Check Out Ownership When Choosing a Nursing Home

For Profits, Equity Investors Fare Poorer in Quality Outcomes

Don Bishop

A study in the Journal of Health Care Finance finds that Florida nursing facilities owned by private equity firms have fewer registered nurses and more deficiencies than chain-owned for-profit facilities and that the longer the facilities are owned by private equity firms, the fewer registered nurses they employ and the more deficiencies they have. You need to do your research when choosing a place for mom and dad.

This issue first came to light in 2011 when the first-ever analysis of the ten largest for-profit nursing home chains reported that compared to all other ownership groups, facilities owned by the top ten for-profit chains had:

  • The lowest staffing levels;
  • The highest number of deficiencies identified by public regulatory agencies; and
  • The highest number of deficiencies causing harm or jeopardy to residents.

Researchers looked at nursing facilities before and after their acquisition by private equity firms.  They compared an experimental group with a control group.

The researchers' hypothesis – that private equity-owned nursing facilities would deliver lower quality care to residents than other investor-owned facilities – was confirmed. 

Structural Variables

The researchers found that compared with other chain-operated for-profit nursing facilities, the facilities owned by private equity firms have:

  • 29% lower RN hours per patient day (PPD), 7% higher licensed practical nurse (LPN) hours PPD, and 12% higher certified nurse assistant (CNA) hours PPD
  • 25% lower skill mix

Nursing facilities owned by private equity firms, compared with other chain-operated for-profit nursing facilities in Florida, provide worse quality of care to their residents.

  Specifically, the researchers report 5% lower pressure sore prevention than the rate for for-profit, chain-owned control group.

Florida facilities had 9% higher pressure ulcer high/low risk prevalence, although differences in the other risk-adjusted outcome variables that they studied  – ADL decline, bowel worsening, and pressure ulcer – high/low risk – were not statistically significant.


In addition to identifying issues with the quality of care in facilities controlled by private equity firms, the researchers express concern with transparency of ownership information, pointing to "the deliberately complex organizational structures constructed by private equity [that] not only hinder the ability of regulators to monitor quality but also limit legal remedies available to aggrieved residents.

Researchers' Recommendations

Recognizing the importance of nurse staffing, which they see as "a primary target for cost-savings," the researchers suggest, "Imposition of federal minimum staffing levels may be helpful and should be seriously considered by CMS."

They also recommend that "Serious thought . . . be given to an expanded regulatory framework shifting the 'locus of accountability' from facility to the chain-level recognizing that chain is not merely an amalgamation of disparate units but represents a common governing and operational philosophy."

The researchers conclude:

Transparency and accountability are inextricably linked.  Without ensuring that nursing home ownership is more transparent, accountability cannot be fixed.  And without a strengthened regulatory framework which attempts to move beyond facility level monitoring system, accountability would be limited.  These are challenges which may be particularly relevant to private equity ownership but are by no means limited to them.  Addressing them would help achieve what engages policymakers, regulators, and patients alike: To ensure that nursing homes deliver high quality care and instances where this expectation is belied, effective tools are available to punish the guilty and to compensate the victims.

Other research over the years has clearly documented that for-profit facilities in general, especially those that are chain-operated, employ fewer nurses and have more deficiencies than not-for-profit and publicly-owned facilities. Do your research.

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