Life Care Centers of America Inc.

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Life Care Centers of America Inc.

3570 Keith Street N.W.
Cleveland, Tennessee 37312-4309
U.S.A.
Telephone: (423) 472-9585
Toll Free: (800) 554-9585
Fax: (423) 339-8341
Web site: http://www.lcca.com

Private Company
Incorporated: 1976
Employees: 30,000
Sales: $1.59 billion (2004)
NAIC: 623110 Nursing Care Facilities; 623311 Continuing Care Retirement Communities; 623312 Homes for the Elderly; 623990 Other Residential Care Facilities; 624110 Child and Youth Services; 624120 Services for the Elderly and Persons with Disabilities; 624190 Other Individual and Family Services

Life Care Centers of America Inc. (LCCA), a privately owned operator of retirement and health care services, manages more than 260 facilities in 28 states. The company offers a variety of retirement and health care services under eight divisions: Alzheimer's care, nursing care, assisted living, rehabilitation services, campus care, retirement center, home care, and specialty services. The Alzheimer's care division provides services for people suffering from Alzheimer's disease. The nursing care division offers skilled nursing care, and physical, speech, and occupational therapies at a patient's place of residence. LCCA's assisted living division offers assistance with scheduling medical appointments and medication management, and assistance with such daily living activities as bathing, dressing, grooming, and walking, as well as monthly blood pressure, weight, and nutritional checkups. The rehabilitation division provides physical therapy, occupational therapy, and speech-language pathology. Under the campus care division, the company operates multiple facilities, including retirement, assisted living, nursing care, respite care, Alzheimer's care, rehabilitation services, and wellness programs (blood pressure and health care screenings). LCCA retirement center division operates almost 40 independent and assisted living communities in 20 states, providing hospital living conditions, dining services, security and emergency call system, and maintenance of facilities. The home care division addresses the needs of people who are recovering from an illness or surgery, or for individuals who are chronically ill. These services include skilled care services (injections, dressing changes, or administration of medication), physical therapy, occupational therapy, speech therapy, sitters and private services, live-in-services for patients unable to take care of themselves, and social services that address the social and emotional needs of the patient. The specialty services division provides respite care, sub acute care, wound care, hospice, and adult day care.

Origins

LCCA was founded in 1970 by Forrest L. Preston, who built his first facility, known as Garden Terrace Convalescent Center, in Cleveland, Tennessee. From 1970 to 1976, Preston built six more centers, five in Tennessee and one in Florida. He incorporated the company as Life Care Centers of America in 1976. In 1989, he established Garden Terrace as a division of Life Care as a specialty care center devoted to the care and treatment of patients with Alzheimer's disease and other dementias. He opened his first such facility in the fall of 1989 in Aurora, Colorado with the aim of building a chain of these specialized care facilities across the country.

1990s: Growth and Expansion

As part of its growth strategy, in 1994 LCCA teamed up with drugstore chain Jack Eckerd Corp., a manager of 710 drugstores in 13 states, to establish home health care centers within selected Eckerd drugstores. Eckerd saw the collaboration as a promising opportunity to broaden its health care services to customers. Under the deal, Life Care would own and operate the centers, which would provide a complete line of home health care products, including canes, crutches, safety side rails, sports braces, hospital beds, ostomy and incontinence supplies, wound care products, diabetes supplies, as well as respiratory therapy equipment. The centers, ranging in size between 700 to 1,000 square feet, would be staffed by trained nurses who would conduct laboratory tests and orthotic fittings. The centers would also offer the services of physical therapists and medical social workers upon request.

In April 1994, Del Crane Medical Corporation, a maker of medical software and supplies, sued Life Care for allegedly violating its copyright of a software program and for not paying for its use. In the suit filed in federal court, Del Crane claimed that Life Centers interfered with contracts that Del Crane signed with the 140 nursing homes. Del Crane altered the 140 individual licensing agreements in early 1993 to one master agreement. In April 1993, however, the nursing homes notified Del Crane that they were changing to different software. The suit claimed that while some Life Care nursing homes continued to use Del Crane's software, others switched to almost identical software produced by former Del Crane employees. The suit claimed that the nursing homes that continued to use the software ceased making payments to Del Crane. In a separate suit filed at the same time, Del Crane charged Life Care with misusing a joint venture formed between the two firms. In 1990, the two companies created Del Care, a partnership to provide supplies and billing services to Medicare patients. According to the suit, Life Care was using Del Care's name and tax identification number for activities outside the joint venture.

In March 1995, Life Care broke ground on a new Garden Terrace Alzheimer's Center in Houston. The new center represented the first of its kind and one of only a few in the nation devoted exclusively to people with Alzheimer's disease. The 64,000-sqaure-foot, 120 bed center was anticipated to cost $6 million to build. Once built, the Garden Terrace facility offered 24-hour supervision and nursing care, in addition to respite care and day care. The center also provided residents with physical, occupational and speech therapies by licensed staff. The center was designed to offer residents in each stage of the disease a different environment and care plans. The center also included special types of lighting, color and interior décor to sooth people with Alzheimer's disease. Other amenities included private dining rooms, visitor lounges, outdoor patios, an ice cream parlor, a gift store, and a beauty and barber shop. The new facility joined the company's other specialized Alzheimer's care centers in Aurora, Colorado and Salt Lake City, Utah. The company began to build these specialized centers with an eye on the demographics. The Alzheimer's Association had estimated, for example, that 4 million Americans had the disease with more than 100,000 dying from it each year, making it the fourth leading cause of death among all adults. At the time when Life Care began building the Houston facility, more than 265,000 Texans were suffering from the degenerative disease with an estimated 25,000 of these people in the Houston area alone. Although members of the Texas Council on Alzheimer's Disease and Related Disorders supported centers that care for Alzheimer's patients, it nevertheless was pushing for legislation that would require such care facilities as Garden Terrace to file disclosure statements with the state in order to receive certification. In subsequent years, Life Care opened other specialized Alzheimer's facilities in Fort Worth, Texas; Charleston, South Carolina; Overland, Kanas; Estero, Flordia; and Federal Way, Washington.

In June 1999, the institutional pharmacy services business, Omincare Inc., acquired Life Care's pharmacy services company. Omnicare purchased Life Care Pharmacy Services Inc., from Forrest Preston, the founder, chairman, and only shareholder of Life Care Centers of America. At the time of the acquisition, the Life Care's was providing pharmacy services to over 17,300 elderly residents in 12 states. With the acquisition, Omnicare's services covered approximately 617,000 residents in 8,600 long-term care facilities in 43 states.

Complaints, Lawsuits, and Looking to the Future

In February 2001, the magazine Consumer Reports named a Life Care Center in Oregon on its published nursing home watch list. The list, based on state survey reports between 1995 and 1998, was compiled by inspectors making surprise visits to home care facilities to observe care, examine sanitary conditions, and investigate complaints. Nevertheless, Jerry Weldon, an administrator who had been hired to improve operations at the facility said that there had been major improvements to clinical and staffing problems at the nursing home. In 1997, as Life Care proceeded to open a new facility in Lakeville, Massachusetts, the company paid a $650,000 settlement over a claim of negligence at its Raynham location. Another 79-year-old woman died in Life Care's West Bridgwater facility shortly after she moved in after a nurse accidentally gave a lethal overdose of morphine. The company fired the nurse and an investigation by the Plymouth County District, Department of Health, medical examiner concluded the death resulted from human error, rather than from company-wide substandard care. Like other companies in the industry, Life Care faced complaints of poor care, but overall the large for profit, private company was found to be on par with others in the retirement and health care services business.

In October 2000, Life Care's Plainwell, Michigan facility lost a National Labor Relations Board (NLRB) dispute with Local No. 79 of the Services Employees' International Union for refusing to bargain following the union's certification. Following an election on October 22, 1999, the union won certification on January 7, 2000, as the exclusive collective-bargaining agent of the employees of the nursing care facility. The company refused to both recognize and bargain with the union as the exclusive representative under Section 9(a) of the National Labor Relations Act. As a result, the NLRB found the company to have engaged in unfair labor practices and to be in violation of the Act.

Company Perspectives:

Life Care Centers of America is committed to being the premier provider of long-term care in America. It is our desire to be the facility of choice in any community in which we operate. Our programs, services and facilities must be designed and operated with superior quality in order to satisfy the needs of our residents.

The company moved to a web-based document and delivery storage management system in 2001 to streamline the printing and distribution of financial and other reports for its 230 eldercare facilities and seven regional offices in 28 states. The web-based system, called ReportSafe, was estimated to save Life Care $55,917 yearly by eliminating the piles of paper. The company spent $20,250 on the cost of training and software implementation, and anywhere from $32,000 to $80,000 on the ReportSafe software. There was a downside to the software, however, requiring a long six-month implementation period as numerous rules needed to be written for the application to work with 500 users in almost 300 locations.

In 2003, a lawsuit was filed against Life Care's Las Fuentes Care Center in Phoenix, Arizona filed for alleging taking money out of employee paychecks for heath insurance but not paying the premiums. The Arizona Court of Appeals ruled that the company could not be sued in state court, stating that any claims employees had fell under the federal pension laws and must be filed in federal court. Court records evinced that Life Care, which operated the Las Fuentes Care Center, signed a 1998 agreement with Premier Healthcare of Arizona for health insurance for the Las Fuentes employees. Under the agreement, Las Fuentes would pay the monthly premiums financed by both employee payroll deductions and its own contributions. Three years later some of the employees filed a class action lawsuit in Maricopa County Superior Court, claiming the company had ceased remitting the payroll deductions.

In 2004, elder care provider Hillhaven and Life Care formed a joint venture under the name Medlife Pharmacy Network to provide pharmaceutical and medication delivery systems, infusion and enteral therapy services, and pharmacy consulting services to long term care and sub acute care facilities. With this venture, the company continued to look to expand in new ways in the $1.7 trillion U.S. health care services market, the world's largest.

Principal Divisions

Alzheimer's Care; Nursing Care; Assisted Living; Rehabilitation Services; Campus Care; Retirement Centers; Home Care; Specialty Services.

Principal Competitors

Beverly Enterprises Inc.; Sava Senior Care LLC; Sun Healthcare Group Inc.

Key Dates:

1970:: Forrest L. Preston founds company as Garden Terrace Convalescent Center.
1976:: Company is incorporated as Life Care Centers of America Inc.
1989:: Company establishes Garden Terrace as division devoted to care and treatment of Alzheimer's disease.
1999:: Omnicare Inc. acquires Life Care Pharmacy Services Inc.
2004:: Hillhaven and Life Care Centers of America form joint venture called Medlife Pharmacy Network