The pandemic adversely affected all senior care companies in the last three years, but not-for-profits seem to have been hit the hardest. First seeing their occupancies decline, they were then hit by inflation and soaring wages, which, when you generally have expense management issues in good times, is a devastating combination. The generosity to support several years of losses at these organizations is noble, but their boards can’t sustain those struggling businesses forever, especially when their mission could be better served in other capacities.
We recently saw the debacle at the not-for-profit ProMedica where Welltower let the health system off the hook with its underwater leases for 147 SNFs, and ProMedica also recently announced it was laying off over 250 mostly remote employees. Good Samaritan Society announced plans to gradually consolidate its services and investments in seven core states in the Midwest, down from 22 today, after already closing 10 locations in the last year. But, better to adapt than to die.
We are also seeing a number of smaller not-for-profits either exit the senior care industry altogether or seek a merger with a larger, financially stronger system. And many signs point to this trend continuing in the first half of 2023, not to mention the dozens or hundreds of distressed, for-profit facilities to be put up for sale too. It won’t be pretty for some time.
