The following extensive analysis was performed by Susan Handlesman of rural Woodstock:
It came from her analysis of the model created by Scott Hartman, which appears below:
Valley Hi analysis of outcomes
- VH has $43 million in the bank.
- VH enterprise fund cannot levy much if anything at present. Levy in excess of 2.8 multiple of past years’ NET operating loss is called ‘Excess Accumulation” and taxpayers who object to this levy will get their money back.
- From 2011 (or further back) VH has run at an operating profit or near breakeven.
- 2015 showed a slight operating loss.
- The interest earned on the $35-$43 million surplus ranged between $65,000 and $93,000 in those years 2011-2015.
- 2015 interest earned was $79,000;$79000/$43,000,000=0.0018372= less than 2 tenths of one percent.
- Funds in excess of a certain amount which exceed FDIC insurance maximums in regular accounts at any given bank are at risk of total loss.
- In 2002 a referendum passed which read as follows: Shall McHenry County beauthorized to levy and collect a tax at a rate not to exceed .1%for the purpose of building, maintaining and operating a county nursing home? YES NO
- On 9-1-2015, a LLC (NOT a ‘non-profit’) filed an application with the Illinois Health Facilities and Services Review Board (HFSRB) for a Certificate of Need CON)in order to build a 98 bed ltc (long term care) facility on the campus of Centegra Hospital in McHenry.
- It is not clear how many, if any, Medicaid beds will be certified in that 98 bed, all private room, for-profit facility.
- Centegra can get around Medicare re-admission penalties by discharging to an on-campus facility and letting docs walk over to tend patients.
- Medicare pays more than double the reimbursement rate of Medicaid.
- HFSRB compiles data on ltc bed need, this is taken into account when issuing CON, and HFSRB data indicate a need for 127 new ltc beds in McHenry County by 2018.
- VH presented model on 3-23-16 indicating that between present and 2023, the $43 million will be spent down to below $20 million. This projection was based upon an 80-20-20-8 bed mix (80 Medicaid, 20 Medicare, 20 private pay, 8 variable).
- The model indicates increased Medicaid percentage of bed mix will exacerbate VH operating losses.
- It was indicated that Illinois Medicaid reimbursements were unreliable, late, and projected to shrink as much as 30% in the future.
- The model indicated that Medicaid beds were operating at around $75/day loss. Breakeven per bed-day was said to be $245 (the day rate charged private payers).
- It was indicated that the 2002 referendum is to be considered the guiding directive, with the interpretation that VH must be kept open as a County run home without regard for cost.
- It was indicated that the WIPFLII presentation is expected to show community need for some form of greater senior service provision.
- It was indicated that the Board believes VH serves the vulnerable needy elderly of McHenry County, and that is the mission of VH.
- According to Genworth 2015 study on cost of care by Statehttps://www.genworth.com/dam/Americas/US/PDFs/Consumer/corporate/cost-of-care/118928IL_040115_gnw.pdf
The daily semi-private room rate in Illinois in Chicago–Naperville–Elgin in 2015 was:
- $135 (min)
- $225 (median)
- $355 (maximum)
- $82,125 (median annual)
- 4% (5 year annual growth).
- Model predicting VH chewing through $23 million in the next 7 years with an accelerated rate of loss projected for later years seems to indicate VH will be broke by 2027.
- Because of PTELL, the levy cannot be reinstituted after 3 years of zero levies. When the surplus funds are gone, a new referendum will be needed, OR, McHenry County will have to find the funds for VH within their General Fund budget.
- With VH net loss expected to jump to to be in the range of $1 million in 2016, a +/-$3 million levy could squeak by that pesky ‘excess accumulation’ limitation.
- The model may be in error. The past decade of profitable operations indicate that. The model may also be conservative, if expenses are allowed to skyrocket and Medicaid payments are cut, and profitable Medicare referrals are lost to new for-profit facility in Centegra parking lot.
VH model is correct, it indicates it will be running at a $4-5 million operating loss within 4 years with surplus extinguished by 2027.
State law caps nursing home property tax rate at 0.10%. [10 cents per $100 of assessed valuation.]
McHenry County EAV is $7 billion (and the trend is declining).
VH levy could be $7 million at most unless EAV rises.
VH projected operating loss will rise above $7 million within 15 years(according to model assumptions of 3.25% cost inflation).
VH will run through all $43 million surplus plus another $35 million or so of new levy in years 11-15.
At that time, VH will not be able to stay open, with operating losses exceeding maximum legal levy.
Need for new nursing home beds within a County is determined by agency (HFSRB) which issues Certificates of Need.
McHenry County is said to need 127 ltc beds, and a for-profit LLC is applying for a CON for 98.
CONs may be issued conditionally upon bed mix (Medicare vs. Medicaid).
By law, a County nursing home must accept admissions from non-County residents.
If primary objective is to serve needy vulnerable elderly of McHenry County, the money VH projects to spend over the next 15 years may be more effectively spent on vouchers for means-tested County resident recipients.
Vouchers could be offered to ltc facilities in the amount of the differential between Medicaid reimbursement rates and breakeven cost. This would enable more facilities to accept Medicaid patients.
Rebate the $43 million excess accumulation to taxpayers.
Start fresh, with a tax levy that is legal and reasonable 2.8 x $160,000= $448,000.
(VH has 2 more years to bump back up to $3 mil levy under PTELL).
Spend within the budget.
Rather than stating wants and ‘needs’, VH will have to live within the budgetary constraints of Medicaid dictates, and Illinois law, and determine a figure which they will be allowed to spend prior to determining a spending plan.