Private equity in health care: Profits before patients and workers

Abstract

On March 25, 2021, U.S. Representative Bill Pascrell Jr. (D-NJ), chairman of the House Ways and Means Subcommittee on Oversight, held hearings into the growing power of Wall Street firms in the health care industry. The hearings focused on recent research documenting higher-than-average death rates in private-equity-owned (PE-owned) nursing homes. A rigorous study published by the National Bureau of Economic Research (NBER) found that mortality rates in PE-owned nursing homes were 10 percent higher than the overall average, while Medicare billing was 11 percent higher.PE-owned homes shifted resources away from patients. Frontline nurses spent fewer hours with patients, and to compensate for lower staffing, the homes made 50 percent greater use of antipsychotic drugs (drugs associated with higher mortality rates). They also spent more money on things unrelated to patient care, such as monitoring fees.