CERTIFICATE OF NEED - New Jersey Department of Health



CERTIFICATE OF NEED

Department Staff Project Summary, Analysis & Recommendations

Transfer of Ownership

Name of Facility: Chilton Hospital CN# FR 121201-14-01

Name of Applicant: Atlantic Health System Total Project Cost: 0

Location: Pompton Plains Equity Contribution: 0

Service Area: Morris and Passaic

Applicant’s Project Description:

This application is for the transfer of ownership of Chilton Hospital from Forrest S. Chilton 3rd Memorial Hospital, Inc (FCMH), a New Jersey non profit corporation to Atlantic Health System, Inc. (Atlantic Health), a New Jersey non profit corporation. Atlantic Health, through its subsidiary, AHS Hospital Corporation, would continue to operate and maintain Chilton Hospital as a short-term, acute care general hospital at the same licensed bed complement and service levels previously provided by FCMH.

When the transfer of ownership is completed, the overall acute care bed capacity would remain at 256 beds. Categorically, the bed composition would continue to reflect 204 Medical/Surgical beds, 24 OB/GYN beds, 16 Pediatric beds, 12 Adult ICU/CCU beds, as well as 4 Intermediate bassinets. The hospital’s service complement would include the existing 6 Mixed Operating rooms, 1 Cystoscopy room, 1 Mobile MRI Unit, 1 fixed MRI, Acute Hemodialysis services, Chronic Peritoneal services, 1 Linear Accelerator,1 mobile PET/CT scanner, 1 cardiac catherization laboratory, primary PTCA services (conditional), and 2 Hyperbaric Chambers. Chilton Hospital would also continue to operate Chilton Health Network at 242 West Parkway in Morris County and Chilton Health Network at Pike Drive in Passaic County as hospital based off-site ambulatory care facilities. In addition, the hospital would continue its designations as a Community Perinatal Center - Intermediate and Primary Stroke Center.

This transfer would result in Chilton Hospital being placed under ownership of Atlantic Health, the same non profit corporation that owns and operates Morristown Memorial Hospital (Morris County), Overlook Hospital (Union County) and Newton Memorial Hospital (Sussex County). This transfer would strengthen financial viability of Chilton Hospital as a general acute care hospital and improve the quality and scope of services offered. The hospital would continue to serve its community residents and medically indigent population without any disruption in services.

Applicant’s Justification of Need:

Chilton Hospital and Atlantic Health have been collaborating since 2005.

This merger would represent not only the coalescence of institutional knowledge, but also the integration of missions, visions and values that focus on achieving a service level of excellence for patients and their families. With both institutions sharing the same core values, the consolidation of these two working entities would undoubtedly produce a positive outcome in service delivery. The proposed ownership merger is a conscious effort to adapt, rather than react, to an evolving and uncertain health care environment.

The applicant believes that there are many benefits to having these institutions merge. First and foremost would be the benefit to the patient community. Atlantic Health‘s superior services include Trauma, Heart, Neuroscience, and Pediatrics making these services more readily available to the patient community served by Chilton Hospital. . There are also financial and infrastructure benefits such as reduced costs to both institutions by sharing services such as Information Services, Human Resources and Finance staffing, Patient financial Services, and Strategic Sourcing.

The applicant is confident that this transfer will enhance the delivery of health care services in the region and improve a physician’s ability to track their patients as the region benefits from the Atlantic Health information system structure. The applicant sees the merger engendering greater access to inpatient and outpatient services with the implementation of their electronic health care record keeping system for their hospitals. The coordination of services between these hospitals will result in better organized community screenings and programs as well as clinical trials to reach more segments of the population.

In addition, the applicant anticipates that more patients will choose Chilton Hospital once it becomes part of Atlantic Health based on its reputation and superior levels of services in areas such as Neurosurgery, Trauma, Cardiac Surgery, and Neonatal Critical Care. The newly formed alliance between Atlantic Health and Chilton Hospital would have a greater sustainable impact on accessing specialized health care services for the Chilton Hospital community and provide for more cost savings opportunities to prepare for addressing the mandates set forth in the Affordable Care Act. Atlantic Health intends to increase access at Chilton Hospital by working towards adopting new practices to reduce cultural barriers and improve health literacy, making their services more readily available regardless of a patient’s ethnicity or orientation. This initiative includes implementation of a “health literacy taskforce,” communication training for health professionals, educational materials for patients, and the formation of a diversity council to ensure the delivery of quality care for a diverse patient population.

Applicant’s Statement of Compliance with Statutory & Regulatory Requirements:

The applicant has stated the following to demonstrate its compliance with the statutory criteria contained in the Health Care Facilities Planning Act, as amended at, N.J.S.A. 26:2H-1 et seq. and N.J.A.C. 8:33-1.1 et seq. as follows:

1. the availability of facilities or services which may serve as alternatives or substitutes:

According to the Applicant:

There are other hospitals providing similar services to those provided at Chilton Hospital that treat residents residing in Chilton Hospital’s primary service area such as St. Joseph’s Wayne Hospital, St. Joseph’s Regional Medical Center, Hackensack Mountainside, St. Mary’s Hospital, St. Clare’s Hospital/Denville, Clara Mass Medical Center, Morristown Memorial Hospital, Hackensack University Medical Center, Valley Hospital, Saint Barnabas Medical Center, Bergen Regional Medical Center, Holy Name Hospital, Englewood Hospital, Overlook Hospital and UMDNJ. There are also other out of state hospitals providing health services for this area, which include NY Presbyterian, Sloan Kettering, Mount Sinai, St. Anthony, Hospital for Special Surgery, NY Presbyterian/Columbia University, NYU and Good Samaritan. These hospitals could serve as alternatives or substitutes for Chilton Hospital but Morris and Passaic County residents would likely experience a substantial reduction in healthcare services if Chilton Hospital were to close or significantly downsize. This merger ensures the current level of services available at Chilton Hospital remains the same and provides a coordinated network for medically complex cases to be transferred to Morristown Memorial.

2. the need for special equipment and services in the area:

According to the Applicant:

This proposed transfer of ownership does not involve special equipment or services in the area. The applicant states that all current services would continue to be offered at Chilton Hospital and easier access would occur to the specialized services at Morristown Memorial Hospital, which includes Neurosurgical, Trauma, Cardiac Surgery, and Neonatal Critical Care, as well as its physicians when the merger is completed for those patients utilizing Chilton Hospital.

3. the adequacy of financial resources and sources of present and future revenues:

According to the Applicant:

One of the main reasons for this transfer of ownership is to help ensure the financial viability of Chilton Hospital. The cost savings associated with this transfer of ownership are expected to result from the implementation of shared services in several departments, including Finance, Human Resources, Information Technology, Patient Financial Services and Purchasing. This merger is a proactive step on behalf of these hospitals to assure adequate financial resources and revenues are available in anticipation of the reduction of payments from Medicare and Medicaid under the National Health Care Reform Act. The integration of these hospitals will ultimately produce a more cost effective operating environment to deliver the health care services at Chilton Hospital.

4. the availability of sufficient manpower in the several professional disciplines:

According to the Applicant:

Sufficient staffing and manpower in the professional disciplines would need to remain within the same existing ratios in order to provide the same high quality care that both Atlantic Health and Chilton Hospital demands. The applicant does not expect any difficultly in continuing to employ qualified personnel to staff all of its hospitals. After this transfer of ownership is approved, Atlantic Health will employ 98-99% of 1,400 employees currently employed at Chilton Hospital. This would translate into 1,386 to 1,372 of the 1,400 employees continuing employment.

5. will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide and will contribute to the orderly development of adequate and effective health care services:

According to the Applicant:

In accordance with the general criteria for Certificate of Need approval at

N.J.S. A. 26:2H-8, specifically that this will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide, the applicant anticipates that the merger will have the opposite impact; namely that the transfer of ownership will enhance the delivery of health care services in the region and have a positive impact on the economics of the region. This merger will offer the region the opportunity to benefit from the service, clinical excellence and demonstrated quality that Atlantic Health would bring to the region. This merger will improve a physician’s ability to track their patients as the region benefits from the Atlantic Health’s information system structure and will contribute to the orderly development of adequate and effective health care services.

Public Hearing:

A public hearing was held at Pequannock Library in Pompton Plains on July 16, 2013 from 6:00 pm to 8:00 pm. Thirty two people attended the hearing with twelve commenting on the application. All twelve speakers were in favor of the application citing the benefits and opportunities associated for a smaller, stand alone hospital to merge with larger well established hospital system. All of the commenters believed the approval of this application would greatly benefit Chilton Hospital and the population of the area. They emphasized how the merging of these institutions would provide greater access to more complex care and technological advances for Chilton Hospital patients as well as how the sharing of services and the investment of capital into Chilton Hospital will reduce operational costs.

It is also noted in the application that Chilton Hospital provided letters of support from state, county and local elected government officials, including Senator Kevin J. O’Toole, Senator Thomas H. Kean, Jr, Senator Anthony R. Bucco, Senator Joe Pennacchio, Senator Steven V. Oroho, Assemblywoman Alison Littell McHose, Assemblyman Gary R, Chiusano, Assemblyman Jon M. Bramnick, Assemblywoman BettyLou DeCroce. Assemblyman Jay Webber, Morris County Freeholder William J. Chegwidden, and Christopher Versano, Mayor of the Township of Wayne. Additional letters were of support were filed by Cedar Crest and the Jewish Family Service of North Jersey.

Department Staff Analysis:

Department staff concluded that the applicant, Atlantic Health, has adequately documented compliance with the applicable certificate of need rules (N.J.A.C. 8:33-1.1 et, seq.) and general statutory standards (N.J.S.A. 26:2H-1 et seq.). For the purposes of this review, this application is considered a transfer of ownership of a licensed facility currently offering health care services and not a reduction, elimination, or relocation of health care services. Department staff reviewed the applicant’s certificate of need and determined that the applicant’s rationale to transfer the ownership of Chilton Hospital is a realistic assessment of Chilton Hospital’s service area and the health care services environment for Morris and Passaic counties and the region. Considering that once transferred, Atlantic Health is committing to operate Chilton Hospital not only at the same bed capacity levels but also with the same outpatient service levels, the transfer proposed by Atlantic Health’s governing authority and management appears to be a feasible option for ensuring that Chilton Hospital continues to provide quality health care services to the community. Overall operating costs and reduced patient volume at Chilton account for Chilton Hospital’s decision to transfer their ownership to Atlantic Health. For Chilton Hospital to continue operating as a small scale independent community hospital would exert significant financial pressure on their limited resources increasing their budgeted losses from operations, possibly leading to either a significant reduction of community health services or an unplanned closure.

The application indicates that the focus of this transfer of ownership is to strengthen and improve the existing health care delivery system at Chilton Hospital. Atlantic Health states that its highest priority is improving the quality and availability of health care services to the patient community at Chilton Hospital. Atlantic Health intends to direct its efforts to provide greater access to inpatient and outpatient care. For example, Atlantic Health will invest monies in the development and implementation of an electronic health record system at Chilton Hospital, a strategic plan to improve patient quality and safety through structured, evidence based measurement process and to provide opportunities for participation in research and clinical trials.

Atlantic Health’s business model for Chilton Hospital includes an emphasis on shared services not limited to information technology but also human resources management, financial management, patient billing services and purchasing. Chilton Hospital would benefit from the experience gained at Atlantic Health in these functional areas as well as their wide array of clinical expertise in such areas as Trauma, Heart, Neuroscience and Pediatrics. The merger of these two hospitals would create a more complete and structured system for Atlantic Health with a greater outreach for both physicians and patients. Patients at Chilton Hospital would be able to access the specialists at Atlantic Health’s facilities more expeditiously and be transferred to their facilities with fewer administrative barriers.

The objective of this transfer is to promote a higher standard of care at Chilton Hospital and reduce their operating costs without any disruption in the continuity of services for patient care. Atlantic Health states that it intends to accomplish these objectives by directing its efforts through operational support, capital and enhanced organizational approaches to the delivery of care, and name recognition for its excellence in patient care. The primary purpose of this transfer is not necessarily to increase volume at Chilton, but build a more stable operational environment for all the hospitals involved to administer health care and assure their collective futures.

Table 1 - Licensed Beds

|2008 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |184 |24 |16 |12 |236 |

|OccRt |63.29% |32.37% |20.70% |85.91% |58.41% |

|ADC |116.46 |7.77 |3.31 |10.31 |137.85 |

|2009 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |184 |24 |16 |12 |236 |

|OccRt |61.70% |31.10% |17.33% |81.37% |56.58% |

|ADC |113.53 |7.46 |2.77 |9.76 |133.53 |

|2010 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |184 |24 |16 |12 |236 |

|OccRt |59.78% |31.39% |9.93% |85.98% |54.84% |

|ADC |109.99 |7.53 |1.59 |10.32 |129.43 |

|2011 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |199 |24 |16 |12 |251 |

|OccRt |55.66% |30.94% |15.62% |90.23% |52.40% |

|ADC |110.77 |7.42 |2.50 |10.83 |131.52 |

|2012 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |53.03% |29.25% |12.76% |89.57% |50.00% |

|ADC |108.19 |7.02 |2.04 |10.75 |128.00 |

|Annualized – last 3 Qs 2012, 1st Q 2013 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |54.00% |28.40% |11.61% |92.26% |50.74% |

|ADC |110.16 |6.82 |1.86 |11.07 |129.91 |

Source: Department’s Health Care Financing Systems Summary of Inpatient Utilization (B-2)

Table 2 – Maintained Beds

|2008 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |184 |24 |16 |12 |236 |

|OccRt |63.29% |32.37% |20.70% |85.91% |58.41% |

|ADC |116.46 |7.77 |3.31 |10.31 |137.85 |

|2009 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |189 |24 |16 |12 |241 |

|OccRt |60.07% |31.10% |17.33% |81.37% |55.41% |

|ADC |113.53 |7.46 |2.77 |9.76 |133.53 |

|2010 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |53.92% |31.39% |9.93% |85.98% |50.56% |

|ADC |109.99 |7.53 |1.59 |10.32 |129.43 |

|2011 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |54.30% |30.94% |15.62% |90.23% |51.38% |

|ADC |110.77 |7.42 |2.50 |10.83 |131.52 |

|2012 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |53.03% |29.25% |12.76% |89.57% |50.00% |

|ADC |108.19 |7.02 |2.04 |10.75 |128.00 |

|Annualized – last 3 Qs 2012, 1st Q 2013 – Chilton |

| |Med/Surg |OB/GYN |PEDs |ICU/CCU |Combined |

|Beds |204 |24 |16 |12 |256 |

|OccRt |54.00% |28.40% |11.61% |92.26% |50.74% |

|ADC |110.16 |6.82 |1.86 |11.07 |129.91 |

Source: Department’s Health Care Financing Systems Summary of Inpatient Utilization (B-2)

A review of the occupancy rate and average daily census for combined service categories (medical/surgical, OB/GYN. Pediatrics and ICU/CCU) for Chilton Hospital shows there is very little difference between their maintained beds when comparing 2010 data to 2012. In 2010, the combined maintained bed occupancy rate was at 50.56%, with an average daily census of 129.43 for 256 beds and for 2012, the occupancy rate was 50.00% with average daily census of 128.00 for the same number of beds. The difference is virtually insignificant. The number of combined licensed beds as well as maintained beds increased from 236 in 2008 to 256 in 2012. The occupancy rate and average daily census for licensed and maintained beds for these years are the same. The annualized data using the last three quarters of 2012 and the 1st quarter of 2013 for both licensed and maintained combined service categories revealed that there was a slight increase in the occupancy rate to 50.74% as well as a rise in the average daily census to 129.91. This increase may be attributed to flu season or other weather related respiratory illnesses. Atlantic Health does not expect these figures to fluctuate to any great extent in the near future but does anticipate that the application of their business model will attract patients presently using out of state providers for their health care.

By category, the occupancy rates and average daily census numbers for maintained beds at Chilton Hospital have declined for the 24 OB/GYN and 16 Pediatrics beds. In 2008, OB/GYN beds were at 32.37% with an average daily census of 7.77 and Pediatric beds had an occupancy rate of 20.70% with an average daily census of 3.31. For the most recent year of 2012, OB/GYN beds were at 28.25% with an average daily census of 7.02, and Pediatric beds had an occupancy rate of 12.76% with an average daily census of 2.04. The number of bed for these categories remained unchanged during these years. The annualized data using the last three quarters of 2012 and the 1st quarter of 2013 showed a insignificant decline in both occupancy and average daily census for OB/GYN and Pediatric beds. OB/GYN occupancy moved doward to 28.40% with an average daily census of 6.82 and the Pediatric occupancy decreased to11.61% with an average daily census of 1.86.

With respect to the occupancy rates and average daily census numbers for maintained beds at Chilton Hospital for the 12 ICU/CCU beds, in year 2008, the occupancy rate and average daily census was 85.91% and 10.31, which increased to 89.57% and 10.75 in 2012. The annualized data using the last three quarters of 2012 and the 1st quarter of 2013 disclosed an increase in both the occupancy rate and average daily census, with the former moving upward to 92.26% and the latter following with increase to 11.07.

With regard to licensed and maintained medical/surgical beds, in 2010, maintained beds had an occupancy rate of 53.92% with an average daily census of 109.99 for 204 beds. Licensed beds had an occupancy rate of 59.78% with an average daily census of 108.99 for 184 beds for 2010. In 2012, the 204 licensed and maintained medical/surgical beds had an occupancy rate of 53.03% with an average daily census of 108.19. There was relatively little change between these years. Prior to 2010, the number of maintained medical/surgical beds was lower at 184 in 2008 and189 beds in 2009, with slightly higher occupancy rates and average daily census than 2012. The increase in maintained medical/surgical beds does not appear to have any substantive positive impact on the utilization of this service since the average daily census declined from a five year high of 116.48 in 2008 to 109.99 in 2012. Licensed medical surgical beds follow virtually the same utilization patterns for 2008 and 2012 since the numbers of beds for those two years are the same as maintained beds. There is a small variation in the history of the number of licensed and maintained medical/surgical beds during this five year reporting period. The one constant is that regardless of the number of beds, the occupancy rate and average daily census for medical surgical beds continued to fall over the reporting period. However, the annualized data using the last three quarters of 2012 and the 1st quarter of 2013 for licensed and maintained medical surgical beds points out a negligible change in the occupancy rate which crept up to 54% with an average daily census of 110.16. That this increase would be accounted for in the 1st quarter of 2013 does not in any way signal a projected departure from the five year trend illustrating a downward pattern for this bed category.

The foundation for Atlantic Health’s transfer of ownership proposal targets reducing cost while improving patient care. Atlantic Health acknowledges the low patient volumes at Chilton Hospital but believes that the application of its health care delivery model would rebuild and strengthen Chilton Hospital from both an operational and quality perspective. Atlantic Health is hopeful that working in conjunction with their service line models would return all of Chilton Hospital’s services to more viable states. Through affiliations with Atlantic Health and their designated Children’s Hospital, Chilton Hospital patients will have access to programs in various diversified medical specialties across the continuum of care to best align patients with inpatient and outpatient services on both campuses. This effort combined with planned and ongoing wellness and prevention programs should have a positive effect on the future delivery and utilization of care at Chilton Hospital. Atlantic Health’s business models integrates Chilton Hospital into the Atlantic Health System providing Chilton Hospital with opportunity to become a stronger and more responsive heath care provider to its patient community.

After carefully reviewing the data and examining the mutual benefits of this transfer of ownership of Chilton Hospital to Atlantic Health, Department Staff believes that the decision to transfer ownership is in the best interest of the residents in the hospital’s service area. This transfer, as presented to the Department, would not result in any unplanned reduction of services or disruption to the area’s healthcare delivery system. Staff does not believe this transfer would significantly affect other hospitals or create access problems since Atlantic Health is committed to serving the same population as its predecessor. Department Staff is satisfied that the health status of the patients in this geographic area would not be compromised based on the completion of this transfer.

Adequacy of financial resources and sources of present and future revenues

According to unaudited financial statements for the period ending 3/31/2013 provided by the hospital to the New Jersey Health Care Facilities Financing Authority (NJHCFFA) Atlantic Health System reported an excess of revenues over expenses of $13,020,000, which translates to a profit margin of 3.4%. Unrestricted cash as of 3/31/13 was $666,731,000, which translates to about 160 days cash on hand. For the same period, Chilton Hospital showed excess of revenue of expenses of $1,205,562 (2.8% profit margin) and cash of $51,076,516 (119 days).

The application does not indicate any health care staff reduction or alteration of profession contracts. It does imply that as a result of the implementation of their shared services approach, there may be a staff reduction in support areas such as human resources and patient financial services. As noted above, the applicant is to maintain the facility as a general hospital at the same licensed bed complement and service levels. The Department also notes that the applicant disclosed no plans to change the existing contracts that Chilton Hospital currently has with commercial insurers.

Staff Recommendations:

Based on this documentation of compliance with regulatory and statutory criteria, Department staff recommends approving the transfer of ownership of Chilton Hospital for the following reasons and with the conditions noted below:

Reasons:

1. As a result of the merger with Atlantic Health, the financial conditions at Chilton Hospital would be strengthened since their operating costs would be reduced through the implementation of shared service programs for human resources management, financial management, patient billing services and purchasing, as well as the development of electronic patient records and disease management improvements programs. This would prevent future financial risks resulting in potential problems for Chilton Hospital that could possibly lead to an unplanned closure or significant reduction of services, or bankruptcy.

2. Both the applicant and Chilton Hospital would benefit from the clinical relationships established and the development of more coordinated patient referral network as the health care services at Chilton Hospital and Morristown would be offered under the same administration. The applicant’s business model and marketing strategies for Chilton Hospital could stimulate an increase in patient volume for their services and result in greater utilization of their medical/surgical beds.

3. This transfer of ownership would be accomplished without any disruption in the scope or level of services being offered at Chilton Hospital for the private pay, insured and uninsured populations since the licensed inpatient and outpatient services would remain the same and the commercial contracts with insurers would also be unchanged. The applicant is confident that its established reputation in the health care field and clinical expertise will bring forth more growth at the hospital by attracting patients who currently are seeking treatment and care at out of state hospitals.

4. The transfer of ownership of Chilton Hospital to Atlantic Health would not adversely impact any of the neighboring hospitals since the applicant is to maintain Chilton Hospital as a general hospital with the same licensed bed complement and service levels. The applicant does not indicate any plan to establish new inpatient services.

Conditions:

Based on this documentation of compliance with regulatory and statutory criteria, Department staff recommends approving the transfer of ownership of Chilton Hospital to Atlantic Health with the following conditions:

1. The applicant completes the Office of Attorney General Community Health Care Assets Protection Act, N.J.S.A. 26:2H-7.10 et seq., review for the proposed transfer of the assets of Chilton Hospital to Atlantic Health.

2. The applicant shall file a licensing application with the Department’s Certificate of Need and Healthcare Facility Licensure Program (CNHCFL) to execute the transfer of the ownership of Chilton Hospital’s license to Atlantic Health.

3. The applicant shall notify the Department’s CNHCFL in writing, specifically who is responsible for the safekeeping and accessibility of all Chilton Hospital patients’ medical records (both active and stored) in accordance with N.J.S.A. 8:26-8.5 et. seq. and N.J.A.C. 8:43G-15.2.

4. As noted by the applicant, Atlantic Health shall hire substantially all Chilton Hospital employees who are employed at the completion of the transfer of ownership.

5. Atlantic Health shall operate Chilton Hospital as a general hospital, in compliance with all regulatory requirements, for at least seven years in accordance with commitment stated in the CN application. This condition shall be imposed as a contractual condition of any subsequent sale or transfer, subject to appropriate regulatory or legal review, by Atlantic Health within the seven year period.

6. Atlantic Health shall continue all clinical services and community health programs currently offered at Chilton Hospital. Any changes in this commitment involving either a reduction of services, relocation out of Chilton Hospital’s current service area, or elimination of clinical services or community health programs offered by Chilton Hospital’s former ownership shall require prior written approval from the Department and shall be subject to all applicable statutory and regulatory requirements.

7. Atlantic Health shall continue compliance with N.J.A.C. 8:43G-5.21(a), which requires that “[a]ll hospitals . . . provide on a regular and continuing basis, out-patient and preventive services, including clinical services for medically indigent patients, for those services provided on an in-patient basis.” Documentation of compliance shall be submitted within 30 days of the issuance of the license and quarterly thereafter for a period of seven years.

8. In accordance with N.J.S.A. 26:2H-18.64 and N.J.A.C. 8:43G-5.2(c), Atlantic Health shall not only comply with federal EMTALA requirements, but also provide care for all patients who present themselves at Chilton Hospital without regard to their ability to pay or payment source.

9. The value of indigent care provided by Atlantic Health shall be determined by the dollar value of documented charity care, calculated at the prevailing Medicaid rate, and shall not be limited to the amount of charity care provided historically by Chilton Hospital.

10. Atlantic Health shall establish a functioning Board of Directors for the hospital responsible for implementing hospital-wide policy, adopting bylaws, maintaining quality of care, and providing institutional management and planning consistent with the Atlantic Health organizational structure. This Board shall maintain suitable representation of the residing population of Chilton Hospital’s service area who are neither employees of, nor related to employees of, any parent, subsidiary corporation or corporate affiliate. Annual notice shall be made to the Department of this Board’s roster, along with any policies governing Board composition, governance authority and Board appointments.

11. Atlantic Health shall provide an organizational chart of the hospital and each service that shows lines of authority, responsibility, and communication between Atlantic Health and hospital management and board. Atlantic Health, as licensee operating Chilton Hospital, shall be responsible for compliance.

12. Atlantic Health shall submit a report to the Department, on an annual basis for the initial seven years following the transfer of ownership, or upon request, detailing:

a. The investments it has made during the previous year at the hospital. Such report shall also include a detailed annual accounting of any long or short term debt or other liabilities incurred on the hospital’s behalf and reflected on the Chilton Hospital’s balance sheet; and,

b. The transfer of funds from the hospital to any parent, subsidiary corporation, or corporate affiliate and shall indicate the amount of funds transferred. Transfer of funds shall include, but not be limited to, assessments for corporate services, transfers of cash and investment balances to centrally controlled accounts, management fees, capital assessments, and/or special one-time assessments for any purpose; and

c. All financial data and measures required pursuant to N.J.A.C. 8:31B and financial indicators monthly reporting.

13. Within 15 days of approval of this application, Atlantic Health shall provide a report to the CNHCFL detailing the communication plan to Chilton Hospital staff and to the community, including but not limited to elected officials, clinical practitioners, and EMS providers, concerning the approval of the transfer of license and the availability of fully-integrated and comprehensive health services. This shall include reference to the outreach plan referenced in Condition 14 below.

14. Chilton Hospital shall hold an annual meeting pursuant to N.J.S.A. 26:2H-12.50 and develop mechanisms for the meeting that address the following:

a. Opportunity for members of the local community to present their concerns regarding local health care needs and hospital operations and how Atlantic Health should address these.

b. A method for Atlantic Health to publicly respond to the concerns expressed by community members at the annual public board meeting.

c. Atlantic Health shall develop these mechanisms within 90 days of this approval and share them with Department’s CNHCFL Program.

15. An outreach plan shall be placed into effect to ensure that all residents of the hospital service area, especially the medically indigent, have access to the available services at the location. A self-evaluation of this effort shall be conducted on a yearly basis for seven years after licensure to measure its effectiveness. This evaluation shall contain any expenditure for activities, including but not limited to, outreach, community programs, and health professional education. This self-evaluation shall be filed for Department review within twenty business days after each year of licensure concludes to demonstrate compliance with this condition. It shall also be presented to the public at the hospital’s annual public meeting.

16. Atlantic Health shall endeavor to maintain existing HMO and commercial insurance coverage at Chilton Hospital following acquisition, including, but not limited to good faith negotiations. If Atlantic Health provides notice to terminate any HMO or commercial insurance contracts within the first year after transfer of license that will expand the out-of network service coverage, Atlantic Health shall in advance meet with representatives from the Departments of Banking and Insurance and Health to discuss the intent to terminate such contracts and document how it will provide notice to patients and providers.

1. In accordance with the provisions of N.J.S.A. 26:2H-18.59h, Atlantic Health shall “offer to its employees who were affected by the transfer, health insurance coverage at substantially equivalent levels, terms and conditions to those that were offered to the employees prior to the transfer.”

2. Atlantic Health shall report annually or within the required time frame as set forth in the individual condition, the requested information to the Department’s CNHCFL Program concerning the status of all of the conditions referenced above in this approval letter.

3. All the above conditions shall also apply to any successor organization to Atlantic Health who acquires Chilton Hospital within seven years from the date of the CN approval.

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