A new study shows that some nursing homes are shunting the majority of their profits off of their own books and into less-visible corners of their owners’ pockets.
The practice makes the nursing homes look poorer than they really are, the study’s authors wrote, which seems to bolster the industry’s arguments to Congress that it can’t meet certain proposed quality standards or handle potential Medicare payment cuts. Artificially decreasing profit margins this way could also help shield their assets from any potential legal settlements.
Nursing homes are hiding their profits by funneling them to “related parties” — companies that share the same owner. The most common related parties are landlords or management companies. An owner hiding profits might charge their nursing home especially high rents or management service fees, and they would pocket all the money.