- Nursing homes that accept Medicare or Medicaid will be required to disclose their owners to the public and federal agencies, in a bid by the Biden administration to increase transparency in the industry, according to a final rule published on Wednesday.
- The new regulation, first proposed in February, is in response to growing concerns about the role of private equity firms in the industry, according to the final rule. PE firms have been purchasing long-term care facilities at an increased rate since 2016, often to the detriment of patient care, according to the agency.
- Research suggests resident outcomes can be worse at PE-owned nursing homes. However, until now, the public has had limited insight into ownership of nursing homes. The rule would allow families to make “informed decisions about care and to hold nursing homes accountable for the service they provide,” according to a release from the HHS.
The rule comes after researchers and lawmakers have homed in on investment firms’ ownership of nursing homes, including studies describing the negative impact of private equity on the industry.
“Research has found that resident outcomes are significantly worse at private equity-owned nursing homes. And in the two to three years after real estate investment trusts invest in nursing homes, registered nurse staffing levels decline by as much as 6%,” the rule says.
Concerns about quality in private-equity backed facilities have dogged the industry for years and intensified in 2022 after outlets, including the New Yorker, published in-depth investigations into the effects of private equity ownership on nursing home care.
Under the rule, nursing homes will be required to publicly disclose their owners, trustees and companies that provide administrative, clinical and financial services, including real estate investment trusts.
The government cited studies in the final rule that linked private equity ownership to short-term mortality rate increases and another that said PE firms cut staffing, services, supplies or equipment in a bid to increase their profits.
Prospective families are typically unaware they are selecting private equity-backed facilities that may put their loved one’s care at risk, the rule alleges.
The rule also may help the government better estimate how consolidation impacts the quality of care.
The ten largest nursing home chains own more than 10% of nursing homes, according to the HHS. The share represents a disproportionate amount that “raises concerns about market concentration,” according to a release on the final rule.
The agency may also use the newly available data to better understand how deeply private equity firms have penetrated the long-term care industry.
Estimates of private equity nursing home ownership can vary from 5% to 11% depending on the source, in part because nursing homes have not been required to list all of their owners.
The government released multiple datasets last year in attempts to demystify investments in the industry. In April 2022, the CMS released data on mergers, acquisitions, consolidations and changes of ownership from 2016 to 2022 for hospitals and nursing homes enrolled in Medicare.
Then, in September 2022, the CMS released additional data on the ownership of approximately 15,000 nursing homes certified as Medicare Skilled Nursing Facilities, and provided more information about organizational owners of nursing homes.
Months later, the CMS released ownership data publicly — for the first time ever — for all Medicare-certified hospitals.
Using the CMS data, the U.S. Government Accountability Office estimated private equity firms owned 5% of nursing home facilities nationwide.
However, without the final rule published this week, that data was still incomplete. The GAO noted that many homes did not have all their owners listed, because they were not required to do so.
The rule takes effect 60 days after it appears in the Federal Register, which is scheduled to occur Friday. Nursing homes must disclose ownerships within a year of that date.