Van Duyn Nursing Home Economics
It's worth far more than County is selling it for.
July 7, 2013
To the Editor:
Claiming projected losses at Van Duyn Nursing Home, Onondaga County plans to sell it for $5M to privately owned Upstate Services Group (USG). However, it will pay $2M for USG's startup costs and $2.5M to demolish an unused building on the site. So, effectively, County is selling Van Duyn for only $500,000.
Incredibly, County was asking $8M--$10M. However, USG wanted a 10yr payment plan, while county offered only a 5yr plan. USG rejected the offer, so County dropped the price to $5M!
Why so cheap? Kindred Healthcare, Inc. recently sold 7 facilities (2 leased) with 900 beds and $63M/yr in revenue and 9% profit margins for $47M. That's $60,000/bed. That suggests a ballpark value of $30M for Van Duyn.
In a recent opinion article, County Legislator Derek Shepard stated: "Medicaid reimbursements haven't been raised in 30 years". However, the NY Dept. of Health website lists rates for Van Duyn from 2006--2012, which increased 28.5% during that time (4.3%/yr). Also Van Duyn's Medicaid reimbursement rate is $20--$40/day more than other CNY nursing homes. The rate is roughly $30/day higher than USG receives at Central Park Rehabilitation and Nursing Center it recently took over.
Finally, Van Duyn's occupancy rate is average for the US and slightly above average for NY. There appears to be no economic reason for Van Duyn to be unprofitable, and no reason to sell it so cheaply. County Legislators, please explain!
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