Nursing homes are a $200 billion industry in the U.S. There are more than 15,000 nursing homes in the United States that employ about 1.4 million staff and provide services to more than 1.3 million residents daily. Total debt in the U.S. healthcare sector doubled between 2019 and 2024. Moody’s rates 80% of debt issued by healthcare firms as speculative grade. Healthcare bankruptcies have hit a record high. While nursing home staffing levels, occupancy, and the composition of staff certifications do not substantially change after a bankruptcy filing, worker separations increase by 10% of the mean relative to control facilities in the year after a bankruptcy filing.
An abstract for a working paper released in mid-May 2025 stated: “Healthcare firms are filing for Chapter 11 bankruptcy at record rates. We find that bankruptcies increase healthcare staff turnover, worsen care, and harm patients. Using a difference-indifferences design, we estimate that a bankruptcy filing immediately increases staff turnover and worsens the firm’s performance on unannounced inspections. Next, using a patient- distance-to-facility instrument, we document that bankruptcies harm patients through increases in hospitalizations, physical restraints, and bedsores. Finally, we employ a randomized survey experiment of nursing home staff to confirm that bankruptcy filings increase voluntary departures and that replacement workers harm patients.”
The working paper states: “we find that bankruptcies result in substantially worse care. Most notably, receiving care from a recently bankrupt facility increases a patient’s probability of hospitalization by 1.44 percentage points (4.1% of the mean). Such hospitalizations represent major harms to patient health, as they imply the patient’s health deteriorated sufficiently to qualify for admission to the hospital. We also find that bankruptcies harm patients in other meaningful ways. Bankruptcies increase the use of physical restraints and bedsores by 77% and 14% of the mean, respectively. Regulators use both of these as indicators of low-quality care and potential abuse.”
“[W]e find that replacing a high-tenure nurse with a low-tenure nurse causally increases the rate of negative patient outcomes by 10 percentage points (44% of the control-group mean) … we find that bankruptcies cause voluntary turnover, supporting our empirical evidence. Participants evaluating a bankrupt facility estimate voluntary turnover to be 47% higher than participants evaluating an otherwise identical non-bankrupt facility.”
“Chapter 11 rarely leads to liquidation or closure for healthcare firms. In our sample, only 6% of bankrupt facilities close … nursing home bankruptcies typically stem from excessive debt rather than incurable business-model flaws … private equity firms have acquired many nursing homes through debt-financed transactions. High levels of debt can lead to bankruptcy, and existing research has shown that private equity ownership affects nursing home operations … private equity acquisitions typically occur more than a decade before bankruptcy filings. In fact, in 96% of the bankruptcies in our sample, no private equity acquisition took place within the 10 years preceding the filing.”
“[A] facility’s bankruptcy increases the probability a patient is hospitalized by 1.44 percentage points … a bankruptcy increases the hospitalization rate by 4.1% of the sample mean, yet it disproportionately increases the number of hospital days by 7.9% of the sample mean. In this sense, bankruptcy-induced inpatient hospitalizations tend to be particularly severe.”
“[A] bankruptcy increases the probability that a patient will be physically restrained by 1.5 percentage points, 77% of the sample mean. It is important to emphasize that the increased use of physical restraints—such as using ties, belts, straps, rails, or other equipment to limit residents’ movement or access to their own body—is alarming.”
“[A] bankruptcy increases the probability of a pressure ulcer by two percentage points (14% of the sample mean).
Many patients in the nursing home setting might be bedridden or substantially immobile and are prone to developing pressure ulcers if they are not repositioned or transferred with sufficient frequency. Pressure ulcers are preventable, but doing so requires considerable effort from staff.”
The working paper concluded: “We find that patients receiving care at recently bankrupt facilities are more likely to be hospitalized, to be physically restrained, and to have bedsores. Finally, using an online survey experiment of current and former nursing home staff, we confirm the linkage between bankruptcy filings, voluntary turnover, and low quality care that harms patients.”
If you or a loved one suffered injuries (or worse) while a resident of a nursing home in the United States due to nursing home neglect, nursing home negligence, nursing home abuse, nursing home understaffing, nursing home pressure ulcer (bedsore), or the nursing home failing to properly care for a vulnerable adult, you should promptly find a nursing home claim lawyer in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf or behalf of your loved one, if appropriate.
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