Private Equity Investors
U.S. Rep. Bill Pascrell Jr. (D-NJ) is chairman of the House Ways and Means oversight subcommittee. He wrote a letter asking the Government Accountability Office to investigate the relationship between private equity investments and closed healthcare facilities. Private-equity has exploited the industry and siphoned taxpayer funds away from resident care. Pascrell cited increased surprise billings, and nursing home mortality rates .
These patterns demand further attention so that policymakers can protect patients and better understand the consequences to the health care delivery system. Further, reports about bankruptcies or closures following PE buyouts are concerning because of their far-reaching impact on patients, families, health care workers, and communities.
Advocates and experts criticize private-equity investment in nursing homes because the profit incentive outweighs quality of care. Transparency and federal oversight would help in understanding the diversion of funds as the cause of neglect, abuse, and negative resident outcomes.
These trends merit further investigation on a more holistic basis, as the closure or bankruptcy of health care facilities threatens the health of communities, raising significant concerns about access to care.
Profits Over People
How much of the $2.1 billion that Trump gave nursing homes under the CARES Act went to real estate, management fees, and payments to related entities? Financial data shows that publicly traded nursing home companies did well during the pandemic despite low occupancy rates. The Journal of the American Geriatrics Society published the analysis.
The study found nursing home corporate revenues remained stable. Researchers reviewed data from Brookdale, Diversicare, Ensign Group, Sabra Healthcare REIT and Omega Health Care. A minority reported slightly lower revenues in 2020 than in 2019.
In addition, the cash-related metrics reported by publicly listed companies including the REITs, except for three companies, improved in 2020 in relation to 2019. Net income and cash-related metrics were generally favorable.