Wealth Extraction from a Nursing Home Chain With Individual, Private Equity, and Real Estate Owners.

Abstract

For-profit nursing home (NH) chains have become increasingly financialized in order to maximize short-term profits. This descriptive case study focused on the wealth extraction from a mid-sized for-profit California NH chain, from its founding in 1999 until its sale in 2021. The chain had individual founders/owners, a private equity owner, and a real estate group owner. The aims were to analyze the chain's (a) history and profits, organizational structure, and board; (b) management, operations, and strategies; (c) financial status; and (d) quality outcomes. Qualitative and quantitative data were collected and analyzed from multiple public and private sources. The company grew to 63 NHs and related companies with an estimated enterprise value of US$1.3 billion in 2020, while making substantial profits for its owners. The private equity owners had a strong, direct influence on the chain's organizational structure, board, management, operations, strategies, and financial controls from 2016-2020. Its cost controls appeared to be associated with a negative impact on NH nurse staffing levels, nursing wages, turnover rates, resident complaints, penalties, and litigation. Future research should study NH policies that improve ownership and financial transparency while ensuring that government funds are used for NH residents and care providers.