State lawmakers are moving quickly to curb private equity’s footprint in nursing homes, setting up what advocates and analysts describe as a turning point for the industry in 2025.
A new tracker from the Private Equity Stakeholder Project (PESP), released Nov. 20, details 25 bills introduced across 18 states since January. At least 15 states have introduced or advanced proposals this year, according to industry sources, reflecting growing concern that private equity ownership can depress staffing and harm resident outcomes.
Private equity firms now control roughly 12% of U.S. nursing homes, up from about 1% in 2000. A body of research has linked those deals to higher mortality and more avoidable hospitalizations. While there is no imminent federal ban, state efforts could shape national policy as the Centers for Medicare & Medicaid Services (CMS) continues its oversight push.
What’s in the new state bills
The wave of legislation varies widely. Some states, including California and Connecticut, are weighing sweeping limits on new private equity and real estate investment trust (REIT) ownership. Others—such as Florida and Texas—focus on transparency, requiring more detailed disclosures around financing, debt, and management agreements.
Connecticut’s HB 5001, introduced March 6, would prohibit new private equity and REIT stakes in nursing homes. In California, AB 1234 advanced out of committee in September and would require state approval for mergers tied to private equity. New York’s S.4567 would mandate comprehensive debt disclosures for would-be buyers.
PESP estimates a 40% passage rate so far this year, though several high-profile measures remain in committee. Supporters argue the bills will bring sunlight to complex ownership structures and slow deals that load facilities with debt.
Quality concerns drive momentum
Advocacy groups point to a widening evidence base. An October analysis from AARP reported that private equity-owned facilities had about 20% higher rates of preventable hospitalizations for infections and falls compared with other homes. Earlier research has associated private equity acquisitions with up to a 10% increase in mortality and significant staffing reductions.
“2025 is a turning point because states are no longer waiting for Washington—they’re acting to protect vulnerable elders from profit-chasing investors who prioritize dividends over dignity,” PESP Executive Director Lindsay Trapnell said in a statement accompanying the tracker.
AARP’s Debbie Bernstein added: “Private equity ownership correlates with worse outcomes: 11% higher mortality, 20% more avoidable hospitalizations. States must demand transparency before it’s too late.”
Industry pushback and access concerns
Industry leaders counter that private equity often brings capital to struggling homes, especially as labor shortages and rising costs squeeze margins. “Blaming private equity ignores the real villains: chronic underfunding and workforce shortages,” American Health Care Association President and CEO Scott Oerther said in a statement. He argued bans could shutter facilities and limit access, particularly in rural areas.
Operators also warn that a patchwork of state rules could complicate compliance for multistate chains and discourage investment. An administrator who requested anonymity said private equity kept one facility afloat during the pandemic but left heavy debt burdens that are now “eating into every line item.”
National implications—and a regulatory squeeze
The state push is unfolding alongside stepped-up federal scrutiny. CMS has rolled out stronger staffing requirements and transparency measures in recent years, and the Biden-Harris administration has signaled further review of complex ownership arrangements. Advocates want CMS to target oversight of underperforming private equity-owned homes, including using the Special Focus Facility program more aggressively.
Financial markets are watching. Analysts say tighter rules could dampen deal activity and spur divestitures, particularly in states with acquisition bans or heavy disclosures. That could stabilize staffing in some markets, advocates say, but also leave capital gaps that states will need to address to avoid closures.
What to watch next
Several proposals in New York, Illinois, and California are slated for hearings or votes before year-end, with more movement expected in early 2026. With 10,000 Americans turning 65 each day through the end of the decade, lawmakers face pressure to balance oversight with access and funding—especially where Medicaid dominates the payer mix.
For now, the center of gravity remains in statehouses. Whether that momentum translates to a federal framework may depend on how many of this year’s bills make it into law—and whether the data on quality outcomes continues to mount.
