Opposition has grown to the idea of a ban on for-profit retirement homes in New York state – but not enough to prevent the idea from becoming law.
The state Assembly approved A.5842 by an 83-64 vote earlier this week, with MKs Andrew Goodell, R-Jamestown, and Joe Giglio, R-Gowanda voting no. A similar measure was approved in 2021 by the Assembly with 91 votes in favour, meaning greater opposition this year than last. The Senate did not put the bill to the Assembly for a vote until the end of the 2021 legislative session. It is unclear whether the Senate will debate the measure before the end of this year’s session.
A.5842 adds a new section to the state public health law to prohibit any future creation or expansion of the bed capacity of a retirement home owned or operated, in whole or in part, by an entity to profit. Current facilities, and those whose applications are pending if the bill becomes law, can move forward. Changes in ownership of an already approved for-profit care home, such as adding or subtracting a shareholder, would be permitted.
Assemblyman Richard Gottfried, D-New York City and chairman of the Assembly Health Committee, sponsored the legislation and said in recent years, for-profit nursing homes in New York City have gone from about one-third of the nursing home market to two-thirds. Gottfried pointed to national data he says shows for-profit nursing homes perform worse on staffing, infection control and other quality indicators, have death rates of higher patients and cost more. He also cited a 2021 report by Attorney General Letitia James showing that real estate and service contract transactions divert money from patient care and have contributed to increased COVID-19 risks for patients.
“At least in the case of nursing homes, government regulations have limited success,” said Gottfried. “Family follow-up has a very limited track record of success. You can’t count on nursing home residents to say, “Damn, I’ve been here a week and I don’t particularly care. I’m going to the retirement home across the street. It doesn’t work that way. All of the mechanisms that we rely on that usually work successfully, to be able to rely on the private sector, really don’t work very well in the nursing home business. And that is why we need this bill.
Among the Republicans to oppose the legislation was Goodell, who said his experience as Chautauqua County executive in the 1990s showed that the county’s for-profit nursing homes forced the home of the Chautauqua County to improve if it were to compete for private patients. . Competition for private paying patients was the only way for the nursing home to operate near a break-even point, as reimbursements from Medicaid and Medicare were not enough to operate the facility without county subsidy. Eventually, after years of growing deficits and county grants, the Chautauqua County home was sold after two years of talks to VestraCare. VestraCare first expressed interest in purchasing the facility from the county in August 2013. Although its first offer to purchase the county home was rejected by the county legislature in October 2013, its second offer of $16 million was approved by the legislature in February 2014.
VestraCare then joined a joint venture partnership with the McGuire Group, operating seven healthcare facilities in New York and Michigan.
“So when we say something is wrong with operating in a fiscally responsible way, there is something wrong with operating profitably, we ignore the fact that seeking the profit in the United States leads to lower costs and better quality”, said Goodel. “That’s why you and I drive high-quality cars, that’s why we have cell phones, that’s why we constantly compete on price and quality. … Every paying private patient whose presence in an EHPAD is essential to the very survival of this EHPAD, these paying private patients go to the EHPADs which offer them the best quality at the best price. This is exactly how they compete, by advertising, they have the best quality at the best price. We should not turn our backs on hundreds of years of proven experience and eliminate the pursuit of profit without considering the price and quality that these facilities have provided.”