County moves toward leasing nursing home

Bedford County Board of Commissioners voted Tuesday night to issue a request for proposals (RFP) from companies interested in a two-year lease of Bedford County Nursing Home. At the end of the two years, both parties would decide what to do next -- which could mean continuing the lease, selling the facility outright to the leaseholder, or returning it to county control.

Early in the meeting, BCNH administrator Wayne Schumann delivered the facility's quarterly report, which had been deferred from the February meeting. Schumann reported that the facility was showing a $62,000 profit at the end of February, had 105 of its 107 beds filled, and that things were "going well." He said the facility's payables had been reduced and that Medicare, Medicaid and insurance payments are now coming in more quickly.

But County Finance Director Robert Daniel, responding to questions from commissioners, painted a much different picture of the facility's financial health. Daniel's figures ran through the end of January, but he said the nursing home had $296,000 in cash but current liabilities of $594,000, and that it still owes the county $243,000 of the $300,000 it borrowed several years ago to install a sprinkler system.

"If you're holding off bills to make a profit, you really don't have a profit," said Daniel.

He said that as of the January figures, BCNH was $125,000 over budget in wages and salaries, $50,000 over budget in benefits and $104,000 over budget in supplies.

The nursing home was hit with a $150,000 settlement last year over a patient death. Daniel said any further incidents would be devastating to the facility's cash flow.

"We've got a cash flow problem right now, in my opinion," said Daniel.

It has only been recently that Daniel has worked closely with the nursing home's finances, which he's preparing to bring under county management. Since the sale of Bedford County General Hospital, the nursing home had been outsourcing its financial reports to an accounting firm.

Commissioner Bobby Vannatta made the motion to put out an RFP for a two-year lease. Vannatta said the best possible care needs to be provided to BCNH residents, but the county also has to consider its own finances and the tight economy.

Commissioner Billy King, however, worried about a situation where the value of the nursing home might be affected by poor management. He said that the hospital, which was run under a management contract during its last few years of county ownership, was "run into the ground and was sold far below its value."

Commissioner Joe Tillett said that the management contract differs from a lease. Under the hospital's management contract, "anything that happened bad fell back on the county." A lease-holder would have greater responsibility. Daniel said the lease-holder would be responsible for any fines incurred by the nursing home.

Commissioner Joyce Tune objected to selling the hospital and has similarly opposed selling the nursing home.

"I regret that the hospital was sold, and I'll always regret it," she said. However, she was open to the idea of leasing the nursing home to a private operator.

"I can go along with leasing it," she said. "I will never go along with selling it."

Tillett said the lease needs to be carefully written to protect county interests.

County Attorney John T. Bobo said that hold-harmless agreements could be written into the lease to protect the county, to some extent, against lawsuits. The lease-holder would be required to meet insurance requirements in order to cover the cost of any such action.

Vannatta's motion passed by a 15-3 margin. In favor were Vannatta, Tillett, Tune, Phillip Vincent, Tony Smith, Jimmy Patterson, Janice Brothers, Jimmy Woodson, J.D. "Bo" Wilson, Linda Yockey, Jeff Yoes, Tony Barrett, John Brown, Ed Castleman and Mark Thomas. Opposed were King, Bobby Fox and P.T. "Biff" Farrar.

Johnson City-based Care Centers Management Group has made inquiries in the past and has spoken to commission committees about buying or leasing the nursing home. Representatives have said that in some cases, a lease has enabled the owners to become comfortable enough with the transition to eventually sell the facility outright.