VIRGINIA DEPARTMENT OF HEALTH Office of Licensure and ...

[Pages:25]VIRGINIA DEPARTMENT OF HEALTH

Office of Licensure and Certification

Division of Certificate of Public Need

Staff Analysis

September 20, 2021

COPN Request No. VA-8571 Virginia Commonwealth University Health System Authority Richmond, Virginia Add One CT Scanner and One MRI Scanner Both Dedicated to Pediatric Care

Applicant

The Virginia Commonwealth University Health Systems Authority (VCUHS) is a public body corporate and political subdivision of the Commonwealth of Virginia governed by the Virginia Commonwealth University Health System Authority Act of 1996--Title 23, Chapter 6.2, 23-50.16: of the Code of Virginia. VCUHS operates VCU Medical Center, which is located in the City of Richmond in Planning District (PD) 15 within Health Planning Region (HPR) IV.

Background

Computed Tomography (CT) Scanners and Utilization in PD 15 According to Division of Certificate of Public Need (DCOPN) records, to date, there are 57 authorized CT scanners in PD 15, all of which are fixed-site scanners (Table 1). More specifically, 32 of the authorized scanners are located within acute care hospitals, while 25 are located within freestanding facilities. According to 2019 Virginia Health Information (VHI) data, the most recent year for which such data is available, all then-existing CT scanners in PD 15 operated at a collective utilization of 113.5% based on the State Medical Facilities Plan (SMFP) expansion threshold of 7,400 CT procedures per CT scanner per year. DCOPN observes that utilization of hospital-based CT scanners varies significantly from that of CT scanners at freestanding facilities. Specifically, hospital-based CT scanners in PD 15 operated at a collective utilization of 145.3% in 2019, while CT scanners located at freestanding facilities operated at a collective utilization of only 44.8% for the same period. Since 2019, 16 additional CT scanners have received COPN authorization in PD 15, of which four have actually been placed into service.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 2 of 25

Table 1. 2019 COPN Authorized CT Scanners in PD 15

Hospital Based Facility

Units

Bon Secours Memorial Regional Medical Center

3

Bon Secours Richmond Community Hospital

1

Bon Secours St. Francis Medical Center

2

Bon Secours St. Mary's Hospital

4

Chippenham Hospital

3

Henrico Doctors' Hospital--Parham

1

Henrico Doctors' Hospital--Retreat

1

Henrico Doctors' Hospital--Forest

31

Johnston-Willis Hospital

42

VCU Medical Center

93

West Creek Medical Center

14

Hospital Based TOTAL and Average

325

Scans 36,845 4,708 23,183 44,380 41,673 10,315 2,839 33,084 28,927 75,153

--

301,105

Scan/Unit 12,281 4,708 11,592 11,095 13,891 10,315 2,839 8,271 14,464 10,736 --

10,754

Utilization 166.0% 63.6% 156.6% 149.9% 187.7% 139.4% 38.4% 111.8% 195.5% 145.1% --

145.3%

Freestanding Facility Bon Secours Chester Emergency and Imaging Center Bon Secours Imaging Center Innsbrook Bon Secours Short Pump Emergency Imaging Center Bon Secours Westchester Imaging Center Buford Road Imaging Chesterfield Imaging Chester Imaging Center Hanover Emergency Center Independence Park Imaging Virginia Cardiovascular Specialists MEDARVA Healthcare NOW Neuroscience, Orthopaedic and Wellness Center Richmond Ear, Nose & Throat Richmond Radiation Oncology Center Swift Creek ER

16

--

1

1,265

17

--

1

4,800

1

2,357

1

4,851

18

--

19

--

1

2,612

1

3,284

110

--

1

54

111

--

112

--

113

--

-1,265

-4,800 2,357 4,851

--2,612 3,284 -54 ----

-17.1%

-64.9% 31.9% 65.6%

--35.3% 44.4% -0.7% ----

1 VHI data appears to be in error. 2 COPN No. VA-04657, issued in May 2019, authorized the addition of a fourth CT scanner. 3 COPN Nos. VA-04464, issued February 2015 and VA-04494, issued November 2019, authorized the additions of

an eighth and ninth CT scanner, respectively. 4 COPN No. VA-04179, issued November 2008, authorized the establishment of West Creek Medical Center, which

will include one CT scanner. 5 While not included in the overall calculations for utilization, this number reflects all changes to the PD 15

inventory that are not reflected in 2019 VHI data. 6 COPN No. VA-04656, issued May 2019, authorized the establishment of a specialized center for CT services with

one CT scanner. 7 Information for this facility not found in 2019 VHI data. 8 COPN No. VA-04655, issued May 2019, authorized the establishment of Chester imaging Center with one CT

scanner. 9 Information for this facility not found in 2019 VHI data. 10 Information for this facility not found in 2019 VHI data. 11 Information for this facility not found in 2019 VHI data. 12 Information for this facility not found in 2019 VHI data. 13 Information for this facility not found in 2019 VHI data.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 3 of 25

VCU Health Emergency Center at New Kent VCU Massey Cancer Center at Hanover Medical Park VCU Medical Center Adult Outpatient Pavilion VCU Medical Center at Stony Point Radiology Virginia Cancer Institute--Harbourside Virginia Cancer Institute--Reynolds Crossing Virginia Ear Nose & Throat--Chesterfield Virginia Ear Nose & Throat--Henrico Virginia Urology Freestanding TOTAL and Average

Fixed CT Unit Grand TOTAL and Average

Source: VHI (2019) and DCOPN records.

114

--

115

--

116

--

1 6,423

1

2,727

1

6,560

1

533

1

617

217

7,047

2518 43,130

5719 344,235

---6,423 2,727 6,560 533 617 7,047 3,318

8,396

---86.8% 36.9% 88.6% 7.2% 8.3% 95.2% 44.8%

113.5%

With respect to the PD 15 VCUHS CT inventory, in 2019, VCUHS' then-authorized CT scanners operated at a collective utilization of 122.6%, far exceeding the SMFP threshold for expansion (Table 2).

Table 2. 2019 Virginia Commonwealth University Health System Authority CT Utilization

Facility

Units Scans Scans/Unit Utilization

VCU Medical Center

920 75,153

10,736

145.1%

NOW Neuroscience, Orthopaedic and Wellness Center 1

54

54

0.7%

VCU Health Emergency Center at New Kent

121

--

--

--

VCU Massey Cancer Center at Hanover Medical Park 122

--

--

--

VCU Medical Center Adult Outpatient Pavilion

123

--

--

--

VCU Medical Center at Stony Point Radiology

1

6,423

6,423

86.8%

VCUHS CT TOTAL/Average

1424 81,630

9,070

122.6%

Source: VHI (2019) and DCOPN Records

Magnetic Resonance Imaging (MRI) Scanners and Utilization in PD 15 According to DCOPN records, to date, there are 38 fixed-site MRI scanners in PD 15 (Table 3). More specifically, 24 of the authorized fixed-site scanners are located within acute care hospitals,

14 COPN No. VA-04598, issued April 2018, authorized the establishment of a specialized center for CT services. 15 COPN No. VA-04546 authorized the introduction of CT services, with one CT scanner, at VCU Massey Cancer

Center. 16 COPN No. VA-04717, issued August 2020, authorized the addition of one CT scanner. 17 COPN No. VA-04672, issued September 2019, authorized the addition of a second CT scanner. 18 While not included in the overall calculations for utilization, this number reflects all additions to the PD 15

inventory not otherwise reflected in 2019 VHI data. 19 While not included in the overall calculations for utilization, this number reflects all additions to the PD 15

inventory not otherwise reflected in 2019 VHI data. 20 COPN Nos. VA-04464, issued February 2015 and VA-04494, issued November 2019, authorized the additions of

an eighth and ninth CT scanner, respectively. 21 COPN No. VA-04598, issued April 2018, authorized the establishment of a specialized center for CT services. 22 COPN No. VA-04546 authorized the introduction of CT services, with one CT scanner, at VCU Massey Cancer

Center. 23 COPN No. VA-04717, issued August 2020, authorized the addition of one CT scanner. 24 While not used in the overall calculations for utilization, this number reflects all changes to the PD 15 VCUHS

inventory not otherwise reflected in 2019 VHI data.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 4 of 25

while 14 are located within freestanding facilities. According to 2019 VHI data, all then-existing fixed-site MRI scanners in PD 15 operated at a collective utilization of 69.1% based on the SMFP expansion threshold of 5,000 MRI procedures per MRI scanner per year. DCOPN observes that utilization of hospital-based MRI scanners varies slightly from that of MRI scanners at freestanding facilities. Specifically, hospital-based MRI scanners in PD 15 operated at a collective utilization of 77.5% in 2019, while MRI scanners located at freestanding facilities operated at a collective utilization of 69.1% for the same period. DCOPN notes that MRI scanners located at both hospitalbased and freestanding facilities operated well beneath the SMFP expansion threshold in 2019. Since 2019, six additional fixed-site MRI scanners have received COPN authorization in PD 15, of which two have actually been placed into service.

With regard to mobile sites, the two PD 15 mobile MRI sites operated at a collective utilization of 76.6% in 2019, marginally beneath the 2,400 procedures per site SMFP expansion threshold (Table 3).

Table 3. 2019 COPN Authorized MRI Scanners in PD 15

Fixed MRI Units

Hospital Based Facility

Units

Bon Secours Memorial Regional Medical Center

2

Bon Secours Richmond Community Hospital

1

Bon Secours St. Francis Medical Center

225

Bon Secours St. Mary's Hospital

226

Chippenham Hospital

1

Henrico Doctors' Hospital--Parham

1

Henrico Doctors' Hospital--Retreat

1

Henrico Doctors' Hospital--Forest

2

Johnston-Willis Hospital

327

VCU Health System

828

West Creek Medical Center

129

Hospital Based TOTAL and Average

2430

Freestanding Facility

Bon Secours Imaging Center at Reynolds Crossing

231

Bon Secours Imaging Center at Innsbrook

1

Scans 9,289 731 7,172 10,356 6,044 2,248 719 5,408 10,932 24,570

-77,469

1,878 1,667

Scan/Unit 4,645 731 7,172 3,452 6,044 2,248 719 2,704 5,466 4,095 --

3,873

Utilization 92.9% 14.6% 143.4% 69.0% 120.9% 45.0% 14.4% 54.1% 109.3% 81.9% --

77.5%

1,878 1,667

37.6% 33.3%

25 COPN No. VA-04673, issued in September 2019, authorized the expansion of MRI services at St. Francis

Medical Center through the relocation and replacement of a MRI unit from Bon Secours Midlothian Imaging Center. 26 2019 VHI data appears to be in error. Bon Secours St. Mary's Hospital currently operates two COPN authorized

MRI scanners. 27 COPN No. VA-04567, issued in May 2019, authorized the addition of one MRI scanner. 28 COPN No. VA-04596, issued in May 2018, authorized the addition of one MRI-equipped linear accelerator with

SRS/SRT capabilities. COPN No. VA-04717, issued in August 2020, authorized the addition of one MRI scanner at

the VCU Medical Center Adult Outpatient Pavilion. 29 COPN No. VA-04179, issued in November 2008, authorized the establishment of West Creek Medical Center,

which will include one MRI scanner. 30 While not included in the overall calculations for utilization, this number reflects all changes made to the PD 15 MRI inventory that are not otherwise included in 2019 VHI data. 31 COPN No. VA-04654, issued in April 2019, authorized the relocation of one MRI scanner from Bon Secours

West End MRI upon the closing of that facility.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 5 of 25

Bon Secours Midlothian Imaging Center Bon Secours West End MRI Bon Secours Westchester Imaging Center Chester Imaging Center Chesterfield Imaging Ellen Shaw De Parades Institute for Women's Imaging Independence Park Imaging MEDARVA West Creek Surgery Center NOW Neuroscience, Orthopaedic and Wellness Center OrthoVirginia MRI Tuckahoe Orthopaedic MRI Center VCU Medical Center at Stony Point Radiology Freestanding TOTAL and Average

Fixed MRI Unit Grand TOTAL and Average

Mobile MRI Units Bon Secours St. Francis Medical Center Virginia Urology Mobile MRI TOTAL and Average

Source: VHI (2019) and DCOPN records.

1 2,031

032

499

1 2,697

133

--

1 3,967

134

--

1 3,482

135

--

1

66

1 5,206

1 4,726

1 3,449

1436 29,668

3837 107,137

2,031 499 2,697 -3,967 -3,482 -66 5,206 4,726 3,449 2,697

3,456

1 1,528 1 2,149 2 3,677

1,528 2,149 1,839

40.6% 10.0% 53.9%

-79.3%

-69.6%

-1.3% 104.1% 94.5% 69.0% 53.9%

69.1%

63.7% 89.5% 76.6%

With respect to the PD 15 VCUHS inventory, in 2019, VCUHS' then-existing eight MRI scanners operated at a collective utilization of 70.2%, falling well short of the SMFP threshold for expansion (Table 4).

Table 4. 2019 Virginia Commonwealth University Health System Authority MRI Utilization

Facility

Units Scans Scans/Unit Utilization

VCU Health System

838 24,570

4,095

81.9%

NOW Neuroscience, Orthopaedic and Wellness Center 1

66

66

1.3%

VCU Medical Center at Stony Point Radiology

1

3,449

3,449

69.0%

VCUHS TOTAL/Average

1039 28,085

3,511

70.2%

Source: VHI (2019) and DCOPN Records

32 Ibid. 33 COPN No. VA-04655, issued in May 2019, authorized the establishment of Chester Imaging Center with one

MRI scanner. 34 Information for this facility not included in 2019 VHI data. 35 COPN No. VA-04612, issued on July 20, 2018, authorized the establishment of MEDARVA West Creek Surgery

Center, which will include one MRI scanner. 36 While not included in the overall calculation for utilization, this number reflects all changes made to the PD 15

MRI inventory that are not otherwise included in 2019 VHI data. 37 While not included in the overall calculations for utilization, this number reflects all changes made to the PD 15

MRI inventory that are not otherwise included in 2019 VHI data. 38 COPN No. VA-04596, issued in May 2018, authorized the addition of one MRI-equipped linear accelerator with

SRS/SRT capabilities. COPN No. VA-04717, issued in August 2020, authorized the addition of one MRI scanner at the VCU Medical Center Adult Outpatient Pavilion. 39 While not included in the overall calculation for utilization, this number reflects all changes made to the VCUHS

inventory that are not otherwise included in 2019 VHI data.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 6 of 25

Proposed Project

VCUHS proposes to expand its existing CT and MRI services through the addition of one new CT scanner and one new MRI scanner, both of which will be dedicated to pediatric care. The proposed pediatric CT and MRI units will be located at the Children's Tower, a new inpatient childrenfocused building under development on the VCU Medical Center campus in downtown Richmond. The Children's Tower will operate under the umbrella of the VCUHS Children's Hospital of Richmond (CHoR).40 The CHoR, which opened in 2016, consolidated VCUHS' outpatient pediatric services previously provided at different locations on the VCU Medical Center campus and replaced the Children's Pavilion, a 1970s building that had become inadequate for the provision of efficient outpatient services. The scope and integration of ambulatory services at the CHoR Pavilion allowed for unprecedented access and coordination of pediatric outpatient services in a healing and welcoming environment built just for kids.

In June 2019, VCUHS broke ground on a new inpatient building--the Children's Tower--joined to the CHoR on the same parcel. The Children's Tower will consolidate in one building the existing pediatric inpatient beds and services and existing pediatric emergency and trauma services currently operated at the VCU Medical Center under the CHoR umbrella. In doing so, it will complete the CHoR's centralization of integrated, comprehensive, highly specialized inpatient and outpatient services within two co-located and connected buildings that are designed and dedicated exclusively to children.

The applicant states that the proposed project represents a critical component of VCUHS' longrange plan to serve all of its pediatric patients. The applicant further states that the proposal addresses the critical need of a full-service academic pediatric hospital with a pediatric emergency department and a Level 1 Pediatric Trauma Center to have on-site, dedicated diagnostic imaging services. The applicant states that the project recognizes the special needs of children and that, as a result, pediatric imaging differs substantially from adult imaging. In brief, the applicant states that implementation of CT and MRI services at the Children's Tower is necessary to ensure that children in need of VCUHS' inpatient and emergency services have optimal access to CT and MRI studies in a highly specialized, high-quality setting focused on, and dedicated to, the needs of pediatric patients, while maintaining appropriate access to outpatient imaging at the CHoR.

If approved, the requested CT until will be installed on the third floor of the Children's Tower, colocated with the pediatric emergency department and trauma center located on that level. This will support expeditious access to needed CT services for emergency patients, and particularly trauma patients. The emergency department will be physically connected to the CHoR through a common "sky lobby", with a shared drop-off area, facilitating patient triage. The proposed MRI, on the other hand, will be located on the second floor of the Children's Tower, in close proximity to the pediatric anesthesiology department. The MRI suite will also be connected to the radiology department of the CHoR Pavilion, supporting access for both inpatients as well as outpatients. In short, the applicant states that the proposed scanners' clinically and operationally indicated locations within the Children's Tower will optimally support the delivery of timely and efficient high-quality care.

40 CHoR operates as an unincorporated department of VCUHS.

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 7 of 25

The projected capital costs of the proposed project total $4,524,997, the entirety of which will be funded using the accumulated reserves of the applicant (Table 5). Accordingly, there are no financing costs associated with this project.

Table 5. VCUHS Projected Capital Costs Direct Construction Equipment Not Included in Construction Contract Architectural and Engineering Fees Other Consultant Fees

TOTAL Capital Cost

Source: COPN Request No. VA-8571

$1,264,537 $3,119,961 $114,419

$26,080

$4,524,997

As previously stated, construction on the Children's Tower commenced on March 14, 2019. The applicant anticipates it to be completed by November 7, 2022. The applicant projects an April 30, 2023 date of opening indiciating that the CT and MRI will be installed and operational upon the opening of the Children's Tower.

Project Definition

? 32.1-102.1:3 of the Code of Virginia defines a project, in part, as "the addition by an existing medical care facility described in subsection A of any new medical equipment for the provision of...computed tomographic (CT) scanning, magnetic resonance imaging (MRI)..." A medical care facility is further defined as "Any facility licensed as a hospital, as defined in ? 32.1-123."

Required Considerations -- ? 32.1-102.3, of the Code of Virginia

In determining whether a public need exists for a proposed project, the following factors shall be taken into account when applicable.

1. The extent to which the proposed project will provide or increase access to health care services for people in the area to be served and the effects that the proposed project will have on access to health care services in areas having distinct and unique geographic, socioeconomic, cultural, transportation, and other barriers to access to health care;

The Children's Tower will be readily accessible from Interstates 64 and 95 as well as from Broad Street. The site is well-served by public transportation, including the new GRTC Pulse System-- a modern, high-quality, high-capacity rapid transit system that serves a 7.6 mile route along Broad and Main Streets. VCUHS is a sponsor of the GRTC Pulse System, and there is a Pulse station on the same block as the Children's Tower, just steps away from its Broad Street entrance.

Notably, in the development of its long-range plan, VCUHS commissioned a comprehensive traffic study of the VCU Medical Center Campus. According to the applicant, the study concluded that the establishment of the Children's Tower (and other construction projects occurring or planned for the campus) would have a negligible impact on traffic volumes or intersection wait times on the campus and in the surrounding area. Additionally, the applicant states that the study determined that the location of the Children's Tower is likely to improve

COPN Request No. VA-8571 DCOPN Staff Report

September 20, 2021 Page 8 of 25

traffic flow on the narrow streets traversing the interior of the campus by moving parking closer to the perimeter along major arteries (e.g., Broad Street).

Regarding socioeconomic barriers to access to the applicant's services, according to regional and statewide data regularly collected by VHI, for 2019, the most recent year for which such data is available, the average amount of charity care provided by HPR IV facilities was 2.7% of all reported total gross patient service revenues (Table 6). The Pro Forma Income Statement provided by the applicant (Table 7) anticipates a charity care contribution equal to 1% of total gross patient revenues derived from CT and MRI services at the Children's Tower (reflected in the "Deductions from Revenue" line). DCOPN notes that this is well beneath the HPR IV average reported by VHI for 2019, as well as beneath the 5.48% contribution made by VCUHS for the same period. However, DCOPN does note that as the Commissioner and DCOPN have previously recognized, children's services experience lower indigent and charity care percentages due to broader Medicaid coverage for children. While recent changes to ?32.1-102.4B of the Code of Virginia now require DCOPN to place a charity condition on all applicants seeking a COPN, for the preceding reasons, DCOPN recommends that the proposed project, if approved, be subject to a 1% charity care condition to be derived from total gross patient services revenue stemming from CT and MRI services at the Children's' Tower. DCOPN further notes that this condition contains a provision allowing for the reassessment of the charity care rate once more reliable information regarding the full impact of Medicaid expansion is the Commonwealth becomes available.

Table 6. 2019 HPR IV Charity Care Contributions

Hospital

Gross Patient Revenues

VCU Health System Bon Secours Richmond Community Hospital VCU Community Memorial Hospital Sentara Halifax Regional Hospital Bon Secours St. Francis Medical Center Bon Secours Memorial Regional Medical Center Bon Secours St. Mary's Hospital Centra Southside Community Hospital Bon Secours Southside Regional Medical Center CJW Medical Center John Randolph Medical Center Henrico Doctors' Hospital Bon Secours Southern Virginia Regional Medical Center Vibra Hospital of Richmond LLC Cumberland Hospital for Children and Adolescents

Total Facilities Median

Total $ & Mean % Source: VHI (2019)

$6,157,295,438 $821,906,538 $299,864,540 $296,240,103 $1,020,058,202 $1,562,406,719 $2,226,799,125 $335,602,265 $2,094,715,568 $7,394,600,760 $980,419,839 $4,822,100,793 $223,258,497 $131,865,765 $64,413,240

$28,431,547,392

Adjusted Charity Care Contribution $337,198,732 $34,703,353 $13,214,243 $11,849,658 $36,854,815 $43,217,694 $59,804,440

$8,611,288 $34,597,144 $107,675,784 $13,467,848 $53,542,021 $1,196,980

$0 $0

$755,934,000

Percent of Gross Patient

Revenue 5.48% 4.22% 4.41% 4.00% 3.61% 2.77% 2.69% 2.57% 1.65% 1.46% 1.37% 1.11% 0.54% 0.00% 0.00% 15 2.6%

2.7%

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