IGT Funding A Concern Moving Forward

With county-owned nursing homes losing money across the board in New York state, according to a recent report by the Centers for Governmental Research, much of the debate boils down to government funding.

Current Chautauqua County Executive Greg Edwards and Republican Vince Horrigan – who is running for the seat that will be vacated by Edwards this year – see Intergovernmental Transfer Funding as a drain on the taxpayers. Democrat Ron Johnson, who is also running for county executive, sees a home that can be turned around.

CGR shows that in 2010, county nursing homes suffered net losses of around $201 million, with the average county home reporting a net operating loss of around $5.9 million. Additionally, 62 percent of all county homes in 2010 had operating margins of -30 percent or worse, including seven homes with operating margins of -50 percent or worse. The only three homes with positive operating margins for the year were hospital-affiliated.

“In spite of implementing most of the Chautauqua County Home CGR recommendations, including increasing the number of private-pay residents to 19 percent, our Chautauqua County Home is losing $7,186.08 per day,” Horrigan said. “The only way to keep the home solvent is through property taxes which pay into IGT. In the County Home IGT funding process, local property tax payments are matched by federal tax payments. Therefore, it is always a temptation to max out local property tax IGT appropriation in order to max out the federal match.

“The more you tax locally, the more you get from the federal match,” Horrigan continued. “For-profit and not-for-profit homes in Chautauqua County take care of 81 percent of all nursing home residents. They do it with no property tax subsidies. Financial deficits in our federal government have resulted in a sequester (across-the-board budget cuts). The future of federal IGT funds to match Chautauqua County property tax funds is uncertain to say the least. If the IGT scheme goes bankrupt, Chautauqua County taxpayers will be on the hook with no federal match. Private nursing homes are sustainable because their business model includes other more profitable modalities of care such as assisted living and independent living options which are prevented by law in government-run nursing homes.”

The report found that for each resident day spent in a county nursing home in 2010, the typical home lost $88. In comparison, the typical for-profit home gained $5 per resident per day, while nonprofits operated at a net operating loss of $5 per resident day.

IGT FUNDING

Another challenge to county homes is not receiving the full amount of Intergovernmental Transfer, or IGT, funding for which a county is eligible. The study found 20 percent of county nursing home administrators said in the most recent year in which their home received an IGT payment, their home had not received the full amount, because their county had not agreed to pay the full match from the county general fund. Additionally, any value the IGT payment has in reducing the county home’s net deficit should realistically be discounted by the amount of the county matching contribution that must be covered by taxpayers from either the county tax levy or the general fund, according to the report.

“Our losses would be millions of dollar per year higher if it wasn’t for the IGT,” Edwards said. “What is frustrating about that is, all of that is using our state and federal tax dollars, just to supplement or subsidize the County Home. With the age we are in right now, the state has no money, the federal government has no money. And, it is completely unrealistic to think that they’re going to fund the IGT going forward. Every year, it’s up to be cut. As the decisions get harder and harder at the state and federal level, I will not be surprised at all if IGT is eliminated in the near term, because there are fewer and fewer county homes. That’s the only reason it’s in there is to subsidize skilled nursing facilities. Since 13 of the 33 are under active sale or the beginnings of active sale, that’s only going to leave 20. With only three of those attached to hospitals, the rest of those will go very quickly. There will be no reason to have IGT.”

The report also finds that IGT payments are increasingly less able to move the bottom line from a net loss to a net gain position in most homes. Additionally, it says the program itself is uncertain in upcoming years.

“The IGT funds, if they stopped doing that, I’m sure there would be another pool of money, a different way, dealing with a different problem,” Johnson said. “It’s been that way, the reason they came up with that is because county home costs were greater than regular nursing, so the Medicaid rates were not keeping up and the IGT was created to try to help that. I’m sure that there will be other funds to help with inequalities. But, it all goes away if we fix the problem. If we fix those structural problems that we have, that would help.”