Tuesday, July 11, 2017

Certificate of Need

The setup is simple. A facility has a hundred rooms or units. Ten have two bedrooms. That can count as 110 beds.

Rent a two-bed unit to one person and you have one extra bed. Rent a one-bed unit to a couple and you loose a one-bed unit to rent.

No one, it seems, foresaw the increase in the need for couples. Three companies were at the Missouri Health Facilities Review Committee (MHFRC) hearing yesterday to request additional rooms to adjust to the changing market with no additional cost or change in rooms or units.

Provision Living at Columbia was tenth in line. The company before us asked for 30 additional beds. The presentation seemed to be a perfect introduction for Provision Living’s request. Couples moving into memory care was far more common than I was aware of. My wife and I were not very unique in doing this. Then, something when wrong.

Asking for so many beds made it suspect of “dirty tricks” that I will discuss later. The issue was decided by granting half the requested number of beds.

Kim made a clear short presentation, building on what had already be presented.

A short discussion followed Kim’s presentation among the committee about having set a precedent of granting half of such requests for correcting bed counts for couples. We were in trouble.

The committee was about to vote when the attorney reported they had one more person: me. Most presenters, like me, had been cut off at a three-minute time limit.

I replaced my one-page discussion with the suggested talking points by the attorney plus my wife’s request:

1.    Married 59 years, in another month.
2.    Cared for wife at home, with health care for one year.
3.    “Don’t put me in an institution.” We stay together.
4.    Residential Care for Two blog on our struggles to find care.
5.    A reasonable second person fee makes this possible.
“You are out of time.”

Immediately the person who makes the motion for the committee to second and vote on, did so. "Second." Vote: All yeas. The five-hour wait was over. The attorney knew what we needed to do.

The Certificate of Need was created in 1974 when hospitals were building far more rooms than needed. To remain profitable, they had to divide the cost of the empty beds among those that were used.

So; simple; control the number of hospital beds and lower the cost to patients. The federal law was repealed in 1987. Several states then dropped their CON law too. In general, normal business competition will determine what companies will thrive or go bankrupt. The rest retained the Certificate of Need.

The Certificate of Need, in Missouri, adds another layer of competition and politics. The committee is composed of state representatives and senators and a few other people who seemed to be well versed in the law. They seemed to work very well with one another. Their humor livened up a long meeting.

In general, each company was able to find lawyers and expert consultants to verify the validity of their requests. One attorney even took a position for one company and against the same position for another company!

One case took about two-hours with many people presenting. They had everything in order to start building except for the Certificate of Need. Their manipulation of the facts and non-facts was highly creative.

This left them open to the only presentations we heard that were against granting a Certificate of Need. Their ten million dollar investment was deigned a certificate.  

Those speaking against the request, provided a fascinating insight into the residential care industry in St. Louis. The labor market is in trouble. There are not enough people to staff new assisted-living facilities. (Assisted Living here includes Memory Care.)

This results in new facilities hiring away from existing facilities. Wages rise. Worker satisfaction increases. Overtime increases. And turnover goes from 100% to as high as 125% a year. They like the work and the money but not the hours.

This has an effect on residents in assisted living but is crucial for residents in memory care. You need to ask a facility, “What amount of overtime is needed in memory care?” and “What is the turnover rate in memory care?”

I ran into the entire set of our caretakers this morning on my way to breakfast. They were visiting at the change of shifts. I was concerned if my wife’s weight was a problem when she got up from a bed. How much had she gained? Two ounces in the last month. They each commented on their observations. They were way ahead of me. This could not be possible with a high turnover rate.

If the facility with 100 rooms with 10 with two beds (110 total beds) has 80% rented (88 beds) is granted 20 more beds (130 total beds) it then changes rank from 80% occupancy to 68% occupancy.

Dirty tricks is to request a large number of beds to prevent other companies from building in competition, or adjusting beds, to meet the need for couples. The committee seemed to make projections on need based on the fixed average of past years rather than on the every increasing rate of need for couples.

One must wait two years before another request can be made. This forces one to request the most beds the committee will possibly accept. Dirty tricks thus contains two games.

One of the committee members brought up a third game that may be being played but which they question the legality: Rent a bed in a room that falls under their jurisdiction and then rent the same room (and possibly the same bed) to a spouse as a second person, independent care; that does not fall under their jurisdiction.

We learned at the Residents Council meeting this afternoon that the additional beds Provision Living at Columbia were granted will allow several waiting couples to move in over the next few months. An equilibrium in bed use between couples and singles may not exceed the new bed assignment limit during the next two years or it may.