Adult day care company moving from Ala. to Md.

Active Services also increasing number of centers with $15 million acquisition

September 07, 2005|By M. William Salganik | M. William Salganik,SUN STAFF

Active Services Corp., a 10-year-old operator of medical adult day care centers, announced yesterday that it is moving its headquarters from Alabama to Owings Mills and is increasing its number of centers from 39 to 58 with a $15 million acquisition.

The move signifies a bet by Sterling Venture Partners, a Baltimore investment firm with a substantial health portfolio, that an aging population will increase the demand for care and rehabilitation services for seniors outside of nursing homes.

"Demographics are working in our favor," said Michael Bronfein, managing partner of Sterling, which invested an undisclosed amount in Active Services in February, assuming a controlling interest in the company. Bronfein, a founder of the recently acquired NeighborCare pharmacy chain, said Sterling was looking for models of "how to deliver chronic-disease services to the elderly in the community on a cost-effective basis."

Advocacy groups for the elderly and for people with disabilities have generally endorsed efforts to provide community alternatives to nursing homes.

Along with increasing demand for a variety of services for the elderly, financially stressed state Medicaid programs are looking for ways to deliver care that are less expensive than nursing homes.

"That's why states are interested - to save money," said Joan Alker, a senior researcher at the Georgetown University Health Policy Institute. "Long-term care is where the costs are growing most quickly."

Medical day-care services typically cost about $70 a day, Bronfein said, compared with $150 and up for nursing home residents. And for many seniors, he said, three days a week of medical day care are sufficient, compared with nursing home care every day.

Nationally, he said, there are an estimated 3,500 centers, but studies have projected a demand for 10,000.

Other Baltimore companies in Sterling's health portfolio include Visicu Inc., the rapidly growing developer of remote monitoring systems for intensive care units, and Woodhaven Health Services, which fills prescriptions for nursing homes. It also invests in education, testing and technology companies.

When Sterling was considering whether to invest in Active Services, it called on Kris Baldock, who had been chief executive of FutureCare Health and Management Co., a Maryland nursing home operator, for his assessment. After his consultation convinced Sterling to invest, Baldock became CEO of Active Services in April. At the same time, Rick Sunderland, former chief financial officer of NeighborCare, joined Active Services as CFO.

The new management team decided to move the company.

Active Services has about 35 headquarters employees but expects to have 60 a year from now, Baldock said. It plans to grow by starting new centers - six next year and 12 a year for the next three years - and by acquiring existing ones from small operators. In all, it expects to add 100 centers in the next two to three years, Baldock said.

In the deal announced yesterday, Active Services is buying the 19 centers - including eight in Maryland - run by Almost Family Inc. of Louisville, Ky. The deal is expected to close Sept. 30 and will bring the number of Active Services centers to 58, said Baldock. Active Services is paying $13.6 million in cash and assuming $1.4 million in debt.

Baldock said each center serves 30 to 100 people - mostly elderly, but some with disabilities. A registered nurse is on the premises. Each offers physical, occupational and speech therapy and "therapeutic recreation" programs, as well as programs for people with dementia.

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