Illuminate Eyes Regional Skilled Nursing Growth After ManorCare Acquisitions

Illuminate HC, which recently took over nine former HCR ManorCare skilled nursing facilities in Michigan, intends to use the deal as the first step toward becoming a regional player.

And for now, at least, it has no aims to go beyond that scale.

“While once we perhaps aspired to be a national presence with hundreds of facilities, we don’t necessarily know if that is the best model in the current climate,” Illuminate President Harry Schayer told Skilled Nursing News. “That said, we definitely intend on expanding our regional footprint, and our core certainly is Michigan, and we would like to expand primarily in Michigan. But then there are some neighboring Big 10 states as well. To give a number would be a little bit premature, but we are certainly looking to continue to grow.”


Finding the sweet spot of skilled nursing scale has been a challenge for players in the space, with a few major operators serving as prime examples of what can happen when an operator potentially grows too large — including ManorCare, which is currently being purchased out of bankruptcy by a non-profit hospital operator, and Genesis Healthcare (NYSE: GEN), which has seen prime landlord Sabra Health Care REIT (Nasdaq: SBRA) move to divest its interests in the provider.

Sabra CEO Rick Matros had blunt words on the current state of major chains: “Being big like that just simply has no advantages any longer, just disadvantages.”

But at the same time, providers have to balance the need to have clout with Medicare Advantage plans and vendors while dealing with a market that is increasingly favoring the regional skilled nursing player.


In this environment, Illuminate — which is headquartered in the Chicago suburb of Evanston, Ill. — is proceeding cautiously. It was founded about 18 months ago, Schayer said, which gave management time to do considerable due diligence on potential transactions. The nine Michigan facilities, which Illuminate jointly owns with a private equity firm based on the East Coast, were not the only ones the company considered acquiring, but they were the first ones deemed to be a good fit, according to Schayer.

In addition, it’s looking to close on two more facilities, also located in western Michigan, this month. The company’s growth over the next 18 months is more uncertain, Schayer said, though the goal is to continue to grow and add more than those two by the end of this year.

The nine-SNF ManorCare portfolio is at roughly 75% occupancy, he told SNN. With the deal, Illuminate, which has about 40 employees, will inherit another 1,500 from the facilities, serving as the new management company for the properties.

But the company is seeking to differentiate itself by making more distinct delineations between patient and family needs and the needs of employees. To that end, Illuminate is using the brand SKLD, pronounced “skilled,” to brand the assets that it manages. Any services that face the families and patients will be known as SKLD, at least in Michigan, Schayer said, while anything that is “internal-facing” or has to do with culture or technology will be Illuminate.

Technology is a particular focus for the young firm. Illuminate is developing a proprietary logistics system that incorporates the use of wearable devices, though Schayer declined to provide details on the types of devices until the system is finalized. Staff will be the primary users of the wearable devices, he said, though there are some ideas in the works for using them with patients.

In the meantime, the company is planning a $20 million improvement project for the facilities, with the funds coming from private investors; more than $15 million of that amount is lined up, and Schayer said the rest will be available as needed over the course of the next 18 months. The improvements themselves will vary on a building-by-building basis, but he expressed the need to think beyond “the prevailing strategy of making [SNFs] as much like five-star hotels” as possible.

“We’ve come to realize that’s a fairly superficial approach,” Schayer said. “Of course, the baseline aesthetic is needed, but the resources that we believe we need to put into the building go to staffing, go into other clinical support and resources, to make sure that we’re achieving the outcomes that both the patients and the hospitals are looking for.”

Written by Maggie Flynn

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