2013-10-17 / Front Page

Medical care facility in need of funds for oPeration

MANISTIQUE – The election is just around the corner, and officials at the Schoolcraft County Medical Care Facility are making their case for a millage request. The millage, which will be used for operation, appears on the Nov. 5 ballot for county residents.

According to Mike Stephenson, director of administration and finance, the facility is requesting up to 1.5 mils for five years. The millage is expected to raise approximately $509,000 in its first year, all of which will be used for operation.

The facility’s current millage, a “Maintenance of Effort” millage, is set to expire next year, explained Stephenson, and the new millage will serve as its replacement.

“The old millage was for 2 mils, and currently is levied at .50 mils, and will expire next year,” he said. “The wording of old millage restricts it to be used only to pay one specific bill from the state of Michigan … MOE is essentially a matching requirement that the state imposes on the county and is mandatory to be paid.”

The MOE millage must only be used for this mandated fee from the state, Stephenson added, and cannot be used to support the facility’s operations. Since the facility is now seeking operational funding from residents, the county has agreed to reduce the MOE millage from the .50 mils to .25.

“The new millage wording will allow for it to be used for general operations, and will also be used to cover the Maintenance of Effort cost,” Stephenson said. “ For a taxpayer with a home valued at $80,000, ($40,000 taxable value) is only $40 per year – that is a pretty low cost to help make sure there is a long term care facility in Schoolcraft County for area residents to use.”

Despite the recent personnel changes and public speculation, Stephenson maintains the financial woes of the facility are mostly due to a changing system.

“More and more people are using other forms of care, such as assisted living, home health care, or adult foster care homes,” he explained. “The result has been that the number of bed days of care the MCF has provided has decreased significantly – so much so the MCF had to cut down on the number of beds they are licensed for from 105 previously, to 80 currently.”

He added that the facility often operates even below the decreased 80 beds, equating to a loss of revenue of approximately $2 million per year.

“That is a huge impact, and not one that any business could easily absorb,” Stephenson explained. “Because of the reduction in our revenues, many cost reduction steps have already been taken at the facility. Staff positions have been cut and wage levels have been reduced. We are watching every penny now, doing our best to make certain we control our costs.”

Stephenson pointed out the facility’s expenses have decreased by nearly $500,000 since 2011, and expenses from 2013 to the projected 2014 budget are expected to drop by almost $1.2 million. The millage, he explained, will allow the facility to regain “solid financial footing”, and the ability to retain resident activities, replace old equipment and furnishings, and survive during the industry’s ups and downs.

“It is important that everyone understands that the new millage has nothing to do with the cash issues the facility experienced this summer,” Stephenson explained. “The millage is not being used to pay for that issue – it is to be used to support ongoing future operations.”

Stephenson noted there has been no “impropriety” with facility funds.

“Not a single nickel was ever used for anything other than the legitimate expenses of the organization,” he said. “The cash crunch which came to light was the combination of a number of issues at the same time.”

These issues included a loss in revenue, returning overpayments to the state, and account receivable collection, he said.

In a report obtained by the Pioneer Tribune, Mark Havens, a consultant hired by the county to visit the facility in August, uncovered some of the issues Stephenson faults for the facility’s downturn. Havens specifically notes previous employees’ misunderstanding of billing procedures, confusion over job duties, impediments to the admissions process, lack of collaboration with other local organizations, and a lack of proper disclosure about the state of the facility’s receivables.

“Mr. Havens asked why the (aging receivable) accounts were not properly reported,” the report states. “Mr. Havens was told that there was direction from the (then) administrator (Jerry Hubbard) not to adjust the accounts for payment because this would reflect poorly to the (county) board. Because this made no sense, and in fact seemed contradictory to the billing process and accounting, Mr. Havens questioned the administrator.

The administrator stated that this was true,” the report continues. “This is a primary concern; the accounts must represent the actual accounts receivable at a specified point in time.”

Hubbard has since resigned from his position and Kandee Wyatt now serves as the facility’s administrator.

Stephenson noted there have also been other staffing changes.

“There is a new administration in place at the facility, and they are working hard to earn the trust and confidence of the community,” he said. “One example is our new director of nursing, Marci Stemick. She is streamlining the admissions process to make sure we can provide quick responses to referral sources and to make sure we are able to say ‘yes’ to as many admissions as possible.

They want to focus on the future, focus on continuing the top quality care their staff has always provided.”

The billing process has been revised, Stephenson added, and a system for collecting previously unpaid bills is now in place and has been effective.

“It is unfortunate that the cash flow issues had not been addressed earlier, but that fact cannot be changed now,” he said.

Stephenson explained that, currently around 120 people are employed at the facility, and 72 residents call the MCF “home”. The average age of residents at the facility is 83 years old, though residents’ ages range from 50 – 100.

Currently, 24 of the 36 county medical care facilities in the state have operating millages, Stephenson said, with average revenue of just over $1 million per year. The millage residents will be voting on this November is vital to the facility, he noted.

“First, without the millage – survival would be short term at best,” he said. “Eventually, there is a good possibility we could be forced to shut down. All of us here are doing our absolute best to make sure that does not happen – but, yes it could happen.”

He noted the facility would be essentially operating as a household that runs from paycheck to paycheck – meaning any unforeseen expenses could be devastating.

“Fact is, we currently have no capacity to survive any such additional ‘blips’,” he said. “If we got lucky and did not have any such blips, we might last a bit longer, but it is only a matter of time before we are unable to make it.”

A shut down would mean the residents would be displaced and the employees would be out of a job, he explained.

“People from the area would have to place their loved ones in Escanaba, Munising, Marquette, Newberry or even farther away,” he said. “That ends up costing their family members lots of travel time and costs – (it) very likely would cost them way more than the $40 tax increase the millage would represent.

Our annual payroll has averaged just below $4 million per year,” he continued. “All of that money comes out of the local economy. That causes other jobs to be lost … a huge ripple through the local economy.”

For more information on the millage, contact the Schoolcraft County Medical Care Facility at 341-6921 or the Schoolcraft County Clerk at 341-3618.

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