Starting a new nursing home business is rare, considering the sector’s notoriously tight regulations and slim margins. But, Indiana-based Journey Skilled Nursing has grown to 22 facilities across six states in just under a year, with plans for more M&A in the spring of 2025.

Journey is led by industry veteran Bernie McGuinness, who has built a team with robust expertise as the company reaches its anniversary, with a focus on a regional cluster model seen at larger nursing home operators like the Ensign Group (Nasdaq: ENSG).

McGuinness spoke with Skilled Nursing News about his new position, and what’s next for Journey in the years ahead, including more acquisitions, significant investments in facilities and technology, and the need for a state-specific understanding of Medicaid.

The following transcript has been edited for length and clarity. Listen to the full interview on SoundCloud or iTunes/Apple Podcast.

SNN: How has business been since launching Journey?

McGuinness: It’s been an exciting 2024. This year, we’ve had the opportunity to look at defining Journey, the type of culture that we want as an organization, the types of markets that we want to pursue. We’ve had the opportunity to look at a multitude of different properties, different opportunities to launch Journey with, [and] really remain focused on our vision to change the world one heart at a time, and focus on that culture that starts with the care team member. We believe that great care is given right there at the bedside and simply put, we just think happy staff give better care.

We’re trying to build out regions in which we can have efficiency and shared staffing resources, relationships with managed care organizations, really become experts at state-operated Medicaid systems, understand the reimbursement in these states, understand rehabilitation services, vendor alignment, you name it.

We think the regional cluster model allows us that opportunity to gain a lot of efficiency. Georgia has been a large growth [market] for us, we’re at nine facilities throughout Georgia. We have six locations in Kentucky. Those are our two largest regional cluster markets. You can get to eight of the nine facilities in Georgia within about 90 minutes of each other. So we’ve got a lot of shared staff, shared referral sources, managed care organizations, vendor relationships that we can maximize.

SNN: Talk a little more about starting a nursing home business from the ground up.

McGuinness: To be honest, it can be really overwhelming and scary to go out on your own and launch from scratch. There’s a lot of opportunities for existing organizations looking for leadership roles to go out, bet on themselves and their leadership teams, take those relationships and find the opportunities.

I think you have to have a passion for it. This is all I’ve done since I was 19. This is my life. I’m passionate about doing this. You have to be mission and vision driven. We do believe, when you deliver great care and outcomes, that you’ll have some financial successes behind it. The margins are very slim and workforce challenges, they’re real. We hope that a cluster market and regional efficiencies allow us the ability to develop relationships with referral sources and see certain opportunities where we can increase skilled mix, premium payer types that can help with financial responsibility.

We also aim to become an expert at capturing state Medicaid reimbursement so that we can find some sort of margin. No mission statements are ever delivered without a margin. And, focus on regulation. The regulations are tough, the amount of paperwork, the redundancy … it’s tough out there.

SNN: What are Journey’s next steps?

McGuinness: We’re very focused on the 22 locations and stabilization. We’ve got some goals set up for these locations so now it’s about delivering those promises. For the first half of this year, you may see a small acquisition, maybe two properties, come on and join the family here this spring. We’ll be active and looking at the right opportunities to continue to fill out our regional cluster model and bring efficiencies and value add-ons to the Journey family. But we’re going to focus on the basics right now: staffing, workforce development, quality. A lot of our initial facilities are heavy regulatory lifts, quality outcomes. We need to change reputations, change culture, have some better survey compliance, and then put some investment back into the facilities in which we have.

Twenty of our 22 buildings used at least 30% agency at the time of acquisition, and as of today, we have one facility currently in agency usage that will be out by the end of the month. Journey should be agency free by the end of the first quarter.

We have a lot of construction and remodel projects that are starting in 2025 and some that are ongoing. We would like to see those get to the finish line this year, that reinvestment into the buildings and reinvestment of technology that we’re putting into the facilities. You’re going to see a lot of stabilization and delivering of the promises we made to the local communities, to the care team members, to the building leadership that has joined Journey over the last year.

A lot of our investment, from a capital and construction standpoint, is remodeling existing acquisitions. Significant investment in being done with what we call entry points, that could be a short term rehabilitation unit, a respiratory unit, a memory care unit, or just remodeling the dining room.

SNN: How have previous leadership positions informed your role at Journey?

McGuinness: Understanding key hiring positions, timing of key positions, and hiring strategies is huge. If you’re in growth mode, you really can’t waver from key initiatives as you’re focused on building out an organization, connecting with vendors, looking at contracting in terms of pricing, what are terms that we can get. Also, understanding the bandwidth that your organization can take on at any given time, and understanding that we’re all human and our whole team has a bandwidth that they can absorb.

How do we keep that culture? How do we celebrate those successes, but how do we set ourselves up so that we can have those successes and not stretch ourselves so thin that we’re setting ourselves up for failure?

SNN: Given Journey’s recent acquisitions, what are your insights on the financial landscape for skilled nursing this year and beyond?

McGuinness: I really hope to see more movement on interest rates and the lending environment. Compared to four or five years ago, it’s much more difficult. Lenders are more hesitant in our space, loan to value is less than what it may have been.

Financial pressure from change of ownership in certain states and the delays with tie-in notices or the ability to bill Medicaid, the loss of managed care contracts and getting back in the network through a change of ownership process – that is a real financial strain as you’re growing, especially a new organization.

I’m not sure I understand why we want it to be so difficult for a new operator … it’s usually a positive change of ownership, it’s a fresh breath of air for that facility. There’s new pay standards, there’s usually a capital investment. A lot of times we’re seeing one star facilities that are struggling, needing some new leadership, needing to join a group that has grown in that local market that might have more shared staffing and efficiencies. Change of ownership processes right now, especially in certain states, really puts a financial pressure on an organization.