Higher Mortality, Lower Quality at PE-Owned Nursing Homes, Studies Say

Nursing homes owned by private equity firms and large chains have higher mortality rates and lower quality, according to recent research.

Nursing homes owned by private equity firms and large chains have higher mortality rates and lower quality, according to recent research.

In May, the Booth School of Business at the University of Chicago released a study that looked at mortality rates at nursing homes over a 15-year period. It found after a private-equity firm bought a nursing home, short-term mortality rates jumped by 10%, which translated into 20,000 additional deaths.

The researchers looked at data covering 18,000 U.S. nursing homes between 2004 and 2019, a period when 1,700 facilities were bought by PE firms. In dollar terms, PE acquisition in U.S. healthcare jumped from less than $5 billion in 2000 to $100 billion in in 2018, the report said.

In late November, the University of Waterloo released a study that traces the growing dominance of financial firms in senior housing across Canada. It found that nursing homes with the highest profit margins have the lowest quality.

“This study is not focused on the public or non-profit seniors’ facilities across Canada, but rather, the pension funds, private-equity firms, public companies and other instruments treating long-term care as an asset class,” said the study’s author, Martine August, a professor in Waterloo’s School of Planning, in a press release.

She added private firms that own senior housing prioritize profit at the expense of other goals. “These financial firms derive maximum value in three ways: cost-savings from cutting staff, reducing services and using government grants to improve facilities, thus raising property values for subsequent sale as real estate,” August said.

The professor tracked LTC ownership data from 2003 to 2020 and found Canada’s top-10 financial firms doubled their holdings of LTC facilities during that time. Currently, 33% of senior housing in Canada is owned by financial firms, the report says.

The study, “Securitising Seniors Housing: The Financialisation of Real Estate and Social Reproduction in Retirement and Long-Term Care Homes,” was published in late November 2021 in the journal Antipode.

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