NJ Bill Proposes Increased Scrutiny of For-Profit Homes:

Seeking to boost owner accountability, the state legislature wants stricter change of ownership requirements.

New Jersey for-profit nursing facilities can expect to provide greater transparency regarding change of ownership (CHOW), thanks to the state legislature’s recent introduction of a bill that amps up disclosure requirements for those seeking to operate nursing homes. According to an article on JD Supra the bill comes as a response to a recent report by a consulting firm hired by the state to conduct a review, following the high number of COVID-19 deaths in NJ long-term care facilities.

Some of the findings of the report included the following discoveries:

  • The convoluted ownership and management configurations utilized by for-profit facilities work to disguise who is ultimately responsible for delivering care, making it all but impossible to hold them accountable
  • Ownership of NJ nursing facilities frequently changes, sometimes multiple times in a week
  • Current NJ Department of Health processes do not subject facilities that have recently undergone a CHOW to further oversight
  • Unlike many states, which require information from those with a 5% or less direct or indirect ownership interest, NJ currently does not require information from anyone with less than 10% interest
  • CHOWs are currently not public, nor are they typically discouraged by the DOH

The report stated that “[r]igorous change of ownership requirements are critical for ensuring accountability and promoting quality and stability of the workforce.”

The NJ bill proposes increased scrutiny of for-profit homes consequently introduced by the legislature, Senate Bill No. 2789/Assembly Bill 4477 will require greater scrutiny of CHOWs in nursing homes. Potential buyers must be screened by the state, which would also have the power to review operations and monitor spending. Any shifts of management to third-party companies or sales/transfers of property must be approved in advance by the DOH, which would include an involved application process, and would require the disclosure of upper-tier ownership. Every CHOW application will be published on the DOH website for public review and commentary.

Applications to transfer controlling interest in a facility must include:

  • A profits and loss and a capital budget projection for the next three years
  • Disclosure of any licensed US health care facilities owned, operated, or managed by the proposed owners and principals in the preceding three years
  • Financial statements for each such facility for the last three years
  • Revelation of any enforcement actions
  • Prospective owners who have never previously owned/operated a licensed NJ nursing home also must hold a public hearing for the application and submit to a background check

Having been passed by the State Senate, the bill requires signing by Gov. Phil Murphy in order to be signed into law. Should the bill become law, nursing home owners hoping to game the system by changing real estate owners or management companies while their CHOW is being processed will be subject to a DOH interim approval process that is as involved and time consuming as the CHOW application process.

Fighting for Your Loved One’s Interests

Determining the quality and safety of the Philadelphia/PA or NJ nursing home where your loved one lives is essential. Pennsylvania and New Jersey nursing homes are required to meet health and safety standards requirements and to ensure the physical, mental, and psycho/social well-being of their residents. Should you have concerns about the quality of care in a Pennsylvania or New Jersey nursing home, or if you suspect neglect, abuse, or fraud has occurred at the Pennsylvania, Philadelphia, or New Jersey nursing home where your loved one lives, please contact nursing home abuse attorney Brian P. Murphy to discover your legal rights and options.