In a U.S. health care landscape dominated by calls to shift from silos to episodic care, skilled nursing facilities have been feeling the pressure to expand their reach.
For the Chicago-based Symphony Post Acute Network, that urge was a major driver behind its recent acquisition of Caretel Inns of Brighton and Caretel Inns of Lakeland, which feature both skilled nursing and assisted living services.
Both facilities are located in Michigan, marking Symphony’s move into the state. But the deal also represents a way the post-acute provider can expand its umbrella amid the changing landscape, according to Symphony COO Michael Munter.
“As we look for the next five, 10, 15, 20 years of our growth, we are looking outside just the skilled nursing environment,” Munter told Skilled Nursing News. “We’re looking to create and expand what we call internally a care network. And to do that … we feel that skilled nursing in and of itself might not be enough of a care continuum.”
The model of the future
Munter declined to name a price for the deal, which will soon grow to include three more properties, but the fact that Caretel was family-owned made it a good fit for Symphony, he told SNN.
Initially founded by Horace D’Angelo, Jr., the company’s facilities offer a range of skilled nursing, memory care, and assisted living services — a spectrum that proved enticing to Symphony as it looks to expand its care network.
“In four of these five buildings, all three of those care modalities are located under one roof,” Munter told SNN. “Which is a model we like, and we think quite frankly might be the future of this industry.”
To get the facilities ready for that future, Symphony is planning to add other clinical specialties on a market-by-market basis. There is “quite a bit of demand” for dedicated cardiac programs, and some interest in pulmonary services; some referral sources have also suggested that inpatient dialysis might be a service to look into, Munter told SNN.
While the assisted living portions of Caretel sport very healthy occupancy — some at 100%, with waiting lists — the skilled side has some more work to do, Munter acknowledged. To that end, Symphony is working with third-party data system providers to dive into the market and identify both clinical needs and underserved areas, he said. The goal is to have strategic business plans for every building by the first quarter of next year.
“We will use clinical programming as that solution to take census to the next level, and build upon what [Caretel] has already successfully done to date,” he said.
A Midwest presence
Symphony is specifically looking to expand in the Midwest because of the strength of its regional and corporate team, Munter said, with an eye on family-owned and not-for-profit facilities because of the perceived cultural fit.
The Caretel deal was part of a multi-step process, with remaining properties in Linden, Bay City, and Woodhaven, Mich. set to become part of Symphony pending approval from the Department of Housing and Urban Development (HUD). The process of shifting debt from the seller in the transfer of physical assets (TPA) takes “a couple of months,” Munter said, and Symphony currently expects that process to be complete by the end of the calendar year.
From start to finish, the transaction took roughly six to nine months, primarily due to the legal work and extensive documentation stemming from Caretel’s multiple decades of operation, Munter said. The process of agreeing on a purchase price and business terms was relatively quick, but the due diligence piece took up more time, though there were few surprises, he said.
The transaction talks also included many discussions about ensuring that Symphony would serve as a trusted steward of the Caretel facilities in the same way the sellers had, Symphony chief brand officer Mark Hartman told SNN.
“It was a great kind of family conversation, and one that we’d like to have with a lot of other portfolios out there, that I think are in the same situation — where they’ve come to a point where they decide it’s time to ‘let their baby go,'” Hartman told SNN.
Sellers’ deep-seated need for assurances that their properties will receive proper care into the future doesn’t always make it into formal documents, but they remain a key part of the process; for example, Symphony might commit to keeping certain employees on for a specified period of time, Munter said.
“You’re beginning to see a pattern of people genuinely concerned about making sure that their legacy lives on in a good, sustainable and thought-of way,” he said. “And that’s really what Symphony is looking to do going forward.”