Abandoned in the Final Chapter: How Private Equity Turned America's Nursing Homes Into Profit Centers and Left Seniors to Suffer

In the spring of 2021, a Senate Special Committee on Aging investigation found that private equity-owned nursing homes were consistently associated with higher rates of deficiencies, lower staffing levels, and worse health outcomes than their nonprofit or government-operated counterparts. The finding was not surprising to the nurses, aides, and family members who had been raising alarms for years. It was, however, a rare moment of official acknowledgment that the financialization of long-term elder care had produced a humanitarian crisis hiding in plain sight — in facilities that house more than 1.2 million Americans at any given time.

That crisis has not abated. If anything, it has deepened.

The Business Model Behind the Neglect

To understand why American nursing homes are failing their residents, you have to understand the financial architecture that governs them. When private equity firms acquire nursing home chains — and they have acquired them at a remarkable pace over the past two decades — the goal is not to deliver superior care. The goal is to extract maximum value in the shortest possible time frame before exiting the investment. That logic produces a specific and predictable set of management decisions.

Staffing is the largest controllable cost in a nursing home. Registered nurses, licensed practical nurses, and certified nursing assistants account for the majority of operating expenses. So when a private equity owner needs to improve margins to service the debt load taken on during acquisition — a debt that is typically transferred to the facility itself rather than held by the parent company — the first thing to be cut is staff. Shifts go unfilled. Overtime is denied. Agencies are called in at the last minute, sending unfamiliar workers into complex care environments with no knowledge of individual residents' needs, medications, or behavioral patterns.

The consequences are clinical and catastrophic. Understaffing is directly associated with increased rates of pressure ulcers, falls, medication errors, dehydration, and preventable infections. A 2021 study published in Health Affairs found that nursing homes acquired by private equity experienced a 10 percent increase in short-term mortality among Medicare patients compared to similar facilities not under private equity ownership. That is not a rounding error. That is a body count.

Sedation as Staffing Strategy

Among the most troubling documented practices in understaffed facilities is the inappropriate use of antipsychotic medications to chemically restrain residents who might otherwise require more intensive care. Advocates and whistleblowers have long described this phenomenon — sometimes referred to as "chemical restraint" — as a staffing strategy: a resident who is sedated is a resident who requires fewer staff hours.

Federal data from the Centers for Medicare and Medicaid Services has consistently shown that nursing homes with the lowest staffing ratios have the highest rates of antipsychotic medication use among residents who have no documented diagnosis for which such medications are clinically indicated. While CMS has run voluntary reduction programs, enforcement remains inconsistent, and the financial incentives that drive the practice remain entirely intact.

Family members have described watching loved ones transformed within weeks of admission — alert and communicative individuals becoming withdrawn, confused, and sedated in ways that bore no relationship to the progression of their underlying conditions. By the time families recognize what is happening and attempt to intervene, the harm is often irreversible.

Medicare and Medicaid: Funding the Failure

Here is the particular outrage at the center of this story: the federal government is paying for it. Medicare and Medicaid together fund the overwhelming majority of nursing home revenue in the United States — in many facilities, more than 70 percent of all income. Taxpayers are, in effect, subsidizing the extraction of wealth from the most vulnerable members of society while receiving demonstrably inferior care in return.

Private equity firms have become sophisticated at structuring these investments to maximize public reimbursements while minimizing accountability. A common approach involves separating the real estate from the operating company through sale-leaseback arrangements, then charging the facility inflated rent — effectively siphoning revenue to a related entity that is insulated from regulatory liability. When a nursing home fails, the operating company can declare bankruptcy while the real estate holding company retains the assets. The public bears the cost. The investors keep the money.

The Regulatory Gap

The Biden administration took a meaningful step in April 2024 when CMS finalized a rule establishing minimum nursing home staffing ratios — the first federal minimum staffing standard in the history of the program. The rule requires facilities to provide a minimum of 3.48 hours of total nursing care per resident per day, with at least 0.55 hours from a registered nurse and 2.45 hours from a nursing aide. Industry groups immediately filed legal challenges, and the rule's implementation timeline extends into 2029 for many facilities.

That timeline matters because it reflects the political and legal power of the nursing home lobby. The American Health Care Association, the industry's primary trade group, spent years opposing any mandatory staffing standard, arguing that workforce shortages make compliance impossible. That argument deserves a direct response: workforce shortages in nursing homes are not a natural phenomenon. They are the predictable result of decades of poverty wages, dangerous working conditions, and high turnover rates driven by the very cost-cutting strategies that minimum staffing rules are designed to prevent. You cannot create a staffing crisis and then cite it as a reason not to fix the staffing crisis.

What Better Looks Like

The variation in outcomes across states is instructive. California, which has maintained higher minimum staffing requirements than federal law for years, consistently shows better resident outcomes on CMS quality metrics than states with no such floors. Minnesota and New York have similarly invested in both staffing requirements and enforcement capacity, with measurable results in reduced hospitalization rates and lower incidence of preventable conditions.

The lesson is not complicated: when you require adequate staffing and enforce that requirement, residents receive better care. The obstacle is not technical or logistical. It is political — specifically, the organized resistance of an industry that has learned to treat federal reimbursement as a revenue stream to be maximized rather than a public trust to be honored.

The People Inside

Behind every statistic in this story is a person who trusted that when the time came, the system would care for them. A 78-year-old woman with dementia who develops a stage-three pressure ulcer because no one turned her for 12 hours. An 83-year-old veteran who falls trying to reach the bathroom because there was no aide available to assist him. A 91-year-old woman whose family drove two hours to visit and found her sitting in soiled clothing, disoriented and afraid.

These are not edge cases. They are the documented, recurring, systemic outcomes of a care model built around the question of how little can be spent rather than how well someone can be cared for. The people inside these facilities are not abstractions. They are our parents, our grandparents, and — if we are fortunate enough to live long enough — eventually ourselves.

A society that allows its elders to be strip-mined for profit in their final years has made a choice about what it values. It is past time to make a different one.