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A lot of questions and concerns are swirling around the plight of the debt-ridden Grand Traverse Pavilions.
Rightly so. The fate of the county-owned long-term care facility appears to be hanging off a precipice with some dire discussions ahead.
Record-Eagle Staff Writer Patti Brandt Burgess has been documenting the circumstances regarding the Pavilions, most recently reporting that an ad hoc committee made up of three county commissioners will explore options for its future.
As far as those options, mention has been made of everything from raising rates, which is currently in progress, to taking out loans, appointing an emergency manager or, as one county official euphemistically put it, “liquidating the asset.”
That last option is unacceptable – as is the fact that no one noticed the warning signs.
Questions should have been raised and alarms should have been going off months ago. This facility, once described as a five-star gem in the community, has been operating in the red since April.
Even so, it’s clear that the financial difficulties go back much further – and have a lot to do with a variety of factors, including millions in federal reimbursements that have yet to be received and fewer employees which limits admissions. So the Pavilions has not been able to meet its census goal of 155 residents — the number needed to keep it in the black — since the pandemic.
Over the last year or so, the census has averaged 130 to 140 residents a month. The facility has a total of 240 beds.
As the pandemic has done with so many other sectors of the economy, it wreaked havoc on long-term care facilities. In the case of the Pavilions, annual audits showed operating losses of $2 million in 2020, $4.6 million in 2021 and $7.4 million in 2022.
Many long-term care facilities in Michigan and some other states have been operating at losses. One of the root causes is Medicaid underfunding, according to the American Health Care Association and National Center for Assisted Living.
“Prior to the pandemic, shortfalls in Medicaid funding had forced providers to operate on shoestring budgets and suffer net losses year after year,” the AHCA/NCAL reported.
The pandemic just served to magnify the problem. At the Pavilions, by the end of March, the fund balance was depleted. As of mid-August, to meet its expenses, it had borrowed about $3.5 million from the county. Rob Long of Plante Moran, the financial consultant hired by the Pavilions to evaluate the financial situation, told county officials recently this operating model is not sustainable.
A Traverse City resident wrote to us this week to underscore that reality with personal experience: “The problem of reimbursements is something I really understand, as my husband and I were providers.”
They owned a pharmacy in Southeast Michigan for 14 years, she said, and lost money every month because it took so long to receive funds from Medicare, Medicaid and insurance companies. “It was months to get reimbursed, so we had to take money out of our savings every month to pay our Rx distributors to pay our bills.”
Knowing this, the county must develop a sustainable system, based on the realities of staffing and census numbers, that will provide a strong financial foundation for the Pavilions.
That won’t be easy, but it’s essential.
“I sincerely hope the commissioners realize how important it is to maintain The Pavilions,” the reader wrote. “The reality of this problem is our caring community counts on The Pavilions to serve all private pay, Medicare, Medicaid and insurance-covered patients and low-income individuals.
“We must figure out how to fund this great community institution. It is imperative our community works this out and not sell this to a corporation or shut it down.”
Well said. We wholeheartedly agree.
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