Despite private equity owning only an estimated 5% of the nursing home industry, its high-profile problems in the sector have made it a bogeyman to politicians and the public.

Why it matters: Even as studies show that 9 of 10 adults prefer to age in place, the need for an institutionalized setting will persist. But the climate has long made investing a challenge for PE.

Driving the news: In his State of the Union address, President Biden called out private equity investors for their role in raising costs and reducing quality at nursing homes, despite their small presence.

* More recently, the Biden administration unveiled a new publicly available database displaying ownership of all Medicare-certified nursing homes.

* Carlyle Group's disastrous ownership of HCR ManorCare — which among other things included allegations of patient neglect — hasn’t helped the case for further investment into nursing homes, nor have the COVID horror stories.

What they're saying: The challenge with investing behind the status quo? “Right now the real estate component is so separate from the health care component,” Welsh, Carson, Anderson & Stowe vice president Ann Hickey says.

* That means you’re not seeing developers meshing the operations of a physical institutional center with forward-thinking strategies to reduce total cost of care and living for a given population, she says.

* The market's reimbursement landscape (largely dependent on state Medicaid programs) is also under scrutiny.

* Plus, Centerbridge Partners senior managing director Jeremy Gelber says, like all facility-based care (i.e., hospitals), nursing homes have high overhead costs: “It’s very hard to innovate.”

* The challenge is figuring out how to orchestrate more offerings around the nursing home, Advent International managing director Carmine Petrone adds. “They're hard to staff, and you need high occupancy rates to create real operating income that you could then use to invest behind some of these other initiatives.”

What we’re watching: The nursing home today is largely considered a real estate play, so what does the next generation of the nursing home look like, and where does the health-care-centric investor fit in or around it?

* Likelihood is, it's more than just providing a bed for seniors.

Zoom in: “I think the model of institutionalized care has to include some sort of individualized care management attention," says Town Hall Ventures general partner Andy Slavitt.

Between the lines: The Program of All-Inclusive Care for the Elderly (PACE) is considered one of the best alternatives to the institutional-level care received in nursing homes, but factors including its capital intensity and regulatory structure have hampered the growth opportunity.

* This model marries medical and physical care to social determinants, the non-medical environmental factors tied to health care, enabling seniors to age safely at home while addressing their wellbeing.

* Whether it's providing an avenue for socialization or offering seniors meals from nine ethnicities, "you can take the game up pretty significantly," says Slavitt, whose firm backs WelbeHealth, a PACE provider.

* PACE isn’t that well understood by the public, adds Slavitt, “so people take the status quo, which isn’t nearly as good for them.”

Meanwhile, we did witness one example of tech innovation around nursing homes just a few months ago.

* Sage, a startup hoping to replace nurse call systems at senior living facilities, notched $9 million in seed funding in July.

Be smart: Amid the increased focus on nursing home ownership, publicly traded Brookdale Senior Living is up for sale.

Our thought bubble: We expect that Brookdale won't draw a robust field of competitive bids from private equity, not only because of investors' tainted history in the industry, but also ... the nursing home model isn't deemed very investable.

The bottom line: The dominant themes in senior care include in-home and community-based care, value-based care, social determinants and tech-enabled approaches that address issues including labor shortages and access and health inequities.