Public services shouldn’t return profits to shareholders at expense of communities

Posted 20 February 2017 at 9:06 pm


I was a county resident working to save our nursing home a couple of years ago.  I joined the fight as a concerned citizen because my research showed many examples of nursing home sales going bad and communities like ours left without a good facility. We failed. The nursing home was sold.

About a year and half ago I read an article that our county was being taken to court because the company that purchased the nursing home was trying to lower the building’s assessed value, and ultimately, its taxes. The legislature was asking town governments to pitch in for the cost of legal representation. I now understand this is a common strategy used by corporations that buy nursing homes. The corporations have the money to fight in courts, small towns do not.

Our legislators said that selling the nursing home would increase tax revenues, release us from the burden of running the home, and not negatively impact care. Well, I’ve heard some negative things about supplies for residents, frustrated staff, and corporate policies that have negatively impacted care.

And I just read the other day that a settlement was reached in the lawsuit and the assessment was reduced by $1.6 million dollars. To quote the article, “When the former county-owned nursing home went on the tax rolls for the first time in 2015, the site was assessed for $6,618,900.  Comprehensive Healthcare Management Services LLC paid $7.8 million for the 120-bed Villages of Orleans Health and Rehabilitation Center on Route 31 in Albion. The sale was effective on Jan. 1, 2015. The new owners filed a challenge to the assessment, saying the site should be valued at $2.5 million.”

First, I don’t even understand how a company can argue something it bought for $7.8 million is actually worth $2.5 million. From the start, Comprehensive Healthcare Management Services LLC has proven itself a poor corporate citizen. And if our legislators did not do enough research to know that a common strategy for corporate buyers like Comprehensive Healthcare Management Services was to take towns to court to lessen their tax burden, it is in issue. If they did know but went through with the sale anyway, it is an arguably bigger one.

For me, this issue comes down to the difference between private for-profit and private non-profit entities. There are two primary differences: the tax code and the driving focus of the organization. In a private for-profit organization, a portion of revenues is directed to shareholders, and the mission of the organization is to maximize profits. That is just what it means to be for-profit.

A private non-profit organization does not take a portion for shareholders, and its primary work is to achieve the mission of the organization. That can be art, elder care, education, etc. These key differences have a major impact on outcomes. As Americans try to decide what is the government’s responsibility and what should be contracted out, I propose we turn to private non-profit organizations to provide the public services that government cannot handle.

The difference between organizations boils down to judgement around the primary focus – to maximize profits or to maximize the mission. The Comprehensive Healthcare Management Services LLC’s move to take the county to court immediately after making the nursing home purchase is another example of for-profit organizations making decisions to maximize profits.

So how long after the five-year guarantee of the reduced tax burden will they stay. History has shown that as soon as the tax credits are gone, for-profit business as gone as well. I have an issue with this as a taxpayer. I don’t believe the government needs to operate all public services, but I do believe that public services should not have a portion of revenues sent to shareholders as profit, or for decisions to be driven by the need to maximize profits.

Thank you.

Betty García Mathewson