key: cord-0074543-5d5xgf27
authors: Braun, Robert Tyler; Jung, Hye-Young; Casalino, Lawrence P.; Myslinski, Zachary; Unruh, Mark Aaron
title: Association of Private Equity Investment in US Nursing Homes With the Quality and Cost of Care for Long-Stay Residents
date: 2021-11-19
journal: JAMA Health Forum
DOI: 10.1001/jamahealthforum.2021.3817
sha: 0f7ae548577082801029e0f75c0b9c549a10998b
doc_id: 74543
cord_uid: 5d5xgf27

IMPORTANCE: Private equity firms have been acquiring US nursing homes; an estimated 5% of US nursing homes are owned by private equity firms. OBJECTIVE: To examine the association of private equity acquisition of nursing homes with the quality and cost of care for long-stay residents. DESIGN, SETTING, AND PARTICIPANTS: In this cohort study of 302 private equity nursing homes with 9632 residents and 9562 other for-profit homes with 249 771 residents, a novel national database of private equity nursing home acquisitions was merged with Medicare claims and Minimum Data Set assessments for the period from 2012 to 2018. Changes in outcomes for residents in private equity–acquired nursing homes were compared with changes for residents in other for-profit nursing homes. Analyses were performed from March 25 to June 23, 2021. EXPOSURE: Private equity acquisitions of 302 nursing homes between 2013 and 2017. MAIN OUTCOMES AND MEASURES: This study used difference-in-differences analysis to examine the association of private equity acquisition of nursing homes with outcomes. Primary outcomes were quarterly measures of emergency department visits and hospitalizations for ambulatory care–sensitive (ACS) conditions and total quarterly Medicare costs. Antipsychotic use, pressure ulcers, and severe pain were examined in secondary analyses. RESULTS: Of the 259 403 residents in the study (170 687 women [65.8%]; 211 154 White residents [81.4%]; 204 928 residents [79.0%] dually eligible for Medicare and Medicaid; mean [SD] age, 79.3 [5.6] years), 9632 residents were in 302 private equity–acquired nursing homes and 249 771 residents were in 9562 other for-profit homes. The mean quarterly rate of ACS emergency department visits was 14.1% (336 072 of 2 383 491), and the mean quarterly rate of ACS hospitalizations was 17.3% (412 344 of 2 383 491); mean (SD) total quarterly costs were $8050.00 ($9.90). Residents of private equity nursing homes experienced relative increases in ACS emergency department visits of 11.1% (1.7 of 15.3; 1.7 percentage points; 95% CI, 0.3-3.0 percentage points; P = .02) and in ACS hospitalizations of 8.7% (1.0 of 11.5; 1.0 percentage point; 95% CI, 0.2-1.1 percentage points; P = .003) compared with residents in other for-profit homes; quarterly costs increased 3.9% (270.37 of 6972.04; $270.37; 95% CI, $41.53-$499.20; P = .02) or $1081 annually per resident. Private equity acquisition was not significantly associated with antipsychotic use (−0.2 percentage points; 95% CI, −1.7 to 1.4 percentage points; P = .83), severe pain (0.2 percentage points; 95% CI, −1.1 to 1.4 percentage points; P = .79), or pressure ulcers (0.5 percentage points; 95% CI, −0.4 to 1.3 percentage points; P = .30). CONCLUSIONS AND RELEVANCE: This cohort study with difference-in-differences analysis found that private equity acquisition of nursing homes was associated with increases in ACS emergency department visits and hospitalizations and higher Medicare costs.

We identified nursing home acquisitions by private equity (PE) firms using a previously established methodology. 1 Acquisitions were identified from 2010 to 2020 using the S&P Capital IQ, Irving Levin Associates Health Care M&A, and Centers for Medicare & Medicaid Services (CMS) Nursing Home Compare Ownership databases, followed by web-based searches. These databases report transactions, including the acquisition announcement date, the name of the acquired nursing home, the platform nursing home that acquired the nursing home, and the PE firm that owns the nursing home. The Nursing Home Compare database provides a CMS Certification Number (CCN), nursing home name, address, owner name, and the date that ownership began.

We confirmed PE acquisitions in the S&P and Irving Levin databases by manually reviewing each acquirer's business profile using the CB Insights, Bloomberg Businessweek, Pitchbook, the acquirer's websites, and web-based searches to examine whether they were a PE firm or PE-backed platform nursing home. Next, we used key word searches in the Nursing home Compare database to identify PE firms and PE-backed platform nursing homes that were not in the S&P and Irving Levin databases. Identified acquisitions were then matched to the CMS Provider of Services file using nursing home name and address to obtain the CCN. More details on the list of PE firms that acquired nursing homes are provided in eTable 1. Observations in the year of acquisition were considered the washout period and excluded from the analysis.

Linear regressions were used for estimation. All models included the following covariates: age (65-69, 70-74, 75-79, 80-84, 85+) , race (white, black, other non-white race), sex, dual-eligibility for Medicare and Medicaid, indicators for 66 chronic and potentially disabling conditions used for risk adjustment (see eTable 2 for a list of the chronic conditions), activities of daily living (ADL) score at initial assessment (scale 1-28), and severe cognitive impairment (scores greater than 3 on the 4-point Cognitive Function Scale). Nursing home characteristics included occupancy rate, an indicator for multi-facility chain affiliation, total number of beds, terciles of the distributions of the percentage of patients covered by Medicare and the percentage covered by Medicaid. Other covariates included fixed-effects for quarter, year, nursing home, Hospital Referral Region (HRR), and HRR interacted with year.

Standard errors were adjusted for clustering at the level of the nursing home. 

85+), race (white, black, other non-white race), sex, dual-eligibility for Medicare and Medicaid, indicators for 66 chronic and potentially disabling conditions used for risk adjustment (see eTable 2 for list of chronic conditions), activities of daily living (ADL) score at initial assessment (scale 1-28), and severe cognitive impairment (values greater than 3 on a 4-point Cognitive Function Scale). Nursing home characteristics included occupancy rate, an indicator for multi-facility chain affiliation, total number of beds, terciles of the distributions of the percentage of patients covered by Medicare and percentage covered by Medicaid. Other covariates included fixed-effects for quarter, year, nursing home