ManorCare Mega-Deal Blurs Care Lines, But Will Doctors Buy In?

When assessing the deal struck by Welltower (NYSE: WELL) to acquire Quality Care Properties (NYSE: QCP) and by ProMedica to acquire HCR ManorCare, outsiders should look at whether the players can pull off a genuine team-based approach to care.

That’s according to Bob Kramer, founder of the National Investment Center for Seniors Housing & Care (NIC). The deal is evidence that seniors housing, home health, and skilled nursing will be “critical pieces in this total disruption of health care delivery,” he told Skilled Nursing News.

With the industry moving to value-based care and alternative payment models, skilled nursing facilities have to consider care coordination along the continuum. The Welltower-ProMedica deal — in which real estate investment trust (REIT) Welltower acquired QCP through a joint venture the non-profit health system ProMedica, which also bought QCP’s skilled nursing tenant HCR ManorCare — embodies many of the trends that have been predicted for health care delivery, Kramer said.


But it’s going to face quite a few challenges to succeed.

“What remains to be seen is the ability of what has been primarily an acute care health system [to] reinvent themselves,” said Kramer, who still serves as a strategic advisor to NIC. “Because that’s in essence what they’re trying to do. They’re blurring the lines between acute care, post-acute care, and home care. That’s a challenging thing for an acute care system, because obviously their most expensive real estate is their acute care.”

The typical view in health care is that the hospital is where the most money is made, with specialist doctors and tests, as well as where the best care is, he said — and the Welltower-ProMedica transaction aims to overthrow that worldview.


The question will be whether the behavior of physicians, nurse practitioners, and physician assistants will change over time under this new structure, Kramer said. Those front-line workers are the ones have the ability to send a patient to a particular care setting. As a result, they have to think differently, and have to be properly incentivized by corporate leadership; in short, they will need “to buy in and do it,” Kramer said.

“The key thing will be: Do the people work as a team, do they have the technology to be able to communicate in real time, and can they work as a team?” he elaborated. “That really makes the difference, so I would be looking… to what extent do the patterns seem to be changing.”

On the acute-care side, this would translate to fewer emergency room visits, a drop in census that would be offset by other factors, and fewer hospitalizations, Kramer said. For post-acute care, it would mean shorter lengths of stay in skilled nursing as appropriate, and moving people into assisted living or memory care — or even into the home setting.

The people challenge, though, will be the biggest one, Kramer stressed. In this transaction, post-acute care “has left the kids’ table,” he said, calling back to comments made by Formation Capital founder and chairman Arnold Whitman at NIC’s Spring Investment Forum in Dallas in March.

It just remains to be seen whether this particular deal will be able to make it a success.

“I think it’ll be really interesting to watch, the ability of a major acute system to transform itself,” he said.

Written by Maggie Flynn

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