First of two parts
By J.K. YAMAMOTO, Rafu Staff Writer
Keiro Senior HealthCare is in talks to have its facilities in Los Angeles and Gardena acquired by a larger health care organization.
According to President and CEO Shawn Miyake, the move, while painful, will enable Keiro to maintain its programs and services for the elderly in their present form for some time to come, although changes down the road are unavoidable.
In response to concerns expressed by families of residents at Keiro’s retirement home, Intermediate Care Facility (ICF) and nursing homes, Miyake gave presentations on Dec. 7 at both the Boyle Heights and Gardena sites. The hour-long presentation at South Bay Keiro was attended by about 50 people.
While stressing, “Nothing’s happened. It’s all talk right now. There’s no binding anything, no contracts,” he said the proposed sale is part of Keiro’s ongoing long-range planning process. “We were making statements about a year ago that we would start to explore … You look into it, you think about it, you have a lot of discussion … Testing the market is more like you’re out there, and we are in the market. You start to talk to people, you see if there’s any interest, and there is. And you begin to say, ‘It looks like this is something that could work.’ Then you move forward.”
He said that non-disclosure agreements prevent him from identifying any of the organizations involved in the talks.
Having chosen to go in this direction, Miyake continued, “Our priorities were twofold. One was residents because they’re directly impacted, and two was staff … Of course we’re very concerned that staff feel safe … So we looked at those two things and we began to talk about how we prepare for that. Our objective in making the decision to be potentially acquired by a larger health care organization was to maintain our culturally sensitive approach …
“The conversations we’ve had with a few people out there is that they all want to preserve this. Now, how can they preserve it if we can’t? They have a larger financial capacity, they’re just bigger. They have more leverage when they talk to insurance companies. We have two nursing homes … We’re talking about organizations that own and operate over a hundred nursing homes … To position the facilities for longer sustainability, to be able to do this, we believe we have to be acquired by a much larger organization if we can get assurances that they will stay focused on Japanese.
“You know over time that the Japanese (community’s demographics) are going to evolve anyway, it’s going to become more diverse naturally. They understand that. They said, ‘Okay, we’re willing to hold this together and then as time moves on it becomes more diverse’ … They seem to be okay with that. They want to keep this and preserve this exactly the way it is … They say, ‘Look, we’re going to keep everything together. There’s no reason to pull it apart. What you have works. We will just be ready when it begins to transition into a more diverse type of thing … But until then, we see it just staying the same. We think substantially all your employees will continue to work. Your buildings are full. We don’t want to mess that up. It works.’
“We’ve gotten that reassurance and I honestly will say I’ve been encouraged by that.”
Miyake added, “The companies we’re looking at right now actually have electronic health records … We haven’t done it because it’s expensive … It’s a way to communicate with health plans and with physicians and with hospitals. I can tell you that the organizations that we’ve talked to, they already have it and they would just extend that to our facilities … so the technology and the sophistication will increase.”
Funders and Founders
A frequently asked question: Doesn’t Keiro have a lot of money? Miyake’s response: “We have money in reserve. We have an endowment, which generates about $300,000 of interest a year. But it’s not enough … It can’t subsidize the whole thing. The problem with endowments is that you have a chunk of money but you can’t spend the principal. You can only spend the interest. So it doesn’t generate enough money to actually cover everything. So right now Keiro Nursing Home subsidizes everything … The problem we’re seeing is that the Keiro Nursing Home profit margin is slipping dramatically in the last few years.”
Eventually, he said, “we would have to raise rents at the retirement home 50 percent and we’d have to shut down the ICF … We think that’s a bad idea.”
Why not ask the donors for more money? Miyake pointed out that the majority of big donors are Nisei, most of whom will be gone in the next five to 10 years.
“I can tell you that Sanseis don’t donate the same way … You don’t volunteer the same way, you don’t donate the same way,” he told the mostly Sansei audience. “There’s nothing wrong about that. It’s not a criticism of Sanseis, because I’m one. It’s just to say that’s the way it is. We don’t think there’s enough donation income to be able to offset the losses …
“The rate cuts on Medicare are anywhere from 30 to 40 percent. If you’re a business owner, you can probably take a 5 to 10 percent cut, which we’ve done every year, and make adjustments. But 30 to 40 percent? I don’t think so.”
Miyake cited the ICF as another example of cuts in reimbursement. “We lose tons of money there every year. They just had a 10 percent cut retroactive to last July. Now ICF today only gets paid $90 a day to take care of somebody for 24 hours. If you go to adult day health care, they’re paid $70-$75 a day for five hours. So how does that make any sense? … The intent of the state is to put ICF out of business. They would prefer that you go to assisted living and pay $6,000, $7,000 $8,000 a month, and it’s on you.”
In addition, utilization of the facilities is dropping, Miyake said. “At the big nursing home, we have a lot of rehab going on (but) they’re down 2,000 patient days … It’s not just this year, it’s a trend that’s been going on for the last few years. We see it declining. So the things that managed care said they were going to do, they’re doing it. It’s already happening.”
Were the remaining founders of Keiro consulted? Miyake said that he spoke with Kiyo Maruyama, James Mitsumori and Frank Omatsu, and the families of George Aratani, Edwin Hiroto and Fred Wada. “We told them what was going on, we briefed them, and they said, ‘You gotta do what you gotta do’ … Throughout the history of Keiro, 52 years, they’ve had to make difficult decisions.”
Noting that Keiro used to run City View Hospital, Miyake said that closing it was “a really difficult decision, a very unpopular decision,” but that “they had to make that decision. That hospital would have driven them out of business. Today there would be no Keiro Nursing Home if not for them doing that. So that was something they did. They went through it and then they moved forward.”
He quoted the founders as saying, “These are all difficult decisions. There’s no easy answer. You just have to make a decision … and try to communicate it.”
(Full disclosure: The writer’s father is a resident of South Bay Keiro.)