“We’ve been looking for a solution to help the care center,” Moab city Mayor Dave Sakrison told the board. “We realize that extended care is absolutely critical to this community and don’t want to go back to shipping family members and loved ones out of this community.”
The center is currently operating at approximately $15,000 to $50,000 in the red each month, said care center accountant Tom Lacy. That amount equates to a budget shortfall of approximately $180,000 to $600,000 a year.
“The budget was struck based on certain typical assumptions, but the margins were very thin right from the beginning,” said care center administrator Roy Barraclough, who is also the chief executive officer for Moab Regional Hospital. “The assumption was certain things would remain constant that did not.”
Barraclough said several factors have contributed to the center’s financial problems, including a decrease in Medicaid reimbursements from the state, an increase in the bed tax, and an increase in the charges from the hospital to the care center for services provided, such as meal service. The cost for meal service was initially $10 per day for each resident. However, because of changes in the way Medicare reimbursements for meals are paid to the hospital, the cost to the care center increased, according to Barraclough.
Lacy said another change affecting the center’s budget came from the Utah Retirement Systems. The Canyonlands Care Center is attached to Moab Regional Hospital, but the center is owned and operated by the Canyonlands Health Care Special Service District. The district receives some funding allocated by Grand County from state payments-in-lieu-of-taxes for mineral leases within the county. Because it is a quasi-governmental facility, full-time employees of the care center receive state retirement benefits.
“When the budget was done, no one knew that the public employees had to be covered by the Utah Retirement Systems, which required the center to pay an average of 13 percent of gross payroll,” said Lacy. “That number went up to 16 percent on July 1. Those are huge amounts of money, and the employee does not pay anything into it.”
Barraclough said the center originally based the budget on historical numbers from when the former-Allen Memorial Hospital provided extended-care services. Allen Memorial maintained 14 beds for extended-care patients and the new facility includes 36 beds. Hospital employees did not, and still do not receive state retirement benefits, officials said.
“If you are being paid less than what it costs you to provide services, you can’t make it up in volume,” said Barraclough. “You have to generate sufficient revenue not just to cover expenses, but make your payroll, pay for supplies, pay for benefits, and leave something over to put into an account for future expenses.”
At the Aug. 30 meeting, the healthcare district board approved a reallocation of $50,000 from the general fund to the operations fund. How the care center will be able to put that money back in the general fund to help the district pay the center’s April 2013 mortgage payment has yet to be determined, according to Lacy and Barraclough.
“The biggest factor is whether we are full. And thankfully, right now we are. But our costs are more than what our revenue is... period,” said Lacy. “We could be breaking even if we didn’t have the state retirement systems requirement, but that will take legislation for us to become exempt.”
Becoming exempt would save the center approximately $15,000 a month. Barraclough said those savings could make the tax increase picture less onerous. The care center is considering what level of tax increase would benefit their budget. Based on current sales tax numbers, Moab city manager, Donna Metzler, estimated a .5 percent increase would generate approximately $750,000 a year for the center.
“Our auditor told us that there are four to five other care centers in the state that are subsidized by a sales tax or property tax from the local government,” Lacy said. “We are the uncommon facility in not having that subsidy.”
The health care district has the authority to impose a property assessment to increase property taxes. However, local property owners would bear the entire brunt of the tax. A sales tax would generate revenue from both local residents and visitors who spend money in Moab. Barraclough said estimates show that approximately 70 percent of the sales tax revenue would be generated by tourists.
Both Lacy and Barraclough said future growth, including respite care or an assisted-living complex on an adjacent property, could also help generate additional revenue.