The list of nursing homes managed by New Beginnings Health Care LLC grew shorter this week as the Hixson-based company that sought to reorganize through Chapter 11 bankruptcy in January and now hopes to hang on to just four of the 15 homes it once controlled.
Sixty residents are being moved out of Oceanside Healthcare and Rehabilitation Center in Tybee Island, Ga., because federal Medicaid and Medicare payments were cut off after regulators found problems there similar to what has occurred at other New Beginnings-managed nursing homes in Tennessee, Georgia and Ohio.
The Georgia Department of Community Health found "deficiencies" at the Tybee Island nursing home during an inspection on Nov. 5, 2015, including a walk-in freezer that was empty and broken, the nursing home had only one working clothes washer, and a faulty door contributed to a fly-control problem.
"Oceanside is a facility that is more than 40 years old and requires a great deal of maintenance and repair," Terry Walker, New Beginnings Care's director of operations, said in an email. "We have spent more than $250,000 in the last three months and a great deal more than that over the last year. We had the intentions of continuing to make improvements and renovate but are not able to keep the facility open."
Oceanside is the ninth nursing home operated by New Beginnings to close since December 2015.
Meanwhile, on Friday, New Beginnings' co-founder Trent Tolbert and his attorney David Fulton were in bankruptcy court in Chattanooga trying to sell another nursing home, Mt. Pleasant Health Care and Rehab, in Mt. Pleasant, Tenn.
New Beginnings Care, which manages nursing homes but doesn't own any facilities, hired OEM Capital Corp., a New York City-based investment banking firm, to help it auction its assets, which include that Medicare and Medi- caid provider numbers that would allow a new operator to get the federal funding without interruption.
But despite what was described as a well-advertised, nationwide campaign to sell New Beginnings Care's leases and assets, only one bidder stepped forward at the auction Thursday: Health Services Management Group. The Cleveland, Tenn.-based company offered to buy the Mt. Pleasant nursing home for $50,000 in cash plus $490,000 in bed taxes owed to the state and a little less than $800,000 unpaid rent to the facility's landlord.
An attorney for the state of Tennessee and an attorney for the landlord told bankruptcy court Judge Nicholas Whittenburg that they'd like the sale to proceed.
But an objection was made by Jay Rankin, the attorney for Marietta, Ga.-based Gemino Healthcare Finance, which in 2014 provided New Beginnings Care with a secured $8 million line of credit. New Beginnings Care currently owes Gemino some $2.2 million. Rankin's objections included that he didn't get enough advance notice about the proposed sale.
"I just heard about the $50,000 10 minutes ago," Rankin told the judge.
Robert Hirsh, the New York City-based attorney who represents the unsecured creditors owed money by New Beginnings, said that Gemino had nothing to lose from the sale.
"If the facility's closed, Gemino gets nothing," said Hirsh, who told the judge that by opposing the sale, Gemino was "actually hurting themselves."
Whittenburg said that Gemino had a right to object.
"[New Beginnings Care] owes $2.2 million, and Gemino's getting $50,000," he said, adding later, "What [Gemino's] doing may be dumb, but I can't order them not to be dumb."
Discussion of the proposed sale will continue Thursday in bankruptcy court. Fulton said that New Beginnings Care hopes to hold on to its four most profitable nursing homes. That's a reduction from the seven "keeper" facilities it identified in February in bankruptcy court.
Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or www.facebook.com/MeetsForBusiness or twitter.com/meetforbusiness or 423-757-6651.
Statement from Terry Walker, Director of Operations at New Beginnings Care, LLC
The Centers for Medicare and Medicaid Services (CMS) sent a notice of their intent to terminate the agreement at Oceanside back near the first part of May due to regulatory issues we have not been able to work out with the Dept of Community Health. We have tried unsuccessfully through appeal and legal measures to prevent the termination from happening. Oceanside is a facility that is more than 40 years old and requires a great deal of maintenance and repair. The physical plant and environmental issues are due largely to the age of the building. We do not own the facility. We are a management company that leases the building from the owner. We have spent more than $250,000 in the last 3 months and a great deal more than that over the last year. We have operated the building for less than 3 years. We had the intentions of continuing to make improvements and renovate but are not able to keep the facility open. We have attempted without success over the last several months to work with the owner to transition the operation to another operator. The care and safety of the residents at Oceanside has always been our mission. There were no issues with the care at Oceanside that lead to the termination, just the physical environment issues. We submitted a closure plan to CMS that included notifying the 60 residents we had here and their responsible parties of the termination and began the process of relocating the residents. Most have been able to stay in the county. None were relocated to Florida. We will be able to retain many of the employees at another location but not all of them.