How many nursing homes are owned by private equity?

Estimates from early 2025 suggest that private equity firms own between 5% and 13% of nursing homes, though determining the precise number is challenging due to complex reporting and ownership structures. Understanding this trend is essential for grasping the financial pressures and operational strategies in the long-term care sector.

Quick Summary

Estimates indicate private equity firms own a significant but difficult-to-track percentage of U.S. nursing homes, ranging from 5% to 13%. Data limitations and complex ownership structures hinder accurate counts. The trend raises concerns about cost-cutting and potential impacts on resident care.

Key Points

• Ownership Tracking Difficulty: Complex structures make it hard to get an exact count of private equity-owned nursing homes, with estimates between 5% and 13%.

• Potential Staffing Impact: Studies suggest a possible link between private equity ownership and reduced staffing levels.

• Research on Patient Outcomes: Research has explored connections between private equity ownership and resident health outcomes.

• Financial Vulnerability: High debt loads associated with private equity acquisitions can potentially increase financial instability.

• Calls for Transparency: Lack of clear ownership data is leading to increased demands for regulatory oversight and new reporting rules.

• Balancing Interests: The financial goals of private equity firms can sometimes be seen as potentially conflicting with the provision of high-quality patient care.

The Challenges of Tracking Private Equity Ownership

Pinpointing the exact number of nursing homes owned by private equity firms is complicated by their use of intricate ownership structures, such as holding companies, LLCs, and REITs, which obscure the ultimate owners. Regulatory bodies and organizations like the GAO and PESP have noted that current data, including from CMS, lacks the transparency needed for accurate tracking.

Varying Estimates

Estimates of private equity ownership in nursing homes vary:

• GAO Estimate (2023): The GAO estimated that at least 5% of Medicare-enrolled nursing homes in 2022 had private equity owners, acknowledging this was likely an underestimate.
• PESP Estimate (2025): PESP's analysis suggests private equity firms own between 5% and 13% of U.S. nursing homes, with indications that the actual figure could be higher due to efforts to conceal ownership.

Investment Trends

Private equity investment in healthcare saw substantial growth between 2000 and 2018, though some capital has shifted to other healthcare sectors.

Potential Impact on Care Quality

Some research has suggested a link between private equity ownership and reduced quality of care.

• Staffing Concerns: Studies have indicated potential reductions in staffing levels following private equity acquisitions.
• Health Outcomes: Research has explored potential connections between private equity ownership and resident health outcomes.

Comparison of Ownership Models

Different ownership models often have distinct motivations:

Feature	Private Equity-Owned Facilities	Non-Private Equity For-Profit Facilities	Non-Profit Facilities
Primary Motivation	Often focused on financial return.	Focused on generating profit.	Mission-driven.
Staffing Levels	Some studies suggest lower levels.	Variable.	Often higher.
Debt Levels	Frequently high.	Varies.	Generally lower.
Quality Indicators	Mixed, some studies raise concerns.	Mixed.	Often higher.

Regulatory Landscape

Challenges in ownership transparency have prompted calls for increased regulatory oversight and proposed new rules. State-level actions are also underway. The aim is to enhance oversight while addressing industry challenges like workforce shortages and funding.

Conclusion

Determining the exact number of private equity-owned nursing homes is difficult due to complex structures, with estimates ranging between 5% and 13%. This ownership model has attracted scrutiny concerning potential impacts on cost-cutting, staffing, and resident care. While private equity can bring capital, its focus on profit can sometimes conflict with providing high-quality long-term care. Moving forward, greater transparency and regulation are seen as important to align ownership incentives with resident well-being. {Link: Private Equity Stakeholder Project https://pestakeholder.org/reports/pe-is-continuing-to-acquire-and-bankrupt-nursing-homes/}

Frequently Asked Questions

Why is it difficult to determine how many nursing homes are owned by private equity?

It is difficult due to the complex corporate structures private equity firms use, often involving multiple layers of holding companies and subsidiaries that hide the ultimate owners. Federal data and reporting requirements have been insufficient for full transparency.

What is the most recent estimate for private equity ownership of nursing homes?

As of early 2025, reports from organizations like the Private Equity Stakeholder Project estimate that private equity owns between 5% and 13% of U.S. nursing homes. A 2023 GAO report found at least 5% ownership but indicated the true figure is likely higher.

Does private equity ownership affect the quality of care?

Research has linked private equity ownership to potential declines in quality of care indicators, including staffing levels and resident health outcomes. Industry associations have presented differing views on these findings.

What are some of the potential negative impacts of private equity ownership?

Potential negative impacts can include reduced staffing, financial instability from high debt, and practices like asset stripping or charging excessive fees. These actions may divert resources from patient care.

What are some of the potential benefits of private equity ownership?

Supporters argue that private equity can provide needed capital for facility upgrades, improve operational efficiencies, and offer business expertise. Some studies, however, suggest that positive impacts are not consistently observed.

Are private equity-owned nursing homes more likely to go bankrupt?

Some private equity-backed nursing home companies have experienced bankruptcy in recent years. Critics argue this is related to high debt and financial strategies employed by these firms. Bankruptcies can pose risks for residents.

What is being done to address private equity ownership concerns?

In response to concerns, policymakers are calling for greater ownership transparency and proposing new reporting requirements. State-level actions and scrutiny from oversight groups are also underway.