How Deadly Is Financial Leverage? Evidence from Care Homes during the COVID-19 Crisis
64 Pages Posted: 9 Feb 2022
Date Written: January 25, 2022
Highly levered care homes have a death rate twice as high as unlevered care homes at the peak of the COVID-19 pandemic. Care homes controlled by private equity firms no longer display significantly higher death rates once controlling for leverage. Leverage matters only once accurately constructed: i) the full ownership structure of each care home needs to be identified; ii) operating leases must be capitalized and added to the balance sheet. These two issues have seldom been tackled in the literature and we show that they matter.
Funding: None to declare.
Declaration of Interests: None to declare.
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