Have Albany County public nursing homes become too costly?

by | Aug 3, 2012

question of what to do with Albany County’s creaky, costly and embattled nursing home has been in the headlines for months now, but the county is hardly alone.

While deciding whether to rebuild or privatize the facility is turning out to be one of the toughest issues facing first-term County Executive Dan McCoy, more than a dozen other counties across the state are also grappling with similar questions.

Public nursing homes, it appears, have gotten too costly for counties to continue operating, at least without some major changes that include privatization or getting labor concessions, say observers.

A combination of public sector union costs, a freeze on Medicaid payments and the state’s new 2 percent property tax cap have forced counties to look at variety of options.

“This issue spans from the furthest tip of Western New York to Suffolk County,” said Stephen Acquario, executive director of the state Association of Counties.

His group recently found that of 34 counties which operate their own public nursing homes, about half are actively exploring privatization or other measures in order to stop the financial hemorrhaging.

Consider the following developments:

Late last month, Steuben County officials hired a Chicago law firm to find potential buyers for their 4-year-old, 105-bed nursing home that is losing $3 million a year. They’ve already moved toward hiring a private contractor for food service, maintenance and housekeeping.

Just northeast of Albany, Washington County officials have discussed selling their money-losing Pleasant Valley Nursing Home, but a series of violations has put a freeze on new Medicaid payments, which could scare off buyers.

In Warren County, finance experts project the Westmount Health Facility will run a $6 million deficit by 2016 if changes aren’t made.

Similar dynamics prompted the Fulton County supervisors earlier this year — after extensive debate — to sell their 167-bed home in the Gloversville area for $3.52 million to the Centers for Specialty Care, a private Bronx-based company.

Even then, the county must still pay $2.5 million for earlier promises such as employee health insurance and workers’ compensation costs. (Back injuries from workers lifting or moving residents are a common injury in the facilities.)

“It was hotly debated and it was an emotional issue for the county,” said Michael F. Gendron, chairman of the Fulton County Board of Supervisors.

In the end, he said, deficits drove the decision.

A decade ago, it cost Fulton County about $800,000 to run the nursing home. In 2010 that had risen to $4 million out of the $100 million county budget.

Gendron and Acquario pointed out that county lawmakers don’t want to sell their nursing homes in part due to their historic roles.

The running of what used to be called “alms houses” and later “infirmaries” was one of the original functions of county governments in the 19th century and earlier.

Such homes are historically known as the refuges of last resort for the aged poor, who today are covered by Medicaid, the state-federal insurance system for the needy.

As a result, people in the community often feel an attachment to their county nursing homes.

Combine that with pressure to keep them open from politically potent unions that represent staffers and change is hard.

The trouble is, privately run nursing homes increasingly take patients who use Medicaid once their own funds are gone.

With costs running to tens of thousands of dollars a month, many people enter private nursing homes, use up all their savings and then must rely on Medicaid.

But private nursing homes aren’t staffed members of public sector unions that enjoy significant advantages at the bargaining table thanks to laws passed years ago by state lawmakers.

As a result, the benefit costs, including health care and pensions, mean that public nursing homes generally spend 25 percent more on their employees, said Donald Pryor, director of human services analysis for the Rochester-based Center for Governmental Research.

“By and large, the county-operated homes have a much higher benefit structure – that is, a much higher proportion of salary structure goes into fringe benefits than would be the case with private nursing homes,” he said.

The nonprofit center has advised numerous counties, including Fulton, on how to deal with their growing nursing home costs.

He stressed that there’s no cookie-cutter approach to the topic, since each county nursing home is unique, in terms of size, expenses and what it provides.

Nor it is a given that privatization is the only option.

If a county home can get savings from employees or outsourcing some services, that could work, too.

Ultimately, Pryor said, it becomes a question of how many tax dollars a county wants to spend on its elderly in nursing home.

“What’s the tolerance for a deficit that an individual county is willing to accept?” he said.

The center has been busy lately — soon it will issue three reports on county nursing homes.

And Gendron said he gets frequent inquiries from other county officials around the state who are considering selling their facilities and want to know how Fulton County has fared.

“The phones have been ringing,” he said.
From: Times Union

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