Manor Care said it will separate its lodging business from its healthcare business through a tax-free spinoff.
"We clearly think that by doing this, we'll be able to grow both businesses faster," said James MacCutcheon, senior vice president, chief financial officer and treasurer.
The company's board of directors approved the transaction, which is expected to close in six to eight months.
Within Manor Care's healthcare business, executives said they plan to expand the post-acute services the company currently offers to its base of private-pay, long-term-care customers.
Manor Care, the nation's third-largest nursing home chain, operates 197 facilities with more than 26,000 beds in 28 states. The company's fiscal 1995 revenues were approximately $1 billion for its healthcare operations, and $1.3 billion total.
Its lodging division, Choice Hotels, is the second-largest hotel franchiser in the world, with approximately 310,000 guest rooms in 3,600 hotels.