For-Profit Nursing Homes Lead in Overcharging While Care Suffers – Bloomberg 12-31-12

Salient to Investors:

The US nursing home industry overbills Medicare $1.5 billion a year for treatments patients don’t need or never receive. 30 percent of claims sampled from for-profit homes were deemed improper versus 12 percent from non-profits.

At least 6 government and academic studies in the last 3 years show that the rise of for-profit providers is fueling waste, fraud and patient harm. At nursing homes, 78 percent of $105 billion in revenues went to for-profits in 2010 versus 72 percent in 2002.

Jill Horwitz at the University of California said research shows for-profits are more likely than non-profits to pursue money in many ways.

For-profit providers dominate most health care sectors, including 96 percent of the outpatient surgery centers, more than half of hospices, 84 percent of home-health care agencies, and 85 percent of dialysis clinics. Nonprofit and government-operated hospitals had 88 percent of revenue in 2010.

The rising influence of for-profits has led to tensions with doctors, insurers and regulators on several fronts.

Scott Becker at Becker’s Hospital Review said wherever government spends huge funds, it incubates growth, and private equity investors have recently taken aim at hospitals, too, because their size and community roots make them the best politically situated to thrive under the Patient Protection and Affordable Care Act.

Medpac says investor-owned facilities earn a 20 percent profit margin on Medicare patients compared to 9 percent for nonprofit operators, according to Medpac.

Read the full article at http://www.bloomberg.com/news/2012-12-31/for-profit-nursing-homes-lead-in-overcharging-while-care-suffers.html.

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