Fountain view moves home to Foothill Ranch

Fountain View Inc. is looking for a fresh start ahead of its exit from bankruptcy protection.

The company, which operates 48 nursing and assisted living homes in California and Texas, recently moved its headquarters to Foothill Ranch from Burbank.

Fountain View signed an eight-year lease

"We liked the operating climate better in Orange County than Los Angeles County," said Boyd Hendrickson, Fountain View's chief executive.

"We employ a lot of professional people like accountants. We felt like we had a little bit better labor pool to draw from" in OC, said Hendrickson, a Coto de Caza resident. He said his residence wasn't a factor in the relocation decision.

"We came down to Foothill Ranch and looked at the professional people-they were readily available," he said.

The Foothill Ranch corporate office houses 80 of Fountain View's 6,500 workers companywide. The company's six OC nursing and assisted living facilities employ 1,200 workers; local operations include Carehouse Care Center in Santa Ana and Anaheim Terrace.

Fountain View had revenue of about $340 million last year. The privately held company reports some financial figures because it has public debt.

About 45% of the company's sales comes from Medicaid payments, with 35% from Medicare and managed care. The remaining 20% comes from private health insurance, according to Hendrickson.

Fountain View filed for bankruptcy in October 2001. That year it was hit with a liability insurance rate hike, a Medicare dispute with federal regulators and a $6.1 million judgment in a court case involving a woman who died after a stay in one of its facilities.

The company said it took the bankruptcy action because it couldn't get lawyers for the deceased woman's family to remove a lien on its bank accounts. Fountain View said it couldn't continue care at its facilities unless it was protected from the judgment.

That liability case eventually was settled for $1.1 million, which was paid by one of Fountain View's insurance companies.

The company is expected to emerge from bankruptcy by the middle of the year, according to Hendrickson. Under the bankruptcy reorganization plan, Fountain View received $150 million in financing from CapitalSource Finance LLC of Chevy Chase, Md., and a Highbridge/Zwirn Capital Management LLC fund, as well as an unnamed financial institution.

During its reorganization, Fountain View received a $3.1 million settlement from the federal government relating to the Medicare dispute.

After coming out of bankruptcy, "our intention would be to grow the company," Hendrickson said.

Fountain View's targeting California and regions between Fountain View's core Texas and California markets for its expansion plans.

"Our play would be more of a regional one," Hendrickson said. "We're not interested in becoming a nationwide company."

The company also has seen several management changes during its reorganization, including the arrival of Hendrickson, who's been the long-term healthcare provider's chief executive for just more than a year.

Before joining Fountain View, Hendrickson ran Evergreen Healthcare Inc., a long-term healthcare provider based in Vancouver, Wash.

Hendrickson's career includes an 11-year stint at Fort Smith, Ark.-based Beverly Enterprises Inc., where he was president and chief operating officer.

Fountain View competitors include Beverly, Sun Healthcare Group Inc., which recently moved its headquarters to Irvine from Albuquerque, N.M. (see story, page 1) and Aliso Viejo-based Covenant Care Inc.

Fountain View has a pair of subsidiaries. Yorba Linda-based Skilled Care Pharmacy provides drugs to Fountain View facilities and 80 other nursing homes in California. Its other unit, Locomotion Therapy, offers physical therapy for Fountain View nursing home residents.

Eileen Schuler of Newport Beach-based Schuler Commercial Real Estate represented Fountain View in the Foothill Ranch lease negotiations.

Don Nourse and Gregg Haly, brokers from CB Richard Ellis and Lin Stinson of Providence Realty Group Inc., represented landlords CT Realty Corp. and Searles Devcorp, both of Newport Beach.