In Churn of Assisted Living Deals, An Island of Misery

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The one-story beige building on Southwest Hill Road in McMinnville, Ore. – an old mill town between Portland and Salem – has seen plenty of trouble over the years of its operation as an assisted living facility.

Two men have been jailed for committing sex crimes inside its walls. Residents of the facility have repeatedly assaulted one another. There has been at least one case of severe, near-fatal neglect. To be sure, then, the building has been something less than the refuge it has held itself out to be for local seniors, many of them afflicted with dementia. State records have chronicled the damage.

The episodes of violence and neglect inside the McMinnville facility, if sad, are not particularly unique. Page through the regulatory records and court files of any state and one will come across such horror stories.

The history of the facility itself reflects a larger reality of the assisted living business. Hundreds of such facilities -- some exemplary, some deeply troubled -- change hands each year, many of them scooped up by the large chains that have come to dominate this swiftly expanding industry.
Such deals typically well serve the large companies that drive them. Often enough, however, they do little to improve conditions in places like the facility in McMinnville, where ownership turmoil can compound the unaddressed problems that undermine care.

In less than three years, the McMinnville facility came under the ownership of three different companies, including two of the most prominent chains in the country. The first, Sunwest Management, collapsed under nearly $2 billion in unpaid debt, a spectacular implosion that led federal prosecutors to label the company a Ponzi scheme and file criminal fraud charges.

The second was a three-way joint venture between Blackstone, the private equity firm, Emeritus Senior Living, the nation’s largest assisted living company, and a real estate company. As part of the deal, Emeritus took over the operation of the facility, dubbing it Emeritus at Osprey Court.

The joint venture held onto the property for a few years before selling it in 2012 to a real estate investment trust with a vast portfolio of health care properties. That trust immediately leased the facility back to Emeritus. Today, Emeritus, under close scrutiny from Oregon regulators due to the continued problems in McMinnville, has decided to subcontract the facility’s operations to an outside firm.

Throughout all the changes, there has been one constant for the elderly people who call the place home: dubious living conditions.

Just last April, citing the facility’s “chronic” inability to follow state laws, the Oregon Department of Human Services, which regulates assisted living in the state, moved to revoke its license and shutter it permanently.

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In Churn of Assisted Living Deals, An Island of Misery