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Q2 2012: Nursing home profits ‘bountiful'; executive salaries balloon 15%; staffing levels ‘dangerously low’

Families for Better Care

WASHINGTON DC—Today, Brian Lee, Executive Director of Families for Better Care, called recent nursing home earnings “bountiful,” with booming profits fueling “plush” executive salaries while caregiver ranks are drained to “dangerously low” levels.

For the second time this fiscal year, publicly traded nursing home companies reported, “profits that exceed expectations”, “surging operational income (as much as 398%)”, and “performance that outran fairly aggressive projections.”

While the industry groans that it’s “been battered by a series of destabilizing federal funding cuts” (along with states “threatening” to reduce Medicaid budgets), nursing home earning reports show “record Medicare revenues” with most companies enjoying relatively stable or “improving” Medicaid rates in 39 states.

“As nursing home profitability continues to defy the lackluster economy (as much as 80% of nursing home revenues are taxpayer subsidized), executives are reaping from the industry’s financial boon,” Lee said.  “Key nursing home executive salaries increased 15% over the past three years, with some CEO salaries ballooning more than 200% last year.”

But the influx of record-setting revenues appears to stop with these executives, failing to trickle down to residents and their caregivers.

According to Nursing Home Compare, two-thirds of these companies’ facilities struggle to meet minimum staffing requirements with more than half of those falling “below” or “well below” what’s needed to provide quality resident care.

“Inadequate staffing only imperils elderly and disabled residents, often resulting in broken bones, dehydration, malnutrition, dangerous infections, medications errors, agonizing pressure sores, or even catastrophic death,” Lee said.

“In addition to the negative consequences to residents’ care, curtailing staff ranks is also poor corporate stewardship,” Lee commented.  “Management’s decision to shrink frontline labor costs (just to tack on a few more basis points to the bottom line) puts a nursing home at-risk for potentially expensive, unnecessary lawsuits that stem from preventable abuse and neglect.”

“It’s in the best interest of residents, staff and owners to shift some of those hefty profits into hiring enough qualified staff to keep residents safe, thus forgoing any harm to residents and mitigating nursing home litigation,” Lee stated.

But until that happens, the robust nursing home industry will continue to wallow in outlandish profits at resident and taxpayer expense.

Families for Better Care, Inc. is a citizen advocacy organization dedicated to quality resident care in nursing homes and other long-term care settings.  Executive Director Brian Lee served as Florida’s State Long-Term Care Ombudsman for most of the past decade.

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Publicly traded nursing home data

ADCARE

States with Adcare-owned facilities (AL, AR, GA, NC, OH, OK)

Source: http://bit.ly/adcareq22012

Second quarter highlights

  • Record Q2 revenues of $55 million, up 10% from Q1 and up 60% from Q2 2011
  • Income from operations surged 398% from Q2 2011
  • Record EBITDAR from continuing operations, up 28% from Q1 2012 and 89% from same period in the previous year
  • “Second quarter results … reflect record revenue and operating profit that has exceeded all expectations.”

Key executive compensation (2011 and percent change from previous year)

  • $2,592,708 (+ 114.42%)

CEO compensation (2011 and percent change from previous year)

  • $995,529  (+ 224.26%)

Facility staffing

  • 27% of facilities rated “below” or “well below” minimum staffing requirements

ADVOCAT

States with Advocat-owned facilities (AL, AR, FL, KY, OH, TN, TX, WV)

Source: http://bit.ly/advocatq22012

Second quarter highlights

  • Sequential adjusted EBITDA grew 73% from $1.6 million to $2.7 million
  • Medicaid rates increased 1.8% sequentially and 4.8% year-over-year
  • At the facility level, operating margins increased by 130 basis points generating an additional $7 million in operational profits
  • ROI on renovated facilities has been measureable, occupancy rose 670 basis points with average Medicare census increasing 17%

Key executive compensation (2011 and percent change from previous year)

  • $3,511,268  (+ 55.20%)

CEO compensation (2011 and percent change from previous year)

  • $2,221,684  (é 202.71%)

Facility staffing

  • 25% of facilities rated “below” or “well below” minimum staffing requirements

ENSIGN GROUP

States with Ensign-owned facilities (AZ, CA, CO, IA, ID, NV, TX, UT, WA)

Source: http://bit.ly/ensignq22012

Second quarter highlights

  • Consolidated revenues hit an all-time high at $204.3 million, up 9.7%
  • Record adjusted earnings per share exceeded the prior year quarter at a record $0.67 per share, compared to $0.63 per share
  • “Second quarter saw performance running ahead of schedule in nearly every corner of the organization, skilled nursing…gained strength and outran our fairly aggressive projections.”

Key executive compensation (2011 and percent change from previous year)

  • $5,678,544  (+ 2.38%)

CEO compensation (2011 and percent change from previous year)

  • $1,583,158  (é .18%)

Facility staffing

  • 49% of facilities “below” or “well below” minimum staffing requirements

KINDRED HEALTHCARE

States with Kindred-owned facilities (AL, AZ, CA, CO, CT, GA, ID, IN, KY, MA, ME, MT, NC, NH, NV, OH, OR, PA, RI, TN, TX, UT, VA, VT, WA, WI, WY)

Source: http://bit.ly/kindredq22012

Second quarter highlights

  • Consolidated revenues rose 19% to $1.5 billion
  • Operating income jumped 7% to $71 million from $61 million last quarter
  • “Great momentum, high degree of confidence in guidance and delivering in back half of year”
  • “Short-term Medicare rate outlook is much better”

Key executive compensation (2011 and percent change from previous year)

  • $15,010241  (+ 17.01%)

CEO compensation (2011 and percent change from previous year)

  • $6,426,120  (+ 15.02%)

Facility staffing

  • 39% of facilities rated “below” or “well below” minimum staffing requirements

NATIONAL HEALTHCARE

States with National Healthcare-owned facilities (AL, GA, KS, KY, MA, MO, NC, NH, SC, TN, VA)

Source: http://bit.ly/nationalhcq22012

Second quarter

  • Net income to shareholders remained relatively unchanged from Q2 2011 at $11.4 million
  • Net operating revenues slid 1.6% to $187.7 million from $190.7 million compare to Q2 2011

Key executive compensation (2011 and percent change from previous year)

  • $8,554,116  (é 13.96%)

CEO compensation (2011 and percent change from previous year)

  • $2,438,241  (é 10.99%)

Facility staffing

  • 40% of facilities rated “below” or “well below” minimum staffing requirements

SKILLED HEALTHCARE GROUP

States with Skilled Health Care Group-owned facilities (CA, IA, KS, MO, NE, NM, NV, TX)

Source: http://bit.ly/skilledhcq22012

Second quarter highlights

  • Revenues increase by 1% over previous year’s quarter to $217.4 million
  • Posted $0.18 adjusted earning per share with an adjusted EBITDA of $26.8 million

Key executive compensation (2011 and percent change from previous year)

  • $6,191,607  (- 5.13%)

CEO compensation (2011 and percent change from previous year)

  • $2,115,997  (+ .87%)

Facility staffing

  • 16% of facilities rated “below” or “well below” minimum staffing requirements

SUN HEALTHCARE

States with Sun Healthcare-owned facilities (AL, AZ, CA, CO, CT, FL, GA, ID, IN, KY, MA, MD, MT, NC, NE, NH, NJ, NM, OH, OK, RI, TN, UT, WA, WV, WY)

Source: http://bit.ly/sunhcq22012

Second quarter highlights

  • Consolidated revenues down 2.9% as compare to same period in 2011
  • Posted $0.15 adjusted earning per share
  • Normalized adjusted EBITDAR at $56.2 million, a 12.3% margin

Key executive compensation (2011 and percent change from previous year)

  • $6,318,582  (- 36.46%)

CEO compensation (2011 and percent change from previous year)

  • $2,150.743  (- 25.20%)

Facility staffing

  • 25% of facilities rated “below” or “well below” minimum staffing requirements