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 University Plaza Rehabilitation and Nursing Center, Inc./ CON # NE 168 th Street, Suite 200 North Miami Beach, Florida Authorized Representative: William Zubkoff, Ph.D., M.P.H. President and Chief Executive Officer (305) Service District/Subdistrict District 11, Subdistrict 11-1 (Miami-Dade County) B. PUBLIC HEARING No public hearing was held or requested on the proposed project to construct a new skilled nursing facility (SNF) of 148 community nursing home beds at University Plaza Rehabilitation and Nursing Center, Inc. through the delicensure of 148 like beds from affiliates of the applicant in District 11, Subdistrict 11-1 (Miami-Dade County, Florida). Letters of Support The applicant submitted 13 unduplicated letters of support for the project. All support letters were signed and of the 13 letters, 10 were dated, with the oldest dated June 19, Four of the 13 letters were from non-resident/non-family members of residents and the remaining nine letters appeared to be from residents or resident family members. Sally Heyman, Commissioner, District 4, Board of County Commissioners, Miami-Dade County. Commissioner Heyman congratulated Jackson Plaza for being ranked one of the top 20 nursing homes in Miami-Dade County by the Center for Medicare and Medicaid Services (CMS). Another support letter, from Leonard Mondschein, a nationally certified elder law attorney, offered similar recognition.

2 Demetria Carter, Branch Chief, Acquisition Policies & Legislation Support, Office of Acquisition Management, Federal Emergency Management Agency, U.S. Department of Homeland Security, thanked the Hebrew Homes Health Network for offering housing, rehabilitation and nursing services for displaced disaster victims that suffered from Hurricanes Fay, Hanna and Ike. Ms. Carter also thanked the Network for its similar offer to Hurricane Katrina victims. The remaining letters were predominantly from residents or family members of residents of Arch Plaza, Hebrew Home of South Beach or Jackson Plaza (all member affiliates of the Network). These nine letters, five being handwritten, expressed thanks and appreciation for the care and assistance provided by the staff at the various facilities. C. PROJECT SUMMARY University Plaza Rehabilitation and Nursing Center, Inc. (CON #10057) (also referenced as University Plaza or the applicant) proposes to construct a 148-bed community nursing home through the delicensure of 148 like beds from affiliates of the applicant in District 11, Subdistrict 11-1 (Miami-Dade County, Florida). The 148 beds come from three sources: (1) 85 licensed beds, presently inactive, license number SNF , at Plaza North, Inc.; (2) existing CON #9867, 25-bed addition to Plaza North, Inc.; and (3) existing 38 beds reflected in a Stipulation and Agreement regarding Jackson Plaza, Inc., CON #9212, which were to be returned and reincorporated into the facility s licensed bed complement. A concurrent and companion application (CON #10058) is submitted in the current batching cycle to account for the 25- bed transfer from CON #9867. The project will result in no change in the number of community nursing beds in the district or subdistrict. University Plaza Rehabilitation and Nursing Center, Inc. indicates it is affiliated with both Plaza North, Inc. and Jackson Plaza, Inc. through its affiliation with the not-for-profit, 501(c)(3) Hebrew Homes Health Network, Inc. (also referenced as the Network). The applicant states that the project objective is to realize greater availability of beds with a new physical plant, with the same number of skilled facilities within the Network but the addition of an assisted living facility (ALF) allowing for the conversion of Plaza North from a SNF into an ALF, extending the continuum of care. The applicant believes project approval would promote improved economies of scale between Jackson Plaza and the tobe-constructed University Plaza, at least in part due to their immediate proximity to each other and being near major hospitals. The applicant indicates that the Network has eight affiliates, with Plaza North, Inc. and Jackson Plaza, Inc. being among them. The applicant indicates that 2

3 significant benefits to project approval include: relocation of existing beds to a site that improves access and availability to potential residents because it is near major thoroughfares and roadways and in close proximity to major hospitals; no increase in the subdistrict s number of licensed nursing homes; placement of a vacant building into service as an ALF, and no adverse impact on area nursing homes. The site location is stated to be at zip code directly east and adjacent to Jackson Plaza. The new facility is designed to have 48 private and 50 semi-private rooms. The project involves 92,943 total gross square feet (GSF) of new construction and no renovation space. The construction cost is $14,700,000. The total cost of the project is $23,160,377. Total project costs include the following: land; building and equipment; project development, financing and start-up. The applicant proposes the following conditions on Schedule C of the application: The facility will be located on a parcel of land adjacent to Jackson Plaza to the east and a minimum of 65.0 percent of the 148-bed facility s total annual patient days will be reimbursed by Medicaid. 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 meets the review criteria. Section 59C-1.010(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, the consultant, Steve Love analyzed the application in its entirety with consultation from the Financial Analyst, Derron Hillman, who evaluated the financial data, and the Architect, Scott Waltz, who evaluated the architecturals and the schematic drawings as part of the application. 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 and 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 July 1, 2011 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 and the number of community nursing home beds will remain constant statewide. The moratorium will allow the expansion of alternative and more costefficient programs. 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; and Market conditions. 4

5 Population demographics and dynamics There are 53 community nursing homes in District 11, Subdistrict 11-1 (Miami-Dade County) with a total of 8,039 community nursing home beds 1. District 11, Subdistrict 11-1 (Miami-Dade County) averaged percent occupancy for the 12-month period ending December 31, District 11 averaged percent occupancy during Calendar Year The table below illustrates the annual utilization for the SNFs planning to delicense community nursing home beds compared to the subdistrict and district averages. Annual Utilization Total Plaza Nursing and Jackson Plaza District 11, Subdistrict 11-1 (Miami-Dade County) January 2008-December 2008 Facility Bed Days Patient Days Total Occup. Medicaid Days Medicaid Occup. Plaza Nursing & Rehab Center* 31, % % Jackson Plaza Nursing & Rehab Center 43,920 40, % 30, % Subdistrict ,929,688 2,604, % 1,674, % District 11 3,017,528 2,663, % 1,715, % Source: Agency for Health Care Administration publication Florida Nursing Home Utilization by District and Subdistrict January December 2008, issued April 3, *Plaza Nursing & Rehab Center s 85 beds have been inactive since April 5, The applicant seeks to transfer the 85 inactive community skilled nursing facility beds from Plaza Nursing & Rehabilitation Center (along with a 25-bed addition at the same facility) and also transfer 38 community skilled nursing facility beds from Jackson Plaza Nursing & Rehabilitation Center. University Plaza Rehabilitation and Nursing Center, Inc. (adjacent to Jackson Plaza Nursing and Rehabilitation Center) would be approximately driving miles 2 toward the southwest from Plaza Nursing and Rehabilitation Center. The Agency for Health Care Administration published population projections for District 11, Subdistrict 11-1, Miami-Dade County, which indicate the following: 1 Agency publication, Florida Nursing Home Utilization by District and Subdistrict, January 2008 December 2008, issued April 3,

6 Population Growth January 2010 to January 2015 District 11, Subdistrict 11-1 (Miami-Dade County) January 2010 January 2015 Five-Year Growth Population Population Population Age Ranges Miami-Dade County 348, , , , % 8.49% District Total 362, , , , % 8.65% Statewide Total 3,352,359 1,692,137 3,943,962 1,850, % 9.33% Source: Agency for Health Care Administration Population Estimates, published September The above table indicates by January 2015, Miami-Dade County s (District 11, Subdistrict 11-1 s) 65 years of age and older population is expected to grow at a rate of percent, slower than the state overall growth rate of percent. Miami-Dade County s 75 years of age and older population is expected to experience growth at a rate of 8.49 percent compared to the state at 9.33 percent. The applicant states that one of the productive characteristics of the project is the proximity to five nearby hospitals: Jackson Memorial Hospital; Anne Bates Leach Eye Hospital, University of Miami Hospital & Clinics (Sylvester Cancer Center), University of Miami Hospital (the former Cedars Medical Center) and the Bruce W. Carter Department of Veterans Affairs Medical Center. The applicant indicates that all of the above five hospitals are within zip code (Need, page #1-3). This is the same zip code as the proposed site. However, there is one exception, that being Bruce W. Carter Department of Veterans Affairs Medical Center located in zip code The applicant indicates that the following six factors support need for the project: inapplicability of the fixed need pool; reasons for and benefits of the project; location; applicant s forecast of skilled care; no adverse impact on existing nursing and benefits of the applicant s facility. Each topic is briefly discussed below. Pursuant to Florida Statutes (1), the Florida Legislature extended a moratorium until July 1, 2011 on the issuance of any certificate of need 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 and the number of community nursing home beds will remain somewhat constant statewide. This project, if approved, will not change the bed count in the planning area

7 The applicant concludes the following benefits occur with project approval: the complement of existing beds is relocated to a site that improves access and availability of beds to potential residents because it is near major thoroughfares and roadways; the project does not increase the number of licensed nursing homes; the project allows the vacated building at Plaza North, Inc. to be put into service as an ALF, adding resources to the community and the Hebrew Home Health Network, Inc.; the project relocates existing beds to a site that improves access and availability to major hospitals and the project produces no adverse impact on area nursing homes. The applicant also contends that by locating the 148-bed project in zip code 33136, University Plaza Rehabilitation and Nursing Center, Inc. will have proximity to major hospitals, increasing the applicant s ability to attract health care professionals, nurses, nursing aides, and others to the facility. The applicant states this proximity will provide the benefits of a medical campus environment. The applicant provides maps (pages #1-6 and 1-7) to reflect the relative locations of the Network s eight nursing homes and a five-mile radius around Jackson Plaza, with 15 nursing homes within the radius. The applicant continues by reporting that for the 12-month period ending December 31, 2008, the 15 nursing homes within a five-mile radius of the proposed site had 2,960 community nursing home beds, the total patient days were 997,784 and the total occupancy rate was 92.4 percent. The applicant points out the total occupancy rate between the 15 facilities is higher than that of the subdistrict for the same period, stating the subdistrict s average occupancy was 88.3 percent. As previously stated, the subdistrict s average occupancy for the period was percent. It is shown that nursing homes within a five-mile radius of the proposed site had a higher average occupancy rate for CY 2008 than the subdistrict and district overall. The applicant concludes that the addition of beds to the area would produce no adverse impact on existing facilities. Below is a map depicting the existing 85-bed Plaza Nursing & Rehabilitation Center and the proposed project location. 7

8 Microsoft MapPoint 8

9 The applicant s Table 1-2 (on page 1-9) shows that for each of the last three years (CY 2006 CY 2008) the District 11 average total occupancy rates and average Medicaid occupancy rates were higher than the state s. Next, the applicant uses the July 1, 2006 July 1, 2008 age 75 and older population estimates to show that District 11 age 75 and older population per 1,000 residents, had a higher patient bed use rate and Medicaid patient bed use rate than the state overall. The applicant s Table 1-3 mistakenly used July 2008, not changing it to July 2007 and 2006 where appropriate for total bed use rates and Medicaid bed use rates (per 1,000 age cohort residents) for the July midpoints. This table also shows that the District 11 Medicaid and total occupancy rates are dropping at a higher rate (-1.5 percent per year vs state total and percent per year compared to the state s -0.9 percent Medicaid) than the state s. The applicant suggests that this data indicates nursing home diversion programs and those that are targeting Medicaid recipients may be delaying or reducing the demand for skilled care; however, the applicant stresses that the actual use rate, based on CY 2008 data, still reflects demand as does the occupancy rate for facilities. Population estimates for July 2008 to July 2013, are provided for Subdistrict 11-1 which show that Miami-Dade s aged 65 years and older population will increase by 37,931 persons and 13,606 or 36 percent will be in the group 75 years and older. The applicant proceeds to show a compound annual growth rate of 2.1 percent in District 11-1 (CY CY 2013) for the age 65 and over population compared to a compound annual growth rate of 1.1 percent for the age 18 and older population. Population growth of the age 65 and older compared to the overall adult population in the subdistrict is cited as supporting need for the project. Considering the 85 beds at Plaza North, 25 beds submitted for transfer in the companion application for this batching cycle (CON #10058) and the 38 beds in the stated Stipulation and Agreement, the applicant forecasts District 11 will have a 90.0 percent average bed occupancy for 2012 and a 91.5 percent average occupancy for 2013 (the 1 st and 2 nd year of operations). The applicant maintains a Medicaid occupancy for the same two years at 64.4 percent. Though nursing home patient days are expected to grow, the applicant holds the same Medicaid percentage in an effort to model the effect of ongoing efforts to redirect Medicaid recipients into managed care and other options to control the utilization of institutional services. 9

10 The applicant provides Network community nursing home beds, for CY 2007 (before Plaza North went inactive in 2008), at 1,020 beds, the bed days for the same period among the eight facilities at 372,530, the patient days at 318,247, an average bed occupancy rate of 85.4 percent, Medicaid patient days at 213,679 for the same period, with an average Medicaid occupancy rate of 67.1 percent. This shows the eight Network facilities, as a whole, averaged a higher Medicaid patient day percentage (67.1 percent) than the district overall (64.4 percent). The applicant also shows the eight facility Network experienced a market share (districtwide) in CY 2007 of 2,716,342 total patient days (11.7 percent of total patient days in the district) and of those total patient days 1,773,085 were Medicaid patient days, which represents 12.1 percent of Medicaid patient days district-wide. As the planning area is Subdistrict 11-1, the applicant s market share percentages should have been compared to Miami-Dade facilities and not the district. Regardless, the applicant s project does not add beds to the subdistrict. The applicant projects year two (ending December 31, 2013) occupancy of 90.2 percent and 65.0 percent Medicaid for year one and year two. 2. 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. 10

11 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 (18), 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. Not applicable. The project is not competitive and is not proposed to be located in a geographically underserved area. 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. The applicant states the proposed facility will be certified by Medicare and Medicaid. Per the application, patients characteristics include acute as well as chronic conditions that require 24-hour nursing services. Assessment tools used are to be the same for Medicare and other patients. Therapies are to be contracted and include physical, occupational, speech and respiratory. Nursing services include: sub-acute medical services; post-hospital care; short-term rehabilitation and long-term care. Resident and family councils are to be offered. 11

12 Position University Plaza Rehabilitation and Nursing Center, Inc. Staffing Patterns Year One and Year Two of Operation Year One FTEs Year One Ending 12/31/2012 Year Two FTEs Year Two Ending 12/31/2013 ADMINISTRATION Administrator/Assist. Admin Director of Nursing Admissions Clerk Bookkeeper Secretary Medical Records Clerk Other: MDS RN TOTAL PHYSICIANS Medical Director TOTAL NURSING RN s LPN s Nurses Aides Other: Ward Clerks TOTAL ANCILLARY Physical Therapist Speech Therapist Occupational Therapist Respiratory Therapist PT Assistant TOTAL DIETARY Dietary Supervisor Cooks Dietary Aides Other Dietary Dept TOTAL SOCIAL SERVICES Social Service Director Activity Director Activities Assistant Other: Social Service Dept TOTAL HOUSEKEEPING Housekeeping Supervisor Housekeepers TOTAL LAUNDRY Laundry Supervisor Laundry Aides TOTAL MAINTENANCE Maintenance Supervisor Maintenance Assistance Maintenance Dept TOTAL GRAND TOTAL Source: CON Application #10057 Financial Schedule 6. 12

13 Chapter , Florida Statutes, currently 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 2.9 hours of direct care for each resident per day. The calculations below are based on the applicant s proposed staffing from Schedule 6A and projected occupancy from Schedule 5 of the application. University Plaza Rehabilitation and Nursing Center, Inc. Minimum Staffing Requirements FTE Nurses/Aides Minimum Requirement 1 st Year nd Year 2013 Nurses 1.0 hours of direct care per resident Aides 2.9 hours of direct care per resident Sources: Extracted from Schedule 5 & 6 of CON Application # As shown in the above table, the applicant s projected staffing patterns meet the minimum requirements outlined in Section (3)(a), Florida Statutes for nurses and for nurses aides. Licensed nursing staff must be at least one per 40 residents and a minimum of one nurse aide for each 20 residents. The applicant s projections are in compliance with applicable 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 facility placed into receivership at any time. 13

14 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. University Plaza Rehabilitation and Nursing Center, Inc. states that since there have been no violations 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. (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. The applicant states that 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. (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 continue to provide the required data to the Health Planning Council of South Florida, Inc. and to the Agency. 14

15 3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care, efficiency, 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 53 community nursing homes in District 11, Subdistrict 11-1, Miami-Dade County, with a total of 8,039 community nursing home beds 4. District 11, Subdistrict 11-1 (Miami- Dade County) averaged percent occupancy for the 12-month period ending December 31, In total for the same period, District 11 averaged percent occupancy. As stated previously, regarding availability, the applicant provides maps (Need, page #1-6, Figure 1-3 and page #1-7, Figure 1-4) to reflect locations of the Network s eight nursing homes and a five-mile radius around Jackson Plaza (the facility immediately adjacent to the proposed site), with 15 nursing homes within the radius. Again, as stated previously, the applicant reports that for the 12-month period ending December 31, 2008, the 15 nursing homes within a five-mile radius of the proposed site had a total number of nursing home beds of 2,960, a total patient day count of 997,784 and a total occupancy rate of 92.4 percent. With the 148-bed project, the applicant estimates the occupancy rate to decline from 92.4 percent to 88.0 percent and this would not have a negative impact on existing facilities. The expected increase in the elderly population is anticipated to increase the number of patient days and hence, likely off-set the decline in the occupancy percentage. The applicant has previously stated a compound annual growth rate of 1.6 percent for Miami-Dade County nursing home residents age 75 and older and a 2.1 compound annual growth rate for those age 75 and older. The 18 to 64 age range is expected by the applicant to realize a 1.1 percent compound annual growth rate. The applicant emphasizes that the elderly, those age 65 and older, are expected to experience a growth rate almost two times that of the 18 to 64 age cohort and that this supports the need justification. 4 Agency publication Florida Nursing Home Utilization by District and Subdistrict, January 2008 December 2008, issued April 3,

16 Regarding quality of care, the applicant provides Agency inspection ratings of all eight Network nursing homes and states an average overall STAR rating of four of a possible five stars (Health Planning, page #3-2, Table 3-1/STAR Rating of Plaza Network Affiliated Nursing Homes). The Agency confirms that the most recent Agency inspection ratings of the eight facilities results in an overall four-star rating (of a possible five-star rating) 5. This is as of an internet run date of July 10, 2009 with the Agency s Nursing Home Guide last updated in May Concerning accessibility, the applicant provides a pictorial view of the proposed site as it relates to major roadways (Health Planning, page #3-4, Figure 1-3). Concerning extent of utilization, the applicant shows that for the 12- month period ending December 31, 2008, Miami-Dade County experienced an average occupancy rate of 88.9 percent (88.3 percent of District 11 overall) and a Medicaid occupancy rate of 64.3 percent for Miami-Dade County (64.4 percent for District 11 overall) [Health Planning, page #3-6, Table 3-2/Nursing Home Utilization in Dade County, Calendar Year 2008]. The applicant elects to respond to additional criteria - the Health Care Access Criteria, as stated in Chapter 59C-1.030(2). Below are the applicant s volunteered responses. (a) 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 has previously shown and the Agency has verified the proposed location is centrally located within Miami-Dade County and is essentially a replacement facility for Plaza North. Within a five-mile radius of the proposed site, some 15 other nursing homes are currently operational with a relatively high occupancy rate (approximately 92 percent) for the 12-month period ending December 31, Agency Nursing Home Guide at 16

17 (b) 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 admissions 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. The applicant anticipates the project will not reduce the supply of licensed beds. Rather, the project will implement 63 beds previously authorized but not yet implemented, enhancing availability and access within the subdistrict. (c) The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and state health plan as deserving of priority. The applicant states this is not applicable, as local health plans are no longer published. This is confirmed by the Agency. (d) In determining the extent to which a proposed service will be accessible, the following will be considered: 1. 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 reports that presently, the Medicaid reimbursed days are 64 percent for both the district and subdistrict. The Agency previously confirmed that for the 12-month period ending December 31, 2008, District 11 realized a Medicaid patient day average of percent and Subdistrict 11-1 experienced a percent Medicaid patient day average. The applicant forecasts that 65 percent of the patient days will be Medicaid-reimbursed days. The applicant has previously shown that the eight Network facilities, as a whole, averaged a Medicaid patient day percentage of 67.1 percent, for the 12-month period ending December 31, It is reiterated that the applicant conditions for a minimum of 65 percent of total patient days to be reimbursed by Medicaid. 17

18 2. The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, 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 is a not-for-profit corporation and states its mission includes community service and care for minorities. It further states its provision of care is based upon medical necessity for admission and does not exclude or limit admission on any other variables. 3. The extent to which Medicare/Medicaid and medically indigent patients are served by the applicant; and The applicant conditions for 65 percent Medicaid, and projects 30 percent Medicare and a five percent self-pay patient day average, as reflected in this section (Health Planning, page #3-8, Table 3-3/Patient Days by Payer for First Two Years of University Plaza Rehabilitation and Nursing Center). The applicant s Table 3-3 is also found on Schedule C-Conditions. 4. The extent to which the applicant offers a range of means by which a person will have access to its services. As a not-for-profit entity, the applicant states it and its Network affiliates work to ensure that all persons do not experience any financial barriers with respect to accessing care at its facilities. The applicant states no purpose should be patient (Health Planning, page #3-9) will be refused admission or discharged due to inability to pay. The applicant also provides the mission statement of the Hebrew Homes Foundation. The applicant states the Network provides over $1,000,000 in uncompensated care annually and provides more than 1,900 seniors with physical therapy, more than 1,700 with occupational therapy and more than 1,100 with speech therapy, annually. 18

19 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. The applicant provides documentation that each of the Hebrew Home Health Network, Inc. s seven active nursing homes in the area hold Joint Commission accreditation (Quality of Care, page #4-1 and page #4-9, Exhibit 4-1/JCAHO Accreditation of Network Affiliates). The applicant further states that Network affiliates have been Gold Seal Awarded, with two facilities (Jackson Plaza and Sinai Plaza) having been recently considered for the award (Quality of Care, page #4-1 and page #4-2, Table 4-1/Nursing Home with Health Planning District 11, Gold Seal for the 2006 to 2008 Period). A current review of Gold Seal recipients indicates none of the affiliate Network nursing homes hold the Gold Seal designation at this time 6. The applicant offers a 10-step summary of quality assurance initiatives as follows: assign responsibility; delineate the scope of care; important aspects of care; indentify indicators; establish thresholds for evaluation; collect and organize data; evaluate care; take action; assess actions and communication of information. Two quality efforts are indentified by the applicant - the Florida Health Care Association (FHCA s) Quality Credentialing Initiative (QCI) and the Evercare Program for long-term care residents. The FHCA s QCI includes both internal and external quality processes, including such features as a self-assessment checklist and a risk management/quality assurance committee, with the latter meeting monthly, per the applicant, to assess resident care and facility practices and to develop, evaluate, implement and monitor plans of action. Evercare is stated to be a Medicare replacement insurance for permanent geriatric residents of long-term care facilities and becomes the payer for all eligible Part A and Part B services. According to the Evercare website 7, Evercare is one of the nation s largest care coordination programs for people who have longterm advanced illnesses, are older or have disabilities. In keeping the community informed of its quality of care to residents at its affiliate nursing homes, the applicant includes a December 18, 2008 article in The Miami Herald that lists Aventura Plaza, Jackson Plaza,

20 Plaza Nursing, Ponce Plaza and Sinai Plaza as five-star inspection rated facilities. It is confirmed by Agency review that these facilities are in fact so rated. There is also an April 22, 2009 Greater North Miami Chamber of Commerce luncheon sponsor award for another Network affiliation facility Arch Plaza. The applicant reports 13 key operating policies and activities (Quality of Care, page #4-8), some include the following: Activities/Recreation Services Assessment; Group Activities; New Admission Checklist; Resident Rights & Responsibilities Acknowledgement; Admission, Transfer & Discharge Rights Policy; Resident Rights Policy; Quality of Life Policy and Standard Admission Record and Agreement. The applicant indicates samples of these operating policies are included in the applicant s Exhibit 4-1. However, a review of the application indicates the policies are not included for Agency review. Agency records indicate three confirmed and no confirmed without deficiency complaints at Plaza Nursing and Rehabilitation Center during the three-year period ending June 10, The three complaints were for the following complaint categories: lack of assessment (one); pressure sores (one) and resident care (one). 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 applicant, a development stage company, is an affiliate of Hebrew Homes Health Network, Inc. (parent). The financial impact of the project will include the project cost of $23,160,377 and incremental year two operating costs of $14,356,200. University Plaza Rehabilitation and Nursing Center, Inc. is a Florida notfor-profit corporation, incorporated in March As of March 31, 2009 the applicant had $300,000 in assets with no operating results. The applicant provided audited financial statements of its ultimate parent company, Hebrew Homes Health Network, Inc., a not-for-profit [501(c)3] corporation, for the periods ending December 31, 2008 and These statements were analyzed for the purpose of evaluating the parent s ability to provide the capital and operational funding necessary to implement the project. 20

21 Short-Term Position: The parent s current ratio of 1.7 is below average and indicates current assets are over one-and-a-half-times current liabilities, a good position. The working capital (current assets less current liabilities) of $8.2 million is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flows to current liabilities of 0.3 is well below average and indicates that operating cash flows are sufficient to cover only 30 percent of current obligations, a moderately weak position. Overall, the parent has an adequate short-term position. (See Table below). Long-Term Position: The ratio of long-term debt to net assets of 1.2 indicates the parent is highly leveraged and may have difficulty obtaining future debt as necessary. The ratio of cash flow to assets of 6.4 percent is below average and a moderately weak position. The most recent year had $3.4 million of revenue in excess of expenses, which resulted in an operating margin of 4.5 percent. Overall, the parent has a moderately weak longterm position. (See Table below). Capital Requirements: Schedule 2 listed capital projects totaling $23.2 million, which consists of only this project. The applicant is projecting a year one operating loss of $508,600, which it will have to fund until profitability can be achieved. Available Capital: Funding for this project will be provided by the parent in the amount of $2.6 million. As discussed above, the parent has working capital of $8.2 million and $3.4 million in operating income, and cash flow from operations was $3.1 million. The applicant will contribute $300,000 with the remaining $23.2 million funded through debt financing. The applicant provided a letter from Greystone Financial Group indicating a strong interest to lend up to $28 million for this project. The letter cited its previous successful transactions with the parent and indicated the 21

22 terms of such a loan in the current lending environment. A letter of interest is not considered a firm commitment to lend. In the absence of a firm commitment to lend, the Agency would consider the financial position of the entity securing the funding. The parent is already highly leveraged and this loan would not improve that position. Further, the parent s cash flow ratios discussed above were below average. The financial position of the parent raises some questions about its ability to acquire additional debt financing. Staffing: Schedule 6 indicates, by December 31, 2012 (the first year of the proposed project), the applicant forecasts FTEs as follows: administrator, director of nursing, admissions clerk, bookkeeper and medical records clerk (1.0 FTEs each); secretary and other-mds RN (2.0 FTEs each); medical director [a physician] (0.10 FTE 8 ); registered nurses [RNs] (5.7 FTEs); licensed practical nurses [LPNs] (17.1 FTEs); nurse s aides (50.1 FTEs); dietary supervisor (1.0 FTEs); cooks (3.0 FTEs); dietary aides (7.0 FTEs); other-dietary department (2.0 FTEs); social service director (1.0 FTEs); activity director (1.0 FTEs); activities assistant (2.0 FTEs); other-social services department (2.0 FTEs); housekeeping supervisor (1.0 FTEs); housekeepers (8.0 FTEs); laundry supervisor and laundry aides (3.9 FTEs each); maintenance supervisor, maintenance assistance and other-maintenance department (1.0 FTEs each). By December 31, 2013 (the second year of the proposed project), the applicant forecasts FTEs, with the same positions and FTEs with the following exceptions: RNs (8.4 FTEs); LPNs (25.2 FTEs); nurse s aides (78.8 FTEs); dietary aides (9.0 FTEs); activities assistant (4.0 FTEs); housekeepers (10.0 FTEs) and laundry supervisor and laundry aides (4.9 FTEs each). Conclusion: Funding for this project is in question and is dependent on the affiliate/parent s ability to obtain debt financing. 8 The medical director is salaried at $100,000 annually, with only a 0.1 FTE. Rule 59A (3) Florida Administrative Code allows a licensed Florida physician to be the medical director for up to 10 nursing homes at any one time. 22

23 CON # December 31, 2008 Audited Financial Statements 12/31/08 12/31/07 Current Assets $20,275,877 $16,233,067 Cash and Current Investment $9,031,769 $6,185,788 Assets limited to use $1,313,272 $0 Total Assets $48,624,450 $42,101,129 Current Liabilities $12,059,203 $23,446,864 Total Liabilities $31,841,865 $28,722,895 Net Assets $16,782,585 $13,378,234 Total Revenues $76,454,890 $75,044,264 Interest Expense $969,519 $1,039,044 Excess of Revenues Over Expenses $3,404,351 $3,055,978 Cash Flow from Operations $3,095,951 $5,058,438 Working Capital $8,216,674 ($7,213,797) FINANCIAL RATIOS 12/31/08 12/31/07 Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (NPO+Int/Int) Net Assets to Total Assets (TE/TA) 34.5% 31.8% Operating Margin (ER/TR) 4.5% 4.1% Return on Assets (ER/TA) 7.0% 7.3% Operating Cash Flow to Assets (CFO/TA) 6.4% 12.0% 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 Schedules 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 23

24 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 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 2007 and The Agency selected 13 similar sized skilled nursing facilities with similar Medicaid utilization. Per diem rates are projected to increase by an average of 3.1 percent per year through December The price adjustment factor used was based on the new CMS Market Basket Price Index as published in the 1st Quarter 2009 Health Care Cost Review. Projected net revenue per patient day (NRPD) of $316 in year one and $321 in year two is above the control group s highest values of $301 in year one and $310 in year two. Highest value in the group is considered the upper limit of feasibility. (See Table below). Net revenues appear to be overstated. Anticipated costs per patient day (CPD) of $332 in year one is above the control group s highest value of $292. The highest level is generally viewed as the practical upper limit on cost efficiency. CPD of $312 in year two is between the control group median and the highest values of $267 and $300. With year two cost between the control groups highest and median values, costs are considered feasible. (See Table below). The Applicant is projecting a decrease in CPD between year one and year two of approximately 11.3 percent. It should be noted that this application is for a new skilled nursing facility. The first year of operation has a below average occupancy rate. The low occupancy rate decreases economies of scale and as the occupancy rate increases, CPD would be expected to decrease. 24

25 Section (3)(a)(2), Florida Statutes, specifies a minimum certified nursing assistant staffing of 2.9 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 exceeds the minimum level required in year one and year two. The year two operating profit for the skilled nursing facility of $1.3 million computes to an operating margin per patient day of $27 which is slightly above the control group s highest value of $25. The majority of the profitable facilities in the control group had relatively high levels of Medicare utilization. The applicant is projecting Medicare utilization at the high end of the control group. Based on the applicant s projected payer mix, profitability for this project appears achievable. However, the level of profitability projected is likely overstated. Conclusion: Assuming the debt financing for this project will be acquired, this project appears to be financially feasible. 25

26 CON #10057 Dec-13 YEAR 2 VALUES ADJUSTED SELECT FY 2007/2008 YEAR 2 ACTIVITY FOR INFLATION COST REPORT DATA ACTIVITY PER PAT. DAY Highest Median Lowest ROUTINE SERVICES 15,439, ANCILLARY SERVICES 6,372, OTHER OPERATING REVENUE GROSS REVENUE 21,811, DEDUCTIONS FROM REVENUE 6,150, NET REVENUES 15,661, EXPENSES ADMINISTRATIVE 3,256, ANCILLARY 1,431, PATIENT CARE 7,464, PROPERTY 1,965, OTHER 238, TOTAL EXPENSES 14,356, OPERATING INCOME 1,305, % PATIENT DAYS 48,729 VALUES NOT ADJUSTED TOTAL BED DAYS AVAILABLE 54,020 FOR INFLATION TOTAL NUMBER OF BEDS 148 Highest Median Lowest PERCENT OCCUPANCY 90.21% 96.5% 90.7% 64.8% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 0 0.0% MEDICAID 31, % 70.0% 66.9% 60.0% MEDICARE 14, % 27.4% 16.6% 4.9% INSURANCE 0 0.0% HMO/PPO 0 0.0% OTHER 2, % 31.8% 18.7% 7.3% TOTAL 48, % 26