McKendree Village Report

2008 Tennessee Annual Conference of

The United Methodist Church

2008 marks McKendree Village’s celebration of 45 years of providing

retirement living options to senior adults in a secure Christian
environment. The Village (MV) offers a continuum of care from
independent living in apartments and cottages, to assisted living, and
nursing home care.

MV has a covenant relationship with the United Methodist Church and

an Affiliation Agreement with Vanderbilt University.

MV achieved accreditation from two national organizations with

stringent evaluation criteria in its recent history.

MV historically achieved good scores from government surveys.

Countless people have shared stories of gratitude for the care that
they or their loved ones received at McKendree.

Against this backdrop, the events of the last quarter of 2007 were
especially challenging.

A State of Tennessee survey cited MV’s nursing home with several

violations deemed Immediate Jeopardy. Efforts of MV to address these
allegations were not fully accepted by the State. A short timeframe
exists under the regulatory process to respond. The end result was
that admissions to the nursing home were suspended, and the contract
with the federal government for Medicare and Medicaid nursing home
payment coverage was terminated. This meant that close to 200
elderly, frail patients had to be relocated during the month of
December. Most of the patients did not want to move, and loved MV
and the care they received there. This was a time of pain and grieving
for many. The private pay nursing home patients were not affected by
the government action, and about 83 remained.

The MV Board of Directors tried to halt the forced eviction in the

federal district court in Nashville but the Court ruled it did not have
jurisdiction to hear the matter. With such a dramatic reduction in the
number of patients, and the commensurate loss of revenue, MV was
forced to reduce its staff significantly. This reduction in force crossed
every department. All told, thousands of individuals were affected by
this dramatic sequence of events: patients and their families; staff
members and their families; contract vendors, and many elected
officials and other people who love and support McKendree in its
mission. Members on the Foundation Board, the Senior Care Board, and
the McKendree Village, Inc. Board devoted countless uncompensated
hours, and staff members worked long and hard to make the
transitions as smooth as possible.

The long planned transition of CEO Mary Anna Womeldorf at the end of
2007 was recognized at a meaningful service and reception, where her
devotion and passion for older adults were commemorated.

Board member Luke Gregory stepped up as interim CEO to guide the

efforts to regain nursing home admission capability, achieve re-
certification, and to guide the appeal process decisions. (MV was also
hit with a fine exceeding $500,000 which ranks among the harshest
fines levied by the federal government in 2007 in this area.)

MV contracted with National Healthcare Corporation (NHC) and other

consultants in its nursing home crisis management phase, and has now
entered into a longer term contract for NHC to manage the entire
campus. Since NHC management began, admissions capability to the
nursing home has been reinstated. This means that residents and
others who may make private payments for care can be admitted to
the nursing home. This was a priority so that the residents would
have the full continuum of care options. Also, under NHC’s
management, the Assisted Living Unit passed its annual state survey
with no deficiencies cited.

As we move forward, the strong support of our residents encourages

us. We are working together to restore the well earned reputation that
McKendree has enjoyed. We need support from each of you. Our
commitment through Golden Cross to provide financial assistance to
our residents who can no longer afford to pay remains paramount. Our
trust in God remains staunch. Our faith that God holds our future
endures. We invite you to walk closely with us as we advance toward
our Golden Anniversary!