Adviser Fall 2018 Vol 1 - Page 35

Good Shepherd/Chase Acquisition Demonstrates the Power of Partnership By Jeff Diamond no secret that not-for-profit skilled nursing facilities (SNFs) across New York are facing unprecedented challenges. Growing financial and regulatory pressures, workforce shortages and shifting demographics have left many providers with little recourse but to make difficult decisions about their futures. Some, however, have managed to weather the storm in a different way: by partnering with other not-for-profits in their communities. It’s What began as a casual conversation at a LeadingAge New York function led to the formation of one such partnership between Chase Memorial Nursing Home, an 80-bed facility in New Berlin, and Good Shepherd Communities, a not-for-profit provider of long term care services in the greater Binghamton area. Prior to the initial dialogue, Chase had been considering selling to a for-profit due to the challenges it experienced as a freestanding facility in rural New Berlin. With the nearest long term care provider located approximately 15 miles west, it had come to play an essential role as the community’s only SNF. Further complicating the decision was the fact that Chase, in addition to skilled nursing, provided several services to the area indirectly, including low-income senior housing through a partnership with another not- for-profit, rental space for the local Head Start program and space for a day treatment program for adults with developmental disabilities. Maintaining those services within the community was a priority for Chase and what ultimately led its leadership to contact Good Shepherd to express interest in an acquisition. Good Shepherd was equally interested in helping Chase remain a not-for-profit and preserve its services in New Berlin. It also, however, recognized the importance of exercising due diligence to protect its existing entities, Good Shepherd Fairview Home and Good Shepherd Village at Endwell. The organization retained The Bonadio Group to study the financial feasibility of the acquisition, developed protections to insulate each entity from the liabilities of the others and evaluated how the success or failure of the acquisition would impact its reputation in the community. Ultimately, after careful deliberation, the boards of both organizations voted to move the acquisition forward. For Good Shepherd and Chase, the success of the acquisition demonstrates the power of partnership for providers navigating a changing health care landscape. The benefits of the acquisition, which has allowed Good Shepherd and Chase to retain their individual identities, have been significant. As started under a management services agreement implemented prior to the acquisition, Good Shepherd has taken over many of Chase’s back office functions including: payroll, human resources, Medicare, Medicaid, third-party and private billing. Further savings for Chase have come from Good Shepherd instituting its vendors and covering all acquisition transition costs with the help of a $1 million Vital Access Provider (VAP) grant, which also funded staff training from LeadingAge New York ProCare. Good Shepherd has experienced the positive impacts as well, observing little to no increase in management costs and benefiting from a management fee from Chase that reduces the amounts charged to its other two entities. For Good Shepherd and Chase, the success of the acquisition demonstrates the power of partnership for providers navigating a changing health care landscape. From implementing a management services agreement to pursuing a full acquisition, there are numerous ways that not-for-profit SNFs can join forces with other organizations in their communities to weather the storm and continue fulfilling their missions. 34