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 On The Road: Rural Long Term Care Facilities Underpin Economies

As factories close, facility jobs take up the slack.

 Senior Editor

​Provider heads for rural stretches of three Mid-Atlantic states this month: Virginia, Pennsylvania, and Maryland.
 
There are times when driving along the bi-ways and back roads of Virginia you can get lost from the modern world, surrounded by more trees and rivers than people and subdivisions. For long stretches, there are no fast-food restaurants or even advertising signs, not even a gas station pops up in some of the small communities west of Richmond and toward the south and border of North Carolina.
 
Of course, there is no hiding from the present. The McDonald’s and Exxons of today’s America are actually very nearby even in rural Virginia, but to a stranger, commercial outlets seem few and far between compared with the metro areas of the populous northern parts of the commonwealth.
 
The countryside of Virginia, Maryland, and Pennsylvania is where we went looking for long term care providers and ancillary businesses this month. Below, we hear from the providers themselves about how at a time of much debate on Medicaid reimbursement cuts, they face rising costs for gasoline and food caused by the long distances that have to be traversed for obtaining supplies and transporting residents.
 
Rural areas in these three states have any number of long term care facilities, but they are few in number when compared with the wide geographic areas they serve. At the same time they provide care, the facilities employ up to hundreds of people at each site, giving local economies a job growth engine to accompany agriculture and other industries, especially in towns and counties where manufacturing plants have closed in recent years.
 

Vital To Rural America’s Economy

As important as nursing facilities are to more populated regions, they are even more vital lifelines in the

sparsely inhabited counties of the Mid-Atlantic, says Tracey Daniels, administrator at Envoy at the Meadows in Goochland, Va.
 
“We’re the only nursing home in a big geographic area,” she says.
 
Goochland County is in the Richmond-Petersburg region of Virginia, with a population of around 22,000. The county has a rich history dating back even before the United States came to be, forming in 1728. Goochland was the first county created after the original eight shires were carved out in the Virginia colony and named for a lieutenant governor, William Gooch.
 
Recent economic data provided by the county government and Daniels shows her nursing facility as a top 10 employer, with just under 100 employees, slightly below the Food Lion and slightly above some local golf clubs. This in turn translates into vital tax revenue for the county and state from Envoy, totaling more than $21,000 combined in 2010 alone, Daniels says, citing data from her corporate parent Consulate Health Care.
 
These numbers show the direct impact of Envoy’s operations in terms of the Goochland economy, but what they don’t show is the indirect benefits. Daniels notes that her facility tries to buy local goods as much as possible, while at the same time controlling costs for her heavily Medicaid population.
 Envoy at the Meadows in Goochland, Va.
Being a rural locale, gas and food prices are the biggest budget eaters, making it imperative that other operations are as cost-conscious as possible. There is also the matter of utilities, which have increased exponentially. Daniels says her electric and gas bill for March 2010 was $6,600, which is cheap compared with the March 2011 tally of $12,100.
 
Threats to state Medicaid reimbursement, especially with the recent expiration of the federal medical assistance percentage (FMAP) adjustment from the federal stimulus law, will and do hit hard, she says. This leaves Envoy to focus its attention on the necessities and not worry right now about the fact it has a well-worn 12-year-old van or other aging infrastructure, Daniels says.
 
“Gas and food prices have really gone up. We’re in a rural area, of course, and even a local drive is 20 miles, and that’s a lot of fuel costs.”
 
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Blackstone Facility Largest Employer

Blackstone is a city of under 4,000 in Nottoway County, Va., about an hour’s drive directly south of Goochland on the way to the border regions of North Carolina and Virginia. The town has an active commercial strip made of restaurants, many of them fast food, and storefronts.
 
Residents and staff at the Heritage Hall Nursing Facility in Blackstone, Va., make ice cream sundaes.Driving down the main drag, one eventually comes to the Heritage Hall nursing facility, a thriving center of care for the elderly and frail and the top employer in town. American HealthCare is the management company for the 16 Heritage Hall Healthcare and Rehabilitation centers across Virginia, including Blackstone.
 
Betty Pomfrey, administrator at Heritage Hall-Blackstone, knows her facility and its 180-bed skilled nursing facility is important economically to her town, because the numbers say so. “We also use more lights and water than anybody in town, and we paid $27,000 in taxes,” she says.
 
Over the past decade, the furniture and textile factories have shut their doors, leaving the nursing facility as the place to go for work for many locals. Pomfrey says Heritage Hall works hard in the community, like organizing a certified nurse assistant recruitment and training program in the local high school and fund raisers with the chamber of commerce, along with other charity events and sponsorships.
 
Pomfrey says it is difficult for many lawmakers to visualize the work being done in nursing facilities unless they have personal experience to draw upon. “It is really hard for the people that make laws [determining reimbursement levels] to understand what the cuts will do if they never had a relative in a nursing home or visited someone in a nursing facility,” she says.
 
So, part of her time she works to raise awareness with state elected officials on the need to protect and improve reimbursement under the Medicaid program, as well as related issues important to the skilled nursing and assisted living community she has worked in for decades.

Funding Battle Looms Ever Larger

Steve Morrisette, president of the Virginia Health Care Association, says this battle over funding in the state capital is a regular event, and one based on making sure state lawmakers understand the “big” numbers they see in the budget are well spent. Long term care providers of every size and shape, no matter if located in rural or urbanized settings, are impacted by the resulting decisions, he says. 
 Heritage Hall-Blackstone, Va. resident
“Quite frankly, every year we have to ask for increased Medicaid reimbursement,” Morrisette says. “I think that because this is such a big number in every state budget, [lawmakers] think there must be fat. The truth is of course we don’t make money on Medicaid.”
 
Finished for the year, Virginia legislators decided to cut by 1 percent the current Medicaid per diem rate for long term care starting July 1 for fiscal year 2011-2012, Morrisette says. In comparison to other states the number does not look too bad, but cuts are still cuts, he says.
 
Virginia nursing care has a somewhat unique difference in that its activities of daily living acuity ratings by the Centers for Medicare & Medicaid Services scale to the highest acuity range. “People in Virginia SNFs [skilled nursing facilities] are as sick or actually ill as any in the country,” Morrisette says, noting the reason is the very strict eligibility criteria for Virginia Medicaid.
 
This fact makes him bemused when he hears talk of the SNF to home- and community-based services policy trend, given what he sees in Virginia.
 
“For patients in Virginia SNFs, it’s hard to imagine how to care for these residents at a less costly setting or with their level of acuity. They are too sick for another setting,” Morrisette says.
 
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Pennsylvania Values Its Rural Providers
 
Stuart Shapiro, president of the Pennsylvania Health Care Association/Center for Assisted Living Management, notes that his state, much to the surprise of many, is quite rural. Paraphrasing a James Carville quote, he notes that Pittsburgh is on one end, with Philadelphia on the other, and as Carville said, “Alabama in the middle.”
 
“Pennsylvania is one of the oldest states by population in America, and they depend on nursing home care as they become older and frailer. Nursing homes in rural Pennsylvania are often an economic engine for their communities and thus have dual importance in their communities: one as caregivers and two as job creators,” Shapiro says.
 
It is against this backdrop of providing care and making economies stronger that Shapiro and the nursing care and assisted living community have been working to correct a longtime gap in Medicaid reimbursement versus the actual cost of providing care.
 
“Reimbursement under state Medicaid does not cover the true cost of Medicaid. As the recession has not yet bottomed out, more and more people are utilizing the Medicaid program, which increases the challenges of nursing homes, especially in rural areas where there are fewer Medicare patients,” he says.
 
Shapiro hopes a budget that recognizes the importance of sufficient funding for Medicaid can be finalized by the end of June (after this publication went to press).

Maryland Medicaid Dollars Shrink

In Maryland, Joe DeMattos, president of the Health Facilities Association of Maryland (HFAM), says his state’s nursing and rehabilitative centers have been fortunate in the most recent years to avoid some of the more severe cutbacks in reimbursement that other health care providers have experienced, but the battles have taken their toll.
 
“Working with Gov. Martin O’Malley [D] and his administration, we were able to avoid reimbursement budget cuts, in part because of increased provider assessments,” DeMattos says.
 
The flat funding has come with more provider taxes, but, in fact, Medicaid dollars have been dwindling in recent times in Maryland, he says.
 
A January study, “The Future of Health Care in Maryland: Nursing and Rehabilitation Centers, a Compelling Value Proposition,” prepared by Sage Policy Group for HFAM, showed that over time, while Medicaid spending in Maryland has grown steadily, the share of all Medicaid dollars provided to nursing facilities has declined significantly.
 
“In 2000, over 20 percent of all Medicaid dollars in Maryland were allocated to nursing facilities. By 2008, just eight years later, approximately 18 percent of Medicaid dollars were devoted to nursing facilities,” the report says.
 Heritage Hall-Blackstone, Va. residents
“This reduction in the share of Medicaid payments directed to nursing facilities is a reflection of the fact that payments to skilled nursing facilities grew much slower than overall Medicaid payments [6.6 percent on average per year from 2000 to 2008 versus 8.1 percent].”
 
The report noted that payments for combined inpatient and outpatient hospital services grew at a faster rate than other Medicaid payments, an annual rate of 8.4 percent. Outpatient hospital services grew much faster than inpatient hospital services (12.5 percent versus 7.4 percent).
 
The fastest-growing payments were those to physicians, other care, home health, clinics, and outpatient hospitals, each growing at double-digit annual rates.
 
“On the one hand, our facilities are providing efficient quality care for Marylanders and often are the largest employer in community, but that very economic viability is being challenged by state and federal cuts,” DeMattos says.
 
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Incomes Higher For LTC Workers

The Sage Policy report had detailed information on the income levels for rural workers in the long term care setting versus those in other jobs.
 
The numbers highlighted that in more rural areas of the state where incomes are significantly lower than the state average, the compensation available for skilled nursing facility workers “can provide solidly middle-income wages, and can even exceed the average compensation for all workers in a county, as is the case in Allegany, Garrett, and Wicomico counties,” the three most rural counties in Maryland, the report says.
 
For example, in Garrett County the average wage for all workers is $29,395, but the average wage for
SNF workers is $39,014—33 percent higher.
 
DeMattos stresses that rural facilities in his state have done well to care for populations in western Maryland, the eastern shore, and southern tip. Many have taken up the slack for now-shuttered manufacturing plants, as in the case of the NMS Healthcare skilled nursing facility in Hagerstown, Md., which occupies a property formerly owned by now-defunct Fairchild Aircraft.
 
“It was a corporate executive retreat for Fairchild and now is a nursing and rehabilitation center,” DeMattos says.

Pennsylvania Supplier Finds More LTC Sales

In addition to the impact that nursing facilities have on local and state economies, a wide range of suppliers also boost the sector, providing the products required to operate a building caring for the special needs of frail and elderly residents.
 
One such business based in Ivyland, Pa. (population just over 1,000), is Medi-Dose/EPS. Family-owned since its inception in 1971, the firm markets to the provider community a number of products, including industry-leading medication dosing systems, complete with bar-coding technology to ensure accurate solid and oral dispensing.
 
Robert Braverman, Medi-Dose/EPS co-owner with his brother Mark, is the director of sales and marketing. He notes that his 35 employees work with a network of vendors and the provider community to find, market, and distribute the latest products needed in the care community. Dosing systems are more popular in the acute-care sector of his business, with long term care facilities interested in the bag, bottle, and ancillary products at Medi-Dose/EPS. He markets directly to nursing facilities and to pharmacy providers.
 
“What I can tell you is that because Americans are getting older, with the baby boomers reaching 65, we’re noticing an uptick in our business that we have from the long term care market.”
 
Demographics will play a large role in expanding that business even more, as it will in the nursing and assisted living markets, where demand for services and housing could grow greatly in the next decade and beyond, he says.
 
What will also grow is demand from rural residents for the same high-quality care the busier, more populated and commercialized locales receive.
 
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