STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION

1. Applicant/CON Action Number Halifax Hospice, Inc. d/b/a Halifax Health Hospice of Volusia/Flagler/CON #10134

1424 Laurel Road

Faber, Virginia 22938

Authorized Representative: Thomas A. Davidson

(434) 263-5107

2. Service District/Subdistrict

Hospice Service Area 4B (Volusia and Flagler Counties) B. PUBLIC HEARING

A public hearing was not held or requested regarding this proposal to

establish a freestanding 12-bed inpatient hospice facility in Volusia

County, Hospice Service Area 4B.

Letters of Support

There were 438 unduplicated letters of support (including testimonials)

in Volumes 2 and 3 of the application. The applicant divided letters of

support as follows: service area physicians (18), service area residents

(413) and testimonials from families of patients (seven testimonials/notes

of appreciation). Some of these are described below.

Gregory Favis, MD, F.A.C.P. stated he has had terminal patients served

by Halifax-Hospice of Volusia/Flagler for 32 years and that the provider

has always been responsible and responsive to his patients’ needs. Dr.

Favis believed his Ormond Beach patients deserved to be cared for in

their community, similarly to how his Daytona Beach and New Smyrna

Beach patients have been cared for in their communities. Dr. Richard

Weiss and Dr. Walter Durkin made similar comments in support of the

project.

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Many of the physician letters were of a form letter variety that are

supportive of the project and the provider’s quality of care. They

indicated that travel can be difficult and stressful for families from the

northern Flagler County area to visit their loved ones at the inpatient

hospice facility in Port Orange, as it can require a drive of 60-120 miles

round trip.

William McKillop, Sc.D., stated he has been a health care professional in

the Ormond Beach area for 28 years and there is a need for the project to

serve the Ormond Beach resident population. Nanci Agett, ARNP, stated

she is a psychiatric nurse practitioner in Volusia County, having had

“many contacts” with individuals and families that have experienced “a

very high degree of end of life support” through the applicant’s existing

hospice services.

State Representative Dorothy L. Hukill, District 28 indicated that though

the majority of the applicant’s patients are cared for in their homes, the

need for general inpatient care exists due to patients being referred very

late in their illness. Representative Hukill stated that a new Ormond

Beach facility would “not only be able to provide more care to those in

need but would allow families to be closer to their loved ones”. She

concluded by stating that “this facility would add 40 professional jobs to

the community as well as hundreds of temporary construction jobs”.

State Representative Charles Van Zant, District 21, stated hospice care

needs of the community are underserved and that the applicant wishes

to “step up to the plate” and provide new construction for this “greatly

needed expansion of available inpatient hospice care”. State

Representative Fred Costello, District 26, stated most patients in need of

hospice care will receive it in their homes but “there are many patients

referred very late in their illness who require inpatient care”.

Representative Costello further stated travel to and from current facilities

can be very burdensome and stressful. He also indicated that the project

would create 40 new jobs in the area.

Frank Bruno, Jr., Volusia County Chair and James Dinneen, Volusia

County Manager, cited the applicant’s 32+ years of kind, considerate and

professional hospice services to the Volusia County area. They also

commented on reduced travel time for northern Volusia and Flagler

County residents who now must travel to Port Orange to see inpatient

hospice care patients.

Donald Fleming, Flagler County Sheriff and Ben Johnson, Volusia

County Sheriff, were highly complimentary of the provider’s existing

quality of hospice care. Both indicated the project could reduce travel

distance for residents and their families of northern Flagler County who

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travel as much as 120 miles round trip to visit family and friends in the

applicant’s existing inpatient hospice facilities. Sheriff Johnson stated

the applicant has served 50,000+ patients and families with kindness,

compassion and professional care throughout the years. Arthur Jones,

Chief of Police, City of Bunnell (Flagler County), made comments similar

to Sheriff Fleming and Sheriff Johnson.

Glenn Ritchey, President/CEO, Jon Hall Automotive Group and Mayor,

City of Daytona Beach, Florida stated the applicant has the largest

number of board-certified hospice physicians and staff in the area.

Others submitting letters include the following members of the Halifax

Health Board of Commissioners; Art Giles, Founder, Giles Electric Co.,

Former Volusia County Council Member and Former Vice-Mayor, South

Daytona, John Johnson, PhD, President & CEO and Karen Jans,

Associate VP, University Relations, Embry Riddle Aeronautical

University. Deanna Schaeffer, CEO, Halifax Health Healthy

Communities also provided a letter1.

Frances Latow, President, Victoria Gardens Women’s Club (Deland,

Volusia County) stated that her organization has supported the

applicant’s local inpatient facility (Orange City/Volusia County) for over

five years and has donated $20,000 to enhance the esthetics of the

environment within that facility.

Alice Reid, General Manager, The Bert Fish Foundation, Inc. (Deland,

Volusia County) stated that her organization recognizes the need for the

project in Ormond Beach. John Evans, Program/Compliance Director,

Goliath Radio (1380 AM WELE, Ormond Beach)2 stated that his station

“regularly” features the applicant’s staff on the station’s public interest

programs and that he has seen the difference Halifax Hospice “staff and

volunteers make”.

Fran Davis, Executive Director, Halifax-Health Hospice indicated the

project location is “just off Route 40, west of I-95 in Ormond Beach”.

Patricia Goodwin, ACSW, LCSW, ACHP-SW, stated she is the primary

social worker at the applicant’s Port Orange and Edgewater inpatient

hospice facilities. Ms. Goodwin expressed some of the transportation

challenges faced by elderly family members when a loved one is in

inpatient hospice care and that the project would help reduce some of

1 Halifax Health Healthy Communities is a branch of Halifax Health that oversees several programs serving children and families in Volusia and Flagler Counties, including Florida Kid Care, Healthy Start, and Volusia/Flagler Safe Kids Coalition, per the website http://www.halifaxhealth.org/locations/healthycommunities.aspx. 2 Goliath Radio, 1380 AM WELE states it offers “the best Daytona Beach talk radio” and reaches most if not all of Flagler and Volusia Counties, per the website http://big1380.com/.

CON Action Number: 10134

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these challenges. Steven DeVane, M. Div., stated he is a Halifax Hospice

employee and that for several years they have recognized a need for

inpatient hospice services closer to northern Volusia and Flagler

Counties. Pamela LeFils, RN, CHPN, who works in Halifax Hospices’

“After Hours Dept.”, stated that Halifax Hospice does not have enough

care center beds available and the project would better accommodate

“north” area families. Beverly Richardson, M.Div., chaplain at the

Southeast Volusia Care Center and chaplain team leader for Halifax

Health-Hospice of Volusia/Flagler stated that the travel distance for

families living in the northern end of Volusia County and in Flagler

County is a hardship. She indicated that “a care center in Ormond

Beach…(would be) more readily available to our patients and families”.

Harvey Kissel, President, Kissel Family Foundation, Inc. (“Learning

through Giving”) stated his organization supports Halifax Hospice by

providing the applicant with money and his time. He further stated that

the project is needed for the families that visit patients on a daily basis.

W. Daniel Hale, Ph.D., Special Advisor, Office of the President, Johns

Hopkins Bayview Medical Center, Adjunct Associate Professor of

Medicine, Johns Hopkins University School of Medicine, stated he is still

on the faculty at Stetson University and will eventually be returning to

Volusia County where he lived for more than 30 years. Dr. Hale also

stated his “great admiration for Hospice of Volusia/Flagler and its

wonderful staff”. He indicated that based on his experience in the study

of end of life needs of patients and families, the project is needed.

The rest of the support letters generally compliment the applicant’s

existing operations and staff, often with positive personal experiences

and express need for the project based on ease of geographic access for

the north Volusia and Flagler County areas.

The applicant included six hand written notes that express a high degree

of appreciation for the hospice services provided by the applicant’s

existing hospice staff. Halifax Hospice facilities are stated to have a

warm and compassionate environment, and staff that provide a caring

and thoughtful atmosphere.

C. PROJECT SUMMARY

Halifax Hospice, Inc. d/b/a Halifax Health Hospice of

Volusia/Flagler (CON #10134), a Florida not-for-profit corporation,

proposes to establish a 12-bed freestanding inpatient hospice facility in

Hospice Service Area 4B (Volusia and Flagler Counties). The proposed

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inpatient hospice facility is to be located in the City of Ormond Beach,

Florida (northern Volusia County). The stated objective is to improve

geographic accessibility to inpatient hospice care for residents of

northern Volusia County and Flagler County. The applicant is licensed

to operate a hospice program in Hospice Service Area 4B and has three

inpatient hospice facilities in Volusia County.

Total project cost is $5,304,348. Costs covered are for land, building,

equipment, project development and start-up. The project involves

17,254 gross square feet (GSF) of construction and construction costs of

$3,481,740.

The applicant does not propose conditions on the project.

D. REVIEW PROCEDURE

The evaluation process is structured by the certificate of need

review criteria found in Section 408.035, Florida Statutes, rules of

the State of Florida, and Chapters 59C-1 and 59C-2, Florida

Administrative Code. These criteria form the basis for the goals of

the review process. The goals represent desirable outcomes to be

attained by successful applicants who demonstrate an overall

compliance with the criteria. Analysis of an applicant's capability

to undertake the proposed project successfully is conducted by

evaluating the responses provided in the application and

independent information gathered by the reviewer.

Applications are analyzed to identify various strengths and

weaknesses in each proposal. If more than one application is

submitted for the same type of project in the same district

(subdistrict or service planning area), applications are

comparatively reviewed to determine which applicant best meets

the review criteria.

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

amendments once an application has been deemed complete. The

burden of proof to entitlement of a certificate rests with the

applicant. As such, the applicant is responsible for the

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

the application in the certification of the applicant.

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

application in its entirety with consultation from financial analyst

Mills Smith, who evaluated the financial data and Said Baniahmad

of the Office of Plans and Construction, who reviewed the

application for conformance with the architectural criteria.

E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA

The following indicate the level of conformity of the proposed

project with the review criteria and application content

requirements found in Sections 408.035 and 408.037, and

applicable rules of the State of Florida, Chapters 59C-1 and 59C-2,

Florida Administrative Code.

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

need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Rule 59C-1.008(2), Florida Administrative Code.

The Agency does not publish need for inpatient hospice beds. Hospice

programs are required by federal and state law to provide hospice

patients with inpatient care when needed (42 Code of Federal

Regulations 418.108) and no more than 20 percent of a hospice’s total

patient days may be inpatient days per Section 400.609(4), Florida

Statutes. Inpatient care may be provided through contractual

arrangements in hospitals and nursing homes, and is generally provided

on a short-term basis within the total hospice stay.

The applicant operates a 16-bed inpatient hospice facility in Port Orange,

an 18-bed facility in Orange City and a 12-bed facility in Edgewater.

Florida Hospital HospiceCare, the other inpatient hospice unit provider

in Hospice Service Area 4B, operates an eight-bed inpatient hospice

facility in Palm Coast (Flagler County). There are 54 licensed inpatient

hospice beds in Hospice Service Area 4B, spread among four facilities

(with 46 of these beds belonging to the applicant). There are no CON

approved inpatient hospice facilities pending licensure in Hospice Service

Area 4B.

Below is a map which identifies the approximate location of the

applicant’s proposed inpatient hospice facility and the existing inpatient

hospice facilities in Hospice Service Area 4B.

CON Action Number: 10134

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Hospice Service Area 4B Licensed Inpatient Hospice Facilities and

Halifax Health of Volusia/Flagler’s (CON application #10134) Proposed Ormond Beach Location

Source: Microsoft@MapPoint 2011

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The applicant reports it has analyzed its historical inpatient utilization

levels and has sized its proposed project accordingly, with the project

estimated to have high utilization and be financially self-sustaining in

the long-term.

Halifax contends that the severity of illness among late-stage hospice

patients indicates that home care, contracted nursing home care and

acute hospital care lack the degree and depth of hospice care that will be

provided at the proposed inpatient hospice facility. The applicant

indicates it can provide the full array of hospice services more effectively

and efficiently through the inpatient hospice facility.

Halifax notes in Table 5, Volume 1 of CON application #10134, that it

had contracts with 31 nursing homes for inpatient hospice services in

Service Area 4B (two in Flagler County and 29 Volusia County) during

the 12-month period ending May 31, 2011. However, the applicant

states it was able to admit hospice patients to a maximum of 12 of these

31 facilities during the period, often due to the more stringent registered

nurse (RN) staffing requirements required by the Medicare Conditions of

Participation.

The applicant indicates that its inpatient admissions, patient days and

percent occupancy all increased from CY 2008 through CY 2010. See

the table below.

Hospice of Volusia/Flagler Inpatient Hospice Facilities

Admissions, Patient Days and Percent Occupancy

Reporting Period

Admissions

Patient Days

Percent Occupancy

CY 2008 1,249 9,012 72.0%

CY 2009 1,599 12,332 73.0%

CY 2010 1,736 12,985 77.0%

Jan-Mar 2011 467 3,440 83.0% Source: CON application #10134, Volume 1, Table 3.

Note: Halifax licensed the Edgewater facility with eight beds (CON #9850) effective 1/16/09 and added four

beds (N0900007) effective 3/31/09.

Halifax states that for the first quarter of 2011, total occupancy including

inpatient, respite and residential days at its three facilities (46 licensed

inpatient hospice beds) was 86.0 percent. The applicant’s table 4

indicates 23 admissions and 126 patient days were either respite or

residential days during the first quarter of 2011. Hospices are not

required to report inpatient hospice facility utilization to the Agency.

Therefore, the reviewer cannot verify the applicant’s reported

occupancies.

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The location of the proposed freestanding inpatient hospice (proximate to

Ormond Beach in northern Volusia County, adjacent to I-95) is stated to

better accommodate inpatient hospice patient needs and their families in

northern Volusia and the entirety of Flagler Counties.

Halifax Hospice indicates that the project is designed to provide four key

benefits to inpatient hospice patients and their families, who reside in

northern Volusia and in Flagler Counties:

Treatment provided by a dedicated, professional team including

hospice trained physicians and nurse practitioners3;

Rapid access to care and services such as hospice nursing, medical

social work, counseling, volunteer and chaplain services, with an

interdisciplinary team experienced in palliative care, consistently and

promptly available to patients and their families;

A supportive, therapeutic environment focusing on the quality of life

and palliative care at the end-of-life, in a home-like, comfortable and

serene setting, where deaths will not be treated as “medical failures”

and end-of-life will be dealt with openly and with compassion; and

The decision to move a patient to inpatient care is a medical decision

and families and other care givers will be more comfortable with the

care and environment provided in a dedicated inpatient hospice

facility compared to an acute care hospital.

b. If no Agency policy exists, the applicant will be responsible for

demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria:

Population demographics and dynamics;

Availability, utilization and quality of like services in the district, subdistrict or both;

Medical treatment trends; and

Market conditions.

3 Schedule 6A indicates no additional physician staff pursuant to this project and notes to the schedule do not discuss the contracting of physicians.

CON Action Number: 10134

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Population demographics and dynamics

As of January 2011, Hospice Service Area 4B’s total population was

604,375 persons. The two-county (Volusia and Flagler County) area is

projected to grow by 7.92 percent reaching a total population of 652,241

by January 2016, as shown below.

Population Growth

Hospice Service Area 4B January 2011 – January 2016

Age Change Group 2011 2016 Number Percent

Under 65 465,641 488,264 22,623 4.86%

65+ 138,734 163,977 25,243 18.20%

Total 604,375 652,241 47,866 7.92% Source: AHCA Florida Population Estimates 2000-2020, September, 2010.

As shown above, the service area’s population age 65 and over is

expected to increase at a much more rapid rate than the under age 65

population – 18.20 percent compared to 4.86 percent from January

2011 to January 2016.

The reviewer further notes the estimated January 2011 to January 2016

total population that the Flagler County age 65 and over population will

increase by 8,864 residents (32.06 percent) compared to Volusia

County’s 16,379 (14.74 percent), as shown below.

Population Growth

Hospice Service Area 4B January 2011 – January 2016

Age Change County Group 2011 2016 Number Percent

Flagler Under 65 69,490 81,711 12,221 17,59%

65+ 27,648 36,512 8,864 32.06%

Volusia Under 65 396,151 406,553 10,402 2.63%

65+ 111,086 127,465 16,379 14.74%

All Counties Total 604,375 652,241 47,866 7.92% Source: AHCA Florida Population Estimates 2000-2020, September, 2010.

As the applicant stated previously, the project is designed to better

accommodate the inpatient hospice needs of residents of northern

Volusia County and Flagler County. If approved, the project would

become the applicant’s northernmost inpatient hospice facility.

Below is a table provided by the applicant comparing CY 2010 with CY

2015 projected population.

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Projected Population Growth

Service Area 4-B 2010 Population Age 2015 Population Age Percent Increase 2010-2015

County Under 65 65 & Over Total Under 65 65 & Over Total Under 65 65 & Over Total

Volusia 404,138 109,519 513,657 421,589 127,248 548,837 4.3% 16.2% 6.8%

Flagler 74,365 24,566 98,931 91,089 32,414 123,503 22.5% 31.9% 24.8%

Total 478,503 134,085 612,588 512,678 159,662 672,340 7.1% 19.1% 9.8% Source: CON application #10134, Table 6, Claritas.

*Note: The reviewer notes the applicant states Service Area 4-A.

Halifax Hospice indicates that it had 2,043 inpatient hospice admissions

in 2010 and estimates 2,373 admissions in 2015, due largely to the

projected age 65 and over population in the total service area (Flagler

and Volusia Counties). Based on this estimate, the applicant anticipates

17,798 patient days in total service area admissions with a projected

need of 54.2 inpatient hospice beds, with an expected 90 percent

occupancy rate. The applicant’s projections indicate in 2015, the

demand will be 8.2 beds short of its current bed inventory and the

project is for a 12-bed inpatient facility.

The applicant estimates two key demographics will develop from a

growing elderly and more frail population, as reflected above. These are

that a larger population of patients will have no or impaired family

caregivers and a larger proportion of patients will suffer from multiple

health disorders, including dementia and other co-morbidities affecting

independent living.

Availability, utilization and quality of like services

Availability and utilization services are previously discussed above.

However, the applicant notes termination of its Flagler County hospice

inpatient services. The hospice agreement was terminated effective

December 1, 2006.

The applicant emphasizes that there is relatively low CY 2010 inpatient

admission rates for age 65 and over residents of the zip codes comprising

Ormond Beach in northern Volusia County and Bunnell and Flagler

Beach in southern Flagler County compared to other residents in Volusia

County (CON application #10134, Volume 1, Table 8). Halifax attributes

this disproportionately low inpatient hospice admission rate to the

termination of the inpatient agreement by Florida Hospital Flagler and

limited nursing home placement opportunities which it states are

compounded by the higher nursing home RN staffing standards for

inpatient hospice care required pursuant to Medicare Conditions of

Participation. Halifax also contends that inpatient hospice use rates are

highly co-related to the proximity of an inpatient unit and that

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geographic accessibility is important because of the frailty of the patient

population, need for family visitation and barriers to transportation that

often affect elderly family members.

Medical treatment trends

Halifax indicates that from 2008 through 2010, its inpatient admissions

grew from 1,249 in 2008, to 1,559 in 2009 and 1,739 in 2010. This is a

38.99 percent increase in admissions from 2008 through 2010.

Inpatient days increased from 9,012 days in 2008, to 12,332 in 2009 and

12,985 in 2010. The applicant states that the average hospice patient

age is increasing, with the patient in later stage illness and that “a large

fraction” of admissions are now directly from acute inpatient settings to

an acute hospice inpatient setting, with some never receiving in-home

care.

Market conditions

Halifax states it is the sole hospice provider in Hospice Service Area 4B

that has made a strategic commitment to providing inpatient hospice

services to all of the residents of the service area. The applicant points

out that licensed hospice inpatient beds at Florida Hospice Flagler (the

only other provider in Hospice Service Area 4B with licensed inpatient

hospice beds) are not available to Hospice of Volusia/Flagler’s hospice

patients.

Halifax Hospice emphasizes that it is part of the Halifax Health System,

with a mission to serve all the residents of its service area, especially the

medically underserved. The applicant states the project is designed to

expand access to the geographically and medically underserved.

2. Agency Rule Criteria and Preferences

a. Rule 59C-1.0355 (7) Florida Administrative Code states that the

Agency will not normally approve a proposal for construction of a freestanding inpatient hospice facility unless the applicant demonstrates that the freestanding facility will be more cost-efficient than contractual arrangements with existing hospitals or nursing homes in the service area. The application shall include the

following:

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(1) A description of any advantages that the hospice program will

achieve by constructing and operating its own inpatient beds.

Halifax contends that the project will offer the following benefits to

patients:

Treatment provided by a dedicated, professional team including

hospice trained physicians and nurse practitioners;

Rapid access to care and services such as hospice nursing,

medical social work, counseling, volunteer and chaplain

services, with an interdisciplinary team experienced in palliative

care, consistently and promptly available to patients and their

families;

A supportive, therapeutic environment focusing on the quality

of life and palliative care at the end of life, in a home-like,

comfortable and serene setting, where deaths will not be treated

as “medical failures” and end of life will be dealt with openly

and with compassion;

Families and other caregivers are more comfortable with the

care and environment provided in a dedicated facility than in

contracted hospital or nursing home facilities;

A physician employed by the applicant, experienced in palliative

inpatient care, will be available to serve any patient 24/7 or if

the patient requests their community physician, as their

primary physician that request will be honored; and

The effective use of volunteers to be present and supportive for

both patient and families is significantly enhanced by the

dedicated unit.

The applicant indicates that existing contractual arrangements

with acute care hospitals and nursing homes are unattractive

financially and do not allow the quality of care the freestanding

hospice will provide. The applicant proceeds to itemize how a

freestanding inpatient hospice facility is more cost-effective than

the current contractual arrangement.

Halifax states a net income loss of $47.91 per patient day (PPD)

under current inpatient hospital contractual arrangements but a

$35.05 net income gain PPD, if the project is approved. Hospice

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inpatient revenue PPD is constant at $636.22 and administrative

overhead PPD is constant at $47.91. The average direct expense

PPD goes from $636.22 if the project is not approved to $553.26 if

the project is approved. Project approval results in a savings to the

hospice of $82.96 PPD. (See the table below).

Inpatient Bed Cost Comparison

Hospitals vs. Freestanding Hospice Service Area 4B, Volusia-Flagler Counties

Per Patient Day Hospice Care Center Hospital Contract

Inpatient Day Inpatient Day

2nd Year 2nd Year

Hospice Inpatient $636.22 $636.22

Revenue (PPD)

Average Direct $553.26 $636.22

Expense (PPD)

Administrative $ 47.91 $ 47.91

Overhead (PPD)

Total Expense (PPD) $601.17 $684.13

Net Income to $ 35.05 ($47.91)

Hospice (PPD) Total Savings to $82.96

Hospice (PPD)

Source: CON application #10134, Volume 1, Table A.

Note: Average direct expense excludes physician expense, as no physician revenues or expenses are included

in hospital contracts.

Halifax concludes that the freestanding inpatient hospice facility

allows more direct control of costs, continuity and continuum of

care and end of life services. The applicant states various

duplications and unnecessary effort and expense can be

eliminated, such as arranging and executing patient transport and

the consolidation of medical records, patient examinations/

assessments and other costs associated with the transfer process.

(2) Existing contractual arrangements for inpatient care at

hospitals and nursing homes, or in the case of the proposed new hospice program, contacts made with hospitals and nursing homes regarding contractual arrangements for inpatient care.

Hospice of Volusia/Flagler states it has contractual arrangements

with most of the acute care hospitals (CON application #10134,

Volume 1, Table 7 shows five) and all of the skilled nursing

facilities (Volume 1, Table 5) in its service area for the provision of

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inpatient hospice services. The applicant provides numerous

executed hospice inpatient contracts with Hospice Service Area 4B

acute care hospitals and nursing homes in the application’s

Volume 2, Appendix 1.

(3) Anticipated sources of funds for the construction.

Halifax indicates that the $5,304,348 project cost will be funded

from cash on hand. The applicant has sufficient resources to

complete this project without the need for additional borrowing.

b. Rule 59-1.0355(8) Florida Administrative Code: Semi-Annual Utilization Reports. Each hospice program shall report utilization information to the Agency or its designee on or before July 20th of each year and January 20th of the following year.

The applicant does not directly respond to this rule. However, Hospice of

Volusia-Flagler regularly submits semi-annual utilization reports as

required by the above rule. The Agency’s semi-annual utilization reports

do not require a hospice to report inpatient hospice days.

3. Statutory Review Criteria

a. Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant’s service area? ss. 408.035(1)( a) and (b), Florida Statutes.

There are five licensed hospice providers in Hospice Service Area 4B, as

follows:

Halifax Health Hospice of Volusia Flagler (the applicant);

Florida Hospital HospiceCare;

Odyssey Hospice;

VITAS Healthcare Corporation; and

Haven Hospice.

The map in part E.,1.,a. shows the existing inpatient hospice facilities in

Hospice Service Area 4B and the proposed project.

The applicant reiterates its inpatient occupancy rates at its existing

inpatient facilities and its projected bed need of over 54 inpatient hospice

beds by 2015 (Table 8, Volume 1 of 3). The applicant also states that the

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proposed location of the new inpatient facility will better accommodate

the needs of residents of northern Volusia County and Flagler County.

Halifax concludes that the following factors demonstrate need for the

project:

A large number of hospice admissions are direct admissions from

hospitals to inpatient hospice facilities;

The applicant estimates 43 percent of its total hospice admissions

from hospitals are direct admissions to its GIP units;

Some hospice patients admitted to hospice care eventually develop

symptoms or conditions that require inpatient hospice care;

The two licensed SNFs in Flagler County do not provide 24-hour RN

coverage4, so they do not meet inpatient hospice requirements as they

relate to Medicare Conditions of Participation; and

A lack of satisfactory alternatives for inpatient hospice care primarily

for northern Volusia County and Flagler County (the sole two counties

in Hospice Service Area 4B) justify the project;

The effective and efficient delivery of the full array of the applicant’s

hospice services to patients and their families is diminished and

disjointed under the current circumstance;

The proposal will result in measurable economies of operations that

will permit the applicant to devote a larger proportion of its patient

care revenues to direct patient care and better support the hospice’s

mission; and overall

The proposal will “substantially enhance access to quality hospice

services among the residents in the applicant’s service area”.

Letters of support (see Item B) often stated that distance to the

applicant’s northernmost inpatient facility is a burden on and stressful

to patients and their families.

b. Does the applicant have a history of providing quality of care? Has

the applicant demonstrated the ability to provide quality care? ss. 408.035(1)( c), Florida Statutes.

Halifax Hospice, Inc. d/b/a Halifax Health Hospice of Volusia/Flagler

states it has a long (since 1979) and exemplary history of providing

quality of care. The applicant is a member of the National Hospice and

Palliative Care Organization and Florida Hospices and Palliative Care,

4 Per the November 2011 update of the Agency’s Nursing Home Guide at

http://apps.ahca.myflorida.com/NHCGuide/ViewFacilityData.aspx?Region=04 , the two licensed Flagler County SNFs, Flagler Pines and Grand Oaks Health and Rehabilitation Center) both offer 24-hour RN onsite coverage.

CON Action Number: 10134

17

Inc. Halifax Hospice states it is in full compliance with Medicare and

Medicaid Conditions of Participation.

Halifax provides a discussion of its quality of care and includes fiscal

year 2011’s, Quality Assessment Performance Improvement Plan, in the

application’s Volume 3, Appendix 7, Halifax Health-Hospice of

Volusia/Flagler Administrative Policies and Procedures Appendix 7. The

applicant also provides a one-page summary of its three question, patient

and family satisfaction survey used at its three existing freestanding

facilities (CON application #10134, Volume 3, Appendix 8).

Hospice of Volusia/Flagler participated in the Agency’s Hospice Provider

Family Satisfaction Survey of October through December 2010, attaining

a five-star rating on each of the five questions in the survey.

Respondents ranged from a low of 117 to a high of 146. The five-star

rating is the highest attainable and indicates respondents were 90 to 100

percent satisfied with the hospices’ performance.

Halifax Hospice indicates that it has received numerous awards during

its 32-year history. Examples of these include:

2010 United Way Volunteer of the Year;

2010 United Way Live United Winner;

2010 Port Orange Youth Achievement Award;

2006 MetLife Foundation Award of Achievement; and

2006 Florida Hospices and Palliative Care State Award-Marketing

Category.

Agency records indicate the applicant had two substantiated complaints

during the three-year period ending December 29, 2011. A single

complaint can encompass multiple complaint categories. The

substantiated complaint categories were for plan of care and medicine

problem/errors/formulary.

c. What resources, including health manpower, management

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

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

$5,304,348. Analysis:

CON Action Number: 10134

18

The applicant provided audited financial statements for the periods

ending September 30, 2011 and 2010. These statements were analyzed

for the purpose of evaluating the applicant’s ability to provide the capital

and operational funding necessary to implement the project.

Short-Term Position:

The applicant’s current ratio of 18.8 is well above average and indicates

current assets are almost 19 times current liabilities, a strong position.

The working capital of $37.2 million is a measure of excess liquidity that

could be used to fund capital projects. The ratio of cash flow to current

liabilities of 2.0 is well above average and a strong position. Overall, the

applicant has a strong short-term position. (See Table 1 below). Long-Term Position:

The applicant has no long-term debt and, therefore, has excess equity to

obtain debt financing, if needed. The ratio of cash flow to assets of 6.8

percent is below average and a moderately weak position. The most

recent year had $2,666,000 in operating income, which resulted in an

above average 5.7 percent operating margin. Overall, the applicant has a

good long-term position. (See Table 1 below). Capital Requirements:

Schedule 2 indicates total capital projects of $6,454,348 which includes

the CON subject to this review. The applicant is projecting a year one

operating loss for this project of $455,957 which will also have to be

funded.

Available Capital:

According to the applicant, funding for this project will come from cash

on hand. Based on our review, Halifax Hospice, Inc., has available

working capital of $37.2 million, $35.2 million in cash and current

investments and cash flow from operations of $2.5 million. It appears

that the applicant has sufficient resources to complete this project

without the need for additional borrowing.

Staffing:

Schedule 6A indicates, by December 31, 2014 (the first year of the

proposed project) and by December 31, 2015 (the second year of the

project), the applicant forecasts for this project a constant 25.25 FTEs.

The breakdown is as follows: 8.87 FTEs registered nurses [RNs]; 3.19

CON Action Number: 10134

19

FTEs licensed practical nurses [LPNs]; 7.97 FTEs hospice health aides

[HHAs]; 3.22 FTEs support/admin staff; one FTE directors/

coordinators/managers and one FTE LCSWs/MSWs.

The applicant’s recruitment and retention efforts are explained as

successful due to competitive wages and benefits, in a dedicated and

collegial work environment. The applicant provides a 24-page Halifax

Health – Work/Life Benefits Package, as an example of strides in

attracting and keeping staff (CON application #10134, Volume 3,

Appendix 10).

Conclusion: Funding for this project should be available as needed.

TABLE 1

Halifax Hospice, Inc. (CON application #10134)

9/30/2011

9/30/2010

Current Assets (CA) $39,308,000

$40,979,000

Cash and Current Investment $35,209,000

$9,403,000

Total Assets (TA) $61,977,000

$60,384,000

Current Liabilities (CL) $2,089,000

$2,333,000

Total Liabilities (TL) $2,089,000

$2,333,000

Net Assets (NA) $59,888,000

$58,051,000

Total Revenues (TR) $46,443,000

$46,715,000

Interest Expense (IE) $18,000

$26,000

Operating Income (OI) $2,666,000

$3,836,000

Cash Flow from Operations (CFO) $4,217,000

$2,455,000

Working Capital $37,219,000

$38,646,000

FINANCIAL RATIOS

9/30/2011

9/30/2010

Current Ratio (CA/CL) 18.8

17.6

Cash Flow to Current Liabilities (CFO/CL) 2.0

1.1

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

0.0

Times Interest Earned (OI+IE/IE) 149.1

148.5

Net Assets to Total Assets (NA/TA) 96.6%

96.1%

Operating Margin (OI/TR) 5.7%

8.2%

Return on Assets (OI/TA) 4.3%

6.4%

Operating Cash Flow to Assets (CFO/TA) 6.8% 4.1%

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

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

CON Action Number: 10134

20

For year two of operations, the applicant projected the following

percentage of total patient days by group: Medicare at 77.8 percent,

Medicaid at 10.6 percent and commercial insurance at 11.6 percent.

The applicant indicated on Schedule 7 that the service it intends to

provide is routine home care and general inpatient care, for which the

Department of Health and Human Services sets rates. The Federal rates

were calculated for the Volusia County, Florida Wage Index for Medicare

Hospice payments of .9043 and inflated through December 2015. The

average price adjustment factor used was 3.0 percent per year based on

the new CMS Market Basket Price Index as published in the 2nd Quarter

2011 Health Care Cost Review.

Estimated patient days for each level of service from Schedule 7, year two

were multiplied by the calculated reimbursement rate for that service in

order to estimate the total revenue that would be generated by that

number of patient days. The results were then compared to the

applicant’s estimated gross revenue. The results of the calculations are

summarized in Table 2 below.

Based on our calculation, the applicant’s projected gross revenue was

0.62 percent or $17,384 lower than the calculated gross revenue. The

difference in revenue projected is not deemed material and therefore

considered reasonable. Operating profits from this project are expected

to increase from an operating loss of $455,957 for year one to an

operating profit of $61,228 for year two.

Conclusion: This project appears to be financially feasible.

CON Action Number: 10134

21

HOSPICE REVENUE TABLE 2

Halifax Hospice, Inc. (CON application #10134)

Wage Index for Volusia County (.9043)

Wage Component Wage Index

Adjusted Wage

Amount Unadjusted Component

Payment Rate

Routine Home Care $103.77 0.9043 $93.84 $47.26 $141.10

Continuous Home Care $605.65 0.9043 $547.69 $275.81 $823.50

Inpatient Respite $84.56 0.9043 $76.47 $71.66 $148.13

General Inpatient $430.04 0.9043 $388.89 $241.80 $630.69

Payment Rate

Inflation Factor Year

Two

Inflation Adjusted Amount

Patient Days Year 2, June

30 -2015

Calculated Gross

Revenue

Routine Home Care $141.10 1.130 $159.40 265 $42,241

Continuous Home Care $823.50 1.130 $930.30 0 $0

Inpatient Respite $148.13 1.130 $167.34 0 $0

General Inpatient $630.69 1.130 $712.48 3,882 $2,765,850

Total 4,147 $2,808,090

From Schedule 7 $2,790,706

Difference

-$17,384

Percentage difference -0.62%

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

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

If approved, this project will expand Hospice of Volusia/Flagler’s licensed

beds from 46 to 58. This project is not offering a new choice of provider

in the service area. However, it is offering a new freestanding inpatient

hospice facility in northern Volusia County.

The impact of the price of services on consumer choice is limited to the

payer type. Most consumers do not pay directly for hospice services.

Rather, they are covered by a third-party payer. The impact of price

competition would be limited to third-party payers that negotiate price

for services, namely managed care organizations. Therefore, price

competition is limited to the share of patient days that are under

managed care plans. The applicant is projecting 11.6 percent of its

patient days from commercial insurance payers with 88.4 percent of

patient days expected to come from fixed price government payer sources

(Medicare and Medicaid).

CON Action Number: 10134

22

With the large majority of patient care being provided from fixed price

government payer sources, this project is not likely to have any

discernible positive impact on price-based competition to promote cost-

effectiveness. As providers offer new or enhanced services to patients

and families as a means to compete on quality measures, cost-

effectiveness would be impacted since the new or enhanced services

would be offered despite the large percentage of fixed priced government

payers. In other words, the potential exists for new or enhanced services

to be provided for the same federal and state dollars.

Conclusion: This project will not result in price-based competition.

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

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

The applicant proposes to establish a new 12-bed freestanding inpatient

hospice facility (eight inpatient hospice beds with the remaining four

reserved for respite care and/or routine care) in Ormond Beach (Volusia

County) Florida. This facility is designed as a one-story building of

Florida Building Code (FBC) type II-B and National Fire Protection

Association (NFPA) type II(000) construction; both construction types are

adequate. The schematic plan indicates the building will be fully

sprinklered. This building is divided in two smoke compartments as

required by the Life Safety Code.

All beds are located in private rooms which exceed the minimum space

requirements of the FBC. As designed, the rooms provide ample space to

accommodate family members. All patient rooms are provided with a

private toilet room attached. The schematic plan indicates that all

patient bedrooms and toilet rooms will be accessible.

The facility is divided in three sections. Administrative and public spaces

are located in the front near the entrance, patient bed rooms are located

in the center of the building and support areas are located in a separate

smoke compartment. The facility shall provide a Level 1, type 10, Class

48 generator, as required by FBC, section 437.2.8.1.

CON Action Number: 10134

23

The plans are schematic and will require further development, but there

are no major code deficiencies identified at this stage.

Based on the analysis of actual cost data of a similar project, the

estimated construction costs appear to be within the expected range.

The information provided in the project completion forecast appears to be

reasonable.

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

in-depth effort to determine complete compliance with all applicable

codes and standards. The final responsibility for facility compliance

ultimately rests with the owner.

The Agency does not require any further plan reviews for hospice

licensure; however, the Agency will provide a formal review of

construction documents for any owner who wants to insure code

compliance.

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

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

Hospice programs are required by federal and state law to provide

hospice patients with inpatient care when needed (42 Code of Federal

Regulations 418.108). Hospice care also must be provided regardless of

ability to pay and regardless of age, race, religion, sexual orientation,

diagnosis, payer source or financial status.

Halifax Hospice states it has a well-established record of services to

Medicaid, the medically indigent and medically underserved populations.

Hospice of Volusia/Flagler reports that it had 15,738 total patient days

during the 12-month period ending May 31, 2011, and 1,766 (or 11.2

percent) were a combination of self-pay, charity and Medicaid patients.

The majority of patient days (12,901 or 82.0 percent) were Medicare

patients.

CON Action Number: 10134

24

Halifax Hospice, Inc. d/b/a

Halifax Health Hospice of Volusia/Flagler Self-Pay, Charity and Medicaid Patient Days

12-Months Ending May 31, 2011

Payer Source Patient Days Percentage

Self-Pay 90 0.6%

Charity 418 2.7%

Medicaid 1,258 8.0%

Total 1,766 11.2%

In Schedule 7A, for year one ending December 31, 2014, the applicant

estimates a patient day payer mix as follows: Medicaid 10.50 percent;

Medicare 77.95 percent and commercial insurance 11.55 percent. For

year two ending December 31, 2015, the estimated patient day payer mix

is 10.61 percent Medicaid, 77.80 Medicare and 11.60 percent

commercial insurance.

F. SUMMARY

The Agency does not publish need for inpatient hospice beds. Hospice

programs are required by federal and state law to provide hospice

patients with inpatient care when needed (42 Code of Federal

Regulations 418.108) and no more than 20 percent of a hospice’s total

patient days may be inpatient days per Section 400.609(4), Florida

Statutes.

There are a total of 54 licensed inpatient hospice beds in Hospice Service

Area 4B. These beds are distributed as follows: the applicant operates a

16-bed inpatient hospice facility in Port Orange, an 18-bed facility in

Orange City; a 12-bed facility in Edgewater (all in Volusia County) and

Florida Hospital HospiceCare operates an eight-bed inpatient hospice

facility in Palm Coast (Flagler County). Project approval would result in

five freestanding inpatient hospice facilities in Hospice Service Area 4B,

four in Volusia County and one in Flagler County; the hospice bed count

would total 66.

After weighing and balancing all applicable review criteria, the following

relevant factors are listed with regard to the project in Hospice Service Area

4B.

CON Action Number: 10134

25

Halifax Hospice, Inc. d/b/a Halifax Health Hospice of

Volusia/Flagler (CON #10134), proposes to establish a 12-bed

freestanding inpatient hospice facility in Hospice Service Area 4B

(Volusia and Flagler Counties). The proposed inpatient hospice facility is

to be located in the City of Ormond Beach, Florida (northern Volusia

County). Halifax states that the facility will primarily serve residents of

Ormond Beach (northern Volusia County) and Bunnell and Flagler Beach

(southern Flagler County).

Total project cost is $5,304,348. The project involves 17,254 GSF of

construction and construction costs of $3,481,740.

The applicant does not propose conditions on the project.

Need/Access:

The Agency does not publish need for inpatient hospice beds. There

are no CON approved freestanding hospice facilities or beds pending

in Hospice Service Area 4B.

Halifax Hospice estimates 43 percent of its total hospice admissions

from hospitals are direct admissions to its inpatient facilities.

Some hospice patients admitted to the applicant’s care, eventually

develop symptoms or conditions that require inpatient care.

The two licensed SNFs in Flagler County do not meet inpatient

hospice requirements as they relate to Medicare Conditions of

Participation.

Halifax contends that the lack of satisfactory alternatives for inpatient

hospice care in northern Volusia County and Flagler County justify

the project.

The effective and efficient delivery of the full array of the applicant’s

hospice services to patients and their families is diminished and

disjointed under the current circumstance.

CON Action Number: 10134

26

The proposal will result in measurable economies of operations that

will permit the applicant to devote a larger proportion of its patient

care revenues to direct patient care and better support the hospice’s

mission. The applicant projects a total savings per patient day of

$82.96, if the project is approved.

The proposal will “substantially enhance access to quality hospice

services for residents in the applicant’s service area”.

Letters of support indicated distance to the applicant’s northernmost

inpatient facility is a burden on and stressful to patients and their

families. Quality of Care:

Halifax Hospice provided a detailed description of its ability to provide

quality hospice care.

Agency records indicate two substantiated complaints against Halifax

Hospice during the three year period ending December 29, 2011.

The applicant offered examples of various service awards.

Financial Feasibility/Availability of Funds:

The applicant has an overall strong short-term position and an overall

good long-term position.

Funding for the project should be available as needed.

The project appears to be financially feasible.

Medicaid/Indigent/Charity Care:

Hospice programs are required by law to provide services to all who

seek them.

Schedule 7A estimates that Medicaid will comprise 10.50 percent of

total patient days in year one and 10.61 percent of total patient days

in year two of the proposed project.

CON Action Number: 10134

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Architectural:

The proposed fully sprinklered inpatient hospice facility meets all

Florida Building Code, National Fire Protection Association and Life

Safety Code standards.

All beds are located in private rooms which exceed the minimum

space requirements of the FBC.

The estimated construction costs appear to be within the expected

range and the project completion forecast appears to be reasonable.

G. RECOMMENDATION

Approve CON #10134 to establish a 12-bed freestanding inpatient

hospice facility in Hospice Service Area 4B, Volusia County. Total project

cost is $5,304,348. The project involves 17,254 GSF of construction and

construction costs of $3,481,740.

CON Action Number: 10134

28

AUTHORIZATION FOR AGENCY ACTION

Authorized representatives of the Agency for Health Care Administration

adopted the recommendation contained herein and released the State Agency

Action Report.

DATE:

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

Jeffrey N. Gregg Chief, Bureau of Health Facility Regulation