Hospital District acquires Life Care facility

A special meeting of the Adams County Public Hospital No. 2 Board of Commissioners on Thursday, Aug. 14, resulted in the decision to acquire the current Life Care Center of Ritzville facility.

For the past two months, the hospital board has been in negotiations with the Life Care Centers of America organization about the donation of the facility.

Due to a confidentiality clause signed by the district, the information was not released to the public until last Thursday. The information was also kept confidential to protect employees of both sites from rumors and job uncertainty.

Two representatives from the Life Care organization attended the special meeting to field questions from community members and employees in the audience. Northwest Division Vice President Raymond Thompson began by explaining the decision to approach the hospital district about the acquisition.

The transaction purpose is to gift the hospital with the facility in order for the center to be locally owned and operated, keeping the responsibility in the community, Thompson said. While Thompson did not state the facility would close if the hospital district did not agree to acquire the building, an example of closure occurring in another hospital district was presented.

Thompson explained once a nursing home closes, it is quite expensive to reestablish, and wanted the community to be aware of the potential risks. The Life Care Founder and Chairman Forrest Preston privately owns the building and the company.

Hospital District CEO/CFO Gary Bostrom asked audience members to voice their opinions about the potential transaction. Bostrom explained the transaction was a complete donation for the land and the building, though the computers would be removed from the facility, which contained the Life Care accounts receivable information.

The initial questions from the community revolved around the suddenness of the decision to donate the facility. Thompson explained the Ritzville center has not been a profitable location in the past, but Preston did not want to see the community without a center, which is why they approached the hospital district.

The Life Care Center of Ritzville had made around a half a million-dollar profit two years ago, under the direction of David Bake. Due to the profitable year, Bake received a promotion and the center was left with a vacancy for nearly a year, making it difficult for the center to be sustainable.

Thompson said the highest priority was to create the least amount of stress possible, especially for the residents living in the facility.

Bostrom did a rough analysis of the nursing home’s financials as compared to income gained from swing beds within the hospital. Based on his estimation, Bostrom said the analysis showed to be a huge gain for the hospital, but would take away from the nursing home.

He said he believes on a good year $58,000 could be generated from the facility; while on a bad year the district could expect a $24,000 loss. Overall, Bostrom believed the district had a good chance of breaking even on a yearly basis.

Bostrom continued on to address the benefits of assuming responsibility of the facility, both for the hospital and the nursing home.

The consolidation would mean dietary services, laundry and linen, and a new van from the nursing home to benefit the district. The district would be able to provide physical therapy assistance and allow residents to have their lab work completed in Ritzville.

“We have all kinds of opportunities to that because we’re right here,” Bostrom said.

“A lot of our costs are related to how rural we are,” Thompson added. “We contract out everything; we don’t have local support, resources available because it’s so far from everything. So the cost savings … is even greater for what we don’t have to spend in labs because we don’t have to be contracting that out anymore. He has a revenue opportunity from the hospital that we don’t have.”

“I think its win-win for our community here,” Thompson said. “I think it is something that would create something that is more sustainable over a period of time. And the truth is we’ve been operated in the negative for a long period of time in this community, and that’s not something that is sustainable.”

Another main concern for those in attendance was the age of the current building. Bostrom explained the facility has been exceptionally maintained, but the building will be appraised after the transaction.

The entire facility is up to code, minus the improvement of the fire suppression system. The project is currently underway and Life Care will absorb the costs of the project.

Randy Stamper, the hospitals contracted lawyer, spoke via speakerphone about the condition of the facility. He advised the facility was well maintained and is beneficial for swing bed patients.

He also expressed concern that if the hospital district did not step up to receive the donation, the facility would likely close. He explained it is typical for hospital districts to have nursing homes, and receiving the donation is a tax write-off, as well as an opportunity to expand services. The only legal cost assumed by the district is the reading of the draft contract.

“What is being proposed here is good,” Stamper said. “There is no hidden agenda.”

Bostrom explained all liabilities and debts would be assumed by Life Care, and after receiving the facility debt free, the hospital will assume all accounts receivable transactions.

The entire transaction process is expected to take 60 days to transfer licensing.

Stamper continued to explain with the gifting of the grounds as well, the hospital district has the potential to expand the center to include services such as a dementia wing, or build additional rooms if the need is there.

Stamper said he believed the hospital had an ethical duty to maintain the nursing home services within the community.

Board Chairman Jerry Snyder addressed his personal opinion and initial reaction after being approached about the opportunity. For the past two or three months that the hospital has been in negotiations, Snyder said he agonized over the confidentiality but understood it’s importance.

The commissioners created a list of pros and cons as individuals, Snyder said, and across the board, they shared the same concerns. The hesitation to accepting the donation, Snyder said, was the economics of the transaction and the potential unknowns.

But the motivating factor to obtain the facility stemmed from the need within the community for a nursing home facility and the potential detrimental effects it could have if the hospital decided not to acquire the facility.

As CEO/CFO for the hospital district, Bostrom now oversees the hospital and the nursing home. He stated the hospital district will assume all of the current employees at the facility.

Bostrom stated bringing all of the employees into the hospital district not only preserves 38 local jobs, but also will allow the two facilities to utilize staff members on both sides and share expertise.

The Life Care Center of America representatives had requested the board make a decision on Thursday night, and cautioned against postponing the decision another week. Community and board members had hesitation about the abruptness of the decision, as the employees and a small group of residents had knowledge of the potential transaction.

The board also expressed their concern regarding making the decision to acquire Life Care when the bond election is only two months away.

The Board of Commissioners unanimously agreed to accept the donation of the Life Care facility, after discussing the overall benefits to the community and sharing the desire to not see the nursing home services leave Ritzville. Eric Walker made the motion to accept the donation, and Ross Heimbigner seconded it.