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In November, one of the Boulder home residents died, and two private-pay residents ran out of money and switched to Medicaid. Personal-care boarding homes such as Anam Chara get $1,440 a month for Medicaid patients; Quinn charges private-pay patients $3,500 a month. So the organization had always tried to make sure that at least half of the residents were private-pay. When that changed that month, the Boulder home began losing money. "We told Peggy to market open beds to private-pay families," Berzins says.
At the November board meeting, Quinn said she needed Irby to stay in her management position a little longer, and the boardmembers allowed her to continue working, at her same salary level, until mid-December (Irby could not be reached for comment for this story). For the next several hours, boardmembers discussed fundraising strategies and other business matters. Then, at the very end of the meeting, Quinn dropped a bomb: She told the board that she didn't know if she'd be able to make payroll at the end of the month.
"That should have been our first order of business!" Berzins says.
By this time, some of the boardmembers were losing confidence in Quinn. She did make payroll in November, Berzins says, but just barely.
"This organization had eighteen people in its care. You can't not meet payroll," says Simpson, who remained on the board after she resigned from her job as development director. "If you can't guarantee the caregivers that they'll get paid, it will affect the quality of care. But more than that, if we ran out of money, where would these people go? Not every facility accepts Medicaid patients, and some have limits on the number they can take. We had real humanitarian concerns."
On the night of the December board meeting, Quinn surprised the group again -- a couple of times. No private-pay patients had been found, although Quinn assured her colleagues that one was coming and that a grant was on its way. Then Irby announced that she didn't know if the nonprofit could make payroll that month, either. Quinn had an answer to the dilemma, however: She and Bezuidenhout had worked out a deal. Bezuidenhout's company, Namaste Comfort Care, would lease the Denver home for $1,000 a month for two years and pay all the bills there. That way, Quinn and the board would only have to worry about the Boulder home, and Namaste could pocket the income from the Denver home.
"Leasing the Denver home was my idea," Bezuidenhout explains. "It came to me one morning after a long board meeting where Peggy said she didn't know if she'd be able to make payroll. I was in the shower, and I thought, 'I want a residential care facility for Namaste, and Peggy can't afford to run it, so what if we do a two-year lease agreement?'
"Namaste has a fully developed business plan for residential care that has always been part of our mission. Anam Chara had the residential component that we wanted and didn't have," she continues, adding that she wants to buy property in Wheat Ridge for a 110-bed facility, but she hasn't yet raised enough money to purchase the land and build the home. "I figured [the lease agreement] would give Namaste a chance to see what it would take to run a residential care facility before the Wheat Ridge deal was done."
But Bezuidenhout soon began to regret her decision to lease the Denver home. She asked Quinn several times for the amount of the mortgage payments, but was answered with three different numbers. "As a boardmember, you count on the executive director to be the conduit between policy-making and the day-to-day business. But how can you count on an executive director who doesn't even know what her bloody mortgage is or how many years she's been open?" Bezuidenhout says. "She sees the world through Peggy-colored glasses."
Berzins was skeptical of the plan. "Peggy said it would eliminate the shortfall, but I'd heard that the Denver home was cheaper to run because the staff there was paid less," he says. "Then Peggy dropped a new budget on our laps that provided for Sherry to stay on at full pay and eliminated the volunteer arts coordinator. We had given specific directions on how the homes were to be structured, and we had said it was important to keep the arts person. To me, it was insubordination."
And Quinn's new solution had some other drawbacks. "We were making an assumption that the Denver home would solve the problem," continues Berzins, "but I didn't believe it would cut the deficit, because then we'd have just one home supporting Peggy's and Sherry's salaries. I told Peggy that she needed to bring a breakdown of the costs for the Denver and Boulder homes over the last three months to the January board meeting."
Despite Berzins's questions, the board authorized Quinn and Namaste to proceed with their arrangement, in which Namaste would run the Denver home.
As promised, Quinn came to the January meeting with expense reports on both homes. Berzins found what he had expected: The Boulder home was, indeed, losing money while the Denver home was making money. According to the budget documents, the Boulder home lost $10,342 in October and $12,563 in November; it was ahead by $1,682 in December. The Denver home made $1,012 in October, $8,869 in November and $4,400 in December.