Private equity ownership and nursing home quality: an instrumental variables approach

Hospital behavior over the private equity life cycle

Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with ambulatory surgery centers. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also manage shorter, less treatment-intensive stays for admitted patients. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.

Nursing home finances associated with real estate investment trust and private equity investments

In 2021, real estate investment trusts (REITs) and private equity (PE) held investments in 1915 (16%) and 1569 (13%) US nursing homes (NHs), respectively. We created a database of REIT and PE investments in NHs, merged it with Medicare Cost Report data (2011-2019), and used a difference-in-differences approach within an event-study framework to compare NH spending and financial performance before and after REIT or PE investment to NHs that did not receive REIT or PE investment. REIT investments were associated with higher total wages (3%), total nursing wages (3%; both logged, per resident day [PRD]), and current ratio (81%). PE investments were associated with lower net patient service revenue (7%), total expenses (7%), and total wages (8%; all logged, PRD). The impact of REIT and PE investments in NHs may vary in different market conditions, as may occur in the current environment of low, falling NH profits, potentially higher minimum staffing requirements, and rising interest rates. Therefore, it is important for stakeholders to understand the impact of these large, growing investments on the financial performance of NHs.

New CMS Nursing Home Ownership Data: Major Gaps And Discrepancies

Nursing home ownership has become increasingly complicated, partly because of the growth of facilities owned by institutional investors such as private equity (PE) firms and real estate investment trusts (REITs). Although the ownership transparency and accountability of nursing homes have historically been poor, the Biden administration's nursing home reform plans released in 2022 included a series of data releases on ownership. However, our evaluation of the newly released data identified several gaps: One-third of PE and fewer than one-fifth of REIT investments identified in the proprietary Irving Levin Associates and S&P Capital IQ investment data were present in Centers for Medicare and Medicaid Services (CMS) publicly available ownership data. Similarly, we obtained different results when searching for the ten top common owners of nursing homes using CMS data and facility survey reports of chain ownership. Finally, ownership percentages were missing in the CMS data for 82.40 percent of owners in the top ten chains and 55.21 percent of owners across all US facilities. Although the new data represent an important step forward, we highlight additional steps to ensure that the data are timely, accurate, and responsive. Transparent ownership data are fundamental to understanding the adequacy of public payments to provide patient care, enable policy makers to make timely decisions, and evaluate nursing home quality.

Skilled Nursing Facility Changes in Ownership and Short-Stay Medicare Patient Outcomes

Importance

Skilled nursing facility (SNF) changes in ownership are receiving attention in the national conversation regarding health care quality and oversight. SNF ownership changes have been cited as possible ways for SNFs to obscure financial arrangements and shift funds away from patient care; however, it is unclear whether ownership changes are associated with quality outcomes, especially for short-stay patients.

Objective

To determine which SNF characteristics are associated with changes in ownership and whether ownership changes were associated with differences in short-stay patient outcomes.

Design, Setting, and Participants

This cohort study was a secondary analysis of 2016 to 2019 Medicare administrative data including SNFs in the United States with complete data. Data were analyzed from January 2016 through December 2019.

Exposure

SNF change in ownership.

Main Outcomes and Measures

Outcomes of interest were facility-level risk-adjusted rates of hospital readmissions, emergency department visits, and community discharge for short-stay patients after admission to an SNF. Analyses were conducted using multivariable logistic regression and controlled interrupted time series.

Results

Of 11 004 SNFs, 1459 (13.26%) changed ownership between 2016 and 2019. Compared with for-profit SNFs, nonprofit and government SNFs had lower odds of changing ownership (nonprofit: odds ratio [OR], 0.40; 95% CI, 0.32-0.49; government: OR, 0.26; 95% CI, 0.17-0.41). Chain SNFs had higher odds of changing ownership than nonchain SNFs (OR, 1.38; 95% CI, 1.21-1.59). Urban SNFs with lower occupancy rates (OR per 10-percentage-point decrease, 1.19; 95% CI, 1.14-1.25), larger Medicaid populations (OR per 10-percentage-point increase, 1.17; 95% CI, 1.13-1.22), and lower staffing ratings (OR per 1-star increase on staffing rating, 1.18; 95% CI, 1.14-1.25) had higher odds of changing ownership. Descriptively, all 3 quality outcomes were worse throughout the study in SNFs undergoing ownership change compared with controls that did not change ownership. However, results of interrupted time series models found no associations between an ownership change and hospital readmissions or community discharge rates. Ownership change was associated with a short-term increase of 0.32 (95% CI, 0.03 to 0.62) percentage points in emergency department visits.

Conclusions and Relevance

In this cohort study of 11 004 SNFs in the US between 2016 and 2019, SNF characteristics historically associated with lower quality were more likely to change ownership; however, ownership changes were only associated with short-term increases in ED visits. These results suggest that SNF ownership changes may be a symptom, not a cause, of lower quality.

Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review

OBJECTIVE

To review the evidence on trends and impacts of private equity (PE) ownership of healthcare operators.

DESIGN

Systematic review.

DATA SOURCES

PubMed, Web of Science, Embase, Scopus, and SSRN.

ELIGIBILITY CRITERIA FOR STUDY SELECTION

Empirical research studies of any design that evaluated PE owned healthcare operators.

MAIN OUTCOME MEASURES

The main outcome measures were impact of PE ownership on health outcomes, costs to patients or payers, costs to operators, and quality. The secondary outcome measures were trends and prevalence of PE ownership of healthcare operators.

DATA SYNTHESIS

Studies were classified as finding either beneficial, harmful, mixed, or neutral impacts of PE ownership on main outcome measures. Results across studies were narratively synthesized and reported. Risk of bias was evaluated using ROBINS-I (Risk Of Bias In Non-randomised Studies of Interventions).

RESULTS

The electronic search identified 1778 studies, with 55 meeting the inclusion criteria. Studies spanned eight countries, with most (n=47) analyzing PE ownership of healthcare operators in the US. Nursing homes were the most commonly studied healthcare setting (n=17), followed by hospitals and dermatology settings (n=9 each); ophthalmology (n=7); multiple specialties or general physician groups (n=5); urology (n=4); gastroenterology and orthopedics (n=3 each); surgical centers, fertility, and obstetrics and gynecology (n=2 each); and anesthesia, hospice care, oral or maxillofacial surgery, otolaryngology, and plastics (n=1 each). Across the outcome measures, PE ownership was most consistently associated with increases in costs to patients or payers. Additionally, PE ownership was associated with mixed to harmful impacts on quality. These outcomes held in sensitivity analyses in which only studies with moderate risk of bias were included. Health outcomes showed both beneficial and harmful results, as did costs to operators, but the volume of studies for these outcomes was too low for conclusive interpretation. In some instances, PE ownership was associated with reduced nurse staffing levels or a shift towards lower nursing skill mix. No consistently beneficial impacts of PE ownership were identified.

CONCLUSIONS

Trends in PE ownership rapidly increased across almost all healthcare settings studied. Such ownership is often associated with harmful impacts on costs to patients or payers and mixed to harmful impacts on quality. Owing to risk of bias and frequent geographic focus on the US, conclusions might not be generalizable internationally.

SYSTEMATIC REVIEW REGISTRATION

PROSPERO CRD42022329857.

Equity financing intention of elderly care enterprises: Influence of institutional logic and operation mode

The elderly population in China is expected to exceed 300 million and enter the stage of moderate aging during the 14th Five-Year plan period from 2021 to 2025. From the sustainable development perspective of elderly care enterprises, the supply of elderly care services would be unsustainable if enterprises suffer long-term losses. In the latter pursuit of high profits, the burden on consumers will increase. Equity financing of these enterprises is the key to achieving high-quality transformation and development by considering economic and social benefits. This study considers 20 well-known China-based elderly care enterprises as the research object. It uses a fuzzy set to explore system logic, operation mode, management performance, and attitude of elderly care enterprises toward investment through the qualitative comparative analysis method. The causal relationship between them is clarified-because, before the endowment enterprise equity financing intention of China, it is important to explore the effective path of equity financing of endowment enterprises. In the past, this helped Chinese elderly care enterprises actively cope with the trend of population aging, meet the needs of diversified and multi-level elderly care services, establish a sustainable development mode, and achieve high-quality transformation and development. The results show that (1) the operating performance of elderly care enterprises under the mode of public construction and private operation is poor; (2) elderly care enterprises driven by public welfare logic are more likely to achieve higher business performance, and (3) elderly care enterprises driven by business logic are more willing to introduce investment when they have made profits.

Mapping the venture capital and private equity research: a bibliometric review and future research agenda

The fields of venture capital and private equity are rooted in financing research on capital budgeting and initial public offering (IPO). Both fields have grown considerably in recent times with a heterogenous set of themes being explored. This review presents an analysis of research in both fields. Using a large corpus from the Web of Science, this study used bibliometric analysis to present a comprehensive encapsulation of the fields' geographical focus, methodological choices, prominent themes, and future research directions. Noteworthily, the foundational themes in venture capital research are venture capital adoption and financing processes, venture capital roles in business, venture capital governance, venture capital syndication, and venture capital and creation of public organizations. In private equity research, style drift into venture capital emerges as a key theme alongside buyouts and privatization, and valuation and performance of private equity investment.

Private equity in ophthalmology: lessons from other specialties

PURPOSE OF REVIEW

In the absence of long-term data of the effects of private equity in ophthalmology, this article reviews the role of private equity in other medical specialties as a guide to the future for ophthalmology.

RECENT FINDINGS

Across an array of medical specialties, including anesthesiology, dermatology, emergency medicine, ophthalmology/optometry, radiology, and urology, medical practices are being consolidated into a few larger platform groups. Although there has been a short-term financial success for both private equity firms and senior medical practice partners, there exists broad skepticism from peer-reviewed publications and the national media.

SUMMARY

Although the impact of private equity on ophthalmology is largely speculative, ophthalmology may follow some of the trends observed in other medical specialties. These trends include increased volume of services, increased profits, improved payer mix, increased payment per patient visit, increased use of midlevel practitioners, decreased physician autonomy, and decreased physician salaries.

Ownership Change and Care Quality: Lessons from Minnesota’s Experience with Value-Based Purchasing

Background and Objectives

Minnesota’s implementation of a new nursing home value-based reimbursement (VBR) system in 2016 presented an opportunity to compare the response of nursing homes (NHs) to financial incentives to improve their quality and efficiency. The state substantially increased reimbursement for care-related costs and tied this rate increase to a composite quality score. Coinciding with rate increases of the new VBR system was an increase in ownership changes, with new owners being primarily for-profit entities from outside of Minnesota, including several private equity firms. Our objective was to examine NHs that underwent a change in ownership to determine their cost and quality response to the change.

Research Design and Methods

Our sample consists of 342 Minnesota NHs that submitted Medicaid cost reports each year from 2013 to 2019. A time differential two-way fixed-effects difference-in-difference model is used to assess changes in quality metrics by comparing measures in years prior to and years following the sale for NHs that changed ownership versus NHs with consistent ownership. Nursing home characteristics, revenue, and spending patterns are examined to understand differences in performance.

Results

Those NHs with ownership change experienced a decline in quality scores with notable changes to expenditure patterns. They performed worse on Minnesota Department of Health inspection scores and had nonsignificant declines in measures of quality of life and clinical care. They had declining staff dental and medical benefits and occupancy rates, greater revenue growth from Medicare Part B, and larger increases in administrative management fees.

Discussion and Implications

Minnesota like many other states has given wide latitude for nursing home ownership changes, without specific oversight for the quality of care and expenditure patterns of new owners. Recommendations include strict guidelines for the transparency of ownership structures, quality performance targets, rigorous financial auditing, and enhanced regulatory oversight.

Surgical Dermatology and Private Equity: A Review of the Literature and Discussion

BACKGROUND

While there has been substantial investment in dermatology by private equity (PE), the relevance of this trend to the dermatologic surgeon has not been assessed.

OBJECTIVE

The literature on PE investment in medicine was reviewed to provide interdisciplinary data relevant to the dermatologic surgeon.

MATERIALS AND METHODS

The PubMed database was queried for all peer-reviewed articles containing the term "private equity" and identified 70 unique articles across 18 medical specialties, comprising 20 original research articles and 50 commentary articles.

RESULTS

Significant PE growth across multiple medical specialties occurred in the 2010s. Private equity ownership was associated with higher levels of nonphysician providers relative to physicians. Pooled data suggest that PE ownership is associated with lower staffing levels, particularly for non-revenue-generating staff, as well as potentially lower levels of medical supplies on hand. Data on financial performance suggests that PE-ownership results in higher profits, revenues, and costs. Surveys of physicians demonstrate concern about autonomy, ethics, and career prospects.

CONCLUSION

For the dermatologic surgeon, issues related to consolidation, provider scope of practice, support staff availability, and supply management are important due to the nature of procedural intervention and the increased risk of adverse events.

Association of Private Equity Investment in US Nursing Homes With the Quality and Cost of Care for Long-Stay Residents

Question

Is private equity acquisition of nursing homes associated with the quality or cost of care for long-stay nursing home residents?

Findings

In this cohort study with difference-in-differences analysis of 9864 US nursing homes, including 9632 residents in 302 nursing homes acquired by private equity firms and 249 771 residents in 9562 other for-profit nursing homes without private equity ownership, private equity acquisition of nursing homes was associated with higher costs and increases in emergency department visits and hospitalizations for ambulatory sensitive conditions.

Meaning

This study suggests that more stringent oversight and reporting on private equity ownership of nursing homes may be warranted.

Importance

Private equity firms have been acquiring US nursing homes; an estimated 5% of US nursing homes are owned by private equity firms.

Objective

To examine the association of private equity acquisition of nursing homes with the quality and cost of care for long-stay residents.

Design, Setting, and Participants

In this cohort study of 302 private equity nursing homes with 9632 residents and 9562 other for-profit homes with 249 771 residents, a novel national database of private equity nursing home acquisitions was merged with Medicare claims and Minimum Data Set assessments for the period from 2012 to 2018. Changes in outcomes for residents in private equity–acquired nursing homes were compared with changes for residents in other for-profit nursing homes. Analyses were performed from March 25 to June 23, 2021.

Exposure

Private equity acquisitions of 302 nursing homes between 2013 and 2017.

Main Outcomes and Measures

This study used difference-in-differences analysis to examine the association of private equity acquisition of nursing homes with outcomes. Primary outcomes were quarterly measures of emergency department visits and hospitalizations for ambulatory care–sensitive (ACS) conditions and total quarterly Medicare costs. Antipsychotic use, pressure ulcers, and severe pain were examined in secondary analyses.

Results

Of the 259 403 residents in the study (170 687 women [65.8%]; 211 154 White residents [81.4%]; 204 928 residents [79.0%] dually eligible for Medicare and Medicaid; mean [SD] age, 79.3 [5.6] years), 9632 residents were in 302 private equity–acquired nursing homes and 249 771 residents were in 9562 other for-profit homes. The mean quarterly rate of ACS emergency department visits was 14.1% (336 072 of 2 383 491), and the mean quarterly rate of ACS hospitalizations was 17.3% (412 344 of 2 383 491); mean (SD) total quarterly costs were $8050.00 ($9.90). Residents of private equity nursing homes experienced relative increases in ACS emergency department visits of 11.1% (1.7 of 15.3; 1.7 percentage points; 95% CI, 0.3-3.0 percentage points; P = .02) and in ACS hospitalizations of 8.7% (1.0 of 11.5; 1.0 percentage point; 95% CI, 0.2-1.1 percentage points; P = .003) compared with residents in other for-profit homes; quarterly costs increased 3.9% (270.37 of 6972.04; $270.37; 95% CI, $41.53-$499.20; P = .02) or $1081 annually per resident. Private equity acquisition was not significantly associated with antipsychotic use (−0.2 percentage points; 95% CI, −1.7 to 1.4 percentage points; P = .83), severe pain (0.2 percentage points; 95% CI, −1.1 to 1.4 percentage points; P = .79), or pressure ulcers (0.5 percentage points; 95% CI, −0.4 to 1.3 percentage points; P = .30).

Conclusions and Relevance

This cohort study with difference-in-differences analysis found that private equity acquisition of nursing homes was associated with increases in ACS emergency department visits and hospitalizations and higher Medicare costs.

Delivering, funding, and rating safe staffing levels and skills mix in aged care

BACKGROUND

Staffing levels and skill mix are critical issues within residential aged care. The positive impact of a sufficient number and skills mix of staff is upheld by abundant evidence within and beyond the sector. While being able to determine suitable staffing levels and skills mix to provide care to nursing home residents is vital, having an appropriate approach to funding the delivery of care is also critical. Beyond determining staffing levels and skills mix and funding care delivery, transparently rating the adequacy of staffing is also important to enable informed decision-making amongst consumers, policy makers, staff, and other stakeholders. There are existing tools for determining nursing home staffing levels and skills mix, funding care, and rating and reporting staffing, however there appears to be ongoing confusion regarding how these different tools might work together to achieve different things in order to ensure safe, quality care.

OBJECTIVES

In order to explain the importance of ensuring at least a minimum number (staffing level) of the right kind of staff (skills mix) to provide care to nursing home residents, in this paper we briefly explain key differences and interrelationships between three tools; one for determining staffing and skills mix, one for determining funding, and one for rating and reporting the level of staffing within a facility as a measure of quality.

RESULTS

Our explanation of the three existing tools has resulted in the development of a conceptual model for how minimum staffing levels and skills mix supports the delivery of safe, quality care and how this can be understood in relation to determining, funding, and rating staffing levels and skills mix.

CONCLUSIONS

Our conceptual model of how determining, funding, and rating staffing levels and skills mix relate to one another and fulfil different but related purposes can be used to demonstrate how minimum staffing levels and skills mix can be understood as foundational to ensuring respectful, safe, quality care.

Comparative Performance of Private Equity-Owned US Nursing Homes During the COVID-19 Pandemic

IMPORTANCE

It is not known whether nursing homes with private equity (PE) ownership have performed better or worse than other nursing homes during the coronavirus disease 2019 (COVID-19) pandemic.

OBJECTIVE

To evaluate the comparative performance of PE-owned nursing homes on COVID-19 outcomes.

DESIGN, SETTING, AND PARTICIPANTS

This cross-sectional study of 11 470 US nursing homes used the Nursing Home COVID-19 Public File from May 17, 2020, to July 2, 2020, to compare outcomes of PE-owned nursing homes with for-profit, nonprofit, and government-owned homes, adjusting for facility characteristics.

EXPOSURE

Nursing home ownership status.

MAIN OUTCOMES AND MEASURES

Self-reported number of COVID-19 cases and deaths and deaths by any cause per 1000 residents; possessing 1-week supplies of personal protective equipment (PPE); staffing shortages.

RESULTS

Of 11 470 nursing homes, 7793 (67.9%) were for-profit; 2523 (22.0%), nonprofit; 511 (5.3%), government-owned; and 543 (4.7%), PE-owned; with mean (SD) COVID-19 cases per 1000 residents of 88.3 [2.1], 67.0 [3.8], 39.8 [7.6] and 110.8 [8.1], respectively. Mean (SD) COVID-19 deaths per 1000 residents were 61.9 [1.6], 66.4 [3.0], 56.2 [7.3], and 78.9 [5.9], respectively; mean deaths by any cause per 1000 residents were 78.1 [1.3], 91.5 [2.2], 67.6 [4.5], and 87.9 [4.8], respectively. In adjusted analyses, government-owned homes had 35.5 (95% CI, -69.2 to -1.8; P = .03) fewer COVID-19 cases per 1000 residents than PE-owned nursing homes. Cases in PE-owned nursing homes were not statistically different compared with for-profit and nonprofit facilities; nor were there statistically significant differences in COVID-19 deaths or deaths by any cause between PE-owned nursing homes and for-profit, nonprofit, and government-owned facilities. For-profit, nonprofit, and government-owned nursing homes were 10.5% (9.1 percentage points; 95% CI, 1.8 to 16.3 percentage points; P = .006), 15.0% (13.0 percentage points; 95% CI, 5.5 to 20.6 percentage points; P < .001), and 17.0% (14.8 percentage points; 95% CI, 6.5 to 23.0 percentage points; P < .001), respectively, more likely to have at least a 1-week supply of N95 masks than PE-owned nursing homes. They were 24.3% (21.3 percentage points; 95% CI, 11.8 to 30.8 percentage points; P < .001), 30.7% (27.0 percentage points; 95% CI, 17.7 to 36.2 percentage points; P < .001), and 29.2% (25.7 percentage points; 95% CI, 16.1 to 35.3 percentage points; P < .001) more likely to have a 1-week supply of medical gowns than PE-owned nursing homes. Government nursing homes were more likely to have a shortage of nurses (6.9 percentage points; 95% CI, 0.0 to 13.9 percentage points; P = .049) than PE-owned nursing homes.

CONCLUSIONS AND RELEVANCE

In this cross-sectional study, PE-owned nursing homes performed comparably on staffing levels, resident cases, and deaths with nursing homes with other types of ownership, although their shortages of PPE may warrant monitoring.