Eight skilled nursing facilities in Wisconsin operated by Dycora Transitional Health and Living have been placed into receivership, with an affiliate of landlord Golden Living Centers taking back control after a two-year break.
The Fresno, Calif.-based Dycora on Thursday became the latest entrant in a string of receivership actions in Wisconsin, with the Milwaukee County Circuit Court appointing attorney Michael S. Polsky as the legal receiver for the eight properties. Menominee River, LLC, an affiliate of Golden Living, will serve as Polsky’s operational partner during the transition period.
The Milwaukee Journal Sentinel and other local publications first reported the news late Thursday.
Golden Living, which owns the properties through multiple affiliates, moved to appoint a receiver after claiming that the operator defaulted on its leases by failing to pay its base rent, according to the initial receivership complaint filed in the Milwaukee court and obtained by SNN. Dycora had also requested that the landlord provide financing to help the operator continue to meet payroll and pay vendors, Golden Living alleged.
“If defendants are unable to pay vendors who provide material medical goods and services necessary to care for the patients at the Wisconsin facilities, the health, safety, and welfare of such patients is likely to be negatively affected,” attorneys for Golden Living wrote in the filing asking for a receivership.
Polsky plans to use his receivership authority to improve the buildings’ finances in anticipation of a future sale, the attorney said in a statement provided to Skilled Nursing News.
“Working with Golden Living, our joint goal will be to provide the resources, support, and expertise needed to allow all of the facilities to focus on delivering quality care and services to the residents,” Polsky, a director at the Milwaukee firm of Beck, Chaet, Bamberger & Polsky, said. “We will maintain normal business operations, retain all staff, and allow the eight facilities to operate without any interruption so that the important care they provide can continue.”
The affected properties consist of locations in Abbotsford, Beaver Dam, Fort Atkinson, Watertown, and Greendale, Wis., along with a pair of SNFs in Glendale, Wis.
“Our top goal at this time is to ensure that residents continue to receive seamless quality care in the centers from the staff they have come to know,” Golden Living senior vice president of operations Wanda Prince said in a statement. “We know many of the staff at these facilities, and they are a great and dedicated group of people who truly care about the residents.”
Polsky pointed to Golden Living’s previous operational experience with the facilities: The Plano, Texas operator had run the buildings before leasing them to Dycora in early 2017.
“Golden Living is one of the best in the business, and I am pleased that they have agreed to take on this important assignment,” Polsky said.
The two companies have had something of an intertwined history, with Dycora CEO Julianne Williams working for Golden Living for 25 years — eventually rising to president of the skilled nursing chain.
Williams cited constrained Medicaid reimbursements in Wisconsin as a major reason behind the receivership action.
“After careful consideration and a thoughtful analysis from an external consulting firm, we have made the decision to focus on a smaller geographic footprint,” Williams said in a statement provided to Skilled Nursing News. “Ultimately, this decision was necessary due to professional market demands.”
The eight facilities in Wisconsin represented Dycora’s only properties outside of its home state of California, where the company operates 19 SNFs; the company remains committed to those Golden State facilities, Williams said.
“Focusing on a smaller geographic footprint allows us to transform the landscape of post-acute care and position our company for organic growth,” she said, adding that the company also plans to explore strategic acquisitions and partnerships to expand in California.
Williams spoke about the company’s strategy of regional density in a November conversation with Skilled Nursing News; in the operator’s home county of Fresno, for instance, Dycora has around 700 beds.
“In our regional markets, what we’re really trying to do is be a provider of choice in many, many ways,” she said. “We are not limited by one facility or one wing. That allows us to really evaluate what’s needed, and then develop the programs that are needed in the community.”
Wave of receiverships
Receivership actions allow a third party — typically a lawyer — to serve as a kind of caretaker CEO for troubled properties until a new buyer steps up to formally take over. The court-appointed receiver can continue to pay vendors and employees, receive reimbursements, and care for residents as normal. Unlike bankruptcy proceedings, which are administered by federal courts and typically involve significant restructuring of companies’ operations, receivership is a state-level process that generally aims to maintain continuity.
Polsky himself is no stranger to receivership actions in Wisconsin: The Milwaukee lawyer has assumed control of properties operated by Fortis Management Group and Atrium Health and Senior Living in the past two years. Over the last 18 years, Polsky has been appointed receiver in 306 separate cases in Wisconsin, including 18 health care companies spanning 142 facilities, according to court documents.
Persistently low Medicaid rates have caused a wave of skilled nursing receiverships and closures in the state, with the Wisconsin Health Care Association reporting 30 shuttered SNFs since 2016. Skilled nursing operators lose about $70 per day on each Medicaid resident, the trade group reports.
Newly elected Gov. Tony Evers has proposed a 2.5% increase in statewide Medicaid spending in his 2020-2021 budget, but the money won’t necessarily flow down to nursing homes. Because the state bases Medicaid rates on the number of patient days, individual closures can have a cascading effect on other operators, according to WHCA president and CEO John Vander Meer.
“Facilities are not able to maintain their operations, so they close their doors, and there are fewer Medicaid beds, and that means there ends up being less allocated in the payment formula for nursing homes,” Vander Meer told SNN.
By the WHCA’s reckoning, nursing homes will receive $40 million less in 2020 and 2021 than they did in the previous two-year period. In response, the WHCA and other senior care advocates are lobbying lawmakers to more closely link reimbursements with certain cost centers — including increases associated with support services such as dietary, housekeeping, and laundry.
“There has to be a connection between the cost of care that we provide to our state’s most frail elderly and disabled citizens, and the reimbursement that we receive,” Vander Meer said.