As long-term care providers struggle with staffing challenges and increasing expenses, some are working to ensure their survival by joining strategic alliances to share financial burdens.
“Increasing financial pressures throughout the industry have led to the closure or sale of 21% of New York state’s nonprofit skilled nursing facilities over the past five years. Although each of these organizations has managed to stay ahead of this trend, a proactive approach is needed to ensure financial viability into the future,” according to western New York-based Lineage Care Group.
Lineage Care Group is a 503(c) organization that serves a passive parent for providers looking to avoid duplicative work. The strategic alliance includes the Buffalo, NY-based Niagara Lutheran Health System, which includes the GreenFields continuing care retirement community; Schofield Care, which offers nursing home and home healthcare as well as adult day, hospice and other services; and, most recently, the Weinberg Campus, a CCRC in Getzville, NY, Lineage Care Group CEO Christopher Koenig told the McKnight’s Business Daily.
”The good news is, we don’t share a lot of the risks of the individual organizations by remaining passive. So there are benefits to [the arrangement],” Koenig said.
The three providers make up the board of Lineage Care Group. All three companies and the three chip in an equal share for his salary and for other executives, as well as shared services such as human resources.
“It’s not an actual organizational merger, but it kind of is,” Koenig said. “Our back offices are the same, our executives are the same. All the administration acts together. It actually works out really well.”
The arrangement means that each organization pays less than if it were to operate independently, he said. And with combined resources, the organizations can afford to pay higher salaries overall to joint hires.
After a year or more of talks, Weinberg Campus signed a contract last month to officially join the group. A long-planned $47 million sale of Weinberg Campus fell through last year, and becoming a member of the strategic alliance offered the organization an opportunity to stay afloat.
“This nonprofit collaboration model provides greater benefits to the residents and community than the for-profit alternative,” Weinberg Campus President and CEO Robert Mayer said, as reported by The Buffalo News. “Free of the financial obligation to generate returns for investors, nonprofit senior care organizations are able to reinvest their profits into their operations and communities, leading to superior clinical outcomes, more satisfied employees, and enhanced patient and community welfare.”
According to Koenig, organizations do not lose their unique identity when they join the alliance.
“Buffalo is a very regional place, and their history is important,” he said. “So every nonprofit that joins us keeps their identity. They keep their board as much as their board wants to be, and they keep that history.”
