A nursing home’s purpose should be to provide a community’s elders with the care that they need. When a person can no longer fulfill daily obligations independently, he or she can live in a place that prioritizes health, security and well-being.
Unfortunately, care may no longer be a high priority for some nursing homes. Throughout the 2000s, private equity firms bought out nursing homes in droves. Families have seen the ramifications of this corporatization over the years, and it may get worse.
Cutting costs
For-profit nursing homes benefit from mitigating costs. Since about half of a nursing home’s operating costs come down to the nursing staff, there is an incentive to use as few nurses as possible. The National Bureau of Economic Research (NBER) reported that nursing staff drops by an average of 1.3% after a private equity buyout and the hours of care for each patient drop by 3%. For-profit nursing homes may also opt for cheaper food, treatments, air conditioning, heating and other necessities to save money.
Repaying debt
Another problem corporate nursing homes may run into is the conditions of a buyout. When a firm invests in a nursing home, the accrued debt can be rather large. A nursing home may not have as much capital to use on improvements if interest rates on this debt are too high. If a nursing home struggles with repayments, it may resort to leasing some of the facility’s units, which can put additional limitations on patient care.
Corporate nursing homes do not have to be more dangerous than non-profit nursing homes, but studies show that they tend to be. Better government regulations, management and accountability can help improve conditions for patients no matter where they are.