STATE AGENCY ACTION REPORT
ON APPLICATION FOR CERTIFICATE OF NEED
A.
PROJECT IDENTIFICATION
1.
Applicant/CON Action Number
VITAS Healthcare Corporation of Florida/CON #10174
100 South Biscayne Boulevard, Suite 1300
Miami, Florida 33131
Authorized Representative:
2.
Michael M. Hansen
Senior Vice President - Field Services
(305) 350-6969
Service District/Subdistrict
Hospice Service Area 9C (Palm Beach County)
B.
PUBLIC HEARING
A public hearing was requested and held on behalf of Hospice of Palm
Beach County regarding the applicant’s proposed establishment of an
eight-bed freestanding inpatient hospice facility in Hospice Service Area
9C, Palm Beach County. The public hearing was held on Friday,
January 4, 2013 at the Quantum Foundation’s Community Meeting
Room in West Palm Beach. Andrea Stephenson, Executive Director of
the Treasure Coast Health Council conducted the hearing.
Karl Acuff of the Law Office of Karl David Acuff, representing Hospice of
Palm Beach County, spoke in opposition to the project. Mr. Acuff stated
the applicant provided no evidence to demonstrate a freestanding facility
would be more cost effective than contractual arrangements with existing
hospitals and nursing homes, as required by Rule 59C-1.0355(7), Florida
Administrative Code (F.A.C.). He questioned the need for the project,
citing low occupancy rates in Palm Beach County’s existing hospice beds.
Mr. Acuff indicated VITAS overstated current inpatient admissions in the
service area, with numbers that would require doubling the inpatient
census record in order to meet projected need. He stated the three
inpatient facilities VITAS cited as evidence of their ability to build the
proposed facility were acquired from existing hospice providers.
Mr. Acuff stated that VITAS is a significant provider of acute service care
to hospice patients through continuous home care, and the application
CON Action Number: 10174
neglected to address VITAS’ current role providing hospice care in this
capacity. He also indicated the application lacked details on the
admission process for the new facility. Mr. Acuff stated the facility will
include only a cold kitchen, with no staff provided for the food prep area.
He also stated that “there is no licensed dietician on staff, while (VITAS)
alludes to nurses being included in that line, that is a separate and
distinct requirement under the facility rules. While you can have nurses
provide dietary consulting for a standard hospice program, when it
comes to inpatient, Rule 58A–2.019 F.A.C., requires a licensed
dietician”.1 Mr. Acuff concluded by saying the applicant failed to prove
that a freestanding facility was the most efficient use of funds, and
asserted VITAS’ interest in the project was motivated by a desire to
acquire a larger share of the hospice market, instead of meeting a need
for this service.
Mr. Acuff also submitted an 11-page document at the hearing. This
document indicates that VITAS failed to document that the proposed
facility will be more cost-efficient than contractual arrangements because
it did not show the cost for contracted inpatient beds in a hospital or
nursing home. It concludes that “without VITAS disclosing these costs or
incorporating the six million dollar project costs, there is no way” the
Agency may determine if the proposed facility is cost efficient. Mr. Acuff
provides evidence of declining death rates in Palm Beach County, with
fewer terminally ill residents requiring hospice care during the last six
years. He contends there is under-utilization of current hospice beds in
Palm Beach County, and provides a count of beds and bed days of nine
facilities to support this statement. Mr. Acuff states VITAS’s claim that
approximately three to five percent of hospice patients require inpatient
care at some point during their hospice ‘stay’ is incorrect in that far
greater numbers of hospice patients require inpatient care, but only for a
short period of their total stay, which results in a smaller need
projection. Mr. Acuff states that “the applicant’s historical provision of
inpatient care in Palm Beach County at only a two percent rate” and “the
applicant’s overall national experience of about a three percent rate”. He
concludes that VITAS’s projected utilization would be realistic only if the
very upper limit (five percent) of the asserted planning range is chosen.
Rule 58A-2.109 F.A.C., requires that the hospice provide consultation by a licensed dietitian but
does not require that the hospice directly employ a licensed dietitian.
1
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CON Action Number: 10174
There were three speakers in support of the project. Michael Hansen,
Senior VP of Field Services for VITAS stated that VITAS’ has an extensive
history of hospice service, both nationally and in Palm Beach County,
where they serve approximately 500 patients per day. He stated that the
need for hospice services in Palm Beach County was clear, and debate
over need focused on a small percentage point of disagreement. Mr.
Hansen provided four maps to demonstrate need for a facility in the
southern end of Palm Beach County. The first map used U.S. Census
data to display the population aged 65 and over of Palm Beach County,
showing greater density for this age group in the southern region of the
county. The second map displayed current inpatient hospice units in
Palm Beach County, showing a preponderance of existing facilities in the
northern end of the county. The third map displayed public transit
patterns in Palm Beach County, demonstrating better public transit for
those aged 65 and over in the southern end of the county. The final map
plotted VITAS patient distribution over the past year, showing a
concentration of patients in the southern portion of the county. Mr.
Hansen stated that due to the scarcity of inpatient hospice facilities in
the southern end of the county, and the high cost of contract beds, the
need for the project was justified. He concluded by stating the project
planned to be co-located for training purposes and would house an endof-life community resource center.
Mary Zalaznik, Senior VP of VITAS Hospice Operations addressed the
issue of continuous home care provided by VITAS to the community of
Palm Beach County. She stated that VITAS did not intend to discontinue
this needed service; however, the proposed inpatient facility was needed
because continuous home care cannot always provide the level of care
required by the most acute patients. Ms. Zalaznik stated that regarding
contract beds available to VITAS in local hospitals, several problems
existed. She stated contract beds are not always available, and when
they are, patients are cared for by existing facility staff, at ratios
determined by the host facility. Ms. Zalaznik stated quality of care may
suffer due to facility patient/nurse ratios and the lack of hospice trained
staff. She concluded by stating the proposed project would provide a 1-4
nurse/patient ratio, trained hospice staff, and improve access to
inpatient hospice services for those in the southern region of Palm Beach
County.
Terry Rigsby, attorney with Pennington, Moore, Wilkinson, Bell &
Dunbar, P.A., stated that in addition to the applicant, Hospice of Palm
Beach County (HPBC) and Hospice by the Sea serve Palm Beach County.
He stated that each of these providers has a freestanding inpatient
facility (36 beds and 30 beds respectively). Mr. Rigsby stated that both of
these facilities are east of I-95, despite 70 percent of residents residing
west of I-95, where the applicant intends to locate the proposed facility.
Mr. Rigsby stated that HPBC is a nonprofit corporation of which
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CON Action Number: 10174
Spectrum Health is the sole member, and is supported by two local
foundations, with assets of approximately fifteen and eighty million
dollars respectively. He further stated that HPBC dominates subdistrict
9-C with approximately 65 percent market share. Additionally, in the
last fiscal year HPBC reported 5.7 million dollars in revenues in excess of
expenses.
Mr. Rigsby stated that HPBC operates six inpatient care centers in Palm
Beach County, one freestanding, and five affiliated with community
hospitals. HPBC has exclusive contracts with these five hospitals,
strengthening further domination of the local hospice market. Mr.
Rigsby stated the applicant is asking the state for the opportunity to
provide “the same effective, efficient and appropriate care that HPBC is
allowed to provide”. He concluded by stating that a freestanding hospice
facility provides ideal care to patients and families, and that HPBC
previously acknowledged in a filing with the Agency that contract bed
care is not ideal.
Mr. Rigsby also submitted written material in which he expanded on the
financial aspect of HPBC, noting high salaries paid to CEO’s during a
time when “HPBC laid off nearly five percent of its workers”. He cited
this as evidence that HPBC was not justified in an attempt to block
competitors due to anticipated financial impact. Mr. Rigsby provided
extensive documentation in the form of financial, tax, news articles, and
previous CON applications to support statements made during the
hearing regarding HPBC.
Letters of Support
Included in the application were 39 unduplicated letters of support
(Appendix 2-Community Letters of Project Endorsement). All were
signed, 37 were dated between October 26 and October 31, 2012, and 34
indicated a Palm Beach County, Florida address. Thirty three were of a
form letter variety. Common themes in the support letters were that the
project would create necessary jobs that will facilitate care to our
terminal citizens and their families and “presently the hospice care needs
of our community in this very specialized “home like” setting are
underserved”.
Stanton Collemer, Chief Financial Officer, The Center for Family Services
of Palm Beach County, Inc., stated that, “We are fortunate to have Vitas
in our community,… they are very community oriented and always going
above and beyond to meet the needs in our community”. Arlene Kaplan,
Ph.D., MSW, Coordinator of the Field Education Program and Assistant
Director, School of Social Work, Florida Atlantic University, stated that
VITAS Innovative Hospice Care (Palm Beach County) has been a field
placement site for her school’s student interns since 2006. Dr. Kaplan
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CON Action Number: 10174
also stated that VITAS has provided educationally enriching field
placements for 20 graduate social work students and VITAS is committed
to furthering education and training of social workers who will work with
terminally ill clients and their families.
Cathy Bowers, MSA, NCG, President, National Patient Advocate, Inc.,
stated in her support letter that as a nationally certified guardian, she
has had experience with patients who are very ill, near death and
eventually pass away. She indicated that as the Palm Beach County
population ages, it is critical that inpatient hospice care is expanded.
Michael Dane, Executive Director, Florida Assisted Living Coalition,
stated that he, “cannot fathom another hospice provider more qualified
to identify the needs for this level of care”. Mr. Dane also stated that,
“only VITAS Innovative Hospice Care has the foresight, the vision, the
recognition to take this bold step for the right direction”.
A sample of individuals that signed the form letter variety letters were as
follows: Joan Williams, BSN, RN.C, Administrator, Homemakers and
Companions of Florida, Inc.; Olga Brunner, President, A Good Daughter,
Inc. (Member, National Association of Professional Geriatric Care
Managers); Sharon Cohan, LCSW, Patient Services Manager and Tracy
Navakas, Senior Campaign Manager, The Leukemia & Lymphoma
Society; Jaime Estremera-Fitzgerald, Chief Executive Officer, Area Agency
on Aging; Milka Santos, ACBSW, Vice President of Education and
Support Services, South Palm Beach County Chapter, National
Parkinson Foundation; Karen Harvey, Owner, Senior Transition
Solutions; Judi Christiano, Administrator, Heritage Park East/Assisted
Living Facility #5113; Danielle Hartman, MNM, President & CEO and
Risa Demato, Site Director-Weisman Delray Community Center, Ruth
Rales Jewish Family Services; Gloria Jacobs, Administrator, Senior Home
Companions Nurse Registry, Senior Home Companions, Inc.; Carolyn
Topper, LCSW, BCD, Personal People Care, Inc.; Barbara Curtis, Day
Center Manager, Louis and Anne Green Memory and Wellness Center,
Christine E. Lynn College of Nursing, Florida Atlantic University and
Rhonda Schroeder, President, Home Health Administrator, Elder
Alternatives.
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CON Action Number: 10174
C.
PROJECT SUMMARY
VITAS Healthcare Corporation of Florida (CON #10174), a Florida forprofit corporation, proposes to establish a new, eight-bed freestanding
inpatient hospice facility in Hospice Service Area 9C (Palm Beach
County). The proposed inpatient hospice facility is to be co-located with
a community outreach and education center and a hospice program
administrative office. The proposed location will be up to 30 miles south
of the applicant’s existing facility-based inpatient unit (at Palms West
Hospital), in Palm Beach County, Florida.
The primary zip codes to be served are stated to be 33446, 33437,
33484, 33496 and 33434; additionally, zip codes 33436, 33426, 33473,
33472, 33498, 33433, 33444, 33445, 33483 and areas west of Interstate
(I)95 in 33487 and 33431 are expected to be secondary service areas2.
The applicant is licensed to operate hospice programs in Hospice Service
Areas 4A, 4B, 7A, 7B, 7C, 8B, 9C, 10 and 11 but has no freestanding
inpatient hospice facilities in Florida. VITAS states it has 36 inpatient
units nationwide, three of which are existing freestanding units.
Total project cost is $6,037,514. Costs covered are for land, building,
equipment, project development, financing and start-up. The project
involves 12,500 gross square feet (GSF) of new construction with new
construction costs of $2,573,254.
The applicant does not propose conditions on the project.
D.
REVIEW PROCEDURE
The evaluation process is structured by the certificate of need
review criteria found in Section 408.035, Florida Statutes, rules of
the State of Florida, and Chapters 59C-1 and 59C-2, Florida
Administrative Code. These criteria form the basis for the goals of
the review process. The goals represent desirable outcomes to be
attained by successful applicants who demonstrate an overall
compliance with the criteria. Analysis of an applicant's capability
to undertake the proposed project successfully is conducted by
evaluating the responses provided in the application and
independent information gathered by the reviewer.
Per the United States Postal Service website at
https://tools.usps.com/go/ZipLookupAction!input.action, each of the applicant’s primary and
secondary service area zip codes correlate to one of the following Palm Beach County cities: Boca
Raton; Boynton Beach and Delray Beach.
2
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CON Action Number: 10174
Applications are analyzed to identify various strengths and
weaknesses in each proposal. If more than one application is
submitted for the same type of project in the same district
(subdistrict or service planning area), applications are
comparatively reviewed to determine which applicant best meets
the review criteria.
Section 59C-1.010(3)(b), Florida Administrative Code, prohibits any
amendments once an application has been deemed complete. The
burden of proof to entitlement of a certificate rests with the
applicant. As such, the applicant is responsible for the
representations in the application. This is attested to as part of the
application in the certification of the applicant.
As part of the fact-finding, consultant Steve Love analyzed the
application in its entirety with consultation from financial analyst Everett
“Butch” Broussard, who evaluated the financial data and Said
Baniahmad of the Office of Plans and Construction, who reviewed the
application for conformance with the architectural criteria. Jessica Hand
provided the public hearing information.
E.
CONFORMITY OF PROJECT WITH REVIEW CRITERIA
The following indicate the level of conformity of the proposed
project with the review criteria and application content
requirements found in Sections 408.035 and 408.037, and
applicable rules of the State of Florida, Chapters 59C-1 and 59C-2,
Florida Administrative Code.
1.
Fixed Need Pool
a.
Does the project proposed respond to need as published by a fixed
need pool? Or does the project proposed seek beds or services in
excess of the fixed need pool? Rule 59C-1.008(2), Florida
Administrative Code.
The Agency does not publish need for inpatient hospice beds. Hospice
programs are required by federal and state law to provide hospice
patients with inpatient care when needed (42 Code of Federal
Regulations 418.108) and no more than 20 percent of a hospice’s total
patient days may be inpatient days per Section 400.609(4), Florida
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CON Action Number: 10174
Statutes. Inpatient care may be provided through contractual
arrangements in hospitals and nursing homes, and is generally provided
on a short-term basis within the total hospice stay.
As previously stated, the applicant operates no freestanding inpatient
hospice facilities in Florida. Existing freestanding inpatient hospice
facilities in Hospice Service Area 9C are as follows: 30 inpatient hospice
beds operated in Boca Raton by Hospice by the Sea, Inc. and 36
inpatient hospice beds operated in West Palm Beach by Hospice of Palm
Beach County, Inc. In total, there are 66 licensed inpatient hospice beds
in Hospice Service Area 9C, as stated above. There are no CON approved
inpatient hospice facilities pending licensure in Hospice Service Area 9C.
b.
If no Agency policy exists, the applicant will be responsible for
demonstrating need through a needs assessment methodology,
which must include, at a minimum, consideration of the following
topics, except where they are inconsistent with the applicable
statutory or rule criteria:
 Population demographics and dynamics;
 Availability, utilization and quality of like services in the district,
subdistrict or both;
 Medical treatment trends; and
 Market conditions.
Population demographics and dynamics
As of January 2012, Hospice Service Area 9C’s total population was
1,332,348 persons. Palm Beach County is projected to grow by 7.16
percent reaching a total population of 1,427,808 by January 2017, as
shown below.
Hospice Service Area 9C
Palm Beach County Population
January 1, 2012 – January 1, 2017
Age
Group
Under 65
65+
Total
January 2012
1,040,638
291,710
1,332,348
January 2017
1,098,991
328,817
1,427,808
Population
Increase
58,353
37,107
95,460
Percent
5.61%
12.72%
7.16%
Source: Florida Agency for Health Care Administration Population Estimates 2010 to 2025, published
February, 2012.
As shown above, the service area’s population age 65 and over is
expected to increase at a much more rapid rate than the under age 65
population – 12.72 percent compared to 5.61 percent from January
2012 to January 2017.
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CON Action Number: 10174
VITAS states that growth statistics indicate “modest” subdistrict
population growth and provides estimates from 2010 through 2035, in
the chart below.
Population Projections, Bureau of Economic and Business Research (BEBR)
2009 vs. 2011
Source: CON application #10174, Chart 3. The Palm Beach County Planning Division - Planning,
Zoning and Building Department, 2011 Population Allocation Model, Page 3 of 15, Table 3 at
http://www.pbcgov.com/pzb/Planning/population/2011/MODELDOC_Nov11.pdf .
VITAS also reports “steady” annual increases in patient average daily
census (ADC) trends over the past five years. The applicant’s “Chart 1
VITAS Average Daily Census Trend” yearly summary portion indicates an
ADC of 51 for the 12-month period ending November 2008 to an ADC of
(34) for the 12-month period ending November 20123. However, the
monthly total indicates an ADC of over 500 patients during the 12-month
period ending November 2012, compared to less than 400 during the
period ending November 2008.
3
Chart 1 is in CON application #10174’s charts section, which does not have page numbers.
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CON Action Number: 10174
Per the applicant, VITAS’ nationwide experience indicates that
approximately three to five percent of hospice patients will require
inpatient care at some point during their enrollment in a hospice
program. The applicant estimates that 15 to 25 of its service area
patients require inpatient hospice services on an average daily basis.
The applicant also states its existing hospital-based inpatient unit in the
north central portion of the county accommodates 12 patients. In
conclusion, the applicant indicates that should the project not be
approved, VITAS patients appropriate for inpatient hospice care will be
provided “service in contract beds, or remain in home care, both of which
situations may not optimally address the patient’s needs”.
Availability, utilization and quality of like services
Per the applicant, “the fact that 83 percent of the hospice inpatient beds
are located to the east of Interstate 95 implies that access for patients
and families to the west of that divider will likely be more difficult”. The
reviewer notes that the two licensed freestanding inpatient hospice
facilities in Palm Beach County are located east of I-95. The applicant
states a belief that the population residing in the southwestern portion of
the service area may encounter barriers in terms of easy access to
hospice inpatient services. The applicant offers a patient distribution
chart to account for its reported current situation.
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CON Action Number: 10174
VITAS Healthcare Corporation of Florida (CON #10174)
Hospice Service Area 9C
Patient Distribution 12 Months Ending November 2012
Source: CON application #10174, Chart 4.
The applicant states letters of support indicate that residents in the
service area may encounter barriers regarding easy access to the
proposed services. These support letters were described in Part B-Public
Hearing/Letters of Support. The reviewer notes that while the support
letters endorse the project, they did not describe existing barriers in
access to hospice inpatient services.
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CON Action Number: 10174
Medical treatment trends
VITAS states its experience indicates that hospice patients are often
referred and admitted at a very late stage in the disease process. A
stated result of this is that more patients are referred and admitted
directly from acute care settings and may be “actively dying”. The
applicant reports these circumstances can result in an increased need
for inpatient levels of care, stressing an already limited resource capacity
throughout Hospice Service Area 9C.
Market conditions
Existing freestanding inpatient hospice facilities in Hospice Service Area
9C were previously described. The applicant states a belief that the
current Palm Beach County freestanding inpatient hospice facility bed
capacities, at existing sites, are of a “relatively large scale” and that “the
community’s choice would be for service to be available in a more
intimate setting”. VITAS comments that a home-like setting is required
by CMS Conditions of Participation and indicates the project will provide
such a setting and augment it with an associated community outreach
center. The applicant states that this will become the model for inpatient
hospice services. In addition, VITAS states its projections indicate
patients served in the proposed facility will be admitted primarily from its
home care census when inpatient care is indicated by the plan of care.
2.
Agency Rule Criteria and Preferences
a.
Rule 59C-1.0355 (7) Florida Administrative Code states that the
Agency will not normally approve a proposal for construction of a
freestanding inpatient hospice facility unless the applicant
demonstrates that the freestanding facility will be more costefficient than contractual arrangements with existing hospitals or
nursing homes in the service area. The application shall include the
following:
(1)
A description of any advantages that the hospice program will
achieve by constructing and operating its own inpatient beds.
VITAS contends that advantages will be realized through project
approval, as described below.
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CON Action Number: 10174
(2)

Patients receiving hospice services in the southern portion of
the county and to the west of I-95 will have an additional option
for home-like inpatient services in a more convenient and more
accessible location.

The cost in inpatient unit space within facilities has escalated to
a point such that “rental” space has become more expensive
than the cost of constructing a freestanding unit.

The reduction of space cost will allow the redirection of funding
into continued enhancement of high-quality patient and family
services.

The availability of the co-located resource center enhances the
community’s access to end of life education and support
resources.
Existing contractual arrangements for inpatient care at
hospitals and nursing homes.
VITAS states it has a contractual arrangement with Palms West
Hospital for contract bed availability for patients requiring the
inpatient level of care. The applicant reiterates contract bed
arrangements are sub-optimal in terms of patient care and hospice
program staff productivity. The applicant reports in the current
situation, patients are placed in various locations within a
contracted facility and are often cared for by separate clinical
teams, often not specifically trained in end of life hospice protocols.
VITAS reiterates that contract bed rates consume “an inordinate
percentage” of government reimbursement rates and indicates that
it recently was unable to secure a reasonable rental price in the
southern portion of Palm Beach County, as the per day rate was
beyond $390.00 per day (approximately 60 percent of the Medicare
inpatient per day reimbursement rate) at full occupancy4. The
applicant indicates this creates financial burdens for hospice
programs and the dispersion of patients throughout these facilities
decreases the efficiency of hospice caregivers attending to those
patients. The reviewer notes the applicant does not offer a side-byside description or other itemization of expected savings to be
This is from CON application #10174, page 3, where the applicant indicates “space rental expense
exceeds the real estate funding costs” of less than $100.00 per patient bed day for the freestanding
facility’s year two.
4
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CON Action Number: 10174
realized from the project. The reviewer also notes the application
does not include the nursing homes that the applicant contracts
with for inpatient care. VITAS does not demonstrate that the
proposed freestanding facility will be more cost-efficient than
contractual arrangements with existing hospitals or nursing homes
in the service area, as required by Rule 59C-1.0355(7) F.A.C.
(3)
Anticipated sources of funds for the construction.
VITAS indicates that the proposed project will be funded by
working cash flows of the applicant and its parent organization –
VITAS Healthcare Corporation.
b.
Rule 59-1.0355(8) Florida Administrative Code: Semi-Annual
Utilization Reports. Each hospice program shall report utilization
information to the Agency or its designee on or before July 20th of
each year and January 20th of the following year.
The applicant does not directly respond to this rule. However, VITAS
regularly submits semi-annual utilization reports as required by the
above rule. The Agency’s semi-annual utilization reports do not require a
hospice to report inpatient hospice days.
3.
Statutory Review Criteria
a.
Is need for the project evidenced by the availability, quality of care,
accessibility and extent of utilization of existing health care
facilities and health services in the applicant’s service area?
ss. 408.035(1)( a) and (b), Florida Statutes.
There are three licensed hospice providers in Hospice Service Area 9C, as
follows:



Vitas Healthcare Corporation of Florida (the applicant);
Hospice by the Sea, Inc.; and
Hospice of Palm Beach County, Inc.
Hospice by the Sea, Inc. operates a 30-bed inpatient hospice facility in
Boca Raton and Hospice of Palm Beach County, Inc. operates a 36-bed
inpatient hospice facility in West Palm Beach. VITAS reiterates its belief
that the two freestanding inpatient hospice facilities in Hospice Service
Area 9C may be perceived by patients and families as institutional, “in
their feel and operation”. Per the applicant, this may be due to their bed
capacity (30+). The reviewer notes project support letters stated hospice
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CON Action Number: 10174
care in the community, in a “home like” setting, is underserved; however,
these letters did not specifically state hospice care services in the area
were institutional “in their feel or operation”. The applicant states that
its smaller facility will offer a more home-like and personal environment
for the comfort of patients and families it serves.
VITAS identifies the following factors to demonstrate need for the project:




Inpatient units that are owned and operated by hospice providers
embrace the hospice philosophy and approach to patient care;
Acute care hospitals and nursing homes have fundamentally different
missions from hospices, and those differences are reflected in the
skills and approaches of the professionals who staff each type of care
setting;
Dedicated inpatient units, especially those that are freestanding, are
designed to support family participation and presence in a “home like”
comfortable setting; and
The proposed freestanding unit is multi-functional in nature,
providing a care setting designed specifically for end of life care,
containing a destination resource center for end of life education and
services, and will include a small hospice administrative office
providing access to additional on-site hospice-experienced staff
available to assist and cross-train.
VITAS reports an average daily census of over 500 patients in Palm
Beach County. VITAS also reports that approximately 90 percent of
these patients are Medicare and Medicaid recipients, for which VITAS
describes compensation at a fixed per diem rate. As stated earlier, the
reviewer notes VITAS does not provide a list of itemized costs to
demonstrate anticipated savings as a result of this project.
VITAS indicates that the two existing freestanding inpatient hospice
facilities in Palm Beach County are located east of I-95. This is
confirmed by the reviewer. The applicant also reports that seven
hospital-based inpatient hospice units are located in Palm Beach
County. Below is the applicant’s chart to account for the two existing
freestanding inpatient hospice facilities and seven hospital-based
inpatient hospice units in Palm Beach County. These facilities are listed
in order of location from northern to southern Palm Beach County.
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CON Action Number: 10174
Hospice Service Area 9C-Palm Beach County
Existing Freestanding Inpatient Hospice Facilities
and Hospital-Based Inpatient Hospice Units
Inpatient Unit Name
Jupiter Medical Center
Palm Beach Gardens Medical Center
Hospice of Palm Beach County
Good Samaritan Medical Center
Palms West Hospital
JFK Medical Center
Bethesda Memorial Hospital
Delray Medical Center
Hospice by the Sea
Street Address
1201 S Old Dixie Hwy
3360 Burns Road
5300 East Avenue
1309 North Flagler Drive
13001 Southern Blvd
5301 South Congress Ave
2815 South Seacrest Blvd
5352 Linton Boulevard
1531 W Palmetto Park Blvd
City
Zip Code
Jupiter
Palm Beach Gardens
West Palm Beach
West Palm Beach
Loxahatchee
Atlantis
Boynton Beach
Delray Beach
Boca Raton
33458
33410
33407
33401
33470
33462
33435
33484
33486
Source: CON application #10174, Chart 6.
Note: The reviewer added zip codes and used the facility address per the Agency’s licensure records.
The applicant indicates there are 88 hospital-based inpatient hospice
beds and 66 licensed hospice beds in the existing freestanding hospice
facilities in Palm Beach County. This totals 154 beds. The applicant
indicates 26 of these 154 beds (or approximately 17 percent) are located
west of I-95.
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CON Action Number: 10174
VITAS reports the Palm Beach County Planning and Zoning Department
has determined Palm Beach County has a population of 1,320,134, with
approximately 919,783 (approximately 69.67 percent of the county’s
residents) residing to the west of I-95. Below is the applicant’s chart to
account for Palm Beach County’s age 65+ resident population by zip
code.
Palm Beach County, Florida Age 65+ Resident Population by Zip Code
Source: CON application #10174, Chart 2.
Per VITAS, Chart 2 (above) and Chart 4 (previously shown) demonstrate
the need for the proposed project, “in the southwest part of the county”.
It is restated here that the applicant offers no conditions for this project.
Further, the reviewer notes that geographically, the southwest part of
Palm Beach County is relatively unpopulated, compared to more eastern
and coastal parts of the county. Large portions of south-southwestern
Palm Beach County are comprised of the following: Arthur R.
Marshall/Loxahatchee National Wildlife Refuge; Browns Farm Wildlife
Management Area; Stormwater Treatment Areas; Everglades Agricultural
Area and the Holey Land Wildlife Management Area, per the website at
http://www.floridacountiesmap.com/palm_beach_county.shtml.
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CON Action Number: 10174
However, the applicant’s stated primary and secondary zip code service
area, in extreme southeastern Palm Beach County, highly correlate with
much more dense populations.
VITAS states that it has inpatient service contracts for hospice patients
with the following seven Palm Beach County hospitals – Boca Raton
Regional Hospital, Delray Medical Center, Good Samaritan Medical
Center, JFK Medical Center, St. Mary’s Medical Center, Wellington
Regional Medical Center and West Boca Medical Center. The applicant
indicates the dispersal of patients throughout contracting hospitals and
nursing facilities creates difficulties and compromises productivity for
hospice staff such as massage therapy, social workers, chaplains,
bereavement facilitators and hospice physicians. The applicant states
though it contracts for inpatient hospice care with “ a number of” Palm
Beach County nursing homes, a hospice cannot use nursing homes that
employ licensed practical nurses as charge nurses because nursing staff
requirements for hospice care require the charge nurse to be a registered
nurse. VITAS did not provide the names of the nursing homes it
contracts with for inpatient hospice care.
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.
The applicant states its parent, VITAS Healthcare Corporation, was
awarded its first Florida license in 1980 and that VITAS Healthcare
Corporation of Florida was awarded its license in 2002. The reviewer
confirms the applicant was first licensed for hospice services in Palm
Beach County in December 2002. The applicant’s current license was
effective November 13, 2011 and expires November 12, 2013.
Per the application, VITAS serves over 4,000 patients and their families
in nine Florida hospice service areas. The applicant also reports that
the parent provides high-quality, comprehensive, standard-setting
hospice and palliative care services to over 14,000 patients nationwide,
including a full range of patient care protocols, multi-disciplined team
practices and recognized staff training.
Although not discussed by the applicant, the reviewer notes that VITAS
Innovative Hospice Care of the Palm Beaches, 1901 S. Congress Avenue,
Boynton Beach, Florida 33426 appears on the “Find A Member” website
of the National Hospices and Palliative Care Association
(http://www.nhpco.org.). The applicant’s previously stated primary
service area zip codes pursuant to this project appear on the “zip codes
serviced” list of this website.
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CON Action Number: 10174
Although not discussed by the applicant, the reviewer notes that VITAS
Healthcare Corporation of Florida participated in the Agency’s Family
Evaluation of Hospice Care Satisfaction Survey, April through June
2012, attaining a five-star rating on each of the five questions in the
survey. Respondents ranged from a low of 357 to a high of 485. The
reviewer notes the applicant had the most respondents for each of the
five survey questions, when compared to the respondent count for each
of the same five survey questions submitted by the other licensed
hospice providers in Palm Beach County. The five-star rating is the
highest attainable and indicates respondents were 90 to 100 percent
satisfied with the hospices’ performance.
Agency records indicate VITAS had four substantiated complaints
statewide (encompassing nine hospice service areas) during the threeyear period ending January 23, 2013. A single complaint can encompass
multiple complaint categories. The substantiated complaint categories
were quality of care/treatment (4), administration/personnel (2), nursing
services (1), and resident/patient/client assessment (1).
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
$6,037,514 and incremental operating costs in year two of $1,538,860.
The applicant provided audited financial statements for the periods
ending December 31, 2011 and 2010. These statements were analyzed
for the purpose of evaluating the applicant’s and parent’s ability to
provide the capital and operational funding necessary to implement the
project.
Short-Term Position:
The applicant’s current ratio of 1.1 indicates current assets are slightly
greater than current obligations, but is below average and a slightly weak
position. The ratio of cash flow to current liabilities of 3.1 is well above
average and a strong position. Overall, the applicant has an adequate
short-term position (see Table 1 below).
19
CON Action Number: 10174
Long-Term Position:
The ratio of long-term debt to net assets of 0 indicates the applicant has
no long-term debt, a strong position. The ratio of cash flow to assets of
24.3 percent is above average and a strong position. The most recent
year had an operating income of $66,317,556, which resulted in a 17.4
percent operating margin. Overall, the applicant has a strong long-term
position (see Table 1 below).
Capital Requirements:
Schedule 2 indicates total capital projects of $7.0 million which consist
of the CON application subject to this review, current year capital
expenditures for Florida and non-specified capital expenditures.
Available Capital:
Funding for this project will be provided by the applicant. Based on our
review, the applicant has available working capital of $2.8 million and
cash flow from operations of $63.5 million. The applicant appears to
have sufficient capital to fund this project and the entire capital budget.
Staffing:
Schedule 6 indicates, by September 2015 (the first year of the proposed
project) and by September 2016 (the second year of the project), the
applicant forecasts for this project a constant 14.72 FTEs. The
breakdown is as follows: 3.8 FTEs secretary; 1.0 FTEs team manager; 0.5
FTEs physicians category-other; 5.6 FTEs registered nurses [RNs]; 1.4
FTEs nurses’ aides; 0.5 FTEs nursing category-other; 1.92 ancillary
services-vac/sick all and 1.0 FTEs social services category-other. Notes
to Schedule 6 indicate the proposed staff will be augmented when needed
by the applicant’s existing hospice program staff dietary services are
stated to be included in the nursing category.
VITAS indicates that it employs over 5,000 professional and management
staff in Florida and “over 300 staff members in Palm Beach County
encompassing patient care, administrative and management personnel”.
The applicant does not discuss staff recruitment and retention
mechanisms or practices.
Conclusion: Funding for this project should be available as needed.
20
CON Action Number: 10174
TABLE 1
VITAS Healthcare Corporation of Florida
CON application # 10174
12/31/2011
Current Assets (CA)
$23,144,885
Cash and Current Investment
$0
Total Assets (TA)
$260,917,116
Current Liabilities (CL)
$20,364,278
Total Liabilities (TL)
$20,364,278
Net Assets (NA)
$240,552,838
Total Revenues (TR)
$382,024,540
Interest Expense (IE)
$0
Operating Income (OI)
$66,317,556
Cash Flow from Operations (CFO)
$63,467,807
Working Capital
$2,780,607
FINANCIAL RATIOS
12/31/2011
d.
Current Ratio (CA/CL)
1.1
Cash Flow to Current Liabilities (CFO/CL)
3.1
Long-Term Debt to Net Assets (TL-CL/NA)
0.0
Times Interest Earned (OI+IE/IE)
N/A
Net Assets to Total Assets (NA/TA)
92.2%
Operating Margin (OI/TR)
17.4%
Return on Assets (OI/TA)
25.4%
Operating Cash Flow to Assets (CFO/TA)
24.3%
What is the immediate and long-term financial feasibility of the
proposal? ss. 408.035 (1)(f), Florida Statutes.
For year two of operations, the applicant projected the following
percentage of total patient days by group: Medicare at 88.9 percent,
Medicaid at 7.9 percent, self-pay/charity at 2.2 percent, and commercial
insurance at 1.1 percent.
The applicant indicated on Schedule 7A that it intends to provide daily
hospital service (general inpatient) for which the Department of Health
and Human Services sets rates. The Federal rate was calculated using
the Florida Wage Index for Medicare Hospice payments of 0.8705 and
inflated through September 2016. The average price adjustment factor
used was 2.83 percent per year based on the new CMS Market Basket
Price Index as published in the 3rd Quarter 2012 Health Care Cost
Review.
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CON Action Number: 10174
Estimated patient days for each level of service from Schedule 5, year
two, were multiplied by the calculated reimbursement rate for that
service in order to estimate the total revenue that would be generated by
that number of patient days. The results were then compared to the
applicant’s estimated gross revenue. The results of the calculations are
summarized in Table 2 below.
The applicant’s projected gross revenue was 4.84 percent, or $83,105,
less than the calculated gross revenue. Understating revenues is a
conservative approach, and the difference in revenue projected is not
deemed material and therefore considered reasonable.
Incremental operating profits from this project are expected to increase
from $34,844 in year one, to $90,457 in year two.
Conclusion: This project appears to be financially feasible.
HOSPICE REVENUE TABLE 2
CON application #10174--VITAS Healthcare Corporation of Florida
Wage Index for Palm Beach County (0.8705)
Wage
Component
Wage Index
Adjusted
Wage
Amount
Unadjusted
Component
Payment
Rate
Routine Home Care
$103.77
0.8705
$90.33
$47.26
$137.59
Continuous Home Care
$605.65
0.8705
$527.22
$275.81
$803.03
Inpatient Respite
$84.56
0.8705
$73.61
$71.66
$145.27
General Inpatient
$430.04
0.8705
$374.35
$241.80
$616.15
Payment
Rate
Inflation
Factor
Inflation
Adjusted
Amount
Patient Days
Year 2,
September
30, 2016
Calculated
Gross
Revenue
Routine Home Care
$137.59
1.106
$152.17
0
$0
Continuous Home Care
$803.03
1.106
$888.11
0
$0
Inpatient Respite
$145.27
1.106
$160.66
0
$0
General Inpatient
$616.15
1.106
$681.43
2,644
$1,801,705
2,644
$1,801,705
Total
From Schedule 7
Difference
Percentage difference
22
$1,718,600
-$83,105
-4.84%
CON Action Number: 10174
e.
Will the proposed project foster competition to promote quality and
cost-effectiveness? ss. 408.035(1)(e) and (g), Florida Statutes.
This application is for an existing hospice program provider in Hospice
Service Area 9C to build a new freestanding, eight-bed inpatient hospice
facility in Palm Beach County. There are currently two freestanding and
seven hospital-based (of which the applicant is one) hospice inpatient
units in Palm Beach County. Therefore, this project is not offering a new
choice of hospice program providers in the service area. The project is
proposing a freestanding inpatient hospice facility for a current hospice
program provider.
The impact of the price of services on consumer choice is limited to the
payer type. Most consumers do not pay directly for hospice services
rather they are covered by a third-party payer. The impact of price
competition would be limited to third-party payers that negotiate price
for services, namely managed care organizations. Therefore, price
competition is limited to the share of patient days that are under
managed care plans. The applicant is projecting 1.1 percent of its
patient days from managed care/commercial insurance payers with 96.7
percent of patient days expected to come from fixed price government
payer sources (Medicare and Medicaid), with the remaining 2.2 percent
as self-pay/charity.
With the large majority of patient care being provided from fixed price
government payer sources, this project is not likely to have any
discernible positive impact on price based competition to promote cost
effectiveness. As providers offer new or enhanced services to patients
and families as a means to compete on quality measures, costeffectiveness would be impacted since the new or enhanced services
would be offered despite the large percentage of fixed priced government
payers. In other words, the potential exists for new or enhanced services
to be provided for the same federal and state dollars.
Conclusion: This project is not likely to result in price-based
competition.
f.
Are the proposed costs and methods of construction reasonable?
Do they comply with statutory and rule requirements? ss. 408.035
(1)(h), Florida Statutes; Ch. 59A-4, Florida Administrative Code
The proposed building will be dedicated to end of life care resulting in a
multi-functional facility. This facility is designed as a one-story 12,500
square foot building, with the patient care segment of approximately
9,000 square feet with separate entry. The construction type is listed in
the narrative as Florida Building Code (FBC) Type II-B, National Fire
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CON Action Number: 10174
Protection Association (NFPA) Type II (0,0,0) and is fully sprinklered.
These construction types with sprinkler are adequate for size and type of
occupancy for the proposed facility.
Patient rooms are arranged in two four-room segments separated by a
nurse station and required support spaces. The main entrance, lobby,
dining, dietary and food serving area are located in the central part of the
building. The community center, administrative areas, and public
services are in a separate section and will be identified by exterior
signage, designed with its own entrance and reception hall. The plans
indicate that the building will be sub-divided into three smoke
compartments.
All beds are located in private rooms which exceed the minimum space
requirements of the FBC. As designed, the rooms provide ample space to
accommodate family members with access to outdoor private patios. All
patient rooms are provided with a private toilet room attached. The
project narrative indicates and it appears that all patient bedrooms and
toilet rooms will be accessible.
All required functional spaces appear to be provided and are adequately
sized. The common area of the patient care segment will include a
massage room and an aroma-therapy and meditation room with outdoor
access.
The plans are schematic and will require further development, but there
are no major code deficiencies identified at this stage.
Based on the analysis of actual cost data of a similar project, the
estimated construction costs appear to be within the expected range.
The information provided in the project completion forecast appears to be
reasonable.
The architectural review of the application shall not be construed as an
in-depth effort to determine complete compliance with all applicable
codes and standards. The final responsibility for facility compliance
ultimately rests with the owner.
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CON Action Number: 10174
The Agency does not require any further plan reviews concerning this
project for hospice licensure; however, the Agency will provide a formal
review of construction documents for any owner who wants to insure
code compliance.
g.
Does the applicant have a history of providing health services to
Medicaid patients and the medically indigent? Does the applicant
propose to provide health services to Medicaid patients and the
medically indigent? ss. 408.035(1)(i), Florida Statutes.
Hospice programs are required by federal and state law to provide
hospice patients with inpatient care when needed (42 Code of Federal
Regulations 418.108). Hospice care also must be provided regardless of
ability to pay and regardless of age, race, religion, sexual orientation,
diagnosis, payer source or financial status.
VITAS states it has consistently admitted and provided care to patients
irrespective of their ability to pay. Per the applicant, it has provided for
the medically indigent in excess of $17,000,000 in patient care on a year
to date basis in 2012 and $7,000,000 of that amount was provided
within the service area in charitable assistance for Medicaid and
medically indigent patients.
VITAS expects total patient days of 2,429 in year one (ending September
2015) and 2,644 in year two (ending September 2016), per Schedule 7A.
The majority of patient days, both years, are attributed to Medicare
patient days.
VITAS Healthcare Corporation of Florida
Self-Pay, Charity and Medicaid Patient Days
12 Months Ending September 2016
Payer Source
Patient Days
Self-Pay
57
Charity*
0
Medicaid
208
Total Patient Days
2,644
Percentage
2.16%
0.00%
7.87%
100.0%
Source: CON application #10174, Schedule 7A.
Note: * The applicant’s Schedule 7A does not indicate a charity patient day category or count. However, notes
to Schedule 7A state that the applicant’s current and projected experience is to provide two percent
of patient care revenue as charity.
Schedule 7A for year one ending September 2015, shows the applicant
projects patient days by payer as follows: self-pay 2.22 percent; Medicaid
7.86 percent; Medicare 88.80 percent and commercial insurance 1.11
percent. For year two ending September 2016, the estimated patient
payer mix is: self-pay 2.16 percent; Medicaid 7.87 percent; Medicare
88.88 percent and commercial insurance 1.10 percent. The reviewer
notes year one totals 99.99 percent and year two 100.01 percent, which
is probably due to rounding estimates.
25
CON Action Number: 10174
F.
SUMMARY
VITAS Healthcare Corporation of Florida (CON #10174), a Florida forprofit corporation, proposes to establish an eight-bed freestanding
inpatient hospice facility in Hospice Service Area 9C (Palm Beach
County). The proposed freestanding inpatient hospice facility is to be
located up to 30 miles south of the applicant’s existing hospital-based
inpatient location (Palms West Hospital). VITAS provides primary and
secondary service area zip codes that are consistent with the following
Palm Beach County cities: Boca Raton; Boynton Beach and Delray
Beach.
Total project cost is $6,037,514. The project involves 12,500 GSF of new
construction and construction costs of $2,573,254.
The applicant does not propose conditions on the project.
Need/Access:

The Agency does not publish need for inpatient hospice beds. There
are two facilities with a total of 66 licensed inpatient hospice beds and
no CON approved freestanding hospice facilities or beds pending
licensure in Hospice Service Area 9C.

VITAS contends that population demographics and dynamics indicate
that the elderly population (age 65+) particularly toward the
southeastern portion of Palm Beach County coupled with no
freestanding inpatient hospice facilities west of I-95 justify the project.

VITAS states serving an ADC of over 500 patients in Palm Beach
County and estimates that based on its national experience, three to
five percent of its hospice patients will need inpatient services at some
point in their hospice service tenure. VITAS projects the potential
need for inpatient capacity for its Palm Beach County program is in
the range of 15 to 25 patients.

VITAS contends that medical trends indicate patients are often
referred or admitted into hospice at later stages of their terminal
illnesses, often calling for more inpatient services.
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CON Action Number: 10174

The applicant’s form letters of support state “presently the hospice
care needs of our community in this very specialized “home like”
setting are underserved”. VITAS contends that its eight bed facility
will provide a more intimate “home-like” setting than the existing
freestanding inpatient hospice facilities in Palm Beach County that
have licensed hospice bed capacities of 30 beds or more.

VITAS states that existing scatter-bed contractual arrangements with
local hospitals often result in a relatively wide dispersion of hospice
patients throughout a facility, leading to less cost-effective and less
efficient delivery of the full array of hospice services for VITAS patients
and their families.

The applicant states that existing scatter-bed contractual
arrangements with local nursing homes often do not meet inpatient
hospice requirements as they relate to Medicare Conditions of
Participation regarding nursing staff. However, the application does
not include VITAS’ existing contractual arrangements for inpatient
care at nursing homes.

VITAS does not demonstrate that the proposed freestanding facility
will be more cost-efficient than contractual arrangements with
existing hospitals or nursing homes in the service area.
Quality of Care:

VITAS maintains hospice programs nationally and in Florida, in
Hospice Service Areas 4A, 4B, 7A, 7B, 7C, 8B, 9C, 10 and 11. The
applicant was first licensed in Palm Beach County in December 2002,
with its current license set to expire on November 12, 2013.

The applicant provided a very brief discussion of its ability to provide
quality care.

Agency records indicate VITAS Healthcare Corporation of Florida had
four substantiated complaints during the three-year period ending
January 23, 2013. The substantiated complaint categories included
quality of care/treatment (4), administration/personnel (2), nursing
services (1) and resident/patient/client assessment (1).
27
CON Action Number: 10174
Financial Feasibility/Availability of Funds:

The applicant has an overall adequate short-term position and an
overall strong long-term position.

Funding for the project should be available as needed.

The project appears to be financially feasible.

The project is not likely to result in price-based competition.
Medicaid/Indigent/Charity Care:

Hospice programs are required by law to provide services to all who
seek them.

The applicant’s Schedule 7A indicates that Medicaid will account for
7.86 percent and 7.87 percent of the project’s total annual patient
days in years one and two, respectively. Notes to Schedule 7A
indicate the applicant expects “to provide two percent of the patient
care revenue as charity”.
Architectural:
G.

The proposed fully sprinklered inpatient hospice facility meets all
Florida Building Code and National Fire Protection Association
standards.

All beds are located in private rooms which exceed the minimum
space requirements of the FBC.

The estimated construction costs appear to be within the expected
range and the project completion forecast appears to be reasonable.
RECOMMENDATION
Deny CON #10174.
28
CON Action Number: 10174
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
29