Privatizing Willow Point: An Attack on Working Families, Moms, and KidsPosted: April 17, 2015
By Andrew J Pragacz firstname.lastname@example.org
The sky’s been falling on Willow Point for 20 years, that is if you believe county officials. A recently released $100,000 report commissioned by Broome County to assess Willow Point’s finances, however, demonstrates that Willow Point is not as bad off as the rhetoric suggests. The nursing home is not losing money hand-over-fist, nor is the county making up any “shortfalls.” Despite the information contained in their own report, its writers, a Rochester based accounting firm, conclude that overgenerous employee benefit packages are drowning Willow Point and will eventually drag Broome County down in financial ruin if it is not privatized. The reasons for the apocalyptic appraisals by County officials and private consultants compared to the view expressed in this piece, that Willow Point is not in financial trouble, are two. First, Willow Point is not a privately run enterprise designed to make profit. The County consultants, however, disregard this fundamental fact and assess Willow Point as if it were. Public and private facilities have very different ways of taking in and spending money. When those differences are not respected, bad conclusions follow. The second reason is that county officials are more concerned with breaking unions and “cutting costs” than supporting the welfare of Broome County residents.
Let’s be clear: the attempt to privatize Willow Point is an attack on working families, especially women, children, and the elderly. Period. If Willow Point is privatized, nurses, most of whom are local mothers, sisters, wives, friends, neighbors, and tax payers, will have less money to support their families. In a time when Broome County is shedding jobs from sectors typically employing men (like manufacturing), women’s income is critical (and has been for 30 years!) to overall family income. Given the experiences in Oswego, Delaware, and Montgomery counties, if Willow Point is privatized we can expect benefit cuts for workers, mass firings, and a facility less accessible to county residents (more patients will come from outside Broome County and stricter standards for applicants adopted). How is any of that good for county residents?
What is the argument for privatizing Willow Point?
The basic contention is that Willow Point is not “self-supporting” meaning the amount of money it takes in through payments for services rendered, from individuals, insurance companies, and federal programs, does not cover its costs. The largest drivers of excess cost, according to the report, are over generous employee benefits, like insurance and pension. In the report’s Executive Summary it states: “Our expectation is that absent a dramatic change to salary and benefit structure, Willow Point will continue to require $5,000,000 a year in County subsidy.”
Why are employee benefits blamed for the nursing home’s economic “woes”?
First, because compared to other nursing facilities in Broome County Willow Point provides better worker benefits. Second, it’s an easy way to break unions and argue for privatization. Zeroing in on earned employee benefits effectively blames unions, those pesky organizations that prevent arbitrary dismissals, advocate for safe working conditions, and (hopefully) help secure a decent standard of living during work years and a retirement. (*Note: salaries at Willow Point are lower than other Broome County nursing homes.) Of course, the easiest way to dispose of the union is to privatize, voiding union contracts. Arguments that target employee pension costs are almost always arguments to privatize facilities.
Workers benefits are not hurting Willow Point. While worker benefits are, overall, more generous than other area nursing homes, that doesn’t mean that non-Willow Point nursing home staff is fairly compensated or, alternatively, the Willow Point staff is overpaid. The comparison only shows that Willow Point workers have lower health payments and greater pension benefits. Rather than reduce Willow Point workers down to the “average,” shouldn’t Broome County Legislators help workers access cheaper health care and guarantee a retirement? Maybe the problem is workers at other nursing homes don’t get a good enough benefit package!
Willow Point is not actually losing money. Believe it or not, the report shows that Willow Point actually earned profit five out of six years from 2008-2013. Instead of the $11 million in losses reported in the Executive Summary (and heavily quoted by news agencies), the nursing home made $5.3 million in this six year period. To put it in other terms “the facility’s net profit margin averaged 4.2% for the six years 2008 to 2013” in line with “industry margins over the past five years.”
Why the two different interpretations? First, Broome County is putting funds into the nursing home. These funds, however, are not to keep the facility afloat, but part of a state mandate. No matter what Willow Point’s balance sheet looks like, BC still has to put money into the facility yearly. Each year New York State shares a pool of money with publicly run nursing homes it acquires from the federal government. This Intergovernmental Transfer (IGT) fund, as it is called, arises from the “reconciliation of the State Medicaid rate and the Medicare rate paid at the federal level through the Upper Payment Limit calculation.” Boiled down, this means that the State shares a pot of money with public nursing homes, funds denied to non-public homes.
In order to access these funds, however, the State demands proof that said nursing homes are actually public. For Willow Point to get its share of IGT money, Broome County has to front 50% of the total award. So, for example, if the state government found Willow Point eligible for $5 million in IGT money, Broome County would need to fork over $2.5 million from its general fund (NOT from property taxes). Unfortunately, the state funds often take several years to materialize, while Broome County has to forward the money in the same year the IGT funds are calculated. Using the example above, BC invests $2.5 million one year for a $5 million allotment to the nursing home that will be paid out in 2-3 years’ time. The lag between the County and State portion of IGT payments, however, often makes Willow Point appear in the red. Yearly, Willow Point receives between $2-$4 million from the County, and double that from the State.
So, how did the accountants make Willow Point look broke?
All the budget minuses and none of the budget pluses were tabulated. They ignored $9-12 million coming in, yearly, from the IGT fund. Regardless of how much Willow Point makes or does not make from residents (most of whose care is paid for by Medicaid and Medicare) Broome County would still have pay. That’s because the IGT is not linked to a facility’s bottom line. Despite worries that the IGT payments will cease, the State extended the program through 2017.
There are deeper reasons for the alternative view of Willow Point’s finances expressed here. The first is that Willow Point is not a private facility. In discounting the County and state funding the nursing home receives, and by demanding it only fund itself through “resident payments” Willow Point is evaluated like a private business. The new report looks like a guide for prospective buyers about how to make Willow Point profitable as a private home, instead of an objective analysis of an important public institution. Willow Point is publicly owned, and so functions in the public interest. When a person cannot pay because they are too poor, Willow Point does not kick them out, as a private facility legally could. If someone is too sick or not sick enough to be profitable, Willow Point provides a bed. Because Willow Point works for the public its financial decisions are made differently and that’s a good thing.
Privatizing Willow Point is an assault on working families, women and children in particular. Nursing is one of the fastest growing middle-income occupations in the country and it is dominated by women (over 80% of all registered nurses are women). This year a report from Pew Research found that 40% of US moms are their family’s breadwinners and 30% of all US moms are single mothers. Cutting healthcare and pension benefits for working and single moms and their families is not only immoral and despicable it’s also idiotic from the perspective of county finances. How does raising health costs for 624 employees at Willow Point (many of whom, statistically, are their family’s primary breadwinner and/or single mom) benefit BC as a whole? How does that build a tax base? The answer is simple: IT DOESN’T!
Note: this piece is part of a larger project on Willow Point’s finances. For the full piece, please contact the author or the People’s Press.
Necessity vs Entertainment
In 2012, the Broome County Sale/Lease Task Force called for the report detailed in the larger article on the future of Willow Point. The task force also looked at several other pieces of publicly owned infrastructure, most notably the airport, garbage dump, and the Veteran’s Memorial Arena. In that report they call for exploring contracting out the facilities management to a private company, meaning the county would pay the company to operate the facility and the county would retain ownership of the building itself. So far, no word on this. Effectively, that report calls for more investment (hiring a private company to run a large facility is a big investment) of an entertainment facility that sucks money out of the county while simultaneously advocating for the privatizing of a crucial piece of the County’s safety net. The Arena is subsidized by the county annually by approximately $1 million. Not only is it morally dubious to sell a public benefit nursing home impacting the employment of 630 persons and elect to keep an entertainment complex instead, but entertainment complexes like stadiums and arenas are terrible economic development tools. They cost taxpayers money and they don’t create wealth. Rather, they increase competition for the same pool of money persons are willing to spend on leisure activities.