Donika Schnell began her healthcare career in financing as a hospital consultant at KPMG and then in financial reporting with The University of Chicago Hospitals. She transitioned to lending to healthcare providers starting with working capital finance in lending operations and adding real estate and cash flow term loans soon after.

Donika moved into business development for Heller Financial, GE Capital and then CapitalSource building pipelines and relationships to providers and capital providers along the entire continuum of healthcare primarily in the Western half of the country. With rounded lending and industry experience, Donika was tapped to build two national healthcare lending divisions for banks before her recent focus on real estate lending at Greystone solely eyeing seniors housing, skilled nursing and hospitals.

Greystone is the number 1 HUD lender to the healthcare industry who also provides Fannie/Freddie and bridge term loan lending.  Greystone additionally owns and operates about 4,000 seniors/skilled beds.

Topics Discussed:

• Overview of the sources of capital available to providers:
  1. Equity – There is approximately $2T of pent up equity to deploy into the economy from the Private Equity sector.  Healthcare is very attractive as it has proven to be recession proof and if supporting the right sectors and operators/managers, equity investments have been solid returns.
  2. Bank Debt – Community banks willing to work with smaller providers.  Larger banks stalled with COVID first hit as they tried to assess existing portfolio risk and then what the pandemic meant overall to the industry.  Took about 90 days or so but most banks are back to lending at usually lower advance rates and perhaps asking for increased credit enhancements.  Pricing increased by 25 to 75 bps.
  3. Finance Companies – also stalled a bit when COVID first hit in March, but are back at lending at prior lending levels. Pricing increased by 50 to 100 bps.
• What does a lender look for in evaluating credit?
  1. Operator experience and track record
  2. Financial performance of the business historically. High emphasis on dealing with COVID in the business.
  3. For real estate such as skilled nursing, look to surveys and reports from CMS and especially Star Ratings and Special Focus Candidate lists.
  4. Occupancy trends.
  5. Projections/Proformas. Sources of revenue, thorough understanding of reimbursement, expenses especially any additional COVID costs such as increased staffing and PPE costs.
  6. Debt needs clearly defined.
• From a national lender’s perspective, how are the Seniors Housing and Skilled Nursing industries performing?
  1. Occupancy naturally down in ALFs and SNFs. With the drop in selective procedures, occupancy went down. Additionally, fewer discharges to SNFs after hospital stays affected occupancy. Independent living facilities have fared rather well with occupancy.
  2. Stimulus monies have helped ease the concern of working capital for providers so they can focus on caring for patients/residents and staff with needed safety measures.
  3. Have seen providers work closely with county and/or state health departments to provide for COVID only patients for care upon hospital discharge. Delicate balance to ask staff if they are committed to working in those buildings and wards – very collaborative efforts being made in communities.
  4. Future sees a high need for mental health services.
  5. Preventative services back to near pre-COVID levels such as with dentists, PCPs, ancillary services put on hold.

Donika's Links:
LinkedIn: https://www.linkedin.com/in/donikaschnell/
Twitter: https://twitter.com/dschnell1968