It was February 2020 when Jody Lomeo, then CEO of Kaleida Health, informed employees that the health system would be putting its HighPointe long-term care facility in Michigan up for sale.
A month later, the Covid-19 pandemic began, with nursing homes among the first establishments to feel the effects. Most healthcare business strategies – in Kaleida and beyond – have been temporarily put on the back burner as doctors, nurses and support staff rush to respond to the kind of health crisis that hasn’t unfolded. not produced for 100 years.
Two years later, efforts to sell HighPointe remain on hold due to Covid-19, said Michael P. Hughes, senior vice president and chief administrative officer of Kaleida.
Asked for further comment, Hughes replied, “Not much to say. Everything is pending.”
But that doesn’t mean we can’t talk about it.
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Let’s start by exploring the reasons cited by Lomeo in his note to employees – at a time when no one knew that Covid-19 would dominate our daily lives for the next two years. Lomeo, who stepped down as CEO in late 2020, said at the time that long-term care accounted for less than 3% of Kaleida’s overall revenue. Further, he noted that long-term care represents “a significant financial, legal and risk burden” that is not justified by the benefits for Kaleida.
Kaleida therefore sought a buyer who focused on retirement homes as a core business. Then Covid-19 hit.
Kaleida opened the $64 million HighPointe, between High and East North streets at the east end of the city’s medical corridor, in December 2011, the first urban nursing home built in Buffalo in decades. With 300 beds, it remains one of the largest nursing homes in the region.
By the time Kaleida announced plans to sell HighPointe, the 9-year-old facility had racked up $80 million in losses.
In 2018, for example, the facility recorded a loss of $3.4 million on net patient revenues of $41.4 million, according to cost reports filed with the Centers for Medicare & Medicaid Services. Its performance was worse in 2017: a loss of $5.2 million on net patient income of $39.8 million.
Although more recent federal figures were not readily available, few nursing homes have emerged in better financial shape from the pandemic.
A common complaint: Long-term care facilities say the state’s Medicaid program, which covers nearly 75% of care days provided in nursing homes, has consistently had stagnant reimbursement rates, which makes it difficult to operate profitably as costs rise rapidly.
The recently signed state budget includes a 1% blanket increase in Medicaid rates, less than nursing home professional groups had hoped.
Some of this “legal and risk burden” that Lomeo refers to is evident in the past fines the facility has collected.
In November 2019, for example, the state attorney general slapped Kaleida with a $500,000 fine in a settlement that criticized the care of 16-month-old Jameir Benn — who died in HighPointe in February 2015 — and called falsified records for 56-year-old Larry Myers, who died there in January 2014. Myers’ case ended with 17 workers convicted of falsifying records or other crimes.
Following these two incidents, Kaleida invested $12 million in staffing and improving the quality of care, the system said at the time.
Just recently, HighPointe was hit with a $40,000 fine by the state health department over lapses in the frequency of Covid-19 testing and missed temperature checks of some employees – issues uncovered during of an unannounced state inspection in May 2021.
“While we have complied with and paid the fine, we remain confident that HighPointe’s record on Michigan during the pandemic stands out among the best for any long-term care facility in Western New York,” said said Hughes.
Hughes’ comment holds up, according to state and federal data, which shows HighPointe had one of the lowest rates of Covid-19 cases and deaths per 1,000 population.
State data shows nine HighPointe residents have died of Covid-19 as of April 20. In the roughly 35 Erie County nursing homes according to state data, 1,033 residents have died from the virus.
If Kaleida, a non-profit organization, does sell HighPointe at some point, it will be part of the current trend of nursing homes being reclaimed over the past five years.
In fact, more than 3,200 nursing homes were sold across the country from 2016 to 2021, according to recently released federal data. This equates to approximately 40 out of every 1,000 nursing homes sold each year.
Compare that with hospitals: only 348 hospital sales during this period, or about 10 per 1,000 hospitals each year.
Breaking down the data further, more than 80 retirement homes were sold in New York City from 2016 to 2021. And, clearly, the pandemic has chilled deal-making: only six of those deals went into effect after March 1, 2020. .
Some have complained of a slow approval process at the state health department. In fact, the negotiators behind the planned $47 million sale of the Weinberg campus to Amherst said a pandemic-delayed state approvals process killed that deal.
Time will tell if Kaleida begins to actively buy HighPointe again.
Want to know more? Three stories to catch up with you:
• Kaleida seeks buyer for HighPointe in bid to cut costs and stem bleeding
• Kaleida’s HighPointe nursing home fined $40,000 for Covid-19 violations
• No deal: $47 million sale of Weinberg campus to Elderwood operators terminated
Welcome to Buffalo Next. This newsletter from The Buffalo News will bring you the latest coverage on the changing economy of Buffalo Niagara – from real estate to healthcare to startups. Learn more at BuffaloNext.com.
Find out about news related to Buffalo Niagara’s economy:
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start The Real Talk Team Won First Place at University in Buffalo’s Henry A. Panasci Jr. Tech Entrepreneurship Competitionwhich earned him $25,000 in seed funding and $30,000 in in-kind services for the educational platform that helps organizations pursue diversity, equity and inclusion in the workplace.
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Buffalo Next reporters Jonathan D. Epstein, Jon Harris, Natalie Brophy and Janet Gramza contributed to this roundup.
Five reads from Buffalo Next:
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2. Build a New Buffalo Bills Stadium expected to create 10,000 local jobs for construction workersbut some contractors feel left out due to the stadium pact, including plans for a project labor agreement that requires contractors to pay prevailing wages.
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4. For WNY workers, experience really pays off: Experienced workers in Western New York earn more than twice as much, on average, as entry-level employees.
5. M&T Bank pledges $300,000 to EforAll entrepreneurship program in Buffalo: EforAll, which opened an office in Buffalo in May 2021, is a national nonprofit organization that helps people from underrepresented communities start and grow their own businesses.
The Buffalo Next team gives you insight into the economic revitalization of the region. Email tips to email@example.com or contact Associate Business Editor David Robinson at 716-849-4435. Want to talk about health? Contact Jon Harris at firstname.lastname@example.org or 716-849-3482.
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