BILL ANALYSIS
AB 1457
Page 1
Date of Hearing: May 5, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 1457 (Davis) - As introduced: February 27, 2009
SUBJECT : Long-term health care facilities: admission
contracts.
SUMMARY : Requires owners of five or more long-term care
facilities (LTCFs) nationwide to disclose the name of the
facility's owner and the name of the single entity responsible
for patient care and operation of the facility on each contract
for admission.
EXISTING LAW :
1)Prohibits any person, firm, partnership, association,
corporation, or political subdivision of the state to operate,
establish, manage, conduct, or maintain a health facility in
this state without first obtaining a license.
2)Requires an applicant for licensure to operate a health
facility to file an application with the Department of Public
Health (DPH) with verified evidence of financial resources
sufficient to operate the facility, names and addresses of the
owner of the building and grounds, and the name of the person
in charge of the facility.
3)Requires skilled nursing and intermediate care facilities to
disclose the name and business address of each general partner
if the applicant is a partnership; or, each director and
officer if the applicant is a corporation; and, each person
having a beneficial ownership interest of 5% or more if the
applicant is a corporation or partnership.
4)Requires any facility operated under a management contract to
disclose the names and address of any person having more than
5% ownership interest, and, if the management company is a
subsidiary of another company the facility must disclose the
name and address of the parent company.
5)Requires LTCFs to prominently and clearly display a notice
informing consumers that information regarding the facility is
available from the State Long-Term Care Ombudsman.
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6)Requires all LTCFs to use a standardized admission agreement
developed and adopted by DPH. Permits use of an abbreviated
admission agreement for patients whose length of stay is
anticipated to be less than fourteen days.
7)Requires a specified Patient's Bill of Rights be attached to
all LTCF contracts.
8)Requires the facility to communicate the content of the
contract to and obtain the signature of the person to be
admitted.
FISCAL EFFECT : None
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, this bill will
improve the quality of care in nursing homes by informing
nursing home residents of the ownership and management
structure of the LTCF which provides their care. The bill
will require identification of the responsible owners of each
facility, as well as parties providing management and
administrative services, on each contract agreement.
2)BACKGROUND . Recently the New York Times (Times) published a
series of articles analyzing trends at nursing homes purchased
by private investment groups. The review by the Times was
based on an analysis of data available from the federal
Centers for Medicare and Medicaid Services (CMS) and examined
more than 1,200 nursing homes and 14,000 other homes. The
analysis compared investor-owned homes against national
averages in a number of categories including complaints to
regulators, fines levied by state and federal authorities and
health and safety violations. The Times had previously
documented that in recent years large private equity firms
have purchased six of the nation's largest nursing home
chains, containing over 141,000 beds, or approximately 9% of
the nation's total number of nursing home beds. The Times
found that at the facilities purchased by private equity
firms, regulators say residents have fared more poorly than
occupants of other homes related to common problems like
depression, loss of mobility and loss of ability to dress or
bathe themselves according to data from the CMS. The typical
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nursing home acquired by a large investment company before
2006 scored worse than the national rates in twelve of
fourteen categories. Almost 60% had cut the number of
registered nurses, reduced the levels of daily care, and
experienced increases in fines and penalties. According to
the Times, the changes in ownership have helped fuel a rise in
quality of care deficiencies among investor owned chains,
including increases in physical restraints, pressure sores,
and easily prevented infections.
In November of 2007 the U.S. House of Representatives Ways and
Means Subcommittee on Health held hearings on the effect of
private equity investment on the quality of care in nursing
homes, which, according to the Times, were prompted by the
purchase of the nation's largest nursing home chain, HCR Manor
Care for $6.3 billion by the Carlyle Group, a private equity
firm. Testimony before the committee, again according to the
Times, reported that a number of the privately purchased
nursing home chains have instituted complex corporate
restructuring to avoid liability when residents suffered
neglect.
California requires extensive information regarding the
ownership and control of skilled nursing facilities and
intermediate care facilities through the licensure process.
The state requires nursing home licensees and applicants to
disclose the ownership structure (for profit corporation,
partnership, etc.) and contact information for all principals.
The state requires any subsidiary organization to identify
the parent company, and requires any management agreement to
identify its owners and individuals with more than a 5%
interest. The licensee is further required to identify the
owner of record of the real property and the individual in
charge of the facility. Failure to comply with these
requirements is grounds for revocation of the license and all
ownership information is required to be updated upon any
change.
3)SUPPORT . The California Advocates for Nursing Home Reform, in
support of this bill, note that publicly available ownership
information, such as that posted in nursing homes or online,
often fails to identify the person or entity that is fully
responsible for the nursing home's operation. This bill
requires disclosure of the ownership on a nursing home's
admission agreement, a document that all residents sign at
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admission. CANHR argues that nursing home residents deserve
to know who owns the facility they live in, and given the
recent trends in nursing home ownership, this disclosure is
increasingly important.
4)OPPOSE UNLESS AMENDED . The California Association of Health
Facilities (CAHF) state they are not opposed to the concept of
requiring facilities to include certain ownership information
on the admission contracts. However, CAHF believes that there
are technical problems with this bill's language as drafted
which make the proposal ambiguous and subject to
misinterpretation.
5)PREVIOUS AND RELATED LEGISLATION .
a) SB 1525 (Mello), Chapter 885, Statutes of 1989 requires
nursing home licensees and applicants to disclose complete
ownership information on the license application.
b) SB 1649 (Mello), Chapter 567, Statutes of 1996 requires
that any ownership changes be disclosed at the annual
license renewal and that all ownership information be made
available to the public.
6)QUESTIONS AND COMMENTS .
a) This bill applies to owners of five or more "long term
care facilities". The definition of "long-term care
facility" includes several different types of facilities
such as those for the developmentally disabled and
congregate living. The term "skilled nursing facility or
intermediate care facility" would be more consistent with
the author's intent.
b) This bill requires the owner of five or more facilities
"nationwide" to disclose ownership information.
Legislative Counsel advises that it is very difficult for
DPH to determine if an applicant or licensee owns or
operates facilities in other states.
REGISTERED SUPPORT / OPPOSITION :
Support
California Senior Legislature (sponsor)
AB 1457
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California Advocates for Nursing Home Reform
Oppose unless amended :
California Association of Health Facilities
Opposition
None on File.
Analysis Prepared by : John Miller / HEALTH / (916) 319-2097