1. Mergers, Acquisitions and the Changing Dynamics of Long Term Care in New Jersey
INDUSTRY
OVERVIEW

2. 53,000 licensed long term care beds (nursing home)
Industry at a GLANCE
53,000 licensed long term care beds (nursing home)
45,000 occupied beds (86.5% %-2015)
362 licensed facilities
72 % for profit
24 % not-for-profit
4 % government owned

3. Statewide Average occupancy by PAYER
Medicare 18.0% 18.8%
Medicaid 62.0% 59.1%
Other 20.0% 22.0%

4. CHANGES
IN PAYER MODEL

5. MEDICARE
By 2018, CMS intends to convert 50% of all MEDICARE payments to “value based purchasing initiatives that include ACOs, SGR (sustainable growth rate formulas), Comprehensive Care for Joint Replacement or other bundled payment plans.
Current Major MEDICARE plans
Horizon %
Aetna %
United/Oxford 41 %

6. MEDICAID
New Jersey’s Managed Long Term Support & Services (MLTSS) program was initiated in July, 2014 to direct new MEDICAID admissions toward community care options. The program claims, with some controversy, a significant reduction of MEDICAID nursing home patients in the first year.
At some point, MLTSS will control and minimize all new MEDICAID admissions to New Jersey’s nursing homes. They are NOT required to contract with all existing nursing homes.
Current Medicaid Managed Care Plans
Horizon 50.4%
United 32 %
AmeriGroup 14%

7. BED SUPPLY
52,000 licensed long term care beds (nursing home)
45,000 occupied beds (86.7% statewide average)
362 licensed facilities
NEW JERSEY is a strictly controlled Certificate of Need State for new long term care beds or licenses.
No new certificates of need granted since 1992
The only bed expansion since 1992 has been acquisition or add-a-bed program
LTC MARKET SHARE
45% of the industry is owned by chains (5 or more facilities)
10 providers own 6 or more facilities (37% of industry)
5 providers own 10 or more facilities (27% of industry)
2 providers own 20 or more facilities (17% of industry)

8. VALUATIONS Facility SALES Licenses & beds; NO PHYSICAL PLANT
2014 License and 34 LTC beds $ 2.8 million
2014 License and 155 LTC beds $ 2.3 million
2015 License and 64 LTC beds $ 2.55 million
2016 License and 45 LTC beds $ 3.0 million
Facility SALES
2014 Burnt Tavern
$ 47,567 per/bed
2014 Courthouse Convalescent
$ 76,041 per/bed
2014 Runnells $ 86,666 per/bed
2015 Warren Haven $ 86,666 per/bed
2015 Monmouth County
$100,000 per/bed (approx.)
2016 McCarrick $100,000 per/bed

9. Target POPULATION Projections
Increase in 65+
Increase in
85+
County
Atlantic
39.60%
22.80%
Bergen
18.20%
7.50%
Burlington
29.20%
15.60%
Camden
26.70%
7.10%
Cape May
21.30%
3.10%
Cumberland
24.60%
9.30%
Essex
17.10%
4.00%
Gloucester
43.80%
19.20%
Hudson
13.40%
4.90%
Hunterdon
40.30%
12.00%
Mercer
26.20%
11.30%
Middlesex
30.80%
16.10%
Monmouth
33.40%
13.10%
Morris
27.20%
23.40%
Ocean
28.70%
8.40%
Passaic
25.60%
15.50%
Salem
27.10%
0.00%
Somerset
42.20%
35.60%
Sussex
49.50%
28.00%
Union
-0.25%
Warren
36.90%
New Jersey
27.00%
11.90%
2013
1,274,600
196,000
2023
1,619,700
219,500
+345,100
+23,500
Target POPULATION
Projections

10. MEDICARE Percentages Payer Type Center Name County Licensed Beds
Resident Census
Medicare
Medicaid
Other
Occupancy
Medicare %
Medicaid %
Other %
NEW JERSEY TOTALS
85.3%
18.84%
59.13%
22.03%
BAYONNE HOSPITAL CENTER TCU
Hudson 17 16
94.1%
100.00%
0.00%
ATRIUM POST ACUTE CARE OF HAMILTON
Mercer 53 4
7.5%
CARE CONNECTION RAHWAY
Union 24 19
79.2%
NEW JERSEY VETERANS MEMORIAL HOME MENLO
Middlesex
328
300
289 11
91.5%
96.33%
3.67%
ALARIS HEALTH AT THE CHATEAU
Bergen 73 63 52 9 2
86.3%
82.54%
14.29%
3.17%
HACKENSACK-UMC MOUNTAINSIDE
Essex 18 14 3
94.4%
82.35%
17.65%
COMMUNITY MEDICAL CENTER TCU
Ocean 25 15
76.0%
78.95%
21.05%
CARE ONE AT HAMILTON 61 41
85.2%
78.85%
21.15%
INSPIRA TRANSITIONAL CARE UNIT WOODBURY
Gloucester
82.4%
78.57%
21.43%
CARE ONE AT WAYNE - SNF
Passaic 54 42 12
74.0%
77.78%
22.22%
HOBOKEN UNIVERSITY MEDICAL CENTER TCU
80.0%
75.00%
25.00%
SOUTHERN OCEAN MEDICAL CENTER 20
RENAISSANCE PAVILION
Atlantic 29 27 7
93.1%
74.07%
25.93%
BRANDYWINE SENIOR CARE AT MOORESTOWN
Burlington 37 21 8
78.4%
72.41%
27.59%
POWERBACK REHABILITATION, ROUTE 73
Camden
120
104 75
86.7%
72.12%
27.88%
CARE ONE AT RIDGEWOOD AVENUE
110 95 68
86.4%
71.58%
28.42%
PROSPECT HEIGHTS CC
196 23
38.3%
69.33%
30.67%
PREFERRED CARE AT MERCER
100 88
88.0%
69.32%
27.27%
3.41%
CLARA MAASS MEDICAL CENTER 5
68.75%
31.25%
CARE ONE AT CRESSKILL 85 58
85.0%
68.24%
31.76%
MERIDIAN SUBACUTE REHABILITATION
Monmouth
130
106 72 32
81.5%
67.92%
1.89%
30.19%
POWERBACK REHABILITATION MOORESTOWN
124 49
58.9%
67.12%
32.88%
ATLANTIC REHABILITATION INSTITUTE
Morris 40
92.5%
62.16%
37.84%
ST LAWRENCE REHAB CENTER 80 56 34 1
70.0%
60.71%
1.79%
37.50%
CARE ONE AT SOMERSET VALLEY
Somerset 64 33 13
51.6%
60.61%
39.39%
BARNERT SUBACUTE REHABILITATION CENTER, LLC 60
88.3%
60.38%
39.62%
CARE ONE AT TEANECK
128 92 55
71.9%
59.78%
40.22%
CARE ONE AT WALL
138 99 59
71.7%
59.60%
13.13%

11. Hospital CONSOLIDATION
Hackensack/Meridian Merger
RWJUH / Barnabas Merger
Geisinger/AtlantiCare Merger
Prime/ St. Clare’s /St. Mary’s/St. Michael’s/Salem
Prospect / EOGH
CarePoint
JFK

13. Hospital CONSOLIDATION
Hackensack/Meridian Merger
RWJUH / Barnabas Merger
Geisinger/AtlantiCare Merger
Prime/ St. Clare’s /St. Mary’s/St. Michael’s/Salem
Prospect / EOGH
CarePoint
JFK

14. RWJUH/ BARNABAS COVERAGE MAP

15. Hospital CONSOLIDATION
Hackensack/Meridian Merger
RWJUH / Barnabas Merger
Geisinger/AtlantiCare Merger
Prime/ St. Clare’s /St. Mary’s/St. Michael’s/Salem
Prospect / EOGH
CarePoint
JFK

16. INDUSTRY TRENDS SUB-ACUTE / MEDICARE MODELS Exceptional physical plant
Rehab Focus
Close proximity to hospitals
High acuity/hospital discharges
Private rooms
SHORT length of stay

17. Hospital PREFERRED Provider lists
Focus on:
Quality indicators
High acuity capabilities
Length of stay management
Cost containment ability
Re-admission guidelines
Medical staff continuity
LIMITED access to discharges

18. EVOLVING ISSUES Unions delaying new contracts until 2017
Hospital-based SUB-ACUTE units (1996 NJSA 26:2H 26:2H-7.6)
Minimum of 12 beds
Maximum length of stay 8 days
Up to 7% of Med/Surg capacity
Unions delaying new contracts until 2017
Property Tax for NON-PROFIT centers

19. FORECAST
Dramatic impact on Medicaid occupancy after full implementation of MANAGED CARE
Increase in bundled payment plans (at-risk models) with hospitals, nursing homes, home health agencies, and physician practices
Increased emphasis on Quality indicators
CONSOLIDATION of providers
Rapid decrease in value of facilities by 2017
Increased government scrutiny on all payment plans
Increase in ethnic specialties

20. Any questions? THANK YOU FOR YOUR TIME T: 609.890.7286
David G. Kostinas & Associates T: E: W: