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Really privatize Champaign County Nursing Home

The Champaign County Nursing Home has been a continuing source of concern for the Champaign County Board and Champaign County taxpayers. First, the construction of the new nursing home was fraught with delays and cost overruns as well as construction problems related to mold and mechanical defects. Unfortunately, the problems did not go away once the new facility opened earlier this year. The operation was losing a reported $100,000 a month prior to budget cuts that reduced the deficit somewhat. Almost every other county nursing home in the state also operates in the red.

Not surprisingly, the county board is concerned about this situation. The board is considering creating a nursing home board to oversee operations and hiring a consultant to provide advice about how to structure future operations. Some employees fear that the advice might include the hiring of an outside firm to actually manage the nursing home. This has been labeled privatization by some critics, but it is really privatization-lite, because the county would still maintain financial responsibility for the operation.

The best long-term solution for the county is real privatization that would be achieved by getting out of the nursing home business. This could be done by selling or leasing (even at a loss) the home to a private provider. On the surface, this may appear heartless and cruel, but the fact is that governments are ill-equipped to manage the delivery of health care services. Governments often pay for such services, but they seldom produce such services efficiently.

One of the best decisions the city of Champaign has made in recent years was to close Burnham Hospital. Even with the closure, the area has not lost the capacity to provide health care for its citizens. Similarly, Cook County is still suffering from the consequences of building a new Cook County Hospital (the John H. Stroger, Jr. Hospital of Cook County). Note the array of new taxes being proposed by Cook County Board President Todd Stroger to bail out the county's troubled finances.

County nursing homes, county hospitals and county poor farms began as a provider of last resort when there were no other institutions to care for people in distress. In modern times, the problems of poverty, sickness and old age have not gone away, but the way that government deals with them has changed. For the most part, governments find ways to pay for services to deal with these problems without actually producing the services. The government subsidizes medical care for the poor and aged through Medicaid and Medicare, and the care comes from private providers who are paid with government funds, not through publicly run hospitals. The government provides social security, unemployment compensation and welfare payments rather than beds in the poor house for those in need.

In today's world, the Champaign County Nursing Home is no longer the provider of last resort. It is simply one of 10 or more providers in Champaign County offering nursing home services by charging substantial fees for their care with those unable to pay being subsidized by Medicaid dollars. It is surprising that the county nursing home is actually running radio advertisements trying to attract new residents to their facility.

Are all the privately-run nursing homes in the county losing money like the county nursing home? That is obviously not the case in the long run because the private nursing homes could not stay in business. Do we as citizens worry about deficits, cost overruns or construction flaws in private nursing homes? Again, the answer is no since the taxpayers are not the funders of last resort who have to bear the costs for such problems. Are nursing homes a natural monopoly where one large provider such as a county home is more efficient than several smaller institutions? Again, the answer is no. A number of smaller institutions probably provide better care for the same or loser cost.

Does a county home offer superior care compared to private providers? There is no clear evidence of this. All nursing homes in the state are subject to the same regulations and controls. Would anyone argue that county hospitals, military hospitals and Veterans Administration hospitals provide better care than private facilities?

Anyone who has ever had any association with a nursing home knows that it is a difficult environment. Even in the best-run facilities, some patients are not happy, their relatives are concerned and anxious and the employees work under very trying conditions. Running a nursing home is a difficult challenge. Public nursing home facilities have the additional constraints of having to deal with a number of contentious political issues. Every decision, whether it is about hiring, wages, working conditions or fringe benefits, eventually becomes a political issue for the county board. Note the recent demonstrations when the Champaign County Board was considering the seemingly innocuous question of hiring a consultant to improve the home's operations.

In summary, the county board should stop temporizing and consider real privatization by selling or leasing the home to a private provider. Nursing homes services will continue to be available in the county. In fact, the county home takes care of only a small fraction of the nursing home residents in the county. The poor will be taken care of in private nursing homes with the payment coming from Medicaid.

This is one situation where the voters have themselves to blame, not the county board, because the construction of the new home was approved in a referendum. Maybe it is time for a new referendum to see if the voters want to continue on the current path.

- J. Fred Giertz is a professor of economics within the University of Illinois' Institute of Government and Public Affairs. He can be reached at (217) 244-4822 or


Morris Beschloss
CIBM Contributor

After a blistering one-two punch against ethanol delivered in recent articles in The New York Times and Wall Street Journal, a knock-out blow was delivered by Professor Mark J. Perry, an economics and finance professor at the University of Michigan, Flint Campus.

He summarized his views by stating that ethanol cannot be justified on a scientific or economic basis. Perry claims that the only reason the industry has survived and barely profited is the very generous subsidies the government has given corn farmers and ethanol producers.

As I previously pointed out, ethanol is produced by mixing corn with U.S. tax dollars, currently $5.5 billion annually in more than 200 ethanol tax breaks and subsidies.

Perry posits that in the headlong rush to replace gasoline with corn ethanol, America is doing itself real economic harm.

He goes on to say that this ethanol push will not only increase taxes and damage the environment, but will add to America's burden of high fuel and food costs, especially hurting people on fixed incomes.

And it will do next to nothing to reduce the dependence on foreign oil, he adds. All of the ethanol production this year will replace less than 5 percent of the gasoline sold, Perry charges.

He is especially outraged by the increased corn-based ethanol production costs to the price of food.

He contends that food costs have escalated by $47 per person, according to an Iowa State study. As the fall season begins, the price of milk has jumped 40 cents a gallon and 60 cents or more for a pound of cheese.

Nevertheless, U.S. Sen. Richard Lugar, R-Indiana and Sen. Tom Hankin, D-Iowa, are co-sponsoring a bill that would raise the ethanol mandate to 60 billion gallons by 2030.

If extended through 2022, as provided by the Senate bill, the ethanol subsidies will cost taxpayers an estimated $131 billion, according to the Tax Foundation. Subsidies under the Lugar-Harkin measure would cost as much as $205 billion over the next 15 years.

The productive problem with corn ethanol is that it contains one-third less energy than gasoline. So a motorist has to purchase one-third more fuel to go the same distance.

If you total up all of the fossil fuel that goes into making and transporting ethanol - nitrogen based fertilizer and herbicides, fuel to run farm machinery and delivery trucks, natural gas for the distilling process at ethanol plants - it takes more energy to provide ethanol than the corn provides.

The rush to produce ethanol is also adversely impacting the environment. In many parts of the corn belt, water tables are dropping. In some places this could exceed 10 feet or more, because it takes so much water to grow corn.

- Morris R. Beschloss graduated from the University of Illinois' College of Communications in 1952.
He is a columnist for the Desert Sun and publishes two newsletters for the pipe, valve and fittings industry. He can be reached at or (760) 324-8166.

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