In my second installment of “Things we can learn from the pandemic,” COVID-19 may force private equity to take a good, hard look at what it is doing in the skilled nursing space.
Such self-analysis stems from new findings from a financial reform advocacy group that private equity-owned and backed nursing home chains in New Jersey have more coronavirus cases and deaths compared to their share of residents relative to for-profit, nonprofit and public facilities.
Among the findings: A total of 58.8% of private equity nursing home residents contracted the coronavirus. This infection rate was 24.5% higher than the statewide nursing home average and 57% higher than at public facilities. The coronavirus fatality rate was 10.2% higher at private equity facilities than the statewide average and higher than at nonprofit and for-profit facilities. In New Jersey, private equity owns, operates or financially backs nearly one-quarter of the for-profit nursing homes.
It must be said that not all nursing homes owned by private equity deliver poor care. But it’s also no mystery at this point that private equity firms in long-term care underperform in terms of care quality compared to their counterparts. Several studies now have found that staffing suffers when private equity takes over a nursing chain. And with that, quality falls, too.
Most recently, a 2020 study by researchers from the University of Pennsylvania, New York University and the University of Chicago found “robust evidence of declines in patient health and compliance with care standards.”
Unfortunately, the cleansing effects of COVID-19 are exposing private equity’s warts in the sector in a whole new way. The last thing the sector needs now is more bad publicity. And the storyline about private equity providing suboptimal care just helps to support the stereotype of money-hungry nursing home owners making profits off the backs of vulnerable old people.
Again, if there is a silver lining of this pandemic, it will be that lawmakers and regulators actively start to address the industry’s endemic problems, from providing adequate funding and resources to taking another look at the survey and certification process.
The field itself can do its own house cleaning. If that means the bad private equity players exit the skilled nursing arena over the tough COVID-19 conditions, the field will be better off for it.
Follow Senior Editor Liza Berger @LizaBerger19.