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 Tidewell Hospice, Inc./CON # North Access Road Englewood, Florida Authorized Representative: Sylvia Scott 5955 Rand Blvd. Sarasota, Florida (941) Service District/Subdistrict Hospice Service Area 8A (Charlotte and DeSoto Counties) B. PUBLIC HEARING A public hearing was not held or requested for the project. Letters of Support Tidewell Hospice, Inc. submitted 31 letters of support signed and dated during June 3 through June 12, Seven letters were undated. Nine letters were submitted by physicians practicing in the Englewood area. Four of these were form letters, signed by Susan Binoy, MD, Anthony DiTomaso, MD, Timothy Blain, MD and James Villotti, MD. This letter stated that inpatient services in the Tidewell Hospice Houses provide a higher level of physician and nursing care for patients whose needs previously could only be met in a hospital patients needing continuous symptom control can be admitted to hospice houses for around-the-clock care until their condition is stabilized. Dr. Pedro F. Casanova, a physician in Englewood, stated that I have often referred my patients with a terminal diagnosis to Tidewell. They have provided excellent, compassionate care to my patients and also helped the families cope with the loss of their loved one.

2 Four area physicians, Jack E. Baron, MD, Kenneth W. Pfahler, MD, Pawel A. Kalwinski, MD and Eric A. Pressman, DO, submitted similar letters indicating that the conversion of beds to inpatient status would better serve the needs of Englewood residents. Helen B. Evans, MSN, RN, wrote that the conversion of existing residential beds to inpatient beds would allow care for patients whose needs previously could only be met in a hospital. These sentiments were echoed by Donna Hoxsie, an employee at Cardiology Center of Englewood. Seven letters were submitted from business persons in the Englewood community. These were variations of a form letter stating inpatient bed conversion will allow Tidewell Hospice to provide a higher level of hospice support and care for our neighbors who previously could only be cared for in a local hospital or outside of our community. Four of these were submitted by the following individuals: Joseph Freda-Owner Joe s Pizza Kathy Betancourt-Remax Realtor Patricia Hensley, Branch Manager, Florida Community Bank Michael R Uselton, Owner, Lemon Bay Funeral Home Three Tidewell Hospice volunteers Nancy Farrell, Dorothy E. Carter, and Linda S. Collins emphasized that by approving the applicant s request for inpatient bed status, the hospice would provide a much needed service to the community. Ten letters were submitted from residents of Englewood and families of former hospice patients emphasizing the importance of Tidewell Hospice s provision of care to the community, and urging approval in order to expand services available at Englewood Hospice House. C. PROJECT SUMMARY Tidewell Hospice, Inc. (CON #10192) is an independent, not-for-profit, community-based organization proposing to establish a seven-bed freestanding inpatient hospice facility through conversion of seven existing residential beds at the Englewood Hospice House in Hospice Service Area 8A, Charlotte County. The total project cost is $73,113. Project cost includes building and project development. The project involves 2,560 gross square feet (GSF) of renovation (no new construction) and a construction cost of $56,527. The applicant proposes no conditions for the project. 2

3 D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section , Florida Statutes; and applicable 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 (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, the consultant, Jessica Hand, analyzed the application in its entirety with consultation from financial analyst Derron Hillman of the Bureau of Central Services, who evaluated the financial data and Said Baniahmad of the Office of Plans and Construction, who reviewed the application for conformance with the architectural criteria. E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicates the level of conformity of the proposed project with the criteria found in Sections and , Florida Statutes; applicable rules of the State of Florida, Chapter 59C-1 and 59C-2, Florida Administrative Code. 3

4 1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed need pool? Chapter 59C-1.008, Florida Administrative Code and Chapter 59C , 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. Tidewell Hospice, Inc., is the sole licensed hospice provider in Hospice Service Area 8A (Charlotte and DeSoto Counties), and operates a 12-bed freestanding inpatient hospice (Port Charlotte House), in Charlotte County. The applicant states that conversion of seven beds at Englewood Hospice House from residential to inpatient status would improve Tidewell Hospice s provision of care within this service area. Below is a map which demonstrates the distance between Port Charlotte House and Englewood Hospice House. 4

5 Hospice Service Area 8A Tidewell Hospice, Inc. s Licensed & Proposed (CON applications #10192 & #10193) Inpatient Hospice Facilities Source: Microsoft MapPoint

6 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 The applicant submits the following chart demonstrating age 65 and over population projections by service area: Tidewell Hospice Service Areas 2013 Population Percentage age 65 and over Percentage age 75 and over Charlotte County 8A 163, % 16.3% DeSoto County 8A 35, % 8.0% Manatee County 6C 336, % 11.1% Sarasota County 8D 390, % 15.9% Source: CON application #10192, page 7. The reviewer notes that Charlotte County is projected to have a total population of 173,421 in July 2018 and 62,986 or 36.3 percent will be persons aged 65 and over. DeSoto County is projected to have a total July 2018 population of 37,224 and 7,165 or 19.2 percent will be persons aged 65 and over. Hospice Service Area 8A s total population is expected to increase from 199,009 in 2013 to 210,645 in 2018 or by 5.85 percent. The service area s population aged 65 and over is projected to increase from 63,120 in 2013 to 70,151 in 2018 or by percent. The population aged 65 and over will account for 33.3 percent of the service area s total population in July Availability, utilization and quality of like services Tidewell Hospice is the only hospice care provider eligible to operate a freestanding inpatient hospice facility in Hospice Service Area 8A. The applicant did not provide utilization reports for the existing inpatient hospice beds. 1 Source: Agency for Health Care Administration Population Estimates 2010 to 2025 published February

7 Medical treatment trends and Market conditions The applicant does not provide a response to medical treatment trends and market conditions. 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. Tidewell Hospice, Inc. states advantages that will be achieved through conversion of residential beds to inpatient beds include: The inpatient designation for Englewood Hospice House will result in a cost savings per inpatient day of $90.70 (year two) when patients receive inpatient care at the facility instead of a hospital. The savings for Tidewell Hospice is directly related to being able to provide a higher quality service at less cost in its own freestanding facility. Inpatient designation will allow immediate access to care and services such as hospice-certified physicians, nursing, medical social work, counseling, volunteer, chaplain services, and grief specialists. These services are not immediately accessible in contracting facilities. The project will improve the applicant s ability to meet the increased need for inpatient services created by increased referrals due to more emphasis of the medical community on palliative care and an informed consumer. The inpatient hospice house promotes a supportive and therapeutic environment, which provides hospice-focused care. The project will provide an optimal environment focused on the quality of life and palliative end-of-life care in comparison to acute care provided by contracted facilities. The hospice house is homelike, comfortable, and serene. 7

8 The inpatient facility will include interdisciplinary hospice staff members who are experienced in palliative care and are consistently available. In contracted facilities, patients are assigned beds that are typically scattered throughout the organization. This does not assure that care is provided by staff that are comfortable with palliative and hospice care. Treatment may begin more promptly and with greater continuity when administered by hospice staff familiar with the patient s needs. Families are often more comfortable with the care and environment provided in a hospice house than in contracted facilities. Caregivers will take advantage of inpatient hospice respite care that is offered in a homelike facility. Many refuse this needed service because it is offered in a nursing home. Families may have made promises to the patient that they would never send him/her to a nursing home or find the concept of a nursing home unacceptable. The applicant states that its freestanding residential Englewood Hospice House s conversion to an inpatient facility will allow Tidewell Hospice to admit higher acuity hospice patients directly from hospitals, reducing the need for contracted hospital beds, which will improve continuity and thus quality of care. Further, the projected cost savings per patient day will allow Tidewell Hospice to re-invest the savings to increase access and future expansion of inpatient hospice care. Tidewell Hospice submits the follow tables to demonstrate savings in freestanding hospice inpatient beds versus hospital contract beds: Contract Cost for Hospice Inpatient Care in Hospitals versus Cost in the Englewood Hospice House with an Inpatient Designation (CY Year Two of Project) Hospital Contract* (cost per patient day) Englewood Hospice House (cost per patient day) Hospice Inpatient Revenue/day $646 $ Expenses (average) day $646 $ Staffing & Administrative $50 Overhead (FY) Total Expenses per Patient day $696 Cost Savings (loss) per patient day ($50) $40.70 *Hospice pays the hospitals the total amount it receives from Medicare leaving hospice with no reimbursement for the care provided by the hospice staff to patients. See Notes and Assumptions in Schedules 7A and 8A. This is a blended rate over two Medicare Fiscal Years. Source: CON application #10192, page 5. The applicant submits the chart below to show that the cost per adjusted patient day at hospitals exceeds what hospice pays, meaning hospital acute care beds are better utilized for acute patients instead of hospice patients. 8

9 Hospital Cost Per Adjusted Patient Day (2010) Versus Tidewell Hospice s Payment for Hospice Inpatient Care Hospital Cost 2013 Hospice Payment to Hospital Facility Per Adjusted Patient Day 7/1--12/31/12 1/1--6/30/13 Charlotte Regional Medical Center $1,477 $ $ Fawcett Memorial Hospital $1,669 $ $ Peace River Regional Medical Center $1,397 $ $ Englewood Community Hospital (Sarasota County) $1,692 $ $ DeSoto Memorial (DeSoto County) $1,535 $ $ Source: CON application #10192, page 5. (2) Existing contractual arrangements for inpatient care at hospitals and nursing homes. Tidewell Hospice has existing contractual relationships for the provision of hospice inpatient care with every hospital and community nursing home in the two county service area and respite care for appropriate patients in some nursing facilities. A list of these hospitals and nursing facilities is provided by the applicant in Volume 1, Appendix E, of CON application # (3) Anticipated sources of funds for the construction. The applicant states this is not applicable because no construction is planned. The applicant s Schedule 1 shows a total project cost of $73,113 and Schedule 3 indicates funds are available for the project. 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, Tidewell Hospice, Inc. regularly submits semi-annual utilization reports as required. The Agency s semi-annual utilization reports do not require a hospice to report inpatient hospice days. 9

10 c. Rule (2) Florida Administrative Code: Health Care Access Criteria. (1) The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The applicant states timely access to Tidewell Hospice care is available regardless of payer, ethnic or racial status, gender, handicap, age, or ability to pay, and staff are trained to be sensitive to diverse cultural, ethnic, and multi-lingual patient needs. (2) The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admission policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. Tidewell Hospice, Inc. contends that inpatient facility designation will increase access to hospice care for medically underserved persons without any reduction in availability of hospice services. (3) The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified as deserving of priority. The applicant cites the Medicare Hospice Benefit (based on a day stay in hospice) and contrasts this with Tidewell Hospice, Inc. s average patient stay of 57 days, with many surviving 12 or fewer days, in order to demonstrate a shift in patient care trends. Per the applicant, new life prolonging treatments and medications have resulted in patients remaining in the hospital for longer periods of time, and arriving at hospice sicker and with fewer days of life remaining. This requires hospice staff to provide more intensive, high acuity hospice care than in the past, and supports the applicant s request for inpatient designation in order to provide this level of needed care. 10

11 (4) In determining the extent to which a proposed service will be accessible, the following will be considered: (a) The extent to which medically underserved individuals currently use the applicant s services, as a proportion of the medically underserved population in the applicant s proposed service area (s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The applicant states that while many hospice patients are covered by Medicare and Medicaid, the high cost of care for the terminally ill results in under-insured situations, and patients who have no ability to pay for care. Tidewell Hospice provides care regardless of ability to pay. (b) The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; Tidewell Hospice states there are no civil rights access complaints against them and they meet applicable Federal regulations regarding uncompensated care, community service and access by all persons. (c) The extent to which Medicare, Medicaid, and medically indigent patients are served by the applicant; Tidewell Hospice, Inc. states the majority of its patients are Medicaid or Medicare eligible and care is provided regardless of ability to pay. (d) The extent to which the applicant offers a range of means by which a person will have access to its services. The applicant states patients will access Tidewell Hospice services per the usual routes for hospice care: hospitals, physicians, nursing facilities, home care agencies, assisted living facilities, group homes, family members, friends and self-referral. The facility is designed to allow changing levels of care based on patient need. To cover costs for patients unable to pay, fundraising events are held throughout the year. 11

12 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. The applicant notes Medicare and Medicaid pay hospice the same amount per day for inpatient care regardless of the approved provider facility type. Tidewell Hospice pays the entire amount received from Medicare per patient day when patients are admitted to a hospital for hospice inpatient care, resulting in no reimbursement to the applicant for care it provides to hospitalized patients. Englewood Hospice House will have a lower patient per day cost than contracted hospitals for inpatient hospice beds. Availability Tidewell Hospice states it has provided quality end-of-life care to patients (and support services to families) in four counties (Hospice Service Areas 8A, 8D, and 6C) since 1980, regardless of patient age, race, sex, religion, or ability to pay, through a network of seven hospice houses. Tidewell Hospice states that memorials, gifts, and donations from individuals, churches, businesses, and community organizations enable the applicant to provide services to those unable to pay for hospice care. Medicaid and Medicare benefits cover physician services, nursing care, medical equipment, drugs, home health aide, therapy, medical social services, counseling and trained hospice volunteers, through home care, short-term inpatient care, and inpatient respite care, with some costs covered by private insurance. Quality of Care The applicant states Tidewell Hospice, accredited by the Community Health Accreditation Program (CHAP), provides quality care in contracted facilities, and 24-hour total management hospice care in freestanding hospice facilities. The applicant is the only hospice provider in the service area (see item 3. b.). Accessibility Tidewell Hospice states the inpatient facility designation will increase access to patients seeking inpatient hospice care and respite services for caregivers in need of a break from the stress of caregiving. The applicant 12

13 states the change in bed designation will allow higher acuity patients access to hospice care and boost physician confidence in discharging patients to hospice. Extent of Utilization of Existing Health Care Facilities and Health Services in the applicant s service area Tidewell Hospice is the only licensed hospice provider eligible to operate a freestanding inpatient hospice facility in its service area. The applicant indicates that fulfilling patient need for inpatient care in a freestanding facility is the project s primary goal. Tidewell Hospice does not provide the utilization for its existing 12-bed inpatient hospice facility in Port Charlotte. The applicant s Schedule 4 shows the seven-bed Englewood residential hospice had 2,340 patient days with percent utilization for the 12 months ending June 30, 2011 and 2,333 patient days with percent utilization for the 12 months ending June 30, Reasons a Freestanding Inpatient Hospice Facility Creates Better Access and Availability for Hospice Patients at the End of Life Tidewell Hospice states freestanding inpatient hospice provides the level of 24-hour care required to manage symptoms that cannot be managed effectively at home includes: Pain or symptom crisis not managed by changes in treatment in the current setting or that requires frequent medication adjustments and monitoring Intractable nausea/vomiting Advanced open wounds requiring changes in treatment and close monitoring Unmanageable respiratory distress Delirium with behavior issues Sudden decline necessitating intensive nursing intervention Imminent death only if skilled nursing needs are present. Per the applicant, hospitals and nursing facilities do not always have contracted hospice beds available, and when they do, the beds may not be localized in the same unit. Doctors may be unwilling to discharge hospice-appropriate patients to their home due to acute care needs, leaving patients to die away from home or the home-like comfort of inpatient hospice. 13

14 b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? [s (1)(c) and (j), Florida Statutes.] Tidewell Hospice states the following: It achieved CHAP accreditation in 2008, including an accommodation for its Quality Assessment Performance Improvement Program which was found to exceed federal regulations and has held deemed status from CHAP since It is a member of the National Hospice and Palliative Care Organization (NHPCO) and complies with NHPCO standards. It participates in the Family Evaluation of Hospice Care (FEHC), an ongoing survey of survivor perceptions of care and service. History of Providing Quality Care The applicant states it has provided quality and compassionate care in Sarasota, Manatee, Charlotte and DeSoto Counties since 1980, and is in compliance with state and federal laws and National Hospice Organization Standards. Tidewell Hospice operates seven hospice facilities that it states are strategically placed to ensure patients can remain as close to home as possible. Demonstration of the Ability to Provide Quality Care The applicant states that in addition to the provision of general hospice programs and services, quality care is demonstrated by its: Hospice Houses - Tidewell Hospice s seven freestanding hospice facilities that provide care through its service areas. Staffing - Unlike hospitals or nursing homes, staff is based entirely on end-of-life care needs, and include registered nurses at a 1:6 nurse to patient ratio, in addition to a physician, LPNs, CNAs, social workers, chaplains and volunteers. Nursing Services Guidelines - the applicant follows NHPCO guidelines for effective use of nursing services in order to provide the highest quality hospice care, in addition to all certification, licensure, and accreditation requirements. Complementary Services - In addition to standard therapy services, Tidewell Hospice offers art, music, pet, horticulture, therapeutic touch, aroma, and caring touch therapies, in order to enhance and provide quality end of life care to all patients. 14

15 Children s Programs - basic hospice precepts are adapted to meet the medical care standards for children, with programs designed for families and siblings of terminally ill children. Veterans Programs - Tidewell Hospice is a four-star member of the We Honor Veterans program, designed to provide support to veterans and their families through hospice staff training, allowing staff to offer programs specifically for those with a military service background. Transitions - a volunteer-based, free program funded by Tidewell Hospice, which provides a care coordinator for patients and families adjusting to the realities of caregiving by assisting with food, errands, support, and respite care. Grief Support - Grief specialists are on staff to provide integrated support through the hospice experience, with up to one year of phone support available to families after the death of a loved one, with specialists provided for survivors of terminally ill children. Quality Assessment and Performance Improvement Tidewell Hospice has a comprehensive Quality Assessment Performance Improvement (QAPI) Plan to provide ongoing monitoring of its performance and to improve care and services. The goals and objectives of the QAPI plan are to: Promote the provision of the highest quality patient care through systematic monitoring and evaluation of the quality and appropriateness of hospice program services Monitor allocation of Hospice resources to identify and resolve problems in the utilization of those resources and to identify ways and means of more effectively allocating resources Identify, assess, and resolve known or potential problems that may adversely affect patient/family care Identify opportunities to improve care Assess the effectiveness of the provision of patient/family care by professional support staff Evaluate and monitor the effectiveness of actions taken to resolve identified problems Monitor the provision of care at all levels and continuity of care between levels of patient status, assessing appropriateness and timeliness of interventions Systematically monitor and implement corrective actions as they relate to the safety of patients, staff, volunteers, and visitors Identify needs in the areas of supervision and education of staff, including volunteers Recommend revisions of policies and procedures when reviews have identified problems. 15

16 Licensure History and Accreditation(s) Held As previously stated, Tidewell Hospice has been licensed and providing quality care to residents since The applicant states it is CHAP accredited, and includes copies of CHAP accreditation in CON application #10192, Volume 1, Appendix D. Agency records indicate Tidewell Hospice, Inc. had one substantiated complaint during the three-year period ending June 25, A single complaint can encompass multiple complaint categories. The substantiated complaint categories were for nursing services and infection control. Tidewell Hospice, Inc. voluntarily participated in the April 2012 through June 2012 Agency Hospice Provider Family Satisfaction Survey, in which a range of 326 to 434 respondents assessed the applicant at a five-star rating (90 to 100 percent satisfaction) for each of five categories. Tidewell Hospice, Inc. demonstrates 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 $73,113 and incremental operating costs in year two of $98,136. The applicant provided audited financial statements for the periods ending June 30, 2012 and These statements were analyzed for the purpose of evaluating the applicant s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant s current ratio of 11.6 indicates current assets are over 11 times greater than current obligations. This is well above average a good position. The ratio of cash flow to current liabilities of 2.2 is above average and a good position. Overall, the applicant has a good shortterm position (see Table 1). 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 11.9 percent is above average and a good position. The most recent 16

17 year had an operating gain of $4.8 million, which resulted in a 4.9 percent operating margin. Overall, the applicant has a good long-term position (see Table 1). Capital Requirements: Schedule 2 indicates total capital projects of $122,148, which consist of this project and CON application # In addition, the applicant will have to fund the projected year one operating loss of $384,470. Available Capital: Funding for this project will be provided by the applicant. The applicant has available working capital of $67.3 million and cash flow from operations of $14.2 million. Tidewell Hospice, Inc., has cash and cash equivalents of $17.7 million. The applicant appears to have sufficient capital to fund this project and the entire capital budget. Staffing: The applicant s Schedule 6A shows a total staffing complement for the proposed bed conversion project of 12.5 FTEs, most of who are currently employed in the existing seven-bed residential hospice facility. This includes the addition of 2.10 RN FTEs and the removal of one LPN FTE. Conclusion: Funding for this project should be available as needed. 17

18 TABLE 1 Tidewell Hospice, Inc. CON application # /30/2012 Current Assets (CA) $73,691,245 Cash and Current Investment $17,717,023 $119,517,11 Total Assets (TA) 9 Current Liabilities (CL) $6,364,160 Total Liabilities (TL) $6,364,160 $113,152,95 Net Assets (NA) 9 Total Revenues (TR) $97,282,025 Interest Expense (IE) $0 Operating Income (OI) $4,766,958 Cash Flow from Operations (CFO) $14,189,641 Working Capital $67,327,085 FINANCIAL RATIOS 6/30/2012 Current Ratio (CA/CL) 11.6 Cash Flow to Current Liabilities (CFO/CL) 2.2 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) 94.7% Operating Margin (OI/TR) 4.9% Return on Assets (OI/TA) 4.0% Operating Cash Flow to Assets (CFO/TA) 11.9% d. Will the proposed project foster competition to promote quality and cost-effectiveness? ss (1) (g), Florida Statutes. This application is for a new inpatient hospice facility to be located in Hospice Service Area 8A which currently has one existing hospice program, run by the applicant. Therefore, this project is not offering a new choice of provider in the service area. 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 6.8 percent of its patient days from managed care/commercial insurance payers with

19 percent of patient days expected to come from fixed price government payer sources (Medicare and Medicaid), with the remaining 4.3 percent as self-pay/charity. With the large majority of patient care being provided from fixed price government payer sources, this project is not likely to have any discernible positive impact on price-based competition to promote costeffectiveness. As providers offer new or enhanced services to patients and families as a means to compete on quality measures, costeffectiveness would be impacted since the new or enhanced services would be offered despite the large percentage of fixed priced government payers. In other words, the potential exists for new or enhanced services to be provided for the same federal and state dollars. Conclusion: Tidewell Hospice, Inc. is the only provider in Hospice Service Area 8A. This project will not result in price-based competition. e. 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 80.2 percent, Medicaid at 8.7 percent, self-pay/charity at 4.3 percent, and commercial insurance and other payers at 6.8 percent. The applicant indicated in the notes to Schedule 7 that the services it intends to provide include routine home care, inpatient respite, and general inpatient care, for which the Department of Health and Human Services sets rates. The federal rates were calculated for the Charlotte County, Florida Wage Index for Medicare Hospice payments of and inflated through June 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 1st Quarter 2013 Health Care Cost Review. Estimated patient days for each level of service from the notes to Schedule 7, year two were multiplied by the calculated reimbursement rate for that service in order to estimate the total revenue that would be generated by that number of patient days. The results were then compared to the applicant s estimated gross revenue. The results of the calculations are summarized in Table 2 below. 19

20 The applicant s projected gross revenue was 4.72 percent, or $62,894, more than the calculated gross revenue. Operating profits from this project are expected to increase from $188,735 for year one to $684,562 for year two. The applicant offered no conditions to its proposed hospice project. Conclusion: This project appears to be financially feasible. The projected revenues in year two appear to be reasonable. HOSPICE REVENUE TABLE 2 CON application #10192 Tidewell Hospice, Inc. Wage Index for Charlotte County(0.9040) Wage Component Wage Index Adjusted Wage Amount Unadjusted Component Payment Rate Routine Home Care $ $95.32 $48.01 $ Continuous Home Care $ $ $ $ Inpatient Respite $ $77.67 $72.80 $ General Inpatient $ $ $ $ Payment Rate Inflation Factor Year Two Inflation Adjusted Amount Patient Days Year 2, December 31, 2014 Calculated Gross Revenue Routine Home Care $ $ $67,305 Continuous Home Care $ $ $0 Inpatient Respite $ $ $36,115 General Inpatient $ $ ,745 $1,166,591 Total 2,425 $1,270,011 From Schedule 7 $1,332,905 Difference $62,894 Percentage difference 4.72% f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss (1)(h), Florida Statutes. The narrative indicates the project is Florida Building Code Type VA construction, fully sprinklered. Exterior walls are one-hour fire rated eight-inch masonry units, and the roof is made of one-hour fire rated 20

21 assembly. This construction type is sufficient for the occupancy and building size. Emergency power is provided via a 200 KW electrical generator. The patient rooms are located in two wings. All patient rooms are private rooms with private toilet/shower rooms which appear to be accessible. All patient toilet room doors will need to be equipped with reversible hardware that will allow the door to swing out in an emergency, as required by the Florida Building Code. All functional spaces have been provided and centrally located. The central support spaces contain a nurse station, medication room, clean utility, soiled utility room and storage facilities. A laundry is provided and appears to be arranged for patient use as required. The plans show that the facility will be subdivided into smoke compartments, as required by the applicable codes. The estimated construction costs and project completion forecast appear to be reasonable. The layout is efficient and functional. 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. 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. The applicant states Tidewell Hospice is a Medicaid and Medicare provider and accepts patients regardless of ability to pay. Rates paid for hospice services by most payers are set in advance, in the amounts shown: FY 2013 Medicare Reimbursement Rate Sarasota and Level of Care Manatee Counties Charlotte County DeSoto County Routine $ $ $ Inpatient Respite $ $ $ General Inpatient $ $ $ Continuous Care $ $ $ Source: CON application #10192, page 19. The applicant states the majority of patients are covered by Medicare. The table below shows Tidewell Hospice, Inc. s fiscal year 2013 to date (July 1, May 1, 2013) payer mix by percent of patient days for the overall program. 21

22 FY 2013 Payer Mix 7/1/2012 through 5/1/2013 Medicare 92.87% Insurance 3.24% Medicaid 2.89% Self-Pay 0.65% Charity Care 0.35% Source: CON application #10192, page 19. Per the applicant, costs for patients unable to pay are covered through donations, fundraising events and gifts from the community. Decisions are made based on quality of life rather than financial considerations. Tidewell Hospice indicates that it provided $2,548,616 in unreimbursed care in FY 2012 and $880,638 of this amount was unreimbursed room and board. The applicant states that a sliding fee scale is used to calculate room and board for residential patients and that room and board is a major portion of Tidewell Hospice, Inc. s unreimbursed care. The applicant s Schedule 7A shows the following projections for year one and two of the project. Projected Payer Mix for Year One Ending 6/30/2014 and Year Two Ending 6/30/2015 of the Project Payer Year One Ending 6/30/2014 Year Two Ending 6/30/2015 Medicare 80.41% 80.21% Medicaid 8.66% 8.66% Commercial Ins. 7.63% 6.80% Self-Pay 3.30% 4.33% Total 100.0% 100.0% Source: CON application #10192, Schedule 7A. However, Tidewell Hospice, Inc. s Schedule 9 indicates that the project will begin operation January Schedule 5 shows the applicant projects 2,425 annual inpatient days and 95 percent utilization during CY 2014 (year one) and CY 2015 (year two). F. SUMMARY Tidewell Hospice, Inc. (CON #10192) proposes to establish a seven-bed freestanding inpatient hospice facility through conversion of seven existing residential beds at the Englewood Hospice House in Hospice Service Area 8A, Charlotte County. The total project cost is $73,113. This includes building and development costs. The project involves 2,560 GSF of renovation and no new construction. The applicant proposes no conditions for the project. 22

23 Need/Access: The Agency does not publish need for inpatient hospice beds. Tidewell Hospice, Inc. is the sole licensed hospice provider in Hospice Service Area 8A. The applicant does not provide the utilization for the 12 inpatient hospice beds at Tidewell Hospice s inpatient hospice in Port Charlotte. Tidewell Hospice contends that: The project is projected to result in a savings per inpatient day of $90.70 (in year two) when patients receive inpatient care at the hospice facility instead of a hospital. The applicant indicates that the savings for Tidewell Hospice is directly related to being able to provide a higher quality service at less cost in its own freestanding facility. Inpatient designation will allow immediate access to care and services such as hospice-certified physicians, nursing, medical social work, counseling, volunteer, chaplain services, and grief specialists. These services are not immediately accessible in contracting facilities. Inpatient designation improves the applicant s ability to meet the rising need for inpatient services created by increased referrals due to more emphasis within the medical community on palliative care. Inpatient designation facilitates an interdisciplinary hospice staff that is experienced in palliative care and is consistently available. In contracted facilities, patients are assigned beds that are typically scattered throughout the organization, which does not assure that care is provided by staff who are comfortable with palliative and hospice care. Quality of Care: The applicant provides hospice care in Sarasota, Manatee, Charlotte and DeSoto Counties since 1980, and is in compliance with State of Florida and federal laws. Tidewell Hospice, Inc. voluntarily participated in the April 2012 through June 2012 Agency Hospice Provider Family Satisfaction Survey, in which a range of 326 to 434 respondents assessed the applicant at a five-star rating (90 to 100 percent satisfaction) for each of five categories. The applicant demonstrates the ability to provide quality care. Financial Feasibility/Availability of Funds: Funding for this project should be available as needed. This project appears to be financially feasible. The project will not result in price-based competition. 23

24 Medicaid/Indigent/Charity Care: Tidewell Hospice provides care to all who qualify for their services, and are not refused service based on payer type or ability to pay. The applicant s Schedule 7A indicates that Medicaid will account for 8.66 percent of the project s total annual patient days in years one and two of the project. Tidewell Hospice indicates that it provided 0.35 percent of its FY 2013 to date (July 1, May 1, 2013) patient days to charity care patients. Architectural: All functional spaces have been provided and centrally located. The layout is efficient and functional. The estimated construction costs and project completion forecast appear to be reasonable. G. RECOMMENDATION Approve CON #10192 to establish a seven-bed freestanding inpatient hospice facility through the conversion of seven existing residential beds at the Englewood Hospice House in Hospice Service Area 8A, Charlotte County. The total project cost is $73,113. The project involves 2,560 GSF of renovation and a construction cost of $56,

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