Jordan Rau, KFF Health News and Irena Hwang, The New York Times
Rehab hospitals that assist folks recuperate from main surgical procedures and accidents have grow to be a extremely profitable slice of the well being care enterprise. But federal knowledge and inspection experiences present that some run by the dominant firm, Encompass Health Corp., and different for-profit firms have had uncommon however severe incidents of affected person hurt and carry out under common on two key security measures tracked by Medicare.
Yet even when inspections reveal grave instances of damage, federal well being officers don’t inform customers or impose fines the way in which they do for nursing properties. And Medicare doesn’t present easy-to-understand five-star scores because it does for normal hospitals.
In probably the most severe issues documented by regulators, rehab hospital errors concerned affected person deaths.
In Encompass Health’s hospital in Huntington, West Virginia, Elizabeth VanBibber, 73, was fatally poisoned by a carbon monoxide leak throughout building on the facility.
At its hospital in Jackson, Tennessee, a affected person, 68, was discovered lifeless in a single day, mendacity on the ground in a “pool of blood” after an alarm that was presupposed to alert nurses that he had gotten off the bed had been turned off.
In its hospital in Sioux Falls, South Dakota, a nurse gave Frederick Roufs, 73, the mistaken drug, considered one of 26 remedy errors the hospital revamped six months. He died two days later at one other hospital.
“I can still see Fred laying in the bed as they shut each little machine off,” mentioned his widow, Susan Roufs. “They clicked four of them, and then the love of my life was gone.”
Encompass, which owns 168 hospitals and admitted 248,000 sufferers final yr, has led the transformation of this area of interest business. In 2023, stand-alone for-profit medical rehabilitation hospitals overtook nonprofits because the locations the place the vast majority of annual affected person admissions happen, a KFF Health News and New York Times evaluation discovered. A 3rd of all admissions had been to Encompass hospitals. Such amenities are required to supply three hours of remedy a day, 5 days per week.
Across the nation, there are actually almost 400 stand-alone rehab hospitals, the majority of that are for-profit. These hospitals collectively generate income of 10%, greater than normal hospitals, which earn about 6%, and way over expert nursing properties, which make lower than 0.5%, in line with the newest knowledge from the Medicare Payment Advisory Commission, an unbiased congressional company.
At the identical time, the variety of small, specialised models inside acute care hospitals — the place most rehab was offered — has dwindled. There are actually round 800 of these, and most are nonprofits.
In its latest annual report, Encompass, which is publicly traded, reported an 11% internet revenue in 2024, incomes $597 million final yr on revenues of $5.4 billion.
Federal data on the efficiency of about 1,100 of the rehab amenities present Encompass tends to be higher at serving to most sufferers return residence and stay there. In a two-year interval ending in September 2023, Medicare rated 233 rehab amenities as performing higher than the nationwide charge for this main metric, known as “discharge to community.” Most rehabs with higher group discharge charges are for-profit, and Encompass owns 79 of them.
But knowledge from Medicare additionally reveals Encompass owns most of the rehabs with worse charges of probably preventable, unplanned readmissions to normal hospitals. Medicare evaluates how usually sufferers are rehospitalized for circumstances that may have been averted with correct care, together with infections, bedsores, dehydration, and kidney failures.
Encompass accounts for about 1 in 7 rehab amenities nationally, however owned 34 of the 41 inpatient rehab amenities that Medicare rated as having statistically considerably worse charges of probably preventable readmissions for discharged sufferers. (Overall, charges of readmission after discharge ranged from 7% to 12%, with a median of 9%.)
And it owned 28 of the 87 rehab amenities — 65 of which had been for-profit — that had worse charges of probably preventable readmissions to normal hospitals throughout affected person stays. (The median for these sorts of readmissions was 5%, and charges for particular person rehabs ranged from 3% to 9%.)
Patrick Darby, the manager vp and normal counsel of Encompass, strongly defended the corporate’s file in written responses to questions. He dismissed Medicare’s readmissions scores of “better,” “worse,” and “no different than the national rate” as “a crude scoring measure” and mentioned “performance is so similar across the board.” He known as the violations discovered throughout well being inspections “rare occurrences” that “do not support an inference of widespread quality concerns.”
“The simplest and most accurate reason for EHC’s success is that our hospitals provide superior care to patients,” he mentioned, referring to Encompass by its company initials.
Chih-Ying Li, an affiliate professor of occupational remedy on the University of Texas Medical Branch at Galveston School of Health Professions, mentioned in an interview {that a} research study she carried out discovered the revenue standing of a rehab facility was the one attribute related to larger unplanned readmissions.
“The finding is pretty robust,” she mentioned. “It’s not like huge, huge differences, but there are differences.”
VanBibber was admitted to Encompass’ Huntington hospital in 2021 for remedy to strengthen her lungs. At the time, the hospital was present process a $3 million enlargement, and state regulators had warned the corporate that areas of the hospital occupied by sufferers needed to be remoted from the development “using airtight barriers,” in line with a well being inspection report.
In her room, which was about 66 ft from the development zone, she started having hassle respiratory, the report mentioned. When she instructed the employees, they ignored her and shut her door, in line with a lawsuit introduced by her property. Staff members ultimately seen that she was “lethargic and gasping for air,” and known as 911.
When the emergency medical squad arrived, the carbon monoxide detectors they wore sounded. By that point, VanBibber’s blood oxygen ranges had been dangerously low, the inspection report mentioned. She died three days later from respiratory failure and carbon monoxide poisoning, in line with the inspection report and the lawsuit. A plumber had been utilizing a gas-powered noticed within the building space, however there have been no carbon monoxide detectors within the hallways, the report mentioned.
In courtroom papers, Encompass and its building contractors denied negligence for VanBibber’s demise. The case is pending.
Inspectors decided Encompass failed to keep up a protected atmosphere for all sufferers throughout building and didn’t correctly consider different sufferers for indicators of poisoning, the report mentioned.
Since 2021, the federal Centers for Medicare and Medicaid Services, or CMS, which oversees well being inspections, has discovered that 10 Encompass hospitals, together with the one which cared for VanBibber, had fast jeopardy violations, federal information present. Such violations — like those that Medicare additionally present in reference to the deaths of Roufs and the affected person who fell after leaving his mattress — imply a hospital’s failure to adjust to federal guidelines has put sufferers at risk for serious injury, serious harm, serious impairment, or death.
Darby, the overall counsel for Encompass, mentioned the corporate regretted any medical issues and had promptly addressed all such findings to the satisfaction of inspectors. He mentioned Encompass that has an “excellent compliance record,” together with superior outcomes from its accreditation company, and that its general variety of well being citations was tiny given what number of hospitals Encompass owns and what number of sufferers it treats.
Six different corporate-operated for-profit hospitals had been additionally cited, whereas not one of the 31 stand-alone nonprofit rehab hospitals acquired such violations from 2021 to 2024. (Inspection experiences for normal hospitals don’t systematically specify during which a part of the constructing a violation occurred, so rehab unit violations can’t be recognized.)
An alert known as a mattress alarm was on the root of fast jeopardies at Encompass hospitals in Morgantown, West Virginia, and Jackson, Tennessee. The gadgets are pressure- and motion-sensitive and emit a sound and show a lightweight to alert employees members that somebody at a excessive danger of falls has left his or her mattress.
In its Morgantown hospital, a nurse technician found a affected person face down on the ground with a big gash on her head after a faulty alarm didn’t go off, an inspection report mentioned. After she died, the nurse instructed inspectors: “We are having a lot of problems with the bed alarms.”
Medicare is just not approved by regulation to tremendous rehab hospitals for security rule violations, even ones involving deaths uncovered throughout inspections, because it has achieved with almost 8,000 nursing homes over the last three years, imposing common fines of about $28,000.
The solely choice is to completely minimize off a rehab hospital’s reimbursement for all providers by Medicare and Medicaid, which cowl most sufferers. That step would almost certainly put it out of enterprise and is sort of by no means used due to its draconian penalties.
“Termination is typically a last resort after working with the provider to come back into compliance,” Catherine Howden, a CMS spokesperson, mentioned in an electronic mail.
As a consequence, as a result of there’s no graduated penalty, even probably the most severe — and uncommon — fast jeopardy violations successfully carry no punishments as long as the hospital places steps in place to avert future issues.
“Only having a nuclear weapon has really hurt patient safety,” mentioned Michael Millenson, a medical high quality advocate.
One fast jeopardy incident did end in a punishment, however solely as a result of the hospital was in California, which permits its well being division to challenge penalties. Encompass’ Bakersfield hospital paid a $75,000 tremendous final yr for failing to regulate the blood sugar of a affected person who died after her coronary heart stopped.
Rapid Growth and a Troubled History
Encompass has accelerated its enlargement lately and now operates in 38 states and Puerto Rico. It plans to open 17 extra hospitals in Arizona, Connecticut, Florida, Georgia, Maine, Pennsylvania, South Carolina, Texas, and Utah by the tip of 2027, in line with its newest report.
It continuously strikes into new markets by persuading native nonprofit hospitals to shutter their rehab models in trade for an fairness stake in a newly constructed Encompass hospital, firm executives have told investors.
The president of Encompass, Mark Tarr, calls it a “win-win proposition”: The native hospitals can use their emptied area for a extra profitable line of service and Encompass will get a “jump start” into a brand new market, with accomplice hospitals usually referring sufferers.
Tarr, who was paid $9.3 million in compensation final yr, instructed traders that Encompass requires that the prevailing hospitals sign a noncompete deal. Sixty-seven Encompass hospitals are joint ventures, largely with nonprofit hospitals as traders, in line with the corporate’s June monetary submitting, the newest obtainable.
Darby mentioned the corporate’s income permit it to construct hospitals in areas that lack intensive inpatient rehabilitation and enhance present hospitals. “High-quality patient care is not only consistent with shareholder return, but quality and shareholder return are in fact critical to one another,” he mentioned.
The success of Encompass is especially notable provided that it barely survived what experts said was one of the largest modern accounting scandals in 2003.
The Securities and Exchange Commission charged that the corporate, then generally known as HealthSouth, overstated earnings by $2.7 billion to fulfill Wall Street analyst quarterly expectations, resulting in the ouster of its founder and administrators. In 2004, the corporate agreed to pay the government $325 million to settle Medicare fraud allegations with out admitting wrongdoing. Darby credited the corporate’s new leaders for acquiring a $2.9 billion judgment on behalf of shareholders towards the corporate’s founder.
The firm modified its identify to Encompass in 2018 after acquiring Encompass Home Health and Hospice. In 2019, the Justice Department introduced the corporate had agreed to pay $48 million to settle whistleblower lawsuit claims that it misdiagnosed sufferers to get larger Medicare reimbursements, and admitted sufferers who had been too sick to profit from remedy. The firm denied any wrongdoing, blaming unbiased physicians who labored at its hospitals. Darby mentioned Encompass settled the case solely to “avoid more years of expense and disruption.” He mentioned the Justice Department by no means filed a lawsuit regardless of years of investigation.
Medication Harms
Rehab hospital inspection experiences should not posted on Care Compare, Medicare’s on-line search software for customers. KFF Health News needed to sue CMS beneath the Freedom of Information Act to acquire all its inspection experiences for rehab hospitals. In distinction, Care Compare publishes all nursing residence inspection experiences and assigns every facility a star score for its adherence to well being and security guidelines.
So folks now selecting a rehab hospital wouldn’t know that on the Encompass hospital in Sioux Falls, South Dakota, in 2021, a nurse by chance gave Roufs a blood stress drug known as hydralazine as an alternative of hydroxyzine, his prescribed anti-anxiety remedy, in line with an inspection report. Roufs went into cardiac arrest. This sort of error, known as a “look-alike/sound-alike,” is one hospitals and employees members are presupposed to be particularly alert to.
Months earlier than, an inner security committee had recognized a pattern of remedy errors, together with when a nurse by chance gave a affected person 10 instances the prescribed quantity of insulin, sending him to the hospital, the inspection report mentioned. The nurse had misinterpret 4 models as 40. Since Roufs’s demise, inspectors have faulted the hospital six instances for numerous lapses, most just lately in April 2024 for improper wound care.
An Encompass hospital in Texarkana, Texas, misused antipsychotic medicines to pacify sufferers, leading to a right away jeopardy discovering from CMS, the report mentioned. And the corporate’s hospital in Erie, Pennsylvania, was issued a right away jeopardy violation for not retaining observe of remedy orders in 2023, when a affected person had a cardiac arrest after not receiving all of his medicine, in line with the inspection report.
The federal authorities’s general high quality oversight efforts are restricted. Medicare docks fee to rehab amenities for sufferers readmitted to a normal hospital throughout shorter-than-average rehab stays, however not like at normal hospitals, there are not any monetary penalties when just lately discharged rehab sufferers are hospitalized for important well being points.
The Biden administration introduced final yr it meant to develop a rating scale of 1 to 5 stars for rehab amenities. The business’s commerce affiliation, the American Medical Rehabilitation Providers Association, requested a delay within the creation of star scores till the present high quality measures had been refined. The Trump administration has not decided whether or not it should proceed the trouble to charge rehab amenities, in line with a CMS spokesperson.
Deadly Bedsores
The household of Paul Webb Jr., 74, claimed in a lawsuit that the Encompass hospital in Erie left Webb unattended in a wheelchair for hours at a time, placing stress on his tailbone, in 2021. His medical information, offered to reporters by the household, listing a sitting tolerance of 1 hour.
Webb — who had been initially hospitalized after a mind bleed, a kind of stroke — developed pores and skin injury generally known as a stress sore, or bedsore, on his backside, the lawsuit mentioned. The swimsuit mentioned the sore worsened after he was despatched to a nursing residence, which the household can also be suing, then residence, and he died later that yr. In his last weeks, Webb was unable to face, sit, or transfer a lot due to the damage, the lawsuit mentioned.
In courtroom papers, Encompass and the nursing residence denied negligence, as Encompass has in another pending and closed lawsuits that accused it of failing to stop stress sores as a result of nurses and aides didn’t frequently reposition sufferers, or discover and deal with rising sores. Darby mentioned Webb’s demise occurred three months after his Encompass keep and was not associated to his care at Encompass. He mentioned no hospital with long-term sufferers may forestall each new or worsening stress sore, however that Encompass’ charges had been much like the 1% nationwide common.
One of Webb’s sons, Darel Webb, recalled a warning given to the household as they left an appointment their father had with wound specialists: A health care provider introduced up Christopher Reeve, the actor who performed Superman in films within the Nineteen Seventies and Nineteen Eighties.
“He goes, ‘Remember, Superman was paralyzed from falling off the horse, but he died from a bedsore,’” he mentioned.
Jordan Rau has been writing about hospital security since 2008. Irena Hwang is a New York Times knowledge reporter who makes use of computational instruments to uncover hidden tales and illuminate the information.
METHODOLOGY
To study the medical rehabilitation hospital business, we obtained and analyzed a database of inspection experiences of freestanding rehabilitation hospitals from the federal Centers for Medicare & Medicaid Services, or CMS. We additionally obtained inspection experiences from a number of states by means of public information requests.
We analyzed inpatient rehabilitation facility traits and affected person quantity knowledge contained in hospital knowledge information from the Rand Corp., a nonprofit analysis group. This dataset compiles value experiences all hospitals submit every year to CMS. For every facility for the years 2012 to 2023, we categorized annual discharges by facility sort (freestanding rehabilitation hospital or unit inside an acute care hospital); facility possession standing (for-profit, nonprofit, or authorities); and which hospitals had been owned by Encompass Health beneath its present or prior identify, HealthSouth.
Financial details about Encompass Health was obtained from the corporate’s Securities and Exchange Commission disclosure filings.
We examined the readmission charges for all inpatient rehabilitation amenities that CMS publishes in its high quality knowledge. CMS evaluates the frequency with which Medicare sufferers had been readmitted for probably preventable causes to an acute care hospital throughout their rehab keep. Separately, CMS additionally evaluates the frequency of probably preventable readmissions to an acute care hospital inside 30 days of discharge from rehab. We additionally examined the speed of profitable return to residence or group. Figures for all three metrics had been obtainable for about 1,100 of the roughly 1,200 rehab amenities within the CMS knowledge. The most up-to-date readmission knowledge coated Medicare discharges from October 2021 by means of September 2023.
We examined nursing residence penalties from the final three years from CMS’ knowledge on nursing properties.
