HCR ManorCare, the second largest nursing home operator in the United States, filed for Chapter 11 bankruptcy protection on March 4 and will transfer ownership to its landlord, Quality Care Properties Inc. This is the latest among several signs of dysfunction in the senior housing industry.
Quality Care Properties is set to become the full owner of ManorCare’s skilled nursing, assisted living, hospice and homecare businesses across the United States. ManorCare was the nation’s largest skilled nursing facility operator during the last decade; however by 2016 it had dropped down to number 2.
The Toledo, OH based HCR ManorCare had owed its landlord more than $300 million in unpaid rent. In a filing with U.S. Bankruptcy Court in the District of Delaware, ManorCare said revenues have failed to cover monthly rent obligations since 2012 which was a year after the master lease was signed.
ManorCare is one of numerous large U.S. nursing home chains that have been unable to keep up with their rent obligations due to changing Medicaid and Medicare reimbursements for nursing homes, low occupancy rates, and rising costs.
“This agreement facilitates a consensual resolution that provides stability and flexibility for the business. We see this as the best available opportunity to improve a challenging situation,” Quality Care Chief Executive Mark Ordan said.
ManorCare has more than 500 skilled nursing and rehabilitation centers, memory care communities, assisted living facilities, outpatient rehabilitation clinics, and hospice and home health care agencies in the United States.