Private Equity Ownership of Nursing Homes: Implications for Quality

Rohit Pradhan, Robert Weech-Maldonado, Jeffrey S. Harman, Kathryn Hyer


Private equity has acquired multiple large nursing home chains within the last few years; by 2009 it owned nearly 1900 nursing homes. Despite wide-spread public concern, the empirical evidence on the purported impact of private equity ownership on nursing home quality remains limited ; ergo this study. Secondary data from the Minimum Data Set, the Online Survey Certification and Reporting (OSCAR) file, Brown University’s Long-term Care Focus, Florida’s semi-annual Nursing Home Rate Setting files, and Area Resource File (ARF) are combined to construct a longitudinal dataset for the study period 2000-2007. The final sample consists of 2822 observations after removing all not-for-profit, independent, and hospital-based facilities. Quality is operationalized through Donabedian’s Structure-Process-Outcome model. Independent variables primarily reflect private equity ownership. The study was analyzed using ordinary least squares (OLS), gamma distribution with log link, logit with binomial family link, and logistic regression. Private equity nursing homes have lower RN staffing intensity and lower RN skill mix compared to the control group. Other quality measures are similar to the control group except deficiencies where private equity nursing homes perform significantly worse. Results suggest troubling shifts in nurse staffing patterns of private equity nursing homes particularly in the case of Registered Nurses. In addition, these facilities report significantly higher number of deficiencies. Implications for policy are discussed and the need for transparency and accountability in nursing home ownership and private equity investments emphasized.

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