Playing a small but impactful role in nursing homes, private equity helps bring high-quality, patient-centered care to their residents across the country

• Private equity firms’ strategic nursing home investments fill system funding gaps due to factors like reduced federal support – providing a stable source of capital that benefits facilities, their staff, and their residents.

• As nursing homes across the board face operational challenges post-COVID-19, wrongly scapegoating private equity forgoes making real, tangible policy changes to improve resident care.

Comprising less than 10% of U.S. nursing home ownership, private equity’s limited but strategic investments have been critical to the vitality of nursing homes across the country – particularly as many homes face post-pandemic challenges like labor shortages and rising costs. Learn how private equity’s targeted nursing home investments are essential to bringing personalized care to residents and supporting facilities’ financial well-being.

Facilitating quality care for nursing home residents

Through strategic investments in nursing homes, private equity supports patient-centered, highly skilled care.

In fact, research from UCLA and Duke University on nursing home performance during the COVID-19 pandemic shows that private equity-owned facilities reported lower rates of cases and deaths than non-private-equity backed homes. The former were also less likely to experience a COVID-19 outbreak than their non-private equity-backed counterparts – even after controlling for things like facility characteristics, resident composition, and local factors. Private equity ownership was also associated with increased availability of Personal Protective Equipment (PPE) to keep residents and staff safe.

Beyond COVID-19, research has also demonstrated that private equity nursing home ownership helps ensure residents receive attentive and skilled care. Researchers have found “no statistically significant differences” in staffing levels and quality of care for long-term patients in private equity-owned nursing homes – while private equity’s management improvements like streamlining care practices and nursing home administrator evaluations can often lead to better resident outcomes. Further, private equity-owned nursing homes are more likely to be located in non-urban settings than their counterparts – expanding nursing home access in smaller, more rural communities to help ensure no seniors get left behind.

Reliable funding helps address systemic issues in nursing homes

The COVID-19 pandemic revealed system-wide nursing home shortcomings that private equity investments are helping address. Facing a looming demographic strain with a rapidly growing retired population, private equity provides nursing homes with much-needed capital to strengthen patient care and facilities’ financial well-being alike.

While federal support for skilled nursing homes that accept Medicare patients has been turbulent in the past several years – and grant-driven innovation is often less dependable – private equity’s support gives homes access to reliable capital that would otherwise be unavailable. According to research from the National Investment Center for Seniors Housing & Care (NIC), nursing homes have “historically been excluded from innovation funding” necessary to update nursing home technological capabilities and infrastructure. Private equity investment, on the other hand, allows organizations to “experiment with new delivery models” and make necessary, care-improving updates – all without fear of incurring losses or losing funding.

Scapegoating private equity forgoes needed, industry-wide changes

For nursing homes and long-term care facilities across the country, COVID-19 has had a lasting impact on staffing while also exposing broader cost and care quality issues. According to the Bureau of Labor Statistics, labor shortages across the health sector have hit long-term care facilities the hardest, with a 15% decline in nursing home workforces.

As health policy experts have argued, solving the “nursing home crisis” will require a concerted effort to address industry-wide challenges – from inadequate federal support for Medicare patients in nursing homes to added costs of COVID-19-specific care. To provide better care for American seniors, nursing home system stakeholders should strive to create solutions, not exacerbate existing problems through misguided scapegoating that misses the opportunity to make real progress.

Bottom line

Private equity’s critical but limited nursing home investments expand access to quality care that all residents deserve, all while helping the industry face post-pandemic challenges and funding gaps head-on.