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Carmel upstart fights nursing home moratorium

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Nursing home companies went on a building spree in Indiana, and now most of them want the Legislature’s help reining in high operating costs brought by over-capacity.

Established players in the industry are pushing for a five-year moratorium on construction, but one well-connected upstart hopes to thwart the effort. Carmel-based Mainstreet Property Group, founded by Zeke Turner, son of Republican state Rep. Eric Turner, is fighting a moratorium bill filed by Republican Sen. Patricia Miller.

Turner Turner

Turner’s company builds hotel-like skilled-nursing facilities that take direct aim at the decades-old institutions operated by his competitors. He believes the moratorium is driven by their inability to keep up.

“It’s like BlackBerry telling Apple, ‘We just need to cool off for a few years and have a moratorium against you,’” Turner said.

But Miller and the long-term-care lobby say Turner’s free-market argument doesn’t make sense for an industry that’s heavily regulated, from reimbursement rates for Medicaid and Medicare to the criteria for admission to a nursing home.

“The state is highly interested in quality care,” said Miller, who is chairwoman of the Senate Health and Provider Services Committee. The committee voted 8-4 in favor of Miller’s Senate Bill 173 on Jan. 15.

Mainstreet has built 12 facilities in Indiana since 2008, and it’s not the only company that was building in Indiana. Twenty-one nursing homes have been built since 2011, said Scott Tittle, president of the Indiana Health Care Association, which represents for-profit and not-for-profit long-term-care providers. Many of those facilities were built by companies now lobbying for the moratorium.

Miller backed a moratorium in 2011 as well, but Turner, along with the construction industry, fought it off. The issue brought to light the Turner family’s close ties to the industry and state government. Eric Turner, who has invested in Mainstreet, sits on the House Public Health Committee, as well as Ways and Means, either of which might receive the bill if it passes the Senate.

Turner abstained from voting on the 2011 moratorium bill when it was before Ways and Means.

Turner’s sister, Jessaca Turner Stults, is a former general counsel for the state’s Family and Social Services Administration and now is a lobbyist whose clients include Mainstreet.

This year, Mainstreet and construction-industry professions and trades are working together as the Indiana Alliance for Quality Senior Living.

Nursing-home lobbyist Vince McGowen, chairman of Hoosier Owners and Providers for the Elderly, representing companies based in Indiana, said passing a moratorium could be difficult because Indiana hasn’t imposed one since 2006, and many lawmakers don’t understand the regulated nature of the industry.

The last moratorium expired in 2008. The Legislature passed another in 2011, but it applied only to Medicaid-certified beds.

The federal government spends $10 billion a year in Indiana on Medicare, the payroll-tax funded program for senior citizens, and the state and feds together spend another $7.5 billion on Medicaid, which is for low-income and disabled people of any age.

Most of that money goes to hospitals, but it also goes to nursing homes, which are a relatively costly way to care for people, Miller noted.

Advocates for a nursing-home moratorium point to the statewide occupancy rate, 74 percent, as a sign the system is overbuilt, creating inefficiency in the use of Medicaid and Medicare funds and stretching nursing-home staffs.

“It is about high-quality staffing that means the world to families,” Tittle said.

Most of the 520 nursing homes in the state accept Medicaid, which covers their staffing costs at a lower rate than private insurance, Tittle said. When beds sit vacant, the nursing home’s overhead costs go up, and they can’t invest in training and technology, he said.

The state has about 50,000 nursing home beds, and 13,000 are vacant.

Competition could solve the vacancy-rate problem on its own, if some nursing homes end up going out of business, Tittle said. But he argues that scenario would leave Indiana with another problem—access to nursing homes for Medicaid patients.

Most newly constructed facilities are certified to accept only Medicare or private insurance, Tittle said.

Miller Miller

Mainstreet’s buildings don’t look like typical nursing homes. Nor do they operate like them. The facilities, operated by a third party, take private insurance and Medicare. The rooms are a mix of assisted living and short-term rehabilitation, what Turner called “skilled-nursing light.”

“If someone does go out of business—and that’s a real concern—then you have an access problem,” Tittle said. “Let’s hit the pause button and allow the market to stabilize.”

Miller said continuing to build nursing homes would draw resources away from home-based care and other alternative settings—which are what patients want, anyway, she said.

Her bill does not affect assisted living. It also would allow existing nursing homes to be replaced, and it provides an exemption for “continuing care residences,” which are typically high-end campuses that draw healthy residents with the guarantee that they won’t have to move if they need skilled nursing later.

“The Turners can build assisted living,” Miller said.

Turner believes nursing homes’ high vacancy rates have to do with the fact that most people, especially baby boomers, will go to great lengths to avoid such institutions, including skipping care they need. He thinks long-term-care providers fear the new style of “product” he’s putting on the market.

Tittle said the style of buildings is irrelevant to quality of care. Many decades-old nursing homes earn high marks in the state’s report cards, he said. The companies that want a moratorium are involved in providing care, while those who oppose it are in the construction business, he noted.

If vacant beds pose such a threat to the system, why did nursing home companies keep building?

“Providers will always follow the rules,” McGowen said. “There has been some growth because that was permitted.”•

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  • Medicare
    I just want to clarify Medicare and payment for nursing home care. Medicare payment is very limited. If you or a loved one is going to a nursing home for more than 20 days, don't expect Medicare to pay for much of the needed care.
  • Littlefish
    Alternatively Littlefish, follow the money on the opposition. Wonder if there has been any "extortion", errrrr "pressure", put on all the construction companies that will supposedly suffer from this bill. Economic cycles are just that--cyclical. Expecting the senior living industry to feed the "machine" through the down part of the cycle will only create a whole new set of problems down the road. Those companies who cry about the potential loss of construction jobs should sharpen their business models and staffing to come to grips with the "new normal" and figure out who they should really be. Building just to build is foolish, which is EXACTLY what is going on.
  • McGowen
    The article also fails to mention that Vince McGowen, chairman of Hoosier Owners and Providers for the Elderly, is also (or was) director of Magnolia Health Systems. Follow the money...Magnolia Health Systems owns quite a bit of current nursing home operations....who when you follow the Miller money trail - these LLCS have donated thousands of dollars to the Miller campaign. DO FULL RESEARCH on how all sides would financially benefits. Tina - If people were happy with the care that they received at the current facilities, why would current nursing home operations even be threatened by these new facilities?
  • Tina's Right
    Tina's idea is a step in the right direction. The argument about construction jobs is so small minded that it doesn't even warrant any more response.
  • Medicaid Beds
    The new Mainstreet homes do not accept Medicaid because it pays less. The problem with all of the new construction is that Medicare and Private Insurance residents flock to these new facilities, even though they may have been perfectly happy with the care they were receiving at another facility. This creates a financial problem for the facilities that are left with only Medicaid patients and the lower reimbursements. How about creating a bill that requires new construction to include a minimum number of Medicaid beds. That would level the playing field financially. It would require investors like the Turners and the company that manages their facilities to shell out quite a bit more money to meet the needs of their residents and would keep them from just cherry picking the easiest and least expensive people to care for. This would be a much more fair way to allow new construction.
    • Construction Jobs
      What about the hundreds of construction professionals that will lose work or even their jobs entirely because of this blatant bought & paid for political intervention? Carpenters, plumbers, HVAC, roofers, drywallers, landscapers, window installers, masons, pavers, cleaning crews, delivery drivers, and many more... AND the suppliers & manufacturers for each of those trades!! Indiana businesses employing Indiana residents & taxpayers being sold out in the midst of a shaky recovery after an awful recession. It really is hard to fathom. Tell me Senator Miller, who exactly is introducing a bill to protect the working interests of those hardworking taxpayers? How is it that the employees of the companies that lined your pockets with donations to create SB 173 are more important than those people? Please note that I am a Republican that lives in Senator Miller's district and I have voted for her at least 5 times over the last 20+ year...No more. Ms. McLaughlin, since you see it fair game to mention one side's political connections, then take some time to peel back the onion on some of the supporters & the author of SB 173 as well. The origination of this bill has less to do with resource management than protecting the business interests of political donors and business allies.
    • Watch out, Paul
      Paul, First of all, the article spends a lot of time talking about those supporting a moratorium, so please read the article in its entirety. Second, putting a government ban on any industry is problematic. Why not oppose new private schools, restaurants, sporting goods stores, car dealerships? Stop new doctors offices, dentists, health clubs? Better yet, why not prevent Paul's business from doing what they want to do? The market will decide who is right. That's how our economy works.
    • Watch Out
      Is anyone else sick of this shameless self promoter Turner putting out a press release every week in the IBJ? It is simply about the almighty dollar to this company and there is nothing "new" or "innovative" about what they are doing... There are plenty of quality nursing homes already in Indiana that already struggle with occupancy. He'll be begging the state for Medicaid coverage for his "hotels" in a few years--watch out.
      • Free Enterprise
        Let the market decide.
      • Ask
        Where does Health and Hospital Corporation stand on this issue? I understand they own and operate a number of nursing homes statewide, and it is a profit-center for them. I wish HHC would focus more resources on the Marion County Health Department, specifically the Department of Housing and Neighborhood Health, which is a "hot mess" as they say.
      • Curious
        Interesting to see Miller's receives nearly 100K in political contributions from healthcare. A quick scan of the contributors would show nursing home owners with existing operations who would be against competition. http://votesmart.org/candidate/campaign-finance/4522/patricia-miller Appears to be politics as usual. A RINO in favor of more regulation and against the free market!
      • Wrong
        We can not allow existing players in any industry limit the "players" in their given business. If someone wants to jump into a certain industry using their own capital and attempt to win customers with a better mouse trap that is what is best for the consumer and the economy!

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