Physicianowned Firm Buys Fair Havens Against Trend
By Catherine Lackner
Bucking an industry trend, a corporation headed by Miami physician-entrepreneur Jack J. Michel has acquired the 269-bed Fair Havens Center in Miami Springs for $9.8 million.
"Nobody’s going into the nursing home business these days, so it’s definitely a contrary move," said Ed Towey, spokesman for the Florida Health Care Association, a Tallahassee-based nursing home industry group.
"Investors in general are not falling all over themselves to invest in nursing homes, primarily because of the cost of liability insurance. We haven’t seen a lot of activity some buys and sells, but not very many."
Dr. Michel, CEO of the 112-bed Larkin General Hospital in South Miami, is no stranger to innovation. Larkin became the county’s only physician-owned hospital when he bought in 1998 for $15 million. Whereas the hospital lost $1.2 million in its final year under the previous owner, Chicago-based Island Trust, Dr. Michel quickly staunched the red ink and managed to post a $30,000 profit in 1999, a year in which many hospitals languished under managed care constraints and high personnel costs.
Dr. Michel and Morris Esformes, his partner in Lincolnwood, IL-based EMI Enterprises Inc., think Fair Havens represents another stellar opportunity.
"This facility has a lot of history and we liked the way that it was set up," he said this week. "It’s a good acquisition when you consider all factors."
Fair Havens, built in the 1920s and once operated as a health "sanitarium" by cereal magnate John Harvey Kellogg, is listed on the National Register of Historic Places and is locally designated as a historic landmark.
For the past 38 years, run as a nursing home by Lutheran Services for the Elderly, it has consistently received high consumer ratings.
EMI Enterprises owns 14 nursing homes, primarily in Illinois and Missouri. Fair Havens is its third Florida acquisition, after the 196-bed Oceanside Extended Care Center on Miami Beach and 120-bed Woodland Terrace skilled nursing facility in Deland, near Orlando.
"The need for long-term care is growing everywhere, but especially in this part of the country," Dr. Michel said. "There’s a big need for quality facilities."
He conceded that insurance problems plague the industry.
"Obviously, we’re paying a higher premium than we’d like, but it wasn’t high enough to dissuade us. This is what my partners do for a living and they know how to do it well. I’m comfortable that they can run it well."
Dr. Michel said he will not participate in day-to-day operations, but "I’d love to continue to be a part of this industry."
Lutheran Services for the Elderly, a church-owned organization, put the extended care facility on the block last year after it became economically difficult to sustain, said Bill Cole, Fair Havens’ former administrator.
"To make a long story short, many of the churches here were not able to support it and provide care in the way we wanted to. It’s a growing phenomenon. The board decided, if we cannot provide the things we want to, the thing to do is to sell it to those who might have the economies of scale to keep it going.
"We wanted it to be more than an agency of the federal government" through Medicare and Medicaid, Mr. Cole said. "We had additional staff, we had a full-time pastor and we had the luxury of some good people. But that all takes additional dollars."
The board of directors "had expressed an interest in selling it as a nursing home," Mr. Cole said. "Dr. Michel’s group, as well as some others, were interested, but we liked the fact that Dr. Michel does have some other interests in South Florida. He can provide a continuum of care that addresses the whole spectrum of needs of the elderly."
Though Mr. Cole said the new owner is a good match for the facility, "after 38 years, it’s kind of sad to see a chapter close on a particular ministry that was viable for a long time."
Douglas Grant, Fair Havens’ new administrator, said the change will be invisible to patients but declined to comment further.
The Aug. 1 transaction is still subject to regulatory approval, said Mr. Towey, the industry group representative, but he said that process is "pro forma, in most cases." Details: Fair Havens Center: (305) 887-1565; Dr.Michel, Larkin Hospital: (305) 284-7500; Ed Towey, (850) 224-6242.