Apr 30, 2018
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Under-capitalization = Mismanagement

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The Kansas City Star had an interesting article about Skyline Healthcare–whose headquarters are above a pizza parlor in New Jersey.  Last month, the Kansas Department for Aging and Disability Services petitioned the courts to take control of Skyline’s 15 nursing homes across Kansas, saying Skyline was on the brink of financial collapse and 845 nursing home residents were at risk.  Nebraska officials had taken similar action about a week earlier with 21 facilities owned by a subsidiary of Skyline.

Formed in 2008, Skyline grew exponentially as its owners took over operations of 110 nursing homes in six states between 2015 and 2017. In two years, Skyline — through dozens of subsidiary LLCs — took control of dozens of homes in Massachusetts, Florida, Arkansas, Nebraska, Kansas and South Dakota.

William Murray III, an attorney who has filed malpractice and neglect suits against Skyline nursing homes in several states, said the numerous LLCs associated with Skyline — like Dorothy Healthcare Management — are gimmicks.

“Oftentimes in the change of ownership process, new operators will create companies that have no track record and no history, even though the people behind them do, in order to escape any scrutiny about whether they’re qualified to take over the facilities,” Murray said.

“Where are all the people who supposedly work on the second floor of a New Jersey pizza parlor? The people who are supposedly working for Dorothy Healthcare Management, taking care of all these frail, elderly Kansans?”

When Skyline took over the ownership and operation of the nursing homes, vendors didn’t get paid and staff paychecks would be direct deposited, taken back and then re-issued days later on paper checks.

“I really think there needs to be a more intensive financial review for them coming in,” said Cindy Luxem, the executive director of the Kansas Health Care Association. “Because I honestly don’t believe the Skyline people had a year’s worth of working capital.”  “The people that own Skyline, they’re not health care providers,” Luxem said. “They’re merely people looking for an investment. Unfortunately, there’s a lot of that in our industry right now, but I wish the state of Kansas had a little bit better checks and balances on people coming into our state.”

The company was owned by a single family, the Schwartzes (Joseph, Rosie, Michael and Louis).  Stephen Monroe, a partner at a research firm called Irving Levin Associates that specializes in the senior housing and health care investment markets, said nursing home industry watchers used to joke about their office above the pizza joint in Wood-Ridge, N.J.

“It’s a group of good ol’ boys from the East Coast buying up a whole bunch of nursing homes in the Midwest because we’re the cheaper ones,” said Carol Tsiames, a former administrator at the Kaw River Care & Rehabilitation Center in Edwardsville, who left about eight months after Skyline took over.  “They abuse the system. Encourage you to use local vendors, and then they don’t pay. … It puts an administrator in a bad position.”



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Advocacy · Staffing · Tort Reform · Trial themes

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