Like many senior living and skilled nursing operators, Country Villa Service Corp was struggling financially in recent years. This, along with class action lawsuits, forced 19 of the facilities to declare bankruptcy. The Chapter 11 filing is not for the entire corporation, but individual assets seeking protection. The two biggest reasons for this move include Medicaid along with the lawsuits.
Medicaid Responsibility
When a patient qualifies for Medicaid, he pays only necessary co-payments or out-of-pocket expenses. Like most other insurance companies, Medicaid is responsible for sending Country Villa funds. Unfortunately, the state of California has been slow in processing and sending money to the skilled nursing facilities. This can be detrimental to the company who cannot then finance their company needs, such as paying wages, attaining medical supplies, or general care needs. Country Villa also experienced lower credit and could not finance through loans.
Class Action Lawsuits
Along with missing funds from Medicaid, Country Villa is up against a number of class action lawsuits. These are due to paid wages and hours along with poor care of patients and medication usage. A total of seven lawsuits are still pending. This led the franchises to file for bankruptcy as a means of protection. It means there are no funds to pay out if the plaintiffs win.
Moving Forward
Country Villa believes there will be no senior housing facilities for sale due to this. There is an overall rate of 90 percent occupancy with a few of the homes at 100 percent. These homes include:
- Plaza Convalescent Center
- Westwood Healthcare Center
- Sheraton Healthcare Center
This means that with diligent planning and financial guidance, the company should be able to move forward. A new financial model was already created so the skilled nursing facilities are ready to start a new chapter after this bankruptcy.
There are a number of reasons skilled nursing facilities must file bankruptcy. Government owned and non-profits cannot use this as a means of protection, but others do and will. It is extremely difficult to make a profit generally, but when the home runs a poor financial plan and does not receive funds due, it is inevitable. If you find yourself stuck and do not think you will move forward from bankruptcy, contact a reputable skilled nursing brokerage. He can help you manage the sale of your senior home and get you out of trouble.
Roylance Senior Housing 