Joshua Nemzoff states that most of StoneBridge Healthcare will be dismantled, but it appears likely that Serenity Spring Senior Living at Scandia Village will not be folded into his new entity
The Philadelphia Inquirer reports:
“I decided there’s just no need for us to buy hospitals as a for-profit. The only reason you would do that is to make money, and we don’t need to make more money, so I think we’re just doing the right thing,” Nemzoff said.
Most of StoneBridge will be dismantled and the company will have no role in the management of the three CHS hospitals, Nemzoff said. “This is a WoodBridge deal. There’s nobody above WoodBridge. There’s no management contract,” he said.
https://www.inquirer.com/health/community-health-systems-sale-woodbridge-20240730.html
These remarks raise the question of what will happen to Scandia Village, renamed as Serenity Spring Senior Living at Scandia Village. It was mentioned this past spring in “For-profit groups have vacuumed up over 70% of America’s nursing homes, and health advocates are worried: ‘The care gets really bad’” : https://fortune.com/2024/03/12/nursing-homes-for-profit-private-equity/
Will Scandia Village be part of Nemzoff’s new non-profit, WoodBridge?
Nemzoff’s comment that StoneBridge will not be a contracting entity for WoodBridge makes legal sense. In 2017, the IRS revoked the non-profit status of a hospital which contracted out its actual operation to a for-profit: https://www.taxnotes.com/research/federal/irs-private-rulings/letter-rulings-technical-advice/hospital-loses-tax-exempt-status/1x976
Several more links which explain the legal situation, including when the situation may be more murky:
https://corporate.findlaw.com/finance/the-irs-warning-to-tax-exempt-hospitals-on-alliances.html
If WoodBridge was going to just be a shell for StoneBridge, the IRS could revoke its newly-granted non-profit status. The legal situation also implies that it would be inadvisable for Scandia Village to be turned over to WoodBridge, since its actual operation is contracted out to Continuum Healthcare, a for-profit. That obstacle could be removed if the relationship with Continuum were to be ended. But the name of WoodBridge’s website, https://woodbridgecaresnepa.org, includes “EPA” at the end for “Eastern Pennsylvania”, which appears to settle the question. WoodBridge is not intended to operate in Wisconsin.
In a previous, failed purchase elsewhere, Nemzoff had described WoodBridge as a non-profit sister organization to StoneBridge: https://www.bizjournals.com/philadelphia/news/2023/12/12/stonebridge-healthcare-tower-health-reading-706m.html
This is the relationship which Nemzoff intended to set up:
In another attempt to be involved in the sale of the health system that includes Pottstown Hospital in western Montgomery County, StoneBridge may be entering into a management contract with a nonprofit organization interested in acquiring Tower Health.
The nonprofit WoodBridge Inc. is expected to send Tower Health a non-binding agreement for the purchase of all of Tower’s assets for $706 million.
https://montco.today/2023/12/tower-health-pottstown/
I wonder what concerns that could have raised at the time.
Looking over the current situation, I see another issue. Joshua Nemzoff’s daughter Jessica is now the CFO of a firm which offers contracts to healthcare providers: https://www.oxfordparkhealth.com/team
Like Woodbridge, OxfordPark Health was founded recently. The page describing its executives includes this sentence:
Nemzoff works with some of the top hospital merger and acquisition consultants, conducting extensive qualitative and quantitative research including identifying potential hospital acquisition targets, analyzing historic financials, creating forecasts and developing a database and algorithm with which to prioritize targets based on specific metrics.
The line about “some of the top hospital merger and acquisition consultants” would seem to include her father and people he knows. The business model intended by OxfordPark Health overlaps with the model used by StoneBridge, but of course they aren’t going to compete.
If in the future WoodBridge were to contract with OxfordPark Health, the relationship could end up drawing scrutiny from the IRS. If Joshua Nemzoff thinks he is going to take the advantages provided under the law for non-profits while granting pecuniary advantage to his daughter’s executive career at a for-profit, he should think again.
It is not clear exactly what kind of non-profit WoodBridge is going to be. There are different courses pursued by different non-profit healthcare institutions. Some have drawn considerable ire. I found some links which give background information.
These two articles discuss concerns over for-profits contracting with non-profits:
https://charitylawyerblog.com/2016/06/29/nonprofits-and-management-contracts/
https://today.tamu.edu/2021/08/20/hospital-outsourcing-often-prioritizes-profit-over-patients/
Some would like the law to be changed to help restrain the behavior of certain non-profit hospitals:
https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2020.01627
https://www.americanprogress.org/article/policies-to-hold-nonprofit-hospitals-accountable
https://www.medicaleconomics.com/view/how-nonprofit-hospitals-get-away-biggest-rip-america
These are some other links I came across:
Bucks County–Based Nonprofit Acquires Last Community Health Systems Hospitals in Pennsylvania
https://bucksco.today/2024/08/woodbridge-healthcare-acquisition
As a related issue, this article criticizes the practice of “turbocharging” at certain for-profit hospitals: https://newsroom.haas.berkeley.edu/research/hospitals-gamed-a-medicare-loophole-to-reap-billions-new-study-finds
IRS information for WoodBridge: https://apps.irs.gov/pub/epostcard/dl/FinalLetter_99-1744599_WOODBRIDGEHEALTHCAREINC_04082024_00.pdf, also https://projects.propublica.org/nonprofits/organizations/991744599
Apparently WoodBridge’s email was nonfunctioning in July: https://www.wvia.org/news/local/2024-07-30/commonwealth-health-eyes-sale-of-scranton-wilkes-barre-hospitals-to-nonprofit-woodbridge
The OxfordPark Health website states that Jessica Nemzoff “began working in healthcare while simultaneously operating Nemzoff International, LLC, a multi-million dollar international equestrian consulting and investment firm.”
Currently the https://www.nemzoff-international.com website is down. The YouTube channel used for posting classified ads for the Nemzoff horses was last active on October 18, 2023. The State of Florida lists the business as “Active”, and the last filing was made on September 12, 2023.
On the “About” page of the OxfordPark Health website, https://www.oxfordparkhealth.com/about1, the name of the business is stated as Oxford Park Capital Partners LLC in the description, but at the very bottom, it is listed as OxfordPark Health, LLC. Searching the longer of these names, https://www.google.com/search?q=%E2%80%9COxford+Park+Capital+Partners+LLC%E2%80%9D, more of the results are about horses than about healthcare. Oxford Park Capital Partners LLC owns horses used in competitions.
Are profits earned on the healthcare side of the business supposed to be put into buying horses? I suppose there could be a tax advantage to reinvesting the income within the business. If horses are bought with the profits instead of paying it out as income, that means losing less money to income taxes.
To close, it would be helpful if Joshua Nemzoff or his representative would make a public statement regarding what, if any, changes are intended for Scandia Village over the next few years. He also ought to publicly state which, if any, conflicts of interest could arise between his business activities and those of OxfordPark Health.
Posts related to Scandia Village
https://doorcounty.substack.com/t/scandia-village