Second Vegas nursing home operator files for bankruptcy

Friday, Oct. 15, 1999 | 10:35 a.m.

SUN STAFF AND WIRE REPORTS

ALBUQUERQUE, N.M. -- Sun Healthcare Group, one of the nation's largest nursing home chains, filed for bankruptcy protection after more than a year of severe losses it blames on declining Medicare fees.

The Chapter 11 filing in U.S. Bankruptcy Court in Delaware will enable Albuquerque-based Sun to restructure its debts and give it more time to pay back creditors.

Sun, which had $1.4 billion in losses from October 1998 through last June, provides care to about 40,000 people at its 320 nursing home facilities nationwide.

The company recently opened its first facility in Las Vegas. SunBridge Assisted Living, a 104-unit nursing home at Flamingo and Durango roads in Las Vegas, opened in March. It is Sun's only operation in Nevada.

Sun is the second big nursing home chain with Las Vegas operations to file for bankruptcy protection recently. Louisville, Ky.-based Vencor filed for bankruptcy protection in September after reporting $1.4 billion in debts.

Albuquerque-based Sun said Thursday it obtained $200 million in financing from a group led by The CIT Group/Business Credit and Heller Healthcare Finance.

Like Vencor, Sun cited severe Medicare cuts implemented last year for its financial situation.

"Deep cuts in Medicare reimbursement exceeded all industry expectations," Sun Chairman and Chief Executive Andrew L. Turner said Wednesday.

Moreover, Medicare changes also resulted in a sharp decline in demand for Sun's therapy services.

Sun has already cut more than 10,000 jobs and has missed making debt payments in the past year. It also has been hit by a series of lawsuits from investors who contend the company should have known the new reimbursement system would hurt earnings and should have warned shareholders.

Sun Healthcare in August reported a second-quarter loss of $589 million, compared to a $61 million loss in the second quarter of 1998.

The bankruptcy protection ensures that Sun "can continue to serve our patients and our customers' patients while we reorganize," Sun President Mark Wimer said.