The Growing Role of Private Equity in Nursing Home Ownership: New data & What It means for You
Concerns are rising about the impact of private equity investment in nursing homes. Reports increasingly link private equity acquisitions to changes in operations focused on maximizing profits, frequently enough at the expense of quality of care. You might potentially be wondering what’s happening and how it affects your loved ones. This article breaks down the latest data and regulatory changes, providing clarity on this complex issue.
The Trend: Private Equity & Nursing Homes
Several reports detail how private equity firms are purchasing nursing facilities. These acquisitions are sometimes followed by operational changes designed to increase profitability.Sadly,research suggests these changes can correlate with a decline in the quality of care residents receive. Currently, the Government Accountability Office (GAO) estimates that approximately 5% of nursing facilities had private equity ownership in 2022.
New transparency Rules from the Biden Management
In November 2023, the Biden Administration implemented a final rule aimed at increasing transparency in nursing home ownership. This rule, separate from a previously proposed staffing rule, requires facilities enrolled in Medicare or Medicaid to disclose detailed data about their ownership structure. Specifically, facilities must now report:
* Anyone exercising financial control over the facility.
* Anyone leasing or subleasing property to the facility, including those owning 5% or more of the property’s value.
* Anyone providing administrative, clinical consulting, accounting, financial, operational, or cash management services.
Importantly, facilities must also disclose if any owning or managing entities are private equity companies or Real Estate investment Trusts (REITs).
Publicly Available Data & Current Limitations
Facilities began self-reporting this data to the Centers for Medicare & medicaid Services (CMS) in early 2024. The data is now publicly available on the CMS website (https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/skilled-nursing-facility-all-owners).However, it’s meaningful to note that the data is currently incomplete.
As of now,fewer than 100 facilities have reported private equity ownership,and just over 300 have reported REIT ownership. Other research estimates these numbers to be substantially higher. This suggests that reporting is still in its early stages and the full picture is yet to emerge.
Understanding Nursing Home Profit Status
The following chart illustrates the distribution of nursing facilities by profit status.
!Distribution of Nursing Facilities by Profit status
What Does This Mean for You?
Increased transparency is a positive step. It allows you, as a consumer and advocate, to better understand the ownership structure of nursing facilities. This knowledge can inform your decisions when choosing care for yourself or a loved one. While the data is still developing,it’s crucial to stay informed and ask questions about the ownership and management of any facility you are considering.
You can find more information and resources on the KFF website (https://www.kff.org/).
Disclaimer: This work was supported in part by The John A. Hartford Foundation. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.
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