Genesis Health Venture Case Analysis

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Story of Genesis Health Ventures

Genesis Health Ventures was established in the year 1985. The company consisted of 9 centers and a management team specializing in medical services delivery to the elderly population, among them nursing homes acquisition, rehabilitation therapy, diagnostic testing, and others.

In the period from 1985 till 1998, the profit of the company grew from 32$ million to 2.4$ billion. The firm became one of the companies delivering high-quality service to people with acute diseases and injuries.

In 1999 the company started experiencing serious financial problems: it had a lot of debts to pay off under the Senior Credit Agreement. That year the government decided to make great cuts to Medicare that influenced the work of Genesis greatly.

In May of 2000, Genesis said the most of its creditors had agreed to give the company a two-month extension. Merrill Lynch was the one who helped the company in developing a restructuring plan of their assets. However, the firm failed to make all the payments on its debts. In June 2000 the company presented petitions to the United States Bankruptcy Court to reform its capital structure under the U.S. Bankruptcy Code, Chapter 11. GHV reorganized and reemerged as a very strong company focused on high-level medical care.

To return to the market and reemerge from the bankruptcy Genesis Health Ventures had to do its best to develop a financial plan (payments on debts) and the business strategy at the same time.

The company had more than 48,000 employees at 66 facilities in the year 1999. The health care industry experienced great labor shortages, which had an adverse influence both on the profitability of Genesis Health Ventures and other health care companies. Nevertheless, Genesis is still aimed at keeping its level of care and finding the appropriate number of employees. The nursing units of Genesis Health Ventures include 3 basic levels: skilled, intermediate, and personal.

In 2003, according to the decision of the company’s Board of Directors, Genesis Health Care adopted the trade name of NeighborCare division and became a corporation named Genesis HealthCare Corp.

Mission of company

Genesis is a rather interesting company for it was created to fulfill a mission to provide health care to high-acute Medicare patients. The primary goal of Genesis was to make medical care available to every elderly (65 years and older) or disabled person in the United States. It made efforts to provide care and compassion to every person, who needed them. GVH had great plans but did not think through their strategy and the consequences of their sometimes rather dangerous actions. It focused all its attention on fast growth. The firm planned to take the dominant position on the aged health care market working in the United States. The company took a great number of loans for buying other Medicare companies. That was very risky since later the income of the firm decreased greatly. The firm Genesis Health Ventures claimed to provide high-quality health care and considered the government to be responsible for its business failures, bankruptcy, and other difficulties. Despite all the company’s difficulties on the way to its aim, it has managed to overcome them and has become one of the largest providers of long-term medical service. Today Genesis has over 350 nursing homes and provides its service to the communities of 16 states.

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