Nursing Home Ownership and Related Party Costs: The Profit Can Be Somewhere Else

Nursing home ownership and related party costs explain where care payments go after they reach the facility: to the operating business, a landlord, a management company or service vendors. Some of those businesses share the same owners. If you see rent and fees leaving a nursing home that says it cannot afford staff, the facility’s accounts may tell only part of the story. Taxpayers pay for health care, and residents depend on that money reaching the bedside.

Who Gets Paid When a Nursing Home Gets Paid?

The operating company receives payments for care. A property company receives rent. A management company collects fees, while therapy, staffing and pharmacy businesses charge for their services. Common ownership can put several of those recipients inside the same economic enterprise.

The Ensign Group describes itself as a holding company with no direct operating assets, employees or revenues. Its operating subsidiaries, centralized service business and real-estate business perform different jobs. The company’s annual filing shows how those jobs fit together financially: its 2025 segment reconciliation eliminated $139.744 million of intercompany revenue.

Consolidation removes internal transactions when the group presents its combined accounts. Rent can appear as an expense at the nursing home and income at the group’s property business, then disappear as an internal transaction in the consolidated statement. Stopping at the facility’s rent expense misses the other side of that payment.

The Facility Name Is Only the Beginning

The certified provider, licensed operator, landlord and manager can be different legal entities. The brand on the building identifies the business to residents. The provider’s certification number and enrollment information, ownership disclosures and contracts connect that building to the entities receiving money and making decisions.

A state license, Medicare provider agreement, Medicaid certification and Medicare enrollment are separate permissions. Certification can also cover a distinct part of a larger institution. That makes the certified provider the starting point for the financial map, even when the campus uses a single name.

The Centers for Medicare & Medicaid Services identifies chain affiliation through shared owners, officers or operational or managerial control. It describes a different relationship from the group of businesses combined in a company’s financial statements. A blank chain field leaves the ownership question open. Contracts show who has authority. The accounts show who got paid. Connecting those businesses is work we do with you.

Why Can a Nursing Home Report a Loss While Its Landlord Earns Money?

A nursing home can report a loss while a landlord under the same ownership earns money because the home’s rent expense is income to the property business. Management and service fees can move income in the same way. The facility account captures the expense even when the payment stays within the owners’ wider enterprise.

An Illinois working paper published by the National Bureau of Economic Research and revised in September 2025 estimated that 68% of profits were shifted to related parties under its methods. Property and management accounted for approximately 77% of related-party spending in that study. Those findings explain why examining the landlord and manager can change the picture of a nursing home’s finances.

There is a separate accounting question inside the facility: which patients’ revenue and costs does a reported margin cover? The Medicare Payment Advisory Commission’s March 2026 report put the aggregate 2024 Medicare fee-for-service margin for freestanding skilled nursing facilities at 24.4%, the all-payer total margin at 2.1%, and the margin outside Medicare fee-for-service at negative 2.3%.

What Does a Related-Party Cost Report Show?

A related-party cost report shows the relationship, the facility’s expense and the adjustment needed to arrive at Medicare-allowable cost. The central comparison is between what the nursing home paid and what supplying the service actually cost the related organization.

As the Department of Health and Human Services’ Office of Inspector General explains in its related-party audit, the general rule uses the related organization’s cost, capped at the price of comparable services, facilities or supplies available elsewhere. There is a defined exception for qualifying suppliers operating in a competitive market. Control can be indirect: the question includes who can significantly influence or direct another business’s actions or policies.

Worksheet A-8-1 identifies related-party expenses and adjustments, along with information about the businesses involved.

The underlying books supply the explanation behind the adjustment. A lease shows the rent charged. The landlord’s depreciation, property taxes and interest expenses help show its underlying costs. A management contract shows the fee arrangement, while the manager’s accounts and allocation records show the costs assigned to that facility and the other businesses it serves. Headquarters expenses can also reach the facility through home-office cost allocations. The invoice is only one part of that comparison.

These are the connections an insider may already understand: an omitted ownership relationship, a fee containing an affiliate’s profit, or an adjustment that never reached the cost report. We examine those connections with the payment records and the decisions behind the reporting.

What the Inspector General Found in the Cost Reports

The Inspector General’s December 2024 audit found both missing relationships and overstated costs. In its selected, nonstatistical sample of 14 skilled nursing facilities, three failed to disclose one or more related parties and seven failed to adjust some related-party costs properly. The overstated costs totaled $1,703,734.

One facility reported a therapy provider’s charge as though it covered only the provider’s expenses. The Inspector General examined the financial records and found that the charge included a profit margin that had not been removed. Elsewhere, a facility said it had an old exception permitting its reporting treatment, but the facility, Medicare contractor and the agency could produce no documentation that the exception had been granted.

The gap extended to oversight. The Medicare contractors had not reviewed disclosure and reporting of related-party costs in the selected reports. The Inspector General also found insufficient agency guidance on determining allowable costs.

Cost reports feed updates to Medicare payment rates. The Inspector General said the overstated costs could affect future skilled nursing payments through those updates.

When the Accounts and the Decisions Become a Case

False cost-report statements and concealed operational control can connect a corporate structure to a specific claim for public money. The Centers and Saratoga cases show different parts of that connection. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Centers Admitted False Statements and Omissions

Centers Healthcare’s July 2025 resolution required $6,063,500 over Medicare cost reports from 44 skilled nursing facilities linked through common ownership or control. Centers admitted that the reports contained false statements or material omissions about transactions with related organizations. It also admitted that management reviewed the reports and knew or reasonably should have known of the false statements.

Management reviewed the reports, yet false statements about payments within the same ownership group still reached Medicare.

Saratoga’s Landlord and Operational Control

The Saratoga Center case reached beyond rent. The Justice Department alleged that, after a financial dispute, the landlord required the licensed operators to surrender control and replaced them with unlicensed operators. The government described inadequate staffing, medication errors, pressure ulcers and failures to maintain hot water and adequate linens.

The landlord and former operators collectively agreed in February 2023 to pay $7,168,000 to resolve allegations of false Medicaid claims for worthless services.

Management Instructions Can Show the Financial Pressure

A therapist’s 2020 complaint against RegalCare Rehabilitation alleged that a manager she understood to work for Stern Therapy Consultants directed her work while she was employed by RegalCare. He reported to RegalCare’s senior executives. The complaint alleged that managers pushed additional treatment when the facility’s billing mix changed:

The alleged instruction connects a revenue problem to a treatment decision. Contracts and ownership filings show the businesses’ roles. An insider can explain how management exercised those roles inside the facility.

Ownership Disclosures Need a Date

Ownership disclosures describe reported relationships at a particular time. Their usefulness depends on the rules, reporting period and transaction they reflect.

The nursing-home attachment to Form CMS-855A, introduced in October 2024, requires information about owners, managers and additional disclosable parties. That last category includes landlords, those exercising operational or financial control, and businesses providing management, consulting, accounting or financial services. The form asks how those parties relate to the facility and to each other.

The CMS guidance dated February 24, 2026 says the prior January 1, 2026 deadline for the special revalidation effort was suspended indefinitely. The agency continued processing submissions, and ordinary ownership-change reporting duties continued. The suspension delayed the collection timetable for the expanded information.

Private-equity investment and real-estate investment trusts add another layer to the map. The Department of Health and Human Services’ 2023 study, Trends in Ownership Structures of U.S. Nursing Homes and the Relationship With Facility Traits and Quality of Care found lower registered nurse hours and higher deficiency scores after those investments relative to other for-profit facilities in its adjusted analysis. For a particular home, the ownership records, payments, staffing accounts and management instructions connect the financial structure to what residents received.

You Know Where the Money Went

If you work in nursing-home finance, administration or a service business and see a gap between the accounts and the care, speak with our whistleblower experts about who controlled the money. We connect the transactions, reporting and management decisions to build your strongest healthcare whistleblower case, with nursing-home fraud whistleblower lawyers who understand related-party costs. We stay beside you as that financial picture becomes a case.