Albany, NY — New York’s nursing home operators are increasingly outsourcing expenses to separate companies that they also own or control, a trend that poses challenges for state policymakers, according to a new report from the Empire Center.

Drawing on financial data gathered by the state Health Department, the report analyzes the growing use of “related companies” in the nursing home industry.

The report, authored by the Empire Center’s Bill Hammond, finds that 72 percent of the state’s for-profit nursing homes did business with one or more related companies in 2020. The transactions totaled more than $1 billion, or 16 percent of their operating expenses. The related companies reported $306 million in net income, or two-thirds of the owners’ overall profits for the year.

The practice is growing fast: Related-company spending by New York nursing homes jumped 164 percent between 2011 and 2020, the second-largest increase of any state.

“As the primary regulator and source of funding for nursing homes, the state should make sure that its policies encourage operators to provide the best possible care with the money available,” Hammond writes. “The patterns discussed in this report raise concern that the current system fails to adequately incentivize care quality, leaving it vulnerable to business strategies that prioritize financial maneuvering over the best interests of patients.”

In addition to publishing this analysis, the Empire Center has also posted a summary the available financial data about all nursing homes and related-company transactions, available here.

The Empire Center, based in Albany, is an independent, not-for-profit, non-partisan think tank dedicated to promoting policies that can make New York a better place to live, work and raise a family.