Some believe sale may be only way to save Vermilion Manor

DANVILLE — As president of the Vermilion Manor Nursing Home foundation board, Phil Kruzich has always been committed to the preservation of the county-owned facility.

Kruzich was part of the "Keep It County" committee that supported increasing taxes in 2004 rather than selling the nursing home. But now he's convinced a sale may be the only way to preserve the financially struggling facility on Catlin-Tilton Road west of Tilton.

"We've reached a point financially where we, the citizens, need to protect other things in the county," said Kruzich, of Catlin, who added that he wouldn't hesitate to raise property taxes again to keep Vermilion Manor county-owned if that were possible.

But that's not an option. The county wanted to ask voters for another tax increase for the nursing home, but the nursing home property tax levy is already at its cap.

So this week, the Vermilion County Board will consider asking voters this fall for the authority to sell the nursing home. The facility was originally created by referendum, so state law requires voter approval for the county to sell it.

Vermilion County Board Chairman Jim McMahon said three private entities have expressed an interest in buying the nursing home, which employs more than 200 and houses around 170 residents. Medicaid pays for about 70 percent of the residents, and that's why the state's lagging Medicaid reimbursements have put the facility in a cash-flow crisis that has county officials predicting that Vermilion Manor will run out of money in four to five months. And county officials are predicting a loss of $600,000 annually in Medicaid revenue and an increase of almost $300,000 in annual expenses with a bump in the minimum wage.

At the request of county officials, John Weaver, director of the Public Building Commission, analyzed the facility's infrastructure earlier this year and identified more than $2 million in improvements that need to be made to the building and grounds. Weaver said there's been little done to the building in the past 30 years.

McMahon said representatives of the private entities, which he would not identify at this point, have told him that if the county is serious about selling the nursing home, they are very interested in buying. McMahon isn't sure what to expect from voters if the question is put on the ballot, but he's convinced that's what must happen to keep the nursing home intact.

"If taxpayers give us the authority in November, we will have ample time to market this properly and in the best interest of taxpayers and in the best interest of the (residents) and workers. No action would be a scarier situation. We would have to keep it with no way to maintain it. That would be the worst-case scenario and that's what happens with a no vote," said McMahon, adding that if the county's not in a high-pressure sale, it would try to negotiate a deal that would protect the patient ratio and workers, 150 of whom are represented by the International Brotherhood of Electrical Workers.

Vermilion County is not alone in its struggles with the nursing home business. There are 28 county-owned nursing homes in the state, according to Melaney Arnold with the Illinois Department of Public Health. And some of those counties are facing the same financial struggles with their facilities.

The Champaign County Nursing Home, which is operating under a lease-management arrangement, has consistently struggled through the years to stay in the black. Champaign County Board Chairman C. Pius Weibel said the board has had casual conversations in the past about selling the nursing home but nothing more. He said the nursing home was losing $100,000 a month and more recently has been breaking even, but there's so much uncertainty surrounding Medicaid and other factors that can affect the situation.

In Livingston County, the county board came to the realization several years ago that it was no longer economically prudent to operate a nursing home, said David Heath, chairman of the county's nursing home committee.

In an advisory referendum, voters supported building a new nursing home, he said, but the county was losing about $2 million a year subsidizing the nursing home operation. The county decided to relinquish its nursing home license and transfer ownership of the license to a private entity, Good Samaritan, which already had a nursing home business.

He said it's been an eight-year process, but the county is getting closer to the end of its long-term plan. Currently, Good Samaritan has the license and is running the nursing home. But the county still owns the building and grounds and is giving Good Samaritan an economic development grant to build a new facility; then the county will sell or tear down the current facility. Heath said the Livingston County Board considered selling several years ago but had no serious, reasonable offers, so it didn't go that route.

"It's a very difficult, emotional thing," said Heath, explaining that there are always people who want to keep a long-term county nursing home in operation but it doesn't make economic sense and the private sector can do a good job. "But it's hard for a lot of people to accept."

Kruzich, of the foundation board, said he would vote, reluctantly, to give the county the ability to sell Vermilion Manor, but he's not sure whether others feel the same. Eight years ago, voters overwhelmingly said yes to raising taxes rather than selling the nursing home.

"I don't know how people (would) vote," said Kruzich, adding that county officials came to the foundation board's meeting last month and explained the situation.

He said the seven members of the foundation board generally support whatever decision the county board makes. A sale to a private entity may be the end of the 501(c)(3) foundation, which has accepted donations on behalf of the nursing home and used them to benefit the residents, such as building a sunroom and converting two rooms into a hospice area. Kruzich said the board would like to continue the foundation if the nursing home is sold, but it may have to legally reorganize to do that. He said the foundation board does not want to see the nursing home close, and he fears that's what would happen if the county cannot sell it.

McMahon said it would give the county the option to sell but doesn't mean a private company would walk into his office with a check the day after the vote. He said taxpayers can't bankroll the state's financial responsibility to the nursing home, but a private entity would be in a better position to do that.

A private company that has other nursing homes can save money on medical and food supplies, therapy and pharmaceutical services through bulk purchases that a standalone facility cannot, McMahon said. A private entity also has the cash flow, he said, to be more patient waiting for state Medicaid payments.

"A sale is still the best option long-term," he said.

This story appeared in print on June 3.

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yates wrote on June 10, 2012 at 8:06 am

200 employees for 170 residents? At least they should be well taken care of.