PUBLIC HEARING TO BE HELD ON CERTIFICATE OF NEED APPLICATIONS 

The Alliance for Health will hold a public hearing to receive comments on four proposals that are seeking Certificate of Need (CON) approval: 

·         Holland Hospital – Add 4 Adult Psychiatric Beds

·         Spectrum Health Hospitals – Portable CT Scanner at Butterworth Hospital

·         Hudsonville Park Place Inn – 25 Bed Skilled Bed Nursing Home

·         Sunset Manor – 24-Bed Waterford Rehab Center in Jenison

The Alliance for Health will evaluate the proposals and make recommendations to the Michigan Department of Community Health as to whether Certificate of Need approvals should be granted to the projects. Comments received at the public hearings will be considered in the evaluations. Interested people are invited to present oral and/or written comments at the public hearing. Anyone unable to attend may submit written comments to the Alliance for Health offices by Monday, December 8, 2008. People commenting at the public hearing also are asked to provide a written copy of their testimony for the record. The proposals are available for inspection 9:00 AM - 4:00 PM Monday through Friday, at the Alliance for Health offices.

The public hearing will be held: 

Wednesday, November 26, 2008
9:00 AM
2^nd Floor Conference Room - Coopers Landing
1345 Monroe Avenue NW
Grand Rapids, Michigan 49505

 Holland Hospital – Add 4 Adult Psychiatric Beds in Holland

Holland Hospital proposes to add 4 adult psychiatric treatment beds to the 12 adult treatment beds it currently has a license to operate. The 4 added adult beds will not require the hospital to construct any additional space to house the new beds and their related support areas. There is no anticipated added capital cost for the project because recent construction projects at the hospital already provided the space required for the 4 added beds. Currently the hospital’s psychiatric unit has 12 private rooms and, upon completion of the project, there will be 8 private rooms and 4 semi-private rooms.

Occupancy of the Holland Hospital adult psychiatric beds has been relatively high according to the adopted Certificate of Need review standards. The average percent occupancy for the 12 beds was 84% and 84.8% in the last two reported years. There also has been a reported upswing in adult psychiatric bed use recently in the greater Grand Rapids area. In 2005, Saint Mary’s Health Care successfully applied for a Certificate of Need to expand by 12 its original allotment of 74 adult psychiatric beds at the Pine Rest Christian Mental Health Services campus. Both Saint Mary’s and Forest View Psychiatric Hospital also have observed a need for more beds at this time, and both recently applied for Certificate of Need approval to add a total of 42 new beds under the “high occupancy” provisions of the CON program and 2 beds based on the bed need formula. After several years of relatively lower use, inpatient occupancies apparently have been increasing to the point where added beds appear desirable to some institutions at this time. The relatively high occupancy alone at Holland Hospital can justify added beds without regard to the computations based on the bed need formula of the CON program. 

Bed need limits of the Certificate of Need program need not apply to inpatient psychiatric beds expansions if a facility of 19 or less beds has sustained an occupancy rate in excess of 75% for a two year period. The number of beds to be increased cannot be more than 1.5 times the average daily census for the last 2 years for which the Michigan Department of Community Health (MDCH) has verifiable reports from the facility. This “high occupancy” provision is intended to enable facilities with uniquely high demand to better respond to market forces. The average daily census for the most recently reported 2 years was 84% and 85.5%. The proposal then states that the occupancy for the period between September 2006 and August 2008 was 85.8%. This occupancy could enable an expansion of up to 3.44 adult psychiatric beds.

The adult psychiatric bed need estimate for the Alliance for Health region is 282 beds. The area currently has 297 approved and proposed adult psychiatric beds, which could preclude adding beds. However, this does not limit “high occupancy” bed expansions. Holland Hospital is proposing 4 beds to come from the “high occupancy” provisions. If approved, these could result in a total of 301 beds, 19 more than the adopted formula for determining bed need indicates. 

Only 0.5 additional full time equivalent staff position will be needed to serve the expected added patient census resulting from the 4-bed expansion. This will be an allocation of 0.5 FTE nurse practitioner. The new staff will be recruited through advertisements in local and regional newspapers and national professional journals. 

 

Among other requirements, the adopted Certificate of Need Review Standards for Psychiatric Beds and Services require an applicant proposing an increase in the number of licensed beds to demonstrate the following in order to receive approval from the Department of Community Health:

(1)     Allocation of at least 50% of the beds being added for use by public patients.

(2)     Fulfillment of any prior commitments to serve public patients.

(3)     Evidence of a signed letter of agreement with the local Community Mental Health (CMH) Services Board to use the added beds to meet the need of public patients, including patients with an involuntary commitment status.

(4)     Verified participation in the Medicaid program.

All of the proposed beds will be available for use by public patients and are intended to serve patients with an involuntary commitment status. The proposal states that more than 20% of the Holland Hospital psychiatric patients were paid by Medicaid and that in the past 5 months, this percent was 28.3%. Holland Hospital participates in the Medicaid program. All of the new beds also are intended to be certified for participation in Medicare. 

Holland Hospital has contracts with several community mental health boards in Michigan. These include: Allegan, Cass, Kalamazoo, Kent/Network 180, Muskegon, Ottawa, VanBuren and Barry. Also, the West Michigan CMH system and CON of St. Joseph County are included in an affiliation service agreement. Under the terms of the contract, adult inpatient services are provided at the rate of $708 per day. Specific support for the added beds was received from the CMH agency in Ottawa County. 

The project is expected to add $916,596 annually to the hospital’s revenues as a result of added inpatient volume. Also, only $77,611 will be needed in added operating expenses, resulting in an $838,985 increase in the hospital’s annual profitability. 

Spectrum Health Hospitals – Portable CT Scanner at Butterworth Hospital in Grand Rapids   

Spectrum Health proposes to initiate a hospital-based portable CT service with the addition of a new portable CT scanner at its Butterworth Hospital in Grand Rapids. Spectrum Health is applying for this scanner under the provisions of a special pilot program. The pilot program is only applicable to applications submitted by October 1, 2008. The Spectrum Health proposal was submitted on September 8, 2008.

The proposed portable CT scanner will support the hospital’s trauma and neurosciences programs at Butterworth. The scanner primarily will be located in the hospital’s radiology department. The portable scanner will enable patients to remain in their beds while being scanned. This will decrease risks involved in moving unstable patients.  Also, Spectrum Health states that the portable scanner will require fewer staff because nursing staff will not have to leave other critically ill patients while accompanying patients to the radiology department for a CT scan. The time in the radiology department otherwise could take up to one hour or more, which is a lengthy time for a nurse to be away from patients in the ICU. 

Bringing the scanner to the patients will enable the hospital to save money on a longer term basis than bringing unstable patients to the CT scanner in the radiology department.  

Based on past CT scanner volume trends, Spectrum Health  expects that the portable CT capacity will be approximately 52 scans/year, or only one scan per week, although the unit will be available 24 hours per day, seven days per week. 

The cost of the portable scanner is $416,150. It will be paid entirely from unrestricted hospital cash, avoiding borrowing and the associated financing costs that otherwise would be passed on to patients and their payers. In the first year with the portable scanner, the average charge for a CT scan will be $570, while it is expected that, after discounts and bad debts, the hospital will receive an average of $386 per scan. The average operating cost to provide a CT scan is $110, and therefore, the hospital expects to receive a profit of $276 for each scan performed.   

Hudsonville Park Place Inn – 25 Bed Skilled Bed Nursing Home in Hudsonville 

Rest Haven Illiana Christian Convalescent Home proposes to construct a new 36,516 square foot nursing home at 5875 Balsam Drive in Hudsonville. Once the construction is complete, the proposed facility will have 25 new nursing home beds, 25 additional nursing home beds that will be relocated from Haven Park Christian Nursing Home in Zeeland, and 25 additional non-licensed beds. All rooms will be private rooms. The applicant’s plan is also to develop an independent living center on the site in order to provide a continuum of care. Rest Haven Illiana, a non-profit corporation, currently owns four nursing homes: 

·         Haven Park Christian Nursing Home in Zeeland, Michigan

·         Rest Haven South Nursing Home in South Holland, Illinois

·         Rest Haven West Christian Nursing Center in Downers Grove, Illinois

·         Rest Haven Central in Palos Heights, Illinois

The cost to construct Hudsonville Park Place Inn will be $11,088,045 or $443,522 per added bed. Of this amount, 75% will come from a mortgage, and 25% will come from the applicant’s unrestricted cash. In the first year of operation, revenues of $2,617,561 are expected as compared to operating expenses of $3,307,390.  This will result in an operating loss of $689,829 in the first year, a loss that will be made up in subsequent years of operation. 

According to the Michigan Department of Community Health (MDCH), Ottawa County currently needs 25 more nursing home beds than currently exist in the county. Subsequently the proposed 25 Park Place Inn beds could be within the limits of the Certificate of Need program. However, Sunset Manor, Inc. also has proposed the development of new nursing home beds in Ottawa County, and the two projects must be considered in relation to each other, with final approval given to only one of the two projects. 

The project will comply with the state’s CON standards for nursing home beds in terms of size, staffing, etc. Park Place Inn sates that it will apply for participation in Medicaid as soon as it is able. All of the beds also will be certified for participation in the Medicare program. The applicant intends to accommodate all patients without regard to the source of payment. 

The new facility will require the hiring of 33.7 new full time equivalent (FTE) staff. The new staff are expected to be recruited from the local labor market. The proposal states “Based on the applicant’s experience in the planning area, there are sufficient numbers of qualified individuals to meet the staffing needs for this project. There are a number of educational institutions generating new health care workers and no reason to predict future shortages of qualified staff.”  The applicant indicates it does not expect any difficulty in recruiting qualified staff. The positions to be filled include: 

The proposal indicated that Hudsonville Park Place Inn will participate in a long term care culture change program. 

Sunset Manor – 24-Bed Waterford Rehab Center in Jenison 

Sunset Manor, Inc. proposes to construct a new 24-bed nursing home, Waterford Rehab Center, at 1725 Port Sheldon Road in Jenison. The facility will provide subacute rehabilitation services.

The cost to construct the 24-bed, 25,244 square foot Waterford Rehab Center on the current campus of Sunset Manor’s new assisted living and  independent living units, which are being constructed in such a manner as to be able to ultimately create a continuing care retirement complex, will be $5,332,125, or $222,172 per added bed. Of this amount, 80% will come from a mortgage, and 20% will come from institutional funds from Sunset Manor, the parent corporation for Waterford Rehab Center, and from a land donation. 

In the first year of operation, revenues of $2,250,156 are expected as compared to operating expenses of $2,510,671.  This will result in an operating loss of $260,515 in the first year, a loss that will be made up in subsequent years of operation. 

The expanded facility will have a total of 24 skilled nursing care beds. Twenty rooms will be private, and two will be semi-private. Despite generally declining nursing home occupancies in West Central Michigan, Waterford Rehab Center expects relatively higher occupancy. It expects that the new beds will be filled quickly from individuals currently within the Sunset Manor system, which includes the Sunset Manor retirement community, Sunset Village I, Sunset Village II, Waterford Place, Sunset Home Services and Brookcrest Manor. The project will be constructed in such a manner as to enable a future 16-unit expansion if warranted and if approved through the Certificate of Need process. The 16 units are being constructed at this time to the nursing home physical standards, but will be used for assisted living services. 

According to the Michigan Department of Community Health (MDCH), Ottawa County currently needs 25 more nursing home beds than currently exist in the county. Subsequently the 25 proposed Waterford Rehab Center beds could be within the limits of the Certificate of Need program. However, Hudsonville Park Place Inn also has proposed the development of new nursing home beds in Ottawa County, and the two projects must be considered in relation to each other, with final approval given to only one of the two projects.

Waterford Rehab Center pledges to apply for participation in Medicaid as soon as it is able. All of the beds also will be certified for participation in the Medicare program. Waterford Rehab Center intends to accommodate all patients without regard to the source of payment. 

The new facility will require the hiring of 33.7 new full time equivalent (FTE) staff. The new staff are expected to be recruited from the labor market in Ottawa and Kent counties. There wil be some sharing of staff with the existing Brookcrest Manor facility, especially therapy staff. Despite reported shortages, especially among nurses, the applicant does not expect any difficulty in recruiting qualified staff. Sunset Manor will provide some support for some human resources functions such as payroll, billing and information services. The positions to be filled include: 

The applicant is committed to hosting Eden Alternative training - “Open Hearts Open Minds” - in 2009. Waterford Rehab Center will give preference in hiring to applicants who have been involved with culture change efforts. The organization states that it is committed to ongoing staff training for long tern care culture change. Another facility under common ownership, Brookcrest Manor, already has been involved with the MyInnerView initiative, which allows measurement of outcomes of current quality improvement efforts.