PENOBSCOT, Maine — The owners of Penobscot Nursing Home have been given 18 months to demonstrate the viability of their company. It’s the last chance the owners will have before the state takes over, which could mean the facility’s closure.
Penobscot Nursing Home, as well as six other nursing homes operated by Connecticut-based Eagle Landing Residential Care Maine LLC, was taken into state receivership in 2008 amid allegations of financial mismanagement and poor residential care. In total, the seven facilities are home to 197 residents.
The Department of Health and Human Services took over the facilities and a court-appointed emergency receiver was named to manage the day-to-day operations. The 2008 move effectively locked Eagle Landing and its president, Sifwat Ali, out of the companies. The current receiver is Michael Tyler of Portland-based Sandy River Group.
“They’re saying that if given the chance, they can make a go of these facilities and make them financially viable while still offering quality care,” said Bonnie Smith, deputy commissioner of DHHS, on Wednesday. “This gives them an opportunity to show us.”
The receiver has been paid by Eagle Landing through fees collected at its seven facilities. While the firms have been in receivership, the state has forgone collections of taxes and MaineCare settlement payments, according to DHHS spokesman John Martins.
Martins said that ELR Care Maine owes the state at least $2.8 million. If the company can show it is viable, the agreement with the state allows for a payment schedule for money owed to DHHS and Maine Revenue Services.
Under a court-approved agreement signed in January between DHHS and the company, Eagle Landing will appoint a vice president of operations to take over management of the facilities for one year under the supervision of Tyler, who will act as the court’s monitor.
The January agreement came seven months after DHHS — claiming the receiver was unable to right the ship of a company $330,000 in the red — filed a petition to close Penobscot Nursing Home. Smith said the new agreement was reached in negotiations with Eagle Landing.
“We’ve looked to see what we can do,” she said. “Some things have gotten better, some have not, as far as financial viability.”
If the seven facilities, as a group or individually, can demonstrate financial viability in that 12-month probationary period, the owner will continue to manage the facilities for another six months.
At the end of that period, if the company can demonstrate to the court that it can keep up with its expenses, the receivership will end. The company will still be required to submit annual reports to DHHS for two years.
If at the 12- or 18-month mark, any of the seven facilities is unable to prove its viability, the agreement would have the state initiate a “wind-down” scenario for that facility. The company would have 90 days to show the state it had an interested buyer able to turn business around in that location. Eagle Landing would have five months to sell off the facility.
If it couldn’t, the state would take over and take any means necessary — including closure — “to assure the best outcome for the residents of affected facilities.”
A special provision for Penobscot Nursing Home was written into the agreement, giving Blue Hill and Penobscot, as well as other peninsula municipalities, the option to submit a proposal for the continued operation of PNH. That option also would include Northern Bay Residential Living Center, an assisted-living center housed within the walls of Penobscot Nursing Home.
Combined, the two Penobscot facilities are home to 79 people, according the most recent DHHS census.
Smith said PNH is a critical asset to the Blue Hill peninsula, and so it was necessary to give those towns a seat at the table and a chance to preserve the facility.
“The municipalities in that area have such a vested interest in keeping this facility running,” she said. “We felt it was appropriate to give them the option of putting together a group to buy the facility, or do whatever they may be able to do.”
Paul Bowen, chairman of the Penobscot Board of Selectmen, said that in the event ELR Care couldn’t keep PNH open, the town would likely not purchase the facility outright. But it would do everything in its power, working with other neighboring towns, to keep the home open.
“It’s in everybody’s interest to keep this place operational,” he said Thursday. Bowen noted that he was encouraged by the fact that since entering receivership, ELR Care had paid the town the back taxes owed on Penobscot Nursing Home.
There’s no such municipal clause in the agreement for the other facilities — Dolley Farm Residential Care Home and Rocky Hill Manor in Westbrook; Gray Manor in Gray; Snow Pond Residential Care Facility in Sidney; and Somerset Residential Care Facility in Madison.
Smith said residents at those locations have more nearby options in case of a closure.
“There are a lot more resources where the others are located, but Penobscot is an area that doesn’t have a lot there,” she said. “There isn’t another facility down the street.”
Conditions were dire for the roughly 180 residents of the seven facilities when the state took over in 2008. At Penobscot Nursing Home and Northern Bay Residential Living Center residents were losing weight. Vendors had stopped delivering supplies and food because of unpaid bills.
At another facility, there was no propane, so no one could cook, and part of the building was unheated. Some facilities lost telephone and Internet service, or were unable to meet payroll. Some resident transportation vehicles had been repossessed.
According to a court document, the company had “routinely” used employees’ personal credit cards to pay for food deliveries, and all employees had been threatened with a 20 percent pay cut.
Smith said that since the state took over, the quality of care for residents has vastly improved, but the question still remains whether Ali and his associates could straighten out the company’s finances.
Smith stopped short of saying she was optimistic Eagle Landing could turn the financials around, but said she was confident it has every opportunity to do so.
“It’s not our hope that these facilities close,” she said. “It’s our hope that we’re able to resolve this, and have facilities that offer quality care for their residents and their communities.”
Michael Tyler at Sandy River Group did not return a call for comment. Efforts this week to reach Ali also were unsuccessful.
Follow Mario Moretto on Twitter at @riocarmine.