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STATE OF ILLINOIS HEALTH FACILITIES AND SERVICES REVIEW BOARD

52525 WEST JEFFERSON ST. • SPRINGFIELD, ILL INOIS 62761 • (217) 782-3516 FAX: (217) 785-4111

DOCKET NO:

D-04

BOARD MEETING:

September 11-12, 2012

PROJECT NO:

12-049

PROJECT COST: Original: $13,757,750 FACILITY NAME:

Manor Court of Carbondale

CITY:

Carbondale

TYPE OF PROJECT: Substantive HSA: V PROJECT DESCRIPTION: The applicants (Edwin Enterprises, LLC, UDI #5, LLC, Unlimited Development, Inc., and Community Living Options, Inc.) propose to establish a 120 bed long term care facility in Carbondale, Illinois. The total cost of the project is $13,757,750. The project completion date is January 31, 2014.


525 WEST JEFFERSON ST. • SPRINGFIELD, ILLINOIS 62761 • (217) 782-3516 FAX: (217) 785-4111

EXECUTIVE SUMMARY

PROJECT DESCRIPTION: • The applicants (Edwin Enterprises, LLC, UDI #5, LLC, Unlimited Development, Inc.,

and Community Living Options, Inc.) propose to establish a 120 bed long term care facility in Carbondale, Illinois. The long term care facility will be located in a continuing care retirement community known as Liberty Village of Carbondale. The community currently has 58 independent living units. The total cost of the project is $13,757,750. The project completion date is January 31, 2014.

WHY THE PROJECT IS BEFORE THE STATE BOARD:

• The applicants are before the State Board because the applicants are proposing the establishment of a health care facility as defined by 20 ILCS 3960.

PURPOSE OF THE PROJECT: • The applicants state the purpose of this project is to address the discontinuation of the

Rehab and Care Center Jackson County Project #12-050. BACKGROUND

• The State Board Staff notes that the applicants have proposed this project as a replacement long term care facility for the county home in Jackson County (Project 12-050). However this project is being reviewed as the establishment of a new long term care facility. However, the applicants and Jackson County have provided a memo of understanding whereby the applicants have agreed:

• to offer placement to residents of the Jackson County Home at the proposed new facility; • to offer employment to all employees of the Jackson County Home; • to pay Jackson County $45,000 a month for 24 months from the approval of this application for permit to the closure of the Jackson County Home. • this “memo of understanding” is attached at the end of this report.

COMPLIANCE ISSUES:

• The applicants had 2 Type A violations at its Centralia Manor facility in May of 2010 and 2 Type A violations at its Pekin Manor facility in June 2011. These violations have been corrected.

NEED FOR THE PROJECT:

• To establish a long term care facility the applicant must: • Document that there is a calculated bed need; • Document that the facility will provide service to the planning area residents; • Document that there is demand for the facility; • Document that the proposed facility will improve service access; • Document that the proposed facility will not create an unnecessary



duplication/maldistribution; • Document that the proposed facility will not impact other area providers; • Document that the bed capacity will not exceed 250 long term care beds; • Document that there is sufficient staffing availability; • Document that the community is in support of the facility; • Document that the facility is appropriately sized, and; • Provide assurance that the facility will achieve and maintain target occupancy

within two years after project completion.

PUBLIC HEARING/COMMENT • No public hearing was requested and no letters of opposition were received by the State

Board Staff. 28 letters of support were included in the application for permit. • Glenn Poshard President of Southern Illinois University stated in support “this

replacement project addresses the tenants of the Illinois Health Facilities Planning Act in that it creates a modern, up to date skilled nursing facility to replace the 40 year old 178 bed Rehab and Care Center, which is the County facility in Jackson County.”

• 83 resident preference letters were received from residents from the Rehab and Care Center Jackson County in Murphysboro indicating that their preference would be to transfer to this proposed facility.

FINANCIAL AND ECONOMIC FEASIBILITY:

• The project will be funded with cash and securities of $13,757,750. The applicants have sufficient funds to fund this project based upon a review of the audited financial statement that have been provided and the fact that they currently operate a number of long term care facilities in the State of Illinois.

CONCLUSIONS: • The applicants were required to address a total of 20 criteria. The applicants have not

met the following criteria:

State Board Standards Not Met Criteria Reasons for Non-Compliance Criterion 1125.530 (a)- Bed Need Determination

There is a calculated excess of 51 long term care beds in the Jackson County Planning Area.

Criterion 1125.540 (d) - Service Demand The applicants did not provide referral letters as required by rule. The applicants did provide 83 resident preference letters indicating that current residents of the Rehab & Care Center of Jackson County prefer to live in the proposed facility.

Criterion 1125.570 (a) – Service Accessibility There are 12 facilities within 30 minutes of the proposed facility. There are a 1,156 long term



State Board Standards Not Met Criteria Reasons for Non-Compliance

care beds within 30 minutes of the proposed facility (excluding the Illinois Veteran’s Home at Anna with 50 beds). Average occupancy of these 1,156 beds is 70.15% for CY 2011. Based upon the 2011 utilization there are 230 beds available at the State Board’s target occupancy of 90%. Four of the facilities within 30 minutes have a star rating of ONE. The applicants’ facility (Parkway Manor in Marion) has a star rating of FOUR.


52525 WEST JEFFERSON ST. • SPRINGFIELD, ILL INOIS 62761 • (217) 782-3516 FAX: (217) 785-4111

STATE BOARD STAFF REPORT Manor Court of Carbondale

PROJECT #12-049

APPLICATION SUMMARY Applicant(s) Edwin Enterprises, LLC, UDI #5, LLC, Unlimited

Development, Inc., Community Living Options, Inc. Facility Name Manor Court of Carbondale

Location Carbondale Application Received May 11, 2012

Application Deemed Complete May 24, 2012 Review Period Ended July 25, 2012 Public Hearing Held No

Can Applicant Request Deferral? Yes Review Period Extended by the State Agency? No

Applicant’ Modified the project? No I. The Proposed Project

The applicants (Edwin Enterprises, LLC, UDI #5, LLC, Unlimited Development, Inc., and Community Living Options, Inc.) propose to establish a 120 bed long term care facility in Carbondale, Illinois. The total cost of the project is $13,757,750. The project completion date is January 31, 2014.

II. Summary of Findings

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

B. The State Board Staff finds the proposed project appears to be in

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

The applicants are Edwin Enterprises, LLC, UDI #5, LLC, Unlimited Development, Inc., and Community Living Options, Inc. The operating entity is UDI #5 and the owner of the site is Edwin Enterprises, LLC. The facility is located at 2940 West Ridge Place, Carbondale, Illinois, in HSA-V, in the Jackson County Long Term Care (“LTC”) Planning Area. There are 3 long term care facilities in the Jackson County Planning Area.



The July 2012 Inventory Update for General Long Term Care services shows an excess of 51 LTC beds in the Jackson County planning area.

The project is a substantive project and subject to Part 1110 and Part 1120 review. Obligation will occur after permit issuance. The anticipated project completion date is January 31, 2014. Summary of Support and Opposition Comments No public hearing was requested and no letters of opposition were received by the State Agency. 28 letters of support were included in the application for permit. 83 resident preference letters were received from residents from the Rehab and Care Center Jackson County in Murphysboro indicating that their preference would be to transfer to this proposed facility. Glenn Poshard President of Southern Illinois University stated in support “this replacement project addresses the tenants of the Illinois Health Facilities Planning Act in that it creates a modern, up to date skilled nursing facility to replace the 40 year old 178 bed Rehab and Care Center, which is the County facility in Jackson County.” Facilities within 30 minutes Table One displays information pertaining to other LTC providers within a 30-minute travel radius. The table includes authorized beds, distance and travel times from the applicant’s facility and respective occupancy rates of the facilities. Data on authorized beds and occupancy rates were obtained from IDPH’s 2011 LTC profiles, distance and travel times were obtained from Map Quest, and the Medicare Star Rating was obtained from the Department of Health & Human Services’ Medicare website (www.medicare.gov). The data in the table is sorted by travel time.

TABLE ONE Facilities within 30 Minutes

Facility Name City Medicare Star

Rating

Gen Beds

Minutes Utilization

Carbondale Rehab & Nursing Care Carbondale 3 131 2 45.40% Helia Healthcare of Carbondale Carbondale 1 118 10 43.70% Rehab & Care Ctr - Jackson Co. Murphysboro 2 178 16 69.80% Helia Healthcare of Energy Energy 1 111 24 82.40% Parkway Manor Marion 4 119 25 77.00% Cobden Rehab & Nursing Ctr. Cobden 5 74 27 78.50% Herrin Rehab & Nursing Ctr. Herrin 3 49 27 75.70%



Shawnee Christian Nursing Ctr Herrin 1 159 27 74.50% Marion rehab & Nursing Ctr Marion 1 125 27 73.20% City Care Center Anna 4 70 29 59.30% Union County Hospital LTC Anna 4 22 29 92.20% Illinois Veterans Home At Anna Anna NA 50 30 93.00% Total 1,206

1. Utilization taken from 2011 Long Term Care Profile Information 2. Time determined by MapQuest 3. Medicare Star Rating taken from CMMS website 4. Parkway Manor is owned by the applicants

There are 12 facilities within 30 minutes of the proposed facility. There are a 1,156 long term care beds within 30 minutes of the proposed facility (excluding the Illinois Veteran’s Home at Anna). Average occupancy of these 1,156 beds is 70.15% for CY 2011. Based upon the 2011 utilization there are 230 beds available at the State Board’s target occupancy of 90%. Four of the facilities within 30 minutes have a star rating of ONE. The applicants’ facility (Parkway Manor in Marion) has a star rating of FOUR.

IV. The Proposed Project – Details

The applicants (Edwin Enterprises, LLC, UDI #5, LLC, Unlimited Development, Inc., and Community Living Options, Inc.) propose to establish a 120 bed long term care facility in Carbondale, Illinois. The long term care facility will be located in a continuing care retirement community known as Liberty Village of Carbondale. The community currently has 58 independent living units. The total cost of the project is $13,757,750.

V. Project Costs and Sources of Funds

The applicant’ provided the project costs for both clinical and non-clinical aspects of the proposed project. Table Two shows the project costs and funding sources using these considerations.

TABLE TWO Project Costs and Source of Funds

Use of Funds Clinical Non -Clinical Total Preplanning Costs $63,750 $11,250 $75,000 Site Survey and Soil Investigation $8,500 $1,500 $10,000 Site Preparation $21,250 $3,750 $25,000 Off Site Work $0 $0 $0 New Construction Contracts $9,301,338 $1,641,413 $10,942,751



TABLE TWO Project Costs and Source of Funds

Use of Funds Clinical Non -Clinical Total Contingencies $650,250 $114,750 $765,000 Architectural & Engineering Fees $403,750 $71,250 $475,000 Consulting & Other Fees $21,250 $3,750 $25,000 Moveable & Other Equipment $612,000 $108,000 $720,000 Other Costs to be Capitalized $612,000 $108,000 $720,000 Totals $11,694,088 $2,063,663 $13,757,751

Source of Funds Cash & Securities $11,694,088 $2,063,663 $13,757,751 Total $11,694,088 $2,063,663 $13,757,751

VI. Cost/Space Requirements

Table Three displays the project’s space requirements for the clinical and non-clinical portions of the project. The definition of non-clinical as defined in the Planning Act [20 ILCS 3960/3] states, “non-clinical service area means an area for the benefit of the patients, visitors, staff or employees of a health care facility and not directly related to the diagnosis, treatment, or rehabilitation of persons receiving treatment at the health care facility.”

TABLE THREE

Gross Square Footage Department Costs Proposed

GSF New

Construction

Clinical Nursing $8,810,673 40,898 40,898 Living/Dining/Activity $1,429,147 6,788 6,788 Kitchen/Food Service $616,462 2,928 2,928 P.T./O.T. $652,675 3100 3100 Laundry $83,374 396 396 Janitor Closets $37,055 176 176 Beauty/Barber $85,690 407 407 Baths/Toilet $176,012 836 836 Total Clinical $11,891,088 55,529 55,529 Non Clinical Office/Administrative $271,176 1,288 1,288 Employee Lounge/Locker/Training $79,374 377 377 Mechanical/Electrical $36,423 173 173



TABLE THREE Gross Square Footage

Department Costs Proposed GSF

New Construction

Lobby $67,794 322 322 Storage/Maintenance $163,379 776 776 Corridor/Public Toilets $1,448,517 6,880 6,880 Total Non-Clinical $2,066,663 9,816 9,816 TOTAL $13,957,750 65,345 65,345

VII. Purpose of Project and Alternatives to the Project

A. Criterion 1125.320 – Purpose of the Project The criterion states: “The applicant shall document that the project will provide health services that improve the health care or well-being of the market area population to be served. The applicant shall define the planning area or market area, or other, per the applicant's definition.

1) The applicant shall address the purpose of the project, i.e., identify

the issues or problems that the project is proposing to address or solve. Information to be provided shall include, but is not limited to, identification of existing problems or issues that need to be addressed, as applicable and appropriate for the project.

The applicants state the purpose of this project is to address the discontinuation of the Rehab and Care Center Jackson County Project #12-050. However that facility has not been discontinued. This project is being reviewed as the establishment of a new facility, and not a replacement of the Jackson County facility.

B. Criterion 1125.330 - Alternatives to the Proposed Project

The criterion states: “The applicant shall document that the proposed project is the most effective or least costly alternative for meeting the health care needs of the population to be served by the project.



1) Alternative options shall be addressed. Examples of alternative options include:

A) Proposing a project of greater or lesser scope and cost;

B) Pursuing a joint venture or similar arrangement with one

or more providers or entities to meet all or a portion of the project's intended purposes; developing alternative settings to meet all or a portion of the project's intended purposes;

C) Utilizing other health care resources that are available to

serve all or a portion of the population proposed to be served by the project; and

D) Other considerations.

2) Documentation shall consist of a comparison of the project to

alternative options. The comparison shall address issues of cost, patient access, quality and financial benefits in both the short term (within one to three years after project completion) and long term. This May vary by project or situation.

3) The applicant shall provide empirical evidence, including

quantified outcome data; that verifies improved quality of care, as available.”

The applicants considered only one alternative and that is for the establishment of a new facility in Carbondale Illinois as part of a continuing care retirement community known as Liberty Village of Carbondale. The applicant has supplied the information requested in accordance with this criterion.

VIII. Establishment of New Facility

A. Criterion 1125.520 - Background of Applicant The criterion:

“An applicant must 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 qualifications, background and character of the



applicant, HFPB 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. A health care facility is considered "owned or operated" by every person or entity that owns, directly or indirectly, an ownership interest. If any person or entity owns any option to acquire stock, the stock shall be considered to be owned by such person or entity (refer to 77 Ill. Adm. Code 1100 and 1130 for definitions of terms such as "adverse action", "ownership interest" and "principal shareholder").”

The applicants provided licensure and certification information as required, provided representations attesting that no adverse actions have been taken against this facility, and the State Agency can access any and all information to determine whether adverse actions have been taken against the applicant. The applicant provided all the necessary information required to address this criterion. THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE BACKGROUND OF APPLICANT CRITERION (77 IAC 1125.520)

B) Criterion 1125.530 (a) – Bed Need Determination

1) The number of beds to be established for general LTC is in conformance with the projected bed need specified and reflected in the latest updates to the HFSRB Inventory.

2) The number of beds proposed shall meet or exceed the occupancy

standard specified in Section 1125.210(c).

The July 2012 Inventory Update for General Long Term Care services shows an excess of 51 LTC beds in the Jackson County planning area. The applicants are proposing a 120 bed long term care facility which if approved will increase the number of excess beds in this planning area to 171 long term care beds. The applicants have not met the requirements of this criterion.

THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT DOES NOT APPEAR TO BE IN CONFORMANCE WITH THE BACKGROUND OF APPLICANT CRITERION (77 IAC 1125.530).



C) Criterion 1125.530(b) - Planning Area Need The applicant shall document that the number of beds to be established or added is necessary to serve the planning area's population, based on the following: b) Service to Planning Area Residents 1) Applicant proposing to establish or add beds shall document that the primary purpose of the project will be to provide necessary LTC to the residents of the area in which the proposed project will be physically located (i.e., the planning or geographical service area, as applicable), for each category of service included in the project. The applicants state that the purpose of the project is to serve the residents of the Jackson County Planning Area. The applicants’ state that they believe that if the Jackson County Long Term Care Facility is discontinued (Project #12-050) that residents of that facility will utilize this new facility in Carbondale. The applicants provided two years of census data from the Jackson County facility that indicates that 65% of the patients of that home come from the Jackson County Long Term Planning Area. Also provided were 83 patient preference letters indicating that 83 patients currently residing in the Jackson County Home will utilize the proposed new facility. It would appear that the proposed nursing home will serve the residents of the planning area. The applicants have met the requirements of this criterion.

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE GENERAL LONG TERM CARE REVIEW CRITERION (77 IAC 1125.530).

D) Criterion 1125.550 - Service Demand

d) Projected Referrals An applicant proposing to establish a category of service or establish a new LTC facility shall submit the following:

1) Letters from referral sources (hospitals, physicians, social

services and others) that attest to total number of prospective residents (by zip code of residence) who have received care at existing LTC facilities located in the area during the 12-month period prior to submission of the application. Referral sources shall verify their projections and the methodology used;



The applicants did not provide referral letters as required. By rule to document demand for the service referral letters must be provided. The applicants provided a memo of understanding between Jackson County and the applicants that states “UDI (the applicant) agrees to offer placement for all residents of the Jackson County Nursing Home. “ The applicants provided resident preference letters that indicate 83 residents from the Jackson County Home prefer to reside in the proposed nursing care facility. These letters were signed by the resident, dated and signed by the Administrator of the Jackson County Home. THE STATE AGENCY FINDS THE PROPOSED PROJECT DOES NOT APPEARS TO BE IN CONFORMANCE WITH THE GENERAL LONG TERM CARE REVIEW CRITERION (77 IAC 1125.550).

E) Criterion 1125.570 - Service Accessibility

The number of beds being established or added for each category of service is necessary to improve access for planning area residents. a) Service Restrictions The applicant shall document that at least one of the following factors exists in the planning area, as applicable: 1) The absence of the proposed service within the planning area; 2) Access limitations due to payor status of patients/residents, including, but not limited to, individuals with LTC coverage through Medicare, Medicaid, managed care or charity care; 3) Restrictive admission policies of existing providers; 4) The area population and existing care system exhibit indicators of medical care problems, such as an average family income level below the State average poverty level, or designation by the Secretary of Health and Human Services as a Health Professional Shortage Area, a Medically Underserved Area, or a Medically Underserved Population; 5) For purposes of this Section 1125.570 only, all services within the 45-minute normal travel time meet or exceed the occupancy standard specified in Section 1125.210(c).



There is no absence of service in the planning area, no access limitations due to payor status, no restrictive admission policies of existing providers and no evidence of the health care system exhibiting medical care problems. In addition there are existing providers not operating at the 90% target occupancy within 45 minutes.

THE STATE AGENCY FINDS THE PROPOSED PROJECT DOES NOT APPEAR TO BE IN CONFORMANCE WITH THE GENERAL LONG TERM CARE REVIEW CRITERION (77 IAC 1125.570).

F) Criterion 1125.580 - Unnecessary Duplication/Maldistribution

a) The applicant shall document that the project will not result in

an unnecessary duplication. The applicant shall provide the following information:

1) A list of all zip code areas that are located, in total or in part, within 30 minutes normal travel time of the project's site;

2) The total population of the identified zip code areas (based upon the most recent population numbers available for the State of Illinois); and

3) The names and locations of all existing or approved LTC facilities located within 30 minutes normal travel time from the project site that provide the categories of bed service that are proposed by the project.

b) The applicant shall document that the project will not result in

maldistribution of services. Maldistribution exists when the identified area (within the planning area) has an excess supply of facilities, beds and services characterized by such factors as, but not limited to: 1) A ratio of beds to population that exceeds one and one-half times the State average; 2) Historical utilization (for the latest 12-month period prior to submission of the application) for existing facilities and services that is below the occupancy standard established pursuant to Section 1125.210(c); or



3) Insufficient population to provide the volume or caseload necessary to utilize the services proposed by the project at or above occupancy standards.

Ten of the 11 existing facilities within 30 minutes are not operating at the target occupancy of 90%. Based upon the 2011 utilization there are 230 beds available within 30 minutes. The establishment of this facility will create an excess supply of beds and result in a duplication of service.

THE STATE AGENCY FINDS THE PROPOSED PROJECT DOES NOT APPEAR TO BE IN CONFORMANCE WITH THE GENERAL LONG TERM CARE REVIEW CRITERION (77 IAC 1125.580).

G) Criterion 1125.580 – Impact on Other Area Providers

c) The applicant shall document that, within 24 months after project completion, the proposed project:

1) Will not lower the utilization of other area providers below the occupancy standards specified in Section 1125.210(c); and

2) Will not lower, to a further extent, the utilization of other area facilities that are currently (during the latest 12-month period) operating below the occupancy standards.

Since CY 2005 facilities in the Jackson County Planning Area have been below 60% utilization. It would appear that the establishment of this new facility will have an impact on other area providers. The applicants have not met this criterion. THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT DOES NOT APPEARS TO BE IN CONFORMANCE WITH THE GENERAL LONG TERM CARE REVIEW CRITERION (77 IAC 1125. 580)

H) Criterion 1125.590 - Staffing Availability

The applicant shall document that relevant clinical and professional staffing needs for the proposed project were considered and that staffing requirements of licensure, certification and applicable accrediting agencies can be met. In addition, the applicant shall document that necessary staffing is available by providing letters of interest from prospective staff members, completed applications for



employment, or a narrative explanation of how the proposed staffing will be achieved. The applicants state that sufficient staff will be available if the State Board approves the discontinuation of the Jackson County Nursing Home. The applicants have stated that all employees of the Jackson County Nursing Home will be offered employment at the new facility. THE STATE AGENCY FINDS THE PROPOSED PROJECT TO BE IN CONFORMANCE WITH THE WITH THE STAFFING AVAILABILITY REVIEW CRITERION (77 IAC 1125.590).

I) Criterion 1125.600 - Performance Requirements – Bed Capacity/Facility

Size The maximum size of a general long term care facility is 250 beds, unless the applicant documents that a larger facility would provide personalization of patient care and documents provision of quality care based on the experience of the applicant and compliance with IDPH's licensure standards (77 Ill. Adm. Code: Chapter I, Subchapter c − Long-Term Care Facilities) over a two-year period of time.

The applicants note the facility will consist of 120 skilled nursing beds after project completion. It appears the applicants are in conformance with the Bed Capacity criterion.

THE STATE AGENCY FINDS THE PROPOSED PROJECT TO BE IN CONFORMANCE WITH THE BED CAPACITY/FACILITY SIZE CRITERION (77 IAC 1125.600).

J) Criterion 1125.610 - Community Related Functions

The applicant shall document cooperation with and the receipt of the endorsement of community groups in the town or municipality where the facility is or is proposed to be located, such as, but not limited to, social, economic or governmental organizations or other concerned parties or groups. Documentation shall consist of copies of all letters of support from those organizations. The applicants provided 28 letters of support from the community in support of this project. The applicants have met the requirements of this criterion.



THE STATE AGENCY FINDS THE PROPOSED PROJECT TO BE IN CONFORMANCE WITH THE COMMUNITY RELATED FUNCTIONS CRITERION (77 IAC 1125.610)

K) Criterion 1125.620 – Project Size The criterion states: “The applicant shall document that the amount of physical space proposed for the project is necessary and not excessive. The proposed gross square footage (GSF) cannot exceed the GSF standards of Appendix B, unless the additional GSF can be justified by documenting one of the following:

1) Additional space is needed due to the scope of services provided,

justified by clinical or operational needs, as supported by published data or studies;

2) The existing facility's physical configuration has constraints or

impediments and requires an architectural design that results in a size exceeding the standards of Appendix B;

3) The project involves the conversion of existing bed space that

results in excess square footage.” The applicant is proposing 463 GSF per room which is below the State Board standard. The applicant has met the requirement of this criterion. A positive finding can be made for this criterion.

TABLE FIVE Project #12-049

Departments Unit of Measure

State Standard/Unit of Measure

State Standard GSF

Proposed GSF Difference

Meets Standards

Nursing Care Beds 120 beds/ 463 GSF per bed

435-713 BGSF/Bed 85,560 55,529 GSF 30,031 GSF Yes

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE SIZE OF PROJECT – REVIEW CRITERION (77 IAC 1125.620).

L) Criterion 1125.630 - Zoning

The applicant shall document one of the following:



a) The property to be utilized has been zoned for the type of facility

to be developed; b) Zoning approval has been received; or c) A variance in zoning for the project is to be sought The applicants have provided documentation that the property is zoned for the type of facility to be developed. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE SIZE OF PROJECT – REVIEW CRITERION (77 IAC 1125.630).

M) Criterion 1125.640 – Assurances

1) The applicant representative who signs the CON application shall submit a signed and dated statement attesting to the applicant's understanding that, by the second year of operation after the project completion, the applicant will achieve and maintain the occupancy standards specified in 77 Ill. Adm. Code 1100 for each category of service involved in the proposal.

2) For beds that have been approved based upon representations for

continuum of care (subsection (c)) or defined population (subsection (d)), the facility shall provide assurance that it will maintain admissions limitations as specified in those subsections for the life of the facility. To eliminate or modify the admissions limitations, prior approval of HFPB will be required.

The applicants provided the required signed documents to satisfy the Assurances Review criterion 1125.640, page 384 of the application for permit. THE STATE AGENCY FINDS THE PROPOSED PROJECT TO BE IN CONFORMANCE WITH THE WITH THE ASSURANCES REVIEW FUNCTIONS CRITERION (77 IAC 1125.640).

IX. 1120.800 - Availability of Funds

The applicant shall document that financial resources shall be available and be equal to or exceed the estimated total project cost plus any related project costs by providing evidence of sufficient financial resources from the following sources, as applicable:



a) Cash and Securities − statements (e.g., audited financial statements, letters from financial institutions, board resolutions) as to:

1) the amount of cash and securities available for the project,

including the identification of any security, its value and availability of such funds; and

2) interest to be earned on depreciation account funds or to be

earned on any asset from the date of applicant's submission through project completion;

b) Pledges − for anticipated pledges, a summary of the anticipated pledges showing anticipated receipts and discounted value, estimated time table of gross receipts and related fundraising expenses, and a discussion of past fundraising experience. Provide a list of confirmed pledges from major donors (over $100,000);

c) Gifts and Bequests − verification of the dollar amount, identification of any conditions of use, and the estimated time table of receipts;

d) Debt − a statement of the estimated terms and conditions (including the debt time period, variable or permanent interest rates over the debt time period, and the anticipated repayment schedule) for any interim and for the permanent financing proposed to fund the project, including:

1) For general obligation bonds, proof of passage of the required referendum or evidence that the governmental unit has the authority to issue the bonds and evidence of the dollar amount of the issue, including any discounting anticipated;

2) For revenue bonds, proof of the feasibility of securing the specified amount and interest rate;

3) For mortgages, a letter from the prospective lender attesting to the expectation of making the loan in the amount and time indicated, including the anticipated interest rate and any conditions associated with the mortgage, such as, but not limited to, adjustable interest rates, balloon payments, etc.;



4) For any lease, a copy of the lease, including all the terms and conditions, including any purchase options, any capital improvements to the property and provision of capital equipment;

e) Governmental Appropriations − a copy of the appropriation Act or ordinance accompanied by a statement of funding availability from an official of the governmental unit. If funds are to be made available from subsequent fiscal years, a copy of a resolution or other action of the governmental unit attesting to this intent;

f) Grants − a letter from the granting agency as to the availability of funds in terms of the amount and time of receipt;

g) All Other Funds and Sources − verification of the amount and type of any other funds that will be used for the project.

The applicants are funding the entire project with cash and securities. A review of the audited financial statements indicates that the applicants have sufficient cash to fund the project. The applicants have met this requirement. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO MEET THE REQUIREMENTS OF THE AVAILABILITY OF FUNDS CRITERION (77 IAC 1125.800)

X. 1125.800 - Financial Viability

The applicant shall demonstrate the financial feasibility of the project based upon the projection of reasonable Medicare, Medicaid and private pay charges, expenses of operation, and staffing patterns relative to other facilities in the market area in which the proposed project will be located. The applicant provided the necessary documentation to meet the requirements of this criterion. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO MEET THE REQUIREMENTS OF THE FINANCIAL FEASBILITY CRITERION (77 IAC 1125.800)

XI. Review Criteria - Economic Feasibility



A. Criterion 1125.800(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;

B) or 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 applicant must submit a notarized statement signed by two authorized representatives of the applicant entity (in the case of a corporation, one must be a member of the board of directors) that attests to compliance with this requirement.

C) The project is classified as a Class B project. The co-applicant do not have a bond rating of “A”. No capital costs, except fair market value of leased space and used equipment, are being incurred by the co-applicant.”

The proposed project is being funded with cash and securities no debt is being incurred for this project. The applicants have met this requirement.

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO MEET THE REQUIREMENTS OF THE REASONABLENESS OF FINANCING CRITERION (77 IAC 1125.800 (a))

B. Criterion 1125.800 (b) - Conditions of Debt Financing

This criterion states: “The applicant must certify that the selected form of debt financing the project will be at the lowest net cost available or if a more costly form of financing is selected, that form is more advantageous due to such terms



as prepayment privileges, no required mortgage, access to additional indebtedness, term (years), financing costs, and other factors. In addition, if all or part of the project involves the leasing of equipment or facilities, the applicant must certify that the expenses incurred with leasing a facility and/or equipment are less costly than constructing a new facility or purchasing new equipment. Certification of compliance with the requirements of this criterion must be in the form of a notarized statement signed by two authorized representative (in the case of a corporation, one must be a member of the board of directors) of the applicant entity.”

The proposed project is being funded with cash and securities no debt is being incurred for this project. The applicants have met this requirement.

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO MEET THE REQUIREMENTS OF THE TERMS OF DEBT FINANCING CRITERION (77 IAC 1125.800 (b))

C. Criterion 1120.800 (c) - Reasonableness of Project Cost

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.”

The State Agency notes the cost identified below are for clinical expenses only.

Preplanning Costs – These costs total $63,750 or less than 1% of construction, contingency, and equipment costs. This appears reasonable compared to the State standard of 1.8%.

Site Survey Soil Investigation and Site Preparation - These costs total $29,750 or less than 1% of construction and contingency costs.



New Construction and Contingencies – This cost is $9,951,588 or $179.42 per GSF. This appears reasonable when compared to the adjusted State Board standard of $181.28 per GSF.

Contingencies – This cost is $650,250 or 6.99% of new construction costs. This appears reasonable when compared to the State Board standards of 10% for new construction.

Architectural and Engineering Fees – This cost is $403,750 or 4.05% of construction and contingency costs. This appears reasonable when compared to the State Board standard of 6.42 – 9.64%.

Consulting and Other Fees – These costs total $21,250. The State Board does not have a standard for this cost. Moveable Equipment - These costs total $612,000, or $5,100 per bed. This is reasonable compared to the State Standard of $6,491.00 per LTC bed.

Other Costs to be Capitalized – These costs total $612,000. The State Board does not have a standard for this cost.

THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO MEET THE REQUIREMENTS OF REASONABLENESS OF PROJECT COST CRITERION (77 IAC 1125.800(c))

D. Criterion 1125.800(d) - Projected Operating Costs

The criterion states: “The applicant 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 cost means the fully allocated costs of salaries, benefits, and supplies for the service.” The applicant state this cost will be $170.07 per patient day. The State Board does not have a standard for this cost.



THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE PROJECTED OPERATING COSTS REVIEW CRITERION (77 IAC 1125.800 (d)).

E. Criterion 1125.800(e) - Total Effect of the Project on Capital Costs

The criterion states: “The applicant must provide the total projected annual capital costs (in current dollars per equivalent patient day) for the first full 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.” The applicant state this cost will be $31.30 per patient day. The State Board does not have a standard for this cost. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH THE TOTAL EFFECT OF THE PROJECT ON CAPITAL COSTS REVIEW CRITERION (77 IAC 1125.800 (e)).

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