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A national nursing home residents’ rights organization is calling for stronger regulation over and transparency into New Jersey nursing home financial practices after examining cost reports from three large nursing home chains.
According to the National Consumer Voice for Quality Long-Term Care, federal cost reports show that the three chains — the Rosenberg Family, Marquis, and Genesis — paid $206.4 million over three years for rent, management fees, and other services to companies owned by the same people who own the nursing homes. These are called related party transactions.
Based on studies of related party transactions in other states, Consumer Voice estimates that the three chains may have diverted as much as $49 million from resident care into hidden profits through rent and management fees that they essentially paid to themselves.
This finding was included in a report released today by Consumer Voice titled Where Does All the Money Go? (Read the full report here.)
The report also reveals that the three chains score low on quality metrics — including direct care staffing levels — and highlights quotes from residents who receive care from these companies.
For the financial data, Consumer Voice analyzed cost reports from 32 New Jersey nursing homes run by Genesis, Marquis, and Rosenberg between 2021 and 2023. The $206.4 million paid to related parties included $33.5 million in management fees and $97.6 million in rents and other real estate payments.
Authors of a prior study in Illinois estimated that 41.7% of management fees and 36% of real estate payments to related parties represent hidden profits. That means the three New Jersey chains may have hidden $49.1 million in profit through management fees and real estate payments.
Today’s report recommends that New Jersey address related party issues by passing Senate Bill S1948/Assembly Bill A1872, which would require nursing homes to submit independently audited, consolidated cost reports annually that provide detailed financial information on all companies related to the operation of nursing homes. Currently, New Jersey requires financial information about the nursing home itself, not the companies related to that nursing home.
Sen. Joseph F. Vitale, Chair of the Senate Health, Human Services, and Senior Citizens Committee and a primary sponsor of Bill S1948: “If there’s nothing to see here, show us. It’s good government to ensure taxpayer dollars are being spent appropriately. Plain and simple. And that’s what my bill, S1948, would do. We want to protect the taxpayer, we want to protect nursing home residents, and we want to protect the nursing home industry and ensure its viability. Confirming that taxpayer dollars paid to nursing homes are being spent on resident care should not be controversial. How anyone could be against transparency of government spending, especially when it’s on a service so critical to a vulnerable population, is beyond me.”
Sen. Angela V. McKnight, Member of the Senate Health, Human Services, and Senior Citizens Committee and a primary sponsor of Bill S1948: “Too many for-profit nursing homes are prioritizing financial gain over delivering compassionate, quality care — even going so far as to hide profits, much of which come from taxpayer funds. This report underscores why we must pass S1948 and ensure every dollar intended for residents is used for their benefit. Strengthening transparency and accountability will help protect our seniors, support our workforce, and restore families’ faith that their loved ones are receiving the care they deserve.”
Sam Brooks, Director of Public Policy at Consumer Voice: “Unfortunately, what we see happening across the country when it comes to nursing home finances is happening in New Jersey. The failure of state and federal governments to hold nursing homes accountable for how they spend taxpayer dollars is having a very negative impact on nursing home residents in New Jersey. Until steps are taken to address the lack of transparency in nursing home finances, New Jersey nursing home residents will continue to suffer.”
Laurie Facciarossa Brewer, New Jersey Long-Term Care Ombudsman: “The bottom line is we don’t get enough information to know that taxpayer dollars are being used as intended, and from what we observe firsthand, in a lot of cases, they’re not. When we are out in the field visiting residents, we see where facilities choose to cut corners. These nursing homes should prioritize hiring more direct care staff. They should pay them as if their job is vital — because it is. They should invest more in food and medical care and essentials. They should provide every resident with meaningful, therapeutic recreational activities. Instead, many seem to be pumping millions of dollars back into the parent company.”
Chris Widelo, State Director of AARP New Jersey: “Every dollar that goes into New Jersey’s long-term care system should be used to keep residents safe, healthy, and treated with dignity and respect. This report from Consumer Voice raises serious concerns that too many taxpayer dollars may be going to for-profit nursing home owners and investors instead of directly supporting resident care — leaving nursing home residents to suffer the consequences. Lawmakers must act now to pass S1948/A1872, ensuring transparency, accountability, and quality care in every facility that receives public funding. Older New Jerseyans deserve nothing less.”
Official Site of The State of New Jersey