New Suitor Emerges For Haven Nursing Home Chain

Genesis HealthCare, which operates nine nursing homes in Connecticut, has been in discussions with state officials about buying the bankrupt Haven Healthcare chain, sources close to the negotiations confirmed Monday.

Genesis, which was bought out last year by Formation Capital, a private equity firm, has been negotiating Medicaid rate increases and other purchase terms for Haven's chain of 25 homes, 15 of them in Connecticut. Officials involved in Haven's bankruptcy case said they hoped a deal could be struck in the next week — before a financing package that has kept Haven afloat runs out at the end of June.

But with the negotiations yet to produce a deal, state officials also have begun looking into ways to keep the nursing-home chain in operation beyond this month.

In a court filing Monday, Haven's key investor warned that the chain was in "immediate jeopardy of having [its] funding terminated" and urged that an auction of the chain, originally set to conclude May 30, be "reconvened."

In response, lawyers for the Haven chain filed court papers Monday saying they had extended the auction at least until this Thursday.

Representatives of the state Department of Social Services and Genesis HealthCare declined to comment Monday. But others involved in the bankruptcy case said that top officials of the social services department have been negotiating with Genesis and Formation for weeks and were trying to resolve several stumbling blocks.

Details of Genesis' initial offer for the chain were not disclosed, but sources said it was lower than a previous offer — $105 million, which was submitted by a Michigan investment firm, LifeHouse Retirement Properties Inc.

LifeHouse withdrew that offer after failing to secure the sizable increases in state Medicaid rates that it had requested.

Genesis HealthCare is one of the largest skilled-nursing providers in the Northeast, with more than 200 nursing homes and assisted living facilities nationwide. In Connecticut, the company owns homes in Groton, Windsor, Naugatuck, Rockville, Colchester, Meriden, Glastonbury and Wallingford.

Federal data from 2006 and 2007 indicate that Genesis' nursing homes in Connecticut had higher staffing levels and fewer patient-care deficiencies than Haven's homes. Genesis homes also had a higher ratio of licensed nursing staff per 100 beds than the statewide average, the data shows.

Attorney General Richard Blumenthal declined Monday to identify any prospective buyers for the Haven chain. But he said that negotiations to sell the chain were "very much ongoing and active," adding that he and social services Commissioner Michael P. Starkowski were directly involved.

"As with any complex and difficult set of negotiations, there are a number of moving parts here," Blumenthal said. "Our first and foremost priority is … sustaining and improving the care at these nursing homes."

Haven filed for bankruptcy last November, in the wake of a series in The Courant detailing the chain's financial troubles and repeated citations for patient-care deficiencies. The company defaulted on millions of dollars in bills for supplies and utilities while its chief executive officer used corporate assets to launch a Nashville recording company and make other purchases.

Haven representatives have said they need to close on a sale by the end of June, when their temporary financing runs out. If Haven is not sold by then, the chain would have to seek another infusion of cash, or it could be placed under state receivership. In receivership, a court-appointed officer would take over the chain and decide whether to close homes or sell them.

Blumenthal would not speculate on what would happen if no deal is reached, but he said, "We certainly are exploring other options" to ensure that Haven's homes will remain open.

Formation and LifeHouse are the only companies that have submitted offers to buy the entire chain. If no deal is reached, the chain could end up split among a number of buyers. Haven has four homes in Rhode Island, three in New Hampshire, two in Vermont and one in Massachusetts.

Contact Lisa Chedekel at

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