The sale of bankrupt Iowa-based QHC facilities may be blocked — again — this time by the Centers for Medicare & Medicaid Services (CMS). The federal agency is concerned the deal will not cover $1 million owed to it.
Blue Diamond Equities, a New Jersey-based privately owned real estate holdings and management company, proposed to buy the facilities, but the deal would only pay off between $509,000 and $730,600 of debt to the federal agency, according to a report in the Iowa Capitol Dispatch.
QHC Management filed for Chapter 11 bankruptcy before the end of 2021 following some of the largest federal fines assessed on any skilled nursing operator in the state; the operator originally claimed $1 million in assets and $26.3 million in liabilities.
The sale to Blue Diamond was held up in July when three of the eight QHC nursing homes were closed down prior to the proposed sale. Two assisted living facilities were due to be included in the sale to Blue Diamond as well.
QHC’s debt was closer to $2.1 million prior to the closures, according to the Dispatch.
While CMS isn’t opposed to the sale as a whole, representatives did cite precise amounts in Covid-19 Accelerated and Advanced Payments (CAAP) that need to be returned, related to three facilities. Crestridge Care Center in Maquoketa still owes $32,182; QHC Fort Dodge Villa owes $935,705; and QHC Humboldt North owes $75,100.
The operator also has racked up roughly $3.9 million in outstanding fees to the state Department of Health and Human Services; Iowa hasn’t filed any written objections with the court.
QHC has asked the state to treat this debt as “lower priority,” as more than 300 other creditors are seeking payment.
Cedar Health Group was another potential buyer for the distressed QHC properties, but exited a deal in March when one of the operator’s lawyers raised concerns regarding some of the facilities losing Medicare funding as a result of care quality issues.
The Iowa operator said in court filings it faced “crippling staffing and employee retention issues” since the pandemic began. QHC’s original eight-SNF portfolio had a maximum capacity of 700 residents.
The operator provides skilled nursing, restorative nursing, respite care, physical therapy, long-term care, occupational therapy, hospice, dementia care, Alzheimer’s care and rehabilitation therapy across its facilities.
Married owners Jerry and Nancy Voyna took over the business after working “within the company home office” for 20-plus years, QHC’s website said. Their son inherited the company this year and has pursued the sales.
The group was founded in 1977 as Quality Health Care Specialists Corp.
Companies featured in this article:
Blue Diamond Equities, Cedar Health Group, QHC Facilities, QHC Management
