Another Nursing Home in State Receivership Stokes Fears of Growing Problems in Minnesota

Three facilities being placed under state control in two years in Minnesota reflects deep troubles for the sector, with many other facilities facing similar prospects and requiring immediate financial help.

The latest to be pushed into state control is the Bay View Nursing and Rehabilitation Center in Red Wing, which serves higher acuity residents. The Minnesota Department of Health (MDH) was assigned a temporary order establishing receivership of the facility last month, and it in turn assigned Pathway Health with managing it.

Court-ordered receivership marks an emergency step and prior to these three, Minnesota had only resorted to it once in the preceding seven years.

This latest incidence of state control underpins an alarming trend within the nursing home sector and one that is directly linked to staffing shortages and expenses at its heart.

Advocates featured in an article in the Star Tribune said that Minnesota’s takeover of the Bay View facility is a worrisome sign that senior care in the state is crumbling. 

For Bay View, it came down to largely being unable to pay its workers, according to the story. The organization also owed Minnesota $1.8 million in licensing fees. 

Sam Weinberg, Bay View’s owner, told the Star Tribune that he had to dip into personal savings to maintain payroll in 2019 when he bought the Red Wing facility from a bankrupt company. “It just kind of spiraled out of control. I needed to cover payroll and the money I was supposed to get just wasn’t there,” said Weinberg.

Bay View only had 61 of 120 beds filled when the state took over. The low census is apparently common at Minnesota’s 349 nursing homes because of staffing shortages, especially for the 61 facilities with low, one-star ratings, the article stated.

Staff turnover rate at Bay View stood at 99% in one year while low-rated nursing homes averaged 62% turnover annually compared with 34% for Minnesota’s highest-rated facilities, according to the article.

While Bay View had deep problems – with more than 15 citations including those related to food safety – ultimately staffing shortages and expenses related to agency staff caused the facility undue financial stress. By fall of 2023, the Centers for Medicare Medicaid Services’ (CMS) listed it on its Special Focus Facility (SFF) program. It was one of 10 Minnesota nursing homes added to the federal list of facilities with serious quality issues.

Usually extreme situations warrant a receivership such as after facilities have lost workers, fallen behind on bills and cut corners, Cheryl Hennen, Minnesota’s ombudsman for long-term care, told the Star Tribune. State control is exerted to prevent financially troubled nursing homes from closing abruptly, she said.

“I don’t think this is a one-off,” Hennen said of Minnesota’s recent state takeovers. “This is a problem. We need to dive into this and figure out what needs to be put in place to be more proactive and prevent this, because we are running out of beds.”

Rising costs associated with skilled care and workforce shortages have resulted in 26 nursing homes closing in the state in five years as other nursing home organizations have pared down operations, according to the newspaper.

Minnesota’s Legislature tried to rescue the sector by promising roughly $300 million in emergency aid, Toby Pearson, chief executive of Care Providers of Minnesota, told the Star Tribune.

“Absent that investment, I think you would have seen a lot more chaos,” he said.

However, some of the state allocations made in spring of 2023 are yet to reach the most troubled of the nursing homes, including Bay View’s facility. That’s because Medicaid payments to nursing homes are based on the actual costs of care, but it takes several months – 15 months or more in Minnesota’s case – to figure out how much more they earned above base payment rates. Many struggling operators such as Bay View find it difficult to stay afloat in the meantime.

And without that government funding, some nursing home owners were asking whether they could voluntarily put their homes in state receivership, Pearson told the Star Tribune.

“That’s how desperate they were,” he said.

Under the receivership facilities are given 18 months to fix problems, although state control could last longer. And, this route doesn’t always mean success. Of the three facilities in this situation in Minnesota, one is still operating under state control 20 months later, while another had to fold, the article noted.

And nursing homes with low ratings aren’t alone in being at risk of closure. A national study published in July suggests that nursing homes with higher ratings are facing the same pressure, ones that nursing home advocates say will only get worse if a proposed federal staffing mandate goes through.