STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number Chatsworth at Wellington Green, LLC/CON #10006 1601 Belvedere Road, Suite 407 South West Palm Beach, Florida 33406 Authorized Representative: Sharon M. Gordon-Girvin The Girvin Group, Inc. (850) 681-8705 2. Service District/Subdistrict District 9, Subdistrict 9-4/Palm Beach County B. PUBLIC HEARING A public hearing was not held or requested on the proposed. Letters of Support The application contains four letters of support. L. Martin Hodgkins, AICP, Community Development Director, Community Services Department, Village of Wellington states the last remaining step prior to construction of the project is the necessary building permits and that the Village Council of the Village of Wellington (composed of the mayor, vice mayor, two councilwomen and one councilman) supports the project. Christopher Devine, D.O. states he has had a family practice in Wellington since 2002 and that there is no skilled nursing home in the “western communities”. He further states that the proposed facility would locate SNF services within minutes of a local hospital and physician’s offices. Robert G. Schemel representing Liberty Inn, LLC and Thomas D. Scott representing Mission Palms Nursing & Rehab Center signed letters to support their delicensure commitments to the project.
Transcript
STATE AGENCY ACTION REPORT
ON APPLICATION FOR CERTIFICATE OF NEED
A. PROJECT IDENTIFICATION
1. Applicant/CON Action Number
Chatsworth at Wellington Green, LLC/CON #10006
1601 Belvedere Road, Suite 407 South West Palm Beach, Florida 33406 Authorized Representative: Sharon M. Gordon-Girvin The Girvin Group, Inc. (850) 681-8705
2. Service District/Subdistrict
District 9, Subdistrict 9-4/Palm Beach County
B. PUBLIC HEARING
A public hearing was not held or requested on the proposed. Letters of Support
The application contains four letters of support. L. Martin Hodgkins, AICP, Community Development Director, Community Services Department, Village of Wellington states the last remaining step prior to construction of the project is the necessary building permits and that the Village Council of the Village of Wellington (composed of the mayor, vice mayor, two councilwomen and one councilman) supports the project. Christopher Devine, D.O. states he has had a family practice in Wellington since 2002 and that there is no skilled nursing home in the “western communities”. He further states that the proposed facility would locate SNF services within minutes of a local hospital and physician’s offices. Robert G. Schemel representing Liberty Inn, LLC and Thomas D. Scott representing Mission Palms Nursing & Rehab Center signed letters to support their delicensure commitments to the project.
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The Agency for Health Care Administration (AHCA) received no letters of opposition concerning this project.
C. PROJECT SUMMARY
Chatsworth at Wellington Green, LLC (Chatsworth or CWG) is proposing to construct a 120 community nursing home bed skilled nursing facility (SNF), at 10331 Devonshire Lane, Wellington, Florida 33414 by taking 68 community nursing home beds from Liberty Inn, LLC (located in Delray Beach, Florida) and 52 community nursing home beds from Mission Palms Nursing & Rehabilitation Center (located in West Palm Beach, Florida). According to the applicant, it is associated, through common principals, with the original developer of Devonshire at PGA National (otherwise referenced as Chatsworth at PGA National), a continuing care retirement community (CCRC) also located in the same district and subdistrict. There is no net change in the number of the subdistrict’s community nursing beds as a result of this project. The applicant states the impact will be to redistribute 120 community nursing home beds to what it believes is the area of the greatest population growth in the county and thereby improve access to care at a newer, more up-to-code, facility. Per the application, the 120-bed facility (CWG) will be constructed along with a number of apartments, villas, and assisted living beds. Chatsworth proposes 80 private rooms and 20 semi-private rooms to accommodate the 120 community nursing home beds. The project involves 82,231 total gross square feet (GSF) of new construction with a construction cost of $13,658,300. The total cost of the project is $23,732,400. Total project costs include the following: land, building and equipment costs; project development and financing costs and start-up costs. The applicant predicates the proposal on the following conditions, as stated in Schedule C of the application: • The specific site for the project is 10331 Devonshire Lane, Wellington,
Florida 33414.
• The applicant is willing to ensure that the current condition on the 68 Liberty Inn beds continues, currently at 38.3 percent. The beds at Mission Palms Nursing and Rehabilitation Center have no conditions.
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Therefore, the applicant is willing to accept a corresponding condition on the 120-bed facility a minimum of 21.7 percent of total annual patient days to Medicaid patients.
• Pursuant to Rule 59C-1.013(4), Florida Administrative Code, the applicant understands that annual reports are due and will adhere to them.
Should the CON be approved, any mandatory reporting requirements, applicable by Rule (as stated on the last condition above), would not be placed on the CON.
D. REVIEW PROCEDURE
The evaluation process is structured by the certificate of need review criteria found in Section 408.035, 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(2) (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.
As part of the fact-finding, the consultant, Steve Love analyzed the application in its entirety with consultation from the Financial Analyst, Melody Miller, who evaluated the financial data, and the Architect, Scott Waltz, who evaluated the architecturals and the schematic drawings as part of the application.
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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 408.035, and 408.037; 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? ss. 59C-1.008(2), Florida Administrative Code.
The Florida Legislature extended a moratorium until July 1, 2011 on the issuance of CONs 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. This project, if approved, will not change the bed count concerning the moratorium.
b. If no Agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria:
• Population demographics and dynamics;
• Availability, utilization and quality of like services in the district, subdistrict or both;
• Medical treatment trends; and
• Market conditions.
Population demographics and dynamics
As of September 1, 2007, there are 56 licensed (54 community and two sheltered) nursing facilities in District 9, Subdistrict 9-4 (also referenced as Subdistrict 4), Palm Beach County, with a total of 6,514 licensed nursing home beds; 6,197 are community nursing home beds and 317 are sheltered beds. For the 12-month period ending June 30, 2007, the average occupancy rate for the subdistrict was 85.10 percent and 86.21 percent for District 9 overall. The table below illustrates the annual
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utilization for both facilities listed in the applicant’s Exhibit 1-1 that agree to relinquish licensed community nursing home beds in the subdistrict in order to support the project:
Annual Utilization Total for Facilities (Liberty Inn and Mission Palms Nursing & Rehabilitation Center)
Relinquishing Beds District 9 Subdistrict 4 (Palm Beach County)
District 9 3,197,400 2,756,559 86.21% 1,618,354 58.71%
Source: AHCA’s publication of “Florida Nursing Home Utilization by District and Subdistrict July 2006-June 2007”. *As of May 1, 2007, formerly Palm Beach Shores Rehab & Sub-Acute Center
Of the 54 community licensed nursing home facilities in the subdistrict, Liberty Inn, LLC was the third least occupied and Mission Palms Nursing & Rehab Center was the fifth least occupied in the subdistrict, for the 12-month period ending June 30, 2007. In respect to the moratorium, the applicant seeks to transfer all 68 of the community nursing home beds at Liberty Inn, LLC and 52 of the 151 community nursing home beds at Mission Palms Nursing & Rehab Center. It is noted that that in a separate application in this batching cycle CON #10007 M.T. Health Center, LLC, a related party to this applicant through common principals, is applying to establish a new 99-bed skilled nursing facility also in Palm Beach County through the delicensure of the remaining 99 beds at Mission Palms Nursing & Rehabilitation Center. Combined, these two proposals (CON #10006 and CON #10007) would zero out the licensed nursing home beds at both Liberty Inn, LLC and Mission Palms Nursing and Rehabilitation Center. As stated under section B above, executives from Liberty Inn, LLC and Florida Preferred Care Health Facilities III, Inc. d/b/a Mission Palms Nursing & Rehab Center agree to delicensing the applicable community nursing home beds. Agency for Health Care Administration (AHCA) published population projections for District 9, Subdistrict 4, Palm Beach County, indicate the following:
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Population Growth from January 2008 to January 2013
Nursing Home District 9, Subdistrict 4
2008 Population 2013 Population 5-Year Growth
Population Age Ranges 65+ 75+ 65+ 75+ 65+ 75+
Palm Beach County 283,344 161,228 329,186 175,585 1.16% 1.09% District Total 429,498 238,729 501,708 262,719 1.17% 1.10% Source: AHCA Population Estimates, published September 2007
The applicant reports 37 named municipalities within Palm Beach County (CON #10006, Table 1-1, page 5 – Need Analysis), with Wellington as the fifth largest (from 38,216 residents in 2000 to 53,429 residents in 2005), experiencing the third highest growth rate of the 37 named municipalities, per Claritas, 2007 update. In its Table 1-2, Chatsworth at Wellington Green, LLC states higher rates of growth among the 65+, 75+ and 85+ population age cohorts, as compared to the subdistrict overall, relative to 10 and 20-mile diameters of the proposed site. The applicant also indicates growth of the elderly is seasonal statewide and that only Lee County has a higher seasonal elderly growth rate than Palm Beach County. Chatsworth states the relocation of the low occupancy beds from Liberty Inn, LLC and Mission Palms Nursing and Rehabilitation Center will enhance the utilization of this resource. The applicant reports two acute care hospitals within a 10-mile radius of the proposed site and two skilled nursing facilities within a five-mile radius (CON #10006, Figure 3, page 10 – Need Analysis). Only one SNF is shown to be more western than the proposed site, within the 20-mile diameter. Availability, utilization and quality of like services In its Table 1-3 (CON #10006, page 12 – Need Analysis), Chatsworth shows its project generates a greater increase in availability of total licensed beds, per 1,000 residents age 75+, by 2012 and within its planned service area. Within a five-mile radius, there’s an increase of 28 beds per 1,000 elderly (age 75+) with the project as compared to an increase of 19 without approval. Within a 10-mile radius, there’s an increase of 44 beds per 1,000 elderly (age 75+) with the project as compared to an increase of 42 without approval. This shows a greater availability within the shorter radius. The applicant anticipates an average daily census (ADC) in year one of operations (ending June 30, 2011) of 76 and in year two of operations (ending June 30, 2012) of 109.
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There are currently no licensed SNFs within the Wellington municipality, with Wellington being previously shown to have the third highest population increase from 2000 to 2005, among the elderly. Significantly lower utilization rates (relative to the subdistrict overall) for the 12 months ending June 30, 2007, at Liberty Inn and Mission Palms, was previously shown. Regarding quality, Chatsworth at Wellington Green, LLC is a proposed new entity with no quality history. However, it is stated the owners are affiliated with Chatsworth at Devonshire, a continuing care retirement community (CCRC) within the subdistrict. The applicant alleges close proximity will ensure quality. Below is a map depicting the proposed site and Liberty Inn, LLC and Mission Palms Nursing & Rehabilitation Center slated to delicense community nursing home beds for re-licensure at the planned location. The map roughly shows the geography of the area up to approximately 20 miles in diameter from the proposed site. As previously stated a separate application in this batching cycle, CON #10007 M.T. Health Center, LLC is applying to establish a new 99-bed skilled nursing facility in Palm Beach County through the delicensure of the remaining 99 beds at Mission Palms Nursing & Rehabilitation Center. Combined, these two proposals would zero out the licensed nursing home beds at both Liberty Inn, LLC and Mission Palms.
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Microsoft MapPoint NOTE: No. 1 above shows an address of 103 Devonshire Circle, as opposed to the applicant’s proposed address of 10331 Devonshire Lane. The former is the nearest physical address that Microsoft MapPoint would identify relative to latter address. MapQuest does not reference a 10331 Devonshire Lane physical address but alternately provides [100-199] Devonshire Circle, with a discrepancy of 0.03 miles.
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Medical treatment trends
Chatsworth at Wellington Green, LLC states that improvements in medical technology and related treatment options have impacted long and short-term stays at SNFs and related facilities. However, it also states that with age often comes longer recovery periods that can be accommodated by SNFs, for rehabilitative and related recovery purposes. The applicant finds that SNFs in general, with Chatsworth at Wellington Green, LLC being no exception, are beginning to emerge as solutions to short-term stays that require rehabilitative and recovery sites, with corresponding longer Medicare stays and shorter Medicaid stays. Market conditions
Market conditions are stated to be reflective of a relatively high median income for residents in Palm Beach County, with a $75,000 median household income, for the Wellington area, in 2005 (per www.city-data.com). The West Palm Beach median household income is reported at $40,047. Mission Palms Nursing and Rehabilitation Center is located within West Palm Beach. Liberty Inn, LLC is located within Delray Beach. The Delray Beach median household income is reported at $46,300. Lower estimated household incomes in West Palm Beach and Delray Beach, as compared to Wellington, is evidence that beds are being relocated from areas of lesser median household income to an area of higher median household income. The Wellington area (as well as Palm Beach County overall) is anticipated to continue to draw seniors both in the near and long-term. The project is stated to be proposed to meet the needs and expectations of the elderly Wellington area population, which has a higher median household income than much of the rest of the subdistrict and district.
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-1.031-.044, Florida Administrative Code.
Chapter 59C-1.036 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.
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a. Geographically Underserved Areas. In a competetitive
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 408.032(18), Florida Statutes (Florida Statutes), and if the applicant meets the applicable statutory certificate of need review criteria specified in section 408.035, 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.
The application is not submitted in order to remedy a geographically underserved area as described by rule and statutes. This project is to construct a new 120-bed SNF by delicensing a corresponding equal number of community nursing home beds at two existing subdistrict facilities.
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 discharge policies.
Chatsworth states all its beds will be Medicare and Medicaid certified. According to the applicant, it will provide a full range of nursing and restorative care including rehabilitation, typically associated with Medicare stays. The applicant states the proposed facility will be modeled after Chatsworth at PGA National, a SNF associated with the corresponding Chatsworth at Devonshire, a
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same-subdistrict CCRC. Though Chatsworth at Wellington Green, LLC is not proposed as a CCRC, the project is on the same campus with planned independent and assisted living facilities (CON #10006, E.4., page 9 – Quality of Care). Services are to include Medicare/Medicaid-certified skilled nursing assistance 24 hours a day, sub-acute rehabilitation and medically complex skilled nursing services. Both short and long-term care are planned. The applicant identifies 21 nursing services, some of which are as follows: 24-hour a day nursing supervision; personalized individual care with activities of daily living; family support programs; specialized and social activity programs; psychological services; rehabilitation and restorative nursing care and case management. The applicant lists other special items such as a specialized beauty/barber shop, fine dining with select menus and a library/computer center. Contracts are proposed for services such as dental, vision, auditory, radiology, laboratory and pharmacy services; however, the applicant does not discuss commitments with any given providers or offer letters of commitment with such providers. The applicant’s Tab 10 - Additional Information includes a sample transfer agreement, patient bill of rights, policies and procedures and quality improvement measures. These are applicable to CCRC Chatsworth at Devonshire and SNF Chatsworth at PGA National and the applicant plans to incorporate the same or like policies and procedures at Chatsworth at Wellington Green, LLC. Below are planned staffing patterns as proposed by the applicant.
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Chatsworth at Wellington Green, LLC
Staffing Patterns For Year 1 and Year 2 of Operation
Other: Social Services Assistant 0.0 0.0 TOTAL 5.4 5.4
HOUSEKEEPING
Housekeeping Supervision 0.0 0.0
Housekeepers 8.8 8.8 TOTAL 8.8 8.8
LAUNDRY
Laundry Supervisor 0.0 0.0
Laundry Aides 2.7 2.7 TOTAL 2.7 2.7
PLANT MAINTENANCE
Maintenance Supervisor 0.0 0.0
Maintenance Assistance 2.4 2.4 TOTAL 2.4 2.4
GRAND TOTAL 120.9 148.3 Source: CON #10006, Financial Schedule 6A.
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The applicant does not discuss staffing for the medical director, ancillary staff or cooks in Schedule 6A or in the schedule’s notes. Chapter 400.23, 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.
Chatsworth at Wellington Green, LLC Minimum Staffing Requirements
FTE Nurses/Aides
Minimum Requirement
1st Year 2011
2nd Year 2012
Nurses
1.0 hours of direct care per resident
1.74 hours
1.54 hours
Aides
2.9 hours of direct care per resident
3.72 hours
3.64 hours
Sources: Extracted from Schedule 5 & 6 of CON# 10006 Application.
As shown in the above table, the applicant’s projected staffing patterns exceed the minimum requirements outlined in Section 400.23 (3)(a), Florida Statutes. In addition, 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 these requirements. The FTE projection from year one to year two increases by 27.4 FTEs. Registered nurses (RNs) and licensed practical nurses (LPNs) increase by 3.3 FTEs each; nurse’s aides increase by 20.8 FTEs. This accounts for the total 27.4 FTE increase; all other FTE categories remain constant. Please see Section 3.c. – Staffing, for greater detail regarding FTE staffing information. According to the applicant its assessment tool is the Minimum Data Set (MDS) for screening and assessment as required for Medicare certified facilities. The applicant does not discuss average length of stay (ALOS); however, patient characteristics are stated in the context of quality indicators as described (CON #10006, E.4. – Quality of Care, pages 5 – 9).
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c. Quality of Care. In assessing the applicant’s ability to provide
quality of care pursuant to s. 408.035(1)[c], 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 is a development stage company (Chatsworth at Wellington Green, LLC) and states it has never had a nursing facility 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 states it has not had a nursing facility placed into receivership at any time.
3. The extent to which the conditions identified within
subparagraphs 1 and 2 threatened or resulted in direct, significant harm to the health, safety, or welfare of the nursing facility residents.
This provision is not applicable.
4. The extent to which the conditions identified within subparagraph 3 were corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory to the agency.
This provision is not applicable.
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(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.
This provision is not applicable. (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.
CWG states it will provide the required utilization data to AHCA and the local health council.
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. 408.035(2), 408.035(7), Florida Statutes.
The applicant poses reasons to justify availability as follows: the absence of a licensed SNF in the community of Wellington (a more western and relatively high income portion of Palm Beach County); redistribution of relatively low utilization licensed nursing home beds where there is currently higher nursing home concentration to an area with no nursing home concentration but a growing elderly population (Wellington) and also increasing bed availability to 28 per 1,000 residents age 75+ by 2012 (within a five-mile radius of the proposed site) and to 44 per 1,000 residents age 75+ by 2012 (within a 10-mile radius of the proposed site). These population estimates the applicant provides through Claritas, 2007 update. The applicant states that Claritas population data indicates that statewide there will be 47 nursing home beds per 1,000 residents age 75+ in 2012 and contends that its proposal would increase the percentage in the five-mile radius of the facility from 21 beds per age 75+ to 28 beds per age 75+ by 2012. Efficiency is stated to be improved by the new state-of-the-art facility with modernized resources and features.
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Regarding utilization and quality of similar health care providers in the 10-mile radius (20-mile diameter) of the proposed site, the applicant provides Table 3-2 (CON #10006, page 7, E. 3. – Health Planning Factors) and states these nursing homes average an 85.57 percent occupancy rate and average a two out of five-star quality rating, as issued by the Agency. The applicant includes recently Agency issued nursing home data, regarding these facilities.
b. Does the applicant have a history of providing quality of care and
has the applicant demonstrated the ability of providing quality care? ss. 408.035(3) 408.035(12), Florida Statutes. The applicant's designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility. ss 408.035(10), Florida Statutes.
The applicant is a development stage company, formed in February, 2007 and has no complaint history. However, the applicant states it (CWG) will adopt like principals, practices and management styles as Chatsworth at PGA National, with a similar mission and vision. The applicant lists 24 quality indicators (CON #10006, page 3 and 4, E.4 – Quality of Care), as the Facility Quality Indictor Profile that it claims is close to the Joint Commission on Accreditation of Health Organizations (JCAHO) Facilitator Program. In Exhibit 4-3, the applicant provides numerous continuous quality improvement (CQI) forms specific to Chatsworth at PGA National that it intends to adopt as its own in maintaining standards of quality and performance. In Exhibit 4-2 of the application (CON #10006, page 15, E.4. – Quality of Care), various certifications and memberships of Chatsworth at PGA National are included for Agency review; they include the following: American Health Care Association membership; Advancing Excellence in America’s Nursing Homes Certificate of Participation and Florida Health Care Activity Coordinators Association membership. The applicant plans to attain same or similar affiliations and associations. Agency records indicate no confirmed complaints at Chatsworth at PGA National, as of the three-year period ending January 22, 2008. Further, it received the state’s Gold Seal Program distinction on May 1, 2006. As of the on-line run date of January 23, 2008, it had an Agency overall inspection rating of five of a possible five stars. Conversely, one of the
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facilities agreeing to delicense some of its beds (Mission Palms Nursing & Rehabilitation Center) has one of a possible five stars as of the same on-line run date. The other facility agreeing to delicense community nursing home beds (Liberty Inn, LLC), has an AHCA inspection rating of five of five stars.
c. What resources, including health manpower, management personnel and funds for capital and operating expenditures, are available for project accomplishment and operation? ss. 408.037(6), Florida Statutes.
This review is for Chatsworth at Wellington Green, LLC, applying to construct a 120-bed skilled nursing facility in Subdistrict 9-4, Palm Beach County, Florida. The project will be implemented through delicensure and relocation of an equal number of beds from two facilities (non-related parties) located in Palm Beach County. The financial impact of the project will include the project cost of $23,732,400 and year two operating costs of $11,948,900.
The audited financial statements of the applicant, for the period ending October 31, 2007 were analyzed for the purpose of evaluating the applicant’s ability to provide the capital and operational funding necessary to implement the project. The applicant is a development stage company that was organized in the State of Florida on February 13, 2007, for the purpose of developing a 120-bed skilled nursing facility on the campus of a proposed senior living development (non-CCRC) in Wellington (Palm Beach County). The financial statements included a cash balance of $300,000. No liabilities were listed in the financial statements. Because the applicant has not begun operations, no operating results were reported in the financial statements, other than a $25,000 consulting agreement expense for the preparation of the CON application. Without results from operations, an analysis of the short and long-term strengths of the applicant cannot be made.
Capital Requirements: Schedule 2 indicates that this applicant’s only capital project is the construction of the 120-bed skilled nursing facility, the subject of this review in the amount of $23.7 million. In addition, the applicant is projecting an operating loss of $994,200 in year one.
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Available Capital: According to Schedule 3, this project will be funded by the combination of debt financing and $300,000 of available cash. The applicant provided a letter of interest from Commerce Bank (lender). The letter indicates that the lender will consider providing funding to the applicant for construction and operating deficits for the 120-bed skilled nursing facility having consistent terms and conditions with commercial loans previously financed for similar projects. This letter is not considered a firm commitment to lend. In the absence of a firm commitment to lend, the Agency would typically evaluate the financial strength of the company to determine the likelihood that the applicant would be able to obtain debt financing. The stronger the applicant’s financial position, the more likely it would be able to obtain additional debt. The weaker the applicant’s financial position, the less likely the applicant would be able to acquire and maintain additional debt. As discussed above, this is a development stage company with no reported operating results. In this situation, the applicant would have to rely on the financial position of a parent company or individuals to secure debt financing. However, no audited information was provided regarding a parent company’s financial position or an individual or group of individual’s financial position. Without this information the Agency cannot address the likelihood that the applicant will be able to obtain the debt financing for this project. Staffing:
Schedule 6A indicates, by June 30, 2011 (the first year of the proposed project), the applicant forecasts 120.9 FTEs as follows: administrator/ assistant administrator, director of nursing and other [central supply] (1.0 FTEs each); medical records (1.1 FTEs); other [nursing admin.] (4.5 FTEs); other [administrative] (6.1 FTEs); RNs (12.0 FTEs); LPNs (12.0 FTEs); nurse’s aides (51.5 FTEs); dietary aides (11.4 FTEs); activities assistant (5.4 FTEs); housekeepers (8.8 FTEs); laundry aides (2.7 FTEs) and maintenance assistance (2.4 FTEs). The total FTE count is 120.9 FTEs for the first year; this total count increases to 148.3 for year two (ending June 30, 2012) – a difference of 27.4 more FTEs. The FTEs remain the same in all categories except for the following changes: RNs (15.3 FTEs); LPNs (15.3 FTEs) and nurses aides (72.3 FTEs). Neither the schedule nor accompanying notes discuss, contractual or otherwise, the following: a medical director; any ancillary FTEs or a cook.
The applicant provides a 39 page Chatsworth at PGA National Employee Manual, dated June 2004, and a 23 page appendix (CON #10006, Tab 10 – Additional Information. Topics such as employment and human resource policies, employee benefits, safety and security,
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communications, general information and termination are covered thoroughly. Benefits are relatively similar to public service employment with the exception that employment is “at will”. A full range of health, disability, vision, dental and worker’s compensation are explained along with paid leave options and a 401K plan. Recruitment is done through the internet and newspaper advertisements, local and state employment services and an employee referral program. The benefits packages are reasonable retention instruments.
Conclusion: The applicant did not prove that either financing was arranged or could be arranged for this project. Funding for this project is dependent on the applicant’s ability to obtain debt financing.
d. What is the immediate and long-term financial feasibility of the proposal? ss. 408.037(8), 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 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 2005. The applicant will be compared to nine similar sized facilities with similar self-pay/other occupancy levels. Per diem rates are projected to increase by an average of 3.47 percent per year through June 2012. The price adjustment factor used was based on the CMS Market Basket Price Index as published in the 3rd Quarter 2007 Health Care Cost Review. Conditions: The applicant offers a condition in which it is willing to ensure that at least the current condition on the 68 Liberty Inn beds continues which is currently 38.3 percent. The beds at Mission Palms
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Nursing and Rehabilitation Center have no conditions. Therefore, the blended rate for the resulting 120-bed facility would be a minimum Medicaid condition of 21.7 percent. The applicant is projecting 22 percent of patient days will be Medicaid. Therefore, the applicant’s projections meet the blended current conditions for this facility. Revenue: Projected net revenue per adjusted patient day (NRAPD) of $308 in year one and $315 in year two is between the control group median and highest values of $292 and $357 in year one and $299 and $366 in year two. With net revenues approximating the median value in the control group, the facility is expected to consume health care resources in proportion to the services provided. (See Table below). Expenses: Anticipated costs per patient day (CPD) of $344 in year one exceeds the highest value in the group of $310. The highest level is generally viewed as the practical upper limit on cost-efficiency. Anticipated CPD of $300 in year two is between the control group median and highest values of $280 and $318. With anticipated CPD between the control group median and highest values, the anticipated costs are considered efficient. (See Table below). The applicant is projecting a decrease in CPD between year one and year two of 12.8 percent. The applicant has projected occupancy rates of 63 percent in year one and 91.1 percent in year two. The lower occupancy rate projected in year one decreases economies of scale and as the occupancy rate increases, CPD would be expected to decrease. Projected expenses appear reasonable. Staffing: Section 400.23(3)(a)(2), Florida Statutes, specifies a minimum certified nursing assistant staffing of 2.9 hours of direct care per resident per day beginning January 1, 2007, 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 certified and licensed nursing staffing exceeds the minimum level required in both years one and two. Profitability: The year two operating profit for the skilled nursing facility of $632,900 computes to an operating margin per patient day of $16 which is between the control group median and highest values of $5 and $47. Conclusion: If the applicant is able to obtain the debt financing discussed above, this project appears to be financially feasible.
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Chatsworth at Wellington Green, LLC
CON #10006 Jun-12 YEAR 2 VALUES ADJUSTED
YEAR 2 ACTIVITY FOR INFLATION
COST REPORT DATA ACTIVITY PER PAT. DAY Highest Median Lowest
ROUTINE SERVICES 11,880,300 298 277 230 208
ANCILLARY SERVICES 2,327,200 58 146 99 57
OTHER OPERATING REVENUE 0 0 10 1 0
GROSS REVENUE 14,207,500 356 393 326 271
DEDUCTIONS FROM REVENUE 1,625,700 41 0 0 0
NET REVENUES 12,581,800 315 366 299 242
EXPENSES
ADMINISTRATIVE 2,292,300 57 88 66 47
ANCILLARY 1,214,700 30 73 49 32
PATIENT CARE 6,110,100 153 156 142 133
PROPERTY 2,212,400 55 43 22 12
OTHER 119,400 3 5 4 3
TOTAL EXPENSES 11,948,900 300 318 280 257
OPERATING INCOME 632,900 16 47 5 -11
OPERATING MARGIN 5.0%
PATIENT DAYS 39,886 VALUES NOT ADJUSTED
TOTAL BED DAYS AVAILABLE 43,800 FOR INFLATION
TOTAL NUMBER OF BEDS 120 Highest Median Lowest
PERCENT OCCUPANCY 91.06% 96.4% 94.2% 84.6%
PAYER TYPE PATIENT
DAYS % TOTAL
SELF PAY 24,335 61.0% 41.8% 31.1% 25.6%
MEDICAID 8,772 22.0% 55.0% 44.1% 28.8%
MEDICARE 6,779 17.0% 36.6% 24.8% 16.6%
INSURANCE 0 0.0%
HMO/PPO 0 0.0%
OTHER 0 0.0%
TOTAL 39,886 100.0%
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e. Will the proposed project foster competition to promote quality and
Competition to promote quality and cost-effectiveness is driven primarily by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/costs in order to remain viable in the market. Provider-Based Competition: This application is for a new 120-bed skilled nursing facility in District 9, Subdistrict 4, Palm Beach County, Florida. According to the Florida Nursing Home Utilization by District and Subdistrict July 2006-June 2007, District 9 has approximately 8,760 community skilled nursing facility beds with occupancy of approximately 86.21 percent, of which Subdistrict 4 comprises 6,197 community beds with an occupancy of approximately 85.10 percent. Considering this project is not adding any beds to the district and that the existing beds in the district are already well utilized, this project’s impact on provider based competition is not likely to be material. Price-Based Competition: The impact of the price of services on consumer choice is limited to the payer type. Most consumers do not pay directly for health care services rather they are covered by a third-party payer. The applicant expects approximately 39 percent of patient days from fixed-price government payer sources (Medicare/Medicaid) which is a relatively low proportion. The applicant has projected no patient days from the managed care payer source. The applicant has indicated the majority of patient days of 61 percent from the private pay payer source. Private patient days are not constrained by any government payment system or pricing. The high percentage of revenues projected from private pay indicates potential competition at the high-end scale for relatively wealthy residents. The delicensure and transfer of beds from facilities with low occupancy rates such as, Liberty Inn, LLC at 45.37 percent and Mission Palms Nursing and Rehabilitation Center at 56.47 percent (according to the Florida Nursing Home Utilization by District and Subdistrict July 2006-June 2007) to a market of anticipated high private-payer mix may increase the utilization of these beds within Palm Beach County while assuring continued access to the majority of residents currently utilizing the beds. Conclusion: This project will not likely result in a material impact on either provider or price-based competition.
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f. Are the proposed costs and methods of construction reasonable? Do
they comply with statutory and rule requirements? ss. 408.035(10), Florida Statutes; Ch. 59A-3 or 59A-4, Florida Administrative Code.
The applicant proposes to build a new 120-bed skilled nursing home on the campus of a proposed senior living development in Palm Beach County. The new beds will take the place of beds being delicensed at two existing facilities in Palm Beach County. The proposed nursing home would be a two-story, fully sprinklered, masonry building. The construction type would be Florida Building Code (FBC) Type 1-A and NFPA Type 1 (443). The narrative indicates that the facility would be designed and constructed to meet all current code requirements for a skilled nursing home. There is no specific mention of the disaster preparedness requirements, but it is assumed that the facility will comply as these requirements are included in the nursing home chapter of the FBC. The attached assisted living facility (ALF) will also be required to comply with the physical plant standards for the disaster preparedness of nursing homes which apply to protection of exterior units and emergency access to the facility. Most of the required functional spaces have been provided and are adequately sized and located. There appears to be a lack of storage spaces in the proposed facility and no room dedicated for equipment storage as required by the FBC. A few alcoves have been provided for wheel chairs, carts and stretchers, but a facility this size will need more storage space. Failure to adequately plan for the storage needs of the facility often results in equipment being stored in the corridors. Another required space which is missing from the nursing home is a beauty salon. This space has been provided within the ALF, but it must be provided within the nursing home to meet the requirements of the building code. A single room has been provided for the house keeping needs of the facility. An additional house keeping room will be needed on the second floor to satisfy minimal code requirements. Additional house keeping rooms on each floor should be considered to help maintain a clean and sanitary environment. All skilled nursing beds are provided with attached toilet rooms. All resident bedrooms and toilet rooms are designed to be accessible. There will be one tub room on each floor for assisted bathing. All resident rooms meet or exceed the size requirements of the FBC.
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The plans for the facility have several life safety issues which must be addressed as the project develops. The path from several exit access doors to an exit exceeds 150 feet. The exit access doors which appear to be too far from an exit include doors from the nurses’ lounge, resident rooms 124 and 117 and the unnamed space between the service kitchen and restorative dining. Also the path from restorative dining to an exit exceeds 200 feet. All of the distances cited above exceed the limitations of the Life Safety Code. A second remote exit access door needs to be provided from suites containing restorative dining and the service kitchen. Other life safety problems include the two-story opening connecting the first and second floor and the exterior stair way. This type of unprotected opening is permitted by National Fire Protection Association (NFPA) 101, but the FBC does not allow these openings to connect floors unless the space is protected as an atrium. There is no indication that the space will be treated as an atrium. Exterior stairs are prohibited from serving as required means of egress for I-2 occupancies by FBC 1022.2. In addition the nursing home will need to separate from the ALF by a two-hour rated barrier as required to separate an I-2 occupancy from a residential occupancy. The project summary on the plan indicates compliance with current codes. Additional architectural, mechanical and electrical physical plant standards will need to be addressed in greater detail as the project is developed. The proposal presents an attractive design, but there are several flaws which need to be addressed. As noted above there are a few spaces which need to be provided within the nursing home. It is not clear how these spaces will be incorporated into the plans. Also there are several significant life safety deficiencies which must be addressed. Based on the analysis of actual cost data of a similar project, the estimated construction costs appear to be within the expected range. It is not clear if the cost data includes any construction costs of the ALF. It is unusual for the building costs to be less than the construction costs. The information provided in the project completion forecast appears to be reasonable.
g. Does the applicant have a history of and propose the provision of health services to Medicaid patients and the medically indigent?
ss. 408.035(11), Florida Statutes.
As a development stage company, formed in February 2007, the applicant has no Medicaid or medically indigent care history. However, the applicant predicates on conditions that it will accept a 21.7 percent Medicaid condition for its entire 120-bed facility, with the beds being
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delicensed and transferred from Mission Palms Rehabilitation and Nursing Center (which have no conditions) and the beds being delicensed and transferred from Liberty Inn, LLC have a 38.3 percent Medicaid condition. The following table compares annual occupancy rates for the two delicensing facilities (Mission Palms and Liberty Inn), Subdistrict 4 (Palm Beach County), District 9 and the state during the period July 1, 2006 through June 30, 2007.
July 2006 – June 2007 Occupancy Rates Total Medicaid
Mission Palms Nursing & Rehab Center 56.47% 62.23%*
Liberty Inn, LLC 45.37% 21.19%
Subdistrict 4 85.10% 56.84%
District 9 86.21% 58.71%
State 88.18% 60.78% Source: Florida Nursing Home Utilization by District and Subdistrict, July 1, 2006 – June 30, 2007 published 10/5/07
*Total bed occupancy of 56.47 percent (34,584 patient days of 61,355 bed days) at Mission Palms Nursing & Rehabilitation Center and 62.23 percent (21,563 days of the 34,583 patient days) were reported as Medicaid bed days.
Chatsworth at PGA National is licensed for 40 community nursing home beds and reported 9,504 patient days during the July 2006 – June 2007 reporting period. None of these were provided to Medicaid patients. The applicant conditions to 21.7 percent of the 120 bed facility’s annual patient days to Medicaid, this is below the subdistrict, district and state average. However, the applicant stresses that due to demographics and relatively high income within its PSA, it anticipates a relatively low Medicaid utilization and expecting Medicaid to be its most modest payer mix.
F. SUMMARY
Chatsworth at Wellington Green, LLC proposes to redistribute 120 existing licensed community nursing home beds in Palm Beach County, District 9, Subdistrict 4. The redistribution is through delicensure of 68 beds at Liberty Inn, LLC and 52 beds from Mission Palms Nursing and Rehabilitation Center. Chatsworth proposes to construct a 120-bed community nursing home on the same campus as a senior living development (what the applicant calls a continuing care retirement community [CCRC] look-a-like). There is no net change in the number of community nursing beds in this project and there is no change in total community nursing home beds in the subdistrict or district. The project involves 82,231 total gross square feet (GSF) of new construction with a construction cost of $13,658,300. The total cost of the project is $23,732,400.
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The applicant predicates the proposal on the following conditions: • The specific site for the project is 10331 Devonshire Lane, Wellington,
Florida 33414.
• The applicant is willing to accept a corresponding condition on the 120-bed facility a minimum of 21.7 percent of total annual patient days to Medicaid patients assuring the same availability of care that currently exists.
• Pursuant to Rule 59C-1.013(4), Florida Administrative Code, the
applicant understands that annual reports are due will adhere to them.
Should the CON be approved, mandatory reporting requirements, applicable by Rule (as stated on the last condition above), would not be placed on the CON. Need:
• Need analysis includes evidence that the skilled nursing facilities
relinquishing community nursing home beds (Liberty Inn, LLC and Mission Palms Nursing & Rehabilitation Center) are among the least occupied in the entire subdistrict, the third and fifth least occupied, respectively, for the 12-month period ending June 30, 2007. This is coupled with Wellington as the fifth largest of 37 named municipalities in the subdistrict and the third fastest growing from 2000 through 2005. This is further enhanced by higher rates of growth among the 65+, 75+ and 85+ population age cohorts, as compared to the subdistrict overall, relative to 10 and 20-mile diameters of the proposed site (per Claritas).
• Palm Beach County is shown (per Claritas) to experience the second highest seasonal growth rate of the elderly in the state, with only Lee County having a higher rate.
• Existing beds are shown to be better utilized by transferring them to a more rapidly growing elderly population area (Wellington) than their current sites.
• Availability is improved for a larger elderly population (Wellington) by more closely tying the state average of 47 nursing home beds per 1,000 residents age 75+, with the project setting 28 comparable beds per 1,000 residents within a five-mile radius and 44 comparable beds within a 10-mile radius of the proposed site.
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• Beds are being relocated from areas of lesser median household income (West Palm Beach @ $40,047 & Delray Beach @ $46,300) to an area of higher median household income (Wellington @ $75,000).
Quality of Care:
• The applicant plans to mirror its practices and procedures with continuing care retirement community Chatsworth at Devonshire and skilled nursing facility Chatsworth at PGA National.
• Agency records indicate no confirmed complaints at Chatsworth at PGA National, as of the three-year period ending January 22, 2008.
• As of a January 23, 2008 on-line run date, Chatsworth at PGA National has five of a possible five-star overall inspection rating, as issued by the Agency.
• Regarding quality of similar health care providers in the 10-mile radius (20-mile diameter) of the proposed site, seven of 19 have a one of a possible five-star inspection rating and four have a two-star rating, as issued by the Agency, meaning most of the facilities lack a three-star or better rating.
Financial Feasibility/Availability of Funds:
• Chatsworth at Wellington Green, LLC is a development stage company with no operating history. With no results from operations, an analysis of the short and long-term strengths of the applicant cannot be made.
• The applicant did not prove that either financing was arranged or could be arranged for this project.
• Provided that the applicant can obtain debt financing and the proposal’s patient days and payer mixes are realized, this project appears to be financially feasible.
• The proposal will not likely result in a material impact on either provider or price-based competition.
Medicaid/Charity Care:
• The applicant predicates on conditions Medicaid patient days of 21.7 percent annually. As a development stage company it has no Medicaid or indigent care history.
• As a virtual “CCRC look-a-like” on the same campus with independent living and assisted living facility operations, along with the relatively high income of the Wellington area, the applicant anticipates most patients to be private pay.
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Architectural:
• This is a proposal to construct a new 120-bed, two-story skilled nursing facility on the campus of a senior living development, through delicensure of an equal number of beds at two facilities in Palm Beach County. The narrative indicates that the facility would be designed and constructed to meet all current code requirements for a skilled nursing facility.
• Disaster preparedness requirements are not discussed directly but must be met.
• There appears to be a lack of storage spaces, no room dedicated for equipment storage, no beauty salon within the facility itself and a lack of housekeeping space, as required by the Florida Building Code.
• The plans as presented do not meet all Life Safety Code requirements and must be addressed as the project develops.
• The project summary on the plan indicates the applicant agrees to comply with current codes.
• Based on the analysis of actual cost data of a similar project, the estimated construction costs appear to be within the expected range and the project completion forecast appears to be reasonable.
G. RECOMMENDATION
Approve CON #10006 construct a 120-bed community nursing home in Palm Beach County, District 9, Subdistrict 4 through the delicensure of 68 beds from Liberty Inn, LLC and 52 beds from Mission Palms Nursing & Rehabilitation Center. The total cost of the project is $23,732,400. Construction costs are $13,658,300 and the project will involve 82,231 GSF of new construction. CONDITIONS: (1) The specific site for the project is 10331 Devonshire Lane,
Wellington, Florida 33414. (2) A minimum of 21.7 percent of the 120-bed facility’s total annual
patient days shall be provided to Medicaid patients.
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AUTHORIZATION FOR AGENCY ACTION Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State Agency Action Report. DATE: James B. McLemore Health Services and Facilities Consultant Supervisor Certificate of Need
