The Department of Health & Human Services proposed a rule that would require facilities to disclose ownership by private equity. Advocates for nursing homes say the issue distracts from the need for more funding.
President Biden has pushed to improve the quality of nursing homes, and now his administration has taken steps to shed more light on the owners of long-term care facilities.
The Biden administration announced this week that it is proposing new rules to offer more transparency on nursing home ownership. The U.S. Department of Health & Human Services issued a proposed rule to compel nursing homes to disclose more information about their ownership and management.
In addition, the rule also calls for nursing homes to disclose if they are owned by private equity investors or real estate investment trusts. The Biden administration has been critical about private equity ownership of nursing homes, saying that they provide lower quality care.
Health and Human Services Secretary Xavier Becerra said the steps reflect the administration’s commitment to ensure nursing home residents get the best possible care.
“President Biden has made clear: improving our nation’s nursing homes is an urgent priority, and this Administration is not afraid to take bold action to tackle this head-on,” Becerra said in a statement.
“We are continuing our unprecedented efforts to increase nursing home ownership transparency – because it’s what the public deserves. We are pursuing all avenues to shine a light on this industry," he said.
Mark Parkinson, president and CEO of the American Health Care Association and National Center for Assisted Living, said nursing homes don’t oppose providing more information on ownership. But he said only a small number of facilities are actually owned by private equity.
“We support transparency and appreciate the Administration’s efforts to assist families in making more informed decisions,” Parkinson said in a statement. “However, focusing on ownership and private equity is a red herring. Less than 5 percent of nursing homes are owned by private equity firms and roughly 12 percent are owned by a REIT, an entity that typically has no influence on daily operations.”
The proposed rule would require nursing homes to disclose home ownership to the Centers for Medicare & Medicaid Services and to the states.
CMS Administrator Chiquita Brooks-LaSure said in a statement that the rule “would strengthen our ability to examine ownership types, including private equity and real estate investment trusts.”
The proposed rule would also require homes to disclose more information about companies “that lease or sublease property to nursing homes, since the facilities and property owners may be set up as different corporate entities even though the entities work hand-in-hand,” the health department said.
The health department cited a study published in JAMA Health Forum that found residents in nursing homes owned by private equity groups were 11% more likely to visit the emergency department and 8.7% more likely to require hospital admissions, compared to other for-profit nursing homes.
In his 2022 State of the Union Address, Biden denounced “Wall Street firms” who have taken over nursing homes and raised costs, even as quality dropped.
Biden has called for minimum nursing standards at nursing homes. The Biden administration has also proposed more funding for inspections and tougher penalties for nursing homes that have fallen short in protecting patients.
Parkinson said the issue of private equity ownership is dwarfed by the inadequate funding of nursing homes, which makes it harder to provide adequate staffing.
“If we truly want to improve America’s nursing homes, we need policymakers to prioritize investing in our caregivers and this chronically underfunded health care sector,” Parkinson said in a statement. “Together, we should focus on meaningful solutions that can strengthen delivering the quality of care and services that our nation’s seniors deserve.”
The National Academies released a report that recommends dramatically changing the funding of the nursing home industry. The report concluded “the way in which the United States finances, delivers, and regulates care in nursing home settings is ineffective, inefficient, fragmented, and unsustainable.”
In April 2022, the health department released several years of data on nursing home ownership and homes that have changed hands due to mergers, acquisitions or consolidations.