May 20-21, Original: $50,325,000 FACILITY NAME:

Transcription

1 DOCKET NO: BOARD MEETING: PROJECT NO: PROJECT COST: A - May 2-21, Original: $5,325, FACILITY NAME: Gottlieb Memorial Hospital TYPE OF PROJECT: Non-Substantive CITY: Melrose Park Current: HSA: VII PROJECT DESCRIPTION: The applicants propose a change of ownership for Gottlieb Memorial Hospital. The fair market value of this transaction is $5,325,.

2 STATE AGENCY REPORT Gottlieb Memorial Hospital Project #8-8 APPLICATION SUMMARY Applicants Loyola University Health System and Gottlieb Health Resources d/b/a Gottlieb Memorial Hospital Facility Name Gottlieb Memorial Hospital Location Melrose Park, Illinois Application Received February 6, 28 Application Deemed Complete March 3, 28 Scheduled Review Period Ended May 2, 28 Review Period Extended by the State Agency? No Public Hearing Requested? No Applicants Deferred Project? No Can Applicants Request Deferral? Yes Applicants Modified the Project? Yes I. The Proposed Project The applicants propose a change of ownership for Gottlieb Memorial Hospital ( GMH ). The facility is a 274-bed hospital located in Melrose Park, Illinois. The fair market value of the acquisition is $5,325,. II. Summary of Findings A. The State Agency finds the proposed project appears to be in conformance with the provisions of Part 111. B. The State Agency finds the proposed project does not appear to be in conformance with the provisions of Part 112. III. General Information The applicants are Loyola University Health System ( LUHS ) and Gottlieb Health Resources d/b/a Gottlieb Memorial Hospital. LUHS owns and operates Loyola University Medical Center ( LUMC located in Maywood HSA VII). GMH is located at 71 West North Avenue in Melrose Park (HSA VII). The distance between GMH and LUMC is approximately 3.5 miles. This is a non-substantive Category B project, which is subject to both a Part 111

3 Project #8-8 Page 3 of 1 and Part 112 review. A public hearing for this project was held on April 3, 28. There were 23 individuals in attendance at the public hearing. Of this number, 14 individuals testified in support of the project and one individual testified in opposition. The State Agency received one letter of support for the project. Project obligation is contingent upon permit issuance. The anticipated project completion date is May 31, 28. IV. The Proposed Project Details The applicants are LUHS and Gottlieb Health Resources ( GHR ) d/b/a Gottlieb Memorial Hospital. The applicants propose to transfer all of the assets, programs and facilities currently owned and operated by GHR which include Gottlieb Memorial Hospital, Gottlieb Health and Fitness Center and Marjorie G. Weinberg Cancer Center to LUHS. The fair market value ( FMV ) of these assets is estimated to be $5,325,. The State Agency notes no funds are being expended or borrowed to complete this transaction. Before executing this change of ownership, GHR will establish a not-for-profit charitable foundation. Once the foundation is established, GHR will transfer $9 million to the foundation with $15 million dedicated to capital improvements at GMH. The foundation will provide support for programs and services at GMH only. Once the change of ownership is complete, LUHS will become the sole owner and operator of all entities of GHR. The operating entity / licensee and owner of GMH will be LUHS. Tables One and Two display the operational data for GMH. Data in the tables includes authorized beds, admissions, patient days, average length of stay ( ALOS ), average daily census ( ADC ) and occupancy. The State Agency notes data in Table One is for 26 and was obtained from IDPH s hospital profiles. The data in Table Two was furnished by the applicants. TABLE ONE Gottlieb Memorial Hospital - Utilization Data for January 1, 26 thru December 31, 26 Service Authorized Beds Admissions Patient Days ALOS ADC Occupancy Medical Surgical 154 6,339 32, % Pediatric % Obstetric , % Intensive Care , % Acute Mental Illness % LTC Beds , % TOTALS 274 8,924 49, % Source: IDPH 26 hospital profile.

4 Project #8-8 Page 4 of 1 TABLE TWO Gottlieb Memorial Hospital - Utilization Data for January 1, 27 thru December 31, 27 Service Authorized Beds Admissions Patient Days ALOS ADC Occupancy Medical Surgical 154 5,685 31, % Pediatric % Obstetric , % Intensive Care 24 1,436 5, % Acute Mental Illness , % LTC Beds , % TOTALS 274 8,833 51, % Source: Data provided by the applicants. Table Three displays the operational data for Loyola University Medical Center for 26. The data in the table was obtained from IDPH s 26 hospital profile. TABLE THREE Loyola University Medical Center - Utilization Data for January 1, 26 thru December 31, 26 Service Authorized Beds Admissions Patient Days ALOS ADC Occupancy Medical Surgical ,515 67, % Pediatric 32 2,79 6, % Obstetric 3 3,753 1, % Intensive Care 134 7,13 33, % NICU , % Rehabilitation , % TOTALS , , % Source: IDPH 26 hospital profile. The applicants payor source information is listed in Table Four. The data was obtained from the 26 hospital profiles. TABLE FOUR Applicants Payor Source Information Loyola University Medical Center Medicare Medicaid Other Public Other Insurance Private Pay Charity Care Totals Inpatients 9,988 5,89 3,472 1, ,242 Percent 32.% 18.9% 11.1% 34.6% 2.3% 1.2% 1.% Gottlieb Memorial Hospital Medicare Medicaid Other Public Other Insurance Private Pay Charity Care Totals Inpatients 4,423 1,29 2, ,924 Percent 49.6% 13.5%.% 29.5% 4.1% 3.3% 1.%

5 Project #8-8 Page 5 of 1 V. Project Costs and Sources of Funds GHR will transfer assets with a FMV of $5,325, to LUHS. An appraisal of the property can be found at pages of the application. The land has an appraised value of $15,19,. The State Agency notes land cost is not subject to State Board review. The State Agency also notes that no funds are being expended or borrowed to complete this transaction. Table Five displays the project s cost information. TABLE FIVE Project Cost Information Acquisition of Property 5,325, Total $5,325, Other Funds and Sources 1 5,325, Total $5,325, 1. Other funds and sources reflect the FMV of the assets transferred. No funds are being expended or borrowed to complete this transaction. VI. General Review Criteria A. Criterion (b) - Background of Applicants 1) The applicant shall demonstrate that it is fit, willing and able, and has the qualifications, background and character to adequately provide a proper standard of health care service for the community [2 ILCS 396/6]. In evaluating the fitness of the applicant, the State Board shall consider whether adverse action has been taken against the applicant, or against any health care facility owned or operated by the applicant, directly or indirectly, within three years preceding the filing of the application. The applicants provided licensure and certification information as required (application pages 58-62). The applicants certified they have not had any adverse actions within the past three years. It appears the applicants are fit, willing and able and have the qualifications, background and character to adequately provide a proper standard of healthcare service for the community. THE STATE AGENCY NOTES THE APPLICANTS APPEAR TO MEET THE BACKGROUND OF APPLICANT CRITERION (77 IAC (b)). VII. Changes of Ownership, Mergers and Consolidations

6 Project #8-8 Page 6 of 1 A. Criterion (b) - Impact Statement The applicant must submit an impact statement which details any proposed changes in the beds or services currently offered, who the anticipated operating entity will be, the reason for the transaction, any anticipated additions or reductions in employees, and a cost/benefit analysis of the transaction. The statement must reflect at least a two-year period following the date of the change of ownership, merger or consolidation. The applicants provided an impact statement (page 75 of the application), which detailed there would be no change in the services offered, no addition or reduction in employees, no cost or benefit associated with the transaction, now or in the next two years. It appears the applicants have met the requirements of this criterion. THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE IMPACT STATEMENT CRITERION (77 IAC (b)). B. Criterion (c) - Access The applicant must document any changes which may result in the restriction of patient admissions and document that no reductions in access to care will result from the transaction. Documentation shall consist of a written certification that the admission policies of the facilities involved will not become more restrictive and the submission of both the current formal admission policies of all institutions involved and the anticipated policy following completion of the project. The applicants state there will be no change in the admission policies or a reduction in access to care currently in effect at the facility. A copy of the admission policies was provided as required (pages of the application). THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE ACCESS CRITERION (77 IAC (c)). C. Criterion (d) - Health Care System

7 Project #8-8 Page 7 of 1 1) The applicant must document that: A) the applicant's care system will not restrict the use of other area care providers; or B) the project improves access to services previously unavailable in the community because of the structure of the applicant's care system. 2) Documentation must detail the current and proposed relationship with those health care or health related organizations which are to be owned (in whole or in part), affiliated, operated, or under management contract with the applicant and provide the following: A) all care system service providers and services offered including location, types of services, number of beds, and utilization levels for provided services over the last 12- month period; and B) the proposed relationship of the project to the care system. Data should include where referrals for categories of service not available at the proposed project will be made, how duplication of services will be resolved, time and travel factors involving referrals within the care system and any organization policies concerning the use of care system providers over other area providers. The applicants state the use of other health care providers outside the health system is determined by physician caring for the patient. The patient s physician makes the decision to refer patients to a non-loyola University Health System facility. The applicants anticipate LUMC will relocate its general obstetrics, general gynecology, and orthopedic joint program to Gottlieb (application page 76). THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE ACCESS CRITERION (77 IAC (d)). VIII. Financial Feasibility Review Criteria A. Criterion (a) - Financial Viability 1) Viability Ratios Applicants (including co-applicants) must document compliance

8 Project #8-8 Page 8 of 1 with viability ratio standards detailed in Appendix A of this Part or address a variance. Applicants must document compliance for the most recent three years for which audited financial statements are available. For Category B applications, the applicant also must document compliance through the first full fiscal year after project completion or for the first full fiscal year when the project achieves or exceeds target utilization pursuant to 77 Ill. Adm. Code 11, whichever is later, or address a variance. 2) Variance for Applications Not Meeting Ratios Applicants not in compliance with any of the viability ratios must document that another organization, public or private, shall assume the legal responsibility to meet the debt obligations should the applicant default. Tables Six and Seven display the applicants financial ratio information. TABLE SIX Gottlieb Health Resources, Inc. d/b/a Gottlieb Memorial Hospital Ratio State Historical Projected Standard Current Ratio >= Net Margin Percentage >=3.5% Percent Debt to Total Capitalization <=6% Projected Debt Service Coverage >= N/A Days Cash on Hand >= Cushion Ratio >= N/A Gottlieb Health Resources, Inc. provided consolidated financial information for all years required. As seen in Table Six, GHR does not meet the State Board s standards for Net Margin Percentage for 25, 26, and 29. The State Agency notes the Percent Debt to Total Capitalization Ratio for 29 will be zero because debt will be reduced to zero as part of the proposed transaction. The Projected Debt Service Coverage and Cushion Ratios are not applicable for 29 because debt is being repaid as part of the proposed transaction. The Day s Cash on Hand Ratio is below the standard for 29 because debt is being repaid. TABLE SEVEN Loyola University Health System Ratio State Historical Projected Standard Current Ratio >= Net Margin Percentage >=3.5% Percent Debt to Total Capitalization <=6%

9 Project #8-8 Page 9 of 1 TABLE SEVEN Loyola University Health System Ratio State Historical Projected Standard Projected Debt Service Coverage >= Days Cash on Hand >= Cushion Ratio >= As seen in Table Seven, LUHS does not meet the standard for the Net Margin Percentage Ratio for 25 and 26 and the Percent Debt to Total Capitalization Ratio for 27. No entity was identified to assume responsibility for the debt should the applicants default. Since the applicants do not meet all of the ratio requirements and since another entity was not identified to assume debt obligations, it appears the applicants do not meet the criterion. THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS HAVE NOT MET THE FINANCIAL VIABILITY CRITERION (77 IAC (a)). B. Criterion (b) - Availability of Funds The applicant must document that financial resources shall be available and be equal to or exceed the estimated total project cost and any related cost. The applicants are transferring assets; no cash is being expended for this change of ownership. Thus, this criterion is not applicable. C. Criterion (c) - Operating Start-up Costs The applicant must document that financial resources shall be available and be equal to or exceed any start-up expenses and any initial operating deficit. This is an ongoing health care facility; there are no operating start-up costs for this project. Thus, the criterion is not applicable. IX. Economic Feasibility Review Criteria A. Criterion (a) - Reasonableness of Financing Arrangements

10 Project #8-8 Page 1 of 1 B. Criterion (b) Conditions of Debt Financing These criteria are not applicable since there is no debt with the project. C. Criterion (c) - Reasonableness of Project and Related Costs Other Costs to be Capitalized - These costs total $53,325,, which reflect the FMV of the assets being transferred. The State Board does not have standards for this cost. D. Criterion (d) - Projected Operating Cost The applicant must provide the projected direct annual operating costs (in current dollars per equivalent patient day or unit of service) for the first full fiscal year after project completion or the first full fiscal year when the project achieves or exceeds target utilization pursuant to 77 Ill. Adm. Code 11, whichever is later. Direct costs mean the fully allocated costs of salaries, benefits, and supplies for the service. Projected operating costs per equivalent patient day are $ The State Board does not have standards for this cost. E. Criterion (e) - Total Effect of the Project on Capital Costs The applicant must provide the total projected annual capital costs (in current dollars per equivalent patient day) for the first full fiscal year after project completion or the first full fiscal year when the project achieves or exceeds target utilization pursuant to 77 Ill. Adm. Code 11, whichever is later. Projected capital costs per equivalent patient day are $89.2. The State Board does not have standards for this cost. F. Criterion (f) Non-patient Related Services This criterion is not applicable. G:\FAC\SAR\28-sar\8-8 Gottlieb Memorial Hospital.doc MC review completed 4/16/8

11 HOSPITAL PROFILE Gottlieb Memorial Hospital Melrose Park Ownership, Management, and Other General Information: Patients by Race Patients by Ethnicity Ownership: Gottlieb Memorial Hospital White 76.1% Hispanic or Latino: Operator: Gottlieb Memorial Hospital Black 21.5% Not Hispanic or Latino Management: Non-Government Other Non-Profit American Indian.1% Unknown: Facility Type: Asian.8% Address: 71 West North Avenue IDPH Number: 851 Hawaiian/ Pacific.3% City: Melrose Park HPA A-6 County: Suburban Cook County Unknown: 1.1% HSA 7 Clinical Service Medical/Surgical -14 Years Years Years Years 75 Years + Pediatric Intensive Care Direct Admission Transfers Authorized CON Beds Obstetric/Gynecology ,99 63 Maternity 638 1,595 Clean Gynecology Neonatal Long Term Care Swing Beds Acute Mental Illness Rehabilitation Dedcated Observation 44 1 Beds Setup 1/1/ Facility Utilization Data by Category of Service Peak Beds Setup and Staffed Peak Census 119 Inpatient Observation Admissions Days Days 6,339 32, ,597 5, , , , Average Length of Stay Average Daily Census CON Occupancy Rate % Page % 82.9%.9% Staffed Beds Occupancy Rate % Totals ,584 49, ,14 3,532 1,854 8,294 1,61 6, 2,32 14,43 Minus ICU Transfers 66 Facility Utilization ,924 49, Inpatient and Outpatient Information by Payor Source Medicare Medicaid Other Public Other Insurance Private Pay Charity Care Totals Inpatients Outpatients 49.6% 13.5%.% 29.5% 4.1% 3.3% % 9.4%.% 46.5% 7.7%.7% Surgical Specialty Cardiovascular Dermatology General Gastroenterology Neurology OB/Gynecology Oral/Maxillofacial Ophthalmology Orthopedic Otolaryngology Plastic Surgery Podiatry Thoracic Urology Totals Surgery and Operating Room Utilization Operating Surgical Cases Surgical Hours Inpatient Outpatient Combined Total Inpatient Outpatient Inpatient Outpatient Total Hours SURGICAL RECOVERY STATIONS Stage 1 Recovery Stations 9 Stage 2 Recovery Stations 21 Hours per Case Inpatient Outpatient

12 HOSPITAL PROFILE Gottlieb Memorial Hospital Melrose Park Page 2 Room Type Gastrointestinal Laser Eye Procedures Pain Management C-Section Procedures Cystoscopy Surgical Utilization - Procedure Inpatient Outpatient Combined Total Inpatient Cases Outpatient Cases Inpatient Hours Outpatient Hours Total Hours Birthing Data Number of Deliveries: 621 Number of Live Births: 616 Birthing : Labor : Delivery : Labor-Delivery-Recovery : 5 Labor-Delivery-Recovery- Postpartum : C-Section : Newborn Nursery Utilization Level 1 Patient Days 1,148 Level 2 Patient Days 17 Level 2+ Patient Days Total Nursery Patientdays 1255 Emergency Service Data Emergency Service Type: Basic Persons Treated by Emergency Services: 21,633 Patients Admitted from Emergency: 5,569 Outpatient Service Data Persons Treated by Outpatient Services: 75 Patients Admitted from Outpatient Services: Organ Transplantation Kidney: Heart: Lung: Heart/Lung: Pancreas: Liver: Total:: Cardiac Catheterization Labs Multi-Purpose Catheterization Labs 2 Dedicated Diagnostic Catheterization Labs Dedicated Interventional Catheterization Labs Dedicated EP Catheterization Labs Total Catheterization Labs 2 Cardiac Catheterization Utilization Diagnostic Catheterizations (-14) Diagnostic Catheterizations (15+) 51 Interventional Catheterizations (-14: Interventional Catheterization (15+) 198 EP Catheterizations 25 Cardiac Surgery Data Pediatric ( - 14 Years): Adult (15 Years and Older): 16 Total: 16 Coronary Artery Bypass Grafts (CABGs): 98 Trauma Care Level of Trauma Service Level 2 Operating Dedicated for Trauma Care Laboratory Studies Inpatient Studies 289,583 Outpatient Studies 21,79 Studies Performed Under Contract 11,913 Diagnostic and Therapeutic Equipment Examinations Equipment Hospital Owned Shared Contracted Inpatient Outpatient Contractual General Radiography/Fluoroscopy 6 25,878 25,622 Nuclear Medicine Mammography Ultrasound Angiography Positron Emission Tomography (PET) Computerized Axial Tomography (CAT) Magnetic Resonance Imaging , , ,37 1,45 1,849 16,689 7, ,645 3,467 Lithotripsy Radiation Therapy Equipment: Linear Accelerator Contractors for Equipment Type of Equipment Contractor Treatment Courses Source: Data based on 26 Annual Hospital Questionnaire administered on behalf of Ilinois Department of Public Health, Health Sytems Development.

13 HOSPITAL PROFILE Foster G. McGaw Hospital - Loyola University Me Maywood Ownership, Management, and Other General Information: Patients by Race Patients by Ethnicity Ownership: Loyola University Medical Center White 71.9% Hispanic or Latino: Operator: Loyola University Medical Center Black 21.5% Not Hispanic or Latino Management: Non-Government Other Non-Profit American Indian.2% Unknown: Facility Type: Asian 1.6% Address: 216 South 1st Avenue IDPH Number: 463 Hawaiian/ Pacific.1% City: Maywood HPA A-6 County: Suburban Cook County Unknown: 4.6% HSA 7 Clinical Service Medical/Surgical -14 Years Years Years Years 75 Years + Pediatric Intensive Care Direct Admission Transfers Authorized CON Beds Obstetric/Gynecology ,753 1,381 1,95 Maternity 3,419 9,782 Clean Gynecology Neonatal Long Term Care Swing Beds Acute Mental Illness Rehabilitation Dedcated Observation 5 24 Beds Setup 1/1/ Facility Utilization Data by Category of Service Peak Beds Setup and Staffed Peak Census 258 Inpatient Observation Admissions Days Days 16,515 67,596 2,174 2,79 6, ,553 33, ,13 19,727 3,45 13, , ,48 Average Length of Stay Average Daily Census CON Occupancy Rate % Page 1 11.% 84.4% 4.6% Staffed Beds Occupancy Rate % Totals , ,318 5, ,49 16,282 6,16 24,865 2,731 12,197 3,278 14, Minus ICU Transfers 3,45 Facility Utilization , ,318 5, Inpatient and Outpatient Information by Payor Source Medicare Medicaid Other Public Other Insurance Private Pay Charity Care Totals Inpatients Outpatients 32.% 18.9% 11.1% 34.6% 2.3% 1.2% % 12.9% 22.% 4.7% 3.8%.1% Surgical Specialty Cardiovascular Dermatology General Gastroenterology Neurology OB/Gynecology Oral/Maxillofacial Ophthalmology Orthopedic Otolaryngology Plastic Surgery Podiatry Thoracic Urology Totals Surgery and Operating Room Utilization Operating Surgical Cases Surgical Hours Inpatient Outpatient Combined Total Inpatient Outpatient Inpatient Outpatient Total Hours SURGICAL RECOVERY STATIONS Stage 1 Recovery Stations 24 Stage 2 Recovery Stations Hours per Case Inpatient Outpatient

14 HOSPITAL PROFILE Foster G. McGaw Hospital - Loyola University Me Maywood Page 2 Room Type Gastrointestinal Laser Eye Procedures Pain Management C-Section Procedures Cystoscopy Surgical Utilization - Procedure Inpatient Outpatient Combined Total Inpatient Cases Outpatient Cases Inpatient Hours Outpatient Hours Total Hours Birthing Data Number of Deliveries: 1,676 Number of Live Births: 1,662 Birthing : Labor : Delivery : 2 Labor-Delivery-Recovery : 7 Labor-Delivery-Recovery- Postpartum : C-Section : Newborn Nursery Utilization Level 1 Patient Days 2,338 Level 2 Patient Days 584 Level 2+ Patient Days 12,39 Total Nursery Patientdays Emergency Service Data Emergency Service Type: Comprehensive Persons Treated by Emergency Services: 51,14 Patients Admitted from Emergency: 11,898 Outpatient Service Data Persons Treated by Outpatient Services: 766 Patients Admitted from Outpatient Services: 766 Organ Transplantation Kidney: 8 Heart: 2 Lung: 27 Heart/Lung: Pancreas: Liver: 14 Total:: 141 Cardiac Catheterization Labs Multi-Purpose Catheterization Labs 3 Dedicated Diagnostic Catheterization Labs Dedicated Interventional Catheterization Labs Dedicated EP Catheterization Labs 2 Total Catheterization Labs 5 Cardiac Catheterization Utilization Diagnostic Catheterizations (-14) Diagnostic Catheterizations (15+) 2,867 Interventional Catheterizations (-14: Interventional Catheterization (15+) 1,54 EP Catheterizations 478 Cardiac Surgery Data Pediatric ( - 14 Years): 4 Adult (15 Years and Older): 517 Total: 521 Coronary Artery Bypass Grafts (CABGs): 33 Trauma Care Level of Trauma Service Level 1 Operating Dedicated for Trauma Care 1 Laboratory Studies Inpatient Studies 1,296,952 Outpatient Studies 1,55,831 Studies Performed Under Contract 47,449 Diagnostic and Therapeutic Equipment Examinations Equipment Hospital Owned Shared Contracted Inpatient Outpatient Contractual General Radiography/Fluoroscopy 14 5,24 61,34 Nuclear Medicine Mammography Ultrasound Angiography Positron Emission Tomography (PET) Computerized Axial Tomography (CAT) Magnetic Resonance Imaging , ,434 5, ,662 2,86 12,638 9,511 14,896 4, ,458 9,511 Lithotripsy 1 56 Radiation Therapy Equipment: Linear Accelerator 3 15,436 Novalis, HDR Contractors for Equipment Type of Equipment Contractor Treatment Courses * Note: Illinois Health Facilities and Programs approved a 2 bed increase in Pediatric unit for Loyola University Medical Center on 12/13/26. The pediatric unit now has 34 beds instead of 32. Source: Data based on 26 Annual Hospital Questionnaire administered on behalf of Ilinois Department of Public Health, Health Sytems Development.

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