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Serving Northern St. Louis County, Minnesota

Nursing homes look to plug funding gap

Taxpayers asked to help sustain senior care

Tom Klein
Posted 9/28/14

REGIONAL - More nursing homes are relying on local taxes to plug a statewide gap in funding for senior care facilities.

For the past five years, the Cook-Orr Area Healthcare District has helped …

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Nursing homes look to plug funding gap

Taxpayers asked to help sustain senior care

Posted

REGIONAL - More nursing homes are relying on local taxes to plug a statewide gap in funding for senior care facilities.

For the past five years, the Cook-Orr Area Healthcare District has helped sustain its nursing home with a local levy and now Ely’s Boundary Waters Care Center is considering a similar approach.

Funding shortfall

At issue is the shortfall between what it costs to provide care for a nursing home resident and how much the state reimburses care facilities. According to Aging in Minnesota, that shortfall has reached epidemic proportions with the gap rising to a statewide average of $65 per resident per day.

Ely-Bloomenson Community Hospital Administrator John Fossum said that gap was a drain on hospital finances and prompted the hospital to turn the nursing home operation over to another provider.

“It’s difficult for small, rural hospitals because they don’t have the economies of scale that larger facilities can achieve,” he said.

Cook Hospital and Nursing Home Administrator Al Vogt agrees. “The shortfall of medical assistance is historic and every year it gets worse,” he said.

The Cook Nursing Home has survived by reducing the number of beds and personnel, but also benefitted from a change in the Cook-Orr Area Healthcare District levy. The levy had previously been restricted for capital improvements only, but five years ago, state legislators changed the levy to allow the use of taxes for operating costs.

Healthcare District Board Chairwoman Judy Pearson said she’s convinced that without the levy funds, the nursing home would have been closed.

Although the levy has increased several times, most notably by 55 percent one year, Pearson said there have been few if any complaints from residents of the district. That’s because people value the hospital and nursing home and are willing to pay for those assets, she said.

Even so, she said, the district is always looking for ways to operate the nursing home and hospital more cost efficiently.

Ely’s situation

Ely’s Boundary Waters Care Center is facing the same dilemma as other nursing homes.

The nursing home has been at a break-even point for the last six months, after suffering tremendous losses, according to Gary Larson, president of the board of directors for the Boundary Waters Care Center. “We lost $125,000 in one month back in 2012,” he told the Ely City Council recently. “It was a disaster.”

But the nursing home could be running short of funds soon. It has already exhausted most of the $900,000 reserve it received from the Ely-Bloomenson Community Hospital. And although it qualified for two years of Critical Access funding, there is no guarantee that the state will renew funding after that period ends.

One potential for a new funding stream is the Equitable Cost-Sharing program for publicly-owned nursing facilities. The program, implemented in 2011, allows publicly-owned care centers to receive higher federal Medicare reimbursement rates if the public owner pays the state share of the cost of the higher rate.

The program is restricted to facilities owned by cities, counties and so-called hospital districts, which could include multiple government entities.

The idea would be to create a special taxing district that would supply the local match to obtain the higher federal reimbursement rate.

The city could consider establishing the district alone or as part of a joint-powers group.

Mayor Ross Petersen said the city is considering its options. “This is very important for our community,” he told the council, and added that the care center helps provide jobs in the area.

Larson said the idea is worth pursuing. Although the facility is at a break-even point, capital needs and other costs looming in the future could undermine the care center’s finances.