For-profits flood into elderly care program

Patient in wheelchair entering car
Elderly patient.

Photo Credit: Getty/Katarzyna Bialasiewicz

Research has suggested that seniors with health issues fare better if they live at home rather than in skilled nursing facilities, but such a situation also apparently boosts the bottom lines of private equity companies.

A recent change in rules by the federal government allowing for-profit companies to manage aging patient populations through the Program of All-Inclusive Care for the Elderly, or PACE, has opened the doors to operators supported by private equity, according to The New York Times.

The PACE program essentially is a daycare program for the elderly, with providers receiving all-inclusive payments for care. A 2010 study suggested the program was $4,200 cheaper on an annual basis than a Medicaid enrollee receiving similar services in a nursing facility. Medicare and Medicaid pay PACE providers $76,728 per patient annually, about $5,500 less than the average cost of a nursing home, according to the article.

PACE had barely enrolled 40,000 people nationwide by allowing only non-profits to provide care, prompting the rule change. “For years we were pariahs, and no one wanted anything to do with us,” Julie Reiskin, executive director of the non-profit Colorado Cross-Disability Coalition, told the NYT. “Now that there’s money involved, everyone is all interested.”

Firms that have recently entered the PACE space include F-Prime Capital Partners, which has provided seed funding for a PACE-related startup, and InnovAge, which recently convered from non-profit to for-profit status. Last year received $196 million in backing from the private equity firm Welsh, Carson, Anderson & Stowe.

NYT noted a similar change that occurred in the 1980s, when Congress allowed Medicare to provide coverage for hospice care, prompting many for-profit operators to enter the space. More than half of the hospice care in the U.S. is currently being provided by for-profit companies with national reach, a state of affairs that has prompted the feds to look more closely into the current finances of the system.

- read the NYT article