Absolut Care Facilities Management, the East Aurora-based operator of 11 nursing homes, is selling four of its properties in four counties to a fast-growing downstate senior care management firm for $20.15 million.
Personal Healthcare LLC, based in Tarrytown, N.Y., is acquiring the Absolut Care nursing homes in Eden, Dunkirk, Salamanca and Houghton, with a total of 300 beds. That will leave Absolut Care with seven facilities in Allegany, East Aurora, Gasport, Orchard Park, Painted Post and Westfield.
The takeover of the facilities won't be complete for months, possibly even a year, because the state Department of Health must first approve the ownership transfer. Those applications are now being submitted.
But Personal Healthcare representatives already began working onsite at the four facilities earlier this month, to get a handle on the operations early and learn what changes or upgrades may be needed.
"By the time we get in there, we'll have a good understanding of the buildings and we'll limit any inconveniences or otherwise inefficiencies that may take place in a transition of a business," said Jay Walden, one of the principals of Personal Healthcare, along with CEO Ephraim Zagelbaum and Alex Barth. "It's a lot of listening, understanding what the community needs, and what the facility needs."
He noted that each facility is individual and different in its needs, as are the residents. But Personal Healthcare will definitely invest "significant amounts of money and capital into the buildings to make them nicer," with both cosmetic improvements and systems upgrades, as well as ensuring that both staff and residents have the right resources.
Still, nothing major is expected and there won't be changes right away.
"We always start from within," Walden said. "First, let's make sure that we're providing good care. That's where it starts."
Absolut Care officials did not respond to repeated requests for comment over several days.
The deal was structured in two phases, because Absolut Care doesn't own the real estate for its nursing homes. That was held by the Arba Group, a Los Angeles property management company whose principals, Jacob Wintner and Ira Smedra, own stakes in nursing homes and shopping centers, particularly in Southern California. Arba sold the real estate underlying the homes to Personal Healthcare earlier this month.
According to documents filed in the Erie County Clerk's office, Personal Healthcare paid $1.325 million to acquire Absolut Care of Eden at 2806 George St. Located near the Eden Corn Festival site, the 13,381-square-foot nursing home was built in 1966 and sits on 4.05 acres.
Additionally, according to the Chautauqua County Clerk's office, the firm paid $1.78 million for Absolut at Dunkirk, a 40-bed facility located at 447 Lake Shore Dr. West.
The company also sold its 120-bed Salamanca nursing home, in Cattaraugus County, for $10.685 million, and a 100-bed site in Houghton, in Allegany County, for $6.36 million, Walden said.
No additional money will be paid when the second part of the deal closes, for the business operations, Walden said.
Based on Gleed Avenue and owned by brothers Israel and Samuel Sherman, Absolut Care is a private, for-profit company that used to operate a dozen sites throughout Central and Western New York, with more than 1,000 beds. They acquired the 173-bed former Niagara Lutheran Home and Rehabilitation Center in Buffalo for $10 million in late 2015. The Shermans also own several other facilities downstate, under other firms.
With the sales to Personal Healthcare, Absolut Care still owns the 37-bed Allegany home, the 320-bed Aurora Park in East Aurora, an 83-bed home in Gasport, the 80-bed Orchard Brooke in Orchard Park, the Three Rivers home in Painted Post with 120 beds, the 202-bed Orchard Park home and a facility in Westfield with 120 beds. That's a total of 962 beds.
However, Absolut Care has been cited by the government for quality issues and violations, even leading to fines. According to the state Health Department, in the last four years, the company received:
- 82 complaints, 42 citations and $12,000 in fines at Houghton;
- 16 complaints, 35 citations and $30,000 in fines at Dunkirk;
- 55 complaints, 29 citations but no fines at Salamanca; and
- 11 complaints, 39 citations but no fines at Eden.
The Buffalo News also reported in August 2016 that the company's facilities have received mixed ratings from the Centers for Medicare & Medicaid Services, with an average star rating of 1.4. According to those ratings, The Eden and Salamanca facilities received four stars each, putting them above average, while Dunkirk posted three stars, or average. Houghton, however, was "much below average," earning just a single star, as did four other facilities that the company retains.
Walden acknowledged the reputational problems his firm now faces as the new owners. "The industry doesn’t have a good name as it is. I understand it," Walden said. "We're behind the eight-ball, because we're expected to have positive outcomes, but it's not always possible to have as good a positive outcome as possible. We're not miracle-makers."
Zagelbaum, a Rockland County resident, began his career in healthcare as a nursing home administrator in Queens in 2003. He and his partners bought their first facility five years later in 2008, and have been growing their business at a rapid clip since then, buying nursing homes in Middletown, Utica, Delhi, Gowanda and Medina. The company now owns 12 nursing homes in New York and three in Massachusetts, with over 1,750 beds, Walden said.
Personal Healthcare, which was founded 10 years ago, tries to help "struggling and poor-performance facilities, turning them into high-quality nursing homes that provide health, safe and positive environments."
The focus is on a personal approach, Walden said, and the goal is to have a bigger impact on a weak operation rather than an incremental improvement in an already strong one.
"These are people's fathers and mothers that we're caring for. The gratification that we feel propels us to do it every day," Walden said. "When you're in a highly regulated industry, there are a lot of tough days. If we were in it for the money, there are a lot of businesses that are a lot easier to deal with. But that wasn't the point."
That's what appealed to them about the four Absolut Care facilities when a broker approached them confidentially to consider the deal.
"This is in our wheelhouse. This geographically fits our model and has the challenges that we've dealt with before," Walden said. "We're looking forward to taking them head-on and working through them, with the goal on increasing the quality care of each facility."
With the Absolut purchase - its largest and furthest deal - Personal Healthcare will now own a cluster of six Western New York facilities, giving them some infrastructure and economies of scale locally. But Walden said the partners would work to digest this purchase before even considering any other opportunities.
"We would not even be interested until we could take these over," he said. "We've worked very hard on being careful on which facilities to purchase and when."