Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Kevin Ellich with RBC Capital Markets.
Kevin Ellich - RBC Capital Markets
I would like to discuss the Five Star Solutions that Bruce talked about. Can you talk about the arrangements and costs associated with providing those services to the residents, are there any costs associated with that?
Bruce Mackey
Breaking the three out, two of them don’t have any costs, elder life care or the elder loans do not. Those are, again, third party arrangements that the resident or perspective resident would enter into with the company. The veteran benefit has a minimal cost for an applications fee, but a nominal amount, several hundred dollars.
Kevin Ellich - RBC Capital Markets
Are those exclusive arrangements or not?
Bruce Mackey
No they are not. There was also marketing costs associated with them, but again it was not that material of an amount.
Kevin Ellich - RBC Capital Markets
Okay. Then moving on to the cost savings that Fran talked about, how much was the interest expense savings?
Fran Murphy
It was $1.7 million.
Kevin Ellich - RBC Capital Markets
That is annually, from the convert?
Fran Murphy
Yes, it is.
Kevin Ellich - RBC Capital Markets
Okay and then the Omni Care agreement, is that going to be a significant expense savings?
Fran Murphy
We’re not disclosing that at this time. It’s a combination of things that are coming into place. We’ve got a preadjudication consultant that’s involved in the process, so some of this will develop over time and we can report back to you later.
Kevin Ellich - RBC Capital Markets
Okay, that’s helpful. Then moving down the line to food services contract that you’re putting out for bid, who is that contract currently with and what is your expectation for cost savings?
Fran Murphy
It’s with FISCO. If we can pick up a few points it means a lot of money at a $40 million annual spend.
Kevin Ellich - RBC Capital Markets
Okay that’s helpful and then Fran, you also talked about the delayed Medicare and Medicaid receivables. I’ve seen some other healthcare providers see some of these issues. Have you identified what the issue is? You have obviously made some personnel changes to try and prove that, so what is your expectation going forward?
Fran Murphy
The personnel change wasn’t directly made to collect Medicare and Medicaid, it’s more directly related to private. The Medicare and Medicaid appear to be several unrelated conditions. Some of them are related to new facilities and getting their licenses.
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