Heritage Village P-J file photo

Financial struggles compounded by the COVID-19 pandemic are forcing Heritage Ministries to “restructure” its operations, the nonprofit’s president and chief executive officer told The Post-Journal.

Lisa Haglund said the organization — which provides skilled nursing, independent and assisted living at locations in New York and Pennsylvania — already has taken steps to hone its mission and focus more on patient care. It comes as Heritage has had to prioritize payments to some vendors and renegotiate a donation in lieu of taxes agreement with the town of Gerry.

“I think this is forcing us to think different and create innovative new strategies to ensure a stronger future,” Haglund said this week. “I feel strongly that this will benefit our residents and employees.”

Next month, Heritage will auction off several pieces of equipment mostly tied to its short-lived Homestead Stables. The equestrian center, located on The Homestead campus in Gerry, opened in late 2018 at a cost of $3 million and included 41 stalls and a riding arena.

At the time, then-CEO David Smeltzer said Homestead Stables would offer Heritage residents ways to maintain an active lifestyle with horses. The project, he said, was part of a “redefining” of Heritage that also included more community participation by offering riding lessons and a place for the public to board horses.

“What started as the idea to create an experience for our residents has grown into a much larger vision since its inception,” Smeltzer said in December 2018. “We realize we are truly only beginning to scratch the surface of all that our facility will be able to provide.”

That vision, however, never fully came into focus.

Homestead Stables was closed in September 2020 during the pandemic, and Haglund confirmed this week the property will not be used again as an equestrian center going forward. She hopes the site can be repurposed in the future as a community wellness center.

As part of its restructuring, Haglund said Heritage is focusing its efforts on residents and their care.

“Restructuring can be nerve-racking, but we’re excited about this,” she said. “We’re getting back to our core market and mission.”

The Sept. 16 liquidation auction will provide much-needed capital toward day-to-day skilled nursing care. According to an online posting, and a recently installed sign in Gerry, the auction will include vans, trucks, tractors, utility vehicles and aluminum bleachers, among other underutilized equipment.

COVID CRUNCH

Haglund has previously alluded to COVID-19 and the financial impact it has had on Heritage.

“Slowing the spread and preventing infection, in addition to increased personal protective equipment stockpile requirements, and increased staffing challenges related to COVID-19 vaccine mandates have been extremely financially taxing on our already underfunded senior housing and health care system,” she said in 2021.

Haglund also cited the state’s vaccination mandate as the reason why Heritage lost almost 10% of its workforce — about 100 employees — at its New York facilities.

Heritage’s website said it serves 2,500 individuals annually overall and employs 1,500 staff. The organization also has 715 nursing and skilled rehabilitation beds and 366 independent living homes.

‘PRIORITIZING PAYMENTS’

Haglund confirmed this week that Heritage had to renegotiate an existing agreement it had in place with the town of Gerry, where it operates The Village and The Homestead. As a nonprofit, Heritage does not pay property taxes, and instead makes a donation payment to the host municipality.

Due to financial struggles, Haglund said Heritage had to put its payments to the town “on the back burner.”

The missing payments, in 2021 and 2022, didn’t go unnoticed by the town. The issue was brought up during several Gerry Town Board meetings, appearing to come to a head last November when the town’s supervisor and attorney said Heritage offered to pay the town $10,000 for 2022, with payments increasing annually until capping out at $35,000 in 2025.

Minutes from the November town board meeting, posted online, state, “This offer is not acceptable as they have owed the Town of Gerry for 2021-2022 and if they are not willing to work with the Town of Gerry the assessor will have no choice but to put heritage village on the tax roll. If the Town does put them on the tax roll, they would be paying around $196,000.00 in taxes.”

However, by January of this year, the town’s attorney said a new agreement had been reached by both sides. Haglund said the payment will be roughly $50,000.

A message to the town supervisor was not immediately returned this week.

It’s not just the town of Gerry that has been seeking missed payments.

In July, the Meadville Tribune reported that Conneautville, a borough in Pennsylvania, had filed a lien against Rolling Fields nursing home for more than $12,000 in unpaid and overdue water bills. Rolling Fields is part of Heritage’s small footprint in Pennsylvania.

According to the Meadville Tribune, the lien was filed on July 14 in the Crawford County Court of Common Pleas regarding water service provided from April 1 to June 30 of this year to the nursing home.

The newspaper also alluded to a May 19 letter Haglund sent to a Meadville flower shop, which served as a supplier to Rolling Fields. On behalf of Heritage Ministries Management Company, Haglund apologized to the business for the “payment delays, communication inconsistencies and inconvenience to your company.”

Haglund further said Heritage was “prioritizing payments on the immediate and ongoing needs of the organization and will need to temporarily suspend payments on outstanding balances.”

She alluded to the pandemic and its impact on the senior living industry, specifically resident reimbursement rates “that are not keeping up with the average cost of care and staffing challenges associated with the health care industry.”

Haglund told The Post-Journal that Heritage is working to pay vendors; the missed payments largely have involved facilities in Pennsylvania, she said.

In addition, Heritage also is part of a federal breach of contract lawsuit pending in U.S. District Court for Western New York. As previously reported by the Meadville Tribune, Quest Diagnostics Inc. filed the suit in December 2022, claiming that Heritage Ministries owes about $350,000 for COVID testing it conducted during the pandemic.

In May 2020, New York state mandated twice-weekly testing of workers in all nursing homes and adult care facilities. In its suit, Quest said it performed 9,875 COVID tests to staff at Heritage facilities in Chautauqua County between June and December 2020.

The two sides were attempting to reach a settlement through court-order mediation, the Meadville newspaper reported last month.

BREAKING EVEN

According to documents Heritage Ministries Management Company filed with the IRS as part of its nonprofit status, the organization reported both $6.98 million in revenues and expenses in 2021, the most recent year available.

In 2020, Heritage reported expenses and revenues totaling $6.3 million.

A large portion of the expenses each year go toward salaries, compensation and employee benefits.

In 2021, her first full year as CEO, Haglund received base compensation of $271,694. With bonuses and other incentives included, she earned $326,622, according to the organization’s filing with the IRS.

Jeremy Rutter, listed in 2021 as the chief clinical officer, was fully compensated $159,161; Mark Wilcox, chief information officer, was compensated $187,921; and Randall Jackson, vice president of facilities management, was compensated $154,839.