A new study examining the impact of Real Estate Investment Trust (REIT) ownership of hospitals shows a significantly higher risk of harm to hospitals and the communities they serve, underscoring the urgency of legislative action in Maine.
The study, released by Harvard University on December 18, found that hospitals acquired by REITs faced a 5.7-fold higher risk of closure or bankruptcy compared with non-REIT-acquired hospitals. The researchers also found no evidence that REIT ownership led to consistent reinvestment in clinical services.
The findings come as Maine continues to grapple with the consequences of private equity and REIT involvement in health care as the one year pause on private equity and real estate investment trust’s ability to purchase a hospital in Maine approaches an end. Genesis Healthcare’s bankruptcy alone affects at least 11 nursing homes in Maine, raising urgent questions about whether current oversight is sufficient to protect patients, workers, and communities from financial extraction.
“REIT acquisition of hospitals has the potential to help hospitals and the communities they serve, or to seriously damage them…The real-world evidence generated by our study can inform federal and state regulatory efforts to more closely monitor hospital ownership and transactions, to ensure that patients and communities are not being harmed.” – Thomas Tsai (a corresponding author of the study, an associate professor in the Department of Health Policy and Management, co-director of the Healthcare Quality and Outcomes Lab, and a surgeon at Brigham and Women’s Hospital).
Maine AllCare applauds the leadership of Senator Mike Tipping and Representative Michelle Boyer and the work of the Commission to Evaluate the Scope of Regulatory Review and Oversight over Health Care Transactions That Impact the Delivery of Health Care Services in the State. The commission’s findings reinforce the need for its recommendations to be implemented into law during this legislative session.
Among the commission’s recommendations was a prohibition on sale-leaseback arrangements involving a health care entity’s main campus or their primary location. The recommendation passed unanimously among the members present; Senator Haggan was absent, and Commissioner Montejo abstained. The recommendations will now move to the Joint Standing Committee on Health Coverage, Insurance and Financial Services.
Included in the commission’s recommendations were suggestions to create a task force to study the demand for long-term care and assess whether funding was needed to maintain the critical nursing home infrastructure. Genesis Healthcare declared bankruptcy in early August. Genesis is tied to Maine based REIT Sandy River Company. Genesis Healthcare’s bankruptcy impacts at least 11 of Maine’s nursing homes. Given the network of REITs tied to Maine’s nursing homes the question remains: will the commission’s actions be enough to protect the people and the health care needs of the state from profiteers? Will the Maine state legislature implement sufficient safeguards to protect people from profit driven private equity and real estate investment trusts?
The Commission was Co-Chaired by Senator Tipping(D-Orono) and Representative Boyer(D-Cape Elizabeth). Last Legislative session Maine AllCare worked with Senator Tipping on LD 985 – “An Act to Impose a Moratorium on the Ownership or Operation of Hospitals in the State by Private Equity Companies or Real Estate Investment Trusts.” The bill was passed as an emergency measure with a one year pause on private equity and real estate investment trust’s ability to purchase a hospital. Former Legislator Dr. Geoff Gratwick worked along with Peter Murrary to draft the bill after reading about the impact of private equity on hospital closures and declining patient care.
The Commission recommends:
“prohibit(ing) any private equity company or real estate investment trust from entering any arrangement with a health care entity for the sale and leaseback of the health care entity’s main campus or primary location to the private equity company or real estate investment trust.”
Maine’s hospital systems have multiple campuses so how this recommendation works within Maine’s ecosystem is unclear.
Genesis Healthcare announced bankruptcy last summer and operates 11 Maine Nursing Homes in Maine. The real estate investment trust that partnered with Genesis Healthcare in Maine is SandyRiver , based in Portland. Sandy River is involved in at least two nursing homes currently under construction in the state. But when you look at Medicare ownership listings, Sandy Hook is shown as owned by Genesis Healthcare of Maine LLC: which is Genesis itself.
Genesis entities in Maine also receive federal funding, including nearly $1 million in Veterans Affairs contracts. There are at least five Genesis-related entities operating in Maine under different names, all doing business locally while receiving federal dollars. In each town, the nursing home’s public name is tied to an LLC that closely mirrors that name. That LLC then connects back to Genesis Healthcare of Maine, and ultimately to Genesis Healthcare.
One of the nursing home facilities under construction is in Portland, replacing a nursing home that closed. It is owned by Sandy River and North Country Associates. North Country Associates operates 8 facilities in Maine and has 2 serious safety deficiencies identified in a Pro Publica report. Sandy River and North Country Associates operate as “MaineSail Care Communities.” Another nursing facility is in the Midcoast, also under construction under the Sandy River name but legally known as Maine Sail Care Communities.
As a result, Mainers reading about Genesis’ bankruptcy, care violations, or bailout requests may not realize that the nursing home caring for a family member or neighbor is part of that system.The same is true for reporting on violations, staffing shortages, or bailout requests. Last spring Genesis healthcare requested a $10 million bailout from Maine citing increased regulatory demands, workplace shortages and inadequate reimbursement rates from Mainecare to explain the budget gap.
Many Genesis-affiliated facilities carry one-star ratings, are cited repeatedly for understaffing and safety concerns, and are granted extended deadlines to comply, often because of the documented labor shortage and the absence of a viable recruitment or retention plan. With Genesis now in bankruptcy, fines related to care delays or deaths may go unpaid.
These investors, banks, and companies get rich on our debt and our medical infrastructure. Maine AllCare urges that new Maine legislation include oversight and safeguards proportionate to the scale of the problem, to protect the health care infrastructure our communities depend on.
More information on the Commission’s recommendations can be found in its draft report.
For research on the impact of Private Equity and Real Estate Investment Trusts on hospitals please consult our research guide or reach out to our team.
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