COOPERSTOWN — As owner and operator of the Otsego Manor, Otsego County is facing millions of dollars in liabilities over and above the $5.5 million public subsidy the nursing home will receive this year, officials disclosed Wednesday.
The county has no money set aside to pay for long-term liabilities incurred as the result of its operation of the Manor, said Russell Bachman, the county’s acting treasurer.
“I don’t think the public understands that the liabilities are what is going to hurt us,” Bachman said.
In 2011, a financial statement prepared for the county by accounting firm Bryans & Gramuglia showed the total loss from operations at the Manor that year alone stood at more than $8.3 million. That figure includes depreciation of $1.3 million per year. The county has created no reserve to cover depreciation, but one should be included in the true cost of operating the nursing home, Bachman emphasized.
Bachman also revealed that concerns about how the county has been funding the Manor have prompted the agency that determines the county’s credit rating, Moody’s Investors Service, to initiate a “surveillance audit” of the county’s books, Bachman said.
If that leads to a reduction in the county’s rating — AA3, which is defined as high quality — the county could end up paying higher interest rates on its debts, Bachman explained.
“The basic question Moody’s is asking is: are you going to get reimbursed for funds you are putting into Otsego Manor?” Bachman said. The answer to that question, he added, is “no.”
One reason the county’s Manor subsidy has grown is the regional pricing scheme the state uses to determine Medicaid reimbursement rates, Bachman said.
Because wage and benefit costs for Manor employees are significantly above the median wages and benefits at other facilities in the region, the state has lowered the Medicaid reimbursement rate for Manor patients, adding to the county’s expense for caring for those patients.