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Southeast Minnesota nursing home had unpaid bills, caretakers quitting, frozen assets before state takeover

At Pine Island, Minnesota, facility, state found a pattern of failing to meet ongoing financial obligations and worried about the impact on residents

Pine Haven Care Center
Pine Haven Care Center in Pine Island, Minn., on Tuesday, June 14, 2022.
Andrew Link / Post Bulletin
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PINE ISLAND, Minnesota — By the time of the state's takeover of Pine Haven Care Center in Pine Island last Saturday, the nursing home was swamped in unpaid bills and the care of its more than 50 residents were threatened over concerns of a potential employee exodus.

According to Ramsey County court documents, it faced a litany of creditors. Pine Haven’s assets and bank account had been frozen. The bank account it used to pay expenses had only $1,500 in it, down from $200,000 last year. Employee insurance wasn’t being paid.

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Its CEO, Marcus Parence, had instructed the director of nursing to get medications out of an emergency kit, because the pharmacy it relied on for residents’ medications refused to provide them without getting paid. Several employees had resigned over the center’s financial instability, and there were concerns more were heading for the doors.

“If Pine Haven Care Center’s current staff quit their jobs due to nonpayment of wages, salaries or health insurance premiums, there would be no one to take care of the 52 residents at the facility,” said state health commissioner Jan Malcolm in one court filing.

Even the human resources management company hired by Pine Haven, UKG, for payroll services threatened to not issue payroll until it got paid.

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Pine Haven Care Center
Pine Haven Care Center in Pine Island, Minn., on Tuesday, June 14, 2022.
Andrew Link / Post Bulletin

By Saturday, after amassing a mountain of evidence of Pine Haven’s financial distress and inability to pay its bills, the state department took control of the beleaguered facility and put Pathway Health, a professional management organization, in charge of its operations. State health officials called the center’s financial situation “precarious.”

“There is reason to believe care at the facility is compromised,” according to one document.

The nursing home is licensed to house 70 residents but currently houses 52. It is licensed by the state and is certified by the federal government to participate in the federal Medicare program and Medicaid, a state/federal program.

Documents noted that MDH investigated a complaint in May concerning Pine Haven’s failure to ensure its staff were aware of a resident’s peanut allergy. When the resident was served dessert containing peanuts, the resident had an anaphylaxis reaction and was sent to the hospital.

“One of the concerns that we had was that there was an immediate threat for the care of the residents, because it takes people to take care of (nursing home residents),” said Maria King, MDH’s director of the health regulation division in explaining the state’s decision to intervene.

Pine Haven Care Center
Pine Haven Care Center in Pine Island, Minn., on Tuesday, June 14, 2022.
Andrew Link / Post Bulletin

King said receivership, a court-appointed tool that helps troubled organizations, allowed the state to “offer some supports to the facility and make sure that they would get their payroll met.”

The state could potentially close the facility and transfer the nursing home’s residents to other facilities, but King said she hoped that would not be the outcome. King noted that the facility is supported by the local Pine Island community and that the physical plant is in good shape.

“What we’re hopeful for is that this managing agent can help to get things back on the right track,” King said. “They’ll, of course, do an assessment and then decisions will be made accordingly based on what we find there.”

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King said she didn’t know why Pine Haven was in such financial trouble and the extent of its financial difficulties won’t be known until the assessment is completed.

State takeovers of nursing homes happen rarely. It has happened only half a dozen times in the last 15 years in Minnesota. Recent examples include Camden Care Center in Minneapolis, which entered receivership in 2014. The facility stayed open but under new ownership.

In 2015, Infinia Owatonna and Infinia Faribault both closed due to financial difficulties. Last year, Twin Cities Gardens nursing home in Minneapolis closed due to numerous financial and physical plant issues.

Nursing homes have been challenged by financial and staffing challenges in the past, a situation exacerbated by the COVID-19 pandemic.

King said she didn’t know at this point whether Pine Haven’s situation was an outlier or a sign of an industry-wide crisis.

“I’m not sure yet,” King said. “Certainly, we know that staffing is an issue in this facility. And it’s an issue in a lot of facilities in the state and nationwide.”

MDH opened an investigation into the Pine Island nursing home after receiving a complaint last month that the center would be unable to make payroll. The complaint was assessed by MDH officials as an “immediate jeopardy” situation, which is the most egregious level, King said.

MDH staff visited the facility early this month and interviewed facility staff, vendors and creditors of Pine Haven.

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The investigation revealed a “pattern of failing to meet ongoing financial obligations.” The nursing home was failing to pay employee wages and health insurance in a timely fashion, as well as a pharmacy, a food vendor and its payroll services provider.

King said one resident, a new admission, did not get their medication for about a day, because of the pharmacy’s refusal to provide it without getting paid. It turned out not to be a life-threatening situation. An arrangement was made with the pharmacy to ensure “that there was not a disruption in the medications,” King said.

Court records reveal that when MDH officials interviewed Randy Hoffarth, chairman of the Pine Haven board of directors, he reported that the prior week the board had learned that the nursing home’s assets and bank accounts had been frozen.

When he went to the bank to determine the reason, he came away empty handed. He told MDH officials that Parence, the nursing home’s administrator, had not told the board that its bank account and a separate account holding resident funds had so little money.

Attempts to reach Parence through Facebook were unsuccessful.

Officials say there have been other allegations and complaints made against the facility within the last year. But the state investigation did not identify “serious issues” with the quality of care provided at the Pine Haven as part of the current inquiry.

“The big concern in this particular receivership was the financial distress that the facility was in,” she said. “It takes people to meet the needs of those individual residents. And those people who are doing the good work are expected to get a paycheck.”

Matthew Stolle has been a Post Bulletin reporter since 2000 and covered many of the beats that make up a newsroom. In his first several years, he covered K-12 education and higher education in Rochester before shifting to politics. He has also been a features writer. Today, Matt jumps from beat to beat, depending on what his editor and the Rochester area are producing in terms of news. Readers can reach Matthew at 507-281-7415 or mstolle@postbulletin.com.
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