An article in Stanford Advocate reports that an audit by the State of Connecticut suggests that nursing home owner Marathon Healthcare is under financial hardship and facing bankruptcy. According to the article, Marathon Healthcare runs seven nursing homes including Marathon-Springfield which is a 127 bed facility located in Springfield Massachusetts. According to the report, the Springfield facility is for sale. Here is an excerpt from the article:

Nursing home firm finances called shaky
By Brian Lockhart
Staff Writer

March 6, 2008

A state audit has concluded that East Hartford-based Marathon Healthcare, which runs seven nursing homes, including one in Norwalk, is under financial hardship and could be facing bankruptcy.

But John McCormick, the Department of Social Services employee who performed the review, did not recommend the state go to court to assume control of the company.

“It is my opinion that the appointment of a receiver is not the appropriate action at this time,” McCormick wrote in his final report, released yesterday by the department.

[. . .]

The chain continues to provide high-quality patient care and already was addressing some of the financial issues cited in the audit, he said. He blamed the problems in part on late Medicaid payments from the department.

“It is a significant factor,” Neagus said. “I don’t know if I can say we wouldn’t be having the conversation (about financial issues) but it would be a different conversation.”

But McCormick’s report concluded one of the biggest strains on the company’s finances is its Springfield, Mass., location, which is for sale.

“Marathon has been undermined by the funding of Marathon-Springfield (which) has drained $4.2 million in cash from the Connecticut facility,” McCormick wrote.

A spokesman for the Massachusetts Department of Social Services did not return a telephone call seeking further information.

The Connecticut Department of Social Services announced its audit of Marathon on Jan. 11 in response to a November financial statement that showed the company’s debt exceeded its assets by $3.3 million.

The department at the time reported that Marathon was dropped by contractors Quest Diagnostics and Swallowing Diagnostics last year after the businesses were not paid for their services.

And on Jan. 7, to ensure its staff was paid on time, Marathon asked the Department of Social Services for a $1 million advance for Medicaid reimbursements set to be paid to the nursing home agency the following week.

McCormick found several “red flags” at Marathon. He said the company, as of Nov. 30, had entered into verbal repayment agreements or promissory notes with vendors totaling $4.2 million and had other accrued expenses of $5.1 million.

At the same time, the chain, according to the audit, had over-borrowed its $6 million line of credit with Webster Bank by $549,204; it had incurred net operating losses of $386,516 as of September 2006 and $219,503 as of September 2007.

McCormick noted those losses were before distributions were made to Marathon owner Earle Lerner of $455,580 in 2006 and $253,924 in 2007.

“Marathon’s financial condition . . . does warrant extremely close monitoring by this department,” McCormick wrote. “The inability of Marathon to meet its current financial obligations may result bankruptcy action by creditors or by Marathon itself.”

[. . .]

According to a published report, Sun Healthcare Group Inc., of Albuquerque, NM, doing business as Harborside Massachusetts LP, purchased four skilled-nursing facilities from Nationwide Health Properties Inc., of Newport, CA, for $20.6 million. The properties totaled 120,142 square feet with a combined total of 401 beds. The sale was equivalent to approximately $51,372 per bed or $171.50 per square foot.

The Massachusetts portfolio includes:

• the 32,917-square-foot Maplewood Manor at 6 Morrill Place in Amesbury;
• the 29,237-square-foot Cedar Glen Nursing Home at 44 Summer St. in Danvers;
• the 19,620-square-foot Northshore Rehabilitation Center at 266 Lincoln Ave. in Saugus; and,
• the 38,368-square-foot Danvers Twin Oaks at 63 Locust St. in Danvers.

The Berkshire Eagle reports that the New Boston Nursing Home facility in western Massachusetts was sold for $525,000 (or about $9,500 per bed). The new owners renamed the facility Berkshire Rehabilitation and Skilled Care Center and plan to invest $500,000 in upgrades. Here is the full text of the article:

Elder care home sold
By Ellen G. Lahr, Berkshire Eagle Staff

Sunday, February 25
SANDISFIELD — Sheehan Health Group, whose co-owner has an interest in seven other elder care facilities in the Berkshires and outside Boston, has purchased the former New Boston Nursing Home, a 55-bed care facility.
Patrick Sheehan and his business partner Karen Clay, a nurse administrator, bought the New Boston business Jan. 1 for $525,000 from Apple Health Care, which had owned the nursing home since 1976.

They plan to invest about a $500,000 in improvements, beginning in March, Sheehan said this week.

Sheehan is a partner in the Craneville Place nursing care facility and in Sugar Hill Senior Living development, both in Dalton.

He and Clay have renamed the New Boston facility the Berkshire Rehabilitation and Skilled Care Center.

Goal of full occupancy

During the past year, Sheehan said that, through marketing and other efforts, he worked with the previous owner to increase the patient census from a low of 32 to 46 patients. He said he is optimistic that the place will be at full occupancy by the end of March.

The result will be more hiring, he said.

That goal will require a facilities improvement, more staffing and hands-on operation, which Sheehan said Clay intend to oversee.
Sheehan is a proponent of owner-operator nursing facilities. He bought the beleaguered former Optimum Care Center in Dalton in the late 1990s, and it became a top performing skilled nursing home, he said.

The state Department of Public Health gave the Berkshire Rehabilitation and Skilled Care Center a rating of 122 in a routine facility survey in November.

The state average score is 122, with a maximum possible score of 132.

Craneville Place has a rating of 124.

Sheehan said the Sandisfield nursing facility was among 27 owned by the Apple Health Group in Avon, Conn.; it was the only facility in the chain located in Massachusetts.

“It didn’t fit with what they wanted to do anymore,” Sheehan said.

Owner-operator philosophy

He said the owner-operator philosophy creates a higher quality facility than does the absentee-owner model, which is common in an increasingly corporate elder nursing care industry.

“We run all our nursing homes with the owner-operator approach,” he said. “We’re evaluating this operation and making improvements where indicated, with the physical plant, staffing and whatever is indicated.

“We tend to operate with higher staff levels than necessary by industry norms.”

Besides seven nursing homes and one assisted-living facility, Sheehan has interests in a hospice care company and a consulting company, Clay and Associates.