Business & Real Estate

Why this Bay Area business wants an alliance with Sacramento region’s Eskaton

Music Partners in Health musician, Elizabeth Proett, plays the harp for Patricia Cavallini at Eskaton Care Center in Fair Oaks on Dec. 4, 2018. Carmichael’s Eskaton is again growing its footprint in the San Francisco Bay Area as the nonprofit senior care company girds for competition with rapidly expanding businesses with billion-dollar balance sheets.
Music Partners in Health musician, Elizabeth Proett, plays the harp for Patricia Cavallini at Eskaton Care Center in Fair Oaks on Dec. 4, 2018. Carmichael’s Eskaton is again growing its footprint in the San Francisco Bay Area as the nonprofit senior care company girds for competition with rapidly expanding businesses with billion-dollar balance sheets. apayne@sacbee.com

Carmichael’s Eskaton is once again growing its footprint in the San Francisco Bay Area as the nonprofit senior care company faces increased competition in Northern California from a number of rapidly expanding for-profit assisted living businesses with billion-dollar balance sheets.

Eskaton announced Friday that, pending state regulatory approval, it will take the reins of The Reutlinger Community, a 180-unit senior community in Danville that includes units for assisted living, memory care, skilled care and rehabilitation. Both organizations say they try to make the aging experience stimulating in environments that limit upheaval.

Eskaton Chief Executive Officer Todd Murch said the union could be completed as early as this summer. Since both organizations are nonprofits, he said, no money will change hands. The Reutlinger would become a subsidiary of Eskaton if their nonprofit affiliation is approved.

“We found the values of our two nonprofit organizations to be very compatible,” Murch said. “Both organizations are (financially) healthy, so that’s always a very good situation when you’re talking about affiliation. Everything seemed to line up to make this a very worthwhile endeavor for both of us to pursue.”

The Reutlinger CEO Jay Zimmer said it was important for his small community is facing increased competition from big for-profits such as Kindred and ManorCare. He said this and other industry changes made the idea of an affiliation with a larger nonprofit attractive.

“I think that we’ll be facing shorter lengths of stay and higher rates of admission, people coming in and going out of rehab more quickly,” Zimmer said. “Just as an example: Three years ago, if you had a knee or hip replaced, you probably came to a rehab center like ours and stayed for 24 or 25 days. Today ... some systems ... send people directly home after surgery. Their rehab is on an outpatient basis.“

Zimmer said that The Reutlinger does some outpatient therapy and has performed well on quality metrics so far, but since the payment model and the health-care industry is undergoing big changes, it seemed like a good time to partner with a larger organization with more resources. The Reutlinger Co. reported $17.5 million in revenue in its fiscal year ending June 2018, while Eskaton reported $226 million for 2018.

Eskaton operates 36 different communities that include multilevel, continuing care communities; rehabilitation and skilled-care facilities; assisted living and memory care apartments; as well as affordable housing. While residents in the Sacramento region know the company’s many Eskaton-branded communities, the nonprofit also has reached affiliation agreements with a number of other properties around California under other names, including the resort-style O’Connor Woods retirement community in Stockton and The Parkview assisted living and memory care property in Pleasanton.

“It has been our strategic focus to seek partnerships for some time now, and most particularly in Northern California, as we really identify ourselves as a regional organization,” Murch said. “We try to provide health and residential services. We provide low-income housing for seniors, and we have a community service and social accountability philanthropic arm.”

Eskaton, which was established 50 years ago, also has been growing its home care services, offering help to seniors who need medical care and those who need a little assistance with daily tasks to continue to live alone, Murch said, adding that 9 out of 10 senior citizens live at home.

He said Eskaton contracts with the Honor Network to obtain caregivers with the skills to do the work. Eskaton staff assess the level of care needed, Murch said, and they ensure clients are satisfied with the service and stay in contact to determine whether there’s a change in needs.

Zimmer said these services were particularly attractive: “Right now, when somebody is discharged from our care, if they go into the community with a private agency’s caregiver, we lose touch. We don’t know if they’re taking their meds, getting to rehab, eating ... so with our own home care capabilities through Eskaton, we will be able to manage those functions more effectively.”

The 59-year-old Reutlinger Community began as a nursing home for Jewish seniors in Oakland, Zimmer said, and the nonprofit has remained committed to the Jewish values of its founders. It expanded services in 1999 when the community moved to its larger home in Danville. A few years ago, thanks to generous donations, he said, Reutlinger was able to do a $10 million update of the property to continue meeting disability regulations and to refresh the look.

As part of the partnership agreement, Murch said, Eskaton said it would continue to preserve The Reutlinger’s Jewish heritage and values. Zimmer said that, when the board decided to seek a strategic partner, that was one of its three key requirements. The other was to find a partner with access to capital and high-quality ratings from the federal Centers for Medicare & Medicaid Services.

“Right now, whatever we do, we have to do it on our own,” Zimmer said. “With a partner like Eskaton, they can bring teams of experts to the table.”

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