Editor's note: This is the first in a series of stories focusing on a financial viability report given by Don Pryor of the Center for Governmental Research on the Chautauqua County Home. This story highlights cost reductions recommended in the report.
MAYVILLE - The digestion period has begun. Days after hearing a viability report from the Center for Governmental Research, lawmakers are now weighing their options regarding the future of the Chautauqua County Home.
Pros and cons of selling and retaining the Dunkirk skilled nursing facility were discussed during the special legislative session. The legislature must now review both options before deciding the home's fate.
But if lawmakers are keen on keeping the facility in the public sector, drastic cuts need to be taken and revenue sources found - and sooner rather than later.
Don Pryor of CGR outlined options for savings and revenues on Tuesday, and said discussions should take place immediately while the county is set to undertake its 2013 budget negotiations.
County Executive Greg Edwards also noted the narrow window before a tentative budget needs to be in place. The county executive plans to outline his budget to lawmakers next month.
Six recommendations have been made to reduce costs at the County Home and to enhance revenue. Some options include implementing new technology, while others include concessions with union workers.
EXPAND USE OF TECHNOLOGY
Pryor made no bones about it: the County Home needs to update its lagging use of technology and electronic medical record keeping.
"By all accounts, the Chautauqua County Home, not unlike many of its counterparts, continues to function in the second decade of the 21st century as a mostly outdated, heavily paper-driven operation," the report notes.
Pryor said the home does not have an efficient Electronic Medical Records system in place, forcing the home to rely on hard-copy paperwork. This has resulted in concerns with integrating clinical and billing systems.
The viability report recommends an EMR system be put into place. That implementation includes investments in "sufficient staff training."
A partially funded and implemented program exists at the County Home. Computer tablets have been in use, and represent a step toward a functioning EMR system at the nurses' aide level.
The report notes, however, that due to "uncertainty" surround the County Home's future, the implementation of a fully functioning system has been delayed.
Not to mention the costs of such a program. Pryor said estimates have surfaced that a fully operational system throughout the home could cost a quarter-million dollars. The facility's budget capital fund, though, lists an amount half that.
"Either way, much of that cost could be absorbed via state subsidy of the costs," the report states. A subscription process may also defray upfront costs through a vendor.
"This may prove less costly and far more efficient than the current inefficient system in place now."
Pryor said by implementing an EMR system, the County Home would save about $500,000 a year, which does take into account for training and start-up costs.
ATTRITION AND OVERTIME
The report notes that the County Home averages five call-ins a day, resulting in staff shortages and an increase in overtime. Time also is used finding replacements, and is burdened by a lackluster, inefficient computerized system.
Pryor said one solution might be to utilize substitution and per-diem workers, which he said has worked well for the home in the past.
But in order to cut down on operating costs, attrition may be the best option. Even if it means bringing in more part-time workers.
Almost $225,000 a year could be saved, Pryor notes, if positions are reassigned at the time of retirements. Savings would come in form of salaries and benefits if those retirement positions are not filled.
Reductions in admissions, social work and activities staff might also save the County Home in the long run. Outsourcing on-site laundry and its pharmacy also may help the bottom line.
The report notes that the County Home is one of a "relatively few nursing homes" to offer an on-site pharmacy, which is operated by an outside vendor. While convenient, Pryor said such a service could be utilized outside the facility and still serve its purpose.
PAYER MIX IMPROVEMENTS
The County Home has "consistently" maintained its annual occupancy rate around 98 percent, so the report notes that little attention is needed in terms of marketing and admissions.
However, who fills those beds is another question. Pryor said a "vast majority" of home residents are on Medicaid, leaving little room for the facility to turn a profit.
"But if more residents can be attracted initially from the private pay sector, and from those initially paid for by Medicare, the facility could significantly improve its financial prospects," the report states.
As much as $425,000 in revenue per year could be generated by attracting more private pay and Medicare residents - similar to numbers the home had four years ago when 3,100 more residents pay through private insurance.
Revenue could also be generated by revamping the home's therapy staff, two of whom spend time doing clerical work.
LIMITS ON SALARIES AND BENEFITS
Pryor said limits on salary increases would be necessary for the County Home to stay solvent. And after some discussions with staff there, it appears workers would be willing to "sit down at the table."
"Many employees recognize that unless they are willing to scale back some of their demands and desires for increasing wages and benefits, those wages and benefits may be reduced anyway if a decision is made to sell the County Home to a private sector owner," the report points out.
If the county and CSEA were to agree on a salary increase of 1 percent in 2013 and 2 percent in 2014 and 2015, the County Home would save $280,000 a year in that time span when compared to projected costs.
Capping fringe benefits at 60 percent of total salary levels also would save the home $2 million off projections for the next three years.
"Benefits have continued to escalate each year," the report states. "... A number of possible suggestions have been made by employees and county officials in our discussions that would have the effect of reducing selected benefits going forward."
Other suggestions for scaling back on benefits include: increased employee contributions to health insurance; adoption of a high-deductible health insurance plan; reduction in sick days and limits on paid days off; and cap on overall benefit plan.
Considered a long-shot option, meanwhile, would be to close a wing of the County Home and convert it to an assisted living facility. Although the county cannot operate such a facility on its own, it could partner with a nonprofit group.
By closing a wing, a number of nursing beds would be removed, thus laying off staff and reducing payroll. As much as $1.25 million would be saved annually, the report notes, if a section of the home was closed.
Revenue would also be recognized if the home were to partner with an outside group to provide assisted living options.
But don't expect this option to come quickly, if ever.
"The potential development of this option is likely to take far longer than action on most of the other scenarios ... and should presumably not be a determinative factor in whether the county should sell the facility or continue to own it," the report notes.