If you're one of the many fine gentlemen in this industry who owns a nursing home through one LLC and the building through another LLC and pays rent from the first LLC to the second LLC at a rate that just happens to be… generous… you might want to pay attention to what's happening in Virginia right now.
Republican State Senator Glen Sturtevant has introduced SB 808, a bill that would require any nursing home paying rent to disclose who's getting the money , and if that rent is more than 125% of a state benchmark to a related party, the facility gets its quality incentive payments and value-based performance bonuses docked. Oh, and if you lie about it on the disclosure? Class 3 misdemeanor. As in criminal.
Let's be clear about what this bill is actually targeting: the classic move where you buy a building, set up a propco and an opco, lease the building to yourself at a number that would make a Manhattan landlord blush, and then tell CMS your margins are razor-thin because look at all this rent you're paying. We don't know anyone who does this, of course. We just hear things.
The Private Equity Stakeholder Project , the guys who've made it their life's mission to make your ownership structures everyone's business , called this bill "a positive and necessary step" and said it could be the first in the country to go after excessive rents directly, rather than trying to block REIT and PE acquisitions altogether. In other words, they're done trying to keep you from buying the building. Now they want to control what you charge yourself to use it.
The Virginia Health Care Association pushed back, arguing that the bill wrongly ties financial arrangements to care quality and duplicates existing CMS cost-reporting rules. They also pointed out that the bill creates a state definition of "related party" that doesn't match the federal one , which, if you've ever dealt with two government agencies trying to agree on a definition of anything, you know is a recipe for chaos.
What triggered all this? A facility called Colonial Heights Rehabilitation and Nursing Center, where several employees got arrested in late 2024 for alleged elder abuse. When reporters started digging, they found the building was paying sky-high rent to a related party. Nothing gets a state senator motivated like a local scandal with a clean narrative.
[Page 2 also contains repeated full-width banner pull-quotes from the Medicare Advantage / AHCA article that appears in full on page 4. Those banners are consolidated under that article below.]