Select Board hears pro forma showing $134.4M rebuild for Our Island Home and rising town subsidy; board warns voters this is a pivotal choice

A March 18 presentation to the Nantucket Select Board laid out financial projections for a proposed new Our Island Home, the town‑run nursing facility, that show a large capital ask and an ongoing operating subsidy requirement.

Tom Hammond of CliftonLarsonAllen (CLA), the consultant engaged by the town, said the pro forma assumes a 45‑private‑room facility with a stabilized average daily census (ADC) of 42 split among private pay (10), Medicare (9) and Medicaid (23). "That 42 average daily census is split between private pay, Medicare, and Medicaid," Hammond said, and the analysis projects operating revenues of roughly $7.6 million and operating expenses of about $11.8 million per year, producing a year‑one operating deficit of about $4.2 million.

Hammond also outlined capital assumptions: an estimated project cost of $134.4 million with a debt portion of $125.5 million and a year‑one debt service projection around $10.6 million. "The top number is our total investment per year, starting at $14.8 million," he said, describing how debt service plus operating transfers drive the town's annual commitment.

Town staff and board members pressed for clarifications on how the shortfall would be funded and how assumptions might change. The town said a current voter‑approved override (about $5 million) is being used now to cover the facility's operating needs; staff warned that as costs grow the override will eventually be outpaced and additional funding decisions would be required. "It's being funded with the override. And at some point the current override will not be adequate," a town official said in answer to a board question.

Bob Eisenstein, the facility operator, described historical occupancy and payer mix: the facility has averaged about 37 residents (roughly 82% occupancy) and has seen higher private and Medicare admissions when marketing and physical conditions improve. "People have said this in other places where it's 45 beds means 45 patients — we've really treated close to 100 people throughout the year because of short‑term rehab," Eisenstein said. He and consultants said an all‑private‑room facility typically improves marketing, shifts payer mix toward higher‑pay Medicare and private admissions, and can help reduce reliance on contract staff.

Board members emphasized the tradeoffs facing voters. Several members said the warrant presentation to town meeting will include a recommendation and context and that the vote is effectively a community choice about whether to continue providing nursing‑home services. Staff and at least one board member said that, absent a vote to build, the town would likely have to begin a multi‑year wind‑down of the current facility within a few years. The board asked staff to draft a clear positive motion and Select Board comment for the Article 11 warrant language before the final warrant is printed.

What the numbers mean

- Baseline assumptions: 45 private rooms; stabilized ADC 42 (private 10, Medicare 9, Medicaid 23). - Daily rate assumptions used in the model: private and Medicare roughly $800/day, Medicaid $260/day. - Year‑one operating revenues: about $7.6 million; operating expenses: about $11.8 million; year‑one operating deficit: about $4.2 million. - Capital estimate: $134.4 million total; debt portion shown at $125.5 million; year‑one debt service about $10.6 million. - Combined town investment (operations + debt service): roughly $14.7–14.8 million in year one, increasing in later years under the pro forma.

What comes next

The Select Board directed town staff to refine a brief Select Board comment and a positive motion for Article 11 (the Our Island Home debt exclusion) for next week's meeting. Town staff emphasized the pro forma uses current assumptions that could change (occupancy, payer mix, wage and inflation assumptions and final borrowing terms) and that final financial impacts will depend on actual bids, market interest rates and voter decisions. If voters do not support the capital article, staff told the board a phased wind‑down of nursing‑home services would likely follow over several years rather than an immediate closure.

Sources and attribution

All financial figures and assumptions above were presented by CliftonLarsonAllen (Tom Hammond) and discussed on March 18 during the Nantucket Select Board meeting. Operator commentary came from Bob Eisenstein; funding and override clarifications were provided by town staff and finance staff (Brian).