February 14, 2017; News-Gazette (Champaign, IL)
The county-owned Champaign County Nursing Home is facing cash flow shortfalls and market instability common to the nursing home industry. Shrinking Medicare reimbursements and nursing home market uncertainty surrounding the future of the Affordable Care Act (Obamacare) are prompting the county’s leaders to seek alternatives. Its federal rating from the federal Centers for Medicare and Medicaid (CMS) was reduced from two stars to one star (on a four-star scale), and average occupancy at the 243-bed facility has recently dropped to below 170.
Ron Aldrich, a New Mexico-based health care consultant with connections to the Champaign area, has proposed that the nursing home become a 501(c)(3) nonprofit corporation with “sponsorship” from county government and several other local and regional health care organizations. He also suggested that one of the proposed partners, Presence Life Connections, become the management company operating the nursing home.
The nursing home’s board of directors and county officials were open to the consultant’s recommendations and plan to seek legal guidance from the state’s attorney’s office to assure that the proposed recommendations are legally feasible.
One the surface, it sounds like an intriguing and collaborative idea. County government is liberated from direct oversight of a nursing home, not to mention the contingent financial liabilities and political fallout should nursing home operations become even more difficult than they already are. The proposed sponsors are experienced in regional health care and long-term care, including the operation of nursing homes. (The current management agency contracted by the county, Management Performance Associates, is located in the St. Louis area and specializes in personnel recruiting and placement. It doesn’t mention nursing home management services on its website.) The proposed sponsors could help reduce costs through access to purchasing networks as well as benefit from the sponsors’ management and operational expertise.
There is one problem, though, that isn’t addressed in the article: How would a struggling government-owned nursing home becoming a nonprofit with multiple sponsors benefit the sponsors? One might argue that the sponsors are themselves overwhelmingly nonprofit and could justify the move as mission fulfillment. However, these organizations each have the responsibility of sustainability. The state recently refused to provide nursing home with a $1 million cash advance to make up for delayed Medicaid reimbursements. This is a big warning sign that the nursing home will need new sources of ready cash, and the most likely presumed source of that cash would be the very organizations making up the new nonprofit’s board of directors.
County voters are being asked to approve a property tax increase in April that would provide additional funds for the nursing home, but will voters say “yes” to supporting a nursing home that is no longer county-owned? If the tax increase is approved, will county officials continue to dedicate tax funds to support a nonprofit-owned nursing home, or will other county obligations take precedence? What would the other proposed nonprofit’s sponsors tell their own respective boards and stakeholders about the advisability of committing their resources to propping up a nursing home with the quality and financial issues of Champaign County Nursing Home?
County officials were split about the possibility of the nursing home’s being sold to a for-profit entity. Some expressed support, but others were concerned about whether the property and facility would be attractive to potential buyers and whether those potential buyers would operate the nursing home with employees who are labor union members. Aldrich expressed concerns over the state of nursing home services for “needy and at-risk populations in the county ‘if all long-term providers were for-profit.’”
We want to believe that the proposed “sponsors” would exercise the enlightened self-interest to examine the ramifications of their participating in a new nonprofit Champaign County Nursing Home. The same considerations that might stop a for-profit corporation from purchasing the facility should be weighed by the proposed nonprofit’s sponsors. Without extensive individual and collective due diligence by the potential sponsors, the new nonprofit might be an exit strategy for the county but no help for the nursing home or the community in need of its services.—Michael Wyland