Allegheny County Councilwoman Heather Heidelbaugh said she was bothered by a recent advertising campaign for the Kane Regional Centers, the county’s assisted care facilities.
It was that two-year, $187,000 ad campaign that got Heidelbaugh thinking about whether the Kanes could be partially or fully privatized.
Tuesday evening, Heidelbaugh introduced legislation in County Council to create a working group to study such a possibility.
“I would like to look at whether the Kanes could be consolidated in some way, and to determine whether any of the facilities could be outright sold to a private company or we could get out of the nursing home business altogether,” Heidelbaugh said.
According to Heidelbaugh’s bill, the four Kane facilities have “collectively operated at a loss ranging from $1.2 million to $10.2 million per year” for the last 11 years, and given that fact, she doesn’t think the county should be spending money on advertising.
Dennis Biondo, executive director of the Kane Regional Centers, said he would characterize those numbers not as an operating loss, but as a county contribution.
“We’re funded by a number of sources,” Biondo said. “We receive reimbursement from Medicare, Medicaid, private insurers, and the county subsidizes or contributes a portion toward the operations each year.”
County Executive Rich Fitzgerald said he agrees with Biondo, pointing out that county government is not a for-profit entity.
Allegheny County spokesperson Amie Downs said the average county contribution has been $2.6 million/year for the last 10 years.
In 2006, the county released an action plan for the centers, meant to address “the enormous financial challenges” of “serving an ever-increasing Medicaid dependent population.” That action plan recommended “right-sizing” the facilities, engaging in “long-term organizational and facility management planning,” and launching a marketing campaign.
Heidelbaugh’s legislation states that the recommendations “have either not been implemented or have proven to be ineffective,” and points to increased expenses in the years following the release of the action plan.
But Biondo said many of the recommendations were implemented, particularly initiatives related to the Ross Township campus, “where we’ve actually leased out part of the land and part of the building for independent living for seniors.”
Downs reported an occupancy rate of 86 percent during the 2012-13 fiscal year for all four facilities, and said the county is projecting a rate of 91 percent for 2013-2014.
But Heidelbaugh said county-reported occupancy rates are skewed, because they only take into account the number of certified beds that are in use. Heidelbaugh said some facilities may actually be able to accommodate more beds than are certified, and taking into account the total potential beds would reveal a lower occupancy rate.
However, according to Pennsylvania Department of Health deputy press secretary Wesley Culp, “if a … nursing facility is certified” to receive Medicare and Medicaid payments, “all of their beds would be certified.”
Heidelbaugh said she also wants to find out if consolidation or privatization could save the county money without negatively affecting the quality of care patients receive.
“Under no circumstance do I want to put the elderly poor at risk,” Heidelbaugh said. “What I want to see is if there is private capacity that can take patients with current existing government funding, such that these under-utilized facilities do not need to be operated anymore.”
Heidelbaugh said she’s made it a goal during her three years as at-large representative, one of only two elected County Council positions, to ensure that the taxpayers’ money is spent wisely.
“I’ve tried to make sure that if Allegheny County is spending money, that we’re spending it on items … that government should be involved in,” Heidelbaugh said. “Because really, I think it’s the poor and the elderly that are hit most by Allegheny County taxes.”
But Fitzgerald said the elderly and the poor are the ones who most need the Kane Regional Centers.
“I am not interested in privatizing the Kanes,” Fitzgerald said. “The Kanes are a service that we provide to some of our most vulnerable seniors and I’m very proud of the work that our Kane Regional Centers have been able to do.”