County Eyes New Contract With Cedarbrook Managers

Lehigh County has negotiated a four-year contract with the management company that runs Cedarbrook nursing home that provides for no increase in fees in the first year.

Beginning July 1, the county would pay LW Consulting $438,000 in the pact’s first year to operate the Cedarbrook facilities in South Whitehall Township and Fountain Hill. That would rise 2.7 percent to $450,000 in the second year. The third and fourth years would see 1.3 percent increases. The county commissioners discussed the contract briefly last week and will vote on it at a future meeting.

LW Consulting is a Harrisburg-based company that runs Cedarbrook with a staff of county employees.

“In our mind they’ve done a wonderful job on a number of fronts,” said Tom Muller, county director of administration. “They’ve run a four-star operation for us. Financially, we haven’t had any of the ups and downs that our neighbors [Northampton County] have seen in nursing home financials.”

LW Consulting has saved the county money by obtaining grants to put fire sprinklers in both Cedarbrook buildings, he said. The firm has also kept the occupancy rate high so there aren’t many open beds. Muller gave former County Executive Jane Ervin credit for first hiring LW Consulting in 2002.  

The budget for Cedarbrook is $60.7 million this year but only $2.1 million will come from county taxes, according to the administration. That amounts to a little less than 2 cents of every dollar the county raises in tax money.  The rest is funded by state and federal money and fees from private patients. Medicaid pays for about 84 percent of Cedarbrook’s patients, according to Tom Muller, county director of administration.

Should the county decide to sell Cedarbrook – an idea that some   county commissioner candidates have supported – it could get out of the LW Consulting contract on very short notice, Muller said.

But getting out of the nursing home business would actually end up costing the county money because the county would have to assume about $3.8 million in indirect expenses that Cedarbrook now helps fund, Muller said. For example, because his duties include overseeing Cedarbrook, the nursing home pays a portion of his salary, Muller said. Without Cedarbrook, the county would have to pick up his whole salary.

If the county sells Cedarbrook, it would still have to pay all the existing pension costs, plus unemployment benefits for staff that is laid off, he said.

Muller put together a chart of county nursing homes in Pennsylvania by the star ranking they get from the Medicare program. Those that have been sold or that a county is considering selling tend to be those with low quality ratings of only one or two stars. Cedarbrook has a four star rating, with five stars being the best.   

“You hear about all the counties getting out of the nursing home business,” Muller said. “All the counties that didn’t do a good job are getting out of the nursing home business.”