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Nursing homes face uphill funding battle

ST. PAUL - The baby boom "age wave" is about to sweep over Minnesota, but nursing home industry leaders say 130 of their facilities are near closing.

Nursing homes in the southwestern and northeastern parts of the state are in the most danger of closing. The Long-Term Care Imperative reports 44 percent of those in the northeast and 42 percent in the southwest recorded operating budget losses at a level industry leaders call a crisis. More than a quarter of all Minnesota nursing homes are in financial problems that threaten their closing, the organization says.

"There will be parts of the state that don't have a nursing home," said Gayle Kvenvold, president of the Minnesota Health and Housing Alliance.

The problem Kvenvold and others see is that state funds provided nursing homes rose 4.6 percent the past four years, compared to inflation increases of 11.6 percent. Kvenvold and President Rick Carter of the Care Providers of Minnesota said the state determines how much money nursing homes receive.

The Long-term Care Imperative, a partnership of Cater and Kvenvold's organizations, seeks a 7 percent funding boost in the first year of the next two-year state budget and 6 percent the second year.

On top of that, they want $10 million starter money to spur $750 million in construction, technology enhancements and other improvements.

Carter compared the state's relationship to nursing homes with how it handles utilities: "Everything is regulated."

"This would be totally unacceptable for utilities," Carter said about lack of state funding for nursing homes.

The outlook for significantly more nursing home money is bleak at this year's Minnesota Legislature.

Before a Wednesday committee meeting, Sen. Linda Berglin, DFL-Minneapolis, told elderly advocates that her health committee's funding bill will not be as rich as they would like.

Other senators agreed that nursing homes will not get what they seek when final decisions are made. Sen. Leo Foley, DFL-Coon Rapids, said more attention is being paid to improving health coverage for children than for the elderly.

Legislators are downplaying how much they have available to spend this year. Most seem to agree nursing homes and other health-related programs cannot receive much more funding without a big tax increase. And most are not calling for increasing taxes.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said most health care reform will wait until next year.

Sen. Keith Langseth, DFL-Glyndon, said on Wednesday that early spending plans from Senate Democratic leaders show smaller-than-wanted spending increases.

"It just isn't there," Langseth said of money. "The good news is we are not going to have to cut further."

Nursing home advocates say after years of budget deficits it is time for them to get more funding.

Rural nursing homes are especially hard hit.

Sen. Mary Olson, DFL-Bemidji, said that is a fairness issue. "While nursing homes around the state are struggling, some are struggling more than others."

Low rates paid in rural nursing homes, in particular, mean they have trouble hiring nurses and other employees. In legislative testimony last month, nursing home administrators from outside the Twin Cities told about registered nurses leaving their facilities to earn more money in the Twin Cities or other metropolitan areas.

Even in the Twin Cities, nursing homes don't have enough money to compete with hospital wages, the Long-Term Care Imperative reports. Nursing homes statewide pay an average of $23.31 an hour to registered nurses, while hospitals pay $34.80.

The number of nursing home beds is falling, with state officials estimating there will be 29,000 in 2015 - about 80 percent of today's number.

That comes at a time when Minnesota is aging rapidly. The state demographer's office estimates that the number of Minnesotans older than 65 in 2020 will be 53 percent higher than today. The number will double by 2030.

Long-Term Care Imperative predictions show that those new elderly will be less likely to spend long periods of time in nursing homes, but the time they spend there will require more intensive, and expensive, care.

In a Wednesday committee hearing, Sen. Yvonne Prettner Solon, DFL-Duluth, asked for the increases sought by the Long-Term Care Imperative. While the committee gave its tentative approval, Berglin gave no indication the bill would be fully funded when the committee produces a final measure.

A long-term solution to the nursing home funding problem is needed, Prettner Solon said, but how much it would cost is not known.

That solution is figuring a new base rate to pay nursing homes. That has not been figured since 1994, and Patty Cullen of CareProviders of Minnesota said some homes' rates are so low that they need to be increased to remain viable. The base is figured on how much it costs a home to provide care, and 1994 figures are far out of date.

"The first time you do it, it will cost real money," Cullen said.

If the base rates are refigured - known as "rebasing" - and updated regularly, annual cost-of-living increases can help keep nursing home rates adequate statewide, Cullen said.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.