Casa Olga, the iconic residence for nearly 9,000 seniors and disabled persons over more than 35 years, will close in a matter of weeks, owners have confirmed.
The eight-story building adorned with the giant mosaic of El Palo Alto at the corner of Emerson Street and Hamilton Avenue is the latest victim of state budget cuts and a bureaucracy that delayed payments for services to patients for six months or longer, according to its owners.
Weary of the struggle with government and now in their 70s, the four partners who built and managed the building since it opened in 1975 have finally given up and will close the intermediate health care facility in the coming weeks. All 88 residents will be moved to other facilities, homes or will be returned to the care of their families, Wanda Ginner, a board member and co-owner, said.
Casa Olga is the only free-standing intermediate health care facility on the Peninsula and serves disabled and elderly persons from throughout the county and surrounding counties, including San Mateo, she said.
Intermediate health care facilities were created in the early 1970s by then-Governor Ronald Reagan, who wanted a less expensive tier of care for disabled persons who are classified as "ambulatory" and were then residing in costly nursing homes and skilled-care facilities, according to Walter Harrington, co-developer of Casa Olga with his late partner, Alexander Kulakoff.
People with debilitating conditions -- including kidney failure and heart failure -- and treatable mental illness who can function in the surrounding community and walk on their own are eligible for the program. They receive housing, laundry service, three meals a day, activities, assisted-care from nurses and doctors, medication supervision and visits from psychiatrists and psychologists.
But ironically many at Casa Olga will now face placement in the more costly nursing homes, Ginner said.
Casa Olga -- which was named for Kulakoff's teenage daughter, Olga, who died suddenly as plans for the building were being drawn up -- began struggling two years ago, Ginner said.
The state slashed payments for services to Casa Olga's parent company, Care Centers Inc., by 10 percent on July 1, 2008 -- a loss of $250,000. On March 1, 2009, the budget cuts were reduced to 5 percent, but that reduction meant Care Centers received $150,000 less annually.
Out of an annual budget of $3 million, $2 million went toward payroll and $1 million covered everything else for patients, which includes three meals a day, laundry services and all other expenses, she said.
A year ago, Care Centers wrote two letters to the California Department of Health Services protesting the 10 percent cut but received no reply, she said.
Department of Health officials could not be reached for comment on Friday, which was a furlough day due to state budget cuts.
Where full-fledged skilled-nursing facilities receive approximately $160 a day per patient from the state, intermediate health care facilities such as Casa Olga receive only $90 but must still provide nursing care, doctors and many of the same services, she said.
"We were just barely breaking even. The owners went two years taking no profit ... but they weren't going to put up that kind of money," she said of the $150,000 deficit.
"The long-term prospect was horrible. We went through our cash reserves and didn't have a lot of choice," she said.
Ginner estimated nearly $250,000 the state owes Care Centers in back payments will finance shutting down the four floors comprising the intermediate health care facility. A plan was approved by the state Department of Health Services on Aug. 14. Two floors of single-room-only tenancies (SROs) will remain, she said.
Ginner said the future use of the four floors has yet to be determined. The four partners are working with Palo Alto developer James Baer to come up with the best financial solution that would also benefit the community, she said. They might decide to convert other units to SROs, she said.
Baer was not immediately available for comment on his ideas for the site.
Harrington said the building could contain as many as 78 suites for younger people in need of a downtown location, or perhaps be available to Stanford students.
Ginner said Care Centers would work with the city to determine future use, which could include retail on the bottom floor, if that is what the city determines is best for the downtown community.
"I promise you it will not be a massage parlor," she said.
But one of the hardest things for Ginner and Harrington will be the layoffs of as many as 70 employees, they said. Some have worked for Casa Olga for 20 years.