Hope Creek Care Center will run out of credit by the end of the year if its financial situation doesn't improve.
Rock Island County Treasurer Louisa Ewert told board members Wednesday night that Hope Creek will have enough credit to borrow for the bond interest payment due in June, but not for the month of December.
Ewert said the county-owned nursing home, 4343 Kennedy Drive, East Moline, will owe $206,637 in June and $1.3 million in December.
"Right now we have enough to borrow to make the June interest payment," Ewert said. "There is a possibility on Dec. 1 that we are not going to be able to make that entire bond payment. That's when the bottom could potentially, totally drop out. We would be out of credit completely."
Ewert said she will have to borrow $210,000 to make the June payment.
Ewert and Rock Island County Auditor April Palmer gave a combined presentation to board members during the committee of the whole meeting on the financial state of Hope Creek.
Palmer said the facility is now $4.6 million in debt.
"Simple division calculates that to 29 percent of their future year's revenue," Palmer said. "They are already in debt today without Ms. Ewert having to borrow those additional dollars she just listed off to you. It's really sad.
"We keep getting farther and farther behind," Palmer said. "The revenues are a bit unstable right now. I'm assuming it's based on their patient count. We were trying to come up with the month when they'll be out of money. I just want to make note, they are already out of money."
Ewert said she hopes not to have to borrow any more money between June and December 1.
"There really is no margin for error if the revenues don't start to increase and at least get up to $950,000 (per month)," Ewert said. "If it starts to get really unstable, there's a good chance that by the Dec. 1 bond payment, we could have borrowed everything we could from the bank and from working cash."
Ewert said the county still has $2.2 million it can borrow from the bank if needed, but Hope Creek currently owes the general fund $733,000.
Ewert said Hope Creek needs $1.1 million in revenue each month just to pay $720,000 in wages and $400,000 in vendor bills and invoices. The facility runs short by $120,000 each month. Revenues in November and December dropped to $800,000 and $850,000, she said.
"If you multiply $120,000 by 12 months, you get $1.4 million in the negative," she said.
Ewert said Hope Creek had to borrow another $212,000 Dec. 21 just to cover payroll.
In June, board members approved writing off $2.7 million of Hope Creek's debt, most of it from unpaid Medicaid claims owed by the state.
Ewert and Palmer were met with stunned silence when they asked board members if anyone had questions.
"This board has never sat down and made the hard choices when it comes to Hope Creek," board member Don Johnston said.
County Administrator Jim Snider advised board members to consider hiring MPA (Management Performance Associates) of St. Louis at a cost of $29,000 to conduct a cost benefit analysis of the nursing home.
Snider provided board members with a 29-page proposal from MPA, outlining their process and track record of success in turning around nursing homes and hospitals from the brink of financial ruin.
The county hired MPA in 2009 to manage Hope Creek, but ended the three-year contract in 2011 without explanation.
Board member and Hope Creek advisory board member Rod Simmer said he thought the professional analysis by MPA would pay for itself.
Board vice-chairman Richard Brunk agreed board members should consider the professional advice of MPA.
"Whatever direction this board decides to go with this home, we can honestly say we've done our due diligence on rock-solid information," Brunk said. "I would argue this is a good investment."
Board member Drue Mielke said it might be time to poll residents and see how they feel about owning a nursing home.
"We don't really know, as a board, if the residents of this county want us owning and maintaining Hope Creek," Mielke said. "It's a good place, but should the county be involved? I wish we could have asked the question years ago on a ballot; do the residents really want us to be in the nursing home business?"