Saving the Genesee County Nursing Home:
An Open Letter to the People of Genesee County
By David A. Olsen,
Founding Member of the Genesee County Libertarian Party
Dear Friends & Neighbors:
Dating back to the first half of the 19th Century, Genesee County has pledged to care for our elderly citizens who are not able to take care of themselves regardless of their wherewithal to pay for the care or not. This is a noble mission and a tradition worthy of being continued. It is the opinion of the author that this promise should continue to be kept and it is our generation’s responsibility to get the GCNH on a path of sustainability and self-reliance. Originally, the County Home was self-sustaining due to the farming engaged in on the same property. That has not been the case for over 50 years. Over the past decade, at least, it has become an increasingly expensive burden for the taxpayers, so much that it is now problematic. By now, May of 2014, it has become obvious to even the most casual observer that the Genesee County Nursing Home is on an unsustainable path. If the people of Genesee County want to preserve the promise made many years ago that care will always be available for those in need for their friends, family and neighbors, then we have to begin thinking differently.
A recommendation follows and I hope the Genesee County Legislature will consider this as a viable suggestion. This letter has been sent to each County Legislator.
The Genesee County Libertarian Party motto is “Educate. Advocate. Choice.” Part of the Educate segment, in addition to clarifying the principles of libertarianism and proving that it is not a selfish philosophy is to show that we, the people can do good things for our fellow man and without the interference of government and without the immorality of theft by taxation.
Last year 60,000 of county taxpayers’ dollars were spent with The Center for Governmental Research on a study to provide some recommendations on how to proceed with the GCNH. This was the second study commissioned. The same organization had already completed a study in 2010 at taxpayers’ expense. I am using one of the options from this earlier report as a base: Option 5, which begins on page 91 of the report titled Genesee County Nursing Home Assessment and Analysis of Future Options, November 2010. ( cite: http://www.cgr.org/reports/10_R-1624_Genesee%20County%20NH%20Final%20Report.pdf )
Why a second study was commissioned is unexplainable in my opinion and totally needless. Again, even the most casual observer understands that NY State and the U.S. governments are both broke and view Medicare/Medicaid & Social Security as “entitlements” and therefore a constant subject of debate on how to cut those expenditures back. In other words, they will not be paying more. The unpaid IGT (Inter Governmental Transfer) funds are a case of fool us once, shame on the Federal government, fool us again shame on Genesee County. The promise made will not be kept, so let’s stop expecting those funds in our budgets.
So what can we do? Please read on.
Quoting Buckminster Fuller: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
I set a few goals for this project:
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Continue the mission of GCNH without county tax funds being added every year to meet the operating expenses;
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End reliance on Government funds outside of Medicare/Medicaid and Social Security;( ie: IGT )
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Preserve the jobs that actually provide patient care at GCNH;
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Place the home under professional management and off the county administration workload;
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Provide future nursing home care for those county residents who cannot afford it.
The actual cost to the taxpayers is somewhat foggy. By amalgamating versions from the County Manager, County Treasurer, Nursing Home Administrator, various legislators and reports from the Daily News and The Batavian, I concluded: since 2002, County tax funds have been required to cover the GCNH operation yearly. The numbers have gone up and down apparently, and this year they are projected to be around $2.5 million in the red. The county has been forced to borrow at times in anticipation of IGT funds. I don’t know the accumulated cost in interest payments. Regardless, this is not sustainable and is not fair. While it is the author’s opinion that a moral obligation does exist to help provide for the least among us, it is also true that the County Legislature has the moral obligation to ensure that if taxes must be levied, they should be spent in the most efficient manner. Unfortunately, neither of those obligations is being met.
The best situation, I feel, would be to lease the home to a private operator preferably a nonprofit, but for-profit corporations should not be excluded. The decision to enter into any privatization agreement and who the operator is ultimately should be decided by referendum of Genesee County voters. Currently the income of the GCNH is expected at $15.797 million per year, their budget runs at $18.2 million, about $2.4 million is expected in IGT Funds, which apparently have not been paid since 2011. Let’s just forget the IGT Funds for now; if the federal government decides to send it to us, great, but it’s looking like a write-off from here. It also appears that privately operated nursing homes receive a higher per patient payment from Medicare / Medicaid than do government run homes. Additionally, the home is running at less than full capacity and a new operator would surely try harder to fill the facility. This scenario is based on the info available regarding what the GCNH receives now, so any difference goes to the bottom line of the operator. I expect that the new operator will bring in substantially more revenue than does the current operation, due to the above. Any schemes of making money for the County’s general fund through rental income, sale of bed licenses or debt repayment are not being considered. The mismanagement of other county operations is a separate issue and I am currently only considering the future of the Nursing Home. All proceeds need to be earmarked for the future care of County residents.
So, here goes:
A.. Lease to be paid by the operator in the amount of $4,739.000 per year for a period of 10 years. This is equal to 30 of $15.797 million (current projected income). Standard business practice is to pay 20 percent of income for rent. This is a highly specialized facility with an existing customer base, so it is surely worth much more. I consider 30 percent to be a discounted rate, and should satisfy the NY Constitutional requirement of “Fair Market Value."
B. During the 10-year period, the County will return to the operator $1.5 million per year for upkeep and maintenance, operator is responsible for any amount over that and can keep any funds not spent. The operator is responsible to complete needed upkeep and maintenance. Facility shall be inspected quarterly by the County for compliance.
C. During the 10-year period the County will pay for the care of indigent or underinsured patients in the amount of 1 million dollars the first year and then decreasing by $ 100,000 each following year so that after the 10th year has passed, there will be no more funding from the County.
D. This leaves $2.239 million remaining from the proceeds of rent payments. Of that 25 percent ($671,700) shall be placed into a contingency fund each year to be spent on Nursing Home issues only, at the discretion of the County Legislature. (Specific items allowed should be quantified in the lease agreement). The remainder, which would be $1,568,300 the first year and then increasing by the amount withheld from the payments described in C. above shall be placed into a permanent fund, which will accrue interest and will be used to fund the County’s share for care of the necessitous citizens of Genesee County after the 10-year period has ended. This will leave the fund with $19,500 in principle paid in. With an estimate of 2-percent interest being earned, the fund should have approximately 24 million dollars in it. That would be enough to have $300,000 to 400,000 per year removed for patient care and still be sustaining.
E. At the completion of the 10-year period, the operator will cease lease payments and either the facility could be transferred to their ownership or the County can retain ownership. The facility would then be placed on the tax rolls, or if continued ownership by the county is desired, a payment plan would be drafted in lieu of taxes. Either way the result will be lower than $4.739 million per year. This should provide an incentive for a farsighted operator to take over the operations even if they may lose money in the first few years, which is why I believe that a nonprofit would be the best fit.
F. The operator shall be offered to purchase County employee benefits for their employees, so as to continue the employment of the current staff for a period of 10 years. A benefit buyout plan should be established for any current employees who remain past the 10-year period and their pension converted to a 401K. I don’t think it wise to demand that wage levels be mandated for the operator, nor should we demand certain staffing levels. Those things are controlled by the State of NY anyway. We can however assist with the high cost of employee health benefits. A large majority (around 70 percent) of the GCNH budget as reported by the County is attributed to “Salary /Fringe” -- this could help alleviate those costs enough for the new operator to function at the reduced income of $12,558,900 (minimum) the first year (70 percent of $15,797 plus the $2.5 million refund from the County) without necessarily reducing the paychecks of employees. Especially in light of the fact that the operator will both earn more per patient and is expected to have more residents at the home.
I’m sure there are laws and regulations which I am unaware of and are not factored in. I know the employees are represented by a union. Unions renegotiate contracts all the time, so that shouldn’t be an obstacle. This is why I am sending this to the Legislators so they can research those issues. This is a starting point and I believe the base premise used here is sound and workable.
Thus the Genesee County Nursing Home is saved, the employees keep their jobs, taxpayers are no longer paying for the operation of the home, the County Administration is no longer spending time and effort on the home, a new private employer has come to town and most importantly the mission of the home to be there as a safety net for County residents will continue.
With Liberty and Justice for All,
David A. Olsen
