STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED

STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number Tidewell Hospice, Inc./CON #10193 919 North Arcadia Avenue Arcadia, Florida 34266 Authorized Representative: Sylvia Scott 5955 Rand Blvd. Sarasota, Florida 34238 (941) 552-7500 2. Service District/Subdistrict Hospice Service Area 8A (Charlotte and DeSoto Counties) B. PUBLIC HEARING A public hearing was not held or requested for the project. Letters of Support Tidewell Hospice, Inc. submitted 45 unduplicated letters of support. Eleven were dated during April 26 through June 14, 2013. Thirty-six letters were not dated, two were not signed and one was signed by two Tidewell Hospice volunteers. Vincent A. Sica, CEO of DeSoto Memorial Hospital states that Today, Tidewell Hospice is providing care, comfort and compassion to nearly 1,200 patients in hospice and pre-hospice programs, regardless of their ability to pay; an invaluable resource to our communities I urge you to approve the certificate of need. Steven Mishkind, M.D., Medical Director of the Emergency Department at DeSoto Memorial Hospital states as a physician, I frequently recommend hospice services for my patients and I believe in the benefits hospice can provide. That is why I would like to lend my support to the application of Tidewell Hospice

Three local Arcadia physicians submitted variations of a form letter: Wael Alokeh, M.D., Ana L. Hernandez, M.D., and Mohan Narayanan, M.D. This letter cites Tidewell Hospice s reputation for providing inpatient hospice care to the community of Arcadia and urged approval for the application to convert existing residential beds to inpatient beds. These sentiments are echoed by Lee Mays, R.N., who states she is a case manager at DeSoto Memorial Hospital, and Robin Bledsoe, R.N. Five letters were submitted by volunteers from Tidewell Hospice s Arcadia Hospice House: Susan Smedley, Frances S. Sletvold, Linda K. Kramer, Larry Duisberg, and Lou and Lois Towne (both signed one letter). These letters state that low/no costs would be needed to convert existing residential hospice beds to inpatient status, and urged approval of the application. Thirty-three variations of a form letter were submitted from residents and businesses in the Arcadia area, including attorney John W. Collins, Jr. This letter states that Tidewell Hospice provides an invaluable resource to the community and that hospice services are needed for the nearly 1,200 patients in hospice and pre-hospice programs in this area. C. PROJECT SUMMARY Tidewell Hospice, Inc. (CON #10193) is an independent, not-for-profit, community-based organization proposing to establish an eight-bed freestanding inpatient hospice facility through conversion of eight existing residential beds at the Arcadia Hospice House in Arcadia, Florida, Hospice Service Area 8A, DeSoto County. The total project cost is $49,035. Project costs include renovation and project development costs. The project involves 2,480 gross square feet (GSF) of renovation (no new construction) and a construction cost of $31,435. The applicant proposes no conditions for the project. D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section 408.035, Florida Statutes; and applicable rules of the State of Florida, and Chapters 59C-1 and 59C-2, Florida Administrative Code. These criteria form the basis for the goals of the 2

review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an applicant's capability to undertake the proposed project successfully is conducted by evaluating the responses provided in the application, and independent information gathered by the reviewer. Applications are analyzed to identify various strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict or service planning area), applications are comparatively reviewed to determine which applicant best meets the review criteria. Section 59C-1.010 (3) b, Florida Administrative Code, prohibits any amendments once an application has been deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the certification of the applicant. As part of the fact-finding, the consultant, Jessica Hand, analyzed the application in its entirety with consultation from financial analyst Derron Hillman of the Bureau of Central Services, who evaluated the financial data and Said Baniahmad of the Office of Plans and Construction, who reviewed the application for conformance with the architectural criteria. E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicates the level of conformity of the proposed project with the criteria found in Sections 408.035 and 408.037, Florida Statutes; 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? Chapter 59C-1.008, Florida Administrative Code and Chapter 59C-1.0355, Florida Administrative Code. The Agency does not publish need for inpatient hospice beds. Hospice programs are required by federal and state law to provide hospice patients with inpatient care when needed (42 Code of Federal Regulations 418.108) and no more than 20 percent of a hospice s total 3

patient days may be inpatient days per Section 400.609(4), Florida Statutes. Inpatient care may be provided through contractual arrangements in hospitals and nursing homes, and is generally provided on a short-term basis within the total hospice stay. Tidewell Hospice, Inc. is the sole licensed hospice provider in Charlotte and DeSoto Counties, Hospice Service Area 8A, and operates a 12-bed freestanding inpatient hospice facility Port Charlotte House in Charlotte County. The applicant states the conversion of eight beds at Arcadia Hospice House from residential to inpatient status would improve Tidewell Hospice s provision of care within this service area. Tidewell Hospice s Service Area 8A licensed and proposed inpatient hospice facilities are shown in the map below. 4

Hospice Service Area 8A Tidewell Hospice, Inc. s Licensed & Proposed (CON applications #10192 & #10193) Inpatient Hospice Facilities Source: Microsoft MapPoint 2013. 5

b. If no Agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and Market conditions. Population demographics and dynamics The applicant submits the following chart demonstrating age 65 and over population projections by service area: Tidewell Hospice Service Areas 2013 Population Percentage age 65 and over Percentage age 75 and over Charlotte County 8A 163,755 34.6% 16.3% DeSoto County 8A 35,254 18.2% 8.0% Manatee County 6C 336,432 23.9% 11.1% Sarasota County 8D 390,272 31.9% 15.9% Source: CON application #10193, page 7. The reviewer notes that Charlotte County is projected to have a total population of 173,421 in July 2018 and 62,986 or 36.3 percent will be persons aged 65 and over. DeSoto County is projected to have a total July 2018 population of 37,224 and 7,165 or 19.2 percent will be persons aged 65 and over. Hospice Service Area 8A s total population is expected to increase from 199,009 in 2013 to 210,645 in 2018 or by 5.85 percent. The service area s population aged 65 and over is projected to increase from 63,120 in 2013 to 70,151 in 2018 or by 11.14 percent. The population aged 65 and over will account for 33.3 percent of the service area s total population in July 2018. 1 Availability, utilization and quality of like services Tidewell Hospice is the only hospice care provider eligible to operate a freestanding inpatient hospice facility in Hospice Service Area 8A. The applicant does not provide utilization reports for the existing inpatient hospice beds. 1 Source: Agency for Health Care Administration Population Estimates 2010 to 2025 published February 2012. 6

Medical treatment trends and Market conditions The applicant does not provide a response to medical treatment trends and market conditions. 2. Agency Rule Criteria and Preferences a. Rule 59C-1.0355(7) Florida Administrative Code states that the Agency will not normally approve a proposal for construction of a freestanding inpatient hospice facility unless the applicant demonstrates that the freestanding facility will be more costefficient than contractual arrangements with existing hospitals or nursing homes in the service area. The application shall include the following: (1) A description of any advantages that the hospice program will achieve by constructing and operating its own inpatient beds. Tidewell Hospice, Inc. states advantages that will be achieved through conversion of residential beds to inpatient beds include: The inpatient designation for the Arcadia Hospice House will result in a cost savings per inpatient day of $86.20 (year two) when patients receive inpatient care at the hospice house instead of a hospital. The savings for Tidewell Hospice is directly related to being able to provide a higher quality service at less cost in its own freestanding facility. Inpatient designation will allow immediate access to care and services such as hospice-certified physicians, nursing, medical social work, counseling, volunteer, chaplain services, and grief specialists. These services are not immediately accessible in contracting facilities. The project will improve the applicant s ability to meet the increased need for inpatient services created by increased referrals due to more emphasis of the medical community on palliative care and an informed consumer. The inpatient hospice house promotes a supportive and therapeutic environment, which provides hospice-focused care. The project will provide an optimal environment focused on the quality of life and palliative end-of-life care in comparison to acute care provided by contracted facilities. The hospice house is homelike, comfortable, and serene. 7

The inpatient facility will include interdisciplinary hospice staff members who are experienced in palliative care and are consistently available. In contracted facilities, patients are assigned beds that are typically scattered throughout the organization. This does not assure that care is provided by staff who are comfortable with palliative and hospice care. Treatment may begin more promptly and with greater continuity when administered by hospice staff familiar with the patient s needs. Families are often more comfortable with the care and environment provided in a hospice house than in contracted facilities. Caregivers will take advantage of inpatient hospice respite care that is offered in a homelike facility. Many refuse this needed service because it is offered in a nursing home. Families may have made promises to the patient that they would never send him/her to a nursing home or find the concept of a nursing home unacceptable. The applicant states that its freestanding residential Arcadia Hospice House s conversion to an inpatient facility will allow Tidewell Hospice to admit higher acuity hospice patients directly from hospitals, reducing the need for contracted hospital beds, which will improve continuity and thus quality of care. Further, the projected cost savings per patient day will allow Tidewell Hospice to re-invest the savings to increase access and future expansion of inpatient hospice care. Tidewell Hospice submits the following table to demonstrate savings in freestanding hospice inpatient beds versus hospital contract beds. Contract Cost for Hospice Inpatient Care in Hospitals versus Cost in the Arcadia Hospice House with an Inpatient Designation (Year Two of Project) Hospital Contract* (cost per patient day) 8 Arcadia Hospice House (cost per patient day) Hospice Inpatient Revenue/day $621 $486.02 Expenses (average) day $621 $449.82 Staffing & Administrative $50 Overhead (FY) Total Expenses $671 Cost Savings (loss) per patient day ($50) $36.20 *Hospice pays the hospitals the total amount it receives from Medicare leaving hospice with no reimbursement for the care provided by the hospice staff to patients. See Notes and Assumptions in Schedules 7A and 8A. This is a blended rate over two Medicare Fiscal Years. Source: CON application #10193, page 5. The applicant submits the chart below to show that the cost per adjusted patient day at hospitals exceeds what hospice pays, meaning hospital acute care beds are better utilized for acute patients instead of hospice patients.

Hospital Cost Per Adjusted Patient Day (2010) Versus Tidewell Hospice s Payment for Hospice Inpatient Care Hospital Cost 2013 Hospice Payment to Hospital Facility Per Adjusted Patient Day 7/1--12/31/12 1/1--6/30/13 Charlotte Regional Medical Center $1,477 $631.71 $640.64 Fawcett Memorial Hospital $1,669 $631.71 $640.64 Peace River Regional Medical Center $1,397 $631.71 $640.64 Englewood Community Hospital (Sarasota County) $1,692 $631.71 $640.64 DeSoto Memorial (DeSoto County) $1,535 $616.15 $620.89 Source: CON application #10193, page 5. (2) Existing or contractual arrangements for inpatient care at hospitals and nursing homes; or, in the case of a proposed new hospice program, contracts made with hospitals and nursing homes regarding contractual arrangements for inpatient care. Tidewell Hospice states it has existing contractual relationships for the provision of hospice inpatient care with every hospital and nursing home in the service area, and respite care for appropriate patients in some nursing facilities. A list of these hospitals and nursing facilities is provided by the applicant in Volume 1, Appendix E, of CON application #10193. (3) Anticipated sources of funds for construction The applicant states this is not applicable because no construction is planned. However, the applicant s Schedule 1 shows a total project cost for renovations of $49,035. b. Rule 59-1.0355(8) Florida Administrative Code: Semi-Annual Utilization Reports. Each hospice program shall report utilization information to the Agency or its designee on or before July 20th of each year and January 20th of the following year. The applicant does not directly respond to this rule. However, Tidewell Hospice, Inc. regularly submits semi-annual utilization reports as required by the above rule. The Agency s semi-annual utilization reports do not require a hospice to report inpatient hospice days. 9

c. Rule 59-1.030(2) Florida Administrative Code: Health Care Access Criteria. (1) The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. The applicant states timely access to Tidewell Hospice care is available regardless of payer, ethnic or racial status, gender, handicap, age, or ability to pay, and staff are trained to be sensitive to diverse cultural, ethnic, and multi-lingual patient needs. Per the applicant, the general inpatient level of care may be initiated when the interdisciplinary group determines patient pain and symptoms cannot be managed effectively in the home or residential setting of the patient. This may be a sudden or gradual process of decline. Tidewell Hospice states that the availability of beds in a freestanding inpatient hospice facility is necessary to provide timely access to care for acute patients. (2) The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admission policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. Tidewell Hospice, Inc. contends that inpatient facility designation will increase access to hospice care for medically underserved persons without any reduction in availability of hospice services. (3) The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified as deserving of priority. The applicant cites the Medicare Hospice Benefit (based on a 90-180 day stay in hospice) and contrasts this with Tidewell Hospice, Inc. s average patient stay of 57 days, with many surviving 12 or fewer days, in order to demonstrate a shift in patient care trends. 10

Per the applicant, new life prolonging treatments and medications have resulted in patients remaining in the hospital for longer periods of time, and arriving at hospice sicker and with fewer days of life remaining. This requires hospice staff to provide more intensive, high acuity hospice care than in the past, and supports the applicant s request for inpatient designation in order to provide this level of needed care. (4) In determining the extent to which a proposed service will be accessible, the following will be considered: (a) The extent to which medically underserved individuals currently use the applicant s services, as a proportion of the medically underserved population in the applicant s proposed service area (s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; The applicant states that while many hospice patients are covered by Medicare and Medicaid, the high cost of care for the terminally ill results in under-insured situations, and patients who have no ability to pay for care. Tidewell Hospice provides care regardless of ability to pay. (b) The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, community service, or access by minorities and handicapped persons to programs receiving Federal financial assistance, including the existence of any civil rights access complaints against the applicant; Tidewell Hospice states there are no civil rights access complaints against them and they meet applicable Federal regulations regarding uncompensated care, community service and access by all persons. (c) The extent to which Medicare, Medicaid, and medically indigent patients are served by the applicant; The applicant states the majority of its patients are Medicare or Medicaid eligible and care is provided regardless of ability to pay. 11

(d) The extent to which the applicant offers a range of means by which a person will have access to its services. The applicant states patients will access Tidewell Hospice services per the usual routes for hospice care: hospitals, physicians, nursing facilities, home care agencies, assisted living facilities, group homes, family members, friends and self-referral. The facility is designed to allow changing levels of care based on patient need. To cover costs for patients unable to pay, fundraising events are held throughout the year. 3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant s service area? ss. 408.035(1)(a) and (b), Florida Statutes. The applicant notes Medicare and Medicaid pay hospice the same amount per day for inpatient care regardless of the approved provider facility type. Tidewell Hospice pays the entire amount received from Medicare per patient day when patients are admitted to a hospital for hospice inpatient care, resulting in no reimbursement to the applicant for care it provides to hospitalized patients. Arcadia Hospice House will have a lower patient per day cost than contracted hospitals for inpatient hospice beds. Availability Tidewell Hospice states it has provided quality end-of-life care to patients (and support services to families) in four counties (Service Areas 8A, 8D, and 6C) since 1980, regardless of patient age, race, sex, religion, or ability to pay, through a network of seven hospice houses. The applicant submitted population estimates and projections for DeSoto County in section E.1. (b) above but does not provide its existing inpatient hospice utilization. Tidewell Hospice states that memorials, gifts, and donations from individuals, churches, businesses, and community organizations enable the applicant to provide services to those unable to pay for hospice care. Medicaid and Medicare benefits cover physician services, nursing care, medical equipment, drugs, home health aide, therapy, medical social services, counseling and trained hospice volunteers, through home care, short-term inpatient care, and inpatient respite care, with some costs covered by private insurance. 12

Quality of Care The applicant states Tidewell Hospice, accredited by the Community Health Accreditation Program (CHAP), provides quality care in contracted facilities, and 24-hour total management hospice care in freestanding hospice facilities. Accessibility Tidewell Hospice states the inpatient facility designation will increase access to patients seeking inpatient hospice care and respite services for caregivers in need of a break from the stress of caregiving. The applicant states the change in bed designation will allow higher acuity patients access to hospice care and boost physician confidence discharging patients to hospice. Extent of Utilization of Existing Health Care Facilities and Health Services in the applicant s service area Tidewell Hospice is the only licensed hospice provider eligible to operate a freestanding inpatient hospice facility in its service area. The applicant indicates that fulfilling patient need for inpatient care in a freestanding facility is the project s primary goal. Tidewell Hospice, Inc. did not provide utilization data for the existing inpatient hospice facility Port Charlotte House in Charlotte County. The applicant s Schedule 4 shows the eight-bed Arcadia residential hospice had 2,493 patient days and 85 percent utilization for the 12 months ending June 30, 2011 and 2,567 patient days and 88 percent utilization for the 12 months ending June 30, 2012. Reasons a Freestanding Inpatient Hospice Facility Creates Better Access and Availability for Hospice Patients at the End of Life Tidewell Hospice states freestanding inpatient hospice provides the level of 24-hour care required to manage symptoms that cannot be managed effectively at home including: Pain or symptom crisis not managed by changes in treatment in the current setting or that requires frequent medication adjustments and monitoring Intractable nausea/vomiting Advanced open wounds requiring changes in treatment and close monitoring Unmanageable respiratory distress 13

Delirium with behavior issues Sudden decline necessitating intensive nursing intervention Imminent death only if skilled nursing needs are present. Per the applicant, hospitals and nursing facilities do not always have contracted hospice beds available, and when they do, the beds may not be localized in the same unit. Doctors may be unwilling to discharge hospice-appropriate patients to their home due to acute care needs, leaving patients to die away from home or the home-like comfort of inpatient hospice. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? [s. 408.035(1)(c) and (j), Florida Statutes]. Tidewell Hospice states the following: It achieved CHAP accreditation in 2008, including an accommodation for its Quality Assessment Performance Improvement Program which was found to exceed federal regulations and has held deemed status from CHAP since 2011. It is a member of the National Hospice and Palliative Care Organization (NHPCO) and complies with NHPCO standards. It participates in the Family Evaluation of Hospice Care (FEHC), an ongoing survey of survivor perceptions of care and service. History of Providing Quality Care The applicant states it has provided quality and compassionate care in Sarasota, Manatee, Charlotte and DeSoto Counties since 1980, and is in compliance with state and federal laws and National Hospice Organization Standards. Tidewell Hospice operates seven hospice facilities that it states are strategically placed to ensure patients can remain as close to home as possible. Demonstration of the Ability to Provide Quality Care The applicant states that in addition to the provision of general hospice programs and services, quality care is demonstrated by its: 14

Hospice Houses - Tidewell Hospice s seven freestanding hospice facilities that provide care through its service areas. Staffing - Unlike hospitals or nursing homes, staff is based entirely on end-of-life care needs, and includes registered nurses at a 1:6 nurse to patient ratio, in addition to a physician, LPNs, CNAs, social workers, chaplains and volunteers. Nursing Services Guidelines - the applicant follows NHPCO guidelines for effective use of nursing services in order to provide the highest quality hospice care, in addition to all certification, licensure, and accreditation requirements. Complementary Services - In addition to standard therapy services, Tidewell Hospice offers art, music, pet, horticulture, therapeutic touch, aroma, and caring touch therapies, in order to enhance and provide quality end-of-life care to all patients. Children s Programs - basic hospice precepts are adapted to meet the medical care standards for children, with programs designed for families and siblings of terminally ill children. Veterans Programs - Tidewell Hospice is a four-star member of the We Honor Veterans program, designed to provide support to veterans and their families through hospice staff training, allowing staff to offer programs specifically for those with a military service background. Transitions - a volunteer-based, free program funded by Tidewell Hospice, which provides a care coordinator for patients and families adjusting to the realities of caregiving by assisting with food, errands, support, and respite care. Grief Support - Grief specialists are on staff to provide integrated support through the hospice experience, with up to one year of phone support available to families after the death of a loved one, with specialists provided for survivors of terminally ill children. Quality Assessment and Performance Improvement Tidewell Hospice has a comprehensive Quality Assessment Performance Improvement (QAPI) Plan to provide ongoing monitoring of its performance and to improve care and services. The goals and objectives of the QAPI plan are to: Promote the provision of the highest quality patient care through systematic monitoring and evaluation of the quality and appropriateness of hospice program services Monitor allocation of hospice resources to identify and resolve problems in the utilization of those resources and to identify ways and means of more effectively allocating resources Identify, assess, and resolve known or potential problems that may adversely affect patient/family care 15

Identify opportunities to improve care Assess the effectiveness of the provision of patient/family care by professional support staff Evaluate and monitor the effectiveness of actions taken to resolve identified problems Monitor the provision of care at all levels and continuity of care between levels of patient status, assessing appropriateness and timeliness of interventions Systematically monitor and implement corrective actions as they relate to the safety of patients, staff, volunteers, and visitors Identify needs in the areas of supervision and education of staff, including volunteers Recommend revisions of policies and procedures when reviews have identified problems. Licensure History and Accreditation(s) Held As previously stated, Tidewell Hospice has been licensed and providing quality care to residents to the service area since 1980. The applicant states it is accredited, and includes copies of CHAP accreditation in CON application #10193, Volume 1, Appendix D. Tidewell Hospice, Inc. voluntarily participated in the April 2012 through June 2012 Agency Hospice Provider Family Satisfaction Survey, in which a range of 326 to 434 respondents assessed the applicant at a five-star rating (90 to 100 percent satisfaction) for each of five categories. Agency records indicate the applicant had one substantiated complaint during the three-year period ending June 25, 2013. A single complaint can encompass multiple complaint categories. The substantiated complaint categories were for nursing services and infection control. c. What resources, including health manpower, management personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation? ss. 408.035(1)(d), Florida Statutes. The financial impact of the project will include the project cost of $49,035 and incremental operating costs in year two of $108,847. Tidewell Hospice, Inc. provided audited financial statements for the periods ending June 30, 2012 and 2011. These statements were analyzed for the purpose of evaluating the applicant s ability to provide the capital and operational funding necessary to implement the project. 16

Short-Term Position: The applicant s current ratio of 11.6 indicates current assets are over 11 times greater than current obligations. This is well above average a good position. The ratio of cash flow to current liabilities of 2.2 is above average and a good position. Overall, the applicant has a good shortterm position (see Table 1). Long-Term Position: The ratio of long-term debt to net assets of 0.0 indicates the applicant has no long-term debt, a good position. The ratio of cash flow to assets of 11.9 percent is above average and a good position. The most recent year had an operating gain of $4.8 million, which resulted in a 4.9 percent operating margin. Overall, the applicant has a good long-term position (see Table 1). Capital Requirements: Schedule 2 indicates total capital projects of $122,148 which consist of this project and CON application #10192. In addition, the applicant will have to fund the projected year one operating loss of $424,920. Available Capital: Funding for this project will be provided by the applicant. The applicant has available working capital of $67.3 million and cash flow from operations of $14.2 million. Tidewell Hospice, Inc. also has cash and cash equivalents of $17.7 million. The applicant appears to have sufficient capital to fund this project and the entire capital budget. Staffing: The applicant s Schedule 6A lists one year 2013, and shows total FTEs will increase from 11.4 to 12.5, with the addition of 2.1 RN FTEs and the removal of 1.0 LPN FTE. Schedule 7A and its notes indicate the project s years one and two end June 30, 2014 and June 30, 2015 and Schedules 5 and 9 indicate the project s years one and two will be CY 2014 and CY 2015, respectively. Conclusion: Funding for this project should be available as needed. 17

TABLE 1 Tidewell Hospice, Inc. CON application #10193 6/30/2012 Current Assets (CA) $73,691,245 Cash and Current Investment $17,717,023 Total Assets (TA) $119,517,119 Current Liabilities (CL) $6,364,160 Total Liabilities (TL) $6,364,160 Net Assets (NA) $113,152,959 Total Revenues (TR) $97,282,025 Interest Expense (IE) $0 Operating Income (OI) $4,766,958 Cash Flow from Operations (CFO) $14,189,641 Working Capital $67,327,085 FINANCIAL RATIOS 6/30/2012 Current Ratio (CA/CL) 11.6 Cash Flow to Current Liabilities (CFO/CL) 2.2 Long-Term Debt to Net Assets (TL-CL/NA) 0.0 Times Interest Earned (OI+IE/IE) 0.0 Net Assets to Total Assets (NA/TA) 94.7% Operating Margin (OI/TR) 4.9% Return on Assets (OI/TA) 4.0% Operating Cash Flow to Assets (CFO/TA) 11.9% d. Will the proposed project foster competition to promote quality and cost-effectiveness? ss. 408.035(1) (g), Florida Statutes. Tidewell Hospice is the only licensed hospice in Hospice Service Area 8A and operates the service area s 12-bed licensed inpatient hospice in Charlotte County. There are no freestanding inpatient hospice beds located in DeSoto County. The impact of the price of services on consumer choice is limited to the payer type. Most consumers do not pay directly for hospice services rather they are covered by a third-party payer. The impact of price competition would be limited to third-party payers that negotiate price for services, namely managed care organizations. Therefore, price competition is limited to the share of patient days that are under 18

managed care plans. The applicant is projecting 6.8 percent of its patient days from managed care/commercial insurance payers with 90.1 percent of patient days expected to come from fixed price government payer sources (Medicare and Medicaid), with the remaining 3.1 percent as self-pay/charity. With the large majority of patient care being provided from fixed price government payer sources, this project is not likely to have any discernible positive impact on price-based competition to promote costeffectiveness. As providers offer new or enhanced services to patients and families as a means to compete on quality measures, costeffectiveness would be impacted since the new or enhanced services would be offered despite the large percentage of fixed priced government payers. In other words, the potential exists for new or enhanced services to be provided for the same federal and state dollars. Conclusion: The applicant is the sole provider in Hospice Service Area 8A. This project will not result in price-based competition. e. What is the immediate and long-term financial feasibility of the proposal? ss. 408.035 (1) (f), Florida Statutes. For year two of operations, the applicant projected the following percentage of total patient days by group: Medicare at 80.5 percent, Medicaid at 9.6 percent, self-pay/charity at 3.1 percent, and commercial insurance and other payers at 6.8 percent. The applicant indicated in the notes to Schedule 7 that the services it intends to provide are routine home care, inpatient respite, and general inpatient care, for which the Department of Health and Human Services sets rates. The federal rates were calculated for the DeSoto County, Florida Wage Index for Medicare Hospice payments of 0.8588 and inflated through June 2015. The average price adjustment factor used was 2.49 percent per year based on the new CMS Market Basket Price Index as published in the 1st Quarter 2013 Health Care Cost Review. Estimated patient days for each level of service from the notes to Schedule 7, year two were multiplied by the calculated reimbursement rate for that service in order to estimate the total revenue that would be generated by that number of patient days. The results were then compared to the applicant s estimated gross revenue. The results of the calculations are summarized in Table 2 below. The applicant s projected gross revenue was 4.9 percent, or $72,412, more than the calculated gross revenue. Operating profits from this project are expected to increase from $199,975 for year one to $748,655 for year two. 19

The applicant offered no conditions to its proposed hospice facility. Conclusion: This project appears to be financially feasible. However, the projected revenues in year two appear to be overstated. HOSPICE REVENUE TABLE 2 CON application #10193 - Tidewell Hospice, Inc. Wage Index for DeSoto County (0.8588) Wage Component Wage Index Adjusted Wage Amount Unadjusted Component Payment Rate Routine Home Care $105.44 0.8588 $90.55 $48.01 $138.56 Continuous Home Care $615.34 0.8588 $528.45 $280.22 $808.67 Inpatient Respite $85.92 0.8588 $73.79 $72.80 $146.59 General Inpatient $436.93 0.8588 $375.24 $245.66 $620.90 Payment Rate Inflation Factor Year Two Inflation Adjusted Amount Patient Days Year 2, December 31 2014 Calculated Gross Revenue Routine Home Care $138.56 1.044 $144.59 510 $73,743 Continuous Home Care $808.67 1.044 $843.88 0 $0 Inpatient Respite $146.59 1.044 $152.97 270 $41,302 General Inpatient $620.90 1.044 $647.92 1,990 $1,289,369 Total 2,770 $1,404,414 From Schedule 7 $1,476,826 Difference $72,412 Percentage difference 4.90% f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss. 408.035(1)(h), Florida Statutes. The applicant proposes to establish a new eight-bed licensed inpatient hospice facility in DeSoto County through conversion of an existing residential hospice facility. The applicant s narrative indicates that the building is fully sprinklered and the construction type is Florida Building Code (FBC) Type IIB. This construction type is sufficient for the occupancy and building size. Emergency power is provided via a 200 KW electrical generator. 20

The patient rooms are located in two wings. All patient rooms are private rooms with private toilet/shower rooms which appear to be accessible. All rooms exceed the minimum space requirements of the Florida Building Code. All functional spaces have been provided and located between the patient wings. The central support spaces contain a nurse station, medication room, clean utility, soiled utility room and storage facilities. A laundry is provided and appears to be arranged for patient use as required. Living and dining areas have direct access to a covered screen porch. The plans show that the facility will be subdivided into smoke compartments, as required by the applicable codes. The estimated construction costs and project completion forecast appear to be reasonable. The layout is efficient and functional. The architectural review of the application shall not be construed as an in-depth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner. g. Does the applicant have a history of providing health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss. 408.035(1)(i), Florida Statutes. The applicant states Tidewell Hospice is a Medicaid and Medicare provider and accepts patients regardless of ability to pay. Rates paid for hospice services by most payers are set in advance, in the amounts shown below: FY 2013 Medicare Reimbursement Rate Sarasota and Level of Care Manatee Counties Charlotte County DeSoto County Routine $150.20 $143.33 $138.56 Inpatient Respite $156.07 $150.47 $146.59 General Inpatient $669.13 $640.64 $620.90 Continuous Care $876.61 $836.49 $808.67 Source: CON application #10193, page 19. The applicant states the majority of patients are covered by Medicare. Payer mix by percent of patient days for the overall program is shown below. 21

FY 2013 Payer Mix 7/1/2012 through 5/1/2013 Medicare 92.87% Insurance 3.24% Medicaid 2.89% Self-Pay 0.65% Charity Care 0.35% Source: CON application #10193, page 19. Per the applicant, costs for patients unable to pay are covered through donations, fundraising events and gifts from the community. Decisions are made based on quality of life rather than financial considerations. Tidewell Hospice provided unreimbursed care in FY 2012 in the amount of $2,548,616; a sliding scale fee is used to calculate room and board per patient, with unreimbursed room and board the largest percentage of this balance ($880,638). The applicant s Schedule 7A shows the following projections for year one and two of the project: Projected Payer Mix Year One and Year Two Payer Year One Ending 6/30/2014 Year Two Ending 6/30/2015 Medicare 81.14% 80.51% Medicaid 8.38% 9.57% Commercial Ins. 7.24% 6.86% Self-Pay 3.24% 3.07% Total 100.0% 100.1% Source: CON application #10193, Schedule 7A. The applicant s Schedule 5 projects 2,625 patient days with 90 percent utilization for year one (CY 2014) and 2,770 patient days with 95 percent year two (CY 2015) of the project. Schedule 7A and its notes indicate that Schedules 7A and 8A are based on the project s years one and two ending June 30, 2014 and 2015, respectively. Schedules 5 and 9 indicate the project s years one and two will be CY 2014 and CY 2015, respectively. F. SUMMARY Tidewell Hospice, Inc. (CON #10193) proposes to establish an eightbed freestanding inpatient hospice facility through conversion of eight existing residential beds at the Arcadia Hospice House in Hospice Service Area 8A, DeSoto County. 22

The total project cost is $49,035. The project involves 2,480 GSF of renovation (no new construction) and a construction cost of $31,435. The applicant proposes no conditions for the project. Need/Access: The Agency does not publish need for inpatient hospice beds. Tidewell Hospice, Inc. is the sole licensed hospice provider in Hospice Service Area 8A and has 12 inpatient beds at Port Charlotte House. There are no approved inpatient beds pending licensure. The project is projected to result in a savings per inpatient day of $86.20 (year two) when patients receive inpatient care at the hospice facility instead of a hospital. The applicant indicates that the savings is directly related to being able to provide a higher quality service at less cost in its own freestanding facility. Inpatient designation will allow immediate access to care and services such as hospice-certified physicians, nursing, medical social work, counseling, volunteer, chaplain services, and grief specialists. The applicant contends that these services are not immediately accessible in contracting facilities. Inpatient designation improves the applicant s ability to meet the rising need for inpatient services created by increased referrals due to more emphasis within the medical community on palliative care. Inpatient designation facilitates an interdisciplinary hospice staff that is experienced in palliative care and is consistently available. In contracted facilities, patients are assigned beds that are typically scattered throughout the organization, which does not assure that care is provided by staff who are comfortable with palliative and hospice care. Quality of Care: Tidewell Hospice, Inc. participates in the Family Evaluation of Hospice Care, an ongoing survey of survivor perceptions of care and service. During the April through June 2012 reporting period, Tidewell Hospice had a range of 326 to 434 survey respondents receiving five star ratings in all categories. Tidewell Hospice, Inc. provides hospice care in Sarasota, Manatee, Charlotte and DeSoto Counties since 1980, and is in compliance with state of Florida and federal laws. The applicant demonstrated the ability to provide quality care. 23

Financial Feasibility/Availability of Funds: Funding for this project should be available as needed. This project appears to be financially feasible. However, the projected revenues in year two appear to be overstated. This project will not result in price-based competition. Medicaid/Indigent/Charity Care: Tidewell Hospice provides care to all who qualify for their services, and are not refused service based on payer type or ability to pay. The applicant s Schedule 7A indicates that Medicaid will account for 8.38 percent and 9.5 percent of the project s total annual patient days in years one and two, respectively. Architectural: All rooms exceed the minimum space requirements of the FBC. All functional spaces have been provided. The layout is efficient and functional. The estimated construction costs and project completion forecast appear to be reasonable. G. RECOMMENDATION Approve CON #10193 to establish an eight-bed freestanding inpatient hospice facility through the conversion of eight existing residential beds at the Arcadia Hospice House in Hospice Service Area 8A, DeSoto County. The total project cost is $49,035. The project involves 2,480 GSF of renovation and a construction cost of $31,435. 24

AUTHORIZATION FOR AGENCY ACTION Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State Agency Action Report. DATE: James B. McLemore Health Services and Facilities Consultant Supervisor Certificate of Need Jeffrey N. Gregg Director, Florida Center for Health Information and Policy Analysis 25