HCR ManorCare Bankruptcy and Patients

One of the largest nursing home chains in the U.S., HCR ManorCare Inc. has filed for bankruptcy protection on March 4, 2018 in the Bankruptcy Court in Wilmington, Delaware.  Quality Care Properties Inc., HCR’s landlord, will take control of the company.

The private-equity firm Carlyle Group owns HCR ManorCare Inc. The departing CEO, Paul Ormond received $115 million in deferred compensation and severance even though HCR is approximately $230 million in debt.

HCR missed numerous rent payments even though Quality Care Properties Inc. agreed to multiple temporary reductions in such payments. Last August QCP took legal action and sued “to replace the company’s management and to appoint a receiver with the power to collect rent.”

The plan of reorganization filed with the bankruptcy court stipulates that the operating business will stay out of bankruptcy and Carlyle’s equity stake will be wiped out.

As per chapter 11 bankruptcy rules, HCR ManorCare will pay all creditors, vendors, and suppliers in full and on time with the exception of QCP. HCR blamed its problems on low reimbursement rates from government health programs.

According to the Wall Street Journal, “The Company, which employs 50,000 people, last year posted a pretax loss of $267.9 million on revenue of $3.7 billion, 82% of which derived from the long-term care business. HCR ManorCare listed $4.3 billion in total assets and $7.1 billion in total liabilities, debt and financing obligations, in court filings.” https://www.wsj.com/articles/hcr-manorcare-files-for-bankruptcy-1520261353?emailToken=3e08c926ad937feb42c06a6e927e293e9epWtsVf4xiOTCAmih%2FzF90OQmpFg%2FwrZe27eRUH2LN9hFhst1liU6fj2rUQEqSWwLOngxtntQr57quk37ilag%3D%3D

When the ownership transfer will be completed, the current Chief Executive Steven Cavanaugh will be replaced by Guy Sansone and Laura Linynsky, the senior vice president at QCP will become interim CFO at HCR ManorCare.

The Toledo-based HCR ManorCare will need approval of the chapter 11 bankruptcy plan within 40 days while QCP will seek government regulatory approval, which may take three to six months, in order to operate a health care business.

HCR ManorCare runs 500 skilled-nursing and rehabilitation centers, assisted living facilities, hospice, and home health agencies. The skilled-nursing industry blames its many problems on low government reimbursement, declining occupancy, and high labor expense.

 “As part of the agreement, HCR ManorCare paid QCP $23.5 million in past-due rent. The companies' plan sponsor agreement stipulates that HCR ManorCare will continue to pay rent during the Chapter 11 period.” http://www.modernhealthcare.com/article/20180305/NEWS/180309949

According to health experts, HCR ManorCare treated 143,000 patients in 2017 and has experienced declining Medicare reimbursements due to the growing Medicare Advantage plans offered through private insurers.

The bankruptcy agreement promises to provide stability for employees, residents, and patients. However, the turnover of employees at one such HCR ManorCare facility in northern Virginia is constant as I have witnessed first-hand over the last four years.

Medicare has been stripped of more than $716 billion over a ten year period in order to fund Obamacare. This has affected seniors and their medical care, including their ability to keep their doctors or to find specialists. Some have decided to no longer accept new Medicare and Medicaid patients and keep only the well-established patients who were grandfathered into the private system they began to accept. https://www.forbes.com/sites/theapothecary/2012/08/16/fact-checking-the-obama-campaigns-defense-of-its-716-billion-cut-to-medicare/#326c1c37385f

Nursing homes are financially strapped due to continuing underfunding. Mark Parkinson, CEO of the American Health Care Association, wrote, "In many areas of the country, nursing homes are paid for only a fraction of the care they provide. Our nation is at turning point where we must decide if we are going to continue to take care of America's seniors and individuals with disabilities." http://www.modernhealthcare.com/article/20180305/NEWS/180309949

This statement hits home for me. HCR ManorCare patients are cared for in one facility in northern Virginia where the atmosphere is somewhat strained, the staff is always short-handed, residents are not always cared for well, medications are denied because they are too expensive, doctors, nurses, and CNAs come and go without as much as a call to the families, patients fall all the time and break bones and hips as was the case for my mom for the last four years and most recently, UTIs are commonplace due to many reasons, one being lack of proper sanitation and slow diapering, not changing gloves between patients, not changing soiled sheets due to low CNAs to patient ratios, and lackadaisical cleaning of rooms.

HCR ManorCare is not the worst facility in the industry and not the best. There is a constant turnover of aides from African countries and new students come to learn on the job; there are employees and CNAs who really care about their patients and go above and beyond the call of duty; they tend to remain on the job long-term; and there are others who do not care at all for their patients.

It is a difficult and demanding job to care for human beings who are so sick that they can no longer fend for themselves and some are even helpless to feed themselves. Care givers must detach themselves from the pain and suffering and meet their patients’ needs. To make matters worse, some patients have dementia and are not cooperative with their CNAs.

Bureaucrats look at the business side of the operation. Due to financial reasons, social workers are often struggling to find transport for their handicapped patients to doctors and hospitals when families are physically unable to do so.

Occasionally nursing homes replace lost or stolen items, yet there is no plan in place for employees to watch for the dentures of the patients they care for. Consequently, dentures are constantly thrown away with the meal tray even though the nursing home must spend money to replace them.

Patients who no longer have families to insist that lost dentures be replaced, are left toothless and meals are chopped up for them every day. Mom’s nursing home lost four of her dentures, sometimes uppers, sometimes lowers. And it’s not just dentures and glasses that are lost, personal belongings are stolen constantly, and even food brought from the outside disappears.

I have watched new recruits who do not understand well or don’t care how disease spreads and the importance of sanitary conditions and gloved, gowned, and masked precautions for themselves and their patients.

Whether they are good or bad, nursing homes and other rehab facilities are a necessary “evil” that our society does not really understand well until they bother to visit their loved ones more than once a year or wind up themselves in one. Not everybody can afford to buy full-coverage private nursing home insurance in order to spend the last years of their lives in the posh five star private facilities, with care and dignity. But then, who is to say that they will be treated better?