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The end of county homes?

Published August 20. 2014 04:00PM

Decades ago, before the federal government provided Medicaid and Medicare, counties had their own nursing homes to care for impoverished senior citizens.

But as of June 5, just 22 of the state's 67 counties, including Schuylkill, Monroe and Lehigh, operated nursing homes.

That number could drop as Schuylkill County officials suggested at a special meeting last month that they may sell the county nursing home, Rest Haven.

The issue was likely to be addressed at the commissioners' meeting today.

As costs continue to outpace income, Schuylkill officials agreed to loan the nursing home $750,000 and to give it $99,825 to make ends meet. The home is struggling under the burden of Medicaid shortfalls, employee health care costs and other financial liabilities, officials say.

Revenues dwindle as costs rise

Even though all 142 beds at Rest Haven are filled, 119 of them are for folks who rely on Medicaid. The cost of care for each patient comes to $221.47 a day, but Medicaid reimburses the home only $172.09 a day.

Rest Haven is not alone. According to the American Health Care Association, the 2012 Medicaid shortfall (the most recent data available) was projected to exceed $7 billion nationally.

According to the 2012 report, the shortfall between cost of care and Medicaid reimbursement dropped from $9.05 in 1999 to $22.34 in 2012, AHCA said.

The rising cost of employee health benefits is also stressing nursing home budgets.

Rest Haven as of June 30 carried $6.5 million in accrued liabilities, a large portion of which is retirees' health care benefits, said Schuylkill County finance director Paul Buber.

In Lehigh County, where officials are faced with maintaining a financially floundering Cedarbrook nursing home, employees agreed to pay more toward benefits and give up 12 of their 20 annual sick days under a new union contract, according to published reports. Lehigh County last year funneled $6.3 million into Cedarbrook.

Monroe County's nursing home, Pleasant Valley Manor, is under the leadership of a board of directors that includes all three county commissioners. It's managed by Premier Healthcare Resources.

Pleasant Valley's latest contract, settled in January, included having employees give up three holidays and make other concessions that will save the county about $500,000, says Commissioner Charles Garris.

Garris estimates Premier this year has saved "at least $400,000 by changing some jobs around. They were $436,000 in the red last year. It's a hell of an improvement."

Monroe had been contributing $1 million a year to keep the home afloat.

Northampton County voters spared the county's nursing home, Gracedale, from sale by a referendum in 2011, Commissioner Bob Warner said. The referendum called for keeping the facility open for five years with a management/marketing group and cost-cutting measures in place.

"The county still contributes $2 to $3 million a year because pension plans and other costs have gone up," Warner said.

Commissioners in 2012 settled an employee contract that reduced the number of sick hours, subtracted a paid holiday and made other concessions.

In Schuylkill County's case, officials must also factor in the cost of training certified nurse assistants, or CNAs. Commissioner George Halcovage said many of those trained leave the nursing home for jobs elsewhere.

From 2011 to this year, the home trained 78 CNAs at a cost of $97,076. Of those, 22 were fired, 27 left and 29 are still employed at Rest Haven.

Forced to sell

Although the Medicaid shortfall and benefits costs are hitting every government nursing home hard, there is no common reason why counties are shedding their nursing homes, said Kelly Andrisano, executive director of Pennsylvania County Affiliated Homes, an affiliate of the County Commissioners Association of Pennsylvania.

"It's a difficult question to answer. The reasons can vary from county to county. There are counties that have chosen to sell, and that was a purely financial decision," she said.

In Carbon County, commissioners in 2010 sold the county nursing home, Weatherwood, to Guardian Elder Care.

Commissioner William O'Gurek, who was chairman at the time, said the reasons included the Medicaid shortfall, combined with empty beds, increased union contracts and more options for potential residents.

"The same factors Schuylkill County is facing are the ones that contributed to it costing Carbon County $3 million a year to operate Weatherwood," he said.

Guardian made some changes that may be helping it sustain the home, he said.

"As one example, when Guardian Elder Care purchased our county home, they kept many of our employees, but health care coverage and salaries changed. I remember Guardian doing its own salary study and ultimately determining that it could not pay wages for some positions like the county had been doing because of contracts. That meant some positions, like those in dietary, laundry and maintenance, paid the retained workers less," O'Gurek said.

Efforts to reach Guardian Elder Care president and CEO Eddy J. Inzana were unsuccessful.

It remains unclear whether counties in other states are also selling or closing their nursing homes. The U.S. Administration for Community Living, which tracks and oversees nursing homes, failed to respond to several phone calls and emailed messages requesting information.

"I don't think there is anyone tracking county nursing home sales nationally in the aggregate," says Brian Lee, executive director of the Tallahassee, Florida-based Families for Better Care, a resident advocacy group. "However, I've noticed the frequency of county nursing home sales happening at a much more steady clip."

Private ownership

"It seems that county commissioners want out of the business of nursing home management, which is unfortunate for residents because very often the quality of care in these facilities is generally better," he says.

"The closer the operators are to the bedside, the better for residents, far better than corporate bean counters 10 states away. County nursing homes are locally owned and operated by neighbors who have lifelong relationships with folks living in their homes. The reason why they might have tighter operating margins is because they're generally staffing higher to meet the needs of the residents," Lee says.

No officials of for-profit nursing home companies returned telephone calls asking how they manage to stay in the black or make money.

Lee is certain he knows the answer.

"The reason why nursing home chains are profitable is because they slash labor costs at the expense of resident care," he says. "Every nursing home company's stock is trending higher since the beginning of the year. In fact, stocks prices for the publicly traded companies have increased 25 percent on average despite the rocky markets."

One concern is the fate of those county nursing home residents dependent on Medicaid when private companies step in.

"County homes are the only ones required to take Medicaid residents on day one, so as more and more homes sell, there is no guarantee that all Medicaid eligible individuals will have a place to go," PCAH's Andrisano said.

Still struggling

In our area, Schuylkill, Lehigh, Monroe and Northampton counties continue to operate nursing homes, despite the financial pressures.

Northampton County Commissioner Warner believes Gracedale is an important part of the county and needs to stay open.

"Gracedale was not built to be a moneymaking facility. It was to take care of the needs of the county residents," he says. "It's based on human service, not dollars. Gracedale's importance to (county residents) is that their family members who are aging are going to be taken care of. It will always be worth the county contribution each year to ensure the well-being of our residents."

In Monroe County, Garris says, "Our philosophy is just break even. that's all we're asking. We're satisfied with break-even, as long as it doesn't cost the taxpayers a million a year."

Lehigh County's nursing home, Cedarbrook, continues to operate. Efforts to reach Commissioner Geoff Brace for details were unsuccessful.

According to recent published reports, the county anticipates the amount it needs to contribute to the homes to total $15.8 million between 2012 and the end of this year.

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