Harvard Profs Challenge Reports that Nursing Home
Care Declines Under Private Investors
‘Many of the transactions we looked at were just a
few years old, so it's hard to draw definitive conclusions’
Sept.
10, 2008 – Two Harvard professors released a report today that
challenges earlier studies showing that nursing home care declined after
they were purchased by private equity investors. Nursing homes have been
increasingly targeted as investment opportunities and government studies
have found declines in patient care.
Spurred by these reports and anecdotal evidence
that these deals led to worsened quality of care, many companies have
found themselves under increased federal scrutiny.
But according to this new study, such conclusions
may be premature.
Private equity purchases of nursing homes—many of
which result in administrative and corporate restructuring—have not
caused quality of care to decline significantly to date. In fact, in
some aspects, the quality of care has improved.
"This is an early look at what happens after these
purchases," says Harvard Medical School assistant professor David
Stevenson, who co-authored the paper with associate professor David
Grabowski.
"Many of the transactions we looked at were just a
few years old, so it's hard to draw definitive conclusions about these
types of deals. However, our results paint a more positive picture than
had emerged previously."
These findings appear in the September/October
issue of the journal Health Affairs.
Starting around 2000, a number of private equity
groups began purchasing nursing home chains, mostly in states like
Florida and Texas, where litigation was more common than in other
states.
As a result of these transactions, and to buffer
themselves against costly litigation expenses, many of the nursing homes
were divided into sub-companies, decentralizing ownership so that, for
example, the same "company" didn't own both the property and operations.
As a result, if a patient were to sue for medical negligence, it would
be more difficult to pursue property assets.
Habana Health
Care Center, a 150-bed nursing home in Tampa, Fla., was
struggling when a group of large private investment firms
purchased it and 48 other
nursing homes in 2002…
…As such
investors have acquired nursing homes, they have often reduced
costs, increased profits and quickly resold facilities for
significant gains.
But by many
regulatory benchmarks, residents at those nursing homes are
worse off, on average, than they were under previous owners,
according to an analysis by The New York Times of data collected
by government agencies from 2000 to 2006.
Investigative reporting, such as a 2007 front page
article in the New York Times, looked at patient care in these homes
both before and after these corporate purchases.
It concluded that such restructuring had weakened
patient care, which in turn led to increased attention and Congressional
hearings on the topic.
The Times report used data collected by the Centers
for Medicare and Medicaid Services, which showed that the typical
nursing home acquired by a large investment company before 2006 scored
worse than national rates in 12 of 14 indicators that regulators use to
track ailments of long-term residents.
Those ailments include bedsores and easily
preventable infections, as well as the need to be restrained. Before
they were acquired by private investors, many of those homes scored at
or above national averages in similar measurements, according to the
Times.
"We wanted to study this issue in a quantitatively
rigorous way, for example controlling for broader trends within nursing
home markets and particular facilities over time," says Grabowski.
"The attention to these transactions and the issues
they raise is important, and we hoped our study would provide a
comprehensive and accurate view of what was happening."
Stevenson and Grabowski examined a range of nursing
home outcomes and compared the quality of care in private equity
purchased nursing homes to those that had not undergone these
transactions.
The researchers looked at various indicators
including nurse and aide staffing, survey deficiencies, and a range of
resident outcomes including the prevalence of catheter use, urinary
tract infections, weight loss, restraint use, pressure ulcers,
residents' ability to take care of their own daily needs, and range of
motion loss.
When the data were analyzed, the researchers found
scant evidence to suggest that the overall quality of resident care had
declined substantially following these purchases. Some factors, such as
RN staffing, did in fact decline. But others, such as aide staffing,
catheter use, UTIs, weight loss, and pressure ulcers, actually improved.
"After taking facility and market trends into
account, we did not find a substantial drop in the quality of care
delivered in these nursing homes overall," says Stevenson.
The researchers caution that these findings are
preliminary, given the recent nature of many of these transactions. In
addition, they emphasize that it is still important to consider a range
of issues around ownership transparency and accountability that extend
beyond private equity investment.
"Our study provides an initial snapshot that is
somewhat reassuring," says Stevenson.
"But the attention on these deals and the corporate
structures that emerge from them still has broader value. Most of all,
we need to be confident that residents are positioned to receive high
quality care and that there is sufficient recourse in cases where they
do not—regardless of who owns the nursing home."
This study was funded by the J. W. Kieckhefer
Foundation, who had no role in study design; in the collection,
analysis, and interpretation of data; or in the writing of the report.
Editor’s Notes:
Source: Health Affairs, September/October, Vol. 27,
number 5
"Private Equity Investment And Nursing Home Care: Is It A Big Deal?"
David G. Stevenson and David C. Grabowski, Harvard Medical School,
Department of Health Care Policy, Boston, MA
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Sept.
10, 2008 – Two Harvard professors released a report today that
challenges earlier studies showing that nursing home care declined after
they were purchased by private equity investors. Nursing homes have been
increasingly targeted as investment opportunities and government studies
have found declines in patient care.