STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED

Transcription

1 STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number Hope Hospice and Community Services, Inc./CON # HealthPark Circle Fort Myers, Florida Authorized Representative: Samira Beckwith President and Chief Executive Officer (239) Service District/Subdistrict Hospice Service Area 8C (Hendry, Glades and Lee Counties) B. PUBLIC HEARING A public hearing was not held or requested regarding this proposal to establish a new 24-bed freestanding inpatient hospice facility in Lee County, Florida. Letters of Support There were 76 unduplicated letters of support for this project. The applicant provided 74 letters of support (CON application #10194, Volume I, Appendix 6) and the Agency for Health Care Administration (the Agency) independently received two letters of support. Seventy-five letters were dated between May 3 and June 7, 2013 (one was not dated), 74 were signed by hand (one indicated an electronic signature and one had a typed signature), six were from area elected officials, seven were from area physicians and the remaining 63 were area business leaders/residents.

2 Recurring themes expressed in the support letters include: the applicant s commitment to providing quality hospice services high regard for the applicant s staff and leadership (particularly Samira Beckwith, LCSW, FACHE, LHO, President and Chief Executive Officer, Hope Healthcare Services) Hope s good working relationship with the community, based on the writers or their family and friends knowledge the project is needed to accommodate the area s overall and aging population growth and to make sure that beds are available when needed the applicant s current inpatient facility hospice bed capacity is at or near capacity, especially during season the project will better accommodate the exceptional end-of-life care that the applicant routinely provides and the project s location near Gulf Coast Medical Center, provides excellent geographic access. Senator Lizbeth Benaquisto, Florida Senate Majority Leader, representing the 30 th District, states that in the Lee, Hendry and Glades County area, one third of the population is over the age of 65 and that she strongly supports project approval. Dane Eagle, State Representative, District 77, The Florida House of Representatives, states Hope Hospice is highly qualified to bring additional hospice care and beds to the area. Local officials submitting letters of support include Lee County Commissioners John Manning, District #1, Tammy Hall, District #4 and Frank Mann, District #5, and Randall Henderson, Jr., Mayor, City of Fort Myers. James Nathan, President, Lee Memorial Health System (LMHS) states that LMHS has an excellent working relationship with Hope and that Hope assures that a person s final days are a time of dignity and respect while also providing significant and vital support for families and loved ones. He also states that LMHS is not able to provide hospice beds because of our own inpatient demands and the reality that an acute care hospital environment is often not the most appropriate setting for the terminally ill. Mr. Nathan states the project will provide access, quality and appropriate care for those in need. Thomas Teufel, MD, Florida Cancer Specialists & Research Institute, indicates that the hospice house environment is much more suitable to the needs of patients and families at this stage of their disease as opposed to hospitalization in an acute care facility. Paul Tritel, MD, Executive Committee, Internal Medicine Associates of Lee County, PA, 2

3 indicates that he and his colleagues have an excellent relationship with Hope Hospice, that the applicant provides high quality care and compassion and that due to the area hospitals own inpatient demands, they (area hospitals) are not able to provide needed beds to Hope. Anthony Mathew, MD, FCCP, Pulmonary Consultants of Southwest Florida, indicates that he works closely with Hope Hospice, which he states provides the best care in the area and that he supports the project. Ramiah Krishnan, MD, FACP, indicates he has practiced internal medicine in Lee County for the past 23 years and has been involved with Hope Hospice all these years. Dr. Krishnan also states Hope Hospice is an excellent organization committed to superior care and services. Roderick Nassif, DO, Gulf Shore Internal Medicine, Tracy Vo, DO, Southwest Internal Medicine, P.A. and Paul Engel, MD, Physicians Primary Care of Southwest Florida echo these comments. Charles Idelson, President, Jewish Federation of Lee and Charlotte Counties states Hope Hospice has reached out to the Jewish community and has cared for many of the federation members and their families. Mr. Idelson also serves on Hope Hospice s board of directors, per the applicant s website (the source used when citing Hope Hospice board membership in this report). Rabbi Solomon Agin, DD, BCC, Interfaith Community Liaison, Fort Myers Ministerial Association states he has been impressed with Hope Hospice s expertise and desire to care for all people, even those with a non-cancer diagnosis and those needing expensive therapies. Wilson Bradshaw, Ph.D., President, Florida Gulf Coast University, states his institution has had a collaborative relationship with Hope Hospice through the school s nursing intern program. Letters were also received from Madlyn Dornaus, Senior Vice President-Compliance, 21 st Century Oncology, LLC (and member of Hope Hospice s board of directors) Peter Dys, President, Shell Point Retirement Community 1, Gail Markham, CPA/ABV/CFF/CFP, President and Founding Partner, Markham North Mosteller Wright & Co. P.A. and Board Chair, Lee County PACE Center for Girls 2. 1 Hospice care at Shell Point Retirement Community is provided in collaboration with Hope Hospice per the community s website at 2 Per the website at PACE offers year round counseling and academic services for girls, ages 12-18, who are facing challenges such as foster care, domestic violence, abuse and neglect, death of a parent, substance abuse, and/or family history of incarceration. The PACE Center for Girls of Lee County in Fort Myers is one of the 17 such centers in Florida. 3

4 H. Timothy Halverson, Pastor, Faith Presbyterian Church (Hope Hospice board member and former chairman from ) H. A. Vanhoose, Executive Director, Community Health Associates, Inc. Janet Darnell, Executive Director, Partners for Breast Cancer Care, Inc. Anne Frazier, President, Junior Achievement of Southwest Florida Katherine Green, President/CEO, Habitat for Humanity Lee and Hendry Counties Robbie Roepstorff, President, Edison National Bank (former chair of the Hope Hospice board of directors) Craig Hersch, Florida certified public account and Florida Bar boardcertified wills, trusts and estates attorney, with Sheppard, Brett, Stewart, Hersch, Kinsey & Hill, P.A. David P. Browne, P.A., Florida Bar board-certified wills, trusts and estates attorney Mike Shephard, President, Advanced Roofing and Sheet Metal (a division of Advanced, Inc.) Thomas Giles, P.E., President/CEO, Avalon Engineering, Inc. (and Hope Hospice board of directors member) Christopher Pacitto, P.E., Vice President, GFA International, Inc. Dennis Pearlman, AIF, President, Case Pearlman Retirement Plan Advisors, LLC Alexander Sandy Robinson, President, Northern Trust, NA (vicechairman of the board of directors for Hope Hospice, and on the board of directors of the Boy Scouts of America-Southwest Florida Council, the Habitat for Humanity-Lee County, and other organizations), and Hope Hospice s architect, Ted Sottong, AIA, LEED AP BD+C, Executive Director/Managing Principal of Studio+. C. PROJECT SUMMARY Hope Hospice and Community Services, Inc. (CON #10194), a Florida not-for-profit, 501(c)(3) charitable entity, proposes the development of a 24-bed freestanding inpatient hospice facility in Hospice Service Area 8C. The facility will also include 24 residential (non-con reviewable) hospice beds. The proposed facility, Center for Hope Hospice House is to be located in south Fort Myers, at the intersection of Six Mile Cypress Parkway and Plantation Road, 1.5 miles from Gulf Coast Medical Center Lee Memorial Health System. The applicant has four inpatient hospice facilities: Fort Myers (16 beds); Cape Coral (36 beds); Bonita Springs (24 beds) and Lehigh Acres (16) beds. Together, these facilities have a total of 92 inpatient beds. Hope Hospice indicates that the proposed facility 4

5 will relieve high occupancies at its existing facilities and provide adequate hospice bed capacity to accommodate projected growth through The applicant is proposing total project costs of $27,860,171 (with $14,905,811 being reviewable and $12,954,360 being non-reviewable). Construction costs are $15,831,841 and the project will involve 70,364 gross square feet (GSF) of new construction 3. Project costs include land, building, equipment, development, financing and start-up costs. The applicant does not propose conditions on the project. D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section , Florida Statutes, rules of the State of Florida, and Chapters 59C-1 and 59C-2, Florida Administrative Code. These criteria form the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an applicant's capability to undertake the proposed project successfully is conducted by evaluating the responses provided in the application and independent information gathered by the reviewer. Applications are analyzed to identify various strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict or service planning area), applications are comparatively reviewed to determine which applicant best meets the review criteria. Section 59C-1.010(3)(b), Florida Administrative Code, prohibits any amendments once an application has been deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the certification of the applicant. 3 The reviewer notes that Schedule 9 of CON application #10194 combines the GSF and total construction costs of both the reviewable 24 inpatient bed and the non-reviewable 24 residential bed portions of the total project. 5

6 As part of the fact-finding, consultant Steve Love, analyzed the application in its entirety with consultation from financial analyst Felton Bradley of the Bureau of Central Services, who evaluated the financial data and Said Baniahmad of the Office of Plans and Construction, who reviewed the application for conformance with the architectural criteria. E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicate the level of conformity of the proposed project with the review criteria and application content requirements found in Sections and , and applicable rules of the State of Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code. 1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Rule 59C-1.008(2), Florida Administrative Code. The Agency does not publish need for inpatient hospice beds. Hospice programs are required by federal and state law to provide hospice patients with inpatient care when needed (42 Code of Federal Regulations ) and no more than 20 percent of a hospice s total patient days may be inpatient days per Section (4), Florida Statutes. Inpatient care may be provided through contractual arrangements in hospitals and nursing homes, and is generally provided on a short-term basis within the total hospice stay. Hope Hospice and Community Services, Inc. is the sole provider of hospice services in Hospice Service Area 8C (Hendry, Glades and Lee Counties). There are 92 inpatient hospice beds in the Hospice Service Area 8C. There are no CON approved inpatient hospice facilities or beds pending licensure in Hospice Service Area 8C. Below is a map which identifies the approximate location of the applicant s proposed and existing inpatient hospice facilities in Hospice Service Area 8C. 6

7 Hospice Service Area 8C Hope Hospice and Community Services, Inc. s Licensed and Proposed (CON application #10194) Inpatient Hospice Facilities Source: Microsoft MapPoint Notes: The proposed project location is an approximation. The applicant s freestanding inpatient hospice facility at 1201 Wings Way, Lehigh Acres, Florida was not accepted by the source mapping software. So, the reviewer used 1290 Broad Street West, Lehigh Acres, Florida 33936, which is geographically approximate to the applicant s Lehigh Acres facility. 7

8 Per the applicant, its four existing inpatient hospice facilities were well occupied in 2012 and in the first five months of The reviewer notes that Hope Hospice includes the eight residential beds at its Lehigh Acres facility in the following bed utilization table for 2008 through the first five months of Utilization at the Existing Hospice Facilities in Hillsborough County Hospice House Utilization Months Beds HealthPark Average Daily Census Hospice House Annual Occupancy 98% 96% 92% 102% 103% 102% Annual Availability 61% 62% 65% 40% 37% 54% Beds Cape Coral Average Daily Census Hospice House Annual Occupancy 96% 94% 92% 97% 89% 100% Annual Availability 71% 77% 82% 63% 87% 50% Beds Joanne s Average Daily Census Hospice House Annual Occupancy 92% 86% 85% 92% 87% 92% (Bonita Springs) Annual Availability 90% 96% 92% 87% 93% 88% Beds Lehigh Acres Average Daily Census Hospice House Annual Occupancy 0% 0% 38% 79% 86% 90% Annual Availability 0% 0% 98% 98% 93% 89% Beds All Average Daily Census Facilities Annual Occupancy 95% 92% 81% 92% 90% 96% Annual Availability 77% 90% 95% 92% 95% 72% Source: CON application #10194, page 11. The applicant states and the table above indicates the following: Overall bed occupancy increased from 81 percent to 90 percent (2010 to 2012) and for the first five months of 2013, bed occupancy was 96 percent; and Bed availability (defined as the portion of days during a year when the facility was not fully occupied) fell below 90 percent in 2011 and 2012 for two of the four facilities (meaning over 10 percent of the time there was not a bed available) and for the first five months of 2013, bed availability was below 90 percent at all four facilities, 72 percent overall. Hope Hospice states that during the first five months of 2013, there have been waiting lists at each facility. Per the applicant, beds are needed to restore bed availability to at least 90 percent on an annual basis and to provide for adequate capacity to accommodate projected growth in hospice census. 8

9 Hope Hospice anticipates need for an additional 48 hospice beds by 2018 (CON application #10194, page 13); however, the reviewer notes that applicant s bed need projection table (see part E. 3. a. on page 14 of this report) indicates a need for an additional 49 beds by the same year. The project is designed to help address the anticipated bed deficit. Hope Hospice indicates an average daily census of about 1,560 patients for 2018 (the project s third year of operation) which it states equates to an average hospice facility census of 126 patients, or the need for 149 beds at an 85 percent occupancy rate. The applicant expects that initially the 24 proposed inpatient hospice facility beds will be utilized at both the inpatient and the residential level of care but that by year two, almost all of these 24 beds will be used for inpatient level care. Hope Hospice reports meeting patient needs through its own facilities and contract beds in hospitals and a dedicated unit in a nursing home (CON application #10194, page 13). Hope Hospice states it will continue to make use of community beds in hospitals and nursing homes as appropriate and necessary for patient care. The applicant indicates that 80 percent of the patient days delivered at its four existing inpatient hospice facilities during CY 2012 were general inpatient care and inpatient respite care, and approximately 20 percent were the routine home care. Hope Hospice states that while it delivers inpatient hospice care through scatter-bed contract 4 with hospitals in Lee and Hendry Counties, this arrangement is not cost effective in comparison to the proposed project and an additional 48 hospice beds is needed to meet demand. Hope Hospice reports the doubling of hospice admission rates in Hospice Service Area 8C (2,217 in 2000 to 4,440 in 2012) and an increased penetration rate (0.412 in 2000 to in 2012). The table below shows the applicant s CY 2000, 2006 (midpoint) and 2012 admissions, resident death count and reported penetration rates. 4 CON application #10194, Volume II, Appendix 10 includes a 23-page sample agreement for inpatient hospice services (applicable to hospitals or skilled nursing facilities), an 18-page sample agreement for nursing facilities and a four-page respite care addendum. 9

10 Hospice Penetration for Hospice Service Area 8C Year Admission Resident Deaths Penetration ,217 5, ,719 6, ,440 6, Source: CON application #10194, page 20. Hope Hospice states that during the recession that began in 2008, economic dislocations led to admissions plateauing at 4,500 but historic growth patterns are expect to resume and a penetration rate of is expected by Hope Hospice expects to provide a range of services at the proposed site general inpatient care, inpatient respite care and routine home care. The site is also planned to serve as a focal point for such community hospice activities as volunteering and educational and bereavement programs and caregiver training. Hope Hospice reports five hospitals in Hospice Service Area 8C with which it has contracts for as needed inpatient care. The reviewer confirms that the five hospitals in the applicant s table are Agency licensed general acute care hospitals, located in the stated cities as reported. See the table below. Hospital Lee Memorial Hospital Hendry Regional Medical Center Lehigh Regional Medical Center Cape Coral Hospital Gulf Coast Hospital Source: CON application #10194, page 34. City Fort Myers Clewiston Lehigh Acres Cape Coral Fort Myers Hope Hospice reports 21 nursing homes in Hospice Service Area 8C with which it has contracts. The reviewer confirms that 19 of these are licensed skilled nursing facilities in Lee County and two are licensed skilled nursing facilities in Hendry County. Per the applicant, contracts with nursing homes will not be weakened or otherwise affected by the development of the proposed project. Hope Hospice indicates it is not its practice to provide general inpatient care in nursing home scatter beds, as nurse staffing levels at some nursing homes do not meet Medicare regulations that require 24-hour coverage by registered nursing staff. However, the applicant reports contracts that provide routine home care to nursing home residents who are terminally ill. 10

11 Hope Hospice indicates that by September 30, 2017, the second year of operation, the proposed Center for Hope Hospice House will realize a savings of about $177 per day in the provision of general inpatient care when compared to contracted hospital beds. See the table below. Cost per Patient Day Comparison For Year Two Ending September 30, 2017 Proposed Cost Elements Center for Hope Hospice House Hospital Scatter Beds Cost of Operations $ Contracting Expenses $0.00 $ Hospice Nursing Service (*) $44.04 Social Work and Chaplain (*) $16.55 Administrative (*) $ Total Costs $ $ (*) included in cost of operations from Schedule 8A. Source: CON application #10194, page 39. By the end of year one, the applicant estimates that with 5,341 patient days, a total projected annual financial benefit or savings of $791,209 and by year two, the applicant estimates that with 7,411 patient days, a total projected annual financial benefit or savings of $1,308,697 (CON application #10194, page 40). Hope Hospice indicates that as a not-forprofit entity, all of these savings will be used to increase the availability, accessibility and quality of hospice care in the service area. b. If no Agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and Market conditions. Population demographics and dynamics Hope Hospice does not specifically address population demographics and dynamics in this section (see part E. 3. a. on page 14 of this report for the applicant s population estimates). The applicant stated previously the project is designed to help accommodate high utilization at its four existing inpatient hospice facilities and expected continued growth and inpatient hospice bed demand in the area. 11

12 Availability, utilization and quality of like services Availability and utilization services are previously discussed above. Medical treatment trends Hope Hospice does not specifically address this criterion. Market conditions Hope Hospice does not specifically address this criterion. As previously stated, the applicant is the sole hospice provider in Hospice Service Area 8C. 2. Agency Rule Criteria and Preferences a. Rule 59C (7) Florida Administrative Code states that the Agency will not normally approve a proposal for construction of a freestanding inpatient hospice facility unless the applicant demonstrates that the freestanding facility will be more costefficient than contractual arrangements with existing hospitals or nursing homes in the service area. The application shall include the following: (1) A description of any advantages that the hospice program will achieve by constructing and operating its own inpatient beds. In addition to being more cost-effective, Hope Hospice contends there are eight other advantages to the project, as follows: In its own facility, the applicant can control the medical and psycho-social support environment and provide hospicefocused care; The environment of the project will be homelike and intimate, unlike the institutional settings of scatter-beds in hospitals and nursing homes; The medical cultures in hospitals and nursing homes are not optimal for palliative end-of-life care; The hospice plan of care cannot by easily followed by nonhospice staff in settings that are structured for a different type of care; Beds available to Hope Hospice in contract facilities are scattered so that consistent staffing by specially trained staff is not possible; 12

13 Pharmaceutical support from hospice-trained pharmacists is not available in the nursing home setting; Patient care coordination and continuity of care will be enhanced in the Center for Hope Hospice House setting because the control of medical records will remain with Hope Hospice; and The patient rooms in the hospice house will provide space for family members to visit and stay overnight comfortably. The reviewer notes the applicant previously described the disadvantages of scatter-bed contract arrangements for inpatient hospice services and its practice of not providing general inpatient care in nursing home scatter beds, as nurse staffing levels at some nursing homes do not meet Medicare regulations that require 24- hour coverage by registered nursing staff. (2) Existing contractual arrangements for inpatient care at hospitals and nursing homes, or in the case of the proposed new hospice program, contacts made with hospitals and nursing homes regarding contractual arrangements for inpatient care. Hope Hospice previously named Lee and Hendry County hospitals and nursing homes with which the applicant holds existing contractual arrangements for inpatient care. (3) Anticipated sources of funds for the construction. Hope Hospice indicates funds will be drawn from the applicant and through bank financing. b. Rule (8) Florida Administrative Code: Semi-Annual Utilization Reports. Each hospice program shall report utilization information to the Agency or its designee on or before July 20 th of each year and January 20 th of the following year. The applicant does not directly respond to this rule. However, Hope Hospice regularly submits semi-annual utilization reports as required by the above rule. The Agency s semi-annual utilization reports do not require a hospice to report inpatient hospice days. 13

14 3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant s service area? ss (1)( a) and (b), Florida Statutes. There is one licensed hospice provider in Hospice Service Area 8C Hope Hospice and Community Services, Inc. the applicant. The map in part E.,1., a. (on page 7 of this report) shows the applicant s four inpatient hospice facilities in Hospice Service Area 8C and the proposed project. Hope Hospice provides a bed need projection table to show an estimated Hospice Service Area 8C inpatient hospice bed need of 149 beds (at 85 percent occupancy) by 2018 (the third year of project operation). The project is to accommodate 48 of the stated need for 49 additional beds. ALOS is average length of stay and ADC is average daily census. See the table below. Hospice Facility Bed Need Projection for Hospice Service Area 8C Bed Year Pop. Death Rate Deaths Penetration Admissions ALOS ADC % in Facilities Facility Census 85% Bed Supply Bed Need , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % , , , , % Source: CON application #10194, page 48. Based on the applicant s stated sources in generating the above table, the reviewer notes the following: population data were stated to have been drawn from the Agency s Population Estimates 2000 to 2020 publication, issued September 2010; however, the applicant s 2010 through 2018 population data is consistent with the Agency s Population Estimates 2010 to 2025 publication issued February 2012, for population estimates as of July 1 for each of those years; 14

15 a penetration rate of 0.71 (for 2012) and of 0.75 (for 2016) is consistent with the applicant s previous stated estimates; and the admission count data of 4,440 for CY 2012 is consistent with the applicant s 2012 Hospice Service Area 8C admissions shown in the Agency s Florida Need Projections for Hospice Programs publication issued March 29, Below is Hope Hospice s expected inpatient and residential hospice house bed distribution for 2018, provided the project is approved. Hope Hospice and Community Services, Inc. Licensed & Proposed Hospice Beds for 2018 Total Hospice House Beds Hospice House Inpatient Beds Residential Beds HealthPark Cape Coral Joanne s House Lehigh Acres Center for Hope Total Source: CON application #10194, page 50. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? ss (1)( c), Florida Statutes. Hope Hospice and Community Services, Inc. provides a current hospice licensure certificate from the Agency and a September 23, 2011 through October 22, 2014 certificate of accreditation from the Community Health Accreditation Program, Inc. Hope Hospice reports maintaining compliance with applicable hospice licensure rules, in Rule 58A-2, Florida Administrative Code. The applicant also reports that it complies with National Hospice and Palliative Care Organization (NHPCO) standards. CON application #10194, Volume III, Appendix 14 includes various policies concerning hospice inpatient care. Below is a list of some of the policies provided for Agency review: Levels of Care (General Inpatient and Inpatient Respite Care); Access to Hope Care; and The 2013 Comprehensive Emergency Management Plan (20 of 54 pages). 15

16 It is noted that Hope Hospice participated in voluntary reporting from April 2012 through June 2012, on the Florida Health Finder, Hospice Provider Family Satisfaction Survey, at Hope Hospice had between 342 and 419 survey respondents and received five-star ratings (90 to 100 percent satisfaction) in all five satisfaction measurement categories. The reviewer notes that Hope Hospice had 1,087 admissions during April 2012 through June 2012, per the Agency s Florida Need Projections for Hospice Programs publication issued March 29, Agency records indicate the applicant had seven substantiated complaints during the three-year period ending June 24, A single complaint can encompass multiple complaint categories. The substantiated complaint categories include four for quality of care/treatment, two for resident/patient/client assessment, and one each in administration/personnel, physical environment and residential/patient/client rights. c. What resources, including health manpower, management personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation? ss (1)(d), Florida Statutes. The financial impact of the project will include the project cost of $14,955,811 and incremental operating costs in year two of $210,233. Hope Hospice and Community Services, Inc., provided audited financial statements for the periods ending September 30, 2012 and These statements were analyzed for the purpose of evaluating the applicant s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant s current ratio of 1.3 indicates current assets are approximately 1.3 times greater than current obligations. This is below average and a moderately weak position. The ratio of cash flow to current liabilities of 0.1 is below average and a weak position. Overall, the applicant has a weak short-term position (see Table 1 below). 16

17 Long-Term Position: The ratio of long-term debt to net assets of 0.0 indicates the applicant has no long-term debt, a good position. The ratio of cash flow to assets of 4.9 percent is below average and a moderately weak position. The most recent year had an operating gain of $8.0 million, which resulted in a 6.8 percent operating margin. Overall, the applicant has a good longterm position (see Table 1 below). Capital Requirements: Schedule 2 listed total capital projects totaling $62,227,171. This includes a $904,500 capital budget, $900,000 in maturities of long-term debt, approximately $14.5 million in new capital for this project, $12.9 million in residential beds, 28.7 million for admin, PACE & other, $2 million in estimated capital and an additional $1.8 million for maturities of long-term debt. In addition, the applicant will have to fund the projected year one operating loss of $768,637. Available Capital: Funding for this project will be provided by the applicant and bank financing. The applicant initially had $8.2 million in cash on hand. However, $1.4 million of the beginning $8.2 million has already been expended for land and land improvements. The remaining funding for the project is likely if a loan commitment is achieved from Northern Trust or other lending sources. According to the audit, the applicant has available working capital of $11.2 million and cash flow from operations of $5.1 million. As mentioned above, the applicant will have to fund the projected year one loss and achieve an affirmative loan commitment to complete the project. Funding for the entire capital budget is not certain. Staffing: Schedule 6A indicates, by September 30, 2016 (year one of operation), a total of FTEs (inpatient only) and by September 30, 2017 (year two of operation), a total of FTEs (inpatient only) for this project. From year one to year two, there is an incremental increase of 3.79 FTEs. See the table below. 17

18 Hope Hospice and Community Services, Inc. Center for Hope Hospice House Staffing Patterns Year One and Year Two FTEs for Year One Ending 9/30/2016 FTE Incremental Increase from 9/30/2016 to 9/30/2017 FTEs for Year Two Ending 9/30/2017 Staff Position Associate Medical Director Chaplin RNs PCS/HHAs Clinical Services Manager Social Services Counselors Pharmacist Cooks Food Services Associate Environmental Services Associate Maintenance Technician III Secretary/Receptionist (HIM Assist) Total Source: CON application #10194, Schedule 6A. The applicant does not discuss recruitment and retention. Conclusion: Depending on the applicant s ability to obtain bank financing, funding for this project should be available as needed. 18

19 TABLE 1 Hope Hospice & Community Service, Inc. CON application # /30/2012 Current Assets (CA) $45,976,100 Cash and Current Investment $7,173,000 Total Assets (TA) $103,081,000 Current Liabilities (CL) $34,787,400 Total Liabilities (TL) $34,787,400 Net Assets (NA) $68,293,600 Total Revenues (TR) $117,948,300 Interest Expense (IE) $113,900 Operating Income (OI) $8,036,100 Cash Flow from Operations (CFO) $5,093,300 Working Capital $11,188,700 FINANCIAL RATIOS 6/30/2012 Current Ratio (CA/CL) 1.3 Cash Flow to Current Liabilities (CFO/CL) 0.1 Long-Term Debt to Net Assets (TL-CL/NA) 0.0 Times Interest Earned (OI+IE/IE) 71.6 Net Assets to Total Assets (NA/TA) 66.3% Operating Margin (OI/TR) 6.8% Return on Assets (OI/TA) 7.8% Operating Cash Flow to Assets (CFO/TA) 4.9% d. What is the immediate and long-term financial feasibility of the proposal? ss (1)(f), Florida Statutes. For year two of operations, the applicant projected the following percentage of total patient days by group: Medicare at 83.1 percent, Medicaid at 8.1 percent, self-pay/charity at 3.1 percent, and commercial insurance and other payers at 5.8 percent. The reviewer notes these percentages total percent. The applicant indicated in the notes to Schedule 7 that the service it intends to provide is routine home care, inpatient respite, and general inpatient care, and for which the Department of Health and Human Services sets rates. The federal rates were calculated for the Lee County, Florida Wage Index for Medicare Hospice payments of and inflated through September The average price adjustment 19

20 factor used was 2.7 percent per year based on the new CMS Market Basket Price Index as published in the 1st Quarter 2013 Health Care Cost Review. Estimated patient days for each level of service from the notes to Schedule 7, year two were multiplied by the calculated reimbursement rate for that service in order to estimate the total revenue that would be generated by that number of patient days. The results were then compared to the applicant s estimated gross revenue. The results of the calculations are summarized in Table 2 below. The applicant s projected gross revenue was 2.07 percent, or $117,291, more than the calculated gross revenue. Operating profits from this project are expected to increase from negative $768,637 for year one to $131,393 for year two. Conclusion: This project appears to be financially feasible. The projected revenues in year two appear to be reasonable. HOSPICE REVENUE TABLE 2 CON application # Hope Hospice and Community Service, Inc. Wage Index for Lee County(0.9595) Wage Component Wage Index Adjusted Wage Amount Unadjusted Component Payment Rate Routine Home Care $ $ $48.01 $ Continuous Home Care $ $ $ $ Inpatient Respite $ $82.44 $72.80 $ General Inpatient $ $ $ $ Payment Rate Inflation Factor Year Two Inflation Adjusted Amount Patient Days Year 2, September Calculated Gross Revenue Routine Home Care $ $ $0 Continuous Home Care $ $ $0 Inpatient Respite $ $ $81,357 General Inpatient $ $ ,411 $5,459,577 Total 7,884 $5,540,934 From Schedule 7 $5,658,225 Difference $117,291 Percentage difference 2.07% 20

21 e. Will the proposed project foster competition to promote quality and cost-effectiveness? ss (1)(e) and (g), Florida Statutes. If approved, this project will expand Hope Hospice Community Services, Inc. s licensed beds from 92 to 116. This project is not offering a new choice of provider in the service area. However, it is offering a new freestanding inpatient hospice facility in the central portion Lee County. The impact of the price of services on consumer choice is limited to the payer type. Most consumers do not pay directly for hospice services rather they are covered by a third-party payer. The impact of price competition would be limited to third-party payers that negotiate price for services, namely managed care organizations. Therefore, price competition is limited to the share of patient days that are under managed care plans. The applicant is projecting 3.8 percent of its patient days from managed care/commercial insurance payers with 91.1 percent of patient days expected to come from fixed price government payer sources (Medicare and Medicaid), and the remaining 3.1 percent as self-pay/charity. With the large majority of patient care being provided from fixed price government payer sources, this project is not likely to have any discernible positive impact on price-based competition to promote costeffectiveness. As providers offer new or enhanced services to patients and families as a means to compete on quality measures, costeffectiveness would be impacted since the new or enhanced services would be offered despite the large percentage of fixed priced government payers. In other words, the potential exists for new or enhanced services to be provided for the same federal and state dollars. Conclusion: Hope Hospice is the sole provider in Hospice Service Area 8C. This project will not result in price-based competition. f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss (1)(h), Florida Statutes; Ch. 59A-4, Florida Administrative Code Hope Hospice and Community Services, Inc. s facility is designed as a two-story building of Florida Building Code (FBC) type II-B and National Fire Protection Association (NFPA) type II (000) construction, fully sprinklered. However, the FBC does not allow any structures with more than one story for the listed construction in health care occupancy (I-2). 21

22 The plans illustrate that the facility will be subdivided into smoke compartments to comply with the NFPA. The architectural narrative indicates the facility will have a 150 KW diesel emergency generator, as required by the FBC. All beds located in private rooms exceed the minimum space requirements of the FBC. As designed, the rooms provide ample space to accommodate family members. All patient rooms are provided with a private toilet room attached. The project narrative indicates that all patient bedrooms and toilet rooms will be accessible. The plans show patient care and support areas will be provided and conveniently located. The support spaces contain a nurse station, medication room, clean utility, soiled utility room and storage facilities. A laundry is provided and appears to be arranged for patient use as required. An elevator is provide and centrally located. The corridor leads to public restrooms, a meeting room, an administrative office, and is connected to a chapel outside by a covered walkway. The plans submitted with this application were schematic in detail with the expectation that they will necessarily be revised and refined during the design development (preliminary) and contract document stages. Based on the analysis of actual cost data of a similar project, the estimated construction costs appear to be within the expected range. The information provided in the project completion forecast appears to be reasonable. The architectural review of the application shall not be construed as an in-depth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner. The Agency does not require any further plan reviews for hospice licensure; however, the Agency will provide a formal review of construction documents for any owner who wants to ensure code compliance. 22

23 g. Does the applicant have a history of providing health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss (1)(i), Florida Statutes. Hospice programs are required by federal and state law to provide hospice patients with inpatient care when needed (42 Code of Federal Regulations ). Hospice care also must be provided regardless of ability to pay and regardless of age, race, religion, sexual orientation, diagnosis, payer source or financial status. Hope Hospice Community Services, Inc. states it has a policy and a history of providing services to all persons regardless of ability to pay, including Medicaid patients and the medically indigent. The applicant indicates plans to maintain this policy and continue to provide services to all patients, regardless of ability to pay or payor source. In Schedule 7A, for year one (ending September 30, 2016) and for year two (ending September 30, 2017), the applicant estimates the following patient days by payer mix(see the table below). Hope Hospice and Community Services, Inc. Center for Hope Hospice House Projected Patient Days by Payer Year One and Year Two Patient Days Year One Ending 9/30/2016 Percentage Patient Days Year One Ending 9/30/2017 Percentage Payer Self-Pay % % Medicaid % % Medicare 4, % 6, % Comm. Ins % % Other Payers % Total 7,027* 100.0%** 7, % Source: CON application #10194, Schedule 7A. *The reviewer notes this arithmetic total is 5,387. ** The reviewer notes this percentage total is In Schedule 7A-1, for year one (ending September 30, 2016) and for year two (ending September 30, 2017), the reviewer notes the applicant estimates the following patient days by payer mix. The applicant s total columns in Schedule 7A-1 were used in its Schedule 7A. However, Hope Hospice did not correctly calculate Schedule 7A-1 s total columns (see the table below with corrections as calculated by the reviewer). 23

24 Hope Hospice and Community Services, Inc. s Center for Hope Hospice (CON application #10194) Projected Patient Days by Payer Years One and Two Patient Days Year One Ending 9/30/2016 Percentage Patient Days Year One Ending 9/30/2017 Percentage Payer Self-Pay % % Medicaid % % Medicare 5, % 6, % Comm. Ins % % Other Payers % % Total 7, % 7, % Source: CON application #10194, Schedule 7A-1, based on reviewer calculation. F. SUMMARY Hope Hospice and Community Services, Inc. (CON #10194) is the sole provider of hospice services in Hospice Service Area 8C (Hendry, Glades and Lee Counties). The applicant proposes to construct a new 48-bed freestanding hospice facility, with 24 inpatient (CON reviewable) and 24 residential beds (non-reviewable) in south Fort Myers, at the intersection of Six Mile Cypress Parkway and Plantation Road, approximately 1.5 miles from Gulf Coast Hospital. The total project cost is $27,860,171. The project involves 70,364 GSF of new construction and construction costs of $15,831,841. The applicant does not propose conditions on the project. Need/Access: The Agency does not publish need for inpatient hospice beds. There are 92 licensed inpatient beds and no CON approved inpatient hospice facilities or beds pending licensure in Hospice Service Area 8C. The applicant states that overall bed occupancy increased from 81 percent in 2010 to 90 percent in 2012 and was 96 percent during the first five months of Hope Hospice indicates that all of its facilities have had waiting lists during the first five months of

25 The project is more cost-effective than to increase the use of hospital scatter beds. The project would allow for an estimated year two savings of $179 per patient day (as opposed to scatter bed contracts) and by the same year, a gross annual savings of $1,308,697 which would be used to increase the availability, accessibility and quality of hospice care in the service area. The applicant contends that the hospice plan of care cannot by easily followed by non-hospice staff in settings that are structured for a different type of care and that it can control the medical and psychosocial support environment and provide hospice-focused care in its own facility. The environment of the project will be homelike and intimate, unlike the institutional settings of scatter-beds in hospitals and nursing homes. The medical cultures in hospitals and nursing homes are not optimal for palliative end-of-life care. Beds available to Hope Hospice in contract facilities are scattered so that consistent staffing by specially trained staff is not possible. Pharmaceutical support from hospice-trained pharmacists is not available in the nursing home setting. Patient care coordination and continuity of care will be enhanced in the Center for Hope Hospice House setting because the control of medical records will remain with Hope Hospice. The applicant and some letters of support indicate that the proposed project location provides excellent geographic access for a growing elderly population area which would help accommodate a growing lack of capacity at the applicant s existing facilities. Quality of Care: Hope Hospice and Community Services, Inc. provides quality hospice care. Hope Hospice and Community Services, Inc. voluntarily participated in the April 2012 through June 2012 Agency Hospice Provider Family Satisfaction Survey, in which 342 to 419 respondents assessed the applicant at a five-star rating for each of five categories. 25

26 Agency records indicate Hope Hospice and Community Services, Inc., had seven substantiated complaints during the three-year period ending June 24, Financial Feasibility/Availability of Funds: The applicant has an overall weak short-term position and an overall good long-term position. Depending on the applicant s ability to obtain bank financing, funding for the project should be available as needed. The project appears to be financially feasible. The projected revenues in year two appear to be reasonable. This project will not result in price-based competition. Medicaid/Indigent/Charity Care: Hospice programs are required by law to provide services to all who seek them. The applicant s projections indicate that Medicaid will comprise 7.59 percent of total patient days in year one and 8.1 percent of total patient days in year two of the proposed project. Architectural: The facility is designed as a two story building of Florida Building Code type II-B and National Fire Protection Association type II (000) and will be fully sprinklered. The Florida Building Code does not allow any structure with more than one story for the listed construction, as proposed. Estimated construction costs appear to be within the expected range and the project completion forecast appears to be reasonable. However, the cost of correcting the code deficiency could affect the applicant s project cost. G. RECOMMENDATION Deny CON #

27 AUTHORIZATION FOR AGENCY ACTION Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State Agency Action Report. DATE: James B. McLemore Health Services and Facilities Consultant Supervisor Certificate of Need Jeffrey N. Gregg Director, Florida Center for Health Information and Policy Analysis 27