Lg ASPE OFFICE OF BEHAVIORAL HEALTH, RESEARCH BRI EF rranuivo axotvauarion DISABILITY, AND AGING POLICY July 7, 2022 CHANGES IN OWNERSHIP OF SKILLED NURSING FACILITIES FROM 2016 TO 2021: VARIATIONS BY GEOGRAPHIC LOCATION AND QUALITY KEY POINTS e A total of 3,254 skilled nursing facilities (SNFs) were sold from January 2016 to December 2021, and the number of transactions changing ownership have increased since 2016. e There is wide variation in the number of SNF ownership changes across states. e For each year since 2016, SNFs with overall lower quality star ratings were sold more often than SNFs with higher quality ratings. In April 2022, the Centers for Medicare & Medicaid Services (CMS) publicly released datasets on hospital and skilled nursing facility (SNF) mergers and acquisitions, consolidation, and other changes of ownership transactions dating back to 2016.1 Publication of these data supports the Administration's goal of improving transparency and accessibility of information that can be readily used for research to help address questions about how ownership structures in these markets are changing, the extent of market consolidation, and whether those changes affect access to care, quality, and prices. A recent report released by ASPE found frequent changes of ownership in hospitals and SNFs between 2016 and 2021, with wide variation across states, and that ownership changes among hospitals were more common in medium and larger hospitals, and hospitals with low profit margins." This brief focuses on change of ownership transactions for SNFs and analyzes variation by geographic location and quality of nursing homes being sold. BACKGROUND There are approximately 15,000 nursing homes (both nursing facilities and skilled nursing facilities) nationwide, serving more than 1.3 million residents.? Over 90% of nursing homes are both Medicare and Medicaid-certified, serving both residents who need short post-acute rehabilitative and palliative services after a stay in an acute care hospital, and those who need longer-term custodial-type care with support services. The Medicare benefit pays for certain post-acute care in SNFs (up to 100 days in a benefit period). This brief uses the newly published ownership data for SNFs that bill Medicare to examine change of ownership transactions after January 1, 2016. This subset of data is derived from the Provider Enrollment, Chain, and Ownership System (PECOS) and contains buyer and seller information, enrollment records, ownership and managerial control information, and dates of when change in ownership occurred.* DATA AND METHODS We used the newly released Skilled Nursing Facility Change of Ownership (CHOW) data files to show changes of ownership of SNFs and the geographic variations of those transactions from 2016-2021. To understand SNF change of ownership trends by quality star ratings, we linked the CHOW data file with the archived Nursing Home Annual Files publicly available in CMS's Care Compare website, which provide quality rating scores of nursing home providers from 2016 to 2022.° The total number of SNFs was also derived from the Nursing Home Annual Files in the Care Compare website. July 2022 RESEARCH BRIEF 1 RESULTS Overall Changes in Ownership of Skilled Nursing Facilities from 2016-2021 Figure 1 shows that a total of 3,254 SNFs were sold from January 2016 to December 2021, and the number of transactions changing ownership has generally increased since 2016. The highest proportion of SNFs sold in any one year was in 2019 (5%, or 779 out of 15,535 SNFs). Transactions have decreased since then, but have remained slightly higher than in prior years, averaging about 3.5% of SNFs sold from 2016 to 2021. Figure 1, Changes in Ownership of SNFs: 2016-2021 Frequency of Changes of Ownership from Q1 2016 - Q4 2021 (Quarterly) Number of SNFs Sold Quarter of Effective.Date Frequency of Changes of Ownership - Proportion of SNFs 5.01% 3.54% 3.86% 3.55% 2.86% | | | SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership and Skilled Nursing Facility Change of Ownership- Owner Information. April 2, 2022. Geographic Variation in Skilled Nursing Facility Ownership Transactions Figure 2 shows wide variation in the number of SNF ownership changes across states since 2016. From 2016 to 2021, a total of 41 out of the 99 SNFs in Utah (41%) had a change in ownership. Texas, Arkansas, Virginia, and Maryland also had a high number of transactions during that period, representing about a third of the SNFs in each state (see Appendix A for the number of ownership transactions in all states from 2016 to 2021). For each individual year, no particular state was an outlier consistently over time, although Texas stands out with a relatively high number of transactions (see Appendix B for the geographic variations by year). July 2022 RESEARCH BRIEF 2 Figure 2. Geographic Variation of SNFs being Sold, Total for 2016-2021* Percent Changes of SNF Selling Transactions, 2016-2021 o1s-2o21 0%| A 20°: states w/ Highest % of Change of Ownership ransactions State Percent SNFs Sold Total SNFs UT 41% 41 99 ™ 38% 468. 1,221 @ AR 35% 81 228 % * o Shes Total # SNFs is the average # SNFS across all years (2016-2021). A 350% 401 287 *Change of Ownership Transaction is the sum across ali years aa i> (2016-2021) up 33% 74 227 © OpenStreetMap SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership and Skilled Nursing Facility Change of Ownership- Owner Information. April 2, 2022. * The data sums the count of each change in ownership transaction, so that one SNF may have experienced more than one change in ownership during the study period. Figure 3. Quality Ratings of SNFs Sold: 2016-2021 irate of Changes of Ownership in each Star Category - Quality Ratings From 2016 - 2021 | Avg. Yearly SNFs Sold 2 a 5. 5% 4.89% AAI q " 3.78% Ss oy s 8 3 3.07% 2 3% a '6 s 5 e S 2.08% < 25 i% 0% i-Star 2-Star : 4Star 5-Star i-Star 2-Star 3-Star 4-Star S-Star Total Number of SWFS Sold fram 675 786 620 627 481 2016-2021" Avg. Number of SWFs Soild per 113 413i: 103 105 80 yeart Avg. Number of 'SNFs Per yeart* 2,307 2,969 2,742 3,412 3,864 Avg, Rate of SWfs Sold per 4.89% 441% 3.78% 3.07% 2.08% year SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022. * CMS CHOW files. ** NH_Providerinfo monthly files from Care Compare Data. July 2022 RESEARCH BRIEF Quality Star Ratings of Skilled Nursing Facilities Sold We also examined differences in the overall nursing home star rating assigned to the SNFs being sold during this time.® CMS's Five-Star Quality Rating System is a system that gives each nursing home an overall rating of 1 to 5 stars, with higher star ratings corresponding to higher measured quality. Figure 3 shows that, from 2016 to 2021, SNFs with overall lower quality star ratings were sold more often than SNFs with higher quality ratings. For example, from 2016 to 2021, an average of 5% of SNFs with 1-star ratings were sold compared to an average of 2% of SNFs with 5-star ratings. CONCLUSION In this analysis of newly released data on SNF changes of ownership, we found that a total of 3,254 SNFs were sold from January 2016 to December 2021, and the number of transactions changing ownership has increased since 2016. We found a wide variation in the number of SNF ownership changes across states, and that SNFs with overall lower quality star ratings were sold more often compared to SNFs with higher quality ratings. With the release of these data, CMS is supporting the Administration's strategy to improve safety and care in the nation's nursing homes by promoting transparency of ownership transactions. A growing body of research and news reports have raised concerns about nursing homes acquired by larger and private equity companies subsequently experiencing increased emergency room visits, hospitalizations, and costs among long-stay residents."*° Our findings are consistent with previous research on older data, which found that low-quality nursing homes were more likely than other nursing homes to be bought or sold by chains in 1993-2010."° Free and readily available access to change of ownership data will allow for more research to better understand how nursing home ownership financial structures have been changing. This in turn will allow researchers to examine how such changes in SNF markets may relate to the safety and quality of care provided in SNFs, as well as changes in health care costs and patient outcomes. This snapshot of the SNF data reveals important trends to consider in future research examining changes of ownership by provider profit status, chain affiliation, size, and occupancy rates, as well as rate of ownership changes of facilities that serve disproportionately high numbers of residents of certain demographic traits (e.g., minorities, dual eligibility status, receiving low-income subsidies). More extensive analysis on the quality of nursing homes being sold would also be useful in determining what implications this may have for market trends, quality, and access to care in SNFs throughout the country. July 2022 RESEARCH BRIEF 4 APPENDIX A: GEOGRAPHIC VARIATION OF SNFS BEING SOLD, TOTAL FOR 2016-2021 Change in Ownership Transactions by State (2016-2021) Percent SNFs Sold aes Teed SNFs Sold tie UT 41% 41 100 MA 19% 74 396 TX 38% 468 1,221 NJ 18% 66 364 AR 35% 81 228 WA 18% 38 214 VA 35% 101 287 GA 18% 64 359 MD 33% 74 227 CA 17% 207 1,199 KY 33% 93 287 NE 17% 36 210 WY 29% 11 38 KS 16% 55 336 SD 28% 30 108 MN 15% 57 375 OH 28% 267 962 MI 15% 66 441 MT 26% 19 74 NH 15% 11 74 wi 25% 96 374 AL 14% 32 228 VT 25% 9 36 NY 13% 83 621 sc 24% 46 189 MO 13% 69 518 NC 24% 103 427 OR 13% 18 134 IL 24% 173 734 LA 13% 36 278 DC 22% 4 19 IA 13% 56 438 OK 22% 66 301 RI 12% 10 82 DE 22% 10 46 AK 11% 2 19 TN 21% 68 317 CT 10% 22 221 PA 21% 148 696 WV 10% 12 125 FL 20% 142 695 IN 9% 51 543 AZ 20% 30 147 NV 8% 5 61 NM 20% 15 73 Ms 8% 17 205 ID 20% 16 80 HI 7% 3 45 co 20% 45 224 ND 6% 5 80 ME 3% 3 98 PR 0% 0 6 GU 9% 0 1 SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW). April 2, 2022. * "Total # of SNFs" is the average total from 2016 to 2020. July 2022 RESEARCH BRIEF 5 APPENDIX B: GEOGRAPHIC VARIATION OF SNFS BEING SOLD, BY YEAR, 2016-2021 2016 and Highest % of Changes of Ownership | Percent SNFs Sold Total SNFs | UT 1496 14 99 | VT 14% 5 37 | AL 796 16 227 | i MS 5% 14 205 | ® : KY 5% 15 290 | SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerlnfo file for quality data from January of the same year. 2017 and Highest % of Changes of Ownership | | Percent SNFsSold Total SNFs | UT 10% 10 99 | OR 806 11 137 | MN 8% 30 379 wy 8% 3 38 ® | TX 8% 95 1,223 SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerlnfo file for quality data from January of the same year. July 2022 RESEARCH BRIEF 6 2018 and Highest % of Changes of Ownership SNFsSold Total SNFs | Percent | MT 18% 13 74 Dc 11% 2 18 OH 10% 100 968 é : KY 10% 28 286 ie AR 96 20 231 | # SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerlnfo file for quality data from January of the same year. 2019 and Highest % of Changes af Ownership | Percent SNFsSold Total SNFs SD 249% 26 107 NE 119% 23 211 NM 11% 8 74 KY 11% 30 285 - > . SC 119% 20 189 SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerlnfo file for quality data from January of the same year. July 2022 RESEARCH BRIEF 7 2020 and Highest % of Changes of Ownership Percent DE 11% 5 OK 9% 27 IL 8% 60 TX 8% 1001, eS ° VA 796 21 SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_Providerinfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerinfo file for quality data from January of the same year. SNFs Sold Total SNFs 46 298 719 216 236 2021 and Highest % of Changes of Ownership Percent SNFsSold Total @6 _ SOURCE: Data.CMS.gov, Skilled Nursing Facility Change of Ownership (CHOW) was linked with the NH_ProviderInfo file from the archived Nursing Home Annual Database in the Care Compare website. April 2, 2022 (Effective Date) of transaction in CHOW were linked with the NH_Providerlnfo file for quality data from January of the same year. VA 13% 38 MD 9% 21 1X 9% 109 «41, co 9% 20 iB - DE 996 4 SNFs 286 226 210 224 A6 July 2022 RESEARCH BRIEF NOTES 10. Centers for Medicare & Medicaid Services Data; Medicaid Services Data. (n.d.). Retrieved May 6, 2022, from hitps://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/skilled-nursing-facility- change-of-ownership. Change of ownership data is provided from PECOS, where CMS's Center for Program Integrity maintains records of mergers, acquisitions, consolidations and other changes of ownership for the hospitals and nursing homes the agency regulates. CMS requires changes of ownership to be reported by the entity within 30 days of the change and through self-reporting by each entity. Welch, P., Ruhter, J., Bosworth, A., De Lew, N., Sommers, B.D. (2022). Changes in Ownership of Hospital and Skilled Nursing Facilities: An Analysis of Newly Released CMS Data (Issue Brief). Retrieved from https://aspe.hhs.gov/reports/changes-ownership-hospital-skilled-nursing-facilities. Centers for Disease Control and Prevention. (2022). FASTSTATS -- Nursing Home Care. Retrieved May 11, 2022, from https://www.cdc.gov/nchs/fastats/nursing-home-care.htm. Centers for Medicare & Medicaid Services Data; Medicaid Services Data. CMS Nursing Homes Archived Annual files. Accessed May 2022. https://data.cms.gov/provider- data/archived-data/nursing-homes. The CMS overall star rating is a composite measure of three individual performance domains, each with its own rating: the star ratings for a Health Inspection domain, a Staffing domain, and a Quality Measure domain. The Health Inspections domain measures are based on outcomes from state health inspection surveys, the Staffing domain measures are based on nursing home staffing levels reported at the time of state health inspection, and the Quality Measures domain measures are based on the CMS Minimum Data Set. Jung, H.-Y. (2021). Private equity ownership of nursing homes linked to lower quality of care, higher Medicare costs. WCM Newsroom. Retrieved June 15, 2022, from https://news.weill.cornell.edu/news/2021/11/private-equity-ownership-of-nursing-homes-linked-to- lower-quality-of-care-higher. Tan, R., Chason, R. (2021). An investment firm snapped up nursing homes during the pandemic. Employees say care suffered. Washington Post. Retrieved June 15, 2022, from https://www.washingtonpost.com/local/portopiccolo-nursing-homes-maryland/2020/12/21/a1ffb2a6- 292b-11eb-9b14-ad872157ebc9_ story.html. Huang, S.S., Bowblis, J.R. (2018). Private equity ownership and nursing home quality: An instrumental variables approach. International Journal of Health Economics and Management, 19(3-4), 273-299. doi.org/10.1007/s10754-018-9254-z. Grabowski, D.C., Hirth, R.A., Intrator, O., Li, Y., Richardson, J., Stevenson, D.G., Zheng, Q., Banaszak-Holl, J. (2016). Low-quality nursing homes were more likely than other nursing homes to be bought or sold by chains in 1993-2010. Health Affairs, 35(5), 907-914. doi.org/10.1377/hlthaff.2015.1042. July 2022 RESEARCH BRIEF 9 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Assistant Secretary for Planning and Evaluation 200 Independence Avenue SW, Mailstop 447D Washington, D.C. 20201 For more ASPE briefs and other publications, visit: aspe.hhs.gov/reports ei ABOUT THE AUTHORS Tara Oliveira, M.A., and Martin Blanco, M.A., M.P.H. work in the Office of Behavioral Health, Disability, and Aging Policy in the Office of the Assistant Secretary for Planning and Evaluation. SUGGESTED CITATION Oliveira, I., & Blanco, M. Changes in Ownership of Skilled Nursing Facilities from 2016 to 2021: Variations by Geographic Location and Quality (Research Brief). Washington, DC: Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. July 7, 2022. COPYRIGHT INFORMATION All material appearing in this report is in the public domain and may be reproduced or copied without permission; citation as to source, however, is appreciated. Subscribe to ASPE mailing list to receive email updates on new publications: aspe.hhs.gov/join-mailing-list For general questions or general information about ASPE: aspe.hhs.gov/about July 2022 RESEARCH BRIEF 10