As the Martha’s Vineyard Hospital takes steps to convert vacant units at Windemere Nursing and Rehabilitation into business and physician office space, a wider discussion has begun to unfold about what will eventually take the place of the Island’s only nursing home.

The hospital plans to convert the former Wildflower Court, a 20-bed assisted living unit at Windemere that closed last year due to low occupancy and high operating costs, to doctors’ offices this fall. New primary care doctors are coming, president and chief executive officer Denise Schepici told the Martha’s Vineyard Commission at a public hearing last week.

“There is urgency. I have doctors coming in September,” Ms. Schepici said. “We’re not going to gain any efficiency in seeing new patients until I have more space.”

The commission is reviewing the change of use at Windemere as a development of regional impact (DRI). Windemere is owned by the hospital and shares its campus. But two of the four original units at Windemere are now closed. The 61 beds in the remaining two second-floor units are full and will remain open, Ms. Schepici said. Those two units are for level two, long-term nursing care, while Wildflower Court was for level four, or so-called rest home care. Another first-floor unit that closed earlier was for level three, or supportive nursing care.

In fact much of the evening was spent discussing emerging plans to address the needs of the growing elderly population on the Island. One week earlier, Ms. Schepici and leaders of the Island’s Healthy Aging group made a presentation about early-stage plans to build a new elderly housing/nursing care complex on the Vineyard. Healthy Aging has completed a feasibility study with Green House Homes, a nonprofit that has developed a small-home alternative to traditional institutional nursing homes.

Early cost estimates to build a complex of small homes (10 to 12 residents in each home with private rooms and caregivers) on the Island are pegged at about $8.5 million, not including land.

Now the hospital plans to do its own feasibility study using Navigator Elder Homes of New England, a potential developer of an elderly home complex. Ms. Schepici said the hospital board voted to give the study a green light at a meeting last month. And the hospital owns six and a half acres of land off State Road in Vineyard haven that could potentially be used for the project, Ms. Schepici said.

“It is our responsibility — my responsibility as a hospital leader — to facilitate this,” Ms. Schepici told the Gazette in an interview this week. “We have assets we can use. And the models of care are evolving as we all think about how we want to grow old.”

She emphasized that the project under discussion is in an early study phase. She she said acute care, not nursing home care, is her area of expertise. But she said it is well known that the nursing home industry as a whole is going through dramatic change. “That whole sector of care is a whole industry that’s in crisis right now,” Ms. Schepici said. “It’s endangered by reimbursement problems — Medicaid does not bring enough money to pay for long-term care.”

At Windemere she said 90 per cent of the patients are on Medicaid while the remaining 10 per cent are private pay. There are only five people on a waiting list (the hospital has 500 people on a wait list for a primary care doctor). Statewide, Ms. Schepici said there are 4,400 open nursing home beds.

“It’s not what people want,” she said, speaking of institutional nursing home care. “The baby boom generation is really driving the thought process around this — how do I want to grow old and where do I want to live?”

At the MVC hearing last week, Navigator president and CEO Renee Lohman told commissioners the feasibility study would take about six weeks to two months to complete and would rely on existing population studies including one done three years ago by the Donahue Institute at the University of Massachusetts.

“We’re talking about two months to have a full business plan and a feasibility plan updated with new numbers and demographics,” Ms. Lohman said.

Commissioners expressed concern about whether such a project would be available for low to middle-income residents. But Ms. Schepici said the homes would cater to Islanders of all incomes.

“You have to have the right payer mix of self-pay and Medicaid,” she said. “The model we’re looking at is 50/50.”

She also acknowledged bluntly that building a new residential facility for the elderly will not address all the needs.

“It’s not a one-and-done thing,” she said. “There have to be other places in other towns that take care of the elderly. I’m just happy that this is one step in the right direction.”

The public hearing has been closed; written comments will be accepted until August 13. The commission is due to deliberate and vote on the modification later this month.

Meanwhile, Ms. Schepici said the hospital will push ahead with exploring innovations in nursing home care. “The reason I’m getting involved in this is because it’s an important issue for the hospital — because of Windemere — but it’s also an important issue for the Island community,” she said. “Windemere is my problem — I’m subsidizing it at $3,000 per patient per day. And that’s before we add in the housing problems for people who work there. It’s a social challenge all the way around.”