Nursing home owners profited as complaints rose
Braemoor Health Center is a modest nursing home in Brockton, licensed to care for 120 residents. But Larry Lipschutz, who owns the property, was able to wring $1.8 million in pay out of it last year, according to state records. His son, Avi “Zisha” Lipschutz, who holds the state license to run the nursing home, extracted nearly $900,000 from Braemoor as payments to a realty company and four management firms he owns.
As the owners were taking hundreds of thousands of dollars out of Braemoor, the nursing home racked up three and a half times as many health and safety problems as the state average, federal documents show.
Over the past year, a portrait has emerged of substandard care in many of the nursing homes run by Braemoor’s owner, Synergy Health Centers. Poor treatment of patients’ festering pressure sores. Medication errors. Inadequate staff training.
Now, a Globe investigation shows that as father and son were paying themselves handsomely, Synergy apparently provided false information when applying for nursing home licenses. The Globe’s review also found that Synergy and its affiliated companies assembled a string of 11 nursing homes with little state scrutiny of the backgrounds of top executives, including Larry Lipschutz, who faces tens of thousands of dollars in fines because of previous business dealings.
Synergy entered Massachusetts in late 2012 with no record of owning nursing homes, but now presides over facilities licensed to care for more than 1,200 residents in the state. It continued to receive licenses despite providing misleading statements about tax payments on the company’s Braemoor facility, and mounting health and safety problems at several Synergy nursing homes.
In 2014, most of the Synergy nursing homes spent less than $100 a day on nursing care for each patient, some considerably less, according to a Globe analysis of industry financial records. The state median is about $100 daily.
“I don’t know how you get yourself into a situation that you give somebody 11 nursing homes with what’s been happening” with Synergy, said Ray Cryan, a former Massachusetts Health Department manager who had conducted suitability reviews of companies before they would be allowed to buy a nursing home. “They are not applying for a parking sticker in the North End here.”
Synergy’s cofounders, through their public relations firm, declined to respond to a detailed list of questions about the company’s operations and owners. Requests for interviews made in person at the company’s New Jersey headquarters and with a company lawyer went unanswered.
After being told about the findings of the Globe’s investigation, the state’s public health commissioner, Dr. Monica Bharel, released a statement acknowledging her agency needs to overhaul its review of nursing home licensing.
“As this industry quickly shifts, Massachusetts regulators need to revise our current review process and respond appropriately to ensure that residents get the highest quality care in a safe environment,” Bharel said.
Owning a nursing home is rarely as simple as just buying one. Owners routinely establish an affiliated company that holds the property itself and set up additional management and related companies. That is done to make it harder for someone who is suing to get access to the company’s money, according to attorneys who represent patients who have been harmed.
But that also creates a web of companies and owners, and the Globe investigation found state regulators often fail to pierce that.
When a company wants a nursing home license in Massachusetts, it must give the state the names and addresses of anyone involved in that web of ownership and operation.
But the state does background checks only on the people seeking the license to operate the nursing home. That means people who run those affiliated companies are not scrutinized.
Consider Larry Lipschutz. He owns the Braemoor property and is part owner of eight other properties that house Synergy nursing homes in Massachusetts, but he does not hold the operating licenses.
If regulators had been required to check his background, they might have discovered an arrest and tens of thousands of dollars in fines related to a tumble-down apartment complex called Branch Brook Gardens he owned in Belleville, N.J.
Lipschutz, a native New Yorker, bought the 22-building development in 1993, and over the next decade ran the once-coveted property into the ground, said New Jersey state Assemblyman Ralph Caputo, who helped tenants lobby for repairs.
“There were broken windows, flooded areas, rats. It was unbelievable,” Caputo said.
State inspectors found roughly 1,400 violations during a March 2004 inspection, according to New Jersey regulators. Local inspectors were citing him, too, with little success in getting repairs or persuading him to show up for court hearings, said Belleville Police Chief Joseph Rotonda.
Local officials finally sought an arrest warrant for the outstanding violations. Lipschutz pleaded guilty in municipal court in November 2004 to local code violations, was fined $935, and still owes Belleville $726.50, according to court documents.
At the same time, state regulators levied $49,369 in fines and fees against Lipschutz but offered to cut that in half if he fixed his buildings. Lipschutz has paid just $3,000 and failed to address the problems, according to New Jersey Department of Community Affairs records.
He sold the complex in March 2005 for $40 million, property records show.
Lipschutz owns a home assessed at $1.1 million in Monsey, N.Y., and a $1.4 million condo in a luxury high-rise in Miami Beach, according to property records. He did not return phone calls and could not be reached at his New York home.
His role in owning the property for six of the Synergy nursing homes is not disclosed in the company’s license applications as required under Massachusetts rules (although even if it had been reported, state authorities acknowledge they wouldn’t have done a background check). That ownership has proved profitable: The $1.8 million in pay he took from Braemoor Health Center stands out among financial reports filed by the state’s roughly 400 other nursing homes, a Globe review shows.
The Globe’s request for copies of all documents the Massachusetts Department of Public Health used in its review of Synergy nursing home applications has been pending for more than a month.
In an e-mailed response to the Globe’s questions, department spokesman Scott Zoback said the Health Department typically checks whether individuals applying for nursing home licenses have a criminal background in Massachusetts or are among vendors prohibited from state and federal health care programs. The agency also checks state and federal records for any other nursing homes an applicant may own, whether sanctions or financial penalties have been imposed, and whether penalties have been paid, Zoback said.
The department also requires applicants to certify they are in “compliance with state law on taxes and child support.”
The state’s review of at least four Synergy license applications apparently missed $30,000 in unpaid unemployment assistance and related state health insurance obligations for the first half of 2014 by Braemoor. A statelien for the delinquent taxes was recently lifted, but during the stretch of time it went unpaid, the Health Department granted Synergy more nursing home licenses. On those four license applications, Synergy indicated it had paid all taxes — even though it hadn’t, according to state records.
Federal liens of $138,000 against Braemoor for unpaid taxes in 2013 and 2014 were satisfied in April of this year, Plymouth County Registry of Deeds records show.
While Larry Lipschutz is listed as the sole owner of the Braemoor property and co-owner of many of the Synergy properties, it’s his 32-year-old son, Zisha, and Dov Newmark, 35, who hold the operating licenses for the Massachusetts nursing homes. They are Synergy’s cofounders.
Their company headquarters is in a two-story brick building tucked behind a bank in Toms River, N.J., a bustling town near the Jersey shore. There is no Synergy sign at the entrance or inside the lobby, only a single 8-by-11-inch piece of paper, with the words “Synergy Health Centers” taped to the front door of the second-floor office. A worker there said no one was available when a reporter visited the office last month.
Three former Synergy employees describe Zisha Lipschutz as an ardent New England Patriots fan and high-energy boss. One former employee and one current worker said Lipschutz would rally his managers during meetings by quoting or showing scenes from “Mad Men,” a TV series about a 1960s-era Madison Avenue advertising firm.
The former employees and the current employee declined to be identified because they still work in the nursing home industry and said they feared that being identified could affect their careers.
The related management and realty companies associated with the nursing homes Zisha Lipschutz and Newmark co-own took in more than $7 million in 2014, according to a review of financial records Synergy filed with Massachusetts regulators.
Both men received bachelor’s degrees in Talmudic law, according to resumes included in their state nursing home licensing application and verified by the Globe.
Lipschutz’s resume lists one New Jersey nursing home company, Regency Post-Acute, Rehab & Nursing Centers, where, it says, he worked for about three years, first as an assistant administrator, then in financial management and business development. Regency verified that Lipschutz had worked there but declined to comment further.
Newmark’s resume lists three Pennsylvania nursing homes and two in New Jersey where, the resume said, he was director of reimbursement and compliance before entering the Massachusetts market in 2012.
That was news to Alex Ringkamp, administrator of Willow Terrace in Philadelphia, one of the nursing homes where Newmark said he had worked between January 2009 and summer 2012.
“I do not know that name, and there was never such a position here,” said Ringkamp, who has worked there since 2008.
Greg Monroe, administrator of Centennial Healthcare & Rehabilitation Center in Philadelphia, another nursing home listed on Newmark’s resume, said Newmark had not been the facility’s director of reimbursement and compliance. Newmark’s resume indicates he held that position from January 2009 until July 2012.
“He was a consultant here for a short period of time, in 2012,” Monroe said. Newmark reviewed documents to help the facility comply with regulations for government reimbursements, Monroe said.
Newmark’s resume also lists him as director of reimbursements and compliance at Concord Healthcare & Rehabilitation Center in Lakewood, N.J., and Tuvya Blumenkrantz, business manager there, confirmed Newmark filled that position from January 2009 until summer 2012.
Administrators at two other facilities listed by Newmark did not return phone calls.
Financial skills would prove useful for the considerable bills Newmark and Zisha Lipschutz now shoulder at Synergy.
Registries of deeds records indicate that since 2012, the company has spent $68.5 million buying 10 of its Massachusetts nursing homes. The 11th, Brockton Health Center, is leased from a separate New Jersey company.
At the same time, Synergy has taken on roughly $99 million in mortgages and loans, the records show.
Since opening for business in Massachusetts, Synergy has earned a reputation for aggressive marketing to attract patients, but several former and current employees said Synergy has skimped on nurse staffing and other essentials, such as fresh linens and creams to prevent pressure sores.
Two other former staffers described coveted Patriots playoff tickets Synergy bought in January 2013 — one month after acquiring its first facility in Sunderland. The company spent roughly $25,000 on a suite at Gillette Stadium and invited local doctors and nurses to help woo more business for its new facility, the staffers said.
“It really offended me because I had to do battle to get basic nursing supplies,” said one of the former staffers who still works in the industry and asked to remain anonymous.
In the months following that playoff game, the company cut back on the quality of adult diapers and fresh fruit at its Sunderland facility, according to a former volunteer state ombudsman and government records, and was cited by state investigators for more than a dozen violations.
Two other workers, one still a Synergy staffer, said they have had positive experiences working for the company. One, a former business manager who has since moved on to another nursing home company, said she remembers Zisha Lipschutz dropping in during off hours to hand out pizza to workers.
“They were very good to me, and they were very much for their employees,” said the woman, who asked that her name not be used because she didn’t want her new employer to read about her talking about her former boss.
“If someone needed a hardship loan, they would offer that as well,” she said.
But another former employee accuses Synergy of reneging on thousands of dollars it owes him. Yitzhak Rosenblum, Synergy’s former director of acquisitions, is suing Lipschutz and Newmark, alleging they fired him in June without cause. Rosenblum says the company owes him more than $200,000 for coordinating the acquisition of several nursing homes worth more than $20 million, according to the suit filed in August in Ocean County Superior Court, in New Jersey.
Rosenblum’s suit notes he may be entitled to even more compensation because he was working on the acquisition of two more nursing homes for Synergy, in Linden, N.J., and in Bristol, Tenn. Representatives of those nursing homes did not return phone calls inquiring whether the deals had been completed.
Synergy argues in court filings it owes Rosenblum less than $200,000. But the company says the amount is irrelevant because the two sides signed an agreement when Rosenblum was hired to keep any differences private and instead settle them before a panel of rabbis.
But Ocean County Superior Court Judge Arnold Goldman ruled last month that Rosenblum was entitled to his day in court and allowed the lawsuit to continue. The ruling may accomplish what Massachusetts regulators have not succeeded in doing: shining a light on the inner workings of Synergy.