Last week, the Centers for Medicare & Medicaid Services (CMS) released data—for the first time—reporting on mergers, acquisitions, consolidations, and changes of ownership of Medicare enrolled hospitals and nursing homes over the past six years. This data, expected to be updated on a quarterly basis moving forward, has been lauded as an important step in improving transparency around nursing facility ownership and enhancing nursing home safety and quality of care. In conjunction with the release of CMS’ data, HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a related report analyzing the data and examining trends in changes of ownership over the past six years. In its report, ASPE also offers preliminary insights into how the data on ownership changes can support implementing policies bolstering competition in health care as well as ensuring program integrity in Medicare and Medicaid.

The data revealed that a much greater percentage of nursing homes (nearly 21% of the total) changed ownership over the past six years compared with hospitals (less than 6%). Ownership and operation of nursing homes, and elder care in general, have been of concern to government officials and others as a ripe area for oversight and neglect. Nursing home care is one of the largest segments of the health care industry, with more than 1.4 million people living in over 15,500 Medicare- and Medicaid-certified nursing homes across the nation. The number of nursing home residents has steadily risen over the past 50 years, and experts anticipate nursing homes to continue to play a prominent role in our health care system with increasing life expectancies, shifts in morbidity, and other socioeconomic changes.

As asserted by the Biden Administration in its State of the Union Action Plan for Protecting Seniors, despite the tens of billions of federal taxpayer dollars flowing to nursing homes each year, many continue to provide poor, sub-standard care that leads to avoidable resident harm. For example, from 2013 to 2017, 82% of all inspected nursing homes had an infection prevention and control deficiency, including a lack of regular handwashing, that was identified through Medicare and Medicaid surveys. At least one report suggests that the pandemic highlighted the impact of substandard nursing home conditions, with more than 200,000 nursing homes residents and staff that have died from COVID-19 in the past two years.

The increasing consolidation of nursing facilities has been cited as a primary (but surely not the sole) cause of worsening nursing home conditions. CMS has asserted that such consolidation often “leaves many underserved areas with inadequate or more expensive health care options.” Notably, ASPE reported an aggregate of more than 3,200 skilled nursing facilities changed ownership between 2016 and 2021, with wide variation across states.

An additional concern explored in the State of the Union is that private equity firms, which have increasingly purchased struggling nursing homes in recent years, pose a particularly dangerous threat to nursing home residents. Specifically, research on the impact of ownership structure on nursing homes was cited for the proposition that private equity acquisition of nursing homes is associated with significantly worse resident outcomes, including increases in short-term mortality and shifts in resources from patient care toward non-patient care items.

The impact of different ownership types and ownership changes on the operation of nursing homes and resident outcomes is of critical importance to the industry. The hope is that having publicly-available data on ownership changes will “help researchers, enforcers, and the public analyze trends and issues in health care markets,” and more specifically, the opportunity to examine how different ownership structures and changes impact access to care, care quality, and health care costs.

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Photo of Michael Shaheen Michael Shaheen

Michael Shaheen is a partner in the White Collar & Regulatory Enforcement and Health Care groups in the Washington, D.C. office of Crowell & Moring. His practice focuses on federal litigation, investigations, and enforcement actions. Michael has significant experience with the False Claims…

Michael Shaheen is a partner in the White Collar & Regulatory Enforcement and Health Care groups in the Washington, D.C. office of Crowell & Moring. His practice focuses on federal litigation, investigations, and enforcement actions. Michael has significant experience with the False Claims Act (FCA), with particular emphasis on health care fraud.

Before joining Crowell & Moring, Michael served as a Trial Attorney with the Fraud Section of the Department of Justice (DOJ), where his work primarily involved investigating and prosecuting FCA matters. At DOJ, he obtained judgments totaling hundreds of millions of dollars and was involved in the settlement of numerous false claims cases of similar magnitude. Michael served in a variety of roles in these cases, ranging from first-chair trial attorney to lead investigator.

Photo of Michelle Chipetine Michelle Chipetine

Michelle Chipetine is a counsel in Crowell & Moring’s New York office and a member of the firm’s Intellectual Property and Health Care groups. Michelle’s practice focuses on patent litigation and representing health care entities and not-for-profit corporations on a wide range of…

Michelle Chipetine is a counsel in Crowell & Moring’s New York office and a member of the firm’s Intellectual Property and Health Care groups. Michelle’s practice focuses on patent litigation and representing health care entities and not-for-profit corporations on a wide range of transactional, corporate, and regulatory matters. Michelle also maintains an active pro bono practice.

Michelle graduated cum laude from Fordham University School of Law, where she was a legal writing and torts teaching assistant and actively involved with Fordham’s Neuroscience and Law Center. During law school, Michelle worked for Mount Sinai Innovation Partners, where she facilitated the transfer and commercialization of technologies developed by Mount Sinai researchers. Michelle also studied neuroscience at Vassar College, where she graduated cum laude.