Despite financial struggles, Petersen Health Care says it's 'not going out of business'

PEORIA – Financial problems at Petersen Health Care will not lead to the demise of the company, said David Campbell, a financial adviser hired by Petersen to help it restructure.

“Petersen is going to reorganize," Campbell told the Journal Star. "The Petersen nursing homes are not in foreclosure, we are not shutting down, we are not going out of business. We will continue to put our residents and patients and employees and communities first, and continue to serve them.”

The 19 nursing homes placed into receivership earlier this year will eventually be returned to Petersen management, Campbell said. The facilities, many of which are in central Illinois, were placed in receivership at the request of two creditors who allege that Petersen is in arrears by about $55.5 million.

More: Petersen Health Care faces foreclosure on nearly $51 million in loans

Petersen says multiple issues led to financial difficulties for the company, which is based in Peoria and owns nearly 100 senior living facilities. Inadequate state and federal funding and staffing challenges were among the biggest challenges, Campbell said.

“We’re in rural communities where it’s very difficult to find employees, so we rely significantly on nurse staffing agencies,” he said. Employees found through nursing agencies cost significantly more, he said.

“And then we had the cyber breach, and that really was the icing on the cake,” said Campbell, referring to a ransomware attack in the fall of 2023 that locked down the company’s computer system.

Cyberattacks are a growing problem for health care agencies. In February a cyberattack on Change Healthcare, the largest health care billing and payment system in the U.S., affected health care providers across the country.

“Had we not had all the other issues, we would have been able to survive. But coming out of COVID, operating in a state where we’ve got very low reimbursements, it just made things very, very difficult, and we needed to hit the pause button and reorganize,” Campbell said.

An industry in distress

Petersen is not alone in its financial struggles. According to the Illinois Department of Public Health, nine long term care facilities closed in 2020 and 12 closed in 2021. Last year, Salem Village Nursing and Rehabilitation in Joliet closed. The privately owned nursing home had been operating for more than 40 years.

"This is not just a Petersen conversation, this is not just a Petersen challenge. These are all structural challenges that everybody in the industry is facing,” Campbell said.

More: Peoria-based health care company is preparing to file bankruptcy, according to report

Tina Roddis, administrator for The Loft Rehabilitation and Nursing of Canton, said that rising costs for food and supplies, along with the rising cost of payroll, has been difficult for the facility. The Loft is not a Petersen facility.

“There was a great incentive that came around to increase the CNA wages with the goal to keep staff during COVID, and I know it helped with staff retention, but it also created a domino effect that increased wages for LPNs and RNs and nurse managers just to stay competitive in the market,” she said.

Matt Pickering, executive director of the Health Care Council of Illinois, said the entire industry is in financial distress.

“We’ve all been on edge for a while. The closures keep coming, and it’s more than just closures. There’s a lot of changes of ownership happening throughout the industry, which is indicative of facilities being in trouble," said Pickering. “There’s a lot of financial pressure that’s coming from a lot of different factors.”

While Petersen Health Care is not among the more than 300 licensed skilled nursing facilities the Health Care Council of Illinois advocates for, Pickering felt compelled to talk about an issue he fears may lead to nursing home deserts in Illinois.

“We’re all in the same boat. Our members are feeling the same pain that Petersen is,” said Pickering.

'We will continue to provide services'

As the largest nursing home company in downstate Illinois, Petersen operates in many small communities throughout Illinois, Missouri and Iowa. In these communities they are often the largest employer, and in some cases, they are the only nursing home in town.

Administrators at Petersen know that the facilities are important in the communities where they are located and are working to reassure their employees and the families they serve, according to Campbell.

"The critical message we’ve been trying to convey is that Petersen will continue to provide services, to employ our friends and neighbors, and to take care of our patients and to be good citizens in our community.”

More: Two more Petersen Health Care facilities in Illinois have been placed in receivership

Leslie Renken can be reached at (309) 370-5087 or [email protected]. Follow her on Facebook.com/leslie.renken.

This article originally appeared on Journal Star: Peoria company reflects larger problems in nursing home industry