How CMS Can Improve Visibility on Nursing Home REIT, Private Equity Ownership

Even as the Biden administration strives to crack down on confusing ownership structures in the nursing home industry, it appears there are gaps in federal data collection and limited visibility into ownership.

Only one-third of private equity (PE) and fewer than one-fifth of real estate investment trust (REIT) investments in the nursing home space are accounted for in the Centers for Medicare & Medicaid Services’ (CMS) publicly available ownership data, according to a new report by Health Affairs.

And making data public isn’t enough, researchers noted. While the current agency data collection efforts are an important step forward, CMS needs to take additional steps to ensure that the public availability of ownership data is timely, accurate and responsive. And, CMS must make time for ease of use and digestibility of information so the public can find and interpret key metrics, researchers said.


When compared to private sources of ownership information, the CMS data is far from complete, researchers said. Only about 33% of PE investments and 17% of REIT investments were included in the CMS change of ownership file, Amanda Chen, lead author of the study who is affiliated with Harvard University, told Skilled Nursing News.

The Health Affairs study compared CMS ownership data to that drawn from Irving Levin Associates and S&P Capital IQ.

“We’re making some really great progress with this new public data that’s available, but there’s still a lot of gaps,” said Chen. “We don’t know who ultimately should be responsible for the care of these nursing home residents [and] that raises some major concerns, because we don’t know what entity should ultimately be held accountable.”


The gaps in the public data are a function of the way that the ownership data is currently collected, said Chen. Such data is self-reported by the nursing home when a change of ownership occurs, through the Provider Enrollment Chain and Ownership System (PECOS), she said.

What’s more, researchers said they got different results when searching for the top ten common owners of nursing homes using CMS data and facility survey reports of chain ownership – the two data sets did not tally. Data on ownership percentages was missing from CMS archives for 82% of owners in the top ten chains, and 55.21% across all facilities in the country.

“We actually know less about the specific ownership stakes for owners that are part of these larger chains, which I think might be a surprising finding,” said Chen. “Knowing these nuances is really important to understand which entity actually has the decision making power.”

Ownership accuracy and quality of care

In terms of better understanding common owners, Chen also said the CMS data didn’t capture in a timely manner when an owner went bankrupt and was subsequently acquired and rebranded.

“Ensuring both the accuracy and timeliness and being able to keep up with these complicated and complex cycles of rebranding and restructuring deals I think is really important to understand the underlying ownership structure and identify who, again, is ultimately responsible for care,” said Chen.

Medicare and Medicaid spent more than $66 billion on nursing home care in 2019, according to the report. Since 12% of nursing homes have private equity or REIT investment, that means roughly $8 billion of these public dollars flow to SNFs with institutional investment, researchers said.

Suggestions for more transparency

For improvements to this data, researchers suggest that on top of more complete ownership data, CMS should also develop a full picture of the organizational structure and “ultimate parent entity” or owner of a facility, complete a systematic evaluation of common owners across facilities, and then present this information in a user-friendly manner.

A final rule that took effect in January of this year should help, Chen said, which defines formally what a PE company is, and what a REIT is. Meaning that on the PECOS form, checkboxes will indicate whether ownership is PE or REIT.

Another suggestion to make the data more useful is to allow for a better understanding of how nursing homes spend their public payments and whether the use of complex ownership structures, including related-party transactions, might be a way operators are hiding payments.

Medicare profit margins for nursing home stays have consistently been above 10%. Without accurate and publicly available data on ownership arrangements, it’s impossible to follow the flow of public funds, according to the report.

CMS should understand how investors might be related to one another too, unraveling the hierarchy of organizational control and identifying bad actors when approving changes to ownership or management of nursing home properties.

“If [CMS] were to identify a bad actor of a nursing home, who might have a history of poor performance or poor quality, then CMS and other regulators or policy makers would be able to take action to prevent these nursing homes from requiring additional facilities,” said Chen.

Considering prior violations and adequacy of financial reserves, along with the minimum staffing provision and adequate care quality was another suggestion to improve transparency.

Researchers doubled down on a suggestion from the 2022 National Academies report too: auditing data on finances, operations and ownership of nursing homes by common owners, since much of what is received is self-reported.

“Although current reporting efforts are concentrated at the facility level, it is important to assess aggregate outcome measures and responsibilities across facilities, including by chains, and to track ownership stability over time, to assess the role of ownership and its effect on quality,” researchers noted.

Filling the gaps to alleviate administrative burdens

The suggested changes for improving transparency will incur additional costs and will require extra resources to be dedicated to addressing such issues, researchers said. Currently, CMS’s process places an excessive burden on facilities to provide the data, and the researchers cautioned the federal agency to proceed without burdening facilities further.

“Moving forward is a balance between trying to get as much information as possible to understand what these ownership structures look like, but at the same time, not putting all the administrative burden on these nursing homes who have a bunch of other things on their plate,” noted Chen.

Operators should be able to recognize how changes in ownership and ownership structure plays a role in patient outcome variability, staffing decisions and profit margins, she said.

“Unpacking these webs of relationships that help the day-to-day operation of the nursing home is important. I think that there’s a real movement to better understand this moving forward,” added Chen, referring to visibility into relationships between owners of property and owners of facility financial services, or owners of consulting companies and medical staffing suppliers.

With more accurate and comprehensive ownership data, CMS could instead focus on taking a more proactive role and maintaining greater scrutiny of facilities with common owners known to have a history of poor performance. 

Outreach and education between CMS and facilities will be needed on the operations side to close the “knowledge gaps and reporting burdens” that will inevitably result from this deeper data collection.

Streamlining the collection of ownership data, and in turn care quality, means there will need to be timely, flexible and responsive data collection matching the complex and changing nursing home landscape, researchers said.

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