The Schuylkill County commissioners are facing a decision that many other counties throughout Pennsylvania have had to make in recent years: whether or not it should get out of the nursing home business.
“The counties are always torn in making the decision,” Douglas Hill, executive director of the County Commissioners Association of Pennsylvania, said Thursday. “It is something they have been doing for about 150 years.”
The County Code once required all counties to operate their own nursing homes. Since that is no longer the case, most counties have decided to cut ties with their nursing homes.
“I have been doing this for about 30 years,” Hill said. “When I started, there were probably 46 or 50 counties that still had nursing homes. Now, it is down to 22.”
Schuylkill County’s Rest Haven nursing home, Schuylkill Haven, had a net operating deficit of about $3 million at the end of 2013.
So far this year, the county commissioners had loaned the facility $1,307,927.73 and allocated $758,891.59 to help pay the bills.
The commissioners allocated $255,415.62 in 2012 and $300,000 in 2011. Before that, the commissioners did not have to allocate funds since giving Rest Haven $975,000 in 2004.
“The easy answer is the cost,” Hill said about county homes not turning profits. “The reimbursement rate per bed is not adequate to cover the cost and counties generally have to make up the difference.”
Hill said about 90 to 95 percent of payments at county-run nursing homes come from Medicaid and Medicare, while it only makes up about 40 to 60 percent at private facilities. The rest comes from private payments.
The reason for the discrepancy is that county homes are required to take in patients that are first-day eligible, Hill said.
Since the cost of care usually exceeds medical reimbursement, private facilities tend to lose less money on their patients.
“The cost balance is easier for a private home to maintain,” Hill said.
Built in 1912, Rest Haven is a 142-bed facility. The daily cost per bed at the facility is $221.47 while Medicaid only reimburses $172.09.
About 84 percent of the patients at Rest Haven pay with Medicaid while 5.5 percent use Medicare. The remaining 10.5 percent use private payments. That is a difference of $29.38 in daily medical reimbursements per bed and adds up to a loss of $2,144,820.30 over the year.
Hill also said reimbursements from medical assistance have not increased accordingly.
“The reimbursement rate is in no way keeping up with rising costs,” he said.
In Carbon County, similar problems led the commissioners to sell Weatherwood Nursing and Rehabilitation Center, Weatherly, in 2010.
“At the time we made the decision to sell the home, we were projected to have a $3 million deficit each year,” Carbon County Commissioner William O’Gurek said Thursday.
O’Gurek, now is in his 11th year on the board, said the facility started losing money in 2008 and through 2009. He also cited low medical assistance reimbursements along with union contracts for nursing home employees making things difficult for county-operated homes.
“With what the costs have increased to, it makes it very hard to keep your head above water,” he said.
A 200-bed facility, Weatherwood only had about 150 beds filled prior to being sold.
Rest Haven, on the other had, was operating at full occupancy at the end of July. The population at Rest Haven has steadily increased since Service Access and Management, Pottsville, took over management responsibilities at the facility in 2012. It is the first time Rest Haven operated at full occupancy in at least six years.
“We found ourselves in a competitive market in Carbon County in that we are surrounded by nursing homes all over the place,” O’Gurek said.
According to the government Medicare website, there are at least 14 nursing homes in Schuylkill County.
“It also dropped because as a Medicare provider, we had faced some violations,” O’Gurek said.
O’Gurek said the facility was not permitted to accept Medicare patients until plans to resolve those issues were submitted to the state Department of Health. The hospitals in the area were also recommending patients to wings at their facilities.
“We were also competing against ourselves in that our Area Agency on Aging administers a waiver program encouraging seniors to stay in their homes longer by providing them with programs and funding for things like nursing and housekeeping,” O’Gurek said. “In one department, we are encouraging people to stay in their homes and in another, we are trying to run a nursing home.”
Carbon County then acquired the services of Marcus & Millichap, Real Estate Investment Services of Philadelphia, to review all the finances at the nursing home, including union contracts, operational expenses and medical assistance reimbursements.
O’Gurek said the company provided them with three options.
One option was to continue operating the facility by cutting costs, which included the possibility of having fewer beds, reducing staff and developing a marketing strategy to attract more patients. Another option was to outsource the management responsibilities at the facility, like Schuylkill County did with SAM.
The commissioners ultimately decided to go with the recommended third option of selling the facility.
“Unanimously, we decided that since we were losing $8,200 a day, let’s get out of the business,” O’Gurek said.
Marcus & Millichap was then hired to help prepare the home for sale and secure bids.
“The firm looked into the stability of those companies and their financial status so that if we were to sell it, we were going to sell it to someone who is capable of keeping it,” O’Gurek said.
O’Gurek said about 10 to 15 proposals were received and about four or five were considered before they agreed to sell it to Guardian Health Care, Nanticoke, for about $11 million. Guardian now owns 30 healthcare communities, with 25 in Pennsylvania, four in Ohio and one in West Virginia, according to its website at www.guardianeldercare.com.
“Our goal had been to keep the facility as a place for the elderly and infirmed that needed that nursing facility and to keep it as a place of employment in that area of the county,” O’Gurek said. “When we sold it to Guardian, we believe we met that target we put out there.”
O’Gurek said all but about five of the 200 employees at Weatherwood were offered jobs with Guardian, although probably at a lesser salary with a less lucrative benefits package than with the county.
“While they were offered jobs, it was difficult for us as commissioners because the conditions of people’s livelihoods were changing,” he said. “For some people, it had more of an impact.”
Guardian also negotiated new agreements with the two unions representing employees at Weatherwood.
“The county put some of the proceeds of the sale to Guardian to help pay the benefits,” O’Gurek said. “They earned it on our watch, so they were owed what we gave to them.”
Under state law, current residents at nursing homes can not be displaced even if it is being sold.
While a difficult decision, O’Gurek said he believes the board made the right call.
“In my mind, it was one of the best and most sound fiscal decisions the three of us has made,” he said. “When we had bleeding, we stopped the bleeding and did what anyone in business losing millions a year would do.”
The county also collected about $132,000 in real estate taxes on the property the following year.
“They became the sixth largest real estate taxpayer in the county,” O’Gurek said.
Luzerne County is attempting to sell its 353-bed Valley Crest Nursing Home in Plains Township and received bids earlier this week. Lebanon County just sold its 324-bed nursing home, Cedar Haven, Lebanon, for $25.5 million in July.
“There is a robust market place out there,” Hill said.
Adams, Blair, Cambria, Dauphin, Lancaster, Lackawanna, Mercer and Northumberland counties also sold their nursing homes within the last 10 years. The sale of Northampton County’s Gracedale nursing home was blocked by a voter referendum in 2011.
The Schuylkill County commissioners have yet announced their plans for Rest Haven, but issued the following statement Thursday:
“As it is clear from the number of counties selling their nursing homes, changes in state policy and reimbursement methods have created significant challenges for county-owned nursing home. Rest Haven is not immune from those challenges and we have openly shared with the public the growing financial support required by the facility. We will continue to monitor this situation closely and strive to balance the best interest of Rest Haven residents, our employees and the county taxpayers.”
Nursing homes sold within the last 10 years:
Adams County
Location: Green Acres, Gettysburg
Beds: 135
Buyer: Transitions Healthcare, Sykesville, Maryland
Year sold: 2011
Price: $6.1 million
Beaver County
Location: Friendship Ridge, Beaver Falls
Beds: 600
Buyer: Comprehensive HealthCare Management Services LLC, New Jersey
Year sold: 2013
Price: $37.5 million
Blair County
Location: Valley View Health and Rehabilitation Center, Altoona
Beds: 240
Buyer: Reliant Senior Care Management, Philadelphia
Year sold: 2013
Price: $16.5 million
Butler County
Location: Sunnyview Nursing and Rehabilitation Center, Butler
Beds: 220
Buyer: Investment 360, Lakewood, New Jersey
Year sold: 2014
Price: $20.4 million
Cambria County
Location: Laurel Crest Rehabilitation and Special Care Center, Ebensburg
Beds: 370
Buyer: Grane Healthcare, Pittsburgh
Year sold: 2010
Price: $14.3 million
Carbon County
Location: Weatherwood Nursing and Rehabilitation Center, Weatherly
Beds: 200
Buyer: Guardian Elder Care, Nanticoke
Year sold: 2010
Price: $11 million
Dauphin County
Location: Spring Creek Rehabilitation and Health Care Center, Harrisburg
Beds: 404
Buyer: Continuum Care Holdings, Wesport, Connecticut
Year sold: 2006
Price: $22 million
Franklin County
Location: Falling Spring Nursing and Rehabilitation Center, Chambersburg
Beds: 186
Buyer: Mid-Atlantic Health Care, Sparks, Maryland
Year sold: 2013
Price: $11 million
Lackawanna County
Location: Lackawanna County Health Care Center, Olyphant
Beds: 272
Buyer: Millennium Management LLC, Miami
Year sold: 2010
Price: $13.4 million
Lancaster County
Location: Conestoga View Nursing Home, Lancaster
Beds: 446
Buyer: Complete Healthcare Resources, Dresher
Year sold: 2005
Price: $8.5 million
Lebanon County
Location: Lebanaon Cedar Crest, Lebanon
Beds: 324
Buyer: Complete Healthcare Resources, Dresher
Year sold: 2014
Price: $25.5
Mercer County
Location: Woodland Place, Mercer
Beds: 100
Buyer: Southwestern Alphia, New Castle
Year sold: 2009
Price: $5 million
Montgomery County
Location: Parkhouse Providence Pointe, Royersford
Beds: 467
Buyer: Mid-Atlantic Health Care, Sparks, Maryland
Year sold: 2014
Price: $41 million
Northumberland County
Location: Mountain View Manor, Coal Township
Beds: 271
Buyer: Complete Healthcare Resources, Dresher
Year sold: 2009
Price: $16.5 million
Warren County
Warren County supervisors voted Wednesday to go ahead with a sale of the county nursing home, reversing a defeat of the proposed sale that occurred less than three weeks earlier. Sixteen of 20 supervisors voted to move forward with a $2.3 million sale of the county-owned nursing home to Centers for Specialty Care Group of New York City. The vote does not complete the sale, but authorizes the county’s negotiating team to complete a sale contract for the 80-bed home.