Articles President’s State of the Union signals significant impact on the Skilled Nursing Industry By J. David Morrissy, Robert Guttmann & Daniel S. Park | March 3, 2022 In Tuesday night's State of the Union Address, President Biden emphasized his administration’s commitment to protecting nursing homes’ patients. Biden asserted that private equity's entry into the Skilled Nursing Facility (“SNF”) sector has led to lower quality of care but higher Federal costs. “That ends on my watch,” the President declared. “Medicare is going to set higher standards for nursing homes and make sure your loved ones get the care they deserve and expect.” Biden’s short remarks echoed the White House’s fact sheet issued on Monday, which listed numerous reforms proposed by the Department of Health and Human Services (HHS). Notably, the fact sheet proposes to hold poorly performing nursing homes accountable for substandard care, and to provide transparency on nursing home conditions so potential residents and their loved ones can identify the best option for long-term care. The Administration is casting the initiative as a fight against the private equity space which, it contends, has become a significant force in the SNF industry over the last several years. However, many of the areas of concern cited by the fact sheet issued by the White House seem more focused on older homes than on a particular type of owner. For example, the fact sheet notes the need for more single-occupant rooms at nursing facilities as well as generally minimizing unacceptable overcrowding. Federal regulation relating to the White House’s focus could have a disastrous impact on older homes that tend to have more than one occupant per room. Also troubling is the proposal to enact new minimum staff-to-patient ratios. Left unsaid is how nursing facilities can meet even more stringent staffing requirements amidst an historic nursing shortage. To increase transparency, the Centers for Medicare & Medicaid Services also plan to identify and track owners and operators to highlight past problems with promoting resident health and safety, enhancing the rating website Nursing Home Care Compare, and examining the role of private equity in nursing home operations. All the above portends heightened scrutiny of the nursing home industry at a time when it is slowly finding its footing in a post-covid world. The government's aims may be well-intentioned, but it is unclear at this stage whether the fixed criteria noted above will have the unintended negative consequence of unfairly penalizing SNF operators that run quality, patient-focused facilities. ZEK's healthcare attorneys will continue to monitor this situation and specifically any forthcoming executive orders or draft legislation in the wake of the President's speech. As always, we are available to discuss any compliance or regulatory issues that may arise in the interim. J. David Morrissy is recognized throughout the country for his skillful navigation of complex commercial transactions, powerful litigation strategies, and insightful management of regulatory compliance matters. Mr. Morrissy has earned a reputation as a trusted counselor and legal and business resource for corporations and their principals, including nursing home owners and operators. For questions regarding this article, please contact David at firstname.lastname@example.org Robert Guttmann advises numerous healthcare operators, including of Skilled Nursing Facilities, in devising practical and cost-effective strategies to implement their goals whether in litigation, government relations or compliance-based issues. For questions regarding this article, please contact Rob at email@example.com. Daniel Park is an associate of ZEK and a member of the firm’s Litigation Department. Daniel’s practice focuses on banking, complex commercial, and mortgage-related litigation. For questions regarding this article, please contact Daniel at firstname.lastname@example.org.