Corporations take assets from bankrupt nursing homes
Interesting article from the Courant.com about a deal to sell the bankrupt Haven Healthcare nursing-home chain. Attorney General Richard Blumenthal said that Formation Capital, which owns Genesis HealthCare, notified the state that it was pulling out of an $85 million deal to take over 14 of Haven’s homes in Connecticut and 10 in other New England states, without giving a reason.
Formation announced June 12 that it had signed a purchase agreement for the homes, but the company had two weeks to reconsider before the deal was to be finalized in bankruptcy court Thursday.
Many nursing homes across the country are owned by real-estate investment firms and managed by other entities — a form of ownership called a REIT, or a real-estate investment trust. By law, a REIT cannot operate a nursing home, but must hire a licensed provider to do so.
“The former management of Haven is history. We are all committed to a new day for these nursing homes, their residents and their dedicated employees,” Blumenthal said.
Blumenthal and officials of the state Department of Social Services said they and the health department will be closely monitoring operations of the Haven homes while the future of the chain remains in limbo. Occupancy in some Haven homes has fallen off dramatically since the chain declared bankruptcy seven months ago.
Haven — one of the largest chains in the state, with more than 1,800 beds — declared bankruptcy last November in the wake of a series in The Courant detailing its financial troubles and repeated citations for patient-care deficiencies. The company defaulted on millions of dollars in bills for supplies and utilities while its CEO used corporate assets to launch a Nashville recording company and make other personal purchases.
The Department of Social Services had offered Genesis sizable Medicaid rate increases and other incentives to take over the chain, but also had required that Genesis agree to provide detailed financial reports and meet certain staffing standards once it took over operations.
Blumenthal said Thursday that a wide-ranging investigation of Haven’s financial dealings will continue, regardless of the outcome of the sale of the chain.