California’s Nursing Home Residents Deserve Better

THE FOLLOWING LETTER WAS SENT TO GOVERNOR NEWSOM ON SEPTEMBER 9, 2021:

September 9, 2021

The Honorable Gavin Newsom
Governor
State Capitol, First Floor
Sacramento, California 95814

Subject:  SB 650 (Stern) - Corporate Transparency in Elder Care Act of 2021 – As Amended 9/2/21 – CO-SPONSOR – REQUEST FOR SIGNATURE

Dear Governor Newsom:

On behalf of over 3.2 million AARP members in California, I am reaching out to ask you to sign SB 650 (Stern), the Corporate Transparency in Elder Care Act of 2021, into law. The time is now to hold nursing home operators accountable. Over 9,000 people have died in nursing homes due to the COVID-19 pandemic. This did not need to happen.  California’s skilled nursing facilities received over $657 million dollars from the CARES Relief Act to help nursing home corporations purchase the necessary personal protective equipment, testing and staffing to implement comprehensive infection control.

In May 2018, the California State Auditor released a report entitled “Absent Effective State Oversight, Substandard Quality of Care has Continued” in California nursing homes. The report revealed that between 2006 and 2015, the number of substandard care deficiencies cited in nursing facilities increased by 31 percent.  Despite this increase in deficiencies, the net income for three of the largest nursing home companies in California increased significantly during the same period. In 2006, none of those companies’ net income exceeded $10 million; in 2015, their net incomes ranged between $35 million and $54 million.

Part of that increase came from related-party transactions. A related-party transaction occurs when one person (or company) owns more than one business, and those businesses engage in transactions with each other.

When families make the very important decision to admit a loved one into a nursing home, they should have confidence that their parent, grandparent, partner, or sibling is safe and will receive quality care. Nursing homes are often a crucial last resort for older adults who have disabilities or chronic illnesses. However, gaps in laws that regulate nursing homes have led to deficiencies and abuses that have jeopardized this vulnerable population.

SB 650 will create more accountability for California’s 1,227 nursing home operators through new reporting requirements.  This bill will help the public better understand how nursing homes are owned and operated, and how money received from Medi-Cal, Medicare, and private care patients is being spent.  SB 650 is needed in order to bring real reform to the nursing home industry in California.  This bill will require nursing home organizations to prepare an annual consolidated financial report that includes data from all operating entities and related parties in which the parent entity has an ownership or control interest of 5% or more that provides any service, facility, or supply to the skilled nursing facility.

AARP strongly supports SB 650 because it will help California move closer toward the goal of improving quality of care and living conditions of nursing home residents, as well as increase consumer rights and access to information. Seniors deserve better, especially at a time when they are most vulnerable.

Sincerely,

Nancy McPherson
State Director

Cc:       Senator Henry Stern