After Arkansas took action Monday to seize temporary control of two nursing homes, the state's new chief long-term care regulator said in an interview that he plans to strengthen how the state vets potential nursing home owners.
A leading Arkansas advocate for nursing home residents said she "couldn't be any more pleased" by the state's twin announcements -- intervention into troubled nursing homes and an early effort to tighten its review of new owners.
The Department of Human Services filed petitions Monday to take over facilities in Poinsett and Yell counties, using an emergency tool for just the second time since the 1980s.
Prolonged money troubles that are endangering resident safety prompted the state to begin the "receivership" process, officials said in court filings.
The Human Services Department took stewardship of Arlington Cove Healthcare in Trumann and Deerview in Ola, which are licensed for a combined 151 beds.
None of the 67 residents who were staying at those two facilities as of Friday will require transfers, officials said.
Department officials also said they will intensively monitor three other facilities daily that are owned by the same Conway man who owns Arlington Cove and Deerview.
The state expects to ultimately take control of those three nursing homes, which have 200 current residents, said Jerry Sharum, director of the Division of Provider Services and Quality Assurance.
"We haven't filed yet on those other three, but our expectation is that we're going to unless something miraculously changes," Sharum said. "[Arlington Cove and Deerview] were the most dire ... but we saw similar issues at all of those facilities."
Lexington Place Healthcare and Rehabilitation in Jonesboro, Lincoln Heights Healthcare in Star City and Prescott Manor Nursing Center are the facilities subject to intensive monitoring. A news release said state surveyors will monitor all three shifts every day at each of the three locations.
Martha Deaver, president of Arkansas Advocates for Nursing Home Residents, praised the Human Services Department for taking over the facilities. Such action usually comes when nursing homes have hit "rock bottom," and it gives residents hope for better care, she said.
"I'm taken aback, and I'm happy," Deaver said. "You couldn't have given me any more good news. ... [What] you're telling me now [indicates] that this new director is really dedicated to turning things around. That's just a miracle."
Companies jointly owned by Keith Head and Cathy Parsons of Conway hold licenses for all five of the facilities, according to Department of Human Services records.
A Poinsett County judge approved a 30-day takeover of Arlington Cove on Monday, and a Yell County judge is expected to issue a similar order today, said Amy Webb, a Human Services Department spokeswoman. Head agreed to the temporary orders for both facilities, state officials said.
"I've got some health issues, and I'm not able to talk right now," Head said when reached by phone, ending the call.
Parsons, whom records show holds 25% of the companies, filed suit against Head in December 2018, alleging "significant accounting irregularities" in their shared nursing homes. The lawsuit seeks hundreds of thousands of dollars in damages related to loans that her solely owned nursing homes gave to their shared facilities.
Parsons "has had no involvement" with the nursing homes primarily owned by Head, nor the management company they have jointly owned, since March 2018, her attorney Dylan Potts said.
Parsons is the sole owner of four other nursing home licenses.
A Facebook post on Sept. 23 alerted state officials to a payroll issue at the Jonesboro nursing home, Sharum said. State officials registered the post as a formal complaint and sent surveyors to all five nursing homes primarily owned by Head.
Surveyors reported that the facilities in Ola and Trumann were days away from being unable to provide residents with medical supplies and life-dependent drugs, according to court records.
Residents' access to food, prescribed drugs, medical supplies and lab services was jeopardized after existing vendors severed ties because of nonpayment.
Widespread and repeated payroll issues prompted at least some staff members at the nursing homes to quit.
Utility companies issued notices that they were preparing to cut the lights and water. Trash was piling up.
"The facility's garbage is no longer being picked up by the [garbage vendor], and the infectious waste pick up at the facility has been terminated," the monitors said of Deerview.
Surveyors of both facilities said "irregularities" in residents' fund accounts are under investigation.
The goal of the state takeover is to get the nursing homes on stable footing and return them to owners. Arkansas, however, can request that the judges order the nursing homes to be sold.
"If we get there, and we just don't see any way out -- the debts are too high, the income is too low, it just can't work out -- our position will be in support of a change in ownership to whomever that may be through that court process," Sharum said.
The state will appoint an Arkansas-based private provider to manage the facilities day to day.
Reliance Health Care, co-owned by Anthony and Bryan Adams of Conway, has agreed to assist Arkansas through the receivership process, company general counsel Eric Bell said by email. The company and its affiliates hold the licenses of about three dozen nursing homes in the state.
"As the Department of Human Services makes a determination to seek a receivership order, Reliance (whose affiliates operate several skilled nursing facilities across Arkansas) will assist the State of Arkansas by making available its operational resources to help stabilize the facilities," Bell said.
Reliance also stepped in as the managing company the last time the state seized nursing homes.
Arkansas took control of two of 22 facilities operated by New Jersey-based Skyline Health Care in May 2018, the first time it seized nursing homes in at least three decades. Skyline at the time was in the midst of a nationwide collapse and ultimately sold all of its Arkansas facilities.
An Arkansas Democrat-Gazette investigation into Skyline's collapse a year later exposed shortcomings in the state's vetting of ownership and found that officials had taken no steps to improve a system that allowed an out-of-state operator to rapidly acquire and then jeopardize 1 in 10 of its licensed nursing home beds.
Specifically, the newspaper found that officials were unaware of an $83.1 million civil fraud judgment in 2015 against one of the new licensees and that the state approved the transfer of 19 former Skyline licenses to firms with business or management ties to the failed company.
During a 30-minute interview Monday, Sharum said Arkansas is looking to strengthen its oversight over the change of ownership process. Officials plan to expand "the scope of what we're going to be asking for" to include civil judgments, bankruptcies and litigation in the applicants' past, he said.
"We're going to be asking for that information, for sure, for each of the changes of ownership pieces, but also we need to assess what the standards are going to be," Sharum said. "We're going to be looking at developing standards, for sure, related to change of ownership."
Sharum and Webb, the department spokeswoman, said Arkansas is reviewing how other states approach vetting ownership.
The Legislature in Kansas passed a bill in April specifically in response to the Skyline crisis. That state took over all 15 of the company's nursing homes last year.
The new law requires stricter disclosure of applicants' finances, including a detailed budget for the first year of operation and evidence the applicant has access to sufficient "working capital." It also bars any operator of seized homes from obtaining a license for 10 years.
Sharum is in his third week on the job after replacing Craig Cloud, who resigned to take a job with Friendship Community Care, a nonprofit provider of Medicaid services for people with developmental disabilities and mental illness.
Sharum also said the department would pay better attention to existing nursing home owners who are delinquent on their bills.
"If you can't pay for supplies, the next step is a decline in care," Sharum said.
State officials can tap a nearly $13 million fund made up of provider penalty payments to pay for operation of the seized nursing homes.
A "six-month, worst-case scenario" cost is estimated at $4 million, Sharum said.
"That may change when we file for the other three, but that's my expectation," he said.
Any costs over $1 million will require legislative approval, Sharum said.
In the Skyline case, the state spent $2 million to operate the two nursing homes. It recouped all but $270,000 of that money, mostly from new owners, Webb said.
A Section on 10/01/2019