“Private Equity Acquisition and Nursing Home Quality? An instrumental variables approach” by Dr. Sean Shenghsiu Huang
Dr. Sean Shenghsiu Huang
Department of Health Systems Administration
Since 2000s, private equity (PE) has been actively acquiring nursing homes (NH) in the U.S. This trend sparks great concerns that with aggressive use of debt financing and strong profit motive, PE ownership may deteriorate NH quality and worsen patient safety. To empirically answer the policy concern, we use a panel dataset of Ohio NHs to identify 5 large NH chains (362 facilities) that were involved in PE transactions between 2005 and 2010. This information is then linked to more than 700,000 patient records in the Minimum Data Set. Because PEowned NHs may select different types of patients, we use differential distance to the nearest PE NH relative to a non-PE NH as the instrumental variable. Contrasted to the public perception, we find that PE-owned NHs provide higher quality. Patients stay in PE NHs are less likely to have bedsores, incontinence, significant pain, and unexpected weight loss.