Two new reports document the negative effects of private equity ownership on nursing home quality. Is It Private Equity? We Can’t See; Federal Database on Owners of Nursing Homes Is Incomplete and Out-of-Compliance with the Law,[1] a September 1, 2022 report by Public Citizen, finds the nursing facilities owned by private equity firms “often provide substandard care,” while failing to publicly disclose their ownership. One example, The Portopiccolo Group, has acquired 136 nursing facilities since 2016, but the name Portopiccolo “does not appear a single time in the federal nursing home ownership database.” However, 43% of facilities identified as owned by Portopiccolo’s CEO had the lowest rating on the federal government’s five-star quality rating system, compared to 17% of facilities nationally.
Portopiccolo is also the subject of an article in The New Yorker, “When Private Equity Takes Over a Nursing Home,”[2] which describes the rapid deterioration of resident care at St. Joseph’s Home for the Aged in Richmond, Virginia (owned by Little Sisters of the Poor), following the non-profit facility’s purchase by Portopiccolo in 2021. Portopiccolo’s management group Accordius Health drastically cut staffing levels from 100 employees to 60; on some days, there were only two aides in the 72-bed facility to provide care for residents. The New Yorker article also describes how Portopiccolo and its owners created separate limited liability companies, one for the property and one for operations, and reduced the quality of services. For example, Accordius canceled a 15-year contract with a local pharmacy that had a pharmacist on call 24 hours a day and delivered medications within an hour, replacing it with a pharmacy company that sent medications to the facility from out-of-state.
Portopiccolo was the subject of prior reports in Barron’s[3] and The Washington Post,[4] whichboth described the private equity firm’s nursing home purchases during the COVID-19 pandemic.
In 2007, an investigative article in The New York Times described the poor quality care in facilities after they were taken over by private equity firms.[5] The article led to Congressional hearings and, ultimately, enactment of §6101 of the Affordable Care Act, which required nursing facilities to provide more comprehensive ownership information to the government. However, regulations proposed on May 6, 2011[6] to implement the statutory provision were never issued in final form.
President Biden’s nursing home reform agenda, announced in February 2022,[7] includes commitments to implement §6101, create a new database of nursing home owners and operators, and examine the role of private equity in nursing facilities, among other important changes to federal nursing home law and policy.
September 8, 2022 – T. Edelman
[1] Taylor Lincoln, Public Citizen, “Is It Private Equity? We Can’t See; Federal Database on Owners of Nursing Homes Is Incomplete and Out-of-Compliance with the Law” (Sep. 1, 2022), https://www.citizen.org/article/nursing-home-transparency/
[2] Yasmin Rafiei, “When Private Equity Takes Over a Nursing Home; 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,” The New Yorker (Aug. 25, 2022), https://www.newyorker.com/news/dispatch/when-private-equity-takes-over-a-nursing-home
[3] Eleanor Laise, “As the Pandemic Struck, a Private-Equity Firm Went on a Nursing-Home Buying Spree,” Barron’s (Aug. 6, 2020), https://www.barrons.com/articles/as-the-pandemic-struck-a-private-equity-firm-went-on-a-nursing-home-buying-spree-51596723053
[4] Rebecca Tan and Rachel Chason, “An investment firm snapped up nursing homes during the pandemic. Employees say care suffered,” The Washington Post (Dec. 21, 2020), https://www.washingtonpost.com/local/portopiccolo-nursing-homes-maryland/2020/12/21/a1ffb2a6-292b-11eb-9b14-ad872157ebc9_story.html
[5] Charles Duhigg, “At many privately owned U.S. nursing homes, more profit and less care.” The New York Times (Sep. 24, 2007), https://www.nytimes.com/2007/09/24/business/worldbusiness/24iht-home-web.7623413.html?searchResultPosition=1
[6] 76 Fed. Reg. 26363, 26385), https://www.govinfo.gov/content/pkg/FR-2011-05-06/pdf/2011-10555.pdf
[7] White House, “FACT SHEET: Protecting Seniors by Improving Safety and Quality of Care in the Nation’s Nursing Homes” (Feb. 28, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/, discussed in “Biden Administration Issues Bold and Comprehensive Nursing Home Reform Agenda” (CMA Alert, Mar. 3, 2022), https://medicareadvocacy.org/bidens-bold-2022-nursing-home-reform-agenda/