Profit Seeking and the Quality of Eldercare - An empirical study of private equity's impact on the Swedish eldercare market: implications for financial performance and quality of care.

Sammanfattning: This paper contributes to the public discussion on whether private equity firms are suitable owners of Swedish nursing home operators. We investigate: (1) if private equity owned nursing home operators are more profit seeking than other private nursing home operators, and (2) if private equity ownership is associated with adverse effects on the quality of eldercare. By a cross sectional comparison of financial statements, we find that private equity owned operators outperform other private operators in terms of EBIT-Margin and Employee Efficiency. Adjusted for industry trends, the average primary buyout on the Swedish eldercare market generates significant upturns in Revenue Growth, EBIT-Margin, and Employee Efficiency. By studying the Swedish National Board of Health and Welfare's annual quality survey, and categorizing nursing homes by mode of provision, we find that private equity ownership is associated with a lower number of employees per resident and a higher proportion of staff employed on an hourly basis. Albeit negative deviations in staffing related quality indicators, nursing homes run by private equity owned operators are associated with a reasonable duration between meals; a high proportion of residents participating in formulating the care plan design; and a high proportion of residents assessed for risk of falling, -pressure ulcers, -and malnutrition.