Public Health and Health Planning Council

Project # 102376-C Albany County Nursing Home

County: Albany (Albany) Purpose: Construction Program: Residential Health Care Facility Submitted: November 15, 2010

Executive Summary
Description Albany County Nursing Home, a 250-bed county-owned residential health care facility (RHCF), requests approval to construct a 200-bed replacement facility and certify a 30-slot adult day health care program (ADHCP). The 200-bed facility will consist of 180 RHCF beds and 20 ventilator-dependent beds. Currently, the facility does not consist of any ventilator-dependent beds. This new facility will be constructed on land adjacent to the existing facility, which has reached the end of its useful life. The County is proposing that this new facility will address deficiencies in the existing building, including a lack of air conditioning, storage space and sprinkler system. Construction of this new facility will comply with the recommendations of the Commission on Health Care Facilities in the 21st Century (the Berger Commission). The Commission recommended the merger of Ann Lee Infirmary and Albany County Nursing Home, building a modern unified facility, and downsizing the number of nursing home beds. Ann Lee and Albany County Nursing Home have been merged at the recommended number of RHCF beds. Total project costs are estimated at $70,938,554. DOH Recommendation Contingent approval. Need Summary Albany County Nursing Home proposes to decertify 50 RHCF beds and certify a 30-slot ADHCP. Albany County has exceeded the RHCF bed need by 65 beds.

The decertification of beds will bring Albany County closer to the 2016 planning optimum. After this replacement facility has been completed the projected excess capacity for the County will be reduced to 15 beds. Program Summary The replacement of the Albany County Nursing Home with a modern nursing facility will provide a significantly improved residential environment. The facility design is in keeping with contemporary nursing home design concepts; however several noted issues should be addressed and incorporated into the final design. Financial Summary Project costs will be met via General Obligation Bonds (30 yrs. @ 4.00%). Budget: Revenues: Expenses: Gain/(Loss): $ 24,327,915 50,813,787 $ (26,485,872)

The applicant provided a letter from the Albany County Executives Office indicating the Countys willingness to continue to offset the losses. Also, the applicant provided documentation from the County Legislature supporting and directing the submission of this Certificate of Need application. Subject to the noted contingency, it appears that the applicant has demonstrated the capability to proceed in a financially feasible manner. Architectural Summary The proposed replacement RHCF and new ADHCP will be attached. The new facility will be a two-story building with a total of 187,590 SF. The existing facility will be decommissioned.

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Recommendations
Health Systems Agency There will be no HSA recommendation for this application. Office of Health Systems Management Approval contingent upon: 1. Submission of a check for the amount enumerated in the approval letter, payable to the New York State Department of Health. Section 2802.7 states that all sponsors whose applications require review by the State Hospital Review and Planning Council shall pay an additional fee of fIfty-five hundredths of one percent of the total capital value of the project, exclusive of CON fees. [PMU] 2. Submission and acceptable programmatic review and approval of final floor plans.[LTC] 3. Submission of the County Bond and Note Resolution that is acceptable to the Department of Health. Included with the submitted bond and note resolution, must be a sources and uses statement and debt amortization schedule, for both new and refinanced debt.[BFA] Approval conditional upon: 1. An acceptable plan for reducing census at the existing 250 bed Albany County Nursing Home, which may include the transfer of residents to other facilities, must be submitted to the Capital District Regional Office for review and approval before the transfer of residents from the facility.[LTC] 2. The submission of State Hospital Code (SHC) Drawings for review and approval, as described in BAEFP Drawing Submission Guidelines DSG-01. [AER] 3. The submission of Final Construction Documents, as described in BAEFP Drawing Submission Guidelines DSG01, prior to the applicants request for, and Departments granting approval for the start of construction. [AER] 4. The applicant shall start construction on or before April 1, 2012 and complete construction by April 1, 2015 upon the filing of Final Construction Documents in accordance with 10 NYCRR section 710.7. In accordance with 10 NYCRR Part 710.2(b)(5), if construction is not started on or before the start date, this shall constitute abandonment of the approval. In accordance with Part 710.10(a), this approval shall be deemed cancelled, withdrawn and annulled without further action by the Commissioner. [AER] Council Action Date December 8, 2011.

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Need Analysis
Background Albany County Nursing Home, a 250-bed public residential health care facility (RHCF) located at Albany-Shaker Road Albany, New York, proposes to decertify 50 residential health care facility (RHCF) beds and certify a 30 slot adult day health care program. The planning area of the county of Albany currently exceeds the projected 2016 RHCF bed need by 65 beds. Decertifying 50 RHCF beds will help the county of Albany better align capacity with the projected planning optimum for needed RHCF resources. The resulting projected excess capacity after the replacement is constructed is reduced to 15 beds. There is no need to review patient displacement due to the number of physical As and Bs at the facility, along with the number of available beds in the capital region. RHCF Need Albany 2016 Projected Need Current Beds Beds Under Construction Total Resources Resource After Bed Reduction Unmet Need

1,844 1,889 20 1,909 - 65

1,844

1,859 - 15

Albany County exceeds the established need by 65 RHCF beds. Albany County Nursing Home, an existing Article 28 RHCF, has utilization above that of Albany County for 2008 but was below that in 2009 as shown in Table 1 below. The facility did not report in 2007. RHCF Occupancy Albany County Nursing Home Albany County 2007 Did Not Report 97.7% 2008 102.3% 99.03% 2009 94.0% 94.6%

At the end January 2010, Albany County Nursing Home had a CMI of .94 with 17 Physical As and 10 Physical Bs. Conclusion Albany County Nursing Home proposes to decertify 50 residential health care facility (RHCF) beds and certify a 30-slot adult day health care program. Albany County has exceeded the RHCF bed need by 65 beds. The decertification of beds will bring Albany County closer to the 2016 planning optimum. After this replacement facility has been completed, the projected excess capacity will be reduced to 15 beds. Recommendation From a need perspective, approval is recommended.

Programmatic Analysis
Facility Information Existing Albany County Nursing Home Heritage Lane-County Road 151 Albany, NY 12211 250 0 Proposed Same Same 200 30

Facility Name Address RHCF Capacity ADHC Program Capacity

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Type of Operator Class of Operator Operator

County Public Albany County

Same Same Same

Albany County Nursing Home is a 250 bed nursing home located at 780 Albany Shaker Road, Albany. Consistent with the Berger Commission recommendation of January 1, 2007, Albany County closed the antiquated Ann Lee Home, a sister 175 bed nursing home, and relocated those residents into the Albany County Nursing Home with the total bed complement downsized to 250 beds. In conformance with the second part of the Berger recommendation, Albany County has now submitted a proposal to replace the Albany County Nursing Home building with a new, reduced capacity nursing home of 200 beds, to be located on adjacent County-owned land which was the former Heritage Park baseball field. The state of the art nursing facility will include a 20 bed ventilator dependent bed unit and a 30 slot adult day health care program. The addition of ventilator dependent beds will offer a significantly needed service to the Capital District, since there is only a single ventilator unit operating in the entire Northeastern New York planning region--an 18 bed unit located at Pathways Nursing and Rehabilitation Center in Schenectady County. The ventilator unit will comply with the code requirements of 10 NYCRR 713-4.5, including piped in oxygen and suction in all 20 rooms, a shower area large enough to accommodate stretchers and an equipment room with a hand washing sink. The single resident rooms will be generously sized at 220 square feet in order to accommodate bariatric and hospice residents. The rooms will feature wide doors and accommodations and associated lifts for the bariatric residents, and additional space in the rooms for family members of hospice residents. The new nursing home will also include two specialty units, a secured 30 bed behavioral unit and a 30 bed dementia unit. The applicant is continuing to develop the program for the operation of these units. As an adjunct to the short term rehabilitation program, the proposed facility will offer home bound training in two efficiency apartments located adjacent to Nursing Unit A. The intention of the program is to ensure that residents discharged back to their homes will be able to resume the tasks of daily living, including cooking, cleaning and personal care activities. The nursing home will certify outpatient therapy services, which will include a hydrotherapy pool, through its rehabilitation department. Adjacent to the outpatient rehabilitation program the nursing home will operate a 30 slot adult day health care program. The program will operate in full compliance with 10 NYCRR 425.5 and 714.4. Physical Environment The single story nursing units are all located on the main floor, arranged in three 40-bed conventional SNF units, a 20bed ventilator/bariatric/hospice unit and twin 30-bed secured units. The three conventional units and ventilator unit will be square buildings with a central hallway with rooms facing the outside or interior courtyard. The two secured units will be triangular shaped and located at the upper end of the site, with rooms facing the outside or center courtyard. All nursing units will contain 100% single bedded rooms with ADA-compliant bathrooms which include individual showers. Each nursing unit will include necessary lounge and dining space, and an adequate number of isolation rooms. The adult day health care program and outpatient services program will be accessed through a separate entrance on the lower end or rear of the site. The adult day health care program will be constructed as fully compliant with 10 NYCRR 714.4. The lower level will extend below the A and B Buildings with additional access through elevators in the central connector adjacent to the training apartments. Ancillary services and offices including pharmacy, dental, recreation therapy and optometry are all situated in the lower area, as well as mechanical and support functions including the laundry, medical records and central storage. Compliance Albany County Nursing Home is in current compliance with all codes, rules and regulations. Conclusion The replacement of the Albany County Nursing Home with a modern nursing facility will implement the second phase of the Berger recommendation and provide a significantly improved residential environment. The facility design is in keeping with contemporary nursing home design concepts. However several issues should be addressed and incorporated into the final design:

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1. Showers in the resident bedrooms must be a minimum dimension of 4 by 5 to ensure handicap accessibility. 2. Plans must demonstrate dining space in compliance with 10 NYCRR 713-2.6. 3. Plans must demonstrate lounge space in compliance with 10 NYCRR 713-3.9. 4. A toilet available for resident use must be located adjacent to all dining areas. 5. A toilet available for resident use must be located adjacent to the beauty parlor and lounge areas by the atrium. 6. The applicant may entertain the option of incorporating a few double rooms, or special accommodations such as adjoining rooms, in the design for couples. This would provide an additional home-like enhancement and choice normally provided for residents admitted to a residential health care facility. 7. Programmatic information reflecting the design of the two secure units should be submitted with final design drawings.

Recommendation From a programmatic perspective, contingent approval is recommended.

Financial Analysis
Total Project Cost and Financing Total project cost, which is for new construction, architect/engineering fees, construction manager fees and the acquisition of moveable equipment, is estimated at $70,938,554, further itemized as follows: New Construction Site Development Design Contingency Construction Contingency Architect/Engineering Fees Construction Manager Fees Moveable Equipment Telecommunications Financing Costs Interim Interest Expense CON Fee Additional Processing Fee Total Project Cost $47,745,047 3,979,205 4,137,408 2,585,649 3,674,383 2,096,687 2,921,658 15,000 925,500 2,468,000 2,000 388,017 $70,938,554

Project costs are based on an April 1, 2012 construction start date and a thirty month construction period. The costs for this project, excluding the CON fees and the additional processing fees, are broken down as follows: Nursing Facility Adult Day Health Care Program $69,805,032 743,505

Based on a mid-point of construction in 2013, the Bureau of Architectural and Engineering Facility Planning has determined that the respective costs exceed the construction cap per bed. As a result, the total allowable reimbursement is limited to $55,805,522. Reimbursable project cost will be $55,805,522, as shown below: Nursing Facility Beds - $268,000 x 180 Ventilator Dependent - $268,000 x 1.20% allowance x 20 ADHCP Costs $48,240,000 6,432,000 743,505

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CON Application Fee Additional Processing Fee Total Reimbursable Project Cost

2,000 388,017 $55,805,522

The applicants financing plan appears as follows: General Obligation Bonds (4.00% for thirty years) $70,938,554

The Department of Health has determined that reimbursement should be allowed 80% of the allowed reimbursable project cost for reimbursement purposes instead of the 75% reimbursement limit due to the applicant decertifying 50 beds. Operating Budget The applicant has submitted an operating budget for the whole facility, in 2011 dollars, for the third year after the replacement facility. The budget is summarized below: Nursing Facility & Ventilator Beds Per Diem $260.64 537.47 450.01 449.79 449.96 600.61 449.96 Total $12,200,685 3,269,482 4,213,013 252,784 1,404,338 174,178 1,404,338 659,434 $23,578,252

Medicaid (Nursing Facility) Medicaid (Ventilator) Medicare (Nursing Facility) Medicare (Ventilator) Private Pay (Nursing Facility) Private Pay (Ventilator) Commercial (Nursing Facility) Other Total Revenues Expenses: Operating Capital Total Expenses Excess of Revenues over Expenses Utilization: (patient days) Nursing Facility Patient Days Ventilator Dependent Occupancy Nursing Facility Occupancy Ventilator Dependent

$651.75 70.87 $722.62

$45,199,001 4,914,926 $50,113,927 ($26,535,675)

62,416 6,934 95.00% 94.98%

The following is noted with respect to the submitted RHCF operating budget: The capital component of Medicaid revenues is based on the interest and amortization reimbursement methodology. The case mix index for the nursing facility is .9400 and the case mix index for the ventilator dependent beds is 1.55. Utilization for the nursing facility beds, broken down by payor source, for the third year after the completion of the replacement facility is as follows:

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Medicaid Fee-For-Service Medicare Fee-For-Service Commercial Fee-For-Service Private Pay

75.00% 15.00% 5.00% 5.00%

Utilization for the ventilator dependent beds, broken down by payor source, for the third year after the completion of the replacement facility is as follows: Medicaid Fee-For-Service Medicare Fee-For-Service Private Pay ADHCP Revenues Expenses Excess of Revenues over Expenses Utilization: (visits) Cost Per Visit The ADHCP will be 100% Medicaid. Also, the applicant has projected additional expenses of $7,417,079 for retiree health care costs, which are included within the budget. The combined revenues and expenses for the facility for the third year are as follows: Revenues Expenses Excess of Revenues over Expenses $24,327,915 50,813,787 ($26,485,872) $749,663 699,860 $49,803 7,020 $99.69 87.71% 8.10% 4.19%

Capability and Feasibility Project costs of $70,938,554 will be met via General Obligation Bonds at an interest rate of 4.00% for thirty years. The submitted budget indicates an excess of revenues over expenses of ($26,485,872) during the third year after project completion. Revenues are based on current reimbursement methodologies, plus incremental capital reimbursement of Medicaid. The losses will be offset by Albany County. The applicant provided a letter from the County of Albany Office of The Executive indicating the Countys willingness to continue to offset the losses. Also, the applicant provided documentation from the legislature supporting and directing the submission of this certificate of need application. This project is imperative to the facility in that a modern structure will enable the facility to remain competitive with other nursing homes in the geographical area. Also, with this application, the facility is reducing their certified bed capacity. The reduction in Medicaid occupancy for the SNF beds reflects managements belief that a new facility with single occupancy rooms will increase Private Pay and Medicare sub-acute occupancy and reduce Medicaid occupancy. The applicant has indicated that incremental expenses will increase by $24,738,774 from the current year (2010) to the third year after project completion. The applicant has indicated that the increases are primarily in the following categories: Salaries and wages are increasing by approximately $3,000,000 due to the additional 14.9FTEs and salary increases.

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Employee Benefits are increasing by approximately $6,000,000 due to the employee benefits for the new hires, trend factor of 1% for employee benefits and retiree health insurance increases by 10% per year. Additional accrual of approximately $7,400,000 related to the retiree health care. Other direct expenses, which consists of cafeteria and other ancillary expenses, is projected to increase by approximately $700,000. Interest expense will increase by approximately $2,400,000 due to the proposed financing. Depreciation expense is projected to increase by approximately $1,700,000.

Presented as BFA Attachment A, is a financial summary for Albany County Nursing Home. As shown on Attachment A, the facility had an average positive working capital position and an average negative net asset position from 2008 through 2010. The facility incurred an average operating excess expenses over revenues of $21,919,164 from 2008 through 2010. To offset the average operating losses, the facility received average inter-governmental transfer funds of $5,498,459 and average County subsidies of $14,070,681 from 2008 through 2010. The applicant has indicated that the reasons for the historical losses are as follows: the cost of employee benefits, and the State Retirement System for employees. As a public facility, Albany County Nursing Home provides a benefit package that exceeds those found in the private sector. Since 2008, facility administration and County policymakers have taken a number of proactive steps to either improve revenues or decrease operational deficits. Those include, but are not necessarily limited to: a reduction in staff size of over 100 positions; a reorganization of the therapy department resulting in a nearly 60% increase in Medicare Part A revenues, and more than 100% increase in Medicare Part B revenues; reviewing departmental budgets and adjusting them to be more in line with industry standards; revamping the Facilitys purchasing system to ensure better monitoring of costs; implementing regular and periodic budget reviews with Facility Department heads to ensure both adequate staffing levels as well as cost control, and a reorganization of the Facilitys MDS and resident assessment process to promote and facilitate a maximization of Medicaid revenues. As stated in a previous section, the County of Albany Office of The Executive has provided a letter stating that the County will continue to offset the losses. Also, the applicant provided documentation from the legislature supporting and directing the submission of this certificate of need application. The applicant provided the Countys 2010 certified financial statements, and it appears that the County has sufficient funds to continue to offset the losses. Subject to the noted contingency, it appears that the applicant has demonstrated the capability to proceed in a financially feasible manner, and approval is recommended. Recommendation From a financial perspective, contingent approval is recommended.

Architectural Analysis
Background This project includes 187,590 SF of new construction. The replacement skilled nursing facility is 182,403 SF and will be constructed adjacent to the existing facility. Attached to the skilled nursing facility will be a new 5,187 SF adult day health care facility with its own dedicated entrance. The facility will be of type II (222) construction and will be fully sprinklered. First Floor (119,553 SF of new construction) The first floor will consist of 119,553 SF of new construction and will include 3 forty-bed units, 1 thirty-bed secured unit, 1 thirty-bed dementia unit and 1 twenty-bed multi-purpose unit for bariatric, ventilator and hospice residents.

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This level will also include an entrance lobby, multi-purpose room, gift shop, caf/ice cream parlor, beauty parlor, central dining room, administrative offices and public toilet rooms. Each nursing unit typically includes a waiting and reception area, private dining, lounge/living, meditation, conference and consultation rooms. Also included are team work stations, dietary/social work stations, charting/nurses office, clean workroom/pantry, medication, nourishment, tub, linen, laundry, soiled holding and equipment storage rooms. Each resident room will be single bed occupancy with a handicap accessible bathroom and shower. Ground Floor (68,037 SF of new construction) The ground floor will consist of 68,037 SF of new construction and will include a clinical area as well as physical, occupational and hydro-therapy spaces. It will also include the support facilities such as dietary, laundry, maintenance, housekeeping, staff lockers, general storage, mechanical spaces and loading dock. A 30-registrant adult day health care facility will also be located on the ground floor and will share common facilities such as therapy and food service. The adult day health care facility will have its own dedicated entrance. There will also be a separate outpatient rehabilitation entrance and waiting area. Environmental Review The Department has deemed this project to be a TYPE I Action and the lead agency shall be the county of Albany or the authority having jurisdiction. Recommendation From an architectural perspective, approval is recommended.

Attachments
BFA Attachment A Financial Summary for Albany County Nursing Home

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