Have Private Equity Owned Nursing Homes Fared Worse Under COVID-19?

Abstract

Over 40% of U.S. COVID-19 deaths occurred in nursing homes. Given increasing private equity (PE) ownership in healthcare and long-standing concerns that PE investors focus on profits to the detriment of patients, it is important to understand the impact of PE ownership during the COVID-19 pandemic. This study evaluates how PE acquisitions impacted the readiness and outcomes of nursing facilities during the onset of the COVID-19 pandemic. We relate PE ownership to COVID-19 cases, deaths, and personal protective equipment (PPE) shortages, controlling for facility characteristics, resident composition, local characteristics, and the severity of COVID-19 outbreak near the facility. PE ownership was associated with a mean decrease in the probability of confirmed resident cases by 7.1 percentage points ("pp") (p<0.01) and confirmed staff cases by 5.4 pp (p=0.01). PE was also associated with decreased probability of PPE shortages—including N95s (6.4 pp; p<0.01), surgical masks (7.6 pp; p<0.01), eyewear (4.8 pp; p<0.01), gowns (7.0 pp; p<0.01), gloves (3.3 pp; p=0.02), and hand sanitizer (2.3 pp; p=0.12). Facilities previously (but not presently) owned by PE firms did not fare similarly well. Prior PE ownership was associated with increased PPE shortages and, if anything, higher probability of resident outbreaks. Our results indicate that—contrary to a common media narrative—PE-owned facilities have actually fared better under the COVID-19 pandemic. They also suggest that the long-run consequences of PE ownership warrant further research.