NURSING HOMES MAKE MONEY? 150 150 Lauren Ellerman

We have written about it before, the difference between for-profit and non-profit health care. If your nursing home is “for profit” you have a legal duty towards your shareholders, to maximize profits. But what does that duty, do for your residents and staff?

Many for-profit nursing homes will tell us in depositions and discovery in a case, that they don’t make that much money. Well – that may be true, but someone is making money. Here is an article I read this morning, about one Fortune 500 company (that owns and operates nursing homes) buying 22 under performing nursing homes from another facility.

As the article states,
“As previously announced, Kindred had entered into definitive agreements with Ventas to acquire 21 nursing centers and one long-term acute care hospital (collectively, the “Facilities”) for $171.5 million. In addition, Kindred paid a lease termination fee of $3.5 million. The current annual rents for the Facilities are approximately $10.3 million.
The Facilities, which contain 2,634 licensed nursing center beds and 220 licensed hospital beds, generated pretax losses of approximately $10 million for the year ended December 31, 2006. Upon closing, Kindred will account for the operations of the Facilities as discontinued operations.
Kindred expects to generate between $80 million and $90 million in proceeds from the sale of the Facilities and the related operations. Kindred expects to record a net loss of approximately $60 million to $70 million in the second quarter of 2007 relating to these divestitures. Kindred expects a total net (after tax) cash outlay of approximately $46 million to $52 million.
“We are focused on disposing of these facilities as soon as possible,” said Paul J. Diaz, President and Chief Executive Officer of the Company. “Completing this transaction allows us to divest of these operating losses and reposition our portfolio to focus on our cluster market strategic growth opportunities.”

WOW – what a business opportunity. Anyone ever think of the people that actually live there?

About the author

Lauren Ellerman

In 2011, Lauren Ellerman was named "Young Lawyer of the Year" by the Roanoke Bar Association for her work in the community. To speak with Lauren about your personal injury case, contact her at

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