Looming Cuts in Medicare Reimbursement Fuel Challenges and Opportunities for Skilled Nursing Facilities

Contemporary Healthcare Capital, LLC Introduces Senior Mortgage Financing—Setting the stage for an Industry Turn-around

SHREWSBURY, N.J.--(BUSINESS WIRE)-- As the Congressional Super Committee begins work on cutting the national debt by $1.2 -$1.5 trillion, senior healthcare industry leaders are struggling to adapt to new Reimbursement Utilization Group Protocols (RUGs-IV) and potentially significant additional cuts in Medicare and Medicaid reimbursement the committee may enact.

“Since the implementation of an 11.1% net reduction in Medicare funding was announced last July, providers have been struggling to adjust their billing practices, patient census mix and staffing requirements to address the looming reductions in funding. While an 11.1% reduction is significant it should be notes that even after such a cut funding would remain about 3% above what it was prior to the funding increases of the past few years,” comments Douglas A. Korey, Managing Director of CHC (Contemporary Healthcare Capital, LLC), a Shrewsbury, NJ based firm that specializes in financing healthcare facilities. “Unfortunately, the highly publicized funding reductions coupled with the national dialogue about debt reduction and an uncertain regulatory environment are discouraging investors from entering the healthcare market and reducing the amount of capital available for the construction, renovation and acquisition of skilled nursing facilities.”

According to Korey, the reimbursement changes and shortage of institutional capital create opportunities for companies in the middle market that operate from five to 25 facilities. It can be more difficult for large national chains to respond quickly to changes in funding and regulation because of their shear size whereas smaller facility operators can react quickly to remain profitable.

“Although market conditions support investment in middle market facilities, it is often difficult for operators to acquire the necessary capital for acquisitions and renovations in the present climate. It can take a year or more to access government agency funding, making these sources impractical for certain operations in an evolving healthcare environment,” explains Korey. “At CHC, we’ve recently introduced our seventh fund, the Contemporary Healthcare Senior Lien Fund I, LP (CHSLF). Through CHSLF we will provide senior mortgage financing for construction, turnaround financing, acquisitions and refinancing as well as traditional revolving lines of credit for working capital. As the name suggests, CHSLF focuses on skilled nursing, assisted living, dementia care and retirement campuses.”

One of the major advantages of CHSLF is CHC’s ability to respond rapidly to the need of its clients. CHC can close senior mortgage loans in as little as 30 to 60 days. The fund will provide leverage of up to 90% loan to cost and 85% loan to value. Additional funding is also available through CHC’s mezzanine and equity products.

Contemporary Healthcare Capital, LLC owns and operates funds that specifically target the healthcare industry. Over the past 12 years the firm has loaned and invested t this industry in over 30 states. CHC has an experienced team of investment professionals who can facilitate the most difficult financing scenarios.


For Contemporary Health Care
Rachel Carlson, 732-292-2400
[email protected]

KEYWORDS:   United States  North America  New Jersey

INDUSTRY KEYWORDS:   Health  Other Health  Professional Services  Finance  Nursing  General Health