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CGR report shows staffing costs, benefits as major reason for loss

September 12, 2013
Westfield Republican / Mayville Sentinel News

By Liz Skoczylas

editorial@westfieldrepublican.com

One of the major contributing factors to county-owned nursing homes losing money, according to the Centers for Governmental Research, can be attributed to staffing costs and benefits.

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One of the major contributing factors to county-owned nursing homes losing money, according to the Centers for Governmental Research, can be attributed to staffing costs and benefits.

Current Chautauqua County Executive Greg Edwards, who participated in the CGR survey on behalf of the Chautauqua County Home, said the data supports what has been occurring in the county. Democrat Ron Johnson, who is in the nursing home business himself, said he sees ways to cut costs when it comes to staffing and benefits. And, Republican Vince Horrigan, a current county legislator, points back to a CGR report specifically targeted to the County Home for answers. Horrigan and Johnson are competing for the county executive seat that will be left open by Edwards.

When it comes to the staffing of county-owned nursing homes, the CGR report shows county facilities have consistently maintained somewhat higher levels of nursing care than their for-profit or nonprofit competitors. However, county homes also have higher costs, due to rising wages and benefits.

Overall payroll costs of county homes significantly exceed those of their competitors, according to CGR. In 2010, the median cost of salaries plus benefits in a county home was about $52 higher per resident day than in a typical nonprofit home, and almost $75 more per resident day than in the median for-profit facility. The report said median salary plus benefits, unadjusted for inflation, increased 75 percent in county homes between 2001 and 2010, compared with increases over that time of 49 percent in nonprofit homes, and 40 percent in for-profit facilities.

"Wages were a significant contributing factor to these significant differences," the report said.

However, the report determined the real issue is employee benefits. Between 2001 and 2010, the CGR shows a 181 percent increase in benefits per resident day. Additionally, the report found that the typical benefits package for all types of homes was typically in the range of roughly 20 to 30 percent of salaries, a number that has not changed significantly since 2001 for nonprofit or for-profit homes. However, in county homes in upstate facilities, the number has increased to 63 percent of salaries between 2001 and 2010.

"The hourly wage paid to workers at county homes, particularly in the skilled positions, (is) almost the same as not-for-profit and private homes," Edwards said. "However, the benefits package has gone up by 181 percent since 2001. What has happened here is, that in and of itself affirms what CGR said, is that the operating county homes is unsustainable. One hundred percent of all county nursing homes in New York state, outside New York City, are operating in the red."

Additionally, CGR reported increases in the costs of health insurance, and especially of pension benefits and legacy costs due to future retirees, are primarily responsible for the increases in employee benefit costs. It said the increases were set in motion by decisions made years ago by state and local policymakers. When responding to survey questions, CGR found most counties wished they had more control over benefits, salary levels and raises, and that they could reduce or better control the amount of paid staff time off.

"As far as benefits go, it's not so much our hourly rate, but it's the benefits package between the New York state Defined Benefit Plan, which we cannot change, we cannot alter, there is no way we can modify that," Edwards said. "Then, when you add in the holidays, days off and other benefits, it is clear that they have gone up by 181 percent. That makes it unsustainable in itself."

On top of this, 56 percent of county government leaders said a change they would like to see if their homes were to continue to be owned by their counties would be to reduce salaries and benefits. Forty percent indicated paid time off days would need to be reduced, and nearly half said certain functions would need to be outsourced.

When asked about their top concerns if their county homes were sold, 56 percent of the nursing home administrators specified the quality of care and staff levels in the future. Almost 40 percent expressed concern over the future of existing staff.

FUTURE DIRECTION

Horrigan cited the Chautauqua County Home CGR report, which says homes with a higher number of employees who call off sick adversely impacts staff morale, quality of care and costs.

"Our CCH CGR report identified this problem as a 'critical one,'" Horrigan said. "Our experience with previous offers on our County Home indicate that our County Home salary structure is similar to the salary structure offered by the proposed buyers. However, the benefit structure is where the major difference appears."

As for the county employee benefit rates increasing 63 percent, Horrigan said the costs reflect primarily increases in the costs of health insurance, and especially of pension benefits and legacy costs due future retirees.

"These increases were set in motion by decisions made years ago by state and local policymakers, and the bill has come due,'" Horrigan said. "In contrast, benefit rates are roughly 20 to 30 percent for non-government run nursing homes. This reality is a significant reason why our Chautauqua County Home is unsustainable as a government run operation and a major reason why I believe it should be privatized."

When it comes to staffing, Johnson emphasized it is driven by the case mix of residents in the home.

"If you have somebody that needs two-person assist, you've got to have people who are able to do that. If you need one-on-one for a particular person, you've got an extra person for the rest of the people. Your staff mix is driven by the people that you have," he said. "It doesn't surprise me that if you look at county homes as a whole, the county home staffing seems to be higher than a private pay, even nonprofit. When you have a situation where you have hard to place people, the staffing levels are going to be higher."

Johnson said part of the solution in controlling the costs comes down to working with the employees of the County Home.

"As far as cost of benefits, my understanding is - and it depends on who you talk to, I'm sure - my understanding is that the county employees in the County Home have offered to take concessions in order to save the home," Johnson said. "It's my understanding that the current administration has declined their offer to talk. I've been assured by the County Home employees that they will talk to me, and I've told them that they're going to be part of the solution to this, and they've agreed with it, which is part of the reason they've endorsed me. They will be part of the solution."

 
 
 

 

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