MORE

Dying for Dollars

Frank and Norma Dougherty lived a modest American dream. It should not have ended in a nightmare.

Frank served as a lieutenant colonel in the Army during World War II, then worked for years as a mechanical engineer at the Denver Federal Center. Norma was a homemaker who devoted herself to raising the couple's four children, keeping their Lakewood home comfortable, and doing volunteer work in the community with the Red Cross and PTA.

In the 1970s the couple retired and moved to a home in the mountains above Silver Plume. Frank joined the Masons, and Norma sang with the church choir. But their golden years were about to turn bleak.

Both Frank and Norma started having health problems. After Norma was diagnosed with Alzheimer's disease, the Doughertys moved to Lakewood to be closer to their children. Frank also began to have trouble remembering things, like paying bills. One day he woke up in excruciating pain. His daughter Catherine drove him to Lutheran Hospital, where he was diagnosed with blood clots in his arteries and legs.

The Doughertys' doctor told Catherine that her parents could no longer live independently. For a while, Frank and Norma had in-home caregivers, but as their health worsened, the family made the difficult decision to move them into a nursing facility. In 1993 they chose Cedars Health Care Center in Lakewood, which had just set up a special "sheltered freedom unit" for patients with Alzheimer's or dementia.

"Cedars said they had a secured unit that was clean and they'd have quality care and quality of life," recalls Catherine. "They were supposed to have social activities on a regular basis, keep them clean and do their laundry."

Two months after her parents moved in, Catherine was alarmed by what she found during a visit. "Dad was sitting on the floor with a big gash on his head," she says. "He was just sitting there. Apparently no one had checked on him or noticed. My father didn't remember what had happened."

She became increasingly concerned as the months rolled by. Her parents' belongings, including her father's shaver and her mother's jewelry, disappeared. Even underwear and socks seemed to vanish. And Catherine was convinced the nursing-home staff was neglecting basic hygiene.

"We'd walk in, and the mattress would be slipped off the box springs, there would be no sheets, and they'd be sleeping on plastic," she says. "The toilet was stopped up and wouldn't flush. The place was filthy."

Norma and Frank were placed on psychotropic drugs and were so doped up they couldn't talk to their own children. They were rarely bathed. One day Catherine discovered an uncut toenail on her father that had infected his foot and apparently hadn't been noticed by the Cedars staff.

Her complaints to the nursing-home management were ignored.
When she visited her parents on Christmas Day, her father was upset and so exhausted he couldn't walk. Catherine believes the staff had forcibly held him down so that he could be dressed and shaved. She was even more disturbed after a Father's Day visit. "When I opened the door, the smell of urine was so strong I could hardly breathe," she says. "My father was lying in his bed in a pool of his own urine. He had bruises and skin tears all over his arms."

Frank Dougherty started getting severe bedsores. He lost forty pounds at Cedars. "It got to the point that his body just gave out," Catherine says.

The family had been looking frantically for another facility that would take both Frank and Norma. In 1996 Catherine was able to move her mother to the Evergreen Terrace Care Center in Lakewood--but there was no bed available for a male resident.

Frank Dougherty died in the spring of 1996, before his family was able to move him to another home.

After leaving Cedars, Norma Dougherty made a remarkable recovery. "They weaned her off the drugs so she was functioning again," Catherine says. Norma seemed much less anxious and stopped the nervous twitching and compulsive hand-wringing her family had observed when they saw her at Cedars. She began to enjoy visits with her family.

Today Norma lives in a small home that specializes in caring for Alzheimer's patients. She enjoys sitting on the patio near the flower garden and has even started singing again, favorite songs like "You Are My Sunshine" and "Take Me Out to the Ballgame."

Her mother is taking joy in life, Catherine says. He father didn't get that last chance.

"It was worse than a nightmare," says Catherine Dougherty. "We trusted those people, but we found out in a heartbreaking way how inhumane their treatment is.

"It's a loss of dignity for the people who made our lives. They deserve more, at least a little love and compassion. They deserve that."

Today the Dougherty family is part of a class-action lawsuit against Cedars, a case that raises disturbing questions about the nursing-home industry in Colorado and the legal safeguards that are supposed to protect some of the state's most vulnerable residents.

Records compiled by the federal government show that the Colorado Department of Public Health and Environment has one of the worst records in the western United States for enforcing the laws that regulate nursing homes.

Nursing-home horror stories were supposed to be part of a shameful history that America had left behind. The fact that they continue to be told reflects the political power of the nursing-home industry, the timidity of state and federal regulators, and a bottom-line mentality on the part of nursing-home operators that has thrilled Wall Street but has led to tragic endings on Main Street.

Documents detailing the lawsuit against Cedars take up several boxes in Denver District Court. While the motions and counter-motions are often written in dry legalese, the stories that emerge are achingly human.

The suit seeks unspecified compensatory and punitive damages on behalf of people who lived at Cedars between 1993 and 1998. Earlier this year the case was recognized as a class-action suit by Denver District Judge Morris Hoffman, which means the plaintiffs can ask for damages for every resident, not just the four who've formally joined the lawsuit. A jury trial is scheduled for March.

Cedars charges $108 per day for care and, like most nursing homes, derives most of its revenues from Medicaid and other federal programs. But the plaintiffs say they didn't get much for their money.

The suit charges that Cedars violated government rules that mandate minimum standards for nursing homes receiving public funds; broke the care contracts Cedars entered into with each resident; engaged in consumer fraud by promising a level of care that was not delivered; and intentionally violated the residents' contract rights.

Cedars' patient care--or lack thereof--seemed in stark contrast to the brochure the facility handed prospective residents. "Our 24 hour care emphasizes the strengths of the individual along with friendly care givers and residents who offer constant support and socialization," boasts the brochure cited in the suit. "Our staff have mastered the sensitive art of caring for the intimate needs of the elderly while supporting the wishes and values of resident families. Regardless of their physical condition, residents at Cedars have a wide range of opportunities to enjoy daily life as well as special occasions."

The quality of that care will be a major issue in the upcoming trial. The suit claims Cedars failed to protect its residents from falling--a serious health issue for the fragile elderly. With 850 falls over one nineteen-month period, the facility has a fall rate that far exceeds that at most nursing homes, the plaintiffs say. (Cedars typically has between 140 and 160 residents.) Federal law requires every nursing-home resident be given a plan of medical care, but the plaintiffs allege that Cedars failed to provide such plans for several residents most in danger of falling.

And the Cedars brochure didn't mention that many staffers had extensive criminal rap sheets. At Cedars, as at most nursing homes, the aides provide the vast majority of personal care for residents, including bathing, feeding, grooming, and helping them dress and walk. But Cedars paid these aides just over $6 an hour, and that limited the pool of people willing to take the job.

According to arrest records, Cedars hired nursing aides who had been arrested for crimes as serious as felony assault, domestic violence, cruelty to a child resulting in death, kidnapping, carrying a concealed weapon, sexual assault and aggravated robbery. The class-action suit claims that 42 percent of the aides hired in 1995 and 1996 had criminal arrest records.

Cedars director Terry Sharron told state investigators that the home had done background checks on all of its aides, as it was required to do on all nursing aides under a 1995 state law, and found none to have felony convictions. After reviewing Sharron's records, the state board that licenses nursing-home administrators ruled that Cedars had not violated any statutes.

State law also requires nursing aides to be certified--meaning they've completed two weeks of training--or to be in the process of obtaining certification when they're hired. The suit claims that Cedars falsely reported that many of its aides were certified.

Such reckless hiring practices were the inevitable result of a push for higher profits, the suit charges.

Records filed with the state show that the average nursing aide's pay at Cedars declined from $7.28 per hour in 1995 to $6.36 per hour in 1996. Those same records reveal that Cedars upped its annual operating profits to $1.7 million in 1996. Sharron received a $25,000 bonus for his cost-cutting efforts.

Cedars attorneys insist that the nursing home has followed the law and deny that it cut back on care to boost profits. They are aggressively fighting the class-action suit.

"The claims and allegations are not well-founded," says Jerome Reinan, attorney for Cedars. "We feel Cedars has done a good job taking care of the residents. It is a clean and safe facility. We've consistently been certified by the state."

The Cedars corporate personnel guidelines make it clear that it is illegal to refuse to hire someone based purely on a record of arrests without convictions, and Reinan says Cedars did nothing wrong in its hiring of nursing aides with records. "All the hiring that has taken place at Cedars has been in compliance with state and federal regulations," he says. (The 1995 law doesn't require that nursing homes do criminal checks of aides who work for temporary agencies, a major source of employees in most facilities.)

At issue in the suit is not just whom Cedars hired, but how many staffers were on duty at any given time.

According to Catherine Dougherty, Cedars often had only one nurse and one aide to care for 32 residents.

The only time Cedars was adequately staffed, the suit claims, was when it was about to be inspected by the state health department.

Much of the nursing home's defense is expected to focus on those inspections. State health department survey records show that Cedars maintained adequate standards of care and was not neglecting its residents, Reinan says. "The facility has undergone a number of surveys by the health department," he adds. "Those surveys don't support their allegations."

A review of health department records shows the department received more than two dozen separate allegations of substandard care at Cedars in 1995. These complaints included charges that the facility was understaffed, that feces was smeared on the walls and that a hospital physician told the family of one Cedars resident that the woman had a "highly unusual" fracture and two bruises that might suggest abuse.

Most of the complaints were investigated several weeks after being filed. Health department surveyors found two of the allegations to be valid, five to be partially valid, a dozen not valid, and half a dozen "unable to verify."

The health department's August 1995 survey of Cedars cited the home for six deficiencies, including a lack of housekeeping ("fecal matter was observed around the bathroom walls"); a lack of adequate medical-care plans for two residents out of 25 sampled; inadequate grooming and personal hygiene for several residents ("I don't think they ever brush her teeth"); a failure to remove accident hazards, including hot water at scalding temperatures in residents' rooms; uncontrolled infections that affected five of the 25 residents sampled and may have been spread through a lack of hand-washing by both residents and staff; and a broken ventilation system that led to a pervasive odor of urine and feces.

Just because the state certifies a nursing home, the suit charges, doesn't mean the facility is really following the law.

Nor, for that matter, does it mean the state is following the law.
"Cedars somehow knew when there would be a health department survey," former nursing aide Betty Keller said in an affidavit. "As a result, it would add temporary staff to make it look like it was properly staffed when it really was not."

Before state officials arrived for their visits, Keller said, Cedars managers would instruct the staff not to tell the inspectors about problems at Cedars.

According to Keller, the nursing home was so short-staffed at times that aides did not get the chance to bathe residents or take them to the bathroom. "Aides did not have time to treat residents gently when caring for them," Keller said. "I heard residents screaming and yelling when aides dressed them. Many aides at Cedars were unqualified to provide resident care. I saw aides come to work drunk. These aides were not disciplined. One aide who came to work drunk worked his entire shift."

Keller also reported that there was evidence of residents being abused by staff. "I saw large numbers of bruises on residents, even bedridden residents," she said in her deposition. "I saw one female resident sobbing. When I went to see what was wrong, I saw a large handprint on her shoulder."

In addition to Keller, a nurse and three other Cedars nursing aides have made depositions in the case that are critical of the care at the facility.

One of them is Nora Phillips. After working as a nursing aide at Cedars for more than a year, she was so upset by the nursing home's treatment of one particular resident, Della Salas, that she resigned.

Della Salas spent her life caring for other people, says her daughter, Christine Bobian.

After she was abandoned by her husband, Salas single-handedly raised six children in a small house in Walsenburg. When one of her daughters died, she brought her five grandkids into that same house, raising another set of children in the small southern Colorado town.

Over the years, Salas's children and grandchildren left Walsenburg and headed up I-25 for the jobs and opportunities available in Denver. With most of her family in the city, Salas's children eventually decided to bring their mother here and put her up in a small apartment. After she fell and broke her arm, the family put her in an assisted-living center.

As Salas aged, she became more frail, and one day she broke her hip. The family decided she needed the full-time care of a nursing home.

"We went to several homes and decided Cedars would be the best one," says Bobian. "They promised us all kinds of things. They said they'd keep her clean and give her three meals a day. We thought they'd take good care of her."

Bobian and her siblings visited their mother frequently, and they became alarmed by the lack of care they saw at Cedars.

Salas was dehydrated and wasn't always given food that she could eat. Bobian says she often found just two nursing aides in charge of forty residents. "How could two people feed, change and bathe all those people?" she asks. "The aides would tell me, 'I'm in charge of too many people and can't do anything.'

"When we'd go visit her, she'd be soaking in urine and feces," Bobian says of her mother. "The filth was just terrible. I'd try and clean it up myself. We'd go to the linen closet and there would be nothing there. Then we'd go to the nursing station, and that closet would also be empty."

Salas was falling frequently; Bobian says it was because the staff didn't know how to properly fix the belt on her walker. "The aides didn't care," she adds. "She had gashes in her forehead. Her eyes were black and blue from the falls."

Eventually Salas was confined to a wheelchair. Bobian believes her mother lost the ability to walk because of the frequent falls.

Salas's family was so concerned about her care that they arranged for a family member to visit her at least once a day.

"I was getting home exhausted from having to stay there and make sure she was getting the care she was supposed to," says Bobian. "If I didn't go, I made sure my brother went. We felt like someone had to go twice a day to check on her."

The family considered moving Salas to another home, but Bobian felt her mother was so frail she might not survive the move. Instead, she and her family made their criticisms known to the staff. They soon developed a reputation as troublemakers.

"They hated to see us coming," says Bobian. "I was trying to get these people to take care of my mother the way they promised they would."

Della Salas had always been a lively, independent woman, but after living at Cedars, she stopped communicating with others, even her own family. "All of a sudden, she just stopped speaking to anybody," says Bobian. "She wouldn't say anything. She'd just stare."

Bobian remembers her mother's final years as a constant struggle for simple dignity. "She took care of all of us kids, and it was my job to take care of her," she says, her eyes tearing.

Salas lived at Cedars from August1995 until her death earlier this year at age 86.

The case of Salas, whose family was the first to sign on to the suit, will be a key part of the litigation. She received substandard care, according to Nora Phillips--and that was with a loving family watching out for her.

"As badly as Ms. Salas was treated," Phillips said in her statement to the court, "I believe that others have been treated even worse because they have no family or relatives to check up on their care."

A groundbreaking federal law passed in 1987 mandates minimum standards of care in every nursing home receiving public funds and requires each state to enforce those standards through regular inspections by trained surveyors. Every nursing home must be examined at least once every fifteen months. Specific complaints about care from the public are supposed to be investigated promptly, and any report that a resident's health or safety is in jeopardy must be investigated within 48 hours.

But even the best law isn't much use if it isn't enforced. And that's exactly the problem in Colorado, say a number of people who work both inside and outside of the state health department.

Under federal guidelines, when a state health department surveyor finds a nursing home has violated care standards, he writes up a "deficiency." These findings can involve a wide range of failings, from filthy living conditions to inadequate medical care. Each deficiency is rated for severity, and the nursing home receives a thirty-day grace period in which to correct the deficiency. If the deficiency is not corrected, the health department can assess substantial fines.

But in Colorado, regulators rarely assess fines. Last year state health department surveyors cited Colorado nursing homes for 687 deficiencies. But only one nursing home, the Sable Care Center in Aurora, was fined, and it paid just $4,680. All told, between July 1995 and December 1997, the department fined just four Colorado nursing homes.

"I'll never forget when a former police detective told me the health department needs more evidence to fine someone for a deficiency than he needed to charge someone with murder," says one longtime state employee who works with nursing homes.

Colorado's enforcement effort against nursing-home abuses is the most lax in the region, according to data compiled by the federal Health Care Financing Administration (HCFA). Colorado substantiated only 10 percent of the complaints it received against nursing homes from July 1995 to August 1998. Meanwhile, neighbors Wyoming and Montana substantiated half of all the complaints they received. Nationally, nearly 30 percent of the complaints were verified.

While Colorado received far more complaints against its nursing homes than any other state in the region--logging 1,162 complaints during the three-year period--the health department substantiated only 124 of those complaints. Utah, a state with barely half the population of Colorado, substantiated 127 complaints out of 454 investigated during the same period.

Colorado health department surveyors also found fewer deficiencies in their nursing-home surveys than their counterparts in neighboring states. While Colorado reported 3.2 deficiencies per survey on average, Wyoming found 5.5 and Utah 4.6. The national average was 5.6 deficiencies per survey.

Paul Daraghy, director of the state health department's health-facilities division, says HCFA's figures are misleading, since every state counts complaints in a different way. "I know what we do, but I have no idea what the other states do," he says. "Whether or not they substantiate 10 percent or 50 percent doesn't bother me. We do it in what we think is the appropriate way."

Daraghy, whose division has 34 surveyors for 220 nursing homes, also says he's unconcerned with Colorado's comparatively low rate of deficiencies per nursing-home survey. "What is the purpose of regulation--to count deficiencies or get people in compliance?" he asks. "Enforcement is a tool, not an end. It's a tool you use along with education."

The Colorado health department's philosophy is to work with the nursing homes on correcting substandard care and avoid penalizing them except as a last resort. Daraghy insists that this is the best approach and that fining more nursing homes would be counterproductive.

"Take Prohibition in the U.S.," he says. "Without educating the public that this was a worthy goal, what kind of compliance did they have? What kind of compliance do we have with speed limits?

"There are some people who want us to use fines extensively," he says. "It's a meter-maid mentality. The problem with that is that if you fine them for every violation, it becomes a cost of doing business, and they pass it on to the consumer."

And the patient could wind up paying the price.
Because of the pressure from insurers to limit hospital stays, nursing homes now have sicker populations than they did in the past. But staffing has not increased at most homes, and the majority of nursing aides continue to be paid poverty-level wages with no benefits.

At the same time, the Colorado nursing-home industry has become dominated by national chains that can pressure local homes to cut costs. While nursing-home operators slurp up huge amounts of public money--last year the government spent more than $335 million to pay for care in Colorado nursing homes--the level of care provided can be appallingly substandard, say critics of the industry.

Many residents of nursing homes are elderly people who may suffer from Alzheimer's or dementia and so are unable to articulate the problems. But other residents are disabled people who suffer from degenerative diseases such as multiple sclerosis--and they've become some of the health department's greatest critics.

"I've been told by someone who worked at a nursing home that they knew the health department would always arrive on a Tuesday and they would arrive by ten o'clock," says Tim Fox, an activist with the Colorado Cross Disability Coalition. "They made sure they had additional staff on Tuesdays and everything was looking nice."

Health department surveyors often rely on the nursing home's own records in making evaluations. Fox says that makes it easy for disreputable operators to cover their tracks by inflating the number of staff on duty in employee logs.

"It's interesting to see how nursing homes fool these surveyors," he adds. "The health department will look at the schedule to determine staffing when what they should look at is time cards. If you're a person motivated by greed, there are ways of getting around the system."

Daraghy, however, says he isn't surprised that nursing homes can sometimes predict when his division's surveyors will walk through the doors. And he claims the federal requirement that surveys be done at least every fifteen months is partly to blame.

"If you've gone twelve months without a survey, you know one is expected," he says. Nursing homes have also learned that a large number of complaints can trigger a survey, he adds.

But critics also charge that the health department fails to track persistent problems at specific homes, even though the same complaints keep coming up. "No one is overseeing any patterns that exist or any hiring practices," says Carolyn Reed, a Denver woman who has been trying to get the state legislature to approve a law that would regulate the use of physical and chemical restraints on nursing-home residents.

And there's another problem hampering efforts to uncover nursing-home abuses: Residents fear retribution if they complain about conditions. "There's a real fear of retaliation among the residents," says Jan Meyers, a coordinator for the office of the state ombudsman for long-term care. "They feel they won't get the same level of care if they complain."

The Colorado ombudsman's office employs forty people to work with sixty volunteers around the state; they play an important role in monitoring nursing homes. The ombudsmen visit every nursing home at least once a month, and they can arrange meetings between nursing-home administrators and families to discuss problems in care. However, the ombudsmen have no authority to penalize homes for substandard care. That's the health department's job.

Daraghy says critics of his work are off the mark. Colorado nursing homes are better than those in many other states, he insists, and he believes his division can take part of the credit. "Our staff is doing a very good job," he says. "I don't necessarily have any criticism of the other states; we just do it the right way."

The state health department has other defenders, especially within the industry it regulates.

"I think they do a good job," says Arlene Miles, director of the Colorado Health Care Association, which represents nursing homes. "I believe they act aggressively if they find problems they believe are threatening to the patient. They also sit down and work collaboratively with nursing homes in trying to find ways to improve the quality of care."

While some members of her group think the health department is too pushy, Miles says that generally the department works well with the state's nursing homes.

The class-action suit against Cedars is part of a wave of recent litigation against the nursing-home industry. Across the country, attorneys are suing nursing homes for failing to provide adequate care and for gross violations of their residents' rights. Many of these lawsuits are successful. A Texas jury recently handed down a $54 million judgment against a nursing-home operator in that state.

"There's an increasing awareness among attorneys nationally and locally that older people have the right to have endings that are not disgraceful," says John Holland, a Denver attorney who has been involved in several nursing-home lawsuits. "People are beginning to understand that older people do matter. Just because they're old and sick doesn't mean their lives should end in horrifying ways. Juries are agreeing with that."

In 1996, Holland sued the Julia Temple Center in Englewood on behalf of 200 residents and former residents, alleging substandard care. That case was settled out of court for an undisclosed sum. He says the failure of government agencies to enforce the standards mandated by Congress has left little alternative but litigation.

"The only way to increase the quality of nursing homes is if we make it so expensive for them with these judgments, they feel they have to staff the nursing homes adequately," says Holland. "We have to send them a message."

But Miles says there's another message that needs to get out. "One of our toughest challenges is letting the public know how good most nursing homes are," she says. "If people could see the people who work in nursing homes and the things they do, they'd thank their lucky stars."

Criticism of nursing homes is hurting the industry, she adds. Stories about abuses make it harder for nursing homes to find good employees and mislead the public into thinking all facilities are bad.

However, stories of abuse so alarmed a congressional committee this past summer that there is now a major push under way for more rigorous enforcement of the laws regulating nursing homes.

The hearings were conducted by the U.S. Senate's Special Committee on Aging and focused on standards in nursing homes in California--chosen because it's the most populated state and because its enforcement effort is considered typical. After conducting an in-depth survey, the General Accounting Office concluded that nearly a third of California's nursing homes had been cited for "serious or potentially life-threatening care problems" by that state's health department but had been allowed to stay in business and avoid fines.

The committee heard chilling testimony about elderly residents going without food, water and medical care and dying from malnutrition and infections. Witnesses said nursing homes routinely faked records to hide neglect of residents.

"To imagine that these things are going on today...is simply intolerable," said Senator Charles Grassley of Iowa, chairman of the committee.

The GAO was sharply critical of both state authorities and the federal Health Care Financing Administration. Under the law, the states are charged with monitoring their nursing homes under the supervision of HCFA, the agency that sets the basic standards of enforcement for every nursing home participating in Medicaid and Medicare. Whereas states are free to enact their own regulations, the federal standards are supposed to provide a baseline that protects every nursing home resident from abuse and neglect.

Grassley's criticism embarrassed the Clinton administration, which recently announced that HCFA would be clamping down and demanding stricter enforcement. Grassley's comments also marked a change of heart on the part of congressional Republicans, who just three years ago were trying to gut the nursing-home reform law and allow nursing homes to regulate themselves.

HCFA representatives have been meeting with Daraghy to discuss Colorado's performance on nursing-home regulation. In the past, Daraghy says, HCFA has tried to pass the buck and blame departments like his for the agency's own lack of oversight. In fact, he adds, HCFA actively discouraged the states from assessing fines against nursing homes.

"They're under pressure from Congress and the president, and they're trying to blame it on the states," says Daraghy. "I can only address what we do here in Colorado. I feel pretty damn good about it."

The nursing-home industry's critics and defenders do agree on one thing: The most important day-to-day care in every facility is provided by nursing aides. That's a job as demanding as it is financially unrewarding.

And with unemployment in Colorado at a record low, virtually every nursing home in the state is scrambling to find aides.

"There's a shortage of people willing to go to work in nursing homes," says Miles. "I'm not sure you can ever pay a nurse's aide what they're worth--they work harder than anybody."

A recent study by the Service Employees International Union determined that nursing-home workers have higher accident rates than construction workers and miners. The study also found that 18 percent of all nursing-home workers are injured or become ill on the job each year, more than twice the rate of other private-sector employees. Many of those injuries are back-related, caused by lifting patients.

"Working at a nursing home is harder on your back and less glamorous than working at McDonald's for $6 or $7 an hour," says Jan Zubieni, acting program administrator for the state board of nursing. "Most of the people who become CNAs [certified nurse's aides] are good people who want to help, but it's a tough job. The better our economy gets, the bigger a shortage there is."

Good nursing homes have aides who genuinely care about the elderly and often stay at the same facility for years. The best homes are the ones that concentrate on providing quality staff rather than fancy decor.

"It's not about how pretty the place is," says Pat Tunnell, a longtime state ombudsman for the elderly. "It's about having staff that are responsive and respond to call lights when they go off. A grand piano can't take care of anybody."

Whereas Colorado requires hair-cutters to receive 1,450 hours of training before they can get a cosmetology license, certified nurse's aides receive just 75 hours of training. And in Colorado, the only requirement for nursing-home staffing is that every home must provide two hours of nursing care daily to each resident.

"If you think of a real frail person, two hours isn't that much," says Tunnell, who notes that many residents have to be fed, dressed, bathed and taken to the bathroom by aides.

Many of those who monitor nursing homes think the state should mandate a minimum level of staffing in every nursing home. While Colorado requires preschools to have one teacher for every ten children, facilities for the elderly do not have a similar requirement.

"There's no staffing ratio in Colorado," says Meyers of the ombudsman's office. "I think we should have that."

Before the ratio can change, though, nursing homes need to find more aides. To do that, they need to pay more money. But while the industry seems to have plenty of funds to lobby for more money, pay increases for aides rank low on the priority list.

The Colorado Health Care Association counts more than 90 percent of Colorado's 220 licensed nursing homes as members. About 70 percent of those homes are for-profit, and the majority are owned by national nursing-home chains.

The association has a stellar crew of lobbyists at the statehouse. Arlene Miles lobbies the legislature frequently, and she's assisted by former state representative Ruben Valdez and Karen Reinertson, who works for Colorado's leading lobbying firm of Hays Hays & Wilson. The nursing-home lobby has also employed Wally Stealey, another familiar figure at the Capitol.

"We lobby on most issues that affect long-term care: reimbursement, staffing and quality of care," says Miles.

Behind that lobbying clout are substantial political donations that make nursing homes some of the most active contributors in the state. In the last election, CHCA gave money to dozens of lawmakers, including $300 to House Majority Leader Norma Anderson and $300 to House Speaker Chuck Berry. Campaign funds for both parties also received industry contributions.

The state lobbying activities mirror those at the federal level. The industry employs a brigade of lobbyists on Capitol Hill, and nursing-home political action committees are major campaign contributors nationally.

"It's for the same purpose that anybody else has to make contributions," says Miles. "It's part of the democratic process to play a role."

Since half of Medicaid is funded by the federal government and half by the state, the democratic process also includes struggles over funding as part of the state's annual budget process.

"There was a bill up last year on Medicaid managed care, and the nursing homes had five lobbyists," says state senator Sally Hopper of Golden, who chairs the Senate's Committee on Health, Environment, Welfare and Institutions. "They're concerned with getting what they consider to be their fair share of Medicaid reimbursement."

Hopper says she worries that Colorado has been cutting Medicaid funding for home health-care services, which allow some people to receive care in their own homes rather than move into a nursing home. She says the nursing-home industry may have influenced legislators to favor nursing homes over home health-care providers.

"I fear that because of the strong lobby, they're catching the ear of some legislators more than other people are," adds Hopper.

Colorado's nursing-home business is highly competitive, with 15 percent of the beds in facilities unoccupied. With the government cutting back on Medicare and Medicaid payments, Miles says it's become a challenge for nursing homes to turn a profit.

"The better care you provide, the more profitable you can be," she says. "Decisions aren't made that 'we're going to up our profit margin by not hiring another aide.'

"I don't believe that nursing homes are making excessive profits," she says. "You can call up the stock reports and see negative earnings."

The nursing home field has certainly caught Wall Street's attention, but not for its supposed losses. The industry is undergoing a wave of consolidations, as financiers engineer mergers in a quickly growing market. The number of Americans over age 65 will grow by 50 percent in the next twenty years, and that adds up to a lot of potential profits. So far this year, there have been more than eighty deals involving sales or mergers of nursing-home chains.

Leon Black, the junk-bond trader who was managing director for mergers and acquisitions at Drexel Burnham Lambert Inc. when that firm collapsed in 1990, is a major figure in the nursing-home industry. His firm, Apollo Advisors--well-known to Coloradans as the owner of Vail Resorts Inc., now the largest ski resort company in the world--last year bought and combined two nursing-home chains into a new company, Paragon Health Network Inc.

That transaction made Black, whose personal fortune exceeds $500 million, the owner of the Cedars Health Care Center.

Now Black has engineered yet another merger that will create the second-largest nursing-home chain in the country. In late summer Paragon merged with Mariner Health Group Inc., creating a new company known as Mariner Post-Acute Network Inc. Financial documents from Mariner and Paragon boast of both firms' profitability and predict the combined company can harvest even more profits by creating a seamless network of nursing homes, specialty-care hospitals, hospices, pharmacies and therapy services.

Paragon reported operating earnings of $58.7 million in the third quarter of its fiscal year, while Mariner bagged $34.8 million in the same period. The two companies' profit margins were 11.9 percent and 17.8 percent, respectively. The new company is expected to have $2.7 billion in annual revenues and will control more than 51,000 beds at its facilities.

Besides Cedars, the new company owns several other facilities in the Denver area, including Red Rocks Health Care Center, Camellia Health Care Center, Cherrelyn Health Care Center, Mariner Health of Denver and Mariner Health of Greenwood Village.

While Cedars today pays its newly hired nursing aides just over $7 per hour, the executives of the new company are pulling down huge salaries. Arthur Stratton, who headed up Mariner before the merger, received a $9.9 million payment after the deal went through. At the newly combined company, where he serves as chief operating officer and president, his base salary will be $850,000 per year, with a bonus of 150 percent of that figure if the company meets its financial objectives. His counterpart at Paragon, Keith Pitts, will serve as chief executive officer of the new company and will receive similar compensation.

"It's important to be a large company in this business," Apollo partner Peter Copses told an investors' conference last year. "Changes are going to create some winners and losers. We hope that we're going to be smart and be one of the winners."

There was just one shadow hanging over the deal that created Mariner Post-Acute Network. The company's report to stockholders mentions the threat of lawsuits as a potential liability.

In an interview with the Wall Street Journal this past summer, Pitts said the company would be spending millions of dollars to check new employees for criminal records, since hiring had become an issue in litigation against the company in Texas and Colorado.

Just how much of a corporate headache that Colorado case will prove to be for Pitt will be determined by a Denver jury next spring--unless the judge rules in favor of the defendant's motion to dismiss the case. (He heard arguments on the motion last Friday.) But the Salas family's attorneys--the firm of Feiger & Collison--are convinced they have a strong case, with four plaintiffs currently signed on and others expected to come on board soon. They're busily preparing for a March trial, which will undoubtedly include dozens of sad stories from families and former staffers at Cedars.

Lydia Dill was born and raised in Greeley, one of eleven children whose parents worked in the sugar beet industry. She married in 1932 and moved with her family to Aurora in the 1950s. She cared for her children and volunteered at Aurora Presbyterian Hospital, where she drove cancer patients to doctor's appointments.

By 1994 Dill had been diagnosed with Alzheimer's disease. After looking at a dozen nursing homes, her family decided to place her at Cedars, which had just opened up a new "sheltered freedom unit" for Alzheimer's patients.

"They told us the staff had special training and there would always be two certified nursing aides on duty," recalls Joyce Lang, Dill's daughter.

Instead, says Lang, the family quickly discovered that because of short staffing, Dill wasn't being bathed regularly or taken to the bathroom. Worse, she developed repeated urinary-tract infections and twice contracted pneumonia from other residents. Cedars also placed her mother on psychotropic drugs, says Lang, and Dill became listless and unaware of her surroundings.

When the family complained to Cedars staff about conditions, they got no response.

"A couple times when I went up to the nursing station, I couldn't get anyone to talk to me," says Ruth Lang, Dill's granddaughter. "They'd get up and leave."

As Dill's health declined, there were times she didn't recognize her own granddaughter. Her weight dropped by fifteen pounds. When she developed a blood clot, she was taken to the hospital and found to be severely dehydrated. Since she could no longer feed herself, she had to be fed intravenously.

Dill made a comeback in the hospital. "It was amazing how quickly she responded," says Joyce Lang. "In a half hour, she started holding my hand and responding to me."

After Dill left the hospital in April 1997, the family moved her to the Evergreen Terrace Care Center in Lakewood. They thought she would soon die there but were astonished when she continued to make a remarkable recovery.

"She just got stronger and stronger and after three weeks was feeding herself," says Ruth Lang.

The new nursing home took her off the psychotropic medicine Dill had been taking at Cedars, and Ruth says her grandmother's whole personality changed. While she has lost the ability to walk--in part because of her care at Cedars, says her family--at 88, Dill is once again the affectionate woman her granddaughter remembers.

"She is doing much better," says Ruth Lang. "She's started to smile and is like her old self again.


Sponsor Content