West Virginia Facility

6 Months Ended

Jun. 30, 2011

West Virginia Facility [Abstract]

WEST VIRGINIA FACILITY

8. WEST VIRGINIA FACILITY

On June 17, 2009, the Company completed the acquisition of certain assets of a skilled nursing facility in West Virginia. The Company had entered into an option agreement to purchase these assets for $850,000 during 2006 and the purchase price of $850,000 is included in other noncurrent assets in the Company’s Interim Consolidated Balance Sheet. The Company did not agree to assume any liabilities or working capital in connection with the acquisition. The existing facility closed in February 2009.

The Company has an agreement with a real estate developer that will construct, furnish, and equip a 90 bed skilled nursing center near Milton, West Virginia, to replace the facility described above. The Company will lease the new facility upon completion. The initial lease term is 20 years from the date the center is completed and fit for occupancy as a skilled nursing center. The Company has the option to renew the lease for two additional five-year periods. Construction on the nursing center began in November 2010, and it is estimated the center will be completed in late 2011. The agreement provides the Company the right to purchase the center beginning at the end of the first year of the initial term of the lease and continuing through the fifth year for a purchase price ranging from 110% to 120% of the total project cost.

The Company has no equity interest in the entity constructing the new facility and does not guarantee any debt obligations of the entity. The owners of the facility have provided guarantees of the debt of the entity and, based on those guarantees, the entity is considered to be a variable interest entity (“VIE”). The Company owns the underlying Certificate of Need that is required for operation as a skilled nursing center. The Company is considered to be the primary beneficiary of the VIE based primarily on the ownership of the Certificate of Need and the fixed price purchase option described above as well as its ability to direct the activities that most significantly impact the economic performance of the VIE and the right to receive benefits from the VIE that could potentially be significant to the VIE.

The following table summarizes the assets and liabilities included in the Company’s Interim Consolidated Balance Sheet associated with the real estate developer’s interests in the VIE. The assets can be used only to settle obligations of the VIE and none of these liabilities provide creditors with recourse to the general assets of the Company.

	June 30, 2011
Land	$	787,000
Building and improvements		3,182,000
Total Assets	$	3,969,000
Current liabilities	$	506,000
Notes payable		1,834,000
Non-controlling interests equity		1,629,000
	$	3,969,000