Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes

Atul Gupta
Sabrina T. Howell
Constantine Yannelis
Abhinav Gupta
November 2020
Cover of "Evidence on the Green House Model of Nursing Home Care: Synthesis of Findings and Implications for Policy, Practice, and Research".


Study finds that private equity ownership of skilled nursing facilities leads to a significantly higher average mortality rate for residents.


Private equity investment in the health care sectors has been growing for many years. Increasingly, policymakers and other stakeholders have raised concerns about the effect on quality of care, particularly for people who are ill and when large government subsidies are involved. Nursing homes offer a unique opportunity to study the impact of private equity ownership on patient outcomes, as they rely on government payers (Medicaid and Medicare), the majority are privately owned, and their residents have observable, acute health conditions.


This study examined Medicare patient and administrative level data from over 12,400 for-profit skilled nursing facilities — of which 1,674 were acquired by private equity firms — between 2000-2017. Overall, after nursing facility acquisition by private equity, mortality increased by 10 percent of the mean for residents during their stay and in the 90 days after their stay. Mortality was concentrated among older residents who had less disease burden. Other patient findings included decreased mobility, increased pain intensity, and a 50 percent greater likelihood of patients being prescribed antipsychotics, which are generally not recommended for older adults due to safety issues.

At the administrative level, the study authors found billing per-stay increased by 19 percent among the private equity-owned nursing homes. Additionally, staffing hours declined by three percent per day for nursing assistants who help residents with activities of daily living and other caregiving tasks.


This study could help policymakers better understand the importance of regulations related to private equity-owned nursing homes, with a particular focus on quality of care and ownership transparency.

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