SALISBURY – The future of a county-owned nursing home was called into question last week following a request for a $489,000 operating loan.
Last week, representatives of the Wicomico Nursing Home came before the Wicomico County Council in a work session to discuss a request for a $489,320 loan to sustain operations through fiscal year 2019.
Jim Crisp of Gross, Mendelsohn and Associates attributed recent financial issues at the nursing home to low occupancy, personnel costs and write offs of bad debt.
“Part of the reason we are here today is to talk about the future of the organization and potentially what might need to be done in order to make this a break even and hopefully, one day, a profitable entity,” he said.
Councilman Joe Holloway pointed out that accounts receivable, or money owed to the nursing home, had reached $1 million and questioned what was being done to collect on the facility’s debts.
“It looks to me like one of our big issues is accounts receivable,” he said.
Council President John Cannon, however, said he took issue with the percentage of bad debt the facility wrote off.
“The real crux of it is what is the percentage of receivables that we are writing off every year?” he said. “Do we know what that specific number is? Because that is the killer.”
Wayne Strausburg, the county’s director of administration, agreed.
“The accounts receivable does not impact your operating profit loss,” he said. “What impacts your operating profit loss are the receivables that you determine has to be written off. So they are two entirely different numbers.”
Crisp said the facility was planning to collect all but $36,000 of the $1 million in accounts receivable. He noted, however, that the nursing home’s low census accounted for most of its financial woes.
“It’s a 102-bed facility,” he said. “When the facility was closer to 90 residents on average, we were making a lot of money. Now we are averaging between 71 patients to 75. When we are down that low, based on the current infrastructure and the personnel, we are actually losing money.”
Crisp said if the nursing home maintained 75 residents, it would have to make $415,000 in salary cuts to break even. If it maintained 80 residents, it would have to make $170,000 in salary cuts to break even.
Yet to attract and maintain those individuals, he said the county-owned facility would have to improve its relationship with the hospital, where most residents are coming from, and invest in its infrastructure.
“To really fix that facility and to make it competitive, you are looking at $15 million at least to renovate that place,” he said.
Cannon questioned if the facility’s low census indicated a change was needed.
“Everyone talks about how this nursing home is strongly needed in the community. We have to have it in the community,” he said. “But from what you are saying it sounds like it’s a nursing home that’s not wanted in the community because we can’t fill the beds.”
Heather Samis, administrator for the nursing home, disagreed.
“I don’t know of one (nursing home) locally that isn’t having census struggles,” she said.
Jim agreed, noting that the facility was competing with other corporately owned nursing homes, assisted living facilities and home care agencies.
“There are so many alternatives now to nursing homes that nursing homes are almost becoming a last resort,” he said.
Strausburg said the nursing home could mitigate operating losses by reducing staff, but noted that the county would have to invest in the facility to make it competitive in the future.
“People buy with their eyes. You can’t compete in most cases in the long term if you are fighting that battle,” he said. “I would never suggest we take cost reduction measures if we are not willing to make the capital investment that needs to be made in the long term.”
Strausburg also questioned if the county should continue to operate the facility or if it should be privatized.
“That’s the real question in my mind,” he said.
In the meantime, Holloway said the nursing home could benefit from a marketing campaign, as well as an advisory board that would provide direction for the enterprise fund.
“We ought to make what we’ve got work,” he said.
While it was agreed that the nursing home would need a loan to keep the facility afloat in the current fiscal year, some questioned if the facility would be better off in the hands of a private entity.
“Would that be more beneficial to the citizens of Wicomico County?” Cannon asked.
After a somewhat contentious debate on the benefits and drawbacks of privatizing the nursing home, county staff agreed to establish an advisory board and to provide the council with more information on investments that would be needed to make the facility competitive.
“We really want a business plan if we want to commit to the facility long term,” Strausburg said.
