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 HealthSouth Rehabilitation Hospital of Ocala, LLC/CON # Ponce de Leon Boulevard, Suite 950 Coral Gables, Florida Authorized Representative: Ms. Patricia Greenberg (305) Service District/Subdistrict District 3 (Alachua, Bradford, Citrus, Columbia, Dixie, Gilchrist, Hamilton, Hernando, Lafayette, Lake, Levy, Marion, Putnam, Sumter, Suwannee & Union Counties) B. PUBLIC HEARING A public hearing was not held regarding the proposed project to establish a comprehensive medical rehabilitation (CMR) hospital of 60 beds in Marion County, District 3. There were 42 letters of support submitted regarding this project. Forty of the letters were submitted with the applicant s previous submission of CON #10009 to establish a 40-bed CMR hospital. H. Rex Etheredge, President & CEO of Ocala Regional Medical Center, submitted a letter of support in which he cites the high stroke population in the Ocala. Mr. Etheredge contends that while the skilled nursing facilities and home health agencies do a fine job, a large number of these patients could utilize a comprehensive medical rehabilitation facility. He states that the closest facility is Shands in Gainesville, which is too far and too tedious a drive for elderly patients and their family members. Katherine Goodenow, Director of Case Management with Ocala Regional Medical Center states that she has difficulty finding appropriate

2 placement for inpatient rehabilitation patients and indicates that approximately 10 patients per month could be admitted to a CMR hospital. Ginger A. Carroll, Chief Executive Officer at West Marion Community Hospital agrees with Mr. Etheredge s statements above regarding rehab and travel and indicates that her facility discharges approximately 10 patients per month who could use CMR services. Ten of the 42 letters of support were from area physicians, who state that the Ocala area would benefit tremendously from the approval of the proposed project. Several physicians cite the travel distance to the existing CMR facilities as a reason for low referrals to rehab hospitals. A local physical therapist and a local physician assistant also sent letters in support of the project indicating they have treated a number of patients who would benefit from an inpatient rehab hospital. One letter was a general letter from a Panama City physician who cites the high quality of care provided by HealthSouth. Of the 42 letters of support, 18 of them are form letters signed by area residents. The remaining eight letters were from area residents who either received rehabilitation services or had family members with this need and had no choice but to travel out of the area for care. These residents state that approval of this project would improve access and provide much needed choice. Some of these residents state they have received services from HealthSouth in Springhill, Florida and were impressed with the level of services they received and look forward to the same level of care in Marion County. C. PROJECT SUMMARY HealthSouth Rehabilitation Hospital of Ocala, LLC (CON #10048) proposes to establish a 60-bed comprehensive medical rehabilitation hospital in Marion County, Florida. The applicant, a wholly owned subsidiary of HealthSouth Corporation, states that HealthSouth is the nation s largest provider of inpatient rehabilitative health care services in terms of revenues, number of hospitals and patients treated. Founded in 1984, Hea lth Sou th em ploys 22,000 in dividu a ls in its 9 3 reh a bilita tion h os pita ls, s ix lon g-term a cu te ca re h os pita ls, 49 ou tpa tien t reh a bilita tion s a tellites a n d 25 licen s ed h os pita l-ba s ed h om e h ea lth a gen cies a cros s 26 s ta tes a n d Pu erto Rico. Hea lth Sou th a ls o m a n a ges s even in pa tien t reh a bilita tion u n its a n d th ree ou tpa tien t s a tellites th rou gh m a n a gem en t con tra cts. Th e a pplica n t s pa ren t opera tes n in e frees ta n din g CMR h os pita ls in Florida with a n a ggrega te of 7 33 licen s ed beds a n d a h os t of s pecia lized in pa tien t a n d ou tpa tien t s ervices a n d own s a n d opera tes a 40-bed lon g-term ca re h os pita l in Sa ra s ota a n d eigh t ou tpa tien t cen ters dis pers ed th rou gh ou t th e s ta te. 2

3 HealthSouth Rehabilitation Hospital of Ocala, LLC has chosen to pursue a 6.2-acre site in central Ocala on 19 th Avenue Road adjacent to Rasmussen College in zip code area This site is east of I-75, just east of SR 200, to the south of SW 17 th Street and west of U.S. 441/301/SR 27. The applicant states that the site is within close proximity to all three of the area s general acute care hospitals. The applicant agrees to condition the project upon the following: 2.5 percent of total patient days will be provided to Medicaid and charity care patients; implement a stroke rehabilitation program to begin upon licensure and will obtain Joint Commission Certification of its stroke rehabilitation program; and that the Auto Ambulator 1 and other appropriate technology will be provided at HealthSouth Rehabilitation Hospital of Ocala and available upon licensure. It is noted that s (4), Florida Statutes prohibits accreditation by any private organization as a requirement for the issuance or maintenance of a certificate of need, so Joint Commission Certification cannot be cited as a condition to approval. The applicant has already received approval to develop a 40-bed freestanding CMR hospital in Ocala, Marion County, via CON # The applicant is currently participating in the Florida Administrative Hearings process regarding CON # The applicant states that it is not seeking final approval for both projects, rather it is the applicant s commitment (that) it will implement only one of the facilities, either CON #10009 or #10048, which is dependent upon that CON which first receives final order and the corresponding final CON. 2 Once either application receives final approval, it will withdraw the other project. Should CON #10048 be approved, the applicant s commitment will be a condition to such withdrawal. The total project cost is estimated at $25,923,588. The project involves 66,900 gross square feet of new construction at a total construction cost of $13,053, A January 5, 2007 article in Health & Fitness indicates that the Auto-Ambulator is a sophisticated treadmill device that helps patients replicate normal walking patterns using the therapeutic concept of body weight-supported ambulation to simulate normal walking motion. The applicant estimates $3,258,500 in total equipment costs for the facility. 2 CON Application #10048, page 2. 3

4 D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section , Florida Statutes, rules of the State of Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code, and local health plans. 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 and data 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(s) best meets the review criteria. Rule 59C-1.010(2) (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, Cheslyn Green, analyzed the application with consultation from the financial analyst, Everett Butch Broussard, who reviewed the financial data and architect, Scott Waltz, who evaluated the architecturals and the schematic drawings. 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 and applicable rules of the State of Florida, Chapter 59C-1 and 59C-2, Florida Administrative Code. 1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed need pool? ss (1), Florida Statutes. Rule 59C-1.008(2), Florida Administrative Code and Rule 59C-1.039(5), Florida Administrative Code. 4

5 In Volume 35, Number 03, dated January 23, 2009 of the Florida Administrative Weekly, a fixed need pool of zero beds was published for CMR beds in District 3 for the July 2014 planning horizon. District 3 has 125 licensed beds and 56 approved CMR beds 3. District 3 experienced an occupancy rate of percent in the 125 CMR beds that were licensed during the 12-month reporting period ending June 30, District 3 local health council reported revised utilization data on May 6, 2009, which indicates that HealthSouth Rehabilitation Hospital of Spring Hill reported 5,787 patient days or percent occupancy during 2d quarter This results in HealthSouth Spring Hill averaging percent and District 3 averaging percent occupancy during the 12 months ending June 30, The applicant is applying outside of the fixed need pool. b. According to 59C (5)(d) of the Florida Administrative Code, need for new or expanded comprehensive medical rehabilitation inpatient services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule. Regardless of whether bed need is shown under the need formula in paragraph (5)(c), no additional comprehensive medical rehabilitation inpatient beds shall normally be approved for a district unless the average annual occupancy rate of the licensed comprehensive medical rehabilitation inpatient beds in the district was at least 80 percent for the 12-month period ending six months prior to the beginning date of the quarter of the publication of the fixed bed need pool. As shown in the table below, District 3 s 125 licensed CMR beds experienced an occupancy rate of percent during the 12-month period ending June 30, Comprehensive Medical Rehabilitation Bed Utilization District 3 June 2007 to June Month Total Occupancy % Facility Beds County Jan.-Mar Apr.-Jun Shands Rehabilitation Hospital 40 Alachua 70.69% 69.09% 69.23% Leesburg Regional Medical Center-North 15 Lake 85.57% 77.29% 75.10% HealthSouth Rehab Hospital of Spring Hill 70 Hernando 90.85% 61.82% 84.52% Total District Beds/District Utilization % 66.00% 78.25% The applicant has CON #10009 approved to establish a 40-bed CMR hospital. Seven Rivers Regional Medical Center has CON Application #9933 approved to establish a 16-bed CMR unit that is not scheduled to accept its first patient until after May 14, Source: Florida Hospital Bed and Service Utilization by District published January 23, 2009 & CON # HealthSouth Rehabilitation Hospital of Spring Hill has Exemption #E approved effective May 7, 2009 to add 10 CMR beds to the existing 70-bed facility. 5

6 As noted in the table above, of the three operational CMR facilities in the district, in the last two quarters for which data is available, the facility experiencing the lowest rate of total occupancy was Shands Rehabilitation Hospital in Alachua County. The facility experiencing the highest rate of total occupancy was HealthSouth Rehabilitation Hospital of Spring Hill. c. Other Special or Not Normal Circumstances The applicant states it intends to serve all residents of Marion County and that there are not normal circumstances that justify its 60-bed request. The applicant cites insufficient geographic and programmatic access; the need for comprehensive medical rehabilitation care relative to the area s patient population; lack of adequate, available and accessible CMR services; and the needs of the community at large as not normal circumstances that exist in District 3. The applicant states that the Agency s CMR bed need calculation is based on district wide utilization; and without a CMR facility in the proposed service area, there is virtually no utilization in the service area and therefore, no need. The Agency s need projections are based on empirical evidence of projected population increases over a specified period of time along with past utilization of particular services and project no need. District 3 utilization for the 12-month period of July 2007 through June 2008 was percent with HealthSouth Rehabilitation Hospital of Spring Hill, licensed for 70 CMR beds during the reporting period having the highest occupancy at percent. As stated above, revised utilization shows HealthSouth Rehabilitation Hospital of Spring Hill averaging percent and District 3 averaged percent occupancy during the 12 months ending June 30, Regarding insufficient geographic and programmatic access, the applicant states that District 3 is the single largest health planning district in the state yet it has only three CMR facilities to serve the 16- county district. The three facilities include Shands Rehabilitation Hospital with 40 beds in Alachua County, Leesburg Regional Medical Center North with 15 beds in Lake County and HealthSouth Rehabilitation Hospital of Spring Hill (70 beds) in Hernando County. The applicant states that there are 125 CMR beds between the three hospitals, of which 70 are licensed by HealthSouth Spring Hill, which is the largest CMR hospital in the district and has an occupancy rate of 95 percent during peak season. The applicant contends that HealthSouth Spring Hill is neither available nor accessible to the population targeted in this application because it is 70 miles away from the center of the proposed Ocala service area. 6

7 The applicant states that with the three CMR facilities in District 3, the services are not accessible to residents of the proposed Ocala service area due to extended drive times that are between 50 to 60 minutes (Shands Rehab Hospital being the closest) to an hour and 30 minutes (HealthSouth Spring Hill Rehab Hospital being the most distant) from the applicant s identified Ocala service area. The applicant also cites travel routes on Highway 50, Interstate I-75, U.S. 441, US-19, State Road 200, and both County Roads 484 and 488 as presenting hazardous conditions through road construction, heavy traffic, dimly lit areas, and two and four lane roads heavily traveled by RV s and large trucks. The applicant provides a traffic study prepared by Kimley-Horn and Associates, Inc. The traffic study was provided to demonstrate extended travel times, road congestion, or hazardous driving conditions for the elderly and their families. According to the traffic study, average travel time to Shands Rehab Hospital is 52 minutes and average travel time to Leesburg Regional is 63 minutes. Kimley-Horn and Associates, Inc. also noted travel conditions such as poor lighting, narrow travel lanes, poor signage and construction as travel conditions that would affect the travel of the elderly. The travel time study procedures were based upon the methodology contained in the Florida Department of Transportation s Manual on Uniform Traffic Studies and the Institute of Transportation Engineers Manual of Traffic Engineering Studies. 7

8 The applicant asserts that because most of District 3 is not within reasonable distance to access inpatient rehabilitation services, much of the district s residents are not utilizing this level of care and therefore the Agency has published a need in District 3 of zero. In sum, the applicant states that the proposed Ocala service area contains 761 acute care beds (including 30 beds to be added at Ocala Regional Medical Center via 8

9 notification) and 90 percent of CMR patients come from acute care discharges but patients in these Ocala area hospitals are generally not utilizing CMR services. The applicant states that data proves that when CMR services are available in a particular geographic area, residents utilize it. It is noted that comprehensive medical rehabilitation services are defined in the Florida Statutes as tertiary care services and unlike acute care services, which are established to serve the local community, are developed for a district-wide service area. Section (17), Florida Statutes contains the following: "Tertiary health service" means a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost-effectiveness of such service. Examples of such service include, but are not limited to, pediatric cardiac catheterization, pediatric open-heart surgery, organ transplantation, neonatal intensive care units, comprehensive rehabilitation, and medical or surgical services which are experimental or developmental in nature to the extent that the provision of such services is not yet contemplated within the commonly accepted course of diagnosis or treatment for the condition addressed by a given service. The Agency shall establish by rule a list of all tertiary Also of note, inpatient rehabilitation services are geographically accessible to District 3 residents within the two-hour driving time standard established in Rule 59C (6), Florida Administrative Code, which requires that CMR inpatient services to be available within a maximum ground travel time of two hours under average travel conditions for at least 90 percent of the district s total population. The applicant states that an increase in the elderly population in the 25 zip code proposed Ocala service area will also increase the need for CMR services. According to the applicant the projected increase in the 65 and older cohort in the service area is comparable to the district overall but nearly six percent greater than the state growth rate. The applicant asserts that statewide the 65+ age cohort will comprise 17.9 percent of the total population yet in the service area the 65+ population will comprise 24.6 percent by According to the applicant, the proposed HealthSouth Ocala service area has a considerable portion of 65 and older individuals whom are the most frequent consumers of CMR services as they typically account for approximately 70 percent of all CMR cases. 9

10 Ocala Service Area HealthSouth Ocala Service Area Current and Projected Population by Age Cohort CY 2008 and CY 2013 CY 2008 CY Year Percent Change Ages , , % Ages ,483 94, % Total 340, , % % % 24.6% -- District 3 Ages ,223,909 1,355, % Ages , , % Total 1,575,449 1,766, % % % 23.3% -- Non-Service Area District 3 (Total of District 3 Excluding Ocala Service Area) Ages ,186,805 15,149, % Ages 65+ 2,837,325 3,336, % Total 17,024,130 18,486, % % % 18.0% -- State of Florida Ages ,420,714 16,505, % Ages 65+ 3,178,865 3,748, % Total 18,599,579 20,253, % % % 18.5% -- Source: CON Application #10048, page 21. Regarding the applicant s claim that there is consistency between the unmet need in the district and the proposed Ocala service area patient base, the applicant states that because of the number of elderly in its immediate area, there is an unmet demand for CMR services. The chart below illustrates the percentage of elderly patients in the district between 2008 and

11 Population Estimates for District 3 Counties and Percent Change by County for the July 2013 Planning Horizon County Total January 2008 Total July 2013 Percent Change Age 65+ January 2008 Age 65+ July 2013 Age 65+ Percent Change Alachua 249, , % 24,301 29, % Bradford 29,227 30, % 3,977 4, % Citrus 141, , % 45,734 51, % Columbia 66,080 70, % 10,227 12, % Dixie 15,864 17, % 3,084 3, % Gilchrist 17,275 19, % 2,709 3, % Hamilton 14,745 15, % 1,760 2, % Hernando 164, , % 47,529 54, % Lafayette 8,408 9, % 1,071 1, % Lake 290, , % 73,616 88, % Levy 40,472 43, % 7,791 9, % Marion 329, , % 79,368 92, % Putnam 74,820 77, % 14,261 15, % Sumter 92, , % 28,653 35, % Suwannee 40,259 45, % 7,460 9, % Union 16,040 16, % 1,328 1, % District Total 1,591,048 1,753, % 352, , % State Total 18,812,038 20,393, % 3,234,876 3,760, % Source: AHCA Population Projections, published September As shown above, the expected growth in the elderly population by 2013 for Marion County is not significantly higher than a number of other District 3 counties. The district is expected to experience a higher growth than the state by 2.84 percent. The applicant indicates that the age 65+ population in the 25 zip code Ocala service area, which includes all Marion County, a portion of northernmost Lake and Sumter Counties and a portion of easternmost Levy County, will increase from 79,483 in CY 2008 to 94,549 in CY 2013 or by 19.0 percent. AHCA population projections for January 1, 2008 show an age 65+ population in Marion County of 79,368, which is projected to increase to 92,822 by July 1, 2013 or by percent. This compares to the district age 65+ population projected increase from 352,869 in January 2008 to 415,670 by July 2013 or by percent. The increase for the state is projected to go from 3,234,876 to 3,760,072 or by percent. Marion County s population age 65+ accounted for percent of the January 2008 district total and percent of the 2013 projected district total. Marion County population at 329,528 of the district s 1,591,048 total as of January 1, 2008, accounts for percent of the district total. Marion is projected to have 366,569 of the district s 1,753,221 population by July 1, 2013 total or percent of the district total. Marion County has the largest population and age 65+ population of any county in the district for both 2008 and

12 HealthSouth contends that there are no like and available CMR services available within the proposed Ocala service area, and appropriate patients are either not receiving medical rehabilitation at all or they are accessing lower levels of care. The applicant provides the following chart based on the criteria for admission to a CMR program that are standard categories set by the Centers for Medicare and Medicaid and are used for its analysis of bed need 4. HealthSouth Ocala Service Area Resident Discharges CMS 13 Total Discharges and Those to Rehabilitation Hospital Programs 12 Months Ending June 30, 2008 Rehabilitation Hospital Discharges Rehab Conversion Rate Total CMS 13 Diagnoses Discharges Amputation % Brain Injury % Burns % Congenital Deformities % Hip Fracture % Joint Replacement % Major Multiple Trauma % Neurological Disorders % Rheumatoid Arthritis % Spinal Cord Injury % Stroke 1, % Systematic Vasculidities % Total CMS 13 Cases 3, % Total without Brain and Spinal Cord Injury 2, % Source: CON Application #10048, page 26. The applicant states that during a 12-month period ending June 30, 2008, there were 3,842 qualifying discharges of Ocala service area residents from all hospitals who met the CMS 13 admissions criteria. Of these qualifying cases, as asserted by the applicant, 1,412 were discharged to home, 564 were discharged to home health and 1,261 were discharged to a skilled nursing facility. However, according to the chart above only 83 cases of the qualifying 3,842 qualifying discharges were discharged to a rehabilitation hospital. HealthSouth presents two need methodologies; the first is bed need based on discharge use rate of freestanding CMR market areas and bed need determined by CMS 13 criteria in the Ocala service area. 4 CMS (Centers for Medicare and Medicaid) established diagnostic related groups (DRGs) for acute care it also developed specific criteria for an acute care rehabilitation hospital. There are 13 diagnosis categories referred to throughout the CON as CMS 13: active polyarticular rheumatoid arthritis; amputation; brain injury; burns; congenital deformity; fracture femur; hip and knee replacement; major multiple trauma; neurologic disorders; osteoarthritis or degenerative joint disease involving two or more weight bearing joints; spinal cord injury; stroke; and systemic vasculidities with joint inflammation. CON Application #10048, page 26 12

13 The applicant s bed need based on discharge use rate of freestanding CMR market areas is as follows. All population and discharge data by patient county and age cohort are sorted into two categories, those counties with freestanding CMR hospital (freestanding markets) and those areas without freestanding CMR hospitals. The number of facility discharges was then applied to population by defined area resulting in a provider discharge use rate. The following table summarizes use rates by age cohort for freestanding communities, all other markets and statewide. CMR Discharge Use Rate per 1,000 Population by Age Cohort Markets with Freestanding CMR Hospitals vs. Markets without 12 Months Ending June 30, 2007 Ages 0-64 Ages 65+ Freestanding Markets All Other Markets State of Florida Source: CON Application # page 34, stated as based on AHCA Inpatient Rehab database, LHC utilization reports, Claritas & NHA Analysis. HealthSouth Ocala indicates that based on the new DRG system which changed in 2008 it cannot evaluate how many patients were provided rehabilitation in the non-freestanding CMR hospitals. The applicant concludes that the above discharge use rate of per thousand population in the freestanding market versus the 3.8 discharge rate per thousand population in the closed market, without freestanding rehab, resulting in 37 percent (3.83/10.27) relative utilization demonstrates lack of access and results in patients foregoing necessary and clinically appropriate treatment. Therefore, the applicant utilizes the freestanding market use rate for both age cohorts to the forecasted Ocala service area population to arrive at forecasted expected cases. The applicant applies the 15.3 ALOS resulting in forecasted patient days and ADC expected in the proposed Ocala service area. 13

14 HealthSouth Ocala Service Area Bed Need by Discharge Use Rate of Freestanding CMR Markets An Open Model Market Calendar Years Rehab Case Demand Ages < Rehab Case Demand Ages 65 & over Total Rehab Demand 1,153 1,189 1,224 Rehab ALOS 15.3 Total Patient Days 17,636 18,185 17,734 Average Daily Census Bed 85% Occupancy Source: CON Application # page 34, stated as based on AHCA Inpatient Rehab Database, Claritas & NHA Analysis. The applicant indicates that no adjustment for in-migration or admissions from non-hospitals is included in this projection as it is based on facility use rate as opposed to resident use rate and already takes into account these additional population groups. The methodology is based on the weighted use rate of all 12 markets in Florida where freestanding CMR hospitals operate. HealthSouth is in nine of these markets. The applicant contends this is a much more accurate predictor of bed need as it relies on Florida data as opposed to the Medpar 5 data, but does not account for local market utilization and the unique circumstances that exist in the proposed Ocala service area. The applicant contends that its Bed Need Determined by CMS 13 Admission Criteria in Ocala Service Area methodology is the most accurate predictor of bed need because it accounts for local market conditions and is based on actual hospital utilization by service area residents, their patient records identifying their clinical circumstances and the resulting designation of each patient record as meeting the CMS 13 clinical criteria for admission. The Centers for Medicare and Medicaid (CMS) 13 categories developed as specific criteria for an acute care rehabilitation hospital is discussed. To qualify for an acute rehab designation, a minimum of 60 percent of all patients admitted must have a primary diagnosis within one of the following 13 diagnosis categories: active polyarticular rheumatoid arthritis; amputation; brain injury; burns; congenital deformity; fractured femur; hip and knee replacement; 5 MEDPAR is the abbreviation for Medicare Provider Analysis and Review. A MEDPAR file allows researchers to track inpatient history and patterns/outcomes of care over time. MEDPAR files contain data from claims for services provided to beneficiaries admitted to Medicare Certified inpatient hospitals and skilled nursing facilities per Centers for Medicare & Medicaid Services website at 14

15 major multiple trauma; neurologic disorders; osteoarthritis or degenerative joint disease involving two or more weight bearing joints; spinal cord injury; stroke; and systemic vasculidities with joint inflammation. The remaining 40 percent of admissions may have cardiac, pulmonary or other disabling conditions which require rehab services and still meet the general admission criteria for a rehab hospital. The applicant indicates that it used the 60 percent rule as described above and assessed all patient records (UB-92s from the AHCA inpatient discharge database) identifying qualifying patient records according the CMS 13 rules issuing ICD-9 coding. As stated earlier, the applicant asserts that there were 3,842 qualifying discharges of Ocala service area residents from all hospitals who met the CMS 13 admissions criteria. Of these qualifying cases 1,412 were discharged to home, 564 were discharged to home health and 1,261 were discharged to a skilled nursing facility. However, according to the applicant only 83 cases of the qualifying 3,842 qualifying discharges were discharged to a rehabilitation hospital. The remaining 522 CMS 13 qualifying discharges were discharged in the following categories: Expired (200), Hospice (179), Specialty Unit Non-Rehab (25), Short-term hospital inpatient care (66), Long-Term Care Hospital (22), and an unexplained other (30). 6 The applicant s use of CMS 13 qualifying categories in its analysis supports its contention that there is need for the project. Medicare uses the CMS 13 qualifying medical conditions to ensure Medicare patients have access to high quality rehabilitation care in the most appropriate setting. Comprehensive medical rehabilitation (CMR) facilities are paid at a higher rate than other hospitals because CMR hospitals are designed to offer specialized rehabilitation care to patients with the most intensive needs. CMS information indicates this payment system is having the desired effect of ensuring the most appropriate Medicare beneficiaries have access to care in CMR facilities, while lower acuity cases are increasingly being served in settings that are both less intensive and less costly. 6 CON Application #10048, page

16 The applicant provides a discussion of the area s 10 skilled nursing facilities, home health services, and discharges to home and concludes that with only 2.16 percent of all CMR appropriate cases admitted to rehab beds there is clear indication that there is a programmatic and geographic access problem prevalent within the proposed Ocala service area. HealthSouth contends that a reasonably conservative and achievable 15 percent of the 3,842 CMS qualifying discharges would convert into CMR beds. Of the 3,842 cases, 1,455 were patients under the age of 65 and 2,387 were older than 65. These cases are solely related to residents of the service area and exclude seasonality. Population and total CMR 13 admission criteria in the proposed Ocala service area in 2008 (12 months ending June 30, 2008) were used to compute a discharge use rate per 1,000 population by age cohort. HealthSouth Ocala Service Area Cases Meeting CMS 13 Admissions Criteria Discharge Use Rate per 1,000 Population 12 Months Ending June 30, 3008 Discharge Status Ages 0-64 Ages 65+ CMS 13 Cases 1,455 2,387 Population 261,511 79,483 Use Rate per 1,000 Population Source: CON Application # page 39, stated as based on AHCA Inpatient Rehab database, Claritas & NHA Analysis. In addition to the CMR cases that meet the CMS criteria, the applicant indicates that HealthSouth s experience is that 40 percent of a CMR hospital s cases can be diagnoses other than the 13 CMS categories. So, the bed need calculation includes a 40 percent addition to the projected CMS market discharges. In the table below, the applicant applies the 15.3 ALOS to projected discharges to arrive at forecasted patient days, ADC and bed need at 85 percent occupancy for the proposed Ocala service area facility. 16

17 HealthSouth Ocala Service Area Forecasted Bed Need by CMS 13 Admission Criteria Calendar Years 2011 through CMS 13 Criteria Case Demand From Service Area Ages 0 to 64 1,549 1,580 1,612 Ages 65 & over 2,658 2,749 2,839 Subtotal All Ages 4,207 4,329 4,451 Conversion Rate of CMS 13 Criteria Case Service Area Ages 0 to 64 15% Ages 65 & over 15% Subtotal All Ages Non-CMS 13 Criteria Cases From Service Area (40%) Ages 0 to Ages 65 & over Subtotal All Ages Total Cases From Service Area Ages 0 to Ages 65 & over Subtotal All Ages 1,052 1,082 1,113 In-Migration from Acute Care Setting (Outside Service Area) Total All Ages 5% Total Including in-migration 1,104 1,136 1,168 Admitted From Home, SNF, LTAC, Other Total All Ages 4% Total Including admits from home 1,149 1,182 1,215 Rehab ALOS 15.3 Total Patient Days Served 17,574 18,083 18,591 Average Daily Census Bed 85% Occupancy Source: CON Application #10048, page 41 from AHCA Data Tapes & NHA Analysis. HealthSouth concludes that this methodology for calculating bed need is the most reliable, as it accounts for the actual historical experience in the local market. It does appear to demonstrate local market conditions as it purports to be based on actual hospital utilization by service area residents, patient records identifying clinical circumstances and the resulting designation of each patient as meeting the CMS 13 clinical criteria for admission. The applicant s projection of five percent of cases being in-migration also appears to be reasonable. However, the 40 17

18 percent of cases being non-cms cannot be affirmed by this reviewer. Should all the above be accurate, the applicant s projections appear to be reasonable. HealthSouth Ocala indicates that the bed need at 85 percent occupancy for 2011, the first year of operation, based on either of the two methodologies is 57 beds. According to the applicant, HealthSouth Spring Hill s experience is that 25.6 percent of CMS 13 criteria eligible patients in its service area that are discharged from local hospitals are admitted to HealthSouth Spring Hill. This being noted, the applicant projects the following forecasted utilization for the facility, which it states is based on its needs assessment, geographic and programmatic access constraints and the existing health care landscape within the proposed Ocala service area 7. HealthSouth Ocala Forecasted Utilization Years One, Two and Three of Operation Admissions Patient Days 8,690 12,041 15,223 Average Daily Census Average Length of Stay Occupancy Percent 39.7% 55.0% 69.5% Source: CON Application #10048, page 72. The applicant asserts that with only 125 CMR beds in District 3 with an occupancy rate of percent, the three existing rehabilitation hospitals are not geographically or programmatically available to serve patients of the proposed Ocala service area. In addition, the applicant states that if these three hospitals were geographically accessible, they would not have the available beds to handle additional demand, particularly such significant demand that exists in the service area, or in the case of Shands providing general rehabilitation services based on its trauma designation and specialty in brain and spinal cord injury. Shands is located in Alachua County and as this project is proposed to be located in Marion County, the applicant contends that two counties basically have mutually exclusive health care networks and are truly independent of each other. Leesburg Regional Hospital North is described as a closed model unit which relies on transfers from its host hospital Leesburg Regional Medical Center. HealthSouth Spring Hill is the largest CMR hospital in the district and has an occupancy rate of 95 7 CON Application #10048, page

19 percent during peak season. The applicant contends that HealthSouth Spring Hill is not available or accessible to the population targeted in this application because of its overall utilization and because it is 70 miles away from the center of the proposed Ocala service area. These assertions appear reasonable. HealthSouth also provides a separate analysis of the forecasted stroke bed need as determined by CMS-13 admissions criteria cases for the CY period. This analysis indicates that 13 beds would be needed in 2011 and 2012 with 14 beds needed in This is stated to be in response to the letters from Ocala Regional concerning need for rehab treatment for stroke victims. However, stroke victims are part of the CMS 13 admission criteria and as such are in the total projections. The applicant also describes the seasonality of the area as an additional positive in demonstrating need and includes a five percent in-migration in the overall need analysis. The applicant states that in addition to the illustrated need, the community support, and special circumstances present in the community, HealthSouth Ocala will offer the service area and District 3 region the widest array of specialized programs and services. It also asserts that inpatient comprehensive medical rehabilitation services are limited in the service area, and with the establishment of the 60-bed CMR hospital in Marion County, HealthSouth Ocala will meet the needs of the underserved and underinsured and ameliorate the not normal circumstances of geographic and programmatic deficiencies. 2. Agency Rule Criteria: Please indicate how each applicable preference for the type of service proposed is met. Refer to Chapter 59C-1.039, Florida Administrative Code, for applicable preferences. 3. General Provisions: (a) Service Location. The CMR inpatient services regulated under this rule may be provided in a hospital licensed as a general hospital or licensed as a specialty hospital. 19

20 The applicant is proposing to establish a new 60-bed comprehensive medical rehabilitation hospital. (b) Separately Organized Units. CMR inpatient services shall be provided in one or more separately organized units within a general hospital or specialty hospital. The applicant is proposing to establish a new 60-bed comprehensive medical rehabilitation hospital. (c) Minimum Number of Beds. A general hospital providing comprehensive medical rehabilitation inpatient services should normally have a minimum of 20 comprehensive medical rehabilitation inpatient beds. A specialty hospital providing CMR inpatient services shall have a minimum of 60 CMR inpatient beds. The applicant states that based on the analysis of the area s demographics, hospital utilization patterns, utilization of inappropriate alternatives to CMR services in the area and historical experience, HealthSouth has determined there to be a need for 60 beds. The applicant states that the facility will have expansion zones so that it may increase its bed count as needed. (d) Conformance with Criteria for Approval. A CON for the establishment of new CMR inpatient services, the construction or addition of new CMR inpatient beds, or the conversion of licensed hospital acute care beds to CMR inpatient beds shall not normally be approved unless the applicant meets the applicable review criteria in Section , Florida Statutes, and the standards of need determination criteria set forth in this rule. See discussion in E.1. above. (e) Medicare and Medicaid Participation. An applicant proposing to increase the number of licensed CMR inpatient beds at its facility shall participate in the Medicare and Medicaid programs. Applicants proposing to establish a new comprehensive medical rehabilitation inpatient service shall state in their application that they will participate in the Medicare and Medicaid programs. The applicant states that it will be a participating provider in the Medicare and Medicaid programs. The applicant proposes to 20

21 ensure the provision of care to underserved/underprivileged persons by conditioning the CON for a combined 2.5 percent of patient days to Medicaid and charity care patients. (f) Comparative Review. A certificate of need application submitted for review under this rule will be subject to a comparative review with all other certificate of need applications subject to review under this rule that propose to serve the same district and which were submitted during the same review cycle. HealthSouth Rehabilitation Hospital of Ocala, LLC (CON #10048) is the only applicant in this batching cycle in District 3 seeking to establish a new CMR hospital; therefore, this criterion is not applicable. (4) Required Staffing and Services. (a) Director of Rehabilitation. CMR inpatient services must be provided under the medical director of rehabilitation who is a board-certified or board-eligible physiatrist and has had at least two years of experience in the medical management of inpatients requiring rehabilitation services. The applicant states it will seek an appropriately qualified and credentialed physiatrist with at least two years of experience in the medical management of inpatients requiring rehabilitation services. The applicant states it is evaluating various candidates and will identify the most appropriate physician to fill the position of medical director. The applicant notes that HealthSouth Corp. s Chief Medical Officer, Dexanne Clohan, MD, was recently named as one of the top five most powerful physician executives in the nation by Modern Physician and Modern Healthcare for (b) Other Required Services. In addition to the physician services, CMR inpatient services shall include at least the following services provided by qualified personnel: 1. Rehabilitation nursing 2. Physical therapy 3. Occupational therapy 4. Speech therapy 5. Social services 6. Psychological services 7. Orthotic and prosthetic services 21

22 The applicant states that it will provide all seven of the above other required services and will expand on those services by including therapeutic recreation services and respiratory therapy services. (5) Criteria for Determination of Need: (a) Bed Need. A favorable need determination for proposed new expanded comprehensive medical rehabilitation inpatient services shall not normally be made unless a bed need exists according to the numeric need methodology in 59C (5)(c), Florida Administrative Code. The Agency published zero need for CMR beds in the district. The applicant states that not normal circumstances exist in District 3. The applicant states that its proposed project is outside the fixed need pool and is in response to: (1) the special not normal circumstances that have been occurring in Marion County and the applicant s proposed Ocala service area; (2) the need for comprehensive medical rehabilitation care relative to this area s unique patient population; (3) lack of adequate, and available accessible CMR beds in the service area; and (4) the needs of the community at large. See item E. 1. (b) Applications from general hospitals for new or expanded comprehensive medical rehabilitation inpatient beds shall not normally be approved unless the applicant converts a number of acute care beds, as defined in Rule 59C-1.038, Florida Administrative Code, excluding specialty beds, which is equal to the number of comprehensive medical rehabilitation inpatient beds, unless the applicant can reasonably project an annual occupancy rate of 75 percent for the applicable planning horizon, based on historical utilization patterns, for all acute care beds, excluding specialty beds. If conversion of the number of acute care beds which equals the number of proposed comprehensive medical rehabilitation inpatient beds would result in an annual acute care occupancy exceeding 75 percent for the applicable planning horizon, the applicant shall only be required to convert the number of beds necessary to achieve a projected annual 75 percent acute care occupancy for the applicable planning horizon, excluding specialty beds. The proposed project involves the establishment of a new freestanding 60-bed comprehensive medical rehabilitation hospital in Marion County. This criterion is not applicable to this project. 22

23 (c) Priority Consideration for Comprehensive Medical Rehabilitation Inpatient Services Applicants. In weighing and balancing statutory and rule review criteria, the Agency will give priority consideration to: 1. An applicant that is a disproportionate share hospital as determined consistent with the provisions of section , Florida Statutes. The applicant states that it is not a disproportionate share provider and as a CMR specialty hospital will not be eligible to be a disproportionate share hospital, pursuant to the applicable statute stated above. 2. An applicant proposing to serve Medicaid-eligible persons. The applicant has conditioned the CON for a combined 2.5 percent of patient days to Medicaid and charity care patients. In pro formas submitted for this project, the applicant shows that 2.0 percent of the CMR hospital s annual patient days will be provided to Medicaid patients in year one with 2.18 percent and 2.19 percent for years two and three respectively. 3. An applicant that is a designated trauma center, as defined in section 10D , Florida Administrative Code. The applicant states that the facility will not be a designated trauma center, pursuant to the applicable code stated above. However, the applicant states it will create a specialized rehabilitation program for stroke survivors. (d) Access Standard. Comprehensive medical rehabilitation inpatient services should be available within a maximum ground travel time of two hours under average travel conditions for at least 90 percent of the district s total population. Inpatient CMR services in the district are available within a twohour drive time for at least 90 percent of the district s total population. There are three existing CMR hospitals and one CON approved 16-bed CMR unit in District 3 that are between 50 minutes to 60 minutes (Shands Rehab Hospital being the closest) 23

24 and an hour and 30 minutes (HealthSouth Spring Hill Rehab Hospital being the most distant) from the applicant s identified Ocala service area. The applicant alleges that the existing CMR hospitals within District 3 are geographically inaccessible to the proposed Ocala service area, between 50 to 90 minutes away from the service area s central point. The applicant provides a traffic study provided by Kimley-Horn and Associates, Inc. whose findings essentially support the applicant s assertions regarding geographic inaccessibility of CMR providers to the Ocala service area patients, families, and physicians. The applicant also states that because of rural roadway patterns, such as two-lane roads and indirect east west routes, much of the district appears more accessible on a map than it really is. The applicant notes different travel routes to and from the proposed Ocala service area to the respective CMR hospital locations throughout District 3 in order to demonstrate the difficulty in travel particularly for elderly individuals. However, the standard for access to this tertiary care service, as adopted in rule, is met in this planning area. As noted earlier, the applicant s project would certainly be more convenient for Ocala area residents and perhaps there is also a safety element here for elderly loved ones visiting CMR patients. (e) Quality of Care: Compliance with Agency Standards. CMR inpatient services shall comply with the agency standards for program licensure described in Section 59A-3, Florida Administrative Code. Applicants who submit an application that is consistent with the agency licensure standards are deemed to be in compliance with this provision. The applicant states it will become accredited by either Joint Commission or Commission on Accreditation of Rehabilitation Facilities, depending on which is more stringent at the time of licensure. The applicant also states that it will implement a quality standards program similar to those programs used at every HealthSouth hospital. Additionally, the applicant will seek Joint Commission Disease-Specific Certification of its stroke rehabilitation program which it will initiate immediately upon licensure. 24