Governor’s budget may cut too much

Published 1:45 pm Thursday, October 2, 2008

NORTH BEND – For its 45 residents, Mount Si Transitional Health Center is more than just a nursing home. It is home.

Pictures of family members adorn the walls of cozy, well-kept rooms. The facility’s lone four-legged resident, Angie the dog, trots down hallways, looking for a hand to scratch her ears. People gather in the lunch room to take part in activities, and staff members are always ready to provide a hug.

But employees at the Upper Valley’s only long-term nursing facility, located in North Bend, are worried that this home could be forced to shut its doors. They say cuts detailed in Gov. Gary Locke’s proposed budget could be disastrous during already-difficult times.

“When you look at those cuts, we just would not be able to survive,” said Debbie Holling, administrator for Mount Si Transitional Health Center.

Locke unveiled his plan to make up for a more than $1.2 billion shortfall in the state’s biennial budget last month. Among other cuts, the supplemental budget calls for the Department of Social and Health Services (DSHS) to reduce by $69 million Medicaid reimbursement funding to nursing homes throughout Washington.

The reduction is not targeted at providing care, but at other “nondirect” costs. The state assumes that to make up for it, nursing homes will “increase their cost-effective practices and reduce operating margins,” according to a DSHS budget recommendation.

For those who qualify for Medicaid, the state pays their long-term care costs. Thirty-seven of Mount Si Transitional Health Center’s 45 residents are on Medicaid, and the nursing home currently receives $117.79 a day in reimbursement money from the state for each Medicaid resident.

The $69 million in cuts would reduce the daily reimbursement rate for Mount Si Transitional Health Center to about $106 – a large enough decrease to cause Holling and the company that runs the nursing home, Hilltop Health Care Inc. of Issaquah, to seriously consider closing the facility.

“We don’t make enough money now with $117.79. We take a loss and our other facilities help keep us afloat,” Holling said. That’s possible because the other facilities have a higher number of residents who pay for their own nursing-home costs. They are charged more per day than what nursing home are reimbursed for Medicaid residents.

At the 64-bed Mount Si Transitional Health Center, the actual cost to care for a resident is $160 a day, Holling said. And that will only get higher as the cost of utilities, food and supplies continues to climb.

“It would be a sad thing if we had to start rationing our incontinent briefs,” she said.

Labor drives much of what it costs to care for residents at the nursing home. Because of North Bend’s distance from the Seattle metropolitan area, and because it must compete against hospitals, clinics and a whole host of other health-care businesses in the region, Mount Si Transitional Health Center pays higher-than-average wages to its nurses.

“Right now, we’re able to provide the services, but we’re stretched,” said Mary Keith, the facility’s director of nursing.

Even though the reduction in Medicaid reimbursement is for nondirect care costs, Holling said care of patients would suffer. If, for example, the expense of preparing meals increased too much, the nursing home could trim its staff to balance the books.

The North Bend nursing home, which employs about 60 people, wouldn’t be the only one affected by the proposed cuts. Dave Rogge, president and chief executive of Hilltop Health Care, said if Locke’s budget is approved, he would consider closing two additional facilities. The company operates a total of nine nursing homes in Washington and Oregon.

“The company as a whole has several facilities that have been struggling significantly over the last couple of years because of the level of reimbursement,” he said.

“Quite frankly, we could see the whole [company] going down.”

Barbara Felver, communications manager of the DSHS budget office in Olympia, said in choosing which programs to reduce funding, the department was “looking for areas that would hurt clients least.”

“We certainly hope no one has to close operations. That is not the intent,” she said.

Ed Penhale, communications director for the state Office of Financial Management, thinks nursing homes may be exaggerating how much they would be hurt by the Medicaid reimbursement reduction.

“We question the accuracy of those claims,” he said. “If private nursing homes are so unprofitable, why are they bought and sold and why are new ones built?”

According to the Washington Health Care Association, which represents 188 nursing homes and 157 assisted-living facilities and boarding homes in the state, most nursing homes operate at a loss, and 12 were forced to close over the past two years because of financial troubles.

Fifth District Rep. Cheryl Pflug, R-Maple Valley, believes Holling’s concerns. What she questions is why Locke would sign a bill last year that increased Medicaid reimbursements in high-cost areas such as King County, but then turn around this year and reduce the funding.

“There’s certainly more things they could do other than putting nursing-home residents and employees out on the street,” Pflug said of ways to balance the budget.

“The bottom line is the state has a responsibility to care for these people, and they need to keep that promise,” she said. Legislators will ultimately vote on whether to adopt or change the proposed budget.

Mike Neeld, the Washington Health Care Association’s executive director, said the situation has been dire for some time.

“It all comes back to inadequacy of payment, and it is getting worse and worse every year,” he said. “We’re seeing the system erode right now.”

Neeld argues that the funding to nursing homes should actually be increased. But that won’t happen because other issues, such as building roads and protecting salmon, are more popular politically.

Holling said that mindset needs to change.

“If this is the situation now, where is it going to be 10 years from now when more baby boomers are going to be in need of long-term care?” she asked.