Forbes’ Gleckman: Lack of Easy Access to Nursing Home Ownership Info Limits CMS’ Transparency Bid

Ownership transparency of nursing homes has been a subject of debate since the Biden administration floated the idea in early 2022, adding to negative notions – many say unfairly – that sullied the reputation of the sector at large. Now that the federal government has finalized a rule to expose the complex ownership arrangements within the sector, experts are weighing in on the transparency bid’s usefulness.

In a recent column for Forbes, Howard Gleckman, a senior fellow at The Urban Institute, noted that the effectiveness of the federal government’s initiative for transparency would be limited in its effectiveness unless prospective residents and their families have easy access to this information.

“The federal government wants to know more, and wants consumers to know more, about who owns nursing homes,” Gleckman wrote. “It is about time. And it may help identify some of the worst actors who pollute the nursing home industry. However, without easier access to this new information, I’m not sure how helpful it will be for prospective residents and their families.”

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Overall, Gleckman’s analysis applauded the federal government’s final rule, which aims to introduce ownership and operator disclosure rules, arguing that it would help dispel a prevailing myth regarding the role of private equity firms on nursing home quality. Gleckman emphasized a crucial caveat to research noted by federal agencies on declining quality and private equity ownership—the ownership of these facilities by private equity firms was a mere 5%, a figure that has been shrinking.

Real Estate Investment Trusts (REITs), which owned about 9% of nursing homes, also came under scrutiny in the column. Gleckman pointed out that their share had remained relatively steady since 2019, and they exhibited similar quality concerns as private equity-owned facilities.

“The other challenge is the ownership or operating structure itself,” Gleckman noted. “Often, chain facilities are controlled by limited partnerships that are owned by one or more other partnerships. That makes it extremely difficult to know who is in charge.”

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Gleckman drew attention to the challenges associated with quality measures, using the government’s Nursing Home Compare 5-star rating system. The system, while widely used in studies, was criticized for significant gaps, especially in measuring patient and resident experience, he said.

A significant concern highlighted by Gleckman was the difficulty consumers faced in determining the ownership of specific nursing home facilities, particularly when they changed hands. The lack of awareness about the new owner’s track record posed potential risks to residents, especially when thousands of facilities changed hands between 2016 and 2021.

Gleckman detailed the intricacies of tracking ownership in the industry, where owners often didn’t directly manage facilities, with many operators leasing from entities such as REITs. This, he noted, made it challenging to identify the key players responsible for day-to-day management decisions.

To address these challenges, the new rules from the Centers for Medicare & Medicaid Services (CMS) will force nursing homes to report ownership details during critical junctures like Medicare or Medicaid applications, recertification, and ownership changes. Gleckman noted, however, that while CMS promised to make this information publicly available about a year after reporting, concerns linger about how easily accessible and understandable it would be for consumers.

“Surveys show consumers mostly pick facilities based on location—those closest to family members,” he wrote. “But the more they know about quality and safety the better. And understanding who owns a facility can help inform those decisions, if only at the margin.”

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