It costs money to take care of elderly people and to do it well.
Proposed cuts to long-term care funding in the budget of Minnesota Gov. Mark Dayton have surprised advocates for the elderly and put some nursing homes in jeopardy of closing, industry sources say.
"The governor sets the table and this time has really set the table with some staggering cuts to older adult services," said Adam Suomala, director of member relations for Aging Services of Minnesota, a trade organization serving more than 100,000 Minnesotans each year.
Aging Services says 21.2 percent of southeastern Minnesota nursing homes, and 14 percent of nursing homes in the state, had operating margins of minus 5 percent or worse in 2010, putting them at risk of closing. Many people in long-term care facilities are young and will need the service for a long time.
Costs keep going up, while reimbursements from federal programs stay the same or decrease.
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"It's getting a whole lot tougher every year," said Steve Ziller, administrator of Pine Haven Care Center in Pine Island.
High costs at nursing homes include health, liability and workers compensation insurance, Ziller said. A "soft market" for liability and workers compensation insurance have helped Pine Haven, he said.
The mix between Medicaid patients and private-pay patients generally determines how well a facility does financially, Ziller said. The state requires that private-pay clients pay the same prices as those getting federally reimbursed service.
"We really don't set rates. We do very, very little with our rates. We're kind of given our rate and that's what we get," Ziller said.
"As a whole, the provider community is very concerned about the governor's budget proposal," Suomala said.
Advocates for the elderly worry that some struggling Minnesota nursing homes will close.
"When a nursing home closes, the impact is significant to residents, their families and staff. Residents may be moved to a facility that is farther away from their loved ones and community, which can result in fewer visits from family and friends," Aging Services says online.
Ziller said Minnesota's mandate pricing for private-pay residents will have to go away eventually, but it's tough for a legislator to propose such a bill because it probably would affect their re-election.
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"I feel sorry for a lot of facilities out there that are really struggling," he said.
