Nursing homes call on state for financial help

By WARREN WOLFE, Star Tribune

Last update: December 12, 2007 - 12:52 AM

Minnesota nursing homes say legislative action -- started but not completed last spring -- is needed to help their dwindling numbers regain a stronger financial footing.

The state's 387 nursing homes, down 53 since 2000, are heavily regulated by state and federal laws and rules, which set standards of care and determine what homes can charge.

"Under the Medicaid rate, set by the state, our homes are losing an average of $25 a day per resident, but our costs keep going up," said Patti Cullen, CEO of Care Providers of Minnesota.

"There are at least three facilities in the metro area that are considering selling, closing or downsizing, and that could mean a loss of 1,000 beds in an area where we already have a tight supply," said Gayle Kvenvold, her counterpart at the Minnesota Health and Housing Alliance.

The two associations are asking the Legislature, which convenes in February, to give nursing homes a 2 percent cost-of-living increase for 2009 that would cost $5.6 million.

They pointed out that early this year, the Legislature, which sets the Medicaid rate, gave state-operated facilities a 3 percent increase for each year of the 2008-09 biennium but gave other homes a 2 percent increase for those years. The Senate would have made that 2.5 percent, but the session ended before the House could act.

A hard sell

An expected budget deficit may make it difficult to get the Legislature's attention next year, Kvenvold and Cullen acknowledged Tuesday.

"We've talked to a lot of legislators and some of them are sympathetic -- especially in rural areas, where the nursing home is a major employer and the homes are facing difficult financial conditions," Kvenvold said.

A study a year ago by the Minneapolis accounting firm Larson Allen Weishair found that nearly one-third of Minnesota's nursing homes had operating losses of 5 percent or more, compared with one-fourth a year earlier.

"A number of homes testified at the Legislature that they had lost $250,000 or $300,000 and that their reserves were nearly gone," said Darrell Shreve, policy director for Kvenvold's association. "How long before you can't make payroll?"

The financial picture has worsened as costs rose faster than Medicaid payments, Cullen said.

Medicaid pays most of the care costs for nursing home residents who have exhausted their savings -- on any given day about two-thirds of those in Minnesota home, roughly 20,250 people.

Medicaid this year is paying an average of $147.49 per day for a Minnesota resident, but the average cost is $172.45 -- a loss of $24.96 -- according to a study by New York-based financial consultant BDO Seidman. Only Illinois, New Jersey and Wisconsin had bigger losses.

The loss has grown. It was $19.98 last year per Medicaid nursing home resident.

For Minnesota homes, that means a loss of about $500,000 a day to care for the 22,250 Medicaid residents.

But the loss actually is higher, because state law prevents homes from charging substantially higher rates for residents who pay for their own care.

Warren Wolfe • 612-673-7253

Recent Local + Metro stories

Dr. David Burrus worked with high-risk pregnancies - December 12, 2007

Dr. David Burrus worked with high-risk pregnancies - No patient or problem was too difficult for Burrus, 59, a co-worker said. He was hit by a car in Los Angeles. More