Real Estate Investors Profit From Long-Term Care While Residents Languish

By the time she was hospitalized in 2020, Pearlene Darby, a retired teacher, had suffered open sores on both legs, both hips, and both heels, as well as a five-inch-long gash on her tailbone. She died two weeks later at age 81 from infections and bedsores, according to her death certificate. Her daughter sued the nursing home, alleging it had left Darby sitting in her own feces and urine time and again. The lawsuit, settled on confidential terms last year, blamed not only the managers of City Creek Post-Acute and Assisted Living but also the building’s owner, a real estate investment trust, or REIT. In the year Darby died, City Creek paid CareTrust REIT more than $1 million in rent, while the Sacramento, California, nursing home ran a deficit, court records show. Federal tax rules ban REITs from running health care facilities, but CareTrust was not an absentee landlord either, according to internal records filed in the case. It chose the nursing home’s management company and required through the lease that the home keep at least 80% of beds occupied. CareTrust granularly tracked how well the home kept to its financial plan, down to the money spent monthly on nurses and food, the records said. And the documents showed that the real estate company kept tabs on government safety inspection findings and Medicare quality ratings. Both CareTrust and the nursing home operator denied liability for Darby’s death. CareTrust officials said in court papers that it is not involved in day-to-day nursing home decisions or patient care, and that it monitors facilities to ensure nothing jeopardizes rent payments. In a written statement, CareTrust Corporate Counsel Joseph Layne told KFF Health News: “We are the property owners, not the operators.” Landlords With Influence Over the past decade, real estate investment trusts have bought thousands of buildings that house nursing homes, hospitals, assisted living facilities, and medical offices. A KFF Health News examination of court filings and corporate records shows that these landlords have more influence than the health care facilities publicly acknowledge. The documents reveal REITs often select the management who oversee the operations and leave them in place even when they are aware of threadbare staffing, floundering governance, repeated safety violations, or other problems that hamper quality of care. A California jury in March awarded $92 million in punitive damages against a former REIT over the death of a 100-year-old resident with dementia who froze to death outside her assisted living facility. “The REITs are in charge,” said Laraclay Parker, one of the lawyers who represent Darby’s daughter. Absence of Oversight Despite their ubiquity, REITs remain invisible to state and federal health regulators. Hospitals and nursing homes are not required to disclose rent payments or landlord identities in the annual reports they submit to Medicare. Under President Donald Trump, the Centers for Medicare & Medicaid Services indefinitely suspended a Biden-era requirement that nursing homes disclose REIT involvement . Catherine Howden, a CMS spokesperson, said in a statement that the agency does not regulate facilities based on their tax status or corporate form and instead focuses on the quality of the care they provide. REITs now own a fifth of the nation’s senior housing, which includes assisted living, memory care, and independent living, according to an industry analysis. REITs also hold investments in 1 in 6 nursing homes. Publicly traded REITs that focus on health care are now worth nearly a quarter of a trillion dollars, according to Nareit, an industry association. While one research study found REIT investments were associated with higher spending on nursing wages , another concluded that after being bought by REITs, nursing homes frequently replaced registered nurses with less skilled nurses and aides. A third analysis concluded that health inspection results were worse after REIT investment. Researchers also found that investor-owned hospital chains that sold buildings to REITs were more likely to close or go bankrupt, as happened in 2024 with Steward Health Care. Often, private equity investors kept the sale proceeds as profits while the hospitals were burdened with new rent costs. “There were no improvements in clinical outcomes,” said Thomas Tsai, an associate professor at the Harvard T.H. Chan School of Public Health. REITs are required to distribute most of their income and don’t have to pay the 21% federal corporate income tax on it. There is a catch: A REIT that “directly or indirectly operates or manages” a health care facility loses the tax break for five years. Typically, a REIT leases the property to another company that runs the nursing home or assisted living facility and maintains its tax break. Nareit said health care REITs distributed more than $7 billion in dividends in 2024. Michael Stroyeck, head of health care analysis at Green Street, a real estate research company, said “there’s definitely a symbiotic relationship” between REITs and facility managers because they have the same goals. He said he has seen REITs replace operators that are having difficulties or go bankrupt. John Kane, a senior vice president at the American Health Care Association and the National Center for Assisted Living, an industry group that represents nursing homes, said in a statement: “Given government funding often falls short, REITs have been valuable partners in helping to invest in long term care without influencing daily operations.” Low Staffing at a Chain Strawberry Fields REIT, which like CareTrust trades on the New York Stock Exchange, owns or controls the buildings of 131 nursing home facilities. The nursing home operations inside 66 of those facilities are owned by Moishe Gubin, Strawberry Fields’ chief executive, and Michael Blisko, one of its directors, according to Strawberry Fields’ annual report for last year. Gubin and Blisko also jointly own Infinity Healthcare Management , which manages their nursing homes; Blisko is Infinity’s CEO. On average, Infinity-affiliated nursing homes provided an hour and a quarter less nursing care per resident per day than the national average of four hours, a KFF Health News analysis of federal records found. Infinity and several of its nursing homes have recently settled 30 death and injury lawsuits in Cook County, Illinois, totaling more than $4 million, said Margaret Battersby Black, a Chicago lawyer. A jury last year awarded $12 million in a lawsuit brought against Infinity and one of its Chicago nursing homes over the 2023 death of Shirley Adams. A retired candy factory worker, Adams died after developing infected bedsores at Lakeview Rehabilitation and Nursing Center, according to the lawsuit. “She had wounds that no one could explain,” one of her adult children, Leslie Adams, testified at trial. Medicare gives Lakeview its lowest quality rating, one star out of five. Paul Connery, a lawyer for Adams’ family, said they are still trying to collect on the judgment against the nursing home and management company, which now totals $17 million with interest and attorney fees. “If I get caught speeding and I went to court, they issue me a ticket and I’ve got a fine to pay,” Adams said in an interview. “How are they able to still continue to move on with business like nothing has happened?” In a phone interview and an email, Gubin said Strawberry Fields, Infinity, and the nursing homes are all legally distinct and that he has not played an active role in Infinity in more than a decade. He said nursing homes get sued all the time but that the verdict against Lakeview is so large that it will force the home to declare bankruptcy or shut down. “The whole thing is unfortunate,” Gubin said by phone. “For 15 years they were a perfectly good guardian” and “a well-run building,” he said. “You wouldn’t think it was fair to be judged on your worst day.” Blisko and an Infinity lawyer did not respond to requests for comment. Strawberry Fields, which owns 10 assisted living facilities and two long-term care hospitals in addition to the nursing homes, earned net income last year of $33 million from $155 million in rent, a 21% profit margin, securities filings show. Gubin said those weren’t excessive returns. A $110 Million Verdict Traditionally, REIT leases make the operating companies responsible for paying property taxes, insurance premiums, and maintenance costs. In 2008, Congress gave health care REITs a new option to make money: On top of collecting rents, they could set up subsidiaries and take profits directly from health care businesses. They still must have independent management overseeing care decisions. Many REITs have embraced the role even though the subsidiaries must pay corporate taxes and risk losing money if the businesses do poorly. Colony Capital was a REIT that through layers of shell corporations owned both the building and the operation of Greenhaven Estates, a Sacramento assisted living and memory care facility. In 2018 Greenhaven paid Colony $1.4 million in rent, nearly a third of its $4.5 million in revenue that year, according to financial records filed in court. Greenhaven also was on the verge of losing its license, according to a revocation notice filed in November 2018 by the California Department of Social Services. Greenhaven had racked up years of health violations, including from letting untrained workers administer medications, lacking enough employees to care for people with dementia, and neglecting a resident who smeared feces over his body, bed, floor, and bathroom, the notice said. In February 2019, a few weeks after celebrating her 100th birthday, Mildred Hernandez,…