Private duty nursing has become an attractive target for private equity (PE) investors. However, the new report states that quality of care and market competition could result in suffering.
A report from the nonprofit Watchdog Group Private Equity Stakeholders Project (PESP) highlights the ongoing challenges faced by private nursing agencies, including sustained labor shortages and low Medicaid reimbursement rates.
Despite these challenges, PES highlights that PE companies continue to invest in the sector, indicating that investors are finding profitable opportunities there.
The report says investors are seeing the potential of home health care for several reasons. First, the industry remains “fragmented” and offers investors the opportunity to integrate small institutions into a larger network.
Furthermore, due to the aging of the US, the need for specialized home care continues to increase due to cost savings and patient age preferences.
A 2023 report from American Americans for Americans for Financial Reform found that “the majority of PE home health care is concentrated in the hands of a small number of businesses,” despite having only 6% ownership of US home health care.
PE's involvement in healthcare is more limited than some people think. A July 2024 pitchbook report found that PE-backed providers represent only 3.3% of the US healthcare provider ecosystem through revenue.
In the pediatric private nursing sector, Bain Capital and J.H. Whitney-supported Avaanna Healthcare is the largest private nursing company in the United States, serving 27 states with 33,500 employees.
Risk and rewards
The report highlights that PE business models often rely heavily on debt to generate high investor returns. PESP argues that this dependency could lead to harmful cost-cutting strategies, potentially exacerbating the difficult and low-wage situation experienced by private nurses.
“Excessive debt levels not only harm the healthcare company's finances and sustainable growth capabilities, but can have a detrimental impact on workers and the patients they care for,” the researchers wrote. “Since labor is usually the biggest expense for healthcare providers, staffing is often influenced by cost-cutting strategies.”
The report also observed that a typical PE business model involves placing large amounts of debt on the acquired companies. This usually occurs during the initial acquisition. This continues later in the ownership cycle, where between 60% and 90% of purchases are often funded through debt. Importantly, PE companies are not responsible for paying off this debt, as the companies themselves secure it.
“This creates a moral hazard issue that could instruct companies owned by PE companies to take financial risks,” the report states. “This means that PE companies can generate return on investment even if the company ends up in financial distress or bankruptcy.”
Several other trends mentioned in the report include lower wages, understaffing, reliance on temporary staff, providing sub-benefits, and inadequate training resources.
The researchers also said ownership of PEs could lead to integration of private nursing organizations, reducing patient options and increasing healthcare costs.
Several PE-owned home healthcare companies offering private duty nursing completed their M&A in the first half of 2025. Medtec Healthcare's merger with senior helper in April created a new home healthcare platform company, Altocare.
Finally, the report shows that PE-owned companies face less regulations than publicly available companies. They do not need to provide the same financial disclosures to the Securities and Exchange Commission or its investors.
However, ownership of PE is not necessarily harmful. Advocates argue that PEs can rejuvenate their struggling healthcare institutions and provide capital, expertise and profit-oriented approaches to increase efficiency and encourage innovation.
Still, the PESP urged lawmakers to address PE's involvement in private nursing through three key actions. Researchers recommended the establishment and expansion of paid caregiver programs with appropriate guardrails, and prevention of anti-competitive mergers. Finally, they proposed limiting the use of debts that PE companies and other investors could use to fund healthcare and add-on acquisitions.
“Because of the lack of guardrails in place, investors owned and other for-profit home health agencies can legally suck up from patient care as patients and their families struggle to find long-term, reliable, quality nursing coverage,” the report states.