One of the very first things John Cusick did after being elected president of Northampton County Council was urge fellow council members to adopt a resolution authorizing a nonprofit study of Gracedale, the county-owned nursing home. The report is in, but was greeted with skepticism at council’s Feb. 18 meeting.

A 501c3 nonprofit is one that is exempt from federal income tax. Persons who make donations are able to deduct their contributions. It is barred from involvement in political campaigns.

During his council campaign, Cusick argued that a 501c3 nonprofit status would enable administrators to get Medicare and Medicaid reimbursements at the same level as non-county homes.

Premier, the county’s administrator at Gracedale, had offered to provide this research at no charge. Vice president John Belko, whose company already manages two nursing homes that have been converted into nonprofits, presented his company’s findings with about 15 Gracedale employees sitting in the office, including union agent Jim Irwin and union president Hector Rivera.

No one spoke during courtesy of the floor. But Controller Steve Barron cautioned council, before the presentation was made, that he would “highly recommend a true and independent opinion” from a party that has no interest in the matter. “We have no preference,” said Belko.

Booster club option

The most innocuous form of nonprofit Belko described is one that would enable the facility to raise private funds that are tax deductible. Barron called this the booster club option because it is similar to booster clubs at many schools, which have a 501c3 status. This is a kind of 501c3 group that Bob Werner and Peg Ferraro had described over a year ago. No one opposes this concept. Gracedale would still remain a county owned and operated nursing home.

County control option

The second option discussed was one in which Gracedale’s assets would be conveyed to a 501c3 nonprofit corporation, but the county would still be in overall control. According to Belko, the county would still receive the same lower Medicare and Medicaid reimbursements as a county-owned home. But he indicated the employees would no longer be considered county employees.

Controller Steve Barron said this would be a financial disaster. Because all these employees will be considered involuntarily terminated, they would be able to take their pensions. In addition, the county would no longer be able to allocate overhead costs to the nursing home. According to Barron, that amounts to nearly $3 million per year.

Belko agreed, and added other drawbacks that include a smaller pool for health insurance and workers’ comp, which would result in higher costs, and the inability to rely on the county for services like IT, payroll and human resources.

But Belko noted two advantages: cheaper labor costs and relaxed bidding standards. Belko said Gracedale would no longer be hampered by the bidding requirements imposed by state and county law, but Ken Kraft questioned whether that’s true. Since the asset itself would still be county-owned, Kraft maintained that all those requirements would still apply. Belko admitted he didn’t know and would have to research the matter.

Belko also admitted the unpopularity of mass firing and mass re-hiring. “All you’re doing ... is taking people’s pensions and paying less money, probably minimum wage.” complained Ken Kraft. “Basically, the employee loses.”

Privatized option

The third and final option was one in which the county would surrender control to some outside board. Though this would enable the nursing home to seek higher Medicaid and Medicare reimbursements, Belko warned that under this option, the outside board could decide it no longer will house people with no income. An independent board could decide it no longer wishes to be a safety net for the poor.

Bob Werner complained that his proposal, which essentially was a booster club option, had been morphed and changed.

There was little sentiment for moving forward with any of the options at this juncture. Hayden Phillips said he is tracking legislation in the state senate that will increase the reimbursements paid to county-owned nursing homes.

After the presentation, a Gracedale employee had a question concerning the residents, but Cusick refused to let her speak. He told her she should have spoken at courtesy of the floor. That occurred prior to the presentation.

Council took no action on the presentation.