Part 1: Crisis in the nursing home industry

Nursing homes face crisis, industry says

This article submitted by Michael Jacobson on 12/13/00.

What's being called a crisis in long-term care has the industry organizing an informational campaign to promote grassroots awareness and to produce relief from the state and federal governments.

"I guess our message is nursing homes are really in a crisis right now," said Tom Kooiman, the administrator for the Good Samaritan Care Center in Paynesville and the Hilltop Good Samaritan in Watkins.

Five of the ten biggest long-term chains nationwide have filed for bankruptcy, Kooiman said.

"I think it exists across the country," added Willie LaCroix, administrator of the Paynesville Area Health Care System, "but it's overwhelming in Minnesota."

In the past few weeks, Kooiman and LaCroix have taken steps in educating their respective boards about the crisis, and lobbying local legislators on the needs of long-term care before the upcoming session.

In late November, the advisory boards of both Good Samaritan Centers met in Paynesville where they listened to an interactive discussion about the long-term care crisis. Leading that discussion were Dr. Judith Ryan, the CEO of the Evangelical Lutheran Good Samaritan Society, and David Durenburger, a former senator for Minnesota, who is now chairing a national coalition aimed at long-term care reform.

LaCroix organized a meeting for the hospital district board with Sen. Michelle Fischbach (R-Paynesville) and Rep. Doug Stang (R-Cold Spring) to discuss the needs of long-term care and what could be done in the upcoming session.

At the forefront is financial relief.

Facilities receive set amounts to care for the small percentage of federal Medicare patients and for the state medical assistance patients who have run out of assets.

Giving a certain amount of reimbursement based on the patient's skill level, the facilities have to provide complete care. "Out of that we have to pay the pharmacy bill, the therapy bill, the lab bill," said Kooiman. "All of those expenses."

LaCroix said PAHCS receives $110 a day for certain patients at the Koronis Manor, but has to pay $600 a day for medicine. "Our costs are higher than our reimbursement," he lamented. "We don't even get cost."

What makes it worse, Kooiman and LaCroix agree, is that Minnesota has a policy of equalized charges. This means that long-term care facilities can only charge private pay patients what they charge others.

So, in the face of rising costs for staffing and other expenses, nursing homes can't raise their prices. "We can't do that because the state sets our rates," explained Kooiman. "We don't have any way to offset (our rising costs) in long-term care," he added.

"We don't have a thing to say about the rates we charge," added LaCroix. "The state sets them."

Kooiman said both of his facilities are running in the red. In Paynesville, he has managed to cash flow the operation by not funding depreciation. "We're living check to check," he said.

The Watkins operation has had to dip into its reserve, he said.

The Koronis Manor has the advantage of being just one part of the operation at PAHCS. So while it hasn't been turning a profit, other profitable sections of the business have picked up the slack.

"Why should the clinics have to make enough to subsidize long-term care?" LaCroix asked. "Why should the hospital?"

Legislative relief
Kooiman and LaCroix are supporting an industry effort in Minnesota to produce long-term care reform in the upcoming legislative session.

The industry's goals include supporting caregivers with wage and benefit changes; reforming the payment system to reflect true costs; and allowing long-term care facilities to transform to meet changing consumer needs.

Fischbach expects long-term care to be a major topic in this winter's legislative session. "The issues they bring up are huge," she said, "and we have to find a way to deal with them."

"Bottom line," she said of the financial situation, "we've got to make sure they get costs."

The Legislature set up a long-term care task force that met over the summer and fall in preparation for the session.

While the interplay of federal and state policies affects how much change the state can make alone, Fischbach said potential fixes exist that the state can try.

"It may not all be solved by the end of the session, but at least it will be on the table," she said.

(The staffing shortage and its effects will be the focus of next week's story.)

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