Nursing Home Execs Dump ALC/Extendicare Stock
Posted by PKSD Law Firm on Jan 07, 2009 in Nursing Homes and Elder Rights
The chairman and vice chairman of Assisted Living Concepts/Extendicare sold nearly all of their shares in the assisted living company over the last two weeks. The sales come as the companys shares have fallen 51% this year and its strategies to boost profits have failed. Assisted Living Concepts, based in Menomonee Falls, WI has 216 residences with more than 9,000 units across the U.S.
Does the sale of this stock by the executives reflect their confidence in the company?
Chairman David Hennigar sold 80,000 shares for $313,000 while vice chairman Melvin Rhinelander sold 201,700 for $822,000. The companys president Laurie Bebo said that the two directors sold the shares for tax purposes.
One of the companys failed strategies involved dropping Medicaid patients. At the end of 2006, nearly 30% of its patients were on Medicaid. The company receives about two-thirds as much from Medicaid as it does from private patients. The companys goal was to shift its patient base, bringing in more of the lucrative private patients.
The New Jersey Department of the Public Advocate started investigating Assisted Living Concepts after hearing about residents being involuntarily discharged once they had exhausted their life savings and were forced to go on Medicaid. The investigation is ongoing.
In February of 2008, ALC kicked out a 98-year-old woman from one of their facilities in Sumner, WA. Cordelia Robertson lived at the facility for 9 1/2 years and spent her life savings ($300,000) to live at the facility. The facility's management assured Cordelia that she could stay at the facility when her money ran out and have Medicaid pick up the payments. Now the facility refuses to allow Medicaid to pick up her costs.
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