Nursing homes still face funding crisis
Despite reimbursement boost, area nursing homes still operating in the red
Tom Klein

REGIONAL – Despite a funding boost from the state, nursing homes still face significant financial challenges.

Al Vogt, administrator at the Cook Nursing Home, estimates that the facility loses $40 per resident per day under the current reimbursement rate. The facility has been kept afloat largely as a result of the Cook-Orr Area Healthcare District levy, according to Vogt. The district was permitted to use the levy to cover hospital and nursing home operating expenses as a result of legislation that passed in 2007. Previously the levy could only be used for capital improvements.

“But that just means we’re having to tax our district residents to cover costs that the state isn’t,” said Vogt. “If the state were giving us more help, we wouldn’t need to tax people as much to cover our costs.”

Lynn Hickey, administrator at the Boundary Waters Care Center in Ely, said her facility faces the same challenges.

“Right now the reimbursement rates don’t cover the cost of care,” Hickey noted.

In addition to setting reimbursement rates for nursing homes, the state also stipulates required staffing numbers which has an impact on the costs of care.

“We actually provide staffing above the state requirement,” said Hickey. “There is no room to cut corners. Our residents deserve the best quality care and our employees deserve to get adequate wages.”

Both the Cook Nursing Home and Boundary Waters Care Center pay their certified nursing assistants well above the state’s current minimum wage. But should the minimum wage rise greatly, it could result in more red ink for both facilities.

That concerns Sen. Tom Bakk, DFL-Cook, who met with the Cook-Orr Area Healthcare District Board on Dec. 27. Representatives of the Boundary Waters Care Center also attended the meeting.

“Rural nursing homes are really strugglilng,” said Bakk, who would like to see additional state funds provided for long-term care. Bakk, who expects increasing the minimum wage to be on the legislative agenda this session, also noted the impact raising the minimum wage could have on nursing homes.

At the same time, he’s avoided making promises that additional funds will be available. “Any new spending on nursing homes will be contingent on February economic forecast,” he said. “We just got our heads above water and we don’t want to make too many decisions that will have tails in the next biennium.”

Funding boost

Long-term care providers did get some assistance in the 2014-15 state budget, which includes incentives for providers to ensure quality care for the people they serve.

Nursing home facilities saw an increase, averaging five percent across facilities, to operating rates effective in September. Of the increase, 75 percent is an across-the-board increase while 25 percent is tied to a facility’s performance on three measures of the Nursing Home Report Card.

Meanwhile, a one-percent increase in rates and grants goes into effect on April 1 for providers of home- and community-based services for people with developmental disabilities and older adults. An additional one-percent increase, effective July 1, 2015, will be tied to the quality of provider services.

Loren Colman, assistant commissioner for long-term care for Minnesota, said the funding boosts were in recognition of the challenges being faced by long-term care providers. But he acknowledged that facilities are still dealing with the consequences of nearly a decade of flat funding as the state grappled with a series of budget deficits. “They were squeezed pretty hard,” he said.

Colman said a significant jump in minimum wage could add financial pressure to nursing homes. But until they have a better handle on how large the increase will be, he said the state can’t run any scenarios on how it might affect facilities. “It’s something we will be watching,” he said.

Graying population

Meanwhile, an even larger issue looms in the future as Minnesota’s graying population grows.

Colman said although the leading edge of the baby boomer population is reaching retirement age, the problem would become more critical in a decade. “That’s when more of the baby boomer population will be turning 75-80 years old, when health issues become more prevalent,” he explained.

The state is looking at a variety of options for addressing that future demand with the objective of keeping folks in their homes as long as possible. “That’s the most cost-efficient option, providing home health care or nutrition services, instead of placing people in nursing homes,” said Colman.

Even so, he said, that option won’t work for all and there will likely be a need for more nursing home beds.

The state is already trying to address that concern by allowing more nursing home beds in areas that have been designated as hardship areas — remote communities distant from other long-term care or health care options.

Local long-term care facilities are also bracing for future demand.

“The projections for the population boom is huge,” said Hickey, who said Boundary Waters also offers short-term rehab options that allow people to return their homes when possible. She also spoke about the niche being filled by assisted living facilities, such as those operated by Spectrum, which has facilities in Ely, Cook and will open one soon in Orr.

Nursing homes, however, will still be needed for those who need more care. Both Cook Nursing Home and Boundary Waters Care Center are committed to keeping their operations going.

“Closing our doors would be the last option,” said Hickey, who cited the strong support from the community for keeping the long-term care center open.

Cook has similarly strong support and board members of the Cook-Orr Area Healthcare District have said closing the nursing home’s doors would be last on their list, as well.

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