'If not us, then who?'

'If not us, then who?'

HEALTH CARE by Mark Gordon | Managing Editor

A Gulf Coast nursing home is plowing ahead with a $23 million renovation project, despite being part of an industry that's a nasty combination of costly and unprofitable.

As colliding health care disasters go, this one's a doozy: The elderly population of Florida is projected to continue its massive growth trends, while the three million-strong group of seniors already here have been defying life expectancy predictions and living longer.

But a state moratorium bans nursing homes from adding new beds through 2011, a bill originally passed in 2001 designed to curb state health care costs. And what's more, the nursing home business model itself can be harrowing, filled with difficulties such as a challenging work environment, thin margins, increasingly steep overhead costs and increasingly feeble insurance reimbursements.

The combustible mix shouldn't be - and in almost all cases hasn't been - a salivating invitation for entrepreneurs, public companies or even saints to expand in or enter the Florida nursing home business.

"The financial situation of most nursing homes is pretty precarious," says Ed Towey, a spokesman for the Florida Health Care Association, a Tallahassee-based lobbying group, adding that the situation has been like that for more than a decade, and is likely to stay that way for at least another decade.

So what is John Overton, president and CEO of the Pines of Sarasota nursing home, doing standing at a podium on a nippy early February morning, bragging about the grand opening of the glistening, 122-bed, $15 million facility behind him? It's a facility that includes a sleek 1,600-square-foot rehabilitation center and gym, complete with a full-immersion aqua pool rarely seen in a nursing home.

And why did the Pines borrow $7 million for the renovation, taking on debt for the first time in its 59-year history?

Not 'sexy'

The answer to both questions is a combination of feel-good altruism and bare bones necessity.

"Taking care of old people isn't a sexy business," Overton, 60, says, "but it's absolutely a business that needs to occur."

The Pines, which was formed in 1948 by the Kiwanis Club of Sarasota, is a private nonprofit organization with a mission that includes providing for "an enhanced quality of life regardless of financial resources." The Pines is funded completely from donations and fundraising; it has never received any state, county or city funds.

But even nonprofits need to generate money to sustain operations, a harsh reality Overton, a 30-year veteran of executive positions in the nursing home industry, was reminded of when he was hired to run the Pines in 2001.

Back then, he was greeted with a blunt and terse welcome from the people at the Agency for Health Care Administration, which oversees statewide nursing home operations. He was told that the Pines' beds and other facilities were in dire need of upgrades, so much so that the building's future licensing depended on it; the upgrades would be allowed under the new-beds ban, because they were replacements.

"We built this project," says Overton, "with the understanding that we didn't have any choice in the matter."

So in addition to caring for its residents, a nursing home-wide rebirth became the organizations' battle cry, down to employee-generated coffee and donuts sales to help pay for it. The project has two phases, and the first phase is about two-thirds complete.

'Chugging along'

The total project, worth $23 million, really began in the boardroom of the Pines of Sarasota Foundation. It was there, in late 2004, that the trustees and foundation board members, which include senior executives from the Bank of Commerce and the Sarasota branches of Wachovia and Bank of America, began coming up with a strategy to raise the funds.

So far, the foundation has raised $11.5 million, although half of that amount is pledges that have not turned into actual dollars yet. The second phase of the project, a renovation of the 60-bed Alzheimer's/Dementia unit, will not begin until funds covering the first phase have been accounted for.

Large-scale fundraising at the Pines has been relatively uncharted territory: While the foundation had been in existence since 1990, it was never called upon to raise such a hefty amount of money in such a short period of time. It hired a capital campaign director and last year, it brought on Estelle Crawford, a former president of a suburban New York City chamber of commerce, as its president.

The Pines, says Crawford, "has been chugging along on its own for way too long." She was further motivated, as are many other Pines executives and employees, on the organizations' unwritten motivation of "if not us taking care of these people, then who?"

Crawford quickly realized the fund raising challenge came in two acts. First, there was the capital campaign and all that came with it, such as publicity, sustaining interest and finding the right donors.

She also took a page from her chamber and business background, and set up "different revenue streams," so as to not over-rely on one person or donation. For example, the foundation set up a planned giving campaign, where potential donors could donate their condo or other assets after they die.

The second act is making sure the needs of current residents are met simultaneously with the renovation project. To cover that, the foundation set up the Pinnacle Club, in which the donations can go to several quality-of-life enhancements for the residents, from field trips to dentures.

All that's left is to go raise the money. Crawford remains optimistic, despite the glut of competition in the Gulf Coast, where there are hundreds of outlets for charitable giving, covering dozens of causes. "The Pines sells itself," says Crawford.

An alternative

The ultimate result has been what renovation project manager Richard Lenna calls a "perfect building." Features include:

• The new rehabilitation gym, which in addition to the unique pool has a separate room with a bed and a washer and dryer, to help some patients get used to everyday tasks again;

• Rooms built under a shared entry suite concept, where there are two beds split by a wall and separate bathrooms for each resident. The beds themselves are from Germany, designed not to look institutional;

• A $250,000 generator, top-shelf PGT windows and other hurricane resistant components that will keep the facility going, says Overton, "regardless of the category of storm" that hits the area.

The new Pines is vastly different from the facility that opened a few years after World War II. The facility has grown in stature and size in conjunction with Sarasota, a point displayed in a lobby of the new building, which is filled with pictures of the area's transformation from a fishing village to a thriving, arts-infused city.

One of the Pines' most significant changes, in addition to the new building, executives say, is providing a concept of care known as the Eden Alternative.

The Pines is the only nursing home in Sarasota to use the concept, which takes the approach that the greatest problem facing residents is loneliness, helplessness and boredom - not a medical situation.

The alternative includes multiple daily activities that focus on some combination of interaction with children, plants and animals.

The Pines has also become well known for its mission of treating and taking care of people that have no where else to go.

In 1976, then-President Gerald Ford even visited the facility to personally praise the work.

Next up in the Pines makeover project is the renovation of the antiquated Alzheimer's/Dementia unit. Caring for Alzheimer's patients is one of the most difficult - and disappearing - disciplines in nursing home care. There is virtually no upside for the resident, plus, says Overton, the care is costly.

So just like the Florida nursing home business itself, it's a dying breed. "Most everyone else is getting out of the business," he says, "but we feel it's important to stay in it."

REVIEW SUMMARY

Business. Pines of Sarasota, Sarasota

Industry. Nursing home, elder care

Key. The Pines is in the midst of a $23 million project to replace its 204 beds, as well as improve other parts of the facility.

'Employer of Choice'

While change might be the word of the day at the Pines of Sarasota, which is undergoing the first major renovation to its facilities in almost 60 years, one aspect executives want to stay the same is employee retention.

The facility, with 350 full-time employees, has had remarkable success in that area, a major accomplishment in a field known for fickle employees. For example, says CEO and president John Overton, five out six employees in the rehabilitation department have been with the Pines for at least five years. Other departments have even longer track records.

Overton attributes the success in retaining employees to a combination of factors, with two of the most important being setting competitive salaries and benefits and treating people well.

On salaries, Overton says he and the HR department spend a lot of time studying what employees are paid at other facilities. The analysis led to a recent change in the Pines' retirement plan structure, going from a profit-sharing plan to a 401(k). And in addition to financial benefits, Pines employees can send their children to an on-site day care facility at a heavily discounted rate.

As nice as the benefits are, Overton says that treating employees well serves as an even better perk. He and the other executives make a priority of treating the staff with respect and dignity - much in the same way the employees are expected to treat the residents. Says Overton: "We want to be the employer of choice."

AT A GLANCE

Pines of Sarasota

• Residents on Medicaid: 85%

• Average age of residents: 87

• Beds: 204

• Room rate, per day: $225, deluxe private; $203, private; $196, dementia unit; $189, shared entry suites, $179, semi-private;

• Occupancy rate: Normally 95%-plus

• Special services: Alzheimer's unit, assisted living, adult day care, hospice, Eden Alternative, 24-hour skilled nursing.

• Employees: 350