County Faces VestraCare Decision

Wednesday night’s information session in Mayville on the potential sale of the Chautauqua County Home to VestraCare answered many newly seated legislators’ questions.

However, with such a decision to be made by county representatives as soon as Feb. 26, many still have reservations.

“How much is the County Home really worth?” Terry Niebel, R-Sheridan, asked Wednesday night, further requesting a commercial appraisal on the facility.

But his request may be too late.

Although market value of the nursing home is unclear, one thing is: Chautauqua County is not profiting from the County Home’s operations.

ACTUAL DEBT

According to a study performed by the Center for Government Research, the projected net cost to operate the County Home would be about $3.5 million per year from 2013-15 without IGT funding, and the fund balance would be depleted over the course of 2014.

Actual projected losses within the 2014 budget are $2.6 million. Projected expenses are an estimated $20 million, with an estimated revenue amount of $17.4 million. The difference breaks down to more than $7,000 in daily losses, meaning the County Home would have to draw from its fund balance in order to pay for operating expenses.

Furthermore, even if the County Home received IGT payments from the county in each of the next three years, the County Home’s enterprise fund would experience deficits ranging from $340,000-$640,000 per year, according to the study.

Continuation of the status quo does not appear to be a viable option for the future of the Chautauqua County Home, stated the analysis.

IGT FUNDING

Almost 80 percent of resident stays at the County Home are paid for by Medicaid, whose rates historically fall short of covering the increasing costs of public nursing homes, according to CGR.

To help offset losses in public nursing homes, a federal Intergovernmental Transfer Program was in place.

To access those payments, the county would provide a 50 percent match from the county’s general fund, which it did prior to 2013.

For the 2014 budget, the legislature eliminated $1.05 million in IGT funding for the County Home. In his 2013 budget, former County Executive Greg Edwards did not include any of the funding, citing it as a drain on taxpayers.

“It was not included in the budget (for 2014) because we do not believe the County Home should be subsidized with taxpayer dollars,” said Vince Horrigan, county executive.

At Wednesday night’s meeting, Edward Farbenblum, executive vice president of VestraCare, asked legislators why they did not apply for the federal funding.

“If we had funded the IGT, the county tax rate would have gone up,” said George Borrello, R-Irving.

“Yes, but if you don’t fund the IGT, you’re still funding a loss,” Farbenblum said of the County Home’s deficits.

Borrello responded by explaining that the county tax rate went down because of the fact that the county did not have to match the federal amount.

“Yes, we still have a loss that has to be subsidized,” Borrello said of the nursing facility. “But, without taking the taxpayer portion and without having to subsidize the County Home in the future, the tax rate would go down. By not funding the IGT this year, the tax rate went down.”

OPTIONS

In 2011, Edwards sought the help of Chicago-based firm Marcus & Millichap to aid in marketing the Dunkirk facility.

“We’ve been working with them in good faith and continue to work with them,” Horrigan said. “They’re really the best that I’m aware of, especially last year with bringing us VestraCare’s offer, and the current offer, which is a continuation of the previous offer.”

The brokers found two qualified purchasers for the County Home (VestraCare and Altitude Health) and one which offered a lease agreement with the possibility of a sale (Absolut Care).

All three purchase offers were voted down by the County Legislature over the course of 2013. However, VestraCare made a second purchase offer on the nursing home in January in the amount of $16 million plus a potential $1 million in upgrades to the facility.

“I think we’re very comfortable that these are the right people,” Horrigan said of VestraCare. “I’ve gotten to know them very well. They’re very transparent and open and I think it’s going to be very good for the county, residents and employees. It’s just a nervous time right now.”

VESTRACARE

The CGR study pointed out that all three purchase offers made for the County Home were worth far more per bed than most recent comparable offers to purchase nursing homes throughout New York.

Estimates from the County Finance Department suggested that ownership by a for-profit entity could reduce the overall tax levy by about $361,000 per year, spread across town, school and county taxes and leaving less taxes for each homeowner to pay, according to the CGR study.

Privatization of the County Home would expand services and grow jobs through the addition of assisted living options as well as other health care specialized services while eliminating the need for taxpayer subsidies, Horrigan said.

VestraCare’s potential upgrades include a revamping and installation of electronic medical records, which are dated, Farbenblum said, and an update to interior furniture. Additionally, 30 acres of land accompanying the facility would be ideal for expansion.

“As far as programs, what we’ll be looking to do is an expansion of services,” said VestraCare representative Shannon Cayea-Delker.

Services could include cardiac rehab, assisted living, adult medical daycare, social daycare and in-home care.

“By doing those programs you’re adding services and you’re adding staff,” Cayea-Delker said. “There would be an extension of staff.”

VestraCare owns two other nursing homes in New York, one in Kingston and the other in Johnson City. Farbenblum said the transition process after purchase was smooth at both locations.

“We don’t anticipate any problems as far as licensure,” Farbenblum said of the transition process if VestraCare acquires the County Home.

Cayea-Delker said VestraCare would “hit the ground running with a transition plan,” noting that the process takes between 6-18 months.