State explores privatizing Pioneer Homes

With the state anxiously seeking ways to cut costs, one idea being discussed is privatizing its Pioneer Home assisted living facilities. The state recently took another step in exploring this possibility, and issued a request for letters of interest for potential privatization of the six Pioneer Homes.

“We’re in a horrible financial situation,” said Vickie Wilson, director of the Alaska Pioneer Homes, Division of Health and Social Services. “The legislature is asking us to consider what’s out there for privatization. All 24-hour facilities owned by the Department of Health and Social Services have been asked to do this.”

Diane Boyer, president of the resident council at the Anchorage Pioneer Home, says privatization of the homes has been up for discussion many times now.

“About a year ago, someone here locally expressed an interest in purchasing the homes with some sort of trust. Myself and the vice president of the resident council met with them, and they indicated that they would be the landlord. That concerned me,” Boyer said.

There was another instance many years ago where Providence in Anchorage offered to purchase the Anchorage Pioneer Home, hoping to combine it with their own assisted living home. However, as the homes can only be purchased as a system, the offers fell through, Boyer said.

“I don’t think privatization is the best way to solve this, though,” Boyer said. “I think they want a request for proposal to solve the budget problem.”

Legislative hearings

On Feb. 15, Wilson and Jessica Bogard, administrative operations manager for the homes, met with the House Finance for the Department of Health and Social Services Budget Subcommittee in Juneau to discuss budget cuts for 2016 and 2017 and the potential for privatization.

According to a PowerPoint presentation provided by Wilson and Bogard, the homes currently take up 2.3 percent of the Dept. of Health and Social Services budget.

The state’s six homes currently house 535 residents, with 325 on the active waiting list and another 4,093 on the inactive list, according to the presentation.

After the budget reductions for the 2016 fiscal year, two full time management positions, 17 positions within the homes and various services and commodities have been cut.

The recent rate increase, effective Feb. 1, will add an estimated revenue of $436,900 for the rest of the 2016 fiscal year. However, it isn’t yet clear if the rate increase will cause certain residents to be forced to join the payment assistance program, Wilson said.

The projected budget cuts for the 2017 fiscal year will continue to reduce the homes’ staffing levels and will cause longer wait times for admissions due to the reduced bed count.

According to the PowerPoint information, the homes’ number one priority in terms of care is “health and wellness across the lifespan,” which includes an emphasis on core services like memory care.

Most residents in the homes average 86 years of age and frequently request “level three” services like memory care and extra medical care. According to the presentation material, 58 percent of the residents in the homes have been diagnosed with dementia, compared with the rest of the United States’ average of 39.6 percent for the number of assisted living community residents diagnosed with dementia.

“I’ve spent 18 years with the homes,” said Wilson, “and this number is higher than it’s been before. We’re here to help people manage cueing and act as safety nets.”

The Anchorage home has three units, and each one specializes in a certain type of care depending on the residents’ care levels.

“Southside is for the level ones and twos,” said Boyer. “A level one means that you are able to do 100 percent of the work on your own. A level two means that you are able to do 75 percent of the work on your own. You basically just need help with making your bed or taking your medications, little things like that.

“Sunset View is for level threes that require extra medical care. A level three means that you can do 25 percent of the work on your own, and you need help with the remaining 75 percent. Delaney Gardens is also for level threes, but these level threes have great mobility. They just need memory care.”

According to Boyer, most other assisted living homes across the state and in the rest of the Lower 48 only do memory care or extra medical care, not both, and the level threes that would need the extra medical care would normally be considered for a nursing home.

“I’ve had the occasion to see other assisted living homes, and their employees don’t give their residents the same level of care as ours do. Our staff has been doing a fabulous job, even with the budget cuts,” Boyer said.

“All of our homes manage this type of care,” Wilson said. “I think that people don’t really realize the extent of the care we have and the dignity that we are able to continue to manage to provide for these individuals.”

Future of the homes

After leaving a request for letters of interest open for 28 days, the homes have received a handful of responses.

NANA Management Services, who already provides food services for all the homes and housekeeping services for the Juneau home, offered to provide housekeeping, food service and maintenance services until they would be able to find a partner to provide direct care services. Southeast Alaska Regional Health Consortium has offered to purchase the entire Pioneer Home system. Marathon Development, Inc., from Washington has offered to manage operations and lease assets if it is determined profitable. Retirement Housing Foundation from California has offered to manage operations.

“The letters of interest were a no-cost attempt to test the waters of privatization,” said Bogard. “At this point, we want to go forward with a feasibility study to see the options.”

Although these initial letters are merely offers, there was nothing stating that the potential new owners would maintain the current client mix.

“There were no responses that guaranteed that those that were the most vulnerable or with a lack of funds would remain within the facilities and that they would be cared for in the future,” Wilson said. “That was disappointing, but not surprising.”

“I personally don’t see how anyone could operate this any better than the state,” said Boyer. “Someone that’s not familiar with this type of business won’t understand this type of care and the certain staffing ratios that we need to follow. There’s a lot of unanswered questions. What would happen with the maintenance programs? What would happen with the activity programs or the resident advisory board? I don’t think this is beneficial for the residents. Our level of care is excellent. I think privatization would take away from our level of care.”

The subcommittee hearing discussed above is archived for viewing online at

Click the “Documents” tab on that page to view or download the PowerPoint presentation.

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