An Aliso Viejo-based chain stands out in an investigation by journalists who found 232 California nursing homes either cut staff, paid lower wages or let caregiver levels slip below a state-mandated minimum after the state gave nursing homes $880 million in additional funding to boost wages and hire more caregivers.
"Of the homes that cut staffing, 13 owned by Orange County-based Covenant Care stand out," reports California Watch, a project of the nonprofit Center for Investigative Reporting. "The homes pared caregivers even as they got $15 million in additional funding."
"The average profit at those 13 homes reached more than $900,000 in 2008--three times higher than the remaining 632 homes analyzed by California Watch," the watchdogs report.
The funds came courtesy of a 2004 state law intended to keep such homes from having to cut staffing and wages. Covenant Care's homes are among those that made the cuts despite collecting about $236 million through 2008, the last year of available data.
Meanwhile, the chain's chief operating officer testified last year in a deposition that Covenant Care plans to house more medically fragile patients, which would lead to higher reimbursements and, according to critics, the higher possibility of dangerous patient conditions due to the lower staffing rates, since such patients require more care.
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Such a business strategy has already led to at least one wrongful death lawsuit filed by the family of a man who was staying at Covenant Care's Royal Care Center in Long Beach.
"Since his death, the home's staffing level sank below the state-mandated staffing minimum set in 2000," California Watch reports. "Royal Care's total profits, though, reached $540,000 in 2008 alone."
And the chain's top administrators and nursing supervisors were rewarded with bonuses based, in part, on how much profit each home generated, the probe shows.
Around the time the bonuses were being doled out, California Watch reports, a family trust associated with Covenant Care CEO Robert Levin paid $4.76 million to purchase an Irvine estate, complete with a theater and outdoor living room.