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NJ FIRM'S WOES HIT NURSING HOMES

Record - 4/17/2018

A Wood-Ridge-based company that owns or operates more than 100 nursing homes around the country has failed to make payroll in Nebraska and Kansas, leading regulators to take over 36 homes serving thousands of patients.

Skyline Health Care, LLC, in Wood-Ridge, owned by Joseph Schwartz, is the parent company for those nursing homes and others in Arkansas, South Dakota, Tennessee, Pennsylvania, Massachusetts, and Florida.

According to state license records, Schwartz also owns three nursing homes with 635 beds in New Jersey:

Hudson View Care & Rehab Center in North Bergen, with 273 beds

Brookhaven Health Care Center in East Orange, with 122 beds

The Voorhees Care & Rehabilitation Center, with 240 beds.Schwartz also has an adult day care center in North Bergen with 80 slots.

New Jersey Health Department officials are aware of the problems in Nebraska, said Donna Leusner, a spokeswoman. The department has not received any reports of problems in New Jersey, she added.

Skyline receives millions of dollars in revenue from various state Medicaid programs for the care of thousands of elderly residents in different states. It is based in a surprisingly modest second-floor office above a pizzeria and barbershop on Marlboro Road in Wood-Ridge.

The office was closed and dark on a recent visit, and the company's website appears to have been taken down. The phone at the corporate offices was answered by an automated system, and company officials did not respond to a voicemail message.

Quick growth

The company expanded very rapidly from its small base in New Jersey and Pennsylvania.

Over the last two years, it acquired or took over operations at dozens of skilled-nursing facilities operated by larger chains that faced financial difficulties. It appears to have defaulted on loans extended to fund those purchases, had trouble paying vendors, and then been unable to meet payroll at facilities in the two states.

The financial failures may not end in Nebraska and Kansas, industry experts said.

"More shoes will drop," wrote Stephen Monroe, the editor of Senior Living Investor, in a recent column.

That could be acutely felt in Pennsylvania, where Skyline took over nine nursing homes from Golden Living, one of the nation's largest chains. Skyline had "come out of nowhere" to become a national player, he wrote.

Nebraska authorities placed 21 nursing homes and 10 assisted-living facilities owned by Skyline in receivership on March 23 after finding that Skyline "was financially unable to pay staff and ensure the future care of residents," a statement from the state's Department of Health and Human Services said.

Kansas asked the courts for permission to take over management of 15 skilled-nursing facilities with 845 patients on March 28 -- the largest takeover ever by that state's Department for Aging and Disability Services. The court authorized a temporary receivership, and a hearing for a permanent receivership is pending.

"The operator appears to be insolvent," the department's statement said. Skyline had advised officials it would not be able to make payroll, a spokeswoman said, and was in arrears on taxes.

Sources within the industry said a combination of low government reimbursement for Medicaid patients, who make up the majority of nursing home residents; high debt-service payments; escalating lease agreements, and lack of experience operating in other states led to the company's problems.

In the nursing home industry, "bigger is not better," one expert said. Mid-sized state or regional chains with 20 or fewer nursing homes tend to operate more successfully.

"Corporate structure, rapid growth, little liquidity and large lease payments" were the explanation for the company's financial problems, rather than low Medicaid reimbursement, Monroe wrote in his column.

Schwartz sold the operations of a Brooklyn-based insurance company he owned, Oxford Coverage, to Hub International, a global insurance brokerage, in 2015, according to the insurance industry newsletter IFANews.

Oxford was a commercial insurer for the nursing home and assisted-living industry.

The following year, Schwartz's companies bought nine Arkansas facilities from AdCare Health Systems Inc., took over operations at the Kansas nursing homes from Golden Living and purchased additional Tennessee nursing homes from Vanguard Healthcare.

On the wall outside Skyline's Wood-Ridge office, some of Schwartz's businesses are listed: Sandpiper Healthcare, which appears to be responsible for five Massachusetts facilities; Hilltop Healthcare, with facilities in Arkansas; Kotel Healthcare and Care Plus Healthcare.

There also is a sign for Congregation Emunas Hatorah Inc., an organization granted tax-exempt status in 2016. According to non-profit records, it reported no revenues that year, and Joseph Schwartz was listed as its only officer.

Skyline Health Care has a second office in a Totowa industrial park.

Joseph Schwartz and Rosie Schwartz are the targets of a federal lawsuit in northern Illinois for breach of contract.

They were guarantors for a group of companies that borrowed $46.5 million in 2016 to purchase nine nursing homes. The two banks that filed the suit allege in court papers that the Schwartzes are in default and failed to pay $1.9 million due on March 1.

In Arkansas, Joseph Schwartz, Skyline Holdings and Skyline CHP Holdings were named in a pair of federal lawsuits filed by the estates of patients who died after months of care at a nursing home they own.

Previous owners, who were also named in the lawsuits, have reached settlements in the cases, which allege negligence and malpractice.

A separate federal lawsuit filed last year in Arkansas on behalf of residents of four nursing homes accuses the homes' owner of understaffing the facilities.

Email: washburn@northjersey.com

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