I will shed some light on this unfortunate situation. The sale of these apartments is happening for one reason: an arrogant former CEO and an apathetic board. As recently as 5 years ago the apartment rent was much lower and the apartments WERE profitable. The overhead was shared between the apartments and nursing home, and cash flow was sufficient to pay for needed repairs. But the CEO had the mistaken idea of building a partnership with Siskin, with the idea that residents who couldn’t undergo intensive Siskin therapy could instead go to St. Barnabas. Of course, if this was a good idea LifeCare would have thought of it long ago. But he convinced the board to build a state-of the art nursing home on the Siskin campus (note that St. Barnabas doesn’t even own the property where the nursing home is!) and renovate the downtown nursing home into a luxurious assisted living.
The CEO was advised that the apartments would never have sufficient cash flow to support the entire overhead of the downtown campus (there would still have to be a kitchen, utilities for the closed nursing home, maintenance on the closed building, etc). The apartments were never meant to take on such expenses. However, he was convinced his marketing plan was sound and the partnership with Siskin would generate enough revenue. He also had the mistaken idea that the “right” apartment manager could bring in enough cash to support the entire downtown operation.
Needless to say, his plan didn’t work out. There were huge cost overruns on building the nursing home and the anticipated revenue from the Siskin partnership didn’t materialize. Because of that and other reasons, planned renovations to the downtown campus couldn’t be completed. The apartments went through multiple managers and the CEO was later fired. By that time it was too late. St. Barnabas was losing too much money, and bankruptcy was inevitable.
A better decision would have been to renovate and expand the downtown campus, which would have allowed St. Barnabas to keep its rich history as a downtown senior living complex while still permitting the sharing of overhead and providing for the smooth transition of residents between the apartments, assisted living, and nursing home. This was all discussed before the first brick was laid, but the convincing CEO would hear none of it. Both he and the board should be ashamed of themselves. The board should be especially ashamed, for they were gullible enough to believe the CEO’s tales of grandeur. Many of the same board members today were on the board at that time. This board has destroyed the identity of a 45 year-old downtown tradition, and is eliminating Chattanooga’s only non-profit continuing care retirement community.