BEVERLY — A company looking to build a rehabilitation center in Beverly is trying to bypass a state moratorium on new facilities by claiming it is replacing a Nursing home that closed 11 years ago.

Transitional Care of Beverly has filed an application with the state to construct a $23 million “state-of-the-art” Facility at the site of the current Roller Palace on Sohier Road.

The state has a longstanding moratorium on new nursing facility licenses due to an oversupply of beds that was driving up costs for taxpayers and forcing Existing Nursing Homes out of business. 

But Transitional Care of Beverly is describing its 90-bed facility as a “replacement project” for the former Radius Healthcare Center, a nursing home on Heather Street that closed in 2005 and was turned into condominiums.

In its application to the state Department of Public Health to determine if there is a need for the facility, the company said it has an agreement to buy the defunct nursing home’s out-of-service “bed rights” and apply them to the new facility.

Paul Lanzikos, executive director of North Shore Elder Services, called the use of a decade-old license a “loophole” in the system and questioned whether a new facility is needed on the North Shore, where six facilities have undergone millions of dollars in upgrades in recent years.

“The question is how much capacity do we need, because ultimately it’s the taxpayers paying for all this capital through Medicare payments,” he said.

According to the company’s application, the new Sohier Road facility would provide rehabilitation services for conditions such as major joint replacement, stroke and heart attack, with an average stay of 20 to 30 days. The company said the facility will be “high end,” with private rooms and baths, a modern therapy center, a cafe/bistro and media/game rooms.

The company said the new facility is needed because patients in the area are now being served by “older, inferior facilities, many of which are becoming functionally obsolete.”

The application was filed by a newly formed company called OPMABev LLC, which is owned by a New Mexico-based company called Encantado Investments. Encantado Investments is owned by Jerry Williamson and Horace Winchester, who both live in Allen, Texas, according to the application.

Williamson and Winchester are the principals of OnPointe Health, a company that operates 19 Health Care Facilities in Texas and New Mexico and has plans for nine others.

One of those proposals, for a 68-bed long-term care facility in Illinois, has drawn strong objections from existing Nursing Homes in the area. In a letter to Illinois state regulators, a lawyer representing nursing home operators said the proposed “Four Seasons”-type facility would “skim” higher-reimbursement patients away from existing facilities that care for poorer patients.

The letter called the Illinois project “a boutique nursing home that would allow businesses and private insurance carriers to circumvent the current healthcare delivery model, essentially cannibalizing the most desirable (highest reimbursement) short-term rehabilitation patients.”

Lanzikos and others expressed concerns that the Beverly facility would have a similar impact on Existing Nursing homes that care for low-income patients. Transitional Care of Beverly said in its application that it will not accept patients on Medicaid, a government program that serves lower-income people and pays health care facilities less than Medicare or private insurance.

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