Work on new DC Neighbors financial plan underway

By LeAnn R. Ralph

MENOMONIE  —  A new financial plan for Dunn County’s nursing home, The Neighbors of Dunn County, is currently in the works.

Gene Smith, county manager, reported on the financial planning at the Dunn County Board’s January 20 meeting.

An earlier financial plan had indicated The Neighbors would “pay for itself” in revenue and that county taxpayers would not have to subsidize the nursing home.

That has turned out not to be the case.

The Dunn County Board approved a budget amendment in November to allocate an additional $384,000 for The Neighbors in the 2015 budget.

At the November county board meeting, Smith said The Neighbors also is expected to not have enough revenue to cover the cost of expenses for 2016, and the shortfall is estimated to be around $550,000 or $600,000 this year.

Work is currently in the process of writing a new financial plan for The Neighbors, Smith said at the January 20 meeting.

Decreased revenue

Several reasons account for why the first financial plan that predicted The Neighbors would pay for itself is no longer valid, Smith said.

The initial financial plan was based on predicted increases in Medicare and Medicaid reimbursements, he said.

After many years of steady increases to Medicare and Medicaid reimbursements, after The Neighbors was built, the increases stopped and there were decreases to reimbursements, resulting in a loss of revenue for the county’s nursing home, Smith said.

An austerity fiscal policy, the federal Budget Control Act of 2011 which went into effect in 2013, reduced Medicare payments by 2 percent per year.

The federal Bipartisan Budget Act of 2015 extended Medicare sequestration until 2025 and continues to decrease Medicare provider and plan payments by 2 percent each year.

The “payer mix” of nursing home residents also has had an effect on The Neighbors finances, Smith said.

While it is true that the nursing home has overall had an occupancy of around 94 percent, it is the specific types of residents that impact the finances — short-term vs. long-term care; Medicare and Medicaid residents vs. private pay, he said.

Pool

Cost controls will help The Neighbors’ finances, Smith said.

In 2015, the facility spent more than $1 million on “pool help” (independent contractors) when nursing home staff could not cover all of the hours, he said.

Over the past several months, the cost for pool help has been close to zero, Smith said.

The Dunn County Board will have to, at some point, decide whether profit or loss is more important than service to the community, he said.

“You will have to decide what level of public support is right for The Neighbors,” Smith said.

Dunn County has contracted with CliftonLarsonAllen LLP, certified public accountants, to formulate a new financial plan, and CliftonLarsonAllen will be meeting with The Neighbors committee on February 29, he said.

Three years

Gary Bjork, county board supervisor from Colfax, said he wished the county board would have had a different financial report to base decisions upon three years ago.

A new financial report would have been “impossible” at the time the county board made the decision to build a new nursing home because it was not known then that Medicare and Medicaid rates would be decreasing, Smith said, adding that the full year of experience in running The Neighbors also is going to be useful.

The Dunn County Board allocated $600,000 out of the general fund to allow for design and construction management services for a new health care center in March of 2010.

Sheila Stori, county board supervisor from Menomonie, wondered if The Neighbors is turning away people because they are under Medicare or Medicaid rather than private pay.

“No,” replied Tony Manzella, nursing home administrator.

No one is turned away from The Neighbors because of the way the nursing home is reimbursed, he said.

Smith noted that while federal reimbursements have decreased, a reduced payment is still more money coming in than if the nursing home bed remained empty.

Three-in-one

The Neighbors is really three separate nursing homes, Manzella said.

The east and west portions of the facility are long-term care, and the nursing home in the middle is for short-term rehabilitation, he said.

Long-term care and the Memory Care unit have a waiting list, Manzella said.

It is the short-term care for rehabilitation that is not as occupied as it could be, he said.

East and West are typically at 100 percent capacity, but Central is the portion that experiences fluctuation, Manzella said.

The private pay rate is higher than the Medicare or Medicaid rate, but “there are not very many who can remain private pay for long,” he said.

CliftonLarsonAllen will consider various combinations of nursing home residents (long-term and short-term) to figure out how The Neighbors finances can be handled better, said Vaughn Hedlund, county board supervisor from Boyceville.

The Neighbors is not required to have a rehab unit, and it is possible that a new business plan will eliminate the rehab unit, Smith said.

“The issue is the blend of occupancy,” said Bob Walter, county board supervisor from Menomonie.

The nursing home’s revenue is not so much determined by the 94 percent occupancy rate, but rather, is determined by the three components of the occupancy, and each component has a different cost, he said.

The February 29 meeting will be open to the public, Smith said.

Being open to the public does not mean, however, that a public hearing will be held, although members of the public are welcome to come and listen, he said.