Private equity investors, Russell Vought’s Office of Management and Budget (OMB), and industry lobbyists are celebrating the Dec. 2 repeal of the federal minimum staffing mandates for nursing homes and long-term care facilities. These minimum standards for staffing were imposed in 2023 in part as a response to the wave of nursing home takeovers by private equity firms that peaked in 2021-2022, which were de-staffing and looting the facilities. Private equity firms have called nursing homes, “gray gold.” There were 1,135 healthcare facilities bought up by private equity firms in 2023 alone, according to the Private Equity Stakeholder Project.
The mandated ratios of staff to patients were themselves a cop-out by the federal government, since no action was taken to 1) stop the equity firm acquisition spree, nor 2) intervene to provide funding and programs for more trained nurses, doctors, and other staff. So, independent, local nursing home owners went out of operation, or succumbed to buyout.
Not surprisingly, the sickness and death rates have measurably risen in these residential treatment centers, taken over and run by equity firms. A 2021 report from the University of Pennsylvania reported: “Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period.” Residents have more maladies, from bedsores to infections.
The Dec. 2 announcement of cancelled mandates came from the Health and Human Services Department, but the plan was at least guided by the OMB, if not originated there. The OMB reviewed a document, “Repeal of Minimum Staffing Standards for Long-Term Care Facilities.” This is not a health plan, but an austerity plan. Although not all provisions of the federal standards were repealed, legal challenges are expected. Some provisions will remain for 10 years.
Multiple studies show that private-equity-controlled facilities have staffing levels 10-15% lower than area competitors (run by counties, towns, or independent operators); the staff skill level is lower; and there is a higher rate of the use of medications to keep residents sedated. Fees are jacked up, and so forth. Equity firms typically buy up, strip, sell out, and move on.
In 2023 the U.S. spent a total of $4.8 trillion on healthcare; the equity firm predations have been extensive in the eldercare income streams.
However, the crisis did not start on Dec. 2. At least 774 nursing homes have closed entirely in the last four years, and 20% of the remaining facilities have closed a wing or a floor. Since 2020, there are 62,567 fewer nursing home beds. In 2024, only 7 new facilities opened, compared to 37 in 2023; 55 in 2022; 71 in 2021; and 73 in 2020. By 2040 the U.S. is expected to have over 78 million people aged 65 or over.
