St. Croix County reviews nursing home options
St. Croix County officials now have a clearer financial picture related to hopes for a new or expanded Health Center nursing home.
Trenton Fast, auditor with LarsonAllen LLP, presented his "strategic planning" findings at the Oct. 13 meeting of the Health and Human Services Committee.
The consultant was directed to look at several scenarios and determine what the likely financial impact on the nursing home operation was if a change were made.
"Can we afford to do something or not?" Fast explained as the reason for the report.
St. Croix County Board members had asked Fast to factor in the anticipated phasing out of county tax funds that currently subsidize the operation of the nursing home. Officials hope to wean the facility off tax subsidies by 2014.
Under those assumptions, Fast said none of the possible scenarios would positively affect cash flow by 2019.
One option, constructing a new 50-bed skilled nursing facility and 30 senior housing units, was estimated to come out better financially than doing nothing at all, however.
Under that plan, Fast said, the facility's operational and debt projections indicate a loss of $979,000 in 2019.
That compares favorably to a $1.67 million operational deficit projected if the nursing home continues to operate as it has in its present building.
The nursing home would see substantial decreases in utility costs with a new building, and the facility would likely see a rise in patients because area residents would be more likely to choose the nursing home if the building was new, Fast said.
Scenarios of only building a new 72-bed or 50-bed nursing home, or a 72-bed nursing home with 30 senior housing units, showed a higher estimated annual operational loss over the next 10 years.
In introducing his findings, Fast noted that the current St. Croix County Health Center nursing home has relatively high expense levels compared to similar government-owned nursing facility.
Total cost (salaries, dietary, health care, administration, etc.) per patient, per day at the New Richmond facility is $240.91. The median cost per day among similar facilities in the two-state region is about $176.85.
Fast admitted that several factors, including New Richmond's proximity to the Twin Cities, play a role in the higher salaries and benefits paid to employees. The fact that the local nursing home is two stories also plays a role in the higher costs, he said, because more employees are needed during each shift to provide sufficient supervision.
"The staffing levels are very consistent with what we'd recommend seeing," Fast reported.
Fast pointed to the facility's overall employee health insurance costs as a big factor in the disparity, indicating that the per-day cost is $21.39 per patient, per day compared to $10.90 for similar facilities. The profit sharing and retirement plan is also more than twice as high as the median, at $12.38 per patient, per day, compared to $6.13 for the median.
Those costs, he suggested, shouldn't be significantly higher for one facility over another.
He noted that the nursing home is losing more money when patients or residents pay their own fees or if Medicaid pays the fees. The facility shows a profit when Medicare or other payers pick up the fees for a client.
Fast said it would be difficult to reject admissions for potential residents or patients based on who is paying the bills, however.
"It's just not that simple," he said.
Health and Human Services Director Fred Johnson said the information was scheduled to be presented to the full county board at its Oct. 26 meeting.
"Then the board will need to decide," he said. "More conversation will need to take place."
It was encouraging, Johnson noted, that under the proposal of building a new 50-bed nursing home with a 30-unit senior housing facility, the taxpayer subsidy required for operations drops significantly.
If you only look at the total operational budget, the loss totals just $258,000 by 2019. In 2005-06, the county's general fund kicked in about $1.3 million to keep the nursing home afloat.
"That would be a substantial reduction in the operational loss," he said.