As the White House looks to hold nursing homes more accountable for the care they provide, signaling out private equity ownership as part of the problem, the Government Accountability Office is reportedly expected to release a report in the fall detailing its ongoing investigation into nursing home ownership.
The investigation, in part, surrounds how much private equity ownership there is in the space, according to a Kaiser Health News report.
Chuck Young, GAO managing director of public affairs, told KHN that the full scope of the report has not been set yet, however, it will likely be focused on the data the Centers for Medicare & Medicaid Services has about nursing home ownership and how the agency uses that information.
Biden specifically called out Wall Street firms during his State of the Union address at the beginning of March, claiming they were taking over nursing homes, which resulted in poorer care quality and rising costs. But with only about 5% of SNFs nationwide owned by private equity firms, some feel signaling them out may be misguided.
Scrutiny of private equity ownership of nursing homes is not new and this is not the first time the GAO has looked into the topic. In 2007, after the New York Times published its investigative report, U.S. Sen. Chuck Grassley ofIowa requested a review of the effects of private equity ownership on nursing home care.
The resulting GAO report found that the Centers for Medicare & Medicaid Services (CMS) system for maintaining ownership and chain data “provided a confusing picture of the complex ownership structures and chain affiliations of the six [private investment]-owned nursing home chains GAO reviewed.”
U.S. Rep. Richard Neal of Massachusetts, also the chairman of the House Ways and Means Committee, requested the government agency conduct a similar report before the pandemic, and U.S. Rep. Bill Pascrell of New Jersey made a similar request in 2021 regarding private equity investment in health care.
Pascrell specifically pointed to the wave of recent research into private equity investment in nursing homes in focusing his criticism.
Pascrell, who chairs the House Ways and Means Subcommittee on Oversight, said during a 2021 hearing that private equity’s track record during the pandemic was “not pretty.”
“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,” Pascrell said at the time.
In New Jersey, facilities with either whole or partial PE ownership were shown to have 10.2% higher COVID-19 death rates and 24.5% greater infection rates than the statewide average, a financial reform advocacy group determined in an August 2020 study. However, a nationwide analysis in October 2020 found no significant differences in COVID outcomes and staffing shortages between PE-owned facilities and those with other ownership types, though PE investment was associated with shortages of personal protective equipment (PPE).
The impact private equity ownership has on the overall nursing home industry has been hotly debated since the White House laid out its nursing home reform package.
A recent report released by professional services firm CliftonLarsonAllen (CLA) showed that private buyers – which includes private equity and strategic buyers – were driving the mergers and acquisitions environment representing nearly 80% of the buying market.
And of the $3.7 billion spent in total skilled nursing transactions in 2021, $3.3 billion, or roughly 89%, were considered private buyers, according to data released by the data service affiliated with the National Investment Center for Seniors Housing & Care (NIC).
Companies featured in this article:
CliftonLarsonAllen, Government Accountability Office, National Investment Center for Seniors Housing & Care
