Financially troubled nursing homes are often sold to new operators. Recent experiences in two states are quite different. The Connecticut Department of Public Health has placed conditions on the purchase of five facilities, with about 500 beds. By contrast, a Pennsylvania chain filed for bankruptcy and says it will close rather than sell its four facilities, with about 450+ beds, if lawsuits against them, with millions of dollars at stake, are not set aside.
The Connecticut Department of Public Health (DPH) has placed conditions on the transfer of state nursing home licenses of five Athena Health Care Systems facilities, with about 500 residents, to National Health Care Associates, a New York company. As reported in CTMirror, National Health Care Associates must hire, for at least a year, an independent nursing consultant who “will work 12 to 40 hours per week monitoring nurse staffing levels and quality of care at all five facilities.” DPH imposed additional requirements on the New York company:
- Appointing a free-floating registered nurse supervisor for the first and second shifts to assess patient care.
- Designating a registered nurse to do at least eight hours of training for employees who deal with residents.
- Contracting with an environmental consulting firm to evaluate each facility
Finally, the New York company “has agreed to pay back taxes [nearly $47,000 owed to four communities] and debts owed to vendors and add $2.6 million to cover unpaid employee health insurance costs.”
In Pennsylvania, as reported last week in “Nursing Homes and Private Equity: ‘A Match Made in Hell,’” a troubled nursing home chain filed for bankruptcy and asked the bankruptcy court to set aside two lawsuits against four of the facilities, with 450+ beds, so that they can be sold to another operator “‘free and clear of all liens, claims, encumbrances and interests’ before the sale.” One of the lawsuits, filed by the U.S. Department of Labor, involves $20 million in unpaid overtime wages for health care staff. The alternative is closure of the facilities. An Editorial in the Pittsburgh Post-Gazette describes the choices before the bankruptcy court: “[T]he choices are either to force irresponsible companies to pay their debts and lose hundreds of needed nursing home beds, or to dismiss millions in debts and lawsuits to ensure care for these vulnerable people continues – at least for a time.”
Both Connecticut and Pennsylvania have recently revised their change of ownership rules for nursing homes in similar ways, significantly expanding the requirements for mandatory disclosures about buyers. Perhaps the explanation for the differences in Connecticut’s and Pennsylvania’s experiences is that the Pennsylvania owners filed for bankruptcy.
July 3, 2024 – T. Edelman