A new national study has found that private equity firms continue to purchase and then bankrupt nursing homes around the nation.
According to a report issued this week by the Private Equity Stakeholder Project, a nonprofit organization that focuses on the impact of the private equity industry on people and the planet, the percentage of American nursing homes now owned by private equity forms ranges from 5 to 13%, with the upper range of that estimate more likely due to the complex manner in which a facility’s true ownership is sometimes camouflaged.
That finding is consistent with a 2023 report from the Government Accountability Office, which reported that while federal data shows at least 5% of nursing homes nationwide are owned by private equity firms, the data is flawed and the true number is likely higher.
In recent years, the acquisition of nursing homes by private equity investors has come under scrutiny by regulators, the media and members of Congress, with critics suggesting too many profit-minded investors are targeting care facilities for acquisition, starving them of cash while collecting a reliable stream of income from Medicare, and then cashing out, in some cases by filing for bankruptcy protection.
In its report, PESP examines six private equity-backed nursing home deals that occurred within the past three years. PESP found that at least three nursing home companies owned directly or indirectly by private equity firms have filed for bankruptcy in recent years: LaVie Care Centers/Consulate Health Care in 2024, Goldner Capital Management in 2024, and Gulf Coast Health Care in 2022.
One private equity firm buys 29 Iowa homes
One acquisition detailed in the report involves the private equity firm Cascade Capital Group, which in September 2024 acquired one of Iowa’s largest nursing home chains, ABCM Corp., for $85 million. The deal included 326 assisted living units as well as 29 nursing homes with 2,346 skilled-nursing beds.
The sale led to 7% of Iowa’s 410 nursing homes being handed over to a private equity firm. A Cascade Capital affiliate, Legacy Healthcare, now manages the homes.
Last year, the non-profit Center for Medicare Advocacy compared federal data from the Iowa homes with data on other Legacy-managed nursing homes and found that the Cascade/Legacy facilities had, on average, considerably lower ratings for overall performance and for their inspection outcomes. They also had lower nurse-staffing ratings, more abuse citations, higher federal civil money penalties, and more denials of payment for new admissions, the center found.
The federal data indicates the Cascade Capital facilities performed more poorly than homes under ABCM’s management, with the Cascade Capital facilities being fined 17 times as much as their ABCM counterparts.
Each ABCM facility had, on average, incurred $4,815 in federal fines over the past three years, while the Legacy-managed facilities averaged $83,994 in federal fines.
In October 2024, a month after Cascade acquired the Iowa nursing homes, a 45-year-old resident of the chain’s Harmony House Health Care Center in Waterloo died. Inspectors reported that the resident, who had special dietary restrictions that limited her food intake to soft, bite-sized items, choked after “stuffing an entire peanut butter and jelly sandwich in her mouth.”
The state alleged that “staff at Harmony House failed to develop and put in place an effective behavioral intervention plan that might have discouraged such behavior” and on Nov. 6, 2024, it imposed a $10,000 fine on the facility. State records show that fine has yet to be paid, with the full amount still owed.
Ownership not always revealed to regulators
The new report also highlights Gulf Coast Health Care’s acquisition of a nursing home chain that operated 28 skilled nursing facilities in Florida, Georgia, and Mississippi. In 2021, Gulf Coast was facing 167 personal injury or wrongful death claims and filed for bankruptcy.
“Multiple studies confirm the harmful effects that private equity ownership has on nursing homes, and the increased risk placed on residents and workers,” the report states. It cautions that the Trump administration may do little to address the issue, noting that during the president’s first term, federal protocols were revised “to discourage regulators from levying fines against nursing homes,” even in cases of resident deaths.
According to the New York Times, that effort was part of a broader plan to relax regulations and reduce bureaucracy and government oversight of business. For example, a requirement that every care facility employ at least one specialist in preventing infections was replaced with a requirement that an anti-infection specialist spend “sufficient time” at the facility.
The report recommends that federal and state agencies be given the authority to approve or reject mergers and sales involving nursing homes based on factors that include the potential impact on quality of care.
The report also calls for greater transparency in nursing home ownership. While homes are now required to report information about their owners, including private equity firms and real estate investment trusts, government authorities should be coordinating efforts to ensure that all facilities comply fully with such requirements.
Some ownership data kept secret by State of Iowa
The report also recommends that nursing homes be required to file public, consolidated cost reports that would detail the owners’ payments to themselves through affiliates and related parties, an amount now thought to be in the billions of dollars.
Under a state law that was approved in 2023, nursing home buyers in Iowa must submit to the state documentation of relationships to any related corporations and provide details of their projected revenue and expenses.
When asked whether the Iowa Department of Inspections, Appeals and Licensing imposed such requirements on the buyers of the ABCM facilities, a department spokesperson said only that it followed the requirements of Iowa law, “which includes a robust financial analysis.”
The spokesperson noted that under state law, all of the information a buyer provides to the state that is related to their business relationships and compliance with the new financial regulations are treated as confidential and are not subject to public disclosure through the state’s Open Records Law.
Earlier this year, Sen. Claire Celsi, a West Des Moines Democrat, introduced Senate File 533, which would have barred the state from approving any change of ownership that results in a nursing home being acquired by a private equity fund or real estate investment trust.
That bill, as well as Senate File 536, which would have required the Office of Long-Term Care Ombudsman to prioritize on-site visits to homes taken over by private equity firms, failed to advance.
The nursing home industry’s main lobbying organization, the American Health Care Association, has argued that with private equity firms owning as few as 5% of all homes, the issue is “distraction” from the real threats faced by facilities and their residents, such as workforce shortages.
In a written statement to McKnight’s Long-Term Care News, the AHCA said “the reality is that owners of long-term care facilities are extremely diverse and are often run by Main Street, not Wall Street.”
