Big Profits in Cutting Corners on Quality for Owners of Long-Term Care Hospitals

The handsome silver-haired doctor in the long white coat, standing at the nurse’s station in a photograph accompanying a New York Times story, is the national medical director for a chain of for-profit long-term care hospitals. But he puts in barely ten hours a week for Select Medical Corporation, which has no physicians in its top management. Or nurses for that matter.

The founders of the publicly traded company, a father and son team, have made about $200 million since they started Select in late 1996, according to the Times. They also own stock worth many millions more.

From barely a handful in the entire country in the 1980s, the number of long-term care hospitals now exceeds 400, with growth fueled by Medicare payment rules that penalize hospitals when patients languish too long with a particular condition but reward those same hospitals if they can transfer the patient to a long-term care facility. Many of the long-term care hospitals — and nearly all in the Select chain — actually consist of a wing or floor within another hospital, so patients can be transferred just a floor or two and for reimbursement purposes be tagged as located in a wholly different facility.

According to the Times report, many of the long-term care hospitals have no doctors in the building overnight as routine practice. They have heart monitors watched by untrained clerks, or not watched at all. Patients have died from lack of appropriate attention.

Here are government inspection reports obtained by the Times from a Freedom of Information request. Statistics show that bed for bed, Select hospitals have four times as many official findings of poor quality than the average hospital.

Medicare rules pay long-term care hospitals more if the patient is hospitalized at least 25 days, but then reimbursement declines drastically for patients who need longer treatment. It’s no surprise that the average length of stay at Select hovers at 25 days.

What is the appropriate role of profit making in American health care? Money can certainly drive improvements in technology and medications, but we have to question the role of profits in routine medical care.