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PAHCS applied for the Community Service Development Grant in March and received notification that theirs was successful in April. In all, 180 facilities applied for $2 million in grants, and PAHCS received the maximum individual grant, which was $250,000.

The grant requires a 50 percent match, meaning PAHCS would need to put in $125,000 to receive the $250,000. That would give PAHCS $375,000 to remodel a facility into assisted living.

"It's pretty significant," said PAHCS CEO Willie LaCroix of the grant, "because it does change favorably the feasibility of switching to assisted living."

Switching nursing home beds to alternative care methods, like assisted living, has been a statewide trend, driven by the state having too many nursing home beds.

PAHCS conducted a market study, using a $13,000 grant, which confirmed those state trends in the local area. That study indicated a need for affordable assisted living in the area and indicated a need for fewer skilled nursing home beds, said Jay Ophoven, who used to be the director of nursing at the Good Samaritan Care Center and now is the long-term-care administrator for PAHCS.

Right now, the study showed a need for 123 skilled beds, which drops to 104 by 2005.

Empty beds are highly unprofitable for nursing homes, which has helped bring on what the nursing home industry has called a crisis. Part of the state's response has been the establishment of a number of reform opportunities, like the Community Service Development Grant.

PAHCS also received that $13,000 transition grant and its $3.2 million exception to the nursing home moratorium as part of that reform. That exception will be used to upgrade the Koronis Manor, adding a new wing with private rooms, private bathrooms, and more home-like amenities.

The plan is similar for Washburne Court, whose occupancy would go from 46 to 28, all in private, assisted-living apartments.

Washburne Court is actually a board and care facility, which cannot do as much skilled nursing as facilities like the Koronis Manor. A skilled facility can do IVs, ventilators, and tube feedings where a board and care facility cannot. A skilled nursing home can also offer rehab twice per day instead of once at a board and care.

"A lot of board and care facilities have closed or converted already," said Ophoven. "Board and care has lost its niche in the market with assisted living cropping up."

A big benefit to the merger, hospital administrators stress, will be the end of what is called "aging in place." Since all facilities were desperate to fill beds, they would take patients who might not have been superbly geared for their facility or kept them long after it was no longer the ideal place for them.

Assisted living, they say, fills another niche in the market. Assisted living would provide three meals per day to residents, would be staffed 24 hours per day (though without the regulations for nursing homes, reducing the need, and cost, for staffing), and would offer a la carte options for further care: dressing, bathing, etc.

The eventual reduction in staffing is a concern to the employees, admitted Ophoven, but with the labor market being so tight in health care PAHCS will try to find jobs for everyone.

The market study indicated affordable assisted living should be offered in Paynesville. A county program would pay $1,200 per resident per month, according to Ophoven, and there is enough demand just from these type of patients to fill 28-bed assisted living at Washburne Court.

The marketing study also indicated a need for a dementia (Alzheimer's) unit in the area, according to Ophoven. This type of unit would cater to patients with cognitive problems. They would be separated from the general population, which has proven to be beneficial for the dementia patients and the general population.

When PAHCS is ready to pursue this, most likely in Watkins, it could apply for another state grant.

The current grant most likely won't be used until at least 2003. The remodeling at the Koronis Manor would need to be done before they could start on remodeling at Washburne Court.

With a new CEO expected to replace LaCroix, who is retiring, the project could wait even longer to come to fruition. Remodeling to assisted living at Washburne Court would take roughly a month per floor.

The estimated base cost for remodeling to assisted living at Washburne Court is $300,000-$400,000, according to LaCroix, but a more elaborate plan could cost up to $700,000, said Ophoven.

PAHCS would also benefit by decertifying nursing home beds, up to 46, for which the state would pay the system $2,080 per year per decertified bed. PAHCS would get this money through additional reimbursement in its nursing home rates, most likely in Watkins.