Vernon County approves management agreement to have Bethany St. Joseph Corporation take over Vernon Manor/Vernon Acres

Monday, Nov. 4, 2024

VIROQUA, Wis. – After about a year of discussing options and negotiating, the Vernon County Board of Supervisors voted 17-1 on Oct 17 to move forward with an agreement that will turn over management of the county owned Vernon Manor and Vernon Acres to Bethany St. Joseph Corporation (BSJ) effective on Dec. 2, 2024. The County will retain ownership of the facilities, but BSJ will be responsible for day-to-day operation of the facilities, including staffing. Employees will no longer be employees of the county and will transition to employment under BSJ.

Vernon Manor is an 80-bed skilled nursing home that has been owned and operated by Vernon County for over one hundred years, earning a reputation for being a facility of choice within the surrounding area. Vernon Acres is a 32-unit senior living community that was constructed by Vernon County in 2021, with occupancy in 2022.

Long-time Vernon Manor/Vernon Acres Board Trustee Lonnie Muller was the lone no vote and voiced his opposition at the Board of Supervisors meeting, as he has for much of the last year. The County had set aside about $90,000 to do a feasibility study but never went down that road once it began talks with BSJ about a possible management agreement.

The county was in a bit of a bind with the facility losing money over the last several years. Several factors seemed to converge that put the facility in a downward spiral that were difficult to overcome. Over the last year the Vernon Manor Board of Trustees as well as other committees discussed those factors and ways to turn them around, including:

1. COVID 19 – Every skilled nursing facility was hugely impacted by the pandemic, and yes, there was federal money to help offset losses, but it still had an impact, especially on staffing.
2. Wages –Vernon County was slow to increase wages which also impacted staffing. But a wage study and a specific raise for Manor employees eventually got wages to one of the highest on the area, but the financial impact and loss in staff was significant.
3. Outside labor – Both the of the previous two factors led to a heavy dependence on outside labor and “traveling nurses” in particular. Many of those positions that the facility was unable to fill locally had to be filled by an outside agency at a cost as high as $60 an hour.  In 2023 Vernon Manor spent $1.2 million on outside help.  
4. Laxed accounts receivable policies. Accounts receivable policies were loose or not enforced tightly resulting in collections going on for months or years, with some accounts ending up in court or uncollectable, and severely impacting the bottom line. In 2023 the county was forced to write off $173,000 and $160,000 in 2024.
5. Management turmoil. Long-time administrator Amanda Hoff stepped down in 2023. The county did a search for a new administrator but with facility having a tough time financially and the possibility of a feasibility study looming that could be read as a sign the position may or may not be long-term, the county had a difficult time attracting applicants. The county was able to bring Kris Brueggen on board as an interim administrator at the beginning of the year, but she was only able to fill the spot until April. Another administrator was brought in as a stop gap temporary solution but abruptly left after a couple of months. The county was able to hire Michael Spitzer as Interim Administrator a few months ago to manage the operations until the management agreement can be completed.
6. Aging facility and outdated design. The county previously rejected proposals by administrators to modernize to cater to Baby Boomers including a proposal in 2011 by previous administrator Nancy Witthoft to split the facilities license and build two new 40 bed facilities, one in Viroqua, and one in Hillsboro.
7. Weak marketing of the newly constructed Vernon Acres. Vernon Acres was constructed in 2021/2022 but has only recently reached full capacity.

Vernon Manor was once financially viable, usually showing a small loss, breaking even, or even some years returning $100,000 or more to the county to help balance the budget, but given the precarious financial performance and difficulty attracting management, county Administrative Coordinator Cassie Hanan decided to forego the feasibility study and began talks with BSJ at the beginning of the year about taking over management. Hanan told the board to date that Vernon Manor/Vernon Acres owed the county general fund $3.4 million.

Bethany St. Joseph Corporation has 39 years of experience with government management agreements. In Jan. 1985, BSJ began management agreements with the cities of Galesville and Westby to manage Marinuka Manor, a 50-bed skilled nursing home, and Norseland Nursing Home, a 59-bed skilled nursing home.

In joint written statement BSJ and Vernon County said this management agreement provides various benefits for Vernon Manor and Vernon Acres, some of which includes the capacity to reinvest in buildings over time (capital), enhanced purchasing power, the opportunity to leverage buying power with suppliers and contracts, improved pricing and contract agreements, volume discounts, career development and educational opportunities for employees, and marketing support from the corporation.

That statement went on to say that through their non-for-profit approach, BSJ is committed to advancing Vernon County’s mission to improve the quality of life for residents while working to inspire life, hope, and healing through exceptional care, devoted staff, and an uplifting, homelike atmosphere. For residents, the management agreement will only build from the quality care they have been receiving at these facilities.

“It’s an honor to partner with Vernon County to continue their legacy of providing quality care to their residents for years to come. We are thrilled to welcome the staff and residents of these facilities into our community and are eager to see what the future holds,” said Kim Gochanour, CEO of Bethany St. Joseph Corporation. Gochanour would like to extend a heartfelt thank you to the Vernon County Administration and the BSJ management team for their work and wonderful collaboration that helped make this agreement possible.

“It’s a win-win for all our residents and caregivers at Vernon Manor and Vernon Acres. This agreement reflects our total commitment to quality care for all residents and maintaining a positive workplace for our caregivers. It was a great team effort to help ensure both these great facilities remain here today and well into the future.”

At the Oct. 17 Board of Supervisors meeting, BSJ CEO Kim Gochanour gave a presentation to the board about their management approach and the specifics of the agreement and how it would work. Gochanour said BSJ’s history began in 1975 when Bishop Frederick Freking and Carl Iverson came together because the building where Bethany St Joe’s is located was built by an outside California company that was a for profit company that built it, and was called Park View. They built the building and decided they didn’t know anything about Wisconsin, so they didn’t want to stay in the business, and so they were going to get rid of the building, close it. It was a 300-bed building at the time, and they decided in the city of La Crosse that we still needed the business.

Gochanour said BSJ is not promising to turn the facility around overnight, but with management practices she hopes it can be viable again over time.

“Am I going to tell you that we’re going to come in and fix every financial woe in the building immediately?”  said Gochanour. “No, we’re going to come in and we’re going to look at your processes, and we’re going to put in new processes, and we’re going to work with the team, and we’re going to elevate what we can do and make that happen as fast as we can. It’s not going to happen overnight”

Gochanour said a big factor in BSJ success has been their employee retention focus that focuses on growing employees from within.

“The profit goes back into the buildings, said Gochanour. “It goes back into the people. It goes back into the buildings. We are known to be one of the higher paying buildings. We pay our staff very, very well. When I compared our salaries, when we go to meet with your staff and make the offers, most of the staff are going to see an increase in their pay for their offers. There may be a couple positions that will be what we call would be left stable with where they’re at. No one’s going to see a pay decrease. Everyone will see, most likely see a pay and pay bump for their offers. And then there may be a couple people that would just remain flat until our our wage bands would meet that and go forward. So we are very, very competitive in the market.”

One of the areas where BSJ will save money is employee benefits. Hanan said in comparing the county benefits to BSJ benefits the BSJ package is actually better than the county in some areas, but the one area that cost the county more was paying into the Wisconsin Retirement System (WRS) for those employees. Hanan estimated the cost to the county for just that benefit at about $250,000 a year. BSJ will not be paying into WRS but does provide its own retirement benefits.

Gochanour also talked about the specifics of how the agreement will work with the county.

The county will pay a management fee to BSJ but if they are able to show a profit they will send some of that back to the county. If there are capital improvements needed they would be done in cooperation with the county and in conjunction with BSJ’s strategic plan.

“You’re still responsible for the operational expenses, any debt payments, your financial audit has to go through,” said Gochanour. “You guys, because that’s just part of it, because you own the license, you own your building, it’s still your responsibility. These would continue annually and be part of the county audit your capital expenditures. I can’t just go spend money. You have to approve those. And they are set a threshold amount that are in the contract. And any accounting advisory committees would be put in place and are established between the county and us. There’s going to be things that will evolve as we go through this. The employees will transition over. Some of the services will have to be done as we go, because it’s just going to it’s going to take time to transition things, if that makes sense, because you can’t just say like, okay, we’re going to move it all over tomorrow. Some things are just going to take a little time.”

Not everyone on the County Board of Supervisors was in favor of the deal. Long-time Vernon Manor/Vernon Acres Board Trustee Lonnie Muller who serves from the La Farge area said state statutes gave the Board of Trustees the sole power to make decisions for the facility and Administrative Coordinator Hannan was going beyond her authority in negotiating the agreement. The trustees had given Hanan the go ahead to work on an agreement and County Corporation Counsel Nikki Swayne disagreed with Muller’s interpretation of the statutes.

“I heard Mr. Muller say that the authority to manage and govern the operations of Vernon Manor lies with the Board of Trustees, and that is not correct,” said Swayne. “And I appreciate and understand why that misunderstanding is there. And that’s the, I guess, dangers I’ll say, of reading a statute in a vacuum, if you will. But the statute is 4618, and in that statute, it does appear to say the Board of Trustees, and it does say that the Board of Trustees manages the, in this case, Vernon Manor. But you read on, and then you read in the Attorneys General’s opinions that is referenced in that statute, and you see that they do so at the direction of the county board. The county board has the ultimate authority over the management of the nursing homes and over who makes those decisions, including whether it’s an administrative coordinator.”

Board Supervisor Bruce Kilmer who is the current chair do the Vernon Manor/Acres Board of Trustees said he is confident after months of discussion that the agreement is the right way to go.

“It’s critical that we want the brightest and best people working out there,” said Kilmer. “And I think BSJ has got the track record and processes in place to attract the brightest and best people. You know, the incentives they have for their nursing staff is, I haven’t heard about that from anybody else that offers that type of a package. It’s amazing. So stability is what’s been lacking in our success. I believe, in my opinion, at these facilities, we’ve got some great people there. We really do. But if we can stabilize things from management on down, it’s my belief that we’re going to get this ship back on an even keel.”

Board Supervisor Charles Jacobson said he has attended many of the meetings and was also in favor of the transition.

“I’ve sat through a lot of these meetings,” said Jacobson. “And the general consensus is there’s good staff there, but with the shortages and all the things going on, it’s hard for the administrator to focus on administration. When they’re putting out fires, doing all those things, the management part seems to be the weak point. I mean, it’s hard to keep have time to keep up with everything. So common sense is, if you have a weakness in the management part, to contract with a management group that has the time and the expertise to do it makes more sense. And we’re still keeping the nursing home. We’re still keeping it here. They still have the same access. You know, the concerns about where’s grandma going to go,still here. But you have professional managers that have the time to keep up with the big manual, the changes, and make sure the billing gets done”

County Board Chair Lorn Goede also expressed his approval.

“I’ve been asked about this a lot,” said Goede. “And what I tell them is that, you know, with their management team, you know, we don’t even know what questions to ask, as far as our management team and their management team knows the answer before the questions even asked, it’s already taken care of. And so, you know, just to have that step up in management is just, it’s going to be really good.”