SCHUYLKILL HAVEN - It is becoming too expensive for Schuylkill County to operate a nursing home and finance officials are looking at all options for the Rest Haven Nursing Home.
In December 2013, the county allocated $500,000 from the general fund to pay expenses at the county-run facility. A month later, the county gave another $500,000 to the nursing home.
"It's getting tougher and tougher," County Administrator Mark Scarbinsky said Friday.
The county contributions have been growing over the last couple years. After allocating $975,000 in 2004, the county did not have to take money from the general fund again until 2011 in the form of $300,000. In 2012, the county allocated $355,415 from the general fund to Rest Haven.
"We are all being proactive and watching it carefully," Paul Buber, county finance director, said Friday.
"It is our hope we do not have to give more than $500,000 for this year, but we would explore all options before increasing it any further because of the constraints on resources."
Rest Haven has not been operating at full capacity for at least the last six years. The facility has 142 beds and 135 were filled at the end of December 2013. That is 14 more at the facility than it had at the end of the two prior years.
"That certainly has been one factor," Buber said. "The other factor is our revenue has not been increasing proportionally with expenditures."
About 72 percent of residency at Rest Haven is paid through Medicare and Medicaid, Buber said. Those federal reimbursements have remained flat for local government facilities while costs have been increasing.
Over the last six years, total revenue at Rest Haven has only increased from $10,021,325 in 2008 to $10,137,771 in 2013. Meanwhile, total expenses in those same years went from $10,772,432 to $11,378,063. In other words, Rest Haven went from being short $751,111 in 2008 to $1,240,291 in 2013.
"I don't think counties ever got into the business trying to make money," Buber said. "I think the whole idea behind how a nursing home is set up is to break even so it is not costing taxpayers any money."
However, Rest Haven would fall in the red even at full occupancy.
Revenue with all 142 beds occupied would only total $10,783,560. Assuming expenses remained the same, Rest Haven would still be $594,503 in the hole.
There are 13 other nursing homes throughout Schuylkill County. Total occupancy in 2012 for all the facilities is 90.34 percent, not significantly higher than the 85.88 percent at Rest Haven.
So, the difference in revenue between homes may not be coming from the bed count, but in medical reimbursements.
According to statistics kept by the Bureau of Health Statistics and Research at the state Department of Health, Rest Haven charged $325 and $300 in 2012 for private and semi-private rooms, respectfully. Medicare and Medicaid reimbursement rates that year for Rest Haven were $250 and $168.
Meanwhile, Seton Manor, Orwigsburg, charged the same amount for the rooms and reimbursement rates were $451 and $179, respectfully.
Scarbinsky said different formulas are used for private businesses that take many other factors into consideration, such as location and care rates. In other words, it is much easier for a private company to receive bonus money.
Privately-run nursing homes also have other advantages, such as buying medical supplies in bulk.
"When you are operating multiple ventures, you are able to do those kinds of things," Scarbinsky said. "Costs are a little higher for a singularly-operated venture."
More federal funding has also been directed toward keeping individuals in their homes, Scarbinsky said.
Like any business, payroll makes up the largest portion of expenses and that is 40 percent at Rest Haven.
While the number of occupied beds deceased from 2008 through 2011, the number of employees went from 128 to 121 and payroll went from $4,505,399 to $4,331,830.
The county also has to pay an additional 40 percent in benefits.
"I think the big unknown right now is how the Affordable Health Care Act is going to impact nursing homes going forward," Buber said. "As an employer, we are still struggling with and trying to get clarification on a lot of things right now. That's just from an employer perspective and I think there are still a lot of questions out there on how it is going to affect nursing facilities going forward."
There are also additional expenses in maintaining the infrastructure of the facility, Scarbinsky said.
"We have done a lot to make that facility meet the basic standards, but as those costs continue to grow and there has to be a decision made by the board (of commissioners) on how you are going to fund that," Scarbinksy said. "Ultimately, we have to look at all options going forward to see where we end up, just like we are with everything else."
The county contracted Service Access and Management Inc. in July 2012 for management responsibilities at Rest Haven. Eight management positions at Rest Haven became employed through the nonprofit human services organization based in Bethlehem.
"The whole goal is to market the facilities to get more agencies in the facility," Scarbinsky said.
While it is the only nursing facility the organization is managing in the area, SAM has been provided those services for the Schuylkill County Mental Health and Developmental Services department for the last several years.
"They have been very efficient in operations there and we felt this opportunity would give us a step in the right direction," Scarbinsky said.
Scarbinsky said SAM has been able to invest more in marketing, an area the county has been limited in due to struggles balancing an annual budget.
There were 117 occupied beds at the facility when SAM started its three-year contract.
"They have been doing a good job for us," Scarbinsky said. "We have been very happy with the contract and their professionalism in taking us to the next level. We just have to figure out how to take it to the next level."
Another option is for Schuylkill County to follow most of the other counties in the state and sell the nursing home to a private owner.
Schuylkill County is only one of fewer than 30 counties in Pennsylvania still operating a nursing facility. Counties were originally required to operate such facilities, but that has not been the case for at least the last 50 years.
"The county has chosen all those years to continue to maintaining and operating one, but as we go further in time, we start dealing with the philosophical issues as to the physical cost and how that bears on the general tax burden," Scarbinsky said. "The board has to look at that and make a decision going forward. I'm not sure we are there yet."
At least nine county-operated nursing homes have been sold in Pennsylvania since 2006.
"There apparently is a very good market right now for selling off nursing homes," Buber said. "It sounds like other counties that went in that direction have had some success."
While prices widely varied depending on bed count, Adams County sold Green Acres, a 135-bed facility, to Transitions Healthcare, Sykesville, Md., in 2011 for $6.1 million.
"One thing we are proud of is we do offer a quality service at Rest Haven," Scarbinsky said. "It has received a number of certificates for quality care over the years and we are very proud of that."