Here's what Northampton County voters need to know about the Gracedale nursing home referendum before hitting the polls Tuesday: A "yes" vote would block the county from selling the Upper Nazareth Township facility for up to five years. A "no" vote would let Executive John Stoffa's administration move forward with a sale.
Q. Stoffa has said taxes would rise 10 percent to 30 percent if the county maintains control of Gracedale. Where do those numbers come from?
A. State and federal dollars cover most of Gracedale's $60 million budget, but recently the county has had to pitch in tax dollars to reconcile revenues and expenses. The county projects the nursing home will need $6 million in 2012 and, while Stoffa has not publicly released a list of capital needs, he says improvements would cost $15 million and maybe more.
Taxes would have to increase 9 percent to generate enough revenue to cover the projected operating deficit, plus one year's interest on $15 million in borrowing for the capital improvements. That means the owner of a home assessed at the county average of $50,000 would pay $590 in taxes, or $50 more than this year.
If the county decided to fund the entire $15 million capital plan as well as operating costs in one year, the tax hike would jump to 26 percent. In that case, the owner of a home assessed at the county average of $50,000 would pay $680 in taxes, or $140 more than this year.
Q: Does Gracedale make money or lose money?
A: Gracedale's balance sheet has fluctuated wildly over the past 20 years. The nursing home earned $9.5 million from 2005 through 2008. Cash payments for capital repairs helped drive total losses of $7.1 million in 2009 and 2010. A $3 million loss is budgeted for the first six months of this year.
Q: Most council members say they won't raise taxes. What happens if Gracedale has to operate in the red?
A: Stoffa has said he would reduce the size of the facility by refusing to accept new admissions and laying off staff. It's unclear how state guidelines on patient care would affect his decisions.
Q: How do those opposed to privatization think the county can afford to keep running Gracedale?
A: They believe the administration has exaggerated Gracedale's financial woes and that the county can use its savings to plug the budget holes and invest in capital improvements. Of the county's $62 million reserve fund, $16 million is unallocated. They also say the county is morally obligated to run the nursing home.
Q: Do both sides agree on anything?
A: Yes. They support the county's plan to hire a management company to try to make the operation more efficient, and favor union concessions. Union benefits add 68 percent to the cost of each worker's salary.
Q: Will anyone be kicked out of Gracedale if the county sells the facility?
A: No one would be forced to leave Gracedale against his or her will no matter what happens with the referendum, Stoffa has said.
Q: Why does the administration believe a private operator can make money off Gracedale, when the county has had to subsidize the nursing home with tax dollars in recent years?
A: Private companies can earn at least $4 million more on Medicaid reimbursements than the county does, a study found. They would overhaul the décor and better market the facility to fill beds, about 15 percent of which are empty today. They could reduce workers' compensation. The county finances could suffer another blow next year with Gov. Tom Corbett's proposal to cut county reimbursement rates by 2 percent or $725,000 annually for Gracedale.
Q: What if voters reject the effort to block a sale?
A: The administration would be free to move ahead with its plan to sell Gracedale to a partnership of companies, TL Management and Global Healthcare Services Group. The companies bid $35 million for the Gracedale buildings and about 18 acres with an option to buy an additional 26 acres. The county would be left with more than 300 acres in Upper Nazareth. The adjacent 911 building is not for sale.
Q: If Gracedale is sold, where will people who can't afford to pay for nursing home care go?
A: The private operators' business model depends on Medicaid payments, just as Gracedale does now. Stoffa has said a sale would hinge on the companies' willingness to reserve at least 85 percent of Gracedale's 725 beds for Medicaid-eligible residents.
Q: What do we know about the companies that want to buy Gracedale?
A: They jointly operate 14 nursing homes. Eleven of those are in Pennsylvania and 12 have a unionized work force. Their facilities average 80 percent Medicaid occupancy, Stoffa has said.
Q: What would the administration do with revenue from a sale?
A: Stoffa wants to devote $5 million over three years to the Area Agency on Aging for services to help senior citizens stay in their homes, $2 million to farmland preservation and $2 million to upgrade and repair bridges. He would reduce taxes and add the balance to the general fund, which he believes would prevent a tax increase for the next two years.
Source http://www.mcall.com/
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