ProMedica, WellTower Launch $3.3B Acquisition of HCR ManorCare

The joint acquisition of the nation's second-largest provider of post-acute and long-term care gives Toledo-based ProMedica immediate access to fast-growing home health and post-acute care markets.

ProMedica Health System is acquiring bankrupt HCR ManorCare in a $3.3 billion deal that will make the 13-hospital, Toledo-based health system one of the largest in the nation by revenue.

The joint venture with real estate investment trust WellTower is being hailed as a "first-of-its-kind partnership" will give not-for-profit ProMedica immediate scale in the fast-growing home health and post-acute care markets.

Toledo-based HCR ManorCare is the nation's second-largest provider of post-acute and long-term care. The company filed for bankruptcy protection in March with $7.1 billion in debts, as it grapples with declining Medicaid and Medicare reimbursements. Its real estate assets are currently held by its landlord, Quality Care Properties.

The acquisition creates a $7 billion healthcare network with 70,000 employees in 30 states, making ProMedica the 15^th largest health system in the nation, as measured by annual revenues.

"We want to take down the wall between traditional hospital and post-acute care services in an effort to enhance the health and well-being of our aging population," ProMedica President and CEO Randy Oostra said in a media release.

Oostra noted that the fastest growing demographic are people in their 70s and 80s, but that the senior care environment is fragmented, costly and inefficient.

Nearly eight million patients are using post-acute care services, he said, presenting a significant opportunity to coordinate those services with healthcare systems to improve quality and reduce the overall cost of care.

"The lines are blurring between where healthcare begins and stops. This acquisition provides us the platform to think differently about health and aging," Oostra said.

HCR ManorCare has more than 50,000 employees providing services in 450 assisted living facilities, skilled nursing and rehabilitation centers, memory care communities, outpatient rehabilitation clinics, and hospice and home health agencies operating under the names of Heartland, ManorCare Health Services and Arden Courts.

Under the joint venture, ProMedica will invest as much as $400 million of growth and upgrade capital over the next five years.

"This is an exciting opportunity for Welltower and singularly validates our strategy of partnering with major health systems to drive health care delivery to lower cost settings while improving health outcomes," said Welltower CEO Tom DeRosa.

"This acquisition will enable ProMedica to expand their service offering beyond acute care hospitals to include home health, post-acute care and residential memory care," DeRosa said.