It looks like trouble for HCR ManorCare. The nursing home giant, the country’s second largest chain, was recently abandoned by the private equity firm that has owned the company for the last 10 years. The firm, Washington, D.C.-based Carlyle Group, had already sold off nearly all of the real estate associated with ManorCare in 2011.
Rumors of problems at ManorCare began over 2 years ago when the U.S. Justice Department filed a lawsuit against the chain for billing Medicare for ‘medically unreasonable and unnecessary services.’ While the chain has attempted to blame the fraudulent charges on a greedy few rather than on a corporate moneymaking scheme, that hasn’t prevented many high level ManorCare executives from leaving the company. Unnamed sources within ManorCare have recently revealed that the company owes close to $400 million to investors for senior loans. Senior loans are particularly important because borrowers are legally obligated to repay this type of debt to a lender before paying any other creditors. In light of these revelations, several vendors have recently abandoned relationships with ManorCare, a sign that the chain’s financial issues are leading to a bankruptcy filing and potential closure of facilities.
ManorCare Well Known but for Many of the Wrong Reasons