Do Nursing Homes Low-Ball Profit Reports To Get Higher Government Payments?

Do nursing home owners understate the profits they report to federal regulators by shifting income to related businesses? Two academic experts in nursing home finance found that in one state 63 percent of margins are hidden this way. To put it another way, only 37 percent of true nursing home profits are reported to federal regulators.

A new paper by health economist Ashvin Gandhi of UCLA and financial economist Andrew Olenski of Lehigh University details how operators “tunnel” expenses to related parties and describes the breadth of the practice, which is widespread throughout the health care industry.