Action on a plan to help make Cedarbrook Nursing Home profitable was pushed back for another month by Lehigh County commissioners Wednesday night.
The county’s administration wants to spend $1.5 million to create a 41-bed, short-term rehabilitation unit in the D2 wing of the nursing home in South Whitehall Township.
On Wednesday, the administration hoped commissioners would approve spending $250,000 for architectural, engineering and construction drawings to begin that project.
But rather than deciding the fate of the proposed project during their meeting, commissioners voted 8-0 to defer any action until their Dec. 10 meeting.
The engineering work must be done before the proposed unit can be built. The administration wants to build it next year, so the unit can begin taking patients in 2016.
Some commissioners are concerned that approving the engineering work will start them down a path they’re not sure they want to take with Cedarbrook, which is losing millions of dollars every year.
“Before we decide to spend the $250,000, we want to make sure the board is committed to move ahead with construction,” said Commissioner Vic Mazziotti.
He said if the commissioners don’t agree with doing the project, they should not approve the $250,000 request.
“We really have to be willing to make both decisions before we make the first one,” he said.
“It wouldn’t make any sense to spend $250,000 on engineering and architectural work unless we plan to move ahead with the project.”
If commissioners approve the pre-construction request, but then don’t approve actual construction, they’ll be throwing $250,000 “right down the drain,” agreed Commissioner Percy Dougherty.
Tip of the iceberg
The commissioners never have taken a formal position on the future of the two county-owned Cedarbrook nursing homes.
But at least some of them don’t like the direction the administration of county Executive Thomas Muller is heading at Cedarbrook.
The proposed rehab unit is the tip of the iceberg in that disagreement.
The estimated total cost of the project is $1.5 million. County officials have predicted the unit will pay for itself within three years.
Rick Molchany, the county’s director of general services, told commissioners the goal is to generate more revenue to make Cedarbrook self-sustaining. “That’s what this one floor change might do.”
Lisa Scheller, chairwoman of the commissioners, suggested deferring a vote on the proposal until Commissioner David Jones can participate.
She said Jones, who was absent, is very interested in it and could be instrumental in how commissioners vote. “He should be a part of any vote.”
Commissioner Geoff Brace suggested deferring a vote until the Dec. 10 meeting.
Scheller acknowledged a great deal of frustration is generated “when we defer, we defer and we defer.”
Before voting, some commissioners want specific information about local competition for short-term rehabilitation, “rather that just saying ‘if we build it they will come’,” said Mazziotti.
“Are we competing against others that will be difficult to compete against?”
Some commissioners also want more information about total projected costs to run the proposed rehab unit — including indirect costs, such as maintenance and capital improvement needs.
The $250,000 to start the project would come out of the county’s 2014-18 capital budget.
If commissioners approve spending the $250,000 for pre-construction work, the administration will be back before them early next year to request the rest of the money.
Mazziotti thought the $250,000 for pre-construction work seemed high, saying such costs usually total 10 percent of the total amount of a project.
Schware wanted to table, not defer
Commissioner Michael Schware initially recommended tabling the proposal indefinitely.
“By approving the $250,000, we’re approving whatever is planned,” he said. “I have a lot of questions as to whether this is the right direction to go.”
Schware acknowledged the proposed project will raise revenue, but suggested the county should do a more comprehensive evaluation of Cedarbrook, rather than proceeding in a “piecemeal” fashion.
“I want know what the end product is going to look like,” said Schware.
Dougherty agreed that commissioners should make a decision on “a package deal” — the rehab unit and also the final product at Cedarbrook.
Administrator getting mixed signals?
Terry Hollinger, Cedarbrook’s new administrator, seemed surprised that some commissioners want to wait for a more complete evaluation of Cedarbrook’s future.
In August, when Hollinger told commissioners he would need a year to do an overall evaluation of Cedarbrook’s finances and propose solutions, some immediately told him that was too long.
On Wednesday, he reminded commissioners that before he was hired in September, they told him they expected fast action to ensure the financial survival of Cedarbrook.
“This is how we survive,” Hollinger told them.
“We have to branch out and look at the business that is available for us to be able to continue our mission.”
Molchany said Hollinger has provided the county with a revenue tool to make money. “It’s about creating something to sell.”
The need for Cedarbrook
Hollinger said the average age of Cedarbrook residents is 85.
He told commissioners that in 2015 there will be 30,000 residents in the county who are between the ages of 65 and 74 and 28,000 who are 75 and older.
He said the number of residents who are 65-74 is expected to increase by 72 percent by 2030 and the number who are 75 and older will increase by 63 percent.
“There is going to be a need as the population gets older and people live longer,” said Hollinger, adding new nursing homes are not being built.
Mazziotti said Cedarbrook’s core mission is to provide services to Medicaid patients. He described it as “providing a service to the least among us who have the most difficult problems.”
“If we didn’t have any Medicaid patients, we probably wouldn’t have a nursing home,” said Mazziotti. “Two-thirds of the counties don’t have nursing homes.”
But the commissioner said Lehigh County loses money on Medicaid patients, making Cedarbrook “a very unprofitable business.”
Mazziotti said the Cedarbrook deficit is $3 million to $5 million a year.
“We’re trying to respond to that by moving into other areas that aren’t part of our core mission, to try to off-set the losses that we have in our core mission,” said Mazziotti.
He said in order to serve people who are the most vulnerable, “which somebody could argue is a public good,” the county is moving into an area that is not really essential for the public good.
Mazziotti said government must provide services for the public good, such as building bridges and highways, operating prisons and providing a court system.
He’s not convinced creating a short-term rehab unit that will compete with similar existing units is a core essential service of county government.
New administrator defends proposal
“Being 100 percent medical assistance is not a viable solution,” agreed Hollinger, Cedarbrook’s administrator.
“For us to be able to continue to service those residents who need us in this county, we have to look at how to increase our revenue.”
Hollinger called creating a 41-bed unit that financially will benefit the other 630 residents in Cedarbrook “a fair trade.”
Said Molchany: “We’ve all agreed doing nothing is probably a worse outcome than doing something.”
Molchany said what the administration is proposing will not interfere with any other long-term decisions about the future of Cedarbrook.
He suggested adding the rehab unit “might make the asset more valuable.” He also said it could become a model for the other floors of the D2 wing at Cedarbrook.
“If we’re successful, and we’re hoping we are, we might be talking about a D-3 expansion.”
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