In a curious twist of funding reality, sometimes less business can bring more money. Because of this, the North Shore Care Center has applied to de-license 10 of its beds, lowering its capacity to 37.
Skilled nursing homes in Minnesota are required to pay a Minnesota bed surcharge of approximately $2,815 a year for each licensed bed, whether it is filled or not. On the other hand, the state is paying skilled nursing facilities —on a perpetual basis—$2,080 per year for beds that have been de-licensed. The state does this by increasing the allowed reimbursement rate for the Medicaid patients who are in the Care Center. That’s $20,800 a year for de-licensed beds.
Not paying the bed surcharge for 10 beds—$28,150 a year—plus being reimbursed more for the remaining beds —$20,800 a year – amounts to $48,950 a year more for the Care Center. Every little bit helps the bottom line, according to North Shore Hospital Administrator Kimber Wraalstad.
The flip side of this is that because the hospital must bill everyone the same amount, private pay residents pay more as well and help cover the extra $20,800 a year the hospital will be reimbursed. Seventy to eighty percent of the Care Center’s residents are on Medicaid.
In a June 17 memo to the hospital board, Wraalstad said that the incentive program is expected to end, since both budgets proposed by Governor Dayton and the state legislature called for an end to the program. Facilities that applied for de-licensing before the new budget, however, are expected to continue to receive the incentive.
The reduction of beds is not likely to keep anyone from accessing the care they need. The Care Center has recently been operating at 75-85 percent capacity. If they move to 100 percent capacity on a regular basis, people needing nursing home care will be able to stay in the hospital’s swing beds until Care Center beds are available.
Options for Care Center operation
With reimbursement levels not meeting the cost of doing business, the Care Center continues to drain the North Shore Hospital and Care Center’s budget each year. On June 23, 2011, CPA and consultant Dave Schuh of Larson Allen presented various options the board may want to consider to reduce the ongoing loss.
The Care Center is an important part of the community, Wraalstad told the Cook County News-Herald in a later interview, with Care Center residents participating in activities out in the community and the community bringing activities into the Care Center.
People want a local choice, Wraalstad said, although the trend toward an older Cook County population is not translating into more use of the North Shore Care Center. People take advantage of a wider array of services not available to previous generations before moving to nursing home care, from home health care to assisted living facilities outside the county. Years ago, the average nursing home stay was three years. Now it’s about nine months. Many of the people who retire in Cook County end up moving to facilities where their families are when they need nursing home care.
Finding ways to increase revenue and reduce costs is challenging. Reimbursement rates are out of local hands, and because the hospital district owns the facility, employees must be paid government employee benefits.
The Care Center’s revenues are lower and its expenses are higher than freestanding nursing care facilities in the Metro area, yet its reimbursement rates are the same. Nursing salaries are higher here than in a comparison group of other rural facilities and in comparison to small facilities in the Metro area.
As the board works with its consultant, it will be looking at various options for the Care Center, including continuing to operate at a loss (of about a million dollars a year right now), reducing labor expenses by cutting hours, salaries, and benefits, selling the facility (although that may be hard since its profitability is so limited), or closing it. Downsizing the number of beds beyond the 10 being de-licensed and trying to increase the use of swing beds in the hospital—which brings in a better reimbursement rate—is another option.
The financial models created by Larson Allen suggest that closing the Care Center would bring the most financial benefit to the hospital in terms of maintaining cash reserves, but that would be at the cost of jobs and a valuable service being available to the community. The next best financial savings option is that of going down to 37 beds.
Traveling MRI unit
Cook County residents will now be able to get MRIs without having to leave the county. Shared Medical Solutions will be in Grand Marais with a mobile MRI unit every other Saturday beginning July 9.
Grant for paramedic equipment
The North Shore Health Care Foundation awarded a $10,161 grant to the hospital for equipment and supplies for paramedics making advanced life support ambulance runs.
Open board position
Board member Ann Rosenquist, representing the east Grand Marais district (the same one as County Commissioner Fritz Sobanja) has resigned from the hospital board effective September 1 because she is moving out of the area. A letter to the board states, “I have thoroughly enjoyed the entire experience of serving on the hospital board and the knowledge that I have gained in the process.”
Someone will be needed to fill Rosenquist’s chair through 2012. Those who are interested in being appointed can contact Kimber Wraalstad at (218)387- 3040.
Leave a Reply