Private equity firms buy all types of businesses. In recent years, they’ve become increasingly interested in the health care industry. This includes not just acquisitions of hospitals but also nursing homes.
A recent study estimates that private equity firms own between 5% and 13% of all nursing homes in the U.S. It’s hard to know the precise number because it’s relatively easy for these firms to disguise their ownership behind vague names.
Why is this a problem?
Private equity firms are focused on turning a profit. While that can be said for just about any business, when vulnerable lives are at stake, it’s crucial that cost-cutting measures don’t endanger them.
That’s why there’s been growing concern among lawmakers, the media, health care advocates and others about the effect of private equity ownership of medical facilities – including nursing homes. The proliferation of private-equity-owned nursing homes can be especially problematic when one firm acquires multiple facilities in the same area, as has occurred.
Quality of care can suffer
Studies of outcomes in hospitals acquired by private equity firms have shown that negative patient outcomes (including fatalities among those who go to the emergency departments) increased. These outcomes have been linked to the staffing reductions that typically follow such an acquisition.
The same is true for nursing homes. A recent report on nursing homes in another state that were acquired by private equity firms found that they performed worse than non-private-equity-owned facilities in the following areas:
- Lower ratings for nurse staffing
- More citations for abuse
- Worse inspection results
- Significantly lower overall performance ratings
The report stated, “Multiple studies confirm the harmful effects that private equity ownership has on nursing homes, and the increased risk placed on residents and workers.” It also predicted that federal oversight is unlikely to help with the problem because, under President Trump’s first term, federal protocols were revised “to discourage regulators from levying fines against nursing homes” even when negligence or wrongdoing caused fatalities.
Advocating for vulnerable loved ones
While it may be challenging to determine who actually owns a nursing home or other care facility, families can and should look at recent data on any facility they’re considering for a loved one and pay particular attention to staffing levels – regardless of who the owners are.
It’s also crucial to determine your options for justice and compensation if a loved one suffers harm that was preventable. Getting sound legal guidance is a good place to start.