Congresswoman Schakowsky: We Are Setting the Stage for ‘Essential’ Nursing Home Ownership Disclosures

As the Biden administration continues down its path toward comprehensive nursing home reform, owners and investors in the space have kept a close ear to the ground when it comes to federal leaders’ increasingly loud opposition toward certain for-profit models — perhaps for good reason.

Congresswoman Jan Schakowsky of Illinois and Congressman Mark Takano of California are the latest government officials to call out the skilled nursing industry, specifically for its lack of access to ownership information and financial activity.

The Linking Investors and Nursing Home Quality (LINHQ) Act, introduced in late July, is “a really good start” to accomplishing the goals President Biden set forth in his State of the Union address back in March and in the administration’s accompanying fact sheets, according to Schakowsky.

“We don’t have all the details that we need to look at actually what is happening and that’s the point of this legislation. Disclosure is such an important first step. Transparency is such an important first step to really find out what’s going on,” she told Skilled Nursing News in an interview.

Biden himself has called out the role of private equity and real estate investment trusts (REITs), going so far as to say private equity is a “dangerous model” that has been “buying up” struggling nursing homes.

But many in the nursing home space think these efforts may be misguided and misinformed.

The legislation would require nursing homes and parties with ownership interests to disclose ownership and financial information each year — down to the 5% ownership level.

Those who do not comply would be subject to admissions being barred and a suspension of federal payments until reporting and quality metrics are met.

Given that taxpayers are bearing the main costs of nursing home care, it is “absolutely appropriate” to look carefully into who is making money, who is investing in these facilities and how that relates to cost and care, Schakowsky said, referencing data from a Congressional Research Service report published in June.

Defining private equity

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 NIC MAP Data, released by NIC MAP Vision.

Research published in JAMA Health Forum found that real estate investment trusts (REITs) owned about 12% of all skilled nursing assets as of 2021.

But how much of the SNF sector is owned by what the administration and others define as private equity continues to be debated.

Private equity, according to Schakowsky, is an entity that is looking for profitable investments and is therefore putting money into something in hopes of earning more in return — without necessarily having concern over quality care.

“The issue of investing when you’re a private equity firm is to make more money,” she said. “This is about money. When you talk about private equity, they’re all over the economy and the goal there is to increase profits, not increase care, necessarily.”

Private equity firms’ investment in health care has ballooned from $5 billion in 2000 to more than $100 billion in 2018, but only about 11% of nursing facilities nationwide are owned by private equity firms, according to MedPAC.

Schakowsky also pointed to an analysis published in 2021 that found that after a nursing home’s purchase by a private equity firm, residents’ short-term mortality rate jumped by 10%, with an 11% increase in spending — stressing the direness to further investigate nursing home ownership.

“We know that the issues of long-term care, of nursing home care, poll off the charts for families. It’s not just [the] concerns of the elderly, but their families that are trying to take care of them,” she added.

When asked who should be operating nursing homes, if not REITs or private equity, Schakowsky said the best outcomes come from not-for-profit nursing homes.

But oftentimes not-for-profit nursing homes operate in smaller, more rural markets that are difficult for owners to break into given the lack of state or federal resources.

The Evangelical Lutheran Good Samaritan Society, with 70% of its communities in rural areas, has had to close or sell nine facilities as of June.

Congress looks to ‘set the stage’

Schakowsky’s bill comes at a time when the Centers for Medicare & Medicaid Services (CMS) is embarking on its own actions toward reform as part of the Biden administration’s plans.

CMS in April unveiled groundbreaking new data on nursing home ownership, which provided information on mergers, acquisitions, consolidations and changes of ownership from 2016-2022 for nursing homes enrolled in Medicare.

The government agency is also on a fast track toward proposing new federal staffing minimum requirements for facilities in Spring 2023.

Schakowsky has been advocating for staffing standards for years, and she believes setting benchmarks should be part of any future legislation or policy, to send a signal that federal officials are serious about compliance and enforcement.

Families want to have basic standards of what they can expect at all times when someone they care for is going into a nursing home, she said.

“So, I think the idea of what CMS is doing and what we do in our legislation — it’s essential, it’s basic,” Schakowsky said.

She also said Congress has and continues to work closely with Health and Human Services Secretary Xavier Becerra, as well as CMS Administrator Chiquita Brooks-LaSure, to make sure everyone is on the same page.

“So while there is work being done at [the federal] agency level, we also want to do something now at the congressional level to set the stage,” she added.

Overall, Schakowsky told SNN that she believes the bill has a “good shot” at moving through the legislative channels — especially given the Biden administration’s laser focus on the issue.

“So we’re in this with both feet and want to keep going, and are very, very inspired by the president’s commitment — he even mentioned in his very first speech — and so I think that we definitely have the administration, the administrative agencies, the public and the activists working in the field on this,” she said.