Heritage repair needs prompt talk of sale
Hubbard County commissioners agree that residents should have the best skilled care nursing home possible.
But commissioner Lyle Robinson questions whether the Heritage Community should be sold, to enable a private entity to render that care and make much-needed repairs to the nursing home.
Otherwise, a new addition could cost up to $11.3 million, with Hubbard County residents kicking in up to $3.6 million.
The county toyed with the idea of selling the county-owned facilities 10 years ago. Robinson suggested with healthcare giant Sanford, a Sioux Falls company, purchasing numerous medical facilities in the tri-state region, maybe the time is ripe to explore a sale.
In a work session Wednesday, county board members, Heritage Director Kurt Hansen and two Moorhead architects, discussed the community's future.
YHR Partners Julie Rokke and Ryan D. Gran said a nursing home moratorium exception came down in June, in which the Minnesota Legislature authorized spending up to $1.5 million to renovate aging nursing homes.
The state has had a moratorium on building new nursing homes for years to keep costs under control. The exception is something that builders haven't seen in five years, Gran said, and may not see for many more.
Rokke cautioned that numerous facilities are lining up to get the funds, and she urged Hubbard County to throw its hat into the ring.
Under the Minnesota Moratorium Exception, the county would have to demonstrate its commitment to the project by pledging up to 25 percent of the equity and have a financing plan in place for the remainder by the Dec. 3 application deadline.
In an $11 million facility, that would be the $3.6 million envisioned.
Currently Heritage has 64 beds in an aging facility that needs demolition, commissioners agreed.
That facility has an occupancy rate of 86.6 percent, Hansen said a feasibility study indicated. It is a mix of private payers and government insurers.
But the emerging market for short-term rehabilitation stays is booming, Hansen said, so the facility should also upgrade its offerings and amenities to lure those types of clients.
Bigger rooms, a health spa, state-of-the-art workout equipment, a cyber café and more privacy are what those rehab patients desire, he said.
If approved, the nursing home project would take two years in phases that would entail moving patients around to complete a new two-story wing and entry.
Robinson said Green Pine Acres in Menahga, which has been upgraded and is located in a tranquil setting, has been the preference of many locals.
The problem is that a new facility "won't cash flow unless equity is put back into the project," Hansen said of the county contribution.
"I don't want to build this and still have an 86 percent occupancy rate," commissioner Kathy Grell said.
Heritage wants to keep skilled nursing as part of an overall "continuum of care" in the community, Hansen said. It has a memory care unit, an assisted living facility and cottages, in which couples can live more or less independently. But when aging couples have varying health needs, providing all options of eldercare available on one campus is a good marketing strategy, Hansen noted.
While the county readies its application for the exception funds, another option is being explored.
David Collins, executive director of the Hubbard County Regional Economic Development Commission, mentioned a program called the New Markets Tax Credit Program.
Begun in 2000, the program aims to help impoverished communities with revitalization efforts.
It provides tax credit incentives in certified projects. Collins said he wasn't sure the non-profit, county-owned nursing home qualified, but promised he would check.
Under the program, the county would pay interest only on the project for the first seven years. After that, 22 percent of the principal would be forgiven and the remainder would be financed.
It was a solution Grell supported and could help the nursing home cash flow. But again, the private sector argument arose.
"If you could walk away from 22 percent of the principal, would it be better done on the private side?" she questioned.
"I wish I had a crystal ball," Hansen said. "We're making decisions today based on the best available information."
Rokke said commissioners need to keep one thing in mind: "Newer facilities get more private pay" clients.
Hansen said long-term patients would offset the "roller coaster nature of (rehab) admissions."
The board will form a small committee to immediately look into both options.