Private equity-owned nursing homes linked to worse outcomes

Nursing homes owned by private equity companies or other types of investment firms have worse quality of care and patient outcomes, according to a Feb. 13 CMS news release.

Between 2016 and 2021, 3,000 nursing homes changed ownership, and the number sold each year continues to increase. Nursing homes with lower ratings on CMS' star-rating program are more likely to change ownership, according to the release.

HHS issued a proposed rule requiring nursing homes to disclose ownership and management information, including the provider of services to a facility. The proposed rule would implement portions of Section 6101(a) of the Affordable Care Act.

Here are five things to know about private equity-owned facilities:

  1. A National Bureau of Economic Research working paper found private equity ownership increased excess mortality for residents by 10 percent, increased prescription of antipsychotic drugs for residents by 50 percent, decreased hours of nursing staffing by 3 percent and increased taxpayer spending per resident by 11 percent. The study implies an additional 20,150 lives lost as a result of private equity ownership.

  2. Another study found that private equity-backed nursing homes had a COVID-19 infection rate and death rate that were 30 percent and 40 percent, respectively, above statewide averages.

  3. The largest 10 nursing home chains own more than 10 percent of nursing homes, which raises concerns about market concentration, according to CMS.

  4. Recent research found that in the two to three years after real estate investment trusts invest in nursing homes, registered nurse staffing levels decline by as much as 6 percent.

  5. A recent study found that residents in nursing homes acquired by private equity were 11.1 percent more likely to have a preventable emergency department visit and 8.7 percent more likely to experience a preventable hospitalization, when compared to residents of for-profit nursing homes not associated with private equity.

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