While some aging services providers last week warned that more scrutiny of healthcare consolidation and rules that seek to limit it further could create “unintended consequences,” others encouraged three federal agencies to proceed with promised work on the issue.
Private equity ownership is associated with increases in short-term mortality of Medicare patients, as well as declines in other quality measures of patient well-being, and reductions in staffing, services, supplies, or equipment, said LeadingAge, in comments authored by Jonathan Lips, vice president of Legal Affairs, citing research.
They also acknowledged that another study using the government’s own data showed PE’s stake in the skilled nursing sector had declined to just 5% by 2022. Further research showed that slowdown persisted into 2023.
“LeadingAge has closely followed trends relating to private equity ownership of nursing homes, home health care and hospice,” the organization’s June 5 letter said. “While not all private equity arrangements cause concerns, we agree that these transactions raise policy questions that are important to understand and address, and we appreciate the Agencies’ study of these matters.”
The Federal Trade Commission, Department of Health and Human Services and Department of Justice in March requested comments related to a Biden administration plan to address “corporate greed” in healthcare.
“Given recent trends, we are concerned that transactions may generate profits for those firms at the expense of patients’ health, workers’ safety, and affordable healthcare for patients and taxpayers,” the departments said. “We are issuing this Request for Information to seek public comment regarding the effects of transactions involving healthcare providers (including providers of home- and community-based services for people with disabilities), facilities, or ancillary products or services, conducted by private equity funds or other alternative asset managers, health systems, or private payers.”
Comments were due last Wednesday (June 5).
Consolidation as needed strategy
Argentum and the American Seniors Housing Association filed a joint letter saying private investment in senior living involves “necessary capital partners” currently being scrutinized by the agencies, they said.
Argentum President and CEO James Balda and ASHA President and CEO David Schless called attention to the differences between assisted living and clinical healthcare settings, noting the residential nature of senior living, its role in facilitating access to healthcare services and its lack of reliance on federal programs and private insurance. Private investment is critical to the sector, they said.
Assisted living, the CEOs said, is a market-driven, private-pay residential living setting that creates value for residents and families, benefits the greater healthcare system and reduces reliance on public resources such as Medicare or Medicaid.
Balda and Schless raised concerns that “premature” regulator and/or legislative action could derail private investment in the sector at a time when demand is expected to outpace supply.
Skilled nursing providers have made similar arguments, especially as more local governments and nonprofit providers have sold off their skilled nursing assets in recent years — and as borrowing has become nearly impossible for others in the current high-interest environment.
Lips’ letter reiterated that the flexibility to consolidate can be a lifeline for operators.
“In many instances, an acquisition by a nonprofit aging services provider of another provider, or an affiliation with another provider, is driven [by] a desire to ensure preservation of access to services available from an organization that is financially distressed and at risk of closing its operations,” he wrote. “In other words, the goal of consolidation and integration often is to preserve and maintain access to services for vulnerable populations.”
Criticism from within and without
Consumer groups made up a significant share of the more than 6,000 comments received.
A coalition of 96 such groups — including the Center for Medicare Advocacy, the National Consumer Voice for Quality Long-Term Care, and National Disability Rights Network — submitted a 14-page letter specifically calling out PE’s influence in the skilled nursing sector.
They asked HHS to further increase transparency into private ownership by creating a user-friendly and searchable ownership tracking tool and requiring states to collect information on private equity companies and real estate investment trusts from Medicaid nursing facilities.
“This may be a matter of life and death for patients,” they wrote.
“The healthcare system functions best when everyone has adequate access to care and decisions are made in the best interest of patients and communities, rather than owners and investors seeking to maximize financial return,” their letter concluded. “The unfettered pursuit of profit is unhealthy for the American economy and for the communities that suffer when PE owners strip their properties of whatever has value, endangering the public’s health.”
But some criticism of consolidation also came from those who work within the skilled nursing sector.
In its comments, the American Speech-Language-Hearing Association said its members had experienced many of the criticisms the Medicare Payment Advisory Commission previously outlined regarding the impact of private equity in skilled nursing. Those members said they had observed productivity standards that focused more on reimbursement than patient care; incentives to discharge patients quickly or provide unnecessary services to patients; administrative mandates that dictate how many treatment sessions a patient may receive.
“ASHA remains concerned that a consolidated healthcare market jeopardizes professional autonomy and patient care. We often hear from our members working in SNFs or home health agencies that are acquired by regional or national chains who share concerning details about how their work environments and practice patterns change dramatically,” wrote ASHA President Tena L. McNamara, AuD.
“Once acquired, the corporate offices of these chains make drastic changes to care delivery patterns — often informing the clinicians working in the SNF or patient’s home that they can only provide a select number of visits for a specific amount of time per visit — regardless of the patient’s diagnosis or the plan of care developed by the multidisciplinary care team who evaluated the patient and reviewed the patient’s medical record.”
For more coverage of this issue, see McKnight’s Senior Living.
