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Atul Gupta, Sabrina T Howell, Constantine Yannelis, Abhinav Gupta, Owner Incentives and Performance in Healthcare: Private Equity Investment in Nursing Homes, The Review of Financial Studies, Volume 37, Issue 4, April 2024, Pages 1029–1077, https://doi.org/10.1093/rfs/hhad082
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Abstract
Amid an aging population and a growing role for private equity (PE) in the care of older adults, this paper studies how PE ownership affects U.S. nursing homes using patient-level Medicare data. We show that PE ownership leads to a patient cohort with lower health risk. However, after instrumenting for the patient-nursing home match, we find that PE ownership increases mortality by 11%. Declines in measures of patient well-being, nurse staffing, and compliance with care standards help to explain the mortality effect. Overall, we conclude that PE has nuanced effects with adverse outcomes for a subset of patients.