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January 28, 2014

County sells Otsego Manor to top bidder

By Joe Mahoney Staff Writer
The Daily Star

---- — A divided board of trustees for the Otsego County Health Facilities Corp. on Monday decided to sell the 174-bed Otsego Manor to Focus Ventures LLC of Rockland County for $18.5 million.

Three of the corporation’s seven trustees split with the majority by voting to sell the facility to VestraCare, which operates Susquehanna Rehabilitation and Nursing Center in Johnson City.

Those supporting that bid said they were more impressed with the quality of care VestraCare offered. One of the dissenters, William Dornburgh, has publicly questioned the financial underpinnings of Focus Ventures, saying he is concerned whether the company is stable enough to run the Manor.

Those voting for Focus were businessman Richard Eastman, former Oneonta Mayor Kim Muller and Otsego County Reps. Katherine Stuligross, D-Oneonta, and Don Lindberg, R-Worcester.

Those supporting the VestraCare bid, in addition to Dornburgh, were Dr. Donald Pollock and Carol Kirkey of Oneonta. The wives of Dornburgh and Pollock are Manor residents. Kirkey’s husband died there as a patient.

Until Focus obtains a state license to operate the Manor, the county will continue to run and manage the facility, which has been losing money to the tune of an estimated $500,000 per month. The completion of the transfer to Focus could take up to a year, officials said.

The trustees voted just after 4 p.m. Monday, following a closed-door executive session that ran about 90 minutes. A reporter for The Daily Star objected to the meeting being held in secret, pointing out that the newspaper had published the amounts of the bids from the two finalists. However, the local development corporation’s attorney, Shawn Griffin, advised the panel it was appropriate to close the meeting.

Sources told The Daily Star that VestraCare sweetened its initial bid of $15 million to more than $16 million before the meeting. Griffin said the new offer was brought to him directly by VestraCare executives and he briefed the trustees on it.

Stuligross, chairwoman of the corporation, said: “Although a finalist has been selected, the process is not yet complete.” It could take up to a year for the state Health Department to review the application for a certificate of need that Focus will have to garner in order to complete the transaction, she said.

She said the state agency must conduct a character and competency review of Focus to ensure it meets the state’s standards for nursing home operators.

A senior executive for VestraCare, Shannon Cayea, of Oneonta, criticized the trustees who voted for Focus.

“We raised our offer, but it’s obvious it’s all about the money,” Cayea said. “I’m really disappointed with the LDC board.”

Cayea noted that the county will continue to be financially responsible for the Manor until Focus can persuade the state Health Department to issue that firm a certificate of need. She pointed out that Focus, more than two years after acquiring what had been a troubled nursing home in Utica, has still not applied for the certificate of need for that facility, which last year received a score of 1 out of 5 on a nursing home scoring system used by the federal government. The two nursing homes run VestraCare attained scores of 4/5 and 5/5 after their most recent federal inspections.

“I’m pretty sad to see that in the place where I live it’s all about the money, and it’s really not about the care of the elderly in this community,” Cayea told The Daily Star.

Dornburgh, a retired banker who once served as a hospital board chairman in New Jersey, said he agreed with that criticism.

“I don’t blame her for being disappointed,” Dornburgh said. “I think the money was the ruling factor — not the quality of care.”

But Stuligross defended the majority’s decision to go with Focus.

“We certainly would not have gone with them if we had not felt the quality of care would continue to be as high or perhaps even higher in the future (than it is now),” he said.

Lindberg also contended that the package offered by Focus is the best deal for the county.

“I was very impressed with Focus,” he said. “I think they worked hard in Utica, and they are going to work hard here.”

The trustees said the agreement with Focus will make the company eligible for a property tax break on the Manor via a payment-in-lieu of taxes agreement that has already been approved by the Otsego County Industrial Development Agency.

The PILOT will be similar to one structured for an Ulster County nursing home sale involving the same investors in the company that owns Susquehanna Nursing and Rehabilitation. That 25-year arrangement calls for yearly increases in the company’s payments, resulting in a savings of some $4 million, according to press reports last year.

LDC trustees backing the high bidder said all current Manor employees will be eligible to apply for jobs with Focus Ventures.

“The firm has a reputation for excellence in relationships with unions and the employees they represent,” the LDC said in a press release that Stuligross distributed.

Along with the Manor, Focus, at the closing, would become owner of the 18.5-acre site as well as the alternative home health care program that the county has been operating.

Following the board’s decision, Stuligross declined a request from The Daily Star for a copy of the proposal submitted by Focus in response to the local development corporation’s request for proposals.

“Talk to the lawyer,” she said when asked for the portion of the proposal that lays out the company’s vision for the facility.

Prior to the formation of the local development corporation, a grassroots group called Save the Manor implored county lawmakers to come up with a way to keep the Manor as a public health care facility. One of those who had disagreed with the sale, Sandra Bliss of Middlefield, said the vote in favor of Focus confirmed her fear that the trustees only wanted to maximize the amount of money the county would reap from the sale.

“We don’t know anything about what this company intends to do with the facility,” said Bliss, her voice cracking with emotion. “The LDC has lacked transparency throughout the whole process. We were promised money would not be the primary issue and care would be the primary issue.”

Stuligross said Focus was chosen after a “comprehensive selection process which involved numerous visits to nursing home facilities operated by the bidders, meetings with representatives of bidding entities, research into relevant state and federal data.”

She said Focus is planning to introduce programs that will enable the Manor to accept patients requiring specialized therapies and will work with Bassett Healthcare Network to provide services to Manor residents.

Cayea pointed out that, as reported earlier this month, the proposal from Focus lacked any mention of a relationship with Bassett. However, the VestraCare proposal specifically outlined a planned relationship with the Cooperstown hospital, whose board issued a letter of intent to work with the company.

She also pointed out that VestraCare was able to get the certificate of need for its nursing home in less than five months. As for the Manor, she said, “The county will subsidize this until they close the deal.”

Once the sale is completed, county government will have no say in how the Manor operates.

The Board of Representatives created the LDC last May after deciding to try to privatize the Manor after county taxpayers have paid for subsidies that have grown year after year.

Otsego County opened the $30 million Manor in November 2004. The nursing home replaced the Otsego Meadows, a complex now used as office space by county agencies.

Focus Ventures, according to the company’s web site, owns Focus Home Care, a Pennsylvania agency, EMStar Ambulance, a medical transportation services company serving the Philadelphia region, American Home Medical, a medical supply company, Focus Assisted Living and Focus Capital, which “ensures that each business has the resources needed to succeed.”

$30 million Original cost of Otsego Manorat 2004 opening $18.5 million Focus Ventures LLC offer accepted by county $16 million Final offer from VestraCare, upfrom original $15 million offer -$500,000 County's estimated monthlylosses on Manor