An Absolut nursing home in Orchard Park will close as its owner, Absolut Facilities Management, seeks Chapter 11 bankruptcy petition while it reorganizes, the company announced Wednesday.
Absolut did not announce a date for the closing of its Absolut Center for Nursing and Rehabilitation at Orchard Park, a 202-bed facility with about 185 residents.
The state Health Department on Wednesday approved a closure plan for the Absolut nursing home, said Jeffrey Hammond, a spokesman for the agency.
"The Department of Health will work to ensure that all residents have been placed in other facilities providing the appropriate levels of care, as required by the closure plan,” Hammond said.
The Health Department would not provide The Buffalo News on Wednesday with a copy of the closure plan it approved. Generally, the Health Department requires nursing homes that plan to close to continue operations until the last resident is relocated.
The Orchard Park nursing home is one of the lowest-rated nursing homes in Western New York. It has an overall rating of one star, or much below average, from the federal government. The nursing home has been cited by the Health Department for numerous deficiencies in recent years, but it has not been fined in the past three years.
Absolut, which operates a chain of nursing homes in New York State, and some of its subsidiaries filed for bankruptcy protection Tuesday in New York City, the company announced.
"These actions were taken in an effort to help the company financially reorganize itself and better position itself for the future," the company said in a news release. "Similar to many other companies that have successfully utilized the Chapter 11 process to restructure their finances, the company expects to emerge from bankruptcy stronger than before."
Absolut will keep open the company's other nursing homes – in East Aurora, Gasport, Allegany, Painted Post and Westfield – as well as an assisted living facility in Orchard Park, the company announced.
Absolut's seven facilities employs 975 people and generate revenues of $83 million, according to its bankruptcy filing. The Orchard Park facility that is scheduled to close has about 234 employees and recorded revenues of $18.1 million in 2018, down from $18.6 million the year before, according to the filing.
Absolut purchased the Orchard Park nursing home, along with other nursing homes in the Buffalo region, in 2007, beginning a wave of local nursing home purchases by investors from the New York City area.
In 2018, Absolut sold four other nursing homes in New York to Personal Healthcare, a downstate chain. Personal Healthcare was operating the former Absolut homes in Dunkirk, Eden, Houghton and Salamanca as it sought Health Department approval.
“As we have seen in recent days with the announcement of the closing of Newfane Hospital, health care generally, and specifically long-term care, faces significant challenges,” said Israel Sherman, CEO of Absolut Care. “We are very confident that we will emerge a much stronger company after these legal proceedings are concluded. It is our expectation that during this process that patient care, our employees and our commitment to excellence will remain our top priority.”
In the bankruptcy filing, Absolut said a number of factors spurred its bankruptcy filing, including high-cost pressures and supply exceeding demand for its services.
• Absolut said it pays about $11 million per year in rent to its landlords, affiliates of the Arba Group, at rates Absolut called "well above" the market rate for comparable facilities.
"That crushing rent burden has made (Absolut's) business, in its current footprint, unsustainable," the company said in court documents. "Not only has the high rent burden put a stranglehold on (Absolut's) cash flow, it is impeding (Absolut's) ability to invest in the improvement of their facilities."
• Absolut said the overwhelming majority of its income comes from Medicare and Medicaid reimbursement payments on behalf of patients, but that there has been an increasing lag in the amount of time it takes to have those payments processed and received. Absolut now routinely waits "many months, sometimes years for approval (and resulting payment) to be received," the company said in its filing.
In the meantime, Absolut said, it has to incur costs related to treating, feeding and housing patients, along with funding the company's payroll and operating expenses. And Absolut said Medicare and Medicaid reimbursements are not keeping up with the cost of living, putting additional pressure on Absolut's cash flow.
• Absolut said the patients in its facilities were primarily born during the Great Depression, when the nation's birth rate was low. While a surge in demand for senior care facilities is expected as Baby Boomers age, "for now, supply outpaces demand," Absolut said. And amid a tight job market, Absolut has to pay "significant overtime costs" to employees to ensure all work shifts are covered.
• Absolut cited legal actions by patients and former patients as another cost pressure, in the form of defending itself against those claims. Absolut said it was seeking the protection under the bankruptcy code partly to "obtain a breathing spell from these litigations and to attempt to resolve them in an efficient manner."
Absolut said it will use the bankruptcy process to evaluate its leases and other obligations and, "to the extent possible," restructure them in a way that would allow Absolut to emerge from bankruptcy with all of its facilities "intact."
"If that proves impossible, (Absolut) will explore other strategic alternatives to ensure uninterrupted care for their patients and to maximize value for their stakeholders," the company said in its filing.
Absolut agreed in October 2018 to pay $425,000 to settle a lawsuit brought by the U.S. Equal Employment Opportunity Commission that alleged the company improperly fired pregnant or disabled workers who were unable to return to work without medical restrictions and subjected employees to impermissible disability-related inquiries and medical examinations.
The case was based on complaints that Absolut discriminated against Lisa Valentin, an Absolut worker in Orchard Park who was pregnant, and three other unnamed workers. Under the court-approved consent decree settling the suit, the company agreed to pay $40,000 in lost wages and damages to Valentin and pay $425,000 into a class settlement fund to compensate other victims.
While the Orchard Park nursing home is closing, another of the Absolut nursing homes has drawn more attention from regulators and protesters. Absolut's nursing home in East Aurora has been rated as a one-star facility almost every month for the past five years by the federal Centers for Medicaid and Medicare Services.
The East Aurora facility has been fined at least $39,210 since 2008 by the state and federal governments. In lawsuits against the nursing home, residents and their survivors have alleged everything thing from untreated bedsores to broken bones to wrongful death. Absolut at Aurora Park agreed to pay $820,000 to settle four lawsuits in 2018, according to State Supreme Court records.
Protesters have demonstrated outside Absolut in East Aurora demanding that the Health Department close the facility.
Chris Luterek, Absolut's vice president for business development in the Buffalo region, did not respond to The News' messages seeking comment on the closure of the Orchard Park facility and the bankruptcy.