By PHYLLIS ZORN

Staff writer

Cuts to Medicaid have created enough financial strain to Salem Home in Hillsboro that the city has agreed to waive $38,100 rent for the building where they are located.

State officials announced a 4 percent cut in Medicaid reimbursements, in May, projected to save $38 million during the current fiscal year. Although rural and critical access hospitals and community-based service providers were spared cuts, nursing homes were not.

Hillsboro city administrator Larry Paine said Salem Home’s board chairman came to him in August to say the nursing home is feeling the effects of reimbursement cuts and needs to develop strategies to cope with reimbursement cuts.

“I don’t know the dollar amounts,” Paine said. “I just know it has impacted their ability to operate on a day-to-day basis.”

Paine said the building belongs to the city and its $6,350-per-month rent goes into a Public Building Commission fund where money accumulates for future projects. The city doesn’t rely on Salem Home rent to provide everyday services to city residents, Paine said.

Paine proposed an amendment to Salem Home’s lease waiving rent Oct. 1 through March 31.

After that time, the city and Salem Home will reconsider, Paine said.

“We’re going to look at the situation at that time and we’ll figure out what we’re going to do then,” Paine said.

Melissa Dinsmore, interim CEO for Salem Home since Aug. 1, said a permanent CEO will begin duties at the nursing home in early October.

Peter Mungai, coming from Hutchinson, has a master of business administration degree and should be well equipped to develop strategies for Salem Home to move forward, Dinsmore said.

One of the things she saw when she began interim duties is that the nursing home has a backlog in payments, she said. The financial quagmire began earlier than Medicaid cuts were announced, Dinsmore said.

“I was so pleased the city is willing to work with us,” Dinsmore said.

Salem Home board chairman Jared Jost said the nursing home is in a transitional period.

“Nursing homes are heavily dependent on Medicaid,” Jost said.

Jost said he talked to the city in order to give Mungai room to implement a new model and structure while continuing to provide excellent services to residents.

“I just want to help him be able to lead this organization as best he can,” Jost said.