rockland pbc complete final report & appendix b

7/31/2019 Rockland PBC Complete Final Report & Appendix B

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ROCKLAND COUNTY PBCEVALUATION

AND

PRIVATIZATION ALTERNATIVES

REPORT TO THE COUNTY

May 14, 2012


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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION AND CONTEXT 3PrefaceMethodologyDemographicsCurrent Governance

CHAPTER 2: PHYSICAL PLANT 13Overview

General Description of FacilitiesArchitecturalMechanicalElectricalPlumbing/Fire Protection

CHAPTER 3: SUMMIT PARK NURSING CARE CENTER 17Regional Competitive MarketQualityReimbursement and LegalPublic Benefit CorporationOverarching Factors Influencing Summit Park Potential OptionsSummit Park Nursing Care Center Options

CHAPTER 4: SUMMIT PARK HOSPITAL 41

Regional DemographicsRegional Competitive MarketSummit Park Hospital Reimbursement EnvironmentSummit Park Hospital Options


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CHAPTER 1: INTRODUCTION AND CONTEXT

PREFACE

This report presents findings, conclusions and preliminary recommendations reflecting work on theCounty of Rockland PBC Consulting Services engagement to assess the feasibility of the Countyscontinued provision of the Summit Park Hospital and Nursing Care Center, along with the Departmentof Mental Healths inpatient and outpatient services.

To carry out this process, the County hired a team led by Toski & Co., a CPA firm with statewide

healthcare and long-term-care experience, to assess the current operations of Summit Park and theDepartment of Mental Health, and to provide an analysis of the strengths, limitations, feasibility andlikely impacts of current and possible future options. The research and policy analysis team alsoincludes CGR (Center for Governmental Research), a non-profit research and consulting firm withextensive experience in analyzing public nursing home and mental health operations; WASA/Studio A,an architecture and engineering firm with extensive healthcare and educational experience throughoutNew York and the northeast region of the country; and Hiscock & Barclay, LLC, a nationally-recognized legal firm with extensive knowledge of long-term care regulations and the reimbursement

environment.

As is discussed throughout the report, the healthcare industry struggles and is in a state of uncertaintyas the result of continuing changes in healthcare regulation, programmatic reimbursement issues andindustry trends and best practices. The external Federal and State regulatory environments that directlyaffect Rockland Countys Summit Park and Department of Mental Health operations are complex,dynamic and subject to change on relatively short noticewhich can impact the entities with respect toregulations, reimbursement and ultimately operations. At the time of this report the financial and

legislative environments at the Federal, State and local levels have seen tumultuous changes as thesegovernment bodies struggle with complex public policy, political and financial issues and as a result,these factors have the potential to not only impact current operations, but also mid- to long-rangestrategic plans as well.


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with regard to the future of Summit Park and mental health services in Rockland County. The finalchapter develops specific recommendations to guide the Countys ultimate decisions, given the

complex realities facing County decision-makers.

Our project team seeks to provide an objective third-party perspective to assist the County in assessingits options. We entered the project with no preconceived predisposition or bias as to the ultimateoutcome of this process, and had as our primary concern simply using objective information andunderstanding of relevant issues to facilitate a process that would result in informed decisions that areultimately in the best future interest of the County.

We have used a number of approaches in conducting this study to date, including:

Interviews

The project team has conducted confidential interviews with more than 65 individuals in one-on-one orsmall group discussions. At least half a dozen of these stakeholders were interviewed more than once.Interviews were conducted with the County Executive and a number of key County Administrationofficials; several County Legislators; administrators and staff of Summit Park and the Department of

Mental Health; union representatives; private service contractors; representatives of selected non-profitagencies and stakeholders representing various community perspectives; attorneys and othersknowledgeable about Public Benefit Corporations; and representatives of other counties involved inmaking decisions about the future of their public facilities and programs. We have also discussed awide range of issues nearly every other week in meetings or conference calls with a high-level projectsteering committee established by Rockland County to oversee the project.

In addition, project staff held three town meetings with any interested staff from Summit Park and

DMH around the transition periods between each of the three shifts. All interested staff were invited toattend to learn about the study and to provide feedback to the consultants about issues of concern tothem. We estimate that between 100 and 125 employees attended these meetings.


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with other facilities and programs, and numerous other types of information compiled for the purposeof this study. In addition, we received extensive guided tours of the facilities, and obtained and

analyzed detailed drawings and renderings of the existing Summit Park physical plant.

Our financial and analysis was limited to data available as of December 31, 2010. As a result, someestimates may be subject to change if more current information becomes available.

DEMOGRAPHICS

Rockland County Description

Rockland County is a suburban county about 15 miles northwest of Manhattan. Just north of the NewYork/New Jersey border, it is across the Hudson River from Westchester County to the east, and issouth of Orange County. It is the southernmost county in New York west of the Hudson River, and thesmallest county geographically in the state outside New York City.

Rocklands population, 311,687 in 2010, has grown rapidlya 17.4% increase since 1990, when thecounty contained just over 265,000 residents. Its median income places it among the highest-incomecounties in the state and nationally. The county is made up of five towns and 19 incorporated villages.It is governed by a County Executive form of government, with a 17-member Legislature.

The County has the second highest population density per square mile in the Hudson Valley Region, asdepicted in the following chart.

Hudson Valley Region Geographic Characterics (2010 Actual, 2040 Projected) - Table 1

Square

2010 2040 Miles 2010 2040

Population Population Per Sq Mi


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older will almost certainly increase significantly, and these numbers will represent increasingly largerproportions of the total Rockland County population.

Projections for Rockland show a substantial overall population growth of 17.4% between 1990 and2010 was significantly outpaced by the disproportionate growth in the elderly population during thatperiod. As shown in Table 3, during those 20 years the number of residents 65-74 grew by more than7,000 (an increase of 47%); those 75-84 grew by more than 5,200 (a 61% increase); and those 85 andolder increased by more than 2,500 (a 20-year growth rate of 81%). As reflected in Tables 2 through 4,over the next 30 years, through 2040, the projected growth rate of those 65 and older will continue tooutpace, by substantial margins, the countys projected growth rate for the entire population (14%)

and will represent greater proportions of the total population in 2040 than in earlier years.

More specifically, between 1990 and 2030, the number of county residents 65 and older is projected tomore than double (from almost 27,000 to almost 59,000). In 1990, that age group represented 10% ofthe countys total population. By 2010, it accounted for 13% of the total population, and by 2030, it isprojected to account for 17% of all county residents. The Cornell projections suggest that the 65+population will grow steadily over the next 20 years, and that by 2030, it will have expanded by anadditional 40% compared to 2010, from just under 42,000 to just under 58,800 residentsalmost

17,000 more residents 65 and older in the county than today.

With the highest proportion of over 65 year old residents in the state, Rocklands population isexpected to grow from approximately 41,841 in 2010 to 60,439 in 2040a 44% increase.

Table 2 - REGIONAL POPULATION PROJECTIONS BY COUNTY, AGE AND GENDER: 1990 - 2040

% Chg

1990 2000 2010 2015 2020 2025 2030 2035 2040 2010 - 40

ROCKLAND

Total 265,475 286,753 311,687 320,536 329,246 337,392 344,540 350,572 355,824 14.2%

0-4 19,048 21,807 23,801 22,718 23,569 23,972 24,193 24,397 24,654 3.6%

5 14 37 883 45 605 48 749 51 206 51 830 52 043 53 304 53 970 54 498 11 8%


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Among those 75 and older (the most significant subgroup in projecting the need for various

levels of long-term care), demographers project an additional increase of 44% (an increase ofabout 8,600 additional persons, to a total of more than 28,000 75+ residents) from 2010 to 2030,when they would represent 8% of the expected overall county population (compared to about6% of the current population). This is on top of a 67% increase projected from 1990 to 2010.The baby boomer generation will begin to reach the age of 75 in the year 2021, following whichmost of the 75+ growth will occur.

In addition, the 85 and older population (those most likely to need institutional care at that stageof their lives) is projected to be almost 2.75 times larger in 2030 than it was 20 years ago in1990. Having grown by 81% in the past 20 years, it is projected to increase by another 50%during the next 20 (an increase of more than 2,800 from 2010 to a total of more than 8,500 by2030 h h 85 d ld ill 2 5% f h l l i )


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Projections are naturally subject to change due to a variety of socio-economic factors, technologyand preference. As a result, these projections can change dramatically as unforeseen events andrealities occur. Notwithstanding such caveats, the number of elderly residents of Rockland Countywill almost certainly be significantly higher over the next two decades than it is now, and theseincreasing numbers will have significant implications on the array of long-term-care servicesneeded for older citizens in the future.

It is worth noting that not only will there likely be a larger proportion of older people in the

population, but they will also live longer and in many cases healthier lives. Research and federaland state policies (although not yet always funding to support the policies) suggest that there willbe increasing demands for various community-based services to support the concept of residentswishing to age in place delaying institutional care as long as possible This suggests that there

Table 4: Projected Growth of Population 65 and Older, Rockland County: 2010-2030

2010 2015 2020 2030

Total TotalChange from

2010Total

Change from2010

Total Change from 2010

Total Pop. 311,687 320,536 3% 329,246 6% 344,540 11%

65-74 22,266 25,948 17% 27,921 25% 30,581 37%

75-84 13,879 14,071 1% 15,277 10% 19,638 41%

85+ 5,696 6,611 16% 7,226 27% 8,560 50%

65+ 41,841 46,630 11% 50,424 21% 58,779 40%

75+ 19,575 20,682 6% 22,503 15% 28,198 44%85+ 5,696 6,611 16% 7,226 27% 8,560 50%

Source: US Census Bureau (2010 population)

Cornell Program on Applied Demographics (Projected 2015, 2020 and 2030 population; produced September 8, 2011)

http://pad.human.cornell.edu/counties/projections.cfm
http://pad.human.cornell.edu/counties/projections.cfmhttp://pad.human.cornell.edu/counties/projections.cfmhttp://pad.human.cornell.edu/counties/projections.cfm


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State need methodologies are based on NYS Public Health Law and relate to specific services andprograms that are institutional in nature, such as hospitals and nursing homes, and those which are

non-institutional or community based, such as home health care, adult day care and adult homes.Various policy decisions, such as the Medicaid waiver programs, laws and regulations such as theAmericans with Disabilities Act, reimbursement policies at the Federal and State levels and courtdecisions, such as the 1999 Olmstead decision, all factor into the development of needmethodology. As can be seen by the distinction between nursing homes being regarded asinstitutional and adult care facilities being deemed community based, the distinction betweenthe types of services offered and community need becomes increasingly gray.

Currently, the main thrust of policy is toward fully integrated community based programs whichallow for autonomy in the least restrictive environment. This thinking, which is similar to the de-institutionalization movement of mental health in the 1960s and 70s, is largely attributable to thefactors noted above and also includes advances in medicine and technology and efforts to reducehigher healthcare costs associated with institutional care.

Estimates of Mental Health Needs in the County

Estimates and projections of Rockland County residents suffering from some type of mental illness aremuch harder to come by than overall population estimates and age projections. In the absence of areliable way of estimating the prevalence of mental illness at a county-specific level, national estimatesare typically used as the best proxies for county estimates. The National Institute on Disability andRehabilitation Research of the U.S. Department of Education provides the following proportions asestimates of the prevalence of mental illness nationallyestimates which we then apply to RocklandCounty population totals:

20% of the population suffers from some type of a mental illness.

2 8% f h l i h i l ill


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provided at the hospital, and in various clinics andprograms operated both by the County and byvarious not-for-profit community-based agencies throughout the community, and for the Local

Governmental Unit (LGU) function responsible for oversight of all mental health services providedcountywide. Additionally, the County Legislature and Hospital Board of Governors provide input intothe operations ofSummit Parks programs and services.

The Commissioner of Hospitals oversees the operation of the Summit Park Hospital, a 100-bed LongTerm Care Hospital (LTCH), and Summit Park Nursing Care Center, a 320-bed New York Statelicensed skilled nursing facility. Both the hospital and nursing home provide a variety of inpatient andoutpatient hospital and nursing home programs and services under statutory Federal and State

regulatory guidelines. The Commissioner is directly responsible to the County Executive for theoperations of the hospital and nursing home. The Commissioner also has reporting responsibility to theCounty Legislature and the Rockland County Hospital Board of Governors. Additionally, 43 of theHospitals 100 licensed beds are currently certified for use for inpatient psychiatric services, and theHospital facility also provides the location and support for much of the Countys outpatient mentalhealth services. Both the inpatient and outpatient mental health services administration fall under thedirection of the Commissioner of Mental Health. Both Commissioners report directly to the CountyExecutive and have lateral reporting responsibilities to each other for their respective operations at the

physical facility. Additional information regarding the relationships appears throughout the report.These relationships are depicted in the following illustrations.


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Overview of Department of Hospitals Organizational Structure

Illustration 1- Organizational/Governance Structure

Inpatient Inpatient

Outpatient Outpatient

Department of Hospitals and Mental Health

Organizational Structure

Board of Governors

Acute

Summit Park HospitalSummit Park Nursing

Care Center

Mental Health

County

Executive

County

Legislature

Commissioner

Mental Health

Commissioner

of Hospitals


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CHAPTER 2: PHYSICAL PLANT

OVERVIEW

The Dr. Robert L. Yeager Health Center, located in Pomona, New York, is a 206 acre campusconsisting of 17buildings on the east and west side of Sanatorium Road. WASA/Studio A inconjunction with the partnership team of Toski& Co. PC (TSC), The Center for GovernmentalResearch, Inc. (CGR) and Hiscock & Barclay (H&B) were retained by the County of Rockland in the

fall of 2011 to undertake a Public Benefit Corporation Feasibility analysis. Buildings A, B, C, D, E, F,and P consisting of approximately 572,000 square feetwere included as part of the study. The buildingshouse a variety of County government departments and a 100-bed acute care hospital and a 320-bedhospital.

A team of professional architects, mechanical, electrical, plumbing, and life safety engineers fromWASA/Studio A performed a visual survey on December 15th, 2011 and on January 5th, 2012. Thesurvey included accessible areas of the exterior such as roofs, facades, windows and accessible interiorspaces. An assessment of vertical transportation systems, a survey of hazardous materials, and surveyof landscape elements were excluded from the scope of this project. Additionally, no destructive probeswere performed as part of this project.

This report describes the existing building systems, documents our findings, and provides generalrecommendations for the Countys consideration. The report is organized by building and detailsgeneral construction, mechanical, electrical, plumbing, and fire protection systems. Photographs of

existing conditions and floor plans of the existing facility are provided at the end of the report. Nophotographs were allowed in areas occupied by patients or residents, specifically floors 3 to 9 inBuilding A and the second floor in Building D.


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A, B, and D appear to have reached the end of their services life and should be replaced. The immediaterepairs should be performed at the masonry chimney located at building E.

Mechanical

The Yeager Health Center has a central chilled water plant and heating hot water plant which arelocated in Building E. The chilled water plant consists of two (2) 1200-ton absorption chillers fed bylow-pressure steam; three (3) condenser water pumps, three (3) chilled water pumps and two (2) two-cells cooling towers located on the roof.

The hot water system consists of two (2) 200 HP high-pressure Cleaver Brooks boilers and three (3)700 HP low-pressure Cleaver Brooks boilers. The boilers are duel fuel; gas and fuel oil # 2. Low-pressure steam is distributed to the absorption chillers and converted to hot water for heating. High-pressure steam is being used in the kitchen and domestic hot water heating.Chilled water is distributedto buildings A, C, D, E, F and P. Heating hot water is distributed to buildings A, E and D.

Existing mechanical equipment was installed at the time of construction. One of the chillers was re-tubed in 1992 and the other chiller was replaced in 1992. The cooling towers were installed in the1970s and have not been replaced. The boilers and heat exchanger are also original and have not beenreplaced. All mechanical equipment is beyond or near its useful life and should be replaced. Buildingcontrols are pneumatic and should be upgraded.

A 4000 gallon underground fuel oil tank located outside Building A serves the emergency powergenerator. Exposed pipes show a lot of deterioration and should also be replaced. Leaks in the ceilingfrom pipes with deteriorated insulation can be seen on dropped ceiling at various locations in various

buildings.

All buildings have numerous exhaust fans on roofs; only fans no longer operating properly should bereplaced. Some rooftop equipment is rusted and some have damaged insulation; some air-handling


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service equipment in Building A is dated from 2009 and is relatively new and in good condition. Theemergency generator in Building E is in fair condition.

Interior lighting fixtures used in the entire facility buildings comprise of recessed and surface mountedfluorescent fixtures with T-8 lamp throughout and recessed down lights in corridors with PL lamp.Lighting fixtures in the basement of Building B are provided with T12 lamps in older fixtures whichseem to be original to the building, consume more energy than available current T-8 lamps and are inneed of replacement. Exit lighting fixtures are of mostly a combination of incandescent type lamps.Emergency lighting in corridors, stairs and exit doors are provided by emergency lighting circuits wiredto available emergency panels in Buildings A, C, E, and D. Building B, F, and P utilize

emergency battery heads with built-in exit signs.

Lighting fixtures are controlled generally by wall toggle switches and/or keyed switches. At the time ofthe survey, toggle switches in Building C were not operational and are in need of replacement. Thebuildings are provided with convenience receptacles and special receptacles throughout as per programrequirements. However toilet areas in Building C are not provided with GFI receptacles.

The buildings are provided Telephone/Data system with all telephone and data outlets provided

throughout as per program requirements. Generally, data closets are located throughout and telephonedemarcation points in main telephone rooms in each buildings.

The buildings are provided with dedicated fire alarm systems except buildings A and C which areconnected to a central Control Panel located at building A. Fire alarm control panels are manufacturedby (4) different vendors.

Buildings A and C are provided with wall/ceiling mounted speakers including control panelprovided as part of Public Address system.Nurse call system is provided at Buildings A and C withassociated call stations, dome lights and respective control panel in nurses station location.The entire facility buildings are provided with telephone/data devices.


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Immediate 1+ 5 Years 6 to 10 YearsArchitecture

Building A $1,725,000

Building B $12,500 $45,000

Building C $15,000 $557,000

Building D $315,000

Building E $75,000 $10,000

Building F $250,000

Building P $11,000 $10,000HVAC

Building E/ Utility Plant

Chiller $1,994,800

Remaining plant $2,622,688

Building A $2,421,518

Building B $18,840

Building C $426,220

Building D $324,850Building F $232,950

Building P $44,325

ELECTRICAL

Building E/ Utility Plant $25,000 $140,000 $100,000

Building A $45,000 $180,000

Building B $50,000 $100,000

Building C $410,000 $75,000

Building D $50,000 $85,000Building F $50,000 $85,000

Building P $30,000 $75,000

PLUMBING

Planning Horison

Rockland County Dr. Yeager Campus Estimated Continued Maintenance Costs


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CHAPTER 3: SUMMIT PARK NURSING CARE CENTER

Summit Park Nursing Care Center is a New York State licensed nursing home under Article 28-A ofthe NYS Public Health Law and federally under section 1888 of the Social Security Act. The facility islicensed for the following certified bed capacity and services:

Services Beds

Medicaid and Medicare Certified Nursing Home Beds 320

Adult Day Health Care Dialysis Clinical Laboratory Service Radiology - Diagnostic

REGIONAL COMPETITIVE MARKET

Nursing Homes

There are 36 Nursing Homes within a 20-mile radius of Summit Park comprising 5,240 licensednursing home beds (exclusive of Summit Park). Based on data from NYSDOH there are approximately

1,587 unoccupied beds on average in the region on a given day, including those unoccupied at SummitPark. Summit Parks occupancy is approximately 10.3% below the regional occupancy rate and 9.1%below other nursing homes in Rockland County as depicted in the following table.


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The locations of competing facilities within the Summit Park market area can be seen in the followingmap.

Figure 1- Nursing Homes Within a 20 Mile Radius


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The decrease in resident days from 101,818 days in 2010 to 95,456 days in 2011 resulted in anestimated loss of approximately $ 1.7 million in revenue to the facility based on the facilitys Medicaidper diem rate.

At its current capacity of 320 beds and assuming the facility could achieve 95% occupancy, weestimate the facility had an additional 15,500 lost days of revenue which would have contributed anadditional $ 2.4 million in revenue to the facility, in addition to the $ 1.7 million identified in theprevious paragraph.

Home and Community Based Services

Adult Care Facilities, Assisted Living Programs and ALRs

2002 2008 2009 2010 2011

# Available Beds 341 341 341 341 320

Total Days of Care 116,769 110,405 104,825 101,818 95,456

% Occupancy for the Year 93.82% 88.46% 84.22% 81.80% 81.73%

Average Beds Filled per Day 319.9 302.5 287.2 279.0 261.5

Discharges per Year 255 281 307 243 -

Average Length of Stay per Episode 457.9 392.9 341.4 419.0 -

Source: NYS Department of Health Hospit ICR & RHCF-2; percent ages calculated by Toski & Co., CPA's

Utilization: Summit Park Nursing and Care Facility, 2002, 2008 - 2010


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Home Care and Hospice

There are currently 114 home healthcare agencies licensed to service Rockland County of which 36 arewithin the Countys borders.

As depicted in the table below, there are 8 Certified Home Healthcare Agencies (CHHA), 4 Long TermHome Health Care Programs (LTHHCP), 2 Hospice Agencies and 100 Licensed Home Care ServiceA i (LHCSA)

Facility City/Town Zip Facility ID Operator CertificateNumber

Numberof beds

Assisted

LivingProgram

beds

Assisted

LivingResidence

(ALR) beds

EnhancedALR Beds

Special

Needs ALR

Beds

FacilityType

OperatorType

Esplanade at Chestnut Ridge Chestnut Ridge 10977 AF0394B Chestnut Operating Company, LLC 620-F-081 150 0 0 0 0 AH PPHA

Garnerville Home for Adults Garnerville 10923 AF0252A Bagsiyao, Corazon 620-F-069 39 0 0 0 0 AH PPHA

Assisted Living at Northern Riverview Haverstraw 10927 AF0198A Assisted Living at Northern Riverview, Inc. 620-E-019 105 100 0 0 0 AH/ALP NFP

Green Hills Estate Haverstraw 10927 AF0257A Sanchez, Anita 620-F-036 164 0 0 0 0 AH PPHA

New Monsey Park Home Monsey 10952 AF0330A Orzel, Israel 620-F-052 263 0 0 0 0 AH PPHA

St. Zita's Villa Monsey 10952 AF0406A St. Zita's Villa 620-E-017 35 0 0 0 0 AH NFP

Old Peoples Russian Orthodox Convent Nanuet 10954 AF0344A Russian Orthodox Convent 620-E-010 76 0 0 0 0 AH NFP

Spring Valley Rest Home Nanuet 10954 AF0400A Daos, Myrna A. 620-F-071 32 0 0 0 0 AH PPHA

L'Dor New City 10956 AF0290B Markowitz, Elliot 620-F-076 44 0 0 0 0 AH PPHA

Tappan Zee Manor Nyack 10960 AF0413B TZ Manor, LLC 620-F-087 100 0 0 0 0 AH PPHA

Promenade at Blue Hill Pearl River 10965 AF0225B Promenade Blue Hill LLC 620-F-085 52 0 0 0 0 AH PPHA

Rockland County Public Home Pomona 10970 AF0372A Rockland County 620-N-040 41 0 0 0 0 AH PUBL

St. Joseph's Home Sloatsburg 10974 AF0402A St. Joseph's Adult Care, Inc. 620-E-016 31 0 0 0 0 AH NFPEvergreen Court Home for Adults Spring Valley 10977 AF0201B G & J New Bader Enterprises, LLC 620-F-077 200 0 0 0 0 AH PPHA

Golden Acres Home for Adults Spring Valley 10977 AF0253B The New Golden Acres LLC 620-F-083 80 46 0 0 0 AH/ALP PPHA

Rudolph Steiner Fellowship Foundation Spring Valley 10977 AF0376A Rudolph Steiner Fellowship Foundation, Inc. 620-E-013 33 0 0 0 0 AH NFP

Total Existing Capacity 1,445 146 0 0 0

Total Existing Facilities 16 2 0 0 0

Proposed Facilities

New 236 56 180 148 42

Expansion 41 128 455 90 58

Total Proposed 277 184 635 238 100

Total Estimated Future Capacity 1,722 330 635 238 100

Total Estimated Future Facilities 20 3 3 3 2Source: Toski & Co. CPA's, NYS Department of Health

Adult Care Facilities and Assisted Living Residences i n Rockland County


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The County, which was once a provider of CHHA and LTHHCP through its Department of Public

Health, sold its interest in CHHA and currently operates a LHCSA.

In February, 2012 The NYS Department of Health published a Request For Application to expand thenumber of Certified Home Health Agencies (Medicare and Medicaid participating) as part of itscommitment to de-institutionalizing Long Term Care, which is consistent with the U. S. Supreme Courtdecision in the landmark Olmstead case which places the focus on health care delivery in a Home andCommunity Based Services (HCBS) setting. This is a national trend in the provision of long term careservices. The expansion is also part of the States Medicaid Re-Design Team (MRT) efforts to reduce

Medicaid spending in the state through reducing hospital re-admissions within 30 60 days of hospitaldischarge and reducing higher costs associated with providing care in an institutionalized setting

As discussed in the previous sections, movement to the HCBS setting for providing long-term carethrough the use of Adult Homes, Assisted Living Programs, Assisted Living Residences, as well asthrough expansion of home care services is seen as a way of reducing Medicaid spending, providinghigher quality of life for persons needing this level of care and improving clinical outcomes whilereducing the need for building additional nursing facilities to absorb the expected increase in the aging

population as previously discussed.

We believe these alternative care programs will dampen the demand curve for nursing home services,despite projected sharp rises in the age demographic requiring long-term care services as persons aretransitioned to community based alternate levels of care. However, given the Countys agedemographics and population density, sufficient demand for nursing home services should continue andit is ultimately up to the facility to aggressively pursue admissions in the increasingly competitivemarket.

QUALITY


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CMS and posted for the public on both the New York State Department of Health website and onCMSs website.

As noted in the table below, the facility ranked higher (worse) than the Statewide Average in StandardHealth Deficiencies and Life Safety Code Deficiencies. Total deficiencies for the facility were 44 ascompared to the statewide average of 24. Only 1 deficiency was related to actual harm which wasslightly below (better than) the statewide average.

Summit Park received 12 deficiencies in its October 7, 2011 Certification Survey as compared to 11 inthe prior year. Life Safety Code violations decreased from 4 in 2010 to 2 in 2011. However, StandardHealth Deficiencies increased to 10 in 2011 as compared to 7 in the prior year. The results of thesurveys are depicted in the table below.

Measure

This

Facility

Statewide

Average

Standard Health Deficiencies 35 17

Life Safety Code Deficiencies 9 7

Total Deficiencies 44 24

Deficiencies Related to Actual Harm or Immediate Jeopardy 1 1

% of Deficiencies Related to Actual Harm or Immediate Jeopardy 2% 4%

Source: NYS DOH. April, 2012. http://nursinghomes.nyhealth.gov/nursing_homes/inspection/253

Facility Comparison to Statewide Average

Survey and Measures Isolated Patterned Widespread Total

October 7, 2011 Certification Survey

Standard Health Deficiencies 6 3 1 10

Last Two Survey Results


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In December, 2009 and September, 2008 Summit Park entered into Stipulation Orders and was fined

$10,000 and $12,000, respectively, for the incidents which were related to quality of resident care..

From a practical standpoint, in addition to potential liability issues resulting from substandard care,public perception can become tainted and result in a facility having more difficulty attracting patients

for admission to the facility, leading to low facility utilization or the inability to develop referralrelationships with hospitals, health systems and third party payors who would prefer to be associatedwith high quality providers that are effective in achieving the highest clinical outcomes.

CMS and National Rankings

Based on the CMS Quality Indicator Rankings, Summit Park has seen a slight decrease in its rankagainst other providers nationally. The facility which was in the 79th percentile (better than 79% of thefacilities nationally) dropped to the 66th percentile in the third quarter of 2010.

DeficiencyStipulation

and

Stipulation

andFine

Survey Date Category of Order Number Order Date Assessed

4-Dec-09 Quality of Care NH-10-045 19-Oct-10 $10,000

5-Sep-08 Quality of Care NH-09-002 5-Jan-09 $12,000

New York State Fines & Enforcement


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A comparison of the facilitys ranking with other public nursing homes in the region and for-profit andnot-for-profit competitors locally appears in the next table and is also represented graphically below.


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the state providing no trend factor increases over historic operating costs in establishing the Medicaidpayment rate despite actual cost inflation, and the proposed commencement January 2012, subject to

federal approval which is still pending, of a new statewide reimbursement methodology.

New York has reimbursed nursing homes under the Medicaid program a set amount for each day ofcare determined under a complex reimbursement formula, calculated for rate periods from 2009through 2011 based on 2002 reported costs for each facility, and beginning in 2012 based on 2007reported costs. A unique Medicaid rate is established for each facility on a per-patient per-day basis.There are four components of the Medicaid rate: direct, indirect, and non-comparable costs(collectively referred to as the operating costs component), and capital costs.

Medicaid Reimbursement Methodology 2009 through 2011

Each nursing home resident was assessed and assigned to one of 53 Resource Utilization Groups(RUGs) that reflects the severity of the residents illness and level of care required. For the directcomponent of the rate, a statewide price is established for each RUG for three facility peer groups,adjusted for regional variations in nursing home wage and fringe benefit levels. The peer groups arefree-standing facilities with less than 300 beds, free-standing facilities with 300 or more beds, and

hospital-based facilities. Summit Park Nursing Care Center is grouped as a hospital-based facility. Aceiling price is established for each RUG group within the peer groups, calculated as a percentage ofthe statewide mean price. Thus, the more complex the care required for a resident, the higher the directcomponent of the Medicaid reimbursement rate will be. Any direct costs in excess of the ceiling wouldcontribute to the nursing homes operating cost deficit. However, there is an adjustment in themethodology for publicly operated facilities that mitigates the deficit by adding 50% of the deficit intothe rate calculation. The average of 2006 patient RUG scores determines the facility case mix indexused in establishing the 2009 direct component of the rate. The reimbursement methodology providesfor no further case mix measures to adjust the rate for the period 2009 through 2011, unless a facilityspecifically appealed for a higher case mix based on significant changed resident case mix. SummitPark Nursing Care Center did not apply as there was not a significant increase in facility case mix.


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The operating cost component of the 2009 through 2011 rate is calculated based on 2002 cost reports

submitted by nursing homes. This approach replaces the historical use of facility 1983 cost reports,trended for inflation, in calculating reimbursement rates. However, the change to full application of the2002 cost report would have resulted in higher expenditures, approximately $450 million per year, thanthe State was prepared to make. Legislation was enacted that limited the aggregate increase inMedicaid expenditures for nursing home care to $210 million. Medicaid rates were adjusted to complywith the aggregate statewide expenditure cap. This aggregate Medicaid expenditure cap was continuedfor 2010, 2011 and 2012. This statewide reduction in Medicaid reimbursement also would contributeto the facility operating deficit.

Capital costs for building and equipment are reimbursed on a per-patient per-day basis based on eachfacilitys actual rate period data, based on the historical capital costs approved for the facility. Capitalcosts include interest and depreciation or amortization.

Under the methodology, high cost facilities such as public nursing homes with high salary and fringebenefit costs and administrative costs that exceed peer group ceilings on direct and indirect costs do notreceive adequate reimbursement to cover all their costs. County-operated nursing homes therefore

experience an operating deficit that must be made up by the sponsoring County.

Proposed 2012 Medicaid Reimbursement Methodology

As a further complication of this highly complex Medicaid reimbursement methodology for nursinghomes, the State is proposing to implement by regulation a new pricing methodology in 2012. A casemix adjusted direct costs component will be composed 50% of statewide data and 50% of peer groupdata, adjusted for differences in wages and fringe benefits related to direct costs by a factor calculated50% on provider-specific data and 50% on regional data. An indirect costs component will becomposed 50% of statewide data and 50% of peer group data, adjusted for differences in wages andfringe benefits related to indirect costs by a factor calculated 50% on provider-specific data and 50% on


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Upper Payment Limits - Intergovernmental TransfersMedicaid reimbursement for nursing home services is calculated under the States Medicaid

Per

2012 2013 2014 2015 2016 2017 CON

Direct (1) 113.88$ 120.36$ 125.49$ 126.96$ 127.54$ 128.12$ 118.07$

Indirect (2) 64.08 67.73 70.61 71.44 71.77 72.09 72.95

NonComp (3) 28.78 28.78 28.78 28.78 28.78 28.78 13.25

Add-On's (4) 2.06 2.06 2.06 2.06 2.06 2.06 -

208.80 218.93 226.94 229.24 230.15 231.05 204.27

Capital (5) 57.02 56.47 55.89 55.29 54.66 54.02 57.56

265.82$ 275.40$ 282.83$ 284.53$ 284.81$ 285.07$ 261.83$

(1) Direct component calculated by NYSDOH using statewide pricing, "300HB" peer group and

1/2011 case mix of .78 Medicaid Only using new weights.

(2) Indirect component calculated by NYSDOH using statewide pricing and "300HB" peer group.

(3) Noncomparable component calculated by NYSDOH using facility specific 2007 data.

(4) Add-on's for BMI, Dementia & TBI calculated by NYSDOH from 1/2011 case mix submission.

(5) Capital component was estimated based on a total project cost of $101,392,934, 100% financing

and 90% reimbursement of interest.

Source: Toski & Co./EFP Rotenber CPA's

Transition Period to Full Statewide Pricing


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March 2014 is pending federal approval.The additional Medicaid payments are funded through what isknown as an IGT, an intergovernmental transfer. The County for each County operated nursing home

and public benefit corporation operated nursing home located in its jurisdiction transfers to the State anamount equal to 50% of the amount of the calculated difference as allocated to their specific facilities.The State uses such County funds as the basis to draw down the federal Medicaid matching 50%. Thetotal of the County and federal amounts are then paid to the nursing homes as additional Medicaidpayments.

CMS has approved use of such intergovernmental transfers from counties as the source of StateMedicaid expenditures eligible for federal financial participation. This program has been in effect for

over 20 years and has been renewed periodically. Any remaining operating deficit of a Countyoperated facility is made up wholly with County funds, with no further federal or State Medicaidcontributions.

Certified Public Expenditures

There is an alternate method available to the states for drawing down the federal Medicaid share. Thisdoes not involve calculation of an upper payment limit. It is called the Certified Public Expenditures,

or CPE, model. New York historically has not used the CPE model to claim federal funds. CPEs are acomplex calculation to determine the amount of actual expenditures properly allocated to Medicaidprogram services for a reimbursement period.

However, in 2010, legislation was enacted (Laws of 2010, Chapter 58, Part B, Section 3-C) thatauthorizes the state to seek federal approval to use CPEs with regard to Medicaid payments made togeneral hospitals . . . for the purpose of recognizing otherwise un-reimbursed allowable medicalassistance costs expended by government for public benefit corporations, with particular referenceto the New York City Health & Hospitals Corporation. The State has submitted a proposed MedicaidState Plan Amendment to CMS. However, CMS has not as yet either approved or disapproved of theuse of CPEs in such circumstances by New York State.


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HEAL GrantMedicaid Re-Design Team

The County is pursuing a Department of Health HEAL grant related to decertifying up to 100 nursinghome beds in the existing facility. This would provide immediate funds to the County. The impact ofreducing the number of licensed beds in the nursing home must be evaluated with the Department ofHealth to determine how the reduction would impact the current Certificate of Need approval toconstruct a replacement facility. Awards are expected to be announced by the Department of Healththis spring.

Managed Long Term Care

The Department of Health is required by law enacted in 2011 to begin enrollment of dual eligibleindividuals over 21 who require more than 120 days of Medicaid community-based long term careservices into the Medicaid Managed Long Term Care Program. This does not apply to nursing homeresidents. Dual eligibles are individuals eligible for both Medicare and Medicaid. Enrollment isbeginning in 2012, contingent upon receipt of federal approval, in New York City with expansion toother geographic areas of the State to follow over the next years as program capacity is developed.

New York also is developing a dual eligible initiative to integrated Medicare and Medicaid servicesinto consolidated capitated managed care programs, with a goal of coordinating services for thispopulation. An application to CMS for approval of a Dual Demonstration Project is being developedby the Department of Health. If approved, implementation would begin in 2014 in New York City andNassau, Suffolk and Westchester counties. While the Demonstration Project is limited to thosecounties, if the program is successful, it would in later years be extended to the other geographic areas.

It is the apparent intention of the State that over the next 5 years long term care services, includingnursing home services in the metropolitan New York area, will be migrating to managed care models ofservice delivery Services would be reimbursed to providers by managed care entities under contract


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Local Development Corporation

Local development corporations are not-for-profit corporations, incorporated pursuant to section 1411of the Not-For-Profit Corporation Law, operated for the exclusively charitable and public purposesenumerated in the statute. The corporation could be formed by public officers or private individuals. Alocal development corporation could own the land and/or building occupied by the County nursinghome and LTCH under a sale and leaseback arrangement with the County. The County would continueto be the licensed operator of the facilities. The benefit to the County is the immediate realization ofthe current remaining un-depreciated value of the property. The purchase by the local developmentcorporation would be financed through the issuance of bonds through the local IDA. The County

would continue to operate the facilities under a lease arrangement, with the lease payments used todefray the annual bond costs. Under Federal and State law, there would be no change in Medicare orMedicaid reimbursement for capital costs resulting from the sale and leaseback of the property.Approval of the Department of Health would not be required for this transaction.

This type of arrangement would be more beneficial to a County with a newer health care facility capitalplant than Rockland County, and therefore a higher un-depreciated value. It could be combined with aplan by a County for the future sale of the entire operation, thus relieving the County of the lease

payments over the long term.

Public Benefit Corporation

The Rockland County Summit Park Hospital & Nursing Care Center have served as providers of highquality services for the aged and disabled. The mission and services of public facilities complement theservices offered by the proprietary and not-for-profit segments of the health care delivery system.

Many county operated facilities have historically operated at annual budget deficits requiring thesponsoring county to provide operating support. Medicaid reimbursement provides the principal sourceof third-party reimbursement for nursing facilities, but the established rates do not fully reimburse forall operating costs of county-operated facilities including unique labor costs of pensions and employee


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PBC Governance

The Public Benefit Corporation would be governed by a Board of Directors that was independent of theCounty. A methodology for appointment to the Board would be established in the authorizinglegislation, with members appointed by the Rockland County Executive and Legislature and by theState. The Board would be accountable for the organizations ongoing operations.

PBC Medicare and Medicaid Capital Cost Reimbursement

Under Federal and State law and regulations, capital cost reimbursement by Medicare and by Medicaid

would not increase as a result of a sale of the hospital or nursing home to a public benefit corporation.This factor would constrain the value of the facility and sale price of the facility for a new operator.

PBC Upper Payment Limits and Intergovernmental Transfers

The calculation of the Medicaid upper payment limit and supplemental Medicaid payments wouldcontinue for the public benefit corporation under the same methodology as applies to the nursing home

as operated by the County. Rockland County would continue to be responsible through theintergovernmental transfer methodology for the non-federal share of the Medicaid upper payment limitsupplemental payment to the public benefit corporation by the State. Funding participation by a countyis mandatory under this program.

PBC Facility Employees

Current county employees would be transferred to the public benefit corporation without interruption in

employment. Employees of the corporation would continue to be categorized as members of the publiccivil service and members of the public retirement system. Current union representation would becontinued, although a new bargaining unit could be established. The public benefit corporationauthorizing legislation could provide that the PBC would thereafter be responsible for labor relations


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The terms of the transfer would be determined in negotiations with the County regarding the scope andvalue of assets to be transferred. The sale could provide a cash infusion benefiting the County. The

County likely would have to guarantee the bond debt as the new public benefit corporation has nooperating history and no credit history. Any current outstanding bond indebtedness applicable to theSummit Park Nursing Care Center would be reviewed and financial options evaluated. An alternativeto sale of the building to the PBC would be to lease to the PBC portions of the County buildingnecessary to the operation of the facilities.

Funding of Construction of a New Facility by the PBC

The public benefit corporation also would have the authority under the legislation to issue bondsthrough the Dormitory Authority to finance the construction of replacement facilities under thecertificate of need approvals issued to the County by the Department of Health. With no operating andcredit history of its own, County backing of the public benefit corporation bonds may be required bythe marketplace to sell the bonds, if the public benefit corporation determines to replace the facilitiesrather than continue in their current location.

OVERARCHING FACTORS INFLUENCING SUMMIT PARK POTENTIAL OPTIONS

In considering the options for the healthcare component of the countys operation at Summit Park, boththe Nursing Care Center and Long-Term Care Hospital, there are certain broad, pervasive factors whichwe consider overarching considerations that have the potential to affect or influence the success of allsegments of the operation. These overarching factors are considered here so as not to add additionalconfusion to individual options or alternatives and rather allow us to focus on specific differences in theindividual options themselves. However, the success or failure of each option is extremely dependenton addressing these considerations appropriately.

Governance


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Accountable Care Organizations, medical home models and suppliers of both human resources(unions/labor) and medical resources (providers, vendors, etc.).

Information TechnologyThe role of information technology in patient and clinical management, claims processing, electronichealth records, information sharing and point of service processing, as well as backend and real-timereporting is imperative to success in the industry today. Due to divergence in the workforce due tochanges in job competency and skill levels and the aging workforce, jobs will need to be evaluated andre-designed to insure direct care givers have adequate time to provide care and achieve desiredoutcomes while minimizing the cost of providing higher quality of care.

Labor and UnionsThe role of labor and unions will need to be redefined into collaborative working relationships that willallow the re-design of processes and job tasks with the emphasis on the provision of consumer orientedcare which improves quality and achieves successful clinical outcomes efficiently at the lowest costattainable. Entitlement benefits and performance appraisals will need to change with a focus onfeedback and performance oriented appraisal based on team performance rather than solely onindividual achievements.

Adaptability to a Changing Reimbursement EnvironmentThe emerging organization will need to adapt to continued reductions in reimbursement due third partypayment reductions, pay-for-performance initiatives, rate reductions and emphasis on managedMedicare and Medicaid programs rather than traditional reimbursement programs. As recently seen bythe cumulative reductions in Medicare payments, such as the 11.1% 2011 Prospective Payment Systemreductions, Medicare bad debt reduction planned for 2012, 3.3% 2010 final rule impacts and the 2012reduction in the market basket productivity adjustment. Additionally, changes in the State

reimbursement methodology for nursing homes to a regional case-mix adjusted rate and variousinitiatives of the Medicaid Re-design Team including linkages to Medicaid Managed Long Term Careprograms will have an additional downward impact on reimbursement to nursing homes in the monthsand years to come Additionally pay-for-performance at the hospital level increased quality and


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Total LTACH NH

Net Patient Service Revenue 52,607,201 20,071,443 32,535,758

Other Operating Revenue:

County Jail - - -

County of Rockland 3,074,763 3,074,763 -

Other 537,812 537,812 -

Total Operating Revenue 56,219,776 23,684,018 32,535,758

Operating Expenses:

Salaries and Wages 29,419,878 6,809,155 22,610,723

Employee benefits 13,378,183 5,180,787 8,197,396

Supplies and other 6,643,565 6,643,565

Depreciation 1,990,342 1,062,971 927,371

County Allocations 9,545,320 3,641,865 5,903,455

Total Operating Ex pense 60,977,288 23,338,343 37,638,945

(4,757,512) 345,675 (5,103,187)

Other

OPEB (12,169,461) (2,816,591) (9,352,870)

Interest Expense (121,134) (64,693) (56,441)

County Transfers - -

Net Deficit (17,048,107) (2,535,609) (14,512,498)

C All i

2010

Summit Park Hospital and Nursing Home


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Hospital M&A activity has also shown increased activity as chains look to position themselves anddevelop referral networks within existing and new markets. Due to the unique nature of LTCHs, only

about 13 acquisitions have taken place since 2002, although some acquisitions included more than onefacility. LTCHs price per bed have ranged from $60,000 per bed to $750,000 per bed depending onmarket position and strength of earnings. The majority of sales have occurred in the $130,000 to$330,000 price range, again based on market strength and earnings.

SUMMITPARKNURSINGCARECENTEROPTIONS

OPTION 1: CONTINUE CURRENT CONFIGURATION

Under this approach, the Summit Park Nursing Care Center would continue to be operated underCounty auspices as an Enterprise Fund. The decision to continue operation under this option wouldrequire the mid to long term commitment of the County to subsidize deficits of the facility until such

time as significant changes in the organizations cost structure could be realized through a combinationof increased utilization and revenues and significant reductions in labor and non-labor operating costs.

It is uncertain given the performance of the organization since 2002 whether this option is viable.

TimelineImplementation of cost savings measures under the current structure would take several months, anddiscussions with unions could be protracted.

Financial ImplicationsThis approach would require additional capital funding for renovations of approximately $19.2 million

h l ( Ch 2 f hi R ) d fi i fi i f h i b h


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Conclusion

Given the Countys financial concerns with continuing subsidies of the nursing home, continuing thecurrent configuration of services may not be feasible, even if CPEs were to be authorized which wouldoffset up to 50% of such subsidies.

OPTION 1AIMPLEMENT VENDOR CONTRACTS FOR SERVICES

Under this approach, the Summit Park Nursing Care Center also would continue to be operated underCounty auspices as an Enterprise Fund, but with the implementation of various outside vendor services

in lieu of County employee services. Department of Health regulatory requirements, sections 400.4and 415.6(e), specify it is the continuing responsibility of the facility operator to establish policies andfor supervision of services provided by outside resources. There are no regulatory provisionsauthorizing or prohibiting management contracts for the overall day-to-day management of a nursinghome.

TimelineAt least six months would be required to develop Requests for Proposals, evaluate responses, interview

potential service vendors, and implement vendor service programs.

Financial ImplicationsCost savings could accrue to the County by use of outside vendors for specific services, e.g., foodservices, laundry, housekeeping, electronic medical records, computer services, etc. Cost savings alsopotentially could be achieved through use of vendor arrangements for clinical services. Savings wouldonly be realized to the extent that County employees that would otherwise be performing the functionsare subject to layoff.

ConclusionUse of outside vendors for non-clinical services could reduce the annual operating deficits, depending


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Financial ImplicationsThis option would allow for sale of nursing home assets to the PBC. Proceeds from the sale could be

used to fund legacy costs of the County. There could be potential advantages for labor restructuring bythe PBC, depending upon whether there is a no-layoff period. The disadvantage is that the PBCapproach may not be approved by the State Legislature, but that is not likely. Unless addressed in thelegislation, Department of Health approval would be required to transfer and extend the Countysapproval to construct a new nursing home to the PBC. Guarantees by the County may be necessary toassure that bonds issued for the PBC, which has no credit history, are marketable. Any subsidiesprovided to the PBC by the County would be mitigated if use of CPEs were authorized for claimingfederal financial participation in County Medicaid service related expenditures that exceeded Medicaid

revenue under the States formula reimbursement methodology.

ConclusionForming a Public Benefit Corporation for operation of the nursing home and potentially the LTCHwould continue the public mission of the facilities, preserve the current public workforce, and limit thefuture obligations of the County. If use of Certified Public Expenditures for claiming Medicaid federalfinancial participation were authorized, County subsidies would be further ameliorated.

OPTION 3LOCAL DEVELOPMENT CORPORATION

A local development corporation could be formed to purchase the County assets with funds from IDAbonds. The County would continue as the facility operator under a leaseback arrangement.

TimelineUp to six months may be required to pursue the IDA process for approval to issue and market bonds forthe purchase of the facility.

Financial ImplicationsThere would be no change in capital cost reimbursement under Medicare or Medicaid in sale of realty


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TimelineDevelopment of plans for construction of a new facility consistent with the HEAL application to

decertify a number of beds at the facility could begin this summer. Approval of the plans by theCommissioner of Health would be required. Actual construction would likely not begin until next year.

Financial ImplicationsSignificant investment by the County in capital assets would be required. However, under the currentreimbursement models approximately 90% of the capital cost would be recovered through thereimbursement system. There is always a potential for diminishing revenue in the future given therecent experience with limitations, changes in reimbursement methodologies and reductions in nursing

home Medicaid reimbursement, and the trend to managed care. Some capital costs would be offset bysavings from the existing buildings inefficiency, e.g. energy costs and maintenance costs, and savingsin future investment in the existing buildings infrastructure if it were to continue as a nursing home.There would be a definite marketing advantage to potential residents in having a new building, butthere would be a need to identify new uses for the existing building. A new building also wouldprovide marketability in the event the County determines to sell the operation in the future.

Conclusion

The CON approval by the Department of Health to replace the nursing home should not be allowed toexpire. The County could proceed to construction or seek a further extension by the Department ofHealth of the project approval for transfer of the operation to a PBC and assumption of the constructionproject by the PBC.

OPTION 5SALE OF THE NURSING HOME

The County would have to consider the social/ethical mission of the facility in selecting a purchaser, aswell as the potential purchasers operational and quality of care experience.

Timeline


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OPTION 6CLOSURE OF THE NURSING HOME

Closure could take the form of a complete closure or partial closure of the facility. At least 90 daysadvance notice of intent to close must be provided to the Commissioner of Health and approval of aPlan of Closure obtained under NYSCRR 401.3(g, (h). The safe and appropriate transfer of residents isthe primary concern of the Commissioner. The social/ethical considerations of closing this communityresource would have to be considered along with the financial considerations.

Timeline

At least 90 days advance notice must be provided to the Commissioner of Health of an intent to close.

Financial ImplicationsThe County must continue to operate the facility during the closure process, which could take severalmonths as residents are placed. The County could cut costs as patients are transferred to the extent staffare subject to layoff, but also would experience reductions in revenue. There would be costs tomaintain a closed building or to find a new use. Current allocations of County costs to the nursinghome would have to be reevaluated and either assigned to other County departments or employees

providing those services terminated. We estimate the County would continue to incur legacy costs ofbetween $ 18.0 and $ 22.6 million post-closure as identified in Appendix B to this report under thisoption.

ConclusionClosure of the facility would provide immediate savings to the County to the extent County employeeswere subject to layoff. The community would lose these beds as a resource for nursing home services.The County could sell the building although its location on the County campus might limit its value.The County could renovate the building for alternative County uses. In assessing this option, theCounty must consider its mission and responsibility to the residents of the County. Additionally, basedon studies developed by the American Hospital Association in its Chart Book Series, the economic


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CHAPTER 4: SUMMIT PARK HOSPITAL

Summit Park Hospital is a 100-bed Long Term Care Hospital (LTCH), which is licensed under Article28 of the NYS Public Health Law and federally under section 1886(d)(1)(B)(iv) of the Social SecurityAct. The LTCH regulations are the same as those for general acute care hospitals with the additionalrequirement that patients have an average length of stay greater than 25 days. The federal designationwas applied to facilities for exclusion from the Medicare Inpatient PPS beginning in1986 if eligibilityrequirements were met; otherwise hospitals meeting the criteria could apply for the designation. In2008 CMS implemented a 3 year moratorium on the approval of new LTCHs and expansion ormovement of existing LTCH beds to other locations. The moratorium has been extended through 2012.

The State of New York does not have an LTCH designation in its regulations. Rather, it generallydesignates such beds as Physical Medicine and Rehabilitation.

The Hospital is currently licensed for the following services:

Services Beds

Physical Medicine and Rehabilitation 57Psychiatric 43

Total Certified Inpatient Beds 100

Medical Social Services Physical Medical Rehabilitation Pharmaceutical Service

Renal Dialysis - Acute Radiology - Diagnostic Respiratory Care


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The Rockland County Department of Hospitals states its mission as:

To be the county leader in medical treatment and long-term care and provide centers of excellence in

the areas of geriatrics, rehabilitation and care of residents with Alzheimers disease. To provideservices for the unique physical, social and emotional needs of each resident and patient within a

therapeutic and home-like atmosphere. To render care with dignity and respect for the individual

regardless of race, beliefs, national origin, sex, age or financial status.

Additionally, the Hospital also provides separate mission statements for three of its service areas:

Outpatient Services:"To bridge the gap between symptoms and medical treatment"

Rehabilitation Services: "To restore and/or maintain a person at their maximum level of function forOptimum Quality of Life"

Adult Day Care: To provide services to the physically disabled adults residing in RocklandCounty that will stave off premature institutionalization regardless of

financial status.

The Hospital, not including the psychiatric unit (addressed in more detail in Chapter 5) had thefollowing trends in occupancy, discharges and average length of stay:

2002 2008 2009 2010 2011

# Available Beds 57 57 57 57 57

Total Days of Occupied Beds 17,002 18,845 17,402 17,070 17,501% Occupancy for the Year 81.72% 90.33% 83.64% 82.05% 84.12%

Average Beds Filled per Day 46.6 51.5 47.7 46.8 47.9

Utilization: Summit Park Hospital, 2002, 2008 - 2010


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with Nyack in the transfer of 26 inpatient psychiatric beds to Nyack under a HEAL grant andCertificate of Need application to New York State. At this time the outcome of the application and

related grant are unknown.

There are no LTCHs within the 20-mile radius; similar patients are treated in acute, post-acute, sub-acute and transitional care units of hospitals and some nursing facilities offering sub-acute and post-acute specialties. This is true locally and nationally as there are only approximately 405 LTCHsnationally. The closest LTCHs in New York are located in New York City, two of which are run by theNYC Health Care Corporation and another whose license is owned Terrence Cardinal Cooke nursinghome. Due to the distinct nature of the LTCH, it can service people regionally depending on the

publics perception of its services and level of clinical outcomes. Therefore it is possible for an LTCHto have a regional as opposed to local market.

LTCHs have been under scrutiny by CMS and MedPAC since 2004 with respect to their place withinthe continuum of care, given their higher reimbursement rates under DRGs. As a result there is amoratorium on new certifications, expansions, transfers and establishment of satellites through the endof 2012, which may be further extended. In addition, regulations with respect to reimbursement,admission criteria and quality reporting are scheduled to be implemented beginning in 2012 as a result

of the continued analysis by CMS and refinement to the regulations and reimbursement policies.

Over 50% of all LTCHs are owned by national chains; these facilities see the highest profit marginsdue to economies of scale. Solely owned LTCHs have the lowest profitability of the LTCH groupnationally according to MedPACs March, 2012 report to Congress.

A map of regionally located acute care hospitals which can be used as a source of admissions follows.


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Figure 2 - Hospitals Within 20 Mile Radius


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2011

Referred

Ambulatory

Pt Days ALC Total Dischs Pt Days ALC Total Dischs

Medicare 3,461 3,461 206 13,178 450 13,628 406 492

Medicaid 2,723 2,723 180 3,118 121 3,239 65 125

Non Profit Indemnity - 28 28 5

Commercial Indemnity - 372 372 11 86

Hmo - Medicare 36 36 4 117 117 4

HMO/PHSP - Medicaid 610 610 82 79 79 4HMO/PHSP - Other 874 874 109 -

Self Insured - -

Workers Compensation - -

No Fault - -

Uninsured/Self-Pay 1,062 1,062 101 38 38 7

Government - - 1

Charity Care - -

Courtesy - -

Total 8,766 - 8,766 682 16,930 571 17,501 496 710

2010

Referred

Ambulatory

Pt Days ALC Total Dischs Pt Days ALC Total Dischs

Medicare 4,358 4,358 226 12,566 280 12,846 445 784

Medicaid 2,938 2,938 140 2,961 178 3,139 70 168

Non Profit Indemnity - 158 158 22

Commercial Indemnity - 454 1 455 17 145

Hmo - Medicare 41 41 5 235 235 9HMO/PHSP - Medicaid 548 548 70 62 62 4

HMO/PHSP - Other 708 708 91 -

Self Insured 951 951 100 -

Workers Compensation

Psych Physical Medicine/Rehab

Utilization by Payor 2010 and 2011

Summit Park Hospital

Psych Physical Medicine/Rehab


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There continues to be significant debate whether LTCHs will survive continued scrutiny by CMS giventheir high reimbursement in an environment that stresses reimbursement containment by federal andstate agencies.

Total LTACH NH

Net Patient Service Revenue 52,607,201 20,071,443 32,535,758

Other Operating Revenue:

County Jail - - -

County of Rockland 3,074,763 3,074,763 -

Other 537,812 537,812 -

Total Operating Revenue 56,219,776 23,684,018 32,535,758

Operating Expenses:

Salaries and Wages 29,419,878 6,809,155 22,610,723

Employee benefits 13,378,183 5,180,787 8,197,396

Supplies and other 6,643,565 3,193,001 3,450,564

Depreciation 1,990,342 1,062,971 927,371

County Allocations 9,545,320 3,641,865 5,903,455

Hospital & Nursing Home

2010

Summit Park


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SUMMITPARKHOSPITALREIMBURSEMENTENVIRONMENTFor the County-operated Summit Park LTCH, Medicare is the principal payer. The reimbursementenvironment for operation of the Rockland County nursing home and long-term care hospital are forcontinued shortfalls in nursing home Medicaid reimbursement and an uncertain future for long-termcare hospital Medicare reimbursement. The Governor also issued an Executive Order requiring Stateagencies to develop salary caps and administrative expense ceilings for all providers that receive Statefinancial support, including Medicaid. The regulations are being developed and will have to be

evaluated for application to the nursing home and hospital industries.

Facing growth nationally in the number of long-term care hospitals and escalating Medicareexpenditures, Congress enacted a moratorium on additional long-term care hospital beds while studiesof the system are conducted by CMS. The moratorium has been extended twice and now runs through2012. If LTCH program reforms are not adopted this year, Congress may further extend themoratorium. Potential Medicare program changes that may be considered by CMS upon expiration ofthe moratorium include: adapting more restrictive eligibility criteria for admission of patients to and

continued stay in long-term care hospital beds, reducing Medicare reimbursement and requiringadditional quality of care reporting by facilities. In 2011, the General Accounting Office issued aReport critical of the lack of oversight exercised by CMS over long-term care hospitals.

Medicare reimburses LTCHs in the same manner as general acute care hospitals. Each patient isassigned to a Diagnosis-Related Group (DRG) based on the patient diagnosis and medicallycomplicating conditions in the medical record. Each DRG is assigned a weight reflecting the relativecosts of care of patients within that DRG. The weight is multiplied by a standardized reimbursement

amount to calculate the operating component of the per-case payment for that patient. A per-dischargecapital cost amount is added to the payment. Medicare has established distinct DRGs for LTCHs. TheNew York Medicaid program which also reimburses acute care hospitals on a DRG basis has notestablished distinct DRGs for LTCHs In New York Medicaid pays LTCHs a per diem rate based on


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establishing patient eligibility for and continued stay in beds designated as LTCH beds and inestablishing that the facility meets quality of care reporting criteria.

SUMMIT PARK HOSPITAL OPTIONS

OPTION 1CONTINUE CURRENT CONFIGURATION

Under this approach, similar to the same option for the nursing home, Summit Park Hospital wouldcontinue to be operated under County auspices as an Enterprise Fund. The decision to continue

operation under this option would require the mid to long term commitment of the County to subsidizedeficits of the facilities until such time as significant changes in the organizations cost structure couldbe realized through a combination of increased utilization and revenues and significant reductions inlabor and non-labor operating costs. Notwithstanding the preceding, potential short to mid-term (1 to 5years) changes in regulations and continued pressure for reduction in reimbursement at the federal andstate levels coupled with continually higher than average increases in health care costs could result ingreater operating deficits if significant operational efficiencies and cost containment measures are notimplemented.

It is uncertain given the performance of the organization since 2002 whether this option is viable.Ultimately it becomes a question of the Countys mission as previously described.

TimelineImplementation of cost savings measures under the current structure would take several months, anddiscussions with unions could be protracted.

Financial ImplicationsThis approach would require additional capital funding for renovations of approximately $19.2 millionin facility replacement, and renovation would be required over the next 10 plus years due to the aging


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ConclusionGiven the Countys financial concerns with continuing subsidies ofboth the nursing home and hospital,continuing the current configuration of services may not be feasible.

OPTION 1A IMPLEMENT VENDOR CONTRACTS FOR SERVICES OR A MANAGEMENTCONTRACT

Under this approach, the Summit Park Hospital also would continue to be operated under Countyauspices as an Enterprise Fund, but with the implementation of various outside vendor services in lieu

of County employee services. Department of Health regulatory requirements, sections 400.4 and405.2(h), specify the continuing responsibility of the facility operator to establish policies and forsupervision of services provided by outside resources. There also is a regulatory process forCommissioner of Health approval of a management contract for operation of the hospital, section405.3(f).

TimelineAt least six months would be required to develop Requests for Proposals, evaluate responses, interview

potential service vendors, and implement vendor service programs. Any proposed managementcontract must be submitted to the Commissioner of Health for approval at least 60 days prior to itsintended effective date.

Financial ImplicationsCost savings could accrue to the County by use of outside vendors for specific services, e.g., foodservices, laundry, housekeeping, electronic medical records, computer services, etc. Cost savings alsopotentially could be achieved through use of vendor arrangements for clinical services. Savings wouldonly be realized to the extent that County employees that would otherwise be performing the functionsare subject to layoff.


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TimelineEstablishment of a new PBC to operate the County nursing home and hospital would require up to oneyear to implement - obtain legislation, appoint the PBC Board of Directors, reach agreement on acontract of sale, and proceed to market bonds. The timeline would be extended if the Legislature didnot return in the fall or deferred action on the PBC legislation until the 2013 legislative session.

Financial ImplicationsWould allow for sale of hospital assets to the PBC. Proceeds from the sale could be used to fundlegacy costs of the County. Potential advantages for labor restructuring by the PBC, depending uponwhether there is a no-layoff period. Disadvantage is that the PBC approach may not be approved by

the State Legislature, but that is not likely. Unless addressed in the legislation, Department of Healthapproval would be required to transfer and extend the Countys approval to construct a new hospital tothe PBC. Guarantees by the County may be necessary to assure that bonds issued for the PBC, whichhas no credit history, are marketable. Any subsidies provided to the PBC by the County for hospitalservices would not be significantly reduced if use of CPEs were authorized for claiming federalfinancial participation, as Medicare is the principal payor for hospital services.

Conclusion

Forming a Public Benefit Corporation for operation of the nursing home and potentially the LTCHwould continue the public mission of the facilities, preserve the current public workforce, and limit thefuture obligations of the County.

Sale of the LTCH beds to a new operator is not permitted during the federal moratorium as the futurerole and reimbursement of LTCH is examined. However, as a government owned and operatedhospital, CMS may authorize, as not contrary to the moratorium, a transfer of LTCH beds from theCounty to a PBC as public ownership and operation would continue. The moratorium is scheduled to

expire at the end of this year, but could be extended by Congress.

OPTION 3LOCAL DEVELOPMENT CORPORATION


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ConclusionThis Option would not be of much benefit to Rockland County. Any short-term gain from the salewould be offset by long-term liabilities on the leaseback arrangement.

OPTION4COUNTY TO BUILD NEW HOSPITAL

The County has approval from the Department of Health to construct a new facility to replace thecurrent hospital. Proceeding with construction could provide the County with a valuable asset forfuture sale. The value would be affected by federal changes in the patient admission criteria, scope of

services, and Medicare reimbursement for LTCHs, which are being evaluated by CMS under themoratorium on new LTCH beds which is scheduled to expire at the end of this year.

TimelineProceeding with plans for construction of a new hospital facility could begin this summer. This shouldbe coordinated with decisions on replacement of the nursing home.

Financial Implications

Significant investment by the County in capital assets would be required. There is the potential fordiminishing revenue in the future given the recent experience with federal limitations on the growth ofMedicare reimbursement. Some capital costs would be offset by savings from the existing buildingsinefficiency, e.g. energy costs and maintenance costs, and savings in future investment in the existingbuildings infrastructure if it were to continue to be operated as an LTCH. There would be a definitemarketing advantage to potential patients as a new regional resource in having a new building, but therewould be a need to identify new uses for the existing building. A new building also could enhancemarketability in the event the County determines to sell the operation in the future.

ConclusionGiven the uncertainties of the future role and Medicare reimbursement of LTCHs, exploring Option


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County to either a PBC or Helen Hayes Hospital as public ownership and operation would continue. Ifthe moratorium expires, transfer of LTCH beds to other community hospitals could be explored by theCounty as an alternative to Helen Hayes Hospital. We estimate the County would continue to incurlegacy costs of between $ 5.3 and $ 6.8 million post-closure as identified in Appendix B to this reportunder this option.

OPTION 6CLOSURE OF THE HOSPITAL

Closure could take the form of a complete closure or partial closure of the facility, which has LTCHbeds and mental health beds. At least 90 days advance notice of intent to close must be provided to theCommissioner of Health and approval of a Plan of Closure obtained. Regulations 401.3(g, (h). Thesafe and appropriate transfer of patients is the primary concern of the Commissioner. However, closureof the LTCH beds could be effected by eliminating new admissions, reducing the number of any patienttransfers that might be necessary. The social/ethical considerations of closing this community resourcewould have to considered along with the financial considerations.

TimelineAt least 90 days advance notice must be provided to the Commissioner of Health of an intent to close.

Financial ImplicationsThe County must continue to operate the facility during the closure process, which could take severalmonths as the census is reduced. The County could cut costs if admissions are curtailed to the extentstaff are not necessary to provide services to remaining patients and are subject to layoff, but also

would experience reductions in revenue. There would be costs to maintain a closed building or to finda new use. Current allocations of County costs to the LTCH would have to be reevaluated and eitherassigned to other County departments or employees providing those services terminated. We estimate


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CHAPTER 5: ROCKLAND COUNTY DEPARTMENT OF MENTALHEALTH

OVERVIEW

The Rockland County Department of Mental Health oversees a comprehensive and integrated systemof mental health, developmental disability and chemical dependency/alcohol-substance abuse servicesavailable to county residents. Many of those services are provided by County employees in programsand services operated directly by the Department. Others have historically been provided by the state.But increasing numbers and varieties of the services are provided by a substantial network of

voluntary/not-for-profit agencies. The Department of Mental Health (DMH) is responsible for theplanning, coordination, administration, evaluation and fiscal oversight of the overall system, includingboth the programs it offers directly and those provided by others.

The DMH mission statement promises: The Department of Mental Health, a component of RocklandCounty Government, shall provide and oversee comprehensive, high quality mental health, mentalretardation and chemical dependency services to the residents of Rockland County in an ethical,courteous, timely, safe and cost effective manner.

The Department operates as a full-fledged independent department of Rockland County government,headed by a Commissioner of Mental Health. But because as one of the Departments services itoperates a 26-bed Psychiatric Inpatient Unit (17 of 43 licensed beds are no longer used) as part ofSummit Park Hospital, the Departments finances are also considered part of the Summit Park Hospitaland Nursing Care Center Enterprise Fund, under the Summit Park Board of Governors and theCommissioner of Hospitals. The DMHs roughly $30 million operating expenses representedapproximately one-third of the total annual Summit Park operating expenses in 2010. In addition, theDepartment is responsible for oversight and monitoring of service contracts worth more than $8 millionannuallyprograms and services provided by more than 20 not-for-profit agencies.


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OUNTYDEPARTMENTOFMENT

ALHEALTH

QualityAssura

nce

UtilizationReview

EvelynHerbert,

RN

PersonnelUnit

SusanPiper

Administrative

SupportStaff

SpecialProjectsAssistant/

HumanResources

LuanneHorgan

Transportation

Unit

LG

U

CorporateC

ompliance

BonnieHa

lley,MPA

Deputy

Commissioner

MichaelLeitzes,

MBA

PWDDLiaison/L

GU

BrigidPigott,

PSW

MethadoneTreatment

Program

JohnScully

ChemicalDependency

Services/LGU

AnneCalajoe,

PSWI

II

RiskManagement/

PI/AOT

TamiSchonberg

RehabCounselorIII

Beha

vioralHealth

Services

RCJail

Se

xOffender

T

reatment

Jim

Foley,

PSW

BehavioralHealth

Servic

es

CriminalJustice

MarkFarsetta

,PSWI

II

FinancialManagem

ent

Finance

SusanThomson

FiscalAdministrator

Commissionerof

MentalHealth

MaryAnnWalsh-Tozer,LCSW

1

0-11


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CHANGING CONFIGURATION OF MENTAL HEALTH SERVICES AND DEPARTMENT

Since the mid-1990s, the Department of Mental Health has been gradually consolidating its ownservices and shifting other services and programs to community-based non-Department providers. Thatdeliberate and planned process of restructuring has accelerated considerably in the past few years. Theimplications can be seen from a staffing perspective: in 1993, the Department carried 419 establishedpositions in the bu

rockland pbc complete final report & appendix b

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