to highlight the common misconceptions surrounding private equity owned nursing homes. The issue has become a distraction from the real issue that all long term care facilities need the support from policymakers to address chronic government underfunding and make continuous care improvements for America’s elderly.
Chronic underfunding of Medicaid and unfunded government mandates have pushed many nursing homes to the financial brink. The lack of financial support for the industry from policymakers has forced a small number of nursing home providers to sell off their assets and seek other revenue sources in order to keep their doors open for their residents and staff. This is where we saw some private equity investments a decade ago, but many of those investments were unsuccessful and the larger private equity firms have since left the nursing home sector.
In fact, nursing homes are often “mom-and-pop" organizations. A majority (63%) of nursing homes belong to operators with 10 or less facilities, of which 31% are run by single property operators. Even the 10 largest nursing home operators account for only 12% of the nation's nursing home beds (National Investment Center for Seniors Housing & Care).
“Private equity firms began buying out hospitals and nursing homes in the 2000s before moving into more lucrative niches post-2010 -- ambulatory surgery, radiology, anesthesiology, emergency room management, neo-natal units, burn clinics, and trauma units, IT health and bill collecting. More recently, they have moved into non hospital-based physician specialties – dermatology, dental practice management, case management, ophthalmology, and orthopedics – as well as behavioral health." (Institute for New Economic Thinking, “Private Equity Buyouts in Healthcare: Who Wins, Who Loses?," March 2020)
Myth: Private equity owned nursing homes performed poorly in response to the COVID-19 pandemic compared to nursing homes with other ownership structures.
Facts: The role of private equity in nursing homes' response to COVID-19, specifically, is not correlated.
A study from October 2020 found that nursing homes owned by private equity firms performed comparably with for-profit and nonprofit nursing homes. Specifically, when looking at staffing levels, COVID-19 cases and deaths or deaths from any other cause, there were not significant differences between PE nursing homes and others.
“In this cross-sectional study of 11 470 US nursing homes, there were no statistically significant differences in staffing levels, COVID-19 cases or deaths, or deaths from any cause between PE nursing homes and facilities with other ownership types. (JAMA Network, “Comparative Performance of Private Equity – Owned US Nursing Homes During the COVID-19 Pandemic," October 2020)
Other independent researchers had similar findings that ownership had little to do with COVID infection rates, but are primarily correlated to the spread of the virus in the surrounding community and the size of the facility.
COVID-19 uniquely targeted nursing home residents, but public health officials failed to prioritize long term care from the very beginning of the pandemic, and this led to devastating results. Heroic caregivers worked day in and day out to protect their residents, but without proper government support or resources needed to mitigate the virus, it was virtually impossible to stop. Ownership is not a factor that contributed to how a nursing home performed during the pandemic when all nursing homes and congregate settings struggled during the pandemic.
Myth: Private equity owned nursing homes have lower staffing levels than other nursing homes because they are more worried about profit than care.
Facts: A study from October 2020 found that private equity owned nursing homes did not have lower staffing levels than other nursing homes during the pandemic.
The entire long term care industry is facing a historic workforce crisis. The COVID-19 pandemic, specifically, has worsened labor levels across the entire health care sector, but nursing homes have been hit the hardest. Policymakers should be concentrating on helping the long term care industry recruit and retain a robust workforce so every resident can get the highest level of care possible – the staff of nursing homes are the backbone of every facility.
Bottom Line:
Nursing homes, no matter the type of ownership, are facing an unprecedented economic and workforce crisis. Without action, seniors' access to long term care will be limited. Lawmakers must prioritize long term care residents and staff by providing support and addressing chronic underfunding, not putting the blame on individuals who have dedicated themselves to serving our nation's most vulnerable. Together, we should focus on meaningful solutions that will help us learn from this pandemic, renew our commitment to our seniors, and continue to improve the quality of care in America's nursing homes.