ManorCare Parent ProMedica Lays Off 100 More Employees

Non-profit hospital system ProMedica last week announced the layoffs of 100 more administrative and corporate employees, marking the second round of staffing reductions since it took over the operations of nursing home chain HCR ManorCare.

The Daily Reporter of Coldwater, Mich. — where ProMedica operates the Coldwater Regional Hospital — initially reported the news, citing a letter from president and CEO Randy Oostra to employees.

“The reduction was related to the reorganization of some operational functions across our system,” Oostra said, according to the Daily Reporter.

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Though the layoffs represent less than 1% of the company’s total workforce of more than 70,000, the reduction in force represents the second such decision in less than a year: The Toledo, Ohio-based firm laid off 100 workers and slashed a further 60 unfilled jobs last August, citing “pre-merger ProMedica financial issues.”

Last summer’s round of cuts came less than a month after ProMedica formally consummated its mega-deal to acquire the struggling ManorCare chain in a joint venture with real estate investment trust (REIT) Welltower Inc. (NYSE: WELL). The non-profit chain kicked in $524 million in cash, along with a $1.15 billion bridge loan, to purchase the bankrupt ManorCare’s operations and a 20% share of its real estate; Welltower purchased the remaining 80% stake in the properties.

All told, the deal was valued at $4.4 billion, with both the hospital system and the REIT positioning the transaction as a revolutionary move to create a vertically integrated care continuum.

The combination of the two companies remains ongoing, but the short-term picture for ProMedica hasn’t been positive: The company lost $70 million in 2018, despite seeing a significant gain in revenues from ManorCare’s 170 skilled nursing facilities, 55 assisted living properties, and 120 home health and hospice entities.

“Total operating expenses increased by $1.7 billion, with nearly $1.3 billion related to acquisitions of HCR ManorCare and a rural hospital,” ProMedica reported. “Provider expenses increased $53 million related to higher staffing costs, including contracted labor.”

At the time of the first round of layoffs, a spokesperson denied that the move was related to the company’s acquisition of ProMedica; when asked about this more recent set, a spokesperson provided a statement reaffirming Oostra’s comment about operational reorganization.

“We empathize with the affected employees and are committed to assisting them through their transition,” the company said in the statement. “Our human resources department is working closely with affected employees to provide support and opportunities to return if a future job opening meets their needs.”

In addition, some employees voluntarily elected to be part of the layoff round, according to the Daily Reporter.

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