Eastern Plumas Health Care was informed Thursday night, Oct. 27, that the Center for Medicare/Medicaid Services (CMS) was approving California State Plan Amendment 11-010 which allows them to cut MediCal payments to its hospital skilled nursing facilities (SNFs) by 10% of 2008 rates (in effect, a 23% cut).

In addition, the cuts will be retroactive, causing EPHC to have to underwrite care it has already given back to June 1. Since a staggering 93% of its SNF patients are on MediCal, this amounts to a $1.1 million hit per year—an unsustainable reduction in revenue to a fragile hospital system that has already scaled back services and been forced, continually, to do more for less, while making sure it meets shifting regulations on every front.

The executive team at EPHC met Friday morning to assess the likely damage these cuts will cause the hospital, and to begin constructing a plan of action that might save the SNFs and will save the hospital (which includes an acute care hospital, four clinics, and emergency and outpatient services) as a whole.

EPHC is hit especially hard by this ruling, because its SNFs are a large part of its business, with facilities in both Loyalton and Portola, and a total of 59 patients. Contrast this to its 9 acute beds, only 3 or 4 of which usually are filled, and you get a sense of the gravity of the problem.

Further, as Chief Executive Officer, Tom Hayes has said repeatedly, the hospital has “zero days of cash on hand,” which means they can’t ride these cuts for long. The executive team has begun what will likely be several months of triage of a different sort. They’re discussing a variety of solutions aimed, primarily, at keeping the hospital viable.

They’re also looking at ways to keep the SNFs functioning. These include a request for a temporary freeze on the SNF’s USDA loan payments, which amount to $56,000 per month. Hayes said, in fact, that if itwasn’t possible to freeze payments for a time, EPHC would likely default on these loans.

Meanwhile, the California Hospital Association’s law firm, Hooper, Lundy & Bookman, PC, filed a lawsuit on Monday, Oct. 31, to stop the cuts from going forward, beginning with a request for an immediate injunction against the state. As hospital Chief Financial Officer Jeri Nelson put it, this doesn’t solve the problem, but it “could buy us some time.”

Nelson is tasked with figuring out what this hospital might look like if the cuts do take effect and, in the worst case scenario, both SNFs are forced to cut way back or close altogether. Without that major source of revenue, she said, the discussion about what services this community really uses and what they need most, is no longer a long range plan–it becomes today’s reality.

Hayes scheduled meetings last Friday at the Portola and Loyalton SNFs and invited all EPHC staff to attend so they could hear first hand about the impending state cuts, and what EPHC plans to do to save itself. While Hayes laid out the problem in stark terms, “We have to come up with $100,000 a month.” He added, “we’re trying to do whatever we can to keep the SNF’s open. This unit [Portola], the hospital, and Loyalton—are our number one goal.”

Hayes continued, “Within a week or two we should be able to figure out whether we have viable alternatives [for the SNFs] . . . I’m not going to promise you we’ll be able to solve this, but we’re going to give it our best shot.” In Portola, staff chose to stay strong. “We’re known as survivors,” said one. “We’re mountain people,” another added.

“Most of all, this hurts our patients,” said Hayes. “This decision by our government is heartless to our patients—these are their homes–and our employees who depend on their jobs for survival.”

The state, after making what Hayes terms “draconian”cuts, requires EPHC to come up with a plan to relocate its residents. Lorraine Noble and Sue Whitfield, Directors of the Portola and Loyalton SNFs respectively, are tasked with devising this worst case scenario plan, which involves attempting to find “beds” for their 59 residents.

They’ll have to look up and down the state. They won’t be allowed to dwell on the fact that their residents will be placed, if they can find places at all, far from loved ones, friends, and the home towns they’ve known for a lifetime. Already, Noble said she’s found 10 beds in Susanville, 10 in Quincy, and one in Truckee. This week, Noble will start making calls further afield.

Fifteen days after filing this plan with the state, EPHC can give its residents a 30 day relocation notice. Residents can actually stay for another 60 days after that.

But, it’s what will happen to these residents, if they’re forced out, that concerns everyone at EPHC the most. Case in point are Gerald (age 98) and Agnes (95) Gervais. They’ve lived most of their lives in Portola, have worked, volunteered, grown up, and grown old here. They’ve known each other since Agnes was 7 years old. They share a room at the Portola SNF, and on Oct. 21, they celebrated their 72nd wedding anniversary there. This skilled nursing facility is their home, its staff, their family.

Betty Folchi, their friend and conservator, has known them since 1949. She was a “young bride that year, and through my church, I was introduced to this amazing couple. They have been the pillars of our small rural community.” Agnes was “the lady who made 50 pounds of candy every year” for the church and the VA hospital in Reno, “angel of mercy to any and all who needed her help for all these years.”

A few years ago, Anges began to have balance problems, fell several times, and finally had a stroke. She entered the Portola SNF in Sept. 2010, and her husband Gerry joined her only two months later. He’d previously worked for the railroad, was the city’s mayor, and was very active in community affairs, Now, virtually blind and completely deaf, he couldn’t survive at home without Agnes, so the two of them made their home—together still–in the Portola SNF.

According to Folchi, they had a small life savings of $60,000, which she used to pay for their care. When that ran out, they turned to MediCal, which helps, along with their Railroad Employees Pension. They are the living victims of these state cuts. The truth is, both the hospital and the Gervaises will find it hard to survive without EPHC’s skilled nursing facilities.