The 2018-19 Budget

Proposed Changes to
Veterans Home in Yountville

The Governor’s 2018-19 budget proposes $15.7 million General Fund for the California Department of Veterans Affairs (CalVet) to conduct a preliminary study to construct a new skilled nursing and memory care facility at the Veterans Home of California in Yountville. In addition, the Governor’s budget proposes to convert double occupancy rooms to single occupancy rooms in the domiciliary care unit at the Yountville veterans home. In this analysis, we (1) provide a brief background on the veterans home system, (2) describe the Governor’s proposal, and (3) provide our recommendations.

Background

The state of California operates eight veterans homes that provide residential or long-term care services to a total of about 2,500 veterans in the state. As shown in Figure 1, the services provided at the homes range from independent living-style domiciliary care to intensive skilled nursing services and memory care for residents with dementia and/or mental impairment. Funding for the veterans homes primarily comes from the General Fund (proposed to be $352 million in 2018-19), which is partially offset by federal funds and member fees (estimated to be $120 million total in 2018-19). (Additional information on the veterans homes system can be found in our January 2017 report, Understanding the Veterans Services Landscape in California.)

CalVet Currently Working on System-Wide Veterans Homes Master Plan. The Legislature enacted budget-related legislation in 2017-18 requiring CalVet to develop a system-wide master plan for the veterans homes by July 1, 2019. Key components of the master plan include (1) an assessment of current demand for services, (2) projecting future long-term care needs among California’s veterans, and (3) determining how to align the veterans homes system to meet current and future demand across all levels of care. CalVet was provided with two temporary positions and $206,000 in 2017-18 to begin work on the master plan.

Overview of the Governor’s Proposals

Proposal One: Preliminary Study to Construct a Replacement SNF and Memory Care Facility at the Yountville Veterans Home. The Governor’s budget includes $15.7 million General Fund for the preliminary plans to construct a skilled nursing and memory care facility at Yountville veterans home. The new facility, which is estimated to cost a total of $317 million once fully complete, would largely replace the existing skilled nursing facility (SNF) and memory care unit at Yountville—meaning that the total number of SNF and memory care beds at the Yountville veterans home would remain relatively flat (only increasing from 231 to 240 total SNF and memory care beds). It is our understanding that no decision has been made as to the future use of both the current SNF and memory care facilities following the completion of the new facility (expected to be completed in May 2024).

The administration’s main rationales for replacing the existing SNF and memory care facility are:

• Current Facilities Make It Difficult to Provide High Quality Care to Residents. It is our understanding from the administration that the designs of the current SNF and memory care unit make it more difficult to administer high quality care to residents. The proposal specifically notes that, for example, the long and narrow hallways and distance between the memory care unit and the on-site medical facilities make it more difficult to supervise residents and transport them to their health-related appointments. Additionally, the current SNF is an institutional setting with very limited gathering spaces that can be used for dining or social activities—making it difficult to provide residents with the more home-like setting that is common in the newer veterans homes and preferred for long-term care services today.

• Current SNF Building Is Costly to Maintain and Operate. The current SNF requires more frequent and costly maintenance than other buildings due to its age (constructed in 1932). The administration anticipates that the operation and maintenance costs for the SNF will increase over time as the facility continues to age.

• A 2013 Plan for Yountville Veterans Home Included SNF Replacement. In 2013, CalVet released a multiyear facilities plan that was specific to the Yountville veterans home only. This plan recommended a number of facilities projects based on current and projected demand. Recommendations from the facilities plan included (1) constructing a new SNF and memory care facility, (2) converting existing buildings to Residential Care Facilities for the Elderly (RCFE), and (3) constructing additional RCFEs.

Proposal Two: Convert Double Occupancy Domiciliary Rooms Into Single Occupancy Rooms. The Governor’s budget proposes to convert the majority of double occupancy rooms to single occupancy rooms in the domiciliary unit at Yountville—reducing budgeted capacity by 115 beds, from 637 to 522. One reason the administration provides for the proposed change is to provide the same quality of life to residents in the Yountville veterans home relative to other veterans homes, which typically provide residents with more spacious and private domiciliary rooms. Another reason is the recent decline in the number of residents in the domiciliary care unit. Specifically, in 2016-17 and 2017-18, the number of residents in domiciliary care decreased to the point that nearly every resident could have their own room. The administration expects future occupancy and demand to remain at or below current levels, meaning the reduced number of domiciliary beds is not expected to affect the state’s ability to meet future demand.

The administration estimates that converting double occupancy rooms to single occupancy rooms would result in savings of just under $1 million General Fund. This is due to the fact that decreasing total capacity in the domiciliary care unit allows for a reduction in support staff—specifically, two fewer kitchen staff positions and one-half of a medical staff position. It is our understanding that there are little to no costs associated with the room conversions. Additionally, because the proposed reduced capacity (522 beds) largely reflects current occupancy levels (523 residents), the proposal is not expected to result in any loss of revenue. However, we note that to the extent there was demand for the 115 beds proposed to be eliminated, the revenue loss associated with this proposal would be about $3.4 million.

LAO Assessment

In Concept, Budget Proposals Have Merit . . . In concept, the proposal to replace the current SNF and memory care facilities at the Yountville veterans home has merit. As previously discussed, the age and design of the SNF makes it more difficult to provide high quality care to residents in a noninstitutional, home-like setting. Similarly, the design of the memory care building makes it difficult to provide the required high level of care and supervision to memory care residents. In addition, the proposed conversion of double occupancy rooms to single occupancy rooms in domiciliary care would reflect current occupancy and demand levels.

. . . But Premature Given Absence of Master Plan. The forthcoming master plan is intended to help the Legislature identify necessary changes to the entire veterans home system in order to meet current and future demand. In addition, the master plan is intended to provide the Legislature with guidance on how to prioritize and think about the trade-offs associated with prioritizing certain proposed changes to the system over others. In the absence of the master plan, it is unclear how the need, scope, costs, and trade-offs of the two Yountville proposals compare to other potentially necessary changes to the veterans home system that will be discussed in the master plan.

Major Changes in the Absence of a Master Plan Have Created Some Challenges. Over the last several years, a number of infrastructure and program changes have been made to the veterans homes that have later had to be redone, modified, or eliminated. These after-the-fact changes were needed, in part, because of shortcomings in the initial project planning, new standards of care, or changing veterans’ needs. Examples of such changes include:

• Renovated Memory Care Unit in Yountville Proved to Be Less Than Ideal. In 2004, major renovations were done to convert an intermediate care facility into the current memory care unit in Yountville. This is the same memory care unit that the administration is now proposing to replace due to its finding that, among other issues, the recently renovated unit has long, sloping hallways and visible exits that are not ideal for memory care patients.

• Community-Based Adult Services (CBAS) Centers in Lancaster and Ventura Were Never Opened. The veterans homes in Lancaster and Ventura were designed and constructed with space for a CBAS center—previously known as an Adult Day Health Care center. The openings of the CBAS centers were initially delayed to prioritize recruiting and licensing efforts towards newer facilities. By 2017, it was determined that the need for additional CBAS programs no longer existed in the surrounding community.

While a master plan may not have necessarily prevented such unforeseen challenges, having such a plan in place prior to making major renovations or changes at the homes could increase the Legislature’s confidence that the proposed changes are the best ones to meet the needs of veterans.

Without Master Plan, Key Questions Remain. In assessing the merits of the proposal, the Legislature may wish to request the following information from the administration:

• How Did the Administration Determine the Proposed Capacity for the SNF? Currently, the longest wait lists across the veterans homes system are for SNF and memory care. However, the proposal to construct a new SNF and memory care facility largely would not expand capacity. Absent the master plan, it is unclear how the administration has projected that the proposed capacity of the new SNF and memory care facility is the best size to meet the future demand for these services. In addition, it is unclear if and how the proposal could be modified to expand capacity and the associated trade-offs of doing so. Finally, in the absence of the system-wide master plan, it is unclear whether the administration is considering the construction or renovation of additional SNFs and memory care units or other facilities at any of the other seven veterans homes.

• How Is the Administration Prioritizing Changes to the Veterans Homes System Moving Forward? It is our understanding that in the past, projects to construct new veterans home in order to expanded capacity within the system were largely prioritized over projects that focused on changes to current facilities. The 2018-19 budget proposals are instead prioritizing projects that address challenges in current facilities above projects that expand capacity. What are the potential trade-offs associated with focusing on projects that maintain capacity rather than increase capacity?

LAO Recommendation

Delay Proposed Changes to Veterans Homes at Least Until Completion of Master Plan. As previously stated, the master plan will improve the Legislature’s ability to effectively assess the proposal in the context of all of the changes on the horizon for the veterans homes system and the trade-offs of prioritizing the two current proposals relative to other potentially necessary projects included in the master plan. In addition, if the construction of a new SNF and memory care facility is prioritized above all other projects, the master plan would identify an appropriate alternative use for the current SNF and memory care unit at Yountville and coordinate any necessary renovations.

Clarify Intent of Master Plan and Assess Current Resource Levels. Since the administration has made these proposals in the absence of a master plan, we find that there may be a need to clarify the Legislature’s intent in regards to the master plan. Specifically, the Legislature should clarify the expected near- and long-term outcomes of the system-wide veterans homes master plan, such as an implementation plan for all system-wide facility changes needed to align the veterans homes to meet current and future demand. The Legislature may also want to consider if periodic updates to the master plan are necessary and how it can leverage existing reporting requirements—such as those that require each home to report annually on its finances and every five years on the needs of its local veterans—to do so. Additionally, the Legislature should consider if additional resources at CalVet are needed for the development and implementation of the master plan as envisioned by the Legislature.