Genesis Goes Bankrupt

Genesis Healthcare, Inc. will file for Chapter 11 bankruptcy, according to Skilled Nursing News. This essentially means that while they are hoping to avoid a permanent shutdown, they are forced to reorganize their finances to continue operating. This will allow them more time to try to figure out how they can manage their crippling $1-10 billion debt. The debt was caused by mismanagement and tunneling of funds to related entities.

Over time, Genesis has become the largest for-profit chain of long-term care, transitional care, and rehabilitation services in the U.S. The company’s revenue exceed billions but somehow they managed to accumulate a debt of $708.5 million, and hopes to repay that much with a “stalking horse” bid from another health care giant, ReGen Healthcare. Remarkably, this is not even the first time Genesis has narrowly escaped bankruptcy, nor the first time ReGen has bailed them out.

In March of 2021, Genesis was forced to voluntarily remove itself from the New York Stock Exchange. To keep the company afloat, ReGen sent the company a $50 million capital infusion to reconstruct itself in return for partial ownership of the company. Genesis also received a reconstructing lease with Welltower to allow them to avoid officially filing for Chapter 11 bankruptcy.  Genesis now owes Welltower more than $112.6 million.

How did Genesis get here again?

Countless theories of various greedy and financially irresponsible scenarios exist to try to make sense of all the ways Genesis has possibly driven such an outrageously profitable company to bankruptcy. What is known for sure is that Genesis made the mistake of expanding too much, too quickly. At one point, the health care company had over 500 facilities, but managing so many at once led them to have far too many inefficiencies and losses. Genesis now runs a more rational 175 facilities in 18 states, with 42 of them in Pennsylvania.

Meanwhile, Genesis blames its poor financial management on inadequate Medicaid funding. This is likely an easy argument for the company to make, considering the ridiculously inflated price tags it places on its typical services that tower in comparison to humble offerings of Medicaid, just trying to keep up.

Genesis also failed to properly respond to the COVID-19 pandemic, as they were unprepared to handle the changes it brought to the skilled nursing facilities. This also worsened their financial status.

The company has been the cause of many wrongful deaths and neglect injuries among its residents that it consistently spends about $8 million a month paying defense lawyers and fighting lawsuits. Perhaps running negligent facilities isn’t as profitable as it used to be…

What does this all mean for us?

Genesis owes a large portion of this money to the public, including $58 million of unsecured debt to the people of Pennsylvania for failing to pay their taxes. As Brandin Cwalina, Department of Human Services Press Secretary, explained, “Genesis owes the Commonwealth of Pennsylvania, and like every taxpaying resident of Pennsylvania, they should pay their fair share.”

While Genesis continues to try to rob the public of their rightful funds, it’s at least encouraging to see that the individuals who are wronged by healthcare giants actually do have some agency in changing the ways of such corporations. The $8 million burden Genesis continuously shells out to individuals they wrongly harmed has helped push the company to their operational cliffs. This is a reminder to us all of us of the importance in addressing the harm caused by long-term care facilities in court. Not just to establish justice for the individual, but also to prevent future residents from being harmed by them as well.

Genesis is now expecting to close several facilities, starting with its only nursing home, which has been in business since 1960. As the company drowns in horrendous debt, including $12.3 million owed to the 1199 New England Health Care Employees Pension Fund, $708.5 million in secured debt, and nearly $800 million in unsecured debt, one Board Executive Chairman boldly stated that filing for bankruptcy will allow them to “emerge a stronger, healthier company poised to exceed [their] goals for clinical and operational excellence.”

If this board member’s perspective of filing for Chapter 11 is not enough to reveal to the world Genesis’ ignorance and entitlement to the situation, perhaps their official shutdown will. Better yet, perhaps the company’s experience of inadequate funds and pressure from creditors will teach the healthcare directors a lesson about financial hardship and encourage them to use empathy when charging Americans outrageous prices for critical care.

In the meantime, Americans must continue to recognize signs of harm in long-term care facilities and properly pursue them when necessary to help ensure, that in this book of Genesis, the guilty are still punished for their embrace of immoral offenses.