Study Documents Devastating Impact of PE Ownership in US Nursing Homes
The New York Times has published a feature article documenting the impact of private equity ownership on US nursing home quality. The Times evaluated data collected by government agencies over the past 6 years, comparing over 1,200 private equity-owned homes with 14,000 others. The results are a powerful demonstration of what happens when locusts are unleashed on the elderly.
The study found that "As such investors have acquired nursing homes, they have often reduced costs, increased profits and quickly resold facilities for significant gains. But by many regulatory benchmarks, residents at those nursing homes are worse off, on average, than they were under previous owners."
According to the study, acquisition by the funds was typically followed by cuts in expenses and staff, including registered nurses. The Times found that the cuts often reduced staff requirements below minimum legal requirements. "Federal and state regulators also said in interviews that such cuts help explain why serious quality-of-care deficiencies — like moldy food and the restraining of residents for long periods or the administration of wrong medications — rose at every large nursing home chain after it was acquired by a private investment group from 2000 to 2006, even as citations declined at many other homes and chains."
The article also describes how complex ownership structures have effectively put the companies beyond government regulatory reach and legal liability. “Private equity is buying up this industry and then hiding the assets,” said Toby S. Edelman, a nursing home expert with the Center for Medicare Advocacy, a nonprofit group that counsels people on Medicare. “And now residents are dying, and there is little the courts or regulators can do. ” "These companies leave the nursing home licensee with no assets, and so there is nothing to take,” said Scott Johnson, special assistant attorney general of Mississippi. Publicly-listed nursing home facilities, notes the Times, are "required to disclose who controls their facilities in securities filings and other regulatory documents."
The full article is available here .