Largest Nursing Home Owner in U.S. Breaks from Operator
Earlier this week, Welltower, a real estate investment trust and the largest owner of nursing homes in the nation, announced it is breaking from Genesis Healthcare, the largest nursing home operator in the U.S. Genesis also announced it is delisting from the New York Stock Exchange.
In addition to terminating its leases for 51 Genesis properties nationwide, Welltower is seeking regional operators to take over managing the nursing homes. Separately, Welltower is also readjusting facilities managed by another joint venture, ProMedia. Ultimately, the investment trust is looking to reduce the risk of its portfolio and focus on post-acute care facilities instead of nursing homes.
While experiencing struggles associated with the pandemic last year, Genesis warned investors it was at risk of going out of business and is now going through fundamental restructuring.
Lower payments from Medicare for post-acute rehab and already low Medicaid payments for long-term care services likely contributed to the reduced functioning of the for-profit nursing home model. And the pandemic did not help. In addition to the deaths of nursing home residents and staff, costs for labor, equipment, and other necessities have increased rapidly.
Industry observers believe several nursing homes nationwide are at risk of failing without major changes to their business model. Although the Genesis-Welltower split does not necessarily signal the end of for-profit nursing homes, it does indicate the industry is in distress.
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