Moon STATE OF MARYLAND MARYLAND HEALTH CARE COMMISSION 4160 PATTERSON AVENUE BALTIMORE, MARYLAND 21215 TELEPHONE 410-764-3460 FAX: 410-358-1235 MEMORANDUM TO: Commissioners, Maryland Health Care Commission Holy Cross Hospital of Silver Spring Clarksburg Community Hospital Montgomery County Department of Health and Human Services Shady Grove Adventist Hospital Shady Grove Adventist Emergency Center at Germantown FROM: Marilyn Moon, Chair/Reviewer A RE: Recommended Decision in the Matter of Proposed New Hospitals in Montgomery County Holy Cross Hospital of Silver Spring, Docket No. and Clarksburg Community Hospital, Docket No. DATE: December 17, 2010 Enclosed is my Recommended Decision in the review of two new general hospitals proposed for development in Montgomery County. Having considered applications, comments on the applications, the opinion of Health Services Cost Review Commission stafi the record in this review, as well as testimony and cross- examination at an evidentiary hearing, I recommend that the application of Holy Cross Hospital of Silver Spring for a Certificate of Need to establish a 93-bed general acute care hospital in Germantown be APPROVED, with conditions. also recommend, based on the same considerations and the record in this review, that the application of Clarksburg Community Hospital for a Certificate of Need to establish an 86-bed general acute care hospital in Clarksburg be DENIED. I recommend that Holy Cross Hospital of Silver Spring be awarded a Certificate of Need because I have concluded that its proposal for a new general acute care hospital in Germantown will supply upper Montgomery County with hospital bed capacity that TDD FOR DISABLED TOLL FREE MARYLAND RELAY SERVICE 1 877 245 1762 1-800-735-2258 Rex W. Cowdry Exscunve DIRECTOR Commissioners. Applicants, and Interested Parties December 17, 2010 Page 2 of4 the current and growing population ofthis region needs at a location that improves access to hospital services lor the greatest number of people, at a reasonable cost. From a strategic perspective, it is a project that, as a "satellite" hospital of the existing Holy Cross Hospital campus in Silver Spring, has the advantage of creating a more direct opportunity for shifting hospital bed and service capacity from an area of the County that will experience relatively less demand for hospital service in coming years to an area of the County that will experience higher rates of growth in demand. It is a project that will make it possible lor the existing Holy Cross Hospital in Silver Spring to more readily modemi/e, by relieving demand pressure at this existing hospital campus. lt is also a timely project whose sponsor is well positioned, financially, to undertake its implementation. lloly Cross Hospital of Silver Spring has a strong record in providing quality care, access to care for the indigent and broader community benefits, and management of its hospital operations that have produced a superior cost position and superior performance indicators relative to its While the Clarksburg hospital proposal would also improve access for the upcounty area and provide beds for the future, it is located in a less densely populated area of the County, Its affiliate, Shady Grove Adventist Hospital in Rockville, which is currently the hospital with the highest share of the hospital market in the upcounty area, has expanded and modernized in recent years and has a campus that can be readily expanded, if necessary, to meet future capacity needs. have concluded that Adventist HealthCare's priority over the next few years must be assuring the long-term viability of Washington Adventist Hospital. This task, critical to restoring Adventist HealthCare to robust financial health, is large enough that it should not be put at risk by simultaneously attempting to establish a new hospital, SUMMARY OF THE RECOMMENDED DECISION Applicants and Interested Parties Clarksburg Community Hospital, Inc. is a not-for-profit corporation formed by Adventist HealthCare, lnc. AHC operates three general hospitals, two of which are located in Maryland, both in Montgomery County. Holy Cross Hospital of Silver Spring is a general acute care hospital located in Silver Spring. It is the only Maryland hospital member of Trinity Health ("Trinity"), a Roman Catholic hospital system that operates 32 hospitals in eight states. The interested parties in this review are the applicants, the Montgomery County Department of Health and Human Services, Shady Grove Adventist Hospital, and the Shady Grove Adventist Emergency Center at Germantown. Commissioners, Applicants, and Interested Parties December 17, 2010 Page 3 of 4 Brief description of the proposed proiects Clarksburg Community Hospital, lnc. proposes the establishment ofa new 86- bed general acute care hospital in Montgomery County, on a site located south of Route 121, Clarksburg Road, and just west ofthe intersection of Route 121 and Interstate 270. The hospital, at approximately 187,000 square feet, would contain 60 general medical/surgical beds, a 10-bed intensive care unit, 16 obstetric beds, four operating rooms, and an emergency department with 17 treatment spaces. CCH estimated that the project would cost $177,081,000 with debt accounting for approximately $136 million of this total. Holy Cross Hospital of Silver Spring proposes the establishment of a new 93- bed general acute care hospital in Montgomery County, on the Germantown campus of Montgomery College. The hospital, at approximately 238,000 square feet, would contain 60 general medical/surgical beds. a 15-bed intensive care unit, 12 obstetric beds, six acute beds, five operating rooms, and an emergency department with 12 treatment spaces. Holy Cross Hospital-Germantown estimated that the project would cost $20l,983,857, with debt accounting for approximately S139 million ofthis total. Review Criteria, Policies and Standards have found that the proposal for a new acute general hospital in Germantown is consistent with the applicable criteria and State Health Plan standards that are applicable in this comparative review and that it represents an approach to improving access to hospital services for upper Montgomery County and providing adequate bed capacity for the future that is both reasonable in its cost and located to the area of the County that will experience the highest levels of population growth. lt creates an opportunity for shifting hospital bed and service capacity from an area of the County that will experience relatively less demand for hospital service in coming years to an area ofthe County that will experience a higher rate of growth in demand. lt is also a project that will make it possible for to more readily modernize and reconngure its existing Silver Spring campus, by relieving demand pressure at that location. Holy Cross Hospital is has the resources available to implement and sustain the new hospital project. The Clarksburg hospital proposal would also improve access for upper Montgomery County. However, it is a riskier project, given the lower population density that exists in the Clarksburg area. also note the weaker financial position of its sponsor, when compared to the proposal for Germantown. The Clarksburg proposal does not meet a need on the part of SGAH to modemize or reduce demand for services at its campus that cannot be fulfilled through expansion and renovation. lt is not a timely project, in that AHC needs to focus its limited resources on improving the long-term viability of Washington Adventist Hospital. has made a stronger ease than CCH with respect to bed need, the cost and effectiveness of project alternatives, and viability ofthe project. Additionally, it has Commissioners, Applicants, and lnterested Parties December 17. 2010 Page 4 of 4 demonstrated that, as a provider of hospital services for Montgomery County, it has a track record that is equal to or better than that of the AHC hospitals with respect to quality of care, community benefits, and efhcicnt and effective management, as shown by its cost and other performance indicators. AND FURTHER PROCEEDINGS This matter will bc placed on the agenda for a meeting ofthe Maryland Health Care Commission on January 20, 2011, beginning at Noon at 4160 Patterson Avenue. The Commission will issue a final decision based onthe record ofthe proceeding, As provided under COMAR l0,24.0l.09B, the applicants and interested parties may submit written exceptions to the enclosed Recommended Decision and Order. Exceptions should be filed no later than Wednesday, January 6, 201 1. Written exceptions and argument must identify specifically those findings or conclusions to which exception is taken, citing the portions of record on which each exception is based. Applicants and interested parties must submit 40 copies of their written exceptions and responses to exceptions. Responses to exceptions should be tiled no later than Monday, January 12, 2011. Oral argument during the exceptions hearing before the Commission is limited to 15 minutes per applicant and 10 minutes per interested party, unless extended by the Vice Chair or the Vice-Chair's designated presiding officer. 1 will not be chairing the meeting when this Recommended Decision is considered by the Commission. The schedule for the submission of exceptions and responses is as follows: Submission of exceptions January 6, 201 1 No later than 4:00 pm Submission of responses January 12, 201 1 No later than 4:00 pm Exceptions hearing January 20, 2011 12:00 Noon