Lake County-run nursing homes becoming a luxury
Lake County moving to privatize operation of revenue-consuming Winchester House
Monica Behnke is a resident of Lake County-owned Winchester House in Libertyville. County leaders want to turn the nursing home's management over to a private company or nonprofit organization that will run it more cheaply. (Michael Tercha/Chicago Tribune)
Behnke, 79, a former Abbott Laboratories accountant who was left partially paralyzed by a stroke, says she has received good care from the staff — most of them unionized county employees — but she's nervous about the future. That's because Winchester House's unique operation could soon change.
County leaders say the Libertyville nursing home is becoming too expensive, threatening to eat up more than the $3.5 million set aside for it annually in a special tax levy. Before that can happen, they want to turn its management over to a private company or nonprofit organization that will run it more cheaply.
The change, which could come later this year, likely would mean pay cuts and less generous benefits for those who work at the home. Behnke, though, has a more elemental concern: What will it do to her care?
"We've had the same nurses and (certified nursing assistants)," she said. "You feel comfortable with them, and you feel safe with them. Some of us have limited movement. They have to move us with a lift. If there are new (staffers) and they don't know how to put a sling on right, it might hurt or they might drop us. There's a lot of concerns about privatization. It affects every facet of your life."
At a time of rising costs and stagnant revenue, government-owned nursing homes across the country are feeling the pressure to privatize or shut their doors, and some in the Chicago area have already done so. But while a researcher who has studied nursing home privatization says it usually results in inferior care or reduced access for the poor, Lake County officials say that won't happen with their facility.
"It's supposed to be a safety net," said county administrator Barry Burton. "However, (voters) also want us to be fiscally responsible. We're trying to do both — keep the safety net and make sure the cost is in line."
Like many county-run nursing homes, Winchester House started in the 19th century as a "poor farm," used to provide food to needy residents. The property evolved into a medical and residential facility in 1942 and has gone through several expansions.
In 1982, Lake County voters approved a special tax levy to help support the home. The rest of its budget came from Medicare, Medicaid and private payments. While that equation has worked for decades, Burton said, it is starting to come undone.
Certified nursing assistants, the bulk of Winchester's employees, cost the county $16 an hour in salary and get contractual raises of 2 to 3 percent each year. They receive the same benefits as other county employees, including health insurance, pension and up to four weeks of paid vacation.
Their private sector counterparts, Burton said, typically make $13 an hour and receive much less generous benefits. The difference means the county's labor expense is about 30 percent higher than privately run homes, he said.
"It isn't a blame game; it's a reality of the market," he said. "We don't have the luxury of paying them what they deserve."
Another big expense is the building itself. It is far out of date, and rather than spend $20 million to refurbish it, county leaders say it would be more cost-effective in the long run to construct a new one for $36 million.
But as costs climb, an important source of revenue isn't keeping up. Medicaid, the state-run insurance program for low-income people, pays for three-fourths of Winchester's residents, but its reimbursement rate has stagnated. Soon, Burton said, the special tax won't be enough to fund the nursing home, and the county can't afford to pay more.
Other local governments have come to similar conclusions.
Cook County shut down its long-term care unit at Oak Forest Hospital in 2007, dispatching more than 200 residents to private nursing homes. Grundy County, about 60 miles southwest of Chicago, leased its home to a health care company in 2005.
Neither county studied how residents were affected by the changes, but Anna Amirkhanyan, a professor at American University's School of Public Affairs, reached some general conclusions after researching nursing home privatization on a national scale.
She found that when a government-run home is taken over by a for-profit company, regulatory violations discovered by state inspectors — a common gauge for quality of care — tend to go up. When a nonprofit organization assumes control, violations don't change much but fewer Medicaid patients are admitted.
"It's different priorities," she said. "There are healthier, wealthier clients in nonprofits. … For-profit companies have residents that are quite poor, but they don't have the (care-oriented) mission."
Burton said officials would avoid bad outcomes through the terms of the contract. The county, which would continue to own and impose a tax for Winchester House, would monitor quality of care through state inspections, customer satisfaction surveys and other means. If the new managers don't measure up, they would lose the contract, Burton said.
The contract also would require the new management to reserve space for Medicaid patients. The percentage, though, could drop as low as 55 percent (that would happen through attrition, not by forcing people out, Burton said).
Matthew LaPierre of the American Federation of State, County and Municipal Employees, the union that represents Winchester employees, said decreased pay and benefits would likely cause turnover in what has been a very stable staff. That would imperil the continuity of a patient's care, and therefore its quality, he said.
Although Will, DuPage and McHenry counties also run their own nursing homes, none is considering privatization. DuPage officials looked into it in 2009, only to reject the concept as potentially harmful to patients. McHenry County, hoping to improve the management of its Valley Hi nursing home, temporarily turned it over to a private company in 2007.
County Board Chairman Ken Koehler said the company helped find new sources of revenue — billing the federal government for oxygen tanks, for instance — and McHenry, as planned, resumed control last year.
But Robert Kaestner, who studies health care economics at the University of Illinois' Institute of Government and Public Affairs, said the overall trend is clear: States are trying to reduce their health spending, so local governments that provide nursing home care will have to absorb ever-escalating bills or get out of the business.
"Counties have been picking up the slack out of their good will," he said, "but it's not a fiscally sustainable model."