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Acres bed bids: Bids high for sale of Acres bed rights

June 26, 2012

Auglaize Acres Administrator Connie Pierce

Bids for the sale of beds from Auglaize Acres could bring in $720,000, if approved by the state.

“We were pleasantly surprised that they came in that high,” Auglaize Acres Administrator Connie Pierce said.

She noted county officials were surprised by the interest shown with bids from four different companies. She expected half that number.

But before the Acres can count on the sale of rights to the beds, the state must certify the high bidder’s certificate of need and go through an appeals process, which could take nearly two years.

The sale is for the rights to the 40 beds, rather than 40 physical beds used at the Acres. Such bed rights are needed as new facilities are built or additions made to existing facilities.

Bids submitted for the Acres bed rights came from VRC Management, of Cuyahoga Falls, for $720,000; NU2 Investments, of Cincinnati, for $560,000; Mainstreet Property Group, of Cicero, Ind., for $620,000; and Otterbein Homes, of Lebanon, for $600,000.

VRC Management was awarded the contract pending completion of all the necessary requirements.

Pierce said not only were they the highest bidder, but VRC Management also indicated in its proposal a strong likelihood of their certificate of need being approved by the Ohio Department of Health.

“We will not see the money immediately,” Pierce said. “There are so many contingencies. It’s all in the hands of the potential buyers now.”

VRC is required to submit a certificate of need by July 31 to the state, followed by what could be a lengthy appeal process.

“It could take up to two years before we might ever see the money,” Pierce said. “So much risk is involved in this you just don’t know.”

If the certificate of need for VRC isn’t approved, the Acres bed rights couldn’t be sold again for another four years in 2016. If the certificate of need is approved, a deal could be approved in five days.

If the bed rights can be sold at the $720,000 rate, approximately $200,000 of that would be applied to a debt owed to the county.

While the money was borrowed before her time at the facility, paying off the outstanding loan to the county’s general fund is a big goal for Pierce. To date, $200,000 is left owed from the original $500,000 borrowed to help the county nursing home stay afloat during financial troubles under former administrators.

“If and when we receive any money, any residual money left would go into a capital improvement fund,” Pierce said.

If the contract with VRC is approved by the state, that would put more than $500,000 in such a fund, which the county nursing home has not had before.

“We have nothing like that now,” Pierce said. “We have nothing for needed repairs, nothing to use if a boiler goes down.”

Pierce said in addition to placing money from the sale of the bed rights in the new fund, she also plans to add money previously allocated for repayment of the loan to the Acres’ new capital improvement fund.

With Community Development Block Grant (CDBG) funds, which have been used in the past for repairs, drying up, they need to get prepared for future repairs which may need to be made, including a flat roofed portion of the facility built in 1976.

“That’s one of our major needs right now,” Pierce said.

State regulations only allow rights to nursing home beds to be sold during open periods every four years when a state analysis looks at each county’s projected bed needs and excess based on census numbers, population numbers and projected populations during the next four years.

The most recent results of such an analysis showed that Auglaize County was overbedded by 170 so it could sell to other facilities, but not to other facilities within the county or in surrounding counties.

“Several counties in the state are under-bedded, but the beds can’t be sold unless it’s an open period,” Pierce said.

Pierce said the rights are for seven certified beds that can no longer be used due to square footage requirements and 33 non-certified beds still on the books. The Acres is working with Columbus broker, Equity Inc., for the sale, agreeing to pay the firm 5 percent of the gross sales price.

Selling the beds would reduce the Acres bed count to 91 dual-certified beds but based on the past four years of census numbers, Pierce said she felt that was a good number to have.

In recent years, the Acres census has averaged between 85 and 86 and has never been more than 91.

“We aren’t anticipating a great need for these beds, plus it will provide the flexibility in how we use the space,” Pierce said.

She said the beds have been decertified since 2005 and would never be utilized by the county again.

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