State Attorney General Rejects Proposed Sale of Keiro to Ensign

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Rafu Staff Report

The Ensign Group, which has been in talks with Keiro Senior Healthcare to acquire Keiro’s retirement home, intermediate care facility and nursing home in Los Angeles and its nursing home in Gardena, announced Monday that the California Attorney General’s Office has not approved the sale.

It was not immediately clear whether the sale — which has been in the works for months — will be dropped or whether another attempt will be made.

In a press release announcing Ensign’s plans to purchase nine skilled nursing and assisted living facilities, a home health agency and a private home care business from Shea Family Care in the San Diego area, Ensign stated:

“[Ensign President and CEO Christopher] Christensen indicated that Ensign was recently informed that its previously announced agreement to purchase four California-based operations from Keiro Senior HealthCare was not given the approval of California’s attorney general, which must approve the acquisition of a non-profit business under California law.

“In its history, Ensign has successfully received approval of the state attorney general in several transactions involving non-profit sellers across several states, including California.

“The notice issued by the California attorney general did not provide a detailed explanation, but the notice did reference the existence of Ensign’s corporate integrity agreement as a factor in the decision.

“The California attorney general has recently sponsored legislation, which was passed but subsequently vetoed by Gov. Jerry Brown, expanding the attorney general’s authority to approve and enforce conditions of healthcare mergers and acquisitions. The California attorney general has also recently withheld approval of other healthcare transactions involving non-profit healthcare operators.

“California law does not require the attorney general’s approval of acquisitions of for-profit businesses, including Ensign’s acquisition of Shea Family.

“Mr. Christensen reiterated that Ensign continues to actively seek additional opportunities to acquire real estate or to lease both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses across the United States. The closing of the Shea Family transaction will bring Ensign’s growing portfolio to 136 healthcare facilities (nine of which will be owned), nine hospice companies, 12 home health agencies, two home care businesses and 14 urgent care clinics across 12 states.”

Keiro President and CEO Shawn Miyake briefly responded to the news on Tuesday with the following statement:

“Keiro has been consistently communicating that the transition process is a lengthy one which involves a number of regulatory approvals. Keiro is still in the process of a change in ownership of its facilities.

“We have been providing timely updates to those directly impacted by any changes and will continue to do so as more information becomes available. We thank everyone for their support and understanding during this time.”

The Rafu Shimpo requested a more detailed explanation from Attorney General Kamala Harris’ press secretary, but a response had not been received at press time.

In a message to Keiro’s supporters in July, Miyake said, “There are still a number of regulatory steps to complete. The California attorney general is reviewing the transaction. From the beginning we were aware that 90 percent of nursing homes in California are operated by for-profit companies. Because of this fact, it was highly likely that a for-profit company would be the buyer of our facilities, and this has turned out to be the case.

“Recognizing that a for-profit company is accountable for some different priorities than not-for-profit organizations, we negotiated language in the purchase agreement that is meant to maintain things as similar as possible to what we do today.”

On Sept. 13, Matt Huefner, executive director of Ensign Services, visited the Keiro facilities in Gardena and Los Angeles to meet with residents’ family members and address their concerns about the transition. He emphasized that he was not making any official statements on behalf of Ensign as the regulatory steps were still pending.

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