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ARHS completes sale of The Foley Center for $12 MM cash and payoff balance of $10 MM HUD loan

By David Rogers. October 4, 2019. BOONE, NC — There are new players in the High Country healthcare market.

COVER IMAGE: An artist’s rendering distributed by Appalachian Regional Healthcare in 2014)

Appalachian Regional Healthcare System (ARHS) announced on Friday that as of October 1, 2019, its post-acute care and rehabilitation unit, The Foley Center at Chestnut Ridge of Blowing Rock, NC, had been sold to Liberty Healthcare Properties of Watauga County, LLC, and Liberty Commons Nursing and Rehabilitation Center of Watauga County, LLC, subsidiaries of Wilmington-based Liberty Healthcare (Liberty).

Financial terms were not disclosed by ARHS, but Blowing Rock News has learned from a source familiar with the transaction (but requesting anonymity) that ARHS received $12 million in cash. In addition, Liberty is to pay off the balance of a $10 million federally insured (HUD) loan previously made to ARHS.

In exchange for the monetary considerations, Liberty is getting the building and the 10-acres of land upon which the campus sits, as well as the Foley Center business.

With this transaction and this agreement, these two companies are ‘married to the hip.’

According to our source, over the last several months since taking over operation of The Foley Center, Liberty has demonstrated its commitment to providing high quality service, as well as its ability to operate the facility even more efficiently than can ARHS. As a consequence, a complete sale of the business is appropriate, but with an incentive-laden contract to ensure ongoing high-quality services are provided.

“With this partnership and under the terms of the partnership agreement,” the source explained, “those two companies are ‘married to the hip’, so to speak. What is good for one is good for the other, and vice-versa.”

In the press release distributed to media on Friday morning, ARHS President and CEO Chuck Mantooth briefly explained the transaction in terms of its need and impact.

“The future of healthcare delivery, particularly in rural areas,” noted Mantooth, “will be about leveraging partnerships. Over the last year, as we worked with Liberty to plan the development of a senior living campus at Chestnut Ridge it became clear that the skilled nursing and assisted living services should be integrated within their care continuum. Liberty can now take the next steps forward to evaluate the nature of and develop the retirement community that we have been working toward for the last 10 years.”

According to land records reviewed by Blowing Rock News on the Watauga County GIS website, ARHS began acquiring real estate parcels east of U.S. 321 near the Edmisten Rd. intersection in 2010, first with a smaller, 24.4 acre tract adjacent to the highway. Over the next few years were additional purchases from Blowing Rock’s Lentz family, including 10+ and 33+ acre parcels that today are the primary site for The Foley Center, as well as the relocated Village Pharmacy and the Charles and Harriet Davant Medical Clinic.

The future of healthcare delivery, particularly in rural areas, will be about leveraging partnerships.

When he unveiled the plans for Chestnut Ridge, former ARHS President and CEO Richard Sparks spoke broadly of ARHS’ vision for a “continuum of care” in the High Country, serving the needs of residents and their visitors “…from birth to death…” with the highest possible level of care.

In addition to the post-acute care and rehabilitation facility as part of that continuum, Sparks’ vision included a residential retirement or senior living community adjacent to the The Foley Center campus. Just as now, the prevailing logic was that a nearby population of senior residents are more likely than younger people to require post-acute care and rehabilitation services beyond or instead of stays in the hospital.

In citing the need for “leveraging partnerships,” Mantooth provided a realistic view of today’s business climate with, presumably, an even better level of healthcare services provided.

Liberty will want to make sure that what will probably be their biggest customer, ARHS, is satisfied with the highest possible level of service.

“The Foley Center will continue to be an important facility to ARHS,” said Mantooth, “in terms of providing post-acute care services for our aging population…This change is part of a broader partnership agreement with Liberty to develop a senior living community on the entire 68-acre tract. Our contract has incentives which are intended to accelerate the study and development of a senior living community and we will be working with Liberty to help it proceed.”

Jeff Wilson, Chief Operating Officer for Liberty commented on the acquisition by saying, “we are extremely grateful to ARHS for working with us to help make Chestnut Ridge a high quality comprehensive senior living community in the future.”

According to another Blowing Rock News source requesting anonymity, the announced partnership and agreement with Liberty “…makes a world of sense.” She observed that ARHS will be Liberty’s biggest probable customer at Chestnut Ridge in referring patients for post-acute care from Watauga Medical Center, “…so there is a natural incentive to make sure your biggest customer, as well as all patients,  are taken care of with the best possible level of service.”

She added that the remaining acreage owned by ARHS for potential development of a senior living community is likely to be done in phases, with each phase contingent upon performance toward the goals and objectives of the mutually agreed upon mission.

For more information about Appalachian Regional Healthcare System visit apprhs.org.
To learn more about Liberty Senior Living visit libertyseniorliving.com.

Related Blowing Rock News stories about Chestnut Ridge and the Foley Center:

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