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SUPPLEMENTAL STATE AGENCY REPORT Riverside Medical Center and

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SUPPLEMENTAL STATE AGENCY REPORT Riverside Medical Center and Powered By Docstoc
					                      SUPPLEMENTAL STATE AGENCY REPORT

     Riverside Medical Center and Riverside Ambulatory Surgery Center, LLC d/b/a
       Riverside Ambulatory Surgery Center, LLC Bourbonnais, Illinois #03-065



I. The Proposed Project

        The applicants propose to construct and establish a free-standing multi-
        specialty ambulatory surgical treatment center (ASTC) with two operating
        rooms (OR). The facility will contain 6,940 gross square feet (GSF). The
        original project cost of the project was $2,953,922 and that project cost has
        been reduced to $2,745,736.



II. Background Information
                                                                                   th
        The application was originally considered by the Board at its February 18
        meeting at which time the proposed project was issued an “Intent-to-Deny”. Prior
        to that meeting, the applicants have submitted additional material which is dated
        April 15, 2004. A copy of the additional material is attached to the supplemental
        report. Only the criteria which received a negative finding in the Original State
        Agency Report (OSAR) will be discussed in this report. The applicants have also
        reduced the original project cost and a revised cost and sources of funds chart is
        also included in this report.
Project Cost and Sources of Funds
Project Costs                                 Original Cost       Revised Cost
Preplanning Costs                                  44,778            42,878.71

Site Survey and Soil Investigation                 88,385            41,553.77

Site Preparation                                   88,385            41,553.77

Off-Site Work                                      15,000               15,000

New Construction Contracts                        1,607,000        1,511,046.2

Contingencies                                     160,700           151,104.62

Architectural/Engineering Fees                    154,674           147,598.99

Consulting and Other Fees                          75,000               75,000

Movable or Other Equipment                        720,000              720,000

TOTAL                                            $ 2,953,922     $2,745,746.06
III.   Summary of Findings

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

       B.     The State Agency finds that the proposed project appears to be in
              conformance with the provisions of Part 1120.


IV.    Review Criteria

       Only the review criteria for which a negative finding was made in the OSAR
       will be discussed here.

       A.     Criterion 1110.1540(e) - Impact on Other Facilities

              The OSAR stated the following:

              “The applicants contacted three healthcare facilities that offer surgery
              services within the GSA. The only response to this inquiry came from
              Provena St. Mary’s Hospital (PSMH) in Kankakee. PSMH estimates it
              could lose approximately 1,189 procedures to the ASTC. This estimate is
              based upon the procedures pledged by physicians to the new facility who
              also have privileges at PSMH. The applicants stated all of the procedures
              at the ASTC will come from RMC. As a result, the applicants believe the
              project will not impact other facilities.

              In determining the project’s impact, the State Agency must also consider
              how RMC will be affected. In addition to this project, two ASTCs (which
              are located near the proposed project) were recently approved by the State
              Board. The Center for Digestive Health, which was approved by the State
              Board in May 2003, is a limited-speciality ASTC offering
              gastroenterology services (Project #03-002). This project estimated 1,613
              surgical hours would be removed from RMC. The project has a
              completion date of February 28, 2005. Oak Surgical Institute (Project
              #01-069) was approved by the State Board on November 29, 2001. This
              facility is also a limited-speciality ASTC offering pain management and
              orthopaedic procedures. The State Agency notes RMC was a co-applicant
              on this project. This project estimated 2,422 surgical hours would be
              removed from RMC. Combined, these two ASTCs would remove
              approximately 4,035 surgical hours from RMC. This figure, combined
              with the estimated 2,183 surgical hours projected to be removed by this
              project, would reduce RMC’s surgical volume by 6,218 hours. For 2002,
              RMC generated 24,120 surgical hours. Applying the estimated volume
              reduction from the three above-referenced ASTCs, would reduce RMC’s
                     volume to 17,902 surgical hours. This reduced volume would still allow
                     RMC to justify its 12 ORs.

                     Additionally, it does not appear the proposed ASTC will negatively
                     impact the other ASTCs considering they provide different services.
                     However, it appears additional surgical capacity exists in the GSA. The
                     application for the Center for Digestive Health anticipated 1,431 surgical
                     hours would be removed from PSMH. This anticipated reduction will
                     decrease the number of ORs justified at PSMH. In 2002, PSMH reported
                     6,109 surgical hours. Assuming the anticipated impact of the Center for
                     Digestive Health is accurate, the surgical hours would be reduced to 4,678.
                     This level of utilization would justify four ORs. PSMH has eight ORs.
                     While it does not appear the proposed facility will remove surgical volume
                     from PSMH, it does appear there is additional surgical capacity at PSMH.

                     Table Three provides surgical utilization data for all hospital and
                     ASTCs within 30 minutes travel time of the applicants’ proposed
                     facility.”
TABLE THREE Hospitals and ASTCs within the Geographic Service Area

                                                                  Total Number                        Total ORs
                                                                  of Operating                        Justified
                                                                     Rooms           Equivalent       per State
                             Total Hours      Total Hours of                         Outpatient       Standard
        Hospitals            of Surgery      Outpatient Surgery                        ORs
Riverside Medical Center            24,120               13,177         12             8.78              16

Provena St. Mary’s                   9,928                6,109         8              4.07               7
                                             Number of            Hours of           Operating Rooms
Ambulatory Surgical Treatment Centers        Operating Rooms      Surgery            Justified


Oak Surgical Institute 1                             2                           0                0

The Center for Digestive Health 2                    2                           0                0
1 Opened in November 2003 as a limited specialty ASTC offering orthopedic and pain management services. No
utilization data available. 2 Facility was approved in May 2003 and is a limited specialty ASTC offering
gastrointestinal procedures. No utilization data available.




          In the additional material the applicants have again identified that the surgeries
          committed to the proposed facility will come only form Riverside Medical Center
          and no other facility. In addition, the applicants have stated that 2 of the 12
          operating rooms at Riverside are dedicated delivery rooms and can only be used
          for deliveries, bringing the total of available operating rooms to 10. The
          applicants have again identified the volume from Riverside that will be committed
          to the Center for Digestive Health and Oak Surgical Institute in addition to the
          proposed ASTC. AS was previously discussed in the OSAR, RMC will have
       enough historical surgical volume to justify its 12 operating rooms, even after the
       volume is removed for the three ASTC’s. The State Agency must still remain
       negative on this criterion due to the additional surgical capacity that exists in
       other planning area facilities.

       THE STATE AGENCY FINDS THE PROPOSED PROJECT DOES
       NOT APPEAR TO BE IN CONFORMANCE WITH THE ABOVE
       REVIEW CRITERION

B. Criterion 1110.230(c) - Alternatives

       The OSAR stated the following: “The applicants must document that the
       proposed project is the most cost-effective or least costly alternative. The
       applicants considered the following alternatives to the proposed project:

1.     1. Maintain the Status Quo
2.     2. Expand services at Riverside Medical Center
3.     3. Establish the Riverside Ambulatory Surgery Center

               As referenced, there is additional surgical capacity available in
               the GSA. Therefore, it appears the best alternative is to utilize
               other planning area facilities.”

               The additional material submitted by the applicant does not change the
               findings in the OSAR.

               THE STATE AGENCY FINDS THE PROPOSED PROJECT
               DOES NOT APPEAR TO BE IN CONFORMANCE WITH THE
               ABOVE REVIEW CRITERION

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

               The OSAR stated the following:

               “The applicants documented that the proposed ASTC will be fully
               utilized by transferring surgical volume from RMC. However, given the
               additional surgical capacity that exists in the GSA, it does not appear the
               facility is needed.”

               The material submitted by the applicants does not change the
               findings in the OSAR.

               THE STATE AGENCY FINDS THE PROPOSED PROJECT
               DOES NOT APPEAR TO BE IN CONFORMANCE WITH THE
               ABOVE REVIEW CRITERION
       D. Criterion 1120.310(c) -Reasonableness of Project Cost

               The OSAR stated the following:

               “Site Survey, Soil Investigation and Site Preparation - These costs total
               $176,770, or 10% of construction and contingency costs. This appears
               high compared to the State standard of 5%. Under the standard, the
               applicants would be allowed $88,385 for this expense. Table Four displays
               the State Agency’s findings.
                                                                  TABLE FOUR
                      Site Survey, Soil Investigation and Site Preparation Costs
     Applicant’s Expense                   State Standard                          Difference

          $176,770                            $88,385                              $88,385


New Construction and Contingency Costs - These costs total $1,767,700 or $254.71 per
GSF. This appears high compared to the adjusted State standard of $239.50 per GSF. The
applicants exceed the standard by $15.71 per GSF. Table Five displays the State
Agency’s findings.”


                                          TABLE FIVE
                                 Construction Cost per GSF
   Applicant’s Cost per GSF                State Standard                    Difference per GSF

           $ 254.71                           $ 239.50                              $ 15.21


               As stated in the OSAR the applicants’ costs for site survey, soil
               investigation, site preparation and new construction costs were high. The
               applicants have decreased the site survey, soil investigation and site
               preparation costs to $83,107, which represents 3.5% which is now in
               compliance with the State Agency standard of 5%.

               Additionally, the new construction costs and contingencies have also
               been decreased and now total $1,662,150.82 which represents $239.50
               which is in conformance with the State Agency standard of $239.50.
               The State Agency is now able to make a positive finding on this
               criterion.

               THE STATE AGENCY FINDS THE PROPOSED PROJECT APPEARS
               TO BE IN CONFORMANCE WITH THE ABOVE REVIEW
               CRITERION


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