GVH resigns management of Willows senior care center

Operation losses too much to absorb

The Gunnison Valley Health (GVH) board of trustees is opting out of its contract for management of the Willows, Gunnison County’s assisted living facility, which is up for renewal in February 2012.

The announcement comes in response to an April decision by the Board of County Commissioners not to support a 2011 ballot measure for a tax-funded facility expansion. At the time, the commissioners suggested postponing the initiative, citing the need to prioritize the library expansion already on the ballot and take more time to educate the public about the expansion. The board of trustees informed the commissioners of their decision not to renew the Willows contract in a May 27 letter.
According to the letter, “Nationally recognized consultants were engaged in researching the situation and the healthcare needs of our senior citizens, and after hours upon hours of time investment by the Board members, a determination was made to approve the plan and pursue the tax support necessary for implementation. The Board of Trustees profoundly believe that they have a fiduciary responsibility to investigate and implement initiatives that could mitigate or reverse the ongoing losses being incurred by the Assisted Living Facility (Willows) and to create private room accommodations for the residents.”
The letter asserted that GVH has incurred more than $700,000 in operating losses since managing the assisted living facility in 2001, including $195,000 in 2010. The new facility would have solved that “financial underperformance,” the letter stated, by allowing for staffing efficiency, providing a broader scope of medical services and reducing the per-resident cost.
The letter went on to assert that the cost of construction will increase more than $1 million as a result of postponing the project, and as a result the window of opportunity has been lost—particularly given anticipated staffing shortages, a pending need to invest in information technology infrastructure and declines in Medicare and Medicaid reimbursements to GVH. For this reason, the letter suggested, the board of trustees believe “Its continued operations of the Assisted Living Facility (Willows) is not in compliance with the fiduciary responsibilities that we are charged with discharging on behalf of the citizens of Gunnison County.”
The board of trustees invited the commissioners to further discussion regarding these matters. In response, the commissioners asked staff to gather financial reports and management practices to inform such a discussion. In a June 3 email to the commissioners, county finance director Linda Nienhueser noted that initial analysis of the Willows financials indicated that wages and salaries at Willows increased 24 percent from 2007 to 2010.
Nienhueser also noted that in 2010, there was an entry to transfer $905,414 from the Health Care Center to the GVH Foundation. Given the mission to “develop, preserve and provide financial resources to the Gunnison Healthcare facilities to improve the quality and breadth of health care in Gunnison County” she suggested that she found it “unusual for the entry to be a transfer of almost a million dollars to the Foundation.”
But according the GVH CEO Randy Phelps, the numbers don’t tell the whole story. In 2008, GVH added a nurse to complement the Willows staff, accounting for a large part of that increase. And, he said, the transfer of funds from the Health Care Center to the GVH foundation has nothing to do with the operating losses.
 “The foundation and the hospital board wanted to transfer the money to the foundation so that it could take a more aggressive look at investment strategies,” Phelps said. There are more investment strategies available to the foundation. “That $905,000 has been grown by over $50,000, and the foundation cannot release the money or the earnings for any use other than to benefit the senior care center. It’s restricted.”
Phelps said the primary reason for the operating losses is that the current facility “produces insufficient revenue to cover the fixed cost of the operation. It’s undersized to be cost effective.”
According to Robert Brickman, trustee board chair, the board of trustees was very clear when it took over management of the Willows in 2008 that it would retain management only if they could find a way to keep it from becoming a drain on the GVH system.
“[The decision to relinquish management] did happen abruptly after the meeting with the commissioners because we gave them the first opportunity to turn the Willows into a financially solvent institution and they turned it down,” Brickman said.
“The board of trustees does not want to go to war with the county commissioners. We’re all looking at the same thing—what can we do to help the community? We just have a little bit different priorities,” he continued.
In response to the letter from the board of trustees and the information provided by county staff, the Board of County Commissioners went into executive session on June 14. According to commissioner Paula Swenson, part of the meeting was intended to understand the statutory requirements governing GVH government of Willows. The executive session was intended to clarify the rules and gain a better understanding of how well they have been followed.
Commissioner Hap Channell said, “What prompted us was to take a look at a few things on the state statutes in terms of our responsibility to them, their responsibility to us, what are their accounting practices—not that we suspect bad accounting but do they account for things differently than we do? Basically, we want to educate ourselves.”
Following the executive session, the commissioners directed staff to continue gathering information before pursuing further discussion with the board of trustees.