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Cardozo Journal of Equal Rights & Social Justice

Abstract

Complex corporate nursing home structures have become commonplace in for-profit nursing home ownership. These structures, designed to shield owners from regulation and liability, allow owners to evade public scrutiny by obscuring the identify of true owners and allow the true owners to direct revenue to other companies they own or benefit from, such as staffing agencies, payroll businesses, and management companies. This has led to a deterioration in the standard of care for nursing home residents, society's most vulnerable population, while providing a boon in profits for the true owners. Money that should be spent on care is instead diverted to high-overhead contractors and above-market rents, which further enriches the beneficial owners of the nursing homes.

To address the crisis, states are beginning to legislatively require nursing homes to spend a minimum percentage on direct care of residents, known as a "direct care ratio." While commendable, these laws may easily be evaded if they are not interpreted and enforced in a wise and effective way. Based on New York's experience, states should adopt a revenue-focused regulatory approach to the implementation of direct care ratio laws. To prioritize residents' care and safety, states should narrowly define costs allowed to count towards the direct care ratio and closely scrutinize those costs. They must also regulate and cap the expenses nursing homes pay in transactions where there is common ownership between the nursing home owner and the contractor. These steps will greatly improve care and safety for vulnerable nursing home residents.

Disciplines

Criminal Law | Criminal Procedure | Housing Law | Law | Medical Jurisprudence

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