HEAL NY PHASE 7 CAPITAL RESTRUCTURING INITIATIVES #2 RFA No. 0712200252 Governor Nelson A. Rockefeller Empire State Plaza Conference Room 3 Albany, New York February 4, 2008 2:05 p.m - 3:35 p.m. APPEARANCES: Christopher Delker James W. Clyne, Jr. Neil Benjamin Robert Schmidt Larry Volk Charles Abel Tracy Raleigh Martin Bienstock Guy Warner ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 2 1 MR. DELKER: Everyone should have 2 picked up a copy of the agenda outside. Let me 3 just give you a quick preview of it. 4 First we're going to hear from Jim 5 Clyne, Office of Health Systems Management, and 6 Neil Benjamin to talk about how phase 7 fits 7 with the larger efforts at restructuring and 8 reconfiguring the health care system. Then 9 we're going to go through eligible activities 10 and costs, what you can and cannot ask for, 11 what we will and won't pay for; and then the 12 basis of the awards, the factors, the main 13 factors we'll consider in scoring and talk 14 about the use of numerical scoring and the 15 proportionate scoring and the regional 16 distribution of funds. We'll then walk through 17 the application, process the application 18 itself, the technical and financial components, 19 which you've probably already noticed, it has 20 two main components. And then we'll talk about 21 the submission of the applications, about how 22 they're supposed to be submitted, by when and 23 in what format. 24 Then we get to the question and answer 25 session, which is the main purpose of being ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 3 1 here, and that's what we want to devote the 2 bulk of the time to. So we're going to run 3 through our agenda fairly quickly. We'll ask 4 that you hold your questions until the end. 5 Everyone will get a chance to ask a question. 6 We have microphones to walk around, and a 7 microphone will be brought to your seat and you 8 can ask your question at that time. 9 Let me first talk about -- this is a 10 competitive procurement process, and that's 11 governed by the State Finance Law, and it might 12 be a little bit different from what some of you 13 have dealt with in grant processes under other 14 sponsorship, under categorical grants or 15 others. What it means is that all information 16 that is imparted has to be available to all 17 parties at the same time, so we have these 18 public forums. And we also have questions and 19 answers that can be submitted to the e-mail 20 addresses on the web that are in the RGA. The 21 questions will be answered on the Department of 22 Health website about a week or two after the 23 closure of the question date. So you cannot 24 assume that you can follow-up with us later and 25 ask something for clarification one on one by ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 4 1 calling us or sending us an e-mail or 2 something. It all has to go through the 3 official Q&A website or be asked in this forum. 4 We also would like to say that under 5 these rules here that govern these types of 6 gatherings that everything we say here is 7 considered preliminary until we publish a 8 transcript on the Department of Health website 9 which should be available, I don't know, it 10 usually takes ten days to two weeks to get it 11 up on the website. So we reserve the right to 12 issue any corrections or clarifications at that 13 time of anything we say here today. We don't 14 think we'll have to do very much of that, 15 because we're pretty confident that we can 16 answer all of the questions fully, but 17 sometimes we have to check on legal aspects or 18 others, or sometimes we just make mistakes and 19 have to eat our words, so to speak, but we 20 don't anticipate a lot of that. But there will 21 be corrections or clarifications, if necessary, 22 issued as the same time as the transcript. 23 There are also rules under competitive 24 procurement because you can't ask any questions 25 outside of this forum. That includes as soon ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 5 1 as we end here. So you cannot come up to us 2 afterwards here and ask us one-on-one a 3 follow-up or a clarification or anything like 4 that, so don't approach us that way. You can 5 talk about anything else you want, but we will 6 have to turn a deaf ear if you ask us anything 7 pertaining to this RGA or following up anything 8 that is said here. 9 I'd like to introduce the panel. I'm 10 Christopher Delker, Division of Health Facility 11 Planning. 12 MR. SCHMIDT: Bob Schmidt, 13 Director of the HEAL Implementation Team. 14 MS. RALEIGH: Tracy Raleigh with 15 the Dormitory Authority. 16 MR. ABEL: Charlie Abel, 17 Department of Health. 18 MR. VOLK: Larry Volk, Dormitory 19 Authority. 20 MR. BENJAMIN: Neil Benjamin, 21 Division of Health Facility Planning and OHSM. 22 MR. CLYNE: Jim Clyne with OHSM. 23 MR. BIENSTOCK: Marti Bienstock, 24 legal, Department of Health. 25 MR. WARNER: And Guy Warner, ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 6 1 Department of Health, Bureau of Licensure and 2 Certification. And our bureau has several 3 additional resident experts that are here 4 today. Joe Meloveck and Dave Holupko right 5 here will be handling any questions regarding 6 ALRs and ALPs. Linda Rush, home care, and Doug 7 Reilly, nursing homes. 8 MR. DELKER: And we also have 9 other people present, Bob Veino, Division of 10 Legal Affairs, and Ed Brivero (phonetic), 11 Division of Legal Affairs. So we're well 12 protected by legal advice here for anything we 13 say. We also have from the Bureau of Accounts 14 Management, Office of Fiscal Management, 15 Marybeth Hefner and Cynthia Miner. They are 16 the people who make sure that the contracts get 17 through the Office of the State Comptroller in 18 approvable form. So if you get an award they 19 are going to become very important people in 20 your lives, and in ours too. Marybeth is 21 shaking her head. Well, they're behind the 22 scenes important. The rest of us are the ones 23 you'll be dealing with, but these are the 24 people that really help get the money flowing 25 once it's awarded. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 7 1 I'd like to introduce Jim Clyne now. 2 MR. CLYNE: Thank you. The Berger 3 Commissioner referred to its final report as 4 only the beginning of reconfiguring the health 5 care facilities, and I think all the staff in 6 the Department who are working on implementing 7 the Berger Commission would agree that it's 8 only the first step, and we don't want to go 9 through it the way we're going through it right 10 now. We'd rather take a different tact, and 11 this RGA is one of the first steps in 12 reconfiguring health care, along with HEAL 6, 13 which is primary care development as well as 14 reimbursement reform, which has been proposed 15 in the budget, and as well as changing the way 16 the Department does planning, including 17 planning grants that are also proposed in the 18 budget. 19 This RGA offers assistance to hospitals 20 and nursing homes that want to voluntarily 21 downsize, consolidate, share services, share 22 governance in order to get a more efficient and 23 better delivery of care. It's focused more on 24 community and needs of the community. 25 The RGA also recognizes coverage ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 8 1 partners of Berger facilities -- we're going to 2 be interpreting that fairly narrowly -- who 3 will be in the communities where Berger 4 recommendations are taking care of the patients 5 in those areas as a result of a closure or a 6 downsizing or another recommendation from the 7 Berger Commission. 8 And the RGA supports strengthening 9 community-based long term care services that 10 are lacking in some areas and probably 11 contribute to the over-reliance that we have in 12 traditional nursing homes. 13 We're going to receive more requests 14 for money than we have. In dealing with the 15 $550 million Berger Commission RGA, we received 16 $2.5 billion, and that was a much more closed 17 pool of applicants. Therefore, we urge you to 18 propose projects that offer substantive change 19 in the way you do business -- more 20 collaboration, new ways of organizing, new ways 21 of delivering care. 22 We really are going to stress providers 23 coming together much more so than we have in 24 the past; whereas, some of the earlier 25 restructuring RGA facilities could act on their ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 9 1 own to simply downsize. We really need to have 2 facilities coming together to make more sense 3 out of the system, but this is also an 4 opportunity to be resourceful, to be 5 innovative, to come up with new ideas. We 6 don't think that we are the only ones who have 7 ideas. 8 We look forward to seeing the 9 applications that you send forward. And, 10 again, unlike the phase 4, the HEAL phase 4, 11 this is a competitive process, so the 12 applications are going to be judged against 13 other applications in your region. To the 14 extent that other facilities are coming forward 15 and merging and coming together with people in 16 the region, that's what you're going to be 17 judged against. And because it's a competitive 18 RGA, we'll be able to talk to you in April when 19 it's over. Thank you. 20 MR. DELKER: And some of you all 21 know I think pretty well, a lot of you do, 22 Neil Benjamin, the Division of Health Facility 23 and Planning, will talk a little bit more about 24 what this means at a community and 25 institutional level. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 10 1 MR. BENJAMIN: Thank you, Chris. 2 Hello everybody. You know, Jim gave, you know, 3 a broad overview, but you can really -- I think 4 when you look at this certainly it's very clear 5 that there are really two broad categories of 6 applications that we're interested in. And to 7 use some maybe not, you know, completely 8 official terminology, but, one, we call them 9 "Berger look-a-likes;" in other words, that 10 would be voluntary initiatives coming forward 11 to us that would carry with it accomplishing 12 the goals and objectives of the Berger 13 Commission, which were pretty broad-ranging but 14 can be simplified down to eliminating excess 15 capacity in the system, developing and forging 16 relationships that are more responsive to a 17 community's needs as opposed to continued, you 18 know, cut-throat competition that may be in 19 itself produces and continues excess cost to 20 the system that we all know that we all pay 21 for. It could come to -- it could be in any of 22 a variety of forms ranging from mergers or 23 acquisitions or affiliations or those types of 24 things that, if you look through the Berger 25 Commission Report, Berger mandated in some ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 11 1 cases, and they're pretty strong ranging from, 2 you know, full asset mergers all the way down 3 to affiliations. Now, we weren't prescriptive 4 on these because again it's up to you all to 5 know your communities and know the types of 6 services that are needed out there and know 7 pretty much what kind of excesses are there. 8 And by excesses, they can range, as I said, 9 again from excess in patient capacity to low 10 utilized other types of services, ancillary, or 11 whatever, that again continue to bring with 12 them another Berger term, "stranded costs" -- 13 dollars that have to support overhead and fixed 14 costs that could otherwise be directed towards 15 improving patient care. 16 Now, the second types -- those are the 17 Berger look-a-likes. And the second one would 18 really be "coverage partners," as we're calling 19 them. And that would be providers who are in 20 communities whose services are affected by the 21 Berger Commission recommendations. Now, for 22 example, there is a hospital that is closing 23 under Berger, and there are certain services 24 that, while Berger mentions they believe those 25 services are covered in the community, those ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 12 1 services may not necessarily be aligned or 2 configured in a way that is most efficient, or 3 there may be the need for some additional 4 resources so that at the end of the day the 5 system is reconfigured most efficiently. And 6 as I said, one of the examples is a closure of 7 an emergency room and the impact that that may 8 have on others, not necessarily all of the 9 other hospitals adding all of that ER capacity 10 but being more creative in terms of looking at 11 the true emergent and non-emergent mix of the 12 patients and developing, for example, urgency 13 center types of things, more efficient 14 triaging, etcetera. This is just one example 15 of a Berger coverage partner, but it 16 nevertheless, I think, conveys what we're 17 looking at. Certainly, the Berger Report goes 18 into much more detail in the non-binding pieces 19 of it. 20 One of the things that I said this 21 morning in the primary care piece, and I think 22 carries through to this afternoon even more so, 23 is we're going to be looking for projects 24 that -- and I think Chris said a little bit 25 earlier, we're going to demonstrate review -- ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 13 1 tend to look more favorably on projects that 2 demonstrate a knowledge of, you know, more than 3 a knowledge, more than a working knowledge, an 4 understanding of just what is going on in your 5 community relative to health care, health care 6 outcomes and the needs of your communities. We 7 all know that there are a lot of databases out 8 there. You have them available to you. We 9 have them available to us. And it's really 10 using this and some changes in our planning 11 process under CON to change the fundamental 12 approach of that plan. And it's really moving 13 away from a process that is focused in on the 14 needs of the institution and how can that 15 institution better itself in a variety of ways, 16 to moving towards what are the real needs of 17 the patients that live in those communities 18 served by those providers, and what are the 19 health status indicators that may be improved 20 upon with realigned delivery of health care. 21 So improving the health of the population, 22 trying to develop projects that assure that 23 patients are receiving more preventative care 24 so that, maybe not tomorrow, next month, next 25 year you can't look to a measurable benefit, ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 14 1 but maybe three, four, five years down the road 2 the incidence of avoidable, preventable 3 hospitalizations may be reduced. And I think 4 that's really important, because we all know 5 the measures that are out there that allow us 6 to look at that -- SPARCs databases, federal 7 HRQ, PQIs and all of those types of things. 8 Well, we're really looking to, first and 9 foremost, say, okay, what are the 10 characteristics of those patients and how can 11 they best be served? Maybe you're serving, you 12 know, a 45 percent ratio of non-emergent 13 patients in your emergency room, or maybe there 14 is a double of county average of preventable 15 hospitalizations occurring in certain zip codes 16 where you live. We're going to be looking for 17 initiatives that will go right to the heart of 18 how can you prevent that or reduce those in the 19 future. That certainly won't be the only 20 mechanism that we'll use to look, but I think 21 it's a good start. It's a very solid start to 22 change the way that we look into health type of 23 planning, and what better way to do it than 24 start off the prudent investment of state and 25 federal resources through this. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 15 1 I said it this morning. For those of 2 you who weren't here, the Department is excited 3 about an initiative that will be web-based. 4 And I've been talking about it for a while now, 5 but it turned out to be a much bigger 6 undertaking than we thought. We contracted 7 some of it out, but it's an interactive model 8 that we call the "PQI explorer," and it's going 9 to be web-based as opposed to other planning 10 type initiatives and tools in the past. We're 11 not going to just say, okay, we, the 12 Department, has it, and we're going to use it 13 to make secretive little decisions on your 14 projects, no. We're going to turn it around, 15 put it on the web and give it to everybody, so 16 you'll be able to get a pretty good sense, at 17 least from this one indicator -- and it is a 18 start -- of just what is happening in your 19 community, because it blends in the SPARCs 20 databases with the federal PQI measures. And 21 we'll have it by ethnicity, by race. There 22 will be factors for income levels, and there 23 will be transportation routes shown and all 24 kinds of drop-down boxes, again just to give 25 you all the tools to better understand what's ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 16 1 going on so that you can put together the 2 things that are more responsive to the people 3 who live in your community. We're excited 4 about that. It's being, you know, really -- 5 it's being intensely -- it's in the testing 6 stage right now, the second level of testing, 7 and we're hoping to have that on the web, I 8 told Jim by the end of January, but I can't say 9 that anymore. So by the end of February, and 10 we're hoping that will help you all here. 11 So, again, we're really looking for, as 12 Jim said, innovation and creativity to create 13 and deliver a better system of health care for 14 everyone who lives in this state. And we're 15 open -- as Jim said, we don't -- Lord knows we 16 don't have any answers, but we think we do have 17 a really exciting new set of data that will 18 help us work with you and assess your 19 applications as well as share with you. So 20 we've got a whole expert group here. As usual, 21 I've probably talked too long, so I look 22 forward to talking to some of you or anybody in 23 the Q&A phase. Thanks for coming. 24 MR. DELKER: Okay, we've already 25 said a couple things about the competitive ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 17 1 procurement about the rules governing 2 information and so on, but there's one thing, 3 this is not structured like phase 4. Phase 4 4 was the RGA that was specifically targeted to 5 those facilities that were subject to Berger 6 Commission mandates that had to downsize or 7 close or right size in some respect. Because 8 of that, it was to a targeted group. It was 9 not competitive, and there could be 10 negotiations back and forth. That will not be 11 the case here. So if you were one of those 12 facilities or colleagues who have heard things 13 can be negotiated, that won't be the case. 14 Once your application is submitted, it will be 15 judged solely on its merits. You can't add to 16 it or clarify it or call Jim Clyne and say you 17 want to change something. Jim Clyne has been 18 going nuts with the negotiations over the last 19 several years so we have to -- or the last 20 several months, rather. 21 MR. CLYNE: It seems like years. 22 MR. DELKER: So bear that in mind. 23 Your application will be judged on its merits. 24 Once we have it, there won't be anything that 25 will be negotiated or changed. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 18 1 Now, in the interest of saving time, 2 I'll kind of go through these next slides 3 quickly since Jim and Neil covered them pretty. 4 I would like to say about eligible 5 applicants, those are listed on pages 6 of your 6 RGA, Section 1.4. If there is any doubt about 7 whether or not you are one of these, we try to 8 have the statutory citation there, so if you're 9 certified under one of those you can be an 10 applicant. 11 Let me say a word about an Article 28 12 network. In just about every HEAL iteration, 13 we get someone, a 501C3 organization of some 14 kind, who calls themselves a health care system 15 or network because they're affiliated with such 16 and such a hospital or two or three hospitals 17 or something and they think they're an Article 18 28 entity. You're not. If you're not 19 established under Article 28 and have that 20 operating certificate hanging on your wall or 21 have your name somewhere on an operating 22 certificate as a co-operator, you're not 23 eligible. The Article 28 networks are defined 24 in Part 401, and that is cited in the RGA, and 25 so I just issue that question. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 19 1 As Jim and Neil said, this is to be 2 congruent with the priorities of the 3 Commission. And the HEAL legislation says 4 that, where possible, HEAL projects shall be 5 compatible with the objectives and the 6 determinations of the Commission, the Berger 7 Commission, or the Commission on Health Care 8 Facilities in the 21st Century, as it's 9 commonly known. As Neil and Jim said, the 10 Berger Commission's Report at the beginning 11 calls for a further reconfiguration and also 12 for alignment of health care and response to 13 community needs. I think with this RGA, and 14 the one we talked about this morning for 15 primary care, we're really focusing more and 16 more on the community side of things now. The 17 previous HEAL iterations have been focused on 18 downsizing that capacity and excess capacity 19 and duplicative of services, and those are 20 certainly things that are still eligible, but I 21 think with the emphasis on community-based 22 long-term care services and on primary care 23 this morning, we're talking about opening it up 24 more to the community. And certainly that's 25 something that facilities can do too, inpatient ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 20 1 facilities, in collaboration with 2 community-based organizations or with primary 3 care providers or others. As Jim said, we urge 4 you to be innovative and be resourceful in that 5 regard. 6 These are some of the same points. I 7 would note the reduction of excess inpatient 8 capacity. You know, that was the main point of 9 a lot of the early Berger recommendations and 10 the earlier HEAL ones. We're not looking here 11 for plain vanilla reduction of beds. Let's 12 face it, you're not staffing a lot of those 13 beds now anyway, so just taking them off of 14 your operating certificate isn't really going 15 to be an innovative, strong project in this, 16 and so we would ask you to bear that in mind. 17 Certainly bed reduction is acceptable and 18 encouraged but don't make it -- we urge you not 19 to make it the main point of your RGA, because 20 that's not the main point of the -- the main 21 point of your applications, because that's not 22 the main point of this RGA. 23 So I think with that said, we'll start 24 moving into the costs and the features of the 25 application. For that, Bob Schmidt is going to ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 21 1 start walking you through that with help from 2 everyone else on the panel. Bob is director of 3 the HEAL implementation unit. And if you don't 4 know him already through other parts of HEAL, 5 you will, because he's the layperson out there 6 and the one who gets most of the phone calls 7 and has to answer most of the e-mails and is up 8 front on a lot of things and tries to make 9 decisions as this whole endeavor unfolds. And 10 he does a lot for us. 11 MR. SCHMIDT: Thanks for the nice 12 introduction, but I'm not doing this all by 13 myself. I would just like to introduce the 14 HEAL team. There's one person not here today 15 with us, but basically it's Janice Dee, Joe 16 LeDuc and Kelley Tuohy. You probably saw 17 Kelley and Joe and Janice out front. 18 Why don't we start the Q&A session. 19 Joe and Janice will each have a microphone. 20 They'll go to separate ends of the room, and 21 we'll just sort of take questions as they come 22 up. 23 Just getting into the rest of the 24 presentation, I'd like to talk about eligible 25 costs. Section 1.8.1 in the RGA identifies ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 22 1 what are eligible costs for the application. 2 The first section is on restructuring. 3 It's basically capital costs to reconfigure 4 infrastructure of hospitals and nursing homes 5 and then the equipment expense and capital 6 acquisition costs associated with downsizing. 7 We've been talking a lot about working 8 together and trying to collaborate, but there 9 are some legal concerns associated with that. 10 And we have an expert on our panel. I don't 11 know if you want to come up. All right, Marti 12 is going to address that, Marti Bienstock. 13 MR. BIENSTOCK: It's a little 14 scary to be called an expert on antitrust, but 15 I'll do my best. 16 Before I start, let me acknowledge Matt 17 Barbaro who works with me on Berger 18 implementation, and I don't think we could get 19 it done without him, as well as everyone else 20 out there. I'm just going to acknowledge the 21 legal crew. And Bob Veino who -- I don't know 22 what legal would do without him kind of in 23 general. 24 Turning to the antitrust, the RGA 25 touches on some potentially sensitive issues ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 23 1 under the Antitrust Laws. And let me just try 2 to address some of them and maybe it will allay 3 some of your fears. Generally, you know, the 4 federal and state Antitrust Laws prohibit 5 agreements that are in restraint of trade. So, 6 for example, two competing facilities 7 ordinarily are not allowed to agree to allocate 8 services between them. They can't say you take 9 cardiac, we'll take oncology. Two competing 10 facilities also can't allocate geographic 11 regions between them. They can't say you take 12 the west end of the island and I'll take the 13 east. In the case of mergers, you can't create 14 a merger that is going to kind of create a 15 monopoly. So, for instance, if all of the 16 hospitals in the capital district region agreed 17 to create one super hospital, you would have 18 all kinds of problems with the Antitrust Laws. 19 Now, if you're familiar with what the 20 Berger Commission did, it seems to have done 21 exactly that in many cases. In fact, if you 22 look at the legislation that established the 23 Berger Commission, it even says that its 24 purpose was to allocate supply with demand, 25 which is what, in our society, competition ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 24 1 typically does. You compete and supply meets 2 demand. But here we have a body that was going 3 to allocate services, create mergers. They 4 were going to make supply meet demand. So how 5 could they do that? Why wouldn't that run 6 afoul of the Antitrust Laws? And the answer is 7 something called the "State Action Doctrine." 8 The State Action Doctrine says 9 essentially actions by the State are immune 10 from the Antitrust Laws. And the State Action 11 Doctrine comes in essentially two flavors. The 12 first flavor is sovereign actions, actions by 13 the sovereign, which I think is where the 14 Berger Commission fits. If the legislature 15 says -- you know, if the legislature does 16 something, if they courts do something, or if 17 they order you to do something then essentially 18 you're exempt from the Antitrust Laws. So 19 that's the first flavor. A more kind of 20 complicated piece is when private parties want 21 to engage in potentially anti-competitive 22 activities with the approval of the State, and 23 in those cases things are a little more 24 complicated. You need to meet a two-part test. 25 There needs to be a clearly articulated state ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 25 1 policy, and there needs to be active 2 supervision by the states. So, you know, in 3 your case, voluntary HEAL application, if it 4 has anti-competitive pieces to it, it needs to 5 be pursuant to clearly articulated state 6 policy, and it has to be subject to our active 7 supervision. 8 Now, in the case of a successful HEAL 9 application the first test will be satisfied in 10 every case; in other words, when you submit to 11 us an application and we approve it, what we'll 12 be saying is that you've demonstrated that 13 you're going to improve quality of care, or 14 you're going to approve your efficiency, or 15 access, or affordability, or some of the other 16 goals that Berger might be designed to address. 17 And the statute that created the HEAL grant, 18 that we're going to be giving out, says that we 19 should award grants in support of the goals of 20 the objectives of the Berger Commission. So 21 the statute says we should give you grants to 22 do these things; clearly, the state 23 legislature's policy is to support what you're 24 going, so you've met the first test of clearly 25 articulating state policy. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 26 1 Now, what about the second test? The 2 second test is a little bit more complicated. 3 We have to actively supervise what you're 4 doing. In some cases where what you're 5 proposing to do is a one-time thing, so you 6 come in and you present it to us. Our 7 reviewers review it, and they say yes do this. 8 So that very process itself will be active 9 supervision of what you're doing. In some 10 cases, though, you may be proposing something 11 that will over time continuously or continually 12 be anti-competitive, and in those cases what we 13 would like you to do is describe a means by 14 which we can actively supervise what you're 15 doing over time so that you've got the 16 imprimatur of the State on what you're doing 17 and you get the protection of the State Action 18 Doctrine. So just one -- you know, in 19 proposing active supervision, though, we would 20 urge that your proposal be reasonable in terms 21 of what we can do. For example, there is no 22 way the Department is going to surprise great 23 negotiations with managed care companies; that 24 is not something we will actively supervise. 25 So don't come in to us and say, you know, this ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 27 1 is what we want you to do, you know, go and 2 supervise our rate negotiations. 3 So I've just described how successful 4 applicants, just by our approving your 5 application, will have met the first part of 6 the test and, you know, we'll design some 7 active supervision that will get you through 8 the second part of the test, and we'll address 9 your concerns about the Antitrust Laws. 10 What about unsuccessful applicants? Do 11 they have anything to worry about? Because 12 we'll never approve what you've done. And the 13 short answer to that is no. There is an 14 entirely separate doctrine called the 15 Noerr-Pennington Doctrine that says that you're 16 entitled to petition the state and acts that -- 17 your petitioning acts are exempt from the 18 Antitrust Laws. And when you think about it, 19 that's the First Amendment, is designed in part 20 to protect petitioning government. So if you 21 come to us with your petition, with your 22 application, that application is protected. 23 And in addition to the application the 24 protection will apply to any reasonable 25 activities that you undertake that are ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 28 1 necessary and incidental to prepare in your 2 application. So it's the application and those 3 steps that are necessary and incidental to 4 preparing the application, those things are 5 protected. 6 So let me just summarize kind of what 7 I've said. You can submit applications to 8 undertake activities that ordinarily might be 9 considered anti-competitive under the Antitrust 10 Laws. In preparing your application, you can 11 also engage in those types of activities as 12 long as they're necessary and incidental to 13 preparing the application. If the application 14 itself is anti-competitive, then you should 15 also present to us a way of describing how we 16 should actively supervise the activities. In 17 some cases that just means we'll actively 18 supervise it by reviewing the application and 19 approving it, telling you yes it's okay to take 20 out these 10 beds, you know, convert these 12 21 beds and go forward. In other cases where 22 you're proposing to do something over time, you 23 should describe how the State can actively 24 supervise what you're doing to make sure its 25 goals are being met. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 29 1 Let me just add two cautions. First, 2 the process shouldn't be used to engage in 3 anti-competitive activities unrelated to your 4 application. So don't think, for example, 5 well, we'll take out 12 beds, and as part of 6 that we'll jointly negotiate together with the 7 hospital across the street against the managed 8 care companies. You know, so don't use this as 9 a sham to engage in things unrelated to what it 10 is that you want to do and what we want you to 11 do . 12 The second is a little bit of 13 sensitivity. Some of you may be familiar with 14 the merger that -- or the antitrust case that 15 went on in Poughkeepsie in the mid '90s where 16 Vassar and St. Francis got together and had an 17 active parent, and they used the active parent 18 as a vehicle for negotiating the managed care 19 contracts. And even though the Department had 20 approved the active parent, and in fact the 21 Department went to bat for the hospitals during 22 the litigation, the courts found against the 23 hospitals in that case. So I guess that's a 24 way of saying, you know, be very careful about 25 sham transactions because, even if we wanted to ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 30 1 support you in that case, there is only so much 2 we can do. 3 So, you know, I guess the final 4 concluding piece would, therefore, be when in 5 doubt consult an attorney, and that's probably 6 a good way to end. You know, unfortunately 7 this is a competitive grant, so we won't be 8 able to assist you on a case-by-case basis in 9 preparing your application, but, you know, I 10 hope this general guidance should be enough to 11 help you prepare your significant grant 12 applications that will meet our goals and will 13 meet your goals and your needs, you know, even 14 if they have competitive effects. But like I 15 said, if you have specific questions, you may 16 need to consult an attorney. Thanks. 17 MR. SCHMIDT: Thanks, Marti. 18 That was very thorough. Appreciate it. 19 All right, I know we're running a 20 little late, so I'm trying to go through this 21 on the quick side. 22 Here is a list of eligible closing 23 costs. This is also in the RGA. I won't read 24 through this. This is available in your 25 document. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 31 1 The next one I want to talk about is 2 basis of awards. Again, see applications, 3 implement, substantive change, respond to 4 Commission mandated closures and downsizes, 5 increase access to care and propose projects 6 that are reasonable, cost effective and 7 financially feasible. 8 We'll just talk to you about how the 9 review process works. It's basically a 10 three-stage review. Stage one is a 11 completeness review, so your applications are 12 submitted, and we're going to make sure that 13 all of the pieces are there and that you've met 14 all of the basic requirements so that it's 15 acceptable to go on to further review. This is 16 just -- if I hadn't mentioned it before, you'll 17 be submitting a technical application and a 18 financial application. And there shouldn't be 19 any financial information in the technical 20 application because they go to two separate 21 review panels. 22 Stage two is an eligible applicant 23 review. That's where we're going to determine 24 if you meet one of the eligible applicant 25 criteria that's listed in the RGA. There is an ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 32 1 error in the RGA that basically -- there is a 2 sentence that should be deleted. It's states, 3 The budget section of the application will be 4 reviewed to confirm at least 50 percent of the 5 project funds come from sources other than this 6 grant. That's not the case. That's listed 7 under the stage two description in the RGA, so 8 you can just ignore that. 9 On the financial documents it shows a 10 section for "other funds," so you can have 11 funds other than the HEAL funds go towards this 12 project but it's not a requirement. 13 And stage three is basically where the 14 two applications separate, and the technical 15 application goes to technical review team, and 16 the financial application goes to financial 17 review teams, and that's where the scores are 18 developed. 19 The technical section's worth 75 20 percent, and the financial section is worth 25 21 percent. 22 We think in terms of scoring criteria. 23 What we're looking to see in the technical 24 section is a demonstration of validating all of 25 the things we've talked about thus far. And in ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 33 1 addition to that, the ability of the 2 application to complete the project, the 3 viability of the project, and then -- oh, and 4 also the sustainability of this project after 5 the grant period. On the financial side, we're 6 looking to see that this is a project that is 7 reasonably priced, it's cost effective and it's 8 going to help reduce overall health care costs. 9 Let's see. 10 Executive summary. Executive summary, 11 there we go. You basically want to see a very 12 brief executive summary. You want to see an 13 executive summary that is really no more than 14 two pages long. If you look at the application 15 template, there is a place to describe your 16 application in more detail after executive 17 summary. We want to emphasize that there are a 18 lot of functions for this executive summary, so 19 we want to keep it under two pages. 20 Community need. We don't want to see 21 an application that has generalized statements 22 about community need. We want to see 23 documented proof that you understand the health 24 care community, you understand your 25 competition, you understand what the need is ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 34 1 and how you're going to address the needs in 2 your community. 3 MR. DELKER: And I think for 4 those -- is this on? Can you hear me? Okay. 5 I think for those that are coverage partners 6 you could say, well, since hospital X closed or 7 downsized, we've noticed a spike in our 8 emergency room so we want some HEAL money. 9 That's not good enough. Show us that those 10 patients are coming from zip codes formerly 11 served by that other facility, or show us that 12 physicians that are referring to your facility 13 where you used to refer to another. You need 14 to document it. You can't just say, well, we 15 know this is the case because we've seen an 16 increase. There may be other reasons for that 17 increase, so bear that in mind. These are, as 18 Bob said and as Jim said, very competitive 19 applications, so you're going to have to 20 document need where you can. 21 MR. SCHMIDT: Okay. Objectives 22 and timeline. In the area of objectives, we 23 want to see you identify your process 24 objectives and then your outcome objectives. 25 They're explained in the application template. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 35 1 Basically, the process objections is how the 2 actual project is going to unfold and what are 3 your milestones along the way. Outcome 4 objectives are basically you're starting this 5 project with the intention of improving X, how 6 that's going to happen, and then at the end of 7 this time period you're going to validate that, 8 you know, your outcome is Y. 9 As far as the timeline goes, we would 10 like to see a timeline and a project work plan 11 that sort of divides life in quarterly 12 increments. So basically I know the RGA states 13 that we'll pay vouchers no more frequently than 14 one month at a time, but the normal payment 15 cycle is every three months. It's a quarterly 16 cycle. So we would like to see reports, 17 milestones, project outcomes in a form of a 18 quarterly format. 19 Monitoring plan. Historically this has 20 been the weakest section in any of the prior 21 HEAL applications. We would like to see a 22 strong monitoring plan. We want to see a plan 23 that not only monitors, let's say, your 24 construction progress or the nuts and bolts 25 part of your work plan progress, but we would ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 36 1 also like to see how the greater improvement to 2 the health care delivery system is going to be 3 monitored. One of our requirements is that you 4 have to submit progress reports for three years 5 after the end date of the contracts, so we're 6 going to be watching to see, you know, did you 7 improve care in this way, or increase access, 8 or improve efficiency, or reduce overall costs 9 or per-unit costs. So that's important to 10 include in your application. 11 The next two slides address the 12 financial portion of the application, and I'm 13 going to hand that over to Larry from the 14 Dormitory Authority, and Charlie from our 15 Division of Financing. 16 MR. ABEL: Well, if you take a 17 look at the RGA it pretty much spells out what 18 we are rating the application by with respect 19 to financial factors. It's printed out on page 20 4 of the RGA, description of the financial 21 application. You need to have a complete 22 detailed project budget. You need to -- 23 because there is no discussion during this 24 review process, we have to rely entirely upon 25 the information that you provide in your ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 37 1 application, so we need to be convinced that 2 the elements that are in your budget are 3 necessary, reasonable and in the public 4 interest. You need to be able to substantiate 5 each budget item and provide all underlying 6 assumptions so that we can understand where 7 you're coming from and how those items directly 8 relate to the project that you're proposing. 9 Project funding sources, it was 10 mentioned a little while ago. There is no 11 match requirement for this application as has 12 been the case in earlier HEAL iterations. That 13 doesn't mean that we're not expecting that 14 available funds to the applicant will not be 15 used for this project. It stands to -- from 16 our perspective, we have a limited pot of 17 money. We're going to have a lot of 18 applications, we expect to. We've had a lot of 19 applications in the past for earlier phases, 20 requesting much more money than we have 21 available to distribute, so we want to make 22 sure that those dollars are invested wisely in 23 the community, that we get the maximum return 24 on our investment. So to the extent that you, 25 as an applicant, have available resources in ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 38 1 not only cash but the ability to borrow funds, 2 the ability to obtain some funding or financing 3 from affiliated entities, we're expecting that 4 that's going to get thrown into the mix so that 5 you have, you know, some commitment beyond just 6 the state and federal dollars that are going to 7 this project. So I think that creates a 8 stronger application and certainly should score 9 better in that regard. 10 Cost effectiveness, this is where we do 11 look for those dollars to be invested wisely 12 and intelligently, targeted to the desired 13 outcome that you've highlighted in your 14 application. How is the State -- how is the 15 system benefiting from those invested dollars, 16 the return on that investment? 17 Financial viability. We expect this 18 could go a number of different ways. If you're 19 proposing a consolidation or a reduction in 20 capacity, we want to make sure that whatever 21 remains, if there is something that remains, is 22 going to be financially viable at the end of 23 day, at then end of the project -- when the 24 project has been implemented. So the dollars 25 that we're investing will generate -- will ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 39 1 leave the area with a system, with a resource 2 that is going to be able to perpetuate itself, 3 to survive after the grant funding period. 4 And that links up with the final 5 element, which is applicant financial 6 stability. We want to make sure that you, as 7 the applicant, and any other stakeholders that 8 are included in your application, have the 9 wear-with-all and the means to do this project, 10 to do it successfully and to remain a viable 11 entity on an ongoing basis. 12 So those are the main elements that 13 your application will be rated by with respect 14 to financial aspects. 15 MR. SCHMIDT: Okay, it sounds 16 good. Thank you. Getting towards the end, 17 don't worry. 18 This slide is on competitive 19 procurements. We can't emphasize this enough, 20 is that when you submit your application that's 21 basically the only action that you're basically 22 going to be allowed. You submit the 23 application, and then it goes through the 24 scoring process. There are no negotiations or 25 adjustments. You can't call and say I forgot ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 40 1 something. I wonder if I can submit an extra 2 piece. There is nothing that's really going to 3 be allowed at this point, so really just make 4 sure you do a complete job. Submit something 5 you're pleased with, and make sure it's in by 6 the deadline. 7 Application submission. Now, as I said 8 earlier, there are separate technical and 9 financial applications. You need to submit two 10 originals, two signed originals of the 11 technical applications, two signed originals of 12 the financial application, four copies of each 13 and then six flash drives or CD with files in a 14 PDF format of your application. The 15 application due date is April 3, 2008. We're 16 going to take questions after this, but if 17 there is a question that you want to submit, 18 you have until February 15, 2008 to either 19 e-mail or write in a question. Our e-mail 20 address is in the RGA. It's 21 healnewyorkphase7@health.state.ny.us. It's in 22 the RGA. 23 We can start the Q&A session now unless 24 the panel would like to add something before we 25 go into a Q&A? No? Okay. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 41 1 MR. DELKER: Just the -- 2 MR. SCHMIDT: Chris will give you 3 some ground rules. 4 MR. DELKER: The ground rules for 5 the Q&A, everyone, if you raise your hand, stay 6 where you are. The microphone will be brought 7 to you. We'll take you in turn. You can ask 8 one question and, if necessary, a related 9 follow-up, so don't plan to ask two unrelated 10 questions. We'll go around until everybody has 11 had a chance to ask one question. If time 12 remains, we'll go back, and you can ask 13 additional questions. We have to do this, in 14 fairness, to make sure that everybody at least 15 gets one chance to ask a question. Who wants 16 to go first? There's one there. 17 MR. MENDELSOHN: Marc Mendelsohn, 18 Catskill Regional Medical Center. My question 19 is can a health care provider submit 20 applications under both the HEAL 6 and HEAL 7 21 proposals? And if so, will they be reviewed 22 separately or as part of one general 23 application? 24 MR. DELKER: Yes, you can submit 25 under both. They will be viewed separately. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 42 1 There will be different scoring criteria and 2 review criteria for each one that is reflected 3 in each RGA that are separate. 4 MR. ABEL: If I can just to add? 5 It should not be the same project submitted for 6 both phase 6 and phase 7, and one project 7 should not be dependent upon the other. If we 8 find one application, one project is desirable 9 but the other one, because it is a competitive 10 process, doesn't rank as highly and we choose 11 not to fund that project, if the first project 12 is dependent on the second or vice versa, we're 13 not going to be able to fund either, and that 14 creates the problem. So I just want everyone 15 to be aware of that. 16 MS. SILVERS: I have a question 17 about -- 18 MR. DELKER: Could you identify 19 yourself please for the record? 20 MS. SILVERS: Oh, sorry. Allison 21 Silvers from Village Care of New York. I have 22 a question about the footnote on page 5. You 23 go through the eligible activities, and number 24 7 seems to include operating costs to get to 25 closure. And later on there are restrictions ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 43 1 that they have to be, what I would call, 2 traditional capital costs. So how do you 3 request funding for operating costs for 4 closure? 5 MR. VOLK: I'll at least start 6 that one out. There are a variety of funding 7 sources for this RGA. One of those funding 8 sources is bonds issued by the Dormitory 9 Authority of the State of New York. Any funds 10 used in HEAL projects, including those under 11 phase 7, which are intended to be used from 12 those bond proceeds, we're going to have to 13 have real traditional capital projects. It's a 14 requirement of the State Finance Law as to the 15 types of things that the Dormitory Authority 16 can bond for for the State of New York, and it 17 has to be real capital. 18 The second question as to whether it 19 has to be uses which would permit the bonds to 20 be tax exempt or taxable, but even assuming we 21 get past those there's still the State Finance 22 Law restriction on the use of bond funds. 23 However, bond funds are only one of the 24 sources. So what the footnote relates to is 25 the fact that anything that we fund with bond ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 44 1 funds has got to be real traditional capital. 2 There are other sources which are not as 3 restrictive; although, they tend to be on the 4 non-strict operating. If you're going to pay 5 salaries of people to perform work today and 6 it's going to be the same work today, tomorrow 7 and next year and the year after that, then 8 it's probably not going to be the type of an 9 expenditure that is going to receive favorable 10 treatment under this proposal. However, things 11 which we would consider to be non-traditional 12 capital expenditures, start-up costs. It may 13 even be paying someone's salary for some period 14 of time while you're getting up and running. 15 Those types of things may be fundable in the 16 context of the overall project. 17 MR. BARETT: My name is Calvin 18 Barrett from Loretto in Syracuse. At risk of 19 simplifying our application, the concept, at 20 least at this point, has to do with converting 21 long-term beds into community based care, a 22 range of community-based care including -- and 23 it looks like from the RGA -- an allowable 24 expense under this project. That's the first 25 part of the question. The second part of the ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 45 1 question is we applied for additional outslots 2 in December which don't totally cover the need 3 from this process, this RGA. Are you going to 4 mitigate those decisions in any way, or are 5 those two decision processes linked in any way 6 or not? 7 MR. WARNER: For the December 8 group, that is going to be a stand-alone. That 9 is not going to be linked with this group. 10 MR. BARETT: So the two 11 applications are independent and you won't -- 12 MR. WARNER: Yes. 13 MR. BARETT: -- be talking to your 14 colleagues about -- 15 MR. WARNER: Oh, we talk to them 16 all the time. 17 MR. BARETT: Oh, well. 18 MR. WARNER: But they're going to 19 be independent, yeah. 20 MR. BARETT: As long as documented 21 need is there, we won't be competing against 22 ourselves. 23 MR. WARNER: No. 24 MS. KORMOS: Thank you. Liz 25 Kormos, Kormos and Company. Related to the ALP ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 46 1 question, if you did not apply for December 2 slots and now wish to include ALP in your 3 application as part of community-based 4 services, is there a possibility of gaining 5 additional ALP beds through this process. 6 MR. WARNER: Neil, I'm just going 7 to look at you. I believe so. I believe the 8 answer is yes. Right? 9 MR. BENJAMIN: That's what it 10 sounds like. 11 MR. WARNER: Yeah. I believe the 12 answer is yes. 13 MR. RICE: Paul Rice from Baptist 14 Health. I have an existing CONs which have not 15 been approved yet. Would that be incorporated 16 into this if we were to utilize that? 17 MR. DELKER: Well, HEAL funds 18 cannot be used to supplant existing funds. And 19 if your CON is already in, presumably you've 20 already demonstrated feasibility, so that would 21 not be eligible. 22 MR. MASSEY: Don Massey from 23 Amsterdam Memorial Hospital. My question is a 24 timing question, and Neil alluded to this a 25 little earlier with the HEAL 6 in terms of the ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 47 1 dovetailing with the submission, the award and 2 the CON component of it. And clearly we're 3 working on a project that would require CON 4 approval. So it's just really a question of a 5 sense of an April 3 deadline. I think July 1 6 was indicated in the grant application when 7 funds could earliest flow and, as I say, 8 dovetail the CON. 9 MR. BENJAMIN: Yeah, I wish I 10 taped my voice from this morning. Don, we're 11 absolutely committed to parallel tracking all 12 of the processes that are necessary to get you 13 to your goal especially if you're an awardee 14 under HEAL. If that means a CON -- we don't 15 have any intention to delay a process that 16 would otherwise hold up time and implementation 17 of an award or a project. So we've got our 18 databases aligned to parallel track CON 19 approvals, etcetera, so that everything is as 20 coordinated as possible. But HEAL, as 21 everybody knows, right, HEAL New York doesn't 22 eliminate the need -- otherwise eliminate the 23 need for CON approvals or whatever, so we 24 understand that's an issue, and we're going to 25 be dealing with it. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 48 1 SPEAKER: As a follow-up, would 2 the antitrust issue that Marti mentioned make 3 this more complicated as far as timing wise? 4 THE STENOGRAPHER: What's your 5 name please? 6 SPEAKER: I'm sorry, that was a 7 follow-up question to my last question. 8 MR. DELKER: The follow-up 9 question, for those of you who didn't hear it, 10 was with the antitrust questions involved might 11 make this approval more time-consuming than 12 otherwise. 13 MR. BIENSTOCK: I guess I would 14 hope not. We would do our best to work with 15 you to move that through as quickly as 16 possible. 17 MR. DELKER: There is one back 18 there. Oh sorry. 19 MS. RIZZO: Anna Rizzo, Loeb and 20 Troeper. Am I to understand that in this 21 application -- actually the combination of a 22 right-sizing initiative as well as applying for 23 the grant, for example, if a facility were to 24 right size their long-term care beds in 25 conversion or requests for a community-based ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 49 1 program, that would put in this plan? 2 MR. DELKER: Are you talking about 3 a simultaneous submission under the nursing 4 home right-sizing plan? 5 MS. RIZZO: Well, in the past what 6 happened was you had the right-sizing 7 initiative, then the awards were granted. Then 8 you had the HEAL 2 application where the 9 facilities actually sought the funding for 10 that. And you had mentioned here that you are 11 looking for applications that would right size 12 long-term care beds with the increase to 13 community services. Absent of having that 14 right-sizing initiative, is that something that 15 is considered in this application? 16 MR. DELKER: Yes. In fact, we 17 meant to use the right-sizing term in the more 18 general sense. They're not linked to the 19 nursing home right-sizing program, which is a 20 legislative, you know, time solicitation. So 21 we mean making the system right, appropriate 22 for community needs. And if that involved 23 converting inpatient long-term care beds to 24 community-based services, that would be an 25 activity eligible for consideration. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 50 1 MS. RIZZO: Thank you. 2 MR. RODAT: Hi. John Rodat, 3 Albany County. Slides 7 and 9 refer to 4 eligible costs, the first relating to 5 restructuring and the 7 relating to closing. 6 To what extent are those lists of eligible 7 costs complete or exclusive? And the reason I 8 ask the question actually goes back to slide 9 number 6, commission priorities phase 7 and the 10 last bullet point which talks about innovation 11 in particular in community-based long term care 12 services. I'm trying to understand the link 13 between that sort of global language about 14 innovation and community-based services, and 15 then we get into a discussion literally in the 16 next slide and then in a subsequent slide which 17 is very concrete very facility-oriented, very 18 capital-oriented and seems limited -- is what 19 we can propose using the funds for, or use the 20 funds for, limited to these eligible costs? 21 And if not, how expansive can we be? 22 MR. DELKER: I think we always 23 hedge with include but not limited to. You 24 know, no RGA can be definitive, nor would we 25 want it to be. I mean, as we said, if you come ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 51 1 up with something that is resourceful and 2 compatible with the goals of the HEAL program, 3 you know, we'll consider it. Does anybody else 4 want to add to that? 5 MR. CLYNE: I think some of the 6 more resourceful things that we're thinking 7 about, though, is how do you partner and 8 organize services. A lot of the innovation 9 that we've seen in dealing with Berger 10 implementation hasn't been in what the costs 11 are eligible. I mean facilities that are 12 merging or downsizing have very similar costs. 13 I mean they vary by the technical facility, 14 whether it's capital, or pension, or severance, 15 or something else, but it's how are they going 16 to come together with other partners in your 17 area to align your services to make the most 18 sense? That's where we see a lot more of and 19 think there is a lot more room for innovation 20 in who you partner with and how you actually do 21 that. 22 MS. SILVER: I'm Licy Silver from 23 the Home Care facility here in Albany. And I 24 wanted to confirm if you're a CHHA you would be 25 able to apply for this if you have a documented ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 52 1 need but it's not necessarily the result of a 2 Berger Commission closing? And also expansion 3 costs associated -- of course, not facility 4 based, and this would go for hospice also, 5 could you use some of that money for training, 6 recruiting staff, perhaps automobiles if you're 7 expanding into an area that needs additional 8 services? 9 MR. DELKER: Well, to answer the 10 first part of your question, yes, as a CHHA you 11 can apply to serve a need that is not 12 necessarily a result of a Berger closing or 13 downsizing elsewhere. For eligible costs, do 14 we pay for cars? 15 MS. SILVER: No. I'm just saying 16 because it's not necessarily facility-based 17 there may be other costs that would be unique 18 to community services. 19 MR. DELKER: Right. 20 MS. SILVER: That wouldn't just 21 be -- 22 MR. CLYNE: Again, remember, we 23 are trying to -- we are restructuring, so the 24 other question is where is the savings that is 25 part of that? Where is going to be the ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 53 1 demonstrated savings, and where is your impact 2 going to be on what institutional-based 3 provider? So you're going to come in and say 4 we're going to expand CHHA services, but where 5 is -- why isn't that just additive to the cost 6 of the system? Where is the savings? Is there 7 going to be a concomitant take-down of nursing 8 home beds somewhere else? And how are you 9 going to show that? That's what you have to -- 10 that's what you have to be able to show. This 11 is not just adding more services on to get 12 filled up so that there are more services paid 13 for. 14 MS. SILVER: Unless you're 15 absorbing patients that were in a nursing home. 16 MR. CLYNE: Right, but, again, as 17 a stand-alone CHHA, you're going to have to 18 show us how that's going to happen, that 19 nursing homes in the area don't agree with you 20 and they just take more physical As and Bs or 21 other patients. It's not really achieving the 22 goal that we set out. 23 MR. DELKER: Who is next? 24 MR. BOESKIN: My name is Brian 25 Boeskin from the Foundation for Quality Care. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 54 1 My question is if an entity has received HEAL 2 award under a previous phase is there anything 3 that would prohibit them from applying again to 4 this phase? 5 MR. ABEL: There wouldn't be 6 anything to prohibit that entity from applying 7 under this phase. However, this should clearly 8 be a new project, certainly not included in the 9 scope of an application that received an award, 10 even if that award was not fully funding your 11 project as described as detailed in the earlier 12 applications. 13 MR. ALOTTA: Tony Alotta from 14 Baptist Health Nursing and Rehabilitation 15 Center. We've heard that there is a new 16 right-sizing grant coming out, and we're 17 wondering what the relationship is with the 18 current HEAL grant. 19 MR. BENJAMIN: Are you referring 20 to the beds, right-sizing of -- 21 MR. ALOTTA: The nursing home 22 right-sizing initiative. 23 MR. BENJAMIN: Or might you be 24 referring to a part of the HEAL which would be 25 separate? ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 55 1 MS. KORMOS: Not sure. Not sure. 2 We just heard that there is another grant 3 coming out relating to nursing home 4 right-sizing. 5 MR. BENJAMIN: Well, yeah, there 6 is a -- Mark Kissinger was here. He had to 7 leave, but our understanding is that soon there 8 will be another RGA hitting the streets for $30 9 million devoted exclusively to long term care. 10 And I don't believe that one is going to be, 11 you know, competitive in the sense that this 12 one is. It will be a similar procurement to 13 what we did under HEAL 4 for Berger. I don't 14 have many more details, but I'm understanding 15 that that will be released fairly soon. 16 MR. WARNER: And you're right, and 17 I think it's a comparative rather than a 18 competitive process. I can't give you any more 19 details than that. 20 MR. CLYNE: There will be more 21 information when that RFP comes out. It was 22 done by the legislature that segregated a 23 portion of the money of HEAL to go towards 24 nursing home right-sizing. 25 MS. KORMOS: Is that Berger only? ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 56 1 MR. CLYNE: No. It's for 2 right-sizing nursing homes, but all of the 3 details will be flushed out more when the RGA 4 comes out and goes to a similar process as 5 this. 6 MS. KORMOS: This is for nursing 7 homes, and that's for nursing homes. 8 MR. CLYNE: Well, nursing homes 9 could apply here. We didn't want to exclude 10 them, and long term care is part of the Berger 11 restructuring, but this is also the opportunity 12 for nursing homes to partner with other 13 community-based providers to access some funds 14 in order to restructure. 15 MR. SAGAN: John Sagan, St. Mary's 16 Hospital in Amsterdam. I think I understand 17 this, but just to be clear regarding ongoing 18 operating costs, would ongoing operation and 19 maintenance of plant costs be eligible for 20 funding up to a point where a facility becomes 21 decommissioned? 22 MR. ABEL: On a closure? 23 MR. SAGAN: Yes. 24 MR. ABEL: To the extent -- we 25 recognize that costs will often not wind down ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 57 1 as quickly as revenues fall off. And so to the 2 extent that you don't have that match, we have 3 considered that an eligible expense under the 4 HEAL 4. I expect we'll be doing the same here. 5 MR. SAGAN: Thank you. 6 MR. DELKER: Bill. 7 MR. GORMLEY: Excuse me, lost my 8 voice for a second here. Bill Gormley, private 9 consulting. Larry Volk mentioned a variety of 10 funding sources and said something about 11 taxable. Does that go to the issue of 12 sponsorship? I assume the funds come from 13 DASNY. They can't be for for-profit 14 institutions, but there would be other funding 15 sources for for-profit institutions? 16 MR. VOLK: You are correct that 17 funds from DASNY would be available only for 18 non-profits. I don't recall there being 19 anything in the RGA that limits it to 20 non-for-profits. 21 MR. GORMLEY: Because there are a 22 variety of funding sources. 23 MR. VOLK: That's correct. 24 MR. GORMLEY: Thank you. 25 MR. LUCAS: Lucas Meyers, Visiting ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 58 1 Nurse Service of Schenectady. This is a 2 follow-up to what Mr. Volk covered. As far as 3 the State appropriations and bond proceeds, are 4 you looking for an applicant to specify in the 5 proposal where they're looking for that money 6 in terms of a break-up, or that would just be 7 determined by the needs? 8 MR. VOLK: We are not specifically 9 asking that you make that determination; 10 however, in your budget there is a column which 11 calls for you to indicate whether the specific 12 costs that you are identifying would typically 13 be considered capital or non-capital for 14 accounting purposes. 15 MR. LUCAS: As a follow-up to 16 that, can you release what the amount of 17 funding for each is, the break-up between bond 18 and state appropriation? 19 MR. VOLK: The overall for the 20 entire HEAL program is 75, 25. There is not a 21 specific, at least I don't believe there's a 22 specific allocation within this particular RGA. 23 MR. DELKER: Greg. 24 MR. BURKE: Greg Burke, Montefiore 25 Medical Center. You all have spoken about ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 59 1 partnerships and essentially between two 2 existing providers, by which I read two 3 existing Article 28s, deciding that they want 4 to collaborate regionalized services, as an 5 example, you know, closed beds in service A in 6 one hospital and consolidate in the other -- 7 duplication and so on. Is that specifically 8 designed to give grants to the union of two 9 existing Article 28s that are different from 10 each other or in a multi-hospital system if 11 there is a regionalization effort to 12 consolidate services would that be eligible? 13 MR. BENJAMIN: Absolutely. 14 MR. DELKER: And I would point out 15 it isn't just Article 28s. I mean certainly 16 nursing homes, Article 36's will collaborate 17 with others or with community-based 18 organizations or with hospitals. So, you know, 19 that's just an example of the Article 28s, but 20 it's certainly not restricted to them. 21 MR. DOWLING: Buz Dowling, 22 Brooklyn Queens Health Care. I'm trying to 23 make sure I understand in my mind the 24 difference between the technical and the 25 financial applications when we're considering ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 60 1 projects that are going to have, as their core 2 in many cases, significant financial impacts, 3 and you could see detailed financial modeling 4 as part of the technical application, while not 5 part of the budget to get there. I just want 6 some, you know -- if any of the staff have a 7 comment on how far or in what context the 8 financial analysis and deeper longs of the 9 technical part of the application versus the 10 budget analysis. 11 MR. DELKER: The technical part of 12 the application should not mention an amount of 13 money being requested, so the reviewers should 14 not be able to determine that. The technical 15 reviewers will be separate from the financial 16 reviewers. I think, was it Charlie or Larry 17 this morning who talked about some of the 18 narrative that might go with the financial? 19 MR. ABEL: Well, my understanding 20 is that the key reason why the financial and 21 the technical application need to be separated 22 is because you want to be able to give a clear 23 rating as to the merits of the project without 24 respect to the costs. You want to see the 25 benefits. And on the financial side, as we've ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 61 1 done reviews in the past, there is not really a 2 problem in us reaching out and understanding 3 the project a little bit better. Sometimes 4 that really helps our review in understanding 5 how much it costs, and especially when we talk 6 about a return on your investment. We've got 7 to see what the benefits are in order to assess 8 whether or not we're truly getting adequate 9 bang for the bucks here. So the financial 10 people tend to have to have a good 11 understanding of the overall project including 12 the cost and what is being requested. And the 13 technical folks focus really basically on the 14 benefits or the merits of the project itself. 15 MR. DELKER: Any other questions? 16 Okay, is there anyone who has not asked a 17 question, a first question that still wants to? 18 All right, anyone who has already asked and has 19 a second question? 20 MS. RIZZO: Anna Rizzo, Loeb and 21 Troeper. Is capital reimbursement available 22 for the grant funds for not-for-profit 23 organizations similar to HEAL 2 for the 24 depreciation? 25 MR. ABEL: Absolutely. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 62 1 MR. DELKER: That's all the 2 questions. 3 MR. BENJAMIN: Chris, seriously, 4 we just had this discussion internally before 5 we came down here. Mary Anne Anglin is 6 becoming an expert on it, so you can call her. 7 MR. DELKER: She's over there. 8 MR. BENJAMIN: All right, sorry. 9 Don't call anybody. 10 MS. KORMOS: Liz Kormos of CBN. 11 You're asking for project budget for capital -- 12 build a building, renovate a building, tear a 13 building down. At what stage do you expect the 14 plans for that in the budget to be a full 15 architectural concept? I don't see anything in 16 the grant request that actually asks to see a 17 floor plan. 18 MR. ABEL: We need schematics. 19 The more detailed review of the application 20 would be submitted as part of the CON 21 submission which would -- you know, it might 22 run concurrent with the review here, but 23 typically it would be submitted after the 24 application's submitted. 25 MS. KORMOS: So related to that ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 63 1 should the schematics be put into this 2 application or not? 3 MR. ABEL: Oh yes. 4 MS. KORMOS: Oh okay. 5 MR. DELKER: There's another 6 question back there. 7 MR. NICHOLSON: Mark Nicholson. 8 Under what circumstances can debt refinancing 9 be utilized for capital other than, you know, 10 project closure or facility closure? 11 MR. ABEL: Well, I can think of a 12 lot of reasons or situations, but I guess what 13 is challenged -- I'm not sure what your 14 underlying thought is, but you've got to wrap 15 this up into a project that meets the objective 16 of the RGA. 17 MR. BENJAMIN: Charlie, you should 18 maybe talk a little bit more about that. I 19 mean we're not -- we didn't at least 20 contemplate anything that would simply use this 21 procurement of HEAL as a way to just pay down 22 debt or pay off debt or contribute towards a 23 refinancing. As Charlie said, it has to be 24 part of an overall project that delivers on the 25 goals and objectives that we talked about ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 64 1 earlier. As Larry mentioned, we do have some 2 flexibility for that and would be an allowable 3 use, but it's a completely different situation 4 from a HEAL 4 and applying directly to Berger. 5 So, you know, we would ask that you be very 6 specific about how a "refi" or partial debt 7 pay-down fits into those goals and objectives. 8 MR. HOSFORD: Matt Hosford, Wilson 9 Elser law firm. Just back to the ALP question. 10 Am I correct in assuming and understanding that 11 the funding from this HEAL 7 cannot be used for 12 the applications that were submitted in 13 December for the construction costs or any 14 expansion there? 15 MR. BENJAMIN: We're actively 16 trying to get an answer to that as we're here. 17 So, you know, Chris, if you have other 18 questions. I'm trying to get an answer before 19 we leave, so if you could just bear with us a 20 little bit. 21 MR. GIULIANELLI: Victor 22 Giulianelli, St. Mary's Hospital at Amsterdam. 23 Will there be any advantage in getting 24 applications in early, or will they all be 25 reviewed after April 3? ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 65 1 MR. DELKER: No, we cannot look at 2 the applications until after the deadline, and 3 they have to be opened in a secured environment 4 and so on. So there will be no advantage of 5 getting them in early. We urge you to be 6 thoughtful and thorough in preparing your 7 applications, and I think you have enough time 8 to do that, so don't rush them. 9 MR. MASSEY: This is Don Massey 10 from Amsterdam Memorial. In the application, 11 the RGA under "closure costs" there is a 12 category identified as appropriate employee 13 related expenses during the closure process. 14 Can someone further define what that means? 15 MR. ABEL: Well, some examples 16 would be severance and out-placement services, 17 retraining, perhaps, in the context of an 18 application that might have those staff going 19 to be reused in a reconfigured entity. Some 20 examples. 21 MR. BENJAMIN: Chris. 22 MR. HOSFORD: I already asked one 23 question. Can I ask another one? 24 MR. BENJAMIN: The gentleman from 25 Wilson Elser, could you repeat your question? ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 66 1 I just want to make sure that there is some 2 late-breaking news. 3 MR. HOSFORD: Just a question on 4 the ALP application we put in December and 5 whether funds from HEAL 7 can be used for 6 construction or expansion related to those 7 applications that are already in. 8 MR. BENJAMIN: And that you have 9 not yet received word on. I believe that it 10 would be -- obviously, it would be an allowable 11 use, obviously the condition upon getting -- 12 you know, winning an award under that separate 13 procurement. Does that make sense? Okay, and 14 we did just find out. There are -- just so 15 everybody knows, there is no intention right 16 now for any additional direct solicitations for 17 more ALP beds. However, in the right-sizing 18 legislation from a few years ago where we still 19 have beds available, we're going to be 20 resoliciting under that, and that will be the 21 only way to get ALP slots by proposing the 22 conversion of nursing home beds. 23 MR. DELKER: Question. 24 MS. SILVERS: Hi. Allison 25 Silvers, Village Care. To keep beating this ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 67 1 dead horse, so if you applied in December for 2 ALP beds through right-sizing, you're eligible 3 to apply for the capital funding to make that 4 happen. In this application can you hedge your 5 bets and also say we will right size -- in 6 other words, have this same intention and 7 either you get it in December -- the ALP beds 8 in December or you get them through the HEAL 9 request here? 10 MR. BENJAMIN: Can I get the 11 question that was in there? I'm trying to 12 figure out what exactly you're asking. No, 13 seriously. 14 MS. SILVERS: No, I know it's 15 difficult, because we don't know the outcome of 16 December, so the point is we want to right size 17 nursing home beds for ALP beds. Can that be 18 done through the HEAL application? 19 MR. BENJAMIN: We think the answer 20 is no, but we're going to have to clarify that. 21 Chris will be talking later, Allison, about 22 questions you might want to submit 23 electronically and give us a little cover on 24 that one, because we really need to take a look 25 at it. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 68 1 MR. DELKER: Any more questions? 2 This is your last chance. There are some more 3 over here. 4 MS. KORMOS: Just to beat the ALP 5 poor animal. It was just recently said that if 6 you got -- didn't apply for December, okay, you 7 want to get some ALP beds as part of 8 right-sizing conversion, you said those would 9 come out of the pool from previous, the ones 10 that never got allocated? As I understand it, 11 only those beds were on Long Island? Are those 12 regionally allocated, or are you putting them 13 into a statewide pool? In other words, is 14 there a pool of ALP beds for this process, for 15 the HEAL process outside of the December 16 process? 17 MR. BENJAMIN: No, there is none. 18 That's clear. There are no ALP beds available 19 under this HEAL solicitation, under HEAL, under 20 HEAL 7, none. You cannot get approval for ALP 21 beds under this you solicitation; however, if 22 you're approved for ALP beds under the December 23 solicitation, okay, you could fund -- an 24 eligible use of these HEAL dollars would be to 25 fund part of the cost of that project. ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 69 1 MS. KORMOS: In other words, if we 2 did not apply previously we cannot get ALP now. 3 MR. BENJAMIN: Correct, correct, 4 correct. We're going to clarify that, but we 5 believe that to be the case. 6 MR. ABEL: Except in the phase 3 7 nursing home right-sizing initiative, which 8 doesn't have money associated with it, but that 9 is another initiative phase 3, the two 10 iterations of this, a total of 2,500 nursing 11 home beds may be permanently or temporarily 12 decertified. And then as part of a permanent 13 decertification you can convert -- suggest that 14 they be converted to something else, some less 15 restrictive alternative -- a community service, 16 or an ALP, or a long term home health care, 17 things like that. 18 MS. KORMOS: We can't do it 19 through this process, but we can do it through 20 something that is coming out? 21 MR. ABEL: When phase 3 of the 22 right-sizing initiative is released, and it's 23 expected any week now, that will give you an 24 opportunity to voluntarily propose a conversion 25 of RHCF beds to something else. Again, there ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 70 1 is no money associated with that, but that 2 provides you with the ability to make that 3 conversion possible. 4 MS. KORMOS: So we would basically 5 apply for both, as she was saying. Got it. 6 MR. TWARDY: Jim Twardy from the 7 Visiting Nurse Service in Schenectady. So the 8 communities that necessarily did not go after 9 the ALP beds due to funding, now that this has 10 come out, any applications that did not go in 11 due to that capital cost constraint, this is 12 not -- the ALP bed process is not part of this. 13 So you're grandfathering in the December people 14 but not any further community need that 15 community agencies or communities that did not 16 pursue that due to that capital constraint 17 prior to December? 18 MR. CLYNE: That's what we 19 believe. That's what we believe it is. If 20 there is no separate procurement of ALP beds 21 through this process but there is funding of 22 beds that have been appropriately put out into 23 the field. 24 MR. TWARDY: Then a follow-up to 25 that. Did we know collectively, I guess, that ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 71 1 this funding was for those ALP beds that were 2 being proposed in December? Because I don't 3 know that that -- 4 MR. CLYNE: I don't know. 5 MR. TWARDY: -- was a known item. 6 Okay. 7 MR. CLYNE: I don't know. 8 MR. BURKE: I tend to look at the 9 world in sort of pre-Berger, Berger and 10 post-Berger timeframes. 11 MR. DELKER: So do we. 12 MR. BURKE: One of the HEAL's was 13 devoted to the Berger Commission named 14 institutions. This one is for those 15 institutions that want to do mergers, 16 consolidations following the Berger. If there 17 were institutions that took Berger-like actions 18 prior to the issuance of the Berger Report and 19 they remained troubled institutions in which 20 capital investments are required to maintain 21 their stability or to keep them in place, 22 having had their need already reinforced, is 23 that something which would be appropriate for 24 this, or is the pre-Berger game closed? 25 MR. DELKER: Well, I think you ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 72 1 would have to show an identifiable distinctive 2 project in response to this RGA that was 3 compatible with it. I think in looking back 4 to past costs -- 5 MR. BURKE: Going forward. 6 MR. DELKER: Well, I think it 7 would certainly have to be a new initiative, so 8 to speak, that was compatible with the goals in 9 this RGA. 10 MR. BIENSTOCK: Agreed. 11 MR. DELKER: Anyone else? Okay, 12 thank you very much. As we said, we will be 13 posting a transcript, any corrections or 14 clarifications. Perhaps you'll have more to 15 say about ALPs when we do that. And in the 16 meantime, if anything occurs to you, you can 17 still submit questions until the dates shown on 18 the front of the RGA on to the website. We 19 will answer those. Thank you. 20 21 22 23 24 25 ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109 C E R T I F I C A T E I, Kyle Alexy, a Shorthand Reporter and Notary Public in and for the State of New York, do hereby certify that the foregoing record taken by me is a true and accurate transcript of the same, to the best of my ability and belief. ___________________ Kyle Alexy DATE: February 9, 2008 ALEXY ASSOCIATES COURT REPORTING SERVICES, LLC (518) 798-6109