Think Tank to Congress: Ban Private Equity Investment in Nursing Homes

Citing research showing lapses in staffing and care quality, a think tank on Friday released a report calling on Congress to ban all private equity investment in nursing homes.

The Roosevelt Institute specifically asked lawmakers to subject all nursing home transactions to Securities and Exchange Commission (SEC) approval in order to weed out “private equity firms and similar private investment funds,” while also requiring PE investors to divest from their existing nursing home holdings within five years.

“The COVID-19 pandemic has spotlighted how we as a nation have failed vulnerable patients in nursing homes,” public health consultant Melea Atkins wrote in the Roosevelt Institute report. “A lack of regulation and oversight has allowed private equity funds to profit from taxpayer dollars while endangering the elderly and infirm. It is critical that policymakers take decisive action to protect vulnerable patients from companies whose first priority is quick, outsized profits.”


The New York-based Roosevelt Institute works to advance progressive policies in the mold of its namesake, Franklin Delano Roosevelt.

The Friday report builds on growing scrutiny and criticism of private equity investment in post-acute and long-term care in the wake of the COVID-19 pandemic. While Atkins cites research that predates the pandemic, the media attention gained steam back in February when a study found that PE ownership of nursing homes resulted in more than 20,000 excess deaths over a 12-year period — as government spending on care increased by 11%.

That study, published by the National Bureau of Economic Research, found staffing cuts at facilities that had been taken over by PE investors, as well as substantially higher expenses such as monitoring fees and lease payments.


Atkins’s brief, which discussed the NBER report, built on those themes, accusing PE firms of using three common strategies that “endanger nursing home patients”:

  • Restructuring companies into complex webs of LLCs in order to reduce liability risk
  • Selling a nursing home’s real estate to generate cash while also saddling the facility with lease payments
  • Creating several ancillary-service businesses, such as pharmacies and rehab services companies, to capture more reimbursement

“Each of these strategies — legal restructuring, sale of real estate assets, and vertical integration — are implemented in the interest of profit, not patients,” Atkins asserted. “Moreover, they each compound incentives that are contrary to high-quality patient care.”

Calls to curb or eliminate PE’s influence in nursing homes aren’t limited to think tanks and researchers: The topic was the subject of a recent Congressional hearing in which lawmakers and advocates called for reforms.

“Research has shown nursing home buyouts are linked with higher patient-to-nurse ratios, lower quality care, declines in patient outcomes, weaker inspection performances, and increased mortality rates,” Rep. Bill Pascrell, a New Jersey Democrat who chairs the House Ways and Means Subcommittee on Oversight, said during the late March hearing. “That’s a horror. Think about it: Our most vulnerable.”

The industry has generally responded by pointing to PE’s relatively small role in its overall financing structure, with American Health Care Association CEO Mark Parkinson pegging private equity ownership of nursing homes at less than 10%; during the March hearing, New York University researcher Sabrina Howell said her team identified a 9% figure, but noted that the number was based on 2015 data.

“The small number of nursing homes that have turned to alternative revenue sources underscore the financial and staffing crisis that nursing homes are facing due to the fact that Medicaid does not cover the cost of care,” Parkinson said in a statement last month.

Atkins expressed concerns that PE ownership may pick up in the wake of the pandemic.

“A powder keg of private equity cash will only accelerate this worrisome trend of private equity investment in nursing homes,” Atkins wrote