state agency action reportahca.myflorida.com/mchq/con_fa/batching/pdf/10174.pdf · palm beach...

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number

VITAS Healthcare Corporation of Florida/CON #10174

100 South Biscayne Boulevard, Suite 1300

Miami, Florida 33131

Authorized Representative: Michael M. Hansen

Senior Vice President - Field Services

(305) 350-6969

2. Service District/Subdistrict

Hospice Service Area 9C (Palm Beach County)

B. PUBLIC HEARING

A public hearing was requested and held on behalf of Hospice of Palm

Beach County regarding the applicant’s proposed establishment of an

eight-bed freestanding inpatient hospice facility in Hospice Service Area

9C, Palm Beach County. The public hearing was held on Friday,

January 4, 2013 at the Quantum Foundation’s Community Meeting

Room in West Palm Beach. Andrea Stephenson, Executive Director of

the Treasure Coast Health Council conducted the hearing.

Karl Acuff of the Law Office of Karl David Acuff, representing Hospice of

Palm Beach County, spoke in opposition to the project. Mr. Acuff stated

the applicant provided no evidence to demonstrate a freestanding facility

would be more cost effective than contractual arrangements with existing

hospitals and nursing homes, as required by Rule 59C-1.0355(7), Florida

Administrative Code (F.A.C.). He questioned the need for the project,

citing low occupancy rates in Palm Beach County’s existing hospice beds.

Mr. Acuff indicated VITAS overstated current inpatient admissions in the

service area, with numbers that would require doubling the inpatient

census record in order to meet projected need. He stated the three

inpatient facilities VITAS cited as evidence of their ability to build the

proposed facility were acquired from existing hospice providers.

Mr. Acuff stated that VITAS is a significant provider of acute service care

to hospice patients through continuous home care, and the application

CON Action Number: 10174

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neglected to address VITAS’ current role providing hospice care in this

capacity. He also indicated the application lacked details on the

admission process for the new facility. Mr. Acuff stated the facility will

include only a cold kitchen, with no staff provided for the food prep area.

He also stated that “there is no licensed dietician on staff, while (VITAS)

alludes to nurses being included in that line, that is a separate and

distinct requirement under the facility rules. While you can have nurses

provide dietary consulting for a standard hospice program, when it

comes to inpatient, Rule 58A–2.019 F.A.C., requires a licensed

dietician”.1 Mr. Acuff concluded by saying the applicant failed to prove

that a freestanding facility was the most efficient use of funds, and

asserted VITAS’ interest in the project was motivated by a desire to

acquire a larger share of the hospice market, instead of meeting a need

for this service.

Mr. Acuff also submitted an 11-page document at the hearing. This

document indicates that VITAS failed to document that the proposed

facility will be more cost-efficient than contractual arrangements because

it did not show the cost for contracted inpatient beds in a hospital or

nursing home. It concludes that “without VITAS disclosing these costs or

incorporating the six million dollar project costs, there is no way” the

Agency may determine if the proposed facility is cost efficient. Mr. Acuff

provides evidence of declining death rates in Palm Beach County, with

fewer terminally ill residents requiring hospice care during the last six

years. He contends there is under-utilization of current hospice beds in

Palm Beach County, and provides a count of beds and bed days of nine

facilities to support this statement. Mr. Acuff states VITAS’s claim that

approximately three to five percent of hospice patients require inpatient

care at some point during their hospice ‘stay’ is incorrect in that far

greater numbers of hospice patients require inpatient care, but only for a

short period of their total stay, which results in a smaller need

projection. Mr. Acuff states that “the applicant’s historical provision of

inpatient care in Palm Beach County at only a two percent rate” and “the

applicant’s overall national experience of about a three percent rate”. He

concludes that VITAS’s projected utilization would be realistic only if the

very upper limit (five percent) of the asserted planning range is chosen.

1 Rule 58A-2.109 F.A.C., requires that the hospice provide consultation by a licensed dietitian but

does not require that the hospice directly employ a licensed dietitian.


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There were three speakers in support of the project. Michael Hansen,

Senior VP of Field Services for VITAS stated that VITAS’ has an extensive

history of hospice service, both nationally and in Palm Beach County,

where they serve approximately 500 patients per day. He stated that the

need for hospice services in Palm Beach County was clear, and debate

over need focused on a small percentage point of disagreement. Mr.

Hansen provided four maps to demonstrate need for a facility in the

southern end of Palm Beach County. The first map used U.S. Census

data to display the population aged 65 and over of Palm Beach County,

showing greater density for this age group in the southern region of the

county. The second map displayed current inpatient hospice units in

Palm Beach County, showing a preponderance of existing facilities in the

northern end of the county. The third map displayed public transit

patterns in Palm Beach County, demonstrating better public transit for

those aged 65 and over in the southern end of the county. The final map

plotted VITAS patient distribution over the past year, showing a

concentration of patients in the southern portion of the county. Mr.

Hansen stated that due to the scarcity of inpatient hospice facilities in

the southern end of the county, and the high cost of contract beds, the

need for the project was justified. He concluded by stating the project

planned to be co-located for training purposes and would house an end-

of-life community resource center.

Mary Zalaznik, Senior VP of VITAS Hospice Operations addressed the

issue of continuous home care provided by VITAS to the community of

Palm Beach County. She stated that VITAS did not intend to discontinue

this needed service; however, the proposed inpatient facility was needed

because continuous home care cannot always provide the level of care

required by the most acute patients. Ms. Zalaznik stated that regarding

contract beds available to VITAS in local hospitals, several problems

existed. She stated contract beds are not always available, and when

they are, patients are cared for by existing facility staff, at ratios

determined by the host facility. Ms. Zalaznik stated quality of care may

suffer due to facility patient/nurse ratios and the lack of hospice trained

staff. She concluded by stating the proposed project would provide a 1-4

nurse/patient ratio, trained hospice staff, and improve access to

inpatient hospice services for those in the southern region of Palm Beach

County.

Terry Rigsby, attorney with Pennington, Moore, Wilkinson, Bell &

Dunbar, P.A., stated that in addition to the applicant, Hospice of Palm

Beach County (HPBC) and Hospice by the Sea serve Palm Beach County.

He stated that each of these providers has a freestanding inpatient

facility (36 beds and 30 beds respectively). Mr. Rigsby stated that both of

these facilities are east of I-95, despite 70 percent of residents residing

west of I-95, where the applicant intends to locate the proposed facility.

Mr. Rigsby stated that HPBC is a nonprofit corporation of which


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Spectrum Health is the sole member, and is supported by two local

foundations, with assets of approximately fifteen and eighty million

dollars respectively. He further stated that HPBC dominates subdistrict

9-C with approximately 65 percent market share. Additionally, in the

last fiscal year HPBC reported 5.7 million dollars in revenues in excess of

expenses.

Mr. Rigsby stated that HPBC operates six inpatient care centers in Palm

Beach County, one freestanding, and five affiliated with community

hospitals. HPBC has exclusive contracts with these five hospitals,

strengthening further domination of the local hospice market. Mr.

Rigsby stated the applicant is asking the state for the opportunity to

provide “the same effective, efficient and appropriate care that HPBC is

allowed to provide”. He concluded by stating that a freestanding hospice

facility provides ideal care to patients and families, and that HPBC

previously acknowledged in a filing with the Agency that contract bed

care is not ideal.

Mr. Rigsby also submitted written material in which he expanded on the

financial aspect of HPBC, noting high salaries paid to CEO’s during a

time when “HPBC laid off nearly five percent of its workers”. He cited

this as evidence that HPBC was not justified in an attempt to block

competitors due to anticipated financial impact. Mr. Rigsby provided

extensive documentation in the form of financial, tax, news articles, and

previous CON applications to support statements made during the

hearing regarding HPBC.

Letters of Support

Included in the application were 39 unduplicated letters of support

(Appendix 2-Community Letters of Project Endorsement). All were

signed, 37 were dated between October 26 and October 31, 2012, and 34

indicated a Palm Beach County, Florida address. Thirty three were of a

form letter variety. Common themes in the support letters were that the

project would create necessary jobs that will facilitate care to our

terminal citizens and their families and “presently the hospice care needs

of our community in this very specialized “home like” setting are

underserved”.

Stanton Collemer, Chief Financial Officer, The Center for Family Services

of Palm Beach County, Inc., stated that, “We are fortunate to have Vitas

in our community,… they are very community oriented and always going

above and beyond to meet the needs in our community”. Arlene Kaplan,

Ph.D., MSW, Coordinator of the Field Education Program and Assistant

Director, School of Social Work, Florida Atlantic University, stated that

VITAS Innovative Hospice Care (Palm Beach County) has been a field

placement site for her school’s student interns since 2006. Dr. Kaplan


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also stated that VITAS has provided educationally enriching field

placements for 20 graduate social work students and VITAS is committed

to furthering education and training of social workers who will work with

terminally ill clients and their families.

Cathy Bowers, MSA, NCG, President, National Patient Advocate, Inc.,

stated in her support letter that as a nationally certified guardian, she

has had experience with patients who are very ill, near death and

eventually pass away. She indicated that as the Palm Beach County

population ages, it is critical that inpatient hospice care is expanded.

Michael Dane, Executive Director, Florida Assisted Living Coalition,

stated that he, “cannot fathom another hospice provider more qualified

to identify the needs for this level of care”. Mr. Dane also stated that,

“only VITAS Innovative Hospice Care has the foresight, the vision, the

recognition to take this bold step for the right direction”.

A sample of individuals that signed the form letter variety letters were as

follows: Joan Williams, BSN, RN.C, Administrator, Homemakers and

Companions of Florida, Inc.; Olga Brunner, President, A Good Daughter,

Inc. (Member, National Association of Professional Geriatric Care

Managers); Sharon Cohan, LCSW, Patient Services Manager and Tracy

Navakas, Senior Campaign Manager, The Leukemia & Lymphoma

Society; Jaime Estremera-Fitzgerald, Chief Executive Officer, Area Agency

on Aging; Milka Santos, ACBSW, Vice President of Education and

Support Services, South Palm Beach County Chapter, National

Parkinson Foundation; Karen Harvey, Owner, Senior Transition

Solutions; Judi Christiano, Administrator, Heritage Park East/Assisted

Living Facility #5113; Danielle Hartman, MNM, President & CEO and

Risa Demato, Site Director-Weisman Delray Community Center, Ruth

Rales Jewish Family Services; Gloria Jacobs, Administrator, Senior Home

Companions Nurse Registry, Senior Home Companions, Inc.; Carolyn

Topper, LCSW, BCD, Personal People Care, Inc.; Barbara Curtis, Day

Center Manager, Louis and Anne Green Memory and Wellness Center,

Christine E. Lynn College of Nursing, Florida Atlantic University and

Rhonda Schroeder, President, Home Health Administrator, Elder

Alternatives.


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C. PROJECT SUMMARY

VITAS Healthcare Corporation of Florida (CON #10174), a Florida for-

profit corporation, proposes to establish a new, eight-bed freestanding

inpatient hospice facility in Hospice Service Area 9C (Palm Beach

County). The proposed inpatient hospice facility is to be co-located with

a community outreach and education center and a hospice program

administrative office. The proposed location will be up to 30 miles south

of the applicant’s existing facility-based inpatient unit (at Palms West

Hospital), in Palm Beach County, Florida.

The primary zip codes to be served are stated to be 33446, 33437,

33484, 33496 and 33434; additionally, zip codes 33436, 33426, 33473,

33472, 33498, 33433, 33444, 33445, 33483 and areas west of Interstate

(I)95 in 33487 and 33431 are expected to be secondary service areas2.

The applicant is licensed to operate hospice programs in Hospice Service

Areas 4A, 4B, 7A, 7B, 7C, 8B, 9C, 10 and 11 but has no freestanding

inpatient hospice facilities in Florida. VITAS states it has 36 inpatient

units nationwide, three of which are existing freestanding units.

Total project cost is $6,037,514. Costs covered are for land, building,

equipment, project development, financing and start-up. The project

involves 12,500 gross square feet (GSF) of new construction with new

construction costs of $2,573,254.

The applicant does not propose conditions on the project.

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, 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.

2 Per the United States Postal Service website at

https://tools.usps.com/go/ZipLookupAction!input.action, each of the applicant’s primary and

secondary service area zip codes correlate to one of the following Palm Beach County cities: Boca

Raton; Boynton Beach and Delray Beach.

https://tools.usps.com/go/ZipLookupAction!input.action


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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.

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, consultant Steve Love analyzed the

application in its entirety with consultation from financial analyst Everett

“Butch” Broussard, who evaluated the financial data and Said

Baniahmad of the Office of Plans and Construction, who reviewed the

application for conformance with the architectural criteria. Jessica Hand

provided the public hearing information.

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? Or does the project proposed seek beds or services in

excess of the fixed need pool? Rule 59C-1.008(2), Florida

Administrative Code.

The Agency does not publish need for inpatient hospice beds. Hospice

programs are required by federal and state law to provide hospice

patients with inpatient care when needed (42 Code of Federal

Regulations 418.108) and no more than 20 percent of a hospice’s total

patient days may be inpatient days per Section 400.609(4), Florida


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Statutes. Inpatient care may be provided through contractual

arrangements in hospitals and nursing homes, and is generally provided

on a short-term basis within the total hospice stay.

As previously stated, the applicant operates no freestanding inpatient

hospice facilities in Florida. Existing freestanding inpatient hospice

facilities in Hospice Service Area 9C are as follows: 30 inpatient hospice

beds operated in Boca Raton by Hospice by the Sea, Inc. and 36

inpatient hospice beds operated in West Palm Beach by Hospice of Palm

Beach County, Inc. In total, there are 66 licensed inpatient hospice beds

in Hospice Service Area 9C, as stated above. There are no CON approved

inpatient hospice facilities pending licensure in Hospice Service Area 9C.

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 January 2012, Hospice Service Area 9C’s total population was

1,332,348 persons. Palm Beach County is projected to grow by 7.16

percent reaching a total population of 1,427,808 by January 2017, as

shown below.

Hospice Service Area 9C

Palm Beach County Population

January 1, 2012 – January 1, 2017 Age Population

Group January 2012 January 2017 Increase Percent

Under 65 1,040,638 1,098,991 58,353 5.61%

65+ 291,710 328,817 37,107 12.72%

Total 1,332,348 1,427,808 95,460 7.16%

Source: Florida Agency for Health Care Administration Population Estimates 2010 to 2025, published

February, 2012.

As shown above, the service area’s population age 65 and over is

expected to increase at a much more rapid rate than the under age 65

population – 12.72 percent compared to 5.61 percent from January

2012 to January 2017.


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VITAS states that growth statistics indicate “modest” subdistrict

population growth and provides estimates from 2010 through 2035, in

the chart below.

Population Projections, Bureau of Economic and Business Research (BEBR)

2009 vs. 2011

Source: CON application #10174, Chart 3. The Palm Beach County Planning Division - Planning,

Zoning and Building Department, 2011 Population Allocation Model, Page 3 of 15, Table 3 at

http://www.pbcgov.com/pzb/Planning/population/2011/MODELDOC_Nov11.pdf.

VITAS also reports “steady” annual increases in patient average daily

census (ADC) trends over the past five years. The applicant’s “Chart 1

VITAS Average Daily Census Trend” yearly summary portion indicates an

ADC of 51 for the 12-month period ending November 2008 to an ADC of

(34) for the 12-month period ending November 20123. However, the

monthly total indicates an ADC of over 500 patients during the 12-month

period ending November 2012, compared to less than 400 during the

period ending November 2008.

3 Chart 1 is in CON application #10174’s charts section, which does not have page numbers.

http://www.pbcgov.com/pzb/Planning/population/2011/MODELDOC_Nov11.pdf


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Per the applicant, VITAS’ nationwide experience indicates that

approximately three to five percent of hospice patients will require

inpatient care at some point during their enrollment in a hospice

program. The applicant estimates that 15 to 25 of its service area

patients require inpatient hospice services on an average daily basis.

The applicant also states its existing hospital-based inpatient unit in the

north central portion of the county accommodates 12 patients. In

conclusion, the applicant indicates that should the project not be

approved, VITAS patients appropriate for inpatient hospice care will be

provided “service in contract beds, or remain in home care, both of which

situations may not optimally address the patient’s needs”.

Availability, utilization and quality of like services

Per the applicant, “the fact that 83 percent of the hospice inpatient beds

are located to the east of Interstate 95 implies that access for patients

and families to the west of that divider will likely be more difficult”. The

reviewer notes that the two licensed freestanding inpatient hospice

facilities in Palm Beach County are located east of I-95. The applicant

states a belief that the population residing in the southwestern portion of

the service area may encounter barriers in terms of easy access to

hospice inpatient services. The applicant offers a patient distribution

chart to account for its reported current situation.


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VITAS Healthcare Corporation of Florida (CON #10174)

Hospice Service Area 9C

Patient Distribution 12 Months Ending November 2012

Source: CON application #10174, Chart 4.

The applicant states letters of support indicate that residents in the

service area may encounter barriers regarding easy access to the

proposed services. These support letters were described in Part B-Public

Hearing/Letters of Support. The reviewer notes that while the support

letters endorse the project, they did not describe existing barriers in

access to hospice inpatient services.


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Medical treatment trends

VITAS states its experience indicates that hospice patients are often

referred and admitted at a very late stage in the disease process. A

stated result of this is that more patients are referred and admitted

directly from acute care settings and may be “actively dying”. The

applicant reports these circumstances can result in an increased need

for inpatient levels of care, stressing an already limited resource capacity

throughout Hospice Service Area 9C.

Market conditions

Existing freestanding inpatient hospice facilities in Hospice Service Area

9C were previously described. The applicant states a belief that the

current Palm Beach County freestanding inpatient hospice facility bed

capacities, at existing sites, are of a “relatively large scale” and that “the

community’s choice would be for service to be available in a more

intimate setting”. VITAS comments that a home-like setting is required

by CMS Conditions of Participation and indicates the project will provide

such a setting and augment it with an associated community outreach

center. The applicant states that this will become the model for inpatient

hospice services. In addition, VITAS states its projections indicate

patients served in the proposed facility will be admitted primarily from its

home care census when inpatient care is indicated by the plan of care.

2. Agency Rule Criteria and Preferences

a. Rule 59C-1.0355 (7) Florida Administrative Code states that the

Agency will not normally approve a proposal for construction of a

freestanding inpatient hospice facility unless the applicant

demonstrates that the freestanding facility will be more cost-

efficient than contractual arrangements with existing hospitals or

nursing homes in the service area. The application shall include the

following:

(1) A description of any advantages that the hospice program will

achieve by constructing and operating its own inpatient beds.

VITAS contends that advantages will be realized through project

approval, as described below.


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Patients receiving hospice services in the southern portion of

the county and to the west of I-95 will have an additional option

for home-like inpatient services in a more convenient and more

accessible location.

The cost in inpatient unit space within facilities has escalated to

a point such that “rental” space has become more expensive

than the cost of constructing a freestanding unit.

The reduction of space cost will allow the redirection of funding

into continued enhancement of high-quality patient and family

services.

The availability of the co-located resource center enhances the

community’s access to end of life education and support

resources.

(2) Existing contractual arrangements for inpatient care at

hospitals and nursing homes.

VITAS states it has a contractual arrangement with Palms West

Hospital for contract bed availability for patients requiring the

inpatient level of care. The applicant reiterates contract bed

arrangements are sub-optimal in terms of patient care and hospice

program staff productivity. The applicant reports in the current

situation, patients are placed in various locations within a

contracted facility and are often cared for by separate clinical

teams, often not specifically trained in end of life hospice protocols.

VITAS reiterates that contract bed rates consume “an inordinate

percentage” of government reimbursement rates and indicates that

it recently was unable to secure a reasonable rental price in the

southern portion of Palm Beach County, as the per day rate was

beyond $390.00 per day (approximately 60 percent of the Medicare

inpatient per day reimbursement rate) at full occupancy4. The

applicant indicates this creates financial burdens for hospice

programs and the dispersion of patients throughout these facilities

decreases the efficiency of hospice caregivers attending to those

patients. The reviewer notes the applicant does not offer a side-by-

side description or other itemization of expected savings to be

4 This is from CON application #10174, page 3, where the applicant indicates “space rental expense

exceeds the real estate funding costs” of less than $100.00 per patient bed day for the freestanding

facility’s year two.


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realized from the project. The reviewer also notes the application

does not include the nursing homes that the applicant contracts

with for inpatient care. VITAS does not demonstrate that the

proposed freestanding facility will be more cost-efficient than

contractual arrangements with existing hospitals or nursing homes

in the service area, as required by Rule 59C-1.0355(7) F.A.C.

(3) Anticipated sources of funds for the construction.

VITAS indicates that the proposed project will be funded by

working cash flows of the applicant and its parent organization –

VITAS Healthcare Corporation.

b. Rule 59-1.0355(8) Florida Administrative Code: Semi-Annual

Utilization Reports. Each hospice program shall report utilization

information to the Agency or its designee on or before July 20th of

each year and January 20th of the following year.

The applicant does not directly respond to this rule. However, VITAS

regularly submits semi-annual utilization reports as required by the

above rule. The Agency’s semi-annual utilization reports do not require a

hospice to report inpatient hospice days.

3. Statutory Review Criteria

a. Is need for the project evidenced by the availability, quality of care,

accessibility and extent of utilization of existing health care

facilities and health services in the applicant’s service area?

ss. 408.035(1)( a) and (b), Florida Statutes.

There are three licensed hospice providers in Hospice Service Area 9C, as

follows:

Vitas Healthcare Corporation of Florida (the applicant);

Hospice by the Sea, Inc.; and

Hospice of Palm Beach County, Inc.

Hospice by the Sea, Inc. operates a 30-bed inpatient hospice facility in

Boca Raton and Hospice of Palm Beach County, Inc. operates a 36-bed

inpatient hospice facility in West Palm Beach. VITAS reiterates its belief

that the two freestanding inpatient hospice facilities in Hospice Service

Area 9C may be perceived by patients and families as institutional, “in

their feel and operation”. Per the applicant, this may be due to their bed

capacity (30+). The reviewer notes project support letters stated hospice


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care in the community, in a “home like” setting, is underserved; however,

these letters did not specifically state hospice care services in the area

were institutional “in their feel or operation”. The applicant states that

its smaller facility will offer a more home-like and personal environment

for the comfort of patients and families it serves.

VITAS identifies the following factors to demonstrate need for the project:

Inpatient units that are owned and operated by hospice providers

embrace the hospice philosophy and approach to patient care;

Acute care hospitals and nursing homes have fundamentally different

missions from hospices, and those differences are reflected in the

skills and approaches of the professionals who staff each type of care

setting;

Dedicated inpatient units, especially those that are freestanding, are

designed to support family participation and presence in a “home like”

comfortable setting; and

The proposed freestanding unit is multi-functional in nature,

providing a care setting designed specifically for end of life care,

containing a destination resource center for end of life education and

services, and will include a small hospice administrative office

providing access to additional on-site hospice-experienced staff

available to assist and cross-train.

VITAS reports an average daily census of over 500 patients in Palm

Beach County. VITAS also reports that approximately 90 percent of

these patients are Medicare and Medicaid recipients, for which VITAS

describes compensation at a fixed per diem rate. As stated earlier, the

reviewer notes VITAS does not provide a list of itemized costs to

demonstrate anticipated savings as a result of this project.

VITAS indicates that the two existing freestanding inpatient hospice

facilities in Palm Beach County are located east of I-95. This is

confirmed by the reviewer. The applicant also reports that seven

hospital-based inpatient hospice units are located in Palm Beach

County. Below is the applicant’s chart to account for the two existing

freestanding inpatient hospice facilities and seven hospital-based

inpatient hospice units in Palm Beach County. These facilities are listed

in order of location from northern to southern Palm Beach County.


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Hospice Service Area 9C-Palm Beach County

Existing Freestanding Inpatient Hospice Facilities

and Hospital-Based Inpatient Hospice Units

Inpatient Unit Name Street Address City Zip Code

Jupiter Medical Center 1201 S Old Dixie Hwy Jupiter 33458

Palm Beach Gardens Medical Center 3360 Burns Road Palm Beach Gardens 33410

Hospice of Palm Beach County 5300 East Avenue West Palm Beach 33407

Good Samaritan Medical Center 1309 North Flagler Drive West Palm Beach 33401

Palms West Hospital 13001 Southern Blvd Loxahatchee 33470

JFK Medical Center 5301 South Congress Ave Atlantis 33462

Bethesda Memorial Hospital 2815 South Seacrest Blvd Boynton Beach 33435

Delray Medical Center 5352 Linton Boulevard Delray Beach 33484

Hospice by the Sea 1531 W Palmetto Park Blvd Boca Raton 33486


Note: The reviewer added zip codes and used the facility address per the Agency’s licensure records.

The applicant indicates there are 88 hospital-based inpatient hospice

beds and 66 licensed hospice beds in the existing freestanding hospice

facilities in Palm Beach County. This totals 154 beds. The applicant

indicates 26 of these 154 beds (or approximately 17 percent) are located

west of I-95.


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VITAS reports the Palm Beach County Planning and Zoning Department

has determined Palm Beach County has a population of 1,320,134, with

approximately 919,783 (approximately 69.67 percent of the county’s

residents) residing to the west of I-95. Below is the applicant’s chart to

account for Palm Beach County’s age 65+ resident population by zip

code.

Palm Beach County, Florida Age 65+ Resident Population by Zip Code


Per VITAS, Chart 2 (above) and Chart 4 (previously shown) demonstrate

the need for the proposed project, “in the southwest part of the county”.

It is restated here that the applicant offers no conditions for this project.

Further, the reviewer notes that geographically, the southwest part of

Palm Beach County is relatively unpopulated, compared to more eastern

and coastal parts of the county. Large portions of south-southwestern

Palm Beach County are comprised of the following: Arthur R.

Marshall/Loxahatchee National Wildlife Refuge; Browns Farm Wildlife

Management Area; Stormwater Treatment Areas; Everglades Agricultural

Area and the Holey Land Wildlife Management Area, per the website at

http://www.floridacountiesmap.com/palm_beach_county.shtml.

http://www.floridacountiesmap.com/palm_beach_county.shtml


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However, the applicant’s stated primary and secondary zip code service

area, in extreme southeastern Palm Beach County, highly correlate with

much more dense populations.

VITAS states that it has inpatient service contracts for hospice patients

with the following seven Palm Beach County hospitals – Boca Raton

Regional Hospital, Delray Medical Center, Good Samaritan Medical

Center, JFK Medical Center, St. Mary’s Medical Center, Wellington

Regional Medical Center and West Boca Medical Center. The applicant

indicates the dispersal of patients throughout contracting hospitals and

nursing facilities creates difficulties and compromises productivity for

hospice staff such as massage therapy, social workers, chaplains,

bereavement facilitators and hospice physicians. The applicant states

though it contracts for inpatient hospice care with “ a number of” Palm

Beach County nursing homes, a hospice cannot use nursing homes that

employ licensed practical nurses as charge nurses because nursing staff

requirements for hospice care require the charge nurse to be a registered

nurse. VITAS did not provide the names of the nursing homes it

contracts with for inpatient hospice care.

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(1)(c), Florida Statutes.

The applicant states its parent, VITAS Healthcare Corporation, was

awarded its first Florida license in 1980 and that VITAS Healthcare

Corporation of Florida was awarded its license in 2002. The reviewer

confirms the applicant was first licensed for hospice services in Palm

Beach County in December 2002. The applicant’s current license was

effective November 13, 2011 and expires November 12, 2013.

Per the application, VITAS serves over 4,000 patients and their families

in nine Florida hospice service areas. The applicant also reports that

the parent provides high-quality, comprehensive, standard-setting

hospice and palliative care services to over 14,000 patients nationwide,

including a full range of patient care protocols, multi-disciplined team

practices and recognized staff training.

Although not discussed by the applicant, the reviewer notes that VITAS

Innovative Hospice Care of the Palm Beaches, 1901 S. Congress Avenue,

Boynton Beach, Florida 33426 appears on the “Find A Member” website

of the National Hospices and Palliative Care Association

(http://www.nhpco.org.). The applicant’s previously stated primary

service area zip codes pursuant to this project appear on the “zip codes

serviced” list of this website.

http://www.nhpco.org/


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Although not discussed by the applicant, the reviewer notes that VITAS

Healthcare Corporation of Florida participated in the Agency’s Family

Evaluation of Hospice Care Satisfaction Survey, April through June

2012, attaining a five-star rating on each of the five questions in the

survey. Respondents ranged from a low of 357 to a high of 485. The

reviewer notes the applicant had the most respondents for each of the

five survey questions, when compared to the respondent count for each

of the same five survey questions submitted by the other licensed

hospice providers in Palm Beach County. The five-star rating is the

highest attainable and indicates respondents were 90 to 100 percent

satisfied with the hospices’ performance.

Agency records indicate VITAS had four substantiated complaints

statewide (encompassing nine hospice service areas) during the three-

year period ending January 23, 2013. A single complaint can encompass

multiple complaint categories. The substantiated complaint categories

were quality of care/treatment (4), administration/personnel (2), nursing

services (1), and resident/patient/client assessment (1).

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(1)(d), Florida Statutes.

The financial impact of the project will include the project cost of

$6,037,514 and incremental operating costs in year two of $1,538,860.

The applicant provided audited financial statements for the periods

ending December 31, 2011 and 2010. These statements were analyzed

for the purpose of evaluating the applicant’s and parent’s ability to

provide the capital and operational funding necessary to implement the

project.

Short-Term Position:

The applicant’s current ratio of 1.1 indicates current assets are slightly

greater than current obligations, but is below average and a slightly weak

position. The ratio of cash flow to current liabilities of 3.1 is well above

average and a strong position. Overall, the applicant has an adequate

short-term position (see Table 1 below).


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Long-Term Position:

The ratio of long-term debt to net assets of 0 indicates the applicant has

no long-term debt, a strong position. The ratio of cash flow to assets of

24.3 percent is above average and a strong position. The most recent

year had an operating income of $66,317,556, which resulted in a 17.4

percent operating margin. Overall, the applicant has a strong long-term

position (see Table 1 below).

Capital Requirements:

Schedule 2 indicates total capital projects of $7.0 million which consist

of the CON application subject to this review, current year capital

expenditures for Florida and non-specified capital expenditures.

Available Capital:

Funding for this project will be provided by the applicant. Based on our

review, the applicant has available working capital of $2.8 million and

cash flow from operations of $63.5 million. The applicant appears to

have sufficient capital to fund this project and the entire capital budget.

Staffing:

Schedule 6 indicates, by September 2015 (the first year of the proposed

project) and by September 2016 (the second year of the project), the

applicant forecasts for this project a constant 14.72 FTEs. The

breakdown is as follows: 3.8 FTEs secretary; 1.0 FTEs team manager; 0.5

FTEs physicians category-other; 5.6 FTEs registered nurses [RNs]; 1.4

FTEs nurses’ aides; 0.5 FTEs nursing category-other; 1.92 ancillary

services-vac/sick all and 1.0 FTEs social services category-other. Notes

to Schedule 6 indicate the proposed staff will be augmented when needed

by the applicant’s existing hospice program staff dietary services are

stated to be included in the nursing category.

VITAS indicates that it employs over 5,000 professional and management

staff in Florida and “over 300 staff members in Palm Beach County

encompassing patient care, administrative and management personnel”.

The applicant does not discuss staff recruitment and retention

mechanisms or practices.

Conclusion: Funding for this project should be available as needed.


21

TABLE 1

VITAS Healthcare Corporation of Florida

CON application # 10174

12/31/2011

Current Assets (CA) $23,144,885

Cash and Current Investment $0

Total Assets (TA) $260,917,116

Current Liabilities (CL) $20,364,278

Total Liabilities (TL) $20,364,278

Net Assets (NA) $240,552,838

Total Revenues (TR) $382,024,540

Interest Expense (IE) $0

Operating Income (OI) $66,317,556

Cash Flow from Operations (CFO) $63,467,807

Working Capital $2,780,607

FINANCIAL RATIOS

12/31/2011

Current Ratio (CA/CL) 1.1

Cash Flow to Current Liabilities (CFO/CL) 3.1

Long-Term Debt to Net Assets (TL-CL/NA) 0.0

Times Interest Earned (OI+IE/IE) N/A

Net Assets to Total Assets (NA/TA) 92.2%

Operating Margin (OI/TR) 17.4%

Return on Assets (OI/TA) 25.4%

Operating Cash Flow to Assets (CFO/TA) 24.3%

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

proposal? ss. 408.035 (1)(f), Florida Statutes.

For year two of operations, the applicant projected the following

percentage of total patient days by group: Medicare at 88.9 percent,

Medicaid at 7.9 percent, self-pay/charity at 2.2 percent, and commercial

insurance at 1.1 percent.

The applicant indicated on Schedule 7A that it intends to provide daily

hospital service (general inpatient) for which the Department of Health

and Human Services sets rates. The Federal rate was calculated using

the Florida Wage Index for Medicare Hospice payments of 0.8705 and

inflated through September 2016. The average price adjustment factor

used was 2.83 percent per year based on the new CMS Market Basket

Price Index as published in the 3rd Quarter 2012 Health Care Cost

Review.


22

Estimated patient days for each level of service from Schedule 5, year

two, 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 Table 2 below.

The applicant’s projected gross revenue was 4.84 percent, or $83,105,

less than the calculated gross revenue. Understating revenues is a

conservative approach, and the difference in revenue projected is not

deemed material and therefore considered reasonable.

Incremental operating profits from this project are expected to increase

from $34,844 in year one, to $90,457 in year two.

Conclusion: This project appears to be financially feasible.

HOSPICE REVENUE TABLE 2

CON application #10174--VITAS Healthcare Corporation of Florida

Wage Index for Palm Beach County (0.8705)

Wage

Component Wage Index

Adjusted

Wage

Amount

Unadjusted

Component

Payment

Rate

Routine Home Care $103.77 0.8705 $90.33 $47.26 $137.59

Continuous Home Care $605.65 0.8705 $527.22 $275.81 $803.03

Inpatient Respite $84.56 0.8705 $73.61 $71.66 $145.27

General Inpatient $430.04 0.8705 $374.35 $241.80 $616.15

Payment

Rate

Inflation

Factor

Inflation

Adjusted

Amount

Patient Days

Year 2,

September

30, 2016

Calculated

Gross

Revenue

Routine Home Care $137.59 1.106 $152.17 0 $0

Continuous Home Care $803.03 1.106 $888.11 0 $0

Inpatient Respite $145.27 1.106 $160.66 0 $0

General Inpatient $616.15 1.106 $681.43 2,644 $1,801,705

Total 2,644 $1,801,705

From Schedule 7 $1,718,600

Difference

-$83,105

Percentage difference -4.84%


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

cost-effectiveness? ss. 408.035(1)(e) and (g), Florida Statutes.

This application is for an existing hospice program provider in Hospice

Service Area 9C to build a new freestanding, eight-bed inpatient hospice

facility in Palm Beach County. There are currently two freestanding and

seven hospital-based (of which the applicant is one) hospice inpatient

units in Palm Beach County. Therefore, this project is not offering a new

choice of hospice program providers in the service area. The project is

proposing a freestanding inpatient hospice facility for a current hospice

program provider.

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 1.1 percent of its

patient days from managed care/commercial insurance payers with 96.7

percent of patient days expected to come from fixed price government

payer sources (Medicare and Medicaid), with the remaining 2.2 percent

as self-pay/charity.

With the large majority of patient care being provided from fixed price

government payer sources, this project is not likely to have any

discernible positive impact on price based competition to promote cost

effectiveness. As providers offer new or enhanced services to patients

and families as a means to compete on quality measures, cost-

effectiveness would be impacted since the new or enhanced services

would be offered despite the large percentage of fixed priced government

payers. In other words, the potential exists for new or enhanced services

to be provided for the same federal and state dollars.

Conclusion: This project is not likely to result in price-based

competition.

f. Are the proposed costs and methods of construction reasonable?

Do they comply with statutory and rule requirements? ss. 408.035

(1)(h), Florida Statutes; Ch. 59A-4, Florida Administrative Code

The proposed building will be dedicated to end of life care resulting in a

multi-functional facility. This facility is designed as a one-story 12,500

square foot building, with the patient care segment of approximately

9,000 square feet with separate entry. The construction type is listed in

the narrative as Florida Building Code (FBC) Type II-B, National Fire


24

Protection Association (NFPA) Type II (0,0,0) and is fully sprinklered.

These construction types with sprinkler are adequate for size and type of

occupancy for the proposed facility.

Patient rooms are arranged in two four-room segments separated by a

nurse station and required support spaces. The main entrance, lobby,

dining, dietary and food serving area are located in the central part of the

building. The community center, administrative areas, and public

services are in a separate section and will be identified by exterior

signage, designed with its own entrance and reception hall. The plans

indicate that the building will be sub-divided into three smoke

compartments.

All beds are located in private rooms which exceed the minimum space

requirements of the FBC. As designed, the rooms provide ample space to

accommodate family members with access to outdoor private patios. All

patient rooms are provided with a private toilet room attached. The

project narrative indicates and it appears that all patient bedrooms and

toilet rooms will be accessible.

All required functional spaces appear to be provided and are adequately

sized. The common area of the patient care segment will include a

massage room and an aroma-therapy and meditation room with outdoor

access.

The plans are schematic and will require further development, but there

are no major code deficiencies identified at this stage.

Based on the analysis of actual cost data of a similar project, the

estimated construction costs appear to be within the expected range.

The information provided in the project completion forecast appears to be

reasonable.

The architectural review of the application shall not be construed as an

in-depth effort to determine complete compliance with all applicable

codes and standards. The final responsibility for facility compliance

ultimately rests with the owner.


25

The Agency does not require any further plan reviews concerning this

project for hospice licensure; however, the Agency will provide a formal

review of construction documents for any owner who wants to insure

code compliance.

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(1)(i), Florida Statutes.

Hospice programs are required by federal and state law to provide

hospice patients with inpatient care when needed (42 Code of Federal

Regulations 418.108). Hospice care also must be provided regardless of

ability to pay and regardless of age, race, religion, sexual orientation,

diagnosis, payer source or financial status.

VITAS states it has consistently admitted and provided care to patients

irrespective of their ability to pay. Per the applicant, it has provided for

the medically indigent in excess of $17,000,000 in patient care on a year

to date basis in 2012 and $7,000,000 of that amount was provided

within the service area in charitable assistance for Medicaid and

medically indigent patients.

VITAS expects total patient days of 2,429 in year one (ending September

2015) and 2,644 in year two (ending September 2016), per Schedule 7A.

The majority of patient days, both years, are attributed to Medicare

patient days.

VITAS Healthcare Corporation of Florida

Self-Pay, Charity and Medicaid Patient Days

12 Months Ending September 2016

Payer Source Patient Days Percentage

Self-Pay 57 2.16%

Charity* 0 0.00%

Medicaid 208 7.87%

Total Patient Days 2,644 100.0% Source: CON application #10174, Schedule 7A. Note: * The applicant’s Schedule 7A does not indicate a charity patient day category or count. However, notes

to Schedule 7A state that the applicant’s current and projected experience is to provide two percent

of patient care revenue as charity.

Schedule 7A for year one ending September 2015, shows the applicant

projects patient days by payer as follows: self-pay 2.22 percent; Medicaid

7.86 percent; Medicare 88.80 percent and commercial insurance 1.11

percent. For year two ending September 2016, the estimated patient

payer mix is: self-pay 2.16 percent; Medicaid 7.87 percent; Medicare

88.88 percent and commercial insurance 1.10 percent. The reviewer

notes year one totals 99.99 percent and year two 100.01 percent, which

is probably due to rounding estimates.


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F. SUMMARY

VITAS Healthcare Corporation of Florida (CON #10174), a Florida for-

profit corporation, proposes to establish an eight-bed freestanding

inpatient hospice facility in Hospice Service Area 9C (Palm Beach

County). The proposed freestanding inpatient hospice facility is to be

located up to 30 miles south of the applicant’s existing hospital-based

inpatient location (Palms West Hospital). VITAS provides primary and

secondary service area zip codes that are consistent with the following

Palm Beach County cities: Boca Raton; Boynton Beach and Delray

Beach.

Total project cost is $6,037,514. The project involves 12,500 GSF of new

construction and construction costs of $2,573,254.

The applicant does not propose conditions on the project.

Need/Access:

The Agency does not publish need for inpatient hospice beds. There

are two facilities with a total of 66 licensed inpatient hospice beds and

no CON approved freestanding hospice facilities or beds pending

licensure in Hospice Service Area 9C.

VITAS contends that population demographics and dynamics indicate

that the elderly population (age 65+) particularly toward the

southeastern portion of Palm Beach County coupled with no

freestanding inpatient hospice facilities west of I-95 justify the project.

VITAS states serving an ADC of over 500 patients in Palm Beach

County and estimates that based on its national experience, three to

five percent of its hospice patients will need inpatient services at some

point in their hospice service tenure. VITAS projects the potential

need for inpatient capacity for its Palm Beach County program is in

the range of 15 to 25 patients.

VITAS contends that medical trends indicate patients are often

referred or admitted into hospice at later stages of their terminal

illnesses, often calling for more inpatient services.


27

The applicant’s form letters of support state “presently the hospice

care needs of our community in this very specialized “home like”

setting are underserved”. VITAS contends that its eight bed facility

will provide a more intimate “home-like” setting than the existing

freestanding inpatient hospice facilities in Palm Beach County that

have licensed hospice bed capacities of 30 beds or more.

VITAS states that existing scatter-bed contractual arrangements with

local hospitals often result in a relatively wide dispersion of hospice

patients throughout a facility, leading to less cost-effective and less

efficient delivery of the full array of hospice services for VITAS patients

and their families.

The applicant states that existing scatter-bed contractual

arrangements with local nursing homes often do not meet inpatient

hospice requirements as they relate to Medicare Conditions of

Participation regarding nursing staff. However, the application does

not include VITAS’ existing contractual arrangements for inpatient

care at nursing homes.

VITAS does not demonstrate that the proposed freestanding facility

will be more cost-efficient than contractual arrangements with

existing hospitals or nursing homes in the service area.

Quality of Care:

VITAS maintains hospice programs nationally and in Florida, in

Hospice Service Areas 4A, 4B, 7A, 7B, 7C, 8B, 9C, 10 and 11. The

applicant was first licensed in Palm Beach County in December 2002,

with its current license set to expire on November 12, 2013.

The applicant provided a very brief discussion of its ability to provide

quality care.

Agency records indicate VITAS Healthcare Corporation of Florida had

four substantiated complaints during the three-year period ending

January 23, 2013. The substantiated complaint categories included

quality of care/treatment (4), administration/personnel (2), nursing

services (1) and resident/patient/client assessment (1).


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Financial Feasibility/Availability of Funds:

The applicant has an overall adequate short-term position and an

overall strong long-term position.

Funding for the project should be available as needed.

The project appears to be financially feasible.

The project is not likely to result in price-based competition.

Medicaid/Indigent/Charity Care:

Hospice programs are required by law to provide services to all who

seek them.

The applicant’s Schedule 7A indicates that Medicaid will account for

7.86 percent and 7.87 percent of the project’s total annual patient

days in years one and two, respectively. Notes to Schedule 7A

indicate the applicant expects “to provide two percent of the patient

care revenue as charity”.

Architectural:

The proposed fully sprinklered inpatient hospice facility meets all

Florida Building Code and National Fire Protection Association

standards.

All beds are located in private rooms which exceed the minimum

space requirements of the FBC.

The estimated construction costs appear to be within the expected

range and the project completion forecast appears to be reasonable.

G. RECOMMENDATION

Deny CON #10174.


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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

Jeffrey N. Gregg

Director, Florida Center for Health Information and Policy Analysis

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