OCTOBER 2017 BILL WALKER GOVERNOR VALERIE DAVIDSON COMMISSIONER

Transcription

1 COMPARATIVE REVIEW MAT-SU REGIONAL MEDICAL CENTER: ESTABLISH ADULT ACUTE PSYCHIATRIC SERVICES AND SUBSTANCE ABUSE TREATMENT SERVICES & ALASKA REGIONAL HOSPITAL: ESTABLISH ADULT ACUTE PSYCHIATRIC SERVICES OCTOBER 2017 BILL WALKER GOVERNOR VALERIE DAVIDSON COMMISSIONER State of Alaska Department of Health & Social Services Office of Rate Review Certificate of Need Program

2 Table of Contents BACKGROUND... 3 PROJECT DESCRIPTION... 3 PROJECT COSTS... 4 REVIEW STANDARDS... 4 General Review Standard #2 Relationship to Applicable Plans... 8 General Review Standard #3 Stakeholder Participation... 9 General Review Standard #4 Alternatives Considered: General Review Standard #5 Impact on the Existing System: General Review Standard #6 Access: SERVICE-SPECIFIC REVIEW STANDARDS Additional Considerations for Concurrent Review of More than one Application Review Methodology FINANCIAL FEASIBILITY Impact to Medicaid PUBLIC COMMENT.. 24 RECOMMENDATION Appendix A Department Request for Additional Information Appendix B - Additional Applicant Information MSRMC Appendix C - Additional Applicant Information ARH

3 BACKGROUND This is a comparative review (aka concurrent review ) of two Certificate of Need (CON) applications ( 7 AAC ). The originating application for this CON review was submitted by Mat-Su Regional Medical Center (MSRMC) on June 27, The proposed project will expand its existing hospital health care services by adding services for inpatient adult acute psychiatric treatment and substance abuse treatment. MSRMC also proposes an outpatient treatment service which is not subject to CON. MSRMC is a licensed 74-bed acute care hospital located in Palmer, Alaska. Mat-Su Regional Medical Center s exact legal name is Mat-Su Valley Medical Center, LLC DBA Mat-Su Regional Medical Center. The two governing owners are Community Health Systems Professional Services Corporation (for-profit entity) and Mat-Su Health Foundation (not-for-profit entity). See CON Application at 2. A concurrent application for similar services was received from Alaska Regional Hospital (ARH) on July 12, This project includes adult acute inpatient psychiatric treatment as well as outpatient treatment services, but does not include inpatient substance abuse and withdrawal management services. ARH is a licensed 250-bed acute care hospital located in Anchorage, Alaska. It is operated by Hospital Corporation of America and is the second largest acute care hospital in the state. See CON Application at 5. PROJECT DESCRIPTION Mat-Su Regional Medical Center Acute Adult Psychiatric Services and Substance Abuse Treatment MSRMC seeks to establish adult acute behavioral health services in the Matanuska-Susitna Borough by adding 36 inpatient beds for adult psychiatric services and adult substance abuse services within the hospital. MSRMC anticipates utilizing up to 9 of the 36 beds for substance abuse and withdrawal treatment with the remainder being utilized for adult acute psychiatric care. MSRMC plans to have all beds identified as Designated Evaluation and Treatment (DET) beds so that services are available to both voluntary admissions and involuntary commitments under Title 47 of the Alaska Statutes. The project will be up to 28,040 square feet in size with a total cost not to exceed $19,250,756. The completion date for the project is on or before December Alaska Regional Hospital Acute Adult Psychiatric Services ARH plans to renovate 24 of its 250 existing acute care beds into adult inpatient psychiatric beds located in the main Alaska Regional Hospital building. The beds will be divided between a 12-bed voluntary unit and a 12-bed involuntary unit which will include increased security and restraint capacity. ARH plans to have all beds designated DET beds so that services are available to both voluntary admissions and involuntary commitments under Title 47 of the Alaska Statutes. 3

4 The unit will be situated in close proximity to the Emergency Room and will have direct access to emergency services. Involuntary beds will accept court ordered patients of a non-violent and nonfelony nature. The project cost is estimated to be $6,776,000 and will encompass 11,125 SF. The project completion date is estimated to be one year from the approval of the CON. PROJECT COSTS MSRMC Establishment of Adult Acute Psychiatric Services and Substance Abuse Services Total cost of the project is estimated at $19,250,756 ARH Establishment of Adult Acute Psychiatric Services Total cost of the project is estimated at $ 6,676,000 $15,000,000 Construction Costs $ 1,145,241 Movable Equipment $ 3,105,515 Other Costs $ 5,241,000 Construction Costs $ 380,000 Movable Equipment $ 1,055,000 Other Costs REVIEW STANDARDS MSRMC and ARH are both licensed health care facilities under AS (8), and each proposed project consists of an expenditure that is over the $1.5 million CON threshold for construction of a health care facility or alteration of a health care facility s capacity. Therefore, each project will receive general review and service-specific review for Behavioral Health Services. To perform this review, each project is first subject to the General Review Standards. Then, [a]fter determining whether an applicant has met the general review standards in Section I of this document, the department will apply the... service-specific review standards, as applicable, in its evaluation of an application for a certificate of need. Alaska Certificate of Need Review Standards and Methodologies at Since this is a concurrent review of two competing proposals, additional considerations specified in regulation for concurrent review will also be applied in this analysis. Alaska Certificate of Need Review Standards and Methodologies at 3. General Review Standards General Review Standard #1- Documented Need: The applicant documents need for the project by the population served, or to be served, including, but not limited to, the needs of rural populations in areas having distinct or unique geographic, socioeconomic, cultural, transportation, and other barriers to care. MSRMC Establishment of Adult Acute Psychiatric Services 4

5 (Note: The substance abuse and withdrawal management services, along with the outpatient treatment component proposed by MSRMC as part of its 36 bed adult acute psychiatric project are not subject to CON requirements.) Documented Need: MSMRC is proposing to establish 36 adult acute psychiatric beds to serve both voluntary and involuntary patient placements. It also intends to develop an aftercare component and provide substance abuse and withdrawal management services (these items are not subject to CON requirements). MSRMC states its project is focused on the whole continuum of care as it relates to Behavioral Health. Within this role, Mat-Su Regional Medical Center s project is designed to be a single behavioral health system that serves patients affected by substance abuse and addiction issues, mental health issues, or a combination of these conditions. See CON Application at 23. To hold and treat involuntary patients (Title 47 patients, under the Alaska Statutes), per the Department of Health and Social Services (DHSS), 72 or more hours requires designation of the facility by DHSS as either a Designated Evaluation and Stabilization (DES) facility (up to 7 days, with a possible extension to a total of 10 patient days) or a Designated Evaluation and Treatment (DET) facility (up to 30 days, with a possible extension to a total of 40 days). MSRMC states they will apply for the DET designation from DHSS as part of their project. See CON Appendix B. Currently, Mat-Su Regional Medical Center contracts with Mat-Su Health Services to provide behavioral health assessments to patients. Mat-Su Health Services is a grantee of the State of Alaska that receives funds to be a Comprehensive Behavioral Center that provides psychiatric emergency services to all people in its service area who are in need of services, regardless of ability to pay. See CON Application at 21. MSRMC has seen the number of assessments performed almost double from 2014 to MSRMC states [t]his growth trend continues in 2017 as the assessments in the first quarter are 47% higher than the number of assessments performed in the first quarter of If the first quarter trend holds, Mat-Su Regional Medical Center will require over 1,100 behavioral health assessments for patients in crisis. To put this in perspective, the total assessments conducted just three years ago was 349. Id. MSRMC states it consistently holds mental health patients in two dedicated ER rooms as they await transfer to Alaska Psychiatric Institute (API). When these two emergency rooms are full, MSRMC goes on psychiatric diversion meaning police and ambulances are diverted to hospitals in Anchorage. See CON Application at 20. To put this concept of psychiatric diversion and holds into perspective, Mat-Su Regional Medical Center recently held 9 patients in its emergency department while it was on psychiatric diversion even though it has basic capacity for 2 patients. Moreover, all of those patients spent several days in the emergency department awaiting transfer to Alaska Psychiatric Institute. Id. MSRMC states that in 2016 it went on psychiatric diversion 234 times. This represents a 1,850% increase in psychiatric diversions between 2013 and See CON Application at 21. 5

6 MSRMC goes on to state, through its application, that its proposed project is crucial, especially in the Mat-Su Borough because no behavioral health continuum of care currently exists in the community. Per a Community Needs Assessment (Mat-Su Behavioral Health Environmental Scan Report 1 The Crisis Response System) Alaska has the highest rate of suicide per capita in the United States. Id. The complete array of services recommended by the Substance Abuse and Mental Health Services Administration (SAMHSA) to meet the needs of residents in crisis do not exist in the Mat-Su and access to these types of services requires private transportation to Anchorage. See CON Application at 23. Service Area: Initially, the MSMRC proposed service area was limited to the Matanuska-Susitna Borough. The proposed service area for this project is the Matanuska-Susitna Borough, and the population to be served consists of Mat-Su Borough residents. The Matanuska-Susitna Borough, located approximately 40 miles northeast of Anchorage, contains 27 communities and encompasses 24,682 square miles. It includes three incorporated cities (Wasilla, Palmer, and Houston) and 25 unincorporated regions or Census Designated Places. See CON Application at 18. Following receipt of applications, the CON Program convened a meeting with both applicants to discuss proposed services and area to be served. Since both applicants proposed services that would include involuntary psychiatric placement, which necessitates a statewide service area, the department confirmed with both applicants that the service area would be statewide. See Appendix A. ARH Establishment of Adult Acute Psychiatric Services (Note: The outpatient treatment component proposed by ARH as part of its 24 bed adult acute psychiatric project is not subject to CON requirements.) Documented Need: ARH is proposing to establish an adult inpatient psychiatric service within their existing hospital facility by converting 24 of their 250 currently licensed and certified acute care beds and dedicate those beds to in psychiatric service. The beds will be divided into a 12-bed voluntary unit and a 12-bed involuntary unit (which will feature increased security and crisis restraint capacity). The involuntary unit will accept court ordered patients of a non-violent and nonfelony nature. ARH also plans to establish an outpatient program to address the therapeutic service needs of discharged patients as they transition to outpatient status. See CON Application at 1. In their application, ARH cites many reasons for the need to increase adult acute psychiatric capacity in the State of Alaska. Some of the reasons include reference to API s rapid release 6

7 rates and ensuing high numbers of readmissions, as well as increased costs due to lack of accessibility. More access to inpatient psychiatric care will provide more Alaskans a place for stabilization and treatment for their most acute psychiatric illnesses. More access to quality stabilization and treatment will slow the rate of rapid relapse currently occurring in the adult psychiatric population and reduce the cost of care for this population. See CON Application at 21. ARH states that they have conducted three separate behavioral healthcare system assessments over the last three years, and each indicates a need for more of behavioral health care services state wide, stating there is an insufficient number of beds and availability of providers, impacting both quality and quantity of available services. See CON Application at 28. Two of the assessments referenced by ARH, one written by Agnew::Beck Consulting, LLC on behalf of the Alaska Mental Health Trust Authority, and one written by Public Consulting Group (PCG) on behalf of the State of Alaska speak to the rapid cycling of patients through admission and discharge and the detrimental impact on levels of care and service delivery at the API. Increased pressure has led to the rapid cycling of patients. The Average Length of Stay (ALOS) for patients at API in FY14 was 13 days while its peer hospitals ranged between 78 days to 1,067 days. This huge disparity is critical as patients rapidly cycle in and out of the hospital. An ALOS beyond a certain point necessary to properly stabilize and treat patients [c]an also indicate inadequate levels of care, and discharge decisions dictated more by the desire to create capacity or to optimize reimbursement than by the treatment needs of the patient. See CON Application at 29. In addition to the over-burdened state run API, ARH contends there are other contributing factors that point to the need for increased behavioral health services, these include the expansion of Medicaid, the state s Recidivism Reduction Plan and the Municipality of Anchorage s chronic homelessness and inebriate issues. The population that is generally in need of acute, inpatient psychiatric care is mostly uninsured this is an [i]ssue and is compounded by the exclusion of Medicaid as a payer source for adults in Institutes of Mental Disease such as API. Because of this exclusion, API cannot be reimbursed through Medicaid for services provided to adults. In the clear majority of cases, this shifts the burden of cost and care for the bulk of those in need from highly qualified hospitals that provide skilled care for those with mental illness to emergency rooms which provide a crisis level of care at a much higher cost. See CON Application at 22. ARH, through its application, acknowledges the Department of Correction s initiative, through its Recidivism Reduction Plan, to address and handle the unprecedented number of violent and non-violent incarcerations. ARH states the Alaska Justice Commission is recommending a reduction in the prison population by 21% in the next ten years; 80% of which has a mental health and/or substance abuse disorder. One of the main barriers to hospitals within the State of Alaska treating adults in need of inpatient psychiatric care has been the difficulty of negotiating the legal issues surrounding this level of care. As such a large percentage of the 7

8 current incarcerated population needs care for mental health issues, and there is currently a high level of traffic between DOC and API; the logical conclusion of removing individuals from prison is the potential increase in need for mental health services in the community. See CON Application at 23. In sum, ARH opines that increased capacity is necessary [d]ue to increased demand for psychiatric care, lack of adequate accessibility to current care, and the certainty of growing future need. There is a tremendous amount of strain currently on the system of care that includes API and the DET hospitals in the state. Utilization rates are high and growing. The number, and length, of times psychiatric wards go on divert are increasing. An increase in involuntary court ordered individuals at API has forced the closure of a general population wing and placed further strain on the system of care. See CON Application at 29. Service Area: ARH originally stated they would provide services state-wide, with the exception of the Mat-Su Valley once MSRMC had their services up and running. Following receipt of applications, the CON Program convened a meeting with both applicants to discuss proposed services and area to be served. Since both applicants proposed services that would include involuntary psychiatric placement, which necessitates a statewide service area, the department confirmed with both applicants that the service area would be statewide. See Appendix A. RECOMMENDATION: MSRMC satisfies GRS #1; ARH satisfies GRS #1. General Review Standard #2 Relationship to Applicable Plans The applicant demonstrates that the project, including the applicant s long-range development plans, augments and integrates with relevant community, regional, state, and federal health planning, and incorporates or reflects evidence-based planning and service delivery. A demonstration under this standard should show that the applicant has checked with the department regarding any relevant state plan, with appropriate federal agencies for relevant federal plans, and with appropriate communities regarding community or regional plans. MSRMC Establishment of Adult Acute Psychiatric Services Per its application, MSRMC demonstrates that it considered local, regional and state government health plans including service specific evidence-based planning and service delivery. The project also strongly integrates with all levels of health planning because it was developed using 20 different studies or reports from local (i.e. community and regional), state, and federal health planning resources, which amounts to over 1,000 pages of material specific to delivering 8

9 behavioral health services according to best practices and projections. See CON Application at 22. MSRMC states that its project was developed and is consistent with national trends and guidelines for behavioral health services and that it is aligned with the United States Substance Abuse and Mental Health Services Administration, the Alaska Department of Health and Social Services Division of Behavioral Health, the Alaska Department of Labor and Workforce Development, the Office of the Governor, the Alaska Mental Trust Authority, the Mat-Su Health Foundation, and the Mat-Su Opioid Task Force. See CON Application at 24. ARH Establishment of Adult Acute Psychiatric Services ARH demonstrates, through their application, they have considered many assessments, factors and plans in the development of their project. In addition to assessing the impact of several state and community health plans including Medicaid Expansion and the Recidivism Reduction Plan (previously mentioned in this analysis), it is clear ARH looked closely at the current status of delivery of acute psychiatric care services. Specifically ARH reviewed the current conditions at the state s only psychiatric hospital, API. ARH states that the API privatization feasibility study, conducted by Public Consulting Group in 2017, presented alarming findings concerning API s utilization and capacity to meet the psychiatric needs of Alaskans. One of the more alarming statistics in the report cited that API s utilization rate is more than triple the national average of state hospital utilizations (per 1,000 residents). See CON Application at 21. Other plans considered and referenced by ARH included: Cost-Effective Solutions to Slow Prison Growth and Reduce Recidivism, the Alaska Criminal Justice Commission, February 2016: Alaska Behavioral Health Systems Assessment Final Report, Agnew::Beck Consulting, LLC and Hornby Zeller Associates, Inc., October 2015; Alaska Department of Health and Social Services (DHSS) Behavioral Health Performance Review, Public Consulting Group, September 2015; Mat-Su Behavioral Health Environmental Scan, Reports 1 3, McDowell Group, November 2014;and the SB 74 (2016) Alaska Psychiatric Institute Privatization Feasibility Study Public Consulting Group, January See CON Application at 21. RECOMMENDATION: MSRMC satisfies GRS #2; ARH satisfies GRS #2. General Review Standard #3 Stakeholder Participation The applicant demonstrates evidence of stakeholder participation in planning for the project and in the design and execution of services. MSRMC Establishment of Adult Acute Psychiatric Services MSRMC, through their application, consistently demonstrates evidence of engaged stakeholder participation. In addition to meetings with experts, local providers, and others, Mat-Su Regional 9

10 Medical Center conducted at least sixteen stakeholder meetings that included the following stakeholders: local rotaries, the Wasilla Chamber of Commerce, the Mat-Su Opioid Task Force, State Senators and State Representatives representing the Mat-Su Borough, a Mat-Su Borough official, the Mat-Su Health Foundation, Hospital Board of Directors, Hospital Board of Trustees, hospital physicians, hospital directors, hospital employees, architects, and behavioral health subject matter experts. See CON Application at 25. MSRMC states that after an on-site visit with behavioral health experts from Community Health Systems in Nashville, Tennessee in April of 2016, and meetings with Mat-Su Health Foundation, hospital staff, Department of Behavioral Health and other local service providers, they determined it was critical they endeavor to provide behavioral health services as part of their health care delivery system. Id. Mat-Su Regional Medical Center believes this demonstrates clear evidence of stakeholder participation at all levels because without this involvement, there would be no project. See CON Application at 26. ARH Establishment of Adult Acute Psychiatric Services There is clear evidence, throughout their application, that ARH incorporated key stakeholder input, research, assessment findings and recommendations into their overall project plan. ARH states, through their application, that they have been working collaboratively with local stakeholders, including Providence Hospital, API, local emergency services and community care programs along with the Alaska Mental Health Trust Authority and the Department of Corrections. We have shared our plans to open an Inpatient Psychiatric Unit and all have been very supportive of this direction. Additionally, we are aware of MatSu s plans to provide inpatient psychiatric care in the MatSu Valley service area. Conversations have already taken place regarding working together to serve this population. See CON Application at 43. Prior to their application submittal, ARH met with the HSS Director of Behavioral Health Services and the CON Program staff to vet proposed project components. ARH states they researched key recommendations in stakeholder informed behavioral health system assessments, including an assessment conducted by Public Consulting Group, commissioned by the Alaska State Legislature ( and one conducted by Agnew::Beck, commissioned by the Alaska Mental Health Trust Authority ( pdf). Both reports found a lack of acute, inpatient psychiatric beds in the state for adults and a compromised outpatient services system offering insufficient support to the beds currently in existence. See CON Application at 39. RECOMMENDATION: MSRMC satisfies GRS#3; ARH satisfies #3. 10

11 General Review Standard #4 Alternatives Considered: The applicant demonstrates that they have assessed alternative methods of providing the proposed services and demonstrates that the proposed services are the most suitable approach. MSRMC Establishment of Adult Acute Psychiatric Services Per its CON application, MSRMC demonstrates that it considered alternative methods for providing the proposed services, and that it is pursuing the most suitable approach. Prior to concluding that its proposed project is the most suitable approach, Mat-Su Regional Medical Center seriously considered options ranging from doing nothing to building a freestanding behavioral health unit at its hospital outpatient center in Wasilla. See CON Application at 26. The application further identifies that development of a free standing building at its hospital outpatient center in Wasilla was explored and then scrapped due to its proximity to the local high school. In the end, MSRMC decided to expand its existing hospital site. They contend the efficiencies of utilizing existing resources and staff at an expanded hospital site, versus establishing services at a new facility, will result in lower cost care and is thus the obvious choice. See CON Application at 27. ARH Establishment of Adult Acute Psychiatric Services Per its CON application, ARH states that it considered two alternatives; do nothing or increase inpatient psychiatric capacity. Doing nothing will perpetuate the inability of those in need of psychiatric care to receive this care. Further, with the expected increase in need, the system of care would be stretched to a dangerous level as gaps in service, lack of beds, lack of providers, and inability to provide services, may lead to life-threatening conditions for adults with acute psychiatric need. See CON Application at 40. ARH contends it is essential to expand inpatient psychiatric capacity in the State of Alaska. ARH states they are choosing to provide these services in addition to their existing acute care hospital services to alleviate an existing, over-burdened and inefficient service delivery system. This approach would offer services at high quality and accessibility while maintaining limited financial liability for the State of Alaska and a long-term decrease in the amount of General Funds necessary to fund Community Behavioral Health Treatment and Recovery Grants due to increased stabilization of this patient population. Id. RECOMMENDATION: MSRMC satisfies GRS #4; ARH satisfies GRS #4. 11

12 General Review Standard #5 Impact on the Existing System: The applicant briefly describes the anticipated impact on existing health care systems within the project s service area that serve the target population in the service area, and the anticipated impact on the statewide health care system. MSRMC Establish Adult Acute Psychiatric Services MSRMC contends that by bringing 36 additional adult acute psychiatric beds designated as DET online, they will vastly increase Alaska s capacity to conduct emergency behavioral health treatments and provide services for involuntary commitments. Currently, there are only 102 DET beds in Alaska, with the bulk (70) of these beds at API. With Alaska Psychiatric Institute operating in a system where it is one of the only hospitals offering inpatient behavioral health services to a population with a heavy need for services, Alaska Psychiatric Institute is functioning as an acute setting designed for short stays, rather than a true safety-net specialty hospital that exists as a last resort. See CON Application at 29. MSRMC notes the increasing need for behavioral services and the discrepancy in capacity and utilization of these services in Alaska compared to those in the lower 48 states. For instance, while Alaska s hospital length of stay for adult patients receiving behavioral health services is 5 days compared to the national average length of stay of 75 days, Alaska s hospital readmission rate for behavioral health services is often close to double the national average (Alaska 2015 Mental Health National Outcome Measures (NOMS): SAMHSA Uniform Reporting System). Additionally, from a patient perspective, consumer surveys show that Alaska is well below the national average for access to behavioral health services, quality of care, positive outcomes, treatment planning, and general satisfaction with behavioral health services. See CON Application at 28. MSRMC goes on to acknowledge that not only is there a lack of capacity statewide, there are no services in the Mat-Su Borough. Mat-Su Regional Medical Center s proposed project will immediately increase access to care by offering key services acute inpatient adult behavioral health services that are non-existent in its service area, which constitutes the second largest, fastest growing population in Alaska (it is important to remember that these services do not currently exist in any form within the Mat-Su Borough, and that the Mat-Su Borough is growing at rate that is nearly four times faster than Anchorage). Id. ARH Establish Adult Acute Psychiatric Services Per its CON application, ARH states its proposed project will have an immediate and positive affect on Alaskans and providers, alike. ARH cites current access to behavioral health services as a leading, limiting factor. Currently, Alaskans with psychiatric need face an issue of limited accessibility to those services. Further, when they obtain those services through an admission to API or other facility, their length of stay is often shortened due to demand for placement for those with greater need. Likewise, providers of this service in the state are under great duress. 12

13 While the goal of these facilities is to provide the best care possible, they are frequently forced to cut short stabilization treatment due to more immediate need. See CON Application at 43. Through their application ARH demonstrates an understanding of how their project affects the entire system of care, including cost. ARH states their proposed project not only provides more capacity but also allows for [a] steadying affect to take place across the system of care; reducing the rapid cycling of admission and discharge, reducing the cost of care to the system, and reducing the level of severity of need for individuals over time as they are stabilized for longer periods of time and restorative care has greater affect. Id. RECOMMENDATION: MSRMC satisfies GRS #5, ARH satisfies GRS #5. General Review Standard #6 Access: The applicant demonstrates that the project s location is accessible to patients and clients, their immediate and extended families and community members, and to ancillary services. This includes the relocation of existing services or facilities. MSRMC Establish Adult Acute Psychiatric Services Per its CON Application, MSRMC demonstrates that the project s location is accessible. MSRMC is located in Palmer, Alaska and is accessible by private, public, medical and other community transportation. Centrally located next to two main highways the Glenn Highway and the George Parks Highway Mat-Su Regional Medical Center is accessible to those traveling from the north, south, east, or west. In the event of an emergency, Mat-Su Regional Medical Center is also immediately accessible by helicopter by way of the helipad that is located adjacent to its emergency department. See CON Application at 30. MSRMC complies with all standards and regulations of the Americans with Disabilities Act, the Joint Commission on Accreditation of Health Care Organizations and Alaska Department of Health and Social Services, and the Federal Register for Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities. MSRMC has an open door policy and does not discriminate on a patient s ability to pay, nationality, race, or creed. Over the course of the last five years, Mat-Su Regional Medical Center incurred nearly $13 million in unreimbursed costs for providing charity care. See CON Application at 30. ARH Establish Adult Acute Psychiatric Services Per its CON Application, ARH demonstrates that the project s location is accessible. ARH is located in Anchorage, Alaska and is accessible by private, public, medical and other community transportation. ARH complies with all standards and regulations of the Americans with Disabilities Act, the Joint Commission on Accreditation of Health Care Organizations and Alaska Department of Health and 13

14 Social Services, and the Federal Register for Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities. ARH has an open door policy and does not discriminate on a patient s ability to pay, nationality, race, or creed. Alaska Regional Hospital is strongly committed to the community. See CON Application at 31. Last year (2016), alone, it incurred $42,652,401 in uncompensated care. Id. RECOMMENDATION: MSRMC satisfies GRS #6; ARH satisfies GRS #6. SERVICE-SPECIFIC REVIEW STANDARDS Behavioral Health Care Services: Review Standards and Methodology Acute Inpatient Psychiatric Treatment Services Review Standards 1. A new freestanding psychiatric hospital must have a minimum of 25 beds; new services located within existing acute care community hospitals must have a minimum of 12 beds. Any deviation must include a five-year projected cost benefit analysis that describes a sustainable economy of scale. Both applicants have an excess of 12 licensed and certified beds. 2. To be considered for authorization to expand bed capacity, inpatient psychiatric treatment services must have an annual average occupancy of at least 80% during the preceding three years. Not applicable. No services currently exist. 3. The applicant demonstrates that the project augments the existing community system of care and facilitates effective interface, transition and timely referral to lower levels of community- based settings. As documented throughout this analysis, both applicants have adequately demonstrated that their proposed projects will augment existing behavioral services throughout the State of Alaska; that they were developed with majority stakeholders and that the overall behavioral health continuum of care is a priority. Additional Considerations for Concurrent Review of More than one Application In completing a concurrent review of two or more applications under 7 AAC , in addition to applying the standards set out above to each application, the department will 1. compare the extent to which each applicant demonstrates a willingness to accept persons under court detention orders, or have contractual agreements to serve such persons; and 14

15 Both applicants will seek the Designated Evaluation and Treatment (DET) designation from the Department of Health and Social Services, Division of Behavioral Health for all beds proposed upon CON approval. 2. approve an otherwise equivalent proposal that entails the conversion of excess acute care hospital capacity to inpatient psychiatric treatment services use over a proposal that entails the development of new facilities and the addition of beds to the licensed bed complement. MSRMC will add 36 acute care beds to their existing cohort of 74. The additional beds will result in new construction, along with applicable federal and state certification and licensure requirements. New construction will be directly adjacent to MSRMC s existing hospital facility in Palmer. ARH is proposing to convert 24 of its 250 current licensed and certified acute care beds. The 24 beds would be converted from their unused existing patient inventory and be located at their primary campus on DeBarr Road in Anchorage in the Denali Medical Arts Building. New construction would consist of renovation of existing space. Documenting Need: Current Inpatient Psychiatric Beds and Facilities Facility Name Calendar Year Total IP Acute Psychiatric Beds ADULT IP Acute Psychiatric Beds YOUTH IP Acute Psychiatric Beds Alaska Psychiatric Institute Bartlett Regional Hospital NA Fairbanks Memorial Hospital NA NorthStar Behavioral Health System ** 104 Providence Alaska Medical Center Total Beds available to public **Services are exclusive to military service members and veterans, and not for public use. 15

16 Currently, there are a total of 268 acute inpatient psychiatric beds available statewide. Of these 268 beds, 121 are dedicated to adults. Per 7 AAC 07, the service specific review standard methodology that the CON must use to calculate adult need for inpatient psychiatric services utilizes bed day averages over the past three years and adult population projections five years out (in this case 2022). Review Methodology The department will use the following formula to determine need for inpatient psychiatric treatment services and the number of dedicated hospital beds required: STEP ONE: Determine the potential inpatient psychiatric treatment services caseload using the formula: C = P x UR C = (561,549) (34,641/537,565) = 36,187 C (caseload) = the number of days of inpatient psychiatric treatment care required five years from the project implementation date P (projected population) = the official State population projected for the fifth year following implementation of the project (Projected population and current population figures were provided by the Dept. of Labor s State Demographer on 10/17/2017) UR (use rate) = the current utilization rate (the average number of inpatient psychiatric treatment days of care used during the preceding three years, divided by population) STEP TWO: Determine the projected inpatient psychiatric treatment service average daily inpatient census using the formula: PSAT ADC = C / SA PSAT ADC = 36,187/365 = 99.14, round up = 100 PSAT ADC = inpatient psychiatric treatment service average daily census SA (service availability) = defined as 365 days a year STEP THREE: Determine the number of inpatient psychiatric treatment service beds required using the formula: PSATBN = PSAT ADC / TO 16

17 PSATBN=100/80% = 80 PSATBN = inpatient psychiatric treatment services bed need PSAT ADC = inpatient psychiatric treatment services average daily census TO = target occupancy factor, defined as 80% for inpatient psychiatric treatment services STEP FOUR: Determine unmet inpatient psychiatric treatment services bed need, if any, by subtracting the number of licensed and CON-approved beds from the number projected to be needed. STEP FIVE: Determine projected bed need for a proposed service area by multiplying the statewide projected bed need by the service area share of population to be served. PBNsa = PBNt x SAS PBNsa = projected bed need for the service area PBNt = total projected bed need for the state SAS (service area share) = the proposed service area s current share of the population to be served, as of the most recent geographic population estimates. If there is public information about service area population changes expected over the planning horizon, such as a military base closing, or a major economic project such as a new mine, the service area share estimate may be modified with explanation to reflect the expected change. PBN(sa) = (-41)(100%)= -41 The unmet Adult Inpatient psychiatric treatment services bed need (80) minus current available Adult Inpatient psychiatric treatment services bed need (121) results in a NEGATIVE 41 beds, or currently there is an excess of 41 beds statewide. Note: CON methodology used to determine need is provided per 7 AAC 07, and is service specific. Thus, in this review the CON Program is mandated to calculate need using the prescribed service specific review standard methodology for acute psychiatric services. This methodology calculates need using bed day averages over the past three years and population projections five years out. The CON Program acknowledges this service specific methodology has limitations in determining need because it does not take into account additional factors which impact utilization and capacity in its calculation. The CON Program provides further commentary on this topic in its Recommendation section of this analysis, found on page

18 FINANCIAL FEASIBILITY MSRMC The total cost of the project is not to exceed $19,250,756. Estimated total project cost is $17,841,294. This consists of $15,000,000 in construction costs and $2,841,294 in equipment and other administrative costs. It is anticipated that the project will be financed by a direct capital outlay from MSRMC, with no debt. 1. Construction Method (Please check) a. Conventional bid Contract management Design and build b. Phased Single project Fast Track 2. Construction Cost (New Activity) (Omit cents) a. Site acquisition (Section VIIIA.2.f) $0.00 b. Estimated general construction** $15,000,000 c. Fixed equipment, not included in a** $0.00 d. Total construction costs (sum of items a, b, and c)** $15,000,000 e. Major movable equipment** $1,145,241 f. Professional Fees:** $1,696,053 (1) Architect / Engineer $1,177,500 (2) Related Professional Fees $256,553 (3) Program Manager $62,000 (4) Impact Fees $200,000 g. Total project cost (sum of items d, e, f) $17,841,294 h. Contingency for Financing (If MSRMC Does Not Self-Fund Project) $802,858 i. Contingency Allowance General $606,604 j. Total project budget (sum of items g, h, i) $19,250,756 k. Anticipated long-term interest rate l. Anticipated interim (construction) interest rate m. Anticipated long-term interest amount N/A n. Anticipated interim interest amount N/A o. Total items with financing N/A p. Estimated annual debt service requirement N/A q. Construction cost per sq. ft. $535 r. Construction cost per bed $416,667 s. Project cost per sq. ft. $687 t. Project cost per bed (if applicable) $534,743 18

19 ARH The total cost of the project is $6,676,000. This consists of $5,241,000 in construction costs and $1,435,000 in equipment and other administrative costs. The project will be financed by a direct capital outlay from HCA, with no debt. 1. Construction Method a. Conventional bid x Contract management Design and build b. Phased x Single project Fast Track 2. Construction Cost a. Site Acquisition (VIIIA.2.f) $0 b. Estimated general construction $3,899,000 c. Fixed equipment, not included in a. $1,342,000 d. Total construction costs (sum of items a, b, and c) $5,241,000 e. Major movable equipment $380,000 f. Other cost (see breakdown exhibit 1.1) $1,055,000 (1) Administration expense (2) Site survey, soils investigation, and materials testing NA (3) Architects and engineering fees NA (4) Other consultation fees (preparation of application included) (5) Legal fees NA (6) Land development and landscaping NA (7) Building permits and utility assessments (including water, sewer, electrical, phones, etc.) NA (8) Additional inspection fees (clerk of the works) NA (9) Insurance (required during construction period) NA g. Total project cost (sum of items d, e, and f) $6,676,000 h. Amount to be financed $0 19

20 Impact to Medicaid 20

21 21

22 22

23 23

24 Public Comment Two public meetings were held to receive public comment on the proposed adult acute psychiatric services projects from MSRMC and ARH. The first meeting was held in Anchorage on August 16, at the Frontier Building located at 3601 C Street in Anchorage, Alaska. Approximately 60 people attended the meeting, and approximately half in attendance provided verbal comment. The second meeting was held on August 31, at the UAA Campus located at 8295 E. College Drive in Palmer, Alaska. Approximately 95 people attended the meeting and approximately 40 in attendance provided verbal comment. Each applicant presented their proposed projects at both meetings. MSRMC presented their project first, followed by ARH at both meetings. The content of each applicant s presentation was the same at both meetings. Summary of Presentation(s) MSRMC s Business Manager, Jared Kosin and Dr. Anne Zink, ER Director, presented MSRMC s proposed project. The presentation outlined the 36 bed adult acute psychiatric services project plan, highlighting alignment with the healthcare goals of the State and community regarding behavioral health care and the continuum of care. Evidence of strong stakeholder support for the project was also included. The presentation provided key details of the project including the provision of both adult acute psychiatric services and substance treatment and withdrawal management. As well as information on how MSRMC planned to manage discharges and aftercare through an outpatient component (not subject to CON). Both Mr. Kosin and Dr. Zink emphasized MSRMC s strong support of the concurrent applicant, ARH, stating need existed for both projects in the State. Mr. Kosin also shared MSRMC s desire to collaborate and work in partnership with ARH if both projects are approved. ARH s CEO, Julie Taylor, presented ARH s proposed project. The presentation gave an overview of the services to be provided including the conversion of 24 existing beds into 12 voluntary and 12 involuntary commitment beds. Ms. Taylor also provided information on the outpatient component of their project, which will provide follow up and after care to patients once they discharge from the hospital (this component is not subject to CON requirements). Ms. Taylor highlighted the quick turnaround time her facility would have converting the existing acute care beds to adult acute psychiatric beds. Ms. Taylor also shared ARH s support for MSRMC s project and also believes there is a current need for both ARH and MSRMC s projects. 24

25 Summary of Verbal Public Comment At both meetings there was overwhelming support for the proposed additional behavioral health services. There was no opposition to either proposed project. Comments were universally in support of one or both projects; many stating the State should approve both. Given the subject matter and services proposed, the commenters at times were very emotional. There was strong support for the proposed substance abuse and withdrawal management component of MSRMC s project, with many of the commenters sharing personal stories of addiction and loss. Law enforcement, emergency first responders, legislative representatives, facility staff and private citizens made up the mix of attendees at both meetings. Of the approximately 60 total comments received at both meetings, all were in favor of additional behavioral health services. There was no voiced opposition for either project. Most commenters stated they felt both applicants should be approved for a CON. Summary of Written Public Comment A written public comment period was open from July 27, 2017 September 11, A total of 260 written comments were received. Of the written comments received: MSRMC ARH BOTH In Favor Not in Favor

26 Recommendation The CON Program recommends that the Commissioner approve MSRMC s application for a CON for its Adult Acute Psychiatric Care Services Project in its entirety. The CON Program recommends that the Commissioner approve ARH s application for a CON for its Adult Acute Psychiatric Care Services Project in its entirety. Rationale 1: Both project components satisfy General Review Standards 1, 2, 3, 4, 5 and 6. Rationale 2: Both projects meet the Behavioral Health Care services specific review standards. Rationale 3: Strong support for, and no written or verbal objection to, services being offered by each facility. Rationale 4: The State of Alaska commissioned a feasibility study for the privatization of API, conducted by PCG in January The report analyzed a variety of issues, including benchmarks for inpatient psychiatric bed capacity. The report identifies six studies that were conducted over the last 48 years that specifically analyzed and recommended benchmark psychiatric bed capacity per 100,000 persons. The following table provides a summary of those studies and the recommended benchmarks for psychiatric bed capacity. Benchmarks for Inpatient Psychiatric Bed Capacity from Feasibility Study of the Privatization of the Alaska Psychiatric Institute, 2/23/2017 Study Year Author(s) Recommended I/P Psychiatric Bed Capacity 1969 British Department of Health and Social Security 50 beds per 100,000 persons 1986 Goplerud, E.N. 50 beds per 100,000 persons 1987 Hafner, H beds per 100,000 persons 1988 Royal College of Psychiatrists Working Party 43 beds per 100,000 persons 1998 Davis, G.E., Walter, L.E., Davis, G.L. 40 beds per 100,000 persons 2010 Torrey et al beds per 100,000 persons Note, the report highlights that we can expect some limitations in the studies and that we can expect lower and upper limits in terms of appropriate capacity. See ort_jan%2026% pdf at 88. Taking the aforementioned into account, and based on national averages for capacity, the State of Alaska falls short in providing adequate inpatient beds for its psychiatric patients. As documented in the above referenced report; the national average capacity for inpatient adult 26

27 psychiatric beds is 50 beds per 100,000 persons. The adult population five years from now (2022) is estimated to be 561,549 persons in the State of Alaska. Based on a conservative recommendation of approximately 50 beds per 100,000 persons, the State of Alaska needs a minimum of 275 beds statewide by Alaska currently has 121 available beds, leaving a gap of 154 beds statewide. When calculating adult, statewide need for services using the CON need methodology, the need reflects an overage of beds, or negative need. See CON Analysis at 18. It is understood that this methodology is flawed and needs to be revised in order to accurately calculate need. The current methodology is a population based formula and does not take into account many attenuating factors, such as different types of psychiatric beds (AS 47 versus AS 12) and census and availability of bed days at any given time. It is the recommendation of the CON Program, despite the calculation of need reflected using the CON methodology, that the Commissioner use her discretionary authority under 7 AAC to approve both facility projects in their entirety. The total beds approved would add 60 new beds for adult acute psychiatric care to the 121 beds currently available, resulting in a net total of 181 adult acute psychiatric beds statewide once both projects are complete. These new beds will allow Alaska to make gains toward the national average of 275 beds by 2022, but still leaves a gap of 94 beds. 27

28 Appendix A Department Request for Additional Information 28

29 29

30 30

31 31

32 Appendix B - Additional Applicant Information MSRMC 32

33 33

34 34

35 35

36 36

37 37

38 38

39 39

40 APPENDIX C - Additional Applicant Information ARH 40

41 41

42 42

43 43

44 44