THE MISSISSIPPI LEGISLATURE

The Joint Committee on
Performance Evaluation and Expenditure Review

Report # 464

A Review of Quality of Care and Cost Efficiency Issues at the State Veterans’ Homes

Executive Summary

Introduction

MISS. CODE ANN. Section 35-1-19 (1972) authorizes the Veterans Affairs Board (VAB) to establish homes to “provide domiciliary care and other related services for eligible veterans of the State of Mississippi.” The Veterans Affairs Board operates veterans’ homes in Jackson, Kosciusko, Oxford, and Collins.

In response to complaints regarding quality of care at two of the four homes, PEER conducted this project to:

review results of external reviews of the homes conducted by the Mississippi Department of Health and the U. S. Department of Veterans Affairs during calendar years 2000 through 2003;

review staffing concerns highlighted in the external reviews;

review internal quality assurance processes in place at the homes; and,

determine whether the VAB is financially managing the homes to achieve cost efficiency.

Background

Each of the Mississippi veterans’ homes was built to accommodate 150 residents, a total of 600 for the four homes. During FY 2003, occupancy at the homes averaged 95%.

Until recently, the VAB contracted with nursing home management companies for daily management of the homes. However, since 2002, the VAB has operated and maintained all four veterans’ homes.

The VAB funds the veterans’ homes through three primary sources of funds: federal VA per diems, resident fees, and state general funds. Other revenue sources include the state Health Care Expendable Fund, veterans’ specialty license tag fees, and the state Budget Contingency Fund.

When the VAB initially approached the Legislature with the idea of constructing the homes, representatives of the agency told the Legislature that the only cost to the state would be the match required to build the homes and certain start-up costs, but that once the homes were operational, there would be no further reliance on state general funds. General fund support of the homes did decline slightly in FY 2002; however, the decline in state general funds was made up for through other state source revenues that had previously not been appropriated to the homes: revenues from the Health Care Expendable Fund and Budget Contingency Fund.

External Reviews of Quality of Care at the State Veterans’ Homes

During calendar years 2000 through 2003, thirty-nine inspections and two focused reviews of the state veterans’ homes by the Mississippi Department of Health and the U. S. Department of Veterans’ Affairs showed deficiencies in areas affecting resident health and safety, particularly at the state veterans’ home in Jackson.

The Mississippi Department of Health and the U. S. Department of Veterans’ Affairs (VA) have established detailed standards governing operation of nursing homes. During inspections, the reviewing agencies cite deficiencies based on the standards and require the home to complete a plan of correction that addresses each deficiency.

PEER analyzed results of the Department of Health’s and VA’s inspections conducted on the four homes from calendar years 2000 through 2003. The majority of the findings identified during inspections of the VAB’s homes during this period relate to deficiencies in patient care, physician services, documentation (including documentation, investigation, and reporting of patient injuries and deaths), and resident assessments and care plans. For calendar years 2000 through 2003, the state veterans’ home in Jackson had more VA and Department of Health inspection report findings than the other three homes combined.

During the period under review, the VA also conducted two focused reviews of the Jackson home. In February 2002, the VA found that the Jackson home’s heavy reliance on nurses hired through health care staffing agencies was negatively impacting resident care and that the home was not following proper procedures for handling sentinel events. In May 2002, the VA found that the Jackson home’s improper administration of medications placed the residents at risk. The VA requested corrective action plans after both investigations.

Staffing

With the exception of the Collins home, the state veterans’ homes have an unstable direct care workforce characterized by:

high vacancy rates in state employee positions (e.g., 85% for licensed practical nurses and 90% for registered nurses in the Jackson home as of August 30, 2003);

a large percentage of temporary workers hired through health care staffing agencies (e.g., 36% of licensed practical nurses and 40% of registered nurses in the Jackson home as of June 30, 2003); and,

high turnover in state employee positions (e.g., 67% for licensed practical nurses and 133% for registered nurses in the Jackson home during January through June of 2003).

Of the 364 direct care full-time equivalent employees the veterans’ homes had as of June 30, 2003, 67% were state employees, 17% were employees hired on individual contracts, and 16% were employees hired through health care staffing agencies. Of these three types of direct care employees hired for the veterans’ homes, VAB pays the lowest salaries to licensed practical nurses and registered nurses who are state employees. This could be a factor in the high vacancy and turnover rates in these positions at the homes.

All of the state veterans’ homes meet current minimum total direct care staffing ratios (calculated as the number of direct care staffing hours per resident per day) established in state and federal regulations as necessary for a minimum level of care. However, none of the veterans’ homes meet the proposed minimum staffing level standard for registered nurses that is contained in Senate Bill 1988, which is currently before Congress.

The state veterans’ homes in Jackson, Kosciusko, and Oxford employ a large percentage of temporary workers hired through health care staffing agencies to fill direct care positions, which could compromise the level of care provided.

Quality Assurance

VAB is not adequately monitoring its own performance on critical indicators of quality of care nor is it making necessary corrections in operations to address performance problems.

A system for ensuring quality in long-term care requires monitoring health care errors and threats to patient safety. Federal regulations require each veterans’ home maintain a quality assessment and assurance committee composed of a primary physician, the director of nursing services, and other members of the facility’s staff. The committee must meet at least quarterly to identify issues, develop and implement appropriate plans of action to address quality deficiencies, and correct these deficiencies within an established period.

While all four veterans’ homes have established quality assessment and assurance committees that meet at least quarterly, only the Collins home is consistently reporting data for all critical indicators of quality. The homes are arbitrarily adjusting minimum levels (thresholds) of acceptable performance in response to increasing deficiencies rather than developing effective strategies for improving performance. All four homes lack sufficient plans for correcting deficiencies. Also, at the Kosciusko home, a physician does not consistently attend quality assurance meetings as required by federal regulations.

Funding and Management of Financial Resources

Until recently, the VAB has not actively managed costs at the state veterans’ homes. In comparison to similarly sized Medicaid-certified nursing homes operating in Mississippi, the VAB is expending more on direct nursing care by using health care staffing agencies (at up to a 135% agency markup) or working employees overtime, but provides fewer direct care hours per resident.

Concerning the tools for financial management at the veterans’ homes, until the new Nursing Homes Division Director began to oversee the state veterans’ homes in July 2003, the VAB was not analyzing expenditures for cost control purposes at the homes. Also, statutory requirements for members of the VAB Board of Directors do not encompass the expertise or education associated with financial and budgeting needs of nursing home operation.

PEER examined selected Calendar Year 2002 expenses of the veterans’ homes, by functional category, and of seven Medicaid-certified nursing homes of similar size operating in Mississippi. PEER’s analysis shows that VAB costs are higher overall--specifically, in costs of physicians, nursing staff, utilities, housekeeping, maintenance, and dietary.

PEER estimates that during Fiscal Year 2003, VAB could have possibly avoided $1.2 million in direct care staffing costs through better management of these costs.

Breakeven analysis of the veterans’ homes shows that the current fees charged to residents in the homes are not adequate to cover operational expenses and require reliance on subsidies from state general and special funds.

Recommendations

The Legislature should amend MISS. CODE ANN. Section 43-11-17 (1972) to require that the state Department of Health conduct a full inspection of all licensed skilled nursing facilities, including the state veterans’ homes, at least once each calendar year to determine compliance with all standards, including life safety code standards.

The VAB’s homes should discontinue the practice of individually increasing performance thresholds in response to failure to attain minimum levels of acceptable performance on critical indicators. The VAB should only change a threshold following a proper assessment to establish a new threshold for the homes and the same threshold should apply to all of the homes. In the meantime, the homes should maintain the thresholds established by the first management company operating the homes, but create intermediate levels of attainment for a specified period. For example, the homes could set intermediate goals of reducing the occurrence of various critical indicators of quality of care (e.g., prevalence of falls) by 1% increments monthly.

The VAB should hold physicians working at the veterans’ homes fully accountable for all care and related documentation for which they are responsible by contract, statute, or regulation by including more specific work requirements (e.g., specific hours of “on call” availability [the VA’s and Department of Health’s regulations require that the homes make available to the residents twenty-four-hour emergency physician services seven days per week; the VA’s regulations require attendance at all quality assurance meetings]) in their contracts with physicians and enforcing penalty provisions contained in the contracts for failure to perform.

Due to the altered nature of the VAB’s focus and responsibilities since assuming the management of the veterans’ homes, the Legislature should amend MISS. CODE ANN. Section 35-1-1 (1972) to add three new members to the Veterans’ Affairs Board and require that three members have experience in financial management, nursing home administration, and nursing. The additional qualifications that PEER recommends are:
- one member should have five years of experience as a licensed certified public accountant, a certified managerial accountant, or a chartered financial analyst;
- one member should be a licensed nursing home administrator with seven years of experience in the management of nursing homes; and,
- one member should be a registered nurse with ten years of experience in nursing.

In addition to continuing the process of coding and classifying of expenditures, the VAB should examine and explore the use of this system in order to better achieve cost efficiency. For example, the VAB should use the system actively as an analytical tool to reduce and forecast expenditures rather than for monitoring purposes only. In order to accomplish this, the VAB should seek to acquire, within existing resources, the knowledge and skills necessary through either additional staff with expertise in this area or through employing a qualified consultant to advise the board in matters concerning financial management, nursing administration, and nursing practice.

The VAB should actively monitor and analyze the staffing and turnover levels of its full-time staff and the composition of its direct care workforce in terms of the number of workers hired through health care staffing agencies, contractually, and through full-time state employment.

The VAB should explore different ways of recruiting and retaining direct care staff in full-time state positions, thereby reducing quality of care problems associated with an unstable workforce and minimizing the expenses associated with the use of direct care employees hired through health care staffing agencies and overtime.

For example, the VAB should work with the State Personnel Board within the framework of existing SPB compensation policy to ensure that state employee direct care staff are receiving total compensation that is competitive with the compensation being paid to direct care employees by health care staffing agencies.

The VAB should explore other nurse recruitment options such as helping to pay the costs of a nurse’s education in return for a certain number of years of service at the homes. The VAB should also consider creative advertising to fill nursing positions in the homes, such as emphasizing the non-monetary rewards of being able to serve the state’s veterans.

If the VAB is unable to recruit and retain a stable workforce at the Jackson home and reduce its deficiencies related to patient care, the board should consider either closing the home or finding a location in the Jackson area where recruitment of direct care staff might not be so difficult.

The VAB should eliminate its reliance on state source funds by increasing resident fees to cover the costs of operation that are not covered through the VA’s per diem payments and veterans’ specialty license tag fees.

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