Spread & Containment
Rebuilding Trust in Coronaworld
Rebuilding Trust in Coronaworld
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[TOTM: The following is part of a blog series by TOTM guests and authors on the law, economics, and policy of the ongoing COVID-19 pandemic. The entire series of posts is available here.
This post is authored by Julian Morris, (Director of Innovation Policy, ICLE).]
Governments are beginning to lift the lockdowns they imposed to slow the spread of COVID-19. That is a good thing. But simply lifting the restrictions won’t immediately take us back to normality. For that to happen requires a massive investment in mechanisms that will rebuild trust.
Prior to COVID-19, people implicitly trusted that travelling on public transit, working in an office, attending a ball game, or going to a shopping mall would not subject them to the risk of infection by a potentially deadly virus (or any other terrible eventuality). In the wake of the pandemic, this implicit trust is gone. Many people are afraid of COVID-19 and will require reassurance. While governments likely contributed significantly to the loss of trust, they are likely not in the best position to rebuild that trust. The onus is thus on businesses and civic organizations to provide reassurance and rebuild trust. This post outlines two ways businesses can contribute to this effort.
Lockdowns and the Trust Deficit
As the incidence of COVID-19 began to rise dramatically in March, governments across the world imposed “lockdowns.” These curfew-like arrangements have gone well beyond the limits on public gatherings and other “social distancing” strategies deployed during previous major pandemics such as the Spanish ‘flu of 1918-19. Indeed, they are among the most far-reaching restrictions ever imposed on human activity during peacetime. Hundreds of millions of people have been cooped up at home for nearly two months, allowed out only briefly each day for exercise or to buy groceries. Millions of those now at home have also lost their main source of income.
Governments are now finally beginning to remove some of the most severe of these restrictions, allowing more businesses to operate. As they do so, businesses are trying to figure out what the post-lockdown economy is going to look like: Will employees come back to work in offices? Will customers shop in stores, eat at restaurants, visit movie theatres, and use rideshares, taxis, planes, and public transit?
Many people are fearful about the consequences of going back to work. A recent IPSOS-MORI poll for the Washington Post found that 74 percent of American adults want policymakers to, “keep trying to slow the spread of the coronavirus, even if that means keeping many businesses closed,” while just 25 percent prefer to, “open up businesses and get the economy going again, even if that means more people would get the coronavirus.” Meanwhile, in a recent survey in the UK, the TUC union found that 40% of workers were worried about the prospects of returning to crowded workplaces.
The loss of trust is likely in part be due to conditioning: for the past two months we have been told by all and sundry to avoid other people (except over Zoom). Governments likely contributed to this through their promotion of scary predictions that millions could die if people didn’t “stay home, stay safe.” Partly, however, it is a natural reaction to the perceived threat posed by COVID-19.
For the elderly and those with underlying conditions more likely to be adversely affected by COVID-19, such anxiety is understandable. But even many people less likely to become seriously ill or die from COVID-19 are worried. This is also not surprising: They may have heard horror stories of young, otherwise healthy people who ended up on a ventilator and either died or suffered permanent lung damage. Or perhaps they read about the mysterious effects COVID-19 can have on other organs, ranging from the intestines to the brain. Or they may have a more vulnerable person in our household and are worried about the possibility that we might infect them. Or, as I am sure is the case with many, they just don’t know—and this is their reaction to uncertainty (fueled, in part by the now-discredited predictions of doom).
Regardless of why a person fears COVID-19, the fact is that many do. And one thing common to all of them is a trust deficit. Given widespread uncertainty regarding who has the virus, how can one trust that the business one works, shops, or dines at provides a safe environment free of COVID-19? This even extends to friends and colleagues: how can one individual trust another individual they might encounter while at work or at play? And it applies also to the use of taxis and rideshares; how can riders and drivers trust one another?
It might be argued that since governments were in no small part responsible for generating the trust deficit, through their well-intentioned but probably misguided efforts to lock down the economy and constant exhortations to avoid all human contact, they should now be trying to do what they can to rebuild trust. Unfortunately, however, they may not be in a very good position to do that. While governments are quite good at scaring people (“I’m from the government and I’m here to help”), they are less good at providing reassurance (“I’m from the government and I’m here to help”), or even data. In other words, governments aren’t much good at engaging in the kinds of “costly signalling” necessary to build trust between individuals and businesses. As a result, much of the responsibility for rebuilding trust will fall on businesses and civic organizations.
Businesses can do several things that would likely reduce this trust deficit and allay the fears of employees and customers. First, they can establish, communicate, and implement clear standards for employees and customers regarding the practices to be adopted to reduce infection risk. Second, and relatedly, where employees are likely to be working in close quarters with one another or with customers or suppliers, they can adopt mechanisms to establish the COVID-19 status of those employees, suppliers and customers (somewhat along the lines of the system implemented by Taiwan in February and subsequently elaborated by Hal Singer in his post in this series here).
The following sections briefly consider how such systems might work.
CV19 Standards
Companies that have not been locked down are already implementing processes to limit the exposure of employees to potentially infected customers, suppliers, and other employees. For example, many supermarkets require staff to use masks and/or protective screens and gloves. Some stores also require customers to wear masks, limit how many people can be in the store, and impose distancing rules. Some have even built seemingly permanent screens in front of check-out clerks and imposed seemingly permanent rules for in-store movement. Other stores and restaurants are currently limiting service to take-out and delivery.
At present, the approaches taken by businesses vary considerably. There is nothing inherently wrong with this; indeed, it is a healthy part of a market process in which companies develop different solutions to the same problem and allow consumers to pick and choose the ones that work best for them. Consumers can be aided in this process by reading reviews and ratings provided by other consumers; that model has worked well for goods and services purchased online. As Paul Seabright has noted, these systems are designed to enable users to build trusting relationships with suppliers. Survey data suggest that consumers find such systems more trustworthy than government regulations.
But when consumers are not well placed to evaluate the most effective solution, for example because it is difficult to observe the effectiveness of the solution directly, it can be helpful for third parties to evaluate the various solutions and either rank them or set out voluntary pass-fail standards. COVID-19 is just such a case: individual consumers and employees are unlikely to be in a good position to evaluate the relative effectiveness of different processes and technologies designed to limit the transmission of SARS-CoV-2. As such, pass-fail standards developed and/or validated by credible, independent third parties are likely to be the most effective way to help rebuild trust.
Standards will vary depending on the type of establishment and activity. For some businesses, such as theatres, gyms, and mass transit systems, the standards will likely be more onerous than others. Plausibly, such establishments could reduce transmission through such things as: mandatory masks, mandatory use of antiviral hand sanitizer on entry, regular cleaning, the use of HEPA filters (which remove the droplets on which the virus is spread), and other technologies. But given the very close proximity of people in such systems, often for extended periods (half an hour or more), the risk of significant viral load being transferred from one person to another, even if wearing basic masks, remains.
For standards to be effective as a means of regaining the trust of employees, suppliers, and consumers, it is important that they are communicated effectively through marketing campaigns, likely including advertising and signage. Standards will also likely change over time as understanding of the way the virus is transmitted, technologies that can prevent transmission, and hence best practices improve. The need for such standards will also likely change over time and once the virus is no longer a major threat there should be no need for such standards. For these reasons, standards should be both voluntary and developed privately. However, governments can play a role in encouraging the adoption of such standards by legislating that organizations that are compliant with a recognized standard will not be liable if an infection occurs on their property or through the actions of their employees.
In addition to other practices designed to reduce transmission of the SARS-CoV-2 virus, some businesses have begun testing employees for the virus, to determine who is and who is not currently infected, so that infected individuals can be isolated until they are no longer infectious (employees who are required to isolate continue to receive their salary). Some businesses are also considering testing for antibodies to the virus, to determine who has had the virus and likely has some immunity. By doing such testing, businesses are probably reducing transmission both among employees and between employees and customers to a greater extent than by merely implementing technologies, hygiene and distancing rules. But the tests are not perfect and given the potential for infection outside work, it is possible that an employee who tests negative on one day could then become infected and be infective a few days later. While daily testing might be an option for some firms, it is unrealistic for most—and will not solve the trust problem for most individuals.
CV19 Status Verification
This brings us to the second major thing that business can do to reduce the trust gap: status verification. The idea here is to enable parties to ascertain one another’s current COVID-19 status without the need to resort to constant testing. One possible approach is to use a smartphone-based app that combines various pieces of information (time stamped virus tests and antibody tests, anonymized information about contacts with people who subsequently tested positive, and self-reported health-relevant data) to offer the most accurate and up-to-date status of an individual.
In principle, such a status app could be used by employers to minimize the likelihood that their staff have COVID (and to require those that may be infected to self-isolate and obtain a test). But their potential application is far wider:
· Universities, churches, theatres, restaurants, bars, and events might utilize the status app not only for employees but also to determine who may participate and/or what forms of PPE they should utilize and/or where participants may congregate.
· Airlines might utilize status apps to determine who might fly and where passengers should be seated.
· Jurisdictions might utilize status apps as a means of facilitating more rapid immigration – and to enable those who most likely do not have COVID-19 to avoid most quarantine requirements.
· Public transit systems might utilize status apps to determine who can use the system.
· Taxis and ridesharing services, such as Uber and Lyft, might utilize data from the status app to help match riders and drivers.
· Personal services facilitators such as Thumbtack might utilize the app to help match service providers and customers.
· Hotels, AirBnB and vacation rental facilitators such as vrbo might use status apps for both hosts (and their employees and contractors) and guests in order to minimize infection risk during a visit.
· Online dating and matchmaking services such as Match and Tinder might utilize status apps to help facilitate virus-compatible matches. (While SARS-CoV-2/COVID-19 is not really comparable to HIV/AIDS, it is noteworthy that sites already exist that seek to match people who are HIV positive.)
How a CV19 Status App might Work
A basic schema for a CV19 status app would be:
· Red = Has COVID-19 (e.g. recently tested positive for virus)
· Red-Amber = May have COVID-19 (e.g. recently tested negative for virus but either has COVID-19 related symptoms or has been in contact with someone who tested positive).
· Amber = Is susceptible: Has not had COVID-19 and likely does not have COVID-19 (e.g. recently tested negative for COVID-19, has no COVID-19 symptoms, and has had no recent known contact with someone who tested positive).
· Green = Has had COVID-19 and is now presumed to be immune (either tested positive for CV19 and then tested negative for CV19, or tested negative for CV19 and also tested positive for Antibodies) (See below regarding immunity concerns.)
This schema is shown in the decision tree below
There are numerous technical issues relating to the operation of an app designed to establish a person’s CV19 status that must be addressed for it to function effectively. First, it will be necessary to ensure that the person using the app is the person whose status is being asserted. It should be possible to address this by storing the information from tests, contacts with infected people, and self-reported symptoms on an immutable digital ledger and use biometric identification both to record and to share status information. (Storing the status information on a person’s phone in this way also avoids the risk of hacking that plagues centralized databases.)
Next there is the question of authenticating test data recorded by the app. Ideally, this would be done by having a trusted third party—such as a doctor, nurse, or pharmacist—verify the data. If that is not feasible—for example because the test was carried out at home—then some other mechanism will be required to ensure the data is input correctly, such as rewards for accurate self-reports and/or penalties for inaccurate self-reports. (Self-reported data could also be treated within the system as less reliable, or simply as tentative—requiring verified test data to be added within a specified period.)
Beyond these verification issues, there remain problems with the specificity and sensitivity of tests—implying a likelihood of both false positive and false negatives. Although there are now both PCR and antibody tests that achieve very high levels of accuracy, even small numbers of false negative PCR tests and false positive antibody tests would clearly create problems for the effective functioning of the status app system. To address these problems, it may be necessary to undertake secondary testing for some portion of the tests.
The more challenging problem is that of infection after tests are conducted. As noted above, this can in principle be mitigated—but not eliminated—by incorporating contact tracing and/or self-reporting of symptoms. Related to this is the possibility that having COVID-19 confers only limited immunity (as has been suggested in relation to some people who have seemingly become reinfected). This obviously poses problems for the notion of a “Green” status; if reinfection is possible, then Green clearly would not be a permanent designation and would require regular testing. The evidence remains ambiguous, with news of five US sailors who had COVID then tested negative twice subsequently having new symptoms and testing positive again; on the other hand, a recent study suggests that people who test positive after recovery do not have a live (infectious) version of the virus.
Contact tracing apps have been used successfully in several locations as part of a strategy for containing COVID-19. However, the only really successful implementations so far have been those in China, South Korea and Hong Kong, which had a mandatory component and were highly centralized. By contrast, apps that required voluntary uptake have generally been less successful.
One reason for the lack of success of voluntary contact tracing apps is heightened concern regarding privacy (for example, the app used in Hong Kong enables anyone to find the gender, age, and precise locations of every person in the city who currently has COVID-19). Of course it is worth repeating Jane Bambauer’s observation in an earlier post that “Objections to surveillance lose their moral and logical bearings when the alternatives are out-of-control disease or mass lockdowns. Compared to those, mass surveillance is the most liberty-preserving option.” But assuming imprisonment is not the only alternative, concerns over privacy are not necessarily unmoored from logic or ethics (pace Christine Wilson’s earlier post). And to address these concerns, several groups have developed privacy-protecting systems. For example, the TCN coalition developed a system that shares anonymized tokens with other nearby phones over Bluetooth Low Energy. That system has now been adopted by Google and Apple in an API that is being made available to government health authorities (but not to other private app developers).
Another reason voluntary contact tracing apps have not been successful is the lack of incentives to adopt them. The main benefit of a contact tracing app is that it notifies the user when they have been in close contact with someone who subsequently tested positive. Logically, the people most likely voluntarily to adopt a contact tracing app are those who are most risk averse. But those people would also presumably be taking strong measures to avoid contracting COVID-19, so they would be less likely to become infected. By contrast, the people most likely to become infected are those who are least risk averse. But those people are least likely to be motivated to use the contact tracing app. In other words, even if there is relatively wide uptake of the app (say, 40% of the population, as in Iceland), it is likely to miss many of the people most likely to be spreading COVID-19 and so would not actually be very useful as a means of identifying and containing clusters.
Tying the contact tracing app to a CV19 Status App potentially overcomes this incentive compatibility problem, since anyone who wants to engage in an activity that requires use of the app would automatically participate in the contact tracing system. It could thus be quite effective at identifying instances of transmission that occur during activities that require the app to be used, which would also presumably be activities that put users at higher risk.
Nonetheless, for the app to be useful as a means of identifying clusters of COVID-19, either a significant proportion of common activities would have to require use of the app (e.g. public transit, rideshares, gyms, and shopping malls) or it would have to be used by at least some proportion of those not required to use it for access to activities.
Adding a symptom monitoring component can help in two ways. First, by offering users a way to self-assess for early symptoms of COVID-19, it encourages more people to download and use the app. More important, symptom monitoring can help identify additional potential COVID-19 infections, both among the individuals reporting symptoms and among their contacts. Thus, the combination of test data, symptom data and contact tracing become the information determining a person’s current status in a manner that is more reliable than relying on any one datum.
It should be noted that even combining these data will not make the status app 100% accurate. Some people with COVID-19 will likely slip through as Green or Orange and others will likely inadvertently be infected as a result. But the number of such instances is likely to be small and certainly much lower than would be the case without the use of the app. Moreover, widespread use of the app should dramatically reduce the infection rate throughout the population, with benefits to all.
Conclusions
Both CV19 standards and CV19 status verification offer potential means by which to address the trust deficit that has emerged in the context of the continuing COVID-19 pandemic. A company that adopts both solutions would likely dramatically reduce the chances of their employees, suppliers and customers contracting the virus on their premises. That would also likely reduce the company’s liability, which could be rewarded by insurance providers offering discounts. Indeed, one could envisage a greater role for insurance companies in designing or certifying the standards and the status app.
However, the real benefits of these systems come not from one or a few companies adopting them but from widespread adoption, which has the potential dramatically to reduce the transmission of the virus both now and in the future (should there be a second wave). This leads to something of a paradox: Governments could mandate adoption, but such an approach may be counterproductive for two reasons. First, much knowledge is dispersed and tacit, so it is generally better to allow private actors to determine which standards to adopt (lest an inferior standard be the subject of a mandate). Second, if companies are genuinely concerned to address the trust deficit, then they will be willing to invest in standards and to limit access though status apps — both of which entail costs. By contrast, if governments mandate the use of standards and apps, they would effectively prevent firms from engaging in such costly signalling, so would undermine at least part of the effectiveness of such tools as trust-generative.
The post Rebuilding Trust in Coronaworld appeared first on Truth on the Market.
Spread & Containment
Separating Information From Disinformation: Threats From The AI Revolution
Separating Information From Disinformation: Threats From The AI Revolution
Authored by Per Bylund via The Mises Institute,
Artificial intelligence…
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Authored by Per Bylund via The Mises Institute,
Artificial intelligence (AI) cannot distinguish fact from fiction. It also isn’t creative or can create novel content but repeats, repackages, and reformulates what has already been said (but perhaps in new ways).
I am sure someone will disagree with the latter, perhaps pointing to the fact that AI can clearly generate, for example, new songs and lyrics. I agree with this, but it misses the point. AI produces a “new” song lyric only by drawing from the data of previous song lyrics and then uses that information (the inductively uncovered patterns in it) to generate what to us appears to be a new song (and may very well be one). However, there is no artistry in it, no creativity. It’s only a structural rehashing of what exists.
Of course, we can debate to what extent humans can think truly novel thoughts and whether human learning may be based solely or primarily on mimicry. However, even if we would—for the sake of argument—agree that all we know and do is mere reproduction, humans have limited capacity to remember exactly and will make errors. We also fill in gaps with what subjectively (not objectively) makes sense to us (Rorschach test, anyone?). Even in this very limited scenario, which I disagree with, humans generate novelty beyond what AI is able to do.
Both the inability to distinguish fact from fiction and the inductive tether to existent data patterns are problems that can be alleviated programmatically—but are open for manipulation.
Manipulation and Propaganda
When Google launched its Gemini AI in February, it immediately became clear that the AI had a woke agenda. Among other things, the AI pushed woke diversity ideals into every conceivable response and, among other things, refused to show images of white people (including when asked to produce images of the Founding Fathers).
Tech guru and Silicon Valley investor Marc Andreessen summarized it on X (formerly Twitter): “I know it’s hard to believe, but Big Tech AI generates the output it does because it is precisely executing the specific ideological, radical, biased agenda of its creators. The apparently bizarre output is 100% intended. It is working as designed.”
There is indeed a design to these AIs beyond the basic categorization and generation engines. The responses are not perfectly inductive or generative. In part, this is necessary in order to make the AI useful: filters and rules are applied to make sure that the responses that the AI generates are appropriate, fit with user expectations, and are accurate and respectful. Given the legal situation, creators of AI must also make sure that the AI does not, for example, violate intellectual property laws or engage in hate speech. AI is also designed (directed) so that it does not go haywire or offend its users (remember Tay?).
However, because such filters are applied and the “behavior” of the AI is already directed, it is easy to take it a little further. After all, when is a response too offensive versus offensive but within the limits of allowable discourse? It is a fine and difficult line that must be specified programmatically.
It also opens the possibility for steering the generated responses beyond mere quality assurance. With filters already in place, it is easy to make the AI make statements of a specific type or that nudges the user in a certain direction (in terms of selected facts, interpretations, and worldviews). It can also be used to give the AI an agenda, as Andreessen suggests, such as making it relentlessly woke.
Thus, AI can be used as an effective propaganda tool, which both the corporations creating them and the governments and agencies regulating them have recognized.
Misinformation and Error
States have long refused to admit that they benefit from and use propaganda to steer and control their subjects. This is in part because they want to maintain a veneer of legitimacy as democratic governments that govern based on (rather than shape) people’s opinions. Propaganda has a bad ring to it; it’s a means of control.
However, the state’s enemies—both domestic and foreign—are said to understand the power of propaganda and do not hesitate to use it to cause chaos in our otherwise untainted democratic society. The government must save us from such manipulation, they claim. Of course, rarely does it stop at mere defense. We saw this clearly during the covid pandemic, in which the government together with social media companies in effect outlawed expressing opinions that were not the official line (see Murthy v. Missouri).
AI is just as easy to manipulate for propaganda purposes as social media algorithms but with the added bonus that it isn’t only people’s opinions and that users tend to trust that what the AI reports is true. As we saw in the previous article on the AI revolution, this is not a valid assumption, but it is nevertheless a widely held view.
If the AI then can be instructed to not comment on certain things that the creators (or regulators) do not want people to see or learn, then it is effectively “memory holed.” This type of “unwanted” information will not spread as people will not be exposed to it—such as showing only diverse representations of the Founding Fathers (as Google’s Gemini) or presenting, for example, only Keynesian macroeconomic truths to make it appear like there is no other perspective. People don’t know what they don’t know.
Of course, nothing is to say that what is presented to the user is true. In fact, the AI itself cannot distinguish fact from truth but only generates responses according to direction and only based on whatever the AI has been fed. This leaves plenty of scope for the misrepresentation of the truth and can make the world believe outright lies. AI, therefore, can easily be used to impose control, whether it is upon a state, the subjects under its rule, or even a foreign power.
The Real Threat of AI
What, then, is the real threat of AI? As we saw in the first article, large language models will not (cannot) evolve into artificial general intelligence as there is nothing about inductive sifting through large troves of (humanly) created information that will give rise to consciousness. To be frank, we haven’t even figured out what consciousness is, so to think that we will create it (or that it will somehow emerge from algorithms discovering statistical language correlations in existing texts) is quite hyperbolic. Artificial general intelligence is still hypothetical.
As we saw in the second article, there is also no economic threat from AI. It will not make humans economically superfluous and cause mass unemployment. AI is productive capital, which therefore has value to the extent that it serves consumers by contributing to the satisfaction of their wants. Misused AI is as valuable as a misused factory—it will tend to its scrap value. However, this doesn’t mean that AI will have no impact on the economy. It will, and already has, but it is not as big in the short-term as some fear, and it is likely bigger in the long-term than we expect.
No, the real threat is AI’s impact on information. This is in part because induction is an inappropriate source of knowledge—truth and fact are not a matter of frequency or statistical probabilities. The evidence and theories of Nicolaus Copernicus and Galileo Galilei would get weeded out as improbable (false) by an AI trained on all the (best and brightest) writings on geocentrism at the time. There is no progress and no learning of new truths if we trust only historical theories and presentations of fact.
However, this problem can probably be overcome by clever programming (meaning implementing rules—and fact-based limitations—to the induction problem), at least to some extent. The greater problem is the corruption of what AI presents: the misinformation, disinformation, and malinformation that its creators and administrators, as well as governments and pressure groups, direct it to create as a means of controlling or steering public opinion or knowledge.
This is the real danger that the now-famous open letter, signed by Elon Musk, Steve Wozniak, and others, pointed to:
“Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?”
Other than the economically illiterate reference to “automat[ing] away all the jobs,” the warning is well-taken. AI will not Terminator-like start to hate us and attempt to exterminate mankind. It will not make us all into biological batteries, as in The Matrix. However, it will—especially when corrupted—misinform and mislead us, create chaos, and potentially make our lives “solitary, poor, nasty, brutish and short.”
International
‘Excess Mortality Skyrocketed’: Tucker Carlson and Dr. Pierre Kory Unpack ‘Criminal’ COVID Response
‘Excess Mortality Skyrocketed’: Tucker Carlson and Dr. Pierre Kory Unpack ‘Criminal’ COVID Response
As the global pandemic unfolded, government-funded…
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As the global pandemic unfolded, government-funded experimental vaccines were hastily developed for a virus which primarily killed the old and fat (and those with other obvious comorbidities), and an aggressive, global campaign to coerce billions into injecting them ensued.
Then there were the lockdowns - with some countries (New Zealand, for example) building internment camps for those who tested positive for Covid-19, and others such as China welding entire apartment buildings shut to trap people inside.
It was an egregious and unnecessary response to a virus that, while highly virulent, was survivable by the vast majority of the general population.
Oh, and the vaccines, which governments are still pushing, didn't work as advertised to the point where health officials changed the definition of "vaccine" multiple times.
Tucker Carlson recently sat down with Dr. Pierre Kory, a critical care specialist and vocal critic of vaccines. The two had a wide-ranging discussion, which included vaccine safety and efficacy, excess mortality, demographic impacts of the virus, big pharma, and the professional price Kory has paid for speaking out.
Keep reading below, or if you have roughly 50 minutes, watch it in its entirety for free on X:
Ep. 81 They’re still claiming the Covid vax is safe and effective. Yet somehow Dr. Pierre Kory treats hundreds of patients who’ve been badly injured by it. Why is no one in the public health establishment paying attention? pic.twitter.com/IekW4Brhoy
— Tucker Carlson (@TuckerCarlson) March 13, 2024
"Do we have any real sense of what the cost, the physical cost to the country and world has been of those vaccines?" Carlson asked, kicking off the interview.
"I do think we have some understanding of the cost. I mean, I think, you know, you're aware of the work of of Ed Dowd, who's put together a team and looked, analytically at a lot of the epidemiologic data," Kory replied. "I mean, time with that vaccination rollout is when all of the numbers started going sideways, the excess mortality started to skyrocket."
When asked "what kind of death toll are we looking at?", Kory responded "...in 2023 alone, in the first nine months, we had what's called an excess mortality of 158,000 Americans," adding "But this is in 2023. I mean, we've had Omicron now for two years, which is a mild variant. Not that many go to the hospital."
'Safe and Effective'
Tucker also asked Kory why the people who claimed the vaccine were "safe and effective" aren't being held criminally liable for abetting the "killing of all these Americans," to which Kory replied: "It’s my kind of belief, looking back, that [safe and effective] was a predetermined conclusion. There was no data to support that, but it was agreed upon that it would be presented as safe and effective."
Tucker Carlson Asks the Forbidden Question
— The Vigilant Fox ???? (@VigilantFox) March 14, 2024
He wants to know why the people who made the claim “safe and effective” aren’t being held to criminal liability for abetting the “killing of all these Americans.”
DR. PIERRE KORY: “It’s my kind of belief, looking back, that [safe and… pic.twitter.com/Icnge18Rtz
Carlson and Kory then discussed the different segments of the population that experienced vaccine side effects, with Kory noting an "explosion in dying in the youngest and healthiest sectors of society," adding "And why did the employed fare far worse than those that weren't? And this particularly white collar, white collar, more than gray collar, more than blue collar."
Kory also said that Big Pharma is 'terrified' of Vitamin D because it "threatens the disease model." As journalist The Vigilant Fox notes on X, "Vitamin D showed about a 60% effectiveness against the incidence of COVID-19 in randomized control trials," and "showed about 40-50% effectiveness in reducing the incidence of COVID-19 in observational studies."
Dr. Pierre Kory: Big Pharma is ‘TERRIFIED’ of Vitamin D
— The Vigilant Fox ???? (@VigilantFox) March 14, 2024
Why?
Because “It threatens the DISEASE MODEL.”
A new meta-analysis out of Italy, published in the journal, Nutrients, has unearthed some shocking data about Vitamin D.
Looking at data from 16 different studies and 1.26… pic.twitter.com/q5CsMqgVju
Professional costs
Kory - while risking professional suicide by speaking out, has undoubtedly helped save countless lives by advocating for alternate treatments such as Ivermectin.
Kory shared his own experiences of job loss and censorship, highlighting the challenges of advocating for a more nuanced understanding of vaccine safety in an environment often resistant to dissenting voices.
"I wrote a book called The War on Ivermectin and the the genesis of that book," he said, adding "Not only is my expertise on Ivermectin and my vast clinical experience, but and I tell the story before, but I got an email, during this journey from a guy named William B Grant, who's a professor out in California, and he wrote to me this email just one day, my life was going totally sideways because our protocols focused on Ivermectin. I was using a lot in my practice, as were tens of thousands of doctors around the world, to really good benefits. And I was getting attacked, hit jobs in the media, and he wrote me this email on and he said, Dear Dr. Kory, what they're doing to Ivermectin, they've been doing to vitamin D for decades..."
"And it's got five tactics. And these are the five tactics that all industries employ when science emerges, that's inconvenient to their interests. And so I'm just going to give you an example. Ivermectin science was extremely inconvenient to the interests of the pharmaceutical industrial complex. I mean, it threatened the vaccine campaign. It threatened vaccine hesitancy, which was public enemy number one. We know that, that everything, all the propaganda censorship was literally going after something called vaccine hesitancy."
Money makes the world go 'round
Carlson then hit on perhaps the most devious aspect of the relationship between drug companies and the medical establishment, and how special interests completely taint science to the point where public distrust of institutions has spiked in recent years.
"I think all of it starts at the level the medical journals," said Kory. "Because once you have something established in the medical journals as a, let's say, a proven fact or a generally accepted consensus, consensus comes out of the journals."
"I have dozens of rejection letters from investigators around the world who did good trials on ivermectin, tried to publish it. No thank you, no thank you, no thank you. And then the ones that do get in all purportedly prove that ivermectin didn't work," Kory continued.
"So and then when you look at the ones that actually got in and this is where like probably my biggest estrangement and why I don't recognize science and don't trust it anymore, is the trials that flew to publication in the top journals in the world were so brazenly manipulated and corrupted in the design and conduct in, many of us wrote about it. But they flew to publication, and then every time they were published, you saw these huge PR campaigns in the media. New York Times, Boston Globe, L.A. times, ivermectin doesn't work. Latest high quality, rigorous study says. I'm sitting here in my office watching these lies just ripple throughout the media sphere based on fraudulent studies published in the top journals. And that's that's that has changed. Now that's why I say I'm estranged and I don't know what to trust anymore."
Vaccine Injuries
Carlson asked Kory about his clinical experience with vaccine injuries.
"So how this is how I divide, this is just kind of my perception of vaccine injury is that when I use the term vaccine injury, I'm usually referring to what I call a single organ problem, like pericarditis, myocarditis, stroke, something like that. An autoimmune disease," he replied.
"What I specialize in my practice, is I treat patients with what we call a long Covid long vaxx. It's the same disease, just different triggers, right? One is triggered by Covid, the other one is triggered by the spike protein from the vaccine. Much more common is long vax. The only real differences between the two conditions is that the vaccinated are, on average, sicker and more disabled than the long Covids, with some pretty prominent exceptions to that."
Watch the entire interview above, and you can support Tucker Carlson's endeavors by joining the Tucker Carlson Network here...
Government
For-profit nursing homes are cutting corners on safety and draining resources with financial shenanigans − especially at midsize chains that dodge public scrutiny
Owners of midsize nursing home chains drain billions from facilities, hiding behind opaque accounting practices and harming the elderly as government,…
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The care at Landmark of Louisville Rehabilitation and Nursing was abysmal when state inspectors filed their survey report of the Kentucky facility on July 3, 2021.
Residents wandered the halls in a facility that can house up to 250 people, yelling at each other and stealing blankets. One resident beat a roommate with a stick, causing bruising and skin tears. Another was found in bed with a broken finger and a bloody forehead gash. That person was allowed to roam and enter the beds of other residents. In another case, there was sexual touching in the dayroom between residents, according to the report.
Meals were served from filthy meal carts on plastic foam trays, and residents struggled to cut their food with dull plastic cutlery. Broken tiles lined showers, and a mysterious black gunk marred the floors. The director of housekeeping reported that the dining room was unsanitary. Overall, there was a critical lack of training, staff and supervision.
The inspectors tagged Landmark as deficient in 29 areas, including six that put residents in immediate jeopardy of serious harm and three where actual harm was found. The issues were so severe that the government slapped Landmark with a fine of over $319,000 − more than 29 times the average for a nursing home in 2021 − and suspended payments to the home from federal Medicaid and Medicare funds.
Persistent problems
But problems persisted. Five months later, inspectors levied six additional deficiencies of immediate jeopardy − the highest level − including more sexual abuse among residents and a certified nursing assistant pushing someone down, bruising the person’s back and hip.
Landmark is just one of the 58 facilities run by parent company Infinity Healthcare Management across five states. The government issued penalties to the company almost 4½ times the national average, according to bimonthly data that the Centers for Medicare & Medicaid Services first started to make available in late 2022. All told, Infinity paid nearly $10 million in fines since 2021, the highest among nursing home chains with fewer than 100 facilities.
Infinity Healthcare Management and its executives did not respond to multiple requests for comment.
Such sanctions are nothing new for Infinity or other for-profit nursing home chains that have dominated an industry long known for cutting corners in pursuit of profits for private owners. But this race to the bottom to extract profits is accelerating despite demands by government officials, health care experts and advocacy groups to protect the nation’s most vulnerable citizens.
To uncover the reasons why, The Conversation’s investigative unit Inquiry delved into the nursing home industry, where for-profit facilities make up more than 72% of the nation’s nearly 14,900 facilities. The probe, which paired an academic expert with an investigative reporter, used the most recent government data on ownership, facility information and penalties, combined with CMS data on affiliated entities for nursing homes.
The investigation revealed an industry that places a premium on cost cutting and big profits, with low staffing and poor quality, often to the detriment of patient well-being. Operating under weak and poorly enforced regulations with financially insignificant penalties, the for-profit sector fosters an environment where corners are frequently cut, compromising the quality of care and endangering patient health. Meanwhile, owners make the facilities look less profitable by siphoning money from the homes through byzantine networks of interconnected corporations. Federal regulators have neglected the problem as each year likely billions of dollars are funneled out of nursing homes through related parties and into owners’ pockets.
More trouble at midsize
Analyzing newly released government data, our investigation found that these problems are most pronounced in nursing homes like Infinity − midsize chains that operate between 11 and 100 facilities. This subsection of the industry has higher average fines per home, lower overall quality ratings, and are more likely to be tagged with resident abuse compared with both the larger and smaller networks. Indeed, while such chains account for about 39% of all facilities, they operate 11 of the 15 most-fined facilities.
With few impediments, private investors who own the midsize chains have quietly swooped in to purchase underperforming homes, expanding their holdings even further as larger chains divest and close facilities. As a result of the industry’s churn of facility ownership, over one fifth of the country’s nursing facilities changed ownership between 2016 and 2021, four times more changes than hospitals.
A 2023 report by Good Jobs First, a nonprofit watchdog, noted that a dozen of these chains in the midsize range have doubled or tripled in size while racking up fines averaging over $100,000 per facility since 2018. But unlike the large, multistate chains with easily recognizable names, the midsize networks slip through without the same level of public scrutiny, The Conversation’s investigations unit found.
“They are really bad, but the names − we don’t know these names,” said Toby Edelman, senior policy attorney with the Center for Medicare Advocacy, a nonprofit law organization.
“When we used to have those multistate chains, the facilities all had the same name, so you know what the quality is you’re getting,” she said. “It’s not that good − but at least you know what you’re getting.”
In response to The Conversation’s findings on nursing homes and request for an interview, a CMS spokesperson emailed a statement that said the CMS is “unwavering in its commitment to improve safety and quality of care for the more than 1.2 million residents receiving care in Medicare- and Medicaid-certified nursing homes.”
The statement pointed to data released by the oversight body on mergers, acquisitions, consolidations and changes of ownership in April 2023 along with additional ownership data released the following September. CMS also proposed a rule change that aims to increase transparency in nursing home ownership by collecting more information on facility owners and their affiliations.
“Our focus is on advancing implementable solutions that promote safe, high-quality care for residents and consider the challenging circumstances some long-term care facilities face,” the statement reads. “We believe the proposed requirements are achievable and necessary.”
CMS is slated to implement the disclosure rules in the fall and release the new data to the public later this year.
“We support transparency and accountability,” the American Health Care Association/National Center for Assisted Living, a trade organization representing the nursing home industry, wrote in response to The Conversation‘s request for comment. “But neither ownership nor line items on a budget sheet prove whether a nursing home is committed to its residents. Over the decades, we’ve found that strong organizations tend to have supportive and trusted leadership as well as a staff culture that empowers frontline caregivers to think critically and solve problems. These characteristics are not unique to a specific type or size of provider.”
It often takes years to improve a poor nursing home − or run one into the ground. The analysis of midsize chains shows that most owners have been associated with their current facilities for less than eight years, making it difficult to separate operators who have taken long-term investments in resident care from those who are looking to quickly extract money and resources before closing them down or moving on. These chains control roughly 41% of nursing home beds in the U.S., according to CMS’s provider data, making the lack of transparency especially ripe for abuse.
A churn of nursing home purchases even during the COVID-19 pandemic shows that investors view the sector as highly profitable, especially when staffing costs are kept low and fines for poor care can easily be covered by the money extracted from residents, their families and taxpayers.
“This is the model of their care: They come in, they understaff and they make their money,” said Sam Brooks, director of public policy at the Consumer Voice, a national resident advocacy organization. “Then they multiply it over a series of different facilities.”
Investor race
The explosion of a billion-dollar private marketplace found its beginnings in government spending.
The adoption of Medicare and Medicaid in 1965 set loose a race among investors to load up on nursing homes, with a surge in for-profit homes gaining momentum because of a reliable stream of government payouts. By 1972, a mere seven years after the inception of the programs, a whopping 106 companies had rushed to Wall Street to sell shares in nursing home companies. And little wonder: They pulled in profits through their ownership of 18% of the industry’s beds, securing about a third of the hefty $3.2 billion of government cash.
The 1990s saw substantial expansion in for-profit nursing home chains, marked by a wave of acquisitions and mergers. At the same time, increasing difficulties emerged in the model for publicly traded chains. Shareholders increasingly demanded rapid growth, and researchers have found that the publicly traded chains tried to appease that hunger by reducing nursing staff and cutting corners on other measures meant to improve quality and safety.
“I began to suspect a possibly inherent contradiction between publicly traded and other large investor-operated nursing home companies and the prerequisites for quality care,” Paul R. Willging, former chief lobbyist for the industry, wrote in a 2007 letter to the editor of The New York Times. “For many investors … earnings growth, quarter after quarter, is often paramount. Long-term investments in quality can work at cross purposes with a mandate for an unending progression of favorable earnings reports.”
One example of that clash can be found at the Ensign Group, founded in 1999 as a private chain of five facilities. Using a strategy of acquiring struggling nursing homes, the company went public in 2007 with more than 60 facilities. What followed was a year-after-year acquisition binge and a track record of growing profits almost every year. Yet the company kept staffing levels below the national average and levels recommended by experts. Its facilities had higher than average inspection deficiencies and higher COVID infection rates. Since 2021, it has racked up more than $6.5 million in penalties.
Ensign did not respond to requests for comment.
Even with that kind of expense cutting, not all publicly traded nursing homes survived as the costs of providing poor care added up. Residents sued over mistreatment. Legal fees and settlements ate into profits, shareholders grumbled, and executives searched for a way out of this Catch-22.
Recognizing the long-term potential for profit growth, private investors snapped up publicly traded for-profit chains, reducing the previous levels of public transparency and oversight. Between 2000 and 2017, 1,674 nursing homes were acquired by private-equity firms in 128 unique deals out of 18,485 facilities. But the same poor-quality problems persisted. Research shows that after snagging a big chain, private investors tended to follow the same playbook: They rebrand the company, increase corporate control and dump unprofitable homes to other investment groups willing to take shortcuts for profit.
Multiple academic studies show the results, highlighting the lower staffing and quality in for-profit homes compared with nonprofits and government-run facilities. Elderly residents staying long term in nursing homes owned by private investment groups experienced a significant uptick in trips to the emergency department and hospitalizations between 2013 and 2017, translating into higher costs for Medicare.
Overall, private-equity investors wreak havoc on nursing homes, slashing registered nurse hours per resident day by 12%, outpacing other for-profit facilities. The aftermath is grim, with a daunting 14% surge in the deficiency score index, a standardized metric for determining issues with facilities, according to a U.S. Department of Health and Human Services report.
The human toll comes in death and suffering. A study updated in 2023 by the National Bureau of Economic Research calculated that 22,500 additional deaths over a 12-year span were attributable to private-equity ownership, equating to about 172,400 lost life years. The calculations also showed that private-equity ownership was responsible for a 6.2% reduction in mobility, an 8.5% increase in ulcer development and a 10.5% uptick in pain intensity.
Hiding in complexity
Exposing the identities of who should be held responsible for such anguish poses a formidable task. Private investors in nursing home chains often employ a convoluted system of limited liability corporations, related companies and family relationships to obscure who controls the nursing homes.
These adjustments are crafted to minimize liability, capitalize on favorable tax policies, diminish regulatory scrutiny and disguise nursing home profitability. In this investigation, entities at every level of involvement with a nursing home denied ownership, even though the same people controlled each organization.
A rule put in place in 2023 by the Centers for Medicare & Medicaid Services requires the identification of all private-equity and real estate investment trust investors in a facility and the release of all related party names. But this hasn’t been enough to surface the players and relationships. More than half of ownership data provided to CMS is incomplete across all facilities, according to a March 2024 analysis of the newly released data.
Even the land under the nursing home is often owned by someone else. In 2021, publicly traded or private real estate investment trusts held a sizable chunk of the approximately $120 billion of nursing home real estate. As with homes owned by private-equity investors, quality measures collapse after REITs get involved, with facilities witnessing a 7% decline in registered nurses’ hours per resident day and an alarming 14% ascent in the deficiency score index. It’s a blatant pattern of disruption, leaving facilities and care standards in a dire state.
Part of that quality collapse comes from the way these investment entities make their money. REITs and their owners can drain cash out of the nursing homes in a number of different ways. The standard tactic for grabbing the money is known as a triple-net lease, where the REIT buys the property then leases it back to the nursing home, often at exorbitant rates. Although the nursing home then lacks possession of the property, it still gets slammed with costs typically shouldered by an owner − real estate taxes, insurance, maintenance and more. Topping it off, the facilities then must typically pay annual rent hikes.
A second tactic that REITs use involves a contracting façade that serves no purpose other than enriching the owners of the trusts. Since triple-net lease agreements prohibit REITs from taking profits from operating the facilities, the investors create a subsidiary to get past that hurdle. The subsidiary then contracts with a nursing home operator − often owned or controlled by another related party − and then demands a fee for providing operational guidance. The use of REITs for near-risk-free profits from nursing homes has proven to be an ever-growing technique, and the midsize chains, which our investigation found generally provided the worst care, grew in their reliance on REITs during the pandemic.
“When these REITs start coming in … nursing homes are saddled with these enormous rents, and then they wind up going out of business,” said Richard Mollot, executive director of the Long-Term Care Community Coalition, a nonprofit organization that advocates for better care at nursing homes. “It’s no longer a viable facility.”
The churn of nursing home purchases by midsize chains underscores investors’ perception of the sector’s profitability, particularly when staffing expenses are minimized and penalties for subpar care can be offset by money extracted through related transactions and payments from residents, their families and taxpayers. Lawsuits can drag out over years, and in the worst case, if a facility is forced to close, its land and other assets can be sold to minimize the financial loss.
Take Brius Healthcare, a name that resonates with a disturbing cadence in the world of nursing home ownership. A search of the federal database for nursing home ownership and penalties shows that Brius was responsible for 32 facilities as of the start of 2024, but the true number is closer to 80, according to BriusWatch.org, which tracks violations. At the helm of this still midsize network stands Shlomo Rechnitz, who became a billionaire in part by siphoning from government payments to his facilities scattered across California, according to a federal and state lawsuit.
In lawsuits and regulators’ criticisms, Rechnitz’s homes have been associated with tales of abuse, as well as several lawsuits alleging terrible care. The track record was so bad that, in the summer of 2014, then-California Attorney General Kamala Harris filed an emergency motion to block Rechnitz from acquiring 19 facilities, writing that he was “a serial violator of rules within the skilled nursing industry” and was “not qualified to assume such an important role.”
Yet, Rechnitz’s empire in California surged forward, scooping up more facilities that drained hundreds of millions of federal and state funds as they racked up pain and profit. The narrative played out at Windsor Redding Care Center in Redding, California. Rechnitz bought it from a competing nursing home chain and attempted to obtain a license to operate the facility. But in 2016, the California Department of Public Health refused the application, citing a staggering 265 federal regulatory violations across his other nursing homes over just three years.
According to court filings, Rechnitz formed a joint venture with other investors who in turn held the license. Rechnitz, through the Brius joint venture, became the unlicensed owner and operator of Windsor Redding.
Brius carved away at expenses, slashing staff and other care necessities, according to a 2022 California lawsuit. One resident was left to sit in her urine and feces for hours at a time. Overwhelmed staff often did not respond to her call light, so once she instead climbed out of bed unassisted, fell and fractured her hip. Other negligence led to pressure ulcers, and when she was finally transferred to a hospital, she was suffering from sepsis. She was not alone in her suffering. Numerous other residents experienced an unrelenting litany of injuries and illnesses, including pressure ulcers, urinary tract infections from poor hygiene, falls, and skin damage from excess moisture, according to the lawsuit.
In 2023, California moved forward with licensing two dozen of Rechnitz’s facilities with an agreement that included a two-year monitoring period, right before statewide reforms were set to take effect. The reforms don’t prevent existing owners like Rechnitz from continuing to run a nursing home without a license, but they do prevent new operators from doing so.
“We’re seeing more of that, I think, where you have a proliferation of really bad operators that keep being provided homes,” said Brooks, the director of public policy at the Consumer Voice. “There’s just so much money to be made here for unscrupulous people, and it just happens all the time.”
Rechnitz did not respond to multiple requests for comment. Bruis also did not respond.
Perhaps no other chain showcases the havoc that can be caused by one individual’s acquisition of multiple nursing homes than Skyline Health Care. The company’s owner, Joseph Schwartz, parlayed the sale of his insurance business into ownership of 90 facilities between mid-2016 and December 2017, according to a federal indictment. He ran the company out of an office above a New Jersey pizzeria and at its peak managed facilities in 11 states.
Schwartz went all-in on cost cutting, and by early 2018, residents were suffering from the shortage of staff. The company wasn’t paying its bills or its workers. More than a dozen lawsuits piled up. Last year, Schwartz was arrested and faced charges in federal district court in New Jersey for his role in a $38 million payroll tax scheme. In 2024, Schwartz pleaded guilty to his role in the fraud scheme. He is awaiting sentencing, where he faces a year in prison along with paying at least $5 million in restitution.
Skyline collapsed and disrupted thousands of lives. Some states took over facilities; others closed, forcing residents to relocate and throwing families into chaos. The case also highlights the ease with which some bad operators can snap up nursing homes with little difficulty, with federal and state governments allowing ownership changes with little or no review.
Schwartz’s lawyer did not respond to requests for comment.
Not that nursing homes have much to fear in the public perception of their reputation for quality. CMS uses what is known as the Five-Star Quality Rating System, designed to help consumers compare nursing homes to find one that provides good care. Theoretically, nursing homes with five-star ratings are supposed to be exceptional, while those with one-star ratings are deemed the worst. But research shows that nursing homes can game the system, with the result that a top star rating might reflect little more than a facility’s willingness to cheat.
A star rating is composed of three parts: The score from a government inspection and the facility’s self-reports of staffing and quality. This means that what the nursing homes say about themselves can boost the star rating of facilities even if they have poor inspection results.
Multiple studies have highlighted a concerning trend: Some nursing homes, especially for-profit ones, inflate their self-reported measures, resulting in a disconnect from actual inspection findings. Notably, research suggests that for-profit nursing homes, driven by significant financial motives, are more likely to engage in this practice of inflating their self-reported assessments.
At bottom, the elderly and their families seeking quality care unknowingly find themselves in an impossible situation with for-profit nursing homes: Those facilities tend to provide the worst quality, and the only measure available for consumers to determine where they will be treated well can be rigged. The result is the transformation of an industry meant to care for the most vulnerable into a profit-driven circus.
The pandemic
Nothing more clearly exposed the problems rampant in nursing homes than the pandemic. Throughout that time, nursing homes reported that almost 2 million residents had infections and 170,000 died.
No one should have been surprised by the mass death in nursing homes − the warning signs of what was to come had been visible for years. Between 2013 and 2017, infection control was the most frequently cited deficiency in nursing homes, with 40% of facilities cited each year and 82% cited at least once in the five-year period. Almost half were cited over multiple consecutive years for these deficiencies − if fixed, one of the big causes of the widespread transmission of COVID in these facilities would have been eliminated.
But shortly after coming into office in 2017, the Trump administration weakened what was already a deteriorating system to regulate nursing homes. The administration directed regulators to issue one-time fines against nursing homes for violations of federal rules rather than for the full time they were out of compliance. This shift meant that even nursing homes with severe infractions lasting weeks were exempted from fines surpassing the maximum per-instance penalty of $20,965.
Even that near-worthless level of regulation was not feeble enough for the industry, so lobbyists pressed for less. In response, just a few months before COVID emerged in China, the Trump administration implemented new regulations that effectively abolished a mandate for each to hire a full-time infection control expert, instead recommending outside consultants for the job.
The perfect storm had been reached, with no experts required to be on site, prepared to combat any infection outbreaks. On Jan. 20, 2020 − just 186 days after the change in rules on infection control − the CDC reported that the first laboratory-confirmed case of COVID had been found at a nursing home in Washington state.
The least prepared in this explosion of disease were the for-profit nursing homes, compared with nonprofit and government facilities. Research from the University of California at San Francisco found those facilities were linked to higher numbers of COVID cases. For-profits not only had fewer nurses on staff but also high numbers of infection-control deficiencies and lower compliance with health regulations.
Even as the United States went through the crisis, some owners of midsize chains continued snapping up nursing homes. For example, two Brooklyn businessmen named Simcha Hyman and Naftali Zanziper were going on a nursing home buying spree through their private-equity company, the Portopiccolo Group. Despite poor ratings in their previously owned facilities, nothing blocked the acquisitions.
One such facility was a struggling nursing home in North Carolina now known as The Citadel Salisbury. Following the traditional pattern forged by private investors in the industry, the new owners set up a convoluted network of business entities and then used them to charge the nursing home for services and property. A 2021 federal lawsuit of many plaintiffs claimed that they deliberately kept the facility understaffed and undersupplied to maximize profit.
Within months of the first case of COVID reported in America, The Citadel Salisbury experienced the largest nursing home outbreak in the state. The situation was so dire that on April 20, 2020, the local medical director of the emergency room took to the local newspaper to express his distress, revealing that he had pressed the facility’s leadership and the local health department to address the known shortcomings.
The situation was “a blueprint for exactly what not to do in a crisis,” medical director John Bream wrote. “Patients died at the Citadel without family members being notified. Families were denied the ability to have one last meaningful interaction with their family. Employees were wrongly denied personal protective equipment. There has been no transparency.”
After a series of scathing inspection reports, the facility finally closed in the spring of 2022. As for the federal lawsuit, court documents show that a tentative agreement was reached in 2023. But the case dragged out for nearly three years, and one of the plaintiffs, Sybil Rummage, died while seeking accountability through the court.
Still, the pandemic had been a time of great success for Hyman and Zanziper. At the end of 2020, they owned more than 70 facilities. By 2021, their portfolio had exploded to more than 120. Now, according to data from the Centers for Medicare & Medicaid Services, Hyman and Zanziper are associated with at least 131 facilities and have the highest amount of total fines recorded by the agency for affiliated entities, totaling nearly $12 million since 2021. And their average fine per facility, as calculated by CMS, is more than twice the national average at almost $90,000.
In a written statement, Portopiccolo Group spokesperson John Collins disputed that the facilities had skimped on care and argued that they were not managed by the firm. “We hire experienced, local health care teams who are in charge of making all on-the-ground decisions and are committed to putting residents first.” He added that the number of facilities given by CMS was inaccurate but declined to say how many are connected to its network of affiliates or owned by Hyman and Zanziper.
With the nearly 170,000 resident deaths from COVID and many related fatalities from isolation and neglect in nursing homes, in February 2022 President Biden announced an initiative aimed at improving the industry. In addition to promising to set a minimum staffing standard, the initiative is focused on improving ownership and financial transparency.
“As Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up. That ends on my watch,” Biden said during his 2022 State of the Union address. “Medicare is going to set higher standards for nursing homes and make sure your loved ones get the care they deserve and expect.”
Still, the current trajectory of actions appears to fall short of what’s needed. While penalties against facilities have sharply increased under Biden, some of the Trump administration’s weak regulations have not been replaced.
A rule proposed by CMS in September 2023 and released for review in March 2024 would require states to report what percentage of Medicaid funding is used to pay direct care workers and support staff and would require an RN on duty 24/7. It would also require a minimum of three hours of skilled staffing care per patient per day. But the three-hour minimum is substantially lower than the 4.1 hours of skilled staffing for nursing home residents suggested by CMS over two decades ago.
The requirements are also lower than the 3.8 average nursing staff hours already employed by U.S. facilities.
The current administration has also let stand the Trump administration reversal of an Obama rule that banned binding arbitration agreements in nursing homes.
It breaks a village
The Villages of Orleans Health and Rehabilitation Center in Albion, New York, was, by any reasonable measure, broken. Court records show that on some days there was no nurse and no medication for the more than 100 elderly residents. Underpaid staff spent their own cash for soap to keep residents clean. At times, the home didn’t feed its frail occupants.
Meanwhile, according to a 2022 lawsuit filed by the New York attorney general, riches were siphoned out of the nursing home and into the pockets of the official owner, Bernard Fuchs, as well as assorted friends, business associates and family. The lawsuit says $18.7 million flowed from the facility to entities owned by a group of men who controlled the Village’s operations.
Although these men own various nursing homes, Medicare records show few connections between them, despite them all being investors in Comprehensive Healthcare Management, which provided administrative services to the Villages. Either they or their families were also owners of Telegraph Realty, which leased what was once the Villages’ own property back to the facility at rates the New York attorney general deemed exorbitant, predatory and a sham.
So it goes in the world of nursing home ownership, where overlapping entities and investors obscure the interrelationships between them to such a degree that Medicare itself is never quite sure who owns what.
Glenn Jones, a lawyer representing Comprehensive Healthcare Management, declined to comment on the pending litigation, but he forwarded a court document his law firm filed that labels the allegations brought by the New York attorney general “unfounded” and reliant on “a mere fraction” of its residents.
The shadowy structure of ownership and related party transactions plays an enormous role in how investors enrich themselves, even as the nursing homes they control struggle financially. Compounding the issue, the figures reported by nursing homes regarding payments to related parties frequently diverge from the disclosures made by the related parties themselves.
As an illustration of the problems, consider Pruitt Health, a midsize chain with 87 nursing homes spread across Georgia, South Carolina, North Carolina and Florida that had low overall federal quality ratings and about $2 million in penalties. A report by The National Consumer Voice For Quality Long-Term Care, a consumer advocacy group, shows that Pruitt disclosed general related party costs nearing $482 million from 2018 to 2020. Yet in that same time frame, Pruitt reported payments to specific related parties amounting to about $570 million, indicating a $90 million excess. Its federal disclosures offer no explanation for the discrepancy. Meanwhile, the company reported $77 million in overall losses on its homes.
The same pattern holds in the major chains such as the Cleveland, Tennessee-based Life Care Centers of America, which operates roughly 200 nursing homes across 27 states, according to the report. Life Care’s financial disbursements are fed into a diverse spectrum of related entities, including management, staffing, insurance and therapy companies, all firmly under the umbrella of the organization’s ownership. In fiscal year 2018, the financial commitment to these affiliated entities reached $386,449,502; over the three-year period from 2018 to 2020, Life Care’s documented payments to such parties hit an eye-popping $1.25 billion.
Pruitt Health and Life Care Centers did not respond to requests for comment.
Overall, 77% of US nursing homes reported $11 billion in related-party transactions in 2019 − nearly 10% of total net revenues − but the data is unaudited and unverified. The facilities are not required to provide any details of what specific services were provided by the related parties, or what were the specific profits and administrative costs, creating a lack of transparency regarding expenses that are ambiguously categorized under generic labels such as “maintenance.” Significantly, there is no mandate to disclose whether any of these costs exceed fair market value.
What that means is that nursing home owners can profit handsomely through related parties even if their facilities are being hit with repeated fines for providing substandard care.
“What we would consider to be a big penalty really doesn’t matter because there’s so much money coming in,” said Mollot of the Long-Term Care Community Coalition. “If the facility fails, so what? It doesn’t matter. They pulled out the resources.’’
Hiding profit
Ultimately, experts say, this ability to drain cash out of nursing homes makes it almost impossible for anyone to assess the profitability of these facilities based on their public financial filings, known as cost reports.
"The profit margins (for nursing homes) also should be taken with a grain of salt in the cost reports,” said Dr. R. Tamara Konetzka, a University of Chicago professor of public health sciences, at a recent meeting of the Medicare Payment Advisory Commission. “If you sell the real estate to a REIT or to some other entity, and you pay sort of inflated rent back to make your profit margins look lower, and then you recoup that profit because it’s a related party, we’re not going to find that in the cost reports.”
That ability to hide profits is key to nursing homes’ ability to block regulations to improve quality of care and to demand greater government payments. For decades, the industry’s refrain has been that cuts in reimbursements or requirements to increase staffing will drive facilities into bankruptcy; already, they claim, half of all nursing homes are teetering on the edge of collapse, the result, they say, of inadequate Medicaid rates. All in all, the industry reports that less than 3% of their revenue goes to earnings.
But that does not include any of the revenue pulled out of the homes to boost profits of related parties controlled by the same owners pleading poverty. And this tactic is only one of several ways that the nursing home industry disguises its true profits, giving it the power to plead poverty to an unknowing government.
Under the regulations, only certain nursing home expenses are reimbursable, such as money spent for care. Many others − unreasonable payments to the headquarters of chains, luxury items, and fees for lobbyists and lawyers − are disallowed after Medicare reviews the cost reports. But by that time, the government has already reimbursed the nursing homes for those expenses − and none of those revenues have to be returned.
Data indicates that owners also profit by overcharging nursing homes for services and leases provided by related entities. A March 2024 study from Lehigh University and the University of California, Los Angeles shows that costs were inflated when nursing home owners changed from independent contractors to businesses owned or controlled directly or indirectly by the same people. Overall, spending on real estate increased 20.4%, and spending on management increased 24.6% when the businesses were affiliated, the research showed.
Nursing homes also claim that noncash depreciation cuts into their profits. Those expenses, which show up only in accounting ledgers, assume that assets such as equipment and facilities are gradually decreasing in value and ultimately will need to be replaced.
That might be reasonable if the chains purchased new items once their value depreciated to zero, but that is not always true. A 2004 report by the Medicare Payment Advisory Commission found that the depreciation claimed by health care companies, including nursing homes, may not reflect actual capital expenditures or the actual market value.
If disallowed expenses and noncash depreciation were not included, profit margins for the nursing home industry would jump to 8.8%, far more than the 3% it claims. And given that these numbers all come from nursing home cost reports submitted to the government, they may underestimate the profits even more. Audited cost reports are not required, and the Government Accountability Office has found that CMS does little to ensure the numbers are correct and complete.
This lack of basic oversight essentially gives dishonest nursing home owners the power to grab more money from Medicare and Medicaid while being empowered to claim that their financials prove they need more.
“They face no repercussions,” Brooks of Consumer Voice said, commenting on the current state of nursing home operations and their unscrupulous owners. “That’s why these people are here. It’s a bonanza to them.”
Ultimately, experts say, finding ways to force nursing homes to provide quality care has remained elusive. Michael Gelder, former senior health policy adviser to then-Gov. Pat Quinn of Illinois, learned that brutal lesson in 2010 as head of a task force formed by Quinn to investigate nursing home quality. That group successfully pushed a new law, but Gelder now says his success failed to protect this country’s most vulnerable citizens.
“I was perhaps naively convinced that someone like myself being in the right place at the right time with enough resources could really fix this problem,” he said. “I think we did the absolute best we could, and the best that had ever been done in modern history up to that point. But it wasn’t enough. It’s a battle every generation has to fight.”
Click here to learn more about how some existing tools can address problems with for-profit nursing homes.
Sean Campbell is an adjunct assistant professor at Columbia University and a contributing writer at the Garrison Project, an independent news organization that focuses on mass incarceration and criminal justice.
Harrington is an advisory board member of the nonprofit Veteran's Health Policy Institute and a board member of the nonprofit Center for Health Information and Policy. Harrington served as an expert witness on nursing home litigation cases by residents against facilities owned or operated by Brius and Shlomo Rechnitz in the past and in 2022. She also served as an expert witness in a case against The Citadel Salisbury in North Carolina in 2021.
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