Note 3 - Other Revenues

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Other Revenues [Text Block]

Note 3 – Other Revenues

Other revenues are outlined in the table below. Revenues from insurance services include premiums for workers’ compensation and professional liability insurance policies that our wholly owned insurance subsidiaries have written for certain healthcare operators to which we provide management or accounting services. Revenues from management and accounting services include fees provided to manage and provide accounting services to other healthcare operators. Revenues from rental income include health care real estate properties owned by us and leased to third party operators. Other revenues include miscellaneous health care related earnings.

	Year Ended December 31,
(in thousands)	2019		2018		2017
Insurance services	$	6,209	$	7,084	$	8,003
Management and accounting service fees		18,533		15,175		16,169
Rental income		22,641		22,262		21,957
Other		1,128		1,386		1,024
Gain on sale of skilled nursing facility		–		1,668		–
Total other revenues	$	48,511	$	47,575	$	47,153

Insurance Services

For workers’ compensation insurance services, the premium revenues reflected in the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 were $3,536,000, $4,392,000, and $5,300,000, respectively. Associated losses and expenses are reflected in the consolidated statements of operations as "Salaries, wages and benefits."

For professional liability insurance services, the premium revenues reflected in the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 were $2,673,000, $2,692,000, and $2,703,000, respectively. Associated losses and expenses including those for self–insurance are included in the consolidated statements of operations as "Other operating costs and expenses".

Management Fees from National

We have managed skilled nursing facilities for National since 1988, and we currently manage five facilities. See Note 18 regarding our relationship with National.

During 2019, 2018 and 2017, National paid and we recognized approximately $6,627,000, $4,304,000, and $4,194,000, respectively, of management fees and interest on management fees. Unrecognized and unpaid management fees and interest on management fees from National total $19,148,000 and $21,398,000 at December 31, 2019 and 2018, respectively.

The unpaid fees from these five facilities, because collection of substantially all of the contract consideration was not probable when the performance obligation was satisfied, will be recognized as revenues only in the period in which the amounts are received as we have no remaining obligation for those services provided. Under the terms of our management agreement with National, the payment of these fees to us may be subordinated to other expenditures of the five skilled nursing facilities. We continue to manage these facilities so that we may be able to collect our fees in the future and because the incremental savings from discontinuing services to a facility may be small compared to the potential benefit. We may receive payment for the unrecognized management fees in whole or in part in the future only if cash flows from the operating and investing activities of centers or proceeds from the sale of the centers are sufficient to pay the fees. There can be no assurance that such future improved cash flows will occur.

Management Fees and Financial and Accounting Services for Other Healthcare Centers

During 2019, 2018 and 2017, we provided management services to certain healthcare facilities (in addition to the five National centers) operated by third party owners.  For the years ended December 31, 2019, 2018 and 2017, we recognized management fees of $2,952,000, $2,532,000 and $2,794,000 from these centers, respectively.

During 2019 and 2018, we provided accounting and financial services to 20 healthcare facilities. No management services are provided for entities in which we provide accounting and financial services.

Rental Income 

The Company leases real estate assets consisting of skilled nursing facilities and assisted living facilities to third party operators. Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 6 – Long Term Leases.

The following table sets forth the undiscounted cash flows for future minimum lease payments receivable for leases in effect at December 31, 2019 (in thousands):

2020	$	22,019
2021		23,011
2022		22,907
2023		22,738
2024		22,730
Thereafter		22,950
Total future minimum lease payments	$	136,355

Gain on sale of skilled nursing facility

In October 2018, the Company sold a skilled nursing facility located in Madisonville, Kentucky.  The total consideration paid to the Company was $4,300,000, which resulted in a gain of $1,668,000. The gain was recorded in "Other revenue" in the consolidated statement of operations.