Earlier this year, Beverly Enterprises Inc, the nation's second-largest for-profit nursing home chain, was sold to an affiliate of Fillmore Capital Partners, a private equity firm. The operating company, called Golden Gate National Senior Care Holdings LLC, will operate 262 nursing homes, and a new company, Geary Property Holdings, will own the land and the buildings.
According to the May 26, 2006, Northwest Arkansas News, Fillmore paid $12.50 a share to acquire Beverly in a $ 2.29 billion deal that closed in March 2006.
"As part of the corporate restructuring, the nursing homes have been split up into separate companies," Golden Gate spokesman Blair Jackson told Northwest News.
As part of that process, Mr Jackson said, Geary Property Holdings, a new separate company was created to own the real estate.
Geary Property now owns the buildings and the land, he said, and Golden Gate is the operating company that runs the 262 nursing homes.
"The move limits the liability of the parent company," Northwest News notes.
Judging from the salaries of its top executives, Beverly was surely not broke when it decided to implement this elaborate liability protection scheme. As company Chairman, CEO, and President, William Floyd earned $2.23 million a year, according to court filings. He was also the largest Beverly shareholder with approximately 803,972 shares of stock at a market value of about $9,326,075.
As the Chief Operating Officer of Nursing Facilities and Executive Vice President, David Devereaux, was paid a salary of about $854,000, and he was the second largest shareholder with approximately 255,204 shares at a value of about $2,960,366.
According to court documents filed on December 22, 2005, as part of the sale, Mr Floyd, Mr Devereaux, and other executives and board members, will receive payments totaling $109 million. Mr Floyd's severance package alone was $40 million.
In 2003, Lisa O'Bradovich was an administrator at a Beverly owned nursing home in Tekamah, Nebraska. She says her job was short lived because Beverly's Regional Director of Operations continually badgered all area administrators to cut costs even as patient care became compromised under budget constraints.
On one occasion, Ms O'Bradovich was reprimanded for allowing labor hours to go over budget by $400 during a flu outbreak even though with the extra help they were able to contain the outbreak in a few days. "At the time," she says, "I felt that patient care was vitally more important than saving costs."
When she first arrived at the facility, she says, there was hardly any regulatory compliance at all. "I literally had to drag the limited amount of existing files," she recalls, "out of a restroom that had been closed off for storage and that should have been in use for regulatory compliance."
In her 6 months at the nursing home, Ms O'Bradovich established policies and procedures to bring the facility back into compliance but as she soon found out, that was not Beverly's goal. "Patient care improved," she says, "but the only thing that corporate cared about was saving costs and increasing revenue."
"We were not losing money at the facility level," she explains, "but raising the census was difficult as not many people in the community wanted to place their relatives there due to the facility's negative reputation."
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