In ongoing efforts to recoup hundreds of millions of dollars in financial distress, the Archdiocese of Philadelphia has agreed to sell seven senior living communities to a for-profit management group for $145 million.
Monday’s sale of six nursing homes and one assisted living community operated by Catholic Health Care Services to Flushing, New York-based Center Management Group (CMG) stems from the Archdiocese’s ongoing mission to address several operating deficits and underfunded balance sheet liabilities, the faith-based organization announced in a statement this week.
Audited financial statements published by the Archdiocese last December for the fiscal year ended June 30, 2013 revealed a core deficit that had shrunk to $4.9 million from the $17.9 million deficit that the organization reported in the prior year.
For the fiscal year ended June 30, 2012, Archdiocese financial statements disclosed a $39.2 million operating deficit as well as significant underfunded balance sheet liabilities that “measured in the hundreds of millions of dollars,” the group said in this week’s statement.
The Archdiocese plans to use the proceeds from the $145 million sale to lessen its balance sheet deficit, which includes funding for organization’s Trust and Loan Fund, Self Insurance Reserve, Priests’ Pension Plan and Lay Employees’ Retirement Plan.
“This agreement will serve the Archdiocese and its people well by ensuring the nursing homes presently operated by Catholic Health Care Services will continue to be dignified centers of care for the elderly in the Catholic tradition and in accord with the moral and ethical teachings of the Church,” stated Archbishop Charles Chaput.
The Archdiocese selected CMG from a group of nearly 30 initial bidders, according to Chaput.
“Center Management Group has a great deal of experience in the operation of nursing homes and they’ve guaranteed the conditions I set forth some time ago in terms of fair treatment of current employees and residents,” Chaput said.
CMG currently owns and operates 16 nursing homes in New York and New Jersey, two of which are operated in a Catholic, faith-based manner, according to the statement.
“Center Management Group is excited about the culmination of the more than six months of meetings and discussions with the senior administration of the Archdiocese of Philadelphia and Catholic Health Care Services that led to today’s agreement,” stated CMG’s CEO Charles-Edouard Gros. “The experience we bring to delivering premier healthcare to our residents, coupled with our commitment to safeguard and fortify the Catholic religious and ethical practices currently in place, will allow the facilities to continue flourishing.”
As part of the sale agreement, CMG will maintain the presence of Roman Catholic priests as chaplains at each facility at the company’s expense, along with a pastoral care department. Additionally, CMG will also maintain existing chapels and places of worship along with all signs and symbols of Catholic identity.
An advisory board will also be established and will maintain responsibility for advising CMG and the management of each facility on issues relating to Catholic identity and practices as they apply to operation of the properties.
The acquired properties are scattered throughout Pennsylvania, including the City of Philadelphia, Chester County, Delaware County and Montgomery County.
Written by Jason Oliva