Dramatic financial turnaround for Valley View nursing facility

April 03--GOSHEN -- Orange County collected $13.3 million in annual federal aid for its nursing home last week.

It's the latest good news for a facility that the county nearly sold twice in recent years and that has undergone a remarkable financial turnaround.

The funding from Washington -- known as an intergovernmental transfer, or IGT payment -- is distributed by the state Department of Health to counties that own and operate nursing homes.

Because that total funding has increased, and the number of county nursing homes in New York has sharply dropped, the amount Orange County gets for its Valley View Center for Nursing Care and Rehabilitation has more than doubled since the privatization effort began in 2011.

County officials had pushed to sell the 360-bed facility to a private operator to stop what they warned would be escalating losses, just as other New York counties were doing with their nursing homes.

But instead of climbing, the amount of money Orange's taxpayers contribute to support the home has plummeted -- from nearly $16 million in 2012 to $2.5 million in 2014.

By 2015, the last year for which Valley View's finances have been audited, the home actually had made a $505,040 profit.

Now federal aid is up, too.

Back in 2011, 41 county nursing homes in New York shared $189 million in IGT money, and Orange County's cut was $6.4 million.

For the most recent payment, covering the state fiscal year that ended March 31, 2016, the total funding pot had grown to $255 million and the number of recipients had dropped to 28, according to data provided by the state Department of Health.

That meant $13.3 million in IGT money for Orange, slightly more than it had gotten for the previous year.

Counties are required to match half of those IGT payments with their own money, so the net gain for Orange is almost $6.7 million.

Sullivan County, which also bucked the privatization trend, is set to get $4.9 million in aid this week for the Sullivan County Adult Care Center, up from $2.8 million in 2011.

Ulster County sold its nursing home, Golden Hill Health Care Center, to a private operator in 2013.

The next IGT payments to Orange and Sullivan might be even higher, since the pool of nursing homes sharing the state's money has now shrunk to 22.

Six counties sold or closed their homes in the past two years.

Orange County Executive Steve Neuhaus attributes Valley View's recent success to the management of Laurence LaDue, the administrator hired to run Valley View in 2013, and to an early retirement incentive the county offered its employees in 2014.

The resulting retirement wave lowered costs by enabling the county to replace higher-paid, longtime workers.

"I think it's made a dramatic turnaround," Neuhaus said last week.

Plans to sell

He and his predecessor, Ed Diana, both tried unsuccessfully to sell Valley View, a hugely contentious issue that divided the county Legislature for four years.

Both Republican executives warned of massive layoffs or tax increases if lawmakers failed to authorize a sale.

Under Diana, lawmakers went so far as to interview prospective buyers in 2012, but ultimately abandoned the effort.

Under Neuhaus, legislators initiated a sale in 2014 by transferring control of the home to an independent board.

A successful lawsuit brought by attorney Michael Sussman thwarted that effort.

Valley View officials last month gave county lawmakers a financial history showing that the home generated surpluses for four years in a row, totaling $27 million from 2012 to 2015 -- even before the county got its last two IGT payments of $13.2 million and $13.3 million.

The surpluses represented excess county funds that were budgeted but not used in a given year.

In 2014, for instance, the county allocated $14.4 of its own money but wounded up needing just $2.5 million by year's end, leaving an $11.9 million surplus.

Getting those surplus figures rekindled debate over how much leftover cash the home is holding in its reserves, money that the county may use only for Valley View.

Legislator Mike Anagnostakis, a Republican who leads Valley View's oversight committee and who fought the privatization push, argues the accumulated surplus should cover any future subsidies Valley View may need.

"I feel this money can make the facility self-sufficient for years -- if not for decades -- into the future," he said.

County officials acknowledge the home generated $27 million in surpluses from 2012 to 2015, but they insist it has a deficit.

They say so because accounting practices require that Valley View's audits include an approximation of the total cost of health insurance premiums the county will have to pay over many years for current employees after they retire.

That estimate totaled $51 million at the end of 2015, making it appear the home had a $25.5 million deficit.

By that argument, the rest of the Orange County government had a $184.4 million deficit at the end of 2015, according to the last countywide audit.

That is because the estimated long-term cost of health insurance for future retirees from all county departments totaled $286.8 million.

In an email exchange last week with the Times Herald-Record, county officials ultimately conceded Valley View had $26 million in leftover funds as of the end of 2015.

In a joint statement, LaDue and Budget Director Neil Blair said, "We can either use the $26 (million) towards that" -- future health insurance obligations -- "or for other purposes related to Valley

cmckenna@th-record.com">View."

cmckenna@th-record.com

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