HCR ManorCare President and CEO Paul Ormond has left his position as the skilled nursing provider continues to work through a potential restructuring with its landlord, real estate investment trust Quality Care Properties, Inc. (NYSE: QCP).
The Bethesda, Md.-based REIT first announced Ormond’s departure from HCR ManorCare on Monday; he has already been replaced by Steve Cavanaugh, who formerly served as the provider’s executive vice president and chief operating officer.
“Paul has been one of the best leaders in all of health care for many years and a tremendous mentor and role model throughout my career,” Cavanaugh said in a ManorCare statement provided to Skilled Nursing News.
ManorCare also thanked Ormond “for his outstanding leadership and commitment to the highest standards of quality, performance, and business ethics over his multi-decade career.”
The shake-up at the top comes as QCP granted its troubled tenant an extension on receivership proceedings, giving HCR ManorCare until October 18 to respond to a complaint that the REIT originally filed in August. In that action, filed in a California court, QCP accused the operator of stonewalling its attempts at installing new leadership and alleged that ManorCare’s directors are too entangled in conflicts of interest to run the company properly
By filing for receivership, QCP said it aimed to restructure the company with a “regionalization strategy” that would bring “investment and new opportunities to local managers.”
The Toledo, Ohio-based ManorCare struck back with a sharply-worded internal memo provided to Skilled Nursing News, calling QCP’s actions “an insult to our frontline caregivers and the corporate staff who provide support to their coworkers in the field.”
Both parties have signed on with restructuring advisory firms, according to QCP, with Alvarez & Marsal working for the REIT and AlixPartners advising ManorCare. Houlihan Lokey and Hazard, two more advisory firms, are also helping QCP develop remarketing plans for the ManorCare facilities in its portfolio, the company said.
Trouble on multiple fronts
QCP’s Monday announcement marks the latest scene in an extended drama that has played out between the two parties over the last year: After entering into a forbearance agreement designed to help ManorCare make rent in April, the provider proceeded to partially pay or completely miss multiple months’ rent. QCP declared that ManorCare had defaulted on its lease obligations over the summer, and despite reportedly securing a more than half-billion-dollar loan, the provider did not indicate whether it would use the money to pay off its debt to QCP.
But landlord woes aren’t the only problems for ManorCare, which operates more than 500 skilled nursing and assisted living facilities: The company is set to face a trial in January over allegations that it committed Medicare fraud by providing unnecessary therapy services.
Ormond had also demanded an immediate payout of a $100 million deferred settlement package back in June, according to a report in the New York Post. Ormond received the cash when the Carlyle Group, a Washington, D.C.-based private equity firm, purchased ManorCare in 2007, but deferred receipt for tax purposes.
A spokesperson for Carlyle did not respond to a request for comment on Ormond’s departure as of press time.
Written by Alex Spanko
Companies featured in this article:
Carlyle Group, HCR ManorCare, Quality Care Properties, The Carlyle Group
