DeKalb County begins sale process for struggling nursing home, with added stipulation

SYCAMORE - Several residents of the financially struggling DeKalb County Rehabilitation and Nursing Center braved the rain to appear before the DeKalb County Board this week to ask that elected officials not put their home up for sale.

About three hours later after a lengthy discussion by board members and employees of the facility, the board voted 22-0 to begin the sale process, but with an added step. As a caveat put forth by board member Scott Campbell, the board agreed to plan for 60 days, or until June 15, to allow the nursing center to reformulate its budget to see if it could remain independently financially viable.

That means a sale, or an approval of a perspective buyer should it arise, won’t occur for a few months still. The nursing facility faces millions in debt caused by what officials have said was years of mismanagement, delinquent billing, falling resident numbers and too heavy a reliance of agency-staffed workers who get paid more than county employees.

During the board debate, discourse arose again over the pros and cons of a privately-owned nursing center, or one kept as is, owned through public government.

Mary Roman, who’s lived at the center for seven years, is the president of the resident council, a group of nursing center residents who meet monthly to voice concerns or bring feedback to the center’s department heads. In her remarks, she heralded the center staff as pivotal to the facility’s success, and questioned whether that would remain under a sale.

“They are why our home is highly recommended,” Roman said. “I am speaking for all the members of the council ... please keep our facility as it is, a county facility and not for-profit. Please keep our facility in your prayers.”

John Garman said he’s called the nursing center home for 12 years.

“My mother died in the nursing home, and I’ve lived there 12 years,” Garman said. “I love the nursing home, too, I want to keep it as a nursing home.”

Tillie Mackey is in her fourth year living at the nursing facility and said she believes it offers the high level of care it does because its county-owned.

“I’m not here to advocate for just me. I’m here for our residents and our workers,” Mackey said. “They have been very dedicated, helpful and concerned. Presently, we need the nursing home, DeKalb needs the nursing home. So don’t take it away from us, we need our home.”

DeKalb resident Carol Beemer said she’s concerned that the county isn’t doing more to attempt to keep the nursing facility under its ownership.

“I cannot tell you how troubled I am that this is the way that you have decided to handle the kinds of problems that I know are not easy to solve,” Beemer said. “I think the greatest shock for me was when I found out you talked about doing a referendum and a week later you took it off. I’d like you to please look at this with an eye beyond the money.”

For about a year, county officials have fielded near-monthly budget deficits from the facility, which faces a $7.4 million budget hole. According to county documents and testimony, the shortfall is due to issues including delinquent billing dating back to 2017, dwindling resident numbers and what employees allege was years-long mismanagement of the facility.

For the past 24 years up until Dec. 31, the nursing center was run by St. Louis-based Management Performance Associates (MPA), a firm which was under county contract. The firm, responsible for overseeing daily operations and creating the facility’s annual budget for county board approval, declined to renew its contract in December.

County Administrator Brian Gregory, who began his job at the county on March 1, 2021 reiterated Wednesday that the ongoing budget issues create a larger problem with county money stores.

“Expenses continue to outpace our revenues dramatically,” Gregory said.

To offset budget shortfalls needed to make payroll and other obligations for the nursing home, the county spent the past year pulling money from funds such as its special projects funds. Gregory said other options, though not ideal, could pull future funds needed to balance nursing center books from the $1.6 million set aside to renovate the third floor of the DeKalb County courthouse, or start dipping into the county’s general fund, which is used for daily operations including the sheriff’s department.

“We’re running out of funds to borrow from,” Gregory said. “When dollars start coming out of general funds, that’s where your core services come from. I just want you to have that information because next fall we’ll be talking about countywide budgets and as resources are moved from other funds it may have certain implications for how you approach other revenue needs.”

Maggie Niemi, executive director of the nursing center who was hired Oct. 1, 2021, said contrary to county narrative, the facility’s books are improving. She said the facility expects to be able to meet its own payroll obligations next week.

“I just want to put all the facts out,” said Niemi, who also during the meeting read a joint letter from the center’s department heads urging to delay or vote against a sale.

Former DeKalb County Board Chairman and current Mayor of Cortland, Mark Pietrowski Jr., told the county board he wished he’s switched the management company during his time on the board.

“We owe it to the employees and residents of the nursing home to do whatever we can and listen,” Pietrowski said. “If I would’ve known I would have just disbanded the operating board like you all did. It is never an easy job but it’s a job that we entrust to all of you.”

County officials echoed sentiments they’ve shared for months now: That if the facility were to be sold, it would remain a skilled nursing facility for residents and those needing rehabilitation. Current center employees voiced skepticism that the level of care would remain the same under new ownership.

Gregory said he was first made aware of the lack of money coming into the nursing home in March of 2021, by an email from the DeKalb County Treasurer’s Office stating the facility wouldn’t be able to make that month’s payroll obligations on its own. Since then, near monthly funds have had to be funneled into the facility to offset cashflow shortages.

The county board has spent the year since deliberating on longterm options.

In early February, the county approved approved a $10,000 contract with Chicago-based consulting firm Marcus and Millichap to help determine what options lay in front of them to address the nursing center’s longevity.

Ray Giannini, senior managing director for the firm, presented those options again to the board this week: Find a new management company, lease the facility to someone else to oversee, or sell the facility and leave the skilled nursing business.

Campbell’s plan is to take the nursing center’s current budget and rework it with center employees and the county’s finance committee.

The center’s current 2022 budget, created by MPA before its exit and approved last year by the county board, assumes an annual average resident census of 175. The actual census currently sits at about 126 beds. From 2017 to 2019, the facility had 183 authorized employees on the budget, Gregory said. That was bumped up in 2020 to 186.

County officials, including board members Ellingsworth Webb and Rukisha Crawford, asked whether the facility could rewrite its budget with operational cuts to the budget, to better account for the actual number of residents.

“I’m wondering while we pursue a sale, we don’t in parallel form a team to look at downsizing and figure out a way to make this profitable?” Campbell said. “Can’t we spend three months looking at that option as rigorously as we looked at the sale option? So while Marcus and Millichap may not be able to see that value, it’s there and we have an obligation to the residents that are there, employees that have put time and energy into that facility to pursue that option.”

Giannini expressed dismay at the 60-day window outlined by Campbell and approved by the board.

According to Giannini’s outline, a sale could take between six to seven months to finalize, but an offer, or three, could come to the county within weeks. The 60-day caveat written into the amended County Board vote Wednesday means a final vote on a sale bid won’t come before June 15.

“The last thing we want to do when we begin a sale process is to somehow tell buyers that we’re not serious with what we’re doing,” Giannini said. “Why would you want to do that?”

“This is what we’re going to decide on,” board member Larry West said in reply to Giannini during a tense exchange. “June 15 will be the first time we can review them. That’s pretty clear. I don’t even know why we’re discussing this.”

Gregory said the 60-day window doesn’t bar Giannini from pursuing offers or bringing them forward to county committees before the full board.

Editor’s note: An earlier version of this story incorrectly quoted DeKalb County Administrator Brian Gregory. The quote has been edited as of 5:20 p.m. April 22, 2022 to state that Gregory said “core services”. An additional correction was made at 6:15 p.m. April 22, 2022 to this article editing a quote made by County Board Member Scott Campbell, who said “Can’t we spend three months looking at that option as rigorously as we looked at the sale option?”