FISCAL NOTE
Date Requested: May 24, 2017
Time Requested: 11:09 AM |
| Agency: |
Health and Human Resources, WV Department of |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4035 |
Introduced |
HB113 |
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| CBD Subject: |
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FUND(S):
0525 - CONSOLIDATED MEDICAL SERVICES FUND, 5156 - HOSPITAL SERVICES REVENUE ACCOUNT
Sources of Revenue:
Special Fund
Legislation creates:
Decreases Existing Revenue, Decreases Existing Expenses, Creates New Fund:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to require the selling of Jackie Withrow Hospital by the Secretary of the Department of Health and Human Resources.
The bill establishes a fund called the "Jackie Withrow Long Term Care Facility Development Fund" to consist of appropriations to effectuate the sale of Jackie Withrow Hospital. The fund will consist of any revenue or sale proceeds.
The Department estimates a positive fiscal impact relating to this bill. Due to the age of this facility (90 years old) and the size, structural repairs needed for the facility reflected the need for a new building rather than repair at a cost of $20M. This analysis was provided by engineering firm in SFY2011. These costs only rise each year due to insufficient funding to make needed repairs.
The Department anticipates a proceeds from the sale of the facility (based on estimates from Real Estate Division) to be approximately $800K-$900K. Additionally the sale of the beds would range between $2.9M-$4.9M based on 199 beds at $15K-$25K per bed.
The Department anticipates selling the beds from this facility to the private sector. As part of the sale, the entity would be required to build a replacement facility in the same general area, transfer the patients to the new facility and hire all of the staff. In addition, part of the profits of the sale would allow for an employees “severance package” or bonus, potentially based on years of services, for additional retirement, etc. There are no calculations regarding the severance package or bonus portion at this time, however preliminary estimates for payout of annual and holiday leave are $245,587.
Additional costs to the Public Employees Retirement System (PERS) are possible depending on what type of benefit may be offered that would affect the retirement benefits of any employee who is laid off or retires as a result of this legislation. However, because the exact benefit offered to employees has not been determined, and because the number of members potentially affected is unknown, it is not possible to accurately calculate an estimate of this cost. Any additional cost to PERS, including administrative cost, would be required to be paid by the agency under a memorandum of understanding as provided in the bill.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2017
Increase/Decrease
(use"-") |
2018
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
-10,210,828 |
| Personal Services |
0 |
0 |
-6,553,323 |
| Current Expenses |
0 |
0 |
-3,657,505 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-8,333,435 |
Explanation of above estimates (including long-range effect):
Based on SFY2016 data, Jackie Withrow had expenditures of $10,210,828 and revenue of $8,333,435 for a net loss of $1,877,393. Additionally, certified match portion indicated below would potentially need moved to Medicaid to be used as state match for payments to private sector.
The State Medicaid agency only provides the federal portion of claims payments to the State-owned Nursing homes. This is because the state facilities can be funded with certified match. State facilities certify that nonfederal funds are expended by the nursing home. If the nursing homes are privatized, there would be an additional outlay in the Medicaid budget as Medicaid would pay the state and federal portion for these claims payments to a private sector facility. The portion of certified match for Jackie Withrow for SFY2016 was $2,962,194. This amount would vary in private sector based on the cost per bed and number of Medicaid residents.
The timeline has not yet been determined but it is not believed this can be accomplished prior to the end of SFY2018, therefore amounts reflected above are for future years. One time revenue and payouts are indicated in summary section, not in graph.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
Person submitting Fiscal Note: Bill J. Crouch
Email Address: dhhrbudgetoffice@wv.gov