Common Ownership of SNFs, Hospitals on the Rise Among Investors

Over the past decade, the behind-the-scenes relationship between hospitals and skilled nursing facilities has warmed through more common investors, and researchers from Harvard University are raising questions about competition and antitrust regulations.

The percentage of acute care hospitals having common investor ties to the post-acute or hospice sectors increased from 24.6% in 2005 to 48.9% in 2015, according to the paper “Corporate Investors Increased Common Ownership in Hospitals And The Postacute Care and Hospice Sectors,” which was published in the September issue of Health Affairs.

Common ownership across sectors was defined as having shared investors found in the Provider Enrollment, Chain and Ownerships System (PECOS), a data set from the Centers for Medicare & Medicaid Services (CMS).


“We found that nearly half of all hospitals have a dominant investor that also owns a significant stake in post-acute care or hospice in the same market,” Annabelle C. Fowler, a PhD candidate at Harvard University and lead researcher on the study, told Home Health Care News.

Loss of Competition?

Researchers were surprised by such a rapid increase in common investors, and raised questions about what the trend means for consumers, as well as the relationship between hospitals and post-acute care providers. What may look like an independent health care provider at first glance may actually be one that’s connected to several others.


The growth in common investors between hospitals and SNFs increased steadily from 2005 to 2015, according to the paper. Hospitals with links to SNFs increased from 10.7% in 2005 to 17.5% in 2015, the PECOS data revealed. For hospice, links with hospitals increased from 9.5% in 2005 to 23.3% in 2015.

One of the biggest concerns is a loss of incentives for competition across health care sectors and providers.

“If a common investor owns providers in different sectors, you might see less incentives for those providers to compete,” Fowler said. “Because the profits of each are going to the investor anyway, [they] won’t compete as aggressively as they would if they had different investors.”

On the other hand, shared investors may bring health care sectors closer together, and even increase care coordination—a long-term goal of CMS. And investors may simply be following along with the regulatory trends.

“Medicare and other payers are trying to encourage providers to control spending growth, through accountable care organizations (ACOs), bundled payments and especially in post-acute care readmission penalties,” Fowler said. “We do see potentially that these common investors could be a mechanism, even in the absence of direct acquisition or formal ownership relationships, to affect provider behavior and respond to some of these alternative payment models.”

Antitrust Considerations

With such an uptick in the level of shared investors across health care sectors, antitrust scholars have started to take notice, according to Fowler, who says there isn’t any evidence regarding what these shared investors may end up doing in terms of their effects on competition. The best approach may be to consider other industries.

“In other industries, [there’s some] suggestions that corporate investors that are shared increase prices—in banking and airline industries—but nothing in terms of health care,” she said.

At this point, the concept of shared investors in health care is just “becoming something that people are starting to think about,” she said.

Above all, researchers argue that this emerging relationship requires more study and thought when it comes to antitrust laws.

“There are tons of different types of relationships between hospitals and post-acute care providers—formal acquisitions, facilities in the same chain, or preferred referral networks,” Fowler said. “We looked at this new dimension, which is the shared investors. So, we argue that it ought to be considered by antitrust regulators.”

Written by Amy Baxter

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