With five of the seven largest for-profit nursing home chains operating in Chapter 11 bankruptcy, and with virtually all nursing home stocks at an all-time low, we are witnessing the virtual collapse of an industry that has existed (for all practical purposes) for fewer than 20 years.

What happened? And what does it mean to Florida?

In the early 1980s, hospital beds began overflowing with patients in need of rehabilitative care. As a result, the medical community, along with federal regulators, developed a system to move many rehabilitation patients into skilled nursing facilities (SNFs). With generous Medicare reimbursements, the growth in SNFs skyrocketed. The country went from a system of nonprofit and faith-based "rest homes" to large, corporate-owned nursing home chains. The General Accounting Office (GAO) reports that Medicare spending for SNFs grew from $578 million in 1986 to $13.6 billion in 1998.

Florida felt this growth more dramatically than the rest of the country because it became a retirement destination. Additionally, the for-profit chains saw the state as a profitable market and, as a result, Florida now shows one of the highest ratios of for-profit beds in the country at more than 85 percent.

Unfortunately, along with the incredible growth came mismanagement and fraud.

This was made public in a 1995 GAO report titled "Medicare: Tighter Rules Needed to Curtail Overcharges for Therapy in Nursing Homes." Since that report, Securities and Exchange Commission filings on for-profit chains document widespread allegations of Medicare fraud, insider trading and securities fraud, false claims, breach of fiduciary duty and unjust enrichment.

For example, this year Beverly Enterprises -- a publicly traded chain that operates more than 60 homes in Florida -- pleaded guilty to fraud and agreed to pay a settlement of $175 million. The government claimed that it stole more than $460 million.

Charges of corruption, false claims and Medicare fraud continue to surface throughout the country.

Congress attempted to slow runaway spending and industrywide problems by changing the method of reimbursement with the Balanced Budget Act (BBA) of 1997. The new rules -- written with significant industry input -- were set up to pay homes a fair wage for care they were to provide while making it more difficult for homes to systematically charge for unnecessary or overpriced care.

However, the act failed to account for the overwhelming debt of the for-profit chains. Nearly every health-policy analyst views the 1990s as a period of unchecked growth and disregard for sound money management policies within the industry.

For example, Integrated Health Services, which operates more than 40 homes in Florida, was $3 billion in debt before declaring bankruptcy this year. As a result, chains were unable to handle debt and had no option but to turn to the courts for protection. Now companies operating under Chapter 11 bankruptcy own more than one in five nursing home beds in Florida.

We now have an industry dominated by large, for-profit chains. It relies almost exclusively on the good fortune of massive government programs, with the lion's share of revenue coming from Medicare and Medicaid. As a result, operators and owners get paid regardless of the quality of service delivered. And of course, this all takes place in an environment that is virtually without competition.

Florida has a chance to stop the bleeding.

This month, the Task Force on the Availability and Affordability of Long-term Care will begin its work examining the industry. This is a rare chance to shape the future of the state's long-term care. With more competition, a wider array of choices for consumers and greater accountability from providers, our state can become a model.

Jim Wilkes, a Tampa resident, is a founder of the law firm Wilkes & McHugh PA. The firm represents nursing home residents in several states.

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