This is a story about huge corporate profits at a time when profits are down.  And how the State of California has dramatically failed its growing and aging population. 

What is our government here in California trying to do?  Kill off all us baby boomers?

In a scathing report the Auditor of California has determined that “The State has not adequately addressed ongoing deficiencies related to the quality of care that nursing facilities provide.”  In other words, my government is not looking out after our best interests, while nursing facilities take our money and fail to provide adequate care.

In their report the California State Auditor concluded that while deficiencies in state nursing home care continue to increase unchecked by state regulators, “the net incomes and use of related parties rose over the past decade for the three companies we reviewed.”

There is much money to be made in the growing industry of nursing care for the aging and feeble population in California.  And somebody’s got to step to the plate and do something about it, because our government is not.  And our California Auditor provides proof.


Tens of thousands of elderly and disabled Californians rely on skilled nursing facilities to provide them with 24-hour inpatient care.  This number grows by the day and will continue to grow over the next two decades as our population ages in unprecedented numbers. 

These nursing facilities that will care for us are generally operated by private companies.  Private companies are about making huge profits, in this case, from us filling their beds until death do us part.

In California, some of these private companies are raking in tremendous profits as they own the nursing facilities that collect payments for the services they provide from Medicare, Medi‑Cal, private insurance companies, and their patients’ life savings. 

Medicare is the federal public health insurance program for individuals over 65, as well as for others with certain disabilities or kidney failure.

As part of the U.S. Social Security Medicaid program, Medi‑Cal is funded by a joint partnership between the State and the federal government and is intended to be the payer of last resort after patients exhaust all other means of paying for their care.


This is huge business for those who own large nursing facilities and it will only increase as the State’s population ages and demand rises for some place for overwhelmed family members to place their aging and or disabled parents or spouses.


A point of particular concern to the California State Auditor in its report was that recorded incidents of poor patient care is on the rise. 

From the years 2006 through 2015, the number of instances in which the California Department of Public Health (Public Health) cited California nursing facilities for deficiencies related to substandard care increased by 31 percent from a total of 445 in 2006 to 585 in 2015, while deficiencies associated with nursing facility noncompliance that caused or were likely to cause, serious injury, harm, impairment, or death to residents increased by 35 percent from 46 in 2006 to 62 in 2015, the report states.


The State of California has not adequately addressed ongoing deficiencies related to the quality of care that nursing facilities provide. 

California assigns oversight responsibilities for nursing facilities to three separate state agencies: Public Health, the Office of Statewide Health Planning and Development (Health Planning), and the Department of Health Care Services (Health Care Services), the report states.

Public Health in particular was singled out in the report for not fulfilling many of its oversight responsibilities, which are meant to ensure that nursing facilities meet quality‑of‑care standards.  This lapse creates potential abuse of the system

An example was cited by the State Auditor where through its licensing process, California Public Health makes a determination whether to approve or deny a company’s application to obtain a license to operate a nursing facility.

Despite the importance of this process, Public Health’s licensing decisions appear inconsistent because of its poorly defined review processes and failure to document adequately its rationale for approving or denying license applications. 

Furthermore, Public Health was cited as having not performed all of the state inspections of nursing facilities that it is required to perform and has not issued citations for facilities’ noncompliance with federal and state requirements in a timely manner.

The California Department of Public Health has also failed to seek legislative actions to increase the penalties associated with those citations by the cost of inflation, “after we recommended in 2010 that it take this action,” the California Auditor’s report says.  “Together, these oversight failures increase the risk that nursing facilities may not provide adequate care to some of the State’s most vulnerable residents.”

I repeat:  The State of California is not doing enough to protect some of “the State’s most vulnerable residents.” 

Wake up present and future California politicians.  This is a major issue that we have to deal with starting yesterday.


The report goes on to discuss the California State Auditor’s examination of the three corporations that are raking in the most nursing care dollars, and how the amount of those profits are increasing.

The auditor’s report says, “Moreover, the sizes of the three private companies we reviewed have increased significantly over the past decade, and their net incomes— their operating revenue after subtracting their operating expenses— grew by tens of millions of dollars, even as the net income for the rest of the industry in the State decreased.”  Profits are more difficult to come for most in this state, while not so much for others. 

The California State Auditor reviewed three of the largest private operators of nursing facilities in the State — Brius, Longwood Management Corporation, and Plum Healthcare Group.

The report notes in 2006, all three companies made less than $10 million in net income, but by 2015 their net incomes had increased to between $35.2 million and $53.8 million. The sources for the largest increases in the companies’ revenue during this period were Medicare and managed care. 

Managed care pays a flat rate for patients regardless of the services they use and receives funding from Medicare, Medi‑Cal, and private insurance, the report says.  Medi‑Cal likely did not contribute significantly to the companies’ net incomes because it does not fully cover nursing facilities’ costs per Medi‑Cal patient.

“In other words, Medi‑Cal patients generally represent a financial loss to nursing facilities. Although the companies’ expenditures also grew during this period, the increases in their revenue significantly exceeded the growth in their expenses, allowing the companies to raise their net incomes,” says the auditor’s report.


Additional sources of income are also available to those who run nursing care facilities in California.  The owners of the three companies reviewed by the California State Auditor were also able to earn income — separate and aside from the revenue their nursing facilities earned from Medicare, Medi‑Cal, or managed care — when their nursing facilities obtained goods and services from related parties, or other businesses that they or their family members owned or controlled. 

“We found that related‑party transactions are common in the industry and are legally allowable,” the State Auditor’s Report says.


The bottom line for all baby boomers to understand is that the more beds that are filled with patients (ie, us), the more profits there are to be made for corporations.  The California Auditor’s analysis of the three companies the State reviewed indicates that there is a strong statistical correlation between the three companies net incomes and the number of patient beds in their facilities.

In other words, these large companies benefit by increasing in scale.  To increase in scale they must fill more beds with our lame bodies and minds.

The auditor’s report notes Plum increased its number of patient beds by 306 percent from 2006 through 2015, while its net income grew by 682 percent. Similarly, Brius increased its number of patient beds by 1,102 percent during this period, while its net income rose by 604 percent.

Now we must look in the mirror of life and ask:  Is our body and mind going to one day fill one of the corporation’s beds?  And if so, and there’s a deficiency in care, what’s the State of California going to do about it?  And will I be alive to find out?