Spending $5 Million a Week on COVID-19, Signature HealthCARE Faces ‘Toughest Period in Our Company History’

Like many nursing home operators, Signature HealthCARE has seen its fair share of strain during the COVID-19 crisis, with skyrocketing costs prompting the provider to lay off 100 corporate employees earlier this month.

But its CEO has indicated that the stress on the Louisville, Ky.-based company may just be starting.

“We think we did it right, that we cut deep enough to withstand the next 12 to 18 months as we rebuild,” Joseph Steier told his hometown Louisville Business First this week. “We feel good, but there’s no guarantee. We all think we will survive long-term. But it’s our going to be our toughest period in our company history.”

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Signature — the largest nursing home chain in the Bluegrass State with 41 Kentucky buildings and 110 overall — has spent $5 million per week on increased testing, personal protective equipment (PPE), and hazard pay for staff, according to the publication; in all this year, the company will spend at least an additional $60 million to meet the COVID-19 challenge, the outlet reported.

At the same time, a decline in post-acute care admissions fueled by suspensions of non-emergency surgeries has resulted in a $125 million drop in revenue.

“This is going to require a lot of restructuring the industry — not just at Signature, across all nursing home situations,” Steier told Louisville Business First.

The operator, which has facilities in 10 states, blamed the Kentucky state government for failing to pass along a federal boost in Medicaid dollars to nursing homes when announcing the 100 layoffs on June 10.

Early on in the COVID-19 crisis, Congress passed a 6.2% boost to the Federal Medical Assistance Percentage, or Washington’s share of state-level Medicaid rates. However, individual state governors had control over how those additional funs would be allocated, and many did not include long-term care facilities in the largesse.

“Perhaps the most frustrating aspect of this situation is how our own state was unwilling to share a portion of the FMAP financing offered by the federal government to assist with our state’s Medicaid patient needs associated with COVID-19,” chief operating officer Chris Cox said in a June 10 statement. “And although our state finally embraced the idea of facility-wide testing for all residents and staff to the point of mandating it statewide, they failed to address the resource needs to accomplish this mandate.”

The administration of Kentucky Gov. Andy Bashear, a Democrat, pushed back against Signature’s assertions.

Political considerations aside, the coronavirus crisis adds another layer to Signature’s complex operating calculus. Back in 2018, the company was forced to restructure its leases with landlords Sabra Health Care REIT (Nasdaq: SBRA) and Omega Healthcare Investors (NYSE: OHI) after falling tens of millions of dollars behind on rent.

Signature also paid $30 million that same year to settle federal accusations that the operator submitted false therapy claims to Medicare.

After resolving those challenges, the company embarked on a program called “Signature 2.0” to reorient its operations for the future, including a focus on care management and meeting the needs of higher-acuity residents amid the overarching shift to the Patient-Driven Payment Model (PDPM).

“We do think you’ll see us end up working at a high level with some major health systems in joint ventures … and that would be where we think health care is going to go over the next eight or 10 years,” Steier told SNN in 2018. “We don’t think we can work in a silo or work as an independent nursing home company by ourselves out in the real world.”

Steier still attempted to strike an upbeat tone in his interview with Louisville Business First.

“We’ve just got to live to tell about and make hard decisions now to get there,” Steier said, according to the publication.

Signature was able to celebrate an positive milestone on Tuesday, announcing that its facilities had logged more than 1,100 recoveries from COVID-19, or about 77.7% of all positive cases at its buildings so far.

The operator also shuttered its flagship COVID-19 unit at Signature HealthCARE of Putnam County in Cookeville, Tenn., which had cared for residents from hospitals and other long-term settings, after declaring it coronavirus-free; out of 57 total positive cases at the Putnam County building, 51 people recovered.

“Much of the media focuses on the negatives of this pandemic that has changed our world. But there are positives, too,” Steier said in a statement announcing the progress. “We must celebrate the victories and let our communities know this pandemic can be defeated, one person, one resident, one staff member at a time. We’ve got one-thousand plus victories to prove it.”

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