States Are Starting to Crack Down on Private Equity in Nursing Homes — Connecticut Just Drew a New Line

Hartford, Connecticut — States are starting to move faster on nursing home ownership rules as lawmakers and regulators focus more directly on private equity’s role in long-term care.

Connecticut last week enacted a new law requiring private equity-backed nursing homes to disclose more of their financial dealings to the state while also barring those investors from directing day-to-day resident care decisions. The move came after a string of high-profile facility failures and emergency resident relocations in the state, according to industry reports and state coverage of the legislation.

The new law lands at a tense moment for skilled nursing operators nationwide. Federal ownership disclosure rules already exist, but critics have argued they still leave too much room for complicated ownership structures that can make it hard to see who really controls a building. That debate has only grown louder as lawmakers in Washington keep pressing CMS over nursing home ownership validation efforts.

Connecticut’s measure goes further than basic disclosure. It also blocks private equity firms from making direct care decisions for residents, an unusual line in state law that reflects how sharply the politics around nursing home ownership have shifted. Gov. Ned Lamont also signed a separate bill aimed at reducing private equity influence over hospitals.

More states are stepping in

Connecticut is not alone. Reports on the issue say at least seven states passed laws last year adding guardrails around private equity involvement in health care, while Illinois and Virginia are weighing additional oversight measures this year. One Virginia proposal would target sale-leaseback arrangements that critics say let investors extract cash quickly while leaving facilities buried under rent obligations.

The pressure is building partly because nursing homes rely so heavily on public funding. Medicaid remains the main payer for long-term nursing home stays, and researchers say that creates a high-stakes question for lawmakers: whether taxpayer dollars meant for care are instead being redirected into investor returns.

Industry groups have pushed back on the broader narrative, arguing private equity owns only a small share of nursing homes and that the sector’s biggest problems still come down to Medicaid underfunding and chronic labor shortages. But researchers cited in recent reporting say studies have linked private equity ownership to more deficiencies, higher hospitalization rates and, in some analyses, higher mortality.

If more states follow Connecticut’s lead, operators could face a new era of ownership scrutiny that goes well beyond standard licensing paperwork. For nursing homes already under reimbursement pressure, that could mean tougher disclosure rules, tighter financing limits and a much brighter spotlight on who profits from resident care.