A California company that operates 35 nursing homes in two states has filed for bankruptcy, making more real frequent warnings that financial pressure will soon lead to broad collapses across the sector.
Windsor Terrace Health filed its petition in US Bankruptcy Court for the Central District of California on Aug. 23, but news spread this week as the larger operating company began notifying its clients and the partners that it owes money.
The Chapter 11 initial filing was followed by a motion to combine several cases so that they can be jointly decided by the court. Included in the case are at least 15 nursing homes in California, one assisted living facility in Palm Springs, a home health entity and hospice operations.
Windsor, also known as Windsor Cares and operating some facilities as S&F Market Street Healthcare, operates 32 nursing homes in California and three in Arizona, according to both the company’s website and the Centers for Medicare & Medicaid Services.
Calls and emails to Windsor’s bankruptcy attorneys were not returned Monday, and the company’s main contact number was not operational.
It remained unclear how the legal filing would impact the daily operation of the Windsor facilities named, as well as those unnamed in the initial filings.
But the case will no doubt be closely watched by nursing home operators nationwide, who have faced increasingly difficult operational choices as inflation and wages cut into already-slim margins.
Gibbins Advisors, a healthcare restructuring consultancy, this summer warned that bankruptcy filings jumped in early 2023, compared to a year earlier. Nursing homes and senior living communities made up nearly 30% of the first-quarter bankruptcies.
“For nursing homes, like any business, if you can’t cover the cost to operate, you have a viability problem absent a fast path to improvement,” Gibbins principal Ronald M. Winters told McKnight’s Long-Term Care News at the time.
In addition to still-low occupancy and Medicaid reimbursement rates that lag years behind inflation, nursing home chains’ complicated balance sheets also can make it more difficult to negotiate their way out of bad debt without going through the bankruptcy process.
“Owing money to a small number of creditors may enable you to negotiate a solution ‘out of court,’” Winters said. “But if you owe money to many creditors, it becomes more difficult to negotiate with many at the same time and a bankruptcy can provide an easier forum … and be hard to avoid.”
In Windsor court documents, the company said it had between $1 million and $10 million in assets, as well as $1 million to $10 million in liabilities. Among Windsor’s biggest creditors are a national healthcare management group offering dining and housekeeping services and a therapy provider.
A meeting of the creditors is scheduled for Oct. 18.
