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 The Joseph L. Morse Geriatric Center, Inc./CON # Fred Gladstone Drive West Palm Beach, Florida Authorized Representative: Keith A. Myers President and Chief Executive Officer MorseLife, Inc. (561) Service District/Subdistrict District 9/Subdistrict 9-4 (Palm Beach County) B. PUBLIC HEARING No public hearing was held or requested on the proposed project to add 30 community nursing home beds to The Joseph L. Morse Geriatric Center, Inc. (Morse Geriatric) through the delicensure of 30 community nursing home beds at Willowbrooke Court at St. Andrews. Gerald Grant, Executive Vice President and Chief Financial Officer, ACTS Retirement-Life Communities, Inc., provided a letter which states he supports the project and that ACTS Retirement-Life Communities, Inc. d/b/a Willowbrooke Court at St. Andrews Estates ( ACTS ), hereby agrees to voluntarily delicense 30 of its licensed designated community nursing home beds should the CON be approved. The Willowbrooke Court at St. Andrews has 79 licensed community nursing home beds and 40 sheltered beds (119 beds in all). Mr. Grant also states that ACTS hereby further agrees that it will submit a licensure application amendment to reduce the number of licensed designated community

2 nursing home beds at Willowbrooke Court at St. Andrews Estates by a total of 30 beds, and such application amendment will be submitted either before or concurrently... with Joseph L. Morse Geriatric Center, Inc. s application to add 30 licensed community nursing home beds to its license. Letters of Support The applicant submitted six support letters; all were signed and dated between May 8 and May 15, Below is a brief summary of the support letters. David Carbone, Chief Executive Officer, St. Mary s Medical Center, stated that Morse Geriatric has a superior reputation in clinical quality and excellence, is a Gold Seal facility, has a long standing relationship with his facility such that they collaborate on many community efforts to improve patient care and that the population of seniors in the area continues to grow at an unprecedented pace. Mr. Carbone stated that the project will better serve his facility s and the applicant s collective patients. Craig Bloom, Senior Director, Business Development, Tenet Health, made comments similar to Mr. Carbone. Mark Nosacka, Chief Executive Officer, Good Samaritan Medical Center, stated that physicians on staff at his facility are intimately familiar with the skill level and overall superior competency of the applicant. Mr. Nasacka provided an assurance that the applicant maintains extremely high standards for care and follow-up. Gerald O Connor, MD, stated that he has practiced in the area for over 30 years, having served as the chief of staff at St. Mary s (Medical Center) and maintains an active involvement with Good Samaritan Hospital. Dr. O Connor stated he has referred many patients to the facility and Morse Geriatric is one of the outstanding providers of skilled nursing care for both long-term and short-term stay nursing home residents. Jaime Estremera-Fitzgerald, Chief Executive Officer, Area Agency on Aging, Palm Beach/Treasure Coast, Inc. stated that Morse Geriatric Center has an outstanding reputation not only as one of the most respected facilities in the community for its superlative services, but also as a community partner that is a vital player in the aging community network of providers. Ms. Estremera-Fitzgerald also stated the applicant has been exemplary in terms of community education and has allowed senior management staff to serve on advisory and board positions for her agency. 2

3 Ilan Hurvitz, Chief Strategic Officer, Jewish Federation of Palm Beach County, stated that Morse Geriatric is well respected and has as part of its mission to serve senior Jewish residents (though we are aware that the facility provides services to other religious denominations) and more than 20 percent of our county population is identified as Jewish. Mr. Hurvitz also stated the population of Jewish seniors in the area is approximately five times the national average and that the 75+ population of this subgroup is expanding. C. PROJECT SUMMARY The Joseph L. Morse Geriatric Center, Inc. (CON #10146) proposes to add 30 community nursing home beds at The Joseph L. Morse Geriatric Center, Inc. (Morse Geriatric) through the delicensure of 30 community nursing home beds from ACTS Retirement-Life Communities, Inc. d/b/a Willowbrooke Court at St. Andrews, Palm Beach County, Florida. The project is to commence on January 1, Willowbrooke Court at St. Andrews has 79 community and 40 sheltered nursing home beds. If approved, Morse Geriatric would increase from 280 to 310 community nursing home beds and Willowbrooke Court at St. Andrews would decrease from 79 to 49, with a separate 40 sheltered beds at the latter facility. ACTS Retirement-Life Communities, Inc. d/b/a Willowbrooke Court at St. Andrews agrees to delicense 30 community nursing home beds at its facility to allow the applicant to implement the proposal. The project will result in no change in the number of community nursing beds in the district or subdistrict. The applicant indicates that ACTS Retirement is planning to improve accommodations at Willowbrooke that would result in the loss of these 30 beds. Therefore, the parties worked together and have agreed to relocate the beds from Willowbrooke to Morse Geriatric. The applicant is a Florida not-for-profit corporation, an affiliate of MorseLife, Inc. (MorseLife). MorseLife is a retirement community that provides independent living, assisted living and SNF care. Per the website ( MorseLife is a nationally recognized provider of health care, housing and support services for seniors and their families in Palm Beach County, Florida. MorseLife is a nonsectarian organization founded in 1983 that has built a reputation of caring for seniors with excellence, dignity and compassion (also see section B, Letters of Support). This project will result in 30 community nursing home beds in the Edwards Building, dedicated to memory care patients in various states of progressive health decline (the latter being the purpose of this application). There are also renovations to accommodate 54 assisted living units for memory care patients within 3

4 the Edwards Building. The applicant indicates that dedicating the entire (Edwards) building to memory support allows for a comprehensive center devoted to both current practice and new initiatives as part of Morse Geriatric s teaching nursing home program. The project involves 14,936 total gross square feet (GSF) of renovation, with no new construction. Total construction cost is $1,629,000. The total cost of the project is $2,802,000. Total project costs include: building; equipment; project development; financing and start-up. The applicant proposes to condition project approval to: The project will be located at 4847 Fred Gladstone Drive, West Palm Beach, Florida Edwards Building and will provide a Dedicated Edwards Building for those with cognitive impairments. The applicant is also willing to condition approval to the provision of 54.6 percent of the 310-bed facility s total annual patient days to Medicaid patients. Morse Geriatric is currently conditioned (CON #4194) to provide a minimum of percent of the 280-bed facility s total annual patient days to Medicaid patients. 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 meets the review criteria. 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. 4

5 As part of the fact-finding, the consultant, Steve Love, analyzed the application with consultation from Financial Analyst, Everett Butch Broussard, 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 criteria and application content requirements found in Florida Statutes, Sections , and ; applicable rules of the State of Florida, Chapter 59C-1 and 59C-2 and 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. Pursuant to Florida Statutes (1), the Florida Legislature extended a moratorium, until Medicaid managed care is implemented statewide pursuant to Sections , Florida Statutes, or October 1, 2016, whichever is earlier, on the issuance of any certificate of need (CON) for increases in the number of community nursing home beds around the state. Due to the moratorium, a fixed need pool was not published by the Agency. This project, if approved, will not change the bed count in the planning 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. 5

6 Population demographics and dynamics The applicant indicates that regarding population demographics and dynamics, Florida and Palm Beach County continue to grow, with Palm Beach County being the largest county in District 9. The reviewer confirms that, as of January 1, 2012, Palm Beach County had the largest total population, age 65+ population and age 75+ population in District 9. The applicant believes continued population growth will likely exert demand for health, social and leisure services for the elderly. Below is a table the applicant uses to explain net population growth, by age cohorts, from 2008 through 2014, by the state, district and Palm Beach County. Net Increase by Year in Population for Palm Beach County District 9 and the State July Mid-Point: Population Estimates, 02/2012 July Mid-Point: Population Estimates, 09/2010 Palm Beach County Total Pop 20,845 18,708 11,761 40, ,577 2, ,933 6,391 4,815 10, , ,683 1, , District 9 Total Pop 37,868 33,663 21,056 45,151 4,057-10,477 1, ,313 10,294 7,443 4,368 2, , ,408 2,974 1,585-12, ,715 State Total Pop 318, , , ,493 43,273-55,206 67, , ,039 83,616 18,840 36,665 22,165 49, ,462 34,777 26, ,535 11,063 64,252-22,892 Source: CON application #10146, page #1-8, Table 1-2. Utilizing data from the Agency s Population Estimates (published September 2010 and February 2012), the applicant calculates that between 2013 and 2014, the total Palm Beach County population is expected to grow by 20,845 and the age 65+ population is expected to grow by 6,933. Per the applicant, the age 65+ cohort accounts for a third of the county s population growth from The reviewer confirms the increase is approximately percent. The applicant further points out an aggregate Palm Beach County total population increase from of 91,399 residents, with 29,133 being in the age 65+ population. The reviewer confirms these aggregate totals. Per the applicant, these numbers represent sizable increases. Another dynamic the applicant considers as a function of demand is income affluence in Palm Beach County relative to District 9 and the state overall. Below is a table the applicant uses to show the 2008 median household income between Palm Beach County, District 9 and the state overall. In the table, the applicant depicts a relatively high median household income in Palm Beach County in

7 Median Household Income and Percent Change Florida and District 9, 2008 Percent Change from 2000 Median Household Area Income Florida $47, District 9 Counties Okeechobee $35, Palm Beach $52, Indian River $48, Martin $52, St. Lucie $44, Source: CON application #10146, page #1-10, Table 1-4 from the Florida Statistical Abstract 2010, Table The applicant emphasizes that, in 2008, Palm Beach County had the highest median household income ($52,807) in District 9, which was also higher than the state s average ($47,802). Palm Beach County s percent increase in median household income (25.7) was greater than any other county in the district and the state average (23.3). The reviewer verifies the applicant s Table 1-4 accurately represents the referenced source. The applicant considers this evidence of strong and continuous growth of the more affluent. Another dynamic the applicant considers as a function of demand is the relative size of nursing and residential care facilities as this relates to the number of units, employees and payrolls, among five leading counties in the state. See the table below. Rank of Top 5 Counties with Respect to Nursing and Residential Care Facilities Monthly Payroll Showing the Average Number of Monthly Private Reporting Units and Employees Covered by Unemployment Compensation Law, 2009 County Payroll ($1,000) Number Reporting Units Number of Employees Florida $390,340 3, ,064 Miami-Dade $40, ,229 Palm Beach $33, ,578 Pinellas $33, ,052 Hillsborough $21, ,470 Orange $21, ,284 Source: CON application #10146, page #1-10, Table 1-5 from the Florida Statistical Abstract 2010, Table The applicant emphasizes that in 2009, Palm Beach County ranked second, after Miami-Dade County, with respect to the average monthly payroll for nursing and residential care facilities, at $33,779,000. Per the applicant, Palm Beach County had the highest average monthly payroll per employee at $2,488, followed by Miami-Dade County at $2,377, with the state at $2,282. The reviewer confirms the accuracy of the stated average monthly payroll calculations, as described by the 7

8 applicant. Per the applicant, these figures show that Palm Beach County would attract a workforce in the nursing and residential care facilities, enhancing the overall appeal of the county for both type of work and salary. Another dynamic the applicant considers as a function of demand is the average monthly payroll for the top five counties in Florida with respect to hospitals. See the table below. Rank of Top 5 Counties with Respect to Hospitals Monthly Payroll Showing the Average Number of Monthly Private Reporting Units and Employees Covered by Unemployment Compensation Law, 2009 County Payroll ($1,000) Number Reporting Units Number of Employees Florida $994, ,577 Miami-Dade $184, ,589 Orange $86, ,804 Hillsborough $83, ,228 Duval $75, ,653 Palm Beach $67, ,276 Source: CON application #10146, page #1-11, Table 1-6 from the Florida Statistical Abstract 2010, Table The applicant emphasizes that in 2009, Palm Beach County ranked fifth among the state s 67 counties with respect to the monthly average size of the hospitals payrolls. However, Palm Beach County ranks second highest at $4,149 average monthly amount per employee. It follows Miami-Dade at $4,438 while the state amount is $3,952. The reviewer verifies the applicant s Table 1-6 accurately represents the Florida Statistical Abstract 2010, Table 20.11, not Table The applicant indicates that higher average salaries for hospital employees add another contributing factor to the overall higher wealth that exists in Palm Beach County. Availability, utilization and quality of like services Concerning availability, there are 53 licensed community nursing homes with a total of 6,098 community nursing home beds in District 9, Subdistrict 9-4 (Palm Beach County.) Subdistrict 9-4 averaged percent occupancy for the 12-month period ending December 31, The table below illustrates the utilization for Morse Geriatric and Willowbrooke Court at St. Andrews, the subdistrict and district in calendar year

9 Morse Geriatric and Willowbrooke Court at St. Andrews Subdistrict 9-4 (Palm Beach County) and District 9 Utilization January 2011-December 2011 Patient Total Medicaid Bed Days Days Occup. Days Medicaid Occup. Facility Morse Geriatric 102,200 97, % 58, % Willowbrooke Court at St. Andrews 28,835 12, % 6, % Subdistrict 9-4 2,211,706 1,849, % 1,091, % District 9 3,149,756 2,675, % 1,623, % Source: Agency for Health Care Administration Florida Nursing Home Utilization by District and Subdistrict January 2011 December 2011, issued March 31, The applicant seeks to transfer 30 licensed and active community SNF beds from Willowbrooke Court at St. Andrews to Morse Geriatric. Morse Geriatric averaged 95 percent and Willowbrooke Court at St. Andrews percent total occupancy during 2011 as shown above. The reviewer confirms that for calendar year 2011, Morse Geriatric was among the most occupied SNFs in the subdistrict, with effectively few available beds, while Willowbrooke Court at St. Andrews was among the least occupied. The applicant emphasizes the importance of every available bed remaining licensed to meet continued demand and that this project will contribute to satisfying that need. Project approval would enhance availability at one of the more occupied facilities in the subdistrict. Concerning utilization, the applicant points out that all licensed beds may not necessarily be in service, due to various considerations semiprivate vs. private accommodations, especially in light of gender, disease status, bed repair or other reasons. The applicant indicates that for the five-year period ending December 31, 2011, the subdistrict realized a lowest total occupancy rate of approximately 83.1 percent (2008) and a highest total occupancy rate of approximately 84.8 percent (2010). For the same five year period, the applicant indicates Morse Geriatric realized a lowest total occupancy rate of approximately 95.0 percent (2011) and a highest total occupancy rate of approximately 96.6 percent (2007 and 2008). The reviewer confirms these total occupancy percentage approximations based on Agency records. Concerning quality of like services, the applicant addresses similarities with sustaining quality in skilled nursing care, between Morse Geriatric and Willowbrooke Court at St. Andrews. Per the Agency s Nursing Home Guide last updated in May 2012, both facilities received an overall inspection rating of five of a possible five stars. The Joseph L. Morse Geriatric Center is a Gold Seal designated facility. 9

10 Medical treatment trends The applicant contends that Florida s expansion of care in assisted living facilities, specifically extended congregate care, has played a major role in reducing nursing home admissions and notes that the state s overall nursing home occupancy has averaged around 88 percent for the last seven years. Managed care, Medicaid waiver programs and the ALF growth channel persons to alternative care. Therefore, nursing home admissions are for short-stay subacute care or rehabilitation, or are permanent placements of very aged, frail and chronically ill individuals requiring supportive and sustained care. Morse Geriatric indicates that because of increased patient fragility and chronic conditions and need for higher intensity services like wound care, tube feeding, ventilator dependency/weaning from ventilators and post-surgical recovery, nursing homes have increased staff skill levels and have improved technology with concomitant increases in costs. The applicant s project is stated to address increased demand for patients with memory impairment, often in varying states of progressively declining health. Market conditions The applicant discusses continuing and growing constraints on reimbursement options in the skilled nursing care setting. Morse Geriatric indicates that as patients are transitioned into their highest degree of achievable independence and functionality, costs from therapyintensive to maintenance care will tend to go down. The applicant further indicates this transition to a maximum level of independence (from higher intensity therapy modalities to maintenance therapy) typically occurs over a six-month period. Costs are stated to be greater in this first six-month period, when higher acuity therapy regimens would be applied. The intended outcome is for the patient to reach a highest attainable quality of life with greatest independent functionality. 2. Agency Rule Preferences Does the project respond to preferences stated in Agency rules? Please indicate how each applicable preference for the type of service proposed is met. Chapter 59C-1.036, Florida Administrative Code. Chapter 59C of the Florida Administrative Code does not contain preferences relative to community nursing home beds nor does the Agency for Health Care Administration publish specific preferences for 10

11 these facilities. However, the rule does contain standards the Agency utilizes in assessing the applicant s ability to provide quality care to the residents. a. Geographically Underserved Areas. In a competetitive certificate of need review within the nursing home subdistrict as defined in 59C-2.200, Florida Administrative Code, the Agency shall award a certificate of need if the applicant meets all applicable criteria for a geographically undeserved area as specified in subsection (15), Florida Statutes (Florida Statutes), and if the applicant meets the applicable statutory certificate of need review criteria specified in section , Florida Statutes, including bed need according to the relevant bed need formula contained in this rule. If the applicant is awarded a certificate of need based on the provisions of this paragraph, the applicant shall agree that the nursing facility will be located in a county without a nursing facility, or in the center of an area within the subdistrict of a radius of at least 20 miles which meets the definition of a geographically undeserved area. The center of the geographically undeserved area shall be the proposed nursing home location in the application. The application is not submitted in order to remedy a geographically underserved area. b. Proposed Services. Applicants proposing the establishment of Medicare-certified nursing facility beds to be licensed under Chapter 400, Florida Statutes, shall provide a detailed description of the services to be provided, staffing pattern, patient characteristics, expected average length of stay, ancillary services, patient assessment tools, admission policies, and discharged policies. Morse Geriatric participates in the Medicare and Medicaid Programs, with its current 280 SNF beds dually certified. Upon project completion, it is planned that the 30 new SNF beds will be dually Medicare/Medicaid certified. The applicant expects that most patients served by the project s 30-bed community nursing home beds will be permanent (long-term) placements due to memory impairment and related progressive health decline. The applicant lists 22 major services to be offered through the project; however, the applicant states the listed services are not exhaustive and that services each person requires will be provided. 11

12 Some of the listed services are: Restorative Nursing Program Wound Care Program IV Therapy Psychological Services Registered Dietician Services Rehabilitation Services Activities of daily living/personal care Memory enhancement/coping skills Resident and Family Councils Caregiver Support and Coping/Skills Training Religious services/options Pet Therapy Secure outdoor areas. Per the applicant, residents in the 30-bed SNF unit will share some activities and functions with the ALF patients. Appropriate integration is to promote an atmosphere of attachment and belonging, considered to be especially meaningful to the memory impaired. Morse Geriatric states that to avoid confusion and disruption, care teams will work with the same residents to promote continuity of care. Morse Geriatric Center indicates that it presently has FTEs and will add FTEs in year one (ending December 31, 2015) and FTEs in year two (ending December 31, 2016). New FTEs in year one include: 0.17 admissions staff, 2.74 licensed practical nurses (LPNs), 6.50 nurses aides, 0.24 other nursing, 1.08 dietary aides, 0.45 activities assistant, 0.63 housekeepers and 0.17 laundry aides. Morse Geriatric s years one and two staffing pattern is in the table below. 12

13 The Joseph L. Morse Geriatric Center, Inc., - CON #10146 Staffing Patterns Year One and Year Two of Operation Year One FTEs Year One Ending 12/31/2015 Year Two FTEs Year Two Ending 12/31/2016 Administration Administrator Director of Nursing Admissions * Finance Secretary Medical Records Clerk Other: IT/PR/Mrt/HR TOTAL PHYSICIANS Unit/Program Director Other: Nurse Practitioner TOTAL NURSING RN s LPN s Nurses Aides Other TOTAL ANCILLARY Physical Therapist and PTA Speech Therapist Occupational Therapist and OTA Other TOTAL ** DIETARY Dietary Supervisor Cooks Dietary Aides TOTAL SOCIAL SERVICES Social Services Director Activity Director Activities Assistant Other: Social Work/Chaplain TOTAL HOUSEKEEPING Housekeeping Supervision Housekeepers TOTAL LAUNDRY Laundry Supervisor Laundry Aides TOTAL * PLANT MAINTENANCE Maintenance Supervisor Maintenance Assistance Security TOTAL 16.90* GRAND TOTAL * *** Source: CON application #10146, Schedule 6A. Note: * These differences appear to be based on rounding. ** The total for both years is FTEs. *** Year two total FTEs are as the applicant s Total Ancillary FTEs equal not

14 The reported year two incremental FTEs include: 0.18 admissions, 2.96 LPNs, 7.00 nurses aides, 0.26 other nursing, 1.16 dietary aides, 0.49 activities assistant, 0.67 housekeepers and 0.18 laundry aides. Chapter , Florida Statutes, currently requires a minimum licensed nursing staffing of 1.0 hours of direct care for each resident per day and a minimum certified nursing assistant staffing of 2.5 hours of direct care for each resident per day. Additionally, s (3)(a)1. a., Florida Statutes, states that there must be a minimum weekly average of certified nursing assistant and licensed nurse staffing of 3.6 combined hours of direct care per resident per day. The calculations below are based on the applicant s proposed staffing from Schedule 6A and projected occupancy from Schedule 5 of the application. Morse Geriatric (CON application #10146) Minimum Staffing Requirements FTE Nurses/Aides Minimum Requirement 1 st Year nd Year 2016 Nurses 1.0 hours of direct care per resident Aides 2.5 hours of direct care per resident Source: CON application #10146, Schedules 5 & 6. As shown in the above table, the applicant s projected staffing exceeds the minimum requirements outlined in Section (3)(a)1., Florida Statutes for nurses and for nurses aides. The proposed bed addition is to be housed in what the applicant refers to as the Memory Support Specialty Center. Morse Geriatric states that the types of residents expected will generally be those with some of the characteristics listed below: Frail, likely of advanced age and with documented cognitive deficit Stroke, or other neurological incident (such as head trauma from a fall) Parkinson s, Dysphasia or related illness Demonstrated behavioral challenges and Other related cognitive and possibly co-morbid conditions 14

15 The applicant expects residents of the Memory Support Specialty Center to have an average length of stay of two years. If ancillary services are documented in a resident s plan of care, a wide range of such services are to be available and ready within or through the larger MorseLife campus. The applicant indicates that required Minimum Data Sets (MDS) forms and requirements are strictly followed and assessments are made timely at various stages of a resident s stay, the first being completed within seven days of admission. An 11 member interdisciplinary team is to include: Attending physician Director of Nursing Charge Nurse and Registered Nurse (assigned to each patient) with nursing assistants Dietary Manger Registered Dietician Services Social Services Manager Activities Director Therapists (as appropriate) Consultants (as appropriate) Others as appropriate or necessary to meet residents needs Tracking sheets and event logs are to be part of the patient record to document relevant occurrences. The applicant indicates that admission policies are based on clinical requirements and Morse Geriatric s ability to timely and appropriately accommodate need. Morse Geriatric facility accepts all payers, including Medicare, Medicaid and managed care plans. The MorseLife Foundation is stated to be available to possibly supplement the cost of care, for those unable to afford the entire cost of care. Morse Geriatric indicates that it has a range of discharge options through MorseLife, that provide relevant/necessary follow-up. However, the applicant expects this 30-bed SNF project to house permanent residents. Discharges are expected to be rare. 15

16 c. Quality of Care. In assessing the applicant s ability to provide quality of care pursuant to s (1), Florida Statutes, the Agency shall evaluate the following facts and circumstances: 1. Whether the applicant has had a Chapter 400, Florida Statutes, nursing facility license denied, revoked, or suspended within the 36 months prior to the application. The applicant has not had a nursing home license denied, revoked, or suspended. 2. Whether the applicant has had a nursing facility placed into receivership at any time during the period of ownership, management, or leasing of a nursing facility in the 36 months prior to the current application. The applicant has not had a nursing home placed into receivership at any time. 3. The extent to which the conditions identified within subparagraphs 1 and 2 threatened or resulted in direct, significant harm to the health, safety, or welfare of the nursing facility residents. This provision is not applicable. 4. The extent to which the conditions identified within subparagraph 3 were corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory to the agency. This provision is not applicable. (4) (f) Harmful Conditions. The Agency shall question the ability of the applicant to provide quality of care within any nursing facility when the conditions identified in subparagraph (e) 1 and (e) 2 result in the direct, significant harm to the health, safety, or welfare of a nursing facility resident, and were not corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory with the Agency. Since there have been no violations, this provision is not applicable. Refer to quality of care discussion below in section E.3.b. of this report. 16

17 (5) Utilization Reports. Within 45 days after the end of each calendar quarter, facilities with nursing facility beds licensed under Chapter 400, Florida Statutes shall report to the Agency, or its designee, the total number of patient days, which occurred in each month of the quarter, and the number of such days that were Medicaid patient days. The applicant states it will continue to provide the required data to the Treasure Coast Health Council, Inc. and to the Agency. 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)(b) and (e), Florida Statutes. As stated previously, there are 53 community nursing homes in District 9, Subdistrict 9-4 (Palm Beach County) with a total of 6,098 licensed community nursing home beds. Subdistrict 9-4 averaged percent occupancy for the 12-month period ending December 31, District 9 averaged percent occupancy overall in CY 2011 and the statewide average was percent. Morse Geriatric notes that the subdistrict has fewer beds per 1,000 elderly persons age 65+ than does the state, respectively, at 20 versus 22. The applicant stresses that the project will reallocate existing beds so that they are not lost and that this strategy is the best plan to keep the beds in service. Also as previously stated, with Morse Geriatric s consistently high occupancy rates over the past several years, the applicant effectively has few beds available in the current scenario. Regarding geographic access, the map below shows the location of both Morse Geriatric and Willowbrooke Court at St. Andrews. The facilities are approximately 31 miles apart. 17

18 CON #10146 Joseph L. Morse Geriatric & Willowbrooke Court at St. Andrews Source: MapPoint Microsoft 18

19 Regarding extent of utilization of existing health care facilities and health services in the applicant's service area, this topic was previously addressed. To summarize, the project would likely enhance utilization of relatively poorly occupied beds in the subdistrict. The applicant chose to respond to additional criteria - the Health Care Access Criteria, as stated in Chapter 59C-1.030(2) Florida Administrative Code. However, based on the project s location and use of existing licensed beds, this material will not be addressed in this report. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? Is the applicant a Gold Seal Program nursing facility that is proposing to add beds to an existing nursing home? ss (1)(c) and (j), Florida Statutes. The applicant currently holds five of a possible five star rating through Agency quality inspection records, last updated in May The Joseph L. Morse Geriatric Center is a Gold Seal designated facility. The applicant is an affiliate of MorseLife. MorseLife is a nationally recognized provider of health care, housing and support services for seniors and their families in Palm Beach County, Florida. The website further states MorseLife is a non-profit, non-sectarian organization founded in 1983 that has built a reputation of caring for seniors with excellence, dignity and compassion (also see section B, Letters of Support). Morse Geriatric is the SNF unit on the larger MorseLife campus. On October 22, 2010, the applicant was notified by the Agency s Long Term Care Unit that Joseph L. Morse Geriatric Center met statutory requirements as outlined in Section , Florida Statutes, and was designated a Teaching Nursing Home. The designation means the applicant has provided credentials demonstrating a commitment to the advancement of geriatric care through education, training and research. The 30-bed community nursing home addition is in conjunction with a 54-bed assisted living unit, in the applicant s Edwards Building. The applicant states intent to provide services to enhance quality of life for residents. 19

20 The applicant reports quality improvement objectives which: Assess resident care practices Review and analyze facility quality indicators Document, review and analyze facility incident reports and Record, and address facility deficiencies and resident grievances and develop appropriate responses to any perceived or real needs. The applicant provides a Residents Bill of Rights Policy (revised 04/12) which includes a five-page, 36-item Statement of Resident Rights and a two-page Morse Geriatric Center Discharge Instructions Form. In addition, a 2012 education programs calendar is included, along with course descriptions stating on-line convenience. Agency records indicate no substantiated deficiency complaints at The Joseph L. Morse Geriatric Center for the three-year period ending June 14, The applicant demonstrated the ability to provide quality care. 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 $2,802,000 and year two operating costs of $1,499,000. The applicant is a member of a larger Obligated Group for which it provided audited financial statements for the periods ending May 31, 2010 and The financial statements were analyzed for both the Obligated Group and the applicant for the purpose of evaluating the applicant s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: Obligated Group The applicant s current ratio of 4.2 is well above average and indicates current assets are just over four times current liabilities, a strong position. The ratio of cash flows to current liabilities of 1.0 is well above average, a strong position. The working capital (current assets less current liabilities) of $21,546,821 is a measure of excess liquidity that could be used to fund capital projects. Overall, the Obligated Group has a strong short-term position. (See Table 1 below). 20

21 Applicant The applicant s current ratio of 5.3 is well above average and indicates current assets are just over five times current liabilities, a strong position. The working capital (current assets less current liabilities) of $18,847,531 is a measure of excess liquidity that could be used to fund capital projects. (Cash flow ratios could not be calculated as no cash flow statement was provided as part of the consolidating schedules of the Obligated Group audit report.) Overall, the applicant has a strong short-term position. (See Table 1 below). Long-Term Position: Obligated Group The ratio of long-term debt to net assets of 2.9 is well above average and may limit the applicant s ability to acquire future debt if necessary. The ratio of cash flow to assets of 8.8 percent is slightly below average, an adequate position. The most recent year had $3,519,758 of revenue in excess of expenses, which resulted in a total margin of 8.5 percent. Overall, the Obligated Group has a slightly weak long-term position. (See Table 1 below). Applicant The ratio of long-term debt to net assets of 0.5 is slightly below average and indicates the applicant has excess equity to obtain additional debt financing if needed. The most recent year had $3,169,144 of revenue in excess of expenses, which resulted in a total margin of 9.6 percent. Overall, the applicant has an adequate long-term position. (See Table 1 below). Capital Requirements: Schedule 2 listed capital projects totaling $44.3 million, which includes $2.8 million for the CON subject to this review. Available Capital: The applicant indicates that the project construction will be funded with available cash on hand ($2,802,000). The campus repositioning will be funded through a combination of cash on hand, funded depreciation, and proceeds from a tax-exempt bond issue. Staffing: Schedule 6A indicates, for December 31, 2015 (the first year of the proposed project), the applicant forecasts FTEs facility-wide and FTEs incrementally added, specific to the project. Per the same schedule, for December 31, 2016 (the second year of the proposed project), the applicant forecasts FTEs facility-wide and FTEs incrementally added over year one, specific to the project. Stated differently the project results in an incremental FTEs added to the facility s existing total FTEs in year one and an incremental 21

22 12.90 FTEs added to the facility s planned FTEs in year one to reach a total facility FTE of , by year two. See table in response to Item E.1.b. 2. Conclusion: Funding for this project should be available as needed. TABLE 1 CON application # The Joseph L. Morse Geriatric Center, Inc. The Morse Obligated Group Morse Obligated Morse Geriatric Group Center 5/31/2011 5/31/2011 Current Assets $28,378,061 $23,249,819 Cash and Current Investment $3,685,097 $2,972,866 Total Assets $75,820,442 $36,537,765 Current Liabilities $6,831,240 $4,402,288 Total Liabilities $58,001,002 $15,562,288 Net Assets $17,819,440 $20,975,477 Total Revenues $41,634,622 $33,023,627 Interest Expense $1,468,881 $52,998 Excess of Revenues Over Expenses $3,519,758 $3,169,144 Cash Flow from Operations $6,686,532 Not Available Working Capital $21,546,821 $18,847,531 FINANCIAL RATIOS 5/31/11 5/31/11 Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) 1.0 Not Available Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (NPO+Int/Int) Net Assets to Total Assets (TE/TA) 23.5% 57.4% Total Margin (ER/TR) 8.5% 9.6% Return on Assets (ER/TA) 4.6% 8.7% Operating Cash Flow to Assets (CFO/TA) 8.8% Not Available 22

23 d. What is the immediate and long-term financial feasibility of the proposal? ss (1)(f), Florida Statutes. A comparison of the applicant s estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions contained in Schedules 7 and 8), and efficiency, (the degree of economies achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired outcome. These relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may, either go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. Comparative data was derived from skilled nursing facilities that submitted Medicaid cost reports in fiscal year 2010 and We selected 20 skilled nursing facilities with Medicaid utilization similar to the level projected by the applicant. The average price adjustment factor used was 3.2 percent per year based on the new CMS Market Basket Price Index as published in the 1st Quarter 2012 Health Care Cost Review. Projected net revenue per patient day (NRPD) of $368 in year one is between the control group median and highest values of $335 and $379 while anticipated net revenues for year two of $371 also falls between the control group median and highest values of $346 and $391 for that year. With net revenues between the median and highest values in the control group, the facility is expected to consume health care resources in proportion to the services provided. (See Table 2 below). Projected revenues appear to be reasonable. Anticipated costs per patient day (CPD) of $360 in year one and $358 in year two is between the control group median and the highest values of $316 and $366 in year one and the median and highest values of $326 and $378 in year two. The lowest level in the group is generally viewed as the practical lower limit on cost-efficiency. With CAPD between median and the highest in the Peer Group, costs are considered feasible. 23

24 (See Table 2 below). The applicant is projecting a slight decrease in CPD between year one and year two of approximately 0.43 percent. The year one occupancy is below average, as the occupancy rate increases, CPD would be expected to decrease through economies of scale. Overall, costs appear to be reasonable. Section (3)(a)(1), Florida Statutes, specifies a minimum weekly average of certified nursing assistant (CNA) and license nurse staffing combined of 3.6 hours of direct care per resident per day. In addition, a minimum CNA staffing of 2.5 hours of direct care per resident per day, with a minimum of one CNA per 20 residents is required. For licensed nurses, a minimum licensed nurse staffing of 1.0 hour of direct resident care per resident day, with a minimum of one licensed nurse per 40 residents must be maintained. Based on the information provided in Schedule 6, the applicant s projected certified nurse assistants and licensed nurse staffing exceeds the minimum levels required for year one and year two. The existing beds currently have a Medicaid condition of percent. The applicant is proposing a Medicaid condition of 54.6 percent for this CON. The most recent Medicaid occupancy rate for the 12-month period ending December 31, 2011, was percent, while the District 9-4 average Medicaid occupancy rate for the same period was percent. With the projected Medicaid rates lower than the most recent and district/sub district rates, the proposed condition appears achievable. The year two operating profit for the skilled nursing facility of $1,312,000 computes to an operating margin per patient day of $12, which is between the control group median and lowest value of $17 and negative $8. For both years, revenues fell between the median and low values while expenses fell between the median and high both conservative assumptions. As a result, projected profitability appears conservative and achievable. Conclusion: This project appears to be financially feasible. 24

25 TABLE 2 CON application #10146 May-16 YEAR 2 VALUES ADJUSTED SELECT FY 2010/2011 YEAR 2 ACTIVITY FOR INFLATION COST REPORT DATA ACTIVITY PER PAT. DAY Highest Median Lowest ROUTINE SERVICES 35,656, ANCILLARY SERVICES 317, OTHER OPERATING REVENUE 2,938, GROSS REVENUE 38,911, DEDUCTIONS FROM REVENUE NET REVENUES 38,911, EXPENSES ADMINISTRATIVE 12,546, ANCILLARY 2,220, PATIENT CARE 18,546, PROPERTY 4,037, OTHER 250, TOTAL EXPENSES 37,599, OPERATING INCOME 1,312, PATIENT DAYS 105,015 VALUES NOT ADJUSTED TOTAL BED DAYS AVAILABLE 113,150 FOR INFLATION Media TOTAL NUMBER OF BEDS 310 Highest n Lowest PERCENT OCCUPANCY 92.81% 96.5% 92.4% 85.8% 3.4% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 11, % MEDICAID 57, % 58.4% 51.4% 47.2% MEDICARE 36, % 36.8% 23.6% 14.5% INSURANCE 0 0.0% HMO/PPO 0 0.0% OTHER 0 0.0% 0.0% 0.0% 0.0% TOTAL 105, % e. Will the proposed project foster competition to promote quality and cost-effectiveness? ss (1)(e) and (g), Florida Statutes. Competition to promote quality and cost-effectiveness is driven primarily by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/costs in order to remain viable in the market. The applicant is asking to delicense 30 beds at another facility and in effect transfer existing beds from one location to another location (both within Palm Beach County). 25

26 As such, this project will not result in new beds to the service area and therefore will not likely have a material impact on competition. Conclusion: This project is not likely to have a material impact on competition between skilled nursing facilities. However, the potential for competition exists with other rehab provider types. 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 preliminary design for this project has been submitted to the Office of Plans and Construction and was approved on March 29, 2012, under project number Since the approved preliminary documents contained more detailed information that the schematic documents required for a CON application, this review will be limited to evaluation of the cost estimate forecast and the proposed construction schedule. The cost estimated for the construction appears to be reasonable in comparison to similar project. The time schedule for construction from the time of building permit to final inspection seems reasonable. g. Does the applicant have a history of and propose the provision of 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 As stated previously, The Joseph L. Morse Geriatric Center has a consistent pattern of providing SNF services to Medicaid patients and the medically indigent. The applicant states intent to create a dedicated program for memory support housed in the Edwards Building. Renovations are to include 54 ALF beds and 30 community nursing home beds. The proposed proportion amount of Medicaid is expected to be greater than the total facility. The applicant projects year one and year two total facility annual Medicaid patient day percentages of 53.3 and 54.6, respectively. The 30-bed project is expected to provide 80 percent of its total annual patient days to Medicaid patients and 20 26