One of the largest developers of post-acute properties in the U.S. is expanding its footprint in Texas while seemingly winding things down in its home state.
Mainstreet Property Group recently moved its development and property operations from Carmel, Indiana to Cedar Park, a suburb of Austin, Texas, according to an April 20 story in the Indianapolis Business Journal. The move accounted for roughly 50 white collar jobs.
The company had already cut 10 people—or about 7% of its corporate workforce—in 2016, and then laid off another 12 workers last November.
Still, despite its shrinking presence in Indiana, the company has no plans to start calling Austin its home base, according to Mainstreet CEO Zeke Turner.
“Mainstreet doesn’t have a typical corporate structure and, as such, we do not use the word headquarters,” Turner told Senior Housing News. “Our offices are resource centers to support our people.”
The decision to grow in Texas came after a series of changes and rocky starts for the developer.
Previously, Mainstreet planned to open 11 high-end “Rapid Recovery Centers” in Arizona and Texas—but part of that plan fell through when start-up costs for the Arizona facilities ran higher than initial projections. A moratorium on new nursing homes in Indiana also has stymied business in the Hoosier State.
The Rapid Recovery Center model is a shift from Mainstreet’s original, hospitality-focused rehab centers. These are meant to help prevent readmissions while shortening length of stay, and in the process make the company a post-acute provider of choice for managed care systems.
In another recent setback, a planned strategy to sell these rehab centers to a real estate investment trust run by former Mainstreet executives, and based out of the same Carmel office, has stalled. That REIT dropped the Mainstreet name and has invested in just nine Mainstreet properties.
“In early 2017, our model broke down,” Turner told the IBJ.
That was due in part to industry headwinds that have battered skilled nursing, with tight labor markets, oversupply pressures, challenges in working with managed care organizations, and regulatory scrutiny all taking their toll.
These challenges have contributed to recent financial struggles and bankruptcies across the skilled nursing landscape, and is informing what Turner says is a more cautious approach going forward.
“The health care industry has seemed to struggle, across many products and levels, with the concept of national platforms,” he told SHN. “With this, Mainstreet is taking a regional approach to our platform growth and taking it one market at a time.”
Mainstreet has invested over $50 million developing, building and staffing its first two Rapid Recovery Centers in Texas, the Business Journal Reported. Six are scheduled to open their doors by the end of the year.
Written by Tim Regan
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