Skilled nursing center owner Diversicare has taken over the management of a 135-bed facility in Huntsville, Ala., which has grown the company's bed count by 2.5 percent. The center generates more than $10 million in revenues per year and is Brentwood-based Diversicare's seventh in Alabama.
A big selling point in Brookdale Senior Living's planned $2.8 billion acquisition of Emeritus is the potential to improve and add to the operations of communities being brought into the fold. CEO Andy Smith and President/CFO Mark Ohlendorf talked about that ancillary expansion strategy and more at the Citi Global Healthcare Conference in New York Wednesday. Smith said a big part of capitalizing on the Emeritus opportunities will be about operational discipline and not getting greedy. (Search here for 'isolate.')
We have a list of, literally, 50 different ideas that we can take advantage of. The hardest thing we’re going to have to do there is to actually focus our activities on just a few, so that we can do them right, and then move on to the balance of the 50.
But that’s no different than what we’ve done in the past. We started with outpatient therapy. Then we went to home health. Now we’re going to private duty home health inside of our communities as well as hospice. So just an effort to strengthen our relationship with our existing customers, get a deeper share of their wallet.
The managers of a New York hedge fund appear to really like Brookdale Senior Living's planned acquisition of rival Emeritus. Senator Investment Group this week said it owned more than 6.2 million shares of Brentwood-based Brookdale as of Monday. That's up from exactly zero on Dec. 31. With event-driven theses a part of Senator's strategy, it's more than likely all those shares were acquired on the heels of the Emeritus news. Even better: Senator already is sitting on a paper profit of more than $8.5 million since Brookdale shares (Ticker: BKD) are up more than 4 percent since the close of Monday's trading.
Senator, which was founded in 2008 with backing from Blackstone, two and half years ago declared a 5 percent stake in Vanguard Health Systems. Since then, its assets under management have grown nicely from $2.3 billion to more than $8.7 billion.
Emeritus Senior Living is under federal investigation for alleged improper Medicaid billing, according to ProPublica, news that follows last week's announcement that Brentwood-based Brookdale Senior Living intends to merge with the Seattle-based company in a $2.8 billion deal.
Investigators with the Justice Department and the U.S. Department of Health and Human Services have been exploring allegations of improper Medicaid billing since January 2013, ProPublica reports, and the company has run into the issue before, paying a $1.86 million settlement in a 2007 Texas fraud case.
The state Attorney General’s office alleged that Emeritus improperly billed for services provided at 11 of its facilities in the state and “routinely submitted false claims to the Texas Medicaid program.” Under the terms of the settlement the company denied any wrongdoing. Emeritus was the subject of a ProPublica/PBS “Frontline” series in 2013 that focused on the company's business practices, its entanglements with regulators in numerous states and its lengthy record of safety lapses.
Brookdale's planned acquisition, which is expected to close in the third quarter, will give the company a national market share of about 10 percent. Brookdale executives said they see a potential $100 million of extra revenue by implementing its home health and hospice services into Emeritus properties.
ProPublica reports that Medicaid accounts for a relatively small portion of Emeritus's primarily private payer-based business — 13.9 percent of its revenues came from Medicaid and Medicare in 2012. Karen Lucas, a spokeperson for the company, said Emeritus was "cooperating fully" with federal authorities.
“As a matter of policy, we will not comment on a pending investigation beyond confirming its existence, because cooperation includes not publicly airing information that might compromise or influence the government’s review,” Lucas said.