Despite helming a presentation that highlighted his company’s move away from health care companies that rely on government reimbursements, Welltower Inc. (NYSE: WELL) CEO Tom DeRosa this week asserted the firm’s longstanding commitment to post-acute care.
“This is a business that we have never abandoned, even in the dark days of that sector, and reimbursement cuts,” DeRosa said in a Wednesday talk at the J.P. Morgan Healthcare Conference in San Francisco.
That said, post-acute assets currently account for less than 10% of the real estate investment trust’s (REIT) net operating income, down from 21% in the fourth quarter of 2015 — a strategic shift that chief financial officer Tim McHugh touted in his portion of Welltower’s remarks at J.P. Morgan.
“We’ve de-risked our portfolio significantly by moving away from direct government-reimbursement real estate, and we’ve also continued to integrate more with the leading health systems in the country,” McHugh said.
The Toledo, Ohio-based Welltower’s tentative partnership with Philadelphia-area hospital operator Jefferson Health, announced last week, marked the latest step in that long-term goal of expanding through health system joint ventures; in briefly expanding on that pending marriage, DeRosa focused primarily the potential for integrating Jefferson Health’s clinicians and social determinants of health programs into new affordable residential assets for seniors.
DeRosa also touched on the REIT’s other major health system play: its joint venture with ProMedica to own and operate the HCR ManorCare chain of nursing homes. As he had in the past, DeRosa described what he saw as a steady erosion of ManorCare’s assets at the hands of its prior private-equity owners, calling the company “the finest post-acute care provider in the United States” until, in his view, previous ownership over-levered the company into bankruptcy.
The CEO didn’t offer many details on the current state of the Welltower-ProMedica-ManorCare alliance, which has seen its share of negative headlines in the wake of its consummation in 2018 — from credit downgrades to struggles at ProMedica’s managed Medicaid plan, which the health system recently scaled back amid hefty losses.
Still, DeRosa remained upbeat about the deal’s long-term effects on the Toledo-based health system’s fortunes.
“This has really put ProMedica on the map, and they were able to do that because of the partnership and capital that Welltower was able to bring to that joint venture,” DeRosa said.
