HEALTH FACILITIES AND SERVICES REVIEW BOARD  STATE OF ILLINOIS

STATE OF ILLINOIS
HEALTH FACILITIES AND SERVICES REVIEW BOARD
5 525 WEST JEFFERSON ST.
DOCKET NO:
H-02

SPRINGFIELD, ILLINOIS 62761
BOARD MEETING:
November 5, 2013
(217)
782-3516 FAX: (217) 785-4111
PROJECT NO:
13-047
PROJECT COST:
Original: $84,100,000
FACILITY NAME:
Midwestern Regional Medical Center
CITY:
Zion
TYPE OF PROJECT: Non-Substantive
HSA: VIII
PROJECT DESCRIPTION: The applicants (Midwestern Regional Medical Center, Inc., and
Sheridan Trust U/A/D 4/1/12), propose to modernize its Medical/Surgical (MED/SURG), and
Intensive Care (ICU) services at its existing acute care hospital. The cost of the project is $84,100,000.
EXECUTIVE SUMMARY
PROJECT DESCRIPTION:
 The applicants (Midwestern Regional Medical Center, Inc., and Sheridan Trust U/A/D 4/1/12) propose
to modernize its Medical Surgical (Med/Surg), and Intensive Care (ICU) Categories of Service at its
acute care hospital in Zion. The cost of the project is $84,100,000.

The anticipated project completion date is December 31, 2015.
WHY THE PROJECT IS BEFORE THE STATE BOARD:
 The project is before the State Board because the cost of the project exceeds the capital expenditure
minimum of $12,495,668.
PURPOSE OF THE PROJECT:
 The purpose of the project is to modernize inpatient services through the establishment of singleoccupancy patient rooms for its Med/Surg bed complement, and the expansion of its ICU department.
BACKGROUND:
 Midwestern Regional Medical Center is the only applicant that operates a health care facility.
 Midwest Regional Medical Center (MRMC), is affiliated with Cancer Treatment Centers of America.
 MRMC is currently the only facility associated with Cancer Treatment Centers of America that does not
provide overnight accommodations on-site.
 No additional beds will be added to the inventory, and no new categories of services will be introduced.
COMPLIANCE:
 The hospital is currently in compliance with the CMS conditions of participation as required.
MODERNIZATION OF CATEGORY OF SERVICE:
 The applicants are required to provide documentation that the modernization is being undertaken:
 To address old and deteriorated facilities;
 To address high maintenance costs;
 To address licensure and life safety code issues; or
 To address changes in the standard of care.
 The applicants must also document that in order to modernize the medical surgical category of
service is operating at the target occupancy of 85%.
PUBLIC COMMENT
 A public hearing was offered on this project; however, no hearing was requested. The State Board Staff
has received no letters of opposition and three letters of support regarding this project.
Illinois Senator Dan Duffy stated in support “I am pleased to welcome the modernization of
Midwestern Regional Medical Center (Midwestern) in our state and am honored to share with you my
experience of their outstanding service to cancer patients. Midwestern offers traditional medical
treatments such as cancer surgery, chemotherapy, radiation, and stem-cell transplants, along with
alternative care services such as organic food, vitamin therapies, massage and nutrition. The
modernization of Midwestern will not only be a valuable asset for our local citizens, but also for those
who travel from outside our state to receive state-of-the-art medical treatment and services. As you are
aware, health care programs are a vital part of every community and there is an ever increasing need for
cancer treatment options and services nationwide. Approximately eighty percent of Midwestern patients
come from outside of Illinois, and I am pleased that this hospital continues to be a destination for
Page2 patients seeking premier services and world-class treatment options in the State. Midwestern not only
provides terrific care for thousands of patients each year but also provides recognition and economic
value for the region. This hospitals projected labor costs next year are over one hundred million dollars
for approximately twelve hundred jobs to working families in Illinois. This hospital projects a total
annual economic benefit to the City of Zion and its neighb6tingcommunities of over six hundred million
dollars. Thus, this growth needs to be supported. The purpose of the Midwestern Imaging expansion
project is to modernize the current imaging' and radiology technology, and help the hospital continue to
maintain the most responsive and highest quality service to care for cancer patients. I look forward to
Midwestern opening its doors to a modem inpatient bed tower and continuing to deliver high quality
cancer care in Illinois. Should you wish to speak to me personally in this regard, please do not hesitate
to contact me.”
Lane Harrison Mayor of Zion stated in support “I am writing to express my support for the
Midwestern Regional Medical Center (Midwestern) Certificate of Need application in regards to their
Inpatient Bed Tower Modernization project. Midwestern is a cancer hospital where patients receive
traditional treatments of care such as surgery, radiation and chemotherapy. The hospital also offers
alternative services such as naturopathic medicine and nutrition, pain management and spiritual, as well
as mind-body support. Midwestern serves as a destination cancer hospital with almost 80% of its
patients traveling from out of state. These patients and caregivers come to Midwestern for excellent
patient care as evidenced by clinical outcome data and award winning patient satisfaction scores.
Midwestern is a very good partner for the City. Midwestern is the largest employer and highest tax
payer in The City of Zion. The patients and caregivers who come to Midwestern spend their valuable
dollars in hotels, restaurants, and stores in our community. The employees of Midwestern live and
prosper in this area. Growth of Midwestern directly impacts the growth and success of Zion.
Midwestern made charitable contributions of approximately $250k for the support of the local
community for organizations such as Kiwanis Club, Zion Park District, YMCA, Habitat for Humanity,
and Boys and Girls Club. Midwestern supports our community and we should support the growth of this
organization. This modernization project will continue to support a high level of care and service for
their patients. By improving their facilities, Midwestern will continue to be able to attract patients and
their caregivers well into the future. Many patients decide to receive treatment at Midwestern due to the
quality of care and support they receive from the hospital. The modernization from shared rooms to
private rooms will serve to increase the level of care which patients deserve. I strongly support
Midwestern's modernization of their Inpatient Bed Tower without reservation.”
Brent C. Paxton Chairman, Lake County Finance and Administration committee stated in
support “Please allow me to take a moment to share my support of the inpatient modernization project
at Midwestern Regional Medical Center in Zion. I am incidentally a chiropractor on staff at Midwestern.
As such, I can speak first-hand that Midwestern understands the needs of cancer patients and their
families - and delivers accordingly and without compromise. That said, the existing inpatient space is
outdated and the proposed modernization to Single occupancy rooms is needed to provide optimal care
to Midwestern's patients. Midwestern is a destination medical center seeing cancer patients from across
the nation. Approximately 80% of Midwestern's patients come from outside of Illinois and travel an
average of over 400 miles for their treatment. Midwestern serves as a strong economic center and pillar
in Lake County and is the City of Zion's largest employer and tax payer. The hospital continues to create
jobs – currently employing approximately 1,200 people and expected to increase year over year.
Moreover, last year, Midwestern provided approximately $5.9 million in charitable care to patients
unable to pay for their cancer treatment. This modernization will allow Midwestern to continue
fulfilling its promise and generate economic development in Lake County which I of course welcome
with open arms. I am excited about Midwestern's mission, vision and values, as well as their continued
growth and investment made in Lake County.”
Page3 FINANCIAL AND ECONOMIC FEASIBILITY:
 The applicants have posted a cash performance bond in the amount of $84,100,000 with the Midwestern
Regional Medical Center, Inc. as Principal, and Fidelity and Deposit Company of Maryland, of Schaumburg,
Illinois, as Surety.
The applicants provided a letter from Zurich Insurance Group stating “Fidelity & Deposit Company of
Maryland is pleased to advise we currently extend a program of committed surety credit to Midwestern
Regional Medical Center, Inc. and we highly recommend them. Our experience with Midwestern
Regional Medical Center, Inc. has been excellent. Should they elect to proceed on the captioned
project, Zurich is prepared to provide a bond up to $100,000,000 on behalf of Midwestern Regional
Medical Center, Inc. for the Midwestern Regional Medical Center Patient Tower. Subject to acceptable
review of the bond form language and pertinent underwriting information at the time of the request, we
anticipate that we could provide this performance bond to the Review Board within 60 days of the
Review Boards approval of the Certificate of Need. Fidelity and Deposit Company of Maryland is A+ "
(Superior) Rated and approved for federal work by the U.S. Department of the Treasury (T-Listed). This
surety company's financial size category is XV ($2 Billion or greater).”
CONCLUSION:
 The applicants addressed a total of 15 State Board’s criteria and failed to meet the following:
Criteria
1110.234(a) Project Size
State Board Standards Not Met
Reasons for Non-Compliance
The project exceeds the State Board standard for
Medical/Surgical beds by 30 DGSF per bed, and ICU beds
by 24 DGSF per bed.
Page4 STATE OF ILLINOIS
HEALTH FACILITIES AND SERVICES REVIEW BOARD
5 525 WEST JEFFERSON ST.

SPRINGFIELD, ILLINOIS 62761
(217)
782-3516 FAX: (217) 785-4111
STATE BOARD STAFF REPORT
Midwestern Regional Medical Center-Zion
PROJECT #13-047
Applicants
Facility Name
Location
Application Received
Application Deemed Complete
Can Applicants Request Another Deferral?
Midwestern Regional Medical Center, Inc.
Sheridan Trust U/A/D 4/1/12
Midwestern Regional Medical Center
Zion
August 5, 2013
August 7, 2013
Yes
I.
The Proposed Project
The applicants (Midwestern Regional Medical Center, Inc., and Sheridan Trust U/A/D 4/1/12)
propose to modernize its Medical/Surgical service by converting 61 beds to all private rooms,
and increase its ICU bed complement to 12beds. The cost of the project is $84,100,000.
II.
Summary of Findings
III.
A.
The State Agency finds the proposed project does not appear to be in conformance
with the provisions of Part 1110.
B.
The State Agency finds the proposed project appears to be in conformance with
the provisions of Part 1120.
General Information
The applicants are Midwestern Regional Medical Center, Inc., and Sheridan Trust U/A/D
4/1/12. The applicants propose to construct a 6-story tower on its campus to accommodate the
conversion to all-private MED/SURG beds, and expand its Intensive Care Unit (ICU). The
proposed project will reduce the MED/SURG bed complement by 6 beds, and increase the ICU
bed complement by 6 beds. The bed complement, upon project completion, will be 61
MED/SURG and 12 ICU beds, and the overall number of beds at the facility will remain at 73
beds. Two floors of the new tower will house a 48-room non-clinical unit to accommodate
family members of patients at MRMC. The project is a non-substantive project and subject to
Part 1110 and Part 1120 review. Project obligation will occur after permit approval. The
anticipated project completion date is December 31, 2015.
CY 2012 Hospital Profile information is included at the end of this report for utilization
and financial data for Midwestern Regional Medical Center, Zion.
Support and Opposition Comments
A public hearing was offered on this project; however, no hearing was requested. The State
Board Staff has received no letters of support or opposition regarding this project.
IV.
The Proposed Project – Details
The applicants propose to construct a 6-story tower on its campus to accommodate the
conversion to all-private MED/SURG beds, and expand its Intensive Care Unit (ICU). The
proposed project will reduce the MED/SURG bed complement by 6 beds, and increase the ICU
bed complement by 6 beds. The bed complement, upon project completion, will contain 61
med/surg and 12 ICU beds, and the overall number of beds at the facility will remain at 73
beds. Two floors of the new tower will house a 48-room non-clinical unit to accommodate
family members of patients at MRMC. The proposed project will involve 168,087 GSF of new
construction, and the overall project cost is $84,100,000.
V.
Project Costs and Sources of Funds
The applicants identified costs associated with the proposed project and State Board staff
compiled these data in Table One. The applicants are funding this project with a performance
bond.
TABLE ONE
Project Costs and Source of Funds
Project 13-047 Midwestern Regional Medical Center-Zion
Use of Funds
Preplanning Costs
$92,737
NonClinical
$197,066
Site Survey & Soil Investigation
$28,800
$61,200
$90,000
$581,799
$1,236,324
$1,818.123
$20,800
$44,200
$65,000
$20,148,614
$41,244,266
$61.392,800
Contingencies
$1,666,189
$3,866,748
$5,532,937
Architectural & Engineering Fees
$1,463,034
$3,108,947
$4,571,981
$434,960
$924,290
$1,359,250
$2,873,608
6,106,418
$8,980,026
$27,310,608
$56,789,459
$84,100,000
Site Preparation
Off Site Work
New Construction Contracts
Consulting & Other Fees
Moveable & Other Equipment
Totals
Clinical
Total
$289,803
Source of Funds
Other (Performance Bond)
$27,310,608
$56,789,459
$84,100,000
Total
$73,732,477
$48,625,024
$122,357,501
Page6 Safety Net Impact Statement/Charity Care
Charity Care Information was provided by the applicants on page 154 of the application. The
State Board Staff notes a safety net statement is not required to be submitted for nonsubstantive projects.
TABLE ONE
Charity Care/Medicaid
Midwestern Regional Medical Center-Zion
2010
2011
2012
$419,127,511
$504,103,521
$569,537,108
Amount of Charity Care (Charges)
$9,413,284
$19,313,951
$21,063,722
Cost of Charity Care
$2,866,637
$4,623,691
$5,903,250
2.2%
.9%
1%
Net Patient Revenue
Charity Care Percentage
VI.
Cost Space Requirements
The applicants are proposing to modernize its Med/Surg department to accommodate a smaller
bed complement of 61 beds (less 6 beds), in all-private rooms. The proposed project will also
involve the expansion of its ICU to accommodate 6 additional (12 beds total). The proposed
project consists of 168,807 GSF of new construction, and will increase the overall size of the
facility to 419,678 GSF. The cost space requirements are illustrated in Table Three.
Department
Cost
Med/Surg
ICU
Other*
Total Clinical
$22,720,562
$4,589,979
$0
$27,310,541
Mechanical/
Electrical/ Storage
Lobby
Food Service
Public Lounge
Public Circulation
Guest Rooms
Other*
Other**
Total Non-Clinical
Total
$10,085,220
VII.
$7,460,476
$10,845,511
$6,032,827
$1,916,320
$20,449,104
$0
$0
$56,789,459
$84,100,000
TABLE THREE
Cost Space Requirements
Clinical
Existing
Proposed
New
GSF
Construction
26,365
42,107
42,107
7,507
8,516
8,516
85,781
85,781
0
119,652
136,404
50,622
Non-Clinical
0
23,454
23,454
5,751
16,073
10,144
3,993
0
28,594
67,383
131,939
251,591
13,083
18,780
14,262
4,530
43,355
0
0
117,464
253,868
13,083
18,780
14,262
4,530
43,355
0
0
117,465
168,087
Modernization
As Is
Vacated
0
0
0
0
0
0
0
0
26,365
7,507
0
33,872
0
0
0
0
0
0
0
0
0
0
0
0
5,751
16,073
0
0
0
28,594
67,383
117,801
203,582
0
0
10,144
3,993
0
0
0
14,138
48,009
Section 1110.230 - Project Purpose, Background and Alternatives
Page7 A)
Criterion 1110.230(a) - Background of Applicant
1)
An applicant must demonstrate that it is fit, willing and able, and has the
qualifications, background and character, to adequately provide a proper
standard of health care service for the community. [20 ILCS 3960/6] In
evaluating the qualifications, background and character of the applicant,
HFPB shall consider whether adverse action has been taken against the
applicant, or against any health care facility owned or operated by the
applicant, directly or indirectly, within three years preceding the filing of
the application. A health care facility is considered "owned or operated"
by every person or entity that owns, directly or indirectly, an ownership
interest. If any person or entity owns any option to acquire stock, the stock
shall be considered to be owned by such person or entity (refer to 77 Ill.
Adm. Code 1100 and 1130 for definitions of terms such as "adverse action",
"ownership interest" and "principal shareholder").
The applicants have provided the necessary documentation as required by the State
Board rules, and attestation that the applicant facility is the only one operated by the
applicants. The applicant supplied licenses and JCAO accreditation documents and
signed authorization permitting the Board to access to licensing/certification documents
and records. It appears the applicants are fit, willing and able and have the
qualifications, background and character to provide the proper standard of care to the
community.
B)
Criterion 1110.230 (b) - Purpose of the Project
The applicant shall document that the project will provide health services that
improve the health care or well-being of the market area population to be served.
The applicant shall define the planning area or market area, or other, per the
applicant's definition.
1)
The applicant shall address the purpose of the project, i.e., identify the
issues or problems that the project is proposing to address or solve.
Information to be provided shall include, but is not limited to, identification
of existing problems or issues that need to be addressed, as applicable and
appropriate for the project
The purpose of the project is to improve and modernize its inpatient services at MRMC
through the construction of a patient tower consisting of all single-occupancy rooms.
The project will also enhance services to its high acuity patients through the expansion
of its ICU to 12 beds. The proposed project will also replace non-clinical components,
resulting in a better overall patient experience at MRMC.
C)
Criterion 1110.230 (c) - Alternatives to the Proposed Project
Page8 The applicant shall document that the proposed project is the most effective or
least costly alternative for meeting the health care needs of the population to be
served by the project.
1)
Alternative options shall be addressed. Examples of alternative options
include:
A)
Proposing a project of greater or lesser scope and cost;
B)
Pursuing a joint venture or similar arrangement with one or more
providers or entities to meet all or a portion of the project's intended
purposes; developing alternative settings to meet all or a portion of
the project's intended purposes;
C)
Utilizing other health care resources that are available to serve all or
a portion of the population proposed to be served by the project; and
D)
Other considerations.
2)
Documentation shall consist of a comparison of the project to alternative
options. The comparison shall address issues of cost, patient access, quality
and financial benefits in both the short term (within one to three years after
project completion) and long term. This may vary by project or situation.
3)
The applicant shall provide empirical evidence, including quantified
outcome data, that verifies improved quality of care, as available.
The applicant considered five alternatives:
1.
Build a Free-Standing Replacement Hospital
The applicants note the current MRMC campus is landlocked, and the
establishment of a free-standing replacement facility would require
demolition of existing structures and suspending services. The option of
establishing a free-standing facility on a new campus was also considered,
but both options were rejected, based on the overall cost. The applicants
identified an approximate project cost of $270,000,000 with this
alternative.
2.
Refer Patients to Other Cancer Treatment Center of America Facilities
The applicants rejected this alternative, citing high occupancy at other
CTCA facilities, and the loss of services at its Midwestern facility (Zion),
would be disadvantageous for Midwestern patients. Lastly, the applicants
note MRMC-Zion is CTCA’s original facility, and it is the applicant’s desire
to remain in Illinois. The applicants identified no associated costs with
this alternative.
Page9 3.
Transfer MRMC Patients to Other Area Hospitals for Med/Surg Services
The applicants note the provision of Med/Surg services is a core component
of patient care in an acute care hospital, and while other services can be
offered through joint initiatives, the provision of Med/Surg care in this
capacity would not be feasible. The applicants identified no costs with
this alternative.
4.
Utilize Other Health Care Resources
The applicants note the proposed project will not introduce additional
beds/services to the planning area, but simply enhance/upgrade the existing
services offered at MRMC-Zion. The applicants rejected this alternative,
based on its inapplicability to the proposed project. The applicants
identified no project costs with this alternative.
5.
Project as Proposed
The applicants view this option as most feasible, based on its benefit to the
existing and future patient populations at MRMC. Single occupancy rooms
are a necessity in the field of modern healthcare, and the high acuity patients
at MRMC benefit greatly from these accommodations. The decision to stay
in Zion has multiple benefits, and the cost of this option was viewed as being
the most cost-effective. Cost of this alternative: $84,100,000.
VIII. 1110.234 - Project Scope and Size, Utilization and Unfinished/Shell Space
A)
Criterion 1110.234(a) - Size of Project
1)
The applicant shall document that the physical space proposed for the
project is necessary and appropriate. The proposed square footage (SF)
cannot deviate from the SF range indicated in Appendix B, or exceed the SF
standard in Appendix B if the standard is a single number, unless SF can be
justified by documenting, as described in subsection (a)(2).
The applicant notes the proposed project includes the expansion /modernization of both
clinical and non-clinical areas. Table Four outlines the spatial configurations of each
clinical component of the proposed project in its entirety, and shows that at the
conclusion of the proposed project, each is compliant with the applicable State
Standard.
Department/Service
Medical/Surgical
(61 Beds)
ICU
(12 Beds)
TABLE FOUR
Size of Project
13-047 Midwestern Regional Medical Center-Zion
Proposed DGSF
State Standard
Difference
42,107 DGSF
(690 DGSF/Bed)
8,516 DGSF
(709 GSF/Bed)
Page10 500-660 DGSF/Bed
600-685 DGSF/Bed
30 DGSF
Over
24 DGSF
Over
Met
Standard?
No
No
The applicants exceed the prescribed State Board size standard for both Med/Surg and
ICU beds (See Table Four). The applicants cite design standards specific to the needs of
cancer patients and complexity of care from its other CTCA facilities, which surpass
State standards, as justification for the overages. A negative finding has been made for
this criterion.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT DOES NOT
APPEAR TO BE IN CONFORMANCE WITH THE SIZE CRITERION (77 IAC
1110.234(a)).
B)
Project Services Utilization − Review Criterion
The applicant shall document that, by the end of the second year of operation, the
annual utilization of the clinical service areas or equipment shall meet or exceed
the utilization standards specified in Appendix B. The number of years projected
shall not exceed the number of historical years documented. If the applicant does
not meet the utilization standards in Appendix B, or if service areas do not have
utilization standards in 77 Ill. Adm. Code 1100, the applicant shall justify its own
utilization standard by providing published data or studies, as applicable and
available from a recognized source, that minimally include the following:
The applicants have documented by 2017, the second year after project completion that
the entirety of Medical/Surgical and Intensive Care beds will be needed to maintain
optimum operational standards. Table Five contains the State utilization standards for
the two clinical components of the project, and the proposed utilization for CY 2017,
the second year after project completion. The applicants have factored in an 7.28%
growth factor for med/surg, and a 21.9% growth factor for ICU, based on historical
utilization data (application, p. 117). Based on these projected data, a positive finding
has been made for this criterion.
TABLE FIVE
Utilization of Clinical Services
13-047 Midwest Regional Medical Center-Zion
Department/Service
Projected CON
Proposed Number State
Occupancy CY of Beds/Units
Occupancy
2017
Standard
Medical/Surgical
87.4%*
61
75%
ICU
82.8%**
12
60%
*Based on realized utilization growth of 7.28% annually beginning in CY 2008.
** Based on realized utilization growth 21.9% annually beginning in CY 2008.
Utilization
Standard
Met?
Yes
Yes
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE PROJECTED UTILIZATION
CRITERION (77 IAC 1110.234(b)).
IX.
1110.530- Medical/Surgical, Obstetric, Pediatric, and Intensive Care
A)
Criterion 1110.530 (b)(2) – Planning Area Need-Service to Planning Area
Residents
Page11 A)
Applicants proposing to establish or add beds shall document that
the primary purpose of the project will be to provide necessary
health care to the residents of the area in which the proposed project
will be physically located (i.e., the planning or geographical service
area, as applicable), for each category of service included in the
project.
B)
Applicants proposing to add beds to an existing category of service
shall provide patient origin information for all admissions for the
last 12-month period, verifying that at least 50% of admissions were
residents of the area. For all other projects, applicants shall
document that at least 50% of the projected patient volume will be
from residents of the area.
C)
Applicants proposing to expand an existing category of service shall
submit patient origin information by zip code, based upon the
patient's legal residence (other than a health care facility).
The applicants propose to enhance services at it cancer treatment hospital by
modernizing its med/surg bed complement by establishing an all-private room
complement, and expanding/modernizing the ICU. The proposed project will result in a
6 bed reduction of the med/surg bed complement, and an increase of 6 beds in the ICU
bed complement. The overall bed count at MRMC will remain at 73 beds. The
applicants note their patient base spans the United States, with its primary service area
focusing on the Midwest. The applicants identified their patient referral base
originating from 27 states, with the majority of these patients originating from
Midwestern states (application. P. 121). It appears the applicants have met the
requirements of this criterion.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE MEDICAL/SURGICAL,
OBSTETRIC, PEDIATRIC, AND INTENSIVE CARE REVIEW CRITERION
(77 IAC 1110.530)(b)(2).
X.
1110.530(b)(4) – Planning Area Need – Service Demand
The applicants will document that:
Service Demand – Expansion of Existing Category of Service
The number of beds to be added for each category of service is necessary to reduce
the facility's experienced high occupancy and to meet a projected demand for
service. The applicant shall document subsection (b)(4)(A) and either subsection
(b)(4)(B) or (C):
A)
B)
Historical Service Demand
Projected Referrals
Page12 C)
Projected Service Demand Based on Rapid Population Growth
The applicants note the proposed project corresponds with the beds needs in the service
area. The September 2013 Revised Bed Need Determination shows an excess of 120
med/surg beds, and a need for 9 ICU beds in planning area A-09. The applicants also
cite the increasing need for ICU beds in the last several years, and the operational
capacity of this service at MRMC, which has consistently been in excess of the State
standard. The applicants also note the reduction of 6 med/surg beds will also address
the current overage of beds in this category of service. It appears the applicants have
met the requirements of this criterion.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE PLANING AREA NEED-SERVICE
DEMAND REVIEW CRITERION (77 IAC 1110.530)(b)(4).
XI.
1110.530(d) – Category of Service Modernization
The applicants will document that:
1)
If the project involves modernization of a category of hospital bed service,
the applicant shall document that the inpatient bed areas to be modernized
are deteriorated or functionally obsolete and need to be replaced or
modernized, due to such factors as, but not limited to:
A)
B)
C)
D)
2)
Documentation shall include the most recent:
A)
B)
3)
IDPH Centers for Medicare and Medicaid Services (CMMS)
inspection reports; and
Joint Commission on Accreditation of Healthcare Organizations
(JCAHO) reports.
Other documentation shall include the following, as applicable to the
factors cited in the application:
A)
B)
C)
4)
High cost of maintenance;
Non-compliance with licensing or life safety codes;
Changes in standards of care (e.g., private versus multiple
bedrooms); or
Additional space for diagnostic or therapeutic purposes.
Copies of maintenance reports;
Copies of citations for life safety code violations; and
Other pertinent reports and data.
Projects involving the replacement or modernization of a category of
service or hospital shall meet or exceed the occupancy standards for the
categories of service, as specified in 77 Ill. Adm. Code 1100.
Page13 The applicants note the accommodations at MRMC have deteriorated over time, and
have become functionally obsolete. The current facility was constructed over twenty
years ago, and is non-conducive to the industry-wide move to establishing all-private
rooms. The applicants cite the health care industry’s endorsement of private rooms as a
catalyst for enhanced infection control, patient privacy, and overall satisfaction with the
inpatient clinical experience. The applicants also note the unique patient population
served ta MRMC, and how these single-occupancy rooms accommodate the special
needs of this group. Most of their patients travel long distances with family members,
and present with higher acuity symptoms, requiring a longer length of stay. With their
immediate family included, the extra space/private accommodations are paramount to
the overall patient treatment experience.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE MODERNIZATION REVIEW
CRITERION (77 IAC 1110.530)(d).
XII
1110.530(e)(f)(g) Staffing/Performance Requirements/Assurances
The applicant shall document that:
(e) Relevant clinical and professional staffing needs for the proposed project were
considered and that licensure and JCAHO staffing requirements can be met.
In addition, the applicant shall document that necessary staffing is available by
providing letters of interest from prospective staff members, completed
applications for employment, or a narrative explanation of how the proposed
staffing will be achieved.
(f) The minimum bed capacity for a Medical/Surgical Unit in an MSA is 100 beds.
The minimum bed capacity for an Intensive Care unit is 4 beds.
(g) The applicant representative who signs the CON application shall submit a
signed and dated statement attesting to the applicant's understanding that, by
the second year of operation after the project completion, the applicant will
achieve and maintain the occupancy standards specified in 77 Ill. Adm. Code
1100 for each category of service involved in the proposal.
Because the overall bed complement will remain unchanged, the applicants do not
anticipate the need for significant staffing changes. Therefore, the staffing criterion is
inapplicable. The facility is an existing specialty care hospital, operating in an MSA,
with Med/Surg beds under the MSA minimum. Because no new beds are being
established, the MSA criterion is inapplicable. The applicants supplied a letter of
understanding from Scott Jones, CEO, Midwestern Regional Medical Center, attesting
to achieving acceptable operating capacity by the second year after project completion
(application p.119)
Page14 THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE PLANING AREA NEED REVIEW
CRITERIA (77 IAC 1110.530)(e)(f)(g).
XII.
1120.120 - Availability of Funds
The applicant shall document that financial resources shall be available and be
equal to or exceed the estimated total project cost plus any related project costs by
providing evidence of sufficient financial resources.
The applicants are funding this project with Other Funds and Sources in the form of a
Performance Bond totaling $84,100,000. The applicants supplied a letter from Zurich
Security, indicating its willingness to issue the mentioned Performance Bond. It is
evident that sufficient cash is available to fund this project.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE AVAILABILITY OF FUNDS
CRITERION (77 IAC 1120.120).
XIV. 1120.130 - Financial Viability
a)
Financial Viability Waiver
The applicant is NOT required to submit financial viability ratios if:
1)
all project capital expenditures, including capital expended through a lease,
are completely funded through internal resources (cash, securities or
received pledges); or
HFSRB NOTE: Documentation of internal resources availability shall be
available as of the date the application is deemed complete.
The applicants are funding this project with Other Funds and Sources in the form of a
Performance Bond totaling $84,100,000. The applicants supplied a letter from Zurich
Security, indicating its willingness to issue the mentioned Performance Bond. It is
evident that sufficient cash is available to fund this project.
THE STATE BOARD STAFF FINDS THE FINANCIAL VIABILITY
CRITERION IS INAPPLICABLE TO THIS PROJECT (77 IAC 1120.130).
XV.
1120.140 - Economic Feasibility
A)
Criterion 1120.140 (a) - Reasonableness of Financing Arrangements
Page15 The applicant shall document the reasonableness of financing arrangements by
submitting a notarized statement signed by an authorized representative that
attests to one of the following:
1)
That the total estimated project costs and related costs will be funded in
total with cash and equivalents, including investment securities,
unrestricted funds, received pledge receipts and funded depreciation; or
2)
That the total estimated project costs and related costs will be funded in
total or in part by borrowing because:
A)
A portion or all of the cash and equivalents must be retained in the
balance sheet asset accounts in order to maintain a current ratio of
at least 2.0 times for hospitals and 1.5 times for all other facilities; or
B)
Borrowing is less costly than the liquidation of existing investments,
and the existing investments being retained may be converted to
cash or used to retire debt within a 60-day period.
The applicants are funding this project with Other Funds and Sources in the form of a
Performance Bond totaling $84,100,000. The applicants supplied a letter from Zurich
Security, indicating its willingness to issue the mentioned Performance Bond. It is
evident that sufficient cash is available to fund this project.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE REASONABLENESS OF DEBT
FINANCING CRITERION (77 IAC 1120.140 (a)).
B)
Criterion 1120.140 (b) - Conditions of Debt Financing
This criterion is applicable only to projects that involve debt financing. The
applicant shall document that the conditions of debt financing are reasonable by
submitting a notarized statement signed by an authorized representative that
attests to the following, as applicable:
1)
That the selected form of debt financing for the project will be at the lowest
net cost available;
2)
That the selected form of debt financing will not be at the lowest net cost
available, but is more advantageous due to such terms as prepayment
privileges, no required mortgage, access to additional indebtedness, term
(years), financing costs and other factors;
3)
That the project involves (in total or in part) the leasing of equipment or
facilities and that the expenses incurred with leasing a facility or equipment
Page16 are less costly than constructing a new facility or purchasing new
equipment.
The applicants are funding this project with Other Funds and Sources in the form of a
Performance Bond totaling $84,100,000. The applicants supplied a letter from Zurich
Security, indicating its willingness to issue the mentioned Performance Bond. It is
evident that sufficient cash is available to fund this project.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPREARS
TO BE IN CONFORMANCE WITH THE TERMS OF DEBT FINANCING
CRITERION (77 IAC 1120.140 (b)).
C)
Criterion 1120.140 (c) - Reasonableness of Project and Related Costs
The applicant shall document that the estimated project costs are reasonable and
shall document compliance with the following:
1)
Preplanning costs shall not exceed the standards detailed in Appendix A of
this Part.
2)
Total costs for site survey, soil investigation fees and site preparation shall
not exceed the standards detailed in Appendix A unless the applicant
documents site constraints or complexities and provides evidence that the
costs are similar to or consistent with other projects that have experienced
similar constraints or complexities.
3)
Construction and modernization costs per square foot shall not exceed the
standards detailed in Appendix A unless the applicant documents
construction constraints or other design complexities and provides evidence
that the costs are similar to or consistent with other projects that have
experienced similar constraints or complexities.
HFSRB NOTE: Construction and modernization costs (i.e., all costs
contained in construction and modernization contracts) plus contingencies
shall be evaluated for conformance with the standards detailed in Appendix
A.
4)
Contingencies (stated as a percentage of construction costs for the project's
stage of architectural development) shall not exceed the standards detailed
in Appendix A unless the applicant documents construction constraints or
other design complexities and provides evidence that the costs are similar to
or consistent with other projects that have experienced similar constraints
or complexities.
HFSRB NOTE: Contingencies shall be limited in use for construction or
modernization (line item) costs only and shall be included in construction
Page17 and modernization cost per square foot calculations and evaluated for
conformance with the standards detailed in Appendix A. If, subsequent to
permit issuance, contingencies are proposed to be used for other component
(line item) costs, an alteration to the permit (as detailed in 77 Ill. Adm.
Code 1130.750) must be approved by HFSRB prior to that use.
5)
New construction or modernization fees and architectural/engineering fees
shall not exceed the fee schedule standards detailed in Appendix A unless
the applicant documents construction constraints or other design
complexities and provides evidence that the costs are similar to or
consistent with other projects that have experienced similar constraints or
complexities.
6)
The costs of all capitalized equipment not included in construction
contracts shall not exceed the standards for equipment as detailed in
Appendix A unless the applicant documents the need for additional or
specialized equipment due to the scope or complexities of the services to be
provided. As documentation, the applicant must provide evidence that the
costs are similar to or consistent with other projects of similar scope and
complexity, and attest that the equipment will be acquired at the lowest net
cost available, or that the choice of higher cost equipment is justified due to
such factors as, but not limited to, maintenance agreements, options to
purchase, or greater diagnostic or therapeutic capabilities.
7)
Building acquisition, net interest expense, and other estimated costs shall
not exceed the standards detailed in Appendix A. If Appendix A does not
specify a standard for the cost component, the applicant shall provide
documentation that the costs are consistent with industry norms based
upon a comparison with previously approved projects of similar scope and
complexity.
8)
Cost Complexity Index (to be applied to hospitals only)
The mix of service areas for new construction and modernization will be
adjusted by the table of cost complexity index detailed in Appendix A.
Preplanning – These costs total $92,737 which is .3% of the new construction,
contingency, and equipment costs. This appears reasonable when compared to the State
Board standard of 1.8%.
Site Preparation – These costs total $389,093 and are less than 1% of construction,
modernization, and contingency costs. This appears reasonable when compared to the
State Board standard of 5%.
Site Survey/Soil Preparation – These costs total $610,599 which is 2.7% of the
construction and contingency costs. This appears reasonable compared to the State
Board standard of 5%
Page18 Off Site Work – These costs total $20,800. The State Board does not have a standard
for this cost.
New Construction Costs and Contingencies - This cost is $21,814,803 or $430.93 per
GSF. This appears reasonable when compared to the adjusted State Board standard of
$434.45 per GSF, the calculated cost per GSF for 2014, the established mid-point of
construction for the proposed project. The medium diagnostic and therapeutic
complexity index (1.11%), was also considered in the determination of this calculation.
Contingencies – This cost is $1,666,189 or 8.2% of new construction costs. This
appears reasonable when compared to the State Board standard of 10%-15% for
modernization.
Architectural and Engineering Fees–New Construction - These costs total
$1,463,034 or 6.7% of new construction and contingencies cost. This appears
reasonable when compare to the State Board standard of 5.52% - 8.28%.
Consulting and Other Fees – These costs total $434,960. The State Board does not
have a standard for this cost.
Moveable Equipment - These costs total $2,873,608. The State Board does not have
an applicable standard for this criterion in relation to hospitals.
Based on these findings, it appears the applicants have met the requirements of this
criterion.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE REASONABLENESS OF PROJECT
COSTS CRITERION (77 IAC 1120.140 (c)).
D)
Criterion 1120.140 (d) - Projected Operating Costs
The applicant shall provide the projected direct annual operating costs (in current
dollars per equivalent patient day or unit of service) for the first full fiscal year at
target utilization but no more than two years following project completion. Direct
cost means the fully allocated costs of salaries, benefits and supplies for the service.
The applicants anticipate the projected operating costs per adjusted patient day to be
$1,713.66. The State Board does not have a standard for these costs.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE PROJECT DIRECT OPERATING
COSTS CRITERION (77 IAC 1120.140 (d)).
E)
Criterion 1120.140 (e) - Total Effect of the Project on Capital Costs
Page19 The applicant shall provide the total projected annual capital costs (in current
dollars per equivalent patient day) for the first full fiscal year at target utilization
but no more than two years following project completion.
The applicants anticipate the total effect of the Project on Capital Costs per adjusted
patient days to be $172.08. The State Board does not have a standard for these costs.
THE STATE BOARD STAFF FINDS THE PROPOSED PROJECT APPEARS
TO BE IN CONFORMANCE WITH THE TOTAL EFFECT OF THE PROJECT
ON CAPITAL COSTS CRITERION (77 IAC 1120.140 (e)).
Page20 13-047 Midwestern Regional Medical Center - Zion
0 mi
5
10
15
20
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25
Midwestern Regional Medical Center
Hospital Profile - CY 2012
Ownership, Management and General Information
Scott Jones
ADMINISTRATOR NAME:
847-872-6300
ADMINSTRATOR PHONE
Northeast Illinois Medical Properties, LP
OWNERSHIP:
Midwestern Regional Medical Center, Inc
OPERATOR:
For Profit Corporation
MANAGEMENT:
(Not Answered)
CERTIFICATION:
General Hospital
FACILITY DESIGNATION:
2520 Elisha Avenue
ADDRESS
CITY: Zion
Page 1
Zion
Patients by Race
White
##### 71.5%
Black
### 19.7%
American Indian
# 0.5%
Asian
## 1.0%
Hawaiian/ Pacific
# 0.0%
Unknown
7.4%
Patients by Ethnicity
Hispanic or Latino: ##
Not Hispanic or Latino:
#####
Unknown:
#
IDPH Number:
HPA
HSA
4.2%
95.8%
0.0%
2956
A-09
8
COUNTY: Lake County
Facility Utilization Data by Category of Service
Authorized
CON Beds
12/31/2012
Peak Beds
Setup and
Staffed
Average
Length
of Stay
CON
Occupancy
Rate %
Staffed Bed
Occupancy
Rate %
Admissions
69
67
67
1,601
0
280
1,131
148
42
12,882
0
2,255
9,098
1,190
339
805
8.5
37.5
54.3
56.0
Pediatric
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Intensive Care
Direct Admission
Transfers
4
4
4
352
261
91
1,482
1,099
383
0
4.2
4.1
101.5
101.5
Obstetric/Gynecology
Maternity
Clean Gynecology
0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Neonatal
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Long Term Care
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0.0
0.0
Acute Mental Illness
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Rehabilitation
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Long-Term Acute Care
0
0
0
0
0
0
0.0
0.0
0.0
0.0
Dedcated Observation
0
Facility Utilization
73
8.1
41.6
56.9
Medical/Surgical
0-14 Years
15-44 Years
45-64 Years
65-74 Years
75 Years +
Swing Beds
Observation
Days
Average
Daily
Census
Inpatient
Days
Clinical Service
Peak
Census
0
1,862
14,364
805
(Includes ICU Direct Admissions Only)
Inpatients and Outpatients Served by Payor Source
Medicare
Inpatients
Outpatients
Financial Year Reported:
Inpatient
Revenue ( $)
Outpatient
Revenue ( $)
Medicaid
Other Public
Private Insurance
Private Pay
Charity Care
9.6%
0.3%
0.2%
76.4%
0.3%
13.2%
179
6
3
1423
5
246
13.3%
4318
2.8%
914
0.1%
29
78.5%
25405
1.6%
529
3.6%
1153
7/1/2011 to
Inpatient and Outpatient Net Revenue by Payor Source
6/30/2012
Charity
Care
Expense
Medicare
Medicaid
Other Public
Private Insurance
Private Pay
Totals
4.7%
0.0%
0.0%
95.1%
0.1%
100.0%
4,404,335
5,006
0
88,251,066
134,901
92,795,308
1.5%
7,259,907
0.0%
0.0%
22,060
16,612
Birthing Data
Number of Total Births:
Number of Live Births:
Birthing Rooms:
Labor Rooms:
Delivery Rooms:
Labor-Delivery-Recovery Rooms:
Labor-Delivery-Recovery-Postpartum Rooms:
C-Section Rooms:
CSections Performed:
98.3%
468,669,837
0.2%
773,384
100.0%
476,741,800
Newborn Nursery Utilization
0
0
0
0
0
0
0
0
0
Level 1 Patient Days
Level 2 Patient Days
Level 2+ Patient Day
Total Nursery Patientdays
Laboratory Studies
Inpatient Studies
Outpatient Studies
Studies Performed Under Contract
1,303,366
4,599,884
Totals
1,862
32,348
Total Charity
Care Expense
5,903,250
Total Charity
Care as % of
Net Revenue
1.0%
Organ Transplantation
0
0
0
0
86,862
246,950
31,389
Kidney:
Heart:
Lung:
Heart/Lung:
Pancreas:
Liver:
0
0
0
0
0
0
Total:
0
Midwestern Regional Medical Center
Hospital Profile - CY 2012
Surgical Specialty
Operating Rooms
Inpatient Outpatient Combined
0
0
0
0
0
0
0
0
4
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Cardiovascular
Dermatology
General
Gastroenterology
Neurology
OB/Gynecology
Oral/Maxillofacial
Ophthalmology
Orthopedic
Otolaryngology
Plastic Surgery
Podiatry
Thoracic
Urology
Totals
0
0
4
Procedure Type
Gastrointestinal
Laser Eye Procedures
Pain Management
Cystoscopy
4
1341
1639
Stage 1 Recovery Stations
SURGICAL RECOVERY STATIONS
Page 2
Zion
Surgery and Operating Room Utilization
Surgical Cases
Surgical Hours
Total
Inpatient Outpatient
Inpatient Outpatient Total Hours
0
0
0
0
0
0
0
0
0
0
0
0
4
500
1301
1213
867
2080
0
287
0
861
0
861
0
37
0
130
0
130
0
63
3
373
3
376
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
360
20
1284
60
1344
0
0
19
0
21
21
0
7
0
35
0
35
0
87
296
386
225
611
4282
5
1176
5458
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
235
0
0
0
707
0
0
0
Multipurpose Non-Dedicated Rooms
0
0
0
0
0
0
0
0
0
Emergency/Trauma Care
Level 1
(Not Answered)
Operating Rooms Dedicated for Trauma Care
Number of Trauma Visits:
Patients Admitted from Trauma
Emergency Service Type:
Number of Emergency Room Stations
Persons Treated by Emergency Services:
Patients Admitted from Emergency:
Total ED Visits (Emergency+Trauma):
No
Level 2
(Not Answered)
0
0
0
5
Hours per Case
Inpatient Outpatient
122
0
0
0
368
0
0
0
490
0
0
0
0.5
0.0
0.0
0.0
0.5
0.0
0.0
0.0
0
0
0
0
0
0
0
0
0
0.0
0.0
0.0
0.0
0.0
0.0
Stand-By
0
2,231
334
2,231
Total Cardiac Cath Procedures:
Diagnostic Catheterizations (0-14)
Diagnostic Catheterizations (15+)
Interventional Catheterizations (0-14):
Interventional Catheterization (15+)
EP Catheterizations (15+)
Cardiac Surgery Data
Total Cardiac Surgery Cases:
Pediatric (0 - 14 Years):
Adult (15 Years and Older):
Coronary Artery Bypass Grafts (CABGs)
performed of total Cardiac Cases :
Outpatient Service Data
0
0
0
0
0
0
0
0
0
0
Cardiac Catheterization Labs
Total Outpatient Visits
Outpatient Visits at the Hospital/ Campus:
Outpatient Visits Offsite/off campus
General Radiography/Fluoroscopy
Nuclear Medicine
Mammography
Ultrasound
Angiography
Diagnostic Angiography
Interventional Angiography
Positron Emission Tomography (PET)
Computerized Axial Tomography (CAT)
Magnetic Resonance Imaging
0.7
Cardiac Catheterization Utilization
Certified Trauma Center
Level of Trauma Service
Diagnostic/Interventional
Equipment
3.2
Stage 2 Recovery Stations
Dedicated and Non-Dedicated Procedure Room Utilzation
Procedure Rooms
Surgical Cases
Surgical Hours
Inpatient Outpatient Combined Total
Inpatient
Outpatient Inpatient Outpatient Total Hours
0
0
0
0
Hours per Case
Inpatient Outpatient
0.0
0.0
0.0
0.0
2.4
0.7
3.0
0.0
3.5
0.0
5.9
1.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3.6
3.0
0.0
1.1
5.0
0.0
4.4
0.8
31,195
31,195
0
Total Cath Labs (Dedicated+Nondedicated labs):
Cath Labs used for Angiography procedures
Dedicated Diagnostic Catheterization Lab
Dedicated Interventional Catheterization Labs
Dedicated EP Catheterization Labs
Examinations
Owned Contract
12
0
1
0
1
0
4
0
1
0
1
3
1
0
1
0
Inpatient
3,556
78
1
475
0
779
29
1,786
342
Radiation Equipment
Outpt Contract
4,433
0
1,850
0
1,489
0
1,111
0
0
2,955
2,581
16,632
3,096
0
0
0
0
0
Owned Contract
Lithotripsy
0
0
Linear Accelerator
4
0
Image Guided Rad Therapy
0
0
Intensity Modulated Rad Thrp
0
0
High Dose Brachytherapy
1
0
Proton Beam Therapy
0
0
Gamma Knife
0
0
Cyber knife
0
0
Source: 2012 Annual Hospital Questionnaire, Illinois Department of Public Health, Health Systems Development.
0
0
0
0
0
Therapies/
Treatments
0
7,233
5,436
9,352
128
0
0
0