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County shifts course on nursing home

Supervisors explore privatization rather than new facility


Contributing writer


After several years of pursuing plans to build a new $32 million replacement for the county-owned Pine Haven nursing home, Columbia County supervisors began moving instead in late May to solicit bids from private companies interested in buying the current home.

The county’s potential change in direction, under which it would simply get out of the nursing home business, has been under discussion for several months. The change puts Columbia County in step with a long list of eastern New York counties that in the past couple of years have opted to privatize their nursing facilities.

But the suggestion of privatizing Pine Haven has already provoked demonstrations and criticism at county board meetings by the nursing home’s employees and others who believe the home should remain a public facility.

The supervisors’ Committee on Health and Medical Services voted narrowly on May 29 to start preparing a request for proposals from potential purchasers of Pine Haven. At the same meeting, the committee tabled for at least a month a related proposal to discontinue planning for a new state-funded building to replace the current facility.

The full Board of Supervisors is expected to take up the issue in June.
County officials say the reasons for the change are complex but reflect a combination of pressures that are affecting county-owned nursing homes across the state.

These include a shift from fee-for-service medicine to managed care as well as recent and anticipated changes in state and federal payment levels from Medicaid and Medicare. In addition, Pine Haven’s expenses, including employee benefit and pension plans, have continued to increase.

Board of Supervisors Chairman Patrick Grattan, R-Kinderhook, said the shift in direction is in response to economic conditions and other circumstances that have forced Pine Haven to rely increasingly on the county government for subsidies and loans in recent years.

“In the past, we could count on certain levels of support from the state and federal governments for Pine Haven, but we can’t expect that anymore,” he said.

Grattan cast the deciding vote in favor of privatization at the county committee meeting on May 29, breaking a 3-3 tie.


Too big a burden?
The county recently added a new page to its Web site (columbiacountyny.com) that says county taxpayers have had to subsidize Pine Haven to the tune of $5 million over the past 12 years. The Web page, headlined “Future of Pine Haven,” says the county also has loaned the facility an additional $4 million with an uncertain prospect for repayment. This year, the county has been providing monthly subsidies that could reach another $4 million for the year; the county says that if this continues into the future, it would be equivalent to a 10 percent increase in the tax levy.
“The cost of Pine Haven to the county is becoming so high that we all have to think very hard about whether or not we can afford to have the county and its taxpayers continue to subsidize the existing facility, much less build a new one,” Grattan said.

Others, however, see the situation differently. They say there are other alternatives to make Pine Haven more efficient and financially self-sustaining, such as trimming expenses and increasing revenues, possibly by adding more profitable services.

Supervisor Clifford “Kip” Weigelt, R-Claverack, whose town includes the village of Philmont where Pine Haven is located, has supported local resolutions passed by the town and village in support of continued county ownership of the facility. Weigelt serves on the Board of Supervisors committee that is considering the issue, and he has voted against recommendations in recent months to halt construction plans and pursue a possible sale.

Weigelt, who won election to his first term in November, said he believes that before making any decision to sell, it’s vital to explore all of the possibilities for retaining Pine Haven under county ownership.

“I was taken aback by the fact that we went so quickly from planning a new building for Pine Haven in December to talking about selling it now,” Weigelt said. “I have an open mind, and I understand debt. But I’m saying, ‘Let everyone see the numbers and look at everything carefully.’ If Pine Haven is losing money, let’s examine its internal workings and finances to see if we can find other ways to make it more efficient and financially viable.”


Statewide trend
Columbia County is not alone in its dilemma. A growing number of counties in New York have already sold or are seriously considering privatization of their county nursing facilities.
The Center for Governmental Research, an independent nonpartisan policy research organization based in Rochester, issued a report last year noting that as recently as 15 years ago, 40 of New York‘s counties outside New York City owned and operated a total of 44 nursing facilities. By early 2013, however, that number of counties had declined to 33, with several other county nursing homes up for sale and another five counties considering privatization. This trend is likely to accelerate, the report concluded.

Other counties in the region that have privatized or are moving toward it include Essex, Washington, Warren and Saratoga.

Arthur Pryor, the director of human services research for the Center for Governmental Research, said the center’s report was not advocating for any position, and he emphasized that each county has to deal with unique circumstances.

However, he said, counties overall are having increasing difficulty maintaining ownership of nursing homes under current and emerging trends in medical insurance reimbursements for care, particularly for patients who rely on Medicaid.

“Some county nursing facilities have been able to thrive, and that is still possible,” said Pryor, who presented the report to Columbia County supervisors in late May. “But most county nursing homes are becoming less sustainable, and it is more difficult for them to survive under county ownership.”

He added that these pressures are systemic.
“It’s not necessarily because of poor management,” he said. “The problem is a ‘perfect storm’ of circumstances, including declines or uncertainties over reimbursements combined with higher expenses, including the cost of obligations to employee benefits and pensions. Added to all of that is the [state’s] property tax cap, which makes it more difficult for counties to raise money to subsidize these nursing homes.”


From black to red ink
Kenneth Flood, Columbia County’s commissioner for planning and economic development, said that until recent years, Pine Haven generally broke even or earned revenues that exceeded expenses.

“However, it has been operating consistently in the red since 2010, and the county has had to provide it with increasing subsidies and loans to cover the difference,” Flood said.

In 2012, expenses exceeded revenues by about $2 million, and in 2013 the deficit increased to about $3 million. So far, the county has been subsidizing Pine Haven at a rate that could reach $4 million for this year if that rate continues, he said.

Flood said Columbia County currently is on a sound financial footing, but he said the continued obligation to subsidize Pine Haven could jeopardize its financial standing. Moody’s Investment Service recently issued a warning on the county’s financial prospects, based largely on the Pine Haven situation.

But Weigelt said it’s important to see exactly what has accounted for those losses. He cited instances in which he said Pine Haven might not have been receiving the full reimbursements available for patient care.

“Pine Haven should be doing everything that’s needed to get every nickel it’s entitled to,” he said. “If that’s not happening, it is possible to make improvements that could make a difference. I’m just saying we need to think this through carefully before rushing into any decision.”

Shawn Morse, a staff member of the United Public Service Employees Union, which represents the about 200 Pine Haven employees, contended there are other fundamental issues at stake.
Morse said privatization would have a negative effect on the county’s economy and employment picture. For the employees who work there, he said, a shift to private ownership could have implications ranging from a loss of jobs to reduced wages and benefits, along with more difficult working conditions with fewer resources available for patient care.

“Many people who work hard at Pine Haven would be severely hurt if a private operator comes in and cuts its work force and makes other changes in wages and status,” Morse said. “They could either lose their jobs or have their income reduced to the point where they would be eligible to apply for public benefits.”


Losing options for care
Morse said privatization would have broader implications for the public, because public-sector institutions like the county nursing homes offer a place for patients who may not have any other options.

“The first and greatest concern is that public facilities like Pine Haven are an important part of the basic fabric of a community,” he said. “Taking care of the oldest, sickest and frailest of our citizens has traditionally been an accepted part of the basic mission of government. County nursing homes are driven by that mission. Do we want to lose that by privatizing those facilities and turning them over to businesses whose primary mission is to earn a profit?”
Morse, who lives in Cohoes, noted that he has been involved in the issue beyond his role as a union official. He also is an elected representative and chairman of the Albany County Legislature.

“I’ve been engaged in this issue for years, and I’m passionate about it,” he said. “I get two or three calls a week from families who are devastated by not being able to find nursing care in the area for an elderly parent. We should not be cutting back on the availability of public-sector nursing care and making it even harder for those who need it and their families.”

Morse also said the overall push for privatization in the state is driven by an element of alarmism about trends that may not be as severe as predicted.

“There’s a lot of crying wolf over things that haven’t happened yet,” he said. “A lot of the changes in policies and reimbursements that people are talking about haven’t happened yet. People are predicting worst-case scenarios, and in the past such dire projections are often proven wrong. Also, if the county sells Pine Haven, it will still have legacy costs [such as employee pensions] that could negate any financial benefit.”

Even if Pine Haven requires further subsidies in the future, these would not be on a scale that justifies sacrificing public ownership, Morse contended.

“The idea that it shouldn’t be funded with tax dollars has no merit,” he said. “Counties provide millions of dollars in services paid for by taxes without batting an eye. At the end of the day, even if Pine Haven does end up requiring continued county subsidies, it provides a unique and important public service and would be one of the least expensive services county government provides.”

He suggested the supervisors should maintain county ownership, use the state resources available to build a new facility, and work with the union to reduce inefficiencies, withholding consideration of privatization for the time being.

“If in the future Pine Haven proves to be too expensive, the county could still sell it,” he said. “They would also be in a better position, because they would have a newer, state-of-the-art facility to offer to buyers.”


Long-term sustainability
But Grattan sees the choice differently. The goal, he said, is to find a way to provide the same access to care and to keep Pine Haven open on a financially sustainable basis in the long run.
“We all want Pine Haven to remain open and not lose those beds,” Grattan said. “A few years ago, I would have agreed with Shawn about the advantages of maintaining Pine Haven as a county facility. But under the new realities, we have to look at the alternatives.”

He also disputed Morse’s contention that the amount of money required to subsidize Pine Haven would be minor in the scheme of the county budget.

“It’s significant in a county with a small population,” Grattan said.
The issue of Pine Haven doesn’t exist in a vacuum, he added.
“We’re also facing pressures and added expenses in other county services, including social services and other areas,” he said.

Grattan also denied that the proposal to sell Pine Haven is being pushed through quickly without public involvement or input. He said soliciting proposals from interested buyers simply gives the supervisors and the public an opportunity to see what the options are, as part of the process of determining the future of Pine Haven.
“Putting out a request for proposals is not automatically saying it’s going to be privatized and sold,” he said. “It’s a chance to see what type of potential buyers are out there and what they are offering. There will be a process of preparing it and then reviewing all of the proposals that come in. This will provide many opportunities for public discussion and involvement before a final decision is made.”
He added that the process also could include conditions to protect the employees and ensure access for Medicaid patients and others who need the services of Pine Haven.

Looking at Pine Haven in the statewide context, Pryor emphasized that there are no easy answers to the dilemmas Columbia County and other counties face.

“Inevitably there have to be tradeoffs between the historical mission of these nursing homes and the financial commitments involved,” Pryor said. “There is no cookie-cutter solution. Each county has to take a hard look at the degree of their specific problems and lay out what the likely scenarios are and what options are available. Ultimately they will have to make decisions about what they are willing to do to fulfill that historical mission and how much they are willing to spend to make sure the costs of these facilities are covered.”