Canyonlands Care Center in Crisis

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The Canyonlands Care Center is in financial trouble. Even at full capacity with 36 residents, the extended care facility is losing $15,000 a month. The care center can lose an additional $5,000 a month per empty bed.

When the care center opened in January 2011 the projected profit margin was already slim. In the original business plan the care center would break even with 34 residents, said Roy Barraclough, administrator of both Canyonlands Care Center and Moab Regional Hospital.

“The original plan was to be self-sufficient,” Barraclough said.

Due to changes in Medicaid reimbursement, state bed tax, food costs and state policies regarding health and retirement benefits the care center will operate at a loss each month, Barraclough said. Many of those changes occurred on July 1 this year, “creating a perfect storm” said Barraclough. The Canyonlands Health Care Special Service District board (CHCSSD) was made aware of the monthly financial loss at their July board meeting

Canyonlands Care Center is owned by CHCSSD, a county government entity. While it is attached to the Moab Regional Hospital and has administrative oversight by Barraclough, the two are separate. However, the care center is contracted to pay $360,000 a year to Moab Regional Hospital for utilities, laundry, food preparation and administrative oversight. CHCSSD pays the mortgage on the care center through payments-in-lieu of taxes (PILT) for mineral leases within the county.

Due to being a government-run entity, health and retirement benefits are higher than what was originally projected when using the same model as Moab Regional Hospital.

“We can’t opt out,” Barraclough said. “Canyonlands Health Care Special Service District is the employer, a government entity, thus it has to participate in the state retirement program.”

Moab Regional Hospital will match up to four percent of what an employee will put in their retirement plan. The state required the care center to put 13% of an employee’s salary into a retirement program. As of July 1, the care center was required to increase the retirement benefit to 16 percent.

Barraclough said that they are appealing to state legislators to change the requirement. If the care center used the same retirement program provided by the hospital, rather than participating in the state retirement system as now required, the care center would save $15,000 a month.

“If we were able to opt out of the retirement program that debt would be reduced and maybe even eliminated,” Barraclough said.

Medicaid reimbursement has dropped by an average of $8 per patient per day. Medicaid reimbursement is assessed and changes on a quarterly basis.

“It had stayed in a range then it dropped this last quarter,” Barraclough said.

At full capacity this can be add up to $7500 of loss revenue each month.

“We have 36 beds per 30 days. We can’t set the rate,” said Tom Lacy, Canyonlands Care Center accountant.

The state bed tax was $6.20 per bed per night when the care center opened. As of July 1 it is $14.50 per bed per night. At full capacity this an increased expense of $9964 per month.

Moab Regional Hospital had been charging Canyonlands Care Center only the cost of food, which was $10 per person per day. Auditors preparing a Medicare cost report determined that the hospital needed to charge the full cost of preparing the food.

“We had no choice but to follow Medicare’s lead,” Barraclough said.

Moab Regional Hospital now charges Canyonlands Care Center $15 per person per day. At full capacity this can be an additional $5400 a month than what was budgeted.

“It will only go up,” Lacy said. “The hospital is trying to delay that as long as they can.”

There are lingering debts as well, some of which can never be recovered.

There was no accountant at the care center from January to November 2011. Bills were sent out by Moab Regional Hospital, but there was no follow-up. Some of the patients who had not paid had died. There were residents who believed their care would be reimbursed by Medicaid and were not.

“The only thing worse than an empty bed is a full one for which we are not getting paid,” Lacy said.

And then there was $120,000 in Medicaid charges that weren’t properly billed. Due to a statutory limit that Medicaid must be billed within one year, the care center will not be reimbursed for those services rendered in 2011.

“We have to write that off,” Lacy said.

Aware of the financial crisis the care center was facing, Moab Mayor Dave Sakrison and Moab City Manager Donna Metzler attended the Aug. 30 CHCSSD board meeting.

“Elderly care is critical to this community. We don’t want to go to where we were before when we were shipping our loved ones out of town,” Sakrison said at the meeting.

Sakrison said that according to Utah State Code the county could levy a sales tax of up to one percent that could be used for health care in the county. The tax would not be on groceries.

Metzler said that according to city tax revenue, a full one-percent could bring in $1.3 to $1.4 million in revenue. Sakrison cautioned that if a tax is considered it should be the lowest percentage necessary.

“This targets everybody, but the transient population would pick up the bulk,” said Ken Ballantyne, Grand County councilman and CHCSSD board member.

The Grand County Council and Moab City Council met with Barraclough and Lacy at a special meeting Sept. 7. The up-to-one percent sales tax was discussed to assist both the care center and to provide seed money for Medicaid Disproportionate Share Payments (DSH) that Moab Regional Hospital has requested. If a government entity donated $250,000 to $300,000 in seed money, Moab Regional Hospital could receive $750,000 to $900,000 a year in DSH allocation.

“My concern is the care center,” said Grand County councilman Gene Ciarus. “The hospital has investors. We did not get involved in the financing of the hospital.”

In order to enact the sales tax, it would have to be proposed by the county council and put on the ballot. The soonest it could be put on the ballot is June 2013. It would have to pass by a 2/3 vote by county residents.

“We’ve hit our headroom for sales tax. I would not propose a one percent figure. A third or a half would be sufficient,” Sakrison said.

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