Louisville, Kentucky-based Signature HealthCare LLC has acquired the skilled nursing assets of Elmcroft Senior Living, effectively adding 18 skilled nursing and rehabilitation centers to Signature’s holdings, Louisville Business First reported. Financial terms of the transaction were not disclosed.
“This strategically works better for us,” Elmcroft CEO Pat Mulloy tells Senior Housing News. “The largest portion of our portfolio is senior housing, so we figured it was time to get out of the business that isn’t our core strength.”
Signature has long pursued a deal of this type, but the process has been slow, in part because real estate investment trust Care Capital Properties (NYSE: CCP) also had to be part of the negotiations, according to the release. CCP owns the Elmcroft real estate; under terms of the deal, Signature will now operate 49 centers under a master lease with the REIT, which was spun off earlier this year from Ventas Inc. (NYSE: VTR).
The deal expands Signatures’ portfolio to 133 post-acute care centers across the country, including 41 in Kentucky, allowing the company to serve 80 counties in the state. Seventeen of the facilities in the portfolio are located in Kentucky, and the other is situated in Pennsylvania.
In addition to its offloaded skilled nursing assets, Elmcroft operates 82 independent living, assisted living and memory care communities, according to a news release.
Integrating the Elmcroft skilled nursing facilities will likely cost Signature between $6 million and $10 million over the course of about six months, Signature CEO and President Joe Steier told Louisville Business First.
The acquisition allows Signature to forego the certificate of need (CON) process, considered one of the bigger barriers of entry for health care companies looking to expand into new Kentucky territories. CONs verify that a certain market does in fact need the services a company seeks to provide.
“It’s so hard to get new CONs in Kentucky,” Steier said, going on to say that purchasing Elmcroft’s skilled nursing properties grants Signature access to rural areas without going through the “long, expensive process” of securing a CON. The process could take as long as five years, he said, and there’s “no guarantee you’ll get one.”
The deal also centers on “continuity, access and cost,” Steier told Louisville Business First, as it enhances the company’s presence in two prominent markets: Lexington and Louisville.
It further bolsters Signature’s strategic vision for the launch of the Signature Integrated Clinical Network in the state, as well, which is linked to its recent implementation of the Signature Advantage Medicare insurance company—all in an effort to establish a statewide footprint to expand Signature’s acute care hospital partnerships for bundled payments, risk-sharing partnerships and clinical collaboration, according to the release.
“We believe this post-acute expansion will give us a bigger voice in the health care policy changes that are needed to enable Kentucky operators to provide our aging citizens with rural access and quality care and services,” Steier said in the release.
While Signature is looking to expand into new areas in a strategy similar to Kindred Healthcare, Elmcroft’s Mulloy says the company did not have the scale in skilled nursing to go that route, opting instead to narrow its focus to senior housing.
Written by Kourtney Liepelt