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Bayfield County Board To Hold Public Hearing On Northern Lights Nursing Home

County Renegotiating Lease Agreement After Missed Interest Payment

Danielle Kaeding/WPR

The Bayfield County Board will hold a public hearing tomorrow night about its lease agreement with Northern Lights nursing home. The nonprofit nursing facility notified the Bayfield County Board in late May that it would be unable to make its June interest payment to the county as part of that agreement. It’s unclear whether the facility was able to make its July interest payment. The 65-bed facility is the county’s only nursing home.

Bayfield County issued Northern Lights around $5.9 million in municipal bonds in 2007 and entered into a lease agreement with the nursing home. The county typically pays principal and interest on the bond and is then reimbursed by Northern Lights. However, Northern Lights was unable to pay the roughly $86,000 it owed the county in June.

Northern Lights Executive Director Jennifer Augustine declined to comment on the missed interest payment, referring questions to the county. Wisconsin Public Radio obtained a letter to the county board dated May 26. In that letter, Augustine requested forbearance on the interest payment, citing “cash flow restrictions.”

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The letter reads. “We apologize for the short notice but cannot put in jeopardy patient needs and the need to utilize current cash for day to day operations.”

The county board approved refinancing those bonds at its June meeting. That means the county will have to enter into a new lease agreement with Northern Lights in order to move forward with refinancing. The move could save Bayfield County around $400,000 over the remaining life of the bonds due to low interest rates, according to Bayfield County Administrator Mark Abeles-Allison.

The county administrator declined a request for an interview about ongoing lease agreement negotiations with Northern Lights.

When asked in an email whether Medicaid reimbursement rates played a role in the nursing home’s financial challenges, Abeles-Allison responded, “Medicaid reimbursement rates that are below the cost of service delivery creates financial hardships.”

The county board also passed a resolution in June to increase Medicaid reimbursement rates to nonprofit nursing homes to ensure coverage for county residents.

Gov. Scott Walker has proposed increasing Medicaid reimbursement rates for skilled nursing facilities by 2 percent each year in the next budget biennium. The increase attempts to bridge the gap between Medicaid reimbursement rates and the cost to provide health care services. The measure has passed through the Joint Finance Committee, but it has yet to be voted on by the full Legislature.

Skilled nursing facilities lose about $56 per Medicaid patient each day under current reimbursement rates, according to the Wisconsin Health Care Association.

In an email, Abeles-Allison said the county is committed to maintaining Northern Lights and working with the nursing home to keep “critical services” for Bayfield County.

Around 63 percent of Bayfield County residents who took part in the 2017 budget survey said the county should continue to financially support Northern Lights. The county currently levies residents for the bonds each year. Any payments the county receives from Northern Lights that exceed bond principal and interest go to fund road or other projects in the county, according to Abeles-Allison.

The nursing home passed state inspections last year and was not cited for any federal violations. In 2015, Northern Lights was cited for 11 federal violations that resulted in “minimal physical, mental, or psychosocial discomfort” to residents. Nursing homes with 50 to 99 beds averaged about eight citations during inspections each year across the state’s 387 nursing homes, according to the Wisconsin Department of Health Services.

The Bayfield County Board meeting will be held at 6 p.m. at the courthouse in Washburn.