LYCOS RETRIEVER 
Health Care Reit
built 678 days ago
The original arguments for a long-term investment in Health Care REIT were its cleaned-up balance sheet and ideal positioning to capitalize on the coming long-term care and nursing needs of baby boomers. Companies such as Ventas
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In commenting on the acquisition, George Chapman, chief executive officer of Health Care REIT commented, "Our strategic merger with Windrose creates a platform capable of driving superior growth throughout the full spectrum of senior housing and health care real estate. The enhanced tenant base and asset diversification produces an even stronger combined entity. We intend to capitalize on the additional opportunities presented in property management and development, while the increased diversification provided by this combination should provide a more secure revenue stream through different operating cycles generating higher quality dividends and incremental value for our stockholders."
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Health care leases are normally three to 20 years long and are often "triple net" structured, meaning the operator is responsible for utilities, taxes, and insurance. Moreover, most leases automatically increase rents, typically 2%-4% a year. So health care REITs have the best of all worlds: They have stable, long-term revenue that's effectively hedged against rising energy costs and inflation.
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There was a "fury to buy in 1994, '95, '96," says John Poirier, executive director of the NH Health Care Association, whose members include about 82 long-term care facilities in the state (most of the remaining facilities are government owned). Then the acquisition trend slowed, as the multi-facility owners got very large and had purchased most of the New Hampshire-based chains," such the 10 McKerley homes, acquired by Genesis Health Ventures. "Rather than negotiate one by one, they got economies of scale" by purchasing the chains, he says.
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The health care industry is in a state of rapid change, with a multitude of internal and external factors driving the changes. As new priorities and technologies are created, new guidelines for environmental performance and efficiency must be introduced. Health care is responsible for the generation of two particularly harmful pollutants that adversely affect human and environmental health. These pollutants, mercury and dioxin, largely result from product and waste disposal. The irony in this situation is that the majority of health care providers and professionals are unaware that this problem exists; ... they focus mainly on recycling programs and compliance with waste regulations.
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- - - - Genesis Health Ventures, is positioning itself to win the managed care race by specializing in providing low -cost long-term care services. The Genesis strategy is to accomplish two goals simultaneously. By aggressively seeking exclusive contracts with managed care organizations, Genesis promises to lower managed care costs . At the same time, Genesis has launched a branding strategy, the "Genesis ElderCare Network," that promises health care consumers a consistently high level of quality care in all of their facilities.
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