Private Equity and Neglect

MarketWatch asked an important question: Would you want your parents to live in a nursing home owned by private equity?  

As a nursing home attorney, I have found that nonprofits are better than for-profits, and chains owned by private equity are the worse.

Over the last two decades, private equity firms bought 2,000 nursing homes. They need to produce quick and substantial profits. This comes at the expense of the residents. Care declined during that time period.

Since equity firms cut corners for higher profits, they neglect residents and face legal risks. That is why they always push for immunity. They need tort reform to protect their profits. I wish they were more concerned about the quality of care.

A new study by the National Bureau of Economic Research entitled “Does Private Equity Investment in Healthcare Benefit Patients? Evidence From Nursing Homes” is telling.  Even though private equity ownership cost more, it causes a 10% increase in the mortality of Medicare patients. That mortality rate implies that 20,150 residents died due to PE ownership of nursing homes.