project description: the applicants propose to …dewittcounty... · application summary...

DOCKET NO:

B - 4

BOARD MEETING:

January 15-16, 2008

PROJECT NO:

07-096

FACILITY NAME:

Dewitt County Dialysis

CITY:

Clinton

PROJECT COST: Original: $1,391,365 Current:

TYPE OF PROJECT: Non-Substantive HSA: IV PROJECT DESCRIPTION: The applicants propose to establish an end-stage renal disease (“ESRD”) facility consisting of six stations in 3,700 gross square feet (“GSF”) of leased space. The total estimated project cost is $1,391,365. The State Agency notes the project received an Intent-to-Deny (“ITD”) at the October 2007 State Board meeting. On November 5, 2007, the applicants informed the State Agency that they wanted reconsideration of the project and that additional information would be submitted to address the issues and concerns raised by the State Board (per 77 IAC 1130.670(b)). Based on this letter, the applicants needed to submit additional information within 30 days of the issuance of the ITD (per 77 IAC 1130.670(c)(3)). No additional information was submitted within the required time frame. As a result, the State Agency report remains unchanged.

APPLICATION SUMMARY

Applicant(s) Total Renal Care, Inc and DaVita, Inc. Facility Name Total Renal Care, Inc., d/b/a Dewitt County Dialysis

Location Clinton Application Received June 6, 2007

Application Deemed Complete June 20, 2007 Scheduled Review Period Ended September 12, 2007

Review Period Extended by the State Agency? No Public Hearing Requested? No

Applicants’ Received an ITD October 22, 2007 Can Applicants Request Deferral? Yes Applicants’ Modified the Project? No

STATE AGENCY REPORT

Dewitt County Dialysis

Clinton, Illinois Project #07-096

I. The Proposed Project

The applicants propose to establish an ESRD facility to be known as Dewitt County Dialysis consisting of six stations in 3,700 GSF of leased space. The total estimated project cost is $1,391,365.

II. Summary of Findings

A. The State Agency finds the proposed project does not appear to be in conformance with the provisions of Part 1110.

B. The State Agency finds the proposed project does not appear to be in

conformance with the provisions of Part 1120. III. General Information

The applicants are Total Renal Care, Inc. and DaVita, Inc., d/b/a Dewitt County Dialysis. The applicants propose to lease 3,700 GSF to house the six-station facility. The proposed facility will be located at 701 Illini Drive in Clinton (Dewitt County) in the HSA IV ESRD planning area. There are 12 ESRD facilities in HSA IV and one ESRD facility within 30 minutes drive time of the proposed site. The December 2007 update to the Inventory of Healthcare Facilities and Services and Need Determination (“Inventory”) does not indicate a computed need or excess of dialysis stations in the planning area.

State Agency Report Project #07-096 of 21

This is a non-substantive project that is subject to both a Part 1110 and Part 1120 review. A public hearing was offered on the proposed project; however, none was requested. In addition, no written comments were received by the State Agency regarding the proposed project. Project obligation will occur after permit issuance. The anticipated project completion date is February 1, 2009.

IV. The Proposed Project - Details

The applicants propose to establish a six-station ESRD facility by leasing 3,700 GSF and building out the shell of the structure. One of the six stations will be used for isolation as needed. Approximately 2,820 GSF will be dedicated to the six station facility and the remaining GSF will be used for peritoneal and home dialysis training.

V. Project Costs and Sources of Funds

The total project cost is $1,391,365. The applicants are funding the project costs with $1,152,975 from cash and securities and $238,390 representing the fair market value (“FMV”) of the leased equipment. Table One displays cost and sources of funds information.

TABLE ONE

Use of Funds Amount

Preplanning Costs 13,000

Site Preparation 10,000

Modernization 559,000

Contingencies 55,900 Architectural/Engineering Fees 52,000

Movable Equipment 201,210

Fair Market Value of Leased Equipment 238,390 Total $1,391,365

Sources of Funds

Cash and Securities 1,152,975

Leases space and equipment (FMV) 238,390

Total $1,391,365 VI. Review Criteria -End Stage Renal Disease

A. Criterion 1110.1430(a) - Data System


The criterion states: “An applicant proposing to establish a renal dialysis facility must document that a chronic renal dialysis data system exists or will be established. This criterion shall not be applicable to existing renal dialysis facilities that are relocating or adding stations.” The applicants indicate they will establish a data system at the proposed facility. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE DATA SYSTEM CRITERION.

B. Criterion 1110.1430(b) - Minimum Size of Renal Dialysis Center

The criterion states: “The minimum facility size for establishment of a renal dialysis facility is:

1) three dialysis stations within the facility in areas not included in an MSA or in an MSA of less than 500,000 people;

2) six dialysis stations in MSA's of over 500,000 population.” The location of the facility is not in an MSA. The facility will contain six stations upon completion and is in conformance with the requirements of this criterion. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE MINIMUM SIZE OF RENAL DIALYSIS CENTER CRITERION.

C. Criterion 1110.1430(c) - Variance to Station Need

The criterion states: “An applicant proposing to establish a renal dialysis facility or to add stations when no need for additional stations exists in the planning area must document one of the following:


1) a new facility will improve access in a geographic area that is within 30 minutes travel time of the proposed facility site as evidenced by documentation that verifies: A) all existing renal dialysis facilities in the area are

operating at or in excess of the target utilization level for the latest 12 month period for which data is available; and

B) a sufficient number of patients is experiencing an access problem to justify the proposed number of stations at the minimum utilization level detailed in 77 Ill. Adm. Code 1100; and

C) the caseload at all existing renal dialysis facilities in the area will not be adversely affected; or

2) additional stations are needed to reduce high utilization of an existing facility as evidenced by documentation that verifies that the number of proposed stations will reduce the facility's experienced utilization level for the latest 12 month period for which data is available to the minimum utilization level detailed in 77 Ill. Adm. Code 1100.”

The applicants propose to establish a six-station facility. Based upon the latest Inventory update, there is not a computed need or excess of dialysis stations in the HSA IV ESRD planning area. The applicants’ project need for additional dialysis stations that exceeds the number projected for the planning area. According to the applicants and verified by the State Agency using MapQuest, there is one other ESRD facility located within 30 minutes travel time of the proposed facility (Macon County Dialysis). According to the most recent data from the Renal Network (September 2007), Macon County Dialysis operated at 63% utilization. As a result, the applicants do not satisfy the requirement of subsection (C)(1)(A) since there is one ESRD facility within 30 minutes travel time that is underutilized. Table Two shows this facility, its distance and travel time from the proposed site and utilization. The State Agency notes distance and travel time were obtained from Map Quest, station information was obtained from the Inventory and utilization data was furnished by the Renal Network.


TABLE TWO ESRD Facilities within 30-minute Travel Time of the Proposed Project

Facility

Location

Stations

Distance (miles)

Travel Time (minutes)

Utilization

Macon County Dialysis Decatur 21 21.2 28.0 63.0% The applicants provided a physician referral letter identifying 12 patients whom are traveling to Decatur and Bloomington and who have expressed interest in transferring to the proposed facility. In addition, the physician letter 34 identified pre-ESRD patients who will be referred to the new facility when treatment becomes necessary. These 46 patients would generate on occupancy level of well over 100%. The pre-ESRD patients alone would generate a utilization level of over 100%. Although the applicants documented the facility would have an appropriate number of patients (to address the criterion at (C)(1)(B)), no information was provided to address the criterion at (C)(1)(C) to document if existing providers in the area would be adversely affected. As noted, Macon County Dialysis is operating at 63%. The applicants indicate 12 patients will transfer to the new facility from Decatur and Bloomington. However, the State Agency cannot determine what facility in Decatur these patients would transfer from. Considering that the applicants cannot successfully address all the requirements of (C)(1) and that the existing provider within 30 minutes travel time operated below target utilization (C)(2), the applicants cannot meet the requirements of the variance. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT DOES NOT MEET THE VARIANCE TO STATION NEED CRITERION.

D. Criterion 1110.1430(d) - Support Services

This criterion states: “The applicant proposing to establish a renal dialysis facility must document that clinical and pathological laboratory services, blood bank, nutrition, rehabilitation, psychiatric and social services, and self-care dialysis support services, will be available. Documentation shall consist of a narrative as to how such services will be provided. This criterion shall


not be applicable to existing renal dialysis facilities that are relocating or adding stations.” The applicants indicate dietary counseling; social services and home/self training will be provided on-site. An agreement with Dr. John Warner Hospital for clinical and pathological laboratory services was provided and the applicants indicate Memorial Medical Center will provide transplant services. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE SUPPORT SERVICES CRITERION.

E. Criterion 1110.1430(e) - Affiliation Agreements

This criterion states: “The applicant proposing to establish a renal dialysis facility must document that a written affiliation agreement or arrangement is in effect for the provision of inpatient care and other hospital services. Documentation shall consist of copies of all such agreements. This criterion shall not be applicable to existing renal dialysis facilities that are relocating or adding stations. “ The applicants provided a Transfer Agreement between Memorial Medical Center in Springfield and Dewitt County Dialysis for inpatient and hospital services. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE AFFILIATION AGREEMENT CRITERION.

F. Criterion 1110.1430(f) - Self-Care and Home Dialysis

This criterion states: “The applicant proposing to establish a renal dialysis facility must document that self-care dialysis, self-care instruction, home dialysis and home training will be provided at the applicant facility or that a written agreement with another facility for the provision of these services exists. Documentation shall consist of a certification that services are provided by


the applicant or copies of all agreements for provision of such services. This criterion shall not be applicable to existing renal dialysis facilities that are relocating or adding stations.” The applicants certified that self-care instruction and home dialysis and training would be provided at the applicant facility. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE SELF-CARE AND HOME DIALYSIS CRITERION.

G. Criterion 1110.1430(i) - Quality of Care

This criterion states: “The applicant must demonstrate the following:

1) that greater than 65% of its patients achieve a urea reduction ratio (URR) of 0.65 or better; and

2) that greater than 65% of its patients achieve a hematocrit level of 31% or better.”

This application is for the establishment of a new facility; therefore, there is no historical data available. The applicants provided quality of care summary information for the DaVita Macon County facility. These levels meet the requirements prescribed by the criterion. THE STATE AGENCY FINDS IT APPEARS THE APPLICANT MEETS THE QUALITY OF CARE CRITERION.

VII. General Review Criteria

A. Criterion 1110.230(a) – Location

The criterion states: “An applicant who proposes to establish a new health care facility or a new category of service or who proposes to acquire major medical equipment that is not located in a health care facility and that is not being acquired by or on behalf of a health care facility must document the following:


1) that the primary purpose of the proposed project will be to provide care to the residents of the planning area in which the proposed

project will be physically located. Documentation for existing facilities shall include patient origin information for all admissions for the last 12 months. Patient origin information must be presented by zip code and be based upon the patient's legal residence other than a health care facility for the last six months immediately prior to admission. For all other projects for which referrals are required to support the project, patient origin information for the referrals is required. Each referral letter must contain a certification by the health care worker physician that the representations contained therein are true and correct. A complete set of the referral letters with original notarized signatures must accompany the application for permit.

2) that the location selected for a proposed project will not create a maldistribution of beds and services. Maldistribution is typified by such factors as: a ratio of beds to population (population will be based upon the most recent census data by zip code), within 30 minutes travel time under normal driving conditions of the proposed facility, which exceeds one and one half times the State average; an average utilization rate for the last 12 months for the facilities providing the proposed services within 30 minutes travel time under normal driving conditions of the proposed project which is below the Board's target occupancy rate; or the lack of a sufficient population concentration in an area to support the proposed project.”

The applicants provided a map, which details the service area of the proposed facility. The applicants provided zip code locations for the patients interested in transferring to the new site and those patients who have been identified as pre-ESRD who are expected to begin treatment at the proposed facility. It appears almost all the zip codes identified are within 30 minutes travel time of the new facility. Thus, it appears the new facility will serve the residents in the proposed service area. The State Agency verified there is only one facility within 30 minutes travel time of the proposal (Macon County Dialysis). This facility is currently operating at 63% utilization. The applicants did not specify whether any of the patients who will transfer to the new facility will come


from this facility. However, the applicants did identify sufficient pre-ESRD patients alone to justify a utilization level of 100% at the new facility. However since an existing provider within 30 minutes travel time is underutilized, the State Agency cannot make a positive finding for this criterion. THE STATE AGENCY NOTES IT DOES NOT APPEAR THE APPLICANT MEETS THE LOCATION CRITERION.

B. Criterion 1110.230(b) - Background of Applicants

This criterion states: “The applicant shall demonstrate that it is fit, willing and able, and has the qualifications, background and character to adequately provide a proper standard of health care service for the community. [20 ILCS 3960/6] In evaluating the fitness of the applicant, the State Board shall consider whether adverse action has been taken against the applicant, or against any health care facility owned or operated by the applicant, directly or indirectly, within three years preceding the filing of the application.”

The applicants provided licensure and certification information as required. The applicants certified they have not had any adverse actions taken by Medicare or Medicaid, or any State or Federal regulatory authority within the past three years. It appears the applicants are fit, willing and able and have the qualifications, background and character to adequately provide a proper standard of healthcare service for the community.

THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE BACKGROUND OF THE APPLICANT CRITERION.

C. Criterion 1110.230(c) – Alternatives

This criterion states: “The applicant must document that the proposed project is the most effective or least costly alternative. Documentation shall consist of a comparison of the proposed project to alternative options. Such a


comparison must address issues of cost, patient access, quality, and financial benefits in both the short and long term. If the alternative selected is based solely or in part on improved quality of care, the applicant shall provide empirical evidence including quantifiable outcome data that verifies improved quality of care. Alternatives must include, but are not limited to: purchase of equipment, leasing or utilization (by contract or agreement) of other facilities, development of freestanding settings for service and alternate settings within the facility.” The applicants considered the following options: 1. Do nothing. The applicants rejected this alternative due to the

computed need for one additional station in the planning area and there belief that the need will only increase in an un-served Clinton area.

2. Utilization of Existing Facilities. The applicants rejected this

alternative due to the lack of facilities within 30 minutes and the factors which actually cause the travel time to be even greater to the nearest facility such as traffic, road conditions, weather and patient conditions.

3. Selection of Alternative Sites. The applicants believe Clinton is the best

location to serve the needs of the planning area. Alternative sites were considered in Clinton but no existing locations were found suitable in size for the facility.

While it appears that a facility will serve the need of the planning area, the State Agency must make a negative finding due to the only facility within 30 minutes travel time operating at a utilization level of 63% according to the most recent data. It appears the more appropriate alternative would be to use existing providers.

THE STATE AGENCY NOTES IT DOES NOT APPEAR THE APPLICANT MEETS THE ALTERNATIVES CRITERION.

D. Criterion 1110.230(d) - Need for the Project

The criterion states:


“1) If the State Board has determined need pursuant to Part 1100, the proposed project shall not exceed additional need determined unless the applicant meets the criterion for a variance.

2) If the State Board has not determined need pursuant to Part 1100, the applicant must document that it will serve a population group in need of the services proposed and that insufficient service exists to meet the need. Documentation shall include but not be limited to:

A) area studies (which evaluate population trends and service use factors);

B) calculation of need based upon models of estimating need for the service (all assumptions of the model and mathematical calculations must be included);

C) historical high utilization of other area providers; and D) identification of individuals likely to use the project.

3) does not result in the establishment of a category of service, the applicant must document that the equipment will achieve or exceed any applicable target utilization levels specified in Appendix B within 12 months If the project is for the acquisition of major medical equipment that after acquisition.”

According to the December 2007 Inventory update, there is not a computed need or excess of dialysis stations in the planning area. In order to establish a dialysis facility when insufficient need for the number of proposed additional stations exists in a planning area, an applicant must address the “Variance to Station Need” criterion. The State Agency reviewed the applicants’ response and finds that the requirements for a variance have not been met. THE STATE AGENCY NOTES IT DOES NOT APPEAR THE APPLICANT MEETS THE NEED FOR THE PROJECT CRITERION.

E. Criterion 1110.230(e) - Size of the Project

This criterion states:


“The applicant must document that the size of a proposed project is appropriate. 1) The proposed project cannot exceed the norms for project size

found in Appendix B of this Part unless the additional square footage beyond the norm can be justified by one of the following: A) the proposed project requires additional space due to the

scope of services provided; B) the proposed project involves an existing facility where the

facility design places impediments on the architectural design of the proposed project;

C) the proposed project involves the conversion of existing bed space and the excess square footage results from that conversion; or

D) the proposed project includes the addition of beds and the historical demand over the last five year period for private rooms has generated a need for conversion of multiple bed rooms to private usage.

2) When the State Board has established utilization targets for the beds or services proposed, the applicant must document that in the second year of operation the annual utilization of the beds or service will meet or exceed the target utilization. Documentation shall include, but not be limited to, historical utilization trends, population growth, expansion of professional staff or programs (demonstrated by signed contracts with additional physicians) and the provision of new procedures which would increase utilization.”

The applicants propose to establish a six-station facility in 3,700 GSF of new space, or 616.7 GSF per station. This appears high compared to the State standard of 470 GSF per station. Under the standard, the applicants would be allowed 2,820 GSF for the facility. The applicants exceed the standard by 880 GSF, or 31.2%. As previously noted, the applicants state 2,820 GSF will be dedicated to the stations and the remaining GSF will be used for peritoneal and home dialysis. Removing the GSF allocated to peritoneal and home dialysis results in 470 GSF per station. This compares favorably to the State Board’s standard of 470 GSF per station. The applicants’ project 27 patients will utilize the facility by the end of the first year of operation. The census is expected to increase to 30 patients by the end of the second year. Based on these projections, the facility will


achieve target utilization by the end of the second year of operation. Table Three displays the projected utilization for the proposed facility.

TABLE THREE

Projected Utilization Year Stations Expected Census Utilization*

1 6 27 75% 2 6 30 83%

Source: Data supplied by applicants. * Assumes each patient will dialyze three times per week, 52 weeks per year. Utilization also assumes each station will be used three times per day, six days per week, 52 weeks per year.

Considering potential patients have been documented for the first year of operation and assuming the growth rate projected can be realized, it appears the number of stations proposed is appropriate. THE STATE AGENCY NOTES APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE SIZE OF THE PROJECT CRITERION.

VIII. Financial Feasibility Review Criteria A. Criterion 1120.210(a) - Financial Viability The criterion states: “1) Viability Ratios

Applicants (including co-applicants) must document compliance with viability ratio standards detailed in Appendix A of this Part or address a variance. Applicants must document compliance for the most recent three years for which audited financial statements are available. For Category B applications, the applicants also must document compliance through the first full fiscal year after project completion or for the first full fiscal year when the project achieves or exceeds target utilization pursuant to 77 Ill. Adm. Code 1100, whichever is later, or address a variance.

2) Variance for Applications Not Meeting Ratios Applicants not in compliance with any of the viability ratios must

document that another organization, public or private, shall assume the legal responsibility to meet the debt obligations should the applicants default.”


The review criterion specifies that certain ratios be met as an indication of financial viability for applicants that do not have a bond rating of “A” or better.

The applicants provided audited financial statements and historical ratios

for DaVita, Inc. The State Agency notes Total Renal Care is a subsidiary of DaVita, Inc. Table Four displays the ratio information for DaVita, Inc. The applicants state that, due to SEC regulations, they are prohibited from providing projected financial ratio information.

TABLE FOUR

Applicants’ Financial Ratio Information Financial Ratio Information for DaVita, Inc.

Historical Projected Ratio State

Standard 2004 2005 2006 Current Ratio >=1.5 1.97 1.67 1.54 * Net Margin Percentage >=3.5% 10.21% 7.69% 5.94% * Percent Debt to Total Capitalization <=80% 72.5% 83.0% 75.0% * Projected Debt Service Coverage >=1.75 6.82 3.48 2.67 * Days Cash on Hand >=45 49 60 26 * Cushion Ratio >=5 4.81 3.09 1.12 * * Applicants are prohibited from providing projected financial ratio information.

As shown in Table Four, the Percent Debt to Total Capitalization is high for 2005. The Days Cash on Hand Ratio was historically below the State standard for 2006. The Cushion Ratio was below the State standard for all three reporting years. An explanation of all ratios is presented below. 1. Current Ratio - is an indication that an entity has the ability to meet

its current obligations by measuring if a business has enough assets to cover its liabilities.

2. Net Margin Percentage – is an indication of the percentage of profit

based on every dollar of net revenue. 3. Percent Debt to Total Capitalization - measures the amount of a

company’s assets that are financed by long-term debt.


4. Projected Debt Service Coverage Ratio - calculates the amount of cash available to meet debt obligations.

5. Days of Cash on Hand - is an indication of the number of days the

facility could operate if no future revenue is provided. 6. Cushion Ratio - is an indication of the amount of cash, short-term

investment and unrestricted long-term investments remaining after paying all fixed debt expenses (annual principal and interest payments)

Considering the applicants do not have an “A” bond rating and since evidence of another entity assuming legal responsibility to meet debt obligations in the event of default has not been provided, the applicants have not met the requirements of the criterion.

THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS HAVE NOT MET THE REQUIREMENTS OF THE FINANCIAL VIABLITY CRITERION.

B. Criterion 1120.210(b) - Availability of Funds The criterion states:

“The applicants must document that financial resources shall be available and be equal to or exceed the estimated total project cost and any related cost.”

The applicants propose to fund the $1,391,365 project with cash and securities. A lease is in place for a portion of the equipment. Sufficient resources appear available to fund the project.

THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE AVILABILITY OF FUNDS CRITERION.

C. Criterion 1120.210(c) - Operating Start-up Costs

The applicants anticipate start-up costs to be $135,034. This represents three months of the total operating costs for the facility. It appears


sufficient funds exist to cover these costs and will be provided by DaVita, Inc.

THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE OPERATING START-UP COSTS CRITERION.

IX. Economic Feasibility Review Criteria A. Criterion 1120.310(a) - Reasonableness of Financing Arrangements

The criterion states: “This criterion is not applicable if the applicant has documented a bond rating of "A" or better pursuant to Section 1120.210. An applicant that has not documented a bond rating of "A" or better must document that the project and related costs will be: 1) funded in total with cash and equivalents including investment

securities, unrestricted funds, and funded depreciation as currently defined by the Medicare regulations (42 USC 1395); or

2) funded in total or in part by borrowing because: A) a portion or all of the cash and equivalents must be retained

in the balance sheet asset accounts in order that the current ratio does not fall below 2.0 times; or

B) borrowing is less costly than the liquidation of existing investments and the existing investments being retained may be converted to cash or used to retire debt within a 60 day period. The applicants must submit a notarized statement signed by two authorized representatives of the applicants entity (in the case of a corporation, one must be a member of the board of directors) that attests to compliance with this requirement.

The project is classified as a Class B project. The applicants do not have a bond rating of “A”. The applicants certified borrowing is less costly than the liquidation of existing investments.

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE REASONABLENESS OF FINANCING ARRANGEMENT CRITERION.


B. Criterion 1120.310 (b) Conditions of Debt Financing The applicants provided a notarized statement indicating that the form of debt financing will be at the lowest net cost available. The State Agency is able to make a positive finding regarding this criterion. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE TERMS OF DEBT FINANCING CRITERION.

C. Criterion 1120.310(c) - Reasonableness of Project and Related Costs

The criteria states: “1) Construction and Modernization Costs

Construction and modernization costs per square foot for non-hospital based ambulatory surgical treatment centers and for facilities for the developmentally disabled, and for chronic renal dialysis treatment centers projects shall not exceed the standards detailed in Appendix A of this Part unless the applicant documents construction constraints or other design complexities and provides evidence that the costs are similar or consistent with other projects that have similar constraints or complexities. For all other projects, construction and modernization costs per square foot shall not exceed the adjusted (for inflation, location, economies of scale and mix of service) third quartile as provided for in the Means Building Construction Cost Data publication unless the applicant documents construction constraints or other design complexities and provides evidence that the costs are similar or consistent with other projects that have similar constraints or complexities.

2) Contingencies Contingencies (stated as a percentage of construction costs for the stage of architectural development) shall not exceed the standards detailed in Appendix A of this Part unless the applicant documents construction constraints or other design complexities and provides evidence that the costs are similar or consistent with other projects that have similar constraints or complexities. Contingencies shall be for construction or modernization only and shall be included in the cost per square foot calculation.


BOARD NOTE: If, subsequent to permit issuance, contingencies are proposed to be used for other line item costs, an alteration to the permit (as detailed in 77 Ill. Adm. Code 1130.750) must be approved by the State Board prior to such use.

3) Architectural Fees Architectural fees shall not exceed the fee schedule standards detailed in Appendix A of this Part unless the applicant documents construction constraints or other design complexities and provides evidence that the costs are similar or consistent with other projects that have similar constraints or complexities.

4) Major Medical and Movable Equipment A) For each piece of major medical equipment, the applicant

must certify that the lowest net cost available has been selected, or if not selected, that the choice of higher cost equipment is justified due to such factors as, but not limited to, maintenance agreements, options to purchase, or greater diagnostic or therapeutic capabilities.

B) Total movable equipment costs shall not exceed the standards for equipment as detailed in Appendix A of this Part unless the applicant documents construction constraints or other design complexities and provides evidence that the costs are similar or consistent with other projects that have similar constraints or complexities.

5) Other Project and Related Costs The applicant must document that any preplanning, acquisition, site survey and preparation costs, net interest expense and other estimated costs do not exceed industry norms based upon a comparison with similar projects that have been reviewed.”

Preplanning Costs – This cost is $13,000, or 1.0% of modernization, contingencies and equipment costs. This appears reasonable compared to the State standard of 1.8%.

Site Preparation - These cost total $10,000, or 1.6% of modernization and contingency costs. These costs appear reasonable compared to the State standard of 5%.


Modernization and Contingencies - The cost of building out the shell of the leased space is $614,900, or $166.19 per GSF. This appears reasonable compared to the adjusted State standard of $174.41 per GSF. Contingencies - The contingency allocation is $55,900, or 10% of construction costs. This appears reasonable compared to the State standard of 10%.

Architects and Engineering Fees –These costs total $52,000, or 8.5% of construction and contingency costs. This appears reasonable compared to the Capital Development Board’s fee structure of 5.65% - 11.9% that is utilized as the State standard.

Consulting and Other Fees - These costs total $35,000. The State Board does not have a standard for this expense. Movable or Other Equipment - Equipment costs total $201,210, which is $33,535 per station. This appears reasonable to the adjusted state standard of $34,557. Fair Market Value of Leased Equipment – These costs total $238,390. The State Board does not have a standard for this cost. Other Costs to be Capitalized – These costs total $226,865. The State Board does not have a standard for this cost. THE STATE AGENCY NOTES IT APPEARS THE APPLICANTS MEET THE REASONABLENESS OF PROJECT COSTS CRITERION.

D. Criterion 1120.310(d) - Projected Operating Cost

The criterion states: “The applicants must provide the projected direct annual operating costs (in current dollars per equivalent patient day or unit of service) for the first full fiscal year after project completion or the first full fiscal year when the project achieves or exceeds target utilization pursuant to 77 Ill. Adm. Code 1100, whichever is later. Direct costs mean the fully allocated costs of salaries, benefits, and supplies for the service.”


The applicants project $84.59 operating cost per treatment. The State Board does not have a standard for these costs.

E. Criterion 1120.310(e) - Total Effect of the Project on Capital Costs The project is not considered a Category B project; therefore, this criterion is not applicable.

F. Criterion 1120.310 (f) Non-patient Related Services

This criterion is not applicable to this project.

G:\FAC\SAR\2007-SAR\07-096, DeWitt County Dialysis(2).doc TS – Review completed 12/17/07

Copyright © and (P) 1988–2006 Microsoft Corporation and/or its suppliers. All rights reserved. http://www.microsoft.com/mappoint/Portions © 1990–2005 InstallShield Software Corporation. All rights reserved. Certain mapping and direction data © 2005 NAVTEQ. All rights reserved. The Data for areas of Canada includes information taken with permission from Canadian authorities, including: © Her Majesty the Queen in Right of Canada, © Queen's Printer for Ontario. NAVTEQ and NAVTEQ ON BOARD are trademarks of NAVTEQ. © 2005 Tele Atlas North America, Inc. All rights reserved. Tele Atlas and Tele Atlas North America are trademarks of Tele Atlas, Inc.

07-096 DEWITT COUNTY DIALYSIS

0 mi 10 20 30 40

# Name Street Address City Zipcode HSA STATIONS1 DaVita - Macon County 1090 West McKinley Avenue Decatur 62526 4 192 DaVita - Decatur East Wood 794 East Wood Street Decatur 62521 4 143 FMC - Decatur 1830 South 44th Street Decatur 62521 4 124 FMC - Bloomington 1505 Eastland Drive Bloomington 61701 4 20

project description: the applicants propose to …dewittcounty... · application summary...

Documents