At Many Homes, More Profit and Less Nursing

The Challenge: Biased Public Reporting Influencing Public Opinion and Regulation

On September 23, 2007, The New York Times published a front page story describing the negative consequences of the privatization of nursing homes. This exposé charged that private equity firms were acquiring nursing homes, siphoning off profits while watching care outcomes and quality decline. Consumer outcry quickly reached the ears of legislators who immediately called for investigation and policy change.

The substantial allegations made by the paper were alarming and implicated almost every national long-term care corporation taken private in the last several years. Many caregivers from these facilities were left questioning the work they do, and in an industry struggling to retain quality staff, the consequences were potentially significant. Families who placed a loved one in these facilities possibly began to question their choices; introducing a negative element into their relationship.

The Solution: Accurate Analysis

PointRight was asked to investigate the allegations, and comment on the conclusions drawn. An analysis of the public data of the corporations implicated in the article revealed a very different story. By replicating the methodology employed by the article's author it became clear that key assumptions made were incorrect. For example, allegations of staffing cuts post-transaction didn't take into consideration an important segment of the licensed-nurse workforce. In fact, staffing in most cases remained stable.

Changes in the corporation's portfolio weren't controlled for, nor were the transaction dates accurate, meaning the corporation was held accountable for survey and staffing outcomes that were not in their control. Recreating the analysis with appropriate measurements yielded very different conclusions. In no case did the privatization of nursing homes cause dire consequences or miraculous benefit. In every case, examples could be found of individual facilities achieving equal or better outcomes than the best quartile of similar facilities.

The Result: Clearer Focus

With this analysis, privatized corporations were able to appropriately respond to the public outcry. Professional associations were able to better understand the issue at hand and work to ensure that inappropriate regulatory restrictions were not placed. While there are certainly issues worthy of scrutiny, knowing where to focus efforts is key.