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Lower revenues, liability concerns push privatization

May 30, 2010
By MICHAEL ANICH, The Leader-Herald

JOHNSTOWN - Much has been publicized since last year about Fulton County government's exploration of the privatization of its nursing home.

The Board of Supervisors is working with Rochester's Center for Governmental Research to study possible privatization of the infirmary. Three proposals from the Pharney Group LLC of Tarrytown, Centers for Specialty Care of the Bronx and Leatherstocking Healthcare of Herkimer are being reviewed.

Mountain Valley Hospice of Gloversville submitted the sole proposal to take over the county nursing service.

Article Photos

The Leader-Herald/Michael Anich

Fulton County Community Services Director Ernest Gagnon stands Friday in front of the Gloversville building that houses the county Mental Health Clinic, which the county may consider privatizing.

But in addition to supervisors trying to decide whether to sell the county Residential Health Care Facility to a private vendor, officials have discussed at least two other county departments that might be ripe for at least some form of privatization.

County administrative officials aren't seeing a trend, but county government's top union official does.

"I do think [privatization] is becoming a trend in this county government," said Ron Briggs, president of the general unit, Local 818 of the Civil Service Employees Association.

Briggs said that laws effecting county departments are "tougher" nowadays, and the levels of reimbursement aren't always as high as they used to be. But the union official said privatization isn't merited in every situation.

"I don't think selling [facilities] is the answer," Briggs said.

He said good department heads should be able to manage their county agencies and provide useful services to county residents.

"We have to have a discussion in the community on what kind of county we want to be," Briggs said.

He said the Fulton County government - with over 800 full and part-time workers - is one of the largest employers in the county. Other major employers in the county include Lexington Center, Nathan Littauer Hospital, the Walmart Regional Distribution Center and the school districts.

Briggs said the county pays its employees a "living wage," and asked whether supervisors' privatization efforts are helpful or hurtful to the county's overall economy.

The county this year has at least talked about full-blown privatization of Fulton County's two Gloversville-based Mental Health Department clinics. They are the county Mental Health Clinic at the County Annex on East Fulton Street and the Addictions Services Clinic at the Argersinger's Service Center on North Main Street.

County Director of Community Services Ernest Gagnon told the Board of Supervisors' Social Services Committee in April that the state Office of Mental Health has new clinic regulations and rates to be phased in over the next four years that will effect the county's two Gloversville-based operations by dropping the rates. He said the Mental Health Department he directs could face a $400,000 revenue loss.

Revenues had actually exceeded expenses for the two clinics by $150,000 in 2009, he said.

Gagnon said the proposed new OMH clinic regulations, published March 17, changes billing to ambulatory payment groups. He said OMH has been reducing his clinics' Medicaid add-on that took the place of state aid for uninsured and underinsured clients from $300 to $200 per person. He said losses in revenues will push mental health clinics across the state to be more competitive.

He told supervisors there is a concern for everyone running a clinic as the state will continue to lower revenue available for counties.

Gagnon said last week that the state basically has a new billing system for Medicaid.

"It gets away from some of the older funding mechanisms," he said. "There's going to be more of a private model."

Gagnon said the best way to determine whether to privatize the clinics is to track interest with a request for proposal. He said he talked to the Community Services Board - made of various local agencies -and it wants to be able to "act quickly" on the clinic situation.

"I think the problem is that in this fiscal climate, we're looking at the state having large deficits," he said. "I think it's prudent to explore that [privatization] option."

Fulton County also is considering privatizing medical services administered at the County Jail at Harrison Street Extension and Route 29 in Johnstown.

Fulton County Board of Supervisors Chairman Greg Fagan said all the talk of privatization doesn't necessarily represent a trend for county government. But he said the county must continue to review its fiscal situation for the good of the taxpayers.

"With mental health, Ernie [Gagnon] came to myself very early this year," Fagan said. "The handwriting was on the wall with the way the rates are going to be. It's starting to play out."

He said it makes for "good business" for county government to be looking at "other options"

"You've got to start seriously looking at them," he said.

The Fulton County Mental Health Department employs about 25 people and has an annual budget of about $4.02 million, according to county Budget Director Alice Kuntzsch. The department includes two psychiatrists, counselors and social workers.

On the Sheriff's Department's consideration to privatize its medical services, Fagan said he believes someone approached Sheriff Thomas J. Lorey before news of a lawsuit broke.

The Fulton County Board of Supervisors' Public Safety Committee in January supported a move to privatize medical services at the County Jail in the wake of last month's $550,000 settlement in favor of an inmate who claimed the jail's medical staff failed to diagnose his cancer. The committee decided to solicit bids from private vendors to take over the county-run portion of medical services for inmates at the jail.

Lorey told supervisors his department would send out requests for proposals to determine what private firms could handle the jail's medical services. He said the county's medical staff at the jail now includes physician John L. Glenn, two full-time nurses and two part-time nurses used on a "limited" basis.

"There are several companies that can provide services as far as nurses and physicians," the sheriff said in January.

Lorey said the county now pays about $401,000 per year for medical services at the jail. Using a private medical service instead could cost more, Lorey said, but it could shield the county from the "huge liability" it faces now.

He said the county medical staff only provides basic coverage five days a week and 16 hours a day, while a private company may be available seven days a week. He said Glenn is at the jail one hour per day, three days per week.

A former inmate, Thomas R. Rachon of Canajoharie, had claimed Glenn failed to diagnose and properly treat what turned out to be cancer in his right arm. He settled his civil lawsuit against the county for $550,000 in December.

Lorey said last week that the county will continue to pursue privatization of jail medical needs.

"I believe there's going to be a request for proposal from the purchasing agent in the future," the sheriff said. "I'm going to throw it in the air and see who comes after it."

Lorey said his department has actually been looking at privatization of jail medical services since the 1990s when he became sheriff. He said he has at least one "very interested" company now, although the RFPs will solicit a variety of bids, including potentially from hospitals.

"I certainly think we can provide better medical services and save some money," Lorey said.



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