2013-08-01 / Front Page

Board: MCF could close doors

Facility struggles to come up with options, county steps in

MANISTIQUE – As the future of the Schoolcraft Medical Care Facility remains uncertain, the Schoolcraft County Board of Commissioners is bringing in help to understand the facility’s finances. The board voted on the decision during a recent meeting, and also discussed whether to assist the MCF financially or to let it close its doors.

According to Commissioner Dan LaFoille, a recent meeting between the county’s finance committee and the MCF board revealed no “concrete figures” in regard to the facility’s finances. Because of this, LaFoille says neither entity will be able to decide what the next step in the process should be.

Last month, the MCF revealed it had run into financial problems and requested the county’s assistance with cash flow. Over the course of a month, the extent of the facility’s financial woes have come to light, and its administrator, Jerry Hubbard, recently announced the facility would likely run out of money by the beginning of October.

Hubbard also proposed a 7.5 percent wage cut for all the facility’s employees and administration. On Tuesday, the union representing the facility’s LPNs and general unit rejected the pay cut. According to a union representative, a meeting between the union and the MCF board is being scheduled. Administrators and non-union employees have reportedly already taken the cut.

In last week’s meeting of the county board, LaFoille noted that the timeline for the end of the facility’s cash flow had changed.

“This week, we got a phone call … being advised that they’d be out of money for the second payroll in August,” he said. “This is very worrisome … we don’t have the time that we need.”

Currently, the county’s finance committee is estimating the facility will be short approximately $50,000-75,000 per month – an amount the county would need to cover if they decide to provide assistance.

“That totals up to a little over a half a million dollars between now and February,” LaFoille said. “That would be very, very straining upon our county budget.”

In February, the facility would start to receive payments from a millage they are considering asking for, he explained. The millage would be voted on by residents in November.

“We believe, at this point, it (the facility) is not sustainable without that millage,” he said.

According to LaFoille, the facility recently listed $1.6 million in receivables, or money expected to be collected as revenue, but that was recently decreased by $400,000 in write-offs, or money that couldn’t be collected. He noted the finance committee believes a substantial amount of the remaining receivables isn’t actually collectable, either.

The county is currently working to obtain the Michigan attorney general’s opinion about its responsibility to the facility; in particular, whether it can legally let the facility close its doors.

“It appears the county could be on the hook for the retirement and the unemployment,” LaFoille said.

If the county does decide to help the facility, it would possibly deplete any financial cushion that’s been created over the past couple of years, he added. While Hubbard originally estimated the financial assistance needed at approximately $350,000, LaFoille explained this number has been changed by a variety of factors.

“Either way, we get wiped out,” he said.

LaFoille explained the county’s attorney, Bonnie Toskey, can draw up a draft “cost assistance agreement” if the county decides to lend the facility money. In this agreement, the county can: stipulate how the money is paid back, require the facility to show payment vouchers for purchases, and give input in regard to staff changes.

This would be one of the only ways for the county to have more input in the facility’s management, he noted.

Recently the facility “changed” its director of nursing, Sue Ray, LaFoille said. During a recent meeting, Hubbard deemed Ray not “qualified” to handle the facility’s finances, despite the fact she had been charged with the task.

“That change has been made,” LaFoille said. “They (the facility) are now, we hope, going to be a little bit easier to get along with, with regard to accepting folks on weekends and being a little bit more aggressive on taking people in.”

He explained getting more patients in and improving the facility’s census was critical, as only 71 of the 80 available beds are filled.

While LaFoille said letting the facility close is a “horrible option”, he added the only other option will put the county at risk financially. He noted, if the facility does have to close, employees and the state will have to be given 30 days notice before a closure proceeding by the state begins. Currently, there is not enough time for the facility to give this notice before it runs out of money, so the county will likely be responsible for at least the first payroll the facility isn’t able to make.

“We’re doing pretty good, but we’re not real solid,” Commissioner Craig Reiter said. “The dollars needed to fund that place cannot come from the taxpayers.”

Reiter also questioned whether Hubbard was lacking the skills to hold his position, as the county had to bring in outside help.

“He has, up to this point, not been able to give us accurate projections,” LaFoille answered. “I can say for me, personally, I don’t have a lot of confidence right now.”

The commissioners also questioned the timing of the facility’s problems.

“This doesn’t happen overnight,” Chairperson Al Grimm said. “This change in funding has happened with us … it’s happened in any kind of government or city or township. People have had to react.

What was going on up there?” he continued. “Why weren’t they reacting – cutting their expenses to match their revenue?”

LaFoille explained the county’s treasurer Julie Roscioli, had asked the MCF board about their finances in the past, but she had been told it was temporary.

“It’s not like we were oblivious,” he said. “As time as gone by, this has been an ongoing concern.”

Commissioner Jerry Zellar pointed out that not one MCF employee or board member was in attendance during the meeting, noting he would like to see drastic changes.

“There’s a big change up there that needs to be made before they ever get my vote,” Zellar said. “Start at the top.”

Since Hubbard needs assistance in coming up with the numbers needed to produce a solid figure for the county to consider, LaFoille said the MCF board and finance committee approached the Michigan Association of Counties and UPCAP.

The two organizations provided the names of two administrators – one formally from the Houghton County medical care facility and one currently working for the Iron County facility. Half the cost of having the individuals come in to conduct an evaluation of the facility and give their professional opinion about the best steps to take will be covered by MAC. The other half will be paid by the facility.

“I think we’re putting a lot of eggs in the basket of these two individuals that are coming to do the assessment,” he said. “We could be faced with a special board meeting here to decide whether to give some money in August.”

Zellar suggested the board also request the MCF’s former administrator, Dennis Boyd, assistance in examining the facility’s finances.

The board unanimously approved approaching Boyd and obtaining the assistance of the two other facilities.

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