Kane centers take top priority
Allegheny County Chief Executive Dan Onorato has a New Year's resolution: fix the budget drain caused by the four Kane nursing homes.
"The Kanes are at the top of my agenda," he said.
Onorato said he is willing to consider everything from closing buildings to privatization to end the John J. Kane Regional Centers' recent run of multimillion-dollar losses. The facilities care for about 1,070 residents, but more than 300 beds are empty.
"Everything is on the table," Onorato said. "I think if you are going to seriously be objective about what's best for the Kanes and the county and the residents, you can't start by saying, 'Oh, by the way, you can't do these three things.'"
It may be hard to find permanent solutions. State law requires each of Pennsylvania 67 counties to care for the elderly poor, noted Michael Wilt, executive director of the Pennsylvania Association of County Affiliated Homes. The problems that lead to shortfalls in the Kanes' $85.6 million annual budget are not unique to Allegheny County, he added.
Onorato said he will talk to residents, union representatives, administrators and political leaders before deciding what changes to pursue.
"Should we get better referrals, are we too top-heavy in management, do we have too many beds, do we need four buildings versus two buildings?" Onorato asked.
"I think all that is going to be discussed."
Stemming the steady flow of red ink won't be easy.
The 360-bed Kane centers in Scott, McKeesport and Ross and the 300-bed facility in Glen Hazel cost the county more than $10 million in 2003 and about $6 million in 2004. Onorato said they may lose another $2.9 million in 2005.
Some counties are forming nonprofit corporations to take over management of their county nursing homes. Mercer County in 1996 sold its 125-bed home to a nonprofit, loaning the new agency the $3.8 million purchase price.
But Wilt said such a move is easier in a smaller, less urban county than in a large one such as Allegheny County.
Public and private nursing homes also are cutting unneeded beds, Wilt said. In the last four years, more than 1,500 have been taken out of service, he said.
Wilt, whose group represents 55 county-affiliated homes, said numerous regulatory and societal changes are creating financial troubles for both public and private nursing homes.
County homes began facing tremendous new competition in 1996 when federal Medicaid regulations changed to make it easier for private homes to earn reimbursement for caring for the indigent patients who formerly filled county homes.
Kane Executive Director Dennis Biondo said there also is a greater emphasis nationwide on keeping old people in their own homes longer, and that federal and state health services and funding are being tailored to match that trend.
The net result, he said, is fewer people coming to nursing homes for shorter stays. "That's a pressure I don't see going away," Biondo said.
The decreasing number of residents at the Kanes has a drastic secondary effect.
Federal guidelines make the Kanes eligible for millions of dollars in annual reimbursements if an average of 90 percent of Kane beds are occupied. The 90 percent is the Holy Grail of government nursing homes, Wilt said.
But Biondo said that right now, only the McKeesport Kane is above the magic number.
The Kanes' recent running average of less than 80 percent occupancy falls well short of the average for all private and public nursing homes in the region.
Allegheny County has 8,534 state-licensed public and private nursing homes beds. Those facilities had an occupancy rate of 88 percent in 2002, the last year for which Pennsylvania Health Department statistics are available.
"Maybe you can't operate all four if you can't fill the beds," said Jake Haulk, executive director of the Allegheny Institute, a South Hills conservative think tank.
Haulk's group has for many years advocated privatizing the Kanes. He said he does not know if it would be easy to find a buyer when there are already many other homes throughout the county, but he urged Onorato to at least test the waters.
"I would at least see what the market could bear before you rule it out," he said.
County Councilwoman Brenda Frazier, D-Stanton Heights, chairwoman of the council's Health and Human Services Committee, said significant changes made recently at the Kanes should be given a chance to work.
She said that for too long, potential customers have not known about the excellent care available at the Kanes. She won an amendment to the county's 2005 budget that added $50,000 for a marketing campaign to get the word out.
Other changes are under way, Biondo said.
Groundbreaking is expected in about a month on a plan to change 60 beds at the Glen Hazel Center into 12 independent living units. Biondo said the independent living units are popular with today's older residents and, in turn, help the Kanes fill existing nursing home beds when increased care becomes necessary.
The Kanes also are creating specialized Alzheimer's disease care units, he said, and gearing other beds to patients who need short-term rehabilitative care.
Frazier said the improvements come after many years of neglect at the center and should be given a chance.
"Right now, I don't think you want to destabilize the Kanes and the effort being put forth to fill beds when that effort wasn't there before," she said.
Onorato, who just hammered out one compromise with fellow council Democrats on row office reform, would face another political challenge in radically transforming the Kanes. More than 1,000 union employees work in the four centers spread throughout the county.
But Onorato said the Kanes are losing too much money to allow him to do nothing. "The politics of this will not be the deciding factor," he said. "What's truly driving this are the financials. I cannot allow the county to go bankrupt."