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COVID-19 Medicaid

How Parasitic Capitalism Is Making the Elkhorn Nursing Home Outbreak Worse

Life Care of Elkhorn is owned by a multi-billionaire who has made a criminal fortune off of providing “care” that has often been fraudulent or horrifically negligent to elderly people of limited means. Now the outbreak is likely causing calamitous staffing shortages at a time when extra care is needed and few outsiders can observe conditions in the facility.

Photo: a house in West Omaha, May 18, 2020.

Preston Forrest is the 87-year-old fundamentalist multi-billionaire who founded Life Care Centers of America, the largest private nursing home chain in the United States. Life Care runs the nursing home in Elkhorn, where two out of three residents have tested positive for coronavirus and five people have died. It also runs Life Care Center in Kirkland, Washington, one of the nation’s first COVID hot spots, where 35 people have died.

In what remotely healthy society does a person become a multi-billionaire running facilities that care for the elderly?

When an elderly person is admitted to a nursing home, the government picks up the cost of care after the financial assets of the patient have been expended. That is, if your grandmother–who is presumably not immensely wealthy–needs to move into a nursing home, the cost of her care is likely to far outstrip what she can afford. In Nebraska, the estimated cost is over $6,000 a month. So the government takes any financial assets your grandmother possesses and applies them to the cost of her care. They even perform a five-year “lookback” to see if your grandmother, knowing or even not knowing her independence was coming to an end, gave any money away. If she did, she is penalized according to how much money she gave away by delaying her eligibility for government coverage of her care. Also, if your grandmother has a spouse who is still living, her spouse’s income, in excess of a small amount to pay for her spouse’s basic living costs, is collected to pay for her care.

What this means is that while wealthy people can create trust funds and other financial vehicles to ensure that their useless heirs amass unearned generational wealth, a working person who responsibly managed to put away a few thousand dollars in savings over the course of her life cannot give that money to her grandchild to help with a down payment on a house without possibly having her own life-sustaining care impacted. Medicaid keeps the elderly poor from living their final years in destitution, but it also siphons up all their scant assets and thereby contributes to the generational wealth divide in the U.S.

So when you see that Forrest Preston has made two billion dollars in nursing home profits, know that that money came from government payments and the last crumbs of income and savings from elderly or disabled people and their families.

And that’s not the half of it. That’s just how the system is supposed to work.

Abuse, Neglect, and Fraud at Life Care Centers of America

Starting in 2006, whistleblowers affiliated with Life Care Centers of America reported the company for fraudulent billing. The company’s Chief Operations Officer had started a “Rehabilitation Opportunity Committee” focused on maximizing government payouts, which included insisting on “ultra high” levels of therapy (a Centers for Medicare and Medicaid Services designation) to patients who, according to the professionals treating them, did not need it. Above their objections, therapists were told to deliver therapy to patients sometimes seven or eight times a day so that their time could be billed to the government, and patients were kept in facilities longer than medically necessary. Prosecutors said that Life Care was billing the government for ultra high therapy for over two-thirds of its patients, which was twice the national average. Court documents uncovered by the Jackson Sun alleged that the Chief Operations Officer frequently told employees that “their job was to make money for Forrest Preston.”

These and similar allegations culminated in a 2016 settlement with the Department of Justice in which Life Care Centers of America and Preston himself were ordered to pay $145 million to offset the fraud.

If you become a billionaire off of “taking care” of elderly people, it’s because you are overcharging for services or cutting corners in your care, or both. Life Care appears to check both those boxes. In addition to systemic fraudulent billing, the company’s facilities have been subject to numerous negligence lawsuits.

The Elkhorn facility has had a number of neglect or abuse allegations made against it, including one settled out of court in 2007 when a woman who had undergone spinal surgery was left to sit in her own feces so long that a second surgery was required to clean the infection and feces out of the wound. And just last summer the facility was cited when a worker was caught not cleaning a glucometer between patients.

How the State Does and Does Not Protect Residents at Long-Term Care Facilities

The state has a hotline that receives reports of abuse and neglect of children and vulnerable adults, including complaints about facilities caring for elderly and disabled adults. Depending on the type of complaint, these may be handled by two different units within the Department of Health and Human Services (DHHS): Licensure, which fields complaints that a facility is delivering substandard care, and Adult Protective Services (APS), which investigates complaints that a caregiver knowingly neglected or abused a patient.

In other words, APS generally investigates felonies in which a specific person abused a specific victim, whereas Licensure addresses substandard practices. However, even when abuse or substandard care is discovered, state workers are limited in what they can do to hold a facility accountable. APS generally find fault with specific caregivers, while Licensure works with the facility to develop a plan for improving care. In either of these cases, it is rare for the people at the highest levels of profit and corporate policy setting to face any kind of consequences for misery suffered by their residents. That is one reason why the DOJ settlement against Preston is so remarkable, and it is also a reason why COVID can run rampant in a nursing home–there are few mechanisms to enforce adequate care under the circumstances.

It appears that as of mid May facilities in Nebraska have not received guidelines from the state for how to handle a catastrophic COVID outbreak. At the daily COVID press conference last Friday, a spokesperson for the Department of Health and Human Services announced that they were very close to providing this valuable tool for long term care facilities. That was May 15, months after the virus first hit Nebraska.

So care facilities in Nebraska have been working with inadequate directives on how to handle a catastrophic outbreak. That means that Licensure doesn’t really have a COVID specific state standard to hold facilities to, and when the problem is a widespread systemic failure, that means APS is limited in their own possible interventions, since they are likely not investigating a willful crime.

A Perfect Shitstorm at Life Care Centers of America

Two additional factors are aggravating the outbreak at Elkhorn: staff shortages and isolation. At least 26 of Elkhorn’s staff have tested positive for the virus–almost 20% of their workforce–indicating that the facility likely has significant staff shortages. Understaffing at a facility where vulnerable people are suffering an outbreak and require special care is particularly dangerous. On top of that, Elkhorn has (understandably) shut down to outside visitors, whose eyes and ears are normally a vital safeguard against abuse and neglect. It’s hard to imagine more alarming conditions for patients’ families. Indeed, reports indicate that care is suffering at the facility and DHHS has made the unusual move of announcing that it is investigating.

But once the virus has taken off in a facility, solutions are limited. Patients cannot simply be carted off to other facilities. What ended up solving the problem in Kirkland was the intervention of a federal “strike team” of 28 medical professionals who took over operations at the facility to get the virus under control. That seems to be exactly what is needed in Nebraska right now.

Which makes us wonder: if the modest assets of working class elderly people are vacuumed up by the government and put in the pockets of a billionaire to pay for their care, will the government be vacuuming up the assets of the billionaire to pay for cleaning up the devastation at his profitable facility? Unlikely.

To recap:

  • The State of Nebraska does not appear to have provided nursing care facilities with comprehensive guidelines on how to handle a COVID outbreak.
  • The state can investigate cases of willful abuse and neglect (APS) and cases of systemic failure to meet standards (Licensure), but a terrible COVID response when no COVID guidelines have been issued is quite likely to elude being adequately addressed by either of those entities, and their powers are limited even in the best of times.
  • The outbreak is likely causing calamitous staffing shortages at a time when extra care is needed and few outsiders can observe conditions in the facility.
  • This facility is run by a multi-billionaire who has made an obscene, criminal fortune off of providing “care” that has often been fraudulent or horrifically negligent to elderly people of limited means.
  • We need a federal strike team to get this situation under control.