Private Equity Nursing Home Acquisitions Linked To More Emergency Room Visits and Higher Costs: Study

Private equity ownership of nursing homes has been increasing rapidly in recent years, raising concerns that the firms are placing profits over the health and safety of residents.

The findings of a new study highlight serious concerns of nursing homes being acquired by private equity firms, finding that facilities saw an increase in emergency room visits and hospitalizations, which may be the result of steps taken to increase profits over resident safety.

Private nursing homes acquired by equity companies not only experience an increase in hospitalizations among long-term residents, they also had an increase in Medicare costs, suggesting quality of care may be lower in these nursing homes, according to a report published last week in the journal JAMA Health Forum.

Researchers with Weill Cornell Medical College conducted an analysis of more than 9,600 residents at 302 private nursing homes acquired by private equity firms, and nearly 250,000 residents in 9,500 other for-profit nursing homes without private equity ownership. Researchers used a new national database of private equity nursing home acquisitions, Medicare claims, and Minimum Data set assessments for the period from 2012 to 2018.

The team focused on ambulatory care-sensitive conditions including visits to the emergency room (ER) and hospitalizations for conditions linked to diabetes and heart failure.

The findings suggest private equity owned nursing homes may offer lower quality of care than other for-profit care facilities. Residents at private equity-owned nursing homes were 11% more likely to have emergency room visits and nearly 9% more likely to be hospitalized.

In addition, Medicare costs were nearly 4% higher, resulting in roughly $1,080 more in annual costs per patient at private equity nursing homes compared to for-profit nursing homes. Overall, average quarterly costs for hospitalization and ER visits were $8,050.

However, the data indicates the risk of antipsychotic use, severe pain or the incidence of pressure ulcers were the same at private equity owned nursing homes as at other for-profit nursing homes.

More private equity firms have been acquiring US nursing homes recently. Roughly 5% of nursing homes are owned by private equity firms and more than half of US adults will require nursing home care. The findings indicate costs increased and quality of care decreased when private equity firms took over nursing home management. This may also make it more likely families will need to pursue nursing home neglect lawsuits over injuries that may have been avoided with better treatment.

More oversight of nursing homes managed by private equity firms may be warranted to help reduce unnecessary ER visits or hospitalizations for conditions that are largely treatable, such as those linked to diabetes, the researchers concluded.