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Nursing home’s future hinges on $10 million plan PDF Print E-mail
Written by BILL SCHANEN IV   
Wednesday, 28 May 2014 18:53

Renovations seen as key to improving care, keeping Lasata Care Center financially viable head to County Board

    That which once divided the Ozaukee County Board — a plan to invest $10 million in the Lasata Senior Living Campus — now has significant support heading into a series of votes that could determine the fate of the county’s 28-year-old nursing home.

    The board is scheduled to vote next week on a proposal to borrow $10.3 million to renovate Lasata Care Center in Cedarburg to create a smaller, efficient nursing home that provides more comfortable and dignified care for the county’s oldest residents.

    But what makes the plan politically viable is its financial ramifications.

    Without the renovations, the nursing home will bleed cash at the rate of $717,000 a year, sapping revenues generated by the other components of the campus — the Lasata Heights apartments and Lasata Crossings assisted-living facility — and saddling the county with an annual deficit, according to an analysis by Horty Elving, a Minneapolis-based architectural and engineering firm hired by the county.

    With the renovations, however, the nursing home’s losses will be held to about $286,000 a year. That deficit will be negated by the $657,000 in annual revenue generated by the Heights and Crossings, leaving the senior-living campus with an annual average profit of $371,000, according to Horty Elving.

    “Going ahead with the renovations just makes good financial sense,” said Supr. Rob Brooks of Saukville, chairman of the Health and Human Services Committee, which oversees the Lasata campus.

    Doing nothing to improve the nursing home, he said, isn’t a viable option.

    “We’re not going to build a new facility and there’s no public support or political will to sell the facility, but if the renovations aren’t approved, we’ll get to a point where the nursing home will be hemorrhaging money and we’ll be forced to sell it. There’s no ifs, ands or buts about it,” Brooks said.

    “I suppose that could be a good or bad thing depending on your view, but I think it would be great to improve the quality of life for nursing home residents with the renovations and be able to continue this service at no cost to county taxpayers.”

    Lasata Campus Administrator Ralph Luedtke noted that even if the county does not approve borrowing $10 million for the renovations, basic infrastructure improvements included in the borrowing plan will need to be made at a cost of more than $1 million a year for several years.

    “Our nursing home will be 50 years old,” Luedtke said. “If the board decides not to make the renovations, we still have boilers and plumbing fixtures and ventilation and electrical systems that will be 50 years old and need to be upgraded.”

    Supervisors, who were briefed on the proposed renovations and toured the nursing home last week, will be asked next week to support the plan, which has the unanimous backing of the Health and Human Services Committee.

    But the true test is expected in July or August. That is when the board will vote on whether to borrow $10.4 million for the renovations. Support from three-quarters of the supervisors on the board — 20 of its 26 members — is needed to pass bonding resolutions.

    If the board authorizes bonding for $10 million, the county plans to borrow about $3.5 million this year and the remaining $6.9 million next year.

    If the proposal clears those hurdles without delays, the project would likely begin early next year and be completed in April 2016, Luedtke said.

    “I think we’ve addressed the concerns that supervisors had and now have very strong support for moving ahead with this,” Brooks said.

    That wasn’t always the case. After more than a year of planning, the Health and Human Services Committee proposed last year building a $3 million, 24-room community-based residential facility (CBRF) adjacent to the nursing home that would specialize in care for the frail elderly and people with dementia, as well as spending $7 million on nursing home renovations.

    That plan was headed toward a County Board vote when several supervisors led by Brooks, who was not a member of the committee at the time, put the brakes on it. Brooks advocated for a more thorough vetting of the plan, arguing that if the CBRF cost more than $3 million to build, it would hamper efforts to renovate the nursing home, putting the future of the facility at risk.

    Earlier this year, a report from Horty Elving revealed that the $3 million CBRF envisioned by the Health and Human Services Committee would cost at least $5.7 million to build. The committee immediately dropped its plans for the new facility and backed a proposal to spend $7.2 million on nursing home renovations.

    Most recently, the cost of the project was increased to $10.4 million so more resident rooms could be renovated.

    About $1.2 million would be spent on infrastructure improvements needed to keep the building operational. This work, which would include replacing vital systems such as heating units, can be done much more efficiently during a major renovation rather than piecemeal over the next several years, Luedtke said.

    The rest of the project would focus on interior renovations that would provide safer, more dignified living conditions for residents and better working conditions for employees in what officials refer to as a “right-sized” nursing home.

    “Lasata Care Center residents deserve a better facility,” Luedtke said. “They deserve a more dignified facility. They deserve a safer facility.”

    The number of beds would be reduced from 162 to 134 to accommodate larger private rooms with more spacious bathrooms, updated bathing rooms, new service kitchenettes and renovated nursing stations and resident day rooms.

    The number of residents would be reduced through attrition, Luedtke said.

    “We’re not going to kick anyone out of our nursing home,” he said.

    Other improvements would include the creation of specialized rooms for larger residents, front lobby renovations and improvements to the therapy facilities.

    The 134-bed facility would maximize efficiencies, Luedtke said, requiring the equivalent of 35 fewer full-time employees to operate and resulting in lower energy costs.

    The financial projections associated with the renovations are based on essentially maintaining a mix of residents in keeping with the Lasata’s mission of providing affordable care. Currently, about 70% of Lasata Care Center residents rely on Medicaid or Family Care to pay for their care. Because the renovations will result in more single-occupancy rooms, however, officials expect that percentage to decrease to about 64%.

    That percentage is critical to the bottom line of the nursing home because Medicaid and Family Care do not cover the full cost of care. For instance, the nursing home realizes $45,000 more in annual revenue for every resident who can afford to pay for care — so-called private-pay residents — and $100,000 more a year for every resident who uses Medicare to pay for short-term, rehabilitative stays at the nursing home, according to Horty Elving.

    “Our projections are very, very conservative,” Brooks said. “If we get just a couple more private-pay residents and one or two more rehab patients, the nursing home could actually operate in the black.

    “We’re in a unique situation. I think we’re probably the envy of other counties with nursing homes because we’re going to be able to operate our campus at a significant profit. That gives us a very strong case to present to the board.”

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