“Their auditors were looking at our balance sheet and saying, ‘You guys are insolvent,’” Canyonlands Care Center accountant Tom Lacy said March 25.
At the time, the care center owed the hospital approximately $500,000, although that figure later grew to just over $600,000, according to Lacy.
But the hospital ultimately ignored the auditors’ advice and took its chances. It wound up collecting every cent that the care center owed it, according to Lacy.
“The Canyonlands Health Care Special Service District’s (CHCSSD’s) board made the decision to pay off this debt,” he said.
The fact that it had enough funds to do so might be one of the surest signs yet that the long-term care facility is on the road to financial recovery.
The CHCSSD’s current budget projects that its enterprise fund will end the year with a loss of $571,380, which translates to an average monthly loss of about $46,000 to $47,000.
But those numbers are more reflective of the reality the district faced one year ago than the financial situation that exists today, Lacy said.
According to Lacy, the enterprise fund is currently operating at a loss of about $20,000 to $25,000 per month.
Those numbers could change again, though, depending on the outcome of ongoing efforts to increase funding through Medicaid’s Upper Payment Limit rate.
“Basically, it’s an accounting trick,” Lacy said. “You send them money, and they send you three times [that amount].”
The payments are subject to certain conditions and limitations, many of which the federal Medicaid program is still working to resolve.
However, if the care center succeeds in those efforts, Lacy anticipates that it would begin to turn a profit each month.
Lacy traces the beginning of the care center’s financial turnaround to August 2013, when Medicaid’s “distressed facility” funding rate for low-income residents shot up from up from $153 to $181 per resident day.
Although it’s been a help to the center, that “distressed facility” rate will only be in place until the start of this August at the latest. But the Upper Payment Limit program is projected to take effect before July 31, and it’s expected yield a higher rate over a longer term, Lacy said.
In the meantime, the care center has found ways to boost revenues from other sources.
Between May and November 2013, for instance, it gradually increased the amount it charges private-pay residents from $172 to $200 per day.
It has also worked to cut its operating costs.
Most recently, care center administrators, CHCSSD board members and others successfully pushed for legislative changes that will allow the facility to opt out of the Utah Retirement System (URS) program. (See related story below)
Lacy estimates that the legislation, Senate Bill 204, will save the care center about $10,000 each month in previously mandated contributions to the state’s public employee retirement program.
In addition to that change, the care center now requires new employees to complete a probationary period of up to 90 days before they receive benefits.
Lacy said the adjustment is perhaps the most effective cost-cutting step the facility has taken to date, considering its traditionally high employee turnover rate.
One final change for the better came about as a result of something that no one expected one year ago – namely, a windfall in mineral lease revenues.
According to CHCSSD board treasurer and Grand County Councilman Ken Ballantyne, mineral lease payments to the district totaled more than $1.34 million in 2013.
Lacy projects that the flow of mineral lease revenue is still on an upward trend, and he estimates those payments are coming in at about three times the budgeted amount.
Grand County Council chairman Lynn Jackson said he believes that funding has really made a difference for the facility.
“I wouldn’t say we’re out of it yet, but things are looking better for the care center than they were a year ago,” Jackson said.
Without that revenue, Jackson said he thinks that one of two things could have happened. Either the care center would have been forced to close its doors, or else the county may have sought a new tax to keep the facility going, he said.
Today, however, Jackson said he is optimistic that sufficient mineral lease revenue will come in over the next five to 10 years to allow the county to continue subsidizing the facility.
But the council’s current distribution formula to the CHCSSD and other special service districts is not guaranteed.
At some point later this year, the county council would like to see a detailed report on the care center’s financial situation, Jackson said.
Based on that report, the council may reallocate mineral lease revenue, giving the CHCSSD enough money to keep the care center going, while ensuring that other special service districts get their shares, he said.
“We want to make sure that we’ve got enough balance there to make you guys whole,” Jackson told CHCSSD board trustees on March 20.
Legislature passes two bills that could benefit care center
Grand County now has the option to ask its voters for a health care facilities tax hike, but the county council’s chairman is hoping that it won’t have to do so.
The Utah State Legislature approved a bill last week that clears the way for the county to impose a sales and use tax of up to 1 percent, subject to voter and county council approval.
Senate Bill 176 amends or repeals six sections of state code that deal with local funding for rural health care. Among other things, it allows class-five counties like Grand to implement a dining tax on a “bundled transaction attributable to food and food ingredients.”
That change could provide another funding source for Canyonlands Care Center.
However, it might not be needed at this point.
The care center’s financial situation has improved considerably in the time since the idea of a new sales tax first arose, and Grand County Council chairman Lynn Jackson views it as a last resort.
“I would hope that things would be fixed so we never have to go ask for that,” he told Canyonlands Health Care Special Service District (CHCSSD) trustees on March 20.
In the event that county and special service district officials pursued a new sales tax, it would still have to be approved by majorities of both county voters and county council members.
But Jackson reiterated that officials should exhaust every other option before they took that step.
“I think we’d all prefer it that way,” he said.
S.B. 176 was one of two major bills that care center administrators and CHCSSD board trustees kept track of during the 2014 legislative session.
State lawmakers overwhelmingly approved a second bill that will allow the care center to opt out of the Utah Retirement Systems (URS) program for public employees.
Care center administrators estimate that Senate Bill 204 will help the facility save around $10,000 per month, or somewhere between $120,000 to $130,000 per year.
CHCSSD board chairman Doug Fix has said that about 16 percent of the district’s annual budget shortages can be traced to the URS contributions. Yet Canyonlands Care Center CEO Roy Barraclough has noted that few of the care center’s employees actually benefit from them.
It takes employees four years to vest into the URS program, yet a majority of the care center’s staffers move on to positions elsewhere after one year to 18 months on the job, according to Barraclough.
The care center will exit the URS program without any actuarial deficits, or costs that it would have to pay back into the system, according to Barraclough.
“So we’ll get out of the program without any cash out of our pocket,” he said March 20.
In the coming weeks, Barraclough plans to work with St. George-based Soltis Investment Advisors to come up with an alternative retirement plan that carries no up-front costs. Barraclough said he hopes to have a new plan in place by July 1 in order to avoid any lapses in coverage.