VENCOR: Nursing Home Chain Files for Bankruptcy Protections
Louisville-based Vencor Inc., one of the nation's largest long term care providers, with facilities in 46 states, filed for Chapter 11 bankruptcy yesterday in a move observers say "signifies widespread weakness in the sector" (Appleby, USA Today, 9/14). Executives blame "dramatic changes" affecting the long term care industry, most notably substantial Medicare cuts resulting from the 1997 Balanced Budget Act. Vencor, like other competing national nursing home chains, also borrowed heavily to expand services several years ago when long term care was being pushed as an alternative to costly inpatient care -- a trend that has not panned out due to Medicare cuts and lower-than-anticipated demand (Freudenheim, New York Times, 9/14). But Vencor's reimbursement and borrowing difficulties have been compounded by Medicare fraud allegations that have left the company negotiating a proposed $90 million payback to Medicare and engaged in lawsuits with shareholders and regulators in Wisconsin and Florida. In all, Vencor's court filings list $1.4 billion in debts and $1.7 billion in assets. (AP/Worcester Telegram & Gazette, 9/14). At the time of the filing, the company had also secured $100 million in financing that is expected to allow for continued operations (New York Times, 9/14). It is unclear what impact the filing will have on Ventas Inc., a real estate holding company that Vencor spun off in 1998 (Patton/Jordan, Lexington Herald- Leader, 9/14).
More Trouble Ahead?
Despite government regulators' vow to increase monitoring efforts at Vencor's approximately 300 nursing homes and 56 long term care hospitals, patient advocacy groups expressed skepticism that the bankruptcy filing would not affect quality. Sarah Green Berger, executive director of the National Citizen's Coalition for Nursing Home Reform, said, "You don't buy health care from a company that is not in sound financial condition because they won't give quality care" (Worcester Telegram & Gazette, 9/14). The sentiment is reflective of an emerging consumer demand for high quality care for seniors. In fact, several eldercare advocacy groups are convening today to declare "a national 'State of Emergency' in the country's nursing homes," according to a release from the Coalition to Protect America's Elders. Following publication of a report detailing "epidemic levels of abuse, neglect and fraud in nursing facilities," the announcement will include recommendations to ensure high quality long term care and reduce elder abuse (CPAE release, 9/14). Meanwhile, in New Hampshire, state regulators prompted by Medicare cutbacks have already begun their own efforts to monitor nursing homes, including three Vencor facilities, for quality. Said state DHHS Associate Commissioner John Wallace, "Our concern is, regardless of what their financial problems might be, are they providing appropriate care?" (Paiste, Manchester Union Leader, 9/14).