Inside Innovative Health’s $80 Million Skilled Nursing Construction Push

Despite a general lack of new construction in the skilled nursing space, one owner/operator stands out for building three brand-new skilled nursing facilities in the Chicagoland area.

And when many companies are paring down staff and consolidating, Brad Haber, principal owner and operator at Innovative Health, LLC, is midway through spearheading three SNF construction projects in Mundelein, Lisle, and Aurora for about $80 million in total.

Innovative Health, a short-term transitional and post-acute health care company based in Northbrook, Ill., will replace Winchester House and bring existing staff to the new Mundelein facility and a new set of staffers to the Lisle and Aurora buildings — adding 200 employees, concentrated mostly in nurses with at least 15 new therapists.

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“If you look at the skilled nursing industry in Illinois, there’s no new product in the market and not a lot of local choices for consumers. No one in Illinois is building three skilled nursing facilities. I’ve seen the skilled nursing buzz change from somewhat negative to more positive in the past few months,” Haber said, adding that almost immediately after the Lisle building exterior and signage was completed, Innovative Health was “already getting calls for employment.”

Many SNF construction projects have providers looking to adapt to the new expectations of nursing home residents and their families, which sometimes means downsizing bed counts. In the case of Innovative Health’s current projects, one facility is being replaced with a newly constructed facility that has 39 fewer beds, while the other two are brand new projects.

Innovative Health had leased Winchester House in Libertyville, which is over 100 years old, from the government of Lake County. Residents at that facility will be transferred to the new $35 million Mundelein facility when it opens in about six months. The bed count will be reduced from 224 to 185, divided into 79 transitional beds and 106 skilled care beds dedicated to dementia and other long-term residents.

The Lisle construction is set for completion in April 2020 – with the Aurora facility following in October 2020. Both Lisle and Aurora spaces will cost in the low $20 million range, with 68 beds each.

Haber’s team works with Transitional Care Management and partner Brian Cloch, the main owner of the management company, to ensure a solid clinical and administrative operation without outsourcing rehab or administrative staff.

“What sets us apart is the fact that we employ everyone,” said Haber.

The 20-year senior care veteran started Innovative Health with Cloch five years ago in the hopes of developing a cutting-edge skilled nursing business targeted at transitional care. Today, he points to a business model that he calls a high-end, “Four Seasons facility quality, with pizza ovens, wood floors, and comfortable common areas to gather.”

“We’re trying to change what’s happened in this industry for the last 50 years, an industry stuck in the ice age, and there’s no reason that has to be that way,” Haber said.

In order to build at Mundelein, Innovative Health submitted a request for proposal (RFP) to fulfill a need for the Lake County, who self-managed Winchester House for a time. Previously, Lake County had worked with a different management group before deciding an entirely new facility was needed, since the newest part of the building was 70 years old.

“The physical plant is obsolete, and there was no mechanism to move the facility to a different site,” Haber said, adding that he completed a certificate of need (CON) change through the Illinois Health Facilities and Services Review Board, reducing the total count by 39 beds.

Innovative Health offers transitional care in the current space, and more than half of the beds are dedicated to skilled nursing and treating dementia — with the rest for long-term care.

“All indications are that the older site will be redeveloped. Nobody will remain since it will be closed down,” Haber said. “All residents will be offered accommodation in the new buildings. That was our promise to the state, the county, and to the guests in the building.”

Simultaneously under construction, the two new facilities are currently referred to as Transitional Care of Lisle and Transitional Care of Fox Valley in Aurora, a pair of western Chicago suburbs. Each 68-bed facility will mostly consist of private rooms and baths “with all of the amenities expected in up-to-date facilities,” said Haber.

In this short-term rehabilitation context, most of Innovative Health’s patients will receive therapy services within a few hours of being admitted, whereas it could take days to see a therapist elsewhere, said Haber. The average length of stay is 17 days, though the exact duration can depend on the case mix: For example, an orthopedic stay could be six days while a stroke or cardiac patient may remain for 25 days.

In terms of future goals, Haber says his plate is pretty full, but his company is looking towards the future for “more selective acquisition” in the Chicago area.

The company prides itself on working with partners who are “incentivized to stay in the business for the long-term, and we are all somehow linked together,” Haber said. Range Comm, their co-development partner, and ARCO Construction, the general contractor, have an equity stake in the deals.

Because they aren’t transient parts of the total equation that “get in and get out,” they are all part of the deal and “everyone involved is linked for the long-term,” Haber said.

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