Wednesday, May 4, 2011

Disharmonic GOP Orchestrates Golden Hill Street Blues

The following appears in the current issue of Kingston, NY's Lincoln Eagle, circulation 18,000. 

Disharmonic GOP Orchestrates Golden Hill Street Blues
Mitchell Langbert, Ph.D.*

The Ulster County Legislature is about to debate the fate of the Golden Hill Health Care Center, Ulster County's publicly owned senior facility.  While the Republicans are the majority party in the county legislature, disharmony within the GOP makes a big government, Democratic Party-style decision more likely than it ought to be.  As a result, future Ulster County taxpayers are likely to be singing the Golden Hill Street Blues at an out of pocket cost of $200 per household per year, and more after 2015.  The capital cost of a new Golden Hill facility will be taxed to each Ulster County household at roughly $1,000.  A private facility would cost you much less than the $1,000 and would provide comparable service.
On the side of efficiency and economic progress is Ulster County GOP chair Robin Yess.  On the side of spending and high taxes is Republican Dean J. Fabiano, Ulster County Legislator from Saugerties.  Walter Frey, also a GOP legislator from Saugerties, marshals factual evidence to show that a private sector firm would be better and more cost effective at managing the Golden Hill facility than Ulster County is. Although he remains uncommitted as to his ultimate vote, Frey notes that he does not support higher taxes to Ulster County's residents.   In contrast, Fabiano and former GOP chair Mario Catalano argue that Medicaid costs may weigh in favor of the existing facility. But Frey produces tomes of evidence that show that costs will be higher with a public facility. If Frey is right, you will pay.

The Golden Hill facility is one of seven senior facilities that adequately address the need for nursing home services in Ulster County.   Six of the seven are privately run facilities that turn a profit and do not receive direct county support.  Since 2002 Golden Hill, the only public sector facility has run an increasing taxpayer-funded deficit.   According to a special task force report presented to the Ulster County Legislature on November 30, 2010, Golden Hill's 2011 budget deficit of between $5.2 and $8.3 million will escalate to between $9.0 and $14.7 million by 2015. With about 70,000 households in Ulster County, that's between $140 and $210 per household.  The report estimates capital costs of about $80 million, or $1,100 per household were the county to rehabilitate the existing structure, and of slightly over $1,000 to your household were the county to build a new facility from scratch. 

Like the Republicans, Democratic Party bigwigs are torn.  In a February 2, 2011 letter to Civil Service Employees Association Southern Region 3 President William Riccaldo, President Pilly Gonzalez of CSEA Local 746 in Ellenville argues that the Kingston CSEA local has been "irresponsible" in demanding that Golden Hill be the only county-run facility.  Gonzalez would like to see the Golden Hill facility split into two facilities, one associated with Ellenville Regional Hospital and one in Kingston.  As well, County Executive Mike Hein is a fiscal conservative.   Mostly, though, the Democrats, sensing a chance for excessive staffing levels, sing harmoniously for the Golden Hill facility, which Legislator Walter Frey calls "a golf course" for government bloat.  Democratic Legislator Jeanette Provenzano goes so far as to argue that Ulster County GOP chair Robin Yess ought to be denied freedom of speech to stop her from criticizing the Golden Hill new facility proposal.  Democratic Kingston legislators David B. Donaldson and Peter M. Loughran did not answer my requests for interviews concerning Golden Hill, nor did Fred Wadnola, a Republican from the
Town of Ulster who is rumored to be a Golden Hill supporter.

One of the most courageous political figures to appear since publication of John F. Kennedy's Profiles in Courage, GOP sachem Robin Yess describes the Golden Hill facility as a symptom of Ulster County's swollen government. "Salary and benefit costs at Golden Hill are 34% higher than in the private sector," Yess told me in a telephone interview.  "What would be the plan to reduce the inefficiency?" she asked.  She added that the special committee has received eight bids, but six have been rejected. The remaining two are offers to buy the nursing home, which is only one of eight options that the legislature has considered.   Yess asks why the request for proposals by which the legislature has solicited bids has been secret.

Mario Catalano, former Ulster County GOP sachem, says that the legislature doesn't have enough information to make an intelligent decision. "One of the differences is that we get paid $192 from Medicaid, so it costs the county $47 per person.  Medicaid pays the average private operator $322. We pay a quarter."
Catalano points out that there are numerous confusing accounting issues surrounding Golden Hill. He says that Golden Hill transferred $2 million to the county's general fund; the county then transferred $4 million to Golden Hill.  Catalano adds that privatizing the facility might increase the percentage of Medicaid recipients."  Republican Legislator Walter Frey says that Catalano is wrong. "We’re required to pay the State $2 million up front for us to receive the $4 million they give for Golden Hill," he said.

I questioned Catalano as to whether his numbers include the $50 to $85 million in capital investment that the various reconstruction and new construction options require.  He e-mailed no, but that is an additional matter to investigate.  But the math doesn't seem hard.   Any differences in Medicaid reimbursement are small compared to the difference between spending $84 million on reconstructing the facility and receiving say $10 or $20 million from the sale of the facility and of the license to a private operator.

Saugerties Legislator Dean J. Fabiano goes further than Catalano. He says that he believes in less government, but, "When you consider disabled people I am more lenient. These are people who have paid their dues in life...I think it's the obligation of government to take care of people who can no longer take care of themselves. This is an issue where you have to put people before money." Fabiano did not know that 99% of Ulster County's senior citizens do not receive any benefit from Golden Hill. He claimed that a large percentage of Ulster County's senior citizens live in Golden Hill. In fact, there are over 25,000 Ulster County citizens over age 65, about one percent of whom, 280, reside in Golden Hill.  While all Ulster County taxpayers pay equally, recipients of the Golden Hill facility have included relatives of wealthy physicians, attorneys and leading political figures in the region.  In other words, elderly homeowners who have been having trouble making ends meet are being asked to subsidize Golden Hill residents who are wealthy in some cases.

Fabiano seconds Catalano's argument that the county pays 25% of Medicaid.  "If you're going to pay anyway, why not own it and have the say?" Fabiano asks.   He concludes, "We can always find money for everything else, for a jail where you don't know if you're walking into a jail or walking into the Hillside Manor. Where do you get the money for anything?"
Tea Party activist Glenda R. McGee of Olivebridge offers the Tea Party response to Fabiano's argument: "It's clear that voters can take no comfort within the Republican Party if they're looking for respect for their property rights and fiscal well-being.  The nursing home is a rich opportunity to repeat the catastrophe of building the Ulster County Jail."

I asked Fabiano what he thought the cost to the taxpayers would be of keeping Golden Hill. He did not know.  I also asked him what he thought the phrase "limited government" means and whether a state where 70% of the economy is under government control would be consistent with his vision of limited government. After hesitating he answered "Yes, it would." I offered to send Fabiano a copy of Friedrich Hayek's Road to Serfdom, which is about the trend toward socialism that the Republicans started under Theodore Roosevelt, and Fabiano agreed to read it.  

Walter Frey, also a Saugerties Republican, paints a more coherent and critical picture than either Fabiano or Catalano. Frey, a powerhouse of information, points out that of Golden Hill's $32 million annual budget, $19 million comes from payroll and benefits.  He also points out that the usual staffing level at senior facilities is one staff member per bed, but at Golden Hill there are approximately 350 staff members for 280 beds, a 25% staff excess.  Whereas at private facilities the staff's employee benefit rate is 18% of payroll, at Golden Hill the benefit rate is more than 40% of payroll.  Whereas in the average senior facility, benefit costs for the staff amount to $26 per resident day, at Golden Hill they are $90 per resident day.  Golden Hill spends $1.7 million per year in administrative costs that are not directly related to patient care. Frey adds that two nearby counties, Dutchess and Westchester, have sold their facilities.  Orange County is currently looking at selling its facility.

Frey adds that without taking Golden Hill into account Ulster County does a great deal for seniors. It administers $117 million on senior programs, which includes the county's Medicaid share that is capped at $33 million.  The $117 million includes federal, state and local contributions for programs such as meals on wheels, Office for the Aging, and transportation.
Contrary to Catalano, Frey states that residents of public and private hospitals have the same Medicare reimbursement rate for the first 100 days.   After that, if they have assets greater than the Medicaid eligible amount, they must spend down their own assets to cover cost of care. Then they become Medicaid eligible, and the County would be responsible for a portion of their care at that point.
 The median patient at Golden Hill has stayed a little over two years, but the trend is toward shorter stays.  The methods of pricing and reimbursement are the same for public and private facilities if they offer the same services, according to Frey.

Frey has thought about this issue carefully. He has concluded that senior living centers are more cost effective than nursing homes; they are better run by private firms because seniors live in a community center and can take care of each other. The county has used up its financial surplus and can ill afford the significant subsidy that Golden Hill will require, he concludes.

*Mitchell Langbert is associate professor of business at Brooklyn College. He blogs at

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