Weather Forecast


Rural nursing homes struggling to survive

What's the gap between breaking even and making money on the average patient in a rural South Dakota nursing home?

About $30 to $40, according to many nursing home officials interviewed in The Daily Republic's print circulation area. That's the difference, they say, between Medicaid reimbursements and the actual cost to provide care for residents.

"We're making it, but it's due to being creative and finding ways to help keep costs as efficient as possible," said Christopher Hahn, administrator at the Good Samaritan Society-Canistota. "We're making it, but barely. We're struggling."

Hahn said the Canistota facility can hold 60 residents and typically keeps about 55 beds filled, 75 to 80 percent of which are funded through Medicaid, the federal health program for families and individuals with low incomes and resources.

"I think it's a struggle every day to find out how to hit our bottom line, to make sure there's enough coming in for what we've got going out," he said.

Efficiency is a theme among nursing home administrators and directors of nursing.

"We try to operate as conservatively as possible without cutting corners," said Julie Schenkel, administrator at Good Samaritan Society-Tyndall.

The Tyndall facility has done some fundraising to replace rehabilitation equipment, patio furniture and landscaping. Most recently, community support allowed the facility to purchase a new piano for the resident chapel.

In Winner, vigilance is key in managing the quantity and quality of staff, supply costs and reimbursements, said John Osse, interim CEO of the Winner Regional Healthcare Center long-term care facility.

"It's always a struggle," he said.

Medicaid reimbursements

Rural nursing homes in South Dakota are largely dependent on state and federal funding to provide care for residents, leaving little left left over to provide extra amenities and upgrades.

A resident takes in the view out the door of Prairie View Care Center in Woonsocket. funding to provide care for residents, leaving little left over to provide extra amenities and upgrades.

A report on nursing home Medicaid shortfalls by Eljay LLC shows nursing homes in South Dakota received $126.09 per resident per day in Medicaid reimbursement. The cost in 2012 per patient per day was approximately $156.14. That leaves nursing homes to make up $30.05 per resident per day.

North Dakota facilities received $214.03 per resident per day through Medicaid and costs were $211.17, leaving $2.86 extra for the facilities.

In Minnesota, nursing facilities dealt with a $27.70 gap between Medicaid funding and costs in 2012. Iowa dealt with an $8.46 gap and Nebraska dealt with an $18.63 gap.

"It's a budgetary challenge trying to make ends meet when we have a 60 percent daily reimbursement that's $30 a day lower than your costs," Schenkel said. "We compensate to meet our expenses and it really has affected our ability to give staff raises. We haven't given raises in three years and we have over 100 employees."

Schenkel said the low reimbursement rate from the state and federal governments makes it difficult to recruit staff, too, because she can't offer competitive wages.

To compensate for the low reimbursement rates, many facilities charge higher rates for private-pay residents. Gaea Blue, administrator at Weskota Manor Avera in Wessington Springs, said the private-pay residents typically pay $70 to $80 more per day than Medicaid residents.

"Medicaid reimburses $40 less than our cost," she said. "That's an unfair tax on the private-pay people to make up for what we don't get from the state."

The state has improved some small increases in its share of Medicaid funding lately.

"Obviously that's a great thing," said Hahn, of Canistota. "But unfortunately even at this point, even a 2 percent raise is kind of like playing catch-up. We're a little behind the 8-ball there."

Anthony Timanus, administrator at Avera Gregory Hospital, said the increases from the Legislature will only get nursing homes in South Dakota back to where they were prior to Medicaid being cut a few years ago.

Staying afloat

Despite low funding reimbursements, nursing homes are taking initiative to provide a better environment for residents. Some spearhead community fundraising and others simply pinch pennies where they can to remodel or improve activities and amenities.

Within the last year, Gale Walker, CEO of Avera Bormann Manor in Parkston, said the community doubled a fundraising goal for remodeling the nursing home.

"We had a $500,000 goal and the community was extremely supportive and raised $1 million," he said. "We have a few more pledges coming in. That's one of the things that shows the commitment of communities."

The remodeling is nearly complete in Parkston, providing many features including a hospice and end-of-life room, a four-season room, conversion of double rooms into singles, showers in each resident room and relocation of the beauty parlor.

One secret to Avera Bormann Manor's success is its all-in-one facility -- nursing home, assisted living and hospital, all connected. Thus, the entire facility shares expenses like laundry, food and business operations.

"Just operating the facility at one site, the full integration of health care at one site, with the economy, that helps to make it work a little better all at one location," Walker said.

Avera Rosebud Country Care Center in Gregory is also attached to a hospital. Timanus said the revenue from the hospital, clinics and nursing home are all combined and he relies on other services to offset the losses of the nursing home.

"The nursing home loses money to the tune of 3 to 5 percent per year," Timanus said. "But we budget for that."

Timanus said Gregory has the advantage of being owned and operated by Avera, which has allowed the nursing home to make improvements it wouldn't have had it been a privately owned facility. In 2012, Timanus said the facility installed a $160,000 fire suppression system and recently installed two new bathrooms in the nursing home.

Timanus plans to have the whirlpool room remodeled and for 2014, the facility budgeted $60,000 to redo the doors, add hallway artwork and install hardwood laminate flooring in the nursing home.

"It makes the entire experience more inviting," he said. "Appearance has a direct impact."

The Gregory nursing home does not fundraise, although Timanus said he's considered it. The community is still generous and gives to the nursing home and private citizens make donations or cash contributions.

Smaller nursing homes not owned or managed by a larger entity are working to provide the same amenities as the larger ones.

Menno-Olivet Care Center is an independent nonprofit organization. Financially, "We're holding our own," said Kaleb Hight, administrator. "But as far as that, we're not in a position to spend a lot of money for building improvements."

Hight tries to update the decor and aesthetic aspects of the facility, but makes a stronger point to keep competitive wages to ensure dependable staff are taking care of the residents.

"We have a great staff right now, but that's always been an issue for smaller communities," he said.

As an independent nursing home, Hight said it's frustrating that most people expect health care to always be up to the same standard as large operations by health systems.

"Sanford and Avera are great medical systems and hospitals, but when it comes to when people think of health care, they think of those two and equate health care with the budget and margins of those two," he said.

While Hight said he cannot meet that level of expectation, he can provide a quality level of care and dedication from his employees.

"Sometimes it's hard to understand the margins are very thin in nursing homes, and there's more regulation," he said. "At some point we're going to see nursing homes have a hard time surviving. Then what are we doing to do?"

Resident-centered care

In White Lake, Aurora-Brule Nursing Home shows some signs of aging. The most recent addition was in the 1970s, the tile floors are shiny but worn, and the resident rooms are still fairly institutional.

But the staff and administrators have made improvements to the facility as best they can with the budget they have.

"It's kind of a roller coaster," said Terasa Gillen, administrator. "I've always felt longterm care can be a roller coaster. Sometimes people are here for a short time and sometimes for a long time. The length really affects your financials."

Despite that, Aurora-Brule offers a solarium with large windows and ample space for family gatherings. Residents are allowed to bring their own beds and other belongings to make their rooms feel like home. An enclosed patio with gardens and a small waterfall offers a place for relaxation and there are weekly barbecues during the warmer months for both residents and staff.

Gillen said officials are working on a long-term plan and have an investment prospect to help fund it.

Aurora-Brule is owned by the White Lake Development Corp., which has helped the nursing home invest money in the past, including putting savings into CDs. Those CDs have come in handy over the last few years as Medicaid reimbursements proved insufficient.

"There's a lot of push for resident-centered care," Gillen said. "That's something we're going to be working on making plans for in the next six months. We don't have a budget for that yet, but we have an investment prospect that we are looking into doing so we can budget these things freely without having to rely on the operating budget."

Freeman's Oakview Terrace nursing facility is an independent nursing home connected to Freeman Regional Health Services. Codirector of Nursing Theresa Laufmann said Oakview Terrace is able to provide more resident-centered care because the entire facility is able to operate with fewer upper-level employees.

"It helps us stay on the solvent side," she said. "But it may get trickier with things coming, more with Medicaid and less private pay."

Laufmann said Oakview Terrace is known for its restaurant style dining and off the grill options. Residents are welcome to give their own recipes to dietary staff, which will either make it for that resident or for the whole nursing home.

"The dietary staff worked very hard on the process," she said. "Food is one of the few choices residents have when they come to a facility."

As in many other places, the residents at Avera Rosebud Country Care Center in Gregory have a resident council, which has convinced its administrator, Anthony Timanus, to get a puppy for the residents.

"The residents and staff brought a united front," Timanus said. "I was a little hesitant."

But he gave in and plans to get the residents a puppy that won't grow into a large dog. He said the residents and staff will share duties in caring for the dog.

"The message was slow to take at first," he said with a laugh. "But the message is that this is their home."

Resident-centered care is a high priority at Avera Brady Health and Rehab in Mitchell. CEO-long-term care/Administrator Veronnica Smith said the facility typically operates in the black with a 3 to 5 percent margin every year. That percentage is invested back into the organization, which has allowed Avera Brady to add on and do some remodeling this year.

"This is a 51-year-old building, so we had barrack-style rooms," Smith said. "Now we will have two-thirds private rooms versus our current 17 private rooms."

Rooms are painted warm colors, rather than white, recently received new carpet, and residents are able to get up and go to bed at their convenience, not on a schedule.

The facility will also improve therapy services by remodeling and adding on to the current space. The residents will also be able to enjoy an indoor movie theater and a pub/ice cream parlor.

"Just because they're older doesn't mean they can't enjoy a beer," Smith said.

Looking into a crystal ball

Survival is difficult for many nursing homes, some officials say.

"When I look at it, it strikes me as incredible the underfunding overall," said Mark Deak, executive director of the South Dakota Health Care Association. "From my view, I see folks impacted. Struggling the most are the ones with high Medicaid percentage."

In recent history, Deak said four nursing homes have closed in South Dakota, including the Storla Sunset Home in the Mitchell area.

"I'm surprised in some that haven't closed yet," Deak said, "because of the low reimbursement."

The town of Storla had a population of six as of the 2010 census, a decrease of nine from 2004 when the nursing home closed.

According to Daily Republic archives, it operated for 48 years and offered 32 beds. In the end, eight of the beds were unoccupied and rising insurance and other costs caused severe financial troubles.

The 50 employees at the home tripled the population every day, giving the small town life, but that wasn't enough to keep the private entity in business. It was run by a seven-member board, which made the final decision to close the facility in July 2004. The home was owned and operated by a nonprofit corporation consisting of 150 members.

Storla is 15 miles from any population center, eventually causing issues with staff recruitment.

Although it lived up to its slogan, "home with a heart," the nursing home simply couldn't survive without money.

When asked what the future of nursing homes in rural South Dakota may be, Deak said, "I wish my crystal ball worked that well."

Although many struggle with roller coaster financials and month-to-month issues, administrators remain positive and persistent in providing the best possible care for those who need it.

"It's an incredible fiscal struggle," Deak said. "For the greatest generation, they were there for us, and now I think we have to be there for them."