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Beware of private homes owned by private equity: Study


19 Nov. 2021 – When you need to help a parent choose a nursing home or you need nursing care yourself, you can consult a health professional, talk to friends, or look at the Nursing Home Compare Website of the Centers for Medicare and Medicaid Services (CMS). The CMS website includes star ratings for each nursing home, both in general and on health inspections, staff and certain quality measures.

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

A study published Nov. 19 in JAMA Health Forum sheds light on at least one aspect of the ownership question: What happens when a private equity (PE) firm acquires a nursing home? According to the study, you can expect a somewhat lower level of quality in a PE-owned nursing home than in other facilities that are profitable.

The researchers compared CMS data on 302 nursing homes owned by 79 PE firms with data on 9,562 facilities not owned by such companies, from 2013 to 2017. Nursing homes were associated with an 11.1% increase in outpatient care-sensitive (ACS) visits to the emergency department (ED) and an 8.7% increase in ACS hospitalizations per quarter, compared to the changes that occurred in the non-PE-owned facilities, they found.

In addition, Medicare costs per beneficiary increased by 3.9% more – or about $ 1,000 per year – in PE-owned nursing homes than in the other group during the study period.

And when the acquired nursing homes were compared with the nursing homes before their acquisition by PE firms, there were no statistically significant differences in unadjusted outcomes, the researchers found. This means the two cohorts were broadly similar.

The researchers adjusted the numbers in their study for various characteristics of the facilities and their residents. For example, the PE-acquired nursing homes would likely have a higher percentage of patients covered Medicare and a lower percentage covered by Medicaid as their non-PE counterparts.

The average percentages of Black residents, female residents and residents aged 85 or older were 12.4%, 65.4% and 36.2% for the PE-owned old age homes and 15.7%, 67.8, respectively. % and 39% for the non-facilities owned by PE.

Less than optimal outcomes

On average, the residents of nursing homes not owned by PE had better outcomes than the patients in the facilities owned by PE. But that does not mean that the average profitable nursing home has had great outcomes.

For all the nursing homes in the study, the average quarterly rate of ACP emergency department visits was 14.1% and the average quarterly rate of ACP hospitalizations was 17.3%.

“These events should be largely, though not entirely, preventable with appropriate care,” the researchers pointed out.

To date, PE firms have invested about $ 750 billion in the US health care, with nursing homes being a major target of these companies, which currently own 5% of skilled nursing homes, according to the study. PE companies are looking for annual returns of 20% or more, the newspaper says, and therefore feel pressure to generate high short-term profits. This can lead to reduced staff, services, supplies or equipment in their facilities.

Some nursing homes purchased by PE firms may be responsible for the debt incurred in their own leveraged buyouts, the researchers noted. There are also concerns that PE firms may focus their properties disproportionately on short-term post-acute care, which will be reimbursed at a higher fee. rate as long-term care, the study says.

For all of these reasons, some health policymakers are concerned about the long-term impact of private-equity nursing home acquisitions, according to the study.



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