February 14, 2019, Alex Spanko, Skilled Nursing News - The operations of four rehab-focused skilled nursing facilities developed by Mainstreet have been sold to a former company executive and his newly formed operating firm, Skilled Nursing News has learned.
Led by Mark Fritz, who helped create the “Rapid Recovery Center” model for the Carmel, Ind.-based senior care developer, Bridgemoor now operates the quartet of buildings in Fort Worth, Round Rock, San Antonio, and Webster, Texas.
Invesque Inc. (OTC: MHIVF), a health care investment firm that spun off from Mainstreet in June 2016, continues to own the real estate associated with the properties, Invesque CEO Scott White confirmed. The deal closed February 1, with the terms of the transaction undisclosed.
Mainstreet rolled out its Rapid Recovery Center format with much fanfare back in early 2017, targeting short-term, post-acute rehabilitation residents by creating a luxe, resort-style setting. CEO Zeke Turner planned to have 11 Rapid Recovery Centers open in Texas and Arizona within 18 months of the initial announcement, with the properties serving as its first foray into the operations game.
“We think it’s going to be a really important part of our business on a go-forward basis,” Turner told our sister publication Senior Housing News in March 2017.
The company hit some bumps in the road over the ensuing two years, halting all Rapid Recovery Center development in Arizona in March 2018 and laying off about 70 employees in the state. Still, Turner insisted that the show would go on for the company in the Lone Star State.
“We have three centers open in Texas right now and are scheduled to open five more over the next 12 months,” Turner said last year. “This is already a huge undertaking and commitment, which did contribute to the Arizona decision.”
But Turner on Thursday classified the handoff as a way for Mainstreet to return to its core focus of real estate development and not operations.
“We really found that our best position in the industry is to be supportive to those operators in helping them grow, and really bringing in those best practices,” Turner told SNN.
Mainstreet still plans to complete planned properties in Amarillo, Temple, and Beaumont, Texas — which the website for its Rapid Recovery Centers model lists as opening in 2019 — though Turner said the company isn’t clear on whether it will sell the operations or stay in the game once construction wraps up.
“We’ll see. Those properties aren’t yet complete,” Turner said. “We’ll see as we get a little closer to completing what, ultimately, the plans are for those properties.”
Turner denied that the company’s troubles in Arizona had anything to do with the decision, and also praised the Bridgemoor management team, noting that the core operations leadership group will not change.
“They are wonderful operators and wonderful people, and we’re really excited about their opportunity to step into this,” he said.
Bridge over troubled water?
Despite the rocky rollout of the model by its previous owners, Fritz — now president of Bridgemoor — has high hopes for his new company’s blend of technology, higher-end amenities, and intensive medical care. While Fritz and the rest of the team at Mainstreet didn’t know about the Patient-Driven Payment Model (PDPM) when developing the RRC model starting in 2016, he noted that the focus on short lengths of stay and positive outcomes fits nicely with the new reimbursement system.
“I think we all had a pretty good idea that it was not going to be minute-based therapy reimbursement, and it was going to be a much more coordinated care model,” Fritz told SNN. “As we were training to develop this, we always kept our eye a little bit ahead of the ball, trying to figure out where it may go.”
Turner seconded that notion in explaining the reasoning behind Mainstreet’s decision to exit the operations of the facilities.
“The intention for us, of building an operating platform, was to really set the stage for what could be,” Turner said. “I can’t profess to know that we were going to be in front of a full payment model regulatory change, but we certainly felt like that the industry was moving in that direction, and wanted to take innovative leadership on that path.”
The company has already achieved full integration between its in-house electronic medical records (EMR) system and the Epic platform used by one of its major hospital partners — allowing acute physicians to monitor residents’ conditions and prevent avoidable rehospitalizations.
“We can manage that patient in place, and that’s becoming, I think, a big asset as we grow and discuss with hospital system,” Fritz said.
Fritz also has extensive experience in the post-acute space, having served as CEO of TRISUN Healthcare and founding Remington Medical Resorts in 2006. Genesis HealthCare (NYSE: GEN) bought Remington in 2015, renaming the properties under the Genesis PowerBack Rehabilitation brand; Fritz then joined Mainstreet the following year.
While Fritz said his new company will explore expansion opportunities, for now, the four-property size fits his current goals as Bridgemoor attempts to integrate with local hospital networks, managed care organizations, and bundled payment systems.
“We really look at our size as our advantage,” Fritz said.