An increase in resident deaths and an uptick in spending on non-patient care are just two outcomes often observed when private equity firms acquire nursing homes, according to a new working paper published by the National Bureau of Economic Research, which studies private-equity buyouts in healthcare.
A group of researchers from the fields of finance and healthcare management examined Medicare quality of care data from more than 18,000 U.S. nursing homes between 2005 and 2017, during which time almost 1,700 were acquired by private-equity firms. They looked specifically at deaths that fell within the 90-day period after a patient left the nursing home.
Findings suggest that going to a private equity-owned nursing home increased mortality for patients by 10% compared with the overall average. That increased mortality rate implies that “about 20,150 Medicare lives [were] lost due to PE ownership of nursing homes during our sample period,” the authors wrote.
Private equity firms were also found to spend more money on items not related to patient care in an effort to increase revenue — such as monitoring fees to medical alert companies owned by the same firm — which drains still more resources away from patients.
“These results, along with a decline in nurse availability, suggest a systematic shift in operating costs away from patient care,” the authors concluded.
This article appeared in the McKnight’s Business Daily, a joint effort of McKnight’s Senior Living and McKnight’s Long-Term Care News.
