When Welltower Inc. (NYSE: WELL) and health system ProMedica teamed up to take over nursing home giant HCR ManorCare in 2018, the players positioned the move as a way to vertically integrate a continuum that could follow a patient from the hospital, to a skilled nursing facility, to home health.
The real estate investment trust (REIT) and the hospital operator bought the real estate associated with ManorCare’s nursing facilities in a joint venture, with ProMedica assuming operations, in a deal pegged at $4.4 billion.
“We are focused on tearing down the walls between care delivery channels to provide simpler navigation across the care continuum, along with greater value,” ProMedica CEO Randy Oostra said in a statement at the time the deal closed. “Further, we see a tremendous opportunity to engage ProMedica’s nationally recognized, social determinants of health work to benefit seniors across the communities we serve.”
Though no one at the time could have predicted the devastation of COVID-19 lurking a few years in the distance, ProMedica Senior Care president David Parker and chief medical officer Dr. Mark Gloth say that the integration set both sides up to respond more comprehensively to the pandemic — while also proving out the provider’s pre-pandemic intent to expand through partnerships with other health systems looking for help with their post-acute options.
“We’ve been approached by a number of health care systems — either to come in and take an equity stake in that skilled nursing facility or assisted living facility, and be an operator for them maybe in a joint venture, or potentially build and develop a skilled nursing facility on hospital campuses,” Parker said. “We have a number of those conversations taking place right now.”
Parker and Gloth joined SNN by phone on December 3 to discuss the Toledo, Ohio-based operator’s COVID-19 strategy, the recent retirement of the HCR ManorCare brand name, and plans to grow its already wide footprint.
What was the strategy behind the recent rebrand?
Parker: If you go back to the negotiations between Welltower and ProMedica and HCR at the time that they purchased the real estate in the JV, and then the operations, ProMedica looked at HCR as an opportunity to really develop and build a national brand.
Our core market — our anchor market, if you will — is northwest Ohio, northeast Michigan, with our 13 hospitals and provider group, as well as our insurance company. If you think about it, to the north of us, we’ve got Beaumont, we’ve got the University of Michigan. We’ve got Henry Ford south of us, Ohio State, Ohio Health. You go to the east, and you’ve got the Cleveland Clinic, Metro, University Hospitals. We’re in a market [where] we just weren’t going to continue to expand.
Quite frankly, we had a clear understanding that acquiring more hospitals was not what we wanted to do. So getting into senior care, and being able to build a national brand that allows us to touch every component in health care, was a primary driver behind the purchase of HCR ManorCare.
As we’ve gone through the integration, we have been working on developing the rebrand to ProMedica Senior Care, and looking to really adopt and change our reputation, our brand as a not-for-profit, mission-oriented health care system in senior care.
Last year, we really got into our not-for-profit work, our mission-based work around our Meals to Go program, which really focused on food insecurity as part of our work on social determinants of health. We partnered with a number of folks around that, including Welltower, and we were providing two meals to go for every patient that was discharged. That was started in Michigan and got into Chicago, and we were working to get into California and Washington when the pandemic hit. We pulled back on that just because of the volume decline.
But we will continue to move — and move not too swiftly, but very thoughtfully — into where we can focus on our not-for-profit, mission-oriented work. We’re doing a lot of work out in our marketplaces with our foundation on doing fundraising; we have a program called Give Where You Live that is specific to the senior care side of our business.
That’s in each one of our local markets with either our skilled nursing facility, assisted living facility, or home health and hospice office. The foundation works with the administrative team at the local level to create fundraisers, and then it is left up to the team at the local level to determine where those funds are donated — we give them suggestions around food insecurity or isolation, and we’ll work with them to make sure those donations are provided.
But that’s where we saw an opportunity to build out and to really differentiate from HCR ManorCare. In the past, we had a good reputation as a quality provider. But now with ProMedica, we have a number of resources — whether it be through our physician practices and specialties in acute care, and even insurance — that are allowing us to be a different provider, and again, the focus on our mission work is even more so.
That really came through during this pandemic. Our first patient was March 16, in Columbia, S.C. As it began to gain speed, our foundation stepped up for all of ProMedica employees across the United States. Everyone was allowed to call in and they could request financial support, and that financial support was $250. It was just: Fill out an application.
We did over 9,000 of those donations; you could come back and show a reason that you needed it. Our foundation ended up spending about $3.5 million providing resources and support to our employees.
I think we’re starting to feel like we were really part of that non-profit, mission-based system. I think it’s going to differentiate us as the largest not-for-profit provider of skilled nursing, assisted living — particularly memory care — and home health and hospice in the United States.
That vertical integration piece was a major reason cited for the joint-venture deal, particularly from now-former Welltower CEO Tom DeRosa. Has the pandemic challenged that model, or has it shown the value of having a more complete system?
Parker: I think the pandemic, if you talk to most acute care systems, has highlighted the need to really be thoughtful and strategic around your preferred provider network. I have said for years, along with many others, that defining your preferred provider network by a total five-star rating is an absolute waste of time.
It’s so much [defined by] subjectivity, and interpretation by surveyors who are different across every state in which we operate. But really defining your preferred provider network around quality measures, and the types of patients that you serve, and the volume of patients you serve in any market, is really the best way to determine the quality of care that the provider provides.
I think what has happened in the pandemic is acute care systems have realized that they’ve really got to go out and they’ve got to evaluate the capabilities — medically and clinically and operationally — in skilled nursing, assisted living, and even down into home health and hospice, to meet the ever-changing demands of hospital discharges, particularly during the pandemic.
We’re seeing that across the country. We have a number of conversations that are taking place right now with not-for-profit health care systems that used to think — maybe they had a skilled nursing facility, and it was an afterthought. The person that ran it also ran the ambulatory clinic, or transportation, or something else. But now, they see it as a very important component of their entire system.
We’ve been approached by a number of health care systems — either to come in and take an equity stake in that skilled nursing facility or assisted living facility, and be an operator for them maybe in a joint venture, or potentially build and develop a skilled nursing facility on hospital campuses. We have a number of those conversations taking place right now.
I think it’s highlighted that you’ve got to really narrow in on the type of provider you want. Not all providers are alike. I get that. We have good providers in this space, and we have providers that aren’t doing a real good job. But that’s true in every industry, and I think this pandemic has really highlighted that there needs to be a real focus on the type of provider that you partner with.
I think that allows us to be a different type of provider, and we’ve got other opportunities that are being considered right now — both from the home health side, and looking at opportunities to partner with other health systems [where] home health is an afterthought.
They’ve got it, but they don’t make a margin on it, or they don’t understand it. We can potentially come in and operate that, because it’s a core business. I wake up every day thinking about skilled nursing, and about home health and hospice, and about assisted living.
That’s just not what the acute care environment does. That’s really what Tom [DeRosa] was thinking about when we got together with Welltower, and I think the pandemic has really accelerated that for us. We expect some things to take place in the near term around some of those partnerships.
Gloth: It’s really been fascinating. The COVID-19 pandemic has really accelerated the original vision associated with developing this system that really does reach across the continuum of care in a very integrated way. One of the unique things for the ProMedica health system is that as a hospital system, and then continuing care and post acute care, it had a national footprint really like no other organization in the health care industry.
So when we first saw the cases in Washington, we were sitting at the table — we meaning ProMedica Senior Care, formerly HCR ManorCare — with the acute care system in ProMedica, as well as with our payer arm, Paramount. We were all on the incident management team.
From the very beginning, we were providing information and additional access to the acute care side. We’re sitting at the same table. As they started to experience it, and they could share the acute care angle of what was happening — which right now is much greater than it was even at the peak in April — we were really able to, in a unique way, share best practices, share our knowledge bases, look at what was happening across the country, and help both the acute and post-acute care entities prepare for what was going on.
We were also able to tap into the expertise on the acute arm. Our infectious disease team at the acute system within ProMedica was involved very much, from the very beginning, in helping us manage our practices and provide additional guidance. They were sitting at the table with us; they were part of that communication.
When we looked at enhancing our telemedicine access — which we did from literally day one, before it even entered into our facilities — we had already started that initiative with getting our own acute care system involved in telemedicine consultations, and so it made the transitions a lot smoother.
I think what we’ve seen is that this partnership not only has tuned the acute care side into the post-acute care side of the business, and vice versa, but we’ve really been able to see those benefits pay dividends to our patient population.
That has really been remarkable when it comes to enhancing quality of care — that communication, that education, that true collaboration. Not just: “Oh, it’s the skilled nursing facility down the street.” But really we’re all part of the same system.
There was a lot of really rapid education, training, that had to occur, that accelerated what we are doing as a system. Our system will be better off, frankly, because of the lessons that we have learned in the pandemic. I think it really does position us very well for the future of providing excellent quality care throughout that continuum — not just in post-acute care, in skilled nursing facilities and assisted living facilities, but on the acute care side of the business.
Has ProMedica been able to establish new partnerships with other health systems and skilled nursing providers during the pandemic, or are players in wait-and-see mode until the crisis dies down?
Parker: I have a couple of letters of intent that are signed, and we’re negotiating final documents. I expect those to be announced in the very beginning of the first quarter of 2021.
What do you want the general public to know about the impact of COVID-19 on your operations, and the work you’ve done since March?
Parker: I’ve been in this industry 33 years. I ran my first skilled nursing facility when I was 21 years old, in Louisiana, and I’m still a licensed nursing home administrator — I just happen to run a company that has 168 facilities.
I’ve been in facilities that have COVID units. I have talked to employees that are working in COVID units. I have talked to [people] that have family members in our facility. They have not seen their loved one, held their hand, hugged them, kissed them for birthdays, now Thanksgiving, now Christmas — or that have had somebody that has passed away, and they were not able to be with them, maybe only look at them through a window.
I have had employees and leaders across the entire United States that have gotten up every day and gone to work. I’ve got guys like Dr. Gloth here, who since COVID started, has been on I think, last count, around 104 flights. That’s 104 flights with 104 rental cars with 104 — or more — different hotels and in facilities daily, talking to our employees, educating our employees, talking to our family members.
I’ve lost 11 great caregivers during this time, and our foundation has provided every one of those family members with financial support post the expiration of one of our team members.
I don’t think that the general public truly understands the length and the depth of commitment that people in our industry have. I’m very involved in the political side of our industry and lobbying and educating — I’m a past president of the Ohio Health Care Association.
We want to continue to get better. We want to drive quality initiatives and quality improvement in this industry. I want to be able to pay all my employees a living wage. I would like to add infection control preventionists to every one of my centers, and I actually budgeted it this year. I would love to be able to do some of the things that people would like me to do, both at the federal level and at the state level.
But what people have to understand is the only way that that happens is if we have payment reform and regulatory reform. We cannot have unfunded mandates, because the margin is, all in, less than 1%. We’re going to have major disruption in this industry in the first quarter. It is going to happen, and it’s going to send shockwaves, because no matter what everybody thinks, not everybody will be able to go home. It’s just not feasible.
They’re not going to have the social support. They’re not going to have the economic means to be able to go home after a stay in an acute care environment with a traumatic illness. We’re still going to be a needed segment of health care. So how do we work together and have a collaborative relationship with CMS, with the CDC, with the federal government to really drive change?
If you look at how we have been impacted by this, we have been regulated to the extreme, while no one else has. I sit here and I work for an organization that has hospitals. I can tell you, you don’t get tested when you go in a hospital. You check your temperature, which is okay, but no one monitors that you take that temperature.
They haven’t had infection control surveys. I’ve had 1,200 surveys since the start of the pandemic. That’s 1,200 extended periods of time that my leaders are not focused on delivering care. And while I think it’s important, I think it’s also excessive, because there’s not a collaborative approach.
Here’s the line: Quality of care costs money. That’s just a fact in life. If we want to drive change in this industry — and I’m all for it. Everybody on my team’s all for it. Everybody at AHCA is all for it.
But if we want to drive change, then we’ve got to sit down, and we’ve got to realize that costs money, and we need to work collaboratively like we do with every other sector of health care. And we can’t have a punitive approach. I think that needs to happen because we’ve got amazing, amazing, dedicated heroes in this business.
I’ve got family members that run skilled nursing facilities, and I’ve got great friends that run great companies. We’re all blessed to have great people that have put themselves at risk, their families at risk, because they care. It means something. It is a very special, special career choice.
The best decision I ever made in my life, besides marrying my wife, was to get into this career. I’m blessed that I’ve got a great group of people.
Look, we’ve got to commit to change in this business and we’ll rise to the occasion. But we’ve got to have a partnership with the federal government and our local and state governments, particularly around Medicaid, so that we can afford to make those changes. Our greatest generation deserves that, and we’re all in for it — if we can get the partnership we need.
This interview has been condensed and edited for clarity.