When Lloyd Saito died in 2004 at the age of 60, his family wasn't told the full story behind his death.

His main survivors, his siblings, didn't know that the woman who ran the Honolulu care home where Saito lived had gone shopping the evening of his fatal accident, leaving no qualified caregiver to watch him or the other residents.

They didn't know that when the Army veteran accidentally fell at the home, he lay seriously injured on the floor for up to an hour before another resident found him, shaking and having seizures. Saito died the next day from head injuries suffered in the fall.

The siblings also weren't told that the state, after a formal investigation, shut down the care home three months later, largely because of what happened to their brother.

Only when a reporter shared those details recently — more than five years after Saito's death — did they learn the full story. The details were mostly disclosed in a license revocation letter to the care home operator that was obtained by The Advertiser through a public-records request.

"Unbelievable," said Linda Saito, 62, a retired city worker and one of Lloyd's sisters. "I'm shocked. No one ever notified us."

The state acknowledged that it should have contacted the family but didn't.

The Saito case illustrates just one of many ways Hawai'i's system for long-term care for the aged and disabled has failed the very people it is designed to serve. It is a system fraught with problems of poor oversight, questionable care practices and breakdowns in the protective net designed to keep seniors safe.

Based on interviews with close to 100 people in the long-term-care arena and a review of thousands of pages of documents, The Advertiser found that government and private-sector oversight has failed to keep pace with changes sweeping the industry as Hawai'i's elderly population rapidly grows, demand for services surges and more care is shifting to converted homes in residential neighborhoods.

Gaps were found throughout the system, from a flawed, inefficient process for placing seniors in neighborhood facilities to lax monitoring once they're placed. And the inefficiencies drive up the cost of care, a problem that becomes magnified in a sluggish economy.

Adding to the system strain, the placement process at times is tainted by fraud, cronyism and use of kickbacks to steer patients to certain neighborhood facilities, according to an internal industry document obtained by The Advertiser and interviews with health care workers and patients' families.

That practice has had a dramatic effect on some seniors. With placements influenced by financial and other nonmedical incentives, some elderly — especially those difficult to tend to — are sent to facilities that are not good matches. Eventually, the caregivers, unable or unwilling to care for them, inappropriately dump the residents at hospital emergency rooms, further gumming up the system, according to health care officials.

The state recently shut down a foster home for refusing to take back a patient from an emergency room after the hospital did not admit the patient.

Because of the many flaws in the overall system, some health care professionals and elder advocates question whether Hawai'i will be adequately prepared for the coming of what is referred to as a silver tsunami.

By 2020, one in four residents here is expected to be 60 or older. The demand for long-term-care services is projected to mushroom, even as the system strains to deal with existing demand.

"There are serious problems that are only going to get worse as we grow," said Donna Schmidt, a social worker who manages care for seniors and is advocating for system reforms. "If we don't fix these now, in five years it's going to be a mess. It's pretty messy out there right now."

PROBLEMS ARE NUMEROUS

While patients, their advocates and health care professionals agree that long-term care in Hawai'i generally is good and the vast majority of caregivers are dependable and hardworking, the newspaper found numerous problems.

Among the findings:

• An inefficient placement process has given rise to unethical and possibly illegal practices in which some health care workers, case managers and others are accepting kickbacks to steer discharged hospital and nursing home patients to neighborhood facilities.

• Lax oversight and loopholes in the law have enabled caregivers who admitted abusing, neglecting or stealing from clients to continue operating their homes or to open new ones. In one case, a care home operator who is on a federal health care-worker blacklist because she neglected her clients continues to operate her Waipahu facility. In another case, a care home operator who was forced to close her business after pleading guilty to stealing thousands of dollars from a dementia client was allowed to open a foster home less than a year later. She was given permission to open the home even though she still was on probation and on a state blacklist that effectively banned her for life from working in a long-term care facility. (See accompanying story.)

• Hawai'i nursing homes are rarely sanctioned by federal regulators, even when patients are harmed because of poor care. Over the past five years, Hawai'i had the lowest sanction rate of any state in the country. (See tomorrow's report.)

• The long-term-care system is widely criticized for being confusing and difficult to navigate by consumers, yet efforts to make quality-of-care information more readily available to the public have been rebuffed at the Legislature. (See Tuesday's report.)

SYSTEM HAS ITS DEFENDERS

Regulators, industry officials and others generally defend Hawai'i's system, saying care is good despite budget shortfalls and other challenges.

"Here in Hawai'i, there's such a wonderful system of care for the elderly," said Heidi Miyashiro, who has a nursing background and has helped four women over the past eight years move to care facilities on O'ahu.

Keith Ridley, head of the Department of Health's Office of Health Care Assurance, said certification regulations and enforcement policies have provided more oversight and accountability — "a definite strength" — and that the public and the facilities' residents are sufficiently protected.

Underscoring such assessments, Hawai'i was one of only six states in which at least 20 percent of nursing homes received the highest marks when the federal government launched a quality-of-care rating system in late 2008.

Hawai'i has about 50 nursing homes, nearly 1,000 adult foster homes, close to 500 care homes and 11 assisted living facilities. All told, they can hold more than 10,000 residents, with roughly half the beds in noninstitutional settings, such as foster and care homes.

While the elderly generally prefer to remain in their own homes as they age, the high cost of in-home care makes that option out of reach for many seniors who no longer can live independently.

Hawai'i also has a shortage of nursing home beds, so government officials and others increasingly are looking to community-based, noninstitutional facilities to help meet the state's growing long-term-care needs.

The more family-like environment of the neighborhood homes and the lower costs typically associated with them make that option even more appealing to some seniors.

But the neighborhood homes also present special challenges for regulators, partly because of the homes' less-structured settings and the fact that there are hundreds of them.

The system used for placing hospital or nursing home patients into these residential homes has been particularly troublesome, senior advocates say.

Take the case of T.J. Davies' friend, a socially active Waikīkī woman in her 80s with no family here. In 2008, she was transferred from a nursing home in town to a Waipahu care home even though she had never been to Waipahu, all her friends live in Waikīkī and nearly all don't drive, Davies said. Consequently, her friends haven't visited her in months.

The placement was all the more puzzling because care homes much closer to Waikīkī had plenty of vacancies.

"To me, it's inexcusable what happened," said Davies, a retired Air Force man.

Patients discharged from hospitals or nursing homes but still needing long-term care are supposed to be given choices. But that doesn't always happen, critics contend, partly because the process is largely a manual one and puts much discretion in the hands of discharge planners and other health care workers who are supposed to be providing impartial guidance based on the patient's best interests.

Those circumstances, however, can lead to conflicts of interest. Hospital and nursing home employees who own or have part-time jobs at outside care facilities, for instance, have been known to be soliciting patients while at their main jobs, health care workers say. Some have steered patients to care or foster homes run by relatives.

An internal document from the Healthcare Association of Hawai'i, the trade group for hospitals and the majority of nursing homes in the state, gives a glimpse of the so-called client brokering problem. The document was written after a December meeting in which the discharge and placement system for Medicaid aged, blind and disabled patients was discussed.

"Hospitals report observing 'case management brokering' for clients," the document says, noting that in some situations the brokers were dually employed by a hospital and a community-based care facility.

"We need to take a look at the processes that are contributing to this behavior that is not only disruptive to the consistency of the discharge process but also results in fraud, kickbacks and could even inhibit the full array of discharge options from being presented to the patient/consumer," the document says.

The memo also cited patient-dumping as a problem.

At Hawai'i Medical Center in 'Ewa, an area with a heavy concentration of care and foster homes, dumping has become a big concern.

"Unfortunately, it is a practice that does occur ... on a fairly consistent basis and is a practice that is very challenging for us to deal with," the hospital said in a statement.

None of the representatives from half a dozen hospitals that The Advertiser contacted would acknowledge that patient-brokering is a problem. They said policies are in place to prohibit such practices, and Coral Andrews, vice president of the hospital trade group, said if employees were to violate the policies, terminations likely would result.

Andrews cautioned the newspaper about referring to the internal document, saying it was a hastily written compilation of notes from a brainstorming session that included more than just hospital representatives. She also said it was not intended for public release and was not vetted for accuracy.

Even though the hospitals would not acknowledge a brokering problem, many health care workers and others told The Advertiser that giving kickbacks to attract clients is not uncommon and involves discharge planners, case managers and care facility operators. One operator told the newspaper she pays a $500 referral fee for each new client. Some give designer handbags and other expensive gifts, health care workers say.

"From what I'm hearing, the practice is rampant," said Rep. John Mizuno, chairman of the House Human Services Committee, which deals with long-term-care issues. "It's a lot more common than people would like to recognize."

It also has been going on for years.

John McDermott, the state's long-term-care ombudsman, recalled getting an unsolicited $500 gift certificate in 1990 from a care home operator after a resident at the nursing home where he worked was transferred to the care home. McDermott returned the gift, telling the operator that it was inappropriate and that the resident, not him, chose where she would live.

Schmidt, the social worker and owner of a case management agency, told legislators at a briefing last year that hospital employees moonlighting as case managers were directing discharged patients to the agencies that employed those same hospital workers.

"This practice is an accepted industry standard yet it violates the very heart of the program: independence and choice for the consumer," Schmidt said.

Mila Medallon-Kaahanui, a Hawai'i Coalition of Caregivers founder who has been involved with the long-term-care network for three decades, said conflicts of interest are undermining consumer confidence in the network.

"The system isn't just broken, it's corrupt," Medallon-Kaahanui said.

One woman told The Advertiser that when her 86-year-old mother was about to be discharged from an O'ahu hospital in November, the hospital social worker provided the name of only one case manager for her mother to work with, according to the woman, who asked not to be named for fear of retribution. The woman said she asked for additional names, but the social worker would provide only that one.

Her mother was discharged to a nursing home for rehabilitation, then — at the recommendation of the case manager — was transferred to a Salt Lake foster home run by a caregiver who also worked at the nursing home, the woman said.

"It seems to be more about the money than the care," said the woman, who was not pleased with the foster home and has since moved her mother to another facility.

The placement system "is not consumer driven, that's for sure," said Sue Cornish, a nurse and case manager with 30 years experience in the health care arena.

State officials say they have no evidence that client brokering is occurring. They also say they don't condone the practice, have implemented policies to prevent conflicts of interest and are continuing to make improvements.

The Department of Human Services, which regulates foster homes and case managers, said it stresses to families that they have the right to choose facilities that best fit their needs and that the families should reject recommendations from any case manager or hospital worker exclusively promoting a particular home, according to Amy Tsark, a DHS administrator.

If hospital workers are getting paid for patient referrals, that clearly violates federal law, according to David Hoffman, a former assistant U.S. attorney who prosecuted health care fraud and now runs a consulting practice in Philadelphia.

"This is an illegal kickback scheme," Hoffman said. "It's that clear cut."

Industry representatives say they are trying to improve the discharge system to make it more streamlined, partly to address a long-standing problem of backlogged patients waiting to be released. The hospitals lose millions of dollars annually because patients no longer needing hospitalization but requiring long-term care can't be discharged because of a shortage of nursing home beds. The health care association is pursuing development of an electronic, real-time system that not only would make the overall process more efficient but remove some of the potential for favoritism.

Hospitals also are taking their own proactive steps to make improvements.

At Wahiawa General Hospital, the administration is developing a conflict-of-interest policy that would prohibit employees who have outside businesses, such as care homes, from soliciting patients in the hospital, according to Don Olden, the institution's chief executive.

"It's unethical behavior, and it's just not fair to the patient," Olden said.

Strapped by shrinking budgets, regulators sometimes have been unable to keep pace with changes roiling the industry.

A state blacklist for certified nurse aides deemed unfit to work in long-term care facilities, for instance, has not been updated in more than two years because regulators still are processing a backlog of cases. Health care facilities are supposed to check the list before hiring CNAs. (See tomorrow's report.)

The Health Department, which regulates care homes, isn't conducting criminal background checks on new applicants — even though a law mandating such checks was enacted nearly four years ago. The agency is still drafting rules to implement the checks. (See today's sidebar.)

When regulators are able to prove wrongdoing by caregivers, they take action. DHS has shut 31 foster homes since 2006, while the Health Department has closed seven care homes since 2004. One of the seven was closed four years after the caregiver left clients unattended, two got into a fight while she was away and one died from injuries suffered in the altercation. As regulators pursued revoking her license, a move the caregiver challenged, she was caught during a surprise inspection in 2004 leaving another resident unattended. That led to the home's closure.

Whatever improvements are made to Hawai'i's long-term care system in the years ahead, the family of Lloyd Saito will be left with unanswered questions that have haunted them since learning the full story of his death.

Jane Yorimoto, 86, Saito's eldest sister, said her brother's caregiver told the family on the night of the accident only that Saito had fallen and was rushed to the hospital. Macrina Tumaneng didn't mention she was away from the home when he fell, Yorimoto said.

Tumaneng told The Advertiser she remembers telling the family she had gone to the store for about 15 minutes and that Saito was discovered on the floor after her return. She said she performed CPR before the ambulance arrived.

More than five years later, Saito's siblings wonder whether he would be alive today had his caregiver been around to promptly summon medical help.

"Maybe the outcome would have been different," Yorimoto said. "We'll never know."