Whatever comes of HCR ManorCare, its new owners should recognize that the company should stay in Toledo.
HRC ManorCare’s valiant effort to remain in business and avoid being forced into bankruptcy has ended in a managed bankruptcy that promises as smooth a transition as possible under the circumstances. HCR’s new overseers should aim to maintain stability by keeping HCR right where it is now.
HCR agreed to file for Chapter 11 bankruptcy and be acquired by Quality Care Properties Inc. of Bethesda, Md. What that means for HCR’s approximately 700 employees in its downtown headquarters is that they will continue to do their jobs here in Toledo, for now, at least.
A “packaged bankruptcy” aims to create as little disruption as possible. Quality Care Properties is a real-estate investment trust which owns the real estate and buildings where HCR ManorCare operates. Quality Care would trade the millions of dollars it is owed in unpaid rent in exchange for turning HCR ManorCare into a wholly-owned subsidiary of Quality Care. HCR’s management team will be replaced by people appointed by Quality Care.
ManorCare operates 292 rehabilitation centers, memory-care communities, assisted-living facilities, outpatient rehabilitation clinics, and hospice and home health care agencies under the names of ManorCare, Heartland, and Arden. Heartland is one of the top five largest hospice companies in the United States.
HCR’s woes are due to cuts in the reimbursement rates paid by Medicare. ManorCare’s financial filings show the company lost $3.7 million in the last three years — the vast majority of that in 2016.
Steven Cavanaugh, ManorCare’s president and chief executive, who also is chairman of the University of Toledo Board of Trustees, said the agreement provides “stability for employees, residents, and patients.”
There are many potential outcomes for ManorCare, experts say, including remaining intact under new owners or being sold off in pieces. It appears that Quality Care, which owns the buildings and real estate where HCR operates, figured that as long as it was going to suffer the lost revenue from rent it should be able to gain the net revenue from HCR’s operations.
The high quality of HCR ManorCare’s facilities and care, which is experienced throughout the country, reflects well on the city of Toledo, and also reflects the values of the city of Toledo and the pride Toledo takes in HCR. Quality Care, when it gets to the point of deciding how to run its new subsidiary, should recognize value in keeping the headquarters where it is right now.
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