Letter by Bill Drake, Andy Duus, Art Norton, and Nancy Weissler, members of the BET’s Nathaniel Witherell Strategic Planning Committee
After extensive analysis, the Board of Estimate and Taxation Nathaniel Witherell Strategic Planning Committee recently issued a final report. In a unanimous vote last week, the BET accepted this 2019 report which is available on the BET’s webpage, together with the Committee’s earlier reports.
The Committee was formed in March 2016, comprised of four BET members – Art Norton (Chair), Beth Krumeich, Jill Oberlander, and Nancy Weissler. The Committee was asked “to perform a broad and
thorough review of the operations of The Nathaniel Witherell (“TNW”).
In 2017, the Committee prepared a report (the “2017 Report”), also accepted by the BET. The 2017 Report concluded that TNW’s business faces challenges arising from (a) its government ownership, (b) increased competition, (c) evolving practices in senior care, and (d) continuing changes to Medicare and Medicaid reimbursement.
Based on its analysis, the Committee developed a simplified model to project the future direction of TNW’s cash flow and to review the key drivers. That model showed that under continued Town ownership, the Town’s cash subsidy to operate TNW would increase substantially
over the next four years.
At the beginning of a new term in early 2018, the BET reconstituted the Committee. Although Arthur Norton and Nancy Weissler were no longer members of the Board, then-BET Chair Jill Oberlander requested both to remain on the Committee (in a non-voting capacity) and Arthur Norton continue as its Chair. Jill Oberlander assumed an ex-officio position on the Committee. The voting members of the reconstituted Committee were BET members Bill Drake, Andy Duus, Beth Krumeich and Jeff Ramer.
The Committee retained independent consultants to review and amplify on the work reflected in the 2017 Report. Health Dimensions Group (“HDG”) produced a “Financial and Operating Report“ dated February 2019. The Committee also retained the accounting firm PKF O’Connor Davies (“PKF”) which conducted a review of the financial statements of TNW for the two years ended June 30, 2018 and prepared a recharacterization of them from government accounting to private sector accounting. These reports are also available on the BET’s webpage.
HDG independently confirmed the key findings of the 2017 Report, specifically related to the expected pressure on TNW’s future revenues from increased competition from competitive alternative facilities, changes to Medicare reimbursement and changing care practices. Additionally, it noted that the wages and benefits received by TNW staff were significantly higher than those of nearby, comparably rated facilities.
As part of its work on behalf of the Committee, HDG analyzed the following three possible strategic options for TNW, which had been identified in the Committee’s 2017 Report: (a) maintain current town ownership and operation while seeking greater efficiencies; (b) lease/sell to a 501 (c) (3) non-profit corporation; and (c) lease/sell to a for-profit operator. HDG developed a financial forecast for TNW for five years under these scenarios. According to that forecast, TNW’s financial loss would be approximately $4.6 million higher annually as a Town-operated facility vs. the option of leasing it to a non-profit or for-profit operator. HDG’s forecast of increasing losses under Town ownership is also consistent with the findings of the 2017 Report. In its report, HDG recommended “further exploration of the scenario of selling/leasing to a 501(c)(3) non-profit corporation while continuing to make operational improvements.”
In addition to the work undertaken by HDG and PKF, the Committee also continued to monitor TNW’s financial performance during the past two years. For the 2019 fiscal year, TNW’s all-in cash cost to the Town, including capital expenditures and debt service, was $6.6 million. For the 2019 fiscal year, the Town had budgeted a contribution of $2.7 million for TNW. Taking that contribution into account, TNW has incurred a negative fund balance of $4.1 million, that will have to be funded in future budgets.
The Committee’s 2019 Report recommended the following:
1. “…that the Town explore utilizing an Enterprise Fund for Witherell in place of the current Special Revenue Fund.” This will provide for greater transparency. The Town’s Comptroller and PKF support this recommendation.
2. “…that a full audit of TNW be considered.”
3. “the retention of a financial advisor would be necessary to make
informed decisions among the strategic options.”
4. “Developing a strategic plan for the Witherell is a substantial
task”…which will continue to engage the BET and others.
Under the Greenwich Town Charter, the BET can decide whether or not to make recommendations and to take next steps for TNW among the strategic options. Any eventual decision among the options should reflect both community input as well as financial considerations.
Bill Drake, Andy Duus, Art Norton, and Nancy Weissler, members of the BET’s Nathaniel Witherell Strategic Planning Committee