In a major shift, disability service providers across the nation are being acquired by investment firms seeking a quick profit, raising serious questions about implications for care.

Traditionally, providers of residential care, home health, personal assistance and other services for people with intellectual and developmental disabilities were nonprofit or religious organizations. But, a new report from the Private Equity Stakeholder Project, a nonprofit watchdog organization, details how private equity firms have moved to consolidate local and regional providers into large, national entities in recent years with an eye toward maximizing profit.

Between 2013 and 2023 alone, there were more than 1,000 private equity acquisitions of disability and elder care providers, the report found. As a result, multiple private equity firms now employ tens of thousands of people serving those with disabilities. Often the firms operate under subsidiaries with various names, obscuring their ownership.

Two providers — Sevita and Help at Home — are owned by the same private equity firms and together they have more than 100,000 employees located in nearly every state, according to the report.

“Firms typically seek to double or triple the value of their investment in 4-7 years, which is challenging to do in IDD services without cutting costs in a way that compromises the quality of care,” the report finds. “In an industry where companies provide such encompassing and essential services as IDD services and supports, private equity’s entrance poses a serious threat.”

The report cites multiple cases where state investigators have uncovered mistreatment or hazardous conditions at private equity-owned IDD providers involving the use of restraints, medication management, severe understaffing and more. In some cases, these issues have endangered individuals with disabilities or even led to death.

In less extreme examples, the report authors note that cutting staff or limiting access to transportation could mean that a group home resident is unable to attend a weekly bowling night or take a job across town, even when such activities are called for in their person-centered service plan and are necessary for the home to qualify as a community-based setting under Medicaid rules.

All the while, the report details how private equity firms have managed to net hundreds of millions of dollars by having disability service providers they own take on debt even as care standards declined.

“Private equity firms are fundamentally altering these services in ways that put some of the most vulnerable members of our communities at risk,” said Eileen O’Grady, director of programs at the Private Equity Stakeholder Project and the lead author of the report. “The private equity model prioritizes short-term financial gains, often at the expense of staffing levels, service quality and even basic client safety.”

Private equity firms are seeking out disability providers due to increased demand for services as individuals live longer and their caregivers age, the report indicates. In addition, with care shifting away from large state-run institutions, there is more room for private providers, and the fragmentation of the industry has made it ripe for investors looking for acquisition and consolidation.

Sevita, which operates the Mentor Network and other disability providers, said that its quality standards remain high regardless of its ownership.

“Since 2019, when new ownership acquired the company, there has been significant capital investment to improve and expand our services, enhance facilities, implement robust training and new technologies, and strengthen our workforce — all with the goal of better serving our individuals and communities,” the company said in a statement. “Whether we have been a nonprofit, public, or private company, our commitment has always been to provide quality services and supports that help people have greater independence, in a community of their choosing, no matter the intellectual or physical challenges they face.”

Two other private-equity owned companies highlighted in the report — Help at Home and Broadstep Behavioral Health — did not respond to requests for comment.

The report recommends that policymakers improve Medicaid rules to prevent cost cutting changes that are driven by profit, impose greater penalties for violations and increase transparency, among other steps.

“Home and community-based services are essential for hundreds of thousands of Americans with disabilities,” said O’Grady of the Private Equity Stakeholder Project. “Private equity ownership imperils the effective delivery of these services and puts individuals with disabilities at risk.”