spokesperson for Eureka Healthcare and Rehabilitation, said the average Medi-Cal rate is approximately $150 to $160 per day per resident, with 70 percent of Eureka Healthcare's 50 residents on Medi-Cal.
She called it a "significantly under-funded payer source" in contrast to the Medicare rate of $300 to $600 per day per resident for room and board, nursing services, assistance with activities of daily living, general activities and social services. Medicare, however, is a temporary payor, maxing out after 100 days.
At the same time, the state expects a great deal for its $150 -- too much, say some people working in the field. Nursing homes must house, feed and provide skilled care for some of society's neediest members. They must do it on the cheap, and they do it under intense scrutiny.
"Nuclear energy used to be the most regulated industry and we were number two," said Mary Johnson, the new administrator at Eureka Healthcare. "Now we are number one." (Johnson made the comment prior to being advised by her employer to defer all questions to Chatelle until the legal wrangling is resolved.)
In the coming months, the statewide class action lawsuit against Skilled Healthcare's California facilities will go to trial. The outcome of the state Department of Justice investigation will likely become known, as will the additional state enforcement actions arising from whatever citations are issued for the November inspection at Eureka Healthcare. Likewise, it's not easy to pin down who to hold responsible for Eureka Healthcare's very bad 2008 -- the parent company? Thrift-happy private and public insurance plans?
And though things appear to have improved, at least at Eureka Healthcare, there's no way to be certain attempts to address the chronic problems of nursing home staffing, especially in Humboldt County, will bear fruit. For Humboldt County families undergoing the intense soul-searching about when, or whether, to entrust a loved one to institutional care, Ross has the following advice.
"It's an institution, not a home," she said. "A family member has to ask, 'Can I give better care myself?' If you've made the difficult decision to put someone in a nursing home, you realize you can't. The families and residents who adjust realize it's never going to be the way it would be if you did it yourself, and it may not be like it used to be."