Otsego County nursing home faces privatization decision

Christopher Ayers/WSKG
March 12, 2013

County nursing homes in upstate New York are in trouble. Increased costs are making it harder for many counties to handle the increasing subsidies they provide. Otsego County is one of them. Otsego’s County Board faces a controversial decision—whether to continue to subsidize a facility that has provided care for the county’s elderly for decades or to privatize it.

Otsego Manor sits on the southern edge of Cooperstown. Ed Marchi has been its administrator for nine years, and, according to him, it was near the end of 2011 that he realized the Manor’s finances were drifting into unsustainable territory.

"The environment was changing rapidly," he says. "Our funding was shrinking, and we needed to respond as an organization."

Specifically, Medicaid reimbursements from the state were declining—about 117 beds in Otsego Manor are funded through the joint state-federal health program on any given day. Eighty percent of the Manor’s budget consists of wages and benefits. Currently, the reimbursement rate per patient day is one hundred and eighty nine dollars.

"So if you start out with one hundred and eighty-nine dollars that we’re being paid for Medicaid, just for our health insurance and our New York State Retirement, you have to subtract eighty-three dollars," Marchi says. "So the rest is what we have to do if we wanted to try to manage our cost within those expenses already bring us down…you know…do the math."

And this is what makes adjusting costs at a county nursing home like Otsego Manor more difficult than at a private facility. Its employees work for the county and are represented by the Civil Service Employees Association (CSEA), which means changes in wages and benefits are subject to negotiation with the county. And those negotiations can take a long time. The county’s last contract with the CSEA expired in 2011 and is yet to be renegotiated.

This increased cost has resulted in a rapid spike in what the county has to pay to keep the Manor in business—from $3.3 million in 2012 to $5.5 million this year, which has led some members of the Otsego County Board, like Otsego Manor Committe Chair Katherine Stuligross, to conclude the cost is no longer affordable.

"This year we are budgeted to support the nursing home for almost six million," says Stuligross. "The budget is at $5.5 million right now, but the numbers are worse even today.The state legislature has said don’t raise taxes. Our taxes here are already high. Some people could afford to pay higher taxes. But many, many people cannot."

Last September, the board voted to sell the Manor in a private session. That vote was voided earlier this month when the CSEA filed a lawsuit saying the board had violated the state’s open meeting law. That, however, has not changed Stuligross’s mind. She says the Manor’s finances make the sale inevitable, that the board will revote, and that it will closely look at every private firm that places a bid.

"I hate to say that it comes down to dollars, because we are committed to researching anybody that gives us a bid," she says. "We will visit them; we will look at their records. We’re not going to sell it to somebody that has a one-star rating by any means."

Otsego County resident Maureen Culbert disagrees. She's a volunteer at Otsego Manor and has been a vocal critic of the board's plan to privatize. She believes that privatizing the home and maintaining it's quality would be impossible to do.

"Once you sell that nursing home, you have no say," she says. "Everything that the research reflects contradicts this effort. Because if you read the research, you can read that low wages, high employee turnover, poor quality of care. Those are the hallmarks of a for profit facility."

Culbert argues that the Manor is just as important as any other service the county provides.

"And we should fight for that," she says. "We should say, 'You’re providing road crew to clean up our roads. It’s just as important for you to provide for our senior citizens and the indigent in this county who are so frail that they can’t take care of themselves'.”

Alternatives have been offered. Last month County Representative John Kosmer proposed a plan that calls for increasing the county sales tax, while renegotiating the contract with the CSEA. But a tax increase has found little favor with other members, and the CSEA has said it is only willing to negotiate if the county guarantees to not move forward with the privatization process. Back at Otsego Manor Ed Marchi says the county had made only one guarantee.

"I think the only guarantee that the county has sort of made is that if the subsidy is going to be five million dollars, they will be out of the business," he says. "So if you want guarantees, our wish is coming true."

And, he says, if that remains the only option, Otsego Manor will not be public this time next year.