Nursing Home Privatization: What is the Human Cost?

Steve Lopez
Publication Date: 
May 1, 1998


In response to increasing financial pressure and cuts in reimbursement, Pennsylvania county governments are considering privatizing countyowned nursing homes. The idea of saving money by turning county nursing homes over to private operators appeals to county leaders seeking to relieve budget pressures. But what happens to the quality of care when counties turn their nursing homes over to private firms?

This report investigates the effects of privatization or attempted privatization on the quality of care at several county and former county nursing homes in western Pennsylvania: Allegheny County’s John J. Kane Regional Centers, where privatization was proposed but not implemented; Comfort Home, which remained public but whose operation was taken over by a for-profit management company; and Chelsea Manor, which was sold outright to a nonprofit entity created by the county for the purpose of buying the facility. The report compares these homes with one another and with Green Gables, a private nursing home that is characterized by low wages, high employee turnover, and poor quality of care.1

The study draws the following conclusions:

  • Although staffing levels declined whether or not privatization was ultimately carried out, the most significant staffing cuts occurred where privatization was taken furthest. After the privatization of Chelsea Manor (the home sold to a newly created private non-profit organization), staffing levels appeared to be nearly identical to those at the low-quality private home—a home where understaffing led state investigators to suspend admissions temporarily in 1997.
  • Workers’ wages and employee turnover, two factors affecting care continuity, were most negatively affected at the home where privatization proceeded furthest. At the Kanes and Comfort home (where collective bargaining continued), workers’wages, benefits, and employee turnover remained stable. At Chelsea Manor, wages fell to levels almost identical to those at Green Gables (where staff turnover was rampant). Turnover at Chelsea Manor appeared to be increasing towards that at Green Gables.
  • At both homes where some form of privatization was implemented, workers complained about shortages of medical and patient care supplies. Both of these homes seemed to have a more serious problem in this area than the Kanes, but at neither home was the problem as serious as at Green Gables.
  • The quality of care at all three of the county and former county homes deteriorated, regardless of whether privatization was actually carried out or only proposed. Once again the worst declines in quality occurred where privatization was taken furthest. After privatization, Chelsea Manor began to develop a pattern of unexplained resident injuries, some of which were not properly investigated or reported. Chelsea Manor’s problems were similar in nature, though not in extent, to quality problems at Green Gables, where several hundred such incidents occurred in a recent 18-month period.
  • Even the best homes in the study, the Kanes and Comfort Home, are now unable to meet all the physical, emotional, and social needs of their residents, even though they exceed federal and state standards for staffing ratios. All of the nursing homes described in this report, in varying degrees of urgency, need more nurses’aides.
  • As do the Kanes, county nursing homes across Pennsylvania have much lower turnover among nurses’ aides than is typical for private homes. Combined with the case studies, this strongly suggests that nursing home privatization may, in many cases, worsen the quality of care.