ST. LOUIS — Behind the serene façade of nursing homes around Missouri lies a troubling reality: Local businesses, essential to their operation, are being left in financial ruin.
An investigation into the nursing home industry reveals a troubling pattern of financial problems and unpaid debts. Local businesses are coming forward with allegations that they've been left high and dry after providing essential services to nursing homes, only to be stiffed on payment.
Brandon Fornachon has dealt with the consequences. He’s the owner of a medical supply company in Wright City, Missouri. He showed the I-Team the impact of unpaid invoices.
“It adds up pretty quick," said Fornachon, the owner of Skilled Medical Solutions.
He said one nursing home owner with an investment firm called Goldner Capital Management racked up a bill of $350,000 and never paid.
“It's kind of infuriating … It hurts because we've had to lay off a few employees, and it definitely hits our bottom line," he said.
And in the end, it's the nursing home residents that suffer "because they're going to be having beds and other necessary equipment being removed from the facilities underneath these residents," Fornachon said.
The equipment, never paid for, is now piled up and not being used by those who desperately need it.
“All they did was take us for granted," Fornachon said.
He said his business was at risk of shutting down.
This is not an isolated incident. Three businesses in Missouri alone told the I-Team they were never paid by the same nursing home owner. Court documents, invoices and other records show their losses total about $530,000.
Businesses that have come forward saying they have been impacted:
Dan Asewe with DanZ Healthcare, a health care staffing company in St. Louis, Missouri, is owed $150,000.
Brandon Fornachon with Skilled Medical Solutions, a medical equipment company in Wright City, Missouri, is owed $350,000.
Nathalie Love with Love's Healthcare Services, LLC, a home care agency in St. Peters, Missouri, is owed $27,000.
Industry sources said the owner of Goldner Capital Management sold many of its facilities and closed the rest in the last several months. It’s why victims are struggling to get their money back. It’s a common industry tactic many operators use to dodge accountability and increase profit, according to many health care advocates, including Sam Brooks, public policy director at the National Consumer Voice for Quality Long Term Care, a nonprofit advocating for better care at nursing homes.
Zachary Lutz, a senior researcher and policy analyst at SEIU Healthcare, a health care union, said Goldner Capital Management has not filed for bankruptcy. He said within the nursing home industry, new owners are not responsible for a previous owner’s debt unless the contract specifies it, which does not happen often. Attorney Kevin Young, who has sued Goldner Capital Management for medical malpractice and wrongful death, confirmed this, saying at this point Goldner Capital Management has not filed for bankruptcy to his knowledge.
Mark Aaron Unruh, associate professor of population health sciences at Cornell University, told the I-Team nursing homes that have private equity investment generally provide poorer care with higher rates of hospitalizations and worse staffing levels. A LinkedIn website shows Goldner Capital Management has private equity backing. Unruh said private equity companies often invest little of their own cash, which leads to poorer quality. His research spurred The White House to propose reforms to increase transparency and accountability in nursing home ownership.
For the last month, the I-Team has been working to contact the owner of Goldner Capital Management. Our repeated calls and emails have gone unanswered.
“I do think it's potentially going to get worse in the state of Missouri," Missouri State Rep. Deb Lavender (D-98th District) said.
Lavender said she believes businesses will keep getting taken advantage of in an industry with little accountability and transparency.
“We don't have good ability as a state to decide who's making contracts and who's not being paid for services, so the state can't regulate what's going on," she said.
The I-Team discovered two Missouri laws call into question how Goldner Capital Management is allowed to operate. Under law, nursing home owners must have the financial ability to stay in business. If they don’t, their license can be taken away. Statute 198.022 states that Missouri issues nursing home licenses if the applicant has the financial capacity to operate. Statute 198.036 states that a nursing home license can be revoked in any case where there is financial incapacity to operate.
SEIU Healthcare's Zachary Lutz told us: “My understanding is that the Missouri Department of Health and Senior Services has a pretty broad mandate to intervene and potentially revoke a nursing home operator’s license … Unfortunately, their surveyors are short-staffed/stretched thin and often fall behind on inspections so unless someone reports an operator/facility they can get away with a lot without the department knowing. The facilities also file Medicaid Cost Reports each year with the state but they include vanishingly few details on contractors (including/especially related parties) and we see little evidence of review other than for facilities to comply with the reporting requirements. I believe the department has sufficient grounds to reject any future Goldner license applications, but the use of nested LLCs makes it possible for the same parties to acquire a license via a new/separate corporate entity. The challenge is proving the relationship between parties and alerting the department regarding bad actor owners before they can raise their liability shield via change of ownership, bankruptcy, etc., when they still have the capacity and legal obligation to make contractors whole.”
Attorney Kevin Young said the owner of Goldner Capital Management is currently being sued by his own insurance company in federal court for not paying his portion of claims, reflecting financial instability.
The I-Team discovered the state has taken some action. The Missouri Department of Health and Senior Services barred Goldner Capital Management from operating at five nursing homes last year. The state cited subpar conditions and financial troubles.
The Missouri Department of Health and Senior Services issued the following notices, which were in part due to financial capacity concerns:
Frontier Health and Rehabilitation- license revocation dated 5/23/23, 2840 W Clay St., St Charles, MO 63301.
Polaris Health and Wellness of Autumn Terrace- license revocation dated 5/12/23, 6124 Raytown Road, Raytown, MO 64133.
Polaris Health & Wellness of Abbey Woods- License revocation dated 11/17/23, 5026 Faraon St., St. Joseph, MO 64506.
St. Joseph Chateau- Denial of Application for License dated 1/19/23, 811 N 9th St., St. Joseph, MO 64501.
St. Joseph- Denial of Application for License dated 1/19/23, 3002 North 18th St., St. Joseph, MO 64505.
Riverside Place (SNF) Denial of Application for License dated 1/19/23, 1616 Weisenborn Road, St. Joseph, MO 64507.
Riverside Place (ALF) Denial of Application for License dated 1/19/23, 1616 Weisenborn Road, St. Joseph, MO, 64507.
Copies of the letters and revocations from the Missouri Department of Health and Senior Services are available here.
But limited resources mean state regulators can’t catch everything. And the law does not mandate continuous financial monitoring of nursing home owners.
Whose responsibility is it to correct this problem?
“Well, I certainly think the attorney general should be able to play a role in this and be able to step in and see what's going on," Lavender said.
We asked Missouri’s Attorney General Andrew Bailey what he plans to do.
“As the marketplace evolves, those rules have to adapt to that marketplace to ensure that we're providing resources and ensuring the safety of our senior population," Bailey said.
A spokesperson with the Missouri Attorney General’s Office said in a statement: “If any Missourian believes they’ve been scammed, I encourage them to reach out to our office. They can call our consumer hotline at 1-800-392-8222 or go online at ago.mo.gov.”
The I-Team also requested an interview with The Centers for Medicare & Medicaid Services, which inspects and reports on every nursing home in the U.S. A spokesperson denied our request and sent a statement, which said in part:
"CMS is generally not involved in contract disputes between individual contractors and Medicare certified nursing homes unless a patient safety concern is implicated. When it is, we can take action. CMS can act when disputes like this result in specific patient safety concerns. For example, if food or pharmacy vendors are not paid (which can impact whether the meals and medications are provided to residents), if staff are not being paid, or if resident funds are not returned to families, these types of situations would warrant a complaint investigation by the State Survey Agency that conducts onsite investigations on CMS’ behalf. CMS is responsible for ensuring the minimum health and safety requirements are met for residents and would act against the provider holding the Medicare/Medicaid agreement."
For now, as a small business owner, Fornachon has a plea to anyone with power to make a change.
“See if they can try to make some changes to prevent these out-of-state operators from coming in and exploiting Missouri small businesses and exploiting Missouri's most vulnerable population. That's what I'd like to see done," Fornachon said.
The road to justice for businesses within the nursing home industry remains fraught with obstacles. It’s all while regulatory agencies struggle to keep pace with the ever-evolving tactics of unscrupulous operators.
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