Premier Healthcare Resources: A Culture Change For Gracedale

Premier Proposal

In a news conference this morning, Northampton County Executive John Stoffa announced that Premiere Healthcare Resources has been recommended as Gracedale's management firm. Stoffa's proposal will be reviewed by County Council at their August 17 Finance Committee meeting, and by the entire Council the following day.


Stoffa's decision is based on the unanimous recommendation of a selection committee consisting of himself, Director of Human Services Ross Marcus, Council members Peg Ferraro and Tom Dietrich, Deputy Director of Administration Tom Harp, Procurement Manager Kathryn Anderson, Area Agency on Aging Administrator John Mehler and Ann Terres, who told me she was there to present a citizen's perspective.

If the proposal is approved, it could cost Northampton County as much as $1.9 million over the next five years. It includes an annual cost of an administrator with 40% for fringe benefits ($182,000 in the first year), along with a bonus of $30,000 per year if the manager is successful in achieving certain benchmarks. One of the things that made Premier stand out among other applicants is that it also offered to accept penalties if it fails to deliver.

Calling Premier a "corporation with a heart," Peg Ferraro stated this manager is aware that "the care level at Gracedale has to stay exactly where it is." She liked Premier's inclusive attitude with its staff, something noted by several committee members at the facilities visited. She added Premier is willing to host a family or volunteer council. Marcus was also impressed that Premier administrators at other facilities would adopt the name tag and even the business card being used at that facility, as opposed to Premier.

Another plus for Ferraro is that Premier owns no nursing homes. She hopes this deflects a concern in the community that a manager "would be just looking to buy down the road."

According to Procurement Manager Kathryn Anderson, twenty-six firms requested copies of the Request for Proposals (RFP), after which four firms did submit detailed proposals. "Everyone was afforded the same opportunity." She indicated Premier was the second lowest bidder, but that cost was only one of several criterion used to make the selection. "They may not have been the lowest, but we think they're the best," added Stoffa.

Will There Be Layoffs?

Ross Marcus and Premier Proposal

When a reporter suggested that a new manager might make some employees worried about job security, Stoffa had a simple answer. "They are here to administrate, to make the place run. If there are things they recommend, in terms of layoffs or changes, we have to look at them seriously. We've got to get the costs down. They're not here to sugarcoat things. They're here to make the place run efficiently."

Premier has already told the County it's staff to patient ratio is too high, but Marcus stated that, instead of just moving into layoffs, "they would try to move people around" or eliminate vacancies. "Layoffs are held to an absolute minimum."

Admissions

According to citizen rep Ann Terres, Premier has some "very creative" ideas for increasing admissions at Gracedale. Marcus explained that most hospitals discharge patients late in the afternoon, so Gracedale should be ready to accept admissions at that time of the day as well as during the main shift. Premier wants new admissions to be possible in the evening as well. They also want the nursing staff "to take residents they never thought about taking."

Premier will encourage admissions staff to be flexible and think outside their comfort zone, according to Marcus.

The goal, according to Stoffa, is to get a new resident admitted in two hours. "And without a lot of committee meetings and that sort of thing," added Terres.

What Can Premier Do About an 11% Reduced Medicare Reimbursement That Will Cost the County $1 million?

According to Marcus, Premier already has ideas about that problem. He stated that his own knowledge and understanding in that area is limited, but Premier is familiar with the different "rungs" in the Medicare regulations, and might actually be able to increase reimbursement in some areas. "Sometimes it's just a matter of improving your documentation," stated Marcus.

When Will Premier Start?

Marcus would like the new manager to start next Friday, but stated a more realistic time table is 30-45 days, as details of the contract are negotiated. They will place an interim administrator, to be followed by a full administrator.

Will the New Manager Make a Tax Increase Next Year Unlikely?

No. In fact, according to Stoffa, the County will be forced to contribute more than the $3.5 million budgeted for Gracedale this year. He added that Gracedale is by no means the sole factor in determining a possible tax increase next year. "What's killing us is not Gracedale. What's killing us is the swaption. The swaption is up to $25.1 million."

In exchange for a quick $1.9 million in 2004, then County Exec Glenn Reibman recommended that Council roll the dice and gamble on the interest rate. Due next year, the swaption was at $17.1 million at this time last year. Since then, it has dropped and risen, and currently stands at $21.5 million. In the fund balance that Council member Lamont McClure has derided as a $60 million "slush fund," only $13.8 million has been set aside to pay for the swaption due next year.Right now, it is growing at $2 million every week.

What About the Unions?

Exec John Stoffa & Council Prez John Cusick

Council President John Cusick, who attended the news conference, stated unions are key to minimizing or eliminating the need for a tax hike. "Contracts have to be renegotiated, concessions have to be made by the unions, if we're going to make this work," he stated. Noting that the benefits paid to Gracedale unions (64%) are well above the industry average (40%), Cusick stated that Gracedale unions compare themselves to other unions in Northampton County when the should be comparing themselves to other nursing home unions.

"Bringing on a management firm is a first step in that direction. The second step must be getting the management firm involved in the renegotiation of the contracts and there should be some concessions on the part of the unions of the want to make this work."

Union benefits at other homes managed by Premier are in the 40-45% range.

Peg Ferraro added that unions "must make concessions."

A term used by nearly everyone at yesterday's news conference was "culture change." The way things have been done for years is no longer adequate or efficient.

"Change is always extremely difficult," stated Ferraro. "But if we don't have that change, what hope is there for us to keep Gracedale in our hands?"

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