More deficiencies, fewer registered nurses at nursing homes owned by private equity, researchers find

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Nursing homes under private equity ownership are cited for more deficiencies and have fewer registered nurses on staff than other for-profit facilities, according to recently published research findings.

Investigators analyzed quality indicators for about 350 nursing homes in Florida for each year between 2000 and 2007.* These facilities had a 9% higher pressure ulcer risk prevalence and reported 21% higher deficiencies compared with a control group of Medicare/Medicaid-certified, for-profit, chain-affiliated, non-hospital nursing homes. The private equity nursing homes also had 29% lower registered nurse hours per-patient-day, the study authors determined.

The findings bore out the investigators' hypothesis that private equity ownership would correlate with diminished care quality. Previous research also has come to this conclusion, the authors noted.

Private equity investments often target financially underperforming chains, taking them off publicly traded markets and attempting to make them profitable. Private equity “turnaround artists” are under significant pressure to deliver high returns and simultaneously have fewer public disclosure requirements than publicly traded companies, creating incentives to cut corners on care to beef up bottom line numbers, the study authors surmised. Substituting less expensive licensed practical nurses or certified nursing assistants for registered nurses might be one outgrowth.

One notable contradictory finding was that private equity facilities reported fewer serious deficiencies than the control group, the investigators stated.

“It is possible that private equity focuses more on serious deficiencies as they are likely to attract stringent regulatory action including monetary fines,” they wrote.

While their sole focus on Florida was one limitation of their work, the study authors emphasized that private equity investment in nursing homes is a nationwide phenomenon. About 1,900 nursing homes were under private equity ownership as of 2009, according to government figures cited in the article. Prominent private equity deals include the Carlyle Group's 2007 acquisition of Manor Care Inc.

The Florida study was done by researchers affiliated with various academic institutions, including the University of Arkansas for Medical Sciences, the University of Alabama at Birmingham and the University of Florida. Findings appear in the Journal of Health Care Finance.

*Editor's Note: This article has been updated. A previous version stated that about 2,500 nursing homes were analyzed. There were more than 2,500 total observations made over the course of the study.

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