- Champaign County Health Care Consumers - https://www.healthcareconsumers.org -

Lots of reasons to oppose sale of CCNH to this buyer. Take Action TODAY!

May 24, 2018

Dear friend,

The sale of the Champaign County Nursing Home (CCNH) is imminent. The Champaign County Board will be meeting TONIGHT – Thursday, May 24 at 6:30 p.m. – and will be voting on the sale of the CCNH. We need supporters of CCNH to take action TODAY to oppose the sale of CCNH at this point in time, to this bidder.

Altitude Health and Extended Care Clinical, LLC, together, are the sole bidder for purchasing the county’s nursing home. These companies are owned by members of the Rothner family, who have extensive ownership in nursing homes in multiple states.

Here is some press coverage from yesterday’s press conference:
http://foxillinois.com/news/local/local-group-raises-concerns-about-champaign-county-nursing-homes-potential-buyer [1]

We have new reports on quality of care, and also a new report from an independent national expert! Also, we have updates on the property tax question. Please scroll through this message to find what you are looking for.

We urge you to:
* Review the research that CCHCC has compiled on these companies, which are owned by members of the Rothner family, and on nursing homes owned by the Rothners. You can see the research here:

  1. NEW: IDPH Nursing Home Violations of Rothner-owned homes 2008-2018:https://www.healthcareconsumers.org/idph-quarterly-reports-on-safety-violations-for-extended-care-clinical-llc-facilities/ [2]
  2. News and other reports of Rothner-owned homes in multiple states, including Rothner homes that were shut down, or denied Medicare and Medicaid payments for quality of care violations:https://www.healthcareconsumers.org/research-on-bidder-for-champaign-county-nursing-home/ [3]

* Review the report by independent national expert in healthcare valuation, James Unland (see below); and,

* Contact your County Board members by phone or e-mail and let them know you oppose the sale of the CCNH to this buyer.

 


Report by National Expert in Healthcare Valuation, James Unland
(Below you will find an email from James Unland, the national expert on healthcare valuation. This email report has been shared with the County Board and County Administration. You can view Mr. Unland’s resume here: http://freepdfhosting.com/42abe272bb.pdf [4])

Claudia, this email is in response to your request that I look into certain matters, including whether a true “valuation” of this nursing home was ever conducted. I did this preliminary work as a courtesy to you, partly because the subject matter interests me in light of the concerns that I have regarding our nation’s going-forward health care, long term care and “chronic care” needs regarding our rapidly growing elderly population. Please understand that my work has been done over a period of a few days; many issues that arose deserve further investigation.

“Value” of the Nursing Home
Despite repeated requests to see an independent certified valuation of the Champaign County Nursing Home (hereafter “the CCNH”) as yet I’ve not seen this. I did see two separate presentations by “brokers” that, evidently, some people considered to be independent valuations. Real estate agents, business brokers, etc. may advise people on what they think a property might sell for, but such advice is not an independent valuation and a broker who represents such has a conflict of interest. If a truly independent valuation was ever performed for the CCNH, I would be delighted to review it. The material that I saw was neither independent nor comprehensive in terms of valuation methodology.

That aside, did or does the CCNH have “value”? I use the word “value” in this context in the commercial business world’s sense. Your favorite parking space might have “value” and Matt Damon’s efforts to bring clean water to Africa might have “value” but not likely in the commercial business context. Not-for-profit enterprises can possess “value” as do for-profit enterprises.  Health care enterprises like hospitals and nursing homes tend to be “limited use” or “single use” facilities that, if not used as intended, might have little or no value. A hospital in Chicago that went bankrupt sold for the value of the underlying land minus the cost of demolishing the hospital facilities. The CCNH is a limited use facility. It is in good shape as far as I now know. If the business ceased as presently constituted, the building might be convertible into assisted living or just elderly housing, but a potential buyer would have to factor conversion costs into their purchase price. “Value” in health care, apart from land and perhaps some equipment, is tied to the reasonable expectation of positive cash flow regardless whether the enterprise is not-for-profit or for-profit. Thus, the demonstration of value requires a realistic demonstration of a workable “turnaround plan” with specific financial projections in a situation where, like CCNH, the business has a long history of losing money or performing marginally.

Pattsi Petrie called me a few days ago and gave me some history of the CCNH. She said the CCNH had had financial troubles since the late 1990s. For many years it has been losing money, with perhaps a few exceptions when it broke even depending how one interprets the accounting.  With this dismal financial history, if one cannot convincingly prove that the CCNH can make a positive cash flow given certain specified changes, then the business entity has little or no value although the building and land might have some value.

Enter Proposed Buyers from Stage Left
The proposed buyers made an offer of $11 million in recent weeks. In the absence of an independent valuation using proper methodologies, there is only one inference that can be drawn: the proposed buyers have detailed plans to dramatically turn this business enterprise around, possibly based on their experiences with other nursing homes, etc. I’m estimating that they would want the CCNH to make a positive annual cash flow of at least $500,000 moving upwards toward $1,000,000. Taking financial/business risk is their prerogative.  In their presentation a few weeks ago, however, they gave strong clues pointing to one area of cost reduction: nursing. They would use far fewer RNs and more LPNs, etc.  Hear a couple of minutes of audio of some of this discussion from a person on the proposed buyers’ team at a recent meeting at: jjunland.egnyte.com/dl/FriHSmR2Mx [5]

What are the implications of this patient care staffing change? That depends on who’s talking  If a buyer with a superb record came in, I might be inclined to have an open mind about their plan to diminish the acceptable qualifications/training of staff. However, this buyer in question evidently has a history of issues, including with the Illinois Dept.of Public Health [2].

The buyer’s methods of engagement with nursing homes has been discussed by them and by other people.  Evidently, they have different ways of interacting with homes including just owning the real estate and leasing the business to an operator or management company. I have not had time to delve into this, but at a meeting one person did bring up the question: are these business arrangements, which in a strict sense  may be perfectly legal, designed to avoid accountability?

The Suggestion to Take Some Time for Additional Due Diligence
There are at least two big issues facing Champaign County in this context:

(a) The big picture is that we are entering the time of maximum need for various forms of “long term care.” Alzheimer’s and dementia alone can be expected to require 1,000 more long term care (“memory care”) beds in Champaign County in the relatively near term. Medicine might bring us better “management” of these conditions but they will remain incredibly prodigious challenges, very likely requiring between 2,000 and 3,000 long term care beds in Champaign County by 2050. When I saw the aerial photo of the nursing home, the first thing I thought was: “can they build another facility on that land??” The policy question for Champaign County is: is this the time to abandon control of this facility and these services?

(b) Is this the right buyer? Are there other options? To address this issue I’ll let the audio of people in Champaign County speak for itself. This runs about 5 minutes and is taken from the recent meeting where the public was permitting to make comments.  he audio can be played from the web page, or downloaded as an MP3 file: The link to the audio is: https://jjunland.egnyte.com/dl/RiWKVUHam2 [6]

The suggestion at a recent meeting for the County Board take at least 90 days was a good suggestion.  There are, from my point of view, many matters that need to be looked into.

Regards,  Jim Unland

This email is from James Unland [4],
President, The Health Capital Group
Professor, Loyola Health Law Institute [7], Chicago
Editor, Journal of Health Care Finance [8]
Member, Association of Health Care Journalists [9]


 

Contact Your County Board Members TODAY; Attend County Board Meeting TONIGHT

What we are asking the County Board to do, and why:  Given the concerns that exist about the current bidder for the CCNH, and the need for more information, we are asking the County Board to simply pause, or slow down, and not rush into the sale of CCNH to this buyer. There are other developments that are promising for the CCNH, and these should be allowed some time.

Below is information on:

  1. Thursday’s County Board Meeting (address, time, etc.)
  2. How to contact your County Board Members

1. Thursday, May 24 County Board Meeting
The sale of CCNH is on the agenda for Thursday’s County Board Meeting. Please contact your County Board members before Thursday’s meeting (see how in next section below). You can also attend the County Board Meeting on Thursday and speak out during public participation. The vote to sell the CCNH is toward the end of the meeting – at the bottom of Page 2 under item XV. New Business, A. Finance, 1. **Adoption of Resolution No. 2018-141 Authorizing the Sale of the Champaign County Nursing Home.

Here are the details for Thursday’s meeting:

WHAT: Champaign County Board Meeting

WHEN: Thursday, May 24, 2018 at 6:30 p.m.

WHERE: Brookens Administrative Center, Lyle Shields Meeting Room
1776 E. Washington Street, Urbana

AGENDA:
http://www.co.champaign.il.us/CountyBoard/CB/2018/180524_Meeting/180524Agenda.pdf [10]

2. How to contact your County Board Members
Please call or e-mail your County Board Members to let them know that you oppose the sale of the Champaign County Nursing Home to the current proposed buyer, given their track record (read sections below for more information). Champaign County can do better than this!

County Board members are under tremendous pressure to sell now, and to sell to this sole bidder because of the County’s finances. The financial strain is real, and the pressure is very intense. However, rejecting this bid does not mean that the County cannot work with its brokers to solicit other bids in the near future.

  1. List of Champaign County Board Members with contact information (find your County Board Members on this list, and call or e-mail them TODAY): http://www.co.champaign.il.us/CountyBoard/pdf/cbmembers.pdf [11]
  2. Not sure which County Board District you live in and who your County Board Members are?

You can look at an Interactive County Map to find your County Board District!
Instructions:

Property Tax Legal Opinion
On Tuesday, we sent an email regarding the county’s plan to keep revenues from the property tax levy for the CCNH, established by voter referendum in 2002. If you’d like to see that e-mail, you can look here:
https://www.healthcareconsumers.org/if-county-nursing-home-is-sold-will-you-still-have-to-pay-property-tax-for-it-you-might-be-surprised/ [13]

The County sought a legal opinion on this issue, and they have now received an opinion from the State’s Attorney’s Office, which you can view here on Page 10 of County’s Additional Information Report:
http://www.co.champaign.il.us/CountyBoard/CB/2018/180524_Meeting/180524_Additional_Information_Packet_Regarding_Sale_of_Champaign_County_Nursing_Home_Resolution_No._2018-141.pdf [14]

Thank you for your activism to help protect Champaign County’s public assets and community’s health!

Sincerely,
Claudia Lennhoff
Executive Director
Champaign County Health Care Consumers