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STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number

Manatee Memorial Hospital LP/CON #10179 1424 Laurel Road

Faber, VA 22938

Authorized Representative: Mr. Thomas Davidson

(434) 263-5107

2. Service District

District 6 (Hardee, Highlands, Hillsborough, Manatee and Polk Counties)

B. PUBLIC HEARING

A public hearing was not held or requested regarding the establishment of a 15-bed Level III neonatal intensive care unit (NICU) at Manatee Memorial Hospital located in Bradenton, Manatee County, Florida.

Manatee Memorial Hospital, LP included 18 unduplicated letters of support in the application’s Tabs D (five with the initial submission)

and 4 (13 in the omissions submission). Seventeen were dated during January 29, 2013 through March 25, 2013, and one (Dr. Bernard

Cartaya’s) letter was not dated.

Dr. Bernard Cartaya, Director of Neonatology, Sheridan Healthcare

Services, states that “as a provider of care to the newborns of this community, I can tell you that Level III neonatal care services are

desperately needed in Manatee County”. He also states that “currently parents of critically ill infants must make a journey of over 30 miles to the closest Level III NICU in a neighboring county”.

Cristian Chiritescu, MD, FAAP and Alina Chiritescu, MD, FAAP with Ellenton Pediatrics submitted a letter which states that “due to the lack

of Level III NICU services in Manatee County, high risk expecting

CON Action Number: 10179

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mothers have to seek expert care in another county”. This “often results in undue traveling, separation from family and support system, and unnecessary anxiety and stress during an already demanding time”.

Ten support letters were form letters signed by local medical professionals including seven pediatricians, six physicians specializing in

obstetrics and gynecology, and one advanced nurse practitioner. Several of the form letters were signed by multiple physicians. This letter

indicates that:

The absence of a Level III NICU in Manatee County has often resulted

in higher risk pregnant patients leaving to seek care in another county.

The distance, travel and separation from family and support network (sometimes including other children) produce additional stress during

a naturally stressful time.

Sometimes an infant born in Manatee County is transported to Level

III NICU facilities outside Manatee County; causing separation between mother and infant, as well as potential medical consequences

of transporting. This letter was also signed by Jennifer Bencie, MD, MSA, Administrator

with the Manatee County Health Department and Jessica Capote-Dishaw, MD, FAAP, Chief of Pediatrics with Manatee County Rural

Health Services.

One letter from a mother of an infant treated at Manatee Memorial

Hospital cites the quality of care experienced by her family. Another letter from a longtime Manatee County resident cites need for the project due to growing population trends. A medical student and Manatee

County resident states that her experience “behind the scenes” in local health facilities convinced her of the need for Level III NICU services in

Manatee County. Steve Dunn, Director, Strategic Business Services at All Children’s

Hospital, a Level III NICU provider in District 5 submitted a letter in opposition to the project. He states that the Agency’s need formula resulted in zero need for Level III NICU beds in District 6 for the July

2015 planning horizon and that current Level III bed capacity exists in District 6 and surrounding districts. Mr. Dunn concludes that “bed

expansion beyond AHCA’s demonstrated bed need formula only serve to further add to area health care costs by creating unneeded new bed capacity in a highly complex service and diluting patient volumes at

established Level III NICU facilities in the area”.


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C. PROJECT SUMMARY

Manatee Memorial Hospital, LP (CON #10179), an existing provider of Level II NICU care, is applying to establish a 15-bed Level III NICU at its facility located in Bradenton, Manatee County, Florida (District 6).

Manatee Memorial Hospital, LP, a wholly owned subsidiary of Universal Health System (UHS), Inc., operates Manatee Memorial Hospital, a Class

I general hospital licensed for 289 acute care, 24 adult psych, and six Level II NICU beds. The applicant indicates that it will add four beds to its six-bed Level II NICU in conjunction with this project.

The applicant commits to a condition to provide a minimum of 75.0

percent of the Level III NICU’s total annual patient days to the combination of Medicaid and charity patients.

The total project cost is estimated at $7,978,335. The project involves 10,516 gross square feet (GSF) of renovated construction and 1,292 GSF of new construction1. The project has a total construction cost of

$3,311,800.

D. REVIEW PROCEDURE

The evaluation process is structured by the certificate of need review criteria found in Section 408.035, Florida Statutes. These criteria form

the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an

applicant's capability to undertake the proposed project successfully is conducted by assessing the responses provided in the application, and independent information gathered by the reviewer.

Applications are analyzed to identify strengths and weaknesses in each

proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant best meets the review criteria.

Section 59C-1.010(3) (b), Florida Administrative Code, allows no

application amendment information subsequent to the application being deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the

representations in the application. This is attested to as part of the application in the certification of the applicant.

1 The Agency’s architectural review indicates the applicant’s narrative stated 10,822 GSF; numbers

above are from the applicant’s Schedule 9.


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As part of the fact-finding, the consultant Jessica Hand analyzed the application with consultation from the financial analyst Everett

Broussard, Bureau of Central Services, who reviewed the financial data and Said Baniahmad of the Office of Plans and Construction, who reviewed the application for conformance with the architectural criteria.

E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA

The following indicate the level of conformity of the proposed project with

the criteria and application content requirements found in Florida Statutes, sections 408.035, and 408.037, 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? Rules 59C-1.008(2) and 59C-1.042(3), Florida Administrative Code.

In Volume 39, Number 13, dated January 18, 2013 of the Florida Administrative Register, a fixed need pool of zero beds was published for

Level III NICU beds in District 6 for the July 2015 planning horizon.

District 6 has 120 licensed and 18 approved Level III NICU beds. The district’s existing beds are located in Hillsborough County; none are located in Manatee County. Lakeland Regional Medical Center, a Polk

County facility, has Exemption number E0900015 to establish an 18-bed unit. Lakeland Regional met the criteria in s. 408.036 (3) (l) F.S., to establish its program by exemption from CON review. Manatee Memorial

states intent to meet the required 10-bed Level II NICU unit size criterion to establish a Level III NICU. However, Manatee’s reported 2,088 live

births during the 12 months ending June 30, 2012, does not meet the exemption’s minimum requirement that a facility have 3,500 births during the previous 12 months. The applicant is applying outside of the

fixed need pool.

b. Regardless of whether bed need is shown under the need formula, the establishment of new Level III neonatal intensive care services within a district shall not normally be approved unless the average

occupancy rate for Level III beds in the district equals or exceeds 80 percent for the most recent 12-month period ending six months prior to the beginning date of the quarter of the publication of the

fixed need pool.


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As shown in the table below, the occupancy rate for District 6’s Level III NICU beds was 67.54 percent during the 12-month period ending June 30, 2012. Eighteen additional Level III NICU beds are approved for

Lakeland Regional Medical Center in Polk County.

Level III Licensed Neonatal Intensive Care Services District 6 July 2011-June 2012

Facility Beds County Total Occupancy

Brandon Regional Hospital 8 Hillsborough 58.44%

St. Joseph’s Hospital (+22-8/9/11) 49 Hillsborough 82.66%

Tampa General Hospital 58 Hillsborough 59.28%

University Community Hospital 5 Hillsborough 36.89%

TOTAL 120 67.54% Source: Florida Hospital Bed Need Projections & Service Utilization by District, January 2013 Batching Cycle.

c. Other Special Circumstances:

Manatee Memorial Hospital, LP states that the proposed project is necessary to assure residents of Manatee Memorial Hospital’s service

area access to Level III NICU services. The applicant states need for the project due to 10 “not normal” circumstances:

1. There is no existing provider of Level III NICU services in Manatee

County.

2. High outmigration levels of Manatee County Level III NICU qualified patients—Manatee Memorial indicates that 44.7 percent

(38 of the 85 total for these patients) were treated in other districts. The applicant also indicates that 26.0 percent (939 of 3,618 births) of Manatee County residents’ live births during the 12-month

period ending June 30, 2012 occurred in hospitals located outside District 6.

3. Manatee County’s neonatal mortality rate is higher than the state

average. The applicant’s Table 5, “Infant Mortality Rates 2007-2011” indicates Manatee County’s 2011 infant mortality rate was

9.2 per thousand compared to the state’s rate of 6.4 per thousand and Manatee County’s rate exceeded the state’s in each of these years. The reviewer confirmed this is correct based on Florida

Department of Health, Bureau of Vital Statistics data obtained at http://www.floridacharts.com.

4. Manatee Memorial Hospital and its UHS affiliate Lakewood Ranch Medical Center are the sole providers of OB services to Manatee County residents. Blake Medical Center, Manatee County’s other

acute care hospital does not provide OB services.

http://www.floridacharts.com/


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5. Manatee County’s rate of low birth weight births is lower than the state average2. This factor, combined with the higher mortality rate, suggests to the applicant that Manatee County’s neonates are

being adversely affected by risk factors that Manatee Memorial and other community agencies can positively impact if Manatee Memorial is approved for Level III NICU services.

6. A high number of babies are born to teen mothers in Manatee County, with rising rates of Neonatal Abstinence Syndrome—

babies born to drug addicted mothers. The Florida Department of Health, Bureau of Vital Statistics Annual Report 2011, Table B-6 indicates that 335 or 9.96 percent of Manatee County’s 3,362

births were by mothers under age 20. This compares to the state’s 8.17 percent of such births (17,430/213,237) during CY 2011.

7. Manatee Memorial Hospital delivers all of Manatee Rural Health Services’ babies. Manatee Rural Health Service is a Federally Qualified Health Center (FQHC) providing obstetric services to low

income and/or high risk pregnant women who cannot obtain care from private practice providers.

8. Manatee Memorial Hospital is the only Level II NICU service

provider in Manatee County. 9. Manatee Memorial Hospital is central to the infrastructure of

health services in Manatee County; Level III NICU services are needed as part of comprehensive care for a growing population.

10. A review of medical literature supports the need for Level III NICU

services at Manatee Memorial.

The applicant asserts that the above stated special circumstances are supported by a quantitative assessment of the service area and resident needs. Analyses of existing provider locations, population growth, and

demographic trends, as well as a review of medical literature, have been examined in order to estimate demand for Level III NICU services.

Manatee Memorial indicates that NICU Level III patient day volume has risen by 31.5 percent during the previous five years, percentage

occupancy has declined as beds have been added by the existing providers. The chart below shows the district’s utilization and bed counts during the previous five 12-month reporting periods ending

June 30, 2012.

2 The Florida Department of Health, Bureau of Vital Statistics Annual Report 2011, Table B-5 indicates that Manatee County had 53 resident live births with birth weights of less than 1500 grams

of its 3,362 total or 1.58 percent compared to the State’s 1.61 percent (3,433 of 213,237).


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District 6

Level III NICU Utilization

12-Month Reporting Periods Ending June 30, 2008 – June 30, 2012

Reporting Period #Beds Bed Days Patient Days Occupancy

2012 120 43,062 29,084 67.54%

2011 98 28,016 24,403 87.10%

2010 68 24,820 20,774 83.70%

2009 68 23,830 21,887 91.85%

2008 58 21,228 22,112 104.16% Source: Florida Hospital Bed Need Projections & Service Utilization by District, January 2009-2013.

As shown above, Level III NICU patient days decreased from 2008 to 2010, but increased by 40.0 percent from 20,774 for the 12 months ending June 2010 to 29,084 during the 12 months ending June 2012.

Manatee Memorial notes that the majority of the increase in patient volume occurred at St. Joseph’s Hospital with 14,115 patient days in 2012 compared to 10,596 in 2008 (a 33.2 percent increase) and Tampa

General Hospital with 12,583 patient days in 2012 and 8,598 in 2008 or an increase of 46.4 percent.

As demonstrated in the map below, there are four licensed and operational Level III NICU programs in District 6, all located in

Hillsborough County. Lakeland Regional Medical Center (Polk County) has Exemption #09000015 to establish an 18-bed Level III NICU.


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District 6 Licensed and Approved Level III NICU Providers and Manatee Memorial Hospital (CON application #10179)

Source: Microsoft MapPoint 2012.

The applicant cites outmigration of NICU Level III qualified neonates from

Manatee Memorial Hospital to facilities in neighboring counties as a key factor in evaluating need of NICU Level III services at Manatee Memorial

Hospital. Complications of outmigration underscore all 10 “not normal” circumstances cited above, which can be divided into three areas of concern: the central role Manatee Memorial Hospital holds as a provider

of OB services to Manatee County residents; demographic challenges unique to Manatee County mothers and infants; and the risks transport

to outside Level III NICU facilities presents to families and most importantly, fragile infants.


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Manatee Memorial Hospital, and its affiliate Lakewood Ranch Medical Center, are the only providers of OB care in Manatee County, delivering a combined total of 2,625 live births during the 12 months ending June

30, 2012. Additionally, Manatee Memorial Hospital provides OB services to all mothers enrolled in Manatee Rural Health Services, an FQHC that provides care to high risk women who cannot obtain OB care from

private practice obstetricians. The applicant states that as the only provider of Level II NICU care in Manatee County, Manatee Memorial

Hospital is experienced in providing care to high risk infants, and seeks to expand its services to patients requiring a higher level of care. Babies who weigh less than 1,000 grams and babies that receive a complex

medical intervention are counted as qualifying for Level III NICU services by the applicant.

The applicant states that during the 12-month period ending June 30, 2012, 85 Manatee County Level III NICU eligible patients were discharged

from Florida hospitals. The chart below illustrates discharges by destination for these patients, with 38 of the 85 infants discharged from facilities outside of District 6.

Patient Destination

Manatee County Level III NICU Eligible Patients

12-Month Period Ending June 30, 2012 Hospital Discharges Percent of Discharges

Manatee Memorial Hospital 33 38.8

Lakewood Ranch Medical Center 2 2.4

Tampa General Hospital 12 14.1

Subtotal District 6 Hospitals 47 55.3

All Children’s Hospital 16 18.8

Sarasota Memorial Hospital 19 22.4

Bayfront Medical Center 3 3.5

Subtotal Other Districts’ Hospitals 38 44.7

Grand Total 85 100.0 Source: CON application #10179, Table 3.

The applicant asserts the population of Manatee County mothers and infants present health care needs justifying a high level of care by the

applicant. Citing the March 2007 publication Health Needs Assessment of Manatee County, the applicant states that:


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Approximately 2/3 of Manatee County mothers obtained prenatal care during the first trimester, down from ¾ in the 1990’s. Overall, the

number of mothers who receive late or no prenatal care is higher for Manatee County residents than the state average. The reviewer notes that during CY 2011, 73.7 percent of Manatee County mothers

obtained prenatal care during the first trimester compared to the state’s 80.3 percent.3

Pre-term births (under 37 weeks gestation) accounted for roughly 13 percent of 2007 Manatee County births.

The infant mortality rate in Manatee County is higher than the state average, and has risen while the state average declined during the

2007-2011 time period. The neonatal mortality rate of Manatee County is also higher than the state average.

The rate of post neonatal mortality in Manatee County is lower than

the state average, indicating that neonatal care intervention is key to reducing infant mortality.

Teen birth rates in every age category (10-14, 15-17, and 18-19) were higher than the state average. During CY 2011, Manatee County’s

age specific birth rate for mothers aged 15-19 was 37.3 per thousand (329 births/8,824 population females 15-19) compared to the state’s

29.1 aged 15-19 birth rate.4

Over the past 10 years Manatee County has seen a sharp increase in

NAS (Neonatal Abstinence Syndrome), babies born to drug-addicted mothers. Fifty-two NAS infants were admitted to Manatee Memorial Hospital in 2012. Typically these infants require Level III NICU care.

Finally, the applicant emphasizes the potential harm transport to Level

III NICU services in other counties presents to both newborns and families in the following ways:

By separating mothers from infants, breastfeeding and bonding, both of which influence the health of the infant, can suffer.

The loss of local support networks, the separation of siblings from mothers and newborns, and difficulties traveling outside the county

all present hardships for Manatee County families.

Based on its review of medical literature, the applicant contends that long-term survival of high-risk infants is correlated to the availability of interventional services in the facility of birth. These risks can be

avoided by ensuring the full spectrum of NICU services are available in the facility where the baby is born.

3 Source: Florida Vital Statistics Annual Report 2011, “Table B-7: Resident Live Births By Trimester

Prenatal Care Began, By County, Florida, 2011”. 4 Source: Florida Vital Statistics Annual Report 2011, “Table B-12: Resident Live Births To Mothers 15 Through 19 Years of Age for Selected Indicators, and Age-Specific Births per 1,000 Females, By

County, Florida, 2011”.


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Manatee Memorial provides the following table comparing Manatee County and Florida infant mortality rates during 2007-2011.

Manatee County and Florida Infant Mortality Rates

2007-2011 2007 2008 2009 2010 2011

Manatee County 8.7 8.0 9.8 6.9 9.2

Florida 7.1 7.2 6.9 6.5 6.4 Source: CON application #10179, Table 5 from Florida Department of Health, Office of Vital Statistics

The applicant notes that Manatee County has had higher infant mortality rates per thousand births for every year during CY 2007 through 2011

compared to the state’s. Manatee concludes that the “differences in mortality rates are fully consistent with the conclusions of the clinical studies that correlate improved mortality outcomes based on the array of

services available at the birthing hospital”. However, Manatee Memorial also states that “explanatory facts other than the absence of a Level III

NICU in the County likely affected these outcomes”. Manatee Memorial next addresses Manatee County’s female population

aged 15 to 44, which it states is projected to increase by nearly ten percent from (52,259 on July 1) 2011 to (57,332 on July 1) 2018 or 1.3

percent annually. Based on the projections in the Agency’s Population Estimates 2010-2025 February 2012 publication, the increase is 9.68

which results in an approximate 1.3 percent annual increase. The applicant notes that during CY 2016 (year one) the female population aged 14-44 will be 55,683. Manatee Memorial projects 3,458 Level III

NICU days, and with Manatee’s market share at 85 percent the result will be 2,939 patient days or an ADC of 8.1 and 53.7 percent occupancy in the 15-bed Level III NICU. Manatee Memorial projects that the July

2017—56,508 female population aged 14-44, will result in 2,983 patient days in year two (2017) and 54.5 percent occupancy.

Manatee Memorial states that it operates a large and growing OB program and has developed a maternal and child health program that

largely addresses the needs of its patient population with the exception of a Level III NICU program. The outmigration for Level III services by residents of Manatee County is cited as need for the program. The

applicant states that the hospital has many of the medical, nursing and other staff needed to develop the Level III program. Manatee Memorial

concludes that the Level III NICU will improve patient outcomes and survival.


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2. Agency Rule Preferences

Please indicate how each applicable preference for the type of service proposed is met. Ch. 59C-1.042, Florida Administrative Code.

a. Ch. 59C-1.042(3)(k), Florida Administrative Code - Services to

Medically Indigent and Medicaid Patients. In a comparative review, preference shall be given to hospitals which propose to provide neonatal intensive care services to Children’s Medical Services

patients, Medicaid patients, and non-Children’s Medical Services patients who are defined as charity care patients. The applicant

shall estimate, based on its historical patient data by type of payer, the percentage of neonatal intensive care services patient days that will be allocated to:

(1) Charity care patients; (2) Medicaid patients;

(3) Private pay patients, including self-pay; and (4) Regional Perinatal Intensive Care Center Program and Step

Down Neonatal Special Care Unit patients.

The applicant and its affiliate–Lakewood Ranch Medical Center are

the only hospitals providing obstetrical care in Manatee County. Manatee Memorial Hospital, LP indicates that the level of care

provided to Medicaid and charity care patients is particularly high in regard to obstetric and NICU care. During the 12-month period ending June 30, 2012 approximately 86.1 percent of Manatee

Memorial Hospital’s OB patients were Medicaid patients, and 1.1 percent were self-pay. During the same period, approximately 86.0 percent of all Level II NICU cases were Medicaid patients, and 1.4

percent were charity or self-pay.

b. Ch. 59C-1.042(4), Florida Administrative Code - Level III and Level IIII Service Continuity. To help assure the continuity of services provided to neonatal intensive care services patients:

(1) The establishment of Level III neonatal intensive care services

shall not normally be approved unless the hospital also provides Level II neonatal intensive care services.

Manatee Memorial Hospital, LP provides Level II NICU services, and the establishment of Level III services will be in compliance with this.


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(2) Applicants proposing to provide Level II or Level III neonatal intensive care services shall ensure developmental follow-up on patients after discharge to monitor the outcome of care

and assure necessary referrals to community resources. Manatee Memorial states that in addition to providing in-hospital

intervention services for infants at risk of developmental disabilities, hospital staff will evaluate patients prior to discharge

and patients requiring follow up will be referred to Sarasota County’s Early Steps program. The applicant also states it

participates in Healthy Start, which provides nursing visits to prenatal clients and post-natal infants requiring services.

c. Ch. 59C-1.042(5), Florida Administrative Code - Minimum Unit Size. Hospitals proposing the establishment of new Level III neonatal intensive care services shall propose a Level III neonatal intensive

care unit with a minimum of five beds and should have 15 or more Level II neonatal intensive care unit beds. Hospitals under contract

with the Department of Health and Rehabilitative Services’ Children’s Medical Services Program for the provision of regional perinatal intensive care center or step-down neonatal special care

unit are exempt from these requirements. Manatee Memorial Hospital, LP is proposing a 15-bed Level III NICU unit.

The applicant currently operates a six-bed Level II NICU unit, which will be increased to 10 beds in connection with the Level III NICU project.

While this is five beds short of the 15-bed Level II NICU requirement, the applicant notes that:

The Agency has approved other Level III NICU projects that do not meet this criteria, including: Brandon Regional Hospital (14 Level II

beds), Florida Hospital Tampa (10 Level II beds), Mease Hospital Dunedin (five Level II beds), and Sarasota Memorial Hospital (13 Level

II beds); and contends that

The combined 25-bed Level II and III NICU proposed by the applicant

meets the forecasted patient bed need for Manatee Memorial Hospital.


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d. Ch. 59C-1.042(6) - Minimum Birth Volume Requirement. Hospitals applying for Level III neonatal intensive care services shall not normally be approved unless the hospital has a minimum service

volume of 1,500 live births for the most recent 12-month period ending six months prior to the beginning date of the quarter of the publication of the fixed bed need pool. Specialty children’s

hospitals are exempt from these requirements.

Manatee Memorial Hospital exceeded this standard by a substantial margin. For CY 2012, the applicant reported 2,165 live births.

e. Ch. 59C-1.042(7) - Geographic Access. Level II and Level III neonatal intensive care services shall be available within two hours

ground travel time under normal traffic conditions for 90 percent of the population in the service district.

The applicant states this standard is met. However, the applicant states that “current medical literature finds that the critical factor contributing to reduced 28-day mortality among at-risk infants is not whether they

can be transferred to a hospital that provides an appropriate level of NICU care, but whether they are born in a hospital that provides an

appropriate level of NICU care”. Manatee Memorial Hospital, LP contends that its provision of Level III NICU services will ensure the best possible outcome for patients in this service area.

f. Ch. 59C-1.042(8) - Quality of Care Standards.

(1) Physician Staffing: Level III neonatal intensive care services shall be directed by a neonatologist or a group of

neonatologists who are on active staff of the hospital with unlimited privileges and provide 24-hour coverage, and who are either board-certified or board-eligible in neonatal-

perinatal medicine. In addition, facilities with Level III neonatal intensive care services shall be required to maintain

a maternal fetal medical specialist on active staff of the hospital with unlimited staff privileges. A maternal fetal medical specialist is defined as a board-certified obstetrician

who is qualified by training, experience, or special competence certification in maternal-fetal medicine. Specialty children’s

hospitals are exempt from this provision.

Manatee Memorial Hospital indicates that four neonatologists are

currently on staff: E. Bernard Cartaya, MD; Marco T. Gonzolez, MD; Alberto Soto, MD; and Pablo Velencia, MD. The applicant includes the curriculum vitae (CVs) for these physicians in the

application’s Appendix C. One additional neonatologist will be hired in connection with this project. All neonatologists have full


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hospital privileges and provide 24 hours per day, seven days per week coverage. The applicant indicates that while it does not have a maternal fetal medical specialist, a qualified candidate will be

selected and hired in connection with this project.

(2) Nursing Staffing: The nursing staff in Level II and Level III

neonatal intensive care units shall be under the supervision of a head nurse with experience and training in neonatal

intensive care nursing. The head nurse shall be a registered professional nurse. At least one-half of the nursing personnel assigned to each work shift in Level II and Level III neonatal

intensive care units must be registered nurses.

Manatee Memorial Hospital’s pediatric and Level II NICU departments are supervised by Rebecca Bouchard, RNC, BSN. Ms. Bouchard has achieved certifications in Neonatal Intensive

Care, Neonatal Resuscitation, Pediatric Advanced Life Support, Basic Life Support, and has served as staff nurse in a Level III NICU in West Palm Beach. The proposed Level III NICU nursing

staff will be under Ms. Bouchard’s supervision. Ms. Bouchard’s CV is included in the application’s Appendix E.

(3) Special Skills of Nursing Staff: Nurses in Level II and Level III

neonatal intensive care units shall be trained to administer

cardio-respiratory monitoring, assist in ventilation, administer I.V. fluids, provide pre-operative and post-operative care of

newborns requiring surgery, manage neonates being transported, and provide emergency treatment of conditions such as apnea, seizures, and respiratory distress.

The applicant states that a majority of nursing staff in the existing Level II NICU meet the above criteria, and staff of the proposed

Level III NICU will be trained accordingly. Manatee Memorial includes the CVs for the Level II NICU nursing staff in the

application’s Appendix F.

(4) Respiratory Therapy Technician Staffing: At least one

certified respiratory care practitioner therapist with expertise in the care of Neonates shall be available in the hospitals with

Level II or Level III neonatal intensive care services at all times. There shall be at least one respiratory therapist technician for every four infants receiving assisted

ventilation.

Manatee Memorial Hospital states a respiratory care practitioner

trained in the care of neonates is available at all times in the existing Level II NICU and a ratio of one therapist to four infants


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receiving assisted ventilation will be maintained. Appendix G of the application includes the CVs for the hospital’s current respiratory therapy staff and other ancillary staff.

(5) Blood Gases Determination and Ancillary Service

Requirements: Blood gas determination shall be available and

accessible on a 24-hour basis in all hospitals with Level II or Level III neonatal intensive care services.

The applicant states that blood gas determination is available and accessible on a 24-hour basis.

(6) Ancillary Service Requirements: Hospitals providing Level II

or Level III neonatal intensive care services shall provide on-site, on a 24-hour basis, x-ray, obstetric ultrasound, and clinical laboratory services. Anesthesia shall be available on

an on-call basis within 30 minutes. Clinical laboratory services shall have the capability to perform microstudies.

All of the services specified are currently available on-site at Manatee Memorial Hospital.

(7) Nutritional Services: Each hospital with Level II or Level III

neonatal intensive care services shall have a dietician or

nutritionist to provide information on patient dietary needs while in the hospital and to provide the patient’s family

instruction or counseling regarding the appropriate nutritional and dietary needs of the patient after discharge.

The applicant maintains a dietitian or nutritionist to meet the patient’s dietary needs while in the hospital and to provide the patient’s family instruction or counseling regarding the appropriate

nutritional and dietary needs of the patient after discharge. Manatee Memorial indicates that Eileen Bogo will oversee the

clinical nutritional assessments and design of dietary regimens for patients of the proposed Level III NICU. Ms. Bogo’s CV is included in Appendix H of the application.


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(8) Social Services: Each hospital with Level II or Level III neonatal intensive care services shall make available the services of the hospital’s social service department to

patients’ families which shall include, but not be limited to, family counseling and referral to appropriate agencies for services. Children potentially eligible for the Medicaid,

Children’s Medical Services, or Developmental Services Programs shall be referred to the appropriate eligibility worker

for eligibility determination.

Manatee Memorial Hospital states that a case management

department is in place to counsel families, screen newborns, and refer for services in compliance with this condition. The applicant

includes the CVs of the hospital’s social workers in the application’s Appendix I.

(9) Developmental Disabilities Intervention Services: Each hospital that provides Level II or Level III neonatal intensive care services shall provide in-hospital intervention services for

infants identified as being at high risk for developmental disabilities to include developmental assessment,

intervention, and parental support and education.

Manatee Memorial Hospital states that in-hospital services for

infants identified as being at-risk for developmental disabilities are provided to NICU patients.

(10) Discharge Planning: Each hospital that provides Level II or

Level III neonatal intensive care services shall have an

interdisciplinary staff responsible for discharge planning. Each hospital shall designate a person responsible for discharge planning.

The applicant states that an interdisciplinary team coordinates

discharge plans for each patient. The team includes the neonatologist, NICU nurses, case managers, hearing screening program representative, respiratory therapist, and physical

medicine specialist.

g. Ch. 59C-1.042(10), Florida Administrative Code - Level III Neonatal Intensive Care Unit Standards: The following standards shall apply to Level III neonatal intensive care services:

(1) Pediatric Cardiologist. A facility providing Level III neonatal

intensive care services shall have a pediatric cardiologist, who

is either board-certified or board-eligible in pediatric cardiology, available for consultation at all times.


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Manatee Memorial Hospital currently employs pediatric cardiologists qualified to provide care to Level II NICU and Level III

NICU infants as required by this rule. The applicant includes the CVs for the pediatric cardiologists in the application’s Appendix L.

(2) Nurse to Neonate Staffing Ratio. Hospitals shall have a nurse to neonate ratio of at least 1:2 in Level III neonatal intensive

care units at all times. At least 50 percent of the nurses shall be registered nurses.

Manatee Memorial Hospital asserts that the nurse to neonate ratio will be in excess of 1:2 for the Level III NICU. All professional

nursing staff assigned to the Level III NICU at Manatee Memorial Hospital will be registered nurses.

Schedule 6A indicates 18.1 RN FTEs will be added in the first year of operation. The applicant projects to have a 7.7 average daily census (ADC) in year one) and an ADC of 7.8 in year two ending

June 30, 2016 and 2017, respectively. Therefore, the applicant’s projections exceed the nurse to neonate staffing ratio.

(3) Requirements for Level III NICU Patient Stations. Each

patient station in a Level III NICU shall have, at a minimum:

a. Eighty square feet per infant;

b. Two wall-mounted suction outlets preferably equipped with a unit alarm to signal loss of vacuum;

c. Twelve electrical outlets;

d. Two oxygen outlets and an equal number of compressed air outlets and adequate provisions for mixing these gases;

e. An incubator or radiant warmer; f. One heated humidifier and oxyhood;

g. One respiration or heart rate monitor; h. One resuscitation bag and mask; i. One infusion pump;

j. At least one non-invasive blood pressure monitoring device for every three beds;

k. At least one portable suction device; and l. Availability of devices capable of measuring continuous

arterial oxygenation in the patient.

The applicant reports that the facility will be in compliance with this rule.


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i. Ch. 59C-1.042(11) - Emergency Transportation Services: Each hospital providing Level II neonatal intensive care services or Level III neonatal intensive care services shall have or participate in an

emergency 24-hour patient transportation system.

(1) Provision of Emergency Transportation. Hospitals providing

Level II or Level III neonatal intensive care services must operate a 24-hour emergency transportation system directly,

or contract for this service, or participate through a written financial or non-financial agreement with a provider of emergency transportation services.

(2) Requirements for Emergency Transportation System. Emergency transportation system, as defined in paragraph

(11)(a), shall conform to section 64E-2.003, Florida Administrative Code.

Manatee Memorial Hospital states that it will develop a 24-hour EMS patient transportation system agreement with the Manatee County Emergency Transport System. Training in correct patient

transfer procedures will be provided to Manatee Memorial Hospital staff by Juan Reyes, of the Wolfson Children’s Hospital in

Jacksonville. Mr. Reyes is a board-certified neonatal pediatric transport and neonatal pediatric respiratory care specialist. Manatee Memorial Hospital will provide 24-hour emergency

services that will enable it to transport infants from its Lakewood Ranch affiliate to Manatee Memorial or from Manatee Memorial to

other Level III NICU facilities in Pinellas and Hillsborough Counties.

j. Ch. 59C-1.042(12) - Transfer Agreements: A hospital providing only Level II neonatal intensive care services shall provide documentation of a transfer agreement with a facility providing

Level III neonatal intensive care services in the same or nearest service district for patients in need of Level III services. Facilities

providing Level III neonatal intensive care services shall not unreasonably withhold consent to transfer agreements which provide for transfers based upon availability of service in the Level

III facility, and which will be applied uniformly to all patients requiring transfer to Level III, as defined in subparagraph (2)(e)2. An

applicant for Level II or Level III neonatal intensive care services shall include, as part of the application, a written protocol governing the transfer of neonatal intensive care services patients

to other inpatient facilities.

Manatee Memorial Hospital currently maintains transfer agreements

with All Children’s Hospital for Level III NICU services and with Lakewood Ranch Medical Center for services not provided there. The


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applicant states that it will not unreasonably withhold consent for transfer agreement with other area hospitals that provide only normal newborn or Level II NICU service if the Level III NICU facility is approved.

k. Ch. 59C-1.042(13) - Data Reporting Requirements: All hospitals

with Level II or Level III neonatal intensive care services shall

provide the Agency or its designee with patient utilization and fiscal reports which contain data relating to patient utilization of Level II

and Level III neonatal intensive care services. 1. Utilization Data

2. Patient Origin Data

As an existing provider of Level II NICU services, Manatee Memorial Hospital currently complies with the Agency’s data reporting requirements. The applicant states that the Level III component of the

NICU will be incorporated into their existing data compilation and reporting upon project initiation.

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.

As previously stated, District 6’s 120 Level III NICU bed averaged 67.54 percent occupancy during the 12 months ending June 30, 2012 and

there are 18 Level III beds approved at Lakeland Regional Medical Center.

Manatee Memorial Hospital, LP states that many of the issues itemized in this question have been addressed previously in response to Question

E.1. Essentially, the applicant maintains a need for the project is evidenced by the availability, quality of care, accessibility and extent of utilization of existing Level III NICU services in the applicant’s service

area because none presently exist in Manatee County.

The applicant reiterates the burden transport outside the county for NICU Level III care places on a disproportionately young and low income patient population, as well as the risks transport poses to the health of

fragile infants. Studies demonstrating the improved survival rate of infants born in facilities providing appropriate levels of care are reiterated by the applicant.


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Manatee Memorial Hospital concludes by saying that the Level III NICU program will be staffed by the same physician group providing care in the existing Level II NICU, thus enhancing quality and continuity of care.

Additional staff needed for Level III NICU care will be hired and integrated easily into the existing healthcare system of Manatee County, in which the applicant is a central provider of health services.

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.

Manatee Memorial Hospital, LP, a wholly owned subsidiary of Universal Health System, Inc., is licensed to operate 289 acute care beds, 24 adult

inpatient psychiatric beds, and six Level II NICU beds (which will be increased to 10 beds in conjunction with this project). The applicant states Manatee Memorial is accredited “by the Joint Commission on the

Accreditation of Healthcare Organizations”. A copy of the hospital’s Joint Commission accreditation is included in Appendix Q of the application.

The applicant states that Manatee Memorial Hospital promotes quality control through a Quality Plan and Evaluation Policy initiative. This

initiative provides “a systematic, hospital-wide plan to measure, assess, and improve organizational performance”, and is overseen by the Hospital’s Board of Governors and its Quality Committee, as well as the

Patient Safety Council, the Medical Staff Quality Improvement Committee, the Medical Executive Committee, and Quality Improvement

Teams. Manatee Memorial states that it has committed to a long-term goal of

comprehensive maternal and child health services, and in addition to its inpatient OB and Level II NICU it provides the following services including:

Childbirth preparation classes

Breastfeeding consultation and classes, post-partum lactation consultation

AHA Heartsaver, Adult and Pediatric (CPR)

Gestational Diabetes education

Serum bilis with nurse assessment

Transcutaneous bilis

Healthy Start

Komen Foundation (Breast Cancer)

American Heart Association

American Cancer Society

Tours for School Children with Community Groups

Car seat safety


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Perinatal Bereavement support

Newborn care classes

Infant safety class

Child Death Review of Manatee County.

The applicant states that it seeks to enhance the quality of care for

infants admitted or born at Manatee Memorial Hospital that need Level III NICU services. The applicant indicates that the absence of Level III

NICU care at Manatee Memorial Hospital often results in a break in the continuity of care available to its patients and their families, and an underutilization of the highly specialized medical, nursing and other

support personnel already available. Manatee Memorial restates that the Level III NICU will benefit its newborns, as well as Manatee County

families who endure hardships of separation and travel burdens when a child needing Level III NICU care is transported out of the county.

Manatee Memorial Hospital’s parent company is Universal Health Services, Inc., which operates 15 hospitals in Florida with a total of 1,595 beds. Agency data obtained for the 36 months ending April 10,

2013, indicates that UHS facilities had 45 substantiated complaints, of which 16 substantiated complaints were for Manatee Memorial Hospital.

A single complaint can encompass multiple complaint categories. The tables below list these complaint categories.

Universal Health Services Substantiated Categories in the Past 36 Months Complaint Category Number Substantiated

Nursing Services 7

Emergency Access 2

Resident/Patient/Client Assessment 3

Quality of Care/Treatment 22

EMTALA 2

Resident/Patient/Client Rights 8

Admission, Transfer & Discharge Rights 4

Restraints/Seclusion General 3

Administration/Personnel 4

Physician Services 1

Resident/Patient/Client Abuse 6

Physical Environment 1

State Licensure 3

Unqualified Personnel 1 Source: Agency For Health Care Administration complaint records.


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Manatee Memorial Hospital Substantiated Categories in the Past 36 Months

Complaint Category Number Substantiated

Nursing Services 7

Emergency Access 1

Resident/Patient/Client Assessment 2

Quality of Care/Treatment 11

EMTALA 1

Resident/Patient/Client Rights 3

Admission, Transfer & Discharge Rights 1

Restraints/Seclusion General 2

Administration/Personnel 2 Source: Agency For Health Care Administration complaint records.

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.

Manatee Memorial Hospital, LP, operates a general hospital consisting of 289 acute care beds, 24 adult inpatient psychiatric beds and six Level II NICU beds (total 319 beds). The applicant is a wholly owned subsidiary

of Universal Health Services, Inc. (Parent). The financial impact of the project will include the projected cost of $7,928,335 and incremental operating cost in year two of $4,810,424. The applicant states the project is to be funded by funds provided by its

parent corporation, Universal Health Services, Inc. In support of this claim, the applicant provided a letter from the parent corporation as documentation of its commitment for funding the project.

The letter of financial commitment stated parent company funding for

this and other projects would come from either current cash balances or its revolving line of credit. The parent company states that as of December 31, 2012, the company had $574 million available under its

$800 million line of credit. In support of the parent company’s ability to fund the project, the

applicant provided a copy of its parent company hospitals in the State of Florida combined audited financial statements for the period ending

December 31, 2010, and December 31, 2011. In addition, the applicant provided a copy of the parent company’s

consolidated balance sheet and income statement from its form 10-K for the period ending December 31, 2011 and 2010. No other financial statements or notes to the financial statements from the 10-K were

provided by the applicant. Therefore, these statements could not be used.


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To supplement the financial statements provided by the applicant, staff retrieved a complete copy of the parent company’s 12/31/2012 Form 10-K from the United States Security and Exchange Commission’s

website for analysis of the audited 12/31/2012 and 12/31/2011 consolidated audited financial statements contained within the 10-K.

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. With regard to the line of credit, while the notes to the 2012 10-K

disclose the line of credit and amount available as stated above, the applicant did not provide any documentation from the lender or

independent third party to support the claimed line of credit and available funding under the line of credit.

Short-Term Position –Parent Combined 12/31/2011: The parent’s current ratio of 0.9 is well below average and indicates current assets are approximately 0.9 times current liabilities, a weak

position. The working capital (current assets less current liabilities) of negative $6.1 million indicates no excess liquidity that could be used to

fund capital projects. The ratio of cash flow to current liabilities of -0.3 is well below average and a weak position. Overall, the parent has a weak short-term position (see Table 1).

Long-Term Position – Parent Combined 12/31/2011:

The ratio of long-term debt to net assets of 1,690.7 is well above average and indicates that long-term debt is greater than equity, a weak position. The ratio of cash flow to assets of -5.4 percent is well below average and

a weak position. The most recent year had revenues in excess of expenses of $38.7 million, which resulted in a 6.3 percent operating margin. Overall, the parent has a weak long-term position (see Table 1).

Short-Term Position – Parent Consolidated 12/31/2012:

The parent’s current ratio of 1.6 is below average and indicates current assets are approximately 1.6 times current liabilities, an adequate position. The working capital (current assets less current liabilities) of

$513.4 million indicates excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities of 0.9 is

above average and a good position. Overall, the parent has a good short-term position (see Table 1a).

Long-Term Position – Parent Consolidated 12/31/2012: The ratio of long-term debt to net assets of 1.6 is well above average and indicates that long-term debt is greater than equity, a weak position.


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The ratio of cash flow to assets of 9.9 percent is slightly above average and a good position. The most recent year had revenues in excess of expenses of $763.7 million which resulted in a 11.0 percent operating

margin. Overall, the parent has an adequate long-term position (see Table 1a).

Capital Requirements: The applicant indicates on Schedule 2 capital projects totaling $14.8

million which includes the CON subject to this review. Available Capital, Parent Combined:

The applicant indicates on Schedule 3 of its application that funding for the project will be provided by its parent. As of December 31, 2011, the

parent had negative $6.1 million in working capital and generated cash from operations of approximately negative $32.9 million. In comparison, at December 31, 2010, the applicant had negative $100.3 million in

working capital and generated cash from operations of approximately $13.2 million.

Available Capital, Parent Consolidated: The applicant indicates on Schedule 3 of its application that funding for

the project will be provided by its parent. As of December 31, 2012, the parent had $513.4 million in working capital and generated cash from operations of approximately $815.3 million. In comparison, at December

31, 2011, the applicant had $528.0 million in working capital and generated cash from operations of approximately $718.3 million.

Conclusion: Based on the combined financial statements provided by the applicant, funding for this project is in doubt, while based on the

consolidated financial statements, funding for this project and the entire capital budget should be available as needed.


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TABLE 1

Manatee Memorial Hospital -- CON application #10179

Universal Health Services, Inc.

Hospitals in the State of Florida

Combined Financial Statements

Parent

Parent

12/31/11

12/31/10

(In Thousands)

(In Thousands)

Current Assets (CA) $107,266

$72,519

Cash and Current Investment $5,399

$882

Total Assets (TA) $614,173

$377,910

Current Liabilities (CL) $113,416

$172,832

Goodwill $137,258

$48,942

Total Liabilities (TL) $613,877

$401,348

Net Assets (NA) $296

($23,438)

Total Revenues (TR) $630,535

$452,108

Interest Expense (Int) $19,051

$10,699

Excess of Revenues Over Expenses (ER) $38,651

($28,772)

Cash Flow from Operations (CFO) ($32,877)

$13,221

Working Capital ($6,150)

($100,313)

FINANCIAL RATIOS

12/31/11

12/31/10

Current Ratio (CA/CL) 0.9

0.4

Cash Flow to Current Liabilities (CFO/CL) -0.3

0.1

Long-Term Debt to Net Assets (TL-CL/NA) 1690.7

-9.7

Times Interest Earned (ER+Int/Int) 3.0

-1.7

Net Assets to Total Assets (NA/TA) 0.0%

-6.2%

Operating Margin (ER/TR) 6.1%

-6.4%

Return on Assets (ER/TA) 6.3%

-7.6%

Operating Cash Flow to Assets (CFO/TA) -5.4% 3.5%


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TABLE 1a

Manatee Memorial Hospital -- CON application #10179

Universal Health Services, Inc. and Subsidiaries

Consolidated Financial Statements

Parent

Parent

12/31/12

12/31/11

(In Thousands)

(In Thousands)

Current Assets (CA) $1,407,496

$1,364,905

Cash and Current Investment $23,471

$41,229

Total Assets (TA) $8,200,843

$7,665,245

Current Liabilities (CL) $894,058

$836,933

Goodwill $3,036,765

$2,627,602

Total Liabilities (TL) $5,434,894

$5,318,127

Net Assets (NA) $2,765,949

$2,347,118

Total Revenues (TR) $6,961,400

$6,760,222

Interest Expense (Int) $178,918

$200,792

Excess of Revenues Over Expenses (ER) $763,663

$696,336

Cash Flow from Operations (CFO) $815,271

$718,251

Working Capital $513,438

$527,972

FINANCIAL RATIOS

12/31/12

12/31/11

Current Ratio (CA/CL) 1.6

1.6

Cash Flow to Current Liabilities (CFO/CL) 0.9

0.9

Long-Term Debt to Net Assets (TL-CL/NA) 1.6

1.9

Times Interest Earned (ER+Int/Int) 5.3

4.5

Net Assets to Total Assets (NA/TA) 33.7%

30.6%

Operating Margin (ER/TR) 11.0%

10.3%

Return on Assets (ER/TA) 9.3%

9.1%

Operating Cash Flow to Assets (CFO/TA) 9.9% 9.4%

d. What is the immediate and long-term financial feasibility of the proposal? ss. 408.035(1)(f), Florida Statutes.

A comparison of the applicant’s estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood

that the services can be provided under the parameters and conditions contained in Schedules 7 and 8), and efficiency, (the degree of economies

achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other

words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to


28

achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired

outcome. These relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may,

either, go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable.

The applicant will be compared to hospitals in the medium urban hospital group (group 5 which includes the applicant). We adjusted the

group using the applicant’s historic case mix index of 1.3795. This index is used to adjust the group values to reflect the intensity of the services

offered. Per Diem rates are projected to increase by an average of 2.6 percent per year. Inflation adjustments were based on the new CMS Market Basket, 4th Quarter, 2012.

Gross revenues, net revenues, and costs were obtained from Schedules 7 and 8 in the financial portion of the application and compared to the

control group as a calculated amount per adjusted patient day. Adjusted patient days were calculated using the applicant’s 2011 adjustment

factor as calculated in group 5. Projected net revenue per adjusted patient day (NRAPD) of $1,930 in year

one and $1,978 in year two is between the control group median and lowest values of $2,207 and $1,612 in year one and $2,264 and $1,653

in year two. With net revenues between the control group’s lowest and median values, net revenues appear to be reasonable (see Tables 2 & 3).

Anticipated costs per adjusted patient day (CAPD) of $1,772 in year one and $1,817 in year two is between the median and lowest values of $2,076 and $1,661 in year one and $2,129 and $1,703 in year two. With

projected cost between the highest and median levels, costs appear to be reasonable (see Tables 2 & 3).

The year two projected operating income for the facility with the project of $20.1 million computes to an operating margin per adjusted patient

day of $161, or 8.2 percent, which is between the control group median and highest level of $99 and $549, respectively. With operating margin

between the control group lowest and median values, operating margin appears reasonable (see Table 3).

Conclusion: This project appears to be financially feasible.


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TABLE 2

Manatee Memorial Hospital CON application #10179 Jun-16 YEAR 1

VALUES ADJUSTED

2011 DATA Peer Group 5 YEAR 1 ACTIVITY

FOR INFLATION

ACTIVITY PER DAY

Highest Median Lowest

ROUTINE SERVICES 894,130,031 7,062

2,540 1,263 593

INPATIENT AMBULATORY 0 0

807 226 53

INPATIENT SURGERY 0 0

0 0 0

INPATIENT ANCILLARY SERVICES 0 0

9,543 5,566 2,736

OUTPATIENT SERVICES 394,421,328 3,115

6,377 4,207 1,999

TOTAL PATIENT SERVICES REV. 1,288,551,359 10,177

16,252 12,563 7,490

OTHER OPERATING REVENUE 900,183 7

116 52 5

TOTAL REVENUE 1,289,451,542 10,184

16,307 12,619 7,606

DEDUCTIONS FROM REVENUE 1,045,083,584 8,254

0 0 0

NET REVENUES 244,367,958 1,930

3,850 2,207 1,612

EXPENSES ROUTINE 109,246,619 863

480 364 240

ANCILLARY 43,270,178 342

1,119 720 572

AMBULATORY 0 0

0 0 0

TOTAL PATIENT CARE COST 152,516,797 1,205

0 0 0

ADMIN. AND OVERHEAD 49,194,333 389

0 0 0

PROPERTY 22,647,710 179

0 0 0

TOTAL OVERHEAD EXPENSE 71,842,043 567

1,623 928 664

OTHER OPERATING EXPENSE 1,104 0

0 0 0

TOTAL EXPENSES 224,359,944 1,772

3,368 2,076 1,661

OPERATING INCOME 20,008,014 158

549 99 -184

8.2%

PATIENT DAYS 87,796 ADJUSTED PATIENT DAYS 126,613 TOTAL BED DAYS AVAILABLE 121,910

VALUES NOT ADJUSTED

ADJ. FACTOR 0.6934

FOR INFLATION

TOTAL NUMBER OF BEDS 334


PERCENT OCCUPANCY 72.02%

83.6% 61.0% 28.1%

PAYER TYPE PATIENT DAYS % TOTAL

SELF PAY 4,308 4.9% MEDICAID 18,244 20.8%

39.4% 13.8% 3.7%

MEDICAID HMO 4,257 4.8% MEDICARE 33,745 38.4%

51.5% 36.5% 14.4%

MEDICARE HMO 14,336 16.3% INSURANCE 210 0.2% HMO/PPO 11,138 12.7%

55.9% 38.6% 27.1%

OTHER 1,558 1.8% TOTAL 87,796 100%


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TABLE 3

Manatee Memorial Hospital CON application #10179 Jun-17 YEAR 2

VALUES ADJUSTED

2011 DATA Peer Group 5 YEAR 2 ACTIVITY

FOR INFLATION

ACTIVITY PER DAY


ROUTINE SERVICES 947,820,866 7,334

2,605 1,295 608

INPATIENT AMBULATORY 0 0

828 231 55

INPATIENT SURGERY 0 0

0 0 0

INPATIENT ANCILLARY SERVICES 0 0

9,789 5,709 2,806

OUTPATIENT SERVICES 416,787,176 3,225

6,541 4,316 2,050

TOTAL PATIENT SERVICES REV. 1,364,608,042 10,559

16,671 12,887 7,683

OTHER OPERATING REVENUE 936,190 7

119 54 5

TOTAL REVENUE 1,365,544,232 10,566

16,727 12,944 7,802

DEDUCTIONS FROM REVENUE 1,109,879,840 8,588

0 0 0

NET REVENUES 255,664,392 1,978

3,949 2,264 1,653

EXPENSES ROUTINE 114,723,782 888

492 373 246

ANCILLARY 45,570,541 353

1,147 738 586

AMBULATORY 0 0

0 0 0

TOTAL PATIENT CARE COST 160,294,323 1,240

0 0 0

ADMIN. AND OVERHEAD 51,606,418 399

0 0 0

PROPERTY 22,890,018 177

0 0 0

TOTAL OVERHEAD EXPENSE 74,496,436 576

1,665 952 681

OTHER OPERATING EXPENSE 2,439 0

0 0 0

TOTAL EXPENSES 234,793,198 1,817

3,454 2,129 1,703

OPERATING INCOME 20,871,194 161

549 99 -184

8.2%

PATIENT DAYS 89,706 ADJUSTED PATIENT DAYS 129,241 TOTAL BED DAYS AVAILABLE 122,244

VALUES NOT ADJUSTED

ADJ. FACTOR 0.6941

FOR INFLATION

TOTAL NUMBER OF BEDS 334


PERCENT OCCUPANCY 73.38%

83.6% 61.0% 28.1%

PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 4,382 4.9% MEDICAID 18,920 21.1%

39.4% 13.8% 3.7%

MEDICAID HMO 4,325 4.8% MEDICARE 34,287 38.2%

51.5% 36.5% 14.4%

MEDICARE HMO 14,566 16.2% INSURANCE 214 0.2% HMO/PPO 11,429 12.7%

55.9% 38.6% 27.1%

OTHER 1,583 1.8% TOTAL 89,706 100%


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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.

The applicant’s 15-bed Level III NICU would constitute a new Level III NICU program in District 6. There are no other Level III neonatal intensive units within Manatee County.

General economic theory indicates that competition ultimately leads to

lower costs and better quality. However, in the health care industry there are several significant barriers to competition:

Price-Based Competition is Limited - Medicare and Medicaid account for almost 68.5 percent of hospital charges in Florida, while HMO/PPOs

account for approximately 24.8 percent of charges (including a small percentage of commercial insurance). While HMO/PPOs negotiate prices, fixed price government payers like Medicare and Medicaid do not.

Therefore price-based competition is limited to non-government fixed price payers. Price-based competition is further restricted as Medicare reimbursement in many cases is seen as the starting point for price

negation among non-government payers.

The User and Purchaser of Healthcare are Often Different – Roughly 93.3 percent of hospital charges in Florida are from Medicare, Medicaid, and HMO/PPOs. The individuals covered by these payers pay little to none of

the costs for the services received. Since the user is not paying the full cost directly for service, there is no incentive to shop around for the best

deal. This further makes price-based competition irrelevant. Information Gap for Consumers – Price is not the only way to compete for

patients, quality of care is another area in which hospitals can compete. However, there is a lack of information for consumers and a lack of consensus when it comes to quality measures. In recent years there

have been new tools made available to consumers to close this gap. However, transparency alone will not be sufficient to shrink the

information gap. The consumer information must be presented in a manner that the consumer can easily interpret and understand. The beneficial effects of economic competition are the result of informed

choices by consumers.

In addition to the above barriers to competition, a study presented in The Dartmouth Atlas of Health Care 2008 suggests that the primary cost driver in Medicare payments is availability of medical resources. The

study found that excess supply of medical resources (beds, doctors, equipment, specialist, etc.) was highly correlated with higher cost per patient. Despite the higher costs, the study also found slightly lower

quality outcomes. This is contrary to the economic theory of supply and demand in which excess supply leads to lower price in a competitive


32

market. The study illustrates the weakness in the link between supply and demand and suggests that more choices lead to higher utilization in the health care industry as consumers explore all alternatives without

regard to the overall cost per treatment or the quality of outcomes. Conclusion: Due to the health care industry’s existing barriers in

consumer based competition, this project will not likely foster the type competition generally expected to promote quality and cost-effectiveness.

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-3 or 59A-4, Florida Administrative Code.

The area of the proposed NICU as indicated in the architectural narrative is 10,822 square feet, which is not consistent with the area indicated in

Schedule 9. This area has to be divided into sleeping suites of max 5,000 square feet or passages must be converted to exit corridors to meet the requirements of the Florida Building Code and the National Fire

Protection Association (NFPA) 101, Chapter 18.

The new NICU will consist of 10 private rooms which include two isolation rooms; and 15 open bay cubicles, which brings the total count to 25 beds. Private rooms except for isolation rooms do not meet the

required area of 150 square feet. All private rooms require hand washing stations within the rooms. Cubical beds must have a minimum area of

120 square feet, although some of the cubical beds do not meet this requirement. A large nurse station is centrally located between the private rooms and cubical beds to provide direct visualization and safety.

However the nurse station does not have a direct visual control of the entrance doors to the NICU. A parent/infant room shall be provided to meet the requirements of Guidelines for Design and Construction of

Health Care Facilities. Entry to the NICU will be controlled access and an infant security system will be installed.

The project narrative and schematic plans do not provide anticipated applicable codes. A complete listing of applicable codes and dates of the

codes will be required for future submissions.

The design appears to provide most of the functional spaces required for the residents and staff. Some changes will be required, but these changes should be easily accommodated within the physical constraints

of the project area and the project budget. The estimated construction costs and project completion forecast appear

to be reasonable.


33

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.

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. Manatee Memorial Hospital states that it extends and will continue to

extend services to all patients in need of care regardless of the ability to pay or source of payment. Medicaid-sponsored, self-pay and indigent

patients are currently served by the hospital, and this policy will continue in the future and at the proposed facility.

Manatee Memorial Hospital’s percentage of Medicaid/Medicaid HMO patients in CY 2010 was 19.9 percent, and in CY 2011 was 24.2 percent. The table below shows the payer proportions the applicant anticipates for

this project in the first two years ending June 30, 2016 and ending June 30, 2017, respectively.

Manatee Memorial Hospital, LP

15-bed Level III NICU

Years One & Two Projected Payer Mix

Payer Percent

Medicaid 76.5

HMO/PPO/Commercial/Other 22.4

Self-Pay/Charity 1.2

Total 100.0* Source: CON application #10179, p. 52, Tab 3. *The actual total 100.1 was replaced with 100.0 by the applicant likely due to rounding.

Schedule 7B indicates that Medicaid is projected to total 76.5 percent of total annual Level III NICU patient days during years one and two ending

June 30, 2016 and June 30, 2017. Manatee Memorial Hospital is proposing to condition the certificate of need for the project upon its commitment to provide at least 75.0 percent of total annual patient days

to Medicaid and charity patients.

Manatee Memorial Hospital is a low-income pool (LIP) participating hospital. For fiscal year 2012-2013, Manatee Memorial’s total LIP allocation is $2,306,916. As of February 20, 2013, the applicant has

received $600,301 in LIP payments. Manatee Memorial Hospital is not a disproportionate share hospital.


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F. SUMMARY

Manatee Memorial Hospital, LP (CON #10179), an existing provider of Level II NICU care, is applying to establish a 15-bed Level III NICU at its facility in Bradenton, Manatee County, Florida (District 6).

The applicant commits to a condition to provide a minimum of 75.0

percent of the 15-bed Level III NICU’s total annual patient days to the combination of Medicaid and charity patients.

Total project cost is estimated at $7,978,335. The project involves 10,516 GSF of renovation and 1,292 GSF of new construction. Total

construction cost is $3,311,800. Need:

In Volume 39, Number 13, dated January 18, 2013 of the Florida Administrative Register, a fixed need pool of zero beds was published for

Level III NICU beds in District 6 for the July 2015 planning horizon.

District 6 has 120 licensed and 18 approved Level III NICU beds. The applicant is applying outside of the fixed need pool.

Manatee Memorial Hospital states that the proposed project is needed to assure residents of Manatee Memorial Hospital’s service area timely

access to NICU services. There are no existing Level III NICU programs in Manatee County.

The applicant cites the high outmigration of Manatee County Level III NICU qualified patients and indicates that 44.7 percent (38 of the 85

total for these patients) were treated in other districts. The applicant also notes that 26.0 percent (939 of 3,618 births) of Manatee County

residents’ live births during the 12-month period ending June 30, 2012, occurred in hospitals located outside District 6.

The project is also supported by Manatee County’s neonatal mortality rate, which is higher than the state average. The applicant’s Table 5,

“Infant Mortality Rates 2007-2011” indicates Manatee County’s 2011 infant mortality rate was 9.2 per thousand compared to the state’s rate of 6.4 per thousand and Manatee County’s rate exceeded the state’s in each

of these years.


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The applicant indicates that the absence of Level III NICU care at Manatee Memorial Hospital often results in a break in the continuity of care available to its patients and their families, and an underutilization

of the highly specialized medical, nursing and other support personnel already available.

Manatee Memorial contends that the Level III NICU will benefit its newborns, as well as Manatee County families who endure hardships of

separation and travel burdens when a child needing Level III NICU care is transported out of the county.

Quality of Care:

The applicant states that it seeks to enhance the quality of care for infants admitted or born at Manatee Memorial Hospital that need Level III NICU services.

Manatee Memorial Hospital is accredited by the Joint Commission. Manatee Memorial offers a full range of patient care and ancillary

services, directly or through referral, consultation, or contractual arrangement.

Agency complaint records indicate that during the three-year period ending April 10, 2013, Manatee Memorial had 16, and UHS’s 15 Florida

hospitals (1,595 beds) had 45 substantiated complaints.

The applicant demonstrated the ability to provide quality care. Medicaid/Indigent Care:

Manatee Memorial Hospital states that it extends and will continue to extend services to all patients in need of care regardless of the ability to

pay or source of payment.

Manatee Memorial Hospital is a low-income pool participating hospital. For fiscal year 2012-2013, Manatee Memorial’s total LIP allocation is $2,306,916 and as of February 20, 2013, the applicant has received

$600,301 in LIP payments.

The applicant commits to a condition to provide a minimum of 75.0 percent of the Level III NICU total annual patient days to the combination of Medicaid and charity patients.


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Financial/Cost:

Based on the parent’s consolidated financial statements, funding for this

project and the entire capital budget should be available as needed. The project appears to be financially feasible.

The project will not likely foster the type competition generally expected

to promote quality and cost-effectiveness. Architectural:

The new NICU will consist of 10 private rooms which include two

isolation rooms; and 15 open bay cubicles, which brings the total count to 25 beds. Private rooms except for isolation rooms do not meet the required area of 150 square feet. Cubical beds must have a minimum

area of 120 square feet and some of the cubical beds do not meet this requirement.

The project narrative and schematic plans do not provide anticipated applicable codes. A complete listing of applicable codes and dates of the

codes will be required for future submissions. The design appears to provide most of the functional spaces required for

the residents and staff. Some changes will be required, but these changes should be easily accommodated within the physical constraints

of the project area and the project budget. The estimated construction costs and project completion forecast appear

to be reasonable

G. RECOMMENDATION:

Approve CON #10179 to establish a 15-bed Level III NICU in District 6, Manatee County. The total project cost is $7,978,335. The project involves 10,516 GSF of renovated construction, 1,292 GSF of new

construction and a construction cost of $3,311,800.

CONDITION: A minimum of 75.0 percent of the Level III NICU’s total annual patient days shall be provided to Medicaid and charity patients on a combined basis.


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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

state agency action report - the agency for … · state agency action report on application for...

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