Private equity firm buys 29 Iowa nursing homes

The sale of one of Iowa’s largest nursing home chains has reportedly been completed, with 29 care facilities now in the hands of a private equity firm.

According to Skilled Nursing News, the real estate brokerage firm of Marcus & Millichap says the $85 million transaction represents the largest nursing home sale ever recorded in Iowa. The 29 facilities represent 7% of the 410 nursing homes operating in Iowa.

The sale involves the transfer of care facilities previously owned by one of Iowa’s largest employers, ABCM Corp. of Hampton, to the Chicago-based private equity firm Cascade Capital Group.

According to a statement that Marcus & Millichap provided Skilled Nursing News, the final sale price of $85 million equates to $36,000 for each of ABCM’s 2,346 skilled-nursing beds and 326 assisted living units.

In recent years, the acquisition of nursing homes by private equity investors has come under scrutiny by regulators, the media and members of Congress, with critics suggesting too many profit-minded investors target care facilities for acquisition, starve them of cash while collecting a reliable stream of income from Medicare, and then cash out.

In 2023, the Government Accountability Office reported that federal data shows at least 5% of nursing homes nationwide were owned by private equity firms — but the GAO cautioned that the data was flawed and the true number is likely higher.

In March, the Federal Trade Commission and U.S. Department of Justice opened inquiries into the effect of private equity investment in hospitals and nursing homes.

Richard Allbee, the head of ABCM Corp., declined to discuss the sale with the Iowa Capital Dispatch. Court records indicate that in 2023, the company employed more than 3,000 individuals.

The transaction had been anticipated for several months. In July, officials at ABCM informed its employees and residents that the company had filed change-of-ownership papers with the state. At the time, ABCM, a for-profit company, indicated its operations would be taken over by an affiliate of Legacy Healthcare.

Legacy Healthcare is an affiliate of Cascade Capital, which has ties to more than 300 care facilities in 19 states. Typically, Cascade acts as owner and landlord of the properties, while Legacy acts as the renter managing the care that’s being delivered by the homes.

The 29 homes involved in the sale are located in the Iowa cities of Allison, Aplington, Armstrong, Battle Creek, Belmond, Bloomfield, Britt, Clear Lake, Elma, Emmetsburg, Garner, Guttenberg, Hampton, Independence, Indianola, Lake Mills, Lisbon, Mason City, Morning Sun, Mount Vernon, Nevada, Nora Springs, Sac City, Sigourney, Waterloo, Waukon and Webster City.

In addition, the deal includes two facilities in Oelwein: the Oelwein Health Care Center and the Grandview Health Care Center. The Morning Sun facility closed on Sept. 9, 2024.