Rising demand for long-term care is inevitable as more and more baby boomers retire. Meeting this demand will be a challenge. Recent evidence from the PACE program demonstrates that for-profit care providers can help meet this growing demand, but only if the regulatory environment allows it.
The PACE program, or Program of All-Inclusive Care for the Elderly, was officially established in 1997. PACE delivers comprehensive community-based care across a range of long-term support services to participants, subject to an income limit. These services include adult day care, medical care, physical and occupational therapy, dental care, nutrition counseling, and prescription medications.
Private organizations, including for-profit entities beginning in 2015, deliver the actual services, which are funded by per-person/per-month fees (e.g., capitated payments) from Medicare and Medicaid. While the program covers costs for patients that require nursing home care, the goal is to keep participants out of nursing homes and in the broader community for as long as possible.
Simply put, the program serves lower-income older adults who are frail, chronically ill, with potentially significant functional and cognitive impairments but who can still live in their own homes.
To qualify, beneficiaries must be “certified by their state to need a nursing-home level of care, reside in the service area of a PACE organization, and be able to live safely at home with PACE support. Nationwide, most PACE participants (87 percent) are dually enrolled in Medicare and full Medicaid. About 13 percent are enrolled in full Medicaid but not in Medicare. Fewer than 1 percent have Medicare without Medicaid or neither Medicare nor Medicaid coverage.”
While PACE’s availability is still limited – the program only serves around 80,000 participants in 33 states – it is widely regarded as a success. First, due to its ability to avoid costlier nursing home expenditures, the program saves the federal and state governments money while allowing seniors to live at home.
Second, while more evidence is necessary, there are indications that patients participating in the PACE program experience better health outcomes. For example, a study in the Journal of the American Geriatrics Society found that “PACE enrollees experienced lower rates of hospitalization, readmission, and PAH [potentially avoidable hospitalization] than similar populations.”
Given these potential benefits, having the resources to expand the PACE program is essential. And the 2015 regulatory change allowing for-profit groups to run specific PACE programs has been critical for driving this growth.
For instance, a March 2025 evaluation of the for-profit expansion of PACE by NORC at the University of Chicago concluded, that the regulatory changes encouraging for-profit entities has accelerated the growth of the PACE program and has expanded the program to a “more racially and ethnically diverse population, with a notable increase in Medicaid-only participants.”
The study also concludes that for-profit entities (including private equity investors) were able to accelerate the growth and reach of the PACE program because they have greater access to capital resources.
A 2025 Health Affairs Scholar piece on the PACE program tracked the different growth rates of for-profit and nonprofit PACE providers found that for-profit programs have been expanding faster. Again, given the capital-intensive needs of PACE programs, the results are unsurprising. The implication is that expanding access to PACE services will likely require expansion of the for-profit providers.
One oft-cited concern that the quality of care at the for-profit centers is also unfounded. A Mathematica Policy Research analysis of for-profit demonstration programs in Pennsylvania, for instance, claimed that “the access to and quality of care received by for-profit enrollees in PACE plans in Pennsylvania is lower along several dimensions compared to the care received by their not-for-profit counterparts.”
However, the study also notes that “many of the differences were not statistically significant.” Since most results are not statistically significant, the study’s own findings do not support the authors’ assertion that the quality of care is different between for-profit and nonprofit providers. This result is also consistent with other findings from the study such as enrollees’ satisfaction with care being similar between for-profit and nonprofit entities.
Undoubtedly, oversight ensuring quality control at PACE programs is warranted, regardless of whether those programs are run by for-profit or nonprofit organizations. Additionally, it is essential to ensure that the incentives of the program operators are aligned with the needs of program participants. However, the need for effective oversight should not distract from the important contributions that for-profit organizations have made to program enrollees.
The PACE program has shown great potential providing enrollees with better care while saving money. Due to the greater ability of for-profit providers (often backed by private equity investors) to more efficiently raise the necessary funds, meaningfully expanding the benefits enabled by PACE programs requires the regulatory environment to support an expanding role for the for-profit sector. Fostering this growth requires a regulatory environment that continues to enable for-profit organizations to responsibly provide these essential services.
Read the full article here
