Jordan Rau reports for KFF News on how real estate investors are buying up long-term care facilities and, sometimes, depriving residents of needed care, in order to boost profits. Because federal law prohibits Real Estate Investment Trusts or REITs from operating health care facilities, they engage a corporate middleman to manage the facilities. But, Congress recently gave REITs the power to earn profits from subsidiary health care companies.
REITs now own or invest in thousands of health care facilities, including hospitals, assisted living facilities, nursing homes (roughly 18 percent) and health clinics. They own roughly 20 percent of senior housing. The question is how much influence do they have over patient care?
REITs choose the companies that oversee the health care facilities and might not care about inadequate staffing, safety issues or other issues that could leave patients without proper care. In one lawsuit against a REIT, the jury imposed $92 million in punitive damages because a patient with dementia had been able to walk out of the facility without any alarms going off and had later been found outside freezing to death.
Medicare and state health regulators tend not to be aware of REIT ownership of health care facilities. The facilities do not and need not reveal the companies to whom they pay rent in their reports. The Centers for Medicare and Medicaid Services had required that nursing homes do so under the Biden administration, but the Trump administration suspended that requirement.
Various studies reveal that REIT ownership of health care facilities often lead to inferior care. For example, nurse aides might staff the facilities rather than registered nurses. And, nurses spend less time providing patient care. Patient safety and health can deteriorate.
Not surprisingly, the REITs prioritize returns for their investors. The CareTrust REIT generated 67 percent in profits last year. It clearly has no financial incentive to spend more on patient care.
Here’s more from Just Care:
- Beware of chain nursing homes
- Private equity buying up orthopedics practices
- Private equity is destroying ER care
- Oregon moves toward restricting private equity from owning physician practices
- Private equity buying up specialists and driving up health care costs
