McKnights reported the success of the Ensign Group as a sign of industry turnaround. Ensign is the largest nursing home company in America. Their second-quarter 2023 results indicate improvement in occupancy, skilled revenue, skilled days and managed care, despite ongoing labor market challenges.
The success leads to even more acquisitions. Those include 20 skilled nursing properties acquired from Sabra Health Care REIT. The company’s operators attract high-acuity patients for higher reimbursement. The growth in skilled mix and an increase in sicker patients will lead to higher 2023 year-end margins.
Unfortunately, a new study shows the quality of care goes down after acquisitions. The new paper in an international medical journal finds such transactions typically bring about a rise in costs and a drop off in quality. An escalation in private equity takeovers across healthcare settings has led to higher costs for patients and payers.
The link between private equity ownership and unsafe staffing is well-known and “pursued as a means of keeping operating costs low.”.
“Since 2015, roughly 46% of not-for-profit changes have been not-for-profits being acquired by buyers from the private sector,” Ziegler reported. “This pattern has been most notable among freestanding nursing homes. Only roughly 10% of not-for-profit nursing homes that look for a new sponsor/owner end up going to another not-for-profit.”
According to a related BMJ editorial, the Medicare Payment Advisory Commission recently estimated that private equity firms own 11% of US skilled nursing facilities and 4% of US hospitals.