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Beyond the Title: Second Look at David Grabowski’s Nursing Home Study

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By Liz Liberman, Health Care Analyst, NIC

David Grabowski, professor of Health Care Policy at Harvard Medical School, published a very interesting study in conjunction with the University of Michigan, in the May issue of Health Affairs. What caught the attention of the press was not the study itself but its attention-grabbing title: “Low-Quality Nursing Homes Were More Likely Than Other Nursing Homes To Be Bought Or Sold By Chains In 1993–2010.” That title kicked off a whirlwind of headlines, from The Boston Globe’s “Repeated Nursing Home Sales Linked to Poor Quality, Study Finds,” to McKnight’s “Corporate Ownership Changed Linked to Poor Nursing Home Quality.”

But Grabowski’s findings are much more nuanced than the title alone suggests. While Grabowski’s research on the impact of property-level transactions on quality certainly deserves media attention, the provocative nature of the headlines that followed did not necessarily do the study justice. In fact, McKnight’s posted a follow-up column by editor James Berklan, who encouraged readers to give the study a second look. But despite the effort, the negative headlines damning chain nursing home ownership had already crept into the zeitgeist. 

Delving Deeper into the Research

Grabowski’s study examined the number of health deficiency citations nursing homes received between 1993 and 2010. The study then compared the number of deficiencies prior to and following a chain-related transaction, which could be the acquisition or divesting of a single property or an entire chain. The most common type of chain-related transaction was chain-to-chain, though chain-to-independent and independent-to-chain also occurred. Nursing homes that experienced chain-related churn were compared to nursing homes that maintained ingle ownership throughout the study period. 

The study looked at data from the Online Survey Certification and Reporting System, known as OSCAR data, and excluded Hawaii, Alaska, and DC. States must conduct health inspections of nursing homes every 15 months and submit the results to CMS through OSCAR, on which the health deficiency tally was based in the study. Only the first transaction was considered for properties that were bought and sold more than once over the period. 

Examining the Results

 Half of chain-owned properties did not change hands during the study period, while one-quarter changed hands once, and one-quarter changed hands more than once. The share of total nursing homes owned by chains grew from 44% to 50% in the study period, but the overall number of chains decreased. At the end of the period, nursing homes that maintained single ownership saw significantly fewer deficiencies than properties that had experienced a transaction.

The following chart taken from the study shows that as the number of transactions increased, the number of deficiencies also increased. The results are statistically significant for all but one field (p < .01). Chains seemed to target properties with more deficiencies, as properties with more deficiencies were more likely to experience an initial chain-related transaction than properties with fewer deficiencies. This finding is even more pronounced when the transaction type is chain-to-chain compared to independent-to-chain. Low-quality facilities did not see improvement in the number of deficiencies after being bought or sold by a chain.

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 The study acknowledges several limitations in methodology, including the validity of usability of OSCAR data. More importantly, the type of analysis Grabowski and his team conducted does not rule out the possibility of reverse causality, which means that poor quality facilities are more likely to cause transactions. Nonetheless, the study authors suggest that policy makers push for increased accountability, oversight, and regulation of nursing home transactions, including adding chain ownership history to Nursing Home Compare.

 Grabowski puts forward one theory to explain the differences in quality relative to chain-related transactions: when ownership is expected to be short-term only, improvements to facility quality are not prioritized. Independently-owned properties do well because the owners are invested in the property for the long haul. Properties that are picked up by chains and subsequently sold again may be viewed by the owner as short-term investments; sales and acquisitions may be based on a desire to adjust the makeup of the portfolio.

What Grabowski suggests is that viewing nursing homes as pawns to be bought, traded, or sold on a whim could be detrimental to resident outcomes. Now that quality is becoming a vital component of nursing home performance in terms of profitability, this transaction trend may shift. Low-performing facilities possibly will be viewed more as long-term investments, as they will not be worth the acquisition if quality performance is not improved. At the same time, owners will be eager to divest low-quality properties and hold on to high-quality properties. The research period Grabowski studied occurred before Nursing Home Compare began to rank nursing homes based on quality, with health deficiencies resulting in the lowest score on the CMS Five-Star Quality Rating scale. An update to this study after implementation of that ranking process may reveal that transaction trends have already begun to shift. Ultimately, residents will get the best outcomes when low-performing nursing homes are viewed as long-term investments, whether or not they experience a chain-related transaction, and capital is leveraged to create improvements in quality.


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