When you place a parent or grandparent in a nursing home, you trust the facility to prioritize their comfort and health. But behind the cheerful brochures and well-manicured lawns, a troubling financial machinery often churns away—one designed to extract maximum profit from vulnerable residents.

The American nursing home industry has undergone a dramatic transformation over the past two decades. What was once dominated by nonprofit and government-run facilities now increasingly answers to Wall Street investors and private equity firms. Understanding this shift isn't just academic—it directly affects the quality of care your loved ones receive and the options available when you need long-term care yourself.

Here's a common scenario in today's nursing home landscape: A private equity firm buys a chain of nursing homes, then immediately sells the buildings to a separate real estate company—often one they also control. The nursing home then rents its own building back at premium rates. On paper, this looks like a routine real estate transaction. In practice, it drains money from resident care into investor pockets.

This maneuver, called a sale-leaseback, is just one tool in a sophisticated financial toolkit. Complex ownership structures spread across multiple shell companies make it nearly impossible to track where your nursing home dollar actually goes. A single facility might have separate entities controlling its real estate, operations, management, and staffing—all charging fees to each other.

Why does this matter for grandma's care? Every dollar extracted through management fees, lease payments, and consulting charges is a dollar that doesn't go toward her meals, her physical therapy, or the aide who helps her to the bathroom. Studies consistently show that private equity-owned nursing homes have higher mortality rates and lower quality scores than their nonprofit counterparts.

Takeaway

When evaluating nursing homes, dig beyond the facility name to understand who actually owns and profits from it. Nonprofit and government-run facilities generally reinvest revenue into care rather than extracting it for investors.

Labor costs represent about 60-70% of a nursing home's operating budget. For an investor seeking returns, that number represents an irresistible target. The result is a nationwide crisis of understaffed facilities where overworked aides care for more residents than any human reasonably can.

The math is brutal. Federal guidelines suggest nursing homes should provide about 4.1 hours of nursing care per resident per day to meet basic needs. Many facilities operate well below this threshold. When one aide must help twenty residents eat breakfast, get dressed, and take medications, corners get cut. Residents wait longer for help to the bathroom. Falls go unwitnessed. Bedsores develop because no one has time to reposition immobile patients.

Facilities minimize staff through high turnover by design—newer workers earn less than experienced ones. They rely heavily on underpaid certified nursing assistants while limiting the more expensive registered nurses and licensed practical nurses. When inspectors visit, some facilities engage in staffing up—temporarily adding workers to pass inspection, then dropping back to skeleton crews afterward.

Takeaway

Before choosing a nursing home, ask for specific staffing ratios and turnover rates. Request this information in writing, and check state inspection reports for staffing-related violations—they reveal what happens when inspectors aren't expected.

The picture isn't entirely bleak. Across the country, nursing homes operating under different ownership models demonstrate that quality care and financial sustainability can coexist. These facilities offer a blueprint for what long-term care could look like if we prioritized residents over returns.

Nonprofit nursing homes—whether run by religious organizations, community groups, or charitable foundations—consistently outperform their for-profit counterparts on quality measures. Without shareholders demanding dividends, they can reinvest surplus revenue into better staffing, facility improvements, and resident programs. Some have adopted the Green House Project model, creating small home-like settings where the same caregivers develop genuine relationships with residents.

Worker-owned cooperatives represent an emerging alternative, where the people providing care also share in decisions and profits. In these models, staff retention improves dramatically because workers have genuine stakes in the facility's success. Government-run facilities, while sometimes bureaucratic, benefit from public accountability and stable funding that doesn't fluctuate with investor expectations.

Takeaway

When searching for long-term care, actively seek out nonprofit, government-run, or cooperative facilities. Their ownership structures align the interests of the organization with the wellbeing of residents rather than with external investors.

Understanding nursing home ownership isn't just about protecting individual family members—it's about recognizing a systemic problem that requires systemic solutions. Stronger regulations, better transparency requirements, and support for nonprofit alternatives could reshape an industry that currently fails too many vulnerable people.

You now have tools to make more informed choices when navigating long-term care decisions. Ask about ownership, demand staffing data, and seek out facilities built around care rather than financial extraction. Your questions create pressure for change, one family at a time.