Major skilled nursing provider Signature HealthCARE almost failed because of medical malpractice laws in the state of Kentucky, among several other financial issues, CEO Joseph Steier told Louisville Business First on Tuesday.
“There were times in the last year and a half that I didn’t know what the outcome of Signature was,” Steier said in an interview with the publication.
The Louisville, Ky.-based Signature, which has 127 locations across the U.S. and brought in $1.2 billion in revenue in 2017, faced a slew of financial headwinds over the past year. In 2017, the real estate investment trusts (REITs) Omega Healthcare Investors Inc. (NYSE: OHI) and Sabra Health Care REIT (Nasdaq: SBRA) reported that Signature had fallen behind on rent, and that they were looking at restructuring the operator’s debt obligations.
In addition to the rent issues and the “hundreds” of medical malpractice suits Steier previously said the company was facing, the company also was being investigated by the U.S. Justice Department over false claims allegations.
In February, Louisville Business First reported that a restructuring of Signature’s financial obligations was in the works, but that bankruptcy proceedings were a possibility. In May, both Omega and Sabra announced they had reached deals to restructure Signature’s lease agreements. Signature ultimately ended up paying more than $30 million to resolve allegations that it violated the False Claims Act (FCA) in a settlement announced in June. The company also was able to restructure its financial obligations to many of the plaintiffs in the medical malpractice suits, Louisville Business First reported.
“We’re blessed to have really good, supportive landlords,” Steier told the publication.
He blamed the malpractice suits — of which Signature was facing more than 350 before it settled a significant number of them — for a major portion of Signature’s financial problems. The state of Kentucky is a difficult one for major health care providers in terms of liability, since the state constitution bans the legislature from enacting laws that cap personal injury claims, American Health Care Association President and CEO Mark Parkinson told Skilled Nursing News in March. Long-term care providers in the state have notably high costs to defend and settle liability claims, and many of them have left the state or gone into bankruptcy protection, Steier told Louisville Business First.
Taking on too much
Steier also raised the possibility that Signature had taken on too much when, over the past few years, it took over some facilities had been operated by Louisville-based Kindred Healthcare Inc. and Elmcroft Senior Living LLC.
“I think I made a mistake in taking over some those portfolios,” he told Louisville Business First. “That was a lot to try to turn around.”
He added that Signature has since divested 19 facilities in Pennsylvania, Kentucky, Tennessee, North Carolina, Florida, and Indiana.
Employment issues were another factor; Steier pointed to dropping unemployment and the need to raise wages to find and retain staff across the country. Signature employs 17,000 nationally.
The company intends to carry out what it is calling a “corporate reset” in about 100 days as part of a five-year effort internally branded as “Signature 2.0.” It is also currently testing a new joint-venture model in eastern Tennessee with Johnson City, Tenn.-based Ballad Health to build a 74,000-square foot rehabilitation and assisted-living center in Johnson City, according to Louisville Business First.
That facility, which is scheduled to open in November, will include a base for Signature’s non-medical home care business, transportation arm, and other ancillary services. Signature could expand the model being tested with Ballad if it is successful, Steier said.
“It’s a chance for us to see if we can put our company all into one campus with a hospital partner,” he told the publication.
Written by Maggie Flynn