Biden-Harris Administration Continues Unprecedented Efforts to Increase Transparency of Nursing Home Ownership
Final rule will require disclosure of new information to shine a light on private equity ownership
The Biden-Harris Administration is taking additional action to empower nursing home residents and their families to make informed decisions about care and to hold nursing homes accountable for the service they provide by requiring nursing homes to disclose additional ownership and management information to CMS and states and making this information public.
It has become increasingly important to scrutinize ownership arrangements as recent studies — including research released today by the Department of Health and Human Services (HHS) Office of the Assistant Secretary for Planning and Evaluation — show that private equity ownership is associated with poorer staffing conditions and resulting decreases in quality of care. Today’s final rule includes definitions of private equity and real estate investment trusts, setting the stage for identifying whether a nursing home belongs to one of these types of owners. These actions continue to build on the Biden-Harris Administration’s unwavering commitment to improving the safety and quality of care in the nation’s nursing homes and President Biden’s historic Executive Order on Promoting Competition in the American Economy. Earlier this year, CMS and HHS also proposed a rule in September to establish national minimum staffing standards for nursing homes to enhance the quality and safety of care.
“HHS continues to take action to improve the safety, quality, and accountability of nursing homes,” said HHS Secretary Xavier Becerra. “The Biden-Harris Administration believes that residents living in nursing homes should receive the dignity, care, and respect they deserve. Taking steps to help consumers to learn more about the owners of a nursing home will allow them to make the choice that best meets their needs.”
“CMS is committed to leveraging our tools to improve safety and quality of care in nursing homes, CMS Administrator Chiquita Brooks-LaSure said. “By strengthening our ability to examine nursing home ownership, including private equity and real estate investment trusts, we can improve transparency for the people we serve and their loved ones, researchers, and regulators, and enable better informed decisions about nursing home care.”
The final rule requires nursing homes enrolled in Medicare or Medicaid — the majority of this country’s nursing homes — to disclose additional information regarding their owners, operators, and management; for example, nursing homes will disclose individuals or entities that provide administrative services or clinical consulting services to the nursing homes. Nursing homes will also be required to disclose entities that exercise financial control over the facility, such as an organization the nursing home hires to manage all of its financial matters.
Nursing homes frequently use other companies to provide major services or supports within a facility, but families currently have no way of knowing which different companies or firms provide care to their loved ones and how they might be connected to the owners of a nursing home. That will change under this rule. The final rule also requires additional information about entities that lease or sublease property to nursing homes, since the facilities and property owners may be set up as different corporate entities even though the entities work hand-in-hand.
Concerns about the quality of care and operations of nursing facilities owned by private equity companies and other types of investment firms have increased since 2011, and the sector continues to attract robust sales.
The number of nursing homes sold each year has increased since 2016, generously outpacing that of hospitals. Between 2016 and 2021, 348 hospitals experienced a change in ownership, but 3,000 nursing homes experienced a change in ownership – four times more than hospitals. Nursing homes with lower Star quality ratings are sold more often than those with higher Star quality ratings, raising concerns about the relationship between ownership changes and quality.
Recent research has found that resident outcomes are significantly worse at private equity-owned nursing homes, and in the two to three years after real estate investment trusts invest in nursing homes, registered nurse staffing levels decline by as much as 6%. Private equity ownership of nursing homes may also lead to an uptick in Medicare costs. Additionally, the 10 largest nursing home chains own more than 10% of nursing homes — a disproportionate share that raises concerns about market concentration.
The additional data required to be reported under the rule will be public, allowing families to make more informed choices about the care of their loved ones. This will also enable CMS and others to scrutinize more closely how ownership types correlate with care outcomes and to determine which environments are more likely to deliver better care for residents and patients.
For a fact sheet on the final nursing home ownership disclosure rule, visit: https://www.cms.gov/newsroom/fact-sheets/disclosures-ownership-and-additional-disclosable-parties-information-skilled-nursing-facilities-and-0
For the ASPE report on nursing home ownership and quality trends, visit:
The final rule can be downloaded from the Federal Register at: