Suffolk loses with nursing home, Legislature differs Report backs executive's plan to sell Foley county facility, citing $51M deficit through 2010
By Joe Darrow	write the author
June 18, 2008 | 04:07 PM Suffolk County can't win, not at the John J. Foley Skilled Nursing Facility. A preliminary report from financial consultant Horan, Martello, Morrone PC of Hauppauge — hired by County Executive Steve Levy to assess the Yaphank facility — appears to support some county officials, including Levy, who want to sell the county-owned Foley facility for a quick cash infusion. According to Horan Martello's June 5 report to the county Legislature, even if Suffolk were to lay off a recommended 50 nurses, outsource part of the facility's management and scrupulously bill patients, it would still lose tens of millions of dollars as long as it continues to own and operate the nursing home. Debate over the Foley facility has raged since March, when Levy proposed selling it as part of a cost-savings package intended to counter a projected $150 million county revenue shortfall in 2009. According to the executive, the county could net nearly $19 million by selling off the facility to a health-care provider better suited to operating a nursing home; according to Horan Martello, Foley operated at a $12.9 million deficit in 2007, and total losses from 2008 to 2010 are predicted to reach $51.4 million Several county lawmakers have balked at the sale plan, expressing concern for current and future patients of the 264-bed home. The Legislature's presiding officer, Bill Lindsay (D-Holbrook), has suggested that privatization of various facility operations might create efficiencies and make Foley's survival as a county entity more feasible. Levy vetoed Lindsay's bill to issue a request for proposals from management consultants, but the Legislature unanimously overrode that veto June 10. Horan Martello identified labor costs as Foley's biggest operating expense — nearly 70 percent of its total budget — and the foremost reason it runs in the red. Foley staffers are county employees eligible for regular step increases in pay and extensive benefits packages that cost more than packages offered to employees at similar private facilities, according to the report. "Labor costs at John J. Foley are significantly higher than almost all other nursing homes in Suffolk County," noted consultant Tony Morrone. The report also noted that 98 percent of Foley patients are Medicaid-eligible, highlighting the growing gap between the rate of Foley salary increases and Medicaid reimbursements. And while the county is locked into its employee structure, private facilities can reduce staff or pay rates in response to patient needs, according to Horan Martello. "The wage, benefit and staff rules and regulations ... make the nursing home uncompetitive in this day's market," Levy said after the presentation. The consultants offered recommendations to shrink the projected three-year deficit by $22.8 million, including more parity between staff levels and Medicaid reimbursements — an idea that would necessitate reducing the staff by 50. Other recommendations include outsourcing the facility's rehabilitation department management and ensuring that all reimbursement opportunities under Medicare and Medicaid are billed. Partial privatization — contracting out food provision, physical therapy and housekeeping operations — would cut the three-year loss to $26.3 million, according to the report. But short of closing, selling or privatizing the facility, the consultants reported no way to eliminate the rest of the forecasted deficit. "We really weren't able to bridge that final gap," said consultant Veronica Bencivenga. "The facility cannot be self-sustaining primarily due to the county employment structure." Completely privatizing Foley would generate a net gain of $8.2 million between now and 2010, according to the report. But Levy said he's more interested in selling the facility and its building, generating some $9.7 million, or simply shutting down Foley, transferring patients to other facilities and selling of the property — a move that could generate upwards of $19 million, counting state grants designed to reduce an overabundance of nursing home beds, Levy said. Some legislators took issue with the stark forecast and repeated concerns about the level of care the county home could offer with a reduced payroll. A quarter of the facility's positions are already vacant. Legislator John Kennedy (R-Nesconset) was skeptical that all of Foley's approximately 250 patients could find comparable local alternatives, especially patients in Foley's 40-bed Alzheimer's unit or equally large AIDS unit. "There is no other nursing facility in the County of Suffolk that has a wing solely devoted to the care of HIV and AIDS patients," Kennedy noted. Lindsay questioned the wisdom of cutting nursing home capacity with retirement of the baby boomer generation imminent. "I'd hate to see us sell a [nursing] facility and then find that we need that facility here in less than a decade," he said. "We ought to be able to come up with a solution for John J. Foley that keeps it open," said Legislator Tom Barraga (R-West Islip), but "if you want this place to stay open, you've got to reduce the expenses and increase the revenues."