Approximately 20% of Florida’s population is over the age of 65. With Florida being a haven for retirees, the need for nursing home beds is on the rise. However, the state does not currently allow free market forces to control whether new nursing homes are constructed. Instead, in order to open a new nursing home, or enlarge an existing nursing home, a lengthy “certificate of need” process documenting the need for additional beds must be completed. Furthermore, the State of Florida enacted a moratorium on any new nursing home beds (regardless of need) from 2001 through 2014. Finally, in 2014, a scant 3,750 new nursing home beds were allowed.
The Florida legislature is now considering repealing the entire certificate of need process allowing free market forces to determine how many nursing home beds are available. The nursing home industry, represented by the Florida Health Care Association, is lobbying hard against doing away with the certificate of need process. Why? Because increased competition will narrow profit margins.
The Centers for Medicare and Medicaid Services provides a five star rating system for nursing homes. Due to the lack of beds, the one star facilities typically have occupancy rates above 90%. When there are not available beds in the five star facilities, the facilities providing substandard care fill up. Our attorneys have brought claims for negligence causing death or injury against 8 of the 10 one star nursing homes in Jacksonville – Duval County. In comparison, we have never had to bring a claim against a single five star facility.
Newer, nicer nursing homes will take residents from existing older facilities – which is exactly how it should be. The industry’s position in this regard is not well disguised. The Florida Heath Care association says that repealing the certificate of need process would lead to an increase in empty beds in “long-established” facilities. Feel free to insert the words “old,” “out of date” or “no longer desirable to consumers” for “long-established.” What the industry is saying is that consumers will choose newer, nicer facilities over the old ones. That is a bad thing?
In what industry is a lack of competition good for consumers? Imagine if car manufacturers were not allowed to create new models and sell the new cars in whatever quantity consumers desired. Instead, the buyers could only choose from a limited number of outdated models. Prices would be high and quality stymied. While that sounds preposterous, that is the framework in which the nursing home industry in Florida operates.
Contrary to the nursing home industry’s claims, nursing homes are very profitable. They are not providing a community service on the brink of bankruptcy. Every time our lawyers investigate the financial status of for-profit nursing homes in the Jacksonville area, we find they operate with significant profits, much of it hidden from view in the form of “management fees” paid to a related company or outlandish rent paid to a related company that owns the nursing home building. By doing so, their balance sheet appears to reflect limited or no profit. Its no more complicated than a hustler’s shell game.
The sponsor of the House bill to do away with the certificate of need process, Alex Miller from Sarasota, details that the current process does not improve the quality of nursing home care, does not improve access and does not control costs.
The nursing home industry claims (apparently with a straight face) that adding more nursing homes will require them to compete for nurses resulting in decreased staffing. What this really means is that the nurses lose right alongside the consumers. Competition for nurses is good for nurses’ pay and working conditions – the same way it is very every other occupation. Further, who provides data to show that the number of licensed nurses is too few to staff additional nursing homes? No one. Even if somehow new nursing homes created a void of nurses (which it would not), why wouldn’t free market forces result in more people getting a nursing degree?
In short, the certificate of need process was never a good idea. Regulations designed to decrease competition have never been good for consumers and never will be. Continue reading