Maple Lawn, the Branch County-owned nursing facility, is facing a financial crisis caused by the COVID-19 pandemic.
Without a short-term cash injection of nearly $1 million, retirement home administrator Jane Sabaitis warned, “We won’t be able to make payroll.”
She also asked the county commission for long-term relief in the form of a 0.99 property tax mile over 10 years. This is expected to go on the November general election ballot requiring a decision from the commission by August 16.
Commissioner Tom Matthew said a half mill had already been approved from 2016 to 2035 for the latest expansion and upgrades. He is not ready to ask more of the citizens.
“We have to work with what we have,” he said.
This mileage tax revenue can only be used for the payment of obligations.
If a new mile passed, the money wouldn’t come until the summer of next year. Matthew noted that mileage would bring in nearly $1.6 million per year for 10 years to solve an immediate problem of $874,976.
“It’s a perfect storm the wrong way round,” Commissioner Randall Hazelbaker said. “I would be willing to go with the mileage.”
The county’s financial problems make a short-term loan very difficult. County Administrator Bud Norman said there was a legal question about whether the county could issue a cash advance.
Commissioners left the matter on the agenda for next Tuesday’s regular meeting without a recommendation.
“We need a lot more information,” Commissioner Jon Houtz said.
Sabaitis said the problem arose with the state’s estimation of Medicaid payments for patients based on history.
“The state then performs a reconciliation based on what the facility charges for Medicaid claims, what they were paid, and Medicaid payments,” she said. “These reconciliations are typically done once a year. But due to the pandemic, the state has not done a reconciliation since April 2019, which was for 2018 Medicaid billings.”
A June reconciliation for 2019, 2020 and 2021 showed Maple Lawn owed the state $874,976.96. He wanted to immediately deduct the amount of the state payments.
The state agreed to withhold repayment in three installments of $291,659 in July, August and September.
“Financially, we received just over $800,000 in Cares Act funding. That money was used for the operation of the facility.” said Sabaitis.
There are federal funds that are not initially available to county-owned nursing facilities.
“We also applied for the federal government employee retention credit for the first three quarters of 2021,” Sabaitis said.
Plant Moran is in the process of fulfilling that request, for a conservative return amount of about $3.2 million, Sabaitis said.
“If this funding materializes, it will be of great benefit to us.”
She thinks federal approval will come, but isn’t sure. The ERC funds would repay the county’s short-term loan.
Sabaitis would usually say the care center was 95% full, but during the pandemic its capacity dropped to around 75%. 2021 revenue is down 5% from 2020. This year, Maple Lawn revenue is down another 20%.
Prior to this combination, Maple Lawn had a cash balance of between $1 million and $1.5 million for several months,” Sabaitis said.
“This reconciliation has a significant impact on our cash balance,” she said.
Before the pandemic, Maple Lawn consistently exceeded a 95% occupancy rate of 114 patrons, Sabaitis said. The operational break-even point is 100 patients.
“Now there are 85,” Sabaitis said. “We rely on hip and knee replacement surgeries for a portion of our rehab census. These numbers have been slow to recover. Many are choosing to return home for rehab with health at hand. home or to go to an outpatient facility.”
There is a waiting list for admission.
“We had to limit or not take new admissions at a few different times due to lack of adequate staff to take on more patients,” she said.
Some staff members left rather than get vaccinated against COVID-19. Other nurses got jobs for $50 an hour or more as everyone fought for healthcare workers.
Financial statements for May showed an operating loss of more than $1 million and an April loss of $860,000. Sabaitis projected that if the state took all three repayments, cash balances would be nearly depleted by the end of next month.
The manager said the building needed $350,000 to repair the original air-handling units in the 33-year-old building.
During COVID-19, the shortage required $500,000 in additional PPE equipment.
Sabaitis said daily operational costs fell to $41,000 per day from $43,000 per day in 2021.
“Procurement costs are rising because of inflation,” she said.
The commissioners will confront the issues on August 9 at their regular meeting.