Nursing Home Sector Resists Wall Street Oversight Rules

Pennsylvania Nursing Home Lobby Fights for Exemption from New Oversight Bill

The nursing home industry in Pennsylvania is pushing to be excluded from a proposed bill that would require deeper scrutiny of private equity acquisitions of health care facilities. The legislation, which has already passed the state House, aims to prevent closures driven by profit-seeking investors and ensure that health care facilities have the resources needed to provide quality care.

The bill was introduced last session with the goal of allowing the state’s attorney general to review and potentially block any acquisition of a health care facility if it is deemed “against the public interest.” However, after hospitals lobbied for changes, the scope of the bill was reduced this session to exclude nonprofit health care transactions. Despite these adjustments, the nursing home industry is now seeking further modifications to the proposal.

Concerns Over Financial Exploitation

State Sen. Tim Kearney (D., Delaware) expressed frustration over the push to exclude nursing homes from the bill. He argued that the process of reviewing acquisitions should not be seen as an obstacle but rather as a necessary step to protect patients and communities. “I don’t understand why it’s such an issue to review them, where we’ve gone through great strides to try to make the process as streamlined as possible,” he said.

Nursing homes are facing similar challenges as hospitals, including sudden closures and job losses. Genesis HealthCare, a national nursing home chain with dozens of locations in Pennsylvania, recently declared bankruptcy despite a $100 million investment from a private equity firm. Executives attributed the failure to low Medicaid reimbursement rates, and now a buyer affiliated with the same private equity firm seeks to acquire the company in full.

“This really shows that nursing homes and their patients need protection from financial exploitation,” Kearney said.

Existing Regulations vs. Proposed Legislation

The Pennsylvania Health Care Association, which represents over 400 nursing home providers, has raised concerns about the new bill. It argues that existing regulations, developed under former Gov. Tom Wolf, already require the Department of Health to review any change in ownership of a nursing home. These rules include collecting information on prospective owners and assessing their past performance before approving a transaction.

The association claims that adding another layer of oversight through the proposed bill could lead to longer review periods, increased costs, and unnecessary risks for all parties involved. “It would be more efficient and effective to continue to rely upon the existing regulatory approval processes of DOH instead of advancing this legislation,” the association stated in a letter to the state House Health Committee.

However, Governor Josh Shapiro’s office supports the bill, arguing that the current regulations focus on clinical standards for safety and care, while the new legislation would provide critical oversight of financial transactions. “The goal of this additional oversight is to ensure that health care facilities have the resources to provide care and keep the promises they make when transactions occur,” said Shapiro spokesperson Manuel Bonder.

Industry Pushback and Political Influence

Zach Shamberg, president of the Pennsylvania Health Care Association, defended private equity involvement, stating that only 5% of elder care facilities in the state are owned by private equity firms. He argued that these investors often bring much-needed capital to struggling homes. However, he also criticized the bill’s provision that would allow the attorney general to block sale-leaseback agreements, which he described as sometimes necessary for liability and financing reasons.

The nursing home industry has significant political influence, having spent at least $2.2 million on lobbying in 2024. During the last legislative session, owners and operators contributed $682,000 in campaign donations to top lawmakers, with nearly 60% going to state Senate Republicans.

Shamberg emphasized that the industry will support lawmakers who back its interests, including Governor Shapiro and leaders of other legislative caucuses.

Mixed Impact of Private Equity

A review of previous studies found that private equity ownership of nursing homes has had mixed results. While some investments brought necessary funding, the overall consensus suggests that private equity ownership introduces pressures that can compromise comprehensive care quality. Sale-leasebacks, in particular, were identified as a concern, as they may reduce transparency and shift resources away from resident care.

Policymakers, according to the study, should expand disclosure rules to require detailed reporting of ownership structures, financing arrangements, and management practices, especially for private equity firms. Making this information publicly available would improve regulatory oversight and help residents, families, and payers make informed decisions.

Ongoing Negotiations

State Sen. Frank Farry (R., Bucks), who chairs the Senate committee responsible for the bill, said negotiations are ongoing among all four legislative caucuses and the governor. He suggested that nursing home and hospital acquisitions might be better addressed in separate bills, noting that the two issues are fundamentally different.

“I’m not dispelling one or the other,” Farry said. “I just think they are an apple and orange, and do they both end up in a bill [together] or not?”

As the debate continues, the future of the bill remains uncertain, with powerful interests on both sides vying for influence in Harrisburg.