Proposals Sought for Sale of Health Center

by Jonathan Weaver

A million-dollar deficit in each of the past five years has caused Armstrong County Commissioners to consider “exploratory” sale of the Armstrong County Health Center in Kittanning.

Wednesday, Susquehanna Group Advisors’ Managing Director Jay Wenger presented Armstrong County Commissioners Pat Fabian, Jason Renshaw and George Skamai with background on the 115-bed facility – which Armstrong has maintained since the 1970’s.

Wenger said all counties that own nursing homes have similar concerns as they compete against not-for-profit, private pay care and also for-profit businesses that only offer skilled care (like Armstrong) but across multiple facilities.

“It’s very similar to why the ‘Mom and Pop’ grocery store or barber shop, hardware store or gas stations have disappeared because the economies of scale are into mass purchasing and resource allocation – like a Sheetz convenience store/gas station,” Wenger said. “While you see all these small operators disappear in other industries, much the same is occurring in the skilled nursing industry because it’s very, very difficult to operate as a single-site facility and be as competitive.”

Most of the state’s counties used to own facilities, but only 20 remain – including Bradford, Indiana and Westmoreland - due to losing revenue.

Wenger presented the county with five options – including hiring a management firm or consultant (as Armstrong has already done in the past), leasing operations or converting the property into a non-profit – but ultimately decided the six – selling the facility.

“We see far-greater value in an outright sale – which is option six (rather than transferring to a non-profit),” Wenger said.

A half-dozen counties have also discussed selling their facilities. Wenger said prices from buyers have continued to escalate.

Renshaw confirmed interest is growing in the Armstrong County Health Center.

“We’ve had multiple people call, e-mail. There seems to be a trend going around the State,” Renshaw said. “You get a few here-and-there (and) get a few more, so we said ‘OK, if there’s that big of an interest and we’re already losing money, we’ll at least entertain it just to see if those people are real.”

Fabian said he has been researching the Armstrong County Health Center since being elected, and found Wenger’s presentation “excellent.”

“For me, it was an easy decision to explore this process of (Request for Proposals),” Fabian said. “Because, we do get calls every single week about the health center. This is something worth exploring at this point.

“This has been a careful evaluation for eight months, and I think this is critical we look at it now (during budget meetings with department heads).”

Fabian wants to hear from buyers with experience working with unions and that will negotiate fairly.

“The highest priority should be patients and those employees,” Fabian said. “At the end of the day we’re not comfortable, we’re not selling and we’ll continue to operate as-is.”

A RFP stipulation states County officials do not have to accept the highest bid.

Renshaw and Fabian re-emphasized the board’s desire to make sure the amount of local jobs and the quality of care “remains the same, if not gets better.” Former County Commissioner Rich Fink also desired such.

“Nothing changes – you take what’s going on there right now (assure the) - same care, same personnel, same everything – and it would be just a change of ownership,” Renshaw said.

Fabian said if the process does work out, the building would go back on the tax rolls for Kittanning Borough. Not only would exploratory findings possibly save the county $1 million annually, but also save Armstrong from making capital improvements necessary.

Financial losses have also depleted much of the nursing facility’s cash resources.

The Armstrong County Health Center is already projecting to lose more than $600,000 in 2016 – and that is after an agreement with Affinity Health Services was severed and a one-time intergovernmental transfer.
Commissioners unanimously entered into an agreement with Susquehanna Group following the presentation for them to begin the exploratory process. Susquehanna Group Advisors have consulted with Armstrong County for about a dozen years, and has consulted with other counties regarding nursing homes as well.

A group of community representatives in addition to county commissioners will make the final decisions and tour facilities operated by other groups.

Wenger and commissioners were to announce the exploratory decision to health center staff Wednesday afternoon.

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  By Watchingfromadistance, August 26, 2016 @ 10:48 AM

  I commend you for seeing that the health center is a financial drain. Now if they could only see that that the Belmont Complex is doing the same, we might be able to keep from raising taxes every year. I ask; with the ice rink in need of repair, how much more money are we going to sink into this pit?
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  By Just sayin, August 26, 2016 @ 11:22 AM

  Coming out of “writing” retirement to comment. Is the Armstrong County Health Center owned by the state or county?

  Here’s is a quote from a February 20,2015 KP article in an interview between Commissioner Bob Bower and reporter Jonathon Weaver:

  “Commissioner Bob Bower thought back to when the building was Armstrong County Hospital – the former Kittanning General Hospital – and it was renovated into two upper stories containing wards, private rooms, a pediatric unit, maternity rooms, an X-ray room, a laboratory and an operating room.

  He remembered watching one of the two floods surround the building with his parents, and later worked at the hospital in 1971 as his first job in the Department of Radiology.

  ‘I remember it more as a hospital than a health center – the Health Center came shortly after that when the County purchased it,’ Bower said.”

  So, which is it?
  I was always under the impression (and apparently so was a commissioner)that the Armstrong County Health Center was owned by the county.

  Something smells rotten in Denmark.

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