Ensigns Expands

Ensign Group CEO Barry Port said that the company is benefitting from the rising demand for nursing home care by building a more “sophisticated web of nursing home services,” which allows the company to grow without facing limits on occupancy capacity.

Ensign is the largest for-profit of skilled nursing beds in the U.S. and has surpassed its pre-COVID occupancy average, according to Port.  Ensign focuses on
buying “turnaround facilities,” where their approach revolves around building census over and over again. Port explains that their goal isn’t just to fill beds, as they “Don’t see a cap, honestly,” and that by adding new kinds of services and diversity, they are generating more revenue.

Ensign continues to acquire new facilities, many of which have low occupancy rates to start, with 47 added last year. Port and other Ensign executives stated that local company leaders are increasingly utilizing the specialty services lever to help new Ensign holdings recruit patients and expand their referral base.

Behavioral health has become a “bigger lever” for the company, which is actively assessing which of its facilities have the physical capacity to add or remove a dedicated unit. “There’s always going to be room for us to move up the acuity chain.” President of Pennant Healthcare, Steve Farnsworth, said that this diversification of services relies heavily on the needs of the local market. “It allows local leaders to align with hospital clinically needs through a continuum of care, as well as managed care networks,” he said. “There’s a lot of efficiency to that and speed. We do not have a master clinical plan, and every state has a standardized approach. It’s very locally driven.”

Ensign considered nearly 500 deals last year, and currently, the company is dividing its efforts between moving into new markets and strengthening its existing subsidiaries. Their priority is to “grow in markets” as there are lots of new opportunities in new states, and their leaders have an “itch” to go do something entrepreneurial. Ensign recently acquired a single facility in Alabama, which has led to a rapid increase in potential purchases. Since acquiring the 91-bed Health Center at Research Park in January, the company has said that it has seen more deals and potential purchases in Alabama than at any
previous time.

Ketch said, “Markets that are adjacent to markets we’re in is probably the next priority,” he added. “And then, over time, we can continue to expand into additional regions, but we’re excited about the Southeast, South Carolina, Tennessee, Alabama, and you know, Georgia will be sort of a next logical step.”

Another priority for Ensign moving forward is to acquire more real estate adjacent to its nursing homes. “Anytime we see an acquisition opportunity, we try and seek to own the real estate,” Keetch said. “That’s not always an opportunity.” The REIT has enabled Ensign to take on larger deals and operate some buildings as a package, while leading others to outside operating partners. With Standard Bearer, the company has been able to find ideal, high-quality third-party tenants to lease and manage the turnaround of buildings that Ensign is too slow to operate on its own—putting more power in the hands of these companies rather than in the hands of the nursing home facilities.