State Law Shows Increased Scrutiny of Low-Profile Skilled Nursing Buyers

The state of Vermont recently enacted sweeping changes to the way government officials regulate the nursing home industry, with an eye on scrutinizing out-of-state buyers.

Starting July 1, the state’s Agency of Human Services will oversee all nursing home ownership transfers, taking over the responsibility from the Green Mountain Care Board, according to a Thursday report from VTDigger.

The human services agency already regulates the operations of skilled nursing facilities, and state officials pointed to concerns over a perceived influx of non-Vermont companies buying facilities, then splitting each entity into an operating company and a real estate firm — also known as “OpCo/PropCo” setups.


Jessica Holmes, a member of the Green Mountain Care Board, said those firms have begun “buying up small, mom-and-pop nursing homes, operating them at arm’s length, and extracting short-term gains,” according to VTDigger.

Under-the-radar buyers have grabbed headlines in recent months, with the spectacular collapse of Skyline Healthcare — a New Jersey operator that emerged seemingly from nowhere to buy more than 100 SNFs across the country despite being run from a small office above a pizza shop — serving as a cautionary tale for regulators in multiple states.

A low profile doesn’t always mean that an operator or investor has nefarious purposes; in fact, the industry has seen an uptick in personal investors with a history in the skilled nursing space snapping up facilities as major real estate investment trusts (REITs) downsize.


“These buyers have been around for a while, but I’d say that they really have come to the forefront over the past 36 months, and especially over the last 18 months,” Jeffrey Davis, president of Cambridge Realty Capital Companies, told SNN earlier this year.

But Vermont’s new oversight bill, signed by Republican Gov. Phil Scott last week, shows that states are paying attention to the changes in the way investors and operators navigate the landscape.

n addition to the agency shift, the legislation creates a working group that must provide recommendations on improving nursing home oversight in the Green Mountain State by January; the 2017 closure of a nursing home in White River Junction, Vt. amid health violations in part prompted the government-level concern about skilled nursing facilities in the state, VTDigger noted.

“This is a segment of the population that is the most vulnerable, and we have to do a better job of making sure they get the best care possible,” Green Mountain Care Board chair Kevin Mullin told VTDigger.

Written by Alex Spanko

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