Private equity-backed nursing homes do worse during pandemic for residents and staff

New Jersey case study examines infection, fatality rate by nursing home ownership 

WASHINGTON —Private equity-owned and -backed nursing homes had higher COVID-19 infection and fatality rates for residents, and those same facilities had a disproportionate share of the COVID-19 resident and staff cases and deaths relative to public, non-profit, and other for-profit nursing homes in New Jersey, according to a new report from Americans for Financial Reform Education Fund (AFREF).

The full report can be found here.

The insufficient and deadly care at private equity-affiliated facilities fall more heavily on people of color, which provide the bulk of nursing home staff. Infection and fatality rates for both residents and employees in counties that are predominantly Black or Latinx were higher than in similar jurisdictions that were overwhelmingly white.

“Private equity has always had a troubling record of degrading the care offered in nursing homes, but the quality issues during this pandemic can have particularly deadly consequences,” said Patrick Woodall, senior researcher at AFREF. “The nation will have to come to grips with the often-poor treatment residents face in the nursing home business, with chronic understaffing, too little investment in facilities, and lax enforcement of regulations. But private equity’s model of extracting profit at the cost of adequate care now appears especially deadly for residents of these homes.”

About 59 percent of private equity-affiliated nursing home residents contracted COVID-19 — an infection rate 25 percent higher than the state average and 57 percent higher than at public nursing homes, according to the study. The resident COVID-19 fatality rate at private equity nursing homes was nearly 29 percent, more than 10 percent higher than the state average.

The study also found that private equity nursing homes represented a disproportionate share of COVID-19 cases and deaths for residents and staff. About 15 percent of New Jersey nursing home residents were at private equity facilities, but about 20 percent of the resident and staff cases and deaths were at private equity nursing homes.

The study is the first to assess the performance of nursing homes during the pandemic by ownership type and utilizes New Jersey’s more comprehensive facility-level COVID-19 data supplemented by federal nursing home data.

“Private equity companies are a major problem for the nursing home industry as they seek the highest possible return on investment without necessarily any knowledge of or regard for providing high-quality, long-term care services for residents,” said Charlene Harrington, professor emerita at University of California San Francisco. “Research on the impact of private equity companies on the quality of long-term care is greatly needed and this report makes an important contribution to our understanding of the growing influence and power of private equity investors.”

The private equity industry has invested in hundreds of nursing homes over the past two decades. The private equity firms typically strip out the nursing homes’ real estate assets, load the companies with debt, and aggressively cut costs — primarily by reducing staffing. New Jersey nursing home staff are overwhelmingly women of color who are paid paltry wages. Many lack health insurance or paid sick leave that is essential to keeping workers, their families, and residents healthy during the pandemic.

“The devastating impact of COVID-19 in New Jersey’s nursing homes—especially in private-equity owned facilities—has laid bare the deadly consequences of profiteering within this industry,” said Milly Silva, executive vice president of 1199SEIU United Healthcare Workers East. “The overriding mission of every licensed nursing home operator, recipients of significant taxpayer funding, must be to provide compassionate, high-quality care to their patients.  New Jersey’s legislators must act to reign in this industry and ensure adequate staffing, supplies, testing, and other essential needs before another wave of COVID-19 hits.”

Government studies, media exposés, and ample academic studies have documented that private equity-affiliated nursing homes receive lower quality ratings, have worse staffing levels, receive more deficiencies for violating federal standards, and have worse health outcomes than other nursing homes. The AFREF report found that private equity-affiliated nursing homes in New Jersey provided fewer total nursing hours per patient per day adjusted for the medical needs of the resident and had a higher number of deficiencies per 100 residents over the past three years than other nursing homes.

“In a world with COVID-19, poor nursing home care results in illness and death,” said Eric Carlson, directing attorney, Justice in Aging. “Nursing homes should put their resources towards caring towards residents, rather than siphoning off money for owners.”

The study also found that disparities between health outcomes depending on the racial composition of the counties where nursing homes are located were particularly stark at private equity nursing homes. Black and Latinx people in the United States have been about three times more likely to contract COVID than whites and far more likely to die if infected. The study found that the resident and staff COVID fatality rate was far higher at private equity nursing homes in counties where people of color made up the majority of the population than in counties that were 80 percent white, and that this gap was much larger for private equity nursing homes than the state average. Staff fatality rates were seven times higher in counties where people of color made up the majority than in 80 percent white counties. Resident fatality rates were 9 percent higher in majority people of color counties.

“The persistent consequences of racism and systemic racial inequities mean that people of color have been far more likely to contract the novel coronavirus and more likely to succumb to the disease,” said Woodall.  “Private equity appears to exacerbate the problem, with even higher resident and staff fatality rates at facilities in communities of color.”

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