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Local nursing homes fall into hands of private-equity firms

NORTH OLMSTED, Ohio — Private-equity ownership of nursing homes is on the rise, while the quality of care diminishes in those nursing homes, according to The White House’s recently released fact sheet titled “Protecting Seniors by Improving Safety and Quality of Care in the Nation’s Nursing Homes.”

In Ohio, private equity firms now own many nursing home that were purchased from in state providers. These purchases have taken place over the last few year, and now total over 300 care centers in the state.

Experts are questioning whether they will follow the trend of lower care standards, decreased capital spending and confusing hierarchy charts where you just don’t know who to contact if you need help. A case in point is an Ephram Lahasky of New York. Lahasky has ownership in 38 homes in Ohio and 178 homes country wide. This owner is currently being sued by the Attorney General of New York. The lawsuit alleges that in one instance, Lahasky and his partners diverted $18.9 million from a nursing home, depriving seniors of basic care. It also alleges this practice is part of a “long term financial fraud” in the nursing home industry.

“Private equity investors are acquiring buildings at premium pricing and, subsequently, drastically cutting expenses– namely labor– in order to attain unrealistically high profit margins,” said Joe Altieri, VP of Business Development for Foundations Health Solutions, a large nursing home company based in Ohio who successfully competes with many of these centers for quality staff and to care for our seniors. “Foundations Health [Solutions] is not dependent on private equity to support our operation. It allows us to invest in our physical plants, offering more private rooms, better clinical quality and higher staff-to-resident ratios. This should be the standard in our industry. Sadly, it has deteriorated with this trend.”

In response to this trend of lower quality care at private-equity-owned nursing homes, the White House added nursing home regulations and cited failures during the Covid pandemic and private-equity ownership as reasons for the increased regulation. Among the sources cited in the White House’s fact sheet was a National Bureau of Economic Research (NBER) paper that states that of the 18,000 nursing home facilities studied over a seventeen-year period, private-equity ownership increased excess mortality for residents by 10 percent.

“That suggests an additional 20,150 lives lost as a result of private equity ownership,” the paper states.

The Journal of American Medical Association (JAMA), NBER and Americans for Financial Reform have all recently published articles and working papers sharing several other data findings that indicate private-equity-owned nursing homes underperform when compared to for-profit nursing homes not associated with private equity.

These findings include:

— 50 percent increased use of antipsychotics at private-equity-owned nursing homes (source: JAMA);

— Private-equity-owned nursing homes had a COVID-19 infection rate and death rate that were 30 percent and 40 percent above statewide averages, respectively (source: Americans for Financial Reform);

— Nursing homes owned by private-equity firms had a 3 percent decrease in hours of frontline nursing staffing (source: NBER);

— Residents at private-equity-owned nursing homes were 11.1 percent more likely to have a preventable emergency department visit (source: JAMA); and,

— Private-equity-owned nursing home residents were 11.1 percent more likely to experience a preventable hospitalization (source: JAMA) Private-equity acquisition of nursing homes was also associated with higher Medicare costs and increases in emergency department visits and re-hospitalizations, according to a JAMA article published in 2021.

“Too often, the private-equity model has put profits before people–a particularly dangerous model when it comes to the health and safety of vulnerable seniors and people with disabilities,” The White House fact sheet states.

While private equity continues to acquire more and more nursing homes throughout the country, experts say it is important for consumers to identify ownership and choose nursing homes that are owned by entities that are not dependent on private-equity money.

“It’s more than just business for us,” says Altieri, of Foundations Health. “We live and work where we own these care centers. We do the right thing because we answer to our residents and their families. Their families are our families. We don’t answer to investors. We don’t pay exorbitant lease costs to an out of state owner. Our teams care about senior care in Ohio. And only Ohio. “

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