STATE AGENCY ACTION REPORTahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/10097.pdf · HealthSouth Rehabilitation Hospital of Marion County, LLC/ CON #10097 505 East Huntland Drive, Suite

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number

HealthSouth Rehabilitation Hospital of Marion County, LLC/ CON #10097

505 East Huntland Drive, Suite 270 Austin, Texas 78752

Authorized Representative: Ronald T. Luke, JD, PhD (512) 371-8166

Marion Community Hospital, Inc./CON #10098 1431 SW 1st Avenue

Ocala, Florida 34474 Authorized Representative: H. Rex Etheredge

(352) 401-1000

2. Service District/Subdistrict

District 3 (Alachua, Bradford, Citrus, Columbia, Dixie, Gilchrist,

Hamilton, Hernando, Lafayette, Lake, Levy, Marion, Putnam, Sumter, Suwannee and Union Counties)

B. PUBLIC HEARING

A public hearing was requested regarding the proposed comprehensive medical rehabilitation (CMR) projects in Marion County, District 3. The

public hearing was held on Tuesday, October 26, 2010, at the WellFlorida Council Inc. main conference room in Gainesville, Florida.

Kim Gokhale, MA, MPH, Associate Planner for WellFlorida Council, Inc., conducted the hearing.

There were nine speakers whose comments are summarized below. Cynthia Kelleher, Randall Braddom, M.D., Cynthia M. Toth, and Dr. Ron Luke representing the applicant, spoke in support of HealthSouth

CON Action Numbers: 10097 & 10098

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Rehabilitation Hospital of Marion County, LLC (CON #10097). Robert Colen and A.J. Biros, local members of the community also spoke in

support of HealthSouth.

Cynthia Kelleher, Vice President of Corporate Development for HealthSouth, thanked the Agency for a prior project approval, two and a half years ago. Per Ms. Kelleher, the application focused on illustrating

why the project is needed and that the level of available medical rehabilitation service makes a difference in people‟s lives and that patients in Marion County are five to 10 times less likely to get CMR care

due to access issues. Ms. Kelleher stated HealthSouth is the largest provider of inpatient rehabilitation services in the country, with 97

rehabilitation hospitals, some having outpatient facilities connected to them. Ms. Kelleher stated HealthSouth has nine CMR hospitals with 733 beds in Florida. HealthSouth‟s first Florida facility was located in Miami

and was licensed in1996 and its newest (CMR) facility is HealthSouth Rehab Hospital of Spring Hill licensed in 2003. She indicated that

HealthSouth‟s nine Florida rehab facilities are Joint Commission certified in stroke care and two are Joint Commission certified in brain injury and spinal cord injury.

Ms. Kelleher stated that HealthSouth will treat all patients appropriate for its services and not just those over the age of 15. She also stated that

one of the project‟s advantages would be the flexibility to serve a range of patients. Ms. Kelleher stated that her organization operates 40-bed

facilities all over the country and finds this arrangement financially and programmatically feasible. She stated that HealthSouth prides itself on high quality care that is measured by outcomes, focuses on technology,

and is cost-effective, with its singular focus on inpatient rehabilitation. Ms. Kelleher stated HealthSouth commits to spend a quarter of a million dollars in rehabilitation technology and to implement electronic medical

records (EMR) at the facility at a cost of one million dollars. She stated that HealthSouth continuously benchmarks to achieve best practices

and to maintain its focus. Ms. Kelleher stated that Marion County, has the largest age 65+

population of any Florida county that does not have a CMR facility. Ms. Kelleher stated both applicants (CON #10097 and CON #10098) use

similar bed methodologies to reach their bed need conclusions. Ms. Kelleher stated Marion County is a distinct medical market with no CMR beds and that HealthSouth does not see its project as shifting

market share since it believes patients are simply not accessing the level of care the applicant plans to offer. She contended that if a CMR facility is physically located within the county, patients will access the care they

are presently not getting. Ms. Kelleher stated that HealthSouth‟s community assessment indicated that Marion County is “somewhat

polarized” between the two existing hospital systems. HealthSouth will


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serve all CMR patients regardless of which acute care hospital they are received from and the project will provide the physicians in the

community another discharge option.

Ms. Kelleher also stated HealthSouth has built the proposed architectural model 11 times, with a range of 32 to 60 beds, tweaked over the years with a focus on patient independence and home

transition. The patient rooms will all be private. Ms. Kelleher indicated the applicant will participate in Medicare and Medicaid, charity and indigent care, will be Joint Commission and CARF accredited with stroke

rehab and has done work on outreach, focused on continuum of care.

Randall Braddom, M.D. stated that he practices in orthopedics, rehabilitation and sports medicine, in Red Bank, New Jersey, and has worked in both CMR and skilled nursing facility (SNF) settings over 38

years in four states. Dr. Braddom contends that patients in Marion County need to have a choice of CMR or SNF levels of care in order to

receive the maximum amount of functional return, to in turn lead to maximum quality of life and freedom. He commented that SNF average lengths of stay run about 30 days on a CMR diagnosis whereas CMR

facility average lengths of stay run about 15 to 16 days (depending on diagnosis). Dr. Braddom also commented on more frequent physician visits, specialty care physician certifications, 24-hour nursing care and

three hour minimum therapy at a CMR facility compared to lesser requirements at a SNF. Dr. Braddom stated that based on various

studies of Virginia and Wisconsin patients, death rates are lower at CMRs compared to SNFs, and CMR patients have lower readmission rates than SNF patients. Dr. Braddom emphasized that both SNF and

CMR care options are needed in a community the size of Marion County. Cynthia Toth, a health care consultant, engaged by HealthSouth,

indicated she was a physical therapist for about 12 years before becoming a hospital administrator (Ms. Toth‟s resume indicates she was

hospital administrator for Shands at AGH during 2000-2004). Ms. Toth stated that she conducted a community need assessment focused on gaining a better understanding of how patients and their families

transition home after an acute episode of rehabilitation and what resources or gaps exist in the Marion County community and to learn

more about Marion County at large. The assessment centered on post-acute need and the community‟s and community physicians‟ awareness of post-acute options for inpatient rehabilitation. Ms. Toth indicated that

discussions where held with about 50 persons over the course of about two months and that five themes of community need emerged1. One is

1 CON application #10097, page 14, lists 55 persons contacted including: 16 physicians, 16 government officials and Agency representatives, 12 health care executives and professionals, 11

patients and families, eight business leaders, five educators, and three support groups.


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the need to educate the community on post-acute options and the differences between the levels of care. Two is that reintegration and

transition assistance for patients and families is lacking. Three is to provide a general community awareness and education about people with

disabilities, and their access and support needs. Four is an infusion of new jobs and economic stimulus, particularly in training opportunities for nursing and allied health professionals and finally, family members of

former patients, physicians and business leaders believe there is a lack of awareness of what inpatient (CMR hospital) rehabilitation is and how it differs from SNF rehabilitative care. Ms. Toth indicated that

neurologists interviewed stated that when they recommend rehabilitation options in Gainesville, Spring Hill, Jacksonville and Leesburg “very few

patients leave the area for the care they need”. Ms. Toth concluded that CMR services result in faster and better overall health care outcomes and patient reintegration back into the community. HealthSouth will ensure

patient community reentry through a community outreach coordinator and is committed to providing funding for three years to the Marion

County Parks & Recreation Department to assist in community reintegration.

Robert Colen, Vice-Chairman of the On Top of the World Homeowner‟s Association, located in Ocala (Marion County), indicated he represented over 8,000 residents, 55+ years of age and possibly the largest

homeowner‟s association in Marion County. Mr. Colen stated the type of intense rehabilitation that HealthSouth provides is vital to the quality of

life for his residents, that many do not drive at all and that travel distance is too far to existing CMR providers in the district. Mr. Colen emphasized the value and benefit of nearby CMR services that

HealthSouth would provide. A. J. Biros, stated that he was a former paramedic firefighter and was

transferred to Shands due to an accident he sustained at age 23 (he is now 28) in Marion County and that due to distance, his family could not

visit him. He also stated he could not see himself in a SNF. Mr. Biros was complimentary of existing hospitals in Marion County (specifically mentioning West Marion Community Hospital and Ocala Regional

Medical Center). Mr. Biros also emphasized the value and benefit of nearby CMR services that HealthSouth would provide. Mr. Biros

commented on how the project would increase jobs and patient care. Mr. Biros believed a facility dedicated to CMR patients would be more focused specifically on those patients.

Ginger Carroll, CEO of West Marion Community Hospital, Gene Nelson, the health care consultant for Marion Community, and Steve Ecenia, the

applicant‟s attorney representative, spoke in support of Marion Community Hospital, Inc. (CON #10098). Mr. Ecenia also spoke against

HealthSouth‟s CON #10097.


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Ginger Carroll indicated Ocala Health System has been serving Marion

County since 1973 and has a „tremendous knowledge base” of what the area medical community looks like, the physicians in the area and what

services are available locally. Per Ms. Carroll, the project is designed to provide CMR services that are geographically accessible to local residents, is cost-effective, will maximize benefits to physicians, patients

and families in need of services and will allow for a continuum of care by a familiar provider. Ms. Carroll commented the applicant has strength and support through affiliation with HCA, which she stated is the second

largest provider of CMR services in the country. Ms. Carroll stated her organization supported HealthSouth‟s 2008 application for a

freestanding CMR hospital but that after that was denied, Ocala Health System considered providing CMR services to residents of Marion County (on a smaller scale). Ms. Carroll indicated that CMR services within an

acute care hospital will provide the best comprehensive services for Marion County. Ms. Carroll stated the area has a friendly competitive

medical community, not unlike that in Alachua County (Gainesville) and that a smaller CMR unit is appropriate for Marion County.

Gene Nelson, Consultant, Health Strategies, Inc., stated that Marion County is the largest county in total population, with the largest age 65+ residents in District 3 but has no licensed or approved CMR beds and is

the second largest county in total population statewide with no CMR beds. Mr. Nelson indicated that District 3‟s CY 2009 CMR average

occupancy of 79.3 percent was the highest in the state. Mr. Nelson commented this is just shy of the 80 percent threshold in state rules for approving additional CMR beds, under normal circumstances.

Mr. Nelson indicated that since existing providers can incrementally add beds and forever keep the utilization rate low and suppress need. Mr. Nelson stated that several written responses from the community

strongly support the applicant‟s belief that the lack of CMR beds in Marion County represents a “substantial unmet need” which “imposes an

unfair burden” on patients and their families who cannot or will not seek CMR care outside the area.

Mr. Nelson indicated that CMR services are underutilized in Marion County, based on a comparison of acute care facility discharges to CMR

providers in the district and acute care facility discharges to SNFs. Mr. Nelson stated that some claim SNFs are being substituted for CMR providers and that if true, one would expect a higher percentage of

discharges to SNFs. He indicated that discharges to SNFs do not off-set the shortfall of discharges to CMR providers for Marion County residents. As a consequence, Mr. Nelson stated the application is complimentary

rather than competing with existing nursing homes. Based on the applicant‟s expected and actual discharge calculations, Mr. Nelson


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indicated a “not normal need” of between 21 and 25 additional CMR beds for Marion County.

Mr. Nelson stated the project will require an addition to an existing

hospital facility at “far less cost” and will meet the need, while HealthSouth (CON #10097) will require the acquisition of land and construction of a new hospital. Mr. Nelson further indicated the

applicant will not jeopardize existing CMR providers but the competing HealthSouth will by necessity have to draw patients from existing CMR providers due to the number of beds it requires. Mr. Nelson indicated

Marion Community‟s project will give Marion County patients and their physicians a choice between inpatient CMR services, SNF or outpatient

care, will be competitive, can be implemented timely and will be well utilized and financially stable. He concluded that Marion Community‟s project will increase CMR services in Marion County so that they are

more in line with similar services in the district.

Steve Ecenia of Rutledge, Ecenia & Purnell, P.A., Attorneys and Counselors at Law, commented first on written materials he entered into the record, a February 16, 2010, 17-page Final Order and corresponding

105 page Recommended Order on CON #10009.2 The Recommended Order proposed denial and the Final Order denied CON #10009. Mr. Ecenia indicated that little to nothing has changed to warrant

approval of CON application #10097. It was stated that previously HealthSouth had a hospital site (for CON #10009) but the current

competitor‟s application (CON #10097) does not have a site. Mr. Ecenia indicated HealthSouth had its chance and submitted all the evidence it could muster to support a 40-bed freestanding CMR hospital but was

rejected by the Agency. He further stated there would be no point to rehash issues already raised in the competitor‟s original application. Mr. Ecenia indicated that existing providers in the community, identified

as TimerberRidge and Shands, heavily focus opposition to HealthSouth (CON #10097) and not CON #10098.

Mr. Ecenia further indicated CON #10097‟s CMR bed demand estimates are even higher than in CON Application #10009, which was soundly

rejected by the Recommended Order and Final Order. Mr. Ecenia compared Marion Community Hospital‟s project cost of around 8.1

million to HealthSouth‟s and indicated that need could be met on a small scale and at significantly reduced cost by CON #10098. He indicated that HealthSouth has conditioned for 1.8 percent Medicaid and 0.7

percent charity patient days compared to Marion Community‟s (CON #10098) 4.0 percent Medicaid, Medicaid HMO and charity patient

2 Rendition No. AHCA-10-0196-FOF-CON, CON No. 10009, DOAH Case No. 08-3814CON and Case

No. 08-3815CON.


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days. Mr. Ecenia also expressed doubt that HealthSouth would maintain a 40-bed inpatient CMR facility considering that it does not operate any

CMR facilities in Florida under 60 beds. However, 80 percent utilization in the existing facility would be required to add CMR beds by exemption

from CON review. Should, either project become operational, 10 CMR beds could be added by the existing provider via exemption under Rule 59C-1.008(6)(c) when utilization exceeds 80 percent during the previous

12 months and there have been no bed additions during these 12 months. Mr. Ecenia stated that approval of the HealthSouth proposal would do nothing to foster competition for CMR services in the area and would in

fact, lessen competition because HealthSouth‟s ability to add beds incrementally would worsen the disparity between HealthSouth‟s market share and that of the other providers in the district. Mr. Ecenia

concluded that Marion Community‟s project (CON #10098) would enhance and improve continuity of care and circumstances in the area

do not support a polarization of health care providers as suggested by HealthSouth representatives.

Ron Luke, J.D., Ph.D., President, Research & Planning Consultants, L.P., spoke in support of HealthSouth (CON #10097). Dr. Luke stated he has been doing health planning consulting in Florida since about 1983 and

that he was retained by HealthSouth after the Recommended and Final Order (previously mentioned ). Per Dr. Luke, the application has a

broader patient range in specialized programs, with additions being spinal cord injury and traumatic brain injury, and additional community initiatives. He stated his belief that the Agency should grant the same

preliminary approval to this application as in the previous application. Dr. Luke indicated that HealthSouth‟s full-service 40-bed freestanding inpatient CMR facility is the best alternative of the two applications.

Dr. Luke indicated the districts were established some 30 years ago and

demographics have changed over time. He commented that the Agency has approved CMR units in sub-acute districts (in Citrus, Hernando, Lake and Sumter Counties) and that Marion County is the only sub-

acute area in the district that does not have CMR beds. Dr. Luke indicated the applicant would not be a threat to existing local providers

because HealthSouth is not in the acute care hospital business. He stated that Marion County patients do not seek CMR services at Shands in spite of Shands efforts to acquire patients from the Marion County

area. He indicated that it is not likely this will materialize over the next five years since it has not over the last five. Dr. Luke also stated that TimberRidge does not have a physiatrist and has only the most basic

rehabilitation equipment. He discussed the (U.S. federal agency) Centers for Medicare & Medicaid Services (CMS) imposing new limitations to SNF

rehabilitation reimbursement and placing more emphasis on applicable


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patients being served at CMR facilities, as opposed to SNFs. Dr. Luke indicated that the referral rate to CMR by District 3 acute care hospitals

located in counties that have freestanding CMR facilities would be the best predictor of how Marion County patients and physicians would

respond to the project (as opposed to including discharges in counties that lack a CMR unit).

Dr. Luke indicated that because HealthSouth has a facility in Hernando County is no more reason to deny the project than the fact that HCA has a facility in Marion County and proposes an acute care hospital in

Sumter County as both facilities would address different markets. Dr. Luke, in conclusion, stated that the application is “a bit of a do-over”,

has been done “right this time” and that the best thing for Marion County is to have a full-service freestanding CMR facility, to meet the needs of its residents like other areas do.

Steve Ecenia, indicated that if CON #10097 is approved, HealthSouth‟s

market share can only go up. He stated his client is committed to providing a full range of services in a reasonably sized unit. Mr. Ecenia reiterated that Mr. Nelson‟s estimate of CMR bed need of up to 25 beds

by 2016 is well under 40 beds as proposed in HealthSouth‟s application. There were two written submissions regarding CON #10097 and three

regarding both CON #10097 and CON #10098. A brief review of these follows.

F. Philip Blank of Blank & Meenan, P.A., Attorneys at Law, on behalf of Shands Teaching Hospital & Clinics, Inc. d/b/a Shands Rehab Hospital

submitted a 15-page opposition letter to HealthSouth‟s (CON #10097) project that included four separate exhibits. Shands‟ opposition is based on: the applicant‟s defined service area, the applicant‟s need

methodology, availability, accessibility and utilization, geographic and programmatic access, quality of care, economic access, availability of

resources including health personnel, management personnel and financial resources, the extent of access to health care for residents of the service district, financial feasibility, competition, and adverse impact.

The included exhibits reference a January 2009 travel study along with deposition and witness testimony concerning CON #10009.

HealthSouth submitted a 23-page spiral bound pamphlet (power point presentation format) document for CON application #10097. The

document addresses project goals, the applicant‟s current Florida and nationwide locations, referral sources and admissions protocols, the applicant‟s profiles concerning high quality care, investments in

technology and cost-effective care, Marion County‟s needs and medical market, CY 2009 stroke and brain injury discharges in the area,

architectural drawings of the project, the hospital overview, comparisons


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of IRF-SNF-LTCH care (i.e. admission criteria, ALOS, etc.), lower death rates and lower readmission rates in CMR than SNF, “What the

community is saying” and community need.

Richard Soehner, Administrator, TimberRidge Rehabilitation & Nursing Center, submitted written opposition to both projects. His opposition letter included a 17-page Final Order and corresponding 105-page

Recommended Order concerning, HealthSouth‟s previously approved CON. Mr. Soehner indicated that a substantial portion of patients in need of rehabilitation services can be appropriately cared for at either a

skilled nursing facility like TimberRidge or a CMR. He concluded that needed services are available, accessible and being provided in a quality

and cost-efficient manner. Stephen Purves, FACHE, President & CEO, Munroe Regional Medical

Center, submitted a two-page opposition letter. He concluded that there is a published need of zero CMR beds for District 3, and the project

would have a negative impact on his hospital‟s financial position and its ability to serve the community as the area‟s only safety-net hospital.

As previously mentioned, Steve Ecenia, on behalf of Marion Community Hospital, Inc., submitted a copy of the CON #10009 Final Order.

Letters of Support:

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) included 18 letters of support dated between August 16

and October 4, 2010. Nine of these were from local physicians, three were from executives of “On Top of the World Communities, Inc.”, two were from physical therapists, and one each from Thomas E. Skinner,

CEO of Workforce Connection; Peter Beasley, Campus Director for Ramussen College, Peder Johnson, CEO of Hampton Manor and one a

relative of a patient. There were eight additional letters, one undated and seven that were dated during March 26 – April 4, 2008. Two of these were from HCA hospital executives, three were from patients and three

were from relatives of patients. Excerpts of the physician letters follow.


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Thomas E. Skinner, CEO of Workforce Connection (for Citrus, Levy and

Marion Counties) indicates that his organization‟s labor study shows 827 persons in the healthcare industry “that we have recently trained

through our local workforce funds” and the additional individuals who are currently seeking employment in the field of health care (292) and construction (494) individuals that are presently seeking employment.

Mr. Skinner indicates that the Marion County labor force consists of 135,986 persons with 19,616 or 14.4 percent of them unemployed. He indicates that the project is projected to add 80 general medical and

surgical hospital jobs in Marion County.

Mr. Skinner also states that is his organization is ready to assist HealthSouth “with the recruitment, training, and placement needs from the construction of the facility to the employment of the hospital staff”.

Peter Beasley, Campus Director for Ramussen College – Ocala Campus,

indicates that clinical experiences for “our” students are limited. HealthSouth‟s project would greatly benefit “our students in health-related programs” as they “would be exposed to rich clinical experiences

in an inpatient rehabilitation facility that an organization such as HealthSouth would provide”. He also states that HealthSouth “would provide job development opportunities for our graduates”.

Peder Johnson, CEO of Hampton Manor indicates that patients in need

of acute rehabilitation are forced to travel great distances or go without the care they need. When patients are forced to leave the area, the family‟s ability to participate in their loved ones care and recovery

process is (adversely) affected, according to Mr. Johnson. Kenneth D. Colen, President of On Top of the World Communities, Inc.

writes:

A relative of a patient who received CMR treatment in Gainesville writes:


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Marion Community Hospital, Inc. (CON #10098) has 10 letters of support dated between September 23 – 30, 2010 and two letters that

were not dated. Of the 10 dated letters, five were physicians, three were registered nurses, one was a hospital case manager, one was from Mr.

Eric Townsend, President of Marion County Continuity of Care which he describes as “a group of healthcare professionals” and one was from a local business owner. Excerpts of these letters include:

William Gaya, MD, Board Certified Neurologist and Jay J. Rubin, MD, PA, (Neurologist) indicate that they strongly support the addition of

inpatient rehabilitation services as they indicate need is convincing. Both cite the difficulty for patients and family with travel to Gainesville or

Lady Lake to obtain CMR services. Dr. Anna Khanna (Neurologist) signed the same letter as Dr. Rubin. Jose A. Gaudier MD (Neurology) indicates that when “aggressive rehabilitation” is needed “many of our

residents are currently receiving sub-optimal level of rehabilitation, which in many cases leads to further deterioration of health or decreased

productivity”. He also cites the travel difficulty for patients and families when the patient must go outside the county. Dr. Anish Khanna (Ocala Hospitalist Group, PA) indicates it is “a fact that a large portion of

patients sent to skilled nursing facilities for rehabilitation do not receive enough physical therapy and/or supervision”. Two of the registered nurse letters, also with Ocala Hospitalist Group, PA provided the same

letter as Dr. Anish Khanna. Brenda Forrest RN, indicates that she is a Stroke Program Coordinator and that many of our Marion County stroke

patients who could benefit from comprehensive inpatient rehabilitation services find it very inconvenient to travel to Gainesville and Leesburg because of the “far travel distance”.

Cindy Warner, BSW, states that she a hospital case manager on the Neuroscience unit at West Marion Community Hospital and that she has

sent some patients to Shands Rehab over the years. However, “more often than not, patients and families opt for something closer to home

and receive far less intensive rehabilitation in one of our local skilled nursing facilities”. Mr. Townsend and Jim Samuelson, the local business operator, indicate aggressive multi-modality rehab is not available in

Marion County and having such a unit at West Marion would be a huge benefit.


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C. PROJECT SUMMARY

HealthSouth Rehabilitation Hospital of Marion County, LLC

(CON #10097) proposes to establish a 40-bed comprehensive medical rehabilitation (CMR) hospital on a 5.5 to 6.5 acre site in Marion County, Florida.

The applicant proposes the following conditions to CON approval on the

application‟s Schedule C.

1. The hospital will provide 1.8 percent of patient days to Medicaid patients and 0.7 percent of patient days to uninsured patients who meet the definition of charity care patients under Florida Statutes.

HealthSouth will work with acute care hospitals, state human service agencies and private organizations to identify uninsured

persons in need of CMR inpatient services in District 3.

2. The hospital will institute a stroke rehabilitation program when it

opens and will obtain specialty certification from the Joint Commission in stroke rehabilitation prior to the third year of operation.

3. The hospital will offer a comprehensive outpatient rehabilitation

program, predominantly for persons who received CMR services at the hospital.

4. The hospital will provide an Auto Ambulator and the other equipment described below as part of a technology packages when

the hospital opens. If technological change makes better equipment available by the time of purchase the hospital may substitute more modern equipment that serves the same

functions.

AutoAmbulator

ReoGoAmbulator

Balance Master

Visipitch SaeboFlex wrist splint and exercise station

VitalStim

Bioness

Interactive Metronome3

3 The applicant describes this equipment in CON #10097 pages 31-35. HealthSouth conditions to provide a wide range of technological equipment and proposes $4,313,503 for total equipment for the

facility with $234,681 designated as Tech equipment in Notes to Schedule 1.


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5. The hospital will be accredited by the Joint Commission. The Joint Commission accreditation will occur by the end of the first year of

operation.

6. The medical director of the hospital be will board-certified or board-eligible physiatrist with at least two years of experience in the medical management of inpatients requiring rehabilitation

services.

7. The hospital will provide at no charge to the community and in accordance with state and federal laws, education programs on

disabilities awareness and community re-entry to improve the independence and quality of life of persons with disabilities and their caretakers.

a. The hospital will employ a part-time (.5 FTE) Community

Outreach Coordinator who will assist patients and families in transition as they return to their communities after an inpatient rehabilitation stay (Attachment 19b). This allied

health professional will be knowledgeable of the needs of patients and families and of the local, regional, and national resources.

b. The hospital will include space that will be made available to

support group meetings and for community education programs developed by HealthSouth and others.

c. Twice annually the hospital will sponsor workshops on the

Disabilities Awareness Merit Badge for Boy Scouts and Girl Scouts in the Marion District of the North Florida Council.

8. HealthSouth will provide $10,000 in nursing scholarships for three years to both Rasmussen College and The College of Central

Florida for a total of $20,000 for each of the three years. In order to quality for scholarships, students will have to meet the following criteria:

Must be a Marion County resident

Must be either a registered nursing student or a physical therapy assistant

Must maintain a 3.0 GPA

9. HealthSouth will provide a clinical instructor three days a week for rotation of nursing students for three years for the College of

Central Florida ($10,000 for each of the three years).


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10. HealthSouth will donate $7,000 annually for the first three years the hospital is in operation to the Marion County Parks and

Recreation Department to fund purchases of adaptive equipment to increase access to outdoor recreation activities for persons with

disabilities. The Department provided a list of the types of adaptive equipment it would like to purchase that reads as follows:

Adaptive kayaks

Kayak paddles/gear (adaptive)

Beach Scooter

Mobi Chair

Mobi mat

Transition plate for wheel chair transfer

Boat ramp plate for ADA access

Hand pedal bike

The applicant also provided 10 “Measurement of Conformance with

Conditions” criteria. Portions of the applicant‟s measurement of condition one on reporting Medicaid and charity care would not be required in the applicant‟s condition compliance report. The applicant

would be required to report the number of total patient days and number of days that were provided the Medicaid, Medicaid HMO and charity care patients. Section 408.043 (4), Florida Statutes prohibits accreditation by

any private organization as a requirement for the issuance or maintenance of a certificate of need, so Joint Commission certification

(portion of condition 2 and all of 5) will not be cited as conditions to approval. Condition number 6, the facility medical director is required by administrative rule and as such does not require a report. Additional

“Measurement” of conditions proposed by the applicant include. 1. The hospital will provide a copy of the admission policy for the

outpatient rehabilitation program, a program description and a count of the patients served each year.

2. In its initial report the hospital will provide photos of each piece of

equipment installed in the hospital. If the hospital has chosen to

purchase a more modern piece of equipment than that listed will be amended and the new equipment replacing it noted.

3. The hospital will provide a list of all community education

programs held that relate to condition number 7. This list will show the title of the course, the instructors, the dates of the courses and the intended audience.


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a. The hospital will include the curricula vita of any person filling the position of Community Outreach Coordinator

during the calendar year and their dates of service. The report will also include a description of his or her activities

throughout the year. b. The hospital will prepare a list of all meetings held in the

hospital that relate to condition number 7. The list will show

the nature of the meeting, the groups holding the meeting, and the date of the meeting.

c. The hospital will prepare a list of the merit badge workshops

held during the year. The list will include the date, location and number of students enrolled in each workshop.

4. The hospital will provide a list of the scholarship recipients, the

school each attended, the degree program and the amount of the

individual scholarship.

5. The hospital will include a letter from an administrator at the College of Central Florida acknowledging the donation and identifying how the funds were used.

6. The hospital will include a letter from an official of the Marion

County Parks and Recreation Department acknowledging the

donation and identifying how the funds were used.

Should the project be approved, the applicant‟s proposed conditions would be reported in the annual condition compliance report as required by Rule 59C-1.013 (3) Florida Administrative Code.

The total project cost is estimated at $21,079,443. The project involves 49,900 gross square feet (GSF) of new construction at a construction cost

of $9,871,171.

Marion Community Hospital, Inc. (CON #10098) proposes to establish a 20-bed comprehensive medical rehabilitation unit by adding a fourth floor to West Marion Community Hospital in Marion County, Florida.

The applicant proposes to condition CON approval to 4.0 percent of the

20-bed unit‟s total annual patient days being provided to Medicaid, Medicaid HMO and charity care patients.

The total project cost is estimated at $8,084,939. The project involves 18,950 gross square feet (GSF) of new construction at a construction cost of $5,609,200.


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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, Chapters 59C-1 and 59C-2, Florida Administrative Code, and local health plans. 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 and data

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(s) best meets the review criteria.

Rule 59C-1.010(2) (b), Florida Administrative Code, prohibits any amendments once an application has been deemed complete. The

burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the

Certification of the applicant.

As part of the fact-finding, the consultant, Steve Love, provided the public hearing review, Cheslyn Green provided background utilization information in Item E. 1. a & b., and James B. McLemore, analyzed the

application with consultation from the financial analyst, Derron Hillman, who reviewed the financial data and architect, Scott Waltz, who evaluated the architecturals and the schematic drawings.

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, Chapter 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? ss. 408.035(1), Florida Statutes. Rule 59C-1.008(2),

Florida Administrative Code and Rule 59C-1.039(5), Florida Administrative Code.


18

In Volume 36, Number 29, dated July 23, 2010 of the Florida Administrative Weekly, a fixed need pool of zero beds was published for

CMR beds in District 3 for the January 2016 planning horizon.

District 3 has 158 licensed and zero approved CMR beds. During CY 2009, District 3 had 151 licensed CMR beds and experienced 79.28 percent utilization. Seven beds were licensed to Leesburg Regional

Medical Center North effective March 23, 2010. The applicants are applying outside of the fixed need pool.

b. According to 59C-1.039 (5)(d) of the Florida Administrative Code, need for new comprehensive medical rehabilitation inpatient

services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule. Regardless of whether bed need is shown under the need

formula in paragraph (5)(c), no additional comprehensive medical rehabilitation inpatient beds shall normally be approved for a

district unless the average annual occupancy rate of the licensed comprehensive medical rehabilitation inpatient beds in the district was at least 80 percent for the 12-month period ending six months

prior to the beginning date of the quarter of the publication of the fixed bed need pool.

As shown in the table below, District 3‟s 151 licensed CMR beds experienced an occupancy rate of 79.28 percent during the 12-month

period ending December 31, 2009.

Comprehensive Medical Rehabilitation Bed Utilization

District 3 – January 2009 to December 2009 Facility

Beds

County

Total Occupancy %

Shands Rehabilitation Hospital 40 Alachua 70.48%

Seven Rivers Regional Medical Center* 16 Citrus 34.70%

Leesburg Regional Medical Center-North** 15 Lake 87.56%

HealthSouth Rehab Hospital of Spring Hill*** 80 Hernando 88.35%

District 3 Total 151 79.28% Source: Florida Hospital Bed Need Projections & Service Utilization by District, July 2010 Batching Cycle. Notes: *Seven Rivers Regional Medical Center’s 16-bed CMR unit was licensed May 27, 2009.

**Leesburg Regional Medical Center – North added seven beds effective March 23, 2010. ***HealthSouth Rehab Hospital of Spring Hill added 10 beds effective October 7, 2009.

The map below shows current District 3 CMR providers and the applicants‟ proposed locations. HealthSouth (CON #10097) is an approximate location based on information provided by the applicant.


19

District 3 Comprehensive Medical Rehabilitation Facilities

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) & Marion Community Hospital, Inc. (CON #10098)

Source: MapQuest 2006.

Note: CON #10098 is to be located on a new fourth floor at West Marion Community Hospital.


20

MapQuest directions obtained November 30, 2010 indicate that the four existing facilities are located within the following approximate drive

times/miles: 42 minutes (Shands Rehab Hospital – 44 miles), 46 minutes (Leesburg North – 38 miles), 47 minutes (Seven Rivers Regional

Medical Center – 33 miles) and an hour and eight minutes (HealthSouth Spring Hill – 68 miles from West Marion Community Hospital‟s (CON #10098) location. We are estimating HealthSouth‟s (CON #10097)

project to be about six minutes and approximately 3.6 miles east of West Marion Community Hospital. While HealthSouth does not have an exact location, the mileage and travel time to the existing providers should not

be significantly different than West Marion Community Hospital‟s.

c. Other Special or Not Normal Circumstances HealthSouth Rehabilitation Hospital of Marion County, LLC

(CON #10097) stated that there has not been a published need for CMR beds in the last five years and because existing CMR providers can add

beds via exemption there will never be a bed need projected for a district. The applicant states that the focus for a CON should be on where new CMR programs are needed. HealthSouth contends that the following

special circumstances merit project approval:

In order to provide high quality acute care and rehabilitation care to

patients who need inpatient CMR services to maximize their recovery it is necessary for the patient to have continuity of care between acute

care, inpatient rehabilitation, and outpatient rehabilitation. Reasonable access to continuity of care from onset of injury or illness

through completion of the rehabilitation program can only be provided if acute care and CMR providers are located in the same medical market.

Due to age, medical fragility and market forces most patients will NOT

be referred for CMR services in a different medical market, even if CMR services are the most appropriate to maximize their recovery.

The absence of CMR services in the county where a patient receives acute care reduces the CMR use rate in that county. The end result of this is that many patients in Marion County are deprived other

CMR care that would have maximized their rehabilitation outcome.


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District 3 is a large geographic area of 16 counties and 10,983 square

miles. It contains the largest number of counties in any district in the state. For CMR planning purposes District 3 consists of five medical

markets (Northern Counties, Marion County, Citrus County, Hernando County, Sumter and Lake Counties) with sufficient

population to support CMR programs. Four of the five medical markets currently have CMR programs. Only one, Marion County, does not. Further information and documentation about the medical

markets is presented below.

Marion County alone has a land area greater than the State of Rhode

Island and a population sufficient to support a CMR specialty hospital of 40 beds. Failure of the Agency to approve a CMR program in

Marion County is a denial of access to a full continuum of rehabilitation services to Marion County residents.

The approval of a CMR facility in Marion County will not prevent any

existing CMR provider from continuing to perform its mission in the healthcare system. Any Marion County resident who receives acute care in Gainesville is likely to receive CMR services in Gainesville. The

number of Marion County residents who utilize other CMR programs in the district is de minimis.

HealthSouth indicates that its physician letters from Drs. Gaya, Lowell, Ethier, Kandru, and Web support need for the project and provides

excerpts of these letters (see Item B - Public Hearing, Letters of Support). These physicians indicate there is a need for CMR beds in Marion County

but do not provide the number of patients they would refer to the facility. HealthSouth next discusses the differences in comprehensive medical

rehabilitation and skilled nursing facility rehabilitation programs. This starts with the CMS definition for inpatient rehabilitation facilities (IRFs) which it states is the same as CMRs.

Designed to provide intensive rehabilitation therapy in a resource

intensive hospital environment for patients who, due to the complexity of their nursing, medical management, and rehabilitation needs, require and can reasonably be expected to benefit from an inpatient stay and an

interdisciplinary approach to the delivery of rehabilitation care.

HealthSouth indicates that CMS says patients appropriate for a less intensive setting are those “who have completed their course of treatment in the referring hospital, but do not require (or cannot participate in or

benefit from) an intensive rehabilitation therapy program”. The applicant contends that the entire continuum of rehabilitation services should be available to patients with serious acute physical impairments such as


22

paralysis, amputation or gait disturbance. It is poor health planning to have only SNF or CMR facilities in a medical market that has sufficient

population to support both. While some patients could be treated in either setting, HealthSouth states that for most patients one is clearly

superior and patients need both options to reach maximum improvement and functional status. HealthSouth next provides the CMS definition of the SNF:

Another inpatient rehabilitation setting is the skilled nursing facility, an institution or a distinct part of an institution in which the primary focus

is the provision of either rehabilitation services or skilled nursing care and related services to residents requiring medical or nursing care.

HealthSouth indicates that there are 14 differences between rehabilitation provided in SNFs and the CMR facilities. The applicant‟s

table below shows 10 areas.


23

HealthSouth CON #10097 Comparison of CMR and SNF Settings

Source: CON application #10097, page 61.


24

As noted in the table above, HealthSouth indicates that CMS requires that at least 60 percent of the patients admitted to CMR hospitals have

one of the 13 diagnoses. These are listed below:

Stroke

Spinal cord injury

Congenital deformity

Amputation

Major multiple trauma

Fracture of femur (hip fracture)

Brain injury

Neurological disorders (including but not limited to, MS, MD,

polyneuropathy, and Parkinson‟s disease

Burns

Active, polyarthricular rheumatoid arthritis, psoriatic arthritis, and seronegative arthropathies

Systemic vasculidities with joint inflammation

Severe/advanced osteoarthritis involving two or more major

weight-bearing joints (not counting joints with prosthesis) with joint deformity, substantial loss of range of motion, and atrophy of

muscles surrounding the joint. (HealthSouth indicates that CMS regulations include several diagnoses with additional qualifications/limitations).

Knee or hip joint replacement, with one or more of the following circumstances: bilateral knee or bilateral hip joint replacement

surgery during hospitalization, extreme obesity with a Body Mass Index of at least 50 upon admission to the CMR hospital, or the

patient is age 85 or older at the time of admission. The applicant provides the following chart which it states demonstrates

how this works in the real world, indicating that the diagnoses prompting admissions to HealthSouth CMRs nationally in 2009 were:

Diagnoses

Percent of Total

HealthSouth

Admissions Stroke 17.5%

Neurological 13.3%

Fracture of the lower extremity 11.7%

Debility 11.5%

Knee/Hip replacement 9.6%

Other orthopedic conditions 9.5%

Brain injury 7.4%

Cardiac conditions 4.7%

Spinal Cord Injury 3.6%

All other 11.2%

Total 100.0%

Source: CON application #10097 page 49.


25

HealthSouth indicates that diagnosis numbers 1, 2, 3, 5, 7, and 9 are on the CMS list and were over 60 percent of HealthSouth CMR hospital

admissions. CY 2009 percentages were provided but not the actual number of HealthSouth admissions. The applicant states that no

particular diagnosis is required for SNF admission if the criteria for nursing care are satisfied.

The applicant notes that nursing homes can admit Medicare patients only within 30 days of hospital discharge and after at least a three consecutive day stay. However, CMR facilities can admit from any

location provided the patient needs intensive rehab services in an inpatient setting. HealthSouth CMR facilities admitted 94 percent of

their patients from acute care hospitals, five percent from physician‟s offices and one percent from SNFs during CY 2009.

While citing the shorter length of stay for CMR facilities compared to SNFs, the applicant notes a 1997 study by Kramer AM, et al., published

in the Journal of the American Medical Association indicated that stroke patients treated in the CMR setting were more likely to return home sooner than those in SNFs. Another study (Munin, et al in 2010

comparing 74 SNF and 144 CMR patients during their treatment) indicated that acute hip fracture patients treated in the CMR setting had

more intense therapy and average length of stay over 11 days shorter than SNF patients. The applicant concludes that patients deserve the opportunity to obtain sufficient improvement to be able to return home

in as short of time as possible and with the best possible results. HealthSouth contends this opportunity requires access to the full continuum of rehabilitation care.

The applicant also cites a 2008 study by Vincent and Vincent that

indicated morality for cardiovascular patient was 2.6 percent in CMR, but 12.9 percent in SNF. Mortality for pulmonary patients was zero percent for CMR and 14 percent for SNF. They also noted that fewer

CMR patients were readmitted to acute care: 15.8 percent compared to 23.2 percent.4 HealthSouth restates its commitment to provide rehabilitation equipment in the CMR setting and notes that SNFs rarely

have any high technology as it proposes for this facility. The applicant summarizes that CMRs and SNFs provide different levels of service and

SNFs are not meant to provide intense rehabilitation as CMR hospitals do. HealthSouth concludes that its provision of CMR services would greatly benefit many patients being treated in short-term acute care.

4 Vincent HR, Vincent KR, 2008 Functional and economic outcomes of cardiopulmonary patients/

AJPMR, 87:371-380 per CON application #10097, page 59.


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HealthSouth provided the following in support of its need projections. The table below includes the Marion County population projections as

determined by the applicant, who indicates that the age 18-44 and 44-64 age cohorts are based on the Florida Bureau of Economic & Business.

While HealthSouth indicates the totals are the July 1 midpoint, they are actually January 1 of the calendar year.

Marion County Population Estimates and Projections by Age Cohort

Calendar Age Group

Total Year 0-17 18-44 45-64 65-74 75 & over

2009 66,751 92,828 90,606 38,615 41,545 330,345

2010 66,318 92,211 91,925 38,776 42,319 331,369

2011 66,270 92,128 92,498 39,792 42,601 333,289

2012 66,669 92,445 93,150 41,302 43,227 336,793

2013 67,710 93,850 94,902 43,188 44,216 343,866

2014 68,813 95,276 97,033 45,295 45,393 351,810

2015 70,096 96,808 99,299 47,522 46,641 360,366 Source: CON application #10097, page 88. Note: CY 2010 total is actually 331,549.

HealthSouth next provides a table (Figure 27, page 88) showing the three year average (CY 2007-2009) discharge rates for discharges to CMR per

100 relevant acute care discharges for Marion County residents. The applicant also provides this for (Figure 29, page 89) for all residents in no CMR counties, counties with hospital distinct CMR unit only and

counties with freestanding CMRs. For convenience these tables are combined below.

Three Year Average Discharge Rates: Discharges to CMR

per 100 Relevant Acute Care Discharges County Patient Age Groups

Total Category 0-17 18-44 45-64 65-74 75 & over

Marion County 0.00 1.12 0.20 0.20 0.18 0.18

No CMR In-County 0.00 1.11 0.21 0.28 0.26 0.22

Hospital Distinct CMR Unit Only 0.17 0.58 0.95 1.71 2.12 1.30

Freestanding CMR (with or without unit) 0.22 0.60 1.34 2.62 3.51 1.97 Source: CON application #10097, pages 88 and 89.

The applicant next projects the relevant acute care patient discharges for Marion County hospitals based on its calculations and actual 2009 discharges. Relevant discharges are described as excluding normal

newborns, NICU, mental health and substance abuse and all patients discharged to death, hospice home or hospice medical facility.


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Projected Relevant Acute Care Patient Discharges

for Marion County Hospitals

Calendar

Age Groups

Applicant's Calculated

Year 0-17 18-44 45-64 65-74 75 & over Total Total

2009 594 4,543 10,271 8,676 11,615 35,699 35,699

2010 591 4,513 10,420 8,779 11,772 35,854 36,075

2011 593 4,513 10,496 9,085 11,905 36,145 36,592

2012 599 4,547 10,613 9,465 12,129 36,674 37,353

2013 609 4,628 10,840 9,919 12,439 37,531 38,435

2014 620 4,701 11,090 10,407 12,777 38,432 39,595

2015 632 4,770 11,332 10,906 13,148 39,336 40,788


HealthSouth indicates that Marion County projected discharges are based on change in population by age group. As noted above, our calculation shows the applicant appears to be underestimating the total

projected discharges for years 2010-2015. The table below shows the applicant‟s “freestanding CMR (with or

without unit)” use rates applied by age category to arrive at the projected number of Marion County‟s hospital discharges that would be

appropriate for CMR services.

Marion County Relevant Acute Care Patient Discharges to CMR

CY 2009-2015

Marion County Acute Care Patients

Calendar Year

2009 2010 2011 2012 2013 2014 2015

Without HS: Acute Care Discharges to CMR

64

64

65

66

68

71

73

With HS: Acute Care Discharges to CMR

801

812

824

844

870

899

928

Difference 737 748 759 778 802 828 855


The applicant‟s “Without HS: Acute Care Discharges to CMR” above is based on the actual CY 2009 acute care hospital discharges of Marion County residents for CMR services. HealthSouth indicates that based on

the above projected discharges it is possible to project the number of beds needed using the following assumptions:

The discharges to CMR generated by the current rate will continue to

go to other facilities and not to HealthSouth.

Because five percent of patients at freestanding CMR facilities do not

come directly from acute care hospitals, the projected number of admissions from acute care hospitals is divided by 0.95.

The average length of stay (ALOS) is projected at 14.0 days. The

applicant indicates this is lower than the current ALOS at HealthSouth‟s Florida facilities, which has been declining but is

consistent with other freestanding CMR facilities in Florida.


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HealthSouth‟s targeted occupancy rate is 0.85, taken directly from the

Agency‟s CMR bed fixed need pool formula.

HealthSouth indicates that based on the above Marion County needs 38

beds in 2013 and 41 CMR beds in 2015. The chart below contains the applicant‟s projections.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097)

Total Projected Need for Marion County Market CY 2009-2015

Calendar Year

2009 2010 2011 2012 2013 2014 2015

Relevant Discharges from Marion Co. hospitals to CMR With HS

801

812

824

844

870

899

928

Relevant Discharges from Marion Co. hospitals to CMR Without HS

64

64

65

66

68

71

73

Additional discharges to CMR due to HS (Difference)

737

748

759

778

802

828

855

Additional discharges to HS not from Acute Care Hospitals (5%)

38

39

40

40

42

44

46

Total Discharges 775 787 799 818 844 872 901

ALOS 14 14 14 14 14 14 14

CMR Patient Days 10,854 11,017 11,188 11,455 11,814 12,202 12,607

Average Daily Census 30 30 31 31 32 33 35

CMR Bed Need at 85% Occupancy 35 36 36 37 38 39 41

Source: CON #10097 application, page 91.

The applicant‟s projection of five percent of cases being from non-acute care appears to be reasonable. HealthSouth does not project any patient days from non-Marion County residents, which if included could increase

the need. HealthSouth CMR Florida facilities CY 2009 ALOS was 14.6 days based on the Agency‟s actual budget data (HealthSouth‟s FYE 12/31/09). The state‟s freestanding CMR facilities average ALOS was

14.4 days during FY 2009. So, the 14 day ALOS is consistent with HealthSouth‟s and the state‟s. Should HealthSouth‟s assumptions be

accurate, the applicant‟s projections appear to be reasonable.

Marion Community Hospital, Inc. (CON #10098) indicates that the

following special circumstances justify approval of its 20-bed CMR unit.

1. Marion County is the most populated county in District 3 and has the largest population of residents age 65 and over (the primary uses of CMR services). This is true at present and in the future

(projections), yet there are no licensed CMR beds in Marion County.

2. Marion County is also the second most populous county overall,

and first in terms of population 65 and over, in the entire state without any licensed or approved CMR beds.

3. Occupancy of CMR beds in District 3 would have exceeded 80 percent, the threshold for approval of beds per Rule 59C-1.039 (5)(d), but for the opening of Seven Rivers Regional Medical

Center‟s 16-bed unit which opened May 27, 2009.


29

4. The calculated net surplus of CMR beds in District 3 is 16, the smallest net surplus of any district in Florida.

5. The average occupancy rate for CMR beds district wide, 79.3 percent, is the highest of any district in the states, less than one

percent below the specified threshold for adding beds under “not normal circumstances”.

6. Written responses from the community strongly support the

applicant‟s belief that the lack of the inpatient CMR beds in Marion County represents a substantial unmet need which imposes an unfair burden on patients and families who cannot or will not

travel to distant CMR facilities in other areas of District 3. 7. Shands Rehabilitation Hospital is the shortest driving time of any

of the four CMR locations from Ocala. Shands is located approximately 44 miles and an estimated 42 minute drive from West Marion Community Hospital. The remaining CMR facilities

are about 46 minutes to an hour and 12 minutes from Ocala. 8. There are huge gaps between the percent of acute care discharges

to CMR among Marion County hospitals and other District 3 hospitals, making it obvious that CMR is greatly underutilized in Marion County.

9. The percent of acute care discharges to SNF tracks the experience in the remainder of District 3 at each age level, although the Marion County age-specific rate in all age categories is lower than

elsewhere in the district. If SNF were being substituted for CMR, a higher percent of discharges to SNF would be expected in Marion

County. Discharges to SNFs do not offset the critical shortfall in discharges to CMR within Marion County.

10. The estimated and projected difference between expected and

actual discharges to CMR beds from Marion County hospitals supports a “not normal” need of between 21-25 additional CMR beds.

11. This shortfall in CMR utilization in Marion County represents a suppressed demand that will drive utilization of the 20-bed unit.

The applicant indicates that this suppressed demand means that its proposal is unlikely to have a significant impact on any existing provider.

The applicant‟s circumstances numbers 1-5 are correct. Seminole

County has the largest population of any county in the State that does not have CMR beds. Marion County has the second largest total population and the largest age 65 and over population that does not have

CMR beds. Circumstances numbers 3-5 are issues which apply to the district wide need and while the applicant is correct, these are not really special circumstances to approve the project. Circumstance number 7 is

addressed by the district travel standard for CMR services which is met in District 3. The applicant‟s discussion of the remaining special

circumstances is addressed below.


30

Marion Community includes physician letters (see CON #10098 Item B.

Public Hearing/Letters of Support) supporting its contention that CMR beds are need in the county. The applicant summarizes the key themes

of these:

The lack of CMR beds in Marion County imposes a burden on patients

and their families who live there and need that level of care. The nature of inpatient rehab demands that families and friends be

involved with the patient during the patient‟s course of rehabilitation, which becomes very difficult when travel to Gainesville or Leesburg is the only realistic option. As a result many persons needing inpatient

rehab elect to forego required care.

Some rehabilitation services are available in local skilled nursing

facilities such as TimberRidge. However, these facilities are not able or oriented to provide the same level or intensity of rehabilitative care

as a inpatient CMR program. The applicant notes that Medicare regulations limit SNF patients to one hour of rehabilitative care per day, when CMR patients must be able to receive at least three hours

per day.

Marion Community compares District 3 to the other district and the state in reference to CMR patient days per 1,000 population. This reveals that the average CMR use rate for Florida was 27.3 per 1,000 population

during CY 2009. District 3 was 24.6 per thousand, fourth lowest in the state. Comparing District 3‟s CMR use rate per population age 65 and over to the state revealed D3 had a use rate of 108.9 (ranked ninth out of

11 districts) which was well below the state‟s median rate of 142.6 days per l,000. The applicant notes that this is significant and relevant

because during CY 2009, District 3 residents age 65 and older accounted for 68.3 percent of all discharges to CMR compared to the state‟s 72.5 percent of discharges to CMR that were age 65 and over.

Marion Community indicates that its project will primarily serve patients

discharged from the three Marion County acute care hospitals, Marion County residents accounted for 86 percent of these facilities total discharges during CY 2009. Population data presented by the applicant

shows that Marion County‟s total population totaled 330,749 as of July 1, 2009 and is projected to increase by 11.7 percent to 368,227 by January 1, 2016 (the planning horizon for the current batching cycle).

Marion County‟s age 65 and over population is 80,511 as of July 1, 2009 and is projected to increase to 97,824 by January 1, 2016 or by 21.5

percent. Marion County CMR utilization trends are discussed next and the

applicant notes that only 51 acute care discharges from Marion County hospitals were admitted to a CMR bed in 2009, representing 0.1 percent


31

of all acute care discharges. The applicant does not include patients admitted to the acute care hospital from SNFs nor those who died.

Marion Community‟s Table 5, on page 19 of the application broke out all acute care discharges by the Marion County facilities compared to other

District 3 acute care hospitals. This table demonstrates that Marion County acute care hospitals discharged 39,073 patients and District 3‟s other hospitals discharged 161,070 patients during CY 2009. The

applicant notes that the percent of patients discharged from Marion County hospitals to SNF is comparable to hospitals in the remainder of District 3 with Marion facilities with 11.1 percent of these discharged to

SNFs compared to the District‟s other hospitals 10.9 percent. The percent of discharges to long-term care hospitals is also comparable at

0.3 percent in both instances. However, other District 3 facilities discharged 1.2 percent of their patients to CMR compared to Marion facilities 0.1 percent.

The applicant provides the following chart showing the disparity between

Marion County and other District 3 acute care hospital discharges to SNF and CMR care by age cohorts.

Acute Care Patient Discharges: CY 2009 Marion versus Other District 3 Hospitals

Percent to SNF Percent to CMR

Age Marion Other District 3 Marion Other District 3

0-14 0.0% 0.0% 0.0% 0.4%

15-44 0.2% 0.7% 0.0% 0.4%

45-54 2.1% 3.2% 0.1% 0.9%

55-64 5.0% 6.3% 0.2% 1.1%

65-74 11.6% 11.7% 0.2% 1.5%

75+ 24.5% 25.9% 0.2% 1.9% Source: CON application #10098, page 20.

Marion Community indicates that if SNF care were being substituted for CMR care, a higher percentage of discharges to SNF would be expected but this is not the case. However, the applicant‟s overall comparison of

discharges indicated that Marion County hospital discharges to SNF were comparable to hospitals in the remainder of District 3 with Marion

facilities with 11.1 percent compared to the district‟s other hospitals 10.9 percent. The applicant‟s data in the table above indicates that percent of discharges to SNFs by Marion County facilities is below the district‟s

other facilities in all age categories. The applicant states that when age is taken into consideration, CMR is greatly underutilized in Marion County. The applicant‟s data demonstrates that Marion County resident

percentage of discharges to CMR is substantially below the district‟s.

Marion Community utilizes the percentages of discharges by age group from all other District 3 acute care hospitals to project its CMR bed need. The table below shows the results of this calculation.


32

Expected versus Actual Discharges: CY 2009

From Marion County Hospitals Based on Percent at Other District 3 Hospitals

SNF CMR

Age Actual Expected

Expected minus Actual Actual Expected

Expected minus Actual

0-14 0 0 0 2 2

15-44 18 49 31 1 33 32

45-54 92 144 52 6 39 33

55-64 295 371 76 10 67 57

65-74 1,013 1,026 13 16 130 114

75+ 2,935 3,100 165 18 231 213

Total 4,353 4,690 337 51 502 451 Source: CON application #10098, page 21.

While the applicant‟s table indicates there is a shortfall for SNF discharges, it is not shown how Marion County hospitals discharging a

larger percentage of their patients to SNFs than the other District hospitals would result in a shortfall. Regardless, SNF need is not the issue with this CON. The applicant‟s CMR discharge comparison is

consistent with the overall numbers presented.

The applicant notes that the 451 shortfall forms the basis for the quantitative estimate of need for the 20-bed CMR unit. Marion Community uses the freestanding CMR facilities CY 2009 ALOS of 14.6

days and arrives at 6,585 patient days or an average daily census of 18 patients. Applying the 85 percent occupancy as used in Rule 59C-1.039(5)(c) f, the resultant need for CY 2009 is 21.2 beds. The applicant

provides population estimates showing an increase of 37,478 persons from July 1, 2009 to January 1, 2016 and notes the largest increase will

be in the age 65 to 74 age group. Marion Community‟s use of the population growth by age group to the CY 2016 need is shown in the following tables from CON application #10098, page 23.

Projected CMR Discharges 2016

Marion

County Rate

Other District

Rate

Difference

(Shortfall)

0 2 2

1 35 34

6 39 33

12 81 69

21 167 146

21 266 245

61 590 529


33

Unmet CMR Need in CY 2016

Shortfall in Discharges 529

ALOS 14.6

Patient Days 7,702

ADC 21.1

Need @ 85% Occupancy 24.8

The applicant‟s utilization forecast indicates that the unit will have an

248 discharges during CY 2014 (year one) resulting in 3,611 patient days and an average occupancy of 49.5 percent. Year two ending December 31, 2015 occupancy is projected at 68.6 percent. The applicant indicates

its projected occupancy is consistent with Seven Rivers Regional Medical Center.

Marion Community Hospital‟s need projections may be understated reasonable based on data presented. The applicant does not include

discharges from any referrals other than hospitals and does not address in-migration. The applicant contends that its projections are based on the shortfall (the difference between the expected discharges and the

actual discharges) forms the potential pool for the available cases the 20-bed CMR unit will serve and therefore it is highly unlikely that the project will have a significant impact on any existing provider.

2. Agency Rule Criteria: Please indicate how each applicable preference for the type of

service proposed is met. Refer to Chapter 59C-1.039, Florida Administrative Code, for applicable preferences.

3. General Provisions:

(a) Service Location. The CMR inpatient services regulated under this rule may be provided in a hospital licensed as a general hospital or licensed as a specialty hospital.


(CON #10097) is proposing to establish a new 40-bed Class III specialty (CMR) hospital.

Marion Community Hospital, Inc. (CON #10098) proposes to establish a 20-CMR unit at West Marion Community Hospital, a

Class I general hospital.


34

(b) Separately Organized Units. CMR inpatient services shall be

provided in one or more separately organized units within a general hospital or specialty hospital.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) states that the entire facility will be dedicated to

providing CMR services. The agency architectural review indicates the facility will have two wings housing patient rooms and support functions.

Marion Community Hospital, Inc. (CON #10098) proposes to

establish a 20-bed CMR unit at West Marion Community Hospital, which will be a separately organized unit on the fourth floor of a general hospital.

(c) Minimum Number of Beds. A general hospital providing

comprehensive medical rehabilitation inpatient services should normally have a minimum of 20 comprehensive medical rehabilitation inpatient beds. A specialty hospital

providing CMR inpatient services shall have a minimum of 60 CMR inpatient beds.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) proposes to establish a 40-bed freestanding CMR

hospital. The applicant indicates that the agency has approved facilities with less than 40 CMR beds, Shands Rehab Hospital has 40 licensed CMR beds and HealthSouth‟s experience is that 40

beds are sufficient to provide high quality programs economically. Marion Community Hospital, Inc. (CON #10098) proposes to

establish a 20-bed CMR unit at West Marion Community Hospital, which meets this criterion.

(d) Conformance with Criteria for Approval. A CON for the

establishment of new CMR inpatient services shall not

normally be approved unless the applicant meets the applicable review criteria in Section 408.035, Florida Statutes,

and the standards of need determination criteria set forth in this rule.

See the applicants‟ responses in Item E. 1. above.


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(e) Medicare and Medicaid Participation. Applicants proposing to

establish a new comprehensive medical rehabilitation inpatient service shall state in their application that they will

participate in the Medicare and Medicaid programs. HealthSouth Rehabilitation Hospital of Marion County, LLC

(CON #10097) states that it “agrees as a condition to this application..[to] participate in the Medicare and Medicaid programs”. The applicant proposes to condition project approval to

provide 1.8 percent of the 40-bed facility‟s annual patient days to Medicaid and Medicaid HMO patients. Schedule 7 indicates that

the facility will provide 86.5 of its total annual patient days to Medicare and Medicare HMO patients and 1.8 percent to Medicaid/Medicaid HMO patients during years one (ending 2013)

through three (ending 2015).

Marion Community Hospital, Inc. (CON #10098) states that it participates in the Medicare and Medicaid programs and will continue to do so in the CMR unit. The applicant indicates that

Medicare patients are expected to be 79 percent of the CMR total. Marion Community proposes to condition project approval to provide 4.0 percent of the 20-bed CMR unit‟s annual patient days

to Medicaid, Medicaid HMO and charity patients. Schedule 7 indicates the applicant will provide 79 percent of the unit‟s total

annual patient days to Medicare and Medicare HMO patients and four percent to Medicaid and Medicaid HMO patients during years one (ending December 31, 2014) and two (2015) of the project.

(4) Required Staffing and Services.

(a) Director of Rehabilitation. CMR inpatient services must be

provided under the medical director of rehabilitation who is a

board-certified or board-eligible physiatrist and has had at least two years of experience in the medical management of inpatients requiring rehabilitation services.


(CON #10097) states it will identify the most appropriate physician to fill this position prior to the hospital accepting patients. The applicant indicates the position will be under contract.

HealthSouth states that estimated cost included in year one is $135,000, adjusted by 2.5 percent in year two and three and this is “only the administrative function and not direct patient

services”. Schedule 6 indicates the medical director is a contract position.


36

Marion Community Hospital, Inc. (CON #10098) indicates it anticipates recruiting a physician for this position and that it will

be assisted by HCA‟s physician recruitment office. The applicant does not provide estimated cost associated with the position.

Schedule 6 indicates the medical director is a contract position.

(b) Other Required Services. In addition to the physician

services, CMR inpatient services shall include at least the following services provided by qualified personnel:

1. Rehabilitation nursing 2. Physical therapy

3. Occupational therapy 4. Speech therapy 5. Social services

6. Psychological services 7. Orthotic and prosthetic services

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) provides a detailed response indicating that it will

have all of the above plus respiratory therapy services. Marion Community Hospital, Inc. (CON #10098) indicates that

all of the above with the exception of rehabilitation nursing and orthotic and prosthetic services are presently available at West

Marion Community Hospital. The applicant indicates it will have staff to provide rehabilitation nursing and orthotic and prosthetic services will provided under contract.

(5) Criteria for Determination of Need:

(a) Bed Need. A favorable need determination for proposed new expanded comprehensive medical rehabilitation inpatient

services shall not normally be made unless a bed need exists according to the numeric need methodology in 59C-1.039(5)(c), Florida Administrative Code.

The applicants contend that special circumstances warrant

approval of their projects (see Item E. 1. above).

(b) Applications from general hospitals for new comprehensive

medical rehabilitation inpatient beds shall not normally be approved unless the applicant converts a number of acute care beds, as defined in Rule 59C-1.002(1), Florida Administrative

Code, excluding specialty beds, which is equal to the number of comprehensive medical rehabilitation inpatient beds, unless

the applicant can reasonably project an annual occupancy rate


37

of 75 percent for the applicable planning horizon, based on historical utilization patterns, for all acute care beds,

excluding specialty beds. If conversion of the number of acute care beds which equals the number of proposed comprehensive

medical rehabilitation inpatient beds would result in an annual acute care occupancy exceeding 75 percent for the applicable planning horizon, the applicant shall only be required to

convert the number of beds necessary to achieve a projected annual 75 percent acute care occupancy for the applicable planning horizon, excluding specialty beds.


(CON #10097) proposes to establish a new freestanding 40-bed comprehensive medical rehabilitation hospital in Marion County. This criterion is not applicable to this project.

Marion Community Hospital, Inc. (CON #10098) listed this

criterion on page 32 of its application and refers the reviewer to its E. 1. and E. 3. a. responses. The applicant‟s response on page 11 indicates this criterion is moot because a facility can add acute

care beds without CON approval. It is noted that West Marion Community Hospital‟s 70 acute care beds averaged 75.62 percent occupancy during CY 2009. This occupancy at the planning

horizon would result in the facility not being required to convert acute care beds to meet this criterion.

(c) Priority Consideration for Comprehensive Medical

Rehabilitation Inpatient Services Applicants. In weighing and

balancing statutory and rule review criteria, the Agency will give priority consideration to:

1. An applicant that is a disproportionate share hospital as determined consistent with the provisions of section

409.911, Florida Statutes. 2. An applicant proposing to serve Medicaid-eligible

persons.

3. An applicant that is a designated trauma center, as defined in section 10D-66.108, Florida Administrative

Code.


(CON #10097) is a start-up entity and as such does not operate existing facilities. CMR hospitals are not eligible for disproportionate share provider status and designated trauma

center designation. The applicant proposes to condition project approval to provide 1.8 percent of its total annual patient days to

Medicaid and Medicaid HMO patients.


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Marion Community Hospital, Inc. (CON #10098) operates two facilities on one license, Ocala Regional Medical Center and West

Marion Community Hospital. These facilities are not disproportionate share hospitals or designated trauma centers.

Ocala Regional Medical Center participates in the Low Income Pool (LIP) Payment Program. Agency Medicaid records indicate that the facility received $2,060,850 in LIP payments for FY 2009-2010.

The applicant proposes to condition project approval to four percent of the 20-bed CMR unit‟s total annual patient days being provided to Medicaid/Medicaid HMO and charity care patients.

(d) Access Standard. Comprehensive medical rehabilitation

inpatient services should be available within a maximum ground travel time of two hours under average travel conditions for at least 90 percent of the district’s total

population.

Both applicants acknowledge that the maximum travel standard is met in District 3.

(e) Quality of Care: Compliance with Agency Standards. CMR

inpatient services shall comply with the agency standards for program licensure described in Section 59A-3, Florida

Administrative Code. Applicants who submit an application that is consistent with the agency licensure standards are deemed to be in compliance with this provision.

(f) Service Description. An applicant for CMR inpatient services

shall provide a detailed program description in its certificate of need application including:

(1) Age groups to be served.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) states it will provide CMR services to patients of all ages.

Marion Community Hospital, Inc. (CON #10098) indicates that its program will serve patients in all adult ranges and

provides the number of projected year two patient discharges by the following age cohorts; 15-44, 45-54, 55-64, 65-74 and

75 and over.


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(2) Specialty inpatient rehabilitation services to be

provided, if any (e.g. spinal cord injury, brain injury).

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) provides a detailed discussion of the following specialty programs it proposes to provide:

Stroke Rehabilitation Program

Lymphedema Management Program

Neurological Rehabilitation Program

Arthritis Program

Wound Care Program

Spinal Cord Injury Program

Orthopedic Rehabilitation Program

Day Hospital Program

Spasticity Management Program

Hand Rehabilitation Program

Balance and Vestibular Program

Fibromyalgia Rehabilitation Program

Chronic Pain Management Program

Marion Community Hospital, Inc. (CON #10098) provides a discussion of the patient conditions and programs it proposes to provide. The applicant indicates that specific

programs include:

Stroke Rehabilitation Program

Neurological Rehabilitation Program; and

Orthopedic Rehabilitation Program.

(3) Proposed staffing, including qualifications of the medical

director, a description of staffing appropriate for any specialty program, and a discussion of the training and experience requirements for all staff who will provide

CMR inpatient services.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097): Schedule 6A indicates that during year two (2014) of operation, the applicant plans to have the

following staff:

Medical Director (by contract and not counted as an FTE)

Administration (18.0 FTEs)


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Nursing Staff (40.02 FTEs) includes 2.0 FTE unit

secretaries

Ancillary (20.9 FTEs)

Dietary (8.0 FTEs)

Social Services (2.0 FTEs)

Housekeeping (6.0 FTEs)

Laundry (by contract, no stated FTE)

Plant Maintenance (2.0 FTEs)

HealthSouth provides a description of training topics and

course categories available to its employees. Attachment 8 of the application included HealthSouth‟s 2010 „Catalog of Learning‟, a 29 page document showing classroom courses,

management courses, clinical training courses, etc. Marion Community Hospital Inc. (CON #10098): Schedule

6A indicates that during year two (2015) of operation, the applicant plans to have the following staff:

Medical Director (by contract and not counted as an FTE)

Administration (2.0 FTEs)

Nursing Staff (17.0 FTEs) includes 2.0 FTE unit

secretaries

Ancillary (7.5 FTEs)

Social Services (1.0 FTE)

Housekeeping (1.5 FTEs)

Plant Maintenance (1.0 FTE)

Marion Community provides an overview of training and

experience requirements for key direct care staff.

(4) A plan for recruiting staff, showing sources of staff.

HealthSouth Rehabilitation Hospital of Marion County,

LLC (CON #10097) states that it is prepared to put forth special efforts to attract quality staff required for its rehabilitation programs and has initiated a number of

innovative approaches to recruit and retain staff throughout its Florida facilities as well as throughout its corporate structure. Methods of staff recruitment include:

In-house job posting

Corporate recruiting

Employment open house

Professional recruitment firms

Participation in local job fairs


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Referral bonuses for select positions

Advertising in local newspapers, specialty newsletter/magazines

Advertising in colleges that have specialty programs

Strong clinical affiliations program with allied health

fields with a wide variety of universities

Participation in professional conferences and educational

events on a local and regional level

HealthSouth Corporation clinical travelers

Hard to fill positions are advertised in specialty journals

Flyers mailed to home addresses from nationwide mailing lists

The applicant states that the Workforce Connection (support letter included in Item B & study in the application‟s

attachment 15) has trained 827 individuals and that it will develop a partnership with this organization to offer

healthcare training and employment opportunities. HealthSouth has residency programs with several schools of allied health, actively participates in professional

organizations, both locally and nationally, and if necessary offers a sign-up bonus to attract high quality personnel. HealthSouth also has established affiliations with health

professional education programs including medical schools, schools of nursing, local vocational/technical schools, and

graduate programs for psychologists, physical therapy, occupational therapy, speech therapy and therapeutic recreation including the University of Florida.

The applicant states that beyond the local recruitment efforts, it can rely on support from its parent corporation‟s

Corporate Recruiting department to assist in recruitment of all professional areas.

Retention activities include providing benefits such as corporate sponsored continuing education capabilities

(Rehabilitation Training Network), generous continuing education allowances, reimbursement for professional

licenses, reimbursement of national dues, annual merit pay increases, medical and dental insurance coverage, paid holidays and sick leave, flexible spending accounts, 401K

retirement investment plan, life insurance, employee stock benefit plan, various employee recognition programs and activities, management development programs, mentoring

programs, tuition reimbursement assistance for staff


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attending relevant courses and seminars, and a scholarship program.

Marion Community Hospital, Inc. (CON #10098) indicates

that it currently recruits in all the proposed FTEs for the project with the exception of rehabilitation nursing. The applicant indicates that it utilizes promotion from within the

facility when possible, promotion and recruitment within HCA, utilization of corporate recruitment personnel and resources, professional recruiting agencies and services

when necessary, and advertisements in local, state and national media and professional publications.

(5) Expected sources of patient referrals.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) indicates that 95 percent of its referrals

will come from the area‟s three acute care hospitals with the remaining five percent coming from nursing homes, physicians, assisted living facilities, home health agencies,

long term care hospitals and word of mouth. The applicant provided a list that included Marion County‟s four hospitals, nine nursing homes and Williston Health Care Center (Levy

County).

Marion Community Hospital, Inc. (CON #10098) indicates “nearly all” of its referrals will come from the three acute care hospitals in Marion County, with the majority from the HCA

facilities. A small number of referrals will come from area SNFs and very rarely from hospitals outside Marion County, according to the applicant.

(6) Projected number of CMR inpatient services patient days

by payer type, including Medicare, Medicaid, private insurance, self-pay and charity care patient days for the first two years of operation after completion of the

proposed project.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) indicates that the facility will have the following year one and two payer mix: 86.5 percent

Medicare/Medicare HMO, 1.8 percent Medicaid, 0.7 percent charity care (as defined in Florida Statutes) and 11.0 percent Managed Care and others.


43

Marion Community Hospital, Inc. (CON #10098) indicates

that the unit will have the following year one and two payer mix: 79.0 percent Medicare/Medicare HMO, 4.0 percent

Medicaid/Medicaid HMO, 1.0 percent self-pay (stated to include 0.7 percent charity care per notes to Schedule 7B) and 16.0 percent commercial insurance, workers comp and

others.

(7) Admission policies of the facility with regard to charity

care patients.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) indicates that it will not discriminate against any person and will treat all patients regardless of

their ability to pay should they meet clinical admission requirements. The applicant restates its proposed

conditions to provide 1.8 percent of the facility‟s total annual patient days to Medicaid and 0.7 percent to charity care patients. The applicant indicates HealthSouth‟s Florida

facilities provided 2.9 percent of their total patient days to Medicaid patients and 0.5 percent to charity care during CY 2009. Agency hospital actual budget data indicates the

totals were 2.4 percent Medicaid and 0.9 percent charity care during CY 2009.

Marion Community Hospital, Inc. (CON #10098) states that extends and will continue to extend services to all

patients in need of care regardless of the ability to pay or source of payment. The applicant refers the reviewer to Schedule 7B (see (6) above) for its projected Medicaid/charity

care.

(g) Utilization Reports. Facilities providing licensed comprehensive medical rehabilitation inpatient services shall provide utilization reports to the Agency or its designee, as

follows:

(1) Within 45 days after the end of each calendar quarter, facilities shall provide a report of the number of comprehensive medical rehabilitation services

discharges and patient days which occurred during the quarter.

(2) Within 45 days after the end of each calendar quarter, facilities shall provide a report of the number of

comprehensive medical rehabilitation inpatient days


44

which occurred during the year, by principal diagnosis coded consistent with the International Classification of

Disease (ICD-9).

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) states that it will participate in the data collection activities of the Agency and the local health council and will

participate in the data collection activities in accordance with Chapter 408 of the Florida Statutes.

Marion Community Hospital, Inc. (CON #10098) states that it

currently reports inpatient acute care discharge data to the Agency or its designee consistent with this provision and will collect and report similar data for patients discharged from the CMR unit.

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.

District 3 has 158 licensed CMR beds. District 3 had 151 licensed CMR

beds which experienced 79.28 percent occupancy during the 12-month reporting period ending December 31, 2009. Seven beds were licensed to Leesburg Regional Medical Center North effective March 23, 2010. There

are no CON approved CMR beds pending licensure as of June 11, 2010.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) indicates that there are no CMR programs reasonably available and accessible to patients in the Marion County medical

market. The applicant refers back to the differences in nursing home and CMR inpatient rehabilitation and indicates that CMS as of October

1, 2010, has “substantially changed its method of paying for SNF services and reduced the ability of SNFs to economically provide rehabilitation services while increasing their ability to provide nursing

services”. HealthSouth provides a comparison of the CMS nursing home RUG III and RUG IV nursing component and therapy payment structure which shows that every therapy payment category has been reduced

while every nursing component has been increased (CON application #10097, page 156, Figure 54). The applicant contends that the

“expectation is that the (NH) industry as a whole will be less likely to accept the most intensive or complex therapy patients, particularly if there is demand by patients with medical needs and/or lower therapy

requirements. The applicant also contends that Marion County nursing homes are highly utilized, and by 2015, Florida‟s moratorium on new


45

nursing home construction coupled with the demand for long term care nursing home services will result in addition nursing home beds to meet

long term care (not rehab) need.

HealthSouth also provides a detailed description of District 3‟s CMR facility utilization which demonstrated that these facilities are essentially serving residents of the county where the CMR facility is located and/or

for the acute care hospitals the facility is aligned with. Shands Rehab is the exception with most coming from other districts or out of state. However, all of the district‟s CMR facilities are shown to treat very few

Marion County residents.

Marion Community Hospital, Inc. (CON #10098) states that District 3‟s CMR facilities are well utilized and indicates that need is not dependent upon an assertion or finding of an absence of quality

preventing utilization. Marion adds that the exemption process by which existing providers add beds to their facilities will suppress need

projections and provides a history of how this has occurred in District 3. The applicant notes that District 3 is unusual in that it is the largest geographic district comprising 16 counties and one of the most

demographically diverse. The northern counties are very rural and thinly populated while the southern counties have experienced substantial growth, especially of older persons, are more densely populated,

developed and have more heavily traveled roadways. The applicant contends that the effect of these circumstances is that CMR services are

denied to a substantial population in need, particularly Marion County because it cannot add CMR services under normal need provisions of certificate of need.

See also the applicants‟ responses in Item E. 1. above. Both applicants do not indicate that existing providers are not providing quality care.

Both contend that access and availability for Marion County residents is an issue.

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.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) as a new entity does not have a history of providing quality care. The applicant indicates that the facility‟s quality care will

be based on HealthSouth‟s experience, knowledge and accreditation principles. The applicant states that it will seek both Joint Commission (in year one of operation) and CARF accreditation (in year three) and

implement appropriate protocols to maintain a superior quality of care upon licensure. According to the applicant, HealthSouth Rehabilitation

Hospitals consistently rank above the national average in overall patient


46

satisfaction and in two important categories: “Would You Recommend” and “Overall Quality of Care”. Further, HealthSouth Corporation devotes

significant resources to developing, implementing and maintaining state-of-the art systems and technology which enables HealthSouth facilities to

provide the highest quality of patient care. The applicant provides examples of HealthSouth systems and technology which include:

Risk Management Reporting System

Equipment (with embedded technology)

Rehabilitation technologies (e.g. AutoAmbulator)

Automated Medical Records System (in process)

Computerized Order Entry System (in process)

Clinical Education.

A detailed description of HealthSouth rehabilitation technologies listed in the applicants‟ conditions is included in this response. The applicant

indicates that HealthSouth is in the process of implementing an automated medical records and computerized order entry systems.

HealthSouth indicates that its facility will have the same quality standards as HealthSouth‟s existing Florida facilities. Agency data

obtained November 24, 2010, indicates that the ten HealthSouth Hospitals (793 total beds) located in Districts 2, 3, 5, and 7-11, had a total of 71 substantiated complaints during the previous 36

months. A single complaint can encompass multiple complaint categories. The table below has these listed by complaint categories.

Complaint Category Number

Substantiated

Nursing Services 19

Plan of Care 11

Patient Assessment 8

Quality of Care/Treatment 8

Patient Rights 4

Medicine Prob/Errors/Formulary 4

Equipment in Disrepair 4

Patient Abuse/Neglect 2

Restraints/Seclusion General 2

Falls/Injury 2

Falsification of Records 2

Sanitation 2

Pressure Sores 2

Dietary 1

Total 71 Source: Agency for Healthcare Administration complaint records.

HealthSouth Ridgelake Hospital (HealthSouth‟s 40-bed long-term care hospital) has 12 of the complaints listed above. HealthSouth Ridgelake‟s

substantiated complaints include plan of care (four) and two each for


47

nursing services, equipment in disrepair, quality of care/treatment and pressure sores.

The applicant indicates that HealthSouth‟s nine Florida hospitals have

Joint Commission specialty certification in stroke care with one also having spinal injury and another brain injury specialty certification. HealthSouth Rehabilitation Hospital of Marion County, LLC

demonstrated the ability to provide quality care. Marion Community Hospital, Inc. (CON #10098) is an existing

provider of acute care hospital services operating two licensed acute care facilities, Ocala Regional Medical Center (200 acute care beds) and West

Marion Community Hospital (70 acute care beds). The applicant indicates that it is a subsidiary of Hospital Corporation of America (HCA) and HCA is the nation‟s second largest provider of inpatient

rehabilitation facility services. HCA has a number of programs and support services available to assist affiliates in the design, construction,

start-up and continuing operation of high quality inpatient rehabilitation programs. The applicant indicates Marion Community Hospital Inc. has certification by the Joint Commission as a primary stroke care. Hospital

licensure records show that Ocala Regional Medical Center and West Marion Community Hospital are state designated primary stroke centers.

The applicant provided a detailed description of the awards its facilities which also operate under the Ocala Health System, have received from

HealthGrades which is stated to be the nation‟s leading independent healthcare ratings company. These include receiving the HealthGrades Distinguished Hospital Award for Clinical Excellence for seven consecutive years (2004-2010) and being rated as one of America‟s 50 Best Hospitals in 2010 (the fourth consecutive year it has received this

award). The applicant states that HealthGrades 50 Best Hospitals designation is the only national hospital quality rating based on clinical

outcomes, recognizing hospitals that have demonstrated superior clinical quality over a nine-year time period. HealthGrades analyzed tens of millions of Medicare patient records from 2000-2009 to identify the top

50 hospitals, according to the applicant. The top fifty hospital achievements include higher survival rates and lower complication rates

across 26 individual medical procedures and diagnoses ranging from cardiac and critical care to spinal surgery. The applicant indicates that it received the following Service Line Excellence Awards from

HealthGrades:

Bariatric Surgery – 5-Star Rated – Among top 5% nationally and #1 in Florida for Overall Bariatric Surgery

Critical Care – 5-Star Rated - Among top 10% nationally

Pulmonary Care 5-Star Rated – Among top 5% nationally and #10 in

Florida overall


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Spine Surgery – 5-Star Rated – Among top 5% nationally and #4 in

Florida

Stroke Care – 5-Star Rated – Among top 5% nationally and #8 in

Florida for treatment of stroke

Women‟s Health – 5-Star Rated – Among top 5% nationally

The applicant presents a detailed discussion of its ability to provide quality care including it „Provision of Patient Care‟ plan, and its

Organization Performance Improvement and Patient Safety Plan.

HCA has 39 licensed hospitals in Florida with a total of 9,748 beds. HCA affiliated hospitals had 489 substantiated complaints during the previous 36 months ending November 24, 2010. The table below has

these listed by complaint categories.

Complaint Category Number

Substantiated

Nursing Services 101

Emergency Access 63

Patient Assessment 61

Patient Rights 43

Medicine Prob/Errors/Formulary 36

EMTALA 34

Quality of Care/Treatment 30

Plan of Care 19

Discharge Planning 12

Infection Control 10

Pressure Sores 9

Administration/Personnel 7

Physician Services 6

Restraints/Seclusion General 6

Call Lights 5

Dietary Services 5

Staffing 5

Admission, Transfer & Discharge Rights 4

Falsification of Records/Reports 4

Lack of Supervision 4

Chapter 394/Baker Act 3

Falls/Injury 3

Patient Abuse/Neglect 3

Physical Environment 3

Sanitation 3

Cause for Denial 2

Environment 2

Specimen Handling 2

Operating Outside Scope of License 1

State Licensure 1

Surgery to Remove Foreign Object 1

Unqualified Personnel 1

Total 489 Source: Agency for Health Care Administration complaint records.


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Ocala Regional Medical Center and West Marion Community Hospital had no substantiated complaints during the previous 36 months.

Marion Community Hospital, Inc. demonstrated the ability to provide quality care.

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.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) is a development stage company which was created

primarily for the purpose of obtaining a CON for a 40-bed CMR in Marion County, Florida. According to the audit, the applicant has no assets, liabilities, or operations as of August 31, 2010. The applicant is an

indirect wholly owned subsidiary of HealthSouth Corporation (parent) which, according to the audit, has contributed $2.6 million in efforts to

acquire the project subject to this review. The applicant also provided a copy of the December 31, 2009, 10-K for

its parent. 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.

Short-Term Position:

The parent‟s current ratio of 1.1 is below average and indicates current assets are approximately 1.1 times current liabilities, an adequate position. The working capital (current assets less current liabilities) of

$34.8 million is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities of 1.0 is above average and a good position. Overall, the parent has an adequate

short-term position. (See table below).

Long-Term Position: The ratio of long-term debt to net assets of negative 2.4 indicates that the parent has no positive equity to borrow against and may have difficulty

obtaining future debt financing if necessary, a weak position. The ratio of cash flow to assets of 24.2 percent is well above average and a strong

position. The most recent year had revenues in excess of expenses of $123.5 million which resulted in a 6.5 percent operating margin. Overall, the parent has a slightly weak but adequate long-term position.

(See table below). Capital Requirements:

The applicant indicates on Schedule 2 capital projects totaling $21.2 million which includes this project and capital equipment purchases in

years two and three of the project.


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

the project will be provided by the parent. In support of the related company financing, the applicant provided a letter from the parent

expressing it will provide the applicant financing for the project cost and any operating expenses that will occur. The parent‟s 2009, 10-K report shows $34.8 million in working capital and $406.1 million in cash flow

from operations.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097)

12/31/09

12/31/08

Current Assets (CA) $426,000,000

$682,700,000

Cash and Current Investment $80,900,000

$32,100,000

Total Assets (TA) $1,681,500,000

$1,998,200,000

Current Liabilities (CL) $391,200,000

$746,200,000

Goodwill $416,400,000

$414,700,000

Total Liabilities (TL) $2,579,100,000

$3,085,400,000

Net Assets (NA) ($897,600,000)

($1,087,200,000)

Total Revenues (TR) $1,911,100,000

$1,829,500,000

Interest Expense (Int) $125,800,000

$159,500,000

Excess of Revenues Over Expenses (ER) $123,500,000

$195,500,000

Cash Flow from Operations (CFO) $406,100,000

$227,200,000

Working Capital $34,800,000

($63,500,000)

FINANCIAL RATIOS

12/31/09

12/31/08

Current Ratio (CA/CL) 1.1

0.9

Cash Flow to Current Liabilities (CFO/CL) 1.0

0.3

Long-Term Debt to Net Assets (TL-CL/NA) -2.4

-2.2

Times Interest Earned (ER+Int/Int) 2.0

2.2

Net Assets to Total Assets (NA/TA) -53.4%

-54.4%

Operating Margin (ER/TR) 6.5%

10.7%

Return on Assets (ER/TA) 7.3%

9.8%

Operating Cash Flow to Assets (CFO/TA) 24.2% 11.4%

Conclusion: Funding for this project and the entire capital budget should be available as needed.

Marion Community Hospital, Inc. (CON #10098) is an indirect wholly owned subsidiary of HCA Inc. The applicant provided its audited

financial statements as of December 31, 2008 and 2009. The applicant also provided a copy of the December 31, 2009, 10-K for HCA, Inc.

(parent). 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.


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Short-Term Position: Applicant - The applicant‟s current ratio of 2.3 is slightly below average

and indicates current assets are just over two times current liabilities, a good position. The working capital (current assets less current liabilities)

of $18.3 million is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities of 1.1 is well above average and indicates operating cash flow exceeds current

liabilities, a strong position. Overall, the applicant has good short-term position. (See table below).

Parent - The parent‟s current ratio of 1.5 is below average and indicates current assets are approximately 1.5 times current liabilities, an

adequate position. The working capital (current assets less current liabilities) of $2.3 billion is a measure of excess liquidity that could be used to fund capital projects. The ratio of cash flow to current liabilities

of 0.6 is slightly below average and an adequate position. Overall, the parent has an adequate short-term position. (See table below).

Long-Term Position: Applicant - The ratio of long-term debt to net assets of 0.0 indicates that

the applicant has minimal long-term debt relative to equity, a strong position. The ratio of cash flow to assets of 11.6 percent is well above average and a good position. The most recent year had revenues in

excess of expenses of $4.8 million, which resulted in an operating margin of 2.0 percent. Overall, the applicant has a good long-term position.

(See table below). Parent - The parent‟s ratio of long-term debt to net assets of negative 3.5

indicates that the parent has no positive equity to borrow against and may have difficulty obtaining future debt financing if necessary, a weak position. The ratio of cash flow to assets of 11.4 percent is well above

average and a good position. The most recent year had revenues in excess of expenses of $2.0 billion which resulted in a 6.7 percent

operating margin. Overall, the parent has a slightly weak but adequate long-term position. (See table below).

Capital Requirements: The applicant indicates on Schedule 2 capital projects of $15.5 million

and includes this project, budgets for years 2010 through 2013, and contingency of $3.0 million.

Available Capital: The applicant indicates on Schedule 3 of its application that funding for the project will be provided by the parent. In support of the financing,

the applicant provided a copy of the December 31, 2009, 10-K for the parent. The parent‟s 2009 10-K shows $2.3 billion in working capital

and $2.7 billion in cash flow from operations.


52

Marion County Community Hospital, Inc. (CON #10098)

Applicant

Parent

12/31/09

12/31/09

Current Assets (CA) $32,628,945

$6,577,000,000

Cash and Current Investment $10,236

$312,000,000

Total Assets (TA) $130,387,252

$24,131,000,000

Current Liabilities (CL) $14,317,785

$4,313,000,000

Due to/from Affiliates $24,758,961

$0

Total Liabilities (TL) $15,878,467

$32,109,000,000

Net Assets (NA) $114,508,785

($7,978,000,000)

Total Revenues (TR) $236,385,752

$30,052,000,000

Interest Expense (Int) $659

$1,987,000,000

Excess of Revenues Over Expenses (ER) $4,762,498

$2,002,000,000

Cash Flow from Operations (CFO) $15,141,669

$2,747,000,000

Working Capital $18,311,160

$2,264,000,000

FINANCIAL RATIOS

12/31/09

12/31/09

Current Ratio (CA/CL) 2.3

1.5

Cash Flow to Current Liabilities (CFO/CL) 1.1

0.6

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

-3.5

Times Interest Earned (ER+Int/Int) 7227.9

2.0

Net Assets to Total Assets (NA/TA) 87.8%

-33.1%

Operating Margin (ER/TR) 2.0%

6.7%

Return on Assets (ER/TA) 3.7%

8.3%

Operating Cash Flow to Assets (CFO/TA) 11.6% 11.4%

Conclusion: Funding for this project and the entire capital budget should be available as needed.

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

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

A comparison of the applicants‟ estimates to the control group values

provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions

contained in Schedules 7 and 8), and efficiency, (the degree of economies achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable,

and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to

achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a

much higher level of economies must be realized to achieve the desired outcome. These relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go

beyond the relevant range of outcomes, revenues and expenses may,


53

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

Gross revenues, net revenues, and costs were obtained from Schedules 7

and 8 in the financial portion of the applications and compared to the control group as a calculated amount per adjusted patient day.

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) will be compared to hospitals in the Rehabilitation Hospital Group (Group 18). We do not have case mix data available for

rehabilitation hospitals so an intensity factor of 0.9722 was calculated for the applicant by taking the projected average length of stay indicated

and dividing it by the weighted average length of stay for the peer group. This methodology is used to adjust the group values to reflect the intensity of the patient as measured by length of stay. Per diem rates are

projected to increase by an average of 2.8 percent per year. Inflation adjustments were based on the new CMS Market Basket, 2nd Quarter,

2010. Projected net revenue per adjusted patient day (NRAPD) of $1,064 in year

one and $1,149 in year two is between the control group median and highest values of $1,050 and $1,418 in year one and $1,081 and $1,459 in year two. With net revenues falling between the median and highest

level, the facility is expected to consume health care resources in proportion to the services provided. (See table below).

Anticipated costs per adjusted patient day (CAPD) of $1,167 in year one is higher than the control group‟s highest of $1,113. The anticipated

CAPD of $1,089 in year two is between the control group median and highest values of $914 and $1,145. With projected cost between the median and highest value in the control group, the year two costs appear

reasonable. (See table below). The applicant is projecting a decrease in CAPD between year one and year two of $78, or 6.7 percent. It should be

noted that this application is for a new facility. The first year of operation has a below average occupancy rate. The low occupancy rate decreases economies of scale and as the occupancy rate increases, CAPD

would be expected to decrease. This also explains why the CAPD exceeds the group maximum value in year one.

The year two projected operating income for the project of $591,262 computes to an operating margin per adjusted patient day of $60 or 5.2

percent which is between the control group lowest and median values of $8 and $145.

Conclusion: This project appears to be financially feasible.


54

HealthSouth Rehabilitation Hospital of Marion County, LLC CON #10097 Dec-14 YEAR 2

VALUES ADJUSTED

2009 DATA Peer Group 18 YEAR 2 ACTIVITY

FOR INFLATION

ACTIVITY PER DAY

Highest Median Lowest

ROUTINE SERVICES 19,277,944 1,940

1,675 650 471

INPATIENT AMBULATORY 0 0

7 0 0

INPATIENT SURGERY 0 0

0 0 0

INPATIENT ANCILLARY SERVICES (P) 0 0

1,291 905 706

OUTPATIENT SERVICES (Q) 87,210 9

557 141 67

TOTAL PATIENT SERVICES REV. (R) 19,365,154 1,949

2,835 1,673 1,473

OTHER OPERATING REVENUE 40,003 4

37 3 1

TOTAL REVENUE 19,405,157 1,953

2,839 1,674 1,476

DEDUCTIONS FROM REVENUE 7,990,202 804

0 0 0

NET REVENUES 11,414,955 1,149

1,459 1,081 939

EXPENSES ROUTINE 2,921,840 294

503 189 160

ANCILLARY 2,571,760 259

317 218 183

AMBULATORY 0 0

0 0 0

TOTAL PATIENT CARE COST 5,493,599 553

0 0 0

ADMIN. AND OVERHEAD 3,554,886 358

0 0 0

PROPERTY 1,775,207 179

0 0 0

TOTAL OVERHEAD EXPENSE (V) 5,330,093 536

638 490 353

OTHER OPERATING EXPENSE 0 0

0 0 0

TOTAL EXPENSES 10,823,693 1,089

1,145 914 733

OPERATING INCOME 591,262 60

317 145 8

5.2%

PATIENT DAYS 9,871 ADJUSTED PATIENT DAYS 9,936 TOTAL BED DAYS AVAILABLE 14,600

VALUES NOT ADJUSTED

ADJ. FACTOR 0.9934

FOR INFLATION

TOTAL NUMBER OF BEDS 40


PERCENT OCCUPANCY 67.61%

81.6% 73.2% 52.7%

PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 68 0.7% MEDICAID (BA) 89 0.9%

10.6% 2.4% 0.0%

MEDICAID HMO 89 0.9% MEDICARE (AW) 8,144 82.5%

84.3% 75.8% 54.4%

MEDICARE HMO 396 4.0% INSURANCE 0 0.0% HMO/PPO (BF) 1,012 10.3%

42.1% 19.4% 10.1%

OTHER 73 0.7% TOTAL 9,871 100%


55

Marion Community Hospital, Inc. (CON #10098): Comparative data were derived from the 28 hospitals in Peer Group 3 (Small Suburban

Hospital Group) that reported data in 2009. Per diem rates are projected to increase by an average of 2.9 percent per year. Inflation adjustments

were based on the new CMS Market Basket, 2nd Quarter, 2010. The applicant did not provide a Schedule 7 for the hospital without the

project or combined with the project, only the CMR unit on a standalone basis. Therefore, the adjustment factor used for the projected patient days was based on the 2009 adjustment factor calculated for Ocala

Regional Medical Center.

The applicant‟s projected net revenue per adjusted patient day (NRAPD) of $2,092 in year one is between the control group median and highest values of $2,077 and $3,109 in year one. Projected NRAPD of $2,094 in

year two is between the control group lowest and median values of $1,395 and $2,137 in two. With net revenues falling close to the median

level, the facility is expected to consume health care resources in proportion to the services provided. (See table below).

Anticipated costs per adjusted patient day (CAPD) of $2,038 in year one and $2,040 in year two is between the control group‟s median and highest values of $1,912 and $3,043 in year one and $1,967 and $3,131

in year two. With projected cost between the median and highest value in the control group, the year two costs appear reasonable. (See table

below). Th e yea r two p rojected opera t in g in com e for th e p roject of $5 .9 m illion

com pu tes to a n opera t in g m a rgin per a d ju s ted pa t ien t da y of $54 or 2 .6

percen t wh ich is between th e con trol grou p lowes t a n d m ed ia n va lu es of

n ega t ive $410 a n d $60 .

Conc lus ion: Th is p roject a ppea rs to be fin a n cia lly fea s ib le.


56

Marion Community Hospital, Inc. CON #10098 Dec-14 YEAR 2

VALUES ADJUSTED

2009 DATA Peer Group 3 YEAR 2 ACTIVITY

FOR INFLATION

ACTIVITY PER DAY


NET REVENUES 231,988,768 2,094

3,199 2,137 1,395

EXPENSES ROUTINE 78,472,578 708

422 296 198

ANCILLARY 59,647,799 538

1,087 736 499

PMATF & Mgt Fee 26,427,053 239

0 0 0

TOTAL PATIENT CARE COST 164,547,430 1,485

0 0 0

ADMIN. AND OVERHEAD 48,684,372 439

0 0 0

PROPERTY 12,823,260 116

0 0 0

TOTAL OVERHEAD EXPENSE 61,507,632 555

1,625 904 692

OTHER OPERATING EXPENSE 0 0

0 0 0

TOTAL EXPENSES 226,055,062 2,040

3,131 1,967 1,704

OPERATING INCOME 5,933,706 54

496 60 -410

2.6%

PATIENT DAYS 76,060 ADJUSTED PATIENT DAYS 110,794 TOTAL BED DAYS AVAILABLE 105,850

VALUES NOT ADJUSTED

ADJ. FACTOR 0.6865

FOR INFLATION

TOTAL NUMBER OF BEDS 290


PERCENT OCCUPANCY 71.86%

82.7% 58.6% 27.1%

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

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

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 73.9 percent of CMR hospital charges in Florida, while HMO/PPOs

account for approximately 21.0 percent of charges. 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. HealthSouth Rehabilitation Hospital of Marion County, LLC

(CON #10097) indicates that 82.5 percent of the facility‟s annual patient days are expected to come from Medicare with 15.1 percent from HMOs.


57

Marion Community Hospital, Inc. (CON #10098) indicates that 73.0 percent of the unit‟s annual patient days are expected to come from

Medicare with 16.0 percent from HMOs.

The User and Purchaser of Healthcare are Often Different – Roughly 94.9 percent of CMR 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 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 – (CON #10097 & #10098): Due to the health care industry‟s

existing barriers in consumer based competition, the projects will not likely foster the type competition generally expected to promote quality

and cost-effectiveness.


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

Do they comply with statutory and rule requirements? ss. 408.035(1)(h), Florida Statutes. Ch. 59A-3 or 59A-4, Florida

Administrative Code. The architectural review of the applications 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.

HealthSouth Rehabilitation Hospital of Marion County, LLC’s

(CON #10097) site for the new hospital has not been selected, but the narrative indicates that the site will be 5.5 to 6.5 acres. The applicant acknowledges that Disaster Preparedness will be criteria in selecting a

site. Plans submitted by the applicant indicate that the building will be fully sprinklered and FBC Type II-A and NFPA 220 Type I(1,1,1). Both

construction types are sufficient for the occupancy and building size. The hospital will have a “U” shaped plan with two wings housing the

patient rooms and support functions for the nursing unit. All patient rooms are private rooms with handicapped accessible toilet/shower rooms. The facility‟s proposed patient living areas would exceed the

minimum requirement of 55 square feet of space per patient. All other required support space are provided and adequately sized and located.

The required adult daily living unit is incorporated into the therapy department which includes a large therapy gym.

The project summary on the plan indicates that the project will comply with current codes. Some additional architectural, mechanical and electrical physical plant standards such as the nurse call, generator

requirements, and door hardware will need to be addressed as more detailed construction documents are produced, but the physical

constraints of the spaces should accommodate these requirements. The estimated construction costs and project completion forecast appear

to be reasonable.

The design as presented does not indicate any major impediments that would prevent the design and construction of a code compliant facility.

Marion Community Hospital, Inc. (CON #10098) proposes to construct a fourth floor addition to West Marion Community Hospital to house the new CMR unit. The project narrative indicates that the existing hospital

was designed and constructed to support the addition floor. Plans submitted by the applicant indicate that the building will be NFPA 220

Type I (3,3,2). This construction types and the corresponding FBC


59

construction type are sufficient for the occupancy and building size. Although not mentioned in the architectural narrative it is assumed that

the facility will be fully sprinklered.

The unit will have a “L” shaped plan with two wings housing 10 patient rooms each. Each wing will contain a dining/recreation/day room for the patients. Support spaces for the two wings are centrally located

limiting travel distances to remote areas of the unit. These central support spaces include a nurse station, soiled holding, clean supply, nourishment and the adult living unit. A waiting area located at the

junction of the two wings can be accessed from adjacent elevators reducing the need for unnecessary travel through the unit.

All patient rooms are private rooms and have toilet/shower rooms that appear to be sized to meet the handicapped accessible requirements of

the Florida Building Code. The plans indicate that only rooms 5 South and 6 East will be handicapped accessible, but all rooms may be

required to be accessible due to the mobility impairment of the patients in the unit.

The project summary on the plan indicates that the project will comply with current codes. Some additional architectural, mechanical and electrical physical plant standards such as the nurse call, generator

requirements, and door hardware will need to be addressed as more detailed construction documents are produced, but the physical

constraints of the spaces should accommodate these requirements. The estimated construction costs and project completion forecast appear

to be reasonable. The design as presented does not indicate any major impediments that

would prevent the design and construction of a code compliant facility.

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.

HealthSouth Hospital of Marion County, LLC (CON #10097), as a new provider, does not have a “history” of providing health services to Medicaid patients and the medically indigent. However, HealthSouth

(the parent) does have a history of providing services to Medicaid and medically indigent patients. Agency actual hospital financial data indicates that during FYE December 2009, HealthSouth‟s nine Florida


60

CMR facilities provided 2.4 percent of their total patient days to Medicaid patients and 0.9 percent to charity care patients. The applicant proposes

to condition project approval to provide 1.8 percent of the 40-bed facility‟s total annual patient days to Medicaid patients and 0.7 percent

to charity care patients. Marion Community Hospital, Inc. (CON #10098) has a history of

providing care to Medicaid and medically indigent patients. Ocala Regional Medical Center participates in the Low Income Pool (LIP) Payment Program. Agency Medicaid records indicate that the facility

received $2,060,850 in LIP payments for FY 2009-2010. During FYE December 2009, the applicant provided 10.2 percent of its total patient

days to Medicaid patients and 1.5 percent to charity care patients. The applicant proposes to condition CON approval to 4.0 percent of the

20-bed unit‟s total annual patient days being provided to Medicaid, Medicaid HMO and charity care patients.

F. SUMMARY

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) proposes to establish a 40-bed comprehensive medical

rehabilitation hospital on a 5.5 to 6.5 acre site in Marion County, Florida.

The applicant proposes ten conditions to CON approval on the

application‟s Schedule C (See Item C – Project Summary).

The total project cost is estimated at $21,079,443. The project involves 49,900 gross square feet (GSF) of new construction at a construction cost of $9,871,171.

Marion Community Hospital, Inc. (CON #10098) proposes to establish a 20-bed comprehensive medical rehabilitation unit by adding a fourth

floor to West Marion Community Hospital in Marion County, Florida.

The applicant proposes one condition (see Medicaid/charity care below) to CON approval on the application‟s Schedule C.

The total project cost is estimated at $8,084,939. The project involves 18,950 gross square feet (GSF) of new construction at a construction cost

of $5,609,200.


61

Need:

In Volume 36, Number 29, dated July 23, 2010 of the Florida

Administrative Weekly, a fixed need pool of zero beds was published for CMR beds in District 3 for the January 2016 planning horizon. District 3 has 158 licensed and no approved CMR beds. During

CY 2009, District 3 had 151 licensed CMR beds and 79.28 percent utilization.

The applicants are applying outside of the fixed need pool. Both applicants present data which indicates that Marion County residents

are underserved compared to other District 3 residents. HealthSouth Rehabilitation Hospital of Marion County, LLC (CON

#10097) provided 18 letters of support indicating there is a need for CMR services in Marion County. HealthSouth included support from the

Workforce Connection and Ramussen College. Workforce Connection indicated that HealthSouth‟s project would help the local economy.

HealthSouth indicates that its data supports a need for 41 CMR beds in CY 2015 based on 85 percent occupancy. HealthSouth‟s projections appear to be reasonable.

HealthSouth proposes to offer more services that Marion Community

Hospital. Marion Community Hospital, Inc. (CON #10097) provided 10 letters of

support indicating there is a need for CMR services in Marion County. Marion Community Hospital, Inc. indicates that its data supports a need

for 24.8 CMR beds in CY 2016 based on 85 percent occupancy. Marion Community Hospital‟s projections may be understated.

Quality of Care:

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097) as a new entity does not have a history of providing

quality care. The applicant indicates that the facility‟s quality care will be based on HealthSouth‟s experience, knowledge and accreditation principles. Agency compliant data shows that HealthSouth‟s ten

facilities (793 beds) had 71 substantiated complaints during the previous 36 months.


62

Marion Community Hospital, Inc. (CON #10098) had no substantiated complaints during the previous 36 months. HCA‟s 39 licensed hospitals

with a total of 9,748 beds had 489 substantiated complaints during the previous 36 months ending November 24, 2010.

Both applicants demonstrated the ability to provide quality care.

Medicaid/Indigent Care:

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON #10097): The applicant‟s parent, HealthSouth Corpora t ion has a history

of providing services to Medicaid and medically indigent patients. During FYE December 2009, HealthSouth‟s nine Florida CMR facilities provided 2.4 percent of their total patient days to Medicaid patients and 0.9

percent to charity care patients.

The applicant proposes to condition project approval to provide 1.8 percent of the 40-bed facility‟s total annual patient days to Medicaid patients and 0.7 percent to charity care patients.

Marion Community Hospital, Inc. (CON #10098) has a history of

providing care to Medicaid and medically indigent patients. During FYE December 2009, the applicant provided 10.2 percent of its total patient days to Medicaid patients and 1.5 percent to charity care patients. Ocala

Regional Medical Center received $2,060,850 in LIP payments for FY 2009-2010.

The applicant proposes to condition CON approval to 4.0 percent of the 20-bed unit‟s total annual patient days being provided to Medicaid,

Medicaid HMO and charity care patients.

Cost/Financial Analysis:

HealthSouth Rehabilitation Hospital of Marion County, LLC (CON

#10097): The applicant‟s parent, HealthSouth Corporation has an adequate short-term position and a somewhat weak but adequate long-term position.

Marion Community Hospital, Inc. (CON #10098) has a good short-term and good long-term position.

Both: Funding for the project and the entire capital budget should be

available as needed. The project appears to be financially feasible.


63

Architectural Analysis:

HealthSouth Rehabilitation Hospital of Marion County, LLC of Marion County, LLC (CON #10097): The facility‟s proposed patient

living areas would exceed the minimum requirement of 55 square feet of space per patient. All patient rooms are private rooms with handicapped accessible toilet/shower rooms.

All required support space are provided and adequately sized and located. The required adult daily living unit is incorporated into the

therapy department which includes a large therapy gym.

Marion Community Hospital, Inc. (CON #10098): All patient rooms are private rooms and have toilet/shower rooms that appear to be sized

to meet the handicapped accessible requirements of the Florida Building Code. The plans indicate that only rooms 5 South and 6 East will be

handicapped accessible, but all rooms may be required to be accessible due to the mobility impairment of the patients in the unit.

Both applicants indicate that their projects will comply with current codes. Some additional architectural, mechanical and electrical physical plant standards will need to be addressed as more detailed construction

documents are produced. The design as presented does not indicate any major impediments that would prevent the design and construction of a

code compliant facility. Both: Estimated construction costs and project completion forecast

appear to be reasonable.

G. RECOMMENDATION

Approve CON #10097 to establish a 40-bed comprehensive medical

rehabilitation hospital in Marion County, Florida. The total project cost is $21,079,443. The project involves 49,900 GSF of new construction at a construction cost of $9,871,171.

CONDITIONS:

1. The hospital will provide 1.8 percent of patient days to Medicaid

patients and 0.7 percent of patient days to uninsured patients who

meet the definition of charity care patients under Florida Statutes. HealthSouth will work with acute care hospitals, state human service agencies and private organizations to identify uninsured

persons in need of CMR inpatient services in District 3.


64

2. The hospital will institute a stroke rehabilitation program when it opens and will obtain specialty certification from the Joint

Commission in stroke rehabilitation prior to the third year of operation.

3. The hospital will offer a comprehensive outpatient rehabilitation

program, predominantly for persons who received CMR services at

the hospital.

4. The hospital will provide an Auto Ambulator and the other

equipment described below as part of a technology packages when the hospital opens. If technological change makes better

equipment available by the time of purchase the hospital may substitute more modern equipment that serves the same functions.

AutoAmbulator

ReoGoAmbulator

Balance Master

Visipitch SaeboFlex wrist splint and exercise station

VitalStim

Bioness

Interactive Metronome

5. The hospital will be accredited by the Joint Commission. The Joint

Commission accreditation will occur by the end of the first year of

operation. 6. The medical director of the hospital be will board-certified or

board-eligible physiatrist with at least two years of experience in

the medical management of inpatients requiring rehabilitation services.

7. The hospital will provide at no charge to the community and in accordance with state and federal laws, education programs on disabilities awareness and community re-entry to improve the

independence and quality of life of persons with disabilities and their caretakers.

a. The hospital will employ a part-time (.5 FTE) Community

Outreach Coordinator who will assist patients and families

in transition as they return to their communities after an inpatient rehabilitation stay (Attachment 19b). This allied health professional will be knowledgeable of the needs of

patients and families and of the local, regional, and national resources.


65

b. The hospital will include space that will be made available to

support group meetings and for community education programs developed by HealthSouth and others.

c. Twice annually the hospital will sponsor workshops on the Disabilities Awareness Merit Badge for Boy Scouts and Girl Scouts in the Marion District of the North Florida Council.

8. HealthSouth will provide $10,000 in nursing scholarships for three

years to both Rasmussen College and The College of Central

Florida for a total of $20,000 for each of the three years. In order to quality for scholarships, students will have to meet the following

criteria:

Must be a Marion County resident

Must be either a registered nursing student or a physical

therapy assistant

Must maintain a 3.0 GPA

9. HealthSouth will provide a clinical instructor three days a week for

rotation of nursing students for three years for the College of

Central Florida ($10,000 for each of the three years).

10. HealthSouth will donate $7,000 annually for the first three years the hospital is in operation to the Marion County Parks and Recreation Department to fund purchases of adaptive equipment

to increase access to outdoor recreation activities for persons with disabilities. The Department provided a list of the types of adaptive equipment it would like to purchase that reads as follows:

Adaptive kayaks

Kayak paddles/gear (adaptive)

Beach Scooter

Mobi Chair

Mobi mat

Transition plate for wheel chair transfer

Boat ramp plate for ADA access

Hand pedal bike

The applicant also provided 10 “Measurement of Conformance with Conditions” criteria. Portions of the applicant‟s measurement of condition one on reporting Medicaid and charity care would not be

required in the applicant‟s condition compliance report. The applicant would be required to report the number of total patient days and number

of days that were provided the Medicaid, Medicaid HMO and charity care patients. Section 408.043 (4), Florida Statutes prohibits accreditation by


66

any private organization as a requirement for the issuance or maintenance of a certificate of need, so Joint Commission certification

(portion of condition 2 and all of 5) will not be cited as conditions to approval. Condition number 6, the facility medical director is required

by administrative rule and as such does not require a report. Additional “Measurement” of conditions proposed by the applicant include.

1. The hospital will provide a copy of the admission policy for the outpatient rehabilitation program, a program description and a count of the patients served each year.

2. In its initial report the hospital will provide photos of each piece of

equipment installed in the hospital. If the hospital has chosen to purchase a more modern piece of equipment than that listed will be amended and the new equipment replacing it noted.

3. The hospital will provide a list of all community education

programs held that relate to condition number 7. This list will show the title of the course, the instructors, the dates of the courses and the intended audience.

a. The hospital will include the curricula vita of any person

filling the position of Community Outreach Coordinator

during the calendar year and their dates of service. The report will also include a description of his or her activities

throughout the year. b. The hospital will prepare a list of all meetings held in the

hospital that relate to condition number 7. The list will show

the nature of the meeting, the groups holding the meeting, and the date of the meeting.

c. The hospital will prepare a list of the merit badge workshops

held during the year. The list will include the date, location and number of students enrolled in each workshop.

4. The hospital will provide a list of the scholarship recipients, the

school each attended, the degree program and the amount of the

individual scholarship.

5. The hospital will include a letter from an administrator at the College of Central Florida acknowledging the donation and identifying how the funds were used.

6. The hospital will include a letter from an official of the Marion

County Parks and Recreation Department acknowledging the

donation and identifying how the funds were used.

Deny CON #10098.


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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 Chief, Bureau of Health Facility Regulation

Documents

STATE AGENCY ACTION REPORTahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/10097.pdf · HealthSouth Rehabilitation Hospital of Marion County, LLC/ CON #10097 505 East Huntland Drive, Suite