SNF REIT holding at 12%
Last year, real estate investment trusts owned about 12% of all skilled nursing facilities, a level that Harvard researchers say should push policymakers to “ensure the REIT business model is compatible.” with» health goals.
Ownership of skilled nursing REITs exceeded that of hospitals (3% nationally), medical office buildings (9%), and senior and assisted living facilities (9%).
The researchers behind a new JAMA Health Forum storytelling study McKnight’s On Monday, they weren’t necessarily surprised by the results of their analysis, which looked at publicly available data, due to “the major influence of private equity and other financial investments in NFCs”. .
But the findings underscore the need to understand how financial pressures might drive REITs to act, and whether their self-interests and the interests of investors align with patient health outcomes.
“There is concern that FPI ownership of healthcare institutions diverts capital from investments in the delivery of clinical care toward generating high returns for investors,” reported the researchers, led by Joseph Dov Bruch, Ph.D. ., visiting scholar at Harvard. Faculty of Medicine Health Care Policy Department.
“To our knowledge, there is no research quantifying the association of IPFs with quality of care, patient costs, and financial security for healthcare providers. Policymakers and healthcare operators need to ensure that the REIT’s business model is compatible with long-term healthcare delivery priorities.
Lack of data for FNS
Although the team found that FPI ownership of hospitals increased for 15 years before dropping during COVID, but the researchers did not have the same data for SNFs. However, in the comments of McKnight’s, Bruch called on policymakers to assess whether REIT acquisitions affect staffing levels; financial results such as margins, debt and patient charges; and quality indicators.
The researchers also noted an association between FPI investment and for-profit operations and skilled nursing facilities in urban settings; and pointed to the potential financial stress associated with the triple net sale-leaseback mechanism. Additionally, the team illustrated how financial pressures on REIT-owned NFCs could lead to access issues, drawing attention to the closure of HCR Manor Care in 2018 after that company sold all of its real estate assets. massive amounts to a REIT.
But the American Health Care Association pushed back on Monday, saying McKnight’s that case studies show that “high-quality nursing home companies have established successful relationships with REITs with lease-management payments.” During the pandemic, some REITs delayed or changed lease payments as nursing home occupancy rates bottomed out.
“REITs can also open doors for some long-term care professionals who want to manage their own buildings, but don’t have the capital to buy the real estate,” the AHCA noted in an email. “NITs are not inherently bad and, as the study found, they have an extremely small footprint in the skilled nursing sector. … We think the bigger issue is the need for state and federal authorities to properly and consistently fund long-term care, so providers don’t feel pressured to seek other investments to keep their facilities afloat. Policymakers can also ensure everyone is focused on the right thing by leveraging incentive programs that encourage providers and investors to create great patient outcomes.
These comments were taken up this week in a new New England Journal of Medicine perspective written by Rachel Werner, MD, PH.D., of the Leonard Davis Institute of Health Economics, and other health policy experts David Grabowski, Ph.D., R. Tamara Konetzka, Ph.D., and David G. Stevenson, Ph.D.
Reiterating their contributions to the national imperative to improve nursing home quality, the researchers called for a combination of improved funding for long-term care, a new approach to nursing home payments, and transparency and accountability that push providers to do more than focus on meeting minimum standards.
“Data on nursing home ownership and financing, including facility expenditures on direct care, remain incomplete and difficult to use,” they wrote.
“The challenges of monitoring spending are exacerbated by the increasing complexity of retirement home ownership practices, making it virtually impossible to understand where and how facilities are spending their resources, including whether they are paying premium services such as rent, management, nursing, or therapy by contracting with related organizations,” they added.