Kindred Healthcare and Ventas Inc., a giant healthcare real estate investment trust, have reached a deal that each hopes will hasten its respective exit from the skilled nursing home business.
Louisville, Ky.-based Kindred has agreed to pay Ventas $700 million for 36 nursing homes Ventas owns and leases to Kindred, the companies announced Monday.
Kindred is trying to find buyers for those facilities and its others so it can exit the skilled nursing business. Kindred currently operates 91 nursing homes.
Last week, Ventas said in a press release that Kindred contractually needed consent from Ventas to sell or transfer the homes to another operator.
“We are pleased with these mutually beneficial agreements with Ventas that allow us to fully exit the skilled nursing facility business in an expedited manner,” said Kindred CEO Benjamin Breier.
Nursing home operators are facing pressure to improve patient care or face reduced Medicare and Medicaid payments while also dealing with increased competition from other sectors.
Nursing homes are Kindred's smallest healthcare business segment behind home health care, rehabilitation services and long-term acute-care hospitals. The segment in the third quarter suffered a 1% decline in average daily census on revenue of $270.3 million.
By comparison, Kindred's home health and hospice revenue posted a 6% increase to $638.5 million and a 5% increase in EBITDA to $106.4 million.
Chicago-based Ventas also is moving away from nursing homes. The company, which owns hospitals, medical offices and a host of healthcare real estate, has created a subsidiary to prune its nursing home holdings.
With the sale of 36 homes to Kindred, Ventas expects to reduce rents from nursing homes to just 1% of its total revenue, the company said. Those facilities generated $49 million in rent every year.