Figure 1 is a donut graph that shows the percentages of nursing facility revenues by funding source for facility fiscal year 2015. Medi-Cal was the largest source, providing 41 percent of nursing facility revenues, followed by Medicare which provided 34 percent. Together these two sources accounted for three quarters of nursing facilities' revenues in facility fiscal year 2015. Managed care, which includes patients covered by private managed care plans as well as patients enrolled in Medi-Cal and Medicare managed care plans, accounted for 16 percent of revenues, while private and other payers represented the final nine percent.
Figure 2 is a diagram that shows the different types of oversight that three state agencies provide over nursing facilities in California. Public Health licenses and inspects nursing facilities and enforces state law to ensure quality patient care. Nursing facilities submit annual cost reports to Health Planning, which conducts desk audits of the cost reports. Health Planning then forwards the cost reports to Health Care Services, which audits the cost reports, calculates Medi-Cal rates, and pays nursing facilities.
Figure 3 is a diagram which shows the relationship between a nursing facility and a related-party business with a common owner. The parent company represents the common owner of both the nursing facility and the related-party business. A green arrow shows the nursing facility providing payment for goods or services to a related-party business. A blue arrow shows the related-party business providing those goods or services in return. The nursing facility and the related-party business can also be related by certain family relationships or by control. Control exists if an individual or an organization has the power, directly or indirectly, to significantly influence or direct the actions or policies of another organization.
Figure 4 shows the amounts of various related-party goods and services which the three companies we reviewed purchased in facility fiscal year 2015.
The top portion of the chart shows that ten percent of Brius's total expenses—or 65.7 million out of 664.8 million dollars, was spent on related-party costs. The largest amounts were for related-party building leases and equipment at 46.7 million, and medical equipment and supplies at 10.3 million. Administration and support amounted to 6.1 million dollars, financial services and loans amounted to 1.7 million dollars, facility capital improvements amounted to .7 million dollars, and miscellaneous services amounted to .2 million dollars. Brius had 79 nursing facilities in this year.
The middle portion of the chart shows that nine percent of Plum's total expenses—or 47.9 million out of 527.5 million dollars, was spent on related-party costs. Administration and support was the largest component, at 29.8 million dollars, followed by related-party building leases and equipment at 18.1 million. Plum had 44 nursing facilities in this year.
Finally, the bottom portion of the chart shows that 11 percent of Longwood's total expenses—or 37.2 million out of 353.6 million dollars, was spent on related-party costs. Building leases and equipment was the largest component at 19.7 million dollars, followed by administration and support at 17.5 million dollars. Longwood had 36 nursing facilities in this year.
Figure 5 is a donut graph showing the percentages each of the seven allowable cost categories makes up in the average nursing facility Medi-Cal rate. The Medi-Cal rate is a facility-specific, per-patient daily payment Medi-Cal pays to nursing facilities for their services. The average daily Medi-Cal rate for each nursing facility per patient in rate year 2016-17 was $209 dollars per patient per day.
The direct care labor category, which includes nursing, social services, and activities, represented 49 percent of the total rate payment. This is followed by indirect care labor at 12 percent, which includes housekeeping, dietary, and maintenance. Pass-throughs, including taxes and fees, the quality assurance fee, training, and mandates also represented 12 percent of the total rate payment. The direct and indirect care goods and supplies category, which includes food, laundry, and linens, represented 11 percent, as did the administrative costs category, which includes administration, property insurance, and interest costs. The capital costs category, which uses a formula based on the facility's age, location, and number of beds, accounted for four percent of the total Medi-Cal rate, while the professional liability insurance category, covering both premiums and deductibles, made up the final one percent.
Figure 6 is a stacked bar graph indicating the number of AA, A, and B citations, excluding those which were dismissed or withdrawn, which Public Health issued from 2006 through 2015. The yellow portion of each bar indicates the number of B citations which Public Health issued in the given year, while the orange portion represents the A citations and the red portion the AA citations. The graph shows that after issuing a total of around 450 citations in 2006, Public Health briefly increased the number of citations it issued to around 600 from 2007 through 2009. Then began a period of decreases as Public Health reduced the total number of citations it issued to about 240 in 2013. 2014 saw an uptick to more than 340 citations, but Public Health again reduced the number of citations it issued to around 300 in 2015. The number of AA and A citations remained relatively steady during this time period meaning most of the decrease in citations is attributable to Public Health issuing fewer B citations.
Figure 7 is bar graph which shows the number of AA, A, and B citations Public Health issued to nursing facilities based on the number of days between the final date of the inspection on which Public Health identified the deficiency, and the date Public Health issued the citation. The bar graph shows that while Public Health did issue 1378 citations in 30 days or less, it also issued 685 citations between 31 and 60 days, 321 citations between 61 and 90 days, and 285 citations between 91 and 120 days after the final date of the inspection. Additionally, Public Health issued 214 inspections between 121 and 150 days, and 154 inspections between 151 and 180 days after the final date of the inspection. Finally, Public Health issued 1167 citations more than 180 days—or six months—after the final date of the inspection in which it identified the deficiency.
Figure 8 is diagram which describes the State's quality assurance fee for nursing facilities. The diagram shows that each nursing facility pays a quality assurance fee to Health Care Services, to help increase the matching federal money California receives. Health Care Services funds Medi-Cal rate payments with state and federal funds, including the quality assurance fees. The diagram then shows that Health Care services returns most of the quality assurance fees to the nursing facilities without condition, while using the rest, in addition to other state and federal funds, to pay nursing facilities Medi-Cal rates based on the facilities' costs.
Figure 9 is a line graph which charts the net incomes—the difference between the nursing facility's revenues and expenses during a specified period— from 2006 through 2015 for the three companies we reviewed. The graph shows that all three companies earned between five and seven million dollars in 2006, but by 2015 were earning from 35 to 54 million dollars. The blue line shows how Brius's net income increased steeply from five million dollars in 2006 to 58 million dollars in 2011, dipped to 52 million in 2012, increased to 57 million in 2013, and then dropped noticeably to 46 million in 2014, and 35 million in 2015. The tan line shows how Longwood's net income increased from 6 million dollars in 2006 to 28 million in 2012, dropped briefly to 21 million in 2013, then rose steeply to 37 million in 2014 and 42 million in 2015. Finally, the yellow line shows how Plum's net income increased steadily from seven million dollars in 2006 to 24 million in 2011, dropped to 18 million in 2013, then increased sharply to 53 million in 2014 and 54 million in 2015.
Figure 10 is chart which includes two line graphs. The upper graph shows the companies we reviewed accumulated up to 240 million dollars in retained earnings from facility fiscal years 2007 through 2015. The lower graph shows the companies we reviewed distributed up to 36 million dollars per year to their owners from facility fiscal years 2007 through 2015.
For the upper graphic, the yellow line shows that Plum generally had higher retained earnings than either Brius or Longwood, with its retained earnings increasing from twelve million dollars in 2007 to 60 million in 2010, 130 million in 2013, and 240 million dollars in 2015. The tan line shows that Longwood had 30 million dollars in retained earnings in 2007, 50 million in 2010, 70 million in 2013, and 80 million dollars in 2015. Finally, the blue line shows that Brius generally had lower retained earnings than either Plum or Longwood, with fifteen million dollars in retained earnings in 2007, 30 million in 2010, and 60 million dollars in retained earnings from 2013 through 2015.
The lower graphic shows that Longwood typically had much higher distributions than Brius, and the Plum had almost no owner distributions. The tan line shows that Longwood had four million dollars in distributions in 2007, which increased to 25 million by 2011, dipped to fourteen million in 2013, then increased to 36 million dollars in 2015. The blue line shows that Brius had zero distributions in 2007, between two and four million dollars in distributions from 2010 through 2012, less than one million in 2013, fifteen million in 2014, and eleven million dollars in distributions in 2015. The yellow line shows that Plum had less than one million dollars in owner distributions in 2007, zero distributions from 2008 through 2014, and less than one million dollars in owner distributions in 2015.
Figure 11 is a line graph which charts the related-party expenses for the three companies we reviewed from facility fiscal years 2007 through 2015. The graph shows that Brius and Plum's related-party expenses increased dramatically over the time period, while Longwood's related-party expenses, which were considerably higher than the other two companies' in 2007, stayed relatively steady and by 2013 were lower than the other two companies' related-party expenses. The blue line shows that in 2007 Brius had one million dollars in related-party expenses, but that by 2009 its related-party expenses had increased to eight million, and then increased further to 43 million in 2013, 49 million in 2014, and 66 million dollars in 2015. The yellow line shows that Plum's related-party expenses were sometimes higher than Brius' and sometimes lower, increasing from six million dollars in 2007 to ten million in 2009, then to 49 million in 2013, before dipping to 46 million in 2014, and 48 million dollars in 2015. Finally, the tan line shows that Longwood had 37 million dollars in related-party expenses in 2007, which increased to between 47 and 48 million from 2010 through 2012, before dipping to 37 million in 2013, 34 million in 2014, and 37 million dollars in 2015.
Figure 12 presents a sample of an interactive web dashboard we created to demonstrate what the State could create to allow the public to better understand the financial health and quality of care of California nursing facilities.
The left hand side of the dashboard displays a map of California, which the user can zoom in on, with a series of color-coded dots located on it. Each color represents a nursing facilities owned by one of the companies we reviewed, and there is a separate color for other facilities. A legend in the lower left corner of the map allows the user to select which company or companies to include on the map, as well as to select whether to display by county, Assembly, or State Senate district boundary lines. By clicking on the map or on facility dots the user can further limit which facilities are displayed.
The right hand side of the dashboard displays the facility fiscal year currently selected and a scorecard of financial and quality-of-care information for the facilities displayed. The scorecard includes such financial information as revenues, expenses, and income for the selected facilities, along with quality-of-care information including citations, deficiencies, median score for quality program incentives, and median nursing hours per patient day.