Private Equity Firms' Increasing Acquisitions of Disability Care Providers Raise Quality Concerns

Private equity firms are rapidly expanding their presence in the disability care sector, with over 1,000 acquisitions of disability and elder care providers between 2013 and 2023, according to a new report from the Private Equity Stakeholder Project. This trend has sparked concerns about potential impacts on care quality and patient safety.

Rapid Expansion and Industry Attraction

The disability care industry, traditionally dominated by nonprofit and faith-based organizations, has become an attractive target for private equity investments. Firms are drawn to the sector due to growing demand for care, high levels of fragmentation, and its perceived recession-resistant nature.

However, the report suggests that the private equity model's focus on short-term financial gains could compromise care quality. Eileen O'Grady, director of programs at PESP and lead author of the report, stated, "Private equity firms are fundamentally altering these services in ways that put some of the most vulnerable members of our communities at risk."

Quality Concerns and Regulatory Challenges

Investigations in multiple states, including Florida, Indiana, California, and Illinois, have uncovered problems stemming from cost-cutting measures implemented by private equity-owned facilities. These issues include severe understaffing and improper use of restraints, potentially jeopardizing patient care.

The report highlights regulatory loopholes that allow for varying safety standards, making it difficult to ensure consistent quality across privately-owned care centers. This is particularly concerning given that patients in disability care centers often have multiple comorbidities and may be unable to advocate for themselves.

Financial Practices and Patient Impact

While some facilities faced accusations of neglecting patients, they simultaneously engaged in practices that benefited investors. For instance, Centerbridge Partners and Vistria Group reportedly paid themselves more than $600 million in dividends from Sevita and Help at Home, even as care standards allegedly declined.

In more severe cases, cost-cutting measures have been linked to direct harm to patients. In Indiana, a patient at a Help at Home facility reportedly died of neglect after weighing just 71 pounds. In Illinois, regulators shut down Broadstep Behavioral Health group homes due to "significant deficiencies" in medication management, staff training, and safety measures.

As private equity firms continue to reshape the disability care landscape, industry watchdogs and healthcare advocates are calling for increased scrutiny and regulation to ensure that financial interests do not compromise the quality of care for some of society's most vulnerable individuals.