state agency action reportahca.myflorida.com/mchq/con_fa/batching/pdf/10134.pdf · w. daniel hale,...
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STATE AGENCY ACTION REPORT
ON APPLICATION FOR CERTIFICATE OF NEED
A. PROJECT IDENTIFICATION
1. Applicant/CON Action Number Halifax Hospice, Inc. d/b/a Halifax Health Hospice of Volusia/Flagler/CON #10134
1424 Laurel Road
Faber, Virginia 22938
Authorized Representative: Thomas A. Davidson
(434) 263-5107
2. Service District/Subdistrict
Hospice Service Area 4B (Volusia and Flagler Counties) B. PUBLIC HEARING
A public hearing was not held or requested regarding this proposal to
establish a freestanding 12-bed inpatient hospice facility in Volusia
County, Hospice Service Area 4B.
Letters of Support
There were 438 unduplicated letters of support (including testimonials)
in Volumes 2 and 3 of the application. The applicant divided letters of
support as follows: service area physicians (18), service area residents
(413) and testimonials from families of patients (seven testimonials/notes
of appreciation). Some of these are described below.
Gregory Favis, MD, F.A.C.P. stated he has had terminal patients served
by Halifax-Hospice of Volusia/Flagler for 32 years and that the provider
has always been responsible and responsive to his patients’ needs. Dr.
Favis believed his Ormond Beach patients deserved to be cared for in
their community, similarly to how his Daytona Beach and New Smyrna
Beach patients have been cared for in their communities. Dr. Richard
Weiss and Dr. Walter Durkin made similar comments in support of the
project.
CON Action Number: 10134
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Many of the physician letters were of a form letter variety that are
supportive of the project and the provider’s quality of care. They
indicated that travel can be difficult and stressful for families from the
northern Flagler County area to visit their loved ones at the inpatient
hospice facility in Port Orange, as it can require a drive of 60-120 miles
round trip.
William McKillop, Sc.D., stated he has been a health care professional in
the Ormond Beach area for 28 years and there is a need for the project to
serve the Ormond Beach resident population. Nanci Agett, ARNP, stated
she is a psychiatric nurse practitioner in Volusia County, having had
“many contacts” with individuals and families that have experienced “a
very high degree of end of life support” through the applicant’s existing
hospice services.
State Representative Dorothy L. Hukill, District 28 indicated that though
the majority of the applicant’s patients are cared for in their homes, the
need for general inpatient care exists due to patients being referred very
late in their illness. Representative Hukill stated that a new Ormond
Beach facility would “not only be able to provide more care to those in
need but would allow families to be closer to their loved ones”. She
concluded by stating that “this facility would add 40 professional jobs to
the community as well as hundreds of temporary construction jobs”.
State Representative Charles Van Zant, District 21, stated hospice care
needs of the community are underserved and that the applicant wishes
to “step up to the plate” and provide new construction for this “greatly
needed expansion of available inpatient hospice care”. State
Representative Fred Costello, District 26, stated most patients in need of
hospice care will receive it in their homes but “there are many patients
referred very late in their illness who require inpatient care”.
Representative Costello further stated travel to and from current facilities
can be very burdensome and stressful. He also indicated that the project
would create 40 new jobs in the area.
Frank Bruno, Jr., Volusia County Chair and James Dinneen, Volusia
County Manager, cited the applicant’s 32+ years of kind, considerate and
professional hospice services to the Volusia County area. They also
commented on reduced travel time for northern Volusia and Flagler
County residents who now must travel to Port Orange to see inpatient
hospice care patients.
Donald Fleming, Flagler County Sheriff and Ben Johnson, Volusia
County Sheriff, were highly complimentary of the provider’s existing
quality of hospice care. Both indicated the project could reduce travel
distance for residents and their families of northern Flagler County who
CON Action Number: 10134
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travel as much as 120 miles round trip to visit family and friends in the
applicant’s existing inpatient hospice facilities. Sheriff Johnson stated
the applicant has served 50,000+ patients and families with kindness,
compassion and professional care throughout the years. Arthur Jones,
Chief of Police, City of Bunnell (Flagler County), made comments similar
to Sheriff Fleming and Sheriff Johnson.
Glenn Ritchey, President/CEO, Jon Hall Automotive Group and Mayor,
City of Daytona Beach, Florida stated the applicant has the largest
number of board-certified hospice physicians and staff in the area.
Others submitting letters include the following members of the Halifax
Health Board of Commissioners; Art Giles, Founder, Giles Electric Co.,
Former Volusia County Council Member and Former Vice-Mayor, South
Daytona, John Johnson, PhD, President & CEO and Karen Jans,
Associate VP, University Relations, Embry Riddle Aeronautical
University. Deanna Schaeffer, CEO, Halifax Health Healthy
Communities also provided a letter1.
Frances Latow, President, Victoria Gardens Women’s Club (Deland,
Volusia County) stated that her organization has supported the
applicant’s local inpatient facility (Orange City/Volusia County) for over
five years and has donated $20,000 to enhance the esthetics of the
environment within that facility.
Alice Reid, General Manager, The Bert Fish Foundation, Inc. (Deland,
Volusia County) stated that her organization recognizes the need for the
project in Ormond Beach. John Evans, Program/Compliance Director,
Goliath Radio (1380 AM WELE, Ormond Beach)2 stated that his station
“regularly” features the applicant’s staff on the station’s public interest
programs and that he has seen the difference Halifax Hospice “staff and
volunteers make”.
Fran Davis, Executive Director, Halifax-Health Hospice indicated the
project location is “just off Route 40, west of I-95 in Ormond Beach”.
Patricia Goodwin, ACSW, LCSW, ACHP-SW, stated she is the primary
social worker at the applicant’s Port Orange and Edgewater inpatient
hospice facilities. Ms. Goodwin expressed some of the transportation
challenges faced by elderly family members when a loved one is in
inpatient hospice care and that the project would help reduce some of
1 Halifax Health Healthy Communities is a branch of Halifax Health that oversees several programs serving children and families in Volusia and Flagler Counties, including Florida Kid Care, Healthy Start, and Volusia/Flagler Safe Kids Coalition, per the website http://www.halifaxhealth.org/locations/healthycommunities.aspx. 2 Goliath Radio, 1380 AM WELE states it offers “the best Daytona Beach talk radio” and reaches most if not all of Flagler and Volusia Counties, per the website http://big1380.com/.
CON Action Number: 10134
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these challenges. Steven DeVane, M. Div., stated he is a Halifax Hospice
employee and that for several years they have recognized a need for
inpatient hospice services closer to northern Volusia and Flagler
Counties. Pamela LeFils, RN, CHPN, who works in Halifax Hospices’
“After Hours Dept.”, stated that Halifax Hospice does not have enough
care center beds available and the project would better accommodate
“north” area families. Beverly Richardson, M.Div., chaplain at the
Southeast Volusia Care Center and chaplain team leader for Halifax
Health-Hospice of Volusia/Flagler stated that the travel distance for
families living in the northern end of Volusia County and in Flagler
County is a hardship. She indicated that “a care center in Ormond
Beach…(would be) more readily available to our patients and families”.
Harvey Kissel, President, Kissel Family Foundation, Inc. (“Learning
through Giving”) stated his organization supports Halifax Hospice by
providing the applicant with money and his time. He further stated that
the project is needed for the families that visit patients on a daily basis.
W. Daniel Hale, Ph.D., Special Advisor, Office of the President, Johns
Hopkins Bayview Medical Center, Adjunct Associate Professor of
Medicine, Johns Hopkins University School of Medicine, stated he is still
on the faculty at Stetson University and will eventually be returning to
Volusia County where he lived for more than 30 years. Dr. Hale also
stated his “great admiration for Hospice of Volusia/Flagler and its
wonderful staff”. He indicated that based on his experience in the study
of end of life needs of patients and families, the project is needed.
The rest of the support letters generally compliment the applicant’s
existing operations and staff, often with positive personal experiences
and express need for the project based on ease of geographic access for
the north Volusia and Flagler County areas.
The applicant included six hand written notes that express a high degree
of appreciation for the hospice services provided by the applicant’s
existing hospice staff. Halifax Hospice facilities are stated to have a
warm and compassionate environment, and staff that provide a caring
and thoughtful atmosphere.
C. PROJECT SUMMARY
Halifax Hospice, Inc. d/b/a Halifax Health Hospice of
Volusia/Flagler (CON #10134), a Florida not-for-profit corporation,
proposes to establish a 12-bed freestanding inpatient hospice facility in
Hospice Service Area 4B (Volusia and Flagler Counties). The proposed
CON Action Number: 10134
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inpatient hospice facility is to be located in the City of Ormond Beach,
Florida (northern Volusia County). The stated objective is to improve
geographic accessibility to inpatient hospice care for residents of
northern Volusia County and Flagler County. The applicant is licensed
to operate a hospice program in Hospice Service Area 4B and has three
inpatient hospice facilities in Volusia County.
Total project cost is $5,304,348. Costs covered are for land, building,
equipment, project development and start-up. The project involves
17,254 gross square feet (GSF) of construction and construction costs of
$3,481,740.
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.
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.
CON Action Number: 10134
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As part of the fact-finding, consultant Steve Love, analyzed the
application in its entirety with consultation from financial analyst
Mills Smith, 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.
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
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.
The applicant operates a 16-bed inpatient hospice facility in Port Orange,
an 18-bed facility in Orange City and a 12-bed facility in Edgewater.
Florida Hospital HospiceCare, the other inpatient hospice unit provider
in Hospice Service Area 4B, operates an eight-bed inpatient hospice
facility in Palm Coast (Flagler County). There are 54 licensed inpatient
hospice beds in Hospice Service Area 4B, spread among four facilities
(with 46 of these beds belonging to the applicant). There are no CON
approved inpatient hospice facilities pending licensure in Hospice Service
Area 4B.
Below is a map which identifies the approximate location of the
applicant’s proposed inpatient hospice facility and the existing inpatient
hospice facilities in Hospice Service Area 4B.
CON Action Number: 10134
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Hospice Service Area 4B Licensed Inpatient Hospice Facilities and
Halifax Health of Volusia/Flagler’s (CON application #10134) Proposed Ormond Beach Location
Source: Microsoft@MapPoint 2011
CON Action Number: 10134
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The applicant reports it has analyzed its historical inpatient utilization
levels and has sized its proposed project accordingly, with the project
estimated to have high utilization and be financially self-sustaining in
the long-term.
Halifax contends that the severity of illness among late-stage hospice
patients indicates that home care, contracted nursing home care and
acute hospital care lack the degree and depth of hospice care that will be
provided at the proposed inpatient hospice facility. The applicant
indicates it can provide the full array of hospice services more effectively
and efficiently through the inpatient hospice facility.
Halifax notes in Table 5, Volume 1 of CON application #10134, that it
had contracts with 31 nursing homes for inpatient hospice services in
Service Area 4B (two in Flagler County and 29 Volusia County) during
the 12-month period ending May 31, 2011. However, the applicant
states it was able to admit hospice patients to a maximum of 12 of these
31 facilities during the period, often due to the more stringent registered
nurse (RN) staffing requirements required by the Medicare Conditions of
Participation.
The applicant indicates that its inpatient admissions, patient days and
percent occupancy all increased from CY 2008 through CY 2010. See
the table below.
Hospice of Volusia/Flagler Inpatient Hospice Facilities
Admissions, Patient Days and Percent Occupancy
Reporting Period
Admissions
Patient Days
Percent Occupancy
CY 2008 1,249 9,012 72.0%
CY 2009 1,599 12,332 73.0%
CY 2010 1,736 12,985 77.0%
Jan-Mar 2011 467 3,440 83.0% Source: CON application #10134, Volume 1, Table 3.
Note: Halifax licensed the Edgewater facility with eight beds (CON #9850) effective 1/16/09 and added four
beds (N0900007) effective 3/31/09.
Halifax states that for the first quarter of 2011, total occupancy including
inpatient, respite and residential days at its three facilities (46 licensed
inpatient hospice beds) was 86.0 percent. The applicant’s table 4
indicates 23 admissions and 126 patient days were either respite or
residential days during the first quarter of 2011. Hospices are not
required to report inpatient hospice facility utilization to the Agency.
Therefore, the reviewer cannot verify the applicant’s reported
occupancies.
CON Action Number: 10134
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The location of the proposed freestanding inpatient hospice (proximate to
Ormond Beach in northern Volusia County, adjacent to I-95) is stated to
better accommodate inpatient hospice patient needs and their families in
northern Volusia and the entirety of Flagler Counties.
Halifax Hospice indicates that the project is designed to provide four key
benefits to inpatient hospice patients and their families, who reside in
northern Volusia and in Flagler Counties:
Treatment provided by a dedicated, professional team including
hospice trained physicians and nurse practitioners3;
Rapid access to care and services such as hospice nursing, medical
social work, counseling, volunteer and chaplain services, with an
interdisciplinary team experienced in palliative care, consistently and
promptly available to patients and their families;
A supportive, therapeutic environment focusing on the quality of life
and palliative care at the end-of-life, in a home-like, comfortable and
serene setting, where deaths will not be treated as “medical failures”
and end-of-life will be dealt with openly and with compassion; and
The decision to move a patient to inpatient care is a medical decision
and families and other care givers will be more comfortable with the
care and environment provided in a dedicated inpatient hospice
facility compared to an acute care hospital.
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.
3 Schedule 6A indicates no additional physician staff pursuant to this project and notes to the schedule do not discuss the contracting of physicians.
CON Action Number: 10134
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Population demographics and dynamics
As of January 2011, Hospice Service Area 4B’s total population was
604,375 persons. The two-county (Volusia and Flagler County) area is
projected to grow by 7.92 percent reaching a total population of 652,241
by January 2016, as shown below.
Population Growth
Hospice Service Area 4B January 2011 – January 2016
Age Change Group 2011 2016 Number Percent
Under 65 465,641 488,264 22,623 4.86%
65+ 138,734 163,977 25,243 18.20%
Total 604,375 652,241 47,866 7.92% Source: AHCA Florida Population Estimates 2000-2020, September, 2010.
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 – 18.20 percent compared to 4.86 percent from January
2011 to January 2016.
The reviewer further notes the estimated January 2011 to January 2016
total population that the Flagler County age 65 and over population will
increase by 8,864 residents (32.06 percent) compared to Volusia
County’s 16,379 (14.74 percent), as shown below.
Population Growth
Hospice Service Area 4B January 2011 – January 2016
Age Change County Group 2011 2016 Number Percent
Flagler Under 65 69,490 81,711 12,221 17,59%
65+ 27,648 36,512 8,864 32.06%
Volusia Under 65 396,151 406,553 10,402 2.63%
65+ 111,086 127,465 16,379 14.74%
All Counties Total 604,375 652,241 47,866 7.92% Source: AHCA Florida Population Estimates 2000-2020, September, 2010.
As the applicant stated previously, the project is designed to better
accommodate the inpatient hospice needs of residents of northern
Volusia County and Flagler County. If approved, the project would
become the applicant’s northernmost inpatient hospice facility.
Below is a table provided by the applicant comparing CY 2010 with CY
2015 projected population.
CON Action Number: 10134
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Projected Population Growth
Service Area 4-B 2010 Population Age 2015 Population Age Percent Increase 2010-2015
County Under 65 65 & Over Total Under 65 65 & Over Total Under 65 65 & Over Total
Volusia 404,138 109,519 513,657 421,589 127,248 548,837 4.3% 16.2% 6.8%
Flagler 74,365 24,566 98,931 91,089 32,414 123,503 22.5% 31.9% 24.8%
Total 478,503 134,085 612,588 512,678 159,662 672,340 7.1% 19.1% 9.8% Source: CON application #10134, Table 6, Claritas.
*Note: The reviewer notes the applicant states Service Area 4-A.
Halifax Hospice indicates that it had 2,043 inpatient hospice admissions
in 2010 and estimates 2,373 admissions in 2015, due largely to the
projected age 65 and over population in the total service area (Flagler
and Volusia Counties). Based on this estimate, the applicant anticipates
17,798 patient days in total service area admissions with a projected
need of 54.2 inpatient hospice beds, with an expected 90 percent
occupancy rate. The applicant’s projections indicate in 2015, the
demand will be 8.2 beds short of its current bed inventory and the
project is for a 12-bed inpatient facility.
The applicant estimates two key demographics will develop from a
growing elderly and more frail population, as reflected above. These are
that a larger population of patients will have no or impaired family
caregivers and a larger proportion of patients will suffer from multiple
health disorders, including dementia and other co-morbidities affecting
independent living.
Availability, utilization and quality of like services
Availability and utilization services are previously discussed above.
However, the applicant notes termination of its Flagler County hospice
inpatient services. The hospice agreement was terminated effective
December 1, 2006.
The applicant emphasizes that there is relatively low CY 2010 inpatient
admission rates for age 65 and over residents of the zip codes comprising
Ormond Beach in northern Volusia County and Bunnell and Flagler
Beach in southern Flagler County compared to other residents in Volusia
County (CON application #10134, Volume 1, Table 8). Halifax attributes
this disproportionately low inpatient hospice admission rate to the
termination of the inpatient agreement by Florida Hospital Flagler and
limited nursing home placement opportunities which it states are
compounded by the higher nursing home RN staffing standards for
inpatient hospice care required pursuant to Medicare Conditions of
Participation. Halifax also contends that inpatient hospice use rates are
highly co-related to the proximity of an inpatient unit and that
CON Action Number: 10134
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geographic accessibility is important because of the frailty of the patient
population, need for family visitation and barriers to transportation that
often affect elderly family members.
Medical treatment trends
Halifax indicates that from 2008 through 2010, its inpatient admissions
grew from 1,249 in 2008, to 1,559 in 2009 and 1,739 in 2010. This is a
38.99 percent increase in admissions from 2008 through 2010.
Inpatient days increased from 9,012 days in 2008, to 12,332 in 2009 and
12,985 in 2010. The applicant states that the average hospice patient
age is increasing, with the patient in later stage illness and that “a large
fraction” of admissions are now directly from acute inpatient settings to
an acute hospice inpatient setting, with some never receiving in-home
care.
Market conditions
Halifax states it is the sole hospice provider in Hospice Service Area 4B
that has made a strategic commitment to providing inpatient hospice
services to all of the residents of the service area. The applicant points
out that licensed hospice inpatient beds at Florida Hospice Flagler (the
only other provider in Hospice Service Area 4B with licensed inpatient
hospice beds) are not available to Hospice of Volusia/Flagler’s hospice
patients.
Halifax Hospice emphasizes that it is part of the Halifax Health System,
with a mission to serve all the residents of its service area, especially the
medically underserved. The applicant states the project is designed to
expand access to the geographically and medically underserved.
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:
CON Action Number: 10134
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(1) A description of any advantages that the hospice program will
achieve by constructing and operating its own inpatient beds.
Halifax contends that the project will offer the following benefits to
patients:
Treatment provided by a dedicated, professional team including
hospice trained physicians and nurse practitioners;
Rapid access to care and services such as hospice nursing,
medical social work, counseling, volunteer and chaplain
services, with an interdisciplinary team experienced in palliative
care, consistently and promptly available to patients and their
families;
A supportive, therapeutic environment focusing on the quality
of life and palliative care at the end of life, in a home-like,
comfortable and serene setting, where deaths will not be treated
as “medical failures” and end of life will be dealt with openly
and with compassion;
Families and other caregivers are more comfortable with the
care and environment provided in a dedicated facility than in
contracted hospital or nursing home facilities;
A physician employed by the applicant, experienced in palliative
inpatient care, will be available to serve any patient 24/7 or if
the patient requests their community physician, as their
primary physician that request will be honored; and
The effective use of volunteers to be present and supportive for
both patient and families is significantly enhanced by the
dedicated unit.
The applicant indicates that existing contractual arrangements
with acute care hospitals and nursing homes are unattractive
financially and do not allow the quality of care the freestanding
hospice will provide. The applicant proceeds to itemize how a
freestanding inpatient hospice facility is more cost-effective than
the current contractual arrangement.
Halifax states a net income loss of $47.91 per patient day (PPD)
under current inpatient hospital contractual arrangements but a
$35.05 net income gain PPD, if the project is approved. Hospice
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inpatient revenue PPD is constant at $636.22 and administrative
overhead PPD is constant at $47.91. The average direct expense
PPD goes from $636.22 if the project is not approved to $553.26 if
the project is approved. Project approval results in a savings to the
hospice of $82.96 PPD. (See the table below).
Inpatient Bed Cost Comparison
Hospitals vs. Freestanding Hospice Service Area 4B, Volusia-Flagler Counties
Per Patient Day Hospice Care Center Hospital Contract
Inpatient Day Inpatient Day
2nd Year 2nd Year
Hospice Inpatient $636.22 $636.22
Revenue (PPD)
Average Direct $553.26 $636.22
Expense (PPD)
Administrative $ 47.91 $ 47.91
Overhead (PPD)
Total Expense (PPD) $601.17 $684.13
Net Income to $ 35.05 ($47.91)
Hospice (PPD) Total Savings to $82.96
Hospice (PPD)
Source: CON application #10134, Volume 1, Table A.
Note: Average direct expense excludes physician expense, as no physician revenues or expenses are included
in hospital contracts.
Halifax concludes that the freestanding inpatient hospice facility
allows more direct control of costs, continuity and continuum of
care and end of life services. The applicant states various
duplications and unnecessary effort and expense can be
eliminated, such as arranging and executing patient transport and
the consolidation of medical records, patient examinations/
assessments and other costs associated with the transfer process.
(2) Existing contractual arrangements for inpatient care at
hospitals and nursing homes, or in the case of the proposed new hospice program, contacts made with hospitals and nursing homes regarding contractual arrangements for inpatient care.
Hospice of Volusia/Flagler states it has contractual arrangements
with most of the acute care hospitals (CON application #10134,
Volume 1, Table 7 shows five) and all of the skilled nursing
facilities (Volume 1, Table 5) in its service area for the provision of
CON Action Number: 10134
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inpatient hospice services. The applicant provides numerous
executed hospice inpatient contracts with Hospice Service Area 4B
acute care hospitals and nursing homes in the application’s
Volume 2, Appendix 1.
(3) Anticipated sources of funds for the construction.
Halifax indicates that the $5,304,348 project cost will be funded
from cash on hand. The applicant has sufficient resources to
complete this project without the need for additional borrowing.
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, Hospice of
Volusia-Flagler 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 five licensed hospice providers in Hospice Service Area 4B, as
follows:
Halifax Health Hospice of Volusia Flagler (the applicant);
Florida Hospital HospiceCare;
Odyssey Hospice;
VITAS Healthcare Corporation; and
Haven Hospice.
The map in part E.,1.,a. shows the existing inpatient hospice facilities in
Hospice Service Area 4B and the proposed project.
The applicant reiterates its inpatient occupancy rates at its existing
inpatient facilities and its projected bed need of over 54 inpatient hospice
beds by 2015 (Table 8, Volume 1 of 3). The applicant also states that the
CON Action Number: 10134
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proposed location of the new inpatient facility will better accommodate
the needs of residents of northern Volusia County and Flagler County.
Halifax concludes that the following factors demonstrate need for the
project:
A large number of hospice admissions are direct admissions from
hospitals to inpatient hospice facilities;
The applicant estimates 43 percent of its total hospice admissions
from hospitals are direct admissions to its GIP units;
Some hospice patients admitted to hospice care eventually develop
symptoms or conditions that require inpatient hospice care;
The two licensed SNFs in Flagler County do not provide 24-hour RN
coverage4, so they do not meet inpatient hospice requirements as they
relate to Medicare Conditions of Participation; and
A lack of satisfactory alternatives for inpatient hospice care primarily
for northern Volusia County and Flagler County (the sole two counties
in Hospice Service Area 4B) justify the project;
The effective and efficient delivery of the full array of the applicant’s
hospice services to patients and their families is diminished and
disjointed under the current circumstance;
The proposal will result in measurable economies of operations that
will permit the applicant to devote a larger proportion of its patient
care revenues to direct patient care and better support the hospice’s
mission; and overall
The proposal will “substantially enhance access to quality hospice
services among the residents in the applicant’s service area”.
Letters of support (see Item B) often stated that distance to the
applicant’s northernmost inpatient facility is a burden on and stressful
to patients and their families.
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.
Halifax Hospice, Inc. d/b/a Halifax Health Hospice of Volusia/Flagler
states it has a long (since 1979) and exemplary history of providing
quality of care. The applicant is a member of the National Hospice and
Palliative Care Organization and Florida Hospices and Palliative Care,
4 Per the November 2011 update of the Agency’s Nursing Home Guide at
http://apps.ahca.myflorida.com/NHCGuide/ViewFacilityData.aspx?Region=04 , the two licensed Flagler County SNFs, Flagler Pines and Grand Oaks Health and Rehabilitation Center) both offer 24-hour RN onsite coverage.
CON Action Number: 10134
17
Inc. Halifax Hospice states it is in full compliance with Medicare and
Medicaid Conditions of Participation.
Halifax provides a discussion of its quality of care and includes fiscal
year 2011’s, Quality Assessment Performance Improvement Plan, in the
application’s Volume 3, Appendix 7, Halifax Health-Hospice of
Volusia/Flagler Administrative Policies and Procedures Appendix 7. The
applicant also provides a one-page summary of its three question, patient
and family satisfaction survey used at its three existing freestanding
facilities (CON application #10134, Volume 3, Appendix 8).
Hospice of Volusia/Flagler participated in the Agency’s Hospice Provider
Family Satisfaction Survey of October through December 2010, attaining
a five-star rating on each of the five questions in the survey.
Respondents ranged from a low of 117 to a high of 146. The five-star
rating is the highest attainable and indicates respondents were 90 to 100
percent satisfied with the hospices’ performance.
Halifax Hospice indicates that it has received numerous awards during
its 32-year history. Examples of these include:
2010 United Way Volunteer of the Year;
2010 United Way Live United Winner;
2010 Port Orange Youth Achievement Award;
2006 MetLife Foundation Award of Achievement; and
2006 Florida Hospices and Palliative Care State Award-Marketing
Category.
Agency records indicate the applicant had two substantiated complaints
during the three-year period ending December 29, 2011. A single
complaint can encompass multiple complaint categories. The
substantiated complaint categories were for plan of care and medicine
problem/errors/formulary.
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
$5,304,348. Analysis:
CON Action Number: 10134
18
The applicant provided audited financial statements for the periods
ending September 30, 2011 and 2010. These statements were analyzed
for the purpose of evaluating the applicant’s ability to provide the capital
and operational funding necessary to implement the project.
Short-Term Position:
The applicant’s current ratio of 18.8 is well above average and indicates
current assets are almost 19 times current liabilities, a strong position.
The working capital of $37.2 million is a measure of excess liquidity that
could be used to fund capital projects. The ratio of cash flow to current
liabilities of 2.0 is well above average and a strong position. Overall, the
applicant has a strong short-term position. (See Table 1 below). Long-Term Position:
The applicant has no long-term debt and, therefore, has excess equity to
obtain debt financing, if needed. The ratio of cash flow to assets of 6.8
percent is below average and a moderately weak position. The most
recent year had $2,666,000 in operating income, which resulted in an
above average 5.7 percent operating margin. Overall, the applicant has a
good long-term position. (See Table 1 below). Capital Requirements:
Schedule 2 indicates total capital projects of $6,454,348 which includes
the CON subject to this review. The applicant is projecting a year one
operating loss for this project of $455,957 which will also have to be
funded.
Available Capital:
According to the applicant, funding for this project will come from cash
on hand. Based on our review, Halifax Hospice, Inc., has available
working capital of $37.2 million, $35.2 million in cash and current
investments and cash flow from operations of $2.5 million. It appears
that the applicant has sufficient resources to complete this project
without the need for additional borrowing.
Staffing:
Schedule 6A indicates, by December 31, 2014 (the first year of the
proposed project) and by December 31, 2015 (the second year of the
project), the applicant forecasts for this project a constant 25.25 FTEs.
The breakdown is as follows: 8.87 FTEs registered nurses [RNs]; 3.19
CON Action Number: 10134
19
FTEs licensed practical nurses [LPNs]; 7.97 FTEs hospice health aides
[HHAs]; 3.22 FTEs support/admin staff; one FTE directors/
coordinators/managers and one FTE LCSWs/MSWs.
The applicant’s recruitment and retention efforts are explained as
successful due to competitive wages and benefits, in a dedicated and
collegial work environment. The applicant provides a 24-page Halifax
Health – Work/Life Benefits Package, as an example of strides in
attracting and keeping staff (CON application #10134, Volume 3,
Appendix 10).
Conclusion: Funding for this project should be available as needed.
TABLE 1
Halifax Hospice, Inc. (CON application #10134)
9/30/2011
9/30/2010
Current Assets (CA) $39,308,000
$40,979,000
Cash and Current Investment $35,209,000
$9,403,000
Total Assets (TA) $61,977,000
$60,384,000
Current Liabilities (CL) $2,089,000
$2,333,000
Total Liabilities (TL) $2,089,000
$2,333,000
Net Assets (NA) $59,888,000
$58,051,000
Total Revenues (TR) $46,443,000
$46,715,000
Interest Expense (IE) $18,000
$26,000
Operating Income (OI) $2,666,000
$3,836,000
Cash Flow from Operations (CFO) $4,217,000
$2,455,000
Working Capital $37,219,000
$38,646,000
FINANCIAL RATIOS
9/30/2011
9/30/2010
Current Ratio (CA/CL) 18.8
17.6
Cash Flow to Current Liabilities (CFO/CL) 2.0
1.1
Long-Term Debt to Net Assets (TL-CL/NA) 0.0
0.0
Times Interest Earned (OI+IE/IE) 149.1
148.5
Net Assets to Total Assets (NA/TA) 96.6%
96.1%
Operating Margin (OI/TR) 5.7%
8.2%
Return on Assets (OI/TA) 4.3%
6.4%
Operating Cash Flow to Assets (CFO/TA) 6.8% 4.1%
d. What is the immediate and long-term financial feasibility of the
proposal? ss. 408.035 (1)(f), Florida Statutes.
CON Action Number: 10134
20
For year two of operations, the applicant projected the following
percentage of total patient days by group: Medicare at 77.8 percent,
Medicaid at 10.6 percent and commercial insurance at 11.6 percent.
The applicant indicated on Schedule 7 that the service it intends to
provide is routine home care and general inpatient care, for which the
Department of Health and Human Services sets rates. The Federal rates
were calculated for the Volusia County, Florida Wage Index for Medicare
Hospice payments of .9043 and inflated through December 2015. The
average price adjustment factor used was 3.0 percent per year based on
the new CMS Market Basket Price Index as published in the 2nd Quarter
2011 Health Care Cost Review.
Estimated patient days for each level of service from Schedule 7, 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.
Based on our calculation, the applicant’s projected gross revenue was
0.62 percent or $17,384 lower than the calculated gross revenue. The
difference in revenue projected is not deemed material and therefore
considered reasonable. Operating profits from this project are expected
to increase from an operating loss of $455,957 for year one to an
operating profit of $61,228 for year two.
Conclusion: This project appears to be financially feasible.
CON Action Number: 10134
21
HOSPICE REVENUE TABLE 2
Halifax Hospice, Inc. (CON application #10134)
Wage Index for Volusia County (.9043)
Wage Component Wage Index
Adjusted Wage
Amount Unadjusted Component
Payment Rate
Routine Home Care $103.77 0.9043 $93.84 $47.26 $141.10
Continuous Home Care $605.65 0.9043 $547.69 $275.81 $823.50
Inpatient Respite $84.56 0.9043 $76.47 $71.66 $148.13
General Inpatient $430.04 0.9043 $388.89 $241.80 $630.69
Payment Rate
Inflation Factor Year
Two
Inflation Adjusted Amount
Patient Days Year 2, June
30 -2015
Calculated Gross
Revenue
Routine Home Care $141.10 1.130 $159.40 265 $42,241
Continuous Home Care $823.50 1.130 $930.30 0 $0
Inpatient Respite $148.13 1.130 $167.34 0 $0
General Inpatient $630.69 1.130 $712.48 3,882 $2,765,850
Total 4,147 $2,808,090
From Schedule 7 $2,790,706
Difference
-$17,384
Percentage difference -0.62%
e. Will the proposed project foster competition to promote quality and
cost-effectiveness? ss. 408.035(1)(e) and (g), Florida Statutes.
If approved, this project will expand Hospice of Volusia/Flagler’s licensed
beds from 46 to 58. This project is not offering a new choice of provider
in the service area. However, it is offering a new freestanding inpatient
hospice facility in northern Volusia County.
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 11.6 percent of its
patient days from commercial insurance payers with 88.4 percent of
patient days expected to come from fixed price government payer sources
(Medicare and Medicaid).
CON Action Number: 10134
22
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 will not 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 applicant proposes to establish a new 12-bed freestanding inpatient
hospice facility (eight inpatient hospice beds with the remaining four
reserved for respite care and/or routine care) in Ormond Beach (Volusia
County) Florida. This facility is designed as a one-story building of
Florida Building Code (FBC) type II-B and National Fire Protection
Association (NFPA) type II(000) construction; both construction types are
adequate. The schematic plan indicates the building will be fully
sprinklered. This building is divided in two smoke compartments as
required by the Life Safety Code.
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. All patient rooms are provided with a
private toilet room attached. The schematic plan indicates that all
patient bedrooms and toilet rooms will be accessible.
The facility is divided in three sections. Administrative and public spaces
are located in the front near the entrance, patient bed rooms are located
in the center of the building and support areas are located in a separate
smoke compartment. The facility shall provide a Level 1, type 10, Class
48 generator, as required by FBC, section 437.2.8.1.
CON Action Number: 10134
23
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.
The Agency does not require any further plan reviews 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.
Halifax Hospice states it has a well-established record of services to
Medicaid, the medically indigent and medically underserved populations.
Hospice of Volusia/Flagler reports that it had 15,738 total patient days
during the 12-month period ending May 31, 2011, and 1,766 (or 11.2
percent) were a combination of self-pay, charity and Medicaid patients.
The majority of patient days (12,901 or 82.0 percent) were Medicare
patients.
CON Action Number: 10134
24
Halifax Hospice, Inc. d/b/a
Halifax Health Hospice of Volusia/Flagler Self-Pay, Charity and Medicaid Patient Days
12-Months Ending May 31, 2011
Payer Source Patient Days Percentage
Self-Pay 90 0.6%
Charity 418 2.7%
Medicaid 1,258 8.0%
Total 1,766 11.2%
In Schedule 7A, for year one ending December 31, 2014, the applicant
estimates a patient day payer mix as follows: Medicaid 10.50 percent;
Medicare 77.95 percent and commercial insurance 11.55 percent. For
year two ending December 31, 2015, the estimated patient day payer mix
is 10.61 percent Medicaid, 77.80 Medicare and 11.60 percent
commercial insurance.
F. SUMMARY
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
Statutes.
There are a total of 54 licensed inpatient hospice beds in Hospice Service
Area 4B. These beds are distributed as follows: the applicant operates a
16-bed inpatient hospice facility in Port Orange, an 18-bed facility in
Orange City; a 12-bed facility in Edgewater (all in Volusia County) and
Florida Hospital HospiceCare operates an eight-bed inpatient hospice
facility in Palm Coast (Flagler County). Project approval would result in
five freestanding inpatient hospice facilities in Hospice Service Area 4B,
four in Volusia County and one in Flagler County; the hospice bed count
would total 66.
After weighing and balancing all applicable review criteria, the following
relevant factors are listed with regard to the project in Hospice Service Area
4B.
CON Action Number: 10134
25
Halifax Hospice, Inc. d/b/a Halifax Health Hospice of
Volusia/Flagler (CON #10134), proposes to establish a 12-bed
freestanding inpatient hospice facility in Hospice Service Area 4B
(Volusia and Flagler Counties). The proposed inpatient hospice facility is
to be located in the City of Ormond Beach, Florida (northern Volusia
County). Halifax states that the facility will primarily serve residents of
Ormond Beach (northern Volusia County) and Bunnell and Flagler Beach
(southern Flagler County).
Total project cost is $5,304,348. The project involves 17,254 GSF of
construction and construction costs of $3,481,740.
The applicant does not propose conditions on the project.
Need/Access:
The Agency does not publish need for inpatient hospice beds. There
are no CON approved freestanding hospice facilities or beds pending
in Hospice Service Area 4B.
Halifax Hospice estimates 43 percent of its total hospice admissions
from hospitals are direct admissions to its inpatient facilities.
Some hospice patients admitted to the applicant’s care, eventually
develop symptoms or conditions that require inpatient care.
The two licensed SNFs in Flagler County do not meet inpatient
hospice requirements as they relate to Medicare Conditions of
Participation.
Halifax contends that the lack of satisfactory alternatives for inpatient
hospice care in northern Volusia County and Flagler County justify
the project.
The effective and efficient delivery of the full array of the applicant’s
hospice services to patients and their families is diminished and
disjointed under the current circumstance.
CON Action Number: 10134
26
The proposal will result in measurable economies of operations that
will permit the applicant to devote a larger proportion of its patient
care revenues to direct patient care and better support the hospice’s
mission. The applicant projects a total savings per patient day of
$82.96, if the project is approved.
The proposal will “substantially enhance access to quality hospice
services for residents in the applicant’s service area”.
Letters of support indicated distance to the applicant’s northernmost
inpatient facility is a burden on and stressful to patients and their
families. Quality of Care:
Halifax Hospice provided a detailed description of its ability to provide
quality hospice care.
Agency records indicate two substantiated complaints against Halifax
Hospice during the three year period ending December 29, 2011.
The applicant offered examples of various service awards.
Financial Feasibility/Availability of Funds:
The applicant has an overall strong short-term position and an overall
good long-term position.
Funding for the project should be available as needed.
The project appears to be financially feasible.
Medicaid/Indigent/Charity Care:
Hospice programs are required by law to provide services to all who
seek them.
Schedule 7A estimates that Medicaid will comprise 10.50 percent of
total patient days in year one and 10.61 percent of total patient days
in year two of the proposed project.
CON Action Number: 10134
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Architectural:
The proposed fully sprinklered inpatient hospice facility meets all
Florida Building Code, National Fire Protection Association and Life
Safety Code 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
Approve CON #10134 to establish a 12-bed freestanding inpatient
hospice facility in Hospice Service Area 4B, Volusia County. Total project
cost is $5,304,348. The project involves 17,254 GSF of construction and
construction costs of $3,481,740.
CON Action Number: 10134
28
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 Chief, Bureau of Health Facility Regulation