How Deadly Is Financial Leverage? Evidence from Care Homes during the COVID-19 crisis

AI-Generated Summary This research paper examines the relationship between financial leverage and COVID-19 death rates in English care homes. The authors argue that high financial leverage, particularly when accounting for operating leases, significantly increases death rates, especially during the first wave of the pandemic. This is because highly leveraged care homes are more likely to cut costs aggressively, potentially compromising resident care. The authors also find that care homes controlled by private equity firms do not have higher death rates once financial leverage is accurately measured. This suggests that the ownership structure itself is less relevant than the level of…