As federal agencies push for ownership transparency, nursing home ownership changes have been linked to a decrease in staffing hours and in turn a drop in Five-Star rating scores, at least for a short period of time following acquisition.

Most acquired facilities showed indications of financial struggles, including lower star ratings and occupancy, plus a higher percentage of stays covered by Medicaid, according to a study conducted by the University of Pennsylvania Leonard Davis Institute of Health Economics (Penn LDI).

In contrast, quality measure scores were higher after a change in ownership, co-author and assistant professor of medicine Dr. Kira Ryskina told Skilled Nursing News. Researchers used newly released data from the Centers for Medicare & Medicaid Services (CMS) on nearly 3,600 nursing homes that changed owners. The data covers the period from 2016 through 2022.

One in five nursing homes changed ownership over this seven-year span, researchers found. That’s 23% of the 15,471 facilities between 2016 and 2022.

Many variables in ownership changes

The Five-Star Quality Care rating system was used as an indicator of overall quality, including the quality of its three components: health inspections, clinical measures including bedsores, catheter use or restraints, and staffing.

“It will be important to understand whether these opposing trends reflect true improvements in care quality under the new management, or deficiencies of the quality measures domain,” she said.

Brian Ellsworth, vice president of public policy and payment transformation with Health Dimensions Group (HDG), said the measure of quality used for the study – the CMS Five-Star rating – is likely not sufficiently sensitive enough, and covered a time period including the onset of the pandemic in 2020. This could have created a lot of variability in the quality outcome data, Ellsworth said in an email to Skilled Nursing News.

“When ownership changes in a facility, there are usually a lot of things going on, some of which can be hard to measure,” he added. “It can take time for new owners to install their systems of care and implement wholesale quality changes.”

The reported data indicates that quality rankings improve over time after the sale, which is consistent with Ellsworth’s scenario.

Study findings

Overall quality ratings decreased slightly with ownership change, about 0.1 points on the Five-Star scale. The health inspection component showed a small decline, while the staffing rating was reduced by about 0.2 points.

Staffing levels dropped most noticeably for registered nurses (RNs) compared to nurses in more administrative roles, the study found, measured by hours per resident day (HPRD) using payroll-based data.

While the drop in RNs needs further study, researchers said the change could have been caused by changes with the new owners, staff reductions or nurses simply leaving or retiring.

In terms of the increase in ratings in clinical measures, researchers said this could be from efficiency gains or from changes in the way quality measures are reported by new owners. Conflicting trends underscore the need for transparency around changes in facility ownership and a better understanding of consequences of changes in ownership that are salient to patients and families, researchers concluded.

A call for greater ownership scrutiny

Overall, researchers called on CMS to further scrutinize nursing home ownership, an echo of what the Biden administration has been pushing for in its reform initiatives. Last November, the federal government announced a final rule requiring facilities to disclose additional ownership management information.

A key element of the rule is to disclose information about individuals, entities providing administrative services, including clinical consulting, accounting or financial services.

The deadline for this rule is coming up soon, with nursing homes required to submit ownership disclosures this November.

“Everyone in this field is trying to improve patient care,” Ryskina said in a statement. “CMS can help by making it easier for families to make informed choices with more transparent, easy-to-understand public information about nursing home ownership.”