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 LifePath Hospice, Inc./CON #10191 c/o Chapters Health System, Inc Telecom Drive, Suite 300 West Temple Terrace, Florida Authorized Representative: H. Darrell White, Esq. Chief Legal Officer Chapters Health System, Inc. (813) Service District/Subdistrict Hospice Service Area 6A (Hillsborough County) B. PUBLIC HEARING A public hearing was not held or requested regarding this proposal to establish a freestanding eight-bed inpatient hospice facility in Hospice Service Area 6A (Hillsborough County, Florida). Letters of Support There were 19 unduplicated letters of support from Hillsborough County residents. These were signed and dated during May 21 through June 5, 2013 (CON application #10191, Volume I, Appendix 6). Recurring themes among these letters include: positive comments about the applicant s services; the applicant is accredited by the Joint Commission and the National Institute of Jewish Hospice;

2 census at the applicant s current inpatient hospice facility (in Ruskin) is nearing or exceeding capacity (per 10 of the letters); and the next nearest inpatient hospice facility in the county (in Temple Terrace) is nearly 30 miles distant, placing a burden on patients and families that need the level of care available at an inpatient hospice facility. Letters were received from Sharon Roush, Chief Executive Officer, South Bay Hospital; Joseph C. Corcoran, DO, FACOG, Chief Medical Officer, Brandon Regional Hospital 1 ; Howard Tuch, MD, MS, Director of Palliative Medicine, Tampa General Hospital; Parenkumar Patel, MD; Sam Scolaro, DO, Valrico Medical Care; Scott D. Judd, MD, Family and Geriatric Medicine, Bay Area Primary Care Associates; Henry A. Odukomaiya, MD, PA; Zubair Faroooqui, MD; Amir Feghhi, MD; Pat Donnelly, Chief Nurse Executive, St. Joseph s Hospital, BayCare Health System; Valerie Sumner Morales, MSN, RNC, ARNP-BC, Geriatric Nurse Practitioner, Division of Geriatric and Palliative Medicine, Department of Internal Medicine, Morsani College of Medicine, University of South Florida; Ellen Buckley, BS, Associate Care Manager, Professional Guardian, Care Management Service Professionals, LLC; Genevieve Faulk, LCSW, MSW, CMC, C-ASWCM, CSA, President, Director of Geriatric Care Management Services & Certified Family Mediator, Aging Care Advocates, Inc.; Michelle Orlando, Administrator, Aston Gardens at The Courtyards (an affiliate of Discovery Management Group, LLC); Barbara Jones, Executive Director, Belvedere Commons of Sun City Center; Cathy Markle, Executive Director, Belvedere Commons of Tampa; Arthur Moseley, Owner/Director, Griswold Home Care-Tampa; Anne Markarian, Administrator, Sunrise Village; and Dee Brown, Administrator, Living with Friends ALF. 1 The Department of Health s license verification website at indicates Dr. Corcoran is a licensed osteopathic physician, not practicing in Florida and that he currently holds faculty appointment as a Clinical Assistant Professor-OBGYN at Nova Southeastern University in Fort Lauderdale, Florida. 2

3 The reviewer notes that Howard Tuch, MD, MS and Valerie Sumner Morales, MSN, RNC, ARNP-BC indicate delays in patient discharges from their respective hospitals because area hospice beds are full. C. PROJECT SUMMARY LifePath Hospice, Inc. (CON #10191), a Florida not-for-profit corporation, proposes to develop an eight-bed freestanding inpatient hospice facility in Hospice Service Area 6C. This facility Plaza Hospice House is to be located at 908 American Eagle Boulevard, Sun City Center, Florida 33753, on the campus of Freedom Plaza Sun City Center 2. The proposed facility, currently leased by the applicant, was formerly licensed as a freestanding inpatient hospice facility. The applicant has a total of 48 inpatient beds at two facilities - Melech Hospice House (24 beds in Temple Terrace) and Sun City Center Hospice House (24 beds in Ruskin). LifePath Hospice, Inc. states that the project will improve access 3 and availability of inpatient hospice care for Hillsborough County residents and provide additional capacity to meet the future inpatient hospice need. Total project cost is $136,092. Project cost includes building, equipment and development costs. The project involves 6,296 gross square feet (GSF) of renovation (no new construction) and a construction cost of $44,229. However, the construction cost may be underestimated which could impact the CON fee. The applicant proposes to condition the project to be located at 908 American Eagle Boulevard, Sun City Center, Florida Per the website at Freedom Plaza Sun City Center is a continuing care retirement community (CCRC) in Sun City Center, Florida and is an affiliate of Brooksdale Senior Living Solutions-All The Places Life Can Go. 3 The applicant states (and the reviewer confirms, through Google Maps at the driving distance is less than one mile (three minutes driving time) between the applicant s proposed site and its nearest inpatient hospice facility, Sun City Center Hospice House, located at 3723 Upper Creek Drive, Ruskin, Florida

4 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. As part of the fact-finding, consultant Steve Love, analyzed the application in its entirety with consultation from financial analyst Eric West, 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. 4

5 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. LifePath Hospice, Inc. is the sole provider of hospice services in Hospice Service Area 6A (Hillsborough County). There are 48 licensed inpatient hospice beds in the hospice service area, 24 beds at Melech Hospice House in Temple Terrace, northern Hillsborough County and 24 beds at Sun City Center Hospice House in Ruskin, southern Hillsborough County. There are no CON approved inpatient hospice facilities or beds pending licensure in Hospice Service Area 6A. Below is a map which shows the applicant s proposed and existing inpatient hospice facilities in Hospice Service Area 6A. 5

6 Hospice Service Area 6A LifePath Hospice, Inc. s Licensed & Proposed (CON application #10191) Inpatient Hospice Facilities Source: Microsoft MapPoint

7 The reviewer confirms that, as indicated in support letters, the driving distance between the applicant s current two inpatient hospice facilities is nearly 30 miles with Google Maps at indicating the exact distance is 28.9 miles (29 minutes driving time). As previously noted, the proposed project site is less than one mile from LifePath Hospice, Inc. s Sun City Center Hospice House, its 24-bed inpatient hospice facility located in Ruskin, Florida. Per the applicant, its two existing inpatient hospice facilities are occupied at high levels and cannot absorb further growth in the demand for inpatient and residential hospice care for the residents of the county. LifePath Hospice, Inc. indicates that while the project will not meet all of the projected increase in need for inpatient hospice beds in Hillsborough County, the proposed building can be re-occupied within a short time and for a modest capital expenditure. The applicant states that the existing facility is owned by its parent (Chapters Health System, Inc.) and is leased to LifePath Hospice, Inc. CON application #10191, Appendix 5 includes a 12-page, signed lease agreement, which indicates the permitted use is for the operation of a licensed hospice (a hospice residential unit and/or an inpatient hospice facility). Below is LifePath Hospice, Inc. s table to account for inpatient hospice bed utilization from 2008 through the first four months of Utilization at the Existing Hospice Facilities in Hillsborough County Inpatient Hospice Utilization Months Beds Melech Average Daily Census Hospice House Annual Occupancy 94% 89% 86% 89% 93% 99% Annual Availability 57% 68% 69% 67% 62% 39% Beds Sun City Center Average Daily Census Hospice House Annual Occupancy 79% 54% 57% 75% 82% 101% Annual Availability 87% 99% 98% 86% 74% 23% Beds All Average Daily Census Facilities Annual Occupancy 74% 72% 72% 82% 88% 100% Annual Availability 100% 99% 98% 89% 79% 33% Source: CON application #10191, page 12. The applicant states and the table above indicates the following: 7

8 Overall bed occupancy increased from 72 percent to 88 percent (2010 to 2012) and for the first four months of 2013, bed occupancy was 100 percent; and There were approximately eight unoccupied beds on any given day during CY 2011, six beds unoccupied in 2012 and all beds were at 100 percent occupancy during the first four months of LifePath Hospice, Inc. states that while it delivers inpatient hospice care through scatter-bed contract 4 with providers in Hillsborough County, this arrangement is not cost-effective in comparison to the proposed project. The applicant indicates that it plans to reduce the use of scatter-beds in the future to no more than 30 percent of the total inpatient hospice utilization. LifePath Hospice, Inc. anticipates a need for an additional hospice beds by The project is designed to help address the anticipated bed deficit. LifePath Hospice, Inc. projects an average daily census of 1,518 patients for 2015 (the project s second year of operation), which equates to an average hospice facility census of 51 patients, or a need for 60 beds at 85 percent occupancy. The applicant indicates it will continue to make use of community beds in hospitals and nursing homes as appropriate and necessary for patient care. LifePath Hospice, Inc. reports that in 2012, 3.0 percent of its hospice patient days were provided at its two existing inpatient facilities and that this percent will rise to about 3.6 percent by LifePath Hospice, Inc. reports increased Hillsborough County hospice admissions from 3,103 in 2000 to 6,262 in 2012, and an increased penetration rate from in 2000 to in The applicant notes that hospice admissions doubled while resident deaths increased by only nine percent. Below, the reviewer provides the applicant s 2000, 2006 (midpoint) and 2012 admissions, resident death count and reported penetration rates. Hospice Penetration Rates for Hospice Service Area 6A Calendar Year Admissions Resident Deaths Penetration Rate ,103 8, ,517 9, ,262 9, Source: CON application #10191, page CON application #10191, Volume II, Appendix 10 includes a 13-page sample agreement for inpatient/outpatient services (applicable to hospitals) and an 18-page sample agreement for nursing facility, respite care and inpatient services (applicable to skilled nursing facilities). 8

9 LifePath Hospice, Inc. expects to provide general inpatient care, inpatient respite care and routine home care at the new facility. LifePath Hospice, Inc. reports 20 hospitals in Hospice Service Area 6A with which it has contracts for inpatient care. The reviewer notes that three hospitals (Hillsborough County Hospital, Vencor Hospital Central Tampa and West Shore Hospital) on the list are closed. LifePath Hospice, Inc. also reports 49 nursing homes in Hospice Service Area 6A with which it has contracts for inpatient care. The reviewer notes 19 facilities on the list are not licensed nursing homes. Per the applicant, contracts with nursing homes will not be weakened or otherwise affected by the development of the proposed project. LifePath Hospice, Inc. 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. LifePath Hospice, Inc. indicates it is considering the development of dedicated beds in a hospital or a nursing home so that it can staff these beds with its own specially trained nurses, aides, social workers and physicians. However, the applicant states such explorations have not yet yielded an adequate, reliable and cost-effective supply of beds for hospice inpatients. LifePath Hospice, Inc. indicates that by December 2016, the second year of operation 5, the proposed Plaza Hospice House will realize a savings of about $138 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 the Year Ending December 31, 2015 Second Year of Operation Cost Elements Proposed Plaza Hospice House Hospital Scatter Beds Cost of Operations $ Contracting Expenses $0.00 $ Salaries (*) $61.03 Benefits (*) $15.26 Total Costs $ $ Source: CON application #10191, page 40. Note: (*) included in cost of operations from Schedule 8A. 5 The reviewer notes that per CON application #10191, both Schedules 6 and 7A indicate a year one ending date of December 31, 2014 and a year two ending date of December 31,

10 The applicant estimates a total projected year one annual financial benefit or cost savings of $331,708, based on 2,342 patient days. For year two, the applicant projects a cost savings of $553,309, based on 2,628 patient days (CON application #10191, page 41). LifePath Hospice, Inc. indicates that as a not-for-profit entity, the 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 LifePath Hospice, Inc. does not specifically address population demographics and dynamics in this section (see part E. 3. a. of this report for the applicant s population estimates). The applicant stated previously the project is designed to help accommodate high utilization at its two existing inpatient hospice facilities, particularly to relieve high demand at the Sun City Hospice House in Ruskin. Availability, utilization and quality of like services Availability and utilization services are previously discussed above. Medical treatment trends LifePath Hospice, Inc. does not specifically address this criterion. Market conditions LifePath Hospice, Inc. does not specifically address this criterion. As previously stated, the applicant is the sole hospice provider in Hospice Service Area 6A. 10

11 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, LifePath Hospice, Inc. contends there are seven 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 LifePath Hospice, Inc. in contract facilities are scattered so that consistent staffing by specially trained staff is not possible; Pharmaceutical support from hospice-trained pharmacists 6 is not available in the nursing home setting; and Patient care coordination and continuity of care will be enhanced in the Plaza Hospice House setting because the control of medical records will remain with LifePath Hospice. 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 6 CON application #10191, Schedule 6 does not show FTEs for pharmacy staff. However, the application s Volume III, Appendix 14 includes Chapters Health System, Inc. s Practice Guideline Medication Admission Orders/Verification and Fill Priority, which describes the applicant s pharmacy practices including the role of the pharmacy director and consultant pharmacists. 11

12 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. LifePath Hospice, Inc. previously named area hospitals and nursing homes with which the applicant holds existing contractual arrangements for inpatient care. As previously stated, several hospitals were closed and 19 facilities listed as nursing homes were not licensed as such. (3) Anticipated sources of funds for the construction. LifePath Hospice, Inc. indicates that the project will be funded by cash-on-hand. 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, LifePath Hospice, Inc. 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. 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 6A LifePath Hospice, Inc. (the applicant). The map in part E.,1., a. (see page 6 of this report) shows the applicant s two existing 24-bed inpatient hospice facilities in Hospice Service Area 6A and the proposed project. LifePath Hospice, Inc. provides a bed need projection table to show an estimated Hillsborough County inpatient hospice bed need of 60 beds or 12

13 an incremental increase of 12 beds, at 85 percent occupancy by 2015 (the project s year two of operation). The project is to accommodate eight of the stated need for 12 additional beds. See the table below. Hospice Facility Bed Need Projection for Hillsborough County Hospice Service Area 6A Year Pop. Death Rate Deaths Penetration Admissions ALOS ADC % in Facilities Facility Census Bed 85% Bed Supply Bed Need ,196, , , , % ,214, , , , % (7) ,232, , , , % (7) ,241, , , , % (2) ,257, , , , % ,280, , , , % ,305, , , , % ,331, , , , % ,355, , , , % ,378, , , , % ,401, , , , % Source: CON application #10191, page 47. Note: ALOS is average length of stay and ADC is average daily census. 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; the applicant s death rate per 1,000 population estimate of 7.38 remains constant from 2013 through 2018; the deaths data was stated to have been drawn from the Florida Office of Vital Statistics for 2005 through Projected deaths are the product of the February 2012 publication s projected populations and the 2013 death rate. The applicant s 2015 death estimate is 9,826, compared to the Agency s July 2014 planning horizon estimate of 9,724. The Agency s projections are based on the September 2010 publication s population projections and deaths; the admission count data of 6,262 for 2012 is consistent with the Agency s Florida Need Projections for Hospice Programs publication, issued March 29, Letters of support (see part B) in some instances indicated delays in needed inpatient hospice admissions due to lack of capacity at the applicant s existing facilities, particular the Sun City Center Hospice House. 13

14 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. LifePath Hospice, Inc. provides its current hospice licensure certificate from the Agency, home care accreditation letter from The Joint Commission and Chapters Health System, Inc. s National Institute for Jewish Hospice certificate in the application s Volume 1, Appendix 2. The reviewer notes that per their website 7, the parent is accredited by the Association of Clinical Pastoral Education, Inc. (ACPE), LifePath Hospice, Inc. reports maintaining compliance with applicable hospice licensure rules, in Rule 58A-2, Florida Administrative Code. The applicant also reports that it complies with NHPCO standards. The reviewer notes the National Hospice and Palliative Care Organization website is CON application #10191, Volume III, Appendix 14 includes various policies and procedures and also practice guidelines of the parent that are stated to be applicable to both LifePath Hospice, Inc. (the applicant) and Good Shepherd, Inc. (a sister hospice licensed to operate in Hospice Service Area 6B-Hardee, Highlands and Polk Counties). Below is a list of some of the policies and procedures and also practice guidelines provided for Agency review: Admission; Clinical Assessment and Care Planning; Patient Temporary Leave; Medication Admission Orders; Short-Term Inpatient Care; Short-Term Management of Patient; Patient Room Decoration; Housekeeping; Meal Service Schedule; Food Handling and Infection Control; Pet Visitation; Medical Staff Privileges; Written Agreements-Inpatient Care; General Inpatient Level of Care in Nursing Facilities; 7 Source: LifePath Hospice, Inc. at 14

15 General Inpatient Hospice Benefit-Hospital; Diet Order Implementation; Controlled Substances; Patient/Family Smoking. LifePath Hospice, Inc. participated in voluntary reporting from April 2012 through June 2012, on the Florida Health Finder, Hospice Provider Family Satisfaction Survey, at LifePath Hospice, Inc. had between 178 and 225 survey respondents and received five-star ratings (90 to 100 percent satisfaction) in all five satisfaction measurement categories. The reviewer notes that for the same quarter (April 2012-June 2012), per the Agency s Florida Need Projections for Hospice Programs publication, issued March 29, 2013, LifePath Hospice, Inc. realized 1,577 admissions. Agency records indicate the applicant had five substantiated complaints during the three-year period ending June 24, A single complaint can encompass multiple complaint categories. The substantiated complaint categories were for quality of care/treatment (three complaints) and nursing services, residential/patient/client assessment and residential/patient/client rights (one complaint each). 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 $136,092 and incremental operating costs in year two of $1,375,749. The applicant, a Florida not-for-profit corporation, provided audited financial statements for the periods ending December 31, 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 1.9 indicates current assets are over 1.9 times greater than current obligations. This is slightly below average, an adequate position. The ratio of cash flow to current liabilities of.5 is below average and a weak position. Overall, the applicant has a moderately weak short-term position (see Table 1 below). 15

16 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 16.5 percent is above average and a good position. The most recent year had an operating gain of $4.8 million, which resulted in a 5.6 percent operating margin. Overall, the applicant has a good long-term position (see Table 1 below). Capital Requirements: Schedule 2 indicates total capital projects of $136,092 which consist of the CON subject to this review. The applicant only provided data pertaining to the project on Schedule 8. Because of this, the Agency does not know if the applicant will have an initial operating loss that requires additional funding. Available Capital: Funding for this project will be provided by the applicant. Based on our review, the applicant has available working capital of $6.2 million and cash flow from operations of $3.4 million. LifePath Hospice, Inc. has cash and cash equivalents of $1.6 million. The applicant appears to have sufficient capital to fund this project and the entire capital budget. Staffing: Schedule 6 indicates, by December 31, 2014 (year one) and by December 31, 2015 (year two) of the proposed project, the applicant forecasts a constant FTEs for this project. The breakdown is as follows: 0.55 FTEs, administrator; 0.38 FTEs, physician; 4.62 FTEs, registered nurses [RNs]; 2.31 FTEs, licensed practical nurses [LPNs]; 4.62 FTEs, nurses aides; 3.30 FTEs, dietary aides; 1.10 FTEs, social worker and 2.20 FTEs, housekeepers. The reviewer notes the arithmetic total of the reported FTEs is This leaves a 1.10 FTE discrepancy (for both year one and year two) between the arithmetic total of the reported FTEs and the FTE grand total shown in Schedule 6. It appears the social servicessocial worker 1.10 FTE was double-counted, which would explain the overage. The applicant does not discuss recruitment and retention. Conclusion: Funding for this project should be available as needed. 16

17 TABLE 1 LifePath Hospice, Inc. CON application # /31/2012 Current Assets (CA) $13,593,953 Cash and Current Investment $1,600,470 Total Assets (TA) $21,219,024 Current Liabilities (CL) $7,297,199 Total Liabilities (TL) $7,297,199 Net Assets (NA) $13,921,825 Total Revenues (TR) $86,516,343 Interest Expense (IE) $0 Operating Income (OI) $4,854,868 Cash Flow from Operations (CFO) $3,492,246 Working Capital $6,296,754 FINANCIAL RATIOS 12/31/2012 Current Ratio (CA/CL) 1.9 Cash Flow to Current Liabilities (CFO/CL) 0.5 Long-Term Debt to Net Assets (TL-CL/NA) 0.0 Times Interest Earned (OI+IE/IE) 0.0 Net Assets to Total Assets (NA/TA) 65.6% Operating Margin (OI/TR) 5.6% Return on Assets (OI/TA) 22.9% Operating Cash Flow to Assets (CFO/TA) 16.5% 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 75 percent, Medicaid at 13 percent, self-pay/charity at zero percent, and commercial insurance and other payers at 13 percent. The reviewer notes this totals 101 percent (probably due to rounding) for both years one and year two. The applicant indicated in the notes to Schedule 7 that the service it intends to provide is routine home care and general inpatient care, and for which the Department of Health and Human Services sets rates. The Federal rates were calculated for the Hillsborough County, Florida Wage Index for Medicare Hospice payments of and inflated through December The average price adjustment factor used was 2.49 percent per year based on the new CMS Market Basket Price Index as published in the 1 st Quarter 2013 Health Care Cost Review. 17

18 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 percent, or $312,027, less than the calculated gross revenue. Operating profits from this project are expected to increase from $195,377 for year one to $353,876 for year two. Conclusion: This project appears to be financially feasible. HOSPICE REVENUE TABLE 2 CON application #10191 LifePath Hospice, Inc. Wage Index for Hillsborough County (0.9319) Wage Component Wage Index Adjusted Wage Amount Unadjusted Component Payment Rate Routine Home Care $ $98.26 $48.01 $ Continuous Home Care $ $ $ $ Inpatient Respite $ $80.07 $72.80 $ General Inpatient $ $ $ $ Payment Rate Inflation Factor Year Two Inflation Adjusted Amount Patient Days Year 2, December 31, 2015 Calculated Gross Revenue Routine Home Care $ $ $20,594 Continuous Home Care $ $ $0 Inpatient Respite $ $ $0 General Inpatient $ $ ,497 $1,752,037 Total 2,628 $1,772,631 From Schedule 7 $1,460,604 Difference -$312,027 Percentage difference % 18

19 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 LifePath Hospice, Inc. s Hillsborough County licensed beds from 48 to 56. This project is not offering a new choice of provider in the service area, but rather additional beds. 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 13 percent of its patient days from managed care/commercial insurance payers with 87 percent of patient days expected to come from fixed price government payer sources (Medicare and Medicaid), and no self-pay/charity patient days. 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: The applicant is the sole hospice provider in service area 6A. 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 The architectural narrative identifies the construction of the building as Florida Building Code (FBC) Type III-A, National Fire Protection Association (NFPA) Type III (211), fully sprinklered. These listed construction types are adequate for occupancy type, but not for the size of the proposed facility. Clarification of the existing construction is needed to determine whether or not the building will comply with construction requirements without alterations. The narrative indicates that the building will have an electrical generator. 19

20 The patient rooms are organized off a central corridor. At one end of the corridor are public spaces, living and dining. At the other end more private staff-accessed spaces are located. All patient rooms are private rooms and exceed the minimum space requirements of the FBC. Each patient room shares a full bathroom with the adjacent room. Patient rooms and bathrooms appear to comply with the requirement of FBC Accessibility. Most of the support spaces have been provided; however other required spaces such as nurse station with hand washing station, stretcher and wheelchair storage will be needed to comply with requirement of the FBC. Washers and dryers for patients cannot be located in the soiled work room. The soiled work room must be equipped with a service sink. The plans do not show that the facility will be subdivided into smoke compartments. Some modifications will need to be made to comply with the requirements of the Life Safety Code including providing smoke barriers and opposite swing doors in the smoke barriers separating compartments. The plans must indicate that all hazardous areas such as the soiled utility room will be separated from other areas by one-hour fire resistant construction and corridor walls must be smoke resistive as required by the FBC and the Life Safety Code. The scope of proposed renovations is limited to very minor upgrades. The construction cost estimates appear to be reasonable for the scope of work. It does appear however, that more work may be required for the facility to comply with current codes. The information provided in the project completion forecast reflect a very limited scope of construction which as mentioned above is expected to expand to include additional alterations to bring the facility into code compliance. Clarification of the construction type is needed to make a determination of code compliance. Additional renovations will be required to bring the facility into compliance with the applicable codes. 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. 20

21 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. LifePath Hospice, 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 both year one (ending December 31, 2014) and year two (ending December 31, 2015), the applicant estimates a patient day payer mix as follows: Medicaid 13 percent; Medicare 75 percent and commercial insurance 13 percent. The reviewer notes this totals 101 percent (probably due to rounding) for both years. F. SUMMARY LifePath Hospice, Inc. (CON #10191) proposes to develop an eight-bed freestanding inpatient hospice facility in Hospice Service Area 6A. The proposed facility, currently leased by the applicant, is an existing building formerly licensed as a freestanding inpatient hospice facility. LifePath Hospice, Inc. indicates that the facility that can be re-occupied within a short time and for a modest capital expenditure. Total project cost is $136,092. The project involves 6,296 GSF of renovation (no new construction) and construction cost of $44,229. The applicant proposes to condition the project to be located at 908 American Eagle Boulevard, Sun City Center, Florida

22 Need/Access: The Agency does not publish need for inpatient hospice beds. There are no CON approved freestanding hospice facilities or beds pending in Hospice Service Area 6A. The applicant states that: Overall bed occupancy in the hospice service area increased from 72 percent to 88 percent (2010 to 2012) and for the first four months of 2013, bed occupancy was 100 percent. There are delays in needed inpatient hospice admissions (some letters support this statement) due to lack of capacity at the applicant s existing facilities, particularly at the Sun City Center Hospice House. The project is more cost-effective than to increase the bed capacity at its two existing facilities (reported to be at their maximum architectural capacity) or to increase the use of hospital scatter beds. The project would result in an estimated year two cost savings of $138 per day (as opposed to scatter beds) and total year two cost savings of $553,309, which would be used to increase the availability, accessibility and quality of hospice care in the service area. In its own facility, the applicant can control the medical and psychosocial support environment, provide hospice focused care and improve patient care coordination and continuity of 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 non-hospice staff in settings that are structured for a different type of care. Beds available to LifePath Hospice, Inc. 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. 22

23 Quality of Care: The applicant demonstrated the ability to provide quality care. LifePath Hospice, Inc. voluntarily participated in the April 2012 through June 2012 Agency Hospice Provider Family Satisfaction Survey, in which 178 to 225 respondents assessed the applicant at a five-star rating for each of five categories. Agency records indicate LifePath Hospice, Inc. had five substantiated complaints during the three-year period ending June 24, Financial Feasibility/Availability of Funds: The applicant has an overall moderately weak short-term position and an overall good long-term position. Funding for the project should be available as needed. The project appears to be financially feasible. 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. Schedule 7A estimates that Medicaid will comprise 13 percent of total patient days in year one and year two of the proposed project. Architectural: The architectural narrative identifies the construction of the building as FBC Type III-A, NFPA Type III (211), fully sprinklered. These construction types are adequate for occupancy type, but not for the size of the proposed facility. Some modifications will need to be made to comply with the requirements of the Life Safety Code. 23

24 Construction costs appear to be reasonable as presented; however, other work may be necessary to comply with FBC and Life Safety Code requirements. Project completion forecast estimates are limited and may not fully account for expansion to include additional alterations to bring the facility into code compliance. Modifications needed to meet licensure standards could impact the CON fee. G. RECOMMENDATION Deny CON #

25 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 25