Nursing homes play a key role in our healthcare system, particularly for older adults who need long-term or post-acute care. In fact, over half of older adults will spend time in a nursing home. Yet despite their importance, public trust in nursing homes is low. Stories of neg
lect, understaffing, and safety failures are far too common.
When examining the causes of poor quality, one trend stood out to: more and more nursing homes are being bought and sold, often by private equity firms or large corporate chains. These ownership changes aren’t always obvious to the public, but they happen often. Not only do they happen often, they happen more in nursing homes than in any other type of healthcare facility. This begged the question of whether this constant turnover had a measurable effect on the quality of care that residents receive. Most existing research focuses on who owns a nursing home: for-profit vs. nonprofit; private equity vs. traditional companies. But I decided to ask a different question: does it matter how often ownership changes?
To explore this, I built a dataset combining information from the Centers for Medicare and Medicaid Services (CMS) and the Internal Revenue Service (IRS), covering the years 2019 through 2023. I used the CMS Five-Star Rating, an independent quality review for nursing home facilities, as my measure of nursing home quality and focused my analysis at the zip-code level. For each zip code, I calculated the number of ownership changes and paired that with average income and resident population size as control variables. I then ran two linear regression models to test whether ownership turnover was associated with changes in care quality.
The results were striking. Each additional ownership change within a zip code was associated with a 0.28 to 0.29 point drop in the average Five-Star Rating. This negative relationship held true even after controlling for mean income and the number of residents. In fact, income was not statistically significant at all, and the effect of resident count, while statistically significant, was very small. What mattered most was the frequency of ownership transitions.
This suggests that ownership changes, which may seem like a technicality, have real-world consequences. When a nursing home is sold, it typically brings changes in leadership, strategy, and staffing priorities. If those transitions happen repeatedly, it’s difficult for any long-term planning and investments to take place. In the context of healthcare, disruptions and instability cost lives, not just a decline in “service.”
Patterns of frequent ownership change fit into a larger conversation around the financialization of healthcare. Healthcare institutions are increasingly being treated like financial assets. They are bought, leveraged, and resold for profit, strategies that might generate returns for investors, but raise serious questions when applied to institutions where people’s well-being is at stake. The dignity of a human life should be placed above extracting the most profit possible from a healthcare facility.
Based on my findings, I recommend several policy changes. First, regulators could introduce mandatory holding periods between ownership transfers, requiring companies to hold onto nursing homes for at least three to five years. This could help reduce rapid flipping and encourage long-term investment. Second, ownership transparency needs to be improved. Many nursing homes are owned through layers of shell companies and subsidiaries, making it difficult to determine who is actually in charge. Reporting systems should be standardized across federal datasets so that regulators and the public can track ownership more easily. I also suggested that CMS Five-Star Ratings be made more visible to consumers, not hidden in the depths of databases, but posted at facility entrances and on their websites and promotional material. More publicity will give patients more choice as well as incentivizing owners to take care into consideration, or else risk losing profits.
There’s still more to learn. My study looked at trends at the zip-code level, but future research could dig deeper into individual facilities or assess how different types of owners handle turnover. We also need to understand how state-level regulations and staffing laws affect these dynamics. Still, I hope my work adds to a growing body of evidence that ownership matters, and not just who owns a facility, but how often it changes hands. Even if ownership turnover doesn’t make headlines, it has a real impact in the lives of patients and how well they are cared for.
Elizabeth Leitzel is a Senior at the O’Neill School in Public and Environmental Affairs, majoring in Policy Analysis with minors in Healthcare Management and Policy and Spanish. Her Honors Thesis is “Profit vs Care: The Effects of Frequent Ownership Changes on Nursing Homes.” She plans to pursue a JD from the University of Wisconsin Law School when she graduates.
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