Department of Public Health's Licensing and Monitoring of the Newcare Health Corporation (Newcare)

This is a state audit of how Massachusetts DPH licensed and monitored NewCare’s operation of four long-term care facilities in western Massachusetts.

“The scope of our audit was to examine certain aspects of DPH’s licensing and monitoring of NewCare.”

The audit looked at DPH’s legal duties, how it approved NewCare’s conditional license, and whether DPH’s licensing administration could be improved.

“Our specific audit objectives were to: (1) determine DPH’s responsibilities pertaining to the licensure and monitoring of LTCFs; (2) assess DPH’s process in granting a conditional license to NewCare, Inc.; and (3) determine whether DPH’s administrative activities relative to its licensure of LTCFs could be improved.”

The reserve account was supposed to help keep the nursing homes operating, but the full amount was withdrawn without DPH knowing or approving it.

“As a result, two days after DPH was notified by NewCare’s attorney that the escrow account was established and funded, NewCare withdrew the entire $500,000 without DPH’s knowledge or consent and did not replenish the balance, jeopardizing DPH’s ability to ensure the continued operation of the four nursing homes being managed by NewCare.”

For residents, families, workers, and taxpayers, the issue is whether the state had enough safeguards when a financially concerning company was allowed to run nursing homes.

“This condition was developed to ensure that sufficient funds would be available to operate the facilities being managed by NewCare in Massachusetts.”

The auditor concluded DPH should have done more to protect the public interest, especially because DPH already had serious concerns about NewCare.

“In our opinion, given the serious concerns DPH had relative to NewCare, it would have been more prudent of DPH to be more proactive in its administration of this matter.”

The report recommended stronger controls, better legal review of agreements, and possible legislation giving DPH control of escrow funds for provisional licenses.

“In addition, DPH should work with the Legislature to draft legislation that would require DPH to hold and control any escrow for any entity granted a provisional license.”

The case exposed a gap in state oversight: DPH relied on agreements and outside parties, but did not have direct control or enough monitoring to know the reserve fund was gone.

“Such measures would have helped to ensure that the interests of DPH, its clients, and the Commonwealth are adequately protected.”

A long-term care facility means a place like a nursing home; a conditional or probationary license means DPH allowed NewCare to operate only if it met special conditions; an escrow account means money set aside for a specific purpose.

“The Massachusetts Department of Public Health, Division of Health Care Quality (DPH), is mandated to license and monitor long-term care facilities (LTCF), including nursing homes, in the Commonwealth.”