Saber Healthcare Group’s joint venture (JV) with Omega Healthcare Investors (NYSE: OHI) was driven by strategic choice rather than financial need, creating “one of the biggest powerhouses in our sector,” Saber CEO Bill Weisberg said, while also preserving operational control and aligning with a trusted capital partner.
The JV combines “one of the best operating companies, one of the best capital partners and financial strength to really go do whatever we want to do in the future,” Weisberg said. Looking ahead, Saber feels ready to tackle rising acuity, higher costs and a shift toward value-based reimbursement, already operating with high staffing levels based on acuity.
But the Ohio-based operator is still waiting for reimbursement systems to better reward their readiness.
“We have the highest acuity, the highest staffing level to respond to that acuity, the lowest length of stay dealing with that acuity and the lowest return to hospital with that low length of stay,” said Weisberg. “That’s the winning value-based proposition, and we’re waiting for the market to reward us for that and stop paying everybody the same rates. We want to see the market change.”
Saber was founded 25 years ago with just one building, and they have more than 140 today across six states. They’ve grown a team with long tenures too, Weisberg said.
The following transcript has been edited for length and clarity. Click here to subscribe to RETHINK via Apple Podcasts, and scroll to the end of this article to access the complete audio of the Bill Weisberg episode.
SNN: To start us off, tell me a bit about your newly formed business relationship with Omega.
Weisberg: In our sector, the only reason you would consider an all-out sale of your real estate is a total exit or a need for capital – neither was our case. We did not have a capital need, so a sale lease back was never really a discussion for us. Selling the assets to Omega as a whole wasn’t really an option to us … we wanted to acquire more real estate on our own and have our operations teams continue to grow, because they have a great deal of capacity. We’re in a very strong financial position, so we have the ability to buy our own real estate.
Over the years, we grew a friendship with the Omega guys. We had tons of conversations with them. We always wanted to do more together, and that conversation just started to veer towards a JV rather than a sale. We discussed ownership, and came to a 49% ownership for them and a 51% ownership for us in the JV. It was a great relationship to start, and they are a trusted capital partner, both in our sector and with us.
We both wanted more alignment with each other, not just on the real estate side. We decided that we would offer them a small ownership percentage, in this case, 9.9% ownership in the operating company. This creates full alignment on both sides of the partnership, as we both have a vested interest in acquiring the best communities.
We did it without adding any debt to Saber; our real estate portfolio, even after the deal, still sits at sub 50% loan-to-value leverage, and that allows us for a ton of equity to continue to acquire and grow without either side having to come up with capital.
Bringing Omega both into the real estate and the operating company was a win-win. It created what we think is one of the biggest powerhouses in our sector, with one of the best operating companies, one of the best capital partners and financial strength to really go do whatever we want to do in the future.
Omega’s CEO Taylor Pickett called Saber the “private Ensign,” hinting at growth for Saber in the next five years. Pickett said this growth would be significant and creative. Anything to add here, and thoughts on the “private Ensign” moniker?
In our sector, there’s been a great deal of noise and, frankly, a lot of failure with some of the larger operators that has led to some bankruptcies and other financial issues that have caused REITs to historically either have to forego rent or, in really bad cases, infuse capital. So when the investor community hears about something like that, or REIT doing a financial deal with an operator, there’s that initial inclination to panic and ask what’s wrong with the operator.
The best way Taylor could have answered that question is by creating a comparative narrative that outsiders could understand. Ensign, they’ve set the gold standard. They are both a quality operation-centric organization, but also they’re financially strong. I look at it like the Ritz Carlton. When you say you are staying at a Ritz or a rich property, you know two things. It’s going to be really, really nice and it’s going to have the best service. Well, I think Ensign does that in our sector. By comparing us in this way, Taylor was able to say, look, Saber didn’t need a rescue plan or capital or even a partner. We wanted to be their partner.
Saber has been Omega’s operating partner for over a decade? How has that relationship developed and deepened over the years? How has it changed to meet an ever-evolving sector?
The Omega relationship actually happened by accident. They bought Aviv REIT over a decade ago, and honestly, we were considering not doing business anymore with Aviv REIT. They just wanted to buy whatever real estate they could, and didn’t care about the operating company. So when Omega came on, it was really a welcome change for us. They spent time telling us what they wanted to do, but more importantly, they wanted to understand what we wanted to do. They wanted to understand our capacity.
There was a level of comfort, knowing that we had a strong capital partner that would help us grow, but they didn’t want to interfere with our operations; it created a level of trust over time.
You look at landlords, some of them are more focused on buying real estate and owning real estate and treating it like a real estate investment without really caring about the operator. Frankly, it’s why I get upset when I hear Omega or REITs compared to private equity, because when you’re a PE firm or when you’re a landlord, that’s just buying real estate. You’re valuing the real estate. A lot of these new buyers are doing that, and they’re just looking at the operator as expendable and replaceable. That’s not Omega; I don’t think that’s REITs in general.
New buyers, in my opinion, don’t value the human aspect of what we do, whereas Omega does, and they understand that we were a people business, we’re taking care of the most vulnerable. You want a partner who understands that.
How do you expect Saber’s relationship with Omega, or REITs overall, to continue changing as acuity rises, care costs rise, and financing deals shift?
Acuity is something that we’ve been running towards already, and we welcome more acuity and reimbursement systems that reward this higher acuity; We are running towards value-based results.
Costs are something we are also ahead of in our markets. Saber-affiliated communities have always been amongst the highest wage payers in the market. For supplies like food, drugs and medical supplies, Saber is a force to be reckoned with. Even as prices go up and things change in the marketplace, we have an economy of scale. Most importantly, and I think this is why Omega looks at us so fondly and compares us to Ensign as well – we pay our bills. We pay our bills timely. Our vendors know that we do, and they reward us with best-in-market pricing. I think we’re in a great position, no matter what the market throws at us.
As for deals, we see a lot of real estate buyers that are paying crazy prices, and they’re viewing the real estate differently than the operator. As they charge exorbitant rent and overpay for these buildings, operators are going to have trouble fulfilling. I think a lot of operators are going to fail, and I think we’re already starting to see that.
Anything else new and exciting in the works at Saber? This can be new services, facility acquisitions, staffing initiatives.
We added four buildings in Pennsylvania from another operator, which puts our footprint very comfortably as one of the largest providers in Pennsylvania. We just broke ground on a new SNF in Virginia too, up in Smith Mountain Lake, a beautiful area.
We just got approval to build on land that we acquired for a new certificate of public need (COPN) too, also in Virginia. We’re constantly looking at deals. Over the next 12 months, we’ll have some growth, some of it being significant.
While the market was yielding prices that we felt were a little bit too high or unrealistic, we took our time internally and invested more into the infrastructure of the organization, like our compliance programs, our IT infrastructure. We’ve added a chief nursing operator to our organization where we didn’t have that position before, so we’ve just continued to strengthen and get ready for what’s coming our way.
The staffing mandate was recently repealed, but certain provisions remain in place, including facility assessments. Thoughts on this update, and will it affect staffing initiatives in 2026?
We put our quality of care first, which requires staffing. When you look at our staffing compared to our acuity, we’re always amongst the highest in staffing. So, the assessments don’t scare us at all, because it’s what we’re already doing internally. We’re looking at what our patient population looks like, we’re looking at the referral activity, we’re looking at our buildings when our budgets are being done at the facility level. They’re taking their acuity and trying to build a staffing model around that, rather than trying to just build a staffing model around costs.
Information required in the assessments is standard practice, it’s things that we would want to know ourselves and be prepared for at the facilities anyhow. So there’s nothing that’s going to affect us, there’s no staffing that we need to add.
I think it’s going to affect a lot of providers out there who have been cost managers or revenue-driven, whereas we have been quality-driven from day one.
What are some major reimbursement challenges expected in the new year, and what’s your advice for overcoming these challenges?
The old days of maximizing your CMI, your case mix, and managing your staffing, I think we’re going to see those go away. In many more states and even at the federal level, I think we’re going to see a lot more value-based care reimbursement. Saber has been preparing for it, but it really hasn’t taken hold in too many states; they’re really not rewarding you.
Over the next few years, we’re going to see a push toward quality systems. To anybody who is preparing for what changes would come, I would say, look at quality. Look at quality systems, quality outcomes. What are you doing to deliver quality? Are you investing in strategies to manage your quality measures effectively? Are you putting systems in place to make sure that whatever the quality metrics there are, you’re going to be potentially rewarded in the future on things that you’re measuring today? You don’t want to learn a system on the fly, like building a plane on the fly.
Talk a bit about Saber’s involvement in institutional special needs plans, or ISNPs. How do you expect Saber’s involvement to change or evolve in 2026?
There’s so many models out there, between ACOs, REACH, TEAMs, and you can chase them in so many different ways. What we decided at Saber was, I-SNPs are pretty simple. You’re being rewarded to do what you do every day. Obviously, get them to the hospital if they need it, but do everything you can at the bedside and make sure you have the competencies needed at the building, and you’ll be rewarded for that. It made sense to really look at that rather than trying to do a little bit of everything.
We like the feel of I-SNPs because we can manage it. We can build a team around it. Our footprint is so large in so many communities, we didn’t really want to go out and own our own I-SNPs. We partnered with Optum because we wanted a company that could grow with us, that had the contracts, the networks, all in the communities where Saber was.
If you look at us from our population and where we have penetration, we represent almost 5% of the entire institutional special needs program in the United States. We’ve looked at the ACO models, but it’s hard when you start taking in two or three different models in your building or chasing new models after you’ve really worked in one for so long. It confuses the families, and it confuses the residents.
And Medicare Advantage (MA)? How has Saber fared with MA contracts, MAOs, and administrative burdens often tied to Part C?
We’re all frustrated with MA plans right now. They don’t behave in a manner that they said they would behave in. We’re in six states, and if you look at our portfolio, we’re one of the largest operators in four states. You would think that would yield an MA plan, or an MAO, or any of those companies to work a little bit closer with us. In some cases, they’re still being bad actors. They’re not offering reasonable compensation. They’re not treating [operators] with respect or removing administrative burdens. It’s been frustrating.
Do we get better contracted rates than most? Sure. Do we have the teams in place to negotiate when there’s something that should be out of contract or we think is unfair, or residents being treated unfairly by not getting the amount of time or services that they need? Yes. I’ve had to add layers of people just to help families and/or our billing department with the denial process, with the certification process, with the recertification process. It’s one of those hidden costs of doing business that’s been very frustrating.
Legislators and the politicians all see it as a problem, and the spotlight is on it.
Speaking of legislators and politicians, any policy changes coming up that you are concerned about? Anything you’re excited to see happen?
Regarding the whole private equity conversation, I’m really excited to get my arms around it. I think PE needs to be defined. You could call anybody that owns their real estate and also owns their operations PE. I think that will lead us to change of ownership (CHOW) reform … some people can hide behind the real estate and make a real estate play, and some people can say that they’re the operations side. Some of these operators that have signed on to deals to try to grow a business, they don’t have the experience, and some of the landlords can just change them out if they fail.
The legislatures are getting frustrated, some state agencies are getting frustrated, some governors are getting frustrated [with PE and CHOW]. We need to start addressing it and helping define it for ourselves, putting some guardrails around people that may need a little bit more time to develop.
How do you expect the sector to further evolve in the coming years? What factors will influence its evolution?
It’s always frustrating to me that nursing homes get a bad reputation, even to the point where if someone asks me what I do, sometimes I don’t want to say I own nursing homes, because I don’t want to be judged right out of the gate. As a sector, we’re going to need to address that and evolve to better promote ourselves.
Putting rules out there that help make a barrier to entry shows that we’re taking it seriously, that we think it’s a privilege and an honor to care for someone’s loved one in their time of need. We should have a system that rewards and recognizes that.
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