Private equity influence in nursing care is a cause for concern

March 18, 2024, 5 a.m. ·

A nursing facility's hallway leading to an exit with a door at the end.
(Archive photo by Pamela Thompson, Nebraska Public Media News)

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A new report shows private equity investment into nursing homes has increased in recent years.

For-profit companies and private equity firms have purchased more than half of the nonprofit nursing homes that have gone out of business in the last decade. That’s according to a new report by KFF Health News.

Richard Mollot is the executive director of the Long Term Care Community Coalition. He said there’s been an influx of predatory owners in the industry.

“Academic studies have shown that there's a correlation between private equity investment, real estate investment, trust investment and poor care,” Mollot said.

Mollot said firms will funnel money and resources through a network of related companies to make a short term profit — before the facility runs dry and has to shut down.

“Nursing homes are hiding their profits by funneling money into these related party transactions, mostly for real estate rent, but also for management services,” Mollot said.

On the whole, Mollot said the quality of care has slightly decreased in recent years across the skilled nursing sector.

He said the system of reporting problems in nursing homes doesn’t reflect the quality of care. Mollot said there needs to be a better system for reporting quality of care concerns in nursing homes to improve care and protect residents.

Since 2020, there have been 11 nursing home closures in Nebraska, according to the American Health Care Association.

This story was updated on Monday, Mar. 18, to correct the spelling of Richard Mollot's name.