New PESP report reveals private equity continues to acquire and bankrupt nursing homes

Today, Private Equity Stakeholder Project (PESP) released a report, “Private Equity Is Continuing to Acquire – and Bankrupt – Nursing Homes,” which reveals that private equity firms continue to acquire nursing home facilities. This continues to pose significant risks to residents and workers due to profit-driven practices, high debt levels, and complex real estate transactions. Current estimates suggest that private equity firms own between 5% and 13% of U.S. nursing homes.

The report, an update to PESP’s 2021 publication “Pulling back the veil on today’s private equity ownership of nursing homes,” details the continued challenges in tracking private equity ownership due to complex ownership structures and a lack of transparency. It also examines recent private equity deals, bankruptcies, and the broader regulatory landscape impacting the industry. 

“Private equity firms are continuing to buy up nursing homes, and use profit-seeking strategies that can put residents at increased risk,” said Michael Fenne, Senior Research & Campaign Coordinator, Healthcare for PESP. “These buyouts often result in unnecessary debt and reduced operating budgets for the nursing homes, and a shift away from a focus on well-being for residents. But a lack of transparency, along with complex ownership structures, make it difficult for the public to know the true scope of the problem.”

Key findings include:

• Continued Private Equity Activity: Private equity firms continue to acquire nursing homes despite industry claims that downplay private equity’s role. PESP identified at least six private equity-backed nursing home deals in the past three years, though this number is likely an undercount.

• Recent Bankruptcies: At least two nursing home companies owned by private equity firms and a private equity firm that itself owned nursing homes have filed for bankruptcy in recent years: LaVie Care Centers/Consulate Health Care (Formation Capital) in 2024, Goldner Capital Management in 2024, and Gulf Coast Health Care (Barrow Street Capital) in 2022. Bankruptcy proceedings have also revealed harrowing conditions at multiple LaVie/Consulate facilities, with reports describing significant concerns about patient care.

• Financial Risks: Nursing homes are also facing financial risks due to owners taking on debt in the form of private credit issued by private equity-affiliated lenders, such as MidCap Financial (affiliated with Apollo Global Management).

• Transparency Issues Persist: Complex ownership structures and a lack of transparency make it difficult to track which firms are currently invested in skilled nursing facilities. Official data often undercounts private equity involvement.

• Quality of Care Concerns: Nursing homes owned by private equity continue to face risks related to profit-seeking, use of debt, and monetization of real estate, which can negatively impact patient care and staffing levels.

“In nursing homes and healthcare more broadly, private equity firms often make risky financial decisions that put care quality at risk, and sometimes lead to bankruptcy,” continued Fenne. “It’s as important now as ever to highlight how private equity firms extract wealth from their nursing home holdings, and that limits be placed on their ability to make short-term profits at the expense of quality, long-term care.” 

The report concludes with several policy recommendations to address the challenges posed by private equity ownership of nursing homes. These include enhanced merger and acquisition review to consider impacts on care quality and market dynamics, alongside increased transparency in ownership reporting and mandatory audited financial reports for facilities. 

To prevent financial exploitation, the report suggests anti-looting measures, stricter limits on sale-leaseback transactions, and restrictions on dividend payouts. Joint liability for private equity owners is recommended to ensure accountability, and investors should be required to report management fees charged to their nursing home holdings. Furthermore, the report emphasizes the need for increased wages for direct care workers and the enforcement of minimum staffing standards. 

The full report is available here.