Private equity’s grip on private duty nursing leads to higher costs, reduced care for medically complex children & adults

PESP released a new report, “Private equity’s investments in private duty nursing,” which exposes how the private equity business model could exacerbate staffing shortages and compromise care for children and adults with complex medical needs who rely on private duty nursing services. The report details how private equity firms’ debt-laden strategies could divert essential resources away from patient care, while families struggle to secure consistent and quality nursing coverage.

Private duty nursing is a critical form of individualized care that enables medically fragile individuals to remain in their homes rather than in institutional settings. However, PESP’s report shows potential risks with private equity-owned nursing agencies in which financial returns are prioritized over patient well-being.

Key findings from the report include:

• Financialization of Care: Private equity firms are investing heavily in private duty nursing, driven by the opportunity to consolidate fragmented markets and generate significant returns, despite persistent labor shortages and low Medicaid reimbursement rates.
• Harmful Business Model: The private equity model, often financed by substantial debt, can lead to cost-cutting measures that worsen working conditions for nurses and negatively affect the consistency and quality of patient care.
• Patient and Family Impact: Case studies of private equity-owned companies, including Team Select Home Care and Aveanna Healthcare, reveal how private equity’s debt-fueled expansion and cost-cutting practices could lead to significant challenges for parents seeking reliable nursing coverage for their medically complex children.
• Medicaid Misuse: Most private duty nursing services for pediatric and adult patients with complex medical needs are paid for by Medicaid. Without guardrails in place, investor-owned and other for-profit home healthcare agencies can legally siphon Medicaid dollars away from patient care, as patients and their families struggle to find long-term, reliable, and quality nursing coverage.

At the end of the report, PESP calls for stronger antitrust enforcement, limitations on debt financing in healthcare acquisitions, and the expansion of paid caregiver programs with robust oversight to ensure accountability and protect patients.

The report emphasizes that cuts to Medicaid are not the path forward to improving access to quality care for individuals and families who rely on private duty nursing. To counter waste, abuse, and fraud in Medicaid, states and the federal government must have appropriate accountability provisions and guardrails in place to ensure that Medicaid dollars are allocated where they are needed and are not diverted to line investors’ pockets instead of supporting patient care. This will be more important than ever as we enter a future with substantial reductions in Medicaid funding.

The full report is available here.