Report: Big Money Ownership Reduces Nursing Home Quality

Craig Stoltz Health Guide
  • The New York Times has published an ambitious piece of original reporting that links nursing home ownership to care quality. Essentially, it finds that operations backed by big private investment firms deliver low quality care.


    Main Findings

    • Private investment firms (often known for acquiring companies like Dunkin' Donuts, the article points out) that buy groups of nursing homes often cut costs to raise profits. Often the biggest cuts are in nursing staff, especially senior nursing staff.
    • Sometimes the new owners' motivation is to make the companies look better to potential buyers.
    • By nearly every measure the Times looked at--"including complaints received by regulators, health and safety violations cited by regulators, fines levied by state and federal authorities, the performance of homes as reported in a national database known as the Minimum Data Set Repository and the performance of homes as reported in the Online Survey, Certification and Reporting database," the story reports--nursing homes owned by these investment groups were worse,sometimes far worse, than national averages.
    • The investment groups often created complex corporate structures that make it difficult to know who is responsible for care in any given facility--and to insulate the real owners from lawsuits.
    • Private investment firms now own 9 percent of nursing home beds in the U.S., and plan to acquire more as the population ages and nursing home demand grows.
    • At the big chains owned by private investors, profit was $1,700 per bed per year--over 40 percent more than the nationwide average. Nursing staff was reduced after purchase at 60 percent of these facilities.
    • Regulators said that care quality measures declined at every chain that as purchased by private capital between 2000 and 2006.

    Owners' Responses

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    Several nursing home operators declined comment. Those that did offered the following explanations:


    The data show an incomplete picture, and their chains are improving care. 

    Lawsuits against nursing homes had grown out of control, and they need protection from them.

    They had brought professional management and new capital to an industry so badly operated and underfunded that it could not meet rising demand.


    Can this be fixed?

    It's easy to suggest that if you're searching for nursing homes, try to find those owned and operated by non-profits or community organizations. But with the trend toward more ownership by private investors, that may become increasingly difficult.


    This suggests that legislative remedies may be necessary to solve these problems.


    Meantime, our site has a useful guide to choosing a nursing home that can help you locate facilities that still offer higher-quality care.  


    Learn more


    This story is part of a series of New York Times reports devoted to problems in the eldercare industry. Any caretaker of the elderly should take the time to read them.



Published On: September 25, 2007