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Nursing homes in the red

April 27, 2013
By CHRIS KNIGHT - Senior Staff Writer (cknight@adirondackdailyenterprise.com) , Adirondack Daily Enterprise

Minus 16, minus 5, minus 44, minus 34, minus 14 and minus 18.

No, those are not the overnight low temperatures at the Adirondack Regional Airport in Lake Clear during a six-day span in early January.

Those are the operating margins, revenue minus expenses (in percentages), of a half-dozen North Country nursing homes. During an April 4 interview with the Enterprise, Adirondack Health President and CEO Chandler Ralph read these numbers from a spreadsheet, although she didn't identify the nursing homes they referred to.

Article Photos

Adirondack Health Chief Senior Services Officer Marc Walker talks with Uihlein Living Center resident Peggy Forkey at the Lake Placid nursing home in November of last year.
(Enterprise file photo — Chris Knight)

She said the figures were provided at a recent meeting of North Country nursing home administrators coordinated by LeadingAge New York, an organization that represents nursing homes across the state.

"They brought us together, showed us this chart and said we're going to lose our nursing homes in the North Country if we don't do something," Ralph said.

While financial losses are nothing new for many nursing homes around the state, North Country nursing home officials say the situation they're facing now is more acute and severe than ever before. That's sparked a dialogue in the last few months among the region's long-term care leaders about ways they can partner, share services or consolidate under one organization.

"We are coming together to see if we can create a new model," said Chip Holmes, president and CEO of Inter-Lakes Health, which runs a nursing home, hospital and other health-care services in Ticonderoga. "I think no option is off the table. Shared governance is an option. Consolidation is an option. Centralization of support services is an option. The only option off the table is going backwards."

Leaders of at least eight to 10 of the region's nursing homes have been involved in these talks, which officials stress are in their infancy. The most recent gathering was last week at Trudeau Institute in Saranac Lake. State Health Commissioner Nirav Shah was among those who attended.

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Numbers

Shortfalls in Medicaid reimbursement are to blame for driving nursing homes into the red, Ralph said. Medicaid accounts for 85 percent of the revenue at Adirondack Health's two nursing homes: Uihlein Living Center in Lake Placid and Mercy Living Center in Tupper Lake.

Uihlein receives $149 per day per resident from Medicaid, but its actual costs are $297 per day per resident. At Mercy Living Center, the daily rate is $196, while actual per-resident costs are $310 per day.

As a result of these shortfalls, the two nursing homes have lost a combined $11 million since Adirondack Health purchased them from the Sisters of Mercy in 2008.

"It's been substantial, absolutely," Ralph said. "There are big losses because New York state's public philosophy is they don't properly fund nursing homes, in the North Country particularly. How can you take care of an elderly person with 24-hour nursing care, and dietary, and housekeeping, at these rates?"

Holmes said his 84-bed Heritage Commons nursing home, which gets 80 percent of its revenue from Medicaid, has lost money each of the last five years. It closed out last year with a $1.2 million loss.

"We are full, our costs are in line, we're taking care of the people we're supposed to be taking care of, and we still can't make ends meet," Holmes said.

The Lake Placid, Tupper Lake and Ticonderoga nursing homes are all run by nonprofit organizations. Many private, for-profit nursing homes in the region are also heavily dependent on Medicaid and are feeling the same crunch.

"We get reimbursed less than $7 per hour for each Medicaid patient," said Paul Richards, administrator of Meadowbrook Healthcare, a 200-bed nursing and rehabilitation facility in Plattsburgh. "That's less than minimum wage, and these patients literally need hour-to-hour care."

"The model's broken for nursing home reimbursement. Nursing homes have been relying on Medicaid, and it just doesn't pay the bills."

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Acute

Dan Heim, LeadingAge's executive vice president, said the financial challenges faced by nursing homes in the North Country are more acute than in other parts of New York.

"They tend to be smaller facilities, on average, than other nursing homes in the state," he said; therefore many of each home's care costs are spread out over fewer people than at a bigger home. "They tend to serve a population whose needs are somewhat different because of the socioeconomic variables in the region and other factors, and as a consequence, their payments from the Medicaid program tend to be lower than we see in other regions of the state. The challenges of being in remote areas kind of add to the difficulty."

Richards said North Country nursing homes are too dependent on Medicaid.

"You can't just survive on Medicaid," he said. "You have to have a private pay mix. You have to have a Medicare mix. Many of these nursing homes are relying 70 to 80 percent on Medicaid, and with all the overhead, they're all drowning."

Part of the problem, Richards said, is that some seniors in the North Country end up in nursing homes and on Medicaid when they could instead be in assisted-living-type facilities. But there aren't as many of those other options here as in other parts of the state, he said.

"In metropolitan areas, there's a lot of different resources, steps along the long-term continuum that support the aging process," he said. "There's support services, bussing, assisted living options, adult day care options. We don't have that as much up here, so you rely disproportionately more on institutional settings like nursing homes. With so much strain on them, I think the communities are really going to have a dearth of viable alternatives to care for their loved ones."

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Breaking point

If nothing changes, nursing home advocates and administrators say there will be even fewer options for long-term care in the region.

"The reimbursement rates in the North Country are so poor, the very viability of some of the homes is questionable at best," Ralph said in an email.

"Some of the facilities are reaching a breaking point," Heim said. "We could see downsizing of facility beds. We could see closures. We most certainly will see changes in ownership of the facilities."

Some of those things are already happening, especially with the county homes that have served seniors for many generations. Last month, Essex County officials signed a contract to sell Horace Nye Nursing Home in Elizabethtown (established in 1832), which was losing between $2 million and $4 million a year, to the Bronx-based Centers for Specialty Care.

Franklin County is transferring operations of its Malone nursing home to Alice Hyde Medical Center, which is building a new facility to accommodate it and a new assisted-living center.

Adirondack Health is cutting the number of beds at Uihlein Living Center in half. It's planning to partner with one or more other organizations to offer assisted living and senior housing on the Lake Placid campus.

Ralph also said Adirondack Health may become involved with home care in the future. She said she's talking to two organizations that are "very interested in bringing home care into the community, should the county decide they don't want to do that anymore." Creating a facility for seniors with dementia, who are often placed in nursing homes but may not need the full cadre of nursing home services, is also being discussed.

"There's better options out there for having people age more in place than what we're doing right now," Ralph said. "We want to be in on developing that and bringing that to these communities here."

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Shift

Heim said the state is pushing long-term care providers toward those other options, which are less costly than typical nursing home care, through ongoing changes to its Medicaid program.

"They are moving Medicaid recipients into managed care plans and other coordinated care arrangements," Heim said, "and we fully expect that under those types of arrangements there will be very strong incentives to serve people more in the community and less in institutional settings."

Despite that shift, Richards argues there will always be a need for nursing home care.

"Every community needs police departments, fire departments, water treatment plants and jails," he said. "They need a certain amount of skilled nursing facility beds because there will be people in the community who need that level of care. You need places for those people to go to.

"If some of these smaller nursing homes do go under, families will have to unfortunately place a loved one farther away from that community," he said. "The state certainly doesn't want to build another nursing home bed, because a bed filled by a nursing home patient comes out of the Medicaid budget, and that's already 40 to 50 percent of the state budget."

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Meeting

LeadingAge has convened at least two meetings of nursing home leaders in the North Country since the start of the year to discuss the future of long-term care in the region.

"As we talk with other long-term care facilities in this part of the world, our stories are very similar," Holmes said. "That's why we're all engaged. We are coming together with a strong desire, focused energy on service, and in cooperation with the Department of Health, looking to see if we can create a new model."

Heim said the goal is to craft a plan "to maintain the viability of the region's nursing homes and to ensure there's a balance of services available to seniors, including home care and assisted living." He said nothing has been decided yet.

"We've brainstormed a number of ideas, certainly looking at how the facilities are governed and operated, whether or not there's a potential for shared services, group purchasing, group negotiation with managed care plans," Heim said.

Although LeadingAge represents nonprofit and public nursing homes, administrators of some for-profit nursing homes, like Richards, have also been involved in the meetings.

"I think the essence was we have to think differently," Richards said. "Obviously it would be extremely challenging to have a county-owned facility and a hospital-related facility and private facilities come together because of the challenges with governing bodies and ownership, but there's enough nonprofit nursing homes in the Adirondack region that that might make sense if people can put their differences and territorial rights aside. Because if you don't do something like that and have shared ownership or shared services, the ma-and-pop approach won't survive."

"It starts with leadership, like shared governance," Holmes said. "If we can all create one body to help govern a certain region, you start bringing together this collective experience, then you can create a shared strategy to serve an area of the world we all have in common."

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State's role

State Health Department officials didn't return a message seeking comment for this story, but attendees at last week's meeting in Saranac Lake said they were pleased that Shah was there to listen.

"He is supportive of us coming together and trying to create a new model," Holmes said.

"Dr. Shah said he'd be willing to listen to all parties, work with everybody and meet monthly, but he said there's got to be some sort of collaboration, there's got to be a new model, and we've got to think out of the proverbial box," Richards said.

Holmes said the parties involved in the talks have committed to continue meeting on a monthly basis.

"The intent of these discussions is really good," said state Sen. Betty Little, "to look at how they can help each other, how they can join together and how they can save, and yet still provide the necessary services in the North Country. I think the hope is that in some ways there will be some savings by creating a greater volume."

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Contact Chris Knight at 891-2600 ext. 24 or cknight@adirondackdailyenterprise.com.

 
 

 

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