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Budget cuts in North Dakota may affect nursing home industry

JAMESTOWN -- The long-term care industry is waiting and worrying about a cut to the state budget and how it will impact nursing home reimbursements in North Dakota, according to Craig Christianson, administrator at the Sheyenne Care Center in Val...

JAMESTOWN -- The long-term care industry is waiting and worrying about a cut to the state budget and how it will impact nursing home reimbursements in North Dakota, according to Craig Christianson, administrator at the Sheyenne Care Center in Valley City and chairman of the board of directors for the North Dakota Long Term Care Association. The association is a trade group of nursing homes and basic care facilities in the state.

“It is frustrating,” Christianson said. “The governor did give some exemptions to other programs. He forgot about the vulnerable adults we serve.”

Gov. Jack Dalrymple ordered all state agencies to cut budgets by 4.05 percent on Monday. The cuts were in response to an estimated $1 billion revenue shortfall, largely blamed on reductions in oil tax collections.

Nursing homes and other long-term care facilities receive payments from the North Dakota Department of Human Services, which has not yet formulated how it will implement the cut. The department intends to submit a plan to the Office of Management and Budget on Feb. 17, according to Heather Steffl. public information officer for the department.

“We are reviewing,” she said. “We are not in a position to discuss it until it is submitted.”

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Tim Burchill, administrator at Ave Maria Village in Jamestown, said the nursing home industry has no real options to make up any loss in funding. The 1989 North Dakota Legislature passed equalization of rates for nursing homes in North Dakota. That means that nursing homes must charge their private-pay patients the same rate as set by Medicaid for people without insurance or other resources.

“In some states, there is the option of passing costs on to the private-pay residents,” Burchill said. “We don’t have that in North Dakota.”

Burchill is also concerned any cuts made to state funding for Medicaid, the program that pays nursing homes, will be larger than intended. The federal government matches dollar for dollar the state contributions to the Medicaid program.

“A cut of $1 in state funding means a $2 reduction (in combined federal and state funds) available through Medicaid,” he said.

Christianson said this could lead to bigger cuts in the nursing home industry.

“We could see deeper cuts than most,” he said, referring to the loss of federal Medicaid matching funds.

If there are cuts, it could cause problems for some nursing homes, Burchill said.

“Some nursing homes, especially rural nursing homes, are hanging on by a thread with no reserves,” he said. “If the cost is $200 per day and there is an arbitrary 5 percent cut, you have to provide the same care for $190. How long can you do that?”

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Burchill and Christianson said there are few expenses in any nursing home budget that are not related to patient care.

About 70 percent of nursing home operating expenses are labor costs. The industry has been raising wages to compete for workers in the last three to five years, Burchill said.

“We don’t want these people to say, ‘Hey, I’ll go to Menards and work because it’s less stress,’” he said.

That leaves a limited number of options for cost savings, Burchill said.

“We’ll delay some capital projects such as replacing phone equipment or things like that,” he said. “Anything resident care related, you can’t delay. That’s not meeting the care of the residents, and that is not an option.”

Christianson said the Long Term Care Association is working with the North Dakota Department of Human Services.

In the meantime, Burchill wants the public to understand the problems the nursing home industry may face.

“The people in North Dakota need to know what’s at stake,” he said.

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