Good Samaritan Society President and CEO Nate Schema

Evangelical Lutheran Good Samaritan Society, the nation’s largest nonprofit provider of skilled nursing beds, plans to exit 15 states and reduce its patient and resident count by roughly 30% as it consolidates services to the Midwest.

President and CEO Nate Schema announced the decision in an email sent to all staff at 7 p.m. ET Thursday. The move ultimately will shrink Good Sam’s footprint to seven states and lower its employee base by an estimated 5,000 staff members. The organization expects the transition period to last more than a year. Residents and staff at 35 skilled nursing facilities and senior housing communities targeted for sale also were being notified.

“We expect we’ll continue to be one of, if not the largest, not-for-profit providers of long-term care even after the transition,” Schema told McKnight’s Long-Term Care News. “Seventy percent of the services we currently provide are within that core seven states today.”

The impact of the refocusing effort will be “relatively balanced,” Schema said, leaving the organization’s split of 70% skilled nursing and 30% seniors housing intact.

The announcement follows a three-year period dominated nationally by COVID-19, staffing struggles and reimbursement challenges. Some pains were felt more acutely outside the seven states where Good Sam will remain: Minnesota, North Dakota, South Dakota, Iowa, Nebraska, Kansas and Colorado.

“As we’ve reflected on the last three years, it’s pretty clear that the landscape has dramatically evolved. We see this as a tremendous opportunity to transform how and where we provide services into the future,” he explained.

“By consolidating and moving forward with this new strategy, we believe it gives us a new opportunity to reinvest in this core service area, whether that’s creating new services, whether that’s reinvesting on our current footprint, maybe remodeling or investing in technology. But what we do know is that the status quo isn’t going to work anymore.”

Moves starting in March

Good Samaritan will be leaving 15 states: Arizona, Arkansas, Florida, Hawaii, Idaho, Indiana, Montana, New Mexico, Ohio, Oregon, Tennessee, Texas, Washington, West Virginia and Wisconsin.

Although the organization has just a small stake in most of the affected states, including a single campus in Tennessee, Florida’s three properties alone are home to thousands of residents.

The transition will begin in the Northwest, where Schema told McKnight’s a deal is in the works to sell 10 properties in Idaho, Montana, Oregon and Washington to Cascadia Healthcare starting in March. The process to transfer the facilities to the new owner is expected to take about six months.

Cascadia is an 8-year-old company with a portfolio of 37 facilities, almost all of them skilled nursing, as of late 2022. Based in Idaho and founded by several former Ensign Group executives, it has grown quickly both as an owner and as an operator for a real estate investment trust. In 2021, Cascadia worked with Good Sam to repurpose one of the nonprofit’s vacant buildings into a COVID-only facility.

“Our relationship with Good Sam has been very positive and with a lot of cultural alignment,” Steve LaForte, Cascadia’s director of corporate affairs and general counsel, told McKnight’s Thursday evening. “We applaud their moves to focus on a more concentrated area and appreciate the opportunity to continue their strong history of cultural service and quality care to the communities we are taking on.”

LaForte said the portfolio’s inclusion of six communities with assisted living and independent living reflect a commitment Cascadia made last year to better serve the senior care continuum with the launch of its Olympus Retirement Living AL/IL platform.

“It’s been important to us all along that we find mission-driven organizations that share the same outlook or mindset when it comes to delivering care,” Schema noted. “It was pretty clear to us within our first meeting that Cascadia is doing this for the right reason and that their mission would complement the Society’s 100-year history of delivering outstanding, mission-driven care.”

No financial details about the pending deal were disclosed.

Regarding 25 other locations Good Sam will sell, Schema said leaders are “in ongoing discussions with other organizations at this time. Those conversations will happen gradually over the next, presumably, year or two.”

Schema said he was confident Good Sam would be able to find a “quality partner” for each. He said they represented a mix of assets, from rural SNFs to continuing care retirement communities in university or tourist towns.

Reversing years of growth

The new strategy is a major reversal for Good Sam, which for many years knew few bounds when it came to growth.

In the 2012 LeadingAge Ziegler 100, Good Sam reported 11,795 nursing care beds and nearly 19,000 combined across skilled nursing, assisted living and independent living. It was the nation’s largest multisite provider on that year’s list.

At the time — and still, today — the organization’s tilt toward skilled nursing made it an usual outlier.

The organization was ranked fifth among all provider types, including for-profit companies, on Provider magazine’s 2021 Top 30 list, with 10,504 beds. The magazine is published by the American Health Care Association/National Center for Assisted Living.

By 2022, Good Sam had seen its overall bed and unit count drop by almost 19% over the past decade, to 15,447, and its skilled nursing beds had dwindled 21% over the same span, to 8,542, to make it the second-largest nonprofit provider in the US. 

But those figures didn’t reflect the challenges of the past year, during which time the organization closed several nursing facilities in Iowa and Nebraska due to staffing and reimbursement problems. It also was forced to take hundreds of independent living beds offline after Hurricane Ian flooded its largest single location in Kissimmee Village, FL.

Being responsive in emergencies is not only easier in a more centralized region, Schema said, but it allows providers to have a more influential voice in policies and actions that affect facilities, their staff and residents.

“More than anything, we want to be an organization that rallies around our people so we can continue bringing that access and high-quality care, wherever it is that we call home,” he said.

“In states like Minnesota, South Dakota, North Dakota, where we have such a significant concentration, we’re able to call up the governor’s office and describe the pain points we might be experiencing on any given topic. …We know that we have a unique opportunity to be more influential and advocate at all different levels of government, just because we’re so much more well known and we have those relationships.”

Health system partnerships a ‘driver’

Schema said being agile pre-pandemic and being able to respond to needs today are two very different things. COVID underscored the challenges of navigating 22 states’ worth of rules and regulations, he pointed out.

But Good Sam also has seen significant changes to its own leadership and structure since 2019. That’s when the organization completed its merger with Sanford Health

COVID hit the following year, and then-Sanford’s CEO exited in late 2021. Long-time Good Sam executive Randy Bury retired a month later, handing the reins to Schema.

Today, about 70% of Good Sam’s patients live in rural settings. Schema has been tasked with helping shepherd a new focus on virtual care that is meant to enhance services at the organization’s nursing homes and for patients still in their homes.

And things are about to get more complex: Good Sam’s parent plans to merge with Fairview Health Services and its Ebenezer Senior Living division in 2023. Fairview is based in Minnesota; Ebenezer has a significant presence in Iowa and some buildings in Minnesota. 

Schema said the pending deal wasn’t a driving force in Thursday’s announcement, but rather “a complementary strategic decision.”

“We’ve been committed to ensuring that we are that cutting-edge provider, and we’re evolving as the sector evolves,” he said. “Being a part of an integrated health system with Sanford Health, we know we have a distinct advantage when we can concentrate our resources and invest in those communities where we already have a significant presence or where we can continue to work with our acute-care partners on advocacy efforts.”

In addition to exploring the construction of new CCRCs, Schema said, Good Sam could reinvest proceeds from sales in new technology and interoperability tools to “build out what it means to be in an integrated health system.”

In the meantime, the organization is committed to supporting its current communities until new buyers are found, he added.

“We have staff members who have worked for Good Samaritan Society for their entire lives, and residents came to us because they knew they would receive top-notch, quality care,” Schema said. “We take that really seriously and we want to make sure that we’re sensitively sharing this information. But we also want them to understand that this isn’t something that is going to happen overnight.”