The federal government’s focus on private equity ownership in nursing homes is just a “red herring” for lawmakers, one leader said after the launch of a new probe into the matter.
The Government Accountability Office recently launched the probe, which will assess the reach and impact private equity investments have had on the nursing home industry. A report is expected in fall. The probe comes in the wake of research that suggests the effect has been negative, KHN reported Wednesday.
The issue is not without controversy. A 2020 study that was last updated late last month found that “contrary to a common media narrative — PE-owned facilities have actually fared better under the COVID-19 pandemic.”
The new GAO probe stems from a pre pandemic request by the House Ways and Means Committee.
“It is my hope GAO will shed more light and provide more information on Wall Street’s dangerous growing control over nursing homes and long-term care facilities,” Rep. Bill Pascrell (D-NJ) told KHN. Pascrell has also submitted a second request to the agency to look into private equity investments in all parts of healthcare.
The American Health Care Association earlier this week told McKnight’s Long-Term Care News that the focus should be on meaningful solutions that will make a positive impact across the entire industry.
“We support financial transparency, and nursing homes already report ownership and financing through a vast array of current requirements,” the association said. “However, neither ownership nor line items on a budget sheet prove whether a nursing home is committed to its residents.”
“The focus on private equity ownership of nursing homes is a red herring,” added AHCA President and CEO Mark Parkinson.
“If policymakers want to talk about private equity, then this is a conversation for the entire healthcare system, not just nursing homes,” Parkinson told KHN.
President Joe Biden’s nursing home reform plan was unveiled on Feb. 28, and a day later, he called out private equity ownership in his State of the Union address. The administration says that private equity’s investment in nursing homes ballooned from $5 billion in 2000 to more than $100 billion in 2018 — with about 5% of all nursing homes now owned by private equity firms.
Some experts have also said that before placing blame, the federal government needs a better understanding of private investment in nursing homes and the role it plays in capital and quality improvements.