This week, a skeleton staff of the Vineyard Nursing Association (VNA) was at work closing down the nonprofit that had furnished home health care and other services to Island customers. There are bills to pay, receivables to collect, and a building with $1.5 million owed on it to sell.
VNA ended operations on Tuesday, March 11. The end of the organization came as no surprise, only the circumstances.
The Visiting Nurse Association of Cape Cod (VNACC), part of Cape Cod Healthcare did not take over the VNA, as announced in January. It picked up the pieces — patients and staff.
“We didn’t end up doing a deal, we didn’t progress from the letter of intent to an actual transfer of assets,” Michael Goldsmith, a lawyer and chairman of the VNA board of directors, said in a telephone conversation Tuesday.
VNA is now winding down its operations under the supervision of VNA chief executive Robert Tonti.
Because VNA is a charity, Mr. Goldsmith said the process of closing out the organization comes under the review of the state attorney general. Money still owed the VNA is being collected and will be used to pay creditors.
That process was likely helped by a donation from the Cape VNA. Mr. Goldsmith confirmed that such a donation was made, but said that, as with any donor, the amount of the donation would be kept confidential, unless the donor chooses to disclose it.
Late Wednesday, Robin Lord, VNACC director of communications, was unable to confirm the donation or the amount.
Mr. Goldsmith said $117,489 owed by the VNA to the Commonwealth of Massachusetts for unpaid overdue contributions or payments in lieu of contributions, plus accrued interest, had been paid to the Department of Unemployment Assistance.
All employees have been paid what they were owed, he said, including accrued vacation time. The VNA owes a total of $1.5 million in mortgage debt to the Edgartown National Bank on its new headquarters on Breakdown Lane in Vineyard Haven, opened in November 2012.
Mr. Goldsmith said the building will be sold by VNA or the bank.
He said the VNA does not expect to enter into bankruptcy.
“Our primary goal was to make sure the patients were taken care of,” Mr. Goldsmith said. “And a competent organization was here to do that. By and large everyone will see the same nurse and physical therapist and home health aid that they saw before. They will be managed by professionals from Cape Cod, who we were very impressed with in the process.”
Little to say
Officials from the two organizations would say little about what caused the VNACC to walk away from a deal it announced in a press release issued on January 29. Then, VNACC, a unit of Cape Cod Health Care, said it would acquire the assets and liabilities of the financially pressed VNA in a transaction worth more than $2 million.
In explaining its retreat from the purchase, VNACC referred to needed approvals from regulatory agencies, which would be required for the purchase to be completed. The large Cape agency was expected to be very familiar with the work needed to get over such regulatory hurdles. For its part, VNA pointed to a change of heart by the Cape group over a three-week span about acquiring the Island home care agency’s new headquarters building.
VNA and VNACC officials each stressed that they had worked together to provide a seamless transition and no interruption in patient care. The Cape agency comes with financial strength — a budget of $50 to $60 million annually, 4,700 employees making more than 300,000 visits each year, and more than 2,000 patients — and it is a unit of Cape Cod Healthcare, whose revenues are more than $700 million.
The collapse of the purchase deal came as a surprise to the Martha’s Vineyard Hospital, which had also expressed a willingness to take over the VNA patients but not the organization and its balance sheet. And, it surprised Martha’s Vineyard Community Services, which was actively in discussions with the VNA to take over the health care agency when the VNACC deal was announced in January, and made a last ditch effort to do so once the deal was off.
“The nationally recognized Visiting Nurse Association of Cape Cod has entered into an agreement to acquire the Vineyard Nursing Association, in order to provide services on Martha’s Vineyard and Nantucket,” said the VNACC press release issued January 29. “The two non-profit organizations have executed a letter of intent outlining the VNA of Cape Cod’s proposal to acquire the assets of Vineyard Nursing Association.”
A VNA press release issued March 11 was more oblique. “The Vineyard Nursing Association, also doing business as Nantucket Visiting Nurses, will be closing its doors effective March 11, 2014. All patients will be given the option to continue receiving home care services by the Visiting Nursing Association of Cape Cod.”
The release said there should be no noticeable changes for patients and Cape Cod would “rely on the professional and paraprofessional staff formerly employed by the VNA to carry out care.” There was no statement that VNACC had decided not to go forward with the deal, leaving VNA with a building and business obligations to dissolve.
On March 13, The Times reported that the VNA had closed its doors and the Cape VNA had taken over the non-profit, according to the terms of the deal first announced in January.
In a press release issued Friday, March 14, VNACC clarified the picture.
“It has been reported over the last few days that the Visiting Nurse Association of Cape Cod acquired the Vineyard Nursing Association, and that information is incorrect,” said Ms. Lord. “The Letter of Intent previously signed by the MVNA and the VNACC expired as of March 5, 2014. The parties were not able to secure the regulatory approvals deemed necessary for the VNACC to actually acquire the MVNA.”
Ms. Lord said that after learning that the VNA would close its doors on March 11, “the VNACC quickly mobilized its own staff to provide whatever assistance it could on both Nantucket and Martha’s Vineyard to assure that at no point would patient care be interrupted.”
Ms. Lord said the VNACC established temporary offices and has begun a search for a permanent space on the Island and offered “employment opportunities” to many former staff members of the VNA.
“The VNACC is and was not privy to the details underlying the decision made by the VNA board of trustees to close their doors,” Ms. Lord said. “We recognize that the health care industry continues to change rapidly and dramatically, making it harder for some businesses to survive. That appears to have been the case here, and we were saddened by this development, as we are any time we hear about the inability of a health care provider to continue its mission.”
Ms. Lord said, “The VNACC did not take part in, or influence in any way, the VNA’s decision to close.”
In a telephone call Monday, Ms. Lord asked that any questions be submitted by email. She declined to provide any details about the decision not to go forward.
In a written response to Times questions, Ms. Lord said the letter of intent provided for each party “to conduct customary due diligence on the business/licensure/regulatory issues germane to transactions of the type” originally envisioned by the two parties. “Much as you wouldn’t want to buy a new house without first conducting an inspection of it, it would be unheard of for any successful organization to acquire another organization that is in trouble without carefully reviewing its operations, financials and potential vulnerabilities.”
Rocky financials growing rockier
VNA operated on a budget approaching $4 million a year, almost all of that from third party payors, including Medicare and Medicaid, the balance from private insurance and private pay. Fundraising supplemented reimbursement income.
The letter of intent expired first on February 19. VNACC asked VNA for a two-week extension. The extension expired on March 5, along with the proposed deal.
Asked why VNACC decided not to go forward with the deal, Mr. Goldsmith said that was a question for the Cape organization. As far as he knew, they made a determination that acquiring the building was not in their best interests.
That put the VNA back at the starting gate, but without the time to explore options with Martha’s Vineyard Hospital or Community Services, which did want the building.
Mr. Goldsmith said VNA had been teetering financially for a long time. It was no secret. The agency decided to go with the best deal on paper, which VNACC offered — turnkey — to take over the VNA’s liabilities and building and keep the jobs.
“It didn’t turn out maybe as we wanted or envisioned, but they did step up,” Mr. Goldsmith said.
Tim Walsh, Martha’s Vineyard Hospital chief executive officer, said he was surprised to learn that the VNA deal, as originally described, had not gone through.
“It basically ends up being what Partners was willing to do in December,” Mr. Walsh said. “Take over the patients.”
Mr. Walsh said at the time that Partners was not willing to take over the assets and liabilities of the organization, but was willing to assist VNA to meet its obligations to its creditors.
The benefit would have been a presence on the Island, Mr. Walsh said.
Discussions with VNA began several months earlier, he recalled, but at first “they were just asking for money, and you can’t give money without looking.”
Mr. Walsh asked the hospital’s chief financial officer to look into VNA’s finances. “We could see they were in a lot of trouble financially, and we were unwilling to do anything that would harm the financial health of the hospital,” Mr. Walsh said, “but we were interested in finding a way to be certain patient care would remain uninterrupted.”
Mr. Walsh said that Partners understood the importance of the VNA to the community and made an offer to take over, or facilitate, patient coverage. What they did not want to do was assume responsibility for all the known and unknown liabilities, which could include any Medicaid billing liabilities or tax problems.
He said that VNA contacted the hospital’s continuing care manager and the doctors’ offices to alert them to the transition.
“That part is fine,” Mr. Walsh said. “I think they did a nice, nice job on that. It was pretty fast, and they seem to have done a good job.”
In January, Juliette Fay, executive director ofMartha’s Vineyard Community Services (MVCS), confirmed that the Island’s umbrella social services agency had actively discussed with the VNA a takeover of the health care agency.
Ms. Fay said Community Services did “due diligence” on the company during the month of December and hired a consultant to help with its examination, which continued through the first weeks of January.
She said Community Services’ interest in the VNA was strategic in nature, not simply a business opportunity. Bringing the VNA under the Community Services umbrella would have allowed the agency to gain needed space. Ms. Fay said that, in her view, there was much to gain in joining the two organizations, particularly in light of national health care reform.
When the VNACC deal surfaced, the discussions stopped.
In a telephone conversation with The Times on Wednesday, Ms. Fay said she learned about two and half weeks ago that the CCVNA deal was not going forward as originally discussed.
“When it became apparent that Cape Cod was just going to come in and take over the patients, that caused us to say, well, we could do that,” Ms. Fay said.
Community Services, which once ran a competing home health care service later absorbed by the VNA, immediately filed forms with the state Department of Public Health to reinstate its lapsed Medicare status, a process expected to take between three and four weeks.
Ms. Fay said Community Services board members met with Mr. Walsh and hospital board president Tim Sweet. The hospital agreed to provide Community Services with the working capital needed to get its new service off the ground.
“We received good support from the hospital,” she said.
But at that point the VNA had already laid the plans for the change in staff and patients, Ms. Fay said. “So we basically just ran out of time the second time around,” she said.