Applewood owners say decreased state dollars will drive them out of business

CHANUTE – The co-owners of a 45-bed nursing facility here that cares for people with severe and persistent mental illnesses have decided to shutter the business.

“We just got our rate-setting form from the state, telling us that our per-day reimbursement would be going down by $4.96 per person, per day,” said Mary Harding, director of nursing at Applewood Rehabilitation, Inc.

“That equates to about $7,000 less a month,” she said. “We’ve been barely breaking even for a while now, so we made the choice that we had to make, and that was to close.”

The decision comes on the heels of state officials announcing last month that Osawatomie State Hospital had reached its maximum capacity and had begun putting would-be patients on a waiting list.

Osawatomie is one of two state-run facilities for Kansans with mental illness. The other is in Larned.

Applewood Rehabilitation’s closing likely will add to the Osawatomie hospital’s troubles since many of the hospital’s patients, when they’re ready for discharge, are sent to community-based nursing facilities like Applewood.

“One of the reasons Osawatomie (State Hospital) is full is because there aren’t enough residential facility beds in the community,” said Richard Spencer, a crisis case manager with the Southeast Kansas Mental Health Center. “So when people are ready to leave the hospital, there’s nowhere for them to go. They have to wait for an opening.”

The state hospital losing access to the 45 beds at Applewood Rehabilitation, Spencer said, will be “horrible.”

“We just got tired of seeing our expenses go up and our reimbursement go down.”

– Mary Harding, co-owner of Applewood Rehabilitation in Chanute

Harding, who’s one of Applewood Rehabilitation’s four co-owners, said she spent much of the past week notifying residents and their family members of the owners’ decision.

“We sent everybody a formal letter (Wednesday),” she said. “And I sent KDADS (Kansas Department for Aging and Disability Services) an email, giving them the 60-day notice that we’re required to give them. August 31st will be our last day.”

Harding said she and her staff are doing everything they can to help residents find other places to live.

Many of the residents, she said, “at some point in their lives have been to a state hospital. Some have been to numerous state hospitals.”

The youngest resident, Harding said, is 24 years old; the oldest is 77.

The decision to close the facility, she said, was irreversible, adding that the owners had grown weary of the near-constant expectation to do more with less.

“We just got tired of seeing our expenses go up and our reimbursement go down,” Harding said. “I’ve been going to meetings for 20 years where this was talked about and everybody said they were going to do something about it. But you know what? They never do anything.”

Harding’s husband, Dennis, is another of the facility’s co-owners. She declined to identify the other two, saying she didn’t have their permission.

Complex funding formula

Prior to July 1, KDADS paid Applewood Rehabilitation $83.06 per day for every resident in its care; after July 1, the rate dropped to $78.10 per day.

In Kansas, rates paid to nursing homes are based on a complicated formula that’s meant to offset a facility’s actual costs, reward efficiency, and ensure adequate care.

Applewood Rehabilitation’s rate was reduced because it hadn’t met the “staff retention” portion of the formula, Harding said.

“In my opinion, that’s something that’s completely out of your control. Staff leave for all kinds of reasons that have nothing to do with what goes on here,” she said. “I’d also point out that I’ve been here 21 years. I have a med aide who’s been here 20 years, and a nurse who’s been here 30 years. My administrator has been here 20 years.”

The facility, she said, has 39 employees.

Angela de Rocha, a KDADS spokesperson, said the agency will be working with Applewood Rehabilitation’s staff and with the state’s community mental health centers on finding “other appropriate accommodations for current residents.”

She added: “This is a voluntary closure… KDADS will require the facility to provide an overall transition plan, discharge locations for residents who have relocated, weekly updates, the location of record storage, etc.”

Applewood Rehabilitation is one of 11 facilities in Kansas that serve about 600 adults with severe and persistent mental illnesses.

For years, these facilities have warned policymakers that the state’s rates fall short of meeting their costs, and that the rate-setting formula is based on meeting the needs of geriatric patients rather than mental health patients.

“A lot of people have their heads in the sand about this,” said Cindy Luxem, chief executive with the Kansas Health Care Association, a group that lobbies on behalf of the state’s for-profit nursing homes.

“The powers that be keep telling us that they’re going to do something new, that they want to take a new approach, that they want to work with us,” Luxem said. “But I’ve been with the association since 2003 and I can tell you these folks (administrators at nursing facilities) have never had a seat at the table.”

Mitzi McFatrich, executive director of Kansas Advocates for Better Care, an organization that advocates on behalf of nursing home residents and their families, said news of Applewood Rehabilitation’s closing wasn’t surprising.

Photo by Chanute Tribune
Photo by Chanute Tribune. Applewood resident Kathryn Boyd enjoys spending time outside on the patio. Boyd is urging Gov. Sam Brownback to intercede on behalf of the facility’s residents and keep it open.

“The concern about inadequate reimbursement is part of a conversation that’s been going on for years,” McFatrich said. “But the state, really, hasn’t shown much interest in investing a lot of money in anything that has to do with adult care or specialty care. And what little has been developed in the way of resources has been of little benefit to the NFMHs (nursing facilities for mental health).”

McFatrich, who monitors conditions in nursing homes throughout the state, said Applewood Rehabilitation appears to be a well-run facility.

“Over the last three years they’ve had low deficiencies, lower than the rest of the state,” she said. “They haven’t had any citations for actual harm or immediate jeopardy or mistreatment, and there haven’t been any investigations resulting from complaints field against that.”

The facility, McFatrich said, has had “a lot of stability in terms of leadership, ownership, and management.”

Kathryn Boyd, 68, moved to Applewood Rehabilitation in 2008.

“I used to have an apartment,” she said. “But got to a point where I couldn’t take care of myself. I was having trouble paying the rent and taking my medication correctly. So when I went to get help, they said I should come here because it was a good place.”

Boyd said she’s written a letter to Gov. Sam Brownback, asking him to do something to “intercede” on the residents’ behalf. She put it in the mail Thursday.

“That seemed like the only thing to do,” she said. “We don’t want to have to move. This is a kindly place. They take good care of us.”

The nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.

Funding woes to close Chanute facility for mentally ill