In his State of the Union address last month, President Joe Biden focused attention on how private equity ownership of nursing homes can affect residents’ health.
“As Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up. That ends on my watch,” Biden said.
Those comments dovetail with growing interest from Congress.
The Government Accountability Office, for instance, is investigating the ownership of nursing homes, including by private equity firms, and expects to issue a report in the fall, said Chuck Young, the GAO’s managing director of public affairs. “The full scope of what we will cover has not been set yet, however the work will likely be focused on the information [the Centers for Medicare & Medicaid Services] has about nursing home ownership and how the agency uses that information,” Young wrote in an email.
The investigation comes in response to a pre-pandemic request from House Ways and Means Committee Chairman Richard Neal (D-Mass.). Yet the pandemic has also underscored the importance of oversight of nursing homes, in light of the lives lost to COVID-19.
The exponential growth in these private equity investments in recent years “has been associated with a host of trends that are negatively impacting the American people” — including an increase in nursing home mortality rates, wrote Pascrell, who chairs the Ways and Means Oversight Subcommittee. He noted the need to “better understand” the consequences of private equity’s involvement in healthcare and “the far-reaching impact” of “bankruptcies or closures following PE buyouts.”
Pascrell said in a statement to KHN that the data the GAO could compile would be valuable in assessing the reach and impact of such investments: “It is my hope GAO will shed more light and provide more information on Wall Street’s dangerous growing control over nursing homes and long-term care facilities.”
That Neal and Pascrell had to ask the GAO for information underscores the dearth of data on nursing home ownership. A June 2021 report by the Medicare Payment Advisory Commission found that information about the effect of private equity ownership on nursing home finances and quality of care was dated and the results of studies were mixed.
Democratic House staffers told KHN that because private equity has stepped up its interest in this industry, it’s even more crucial to understand how residents’ health outcomes and staff working conditions compare with those in facilities not owned by private equity companies.
From 2010 to 2019, there was a large increase in private equity companies buying up nursing homes, along with other investments in healthcare. An exact figure is elusive because private purchases are difficult to track, but it’s estimated that such groups own anywhere from 5% to 11% of nursing homes nationwide.