Genesis HealthCare announced a set of deals that will see the skilled nursing giant chain transfer control of 19 facilities to a regional operator — while also still making profits as a provider of back-office support and ancillary services.
Under the terms of the $79 million transaction, New Generation Health, LLC purchased the operations and real estate associated with six skilled nursing facilities. New Generation also assumed full operational responsibility for 13 more properties — seven SNFs, five behavioral health centers, and one assisted living community — in California, Nevada, and Washington state. Genesis will still maintain an indirect 50% stake in the latter group of 13 buildings. In addition, the operator will provide an entire host of administrative services — including payroll, financial reporting, legal services, human resources, and revenue cycle management — to the entire 19-building portfolio through administrative support agreements with New Generation. Genesis will also continue to offer therapy at the properties, according to the company.
The move marks the next step in Genesis’s ongoing plan to overhaul its sprawling portfolio of about 400 skilled nursing facilities and senior living communities in 26 states. To date, that project has mostly been focused on expanding the provider’s real estate holdings, including an October deal that saw Genesis land a 30% stake in 18 of its skilled nursing facilities through a joint venture, and the $204 million acquisition of 15 SNFs from Welltower Inc. in conjunction with Next Healthcare Capital this time last year.
Genesis’s plan to mix local-market knowledge with a national administrative backbone strongly resembles the strategy of The Ensign Group which prides itself on being a loose collection of autonomous regional entities — each led by an administrator with a direct stake in the facilities’ success — held together by a central business-services center. This way they can benefit and profit from the operation but claim they are not accountable for any neglect or abuse.
In addition, Genesis made a deal with their rival SaveSeniorCare. Long-term care physicians that provide physician services on behalf of SavaSeniorCare facilities will now be able to participate in the Medicare Shared Savings Program through Genesis Healthcare’s accountable care organization.
Genesis announced the partnership between its LTC ACO and skilled nursing provider SavaSeniorCare. The company announced a similar partnership with Senior Living Properties last month.
“With numerous years of experience behind us, we are now able to work with organizations like Sava to significantly expand our resident attribution, improve outcomes and create an alternative payment model throughout the skilled nursing industry,” LTC ACO President Jason Feuerman said.
“We, along with the rest of the industry, are always focused on improving quality and efficiency,” SavaSeniorCare CEO Jerry Roles said in a statement. “With LTC ACO’s help, we will attempt to utilize their best practices and expertise to improve overall outcomes and quality while managing episodic and chronic cost.”
In December, LTC ACO announced the addition of 200 new, unaffiliated long-term care facilities just weeks after announcing plans to expand the ACO.