Hartford, Connecticut — Connecticut lawmakers are moving to pull back the curtain on who actually owns the state’s nursing homes, and private equity firms are paying close attention.
Legislation advancing through the state Senate would require private equity companies that own nursing homes to submit detailed financial disclosures to the Department of Social Services each year — including investor names, business addresses, and thorough financial breakdowns. A second provision would bar those firms from selling or transferring nursing home property within five years of purchase, unless the state’s Public Health Commissioner signs off.
The bill, SB 125, cleared the Aging Committee and now heads to the full Senate.
Why Lawmakers Are Worried
The push stems in part from a troubling body of research. Wharton School researcher Atul Gupta and colleagues studied more than 1,600 skilled nursing facilities acquired by private equity firms between 2005 and 2016. What they found was stark: mortality rates at those facilities climbed 11% after acquisition, while spending rose 8% — even as nursing staff levels declined and CMS five-star ratings dropped.
A more recent analysis published in the journal Health Policy reached similar conclusions, linking private equity ownership to higher deficiency rates, increased hospitalization rates, and higher mortality, though it noted some improvement in care processes in a handful of cases.
Senate President Pro Tem Martin Looney didn’t mince words when calling for broader restrictions at the start of the legislative session. He described private equity’s role in nursing homes, housing, and other essential services as “dangerous and toxic as a matter of public policy.”
A Bill That’s Been Softened — But Still Has Teeth
The original version of SB 125 would have outright banned private equity from owning nursing homes. Lawmakers dialed that back after consulting with state agencies, concluding that not every private equity firm is a bad actor.
“Sometimes they use it to make improvements,” said Sen. Jan Hochadel, a Meriden Democrat who co-chairs the Aging Committee.
Still, Hochadel made clear what’s driving the legislation. “That money does not go toward patients,” she said of private equity returns. “We have seen some good players but the bad players — they’re coming in to make money. They’re not coming in to take care of these patients that are elderly, the most fragile.”
The state doesn’t yet know how many of its nursing homes are privately equity-owned. Lawmakers said that’s exactly the point: the bill would generate the data needed to answer that question. The Private Equity Stakeholder Project, a watchdog group, estimates the figure at roughly 5.4% of Connecticut’s nursing home stock.
Connecticut isn’t alone in pressing for greater scrutiny of private equity ownership in nursing homes. Federal legislators have also proposed barring Medicare reimbursements to PE-owned facilities entirely.
Industry Groups Split
The state’s long-term care trade group eventually came around on the revised bill. Matt Barrett, CEO of the Connecticut Association of Health Care Facilities, said the additional ownership disclosures would help distinguish which types of private equity structures are linked to worse outcomes and which ones aren’t.
But he cautioned against going further. “Prematurely adopting other provisions in this year’s bill will too broadly increase costs for a wide range of nursing homes and limit access to nursing home care by restricting property transfers,” Barrett said.
Some observers pointed to what happened with Prospect Medical Holdings — a private equity firm that owned three Connecticut hospitals — as a cautionary tale. The company filed for bankruptcy last year after years of inadequate staffing and aging facilities. Two of those hospitals have since been sold to new operators.
Lawmakers say they don’t want to see something similar play out with nursing homes — and that more transparency is the first step toward making sure it doesn’t.
