Private equity acquisition of nursing homes: Implications for quality and finance. Private equity (P.E) has acquired multiple large nursing home chains within the last few years;by 2007, it owned six of the 10 largest chains. Critics have alleged that P.E nursing homes compromise quality of care in pursuit of profits and have called for greater regulatory oversight. Nursing home quality is an important public concern because the well-being of some of the nation's most vulnerable citizens is at stake;in addition, the industry's principal payer government has a strong interest in nursing home performance and its continued financial viability. However, the empirical evidence on the purported impact of P.E ownership on nursing home quality remains limited and often contradictory. The proposed research will be guided by the following research aims: 1) To examine the impact of private equity acquisition on nursing home quality as visualized by Donabedian's Structure-Process-Outcome (SPO) framework. 2) To analyze the impact of private equity acquisition on nursing home financial performance (i.e. costs, revenues, and margins). The data for this study comes from five different sources: Online Survey, Certification and Reporting (OSCAR), Nursing Home Compare dataset, Brown University's Long-Term Care Focus dataset, Medicare Cost Reports, and Area Resource File (ARF) for the study period 2000-2008. The sample will consist of nursing homes located in California, Florida, Illinois, New York, and Texas. The primary independent variables would be Private equity ownership. It would coded as a dichotomous variable (0 or 1) for nursing home ownership expressing whether the said nursing home is owned by private equity or not.
For research aim 1, quality would be as visualized as Donabedian's Structure- Process-Outcome (SPO) framework and modeled as a function of private equity ownership.
For research aim 2, financial performances would be measured by multiple variables (costs, revenues and margins) expressed as a function of private equity ownership. The proposed study will increase our understanding of the impact of private equity ownership on nursing home performance. This will facilitate the framing of appropriate policy responses, and help protect the interests and quality of life of some of the most vulnerable Americans.
Private equity acquisition of nursing homes: Implications for quality and finance. Concern has been raised in policy circles due to increasing private equity investments in nursing homes and its purported impact on their performance. Private equity is said to be excessively focused on short-term profitability with possible detrimental effects on nursing home quality and their long-term financial viability. Therefore, this research documenting the effect of private equity ownership on nursing home performance has important policy and regulatory implications.