Driven by its cluster model, The Ensign Group (Nasdaq: ENSG) has pursued a deliberate and consistent acquisition strategy – focusing on markets where it already has a footprint.

“Our goal isn’t necessarily to be in all 50 states,” Chairman and CEO Barry Port told the Orange County Business Journal, emphasizing that the company prefers expanding in regions it already knows well. “We represent almost two and a half percent of the entire industry, so there’s still a huge amount of opportunity.”

Turning around under performers is a big part of Ensign’s growth strategy, which has a “fanatical sort of consistency,” Port noted. 

And so is keeping assets under control through subsidiaries. While a high percentage of other skilled nursing facility operators lease from third parties, according to Port, a majority of Ensign’s real estate – nearly 150 properties – is owned by its subsidiary, Standard Bearer.

“That’s a big part of our strategy too,” Port said in the interview.

Ensign’s recent transactions include an addition of more than 1200 beds in California, Wisconsin, and Iowa, including five skilled nursing and three assisted living facilities in California, plus three more pending approval. It also added a 120-bed facility in Wisconsin and a 72-bed facility in Iowa, expanding its portfolio to 361 operations – 47 of which are senior living facilities – across 17 states.

Port also discussed Ensign’s preference for a cluster model, which promotes stronger collaboration among independently operated facilities located near each other by tying compensation to the collective financial performance of the cluster.

“Density is actually helpful as our clusters work together, with health plans and hospitals to provide a diversity of services, almost like a network to meet the needs of the local health care community,” he said.

Despite the strong performance, Port acknowledged the challenges of the skilled nursing industry.

“It’s not for the faint of heart,” he said, citing the pressures from state and federal funding, billing scrutiny, and shifting political landscapes.

That said, the company should continue to perform well financially, reaping benefits from easing of regulations for the nursing home sector, according to financial analysts.

“We left our meetings with [Ensign] feeling that the company has considerable operating momentum and should benefit from an improving industry backdrop over the next few years,” UBS analysts AJ Rice, James Kurek and Joseph Overman wrote in an investment note recently.