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By Thomas Goldsmith

North Carolina taxpayers will shell out $5.3 million more during the next five years to have a Georgia-based company, instead of a lower bidder, manage the state’s veterans nursing homes, according to state documents.

PruittHealth, which has held the contract from the state Department of Military and Veterans Affairs since 1998, submitted a bid based on a 10 percent share of $290 million in revenues for the four facilities across the state. 

Here’s how it worked out for the company:

  • Pruitt succeeded in getting its share for managing the state veterans nursing homes up to 10 percent from the previous 9.25 percent, for an 8 percent rate increase.
  • Pruitt’s fee under the five-year contract will increase to $29 million from the $18.5 million it contracted for during the last full term. That’s a 56.5 percent overall fee increase.
  • The larger fee came in part because of the higher management percentage. In addition, the state contract detailed that overall spending for the homes would increase from $200 million to $290 million, or 45 percent.

Pruitt justified its higher operating fee this time around by saying it would be opening an additional nursing home facility for veterans in 2024. 

Pruitt had the same oversight duties when a review by NC Health News found that between April 21, 2020, when the first veteran in a state nursing home died of COVID, and July 2020, 36 veterans died of the disease, even as no veterans in neighboring states had died in equivalent facilities. All told, 39 veterans died of COVID-19 in the North Carolina homes they currently manage.

An analysis of Centers for Medicare and Medicaid Services data showed that no veterans had died of COVID-19 during that period in state-run nursing homes in Virginia, Tennessee and South Carolina.

Neither Pruitt nor the state has made public any investigation into the deaths, but legislators have included in the state budget a proposal that could increase oversight of the way that veterans health issues are managed. Included in the budget provision are plans to determine whether the state should consider options other than state-owned, privately run nursing homes for frail and older veterans.

“Ensuring the high quality of health care and long-term living facilities for our veterans is critical and the administration continues to review these provisions,” a spokesman for Gov. Roy Cooper said last week.

A representative of Pruitt’s communications team responded on Oct. 13, saying: 

“It is an honor and a privilege to serve those who have given so much of themselves for our freedom and our country, and we are grateful to the North Carolina Department of Military and Veterans Affairs for entrusting the PruittHealth family of providers with caring for these heroes for another five years.”

State: Other bids fall short

Wilmington-based Liberty Healthcare offered to run the facilities for a bid of 8.15 percent of revenue budget for running the four state veterans nursing homes. Those evaluating the bids gave a mixed review to Liberty as potential managers of the four existing veterans homes, with another in Raleigh projected to come online in 2024. Another home has been planned for Kernersville but is not mentioned in letters detailing the contract with Pruitt.

“Liberty’s overall past performance shows the Vendor has the ability to manage the [North Carolina State Veterans Homes] and complete the transition to take over the management,” the team said. “There are concerns with the quality of care with the past ratings of this Vendor’s facilities.”

Liberty’s fee would have amounted to $23.6 million, with Pruitt now in line to earn $29 million. Principle Healthcare, the company that was ruled out of consideration, would have taken $21.75 million with a bid based on 7.5 percent of revenue. Administrators are not required to take the low bid. 

“Award of a Contract to one Vendor does not mean that the other proposals lacked merit, but that, all factors considered, the selected proposal was deemed most advantageous and represented the best value to the State,” according to a request for proposals sent in May. 

In explaining its decision, the evaluation team gave a statement, which reads in part:

“Pruitt made note that increase to percentage from current contract at 9.25% is to accommodate for opening of 2 additional homes. Pruitt brings the strongest Technical Evaluation and has proved under the current contract that they proved an excellent program.

The 1.85% differential in cost is the difference between experience, excellence in program design, management plan, and key personnel that Pruitt proposes.” 

Meanwhile, regulators in Eastern several states are prepared to monitor closely the amounts that nursing home operators spend on direct care, to the point of limiting profit gleaned from revenue, according to recent coverage in Kaiser Health News. New laws in New York, New Jersey and Massachusetts are already getting pushback from the long-term care industry, but lawmakers continue to make the case for the changes.

“If they choose to rely on public dollars to deliver care, they take on a greater responsibility,” New York Assembly member Ron Kim told Kaiser Health News. “It’s not like running a hotel.”

Pruitt achieves boost in rate

Pruitt fared better in this year’s bidding than in 2014, when the Department of Administration whittled down the company’s requested percentage of the nursing homes’ revenue from 9.75 percent to the 9.25 percent awarded. Another company had its bid declared inactive so that only Pruitt remained in the bidding.

Kinston-based Principle HealthCare, the company that submitted an initial rate that was 25 percent less than Pruitt’s, was taken out of the running on other considerations.

“Principle only provided 2 years of financial information,” the evaluation team who reported to the Department of Military and Veteran Affairs said in a letter. “This coupled with the Vendors request to only review 3.5 years of documentation eliminated this Vendor from the final consideration after the full technical evaluation.”

Principle operates more than 50 long-term facilities in North Carolina, Virginia and Kentucky, according to its website.

The evaluation team is comprised of members of the North Carolina Veterans Affairs Commission and spent two weeks appraising the bids. As a group, they have served 88 years in the military. At the time of appraisal, the commission members included Jane Campbell, mayor of Davidson; John Scherer, general counsel of UNC-Wilmington; Lovay Wallace-Singleton, founder of the Veterans Employment Base Camp and Organic Garden; and Larry Pendry, National Guard president in North Wilkesboro.

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Thomas Goldsmith

Thomas Goldsmith worked in daily newspapers for 33 years before joining North Carolina Health News. Goldsmith is a native Tar Heel who attended the UNC-Chapel Hill, and worked at newspapers in Tennessee...

One reply on “NC Veterans Nursing Home managers get a new contract, profit boost, despite managing homes where COVID deaths took place”

  1. Comparing nursing homes in different states makes no sense as COVID infection rates were different in each state. The only good comparison is against facilities in the same geographic area. Just because they are all Veterans homes, does not make for a good comparison. I think you are trying to create controversy where none really exists. You can call into question the rate increase. That’s fair. But don’t base it on infection rates in other states.

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