Chris Wright talks about how purchasing bankrupt facilities has become a hugely successful model for his organization.

Headquartered in Manchester, Connecticut, iCare Management is unique in that it has established a successful model out of purchasing and acquiring nursing facilities that previously went bankrupt and entered into state receiverships. The organization purchased its first five facilities from a state-appointed receiver in April 1999 and four similar facilities in December 2003.

Chris Wright, President, CEO, and Manager

“The owners of iCare share some common control and ownership with the nine nursing facilities, even though they are nine separate companies with their own identities as far as name and legal organization,” Wright said. “We own the assets of the property and operations of all of our facilities.”

Continuing care
Taking control of nursing homes out of state receiverships, which means the facilities were previously bankrupt, has been a hugely successful strategy for iCare, according to Wright. Particularly in Connecticut, when nursing homes go bankrupt, the state typically appoints a state receiver to manage the facilities (since in most cases the majority of the nursing home residents are on Medicaid.) “In addition to managing the nursing homes, their role as the receiver is to find someone to either purchase the facilities or recommend and implement closure,” Wright said.

Before purchasing the bankrupt facilities, the chief executive noted he and his partners did a significant amount of homework regarding the future value of the facilities. In buying the facilities at their lowest point, Wright knew finding the right management structure would add value to the bankrupt facilities. And not just financial value, he noted, but the added value to maintain a workforce of approximately 1,800 employees, to restore competitive wages and benefits to retain and attract quality staff, and to continue the care and service to the residents and community.

Many people question why iCare purchases bankrupt facilities. In most cases, once the state of Connecticut has determined that the facility should remain open because of regional need, the state will request bids from those interested in purchasing the facility. “That process tends to present opportunities to establish higher Medicaid reimbursement rates, or at least that was part of the process in negotiating for these facilities,” Wright said.

iCare sits down with the state’s Department of Social Services, which handles the money side of Medicaid, to go through many versions of pro formas and budgets based on what its bid is and what the Medicaid rate needs to be to cover actual cost of care, physical plant needs, and general limitations the state budget has for Medicaid. “It’s a tedious, number-crunching negotiating process, but it presents opportunities. If you work your numbers correctly, understand the business, and have some foresight in where you want to take this opportunity, it can be a success,” Wright said.

Behavioral health
When iCare began managing the first five buildings in 2001, its occupancy rates were at an estimated 82%. Today, its occupancy ranges between 93% and 94% for all nine facilities, and several facilities are frequently 100% occupied, according to Wright. “We’ve been successful just from the basic management 101 understanding of how we get reimbursed, where the money comes from, and the components that make up our revenue—especially from Medicaid. We want to be as efficient as possible with our expenses to preserve the resources for essential things, such as competitive wages and patient healthcare delivery services. As a patient advocate organization, we constantly pay attention to details that will better serve our residents and meet their daily healthcare needs.”

iCare’s managed facilities’ total annual revenues grew from $46.6 million in 2001 to $110 million for fiscal year 2006, increasing 236% in five years. iCare is currently on a run rate to exceed $116 million in annual revenue for fiscal year 2007. According to Wright, its volume and revenue didn’t increase simply because the organization purchased additional buildings.

Another unique aspect about the organization is that it has developed and markets a behavioral health program in the majority of its facilities primary service areas. Most people associate a skilled nursing facility with geriatrics (or the typical frail and elderly population), but since 2001, iCare has taken care of patients with behavioral issues ranging from ages 45 to 50 years old. Currently, the organization takes care of an estimated 1,300 residents on a daily basis in all of its nine facilities, and out of that number about 330 residents (roughly 25%) make up the behavioral health population.

Typically, the behavioral services are in separate nursing units in the facility, with a typical bed size of 30 beds. Patient diagnoses range from schizophrenia, bipolar disorder, and depressive disorder to substance related disorders.

“We’re not only treating geriatrics that one typically associates with nursing homes. We’ve found a niche because there is a need for these behavioral type programs for an underserved population. We believe we are a leader in offering behavioral health programs in the nursing home industry in Connecticut. In most cases, these units filled up within 30 to 60 days of opening. Although challenging in many respects, our behavioral health programs have been our success from an innovative, patient care delivery system perspective,” Wright said.

Digesting growth
Wright is constantly looking for opportunities for facilities that will fit iCare’s current model of success. “Thanks to our dedicated staff and employees, we feel we have a good reputation in turning around financially troubled facilities, and with our experience in the state, we keep a close eye on what’s going on out there,” he said.

Wright feels the organization is now ready to take its next step and become more aggressive in either acquiring more buildings or expanding into ancillary businesses that service nursing homes. “We purchased five buildings in 1999, and it took us about four years to get comfortable. We acquired four more in 2003, and four years later, we feel we’re ready to digest some more growth,” he concluded.