Why Nursing Homes and Hospice are So Expensive in the U.S.
Aging Population and Lack of Preparation
Baby boomers are about to be the largest generation in American history to hit the long-term care space. Born between 1946 and 1964, as defined by Pew Research, the oldest baby boomers are turning 80 next year. The group is set to flood a senior care space that is already understaffed, underfunded, and facing political uncertainty.
“This space is completely underprepared for the number of older adults that are going to need long-term care and end of life care,” said David Grabowski, professor of health care policy at Harvard Medical School. “We’ve historically relied heavily on families. There’s not going to be the number of family members that we’ve had in the past.”
Private Equity’s Increasing Investment in Senior Care
Now private equity is increasingly looking to get in on the market. A recent study found between 2015 to 2022, 47 private equity firms bought 124 U.S. hospice agencies. Today an estimated 75% of U.S. hospice agencies are for-profit, according to a study out of the University of Pennsylvania.
“Hospice was started as a grassroots, nonprofit movement where the majority of care, a couple decades back, was provided by strictly non-profits,” said Robert Tyler Braun, assistant professor in the division of health policy and economics at Weill Cornell Medicine. “In this current landscape now, the majority of hospice providers are for-profit.”
A Changing Landscape
Nursing homes and long-term care facilities have long been an acquisition target for private equity and publicly traded companies. Data provided to CNBC by Coherent Market Insights shows those same trends in the hospice care space have picked up significantly since the 2010s.
Consequences for Seniors and Their Families
Private equity’s increasing investment in the senior care industry has significant consequences for seniors and their families. The video below provides an in-depth look at how these investments are impacting the space, who is investing in it, and what it means for seniors and their families.
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Conclusion
The senior care industry is facing a perfect storm of demographic changes, lack of preparation, and private equity investment. The result is a market that is increasingly driven by profit rather than patient care. As the baby boomer generation continues to age, it is essential to address the systemic issues facing the industry and prioritize the needs of seniors and their families.
FAQs
* What is driving the increase in private equity investment in senior care?
Private equity firms are attracted to the senior care industry due to its high demand and limited supply, making it an attractive market for investment.
* What are the consequences of private equity’s increasing investment in senior care?
The increasing presence of private equity in the senior care industry is leading to a market that prioritizes profit over patient care, resulting in higher costs and reduced access to quality care for seniors and their families.
* How can the industry be improved?
To address the systemic issues facing the senior care industry, it is essential to prioritize patient care, increase funding, and address the shortage of healthcare workers.
