Coalition of State Attorneys General Call for Transparency in Nursing Home Ownership

Nursing homes with private equity ownership often have chronic understaffing and high resident mortality rates, and ownership structures that prevent those responsible for the decisions from being held accountable

In recent years, a number of privately owned nursing homes have been found to cut corners, as part of an effort to increase profits, even though it exposes residents to serious risks and results in substandard care. However, many of these same facilities have complex ownership structures, which are intended to insulate the individuals and companies that drive these decisions from liability in nursing home negligence lawsuits.

In response to these growing problems, a group of eighteen state attorney generals have joined together to submit a letter this month to the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), requesting new rules to require better transparency of those who control the daily operations at privately owned nursing home facilities, which will create better accountability for substandard resident care.

The attorneys general letter raises concerns over the growing number of nursing homes run on a for-profit basis by private equity investors and real estate investment trusts, indicating that these facilities have a worse standard of care history than non-profit facilities. The letter points to a recent study that linked private equity nursing home ownership to a 10% higher risk of resident mortality.

The state attorney generals indicate the most effective way to reduce instances of nursing home neglect in these privately owned facilities is for CMS to implement an ownership transparency requirement, which will allow regulators to identify “bad actors” and hold them accountable.

Private Equity Owned Nursing Home Violations

Massachusetts Attorney General (AG) Andrea Campbell and New York AG Letitia James are co-leading the coalition supporting the CMS proposal. The group also includes the attorneys general of Arizona, California, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

As outlined in the coalition letter, the proposed CMS rule would require the disclosure of ownership, managerial, and other information, such as who is responsible for facility operations, setting staffing levels and protocols, and creating resident care guidelines. The new rule would apply to the 80% of all U.S. nursing homes certified to accept Medicare/Medicaid payment.

The AG letter accuses for-profit nursing homes of frequently using legal loopholes to hide their true ownership structure to avoid accountability for resident care violations. In addition to higher resident death rates, privately owned nursing homes have been linked to an increased likelihood of other care violations, such as consistent understaffing, worsening mobility of residents, and elevated use of antipsychotic medications.

The state AGs who signed the letter indicated they have a vested interest in the success of the CMS proposal, because they are legally responsible for ensuring the quality of nursing home care within their states. Their offices have authority to investigate nursing home abuse and neglect allegations, whether through Medicare Fraud Control Units (MFCU) or other means.

“When actors in the nursing home industry put profits first at the expense of people’s health and well-being, the public deserves to know who they are,” AG Campbell said in a press release announcing the AG coalition support letter.

Nursing Home Lawsuits Often Allege Profits Come Before Patient Care

Several high profile nursing home wrongful death lawsuits filed against privately owned nursing homes in recent years, raising allegations that for profit ownership structure in these facilities prioritize cost cutting measures at the expense of residents.

Some of these lawsuits also claim privately owned facilities skimp on liability insurance to avoid significant payouts to victims of substandard care.

Families who must choose a nursing home for their loved one are often misled about the quality of care provided in for-profit nursing homes, according to a recent study revealing flaws in the federal nursing home care rating system.