Private equity ownership and nursing home quality: an instrumental variables approach

  • Sean Shenghsiu HuangEmail author
  • John R. Bowblis
Research article


Since the 2000s, private equity (PE) firms have been actively acquiring nursing homes (NH). This has sparked concerns that with stronger profit motive and aggressive use of debt financing, PE ownership may tradeoff quality for higher profits. To empirically address this policy concern, we construct a panel dataset of all for-profit NHs in Ohio from 2005 to 2010 and link it with detailed resident-level data. We compare the quality of care provided to long-stay residents at PE NHs and other for-profit (non-PE) NHs. To account for unobservable resident selection, we use differential distance to the nearest PE NH relative to the nearest non-PE NH in an instrumental variables approach with and without NH fixed effects. In contrast to concerns of the public regarding quality deterioration associated with PE ownership, we find that PE ownership does not lead to lower quality for long-stay NH residents, at least in the medium term.


Private equity Acquisition Nursing home Quality Instrumental variables Organizational structures Differential distance 

JEL Classification

G34 I11 L22 


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Georgetown UniversityWashingtonUSA
  2. 2.Miami UniversityOxfordUSA

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