How nursing homes became a profit-making target for investment funds

The nursing home industry in Ireland has seen a notable influx of investment funds, which are growing quite quickly. Currently, (opens in a new window)just ten investment funds own one-third of the state's nursing home beds, which is a significant change from 2017, when they were essentially nonexistent.

Two significant questions are brought up by their increasing dominance: How have these financial players handled such quick expansion? And why do foreign investors find Irish nursing homes so alluring?

The funds in question include real estate investment trusts, or REITs, and private equity firms. Private equity generates money to purchase companies with the goal of selling them for a profit in a few years. As financial landlords, REITs purchase or finance real estate, collect rent, and distribute profits to shareholders. To put it briefly, nursing homes are a resource that private equity and REITs employ to extract profit.

Privatisation

The (opens in a new window)Economic and Social Research Institute (ESRI) and the (opens in a new window)Health Information and Quality Authority (HIQA) have drawn attention to the trend towards a market-based care paradigm that is dominated by private, for-profit delivery. More than half of all nursing home beds in the US were in public facilities in 1990. That percentage fell to just 16% by 2023. Private for-profit providers soared from 32% to a commanding 81% over that time (see graph below).

Share of (opens in a new window)total nursing home bed supply by provider type (1990-2023), private for- profit vs. public vs. non-profit

With more than 80% of beds offered privately, Ireland and England now have (opens in a new window)the most privatised nursing care systems in Europe. Even third-place Spain, on the other hand, has less than 50% in private ownership. For international investment funds, this dominance has produced favourable conditions. They wouldn't have had anything to invest in if there hadn't been an established market.

This is a preview of the article written by Dr Nicholas O’Neill for RTÉ, to read the full paper click (opens in a new window)here.