Private-duty nursing has become an attractive target for private equity (PE) investors. However, a new report states that care quality and market competition could suffer as a result.

The report by the nonprofit watchdog group Private Equity Stakeholder Project (PESP) emphasizes the ongoing issues faced by private-duty nursing agencies, including persistent labor shortages and low Medicaid reimbursement rates. 

Despite these challenges, PESP highlights that PE firms continue to invest in the sector, indicating that investors find profitable opportunities there.

According to the report, investors see potential in home health care for several reasons. First, the industry has “remained fragmented,” providing an opportunity for investors to consolidate smaller agencies into larger networks.

Furthermore, with the aging U.S. population, the need for specialized home health care continues to grow due to cost savings and patients’ preference to age in place.

A 2023 report from the American Antitrust Institute and Americans for Financial Reform found that despite accounting for only 6% ownership in U.S. home health care, “a significant portion of PE home health care is concentrated in the hands of just a few firms.”  

PE involvement in health care is more limited than some may think. A July 2024 PitchBook report found that PE-backed providers represent only 3.3% of the U.S. health care provider ecosystem by revenue. 

In the pediatric private-duty nursing sector, Bain Capital and J.H. Whitney-backed Aveanna Healthcare is the largest private-duty nursing company in the U.S., offering its services across 27 states with 33,500 employees, the report stated.

Risks and rewards

The report highlights that PE business models often depend heavily on debt to generate high investor returns. PESP contends that this dependence can result in harmful cost-cutting strategies, potentially worsening the difficult and low-wage conditions experienced by private-duty nurses.

“Excessive debt levels may not only harm a health care company’s finances and ability to grow sustainably, but can also have detrimental impacts on workers and the patients for whom they care,” researchers wrote. “Labor is typically the biggest expense for health care providers, and so staffing is often impacted by cost-cutting strategies.”

The report also observed that the typical PE business model involves placing significant debt on the companies they acquire. This typically occurs during the initial buyout, when 60% to 90% of the purchase is often financed through debt, and continues later in the ownership cycle. Importantly, PE firms are not responsible for repaying this debt, as the companies themselves secure it.

“This creates a moral hazard issue where PE firms might direct the companies they own to take financial risks,” the report stated. “This means that a PE firm can generate returns on investment even if the company ends up in financial distress or bankruptcy.”

Some other trends noted in the report include lower wages, understaffing, reliance on temporary staff, provision of subpar benefits, and inadequate training resources.

Researchers also noted that PE ownership could lead to the consolidation of private-duty nursing organizations, which may reduce patient options and increase health care costs.

Several PE-owned home health companies providing private-duty nursing have completed M&A in the first half of 2025, including Abound Health, Star Pediatric Home Care, Aveanna, Thrive Skilled Pediatric Care, Avid Health at Home, Home Care Angels and Private Duty Home Healthcare. MedTec Healthcare’s merger with Senior Helpers in April formed a new home health platform company, Altocare. 

Finally, according to the report, PE-owned companies face fewer regulations than publicly traded firms. They are not required to provide the same financial disclosures to the Securities and Exchange Commission or their investors.

However, PE ownership is not always detrimental. Supporters argue that PE can rejuvenate struggling health care agencies, enhance efficiency and foster innovation by offering capital, expertise and a profit-oriented approach, which may result in improved patient care and outcomes, as noted in a study published in the American Journal of Ethics.

Still, PESP urged lawmakers to address PE involvement in private-duty nursing through three key actions. Researchers recommended the establishment and expansion of paid caregiver programs with proper guardrails and the prevention of anti-competitive mergers. Finally, they suggested limiting the use of debt that PE firms and other investors can leverage to finance buyouts and add-on acquisitions in health care.

“Without guardrails in place, investor-owned and other for-profit home health care agencies can legally siphon Medicaid dollars away from patient care as patients and their families struggle to find long-term, reliable and quality nursing coverage,” the report stated.