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Hubbard County allocates another $1.4 million to Heritage

Earlier this year, the Hubbard County Board gave another $1 million of ARP to Heritage Living Campus.

Heritage Living Center
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Hubbard County commissioners voted on Tuesday to use $1.38 million in American Rescue Plan (ARP) funds to offset losses at the county-owned nursing facility.

Earlier this year, they allocated another $1 million of ARP to Heritage Living Campus.

In 2021, they gave an additional $1 million of ARP to the facility.

County commissioner David De La Hunt gave an overview of the situation.

Overview

Reading from a prepared statement, De La Hunt said, in 2014, Hubbard County agreed to $1.5 million in equity to a remodeling project at the campus.

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“Hubbard County then agreed to an additional $2 million in equity in year seven (2021) to help with refinancing the remaining debt, which did not occur because of interest rates,” he said. “The remodel was a three-year project with portions of the campus shut down for periods of time. The first full year in operation after the remodel was 2019. The remodel exhausted much of the cash on hand. When COVID hit and we lost 13 residents in the nursing home, the census did not rebound. It continued to decline to below 50% due to the pandemic. At the same time, the senior living market more than doubled in size in our area.”

COVID and its related policy issues “accelerated staffing shortages across the health care sector.”

Hospitals experienced difficulty during the pandemic as well, “so temporary-stay patient intake completely disappeared.”

“Through the pandemic, the campus was losing money at a clip of about $180,000 per month. Austerity measures were implemented, but without a robust census not much more can be cut,” De La Hunt continued. “The county continues to explore options for divestiture,” but rising interest rates may make a sale difficult.

The 2023 budget projects “a small, positive cash flow, but at some point, a much greater cash flow is needed to account for depreciation and interest expense.”

Next year’s budget reflects “a more robust marketing strategy.”

Due to nursing and hospital staff shortages, short-stay patient intake has not recovered. “Staffing issues remain a major concern for Heritage Living Center,” De La Hunt said. “Heritage Living Center continues to use the traveling nurse pool to cover nursing shortages, and this is approximately two to three times more expensive than if we had our own staff.”

Heritage Living Center (HLC) has 64 beds, Heritage Manor has 26 units and Heritage Cottages has 18 units. HLC’s and Heritage Manor’s census remains at or below 50%, while the Cottages is at 85% to 100% full, but nursing expenses have cut into its profits, according to De La Hunt.

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Budget summary

Heritage Administrator Kurt Hansen and Katie Lundmark, regional director of operations for Ecumen, reviewed the 2023 operating budget.

Last year was the first full year post-COVID, so there were more unknowns, Hansen explained. “This year, we have a better, very conservative budget.”

Inflation has “been kind of a wild card,” he continued, but supplies aren’t a huge part of the budget. They used an average of 5% inflation on raw food, utilities and the like.

They also included pay and benefit increases to be a more competitive employer. Their goal is to sunset traveling/agency nurses by Jan. 1, 2024.

“That might be a little aggressive. This is a tough labor market we’re looking at,” Hansen said. “But we did dramatically increase marketing dollars for the purpose of recruitment.”

County commissioner Dan Stacey asked if the facility is competitive within the area.

Hansen said they are now, but pay levels are volatile. He said they are not comparable to the hospital.

Heritage Manor and Heritage Cottages will have a rate increase. HLC incorporates rate increases for Medical Assistance, Medicare and private pay per Minnesota Department of Human Services.

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Hansen said “the potential is great” for HLC. Before COVID, the nursing home typically had 56 beds filled, but it’s currently at 31. At current staffing levels, the HLC can have 40 beds.

While most COVID restrictions have been lifted, Hansen said they are still masking because Hubbard County has a high transmission rate.

County commissioner Tom Krueger inquired where people are going instead of the local nursing home.

“People who used to utilize the nursing home are seeking alternative care, including other assisted living and home health,” Hansen replied. “That’s a very viable option for many. They prefer to be in their own home, hence the short-stay admission. So if they’ve got a Medicare-covered procedure that was completed, they can come and have that paid 100% out to 20 days and copay out to 100.”

Lundmark expanded upon that, saying many are staying in hospitals longer because of staffing shortage at nursing homes. “We’ve really had a strain on our industry. This really isn’t just a Heritage Living Center scenario. This has been a struggle across the state,” she said, adding hospitals want to discharge these patients to appropriate settings.

Hansen is retiring in early November. Lundmark said there are currently two applicants for the position. There will likely be an interim director since a new hire wouldn’t be on board until the end of 2022.

READ ABOUT HANSEN'S RETIREMENT:
Hansen reflects on his career. His last official day is Nov. 4, 2022.

ARP to ‘shore up’

County Administrator Jeff Cadwell said the county received about $2 million of ARP in May.

The board agreed to distribute $1.38 million to shore up the 2022 cash balances for all three entities.

“The hardcore reality is we don’t have a choice,” De La Hunt said.

County commissioner Dan Stacey called the situation “disheartening” and “a bad deal.”

Brokerage agreement

Following a closed session, the board reopened the meeting and passed a motion to enter a brokerage agreement with Senior Care Realty.

They revised the contract so that the county board may accept or reject any bid and that a fee to the firm is contingent upon a successful closing of the property sale.

According to the minutes, the board met with three different brokers: Senior Care Realty of Sun Prairie, Wis., Evans Senior Investments of Chicago, Ill. and Lakes & Woods Realty of Bemidji.

“I’m not sure I have enough information to vote,” county commissioner Tom Krueger said.

The motion passed 3-2, with Krueger and county commissioner Dan Stacey opposed.

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Shannon Geisen is editor of the Park Rapids Enterprise.
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