State Oversight of Nursing Homes Draws Criticism

Two government agencies — one federal and one state — are accusing the California agency that’s supposed to be keeping tabs on the state’s nursing homes of falling asleep on the job.

Last month, responding to scathing testimony and a critical report from the Legislative Analyst’s Office, California legislators ordered an audit of the Licensing and Certification Division of the Department of Health Services. In January, a congressional report by the U.S. Government Accountability Office cited California as one of several states in which health officials underreport deficiencies and harm to residents at nursing homes.

Last fall, a consumer advocacy group filed suit against the Licensing and Certification Division alleging the program was not following state laws which call for timely investigation of nursing home complaints.

Criticism and investigations are not new for the agency. In 1994, a similar state audit was ordered. But this year’s allegations, more numerous and coming from several directions, appear more serious.

“The Licensing and Certification Division has lost sight of its mission and the people it is supposed to protect. It is failing its most basic duty to protect nursing home residents from abuse and neglect,” Patricia McGinnis — executive director of California Advocates for Nursing Home Reform, a consumer watchdog organization that monitors LCD — said.

Asked for a response to the state investigation, Brenda Klutz, director of the LCD, referred inquiries to the Department of Health Services public relations office, which issued this written statement: “The Department of Health Services regularly works with the Office of State Audits in regards to many of our programs. We’ll be happy to participate and provide any necessary information to them as they conduct their audit.”

A DHS spokesperson said neither Klutz nor other agency officials would discuss the investigation or respond to any allegations.

State Audit

This year’s audit, ordered by the Joint Legislative Audit Committee, will be conducted by the Office of the State Auditor and might take up to a year to complete. The investigation was ordered soon after a report by the Legislative Analyst’s Office showed that staff reductions have delayed follow-up on complaints, cut the number of citations issued, caused a drop in the amount of penalties imposed and scheduled inspections of nursing homes so predictably that facilities can prepare for them, effectively undermining their value.

The state report on the Licensing and Certification Division is part of LAO’s analysis of California’s 2006-2007 budget.

Federal Investigation

The federal report by the Government Accountability Office showed that from July 2003 to January 2005, California inspectors found serious deficiencies at 6% of the state’s nursing homes, down from a high of 29% in 1999. Other states, the report showed, often find deficiencies in as many as half their nursing homes. Connecticut found serious deficiencies at 54% of its nursing homes.

DHS officials, who did respond to the federal report, said LCD received conflicting instructions from the federal government about which deficiencies should be reported.

“We firmly believe that part of the decline in the scope and severity of deficiencies being identified is because we detect so many more things at an earlier stage and require nursing homes to correct them before they get to the point where they harm residents,” Klutz told reporters in January.

California Advocates for Nursing Home Reform disagrees. In detailed testimony delivered by Michael Connors before the Joint Legislative Audit Committee, CANHR said nursing home residents are endangered by what it says is LCD’s neglect of its duties. CANHR said as many as 60% of the complaints filed by consumers are not investigated.

Connors said Licensing and Certification is “failing its most basic responsibility to protect nursing home residents from abuse and neglect and is ignoring numerous California nursing home reform laws. Nursing home residents are being denied many hard-fought rights and protections enacted by California legislators over the past 20 years.”


Under contract with CMS, states conduct annual nursing home inspections to assess compliance with federal quality and safety requirements. States also are charged with investigating complaints. Because there are federal as well as state regulations and funding sources, how rules are enforced varies from state to state and from administration to administration.

McGinnis said there was a noticeable change in attitude and priorities when the administration of Gov. Arnold Schwarzenegger (R) took over in Sacramento.

“Licensing and Certification is supposed to be looking out for the consumer but in the past few years we’ve seen a change in who that office is serving,” McGinnis said. “Now they refer to providers as clients — meaning they are serving the nursing home industry, rather than the residents. That’s not the way it’s supposed to work,” McGinnis said. “I’ve been involved with nursing homes for 30 years, and I’ve never seen it this bad.”

In October, CANHR sued DHS seeking enforcement of state laws requiring timely investigation of nursing home complaints. The lawsuit charges DHS with pervasive failure to investigate complaints within the mandatory 10-day response time as required by California law. The case is pending in San Francisco Superior Court.

Looking Ahead

Meanwhile, in the background, a major shift is taking place. Occupancy rates in California’s nursing homes are dropping while the number of residential care facilities and the number of people living in them are rising.

There are close to 7,000 residential care facilities in California now, and the number is growing by about 100 a month, according to some estimates.

Nursing homes are considered health care facilities in California and as such are licensed and overseen by DHS. Assisted living and residential care homes are not considered health care providers.

“But those regulations are getting stretched now to the point where something’s got to give,” McGinnis said.

The number of U.S. residents age 65 and older is expected to grow by 50% over the next 20 years, and a disproportionate number of them will live in California. Estimates predict about 2.6 million more seniors in California within the next two decades, a population shift that will bring the state’s retiree population to about 6.3 million.

If these retirees need health care — and everybody knows seniors need more health care than any other age group — will the state be up to the task?

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