Michigan Nursing Homes Face Scrutiny Over Financial Transparency, Care Standards
Advocates tell Michigan senators that nursing homes use complex corporate structures to hide profits while thousands of residents receive substandard care.
LANSING, MICHIGAN — Michigan nursing homes are operating under complex corporate structures that obscure profits while providing substandard care to residents, advocates told state lawmakers during a Wednesday hearing examining the industry’s practices.
The Michigan Elder Justice Initiative presented testimony to the Senate Oversight Committee highlighting widespread financial opacity and poor conditions across the state’s long-term care facilities.
“The nursing home industry says there simply isn’t enough money to do better, and that’s where our advocacy has always unfortunately ended,” Alison Hirschel, director of the Michigan Elder Justice Initiative, told lawmakers. “The reason it matters so much is because there are thousands of people across the state, your constituents, who are living in nursing homes and not getting the quality of care of life that you would consider acceptable for yourself or you would want for somebody you care about.”
Financial Structure Hides True Profits
While nursing homes commonly claim they operate unprofitably, advocates argued this narrative masks a more complex financial reality. Group members explained that nursing facilities utilize opaque corporate structures that make tracking actual profits extremely difficult.
Dr. Ashvin Gandhi, professor at the UCLA Anderson School of Management, testified about techniques used to conceal profits through what he termed “profit tunnelling.” This strategy involves the same ownership groups who control nursing homes creating separate entities that extract money from the facilities.
The advocacy group called for legislative action requiring greater transparency and oversight of nursing home finances to better understand how funds are being allocated and whether adequate resources reach patient care.
Declining Standards of Care
Beyond financial concerns, testimony revealed a troubling pattern of deteriorating care standards across Michigan nursing facilities. Salli Pung, the Michigan long-term care ombudsman, described a normalization of previously unacceptable conditions.
“What at one point was not acceptable seems to now be acceptable,” Pung said during the hearing. “We need to hold providers and the owners accountable to meeting the minimum requirements to afford residents the highest quality of life and their appropriate care.”
The ombudsman’s office serves as an independent advocate for nursing home residents, investigating complaints and working to resolve issues between families and facilities.
Call for Legislative Action
The Michigan Elder Justice Initiative urged senators to implement stronger regulatory measures that would pierce the corporate veil surrounding nursing home operations. The group emphasized that current oversight mechanisms fail to adequately protect vulnerable residents or ensure appropriate use of public and private funding.
Staff shortages compound the quality issues, with facilities struggling to maintain adequate personnel levels while corporate owners potentially siphon profits through complex financial arrangements, according to the testimony.
The hearing is part of ongoing legislative scrutiny into Michigan’s long-term care system, as lawmakers grapple with balancing industry concerns about operational costs against mounting evidence of care deficiencies and financial manipulation.
