REPORT DIGEST

HEALTH FACILITIES AND SERVICES REVIEW BOARD
AND THE CERTIFICATE OF NEED PROCESSES

PERFORMANCE AUDIT
In accordance with Public Act 96-031

Release Date: November 2017

State of Illinois, Office of the Auditor
General
FRANK J. MAUTINO, AUDITOR GENERAL

To obtain a copy of the Report contact:
Office of the Auditor General, Iles Park
Plaza, 740 E. Ash Street, Springfield, IL
62703
(217) 782-6046 or TTY (888) 261-2887

This Report Digest and Full Report are also
available on the worldwide web at
www.auditor.illinois.gov

Executive Summary

The Illinois Health Facilities Planning Act
at 20 ILCS 3960/19.5 (enacted by Public Act
96-031 and amended by Public Act 99-527)
required the Office of the Auditor General to
conduct a performance audit of the Health
Facilities and Services Review Board (HFSRB
or Board) and the Certificate of Need
processes. Specifically, the audit was to
determine:

• Whether changes to the Certificate of Need
(CON) processes are being implemented
effectively, as well as their impact, if any,
on access to safety net services (i.e.,
services in low-income or rural areas); and
• Whether fines and settlements are fair,
consistent, and in proportion to the degree
of violations.

A performance audit was also conducted of the
HFSRB as required by the Illinois Health
Facilities Planning Act (Planning Act) and
released in May 2014. The May 2014
performance audit contained seven
recommendations and included, in addition to
the above, an assessment of the Center for
Comprehensive Health Planning (Center).
However, in July 2016, Public Act 99-527 was
signed into law which, effective January 1,
2017, repealed the requirement for the
Illinois Department of Public Health to
establish the Center; therefore, the two
related recommendations from the May 2014
audit are not repeated. Two additional
recommendations are not repeated and three
are repeated as recommendations in this
report.

The audit found:
• Board members were not reviewed annually by
the Board Chairman as required by the
Planning Act. Additionally, attendance
records for Board members were not reported
to the General Assembly as required by the
Planning Act.
• In 9 of 39 projects, Board members did not
provide rationale when voting on an item at a
State Board meeting as required by a change
to the Planning Act.
• All 30 projects in our sample which
required a Safety Net Impact Statement
submitted one; however, 5 of the 30
statements did not contain all the required
elements. Also, 4 of the legal notices
published by the HFSRB did not include the
required statement about the filing of a
Safety Net Impact Statement.
• Ten fines and settlement agreements had
starting fines which were not calculated
correctly, likely due to not accounting for a
30-day period, or fraction thereof, as
required by the Planning Act.

Generally, we found that changes made to the
Planning Act and CON process since July 1,
2013, have been implemented effectively and
the only changes that appear to potentially
impact access to safety net services are
limited to projects applying for exemptions
as opposed to CON permits. While we found it
difficult to make comparisons among projects
due to the many factors influencing the size
of the fine or settlement, we concluded that,
with the exception of limited inconsistencies
and given their respective circumstances,
most settlements did not appear unreasonable.

AUDIT SUMMARY AND RESULTS

The Illinois Health Facilities Planning Act
at 20 ILCS 3960/19.5 (enacted by Public Act
96-031 and amended by Public Act 99-527)
required the Office of the Auditor General to
conduct a performance audit of the Health
Facilities and Services Review Board (HFSRB
or Board) and the Certificate of Need
processes. Specifically, the audit was to
determine:

• Whether changes to the Certificate of Need
(CON) processes are being implemented
effectively, as well as their impact, if any,
on access to safety net services (i.e.,
services in low-income or rural areas); and
• Whether fines and settlements are fair,
consistent, and in proportion to the degree
of violations.

A performance audit was also conducted of the
HFSRB as required by the Illinois Health
Facilities Planning Act (Planning Act) and
released in May 2014. The May 2014
performance audit contained seven
recommendations and included, in addition to
the above, an assessment of the Center for
Comprehensive Health Planning (Center).
However, on July 8, 2016, Public Act 99-527
was signed into law which, effective January
1, 2017, repealed the requirement for the
Illinois Department of Public Health to
establish the Center; therefore, the two
related recommendations from the May 2014
audit are not repeated. Two additional
recommendations are not repeated and the
remaining three are discussed and included as
recommendations in this report. (page 1)

Certificate of Need (CON) Process

We were asked to determine whether changes to
the CON process are being implemented
effectively, as well as their impact, if any,
on access to safety net services. The most
substantive changes were in the following
areas: general clarifications, change of
ownership exemptions, discontinuations,
administrative rules, post decision/permit,
and fines. Generally, we found that changes
made to the Planning Act and CON process
since July 1, 2013, have been implemented
effectively. The only changes that appear to
potentially impact access to safety net
services are limited to projects applying for
exemptions as opposed to CON permits. (pages
20-23, 27-28)

We sampled 40 of 195 CON permit applications
and 25 of 115 exemption applications received
by HFSRB during FY14-16. CON permit and
exemption testing showed some areas of
noncompliance with the Planning Act or the
HFSRB’s administrative rules:

• Board members did not always provide
rationale when voting on an item at a State
Board meeting as required by an August 2014
change to the Planning Act. Of the 39
projects subject to the Public Act 98-1086
changes, 9 of the projects, when voted upon
by the Board members, were missing voting
rationale for one or more members. We made a
recommendation in this area.
• HFSRB staff received written responses to
State Board Staff Reports and written
comments regarding project applications after
deadlines established by Board rules. We
found 11 projects which received public
comments after the Board’s 20-day deadline
and 6 projects which received written
responses to the State Board Staff Report
after the Board’s 10-day deadline. While
these communications were posted on the
Board’s website, they were received outside
of the public comment process and therefore,
according to Board rules, these
communications should be considered ex parte
communications. The Board’s administrative
rules state that ex parte communications
should be filed in a separately identified
section for the subject project and reported
to the General Assembly. The responses/
comments in question were not identified on
the website as ex parte communications and
were not reported to the General Assembly. We
made a recommendation in this area. (pages
23-25)
• Safety Net Impact Statement testing showed
areas of noncompliance with the Planning Act.
All 30 projects in our sample which required
a Safety Net Impact Statement submitted one;
however, 5 of the 30 statements did not
contain all the required elements. Also, 4 of
the legal notices published by the HFSRB did
not include the required statement about the
filing of a Safety Net Impact Statement. We
made a recommendation in this area. This was
also a recommendation in the May 2014
performance audit. (pages 28-29)

Fines and Settlements

The second determination asked us to
determine whether fines and settlements are
fair, consistent, and in proportion to the
degree of violations. While we found it
difficult to make comparisons among projects
due to the many factors influencing the size
of the fine or settlement, we concluded that,
with the exception of limited inconsistencies
and given their respective circumstances,
most settlements did not appear unreasonable.

We tested 24 of 36 settlement agreements and
5 of 11 fines and found the following:

• Twelve (8 of 24 settlement agreements and 4
of 5 fines) had starting fines which were not
calculated correctly. Ten of these 12 were
likely due to not accounting for a 30-day
period, or fraction thereof, as required by
the Planning Act.
• For settlement agreements, we found one
instance in which there was only one fine
assessed despite multiple violations within
the same violation category.
• Prior to a July 23, 2015 change to the
Planning Act, HFSRB staff were not consistent
in the end date used in calculating a fine’s
accrual; however, after July 23, 2015, the
HFSRB was in compliance with this
requirement.

We made a recommendation in this area. (pages
31-37)

HFSRB staff made significant improvements,
compared to the performance audit released in
2014, in improving the timeliness of
identifying violations and moving through the
compliance process. The 2014 audit
recommended that HFSRB staff should identify
violations and initiate and complete the
fines process in a timely manner and testing
of 24 settlements showed improvements in the
current process. Based on these improvements,
the recommendation from the May 2014 audit
will not be repeated. (pages 37-38)

Duties and Requirements of the Board and its
Staff

The Board has been tasked with various duties
and requirements by the Planning Act. Some of
these requirements were completed and some
are required on an ongoing basis. One of the
ongoing requirements is to publish various
reports on its website; however, the Board
staff did not post all reports on its website
as required. We made a recommendation in this
area. This was also a recommendation in the
May 2014 performance audit. (pages 9-12)

Board members were not being reviewed
annually by the Board Chairman as required by
the Planning Act. Additionally, attendance
records for Board members were not reported
to the General Assembly as required by the
Planning Act. We made a recommendation in
this area. This was also a recommendation in
the May 2014 performance audit. (pages 12-13)

RECOMMENDATIONS

The audit report contains six
recommendations. The Health Facilities and
Services Review Board agreed with all six of
its recommendations. Appendix E to the audit
report contains the agency responses.

This performance audit was conducted by staff
of the Office of the Auditor General.

AMEEN DADA
Division Director

This report is transmitted in accordance with
Section 3-14 of the Illinois State Auditing
Act.

FRANK J. MAUTINO
Auditor General

FJM:TEW