Why Concerns Over Private Equity Involvement Extend Beyond Nursing Homes

As the federal government continues to seek to understand who is buying and financing nursing homes, the role private funds play in the health care system more broadly appears to be trending upward.

Private equity (PE) firms spent $206 billion on more than 1,400 health care acquisitions in 2021, according to a Kaiser Health News report citing PitchBook data, including deals involving eye care clinics, dental management claims, physician practices, hospices, pet care providers and other health care companies.

Studies have linked private equity involvement to a decline in quality of care in long-term care settings, although further research is needed to understand the broader implications for the sector. A KHN investigation found that organizations owned or managed by PE firms have paid more than $500 million in fines since 2014 to settle at least 34 lawsuits under the False Claims Act. 

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Back in February, President Joe Biden mentioned SNFs specifically and promised that the practice of Wall Street firms buying up nursing homes would end on his watch. It remains unclear whether Biden and other federal officials see private buyers and private equity as one-in-the-same.

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 such firms, according to MedPAC.

Of the $3.7 billion spent in total skilled nursing transactions in 2021, $3.3 billion, or roughly 89%, were considered private buyers, data released by the data service affiliated with the National Investment Center for Seniors Housing & Care (NIC) showed.

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Private equity, according to Illinois Congresswoman Jan 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,” Schakowsky previously told Skilled Nursing News.

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