How Real Estate Investment Trusts Profit from Nursing Homes While Residents Suffer Neglect

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 repeatedly. 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 (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. The documents also showed that the real estate company monitored 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 Long-Term Care

Over the past decade, real estate investment trusts have bought thousands of buildings housing nursing homes, hospitals, assisted living facilities, and medical offices. A KFF Health News examination of court filings and corporate records shows that these landlords wield more influence than health care facilities publicly acknowledge.

The documents reveal that REITs often select the management overseeing operations and retain them even when aware of issues like threadbare staffing, floundering governance, repeated safety violations, or other problems that undermine quality of care.

In March, a California jury 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 representing Darby’s daughter.

Lack of Regulatory Oversight for REITs in Health Care

Despite their growing presence, 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 (CMS) 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 property owners or their financial arrangements with health care providers.