Saturday, April 10, 2010


O.K. I'll be a pinhead. But only this once... or twice.

I've received a bunch of emails on the series that the Advertiser ran on the elderly. Seems like readers believe that I'm advocating for more regulations by the state because I've posted the link on my personal profile. That is far from the truth. So I'll explain.

Don Having fun with patient in nursing home

I'm a proud Graduate of Farrington High School so I know lots of things. I was on full scholarship because I don't recall paying any tuition. Whatever I don't know, I readily make up. So I'll give you the real scoop.

The more government involvement, the more long-term-care costs will be. And the fewer choices will be available to those in need of the services.

Here's the Advertiser series:

Currently, charges run from $50 a day for adult day care (must be ambulatory) to $300 a day or more for acute nursing care. In between are facilities with charges based upon the amount of care the patient requires.

Let's examine some of the factors that go into the cost of running a care facility. A certified nurse's aide (CNA) gets paid about $10 an hour. We'll use this figure because I'm not very bright and it'll be easier for me to do the calculations.

The facility needs to generate revenue equal to twice that amount in order to break even. That's because they have to pay for worker compensation insurance, Temporary Disability insurance (TDI), Unemployment insurance, medical insurance, Social Security and Medicare premiums. There is also the cost of professional liability insurance in addition to the comprehensive general liability insurance premiums on the operation and premises.

The facility also must pay for support services, including supervisory costs, rent or facilities costs, etc. If the State increases the regulatory requirements, then those reporting and administrative costs must also be added to the cost of operations. Labor to fill and maintain file cabinets costs money.

Generally, regulatory costs are included in the licensing fees by the state and that is charged to care operators. I'm not sure it includes the costs to operate both the licensing board and the Regulated Industries Complaints Office (RICO). But increased rules and regulations also increases the State's cost to inspect, examine complaints and to issue judgments.

Once a report goes to a state agency, the state has culpability and must examine every report in detail. Many want more regulation because the State is considered to have "deep pockets". So if a State employee is paid $15 an hour to examine paperwork, they need to increase tax/fees revenues by 250% of that amount because of the generous employee benefits programs that the state offers. The amounts paid out to settle lawsuits are charged to taxpayers.

And these additional costs are passed on to the consumer by the facility or the facility goes belly up.

Here's a solution if anyone cares.

Require each facility to completely disclose everything to each entering resident/patient. If they do not carry professional liability insurance, or if they have very low limits, then that should be a part of the disclosure and written agreement. You can even be named as "additional insured" on the liability policy so if the policy lapses, you would be notified.

A clearing house could also be set up to register the number of complaints (not anonymously) each facility receives. This could be set up by the professional association and be available online. The data gives a prospective patient relevant facts to make an informed decision.

The result is that each person (or appropriate family members) entering a facility, having received such complete disclosure takes responsibility for the choice made. If they decide to choose a low-cost facility by selecting a facility that shaves costs, then they are entering into the agreement with their eyes wide open. This gives people a wide range of choices on the already shrinking supply of care facilities.

Lawsuits are also remedies open to patients and families of patients. If the care home operator doesn't carry professional liability insurance, you may want to ask them to provide you with a financial statement prepared by a CPA to determine if assets are available should a lawsuit is necessary. Or not. Your choice. Everyone has choices and is responsible for his decisions.

If the Advertiser article still bothers you because you believe that it advocates for more regulations instead of being fair journalism, then you may want to stop buying the newspaper.

Freedom with individual responsibility is wonderful.

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