Ask anyone who has faced the need for it and they’ll tell you that choosing a nursing home for a loved one is a decision fraught with concern, uncertainty, and anxiety. One reason being that the care, comfort and the very fate of your loved one is at stake. But oftentimes another reason is confusion about who or what owns and manages a nursing home. What is their reputation? What are their priorities? The answer to questions like these frequently boils down to whether a nursing home’s main focus is on patient care or generating a profit.
Nonprofit nursing homes have generally been credited with having a stronger focus on patient care when compared to for-profit homes. Countless articles in both the professional and lay media have criticized for-profit nursing homes for being overly focused on balance sheets and returns to stockholders, resulting in lower quality patient care as they constantly seek to minimize costs in order to boost net income. While there are certainly exceptions—for-profit entities that do provide exceptional care as well as nonprofits that do not—the variance in patient care appears to hold true overall.
The impacts of private equity nursing home ownership
Another key factor is the entry of private equity (PE) firms into nursing home ownership ranks through major acquisitions. This often makes ownership yet another step removed from patients being served—and it’s an ownership heavily weighted toward profit-making. Private equity investment in nursing homes has soared in recent years, with an estimated $750 billion in acquisition deals over a 10-year period. At present, approximately 5 percent of nursing homes in the United States are owned by PE firms, and that number is steadily growing.
A Weill Cornell Medical College study found that nursing homes acquired by PE companies saw an increase in emergency room visits and hospitalizations among long-stay residents and an uptick in Medicare costs. The findings led investigators to suggest that “quality of care declined when private equity firms took over the facilities.” Said one associate professor of population health science at Cornell: “These residents are among the most vulnerable in our health care system, and a lack of transparency in ownership makes it difficult to identify facilities with private equity ownership, which consumers may be interested in knowing.”
Cornell investigators went on to say the pressure to generate high, short-term profits can “lead private equity-owned nursing homes to reduce staffing, services, supplies or equipment, which may have an adverse association with quality of care,” adding that such firms seek annual returns of 20 percent or more. Numerous similar reports have surfaced elsewhere pointing to these kinds of shortcomings in care quality.
“Incomprehensively opaque” reporting
Making things even more difficult for the individual evaluating nursing homes is that the facilities often do not report private equity firms among their owners, even though a 2010 law requires full disclosure of nursing home ownership by PE firms.
Public Citizen (PC), a nonprofit, progressive consumer rights advocacy group, released results of a study in the fall of 2022 that it said showed nursing home ownership reports to be “incomprehensibly opaque” even as private equity firms were “slashing costs to supercharge profits.” PC stated that Congress mandated in the 2010 Affordable Care Act that nursing homes provide full ownership details and make them publicly available. “The law required the Department of Health and Human Services to implement the transparency provisions within two years,” PC stated, “but more than a decade later HHS still has not issued such regulations.”
“Comprehensive ownership information is essential for effective oversight and for families to decide where to place their loved ones,” said PC’s research director. Otherwise, he said, it’s impossible to assess the overall track record and reputation of a particular ownership entity.
Colorado’s data about Nursing Homes
Our writer can generally confirm what Public Citizen says. According to SeniorGuidance.org, Colorado has an estimated 230 nursing homes. They house some 16,000 patients at any given time. Our writer tried to separate out which homes were owned by private equity firms but was unable to. Ownership information in general was not easily accessible. A number of large firms could be identified as having multiple facilities in Colorado—such as Five Star Senior Living, Genesis Health Care, Life Care Centers of America, and Brookdale Senior Living. These firms say they run facilities in as many as 27 states. Their size and scope, their ‘.com’ URLs, and the fact that some list their stock price on their website would point to their being for-profit enterprises. No information could be found one way or the other about private equity involvement.
The Centers for Disease Control and Prevention (CDC) states that about 70% of the nation’s 15,600 nursing homes are for-profit, which includes PE-owned facilities but does not separate them out. If that percentage held true for Colorado, it would mean about 160 of the state’s nursing homes are for-profit. But again, how many are PE-owned is another question.
Public Citizen’s study found one private equity firm that appeared to own close to 190 nursing homes around the nation, but said this does not appear in the federal government’s ownership data as it should. It also found diagrams showing relationships between each nursing home’s owners have not been made public as should be the case.
The report by PC claims for-profit ownership “in general poses risk because the incentives of owners may not line up with the interests of residents. Private equity-owned facilities often place the greatest emphasis on short-term cost-cutting [and] for-profit nursing homes are less than half as likely as nonprofit facilities to receive the government’s highest rating.” PC also points out that “The public has a particular right to this information because about 85% of nursing home revenue comes from the taxpayer-funded programs Medicare and Medicaid.”
Evaluating and choosing a nursing home
So what can a person do when evaluating and choosing a nursing home?
Amanda Lambert, a Certified Care Manager, recently outlined a number of steps on the “Cake” website. (Cake bills itself as the largest end-of-life platform on the internet.)
Lambert confirms that the majority of nursing homes are for-profit, and it can be difficult to know who the owners are in some cases. “This makes it harder to hold for-profit nursing homes accountable [whereas] nonprofit nursing homes may have a more transparent ownership structure.” She echoes what others have said, observing that “In general, for-profit nursing homes are in the business of making money for their owner and or shareholders,” but “just because a for-profit has the goal of making money does not necessarily mean they don’t provide good care.”
For-profits must file annual tax returns with the federal and state government. They operate similarly to any other business. Most nonprofits are exempt from income taxes, but they must file annual federal and state information returns, which are public record.
“The takeaway message,” according to Lambert, “is that since nonprofit nursing homes are not beholden to making a profit for their shareholders, any additional money is spent on the care of residents or other capital expenditures. Staffing is more likely to be robust, and staff may be better paid in a nonprofit nursing home.” But, because nonprofit homes are fewer in number, they may be harder to get into. Lambert says, “Try finding the best nursing home regardless of profit status. However, most research shows better care, lower infection rates, and happier employees in nonprofit nursing homes.”
She also advises before choosing a nursing home to think about other possible senior housing options that might suffice instead of a nursing home. “Sometimes creative approaches to care needs might eliminate nursing home placement. For example, senior group homes are increasingly common.”
It goes without saying to take great care in choosing what you hope will be the best place. Lambert advises: “Using a tool like Medicare Compare is probably not in your best interest since many nursing homes have found ways to game the system. Instead, use ProPublica’s Nursing Home Inspect Report (https://projects.propublica.org/nursing-homes/) for more accurate reporting on deficiencies.”
Think also about your state or local ombudsman program. In Colorado: http://www.coombudsman.org/ The ombudsman is responsible for investigating allegations of abuse and neglect in nursing homes and may have reliable information on any specific nursing home you have in mind.
Other suggestions by Lambert:
Search online. See what nursing homes pop up. Be aware that many nonprofit nursing homes are faith-based but accept all denominations, so don’t let that discourage you.
Don’t be overly influenced by appearance. A nonprofit need not have what she calls the “chandelier effect” to be high-quality. Often any profits of theirs are returned to the community by hiring more staff and providing other resident-related services.
Take a tour. Make it more than a simple breeze through the community. Note any potential red flags. For example, look for resident cleanliness, smells, staff demeanor, dining room ambiance, and staff responsiveness to your questions. Try and visit more than once if you have time to get a consistent impression of the nursing home.
Ask other healthcare providers. Doctors, nurses, therapists, and others can be great resources for finding a good nonprofit nursing home. Ask about their direct experience. Social workers, geriatric care managers, and senior placement specialists are also excellent resources.
Contact your Area Agency on Aging. Most staff at AAAs have years of experience dealing with assisted living, nursing homes, and other senior-related living situations. They can often be a good resource in looking for a nursing home. (Find Colorado AAAs in “Aging Advocacy and Resources” under the Provider Directory tab on our AgeWise website.)
Consider a Continuing Care Retirement Community (CCRC). This is a life plan community that provides all levels of care from independent to assisted/memory care to nursing home care. Though many are faith-based, they are not inexpensive. To consider a CCRC for a loved one, you should meet with a financial advisor to determine whether such a cost (and if you get back some of your investment) is worth it.