After Charles-Edouard Gros bought four stand-alone nursing homes from the Archdiocese of Philadelphia in 2014, the facilities experienced a remarkable rise in profits.
St. Francis Center for Rehabilitation & Healthcare went from roughly break-even in the two full years before Gros bought it to being the second-most profitable nursing home in the Philadelphia region last year.
Then, its quality of care tanked. Last September, inspectors found rampant neglect at the Darby facility and revoked its license, a step taken only in extreme cases.
"This guy is just making a vast amount of money, and he did it by cutting staff," said Toby Edelman, senior policy attorney at the Center for Medicare Advocacy, a public-interest law firm in Washington that works on behalf of the elderly and disabled. "There's no question that if staff are cut, quality of care and quality of life for residents will decline."
Gros' homes comprised four of the region's five most profitable nursing homes, achieved by cutting staff and taking on sicker patients, an Inquirer analysis found. At the same time, regulators cited the former archdiocesan facilities 14 times for actual harm to residents, six at St. Francis, since Gros bought them, compared with once in the three previous years, federal records show.
While profits were surging, St. Francis patients were suffering from what a state official in January called "extreme" conditions, including a lack of proper wound treatment and nursing care. Four St. Francis residents died about the time of the inspection that led the Pennsylvania Department of Health on Sept. 1 to revoke St. Francis' license, state officials have said. The home currently has a provisional license and remains open.
Lois Coleman, 88, who entered St. Francis after a hip replacement in early November 2014 and died on Sept. 7, 2017, from severe bed sores and a long list of infections that she acquired during her nearly three-year stay at the 273-bed facility in Delaware County.
"She went in there for rehab, and she never came out," said Coleman's daughter Shirley Burch, who, on her visits from Los Angeles, noticed dramatic declines in staffing levels at St. Francis.
In a lawsuit filed last month, Burch said that a doctor ordered staff to change Coleman's position every two hours on all shifts, but that did not happen, and the resulting bed sores pushed all the way through to the bone over the next two weeks.
Gros' Center Management Group LLC has not yet responded to that federal suit in the Eastern District of New York.
Gros' financial turnaround bucks the trend of declining profits in the nursing-home industry. Providers, particularly those such as Gros who serve mainly Medicaid patients, are contending with rising costs, flat reimbursement, and increasing efforts to keep people out of nursing homes. More than 100 of Pennsylvania's 700 nursing homes have been through financial reorganizations or were sold under duress in the last five years, according to the Pennsylvania Health Care Association.
Gros' holdings include St. John Neumann Center for Rehabilitation & Healthcare in Bustleton, which led the region with a daily profit of $54 a patient, just ahead St. Francis, which made $50 a day a patient.
The other two facilities that Gros bought from the archdiocese also did well: St. Monica Center in South Philadelphia ranked fourth at $46, and Immaculate Mary Center in Northeast Philadelphia came in fifth, at $37. The third-ranked Majestic Oaks Nursing & Rehabilitation Center in Warminster, at $48, was unrelated to the group.
On average, profits from patient care at Gros' Pennsylvania facilities climbed to $46 a patient day in fiscal 2017 from $3 a patient day in fiscal 2014, the last full year they were owned by the archdiocese. The median — which means half did better and half did worse — for the region was a loss of $18 a patient day last year, more than triple the median loss of $5 in fiscal 2014.
In New Jersey — Gros' Majestic Center for Rehabilitation & Sub-Acute Care in Camden and St. Mary's Center for Rehabilitation & Healthcare in Cherry Hill — ranked first and third for profitability during 2016 among nursing homes in Burlington, Camden, and Gloucester Counties. The two facilities averaged a daily operating profit of $35 a patient, compared with a median loss of $8 for the three counties. Cost reports for 2017 are not yet public. The two New Jersey facilities have not been cited for harming patients since Gros bought them.
Gros paid the Archdiocese of Philadelphia $145 million for the six senior living facilities. In 2015, he paid the Diocese of Camden $40 million for four facilities.
The Inquirer analysis did not include Gros' St. Martha Center in Downingtown and St. Mary Center in Lansdale, or other facilities that are part of larger retirement communities. Inconsistencies in the reports of such facilities to the Centers for Medicare and Medicaid Services make complete comparisons difficult.
St. Francis successfully appealed the license revocation, just the second in the last 10 years in Pennsylvania, and now has a provisional license. It also appealed a $675,750 fine from the state health department. The facility remains under an investigation by the Pennsylvania Office of Attorney General.
Gros, 40, and a Long Island resident according to public records, has not responded to multiple requests for comment since October, when the St. Francis license revocation was disclosed.
His lawyer, Paula G. Sanders of Post & Schell P.C. in Harrisburg, said in email: "It is inappropriate to measure profitability of a facility in the first few years after a change of ownership because expenses are not yet stabilized and rates are based largely on historic expenses. Over time, profitability changes, but efficient operators save the taxpayer money and less-efficient operators cost the taxpayer money."
Gros cut staff at each of the stand-alone nursing homes he bought from the archdiocese, records show. Overall employment at the four facilities fell 17 percent, Pennsylvania Medicaid cost reports show.
Gros reduced the number of registered nurses, with cuts ranging from 18 percent at St. John Neumann to 46 percent at St. Francis. He also slashed the number of certified nursing assistants across the board. Those reductions ranged from 19 percent at St. Monica to 27 percent at Immaculate Mary. On the other hand, he increased by 9 percent the number of licensed practical nurses, who earn significantly less than registered nurses.
"LPNs, they don't have as much training. They can't do all the things registered nurses can do," Edelman said. "So this is not a good thing to replace RNs with LPNs."
Gros kept wages relatively flat, but slashed benefits by 50 percent an hour, saving $6.9 million in fiscal 2017, compared with the last year of ownership by the archdiocese, according to the homes' Medicare cost reports.
Daily revenues per patient rose 16 percent, compared with less than 1 percent for the region. An increase in the degree of patients' ailments contributes to higher reimbursement.
Meanwhile, state health department surveys reported resident complaints about low staffing. During a group interview in August 2016 at Immaculate Mary, 16 residents "reported in unison that the nursing assistants responded to call bells by turning them off."
A year later, residents at the same facility complained that licensed nurses and nurses aids "do not always treat residents with dignity and respect" and "make fun of the residents in front of other residents and staff members."
Deficiencies in care at Gros' facilities have continued. For example, despite being put on notice about the extraordinary failures to treat bedsores at St. Francis, another Gros facility, St. Monica, was cited in January for failing "to timely assess the residents risk for factors for skin breakdown."
Marie Uva experienced horrors at both St. Monica and St. Francis, said her daughter, Joanne Grandelli. But St. Francis, which Uva entered in August 2016, was far worse. "From day one, nothing but abuse," she said. "They left her in [dirty] diapers. They did nothing but fight, scream, and holler."
Uva died at a different nursing home this year.
The last time Burch saw her mother was on Sept. 3 in Mercy Fitzgerald Hospital, where Coleman had been sent on Aug. 22 while state health inspectors were at St. Francis. Asked what she saw of her mother's condition on that last visit, Burch said, "Oh, man, now you're going to make me cry.
"What I saw was boils and stuff all between her behind. It was just terrible. Stuff oozing out of there. There's nowhere else to go but to the hospice, so they push you up, and roll you out the door."
Coleman never wanted to leave Darby so she could stay close to siblings, and she died four days later.
"That was negligence. To me, it was murder. That's how I look at it," Burch said.