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The Biden administration is looking to shine a greater light on the ownership of nursing homes in an effort to raise standards of care.
The Department of Health and Human Services this week proposed a new rule requiring nursing homes to disclose more ownership and management information, including whether they are owned by a private equity firm or real estate investment trust.
The move is part of Biden's effort to push back against rising private equity ownership of nursing homes that researchers have connected to declining standards of care.
“President Biden has made clear: improving our nation’s nursing homes is an urgent priority, and this Administration is not afraid to take bold action to tackle this head-on,” HHS Secretary Xavier Becerra said in a statement. “We are continuing our unprecedented efforts to increase nursing home ownership transparency — because it’s what the public deserves."
Because nursing home owners may hire or retain third-party services at facilities, families can have a difficult time determining who owns a home, the department said in its release. The rule would require greater disclosure of entities that lease or sublease properties as a way to cut to the ultimate owner of a nursing home.
The rule would apply to the owners of more than 15,000 nursing home owners in the Medicare system. Becerra threatened to kick owners out of Medicare and "perhaps" Medicaid if they don't abide by the rule, Politico reported Tuesday.
The proposal comes just over a year after Biden decried Wall Street ownership of nursing homes in his 2022 State of the Union address, saying costs have gone up while standards of care have declined.
"That ends on my watch," Biden said.
Before finalizing the new rule, the administration is accepting public comments on the proposal through April 14.
In a release on Monday, HHS cited a study of nearly 10,000 nursing homes published in 2021 that found private equity-owned nursing homes were significantly more likely to have preventable emergency department visits and hospitalization.
Private equity firms owned an estimated 5% of all nursing homes by 2022, Skilled Nursing News reported.
REITs have also come under increased scrutiny for nursing home ownership. In December, short seller Hindenburg Research alleged that Welltower REIT was using a "shell game" to hide its ownership of troubled nursing homes across several states.
The report also cited wage inflation and high rates of defaults in recent months as contributors to underlying distress in the industry.
Despite market conditions and the new regulatory pressure, Green Street's forecast for the senior healthcare industry was positive in its 2023 sector outlook, released on Feb. 2.
Green Street expects 20% growth for senior housing portfolio net operating income across 2023 and 2024, McKnight Senior Living reported.
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