Big cash reserve to fund facility upgrade

HANCOCK – The Houghton County Medical Care Facility is planning a large renovation to bring the facility in line with the new movement towards person-centered care. And it’s been saving money for years to do it.

At the end of June, the facility had almost $20 million in the bank – $10.2 million in capital and $9.3 million in operating, plus $350,000 in workers’ compensation reserve. Operating money will go towards fixing underfunding on the pension plan and paying $1 million owed to the state, which will bring it to $5.8 million in operating.

The building project will use $9.7 million of the $10.2 million in the facility’s capital fund.

After the work is done, the facility’s reserves will be at about 6.7 million – right around the 100 days of cash benchmark it is supposed to have, said Gerry Jarvey, the facility’s business manager.

The facility has also received money through the state’s intergovernmental transfer program. Over an eight-year period, the facility received about $6 million through the program, in which the state would transfer $19 million to the county for Medicaid reimbursement; the county would then keep $1 million and wire back the rest.

“The state told us at the time, ‘These are one-time funding opportunities that you have. Don’t build this into your operating, use it to improve your building,'” he said. “We banked that money, because frankly it’s easier to do one big project and fix a lot, instead of piecemealing it year to year. We’ve been banking a lot of those monies over the years, and that’s how we got that capital that high.”

The renewal of the six-year operating millage for the facility will be on Tuesday’s primary ballot. If approved, the measure would levy 2.5531 mills in the county from 2016 to 2021. The millage has existed for about 30 years; residents most recently approved it in 2010, with about 70 percent of the vote.

If the millage doesn’t pass, Administrator Tammi Lehto said, Houghton County would be responsible for paying the maintenance of effort obligation, which counties must pay to the state Medicaid fund for all facilities that accept Medicaid. That currently comes out of the funds raised by the millage.

“I don’t think Houghton County can at this time come up with $400,000 to pay the facility for operation of maintenance,” said Ed Jenich, the facility’s board chairman. “The county isn’t getting bigger, but we’re getting older in the county, and that’s why a facility of this nature is almost a necessity in the county that we’re living in.”

About 70 percent of the facility’s operating funds go towards staffing, such as wages and benefits. Staffing levels would have to be looked at if that money wasn’t there, Lehto said.

Unlike for-profit facilities, county-based medical care facilities can’t deny admission to residents because of their payer source or their ability to pay. About 80 percent of residents are on Medicaid, Jarvey said. For-profit facilities are at about 66 percent statewide, Jarvey said.

“We have accepted residents that other facilities have declined because of the cost of their care, or the acuity or difficulty of their care that’s needed,” Lehto said. “We don’t deny admissions based on that, so that’s why we’re considered to be the safety net. Without the millage, that makes it a little bit difficult for us to continue to meet that mission.”