Meji Home
Many Michigan nursing homes struggle to provide adequate staffing and meet residents’ basic needs. While the nursing homes blame insufficient funding, there has been significant national attention to the lack of transparency and accountability in how nursing home corporations use billions of dollars of taxpayer funds. Researchers and regulators are particularly concerned about “related party transactions” in which nursing home corporations hide profits by making inflated payments for goods and services to other companies the nursing home corporation owns or controls. When these public funds are diverted to profits instead of necessary staffing and care, residents suffer.
The Michigan Nursing Home Transparency and Accountability Project, working in collaboration with national experts and the National Consumer Voice for Quality Long Term Care, seeks to examine how Michigan nursing homes allocate millions of dollars of public funds and whether those taxpayer dollars are used appropriately to meet residents’ critical needs. This novel project is Michigan Elder Justice Initiative’s newest initiative in its long-standing efforts to improve nursing home residents’ quality of care and quality of life.
The issue of lack of transparency and accountability in nursing home finances has recently been addressed by the federal government and a number of respected national researchers and organizations. For example:
- An April, 2024 working paper by researchers from UCLA and Lehigh University concluded that in 2019, 63% of nursing home profits were hidden by nursing homes that made inflated payments for goods and services to companies with common ownership.
- In November, 2023, the federal Centers for Medicare and Medicaid issued a final rule that required nursing homes enrolled in Medicare or Medicaid — the majority of this country’s nursing homes — to disclose additional information regarding their owners, operators, and management. Nursing homes will also be required to document any entities that exercise financial control over the facility.
- The federal Department of Health and Human Services Office of Inspector General is examining how nursing homes spend taxpayer funds including analyzing how nursing homes may use “related party transactions” to divert profits to businesses they own or are connected to. According to a September 1, 2023 White House Fact Sheet, “These “related-party transactions,” have not only obscured how taxpayer funds are being used by nursing homes, but also obscure whether profits and payouts to shareholders are prioritized above investments in resident safety and fair wages for workers.”
- A March, 2023 report by the National Consumer Voice for Quality Long Term Care, Where Do the Billions of Dollars Go?: A Look at Nursing Home Related Party Transactions concluded that nursing homes funnel billions of dollars through related party transactions with little scrutiny from the federal government.
- In April, 2022, the National Academies of Sciences, Engineering and Medicine (NASEM) issued The National Imperative to Improve Nursing Home Quality: Honoring Our Commitment to Residents, Families and Staff. It concluded that facilities use “related-party transactions or unrelated business entities to hide profits.”
Despite the growing body of national evidence that residents are endangered if nursing home corporations hide profits and make excessive payments to entities the corporation owns or controls, no in-depth study of nursing homes’ use of public funds has been conducted in Michigan. The Michigan Elder Justice Initiative (MEJI) is delighted to have been chosen as one of two state advocacy organizations to explore this issue in a 2 year project with the National Consumer Voice for Quality Long Term Care. MEJI is also grateful to Metro Health Foundation for support of this important work.