State Takeover Of Nursing Homes Reveals Company's Financial Woes, Mismanagement

May 4, 2018

DHS Director of Provider Services & Quality Assurance Craig Cloud and Chief of Communications Amy Webb brief reporters at DHS headquarters in downtown Little Rock.
Credit Daniel Breen / KUAR News

The Arkansas Department of Human Services has taken temporary control over two nursing homes in the state over concerns of nonpayment of food vendors.

The two facilities, Dierks Healthcare & Rehabilitation Center in Dierks, and Spring Place Healthcare & Rehabilitation in Hazen, are licensed and operated by sub-corporations of New Jersey-based Skyline Health Care, LLC. The two managed care facilities serve 52 and 39 residents, respectively. 

This comes after similar actions in other states were taken against care facilities operated by Skyline, which operates 19 other nursing homes and managed care facilities in Arkansas. State agencies in Nebraska, Kansas, Pennsylvania and South Dakota have taken steps to oversee more than 40 facilities operated by Skyline in the past three months due to financial problems.

Craig Cloud, director of the Division of Provider Services & Quality Assurance at the Arkansas Department of Human Services, said patients at the two care facilities were not lacking food, despite issues with food "delivery and accessibility."

"It was apparent that the state needed to move in, take immediate action to ensure the effective operation of the facility, again, to ensure that they were effective, efficient, and we can protect the residents and ensure that they receive the care that they needed," Cloud said.

In 2016, reports of incidents at two separate Skyline-operated facilities in Little Rock surfaced. One, at Woodland Hills Health and Rehabilitation, involved administrators buying pizza for employees after not receiving their paychecks on time. Another, at Capital Health and Rehabilitation Center, involved maggots found in a patient’s urinary catheter.

Dierks Healthcare & Rehabilitation in Dierks, roughly 60 miles north of Texarkana, is shown in this Aug. 2013 photo.
Credit Google Street View

Reports of Skyline's appearance of insolvency from out-of-state news agencies echoed the statement from Cloud that the company's financial instability was apparent to DHS. 

"We had immediate concerns with regards to their financial stability. Again, there were issues with the food vendor being able to provide an adequate supply of food," Cloud said. "That was sufficient enough with regards to the financial stability... that required us to take immediate action."

The Arkansas DHS has been granted orders with circuit courts in Howard and Prairie Counties to act as receiver of the two nursing homes. Under the temporary state control, Conway-based Reliance Health Care will oversee day-to-day operations of the two facilities. The facilities will also receive Medicaid funding during the transition through Reliance. 

Skyline, through five sub-corporations, continues to operate 19 other facilities in Arkansas, though the DHS has not found any cause for concern at any other site. Reliance owns the buildings the two nursing homes are housed in, and leased the facilities to Skyline. Reliance has not operated either facility since 2009 according to a statement from Reliance General Counsel Eric Bell

A statement from a public relations firm representing Skyline Healthcare is published below in its entirety.

"Skyline is deeply saddened that it is unable to continue operations in these two facilities. Skyline will cooperate with the state to transition the two facilities to the new operator and will work to ensure the continued operation of the facilities and the best interests of the residents."