The Effects of Private Equity Firms on Disability Services

Takeaways

• Private equity firms are acquiring disability service providers, a trend that has had detrimental effects on vulnerable individuals, including understaffing, neglect, and reduced quality of care.

Many people who rely on intellectual and developmental disability (IDD) services are not receiving the level of service they should receive.

In part, experts say this is because for the past several years private equity firms have been buying and consolidating providers of intellectual and developmental disability services and cutting costs to boost profits. These services affect individuals in group homes and residential care, patients who rely on certain therapies and durable medical equipment, and others. The goal of these private equity firms is to tap into a recession-resistant, Medicaid-funded sector experiencing rising demand, then extract significant short-term profits.

What Is a Private Equity Firm?

A private equity (PE) firm is an investment company that pools money from wealthy individuals, institutional investors (like pension funds), or other entities to buy and manage companies — usually with the goal of improving their profitability and eventually selling them for a profit.

PE firms typically buy companies that are privately owned or take public companies private. They then attempt to boost profits by using cost-cutting measures, such as restructuring, consolidating, merging companies, or changing leadership. PE firms often use borrowed money, through leveraged buyouts, to finance their purchases. After a few years, they sell the company through a public offering or private sale, aiming for a high return.

In short, private equity firms invest in companies, often take control of them, make changes to increase their value, and then sell them to make a profit.

Why Are PE Firms Investing in IDD Services?

PE firms are investing in intellectual and developmental disability services for a few reasons, including:

• Steady, growing demand. As people with IDDs live longer and state-run institutions close, families need more community-based care.
• Medicaid and insurance funding. Over half of long-term care spending comes from public funds, reassuring PE investors of reliable cash flows.
• Fragmented market. Dozens of small providers make it easy for PE firms to build regional or national networks.
• Debt-fueled profit extraction. By loading newly acquired companies with debt, PE firms can take out large dividends early, often before the quality of care declines.

The Effects on Vulnerable Individuals

Even though the idea of consolidating companies with a view of running them more efficiently may seem beneficial, the trend of PE firms acquiring companies that provide IDD services often has detrimental effects on those receiving the services.

Staffing Cuts and Burnout

Chronic understaffing pushes caregivers into unsustainable shifts, in some cases 16 to 24 hours straight according to one recent report, causing exhaustion and stress. Some PE-owned companies have come under scrutiny and have been fined for not providing appropriate care. In 2022, a NeuroRestorative home in Iowa was fined for failing to ensure its staff were adequately trained after a resident who was left unattended in a liquor store drank three-quarters of a bottle of vodka.

Overworked staff can also fail to meet their clients’ medical needs, missing therapy appointments or social activities, thus negatively affecting the level of care they provide.

Abuse, Neglect, and Safety Breaches

Cases of severe neglect include a Help at Home resident in Indiana dying in 2019 underweight (71 lbs.) with multiple pressure sores. In 2024, Florida attempted to revoke NeuroRestorative’s license to operate in the state after numerous violations were uncovered, including a failure to implement training programs and to continue to train staff. Multiple state violations have led to license revocations, fines, and home closures.

Profits Over Personalized Care

Since PE firms are fundamentally driven by the goal of maximizing returns for their investors, they have an incentive to cut costs whenever possible. Cost-cutting inherently reduces services and the level of care patients receive. Sometimes services are abandoned all together, as in the case of SoftBank’s Elemy abruptly terminating services for patients in 11 states, in some cases with minimal notice to the patients’ families.

The aggressive growth model that contributes to the high returns compels PE firms to sign up new patients even if they don’t have the resources to handle them. This can lead to higher than recommended caseloads for staff members, which in turn leads to less supervision, fewer individualized plans, and potential overbilling.

Delayed Access to Essential Equipment

At the same time, PE-backed durable medical equipment (DME) dealers have slowed repairs, resisted right-to-repair laws, and prioritized profits — leaving clients stranded without mobility support for weeks or months. One field service technician reported managing up to 2,000 clients — far beyond feasible service levels.

The Systemic Trend

Between 2013 and 2023, over 1,000 IDD care companies were acquired by PE firms. This trend created billion-dollar revenue platforms with tens of thousands of employees. In 2024, the Private Equity Stakeholder Project identified 1,049 IDD-related deals.

The purchased IDD companies often take on heavy debt to finance PE dividends — for example, Centerbridge Partners and Vistria Group pulled more than $600 million in payouts from Sevita and Help at Home as care standards declined.

Calls for Action

Advocates of people with disabilities are calling for greater transparency through disclosure of the real owners of IDD service and equipment providers. They are also advocating for tighter Medicaid oversight, stricter staffing and quality audits, and stronger penalty enforcement.

Some suggest that insurers should support fee-for-service care linked to outcomes, instead of volume. The Private Equity Stakeholder Project and the National Disability Rights Network assert that states should support right-to-repair laws that allow individuals to safely fix their own equipment, or in other ways make it easier and faster to get equipment repaired or replaced.

Additional Resources

The consolidation of IDD services companies by PE firms into large, debt-laden chains prioritizes investor returns over vulnerable individuals. The result is understaffing, neglect, unsafe facilities, disrupted services, and delayed access to essential equipment.

If this trend continues unchecked, the most marginalized individuals with disabilities — who depend on consistent, high-quality support — could be left behind. Lawmakers, families, and advocates must demand accountability, transparency, and meaningful standards that place care before profits.

If you have questions about your rights or believe you are being discriminated against, contact a special needs planning attorney near you.

For additional reading about disability benefits and services, check out the following articles:

• Medicare and Social Security Disability Benefits
• States Increasingly Looking to Managed Care for Long-Term Care Services
• Disability Community Continues Fight for Access to Home Care
• Report Finds Feds Aren't Monitoring States That Have Moved Long-Term Care Services to Managed Care