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Acknowledging that many private nursing homes have in effect become mental institutions, state officials are planning licensing procedures that would create a new class of facility specifically designed to serve psychiatric patients.

Though many facilities now classified as nursing homes would continue to accept mentally ill patients, they would come under stricter regulation to protect the elderly from violent mental patients and be subject to more rigorous health standards.

The state’s proposal comes after the Tribune reported recently that the widespread dumping of mentally ill patients into geriatric nursing homes has resulted in hundreds of violent incidents involving the elderly, including rape and murder.

Critics of the plan, however, say it is inadequate, particularly in light of the state’s woeful record of enforcement of such measures.

Under the legislative proposal drafted by three key state agencies and set to be unveiled next week, nursing homes with 75 percent or more mentally ill will be reclassified as “psychiatric rehabilitation centers.”

While on the surface it seems contradictory to allow facilities that still have up to 74 percent mental patients to remain classified as nursing homes, the practical hope is that the reclassification will prompt the consolidation of psychiatric patients into a few facilities that would serve them exclusively.

Specifically, it is expected that many of the 12,000 mentally ill patients scattered throughout the 562 nursing homes in the state will be concentrated in up to two dozen of these new state-funded centers. That should move the most dangerous mentally ill out of nursing homes, backers say.

In moving to transform existing nursing homes into psychiatric institutions, the state for the first time is acknowledging that the decades-long practice of closing mental institutions and housing the mentally ill in nursing homes has brought widespread problems.

“I believe this is a tremendous rule, in the sense that it will put in place standards that will more clearly define and clearly direct the kinds of services that persons with mental illness require,” said Judy Bukowski, an architect of the proposal who serves as assistant associate director of the state Office of Mental Health.

Besieged by vacancies as many senior citizens choose other long-term care alternatives, the nursing home industry increasingly has filled empty beds with psychiatric patients.

Several mental health advocates interviewed by the Tribune, however, remain skeptical that state officials will overcome the politically powerful nursing home industry, led by a small group of Chicago businessmen who have made millions of dollars by filling beds with psychiatric patients while providing, in many cases, minimal or no specialized care.

Further, the majority of nursing homes with the highest concentrations of patients with mental illnesses have failed to pass minimum health and safety standards, a Tribune analysis of state nursing home inspection records shows. In the Chicago area, 10 of 13 homes exclusively filled with mentally ill patients have failed state or federal inspections during the last two years.

Today, more psychiatric patients reside in nursing homes than in state institutions, state records show.

Despite promises of improvements, the state’s proposal falls far short of a remedy, said three directors of community mental health organizations.

The proposal still would allow any nursing home to admit patients with severe psychiatric diseases and provides no economic incentives for nursing homes to transfer patients to the rehabilitation centers.

Bukowski said many details need to be worked out before the proposal is formally submitted to the legislature, probably early next year. On Nov. 18, the Long Term Care Facility Advisory Board will begin public hearings in Springfield.

Many elements of the proposal have been pushed for years by various state agencies, but only now is momentum building to pass it, according to state officials from the Departments of Public Aid, Public Health and Human Services.

Bukowski said the proposal recognizes that some nursing homes already are being operated as mental institutions. Increased training, requirements for specialized treatment and better standards of care are among the many proposed changes, she said.

The rehabilitation centers will be required to integrate patients back to the community. The majority of nursing homes have done little to find ways to discharge patients because an empty bed represents an average of $100 a day in lost revenue, Public Health officials said.

Jan Holcomb, executive director of the nonprofit Mental Health Association in Illinois, said that she is encouraged by the proposed changes but that the state has a long history of failing to fund programs.

“The current way of doing business with the Office of Mental Health is to place somebody in a nursing home, follow them for a very short period of time, then forget about them,” she said.

“I certainly think that in any new structure, the Office of Mental Health has to play a key role in monitoring and making sure the standards are what they ought to be.”

State officials said employees from the Office of Mental Health will take part in future inspections of nursing homes, which is not done now.

Creating a new license for rehabilitation centers is a bold departure from a long-held state stance that geriatric nursing homes are the most appropriate places for patients with severe mental illnesses. By renaming the homes, the state can create new standards directed specifically at psychiatric patients, said Steve Orr, chief of enforcement and inspection at the Department of Public Health.

The current nursing home regulations were designed for geriatric residents, not patients with psychiatric disorders, Orr said.

Whether the new proposal will increase state costs is open to question. Facilities that become psychiatric centers might actually save money because they can bypass costly structural requirements for nursing homes–such as handrails in all hallways and other such modifications. At the same time, care of severely ill mental patients may require the hiring of more extensively trained and costlier workers.

The rush to fill beds, aided by nursing home employees known as bed brokers, has prompted Public Aid to launch an investigation into whether offers of cash and gifts have been made in exchange for new patients, which is a felony criminal offense.

The Tribune reported that one official at Chicago’s largest homeless shelter, Pacific Garden Mission on South State Street, received gifts of baseball and Chicago Bulls tickets from bed brokers. Mission employees acknowledge that dozens of homeless men, many of whom are mentally ill, have been transferred to nursing homes.

Currently, the state has no prohibition against mixing patients by age or diagnosis at nursing homes. There is nothing inherently unsafe about housing the mentally ill and elderly together if proper treatment is provided, mental health experts and state officials said.

Leon Shlofrock, one of the state’s wealthiest and most influential nursing home owners, said he and other owners have been fighting for years for adoption of many elements contained in the proposal.

The 78-year-old Chicago businessman, who founded the industry’s powerful lobbying group, the Illinois Council for Long Term Care, owns seven nursing homes, but his financial reach extends to dozens of others.

Three of his facilities are primarily filled with mentally ill patients, but he has argued that they have never been nursing homes.

“Let’s call them what they are,” he said, noting he supports the state’s name change.

It was semantics that brought trouble in 1981 when the federal government first found that Illinois officials were dumping thousands of mentally ill patients from state institutions into nursing homes, then charging half of treatment costs to Medicaid.

The Health Care Financing Administration ruled that the state had quietly established mental institutions under the guise of nursing homes. As a result, the state was required to pay all costs of homes primarily filled with psychiatric patients. Such facilities, the federal government has ruled, are primarily a state responsibility.

As a result, the state will be required to pay all treatment costs of the nursing homes relicensed as mental institutions, despite their private management.

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ON THE INTERNET: Find resources and a searchable database on Illinois nursing homes at: chicagotribune. com/go/nursinghomes