When Investor Greed Leads to Nursing Home Abuse

25 Oct, 2017
By: Donald W Fohrman
When Investor Greed Leads to Nursing Home Abuse

Shortages Lead to Neglect, Abuse

According to a study, for-profit nursing homes are chronically short on staff and funding resulting in conditions that are comparable to the poor, developing countries. Specifically, the study found that malnutrition and dehydration rates are severe at many nursing home facilities. The study highlighted that these conditions result, not from a lack of water or food, but from a lack of staff to assist disabled residents in eating and drinking.

Insufficient Funding

Investors are concerned with profits, not patient well-being. Medicaid, unlike private insurance or wealthy residents, pays much lower rates per resident. Nursing homes cannot negotiate higher rates. Therefore nursing homes cut costs and increase the number of residents wherever possible to save money and increase profits.


Nursing homes can cut costs by purchasing cheaper beds and supplies. However, staff composes some of the biggest and most fungible expenses. Many for-profit nursing homes save money by hiring fewer staff members for more residents. Nursing homes, therefore, generate a profit by inevitably neglecting residents.

Nursing Homes Answer to Investors

For-profit nursing homes are an oxymoron. They are required to provide care to their residents, but they don’t answer to their residents, who are usually boarded using Medicaid funding, but rather to their investors. According to the AARP, about 65 percent of residents are supported by Medicaid. Additionally, Medicaid pays for 45 percent of all nursing home bills.

Since many residents do not directly pay for their care, they cannot exert the same “market influence” over their caregivers as someone else, for instance, switching movie theaters or changing doctors. The divorcing of those who pay for the care from those who receive it means that government regulators and the nursing homes must regulate themselves. However, Medicaid is responsible for providing care for hundreds of thousands of patients living in thousands of homes; it is an impossible task to check every single one. Without adequate supervision, nursing homes ultimately answer to their investors.

Category: Nursing Home

About The Author

Photo of Donald W Fohrman
After completing law school Donald became an assistant Attorney General for 7 years and was assigned to the Industrial Commission Division. During that time he spent evenings establishing his own firm. Donald became a founding partner of a large workers’ compensation/personal injury firm but decided to leave the firm in 1990 to start a smaller “boutique” firm with the belief that bigger isn’t always better!
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