A pair of buildings owned by affiliates of Omega Healthcare Investors (NYSE: OHI) have entered court-ordered receivership after their operators failed to pay more than $7 million in rent and other expenses.
A Virginia circuit court judge ordered the third-party takeover of Blue Ridge Rehab Center and Blue Ridge Manor — a skilled nursing and assisted living facility, respectively — in Martinsville, Va. last month at the request of the Omega affiliates, the Martinsville Bulletin reported Tuesday.
Citing court documents, the Bulletin identified the owners of the properties as OHI Asset Martinsville LLC and OHI Asset Martinsville ALF LLC; a pair of companies called OHI Asset (VA) Martinsville SNF LLC and OHI Asset (VA) Martinsville ALF LLC appear on a list of Omega subsidiaries filed with the Securities and Exchange Commission, current as of this past December 31.
The operators were identified only as BRNURSCO and BRALFCO LLC, according to the publication. A spokesperson for Omega declined to comment on the matter, citing the ongoing legal proceedings.
Based on the addresses provided in the report, the facilities appeared to operate as Blue Ridge Village — which made the news last summer after its CEO, Chris Oswald, “fired” himself amid declining reimbursements and lengths of stay in the wake of increased Medicare Advantage penetration.
By cutting his own position, Oswald estimated that he was saving the organization $300,000 to $400,000 per year, potentially allowing it to break even.
“Medicare Advantage was formed not to improve patient care, but to cut costs, and they are doing an excellent job of it,” Oswald told Skilled Nursing News at the time. “They are reducing average length of stay by sometimes double-digit numbers.”
Suzanne Roski will serve as the receiver for 30 days through July 19, with a follow-up hearing scheduled for that day, the Bulletin reported. Roski has been authorized to appoint Kissito Healthcare as the temporary operator.
“Kissito will serve as the current operator until such time that a new operator is identified,” Kim Beazley, deputy director of the Virginia Department of Health Office of Licensure and Certification, told the publication. “The facility will remain open and operate as usual. The residents will remain in the facility. I can only speak to Blue Ridge Rehab, as we are the licensing entity for that facility.”
Blue Ridge Rehab features 300 licensed beds, according to the Virginia Department of Health, with 180 for nursing and 120 approved for either skilled or regular nursing. As of July 3, the facility had 231 residents, the Bulletin reported, while the adjacent assisted living property had 38 as of mid-May.
The operator of the two properties has experienced persistent financial problems, with the publication reporting that the ownership affiliates terminated its master leases in February. At that time, the operator had failed to pay $5.6 million in rent, with an additional $2.3 million accrued by the end of May — and increasing at a rate of nearly $25,000 per day.
The unnamed operator also owes more than $200,000 in unpaid property taxes, according to the Bulletin report, and was unable to make payroll starting in June. Multiple vendors have also required cash-on-delivery payment terms in the wake of the financial issues.
Receivership is a common solution for troubled skilled nursing facilities, with a third party stepping in on an interim basis to ensure uninterrupted resident care until the facilities come under the control of a new third-party operator or close.
A portfolio of 16 properties in South Dakota that had been operated by the now-defunct Skyline Healthcare, for instance, was recently transferred to the Illinois-based Cascade Capital Group after a protracted receivership process. By contrast, a group of five Skyline-operated nursing homes in Massachusetts closed down at the end of the receivership process.
Virginia’s Department of Health cannot approve the transfer of the properties until the current operator surrenders its license, the Bulletin report; a state official asked the judge to grant the receiver the power to force BRNURSCO to do so.
Maggie Flynn contributed reporting to this story.