Public officials and consumer groups have alleged negative effects of private equity’s ownership of nursing homes. But those investors also are squeezing providers themselves through a critical mechanism: pursuing opportunistic ownership stakes in staffing agencies.
Government officials as high as President Biden have called out tactics and strategies that seem to show resident and staff care sacrificed for profit. Nursing home and nursing advocates have cited study after study in alleging higher rates of poor health and mortality in locations run by private equity owners.
A report targeted investors for another of their more recent interests – and a scourge of nursing homes – staffing agencies. Profiting in Crisis: Exploring Private Equity’s Investments in Travel Nursing Amidst a Critical Nursing Shortage and a Pandemic, by the Private Equity Stakeholder Project, says private equity investment in medical staffing agencies are exacerbating the national nursing staffing shortage.
“We know there is a nurse staffing crisis in the United States right now,” the report author Mary Bugbee said in a release accompanying the report. “This wasn’t caused by the pandemic, but has certainly gotten worse during it. Travel nursing agencies and investors have taken advantage of a health crisis and government relief funds to hike up rates charged to hospitals for travel nurses.”
Nursing homes and hospitals have paid much more for agency staffing than in-house employees throughout the pandemic; the expense squeezed already tight margins, especially as nurses left to make more money with agencies. Though that trend has waned, many providers are still reliant on agency staff to remain operational.
The effects are both micro and macro, the report said.
“With the absence of price controls on travel nursing agency rates, these companies and their investors can make outsized profits amidst a nursing shortage and a pandemic,” said the report. “These business practices and profits drive up the cost of care and further leave our health system vulnerable, especially in rural and low-income areas.”
Since the beginning of the pandemic, there has been an uptick in travel nursing, the report said, accompanied by record levels of private equity activity in the medical staffing space.
“Two of the largest healthcare staffing companies are private equity-owned: CHG and Medical Solutions, and have been since 2006 and 2012,” report authors noted. “The medical staffing industry is fragmented, with substantial opportunity for consolidation, making medical staffing increasingly inviting to private equity investors. The pandemic and ensuing demand for travel nurses and other temporary medical staff has generated further investment interest: 2021 was a record year for private equity M&A transactions in medical staffing.”
Meanwhile, many facilities – some owned by private equity firms – have not made the changes that staff nurses have asked for, like higher pay and safer staffing-to-resident ratios, said a release accompanying the report,.
The report cited several large private equity companies invested in staffing who have been and are presently involved in litigation brought by employees.
“Various policymakers and the hospital industry have called upon federal and state agencies to investigate travel nursing agencies and their rate hikes during the pandemic,” said the report. “Unfortunately, current regulations and enforcement of those regulations have been insufficient to contain costs and address the acute labor shortage within our healthcare system.”
