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As the future of the DeKalb County nursing home remains uncertain, researchers weigh in on private equity model

Mary Roman
Mary Roman

“Donna, we have to give this one a face,” said Mary Roman, 89, as she holds a ball of purple yarn with threading needles sticking out of it like antennas.

Donna Butz is an activities coordinator at the DeKalb County Rehab and Nursing Center.

“Absolutely,” Butz said, “we have googly eyes.”

The Martian-like figure that Roman makes will be a part of the center’s craft fair.

The activity gives Roman an outlet to be creative but also contribute to the center’s community. Activities like this are crucial for residents of shared living facilities like the one in DeKalb.

County boards in northern Illinois continue to debate the fate of their publicly-funded nursing homes as financial challenges creep up, with selling to the highest bidder placed as an option.

At the DeKalb County Board meeting on Wednesday two motions to remove affiliates of Saba Health as buyers in the sale contract failed. Avi Zuckerman of Illuminated HC initiated the proposal. In the state review board’s August meeting, members expressed concern about the record of care at facilities managed by Saba Health. In his remarks at the board meeting, Zuckerman said removing affiliates of Saba Health may increase the chances of winning approval from the state review board.

In a unanimous “no” vote, the DeKalb County Board voted against removing Saba Health as a party to the contract. The crowd broke into cheers, as the presumption is that the state review board will likely vote against granting a certificate of need, the last step in the transfer of the publicly funded nursing home to a private firm.

The Illinois Health Facilities and Services Review Board is scheduled to meet on Tuesday.

If the review board votes against the deal, the DeKalb County board will be drawn again to tackle the financial challenges faced by the nursing home. Several members told WNIJ that bringing forth a referendum that would seek the public’s support for an increase in a tax levy to support the home may be under consideration.

Quality of Life

University of Minnesota School of Public Health professor and social gerontologist Tetyana Shippee said a room for making crafts is one of the spaces that sometimes gets cut at for-profit nursing homes.

She said at for-profit facilities there may be very tiny rooms or no activities room at all, “because,” she said, “they're using all of their space for resident rooms.”

"They're squeezing out that space to make profit,” Shippee explained.

She said having activities and programming available for seniors is a matter of their quality of life.

She said, as a researcher, when gauging a person’s quality of life, she’s measuring a resident’s satisfaction with care they receive in a facility and their satisfaction with activities and programming.

Another way they measure quality of life is examining whether the resident has felt depressed, and their motivation level.

“In the last 30 days, how often they felt sat down [check this] and depressed, not being able to motivate to do anything,” she said. “If you live somewhere for years, and every day you're down and depressed, that speaks to poor quality of life.”

Residents' relationship with staff is also a determinant in quality of life.

Shippee said these factors aren’t taken into account by agencies overseeing nursing homes, and yet, low quality of life ultimately affects their physical well-being.

She said in contrast the Center for Medicare and Medicaid Services focuses on “quality of care,” which refers to medical aspects of care.

“So it's pressure ulcers, falls, urinary tract infections,” Shippee said, “and there are several specifics like catheter use -- how many people you've had to put on catheters?”

She said those are the measures that the CMS pays attention to.

Thus, she says, for-profit nursing homes are not incentivized to focus on residents' quality of life.

“You're going to look for ways to cut what they deem as non-essential in terms of reimbursement,” Shippee said. “Some clinical measures are essential, because they're directly tied to reimbursement. ‘Quality of life’ is not tied to reimbursement, unfortunately.”

She said, overall, for-profit nursing homes rank lower in care compared to non-profit nursing homes.

The Private Equity Business Model

University of Chicago Finance Professor Constantine Yannelis co-authored a research paper that examined how private equity ownership in nursing homes impacts quality of care.

His research came to a similar conclusion.

“On average, my study shows that after acquisitions, consumers pay more and more people die,” Yannelis said. “So, they're pretty bad outcomes on average.”

He says one way that private equity firms make a profit is by investing less in staff, and instead finding cheaper substitutes like medication.

“What's happening essentially, is that instead of having a skilled nurse, taking care of people, these nursing homes are giving more drugs to patients,” Yannelis said, “and that's against guidelines for the American Medical Association and other regulatory bodies.”

Yannelis said the private equity model works when applied to the acquisition of manufacturing and restaurants because there’s high levels of competition and product quality is transparent.

But he said in industries that are heavily government-subsidized or where product quality is harder to measure, private equity firms can make profits at the expense of patients.

“They can cut care, spend more on advertising, collect more money from the government and taxpayers, while providing a worse product for consumers,” Yannelis said, “And in this case, people actually die when there's worse quality of care at nursing homes.”

At a recent DeKalb County Board meeting, attendees pleaded for the county to keep its nursing home. They emphasized the importance of a continuance of quality of care for the residents.

Back at the rehab and nursing center, folks are gathered in the activity room of the facility.

“This used to be where we had our courtyard, Roman said, “and we had the water pond, and gazebo.”

She said residents play bingo and Jeopardy in this space and even play rounds of bowling with lightweight balls.

“Now, sometimes the ball decides it's going to go up, but it doesn't make it all the way down to the pins,” she said. “We try again, we never give up.”

A Chicago native, Maria earned a Master's Degree in Public Affairs Reporting from the University of Illinois Springfield . Maria is a 2022-2023 corps member for Report for America. RFA is a national service program that places journalists into local newsrooms to report on under-covered issues and communities. It is an initiative of The GroundTruth Project, a nonprofit journalism organization. Un residente nativo de Chicago, Maria se graduó de University of Illinois Springfield con una licenciatura superior en periodismo de gobierno.