The Alder House assisted living facility in South Bend, one of only two assisted living facilities in Pacific County, will close May 8, provided living arrangements have been made for the 20 residents now living there.

“We have started the process of closure and a 60-day notification timeline with the Washington Department of Health,” said Matthew Kempton, Alder House Administrator. “Our assisted living license would be surrendered at the end of the 60 days, which is May 8.”

The closure of the 37-room Alder House is due to continued operating losses attributed to declining Medicaid payment rates and a steep decline in resident admissions since the beginning of the COVID-19 pandemic.

The state Department of Social and Health Services shows only one other assisted living facility in the county on its providers website, Golden Sands at Klipsan Beach in Ocean Park, and one nursing home, Willapa Harbor Health and Rehab, in Raymond.

The Alder House will close only when its current residents have found other accommodations.

“We must ensure that every resident is placed,” said Kempton, who is also the CEO of Willapa Harbor Hospital. “If there are one or more residents whom we haven’t found placement for by May 8, we will continue to operate until placement is found for each resident. This is difficult for the residents and staff. We are doing everything we can to find placement for residents and to help employees locate jobs.”

The facility currently has about 22 employees, said Kempton.

The Alder House opened in 1995, its construction funded through the state Department of Community, Trade and Economic Development, which required that 60% of its residents qualified for Medicaid, according to Kempton’s statement.

“Unfortunately, Medicaid payment rates for assisted living facilities in Washington and nationwide have declined substantially over the past 26 years in comparison with rising costs and inflation,” read the statement. “Currently, the average price per month in Washington for an assisted living room is $5,000. Washington Department of State Health Services, through Medicaid, only pays approximately $2,500 per month per resident.”

The Medicaid payment requirement, coupled with the low number of residents who don’t pay with Medicaid, has caused the Alder House to lose money in each of its 26 years of operation, with losses increasing gradually each year.

Alder House board members, shortly before construction was completed, contracted with Willapa Harbor Hospital to manage the facility for $1,500 per month. The facility was set up to pay its expenses through its revenues, but the revenues haven’t covered expenses and the hospital has supplemented it for years.

“Unfortunately, the Alder House has never made enough money to pay for the cost of its operations, let alone the monthly management fee,” said Kempton’s statement. “Willapa Harbor Hospital has advanced money to the Alder House for the past 15 years, due to Alder House financial instability.”

These Willapa Harbor Hospital advances to the Alder House have averaged $130,712 per year, said Kempton, and the current total the hospital has advanced the Alder House over the past 15 years is $1,960,682. Willapa Harbor Hospital has never collected any payments from the Alder House on this outstanding debt, nor the monthly management fee — the total outstanding debt due to Willapa Harbor Hospital from the Alder House is $2,302,682.

“Willapa Harbor Hospital has notified Alder House Board members of (its) intent to graciously forgive the owed advances over the past 15 years before the planned closure,” said Kempton. “After closure, Willapa Harbor Hospital will continue to pay down all of the Alder House’s commercial loans, totaling $1,048,781.”

The decline in admissions during the pandemic often has the Alder House occupied by fewer than 20 residents, with a capacity of 37 rooms, which has led Willapa Harbor Hospital, itself financially impacted by the pandemic, to advance above the annual average of $130,000 to $350,000 by the end of 2020.

“Willapa Harbor Hospital reported a loss in net patient revenue of over two million dollars in 2020 as a direct result of the COVID-19 pandemic,” said hospital chief financial officer Scot Attridge.

“These factors combined with increased staffing and supply costs due to the pandemic, with no 2020 growth and 2021 non-Medicaid resident admission growth highly unlikely, we cannot in good faith ask Willapa Harbor Hospital to continue advancing funding for our operations,” said Kempton. “We cannot let our financial instability put the sustainability of the hospital or its future at risk.”

Alder House board member Sherri McDonald said, “We are very grateful for all Willapa Harbor Hospital has done for us over many years to keep us in operation despite no contractual requirement to do this. We are hopeful that Willapa Harbor Hospital will now have an increased ability to serve the patients and residents of Pacific County without continuing to financially support our operations.”

The land the facility sits on was leased to Willapa Senior Independent Housing (WISH), a nonprofit organization. The building itself is owned by WISH and ownership would go to the hospital.