Finding 9987 (2023-002)

Significant Deficiency Repeat Finding
Requirement
L
Questioned Costs
-
Year
2023
Accepted
2024-01-25
Audit: 13626
Organization: Rannie Webster Foundation (NH)

AI Summary

  • Core Issue: Rannie Webster Foundation's debt service coverage ratio is below the required 1.0, indicating a significant internal control deficiency.
  • Impacted Requirements: The Foundation is not complying with its Regulatory Agreement with HUD, which mandates maintaining the specified debt service coverage ratio.
  • Recommended Follow-Up: Management should explore cost-cutting measures to improve financial performance and avoid potential HUD intervention.

Finding Text

Federal agency: U.S. Department of Housing and Urban Development Federal program title: Mortgage Insurance Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities Assistance Listing Number: 14.129 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Rannie Webster Foundation’s Regulatory Agreement with HUD requires the Foundation to maintain a debt service coverage ratio of 1.0. Condition: Rannie Webster Foundation’s debt service coverage ratio was calculated as below 1.0. Questioned costs: None Context: Rannie Webster Foundation’s debt service coverage ratio was calculated as below the requirement of 1.0. Cause: Rannie Webster Foundation experienced higher costs as a result of overall economic conditions and higher costs on contracted nursing services in the wake of healthcare hiring challenges. Effect: This may be considered a project operating deficiency by HUD. HUD may provide the Foundation with written notice that the Foundation must select and engage (at the Foundation’s expense), within ten business days of such notice, the services of a management consultant. HUD’s decision to require or not require the engagement of a consultant is within HUD’s sole discretion. Repeat finding: This is a repeat finding and was reported as finding 2022-02 in the prior year. Recommendation: Management should evaluate and consider cost-cutting measures or strategies to improve the financial results. Views of responsible officials: Management is in agreement with the finding.

Corrective Action Plan

Silverstone Living (SL) recognized several operational opportunities for the sustainability of the Foundation, which is the reason why the affiliation occurred. These opportunities were three-fold: increasing census to fill beds which have been unoccupied for some time, maximizing the reimbursement for services already being provided, and the control and reduction of expenses. In the short amount of time since the affiliation with SL, the average daily census has increased over the prior 3-year period by nearly 7% for Assisted Living services, and nearly 9% for skilled and nursing services. This equates to over $1,000,000 in additional annual revenues because of the census increase alone. SL believes that there is potential to further increase census as we continue to stabilize and onboard additional clinical staffing. SL recently brought on an individual skilled in coding maximization to ensure the Foundation receives the appropriate reimbursement for the services being provided which was previously lacking. On the expense side, SL renegotiated rates with staffing agencies for clinical positions as well as the contracted rehabilitation services to reduce the amounts being charged which has resulted in nearly $40,000 per month in savings from the earlier part of the calendar year. SL also brought the Foundation under its umbrella in the areas of employee benefits and facility insurance, negating any premium increases and a reduction of over $50,000 in Workers Compensation insurance premiums in the coming year. Through attrition, SL also worked to restructure and eliminate several non-clinical positions for operational efficiency and will continue to review staffing needs as turnover occurs. SL is continuing to transition administrative functions such as payroll and accounting onto its systems, further reducing outside contracted services and systems over the coming months. Through this multi-pronged approach, we are seeing dramatic improvements in the financial outlook of the Foundation. During the 3-month fiscal period beginning 2024 compared to the same period in 2023, there has been a $670,000 improvement in income from operations, which we believe will trend throughout the remainder of the new fiscal year, and into the future.

Categories

HUD Housing Programs Significant Deficiency Internal Control / Segregation of Duties

Other Findings in this Audit

  • 9986 2023-001
    Significant Deficiency
  • 586428 2023-001
    Significant Deficiency
  • 586429 2023-002
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
14.129 Mortgage Insurance_nursing Homes, Intermediate Care Facilities, Board and Care Homes and Assisted Living Facilities $15.99M
93.498 Provider Relief Fund $357,203