Fighting For The Elderly, Vulnerable and Injured.

Private Equity Owners and Nursing Homes From Hell

On Behalf of | Mar 5, 2021 | Blog, Elder Abuse, Nursing home Abuse, Nursing Home Neglect, Personal Injury, Recent Articles

Long before the Coronavirus infected and killed more than 150,000 nursing home residents and staff, there was another invisible and silent killer at work systematically causing death and destruction, namely Private Equity owners. According to a study published by researchers from the University of Pennsylvania, University of Chicago, and NYU, nursing home ownership by Private Equity investors increased the short-term mortality of Medicare patients by 10%. In a 12-year sample period of data between 2004 and 2016, the researchers found that more than 20,000 lives were lost due to PE ownership.

What has caused the rise in Private Equity Owners running Nursing Homes from Hell?

How did the researchers arrive at that conclusion? They looked at data from 15,000 nursing homes and compared information from PE-owned and non-PE-owned facilities; the evidence is clear. They discovered that PE owners cut frontline nursing assistants, which resulted in a significant decline in hours per patient-day. Fewer caregiver hours meant less personal interaction, less mobility assistance, and less sanitary conditions. Because staff was shorthanded, the only way to control patient populations was to give them more drugs. The researchers found that one-third of the mortality resulted from the effects of antipsychotics and lower nurse availability. In short, to control costs, PE firms cut staff and drugged residents, which caused these seniors to die sooner than they otherwise would have. The statistical proof is incontrovertible. What can be done to curtail the rise between private equity owners and nursing homes?

The idea that private equity owners improve efficiency may be real in some industries but is a recipe for disaster in healthcare.

When facilities and institutions put profits over people, bad things happen. In this case, nursing homes owned by PE firms deliberately cut costs to juice profits. The reason why this is now becoming critical is that over the past 20 years, PE firms have made staggeringly significant investments in healthcare, including nursing homes of all kinds. In 2000, total investment was less than $5 billion. In 2018, investment was more than $100 billion. Unless someone stops them, nursing homes will continue to be swallowed up by PE firms because the sector is projected to grow from $166 billion in spending in 2017 to $240 billion by 2025. It’s a juicy target, ripe for the picking.

At the same time that PE-owned facilities are cutting corners and killing residents, the researchers found that taxpayer spending went up – an average of 11% for short-stay Medicare patients over their first 90 days. In short, they milked the system, killed people, and we’re all paying the price.

PE investment in education, defense, and infrastructure companies may be beneficial, as such ownership makes them more efficient and sometimes better functioning, but in healthcare, especially nursing homes, the evidence is clear that PE firms do more harm than good.

In the meantime, PE firms continue to kill people, and we must make them accountable, or the greed, PE shortcuts and resulting deaths will continue unabated. Unfortunately the relationship between private equity owners and nursing homes will most likely continue to escalate.

Attorney Wendy York of York Law Firm specializes in prosecuting elder abuse and wrongful death cases in California. For further information, please contact Wendy York today.