McCOOK, Nebraska -- Hillcrest Nursing Home officials may need to ask Red Willow County commissioners to take out a $1.1 million loan to help rectify a cash flow problem.
Nursing home interim administrator Jerry Rothmeyer and board member Randy Dean told commissioners last week that the facility's cash flow problems started when a billing clerk's employment was terminated in February, and three months of Medicare and Medicaid claims that she would have filed for payment were not. Medicare and Medicaid claims together would have amounted to about $225,000 per month.
All of the claims have now been filed, Rothmeyer told commissioners Monday morning.
Another cash flow blow came about more recently when a sale of bed licenses that was to have generated $250,000 did not go through as quickly as anticipated. While the market for the beds remains, the sale is not expected to go through until Oct. 1 at the earliest.
Rothmeyer, Dean and fellow trustees Jim Hall and Jim Howard met with commissioners Monday morning to ask that the county consider authorizing an emergency loan. Because the nursing home is owned by the county, the nursing home's board of trustees is not authorized to borrow money; it will take a vote by two-thirds of the county board to authorize the loan.
During their weekly meeting June 18, commissioners authorized a "loan" to Hillcrest of up to $300,000 from the county's inheritance tax fund. Commission chairman Earl McNutt said Monday he would rather take out a bank loan than "wipe out" the county's inheritance tax fund of about $788,000.
County attorney Paul Wood suggested that a bank loan could be used to pay the nursing home's "three big obligations," freeing revenues to pay for operating expenses. "These big obligations you know exist. You have to be able to meet them," he said.
The three big obligations are construction payments of $333,291 due July 1 and (a final payment of) $596,286 due Aug 1, and a bond payment of $165,000 due Nov. 1. These payments total $1,094,577.
Wood suggested that the loan could be written as a "line of credit" used if/as it is needed, and repayment not structured as monthly payments.
Dean said that the nursing home's checking account balance, reserve fund CD's of $274000, Medicare and Medicaid payments and accounts receivable will be sufficient to make payroll and expenses between now and Aug. 1. "Our critical time will be August," Dean said.
Rothmeyer said that reopening the remodeled 100 wing -- with 10 new rooms and their associated income -- and reducing expenses will also help the nursing home's bottom line. Rothmeyer said cost reductions would not impact resident care.
While state statutes do not restrict the length of a loan, commissioner Steve Downer said that "long-term borrowed money" is relatively inexpensive. Both Dean and Rothmeyer said they would anticipate paying off the loan within a couple years.
Commissioners asked Wood to investigate whether it is possible that a levy to pay back a loan for construction costs -- if such a levy becomes necessary -- can be placed outside the county's state-mandated 50-cent tax levy limit as capital improvements.
Rothmeyer said that Medicare/Medicaid payments are coming in. Jim Howard told commissioners, "We're going to fix this. We are able to fix this, and we are fixing it."
Wood suggested to commissions that he, Hillcrest administrators and board members, a commissioner, Brian Esch of McCook National Bank and Dan Miller, the county's budget clerk, get together to determine the amount and structure of a possible loan. Esch encouraged officials to think at least a month in advance. Loan mechanics, tax levies and county budgets "are complicated," he said. He also said that if Hillcrest hires a strategic planner to work with whomever is hired as the new administrator, "they can't do strategic planning if they're fighting weekly cash flow problems."