HEALTH SERVICES AND DEVELOPMENT AGENCY ......Creek Road, Johnson City (Washington County) 37615, a...

Christian Care Center of Washington County CN2005-017

August 26, 2020 PAGE 1

HEALTH SERVICES AND DEVELOPMENT AGENCY MEETING AUGUST 26, 2020

APPLICATION SUMMARY

NAME OF PROJECT: Christian Care Center of Washington County

PROJECT NUMBER: CN2005-017

ADDRESS: 2234 Boones Creek Road Johnson City (Washington County), Tennessee 37615

LEGAL OWNER: Christian Care Center of Washington County, LLC 2020 Northpark Drive, Suite 2D Johnson City (Washington County), Tennessee 37604

OPERATING ENTITY: Care Centers Management Consulting, Inc. 2020 Northpark Drive, Suite 2D Johnson City (Washington County), Tennessee 37604

CONTACT PERSON: Jerry W. Taylor, Attorney (615) 724-3247

DATE FILED: May 15, 2020

PROJECT COST: $10,073,240

FINANCING: Commercial Loan

REASON FOR FILING: A 63-bed replacement nursing home created by relocating and replacing the 63-bed inactive Christian Care Center of Washington County fka Family Ministries John M. Reed Nursing Home. The nursing home beds in this project are NOT subject to the 125 bed Nursing Home Bed Pool for the July 2019-2020 state fiscal year period.

DESCRIPTION:

Christian Care Center of Washington County, LLC, is seeking approval for the relocation and replacement of its existing 63-bed nursing home, formerly known as Family Ministries John M. Reed Center, currently located at 124 John M. Reed Nursing Home Road, Limestone (Washington County), TN 37681. The proposed

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63-bed replacement facility will be constructed at a 1.5-acre site at 2234 Boones Creek Road, Johnson City (Washington County) 37615, a distance of approximately 14.4 miles from the existing nursing home location. The former Family Ministries John M. Reed Center was decertified by Medicare in 2017 and the license was placed on inactive status by the Tennessee Department of Health at the voluntary request of the former owner. The applicant acquired the existing facility from the former owner on April 21, 2020 (documentation of the change of ownership is reflected in the April 23, 2020 letter from the Tennessee Department of Health included in Supplemental #1). A letter dated October 16, 2019 from the Department of Health extending the inactive licensure status of Family Ministries John M. Reed Center to October 7, 2020 was provided in Supplemental #1. If approved, the replacement facility will resume services as a 63-bed nursing home with all beds being dually certified for TennCare and Medicare, as they were prior to the suspension of services. Since no new beds are being requested, the proposed project is not subject to the 125-bed Nursing Home Bed Pool for the 2020-2021 state fiscal year period. Not to Agency members: T.C.A. § 68-11-1627 permits the replacement of one or more currently licensed nursing homes with one single nursing home. SERVICE SPECIFIC CRITERIA AND STANDARD REVIEW CONSTRUCTION, RENOVATION, EXPANSION, AND REPACEMENT OF

HEALTH CARE INSTITUTIONS

1. Any project that included the addition of Beds, Services, or Medical Equipment will be reviewed under the standards for those specific activities Not applicable to this application.

2. For relocation or replacement of an existing licensed health care institution: a. The applicant should provide plans which include costs for both

renovation and relocation, demonstrating the strengths and weaknesses of each alternative.

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https://www.lawserver.com/law/state/tennessee/tn-code/tennessee_code_68-11-1609



Renovation of the current facility was not considered since it would be cost prohibitive to bring the current building that housed the nursing home up to current codes to re-open.

The applicant appears to meet this criterion.

Note to Agency Members: A comprehensive overview of the amenities planned for the new replacement facility is provided on page 2 of Supplemental #1.

b. The applicant should demonstrate that there is an acceptable

existing or projected future demand for the proposed project.

The applicant projects 49.5% occupancy in Year 1 of the project increasing to 90% in Year 2. Detailed information about the methodology to project utilization is provided on page 17 of the application.

It appears this criterion has been met.

Note to Agency members: According to the 2018 Joint Annual Report, Washington County’s eight actively licensed nursing homes (811 beds) reported a licensed occupancy of 83%. A table of Washington County nursing home utilization for the years 2016-2018 is located on page 1 of Supplemental #1.

Staff Summary

The following information is a summary of the original application and all supplemental responses. Any staff comments or notes, if applicable, will be in bold italics. Application Synopsis The proposed project will involve the relocation of the 63-bed dually certified, skilled nursing facility, Christian Care Center of Washington County (CCC of Washington County), formerly known under previous ownership as Family Ministries John M. Reed Center, from its current location at 124 John M. Reed Nursing Home Road, Limestone (Washington County), TN 37681 to a newly constructed 63-bed replacement facility located approximately 14.4 miles from the current facility, 2234 Boones Creek Road, Johnson City (Washington County) 37615 pursuant to T.C.A. § 68-11-1627.

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https://www.lawserver.com/law/state/tennessee/tn-code/tennessee_code_68-11-1609



The applicant anticipates that the project will take approximately 24 months to complete subject to licensure by the Division of Health Care Facilities, Tennessee Department of Health in October 2022.

Ownership • CCC of Washington County, a single member Tennessee limited liability

company (LLC) was formed on April 10, 2019. Its sole member is J. R. “Randy” Lewis who has over 35 years of experience in owning and operating nursing homes through affiliated companies.

• The applicant plans to contract with Care Centers Management Consulting, Inc. (CCMC) for a 20-year management consulting and services agreement.

• CCMC and its affiliates own and/or operate ten skilled nursing facilities in Tennessee and one facility in Kentucky.

• A Medicare Compare Rating chart of the ten nursing homes in Tennessee managed by CCMC is listed under Item #3 of Supplemental #1. The overall Medicare star rating of the ten nursing homes consist of the following: Overall Star Rating-3.1; Star Rating Health Inspection-3; Star Rating Staffing-2.3; and Star Rating Quality Measures-3.4.

• An organizational chart is located in Attachment Section A-4B of the original application.

Facility Information

• The new replacement facility will contain a total of 30,238 leased square feet (SF) with 16 private, 23 semi-private rooms and one (1) bariatric room. The facility will also include 2,704 SF for nursing areas (includes 2 nursing stations), 3,363 SF for dining/kitchen, 2,175 SF for dayroom/activities, and 1,508 SF for therapy services. Note to Agency members: A bariatric room is equipped to care for any individual whose weight and/or size interferes with the ability to provide safe, reasonable care (Gallagher, 2012).

• A Square Footage Chart and floor plan drawing are included in the application attachments.

NEED Project Need The applicant provided the reasons to relocate and replace the current nursing home facility:

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• The former owner needs the current nursing home building for the expansion of an assisted care living facility at 124 John M. Reed Nursing Home Road, Limestone (Washington County), TN.

• The building that formerly housed the nursing home would be required to be brought up to current codes in order for the inactively licensed nursing home to re-open in that space, which is cost-prohibitive.

• The new owner desires to construct a new and spacious modern nursing home facility for long-term care patients.

Service Area Demographics Christian Care Center of Washington County’s declared service area consists of Washington County.

• The total population of Washington County is expected to increase by 3.2% from 132,269 residents in 2020 to 136,545 residents in 2024.

• The overall statewide population is projected to grow by 3.1% from 2020 to 2024.

• The Washington County 2020 age 65 and older category will increase by approximately 10.3% from 25,472 residents in 2016 to 28,102 in 2024 compared to a statewide increase of 10.8%.

• The 65 and older population cohort presently accounts for approximately 21% of the total service area population compared to a statewide average of 19%.

• The number of service area residents enrolled in the TennCare program is estimated at approximately 18.3% of Washington County population compared with the statewide average of 20.7%.

Service Area Historical Utilization The inventory and utilization of nursing homes in Washington County is summarized in the following table.

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Washington County Nursing Home Utilization

Nursing Home 2020 Lic.’d Beds

2016 Patient Days

2017 Patient Days

2018 Patient Days

’16- ’18 %

Change

2016 %

Occ.

2017% Occ.

2018 %

Occ. Agape Nursing and Rehabilitation Center

84 26,776 27,252 27,685 +12% 80% 82% 89%

Appalachian Christian Village

103 30,099 30,769 33,561 12% 91.5% 89.3% 87%

Christian Care Center of Johnson City

84 22,515 26,992 27,042 +20.1% 81% 89% 90%

Four Oaks Health Care Center

84 28,158 27,038 28,027 0% 92% 88% 91%

Lakebridge Health Care Center

109 21,066 34,269 35,143 67% 53% 86% 88%

Life Care Center of Gray

125 33,626 32,394 30,203 -10% 69% 67% 62%

NHC HealthCare 167 50,744 54,438 54,111 7% 83% 88% 89% Princeton Transitional Care

47 10,105 8,840 10,169 +1% 59% 52% 59%

Total 811 209,667 240,274 244,657 +17% 71% 81% 83% Source: Nursing Home JAR, 2016-2018, CN2005-017 Supplemental #2, Page 1.

• In the combined 8 actively licensed nursing homes in Washington County,

total patient days increased by approximately 17% from 2016-2018. • Utilization increased in 6 of the 8 nursing homes from 2016-2018. • 2018 bed occupancy ranged from 59% at Princeton Transitional Care (47

beds) to 91% at Four Oaks Care Center (84 beds). The table below highlights the applicant’s projected utilization in the first two years of the project.

Christian Care Center of Washington County Projected Utilization

Year Lic.’d Beds

*MCARE Only

Certified beds

SNF MCARE

ADC

Level 2 MCAID

ADC

Skilled Other payors ADC

Non Skilled

ADC

Total ADC

Lic.’d Bed Occ.

Year 1 63 63 3.7 2.8 0.0 24.7 31.2 49.5% Year 2 63 63 10.6 3.8 8.5 33.8 56.7 90.0%

Source:CN2005-017, Supplemental #1, Page 12

* Includes dually-certified beds

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• CCC of Washington County estimates the licensed occupancy of the new replacement 63-bed nursing home will increase from 49.5% in Year 1 of the project to 90.0% in Year 2.

• The applicant projects that the Medicare skilled patient mix and the non-skilled patient mix will account for approximately 10.6% and 33.8%, respectively, of the nursing home’s total utilization in the second year of the project.

ECONOMIC FEASIBILITY Project Cost The replacement facility will be owned and constructed by Washington County Real Estate Investors, LLC. Related to the applicant through common ownership by its sole member, J.R “Randy” Lewis, Washington County Real Estate Investors, LLC will lease the facility to the applicant. Major costs of the $10,073,240 project are as follows:

• Construction plus Contingency - $6,327,165 and $442,901 for a total of $6,770,066 or approximately 67.2% of the total project total cost.

• Purchase of real estate $555,556 and site preparation $849,000 for a total of $1,404,556 or approximately 13.9% of total project cost.

• Furniture, fixtures, and equipment - $1,176,028 or 11.6% of total cost. • For other details on Project Cost, see the Project Cost Chart on page 19 of

the original application. • As reflected in the chart on page 11 of the application and summarized in

the table below, the proposed construction cost of the applicant’s replacement facility is $237.32/PSF and is above the 3rd quartile ($219.34/SF) of statewide nursing home construction projects from 2017 to 2019.

Nursing Home Construction Cost per Square Foot (SF)

2017-2019 Renovated

Construction New Construction Total

Construction 1st Quartile * $163.45/SF $147.62/SF Median * $175.00/SF $165.26/SF 3rd Quartile * $219.34/SF $192.82/SF

Source: HSDA Applicant’s Toolbox as of 6/29/2020 *Due to insufficient sample size, construction ranges are not available. Financing

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As noted, the proposed replacement facility will be constructed by Washington County Real Estate Investors, LLC and leased to the applicant for an initial five (5) year renewable period. A copy of a fully executed lease was provided in the application attachments. Washington County Real Estate Investors, LLC will secure financing for construction of the replacement facility through a $7,176,165 commercial loan issued by the Bank of Tennessee. An April 30, 2020 letter from Scarlett M. Dale, SVP, Carter County Bank, Bank of Tennessee, was provided in the application that identifies the terms of the construction loan. As noted on page 2 of the application, the applicant indicates that financial stability and viability will be assured through a $1,000,000 operating line of credit. An April 30, 2020 letter from Scarlett Dale, SVP, of Carter County Bank, Bank of Tennessee, was provided in the application that confirms the availability of a $1,000,000 line of credit with an interest rate of Wall Street Journal Prime. Net Operating Margin Ratio

• The applicant projects a net operating margin ratio for the total facility of 0.26% in Year 1 improving to a favorable margin of 0.038% in Year 2.

Note to Agency Members: The net operating margin demonstrates how much revenue is left over after all the variable or operating costs have been paid. Capitalization Ratio

• The applicant states that this does not apply to the proposed project since Christian Care Center, LLC is a newly formed entity and has no parent company.

Note to Agency Members: The capitalization ratio measures the proportion of debt financing in a business’s permanent financing mix. Historical Data Chart The applicant acquired Family Ministries John M. Reed Nursing Home effective April 21, 2020 and does not have access to the previous owner’s financial information.

Projected Data Chart The applicant projects $2,972,430 in total gross revenue on 11,391 total patient days in Year 1 increasing to $6,385,450 in Year 2, as the facility census increases from an average occupancy of 49.5% to 90.0% during the 2-year period. Projected favorable net income of $115,648 is anticipated in Year 2.

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The Projected Data Chart also reflects the following:

• Deductions from operating revenue for bad debt are estimated at $199,477in Year 2.

• Deductions for charity care are $29,396 in Year One increasing to $63,533 or approximately 1.0% of total gross operating revenue in the second year of facility operations.

Charges Summarizing from the table on page 25 of the application, the average patient daily charges are as follows:

• The proposed average gross per diem charge is $260.94/day in Year I increasing to $308.96/day in Year 2.

• The applicant’s projected net charge after contractual adjustments amounts to $251.62/day in Year 1 and $299.32/day in Year 2.

Note to Agency Members: Section 4432(a) of the Balanced Budget Act of 1997 changed how payment is made for Medicare skilled nursing facility services from a cost based to a per-diem prospective payment system (PPS) covering all costs (routine, ancillary and capital) related to the services furnished to beneficiaries under Part A of the Medicare program. Under PPS, payments for each admission are case-mix adjusted to classify residents into a Resource Utilization Group (RUG) category based on data from resident assessments and relative weights developed from staff time data. Source: “Skilled Nursing Facility PPS”, CMS.gov.

Medicare/TennCare Payor Mix

• As noted on page 28 of the application, projected Medicare and TennCare/Medicaid gross operating revenue is $506,762 and $1,408,963, respectively, of $2,972,430 total gross operating revenue in Year 1.

• TennCare/Medicaid revenue accounts for the highest portion or approximately 47.4% of total gross revenue in Year 1.

PROVIDE HEALTHCARE THAT MEETS APPROPRIATE QUALITY STANDARDS Licensure

• If approved, Christian Care of Washington County will be applying for licensure by the Tennessee Department of Health (TDH).

• The Commissioner of Health suspended admissions to Family Ministries John M. Reed Nursing Home (facility was under previous ownership at the

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time of the TDH survey) effective March 22, 2018 as a result of a March 6, 2018 survey and imposed three Type A Civil Monetary Penalties that totaled $6,000. A copy of the Notice of Suspension of Admissions is located in Supplemental #1.

• A letter dated October 16, 2019 from the Department of Health extending the inactive licensure status of Family Ministries John M. Reed Center to October 7, 2020 was provided in Supplemental #1.

Certification

• The applicant will seek certification for provider participation in TennCare and Medicare.

Accreditation

• The applicant intends to seek Joint Commission accreditation for the proposed replacement nursing home.

Other Quality Standards

• The applicant commits to obtaining and/or maintaining the following: o Staffing levels. o Licenses in good standing. o Medicare certifications. o Three years’ substantial compliance with federal and state

regulations. o The applicant has not been decertified in last three years. o Self-assessment and external peer assessment processes. o Data reporting, quality improvement, and outcome/process

monitoring systems. CONTRIBUTION TO THE ORDERLY DEVELOPMENT OF HEALTHCARE Agreements

• The applicant plans to develop resident transfer agreements with Franklin Woods Hospital and Johnson City Medical Center. A list identifying the hospitals and other healthcare providers is included on page 35 of the original application.

Impact on Existing Providers

• The proposal will not have any negative impact on other providers as the applicant is not requesting additional licensed beds.

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Staffing The applicant provided the facility staffing complement in the table on page 29 of the application. The nursing staffing in full time equivalents in Year 1 is shown below.

• 4.2 FTE-Registered Nurses • 7.0 FTE-LPN’s • 19.6 FTE-Nurse Aides • 30.8 Total FTEs

Ownership and property documentation are on file at the Agency office and will be available at the Agency meeting. Should the Agency vote to approve this project, the CON would expire in two years. CERTIFICATE OF NEED INFORMATION FOR THE APPLICANT There are no other Letters of Intent, denied or pending applications, or outstanding Certificates of Need for this applicant. Note: Christian Care Centers, LLC has a financial interest in this and other projects as follows: Outstanding Certificates of Need Christian Care Center of Unicoi County, CN1910-040A, has a Certificate of Need that will expire on April 1, 2022. The project was approved at the February 26, 2020 Agency meeting for the addition of five Medicare certified nursing home beds to an existing 46 bed Medicare certified skilled nursing home located at 100 Greenway Circle, Erwin (Unicoi County), Tennessee 37650. The service area is Unicoi County. The estimated project cost is $50,000. Project Status Update: According to a May 15, 2020 update, the five additional beds are operational and received licensure approval March 19, 2020. The final progress report is pending Christian Care Center of Medina, CN1802-006AE, has a Certificate of Need that will expire on February 1, 2022. The project was approved at the June 27, 2018 Agency meeting for the relocation of the 66 bed dually certified nursing home, f/k/a Milan Health Care Center, from its current location at 8060 Stinson Road, Milan (Gibson County), TN to an undeveloped site located approximately 10 miles away on State Highway 45E and Sonic Drive in or near the city limits of

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Medina (Gibson County), TN. The service area is Gibson County. The total estimated cost is $10,172,313.00. Project Status Update: The applicant was approved on April 1, 2020 for an 18-month extension to 2/1/2022. The initial review of the construction plans by the Tennessee Department of Health required some modifications and re-submission of the plans that required a major re-design. Christian Care Center of Bolivar, CN1712-036A, has a Certificate of Need that will expire on February 1, 2022. The project was approved at the April 25, 2018 Agency meeting for the relocation of the 67 bed dually certified nursing home, f/k/a Pleasant View Health Care, from its current location at 214 North Water Street, Bolivar (Hardeman County), TN to an undeveloped site located approximately 3.7 miles away on State Highway 64 at the intersection of Lucy Black Road in or near the city limits of Bolivar (Hardeman County), TN. The service area is Hardeman County. The total estimated cost is $9,702,271.11. Project Status Update: Per a July 14, 2020 update, all the footers are poured, the plumbing and the underground electrical service are being installed, and the main sewer and water services have been brought up to the building. The concrete slab will be poured by the end of July 2020. CERTIFICATE OF NEED INFORMATION FOR OTHER SERVICE AREA FACILITIES: There are no Letters of Intent, denied or pending applications, or outstanding Certificates of Need for other health care organizations in the service area proposing this type of service. PLEASE REFER TO THE REPORT BY THE DEPARTMENT OF HEALTH, DIVISION OF HEALTH STATISTICS, FOR A DETAILED ANALYSIS OF THE STATUTORY CRITERIA OF NEED, ECONOMIC FEASIBILITY, HEALTH CARE THAT MEETS APPROPRIATE QUALITY STANDARDS, AND CONTRIBUTION TO THE ORDERLY DEVELOPMENT OF HEALTH CARE IN THE AREA FOR THIS PROJECT. THAT REPORT IS ATTACHED TO THIS SUMMARY IMMEDIATELY FOLLOWING THE COLOR DIVIDER PAGE. PME (08/13/2020)

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CERTIFICATE OF NEED APPLICATION

FOR

CHRISTIAN CARE CENTER OF WASHING TON COUNTY

The Relocation and Replacement of a 63 Bed Skilled Nursing Facility

Washington County, Tennessee

May 15, 2020

Contact Person:

Jerry W. Taylor, Esq. Burr & Forman, LLP

222 Second Avenue South, Suite 2000 Nashville, Tennessee 37201

615-724-3247

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State of Tennessee Health Services and Development Agency Andrew Jackson Building, 9th Floor, 502 Deaderick Street, Nashville, TN 37243 www.tn.gov/hsda Phone: 615-741-2364 Fax: 615-741-9884

CERTIFICATE OF NEED APPLICATION SECTION A: APPLICANT PROFILE

1. Name o{Facilitv, Agency, or Institution

Christian Care Center of Washington County Name

2234 Boones Creek Road Street or Route

Washington County

Johnson City TN 37615 City State Zip Code

Website address: NIA ~'-'-'-------------------------Note: The facility's name and address must be the name and address of the project and must be consistent with the Publication of Intent.

2. Contact Person Available for Responses to Questions

Jerry W. Taylor Name

Burr & Forman, LLP Company Name

222 Second A venue South Suite 2000 Street or Route

Attorney Association with Owner

Attorney Title

[email protected] Email address

Nashville City

615-724-3247 Phone Number

TN State

615-724-3248 Fax Number

37201 Zip Code

NOTE: Section A is intended to give the applicant an opportunity to describe the project. Section B addresses how the project relates to the criteria for a Certificate of Need by addressing: Need, Economic Feasibility, Contribution to the Orderly Development of Health Care, and the Quality Measures.

Please answer all questions on 8½" X 11" white paper, clearly typed and spaced, single or double-sided, in order and sequentially numbered. 111 answering, please type the question and the response. All questions must be answered. If an item does not apply, please indicate "NIA" (not applicable). Attach appropriate documentation as an Appendix at the

end of the application and reference the applicable Item Number 011 the attachment, i.e., Attachment A.I, A.2, etc. The last page of the application should be a completed signed and notarized affidavit.

43485016 v1 1

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3. SECTION A: EXECUTIVE SUMMARY

A. Overview

Please provide an overview not to exceed three pages in total explaining each numbered point.

1) Description - Address the establishment of a health care institution, initiation of health services, bed complement changes, and/or how this project relates to any other outstanding but unimplemented certificates of need held by the applicant;

The applicant Christian Care Center of Washington County, LLC recently acquired a 63 bed license nursing home formerly known as Family Ministries John M. Reed Nursing Center. The license is currently in Inactive Status as approved by the Board for Licensing Health Care Facilities (BLHCF).

The applicant seeks authorization to relocate the nursing home to a new site also located in Washington County, and to build a new replacement facility to re-open under the name Christian Care Center of Washington County. No new beds are sought by this application. All 63 beds will be dually certified for Medicare and Medicaid/TennCare.

2) Ownership structure;

CCCWC is owned by Christian Care Center of Washington County, LLC. Its only member and 100% owner is J. R. (Randy) Lewis. Mr. Lewis and his affiliated companies own and/or operate 10 nursing homes, 9 of which are in Tennessee. CCCWC was acquired from the former owner effective April 21, 2020.

3) Service area;

The service area consists of Washington County. Approximately 75% of the patients are projected to be residents of Washington County. Due to the low census of the facility under the prior ownership due to compliance issues, the past history is not an accurate indicator of future patient origin. Washington County is expected to be the primary service area due to the location of the new site being centrally located in Washington County.

4) Existing similar service providers;

There are 9 licensed nursing homes in Washington County, including CCCWC, the license for which is in Inactive Status.

5) Project cost;

The total estimated project cost is $10,015,650 not including the filing fee.

6) Funding;

43485016 v1

Funding will be secured through a commercial loan. A letter of interest from Carter County Bank is provided later in the application.

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7) Financial Feasibility including when the proposal will realize a positive financial margin; and

The new facility will experience an operating loss in Year 1, but will become profitable in Year 2. The applicant will have access to a $1 million line of credit from Carter County Bank if working capital is needed until the facility becomes profitable.

8) Staffing.

The staffing plan calls for 39.5 FTE direct patient care positions, and 9.3 FTE non-direct patient care positions.

B. Rationale for Approval

A certificate of need can only be granted when a project is necessary to provide needed health care in the area to be served, can be economically accomplished and maintained, will provide health care that meets appropriate quality standards, and will contribute to the orderly development of adequate and effective health care in the service area.

Provide a brief description of how the project meets the criteria necessary for granting a CON using the data and information points provided in Section B of the application.

1) Need;

The applicant is the new owner of a licensed nursing facility formerly known as Family Ministries John M. Reed Nursing Home. The facility also included an Assisted Care Living Facility (ACLF). The former owner struggled with NF compliance issues and was decertified by Medicare in approximately 2017. In light of the past compliance difficulties, the former owner decided to concentrate on and expand the ACLF component and to sell the nursing home to the applicant.

The nursing home license was voluntarily on Inactive Status by the previous owner, and approved by the Board for Licensing Health Care Facilities (BLHCF). The Inactive Status is scheduled to expire on October 4, 2020, but an extension will be sought by the applicant, and it is expected to be granted.

The relocation and replacement facility are needed for several reasons. The former owner needs the nursing home building for the expansion of the ACLF. Furthermore, the building which formerly housed the nursing home would be required to be brought up to current codes in order for the nursing home to re-open in that space. This is cost prohibitive. Finally, the new owner wants to build a new and spacious nursing home facility, consistent with Care Centers' other nursing home facilities across the state. Care Centers has a well-deserved reputation for providing very nice living environments for its long term care patients.

2) Economic Feasibility;

The new facility will experience an operating loss in Year 1, but will become profitable in Year 2 and remain profitable thereafter. The applicant will have a $1,000,000 line of credit from Carter County Bank which it can use as working capital if needed during the first year of operations. A copy of the letter of interest from Carter County Bank is provided further on in this application.

3) Quality Standards;

43485016 v1 3

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CCCWC will meet or exceed all quality standards, as evidenced in part by the following:

• It will be licensed by the Tennessee Board for Licensing Health Care Facilities.

• Accreditation will be sought from the Joint Commission

• The management company, Care Centers Management Consulting (CCMC), manages nine nursing homes in Tennessee, and has experience and expertise in providing management consulting services to Tennessee nursing homes.

• CCMC and its affiliated companies have significant experience in acquiring distressed

nursing facilities, building replacement facilities, and re-opening successfully run

nursing homes.

4) Orderly Development to adequate and effective health care.

This project represents orderly development for several reasons, including:

• It is bringing no additional beds to the market.

• It will replace a financially and performance-distressed facility with a spacious, new,

successfully run nursing home.

• All of its beds will be dually certified, allowing access to beds for both Medicare and

Medicaid/TennCare patients.

C. Consent Calendar Justification

If Consent Calendar is requested, please provide the rationale for an expedited review.

A request for Consent Calendar must be in the form of a written communication to the Agency's Executive Director at the time the application is filed.

NIA

43485016 v1 4

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4. SECTION A: PROJECT DETAILS

A. Owner of the Facility, Agency or Institution

Christian Care Center of Washington County, LLC

B.

Name

2020 Northpark Suite 2D Street or Route

Johnson City City

Type of Ownership of Control (Check One)

1) Sole Proprietorship

2) Partnership

3) Limited Partnership

4) Corporation (For Profit)

5) Corporation (Not-for-Profit)

6)

7)

8)

9)

TN State

423-974-5455 Phone Number

Washington County

37604 Zip Code

Government (State of TN or Political Subdivision)

Joint Venture

Limited Liability Company X

Other (Specify)

Attach a copy of the partnership agreement, or corporate charter and certificate of corporate existence. Please provide documentation of the active status of the entity from the Tennessee Secretary of State's website at https:/ltnbear.tn.gov/ECommerce/FilingSearch.aspx. Attachment Section A-4AB.

Copies of the organizational documents are attached as Attachment Section A-4, A.

Describe the existing or proposed ownership structure of the applicant, including an ownership structure organizational chart. Explain the corporate structure and the manner in which all entities of the ownership structure relate to the applicant. As applicable, identify the members of the ownership entity and each member's percentage of ownership,for those members with 5% ownership (direct or indirect) interest.

CCCWC is owned by Christian Care Center of Washington County, LLC. Its only member and 100% owner is

J. R. (Randy) Lewis. An ownership chart is attached as Attach:ment Section A-4, B.

5. Name of Management/Operating Entity (If Applicable)

Care Centers Management Consulting, Inc. Name

2020 Northpark, Suite 2D Street or Route

Johnson City City

Website address: N/ A

TN State

Washington County

37604 Zip Code

------------------------------

For new facilities or existing facilities without a current management agreement, attach a copy of a draft management agreement that at least includes the anticipated scope of management services to be provided, the anticipated term of the agreement, and the anticipated management fee payment methodology and schedule. For facilities with existing management agreements, attach a copy of the fully executed final contract. Attachment Section A-5.

A draft Management Consulting Agreement is attached as Attachment Section A-5.

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6 A. Legal Interest in the Site

(Check appropriate line and submit the following documentation)

The legal interest described below must be valid on the date of the Agency consideration of the certificate

of need application.

□ Ownership (Applicant or applicant's parent company/owner)

Submit a copy of the title/deed.

X Lease (Applicant or applicant's parent company/owner) Attach a fully executed lease that includes the terms of the lease and the actual

lease expense.

D Option to Purchase Attach a fully executed Option that includes the anticipated purchase price

D Option to Lease Attach a fully executed Option that included the anticipated terms of the Option

and anticipated lease expense

□ Other (Specify)

Check the appropriate line above: For applicants or applicant's parent company/owner that currently own the

building/land for the project location, attach a copy of the title/deed. For applicants or applicant's parent company/owner that currently lease the building/land for the project location, attach a copy of the fully executed lease agreement. For projects where the location of the project has not been secured, attach a fully executed document including Option to Purchase Agreement, Option to Lease Agreement, or other appropriate

documentation. Option to Purchase Agreements must include anticipated purchase price. Lease/Option to Lease Agreements must include the actual/anticipated term of the agreement and actual/anticipated lease expense. The legal interests described herein must be valid on the date of the Agency's consideration of the certificate of need application.

The landlord and Lessor is Washington County Real Estate Investors, which is 100% owned by J.R. Lewis. Mr.

Lewis is also the sole owner of the applicant Christian Care Center of Washington County, LLC. The lease is

structured to cover the costs of the land acquisition and construction of the building. For this reason, a precise

rent amount cannot be determined until after the building is constructed and ready for occupancy. A copy of the

Lease Agreement is Attached as Attachment Section A-6, A.

6B. Briefly describe the following and attach the requested documentation on an 8 1/2" by 11" sheet of white paper, legibly labeling all requested information.

1) Plot Plan must include:

a) Size of site (in acres);

b) Location of structure on the site;

c) Location of the proposed construction/renovation; and

d) Names of streets, roads or highway that cross or border the site.

43485016 v1 6

20

7.

A plot plan is attached as Attachment Section A-6, B, 1.

2) Floor Plan - If the facility has multiple floors, submit one page per floor. If more than one page is needed, label each page.

a) Patient care rooms (private or semi-private) b) Ancillary areas c) Equipment areas d) Other (specify)

A floor plan is attached as Attachment Section A-6, B, 2.

3) Public Transportation Route - Describe the relationship of the site to public transportation routes, it any, and to any highway or major road developments in the area. Describe the accessibility of the proposed site to patients/clients.

The site location is just northeast of Johnson City, in an area roughly half way between the

confluence oflnterstate 75 and Interstate 81. It is in one of the highest growth areas of Washington County. It is roughly equidistant from the five closest nursing homes in the area. Thus it is perfectly located to serve the high population growth area without significantly threatening the other existing providers. There is no public transportation route in the immediate area.

Type oflnstitution (Check as appropriate--more than one response may apply)

A. Hospital (Specify) ___ _ B. Ambulatory Surgical Treatment

Center (ASTC), Multi-Specialty C. ASTC, Single Specialty D. Home Health Agency E. Hospice F. Mental Health Hospital G. Intellectual Disability

Institutional Habilitation Facility ICF/IID

H Nursing Home I. Outpatient Diagnostic Center J. Rehabilitation Facility K. Residential Hospice L. Nonresidential Substitution

Based Treatment Center for Opiate Addiction

M. Other (Specify) ____ _

43485016 v1 7

21

8 Purpose of Review (Check appropriate--more than one response may apply)

A. Establish New Health Care Institution

B. Change in Bed Complement C. Initiation of Health Care

Services as Defined in TCA 68-11-1607(4) (Specify)

D. Relocation and/or Replacement X E. Initiation of MRI F. Initiation of Pediatric MRI

9 Medicaid/Tenn Care, Medicare Participation

MCO Contracts [Check all that apply]

G. MRI Unit Increase H. Satellite Emergency

Department I. Addition of ASTC Specialty J. Addition of Therapeutic

Catherization K. Other (Specify)

X AmeriGroup X United Healthcare Community Plan X BlueCare X TennCare Select

The applicant will contract with all MCOs with which an agreement is reached.

Medicare Provider Number --=T~o_b~e~a=p~p~l=ie~d-'fi~o--=-r ____________ _

Medicaid Provider Number --=T~o-'b~e-'a""p""'p=li~e~d~fi~or=;...._ ___________ _

Certification Type -"-N-'-"u=r=si=n=g~F~a~c=il=it'-'--y ____________ _

Medicare certification was terminated under the former ownership. The applicant will establish a new

provider number with Medicare and TennCare.

If a new facility, will certification be sought for Medicare and/or Medicaid/TennCare?

Medicare X Yes No NIA Medicaid/TennCare X Yes No NIA

43485016 v1 8

22

10. Bed Com~lement Data

A. Please indicate current and proposed distribution and certification of facility beds.

TOTAL Current Beds *Beds **Beds Beds at

Licensed Beds Sta[fed Prop_osed Approved Exemp_ted Co!:!!J!.letion 1) Medical

2) Surgical

3) ICU/CCU

4) Obstetrical

5) NICU

6) Pediatric

7) Adult Psychiatric

8) Geriatric Psychiatric

9) Child/ Adolescent Psychiatric

10) Rehabilitation

11) Adult Chemical Dependency

12) Child/Adolescent Chemical Dependency

13) Long-Term Care Hospital

14) Swing Beds

15) Nursing Home - SNF (Medicare only)

16) Nursing Home - NF (Medicaid only)

17) Nursing Home- SNF/NF (dually certified Medicare/Medicaid) 63 Q Q Q Q 63

18) Nursing Home - Licensed (non-certified)

19) ICF/lID

20) Residential Hospice

TOTAL * Beds approved but not yet in service **Beds exempted under 10% per 3 year provision

B. Describe the reasons for change in bed allocations and describe the impact the bed change will have on the applicant facility's existing services. Attachment Section A-10.

NIA

C. Please identify all the applicant's outstanding Certificate of Need projects that have a licensed bed change component. If applicable, complete chart below.

CON Number I CON Expiration Date I Total Licensed Beds Approved CN1910-040 I May 1, 2022 ls The new beds are operational. The Final Progress Report is due in June, 2020.

I I I I

43485016 v1 9

23

11. Home Health Care Organizations - Home Health Agency, Hospice Agency ( excluding Residential Hospice), identify the following by checking all that apply: NIA

-Existing Parent Proposed

-Existing Parent Proposed

Licensed Office Licensed Licensed Office Licensed

County County County County County County

Anderson □ □ □ Lauderdale □ □ □ .. Bedford □ □ □ Lawrence □ □ □ Benton □ □ □ Lewis □ □ □ Bledsoe □ □ □ Lincoln □ □ □ Blount □ □ □ Loudon □ □ □ Bradley □ □ □ McMinn □ □ □ Campbell □ □ □ McNairy □ □ □ Cannon □ □ □ Macon □ □ □ Carroll □ □ □ Madison □ □ □ Carter □ □ □ Marion □ □ □ Cheatham □ □ □ Marshall □ □ □ Chester □ □ □ Maury □ □ □ Claiborne □ □ □ Meigs □ □ □ Clay □ □ □ Monroe □ □ □ Cocke □ □ □ Montgomery □ □ □ Coffee □ □ □ Moore □ □ □ Crockett □ □ □ Morgan □ □ □ Cumberland □ □ □ Obion □ □ □ Davidson □ □ □ Overton □ □ □ Decatur □ □ □ Perry □ □ □ DeKalb □ □ □ Pickett □ □ □ Dickson □ □ □ Polk □ □ □ Dyer □ □ □ Putnam □ □ □ Fayette □ □ □ Rhea □ □ □ Fentress □ □ □ Roane □ □ □ Franklin □ □ □ Robertson □ □ □ Gibson □ □ □ Rutherford □ □ □ Giles □ □ □ Scott □ □ □ Grainger □ □ □ Sequatchie □ □ □ Greene □ □ □ Sevier □ □ □ Grundy □ □ □ Shelby □ □ □ Hamblen □ □ □ Smith □ □ □ Hamilton □ □ □ Stewart □ □ □ Hancock □ □ □ Sullivan □ □ □ Hardeman □ □ □ Sumner □ □ □ Hardin □ □ □ Tipton □ □ □ Hawkins □ □ □ Trousdale □ □ □ Haywood □ □ □ Unicoi □ □ □ Henderson □ □ □ Union □ □ □ Henry □ □ □ Van Buren □ □ □ Hickman □ □ □ Warren □ □ □ Houston □ □ □ Washington □ □ □ Humphreys □ □ □ Wayne □ □ □ Jackson □ □ □ Weakley □ □ □ Jefferson □ □ □ White □ □ □ Johnson □ □ □ Williamson □ □ □ Knox □ □ □ Wilson □ □ □ Lake □

.. · .

□ □ .. · .

43485016 v1 10

12. Square Footage and Cost Per Square Footage Chart

Unit/Department

Administrative

Nursing

Day Room/ Activities

Therapy

Kitchen/ Dining

Laundry

Storage

Patient Rooms/

toilets

Mechanical/ Elec

Unit/Department

GSF Sub-Total

Other GSF Total

Total GSF

*Total Cost

... Cost Per Square

Foot

,_

Existing

Location

,T ·•-

Existing

SF

--

Cost per Square Foot Is Within Which Range

Proposed

Temporary Final

Location Location

,.. -

� -""

�-

(For quartile ranges, please refer to the Applicant's Toolbox on www.tn.gov/hsda)

*The Total Construction Cost should equal the Construction Cost reported on line A5

of the Project Cost Chart.

** Cost per Square Foot is the construction cost divided by the square feet. Please do not include contingency costs.

R-11

Proposed Final Square Footage

Renovated

D Below 1 st

Quartile

□ Between

1"1 and 2nd

Quartile

D Between

2nd and 3rd

Quartile

□ Above 3rd

Quartile

New

1805

2704

2175

1508

3363

740

2002

14800

749

29,846

392

30,238

$6,327,165

$209.25

D Below 1st

Quartile

□ Between

1st and 2nd

Quartile

□ Between

2nd and 3rd

Quartile

x Above 3rd

Quartile

Total

1805

2704

2175

1508

3363

740

2002

14800

749

29,846

392

30,238

$6,327,165

$209.252

□ Below 1st

Quartile

□ Between1 st and 200

Quartile

□ Between

2nd and 3rd

Quartile

x Above 3rd

Quartile

24

"

25

A. Describe the construction and renovation associated with the proposed project. If applicable, provide a description of the existing building, including age of the building and the use of space vacated due to the proposed project.

13. MRI, PET, and/or Linear Accelerator

□

□

□

Question A 13 and its sub-parts are not applicable to this application.

1. Describe the acquisition of any Magnetic Resonance Imaging (MRI) scanner that is adding a MRI scanner in counties with population less than 250,000 or initiation of pediatric MRI in counties with population greater than 250,000 and/or

2. Describe the acquisition of any Positron Emission Tomographer (PET) or Linear Accelerator if initiating the service by responding to the following:

A. Complete the chart below for acquired equipment.

Linear Accelerator Mev Types: □ SRS □ IMRT □ IGRT □ Other

□ By Purchase Total Cost*: □ By Lease Expected Useful Life (yrs) --□ New □ Refurbished □ If not new, how old? (yrs)

MRI Tesla: Magnet: □ Breast □ Extremity □ Open □ Short Bore □ Other --

□ By Purchase Total Cost*: □ By Lease Expected Useful Life (yrs)

--□ New □ Refurbished □ If not new, how old? (yrs)

PET □ PET only □ PET/CT □ PET/MRI □ By Purchase

Total Cost*: □ By Lease Expected Useful Life (yrs) --□ New □ Refurbished □ If not new, how old? (yrs)

* As defined by Agency Rule 0720-9-.01(13)

B. In the case of equipment purchase, include a quote and/or proposal from an equipment vendor. In the case of equipment lease, provide a draft lease or contract that at least includes the term of the lease and the anticipated lease payments along with the fair market value of the equipment.

C. Compare lease cost of the equipment to its fair market value. Note: Per Agency Rule, the higher cost must be identified in the project cost chart.

D. Schedule of Operations:

NIA

E. Identify the clinical applications to be provided that apply to the project.

F. If the equipment has been approved by the FDA within the last five years provide documentation of

the same.

43485016 v1 12

26

SECTION B: GENERAL CRITERIA FOR CERTIFICATE OF NEED

In accordance with T.C.A. § 68-ll-1609(b), "no Certificate of Need shall be granted unless the action proposed in the application for such Certificate is necessary to provide needed health care in the area to be served, can be economically accomplished and maintained, will provide health care that meets appropriate quality standards, and will contribute to the orderly development of health care." In making determination, the Agency uses as guidelines the goals, objectives, criteria, and standards provided in the State Health Plan. Additional criteria for review are prescribed in Chapter 11 of the Agency's Rules, Tennessee Rules and Regulations 01730-11.

The following questions are listed according to the four criteria: (1) Need, (2) Economic Feasibility, (3) Quality Standards, and ( 4) Contribution to the Orderly Development of Health Care. Please respond to each question and provide underlying assumptions, data sources, and methodologies when appropriate.

QUESTIONS NEED

The responses to this section of the application will help determine whether the project will Provide needed health care facilities or services in the area to be served.

1. Provide a response to the applicable criteria and standards for the type of institution or service requested. http://www.tn.gov/hsda/hsda-criteria-and-standards.html.

CONSTRUCTION, RENOVATION, EXP ANSI ON, AND REPLACEMENT OF HEAL TH CARE INSTITUTIONS

1. Any project that includes the addition of beds, services, or medical equipment will be reviewed under the standards for those specific activities.

NIA. No new beds or covered equipment are included in this application.

2. For relocation or replacement of an existing licensed health care institution:

a. The applicant should provide plans which include costs for both renovation and relocation, demonstrating the strengths and weaknesses of each alternative.

Renovation is not a viable option and relocation is necessary for several reasons: The former owner needs the nursing home building for the expansion of the ACLF. Furthermore, the building which formerly housed the nursing home would be required to be brought up to current codes in order for the nursing home to re-open in that space. This is cost prohibitive. Finally, the new owner wants to build a new and spacious nursing home facility, consistent with Care Centers' other nursing home facilities across the state. Care Centers has a well-deserved reputation for providing very nice living environments for its long term care patients.

b. The applicant should demonstrate that there is an acceptable existing or projected future demand for the proposed project.

CCCWC is a licensed facility which has been servicing Washington County and surrounding areas of many years under previous name and ownership. The census of the facility has been abnormally low for several years due to compliance problems and other issues faced by the previous ownership and

43485016 v1 13

27

management. The new ownership and management will not experience these problems, and will take the nursing home to a new level of quality care in a comfortable and inviting living environment in the new replacement facility. This will bring the utilization of the facility back up to the projected rates.

3. For renovation or expansions of an existing licensed health care institution:

NIA

a. The applicant should demonstrate that there is an acceptable existing demand for the proposed project.

NIA

b. The applicant should demonstrate that the existing physical plant's condition warrants major renovation or expansion.

NIA

[END OF RESPONSES TO STATE HEALTH PLAN CRITERIA]

2. Describe how this project relates to existing facilities or services operated by the applicant including previously approved Certificate of Need projects and future long-range development plans.

NIA. This project is not directly related to any other facilities or CON projects of Care Centers Management Consulting and its affiliated companies.

3. Identify the proposed service area and justify the reasonableness. Submit a county level map for the Tennessee portion of the service area using the map on the following page, clearly marked and shaded to reflect the service area as it relates to meeting the requirements for CON criteria and standards that may apply to the project. Please include a discussion of the inclusion of counties in the border states if applicable. Attachment Section B - Need-3.

The primary service area consists of Washington County. Approximately 75% of the patients are projected to be residents of Washington County. Due to the low census of the facility under the prior ownership due to compliance issues, the past history is not an accurate indicator of future patient origin. Washington County is expected to be the primary service area due to the location of the new site, which is centrally located in Washington County. The projections for the secondary service area counties are estimates based on location of the counties and relative populations.

Breakdown of projected patient origin:

PSA: Washington County

SSA: Sullivan County Greene County All other

75%

8% 5% 12%

Complete the following utilization tables for each county in the service area, if applicable:

NIA. Please see explanation above.

43485016 v1 14

28

-I>-

~ (X)

'-" ~ 0)

5.

Primary Service Area Christian Care Center of Washington County

29

4. A. 1) Describe the demographics of the population to be served by the proposal.

2) Provide the following date for each county in the service area using current and projected population data from the Department of Health: (http://www.tn.gov/content/tn/health/health-program-areas/statistics-data/con.html), the most recent enrollee date from the Division of Tenn Care: http://www.tn.gov/tenncare/information-statistics/enrollment-data.html), and US Census Bureau demographic information: http ://factfinder .census. gov /faces/nav /j s£'pages/index.xhtml

Demographic Variable/ Geographic Area

Washington County Primary Service Area Total State of TN Total

132,269 136,545

132,269 136,545

6,883,347 7,097,353

*The Target Population 1s ages 65+

Department of Health/Health Statistics

3.23% 25,472 28,102 10.33% 21% 39.9

3.23% 25,472 28,102 10.33% 21% 39.9

3.11% 1,189,428 1,318,822 10.88% 19% 38.9

Bureau of the Census

$46,752 20,766

$46,752 20,766

$52,375 1,053,152

15.7%

15.7%

15.3%

TennCare

.. 0 ; N U o C N C - ..

f-

24,227 18.3%

24,227 18.3%

1,421,442 20.7%

**The Census Bureau website does not p~Clvide)lhElnumbEirof persons below povElrt)' level. The totals in this column are calculated b)' perce11tageof below poverty leve.l diyide.dJiy1otaJpopulation in current year.

* Target Population is population that project will primarily serve. For example, nursing home, home health agency, hospice agency projects typically primarily serve the Age 65+ population; projects for child and adolescent psychiatric services will serve the Population Ages 0-17. Projected Year is defined in select service-specific criteria and standards. If Projected Year is not defined, default should be four years from current year, e.g., if Current Year is 2019, then default Projected Year is 2023.

B. Describe the special needs of the service area population, including health disparities, the accessibility to consumers, particularly the elderly, women, racial and ethnic minorities, TennCare or Medicaid recipients, and low-income groups. Document how the business plans of the facility will take into consideration the special needs of the service area population.

Some relevant demographics characteristics of the PSA include the following: (1) The growth rate for the overall population of the PSA (3 .23 % ) is higher than the state as a whole (3 .11 % ); (2) the growth rate for the target population of the PSA (10.3%) is slighter lower than the state as a whole (10.8%); (3) the median household income of the PSA ($46,752) is lower than the state as a whole ($52,375); (4) the poverty rate of the PSA (15.7% is higher than the state as a while (15.3%); the percentage of TennCare enrollees of the PSA (18.3%) is lower than the state as a whole (20.7%).

CCCWC is accessible to all patients who need long term care services offered at the facility. CCCWC will participate in Medicare and TennCare, and all of its beds will be dually certified for enrollees of either program.

5. Describe the existing and approved but unimplemented services of similar healthcare providers in the service area. Include utilization and/or occupancy trends for each of the most recent three years of data available for this type of project. List each provider and its utilization and/or occupancy individually. Inpatient bed projects must include the following data: Admissions or discharges, patient days, average length of stay, and occupancy. Other projects should use the most appropriate measures, e.g., cases, procedures, visits, admissions, etc. This doesn't apply to projects that are solely relocating a service.

NI A. This is a relocation of an existing licensed provider.

43485016 v1 16

30

6. Provide applicable utilization and/or occupancy statistics for your institution for each of the past three years and the projected annual utilization for each of the two years following completion of the project. Additionally, provide the details regarding the methodology used to project utilization. The methodology must include detailed calculations or documentation from referral sources, and identification of all assumptions.

The applicant Christian Care Center of Washington County, LLC acquired the 63 bed nursing home formerly known as Family Ministries John M. Reed Nursing Center effective April 21, 2020. The former owner struggled with NF compliance issues and was decertified by Medicare in approximately 2017.

Due to the compliance problems and Medicare decertification, the census of the facility under the prior ownership has been unrealistically low. Because of this, the historical utilization is not an accurate basis for projecting future utilization.

Since the license is on Inactive Status, the facility will begin its first year of operation with no patients. The utilization projections were therefore based on the model of a new facility in a similar market. Care Centers Management Consulting and affiliated companies own and/or manage 10 nursing homes, 9 of which are in Tennessee. Although the monthly fill rate will obviously vary some, it was assumed that the facility would achieve 15% occupancy during Month 1, and occupancy would grow steadily each month at a rate of 6.25% during the first year of operation, reaching 90% occupancy by the end of the first year.

ECONOMIC FEASIBILITY

The responses to this section of the application will help determine whether the project can be economically accomplished and maintained.

1. Project Cost Instructions

A. All projects should have a project cost of at least $15,000 (the minimum CON Filing Fee).

The correct filing fee is reflected on the Project Costs Chart

B. The cost of any lease (building, land, and/or equipment) should be based on fair market value or the total amount of the lease payments over the initial term of the lease, whichever is greater. Note: This applies to all equipment leases including by procedure or "per click" arrangements. The methodology used to determine the total lease cost for a "per click" arrangement must include, at a minimum, the projected procedures, the "per click" rate and the term of the lease.

43485016 v1

There will be a lease arrangement between the applicant, Christian Care Center of Washington County, LLC, and the owner of the land and building, Washington County Real Estate Investors, LLC. The sole member and 100% owner of both entities is J. R. (Randy) Lewis.

The lease agreement is a cost-based lease, intended to repay the costs of the land acquisition and construction of the building. For this reason, it is not possible to determine the amount of the lease payments until the land transaction has closed and the building construction is complete.

Since the applicant/lessee and the landlord/lessor are essentially the same through common ownership, and since the cost-based lease means the value of the lease is roughly the same as the cost of the land acquisition and construction costs, the latter costs are included on the Project Costs Chart as the appropriate measurement of cost in this category.

17

31

C. The cost for fixed and moveable equipment includes, but is not necessarily limited to, maintenance agreements covering the expected useful life of the equipment; federal, state, and local taxes and other government assessments; and installation charges, excluding capital expenditures for physical plant renovation or in-wall shielding, which should be included under construction costs or incorporated in a facility lease.

NIA

D. The Total Construction Cost reported on line 5 should equal the Total Cost reported on the Square Footage Chart.

E.

43485016 v1

The two numbers match.

For projects that include new construction, modification, and/or renovationdocumentation must be provided from a licensed architect or construction professional that support the estimated construction costs. Provide a letter that includes the following:

1) A general description of the project;

2) An estimate of the cost to construct the project;

3) A description of the status of the site's suitability for the proposed project; and

4) Attesting the physical environment will conform to applicable federal standards, manufacturer's specifications and licensing agencies' requirements including the AIA Guidelines for Design and Construction of Hospital and Health Care Facilities or comparable document in current use by the licensing authority.

A letter from the architect is attached as Attachment Section B, Economic Feasibility, 1.

A Project Costs Chart is attached on the following pages.

18

32

PROJECT COST CHART

A. Construction and equipment acquired by purchase:

1. Architectural and Engineering Fees

2. Legal, Administrative, Consultant Fees

3. Acquisition of Site

4. Preparation of Site

5. Total Construction Costs

6. Contingency Fund

7. Fixed Equipment (Not included in Construction Contract)

8. Moveable Equipment (List all equipment over $50,000.00)

9. Other (Specify) FFE&E See Attached List

B. Acquisition by gift donation, or lease:

1. Facility (Inclusive of building and land)

2. Building Only

3. Land Only

4. Equipment (Specify)

5. Other (Specify)

C. Financing Costs and Fees:

D.

E.

F.

43485016 v1

1. Interim Financing

2. Underwriting Costs

3. Reserve for One Year's Debt Service

4. Other (Specify)

Estimated Project Cost (A+B+C)

CON Filing Fee

Total Estimated Project Cost (D + E)

19

TOTAL

$300,000.00

$35,000.00

$555,556.00

$849,000.00

$6,327,165.00

7% $442,901.00 -----'----=----

$1,176,028.25

$280,000.00

$50,000.00

$10,015,650.25

$57,589.99

$ 10,073,240.24

33

FF&E (line A, 9)

Furnishings Softgoods Signage Shelving Art Freight/ installation included

Total

Nursing equipement/ Food service/ Housekeeping equipement/ Hair Salon equipment/ Therapy equipment

Computer system/ equipement Nurisng start up supplies Video conference equipment Tools for Maintenace dept

Total

5% contingecny

Grand total

43485016 v1 20

468,800.02 163,131.08

8,812.17 29,093.72 15,000,00

684,836.99

335,927.54

70,000.00 12,262.37 10,000.00

7,000.00

435,189.91

56,001.35

1,176,028.25

34

2. Identify the funding sources for this project.

Check the applicable item(s) below and briefly summarize how the project will be financed. (Documentation for the type of funding MUST be inserted at the end of the application, in the correct alpha/numeric order and identified as Attachment Section B-Economic Feasibility-2.)

X A. Commercial loan - Letter from lending institution or guarantor stating favorable initial contact, proposed loan amount, expected interest rates, anticipated term of the loan, and any restrictions or conditions;

Funding letters for a loan and a line of credit are attached as Attachment Section B, Economic Feasibility, 2.

B. Tax-exempt bonds - Copy of preliminary resolution or a letter from the issuing authority stating favorable initial contact and a conditional agreement from an underwriter or investment banker to proceed with the issuance;

C. General obligation bonds - Copy of resolution from issuing authority or minutes from the appropriate meeting;

D. Grants - Notification of intent form for grant application or notice of grant award;

E. Cash Reserves - Appropriate documentation from Chief Financial Officer of the organization providing the funding for the project and audited financial statements of the organization; and/or

F. Other - Identify and document funding from all other sources.

3. Complete Historical Data Charts on the following two pages-Do not modifv the Charts provided or submit Chart substitutions!

Historical Data Chart(s) represents revenue and expense information for the last three (3) years for which complete data is available. The "Project Only Chart" provides information for the services being presented in the proposed project while the "Total Facility Chart" provides information for the entire facility. Complete both, if applicable.

Note that "Management Fees to Affiliates" should include management fees paid by agreement to the parent company, another subsidiary of the parent company, or a third party with common ownership as the applicant entity. "Management Fees to Non-Affiliates" should include any management fees paid by agreement to third party entities not having common ownership with the applicant.

The applicant acquired the nursing home effective April 21, 2020. The applicant does not have access to the previous owner's data that would be necessary to complete a Historical Data Chart.

43485016 v1 21

35

4. Complete Projected Data Charts on the following two pages - Do not modifv the Charts provided or submit Chart substitutions!

Projected Data Chart(s) Provide information for the two years following the completion of the project. The "Project Only Chart" should reflect revenue and expense projects for the project (i.e., if the application is for additional beds, include anticipated revenue from the proposed beds only, not from all beds in the facility). The "Total Facility Chart" should reflect information for the total facility. Complete both, if applicable.

Note that "Management Fees to Affiliates" should include management fees paid by agreement to the parent company, another subsidiary of the parent company, or a third party with common ownership as the applicant entity. "Management Fees to Non-Affiliates" should include any management fees paid by agreement to third party entities not having common ownership with the applicant.

A Projected Data Chart is attached on the following pages.

43485016 v1 22

36

PROJECTED DATA CHART

Give information for the last two (2) years for which complete data are available for the facility or agency. The fiscal year begins in January (Month)

A.

B.

Utilization/Occupancy Data (Specify unit of measure, e.g., 1,000 patient days, 500 visits) Revenue from Services to Patients

1. Inpatient Services 2. Outpatient Services 3. Emergency Services 4. Other Operating Revenue

Specify: Phone, Cable, Guest Meals Gross Operating Revenue

C. Deductions from Operating Revenue

1. Contract Deductions 2. Provision for Charity Care 3. Provision for Bad Debt

Total Deductions

NET OPERATING REVENUE

D. Operating Expenses

1. Salaries and Wages a. Direct Patient Care b. Non-Patient Care

2. Physicians' Salaries and Wages 3. Supplies 4. Rent

a. Paid to Affiliates b. Paid to Non-Affiliates

5. Management Fees: a. Fees to Affiliates b. Fees to Non-Alffiliates

6. Other Operating Expenses Total Operating Expenses

E. Earnings Before Interest, Taxes, and Depreciation F. Non-Operating Expenses

1. Taxes 2. Depreciation 3. Interest 4. Other Non-Operating Expenses

Total Non-Operating Expenses NET INCOME (LOSS) G. Other Deductions

1. Estimated Annual Principal Debt Repayment 2. Annual Capital Expediture

Other Total Deductions

NET BALANCE DEPRECIATION

FREE CASH FLOW (Net Blance + Depreciation)

43485016 v1 23

Year: 11,391 patient days 49.5% occupancy

$2,967,449.00

$4,981.00

$2,972,430.00

$32,773.00 $29,396.00 $44,095.00

$106,264.00

$2,866,166.00

$822,258.00 $546,188.00 $18,000.00

$155,214.00

$720,000.00

$192,191.00

$1,153,090.00 $3,606,941.00 -$740,775.00

$13,874.00 $78,013.00

$4,725.00

$96,612.00 -$837,387.00

$0.00

-$837,387.00 $78,013.00

-$759,374.00

~ Total Facility

Project Only

Year: 20,695 patient days 90.0% occupancy

$6,385,450.00

$8,532.00

$6,393,982.00

$40,644.00 $63,533.00 $95,300.00

$199,477.00

$6,194,505.00

$1,309,612.00 $779,138.00

$18,000.00 $271,851.00

$720,000.00

$379,550.00

$2,483,992.00 $5,962,143.00

$232,362.00

$13,874.00 $94,013.00

$8,827.00

$116,714.00 $115,648.00

$0.00

$115,648.00 $94,013.00

$209,661.00

37

PROJECTED DATA CHART -- OTHER EXPENSES

OTHER OPERATING EXPENSES Employee Benefits & Payroll Ta)(es Pharmacy, Lab, Xray, Other Ancillary Expenses Insurance Utilities Telephone Contracted Therapy Services Dues & Subscriptions Other Contracted/Purchased Services Furniture & Equipment Purchases State Assessment Fees Real Estate Taxes Marketing & Public Relations Other Operating Expenses

TOTAL OTHER OPERATING EXPENSES

43485016 v1

YEAR1

$259,455 $51,773 $96,039 $103,789 $20,978 $182,091 $56,400

$107,920 $7,426

$122,613 $82,236 $12,000 $50,370 $1,153,090

24

YEAR2

$359,959 $340,449 $104,220 $122,754 $20,978

$946,418 $65,772

$225,402 $13,491 $122,613 $82,236 $12,000 $67,700 $2,483,992

2L. Total Facility Project Only

38

5. A. Please identify the project's average gross charge, average deduction from operating revenue, and average net charge using information from the Projected Data Chart for Year 1 and Year 2 of the proposed project. Please complete the following table.

Gross Charge (Gross Operating Revenue/Utilization Data) Deduction from Revenue (Total Deductions/Utilization Data) Average Net Charge (Net Operating Revenue/Utilization Data)

Gross Charge (Gross Operating Revenue/Utilization Data) Deduction from Revenue (Total Deductions/Utilization Data) Average Net Charge (Net Operating Revenue/Utilization Data)

Previous Current Year Year

Previous Current Year Year NIA NIA

NIA NIA

NIA NIA

Year One

Year One

$260.94

$9.33

$251.62

Year Two

Year Two

$308.96

$9.64

$299.32

% Change ( Current Year to Year 2)

% Change ( Current Year to Year 2)

18.4%

3.3%

18.9%

B. Provide the proposed charges for the project and discuss any adjustment to current charges that will result from the implementation of the proposal. Additionally, describe the anticipated revenue from the project and the impact on existing patient charges.

There are no current charges, since the license is on Inactive Status. The proposed room and board rates are as follows:

Private Pay rate:

Medicaid rate (TennCare): Medicare rate:

$245 (Semi-private) $285 (Private) $215 $465

C. Compare the proposed charges to those of similar facilities in the service area/adjoining service areas, or to proposed charges of recently approved Certificates of Need. If applicable, compare the proposed charges of the project to the current Medicare allowable fee schedule by common procedure terminology (CPT) code(s).

43485016 v1

The average daily rates of 3 nursing homes in the geographic area of the new site are reflected below. The source is the 2018 Joint Annual Reports. The average daily charge was calculated by dividing the total patient revenue by the total patient days. The names of the facilities are available upon request.

25

39

Facility

Nursing Home A

Nursing Home B

Nursing Home C

CCCWC (this project)

Average Daily Charge (2018)

$230.25

$214.51

$290.33

$251.62 (Projected 2022)

6. A. Discuss how projected utilization rates will be sufficient to support the financial performance.

1) Noting when the project's financial breakeven is expected, and

The new facility will experience an operating loss in Year 1, but will become profitable in Year 2 and remain profitable thereafter. The breakeven point will likely fall somewhere in the 1st Quarter of Year 2.

2) Demonstrating the availability of sufficient cash flow until financial viability is achieved.

The applicant has a $1,000,000 line of credit commitment from Carter County Bank which it can use as working capital if needed during the first year of operations. A copy of the commitment letter is attached as Attachment Section B, Economic Feasibility, 2.

Provide copies of the balance sheet and income statement from the most recent reporting period of the institution and the most recent audited financial statements with accompanying notes, if applicable. For all projects, provide financial information for the corporation, partnership, or principal parties that will be a source of funding for the project. Copies must be inserted at the end of the application, in the correct alpha-numeric order and labeled as Attachment Section B-Economic Feasibility-6A.

NI A. Christian Care Center of Washington County, LLC is a new entity and has no financial data to report. The project is being funded through a loan from a commercial lender.

B) Net Operating Margin Ratio: The Net Operating Margin Ratio demonstrates how much revenue is left over after all the variable or operating costs have been paid. The formula for this ratio is: (Earnings before interest, Taxes, and Depreciation/Net Operating Revenue).

43485016 v1

Utilizing information from the Historical and Projected Data Charts please report the net operating margin ratio trends in the following tables. Complete Project Only Chart and Total Facility Chart, if applicable.

Project Only Chart - NIA

2nd Previous 1st Previous Most Recent Projected Projected Year

Year to Most Year to Most Year

Recent Year Recent Year Year Year 1 2

Year Year Year Year Year -- -- --

Net Operating Margin Ratio

26

40

Total Facility Chart

2nd Previous 1st Previous Most Recent Projected Projected Year

Year to Most Year to Most Year

Recent Year Recent Year Year Year 1 2

Year Year 2022 Year2023 Year Year

Net Operating NIA NIA NIA -.26 .038 Margin Ratio

C) Capitalization Ratio: The Long-term debt to capitalization ratio measure the proportion of debt financing in a business's permanent (long-term) financing mix. This ratio best measures a business's true capital structure because it is not affected by short-term financing decisions. The formula for this ratio is: ((Long-Term Debt)/+ Long Term Debt+ Total Equity {Net Assets}) x 100

For self or parent company funded projects, provide the capitalization using the most recent year available from the funding entity's audited balance sheet, if applicable. Capitalization Ratios are not expected from outside the company lenders that provide funding. This question is applicable to all applications regardless of whether or not the project is being or totally funded by debt financing.

NIA. The project is being funded through a loan from a commercial lender.

7. Discuss the project's participation in state and federal revenue programs including a description of the extent to which Medicare, Tenn Care/Medicaid and medically indigent patients will be served by the project. Additionally, report the estimated gross operating revenue dollar amount and percentage of projected gross operating revenue anticipated by payor classification for the first year of the project by completing the table below. Complete Project Only Chart and Total Facility Chart, if applicable.

CCCWC will participate in both Medicare and Medicaid. Please see the tables below for the payor mix and projected revenue from those as well as other payors.

43485016 v1

Applicant's Projected Payor Mix, Year 1 Project Only Chart-NIA

Payor Source Projected Gross As a % of total Operating Revenue

Medicare/Medicare Managed Care

Tenn Care/Medicaid

Commercial/Other Managed Care

Self-Pay

Other (Specify)

Total*

Charity Care

* Needs to match Gross Operating Revenue Year One on Projected Data Chart

27

41

Applicant's Projected Payor Mix, Year 1 Total Facility Chart

Payor Source

Medicare/Medicare Managed Care Tenn Care/Medicaid Commercial/Other Managed Care Self-Pa Other

Chari Care

Projected Gross As a % of total 0 · Revenue

$506,762 17.05% $1,408,963 47.40%

$0 0.00% $1,056,705 35.55%

$0 0.00% $2,972,430 100.00%

1.00%

* Needs to match Gross Operating Revenue Year One on Projected Data Chart

8. Provide the projected staffing for the project in Year 1 and compare to the current staffing for the most recent 12-month period, as appropriate. This can be reported using full-time equivalent (FTEs) positions for these positions. Identify projected salary amounts by position classifications and compare the clinical staff salaries to prevailing wage patterns in the proposed service area as published by the Department of Labor & Workforce Development and/or other documented sources, such as the US Department of Labor. Wage data pertaining to healthcare professions can be found at the following link: https://www.bls.gov/oes/current/oes tn.htm.

Please see the table on the following page.

43485016 v1 28

42

Existing Projected Average Area

Position Classification Wide/Statewide FTEs FTEs Wage Average Wage

Direct Patient Care I :. • :, : . ,: .• < ·.•

A ·.

Positions I\ i

i, ... 'lt; ... ( ·.• I .· 1, · .. · .•··· ·.• I

RN NIA 4.2 $32.39 $30.00 LPN NIA 7.0 $23.81 $20.20

CNA NIA 19.6 $13.35 $12.00

Activities & Chaplain NIA 2.25 $17.57 Not Listed Dietary NIA 6.42 $13.25 $12.00

Total Direct Patient Care NIA 39.47 $20.07 $18.55 Positions

I ..

: .. } c::·· , . : ... '·' ::j ./ ... . :·

B Non-Patient Care I

I> ··•• • > :~:• ;;i

I .. ,.j{(}:,f/ >• Positions i, , •c. . .. l:r .·::'·, ,., ;

· .. · ·•

Administrator NIA 1.0 $48.08 $46.00

Human Resources NIA 2.0 $19.65 $19.65

Housekeeping NIA 4.94 $11.60 $9.85

Laundry NIA 1.4 $11.60 $9.85

Total Non-Patient Care NIA 9.34 $22.73 $21.34 Positions

Total Employees 48.81 $21.40 $19.95

(A+B) NIA C Contractual Staff 0 0 0 0

Total Staff NIA 48.81 $21.40 $19.95

9. What alternatives to this project were considered? Discuss the advantages and disadvantages of each, including but not limited to:

A. The availability of less costly, more effective and/or more efficient alternative methods of providing the benefits intended by the proposal. If development of such alternatives is not practicable, justify why not, including reasons as to why they were rejected.

43485016 v1

No such alternatives were available or were not practical. The relocation and replacement facility are needed for several reasons. The former owner needs the nursing home building for the expansion of the ACLF. Furthermore, the building which formerly housed the nursing home would be required to be brought up to current codes in order for the nursing home to re-open in that space. This is cost prohibitive. Finally, the new owner wants to build a new and spacious nursing home facility, consistent with Care Centers' other nursing home facilities across the state. Care Centers has a well-deserved reputation for providing very nice living environments for its long term care patients.

29

43

B. Document that consideration has been given to alternatives to new construction, e.g., modernization or sharing arrangements.

This was not considered, for the reasons stated above.

QUALITY STANDARDS

1. PC 1043, Acts of 2016, any receiving a CON after July 1, 2016 must report annually using forms prescribed by the Agency concerning continued need and appropriate quality measures. Please verify that annual reporting will occur.

The facility will comply with all reporting requirements.

2. Quality-The the proposal shall provide health care that meets appropriate quality standards.

43485016 v1

Please address each of the following questions:

A. Does the applicant commit to the following?

1) Maintaining the staffing comparable to the staffing chart presented in its CON application;

Yes

2) Obtaining and maintaining all applicable state licenses in good standing;

Yes

3) Obtain and maintaining TennCare and Medicare certification(s), if participation in such programs was indicated in the application.

Yes

4) For an existing healthcare institution applying for a CON - Has it maintained substantial compliance with applicable federal and state regulation for the three years prior to the CON application. In the event of non-compliance, the nature of non-compliance and corrective action should be discussed to include any of the following: suspension of admissions, civil monetary penalties, notice of 23-day or 90-day termination proceedings from Medicare, Medicaid/TennCare, revocation/denial of accreditation, or other similar actions and what measures the applicable has or will put into place to avoid similar findings in the future.

The applicant is the new owner of a licensed nursing facility formerly known as Family Ministries John M. Reed Nursing Home. The facility under the former owner struggled with NF compliance issues and was decertified by Medicare in approximately 2017.

The former owner voluntarily placed the license on Inactive Status, and it has not operated since that time. Since the applicant is a new owner, and had no relationship with the former owner, the non-compliance issues of the former owner cannot be considered as negative as to the applicant and current owner.

5) For an existing healthcare institution applying for a CON - Has the entity been decertified within the prior three years? If yes, please explain in detail. (This provision shall not apply if a new, unrelated owner applies for a CON related to a preciously decertified facility).

30

4443485016 v1

NIA. Please see the preceding response.

B. Respond to all of the following and for such occurrences, identify, explain and provide documentation:

1) Has any of the following:

a. Any person(s) or entity with more than 5% ownership (direct or indirect) in the

applicant (to include any entity in the chain of ownership for applicant);

b. Any entity in which any person(s) or entity with more than 5% ownership (direct or indirect) in the applicant (to include any entity in the chain of ownership for applicant) has an ownership interest

c. Any physician or other provider of health care, or administrator employed by any entity in which any person(s) or entity with more than 5% ownership in the applicant (to include any entity in the chain of ownership for applicant) has an ownership interest of more than 5%.

2) Been subjected to ant of the following:

a. Final Order or Judgment in a state licensure action;

No

b. Criminal; fines in cases involving a Federal or State health care offense

No

c. Civil monetary penalties in cases involving a Federal or State health care offense;

No

d. Administrative monetary penalties in cases involving a Federal or State health care offense;

No

e. Agreement to pay civil or administrative monetary penalties to the federal government or any state in case involving claims related to the provision of health care items and services; and/or

No

f. Suspension or termination of participation in Medicare or Medicaid/TennCare programs. No

g. Is presently subject of/to an investigation, regulatory action, or party in any civil or criminal action of which you are aware.

31

4543485016 v1

No

h. Is presently subject to a corporate integrity agreement.

No

C. Does the applicant plan, within 2 years of implementation of the project, to participate in self-assessment and external assessment against nationally available benchmark data to accurately assess its level of performance in relation to established standards and to implement ways to continuously improve?

NOTE: Existing licensed, accredited and/or certified providers are encouraged to describe their process for same.

CCCWC will put in place internal programs, 1.e., Quality Assurance and Performance Improvement Program, for this purpose. Additionally, the facility will utilize a series of satisfaction surveys to monitor and measure performance, and will also consider other national benchmarking tools in evaluating and monitoring the facility's performance. Finally, CCCWC will submit itself to Joint Commission scrutiny and meet its high standards.

Please complete the chart before on accreditation, certification, and licensure plans.

1)

Credential

Li censure

Certification

If the applicant does not plan to participate in these type of assessments, explain why since quality healthcare must be demonstrated.

Agency Status (Active or Will Apply)

X Health Will apply

□ Intellectual and Developmental Disabilities

□ Mental Health and Substance Abuse Services

X Medicare Will apply

X Medicaid/TennCare Will apply

□ other Accreditation Joint Commission Will apply

2) Based upon what was checked/completed in above table, will the applicant accept a condition placed on the certificate of need relating to obtaining/maintaining license, certification, and/or accreditation?

If the Agency determines such a condition would be appropriate and necessary, the applicant would accept it.

D. The following list of quality measures are service specific. Please indicate which standards you will be addressing in the annual Continuing Need and Quality Measure report if the project is approved.

32

46

□

□

□

□

□

□

□

□

X

43485016 v1

For Ambulatory Surgical Treatment Center projects: Estimating the number of physicians by specialty expected to utilize the facility, developing criteria to be sued by the facility in extending surgical and anesthesia privileges to medical personnel, and documenting the availability of appropriate and qualified staff that will provide ancillary support services, whether on-or off-site?

For Cardiac Catheterization projects:

a. Documenting a plan to monitor the quality of its cardia catheterization program, including but not limited to, program outcomes an efficiencies; and

b. Describing how the applicant will agree to cooperate with the quality enhancement efforts sponsored or endorsed by the State of Tennessee;

c. Describing how cardiology staff will be maintaining:

Adult Program: 75 cases annually averaged over the previous 5 years;

Pediatric Program: 50 cased annually averaged over the previous 5 years.

For Open Heart projects:

a. Describing how the applicable will staff and maintain the number of who will perform the volume of cases consistent with the State Health Plan (annual average of the previous 2 years), and maintain this volume in the future;

b. Describing how at least a surgeon will be recruited and retained (at least one shall have 5 years' experience);

c. Describing how the applicable will participate in date reporting, quality improvement, outcome monitoring, and external assessment system that benchmarks outcomes based on national norms (demonstrated active participation in the STS National Database is expected and shall be considered evident of meetin2 this standard). For Comprehensive Inpatient Rehabilitation Services projects: Retaining or recruiting a physiatrist? For Home Health projects; Documenting the existing or proposed plan for quality data reportin2, quality improvement, and an outcome and process monitorin2 system. For Hospice projects: Documenting the existing or proposed plan for quality data reporting, quality improvement, and an outcome and process monitorin2 system. For Megavoltage Radiation Therapy projects: Describing or demonstrating how the staffing and quality assurances requirements will be met of the American Society of Therapeutic Radiation and Oncology (ASTRO), the American College of Radiology (ACR), the American College of Radiation Oncology (ACRO), National Cancer Institute (NCI), or similar accreditin2 authority. For Neonatal Intensive Care Unit projects: Documenting the existing or proposed plan for data reporting, quality improvement, and outcome and process monitoring systems; document the intention and ability to comply with the staffing guidelines and qualifications set forth by the Tennessee Perinatal Care System Guidelines for Regionalization, Hospital Care Levels, Staffing and Facilities; and participating in the Tennessee Initiative for Perinatal Quality Care (TIPQC). For Nursing Home projects: Documenting the existing or proposed plan for data reporting, quality improvement, and outcome and process monitoring systems, including in particular details on its Quality Assurance and Performance Improvement program.

33

□

□

□

X

For Inpatient Psychiatric projects:

• Describing or demonstrating appropriate accommodations for:

• Seclusion/restraint of patients who present management problems and children who needquiet space, proper sleeping and bathing arrangements for all patients);

• Proper sleeping and bathing arrangements;

• Adequate staffing (i.e. that each unit will be staffed with at least two direct patient carestaff, one of which shall be a nurse, at all times);

• A staffing plan that will lead to quality care of patient population served by the project.

• An existing or proposed plan for data reporting, quality improvement, and outcome andprocess monitoring systems; and

• If other psychiatric facilities are owned or administered providing information onsatisfactory sunreys and quality improvement programs at those facilities;

Involuntary admissions if identified in CON criteria and standard review

For Freestanding Emergency Department projects: Demonstrating that it will be accredited with

the Joint Commission or other applicable agency, subject to the same accrediting standards as

the licensed hospital with which it is associated.

For Organ TranspJant projects: Describing how the applicable will achieve and maintain

institutional membership in the national Organ Procurement and Transportation Network

(OPTN), currently operating as the United Network for Organ Sharing (UNOS), within one year

of program initiation. Describing bow the applicable shall comply with the CMS regulations set

forth by 42 CFR Parts 405, 482, and 498. Medicare Program; Hospital Conditions of

Participation; Requirements for Approval and Re-Approval of Transplant Centers to Pe1form

Organ Transplants;

For Relocation and/or Replacement of Health Care Institution projects; Describing how facility

and/or services specific measures will be met.

The applicant and its management consulting company will operate the facility and provide services in a manner that will meet or exceed all applicable licensing regulations and standards of the Tennessee

Department of Health, and all accreditations standards of the Joint Commission. The new replacement facility will be spacious and esthetically pleasing for patients, providing a comfortable living

environment.

1n addition, CCCWC will put in place internal programs, i.e., Quality Assurance and Performance Improvement Program, to assure continued excellence. The facility will utilize a series of satisfaction surveys to monitor and measure performance, and will also consider other national benchmarking tools

in evaluating and monitoring the facility's performance. Finally, CCCWC will submit itself to Joint Commission scrutiny and meet its high standards.

R-34

47

,___J__ _ _ ---------;----:--

•

48

CONTRIBUTION TO THE ORDERLY DEVELOPMENT OF HEAL TH CARE

The responses to this section of the application helps determine whether the project will contribute to the orderly development of healthcare within the service area.

1. List all existing health care providers (i.e., hospitals, nursing homes, home care organizations, etc.), managed care organizations, alliances, and/or networks with which the applicant currently has or plans to have contractual and/or working relationships, that may directly or indirectly apply to the project, such as, transfer agreements, contractual agreements for health services.

Inpatient Consultants of Tennessee - Medical Director

Broad River Rehabilitation - Therapy Services

PNS Institutional Pharmacy - Drugs, Pharmaceutical Services And Consulting

Claxton Dietetics - Registered Dietician

Encore Healthcare - Optometry, Respiratory Podiatry And Dental Services

Reinhart Foodservice - Food Supplier

Medline Industries - Medical Supplier

Fresenius Kidney Care - Dialysis Services

Access RN - Vascular Access Service

SA Swallow Services - Swallow Study

Mobile Images - Mobile Radiology

Quest Diagnostic - Laboratory

Adventa Hospice - Hospice Services

Caris Healthcare - Hospice Services

W ellmont Hospice - Hospice Services

A val on Hospice - Hospice Services

Smoky Mountain Home Health and Hospice - Hospice Services

Agape Nursing & Rehabilitation Center - Emergency Housing

Franklin Woods Hospital - Resident Transfer

Johnson City Medical Center - Resident Transfer

Washington County Ems -Emergency Transportation

First TN Human Resource Agency - Medical Transportation

2. Describe the effects of competition and/or duplication of the proposal on the health care system, including the impact to consumers and existing providers in the service area. Discuss any instances of competition and/or duplication arising from your proposal including a description of the effect the proposal will have on the utilization rates of existing providers in the service area of the project.

A) Positive Effects

1. This will result in new ownership and management with a long history of providing high quality care and

service taking over a facility with a troubled compliance history.

2. This will result in a nice new physical facility replacing an older and outdated facility.

3. The new replacement facility will have more private rooms and beds than did the previous.

B) Negative Effects

Certainly from the patients' and their families' perspectives, there are no negative effects. This is an

already licensed facility, so from a licensure perspective there are no new beds or services coming on the 43485016 v1 3 5

49

market. In light of the past compliance problems, a competitor facility may see this new ownership and new facility as a negative because it will result in more effective competition for patients.

3. A. Discuss the availability of and accessibility to human resources required by the proposal, including clinical leadership and adequate professional staff, as per the State of Tennessee licensing requirements. CMS, and/or requirements of accrediting agencies, such as the Joint Commission and Commission on Accreditation of Rehabilitation Facilities.

The staffing pattern was previously disclosed in this application. The staffing will always meet or exceed all applicable regulatory requirements

B Document the category of license/certification that is applicable to the project and why. These include, without limitation, regulations concerning clinical leadership, physician supervision, quality assurance policies and programs, utilization review policies and programs, record keeping, clinical staffing requirements, and staff education.

CCCWC will be licensed by the Tennessee Board for Licensing Health Care Facilities. Accreditation will be sought and is expected to be received from the Joint Commission. The facility will also be certified for participation in Medicare and Medicaid/TennCare. CCCWC will maintain compliance with all standards of these organizations.

C) Discuss the applicant's participation in the training of students in the areas of medicine, nursing, social work, etc. (e.g., internships, residencies, etc.).

No such arrangements have been made so far, but it is possible that will occur after opening, or closer to such time.

4. Outstanding Projects:

A. Complete the following chart by entering information for each applicable outstanding CON by Applicant or share common ownership; and

Outstanding Projects

Date *Annual Pro!!ress Renorffs)

Ex:uiration CON Number Project Name

A:u:uroved Due Date Date Filed Date Final Report

Christian Care Center February Due approx. CN1910-040A of Unicoi County 2020 7/1/20 Not yet due May 1, 2022

Christian Care Center September February 1, CNl 802-006A of Medina June 2018 2020 Not yet due 2022

Christian Care Center December 1, CNl 712-036A of Bolivar April 2018 June 2020 Not yet due 2020

* Annual Progress Reports - HSDA Rules require that an Annual Progress Report (APR) be submitted each year. The APR is due annually until the Final Project Report (FPR) is submitted (FPR is due within 90 ninety days of the completion and/or implementation of the project). Brief progress status updates are requested as needed. The project remains outstanding until the FPR is received.

B. Describe the current progress, and status of each applicable outstanding CON.

CN1910-040A: The new beds are operational and received licensure approval on March 19, 2020.

CNl 802-006A: Awaiting final Plans approval. Review and approval has been slowed due to Coronavirus.

43485016 v1 36

50

CNl 712-036A: Site work is underway, and construction is expected to begin in early summer of 2020. Progress has been slowed by weather delays.

5. Equipment Registry - For the applicant and all entities in common ownership with the applicant.

A Do you own, lease, operate, and/or contract with a mobile vendor for a Computed Tomography scanner (CT), Linear Accelerator, Magnetic Resonance Imaging (MRI), and/or Positron Emission Tomographer (PET)?

No

B. If yes, have you submitted their registration to HSDA? If you have, what was the date of

submission?

NIA

C. If yes, have you submitted your utilization to Health Services and Development Agency? If you

have, what was the date of submission?

NIA

SECTION C: STATE HEALTH PLAN QUESTIONS

T.C.A. §68-11-1625 requires the Tennessee Department of Health's Division of Health Planning to develop and annually update the State Health Plan (found at http://www.tn.gov/health/health-programareas/healthplanning/state-health-plan html). The State Health Plan guides the State in the development of health care programs and policies and in the allocation of health care resources in the State, including the Certificate of Need program. The 5 Principles for Achieving Better Health are from the State Health Plan's framework and inform the Certificate of Need program and its standards and criteria.

Discuss how the proposed project will relate to the 5 Principles for Achieving Better Health found in the State Health Plan.

1. The purpose of the State Health Plan is to improve the health of Tennesseans.

The mission of CCCWC is consistent with this goal.

2. Every citizen should have reasonable access to health care.

This project will improve access by making the 63 licensed beds available again after the temporary voluntary suspension of operations by the previous owner. It will optimize care by bringing to the market a spacious, modem, conveniently located facility, under the ownership and management of companies with a long history of providing excellent care.

3. The state's health care resources should be developed to address the needs of Tennesseans while encouraging competitive markets, economic efficiencies and the continued development of the state's health care system.

The project will improve access to and quality of health care in an economically feasible manner, as reflected in the Projected Data Chart.

4. Every citizen should have confidence that the quality of health care is continually monitored and standards are adhered to by health care providers.

43485016 v1 37

51

The new Christian Care Center of Washington County will maintain its licensure with the Tennessee Board for Licensing Health Care Facilities in good standing. It will be certified by CMS for Medicare and Medicaid participation. It will submit itself to the scrutiny of the Joint Commission and be accredited thereby. It will adhere to the quality monitoring and standards of all such institutions.

5. The state should support the development, recruitment, and retention of a sufficient and quality health workforce.

Christian Care Center of Washington County will hire approximately 39 direct and 9 non-direct patient care FTE positions. It will pay competitive salaries and benefits in order to help retain its staff.

43485016 v1 38

52

PROOF OF PUBLICATION

Attach the full page of the newspaper in which the notice of intent appeared with the mast and dateline intact or submit a publication affidavit from the newspaper that includes a copy of the publication as proof of the publication of the letter of intent.

Date LOI was Submitted: 518120

Date LOI was Published: 5110120

A Publisher's Affidavit from the Johnson City Press is attached on the following pages.

NOTIFICATION REQUIREMENTS

1. T.C.A. §68-ll-1607(c)(9)(A) states that" ... Within ten (10) days of the filing of an application for a nonresidential substitution-based treatment center for opiate addiction with the agency, the applicant shall send a notice to the county mayor of the county in which the facility is proposed to be located, the state representative and senator representing the house district and senate district in which the facility is proposed to be located, and to the mayor of the municipality, if the facility is proposed to be located within the corporate boundaries of a municipality, by certified mail, return receipt requested, informing such officials that an application for a nonresidential substitutionbased treatment center for opiate addiction has been filed with the agency by the applicant."

2. T.C.A. §68-11-1607(c)(9)(B) states that" ... If an application involves a healthcare facility in which a county or municipality is the lessor of the facility or real property on which it sits, then within ten (10) days of filing the application, the applicant shall notify the chief executive officer of the county or municipality of the filing, by certified mail, return receipt requested.

Failure to provide the notifications described above within the required statutory timeframe will result in the voiding of the CON application.

Please provide documentation of these notifications. NI A

DEVELOPMENT SCHEDULE

T.C.A. §68-11-1609(c) provides that a Certificate of Need is valid for a period not to exceed three (3) years (for hospital projects) or two (2) years (for all other projects) from the date of its issuance and after such time shall expire; provided, that the Agency may, in granting the Certificate of Need, allow longer periods of validity for Certificates of Need for good cause shown. Subsequent to granting the Certificate of Need, the Agency may extend a Certificate of Need for a period upon application and good cause shown, accompanied by a non-refundable reasonable filing fee, as prescribed by rule. A Certificate of Need which has been extended shall expire at the end of the extended time period. The decision whether to grant such an extension is within the sole discretion of the Agency, and is not subject to review, reconsideration, or appeal.

1. Complete the Project Completion Forecast Chart on the next page. If the project will be completed in multiple phases, please identify the anticipated completion date for each phase.

2. If the CON is granted and the project cannot be completed within the standard completion time period (3 years for hospital projects and 2 years for all others), please document why an extended period should be approved and document the "good cause" for such an extension.

NIA

43485016 v1 39

53

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54

J S I PRESS PUBLICATION CERTIFICATE /5/ '5Q5 &

Johnson City, Tennessee

This is to certify that the Legal Notice hereto attached was published in the Johnson City Press, a daily newspaper published in the City of Johnson Cou of Washington, State of · · in the issue /{) c}[) U and appearing I consecutive

of Cm, ~ ~JYIW}t_-b

STATE OF TENNESSEE, WASHINGTON COUNTY, TO WIT:

Personal! this _ _,_/,__/.fA~_day o -+-I-~~---'

2o_dQ_,~~~~~~~------~---of the Johnson ity Press and in due form of law made oath that the

foregoin9.,'5t~iA~e~t was true to the best of my knowledge and belief . .......... ~~~···········~s "',-:. '(\

:: _./ STATE. \.. ".::. • ~ ~ ~ .. • OF • -: ~ TENNESSEE. l :_,. ~ \ ~i:i"L~6 / : Notary Public

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55

PROJECT COMPLETION FORECAST CHART

Assuming the Certificate of Need (CON) approval becomes the final HSDA action on the date listed in Item 1 below, indicate the number of days from the HSDA decision date to each phase of the completion forecast.

Phase

1. Initial HSDA decision date

2. Architectural and engineering contract signed

3. Construction documents approved by the Tennessee Department of Health

4. Construction contract signed

5. Building errnit secured

6. Site preparation completed

7. Building construction commenced

8. Construction 40% corn lete

9. Construction 80% complete

10. Construction 100% complete (approved for occu ancy

11. *Issuance of License

12. *Issuance of Service

13. Final Architectural Certification of Payment

14. Final Project Report Form submitted (Form HR0055)

30

180

180

210

300

330

450

570

690

720

720

780

810

Antici~ated Date Month/Year

August 2020

Se ternber, 2020

February, 2021

February, 2021

March, 2021

June, 2021

Jul , 2021

November, 2021

March, 2022

Jul , 2022

August, 2022

August, 2022

October, 2022

November, 2022

*For projects that DO NOT involve construction or renovation, complete Items 11 & 12 only.

NOTE: If litigation occurs, the completion forecast will be adjusted at the time of the final determination to reflect the actual issue date

43485016 v1 40

56

LIST OF ATTACHMENTS

Organizational documentation

Ownership chart

Draft management consulting agreement

Real Estate Purchase Agreement and Lease

Plot plan

Floor plan

Architect Letter

Funding Letters

43444301 vl

Attachment Section A-4, A

Attachment Section A-4, B

Attachment Section A-5


Attachment A-6 B, 1

Attachment A-6 B, 2

Attachment Section B, Economic Feasibility, 1


57

Division of Business Services Department of State

State of Tennessee

Tre Hargett Secreta1y of State

CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC RISK MANAGEMENT STE2D 2020 NORTHPARK DR JOHNSON CITY, TN 37604-3127

312 Rosa L. Parks A VE, 6th FL Nashville, TN 37243-1102

April 10, 2019

Filing Acknowledgment Please review the filing information below and notify our office immediately of any discrepancies.

SOS Control # : 001022572 Formation Locale: TENNESSEE Filing Type: Limited Liability Company - Domestic Date Formed: 04/10/2019 Filing Date: 04/10/2019 3:14 PM Fiscal Year Close: 12 Status: Active Annual Report Due:04/01/2020 Duration Term: Perpetual Image#: 80690-3992 Managed By: Member Managed Business County: WASHINGTON COUNTY

Document Receipt

Receipt#: 004749374

Payment-Credit Card - State Payment Center - CC #: 3755236062

Registered Agent Address: JOEL S HOLLINGSWORTH RISK MANAGEMENT STE 20 2020 NORTHPARK DR JOHNSON CITY, TN 37604-3127

Filing Fee:

Principal Address: RISK MANAGEMENT STE2D

$300.00

$300.00

2020 NORTHPARK DR JOHNSON CITY, TN 37604-3127

Congratulations on the successful filing of your Articles of Organization for CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC In the State of Tennessee which is effective on the date shown above. You must also file this document in the office of the Register of Deeds in the county where the entity has its principal office if such principal office is in Tennessee. Please visit the Tennessee Department of Revenue website (apps.tn.gov/bizreg) to determine your online tax registration requirements. If you need to obtain a Certificate of Existence for this entity, you can request, pay for, and receive it from our website.

You must file an Annual Report with this office on or before the Annual Report Due Date noted above and maintain a Registered Office and Registered Agent. Failure to do so will subject the business to Administrative Dissolution/Revocation.

Secretary of State

Phone (615) 741-2286 * Fax (615) 741-7310 * Website: http://tr Attachment Section A-4, A

58

111111 1111111111 ttJ C O" l.C C I

ARTICLES OF ORGANIZATION u: l.C

LIMITED LIABILITY COMP ANY ss-4210 l.C i------------------------------------------0.:

TreHargett Secretary of State

Division of Business Services Department of State

State of Tennessee 312 Rosa L. Parks A VE, 6th FL

Nashville, TN 37243-1102

(615) 741-2286

Filing Fee: $50.00 per member (minimum fee= $300.00, maximum fee= $3,000.00)

For Office Use Only

-FILED-contro1 # 001022572

The name of the Limited Llability Company is: CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC

11. The complete mailing address of the entity (if different from the principal office) is: RISK MANAGEMENT STE2D 2020 NORTHPARK DR JOHNSON CITY, TN 37604-3127

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1------------------------------------------<l 12. Non-Profit LLC (required only if the Additional Designation of "Non-Profit LLC" is entered in section 3.)

D I certify that this entity is a Non-Profit LLC whose sole member Is a nonprofit corporation, foreign or domestic, incorporated under or subject to the provisions of the Tennessee Nonprofit Corporation Act and who is exempt from franchise and excise tax as not-for-profit as defined in T.C.A. §67-4-2004. The business is disregarded as an entity for federal income tax purposes.

(D

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1------------------------------------------(D !:j 13. Professional LLC (required only if the Additional Designation of "Professional LLC" Is entered In section 3.)

D I certify that this PLLC has one or more qualified persons as members and no disqualified persons as members or holders.

Licensed Profession:

!:j (D Cl) Cl) (D

1------------------------------------------(D 14. Series LLC (optional)

D I certify that this entity meets the requirements of T.C.A. §48-249-309(a) & (b) {/) (D

0 i------------------------------------------1-i (D 15. Obligated Member Entity (list of obligated members and signatures must be attached)

D This entity will be registered as an Obligated Member Entity (OME) Effective Date: (none) □ I understand that by statute: THE EXECUTION AND FILING OF THIS DOCUMENT WILL CAUSE THE

MEMBER(S) TO BE PERSONALLY LIABLE FOR THE DEBTS, OBLIGATIONS AND LIABILITIES OF THE LIMITED LIABILITY COMPANY TO THE SAME EXTENT AS A GENERAL PARTNER OF A GENERAL PARTNERSHIP. CONSULT YOUR ATTORNEY.

(7"

Ill l"i '<!

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1------------------------------------------{/) 16. This entity is prohibited from doing business in Tennessee:

D This entity, while being formed under Tennessee law, is prohibited from engaging in business in Tennessee. rt Ill rt

1------------------------------------------(D 17. Other Provisions: 1-3

1-i (D

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Electronic SECRETARY, CFO 1-i ----------------------- ------------------LQ Signature Title/Signer's Capacity (D

rt _A_N_IT_A_B_W_E_ST __________________ A_,_pr_1_0.:..., 2_0_1_9_3_:1_4_PM ___________ rt Printed Name Date

SS-4270 (Rev. 12/12) RDA2458

59

J. R. (Randy) Lewis

(Sole Member and 100% Owner)

Christian Care Center of Washington

County, LLC

(Licensee and Applicant)

~ase

Washington County Real

Estate Investors, LLC

(Building owner and Landlord)

i J. R. (Randy) Lewis

(Sole Member and 100% Owner)

43458541 vl

Attachment Section A-4, B

60

MANAGEMENT CONSULTING AND SERVICES AGREEMENT

THIS MANAGEMENT CONSULTING AND SERVICES AGREEMENT ("Agreement") is made and entered into as of the Effective Date by and between CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC, a Tennessee limited liability company, having a mailing address of 2020 Northpark, Suite 2D,Johnson City, Tennessee 37604 ("Owner"), and CARE CENTERS MANAGEMENT CONSULTING, INC., a Tennessee corporation, having an office at 2020 Northpark, Suite 2D,Johnson City, Tennessee 37604 ("Management Consultant").

WITNE S SETH:

WHEREAS, Owner owns and operates a 63-bed long term care facility located at 124 John M. Reed Home Road, Limestone, Tennessee 37681; and

WHEREAS, Owner desires to engage Management Consultant to provide professional consulting services in accordance with the terms and conditions set forth hereinto.

NOW THEREFORE, for and in consideration of the foregoing premises, the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

When used in this Agreement, the following words or terms shall have the following definitions:

1.1 "Effective Date" means the date on which Owner commences its operation of the leased Nursing Home.

1.2 "Fiscal Year" means a year, commencing January 1, and ending December 31, except that the first Fiscal Year shall be that period commencing on the Effective Date and ending on the next succeeding December 31.

1.3 "Management Consultant Affiliate" means any entity to which Management Consultant is related via common ownership and/ or control.

1.4 "Improvements" means Owner's leased Nursing Home and all other leased structural improvements situated on the Land.

1.5 "Land" means Owner's leased tract ofland located at 124 John M. Reed Home Road, Limestone, Tennessee 37681.

1.6 "Nursing Home" means Owner's leased nursing home located on the Land.

Attachment Section A-5

61

1. 7 "Operating Plan" means the broad plan of Project operation including, but not limited to, all systems, methods, policies, procedures, job descriptions, salaries, wages, benefits, budget guidelines and parameters, forms, manuals, internal controls, quality assurance programs, compliance programs, and insurance programs utilized by Owner in its operation of the Project. The Operating Plan shall be prepared by Management Consultant and recommended to Owner via communication of same to Owner's Administrator. The Operating Plan shall at all times belong to Owner, and it will be the sole responsibility of Owner's Administrator to evaluate and implement the Operating Plan.

1.8 "Patients" means the residents of Owner's Nursing Home.

1.9 "Project" means Owner's Land, Owner's Improvements, and Owner's Nursing Home operation.

1.10 "Project Expenses" means all Project-related expenses, costs, and charges of every kind and nature incurred in connection with the operation and maintenance of the Project. All Project Expenses shall be and remain the sole responsibility of Owner.

1.11 "Project Income" means, with respect to a specific period of time, Owner's revenues from all sources in connection with the operation of the Project. Project Income shall not include or mean (i) capital contributions of Owner, (ii) non-Patient-services-related insurance proceeds (however, business interruption insurance proceeds shall be included in "Project Income"), (iii) tax refunds, (iv) condemnation proceeds or awards, or (v) amounts collected from Patients as security deposits, if any, except to the extent those security deposits are actually applied against the payments owed to the Nursing Home.

1.12 "Salaries and Benefits" means all of the Project's salaries, wages, bonuses, and other direct compensation, group life, accident, disability, medical and health insurance, pension plans, social security payments, payroll and other employee taxes, worker's compensation payments, employer's contribution to F.I.C.A., unemployment compensation, and similar so-called fringe benefits.

1.13 "Administrator" means the individual charged by Owner with the responsibility of administration and management of the Nursing Home. The Administrator shall be an employee of Owner, shall be licensed pursuant to Tennessee law, and shall be the executive delegated the responsibility by Owner to directly interact with and to evaluate and implement the recommendations from Management Consultant.

1.14 "Service Center Expenses" means those expenses associated with the performance, at a central location, of certain services, including, without limitation, human resource services, billing and disbursement services, legal services, risk management services, executive direct care coordinator services, marketing services, information technology services and plant maintenance consulting services, performed either by Management Consultant or a Management Consultant Affiliate subcontracted to perform such services (the "Service Center"). The Service Center directly incurs, on behalf of several facilities, the direct costs and related overhead expenses associated with the above services and each month bills each facility its pro-rata share of such costs and expenses based on the facility's patient days.

Management Consulting Services April 21, 2020 2

62

When used in this Agreement, the words and terms for which definitions are specified in the introductory paragraph of this Agreement and in the further Articles of this Agreement shall have the

definitions respectively therein ascribed to them.

ARTICLE II

RELATIONSHIP OF PARTIES

2.1 Status of Management Consultant. It is expressly acknowledged by the Parties that Management Consultant is an independent contractor, and nothing contained in this Agreement is

intended or shall be construed (a) to create a partnership or joint venture between the Parties, or any affiliate, employee, officer, agent, or associate of any of the Parties, (b) to cause Management

Consultant or any affiliate, employee, agent, or associate of Management Consultant to be responsible

in any way for the Owner's and Project's debts, liabilities, responsibilities, duties or obligations of the

other Party, or (c) to constitute an employer-employee relationship between the Parties. In the event the Internal Revenue Service should question or challenge the independent contractor status of

Management Consultant, the Parties mutually agree that Management Consultant and Owner shall

have the right to participate in any discussion or negotiation occurring with the Internal Revenue

Service, irrespective of whom or by whom those discussions or negotiations are initiated.

2.2 Clarification Of Management Consultant's Services. The parties hereto

hereby acknowledge and understand that Management Consultant's role is to make recommendations

to Owner on matters pertaining to its business via its direct interaction and communication with the Administrator. The parties further understand and acknowledge that:

(a) Patient Services. Management Consultant is not a "management company" as

defined any form(s) issued by any regulatory or other governing entity as in effect on the Effective Date, and Owner retains ultimate legal responsibility for operation of the Nursing Home, even if said

form(s) incorrectly identifies Management Consultant as a "management company." Management

Consultant will not provide Patient services, and in no way and under no circumstances shall

Management Consultant be held responsible for the quantity and/ or quality of said Patient services provided by Owner. All Patient services shall be provided under the authority of the Administrator

solely by Owner's employees and contracted service providers (excluding Management Consultant),

and the responsibility for same shall rest with Owner's employed/ engaged staff and contractors as

overseen and directed by the Administrator.

(b) Owner's Employees. Management Consultant shall have direct interaction and

communication with Owner's Administrator but shall not be expected to directly or indirectly

supervise Owner's services providing staff. Owner shall be responsible for, and Management

Consultant shall be prohibited from, making employment-related decisions relating to Owner's

employees, but Management Consultant shall make recommendations pertaining thereto to the Owner through Owner's Administrator.

(c) Commencement of Services. Management Consultant shall begin providing

services when this Agreement becomes effective and shall continue to provide services through

termination of the Agreement for whatever reason.

(d) Cooperation in Litigation. In the event that an action is brought, whether


63

by an employee, a Patient, a Patient's estate or representative, or a governmental agency for acts or omissions pertaining to the operations of the Nursing Home, which action names Management Consultant, a Management Consultant Affiliate, and/ or any of their stockholders, directors, members, officers, employees, and/ or other agents as a defendant, Owner agrees to cooperate with Management Consultant in Management Consultant's motion to dismiss the action as to Management Consultant on the ground that Management Consultant does not manage or control Owner, any of Owner's employees, the operations of the Nursing Home, or any services provided by Owner to Patients, and Owner shall provide, in support of such motion to dismiss, an affidavit stating that Management Consultant neither manages nor controls, in any manner or to any degree, Owner, any of Owner's employees, the operations of the Nursing Home, or any services provided by Owner to Patients. Owner hereby waives any right it may have, if any, that pursuing such motion to dismiss presents a conflict of interest for Management Consultant.

(e) Scope of Services. The scope of the services provided by Management Consultant shall be defined only by the terms and provisions of this Agreement, and the choice of Owner, of any of Owner's other consultants, or of any of Owner's principals, employees, or other agents to act or not act in any given situation relating to the operation of the Nursing Home shall not have the effect of increasing, expanding, or otherwise amplifying the obligations of Management Consultant as embodied in this Agreement.

2.3 Indemnity. Management Consultant and Owner shall each be responsible for their own acts and omissions in the performance of their duties hereunder and the acts and omissions of their own employees and agents, and shall indemnify and hold harmless the other party from and against any and all claims, liabilities, causes of action, losses, costs, damages, and expenses (including reasonable attorney's fees) incurred by the other party as a result of such acts or omissions. Such responsibilities shall be defined strictly by and limited to the terms of this Agreement.

ARTICLE III

AUTHORIZATION OF MANAGEMENT CONSULTANT SERVICES

3.1 Administrative Services. Management Consultant is authorized, in accordance with the Operating Plan, to provide the following administrative services for Owner:

(a) Service Contracts. Management Consultant shall (i) enter Owner into or renew, in the name of and at the expense of Owner, contracts ("Service Contracts") for electricity, gas, water, telephone, cleaning, fuel oil, elevator maintenance, vermin extermination, trash removal, linen service, and other services that in the opinion of Management Consultant are needed by Owner in the ordinary course of the operation of the Project; (ii) purchase, in the name of and at the expense of Owner, all supplies and equipment that in the opinion of Management Consultant are necessary to maintain and so operate the Project; and (iii) credit to Owner any discounts, rebates, or commissions obtained for purchases or otherwise. Prior approval by Owner is not required for any new Service Contract with a term of one (1) year or less and/or that provides for termination by Owner (without the payment of premium or penalty) upon ninety (90) days' or less written notice. The Administrator shall be responsible for the day to day supervision of all Service Contract services.


64

(b) Maintenance and Repair. Management Consultant shall maintain or cause to be maintained, both at Owner's expense, the Improvements and grounds of the Project. Such maintenance shall include, without limitation, interior and exterior cleaning, painting, decorating, plumbing, carpentry, and other normal maintenance and repair work.

(c) Collection. Management Consultant shall assist facility staff in their efforts to request, demand, collect, and receive all charges due from Patients and otherwise due Owner with respect to the Project.

(d) Project Expenses; Mortgage Loans. Management Consultant shall, utilizing Owner's funds and at Owner's expense, pay all Project Expenses, if reasonably possible, on or before the date (the "Due Date") after which interest or penalty will begin to accrue thereon; provided, however, that Management Consultant shall be further authorized to contest, if and to the extent appropriate, the payment of any Project Expense (or portion thereof) that Management Consultant has reasonable grounds to believe on the basis of the facts and information actually known to Management Consultant should be contested. Contest expenses shall be included as Project Expenses. Any interest or penalty that accrues and may thereafter become payable with respect to such Project Expense shall itself be a Project Expense regardless of cause.

(e) Reports. Management Consultant shall, as soon as reasonable and practicable each month, render to the Administrator and to any other person or entity designated by Owner a statement of income and expenses showing the results of operation of the Nursing Home for the preceding month and of the Fiscal Year to date. As soon as reasonable and practicable after the end of each Fiscal Year, Management Consultant shall deliver to Owner profit and loss statements showing Project Income, Project Expense, the results of operations for that Fiscal Year, and a balance sheet of the Project as of the end of that Fiscal Year, prepared on an accrual basis in accordance with generally accepted accounting principles consistently applied. All such monthly reports shall be in the format normally utilized by Management Consultant. If so instructed by Owner, Management Consultant shall, at Owner's expense, have prepared and delivered to Owner audited financial statements within one hundred and eighty (180) days after the close of each Fiscal Year. Management Consultant shall, upon reasonable notice from Owner, prepare and submit to Owner such other reports, certificates, or representations as Owner may reasonably request concerning such matters relating to the Project as are within the scope of Management Consultant's services provided for in this Agreement. If any such additional reports or alternate report formats requested by Owner require, in Management Consultant's sole discretion, Management Consultant to engage auditors or other professionals to assist Management Consultant in designing or preparing such report, or require, in Management Consultant's sole discretion, Management Consultant's employees to expend substantial amounts of additional time designing or preparing such report, then Owner shall promptly reimburse Management Consultant for the reasonable actual cost to Management Consultant of engaging such consultants, auditors, or other professionals, or of such time expended by Management Consultant's employees.

(f) Records. Management Consultant shall, at Owner's expense, maintain, at the address for Management Consultant provided for in Section 10.2 of this Agreement, or such other place or places as Management Consultant may deem appropriate, a system of office records, books, and accounts, including, without limitation, copies of all reports filed pursuant to subsection (e) above and any additional information or records reasonably required by Owner for the preparation of federal, state, and local tax returns, all in a manner reasonably satisfactory to Owner. Owner and others designated by Owner, including Owner's auditors and accountants, shall have, upon reasonable notice


65

to Management Consultant and during normal business hours, access to and the right to audit and make copies of such records, accounts, books, and all vouchers, files, and other material pertaining to the Project and this Agreement, all of which Management Consultant shall take reasonable steps to keep safe and available to Management Consultant and Owner and all of which shall be owned by Owner and stored at Owner's expense of storage space.

(g) Legal Proceedings. Management Consultant shall arrange for the institution, prosecution, and/ or defense of, in the name and at the expense of Owner, such actions and proceedings necessary to effect the purposes, perform the services, and take the actions contemplated by this Agreement, including without limitation, actions (i) to evict Patients in default; (ii) to recover possession of rooms occupied by such Patients; (iii) to sue for and recover charges and other damages due from Patients and Residents and other persons obligated to Owner or Management Consultant in connection with the Project; (iv) to settle, compromise, and release any such actions or suits or reinstate such Patients; and (v) sign and serve in the name of Owner notices and other communications relating to any of the foregoing matters.

(h) Process Insurance Claims. Management Consultant shall, at Owner's expense, process or cause to be processed all claims under any insurance coverages pertaining to the Project in an expeditious manner, so as to minimize delay in receipt by the Project of the proceeds of such insurance.

(i) Maintenance of Licenses. Management Consultant shall assist Owner and Owner's staff in obtaining and maintaining all licenses, certifications, and permits required for operation of the Project, such as contracts with fiscal intermediaries and agencies and eligibility for participation in medical reimbursement programs. All licenses, certificates, and permits shall be obtained and maintained in the name and at the expense of the Owner. All cost and other reports prepared shall be an expense of Owner.

G) Reimbursement Schedules. Management Consultant shall, at Owner's expense, (i) develop price and reimbursement schedules; (ii) obtain approval of appropriate price schedules by government agencies and appropriate reimbursement schedules from third-party paying agencies; (iii) provide statistical, financial, and other data necessary to obtain reimbursement from the appropriate agencies; and (iv) effect final settlement of all claims for reimbursement.

3.2 Quality Assurance Consulting Services. Management Consultant shall consult periodically with the Administrator and other department heads of the Nursing Home to develop and maintain quality assurance policies and procedures for the Nursing Home. The quality assurance policies and procedures developed by the Management Consultant shall be provided to the Administrator for implementation at the Nursing Home. Notwithstanding the foregoing, Management Consultant shall not be responsible for implementation of, or adherence to, such policies and procedures by the Administrator, department heads, or other employees of the Nursing Home.

3.3 Extraordinary Services. Whenever Owner reasonably determines that a service not included in the basic services required to be rendered by Management Consultant pursuant to the Agreement (and not constituting an emergency) is necessary or desirable for the efficient operation of the Nursing Home (collectively, the "Extraordinary Services"), Owner may request that Management Consultant perform the Extraordinary Services in accordance with directions of Owner as to the


66

performance thereof and the amount to be expended by Owner therefor. Extraordinary Services may include:

(a) Major Repairs. Coordination and supervision of out of the ordinary major repairs, replacements, and alterations to the Nursing Home.

(b) Compliance with Legal Requirements. Consultation regarding the Nursing

Home's compliance with any and all orders or requirements affecting the Project by any federal, state,

county, municipal, or other governmental authority having jurisdiction thereover.

(c) Tax Abatement and Eminent Domain. Consultation regarding the negotiation or

prosecution by Owner of claims for the abatement of property and other taxes affecting the Nursing

Home and for awards for taking by eminent domain affecting the Nursing Home.

(d) General. Performance of any other services, acts, items, or matters relating to or

affecting the Nursing Home that are or may be desirable or necessary for the efficient operation thereof and that are not otherwise included within the services required by this Agreement.

3.4 Expense of Owner. All Project Expenses shall be the sole obligation of Owner,

including, but not limited to, expenses incurred by Management Consultant and/ or a Management

Consultant Affiliate in good faith expectation of reimbursement from Owner. Notwithstanding any

other provision of this Agreement to the contrary, Management Consultant shall not be obligated to

make any advance to or for the account of Owner or to pay any sums, except out of Owner's funds

held in any Owner account maintained under Article VI, nor shall Management Consultant be

obligated to incur any liability or obligation for the account of Owner.

ARTICLE IV

INSURANCE

4.1 Owner's Insurance. Management Consultant is authorized to use reasonable efforts

to obtain in Owner's name, and naming Management Consultant as additional insured, and all policies at Owner's expense, and, if reasonably available, keep in force during the term of this Agreement, as

close as reasonably possible the following configuration of insurance coverages:

(a) comprehensive general liability and medical malpractice insurance, with broad form comprehensive endorsement, protecting and indemnifying Owner against claims for injury to or

death of persons or damage to or destruction of property occurring upon, in, or about the Project and

the adjoining streets (other than streets dedicated to and accepted for maintenance by the public).

Such insurance shall (i) afford immediate protection to the limit of not less than $1,000,000 combined

single limit bodily injury and property damages and medical malpractice coverage of not less than

$1,000,000; (ii) be issued on an "occurrence basis" (or its substantial equivalent, such as a "claims

made" policy with appropriate tail coverage) and be endorsed specifically to include within its scope

of coverage all liabilities and indemnities for which Owner is obligated and liable under the terms of this Agreement; and (iii) not provide for a self-insured retention in excess of $100,000;

(b) worker's compensation insurance with statutory and employee's liability insurance;


67

(c) employee's fidelity insurance in the amount of $500,000;

( cl) auto liability insurance covering motor vehicles owned or hired by Owner,

protecting and indemnifying Owner against claims for the injury to or death of persons or damage to

or destruction of property. Such insurance shall afford immediate protection to the limit of not less

than $250,000 for injury or death of each person; $500,000 for injury to or death of persons for each

occurrence; and $100,000 for damage to or destruction of property;

(e) fire and extended coverage insurance on the Project and its components and

contents against loss or damage by fire and other casualties covered under such form of policy, in an

amount not less than the full replacement cost of the Project. In the event such insurance provides

for a self insurance retention or a deductible amount, such self-insurance retention or deductible

amount shall not exceed $25,000; and

(f) such other coverages, in such amounts as shall be recommended and reasonable

for the protection of Owner and Management Consultant.

Such insurance shall, if reasonably possible, be written by companies that are nationally

recognized and shall be selected in good faith by Management Consultant. The policies shall name

Owner as the insured and Owner's affiliates, stockholders, directors, officers, and/ or agents as

additional insureds, and Management Consultant and Management Consultant's affiliates,

stockholders, directors, officers, and/ or agents as additional insureds.

4.2 Policies. Management Consultant shall use reasonable efforts to ensure that each

policy referred to in Section 4.1 above shall:

(a) provide that it will not be canceled, amended, or reduced except after not less than

thirty (30) days' written notice to Owner and Management Consultant;

(b) provide that such insurance shall not be invalidated by any act or negligence of

Owner or Management Consultant or any person or entity having an interest in the Project, by any

foreclosure or other proceedings or notices thereof relating to the Project, or by any change in title to

or ownership of the Project; and

(c) include a waiver of all rights of subrogation against Management Consultant and

Owner, their respective officers, directors, shareholders, constituent partners, employees, and agents.

Management Consultant shall deliver to Owner certificates of insurance evidencing

the existence of all insurance required to be maintained for Owner, such delivery to be made:

(a) within ten (10) days after the execution and delivery of this Agreement; and

(b) at least ten (10) days prior to the expiration date of any such insurance policy.

4.3 Cooperation. Management Consultant and Owner each shall furnish to the other

whatever information is reasonably requested by the other for the purpose of obtaining the insurance

coverages required hereunder.

Management Consulting Services April 21, 2020

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4.4 Other Contractor's Insurance. Pursuant to the program of insurance for the Project, Management Consultant shall assist Owner's staff in making reasonable attempts to require that each Nursing Home Contractor maintain insurance at the Nursing Home Contractor's expense.

4.5 Management Consultant's Authority to Cancel Policies. Owner hereby acknowledges that Management Consultant procures group insurance coverage for a variety of client facilities and that as a condition of financing the premiums for such group coverage, it often has had to agree that any default of one client facility may result in the cancellation of the policies for all client facilities. Owner therefore acknowledges, agrees, and authorizes Management Consultant to preempt an imminent default by Owner with respect to Owner's insurance coverage by canceling the Nursing Home's insurance policy if it appears, in Management Consultant's sole discretion, that Owner will be unable or unwilling to pay Owner's premium when due. In addition, it is understood by the parties that Management Consultant may terminate Owner's insurance coverage upon termination of this Agreement.

ARTICLEV

BANK ACCOUNTS

5.1 Operating Account. Management Consultant is authorized for and on behalf of Owner to establish an operating account for the Project at an FDIC insured bank to deposit all Project Income therein, and to pay all Project Expenses therefrom. The authorized signatory on such account shall be designated by Management Consultant.

5.2 Operating/Working Capital. Owner shall be obligated to provide any and all operating/working capital needed by Project to pay all Project Expenses, including debt service payments. Owner agrees to provide the Project a bank operating line of credit, secured by the Project's accounts receivable and in an amount not less than 80% of Project's accounts receivable balance. Said line of credit shall be perpetually available to the Project, may only be utilized to pay Project Expenses, may only be drawn by Management Consultant and then only into the Operating Account of Owner.

5.3 Right to Collect Payments to Management Consultant. Management Consultant shall be entitled to and is hereby authorized to disburse from the Operating Account to itself the accrued amounts due to Management Consultant pursuant to this Agreement. To the extent funds are not immediately available in the Operating Account to pay same, such amounts due to Management Consultant shall accrue interest at a rate of seventy-nine one hundredths of one percent (0. 79%) per month, and shall be payable as provided in Article VII hereof.


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ARTICLE VI

CONSULTING FEE AND ADDITIONAL PAYMENTS

6.1 Consulting Fee; Cost Center Allocations; Mobilization Fee. During the term of

this Agreement, Owner shall pay Management Consultant, in the manner provided below, Consulting

Fees equal to three percent (3%) of the Project Income during the year concerned. Project Income

for purposes of this Section 6.1 shall not include income adjustments relating to periods of time dating

prior to the Effective Date. In addition, Owner shall pay Management Consultant its pro-rata share of Service Center Expenses, as defined in Section 1.14 above. In addition, Owner shall pay a one-time

Mobilization Fee to Management Consultant pursuant to Section 6.6 below.

6.2 Payment of Consulting Fee and Service Center Allocations. The Consulting Fee

shall be due on the twentieth day of each month following the immediately preceding month, and

shall be calculated by multiplying the prior month's Project Income by five percent (5%). Income adjustments relating to periods of time dating prior to the Effective Date shall not be included in

Project Income for purposes of this Section 6.2. Owner's pro-rata share of Service Center Expenses

shall be billed following the end of each month, and Owner shall pay such billed amount within ten (10) days of Owner's receipt of each invoice.

6.3 Annual Payment Adjustment. Within fifteen (15) days after the delivery of the annual financial statements of the Project, Owner shall pay to Management Consultant or

Management Consultant shall pay to Owner such amount as is necessary to make the amount of Consulting Fees paid with respect to the year equal to the amount of Consulting Fees shown to be

due by the annual statements of Owner and Management Consultant and in accordance with Sections

hl and 6.2 hereof.

6.4 Temporary Staffing Assistance. Should Project need a temporary staffing

placement and should Management Consultant, in its sole judgment, determine that Management

Consultant has staff available to fill the Project's temporary staffing need, Management Consultant

may do so and same service shall be at an additional charge to Owner. The charge for the temporary staffing placement shall be Management Consultant's total costs including but not limited to all direct

costs and overheads plus a fifty percent (50%) markup. Owner shall pay such temporary staffing assistance charges as Project Expenses within thirty (30) days of receiving an invoice for same from

Management Consultant.

6.5 Project Expenses Incurred by Management Consultant. Owner understands

and agrees that certain of Owner's Project Expenses, as a convenience to Owner, will be incurred by

Management Consultant on behalf of Owner. Some examples of such items are: staff recruitment

advertising, other advertising, software access charges, check stock, postage, travel arrangements for

Owner staff, facility's stationary /business cards/brochures/ envelopes and other mailing supplies,

insurance premiums, copies, telephone, dues and subscriptions, CPA firm services, legal services,

payroll processing firm charges, education and seminar arrangements, staff recruiter firm services,

customer relations phone center and mystery shopper services, bank service charges for Project accounts, rental charges to store Owner's records, etc. Owner agrees that all such Owner Project

Expenses incurred by Management Consultant shall be promptly reimbursed to Management

Consultant from the Operating Account.


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6.6 Mobilization Fee. Owner shall pay to Management Consultant a one-time fee in the amount of Thirty Thousand Nine Hundred Twenty-Four Dollars ($30,924) (the "Mobilization Fee"). The Mobilization fee shall be paid to Management Consultant in six equal monthly installments of Five Thousand One Hundred Fifty-Four Dollars ($5,154) beginning on the date that is thirty (30) days after the Effective Date and continuing every thirtieth day thereafter until paid in full.

ARTICLE VII

TERM

7.1 Term. This Agreement shall commence on April 21, 2020 at 12:01 a.m., the "Effective Date" and shall thereafter continue for a period of twenty (20) years and automatically renew for successive twenty-year terms unless otherwise terminated pursuant to the terms hereof.

7.2 Optional Termination. Owner or Management Consultant may terminate this Agreement, with or without cause, upon three full and complete calendar months' written notice to the other, at any time during the term hereof. No notice of termination shall be given prior to the Effective Date. No termination permitted hereunder shall affect or prejudice Management Consultant's right to receive payments for Consulting Fees, Service Center Allocations, and the Mobilization Fee that accrue pursuant to this Agreement along with related interest charges that were accrued through the date of the termination notice and that subsequently accrue during the notification period and thereafter until Management Consultant is paid in full.

7.3 Termination Upon Default. Either Party hereto may terminate this Agreement upon the uncured default of the other Party. The following shall constitute events of default:

(a) The filing of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law by either Owner or Management Consultant;

(b) The consent to an involuntary petition in bankruptcy or the failure by either Owner or Management Consultant to vacate within ninety (90) days from the date of entry thereof any order approving an involuntary petition;

(c) The entering of an order, judgment, or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating either Owner or Management Consultant as bankrupt or insolvent or approving a petition seeking reorganization or appointment of a receiver, trustee, or liquidator of all or a substantial part of such Party's assets, which order, judgment, or decree shall continue unstayed and in effect for a period of one hundred twenty (120) consecutive days;

(d) The failure or refusal of Owner to provide funds necessary to pay Project Expenses;

(e) The failure of either Owner or Management Consultant to perform, keep, or fulfill any of the covenants, undertakings, obligations, or conditions set forth in this Agreement and the continuance of any such failure for a period of thirty (30) days after written notice of said failure;


71

If either Party hereto desires to terminate this Agreement as a result of any such event of default by the other Party hereto, the non-defaulting Party shall first give to the defaulting Party notice (a "Final Notice") of its intention to terminate this Agreement. After the expiration of a period of thirty (30) days from the date of such notice, and upon the expiration of such thirty (30) day period, this Agreement shall terminate. If, however, upon receipt of such final notice, the defaulting Party cures the default within said thirty (30) day period ( or, if the default is other than as referred to in subsections (d) or (e) above, such longer period as is reasonably necessary to remedy such default, provided the defaulting Party shall commence curative efforts as soon as reasonably practicable and pursue such remedy with all due diligence until such default is cured), then this Agreement shall not terminate by reason of such Final Notice. Notwithstanding the provisions of this Section, in no event shall either Party be obligated to deliver more than two (2) such Final Notices with regard to events of default listed herein to the other Party hereto within any consecutive twelve (12) month period or one Final Notice with regard to an event of default substantially similar in nature to an event of default occurring within the previous twelve (12) months, and upon the third (or second, as applicable) such default by the other Party hereto within such twelve (12) month period, and after the notice provided above for such third (or second, as applicable) default has been given and the curative period applicable thereto has lapsed, then the non-defaulting Party may terminate this Agreement without giving a Final Notice.

7.4 Effect of Termination. Upon termination of this Agreement, Management Consultant shall forthwith:

(a) Surrender and deliver up to Owner any and all Project Income in the operating account less the amounts accrued and/ or due to Management Consultant through the termination date, as provided in this Agreement;

(b) Deliver to Owner as received any monies due Owner under this Agreement but received by Management Consultant after such termination;

(c) Deliver to Owner all materials, supplies, keys, contracts and documents, plans, specifications, promotional materials, and such other accountings, papers, and records pertaining to the Nursing Home;

(d) Deliver to Owner a final accounting of the Project prepared in accordance with the provisions of Section 3.1 (e) up to and including the date of termination;

(e) Cease the performance of all services authorized to be performed by Management Consultant under this Agreement, including without limitation, providing Owner access to Service Center Expenses;

(f) Cooperate, within reason, with Owner for Owner to undertake responsibilities allocated to Management Consultant by this Agreement.

(g) Remove from the Nursing Home all proprietary tools including, but not limited to, manuals, policies, procedures, forms, computers, software, equipment, etc. of any nature whatsoever that were created by or otherwise are the property of Management Consultant and further, Owner hereby agrees not to utilize, duplicate or in anyway share any of Management Consultant's proprietary tools, methods, systems, etc. following termination of this Agreement.


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(h) Remove from the Nursing Home all other property belonging to Management

Consultant or assigned by Management Consultant temporarily to Nursing Home during the term of this Agreement.

Upon termination of this Agreement for any reason, Management Consultant's right to

receive Consulting Fees, Service Center Allocations, the Mobilization Fee, and Project Expense reimbursements that accrue under the terms of this Agreement, including any interest thereon, shall

survive such termination and continue in force and effect, and Owner shall be obligated to promptly make such payments to Management Consultant.

ARTICLE VIII

CASUALTY; CONDEMNATION

8.1 Total or Substantial Destruction. If the Project or any portion thereof is damaged

or destroyed at any time or times during the term of this Agreement by fire, casualty, or any other

cause that renders the Project totally or substantially inoperative for its intended purpose, and if Owner does not notify Management Consultant within three (3) months following the occurrence of such

damage or destruction that Owner intends to rebuild or replace the same to substantially its former condition prior to such damage or destruction, this Agreement shall terminate as of the date of the

damage or destruction with each Party's rights accruing through such date. If Owner notifies Management Consultant within three (3) months following the occurrence of such damage or

destruction that Owner intends to rebuild or replace the Project and does rebuild or replace the Project

within a reasonable time, this Agreement shall continue in full force and effect except that the term

hereof shall be extended for the period of time equal to that period during which the Project is

inoperative.

For purposes of this Agreement, total destruction or damage "that renders the Project

totally or substantially inoperative for its intended purpose" shall mean damage or destruction that, according to an engineer selected by Owner and Management Consultant (each party agreeing to

cooperate reasonably in such selection), could not reasonably be expected to be repaired or restored within twelve (12) months after the occurrence of such damage or destruction, so that at such time

the Project will be restored substantially to the condition in which it existed prior to such damage or destruction, with services and amenities substantially equivalent to those which existed prior to such

damage or destruction.

8.2 Partial Damage or Destruction. If the Project is damaged or partially destroyed in

such a manner as to not totally or substantially render the Project inoperative for its intended purpose

(as defined in Section 8.1 above), this Agreement shall remain in full force and effect as to that portion

of the Project not so damaged or destroyed, with an appropriate abatement in the services to be

performed by Management Consultant as to such damaged or destroyed portion, except that if Owner does not notify Management Consultant within three (3) months following the occurrence of such

damage or destruction that Owner intends to repair or replace the portion of the Project that was damaged or destroyed, Management Consultant shall have the option, upon thirty (30) days' notice to

Owner, to terminate this Agreement, such termination to be effective upon the expiration of said


73

thirty (30) day period, and thereafter Management Consultant shall have no claim against Owner (except as provided in Section 7.4 above) arising from such failure to rebuild and such termination.

8.3 Condemnation. If the whole or substantially all of the Project is condemned or taken in any manner for any public or quasi-public use under any statute or by right of eminent domain, then this Agreement shall terminate as of the date of vesting of title thereto in the condemning authority, with each Party's rights accruing through such date. If a part of the Project is so taken or condemned, and if such taking substantially affects the Project, or if such taking is of a substantial part of the Project, Management Consultant shall have the right, by delivery of notice to Owner within sixty (60) days after such taking, to terminate this Agreement as of the date of the vesting of title thereto in the condemning authority, with each Party's rights accruing through such date. If Management Consultant does not so elect, this Agreement shall remain unaffected by such taking, except that, effective as of the date of such taking, appropriate abatement shall be made in the services to be performed by Management Consultant as to such taken area of the Project.

For purposes of this Agreement, the condemnation or taking of the "whole or substantially all of the Project" shall mean the condemnation or taking (or conveyance in lieu thereof) of a material portion of the Project, such that the Project ceases to be a first-class Nursing Home, ceases to have adequate available parking or access, or ceases to have services and amenities substantially similar to those existing immediately prior to such condemnation or taking ( or conveyance in lieu thereof).

ARTICLE IX

MISCELLANEOUS

9.1 Notices. All notices, directives, or demands required by this Agreement shall be in writing and shall be sent by registered or certified mail, return receipt requested, postage prepaid, or by overnight courier service (e.g., Federal Express, Airborne, or Network Courier) and overnight courier shall be used when the circumstances merit expedient delivery, addressed, in the case of Management Consultant to (a) 2020 Northpark, Suite 2D,Johnson City, Tennessee 37604, Attention: General Counsel, and in the case of Owner to 300 East Bay, Largo, FL 33770, Attention: President, or to such other address or addresses as shall, from time to time, be designated by notice by either Party to the other Party. Notices given in compliance with the foregoing provisions by registered or certified mail shall be effective on the date shown on the return receipt thereon as the date of delivery or attempted delivery, and notices sent by overnight courier shall be effective on the date shown on the courier's receipt therefor as the date of delivery.

9.2 Entire Agreement. This Agreement shall constitute the entire agreement between the Parties hereto and shall supersede all other prior agreements, written or oral, between the Parties hereto and relating to the Project. No modification hereof shall be effective unless made by supplemental agreement in writing executed by Owner and by the President of Management Consultant.

9.3 Nature of Contract. Neither the relationship between Owner and Management Consultant nor anything contained in this Agreement shall be deemed to constitute a partnership, joint venture, or any other similar relationship, and Management Consultant shall at all times be


74

deemed an independent contractor for purposes of this Agreement, and shall at all times be deemed

a consultant and not the Project operator.

9.4 Governing Law. This Agreement is made pursuant to, and shall be governed by and

construed in accordance with, the laws applicable to contracts made and to be performed in the State

of Tennessee.

9.5 No Waiver; Cumulative Remedies. The failure of Owner or Management Consultant

to seek redress for violation or to insist upon the strict performance of any covenant, agreement,

provision, or condition of this Agreement shall not constitute a waiver of the terms of such covenant,

agreement, provision, or condition, and Owner and Management Consultant shall have all remedies

provided herein and by applicable law with respect to any subsequent act that would have originally

constituted a violation.

9.6 Severability. If any provision of this Agreement is determined to be illegal or

unenforceable, such determination shall not affect any other provision of this Agreement, and all such

other provisions shall remain valid and in full force and effect.

9.7 Assignability. Other than an Assignment by the Owner to an affiliate of the Owner,

no assignment shall be permitted without the prior written consent of Management Consultant, which

shall not be unreasonably withheld. Any assignment of this Agreement shall be binding upon and

inure to the benefit of the successor or assignee of Owner, but no such assignment shall release Owner

from its obligations hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first

above written.

OWNER:

CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC

By: J .R. Lewis, Chief Manager

Date:

Management Consulting Services 15

MANAGEMENT CONSULTANT:

CARE CENTERS MANAGEMENT CONSULTING, INC.,

By: Anita B. West,

Secretary, Chief Financial Officer

Date: ______________ _

April 21, 2020

75

CONTRACT FOR SALE OF REAL EST ATE

THIS CONTRACT is made and entered into by and between Benny S11ylo1· and Jerry Saylm·, CoF.xecuto.-s of the Estate of ,fames D. Saylor, deceased, nnd Uenny S11ylo1· and Jerry Saylor, individunlly, ("Seller") and Washington County Ueul Estate Investors, LLC a Tennessee limited liability company, ("Buyer") and their respective heirs, successors and assigns.

WITNESSETH

For the considcrntion set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

l. SALE OF PROPERTY. Seller agrees to sell, and Buyer agrees.to purchase certain real estate located in Washington County, Tennessee, consisting of approximately 7.2 acres as shown in the attached Exhibit A, exact acreage and description to be more specifically defined by the architect and a survey prior to closing, which real estate fronts Boones Creek Road . The Pl'Ope1:ty is a portion of an 8.9-acre tract acqitircd by James D. Saylol' from Howard D. Saylor, Vil'ginia Ruth Carpenter and husband Jack Carpenter via a Warranty Deed dated April t11h, 1953 and recorded in Roll/Image DB277 Images 135-136 in the Washington County Register of Deeds.

2. CONSIDERATION. Buyer agrees to pay for the property the sum of exactly Five Hundred Fifty-Five Thousand, Five Hundred and Fifty-Six and No/100 Dollars ($555,556.00) (Purchase Price"), payable as follows:

A. Twenty thousand and No/100 Dollars ($20,000) upon execution by Seller of this contract as earnest money ("Earnest Money"); held by Lefemine Commercial Properties, LLC, l 12 Joe Hale Drive, Gray, 1N 37615. Except as otherwise provided below, all Earnest Money shall become non-refundable aflel' 150 days.

B. The balance in cash, cashier's check or wire transfer at Closing.

3. DUE DILIGENCE PERIOD, Buyer will, at Buyer's expense and within 360 days from the last date of signing of this Contract determine whether the Property is suitable, in Buyer's sole and absolute discretion, for Buyer's intended use and development of the Prnperty ("Due Diligence Period"). During the Due Diligence Period, Buyer may conduct any tests, analyses, surveys and investigations ("Inspections") which Buyer deems necessary to determine to Buyer's satisfaction the Property's engineel'ing, al'chitectural, envimnmental properties; zoning and zoning restrictions; tlood zone designation and restrictions; subdivision regulations; soil and grnde; availability of access to public l'oads, water, and other utilities; consistency with local, state and regional growth management and comprehensive land use plans; availability of permits, government approvals and licenses; absence of soil and ground water contamination; and other inspections that Buyer deems appropriate to determine the suitability of the Property for Buyer's intended use and development. Buyer will delive1· written notice to Seller prior to the expiration of the Due Diligence Period of Buyer's determination of whether or not the Property is acceptable. Buyer's failure to comply with this notice requirement will constitute acceptance ofthe Property in its present "as is'' condition. Seller grants to Buyer, its agents, contractors and assigns, the right to enter the Prope1iy at any reasonable time during the Due Diligence Period for the pmpose of conducting Inspections; provided, however, that Buyer, its agents, contractors and assigns enter the Property and conduct Inspections at their own risk. Buyer will indemnify and hold Seller harmless from losses, damages, costs, claims and expenses of any nature, including reasonable attorneys' foes at all levels, and from liability to any person, arising from the conduct of any and all inspections or any work authorized by Buyer. Should Buyer delive1· timely notice that the Property is not acceptable within 150 days, Seller agrees that the Eamest Money will he fully and immediately returned to Buyer, the Contract terminated, and the parties shall have no fmther obligations to each other,

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4. TlTLE. Seller is, or at the time of closing will be, the owner of good and marketable fee simple title to the Property, free and clear of any liens, mortgages, assessments, pledges security interests, options, encumbrances, easements, tenancies, covenants, restrictions, conditions, charges, agreements, encroachments, and all other encumbrnnces and exceptions to title whatsoever,

IfBuye1·'s title insurance binder discloses matters or defects in the title to the Property, Buyer shall give Seller written notice of the same and Seller may be allowed a reasonable time, not in excess of thirty (30) days from such notice, within which to cause the matter 01· defect to be cured. Seller shall, within five (5) days after receipt of notice of defect, notify Buyer of his intentions to cure the defect. If Seller does not so notify Buyer, Seller shall be deemed to have elected not to cure the defect.

In the event Seller elects not to cure any material title defect under this paragraph, or if Seller is unable to cure a title defect after making reasonable efforts to do so, then Buyer may:

A. elect to accept the defect and proceed to close the transaction; or

n. Buyer may cancel this contract by notice in writing to Seller whereupon the Earnest Money shall be returned to Buyer, and each patty shall be released from further liability to the other.

5. SURVEY. Buyer shall obtain a newly cc11ified survey of the Prnpe1ty prepared by a licensed surveyo1·. The survey must be sufficient in form and content to allow u title insurance company to waive all matters of smvey and must show on its face that the Pmperty is not located within any recognized flood hazard area. If the survey is not acceptable to tho tille insurance company, or shows material encroachments, and Seller elects not to remedy said survey issues or is unable to remedy said survey issues, then Duyer, within (30) days from receipt of the survey, shall have the right upon written notice to Seller to terminate this Contract, whereupon the Earnest Money shall be returned to Buyer, or to close the purchase and sale of the Property regardless of the condition, with an adjustment to the purchase price.

6, TAXES AND ASSESSMENTS. Seller shall pay in foll, on or before closing, all real estate taxes which are a lien on the Property as of the date of Closing, whether past due or not, except for cu1Tent year's real estate taxes, which shall be prorated a,; of the date of Closing. At Closing Seller shall pay in full all special assessments which are presently owed and other charges which are or may become a lien on the Property whether past due or not.

7. GENERAL REPRESENTATIONS, WARRANTIES, AND AGREEMENTS OF SELLER. Seller represents, warrants, and agrees as fol lows as of the date of this contract and the date of closing; which representation and warranties shall survive the closing:

A. Seller knows of no violation of any laws, municipal ordinances, orders, or other requirements of any governmental entity which affect or might affect the property.

B. There arc currently no lawsuits involving the Property, nor any contingent liabilities involving the property or the continued operation of the Property.

C. There is no pending or threatened condemnation or similar proceeding affecting the Prnperty or any portion thereof, and Seller has no knowledge that any such action is presently contemplated.

D. Seller has no information or knowledge that there are any laws, ordinances, or restrictions, or any changes contemplated therein, or any judicial or administrative actions, or any actions by adjacent landowners or natural or artificial conditions upon the Property, or any other facts or conditions which would have a material adverse effect upon the Property or its value, which have not been disclosed in writing to Buyer.

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E. There ~re no parties in possession of any portion of the Propcl'ty.

F. Neither Seller nor the Property ls subject to any pending proceedings under any state or federal insolvency or bankruptcy legislation. To Seller's knowledge, no such proceedings, either voluntary or involuntary, are imminent m· threatened.

G. To the best of Seller's knowledge, the Property has not been used, and is not presently being used, and will not through the date of the closing, be used for the handling, storage, transportation or disposal of hazardous or toxic materials.

H. To the best of Seller's knowledge, there are currently no underground storage tanks located on the Property.

I. There arc no outstanding Notices with respect lo the Property, including specifically Notices of Violations or enforcement actions for hazardous or toxic waste cleanup or presence and Seller has no reason to believe that any Notices of Violations will be given or enforcement activities commenced, either by governmental authorities or private individuals or corporations.

8. CONDITIONS TO CLOSING, The obligation of Buyer to purchase the Property and to perform Buyer's other obligations hereunder shall be su~jecl lo the following conditions, which may be waived, in whole 01· in patt, but only in writing by Buyer:

A. All representations, warranties, and agreements made by Seller herein shall be true and correct in all respects on and as of the date of Closing, with the same force and effect as is made on and as of such date, and Seller shall have performed all covenants and obligations and complied with nil conditions required by this Contract in a timely manner.

B. Buyer must be able lo obtain a title insurance commitment to issue an ALTA Form B owner's policy of title insurance with no exception.

C. Seller must have furnished Buyer no later than ten (I 0) days prior to closing with a written certificate executed by the holder of any existing liens, representing and stating the amount of the unpaid principal balance including interest; the balance of all funds and sums owed in ordel' to fully satisfy the obligation secured by any existing lien as. of the date of the certificate, and a per diem amount payable aftel' that date in ordel' to satisfy fully said obligations.

D. Buyer is able to obtain an environmental site assessment of the opinion that the Property is not contaminated with hazardous or toxic substances and that no remediation 01· further investigation is warranted.

E. Buyer shall have received notice from all necessmy govemment agencies indicating that Buyer's applications and/or requests for review and any and all re-zoning, re-platting, subdividing, and other modifications to the Property have been approved and are considered final by the applicable government agencies, allowing Buyer to proceed with construction of a 63-bed skilled nursing facility on the Property.

In the event any of the conditions set forth above arc not satisfied, then at Buyer's option, this Contract may be terminated, and the obligations of the parties to each other under this Contract shall cease.

9. CLOSING. The Closing shall be held on or before the 45th day following the Buyer's receipt of a final, non-appealable l'eplaccment facility certificate of need issued to the operator of a sixty-three (63) heel sldlled nursing facility on the Property and final approval of any and all re-zoning, re-platting, subdividing, and other modifications to the Property as set fol'th section 8.E herein. Provided, however, that in the event, at the end of the 360 day period as set forth in paragraph 3, the Buyer continues to await the approval of the certificate of need, Buyer may at its option

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extend the closing date by up to 90 days. In the event that Buyer extends the closing dale, Buyer shall deposit an additional $20,000 non-refundable earnest money deposit, the total $40,000 earnest money to be applied to the purchase price at closing and in the event Buyer fails to close the Seller shall retain the $40,000 earnest money deposit. The Closing shall occur at the office of the closing agent selected by Seller. The Buyer shall provide Seller three (3) days' notice prior to Closing.

At Closing, all documents necessary for the conveyance of the Prnperty, the payment of the Purchase Price, and financing arrangements contemplated hereunder, shall be executed and delivered. Said documents shall include, without limitation, the following,

A, General Warrnnty Deed transferl'ing the Property from Seller to Buyer subject only to the exceptions set forth herein;

B. Lien Affidavits, Sut'vcy, Surveyor's Ce11iflcate, Confirmations, Consents, Approvals, and other doeumenls contemplated by this Agreement, or reasonably required by holder of a Pirst Mortgage Loan;

C. Any other documents reasonably required by Buyer.

10. CLOSING COSTS AND ADJUSTMENTS.

A. Seller shall be responsible for the cost of preparing the General Warranty Deed;

B. Buyer shall be responsible for the costs of inspecting the Property, the cost of title insumnce and documentary stamps, costs of completing all olhel' due diligence requirements;

C. At Closing, the following adjustments between the parties shall be made as of 12:01 a.m. on the date of Closing.

(i) City, State, and County real and personal property ad valorem taxes shall be apportioned us of the date of Closing. [f the amount of such taxes for the year in which the closing occurs cannot reasonably be determined, the apportionment shall be based upon lhc amount of tax for the next preceding tax year, and later adjusted. Provided, however, such adjustment must be requested in writing by the party so requesting such adjustment within one year from the date of Closing; otherwise, no adjustment shall be made and no obligation to make an adjustment shall exist.

D. Each party shall bear its own atlomeys' fees and costs.

11. CONDEMNATION. Ir any portion of the Property shall be condemned or otherwise taken through any power of eminent domain prior to Closing, or if proceeding to condemn or otherwise take any portion of the Property arc commenced within 150 days, Ouyer may elect:

A. to terminate this Contt'act, whereupon the Earnest Money shall be t'efunded to Buyer, and Buyer and Seller shall be relieved of furthe1· obligations, hereunder, or

B. to purchase the Property under the terms of this contract, whereupon Seller shall be required to assign to Buyer at Closing, all of lhe Seller's right, title and interest with respect to any condemnation or other governmental action to condemn or take nny portion of the Prnperty.

12. OFFER AND ACCEPTANCE. Buyer by signing this Contract hereby ofters to purchase the Prnperty from Seller on the terms and conditions set oul herein. Acceptance of this offer by the Seller may only be made by actual delivery to Buyer of an executed original (via the methods of delivery provided in Section 13 herein) of this Agreement signed by Seller. The <lute of acceptance shall be the date on which Buyer receives the Agl'eement executed

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by the Seller. Buyer may revoke this offer at any time prior to Buyer's receipt of Seller's formal executed acceptance of this Agreement. The offer shall be automatically revoked if Seller has not accepted as specified above by 5:00 p.m. Eastern, December 13, 2019.

13, NOTICE. Any notice to be given under this Contract shall be deemed given if provided by electronic communication, facsimile, overnight delivery, or U.S. mail - postage pre-paid to the following:

To BUYER: Washington County Real Estate Investors, LLC 2020 Northpark, Suite 2D Johnson City, TN 37604 Attention: General Counsel Email: [email protected]

14. MISCELLANEOUS.

A. This Contract constitutes the sole and entire agreement between Buyer and Seller. No modification hereof shall be binding unless made in writing and executed by Buyer and Seller. No representations, promises, or inducements not included in this Contract, or any verbal modification or amendment hereof, shall be binding upon Buyct· and Seller, and their respective heirs, successors, assigns, beneficial owners and representatives.

B. Time is of the essence oflhis Contract.

C. The validity, constrnction and inte1-pretation of this Contract shall be determined in accordance with the laws of the State of Tennessee.

D. The captions used in this Contract are for purposes of convenience only shall not be construed or interpreted so as to limit or define the effect of this Contract.

E. All agreements, l'Cpl'cscntutions, and warranties of the Seller contained in this Contract shall survive the Closing oflhis tnmsaction.

F. This Contract may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same instrument.

G. Buyer may waive any provision hereunder which is a condition to Buyer's performance and may elect to close the transaction.

H. Seller certifies, represents, and wmrants, under penalty ofpe1jury, that Seller is not a foreign person or nonl'csident for purposes of Section 1445 of the Internal Revenue Code, 01· any related provisions, and Seller will execute such further certifications with respect thereto as Buyer may 1·equire,

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I. Buyer may assign this Agreement with all rights terms & conditions hereunder to any individual, corporation, 01· limited liability company which has the same ownership structure of the Buyer, but not otherwise.

J. Seller will pay IO¾ of gross sales price as compensation to Bl'Okers, 50% to ReMax Checkmate and 50% to Lefemine Commercial Properties.

IN WITNESS WHEREOF, the parties have executed this agreement as of the date set forth below.

SELLER:

Date: /,J,-., /.2 ~ Jtlf CJ

-id . Saylor

Date: /'2.... ,_, /"'2- - / j

~;,0,¥-Benny Saylor, lndivld&iy

Date: _ _._/_'L_. _-_/_2-_-_7_<>i"'----

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LEASE

THIS LEASE ("Lease" or "Agreement"), dated as of April 30, 2020 is made and entered into by and between WASHINGTON COUNTY REAL ESTATE INVESTORS, LLC a Tennessee limited liability company ("Lessor"), and CHRISTIAN CARE CENTER OF WASHINGTON COUNTY, LLC, a Tennessee limited liability company ("Lessee").

WITNESS ETH:

Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, as hereinafter defined, for the term of this Lease and subject to the terms, covenants, agreements and conditions hereinafter set forth.

1. Definitions. The terms set forth below shall have the meanings respectively ascribed thereto, except as othenvise clearly required by the context:

1.1 "Additional Rent" means any and all sums payable by Lessee hereunder other than Base Rent.

1.2 "Agency" means the agency or department of the State of Tennessee or its successor agency or depaittnent having authority over the licensure of skilled nursing facilities in Tennessee.

1.3 "Agreement" means this Lease, as in effect from time to time.

1.4 "Base Rent" has the meaning ascribed thereto in Section 4.1 hereof.

1.5 "Facility" means the 63-bed nursing facility located on the Premises.

1.6 "FF&E" means the furniture, fixtures, and equipment located in the Facility on the date hereof.

1. 7 "Financing Lease" means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with U.S. generally accepted accounting principles to be capitalized on a balance sheet of the lessee.

1.8 "Guaranty Obligation" means as to any person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "pritnaty obligations") of any other third person in any manner, whether directly or indirectly.

1.9 "Hazardous Material" means any hazardous, toxic, or dangerous waste, substance or material, pollutant or contaminant, as defined for purposes of the Comprehensive EnvirorunentalResponse, Compensation, and Liability Act (42 ofU.S.C. Section 6901 et seq.), as amended, or any other federal, state or local law, ordinance, rule or regulation applicable to the Premises, or any substance that is toxic, explosive, corrosive, flammable, infectious, radioactive,

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carcinogenic, nmtagenic, or othe1wise hazardous to the environment or to human health or safety, or any substance which contains gasoline, oil, diesel fuel or other petroleum hydrocarbons or byproducts, polychlorinated bipheyls (PCBs), or radon gas, urea formaldehyde, asbestos or lead.

1.10 "Indebtedness" means, with respect to any person at any date, without duplication, (a) all indebtedness of such person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or setvices ( other than cuttent trade liabilities incurred in the ordinaty course of business and payable in accordance with customa1y practices), (b) any othet indebtedness of such petson which is evidenced by a note, bond, debenture, or similar insttument, (c) all obligations of such person under Financing Leases, (d) all obligations of such petson in respect ofletters of credit, acceptances, or similar instt-urnents issued or created for the account of such person and (e) all liabilities secured by any Lien on any property owned by such person even though such person has not assumed or otherwise become liable for the payment thereof.

1. 11 "Infectious Waste" has the meaning assigned to the tetm "Biohazardous Waste" as such term is defined in applicable state statutes and tules.

1.12 "Inventoty" shall mean the routine supplies located at the Facility.

1.13 "Lease" means this Lease, as in effect from time to time.

1.14 "Lessee" means Christian Care Center of Washington County, LLC, a Tennessee limited liability company.

1.15 "Lessor" means Washington County Real Estate Investors, LLC, a Tennessee limited liability company.

1.16 "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutoty or other), charge, or other security interest or any preference, priority, or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or othet title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing), and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing.

1.17 "Mortgage Loan" has the meaning ascribed thereto in Section 4.1.1 hereof.

1. 18 "Permitted Use" means the operation of a skilled nursing facility, the provision of ancillary or other health care items and services to the residents thereof and to members of the community, the provision of adult day care, psycho-social, or similar services to members of the community, and any use or activity related to or associated with the operation of a skilled nursing facility, including, without limitation, any activity which, in accordance with accepted commercial practice, may now or hereafter be conducted at a skilled nursing facility, whether or not such activity relates to the provision of services to residents of such facility.

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1.19 "Premises" means the property and improvements identified as parcel number 036 018.01 and located at 2244 Boones Creek Rd,Johnson City, Tennessee 37604, as more fully depicted on Exhibit A attached hereto and inco1porated herein.

1.20 "Property Taxes" shall mean the gross amount of all real estate taxes and governmental assessments attributed to the Premises, less any early payment or other discounts realized, specifically excluding inheritance taxes, gift taxes, transfer taxes, franchise taxes, excise taxes, and income taxes of Lessor.

1.21 "Rent" shall mean the sum of the Base Rent and Additional Rent.

1.22 "Skilled Nursing Facility" shall mean intermediate care and/ or skilled care nursing facility.

1.23 "Regulato1y Clearances" shall mean (i) receipt by Lessee of notice from the Agency to the effect that upon receipt of evidence of the consummation of the transactions contemplated hereby and commencement of the term of this Lease, the Agency will issue a license authorizing Lessee to operate the Facility as a skilled nursing facility; (ii) receipt by Lessee of all other governmental approvals that are required as a condition precedent for the lawful commencement of the term of this Lease and operation of the Facility by Lessee as a skilled nursing facility.

2. Lease. Lessor hereby leases to Lessee the Premises, including the Facility and the FF&E, on the terms and conditions herein provided.

3. Term and Renewal. The initial term of this Lease is Five (5) years and shall commence on the date that Lessor acquires fee simple ownership of the Premises (the "Commencement Date"). This Lease shall automatically renew for two successive five-year terms unless either party gives notice to the other, at least sixty (60) days period to the expiration of any particular term, of its intent to terminate the Lease. Rent shall commence on the date Facility receives its license from the State of Tennessee allowing it to occupy the Premises and operate as a Skilled Nursing Facility.

4.1 Base Rent. The base rent hereunder for each month of the term hereof (the "Base Rent") shall be paid by Lessee to Lessor in advance on the seventh (r1t) day of each month during the term hereof, and shall be equal to the following::

4.1.1 Debt Se1vice on Mortgage Loan. An amount equal to the payment in respect of principal and interest required to be made by Lessor in such month to its lender under its mortgage loan, if any (the "Mortgage Loan"); plus

4.1.2 Debt Service on Improvement Loan. An amount equal to the payment in respect of principal and interest required to be made by Lessor in such month to its lender under its improvement loan, if any (the "Improvement Loan");pltts

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4.1.3 Debt Service - Other. An amount equal to the payment of principal and interest required to be made in such month in respect of any future debts incurred by Lessor in Lessor's needed renovation, replacements within and/ or maintenance of the Facility, and/ or in Lessor's expenditures required to maintain the Facility's physical compliance with local, state, and

federal regulations;phts.

4.1.4 Fixed Return Amount A fixed return amount, which shall be equal

to twenty-five percent (25%) of the aggregate debt service payments, principal and interest, in Sections 4.1.1, 4.1.2 and 4.1.3, during the Te11n hereof.

In addition to the foregoing, and included in the Base Rent, Lessee shall pay Lessor an amount in each month equal to any sales tax levied by local and/ or state of Tennessee taxing authority on the

foregoing, if levied.

4.2 Utilities and Property Taxes and Assessments.

4.2.1 In General. Lessee shall be responsible for all charges for the use of electric, gas, telephone, water, sewer, waste disposal, and all other utilities accruing during the Term

of this Lease. Lessee shall pay or cause to be paid all Property Taxes atti'ibutable or assessed to the Premises accruing during the Term of this Lease. Lessee shall pay same when due with the maximum (real and personal) discount being utilized by Lessee. Lessee shall pay all assessments, whether general or specific, whether certified or pending, and shall pay all fees, costs, and other

obligations when due to maintain all licenses to operate the Premises as a skilled nursing facility accntlng during the Term of this Lease.

4.2.2 Hold Harmless. Lessee shall protect and hold Lessor and the Premises harmless from liability from any and all of the foregoing taxes, assessments, and charges, together with any interest, penalties, or other sums thereby imposed and from any sale or other

proceeding to enforce payment thereof.

4.2.3 Right to Contest. Lessee shall have the 1'ight to contest or review by legal proceedings, as permitted under applicable law, any assessed valuation, real estate tax, or

assessment. Lessor shall, if so requested by Lessee, join in any proceeding to contest or review such taxes or assessments at Lessee's cost and expense including reasonable attorney's fees. Should any of

the proceedings result in reducing the Property Taxes for the Premises, Lessee shall be entitled to receive all refunds paid by the taxing authorities.

4.2.4 Limitation. Nothing contained in this Lease requires, or shall be constlued to require Lessee, to pay any gift, estate, inheritance, or other tax assessed against Lessor,

its heirs, successors, or assigns, or any income or other tax, assessment, charge, or levy on the rent payable by Lessee under this Lease to Lessor with the exception of Tennessee sales tax due, if any.

4.3 Additional Provisions.

4.3.1 Form and Manner of Payment. All sums due and payable pursuant to the terms and provisions of this Lease shall be paid by Lessee in lawful money of the United States

of America. In addition, all such suins shall be paid to Lessor, and payment to Lessor shall fully

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discharge Lessee with respect to the amount so paid, Lessee having no liability or responsibility with respect to the allocation or distribution of any such payment between the owners of Lessor.

5. Use of Premises; Maintenance; Alterations; Mechanic's Liens.

5.1 Use of Premises. The Premises shall be used in accordance with the Permitted Use and for no other purposes. Lessee shall not commit, or suffer to be committed, any waste on the Premises. The Premises shall not be used in any manner to create any nuisance, offensive activity or unsightly condition, nor to vitiate the insurance on the Premises nor violate any 1ules, regulations, orders, or other obligations of any federal, state, or local government or other agency that may affect in any way the licensing or use of the Premises as a skilled nursing facility. Lessee shall be responsible for obtaining and maintaining all licenses necessa1y to operate Lessee's business as ·a skilled nursing facility.

5.2 Renovation and lvfaintenance. Lessee, by occupancy hereunder, accepts the Premises as being in reasonable repair and condition; provided that Lessor agrees to when and as reasonably needed by the Facility renovate the premises, replace HV AC units, replace resident room furniture, replace the roof, redecorate the Facility, etc., which shall first be recommended and presented to Lessor by qualified building architects, engineers, and interior design consultants (as the case may require) reasonably acceptable to Lessor and Lessee. In the event that any maintenance issue arises that is by its nature Lessor's responsibility and that puts the Facility or any of its residents, employees, or guests in actual or anticipated jeopardy of physical injury or regulatory deficiency, Lessor shall immediately undertake to correct the situation and shall see that it is corrected within ten (10) days of notice of such situation, and, if Lessor fails to do so, Lessee shall have the right to undertake to correct such situation utilizing whatever laborers it, in its sole discretion, deems desirable and shall be expressly permitted to full reimbursement from Lessor for the cost of such correction by a set off in Rent.

Lessee shall routinely maintain the Premises and eve1y part thereof, including the Personal Property, in good repair and condition, damages by causes beyond the control of the Lessee excepted.

Notwithstanding herein to the contra1y, Lessor agrees to indemnify and hold harmless Lessee, its officers, agents, and employees from any loss, cost, damage, expense, attorney's fees, and liability by reason of bodily inju1y, property damages, or both of whatsoever nature or kind, arising out of or as a result of Lessor's non-compliance with federal, state, or municipal laws, regulations, or codes pertaining to Hazardous Substances.

5.3 Alterations. Lessee shall make no st1uctural alterations without the prior approval of Lessor, which approval shall not be unreasonably withheld.

6. Damage or Destruction.

6.1 50% or More of the Replacement Cost. If by fire or other casualty, the Premises are totally destroyed or partially damaged or destroyed to the extent of fifty percent (50%) or more of the replacement cost thereof, Lessor shall have the option of terminating this Lease, or any renewal thereof, by serving written notice upon Lessee within thirty (30) days from the date of the casualty, and any prepaid Rent shall be prorated as of the time of destruction, and any unearned

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Rent shall be refunded without interest. Nevertheless, should Lessor elect to repair such damage or destruction, then upon completion of such repairs this Lease shall be reinstated at the option of Lessee. In such event, Lessor shall give written notice to Lessee of the completion of such repair and Lessee shall have thirty (30) days within which to exercise its option to reinstate this Lease by written notice to Lessor, such reinstatement to be effective as of the date specified in such notice from Lessee, but not more than shty (60) days after the date of such notice.

6.2 49% or Less of the Replacement Cost. If by fire or other casualty, the Premises is damaged or partially destroyed to the extent of forty-nine percent ( 49%) or less of the replacement cost thereof, then Lessor shall restore the Premises.

6.3 Abatement of Rent. In the event of restoration by Lessor, all Rent thereafter accruing shall be equitably and proportionately adjusted according to the nature and extent of the destruction or damage, pending completion of rebuilding, restoration, or repair. In the event the destruction or damage is so extensive as to make it infeasible for Lessee to conduct Lessee's business on the Premises, the Rent shall be completely abated until the Premises is restored by the Lessor, or until the Lessee resumes use and occupancy of the Premises, whichever shall first occur. The Lessor shall not be liable for any damage to, or any inconvenience or interruption of, the business of the Lessee or any of its employees, agents, or invitees occasioned by the fire or casualty.

6.4 Repair. If the Premises is to be repaired under this Section 6, Lessor shall make such repairs at its cost.

7. Compliance With Legal Requirements. Lessor shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances, and govetnmental iules, regulations, or requirements now in force, or which may hereafter be in force, with the requirements of any board of fire underwriters or other similar body now or hereafter constituted, with any direction or occupancy certificate issued pursuant to any law by any public officer or officers, as well as the provisions of all recorded documents affecting the Premises, insofar as any thereof relate to or affect the condition, use, or occupancy of the Premises, excluding requirements of structural changes not related to or affected by improvements made by or for Lessee or Lessee's acts.

8. Assignment and Subletting. Lessee shall have no right to assign or sublet this Lease without the prior written consent of Lessor.

9. Entry by Lessor. Lessor may enter the Premises upon reasonable notice to Lessee to (i) inspect the same, (ii) exhibit the same to prospective purchasers, lenders, or lessees, (iii) detetmine whether Lessee is complying with all of its obligations hereunder, (iv) supply any set-vices to be provided by Lessor to Lessee hereunder, (v) post notices of non-responsibility, and (vi) make repairs required of Lessor under the terms hereof. Lessee hereby waives any claim for damages for any injury or inconvenience to or interference with Lessee's business, any loss of occupancy or quiet enjoyment of the Premises, or any other loss occasioned by such enti.y.

10. Events of Default and Lessor's Remedies. All rights and remedies of the Lessor herein enumerated in the event of a default shall be cumulative, and nothing herein shall exclude any other right or. remedy allowed hereunder, at law, or in equity.

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10.1 Bankmptcy. If any voluntaiy or involuntaiy petition or similar proceeding under any section or sections of any bankmptcy act shall be filed by or against Lessee, or any volunta1y or involuntaiy proceeding in any court or tribunal shall be instituted to declare Lessee insolvent or unable to pay Lessee's debts, and such petition or proceeding is not discharged or dismissed within ninety (90) days after the corrunencernent thereof, then and in any such event Lessor rnay, if Lessor elects, but not othenvise, and with or without notice of election, forthwith terminate this Lease, and notwithstanding any other provisions of this Lease, Lessor shall forthwith, upon such termination, be entitled to recover damages in an arnount equal to the then present value of the Rent, specified in Section 4 of this Lease, for the residue of the stated term hereofless the fair rental value of the Premises for the residue of the stated terrn hereof.

10.2 Payment, Etc. If the Lessee defaults in the payment of Base Rent or Additional Rent, or in the prompt and full performance of any provision of this Lease, or if the leasehold interest of the Lessee is levied upon under execution or is attached by process of law, or if the Lessee rnakes an assignment for the benefit of creditors, or if a receiver is appointed for any property of Lessee, or if the Lessee abandons the Premises, and if any such event is not cured within thirty (30) days after notice thereof from Lessor, then and in any such event the Lessor may, if the Lessor so elects, but not otherwise, upon three (3) days' written notice of such election, either forthwith terminate this Lease and the Lessee's right to possession of the Premises or without terminating this Lease, forthwith terminate the Lessee's tight to possession of the Ptemises, but the Lessee shall temain liable for damages as pe11:n.itted by law, and as provided for herein.

10.3 Surrendet. Upon termination of th.is Lease, whether by lapse of time ot otherwise, or upon any tetmination of the Lessee's right to possession without tetmination of the Lease, Lessee shall sutrender possession and vacate the Pternises immediately, and deliver possession thereof to the Lessor, subject, in the case of expiration or tetmination of this Lease without default by Lessee, to the performance by Lessor of its obligations heteunder in connection with the expiration or termination hereof.

11. Representations and Warranties Lessor. Lessor teptesents, warrants, and covenants to Lessee, as of the date hereof and as of the Commencement Date, as follows:

11.1 Authotity. Lessot has the full legal capacity and autho1ity to enter into, and to petform its obligations under, this Agteement and all other agreements and instiuments to be executed by it pursuant to this Agreement. Lessor's execution, delive1y, and performance of this Agreement and all other agreements, instruments, and certificates to be executed by it pursuant to this Agteement have been duly authorized by all necessa1y company actions and will not violate any provision of Lessor's charter documents, including its atticles of incotporation or otganization, its bylaws or opetating agteement, ot other similar documents. This Agreement is, and the other documents to be delivered by Lessor (when executed and delivered by it) will be, valid and enforceable obligations of the Lessor, binding in accordance with their terms.

11.2 Organization. Lessor is, and on the Corrunencement Date will be, a duly organized, validly existing Tennessee funited liability company in good standing with the legal power to own and opetate its properties and assets and to cariy on its intended business. Lessor has complied with all provisions of its charter documents.

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11.3 Title. Lessor has good and marketable fee simple title to the Premises subject to easements, restrictions, limitations, and encumbrances of public record and the lien of the Mortgage Loan and the Improvement Loan.

11.4 No Condemnation Proceedings. There is no pending or, to the knowledge of Lessor, threatened condemnation or similar proceeding affecting the Premises or any portion tl1ereof, and Lessor has not received any written notice, and has no knowledge, that any such a proceeding is contemplated.

11.5 Use. There are no restnct:1ons, recorded or unrecorded, or existing rules, regulations, laws, ordinances, or orders of any governmental or quasi-goverrunental authority which would impair Lessee's use of the Premises for the Permitted Use. Lessor has no knowledge of any judicial or administrative action, or any action by adjacent landowners, that has not been disclosed in writing to Lessee and that would prevent, limit, impede, or render more costly tl1e present or any future use of the Premises or the cons1:1.uction of any additions or improvements thereto in compliance with existing laws. Lessor is not aware of any other facts or circumstances that would materially and adversely affect Lessee's use or value of fue Premises as a skilled nursing facility.

12. Representations and Warranties of Lessee. Lessee hereby represents and wa11:ants as follows:

12.1 Organization. Lessee is a duly organized, validly existing Tennessee limited liability company in good standing with the legal power to own its properties and assets and to catty on its intended business.

12.2 Authorization. Lessee has the full power, legal capacity, and authority to enter into, and to perform its obligations under, this Agreement. Lessee's execution, delivery, and performance of this Agreement and all other agreements and insttuments to be executed by it pursuant to this Agreement have been duly authorized by all necessaty company actions. This Agreement is, and the other documents to be delivered by Lessee pursuant hereto (when executed and delivered by it) will be, valid and enforceable obligations of Lessee, binding on Lessee in accordance with their terms.

13. Additional Covenants of the Parties.

13.1 Governmental Approvals. To the extent not already accomplished, Lessee shall, promptly after the execution of this Agreement, submit to the Agency an application for a license in the name of Lessee, to authorize Lessee to operate the Facility, and applications for approval as a provider under the Medicare and Medicaid Programs. Thereafter, Lessee shall use reasonable efforts to pursue the issuance of such license and approvals. Lessor shall cooperate with and assist Lessee in the pursuit of such license and approvals as requested by Lessee from time to time (both before and after the Commencement Date).

13.2 Maintenance of Existence, Etc. During the term of this Lease, Lessor shall maintain intact its entity existence, and, including with respect to its assets, shall not liquidate or dissolve, or enter into any merger, consolidation, or similar transaction (regardless of the sutvivor), or acquire or be acquired by any person or entity, except with the written consent of Lessee.

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13.3 Loan Guarantee Fee. If either party hereto guarantees the repayment of a loan made to the other party, the patty making the guaranty shall be entitled to an annual loan guarantee fee, payable on December 31st of each calendar year, in the amount of One Percent (1 %) of the highest amount of debt so guaranteed during the preceding calendar year.

13.4 Purchase at Termination. On the expiration or termination of this Lease for any reason, Lessee shall sell, and Lessor shall purchase: (i) all leasehold improvements of the Premises made by or at the expense of Lessee (other than through payments of Rent hereunder); (ii) all furniture, fi'Ctures and equipment then located at the Facility and purchased and owned by Lessee; and (iii) all supplies invento1y then located at the Facility which has been purchased by Lessee. The purchase price for the foregoing shall be an amount equal to the net book value thereof as of such expiration or termination, as shown on the books of Lessee prepared in accordance with generally accepted accounting principles, and shall be paid in immediately available funds within thirty days of the date of such expiration or te1mination.

13.5 Operation by Lessee. Lessee hereby covenants and agrees to use best efforts to maintain the Premises and the Facility free and clear of all claims, actions, suits, or other proceedings which could affect the Facility's ability to operate as a skilled nursing facility during the term of this Lease. Lessee agrees to maintain the use of the Property and shall comply with all environmental laws. Notwithstanding the foregoing, Lessee shall not have any liability for violations of environmental laws that do not result from acts or omissions of Lessee.

13.6 Medicare, J\/Iedicaid Requirements. Lessee hereby covenants and agrees to use its best efforts to maintain and comply with all applicable Medicaid and Medicare requirements or other Agency requirements, to maintain the Premises and its licenses and permits, to operate a skilled nursing facility upon the Premises, to comply with all iules and regulations as they may relate to residents and/ or resident tn1st funds and to maintain such licenses and permits in good standing throughout the Term of this Lease. All Medicare and Medicaid cost reports, if any, required to be filed by Lessee shall be accurately completed in all material respects and timely filed. Any pending statement of deficiencies related to the Premises or the Facility after the Commencement Date issued by any agency shall be complied with in a timely manner.

13.7 Transfer of Licenses, etc. On the expiration or earlier termination of this Lease for any reason, Lessee (its successors, assigns, agents, trustees or receivers) shall transfer and relinquish to Lessor or Lessor's nominee and cooperate with Lessor or Lessor's nominee in connection with the processing by Lessor or such nominee of all licenses, operating permits, certificates of need and other regulato1y clearances or matters, including without limitation, a Certificate of Need, the Facility license, and any other contracts with governmental or quasigovernmental entities which may be necessaiy or appropriate for the operation of tl1e Premises and Facility by Lessor or such nominee; provided that the costs and expenses of any such transfer or the processing of any such application shall be paid by Lessor or Lessor's nominee or assigns. Any and all such permits, licenses, certificates, certifications and the like, and/ or contracts which are held in Lessor's or Lessee's name at the execution or termination of this Lease or at any time during the te1m of this Lease shall at all times remain the property of Lessor, and Lessee is strictly prohibited from transferring the rights to said permits, certificates, certifications and licenses to or having new permits, certificates, certifications, and/ or licenses issued at a location other than the Premises. Any lessee leasing the Premises is also leasing the rights to operate the Premises and will relinquish said rights upon the termination of this Lease.

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14. Conditions to Lessee's Obligations. The obligations of Lessee from and after the Comrnence1nent Date are subject to the following conditions, any one or any of which may be waived by Lessee:

14.1 Representations and Warranties. The representations of Lessor contained in this Agreement shall be tiue and accurate in all material respects on and as of the Commencement Date as if made on and as of the Commencement Date.

14.2 Absence of Adverse Changes. There shall not have occurred any material adverse change affecting the Facility or the use or operation thereof by Lessee after the Commencement Date.

14.3 Litigation. No litigation shall be pending or threatened that seeks to prevent the transactions contemplated hereby or damages from Lessor or Lessee in relation thereto.

15. Conditions to Lessor's Obligations. The obligations of Lessor from and after the Commencement Date are subject to the following conditions, any one or any of which may be waived by Lessor:

15.1 Representations and Warranties. The representations of Lessee contained in this Agreement shall be tiue and accurate in all material respects on and as of the Commencement Date as if made on and as of the Commencement Date.

15.2 Litigation. No litigation shall be pending or threatened that seeks to prevent the transactions contemplated hereby or damages from Lessor or Lessee in relation thereto.

16. Failure of Conditions. In the event that there is a material failute of any of the conditions to the obligations of a party hereunder, which is not waived by such party, then such party may terminate and abandon this Lease by written notice to the other party, and in the event of such termination neither party shall have any further liability or obligation under this Lease to the other party hereto.

17. Lessor's Right to Cure Defaults. All agreements and provisions to be performed by Lessee under any of the terms of this Lease shall be at its sole cost and expense and without any abatement of rental. If Lessee shall fail to pay any sum of money, other than the Rent, required to be paid by it hereunder, or shall fail to perform any other act on its part to be performed hereunder, Lessor may, but shall not be obligated to, and without waiving or releasing Lessee from any obligations of Lessee, make any such payment or perform any such other act on Lessee's part to be made or performed as in this Lease provided. All sUins so paid by Lessor and all necessary incidental costs shall be deemed Additional Rent hereunder and shall be payable to Lessor upon demand, and Lessor shall have (in addition to any other right or remedy of Lessor) the same rights and remedies in the event of the non-payment thereof by Lessee as in the case of default by Lessee in the payment of rental.

18. Eminent Domain. The terms "eminent domain," "condemnation," "taking" and the lilce in the following paragraphs include takings for public or quasi-public use and private purchases in place of condemnation by any authority authorized to exercise the power of eminent domain.

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If the entire Premises or the portions of the Premises required for reasonable access to, or reasonable use of, the Premises are taken by eminent domain, the Lease shall automatically end on the earlier of:

(i) the date the title vests in the condemning authority; or

(ii) the date Lessee is dispossessed by the condemning authority.

If the taking of a part of the Premises materially interferes with Lessee's ability to continue its business operations in substantially the same manner, the Lease shall automatically end on the earliest of:

(i) the date when title vests;

(ii) the date Lessee is dispossessed by the condemning authority, or

(iii) sixty (60) days following notice to Lessee of the date when vesting or dispossession is to occur.

If there is a partial taking and tl1.e Lease continues, then the Lease shall end as to the part taken, and tl1.e Rent shall abate in proportion to tl1.e part of the Premises taken and Lessee's pro rata share shall be equitably reduced.

Lessee shall be permitted to make its own claim with the condemning authority for the value of its leasehold improvements and for the value of the unexpired term of the Lease.

19. No Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Lessor terminate all or any existing subleases or subtenancies, or may, at the option of Lessor, operate as an assignment to it of any or all such subleases or subtenancies.

20. Waiver. The waiver by Lessor or Lessee of any agreement, condition, or provision herein contained shall not be deemed to be a waiver of any subsequent or further breach of the same, or any other agreement, condition, or provision herein contained, nor shall any custom or practice that may arise between the parties in the administration of the terms hereof be construed to waive or to lessen the right of Lessor or Lessee to insist upon performance in accordance with said terms. The subsequent acceptance of Rent or Additional Rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee of any agreement, condition, or provision of this Lease, other tlian the failure of Lessee to pay the particular Rent or Additional Rent so accepted, regardless of Lessor's lmowledge of such preceding breach at the tune of acceptance of such Rent or Additional Rent

21. Notices. All notices and demands tl1.at may or ate required to be given by either party to the other hereunder shall be in writing and shall be deemed to have been fully given when deposited in the United States Mail, certified or registered, postage prepaid, or with a nationally recognized overnight courier, and addressed as follows: to Lessor, at 2020 Northpark, Suite 2D, Johnson City, Tennessee, Attention: JR. Lewis, or at such other place as Lessor may from tune to tune designate in writing to Lessee; to Lessee, at 2020 Northpark, Suite 2D,Johnson City, Tennessee

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37604, Attention General Counsel, or at such other place as Lessee may from time to time designate in writing to Lessor.

22. Estoppel Certificate. At any time and from time to time, but on not less than ten (10) days' prior written request by Lessor, Lessee will execute, acknowledge, and deliver to Lessor and any Mortgagee, promptly upon request, a certificate certifying (i) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date and nature of each modification), (ii) the date, if any, to which Rent, Additional Rent, and any other sums payable hereunder have been paid, (iii) that no notice has been received by Lessee of any default that has not been cured, except as to defaults specified in said certificate, and (iv) such other matters as may be reasonably requested by Lessor. Any such certificate may be relied upon by a prospective purchaser or mortgagee of the Premises or any part thereof.

23. Holding Over. If, without objection by Lessor, Lessee holds possession of the Premises after the expiration of the term of this Lease, Lessee shall become a Lessee from month to month, upon the terms herein specified. Each party shall give the other written notice at least one (1) month prior to the date of termination of such monthly tenancy of its intention to terminate such tenancy. This Section shall in no way be deemed to give Lessee any right whatsoever to hold possession of the Premises after the expiration of the term hereof.

24. Insurance.

24.1 Lessee hereby agrees to use its best efforts to maintain in full force and effect at all times during the Tenn of this Lease, at its own expense, for the protection of Lessee and Lessor, as their interest may appear, policies of insurance issued by a responsible carrier or carriers that offer the following coverages:

(i) Comprehensive General and Professional Liability Insurance in an amount not less than $1,000,000 pet claim and $3,000,000 in the aggregate;

(ii) Fire and Extended Coverage, Vandalism and Malicious Mischief (where applicable) insurance, to cover all the Premises; and

(iii) Worker's Compensation as required by Tennessee law; and

(iv) Business Intermption Insurance.

24.2 Lessee shall deliver to Lessor at least thirty (30) days prior to the time such insurance is first required to be carried by Lessee, and thereafter at least thirty (30) days prior to expiration of such policy, Certificates of Insurance evidencing the above cove1·age. Such Certificates shall name Lessor as an additional insured. Further, all Certificates shall provide that no less than thirty (30) days' prior written notice shall be given Lessor in the event of a material alteration to, or cancellation of, the coverages evidenced by such Certificates.

25. Quiet Enjoyment. Subject to the terms of this Lease and provided Lessee pays the Rent, Additional Rent, and any and all other sums due and payable hereunder, and performs all of

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the covenants and agreements herein contained, Lessee shall and may peaceably have, hold, and enjoy the Premises for the Term hereof.

26. Entire Agreement. There are no oral agreements between Lessor and Lessee affecting this Lease, and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements, and understandings, if any, between Lessor and Lessee or displayed by Lessor to Lessee with respect to the subject matter of this Lease. There are no representations between Lessor and Lessee other than those contained in this Lease.

27, Revision of Lease; Alteration. This Lease shall not be altered, changed, or amended except by an instrument in writing signed by both parties hereto.

28. Miscellaneous. The words "Lessor" and "Lessee" as used herein shall include the plural as well as the singular. Time is of the essence of this Lease and each and all of its provisions. Submission of this insttument for examination or signature by Lessee does not constitute a reservation of or option for Lease, and this instrument is not effective as a lease, or otherwise, until execution and delivety by both Lessor and Lessee. The agreements, conditions, and provisions herein contained shall, subject to the provisions herein as to assignment, apply to and bind the heirs, executors, administrators, successors, and assigns of the parties hereto. If any provision of this Lease shall be determined to be illegal or unenforceable, such determination shall not affect any other provision of this Lease, and all such other provisions shall remain in full force and effect. This Lease shall be govetned by and construed pursuant to the laws of the State of Tennessee. The captions used herein are provided only as a matter of convenience and for reference and in no way define, limit, or describe the scope of this Lease or the intent of any provision thereof.

29. Liability for Previous Operations and Indemnification. Lessor shall indemnify and hold Lessee and the managers, directors, officers, shareholders, members, employees, and agents of Lessee harmless from all loss, costs, and expense, including reasonable attorneys and paralegals fees at all levels of proceeding; including appeals, resulting from claims asserted against Lessee relative to Lessor's previous operation of the facility prior to Co:tntnencement Date of this Lease. Lessor shall be responsible for but not limited to, insured and uninsured claims, personal injuty, medical malpractice or other tort claims and any and all claims against the Lessee by any person, firm, entity or governmental agency relating to Lessor operations prior to the Commencement Date of this Lease. Lessor shall be liable for, and shall make prompt payment to Lessee of any charge backs or audit adjustments, etc. related to third party payor programs, including Medicare and Medicaid for periods prior to the Commencement Date of this Lease.

30. Schedules and Exhibits. The schedules, exhibits and addenda, if any, attached to this Lease are by this reference made a part hereof.

[signatures on following page]

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IN WITNESS WHEREOF, the parties have executed this Lease on the respective dates indicated below:

LESSEE

CHRISTIAN CARE CENTER OF WASHINGTON COUN1Y, LLC

By ~L lJtd[ NameT-tawest, Secretaty

Date of Execution Al ByLessee: lllftlij /~ JPZO

5/1/2020

Lease (\VCR.EI to CC\'v') (050120)

LESSOR

WASHINGTON COUN1Y REALE STATE INVESTORS, LLC

s, Chief Manager

Date of Execution/""' / By Lessor: :, - -

Pngcl4 of15

96

""'l:lifl""'

PROPOSED 29,846 SQ. FT. FACILITY 63 TOTAL BEDS CONSISTING OF: 16 PRIVATE ROOMS 23 SEMI-PRIVATE ROOMS 1 BARIATRIC ROOM

N

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97

ken 1\955 ARCHITECTS-architects + planners

210EastWataugaAvenue Tel: 423-929-2191 Johnson City, TN 37601

www.ken~.com

April 10, 2020

RE: Christian Care Center of Boones Creek

To Whom It May Concern:

We verify that the Estimated Construction Cost of $7,176,165 is reasonable for this facility.

This proposed facility will be designed and constructed to comply with the Building Codes adopted by Tennessee State Health Department (Department of Tennessee Health Care Facilities) listed below:

2012 International Building Code 2012 International Fuel Gas Code 2012 International Fire Code 2012 International Mechanical Code 2012 International Plumbing Code ' 2012 NFPA 1, excluding NFPA 5000 2012 NFPA 101 Life Safety Code 2011 NFPA 70 National Electrical Code 2012 International Energy Conservation Code 2010 ADA Standards for Accessible Design 2018 FGI Guidelines for Design and Construction of Healthcare Facilities

Respectfully,

Ken Ross

KR/js

Cc: Edward Sorrell

Attachments: Concept Site Studies Concept Building Plan


98

Apl'il 30, 2020

Washington County Real Estate Investors, LLC

2020 Northpark, Suite 2D

Johnson City, TN 37604

Deat· Mr. Lewis,

We have had favorable preliminary discussions with Washington County Real Estate

Investors, LLC regarding the pla1med construction of a 63 bed, skilled nursing facility in Johnson

City, TN. Based on those discussions a proposed loan amountof$7,176,l65 is being

considered, with an interest .rate of 4.25%. The proposed loan terms will consist of interest

only during the constrnction period of 18 months, then converting to monthly principal and

interest payments based on a 20 yem· amortization. These p1'0posed terms are subject to the

issuance of a Replacement Facility Certificate of Need and the standard restl'ictions and

conditions of a Commitment Lettet·.

Sincerely,

~w~ Scarlett M. Dale, SVP Carter County Bank A Division of Bank of Tennessee

866,378.9500 P . carlorcountybank.com Cnrler Counly Oahk Is ,


99

April 30, 2020

Christian Care Center of Washington County, LLC

2020 Northpark, Suite 2D

Johnson City, TN 37604

Dear Mr. Lewis,

We have had favorable preliminmy discussions with Christian Cal'e Center of Washington

County, LLC regarding a one (l) year renewable Operating Line of Credit for the operation of

a 63-bed Skilled Nursing Facility in Johnson City, TN .. Based on those discussions a proposed

loan amount of $1,000,000 is being considered, with an interest rate of Wall Street Journal

Prime, subject to the issuance of a Replacement Facility Certificate of Need and the standard

restrictions and conditions of a Commitment Letter.

Sincerely,

¢1~~ Scarlett M, Dale, SVP Carter County Bank A Division of Bank of Tennessee

806,378.9500 P.O. !lox 1990 Elizobolhlon, TN 37644

cartotcounlyll:ink.com Carlt'.!1 Counl,i Bank Is a Division of Unnk ol To1Hrnssoe t.tomher fOIC

100

STATE OF TENNESSEE

COUNTY OF M,/11 't,4/c,/J __,

AFFIDAVIT

Al) ,/4 P ~ J.kd , being first duly sworn, says that he/she is the applicant named in this application or his/her lawful agent, that this project will be completed in accordance with the application, that the applicant has read the directions to this application, the Agency Rules, and T.C.A. §68-11-1601, et seq., and that the responses to questions in this application or any other questions deemed appropriate by the Tennessee Health Services and Development Agency are true and complete.

Nam~f>AAC 5et:ff!ar7 . t!f'IJ

Title 1

Sworn to and subscribed before me this the I y+h day of M ~ and for W ?i.Sh119 h:>n County, Tennessee.

, 2020 a Notary Public in

~ ~~

Notary Public

M C . . E . ~U/'Y\ h-uv IC/ ' 2D l3 y omm1ss10n xp1res: _________ _

SUPPLEMENT AL RESPONSES


FOR

CHRISTIAN CARE CENTER OF WASHINGTON COUNTY


Project No .. CN2005-0l 7


May 28, 2020

Contact Person:



615-724-3247

101

Christian Care Center of Washington County CN2005-017 Supplemental Responses Page 1

1. Section A, Executive Summary, Overview, A.1. Description and A.2,Ownership, Page 2

Please prove a copy of the letter from the Tennessee Department of Health placing the license of John M. Reed Health and Rehabilitation into an inactive status.

A copy of the letter is extending the Inactive Status of the license through the October 2020 meeting date of the Board for Licensing Health Care Facilities (BLHCF) is attached following this response. The applicant does not have a copy of the letter which originally approved the Inactive Status.

Please provide a copy of the letter from the Department of Health thereby recognizing the applicant as the holder of the inactive license formerly issued to Family Ministries John M. Reed Nursing Center.

A copy of the letter is attached following this response.

43528019 vi

102

Department of

.Health

April 23, 2020

Risk Management Christian Care Center of Washington County 2020 Northpark, Suite 2D Johnson City, TN 37604

Dear Lisa Cawood:

License number 293 has been issued due to the change of ownership for Christian Care Center of Washington County, LLC doing business as (d/b/a) Christian Care Center of Washington County located at 124 John M. Reed Home Road, Limestone, Tennessee 37681; effective April 21, 2020. The previous owner of the facility was Family Ministries John M. Reed Center, LLC d/b/a Family Ministries John M. Reed Center, LLC. The owner of the facility is Christian Care Center of Washington County, LLC d/b/a Christian Care Center of Washington County.

The administrator of this facility is TBD (Inactive Status).

An updated license will be forwarded to your facility within the next seven to ten business days.

For certification purposes, please be advised that it is your responsibility to contact your Health Care Facility's regional office to make changes to your Medicare/Medicaid participation including a name change of the facility. The East Tennessee Regional Office' phone number is 865-594-9396.

Please contact me ifl can be of further assistance.

Sincerely,

Eddie J. Stewart Health Facilities Program Manager

Office of Health Care Facilities Licensure Unit

cc: East Tennessee Regional Administrator Amanda Schaefer, Medicaid Provider Enrollment Health Services and Developmental Agency Nerissa Harvey, Policy Planning and Assessment Philip Q. Lester, TennCare Office of Health Statistics Kay Ulmer, Office of Health Finance and Administration THCA Plans Review Information Technology Services Division

Division of Health Licensure and Regulation • Office of Health Care Facilities, 665 Mainstream Drive Second Floor• Nashville, TN

37228-1254 Phone: 615-741-7221/Fax: 615-253-8798

103

Department of

iiiiiiiiiiii ..... Health

October 16, 2019

( Via email: _ftog{or@l,wr.com)

Jerry W. Taylor Attorney Burr/Forman, LLP 222 Second Avenue South, Suite 2000 Nashville, TN 37201

RE: Waiver Request: Family Ministries John M. Reed Center, Limestone, License #293-Inactive Status Extension

Dear Mr. Taylor:

The Board for Licensing Health Care Facilities met on October 2, 2019. The following request was granted:

TO ALLOW FAMILY MINISTRIES JOHN M. REED CENTER, LIMESTONE, LICENSE #293,

TO BE GRANTED AN INACTIVE STATUS EXTENSION FOR THEIR LICENSE FOR AN

ADDITIONAL TWELVE (12) MONTHS UNTIL THE OCTOBER 7,2020 BOARD FOR

LICENSING HEALTH CARE FACILITIES MEETING.

Board action was taken in accordance with Section 68-11-206, Chapter 11, Tennessee Code Annotated, which gives the Board authority to place a license in an inactive status for a period determined by the Board upon finding that:

• the licensee has a need to temporarily suspend operations;• the licensee intends to continue operations for a period of suspension.

Any facility that has not placed its license back in an active status before the expiration of the inactive timeframe will then notify the Board for Licensing Health Care Facilities in writing requesting an extension. The inactive status extension request will be presented at the next scheduled Board meeting.

Facilities that have been granted an inactive status and who are now wishing for their license to be placed back in an active status shall notify the Board for Licensing Health Care Facilities in writing that they are now meeting all

. / rcquir me11ts.

s;n e1dy, L � 0 �- r/

£.h�fl� 0eed, RN. J� Director of Licensure Division of Health Care Facilities

ARR/weh

cc: ETRO Lonnie Matthews Trent Sansing Cheryl Hines Dolores Willis Philip._Q.._Le.s� ..... · ----------· Fiilavision of Health Licensure and Regulation • Office of Health Care Facilities

665 Mainstream Drive• Second floor· Nashville, Tennessee• 37243

104

Christian Care Center of Washington County CN2005-017 Supplemental Responses Page2

43528019 vl

Please provide a description of the amenities provided by the proposed facility that promotes resident independence, organized activities, resident privacy, and a residential home•like environment, while at the same time maximizing safety. Also, please provide a brief description of the physical plant and the type of rehabilitation services available.

Christian Care Center of Washington County (CCCWC) will offer a wide range of services and conveniences, all of which are designed to provide the best care possible, and stimulate and enrich the lives of its residents.

Highlights of services and special amenities provided include:

• Skilled and Intermediate Nursing Care• Private and Semiprivate Rooms• On-Call Physician Services• Licensed Nursing Staff• Social Services• Physical, Speech and Occupational Services• Restorative Program• Pharmacy Services• Hospice and Respite Services• Beauty and Barber Shop Services• Laundry Services• Daily Recreational Activities• Group Outings

Please list the 10 nursing homes owned by the applicant. In the listing, please indicate if the applicant owns and/or manages each facility through common ownership.

The number of facilities owned in whole or in part by J. R. (Randy) Lewis and/ or managed by Care Centers Management Consultants, Inc. is 10 in Tennessee and 1 in Kentucky. Care Centers Management Consulting, Inc. has management consulting agreements with all of these. The ownership percentages held by J. R. (Randy) Lewis in each are reflected below.

Sweetwater Nursing Center, Inc. d/b/ a Sweetwater Nursing and Rehabilitation Center 978 Highway 11 South Sweetwater, TN 37874 Description: Skilled Nursing Facility Ownership: 60%

Christian Care Center of Bristol, LLC 2830 Highway 394

105

. .


Bristol, TN 37617 Description: Skilled Nursing Facility Ownership: 60%

Agape Nursing & Rehabilitation Center, LLC 505 North Roan Street Johnson City, TN 37601 Description: Skilled Nursing Facility Ownership: 60%

Oaktree Health and Rehabilitation Center, LLC dba Christian Care Center of Memphis 6500 Kirby Gate Boulevard Memphis, TN 38119 Description: Skilled Nursing Facility Ownership: 50%

Christian Care Center of McKenzie, LLC 14510 Highway 79 McKenzie, TN 38201 Description: Skilled Nursing Facility Ownership: 50%

Christian Care Center of Unicoi County, LLC 100 Greenway Circle Erwin, TN 37650 Description: Skilled Nursing Facility Ownership: 100%

K.D.M., Inc.,d/b/ a Durham-Hensley Health and Rehabilitation55 Nursing Home RoadChuckey, TN 37

6

41Description: Skilled Nursing FacilityOwnership: 0%Managed facility only

Ivy Hall Nursing Home 301 South Watauga Avenue Elizabethton, TN 37643 Description: Skilled Nursing Facility

43528019 vi

106

Christian Care Center of Washington County CN2005-017 Supplemental Responses Page4

Ownership: 0% Managed facility only

Cornerstone Village 2012 Sherwood Drive Johnson City, TN 37601 Description: Skilled Nursing Facility Ownership: 0% Managed facility only

Agape Nursing and Rehabilitation Center, LLC 505 North Roan Street Johnson City, TN 37604 Description: Skilled Nursing Facility Ownership: 60%

Christian Care Center of Kuttawa, LLC 1253 Lake Barkley Drive Kuttawa, Kentucky 42055 Description: Skilled Nursing Facility Ownership: 100%

In addition to these operational facilities, Mr. Lewis holds 100% ownership in two facilities for which he has received a CON to relocate and replace, and those projects are underway. These are Christian Care Center of Medina (CN1802-006A), and Christian Care Center of Bolivar (CN1712-036A).

What is the distance from 124 John M. Reed Nursing Home Road Limestone, TN to 2434 Boones Creek Road, Johnson City, TN 37615?

14.4 miles via Hwy. 321, according to Google Maps.

2. Section A, Executive Summary, Rationale for Approval (Need), Item 3.B.1 Page4

43528019 yj

It is noted by the applicant the former owner struggled with NF compliance issues and was decertified by Medicare in approximately 2017. However, please provide a history since 2015 of John M. Reed Health and Rehabilitation that will allow the Agency insight into events that has affected past utilization. Please include the following:

107

•

Christian Care Center of Washington County CN2005-017 Supplemental Responses Page�

43�28019 vi

The applicant acquired this facility in April of 2020. Prior to that time, the applicant had no affiliation or association with the facility or its former owner. With the exception of a couple of items as noted below, the inf01,mation and/ or explanations requested are not within the possession or knowledge of the applicant.

• 2014 Joint Annual Report-15,720 Level I days, 2,880 Level II SkilledNursing Days-82.9% OccupancyThe applicant does not know.

• Please provide the results of a December 2015 State SurveyThe applicant does not know and/ or it is not available to applicant.

• 2015-No Joint Annual Report Filed (reason(s) not filed)The applicant does not know.

• December 2015-The Johnson City Press reports John M. Reedtransferred all but 12 private pay residents to other Washington CountyFacilities. Please address.The applicant has no further information.

• 2016-No Joint Annual Report Filed (reason(s) not filed)The applicant does not know.

• 2017-Please provide documentation of Medicare decertification that wasmentioned in the application on page 3.

The applicant does not have copies of any source documentation of this. A copy of a newspaper article describing the decertification is attached following this response.

108

L

5/27/2020 John M. Reed Facility Found Deficient I Local News I greenevillesun.com

https://www.greenevillesun.com/news/locaLnews/john-m-reed-facility-found

deficient/article_f5294cfb-a9f5-5c7f-8575-0b9l2cle6032.html

John M. Reed Facility Found Deficient

Ken Little

Dec 4, 2015

The federal government has ended its Medicare/Medicaid provider agreement with the John M. Reed Health & Rehabilitation nursing home in Limestone, citing numerous patient care deficiencies.

O.J. Early

The federal government formally terminated its Medicare/Medicaid provider

agreement with the John M. Reed Health & Rehabilitation facility in Limestone on

Nov. 28 following a detailed review noting deficiencies that could potentially affect

the health of residents, placing some in "immediate jeopardy."

-

https:/IW'MN.greenevillesun.com/news/local_newsljohn-m-reed-facility-found-deficienVarticle_f5294cfb-a9f5-Sc7f-8575-0b912c1e6032.html 1/6 109

=---

~~

5/27/2020 John M. Reed Facility Found Deficient I Local News I greenevillesun.com

Deficiencies found at the facility at 124 John Reed Horne Road were identified during

a complaint investigation started on Oct. 14 and during a joint rectification and

licensure survey started on Nov. 2.

"The Centers for Medicare and Medicaid Services has determined that [Reed] is not

in compliance with the requirements for participation. The Medicare/Medicaid

program will not make payment for in-patient nursing services to residents who are

admitted after Nov. 28," according to a public notice published in The Greeneville

Sun.

For residents admitted before Nov. 28, "payment may continue for a maximum of 30

days for nursing services;' the notice states.

The state Department of Health served as the state survey agency for the federal

Centers for Medicare and Medicaid Services, a division of the Department of Health

& Human Services.

SURVEY FINDINGS

The survey revealed a series of "deficient practices" at the facility. Among its

conclusions were that the facility failed to:

* "recognize concerns and implement interventions in the area of quality of care."

* "ensure timely incontinence care and repositioning."

* "prevent traumatic penile and urethral injuries."

* "prevent avoidable pressure ulcers and excoriation."

* prevent "repeated urinary tract infections."

-

https://www.greenevillesun.com/news/local_news/john-m-reed-facility-found-deficienUarticle_f5294clb-a9f5-5c7f-8575-0b912c1e6032.html 2/6 110

5/27/2020 John M. Reed Facility Found Deficient I Local News j greenevillesun.com

* "administer antibiotics as ordered by the physician."

* "maintain dignity by ensuring residents are dressed in their own personal clothing."

In the area of nursing services, the John M. Reed Home "failed to recognize concerns

and implement interventions."

"The facility failed to ensure nursing staff to repeatedly meet the needs of the

residents;· the survey stated.

In one instance, a housekeeper who is not a certified nursing assistant told survey

interviewers that she checked vital signs of patients one night in November due to a

staffing shortage.

The employee "confirmed she is assigned or pulled to work the floor when the

facility is short of CNAs."

There are several instances noted of patients who developed sacral pressure ulcers

"from untimely incontinence care and repositioning, and (not addressing) avoidable

urinary tract and pressure ulcer infections" in some patients, according to the

survey.

The facility also "failed to prevent repeated medication errors by not transcribing

and administering medications for infectious processes, as ordered."

OTHER DEFICIENCIES

The state recertification and licensure survey found a series of potentially dangerous

building and maintenance deficiencies in the Reed facility.

-

https://www.greenevillesun.com/news/local_news/john-m-reed-facility-found-<leficienl/article_f5294cfb-a9f5-5c7f-8575--0b912c1e6032.html 3/6 111

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8019

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112

..


Sweetwater Nursing and Rehab Center 3 3 2 4

Durham Hensley Health and Rehab 3 4 2 1

Christian Care Center of McKenzie 2 2 3 2

Christian Care Center of Memphis 3 3 2 4

Christian Care Center of Kuttawa 2 2 2 3

Average of Total Nursing Homes 3.1 3 2.3 3.4

Please note that Cornerstone Village shows a 2 star overall and this is mainly due to a bad survey on 5/17/2017, which was prior to Care Centers Management Consulting being affiliated with them in a management consulting agreement. They have had 2 good annual surveys since the bad annual survey. One more good survey will drop the bad survey off the report and significantly help their health inspection and overall star rating. Their Quality Measures is 5 stars which is an indication of how they are performing now. They achieved.Joint Commission Accreditation on February 24, 2020. Only 6 percent of all nursing homes in the United States have achieved this status.

Christian Care Center of Unicoi also carries a bad survey from a time prior to Care Centers Management Consulting being affiliated with the facility. They had a bad survey on 5/3/2017. Since then, they have had 2 good surveys and when they have one more good survey, their health inspection and overall star rating will increase as the bad survey will drop of from their record. They are scheduled for Joint Commission Accreditation Survey in June, 2020.

Christian Care Center of McKenzie is carrying a survey with more than the average number of tags from 3 annual surveys ago on March 6, 2018. The facility has had two very good surveys since and one more good survey will drop the bad survey off increasing their health inspection and overall star rating. They achieved Joint Commission Accreditation on July 30. 2019.

4. Section A, Project Details, Item 6A. Legal Interest, Page 6

Please provide a copy of the title/deed that confirms site control.

A copy of the deed is attached following this response. Since the 1953 conveyance reflected in this deed, James D. Saylor died. His will identified Ben Saylor and Jerry Saylor as co-executors and beneficiaries, which is why they are listed as sellers (in both capacities) in the Contract for Sale of Real Estate to WCREI.

43528019 vi

113

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115


43528019 vi

The lease for a 63-bed nursing facility is noted. However, please clarify if the lease is a turnkey lease.

We are not certain what is meant by "turnkey lease." The lessor will have all duties and obligations normally ascribed to a commercial landlord ( e.g., delivering the premises in a commercially acceptable and usable condition and responsibility for major repairs and maintenance). The lessor will also be responsible for purchasing the needed FF&E (including medical equipment), which will be installed pursuant to the construction contract by the lessor's builder. The applicant/lessee, with the assistance of the consulting company, will be responsible for talking all steps needed to make the facility compliant with clinical licensing standards.

What party is responsible for the construction of the proposed 63-bed nursing home and where is that documented?

The building will be constructed by Washington County Real Estate Investors, LLC (WCREI). This company is wholly owned by J. R. (Randy) Lewis.

The fact that WCREI will construct and own the building is verified in a revised letter from Ken Ross, the project architect, attached following this response.

116

,

l<en �'55 ARCHITECTS-

architects + planners

21 O East Watauga Aven11e Johnson Oty,TN 37601

Te,!: 423-929·2191

www..ke n�.eom

May 21, 2020

Washington County Real Estate Investors 2020 North Park Drive Johnson City, TN 37604

RE: Christian Care Center of Washington County

To Whom It May Concern:

Washington County Real Estate Investors intends to construct a building consisting of approximately 30,238 square feet on a lot it is acquiring, located at 2234 Creek Road.

The construction of a new 63 bed, 29,846 SF nursing home consisting of 16 Private Rooms, 23

Semi-Private Rooms, 1 Bariatric room, in resident room toilets, Physical Therapy, Nurse's Stations, Central Baths, Activity Room, Kitchen, Dining Room, Laundry, and Support Offices. Project inciudes site preparation and parking for said facility.

We verify that the Estimated Construction Cost of $7,176,165 is reasonable for this facility.

This proposed facility will be designed and constructed to comply with the Building Codes adopted by Tennessee State Health Department (Department of Tennessee Health Care Facilities) listed below:

2012 International Building Code 2012 International Fuel Gas Code 2012 International Fire Code 2012 International Mechanical Code 2012 International Plumbing Code 2012 NFPA 1, excluding NFPA 5000 2012 NFPA 101 Life Safety Code 2011' NFPA 70 National Electrical Code 2012 International Energy Conservation Code 201 0 ADA Standards for Accessible Design 2018 FGI Guidelines for Design and Construction of Healthcare Facilities

Respectfully,

Ken Ross

KR/pr

Cc: Edward Sorrell

117

. ...

•

Christian Care Center of Washington County

CN2005-017 Supplemental Responses Page 9

5. Section A.12 (Square Footage and Cost Per Square Footage Chart, Page 11

43528019 vi

Please discuss the reason(s) construction costs of $237.32 are above the 3rd quartile construction costs of $188.39 SF for similar statewide nursing home projects from 2016-2018.

Please see a responsive letter from Ken Ross, the project architect, attached following this response.

118

..

May 22, 2020

!<en�% ARCHITECTS=

architects + planners

210£.astWatauga Avenue Tei: 423-929-2HJ1 Johnson City, TN 37601

www.ke�.com

Mr. Edward Sorrell Care Centers Management Consulting, Inc. 2020 Northpark, Suite 2D Johnson City, TN 37604-3127

RE: Christian Care Center of Washington County

Mr. Sorrel.I:

In response to Item 5, Section A-12 of the letter from the State, we offer the following

information:

Currently, we have two (2) nursing homes that recently started construction as follows:

• Christian Care Center of Bolivar, TN - New Construction29.846 square feetTotal Costs: $6,571,680Total cost per square foot is $220.19Deduct Slte Work costs of $892,624 and the building square foot cost is $190.28

Total Beds: 67These costs also include kitchen and laundry equtpment of about $200,000The exterior is vinyl siding

• Christtan Care Center of Medina, TN - New Construction29,84.6 square fe.etTotal Costs: $6,759,952Tota1 cost per square foot is .$226.50Deduct Site Work costs of $1,100,000 and the building square foot cost rs $189-64Total Beds; 66These costs als"O include kitchen and laundry equipment of about $200,000The exterior is vinyl siding

The nursing home in Washington County is 29,846 square feet and the total cost is $7,176,165, That is $237.32 per square foot. If you deduct the slte costs of $1,220,000, that results in a building costs of $199.56 per square foot. This project also includes kitchen and laundry equipment costs of $200,000. This project is situated in an Overlay District which requires brick that results in additional costs.

Th:e square foot costs of $188.29 cited in the fetter from the State does not mention whether the costs include site work or kitchen and laundry equipment. Also, that cost is an average from 2016 to 2018 which makes that average 2 to 4 years old.

119

. -

r

•

•

.. .,.

•

Mr. Edward Sorrell Ca.""e Centers Management Consulting, Inc. RE: Christian Care Q..-nter of Washington County Pai:,>e 2

We have bid numerous projects in the past 2 years and we have seen a price increase of 15%-20% since 2018. To verify this, we- talked to four (4) contractors today and they an agreed with that increase· for our area.

Also, smaller nursing homes, will cost more per square foot than larger ones because you still

need a .kitchen, laundry and other support areas that drive the costs up.

Hopefully, this answers your question.

Respectfully,

Ken Ross

120

,.

KR/pr


6. Section A.12.A, Page 12

Describe the construction associated with the proposed project.

A general description the building to be constructed is included in a letter from Ken Ross, the project architect, attached following the response to Question 4.

7. Section B, Need, Item A (Specific Criteria-Construction, Renovation, Expansion,and Replacement) 2.b. Pages 13-14

It is noted the applicant will be dually certified for Medicare and Medicaid/fennCare. In addition, the applicant has only provided 1,7� Level I-Intermediate Care Days since 2015 and no Level II Care Skilled Nursing Care.Why is there a need for the proposed project while it appears the applicantclosed in December 2015 and transitioned a majority of patients to otherfacilities, has been providing no Level II Skilled Nursing Care, and apparentlynot operating in the last three years? What is the latest Tennessee Departmentof Health Washington County Nursing Home Bed Need?

This faciity has been licensed and its beds have been in the service area for many years. For that reason the need for additional beds is not an issue since the need for the beds has been previously determined, and the bed need formula" -- which obviously addresses the need for additional beds -- is not applicable. Since the facility has temporarily _ceased operations, the need for the replacement facility and the services the facility provides is a relevant inquiry.

There is always a need, when possible, to substitute ownership and/ or management of an under-performing and lower quality facility for new ownership and management which has a track record of turning around such underperforming facilities. Mr. Lewis and Care Centers Management Consulting Group have such a track record.

The most obvious example is Cornerstone Village, a 103 beds skilled nursing faciity in Washington County. Shortly after entering into a management consulting arrangement with Cornerstone effective in April of 2019, it was discovered the facility was on the CMS list of "Special Focus Facilities" (SFF). This designation means it was one of the worst performing Medicare certified SNFs in terms of Medicare compliance. Due in large part to CCMC' s expertise and experience, on February 25, 2020 Cornerstone obtained Joint Commission accreditation, placing in the top 6% of facilities in the country.

43528019 vi

121

•


There is also a strong need for new replacement facilities as SNFs across the state age and are increasing! y unable to provide environments that are the most comfortable and pleasing for patients and their families. Mr. Lewis and CCMC likewise have significant experience in acquiring older facilities and relocating and replacing them with nice up to date facilities with many amenities. Examples include Christian Care Center ("CCC") of Memphis, CCC of Bristol, and CCC of Johnson City (sold in 2016). In addition to those completed relocation and replacement projects, they hold CONs for the relocation and replacement of CCC of Medina (CN1802-006A), and CCC of Bolivar (CN1712-036A).

Please complete the following table for licensed nursing homes located in Washington County:

2020 2016 2017 2018 '16- 2016 2017 Lic'd. Pat. Pat. Pat. '18% 0cc. 0cc.

Nursing Home Beds Days Davs Davs Change % %

Agape Nursing & Rehab 84 N/R N/R N/R N/A N/A N/A Cornerstone Village 103 N/R N/R N/R N/A N/A N/A Four Oaks Health Care Center 84 28,158 27,038 28,027 0% 92% 88%

Lakebridge, A Waters Community 109 21,066 34,269 35,143 67% 53% 86%

Life Care Center of Gray 133 33,626 32,394 30,203 -10% 69% 67%

NHC Healthcare 167 50,744 53,438 54,111 7% 83% 88%

Princeton Transitional Care 47 10,105 8,840 10,169 1% 59% 52%

The Waters of Johnson City 84 N/R N/R N/R N/A N/A N/A Total (of reporting- facilities) 811 143,699 155,979 157,653 10% 49% 53%

"N/R" means no Joint Annual Report is on file for a facility with this name. Source: Joint Annual Reports

The 2018 average occupancy rate for Washington County is most likely higher than 53%. The county wide average is held down due to the 3 non-reporting facilities.

8. Section B, Need, Item 6., Page 17

Your response to this item is noted. Please complete the following charts:

43528019 vl

2018 0cc. %,

N/A N/A 91%

88%

62%

89%

59%

N/A 53%

122

Christian Care Center of Washington County

CN2005-017 Supplemental Responses Page 12

Projected Utilization

Year Licensed *Medicare- SNF Level 2 SNF Non- Total Licensed

Beds certified Medicare Medicaid All Skilled ADC Occupancy

beds ADC ADC other ADC %

Payors ADC

1 63 63 3.7 2.8 0.0 24.7 31.2 49.5%

2 63 63 10.6 3.8 8.5 33.8 56.7 90.0%

.. Includes dually-certified beds

The oatients that went to Familv Ministries Tohn M. Reed Nursin� Center have obviouslv found a different alternative. Is 90% occupancy realistic by Year 2? Provide calculations that leads to this projection.

Yes. The owner and management consulting company affiliated with the aoolicant have substantial experience in financial and oualitv-of-care turnarounds, and relocation/replacements of distressed and/ or outdated nursing homes in Tennessee. Based on its experience with SNFs in Tennessee, the applicant is confident the fill rate and resulting 90% occupancy by Year 2 are reasonable.

9. Section B. Economic Feasibility, Item I.A, Project Cost Chart, Page 17

The Letter of Intent indicates the project cost at $10,500,000. However, theProject Cost Chart total is $10,073,240.54. Please clarify.

The published estimated cost is intended as a "not to exceed" figure, to allow forflexibility in determining the final estimated cost included on the Project CostChart.

10. Section B. Economic Feasibility Item 1.D. Total Construction Cost, Page 18

The Total construction cost reported on line 5 in the Project Cost Chart does notequal the Total Cost reported in the Square Footage Chart. Please clarify.

The construction cost in the Square Footage Chart includes site preparation,whereas those two figures are itemized separately on the Project Costs Chart.

11. Section B. Economic Feasibility Item 1.E., Architect's Letter, Page 18

The Architect's letter is noted. However, the letter pertains to Christian CareCenter of Boones Creek. Please clarify.

43528019 vl

123

Christian Care Center of Washington County CN2005-017 Supplemental Responses

Page 13

The letters from the architect attached after the responses to Questions 4 and 5 refer to the correct name of the project.

12. Section B, Economic Feasibility, Item 5.C., Page 26

Please identify Nursing Home A, B, and C.

Nursing Home A is Life Care Center of GrayNursing Home B is Four Oaks Health Care CenterNursing Home C is NHC of Johnson City

13. Section B, Economic Feasibility, Item 6.C., Page 27

Since the applicant will be financing the project with a commercial loan, pleaseprovide a capitalization ratio from the most recent year available from theparent company.

There is no parent company of Christian Care Center of Washington County, LLC.It is a sole member limited liability company.

14. Section B. Quality Standards, Item 2.A.4, Page 30

What date did the former owner voluntarily place the license on inactive status?

The applicant does not know what date the license was originally placed onInactive Status. It was inactive as of the date the applicant was in negotiations topurchase the facility, and that ran through October, 2019. On September 9, 2019 arequest was made to the Board for Licensing Health Care Facilities (BLHCF) toextend the Inactive Status through October 2020. This request was approved bythe BLHCF on October 2, 2019.

Please provide a copy of the August 28, 2018 suspension of admission orderfrom the Tennessee Department of Health.

A copy of the Notice of Suspension of Admissions is attached following thisresponse.

43528019 vl

124

. ,

'

..

BEFORE THE COMMISSIONER OF THE TENNESSEE DEPARTMENT OF HEAL TH

IN THE MATTER OF:

FAMILY MINISTRIES JOHN M REED CENTER, 124 JOHN REED HOME ROAD LIMESTONE, TN -37681

License No. #293

) )

LLC)

)

)

)

) BY ORDER OF THE COMMISSIONER

NOTICE OF SUSPENSION OF ADMISSIONS

On February 28, 2018 through March 6, 2018, a Department of Health (hereinafter "Department")

survey team conducted complaint survey at Family Ministries John M Reed Center, LLC in Limestone,

Tennessee (hereinafter "Family Ministries"), pursuant to T.C.A. § 68-11-210. The investigation was

completed on March 22, 2018.

The investigation and survey revealed violations of licensure statutes and regulations that are

considered detrimental to the health, safety, or welfare of the residents.

Pursuant to T.C.A. §68-l 1-207(b), whenever the Commissioner of the Department of Health

(hereinafter "Commissioner") determines that conditions in a nursing home are, or are likely to be,

detrimental to the health, safety, or welfare of the residents, the Commissioner shall have the authority to

suspend new admissions of residents to the facility, pending a prompt hearing.

125

Pursuant to T.C.A. §68-11-801, the Commissioner has the authority to impose civil monetary penalties

upon deficient nursing homes. Further, pursuant to T.C.A. §68-11-802, the Commissioner has the authority

to impose a Type A Civil Monetary Penalty upon a nursing home when the penalty assessment is

accompanied by an Order suspending admissions pursuant to T.C.A. §68-l l-207(b).

Based upon the surveyors' findings and recommendations, the Commissioner has exercised the

authority to suspend admissions to the facility, effective March 22, 2018, at 5:00 p.m. Further, the

Commissioner has concluded that a Type A Civil Monetary Penalty should be imposed upon this facility.

The facility was orally advised and provided written notification of the possible imposition of a Type

A Civil Monetary Penalty when surveyors exit the facility on March 6, 2018 and by letter from the

Commissioner dated March 22, 2018 in conjunction with the Commissioner's notification of the Suspension

of Admissions imposed upon the facility, appended hereto as Attachment 1.

FACTS

A detailed statement describing the findings of the survey with particularity and citing the law with

specificity, pertaining to the Suspension of Admissions and the assessment of a Type A Civil Monetary

Penalty, is appended hereto as Attachment 2 and incorporated by reference herein. Attachment 2 is the

licensure "Statement of Deficiencies" compiled by the surveyors upon completion of the survey.

126

SUSPENSION OF ADMISSIONS AND ASSESSMENT OF TYPE A CIVIL MONET ARY PENAL TY

Therefore, pursuant to T.C.A. §§68-11-207(b) and based upon the aforementioned facts and

incorporated by reference herein, the Commissioner has ordered that the admission of new residents at

FAMILY MINISTRIES be suspended, effective on March 22, 2018 at 5:00 p.m. Pursuant to T.C.A. §§68-11-

801 and 68-11-802, the Commissioner hereby assesses three (3) Type A civil monetary penalties in the amount

of three thousand dollars ($3,000.00) for the standard of Basic Services [Nursing Services}, and one thousand

five hundred dollars ($1,500.00) each for the standards of Basic Services [Medical Records] and Basic Services

[Pharmaceutical Services] against FAMILY MINISTRIES for a total of six thousand dollars ($6,000.00).

The violations which the Commissioner considers to be detrimental to the health, safety, or welfare of

the residents are the serious violations of, Basic Services - [Nursing Services], Basic Services - [Medical

Records] and Basic Services - [Pharmaceutical Services].

In order for this Suspension of Admissions to be lifted, the cited conditions must be corrected so as to

remove the detriment to the health, safoty, or welfare of the residents, as verified by u foliow-up survey of the

facility conducted by the Department.

Pursuant to T.C.A. §68-11-221, which provides that whenever admissions at a health care facility are

suspended under the authority of T.C.A. §68-11-207, the Commissioner shall appoint one or more special

monitors if the deficiencies threaten serious bodily harm to the residents at the facility, the Commissioner

hereby appoints a monitor or monitors to be present in the facility for a minimum of twenty (20) hours per

week in order to observe the operation of the facility and to submit written reports on the operations of the

127

..

facility to the Department. The monitor(s) shall have the power to observe and review all of the facility's

operations with attention to those aspects for which the Suspension of Admissions was imposed. The facility

shall be liable for the cost of the special monitor(s) until it is determined by the Department that all the

deficiencies which caused the appointment of the monitor(s) have been corrected.

The facility's attention is directed to the statement of its rights in this matter, appended hereto as

Attachment 3.

The facility is hereby ordered to post a copy of this Notice and Order, pursuant to the rules of the Board

for Licensing Health Care Facilities Rule 1200-08-11-.03(5) upon the public entrance doors of the facility and

prominently display it there for so long as it remains effective. During the Suspension of Admissions, the

facility shall inform any person who inquires about the admission of a new resident of the provisions of the

order and make a copy of the order available.

This Suspension of Admissions became effective at 5:00 p.m. on March 22, 2018 and continues as

effective.

This assessment of three (3) Type A Civil Monetary Penalties in the amount of $6,000.00 shall go into

effect on the 22nd day of March 2018.

Entered this 22nd day of March 2018.

Joh11 J. Dreyzehne. MD, MPH, FACOEM Commissioner

128


15. Section B. Quality Standards, Item 2.D

For relocation and/or replacement of health care institution projects; Describehow facility and/or services specific measures will be met.

Please see the response on Replacement Page 34, attached following this response.

43528019 vl

129

AFFIDAVIT

STATE OF TENNESSEE

COUNTY OF �1119 for,..,

I, ___::.Jp...µ..;...,'-'-h�-J___:j'-------. �hi:"--·�-'¢ ___ , after first being duly sworn, state under oath that I am the applicant named in this Certificate of Need application or the lawful agent thereof, that I have reviewed all of the supplemental information submitted herewith, and that it is true, accurate, and complete.

� llk!f- . $eerdartJ {!fZJSignaturerfitle .1 �

� Sworn to and subscribed before me, a Notary Pub!ic, this the .aEJ day of �' 20 �.

witness my hand at office in the County of I.U� , State of �ennessee.

My commission expires ()lC,urLlx.n... /Cf

HF-0043

Revised 7 /02

NOTARY PUBLIC

130

SECOND SUPPLEMENTAL RESPONSES


FOR

CHRISTIAN CARE CENTER OF WASIDNGTON COUNTY


Project No. CN2005-0l 7


May 29, 2020

Contact Person:



615-724-3247

131

Second Supplemental Responses Christian Care Center of Washington County, CN2005-017 Pagel

1. Section A.12 (Square Footage and Cost Per Square Footage Chart, Page 11

It is noted the Square Footage Chart and Cost Per Square Footage Chart includes the

site preparation cost of $849,000. In addition, the architect's letter notes construction

cost includes parking. Per application instructions, please only use total construction costs of $6,327,165 in the Square Footage and Cost Per Square Footage Chart. Please

revise the chart calculations and quartiles, and submit a replacement page 11 (labeled

as 11-R).

A revised Square Footage and Cost Per Square foot Chart is attached follwing this

reponse.

2. Section B, Need, Item A (Specific Criteria-Construction, Renovation,Expansion, and Replacement) 2.b. Pages 13-14

Please complete the following table for licensed nursing homes located in Washington County from the Department of Health Joint Annual Reports. Please

note under each nursing home listed in the following chart, the licensed name the nursing home is currently listed as at the Department of Health Facilities web-site.

N�rsing Hom�

Appalachian Christian Village (a/k/a _Cornerstone Vill�ge) Asbury Place at Johnson City (a/k/a Agape Nursing & Rehab) Christian Care Center at Johnson City (a/k/a The Wat�rs C>f_Johnson City) Four Oaks Health Care Center

�- . ··- -- ...... -

Lakebridge, A Waters Community Life Care Center _of <:iray _ NHC Healthcare Princeton Transitional Care --•-- - ---•·- ... ·-

Total/Avg.

Source: Joint Annual_Reports

43560156 v1

2020

Lic'd. Beds

103

84

84 84

109 133 167 47

811

2016 2017 2018 '16- '18 Pat. Days Pat. Days P�t. Days % Change

3.Q,099

24,776

11,093 ..

28,158 21

!066

�3.!.6�6 50,744 10,1_95

209,6��

_i0,769 33,561

27,252 ?7!6�5

26,2?4 . ?�,_7�8 __ 27,038 28,027 34,269 35,143 32,394 30,20.:3 53,438 __ 54��;� __ 8,840 10,169 � -·- -

_240!2!4 2_44,657

12%

12%

132% 0%

67% -10%

7% 1%

17%

2016 2017 2018 Occ.% 0cc. % 0cc. %

--

80% 82% 89%

81% 89% 90%

36% 86% 84% 92% 88% 91% 53% 86% 88% 69% 67% 62% 83% 88% 89% 59% 52% 59% 71% 81% 83%

132

•

STATE OF TENNESSEE

COUNTY OF /l(J5/Ji'tJ1ft:Jn

AFFIDAVIT

NAME OF FACILITY: f!hnsf!0/1.. flue, &ler of #tl9Jlllq/M &tU1-fu LLe._, JI

I, -'--l/n'--·-1_f, __ 'B._._�_i_�_I: __ , after first being duly sworn, state under oath that I am the

applicant named in this Certificate of Need application or the lawful agent thereof, that Ihave reviewed all of the supplemental information submitted herewith, and that it is true,accurate, and complete.

� Sworn to and subscribed before me, a Notary Pu�lic, this the _tl_ day of � , 20 t6,

witness my hand at office in the County of W�h-w1g-+oY'\ , State of Tennessee.

NOTARY PUBLIC

My commission expires-�------'-°'- _W_� __

HF-0043

Revised 7 /02

133

LETTER OF INTENT TENNESSEE HEAL TH SERVICES AND DEVELOPMENT AGENCY

The Publication of Intent is to be published in the Johnson City Press which is a newspaper of general circulation in Washington County, Tennessee, on or before May 10, 2020 for one day.

============================================================================= This is to provide official notice to the Health Services and Development Agency and all interested parties, in accordance with TC.A. § 68-11-1601 et seq., and the Rules of the Health Services and Development Agency, that Christian Care Center of Washington County, owned by Christian Care Center of Washington County, LLC, a Tennessee Limited Liability Company, which will have a management consulting agreement with Care Centers Management Consulting, Inc., intends to file an application for a Certificate of Need for the relocation of and replacement facility for a 63 bed nursing facility formerly known as Family Ministries John M. Reed Center. The current location is 124 John M. Reed Nursing Home Road, Limestone, TN 37681. The proposed new location is 2234 Boones Creek Road, Johnson City, Tennessee, 37615. The licensed bed complement will not increase, and the beds and facility will continue to be licensed as a nursing home by the Tennessee Board for Licensing Health Care Facilities. The total estimated project cost is $10,500,000.00. The anticipated date of filing the application is May 15, 2020.

The contact person for this project is Jerry W. Taylor, Attorney who may be reached at: Burr & Forman, LLP, 222 Second Avenue South, Suite 2000, Nashville, Tennessee, 37201 , 615-724-3247; ·ta lor

Date

The published Letter of Intent contains the following statement: Pursuant to TC.A. § 68-11-1607(c)(1): (A) Any health care institution wishing to oppose a Certificate of Need application must file a written notice with the Health Services and Development Agency no later than fifteen (15) days before the regularly scheduled Health Services and Development Agency meeting at which the application is originally scheduled; and (B) Any other person wishing to oppose the application must file written objection with the Health Services and Development Agency at or prior to the consideration of the application by the Agency. =========================================================-========================== * HF0051 (Revised 05/03/04 - all forms prior to this date are obsolete)

RULES OF

HEAL TH SERVICES AND DEVELOPMENT AGENCY

CHAPTER 0720-11 CERTIFICATE OF NEED PROGRAM - GENERAL CRITERIA

TABLE OF CONTENTS

0720-11-.01 General Criteria for Certificate of Need

0720-11-.01 GENERAL CRITERIA FOR CERTIFICATE OF NEED. The Agency will consider the following general criteria in determining whether an application for a certificate of need should be granted:

( 1) Need. The health care needed in the area to be served may be evaluated upon the following factors:

(a) The relationship of the proposal to any existing applicable plans;

(b) The population served by the proposal;

(c) The existing or certified services or institutions in the area;

(d) The reasonableness of the service area;

(e) The special needs of the service area population, including the accessibility to consumers, particularly women, racial and ethnic minorities, TennCare participants, and low-income groups;

(f) Comparison of utilization/occupancy trends and services offered by other area providers;

(g) The extent to which Medicare, Medicaid, TennCare, medically indigent, charity care patients and low income patients will be served by the project. In determining whether this criteria is met, the Agency shall consider how the applicant has assessed that providers of services which will operate in conjunction with the project will also meet these needs.

(2) Economic Factors. The probability that the proposal can be economically accomplished and maintained may be evaluated upon the following factors:

(a) Whether adequate funds are available to the applicant to complete the project;

(b) The reasonableness of the proposed project costs;

(c) Anticipated revenue from the proposed project and the impact on existing patient charges;

(d) Participation in state/federal revenue programs;

(e) Alternatives considered; and

(f) The availability of less costly or more effective alternative methods of providing the benefits intended by the proposal.

May, 2017 (Revised)

CERTIFICATE OF NEED PROGRAM - GENERAL CRITERIA

(Rule 0720-11-.01, continued)

CHAPTER 0720-11

(3) Quality. Whether the proposal will provide health care that meets appropriate quality standards may be evaluated upon the following factors:

(a) Whether the applicant commits to maintaining an actual payor mix that is comparable to the payer mix projected in its CON application, particularly as it relates to Medicare, TennCare/Medicaid, Charity Care, and the Medically Indigent;

(b) Whether the applicant commits to maintaining staffing comparable to the staffing chart presented in its CON application;

(c) Whether the applicant will obtain and maintain all applicable state licenses in good standing;

(d) Whether the applicant will obtain and maintain TennCare and Medicare certification(s), if participation in such programs was indicated in the application;

(e) Whether an existing healthcare institution applying for a CON has maintained substantial compliance with applicable federal and state regulation for the three years prior to the CON application. In the event of non-compliance, the nature of noncompliance and corrective action shall be considered;

(f) Whether an existing health care institution applying for a CON has been decertified within the prior three years. This provision shall not apply if a new, unrelated owner applies for a CON related to a previously decertified facility;

(g) Whether the applicant will participate, within 2 years of implementation of the project, in self-assessment and external peer assessment processes used by health care organizations to accurately assess their level of performance in relation to established standards and to implement ways to continuously improve.

1. This may include accreditation by any organization approved by Centers for Medicare and Medicaid Services (CMS) and other nationally recognized programs. The Joint Commission or its successor, for example, would be acceptable if applicable. Other acceptable accrediting organizations may include, but are not limited to, the following:

(i) Those having the same accrediting standards as the licensed hospital of which it will be a department, for a Freestanding Emergency Department;

(ii) Accreditation Association for Ambulatory Health Care, and where applicable, American Association for Accreditation of Ambulatory Surgical Facilities, for Ambulatory Surgical Treatment Center projects;

(iii) Commission on Accreditation of Rehabilitation Facilities (CARF), for Comprehensive Inpatient Rehabilitation Services and Inpatient Psychiatric projects;

(iv) American Society of Therapeutic Radiation and Oncology (ASTRO), the American College of Radiology (ACR), the American College of Radiation Oncology (AGRO), National Cancer Institute (NCI), or a similar accrediting authority, for Megavoltage Radiation Therapy projects;

(v) American College of Radiology, for Positron Emission Tomography, Magnetic Resonance Imaging and Outpatient Diagnostic Center projects;

May, 2017 (Revised) 2



CHAPTER 0720-11

(vi) Community Health Accreditation Program, Inc., Accreditation Commission for Health Care, or another accrediting body with deeming authority for hospice services from CMS or state licensing survey, and/or other third party quality oversight organization, for Hospice projects;

(vii) Behavioral Health Care accreditation by the Joint Commission for Nonresidential Substitution Based Treatment Center, for Opiate Addiction projects;

(viii) American Society of Transplantation or Scientific Registry of Transplant Recipients, for Organ Transplant projects;

(ix) Joint Commission or another appropriate accrediting authority recognized by CMS, or other nationally recognized accrediting organization, for a Cardiac Catheterization project that is not required by law to be licensed by the Department of Health;

(x) Participation in the National Cardiovascular Data Registry, for any Cardiac Catheterization project;

(xi) Participation in the National Burn Repository, for Burn Unit projects;

(xii) Community Health Accreditation Program, Inc., Accreditation Commission for Health Care, and/or other accrediting body with deeming authority for home health services from CMS and participation in the Medicare Quality Initiatives, Outcome and Assessment Information Set, and Home Health Compare, or other nationally recognized accrediting organization, for Home Health projects; and

(xiii) Participation in the National Palliative Care Registry, for Hospice projects.

(h) For Ambulatory Surgical Treatment Center projects, whether the applicant has estimated the number of physicians by specialty expected to utilize the facility, developed criteria to be used by the facility in extending surgical and anesthesia privileges to medical personnel, and documented the availability of appropriate and qualified staff that will provide ancillary support services, whether on- or off-site.

(i) For Cardiac Catheterization projects:

1. Whether the applicant has documented a plan to monitor the quality of its cardiac catheterization program, including but not limited to, program outcomes and efficiencies;

2. Whether the applicant has agreed to cooperate with quality enhancement efforts sponsored or endorsed by the State of Tennessee, which may be developed per Policy Recommendation; and

3. Whether the applicant will staff and maintain at least one cardiologist who has performed 75 cases annually averaged over the previous 5 years (for an adult program), and 50 cases annually averaged over the previous 5 years (for a pediatric program).

U) For Open Heart projects:




CHAPTER 0720-11

1. Whether the applicant will staff with the number of cardiac surgeons who will perform the volume of cases consistent with the State Health Plan (annual average of the previous 2 years), and whether the applicant will maintain this volume in the future;

2. Whether the applicant will staff and maintain at least one surgeon with 5 years of experience;

3. Whether the applicant will participate in a data reporting, quality improvement, outcome monitoring, and peer review system that benchmarks outcomes based on national norms, with such a system providing for peer review among professionals practicing in facilities and programs other than the applicant hospital (demonstrated active participation in the STS National Database is expected and shall be considered evidence of meeting this standard);

(k) For Comprehensive Inpatient Rehabilitation Services projects, whether the applicant will have a board-certified physiatrist on staff (preferred);

(I) For Home Health projects, whether the applicant has documented its existing or proposed plan for quality data reporting, quality improvement, and an outcome and process monitoring system;

(m) For Hospice projects, whether the applicant has documented its existing or proposed plan for quality data reporting, quality improvement, and an outcome and process monitoring system;

(n) For Megavoltage Radiation Therapy projects, whether the applicant has demonstrated that it will meet the staffing and quality assurance requirements of the American Society of Therapeutic Radiation and Oncology (ASTRO), the American College of Radiology (ACR), the American College of Radiation Oncology (ACRO), National Cancer Institute (NCI), or a similar accrediting authority;

(o) For Neonatal Intensive Care Unit projects, whether the applicant has documented its existing or proposed plan for data reporting, quality improvement, and outcome and process monitoring system; whether the applicant has documented the intention and ability to comply with the staffing guidelines and qualifications set forth by the Tennessee Perinatal Care System Guidelines for Regionalization, Hospital Care Levels, Staffing and Facilities; and whether the applicant will participate in the Tennessee Initiative for Perinatal Quality Care (TIPQC);

(p) For Nursing Home projects, whether the applicant has documented its existing or proposed plan for data reporting, quality improvement, and outcome and process monitoring systems, including in particular details on its Quality Assurance and Performance Improvement program. As an alternative to the provision of third party accreditation information, applicants may provide information on any other state, federal, or national quality improvement initiatives;

(q) For Inpatient Psychiatric projects:

1. Whether the applicant has demonstrated appropriate accommodations for patients (e.g., for seclusion/restraint of patients who present management problems and children who need quiet space; proper sleeping and bathing arrangements for all patients), adequate staffing (i.e. , that each unit will be staffed with at least two direct patient care staff, one of which shall be a nurse, at all




CHAPTER 0720-11

times), and how the proposed staffing plan will lead to quality care of the patient population served by the project;

2. Whether the applicant has documented its existing or proposed plan for data reporting, quality improvement, and outcome and process monitoring system; and

3. Whether an applicant that owns or administers other psychiatric facilities has provided information on satisfactory surveys and quality improvement programs at those facilities.

(r) For Freestanding Emergency Department projects, whether the applicant has demonstrated that it will satisfy and maintain compliance with standards in the State Health Plan;

(s) For Organ Transplant projects, whether the applicant has demonstrated that it will satisfy and maintain compliance with standards in the State Health Plan; and

(t) For Relocation and/or Replacement of Health Care Institution projects:

1. For hospital projects, Acute Care Bed Need Services measures are applicable; and

2. For all other healthcare institutions, applicable facility and/or service specific measures are applicable.

(u) For every CON issued on or after the effective date of this rule, reporting shall be made to the Health Services and Development Agency each year on the anniversary date of implementation of the CON, on forms prescribed by the Agency. Such reporting shall include an assessment of each applicable volume and quality standard and shall include results of any surveys or disciplinary actions by state licensing agencies, payors, CMS, and any self-assessment and external peer assessment processes in which the applicant participates or participated within the year, which are relevant to the health care institution or service authorized by the certificate of need. The existence and results of any remedial action, including any plan of correction, shall also be provided.

(v) HSDA will notify the applicant and any applicable licensing agency if any volume or quality measure has not been met.

(w) Within one month of notification the applicant must submit a corrective action plan and must report on the progress of the plan within one year of that submission.

(4) Contribution to the Orderly Development of Adequate and Effective Healthcare Facilities and/or Services. The contribution which the proposed project will make to the orderly development of an adequate and effective health care system may be evaluated upon the following factors:

(a) The relationship of the proposal to the existing health care system (for example: transfer agreements, contractual agreements for health services, the applicant's proposed TennCare participation, affiliation of the project with health professional schools);

(b) The positive or negative effects attributed to duplication or competition; and




CHAPTER 0720-11

(c) The availability and accessibility of human resources required by the proposal, including consumers and related providers.

(5) Applications for Change of Site. When considering a certificate of need application which is limited to a request for a change of site for a proposed new health care institution, The Agency may consider, in addition to the foregoing factors, the following factors:

(a) Need. The applicant should show the proposed new site will serve the health care needs in the area to be served at least as well as the original site. The applicant should show that there is some significant legal, financial, or practical need to change to the proposed new site.

(b) Economic factors. The applicant should show that the proposed new site would be at least as economically beneficial to the population to be served as the original site.

(c) Quality of Health Care to be provided. The applicant should show the quality of health care to be provided will be served at least as well as the original site.

(d) Contribution to the orderly development of health care facilities and/or services. The applicant should address any potential delays that would be caused by the proposed change of site, and show that any such delays are outweighed by the benefit that will be gained from the change of site by the population to be served.

(6) Certificate of need conditions. In accordance with T.C.A. § 68-11-1609, The Agency, in its discretion, may place such conditions upon a certificate of need it deems appropriate and enforceable to meet the applicable criteria as defined in statute and in these rules.

Authority: T.C.A. §§ 4-5-202, 4-5-208, 68-11-1605, 68-11-1609, and 2016 Tenn. Pub. Acts Ch. 1043. Administrative History: Original rule filed August 31 , 2005; effective November 14, 2005. Emergency rule filed May 31, 2017; effective through November 27, 2017.


DOH/PPA/…CON#2005-017 Christian Care Center of Washington County Construction, Renovation, Expansion, Replacement of Healthcare Institutions

CERTIFICATE OF NEED REVIEWED BY THE DEPARTMENT OF HEALTH

DIVISION OF POLICY, PLANNING AND ASSESSMENT 615-741-1954

DATE: July 31, 2020 APPLICANT:

Christian Care Center of Washington County 2234 Boones Creek Road Johnson City, TN 38478

CON#: CN2005-017 CONTACT PERSON: Jerry W. Taylor Burr & Forman, LLP 222 Second Avenue South, STE 2000 Nashville, TN 37201

COST: $10,073,240.24 In accordance with Section 68-11-1608(a) of the Tennessee Health Services and Planning Act of 2002, the Tennessee Department of Health, Division of Health Planning and Assessment, reviewed this certificate of need application for financial impact, TennCare participation, compliance with Tennessee’s State Health Plan, and verified certain data. Additional clarification or comment relative to the application is provided, as applicable, under the heading “Note to Agency Members.” SUMMARY: Christian Care Center of Washington County, LLC is seeking a Certificate of Need for the relocation of a newly purchased 63 bed nursing home formerly known as Family Ministries John M. Reed Nursing Center. The applicant seeks to build a new replacement in Washington County under the name of Christian Care Center of Washington County. The facility will be owned by Christian Care Center of Washington County, which is wholly owned by J.R. Lewis, who also owns ten other nursing homes. The applicant has identified its primary service area as Washington County, which currently has nine nursing homes. The estimated total cost of the project is $10,073,240.24, which will be funded through a commercial loan. The applicant expects to reach a positive financial margin within the second year of operation. The staffing plan for the facility calls for 39.5 FTE direct care positions and 9.3 FTE non-direct patient care positions.

GENERAL CRITERIA FOR CERTIFICATE OF NEED The applicant responded to all of the general criteria for Certificate of Need as set forth in the document Tennessee’s State Health Plan. NEED: The applicant, Christian Care Center of Washington County, LLC, is seeking a Certificate of Need for the relocation of a newly purchased 63 bed nursing home formerly known as Family Ministries John M. Reed Nursing Center. The applicant has identified its primary service area as Washington County, whose population data is illustrated in the chart below:

County 2020 2024 % change Washington 25,472 28,102 10.3%

Tennessee Population Projections 2020 Revised UTCBER, Tennessee Department of Health The previous owner struggled with compliance issues for the nursing facility, becoming decertified by Medicare in 2017. As a result of all of the compliance issues, the nursing home license was voluntarily placed on Inactive Status by the previous owner, who decided to sell the nursing home to the applicant.

__________________________________________________________________________________________________ DOH/PPA/…CON#2005-017 Christian Care Center of Washington County Construction, Renovation, Expansion, Replacement of Healthcare Institutions

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The applicant states that the relocation and replacement facility are needed for many different reasons. First, the previous owner needs the building that formerly housed the nursing home in order to expand the Assisted Living Care Facility (ACLF). Also, the current building would have to be completely renovated to be brought up to code in order for the nursing home to be re-opened, which is cost prohibitive. Furthermore, the new owner wants to build a new and spacious nursing home facility that is consistent with Care Centers’ other nursing facilities. The following chart shows the historical utilization of the other nursing homes in the service area:

The following chart shows the projected utilization of the facility upon completion:

Projected Utilization

Year Lic. Beds

*Beds – MCARE

Certified

SNF Medicare

ADC

Level 2

MCAID ADC

SNF All

Other Payors

ADC

Non-skilled ADC

Total ADC

Lic. Occupancy

Year 1 63 63 3.7 2.8 0.0 24.7 31.2 49.5% Year 2 63 63 10.6 3.8 8.5 33.8 56.7 90.0%

*Includes dually-certified beds. TENNCARE/MEDICARE ACCESS: The applicant will be accessible to patients with TennCare/Medicare. The applicant will apply for both Medicare and Medicaid Provider Numbers. The applicant will have numerous MCO Contracts with organizations such as AmeriGroup, United Healthcare Community Plan, BlueCare, and TennCare Select. ECONOMIC FACTORS/FINANCIAL FEASIBILITY: The Department of Health, Division of Policy, Planning, and Assessment have reviewed the Project Costs Chart, the Historical Data Chart, and the Projected Data Chart to determine if they are mathematically accurate and if the projections are based on the applicant’s anticipated level of utilization. The location of these charts may be found in the following specific locations in the Certificate of Need Application or the Supplemental material: Project Costs Chart: The Project Cost Chart is located on page 19 of the initial

application. The total estimated project cost is $10,073,240.24. This includes $6,327,165 for construction costs, $849,000 for the preparation of the site, $555,556 for the acquisition of the site, $442,901 for a contingency fund $300,000 for architectural and engineering fees, $57,589.99 for the CON filing fee, and a plethora of other fees.

2020 2016 2017 2018 '16- '18 2016 2017 2018 N!,!rsing Home Lic'd, Beds Pat. Days Pat. Days P~t. Days % Change Occ.% Occ.% Occ.%

Appalachian Christian Village (a/k/a

Cornerstone Vill~ge) 103 30,099 30,769 33,561 12% 80% 82% 89% Asbury Place at Johnson City (a/k/a

Agape Nursing & Rehab) 84 24,77_6 27,252 27!685 12% 81% 89% 90% Christian Care Center at Johnson City

(a/k/a The Waters of Johnson City) 84 11,093 26,274 ~S,758 132% 36% 86% 84% Four Oaks Health Care Center 84 28,158 27,038 28,027 0% 92% 88% 91% Lakebridge, A W~ters Community 109 21,066 34,269 35,143 67% 53% 86% 88% Life Care Center of Gray 133 33,626 32,394 30,20.? -10% 69% 67% 62% NHC Healthcare 167 50,744 53,438 _54~11! 7% 83% 88% 89% Princeton Transitional Care 47 10,105 8,840 10,169 1% 59% 52% 59% Total/Avg. 811 209,6~7 240,274 244,657 17% 71% 81% 83% Source: Joint Annual Reports


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Historical Data Chart: The applicant does not have access to the previous owner’s data that would be necessary to complete a Historical Data Chart. Projected Data Chart: The Projected Data Chart is located on page 23 of the initial application. During the first year of operation, the applicant expects to have 11,391 patient days for a gross of ($759,374). During the second year of operation, the applicant expects to have 20,695 patient days for a gross of $209,661.

Proposed Charge Schedule

Previous Year Current Year Year One Year Two % Change

Gross Charge N/A N/A $260.94 $308.96 18.4%

Average Deduction N/A N/A $9.33 $9.64 3.3%

Average Net Charge

N/A N/A $251.62 $299.32 18.9%

The following chart shows the projected payor mix for the first year of the project:

Projected Payor Mix Year One Payor Source Projected Gross

Operating Revenue

% of Total

Medicare/Medicare Managed Care $506,762 17.05% TennCare/Medicaid $1,408,963 47.40%

Commercial/Other Managed Care $0 0.00% Self-Pay $1,056,705 35.55% Other $0 0.00% Total $2,972,430 100%

Charity Care 1.00%

The following chart shows the projected Net Operating Margin for the first two years of the project:

Year 2nd Year

previous to Current Year

1st Year Previous to

Current Year Current Year

Projected Year 1

Projected Year 2

Net Operating Margin Ratio N/A N/A N/A -0.26 0.038

CONTRIBUTION TO THE ORDERLY DEVELOPMENT OF HEALTHCARE: The applicant states that the implementation of this project will have positive effects on healthcare within the primary service area. The new replacement facility will replace an older, outdated one and will offer more private rooms than the previous facility. The new ownership and management have a long history of providing quality care and service taking over distressed facilities. Also, the facility will be dually certified for participation in Medicare and Medicaid/Tenncare. Furthermore, the applicant states that the staffing will always meet or exceed all applicable regulatory requirements. The applicant does not anticipate the implementation of this project having any negative effects on the primary service area. QUALITY MEASURES: The applicant states that the facility will comply with all reporting requirements. The applicant will obtain and maintain all applicable state licenses in good standing. The facility will be licensed by the Tennessee Board of Licensing Health Care Facilities. The applicant will seek accreditation from the Joint Commission. Also, the management company, Care Centers Management Consulting, manages nine nursing homes in Tennessee and has significant experience in acquiring distressed nursing facilities and re-opening successfully run nursing homes. The staffing plan for the facility calls for 39.5 FTE direct care positions and 9.3 FTE non-direct patient care positions.


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CONSTRUCTION, RENOVATION, EXPANSION, AND REPLACEMENT OF

HEALTH CARE INSTITUTIONS 1. Any project that includes the addition of beds, services, or medical equipment will be

reviewed under the standards for those specific activities. N/A. No new beds or covered equipment are included in this application. 2. For relocation or replacement of an existing licensed health care institution:

a. The applicant should provide plans which include costs for both renovation and relocation, demonstrating the strengths and weaknesses of each alternative. The applicant states that renovation is not a viable option and relocation is necessary for several reasons. The former owner needs the nursing home building for expansion purposes. Also, the former building would have to be brought up to current codes for the nursing home to re-open in that space, which the applicant feels is cost prohibitive. Furthermore, the new owner wants to build a new and spacious nursing home facility that is more consistent with Care Centers’ other nursing home facilities across the state.

b. The applicant should demonstrate that there is an acceptable existing or projected future

demand for the proposed project. CCCWC is a licensed facility that has serviced Washington County and surrounding areas of many years under a previous name and ownership. The applicant states that while the census for the facility has been abnormally low over recent years, the new ownership and management is committed to taking the nursing home to a new level of quality care in a more comfortable and inviting living facility. The applicant expects that this will increase the utilization.

3. For renovation or expansions of an existing licensed health care institution: a. The applicant should demonstrate that there is an acceptable existing demand for the

proposed project. N/A b. The applicant should demonstrate that the existing physical plant’s condition warrants

major renovation or expansion. N/A

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