Private Equity Targeted in CMS Nursing Home Ownership Regulation
Modern Healthcare | By Alex Kacik
Nursing homes would have to disclose whether private equity firms or real estate investment trusts own or help operate their facilities under a proposed rule the Centers for Medicare and Medicaid Services issued Monday.
President Joe Biden's administration contends that promoting transparency in nursing home ownership would improve safety and quality. Research has linked private equity and REIT ownership to lower staffing levels and subpar quality care.
“We are pursuing all avenues to shine a light on this industry. We will keep doing everything we can to ensure all Americans receive the dignity, care and respect they deserve,” Health and Human Services Secretary Xavier Becerra said in a news release. Biden unveiled a slate of nursing home proposals during his State of the Union address in 2022 but few of them have come to fruition.
HHS debuted a public database of skilled nursing facility ownership information in September that draws from what facilities that treat Medicare and Medicaid beneficiaries are already required to disclose to regulators. The proposed rule lays out stricter reporting requirements: Nursing homes would have to disclose outside investors with ownership stakes in their facilities as well as any entities that provide administrative or clinical consulting services…
More cash-strapped nursing homes have been selling their real estate assets to investment trusts, which then lease back the spaces to operators. Registered nurse staffing levels decline by as much as 6.3% within three years of a REIT investment, according a study published in Health Affairs last month.
Nursing homes also frequently turn to private equity firms amid financial distress. Despite an increase in corporate investment, roughly 400 nursing homes closed between 2020 and last month, according to CMS data. Nursing and residential care facilities shed more than 210,000 jobs over that span, Bureau of Labor Statistics data show.
Researchers and policymakers have warned that quality declines when private equity firms invest in nursing homes. A JAMA study published in November found that residents of nursing homes acquired by private equity firms were 11.1% more likely to have preventable emergency department visits and 8.7% more likely to experience preventable hospitalizations.
CMS is accepting comments on the proposed rule, which is scheduled to appear in the Federal Register on Wednesday, through April 14.
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