Issues of transparency and accountability are two reasons why federal and state agencies should be authorized to approve or reject mergers and acquisitions involving nursing homes, according to a report issued Wednesday by the Private Equity Stakeholder Project.
PESP says that its recommendations are being made as private equity investors are actively acquiring skilled nursing facilities and currently owning between 5% and 13% of facilities nationwide. However, according to a report entitled “Private Equity continues to acquire nursing homes and continue to go bankrupt,” private equity transactions are difficult to track and sometimes create debts up to the bankruptcy point.
The new report is an update to PESP's 2021 publication, “Looking back the veil of ownership of private equity in today's nursing homes.”
The authors also recommend that policymakers and regulators seek more transparency, financial reporting requirements, leisurely action, joint liability, fee limits, and increased wages and staffing requirements for direct care workers.
“Private equity companies continue to buy nursing homes and use strategies to seek benefits that can increase their residents' risk,” said Michael Fenne, Healthcare, PESP Senior Research & Campaign Coordinator, in a press release. “These acquisitions often result in unnecessary debt and reduced nursing home operating budgets, allowing us to move away from focusing on the well-being of our residents. However, the lack of transparency along with the complex ownership structure makes it difficult for the public to know the true scope of the issue,” he added.
Because of its lack of transparency, PESP said it is difficult to track all private equity-backed nursing home transactions. The organization has been able to identify six private capital-backed nursing home transactions over the past three years, but “this number is probably short,” they said.
Recent Examples Private-Equity Bucked SNF Trading:
Portopiccolo Group has obtained four SNFs in the Hampton Road area, Virginia from Bon Secours Mercy Health. Tryko Partners purchased two nursing homes in New Jersey from Health System Virtua Health. Lee Equity Partners and Coastwood Senior Housing Partners have acquired Assisted Living and Discovery Senior Living, which owns and operates skilled nursing facilities. Owned by Pinta Capital Partners, Genesis Healthcare has acquired 34 nursing homes in Pennsylvania and has envisaged four people in Colorado. Marquis Health Services, nursing home operator at Tryko Partners, has taken over the operation of the skilled nursing unit at Penn Medicine Rittenhouse. Cascade Capital acquired one of Iowa's largest nursing home chains for $85 million. The portfolio includes 29 real estate properties, including skilled nursing facilities and living assistance communities.
Previous PESP reports noted that equity-backed companies accounted for 88% of the largest health-related bankruptcies worth more than $500 million in 2024.
In a report on Wednesday, PESP identified three nursing home companies owned by private equity companies that have filed for bankruptcy in recent years: Rabby Care Centre/Consulate Healthcare (Formation Capital) in 2024, Goldner Capital Management in 2024, and Gulf Healthcare (Barrow Street Capital) in 2022.
In addition to the issue of transparency, PESP noted that SNF faces financial risks as it owes debt in the form of private credit issued by lenders whose owners belong to private equity.
“In more widely, in nursing homes and healthcare, private corporations often make dangerous financial decisions that put the quality of care at risk, and sometimes lead to bankruptcy,” Fenne said. “It is now as important as ever to emphasize how private equity companies extract wealth from nursing home holdings. That limitation is placed on their ability to make short-term profits at the expense of long-term care of quality.”
For additional coverage of the report, see McKnight's Long-Term Care News.
