“I said reach up,” Marshall Swiney sings out over a steady drumbeat. Ten of the 12 seated seniors facing him gamely raise their hands. As the group switches to reaching forward and pulling back, another wave of people – some in wheelchairs, some with walkers – enter assisted by staff members.

Morning Rhythms has gotten off to a slow start today, but by the time the 45-minute session draws to a close, more than 20 residents of the Greater Harlem Nursing Home and Rehabilitation Center are lifting their knees and leaning over to touch their toes, following Swiney’s stream of sung instructions. He walks around, all smiles, gently encouraging his charges to push themselves just a little further.

Swiney leads this workout every morning, Monday through Friday, as part of a state grant; it’s the only regular exercise program the facility offers. A strong proponent of exercising daily to keep healthy, he says he’s seen calisthenics be particularly helpful for dementia patients and stroke victims. “It’s good for your soul,” he tells everyone, repeatedly.

But with looming cuts in both state and federal funding, Swiney’s holistic medicine might have to be scaled back to just two or three days a week, said Zakelma Batson, the home’s recreation director. That would be just one of the tough calls Greater Harlem fears having to make.

The House of Representatives health care bill would reduce Medicare spending by over $400 billion. And, even though the Senate bill exempts nursing homes, it contains other causes for concern, like annual productivity cuts that would almost certainly cause nursing homes to lose money, experts say.

The problem is only heightened in New York where, in an effort to control ballooning health care costs, the state is poised to reduce its Medicaid budget by $471 million. The state currently contributes about $15 billion to a total annual Medicaid budget of around $45 billion.

The proposed legislation weighs heavily on Greater Harlem CEO Tim Foristall as he walks the halls of his facility. It looks institutional, as he freely admits, like a hospital, with its long tiled hallways and fluorescent lighting. Changing that is one of his many plans for the place – and with the help of a $25 million state grant, he may achieve at least that goal.

But being able to keep his current staff and programming? That’s looking much less likely.

The picture for nursing homes in New York is already grim. In the last 32 months, they’ve lost over $1 billion through a series of six state budget cuts, said Scott Amrhein, president of the Continuing Care Leadership Coalition (CCLC). Nursing homes historically operate on thin margins, reporting total losses of about 2 or 3 percent annually. But this year, CCLC is projecting average losses of 11 percent. “We’re seeing a real weakening in the bottom lines,” Amrhein said.

If the proposed federal and state legislation were enacted, about 25 percent of the nursing homes in New York State would declare bankruptcy, estimated Foristall. He’s been working late nights, crunching the numbers and looking for ways to keep his own establishment open. State Medicaid cuts alone would cost the facility $1.5 to $2 million.

The Greater Harlem Nursing home was built in the 1970s. The city was bankrupt and the community had to raise all the money. It was the city’s first black-owned nursing facility, Foristall said, and the majority of its residents still come from the community. “To allow a facility like this to close would be devastating,” he said. “Where are these people going to go?”

Greater Harlem is the only nursing home in Central Harlem. There are a couple semi-nearby to the south and a handful a subway’s ride away in the Bronx, but visiting relatives at other facilities would be more difficult for local residents.

Like most non-profit nursing homes, Greater Harlem receives most of its money from Medicaid, which pays the tab for almost all its 200 residents. But Medicare reimbursements, which are higher, are even more critical – the only way it stands a chance of turning a profit, or at least breaking even.

Medicaid is mainly used by the Greater Harlem’s permanent residents– about 175 people, Foristall said. Medicare, however, mostly covers short-term rehab patients.

Each program uses a complicated formula, based on the medical problems and needs of each resident, to determine how much reimbursement the nursing home gets. The sicker the patients or the more help they need doing daily activities, the more money the facility receives. So competition runs high to get the patient with the most acute problems, said Carlotta Brown, admissions director at Greater Harlem.

She receives stacks of patient reviews from hospitals every day and scans them to find the patients that need the most care. But she knows every other nursing home in Manhattan is doing the same.

“It’s a rat race,” Brown said. Looking for the worst patients is a “terrible” way to operate a health care system, she says – but if cuts go through, such patients will only become more desirable.

New York’s Medicaid program has underpaid nursing homes to a greater extent than any other state for years running, with reimbursements ranging from $16 to $26 a day less than it costs to provide care, Amrhein said.

So, while Greater Harlem receives $225 a day per resident, it spends $240 to $250, Foristall said.

With the facility losing money on Medicaid patients each day, admitting Medicare patients, although they make up a small portion of the population, becomes absolutely critical. Their reimbursements provide the cushion to cover what Medicaid misses. If the state cuts Medicaid further, Greater Harlem simply can’t afford to let its Medicare reimbursements dwindle as well.

And while the exact fate of the relationship between Medicare and nursing homes is unknown, experts in the industry see disturbing signs.

Although the Senate bill would exempt nursing homes from reductions to the total Medicare program, it may introduce new annual decreases. The bill operates on an assumption that nursing homes become more productive each year and thus will provide 1.3 percent less money annually.

The figure is based on “general industry” in the United States. Applying the standard to nursing homes unfair, Amrhein said. “It’s over-cutting nursing homes. Productivity just doesn’t occur at that rate.”

Medicare rates have also, in the past, increased each year by about 3 percent based on a market basket index, which essentially keeps the rates in line with inflation. At the federal level, “they want to freeze the market basket for the next couple years,” said Patrick Cucinelli, senior financial policy analyst at the New York Association of Homes and Services for the Aging. “It would have a significant impact.”

Some provisions in the bill are more ambiguous in their effects, but worrisome nonetheless. “One thing that they have looming out there is an independent Medicare advisory panel that will be charged with finding savings from the nursing home sector,” Amrhein said, calling it a “cause for concern.”

Some legislators, as well as the Obama Administration, argue that any cuts will be offset by changes in the Medicare program to make it more efficient, ultimately improving the performance of health care providers. But Michael Sparer, professor of Health Policy and Management at Columbia University’s Mailman School of Public Health contended that the reductions are simply one way to offset the cost of covering currently uninsured Americans.

“They don’t want that additional coverage to add a dime to the federal deficit,” he said. Whether hospitals and other care providers become more efficient as a result is secondary.

At Greater Harlem, getting slammed by state Medicaid cuts and fearing the federal government will pay less for Medicare patients, some things will have to change. They’re going to have to change at most nursing homes.

Since 75 percent of the facility’s expenses are labor related, trimming the staff is the easiest way to reduce the budget, Foristall said, estimating he might have to get rid of 20 to 25 people.

The home has 225 full-time employees, over 100 of them in the nursing department. The bulk of layoffs would come from there. Food service, the second largest department, would also be hit and a few clerical positions would be eliminated, he said.

But take away employees and the quality of care will suffer, he predicts. “Part of healing and getting better and staying better is human interaction,” he said. Layoffs wouldn’t mean that residents wouldn’t get their medicine on time. But it would mean that they would get less one-on-one interaction with staff and fewer recreational programs.

Greater Harlem offers a steady stream of activities throughout the day, from Morning Rhythms to movie matinees, manicures to violin performances. Many in-house programs would be able to survive, but outside entertainment would be the first to go, said Batson, the recreation director. “If the cuts do go through, my department is going to get hit the worst,” she said.

The actual effect of staff cuts will never be easy to quantify, but Foristall is certain it will have a distinct negative influence. With fewer programs and less interaction, “will people decline quicker?” he asked. “You bet they will.”