Jefferson County officials fear nursing home challenge will cost county millions

Commissioner Jimmie Stephens.JPGJefferson County Commissioner Jimmie Stephens. (The Birmingham News/Mark Almond)

BIRMINGHAM, Alabama — Jefferson County officials said a new filing by HealthSouth Corp. today threatens to cost the county more than $11 million in instant revenues and millions more in expenses, both of which the bankrupt county can ill-afford.

HealthSouth filed a request for a contested case proceeding over Northport Holding LLC‘s certificate of need (CON) applications with the Alabama State Health Planning and Development Agency in Montgomery.

The filing seeks an administrative law judge hearing to its challenge of Northport Holding replacing the Jefferson Rehabilitation and Health Center — also known as the Ketona Nursing Home in Tarrant — and its 238 nursing home beds with two new ones in Vestavia and Hoover by dividing the beds.

The move further delays the county’s planned $8.3 million sale of its nursing home beds and a subsequent sale of the existing nursing home property for more than $2.8 million.

Jefferson County Commissioner Jimmie Stephens said the county was counting on that cash.

“Jefferson County was needing that one-time revenue to sustain county services,” he said in an interview. “We were actually counting on utilizing that to help finish out this year and perhaps allow us to begin next year. Now, it’s going to be very difficult going forward.”

County officials have been downsizing the Ketona nursing home for more than a year in anticipation of selling beds to Northport Holding.

Jefferson County Manager Tony Petelos said in an interview another nursing home wants to buy the Ketona property for more than the $2.8 million appraised value with plans to transfer beds it already has a CON license for there and continue to operate it as a nursing home.

“We would continue to have a nursing home on that site,” he said. “The patients who want to stay there could have that opportunity.”

The Ketona nursing home has 38 residents, down from 131 a year ago.

Not only could the county be out the millions from the sale of the beds and property, it will have to continue to pay to operate the Ketona nursing home until a resolution is reached, Petelos said.

“This could kill the deals for both the sell of the beds and the property,” he said. “Worst of all, we’ve been downsizing over there getting ready to close it down and it’s going to continue to cost us millions more in operation dollars to keep it open while this continues in limbo.”

It’s a setback Petelos said the county did not need.

Tony PetelosJefferson County Manager Tony Petelos (The Birmingham News/Bernard Troncale)

“We’ve been working hard liquidating assets in the county. We’ve been working hard to cut expenses. We’ve been working hard to generate revenue. This is a huge stumbling block for us,” Petelos said. “We feel like innocent victims in this.”

Stephens said the county had a near perfect deal in the works.

“We had a win-win situation for the citizens of Jefferson County,” he said. “A-We were getting out of the nursing home business; B-We were receiving adequate compensation for the services rendered and; C-We were going to do that and actually improve the quality of care for our elderly throughout the county. All of that has been placed on hold by the actions of HealthSouth. I would sincerely hope they would reconsider so that we can move forward.”

Northport Holding wants to invest $24 million to build two new nursing homes to replace the Ketona home at sites it already purchased near Cahaba River and Caldwell Mill roads in Vestavia and at U.S. 31 and Interstate 65 in Hoover.

Northport Holding officials said moving licensed beds around within Jefferson County is not a major departure from the state health plan. They pointed to the fact that no other nursing home company challenged the move.

HealthSouth’s filing today came 10 days after HealthSouth filed its “notice of opposition and intervention” one hour before the deadline to block the deal out of concerns the move is not in keeping with the Alabama State Health Plan.

In the filing, HealthSouth said it does not want to see any unnecessary delays but wants to ensure the deal is properly vetted.

HealthSouth said in its filing it wants to make arguments before an administrative law judge in a contested case hearing separate from the scheduled June 20 meeting of the CON Review Board. The company said it would hope officials will assign a judge within 10 days of today’s request with hearings to begin within 45 days and completed within 90 days of the judge being assigned. The judge could then issue a decision within 30 days of the transcript being completed, the company said.

Among the arguments HealthSouth raised in its filing are:

  • The Hoover and Vestavia facilities to not meet the requirements for “replacement facilities,” and are not consistent with the applicable sections of the Alabama State Health Plan.
  • The patients in Jefferson County will not experience serious problems in obtaining inpatient skilled nursing care and the services proposed by the applicants without construction of the two new facilities.
  • Granting of the applications will add duplicative and unnecessary additional cost to the Alabama health care system and will specifically adversely impact the state Medicaid program which is currently in a critical financial crisis.

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