Private equity's footprint in nursing homes
Private equity (PE) investment in the healthcare sector, including nursing homes, has grown dramatically over the past two decades. These firms acquire businesses with the goal of increasing profits, often over a relatively short period, typically three to seven years, before selling them off. This model has brought significant scrutiny, especially in the context of long-term care for vulnerable populations. Determining the precise figure for what percent of nursing homes are owned by private equity is challenging due to inherent data limitations.
Challenges in identifying true ownership
- Complex Corporate Structures: PE firms often use layered ownership structures, creating shell companies to make tracing ownership difficult.
- Inadequate Reporting: The Centers for Medicare & Medicaid Services (CMS) has historically had incomplete ownership data, as nursing homes do not always report all direct and indirect owners. A 2024 CMS rule aims to expand disclosure requirements to address this.
- Lack of Clear Identification: Until recently, there was no standardized method for federal regulators to identify and track private equity investors specifically.
The shifting percentage of PE ownership
Different reports provide varying estimates on what percent of nursing homes are owned by private equity, underscoring the challenge of obtaining a definitive number. The figures often diverge based on the data sources and methodology used.
- Government Accountability Office (GAO): In 2023, the GAO estimated that 5% of approximately 14,800 Medicare-enrolled nursing homes had private equity owners, based on 2022 data. The report noted that this figure is likely an undercount due to data limitations.
- Private Equity Stakeholder Project (PESP): An April 2025 report from the nonprofit PESP suggests that PE firms own somewhere between 5% and 13% of US nursing homes. PESP also highlights ongoing acquisition activity and the difficulty of tracking ownership.
- Academic Studies: A 2021 study from Weill Cornell Medical College, looking at data up to 2017, estimated around 5% private equity ownership, linking it to lower quality of care. A July 2025 study mentioned in Healthcare Brew found a rise from 1% in 2005 to about 13% in 2021, though federal figures remain lower.
Potential impacts of private equity ownership
The impact of private equity involvement in nursing homes is a subject of intense debate, with stakeholders presenting differing viewpoints. Concerns over the profit-driven model are frequently raised, while proponents highlight potential benefits such as capital investment.
Comparative analysis: Private equity vs. non-PE nursing homes
| Feature | Private Equity-Owned Nursing Homes | Other Ownership Types (Non-PE For-profit, Non-profit) |
|---|---|---|
| Profit Motivation | High emphasis on short-term profits for investors. | Varies, with non-profits prioritizing resident care over profit. |
| Debt Structure | Often use leveraged buyouts, placing significant debt on the acquired facility. | Less common to carry high-leverage debt burdens from acquisition. |
| Staffing Levels | Some studies show staffing reductions to cut costs. | Staffing levels vary widely depending on management and funding. |
| Quality of Care | Research has linked PE ownership to lower quality indicators, including higher mortality rates and preventable hospitalizations. | Quality varies, but some studies indicate better outcomes in non-PE facilities. |
| Transparency | Ownership is often obscured through complex, multilayered structures. | Generally more transparent ownership structures. |
| Facility Closures | Increased risk of closures and bankruptcies, especially for struggling facilities. | Closures occur for various reasons, not primarily tied to high-leverage business models. |
Arguments against PE ownership
- Staffing Reductions: Cost-cutting is a primary strategy for PE firms. Reports indicate this can lead to reduced staffing levels and paid hours, which negatively impacts resident care.
- Increased Mortality: Studies have controversially linked PE ownership to higher resident mortality rates. A National Bureau of Economic Research paper mentioned a working paper noting an 11% increase in mortality.
- Reduced Operational Resources: High debt loads from leveraged buyouts can divert funds away from essential resident care, facility maintenance, and operational needs.
- Lack of Transparency: Complex ownership structures make accountability difficult and can hide potential conflicts of interest.
Arguments for PE ownership
- Access to Capital: Proponents argue that PE investment brings much-needed capital to update aging facilities, invest in new technology, and enhance operational efficiency.
- Operational Expertise: PE firms can provide professional management and expertise, potentially improving efficiency and business operations.
- Stabilizing Financials: In some instances, PE investment can stabilize a struggling facility's finances and keep it from closing entirely.
Conclusion: Navigating the data and policy landscape
While federal data, such as the GAO's 2023 report, officially puts private equity ownership at around 5%, the complex realities of tracking this investment suggest the true percentage is likely higher. Estimates from organizations like the Private Equity Stakeholder Project range up to 13%, pointing to continued activity in the sector. The debate over the impact of this ownership model continues, with research highlighting significant concerns about potential trade-offs in quality of care and staffing, while proponents emphasize the benefits of capital infusion and operational improvements. New CMS regulations aimed at increasing transparency may provide clearer data in the future, allowing for more informed decisions by policymakers and families. Ultimately, understanding what percent of nursing homes are owned by private equity is a nuanced issue, but it's clear the sector's involvement is a major factor shaping the future of long-term care.
Regulations and public attention
- Increased Scrutiny: The significant risks associated with PE ownership in nursing homes have led to increased scrutiny from regulators and the media. President Joe Biden has also publicly noted concerns.
- CMS Transparency Rule: Effective in early 2024, CMS implemented a new rule to expand disclosure requirements for nursing facilities regarding ownership.
- State-Level Legislation: In some states, such as Iowa, recent legislation and proposed bills have aimed to increase transparency and oversight of nursing home buyers.
Impact on care quality
Studies on the relationship between PE ownership and care quality have yielded varying results, contributing to the ongoing debate:
- A 2021 study published in the Journal of the American Medical Association found that residents in PE-owned facilities were 10% more likely to die within 90 days of admission.
- A Weill Cornell study found PE-owned facilities had a higher likelihood of preventable emergency room visits and hospitalizations.
- An older Weill Cornell study from October 2020, focusing on national data, found no significant difference in staffing or COVID-19 cases and deaths, but did note lower levels of personal protective equipment.
Considerations for families and policymakers
The rising presence of private equity in the long-term care market means that understanding ownership structures is more important than ever for families choosing a facility for their loved ones. For policymakers, the key takeaways focus on improving transparency and oversight to protect residents.
- For Families: The complex ownership chains mean that checking a facility's public record might not reveal a connection to a private equity firm. Using state ombudsman services or cross-referencing information from advocacy groups may provide a clearer picture.
- For Policymakers: The lack of accurate ownership data is a significant regulatory challenge. Requiring more robust disclosure and enforcing stronger financial accountability measures could mitigate some of the risks associated with highly-leveraged, profit-driven ownership.
Visit the Private Equity Stakeholder Project website for more research on PE's impact on healthcare.
The larger picture
The trends observed in the nursing home industry are part of a broader pattern of private equity investment in healthcare, encompassing hospitals, doctor's offices, and other medical services. As these financial models become more entrenched, the need for robust regulation, transparency, and public scrutiny will only increase.
