ProMedica to Blur Acute, Post-Acute Lines with ManorCare Deal

The acquisition of HCR ManorCare, the nation’s second-largest skilled nursing provider, by nonprofit health system ProMedica falls in line with a growing trend of payors and providers building out their care continuum, with one goal being to treat patients more frequently in lower-cost care settings like home health care.

On late Wednesday night, ProMedica announced it was acquiring the operations of HCR ManorCare, including its home heath and hospice business, for $1.35 billion. In a joint venture deal with heath care real estate investment trust (REIT) Welltower Inc. (NYSE: WELL) ProMedica is also acquiring a 20% stake in the company’s real estate assets, with Welltower owning the remaining percentage. Separately, Welltower is also acquiring ManorCare’s landlord, Quality Care Properties (QCP).

The venture greatly expands ProMedica’s footprint in the post acute care space, doubling its revenue to more than $7 billion and adding about 100 home health care locations in 23 states.


The transaction will establish ProMedia as one of the 15 largest nonprofit health systems in the country and the largest health system operator of private-pay senior housing.

The deal follows similar moves by other health care giants: Humana (NYSE: HUM) recently announced it is acquiring the home health and hospice operations of Kindred Healthcare (NYSE: KND) and Curo Hospice. Amazon (Nasdaq: AMZN), Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) also recently launched their own health care play to lower health care costs for their employees and push for low-cost care settings. Another recent deal between CVS Health (NYSE: CVS) and Aetna (NYSE: AET) focused on expanding community-based services.

“Now that the whole health care delivery model is changing, they need to rationalize that and look for other ways to bring their health care delivery to lower cost, more modern settings—that is the entire theme of what you are seeing happening,” Tom DeRosa, CEO of Welltower, said during the company’s first quarter earnings call Thursday. “Whether it’s what Humana is doing, whether its Berkshire, Amazon and JPMorgan, health care delivery is being disrupted.”


The structure of the deal—which brings together a not-for-profit health system, a health care REIT, and a post-acute care provider—is being touted as “transformative” and the first of its kind in the space, according to Welltower executives.

ProMedica similarly sees the deal as transformative, but not just because of its structure.

“We see the lines in health care, clinical care have really blurred,” CEO Randy Oostra told HHCN Thursday. “We’re hoping to blur that further, between the line of acute and post acure [care].”

The deal is happening at a particularly strenuous time for the skilled using industry, with HCR ManorCare’s home health and hospice business being a bright spot on its earnings and revenue over the last year. The profitability of the home health business was one draw for ProMedica, Oona told HHCN.

“I’d say the home health and hospice business is certainly attractive,” Chad Vanacore, analyst with Stifel, told Home Health Care News. “Both home health and hospice [are] attractive assets with growing demand, and certainly will [command a] premium valuation in the market.”

As part of the deal, ManorCare CEO Steve Cavanaugh is the CEO will stay on in his role, with Matt Kang continuing to serve as chief financial officer, according to a memo sent to employees Thursday.

Written by Amy Baxter

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