People over Profits: Protecting Nursing Home Patients from Private Equity
April 30, 2021
By Ariela Weinberger
As private equity (PE) investment in health care continues to soar, there are renewed concerns that the tens of billions of taxpayer dollars spent each year on nursing home care may, in fact, be lining the pockets of rich PE investors at the expense of vulnerable seniors.
In “The Impact of Private Equity on Nursing Home Care: Recommendations for Policymakers,” author Melea Atkins examines the often-conflicting pressures nursing homes face to simultaneously make a profit and care for patients—a tension that is particularly strong in a growing number of nursing homes backed by PE firms. She concludes that evidence of the impacts of PE ownership on nursing homes supports policy action to stop PE investment in the nursing home sector.
To make this argument, the issue brief:
- Highlights research on the quality of care provided at PE–owned nursing homes both before and during the COVID-19 pandemic;
- Discusses how three common profit-maximizing strategies pursued by PE–backed nursing homes lead to low-quality care; and
- Recommends that policymakers enact a ban on PE firms owning nursing homes and require PE firms already in the nursing home business to divest within five years.
“The COVID-19 pandemic has spotlighted how we as a nation have failed vulnerable patients in nursing homes. A lack of regulation and oversight has allowed PE funds to profit from taxpayer dollars while endangering the elderly and infirm. It is critical that policymakers take decisive action to protect vulnerable patients from companies whose first priority is quick, outsized profits,” said Atkins.
This issue brief follows a number of highly publicized studies on the negative impact of private equity ownership on nursing homes, including a National Bureau of Economic Research working paper and a recent report from Americans for Financial Reform, which both found higher mortality rates among residents of private equity–owned nursing homes.
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