Good morning, ProviderNation. If it’s possible for one of the profession’s largest companies to be aggressive, quietly, the fine folks at The Ensign Group have certainly contrived it.
Already the nation’s eighth largest skilled nursing (and 29th largest assisted living) company, according to Provider’s 2015 rankings, Ensign (NASDAQ: ENSG) has steadily built an empire—not through blockbusters, but through relatively small acquisitions.
Since the beginning of the year, the Mission Viejo, Calif.-based company has announced at least 18 different acquisitions, according to Levin Associates. In August, Ensign crossed the Mississippi for the first time and bought up 15 assisted living communities in Wisconsin. Barely three months later, and Ensign announced that it had acquired a 125-bed center in West Columbia, S.C.
Get Globally, Merge Locally
Ensign leaders say they’re becoming global because they’re thinking locally.
“This really goes back to our belief in local leadership,” President and CEO Christopher Christensen said on an investors’ call last week. “The deal has to make sense, and the state has to make sense, and the facility has to make sense, but we do better when we have somebody who has a local passion for the site.”
Most of the acquisitions this year were of places that weren’t on the market: It was simply a matter of local Ensign leaders seeing an opportunity, Christensen said. “We were able to get them to see that getting these assets into our hands would be better, more stable,” he said of their acquisitions’ executives.
There’s another way Ensign likes to differentiate itself, as well: quality. In 2009—two years after the company went public—more than 40 percent of its buildings were rated One-Star. Today, even as the company has expanded rapidly, nearly 65 percent of Ensign’s buildings are Four- or Five-Star, and less than 5 percent are One-Star.
Value-Based Purchasing—What, We Worry?
That may also be why company executives say they don’t fear payment reform the way some operators do.
“Some form of value-based reimbursement is ultimately better for the patient, and it’s something that we care about,” Executive Vice President Chad Keetch told investors and analysts last week, adding that Ensign is already participating in bundling models for dual eligibles—arguably the biggest risk group out there.
In any case, Keetch says he’s not sure he shares the sky-is-falling sentiment of those who worry over payment reform.
“I don’t really understand the logic there. Everything we see points to a positive reimbursement environment. At the end of the day, there may be some shrinking length of stay, but the providers that are thinking ahead will manage for volume,” he said.
Right or not, Ensign’s presentation had stock analysts practically going full-on wolf during last week’s investors’ call. As if to whet their whistles even more, Ensign had just announced a $15 million stock buy-back ahead of its third-quarter earnings call. That’s usually a sign that a company thinks its stock is undervalued.
Oh, and the company has just opened its first health care resort. Four more are expected next year.
Consulate: Meet The New Bosses
Speaking of capitalism and all that, mad props to new Consulate Health Care overlords Bill Mathies (CEO) and Chris Bryson (CFO).
Mathies comes over from Sun Healthcare Group, where he’d been chairman and CEO; Bryson was previously COO at Pruitt Health.