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Nursing homes may file for bankruptcyMove would affect 101 Texas facilities01/18/2000By Kuempel / The Dallas Morning NewsAUSTIN - The nation's second-largest nursing-home chain - home to more than 9,000 aged Texans in 101 facilities across the state - is expected to seek Chapter 11 bankruptcy protection Tuesday, according to industry sources.

MARINER POST-ACUTE NETWORK FACILITIES

Mariner's Dallas-Fort Worth operations:

Beds

Employees

Autumn Years Lodge - Fort Worth

170

210

Castle Manor - Garland

94

115

Mariner Health of Arlington

122

158

Mariner Health of Fort Worth

180

212

Mariner Health of North Dallas

150

177

North Dallas Rehab Hospital

36

58

North McKinney Nursing and Rehab Center

140

167

SOURCE: Mariner Post-Acute Network

Atlanta -based Mariner Post-Acute Network would be the third big long-term-care chain to seek refuge from creditors in the last six months. The company is Texas' largest nursing-home provider.

Mariner officials declined to comment, and the amount of the company's assets and liabilities were not immediately available. But an official close to Mariner said earnings were off more than $1.5 billion in the fiscal year ended Sept. 30.

The filings are expected in U.S. Bankruptcy Court in Wilmington, Del.

Officials say none of Mariner's patients are expected to be immediately displaced.

Once granted bankruptcy protection, a company can continue normal operations under supervision of the bankruptcy court as it attempts a reorganization plan. The company's creditors, who often end up with far less than they are owed, must sign off on any agreement before the firm can emerge from bankruptcy.

Industry officials say Mariner would be just the latest victim of problems plaguing the entire industry. Those difficulties are identified as inadequate federal and state assistance for care for the elderly and poor as well as soaring liability-insurance costs.

Three other companies - Vencor Inc., Sun Healthcare Group Inc. and Denton-based Texas Health Enterprises - earlier sought bankruptcy protection.

Mariner's filing would add 101 nursing homes to the 144 already in bankruptcy in Texas, state officials say. That would mean that more than 20 percent of Texas' 1,157 long-term-care facilities with a total of 19,478 residents are in financial straits.

"That is not a good sign," said Tim Graves, president of the Texas Health Care Association, an industry group representing more than 700 Texas nursing homes.

"It indicates that there are some financial issues that have to be dealt with."

Mariner operates 404 homes across the nation with 47,400 licensed beds. It has 55,000 employees. Most of its Texas homes are in and around Dallas, Fort Worth, Austin, San and Houston.

The value of Mariner stock plummeted last year, and trading was suspended on the New York Stock Exchange in October because of the company's deteriorating financial condition, industry officials say.

State Medicaid payments for caring for the poor, which are among the lowest in the nation, are significantly contributing to the industry's problems, providers say.

The state's $79-a-day average payment is more than $20 less than the national average and is 45th lowest in the nation, they say.

Lawmakers last year rejected an industry request to raise the rate to the national average and instead approved a small increase to keep up with inflation, Mr. Graves said.

He said Congress also dealt the industry a serious blow in 1997 with passage of the Balanced Budget Amendment that slashed Medicare payments to nursing homes by $16 billion over five years.

Medicare is the federal health plan for the elderly.

Congress tried to make amends last year by returning about $2.7 billion of that amount for nursing-home care over the next three years, Mr. Graves said.

About 75 percent of Mariner's 9,100 Texas patients are on Medicaid, the state program for the indigent, and 8 percent are covered by Medicare, officials said. The rest are covered by insurance or personal resources.

State Rep. Rob Junell, D-San Angelo, chairman of the House Appropriations Committee, said it is disingenuous of the industry to blame the state for its problems.

He said big court judgments for patient abuse and poor business decisions are also to blame.

Mr. Junell also noted that lawmakers last year increased Medicaid spending by 3.7 percent a year.

"The industry asked for 3.7 percent, and that's what we did," he said.

Mr. Graves said, however, the 3.7 percent was only to keep up with inflation; the industry sought a much larger increase to bring the state to the national average.

Jim Lehrman, who oversees nursing homes for the Texas Department of Human Services, said the state's Medicaid contributions are higher than industry claims. That's because medication is paid separately, unlike in other states where patient care and medication payments are lumped together, he said.

"We don't pay the the highest rate, but we're not as low as what the industry says," he said.

Beth Ferris of Austin, president of Texas Advocates for Nursing Home Residents, said her group worries that the bankruptcies will compromise patient care.

"One of the concerns we have, of course, is that some of the staff will leave and go to other places that are more stable," she said.

"And if staff starts leaving, this leaves these people that need care vulnerable."

But that may already be occurring. Mr. Graves said employee turnover exceeds 100 percent a year in all categories.

"That really causes problems in continuity of care, as you can imagine," he said.

Texas homes have on staff an average of three registered nurses, four fewer than the national average, Mr. Graves said.

Mr. Lehrman said service hasn't suffered.

"So far, we have not seen a massive decline in care," he said. "Now if they [Mariner] slide into Chapter 7 [liquidation], I get real worried."

Rosemary , a state health department spokeswoman, said the agency is carefully monitoring financially troubled homes "just to be sure the problems are not impacting the care."

"We are very concerned about anything that could impact resident care. That is our concern ," she said.

Industry officials complain that Texas' personal-injury laws make nursing homes an easy target for lawsuits. And that drives up liability-insurance costs.

"Liability insurance for nursing facilities, one, is becoming unavailable, and, two, the cost has at least doubled and in some cases tripled," Mr. Graves said.

"There has been quite a bit of litigation around nursing-home cases and some [awards] have been sizable.

"That has made the industry very nervous about what it is they are insuring. Many already have left the market," he said.

Mr. Graves estimated that nursing-home operators in Texas will pay more than $100 million in liability-insurance premiums this year .

An official close to Mariner said liability insurance in Texas is costing the company $10 a day per patient.

[ Texas Southwest | Dallasnews.com ])1999 The Dallas Morning News

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