Capital Living and Rehabilitation Centres Vital Access Provider (VAP) Application. Part I. General Descriptive/Contact Information of Applicant

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1 Capital Living and Rehabilitation Centres 1 Capital Living and Rehabilitation Centres Vital Access Provider (VAP) Application Part I. General Descriptive/Contact Information of Applicant Applicant Facility s Legal Corporate Name: Jansen Road Nursing and Rehabilitation Center, LLC d/b/a The Mountain View Nursing and Rehabilitation Centre Operating Certificate Number: N PFI Number: 1001 Applicant Category: Nursing Home/Skilled Nursing Facility Applicant Mailing Address: 1 Jansen Road New Paltz, New York Contact Person: Patrick R. Martone, CEO 26 North Broadway Schenectady, New York Phone (518) x10105 Fax (518) Part II. Background Information Project Name: Relocation and Expansion of The Mountain View Nursing and Rehabilitation Centre Executive Summary: Jansen Road Nursing and Rehabilitation Center, LLC d/b/a The Mountain View Nursing and Rehabilitation Centre ( The Mountain View ) is a 79 bed skilled nursing facility owned by DMN Management Services, LLC d/b/a Capital Living Nursing and Rehabilitation Centres ( Capital Living ). The Mountain View, located in the town of New Paltz, Ulster County, is seeking to close its current skilled nursing facility and move to a new location within southern Ulster County, transferring the certified beds and existing residents into the new facility and expanding the facility s capacity to 120 beds. The existing facility was originally constructed in 1939; current deficiencies and code violations impact resident quality of life and staff efficiency, and renovation of the space would be cost prohibitive. The current Mountain View site is also prone to flooding, as evidenced by severe disruptions caused by tropical storm Irene and other lesser weather events and these flooding issues cannot be fully remediated. In spite of the current facility s condition, The Mountain View is a well-established, welladministrated facility. Facility staff is long-tenured and committed to serving the Ulster County community; they fully support the continuation of The Mountain View as a service provider in the area. Relocation to a new, upgraded facility would allow The Mountain View to better serve

2 Capital Living and Rehabilitation Centres 2 the senior population of Ulster County with enhanced rehabilitation capabilities, the ability to care for more clinically complex and special needs patients, and the opportunity to provide outpatient rehabilitation, creating a continuum of care in the Ulster County community. The Mountain View is seeking VAP funding to assist with operational needs associated with closing the current SNF and moving to a new, state-of-the-art facility with the capacity to provide multiple levels of care. Capital Living has met with state health officials in an effort to discuss the possibility of relocation and increasing capacity at The Mountain View. Capital Living has also met with representatives from the Ulster County Executive s administration to discuss potential approaches to developing a new facility in the County; the administration recognizes the urgent community need to keep The Mountain View in southern Ulster County and is proactively exploring alternate site options as well as continuing discussions and outreach to the local community. Project Objectives Provide residential options to replace needed RHCF capacity. This project will add 41 new SNF beds in the southern tier of Ulster County and provide needed, cost effective long term care residential services in an area that has been identified as having limited flexibility to diversity care needs due to a deficiency of SNF beds. The proposed SNF environment would be less restrictive and institutional in nature than the current facility, qualities that are attractive to consumers, and more flexible in meeting future Mountain View needs. Improve quality of life. The Mountain View has numerous physical plant deficiencies that impact resident dignity and quality of life and its outdated design is not conducive to providing optimal SNF care. Constructing a replacement Mountain View physical plant would result in an upgraded, state-of-the-art facility that appeals to its residents and promotes comfort and quality of life while allowing staff to better cater to communitybased services and needs. The new facility would offer expanded patient-centered clinical pathways and provide direct admissions for those requiring enhanced clinical intervention outside of an acute care setting. A physician suite, with doctors providing comprehensive inpatient and outpatient services, would encourage staff to work closely with physician groups to develop prevention models. Increase capacity to provide multiple levels of care. A new, state-of-the-art facility will allow The Mountain View the opportunity to replicate the model currently offered at Capital Living s Schenectady facility and better serve the senior population of Ulster County. An upgraded facility would allow for enhanced rehabilitation capabilities, the ability to care for more clinically complex and special needs patients, and the opportunity to provide out-patient rehabilitation. Targeted Population The Mountain View currently offers both short and long-term skilled nursing services and shortterm rehabilitative services to a predominantly senior population who cannot immediately return to their homes after a hospital stay. The facility s payer mix is approximately 73% Medicaid, 13% Medicare and Medicare Managed Care, 10% private and 4% other. The specific population to be served consists primarily of the 65+ years of age population of Ulster County that is in need of skilled nursing facility care and/or short term rehabilitation. Census data and projections indicate that this population is expected to increase by 28.7%

3 Capital Living and Rehabilitation Centres 3 through Of particular significance is the projected growth in the 85+ years of age population, which is projected to increase 14.6% through This age group utilizes skilled nursing home services at a significantly higher rate than other senior age cohorts; an increase in this population will intensify the need for skilled nursing home services in Ulster County. While many consumers prefer community-based alternatives to skilled nursing care, skilled nursing placement frequently represents the paramount option for patients facing multiple chronic progressive medical problems and complex needs. Upon completion of the project proposed here, The Mountain View would have more diverse and flexible capabilities to address the needs of an ever-changing population. A new facility would support the growing population in the southern tier of Ulster County by expanding the identified range of services offered while maintaining the high quality of care currently provided. Need The need to expand The Mountain View is clearly evident based on the following factors: RHCF Need Methodology Indicates Need: The 10 NYCRR Section bed need methodology indicates a need for 79 additional RHCF beds in Ulster County. Significant Outmigration of Ulster Residents for SNF Services: Analysis of data on Medicaid expenditures paid for Ulster County residents in skilled nursing facilities in 2010 and 2011 indicates a significant outmigration for skilled nursing services of Ulster County residents who are Medicaid recipients. The data indicates that skilled nursing services provided by facilities in Ulster County accounted for only 62.1% of such expenditures in 2011 and 63.7% in In addition to an out-of-state outmigration of 3.5% in 2011 and 2.8% in 2010, there is significant outmigration to facilities in Dutchess County; this is evidenced by the fact that Dutchess County facilities accounted for 19.0% of Medicaid expenditures paid for Ulster County residents in skilled nursing facilities in 2011 and 17.9% in Although some of this outmigration may be voluntary, the data supports the idea that there is insufficient RHCF capacity in Ulster County. Quality of life for RHCF residents can decline swiftly when home and family contacts become diminished because family and friends may not be able to bear the expense and rigors of frequent travel, particularly to an area where there is limited public transportation. Travel is a particular hardship for the economically disadvantaged and the elderly, further contributing to a diminished quality of life for Ulster County residents forced to seek care out of the area due to a lack of available services nearby. Changes to Ulster County Healthcare System: Closure of hospitals and significant downsizing of regional acute care capacity have made it imperative that sufficient RHCF capacity be made available in Ulster County with greater flexibility. Diminished capacities and the ever-evolving landscape of healthcare facilities in the area could lead to diminished access to acute care beds during peak periods such as flu season when actual occupancy traditionally exceeds average occupancy. Sufficient RHCF capacity is critical to maintaining access to these acute care beds; it is vital that a healthcare facility be able to discharge eligible patients in need of skilled nursing care to an appropriate facility as quickly as possible to avoid clogging acute care beds with alternate level of care patients. In addition, the expanded homecare and community-based model will require SNF services in certain situations in order to avoid costly hospitalization. Furthermore, the sale of Golden Hill Health Care Center, the County nursing home, increases the need for additional skilled nursing facility beds in the County to maintain Medicaid access to skilled nursing beds.

4 Capital Living and Rehabilitation Centres 4 Financial Condition of Provider The Mountain View is wholly owned by DMN Management Services, LLC d/b/a Capital Living Nursing and Rehabilitation Centres, which also owns seven other skilled nursing facilities. Capital Living and Rehabilitation Centres 2012 and 2011 audited financials shows consolidated income of $357,000 and a consolidated loss of over $1.5 million, respectively. The 2011 numbers include the absorption of non-recurring New York State Medicaid budgetary cuts for rather than a loss strictly manifested by operating results. As of December 31, 2012, Capital Living has approximately $1.4 million in equity. In 2009, 2010, 2011 and 2012, The Mountain View has had losses from operation of approximately $421,000, $567,000, $710,000 and $689,000, respectively. These losses are after the inclusion of Disadvantaged Facility assistance in some of the years. The current ratios were.36:1,.33:1,.25:1 and.26 for 2009, 2010, 2011 and 2012, respectively. This poor financial performance demonstrates that The Mountain View would be insolvent and operations would cease, if not for the support of its parent company and the parent company s other profitable affiliated facilities. The recent increase in operating losses is a function of a loss of disadvantaged funding coupled with a decrease to Medicaid rates with statewide pricing for facilities with less than 80 beds. Facilities with less than 80 beds received a safety net enhancement to the Medicaid rate in the prior reimbursement system (statewide rebasing). Of the seven existing nursing homes owned and operated by Capital Living, The Mountain View has been the most financially underperforming. Capital Living has utilized its experience and professional expertise to determine the reasons for this and has concluded that it is due to a confluence of factors including the historical costs, case mix, an outdated and functionally deficient facility and the hardships unique to a small facility in covering all of the attendant costs associated with running a skilled nursing facility. A replacement facility would eliminate the negative drag crated by the Mountain View on Capital Living s overall operating performance, thus improving the financial strength of the whole group. Part III. VAP Proposal Proposal The Mountain View is requesting funding from New York State to fund the costs of moving The Mountain View to a new facility and expanding the services provided. The current facility is a 79 bed skilled nursing facility located in New Paltz, Ulster County; the proposed facility would also be located in New Paltz and its capacity would be increased to 120 beds. In addition, the new facility would be designed to allow The Mountain View to provide additional out-patient services and would increase the number of employees from 104 FTEs to up to 144 employees. The proposed project consists of the following components: Construction of a 120 bed SNF with an expanded and more flexible rehabilitation gym and a physicians suite; Transfer of current SNF patients to new facility; Demolition of the existing Mountain View structure.

5 Capital Living and Rehabilitation Centres 5 The proposed changes in the configuration of services at The Mountain View can only be accomplished by building a new facility. The existing physical plant has significant, existing deficiencies and code violations that impact resident quality of life and staff efficiency, but renovations to the existing building are cost prohibitive. The Mountain View facility currently houses 79 certified residential health care facility beds. It is contained in a one-story building consisting of two nursing units. The original nursing home building is a converted wood-framed resident building with a full basement, constructed in Over the years there have been several additions, but these additions are now nearing the end of their useful lives. The two nursing units, one with 40 beds and one with 39 beds, consist primarily of single occupancy rooms with the exception of two 4-bedded rooms and three 2- bedded rooms. The multi-bedded rooms are housed in the older part of the building. The current building design and configuration are such that it is difficult to deliver quality care due to the following features that will be addressed by the building of a new facility: The multi-bedded rooms are undersized and do not provide sufficient space and privacy for residents; The facility lacks sufficient appropriate bathing facilities for the number of residents; Resident spaces are poorly designed and poorly sized; Space available for activities, resident lounges and family meeting areas is inadequate; and Call systems are inadequate and lack voice communicating capabilities. Infrastructure systems at The Mountain View are also deficient. Specific problems include: All mechanical systems (heating, hot water, telephone, HVAC, fire systems) have reached the end of their life cycle and are in need of replacement; Window replacements are needed; Electrical circuits are inadequate and electrical system upgrades are needed. In addition, new wiring for computers, HVAC controls, and communications devices is required; Full sprinkler coverage is lacking; The security system is inadequate; Space is poorly located and inadequate for storage and equipment cleaning areas; The kitchen is a freestanding structure connected to the nursing home via one of the nursing units, contains antiquated equipment and lacks proper support services and storage capacity; Waste water and sewer system is a series of leaching fields constructed throughout the life of the facility and have reached capacity; The existing corridors are inefficient as they are set up in a longer, institutional style; The generator service does not power the entire building; The water supply is through a series of wells and an on-site water treatment system that is difficult to maintain; and Resident rooms have toilets with no walls (just draw curtains). The Mountain View also needs a complete corridor and room renovation, including flooring and ceiling replacements, new lighting fixtures, new handrails and wall protection and new wall covering/paint. The construction of a replacement facility will serve to add needed skilled nursing facility beds and cost effective long term care residential services in the southern tier of Ulster County, where there is a demonstrated need. In addition, the new construction and upgraded facility will create a

6 Capital Living and Rehabilitation Centres 6 state-of-the-art environment that is less restrictive and institutional in nature. An improved facility will promote resident dignity and improve comfort and safety, while increasing staff efficiencies and increasing the quality of the work environment. As an existing provider of skilled nursing care in Ulster County, The Mountain View has extensive existing relationships with housing, social, environmental and medical supports in the community. These include but are not limited to the Ulster County Department of Social Services, the Ulster County Office for the Aging, local hospitals and certified home health agencies, assisted living facilities and community physicians. The Mountain View will utilize these relationships to make consumers aware of programs and services. Specific activities/deliverables to be funded through a rate adjustment are not applicable to this project. Timeline Preconstruction and Construction Activities for The Mountain View Activity Time Frame Responsible Party Submit VAP application 11/2013* Capital Living CEO and CFO Complete architectural plans 3/2014 Architect with detailed drawings Obtain final local approvals 8/2014 Developer and Capital Living CEO Obtain financing 9/2014 Developer Finalize construction contracts 9/2014 Developer and Capital Living CEO and CFO Commence construction 9/2014 Developer Monitor construction 9/ /2015 Developer and Capital Living CEO and CFO Develop a transfer plan for residents and obtain DOH approval 8/2015 Capital Living CEO, Administration of Mountain View Obtain Certificate of 10/2015 Capital Living CEO and CFO Occupancy Secure DOH survey of new 11/2015 Capital Living CEO and CFO facility Transfer residents to new SNF 11/2015 Capital Living CEO, Administration of Mountain View Move old medical records 10/2015 Capital Living CEO and CFO from discharged residents Demolish existing facility 11/ /2015 Capital Living CEO and CFO *Please note that the timeframes referenced are all estimated.

7 Capital Living and Rehabilitation Centres 7 Part IV. Financial Operating Budget Financial Budget Capital work: Fees: Equipment $594,000 CON Application Fees $137,000 Legal $150,000 Consulting/Planning $100,000 Debt Restructure: Pay-off Bank Mortgage Debt $2,633,333 Ramp up working capital $ 500,000 Closure Expenses: Demolition/Asbestos Abatement $ 800,000 Total VAP Application Budget $4,914,333 Part V. Objectives to be achieved with Metrics for Documentation Despite the fact that the current Mountain View facility is at the end of its useful life, as detailed above, and that the current physical limitations of the facility directly impact resident quality of life and staff efficiency, renovation of the space would be cost prohibitive. In spite of the current facility s condition, The Mountain View is a well-established, well-administrated, and stable workplace. Facility staff is long-tenured and committed to serving the Ulster County community; while staff has struggled mightily to continue to provide high quality care at the current facility, they are fully supportive of the continuation of The Mountain View as a service provider in the area. Having lost reimbursement given to facilities with less than 80 beds, coupled with the loss of disadvantaged monies, has place The Mountain View into a financial tail spin with only one viable solution to return to profitability. This solution is relocation and expansion to a new, larger SNF with more flexibility for providing multiple levels of care. Capital Living, The Mountain View s parent company, recently opened a new facility in Schenectady County that resulted in increased access to care, including outpatient services, for community-based residents with the continued ability to expand based on need. This upgrade demonstrates the enhanced level of services that Capital Living is capable of providing and serves as a replicable model that can be emulated in Southern Ulster County where a documented need exists. The financial objective of this project is to reverse the financial tailspin The Mountain View has experienced for the better part of the past decade and bring that operator back to profibility and

8 Capital Living and Rehabilitation Centres 8 current ratios greater than 1:1. Establishing a new, more efficient and therefore more costeffective facility to house The Mountain View while allowing for an expansion of services offered would serve to achieve this objective. Ensuring the financial health of The Mountain View would remove the pressure already felt by Capital Living from a cash flow perspective due largely to the current economic environment, budget cuts and reduced healthcare spending.

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