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Texas Nursing Homes
HMP Orchestrates Dramatic Turnaround of Nursing Home Chain
The lender that had provided financing to a group of five troubled nursing homes recruited Healthcare Management Partners to assess the viability of the provider and chart a possible turnaround.
By the time HMP arrived for the assessment, the nursing homes had fallen into receivership after emerging from bankruptcy. After examining the organization's finances and operations, HMP's experts found many areas ripe for improvement, and they developed a compelling turnaround plan.
But when the lender shared the plan with the chain's management, senior executives resisted making the recommended changes. The lender then foreclosed, freeing up the operating license for the Texas-based nursing homes.
HMP stepped into the breach, agreeing to take over the licenses to operate the nursing homes and launch the turnaround. The firm rolled out a program to sharpen the focus on customer service by putting in place new operating models and staff training. To enhance the resident experience, HMP modernized and improved the physical surroundings and amenities, including redecorating, installing movie theaters and upgrading meals. It also initiated a communications program to update area agencies and institutions that refer seniors to nursing homes, explaining the chain's many new improvements.
In one short year, the reversal of fortunes was striking. The number of residents increased by more than 15 percent to 360. In HMP's first year of operation, the chain will record $750,000 in earnings before interest, taxes, depreciation and amortization (EBITDA) and break even on a net basis--even after it invested $700,000 in capital improvements. The year prior to HMP's arrival, the nursing homes reported a $4 million loss in EBITDA.
Under HMP's care, the nursing homes are clearly on a path to sustained success while the lender stands to emerge whole on its real estate investment.
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