[R]ANDOLPH — When it comes to Gifford Health Care’s new Strode Independent Living complex, state regulators seem to be of two minds.
On one hand, the Green Mountain Care Board has imposed additional reporting requirements on the Randolph-based health care provider after expressing concern about the facility’s permitting process and its financial losses.
But the care board also found that Strode “addresses an identified need for senior housing” and is likely to generate a “positive cash flow” soon.
Gifford administrators agree.
Despite the board’s concerns, “I think what they understand is the same thing that we understand: This is a great project for the people in our area,” President and Chief Executive Officer Dan Bennett said. “It’s a great project in what it adds to our overall operations.”
Strode Independent Living is a 49-unit, $14.1 million apartment complex situated on a larger Randolph Center parcel that also hosts the 30-bed Menig Nursing Home. Gifford Health Care leaders expect to develop an assisted living facility on the property at some point in the future.
Administrators say Strode, which is reserved for residents age 55 and up, is considered “independent living” because it does not provide any health services. But it does include a host of amenities including 24-hour front desk attendants, an activities director, cleaning services, a library, a large dining room and exercise areas.
For older Vermonters who are looking to downsize, “there’s not a lot of available options” in the Randolph area, said Ursula Margazano, executive director of Gifford Retirement Community.
“It’s kind of more of a community feel, and easier access to things,” Margazano said. “If you live out in the country, a larger home, you’re a little bit more isolated.”
The Green Mountain Care Board also took note of Strode’s benefits. By providing services like transportation and on-site care coordination, “the project will allow seniors to retain their independence while remaining in the region,” board members wrote when issuing a certificate of need permit for the facility.
But the care board also took Gifford Health Care to task for several issues, including the fact that the board’s certificate was issued long after Strode opened in August 2017.
Under state statute, health care projects that are subject to certificates of need must receive them prior to construction. While Strode is not technically a health care facility, the board said the fact that Gifford Health Care is the parent company of a hospital means that its independent living facility must follow health care permitting requirements.
“We are compelled to voice our concern with the applicant’s failure to recognize, prior to construction, that the project was subject to (care board) review, particularly in light of its impact on Gifford Medical Center, a related entity, which has assumed substantial financial risk,” board members wrote.
Under the law, the care board can impose financial penalties for failure to obtain a certificate of need. Act 167, which the Legislature approved this year, increased the maximum penalties to $75,000 or $200,000 for a continuing violation.
But the care board declined to impose a penalty on Gifford in this case. Instead, the board said it would “closely monitor both the applicant’s and the hospital’s financial performance as the project goes forward.”
Strode’s effect on Gifford’s finances is another concern for the care board – especially given the fact that Gifford Medical Center already has come under increased scrutiny due to recent financial difficulties.
The independent living facility’s financing included $1.6 million in “bridge loans” from Gifford Medical Center. Also, care board officials say the hospital has been covering Strode’s financial losses because the new facility “has failed to achieve its projected occupancy rate.”
As of March, state documents say, Strode had exceeded its budget by 31 percent and had posted a $458,565 year-to-date loss.
Gifford’s “bare assertion that the project will have no impact on the Gifford Medical Center’s operations or services is unpersuasive in light of the hospital’s ongoing obligation to cover the facility’s shortfalls resulting from lower-than-projected occupancies and revenues,” care board members wrote.
As a result, the board ordered Gifford Health Care to produce a “written plan and timeline” for repayment of the hospital’s $1.6 million bridge loan for Strode. The board also said the hospital must “report on all financial and operational impacts that result from its financial support” of the independent living center.
Additionally, the care board requested quarterly reports until Strode “repays what is due … and reaches an occupancy that generates a positive cash flow.”
Late last month, the care board amended its initial order for Strode after receiving input from Gifford. That’s evidence, Bennett said, that “we’ve been able to work collaboratively with them to satisfy their questions and, I think, clearly illustrate the value of this project.”
In an interview Thursday, Bennett and other Gifford administrators also addressed each of the board’s contentions.
On the certificate of need issue, they said the Strode project was no secret, given that Gifford had presented its senior-housing plans to the care board on multiple occasions.
“There were multiple opportunities where this was discussed, and it was the opinion of Gifford that a (certificate of need) was not required,” Bennett said.
He noted that Gifford has complied with the care board’s permitting requirements since being notified of the issue last year.
As for Strode’s performance, administrators say occupancy is currently at about 40 percent. They point out that the facility has been open for only 12 months, and the transition for seniors who own a home can be complicated.
“Oftentimes with independent living, it’s not a quick move,” said Gifford spokesperson Ashley Lincoln. “It’s, ‘I’m interested, but I’ve got to take care of a lot of stuff.’ And I think that was something that we just weren’t completely aware of (at the outset).”
But administrators also said they’ve received hundreds of inquiries from prospective Strode tenants.
“We are on schedule,” Bennett said. “We are filling up at the rates that we expect to. And we expect that, with our budget that we’re putting in place … we’re going to hit our targets there.”
