McKnight's Exclusive: Sailing toward profitability

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Mariner Health Care's chief executive talks about how he aims to simplify and streamline operations to stabilize the recently bankrupt chain.

Mariner Health Cares Chief Executive C. Christian Winkle seems to have a lot to smile about these days.
Not only has his nursing home company's stock price soared to $22 from $3 since last May, but he also has scored key victories in his quest to rebuild from a complicated bankruptcy.
Winkle refinanced the Atlanta-based nursing home company with $225 million in bank financing and $175 million in bonds in December. He followed other big chains in exiting the highly litigious Florida market the same month, selling 21 skilled nursing facilities for $92 million and terminating eight leases in three waves.
Winkle now oversees the fifth-largest nursing home chain in the country, with 255 skilled- nursing facilities, 11 long-term care hospitals, and nine assisted-living facilities, mostly in Texas, North Carolina, California and Colorado. Mariner owns 70% of the facilities.
The quiet, normally press-shy chief executive is ready to chat. He reclines in a plush armchair in his 14th floor office overlooking northern Atlanta, sips coffee and theorizes about federalizing Medicaid.
"Ultimately, the money is coming from the federal bucket to the states," he says. "You get to the point where you're like 'Come on, how can we make this any more complicated than we have?'"
Winkle, with his eye focused on simplicity for his own business, is on a straight path toward profitability. But he's not quite there. The nursing home company narrowed its fourth-quarter loss to $20 million, compared with $71 million in the red a year earlier. Mariner recorded a $12.8 million loss on revenues of $1.7 billion in 2003.
Winkle's vision is clear, though. He aims to streamline his business. His first step: Centralize and trim his nonpatient care costs, such as payroll, billing and technology. He wants to minimize variations in his homes across the nation. Then, he plans on building his core areas, which he calls clusters.
"We're not going to look into jumping into a lot of opportunities," he says carefully. "I don't want to call us ultraconservative, but we're really grounded in our focus. I see us continuing to build around key footprints."
Winkle says he has a dozen of these footprints in metropolitan areas such as Detroit, Dallas-Ft. Worth and Houston, where Mariner has a decided presence. In Houston, for example, the chain has 17 skilled-nursing facilities and two long-term care hospitals. Winkle says he envisions expanding his skilled-nursing facilities and long-term care hospitals, but not his assisted living facilities.
He says he sees "natural extensions" in businesses such as hospice care, but is reticent to name specific plans. He's still preserving fresh capital since navigating through the recent bankruptcy.
Like its top boss, Mariner, too, has cautiously kept itself off the radar since it emerged.
"Mariner is really quiet," says Stephen M. Monroe, partner with New Canaan, CT-based Irving Levin Associates, which studies the long-term care markets. "I think they're still very tightly controlled by the creditors who got most of the equity post-bankruptcy."

Thrown into the fire

The 41-year-old Winkle, the youngest of the chief executives of the 10 biggest for-profit North American nursing home chains, was promoted to Mariner's top post in March 2000, two months after the company filed for Chapter 11 bankruptcy protection. An operations man, he got the company back on its feet: Mariner emerged in May 2002.
He found himself at the helm after working his way up through the independent acute-care arena. He started on a whim as the business office manager at the former Health Hill Hospital in Cleveland in 1985 upon graduating Case Western Reserve University with a bachelor's degree in accounting. He then served as chief financial officer of Southern Hills Hospital in Princeton, WV; chief financial officer of Great Lakes Rehabilitation Hospital in Erie, PA; and he ran HealthSouth Renaissance Rehabilitation Hospital in Chattanooga, TN -- all before joining Integrated Health Services in 199