FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 09:16 PM |
| Agency: |
Health Facilities, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1991 |
Introduced |
SB12 |
|
|---|
| CBD Subject: |
|
|---|
|
FUND(S):
0408 - Health Facilities - Hopemont Hospital; 0411 - Health Facilities - Jackie Withrow Hospital; 5156 - Hospital Services Revenue Account
Sources of Revenue:
General Fund
Legislation creates:
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The purpose of this bill is to require the Secretary of the Department of Health and Human Resources to modernize or construct new facilities at Hopemont (Terra Alta) and Jackie Withrow (Beckley) Hospitals to provide long-term care and substance abuse treatment to address critical needs of the citizens of this state.
The Department of Health Facilities estimates the cost of this bill to include both one time construction costs and ongoing operational costs. The estimated cost to construct a 200 bed facility (100 LTC and 100 substance abuse) at Hopemont is $42,055,680. The estimated cost to construct a 300 bed facility (200 LTC and 100 substance abuse) at Withrow is $58,465,920. The total estimated one-time construction cost for both facilities required by the bill would be $100,521,600.
The total estimated additional cost to operate a 200 bed facility at Hopemont and 300 bed facility at Withrow is $136,567,751 annually (Hopemont: $59,850,656 and Withrow: $76,717,095). This is taking into account the current operational costs of the facilities for FY2024.
The total additional revenue from the increased number of LTC beds (assuming full occupancy) is $13,804,574 annually ($7,659,609 at Hopemont and $6,144,965 at Withrow).
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
100,521,600 |
136,567,751 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
136,567,751 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
100,521,600 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
13,804,574 |
Explanation of above estimates (including long-range effect):
The cost to the Department of Health Facilities is comprised of one-time construction costs of $100,521,600 and on-going operational costs $136,567,750. The construction costs were developed based upon a June 2011 report submitted by ZDS Design/Consulting Services in which they evaluated the cost of renovation of Withrow Hospital compared to constructing a new facility on the property and determined that new construction was cheaper. The original construction estimates for a new facility at Jackie Withrow were based upon a new 119 bed facility. The Office used the same formula used by ZDS for their estimate and updated it for use in both Hopemont (using 200 beds) and Withrow (using 300 beds) to estimate the cost of construction. The updated calculations used a 3% cost escalation for 16 years - 14 years to bring the costs up to date and an additional 2 years to allow for construction to be completed.
The ongoing costs were calculated separately for the long term care bed portion and the inpatient substance abuse bed. The long term care portion was based upon the calculated cost per day pulled from the FY2024 cost report for both Hopemont and Withrow. For Hopemont, $634.95/day * 100 beds * 365 days = $23,175,675 less the FY2024 operational cost of $11,117,207. For Withrow, $539.67/day * 200 beds * 365 days = $39,395,910 less the FY2024 operational cost of $10,471,003. The inpatient substance abuse portion was based upon the average calculated cost per day pulled from the FY2024 cost reports for Sharpe and Bateman. For both Hopemont and Withrow the calculation was as follows: $1,309.38/day * 100 beds * 365 days = $47,792,188 each.
The increase to LTC revenues is the difference between the current average daily census and the proposed 100 beds multiplied by the Federal Financial Participation (FFP) rate multiplied by 365 days for a total of $13,804,874. For Hopemont, 100 beds * $428.27/day * 365 days = $15,631,855 less 51 beds * $428.27/day * 365 days = $7,972,246 for a total revenue of $7,659,609. For Withrow, 100 beds * $350.74/day * 365 days = $12,802,010 less 52 beds * $350.74/day * 365 days = $6,657,045 for a total revenue of $6,144,965.
Because the state of West Virginia does not currently permit 100-bed inpatient substance abuse programs, the Department used the average calculated cost per day from Sharpe and Bateman because, in addition to treating patients with psychiatric diagnoses, they also treat patients with substance abuse diagnoses.
Due to the use of an overall cost per day in our calculation of on-going operational costs, Personal Services, Current Expense, Repairs and Alterations, etc. are all included as operational costs under Current Expense.
Memorandum
Based upon a 02/13/2025 position report, Hopemont reported a 40.00% vacancy rate and Jackie Withrow reported a 15.08% vacancy rate for State Funded FTE positions. With the proposed increase in capacity and the associated staffing needs, it is likely that the facilities will need to utilize contract staffing at a higher rate than current costs used in preparing this fiscal note.
The Department does not currently administer substance abuse treatment services in coordination with Long Term Care Services as provided for in the bill. It is possible that further development of construction and/or staffing needs would require the separation of those services into separate structures requiring construction of two smaller facilities at each location which could result in a higher cost.
The language in the bill refers to the Department of Health and Human Resources which has now been split in to the following departments: Health, Human Services and Health Facilities.
26-5-2 (c) and 26-9-3 (c) of the bill state the Secretary shall hire adequate full time professional staff for the facility who are trained in long-term care and substance abuse treatment and who shall be classified employees. The current code section for the Department of Health Facilities (26-1-1 (c)) states employees are not eligible for civil service.
Person submitting Fiscal Note: Michael J. Caruso, Secretary
Email Address: osafiscalnotes@wv.gov