5 assisted-living centers join the Hallmark family

Towson company also looking to buy 2 Maryland facilities

July 10, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Continuing its strategy of building a strong foothold region by region, Towson-based Hallmark Senior Communities LLC said yesterday that it has acquired five more assisted-living facilities, bringing its total to 15 and increasing its capacity by 57 percent.

Two of the newly acquired facilities are in Hazelton, Pa.; one is in Altoona, Pa.; one is in Lebanon County, Pa.; and the fifth is in central New Jersey.

The acquisitions, which together cost $22 million, bring the company's holdings to 14 facilities in Pennsylvania and one in New Jersey with a residential capacity of 1,760 and boost the privately held company's annual revenue to $19 million, said Daniel A. Hirschfeld, chairman, chief executive and president.

Hirschfeld, who co-founded the company two years ago, said he is negotiating two acquisitions in Maryland that he expects to announce within four months. He said Hallmark plans to acquire 12 to 15 facilities per year to grow from its position as the 27th-largest assisted-living company in the country, as ranked in the July issue of Provider magazine, published by the American Health Care Association.

"They are strategic locations [in Maryland] given our growth plan of expanding from Ohio to Pennsylvania to Virginia," he said. "Our long-term goal is to build clusters of long-term care facilities."

That is easier said than done.

"The challenge we face is that there are lots of opportunities for us to acquire companies, and the question is that we only have so much equity," Hirschfeld said.

In December, the Chicago-based equity firm William Blair Capital Partners and Aetna Life Insurance Co. invested $25 million in Hallmark and are majority owners.

"It's great that we could raise $25 million, but if you take that and assume you put 20 percent down and borrow the rest, you can only buy $125 million worth of properties," Hirschfeld said.

"We have opportunities to acquire properties in excess of that amount, so in an effort to do those acquisitions we are having conversations with others who would buy the facilities and have us manage them."

The Assisted Living Federation of America in Fairfax, Va., estimates that assisted living is a $12 billion to $15 billion industry that is growing about 15 percent a year, said Tim Whittier, vice president of programs and services.

"It's growing rapidly due to a wider understanding of what it is and that it's out there," he said, "and, with the aging of the American population, an increased life expectancy and the continued increase in the number of people who live alone because of the divorce rate and women living longer than men."

In Maryland, there are about 4,500 assisted-living facilities that serve approximately 13,000 residents, said Dianne Dorlester, executive director of the Maryland Assisted Living Association.

That number could grow considerably under a bill recently signed by Gov. Parris N. Glendening that would allow more Medicaid dollars to go toward assisted-living facilities.

Dorlester said 110 people in the state receive Medicaid dollars for assisted living, but that number could potentially jump as high as 7,500 if federal officials approve the state's plan.

The program would be phased in and cover 1,000 people in the first year, she said.

Hirschfeld said he is lobbying Pennsylvania officials to adopt similar legislation, arguing that the state would save money by paying for assisted living instead of only for nursing home care.

Care at Hallmark facilities costs an average of $60 a day, including meals and nursing care, he said, while traditional nursing homes generally cost at least one-third more.

"If our cost is one-half to two-thirds of a nursing home," he said, "then it would be in everybody's best interest to provide a payment system for those services."

Pub Date: 7/10/99

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