Private equity (PE) investment has been on the rise in the English health and care home sectors. Its
presence in the sector has caught the attention of both policymakers as well as researchers, mainly in
the US, who are increasingly interested in understanding its ensuing impact (Offodile II et al., 2021).
Economists have examined the role of PE investment in the US nursing home sector (Stevenson and Grabowski, 2008; Pradhan et al., 2013; Gupta et al., 2021). Studies point out that while on the one hand, PE firms have stronger incentives and better management practices (Bloom et al., 2015), which should be able to revive already ailing homes, there are also cost cutting measures adopted by these firms that can lead to poor quality of care and thereby worse outcomes for patients (Gupta et al., 2021). Moreover, since leveraged buyouts involve debt financing, thereby loading ailing firms with more debt can also increase the risk of bankruptcy (Ayash and Rastad, 2021). The CQC Market Oversight scheme failure to prepare to implement contingency plans (CQC, 2022). However, as highlighted by NAO there is still a need to improve the structure.
This research project seeks to answering the following specific questions related to the English market of care homes:
o What is the mechanism of leverage buyouts of care homes by Private Equity firms (PE)? Do these firms target ailing care homes to restructure and improve efficiency or healthy care homes with leveraged capital structures?
o How the local market reacts to the penetration of PE firms? Is there any spillover effects of PE firms entry in a local market for non-PE competitors?
o What is the likelihood of subsequent closure among PE care homes?
o How does a leverage buyout affect competitors? (Does it trigger the local authority into pre-emptive action? more inspections of neighbouring Sites)
o Impact of a leverage buyout on types of contracts negotiated by local authority?
o How are local authorities are predicting supply and demand?
o What actions, and how are, local authorities planning service provision to ensure demand is met in their area?