state agency action report on application for...

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION:

1. Applicant/CON Action No.

John Knox Village of Florida, Inc.

d/b/a John Knox Village of Pompano Beach/CON #10203 830 Lakeside Circle Pompano Beach, Florida 33060

Authorized Representative: Mark D. Rayner

Director of Health Facilities (954) 783-4001

2. Service District/Subdistrict

District 10 (Broward County)

B. PUBLIC HEARING:

No public hearing was held or requested regarding the proposed project.

C. PROJECT SUMMARY

John Knox Village of Florida, Inc. (CON #10203) proposes to add 17

sheltered nursing home beds as part of its on-site replacement project for its existing nursing home (John Knox Village of Pompano Beach) at 651 Village Drive, Pompano Beach, Florida, 33060. The applicant’s 177-bed

facility presently has 70 community and 107 sheltered nursing home beds. John Knox Village of Florida, Inc. includes notification

(#NF130013) for the replacement facility in Exhibit 8-1, Tab 8, of CON application #10203.

The applicant includes its certificate of authority from the Office of Insurance Regulation to operate a continuing care retirement community (CCRC) in Florida, regulated under Chapter 651, Florida Statutes, issued

February 15, 1980, in Exhibit 1-1, Tab 1 of CON application #10203.

CON Action Number: 10203

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John Knox Village’s 65-acre campus presently consists of 742 independent units and 64 assisted living facility beds. A home health

agency completes the campus.

John Knox Village states the additional 17 sheltered nursing home beds will be placed, along with 127 licensed nursing home beds (77 sheltered and 50 community) in a new Green House® designed long-term care

building comprised of 144 nursing home beds. The applicant indicates that the facility’s existing building will be renovated and will continue to house 50 beds. Upon project completion, the applicant’s facility will

consist of 194 beds, of which 124 will be designated sheltered beds and 70 will be community nursing home beds.

The applicant proposes no conditions on its Schedule C.

Total project cost is $5,645,000. The project involves 18,571 gross square feet (GSF) of new construction. Total construction cost is

$3,971,429. Total project cost includes: building, equipment and project development costs.

In 2011, the Florida Legislature extended the moratorium on the

issuance of certificates of need for additional community nursing beds until Medicaid managed care is implemented statewide pursuant to Sections 409.961-409.985, Florida Statutes, or October 2016, whichever

is earlier. However, pursuant to Section 408.0435 (3) Florida Statutes:

“This moratorium on certificates of need shall not apply to sheltered nursing home beds in a continuing care retirement community certified by the former Department of Insurance or by the Office of Insurance Regulation pursuant to chapter 651.”

The application was filed in accordance to 59C-1.004(2)(a), Florida Administrative Code, which allows applications for sheltered nursing

home beds to be reviewed as expedited applications rather than competitive batch review applications.

D. REVIEW PROCEDURE

The evaluation process is structured by the certificate of need review criteria found in Section 408.035, Florida Statutes; and applicable rules

of the State of Florida Chapters 59C-1 and 59C-2, Florida Administrative Code. These criteria form the basis for the goals of the review process.


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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 meet(s) the review criteria.

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(s). As part of the fact-finding, the consultant Jessica Hand analyzed the

application with consultation from the financial analyst, Everett “Butch” Broussard, who reviewed the financial data and Said Baniahmad of the Office of Plans and Construction, who reviewed the application for

conformance with the architectural criteria.

E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA

The following pages indicate the level of conformity of the proposed project with the review criteria and application content requirements found in Sections 408.035 and 408.037, Florida Statutes; and Chapters

59C-1 and 59C-2, Florida Administrative Code. Sheltered nursing homes are regulated under Chapter 651, Florida Statutes. Section

651.118 gives instruction to the Agency for review of any proposal for sheltered nursing beds.

Pursuant to s. 651.118 (2), Florida Statutes: The Agency for Health Care Administration shall issue a certificate of need to any holder of a

provisional certificate of authority pursuant to s. 651.022 to construct nursing home beds for the exclusive use of the prospective residents of the proposed continuing care facility if the holder of the provisional certificate of authority meets the Agency's applicable review criteria, utilizing the bed need provisions of subsection (4).


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Subsection (4) contains the following language: The Agency for Health Care Administration shall approve one sheltered nursing home bed for every four proposed residential units, including those that are licensed under part I of chapter 429, in the continuing care facility unless the provider demonstrates the need for a lesser number of sheltered nursing home beds based on proposed utilization by prospective residents or demonstrates the need for additional sheltered nursing home beds based on actual utilization and demand by current residents.

1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed

need pool? Ch. 59C-1.008(2), Florida Administrative Code. As noted above, this project is being reviewed under Rule 59C-

1.004(2)(a), Florida Administrative Code. Expedited reviews may be submitted at any time and do not respond to fixed need pool

publications. The applicant seeks to add 17 sheltered nursing home beds to a new Green House® designed long-term care building comprised of 144 nursing home beds. Fifty beds will remain in the existing long-

term care building, which will also be renovated. Upon project completion, the applicant’s facility will consist of 194 beds, of which 124

will be designated sheltered beds and 70 will be community nursing home beds. As previously stated, John Knox Village has notification (#NF130013) for the replacement facility.

Pursuant to Rule 59C-1.037(1)(b), Florida Administrative Code, based on the applicant’s 742 independent units and 64 licensed assisted living

facility beds, the CCRC qualifies for 201 sheltered nursing home beds.

John Knox Village indicates need for the project is driven by 100 percent utilization of the existing 107 sheltered nursing home beds by life care residents, with a facility-wide occupancy rate in both sheltered and

community beds of over 81.7 percent for calendar year 2012. The applicant states demand for rehabilitation services will continue to grow in Broward County, a popular retirement destination that comprises the

only single county health planning district in Florida. Twenty-four hospitals (including psychiatric, long-term acute care, comprehensive

rehabilitation) exist within Broward County, and 11 adult community nursing homes with 1,462 community nursing home beds are within a five-mile radius of John Knox Village. The applicant is one of only two

CCRC’s in Broward County.

The applicant submits the following chart showing annual facility utilization for the three most recent years.


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John Knox Village Historical Utilization CY 2010-2012

Sheltered Beds

Calendar Year 2010 2011 2012

Beds 107 107 107

Bed Days 39,055 39,055 39,162

Sheltered Days 39,815 39,269 45,309

Medicaid Days 2,843 1,426 6,997

Percent Occupancy 101.9% 100.5% 115.7%

Percent Medicaid 0.0% 3.6% 15.4%

Community Beds Calendar Year 2010 2011 2012

Beds 70 70 70

Bed Days 25,550 25,550 25,620

Community Days 11,039 11,274 7,595

Medicaid Days 4,908 5,734 2,073



Total Facility Total Days 50,854 50,543 52,904



Source: CON application #10203, page 1-12.

As shown above, occupancy rates in the sheltered beds exceed 100

percent during the three most recent calendar years. Continuing care contract holders who require nursing home placement may utilize

community beds when sheltered beds are full. Within the health center, short and long-term care is provided, with Medicare the primary payer for short-term care. John Knox Village includes the following Medicare

utilization data on the basis of the average daily census (ADC) for the three most recent calendar years.

Medicare ADC in Health Care Center

Three Most Recent Calendar Years Calendar Year ADC Medicare Residents

2010 23.8

2011 20.8

2012 18.1


The application includes the John Knox Village Foundation Annual

Report CY 2011 entitled “Is this the door to our New Health Center?” detailing The Green House® design scope and benefits to the project (Volume 1, Tab 10).

The applicant states the project is part of an update and modernization of John Knox Village in order to meet quality care expectations from

retirees and to increase the number of continuing care contract holders.


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The applicant cites population data for Broward County to forecast a 9.5 percent increase in populations aged 65 and over during the next five

years, from 1,803,753 in 2013 to 1,898,437 in 20181.

John Knox Village utilization forecasts for the proposed 17 beds are based on the assumption that the beds will comprise part of a 36-bed short-term stay unit utilized by Medicare beneficiaries. The applicant

indicates that 760 CCRC residents occupied independent residences in CY 2012. John Knox Village uses the 760 residents to the CY 2012’s average daily census (ADC) of 29 “within the health center” as the basis

for the projections presented in the table below.

Future Forecast Using Limited Assumptions for John Knox

Village for Medicare Beneficiaries with 36 Beds Allocated for Medicare in the New Building

Forecast Using Benchmarking Medicare Beds Allocated 36

Medicare Sheltered Beds 31

Medicare Community Beds 5

Medicare Bed Days 13,140

Medicare Resident Days 10,735

ADC Medicare 29

Medicare Occupancy 81.7%

Current CCRC Residents 760

Percent Medicare/Residents 3.9%

Estimate Based on 0.3% CCRC Resident 2010 – 2012 Annual Growth

CCRC Residents in 2018 773

ADC Medicare 30

Medicare Occupancy 83.1%

Estimate Based on 1.0% Growth

CCRC Residents in 2018 780

ADC Medicare 30

Medicare Occupancy 83.9% Source: CON application #10203, page 1-18.

The applicant notes that the existing facility is, and states the new

facility (all 194 beds) will be dually certified for Medicaid and Medicare. However, the applicant states that Medicare usage is expected to

increase as existing residents’ age and this project is for Medicare patients. John Knox Village notes that its projections are based on modest growth with the sale of continuing care contracts. However, the

applicant states that the renovations and improvements to the campus are expected to improve the overall appeal of the campus which may

increase the numbers of residents.

1 CON application #10203, page 1-14, cites a 9.7 percent increase. The reviewer confirms 9.5 percent

is the correct number per the data provided (1,803,753/1,898,437).


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2. Agency Rule Preferences

a. Use of Sheltered Nursing Home Beds. Under subsection 651.118(7),

Florida Statutes, sheltered nursing home beds may be used for persons who are not residents of the continuing care facility, and who are not a party to a continuing care contract, for a period of up

to five years from the date of issuance of the initial nursing home license for sheltered beds constructed in conjunction with the non-nursing home portion of the continuing care facility. Applicants

applying at a later time for additional sheltered nursing home beds without increasing the number of residential units shall restrict the

use of the additional sheltered beds to continuing care residents. Applicants who are adding additional residential units shall be allowed to apply for additional sheltered nursing home beds not

exceeding a ratio of one nursing home bed per four residential units. Nursing home beds approved under this condition may be used for

community residents for a period of up to five years from the date of issuance of the initial license of these beds.

The applicant states the total residency at John Knox Village is 806 units, of which 64 are housed in the assisted living facility, and 742 are independent units configured into apartments and villas. Based on the

ratio of one nursing home bed for every four residential units, the applicant is eligible for up to 201 sheltered beds. Presently, John Knox

Village has 107 sheltered beds and seeks to add 17 sheltered beds, well within the allowable ratio.

b. Criteria and Standards. In addition to meeting the applicable review criteria in Section 408.035, Florida Statutes, and the provisions in

this rule, applicants for certificates of need for sheltered nursing home beds shall comply with the criteria and standards outlined under Section 651.118, Florida Statutes.

The applicant states intent to comply with all applicable standards and criteria in this section, and holds a certificate of authority #97-59-

1800721 dated February 15, 1980. A copy was provided in CON application #10203 in Tab 1, Exhibit 1-1.

c. Data Collection and Reporting Procedures. Continuing care

providers shall submit to the Agency, or its designated Agency,

semi-annual bed utilization reports for the purpose of determining community and sheltered nursing home bed utilization based on

historical use by residents and non-residents of the continuing care facility. Bed utilization data shall be reported on July 30 for the period of January 1 through June 30, and on January 30 for the

period of July 1 through December 31 of each calendar year. Bed utilization data shall include:


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(a) Total number of resident admissions during the six-month

reporting period. (b) Total number of non-resident admissions during the six-month

reporting period. (c) Total admissions for the six-month reporting period. (d) Total resident patient days for the six-month reporting period.

(e) Total non-resident patient days for the six-month reporting period.

(f) Total patient days for the six-month reporting period.

John Knox Village of Florida, Inc., states that it will continue to comply

with data reporting requirements.

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?

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

As previously discussed, John Knox Village holds a certificate of

authority from the Department of Insurance Regulation to operate a CCRC in Florida, regulated under Chapter 651, Florida Statutes. Based

on 806 residential units, the applicant is eligible for 201 sheltered nursing home beds. The applicant is presently licensed for 107 sheltered nursing home beds and is seeking approval for an additional 17

sheltered nursing home beds. Ratios established in statute authorize sheltered nursing home beds for a CCRC in order to assure access to and availability of care. The project is consistent with the statutory ratio.

The applicant has previously stated that the need for the project is

evidenced by:

Existing high utilization of the facility’s 107 sheltered beds

Extending life style options to accommodate the aging and increased

needs of residents

Demographic trends in Broward County,

John Knox Village of Florida, Inc. also discusses need in the context of availability, accessibility and extent of utilization of the existing health

care facilities.


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b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? Is

the applicant a Gold Seal Program nursing facility that is proposing to add beds to an existing nursing home? Section 408.035(1)(c) and

(j), Florida Statutes. The applicant states that it has a history of providing quality care to its

residents, holding itself to high standards that are closely monitored and held accountable for all levels of service by the residents and their families. John Knox Village presents details of its Green House Health

Center (which includes this project), its Sharing and Caring Program, special programs to improve quality, nursing services and quality

improve plan. The applicant provided federal Medicare Nursing Home Compare Results from http:/www.medicare.gov/nursinghomecompare, which show the facility has an overall five (highest) star rating. John

Knox Village provided a detailed description of its ability to provide quality care.

John Knox Village of Pompano Beach received an overall four-star inspection quality rating for the rating period of January 2011 - June

20132. The overall four-star rating was drawn from the following ratings: quality of care (four stars), administration (four stars) and quality of life (four stars). The facility received five of five stars for each of the following

rating components: nutrition and hydration, restraints and abuse, pressure ulcers, and decline. The applicant received three stars for

dignity. John Knox Village of Pompano Beach is a Gold Seal facility. The

applicant was awarded a Gold Seal by the State of Florida Panel On Excellence in Long-Term Care effective July 1, 2012 through June 30,

2014. A copy of the applicant’s Gold Seal award certificate is provided as Exhibit 1-2, Tab 1.

Agency licensure records indicate that the applicant had zero substantiated complaints during the three-year period ending on

October 7, 2013.

c. What resources, including health manpower, management

personnel, and funds for capital and operating expenditures are available for project accomplishment and operation? Section

408.035(1)(d), Florida Statutes.

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

$5,645,000 and year two’s operating costs of $20,487,148.

2 Per the Agency’s website @ FloridaHealthFinder.gov last updated August 2013, which was confirmed

by reviewer on October 7, 2013.


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The applicant submitted audited financial statements for the periods

ending December 31, 2012 and 2011. We analyzed the audited financial statements to evaluate the applicant’s ability to provide the capital and

operational funding necessary to implement this project. Short-Term Position:

The applicant’s current ratio of 6.2 is well above average and indicates current assets are 6.2 times current liabilities, a strong position. The ratio of cash flow to current liabilities of 2.4 is above average, a strong

position. The working capital (current assets less current liabilities) of $27.7 million is a measure of excess liquidity that could be used to fund

capital projects. Overall, the parent has a good short-term position. (See Table 1).

Long-Term Position: The ratio of long-term debt to net assets of 1.9 is well above average and

indicates that long-term debt is greater than equity, a weak position. The cash flow to assets ratio of 9.3 percent is slightly below average and an adequate position. The most recent year had an operating income of

$3.5 million, which resulted in an operating margin of 7.8 percent. Overall, the applicant has a slightly weak long-term position. (See Table 1).

It should be noted that the Office of Insurance Regulation requires

CCRCs to maintain a minimum liquid reserve in an amount equal to the aggregate amount of all principal and interest payments due during the fiscal year on any mortgage loan or other long-term financing of the

facility, including taxes and insurance. We contacted the Office of Insurance Regulation and confirmed that the CCRC is currently meeting its minimum liquid reserve requirement.

Capital Requirements:

Schedule 2 listed capital projects totaling $46.5 million, which includes $5.6 million for the CON subject to this review.

Available Capital: According to the application, funding for the project is to be provided

primarily by bond financing. In support of its ability to acquire bond funding, the applicant provided a

letter from Cross Point Capital, acknowledging the project and its involvement in securing funding for such projects and indicating confidence that financing could be secured for this project.

Staff believes this infers interest in securing financing but not a

commitment.


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Section 651.118(5), Florida Statutes, requires a certificate of authority

prior to construction of a sheltered bed. The applicant currently has a certificate of authority dated February 20, 1980, which will allow them to

market and take reservation deposits. The financial filing requirements for a certificate of authority are more expansive and restrictive than for a CON review and construction of this project will not be permitted unless

the applicant obtains a certificate of authority from the Office of Insurance regulation.

TABLE 1

CON application #10203 -- John Knox Village of Florida, Inc.

12/31/2012 12/31/2011

Current Assets $33,014,992

$30,341,618

Cash and Current Investment $27,972,813

$24,886,864

Assets Limited to Use $24,771,628

$22,599,013

Total Assets $136,479,439

$130,206,459

Current Liabilities $5,349,545

$4,383,173

Total Liabilities $90,837,584

$89,170,866

Net Assets $45,641,855

$41,035,593

Total Revenues $44,991,513

$42,680,154

Excess of Revenues Over Expenses $3,504,112

$3,430,031

Cash Flow from Operations $12,759,707

$11,309,775

Working Capital $27,665,447

$25,958,445

FINANCIAL RATIOS

12/31/12 12/31/11

Current Ratio (CA/CL) 6.2

6.9

Cash Flow to Current Liabilities (CFO/CL) 2.4

2.6

Long-Term Debt to Net Assets (TL-CL/NA) 1.9

2.1

Net Assets to Total Assets (TE/TA) 33.4%

31.5%

Total Margin (ER/TR) 7.8%

8.0%

Return on Assets (ER/TA) 2.6%

2.6%

Operating Cash Flow to Assets (CFO/TA) 9.3% 8.7%

Staffing: Section 400.23(3)(a)1, Florida Statutes, specifies a minimum certified

nursing assistant staffing of 2.5 hours of direct care per resident per day and a minimum licensed nursing staffing of 1.0 hour of direct resident


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care per resident day. Based on the information provided in Schedule 6A, the applicant’s projected certified nursing staffing exceeds the

minimum levels required for nurses’ aides, but does not meet the minimum levels required for licensed nurses in years one and two of the

project.

Projected Nurse Staffing FTE

Nurses/Aides

Minimum Requirements 1st Year

YE 12/31/16 2nd Year

YE 12/31/17

Nurses

1.0 hour of direct care per resident

0.61 58 hours 0.60 57 hours

Aides

2.5 hours of direct care per resident

3.20 hours

3.14 hours

Source: CON application #10203, Schedule 6A.

John Knox Village projects 29.9 (2.8 RN, 5.6 LPN, 14.0 nurse’s aides, 1.4 dietary aide, 1.4 social worker, 2.8 activities assistant, 1.0 housekeeper, 0.5 laundry aide) incremental FTEs in year one ending December 31,

2016, and year two of the project.

The applicant’s Schedule 6A shows the facility has 137.1 FTEs which will increase to 166.6 in year one and year two of the project.

Conclusion: Funding for this project is dependent on the applicant’s ability to obtain its proposed debt financing. It should be noted that the Office of

Insurance Regulation will not allow this project to move forward without proof of sufficient capital reserves.

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

proposal? Section 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.


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Comparative data was derived from skilled nursing facilities that

submitted Medicaid cost reports in fiscal year 2011 and 2012. We selected nine similar sized skilled nursing facilities with similar Medicaid

utilization. The average price adjustment factor used was 2.7 percent per year based on the new CMS Market Basket Price Index as published in the 2nd Quarter 2013 Health Care Cost Review.

Projected net revenue per patient day (NRPD) of $245 falls between the control group median and low values of $878 and $222 for year two.

With net revenues between the median and low values in the control group, the facility is expected to consume health care resources in

proportion to the services provided (see Table 1). Projected revenues appear to be reasonable.

Anticipated costs per patient day (CPD) of $350 in year two are between the control group median and lowest values of $805 and $304. The

lowest level in the group is generally viewed as the practical lower limit on cost-efficiency. With CPD between the median and lowest in the peer group, costs are considered to be efficient (see Table 1). The applicant is

projecting a decrease in CPD between year one and year two of approximately 1.38 percent. As the occupancy rate increases from 81.6 percent in year one to 82.8 percent in year two, CPD would be expected

to decrease through economies of scale. Overall, costs appear to be reasonable.

Section 400.23(3)(a)(1), Florida Statutes, specifies a minimum weekly average of certified nursing assistants (CNA) and licensed nurse staffing

combined of 3.6 hours of direct care per resident per day. In addition, a minimum CNA staffing of 2.5 hours of direct care per resident per day, with a minimum of one CNA per 20 residents is required.

For licensed nurses, a minimum licensed nurse staffing of 1.0 hour of

direct resident care per resident day, with a minimum of one licensed nurse per 40 residents must be maintained.

Based on the information provided in Schedule 6, while the applicant’s projected certified nurse assistants meet the minimum levels required for

year one and year two, projected licensed nurse staffing does not. While the applicant is projecting the required one licensed nurse to 40 residents requirement, it is not projecting to meet the one hour of direct

care minimum in either year one or two. Given the total beds and projected occupancy, licensed nursing staff direct care per resident per day is projected at 0.61 hours per resident per day in year one and 0.60

in year two.


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Based on the information provided in Schedule 6, while the applicant’s projected certified nurse assistants meet the minimum levels required for

year one and year two, projected licensed nurse staffing does not. As a result, the projected level of licensed nurse staff does not appear to be in

compliance with Section 400.23(3)(a)(1), Florida Statutes. The year two operating profit for the skilled nursing facility of a negative

$6.1 million computes to an operating margin per patient day of a negative $104 which is below the control group’s median and lowest value negative $71.

Generally the skilled nursing portion of a CCRC is not considered a profit

center, particularly in the early years of operations. As such the feasibility of the skilled nursing facility is dependent on the overall operations of the CCRC. According to Schedule 8, the entire facility,

including non-nursing home income, would have a net income after tax of $4.4 million.


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TABLE 2

CON application #10203 Dec-17 YEAR 2

VALUES ADJUSTED

SELECT FY 2011/2012 YEAR 2 ACTIVITY

FOR INFLATION

COST REPORT DATA ACTIVITY PER PAT. DAY

Highest Median Lowest

ROUTINE SERVICES 21,311,473 364

334 297 265

ANCILLARY SERVICES 5,610,657 96

700 -270 -313

OTHER OPERATING REVENUE 0 0

1,659 517 -42

GROSS REVENUE 26,922,130 459

1,659 577 2

DEDUCTIONS FROM REVENUE 12,541,475 214

0 0 0

NET REVENUES 14,380,655 245

2,082 878 222

EXPENSES ADMINISTRATIVE 3,593,311 61

471 257 36

ANCILLARY 1,384,912 24

0 0 0

PATIENT CARE 11,090,296 189

440 252 153

PROPERTY 4,104,264 70

576 137 21

OTHER 314,366 5

0 0 0

TOTAL EXPENSES 20,487,149 350

1,811 805 304

OPERATING INCOME -6,106,494 -104

231 39 -71

-42.5%

PATIENT DAYS 58,616

VALUES NOT ADJUSTED

TOTAL BED DAYS AVAILABLE 70,810

FOR INFLATION

TOTAL NUMBER OF BEDS 194

Highest Median Lowest

PERCENT OCCUPANCY 82.78%

96.8% 90.6% 73.2%

PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 38,206 65.2% MEDICAID 7,483 12.8%

26.0% 21.6% 3.9%

MEDICARE 11,395 19.4%

66.0% 15.0% 11.1%

INSURANCE 0 0.0% HMO/PPO 1,532 2.6% OTHER 0 0.0%

0.0% 0.0% 0.0%

TOTAL 58,616 100.0%

Conclusion:

The skilled nursing facility is not feasible on a standalone basis. As part

of a CCRC the feasibility is linked to the overall success of the entire operations of the CCRC. In addition, the applicant is not projecting the minimum licensed nursing staff required by Section 400.23(3)(a)(1),


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Florida Statutes. However, considering operations as a whole and assuming the applicant is able to acquire the financing needed for

construction and working capital, and meets the minimum nursing staff requirements, this project appears to be financially feasible.

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

cost-effectiveness? Section 408.035(1)(g), Florida Statutes.

Pursuant to Section 651.118(7), Florida Statutes, at the discretion of the

continuing care provider, sheltered nursing home beds may be used for persons who are not residents of the continuing care facility and who are not parties to a continuing care contract for a period of up to five years

after the date of issuance of the initial nursing home license.

A provider whose five-year period has expired or is expiring may request the Agency for Health Care Administration for an extension, not to exceed 30 percent of the total sheltered nursing home beds, if the

utilization by residents of the nursing home facility in the sheltered beds will not generate sufficient income to cover nursing home facility expenses. However, no additional residential units are being constructed

in conjunction with this project, which limits the 17 beds to exclusive use by CCRC residents.

Conclusion: The project’s 17 beds are to be utilized by CCRC residents. Therefore,

increased competition is not likely to be realized.

f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? Section 408.035(1)(h), Florida Statutes; Ch 59A-4, Florida Administrative

Code. The 17 new beds will be integrated into a new building of 144 beds. The

144-bed, seven-story building will be configured into six residence floors, with 24 nursing home beds on each floor, organized into two 12-bed

neighborhoods. The first floor community commons consists of a main entrance to the facility, administrative offices, bistro, convocation/multi-purpose room, day spa, rehabilitation, and employee support services.

The construction type on the schematic plans is listed as Florida

Building Code (FBC) type 1B; this construction type does not allow for a seven-story building for health care (I-2) occupancy. However, fire resistance rating for building elements as indicated on the submitted

plans can qualify the building for type 1A construction that is suitable for the proposed facility. Architectural narrative indicates the entire


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building is fully sprinklered in accordance with NFPA 13. Plans show the floors have been subdivided into smoke compartments as required for all

I-2 occupancies.

All beds will be located in private rooms, with attached private toilet/shower rooms. The new resident rooms exceed the minimum area requirements. However, 50 percent of resident bathrooms are required

to meet Florida Building Code accessibility standards. The facility will feature a Green House design (house hold design model

per FBC) organized into two communities on each floor with support areas. Each community would have a kitchen, dining room, activity and

living room that would be open to the corridors. All other required functional spaces have been provided and are adequately sized and located. Additionally, there is a central bathing/spa for each community.

According to the architectural narrative, the entire building will comply

with all new codes and standards, including all exterior units and the emergency generator system. However, minor plan revisions will be required to resolve dead end corridors near the stairs and the

accessibility requirements. Overall, the proposed project as submitted is designed to be functional

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

The estimated construction costs for the 17 additional beds are pro-rated from the costs and square footage for the entire 144-bed new building,

and appear to be reasonable. The schedule for construction from the time of building permit to final

inspection is reasonable.

The plans submitted with this application were schematic in detail with the expectation that they will necessarily be revised and refined during the design development (preliminary) and contract document stages. 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.


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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? Section 408.035(1)(i), Florida Statutes.

The applicant states that charity care does not exist in nursing homes and Medicaid becomes the payer of last resort when patient resources

fall below a certain level and a means test is met. John Knox Village of Florida, Inc. has a history of providing services to Medicaid patients, and provides the following 2011 Medicaid Cost Report data:

2011 Medicaid Cost Report

Resident Days and Occupancy Rates at John Knox Village

Payer Patient Days Percent

Private Pay 34,486 68.3

Medicare 7,570 15.0

Medicaid 7,002 13.9

Other 1,433 2.8

Total 50,491 100.0


The applicant submits the following historical Medicaid utilization for

John Knox Village of Pompano Beach in the three most recent calendar years:

Patient Days, Medicaid Days, and Occupancy Rates at John Knox Village

Most Recent Three Calendar Years*

*Community Beds=70 Sheltered Beds=107, Total Beds=177 Patient Days Total Occupancy

Bed Type 2010 2011 2012 2010 2011 2012

Community 11,039 11,274 7,595 43.21% 44.13% 29.64%

Sheltered 39,815 39,269 45,309 101.95% 100.55% 115.70%

Total 50,854 50,543 52,904 78.72% 78.23% 81.66%

Medicaid Days Medicaid Occupancy

Bed Type 2010 2011 2012 2010 2011 2012 Community 4,908 5,734 2,073 44.46% 50.86% 27.29%

Sheltered 2,843 1,426 6,997 7.14% 3.63% 15.44%

Total 7,751 7,160 9,070 15.24% 14.17% 17.14% Source: CON application #10203, page 9-2.

As stated previously, the 17-bed project will be integrated as part of a

36-bed short-term stay unit utilized by Medicare beneficiaries. Thus, the applicant’s Schedule 7 indicates zero percent Medicaid utilization for years one and two of the project. Projected admissions and patient days

by payer for years one and two (ending December 31, 2016 and December 31, 2017) of the entire facility are shown below.


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John Knox Village of Pompano Beach

194-bed Nursing Facility

Projected Admissions and Patient Days by Payer

Year One - CY 2016 Year Two - CY 2017

Payer Admissions Patient Days

Percent Total

Patient Days

Admissions Patient Days

Percent Total

Patient Days

Self-Pay 211 38,055 65.8% 212 38,206 65.2%

Medicare 239 10,759 18.6% 253 11,395 19.4%

Medicaid 41 7,454 12.9% 42 7,483 12.8%

Other Managed Care 34 1,525 2.6% 34 1,532 2.6%

Total 526 57,793 100.0% 541 58,616 100.0% Source: CON application #10203, Schedule 7.

As shown in the table above, the applicant projects Medicaid will comprise 12.9 percent in year one and 12.8 percent in year two of the

total facility patient days. The applicant proposes no conditions for the project.

F. SUMMARY

John Knox Village of Florida, Inc. (CON #10203) proposes to add 17 sheltered nursing home beds as part of its on-site replacement project for

John Knox Village of Pompano Beach at 651 Village Drive, Pompano Beach, Florida, 33060. The applicant’s facility presently has 70

community and 107 sheltered nursing home beds. Upon project completion, the applicant’s facility will consist of 194 beds, of which 124 will be sheltered beds and 70 will be community nursing home beds.

The applicant proposes no conditions on its Schedule C.

Total project cost is $5,645,000. The project involves 18,571 gross square feet (GSF) of new construction. Total construction cost is

$3,971,429. After weighing and balancing all relevant criteria, the following issues are presented:

Need: The proposed project is not submitted in response to the fixed need pool.

By adding 17 sheltered nursing home beds to the CCRC’s current 107, the applicant seeks to meet the current and future needs of its life care contracted residents and to ensure that these residents will have access

to skilled nursing services on their own campus when and if needed.


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John Knox Village states that the need for the project is evidenced by high utilization, a need to extend life style options to accommodate the

needs of residents and the added capacity is expected to have a positive impact on the facility.

The applicant received a four out of five star overall inspection quality rating during its most recent rating period.

John Knox Village of Pompano Beach had zero substantiated complaints during the three-year period ending on October 7, 2013.

The applicant demonstrated the ability to provide quality care.

Cost/Financial Analysis:

Funding for this project is dependent on the applicant’s ability to obtain its proposed debt financing.

The skilled nursing facility is not feasible on a standalone basis. However, considering operations as a whole and assuming the applicant

is able to acquire the financing needed for construction and working capital, this project appears to be financially feasible.

The project will not increase competition.

Medicaid/Indigent Care: The 17-bed project will be integrated as part of a 36-bed short-term stay

unit utilized by Medicare beneficiaries. Thus, the applicant’s Schedule 7 indicates zero percent Medicaid utilization for the 17 beds in years one and two of the project.

The applicant projects Medicaid will comprise 12.9 percent in year one

and 12.8 percent in year two of the total facility patient days. Architectural Analysis:

The architectural plan indicates compliance with applicable codes.

Resident rooms all exceed the minimum area requirements of the Florida Building Code. All resident bedrooms and toilet rooms are designed to be

accessible. Construction costs appear to be within the expected range. The project

completion forecast appears to be reasonable.


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G. RECOMMENDATION

Approve CON #10203 to add 17 sheltered nursing home beds. The total

project cost is $5,645,000. The project involves 18,571 GSF of new construction and a total construction cost of $3,971,429.


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AUTHORIZATION FOR AGENCY ACTION

Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State

Agency Action Report.

DATE:

James B. McLemore Health Services and Facilities Consultant Supervisor

Certificate of Need

Jeffrey N. Gregg

Director, Florida Center for Health Information and Policy Analysis

state agency action report on application for...

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