Dive Brief:
- Private equity firms are rapidly buying up disability care providers, according to a new report from the Private Equity Stakeholder Project published Tuesday.
- Although the disability care industry has historically been dominated by nonprofit and faith-based organizations, private equity firms made over 1,000 acquisitions of disability and elder care providers between 2013 and 2023, according to the report. That figure could be an undercount, as private equity firms are not always required to disclose acquisitions, the watchdog organization said.
- Private equity ownership could pose a threat to patient care, according to the report. The firms typically attempt to buy and flip assets at a profit within four to seven years — a timeline that would be difficult to achieve without cutting costs and compromising care quality.
Dive Insight:
Private equity firms have recently come under fire for their role in healthcare, including their management of hospitals, nursing homes and long-term care facilities.
However, the Private Equity Stakeholder Project says the financiers’ inroads into disability care, which manages services including residential care, home health and personal assistance, is just as troubling, but has yet to garner attention.
Private equity firms are attracted to the industry because of growing demand for care, high levels of fragmentation across disability care, and its expected recession-resistant nature, according to the report.
But patients in disability care centers tend to be some of the most disadvantaged, and often have multiple comorbities, making them unable to stand up for themselves in cases of questionable management practices. The report accuses private equity firms of neglecting or abusing patients, adding that poor care is possible in part due to regulatory loopholes that allows for varying safety standards.
“Private equity firms are fundamentally altering these services in ways that put some of the most vulnerable members of our communities at risk,” said Eileen O’Grady, director of programs at PESP and lead author of the report, in a statement. “The private equity model prioritizes short-term financial gains, often at the expense of staffing levels, service quality, and even basic client safety.”
Investigations in Florida, Indiana, California and Illinois found cost-cutting measures by private equity firms led to problems that impacted patient care, including severe understaffing and improper use of restraints at some facilities.
The watchdog organization said intense pressures to cut costs are in part to blame for the failures. In some cases, while the facilities were accused of neglecting patients, they were simultaneously funneling hundreds of millions of dollars to investors through debt-funded dividends.
For example, Centerbridge Partners and Vistria Group paid themselves more than $600 million in dividends from Sevita and Help at Home, even as the Private Equity Stakeholder Project says care standards declined.
In some cases cost-cutting measures resulted in direct harm to patients.
Regulators shut down Broadstep Behavioral Health group homes in Illinois after finding “significant deficiencies” in medication management, staff training and safety measures, including repeat violations in safety drills and deficient cleanliness. In Indiana, a patient reportedly died of neglect after weighing just 71 pounds at a facility run by Help at Home, according to the report.
“Home and community-based services are essential for hundreds of thousands of Americans with disabilities,” O’Grady said. “Private equity ownership imperils the effective delivery of these services and puts individuals with disabilities at risk.”