Life Care Founder Becomes Billionaire on Aging PopulationAnnelise Alexander
More than 10,000 Americans turn 65 every day. By 2030, 18 percent of the nation’s population will have reached that age, including the entire baby boom generation, according to projections by Pew Research Center.
The aging populace has been a boon for Life Care Centers of America Inc., the third-largest nursing home operator in the U.S., and made Forrest Preston, the closely held company’s founder and chairman, a billionaire.
“They’ve been like the little engine that could,” John O’Connor, editorial director for long-term care magazine McKnight’s, said in a phone interview. “Year after year, they’ve steadily gotten bigger and stronger. They really are titans within the field.”
Revenue at the Cleveland, Tennessee-based company has jumped 81 percent in the past decade to $2.9 billion, according to PrivCo, a New York firm that studies private company performance.
Life Care manages more than 200 facilities with 31,255 beds in 28 states, and provides long-term, post-acute and short-term care and rehabilitation services for elderly patients, and also offers home-care services through its subsidiary, Life Care Home Health Inc.
While many long-term care operators are expanding into hospice care –- a niche O’Connor calls the “flavor of the month” –- Life Care has focused on long-term care, where a private room in a nursing home costs almost $88,000 a year on average, according to a 2013 survey by Genworth Financial Inc.
In an effort to reduce re-hospitalizations, Life Care places more full-time doctors in its facilities than its competitors. Most long-term care providers opt to keep a doctor on call, according to Jay Moore, Director of Communications at the Tennessee Health Care Association, a trade organization of which Life Care is a member. The company breaks that mold.
“They’re known in long-term care circles for championing that concept,” said Moore in a phone interview.
Life Care President Beecher Hunter told Provider Magazine in 2012 that the company reduced re-hospitalizations to 15 percent from 40 percent in one year among its facilities with resident physicians.
Last year, the company received the top honor in the quality category of McKnight’s Excellence in Technology Award for its development of a program that provides health-care facility rankings based on resident conditions. Its purpose is to ensure quality control and single out which facilities might need special attention.
Preston has spent most of his professional life in the health-care industry. With his late brother Winston, he co-founded Hospital Publications Inc., which produced patient booklets and public relations material for hospitals in the U.S.
He started his first convalescent home in 1970 and opened five additional care centers before incorporating Life Care in 1976.
Preston is the sole shareholder of the company, according to a document filed with Tennessee’s Health Services and Development Agency. His stake is valued at $2.3 billion, based on the average enterprise value-to-sales and enterprise value-to-earnings before interest, taxes, depreciation and amortization multiples of five publicly traded peers: Brookdale Senior Living Inc., Emeritus Corp., Five Star Quality Care Inc., The Ensign Group Inc. and National HealthCare Corp.
Life Care’s Hunter said the company declined to comment and wouldn’t confirm any of the information in this article.
Life Care is currently entrenched in a whistle-blower lawsuit filed by employees at facilities in Florida and Tennessee. The suit alleges that Life Care made false claims to Medicare for medically unnecessary rehabilitation therapy services.
“The government is engaging in aggressive efforts to restrict health care costs, which in principle is a noble goal,” the company said in a Nov. 12, 2012, statement. “However, instead of using administrative procedures established for this purpose, the government is relying upon procedural shortcuts and escalating policy disagreements to allegations of fraud.”
A motion to dismiss the suit was denied in March by a federal judge in Chattanooga.