The House Energy and Commerce and House Financial Services committees on Tuesday said they would begin an investigation into the business practices of nursing homes owned by private equity companies, the New York Times reports (Duhigg, New York Times, 10/24). The committees announced the investigations in response to concerns raised by the Service Employees International Union that private equity companies purchase nursing homes and reduce services to increase profit (Edney, CongressDaily, 10/23).

In addition, the committees cited a Times article published last month that said private equity companies "often cut expenses and staff, sometimes below minimum legal requirements, to increase their profit" and use "complicated corporate structures to avoid liability when residents suffered from neglect," the Times reports (New York Times, 10/24).

Energy and Commerce Chair John Dingell (D-Mich.) and Financial Services Chair Barney Frank (D-Mass.) on Tuesday met with the SEIU to discuss the issue. They said that they likely will not introduce legislation to address the issue this year (CongressDaily, 10/23). However, the investigation and subsequent committee hearings might "lead to significant shifts within the nursing home industry," the Times reports.

In addition to the investigation by the House committees, Senate Finance Committee Chair Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) last week sent letters to five private equity companies that asked for information on their ownership of nursing homes. The lawmakers also asked CMS for information on oversight of nursing homes owned by private equity companies.

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Dingell said, "There are serious concerns that private equity firms are reducing the care at nursing homes by decreasing the number of employees," adding, "We've been made aware that nursing home residents are losing their ability to use lawsuits to fight poor care and that people may be suffering" (New York Times, 10/24).

Frank said, "If you look at what private equity brings to the table, I'm skeptical that's what the nursing home industry needs" (CongressDaily, 10/23). SEIU President Andy Stern said, "We've spent the last five years trying to improve long-term care for working Americans, and now private equity wants to come in and pocket as much as they can" (New York Times, 10/24).

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