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Vote on $8.1M sale of ailing DeKalb County nursing home postponed amid second offer

SYCAMORE – A scheduled vote on a proposed $8.1 million sale of the DeKalb County Rehabilitation and Nursing Center was postponed by the DeKalb County Board this week amid news that a second offer has been made for the struggling facility.

Board member Rukisha Crawford, a Democrat who represents DeKalb in District 6, said she would vote no against the proposed $8,150,000 offer by Evanston-based Illuminate HC LLC for the struggling nursing home at 2600 N. Annie Glidden Road in DeKalb, which sits more than $7 million in the hole. The vote expected during a tense Wednesday meeting for the county to sign a non-binding letter of intent with Illuminate was postponed until July. Crawford led the motion to postpone amid news that a second offer had been made for the nursing home not two hours prior to the start of Wednesday’s board meeting.

“I’m also hearing there’s another bid. Is that what’s going on?” Crawford said. “So how can we possibly push this through if there’s another bid? ... I would like more transparency.”

DeKalb County Administrator Brian Gregory said a second offer to buy the nursing center had been made, but he declined to share more details during the meeting.

“Tonight at 5:24 p.m., we received a second offer letter of intent, and so as soon as we received that it was emailed out to the board,” Gregory said Wednesday. “We cannot discuss that letter because it’s not on the agenda. The Open Meetings Act requires us to post notice if we were to discuss that letter. So we can’t take any kind of action on that.”

The County Board is expected instead to send the Illuminate offer back to its executive committee July 13 and also deliberate on the new offer at the next full board meeting, scheduled for July 20.

No details on the second offer for the nursing center have yet been made public as of Thursday night.

This week’s County Board meeting began like many over the past several months, as almost two dozen members of the American Federation of State, County and Municipal Employees No. 3537, the union that represents the nursing center’s employees, rallied in front of the building ahead of the meeting. Union members were joined by state union representatives and community supporters who wore “Stop the sale” badges and held signs voicing opposition to a privatization of the county nursing center.

“What I think you could do is do a search and hire the best manager you can find anywhere and then hold them accountable,” said Sycamore resident Ted Strack, whose grandmother lived at the nursing center. “The quickest way to solve this as a board is to sell it. … That’s a very short-term decision in my opinion. I hope you consider a long-term decision that benefits DeKalb County residents.”

Several others voices opposition to a sale during the meeting, including resident Mary Roman.

“I don’t want to live in a home where I’d be living in fear of uncomfortable living,” said nursing center Roman said. “I haven’t had that feeling in the past seven years living here, and I would like to keep it that way.”

Israel Davis, regional director of operations and director for human capital at Illuminate HC, appeared in front of the County Board on Wednesday to represent Illuminate.

If Illuminate’s purchase of the nursing center moves forward, it would be the company’s first facility owned in Illinois, he said. Although based in Evanston, the management company operates several nursing homes in Ohio and Michigan. Davis said the company - which operates under several names - elected not to do business in Illinois four years ago because of an existing non-compete agreement. Such agreements dictate a legal contract that stipulates that parties can’t work in a specific industry or geographical area for a defined amount of time.

“Some of the principals of Illuminate HC used to operate in multiple skilled nursing facilities in Illinois, all of which we had sold to another operator,” Davis said. “And part of that sale stipulation was a non-compete. That non-compete has been satisfied.”

Davis said Illuminate HC wants to buy the nursing home so it can remain a skilled nursing facility.

Up for debate

Discussion this week included debate over star ratings for nursing centers put forth by federal standards, including the U.S. Centers for Medicare and Medicaid Services.

Star ratings for skilled nursing facilities are populated over three years’ worth of data, according to medicaire.gov, which shows ratings most recently published May 25.

According to that data, the DeKalb County Rehabilitation and Nursing Center sits at three stars, which medicare.gov reports is average. Star ratings are based on health inspections, staffing and quality measures.

The nursing facility reports two stars for health inspections, which is below average, five stars for staffing (much above average, data states) and four stars for quality measures (above average). The facility is certified for 190 beds, although the census as of Wednesday sits at 127, said Maggie Niemi, nursing home administrator.

According to the Centers for Medicare and Medicaid Services, Illuminate HC operates 11 long-term care facilities out of Michigan and one out of Toledo, Ohio. According to county documents, the management company is in talks to buy 10 more Ohio facilities, and CNA staff under Illuminate-owned facilities are offered $17 per hour.

Its facilities’ names are largely listed under “SKLD” and the city in which they operate, according to medicare.gov. A 159-bed Illuminate-owned facility in Bloomfield Hills, Michigan, reports a 1-star rating, as does a 138-bed Zeeland, Michigan, facility named SKLD Zeeland, data shows. The Zeeland facilities’ star rating includes one star for health inspections and staffing and one for quality measures.

Other Illuminate HC-owned facilities include a 69-bed SKLD Leonard facility in Grand Rapids, Michigan, which lists three stars, according to medicare.gov, and a 101-bed SKLD Plymouth in Plymouth, Michigan, also three stars.

An Illuminate-owned facility called SKLD Livonia in Livonia, Michigan, reports two stars among its 110-beds, and a 92-bed facility in Wyoming, Michigan, reports two stars, encompassing a one-star rating for health inspections, three stars for staffing and five stars for quality measures. Its most recent inspection was March 11, 2021, according to the data.

And a 90-bed Illuminate-owned facility in Toledo, Ohio, called Point Place Healthcare and Rehabilitation reports a three-star rating, including two stars for health inspections and staffing, and five stars for quality measures.

When asked by DeKalb County Board member Tim Bagby, a Republican representing District 3, to address the low-star ratings brought forward Wednesday, Davis called the star system “flawed.”

“The reality is that the star system itself is a flawed system,” Davis said. “We’re not perfect. ... It’s hard to gauge something by a standardized metric when everybody has a different standard on what’s important. ... Why would people keep coming back if we were such a horrible place?”

DeKalb County Board member Jerry Osland, a Republican representing District 12, said he thinks Niemi is turning things around and pointed fingers at county staff for what Osland said was their intent to move too quickly with a sale.

“I think that she’s turning things around in the mess that she did not make, and the county has got their fingerprints all over it,” Osland said. “Shame on them. I also believe Mr. Gregory’s not helping her in this turning around. I apologize, but I think that’s what’s going on. We want to push, push, push before Maggie can get this turned around.”

County Board member Scott Campbell, a Democrat representing District 7, stood up for Gregory’s work.

“I just want to object to the characterization of Mr. Gregory as being in any way disingenuous,” Campbell said. “I’ve spent just as much time with him, and his heart is in it. Granted he may have a different direction that he wants to go. ... He’s being pretty open-minded about it.”

Chuck Coulter, a maintenance worker at the DeKalb County Rehab and Nursing Center and union president of AFSCME No. 3537, said the postponed vote buys staff time.

“Obviously this is more of a pause than a true stoppage of it,” Coulter said. “But I think the board’s finally realizing that they have to do their own due diligence and actually look into who these companies are before they just accept the check.”

Tracking the money

County officials have said the nursing home isn’t financially sustainable on its own anymore.

A multi-million dollar expansion project undertaken in 2018 remains unfinished at the facility and could cost thousands more if completed, officials said in April. In August 2020, the County Board approved a sale of $13 million in bonds to cover the nursing home’s expansion, meant to accommodate what officials said at the time was a growing population and expand the facility’s transitional care unit capabilities. The bond is a 30-year deal, averaging $661,500 the county is liable to pay, or $19.8 million for the next three decades.

Nursing center staff have for months pleaded with the County Board to halt a sale to a private buyer, declaring fears that a privatization could mean lowered quality of care for residents and lost benefits for employees.

County officials have maintained any sale would mean the center would continue to operate as a skilled nursing facility. County staff said a sale could stem the cashflow needed to support the struggling center from causing more significant impacts on the county’s overall budget.

For the past 24 years up until Dec. 31, the nursing center was run by St. Louis-based Management Performance Associates, a firm that 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.

The nursing home is being marketing through a $10,000 county contract with Marcus and Millichap and has been on the market since late April, when the board elected to begin the sale process.

Davis said he was involved in the negotiating process before the Illuminate offer and went on a tour of the facility.

A non-binding contract for a sale would also have stipulations, including that the board could later decide to back out of a deal in the future if they so choose, Gregory has said.

If a sale contract is signed by the County Board with a 2/3 majority vote, Illuminate would be expected to pay $20,000 in upfront, non-refundable costs as a showing of good faith, officials said. The county government would still be liable for the $7.3 million debt hole created by the nursing center, and the expansion bond debt.

If the County Board approves the $8.15 million sale, 3% of the sale revenue will go to Marcus & Millichap for commission, Gregory has said. That leaves about $7.9 million which Gregory proposed the county use to pay off the nursing home debt, which totals about $13 million.

Over the past month, Campbell also presented financial reports which outlined how the facility could right-size its budget issues by 2024 if it remained under county control. According to DeKalb County documents, the proposal includes a five-year look at what it would take to keep the facility under county control.

Proposed solutions include reducing nursing center staff by 21.5 full-time equivalent positions over a 12-month period, to allow for the reduction of staff primarily through attrition. A 3% increase in salary ranges was also included to adjust for inflation and bargaining.

The report looked at 2020 and 2021 budgets for the facility, five-year projections, a staffing model taking into account agency-provided workers, and scenarios for budget projections such as if a 0.1% tax levy were to be used to offset budget constraints.

Despite previously suggesting it, the County Board in March declined to move forward with a proposed 2022 ballot referendum that would have asked voters to consider a tax levy to help the facility’s money problems.

Gregory said Wednesday the County Board could rekindle tax referendum considerations as early as August.

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.