By RUSS OLIVO
WOONSOCKET – Rejecting the recommendation of the state Health Services Council, Health Director Nicole Alexander-Scott will not allow the Ballou Home for the Aged to be sold to the lead principal of a New York nursing home operator, citing his failure to disclose patient care issues at another facility.
In a letter released by the HSC Monday, Alexander-Scott told Menachem Yifat that he misled the panel when he told members last month that there had been no citations, investigations, violations or other enforcement actions against either of the two facilities under his control in Herkimer, N.Y. The so-called “attestation of good standing” from Yifat was among the conditions of the HSC's approval of his bid to purchase the Ballou Home at 60 Mendon Road.
Yifat is the principal managing member of Onyx Healthcare Group, and had offered to purchase the Ballou Home for $500,000 – an unusual bargain according to some critics of the deal. The company runs the 163-bed Foltsbrook Center for Nursing and Rehabilitation and its sister facility, Foltsbrook Assisted Living, also in Herkimer. An affiliate of Onyx would also have operated the Ballou Home had the deal been permitted.
On June 22, Alexander-Scott said, members of the HSC specifically asked Yifat about the good standing of the New York facilities, and she quoted his answer in her rejection letter, dated July 9.
“Yes, they're in good standing,” Yifat replied, appearing to limit his understanding of the question to how they were handling the pandemic. “All our infection controls have been zero deficiencies. So we're in good shape.”
Yifat also made a similar attestation in his written application. Asked whether there had been any investigations or violations at any other facilities he runs within the three-year time frame, his answer was, “None,” the health director said.
But after the June 22 hearing, Alexander-Scott said, the HSC learned that, just weeks earlier, the Foltsbrook nursing home had been cited by the New York Department of Health because a patient had suffered second-degree burns after having been served food and beverages that were improperly microwaved at temperatures that were too hot. The incident happened to one patient on “multiple occasions,” Alexander-Scott said.
Moreover, Alexander-Scott said the HSC learned that the New York authorities had also issued a stipulation against Foltsbrook in 2018 that resulted in the federal Centers for Medicare & Medicaid Services to fine the facility $85,903. Details of the allegations were not immediately available, but Alexander-Scott said that, as a result of the stipulation, Foltsbrook was suspended from an accreditation program for healthcare workers known as NATCEP, for the Nursing Home Training and Competency Evaluation Program, for two years.
“Your June 22, 2021 failure to disclose to the Council the NYS Stipulation and Order, a substantial enforcement action that included sanctions extending into 2021, is considered by RIDOH to be misleading by omission,” Alexander-Scott wrote. “In the context of that proceeding it is my opinion that this constitutes material misrepresentation to the members of the Council about the past status of the facility's license.”
Yifat's offer to buy the Ballou Home, one of the most highly rated in the region by U.S. News and World Report, had come under fire before the HSC voted to recommend the sale.
James Nyberg, executive director of LeadingAge RI, argued the sale was unnecessary and not in the best interest of patients at the 43-bed facility.
In a letter to Fernanda Lopes, the Rhode Island Department of Health's director of health systems development, Nyberg said that the acquisition price of the Ballou Home appeared to be far too low. The deal boiled down to about $11,000 a bed, a fraction of what other nursing facilities have sold for recently.
“This price is extremely divergent from recent sales in the industry, which have ranged from $19.5 million, or about $97,000 per bed (Hopkins Manor) to $27 million, or $122,000 per bed (Berkshire Place),” Nyberg wrote.
Also, Nyberg pointed out that the new owners weren't simply preparing to switch the Ballou Home nonprofit to for-profit facility – they were positioned to abandon its unique operating model. The facility was established as a private foundation and, Nyberg said, is presently sitting on cash reserves of over $7 million, a figure he based on IRS returns.
“While the nursing home industry in Rhode Island is certainly facing a difficult financial situation, the Ballou Home is unique in having such reserves to help offset operating losses as it works to plan for the future,” Nyberg said. “Again, it is unclear why this nursing home is not using its endowment, which appears to be unrestricted, to support its mission of caring for our frail elders, and instead is just being sold.”
Brian Lamoureux, the lawyer who represented the operators of the Ballou Home, defended the transaction, however. In a rebuttal letter to Nyberg, he said the operators had hired a national consulting firm in attempts to locate a buyer and had come to the conclusion that Yifat's offer was fair.
“The home's board, in exercising its thoughtful and reasonable business judgment, accepted this offer,” he said. “We can assure you that this was a difficult, but necessary decision.”
Lamoureux said the marketing consultant did not receive any offer from a nursing home operator in Rhode Island. “Stated differently,” Lamoureux said, “despite LeadingAge and its members being well aware of the home's availability, not one of LeadingAge's 40-plus members saw fit to submit an offer...at any price.”
Lamoureux said the Ballou Home has already used a substantial portion of its invested assets to pay against operating losses. And the board's desire is to use what remains of it to establish a “grantmaking foundation” to carry on the Ballou Home's legacy of providing care to frail elders.
Follow Russ Olivo on Twitter @russolivo