Over the last decade, nursing home ownership and operating structures have continued to evolve, including an increase in private investment ownership of nursing homes and the development of more complex structures. Nursing home ownership varies in terms of profit status, level of management involvement, number of homes owned, and whether the real estate of homes is owned or leased.  Profit status. Owners may be for-profit, nonprofit, or government entities; about two-thirds of nursing homes are for-profit businesses. In general, for-profit businesses, which may be publicly traded or privately owned, have a goal of making profits that are distributed among the owners and stockholders. In contrast, a nonprofit entity receives favorable tax status because it may not operate for the benefit of nor distribute revenues to private interests.  Management involvement. Nursing home owners vary in terms of their involvement in management of the business: they may be the operators, and hold the state license, or they may contract with separate licensed entities to manage the day-to-day operations.  Number of homes owned. Owners or operators may have only one facility or they may have multiple facilities across one or more states that are part of a chain. Owners or operators may also have multiple chains. According to a study conducted for the Department of Health and Human Services, about half of nursing homes are part of a chain.  Real estate. Owners or operators do not necessarily own the real estate where care is delivered, but instead may lease it. The separation of real estate assets from the operations may be done to obtain financing or in an attempt to protect real estate assets from malpractice claims. Furthermore, the owners, leaseholders, and operators may or may not be owned by the same or related entities. PI firm nursing home ownership. In general, PI firms use a combination of investment capital and debt financing to acquire companies, including nursing home companies, with a goal of making a profit and eventually returning that profit to investors and the firm. As we noted in our prior report, some of the 10 PI firms we studied acquired both the operations and the real estate of nursing home chains while others only acquired the real estate. The former firms sit on the chains’ boards of directors and told us that their role is to provide strategic direction rather than directing day-to-day operations. In contrast, PI firms we studied that only purchased real estate do not sit on the nursing home chains’ boards of directors. Among the PI firms that shared their reasons for investing in the nursing home industry, most cited the increased demand for long- term care due to an aging population. We also reported that the investment time horizons and objectives of PI firms vary. Some PI firms purchased the homes with a planned short-term “exit strategy” and others intended to hold the investment over the long term. PI firm managers said they are able to make business improvements that their publicly traded competitors may be less willing to make because they generally are not subject to periodic disclosure requirements about their financial performance and therefore are not tied to producing profits on a quarterly basis. In addition, PI firms have said that they increase the operator’s access to funding that can be used to increase staff wages, enhance operations, or modernize facilities and which ultimately may result in improved quality of care. PI firm business strategies. PI firms may pursue different business strategies with respect to the types of residents they want to attract and the efficiency of their operations. Researchers have found that some nursing homes may specialize in caring for residents with certain care needs or Medicare residents. Care for such residents may result in higher levels of reimbursement. Indeed, prior to and after acquisition, PI homes we studied had a higher average percentage of residents whose care was reimbursed by Medicare compared to other for-profit and nonprofit homes. After acquisition, the percentage of residents in PI homes whose care was paid for by a source other than Medicare or Medicaid was higher on average than in other for-profit homes, but lower than in nonprofit nursing homes. Prior to acquisition, the average occupancy rates in PI homes were not significantly different from other homes. However, after acquisition in 2009, the average occupancy rates in PI homes were higher than other for-profit homes, although they did not differ significantly from nonprofit homes’ occupancy rates. The Social Security Act requires all nursing homes that participate in Medicare and Medicaid to undergo periodic assessments of compliance with federal quality standards. It also includes certain ownership reporting requirements. Under contract with CMS, state survey agencies conduct standard surveys, which occur once a year, on average, and complaint investigations as needed. A standard survey involves a comprehensive assessment of about 200 federal quality standards. In contrast, complaint investigations generally focus on a specific allegation regarding resident care or safety made by a resident, family member, or nursing home staff member. Deficiencies identified during either standard surveys or complaint investigations are classified in 1 of 12 categories according to their scope (i.e., the number of residents potentially or actually affected) and severity (i.e., the potential for or occurrence of harm to residents). Serious deficiencies indicate care problems that have resulted in actual harm or immediate jeopardy (actual or potential for death or serious injury) for one or more residents. We, CMS, and other researchers have examined the rates of deficiency citations, by state and among groups of nursing homes, to track trends in the proportion of homes with serious deficiencies and better understand recurring care problems. Our prior reports identified considerable interstate variation in citations for serious deficiencies on standard surveys and the understatement of serious deficiencies on those surveys. Although several studies have shown that for-profit nursing homes generally have a greater number of total deficiency citations than nonprofit homes, others have found no statistical difference in total deficiency citations between for-profit and nonprofit homes. Similarly, research that examined differences in the citations for serious deficiencies has not consistently found a difference between for-profit and nonprofit homes. One study examined the effect of PI acquisition on total and serious deficiencies; it did not find a significant difference from before to after PI acquisition. A different study that examined the impact of ownership of nursing home operations and real estate found that deficiency rates were similar across homes regardless of whether or not ownership was split between different entities. Nursing homes employ three types of nursing staff—RNs, LPNs, and CNAs. The responsibilities and salaries of these three types of staff are related to their level of education. The staffing mix—that is, the balance a nursing home maintains among RNs, LPNs, and CNAs—is generally related to the needs of the residents served. For example, a higher proportion of RNs may be employed to meet residents’ needs in homes that serve greater numbers of residents with acute care needs or those with specialty care units (such as units for residents who require ventilators). However, homes may not be able to pursue their ideal staffing mix because of RN shortages in certain geographic areas. High turnover among licensed nurses and CNAs may also affect staffing mix. Licensed Nurses and Nurse Aides  RNs have at least a 2-year degree and are licensed in a state. Due to their advanced training and ability to provide skilled nursing care, RNs are paid more than other nursing staff. Generally, RNs are responsible for managing residents’ nursing care and performing complex procedures, such as starting intravenous feeding or fluids.  LPNs have a 1-year degree, are also licensed by the state, and typically provide routine bedside care, such as taking vital signs.  CNAs are nurse aides or orderlies who work under the direction of licensed nurses, have at least 75 hours of training, and have passed a competency exam. CNAs’ responsibilities usually include assisting residents with eating, dressing, bathing, and toileting. In a typical nursing home, CNAs have more contact with residents than other nursing staff and provide the greatest number of hours of care per resident per day. CNAs generally are paid less than RNs and LPNs. Researchers have found that higher total and RN staffing levels are typically associated with higher quality of care as shown by a wide range of indicators, including deficiencies and health outcomes. Lower total nurse staffing levels and lower levels of RN staffing have been linked to higher rates of deficiency citations. In addition, higher total nurse staffing ratios (hours per resident per day), and higher levels of RN staffing in particular, have been associated with better health outcomes (such as fewer cases of pressure ulcers, urinary tract infections, malnutrition, and dehydration) as well as improved residents’ functional status. A home’s management of its nurse staffing has the potential to affect the quality of resident care, as well. For example, nursing staff turnover complicates nursing homes’ efforts to train their staff and can contribute to quality problems. There are no federal minimum standards linking nurse staffing to the number of residents but a number of states have such standards. By statute, nursing homes that participate in Medicare and Medicaid are required to have sufficient nursing staff to provide nursing and related services to allow each resident to attain or maintain the highest practicable physical, mental, and psychosocial well-being. In addition to this general requirement, every nursing home must have 24 hours of licensed nurse (RN or LPN) coverage per day, including one RN on duty for at least 8 consecutive hours per day, 7 days per week. In contrast, one researcher reported that, as of 2010, 34 states had established minimum requirements for the number of nurse aide or direct care hours, which ranged from about 0.4 to 3.5 hours per resident per day. In 2000, CMS examined the impact of nurse staffing on quality of care in nursing homes. CMS concluded that a minimum nurse staffing ratio of 2.75 hours per resident day was needed to maintain quality of care, while also noting a preferred ratio of 3 hours and an optimal ratio of 3.9 hours.