Ken and Linda Klaasmeyer, representing the management of the receivership of the Cozad Care and Rehabilitation Center met with the Cozad City Council during a special meeting Monday afternoon. Mayor Nancy Meyer said she asked them to meet with Council Members and Cozad Care employees as a “fact finding mission”.
Ken Klaasmeyer began his presentation saying his healthcare consulting firm was appointed receiver for all 21 Skyline Health Care facilities in the state on March 23, 2018. Klaasmeyer says the State of Nebraska had initially posed the possibility to them about 30 days prior. He said it’s not the first time they have handled a healthcare facility receivership for the State.
Klaasmeyer said the reason the nursing facilities were put in receivership was because Skyline had missed a payroll. He said the State felt that someone else need to take over the management, which he described as a “management receivership”. “We really don”t know how long the receivership goes on”, he continued. Golden Living still owns all of the 21 buildings, Skyline was leasing the buildings from Golden Living. There were about 1,650 former employees in Nebraska under Skyline, that have been brought under an entity of Klaasmeyer and Associates under the receivership with payroll about $2 Million every two weeks.
Until a new group or number of groups lease the buildings, Klaasmeyer said the State(of Nebraska) is “very concerned about the residents and the staff.” “But, our main purpose is to insure that the residents are being adequately taken care of and the employees are being paid and vendors are being paid”. He noted that his firm is only authorized to pay vendors for dates of service from March 23rd forward, while operating on the revenue that was coming into the facility at the time. Though he noted the State did provide some additional revenue for the start of the receivership.
Klaasmeyer says the Skyline receivership has been different than any others he’s had to dealt with. He noted the employee health insurance place was a self-insured plan but, there wasn’t any money left to pay the claims. They found that Skyline had deducted premiums from employee paychecks but, hadn’t been paying those premiums to the vendors. Since then, his firm has secured health insurance, life insurance and dental insurance. Insurance polices for property, workman’s compensation and liability had also been canceled so Klaasmeyer’s firm also scrambled to get coverage for those services as well. They also set up separate financial accounts for each of the 21 facilities.
Klaasmeyer said the owner of the 21 buildings, Golden Living, initially wanted to lease the skilled nursing facilities to another company. Klaasmeyer said he told them that might not be in the best interests of the residents, staff and communities they are located in. He said Golden Living agreed to allow him to approach communities to see if there was interest in bringing back “local control” in how the facilities should be operating. Klaasmeyer was proposing the local cities, counties or hospitals consider taking over operations of the facilities.
Since assuming the receivership Klaasmeyer said he’s met with Cozad Community Health Systems leadership a couple of times. Klaasmeyer said the buildings need capital improvements, or as he calls them…”facelifts”. Golden Living has indicated a willingness to help provide some up-front money for capital improvements, “so we’re working on that”.
Klaasmeyer said Cozad Care has been a good facility financially, “not every facility can say that”. Klaasmeyer said Golden Living is not interested in selling their buildings at this time, only in leasing them. Klaasmeyer said leases don’t require a lot of capital to take over these facilities. He said the main source of income for Cozad Care is Medicaid, which is a state program and the resident has a cost-share in that. Other revenue comes from Medicare, Veterans Administration and private pay.
Loretta Smith, Director of Nursing at Cozad Care, said there are 89 beds at the Cozad facility with a census of 75 on Monday. Average daily census is 74 to 78 residents. There are 94 full- and part-time employees. Klaasmeyer said that when the receivership took place, some facilities in the system lost residents and at least one lost “a fair amount of staff”. But, “Cozad has some very loyal employees and we really didn’t see the drop in census.”
Klaasmeyer said like other nursing homes, Cozad Care was built in the 60’s and 70’s with a lot of semi-private rooms. Today people are asking for private rooms now, which is a challenge that a lot of facilities face. In his assessment, Klaasmeyer says he believes “there’s real potential” for the future of Cozad Care. Golden Living still owns the buildings and the licensure for the beds and the operation. With Skyline Health Care “out of the picture altogether”, it opens the opportunity for other entities to propose a lease arrangement with Golden Living to operate the facilities. He said Golden Living has been transitioning from a nursing home company to more of a real estate company.
Klaasmeyer says Cozad Care needs a new roof and some cosmetic items he estimates around $200,000 to $250,000. He adds that it would cost very little to convert more of the two-bed rooms to one-bed rooms. But, the lease of just over $18,000 per month to Golden Living would remain the same. He says their lease amount per bed is pretty reasonable in the industry. He admits the employee health insurance plan they obtained is a “terrible plan” with a $7,000 deductible. But, it wasthe best they could obtain at the time and was similar to the plan that was previously in place. He said a new employee plan could be sought under new management. He estimates Cozad Care could generate a monthly financial profit of $30,000 to $40,000 per month.
Klaasmeyer’s firm does provide management consulting services for nursing homes. Council members and some audience members asked questions on how the arrangement works. Klaasmeyer says his online accounting system allows him to look at financial records anytime. Representatives of the firm also make on-site visits on a monthly basis. He says they believe the administrator of a facility should be an employee of the facility instead of his firm. Right now there is an Administrator vacancy at Cozad Care. A provisional administrator is currently in place.
He further said that when a new administrator is hired, they prefer to screen the candidates down to two or three and then have a local board choose which person they want. He believes that is important to do that instead of the management group “plopping somebody in the chair”. He says it can take two to three months to establish a lease arrangement for a nursing facility with an interested group or entity.
Overall, Klaasmeyer says he doesn’t know how long his receivership will last, at least until the facility is leased. He says Skyline Health Care owes many creditors but, he is most concerned about local vendors. He said a $3,000 unpaid bill is worse for them to absorb that a national organization. He noted that he is not authorized to pay for services prior to March 23rd(when the nursing homes were placed into receivership). He said “Skyline was writing bad checks”. He added that private pay residents paid at the beginning of the month. If they leave, families were not refunded any money. Skyline began leasing the 21 nursing homes from Golden Living in October 2016.
Mayor Nancy Meyer addressed employees of Cozad Care who attended the meeting. Mayor Meyer said “you showed what kind of facility it was when you stood by them(the residents), and you continued to go to work.” One employee said they only lost two staff and one resident in the transition. Several employees also expressed their appreciation to the community support in return.
Klaasmeyer said money recently raised by Cozad Community Health System will be distributed this week on a pro-rated basis of their net payroll. It will be paid out in Cozad Bucks.
Director of Nursing Loretta Smith said that they have a lot of staff that have been there for a lot of years…”we just appreciate everything that the community does”. It was also mentioned that several employees gave their checks to other employees, particularly single moms. Klaasmeyer said “what these employees have had to put up with is criminal.”
Following the meeting, Mayor Meyer told KRVN News that there has been some discussions on having some local control of the Cozad Care facility through a local lease arrangement. The City of Cozad, another local entity and some private citizens or a combination of them is one scenario being considered. Mayor Meyer said it is important to keep those 94 jobs and 75 residents in the community. She said the employees showed how much they cared for the facility when despite not being paid, they still went in to work.
During the meeting, Klaasmeyer indicated he would be able to share some financial records of Cozad Care with City leaders to evaluate under a non-disclosure agreement. Some records were also public information.