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HomeMy WebLinkAboutNursing Home Steering Committee 09-05-01REVISED ST. CROIX COUNTY NOTICE OF COMMITTEE MEETING TO: Thomas Dorsey, Chairman St. Croix County Board FROM: John Borup, 246 -8223 COMMITTEE TITLE: St. Croix County Nursing Home Steering Committee DATE: 09/05/01 TIME: 12:00 noon LOCATION: St. Croix County Health and Human Services Complex, New Richmond CALL TO ORDER ROLL CALL ADOPTION OF AGENDA DATE OF NEXT MEETING: ACTION ON PREVIOUS MINUTES: 08/09/01 ANNOUNCEMENTS APPOINTMENTS: UNFINISHED BUSINESS: NEW BUSINESS: 1. Status Reports a. State Budget /Item Veto Update b. County Home Subsidy Definition c. Other Issues 2. Financial Analysis a. Option -l- Status Quo: 1. Key Assumptions 2. Results b. Option -2- Selling Licensed Beds: 1. Re- Location Study -Cost Estimates 2. Other Key Assumptions 3. Summary of Costs c. Option -3- Modified Option with a Vision for a Care Continuum 1. Architect's Capital Cost Estimates 2. Other Key Assumptions 3. Results 3. Vision for Care Continuum 4. Next meetings a. Board Presentation - to be discussed b. Final Report - to be discussed 5. Discussion on written definition of fund balance ANNOUNCEMENTS & CORRESPONDENCE POSSIBLE AGENDA ITEMS FOR NEXT MEETING: ADJOURNMENT (Agenda not necessarily presented in this order) SUBMITTED BY: John M. Borup and Chuck Whiting DATE: COPIES TO: COUNTY BOARD OFFICE COUNTY CLERK NEWS MEDIA /NOTICE NURSING HOME STEERING COMMITTEE September 05, 2001 The Nursing Home Steering Committee met on September 05, 2001 at the St. Croix County Health and Human Services /Health Center complex. MEMBERS PRESENT: Robert Stephens, Chair Richard King Stan Krueger Ralph Swenson Esther Wentz MEMBERS ABSENT: none STAFF PRESENT: John Borup, Health and Human Services Director Carolyn Krieger, Nursing Home Administrator Judy Ziegler, Accounting Supervisor Malva Berg, Secretary OTHERS PRESENT: Chuck Whiting, Administrative Coordinator John Keefe, Keefe and Associates Sandy Hayes, Keefe and Associates Chair Stephens called the meeting to order at 12:00 noon noting the meeting was properly and legally publicized. AGENDA Motion A motion was introduced by Wentz, seconded by King, and unanimously adopted: That the agenda be approved as circulated. MINUTES Motion A motion was introduced by King, seconded by Wentz, and unanimously adopted: That the minutes of the 08/09/01 Nursing Home Steering Committee be approved as circulated. The Nursing Home Steering Committee is scheduled to give a presentation to the full County Board on October 9, 2001. Status Reports State Budget -- Keefe reported that Gov. McCallum had issued his line item vetoes of the budget, and signed the rest of the 2001 -03 state budget. Of primary interest to county nursing homes were: ➢ His line item veto improved the certainty that county homes would receive at least the $40 million in addition to the previous level of $37 million as part of the Intergovernmental Transfer Program (IGT), and ➢ His veto of new COP - waiver and CIP -II slots for the next two years, reducing the capability of keeping people in community settings. The federal government has sued the State of Wisconsin in an attempt to recoup about $83 million in IGT funds, but the State has said it will appeal and can keep the issue tied up in the courts for years. In addition, the federal government has not formally promulgated the IGT rules it proposed earlier this year, which potentially could mean Wisconsin would be able to use IGT funding for longer than the two years suggested earlier but there are no definite answers at this time. Regarding Medicaid rates for nursing homes for 2001 -02, Keefe reported considerable uncertainty still existed. It is not sure when the final numbers will be available but possibly some will be available by the 10/09/01 presentation. The State had not decided how to implement revisions in labor regions, which originally could have cost St. Croix Nursing Home approximately $300,000 a year. The State does plan to proceed with the phased implementation of a Prospective Payment System (PPS) for Medicaid, with 25% of the MA rate to be based this year on the fixed rates associated with PPS. He said this potentially could have a negative effect on St. Croix Nursing Home's MA rates. County Subsidy Definition —Keefe asked if the Committee had resolved any of the issues identified at the last meeting about the definition of the county subsidy for the Nursing Home. Stephens, Swenson, and Whiting reported on proposed revisions in policies relating to the use of fund balances by the Nursing Home. The policy under consideration would provide for the Nursing Home to re -pay over time monies used from the Fund Balance for operational purposes. They reported changes in the ways the Nursing Home budgets for and uses depreciation also are under consideration. Health and Human Services Administration will meet with the County Finance Committee on September 7 to further discuss this issue. Ziegler confirmed that the Nursing Home has included depreciation as part of its budget but has not included depreciation in the last several budgets as the monies were used for salaries and fringes. Regarding how K &A should reflect the subsidy in the projected financial statements for the Nursing Home, Stephens stated the Committee and the County Board wants to know the cost to the county of the Nursing Home. It was the consensus of the committee that the total county contributions to the Nursing Home should be reflected. Keefe and Hayes said the financial projections would be formatted to allow for this, but would exclude depreciation, consistent with the Nursing Home's historical budgeting practice. Whiting noted that capital items would have to be viewed separately from the budget and the levy. He added that a line should be included in the financial projections that would identify a cost to the Nursing Home of replenishing the Fund Balance. Issue to be decided would be where is the money for maintenance repairs going to come from, would they be levy dollars or depreciated over time? Financial Analysis Projections Keefe indicated that three strategic options, with financial projections, were proposed. These included: 1. Option 1 —The Status Quo; 2. Option 2— Facility Closing or Selling Licensed Beds; 3. Option 3— Continued Operations with Re- Building a Downsized Nursing Home. Stephens said he thought one additional option should be developed — remodeling the existing Nursing Home. He thought Board members would want to know the 2 costs and implications of this option. Keefe noted that the agreement with the county provided for development of up to three options. Option 1 -- Hayes presented the projected financial statement for the Status Quo option, and explained the format and assumptions. Hayes said she is trying to present the financial report in a way that is understandable. It was the consensus of the Committee that the County Board will want to know what it is going to cost to run the Nursing Home in 2002. Swenson suggested that the model assumptions be revised to reconcile with the Nursing Home's budget request for 2002. Hayes said the model was closely reconciled with the 2001 budget (within 1 %) and actual -to -date revenues and expenses, but the uncertainty of the state Medicaid rates for 2001 -02 made it difficult to reconcile. Swenson, noting he would like to have projections that are "most probable," asked that the model's assumptions be reconciled within the 1 -3% range of the 2002 budget. Hayes said two areas that would account for a significant part of the differences would be depreciation (which was included in K&A's model) and the amount estimated for IGT payments. Based on questions from the Committee, it was agreed that the salary inflation rates in the model would be revised to 3.5% a year, and that the fringe benefit inflation assumption would be increased in the model. It also was agreed that the financial projections would be extended beyond the five -year period originally assumed and go to 2009. Regarding the format of the financial statement for the County Board presentation, it was agreed to modify the traditional revenue and expense statement format to exclude depreciation, providing for a distinction for a levy amount for operation and for capital, and relying more on a cash flow statement format. It was agreed by the Committee and K&A that a cash flow - type format would provide a more accurate reflection of the actual cost of the Nursing Home to the County. Option 2 —Keefe presented a memo summarizing the implications and costs associated with either closing the Nursing Home or selling the licensed beds. In closing the Nursing Home (without any sale), Keefe noted that the County would be able to convert some of the nursing home beds to additional CIP -II slots for use by the Human Service Department for community placements, and receive state CIP funding on an annual basis for the available slots but this does not translate to mean all 126 beds was transfer into COP /CIP slots for St. Croix County. In selling the licensed beds, the County would receive a one -time payment from a buyer. Keefe said the primary point of this analysis was to indicate that both closing and selling decisions would have cost considerations for the County. Stephens said closing is not a neutral statement and is presented as a consideration process. In addition, it posed the likelihood of creating other intangible implications for residents, their families, Nursing Home employees, and other county agencies. The cost considerations were divided into three groups: 1. Additional costs incurred by the County during the interim between when a decision is made and when the facility is actually closed /sold, 3 2. Additional costs incurred at the time of closing, and 3. Continuing annual costs after closing. (See memo and summary presented to committee.) The Committee asked several questions about various elements in the analysis. It was agreed several revisions in the order of presentation would be made and development of additional estimates for transition costs. Keefe noted that some of the estimates in the memo would likely be revised for presentation to the full County Board. However, he pointed out that the revisions would not significantly change the estimates that indicate the County would incur significant additional and continuing costs if the Nursing Home were closed or sold. Costs would not completely be eliminated, he noted, but in some cases simply would be shifted to other county agencies and the county tax levy for those agencies. This option would impact Health and Human Services staff. In addition, there is not space in the community to house nine residents currently possible to discharge into the community. Costs to maintain the building would continue even if the Nursing Home does not continues, such as insurance, maintenance to the building, etc. Most of these costs would be reimbursed by the State if the Nursing Home continues but the revenue will go away if the Nursing Home no longer exists and the costs will have to be reallocated to other County departments. King questioned placement of the residents who are protectively placed if the Nursing Home was closed. There is only one IMD in the State in Trempealeau County. They have over 55 on their waiting list with over a year wait for placement. Option 3 —Keefe discussed the choice of remodeling or new construction as the main focus of Option 3— continued operations. He noted the remodeling costs that had been presented at the last meeting by the architect. Based on follow -up research, K &A had estimated "soft costs" which had been added to the total to reach a total estimate of remodeling of the existing facility. In his opinion, he said the high remodeling costs (more than $4 million) were sufficient to raise the question whether the County would be better off spending somewhat more for a new nursing home, in order to have a more efficient facility that would be more attractive to residents and their families. As a result, he said the financial projections for Option 3 were developed as a facility replacement choice. Hayes presented the financial projections for continued operations of the Nursing Home, assuming it were replaced with a new facility and downsized. Projections were presented for both a 72 -bed and a 90 -bed option. Originally, it was thought a 90 -bed facility would be more cost - effective than the 72 -bed option, but the projections indicated minimal difference in the projected County contribution. Hayes said the 90 -bed option was not as cost - effective because all of the additional 18 beds would be filled by Medicaid residents, which are not fully reimbursed and therefore cost the County more. With new construction, maintenance and utility costs would be less. Also, every room would be a private room so rates would be higher. 4 She said she thought Option 3 assumptions for staffing could be modified somewhat, especially for support services, and provide for a lower County contribution. Currently, nursing staff is based on a 1:6 staffing ratio; in the projection, assuming a more efficient building, the CNA staffing ratio was 1:9 residents, while the RN ratio was 1:18, Hayes said. Krueger asked when the proposed facility was assumed to open. Hayes said in 2003. Krueger said that probably was too soon, and Hayes said that could be changed to 2004. The focus of this study is on the Nursing Home care activity. Other considerations would be the need for continuum of care with possible assisted living facility, etc. and other services consistent with the Nursing Home facility. County Equity Contribution —Keefe also raised the potential of the County making an equity contribution to the new facility, which would allow the debt and costs to be reduced. He noted that the value of the County farm is estimated to be significant, and has been the subject of interest by potential developers. If the County sold some of the farm, he said the revenues realized could be designated to help offset the new construction. He pointed out that Manitowoc County recently approved a similar transaction in deciding to downsize, re- locate, and re -build its county nursing home. Committee members discussed the potential of selling part of the County farm. For Option 3, Keefe said he would like to include as an assumption that the County make an equity contribution up to $3 million. He said the revised projections for Option 3 would make this assumption. Wentz questioned the possibility of having a public hearing on the Nursing Home issue to obtain public input. Motion A motion was introduced by King, seconded by Wentz, and unanimously adopted: That the Nursing Home Steering Committee make a recommendation to the County Board following the presentation of the information regarding the study giving the options available at the County Board meeting following the budget presentation. Whiting said it would be appropriate for the Committee to state an opinion as to what should be done but no position should be taken until after the report to the County Board. Next Meeting It was agreed K&A should present its findings to the full County Board at 9:00 a.m. October 9, 2001. The Committee also discussed the need to review a final version of the financial projections. The members discussed the potential of reviewing the revisions without a meeting, and the potential of scheduling another meeting. It was agreed the Committee would meet again at noon on October 1, which would give K&A time to make any revisions before presentation to the Board the following week. Stephens will review with Dorsey the procedural charge of the Nursing Home Steering Committee. Any information received regarding the fund balance policy /procedure will be relayed to Keefe as soon as information is received. 5 Motion A motion was introduced by King, seconded by Wentz and unanimously adopted: That the meeting be adjourned. Time: 3:25 PM Chair: Attest: (secretary)