Nursing Home Ownership and Quality of Care

The Fact Sheet issued in February by the White House addressed improving safety and quality of care in nursing homes.  The statement cited studies that nursing homes owned by private equity firms tended to have “significantly worse outcomes for residents,” which is disputed by the nursing home industry.  Regardless of ownership structure, long-term care facilities are facing significant staffing and economic pressures.  Whether public or private, for-profit or not-for-profit, providing high quality care to residents is the primary focus in this time of unprecedented challenges.

Government Perspectives

The Protecting Seniors by Improving Safety and Quality of Care in the Nation’s Nursing Homes Fact Sheet asserted that private equity firms invested over $100 billion in nursing homes in 2018, with 5% of the nation’s facilities owned by PE firms.  It further referenced studies that residents in PE owned nursing homes are 11.1% more likely to have preventable emergency visits, had excess mortality of 10%, and had a COVID-19 death rate of 40% above statewide averages.  These statistics are used to support initiatives to give CMS new authority to require minimum corporate competency to participate in Medicare and Medicaid programs.  This includes a proposed “robust compliance program” with $500 million in funding to perform inspections and impose meaningful penalties when deficiencies are found.  In addition, the administration seeks to increase per instance financial penalties from $21,000 to $1 million.

In April, CMS began releasing data from the provider enrollment, chain, and ownership system (PECOS), which contains corporate ownership and operating data.  A primary focus of this initiative is public transparency, particularly the role of private equity, REITs, and other investment structures.   Some states have already put forth new regulations for nursing home buyers to demonstrate financial stability and corporate history.  These requirements are intended to increase transparency and ensure buyers have a good reputation.  While generally supported by providers, there is concern that the process could delay transactions and ultimately impact access to care.

nursing home staffing

Industry Perspectives

The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) published a fact sheet in response to the White House statement related to private equity ownership.  They note that 63% of nursing homes are owned by operators with 10 or less facilities, and that only 12% of nursing home beds are run by the 10 largest operators.  The $100 billion investment by PE in nursing homes referenced by the White House Fact Sheet was in fact investments that included all areas of healthcare.  Private equity investment dollars have actually shifted to areas such as dermatology and orthopedics since 2010.

Regarding quality, particularly related to the pandemic, an October 2020 JAMA study  of over 11,000 nursing homes revealed “no statistically significant differences in staffing levels, COVID-19 cases or deaths, or deaths from any cause between PE nursing homes and facilities with other ownership types.”

A review of scientific research conducted by various organizations, including Harvard Medical School, The University of Chicago, and the U.S. Government Accountability Office, found that ownership type and quality performance were not strong indicators of how prepared a nursing home was for the pandemic, nor were their previous ratings or infection control citations.  Community spread was the main driver in the spread of COVID-19 among LTC residents, who are more susceptible to the virus due to age and underlying medical conditions.

AHCA and LeadingAge, which represents not-for-profit organizations, have been advocating for lawmakers to prioritize long-term care residents and staff by providing relief from underfunding and support for workforce improvements.  They have put forth many proposals, such as the Care For Our Senior Act, which includes oversight and assistance for chronic poor performing nursing facilities and change of ownership.  In June, the National Investment Center (NIC) released a study on the access to capital in the nursing home industry.  A main takeaway of the paper noted “the current public-private partnership for skilled nursing facilities is failing.”  The conclusions urge policymakers to rethink the different types of public and private capital funding available to better serve patients and staff.

Defense Perspectives

In any type of ownership structure, quality of care for residents in long-term care facilities is paramount.  When that quality is called into question, facilities must be able to demonstrate the type and level of care that was provided through documentation in the resident’s medical records, as well as through policies, procedures, and other business records.  Excelas has the tools and the expertise to assist long-term care facilities in conducting audits, assessing documentation quality and completeness, integrating facility policies and procedures with individual resident medical records, reviewing staffing records, and preparing comprehensive analyses for facility administrators, risk managers, insurers, and counsel.

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