Program: Grand Rapids veterans’ home

Appropriation:

Interdepartmental Grant:

$0

 

Federal Funds:

$13,102,900

 

Special Revenue:

$14,260,700

 

GF/GP:

$15,201,100

 

Total:

$42,564,700[16]

Program: D. J. Jacobetti veterans’ home

Appropriation:

Interdepartmental Grant:

$0

 

Federal Funds:

$3,564,800

 

Special Revenue:

$4,193,800

 

GF/GP:

$5,199,200

 

Total:

$12,957,800[17]

Program Description:

This appropriation funds the Grand Rapids Home for Veterans, and the D. J. Jacobetti Home for Veterans.  The two homes combined maintain 940 beds for veterans.  Funding for these two facilities comprises 63 percent of the state’s Department of Military and Veterans Affairs budget.  Because of their size and the many regulatory agencies under which they must be licensed, the nursing homes are complex operations.  Along with GF/GP appropriations, the homes have other sources of revenue, such as federal funds, insurance reimbursement and some fees generated for particular services.  Michigan’s veterans’ hospitals charge about $190 per day per patient.  By contrast, the statewide average for private-sector care ranges between  $120 to $130 per day per patient. Michigan Department of Military and Veterans’ Affairs officials acknowledge that they are the two most expensive nursing homes in the state.[18]

The DMVA has had some success in outsourcing some staff functions, such as certified nursing aides, housekeeping, physical therapy, and fire and safety functions.  Officials at the Grand Rapids Home for Veterans estimates that such outsourcing has saved taxpayers about $1,690,000 since 1995.[19]

Recommended Action:

Outsource the entire operation of these nursing homes to the private sector.  A well-written contract between the state and private nursing homes can guarantee whatever level of quality is now being maintained (if not better) while saving money.  The state contracts out for management of an entire prison; the same could be done for nursing homes.

Privatization has worked for other states’ veterans’ homes.  The state of Georgia contracted with Priva-Trends, Inc. for management of the Georgia War Veterans Home, which covers more than 20 acres and maintains 550 beds.

The 10-year management contract with Priva-Trends began in 1997 and is expected to save the state an average of $10,600,000 per year.  Before Priva-Trends took over the Home, the per-patient daily rate for advanced-care patients was $164.  As a result of the contract, this cost dropped to $92 — a 44 percent savings.  Those patients requiring simple residential services were costing the state of Georgia $101 per patient per day, but under the contract this cost dropped to $59.91, or 40 percent.  More importantly, an analysis by the U.S. Department of Veterans Affairs revealed that Georgia’s veterans are now getting better care under the Priva-Trends contract than they did when the home was state managed.  Savings:  $22,209,000.