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American Investment Council: Narrowly Focused Nursing Home Working Paper Inconsistent with Recent Studies Showing that Private Equity Delivers Quality Care
Research from Duke, University of California, University of Michigan and Miami University Research Proves Private Equity Helps Deliver Quality Care to Seniors

In February 2021, a working paper from March 2020 was republished about the level of care provided at private equity-backed nursing homes, a critical issue impacting our seniors and many of society’s most vulnerable populations. This working paper — which has not been peer-reviewed or subject to review by the National Bureau of Economic Research Board of Directors — only focused on a very narrow subset of nursing home patients. It is inconsistent with recent peer-reviewed academic research that shows that private equity-backed companies are delivering high-quality care to nursing home residents, particularly during the COVID-19 crisis.

Private equity firms own about 9 percent of nursing home facilities nationwide. Here’s some important research to consider about private equity’s record of delivering quality care for seniors:

  • University of California and Duke University – Private equity-owned nursing homes have fared far better under Covid-19 than non-private equity-backed homes, with lower rates of cases and deaths. A study conducted in August 2020 by researchers at University of California Los Angeles and Duke University found that non-private equity nursing homes were twice as likely to report cases or deaths among residents than private equity-owned nursing homes, and private equity ownership was also associated with increased availability of Personal Protective Equipment.
  • University of Michigan and Miami University – Another recent comprehensive study conducted by researchers at the University of Michigan and Miami University similarly found that PE-backed nursing homes provide similar quality of care for long-term residents when compared to traditional for-profit nursing homes, stating, “Although the media and advocacy community are concerned that PE ownership would lead to lower quality, our results do not support this point of view.”’
  • Studies published by experts at the Government Accountability Office, Harvard Medical School, Vanderbilt University, the University of California, San Francisco, and others on private equity ownership in the nursing home industry also found no consistent difference in quality and other operating outcomes (Cadign et al. 2015; GAO 2011; Harrington et al. 2012; Pradhan et al. 2013).

Private equity firms make long-term investments in businesses like nursing homes to help rescue, build or grow businesses, often providing much-needed capital to strengthen struggling companies and employ Americans. At a time when skilled nursing homes accepting Medicare patients are facing reduced federal support, private equity companies are making active investments in financially distressed nursing homes to improve financial well-being and the quality of care.

The industry is committed to supporting companies that deliver affordable, high-quality health care — and that includes improving care for our seniors in communities across America. Research shows that private equity ownership often leads to better care for residents through improved management, such as instituting more standardized care practices and evaluation of nursing home administrators. Private capital is also filling an important gap in resources as the number of retiring Baby Boomers increased more from 2019-2020 than in previous years, placing a looming demographic strain on nursing homes.

Recently, the American Investment Council released a new overview of the critical role that private equity plays in supporting quality, affordable health care in the United States. For decades, PE-funded innovations have delivered effective treatments and saved lives — and, importantly, helped lower health care costs for millions of Americans. According to data compiled by Pitchbook, private equity invested more than $79 billion in U.S. health care throughout 2020 to fund research into deadly diseases like Alzheimer’s and Parkinson’s, expand and renovate facilities, modernize medical records and health care data, and make other needed investments.