White River Junction
The agency, known as VNH, intends to occupy one story of a two-story building on Prospect Street adjacent to the recently constructed state office building. Officials hope to break ground this spring and move into the office no later than December of this year, according to Michael J.Counter, VNH’s chief financial officer.
But although financial arrangements seem just about set, work isn’t quite ready to begin.
“We are still in the process of dotting the i’s and crossing the t’s,” Jeanne McLaughlin, the VNH executive director, said in an email Thursday.
Not to worry. Sometimes delay is not a bad thing.
For example, time has so far been kind to VNH’s plan to finance the project with a 30-year rural development loan from the U.S. Department of Agriculture.
The interest rate on USDA rural development loans is now 3.125 percent, but that will reset — almost certainly lower — at the end of this month, according to Ted Brady, USDA state director for rural development in Vermont and New Hampshire.
An announcement about the loan is expected within a few weeks, he said.
“We do have an application,” Brady said. “We do not see any problems moving forward.”
When VNH filed its application to the Green Mountain Care Board five months ago, it assumed that the loan would come with a 3.625 percent interest rate. That would have resulted in an annual tab for loan repayments and condo fees of $212,000 and resulted in total expenditures to finance the project of about $4.2 million, according to VNH filings.
But at 3.125 percent, that annual expense would fall to about $203,000 and the total cost of the financing package would slip just under $4 million.
In its decision to build a new office, VNH passed on an alternative site in downtown where it would have paid $174,000 annually for a five-year lease for 8,470 square feet. An additional 2,000 square feet of space that would have been available in the second year of the lease in an adjoining building would have increased the annual rent to $232,000.
The Green Mountain Care Board, the state board that regulate health care expenditures, agreed with VNH that buying would prove a better deal than renting, which would be “more costly over time” as VNH added space and leases had to be renewed.
VNH filed its application with the Green Mountain Care Board in October, the same month that Vermont’s Department of Aging and Independent Living approved VNH’s plan to formally affiliate with Dartmouth-Hitchcock, the Lebanon-based operator of a hospital and clinics.
VNH, which has 268 employees, provides services in more than 140 towns in New Hampshire and Vermont, where it is incorporated.
VNH’s current headquarters is in West Lebanon on Benning Street off Route 12A, and it has a second administrative office in Wilder. The organization pays annual rent of $280,100 on leases that run through December.
The agency began looking for a new office after it shut down an office in Bellows Falls and the U.S. Centers for Medicare and Medicaid Services rejected its proposal to consolidate all administrative functions in its current West Lebanon office. CMS — which accounts for three-quarters of VNH’s operating revenue, including 68 percent from Medicare and 16 percent from Medicaid — ruled that VNH needed to have its headquarters in the same state in which it is incorporated.
VNH operations have hovered around the break-even point in recent years, but the agency has benefited from a strong balance sheet. In 2014, VNH’s operating revenue of $20.2 million exceeded expenses by only $19,000, according to its audited financial statement. That year, the agency posted $1.6 million in “other revenue,” including $656,000 in investment income and gains, $581,000 in municipal appropriations and $352,000 in contributions.
In December, VNH projected its 2015 expenses of $20.9 million would exceed operating revenue by $369,000. The deficit resulted from a reduction in Medicare reimbursement rates and the increased use of temporary employees provided by contractors, VNH said in a January filing.
Temporary staffers are more expensive but have been needed to address rising patient volume (up 6.6 percent in 2014) and “higher than expected staff turnover,” the filing said.
VNH does have a substantial financial cushion: a portfolio of stock and bond investments that was valued at $14 million at the end of 2014.
In October, VNH got a new, deep-pocketed friend when Vermont regulators approved its affiliation with D-H, which posted revenue of $1.6 billion in the fiscal year that ended June 30.
But that relationship came with strings attached. As part of the affiliation, D-H gained final say over VNH’s budget, programs, strategy, governing board and chief executive. The deal called for VNH’s financial planning and management functions to be integrated into those of its larger affiliate but preserved VNH’s “exclusive control of allocation” of assets in its investment portfolio.
VNH is designated by the state of Vermont as the nonprofit home health care provider in Windsor and Windham counties and a portion of Orange County. Bayada Home Health Care, a for-profit company with a statewide footprint, also offers services in that territory.
Currently, Medicare’s Home Health Compare website gives VNH four out of five possible stars for the quality of its services, while Bayada has a rating of 3.5 stars. Both VNH and Bayada got three stars, or average ratings, on patient surveys conducted by CMS.
VNH is one of three Upper Valley-based nonprofit providers that offer services in New Hampshire. New London-based Lake Sunapee Home Care and Hospice and Newport-based Connecticut Valley Home Care both have three-star ratings for quality on the Medicare website, and garnered four-star ratings in patient surveys.
Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.