Warren County Freeholders will bring in consultants to advise them on a possible sale or lease of Warren Haven, the county's nursing home.
Freeholders tentatively plan an initial presentation by consultants at their March 13 public meeting.
They also are getting bids to see how much money can be saved by having outside companies take over Warren Haven's dietary, housekeeping and laundry services – which would cost many nursing home employees their jobs.
Warren Haven operated at a $3.3 million deficit in 2012, according to county financial officials.
The future of the nursing home was the subject of a Saturday morning budget session by freeholders in the county administration building near Belvidere.
They are trying to eliminate a $4 million deficit before adopting the county's 2013 budget in late Match.
Warren Haven "is the centerpiece of our budget problem" said Dan Olshefski, the county's budget analyst.
Jason Sarnoski, director of the three freeholders, recommended investigating the possible sale or lease of the nursing home, while stressing the county has not decided to do either. He said freeholders will be doing a disservice to themselves and the community if they don't look at every possible option.
A consulting firm will evaluate the facility, its finances, its value on the open market and possible privatization. Sarnoski said at least one firm will do that work for free, explaining it gets a commission only if the nursing home is sold or leased.
"We could go all the way to the one-yard line and say we're not going to do it and it doesn't cost the county a dime," he said.
Sarnoski stressed the public will be involved "early and openly" in the decision-making process about Warren Haven's future.
While no vote was taken to bring in a consultant, Freeholder Edward Smith supported Sarnoski's proposal.
"We have to make changes in the way we do business," said Smith. "The entire county's ability to finance itself becomes imperiled if we continue in this direction. We have to address it this year."
Freeholder Richard Gardner seemed reluctant to take any steps toward a possible sale or lease, indicating new marketing initiatives outlined by Warren Haven's staff should first be given an opportunity to succeed.
"We're the Cadillac of elder health care," said Gardner. "I'm not going to dilute the positive energy that's going forward to try to have these beds filled. Our population is getting older across the state. Folks need care."
County-run nursing homes are not being closed, said county administrator Steve Marvin, but they are being sold to private operators. Marvin estimated a half dozen county-run nursing homes in New Jersey, including one in neighboring Sussex County, were sold in the last two years and he expects more will be sold.
As she and her management staff left the budget workshop before it ended, Laura Decker, Warren Haven's administrator, would only say: "I think the freeholders are facing a huge challenge."
Freeholders praised the nursing home's management for their efforts to keep costs under control. The problem is, many of those costs are beyond their control.
County officials blame reductions in state and federal support to the nursing home as
primary reasons for the deficit, as well as "uncontrollable" pension and medical benefits for Warren Haven employees.
"In 2001, we had no pension share costs, now we're looking at $800,000," said Sarnoski.. "Medical costs have doubled in the last 10 years."
Total expenses at the nursing home increased by $1 million in the last year, according to Olshefski, while revenue it generated dropped by $1.3 million – from $14.85 million in 2011 to $13.5 million in 2012.
Ironically, $1.3 million also is the maximum amount property taxes can be raised in one year for Warren County's entire budget, said Olshefski. "We've got all these other departments to consider. These freeholders are in a very difficult situation."
Occupancy is down in the 180-bed facility, which reduces revenue.
In 2008, Warren Haven was at 98 percent occupancy, said Olshefski. In 2010, it dropped to 95 percent. And in 2011 and 2012, it dropped to 89 percent.
County officials said there is no waiting list for people to get into Warren Haven.
Olshefski said even 100 percent occupancy would not solve Warren Haven's financial problem. "They are swimming upstream."
Officials cited several reasons for the decline in occupancy.
"There has been a concerted effort on the part of the federal government to care for these people in their home environments," said Charles "Pete" Houck, the county's chief financial officer. "Why? Because it's cheaper. So people stay in their homes longer."
The economy is another factor, said Decker: "More folks are keeping grandma at home because the husband lost his job and grandma gets $600 a month in Social Security, so that helps them. Or they can't sell grandma's house."
When elderly folks do go to Warren Haven, they are much older and sicker than patients in past years, said Decker.
"And they don't last as long, to be blunt about it," said county administrator Steve Marvin.
"It's a revolving door," agreed Houck, who said people who are older and less healthy
require more hands-on, labor-intensive care, which is more costly.
Marvin anticipates the 2013 county budget will be introduced at the Feb. 27 freeholders meeting and adopted at their March 27 meeting.
Warren Haven is requesting $11.1 million for its 2013 operating budget, $100,000 less than in 2012.
How much the freeholders actually give the nursing home will be impacted by whether they do decide to contract outsiders for laundry, housekeeping and dietary services.
On Feb. 21, bids will be opened from companies interested in providing those services at the nursing home.
The county hopes to save more than $1 million by doing that, said Olshefski, but the jobs of 68 employees now providing those services in-house probably will be eliminated, after 90 days' notice.
He predicted if those services are contracted out, the change won't happen until mid-year.
"Every nursing home in the state has contracted out some or all of these services," said Sarnoski. "Where they haven't contracted out these services, they sold the facility. It's a necessary step in controlling expenses. It has to be looked at."
Warren Haven currently has 250 employees, said Olshefski. If the nursing home would be sold, they could be rehired by new operators, but possibly at lower salaries with fewer benefits.
Capital improvements needed
The nursing home requested $1.74 million for capital improvements this year, but freeholders plan to approve only $244,000, said Olshefski.
Patient room renovations and replacement of windows, both requested since 2004, have been pushed back to at least 2014, as has a new HVAC system for the kitchen.
Sarnoski said by July, freeholders may have to consider a capital bond question on improvements needed to maintain Warren Haven. "We're talking about $1.7 million in upgrades coming up in the next year."
Such a bond question could go on the county ballot in November. Sarnoski said results of that vote "could tell us if the public wants to maintain the facility."
Some good news
Decker said some good news is coming out of Warren Haven: In 2012, it conducted its first-ever customer satisfaction survey "and 95 percent of our family members said they would recommend us to somebody else."
Janet Mahoney, assistant administrator at Warren Haven, said people did not know it does not have a waiting list. As part of her "revenue-neutral" marketing effort to increase occupancy, Mahoney developed the theme: "Warren Haven, the best kept secret in northwestern New Jersey." She said she's visited hospitals and senior centers to raise awareness about its "resident-centered care."
Gardner suggested his fellow freeholders should not forget the human element: "We're taking care of our own with great pride and wonderful treatment of the residents. You don't place a dollar figure on that, but we all have to live in this real world."
Sarnoski agreed with Gardner that the county should do nothing to take away the momentum at the nursing home toward generating more revenue and cutting expenses, but said consultants can be brought in at the same time.
Sarnoski made it clear freeholders are not abandoning Warren Haven. The county will develop a Web site to market the nursing home and freeholders personally will do more to help will promote it.
Allentown, PA 18102