In another sign of how hard it is to run a nursing home even before the pandemic, Abramson Senior Care, a nonprofit, sold its highly rated Horsham nursing home to a relatively new for-profit firm from New Jersey called Imperial Healthcare Group. Carol Irvine, president and chief executive of Abramson, said the 324-bed nursing home, a fixture in Philadelphia’s Jewish community, was marketed widely, including to the nonprofit sector. But none of the seven bids were from nonprofits — which usually don’t have as much appetite for financial risk as for-profits do.
The Ensign Group, Inc. (Nasdaq: ENSG), the parent company of the EnsignTM group of companies, which provide skilled nursing and assisted living services, physical, occupational and speech therapies and other rehabilitative and healthcare services, announced today that it acquired the real estate and operations of The Medical Lodge of Amarillo, an 82-bed skilled nursing facility, located in Amarillo, TX. The acquisition was effective November 1, 2020. This acquisition brings Ensign’s growing portfolio to 227 healthcare operations, 24 of which also include assisted living operations, across thirteen states. Ensign owns 95 real estate assets.
COVID-19 is upending operations in the skilled nursing world, but when it comes to the business side of running a SNF, upheaval was taking place well before the pandemic. This was particularly true when it came to ownership of the real estate and operations. Well before the new coronavirus reality, real estate investment trusts (REITs) that owned skilled nursing properties were selling the assets, and that could create an opportunity for private equity firms looking to put their capital to work, according to experts speaking at the virtual Skilled Nursing News RETHINK summit on the evolution of private equity in skilled nursing.
At the height of the COVID-19 emergency, in-patient hospital volumes fell, with skilled nursing facilities (SNFs) and home health providers experiencing similar downturns. While home health providers began to see a turnaround in June, the same can’t be said for SNFs. That’s according to a recent Avalere Health study examining discharge destinations recorded on in-patient hospital claims for Medicare fee-for-service beneficiaries. Specifically, Avalere researchers found that discharges to home health saw a year-over-year increase in June, with a 4.6% increase in discharge volume. Meanwhile, SNFs saw a 25.4% decrease in year-over-year discharges, which was below pre-pandemic levels. By July, there was a 34% decrease in patients discharged from hospitals and into SNFs. Home health volumes took less of a hit, with only a 1.8% decrease.
Census pressure and uncertainties caused by COVID-19 continue to threaten the nursing home industry. But at least one major real estate investment trust CEO sees this period as a time of good opportunity for nursing home operators. In brief, solid things are forged out of fire, believes Rick Matros, president and CEO of Sabra Health Care REIT. A global health crisis and U.S. public health emergency have provided plenty of long-term care horror. With more than 80,000 nursing home personnel dead — or 40% of the national total regarding COVID-19 — it doesn’t get much more horrific, stakeholders agree. Ironically, out of this carnage, nursing homes’ profile has been raised, Matros noted in an interview with McKnight’s Long-Term Care News late last week. Matros is one of the most influential execs in the field, and one of its strongest believers in skilled nursing.
Heavenrich & Co. has negotiated the sale of Villa Toscana at Cypress Woods, a 120-bed skilled nursing facility located in Northwest Houston. The buyer was O&M Investments, a private equity firm focused on skilled nursing. The price was $5.3 million, or just over $44,000 per bed. Occupancy was 76 percent at the time of sale.
The board of directors of Sunset Communities has announced an affiliation with Otterbein SeniorLife, based in Lebanon, Ohio. Both are senior care non-profit organizations that provide a wide array of senior services including independent and assisted living, memory-support, skilled nursing and rehabilitative care and hospice. Sunset Communities CEO and President Vicky Bartlett said that the affiliation with Otterbein gives Sunset a number of advantages for future growth and success. These include a vision for and strategic plan to reposition the Communities with greater access to capital, which provides the opportunity for increased investment in the Sunset campuses. She said by joining forces with a large, multi-site entity, Sunset can increase its resources and purchasing power, which ultimately leads to providing enhanced facilities and excellence in care.
The ongoing pandemic has rightfully shifted attention away from dealmaking in the long-term and post-acute care space, but several leaders have expressed optimism that investors will support the sector moving forward Ñ though the influx of federal cash keeping operators afloat could scramble valuation math for some time to come. With overall uncertainty in the future of various industries, health care companies represent a safe bet for real estate-minded equity partners, banks, and other lenders, LTC Finance managing partner Steve Zicherman said during a virtual panel discussion last week held by accounting firm Roth & Co. “I don’t know if they have a better place to put their money at this point,” Zicherman said. “I don’t know that office buildings, or retail, or restaurants, or hospitality are better at this point, or more secure, than health care.”
Bain Capital clinched a $1.2 billion deal on Tuesday to buy Japanese nursing-home operator Nichiigakkan after fending off a higher, last-minute bid from rival Baring Private Equity Asia (BPEA). Some financial industry professionals criticised Bain for closing its bid despite a new offer on Monday from Hong Kong-based Baring – which represented a 20% premium to Bain’s bid of 1,670 yen a share – saying minority shareholders’ interests had been neglected and they had lost out. Tokyo-based Nichiigakkan’s core businesses of elderly care, childcare and hospital staffing are growing steadily, according to the company, as demand for the services are rising in a country with a rapidly ageing population.
Sentara Healthcare is selling off its nursing homes, including five facilities in Hampton Roads, for an undisclosed price to an Ohio-based long-term care company. The sale, which is expected to close Nov. 1, will put Sentara out of the senior living business, divesting its Life Care division to Saber Healthcare Group, a for-profit nursing home chain that operates over 120 centers nationally. The deal was struck before Sentara’s announcement Wednesday that it has begun the process of a major hospital system merger with North Carolina-based Cone Health. Representatives from Sentara and Cone said the integration of the two companies could allow them to focus on expanding outpatient medical services and add more digital and virtual-visit technology.
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