Facing a growing deficit at its health care center in Rockleigh, Bergen County is considering joining the growing list of New Jersey counties that have sold off their nursing homes.
The 110-bed nursing home cost about $13.5 million to operate in 2010 and brought in about $9.7 million in revenue, resulting in a $3.8 million deficit.
The numbers for 2011 aren't final yet, but preliminary indications are that the shortfall grew to $4.5 million, officials said. The gap could get even larger in 2012, especially after the state reduced Medicaid payments in October.
The New Jersey Association of Counties estimates that the Bergen County Health Care Center in Rockleigh will lose another $300,000 per year as a result of the recent Medicaid cuts.
“We’re looking into whether the county should be in the nursing home business,” said Jeanne Baratta, chief of staff for County Executive Kathleen Donovan. “We’re analyzing that right now. We don’t know what the answer is yet.’’
“Running a nursing home is an expensive endeavor,’’ said John Donnadio, NJAC’s executive director. “With the two-percent property tax cap and the cuts in Medicaid, the pool of money is starting to run dry.’’
Last year, Salem and Mercer counties sold their nursing homes and officials in Sussex and Cumberland counties are considering similar action, nursing home experts said.
“Mercer wasn’t the first county to do it and it won’t be the last,’’ said Paul Langevin, president of the Health Care Association of New Jersey, a group that represents private nursing homes in the state. “It’s a very difficult business right now.’’
“Most counties want to do the right thing and still have nursing homes,’’ said Michele Kent, a former state commissioner of human services and president of LeadingAge New Jersey, the trade group representing nonprofit nursing homes in the state.
Many of New Jersey’s counties began operating nursing homes in the middle of 1900s.
“They provided the safety net for the lowest income patients who couldn’t afford private nursing homes,’’ said Donnadio. Over the years, changes in federal and state laws required almost all nursing homes to set aside beds for people with little money, but county facilities still serve the highest percentage of them, industry experts said.
At Rockleigh, about 88 percent of the nursing home residents pay for their care with Medicaid, the federal insurance for people with low-incomes, according to a report by NJAC. In fact, the Bergen facility’s percentage of Medicaid clients is higher than that of about 75 percent of the county nursing homes in New Jersey, the study shows.
That’s bad news for taxpayers. As a general rule of thumb, the more residents who are on Medicaid at a nursing, the more money the facility loses, industry experts say. Recent studies show that Medicaid payments fall short of covering the actual cost of providing nursing home care in New Jersey by about $28 per person per day.
Baratta said Bergen County is very early in the process of examining the finances at the Rockleigh facility and she doesn’t expect any recommendation to be made soon. The issue has not come up for a discussion at any freeholder meetings yet, said the board’s spokesman, John Gill.
In her first year as county executive, Donovan produced a budget that contained a tiny decrease in the total tax levy, reversing the trend of previous years.
Baratta said the county is looking for whatever cost savings it can find in 2012.
A quick look at the county budget doesn’t reveal the nursing home’s deficit. In fact, the budget shows the facility pulls in slightly more money than it costs.
“You have to factor in the fringe benefits,’’ said Bergen County’s Chief Financial Officer Alfred Dispoto. “They’re running a deficit because of the fringe benefits.’’
The Care Center in Rockleigh is one of 31 nursing homes in Bergen County that provide about 4,000 beds for the elderly and people with various disabilities. All but a handful of those facilities are run by private, for-profit companies. But the states requires them to set aside at least 45 percent of their beds for people on Medicaid, nursing home officials said.
At the nursing homes sold by various counties in recent years, the same folks continue to live there after the change in ownership, according to experts. No one gets put out on the street.
But the shift to private ownership allows the new operators to make staffing changes without navigating the restrictions of civil service laws or old union contracts, experts say. Sometimes that produces efficiencies; sometimes that results in fewer staff members to care for residents, advocates said.
Over time, nursing homes run by for-profit companies will try to gradually reduce the percentage of Medicaid residents, experts said.
Statewide, counties provide about 4,000 nursing home beds and about 79 percent of them are occupied by people on Medicaid, Donnadio said.
That why the recent Medicaid cuts pose such a challenge for the industry. The reduced payments affected different nursing homes by different amounts. The average cut came out to be about 4.5 percent, officials said.
Some advocates say the timing of the cuts – just before the Baby Boom generation moves into the nursing home age range, is unfortunate.
“As a nation and a state, we are on the leading edge of a huge tsunami of senior residents,’’ Kent said. “The fastest growing cohort of our citizenry is the 100-plus population. We shall need a strong infrastructure of high quality facilities and programs available to care for this predictably massive influx of elderly. This is not the time to cut, and thereby undermine, any part of our increasingly important system of supports for this population.”