ProMedica offloads Welltower joint venture SNFs
ProMedica, a non-profit healthcare system with locations in northwest Ohio and southeast Michigan, is transferring the real estate and management of all its skilled nursing facilities (SNFs) to Welltower in a new agreement with the real estate investment trust (REIT).
The SNFs involved are already part of a joint venture and master lease with Welltower, and a new Welltower venture will own the real estate interest of the SNFs. New operators will also take over management of the SNFs. ProMedica will retain operation of its assisted living and memory care facilities.
The move comes as the skilled nursing industry has faced numerous challenges over the past several years and is currently dealing with a staffing shortage, an ever-changing regulatory environment and higher costs and inflation rates. Skilled nursing was also slammed by the COVID-19 pandemic, with decreases in volume, high rates of COVID-19 among patient populations, new payment models and changing regulations, as well as payment system changes.
By offloading its SNFs, ProMedica resolves its operating losses within its senior care division, and the move is part of the company’s ongoing comprehensive financial performance improvement plan. During the second quarter of 2022, ProMedica reported losses of $105 million within its senior care division, Skilled Nursing News reported.
The company has also undergone major leadership changes this year, with ProMedica recently announcing a new CEO in Arturo Polizzi, who took over the role Nov. 1 from Randy Oostra. Oostra retired from leading the health system after 25 years at the organization. ProMedica also appointed Louis E. Robichaux IV as interim CFO in May, after ousting CFO Steve Cavanaugh, who took the role in June 2019.
"By engaging in this transaction, we will be able to increase focus and resources on the other areas of our health system as we continue to provide high-quality, compassionate care and invest in our communities and dedicated caregivers," Polizzi said in a statement. "This was a complex transaction, and I would like to personally thank Welltower's executive team––particularly Shankh Mitra, CEO––for their efforts."
The agreement with Welltower, one of the largest healthcare REITs, does not include ProMedica's non-Welltower leased senior care centers located in Adrian and Monroe, Michigan, the skilled nursing and memory care facilities located on the ProMedica Flower Hospital campus in Sylvania, Ohio, and ProMedica's Home Health and Hospice agencies. ProMedica will continue to operate those facilities, plus its 58 Arden Court memory care communities within its real estate joint venture with Welltower.
In addition to shoring up its senior care division, ProMedica is offloading its SNFs ahead of a critical Supreme Court decision that could impact the healthcare sector. The case at hand, Health and Hospital Corporation of Marion County, et al., v. Gorgi Talevski, by his next friend, Ivanka Talevski, stems from the death of Talevski. The lawsuit, which was filed by Talevski’s family in 2019, alleges the Indiana nursing home where he resided violated his federal rights under the Federal Nursing Home Reform Act, and the Civil Rights Act of 1871. However, the case hinges on whether state-owned SNFs are subject to federal lawsuits. The case could also make it potentially harder for Medicaid beneficiaries to sue in federal court if their rights are violated, should the court side with Health and Hospital Corporation.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."