More than 40 years ago, Edward E. and Lillie M. Matney founded the Colonial Manor Nursing Home in Sioux City, NE, handing it down to their son Edward in the 1980s. The younger Edward enlisted his wife, who died in 1998, and children in the family-run facility, and prioritized resident care over the intervening decades, his son said.

“We grew up working in the nursing home, working in the kitchen or as nurse aides,” one of his sons, Edward H. Matney III, told me Thursday.

A few months ago, the elder Matney, 67, had bypass surgery. While the family figured the worst was over, in late June, he woke up gasping. He died shortly afterwards.

That left his family to figure out the future. Edward Matney III, a lawyer, had been involved as counsel for the Manor, but wasn’t involved in operations.

Inadequate Medicaid reimbursement led him and his siblings, and stepmother, to make a wrenching decision at the end of July: To ask the state to take over the Manor. Shortly afterward, the state appointed Lantern Health Services to guide the facility during receivership.

“It was very difficult,” Matney said of the receivership decision. “It was painful to drive down and hand deliver that letter to Lincoln [where the Department of Health is located]. It wasn’t a frivolous decision. When we initially had to make the decision to notify the department, the reaction was unexpected,” Matney said, which included a state official chastising him.

But Matney said they simply were out of options.

“As my brother and I primarily were looking after my Dad’s affairs, it became clear we were facing an urgent situation,” he said. “As a family we didn’t want it to happen – we didn’t want anyone to miss a paycheck and jeopardize resident care.”

Fellow skilled nursing operators will sympathize with the Matneys’ challenge, especially as it relates to zig-zagging Medicaid rates. The Manor’s basic rate went from $129.51 in 2016-2017 to $126.05 last year, then back to $130.16 in the current fiscal. The Nebraska Department of Health and Human Services told the Omaha World-Herald the rates were “rebased” rather than cut.

But Matney said in Sioux City there are two facilities, including the Manor. The other facility, six blocks away, last year had its rate set at $157.10. Matney doesn’t blame them, but says leaner skilled care operators’ operations in skilled nursing are being punished. Last year, when his father questioned an employee setting rates, the facility received a three-day audit shortly afterwards.

“The state is picking winners and losers. It’s very odd to me that you would want to reward higher costs,” he says.

Even with the financial challenges, Matney says he looked at different options before his father died, such as becoming a nursing home administrator. After his father’s death, he talked to brokers and other parties.

But with an older facility and low Medicaid rates, Matney said there was little interest. One fellow skilled operator said his company was focused on building new rather than buying older buildings. At this point, the Manor’s future and the Matney family’s responsibly for it are unclear. Matney, however, says he wants to shine a light on how difficult it is to be a skilled operator in the Cornhusker State.

“I’m determined that something happen with the rate situation in Nebraska,” he says.

The state Appropriations Committee will be holding a hearing Oct. 19 on Medicaid payment rates and other issues affecting nursing homes. It’s a date that’s highlighted on Matney’s calendar.

Follow Senior Editor Elizabeth Newman @TigerELN.