Low-Quality Nursing Homes More Likely to be Bought and Sold

Based on facility-level data for 1993–2010, 1,200 to 2,000 nursing homes in the United States (7-13%) reported a transaction annually, with the most commonly reported transactions being mergers across chains.

For the 10 largest chains, which contain 12% of all nursing homes, a tremendous churning occurred in the study period; only two of the 10 chains did not experience any change in corporate ownership. But in spite of all these transactions, the researchers found that the organizational structure of the nursing home industry remained relatively constant. For example, the proportion of nursing homes owned by a chain is the same today as it was in the late 1990s.

The researchers found that nursing homes that underwent chain-related transactions had more deficiency citations in the years preceding and following a transaction than those nursing homes that maintained common ownership. They concluded, therefore, that the transactions did not lead to a decline in quality, but that corporate chains targeted nursing homes that were already having quality problems, and that these problems persisted after the transaction. The study was published in the May 2016 issue of the journal Health Affairs.

“This result raises important issues for nursing home policy regarding ownership accountability, oversight, and transparency. More detailed data on chain ownership and quality is needed for both consumers and regulators,” concluded lead author professor of health care policy David Grabowski, PHD, of Harvard Medical School. “Going forward, the number of chain-related transactions could be a useful indicator of potential quality to consumers and their advocates, and best practices should include requiring nursing homes to make the notification of an impending sale publicly available.”

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Harvard Medical School
University of Michigan