If Nonprofit Nursing Homes Outperform Private Equity, Can Policy Catch Up?

While an aging population is obviously a stressor on the system, shortfalls in US eldercare stem not just from an increasingly aged population, but rather from a combination of profit-driven ownership and ageist ideology, which together produce devastating outcomes.

The numbers do not lie. Data show that private equity increases nursing home mortality by 10 percent, resulting in over 20,000 deaths in 12 years.

Cultural views of aging as inevitable decline make this harm and death politically acceptable.

Stuart Kaplan and Marcus Riley, both of whom lead nonprofits, in a forthcoming book titled Your Aging Advantage: The 7 New Stages of Aging, show what is possible when structural protections afforded by nonprofits become the norm rather than the exception.

Three Pillars of Ageism

Data show that private equity increases nursing home mortality by 10 percent, resulting in over 20,000 deaths in 12 years.

Before considering their perspective, it’s worth considering how ageism affects nursing care today. Margaret Morganroth Gullette’s scholarship shows how age ideology enables and sustains extraction through three interconnected mechanisms that create conditions ripe for exploitation.

First, decline narratives justify inadequate care and poverty wages by framing aging as inevitable deterioration that requires only custodial warehousing instead of skilled, dignified care. If society accepts that older adults are simply declining toward death, then inadequate staffing gets framed as cost containment rather than the systemic neglect that it is.

Second, labor market ageism forces experienced workers into precarious retirement, creating economic vulnerability. Age discrimination makes employment tenuous after 50, while Social Security narratives frame benefits as burdens rather than earned rights. Older adults enter care facilities already economically weakened, making them dependent on whatever options nursing homes provide.

Third, age segregation isolates older adults in specialized facilities, keeping poor conditions invisible to the public and weakening collective advocacy. When care happens behind closed doors in age-segregated institutions, systemic problems remain hidden until individual families encounter them, too late and too isolated to mount effective resistance.

Why Private Equity’s Business Model Harms Nursing Home Care

Atul Gupta, a professor of healthcare management at the Wharton School, is the lead author on a paper that documents how private equity employs four primary extraction strategies that together maximize investor returns while degrading care.

First, staffing reductions produce immediate cost savings and profit. Facilities experience a 3 percent decline in nursing hours after acquisition, with certified nursing assistants (who provide most of the direct care) bearing the brunt through layoffs, hour reductions, and wage suppression.

Second, real estate sale-leasebacks extract facility value while imposing rent obligations that drain operational budgets. The facility’s physical assets are sold to generate immediate returns for private equity investors, then leased back at rates that guarantee ongoing extraction from care budgets.

Third, management contracts with related entities—separate but affiliated companies—enable disguised profit extraction, moving money between corporate entities while appearing as business expenses.

Fourth, resident selection practices prioritize profitable private-pay residents over Medicaid patients, despite legal obligations to serve low-income populations. This is not market failure; it is extraction working as designed.

Why Nonprofit Models Succeed

According to a recent report from a research team led by Charlene Harrington of the University of California, San Francisco, nonprofit facilities have consistently demonstrated superior outcomes because their structural obligations limit extraction and mandate mission-driven care.

Nonprofits have higher staffing levels, averaging 4.3 hours of direct care per resident daily compared to 3.6 hours in for-profit facilities, according to one estimate. This translates to meaningfully better outcomes: fewer pressure ulcers, reduced infections, and lower mortality. Researchers conducting a systematic review concluded that nonprofit facilities consistently deliver higher quality care across multiple measures.

Financial structures reveal the mechanism: Harrington’s study found nonprofits reinvest 91 percent of revenues into operations and improvements, while for-profit chains extract 23 percent as profit before operational costs are met. This difference produces the quality differentials documented across studies.

Innovative care models emerge from nonprofit structures that allow experimentation not possible under extractive ownership. The Program of All-Inclusive Care for the Elderly (PACE) integrates medical and social services to keep frail elders in communities (often known as “aging in place”). Selfhelp Community Services, a large nonprofit that provides “affordable housing, home care, and community-based services to more than 25,000 aging adults,” similarly operates what are known as naturally occurring retirement communities or NORCs. These models require mission commitment, which is hard to achieve under private equity investor pressure for quarterly returns.

The nonprofit advantage is not sentimental; it’s structural. Kaplan, CEO of Selfhelp, told NPQ that “after decades in nonprofit leadership, I’ve seen that individuals flourish when they have the tools to plan purposefully, navigate transitions, and stay connected to what matters most to them.” Mission-driven governance limits extractive behavior as reinvestment obligations help to direct resources toward care.

Changing Policy to Facilitate Nonprofit Care

Kaplan and Riley’s vision calls not only for dismantling the three pillars of ageism, but also for establishing legal and structural protections against extraction—that means no longer tolerating mechanisms by which private equity gains a market advantage by, in part, choosing its patient profile to reduce costs and maximize profits. Three conditions, they indicate, are most important:

Condition 1: Equitable Access Guaranteed by Law

In Australia, the Aged Care Act 2024 mandates that accredited residential facilities reserve between 16 and 40 percent of placements for low-income applicants, with quotas varying by area demographics. Government-guaranteed accommodation payments ensure facilities cannot reject residents for poverty. By contrast, US nonprofits face market pressures to compete with for-profit entities that are relatively unconstrained to cherry-pick their patients to reduce their cost profile.

Condition 2: Non-Extractive Ownership

Australian regulations explicitly restrict private equity ownership of aged care facilities receiving government subsidies. In other words, private equity ownership for nursing home facilities is primarily limited to “private pay” patients, patients who by definition have more resources and whose families are better positioned to demand quality care.

Condition 3: Mandated Staffing and Worker Protections

Australia’s system includes minimum staffing requirements and strong worker protections. The United States, by contrast, has resisted federal minimum staffing standards for decades, despite evidence that adequate staffing leads to better resident outcomes. High turnover driven by low wages also disrupts care continuity. Certified nursing assistants who know residents’ preferences, communication patterns, and subtle health changes provide irreplaceable expertise. Extractive models sacrifice this expertise for profit.

Implementing the Vision

What Kaplan and Riley present is a vision of aging that’s centered on purpose, agency, and possibility rather than decline and limitation. As Riley told NPQ, “We wrote this book to help people rethink what’s possible as they grow older. The traditional notion of decline doesn’t reflect the lives I’ve seen or the global research we draw from.” Kaplan added that he and Riley wanted “to give people a new and practical way to understand their own aging—not through the limits of a birthdate, but through their passions, choices, and potential to ‘age on pace.’”

The goal, Kaplan said, is to help “people reclaim agency and clarity at every stage of life.”

Yet Gullette’s research adds a crucial caveat: Individual agency requires collective transformation. “Aging on pace” becomes possible only when cultural narratives, labor market structures, and care financing align to support rather than undermine personhood.

The Path Forward

Achieving Kaplan and Riley’s vision requires both policy and cultural change. On the policy side, it has been established that the private equity business model is structurally incompatible with care quality. Given documented mortality increases, private equity ownership of nursing homes should, as has been done with government-subsidized care in Australia, be banned—or minimally restricted to cases demonstrating clear public health benefit.

Other desired policy reforms include:

1. Require care facilities to reserve a percentage of beds for Medicaid residents with guaranteed government funding for accommodation. Economic diversity strengthens facilities while ensuring access.
2. Establish federal minimum care staffing ratios—and offer adequate Medicaid reimbursement to meet those requirements.
3. Guarantee living wages for certified nursing assistants. Forcing workers into multiple jobs through poverty wages destroys care continuity and devalues crucial expertise.
4. Create worker governance mechanisms to ensure that frontline expertise shapes facility policy and prevents management decisions that sacrifice care for profit.
5. Establish rights-based legal frameworks. Following Australia’s Aged Care Act, create enforceable resident rights with independent complaint mechanisms, whistleblower protections, and meaningful penalties for violations.

Aging people can flourish when supported by a culture that values people as they age and is supported by nonprofit and rights-based care.

These proposed policy items surely seem ambitious, particularly given the current political climate in which federal healthcare spending is being cut drastically. Nonetheless, if advocates do not ask for what is needed, failure is certain. And with demands for better care comes the possibility of positive federal action in the not-so-distant future.

Changes in policy must also be reinforced by cultural transformation. This means challenging decline narratives that medicalize normal aging and recognize continuing development; transforming labor markets by ending forced retirement and age discrimination while valuing experience; resisting age segregation by questioning why we isolate older adults in specialized facilities; and building intergenerational solidarity by rejecting narratives that pit generations against each other.

The nation’s eldercare crisis, in short, while often described as the inevitable result of an aging population, is in fact the result of systemic failures that are avoidable—if society acts to address them.

Aging people can flourish when supported by a culture that values people as they age and is supported by nonprofit and rights-based care. It is well past time to make this so.