NLR Accountants Carve Niche in Nursing Home Litigation

by Jamie Walden  on Monday, Jun. 8, 2009 12:00 am  

A small business of a dozen employees in North Little Rock has carved a niche in nursing home litigation by providing financial analyses for plaintiffs' attorneys.


Creating a Database

Countless hours spent acquiring hard copies of information on nursing homes and then wading through irrelevant data to find the right information led CFO Network to design a tool that streamlines the financial analysis process.

Last year, CFO Network acquired a sea of nursing home data from the U.S. government.

"We have purchased all the raw data from the federal government on every nursing home in America for the last 10 years and have created a database and developed a query engine that has allowed us to basically construct a financial statement [for any nursing home]," said Engstrom, who declined to reveal the purchase price.

The financial statements, Engstrom added, include all the financial information that nursing homes include in a cost report, which is a disclosure document nursing homes in Arkansas provide the Department of Human Services revealing the cost of caring for Medicaid patients.

However, CFO Network's report follows a more traditional financial statement format.
"And we can construct any particular nursing home's numbers and compare them to a peer group. And we can build the peer group based on a similar number of beds or similar revenue range or geography," Engstrom said.

The report helps a plaintiff's attorney spot fishy figures. 

"If a nursing home has a real estate company that owns its real estate and is charging 250 percent above market rent, we can compare it to the peer group based on a similar number of beds," Engstrom said. "And we can spot that pretty easily, that their rent is way out of bounds. And so that can kind of point us and the attorneys to focus on that a little more."

Engstrom said CFO Network developed the idea through an effort to streamline its process to provide information more promptly to clients.

"We would get engaged on a case and we would have to go through the normal discovery process to get hard copies of the cost reports. And half the time we were just sitting around twiddling our thumbs when we really needed to do the analysis. And then the case would settle. And we would have gotten engaged and had resources standing by and weren't able to do any work on it," Engstrom said.

The crew at CFO Network discovered a way to acquire the information electronically. However, CFO Network associates still had to examine a great deal of data to elicit the pertinent bits of information.



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