CHIP BULLETIN #7 May 30, 2026
Connecting Finance & Ethical Medical Care
The Ensign Group, the largest nursing home corporation in the United States, is deeply dependent on Medicaid revenues. This Bulletin reviews the company’s financial filings to evaluate whether its Medicaid funded business practices meet ethical standards expected of providers entrusted with the care of vulnerable Americans.
Medicaid is welfare medicine. The U.S. is unique among its peer countries in carving out and codifying the special category of “medically indigent” for low-income people in federally funded medical care programs. People must be poor to qualify for Medicaid benefits. For that reason, they are placed in a stigmatizing, lower tier of the medical system. Objective evidence suggests that Medicaid patients receive lower quality care – especially in the nursing home system.
Sixty percent of the Ensign Group bed days are allocated to Medicaid patients. Nevertheless, their cash conversion into shareholder equity and growth from Medicaid and Medicare revenue is phenomenal. The company generates extraordinary operating cash flow while maintaining chronically low staffing and directing nearly all available capital into growth, acquisitions, and investor returns.
Should Poor People’s Medicine Divert Immense Amounts of Cash to Investors at the Expense of Care?
Because the U.S. nursing home industry depends on Medicaid — a taxpayer funded welfare program – there are few expectations for high quality care and a conventional view that for-profit providers struggle financially due to underfunding. Conventional wisdom regarding the industry’s financial position is false and misleading. There is overwhelming evidence debunking widespread misconceptions concerning the industry’s hardship pleas, but it is often ignored by scholars, legislators, and journalists. At times, academics merely assume without evidence that it is true.
The best evidence for revealing the nursing home industry’s robust profitability can be found in consolidated financial statements — especially those required by the Securities and Exchange Commission (SEC). CMS cost reports provide some enlightenment for scholars attempting to unravel the flow of taxpayer provided capital into care versus return to investors. However, facilities are pass through entities. Their bottom line is revenue minus expenses with a large proportion of their expenditures routed to their parent companies’ subsidiaries.
The Ensign Group’s facilities reported net patient revenue of $3,870,955,330 and operating expenses of $3,455,738,775. Hence their net income from facility operations of $1,451,806 was a mere .04% of revenue. However, the company’s facilities reported $3.5 billion in expenses, which included $384.4 million (9.5%) in payments to their home office for management fees and payments to Ensign subsidiaries for rent, insurance, and other goods and services. Expenses also included noncash expenses such as interest, depreciation, and amortization. These return money to the company as tax write downs. So, facility cost reports can mislead scholars into believing that nursing home providers are financially strapped. Consolidated financial reports submitted by parent/holding companies tell a far different story.
A review of the Ensign Group’s recently released SEC annual financial report (10-K), Proxy statements, CMS Cost Reports, juxtaposed with data from 2025 4th quarter ProviderInfo file shows the following regarding, among other pertinent information, their financials and quality of care:
- Net operating income of 8% – not the paltry .04% shown on their combined facility cost reports, but:
- Cash is King: Operating capital, liquidity, and cash available for growth, investment, and sharehold equity is the metric of financial strength and weakness. Ensign had Operating cash flow of $564 million (11% of revenue) from $5.3 billion in 2025 revenue
- True free cash flow: (Operating cash flow minus investing & financing activities): $39 million (0.8% of revenue)
- Investing outflows: $513 million (aggressive expansion)
- Average staffing metric: 3.6 Hours Per Resident Day (HPRD), below the Biden Administration proposed minimum of 3.8 HPRD
- Executive compensation: CEO 2025 salary $11 million+; top five executive compensation packages range from $9 to $11 million
- Ownership: 96% institutional (BlackRock, Vanguard, Schwab, etc.) with 0% retail investor ownership; the Christensen family retains major insider control
- Political Capture: Addition of former AHCA/NCAL CEO and former Kansas Governor Mark Parkinson to the board of directors (compensation package ~$367,000 per year)
This conclusion is unavoidable: Ensign is not financially constrained. It is strategically choosing growth over care.
The Ensign Group is not just another nursing home chain, it is a bellwether telling us where a more concentrated, politically powerful, financially sophisticated industry is moving in the 2nd quarter of the 21st century. Reliable flows of Medicaid and Medicare funding add considerable value to an interconnected complex of real estate, direct care, insurance, therapy, and other related businesses. As Table 1 demonstrates the Ensign Group’s amazing growth trajectory, fueled by excessive extraction of cash at the expense of care.
Table 1: Four Years of Ensign Growth
As Figure 1 indicates, Ensign has been extracting excessive amounts of while continuing to provide lower than acceptable care for patients. This illustrates the disconnect of finance from the ethical-moral issue of treatment for patients receiving lower tier medical care. Investors and corporations are interested in return on investment and growth despite the source of revenue and responsibility to funders and patients.
Figure 1: Ensign Revenue & Cash Flow 2022 – 2025
What Would It Have Cost the Ensign Group to Raise Hours Per Resident Day (HPRD) to 3.8 in 2025?
CMS 2024 cost report data suggests that raising overall staffing from a substandard 3.6 HPRD to the Biden Administration’s proposed minimum of 3.8 HPRD would have cost $40,901,789 — approximately 7.2 percent of cash generated by operations, or a mere 8% of the cash sitting on their balance sheet as cash and cash-equivalents.
Rather than financially strapped, this major nursing home chain is flush with cash. It has generated substantial amounts of cash for rapid, aggressive expansion while maintaining impressive liquidity and an excess of working capital.
Why This Matters
For decades, the nursing home industry has argued that Medicaid underfunding makes adequate staffing impossible. Ensign’s 2025 financials directly contradict this narrative.
The company’s operating cash flow margin of 11% is higher than many profitable industrials, utilities, and S&P 500 firms. Yet its true free cash flow margin of 0.8% shows that nearly all available cash is being reinvested in expansion and shareholder equity rather than care.
Consolidated financial reports demonstrate how capital allocation, governance structure, and political influence combine to produce structural understaffing – not as an artifact of underfunding, but as a predictable outcome of the firm’s financial model. And structural understaffing is structural violence in the form of neglect and abuse of nursing home patients.
Editor’s Note
Finance is never ethically neutral, especially when it governs programs intended for people who are poor, disabled, or otherwise without power. When private enterprises extract large amounts of cash from Medicaid, the issue is not merely financial — it is moral. Corporations operating with taxpayer dollars carry a fiduciary obligation to the public, not only to shareholders. Yet the industry routinely puts out a narrative of financial hardship while refusing to provide evidence for the framing of their argument. The claim that the flow of tax dollars into care for poor people is somehow value‑free is not only false; it obscures the real distribution of power and harm.
The Ensign Group as a publicly traded company must disclose audited financial statements to comply with federal securities law. These disclosures exist to protect investors, not to monitor the quality of care. Most for‑profit nursing home chains, however, are closely held and shielded from public scrutiny. They can claim capital shortages, low margins, or financial distress without offering any verifiable data. This asymmetry in transparency allows the industry to shape public perception while keeping the underlying financial reality hidden.
Americans rely on their government to oversee both the financing and the quality of nursing home care. Yet while care standards are vague and weakly enforced, there are effectively no financial standards. The relationship between cash extraction and quality of care has been kept out of political discourse — not by accident, but through sustained lobbying that promotes a narrative justifying dehumanizing care. If the United States is to move from a warehousing model of long‑term care to one grounded in dignity, transparency and accountability in financial practices must become central to reform efforts.
Dave Kingsley, PhD
CEO, Center for Health Policy & Management (a 501C3 nonprofit organization).