Valley Hi Consultant’s Report

Have to say I was disappointed with the Wipfli LLP Market Study Report presented at the joint meeting of the Valley Hi Operating Committee and Public Health and Human Services Committee.

Valley Hi's entrance.

Valley Hi’s entrance.

From the hour or so presentation and discussion I distilled the following two recommendations to continue to attract lucrative post-hospital Medicare patients:

  1. single occupancy (private) rooms need to be made available.  (These could be put in the lower level–a basement currently with a gravel floor that could be a walk out because of the sloop of the terrain.)
  2. the rehab facilities need to be updated.

The next biggest recommendation seemed to be to hire an architect to provide cost figures.

That leaves County Board members and the public with what I characterized as the Valley Hi “wish list.”

It totaled $6.7 million.

Not listed was the cost for single occupancy rooms.

Many times have I heard that consultants are hired by government to tell the governmental officials what they want to hear.

Mike Edwin, the consultant, had these last words to the Operating Board:

“If you have additional comments in there, changes you want, let us know.”

There were other suggestions including  “a dementia care program, a stand-alone assisted living and memory care option or a unit in the nursing home for supported living facility.”

The consultant suggested that outside investors be sought, but advised that the country location would be a detriment.

Interesting was that the average nursing home is at 88-90% occupied, while Valley Hi is at 98%, the highest the consultant had seen.

That there is currently a excess capacity of nursing home beds in the county with two developers (Centegra and Alden) seeking an permission to build another 208 beds was interesting.

The lower level could also be used for adult day care, but “It’s unfortunate that you are here [too far from the population center].”

Questions indicated that services provided by Family Alliance would not be a good fit.

The catch phrase for the night was “continuum of care.”

The creation of that was recommended in case “Medicare and Medicaid blow up.”

County Board member Donna Kurtz said that a cost-benefit analysis was needed.

Mike Walkup wanted to know the desirability of Valley Hi’s location.

The consultant said Valley Hi had “been able to buck the tide.”

He then described McHenry County as “basically rural” to rolling eyes from those from the eastern part of the county.

Walkup also asked about the possibility to selling the nursing home.

Kurtz disagreed with Walkup, indicating the referendum approval in 2002 meant county taxpayers wanted the facility.

“The premise of selling this facility makes no sense at all.”

A member of the Operating Board commented about the “incredible lack of certainty” that the administration and Operating Board faced.

She said that “spreading out the risk, exploring these options makes a great deal of sense.”

Operating Board Chairman Jim Kennedy, a former County Board member elected as a Democrat, noted that McHenry County’s nursing home was not in the financial trouble that DuPage’s had, but “we may not be far behind.”

“I don’t know of any county nursing home doing any  better than ours,” County Administrator Peter Austin observed.

Valley Hi Administrator Tom Annarella pointed to two options.

The first would be to do nothing.

He said that five years from now the odds were good that the facility would be “running into something.”

He talked of a lower level walkout.

“There’s no problem with filing our beds now,” but “younger, more high skilled Medicare persons want a more modern hospital environment.”

County Board member and Chairwoman of the Public Health Committee said that the rehabilitation part of Valley Hi needed modernizing.

Walkup wondered if the County should “say we’re going to be the last resort for the indigent.”

Previously, it had been discussed that private nursing homes had no incentive to take Medicaid (welfare) patients.

“That is our mission,” Kennedy stated emphatically, adding, “If we go all Medicaid, [it’s] almost undoable.

“We may be the only stop for Medicaid 5-10 years down the road.”

McCann noted that Valley Hi should be operated as “close to break even as possible.”

Micheal Rein, a member of the Public Health Committee, asked for the operating loss.

“$700,000,” Annarella replied, noting that this year that the balance was “not trending in the right direction.”

Discussion turned to the “surplus.”

Austin said the Operating Board had $18 million as a “target reserve.”

Monday, there was $41,660,082.57 in the Valley Hi bank accounts.

Annarella pointed out that every year the $18 million figure went up because of increases in operating expenses.

Operating Board Chairman Kennedy explained that Valley Hi was “currently not using any tax levy to operate the nursing home” and asked, “What’s the philosophy going to be?”

He argued that the surplus “proves businesswise that we’ve been a [tremendous] success.”

He wondered if the Board should be helping the most indigent or selling the nursing home.

Kennedy added that he thought that, if another referendum were held, it would pass.

= = = = =
Democratic Party District 3 County Board candidate Dominique Miller attended the meeting.


Valley Hi Consultant’s Report — 17 Comments

  1. The last recommendation in every consultant’s report is, “you need more consulting done”.

  2. Oh I doubt very much that any referendum adding to our tax burden would pass today.

  3. VH $25,000 consultant report findings from powerpoint distributed at public meeting of VH op board:

    (page 5): Market Study Findings–Nursing Home Demand Modeling Nursing Home Bed Demand Findings for McHenry County, For 2016-2026

    Total number of Additional Beds Needed To Meet Demand
    McHenry County 2016(250) (that is, there are 250 too many beds this year)

    2021 88
    2026 263

    “Valley Hi is well positioned to remain a provider of choice in the county for the next few years and until new homes are opened in the area.

    The nursing home bed demand model suggested there is currently an excess number of beds in the area.

    The model suggested there would be demand for all the beds in the area an possibly more (88) by 2021 and if some beds are moved from the county.

    There is a new nursing home planned for Huntley,IL.

    Alden realty Services has approved plans for a senior living campus and would potentially move 110 beds to the location.

    Centegra has submitted a certificate of need for 98 new nursing home beds for McHenry.”

    the data sources listed for these projections: Il Dept. of Commerce and Economic Opportunity, Il Dept. of Public Health, Assisted Living and Shared Housing Establishments directory, Il Health Facilities and Services Review Board, Il Supportive Living Program directory, US Census Bureau, Wipfli phone survey and interviews, and ESRI a national demographic data firm.

  4. The rest of the report had to do with primarily non-nursing home suggested market demand.

  5. Public comment to Op Board

    The wording of the 2002 referendum authorizing taxation for Valley Hi:

    “Shall McHenry County be authorized 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”

    Bear in mind that there was also another successful referendum from 2003 authorizing collection of tax money at the maximum statutory rate .025% to separately fund senior services in this County.

    To open or expand or reduce a nursing home in Illinois you need a Certificate Of Need, from the Illinois Health Facilities and Services Review Board (that is: A CON from HFSRB).

    HFSRB compiles statistics projecting elderly population demographics and bed need per County.

    This is the data upon which the HFSRB bases decisions to issue CONs.

    You can access this elder population and bed need projection data for free on the internet.

    To the extent that this consultancy presents HFSRB information as evidence for need, you overpaid public funds for their services.

    To the extent that conflicting or extraneous information is presented, you have wasted taxpayer funds on obtaining data irrelevant to Valley Hi’s specific directive per the 2002 referendum.

    HFSRB projects bed need for 127 new beds in this county, and a for-profit LLC has applied for a CON for 98 new beds on the Centegra campus in McHenry.

    As an aside, Centegra was recently allowed to close around 40 LTC beds in Woodstock by the HFSRB, indicating that the need for western McHenry County LTC beds must not have been that urgent.

    Your County financial officer has prepared a report projecting that VH, under current bed mix, will blow through its $43 million excess accumulation surplus within 7 years and by year 11 will be running at a $7 million annual deficit.

    This is relevant to today’s meeting because by law you cannot tax more than 0.10% of County EAV for a County nursing home, and at $7 billion EAV for McHenry County, $7 million annual levy would hit that maximum cap.

    Any expansion or additional spending based upon this consultant report today will shorten your projected 11 year terminal lifespan of this County Nursing Home.

    Please resist the urge to play Lady Bountiful with other people’s money.

    You are not the only individuals in this County with compassionate hearts, and you insult all citizens when you take an adversarial position of assuming you must ‘protect’ Valley Hi from taxpayers.

    Listen to this presentation, but recognize it as irrelevant.

    If there is evidence of need for non-County-nursing-home maintenance and operation presented today, it is evidence that has no bearing on Valley Hi funding.

  6. Sources
    (The Health Facilities Planning Act (the Act) (20 ILCS 3960), established Illinois’ certificate of need (CON) program.)
    page 8, 65, 116, 122, 125 As the initial projection for 2015 was in error, the projections for 2025 must be adjusted down to reflect that error.
    (McHenry County is health service area 8) (see Doc page 124; pp118-124)

    55 ILCS 5/5-21001
    55 ILCS 5/5-1034 (Statutes setting maximum tax rates per senior services provisions)

  7. The consultant recommended that Valley Hi had to build private rooms and a modern therapy gym to compete for lucrative short term Medicare patients–that these patients demand modern amenities and do not want to see the nursing home end of the business.

    This recommendation (expansion, significant capital expenditures) seems contraindicated by his other findings and statements by Director of VH: that the other nursing homes which are moments away from Centegra hospitals (and financially affiliated to some degree) will likely get post surgical (Medicare) discharge patients, that VH is too far from concentrated populations to be attractive for adult day care.

    Key point, Medicare patients demand a lower nurse-patient staffing ratio.

    Director stated again later at that meeting the tremendous difficulty of attracting and keeping CNA staff at $12/hour, and nurses at the current pay rate (and if $15/hour minimum wage passes there would be no persons willing to do the backbreaking heartbreaking dangerous work of these wonderful CNAs (I agree with all my heart on the selfless compassionate hard-working quality of CNA and nursing and all staff at VH) when they could flip burgers for no risk instead.

    The idea is that VH must attract Medicare patients into the mix in order to maintain their near-(operational) breakeven.

    Medicaid reimbursement is about $75 short of breakeven, and Medicare is $150-$250/day profit.

    The aim of VH is to at least maintain some Medicare clientele enough to maintain the breakeven Operational budget.

    State of Il is as always a problematic payer and they pay Medicaid.

    Director of VH has been instrumental crafting an important Bill SB 419 which would correct an inequity in nursing home reimbursement, by restating the formula to include nurse-patient staffing ratios and acuity rate of patients in the formula some nursing homes have been profiteering by under-staffing).

  8. We the people should NOT be subsidizing a nursing home at all!!!!

    It is not my job or problem to care for other people’s elderly parents an such!

  9. I wonder how many fat a**es complain about having to subsidizes other peoples stuff?

    I am tired of having my insurance be so damn high because I am in good health and most people are on medications and eat crap from the store and don’t get off there lazy a**es!

    Which BTW is one of the greatest costs that this country faces is people being fat!

    I am tired of my insurance being so high when I have a good record for driving but I have to pay for everyone that has tickets and accidents!

    I’m tired of home insurance being high because of people that have there house in tornado alley.

    I’m tired of Veterans that claim disabilities when they have nothing wrong with them but since nobody wants to deny a Veteran anything they sign off on it!

    I’m tired of funding Chicago everything!

    I am not tired of paying a small tax for Valley Hi nursing home that helps our elderly and mostly indigenous ones.

  10. My, my, my. How easy it is for many of you to disregard Valley Hi’s mission statement and history in our county.

    Valley Hi began in 1884 with the purchase of 113 acres of land and was supported by all the townships in our county.

    Their mission statement is “Caring for those least able to care for themselves.”

    I believe we still have those in need in our county and probably more to come.

    Personally, I am very glad they have money in the bank and will be able to make improvements as needed.

    Wouldn’t you like to know, that even if you didn’t make a lot of money during your earning years, you had this option for when you were aged and/or disabled without the resources of those able to purchase long-term health care?

    A place near where you lived, worked, possibly raised a family and where you considered “home.”

  11. That isn’t the point.

    Excess accumulation taxation by any taxing body is illegal.

    There are legal limits because every taxing body can destroy lives in the community by excess taxation.

    The point is defining the legal AND ethical appropriate amount which each taxing body may extract by law from household budgets which are (in this county very specifically) strained beyond all limits of tolerance.

    The point is, how many people’a lives are you willing to destroy to accomplish :_______(fill in the blank).

    To you, it might be overfunding Valley Hi.

    To your neighbor, it might be overfunding the Conservation District.

    To all the teachers and school employees, it will certainly be overfunding school budgets.

    And add to the list each individual desire of boosters of every other taxation-empowered pet project).

    Now answer this:

    how high a property tax rate are you personally willing to pay to over fund ALL of everyone’s desires?

    Coupled with that, how low are you willing to have your home value fall?

    If you are a renter, how high will your rent have to go (because as property taxes rise, so too must rents go up in tandem) before you say enough, and walk away and let funding McHenry County be somebody else’s problem?

  12. Though I agree with you Susan I feel that the School Districts are the biggest culprits.

    Isn’t Valley Hi’s resources being taking down by them not taking the levy?

    How long will it take for Valley Hi to get the reserves down?

    My question is that it appears that the board has been trying to find ways to get rid of the over funding?

    Or are they just not giving a crap?

    I’m just asking?

    Not saying that what happened is right but are things trying to be fixed or is government just no caring?

  13. The vh op board is great, the director is superb.

    The place has run at an operating profit or break-even since this new director was brought in .

    That doesn’t mean that they are allowed to over- tax under the law.

  14. @Holly It’s nice that you believe what “they” are selling, but it may not have any openings for you to live nicely near where you called home.

    Valley Hi is not reserved strictly for McHenry County residents and is not exclusive to the McHenry County taxpayers that are supporting it.

    Put yourself on the list now, because if you wait until you truly need a place to go, you will be put on a very long waiting list.

    If you are medicaid, it will take even longer.

    Can’t there ever be a new referendum to rid us of the 2002 referendum?

    How about something like:

    shall McHenry County be authorized to abolish the levy and collection of a tax for the purpose of building, maintaining and operating a county nursing home? Yes or No?

    Sell it!

  15. These are arguments I’ve heard presented by the op board:

    Medicaid reimbursement from Illinois is problematic and may be cut.
    (This rationale is used to justify keeping a reserve of one year operating expenses).

    They believe their mission is to serve the most indigent and needy elderly.

    This operating board seems sincere and diligent, and the director is extremely intelligent.

    VH is a wonderfully run home, and residents seem genuinely content.

    There seems to be humane motivation, but there does seem to be sense of entitlement to the $43 million excess accumulation surplus.

    Any levy based on a break-even operating budget history is subject to lawsuit (excess accumulation) and claw back by tax objector citizens.

    But if vh can record an annual operating loss of a little over a million, they can keep legal levy at $3 million.

    In the past years VH has placed the entire levy in a bank account.

    The amount has built up rapidly to $43 million dollars.

    Interest earnings indicate less than two tenths of one percent.

    Furthermore, money in a non insured bank account is subject to total loss above FDIC insured limits.

    When I asked former op board member Ken Koehler why vh holds that amount of money in short term at risk account, he said they may need rapid access to funds.

    I asked for what would they need rapid access to $36 million?

    He said a new roof (building was six years old at the time).

    When I said a new roof might only cost a million or less, he said he wasn’t going to argue with me.

    Vh had a report prepared by a County Finance officer.

    The report included anticipated spike in operating losses.

    This report indicates rapidly growing operating losses based upon higher salaries and ops&maintenance costs, and more aggressive capital expenditure.

    By the projections of this report (including holding an $8 million capital needs reserve, and an $11 million and rising annually operating cost reserve) all excess reserves will be gone in 7 years and the total reserves gone in 3-4 more years.

    At that time the (extrapolated) levy is projected to be $7 million for annual operation.

    0.10% is the max rate by law which can be levied for a county nursing home.

    County EAV is 7 billion.

    So $7 million hits the max.

    The Illinois Medicaid threat of non reimbursement has been raised for years.

    Illinois is threatening cuts of 20% which would devastate all nursing homes.

    Federal government reimburses States a minimum of $1 for every qualifying Medicaid dollar spent.

    But VH has all the rights of any taxing body, and bailout likelihood from County budget in times of emergency if needed.

    By the logic of keeping a $43 million excess accumulation because someday they may need to build a new building, every taxing body could do the same.

    Imagine Woodstock D200 (already $140 million in debt from their 2007 building spending spree, Woodstock property tax rate is 4.6%) adding to their levy in the name of saving up for their next new school building.

    Imagine every taxing body empowered to tax ever more so they could all save up for new future facilities.

    Just because citizens are asking specific questions about use of funds does not imply a criticism of VH, its wonderful employees, or its diligent good hearted operating board.

    An intelligent and productive discourse could ensue if other politicians would cease to generalize and divert the issue with implications that anyone who doesn’t agree to disregard all the financial details must be contemptible monsters.

  16. All boards should have a board policy that any Powerpoints and reports presented during the open portion of a board meeting will be posted indefinitely on the taxing district website.

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