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 Hernando-Pasco Hospice, Inc./CON # Majestic Boulevard Hudson, Florida Authorized Representative: Mr. Thomas Barb (727) Service District/Subdistrict Hospice Service Area 5A (Pasco County) B. PUBLIC HEARING A public hearing was not held or requested regarding this proposal to establish a seven-bed inpatient hospice facility in Service Area 5A, (Pasco County) Florida. Letters of Support There are 88 unduplicated letters of support included in CON #10121 s Tab 5 (Letters of Support). Two letters were not dated, the other 86 were dated between May 15, 2011-June 17, The Agency received two letters dated May 28, and June 15, 2011, that were not included with the application. Some of the support letters received in the stated tab are listed below. The Honorable Gus M. Bilirakis, U.S. House of Representatives, 9 th District states, HPH Hospice is a great example of the steadfast commitment that non-profits provide our community. I would like to see them have an opportunity to bring this additional service to north Pasco County.

2 Seven letters from members of the Florida Legislature document support. These include: the Honorables Mike Fasano, Florida Senate (District 11), Jim Norman, Florida Senate (District 12), and from the Florida House of Representatives the Honorables Robert Schenck (District 44), Richard Corcoran (District 45), John Legg (District 46), Peter F. Nehr, (District 48), and Will Weatherford (District 61). Senator Fasano writes, This project is part of HPH s continuing plan to provide compassionate care to the residents of Pasco County. Senator Norman states, As a member of the Health Regulation Committee in Tallahassee, we were faced with a tremendous budget deficit. Despite this deficit, we made significant reforms to our state s Medicaid system that will increase competition without sacrificing the quality of care for patients. I recommend a CON be granted to HPH Hospice. Representative Corcoran states HPH Hospice has earned the reputation of being a high quality care center with a long track record of excellence. Representative Legg declares, By offering north Pasco residents the option of (hospice) in-patient level as well as residential level care at the HPH facility, hospice patients will benefit. Representative Nehr comments HPH will assist families in this transitional period and offer bereavement counseling for families as they adjust to (life) without their loved ones. Representative Weatherford cites HPH s, true skill at providing exemplary hospice care in comfortable home like surroundings. Seventeen support letters are from elected local officials: W. Cliff McDuffie, Mayor of the City of Zephyrhills; Chris Nocco, Sheriff of Pasco County; Paula S. O Neil, Clerk and Comptroller of Pasco County; Mike Olson, Pasco County Tax Collector; Brian E. Corly, Supervisor of Elections for Pasco County; John J. Gallagher, County Administrator for Pasco County; Pat Mulieri, District 2 Pasco County Commissioner; Ann Hildebrand, District 3 Pasco County Commissioner; Henry Wilson, District 4 Pasco County Commissioner; Jack Mariano, District 5 Pasco County Commissioner; Bob Consalvo, Mayor of the City of New Port Richey; John Schneiger, City Manager of the City of New Port Richey; Judy DeBella Thomas, Councilwoman for the City of New Port Richey; Bob Langford, Councilman for the City of New Port Richey; Ginny Lane Miller, Councilwoman for the City of New Port Richey and Mike Wells, Pasco County Property Appraiser. One letter was signed by multiple members of the City of Port Richey including: Richard Rober, Mayor; Bill Colombo, Vice Mayor; Steve O Neill, Councilman; Nancy Britton, Councilwoman and Terrence Rowe, Councilman. 2

3 There are 13 letters of support from physicians and clinicians including: Dr. Anantkumar Shah, Dr. K.T. John, Dr. Sindhu Kotwanit, Dr. Daniel P. McBath, Dr. Paul Chakola, Dr. HaiDang Hoang, Dr. Laurence J. Martin, Dr. Hugo Medonca, Dr. Rajesh B. Dave, Dr. Arthur L. Verga, Dr. Chandravadan J. Patel, Dr. Joseph Pino and Dr. John J. Pirrello. Ten health care service providers submitted letters in support of the project. These include: Shayne George, CEO, Shalin Shah, CFO and Susan H. Bearden, Case Management Director of Regional Medical Center Bayonet Point; Janice Dennison and Esmeralda Santos, RN of Adult Family Care Home; Karen Young, Owner and Operator of Little House of Oakshire; Carole Edwards, Director of Nursing at The Edwinola Retirement Community; Mickey Smith, CEO of Oak Hill Hospital; Dee Thomas, President of Ewing and Thomas Registered Physical Therapists and Andrew G. Williams, General Manager of Med Fleet. Mickey Smith, Oak Hill Hospital CEO stated, We believe in the value of reasonable competition as it tends to improve the level of care and services a community receives by the hospice programs. We also embrace the concept of partnering with other hospice programs to accomplish our mission. Eleven letters are from individuals whose loved ones received care through the provider and volunteers of HPH Hospice. These letters expressed gratitude for the care and support witnessed in HPH Hospice. Most letters touched on the burden it is to drive outside their service area for hospice care and the need for inpatient care in the northern area of the county. Thirty-one support letters came from the community. These included: John Moors, Executive Director of the Greater Dade City Chamber of Commerce; Katherine M. Johnson, President of Pasco-Hernando Community College; Bill Aycrigg, President/CEO of Community Aging & Retirement Services, Inc.; David R. Weis, Director of Operations of the Greater Wesley Chapel Chamber of Commerce; Vonnie Mikkelsen, Executive Director of the Greater Zephyrhills Chamber of Commerce; Maxwell D. Sargent, President of the Suncoast Guardian Association; John Hagen, President and CEO of the Pasco Economic Development Council; Joe Alpine, President of the West Pasco Chamber of Commerce; Dominick DePetrillo, Executive Director of the Alzheimer Family Organization; Greg Johnson, Senior Pastor at Generations Christian Church; and David West, Preacher for Dade City Church of Christ. The other 20 letters came from businesses and services within Pasco County. 3

4 In summary, the 90 support letters carry the following recurring themes: HPH Hospice has a long standing relationship with the residents of Pasco County for their end-of-life care, northern Pasco residents have a difficult time commuting to current facilities due to distance, the care/support of the staff and that the proposed facility would be a great benefit to patients and families during the end-of-life hardship. C. PROJECT SUMMARY Hernando-Pasco Hospice, Inc. (CON #10121), a Florida non-profit corporation, proposes to establish a seven-bed inpatient hospice facility in Hospice Service Area 5A, Pasco County, Florida. The applicant will convert the existing HPH Hudson Hospice House (seven residential beds) to the inpatient level of care. The facility is located at Majestic Boulevard, Hudson, Florida The project involves a total cost of $392,685. Construction costs are $19,000 and the project will involve 5,600 gross square feet of renovation. Costs covered are for land, building costs, equipment and project development. The applicant proposes no conditions. D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section , Florida Statutes. 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 assessing the responses provided in the application, and independent information gathered by the reviewer. Applications are analyzed to identify strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant best meet the review criteria. 4

5 Section 59C-1.010(3) (b), Florida Administrative Code, allows no application amendment information subsequent to the application being 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. As part of the fact-finding, the consultant, Marisol Novak, analyzed the application in its entirety with consultation from the Financial Analyst, Everett Butch Brussard, who evaluated the financial data, and the Architect, Scott Waltz, who evaluated the architecturals and the schematic drawings as part of the application. E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicate the level of conformity of the proposed project with the criteria and application content requirements found in Florida Statutes, sections , and ; applicable rules of the State of Florida, Chapter 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 a total hospice stay. Currently there are two licensed hospice providers in Service Area 5A. These providers are HPH Hospice and Gulfside Regional Hospice, Inc. HPH Hospice and Gulfside Regional Hospice, Inc. are currently licensed to provide hospice general inpatient care in freestanding inpatient hospice facilities. There are 92 licensed inpatient hospice beds in Service Area 5A. HPH Hospice has 48 beds in New Port Richey and 32 beds in Dade City and Gulfside Regional Hospice has 12 beds in Zephyrhills. 5

6 The map below identifies the current inpatient hospice facility locations and HPH s proposed site. Licensed Inpatient Hospice Facilities in Service Area 5A and HPH Hospice s (CON #10121) Proposed Location Source: MapPoint 2006@Microsoft Hernando-Pasco Hospice states that the need for an inpatient hospice facility in northwest Pasco County is based upon its experience and knowledge of hospice operations within the county, future population growth in Pasco County and end-of-life needs/preferences for terminallyill patients and their families. The applicant states that the proposed facility will convert the existing seven-bed residential HPH House to a seven-bed hospice inpatient facility to accommodate patients requiring the inpatient level of care. HPH asserts the proposed facility will accommodate future inpatient needs in the next couple of decades as the demand in the community increases. 6

7 Furthermore, the applicant maintains that the proposed facility will provide the following services and benefits: Skilled medical care to be provided to Pasco County s terminally-ill residents for which short-term inpatient care is necessary. Psychological and psychosocial services to address issues such as acute anxiety, fear of dying, depression and lack of family support. HPH will provide education for patients and their families on complex medicinal regimens and palliative treatments. HPH will have a designated interdisciplinary team consisting of physicians, registered nurses, licensed nurse practitioners, home health aides, social workers, chaplains, bereavement counselors and support staff. Clinical personnel will be available as needed, 24 hours a day, seven days a week. 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. Market conditions. Population demographics and dynamics HPH states that it has been licensed in Pasco County since The applicant maintains that Pasco County has seen tremendous growth of both the total and senior populations in the last five years, increasing by 9.4 percent (37,702 residents) from CY 2005 to CY 2010 in total population and by 5.6 percent (5,473 residents) in residents 65 and older. In addition, HPH indicates that between 2010 and 2015, the 65 and older age cohort is expected to increase by 13.7 percent (14,223 residents) and from 2015 to 2020 the increase will be 19.1 percent (22,533 residents). See the table below. 7

8 Population Estimates Historical and Forecasted Time Period All Ages Ages ,337 98, , , , , , , , , , , , , , ,271 5 Year Annual Growth 37,702 5,473 5 Year Growth Rate ( ) 8.3% 13.7% Source: CON application #10121, page 17. Data is from the Florida Population Estimates & Projections 2000 to 2020, published September HPH does not provide data for CY 2011, 2014 and 2015 in its table. However, adding 37,702 to CY 2010 s total population of 440,049 results in 477,751 total population or an 8.6 not 8.3 percent increase. HPH s narrative indicates the increase is by 36,407 persons which does result in the 8.3 percent increase. The age 65 and over projection of 103,727 in 2010 with 5,473 added by 2015 results in 109,200 population age 65 and over or 5.3 percent growth compared to the 13.7 percent shown in the above table. However, the table s stated 2013 age 65 and over population of 110,271 is an increase 6,544 persons. The Florida Population Estimates and Projections for January 2015 indicate the 65 and over population will be 117,950, which is an increase of 8,750 from January 2010 s 103,727 or a 13.7 percent increase. So, although the applicant s table is inaccurate and missing data the 8.3 percent and 13.7 percent increase from January 2010 to January 2015 for the population groups is correct. The applicant maintains that of the nearly 442,000 Pasco County residents, 24 percent are 65 and older this growth in population will continue to drive hospice admissions in the county. In addition, HPH asserts that the northwest portion of Pasco County is one of the population centers that will outpace the expected increase in the 65 and older age cohort of the county over the next five years. See the table below. 8

9 Population Increase in Northwest Pasco County Northwest Pasco Age 65 and Over Zip Code City 2011 Estimated 2016 Projected % change Spring Hill 1,540 2, % Hudson 10,705 12, % Hudson 2,166 2, % Land O Lakes % Land O Lakes 2,242 2, % Port Richey 12,643 13, % Totals: 26,813 34, % Source: CON application #10121, page 18 from Nielson Solutions Center, June 2010 estimates for 2011 and projections for 2016 and HPH Hospice Analysis. HPH contends that because northwest Pasco has had immense growth, and traffic and congestion has accompanied this growth, residents have to endure multi-lane roadways and numerous traffic lights resulting in significantly increased travel times compared to more rural areas. Seniors, the applicant maintains, are particularly susceptible to the daunting task of traffic congestion. Therefore, HPH s proposed inpatient facility will be situated in Hudson and conveniently located to be accessible for patients and their families in northwest Pasco County, 1.3 miles from U.S. Highway 19 and 0.1 mile from S.R. 52. Availability, utilization and quality of like services The applicant notes that there are two hospice providers in Service Area 5A, HPH Hospice and Gulfside Regional Hospice. HPH is the dominant provider with between 70 to 75 percent market share during the last years. Currently HPH has two freestanding facilities with 80 inpatient beds in Pasco County and while it is the goal of the applicant to provide inpatient care to patients and their families in a private room whenever possible the additional capacity in each facility ensures that no patient requiring hospice care in an ideal freestanding hospice setting will ever be turned away. The other hospice provider in Pasco County, Gulfside, is a community based, not-for-profit provider that has been serving the county since It currently has one 12-bed freestanding inpatient hospice facility in Zephyrhills (east Pasco County). See the table below for Service Area 5A s CY 2010 admissions and market share. 9

10 Hospice Admissions and Market Share Subdistrict 5A, CY 2010 Admissions Market Share HPH Hospice 2, % Gulfside 1, % Total: 3, % Source: CON application #10121, page 19 from Florida Hospice Need Projections published April 1, HPH maintains that in aggregate, HPH and Gulfside have successfully increased accessibility, availability and quality of hospice services in Pasco County. Hospice penetration rate in Subdistrict 5A for 2009 was 65 percent, the applicant indicates that this is higher when compared to the statewide rate of 64.7 percent. Therefore, the applicant concludes that HPH and the other existing provider have successfully fulfilled their joint mission to provide hospice care to the terminally-ill residents of the community. The applicant contends that per Gulfside s semi-annual report (July through December 2010) it had a caseload of 13 inpatient beds thereby filling Gulfside s 12-bed freestanding facility. Therefore, HPH maintains that to the extent inpatient hospice data is available, Gulfside s freestanding inpatient beds operate at full occupancy and will remain at full occupancy due to forecasted population and resident death growth. For fiscal year 2010, HPH leased a 10-bed inpatient unit at Bayonet Point Health and Rehab which provided 862 inpatient hospice days for an average daily census of 2.2. In 2009 (the last full year of operation as HPH s lease expired September 2010) it served a total of 1,899 inpatient days. HPH indicates that in 2010, it provided 9,350 inpatient days in Service Area 5A. This is an ADC of approximately 26 patients while HPH has 80 licensed inpatient beds. The applicant states that in the proposed facility, the seven inpatient beds will also continue to be utilized for routine care allowing HPH to provide the appropriate level of inpatient care and routine care depending on each patient s needs and plan of care. Additionally, HPH indicates that there are higher costs associated with providing inpatient care in the leased unit or in scatter beds than in a freestanding inpatient hospice facility. Higher costs, the applicant contends, makes care less accessible as it makes it more challenging for HPH to provide. Therefore, the applicant states that the proposed facility will increase the availability of inpatient care as it becomes more economically feasible for HPH to provide such service. 10

11 HPH states that its mission is to provide the highest quality medical, social and spiritual care and comfort to those who are nearing the close of their lives while supporting and sustaining their families and those who grieve. The applicant is committed to serving and honoring each person s dignity, self-respect and individuality. In 2007, HPH opened an inpatient unit within Bayonet Point Health and Rehabilitation Center containing 10 patient care rooms. The applicant states that the purpose of the lease was to determine the long-term feasibility of the unit as well as the feasibility of a potential freestanding hospice inpatient facility to replace the leased unit. In May 2010, the decision was made to allow the lease contract to sunset because the number of beds was greater than demand at that time. However at this time, the applicant asserts that it has become apparent that there is need for a freestanding inpatient unit to serve the HPH hospice patients of northwest Pasco County. HPH states that rather than build and add additional freestanding hospice beds, licensing the existing freestanding residential hospice beds to accommodate the inpatient level of care will best meet the needs of its hospice patients. Furthermore, HPH asserts that this is the most costeffective approach that will utilize an existing hospice facility. The proposed facility will guarantee the community will be served now and into the future. The applicant contends that this guarantee is not possible with leased space or scatter beds. HPH further asserts that in its freestanding facilities, HPH is able to provide comforts of home including wall-to-wall carpeting, artwork, wallpaper, warming oak furniture, sleeper sofa or recliner for family members, coffee table, private or semi-private bath and TV/DVD player. Additionally, snacks are provided for family members at all HPH Care Centers but only meals can be provided to family member at the previously leased unit. The applicant concludes by stating it is a quality hospice provider that has experience in successfully developing and operating freestanding care centers. Northwest Pasco County residents will benefit as HPH expands its quality service to the freestanding inpatient setting. 11

12 Medical treatment trends The applicant maintains that inpatient hospice care is typically provided as a final modality of care during the last few days of life. The freestanding inpatient facility cares for the actively dying patient who cannot be cared for in their own home due to the high level of skilled nursing care required. Hospice inpatient facilities also have the capabilities to provide respite and routine care for patients who do not meet inpatient admission criteria. Furthermore, patients are under the care of a physician and receive high levels of skilled nursing care along with pain and symptom management, established drug routines, wound care as needed, bereavement counseling and education for patient, families and loved ones. HPH states that there are 52 freestanding inpatient hospice facilities with 951 total licensed beds in the State of Florida with many providers having multiple facilities in a single subdistrict. In 2006, there were 37 freestanding inpatient facilities with 517 total licensed inpatient beds. The applicant contends that this 84 percent growth is indicative of the well accepted and highly efficient care model for treating the most acute terminally-ill patient population 1. Market conditions According to the applicant, Pasco County has 29,887 medically underserved residents age 65 and older and within the 60 and older age cohort, 96.1 percent of the population is non-hispanic and 97.2 percent is white. Pasco County has six hospitals with 1,125 beds, 17 skilled nursing facilities with 2,058 licensed beds (includes the 120-bed Baldomero Lopez Veterans Nursing Home), 52 assisted living facilities with 2,402 beds, 19 adult family care homes with 85 beds, 30 home health agencies and 671 licensed medical doctors. HPH asserts that the sheer volume of Veterans, 50,521 (25,079 age 65 and older), is unique to the community. HPH and Gulfside have successfully increased accessibility, availability and quality of hospice services in Pasco County maintains the applicant. In 2010, the subdistrict (5A) hospice penetration rate was 65 percent while the statewide rate was at 64.7 percent. 1 The state s freestanding inpatient hospice growth was confirmed by review of the Florida Need Projections for Hospice Programs published April 1, 2011 and April 7,

13 The applicant maintains that the proposed facility location in Hudson, Florida is convenient to northwest Pasco and southwest Hernando Counties. The access to this facility is convenient via major roadways, S.R. 52 (the major east-west highway, passing through Hudson and Land O Lakes) and U.S. Highway 19 (the north-south highway which passes through Springhill, Hudson and Port Richey). 2. Agency Rule Preferences a. Rule 59C (7) Florida Administrative Code states that the Agency will not normally approve a proposal for the 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. The applicant asserts that its extensive experience and knowledge have helped HPH to understand that leased inpatient hospice units have several limitations, including: Since the space is within an another type of licensed facility, the hospice inpatient unit is hampered in developing a strong community identity and limited in the way that space can be used. The secondary entrances at the leased units used by hospice patient families are less than desirable. These types of entrances are very uninviting for late night arrivals and make a difficult situation more difficult. The monthly lease payment exceeds the cost of HPH owning and operating its own building. Leased space can be terminated or the number of beds can be reduced should the lessor require the space or beds. Leased space prohibits construction or alterations to the existing building that would make it more suitable for a homelike environment. Leased space does not provide for visitation space, activity space, children play area or other quality enhancers which are available at freestanding centers. The applicant must purchase dietary services from leased facilities whereas in its own facility, staff and volunteers cook every meal and it is available 24/7 similar to a home kitchen. 13

14 HPH contends that a contracted unit was never meant to be a long-term response to the inpatient need in northwest Pasco County, rather to serve as an introduction to the inpatient level of care. The applicant states that there are three main advantages achieved with the proposed project: cost-effectiveness, all services geared toward the hospice patient and the facility is a more homelike atmosphere. For fiscal year 2010 (ending September 30, 2010), HPH states that total rent expense for its leased inpatient unit at Bayonet Point Health and Rehabilitation was $722, The applicant contends that the cost of owning an inpatient facility represents a significant cost savings compared to leasing space within another typed of health care facility a $271 per census day savings. See the table below. Expenses per Census Day HPH Bayonet Point Health and Rehab versus Average of HPH Freestanding Care Centers Fiscal Year HPH Bayonet Point and Rehab Inpatient Unit HPH Freestanding Care Center* Cost Difference Percent Difference Rent/Mortgage $380 $ Utilities $0 $ Building Repairs & Maintenance $0 $ Food $0 $ Linen $0 $ Total $380 $109 $ % Source: CON application #10121, page 27. *Includes the average of HPH s three freestanding care centers in New Port Richey, Hernando and East Pasco. The applicant also carried out a cost comparison analysis on a per bed day basis. 3,650 possible bed days were used for its 10-bed unit at Bayonet Point Health and Rehab versus 23,360 possible bed days for the New Port Richey, Hernando and east Pasco facilities. See the table below. 2 While the applicant labels this chart as based on 2010 fiscal year, the numbers for Bayonet Point and Rehab Inpatient Unit are actually based on the 2009 fiscal year. 14

15 Expenses per Bed Day HPH Bayonet Point Health and Rehab Unit versus Average of HPH Freestanding Care Centers Fiscal Year 2010 HPH Bayonet Point Health and Rehab Unit HPH Freestanding Care Centers Rent/Mortgage $198 $49 Utilities $0 $11 Building Repairs & Maintenance $0 $3 Food $0 $8 Linen $0 $7 Total $198 $78 Source: CON application #10121, page 28. HPH states that it anticipates having lower costs of $ per patient day with its freestanding hospice compared to the leased unit at Bayonet Point Health and Rehab. If approved, the proposal will result in lower costs per patient day when compared to the cost of leased inpatient space and greater operational efficiency/autonomy which will enhance HPH s identity and quality in the community. (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. HPH states that it has bed agreements to provide inpatient service with the following hospitals and skilled nursing facilities: Florida Hospital Zephyrhills Community Hospital Regional Medical Center Bayonet Point Morton Plant Mease North Bay Pasco Regional Medical Center Heather Hill Healthcare Center Royal Oaks (actually Royal Oak Nursing Center). The applicant also has conventional contracts for routine hospice care with every nursing home in the county. HPH provided a list which includes all 17 Pasco County nursing homes. 15

16 HPH maintains that it has many positive relationships in the community and will continue to build upon these in providing residents with the very best end-of-life care. In addition to developing its own inpatient facility, the applicant states it will maintain agreements for routine care with area nursing facilities. (3) Anticipated sources of funds for the construction. The applicant states that it will fund the construction of the freestanding inpatient facility through operational cash. Funds will be from cash on hand at HPH as indicated by a letter of financial commitment included in CON application # 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. HPH indicates that it will continue to comply with all reporting requirements and will submit this information by the January and July 20 deadlines. 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 As previously stated, HPH maintains that licensing the existing freestanding residential hospice beds to accommodate the inpatient level of care will best meet the needs of HPH hospice patients and their families. The applicant asserts that this is the most cost effective approach as well as expanding permanent hospice services to northwest Pasco County. HPH contends that the proposed facility will guarantee the community will be served now and in the future. The applicant notes that there are two hospice providers in Service Area 5A, HPH Hospice and Gulfside Regional Hospice. HPH is the more dominant provider with between 70 to 75 percent market share during the last five years. HPH has two inpatient hospices with a total of 16

17 80 inpatient beds in Pasco County. The other hospice provider in Pasco County, Gulfside, is a community based, not-for-profit provider that has been serving the county since It currently has one 12-bed freestanding inpatient hospice facility in Zephyrhills (east Pasco County). For fiscal year 2010, HPH leased a 10-bed inpatient unit at Bayonet Point Health and Rehab which provided 862 inpatient hospice days for an average daily census of 2.2. In 2009 (the last full year of operation), it served a total of 1,899 inpatient days. HPH indicated it had 9,350 inpatient days in Service Area 5A during 2010, or an ADC of approximately 26 patients in its 80 inpatient beds. The applicant states that in the proposed facility, the seven inpatient beds (converted from residential beds) will also continue to be utilized for routine care allowing HPH to provide the appropriate level of inpatient care and routine care depending on each patients needs and plan of care. HPH maintains it will use existing resources to ensure inpatient care is available to northwest Pasco County residents who require it. HPH indicates that while the subdistrict will have a net increase of seven inpatient beds with the proposed facility, the net increase of all hospice beds in the subdistrict will be zero since the beds will be converted from existing freestanding residential hospice beds. The applicant contends that the bigger effect of the realignment of the residential beds to inpatient beds will be the enhanced availability, accessibility and utilization in the market. HPH maintains that approval of the proposed facility will not impair volume at the existing hospices. The applicant projects its year one and two inpatient facility ADC to be 5.2 patients including the continuation of residential care in the facility. HPH indicates that this is a reasonable projection based on its experience in Pasco County and its operation of three freestanding care centers 3. HPH does not provide the projected inpatient hospice days as its projections include both inpatient and residential days. The applicant states it has been providing quality hospice services to the terminally-ill and their families in Hernando and Pasco Counties for 30 years. HPH maintains that since its inception it has been in compliance with the Conditions of Participation for hospice providers of services under the Health Insurance for the Aged and Disabled Program as well 3 HPH has a 48-bed inpatient facility in Hernando County (Service Area 3D) in addition to its Pasco County facilities. 17

18 as the Medicaid Program. The applicant has had no Medicare cap issues or other investigations. HPH states that its commitment to quality and patient care is evidenced in its less stringent admission criteria, its ability to admit most patients within 24 hours, its assistance in obtaining physician referrals for new patients, and provision of room and board at no charge. The applicant maintains that quality in terms of patient satisfaction, will only improve with the establishment of a freestanding inpatient hospice facility in northwest Pasco County. Some of the operational factors that HPH patients benefit from are as follows: High level of HPH physician involvement with the applicant s patients is unmatched. Twenty-three professionals are involved in the care management and delivery of patients in the three counties served by HPH. The applicant also has its own in-house institutional pharmacy to meet its patients needs after hours, seven days per week with four registered pharmacists (one with a doctorate in pharmacology) and nine pharmacy technicians. HPH has its own in-house durable medical equipment company to meet its patients' needs 24 hours per day, seven day per week. Control of this organization regularly contributes to patient needs and enhances quality and expedites the admission process. HPH indicates that there are a number of operating factors and philosophies that distinguish it from other hospice providers as a true community provider of end-of-life care. These factors and descriptions include: Children s Assistance Program Compassionate Paws Program Medicare Compliance In-House Home Health Services Volunteerism Veterans Program Assisted Living and Nursing Home Relationships Attending all at home and Care Center deaths, including pronouncements Pharmacy Services In-House Medical Equipment Company Provides medically appropriate palliative radiation and chemotherapy Legacy Program Streamlined admission process 18

19 Thrift shop HPH will clean out the deceased s home at the family s request Inpatient facilities are built and decorated to be a comforting homelike environment. HPH states that its financial performance as a hospice provider for more than 25 years further demonstrates that HPH is an efficient provider. The applicant maintains that despite all its activities, including unfunded activities, it is able to be programmatically and financially viable. HPH contends that one of the major criteria used in the evaluation of CON applications is the extent to which a proposed service will be accessible, in accordance with the access criteria. The applicant states it provides programmatic (clinical) access to appropriate care, educates the constituent population, maintains its less stringent admission criteria and continues with its policy of no charge for room and board at its hospice houses. HPH has a history of serving the Medicaid population and the medically indigent. Medically indigent patients at HPH (in each of its three subdistricts) have represented a census of 24 on a daily basis. The applicant indicates that this is a financial commitment to the medically indigent totaling in excess of $1.25 million for the most recent year. HPH states it will continue to admit all patient without regard to payment. 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 HPH states it has had no licensure violations and is enrolled in both the Medicare and Medicaid programs. It is a member of the National Hospice and Palliative Care Organization (NHPCO) and ascribes to NHPCO policies and procedures. The applicant maintains that it operates the hospice consistent with the accreditation requirements. The applicant states that it is committed to quality and this is inherent in its activities, its mission, its value and its operating philosophy. HPH has a Quality Assurance and Performance Improvement Plan in place, its priorities in the current fiscal year include: Improve the organization s ability to assess and manage patient s pain Pain analysis quarterly Ten percent chart review completed each quarter utilizing an in-depth survey comprising areas surveyed by federal and state mandates. One hundred percent compliance in mandated areas. Reporting outcome measures to the state 19

20 Analysis and appropriate action of occurrences Any activities of high-risk, high-volume and problem-prone aspects of services that would have a significant impact on patients, staff or the organization will be identified and analyzed. Staff competency and education Community education including physicians Obtain benchmarks for quality monitors Improve synergy between hospice and home health The HPH Model and Structure for improvement is the AIM-PDCA developed by the Institute for HealthCare Improvement and recommended by the NHPCO. This framework is utilized in the NHPCO Quality Partners Ten Components and adopted by HPH. The applicant s Ten Components include: patient and family centered care, ethical behavior and consumer rights, clinical excellence and safety, inclusion and access, organization excellence, workforce excellence, standards (safe/effective/equitable), compliance with laws and regulations, stewardship and accountability and performance management. The applicant states that a plan for each of these components is included in HPH s quality improvement activities program plan for the fiscal year. Additionally, HPH updates its Quality Assurance and Improvement Plan in accordance with its practices which are consistent with Medicare conditions of participation, Florida Statutes and Rules. It is noted that the applicant participated in voluntary reporting from July 2010 through September 2010, on the Florida Health Finder, Hospice Provider Family Satisfaction Survey. HPH had between 342 and 443 survey respondents and received five-star ratings (90 to 100 percent satisfaction) in all categories. Agency records indicate HPH had three substantiated complaints during the three-year period ending June 30, A single complaint can encompass multiple complaint categories. The substantiated compliant categories were: quality of care/treatment (three), and one each for plan of care, administration/personnel, nursing services and resident/patient/client assessment. 20

21 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 applicant provided audited financial statements for the periods ending September 30, 2010 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: Note: The applicant s audit did not clearly identify short or long-term assets and liabilities. The following analysis represents our best estimate of the short and long-term position of the applicant based on the information provided in the audit report. The applicant s current ratio of 4.0 indicates current assets are four times current liabilities, a strong position. The working capital of $20.3 million is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities of 0.4 is well below average and a weak position. Overall, the applicant has an adequate short-term position. (See Table 1.) Long-Term Position: The ratio of long-term debt to net assets of 0.4 is below average and indicates the applicant has excess equity to obtain additional debt financing if needed. The ratio of cash flow to assets of 5.8 percent is below average and a moderately weak position. The most recent year had $1,998,000 in operating income, which resulted in an above average 3.2 percent operating margin. Overall, the applicant has an adequate long-term position. (See Table 1). Capital Requirements: Schedule 2 indicates total capital projects of $6,881,641 which consist of the CON subject to this review and another CON (#10120) for eight inpatient hospice beds. Available Capital: According to the applicant, funding for this project will come from cash on hand and investments ($1,834,572), operating cash flows ($497,069) and non-related company financing ($4,500,000). The non-related company financing will be a term loan from Sun Trust. The bank issued a letter of interest in the loan, but no guarantee of financing was 21

22 provided. Based on our review, the applicant has available working capital of $20.3 million and cash flow from operations of $2.8 million. It appears that the applicant has sufficient resources to complete this project without the loan. Staffing: Schedule 6A is reproduced below illustrating the applicant will have 3.10 FTEs by December 31, This total FTE count remains stagnant at 3.10 FTEs for year two. HPH Pasco County, CON #10121 Staffing Patterns Year One and Year Two of Operation Year One FTE Staff Added By This Project New Total Number of FTE Staff FTE Staff Added By This Project Year Two New Total Number of FTE Staff PC Secretary Team Director (R.N.) RNs LPNs Nurses Aides -1.0 Social Worker Volunteer/Bereavement Manager Chaplain Grand Total Source: CON Application #10121, Schedule 6A for year one and two of operations. The applicant s Schedule 6A does not include existing staff, which it indicates it already has in place, and therefore the schedule is incomplete. Conclusion: Funding for this project should be available as needed. 22

23 TABLE 1 Hernando-Pasco Hospice, Inc (CON #10121) 9/30/2010 9/30/2009 Current Assets (CA) $27,146,000 $24,248,000 Cash and Current Investment $5,116,000 $7,370,000 Total Assets (TA) $48,240,000 $45,539,000 Current Liabilities (CL) $6,813,000 $7,545,000 Total Liabilities (TL) $19,504,000 $19,246,000 Net Assets (NA) $28,736,000 $26,293,000 Total Revenues (TR) $63,212,000 $65,024,000 Interest Expense (IE) $534,000 $539,000 Operating Income (OI) $1,998,000 $1,422,000 Cash Flow from Operations (CFO) $2,815,000 $2,160,000 Working Capital $20,333,000 $16,703,000 FINANCIAL RATIOS 9/30/2010 9/30/2009 Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (OI+IE/IE) Net Assets to Total Assets (NA/TA) 59.6% 57.7% Operating Margin (OI/TR) 3.2% 2.2% Return on Assets (OI/TA) 4.1% 3.1% Operating Cash Flow to Assets (CFO/TA) 5.8% 4.7% 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 100 percent of total patient days attributable to Medicare. The applicant indicated on Schedule 7 that the services it intends to provide are routine home care and general inpatient care for which the Department of Health and Human Services sets rates. It should be noted that in the narrative of the application (page 58) the applicant indicated that inpatient respite care would also be available; however, no days were projected for this service. The federal rates were calculated for Pasco County Wage Index for Medicare Hospice payments of and inflated through December The average price adjustment factor used was 2.9 percent per year based on the new CMS Market Basket Price Index as published in the 1 st Quarter 2011 Health Care Cost Review. 23

24 Estimated patient days for each level of service from 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. Based on our calculation, the applicant s projected gross revenue was percent, or $88,724, greater than the calculated gross revenue. Approximately 47.8 percent of the difference can be accounted for as physician services. Revenues appear to be overstated. Projecting operating losses in both years, the hospice house would not be viable on its own, but would have to rely on continued funding from the overall hospice program. Operating losses from this project are expected to be ($157,292) and ($168,494) in years one and two respectively. Given the apparent overstatement of revenue, the projected losses are likely to be higher. It should be noted that the applicant is projecting a larger loss if operations continue without the inpatient hospice beds. With the applicant generating $2.8 million from its overall operations in 2010, it should be able to fund the ongoing losses of the hospice inpatient beds through other profitable operations. HOSPICE REVENUE TABLE 2 Hernando-Pasco Hospice, Inc (CON #10121) Wage Index for Pasco County (0.9390) Wage Component Wage Index Adjusted Wage Amount Unadjusted Component Payment Rate Routine Home Care $ $94.60 $45.88 $ Continuous Home Care $ $ $ $ Inpatient Respite $ $77.09 $69.57 $ General Inpatient $ $ $ $ Payment Rate Inflation Factor Year Two Inflation Adjusted Amount Patient Days Year 2, Dec Calculated Gross Revenue Routine Home Care $ $ ,418 $212,405 Continuous Home Care $ $ $0 Inpatient Respite $ $ $0 General Inpatient $ $ $320,798 Total 1,898 $533,202 From Schedule 7 $621,926 Difference $88,724 Percentage difference 14.27% 24

25 Conclusion: The feasibility of this project is dependent of the profitable operation of the overall hospice. e. Will the proposed project foster competition to promote quality and cost-effectiveness? ss (1)(e) and (g), Florida Statutes Service Area 5A currently has three existing inpatient hospice care centers in Pasco County, two of which are owned by the applicant. 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 100 percent of its patient days from a single fixed price government payer source Medicare. With all the patient care being provided from a fixed price government payer, this project is not likely to have any discernable positive impact on price-based competition to promote cost-effectiveness. As providers offer new or enhanced services to patients and families as a means to compete on quality measures, cost-effectiveness 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. 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-3 or 59A-4, Florida Administrative Code The applicant proposes to establish a new seven-bed licensed in-patient hospice facility in Pasco County through conversion of an existing residential hospice facility. The narrative indicates that the building is fully sprinklered and will have an electrical generator. The patient rooms are located in two wings that are accessed through common living areas. All patient rooms are private rooms with private toilet rooms. It does not appear that any of the toilet rooms are accessible. To comply with current codes regarding the toilet rooms, these plans will need to be modified to meet accessibility requirements. 25