Private Equity Group Drops Bid to Purchase Five Vermont Nursing Homes | Off Message

Private Equity Group Drops Bid to Purchase Five Vermont Nursing Homes

By

MATT MORRIS
  • Matt Morris
A group of New York-based nursing home investors has dropped its effort to purchase five of the state's largest and most troubled facilities.

Priority Healthcare Group withdrew its application to the Vermont Agency of Human Services to assume full control of Burlington Health & Rehab and similarly named homes in Bennington, Berlin, St. Johnsbury and Springfield, according to a spokesperson for the current owner, national health care conglomerate Genesis HealthCare.
The application had been pending for more than a year. A Seven Days investigation of the buyers' backgrounds last July revealed problems at some of the homes members of the group owned in other states.

The withdrawal comes just as state officials were preparing to issue a decision on the application, which involves more than 500 beds — nearly 20 percent of all skilled nursing home care across Vermont. It follows a hearing earlier this month in which agency officials scrutinized Priority's track record and questioned the complex and shifting ownership structure for the Vermont deal.
Priority Healthcare is headed by David Gamzeh and Akiva Glatzer, who operate more than 30 nursing homes in Michigan, Pennsylvania, Indiana and Massachusetts. The company has also operated Barre Gardens in Barre since 2017.
David Gamzeh (left) and Akiva Glatzer at a December hearing with the Vermont Agency of Human Services - COURTESY ©️ SEVEN DAYS
  • Courtesy ©️ Seven Days
  • David Gamzeh (left) and Akiva Glatzer at a December hearing with the Vermont Agency of Human Services
The ailing Genesis agreed to sell five of its nine Vermont homes to a group of private investors, including Gamzeh and Glatzer, in October 2020 amid a pandemic-fueled financial pinch. The deal was worth $46.6 million, according to a U.S. Securities and Exchange Commission disclosure.



A set of buyers that includes Gamzeh and Glatzer closed on the real estate last year. Since then, Priority affiliates have been managing each of the five facilities through contracts with Genesis, which were not subject to state approval. Over the last 13 months, Priority shuffled leadership at the homes and rolled out new logos and names, even as its application to assume ownership of the operations was pending with the state. Burlington Health and Rehab, for instance, is now branded as Queen City Nursing and Rehabilitation.

The state reviewed the ownership transfer application under an interim process that provided no opportunity for public input. Under the interim rules, authority to approve or deny an application rests with the secretary of Human Services — currently Mike Smith, who is retiring on Friday, December 31.

Gamzeh and Glatzer revised their application last summer after Seven Days and Agency of Human Services officials raised questions about their third investor partner, Akiko Ike, and her spouse, a prominent nursing home investor named Ephram "Mordy" Lahasky, who was not named as an applicant. They dropped Ike's name from the application and told officials at the December 2 hearing that neither she nor Lahasky would have any control over the operations.

Smith and other agency officials bluntly criticized aspects of Gamzeh and Glatzer's application during that December 2 meeting, noting that their financing documents continued to describe Lahasky as an active manager of the business.

What Priority's decision to pull its application means for the five nursing homes was not immediately clear. Genesis spokesperson Lori Mayer said in a statement that the company is "working in collaboration with the Priority managers to assure that the centers remain in compliance with state and federal regulations." Gamzeh and Glatzer's Vermont attorney, Shireen Hart, did not provide a comment or respond to a question Tuesday afternoon about whether her clients intended to reapply at a later date.

The facilities have had below-average federal quality ratings under Genesis. In 2020, Genesis agreed to pay the State of Vermont $740,000 to settle allegations of neglect at  St. Johnsbury Health & Rehab, Berlin Health & Rehab and Burlington Health & Rehab.

Last month, Burlington Health and Rehab was listed as a "special focus facility" by the Centers for Medicare & Medicaid Services, a federal program for the nation's worst-performing nursing homes.