Home to 40 million, California alone comprises approximately 12% of all Americans. It’s a ripe market for nursing home chains eager to fill beds, which all too often is a recipe for trouble when regulations and government enforcement measures can’t keep up with the tricks and loopholes employed by corporations. The Washington Post recently came out with an article exposing one such tactic used to funnel money out of patient care and into the pockets of profiteers – a tactic which the largest for-profit nursing home operator in California seems to be employing.
Known as Brius Healthcare, the chain received more than $800 million from Medicare and Medicaid in 2018 to care for residents in their approximately 80 nursing homes. Yet much of that money may have never reached those residents in any capacity. Instead of relying on outside businesses to supply services such as food and rental space, Brius pays businesses financially tied to them instead, resulting in multi-million dollar payments to themselves.
This practice may be both common and legal, but that doesn’t make it benign. Over 70% of American nursing home operators use Medicare and Medicaid funds to pay themselves through other companies they or their family members own. Watchdog groups have decried the practice on account of it allowing nursing home owners to excessively enrich themselves using public funds, often at the expense of their residents’ care. The problem is exacerbated by a lack of transparency; related businesses, such as those owned by a family member, do not have to disclose their profits, rendering regulators unable to keep an eye on the millions these owners are reaping.
Yet despite the widespread use of this tactic, few nursing home chains have drawn as much scrutiny in California as Brius Healthcare. The company, owned by Shlomo Rechnitz, stands out for how often its financial practices and quality of care have been investigated and criticized by state legislators and attorneys. Staffing levels and safety ratings for Brius Healthcare homes are well below state average, and there have been a number of lawsuits regarding their standards of care.
The Washington Post investigation found that Brius homes pay 40% more per bed to related companies compared to other for-profit nursing homes in California. In 2018, Brius paid over $100 million to dozens of these related companies. Four of these – Brius LLC, Brius Management, Citrus Wellness Center LLC, and Sol Healthcare LLC – took in a total of $38 million in 2013. The Washington Post was able to verify that of the money those four companies were handed, almost $28 million went to Rechnitz and his wife.
Data from other years was unable to be tracked on account of a lack of transparency laws, so there is no way to know Rechnitz’s total income. But criticism of transparency problems has increased amid the COVID-19 pandemic, as Brius Healthcare has received $54 million in relief aid and the industry continues to push for more.
California assemblyman Jim Wood wrote legislation two years ago requiring nursing homes to disclose the profits of related parties. The new law went into effect in 2020, but it’s only a necessary first step to reigning the nursing home industry’s worst actors.
“We hear all the time from these facilities, ‘Well, we’re not profitable, therefore we can’t pay our workers more,’” Wood said. “But I can’t help but think that when you add all of this together, somebody is making a lot.”
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