Assembly Panel Advances Chiaravalloti, Conaway & Downey Bill to Revise Licensure, Operational & Reporting Requirements for Long-Term Care Facilities

(TRENTON) – In New Jersey, 74 percent of long-term care facilities are under for-profit ownership. Many facilities owned by private equity and investment firms have suffered financial losses for years, often struggling to attract new residents and manage aging buildings in disrepair.

To address longstanding issues in long-term care facility ownership, the Assembly Aging and Senior Services Committee on Thursday approved legislation to ensure owners are able to operate long-term care facilities that meet safety standards, increase transparency in management and ensure the appropriate use of public funds, which pay for the majority of nursing home care.

To turn a profit, many private investors in the long-term care industry created new companies to hold real estate assets because the buildings were more valuable than the businesses. In some cases, investors would buy a long-term care facility from an operator only to lease back the building and charge the operators significant management and consulting fees, among other strategies. These practices have resulted in frequent changes in ownership in long-term care centers, which can have a negative impact on resident care.

The bill (A-4477), sponsored by Assembly Democrats Nicholas Chiaravalloti (D-Hudson), Herb Conaway, M.D. (D-Burlington) and Joann Downey (D-Monmouth), would codify current State regulations regarding the review of transfer of ownership applications, and implements recommendations made in Manatt Health’s review of New Jersey’s long-term care system. The proposals include:

• Updating the current receivership and management assistance law to ensure the New Jersey Department of Health has the authority to monitor the financial health of long-term care facilities and take action and;
• Strengthening the transfer for long-term care ownership disclosure requirements, including submitting a projection of losses and profits for the next three years, mandating the transfer of ownership application be made public for at least 30 days, and prohibiting the transfer of ownership within six months after an approved transfer.

The measures’ sponsors released the following joint statement:

“In New Jersey and across the nation, we have seen a scrambling of changing ownership at many for-profit long-term facilities. These troubling patterns call into question the intentions of for-profit facility owners, who may be putting the expectations of shareholders over the needs of elderly, disabled and vulnerable long-term care residents. No resident should ever receive poor care because of a facility’s financial mismanagement.

“By codifying strict licensure, operating and reporting requirements, we will ensure owners of long-term care facilities are held to the highest standards. These changes will hold owners accountable for keeping their finances in check and delivering high-quality care to all residents.”