Download - STATE AGENCY ACTION REPORT - FL Agency for Health Care ... · Hospice Care, A Report for Florida Hospices and Palliative Care, Inc. prepared February, 2004 by the Center for Gerontology

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED (CON)

A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number

Odyssey Healthcare of Marion County, Inc./ CON #9983 717 North Harwood, Suite 1400 Dallas, Texas 75201 Authorized Representative: Woodrin Grossman

(214) 245-3266

2. Service District/Subdistrict

Hospice Service Area District 3, Subdistrict 3B, Marion County B. PUBLIC HEARING

A public hearing was not held or requested regarding the proposal to establish a hospice program in Marion County, Hospice Service Area 3B. Thirty letters of support were submitted by the applicant and received via mail for the proposed hospice program in Hospice Service Area 3B. Eleven of these letters were submitted from within the proposed service area, with each of these 11 being submitted by health care facility1 administrators, residential care directors, registered nurses and physicians describing need for choice in hospice providers. The 11 letters of support from within the proposed service area do not provide intentions or commitments to contract with the applicant’s proposed program for hospice services. However, there were three Memorandums of Understanding provided by Service Area 3B health care providers.2 An additional 11 of the total 30 letters received were thank you notes or

1 These Hospice Service Area 3B health care facilities include Palm Garden of Ocala, Summerville at Ocala East, Senior Residential and Assisted Living; The Bridge at Ocala, Assisted Living; Brookdale Chambrel at Pinecastle, Assisted Living Facility; Summerville at Ocala West, Senior Residential and Assisted Living; Marion House Health Care Center; Hampton Manor, Assisted Living; and Ocala Health and Rehabilitation. 2 Palm Garden of Ocala, Marion House Health Care Center, and Ocala Health and Rehabilitation.

CON Action Number: 9983

memorial contribution notes written by patient family members. There were eight letters of support from the applicant’s current service areas in Daytona, Florida and Miami, Florida. Letter of Opposition The current provider for Hospice Service Area 3B, Hospice of Marion County, submitted a packet reflecting its commitment to its patients and the community. The current hospice provider states it opposes the applicant because of lack of published need and absence of special circumstances, the Hospice of Marion County.

C. PROJECT SUMMARY Odyssey HealthCare of Marion County, Inc. (CON #9983) proposes the establishment of a new hospice program in Marion County, Hospice Service Area 3B. The applicant has two existing Florida hospice programs in Subdistrict 4B, Volusia County and 11, Miami-Dade and Monroe Counties. The applicant has submitted two applications to establish new hospice programs in this batching cycle. In addition to this proposal in Service Area 3B, it has submitted an application for a new program in Service Area 5B, Pinellas County and Service Area 6A, Hillsborough County.

The applicant is proposing total project costs of $550,488 for equipment, project development costs and start-up costs. The project does not involve any construction costs. The applicant is requesting that the proposed program be conditioned for the following provisions:

1. The applicant will provide supportive services, such as but not

limited to: palliative radiation therapy and palliative chemotherapy related to the patient’s terminal diagnosis. This will be measured via a signed declaratory statement by the applicant, which may be supported via a review of patient medical records.

2. The applicant will provide hospice services 24 hours a day, seven days a week including weekend care as indicated by the patient’s medical condition.

3. Admission of all eligible patients without regard to their ability to pay.

4. Every patient will be assessed by a physician prior to being admitted to the hospice.

5. Immediate implementation of the performance improvement (PI) plan including the following assessments: Pain management,

2


family satisfaction, employee satisfaction, and referral source satisfaction. This will be measured via a signed declaratory statement by the applicant, which may be supported via a review of patient medical records.

6. Make available a range of non-covered supplementary therapies such as but not limited to: pet, music, massage, aroma and other holistic treatments. This will be measured via a signed declaratory statement by applicant, which may be supported via a review of patient medical records.

7. Implementation of Odyssey’s triage and on-call programs upon licensure. These programs provide for uninterrupted 24-hour care seven days a week.

8. Establish a local ethics committee within the first year of operation.

9. Establish a local medical advisory committee within the first year of operation.

10. Offer the EPEC educational program (Train-the-Trainer) to local physicians who will in turn train other local subdistrict physicians and care givers in the community. The mission of the EPEC project is to increase the core skills of palliative care for all physicians and other caregivers.

11. Provide in-service training (components of Odyssey University) resources to the community, including nursing homes, assisted living facilities, Council on Aging and the staff of the Hospice of Marion County. In-service training would be offered to registered nurses. Social workers, administrators and other staff that would benefit from an increased knowledge of hospice care and services.

12. Provide patients, family members and referral sources with information of services provided by the Dream Foundation. The Dream Foundation is the first national group of its kind that exists for terminally ill adults over the age of 18. The Dream foundation provides patients and families with a sense of completion and fulfillment. Odyssey has formally partnered with the Dream Foundation to improve care for our patients and to advance our mutual interests in the field of hospice. This will be measured by the Applicant’s inclusion of Dream Foundation information in Odyssey’s collateral materials.

13. The applicant will make a $25,000 contribution to an appropriate not-for-profit entity in the community to fund education for end-of-life issues.

3


14. The applicant will commit to 0.5 FTE the first year of operation for the development efforts of a children’s hospice program in the Marion County community. The children’s program will offer an expanded hospice benefit for patients up to age 21. This program will focus on longer term services for patients who may not otherwise qualify for hospice such as those with developmental conditions, cancers, chronic illnesses or brain injury that shorten lives and place special demands on families. After one year and as the census of pediatric and PIC patients increases, dedicated staff will be increased to constitute a CSFP (child and family support program) interdisciplinary team.

15. The applicant will commit to 0.5 FTE the first year of operation for the development efforts for community bereavement programs in Marion County community. The bereavement program will be broadly based to extend beyond the families of patients admitted to Odyssey HealthCare. These programs will be an extension of the programs currently offered in Marion County. The applicant will provide bilingual staff to provide bereavement services to the Hispanic population, including Hispanic children. At a minimum, one bereavement group consisting of approximately eight sessions will be offered by the end of the first year of operation. As the bereavement client census increases after one year, full-time staff will be employed.

16. The applicant will commit to the provision of programs for the Hispanic populations which will include support from or involvement of bilingual staff, translated literature, training on cultural differences and competencies and flexible programming to meet their unique needs. Bereavement services will include Hispanic children.

17. The applicant will develop a community resource library during the first year of the proposed hospice’s operation. The library will include various lay and professional education pieces related to chronic illness, death, dying and bereavement.

18. The applicant commits that the Odyssey Foundation will establish a children’s bereavement camp in Florida by the end of the first year of operation, replicating what currently exists in Odyssey’s SKY Camp. This will be measured via a signed declaratory statement by the applicant. The location of this Florida camp is not provided, however, the applicant does indicate that at its existing Texas camp, transportation arrangements are made for children who do not live in the area of the camp’s location.

4


19. The applicant will have a minimum of three community education representatives’ staff members, expanding community awareness of hospice services and educating local medical staff, community leaders and potential hospice patients as to the benefits of and availability of hospice care. Compliance which the condition will be measured via submission of an annual report confirming that at least three CER staff members are employed at the proposed new service and active in the local community.

20. The applicant will model the proposed new hospice program as a Comprehensive Hospice Center as defined in The Florida Model of Hospice Care, A Report for Florida Hospices and Palliative Care, Inc. prepared February, 2004 by the Center for Gerontology & Health Care Research, Brown University School of Medicine.

Although some of the proposed conditions, such as admission of all eligible patients without regard to their ability to pay, are required of all hospice programs and therefore a CON condition is unwarranted, many are not. Should the CON be awarded, those conditions that are not already requirements of licensing in Florida will 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, rules of the State of Florida, and Chapters 59C-1 and 59C-2 of the Florida Administrative Code. 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 evaluating the responses provided in the application and independent information gathered by the reviewer. Applications are analyzed to identify various strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict or service planning area), applications are comparatively reviewed to determine which applicant best meets the review criteria.

5


Section 59C-1.010(3)(b), Florida Administrative Code, prohibits any amendments once an application has been 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 Cheslyn Green analyzed the application in its entirety with consultation from the financial analyst Ryan Fitch, who evaluated the financial data 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 review criteria and application content requirements found in Sections 408.035, and 408.037, and applicable rules of the State of Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code.

1. Fixed Need Pool

a. Does the project proposed respond to need as published by a fixed need pool? Chapter 59C-1.008, Florida Administrative Code and Chapter 59C-1.0355, Florida Administrative Code.

The Agency for Health Care Administration in its April 6, 2007 publication: Florida Need Projections for Hospice Programs, Background Information For Use in Conjunction with the April 2007 Batching Cycle for the July 2008 Hospice Planning Horizon, published no numeric need in Hospice Service Area 3B. The applicant is applying to establish a hospice program in Hospice Service Area 3B in the absence of published numeric need. Chapter 59C-1.0355(4)(d) of the Florida Administrative Code specifies special circumstances under which a CON may be awarded in the absence of published need.

6


b. Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following:

1. That a specific terminally ill population is not being served.

2. That a county or counties within the service area of a licensed hospice program are not being served. 3. That there are persons referred to hospice programs who are

not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.

The applicant does not contend any terminally ill population is not being served, but does assert that some populations are underserved as discussed below. The planning area is a single-county area. The applicant presented a table on pages 7 and 106 of the application that is titled “Hospice of Marion County Admission Delay Analysis” and has identified the source of this information as “Hospice of Marion County Admissions Department Daily Scheduled/Admission Log”. The applicant indicates that the information it presented in this chart “is not available in any public format nor is it possible to obtain such data without the use of discovery tools associated with active litigation. As a result, it is impossible to document this access issue unless the information is required to be produced in a litigation setting.”3 However, the applicant has not explained why, if it was given this information in a case in which the Agency was an active participate, it cannot provide this information to the Agency. Additionally, while the applicant states that this information cannot be provided because it is confidential, it has none-the-less provided it in summary form that cannot be verified by the Agency. The information either is or is not confidential. Agency staff have not been able to determine that the information obtained by Odyssey actually shows that these figures represent persons referred to hospice programs who were not admitted within 48 hours, excluding cases where a later admission date has been requested.

3 CON #9983, page 106

7


Hospice of Marion County Admission Delay Analysis

Month/Year

Total Admissions

Admissions with 48-hour

Lag time

% of Total

Admissions with 48-hour

Lag Time

48-hour

Admissions Admitted on

Monday

% 48-hour Admissions Admitted on

Monday Jan 2006 188 56 29.8% 15 27% Feb 2006 176 67 38.0% 21 31% Mar 2006 210 59 28.1% 18 31% Apr 2006 156 35 22.4% 12 34% May 2006 150 35 23.3% 15 43% Jun 2006 171 47 27.5% 13 28% Jul 2006 170 42 24.7% 13 31% Aug 2006 195 34 17.4% 18 53% Sep 2006 101 13 12.9% 5 38% Jan-Sep 2006 1,571 388 25.6% 130 34% Estimated CY06

549

Source: CON #9983 pages 7 and 106 source of data given as “Hospice of Marion County Admissions Department Daily Scheduled/Admission Log” As noted above, information provided by the applicant cannot be verified by the Agency. The information provided does not present evidence of the existence of special circumstances.

c. Other Special Circumstances:

The applicant contends that other special circumstances exist, outside of those contained in section 59C-1.0355 (4) (d) of the Florida Administrative Code. The applicant provides discussion regarding cancer patients age 65 and older and believes that group is underserved. The applicant also states that cancer patients aged 65 years and older are consistently underserved in Subdistrict 3B. The applicant states that from 2001 to 2006 the Hospice of Marion County, Inc has consistently served fewer cancer deaths over the age of 65 compared to those served by the State of Florida. The applicant also states that the number of Marion County residents over the age of 65 years dying of cancer has steadily been increasing. It states that in 1996 there were 627 cancer deaths (age 65 years and over) steadily rising to 766 deaths in 2005.

Resident Deaths by Cause and Age for Hospice Service Area 3B Area/County Resident Deaths in 2005 Projected Deaths July 2008 – June 2009

Total Deaths

Cancer Under Age 65

Cancer Over Age 65

Total Deaths

Cancer Under Age 65

Cancer Over Age 65

3B Marion 3,897 255 766 4,376 286 860 State of FL 170,300 11,266 29,006 186,104 12,328 31,795

Source: Florida Need Projections for Hospice Program April 2007 Batching Cycle for July 2008 Hospice Planning Horizon.

8


The current hospice provider in Subdistrict 3B had a total of 2,233 admissions from January 2006 – December 2006. Of those admissions, 637 were of cancer patients age 65 and older. Twenty-eight percent of the admissions to the Hospice of Marion County, Inc. were of cancer patients age 65 and older. The State of Florida had a total of 93,764 hospice admissions for January 2006 – December 2006. Of those admissions 25,676 were of cancer patients age 65 and older. Twenty-seven percent of total State of Florida hospice admissions were of Cancer patients 65 and older. The applicant states that cancer patients aged 65 years and older are being consistently underserved by the current hospice provider. Compared to the State of Florida as a whole, the Hospice of Marion County, Inc. has a slightly higher percentage of admissions from cancer patients age 65 and older. Although the percentage of cancer patients in the county is less (by one percent) than that of the state as a whole, this is not a demonstration that this population is underserved. The applicant does not provide sufficient evidence of special circumstances for the population of cancer patients 65 and older. The applicant also states that it will provide enhanced access to hospice care through the introduction of competition; enhanced access for hospice patients with cancer and non-cancer diagnoses, higher acuity levels and multiple co-morbidities; enhanced access to experienced and specialized programs; enhanced access to patients in non-traditional hospice locations; and enhanced access to patients with no primary care giver. The applicant anticipates that the introduction of a new hospice will enhance and broaden hospice services within the market place. In further support of this concept, the applicant provides research by Research and Planning Consultants, L/P which concluded that counties with more than one hospice program have a higher penetration rate (percent of patients dying who use hospice services) than counties with just one hospice provider. This appears to be a national study that does not look specifically at Florida hospice penetration rates. The applicant relied on several federal data sources to compile information for its research, including CMS and U.S. Census Bureau. The researchers did not provide any evidence of solely examining single provider areas versus multi-provider areas in Florida. As discussed in more detail in E.3.a. below, this is not true in Florida. Penetration rates in areas where there is a single provider are higher than the state average for the past five years. The applicant asserts that while there may be some small

9


counties that cannot support more than one hospice program due to minimal population size or population density, it contends that this is not the situation in Subdistrict 3B.4 However, this was not demonstrated. The applicant states it has the specific resources required to broaden the hospice services, both traditional cancer patients and those patients with a non-cancer terminal diagnosis, multiple co-morbidities and high acuity levels. Odyssey states that it has implemented a community education plan designed to address the specific needs of the patients and patient referral sources in that market. Odyssey currently employs approximately 260 community education representatives company-wide. Each community education representative seeks to develop relationships with patient referral sources by regularly calling on these referral sources and educating groups of physicians, social workers, nurses, hospital discharge planners, assisted living facility personnel and nursing home personnel regarding hospice care in general and Odyssey services in specific. The applicant states it has been able to develop a significant base of patient referral sources because Odyssey provides specific clinical educational tools to assist health care providers to identify and document the clinical indicators that confirm when a patient becomes an appropriate candidate for hospice services. In addition to providing clinical education about hospice to health care providers, Odyssey states one of the biggest benefits it can bring to Subdistrict 3B is a dedication to cross training staff to treat multiple disease processes, rather than specializing in one disease process. The applicant also proposes to enhance access to patients who have no primary care giver. Odyssey states that it provides care to all patients by first attempting to provide care to all patients in their home setting; however in the event a patient can no longer be managed at home, or if the patient is homeless, the patient is evaluated by the Odyssey nurse for possible inpatient placement to a hospital or long-term care facility. Odyssey provides examples of its willingness to serve all potential hospice patients. In its Daytona program, the applicant states it was contacted by a nurse from a local alcohol treatment center regarding the needs of a homeless man. According to the application, a nurse was sent to determine if the patient was a hospice-appropriate admission and attempted to find appropriate placement for the homeless man. The applicant stated that while no formal agreement existed between the alcohol treatment center and Odyssey, the staff of the two entities worked in conjunction to meet the needs of this homeless person. Another example provided by the applicant, also from its Volusia County program, was when the Volusia County jail medical department

4 Research and Planning Consultants, LP’s study can be found in Appendix Q of CON #9983.

10


contacted Odyssey to help place a young man that was being released with advanced MS who had no family or assistance when being released. Odyssey staff worked to find placement for him in a local nursing home. The applicant states that similar support and care for Pinellas County residents without a caregiver will be provided. Regarding competition, this area is served by a single hospice provider. With hospice services, unlike other health care services, this limitation means that there is no choice in hospice provider for Marion County residents. If someone in Marion County elects hospice services and is admitted from their place of residence, they either accept services from Hospice of Marion or they cannot receive hospice services. If it were hospital services they needed instead of hospice and they did not want to go to a Marion County hospital, the Marion County resident could go to a hospital in any other county if they chose and be monitored in their home by that out of service area hospital. Hospice providers outside of Marion County are not allowed, under state regulations, to offer in-home services to residents of Marion County. Hospices services are largely provided in the patient’s home. According to the applicant the total population of District 3, Subdistrict 3B is projected to grow from 327,501 persons in 2007 to 344,799 persons in 2009; an increase of 17,298 persons or 5.3 percent. The percentage increase is greater than that projected for District 3 (4.7 percent) or the State of Florida (4.2 percent).

District 3 Projected Total Population Growth by Subdistrict 2007-2009

2007

2009

Absolute Change

Percent Change 2007-2009

Subdistrict 3A 570,182 588,915 18,733 3.3% Subdistrict 3B 327,501 344,799 17,297 5.3% Subdistrict 3C 139,749 145,415 5,661 4.1% Subdistrict 3D 160,173 167,614 6,883 4.3% Subdistrict 3E 371,689 396,673 27,984 6.7% District 3 Total 1,569,852 1,643,411 73,559 4.7% State of Florida 18,825,637 19,625,150 799,513 4.2%

Source: CON #9983 pg 123. The applicant states that while the projected growth in the total population is important, a more important consideration is the projected population of the older age cohorts of the service area population, the population that is most likely to use hospice services. It is noted that the Agency considers area deaths, area population growth, and area hospice admissions in its need methodology adopted in the Florida Administrative Code under section 59C-1.0355.

11


Subdistrict 3B Percent Increase in Population by Age Cohort, 2007-2009

Percent Change 2007-2009 64 and Under 4.8% 65 and Older 6.9% 75+ 6.4% Total Population 5.3% Source: CON #9983 pg 124 According to the chart, the applicant states that the older age cohorts will experience a greater percent increase than the younger age cohorts. In Subdistrict 3B the population age 65 and older will increase 6.9 percent between 2007 and 2009. Likewise, the population age 75 and older will increase 6.4 percent. Therefore, Subdistrict 3B is home to a growing population of those persons more likely to utilize hospice services. Projected growth in hospice patient admissions is considered in the Agency’s need formula. Those projections are calculated twice a year. As noted above, the projections resulted in zero need for an additional hospice program in Hospice Service Area 3B. The applicant’s presentation of expected population growth is not demonstration of need for an additional hospice program in the area. Special circumstance or not-normal need has not been demonstrated.

2. Agency Rule Criteria and Preferences a. Rule 59C-1.0355(4)(e) Preferences for a New Hospice Program.

The Agency shall give preference to an applicant meeting one or more of the criteria specified in the below listed subparagraphs: (1) Preference shall be given to an applicant who has a

commitment to serve populations with unmet needs.

The applicant states that access to hospice care would be improved for non-cancer patients, those in non-traditional home settings and those without primary caregivers, due to the experience of the applicant’s management affiliate with non-cancer patients. As discussed above, the applicant addresses special circumstances that exist within Subdistrict 3B and claims that those circumstances include patients not being admitted to hospice within 48 hours and the underserved cancer patients aged 65 and older. As previously discussed, neither claim has been demonstrated.

12


The applicant does not meet this preference.

(2) Preference shall be given to an applicant who proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost-efficient alternative. The applicant states it will use existing licensed hospital and SNF beds to provide hospice services and will contract with acute care providers and SNFs in the proposed service area. The applicant states that in its existing hospice programs, Odyssey in Volusia and Miami-Dade Counties has been able to establish arrangements with local nursing homes and assisted living facilities to ensure that these residents can receive not only routine hospice care in their “home” setting, but also general inpatient and continuous care if indicated. The applicant provided memoranda of understanding three Subdistrict 3B providers: Palm Garden of Ocala, Marion House HealthCare Center, and Ocala Health and Rehabilitation Center. These memoranda state that “Odyssey and the ‘Facility’ agree and acknowledge that they desire to and will endeavor to enter into an agreement to provide hospice routine home care to eligible residents of ‘Facility’ and to provide room and board services, general inpatient care and inpatient respite care to Odyssey’s hospice patients.” The memorandum goes on to state that “ The parties further acknowledge and agree that in the event Odyssey is approved for operation of a hospice program in Hospice Service Area, they will enter into a Nursing Facility Services Agreement.” The applicant states that its existing programs in Hospice Service Area 4B and 11 have been able to establish arrangements with local providers. Evidence provided of these arrangements consists of a list of names, addresses, and service types in Appendix D of the CON application.

(3) Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. The applicant states it provides services to all patients who meet the criteria for admission to hospice, including those without a primary caregiver at home, the homeless and patients with AIDS. The applicant quotes from its non-discrimination policy and adds that those who can no longer be managed at home or who are

13


homeless will be evaluated by a hospice nurse for possible inpatient admission to a hospital or long-term care facility.

(4) In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties. Hospice Service Area 3B consists of one county: Marion. This preference is not applicable.

(5) Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid or Medicare.

The applicant states that it will provide services not specifically covered by private insurance, Medicaid or Medicare, including: pet therapy, music therapy, massage therapy and aromatherapy. The applicant has proposed a condition for the provision of non-covered services. This preference is met by the applicant.

b. Chapter 59C-1.0355, Florida Administrative Code contains the following general provisions and review criteria to be considered in reviewing hospice programs.

(1) Consistency with Plans (Rule 59C-1.0355(5), Florida

Administrative Code). An applicant for a new hospice program shall include evidence in the application that the proposal is consistent with the needs of the community and other criteria contained in the local health council plan. The application for a new hospice program shall include letters from health organizations, social services organizations, and other entities within the proposed service area that endorse the applicant's development of a hospice program.

The applicant states that through interviews with local health care community members there was a general level of dissatisfaction with the current hospice provider’s inability to admit patients in a timely manner. The applicant provided a letter of local support specifically stating “difficulty in gaining timely admission for several people in need of hospice services.” However, it is not clear whether patients requested a later admission.

14


(2) Required Program Description (Rule 59C-1.0355(6), Florida Administrative Code): An applicant for a new hospice program shall provide a detailed program description in its certificate of need application, including:

(a) Proposed staffing, including use of volunteers.

The applicant indicates 14 FTEs for year one of operations, including 3.0 FTEs for community relations representatives, 2.5 FTEs for registered nurses (RNs), 0.3 FTE for a Dietician and 2.0 FTEs for home health aides (HHAs). For year two, the applicant indicates a total of 27.2 FTEs, increasing the RN FTEs to 6.8 and the HHA FTEs to 5.6. The applicant states that the proposed staffing for the program will include an interdisciplinary team specializing in end of life care and pain/symptom management. The applicant states it will document and maintain a volunteer staff sufficient to provide administrative or direct patient care in an amount that equals at least five percent of the total patient care hours of all paid hospice employees and contract staff, as required by Medicare. The applicant contends that its volunteer recruitment program is so successful that Odyssey – Daytona has 30 volunteers. The program exceeded the required five percent volunteer hours in CY 2006, providing 2,417 volunteer hours. These volunteers had provided nearly 1,000 hours of service year to date in 2007 (YTD 5/31/2007). Odyssey Miami has 23 active volunteers and has been able to serve all patients who have requested volunteer services. These volunteers have provided more than 1,600 hours of service year to date in 2007 (YTD 5/31/2007).

(b) Expected sources of patient referrals. The applicant states it will actively seek patient referrals from throughout the community, and specifically names the following: physicians; long-term care facilities, including nursing homes, assisted living facilities and adult care centers; hospitals; managed care companies; insurance companies. The applicant states that it has experience in conducting local educational campaigns that will promote hospice care and increase public awareness of hospice programs.

15


The applicant states that a growing source of referrals is assisted living facilities, and provides discussion of its approach to providing hospice service within the assisted living facility setting. The applicant provided memoranda of understanding from area nursing homes.

(c) Projected number of admissions, by payer type, including Medicare, Medicaid, private insurance, self-pay, and indigent care patients for the first two years of operation. The applicant provided the following projected admissions by payer group:

Projected Admissions by Payer Type Payer Source Year One Year Two Self-Pay 06 08 Medicaid 09 12 Medicare 264 377 Insurance 06 08 Other -- -- Total 285 405

Source: CON Application 9983, page 151.

(d) Projected number of admissions, by type of terminal illness, for the first two years of operation. The applicant provided the following projected number of admissions by type of terminal illness:

Projected Admissions by Type of Terminal Illness Diagnosis Year One Year Two Cancer 91 130 Alzheimer’s/Dementia 51 73 CHF 51 73 COPD 23 32 Debility 43 61 Renal 09 12 Liver/Other 17 24 TOTAL 285 405

Source: CON Application 9983 pg 152. The April 2007 Hospice Projections published by the Agency in Florida Need Projections for Hospice Programs for use in conjunction with this batching cycle indicate that cancer patients for Service Area 3B are projected to total 1,005 and non-cancer patients are projected to total 1,488. If all projections are realized5, the applicant’s program would be

5 The applicant’s proposed first year of operations would be 2008, which is here compared against Agency published projections for 2008 in this service area.

16


admitting 13.03 percent of non-cancer patients in the service area and 9.05 percent of cancer patients. This would result in the existing hospice provider admitting 86.97 percent of non-cancer patients in the service area and 90.95 percent of cancer patients. Year two, as shown above, would increase these percentages, but the existing provider would still be the dominant provider by a sizeable margin.

(e) Projected number of admissions, by two age groups, under 65 and 65 or older, for the first two years of operation. The applicant provided the following projected number of admissions by age group:

Projected Admissions by Age Group Age Group Year One Year Two Under 65 29 41 Over 65 256 364 TOTAL 285 405

Source: CON Application 9983 pg 152.

(f) Identification of the services that will be provided directly by hospice staff and volunteers and those that will be provided through contractual arrangements. The applicant states that most hospice services will be provided directly6 by hospice staff and volunteers. The applicant states its interdisciplinary team will include a home health care aide, chaplain, social worker bereavement coordinator, and an on-call nursing team. While the services of physicians, physical therapy, speech therapy and occupational therapy will be provided through contractual arrangements. The need for these contract services is stated to be determined on an individual basis by the

6 400.609(1)(a) and (b), Florida Statutes: The hospice care team shall directly provide the following core services: nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. A hospice may also use contracted staff if necessary to supplement hospice employees in order to meet the needs of patients during periods of peak patient loads or under extraordinary circumstances. (b) Each hospice must also provide or arrange for such additional services as are needed to meet the palliative and support needs of the patient and family. These services may include, but are not limited to, physical therapy, occupational therapy, speech therapy, massage therapy, home health aide services, infusion therapy, provision of medical supplies and durable medical equipment, day care, homemaker and chore services, and funeral services.

17


interdisciplinary team in consultation with the patient, family and attending physician.

(g) Proposed arrangements for providing inpatient care. The applicant states that it will arrange for providing inpatient care through contractual arrangements with hospitals, nursing homes and “other settings such as hospice inpatient units.” The applicant states that its existing hospice program in Volusia County and Miami-Dade has established arrangements with local service providers. A listing of these service providers is in Appendix D of the application. The applicant provided three memoranda of understanding with Subdistrict 3B skilled nursing providers.

(h) Proposed number of inpatient beds that will be located in a freestanding inpatient facility, in hospitals, and in nursing homes. The applicant states it will arrange for providing inpatient care through contractual arrangements with hospitals, nursing homes and other settings. However, the only other facility setting that can be used for hospice inpatient care is a freestanding hospice facility and the applicant has not discussed operating its own freestanding facility.

(i) Circumstances under which a patient would be admitted to an inpatient bed. The applicant states that inpatient care will be dictated by the patient’s medical need. The applicant states it will secure inpatient contracts with hospitals and nursing homes to meet the hospice needs of an inpatient. Three memorandums of understanding where provided by the applicant from area nursing home providers.

(j) Provisions for serving persons without primary caregivers at home. The applicant states that if a patient cannot be managed at home, the patient will be evaluated by an Odyssey nurse for possible inpatient placement to a hospital or long-term care facility.

18


(k) Arrangements for the provision of bereavement services.

The applicant states that qualified hospice staff and volunteers will begin assessing needs for bereavement services upon admission of the hospice patient. A bereavement coordinator will be designated for managing the services of the bereavement program. According to the applicant, it offers: condolence correspondence, written materials, articles, and resources, one on one counseling, bereavement letters, grief support groups, memorial services, and holiday bereavement programs. The applicant also states that through the Odyssey HealthCare Foundation, Sky Camp, is offered to children ages seven to 17. It is a free weekend camp for children grieving the death of a loved one; the camp provides a place for the children to feel safe, and nurtured. The applicant also commits 0.7 FTEs in year one and 1.0 FTEs in year two in its Schedule 6A to a bereavement coordinator.

(l) Proposed community education activities concerning hospice programs. The applicant states that it will implement a community education plan to promote its services in the proposed area. The applicant states that three or more dedicated community education representatives will be available to call on patient referral sources and to educate health care providers in the area. The applicant states it will conduct local education campaigns that promote hospice care and seek to increase public awareness of hospice care.

(m) Fundraising activities. The applicant states that it will not perform any local fundraising activities in direct support of its operations. All program services and activities will be funded by the hospice’s operations. Rather, the applicant states that it will support existing community-based fundraising efforts including the fundraising efforts of local health care support groups and the existing hospice provider as well as the fundraising efforts of the Dream Foundation. According to the applicant, it parent, Odyssey HealthCare, has an active national contributions program. In 2006, the applicant states, its contributions program gave approximately $4.9 million in charity care back to the communities it serves and

19


an additional $680,000 through the Odyssey Foundation. The applicant lists many services and “extras” that are not reimbursable.7

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. Hospice Service Area 3B is currently served by a single-provider, Hospice of Marion County, which operates four residential hospice houses in Ocala and Summerfield. For calendar year (CY) 2006, Hospice of Marion County reported 2,233 total admissions to its hospice program. Resident deaths (with age stated) in Hospice Service Area 3B during CY 2005 totaled 3,897 which equates to a 57.30 percent penetration rate for Hospice of Marion County. Single service area service providers in the state averaged 57.51 percent penetration rate during CY 2006.8 The most recently published Florida Need Projections for Hospice Programs publication dated April 06, 2007 indicates a projected hospice patient count over current hospice patient count of 260, an amount below the 350 count established in Ch. 59C-1.0355(4)(a) as demonstration of numeric need for an additional program; therefore, numeric need is not published for this service area. From 1997 through the end of 2006, hospice penetration rates have increased overall throughout the state. Service Area 3B experienced hospice penetration rates at or above the statewide average from 1997 through 1998, and slightly below the statewide average from 1999 through 2003. In 2004, Service Area 3B penetration rates were above the statewide average. The existing provider penetrated a lesser percentage of Service Area 3B than the average for single-provider service areas (SPSA) for most of this 10-year period. The following table illustrates the penetration rates for Service Area 3B, the average single-provider service area (ASPSA), and the State of Florida as a whole:

Hospice Calendar Year Penetration Rates 1997 - end of 2006 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Service Area 3B 30.31% 30.85% 29.82% 34.83% 36.82% 40.02% 45.03% 51.76% 50.55% 57.30%

7 A list of services and extras provided by the applicant are listed on pgs 157-159 of CON #9983. 8 The 12 single-provider hospice service areas in Florida totaled 33,334 hospice admissions in 2006, with resident deaths in 2005 (with age stated) of 56,925. These service areas are: 3A, 3B, 3D, 3E, 5B, 6A, 6C, 8A, 8B, 8C, 8D, 9A.

20


Average SPSA 30.46% 31.37% 31.47% 36.93% 40.36% 43.07% 49.88% 54.29% 55.51% 57.51% State Median 30.31% 30.51% 32.16% 35.87% 39.91% 42.18% 46.27% 51.68% 52.19% 55.15%

Source: Florida Need Projections for Hospice Programs for indicated years. The table above illustrates that single-provider service areas maintained higher percentages of penetration than did all service areas together for all but one year of the 10 years shown above, therefore indicating that multi-provider service areas penetrated lesser percentages of their service areas than did single-provider service areas during those years. Quality of the applicant’s care is discussed throughout the application, and is largely reflective of the generalized care of the applicant’s management affiliate Odyssey. General policies and care practices are outlined that the applicant reports would be implemented in Service Area 3B. The applicant states that Odyssey HealthCare’s hospices are members of the National Hospice and Palliative Care Organization and have a broad range of policies and procedures in place to ensure quality of care. The applicant states it employs an interdisciplinary team of Odyssey employees, volunteers and the patient’s physician to manage patient care, pain and symptoms. Agency records indicate one confirmed complaint was received regarding administrative issues for Odyssey HealthCare--Miami, during the three-year period ending June 08, 2007. The applicant states that the introduction of a new provider would increase non-price competition in the service area, thus forcing an improvement in services and quality of care. However, no evidence was provided to demonstrate how this project will improve quality of care in the area. The applicant contends that efficiency will be achieved within its proposal, as its management affiliate’s nationwide organization maintains centralized corporate services and a host of operational programs in place to staff, educate and maintain operations at its facilities. The applicant describes the Odyssey development and operating models that allow it to establish/acquire hospices efficiently while tailoring services to local populations. No details are given as to how the applicant would tailor its services to this local population, only that it would tailor its services to any local population. Need for the proposed project is not 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.

b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? ss. 408.035(3), 408.035(12), Florida Statutes.

21


The applicant states that its management affiliate, Odyssey HealthCare, Inc., has a strong history of providing quality care and is one of the largest providers of hospice care in the nation. Within Florida, Odyssey has two licensed, Medicare and Medicaid certified hospice programs. The applicant provides a description of Odyssey’s quality of care. In the past three years the applicant has had one confirmed administrative complaint.

c. What resources, including health manpower, management personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation? ss. 408.035(6), Florida Statutes.

This review is for Odyssey Healthcare of Marion County, Inc., applying to establish a new hospice program in Hospice Service Area 3B, Marion County, Florida. The financial impact of the project will include the project cost of $532,500 and year two operating costs of $2,820,192. Odyssey HealthCare of Marion County, Inc. was formed as a for-profit corporation in Delaware on April 19, 2007. As of April 30, 2007, the applicant had no assets or liabilities. The applicant provided audited financial statements of its ultimate parent company, Odyssey Healthcare, Inc. (parent), a for profit corporation, for the periods ended December 31, 2005 and 2006. 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.

22


ODYSSEY HEALTHCARE, INC.

12/31/2006 12/31/2005 Current Assets $145,929,000 $130,368,000

Cash and Current Investment $69,962,000 $63,469,000

Assets Restricted for Capital Projects $0 $0

Total Assets $269,986,000 $244,967,000

Current Liabilities $76,131,000 $68,721,000

Total Liabilities $90,390,000 $77,669,000

Net Assets $179,596,000 $167,298,000

Total Revenues $409,831,000 $378,073,000

Interest Expense $187,000 $198,000

Operating Income (OI) $32,091,000 $33,426,000

Cash Flow from Operations $34,886,000 $58,644,000

Working Capital $69,798,000 $61,647,000

FINANCIAL RATIOS 12/31/2006 12/31/2005 Current Ratio (CA/CL) 1.9 1.9

Cash Flow to Current Liabilities (CFO/CL) 0.5 0.9

Long-Term Debt to Net Assets (TL-CL/NA) 0.1 0.1

Times Interest Earned (NPO+Int/Int) 172.6 169.8

Net Assets to Total Assets (TE/TA) 66.5% 68.3%

Operating Margin (ER/TR) 7.8% 8.8%

Return on Assets (ER/TA) 11.9% 13.6%

Operating Cash Flow to Assets (CFO/TA) 12.9% 23.9%

Short-Term Position: The parent’s current ratio of 1.9 indicates current assets are slightly less than two times current obligations; this is slightly below average and an adequate position. The working capital (current assets less current liabilities) of $69.8 million is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities of 0.5 is below average. It should be noted that the applicant’s cash flow ratios are down significantly from the prior year due to payment of a $13 million cash settlement with the Department of Justice. Overall the applicant has an adequate short-term position. Long-Term Position: The parent’s long-term debt to net asset ratio of 0.1 indicates the parent has minimal long-term liabilities when compared to net assets, a good position. The most recent year had $32.1 million in operating income, which resulted in an operating margin of 7.8 percent. Overall, the parent has a good long-term position.

23


Capital Requirements: Schedule 2 listed capital projects totaling $550,458. The applicant is projecting a year one operating loss of $433,519. The applicant will have to fund the year one operating loss until profitability can be reached. In addition, Section 408.810, Florida Statutes, requires a licensees access to contingency financing. Contingency financing has been defined as one month’s average operating expense over the first year of operations. The applicant is projecting year one operating expense of $1.5 million and the average monthly operating expense in year one is $123,241. It should be noted that the parent company has pledged funding for two other hospice programs in this batching cycle (CON #9986 Hillsborough and CON #9984 Pinellas). The other two programs are projected to have similar capital and operating cost to this application. Available Capital: The parent corporation, Odyssey Healthcare, Inc., will provide funding for all capital projects. The applicant provided a letter dated May 14, 2007, from Odyssey Healthcare, Inc. committing to provide funding and working capital to the applicant for this project and all other capital projects. As discussed above, the parent company has working capital of $69.8 million and $32.1 million in operating income. In addition, cash flow from operations was $34.9 million and according to the parent’s 10-Q a $20.0 million revolving line of credit was renewed on May 4, 2007. Staffing: Schedule 6A states the applicant will have 14.0 FTEs for year one and 27.2 FTEs for year two. FTEs for year one are as follows: Administration has 7.3 FTE which include 3.0 FTE community service representatives, 1.0 FTE general manager, 1.0 FTE admissions coordinator, 1.0 office manager, 1.0 FTE patient care manager, and 0.3 FTE patient care secretary; 0.1 FTE medical director; 2.5 FTE registered nurses and 2.0 FTE home health aides; 0.7 FTE bereavement coordinator; 0.4 FTE spiritual care coordinator; 0.2 volunteer coordinator; 0.3 dietitian; 0.6 FTE medical social worker. Conclusion: Based on the parent corporation’s financial position and the relatively small size of the project, funding for this project and all capital projects should be available as needed.

24


d. What is the immediate and long-term financial feasibility of the

proposal? ss. 408.035 (8), Florida Statutes.

Schedule 7 of the application indicates that the services to be provided are: routine home care, continuous home care, respite and general inpatient care. The payer types identified in the application as a percentage to total patient days are: Medicare at 93.0 percent, Medicaid at 3.0 percent, charity at 2.0 percent, and commercial insurance and managed care at 1.0 percent each. The Department of Health and Human Services sets rates for routine home care, continuous home care, inpatient respite care, and general inpatient care. The Federal rates were calculated for the Marion County, Florida wage index for Medicare Hospice payments of 0.9491 and inflated through June 2010. The average price adjustment factor used was 3.07 percent per year based on the new CMS Market Basket Price Index as published in the 2nd Quarter 2007 Health Care Cost Review. Estimated patient days for each level of service from Schedule 7, year 2 were multiplied by the calculated reimbursement rate for that service in order to estimate the total revenue that would be generated by that number of patient days. The results were then compared to the applicant’s estimated gross revenue. The results of the calculations are summarized in the Table below.

25


HOSPICE REVENUE CON #9983 Odyssey Healthcare of Marion County, Inc. Wage Index for Marion County (0.9491)

Wage

Component Wage Index

Adjusted Wage

Amount Unadjusted Component

Payment Rate

Routine Home Care $89.87 0.9491 $85.30 $40.92 $126.22

Continuous Home Care $524.50 0.9491 $497.80 $238.86 $736.66

Inpatient Respite $73.24 0.9491 $69.51 $62.06 $131.57

General Inpatient $372.42 0.9491 $353.46 $209.40 $562.86

Payment

Rate

Inflation Factor

Year Two

Inflation Adjusted Amount

Patient Days. Year 2, June

2010

Calculated Gross

Revenue

Routine Home Care $126.22 1.082 $136.53 19,515 $2,664,448

Continuous Home Care $736.66 1.082 $796.88 204 $162,564

Inpatient Respite $131.57 1.082 $142.33 203 $28,893

General Inpatient $562.86 1.082 $608.88 406 $247,204

Total 20,328 $3,103,108

From Schedule 7 $3,182,237

Difference $79,129

Percentage difference 2.49% The applicant offered 20 conditions to its proposed hospice program. Several of these conditions would likely have a financial impact on the applicant. Based on the notes accompanying the projections, it appears that the applicant has taken into consideration the costs associated with the proposed conditions in the financial projections. The applicant’s projected gross revenue was 2.49 percent or $79,129 greater than the calculated gross revenue. It appears that the applicant’s projected revenues are overstated. However, the overstatement in revenue is less than the applicant’s projected profit of $232,889 by the end of year two. This project appears to be financially feasible.

26


e. Will the proposed project foster competition to promote quality and

cost-effectiveness? Please discuss the effect of the proposed project on any of the following: ss. 408.035(9), Florida Statutes. This application is for a new hospice program to be located in Service Area 3B which currently has one existing hospice program. Therefore, this project is offering a new choice of provider in the service area. The impact of the price of services on consumer choice is limited to the payer type. Most consumers do not pay directly for hospice services. Rather, they are covered by a third-party payer. The impact of price competition would be limited to third-party payers that negotiate price for services, namely managed care organizations. Therefore, price competition is limited to the share of patient days that are under managed care plans. The applicant is projecting 1.0 percent of patient days from managed care payers with 96.0 percent of patient days expected to come from fixed price government payer sources (Medicare and Medicaid). With the large majority of patient care being provided from fixed price government payer sources, this project is not likely to have any discernable positive impact on price-based competition to promote cost-effectiveness. However, if approved, this applicant would be an alternative to the only existing hospice provider in the service area. The potential exists for new or enhanced services to be provided for the same Federal and State dollars.

f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss. 408.035(10), Florida Statutes and Ch. 59A-3 or 59A-4, Florida Administrative Code.

Odyssey Healthcare of Marion County, Inc. is requesting approval to establish a new hospice program rather than the development of a freestanding inpatient hospice facility. There are no construction costs and methods associated with this proposal.

g. Does the applicant have a history of providing health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss. 408.035(11), Florida Statutes.

The applicant states it has consistently provided care to all patients in need of its services, including the Medicaid/charity/indigent populations. The applicant states that 60 percent of its FY 2006 non-

27


Medicare net revenue was Medicaid. Approximately 1.2 percent of services are provided to indigent/charity patients. Schedule 7A states in year one projected revenues are as follows: two percent self-pay, three percent Medicaid, 93 percent Medicare, one percent Insurance, and one percent other managed care. Year two projections are identical to year one.

F. SUMMARY

Odyssey HealthCare of Marion County, Inc. (CON #9983) proposes the establishment of a new hospice program in Marion County, Hospice Service Area 3B. The applicant also has hospice programs in Hospice Service Areas 4B and 11.

The applicant has submitted two other applications to establish new hospice programs in this batching cycle. In addition to this proposal in Service Area 3B, it has submitted applications for new programs in Service Area 5B, Pinellas County and Service Area 6A, Hillsborough County.

The applicant is proposing total project costs of $550,488 for equipment, project development costs and start-up costs. The project does not involve any construction costs. After weighing and balancing all applicable review criteria, the following relevant factors are listed with regard to the establishment of a hospice program in Hospice Service Area 3B: Need/Access: • Zero net need was published for Hospice Service Area 3B. The

applicant is applying to establish a hospice program in Hospice Service Area 3B in the absence of published numeric need.

• The applicant contends that patients not being admitted into hospice within 48 hours. The admission information submitted by the applicant could not be confirmed.

• The applicant also states that cancer patients aged 65 years and older

are consistently underserved in Subdistrict 3B. The applicant states that from 2001 to 2006 The Hospice of Marion County, Inc. has consistently served fewer cancer deaths over the age of 65 compared to those served by the State of Florida. The applicant also states that the number of Marion County residents over the age of 65 years dying

28


of cancer has steadily been increasing. However, no documentation was presented to demonstrate that this population is underserved.

Quality of Care: • Within Florida, Odyssey has two licensed Medicare and Medicaid

certified hospice programs. In the past three years the applicant has had one confirmed administrative complaint.

Financial Feasibility/Availability of Funds: • The applicant has an adequate short-term position and a strong long-

term position.

• Funding for this project and all capital projects should be available as needed.

• This project appears to be financially feasible.

Medicaid/Charity Care: • The applicant states it has consistently provided care to all patients in

need of its services, including the Medicaid/charity/indigent populations. The applicant also states that 60 percent of its FY 2006 non Medicaid net revenue was Medicaid. Approximately 1.2 percent of services provided were to indigent/charity patients. Schedule 7A states in year one projected revenues are as follows two percent self-pay, three percent Medicaid, 93 percent Medicare, one percent insurance, and one percent other managed care. Years one and two have identical projections.

Architectural: • The applicant is requesting approval to establish a new hospice

program rather than development of a freestanding inpatient hospice facility. There are no construction costs and methods associated with this proposal.

G. RECOMMENDATION Deny CON #9983.

29


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: Karen Rivera Health Services and Facilities Consultant Supervisor Certificate of Need Jeffrey N. Gregg

Chief, Bureau of Health Facility Regulation

30