Specter of Insolvency Overshadows Skyline Health Care

Specter of Insolvency Overshadows Skyline Health Care

The financial travails of Skyline Health Care and its affiliates ushered in a recent change of ownership at nine Arkansas nursing facilities and new license holders at two others.

The deals encompass nearly half of the 2,608 nursing home beds in the state that had been owned or managed by Skyline, of Wood-Ridge, New Jersey.

Strawberry Fields REIT Ltd. of South Bend, Indiana, purchased nine Arkansas properties for about $38 million. Individual real estate sales associated with the 1,173-bed transaction include:

  • The 154-bed Little Rock Post Acute & Rehabilitation Center at 5720 W. Markham St., $4.28 million.
  • The 140-bed Hillview Post Acute & Rehabilitation Center at 8701 Riley Drive in Little Rock, $3.89 million.
  • The 140-bed North Little Rock Health & Rehabilitation Center at 2501 John Ashley Drive in North Little Rock, nearly $3.89 million.
  • The 120-bed Capital Health & Rehabilitation Center at 1516 Cumberland St. in Little Rock, $3.34 million.
  • The 110-bed Ozark Terrace Health & Rehabilitation Center at 1513 S. Dixie-land Road in Rogers, $3.06 million.

Other properties included in the deal are the 117-bed Fort Smith Health & Rehabilitation Center, the 152-bed Heritage of Hot Springs Health & Rehab, the 120-bed Lindley Health & Rehab Center in Newport and the 120-bed White Hall Health & Rehab.

In addition to the Arkansas projects, the sale of a 120-bed facility in Louisville, Kentucky, pushed the overall transaction between Skyline and the Strawberry Fields REIT to $42.4 million.

The acquisitions mark the first in Arkansas for the $712 million-asset real estate investment trust focused on buying nursing facilities and leasing the projects to operators.

Infinity Healthcare Management of Hillside, Illinois, oversees operations at the nine Strawberry Fields-owned projects and 10 remaining Skyline properties in the state, according to the Arkansas Department of Human Services.

Infinity operates nursing facilities in Indiana, 16; Illinois, 14; Tennessee, 12; and Kentucky, six. Of those 48 properties, 36 are listed among the Strawberry Fields portfolio.

Two 70-bed Arkansas properties formerly managed by Skyline are transitioning from DHS receivership.

Dierks Health & Rehab exited receivership, and the operational license for the facility was granted to PM OPS Inc., an affiliate of Conway’s Reliance Health Care Inc.

Spring Place Health & Rehab in Hazen is in the process of exiting DHS receivership for management by another Reliance affiliate, HNC Inc.

Issuance of an operational license for the facility is expected during the next few weeks.

Reliance, which operates 38 nursing facilities in Arkansas, was appointed to manage Dierks and Spring Place during this summer’s DHS receivership.

The former and current Skyline properties are still drawing special attention by state regulators.

“We continue to monitor the facilities to ensure the health and safety needs of residents are being met,” said Marci Manley, DHS deputy chief of communications. “We also continue to monitor the financial stability of the operations to make sure adequate resources are provided to residents in those facilities.”

The Arkansas Department of Human Services took Spring Place and Dierks Health & Rehab into receivership after concerns surfaced over the company’s finances and its ability to provide food to residents. It was the first time since the 1980s that DHS had sued to take control of a nursing home.

Regulatory intervention in Arkansas was on a small scale compared to other states where Skyline did business.

Earlier this year, officials in Nebraska took 31 nursing facilities into receivership when the company ran out of money. In South Dakota the count was 19 and in Kansas, 15.

Fiscal problems with Skyline nursing facilities in Pennsylvania, Massachusetts and Florida brought more into the regulatory mix.

When company growth really ramped up during 2015-17, some industry observers wondered about Skyline’s capability. Was a venture operating more than 100 nursing facilities around the country out of an office above a pizzeria and barber shop in New Jersey a telltale sign of a company out of its professional depth?

News accounts in other states indicate Skyline, owned by the Joseph Schwartz family, began having fundamental money troubles as early as 2016.

Chronic problems meeting payroll and buying food to serve residents at some of its properties became an across-the-board crisis this year that prompted regulators to step in.

A nine-property, $55 million acquisition from Atlanta’s Adcare Health Systems Inc. expanded Skyline’s roster of Arkansas properties to 21 in 2016. Now, the company is liquidating its portfolio of nursing facilities and exiting the health care business.

Another round of sales to Strawberry Fields is expected to bring new ownership to more Skyline projects in Arkansas and other states. Three additional Arkansas projects are listed among the “coming soon” list of facilities at Infinity Healthcare Management, Strawberry Fields’ frequent business partner.

The projects are the 140-bed Madison Health & Rehab in Little Rock, the 97-bed Mountain View Health & Rehabilitation Center and the 94-bed Homestead Health & Rehabilitation Center in Stamps.

This trio and the nine properties already acquired by Strawberry Fields are all poised for rebranding under “The Waters” banner.

Skyline Nursing Homes in Arkansas
Occupancy figures are for fiscal year ended June 30, 2017

    Licensed Beds Occupancy
1. Batesville Health & Rehab 150 65.36%
2. Broadway Health & Rehab, West Memphis 119 82.90%
3. Capital Health & Rehabilitation Center, Little Rock 120 73.66%
4. Creekside Health & Rehab, Yellville 96 76.58%
5. Dierks Health & Rehab Center 70 76.27%
6. Fort Smith Health & Rehabilitation Center 117 94.16%
7. Heritage of Hot Springs Health & Rehab 152 77.56%
8. Hillview Post Acute & Rehabilitation Center, Little Rock 140 67.14%
9. Homestead Health & Rehabilitation Center, Stamps 94 53.49%
10. Jonesboro Health & Rehab 136 92.28%
11. Lindley Health & Rehab Center, Newport 120 84.00%
12. Little Rock Post Acute & Rehabilitation 154 57.80%
13. Madison Health & Rehab, Little Rock 140 54.99%
14. Magnolia Health & Rehabilitation 140 80.18%
15. Mine Creek Health & Rehab, Nashville 78 73.79%
16. Mountain View Health & Rehabilitation Center 97 74.14%
17. North Little Rock Health & Rehabilitation 140 86.30%
18. Ozark Terrace Health & Rehabilitation Center, Rogers 110 68.48%
19. Searcy Health & Rehab 245 37.59%
20. SpringBrook Health & Rehab Center, Hazen 70 59.35%
21. White Hall Health & Rehab 120 68.87%