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Menahga council trying to gain control of nursing home deals

Greenwood Connections and Menahga have been at odds over leadership and whether the city council should be involved in the day-to-day operations of the facility. (Sarah Smith / Enterprise)

Small town politics can always be dicey and a long-simmering dispute in Menahga, between city leaders and the city-owned nursing home, is "Exhibit A."

At the heart of the dispute is what constitutes a conflict of interest and nepotism. Conflicts of this nature are often unavoidable in towns where a limited number of people are related, live together, work together and govern each other.

But the city vs. nursing home fracas is frustrating both sides and neither seems inclined to budge.

The issues

The political hot potato is that the sister-in-law of Greenwood Connections administrator Clair Erickson is profiting from business she derives from the nursing home facility.

Dr. Vern Erickson, Clair Erickson's brother, is the medical director of the nursing home. Vern Erickson's wife owns Park Rapids Physical Therapy, which is listed in Greenwood Connections' recent financial statement to the city council as having received $113,191.63 over the three-month period from Oct. 1, 2009 through December 2009, according figures released Monday night. That figure may represent a spike in revenues, however.

"On average, it runs $12,000 to $15,000 a month," said Mayor Tom Larson. "It's a conflict of interest, I agree."

Both Clair and Vern Erickson vehemently disagree. Clair Erickson said the city is micromanaging his facility. He sees no conflict of interest and points to a city attorney's opinion that supports him.

"It's just a matter of serving the community, it's not a matter of a financial benefit to my wife," Vern Erickson said.

Larson said the nursing home has a sound political base among some council members, so it's been a Sisyphean task to break the business-as-usual model and try to institute a competitive bidding process to see if the city can save money on a facility that "lost $5,000 in January.

"To try and fix it, it just ain't working and as a mayor I'm not sure what I can do," Larson said. "I try to keep bringing it up."

Sowing the seeds of discontent

Greenwood Connections is a consortium of four service areas, including an assisted living facility called Woodside Manor, a skilled care facility called Green Pine Acres, Menahga Home Health and an adult daycare through Green Pine Acres.

Issues between the city and Greenwood came to a head when Clair Erickson, backed by his Greenwood board, clashed with the council over directives. Erickson maintained he needs some clarification of the two boards' roles before he's issued marching orders. Some council members questioned his communications skills and whether he was guilty of insubordination.

"I've been there for 33 years now in May and the first 25 years, absolutely no problem but the last few years I've gotten this, I don't know, I almost feel I'm second-guessed and distrusted in anything I do anymore," Clair Erickson said.

For 20 years the nursing home board oversaw Greenwood, he said. The council has hamstrung that body lately, he said, rendering it impotent.

"I don't see how I can continue to have a nursing home board that's going to cooperate if they don't have some bylaws that describe what their role is and where they fit in the organization," Clair Erickson said. "Otherwise I'm afraid I have board members that say, 'I have better things to do with my time than make a mark on the wall.'"

Larson traces the disagreement back to his previous tenure as mayor, when he initiated moves to put the proverbial genie back into the bottle.

"We starred looking at this closely three, four years ago, trying to get it back in the box where it's supposed to be," he said of the power struggle with Clair Erickson. "I feel that's one of the reasons I lost the election two years ago because of the nursing home."

The facility has $2.6 million in reserves and is generally regarded as fiscally healthy. But the declining census and recent losses did prompt council questions Monday night.

Clair Erickson was asked how he was marketing the facility and he replied, "word of mouth."

"Somehow we have to market it more than word of mouth," council member Kim Rasmussen said. "We have empty beds and we've got to market ourselves."

The nursing home has been repainting rooms and rehabbing hallways. As rooms are upgraded, existing patients move into them, Clair Erickson told the council.

"What are you doing to stem the tide of the census?" questioned councilor Joel Mickelson.

Erickson responded he'd cut some staff hours, but cutting staff altogether could result in "unemployment issues if we have to make permanent cuts."

Conflict or not?

While some city officials are worried about the potential conflict of interest, the Erickson brothers are not. Both say Dr. Erickson and his wife are providing services, not goods, so the city doesn't need to place those services up for bid.

City attorney Jeffrey Pederson issued a legal opinion Jan. 7 that stated in part:

"Certain contracts are exempted from the competitive bidding requirements of the (state) statutes. Those include professional services contracts of this nature. While the contract is exempt from the bidding requirements the city is certainly free to request bids of proposals for services such as these if it so chooses."

And that is what council members thought they had directed Clair Erickson to do, both for his brother's job and for the physical therapy services.

The Request for Proposals didn't quite go as envisioned.

Clair Erickson reported he'd sent the RFP for his brother's position to three area clinics with no response.

Council member Maxine Norman questioned whether the council was seeking "competitive bids for medical services."

"You're not doing competitive bids," responded city administrator Teri Osterman.

But when Rasmussen questioned if the process should be advertised as a "fairer way for the city to operate," Norman wondered if any qualified candidates would surface through a newspaper ad that wouldn't have received notification from the clinics.

The implication that Clair Erickson may have been steering the process to hire a medical director clearly made some council members uncomfortable; they frowned when Erickson said his search did not include advertising.

"I haven't even applied," said Vern Erickson. "I will. I just haven't done it. They're hassling my brother and it's just ridiculous."

No RFP has been sent out for therapy services and it appears as if a 2007 contract between Park Rapids Physical Therapy and Menahga is unsigned.

"The council does not agree on some of that stuff," Larson admitted in an interview Wednesday. "There's not much that can be done, or that I can do as mayor. If we had a full council that was not split on this stuff, yeah."

"No comment," said council member Dennis Komulainen. "The way you newspapers report this, I don't have to talk to you."

A brother weighs in

As relations between the city and Clair Erickson deteriorated, so did the relationship with Vern Erickson, who then made a salary demand.

"I've served as medical director there for 25 years and didn't charge them one red cent," Vern Erickson said. "I did it just because my brother's the administrator and the other doctor did it for years (gratis) but I guess I get tired of working for nothing."

He said he felt unappreciated; federal guidelines indicate medical directors should be paid positions, so he requested $1,500 per month.

"I've got expenses and when I leave the office (at his Park Rapids medical clinic) I've got four or five girls I'm paying and I'm sitting in an office in Menahga without making any money. It doesn't make any sense," he said.

He believes the salary is low, comparatively speaking.

"They're going to come out better in the long run," Vern Erickson said. "It's not going to cost them anything and I'm going to be out recruiting for the nursing home."

He said he plans to visit hospital discharge planners in the region to recruit patients for Greenwood. But some of that business would be for therapy services, because Park Rapids Physical Therapy provides twice-a-day PT, unlike other facilities, he said.

"Therefore the patient gets better faster."

A volatile business in flux

The dwindling census of the scaled down nursing home, which formerly had 91 beds at full occupancy and now has 65 beds at 82 percent occupancy, is affecting the facility's financial solvency.

Clair Erickson said it's a temporary situation.

"The whole industry is changing right now," he said. "There used to be 44,000 nursing home beds in the state of Minnesota. Now we're down to 30,000.

"The assisted living, there are 60,000 assisted living beds in the state so the whole industry has changed dramatically. There are many more options out there for people. Our business has changed from long-term to a high number of short-term rehab" beds.

"We have a number of admissions that are short-term for hip replacements, knee replacements, extensive rehab and different situations so it makes our census very volatile," Clair Erickson said. "It's up and down like a roller coaster. It was not part of the long-term care industry a few years ago. So rehab becomes a very integral part of our business."

At a time when Greenwood Connections showed nearly a $500,000 profit in 2009, Vern Erickson, said, "nursing homes are going bankrupt and then they're hassling him (Clair) for doing a good job. It doesn't make any sense. That's how I see it. I may be biased but..."

While neither Erickson sees a conflict, neither also sees what some council members view as the appearance of impropriety.

Vern Erickson said his wife's company stepped into the breach 10 years ago and provided a service the nursing home never had, did it competitively, and better than hospital therapy programs could. When Park Rapids PT does outpatient therapy at Greenwood, it pays rent, Erickson maintains.

"There's the old adage you can't fight city hall and that's true," said Clair Erickson. "The council can do whatever they want whether there's a requirement or not, they can make their own requirement."

Sarah Smith

Sarah Smith is the outdoors editor. She covers courts, business and breaking news in addition to outdoors events.

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