So here we are, barely two weeks away from the National Investment Center for Seniors Housing & Care’s annual conference. Without a doubt, it’s the industry’s premiere dealmaking event.
And as if on cue, the New Yorker just published a piece that might cause some of those dealmakers to wonder if they are in the right line of work.
“When private equity takes over a nursing home” is the name of the story, and that alone probably tells you most of what you need to know about what follows. If not, there’s the subhead:
“After an investment firm bought St. Joseph’s Home for the Aged in Richmond, Virginia, the company reduced staff, removed amenities, and set the stage for a deadly outbreak of COVID-19.”
It might be unfair to call the piece a hatchet job. But not by much. Turns out the author has basically nothing nice to say about private equity, about its growing presence in long-term care — or about the fruits of such transactions.
Yes, on balance it is unbalanced. Still, what’s revealed is fairly damning stuff. One of the story’s most troubling quotes comes courtesy of David Grabowski, a well-known health-policy professor at Harvard:
“We’re in this loop, where the only kind of groups that seem to be interested in investing in nursing homes are bad actors,” Grabowski said. “Yet, in the long run, we can’t break this vicious cycle unless we get new owners who really want to invest in the health of residents.”
To simply write off the piece would be to dismiss its possible impact on the general public, and to ignore the legitimate points about private equity ownership it raises. Such as:
• Does staffing suffer?
• Does care decline?
• Do residents face increased morbidity?
• Do opaque ownership schemes prevent accountability?
Some will surely question what all the fuss is about. After all, private-equity controls only about 10% of the market. But by all indications, that number is growing.
There are going to be some really interesting sessions at the NIC Fall Conference. It would be nice if one addressed whether private equity helps or hurts. Then again, given the makeup of most attendees, it’s not hard to imagine where their sentiments would lie.
Nor is it too hard to imagine how readers outside the industry would likely respond.
John O’Connor is editorial director for McKnight’s.
Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.
