County Home dilemma: staying at 98 percent full, yet still losing money
By LIZ SKOCZYLAS
OBSERVER Mayville Bureau
The old saying “there is no such thing as a free lunch” applies to the Chautauqua County Home as well.
Every resident who is admitted into the home has expenses, whether they are covered by Medicare, Medicaid, out-of-pocket, or some combination. And, according to Colleen Wright, County Home financial officer, despite running at high occupancy rates nearly 98 percent in 2011, the year most recently audited the home is still losing money.
In fact, according to an income statement provided by Wright for the home for 2011, the home lost more than $39 per resident each day. Multiplied by each of the County Home’s 216 beds, the home lost more than $8,400 a day. Even if each day the home is only occupied at 98 percent, the home would still lose more than $8,200 each day.
“We are losing money,” Wright said. “We are losing a significant amount of money. We are not losing money when you give us a subsidy.”
In 2010, the County Home received no Intergovernmental Transfer, or IGT, funds, money given to the home by the county and matched by funding from the state. The County Home ended the year with a net loss of $1,788,542. In 2011, the home received $3,166,812 in IGT funds and ended the year with a net profit of $106,475. According to the income statement, if the home had not received IGT funds, it would have had a loss of $3,006,337.
PAYING FOR CARE
Wright said Medicare generally pays between $160.10 and $658.38 for a resident’s care each day for up to 20 days, based on the level of care a resident needs while in the facility. After day 20, residents must pay $148 per day, and Medicare pays the remaining balance for each additional day of care, up to 100 days.
Medicaid pays at most $176.41 for a resident each day. Under the Medicaid option, all other income whether it’s Social Security, interest or pensions also goes toward care at the County Home. Residents are able to keep an allowance of $50 per month.
Currently, a resident pays $287 for room and board for a private room, or $275 for room and board for a semi-private room. Additional costs are incurred if a resident requires ancillary services such as physical therapy, oxygen therapy, laboratory services or any outside medical consultations.
“When a person comes to the County Home, we do require them to pay, and we do require a payer source,” Wright said. “What we pay in taxes doesn’t affect at all what we pay to come here.”
She also cautioned that all of the reimbursement rates are generalizations, as each company has its own set of stipulations that must be followed. And, there are times when people who begin their residency at the home under one form of payment or insurance change to another by the time they are ready to leave.
Wright compared the cost per person for care in the County Home to purchasing a seat on an airplane, where the cost of one seat is not necessarily the same as the seat next to it. She explained that there are different rates for an airplane seat, depending on how it is booked. Similarly, rates for each resident in the County Home are different, depending on the care each person needs and the various types of insurance they hold.
“It’s not like you get the same amount for every person who is here, who is in the home,” Wright said.
COUNTY HOME CENSUS
Instead of operating at 365 days a year, the County Home operates at 78,840 365 days for each of its 216 available beds.
In 2011, the home was occupied for 76,863 days, which is an occupancy rate of 97.5 percent. Throughout the year, there were 1,977 “days” where a bed was not filled and the County Home, therefore, was not making money on the bed.
“We are relatively full, which is a good thing for the taxpayers,” Wright said. “We are trying to get as many people into the home as possible.”
From January through December 2011, Medicaid accounted for 80 percent of the billed beds; Medicare accounted for 3 percent of the billed beds; private pay accounted for 13 percent of the billed beds; and HMOs and other insurances accounted for 4 percent of the billed beds.
According to a County Home study performed by the Center for Governmental Research this past August, in any nursing home, Medicare payments tend to be most favorable, as they can have much higher rates, while Medicaid’s reimbursement rates are typically significantly less per day.
“Nursing homes do not have full control over whom they admit,” the CGR report states. “They are dependent upon referral sources such as hospital discharge planners, geography, perceptions, and many other variables over which they have little or no control.”
However, the report goes on to state that there may be opportunities within this overall context to market more aggressively on a selected basis in the community, such that the facility increases the odds of attracting more private pay and Medicare residents.
Attracting Medicare residents, though, is not as simple as marketing.
“We don’t turn any Medicare person away,” Wright said. “So, while the report is on the right track, it’s hard to find them. But, I’m not saying you can’t.”
REVENUES AND EXPENSES
Each month, Wright provides an income statement to the legislature for review. Additionally, the County Home is audited by BWB each year.
In 2011, room-and-board costs accounted for the majority of the County Home’s revenues, generating an income of $15,863,819, or 77.9 percent of the home’s revenues.
Additionally, IGT funds in 2011 made up 15.6 percent of the home’s revenues. Miscellaneous revenues such as beauty and barber services, telephone services and donations and ancillary services accounted for 1.1 percent and 5.4 percent of the revenues, respectively.
Offsetting the revenues are the County Home’s expenses. Notably, personal services, including base pay and other expenses – including overtime, clothing allowance and vacation buy back – accounted for 42.7 percent of the home’s expenses. Additionally, employee benefits, such as FICA and Medicare, accounted for 24.4 percent of the expenses.
Other expenses are accounted for in equipment, building depreciation, contractual obligations and interest on bonds.
“We pay more on fringe than we do for stuff like utilities, food and whatnot,” Wright said.
Although the County Home recorded a surplus for 2011, Wright said had it not been for the IGT funds, the home would have recorded a net loss of more than $3 million. Although the books are not yet closed for 2012, many of the same revenue and expense issues apply.
The County Home, under a state regulation, can only provide to its residents a skilled level of care.
“The County Home can’t have anything but this level of care, the skilled level of care,” Wright said. “We can’t have assisted living or anything like that. That is an absolute state regulation.”
Although other nursing facilities in the county offer programs, such as assisted living, the County Home cannot expand to include programs such as this.
“To be skilled, you have to have certain needs,” Wright said. “When people come in, they have to be tested to make sure they have the right needs. But, we could never build an apartment complex. We’re just not allowed to do that.”
The County Home is able to expand within the skilled care definition to meet the needs of its residents, though. If the home remains county-owned, it would be able to expand its Alzheimer’s unit or a bariatric unit anything that falls under skilled nursing.
Wright also pointed out that residents generally are no longer coming into the home for years at a time.
“People used to come to a nursing home for two years, three years,” she said. “Now, they’re coming in later, they’re coming in sicker and they’re staying for a shorter period of time.”
The majority of the residents in the home, according to Wright, are north county residents. She said that this is primarily because it is convenient for any nursing home resident to be close to their family, and because the County Home is located in Dunkirk, many of its residents are from the surrounding area.
TO SELL OR NOT TO SELL
Wednesday night will likely be another step forward for legislators in the saga of whether to sell the County Home. The sale has been a discussion among legislators for more than a year.
The county commissioned Chicago-based marketing firm Marcus and Millichap to market the home in December 2011. In July 2012, the firm came back with two potential qualified buyers: Whilliam (Avi) Rothner, who offered $16.5 million cash upon closing, and Israel Sherman, CEO of Absolut Care Facilities Management, LLC, East Aurora, who submitted a lease offer of $1.6 million a year with a purchase option at any time of $16 million.
Since the July report, County Executive Greg Edwards has moved forward with the proposal from Rothner. In order to sell the County Home, two-thirds of the legislators’ votes would be required. The supermajority vote stems from a county local law dating back to 1975, which requires a two-thirds vote for sales of real property owned by Chautauqua County.
Over the last week, legislators have had the chance to review a proposal between the county and Rothner. Two resolutions will be brought forward during the legislature meeting Wednesday.
The Human Services Committee and Audit and Control Committee heard from Edwards and County Attorney Steve Abdella this past week, regarding a resolution authorizing the sale of the County Home to Altitude Health Systems Inc. Additionally, the committees heard a resolution from fellow legislator Larry Barmore, R-Gerry, regarding intent to sell the County Home.
According to a memo to both committees from Edwards, “If the first resolution were to pass the full Legislature, the second resolution would be ruled out of order. If the first resolution does not pass the full Legislature, the second resolution will be available for action.”
The legislature meeting will take place in the Legislative Chambers on Wednesday at 6:30 p.m.