Nursing homes in Connecticut owned by private equity firms will face new rules under a law aimed at protecting residents from cost-cutting and declining care.
Under the law — signed by Gov. Ned Lamont last week — investors are not allowed to control the health, care or safety of nursing home residents. Nursing homes must certify this annually to the Department of Public Health, starting in February 2028.
State Sen. Jan Hochadel, a Democrat from Meriden who co-chairs the Aging Committee, said private equity control has been detrimental in the industry.
“What ends up happening is you see staff being cut, skimping on training, delays in repairs, supplies, things like that,” Hochadel said.
Beginning in February 2027, the bill also requires nursing homes in Connecticut to disclose individuals or groups that have at least a 5% financial stake in the facility. Reports must include the names and addresses of investors, ownership shares and the purchasing agreement for the home.
A $1,000 a day penalty may be issued to nursing homes that don’t share this information.
The Government Accountability Office estimated that in 2022 private equity firms owned 5% of nursing homes in the nation that participate in Medicare. The watchdog nonprofit group Private Equity Stakeholder Project said in a recent report that number is likely higher because of the lack of ownership transparency.
SEIU District 1199 New England, which represents thousands of nursing home workers, testified earlier this year in support of tighter restrictions.
“Healthcare facilities, especially nursing homes, are not speculative assets," the group wrote. “They are homes for vulnerable residents and workplaces for thousands of caregivers. Ownership structures must align with that reality.”
Another component of the new law requires nursing facilities to get a bond or insurance policy to cover at least 90 days of operating costs if investment entities have at least a 5% stake in the business.
Hochadel said the provision, which goes into effect in July 2028, aims to protect the state in case of bankruptcy.
“When these types of nursing homes that are owned by private equity close … Connecticut isn't left holding the bag financially,” Hochadel said.
The state Department of Social Services will be responsible for comparing care quality of skilled nursing facilities that don't have private equity investment to those that do. That information is due to the legislature by February 2028.
Hochadel said people who are aging can be in a vulnerable position and deserve respect.
“I think this is one way that we can actually make sure that they are getting the best care that they possibly can,” she said.
