Two More Nursing Home Chains Bankrupt

WASHINGTON, April 10, 2003 -- Chapter 11 filings by Connecticut and New Mexico-based caregivers brought expressions of outrage from the American Health Care Association, a trade group representing nursing homes, assisted living facilities and other service providers.

AHCA had warned in December that recently enacted $1.8 billion Medicare cuts and an unresolved reimbursement crisis associated with chronic Medicaid under funding could precipitate a new round of long-term-care Chapter 11 proceedings.

Lexington Healthcare Group in Connecticut and Ballantrae Healthcare in New Mexico are the most recent to seek protection under Chapter 11 bankruptcy laws.

Lexington maintains eight facilities throughout Connecticut -- and an official of the company stated the Medicare cuts were “the straw that broke the camel’s back” on top of inadequate Medicaid reimbursements and cutbacks; Ballantrae, with 35 facilities in six states, was driven into Chapter 11 proceedings by what officials said was a combination of Medicare cuts and Medicaid underfunding.

In addition, just days after Congress went home for the Christmas holidays without restoring the $1.8 billion “Medicare Cliff,” Centennial Healthcare – which leases and manages 86 nursing homes in 19 states -- also filed for Chapter 11 protections.

“These disastrous developments underscore the consequences and human costs associated with the federal government’s egregious implementation of Medicare cuts, and continuing to side-step resolving a reimbursement crisis that grows worse, and more dangerous for the frail, elderly and persons with disabilities in our nation, by the day,” said Charles H. Roadman II MD, CNA, President and CEO of AHCA.

“Thus far, 2003 has been a year in which seniors’ care is increasingly jeopardized, frontline caregivers are losing their jobs, and the term ‘access to quality care’ is becoming but a policy goal -- not a current reality,” he continued. “In conjunction with worsening state budget crises, Medicaid cuts and the chronic under funding of Medicaid, the Medicare cuts are causing undue hardship on the nation’s most vulnerable population of seniors and those with disabilities. It is wrong, and it must end.”

In other recent developments related to the Medicare cuts and the ongoing reimbursement crisis:

• The Camden, NJ Courier-Post reported that 208 seniors will be displaced when Cooper River East, a 240 bed rehabilitation and nursing facility will close by May 31st. A facility official stated, “The unfortunate combination of NJ Medicaid payments—which simply don’t cover what it costs us to provide care—coupled with the October Medicare cuts, has destroyed this center’s financial viability.” Another observed, “These problems are not reconcilable at the local facility level, they have to be addressed federally and statewide.”
• Sun Healthcare Group, due problems it has attributed to “recent reductions in government support for long term care givers such as the failure of Congress to restore Medicare funding to the levels existing prior to October 1, 2002,” was forced to commence a wholesale restructuring of its facility lease agreements. Dr. Roadman observed that “a situation such as this is ‘Exhibit A’ proving our case that the federal government’s policies are undermining the nation’s long term care health care system, and hurting our nation’s ability to care for today’s and tomorrow’s seniors.”