STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED

Transcription

1 STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number Helen Homes of South Dade, LLC d/b/a Homestead Manor A Palace Community/CON # SW 113 th Place Miami, Florida Authorized Representative: Mr. Oscar Roiz, CPA, CFO (305) Service District/Subdistrict District 11/Subdistrict 11-1 (Miami-Dade County) B. PUBLIC HEARING A public hearing was not held or requested regarding this proposal. Letters of Support Five unduplicated letters of support were included in the application. These letters were signed and dated during November 6, 2013 through November 11, 2013, addressed from Miami-Dade County, Florida, and individually composed. Overall, the support letters had the following common themes about the proposed project and the applicant s staff: Exceptional, high quality care of residents Increasing elderly population growth and increasing skilled nursing facility (SNF) bed demand in the Homestead area, particularly for the applicant s facility; and Limited bed capacity at Homestead Manor.

2 The letters were signed by: Robert Jaeger, DO Jules Minkes, DO Rita Nunez, RN (Vitas Hospice Representative) Kathleen DeLong, Physical Therapist; and Gina Richterkessing, Occupational Therapist. C. PROJECT SUMMARY Helen Homes of South Dade, LLC d/b/a Homestead Manor A Palace Community (CON application #10214) (also referenced as Homestead Manor) proposes to convert its licensed assisted living facility (ALF) unit into 24 community skilled nursing beds to its existing 64-bed skilled nursing facility (SNF). The project is to be implemented through the delicensure of 24 licensed skilled nursing beds at 462-bed SNF Miami Jewish Health Systems, Inc. Both SNFs are in Miami-Dade County (Subdistrict 11-1), Florida. The proposed project adds no new beds to the subdistrict. Exhibit 1 of the application is an October 11, 2013 notarized letter signed by Jeffrey Freimark, President and CEO, Miami Jewish Health Systems, Inc. to voluntarily delicense 24 community nursing home beds (which Mr. Freimark indicates may or may not be inactive at the time) to Helen Homes of South Dade, LLC, should the project be approved. Miami Jewish Health Systems, Inc. has a licensed capacity of 462 community nursing home beds. Forty of these beds have been in inactive status since December 10, Homestead Manor anticipates the project s issuance of license on June 15, 2014 and initiation of service on July 1, The applicant offers the following reasons for project approval: Relocates skilled beds to an area with fewer nursing home beds in proportion to the population Relocates skilled beds to an area with higher population growth, particularly for the elderly, those ages 65 and older, whose needs will continue to include the provision of facility-based care, whether for short or long-term care Improvements in efficiencies at Homestead Manor will occur with the change in functional space, creating a single mission (by deleting ALF services) to provide high quality, short and long-term nursing care 2

3 High SNF utilization at Homestead Manor (over 95 percent) requires that additional capacity is provided to address staffing, resident services needs, and to improve response times to accommodate admissions when requested. The applicant indicates admissions sometimes cannot be provided due to the lack of a vacant bed. The project is the best use of available space and health care resources at Homestead Manor. The project involves 7,765 gross square feet (GSF) of renovation (no new construction). The construction cost is $42,000. Total project cost is $1,748,534. Project cost includes land, building, equipment, project development and financing costs. Homestead Manor A Palace Community does not have any CON conditions. Schedule C indicates that Helen Homes of South Dade, LLC does not wish to accept any conditions on the project. D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section , Florida Statutes. These criteria form the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an applicant's capability to undertake the proposed project successfully is conducted by assessing the responses provided in the application, and independent information gathered by the reviewer. Applications are analyzed to identify strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant best meet the review criteria. Section 59C (3) (b), Florida Administrative Code, allows no application amendment information subsequent to the application being deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the Certification of the Applicant. 3

4 As part of the fact-finding, consultant Steve Love 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 indicate the level of conformity of the proposed project with the criteria and application content requirements found in Florida Statutes, sections , and ; applicable rules of the State of Florida, Chapter 59C-1 and 59C-2, Florida Administrative Code. 1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Rule 59C-1.008(2), Florida Administrative Code. Pursuant to Florida Statutes (1), the Florida Legislature extended a moratorium, until Medicaid managed care is implemented statewide pursuant to Sections , Florida Statutes, or October 1, 2016, whichever is earlier, on the issuance of any certificate of need (CON) for increases in the number of community nursing home beds around the state. Due to the moratorium, a fixed need pool was not published by the Agency. This project, if approved, will not change the bed count in the planning area. b. If no Agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics Availability, utilization and quality of like services in the district, subdistrict, or both. Medical treatment trends. Market conditions. The applicant s need justification is summarized briefly here because need for the project is not an issue, due to the fact, as previously stated, that the proposed project adds no new beds to the district or subdistrict. 4

5 The proposed project does not change the bed count in the planning area. Population demographics and dynamics The applicant cites the Agency s publication, Population Estimates 2010 to 2030, issued September 2013 and the Nielson Company to indicate that by July 2016, the 15-mile radius of the proposed site will have a greater percentage of age 65 and older and age 75 and older residents than Miami-Dade County and the State of Florida. See the table below. Population Growth by Age Cohort for the 15-Mile Radius, Subdistrict 11-1 and the State July 2013-June 2016 Population Increase Growth Rate Age Cohort 15-Mile Radius Miami-Dade County Florida 15-Mile Radius Miami-Dade County Florida Age 65+ 6,819 25, , % 6.8% 9.2% Age 75+ 2,040 10, , % 6.0% 6.7% Total Population 25,127 68, , % 2.6% 4.0% Source: CON application #10214, page 1-4, Table 1-1. Note: The reviewer collapsed the applicant s table to more strictly reference the population growth estimates for the specified age cohorts and the total population. Homestead Manor indicates that the increase in the elderly population will continue to place higher demand on skilled nursing providers as the population grows and ages. Availability, utilization and quality of like services Concerning availability, there are 54 licensed community nursing homes with a total of 8,456 community nursing home beds in District 11, Subdistrict 11-1 (Miami-Dade County). Subdistrict 11-1 averaged percent total occupancy for the 12-month period ending June 30, The applicant uses data from the Agency publication Florida Nursing Home Utilization by District and Subdistrict to compare nursing home bed utilization at Homestead Manor, Miami Jewish Health Systems, Inc., Subdistrict 11-1 (Miami-Dade County) and District 11, during the 12-month period ending June 30, Homestead Manor s total occupancy rate exceeds that of Miami Jewish Health Systems, Inc., Miami-Dade County, and District 11 overall. See the table below. 1 Source: Florida Nursing Home Utilization by District and Subdistrict utilization data published September 27,

6 Homestead Manor, Miami Jewish Health Systems, Inc., Subdistrict 11-1 (Miami-Dade County) & District 11 Utilization July 1, 2012-June 30, 2013 Patient Total Medicaid Medicaid Occup. Facility Bed Days Days Occup. Days Homestead Manor 23,360 22, % 14, % Miami Jewish Health Systems, Inc. 168, , % 92, % Subdistrict 11-1 (Miami-Dade County) 3,041,300 2,680, % 1,731, % District 11 3,128,900 2,724, % 1,756, % Source: Agency for Health Care Administration Florida Nursing Home Utilization by District and Subdistrict September 27, The applicant seeks to transfer 24 licensed community SNF beds from Miami Jewish Health Systems, Inc. to Homestead Manor. The above table supports the applicant s assertion that the proposed project would relocate community nursing home beds from a SNF with less occupancy (86.92 percent) to a highly utilized SNF (94.96 percent). Total occupancy rates in the above table also support the applicant s assertion that the proposed project would result in better use of available space and health care resources at Homestead Manor. The applicant further provides a figure (page 1-6, Figure 1-1) to indicate that Homestead Manor s location in the southern portion of the service area is far removed from the majority of other nursing facilities which are clustered in the northern half of the area. The applicant maintains that of the 54 community nursing homes within the subdistrict only seven other facilities are within the 15-mile radius of Homestead Manor. The applicant additionally states that three hospitals are located within a 15-mile radius of Homestead Manor Homestead Hospital, Jackson South Community Hospital and Kendall Baptist Hospital. Per the Agency s Florida Health Finder website at indicates that Homestead Manor is the following driving distances to the nearest three acute care hospitals: Homestead Hospital, 3.12 miles; Jackson South Community Hospital, miles and West Kendall Baptist Hospital, miles. The same source also confirms that there are seven nursing homes within 15 miles of Homestead Manor. Concerning utilization of beds, the applicant indicates that for the five year period ending June 30, 2013, Homestead Manor s lowest 12-month total occupancy rate occurred for the period ending June 30, 2012 (93.53 percent) and for the same five-year period, the same facility s highest total occupancy rate occurred for the period ending June 30, 2009 (96.10 percent). The reviewer confirms this is correct per the Agency s Florida Nursing Home Utilization by District and Subdistrict publication, issued 6

7 September 2009 to September Homestead Manor asserts that this historical high utilization shows continued high demand that will continue as the population increases and ages. Homestead Manor notes the following observations concerning the seven SNFs within 15 miles of the proposed project and Homestead Manor, over the 12-month period ending June 30, 2013: Eight of the seven facilities have 90 percent or over utilization The facilities in the 15-mile radius average 92 percent occupancy, limiting access, thus making it more difficult to find an available bed when needed; Six of the eight facilities are large facilities, with 120, 163, 180 beds and one has 220 beds; and Homestead Manor provides higher than average services to Medicaid recipients, helping ensure access to all persons regardless of ability to pay. The reviewer confirms the Homestead Manor s four bulleted observations, through the Agency s Florida Nursing Home Utilization by District and Subdistrict publication, issued September The applicant also notes that 40 licensed community nursing home beds at Miami Jewish Health Systems, Inc. are inactive and states that the proposed project will not displace any nursing home residents. Using Claritas data and Agency publications, the applicant contends that there are beds per 1,000 persons aged 65 and over within a 15-mile radius of Homestead Manor, compared to beds per 1,000 persons for the same age cohort in Miami-Dade County overall. Medical Treatment Trends and Market Conditions Homestead Manor asserts that the proposed project will allow for a single direction for its operations. Staffing efficiencies are expected to improve and reporting and billing requirements will be simplified with clear expectations and service lines for residents. The applicant estimates utilization for the proposed bed addition and the total facility, by patient days, occupancy rates and average daily census (ADC), for year one and year two of the project. See the table below. 7

8 Projected Utilization at Homestead Manor First Two Years of the 24-Bed Addition 24-Bed Addition Patient Days Occupancy Rate ADC Year One Ending June 30, , % 13.0 Year Two Ending June 30, , % 22.9 Total Facility 88 Beds Year One Ending June 30, , % 74.7 Year Two Ending June 30, , % 84.7 Source: CON application #10214, page 1-14, Table Agency Rule Preferences Does the project respond to preferences stated in Agency rules? Please indicate how each applicable preference for the type of service proposed is met. Chapter 59C-1.036, Florida Administrative Code. Chapter 59C of the Florida Administrative Code does not contain preferences relative to community nursing home beds nor does the Agency for Health Care Administration publish specific preferences for these facilities. However, the rule does contain standards the Agency utilizes in assessing the applicant s ability to provide quality care to the residents. a. Geographically Underserved Areas. In a competitive certificate of need review within the nursing home subdistrict as defined in 59C-2.200, Florida Administrative Code, the Agency shall award a certificate of need if the applicant meets all applicable criteria for a geographically undeserved area as specified in subsection (15), Florida Statutes (Florida Statutes), and if the applicant meets the applicable statutory certificate of need review criteria specified in section , Florida Statutes, including bed need according to the relevant bed need formula contained in this rule. If the applicant is awarded a certificate of need based on the provisions of this paragraph, the applicant shall agree that the nursing facility will be located in a county without a nursing facility, or in the center of an area within the subdistrict of a radius of at least 20 miles which meets the definition of a geographically undeserved area. The center of the geographically undeserved area shall be the proposed nursing home location in the application. Per Homestead Manor, the application is not submitted in order to remedy a geographically underserved area. 8

9 b. Proposed Services. Applicants proposing the establishment of Medicare-certified nursing facility beds to be licensed under Chapter 400, Florida Statutes, shall provide a detailed description of the services to be provided, staffing pattern, patient characteristics, expected average length of stay, ancillary services, patient assessment tools, admission policies, and discharged policies. Homestead Manor reports being certified for and participating in both the Medicare and Medicaid programs. Schedule 6A indicates year one (ending June 30, 2015) FTEs, total facility-wide, with 15.1 FTEs added by the proposed project. For year two (ending June 30, 2016), the applicant forecasts FTEs facility-wide, with 26.9 FTEs specific to the proposed project. The 24-bed project s year one and year two FTEs are shown in the table below. Helen Homes of South Dade, LLC d/b/a Homestead Manor A Palace Community Incremental Staffing Year One Ending June 30, 2015 and Year Two Ending June 30, 2016 Number of FTEs Added Year One Number of FTEs Added Year Two Position Nursing RNs LPNs Nurses Aides Dietary Dietary Aides Housekeeping Housekeepers Laundry Laundry Aides Total Source: CON application #10214, Schedule 6A. Per notes to Schedule 6A, the proposed staffing patterns and the number of FTEs are based on the experience of the applicant s management. Chapter , Florida Statutes requires a minimum licensed nursing staffing of 1.0 hours of direct care for each resident per day and a minimum certified nursing assistant staffing of 2.5 hours of direct care for each resident per day. Additionally, s (3)(a)1. a., Florida Statutes, states that there must be a minimum weekly average of certified nursing assistant and 9

10 licensed nurse staffing of 3.6 combined hours of direct care per resident per day. The applicant s projections exceed these staffing requirements. c. Quality of Care. In assessing the applicant s ability to provide quality of care pursuant to s (1), Florida Statutes, the Agency shall evaluate the following facts and circumstances: 1. Whether the applicant has had a Chapter 400, Florida Statutes, nursing facility license denied, revoked, or suspended within the 36 months prior to the application. The applicant has not had a nursing home license denied, revoked, or suspended. 2. Whether the applicant has had a nursing facility placed into receivership at any time during the period of ownership, management, or leasing of a nursing facility in the 36 months prior to the current application. The applicant has not had a nursing home placed into receivership at any time. 3. The extent to which the conditions identified within subparagraphs 1 and 2 threatened or resulted in direct, significant harm to the health, safety, or welfare of the nursing facility residents. This provision is not applicable. 4. The extent to which the conditions identified within subparagraph 3 were corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory to the agency. This provision is not applicable. 10

11 5. Rule 59C (4) (f) Harmful Conditions. The Agency shall question the ability of the applicant to provide quality of care within any nursing facility when the conditions identified in subparagraph (e) 1 and (e) 2 result in the direct, significant harm to the health, safety, or welfare of a nursing facility resident, and were not corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory with the Agency. Since there have been no violations, this provision is not applicable. Refer to quality of care discussion below in section E. 3. b. of this report. d. Rule 59C (5) Utilization Reports. Within 45 days after the end of each calendar quarter, facilities with nursing facility beds licensed under Chapter 400, Florida Statutes shall report to the Agency, or its designee, the total number of patient days, which occurred in each month of the quarter, and the number of such days that were Medicaid patient days. The applicant states it will provide the required data to the Health Council of South Florida, Inc. and to the Agency. 3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant's service area? ss (1)(b) and (e), Florida Statutes. As stated previously, there are 54 licensed community nursing homes with a total of 8,456 community nursing home beds in District 11, Subdistrict 11-1 (Miami-Dade County). Subdistrict 11-1 averaged percent total occupancy for the 12-month period ending June 30, Homestead Manor s total occupancy was percent. Homestead Manor discusses quality of care and access indicating that it has provided high quality of care while experiencing total occupancy of percent or greater during the five-year period ending June 30, Homestead Manor reiterates that the proposed project will result in no new beds added to the subdistrict and the beds will be relocated from an area where the majority of nursing homes are located to an area where demand is high and fewer beds are available. 11

12 Regarding geographic access, the applicant indicates that, per The Neilsen Company, the zip codes within a 15-mile radius of Homestead Manor will realize an age 65 and over age population increase of 6,819 residents (a percent increase) over the three-year period ending June 30, The map below shows the location of Homestead Manor and Miami Jewish Health Systems, Inc. Homestead Manor A Palace Community (CON Application #10214) and Miami Jewish Health Systems, Inc. Source: Microsoft MapPoint

13 Homestead Manor reiterates that it participates in the Medicare and Medicaid programs and plans to continue to participate in them. The applicant also indicates that to promote access, the facility is projected to realize a minimum of 63 percent of the total annual patient days to Medicaid residents by the end of year two of operations. Regarding extent of utilization of existing health care facilities and health services in the applicant's service area, this topic was previously addressed. To summarize, the project would make more SNF beds available in a relatively high SNF bed demand area. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? Is the applicant a Gold Seal Program nursing facility that is proposing to add beds to an existing nursing home? ss (1)(c) and (j), Florida Statutes. Homestead Manor, A Palace Community (Homestead Manor) is an affiliate of The Palace Group, which owns two SNFs, four ALFs, two independent living facilities and a home health agency in Miami-Dade County. The applicant also has a retirement community, an independent living facility and an ALF in District 10 (Broward County). In Exhibit 4-1 of the application, Homestead Manor provides the following awards and accreditations among The Palace Group facilities: For the most recent rating period (April 2013 through September 2013), Homestead Manor A Palace Community received five of a possible five-star rating through the Agency s quality inspection records The Gold Seal (August 1, 2012 July 31, 2014) issued by The Florida Panel on Excellence in Long-Term Care, for The Palace at Kendall Nursing and Rehabilitation Center CARF accreditation for The Palace Gardens, The Palace Renaissance and The Palace Royale (ALFs); and Joint Commission accreditation for The Palace at Home (a home care program). 13

14 Homestead Manor notes that its current ALF residents will move to The Palace Gardens, an affiliate facility located less than 1,000 feet from Homestead Manor. Homestead Manor provides a detailed description of its performance improvement and quality assurance policies and procedures (pages 4-2 through 4-10 of the application). In Exhibit 4-2 of the application, Homestead Manor includes a variety of nursing evaluation and related sample forms: System Evaluation Skin Evaluation Braden Scale Pain and Fall Risk Evaluation Smoking/Behavior/ Elopement Evaluation Interim Plan of Care; and Interdisciplinary Discharge Summary. Homestead Manor s Resident s Bill of Rights are included in Exhibit 4-4, of the application. Homestead Manor also discusses employee training, with topics such as orientation, ongoing training, education and communication and then documentation. The applicant also offers signed and dated affiliation agreements (Exhibit 4-5 of the application) between itself and Keiser University-Kendall Campus and Dade Medical College nursing programs for clinical practice experience for students. Regarding the parent company, The Palace Group, none of its affiliated Florida SNFs had a substantiated complaint during the 36 months ending December 19, The Palace Group s two affiliated Florida SNFs have a cumulative total of 244 community nursing home beds. c. What resources, including health manpower, management personnel and funds for capital and operating expenditures, are available for project accomplishment and operation? ss (1)(d), Florida Statutes. The financial impact of the project will include the project cost of $1,748,534 and incremental year two operating costs of $1,948,

15 The audited financial statements of the applicant for the periods ending December 31, 2011, and December 31, 2012 were analyzed for the purpose of evaluating the applicant s ability to provide operational funding necessary to implement the project. Short-Term Position: The applicant s current ratio of 1.2 is below average and indicates current assets are approximately 1.2 times current liabilities, a weak position. The ratio of cash flows to current liabilities of 0.0 is below average, a weak position. The working capital (current assets less current liabilities) of $167,225 is a measure of excess liquidity that could be used to fund capital projects. Overall, the applicant has a weak short-term position (see Table 1 below). Long-Term Position: The ratio of long-term debt to net assets of 1.9 is well above average and indicates the applicant may have difficulty acquiring future debt financing, if necessary. The ratio of cash flow to total assets of -0.6 is below average, a weak position. The most recent year had $472,230 of expenses in excess of revenues, which resulted in a total margin of -7.4 percent. Overall, the applicant has a weak long-term position (see Table 1 below). Capital Requirements: The applicant indicates on Schedule 2 capital projects totaling $1.76 million which includes this project and capital expenditures. Available Capital: The applicant indicates on Schedule 3 of its application that funding for the project will be provided by $100,000 in cash-on-hand and a bank loan from Synovus Bank. Synovus provided a letter indicating they have strong interest to provide funding, not that they would guarantee funding. Staffing: Schedule 6A indicates, for year one (ending June 30, 2015), the applicant forecasts a total of FTEs facility-wide, with 15.1 FTEs having been incrementally added, specific to the proposed project. For year two 15

16 (ending June 30, 2016), the applicant forecasts FTEs facility-wide, with 26.9 FTEs having been incrementally added, specific to the proposed project. The applicant s incrementally added FTEs, for year one and year two, are shown in the table below. Helen Homes of South Dade, LLC d/b/a Homestead Manor A Palace Community Incremental Staffing Year One Ending June 30, 2015 and Year Two Ending June 30, 2016 Number of FTEs Added Year One Number of FTEs Added Year Two Position Nursing RNs LPNs Nurses Aides Dietary Dietary Aides Housekeeping Housekeepers Laundry Laundry Aides Total Source: CON application #10214, Schedule 6A. Per notes to Schedule 6A, the proposed staffing patterns and the number of FTEs are based on the experience of the applicant s management. Conclusion: Funding for this project and the entire capital budget is in question. 16

17 TABLE 1 CON application # Helen Homes of South Dade, LLC Applicant 12/31/11 12/31/12 Current Assets $881,149 $977,474 Cash and Current Investment $34,368 $112,703 Total Assets $6,418,059 $6,343,108 Current Liabilities $687,970 $810,249 Total Liabilities $4,287,970 $4,410,249 Net Assets $2,130,089 $1,932,859 Total Revenues $1,037,754 $6,512,094 Interest Expense $35,030 $206,790 Excess of Revenues Over Expenses ($150,638) ($472,230) Cash Flow from Operations ($429,185) ($36,007) Working Capital $193,179 $167,225 FINANCIAL RATIOS 12/31/11 12/31/12 Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (ER+Int/Int) Net Assets to Total Assets (NA/TA) 33.2% 30.5% Total Margin (ER/TR) -14.5% -7.3% Return on Assets (ER/TA) -2.3% -7.4% Operating Cash Flow to Assets (CFO/TA) -6.7% -0.6% d. What is the immediate and long-term financial feasibility of the proposal? ss (1)(f), Florida Statutes. A comparison of the applicant s estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions contained in Schedule s 7 and 8), and efficiency, (the degree of economies achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired outcome. These relationships hold true for a constant intensity of service 17

18 through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may either go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. Comparative data was derived from skilled nursing facilities that submitted Medicaid cost reports in fiscal year 2011 and We selected 25 skilled nursing facilities with similar Medicaid utilization. Per diem rates are projected to increase by an average of 2.7 percent per year. The price adjustment factor used was based on the new CMS Market Basket Price Index as published in the 3rd Quarter 2013, Health Care Cost Review. Projected net revenue per patient day (NRPD) of $288 in year one and $292 in year two is between the control group lowest and median values of $282 and $310 in year one and $289 and $319 in year two. With net revenues between the lowest and median values in the control group, the facility is expected to consume health care resources in proportion to the services provided (see Tables 2 and 3 below). Projected revenues appear to be reasonable. Anticipated costs per patient day (CPD) of $272 in year one and $264 in year two is between the control group lowest and median values of $249 and $291 in year one and $256 and $299 in year two. With net revenues between the lowest and median values in the control group, projected costs are considered feasible (see Tables 2 and 3 below). The applicant is projecting a decrease in CPD between years one and year two of approximately 2.9 percent. Overall, costs appear to be reasonable. Section (3)(a)(2), Florida Statutes, specifies a minimum certified nursing assistant staffing of 2.5 hours of direct care per resident per day and a minimum licensed nursing staffing of 1.0 hour of direct resident care per resident day. Based on the information provided in Schedule 6, the applicant s projected licensed nursing staffing and direct care exceeds the minimum level required in year one and two. Furthermore, the applicant s certified nursing assistant staffing exceeds the minimum required by statute in years one and two. The year two operating profit for the skilled nursing facility of $865,566 computes to an operating margin per patient day of $28 which is between the control group median and highest values of $20 and $51. Overall profitability appears achievable. Conclusion: This project appears to be financially feasible based on the prior profitable operations of the facility. 18

19 TABLE 2 Helen Homes of South Dade, LLC d/b/a Homestead Manor, A Palace Community CON application #10214 Jun-15 YEAR 1 VALUES ADJUSTED SELECT FY 2011/2012 YEAR 1 ACTIVITY FOR INFLATION COST REPORT DATA ACTIVITY PER PAT. DAY Highest Median Lowest ROUTINE SERVICES 7,838, ANCILLARY SERVICES 1,187, OTHER OPERATING REVENUE GROSS REVENUE 9,025, DEDUCTIONS FROM REVENUE 1,172, NET REVENUES 7,853, EXPENSES ADMINISTRATIVE 1,776, PATIENT CARE 4,953, PROPERTY 612, OTHER 79, TOTAL EXPENSES 7,420, OPERATING INCOME 433, % PATIENT DAYS 27,266 VALUES NOT ADJUSTED TOTAL BED DAYS AVAILABLE 32,120 FOR INFLATION TOTAL NUMBER OF BEDS 88 Highest Median Lowest PERCENT OCCUPANCY 84.89% 97.9% 92.4% 77.7% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY % MEDICAID 17, % 67.7% 63.7% 58.4% MEDICARE 3, % 35.5% 19.6% 11.2% INSURANCE 0 0.0% HMO/PPO 0 0.0% OTHER 5, % TOTAL 27, % 19

20 TABLE 3 Helen Homes of South Dade, LLC d/b/a Homestead Manor, A Palace Community CON application #10214 Jun-16 YEAR 2 VALUES ADJUSTED SELECT FY 2011/2012 YEAR 2 ACTIVITY FOR INFLATION COST REPORT DATA ACTIVITY PER PAT. DAY Highest Median Lowest ROUTINE SERVICES 9,039, ANCILLARY SERVICES 1,389, OTHER OPERATING REVENUE GROSS REVENUE 10,428, DEDUCTIONS FROM REVENUE 1,371, NET REVENUES 9,057, EXPENSES ADMINISTRATIVE 2,010, PATIENT CARE 5,471, PROPERTY 616, OTHER 93, TOTAL EXPENSES 8,191, OPERATING INCOME 865, % PATIENT DAYS 30,989 VALUES NOT ADJUSTED TOTAL BED DAYS AVAILABLE 32,208 FOR INFLATION TOTAL NUMBER OF BEDS 88 Highest Median Lowest PERCENT OCCUPANCY 96.22% 97.9% 92.4% 77.7% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 1, % MEDICAID 19, % 67.7% 63.7% 58.4% MEDICARE 4, % 35.5% 19.6% 11.2% INSURANCE 0 0.0% HMO/PPO 0 0.0% OTHER 6, % TOTAL 30, % e. Will the proposed project foster competition to promote quality and cost-effectiveness? ss (1)(e) and (g), Florida Statutes. Competition to promote quality and cost-effectiveness is driven primarily by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/costs 20

21 in order to remain viable in the market. In this case the applicant is transferring existing beds from one location to another. Therefore, this project will not result in new beds to the service area and will not have a material impact on competition. Conclusion: This project is not likely to have a material impact on competition between skilled nursing facilities. f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss (1)(h), Florida Statutes; Ch. 59A-4, Florida Administrative Code. The applicant proposes to convert existing space currently licensed as assisted living within the footprint of the skilled nursing facility (SNF) for the addition of 24 SNF beds. The proposed project includes nine rooms currently licensed as semi-private assisted living facility (ALF), four rooms currently licensed as private SNF rooms, and one inactive semiprivate room. Once these 14 rooms are converted to semi-private SNF rooms, this will yield 24 new SNF beds. All of the existing rooms that are currently licensed as ALF bedrooms were designed to meet the accessibility codes in effect in 1996; however, they do not meet the requirements of the current accessibility code. The office of Plans and Construction will not require these bathrooms to be altered to meet current accessibility since the facilities were built according to the previous accessibility requirements when the rooms were licensed as ALF beds and they have not been modified to reduce compliance with these standards. There are two bedroom types being considered in this application. The net square footage after the required renovation, are 190 and 200 square feet. The current Florida Building Code (FBC) requires 100 square feet of clear floor space per bed for all new double occupancy rooms. Proposed alterations within the resident rooms will increase the clear floor space to acceptable areas. The enlarged floor plans do not depict bed locations, but it appears that room will accommodate bed locations which comply with all required clearances. The project proposes adding 840 square feet of resident living, social area for the 24 new residents beds. However an existing storage room was used to achieve this area; equipment storage must be provided for the new 24 beds and also replace the existing storage room to comply with 21

22 the requirements of the FBC. Additionally, an existing 100 square feet office will be converted into a tub room with adjacent toilet room, as required by FBC. Schematic plans indicate proposed resident rooms will utilize the existing nursing unit s support rooms, including nurse station, clean holding, soiled utility, med room, nourishment, and dining/multi-purpose room. The construction type is not listed on the architectural narrative or the schematic floor plan, but the facility is an existing nursing home so the construction type should meet the minimum requirements. The information provided in the estimated construction cost and project completion forecast appears to be reasonable. The plans submitted with this application were schematic in detail with the expectation that they will necessarily be revised and refined during the Design Development (Preliminary) and Contract Document Stages. 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 and propose the provision of health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss (1)(i), Florida Statutes Homestead Manor indicates a history or providing health services to Medicaid residents and states plans to continue to do so. The applicant also states that Homestead Manor has a history of providing Medicaid at similar levels to the Subdistrict average. See the table below. 22

23 Historical Provision of Medicaid at Homestead Manor A Palace Community Most Recent Five Years Medicaid Patient Days Medicaid Patient Days 7/08-6/09 7/09-6/10 7/10-6/11 7/11-6/12 7/12-6/13 Homestead Manor 16,443 17,411 18,079 13,637 14,041 Subdistrict ,663,919 1,680,086 1,704,541 1,694,268 1,731,756 District 11 1,696,406 1,701,746* 1,706,068 1,709,272 1,756,892 Florida 15,321,959 15,480,978 16,612,015** 15,726,251 15,676,855 Medicaid Occupancy 7/08-6/09 7/09-6/10 7/10-6/11 7/11-6/12 7/12-6/13 Homestead Manor 73.20% 78.13% 81.22% 62.24% 63.30% Subdistrict % 64.28% 64.33% 64.24% 64.61% District % 64.36% 64.31% 64.05% 64.49% Florida 60.84% 61.32% 61.56% 61.96% 61.58% Source: CON application #10214, page 9-1, Table 9-1 from Florida Nursing Home Utilization by District and Subdistrict publication, issued September 2009 September * Agency records indicate this total is 1,701,743. * * Agency records indicate this total is 15,612,015. The reviewer confirms that the applicant s percentages in Table 9-1 (above) are consistent with the Agency s published utilization. Homestead Manor states plans to continue to care for all patients, regardless of payer source. The applicant offers forecasted admissions, patient days and percent of total days by payer source for year one and year two of the proposed project. See the table below. Forecasted Patient Days for Homestead Manor First Two years of the 24-Bed Addition (Total Facility of 88 Beds) Year One: Ending June 30, 2015 Year Two: Ending June 30, 2016 Payer Admits Patient Days Percent of Total Days Admits Patient Days Percent of Total Days Medicare 120 3, % 137 4, % Medicaid Managed Care 83 17, % 94 19, % Managed Care % % Self-Pay % 14 1, % Other 69 5, % 78 6, % Total , % , % Source: CON application #10214, page 9-2, Table 9-2. The applicant projects Medicaid Managed Care will be 63.2 percent of year one and 63.0 percent of year two total facility annual patient days. Homestead Manor s Schedule 7A is consistent with Table 9-2 (above). 23

24 F. SUMMARY Helen Homes of South Dade, LLC d/b/a Homestead Manor A Palace Community (CON application #10214) proposes to convert its licensed ALF unit into 24 community nursing home beds through the delicensure of 24 community nursing beds at Miami Jewish Health Systems, Inc. Both SNFs are in Miami-Dade County (Subdistrict 11-1), Florida. The proposed project adds no new beds to the subdistrict. An authorized representative of Miami Jewish Health Systems, Inc. has agreed to voluntarily delicense 24 community nursing home beds to accomplish the project. The project involves 7,765 GSF of renovation (no new construction). The construction cost is $42,000. Total project cost is $1,748,534. Project cost includes land, building, equipment, project development and financing costs. The applicant proposes no conditions to project approval. Need/Access: The applicant offers the following reasons for project approval: The project relocates skilled beds to an area with fewer nursing home beds in proportion to the population. The project relocates skilled beds to an area with higher population growth, particularly for the elderly, those ages 65 and older, whose needs will continue to include the provision of facility-based care, whether for short or long-term care. There will be improvements in efficiencies at Homestead Manor due to the change in functional space, creating a single mission (with the deletion of ALF services) to provide high quality, short-stay rehab and long-term nursing care. The high utilization at Homestead Manor (SNF beds over 95 percent) requires that additional capacity is provided to address staffing, resident services needs and to improve response times to accommodate admissions when requested. The applicant indicates admissions sometimes cannot be provided due to the lack of a vacant bed. The project is the best use of available space and health care resources at Homestead Manor. 24

25 Quality of Care: For the most recent rating period (April 2013-September 2013) Homestead Manor had five of a possible five-star quality inspection rating. The applicant provided a good description of its ability to provide quality care. The Palace Group SNFs (including Homestead Manor) had no substantiated complaints during the three-year period ending December 19, Financial Feasibility/Availability of Funds: Funding for the project and the entire capital budget is in question. This project appears to be financially feasible based on the prior profitable operations of the facility. This project is not likely to have a material impact on competition. Medicaid/Indigent/Charity Care: The applicant has a history of providing care to Medicaid recipients. In the 12 months ending June 30, 2013, Medicaid was percent of the facility s total patient days. The applicant estimates year two (ending June 30, 2016), a total facility Medicaid managed care occupancy rate of percent. Architectural: The assisted living facility bed space portion of the proposed 24-bed SNF area met accessibility requirements in effect for assisted living facility beds in 1996 and the Office of Plans and Construction will not require the bathrooms be altered to meet the current accessibility code. Equipment storage must be provided and the storage room must be revised for the new 24 beds to comply with the Florida Building Code. The estimated construction cost and project completion forecast appear to be reasonable. 25

26 G. RECOMMENDATION Approve CON #10214 to add 24 community nursing home beds through the delicensure of 24 beds at Miami Jewish Health Systems, Inc. in District 11, Miami-Dade County. The total project cost is $1,748,534. The project involves 7,765 GSF of renovation and a construction cost of $42,

27 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 27