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Beware of Private Equity-Owned Nursing Homes: Study

November 19, 2021 – When you need to help a parent choose a retirement home or need nursing home care yourself, you can consult a healthcare professional, talk to friends, or check the website Nursing Home Compare from the Centers for Medicare. and Medicaid services (CMS). The CMS website includes stars for each nursing home, both overall and on health inspections, personnel and some quality metrics.

But what you might not know is what financial incentives a particular nursing home might have to provide high quality care, depending on the type of entity that owns the facility.

A study published on November 19 in JAMA Health Forum sheds light on at least one aspect of the ownership issue: What happens when a private equity (PE) company acquires a retirement home? According to the study, you can expect a slightly lower standard of quality in a PE-owned nursing home than in other for-profit facilities.

Researchers compared CMS data from 302 nursing homes owned by 79 PE companies to data from 9,562 for-profit non-PE companies from 2013 to 2017. Among Medicare fee-for-service patients in care long-term nursing homes were associated with an 11.1% increase in sensitive ambulatory care (ACS) visits to the emergency department (ED) and an 8.7% increase in hospitalizations for ACS per quarter, compared to changes in establishments not belonging to the PE. facilities, they found.

Additionally, Medicare costs per beneficiary rose 3.9% more – or about $ 1,000 per year – in PE-owned nursing homes than in the other cohort during the study period. .

And when acquired nursing homes were compared to nursing homes prior to their acquisition by PE companies, there were no statistically significant differences in unadjusted results, the researchers found. This means that the two cohorts were broadly comparable.

The researchers adjusted their study numbers based on various characteristics of the facilities and their residents. For example, nursing homes acquired by PE were likely to have a higher percentage of patients covered by Medicare and a lower percentage covered by Medicaid than their non-PE counterparts.

The average percentages of black residents, male and female residents aged 85 or older were 12.4%, 65.4% and 36.2%, respectively, for nursing homes owned by PE and 15, 7%, 67.8% and 39%, respectively, for non-residents. Facilities owned by PE.

Less than optimal results

On average, residents of non-PE nursing homes performed better than patients in non-PE facilities. But that doesn’t mean the average for-profit nursing home has had tremendous results.

For all nursing homes in the study, the average quarterly emergency room visit rate for ACS was 14.1% and the average quarterly hospitalization rate for ACS was 17.3%.

“These events should be largely, but not completely, preventable with proper care,” the researchers stressed.

To date, PE companies have invested around $ 750 billion in healthcare in the United States, with nursing homes being a major target of these companies, which currently own 5% of qualified nursing facilities, according to the study. Private equity firms are looking for annual returns of 20% or more, according to the document, and therefore feel the pressure to generate high profits in the short term. This could result in a reduction in personnel, services, supplies or equipment in their facilities.

Some retirement homes purchased by PE firms may be responsible for debt incurred through their own debt buybacks, the researchers noted. than long-term care, according to the study.

For all these reasons, some health policy makers are concerned about the long-term impact of privately-owned nursing home acquisitions, the study found.

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