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37 golden permits in Medicaid bill

By Christine Jordan Sexton
5/8/2009 © Health News Florida 

A little-noticed provision in a bill now on the way to Gov. Charlie Crist will extend the life of valuable permits to construct 37 new hospitals, nursing homes and hospices.
The permits – called “certificates of need”, CON’s for short -- will double their shelf life if Crist signs the measure into law. There’s a chance that the legislation could come under fire from rival hospitals that want to see the projects die.

Jeff Gregg, who heads the CON program at the state Agency for Health Care Administration, said it makes sense to add 18 months to the deadline for breaking ground on new construction, given the tight financial markets.
Sponsors of projects that have CONs about to expire -- including the 60-bed Tri County Hospital in Chiefland -- agree. 

"We are estatic, because this gives us a better opportunity to try to get good terms on financing," said Tri County President and CEO Frank Schupp. His project has already passed sinkhole examinations and architectural standards, he said. "I'm going to use a term that President Obama uses .... We're shovel ready." 

The extension of CON permits from 18 to 36 months is part of the health care “train” bill sponsored by Sen. Don Gaetz, R-Niceville. SB 1986 cracks down on Medicaid fraud, establishes a new medical-home pilot project and streamlines AHCA responsibilities. It was called a "train" because it carried so many projects important to legislative leaders and thus would be difficult to derail. Schupp, who lives in Gaetz's district, also got support from Sen. Charlie Dean, who represents Chiefland. 

Gregg said current rules allow CONs to be extended if a project is delayed by actions at the local level, such as permitting disputes. However, the rules don’t allow extensions to resolve the types of financing problems occurring today, he said. 

Tallahassee attorney Karl Acuff, who is often involved in CON litigation, said the state’s original decision on granting a CON can take more than 18 months. It’s also very expensive to construct and equip new facilities -- about $1 million a bed, he said. 

Considering how drastically the financial markets have changed since applications were submitted two years ago, Acuff said, the temporary extension will go a long way to protect investments. 

Through the CON program, the state attempts to control over-building and waste in the health-care system. While many types of service have been declared exempt in recent years, construction for new hospitals, nursing homes and hospices has not.. AHCA’s Gregg said the majority of CON applications in the last four years have been for long-term-care facilities. 

CON, however, always is controversial. Acuff predicted that the extension provision may not sit well with everyone, especially a competitor hospital that may not want to see a project completed. 

“I guarantee you there will be somebody out there who’s not aware of this bill,” said Acuff, an attorney with Watkins & Associates. 

The provision in the bill was supported by the Florida Hospital Association after it was narrowed down. An earlier version—which passed in HB 873—would have allowed any CON to be extended regardless when it was received. The language in SB 1986 limits extensions to CONs secured before April 1. The more narrow language in SB 1986 will trump the broader provision in HB 873 because it passed later, under legislative rules. 

Florida Hospital Association President Bruce Reuben said the extension is tailor-made to fit the current credit crunch, which is “a very big problem.” He noted that multimillion-dollar hospital projects pump construction money into the local economy in the short term and offer other kinds of jobs in the long run. 

Hospital projects sometimes struggle for years to get the state to approve a CON and spend a fortune on legal fees, especially if rivals file objections. Tri County Hospital was turned down twice before parent company Ameris Health Systems received approval in April 2007 as part of a settlement agreement with AHCA. 

According to its CON application, 95 percent of the $45.7 million cost of the facility was to be financed. That proved difficult, and city officials say there’s been no progress on the new hospital. 

That has stalled the City of Chiefland’s $650,000 grant from the Department of Community Affairs for water and sewer service at the proposed site. The reason, the city's financial project coordinator Laurie Copeland told Health News Florida, is that the parent company hasn’t been able to show the state proof of financing. “It’s the missing component,” she said. 

Meanwhile, there are two other changes the Legislature made to hospital licensure requirements meant to help rural Gadsden County, just outside the state capital, as well as Miami Children’s Hospital. 

Gadsden’s hospital closed in December 2007 for licensure violations, and the county has been trying ever since to find money for a new hospital. The hospital license, which expires in June, would be extended by 20 months if Crist signs HB 873. 

Another hospital would benefit from the Medicaid train bill: Miami Children’s Hospital could offer certain adults open-heart surgery. Gregg said the hospital has asked AHCA several times for permission to treat adults, something it cannot do with its license as a children’s hospital. 

Children born with heart problems are now living longer and aging out of the children’s facilities where their doctors and surgeons work. It’s not an issue for the other children’s hospital—All Children’s in St. Petersburg -- because that facility shares a CON for open heart with Bayfront Medical Center. 

--Contact for Christine Jordan Sexton