title: Private equity ownership and nursing home financial performance.
abstract: BACKGROUND
  Private equity has acquired multiple large nursing home chains within the last few years; by 2009, it owned nearly 1,900 nursing homes. Private equity is said to improve the financial performance of acquired facilities. However, no study has yet examined the financial performance of private equity nursing homes, ergo this study.
  
  
  OBJECTIVE
  The primary purpose of this study is to understand the financial performance of private equity nursing homes and how it compares with other investor-owned facilities. It also seeks to understand the approach favored by private equity to improve financial performance-for instance, whether they prefer to cut costs or maximize revenues or follow a mixed approach.
  
  
  METHODS
  Secondary data from Medicare cost reports, the Online Survey, Certification and Reporting, Area Resource File, and Brown University's Long-term Care Focus data set are combined to construct a longitudinal data set for the study period 2000-2007. The final sample is 2,822 observations after eliminating all not-for-profit, independent, and hospital-based facilities. Dependent financial variables consist of operating revenues and costs, operating and total margins, payer mix (census Medicare, census Medicaid, census other), and acuity index. Independent variables primarily reflect private equity ownership. The study was analyzed using ordinary least squares, gamma distribution with log link, logit with binomial family link, and logistic regression.
  
  
  RESULTS
  Private equity nursing homes have higher operating margin as well as total margin; they also report higher operating revenues and costs. No significant differences in payer mix are noted.
  
  
  CONCLUSIONS
  Results suggest that private equity delivers superior financial performance compared with other investor-owned nursing homes. However, causes for concern remain particularly with the long-term financial sustainability of these facilities.
authors.affiliation: Department of Health Services Administration, University of Alabama at Birmingham, USA. rpradhan@uab.edu
authors.forename: Rohit
authors.initials: R
authors.lastname: Pradhan
authors.forename: Robert
authors.initials: R
authors.lastname: Weech-Maldonado
authors.forename: Jeffrey S
authors.initials: JS
authors.lastname: Harman
authors.forename: Alex
authors.initials: A
authors.lastname: Laberge
authors.forename: Kathryn
authors.initials: K
authors.lastname: Hyer
mesh_terms: D017598:Efficiency, Organizational; D005431:Florida; D006269:Health Facilities, Proprietary / Q000191:economics*; D006801:Humans; D008134:Long-Term Care / Q000191:economics; D018803:Models, Economic; D009735:Nursing Homes / Q000191:economics*