Gracedale: Sell Stoffa, Lease Angle

"Sell Stoffa, Lease Angle."

That's what was on one of several signs carried by Gracedale workers at last night's crowded County Council meeting. When I asked Northampton County Exec John Stoffa for his reaction, he just laughed and said, "There'd be no buyers."

One thing is certain. Very few of the 150 or more people who crammed into Courtroom One were buying into any proposal to sell or lease Gracedale. Of course, most of them work there, and were justifiably worried about their jobs.

Complete Healthare Resources, a nursing home consultant, spent eight weeks evaluating Gracedale. It highlighted the following problems:

1. High fringe benefit costs. - In 2009, total fringe benefits at Gracedale amounted to $18.14 million, which is 65.17% of the total wage expense of $27.85 million. In 2011, it will be even higher, amounting to 77.49% of the wages paid. Retirement costs alone will have increased by 1,772.69% (No, that is not a typo) between 2008 and 2011. What's sad is that, even if they wanted to, County workers are unable to modify their fixed benefit pensions, which are set by state law. In the private sector, where fixed benefit pensions are rare, the ratio of fringe benefits to total wage expense is closer to 40%.

2. Decline in residents. - As you can see in the graph above, the number of residents at Gracedale is dwindling, year by year. There are several reasons. People tend to stay in their own homes longer than in previous years. The number of nursing homes has increased. Gracedale is slow to admit prospective residents, who often end up going somewhere else. It's downright lousy at marketing.

3. Reimbursements are declining. - State reimbursements for Medicare and Medicaid have plummeted, in both private and public sector, but more so in the public sector.

4. Unpaid bills. - The County is carrying nearly $7 million in accounts receivable beyond thirty days. $2.1 million in accounts receivable is actually over 120 days.

5. Bloated staff. - In Housekeeping (15), kitchen (2.5), laundry (5) and even nursing administration (2).

Could Gracedale enhance revenues and reduce operating costs? Yes, but according to Complete HealthCare, not enough to make a difference. It would still lose money because of the high cost of benefits. They recommended a sale or lease. Twenty-one Pennsylvania counties have sold their nursing home, and thirty-eight of Pennsylvania's sixty-seven counties have no nursing home at all.

Under questioning, Council member Lamont McClure tried to make the case that Gracedale has only become negligent within the last four years, laying the groundwork for blaming everything on Stoffa. McClure also argued that the consultants purposely picked 2009, a very bad year for Gracedale, as their base year. But they replied that they used 2009 because it is the most recent year.

Council member Ann McHale objected to telephone calls consultants placed to individual council members, suggesting that they were committing a Sunshine Act violation. She also noted that the word "mercy," which is part of the County Seal, tells her we must have "compassion for the less fortunate."

Council member Tom Dietrich, who chairs the Human Services Committee, complained he needed more time to review the report.

After Council had finished its questioning, twenty-one people spoke. Most were Gracedale employees, union agents or politicians. It didn't take long for one of them to compare Ron Angle to Hitler. One of them claimed they care so much about the residents that they take them shopping or even bring them home for Christmas. Ironically, another worker complained that workers should not have to take residents shopping and should ask family members to be more involved.

AFSCME President Hector Rivera told Angle, "You want to slap us in the face. ... You just push the elderly aside." Paulette Brown, a 15-year employee, told Council, "My family counts on my paycheck. ... It's scary."

Angle held a copy of a Sheriff Sale Notice in his hand. "I've also got to worry about these 129 people who lost their homes in July." Someone in the crowd asked, "Do you think their taxes are not going to go up anyway?" Angle answered, "For every one of you who works at Gracedale, there's 500 who get a tax bill."

After everyone had spoken, County Executive John Stoffa laid out the options: "1) You can increase taxes for that $10 million shortfall; 2) We pay $18 million in benefits. Cut it in half. Are the unions going to do that? No. 3) lease; 4) sell." He suggested that Council take some time to review its options, "but not too long."

Then Council member Peg Ferraro, who had been sitting quietly all night, decided to speak up. She acknowledged that the County should have made better provisions for Gracedale when times were good, but "we are in the here and now." Noting that "we're all in this together," she suggested, "Maybe we do need a small tax increase." But she added, "Maybe we need some help from the employees."

Since practically every union agent in the country was at last night's meeting, Angle asked them point blank if they'd be willing to talk. "We're always ready to talk," said Jerry Green, who represents the Steelworkers. So Angle asked Stoffa to sit down with the unions, saying he and Lamont McClure would participate, too.

While these arrangements were being made, one union worker shouted out, complaining that it's unfair for her union to make concessions when none of the County's thousand other unions are doing so.

Peg Ferraro had a quick answer, "Somebody has to be first."

After the meeting, Fiscal Affairs Director Vic Mazziotti told me the County could avoid a tax increase next year if workers were willing to give up some of their health benefits and a new management team were inserted at Gracedale to make the cost-savings measures proposed. So this could work. I am very doubtful that the unions are willing to concede anything, and with next year's budget coming loser and closer, time is of the essence. But Peg did the right thing in suggesting that the County and union try to work together.

Unfortunately, when Council next meets, I believe they'll ask Stoffa to sell or lease Gracedale.

For those of you living in Lehigh County and laughing, I am informed that Cedarbrook will lose $2 million this year. Like Northampton County, Lehigh is looking at a hefty tax hike next year.