DOCKET NO: A-13 BOARD MEETING: January 12-13, 2010 PROJECT NO ...

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DOCKET NO: A-13 BOARD MEETING: January 12-13, 2010 PROJECT NO ...

  1. 1. DOCKET NO: BOARD MEETING: PROJECT NO: PROJECT COST: A-13 January 12-13, 2010 09-034 Original: $8,000 FACILITY NAME: CITY: Current: Regional Surgicenter, Ltd. Moline, IL TYPE OF PROJECT: Substantive HSA: XPROJECT DESCRIPTION: The State Board is being asked to consider theestablishment of a multi-specialty ambulatory surgical treatment center. Project cost:$8,000.
  2. 2. STATE AGENCY REPORT APPLICATION SUMMARY Facility Name Regional Surgicenter, Ltd. Gastroenterology Consultants, S.C. Applicants RSC Illinois LLC, d/b/a Regional Surgicenter, Ltd Location Moline Application Received July 28, 2009 Application Deemed Complete August 10, 2009 Scheduled Review Period Ended December 8, 2009 Review Period Extended by the State Agency No Public Hearing Requested No Applicants’ Deferred Project No Can Applicants Request Another Deferral? Yes Applicants’ Modified the Project NoI. The Proposed Project The applicant proposes to establish a multi-specialty ambulatory surgical treatment center (“ASTC”) by adding specialties to its currently established single-specialty ASTC. The estimated project cost is $8,000.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 Gastroenterology Consultants, S.C., RSC Illinois, LLC, and Regional Surgicenter, Ltd. The facility is located in Moline, Illinois, Rock Island County, in HSA X. This is a substantive project subject to both a Part 1110 and Part 1120 review. This project is before the State Board because the proposed project substantially changes the scope or functional operation of a health care facility (77 IAC 1130.140) by adding a surgical specialty not previously approved by IHFSRB for an ambulatory surgical treatment center that has not been classified as a multi-specialty ASTC. A public hearing was offered on this project; however, no hearing was requested. The State Agency received one letter of opposition regarding this project. Project obligation will occur at the time of permit issuance. The anticipated project completion date is December 15, 2010.
  3. 3. State Agency ReportProject #09-034Page 2 of 23IV. The Proposed Project – Details The applicants are Gastroenterology Consultants, S.C., RSC Illinois, LLC, and Regional Surgicenter, Ltd. The facility is located in Moline, Illinois, at 545 Valley View Drive. The applicant proposes to establish a multi-specialty ASTC by adding plastic surgery to its currently established limited-specialty ASTC. The estimated project cost is $0. The existing facility specializes in Gastroenterlogy, and General Surgery. The ASTC has eight operating rooms and no recovery stations. The existing facility reported 14,154.75 surgical hours and 1.25 hours per procedure on its 2007 IDPH ASTC Questionnaire. The applicants are not proposing new construction or the modernization of their existing surgical facility therefore no gross square footage will be reviewed to determine conformance with the State Board standards. The applicants indicate that project funds will be expended to purchase the following specialized equipment: • Liposuction Machine: $5,000 • Light Source: $2,500 • Miscellaneous Attachments: $500 TOTAL $8,000V. Project Costs and Sources of Funds TABLE ONE Monroe County Surgical Center, LLC Use of Funds Clinical Site Preparation $0 Contingencies $0 Architectural/Engineering Fees $0 Consulting & Other Fees $0 Moveable or Other Equipment $8,000 Net Interest Expense During Construction $0 Fair Market Value of Leased Space or Equipment $0 Totals $8,000 Source of Funds Cash and Securities $8,000 Other Funds and Sources $0 Total $8,000
  4. 4. State Agency ReportProject #09-034Page 3 of 23VI. General Review Criteria A. Criterion 1110.230(a) – Purpose of Project The Criterion states: 1. Document that the project will provide health services that improve the health care or well-being of the market area population to be served. 2. Define the planning area or market area, or other, per the applicant’s definition. 3. Identify the existing problems or issues that need to be addressed, as applicable and appropriate for the project. [See 1110.230(b) for examples of documentation.] 4. Cite the sources of the information provided as documentation. 5. Detail how the project will address or improve the previously referenced issues, as well as the population’s health status and well- being. 6. Provide goals with quantified and measurable objectives, with specific timeframes that relate to achieving the stated goals. The applicants are proposing to establish a new plastic surgery category of service in an ASTC that currently offers Gastroenterology and General Surgery. The applicants state that no ASTCs currently exist in the Quad Cities area, offering Plastic Surgery services. This void leads patients in search of this service to use hospitals, which are less cost effective. The State Agency has identified four hospitals and two ASTC in a 30-minute drive radius from the applicant facility (See Table Two). Of these facilities,
  5. 5. State Agency Report Project #09-034 Page 4 of 23 TABLE TWO Facilities within 30 Minutes of Central Illinois Surgery Center, LLC ASTC Provider/ Travel Operating Rooms/ Multi/Limited Specialty and Distance City Time Recovery Stations Surgical Services Quad City Ambulatory .25 .03 2/8 Multi Surgery Center, Moline Oral/Maxillofacial, Orthopedic, Pain Management, Podiatry Quad City Endoscopy, 2 .6 2/8 Limited LLC Gastro-Intestinal HOSPITALS Trinity Medical Center, 2 1.2 9/13 Neurology, OB/Gynecology, Orthopedic, Thoracic Moline Plastic Surgery, Gastroenterology, General, Oral/Maxillofacial, Otolaryngology, Urology Trinity Medical Center- 6 3.3 7/7 Cardiovascular, Neurology, Gastroenterology, West, Rock Island OB/Gynecology, Orthopedic, Otolaryngology, Plastic Surgery, Thoracic, Urology, General Genesis Medical Center 13 8.6 2/6 Cardiovascular, Neurology, Gastroenterology, Illini Campus, Silvis Plastic Surgery, Oral/Maxillofacial, Otolaryngology, OB/Gynecology, Ophthalmology, Orthopedic, Podiatry, Urology, General Hammond Henry 29 24.3 3/14 Gastroenterology, Plastic Surgery, OB/Gynecology, Hospital, Geneseo Ophthalmology, Orthopedic, Podiatry, Urology, GeneralTotal Units 25/56*Facility supplied a letter of acceptance. TABLE THREE Surgical Utilization of Providers within the Proposed 30-Minute GSA Hospitals Hours Number of Equiv. OP ORs Excess of ORs ORs Justified OR Hours of Surgery Capacity OPFacility City SurgeryTrinity Medical Center Moline 8,396 7,749 9 1.2 6 YesTrinity Medical Center-West Rock Island 8,563 2,919 7 1.9 6 YesGenesis Medical Center-Illini Campus Silvis 5,116 2,982 2 1.3 2 NoHammond Henry Hospital Geneseo 4,318 3,376 3 1.3 3 No Ambulatory Surgery Treatment Centers Multi or Limited Number of Hours of ORs Excess Ors Surgery Justified OR Facility City CapacityQuad City Ambulatory Surgical Treatment Ctr. Multi Moline 2 4,254 3 NoQuad City Endoscopy* Limited Moline 2 2,046 2 No*Procedure rooms instead of surgical roomsInformation taken from 2008 IDPH Hospital and ASTC Questionnaires
  6. 6. State Agency ReportProject #09-034Page 5 of 23 B. Criterion 1110.230(b) - Background of Applicant The Background of Applicant “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 applicant provided licensing information for the current facility. The applicant provided a letter certifying that there has been no adverse action against its facilities, and the applicant authorized the Agency to access information. C. Criterion 1110.230(c) - Alternatives The 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. Build a New Surgery Center Dedicated to Plastic Surgery.
  7. 7. State Agency ReportProject #09-034Page 6 of 23 The applicant rejected this alternative due to the estimated cost to build a new facility ($3,000,000). The applicants also noted underutilization of their current facility, and the opportunity to address this issue through the proposed project. 2. Do Nothing. Continue to Provide Plastic Surgery in the Hospital Setting Only. The applicant rejected this alternative because it did not address the issues of expense and inefficiencies associated with hospital-based plastic surgery service. The applicants feel plastic surgery service in an outpatient setting would best remedy the issues of expense and inefficiencies. 3. Establish a Joint Venture with Other Area ASTCs. The applicants rejected this alternative, citing the need for renovations that would be costlier than the ones associated with the proposed project. The applicants feel the most cost-effective alternative would be to renovate one of their existing general surgery suites. 4. Expand the RSC Facility. The applicants felt this alternative would be unnecessary, based on the cost of construction and the fact that the increased surgical volume could be handled in eth existing space. The applicant proposes to establish a multi-specialty ASTC by adding plastic surgery service to its currently established single-specialty ASTC. The costs for the project are for specialized equipment and no new construction is proposed. Although there are facilities in the GSA having excess capacity, this project does not propose to add any additional capacity and will not therefore add to any maldistribution in the area. D. Criterion 1110.234 Project Service Utilization The Criterion States:
  8. 8. State Agency ReportProject #09-034Page 7 of 23 This criterion is applicable only to projects or portions of projects that involve services, functions or equipment for which HFPB has not established utilization standards or occupancy targets in 77 Ill. Adm. Code 1100. Document that in the second year of operation, the annual utilization of the service or equipment shall meet or exceed the utilization standards specified in 1110.Appendix B. The 2008 ASTC Profile reports a total of 14,810 hours of surgery, which justifies the need for 8 operating rooms. The applicants report a total of 11,768 total Gastroenterology and General Surgical procedures for 2008. And when applied to the standard of 1,500 hours of surgery per room, also justifies the need for eight operating rooms. The applicants project to provide an additional 250-500 hours of surgical service at their facility, in the existing facility, upon project approval. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH CRITERIA 1110.234 PROJECT SERVICE UTILIZATION. A. Criterion 1110.530 Planning Area Need B(1). Formula Need Calculation The criterion states: 1. Complete the requested information for each category of service involved. Refer to 77 Ill. Adm. Code 1100 for information concerning planning areas, bed/station/key room deficits and occupancy/utilization standards. 2. Indicate the number of beds/stations/key rooms proposed for each category of service. 3. Document that the proposed number of beds/stations/key rooms is in conformance with the projected deficit specified in 77 Ill. Adm. Code 1100. 5. Document that the proposed number of beds/stations/key rooms will
  9. 9. State Agency ReportProject #09-034Page 8 of 23 be in conformance with the applicable occupancy/utilization standard(s) specified in Ill. Adm. Code 1100. The applicants supplied patient origin information that illustrates at least 50% of the additional patient volume will originate from the planning area. Patient origin information by zip code was also provided for patients of the plastic surgeon, Aric Eckhart, M.D. The data shows that more than 58% of plastic surgeon’s patients are from the planning area. C. Service Demand-Establishment of Category of Service 1. Historical Referrals If the applicant is an existing facility, document the number of referrals for the last two years for each category of service. 2. Projected Referrals An applicant proposing to establish a category of service or establish a new hospital shall submit physician referral letters containing ALL of the information outlined in Criterion 1110.530(b)(3) The applicants utilized the formulary in Administrative Code 1110 Appendix B and determined a need for service based on historical utilization data for the last two years (See Table Four). The applicants also provided projected utilization standards for the plastic surgery service by including a letter from Aric Eckhardt, M.D., attesting to the performance of 871 outpatient plastic surgery procedures in 2008. TABLE FOUR Historical Service Demand, Regional Surgicenter, Moline Category of Service Annual Procedures per Procedures per Utilization Room 2007 Room 2008 Standards Gastroenterology 250+ cases 11,263 11,635 General Surgery* 250+ cases 38 133 *General Surgery was approved in 2007, and the first full year of providing the service occurred in 2008. Between 7/1/08 and 7/1/09, RSC has performed 235 general surgery procedures, and anticipate exceeding the standard within the next two years.
  10. 10. State Agency ReportProject #09-034Page 9 of 23 E. Service Accessibility/Service Restrictions 1. The applicant shall document that at least one of the factors listed in subsection (b)(5) of the criteria for subject service(s) exists in the planning area. 2. Provide documentation, as applicable, listed in subsection (b)(5) of the criteria for the subject service(s), concerning existing restrictions to service access: The applicants note no non-hospital based ambulatory surgical services exist in the defined service area that provides outpatient plastic surgery. The applicants also note plastic surgery is only available to inpatients in a hospital setting (See Table Two). The applicants cite unnecessary expense, and a greater risk of exposure to infection. F. Unnecessary Duplication/Maldistribution The applicants provided a list of all zip codes within the proposed service area, with the percentage of zip code addresses served in each county. The applicants note because the proposed facility would be the only facility in the defined service area offering outpatient plastic surgical services, no unnecessary duplication or maldistribution of service exists.
  11. 11. State Agency ReportProject #09-034Page 10 of 23 H. Staffing Availability 1. For each category of service, document that relevant clinical and professional staffing needs for the proposed project were considered and that licensure and JCAHO staffing requirements can be met. 2. Provide the following documentation: a. The name and qualification of the person currently filling the position, if applicable; and b. Letters of interest from potential employees; and c. Applications filed for each position; and d. Signed contracts with the required staff; or e. A narrative explanation of how the proposed staffing will be achieved. The applicants believe they can meet the clinical staffing requirements with the staff currently employed. The staff that currently provides clinical support for endoscopic and general surgery services is also experienced in assisting with plastic surgery. RSC is AAAHC accredited, and the applicants say they will continue to meet the standards of this accrediting body. I. Performance Requirements/Assurances The applicants utilized the formulary in Administrative Code 1110 Appendix B and determined a need for service based on a referral letter from Aric Eckhardt, M.D., committing to perform at 250 procedures at the proposed facility. The applicants also sufficiently identified a service need based on the absence of outpatient plastic surgery services within the proposed geographical service area, and supplied a signed statement of attestation that the facility will achieve sufficient utilization standards by the second year after project completion. THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS TO BE IN CONFORMANCE WITH CRITERIA 1110.530 PLANNING AREA NEED.
  12. 12. State Agency ReportProject #09-034Page 11 of 23VII. Review Criteria – Non-Hospital Based Ambulatory Surgery A. Criterion 1110.1540(a) – Scope of Services Provided The criterion states: “Any applicant proposing to establish a non-hospital based ambulatory surgical category of service must detail the surgical specialties that will be provided by the proposed project and whether the project will result in a limited specialty or multi-specialty ambulatory surgical treatment center (ASTC). 1) The applicant must indicate which of the following surgical specialties will be provided at the proposed facility: Cardiovascular, Dermatology, Gastroenterology, General/Other, Neurological, Obstetrics/Gynecology, Ophthalmology, Oral/Maxillofacial, Orthopaedic, Otolaryngology, Plastic, Podiatry, Thoracic, and Urology. 2) The applicant must indicate which of the following type of ASTC will result from the proposed project: A) Limited specialty ASTC, which provides one or two of the surgical specialties listed in this Section; or B) Multi-specialty ASTC, which provides at least three of the surgical specialties listed in this Section. In order to be approved as a multi-specialty ASTC, the applicant must document that at least 250 procedures will be performed in each of at least three of the surgical specialties listed in this Section.” “A permit is required for the addition of a surgical specialty by a limited specialty ASTC.” The applicants propose to re-classify their limited specialty ASTC as a multi-specialty facility by adding plastic surgery to its existing Gastroenterology and General Surgical service. The applicants provided one physician referral letter identifying 250 plastic surgery referrals. Therefore the applicant meets the 250 procedure volume as required of the criterion.
  13. 13. State Agency ReportProject #09-034Page 12 of 23 THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE SCOPE OF SERVICES PROVIDED CRITERION (77 IAC 1110.1540(a)). B. Criterion 1110.1540(b) – Target Population The criterion states: “Because of the nature of ambulatory surgical treatment, the State Board has not established geographic service areas for assessing need. Therefore, an applicant must define its intended geographic service area and target population. However, the intended geographic service area shall be no less than 30 minutes and no greater than 60 minutes travel time (under normal driving conditions) from the facilitys site.” The applicants provided a map with the designated geographic service area (“GSA”) indicating the estimated population to be 212,936. Travel time from the proposed facility to the GSA borders is approximately 30 - 45 minutes. This criterion requires the geographic service area shall be no less than 30 minutes and no greater than 60 minutes travel time from the facility’s site; therefore, a positive finding can be made. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE TARGET POPULATION CRITERION (77 IAC 1110.1540(b)). C. Criterion 1110.1540(c) – Projected Patient Volume The criterion states: “1) The applicant must provide documentation of the projected patient volume for each specialty to be offered at the proposed facility. Documentation must include physician referral letters which contain the following information: A) the number of referrals anticipated annually for each specialty; B) for the past 12 months, the name and location of health care facilities to which patients were referred, including the number of patients referred for each surgical specialty by facility;
  14. 14. State Agency ReportProject #09-034Page 13 of 23 C) a statement by the physician that the information contained in the referral letter is true and correct to the best of his/her information and belief; and D) the typed or printed name and address of the physician, his/her specialty and his/her notarized signature. 2) Referrals to health care providers other than ambulatory surgical treatment centers (ASTC) or hospitals will not be included in determining projected patient volume. The applicant shall provide documentation demonstrating that the projected patient volume as evidenced by the physician referral letters is from within the geographic service area defined under subsection (b).” The applicants propose to establish a multi-specialty ASTC with eight operating rooms by adding plastic surgery service to the currently established limited-specialty ASTC. The applicants provided one physician referral letter identifying 250 plastic surgery referrals. The existing facility reported 11,635 gastroenterological and 133 general surgical procedures on its 2008 IDPH ASTC Questionnaire. The referral letter does indicate at what hospitals the surgeries have been performed. The criterion states “for the past 12 months, the name and location of health care facilities to which patients were referred, including the number of patients referred for each surgical specialty by facility. The State Agency is able to make a positive finding regarding this criterion. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE PROJECTED PATIENT VOLUME CRITERION (77 IAC 1110.1540(c)). D. Criterion 1110.1540(d) – Treatment Room Need Assessment The criterion states: “1) Each applicant proposing to establish or modernize a non- hospital based ambulatory surgery category of service must document that the proposed number of operating rooms are needed to serve the projected patient volume. Documentation must include the average time per procedure for the target population including an explanation as to how this average time per procedure was developed. The following formula can be applied in determining treatment room need:
  15. 15. State Agency ReportProject #09-034Page 14 of 23 Required Treatment = Hours of Surgery/Year * Rooms 250 Days/Yr. x 7.5 Hrs./Day x .80** (*Hours of surgery includes cleanup and setup time and will be based on the projected volume) (**80% is desired occupancy rate) 2) There must be a need documented for at least one fully utilized (1,500 hours) treatment room for a new facility to be established. Also, utilizing the formula the application must document the need for each treatment room proposed.” The applicant proposes to establish a multi-specialty ASTC by adding plastic surgery service to its currently established limited-specialty ASTC. The existing facility reported 14,810 surgical hours on its 2008 IDPH ASTC Questionnaire. The applicants provided a physician referral letter that demonstrates a referral volume of 250 patients. The State Board standard is 1,500 hours per OR. The applicant indicates that it anticipates 11,763 (11,263 gastroenterology, 250 general surgery, and 250 plastic surgery) surgery patients after the second year. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE TREATMENT ROOM NEED ASSESSMENT CRITERION (77 IAC 1110.1540(d)). E. Criterion 1110.1540(e) "Impact on Other Facilities" – Review Criterion The criterion states: “An applicant proposing to change the specialties offered at an existing ASTC or proposing to establish an ASTC must document the impact the proposal will have on the outpatient surgical capacity of all other existing ASTCs and hospitals within the intended geographic service area and that the proposed project will not result in an unnecessary duplication of services or facilities. Documentation shall include any correspondence from such existing facilities regarding the impact of the proposed project, and correspondence from physicians intending to refer patients to the proposed facility. Outpatient surgical capacity will be determined by the Agency, utilizing the latest available data from the
  16. 16. State Agency ReportProject #09-034Page 15 of 23 Agencys annual questionnaires, and will be the number of surgery rooms for ASTCs and the number of equivalent outpatient surgery rooms for hospitals. Equivalent outpatient surgery rooms for hospitals are determined by dividing the total hours of a hospitals outpatient surgery by 1,500 hours. In addition to documentation submitted by the applicant, the State Agency shall review utilization data from annual questionnaires submitted by such health care facilities and data received directly from health facilities located within the intended geographic service area, including public hearing testimony.” The applicant proposes to establish a multi-specialty ASTC with eight operating rooms, by adding plastic surgery service to its currently established limited-specialty ASTC. The applicant contacted 5 facilities within the proposed GSA. No responses were received from any of the providers. Table Three provides surgical utilization data for the 4 hospitals and 2 ASTCs within the proposed GSA. 2 of the 4 hospitals within the proposed GSA have excess capacity and none of the 2 ASTCs have excess capacity (See Table 3). The excess surgical capacity within the proposed GSA, as demonstrated Table Three, will not allow the State Agency to make a positive finding for these criteria. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT DOES NOT MEETS THE REQUIREMENTS OF THE IMPACT ON OTHER FACILITIES CRITERION - 1110.1540(e). F. Criterion 1110.1540(f) – Establishment of New Facilities This criterion is not applicable to this project because the applicant proposes to establish a multi-specialty ASTC by adding one surgical specialty to its currently established limited-specialty ASTC. The applicant is not proposing the establishment of a new facility. THE STATE AGENCY FINDS THE REQUIREMENTS OF THE ESTABLISHMENT OF NEW FACILITIES CRITERION (77 IAC 1110.1540(f)) IS NOT APPLICABLE TO THIS PROJECT. G. Criterion 1110.1540(g) – Charge Commitment
  17. 17. State Agency ReportProject #09-034Page 16 of 23 The Charge Commitment Criterion states: “In order to meet the purposes of the Act which are to improve the financial ability of the public to obtain necessary health services and to establish a procedure designed to reverse the trends of increasing costs of health care, the applicant shall include all charges except for any professional fee (physician charge). [20 ILCS 3960/2] The applicant must provide a commitment that these charges will not be increased, at a minimum, for the first two years of operation unless a permit is first obtained pursuant to 77 Ill. Adm. Code 1130.310(a).” The applicants state the proposed facility will maintain charges for the first two years of operation of the proposed surgery center; therefore, a positive finding can be made. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE CHARGE COMMITMENT CRITERION - 1110.1540(g). H. Criterion 1110.1540(h) – Change in Scope of Service The criterion states: “Any applicant proposing to change the surgical specialties currently being provided by adding one or more of the surgical specialties listed under subsection (a) of this Section must document one of the following: 1) that there are no other facilities (existing ASTCs or hospitals with outpatient surgical capacity) within the intended geographic service area which provide the proposed new specialty; or 2) that the existing facilities (existing ASTCs or hospitals with outpatient surgical capacity) within the intended geographic service area of the applicant facility are operating at or above the 80% occupancy target; or 3) that the existing programs are not accessible to the general population of the geographic service area in which the applicant facility is located.
  18. 18. State Agency ReportProject #09-034Page 17 of 23 The applicant proposes to establish a multi-specialty ASTC with eight operating rooms, by adding plastic surgery to its currently established limited-specialty (gastroenterology/general) ASTC. As seen from Tables Two and Three, there are hospitals that can provide the proposed specialty, but there are no outpatient facilities (ASTCs), offering plastic surgery service. There is excess surgical capacity in the proposed GSA a positive finding cannot be made. THE STATE AGENCY NOTES IT APPEARS THE APPLICANT MEETS THE REQUIREMENTS OF THE CHANGE IN SCOPE OF SERVICES CRITERION (77 IAC 110.1540(h)).VIII. Review Criteria - Financial Feasibility 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. Co-applicants must document compliance for the most recent three years for which audited financial statements are available. For Category B applications, the applicant 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 Co-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 applicant 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.
  19. 19. State Agency ReportProject #09-034Page 18 of 23 The applicants are RSC Illinois, LLC, Gastroenterology Consultants, S.C, and Regional Surgicenter, Ltd. The facility is located in Moline, Illinois, at 545 Valley View Drive. The applicant proposes to establish a multi- specialty ASTC with eight operating rooms, by adding plastic surgery service to its currently established limited-specialty ASTC (gastroenterology/general surgery). The State Agency notes that the estimated project cost is $8,000 and the applicant provided historical financial ratios for 2006, 2007, and 2008, and financial data for 2011, the first full fiscal year of operation, was not needed based on the category rating of the project. TABLE FIVE Regional Surgicenter, Ltd. Ratio Standard 2006 2007 2008 2011 Current Ratio >=1.5 2.7 2.2 1.5 Net Margin Percentage >=3.5% 49.48% 36.21% 39.64% Percent Debt to Total Capitalization <=80% N/A N/A N/A Projected Debt Service Coverage >=1.75 N/A N/A N/A Days Cash on Hand >=45 54 17 22 Cushion Ratio >=5 N/A N/A N/A The applicants claim to not have any long-term debt, making the Percent to Total Capitalization, Projected Debt Service Coverage, and Cushion Ratio inapplicable. It appears the applicants meet the remaining standards for the historical viability ratios. Therefore, a positive finding can be made. THE STATE AGENCY FINDS THE APPLICANT APPEARS TO MEET THE REQUIREMENTS FOR THE FINANCIAL VIABILITY CRITERION (77 IAC 1120.210 (a)) B. Criterion 1120.210(b) - Availability of Funds The criterion states: “The co-applicants must document that financial resources shall be available and be equal to or exceed the estimated total project cost and any related cost.”
  20. 20. State Agency ReportProject #09-034Page 19 of 23 The project is being funded with cash and securities in the amount of $8,000, and it appears that financial resources exist to fund this project. C. Criterion 1120.210(c) - Start-Up Costs The applicant is not establishing a new facility; therefore this criterion is not applicable. THE STATE AGENCY FINDS THE REQUIREMENTS FOR THE AVAILABILITY OF FUNDS AND THE START-UP COSTS CRITERIONS ARE NOT APPLICABLEIX. Review Criteria - Economic Feasibility A. Criterion 1120.310(a) - Reasonableness of Financing Arrangements B. Criterion 1120.310(b) - Terms of Debt Financing The applicant is not establishing a new facility and the project is being financed with cash and securities (no debt financing), therefore these criteria are not applicable. THE STATE AGENCY FINDS THE REQUIREMENTS FOR THE REASONABLENESS OF FINANCING ARRANGEMENTS, TERMS OF DEBT FINANCING ARE NOT APPLICABLE C. Criterion 1120.310(c) - Reasonableness of Project Cost 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
  21. 21. State Agency ReportProject #09-034Page 20 of 23 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
  22. 22. State Agency ReportProject #09-034Page 21 of 23 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. Movable Equipment Costs – These costs are $8,000. The State Board does not have a standard for these costs. D.Criterion 1120.310(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 costs mean the fully allocated costs of salaries, benefits, and supplies for the service.” The applicant projects no new operating expenses per procedure for the first year of operations. This criterion is not applicable. THE STATE AGENCY NOTES THE REQUIREMENTS OF THE PROJECTED OPERATING COSTS CRITERION (77 IAC 1120.310 (d)) IS NOT APPLICABLE. E. Criterion 1120.310(e) - Total Effect of the Project on Capital Costs The applicant is not establishing a new facility; therefore this criterion is not applicable. THE STATE AGENCY NOTES THE REQUIREMENTS OF THE EFFECTS OF THE PROJECT ON CAPITAL COSTS CRITERION (1120.310 (e)) IS NOT APPLICABLE. F. Criterion 1120.310(f) - Non-Patient Related Services
  23. 23. State Agency ReportProject #09-034Page 22 of 23 This criterion is not applicable.
  24. 24. AMBULATORY SURGICAL TREATMENT CENTER PROFILE-2008 REGIONAL SURGICENTER, LTD. MOLINEReference Numbers Facility Id 7001878 Number of Operating Rooms 8 Health Service Area 010 Planning Service Area 161 Procedure Rooms 0REGIONAL SURGICENTER, LTD. Exam Rooms 0545 VALLEY VIEW DRIVE Number of Recovery Stations Stage 1 0MOLINE, IL 61265-6138 Number of Recovery Stations Stage 2 0Administrator Date Kay Wynn, RN Completed 4/2/2009Registered Agent Dr Rao and Vedavathi Movva Type of OwnershipProperty Owner Corporation (RA required) Rao V Movva MDLegal OwnerVedavathi MovvaRao V Movva MD HOSPITAL TRANSFER RELATIONSHIPS HOSPITAL NAME NUMBER OF PATIENTS Genesis Hospital Illini Campus 0 Trinity Medical Center 17 0 0 0 STAFFING PATTERNS DAYS AND HOURS OF OPERATIONPERSONNEL FULL-TIME EQUIVALENTS Monday 10Administrator 1.00 Tuesday 10Physicians 0.00 Wednesday 10Nurse Anesthetists 0.00 Thursday 10Dir. of Nurses 1.00 Friday 10Reg. Nurses 10.00 Saturday 0Certified Aides 1.00 Sunday 0Other Hlth. Profs. 4.00Other Non-Hlth. Profs 0.00TOTAL 17.00FACILITY NOTESSource:Ambulatory Surgical Treatment Center Questionnaire for 2008, Illinois Department of Public Health, Health System Page 249 of 268 9/16/2009
  25. 25. AMBULATORY SURGICAL TREATMENT CENTER PROFILE-2008 REGIONAL SURGICENTER, LTD. MOLINE NUMBER OF PATIENTS BY AGE GROUP NUMBER OF PATIENTS BY PRIMARY PAYMENT SOURCEAGE MALE FEMALE TOTAL PAYMENT SOURCE MALE FEMALE TOTAL 0-14 43 58 101 Medicaid 218 633 85115-44 726 1,138 1,864 Medicare 1,708 2,154 3,86245-64 2,435 3,023 5,458 Other Public 69 48 11765-74 1,194 1,326 2,520 Insurance 3,056 3,580 6,63675+ Yea 781 1,044 1,825 Private Pay 122 168 290TOTAL 5,179 6,589 11,768 Charity Care 6 6 12 TOTAL 5,179 6,589 11,768 NET REVENUE BY PAYOR SOURCE for Fiscal Year Charity Charity Care Care Expense as % of Medicare Medicaid Other Public Private Insurance Private Pay TOTALS Expense Total Net Revenue 16.9% 1.5% 0.8% 73.5% 7.4% 100.0% 0% 1,584,367 142,221 74,553 6,904,322 692,354 9,397,817 19,377 OPERATING ROOM UTILIZATION FOR THE REPORTING YEAR SURGERY PREP and AVERAGE SURGERY CLEAN-UP TOTAL CASE TOTAL TIME TIME SURGERY TIME SURGERY AREA SURGERIES (HOURS) (HOURS) (HOURS) (HOURS) Cardiovascular 0 0.00 0.00 0.00 0.00 Dermatology 0 0.00 0.00 0.00 0.00 Gastroenterology 11635 5,817.50 8,726.25 14543.75 1.25 General 133 99.75 166.25 266.00 2.00 Laser Eye 0 0.00 0.00 0.00 0.00 Neurology 0 0.00 0.00 0.00 0.00 OB/Gynecology 0 0.00 0.00 0.00 0.00 Ophthalmology 0 0.00 0.00 0.00 0.00 Oral/Maxillofacial 0 0.00 0.00 0.00 0.00 Orthopedic 0 0.00 0.00 0.00 0.00 Otolaryngology 0 0.00 0.00 0.00 0.00 Pain Management 0 0.00 0.00 0.00 0.00 Plastic 0 0.00 0.00 0.00 0.00 Podiatry 0 0.00 0.00 0.00 0.00 Thoracic 0 0.00 0.00 0.00 0.00 Urology 0 0.00 0.00 0.00 0.00 TOTAL 11768 5,917.25 8,892.50 14809.75 1.26 PROCEDURE ROOM UTILIZATION FOR THE REPORTING YEAR PREP and AVERAGE SURGERY CLEAN-UP TOTAL CASE PROCEDURE TOTAL TIME TIME SURGERY TIME SURGERY AREA ROOMS SURGERIES (HOURS) (HOURS) (HOURS) (HOURS) Cardiac Catheteriza 0 0 0 0 0 0.00 Gastro-Intestinal 0 0 0 0 0 0.00 Laser Eye 0 0 0 0 0 0.00 Pain Management 0 0 0 0 0 0.00 TOTALS 0 0 0 0 0 0.00Source:Ambulatory Surgical Treatment Center Questionnaire for 2008, Illinois Department of Public Health, Health System Page 250 of 268 9/16/2009
  26. 26. 09-034 Regional Surgicenter, LLC-Moline 0 mi 5 10 15 20 25Copyright © 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, © Queens 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 aretrademarks of Tele Atlas, Inc.

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