The Sky Is Falling, At Least At Skyline

Over the past couple of years, we have been watching as a company called Skyline Healthcare seemed to come out of nowhere to becoming a national operator of skilled nursing facilities with perhaps 120 or more facilities under management. This has occurred in a very short period of time, and many of their properties came from Golden Living, as that company, after some run-ins with various state regulatory agencies, switched from being an operator to a landlord. To do that, you need a lot of providers to step in and lease your buildings, or maybe a few to take over operations for a lot of them.

It looks like Skyline became a go-to provider for them. Two states, however, have taken over operations from Skyline after finding out the company couldn’t meet payroll, and maybe other financial obligations. In Nebraska, the state put into receivership 21 SNFs and additional assisted living communities operated by Skyline through an entity called Cottonwood Healthcare. They had taken over operations from Golden Living in 2016. According to local media reports, some employees had not been paid for three weeks. We have to wonder what food has been served the residents, and what kind of medical supplies are still on the shelves. The state has appointed Klaasmeyer & Associates to manage the facilities while a long-term plan is worked out.

This was followed by the same thing happening in Kansas, with the state asking the courts to put 15 SNFs into receivership. Wood-Ridge, New Jersey-based Skyline has been operating them since 2016. Again, the company was not able to make an upcoming payroll payment. Apparently, Mission Health Care, which operates in Kansas as well as four other states, will be stepping in to oversee the operations of these 15 facilities until a more permanent solution can be found.

The knee-jerk reaction from the industry will be that low Medicaid reimbursement was the cause. While Nebraska is not known for a generous Medicaid rate, we would argue that the corporate structure, rapid growth, little liquidity and large lease payments were the culprits, among others. We think more shoes will drop, and Pennsylvania could be the location of one of them where Skyline took over operations of nine Golden Living facilities. This mess could get even uglier, but it was so predictable.


17 comments on “The Sky Is Falling, At Least At Skyline

  1. Please see my LinkedIn article “The Cottonwood Healthcare, LLC/Skyline Healthcare Debacle: How We Got Here” for a comprehensive examination of Skyline’s management practices and legal history.

    1. Thank you Leigh. Do you know if Golden Living was still the landlord for the Nebraska and Kansas facilities operated by Skyline? I assume they leased them to the Skyline affiliates.

  2. Still waiting to see if employees will be paid this next payday, Friday 4/6. Three weeks pay has simply vanished. Local management’s response is simply “it’s being worked on” and nothing more. There seems to be a news blackout surrounding this entire situation. Employees are very much in the dark. This story doesn’t seem to spark much interest, if any, in local news agencies, be it print or broadcast. Why the state of Nebraska allowed a sketchy company like Skyline to operate in Nebraska is the question for the ages.

      1. In the mid 1990’s, Nebraska had the most stringent CON process for a CHOW. Effective lobbying and campaign contributions fixed that “problem”. Even with a strict vetting process, I’m not sure most state agencies have the strength to say no.

          1. The Skyline process in the past was to offer a list of its current facility employees to vouch for it. This happened when Skyline attempted to take over a facility in Maine, for example. So it is wholly possible facilities in different states knew. Certainly, the Nebraska Healthcare Association president is in close contact with his counterparts in SD & KS, so I am skeptical no one realized Skyline was asking to manage facilities in multiple states all at once.

    1. Believe me, Tim Smith, I have emailed & called Nebraska Health & Human Services officials, the Nebraska Healthcare Association president, Senator Ernie Chambers, The Omaha World-Herald & The Lincoln Journal Star. People are watching from the sidelines to see how it all plays out. Skyline attempted to access facility Facebook pages on April 4 to post a pro-Skyline press release. Cornerstone Quality Care, LLC has a part to play in all of this. There is so much to uncover. I am confident the truth will win out:)

    1. Hi Steve, South Dakota, Pennsylvania, Arkansas, Tennessee, Massachusetts, Florida and New Jersey, but there may be a few others. What have you heard about them in Arkansas?

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