by James C. Sherlock

One discerning group of investors in the real estate-with-nursing-home-tenants business appears to hire operating chain-management companies exclusively from those headquartered in the Lakewood, New Jersey, area. The chains compete, but are all run by the same small circle of acquaintances.

That background is meaningful because five of Lakewood-based Medical Facilities of America (MFA)’s facilities in central Virginia are being sold. Not coincidentally, they are among the worst skilled nursing facilities (SNFs) in America:

• Colonial Heights Rehabilitation and Nursing Center (Colonial Heights) of multiple staff arrests for neglect and wrongful death fame,
• Henrico Health and Rehabilitation Center in Highland Springs, officially designated the worst nursing home in Virginia,
• Parham Health Care and Rehab Center in Richmond,
• Wonder City Rehabilitation and Nursing Center in Hopewell, and
• Westport Rehabilitation and Nursing Center in Richmond.

It may not have been up to the CEO of MFA to decide whether to sell those five facilities or to whom. The facilities are likely being sold not because they are awful, which they have been for years, but rather because their occupancy rates have dropped well below the levels that supported the 20% rates of return investors saw in earlier years.

That is cause for celebration in Virginia, but not in Lakewood. It is primarily due to WTVR TV6 News’ excellent and dogged reporting since the Colonial Heights scandal in December 2024. We all owe that station and its lead reporter on those stories, Tyler Layne, a major vote of appreciation.

But for investors, it signaled time for a change. They want to be able to advertise “under new management” to residents and regulators to wipe away the mess. It may work.

The owners are changing horses, but not stables.

Two nursing home chains were chosen (in quick succession) to replace MFA. They are both, like MFA, headquartered in the Lakewood area.

Lakewood is seven miles from Howell and five miles from Brick. The three nursing home chains involved in this sale are located in that small area.

Some of the key players grew up in the same neighborhoods and attended the same schools, including colleges. Some are second-generation in the business. Each includes a real estate section, a nursing home section covering operations and clinical matters, and a CFO structure. There is a pipeline.  All the leaders have been mentored and apprenticed in their specialties.  

What does a “sale” mean here?

Freestanding nursing homes owned by private interests like these are nearly always structured as two limited liability companies: an operating company (Opco) LLC and a property company (Propco) LLC, one of each for each facility. The Propco leases space to the Opco.

In this case, we know only that MFA is selling the five Opcos.

MFA also manages most, but not all, of the Propcos in its chain. MFA Propco owners have recently sold some of them to real estate investment trusts (REITs). Henrico Holdings 1 LLC, the Propco for Henrico Health and Rehabilitation Center, is registered to Lancaster Pollard (now Lument), a commercial real estate mortgage and investment banking firm in the healthcare sector.

But with co-ownership, profits are often shifted to the Propcos through extraordinary rents and triple-net leases that can leave the Opco LLCs nearly insolvent if sued, while the owners, shielded by the LLCs, draw on the Propcos’ profits. While such an arrangement can get messy in a bankruptcy involving the Opcos, it’s legal.

Marquis’ CFO, Mindee Posen, registered all five nursing facilities as new Opcos with the National Provider Identifier (NPI) system, thereby enabling them to bill Medicare and to contract with Virginia Medicaid.

But two weeks later, CEO Moshe Stern registered the same locations under different Opco names for the chain Prestige Healthcare Administrative Services (Prestige) of Howell, NJ.

The sequence of NPI registrations, using the Colonial Heights facility as an example, was:

• Mindee Posen registered an Opco for Marquis on May 15, 2026, as Ellerslie Operator LLC.
• Moshe Stern registered one for Prestige on May 29, 2026, under the name Magnolia Post Acute LLC.

NPI registrations are usually made about a month before operations begin as a predicate for charging Medicare and Medicaid, so it was really a last-minute change.  

MFA investors, hidden behind LLCs, may not care about reputational damage, but they do care about a significant drop in occupancy. Amid the bad publicity, occupancy at those five facilities fell sharply from the mid-90% range to between 68% and 86%, depending on the facility. That represents a major loss of revenue and, thus, profits.

Prestige Healthcare Administrative Services

We don’t know why Marquis was not permitted to proceed with the acquisition, and Prestige was selected instead so close to the sale date. 

Prestige operates nursing homes in Pennsylvania and Delaware. Those two states present a different operating and oversight environment from Virginia. Both states have strict staffing requirements that are strictly enforced, but both states’ Medicaid programs also pay per diem for long-term care at rates considerably higher than Virginia’s.

Prestige uses a business model that works for its investors in those two states.  Unhelpful to their welcome in Virginia, the three Prestige facilities in Delaware currently have the lowest staffing ratings of any chain in the state.

A business model used to maximize income there would necessarily differ in key respects from one designed to achieve the same returns in Virginia, given the very different financial and oversight environments.  On average, Virginia facilities have higher occupancy than those in Pennsylvania and Delaware due to COPN, but Virginia Medicaid pays much less per capita.  Owners can get away with lower staffing in Virginia than is permitted in Delaware.

There is some cause for discomfort in the choice of Prestige.  

The Propcos to which Prestige-operated nursing homes elsewhere currently pay rent are controlled by Nathan Stern and Eliezer Scheiner. Those two gentlemen controlled companies that collectively paid almost $5 million “to resolve allegations of fraudulent billing” to Medicare and Tricare in 2018. Since they settled without admitting guilt, they are free to participate in federal healthcare programs.  They remain big players.

One of the facilities Prestige advertises as part of its chain is Caring Heart Rehabilitation and Nursing Center in Pennsylvania, an SNF within a not-for-profit continuing care community. In the same 2018 federal settlement, Caring Heart paid almost $1.3 million to resolve the same allegations. It may be the only nonprofit this author has seen involved in such a situation.

We’ll hope all of them learned a lesson.

Bottom line

The state appears unlikely to take action to block the sale.

MFA has several features in its profit-maximization business model here that we hope Prestige avoids, including ritual understaffing.  Perhaps the foremost concern is that the facilities newly acquired by Prestige in Virginia remain as understaffed as they are, even as occupancy is increased to generate the same returns MFA investors are used to.  The residents of those nursing homes, their loved ones, and all Virginians certainly hope not.

This author will be among the first to congratulate Prestige if it markedly improves the performance of those facilities.  If the new owners consider whether new senior staff is needed, turn to staffing agencies to increase nurse and CNA staffing levels, and hire Medical Director physicians who commit to spending time in the facilities and supervising medical care, they will deserve our thanks.   

But the dreadful current state of the facilities being acquired makes this sale truly an exceptional case. 

The beleaguered residents deserve the additional state oversight that would result from placing all five facilities in the Special Focus Facility (SFF) program.  Henrico is already the state’s only SFF.  The other four should be designated as SFF Candidates until the new owners demonstrate improvement.  

This author hopes it happens.  

Post Script.  MFA and Marquis both operate in Virginia.  MFA and Prestige both operate in Delaware.  

We will use the examples of Delaware and Virginia in the next article to show readers the stark differences in nursing home performance:

• Between a state in which they are well regulated and one in which they are not.  
• Between a legislature that cares how they are operated and one that does not.  
• Between a state that has very low campaign donation limits and one that has no limits.

We will also examine the issues common to Lakewood-area chains in both states.  

The story will embarrass some people, assuming those exposed are capable of embarrassment.