When one of Pennsylvania’s largest nursing home owners, Welltower Inc., announced this month that new companies would take over the day-to-day management of 147 nursing homes in 15 states, it came as no great surprise.
The nonprofit ProMedica Senior Care, the current operator of the Welltower nursing homes, including 38 in Pennsylvania and seven in New Jersey, has lost vast amounts of money over the past two years, including $316 million in the first nine months of 2022.
Confusingly for elder advocates and others closely watching the care home industry, the company that Welltower is bringing in to facilitate the transition to new operators is unknown in the care home world, even to industry veterans.
That could make it harder for nursing home residents and their families to know who is actually responsible for care at the nursing homes, long known as ManorCare facilities and caring for nearly 15,000 residents a day as of October, according to federal data.
That new company, Integra Health, will lease Welltower’s facilities and then sublease them to regional operators, according to Welltower. Integra CEO David Gefner did not respond to multiple requests for more information about his real estate and healthcare experience. Welltower declined to provide details about its dealings with Integra, also known as Integra Healthcare Properties.
What is known about Integra
According to Gefner’s LinkedIn profile, Integra was founded this year. Public records indicate that Gefner is 29 years old. Attempts to reach Gefner at a Monsey, NY telephone directory were unsuccessful. A person who answered the phone twice said Gefner was not there and would not take a message.
Gefner’s LinkedIn profile also says he founded Perigrove LLC in 2012. The company is described there as “a real estate investment trust with a vertically integrated development arm that positions the company to create and capitalize on emerging trends across equity sources such as sovereign equity, international financing, next-generation currencies and more.”
But Perigrove’s website doesn’t disclose the company’s real estate investments. Gefner did not respond to two voicemails on his Perigrove numbers. Two emails to a general address at Perigrove went unanswered.
Gefner said in Welltower’s press release announcing the deal that it aims to bring nursing homes “back to their former glory.”
Lack of ownership transparency
Welltower’s move comes as nursing home regulators seek to increase transparency in the increasingly complex nursing home ownership structure, where real estate is often separate from operations and there is a mix of affiliated companies providing services such as staffing .
Pennsylvania recently enacted new regulations that require closer scrutiny by Department of Health officials when nursing homes change hands, but key ones don’t come into effect until next summer — meaning Integra may not face more scrutiny. A bill introduced in New Jersey in May would improve financial and ownership disclosures for nursing homes.
The regulatory push aims to make it easier for care home residents and their families to know who is ultimately responsible for care in the facilities, right down to the landlords, who switch operators when they are not achieving the financial results they want.
It’s not clear how long it will be before ProMedica is replaced in local nursing homes. Because ProMedica is a non-profit organization, at least Pennsylvania referrals are subject to Attorney General review, which requires at least 90 days’ notice.
Welltower: Time for a change
The facilities in question, including 13 in the Philadelphia area, have had turbulent financial histories at the hands of a number of investment firms. Welltower bought the former ManorCare nursing homes out of bankruptcy for $2 billion in 2018, with ProMedica as an operating partner.
During Welltower’s Nov. 7 conference call, the company’s CEO, Shankh Mitra, stood by the investment despite the need to switch operators.
“We did not predict COVID and its impact on the cash flow portfolio and quite frankly were blown away by the execution,” Mitra told analysts, referring to ProMedica’s management of the nursing homes.
However, in the spring of 2021, Welltower used ProMedica to replace Genesis Healthcare Inc. as the operator of nine Genesis PowerBack facilities focused on rehabilitation.
Welltower didn’t give analysts any further details about Integra other than that it had experience with Integra in 21 properties. Federal nursing home records show no evidence of company or Gefner involvement in nursing homes.
“We have previously worked with Integra and its parent company on many of these transactions. There is no question that they are significantly better at skilled nursing than we have ever been and ever will be,” Mitra said.
When asked for more details after the conference call involving Integra at the Welltower nursing homes, a Welltower spokeswoman Tara Gallagher said in an email, “We have no further comments beyond what has been publicly released and was discussed in our conference call on the results.”
More rental dollars to Welltower
One Wall Street analyst found it notable that Welltower expects to get higher rents — and therefore more money for the bottom line — from Integra, despite ProMedica’s losses.
“I’ve been doing this for 15 years. I don’t think I’ve ever seen a rental restructuring where rents have gone up. So that’s pretty cool to see,” Omotayo Okusanya, a chief executive of Credit Suisse, said on the Nov. 7 earnings call.
For advocates like Toby Edelman, senior policy attorney at the Center for Medicare Advocacy in Washington, higher rents are alarming.
“When the rent goes up, there’s less money for resident care, the staff,” Edelman said.