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of governor’s budget plan

Nursing homes fear impact
of governor’s budget plan

The operators also contend that passage of Gov. George Pataki’s budget will devastate an already struggling industry.
New York’s nursing homes were in the black in 1993 despite a $27 million decline in income from the previous year, the Health Department’s latest figures show. Rochester’s non-profit and public homes fared even better than their peers statewide, both reporting increased income and healthier operating margins than in 1992.
While still in the black, Rochester’s for-profits–the majority of area homes –reported an almost $2.5 million decline in net income compared with the previous year and an operating margin slightly less than the average of New York’s for-profits.
“Generally speaking, I would say the nursing home industry in this state is relatively healthy,” said Mark Van Guysling, assistant deputy director of health care financing for the Health Department. “(But) there are always those that don’t make out as well.”
Most homes are not making out well, said Daniel Heim, economist for the New York Association of Homes and Services for the Aging, representing non-profit and public homes. In fact, he said, 70 percent of all three types of facilities lose money on Medicaid reimbursements.
The Health Department’s numbers, Van Guysling noted, are reported by the facilities themselves. However, Heim said his association is preparing a report using the same numbers but portraying a more accurate picture.
Income for 1993, as reported by the state, is pumped up by county subsidies for public homes and by philanthropic contributions–often for renovations and other one-time projects–to non-profits, he said.
Heim added that in 1993, the state was updating its Medicaid rates to reflect current conditions, which it had not done in some time. And rate appeals and other adjustments for income past due appeared in 1993 figures.
Revenues in 1993 and 1994 remained steady for the non-profit Jewish Home of Rochester, said Arnold Gissin, executive director. But the home is receiving less Medicaid revenues than necessary.
The home each year for the last six or seven years has been reimbursed some $350,000 in Medicaid dollars less than what it cost to treat patients, he said. State back pay showed up in the home’s 1993 figures and will show again in figures for 1994.
Still, Gissin estimates that each day the Jewish Home spends $18 per patient more than it receives in Medicaid reimbursement. Without charity contributions and funded depreciation, the home could not meet its budget requirements.
A decline in the case-mix index might have contributed to the fall in for-profit-home income, said Dennis Christiano, owner and operator of for-profit facility Westgate Nursing Home. As homes rehabilitate patients more quickly, the case mix with which the state determines reimbursement declines, and with it falls revenues. Also, he said, the state continues to underestimate the severity of patient conditions in determining its case-mix adjustments.
If things look bad for nursing homes now, wait until Pataki’s budget goes into effect, nursing home operators and representatives said.
Pataki proposed to reduce nursing home payments to save $243 million by cutting their profits by 50 percent. But the net-income figures on the state’s financial report are misleading, nursing home advocates said. Homes must use that money for renovations, employee raises and other items.
“You can’t run a business at zero,” Christiano said. “When the roof starts to leak, the money that you need to fix that leak comes from profits.”
Because labor accounts for 70 percent of nursing home operating costs, Heim said, reduced Medicaid payments and other cuts would have a devastating impact on the quality of care they can provide.
The Jewish Home nursing assistants each care for approximately seven patients, Gissin said. Should Pataki’s proposals be approved, he estimates one nursing assistant would take care of 12 to 13 patients.
The proposed elimination of programs such as adult day-care, long-term home care and assisted living especially troubled the Association of Homes and Services for the Aging, Heim said. These programs provide a cost-effective alternative to institutionalization.
Without them, more people will see nursing home care, yet Pataki also has proposed a moratorium on construction and expansion.
The Pataki administration has not considered the wider economic impact of its proposals, Christiano said. Westgate alone provides some 140 jobs and pays more than $100,000 in property taxes each year, among other taxes.
The Jewish Home projected a $330,000 operating deficit for fiscal 1995, Gissin said. Should Pataki’s proposals go through, the home’s deficit could reach $2 million.
Factoring in actual costs, non-profits and public facilities statewide posted a $150 million loss in fiscal 1993, Heim said. Approval of Pataki’s budget proposals would remove $600 million annually from the Medicaid revenue base of those homes, beginning in fiscal 1995.

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