Nursing home firm strengthens its rehab arm

Genesis Healthcare, a nursing-home giant based in Kennett Square, is expanding its short-term rehabilitation business with a $30 million facility under construction in Voorhees.

Genesis is also converting three of its traditional nursing homes in Southeastern Pennsylvania to this new rehabilitation model - called PowerBack - for patients who have had joint replacements or heart problems and are not ready to go straight home.

The moves are happening amid the financial pressure of Medicare's 11 percent funding cuts for nursing homes last year and perpetually insufficient payments for Medicaid patients, which account for most of the nursing home industry's business.

All four Philadelphia-area PowerBack sites are expected to open this year, company officials said. They did not identify the Pennsylvania facilities because they have not yet notified residents and employees. Genesis expects to break ground on a PowerBack site in Moorestown this fall.

The Voorhees facility, under construction near Virtua Health's $463 million hospital that opened in May 2011, is aiming at a higher level of care and amenities than is typical for the industry, said Paul Bach, a Genesis executive vice president and central-area president for Pennsylvania and New Jersey.

A key goal of the PowerBack model is do better than the rest of the industry at preventing patients from needing to be rehospitalized. Under the Affordable Care Act, Medicare in October will start penalizing hospitals for what it deems unnecessary readmissions.

"We know the government has an interest in providing care in the most efficient setting possible," Bach said.

The 124-bed PowerBack facility, with all private rooms, will have doctors on staff and offer therapy 12 1/2 hours a day, seven days a week. The new center will include a water-therapy pool with a floor that goes up and down, eliminating the need for a patient lift. Cooked-to-order meals will be available whenever patients like.

"The day of the steam table is gone," Genesis chef Jeff Moyer said.

Industry observers praised the PowerBack concept.

"It feels more like an assisted-living or retirement facility" than a traditional rehabilitation facility, said David Baiada, practice leader for home-health services at Bayada Home Health Care, a Moorestown firm that gets some patients from Genesis.

Historically, in the health-care industry, "it's a struggle with the handoff" from one care provider to the next, said Baiada, who has visited the Voorhees site, where a hallway and some rooms are already finished. Baiada called it a "forward-thinking move to ensure a safe transition of patients from an acute setting to their home."

Stuart Shapiro, president and chief executive of the Pennsylvania Health Care Association, a nursing home trade group, said: "The PowerBack model that Genesis is proposing will provide a center of excellence for rehabilitation services." He added that nursing homes generally are able to "provide high-quality rehabilitation services in a very cost-effective manner."

Nursing homes are motivated to expand their short-term rehabilitation businesses because Medicare payments for those services allow them to make a profit. Most long-term nursing home residents rely on Medicaid, whose rates do not cover expenses, Shapiro said.

Officials at Mid-Atlantic Health Care L.L.C., which last year bought five nursing homes in Philadelphia, also said they were trying to boost the company's short-term rehabilitation business to get more Medicare revenue.

The plan at Genesis' PowerBack site in Voorhees is to attract short-term patients from Virtua, Cooper, Kennedy and other area hospitals, with payments coming from Medicare and private insurers. Bach said the company still had plenty of room for Medicaid patients at two other sites in Voorhees.

Health Care REIT Inc., a Toledo, Ohio, company that bought Genesis' real estate for $2.5 billion from private-equity investors, is providing the financing for the PowerBack location and will own the building when it is completed. The Genesis business operations are still owned by Formation Capital L.L.C. in Alpharetta, Ga.

The publicly traded real estate investment trust is also backing a medical office building on the Virtua campus and a $32 million assisted-living facility that is under construction for Brandywine Senior Living, of Mount Laurel, on the north side of Virtua.

Genesis officials said the company has no formal relationship with Virtua, but Health Care REIT's chief executive, George L. Chapman, has touted the potential for Virtua, Genesis, and Brandywine to work together.

Virtua officials had no comment.

In a June conference call, Chapman cited the potential of single payments by insurers to cover the entire spectrum of care for a knee replacement as an example of possible cooperation between Virtua and Genesis.

"All of them are putting themselves in a position where they can deal with a bundled payment, as and when that comes up," he said.