STATE AGENCY ACTION REPORTahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/10115.pdf · The Hospitalist Company, and NCH hospitalist since January 2011 and Bonnie Rashid, M.D., also provided

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number

Naples Community Hospital, Inc./CON #10115

d/b/a NCH Healthcare System North Naples Hospital Campus

350 7th Street North

Naples, Florida 34102

Authorized Representative: Ms. Heather Baker

Administrative Director, Rehabilitation

(239) 436-5177

2. Service District/Subdistrict

District 8 (Charlotte, Collier, DeSoto, Glades, Hendry, Lee and Sarasota

Counties)

B. PUBLIC HEARING

A public hearing was not held or requested regarding the proposed

project. However, Naples Community Hospital, Inc. included 11 letters of

support for the project. Ten were dated during February 16, 2011

through March 14, 2011.

Jeffery McCartney, M.D., P.A., who serves as Chair, Department of

Neurology, NCH Healthcare System, stated that NCH has specialty

accreditations in stroke rehabilitation and has “advanced (its) ranking

within the national rehabilitation field to the 85th percentile for functional

outcomes”. He stated that the “opportunities associated with the

relocation are bountiful and would enable the program to advance to the

next level”. Dr. McCartney concluded that the new location would

improve access by allowing NCH to serve more patients from “other

hospital facilities within the community” and promote “a more holistic

(less institutional) setting for rehabilitation and community re-entry.”

Joseph Anders, D.O., stated that he has been the hospitalist physician at

the NCH rehabilitation program for over three years. He also stated that

CON Action Number: 10115

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the North Campus location is newer and has the necessary ancillary and

support services already in place to support the project. The support

letter from Dr. Anders was not signed. Maria Becka-Fitzgerald, D.O., IPC

The Hospitalist Company, and NCH hospitalist since January 2011 and

Bonnie Rashid, M.D., also provided general support letters for the

project.

The Honorable Bill Barnett, Mayor, City of Naples indicated that NCH “is

an integral civic partner to the City of Naples and greater area, both as a

health care leader in the community and a major employer”. Mayor

Barnett also indicated that relocating the beds to the north campus will

not only improve access “throughout the region but will also afford new

opportunities to further develop acute care services at the Downtown

campus”.

Mollie Venglar, DSc, MSPT, NCS, CKTP, Assistant Professor, Department

of Physical Therapy and Human Performance, Florida Gulf Coast

University, stated that she had “recently visited the current NCH CRC

location and the intended location in north Naples” and found “the north

Naples Campus is simply ideal for a rehabilitation facility”. She also

stated that ease of movement within the continuum of care will be

maintained and access “for patients and families will be dramatically

improved.” Dr. Venglar further commented that the academic

collaboration between the applicant and Florida Gulf Coast University

will be enhanced by the project.

Robert Ayres, Founder, Miracle Limbs-Courage in Motion, stated his

501(c )(3) organization is dedicated to the various needs of amputees and

works closely with NCH “providing assistance with therapy as well as

peer visitations and support group meetings”. His letter was not dated.

Mr. Ayres also stated that the North Naples facility is “far more centrally

located for so many Collier and Lee amputees” and would “certainly be

more accessible for many who would like to participate in the amputee

support group”.

The remaining support letters were from NCH rehabilitation patients or

family members. These letters expressed high regard for the

rehabilitation services provided at the current location and the advantage

that would be realized by a newer facility located in the area with the

largest projected elderly population growth.

Karl David Acuff, Attorney representing Lee Memorial Health System

d/b/a The Rehabilitation Hospital, submitted a letter on April 13, 2011,

which stated his client was supportive of the relocation; but has concern

about the applicant’s proposed CMR CON condition when compared to


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Lee Memorial’s. Mr. Acuff stated that Lee Memorial Health System is a

major health care safety-net provider in Lee County, has a mission to

care for patients without regard to their ability to pay and that The

Rehabilitation Hospital has an open door policy, accepting patients

without regard to their ability to pay. He noted that Lee Memorial’s CON

(#6623) condition requires 4.6 percent of the 60-bed CMR unit’s total

annual patient days be provided to Medicaid, Medicaid HMO and charity

care patients on a combined basis while Naples Community Hospital’s

CON condition requires 2.5 percent of the 60-bed CMR unit’s total

annual patient days be provided to Medicaid, charity and self-pay

patients.

Mr. Acuff stated that the Agency does not recognize self-pay as being the

same as indigent or charity care and that historically, there are some

cash-paying self-pay patients in the Naples market. He indicated the

project will draw patients from southern Lee County and for the

applicant to “have such a low condition” and “one which includes self-

pay patients”, presents an unfair competitive advantage which could

result in Lee Memorial Health System losing patients with attractive

payer sources, and thus disproportionately bearing an even greater

portion of the Medicaid and charity caseload in the area. Mr. Acuff

requested that the Agency consider making some change to Naples

Community’s CMR condition and that, at a minimum, no longer include

self-pay patient days.

C. PROJECT SUMMARY

Naples Community Hospital, Inc. d/b/a NCH Healthcare System North

Naples Hospital Campus, a not-for-profit Florida hospital, proposes to

establish a 54-bed inpatient comprehensive medical rehabilitation (CMR)

unit at NCH Healthcare System North Naples Hospital Campus’

Brookdale Center for Healthy Aging through the relocation of 54

inpatient CMR beds from the downtown Naples Hospital campus. The

applicant proposes to voluntarily delicense six CMR beds. The driving

distance from the existing to the proposed CMR unit site is 9.61 miles1,

due north. Per the applicant, the new site’s physical plant and grounds

offer a post-acute placement in beautiful surroundings in a setting that

supports a longer length of stay.

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Naples Community Hospital, Inc. (the downtown campus) is a 420-bed

Class 1 hospital with the following bed complement: 337 acute care beds,

23 adult psychiatric beds and 60 CMR beds. The hospital also has a

Level 2 adult cardiovascular program.

NCH Healthcare System North Naples Hospital Campus is a 261-bed

Class 1 hospital with the following bed complement: 252 acute care beds

and nine NICU Level II beds. The hospital also has a Level 1 adult

cardiovascular program. The proposed project will establish a 54-bed

CMR unit at this site and voluntarily delicense six CMR beds at Naples

Community Hospital, Inc. (the downtown campus).

The applicant’s Schedule C proposes to condition CON approval of the

new site at NCH Healthcare System North Naples Hospital Campus and

that 2.5 percent of 54-bed CMR unit’s total annual patient days will be

provided to Medicaid/charity/self-pay patients on a combined basis.

This the same payer mix condition that is on the applicant’s existing 60-

bed CMR unit

The total project cost is estimated at $2,393,853. The project involves

18,751 gross square feet (GSF) of renovation at a renovation cost of

$1,510,197. The total project costs include: building, equipment, project

development and start-up costs.

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.


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Rule 59C-1.010(3) (b), Florida Administrative Code, prohibits any

amendments once an application has been deemed complete. The

burden of proof to entitlement of a certificate rests with the applicant.

As such, the applicant is responsible for the representations in the

application. This is attested to as part of the application in the

Certification of the applicant.

As part of the fact-finding, the consultant, Steve Love, analyzed the

application with consultation from the financial analyst, Mills Smith,

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(s)

with the review criteria and application content requirements found in

Sections 408.035, and 408.037 and applicable rules of the State of

Florida, Chapters 59C-1 and 59C-2, Florida Administrative Code.

1. Fixed Need Pool

a. Does the project proposed respond to need as published by a fixed

need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? ss. 408.035(1)(a), Florida Statutes, Rules 59C-1.008(2) and 59C-1.039(5), Florida Administrative Code.

In Volume 37, Number 3, dated January 21, 2011 of the Florida

Administrative Weekly, a fixed need pool of zero beds was published for

CMR beds in District 8. District 8 had 260 licensed CMR beds and 66.61

percent utilization during the 12 months ended June 30, 2010. There

are no CMR approved but not licensed beds as of January 21, 2011.

Naples Community Hospital’s 60-bed CMR unit averaged 61.73 percent

occupancy during the reporting period. This project is not proposed in

response to the fixed need pool.

The applicant seeks to relocate 54 of its 60 licensed adult inpatient CMR

beds from its downtown Naples Community Hospital campus to its North

Naples Hospital Campus at the Brookdale Center for Healthy Aging. The

applicant plans to voluntarily delicense the remaining six adult inpatient

CMR beds that would remain at the original downtown location.


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Below is a chart showing population estimates from January 2011 to the

July 2016 planning horizon.

Population Estimates for District 8 Counties and Percent Change by County

for the July 2016 Planning Horizon

County

Total

January 2010

Total

July 2016

Percent Change

Age 65+

January 2010

Age 65+

July 2016

Age 65+ Percent Change

Charlotte 166,447 179,631 7.92% 56,959 64,645 13.49%

Collier 334,865 376,301 12.37% 81,856 99,430 21.47%

DeSoto 34,444 36,294 5.37% 6,388 7,264 13.71%

Glades 11,349 11,678 2.90% 2,139 2,347 9.72%

Hendry 40,941 43,993 7.45% 4,376 5,028 14.90%

Lee 621,955 713,689 14.75% 150,953 188,273 24.72%

Sarasota 390,843 422,701 8.15% 124,950 146,856 17.53%

District Total 1,600,844 1,784,287 11.46% 427,621 513,843 20.16%

State Total 18,826,847 20,232,820 7.47% 3,361,577 4,000,636 19.01% Source: Agency for Health Care Administration Population Projections, published September 2010.

As shown above, Collier County has the second highest projected

percentage growth for age 65 and over population of the seven counties

in District 8. The district is expected to experience a higher total

population growth rate than the state. District 8’s elderly population

(age 65+) growth rate is estimated to be 1.15 percent higher than the

state.

As stated previously, the distance from Naples Community Hospital to

the proposed North Naples Hospital Campus is approximately 9.61 miles.

Below is a map showing the geographic location of Naples Community

Hospital, Inc., the applicant’s North Naples Hospital Campus site and the

other licensed CMR providers in District 8.


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CON #10115 - Naples Community Hospital, Inc. and District 8 CMR Providers

MapPoint 2006 by Microsoft


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The distance from the applicant’s North Hospital Campus to Lee

Memorial Hospital is 34.05 miles2.

Reasons for the Project

The applicant indicates the CMR bed relocation project attains the

following objectives:

better utilization of a non-institutional acute care asset through the

provision of a single-story facility with its entrance and portico to

create distinction in post-acute services from the acute care services

in the patient tower;

establishes a post-acute environment for CMR services apart from the

acute care services, while still remaining part of the licensed hospital;

and,

provides cost-efficient acute care expansion at Naples Community

Hospital (downtown campus) as acute care beds are moved into the

space vacated by the CMR beds, allowing the hospital to best meet

demand in seasonal months.

As a result of the project, the applicant indicates the bed move makes the

best use of existing resources without increasing the CMR bed supply.

Furthermore, it is stated the project does not impede access to either

CMR services or to acute care services. The applicant provided a series

of photographs comparing the existing NCH CMR unit space to the

Naples North Campus location. These show that the existing CMR unit

located on the 4th and 5th floors at the Naples Community Hospital, Inc.’s

downtown campus is less spacious and lacks the aesthetics and non-

institutional ground floor setting that will be provided at the proposed

site.

Improved Geographic Access

Per the applicant, between October 1, 2008 and January 23, 2011,

Naples Community Hospital, Inc. experienced 2,665 CMR admissions,

2246 (84.28 percent) were Collier County residents, 164 (6.15 percent)

were Lee County residents, and the remaining 255 admissions

(approximately 9.57 percent) were from other counties and zip codes.

Below is a summary chart to account for these totals, as presented by

the applicant.

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Historical CMR Admissions to Naples Community Hospital, Inc. October 1, 2008 through January 23, 2011

Patient Residence County Number of Cases Admitted Percentage

Collier 2,246 84.28%

Other 255 9.57%

Lee 164 6.15%

Total 2,665 100.00% CON application #10115, Table 1-1, Needs Analysis, Page #1-16.

The applicant also indicates that of the 20 zip codes itemized in

Table 1-1, zip code 34113 is south of the present location and in the time

frame stated, represented 110 CMR admissions (or 4.13 percent of CMR

admissions). Collier County zip codes in and around the location of the

proposed site (north of the existing site and toward the proposed site)

represent a majority of CMR admissions for the period.

Analysis of Need

The CMR beds in this proposal are licensed, hence need is stated to be

based on facility–specific conditions that improve service delivery and

maximize existing resources. The bed relocation is stated to improve

access and make better use of existing resources.

The applicant indicates seasonal demand by winter tourists, increased

number of retirees and the growth in the elderly population drive both

acute care utilization and CMR services as a post-acute care option. Per

the applicant, high acute care bed utilization for the first quarter

(January through March) from 2006 through 2010, accounts for

correspondingly high CMR use rates at the NCH downtown campus.

NCH indicates that acute care occupancy during January through March

at the downtown campus is over 85 percent, with a common operating

standard for acute care being 75 percent in order to accommodate

emergencies. The applicant notes that NCH’s downtown 337 acute care

beds have reported utilization over 84 percent during every winter

quarter from 2006-2010. NCH North Campus added 133 beds to reach

its current 252 acute bed complement during the winter quarter of CY

2007. Since then, North’s highest first quarter utilization was 62.49

percent experienced during CY 2009. The CON reviewer compared the

applicant’s utilization data as reported to the local health council for the

periods above and confirmed higher CMR and acute care utilization

during these months. North Campus’ lower percentage first quarter

occupancy was also verified.

Below is a summary chart to account for the applicant’s use rate per

1,000 elderly residents based on Collier County population estimates

over the last five years.


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CMR Patient Days Delivered at Naples Community Hospital, Inc. with Corresponding Occupancy and Days per 1,000 Elderly (Age 65+)

Based on Collier County Population Estimates Most Recent Five Years Factor

Year 7/05-6/06

Year 7/06-6/07

Year 7/07-6/08

Year 7/08-6/09

Year 7/09-6/10

Five-Year Average

CMR Patient Days 15,107 14,079 14,407 15,627 13,519 14,548

Occupancy 68.98% 64.29% 65.61% 71.36% 61.73%

Days/1,000 197.84 179.39 182.88 196.02 167.87

Elderly Pop. 76,359 78,485 78,778 79,720 80,532 78,775

Net Increase in Elderly 2,126 293 942 812

Use Rate/1,000 Elderly 197.8 179.4 182.9 196.0 167.9 184.7 CON application #10115, Table 1-5, Needs Analysis, Page #1-19.

Based on the use rate per thousand of 184.7 applied to the projected

Collier County age 65 and over population for CY 2011, the applicant

estimates 15,119 CMR patient days and an average daily census (ADC) of

41. By 2015, the applicant estimates 17,319 CMR patient days and an

ADC of 47.

However, the applicant indicates experience shows that NCH will not

reach the above projected CMR utilization at the existing site and

presents a discussion of factors which contribute to lower utilization.

These include:

high seasonal demand that tends to fluctuate overall demand;

a vacancy in the medical director position as a permanent medical

director was sought in 2010;

the phase-in of more restrictive rules from the Centers for Medicare

and Medicaid services that limits 60 percent of CMR admissions

within 13 diagnostic categories; and

constraints within the existing site at an acute care hospital where

there is continued demand for space during peak months.

The project could address the spatial constraints NCH experiences

during the peak season period which it contends can affect both the

number of patients that can be admitted and the numbers of those

admitted that will require post-acute placement in the CMR unit. The

applicant indicates that private room demand and emergencies also

impact admissions at the downtown campus. NCH plans to construct a

new patient tower at the North Campus to include the 54 beds that will

be displaced at the Brookdale Center and add 10 acute care beds for a

total of 262 acute care beds. These will all be private rooms with 32 on

the fifth floor and 32 on the sixth floor. NCH contends that the resulting

separation of the acute care beds from the CMR beds will enhance access

and decrease the seasonal fluctuation experienced at NCH North,

compared to NCH downtown, and will improve CMR admissions.


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The table below shows the applicant’s projections with and without the

project. The CMR utilization at the downtown campus begins with the

applicant’s 13,519 days reported for the 12 months ended June 2010.

The patient days are then inflated at 2.754 percent per year based on the

projected Collier County age 65 and over population growth.

CMR Utilization Projections

Current and Proposed Locations

Year

CMR Patient

Days NCH

Occupancy 60 CMR

Beds

Brookdale

Center

Occupancy 54 CMR

Beds

Increase at

New Location

7/10-6/11 13,519 61.7% 0 0 0

1/11-6/12 13,891 63.4% 15,505 78.7% 1,614

7/12-6/13 14,274 65.2% 16,040 81.4% 1,766

7/13-6/14 14,667 67.0% 16,672 84.6% 2,005

7/14-6/15 15,071 68.8% 17,319 87.9% 2,248 Source: CON application #10115, Table 1-8, Needs Analysis, Page #1-22.

NCH estimates an ADC of 47 CMR patients at the new site by 2015, as

opposed to 41 CMR patients at the current site with six fewer licensed

CMR beds.

Adverse Impact

The applicant presents a comparison of District 8’s CMR facilities and

concludes that changes in a particular facility’s occupancy rates appear

to be unrelated to the experience reported by the other facilities. This is

based on annualized occupancy rates at CMR facilities within the

district, over the five-year period ending June 30, 2010. The applicant

concludes that fluctuations in occupancy rates are more likely due to

internal hospital decisions or actions or broader changes such as rule

change in the core services that affect them all similarly.

Lee Memorial Health System, a Class 1 hospital in District 8 that

operates 60 licensed CMR beds, submitted a letter that expressed

concern that NCH’s project would draw patients from southern Lee

County and NCH’s proposed payer condition could adversely Lee’s

program.


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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.

(a) General Provisions:

1. 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.

Naples Community Hospital, Inc. and NCH Healthcare System

North Naples Hospital Campus are Class 1 general hospitals.

2. Separately Organized Units. CMR inpatient services shall be

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

Naples Community Hospital, Inc.’s 60-bed CMR unit is located on

its 5th floor. The applicant will voluntarily delicense six CMR beds

and relocate the remaining 54 CMR beds to the ground floor of the

Brookdale Center for Healthy Aging at the NCH Healthcare System

North Naples Hospital Campus.

3. 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.

Naples Community Hospital, Inc. meets this criterion and will

continue to do so with this project which will decrease the size of

the unit from 60 to 54 CMR beds.


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4. Conformance with Criteria for Approval. A CON for the establishment of new CMR inpatient services, the construction or addition of new CMR inpatient beds, or the conversion of licensed hospital acute care beds to CMR inpatient beds 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.

The applicant is proposing to relocate 54 CMR beds at the

Brookdale Center for Healthy Aging at the NCH Healthcare System

North Naples Hospital Campus through the delicensure of 60

existing CMR beds at Naples Community Hospital, Inc. (the

downtown campus) and voluntarily reduce its total CMR unit

complement by six CMR beds. See Item E. 3. below.

5. Medicare and Medicaid Participation. Applicants proposing to

increase the number of licensed CMR inpatient beds at its facility shall participate in the Medicare and Medicaid programs. Applicants proposing to establish a new comprehensive medical rehabilitation service shall state in their applications that they will participate in the Medicare and Medicaid programs.

Naples Community Hospital, Inc. is a Medicaid and Medicare

participant. Naples Community Hospital, Inc.’s existing CMR unit

is currently conditioned by CON #9391 to provide 2.5 percent of

total annual patient days in the 60-bed CMR unit to

Medicaid/charity/self-pay patients on a combined basis. The

applicant proposes the same condition to the 54-bed CMR unit at

the Brookdale Center for Healthy Aging at NCH Healthcare System

North Naples Hospital Campus. The applicant states it will

continue its participation in the Medicaid and Medicare programs.

Schedule 7B, NCH Healthcare System North Naples Hospital

Campus projects Medicaid to account for 3.59 percent of the 54-

bed CMR unit’s patient days in years one and two ending

September 30, 2013 and 2014, respectively.


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6. Comparative Review. A certificate of need application submitted for review under this rule will be subject to a comparative review with all other certificate of need applications subject to review under this rule that propose to serve the same district and which were submitted during the same review cycle.

This is not applicable.

(b) Required Staffing and Services.

1. 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.

The applicant reports that Jackie Kawiecki, M.D. M.H.A, is the

medical director of NCH Healthcare System – Comprehensive

Rehabilitation Center, and will continue to serve as the medical

director at the proposed inpatient CMR unit at the NCH Healthcare

System North Naples Hospital Campus. Dr. Kawiecki is board-

certified by the American Board of Physical Medicine &

Rehabilitation in both physical medicine and rehabilitation and

spinal cord injury medicine. Dr. Kawiecki’s Curriculum Vitae was

provided in Tab 5 of the application.

2. 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. Orthopedic and prosthetic services

The applicant reports a complement of allied health professionals

at NCH Healthcare System – Comprehensive Rehabilitation Center,

as listed above. The applicant also reports additional services,

some of which include recreation therapy, chaplaincy, community

re-entry outings, pain management, augmentative communication

aids, wheelchair adaptation/prescription and others.


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Psychological services and neuropsychology are available on-site,

through non-staff providers. There is also a referral service for

biofeedback, vocational assessment, adapted driver education and

related services. The applicant reports an increase in FTEs for the

proposed CMR unit, due to an anticipated increase in patient

volume. The applicant further indicates existing CMR staff will

continue to serve the CMR unit at the proposed site.

(c) Criteria for Determination of Need:

1. Bed Need. A favorable need determination for proposed new or

expanded comprehensive medical rehabilitation in patient services shall not normally be made unless a bed need exists according to the numeric need methodology in paragraph (5)(c) of this rule.

As previously stated, the applicant’s project is not proposed in

response to need. Naples Community Hospital, Inc. is proposing to

relocate its existing licensed CMR inpatient services to the NCH

Healthcare System North Naples Hospital Campus. Delicensure of

60 adult CMR beds at Naples Community Hospital, Inc. (the

downtown campus) is to be simultaneous with the licensure of the

54 CMR beds at the Brookdale Center for Healthy Aging at the

NCH Healthcare System North Naples Hospital Campus.

(d) 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.

Naples Community Hospital participates in the Low Income Pool

(LIP) Payment Program. Agency Medicaid records as of

April 19, 2011 indicate that the facility has received a year-to-date

sum total of $596,738 in all applicable LIP payment categories for

FY 2010-2011. See Item E. 3. g. below.

2. An applicant proposing to serve Medicaid-eligible persons.

The applicant recommits to its current condition of a minimum of

2.5 percent of total annual patient days to Medicaid/charity/

self-pay patients on a combined basis.


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

The applicant states it is not a designated trauma center. The

Agency confirms through the Department of Health that the

applicant is not a designated trauma center.

(e) 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.

The applicant indicates that services are located such that they are

accessible within two hours travel time of 90 percent of the population of

District 8. However, the proposed site will be even more accessible due

to its more centrally located site.

(f) 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.

The application’s Tab 4 includes Exhibit 4-2, NCH Healthcare System,

Inc.’s Joint Commission Accreditation and Exhibit 4-3, NCH Healthcare

System’s CARF Accreditation.

Naples Community Hospital, Inc. (the downtown campus) and NCH

Healthcare System North Naples Hospital Campus operate under the

same license (License #4113). Naples Community Hospital, Inc. had

three substantiated complaints during the three-year period ending

April 19, 2011. The substantiated complaints cited were for the following

(one each): infection control, falls/injury and resident/patient/client

rights.

(g) 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.

Per the applicant, the CMR unit serves adults.


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2. Specialty inpatient rehabilitation services to be provided, if any (e.g. spinal cord injury; brain injury).

Per the applicant, the hospital has provided and will continue to

provide these specialty inpatient rehabilitation services:

Spinal cord injury

Brain injury services

Amputee services

Neurological services

Orthopedic services

Stroke services

Trauma services

NCH states that it participates in the Uniform Data Systems

Medical Rehabilitation (USDMR) data reporting associated with the

University of Buffalo. In Table 2-2 of the application, the applicant

provides statistics comparing NCH’s patient outcomes and provider

performance measures in rehabilitation, stroke, orthopedic and

trauma services with the national average. This data is from

September 1, 2008 to September 1, 2009 and indicates that Naples

compares favorably with the national average. The applicant

indicates that NCH ranked 105th out of the 805 providers in the

database for clinical outcomes which is the 87th percentile. 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.

As previously stated, Jackie Kawiecki, M.D. M.H.A, is the medical

director of NCH Healthcare System – Comprehensive Rehabilitation

Center, and will continue to serve as the medical director at the

proposed inpatient CMR unit at the NCH Healthcare System North

Naples Hospital Campus.

The applicant states that NCH’s Interdisciplinary Rehabilitation

Team is composed of the following: physicians, physiatrists,

rehabilitation nurses, a case manager, physical therapist, an

occupational therapist, a dietician, recreational therapist and

speech therapist.

Schedule 6A indicates the applicant projects 121.68 FTEs for year

one (ending September 30, 2013) and 124.03 FTEs for year two


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(ending September 30, 2014). The 2.35 FTE increase from year

one to year two is for clinical techs. The full staff complement by

year two is as follows:

Administrative Director (1.0 FTEs)

Administrative Assistant (1.0 FTEs)

Admissions Coordinator (1.5 FTEs)

Rehab Coding Specialist (1.0 FTEs)

Rehab Liaison RN (3.1 FTEs)

Lead Rehab Records Analyst (1.0 FTEs)

Rehab Records Analyst (3.5 FTEs)

Director Nursing/Therapy (1.0 FTEs)

Nurse Manager (1.0 FTEs)

RNs (35.28 FTEs)

Clinical Techs (36.85 FTEs)

Other: Unit Secretary (3.6 FTEs)

Clinical Coordinator/IP Rehab (1.0 FTEs)

Program Leader Rehab OT (2.0 FTEs)

PT/OT Assistants (4.0 FTEs)

Rehab Techs/PT (6.3 FTEs)

Physical Therapists/Rehab (5.6 FTEs)

Speech Therapists (2.0 FTEs)

Occupational Therapists (8.0 FTEs)

Recreational Therapy Rehab/OT (0.6)

Physical Therapists/Travelers (1.3 FTEs)

RN Case Managers (2.0 FTEs)

Rehab Case Managers (1.4 FTEs).

Schedule 6A further indicates that the medical director is by

contract. Dietary, housekeeping, laundry, and plant maintenance

are stated to be provided by the hospital. Notes to Schedule 6A

indicate that staffing projections are based on the current staffing

of the existing 60-bed CMR unit at Naples Community Hospital,

Inc. Further, the mix of services provided by the relocated CMR

unit is not expected to change from the existing service mix already

provided.

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

Per the applicant, existing staff are expected to remain.


19

5. Expected sources of patient referrals.

NCH states that referral sources are primarily the physicians

within the community that Naples Community Hospital serves.

Referral patterns for the new location are expected to be similar to

the existing pattern, with 82.0 percent generated from physicians

from within the primary market, 15.0 percent within a 15-mile

radius and 3.0 percent from outside the county. 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.

The applicant references Schedule 7B. Below is a table to

represent the expected payer mix.

Payer Mix

Proposed Site September 30, 2013 (Year One) and September 30, 2014 (Year Two)

Year One

Year Two

Self-Pay/Charity 1.0% 1.0%

Medicaid including HMO 3.6% 3.6%

Medicaid HMO 0.0% 0.0%

Medicare including HMO 84.8% 84.8%

Medicare HMO 0.0% 0.0%

Commercial Insurance (HMO/PPO) 9.2% 9.2%

Managed Care 0.0% 0.0%

Other Payers 1.4% 1.4%

Total 100.0%* 100.0%*

Source: CON application #10115, Schedule 7B.

7. Admission policies of the facility with regard to charity care

patients.

NCH indicates that the hospital’s current admission criteria for

charity care patients will remain unchanged and provides its Policy

14, last updated in June 2010, which is a three-page, 18-item

charity policy in the application (Exhibit 2-1, Charity Guidelines).

On Item #1 of the policy, the applicant indicates that NCH

Healthcare System shall offer charity assistance to qualified

patients on the self-pay portion of their accounts and will decide

on a case-by-case basis the extent of non-urgent, non-emergent

care provided to all patients. The applicant conditions to 2.5

percent of the 54-bed CMR unit’s total annual patient days being

provided to Medicaid, charity and self-pay patients on a combined

basis.


20

(h) Applications from Licensed Providers of Comprehensive Medical Rehabilitation Inpatient Services. A facility providing licensed comprehensive medical rehabilitation inpatient services seeking certificate of need approval for additional comprehensive medical rehabilitation inpatient beds shall provide the following information in its certificate of need in its certificate of need in addition to the information required in subsection (8):

1. Number of comprehensive medical rehabilitation inpatient

services admissions and patient days for the 12-month period ending six months prior to the beginning date of the quarter of the publication of the fixed need pool.

Naples Community Hospital, Inc. (the downtown campus) Inpatient Rehabilitation Services Utilization

October 1, 2009 to September 30, 2010 Number of Admits Patient Days Occupancy ALOS Days

1,046 12,520 57.17% 12.0 Source: CON application #10115, E.2. Rule Preferences, Page 2-11.

Above are the admissions and occupancy rates for Naples

Community Hospital, Inc. (the downtown campus), 60-bed

inpatient CMR unit, for the 12-month period ending September 30,

2010. The proposal is to transfer 54 of the 60 licensed CMR beds

to the Brookdale Center for Healthy Aging at the NCH Healthcare

System North Naples Hospital Campus and delicense the

remaining six CMR beds.

2. Number of comprehensive medical rehabilitation inpatient

services patient days by payer type, including Medicare, Medicaid, private insurance, self-pay, and charity care patient days, for the 12-month period ending six months prior to the beginning date of the quarter of the publication of the fixed need pool.

The applicant provides the following payer data for Fiscal Year,

October 1, 2009 through September 30, 2010:

Naples Community Hospital, Inc. Rehabilitation Services

Days and Percent by Payer October 1, 2009 through September 30, 2010

Payer Type Total Patient Days Percent Medicare 10,422 84.8%

Medicaid 441 3.6%

Insurance 1,127 9.2%

Self-Pay/Charity 122 1.0%

All Other 174 1.4%

TOTAL 12,286 100.0% Source: CON application #10115, E.2., Agency Rule Preferences, Page 2-11.


21

3. Gross revenues by payer source for the 12-month period ending six months prior to the beginning date of the quarter of the publication of the fixed need pool.

The applicant provides the following gross revenue amounts by

payer for FY 2010 (October 1, 2009 through September 30, 2010):

Total Gross Revenue by Payer October 1, 2009 through September 30, 2010

Payer Type Total Patient Days Percent Medicare $27,938,206 84.9%

Medicaid 1,074,970 3.3%

Insurance 3,173,356 9.6%

Self-Pay/Charity 284,408 0.9%

All Other 447,869 1.4%

TOTAL $32,918,809 100.0% Source: CON application #10115, E.2., Agency Rule Preferences, Page 2-12.

Agency arithmetic calculations total these percentages, as presented by the applicant, at 100.1

percent.

4. Current Staffing

The applicant proposes 124.03 FTEs at the Brookdale Center for

Healthy Aging’s 54-bed CMR unit at NCH Healthcare System North

Naples Hospital Campus, by the second year of operations, ending

September 30, 2014. Physicians will be by contract and dietary,

housekeeping, laundry and plant maintenance will be provided by

the hospital.

5. Current specialty inpatient rehabilitation services, in any (e.g. spinal cord injury, brain injury).

As stated previously, the hospital has provided and will continue to

provide these specialty inpatient rehabilitation services:

Spinal cord injury

Brain injury services

Amputee services

Neurological services

Orthopedic services

Stroke services

Trauma services


22

(i) Utilization Reports. Facilities providing licensed CMR inpatient services shall provide utilization reports to the agency or its designee.

The applicant currently participates in required Agency data collection

activities and those of the local health council. The applicant agrees to

continue reporting in the future.

(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 year facilities

shall provide a report of the number of comprehensive medical rehabilitation inpatient days which occurred during the year, by principal diagnosis coded consistent with the International Classification of Disease (ICD-9).

The applicant has complied with these requirements and agrees to

continue to do so.

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.

The applicant is not seeking to add new or expand CMR services in the

district. The applicant proposes to relocate 54 of its 60 licensed

inpatient CMR beds to the existing Brookdale Center for Healthy Aging at

NCH Healthcare System North Naples Hospital Campus. The applicant

further proposes to delicense six CMR beds. This results in a net

decrease of six licensed inpatient CMR beds in District 8. The 54

licensed acute care beds at the Brookdale Center for Healthy Aging/NCH

Healthcare System North Naples Hospital Campus are to be shifted to

the new patient tower. The driving distance between the two campuses

is approximately 9.61 miles.

District 8 has 260 licensed comprehensive medical rehabilitation beds

that experienced an occupancy rate of 66.61 percent during the 12-

month period ending June 30, 2010. As of January 21, 2011, there are

no CON approved CMR beds in District 8. District 8’s CMR utilization by

facility is presented below.


23

Comprehensive Medical Rehabilitation Bed Utilization

District 8 – July 1, 2009 through June 30, 2010

Facility Beds Percent Occupancy

Naples Community Hospital 60 61.73%

Fawcett Memorial Hospital. 20 39.47%

Lee Memorial Hospital 60 52.50%

HealthSouth Rehab Hospital of Sarasota 86 85.75%

Sarasota Memorial Hospital 34 70.06%

District Total 260 66.61%

Source: Florida Bed Need Projections & Service Utilization by District January 21, 2011.

District 8 had 250 CMR beds during the 12 months ending June 2008

and 2009 and averaged 68.52 and 71.05 percent occupancy respectively.

HealthSouth Rehabilitation Hospital of Sarasota added 10 CMR beds via

exemption on December 1, 2009. District 8’s CMR utilization increased

for the 12-month period from June 2008 to June 2009 but decreased

during the 12-month period ended June 2010. Regarding availability,

the district’s 66.61 percent occupancy indicated ample CMR bed

availability within the district. The decrease in licensed CMR beds by six

in this project should have no adverse impact on availability, particularly

considering that the applicant estimates increased occupancy at the new

site. Existing providers that experience 80 percent occupancy during a

12-month period can add 10 CMR beds or 10 percent of the facility’s

total CMR beds by exemption.

Regarding quality of care, NCH reports that all District 8 CMR units have

CARF accreditation for adults and that Lee Memorial Hospital also has

CARF accreditation for children and adolescents. The applicant goes on

to indicate that Naples Community Hospital, Sarasota Memorial Hospital

and HealthSouth Rehabilitation Hospital of Sarasota hold CARF

accreditation for Hospital: Stroke Specialty Program(s). As indicated

previously, Naples Community Hospital, Inc. includes documentation of

its current CARF accreditation. The applicant states that no change in

NCH’s accreditation will occur as a result of the proposed project and

that quality will be improved in that the new site has a less institutional,

post-acute setting, with improved views and access to the outdoors.


24

Regarding accessibility, the applicant states three specific advantages to

the project:

moves the existing CMR program more central within the county,

improving geographic assess;

aesthetic and physical accessibility improvements, fostering greater

ease of physical access and a separate and more distinct post-acute

identity; and

continuance of availability and access to CMR services, with the same

accreditation for program continuity.

The project should improve physical plant conditions for rehabilitation

services from the “old” to the “new” sites and has the potential to improve

and enhance quality of care at both facilities (Naples Community

Hospital, Inc. [the downtown campus] and the NCH Healthcare System

North Naples Hospital Campus).

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.

NCH indicates that there will be no change in CMR medical or

administrative staff as a result of the project. NCH Healthcare System,

Inc. has current Joint Commission and CARF accreditations. The

applicant indicates its latest CARF accreditation represents a

continuation of a 21-year history of this accreditation to NCH Healthcare

System. NCH provides its existing comprehensive rehabilitation center

mission and vision statements on the application’s page 4-2 and includes

a four-page leadership core competency measures matrix (Table 4-1,

Leadership Core Competency Measures/NCH Healthcare System –

Comprehensive Rehabilitation Center) on pages 4-3 through 4-6. This

measures the following major topics: commitment to quality,

commitment to people and commitment to fiscal responsibility. Each

major topic has sub-topics that measure performance rates and

outcomes, with lead staff assigned. The applicant also discusses

personalized physician outcome reports, clinical outcomes and

outpatient rehabilitation programs.


25

NCH Healthcare System reports operating the following five outpatient

rehabilitation facilities:

Greentree Rehabilitation Center;

Naples Outpatient Rehabilitation Center at Briggs Health Pavilion;

Immokalee Rehabilitation Center;

Marco Island Rehabilitation Center; and

Bonita Springs Rehabilitation Center.

The applicant further reports an overall patient satisfaction survey rating

of 90.6 from its July 2010 patient survey. NCH included a sample

education and community outreach and events calendar for its CMR

program (Exhibit 4-4, Sample Education Calendar and Sample

Community Outreach and Events Calendar). The samples indicate NCH

provides two or more educational offerings and at least one community

outreach event each month of the year.

Naples Community Hospital, Inc. had three substantiated complaints

during the three-year period ending April 19, 2011. It is noted that these

complaints are not CMR specific but apply to all operations by the

applicant. The substantiated complaints cited were: infection control,

falls/injury and resident/patient/client rights.

c. What resources, including health manpower, management

personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation? ss. 408.035(1)(d), Florida Statutes.

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

$2,393,853 and incremental operating costs in year two of $2,485,026.

The audited financial statements of the applicant for the periods ending

September 30, 2010 and 2009 were analyzed for the purpose of

evaluating the applicant’s ability to provide the capital and operational

funding necessary to implement the project.

Short-Term Position:

The applicant’s current ratio of 2.6 is above average and indicates

current assets are approximately 2.6 times current liabilities, a good

position. The working capital (current assets less current liabilities) of

$103.6 million is a measure of excess liquidity that could be used to fund

capital projects. The ratio of cash flow to current liabilities of 0.7 is

slightly above average and an adequate position. Overall, the applicant

has a good short-term position. (See table below).


26

Long-Term Position:

The ratio of long-term debt to net assets of 0.4 is below average and

indicates that the applicant has excess equity to borrow against if

necessary, a good position. The ratio of cash flow to assets of 9.0 percent

is slightly above average and a good position. The most recent year had

revenues in excess of expenses of $22.2 million which resulted in a 4.8

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

position. (See table below).

Capital Requirements:

The applicant indicates on Schedule 2 capital projects totaling $158.2

million which includes this project.

Available Capital:

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

the project will be provided by resources on hand (cash and cash

equivalents $34 million, short-term investments $58 million, board-

designated assets $96 million). As of September 30, 2010, the applicant

had $103.6 million in working capital and generated cash from

operations of approximately $47.2 million.

Staffing:

Schedule 6A indicates the applicant projects 121.68 FTEs for year one

(ending September 30, 2013) and 124.03 FTEs for year two (ending

September 30, 2014). The 2.35 FTE increase from year one to year two

(121.68 FTEs + 2.35 FTEs = 124.03 FTEs) is for clinical techs. The full

staff complement by year two is as follows:

Administrative Director (1.0 FTEs)

Administrative Assistant (1.0 FTEs)

Admissions Coordinator (1.5 FTEs)

Rehab Coding Specialist (1.0 FTEs)

Rehab Liaison RN (3.1 FTEs)

Lead Rehab Records Analyst (1.0 FTEs)

Rehab Records Analyst (3.5 FTEs)

Director Nursing/Therapy (1.0 FTEs)

Nurse Manager (1.0 FTEs)

RNs (35.28 FTEs)

Clinical Techs (36.85 FTEs)

Other: Unit Secretary (3.6 FTEs)

Clinical Coordinator/IP Rehab (1.0 FTEs)

Program Leader Rehab OT (2.0 FTEs)

PT/OT Assistants (4.0 FTEs)

Rehab Techs/PT (6.3 FTEs)

Physical Therapists/Rehab (5.6 FTEs)


27

Speech Therapists (2.0 FTEs)

Occupational Therapists (8.0 FTEs)

Recreational Therapy Rehab/OT (0.6)

Physical Therapists/Travelers (1.3 FTEs)

RN Case Managers (2.0 FTEs)

Rehab Case Managers (1.4 FTEs).

Schedule 6A further indicates that medical director is by contract.

Dietary, housekeeping, laundry and plant maintenance are to be

provided by the hospital. Notes to Schedule 6A indicate that staffing

projections are based on the current staffing of the existing

60-bed CMR unit at Naples Community Hospital, Inc. (the downtown

campus). Further, the mix of services provided by the relocated CMR

unit is not expected to change from the existing service mix provided.

Conclusion:

Funding for this project and the entire capital budget should be available

as needed.

Naples Community Hospital, Inc. CON #10115

09/30/10

09/30/09

Current Assets (CA) $168,144,277

$175,709,672

Cash and Current Investment $92,431,176

$95,952,303

Total Assets (TA) $521,626,955

$513,084,122

Current Liabilities (CL) $64,568,457

$69,966,966

Board Designated Assets $95,991,915

$91,446,890

Total Liabilities (TL) $183,154,871

$195,226,139

Net Assets (NA) $338,472,084

$317,857,983

Total Revenues (TR) $458,238,266

$449,631,045

Interest Expense (Int) $5,323,161

$5,649,139

Excess of Revenues Over Expenses (ER) $22,185,897

$9,412,736

Cash Flow from Operations (CFO) $47,171,396

$43,495,933

Working Capital $103,575,820

$105,742,706

FINANCIAL RATIOS

09/30/10

09/30/09

Current Ratio (CA/CL) 2.6

2.5

Cash Flow to Current Liabilities (CFO/CL) 0.7

0.6

Long-Term Debt to Net Assets (TL-CL/NA) 0.4

0.4

Times Interest Earned (ER+Int/Int) 5.2

2.7

Net Assets to Total Assets (NA/TA) 64.9%

62.0%

Operating Margin (ER/TR) 4.8%

2.1%

Return on Assets (ER/TA) 4.3%

1.8%

Operating Cash Flow to Assets (CFO/TA) 9.0% 8.5%


28

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

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

A comparison of the applicant’s estimates to the control group values

provides for an objective evaluation of financial feasibility, (the likelihood

that the services can be provided under the parameters and conditions

contained in Schedules 7 and 8), and efficiency, (the degree of economies

achievable through the skill and management of the applicant). In

general, projections that approximate the median are the most desirable,

and balance the opposing forces of feasibility and efficiency. In other

words, as estimates approach the highest in the group, it is more likely

that the project is feasible, because fewer economies must be realized to

achieve the desired outcome. Conversely, as estimates approach the

lowest in the group, it is less likely that the project is feasible, because a

much higher level of economies must be realized to achieve the desired

outcome. These relationships hold true for a constant intensity of service

through the relevant range of outcomes. As these relationships go

beyond the relevant range of outcomes, revenues and expenses may

either go beyond what the market will tolerate, or may decrease to levels

where activities are no longer sustainable.

Projected net revenue of the CMR unit was 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 0.840278

was calculated for the applicant by taking the actual 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,

4th Quarter, 2010.

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

and 8 in the financial portion of the application and compared to the

control group as a calculated amount per adjusted patient day.

Projected net revenue per adjusted patient day (NRAPD) of $1,229 in year

one and $1,343 in year two is between the control group median and

highest values of $1,008 and $1,361 in year one and $1,038 and $1,401

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).


29

Anticipated costs per adjusted patient day (CAPD) of $1,242 in year one

and $1,250 in year two exceed the maximum group values of $1,069 in

year one and $1,100 in year two respectively. This would suggest that

expenses are overstated. Although this is described as a unit of a

hospital, the application indicates that it would be housed in its own

separate building. Therefore, we believe that it is appropriate to compare

the cost to the freestanding rehabilitation hospital group. It is unclear

why the costs are outside the maximum values in the group. The notes

to the projections indicate that common costs from the hospital were

allocated to the unit. It is likely that the allocation method used is not

necessarily representative of actual costs for the unit. In any event,

overstating expenses is a conservative assumption and therefore

considered reasonable. (See table below).

The year two projected operating income for the project of $710,970

computes to an operating margin per adjusted patient day of $43, or 3.3

percent, which is below the groups lowest value of $78. Given the

overstated cost discussed above, the margin appears reasonable. The

applicant indicates that this project will be slightly more profitable than

the current situation; primarily from an increase in utilization at the new

location.

Conclusion:

Assuming the applicant will be able to meet the assumptions for patient

days and payer mix, this project appears to be financially feasible.


30

Naples Community Hospital, Inc. CON #10115 Sep-14 YEAR 2

VALUES ADJUSTED

2009 DATA Peer Group 18 YEAR 2 ACTIVITY

FOR INFLATION

ACTIVITY PER DAY

Highest Median Lowest

ROUTINE SERVICES 52,263,745 3,135

1,609 624 452

INPATIENT AMBULATORY 0 0

6 0 0

INPATIENT SURGERY 0 0

0 0 0

INPATIENT ANCILLARY SERVICES (P) 0 0

1,239 869 678

OUTPATIENT SERVICES (Q) 0 0

535 136 65

TOTAL PATIENT SERVICES REV. (R) 52,263,745 3,135

2,722 1,606 1,415

OTHER OPERATING REVENUE 0 0

36 3 1

TOTAL REVENUE 52,263,745 3,135

2,726 1,607 1,417

DEDUCTIONS FROM REVENUE 30,716,599 1,842

0 0 0

NET REVENUES 21,547,146 1,292

1,401 1,038 901

EXPENSES

ROUTINE 11,178,213 670

483 181 153

ANCILLARY 6,204,348 372

305 209 176

AMBULATORY 0 0

0 0 0

TOTAL PATIENT CARE COST 17,382,561 1,043

0 0 0

ADMIN. AND OVERHEAD 2,938,897 176

0 0 0

PROPERTY 514,718 31

0 0 0

TOTAL OVERHEAD EXPENSE (V) 3,453,615 207

612 471 339

OTHER OPERATING EXPENSE 0 0

0 0 0

TOTAL EXPENSES 20,836,176 1,250

1,100 878 704

OPERATING INCOME 710,970 43

214 145 78

3.3%

PATIENT DAYS 16,672

ADJUSTED PATIENT DAYS 16,672

TOTAL BED DAYS AVAILABLE 19,710

VALUES NOT ADJUSTED

ADJ. FACTOR 1.0000

FOR INFLATION

TOTAL NUMBER OF BEDS 54

Highest Median Lowest

PERCENT OCCUPANCY 84.59%

81.6% 73.2% 52.7%

PAYER TYPE PATIENT DAYS % TOTAL

SELF PAY 166 1.0%

MEDICAID (BA) 598 3.6%

10.6% 2.4% 0.0%

MEDICAID HMO 0 0.0%

MEDICARE (AW) 14,143 84.8%

84.3% 75.8% 54.4%

MEDICARE HMO 0 0.0%

INSURANCE 1,529 9.2%

HMO/PPO (BF) 0 0.0%

42.1% 19.4% 10.1%

OTHER 236 1.4%

TOTAL 16,672 100%


31

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

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

There are five existing CMR programs in District 8 with a total of 260

licensed CMR beds, which will decrease to 254 beds with project. The

relocation of the CMR unit will not result in a new provider of

rehabilitation services in the area. The relocation will be approximately

9.61 miles north of the current location. Given the provider of service

will not change and the location is a relatively short distance from the

current location, there is not likely to be a material change in the existing

market for these services.

Conclusion:

This project is likely to have little to no impact on existing providers and

therefore, would not alter the existing competitive forces in the market.

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 applicant states that the vacated CMR beds at the downtown

campus would be converted to acute care beds allowing the facility to

create more private rooms. The relocated CMR unit would be on the first

floor of the North Campus in an area currently occupied by a 54-bed

medical/surgical unit. The displaced medical/surgical beds would be

relocated to the fifth and sixth floors where new patient rooms are being

built in a shell space.

The construction type is listed as NFPA Type I (332) and FBC Type I-B.

The project area is currently sprinklered in accordance NFPA 13. Both

construction types are sufficient to meet code requirements.

All patient beds would be located in semi-private rooms with access to a

handicap accessible toilet shower room without entering the corridor. All

support spaces have been included in the design and are adequately

sized and appropriately located. The location of the patient rooms and

patient dining offers great views of nature.

Based on the project description the scope of work appears to be limited

and the estimated construction costs appear to be within the expected

range.


32

The information provided in the project completion forecast appears to be

reasonable.

The design of the relocated CMR unit would be located in a unit formerly

used as a medical/surgical unit. The layout of the unit appears to work

well.

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

in-depth effort to determine complete compliance with all applicable

codes and standards. The final responsibility for facility compliance

ultimately rests with the owner.

g. Does the applicant have a history of providing health services to

Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss. 408.035(1)(i), Florida Statutes.

Naples Community Hospital, Inc. has a history of providing health

services to Medicaid patients and the medically indigent. Naples

Community Hospital participates in the Low Income Pool (LIP) Payment

Program. Agency records indicate that the facility received $2,029,754 in

LIP program payments during FY 2009-2010. NCH has received a total

of $596,738 in LIP payments for FY 2010-2011, as of April 19, 2011.

NCH’s Table 9-1, provides Medicaid, charity and self-pay days and

percentages over the five years ending 2009, for consolidated Naples

Community Hospital, Inc. (the downtown campus) and NCH Healthcare

System North Naples Hospital Campus.

Naples Community Hospital, Inc.

Medicaid/Charity Care/Self-Pay Patient Days and Percentages Calendar Years 2005-2009

Payer 2005 2006 2007 2008 2009

Medicaid Days 15,161 14,530 17,325 15,323 18,577

Medicaid Percent 10.06% 9.55% 11.52% 9.76% 12.46%

Charity Days 6,972 6,984 8,623 6,920 5,261

Charity Percent 4.63% 4.59% 5.74% 4.41% 3.53%

Self-Pay Days 7,378 8,739 9,988 8,101 7,436

Self-Pay Percent 4.89% 5.74% 6.64% 5.16% 4.99%

Total Patient Days 150,735 152,163 150,345 156,999 149,128 Source: CON application #10115, Pages 9-1 and 9-2, Table 9-1.

Note: NCH, Inc. includes both locations in its financial reports.

The applicant proposes to condition project approval to provide a

minimum of 2.5 percent of the 54-bed inpatient CMR unit’s total annual

patient days to Medicaid/charity/self-pay patients on a combined basis.

This is the same condition on the current 60-bed CMR unit’s CON

#9391. NCH has a long history of compliance with its CMR condition.


33

Below is a table of projected patient days by payer for the relocated CMR

unit for the first two years of operation.

Forecasted Patient Days by Payer Years One and Two

Payer Type

Percent Discharges

Year One Patient Days

Year Two Patient Days

Medicaid 3.6% 576 598

Medicare 84.8% 13,606 14,143

Other 1.4% 227 236

Insurance 9.2% 1,471 1,529

Self-Pay/Charity 1.0% 159 166

Total 100.0% 16,039 16,672 Source: CON application #10115, Page 9-2, Table 9-2.

As shown above, the applicant projects that it will exceed the proposed

2.5 percent Medicaid/charity/self-pay condition with these days

accounting for 4.6 percent of years one and two’s total annual patient

days.

F. SUMMARY

Naples Community Hospital, Inc. d/b/a NCH Healthcare System

North Naples Hospital Campus (CON #10115) proposes to relocate 54

of the 60 existing licensed CMR beds at Naples Community Hospital, Inc.

(the downtown campus) to The Brookdale Center for Healthy Aging at

NCH Healthcare System North Naples Hospital Campus. Six inpatient

CMR beds will be delicensed.

Naples Community Hospital, Inc. proposes to condition CON approval to

the project location at The Brookdale Center for Healthy Aging, NCH

Healthcare System North Naples Hospital Campus and to 2.5 percent of

54-bed CMR unit’s total annual patient days being provided to

Medicaid/charity/self-pay patients on a combined basis.

The total project cost is estimated at $2,393,853. The project involves

18,751 gross square feet (GSF) of renovation at a renovation cost of

$1,510,197.


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Need:

This project was not submitted in response to published need. The

54-bed CMR unit will be established at NCH Healthcare System North

Naples Hospital Campus and the 60-bed unit at NCH (downtown) will be

delicensed. North Naples Hospital Campus is located approximately 9.61

miles due north of Naples Community Hospital. The applicant contends

this location is more geographically accessible and in the area of greatest

projected population growth.

The applicant states that the 54-bed CMR will attain better utilization in

a non- institutional, single-story facility and establish a post-acute care

environment for CMR services apart from acute care services. The

applicant contends this will lead to improved therapeutic outcomes.

The project will also allow cost-efficient acute care expansion needed to

meet high seasonal demand at NCH (downtown) as acute care beds will

be moved into the vacated CMR space.

Quality of Care:

The applicant demonstrated the ability to provide quality care.

Naples Community Hospital, Inc., had three substantiated complaints

during the three-year period ending April 19, 2011.

The project has the potential to improve and enhance quality of care at

both facilities.

Cost/Financial Analysis:

Funding for the project and the entire capital budget should be available

as needed. Assuming the applicant will be able to meet the assumptions

for patient days and payer mix, this project appears to be financially

feasible.

The project is likely to have little to no impact on existing providers and

therefore, would not alter the existing competitive forces in the market.


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Medicaid/Indigent Care:

Naples Community Hospital, Inc. has a history of providing health

services to Medicaid patients and the medically indigent.

Schedule 7B projects Medicaid to account for 3.59 percent of the 54-bed

CMR unit’s total annual patient days in years one and two ending

September 30, 2013 and 2014, respectively.

The applicant proposes to condition CON approval to provide 2.5 percent

of the 54-bed CMR unit’s total annual patient days to Medicaid/charity/

self-pay patients on a combined basis. This is the same condition that is

on NCH’s 60-bed CMR (CON #9391). NCH has a long history complying

with its CMR condition.

Architectural Analysis:

The new planned 54-bed CMR unit at the North Campus is currently a

54-bed medical/surgical unit. The displaced medical/surgical beds

would be relocated to the fifth and sixth floors at the North Campus.

Vacant CMR unit space at the applicant’s downtown campus would be

converted to acute care bed space, allowing for more private rooms.

All patient beds would be located in semi-private rooms with access to a

handicap accessible toilet shower room without entering the corridor.

Support spaces are adequately sized and appropriately located.

The listed construction types (National Fire Protection Association Type I

(332) and Florida Building Code Type 1-B are sufficient to meet code

requirements.

The information provided in the project completion forecast appears to be

reasonable.


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G. RECOMMENDATION

Approve CON #10115 to establish a 54-bed inpatient CMR unit at NCH

Healthcare System North Naples Hospital Campus’ Brookdale Center for

Healthy Aging through the relocation of 54 inpatient CMR beds from the

downtown Naples Hospital Campus. The total project cost is $2,393,853.

The project involves 18,751 GSF of renovation at a renovation cost of

$1,510,197.

CONDITIONS:

(1) The project will be located at The Brookdale Center for Healthy

Aging, NCH Healthcare System North Naples Hospital Campus.

(2) A minimum of 2.5 percent of the 54-bed CMR unit’s total annual

patient days will be provided to Medicaid/charity/self-pay patients

on a combined basis.


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AUTHORIZATION FOR AGENCY ACTION

Authorized representatives of the Agency for Health Care Administration

adopted the recommendation contained herein and released the State

Agency Action Report.

DATE:

James B. McLemore Health Services and Facilities Consultant Supervisor Certificate of Need

Jeffrey N. Gregg Chief, Bureau of Health Facility Regulation

Documents

STATE AGENCY ACTION REPORTahca.myflorida.com/MCHQ/CON_FA/Batching/pdf/10115.pdf · The Hospitalist Company, and NCH hospitalist since January 2011 and Bonnie Rashid, M.D., also provided