4615.1

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CHAPTER 2. HEW PROCESSING AND PROCEDURES

2-1. INFORMATION TO BE FURNISHED. An applicant for Federal assistance

under this program will be required to furnish specific information

about the proposed project so that eligibility and conformity

with requirements on the program can be determined. This

information will be furnished on an HEW application form hereinafter

discussed. In addition, there are certain required assurances

which the applicant must agree to carry out. Processing procedures

will differ somewhat on nonprofit facilities, depending on

whether the project is to be constructed with Federal assistance

under both the HUD mortgage insurance program and the Hospital

and Medical Facilities Construction (Hill-Burton) Programs or

whether it will be constructed without Hill-Burton assistance.

a\. When the project is to be constructed without Hill-Burton

assistance, the applicant should submit the initial HEW

application to the State Hill-Burton agency which will issue

the certificate of need for the facility. All revisions

of the HEW application will be submitted directly to the

HEW regional office serving the applicant\'s area.

Simultaneously with the submission of each HEW application to

the HEW regional office, a copy will be sent to the State Agency

by the applicant. (If the project is a proprietary facility,

Previous Participation Clearance, FHA Form 2530 must be

obtained from the HUD office prior to submitting HEW initial

application.)

b\. When a nonprofit project is to receive Federal assistance

under the Hill-Burton Program, the applicant should proceed

in accordance with Hill-Burton program instructions, using

the appropriate forms and submitting all procedures through

the State Agency (Appendix 6).

\(1\) Application form and guide material. The Project

Construction Application (HEW 537) with instructions

is available from the HEW Regional Office or the

State Hill-Burton agency. The Public Health Service

publishes General Standards of Construction and

Equipment for Hospital and Medical Facilities (PHS

Publication No. 930-A-7) and other guide material for

planning hospitals and other health facilities. The

HEW Regional Office or the State Agency will provide

copies of this material to assist in planning and

constructing projects.

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Page 2-1 1/73

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4615.1

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\(2\) Application format. The application is divided into an

initial application and necessary revisions. Final

approval of an application is given only after

application and the plans and specifications have been

submitted and approved.

2-2. PROJECT DESCRIPTION AND PRELIMINARY INFORMATION. The primary

purpose of the initial application is to elicit information to

determine the eligibility of the proposed project. Before a

project can be approved by HEW, a narrative description of the

program must be developed as an integral portion of the application.

The program narrative should comprise a general or brief review

of the scope of services, as outlined below. It should be a

summary of the facility\'s program, and as such should be as

brief as possible, yet sufficiently detailed to adequately describe

the program of services. Details of the site, to include

its location, size and boundaries should be included. The program

narrative should also prove useful to the project sponsor in that

it can, through a step-by-step expansion, provide a basis for an

organizational plan for the administration of the program of

services, as well as provide valuable assistance and guidance to

the project architects and engineers in the development of design

drawings and specifications.

Since this program narrative guide was developed to assist in

the preparation of a narrative for all types of health care

services, and not restricted to one type of health care facility,

it is not expected that each proposed project contain all of the

health services listed; however, where appropriate and feasible,

the project sponsor should consider ways by which needed community

health services, when not a part of a proposed project, can in

fact be provided, such as through formal patient transfer

agreements, or through service sharing agreements with other

facilities.

a\. Applicant Eligibility and Need for Facility.

\(1\) Describe the method for determining the need in the

community for the facilities and services to be provided.

Include information about the results of any local

studies which reflect a need for such facilities and

services.

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1/73 Page 2-2

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4615.1

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(2-2) (2) Describe the geographic and/or political subdivisions

now being served by the facility, and describe, as

measured in travel time, the accessibility of the

facility to the population.

\(3\) Describe the efforts that have been made or are being

made in areawide or interfacility planning to meet the

needs of the community in the most effective and

economical manner.

b\. Description of Programs to be Conducted in Facility.

\(1\) Describe the broad categories of health services to be

offered. Where applicable include services such as

medical, surgical, obstetrics, pediatrics, psychiatrics,

long-term care or extended care and also include:

\(a\) Overall bed complement.

\(b\) Bed distribution by services (e.g., medical,

surgical, intensive care, psychiatric, long-term

or extended care).

\(c\) Allocation of beds by nursing units.

\(d\) Allocation of beds by patient rooms.

\(e\) The number of operating rooms, obstetrical delivery

rooms, labor rooms, nurseries, etc.

\(f\) Outpatient and emergency services. Is a formally

organized outpatient service planned? If so, will

the outpatient service be a satellite, noncontiguous

unit organized into clinics? If so, give the types

of clinics proposed.

\(g\) Other diagnostic and treatment services \-- e.g.,

dental, radiology, laboratory, physical medicine

and rehabilitation, hemodialysis, cardiopulmonary

function, etc.

\(h\) Describe the social service and home care programs;

the extent of the services to be provided and

facilities required.

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Page 2-3 1/73

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4615.1

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(2-2) (i) Describe any preventive medicine programs, such as

prenatal and well-baby clinics, TB detection,

nutrition and obesity clinics, and inoculation

programs.

\(2\) Educational and Research Programs.

\(a\) What programs are proposed for clinical and basic

biomedical research, and research in medical care

administration?

\(b\) Describe any formal educational programs for nurses,

interns, residents, technicians, therapists, and

others. State briefly the scope of the programs

and levels of preparation by professional category.

\(1\) Indicate services and facilities \-- e.g.,

teaching spaces, laboratories, offices, library,

student living quarters, recreational facilities

and supporting areas. (2) Give the approximate

size of the student body and faculty.

\(c\) Describe the health education programs for patients,

community and personnel.

\(3\) Identify all Individual Departmental Functions (as

physical and organizational units) \-- e.g.,

administration, medical records, central services, dietary,

pharmacy, general stores, housekeeping. These may be

grouped by functional similarities suitable to

organizational structure and administrative prerogatives,

such as diagnostic and treatment services, service

departments, nursing services. (Indicate if any of these

will receive unusual emphasis or otherwise be specially

designed as a result of sharing services with other

facilities, or modifications of program through

cooperative agreements.)

\(4\) Staffing Requirements.

\(a\) Show the existing and proposed staffing by position

and number of employees for each service.

\(b\) Give the approximate number of physicians who will

serve on the medical staff indicating general or

special practice.

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1/73 Page 2-4

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4615.1

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(2-2) (5) Working Relationships with Other Facilities.

\(a\) Describe in detail existing and proposed plans for

coordinating services with other facilities; and

any existing or proposed formal working agreements

with health or other organizations providing

services to the general public.

\(b\) Include a description of any plans to share services

or facilities with other institutions. (Existing

and proposed referral services should also be

included.)

\(6\) Physical and Environmental Requirements.

\(a\) Interdepartmental relationships.

1 Describe the functional relations between

services and program areas, and the general

locations of these for maximum effectiveness of

interdependent activities.

2 Give the approximate gross square footage of the

proposed project and of each functional area,

and the total for each department or major

division of the facility.

3 Determine the rooms and separate work areas by

type and number necessary for the performance

of programmed functions.

\(b\) Describe the transportation and distribution

systems for moving people, equipment, food, records

and waste.

\(c\) Describe the electrical and communication systems

to be installed \-- e.g., nurse call, paging, central

dictation, radio and television, and emergency

power.

c\. Initial Application should also Indicate the Proposed financing

of the applicant\'s share of the cost of a project, and

the financial responsibility of the applicant for maintenance

and operation of the project for a two-year period following

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Page 2-5 1/73

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4615.1

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(2-2) construction, establish the proprietary or nonprofit status

of the applicant\'s project, and present a preliminary estimate

of the number of square feet in the project, the cost per

square foot, the cost of equipment and other estimated costs.

Schematic drawings of the proposed project should also be

included. The financial capability of the applicant (mortgagor)

to amortize a HUD-FHA insured mortgage will be determined

for each project by the HEW Regional Office, after review of

analyses and recommendations submitted by the State Hill-Burton

Agency and supporting documents which will be submitted

with the initial Application. These supporting documents

will include the following data and other information:

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1/73 Page 2-6

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4615.1

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1(a). Provide the following data for the past three years:

Admissions or

\(1\) Accommodation No. of Beds Discharges Total Pt. Days

Yr. Yr. Yr. Yr. Yr. Yr. Yr. Yr. Yr.

Private \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_

Semi-Private \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

Ward \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_

TOTALS \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_

\(1\) Accommodation No. of Beds % Occupancy

Yr. Yr. Yr. Yr. Yr. Yr.

Private \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Semi-Private \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Ward \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

TOTALS \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Admissions or

\(2\) Clinical Serv. No. of Beds Discharges Total Pt. Days

Yr. Yr. Yr. Yr. Yr. Yr. Yr. Yr. Yr.

Medicine & Surgery \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

Obstetrics \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

Pediatrics \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

Psychiatry \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

Other (specify) \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_ \_\_\_\_

TOTALS \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_
\_\_\_\_ \_\_\_\_

\(2\) Clinical Serv. No. of Beds % Occupancy

Yr. Yr. Yr. Yr. Yr. Yr.

Medicine & Surgery \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Obstetrics \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Pediatrics \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Psychiatry \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

Other (specify) \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

TOTALS \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

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Page 2-7 (1 of 2) 1/73

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4615.1

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1(a). Provide the following data for the past three years:

\(3\) Source of Payment % of Gross Revenue

Yr. Yr. Yr.

Blue Cross \_\_\_\_ \_\_\_\_ \_\_\_\_

Other Insurance \_\_\_\_ \_\_\_\_ \_\_\_\_

Medicare \_\_\_\_ \_\_\_\_ \_\_\_\_

Medicaid \_\_\_\_ \_\_\_\_ \_\_\_\_

Self-Pay \_\_\_\_ \_\_\_\_ \_\_\_\_

Free Care \_\_\_\_ \_\_\_\_ \_\_\_\_

Other (specify) \_\_\_\_ \_\_\_\_ \_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_ \_\_\_\_ \_\_\_\_

TOTALS 100 100 100

Note: In (3) above, exclude bad debts;

include both inpatients and outpatients

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Page 2-7 (2 of 2) 1/73

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4615.1

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\(4\) Revenue and Units of Service by Income Category (Use American

Hospital Association (HAS) Definitions.)

Year\_\_\_\_\_ Year\_\_\_\_\_

Service (Use Gross Revenues) Units \$ Units \$

Daily Patient Services \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Delivery & Labor Rooms \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Operating Rooms \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Central Services & Supply \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Laboratory \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Blood Bank \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Radiology \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Pharmacy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Inhalation Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Physical Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Occupational Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Outpatient Clinics \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Emergency Department \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

Cafeteria \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Miscellaneous \_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_
\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_
\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_
\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_
\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

TOTALS \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Less Discounts, Allowances,

Bad Debts, Etc. \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Net Revenues \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\(5\) SSA-1562 \"Reimbursable Cost on the Combination Method\"

\(6\) SSA-1563 \"Hospital Statement of Reimbursable Cost\"

\(7\) Audits performed by Blue Cross

\(8\) Annual financial and statistical reports submitted to Blue Cross

and Medicaid

\(9\) Audited annual financial statements

1(b). Provide the following:

\(1\) Schedule of current charges

\(2\) Monthly financial and statistical reports submitted

to the facility board during the current year.

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1/73 Page 2-8 ( 1 of 2 )

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4615.1

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\(4\) Revenue and Units of Service by Income Category (Use American

Hospital Association (HAS) Definitions.)

Year\_\_\_\_\_

Service (Use Gross Revenues) Units \$

Daily Patient Services \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Delivery & Labor Rooms \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Operating Rooms \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Central Services & Supply \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Laboratory \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Blood Bank \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Radiology \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Pharmacy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Inhalation Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Physical Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Occupational Therapy \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Outpatient Clinics \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Emergency Department \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Cafeteria \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Miscellaneous \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_ \_\_\_\_\_\_\_\_\_

TOTALS \_\_\_\_\_\_\_\_\_

Less Discounts, Allowances,

Bad Debts, Etc. \_\_\_\_\_\_\_\_\_

Net Revenues \_\_\_\_\_\_\_\_\_

\(5\) SSA-1562 \"Reimbursable Cost on the Combination Method\"

\(6\) SSA-1563 \"Hospital Statement of Reimbursable Cost\"

\(7\) Audits performed by Blue Cross

\(8\) Annual financial and statistical reports submitted to Blue Cross

and Medicaid

\(9\) Audited annual financial statements

1(b). Provide the following:

\(1\) Schedule of current charges

\(2\) Monthly financial and statistical reports submitted

to the facility board during the current year.

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1/73 Page 2-8 ( 2 of 2 )

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4615.1

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1(c). Provide the following data projected for the first two

years of operation:

\(1\) Budget to include:

a\. Data called for in A (1) through (4) above.

b\. For each source of inpatient payment, specify:

Number of Average Total % of Total Net

Patient Daily Gross Gross Patient

Source of Payment Days Charge Charges Revenue Income

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_

Blue Cross \_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_ \$\_\_\_\_\_\_
\_\_\_\_\_\_\_ \$\_\_\_\_\_\_\_\_

Other Insurance \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

Medicare \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_

Medicaid \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_

Self-Pay \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_

Free Care \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_

Other (specify) \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

TOTALS \_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_ 100 \$\_\_\_\_\_\_\_\_

Number of Total Total Net

Patient Gross Patient Net Average

Source of Payment Days Charges Income Per Diem

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_

Blue Cross \_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_ \$\_\_\_\_\_\_\_\_
\$\_\_\_\_\_\_\_\_\_\_

Other Insurance \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

Medicare \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

Medicaid \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

Self-Pay \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

Free Care \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

Other (specify) \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_
\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_

TOTALS \_\_\_\_\_\_\_\_\_ \$\_\_\_\_\_\_ \$\_\_\_\_\_\_\_\_

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Page 2-9 ( 1 of 2) 1/73

HUD-Wash., D.C.

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4615.1

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

c\. Other projected income such as endownments, fund

drives, etc.

d\. Total operating budgets, with individual

departmental expenses to include salaries and

wages, supplies and other expenses. Salary

and wage detail should show the following

departmentally: position(s), unit salary, number

of staff in category, and total salary and wages.

e\. Provide detailed proposals supporting proposed

expenses for major contractual services. (e.g.,

laundry, food service, housekeeping, etc.)

f\. Debt service per patient day.

g\. Statement of existing indebtedness.

h\. Where applicable, such as in the case of

for-profit hospitals, provision for real estate,

income and other taxes.

i\. Reserve for replacement (proprietary only).

Note: Provide statements setting forth basis for assumptions and
rationale

for projections.

1(d). Attach the following:

\(1\) Facility organization chart.

\(2\) Listing of board of directors and committees,

to include credentials and qualifications of members.

\(3\) Composition of planning and development committee,

to include credentials and qualifications of members.

\(4\) Amortization schedule showing principal and interest

payments for mortgage period at the projected interest

rate.

\(5\) Tables showing projected annual depreciation for

buildings, fixed equipment and movable equipment.

Indicate projections for purchase of equipment.

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Page 2-9 ( 2 of 2) 1/73

HUD-Wash., D.C.

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4615.1

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(2-2) d. The Project Construction Application (HEW 537) includes

certain assurances to be signed by the applicant.

THE APPLICANT SHOULD READ CAREFULLY ALL THE REQUIRED

ASSURANCES IN THE APPLICATION BEFORE SIGNING.

e\. Determination of tentative amount of maximum insurable

mortgage. In its processing of the initial application the

HEW regional office can determine the tentative amount of

the maximum insurable mortgage as follows:

\(1\) Using the Guide Form of the HEW Final Approval Letter

add Items 5, 7 and 9.

\(2\) Divide the total amount by the factor shown in Column 3

below, which is based on a 7% interest rate mortgage:

\(1\) (2)\* (3)\*

Construction Period Carrying Charges and Factor

(Months) Financing (%) (100 - Col. 2)

12 8.3 91.7

15 9.3 90.7

18 10.3 89.7

21 11.3 88.7

24 12.3 87.7

27 13.3 86.7

30 14.3 85.7

33 15.3 84.7

36 16.3 83.7

\*Note for nonprofit facilities each percentage in Column 2

should be increased by 2.0 and each percentage in Column 3

reduced by 2.0 to reflect AMPO in nonprofit proposals where

applicable (or a lesser percent if so desired by the applicant).

(To compensate for any change in the maximum interest rate

the above columns 2 and 3 may be adjusted either up or down

by .0625 for each 3 month interval cumulatively for each 1/2

of 1% change in the interest rate - Increased interest rate

\- column 2 would be increased and column 3 decreased;

Decreased interest rate - column 2 would be decreased and

column 3 increased.)

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1/73 Page 2-10

HUD-Wash., D. C.

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4615.1

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

The percentage figure in Column 2 includes mortgage interest,

mortgage insurance premium, HUD-FHA application, commitment

and inspection fees, the FNMA commitment, purchasing and

marketing fee, and Allowance to Make Project Operational

(AMPO) (where applicable). Not included are real estate

taxes, fire and hazard insurance (usually in the construction

contract) and title and recording expense.

Upon publication of any change in the maximum interest rate,

a new table of factors will be issued based upon the new

rate.

f\. Approval of Initial Application. After approval of HEW

initial application, the Regional Office advises the

applicant to submit formal application, FHA Form 2013-HOSP.

to HUD through approved lender, at the same time advising the

State Agency that it is in order to issue a Certificate of

Need to the sponsor.

2-3. REVISED APPLICATION: THE AGREEMENT: Certain cost and other

information must be submitted after bids have been opened and

approved and before the construction contract is awarded. In

straight-loan projects, this information replaces the revised

application. In combined projects this information is submitted

with the Revised Application. This information establishes a

basis for initial mortgage insurance approval and an agreement

whereby the applicant agrees to construct the project in accordance

with the approved application. After this approval, the

applicant will be notified concerning the procedure of making an

amended application to HUD for mortgage insurance.

In addition to cost figures shown on this part of the application,

carrying charges and financing during construction will be added.

These later costs will be calculated precisely by the HUD Office

concerned prior to final approval of the loan.

2-4. REVISED APPLICATION OR EQUIPMENT: COMPLETION OF PROJECT. When

construction of the project is completed, the applicant submits

a revised application and/or substitute information reflecting

final project costs. Total mortgage amount endorsed will be the

original insurable amount, or 90% of the actual total project

cost, whichever is less. After a final inspection of the project

by the HEW Regional Office, HUD will be notified that (final)

endorsement of the mortgage is in order.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Page 2-11 1/73

HUD-Wash., D. C.

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4615.1

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

2-5 DESIGN OF THE PROJECT AND CONTRACT REQUIREMENTS.

a\. Predesign Conference. The design of a project should begin

with the scheduling of a predesign conference. The conference

should be attended by the applicant, the project architect,

and representatives of the State agency and the Regional

Office. It is recommended that the conference agenda include

a written program which sets forth the requirements of the

facility, specification content, the need for current cost

estimates, and the responsibilities of all concerned with

the project.

b\. Construction standards and minimum requirements. The General

Standards of Construction and Equipment for Hospital and

Medical Facilities are contained in the Public Health Service

Publication No. 930-A-7. A thorough study of these standards

by the applicant and his architect is necessary before the

design of the project is started. These standards constitute

the minimum requirements for construction. Other recommended

design guide material is available from the HEW Regional

Office. Consultation services on the technical and

administrative aspects of the functional program in existing

facilities, or the proposed programs for new facilities, are

available upon request to the HEW Regional Office.

c\. Submission of drawings, specifications, and other material.

To assist the applicant in pursuing an orderly routine in

the development of the project, the drawings and other design

material shall be submitted to the HEW Regional Office in

three stages:

\(1\) First stage - schematics. When the building site has

been selected, the next planning step takes the form of

small scale schematic drawings. The information

contained in the narrative program (described under

paragraph 2-2) will be translated into terms of required

areas and their functional relationship. Based on the

narrative program and studies by the applicant\'s

architect, the results should be a fairly accurate

concept of the final form of the facility. This plan

should be studied in detail by all concerned and

necessary changes should be made at this time. Schematic

drawings are to be submitted with the initial Application.

After the schematic drawings have been agreed upon, a

reasonably accurate estimate of the project cost can

be made. This estimate should include the cost of

construction of the building(s), fixed and movable

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

1/73 Page 2-12

HUD-Wash., D. C.

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4615.1

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(2-5) equipment, architect\'s and consultant\'s fees, inspection

and supervision, parking areas, grading, walks, roads and

landscaping, and contingencies.

\(2\) Second stage - preliminaries. After the schematic

drawings and initial cost estimates have been approved,

the plan should be developed to a larger scale

indicating major items of equipment for the building.

During the preliminary stage, the architect and his

consulting structural, mechanical, and electrical

engineers will have been studying the program requirements

to determine the most economical and practical

systems of foundations, structural framing, plumbing,

heating, electrical distribution, ventilation, and

air-conditioning. They must determine which type of fuel

is most economical, which types of elevators and control

devices will be most satisfactory, which materials are

most suitable from the point of view of economy, function,

and maintenance. These questions must be decided before

proceeding with the third stage (working drawings).

Each floor plan should show the square feet of space

and the number of beds required, and should indicate

the function of each room.

\(a\) The architect should now review the cost estimate

and advise the applicant if adjustments in the

budget are required.

\(b\) During this planning phase, the architect should

have given all those concerned with the project

ample opportunity to study the drawings and to

make comments and recommendations. The design

team may now proceed with the development of

final working drawings and specifications.

\(3\) Third stage - working drawings. The working drawings

are the final stage of the design process. These are

the drawings upon which the contractor will base his

bid. It is of the utmost importance that they represent

in every instance and in great detail exactly what is

to be constructed. This will minimize misunderstandings,

claims for extras, and change orders during the

construction period.

\(a\) The final working drawings should comply with the

requirements contained in Public Health Service

regulations. Separate drawings shall be prepared

for each of the branches of work: (1)

architectural, (2) structural, (3) mechanical, and

\(4\) electrical.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Page 2-13 1/73

HUD-Wash., D. C.

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4615.1

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(2-5) (b) The working drawings, together with the

specifications, are the most important documents

constituting the contract. They translate concept

into accomplishment. On their quality depends

exactness in estimating and effectiveness in

building what was planned. Their careful

preparation is the best insurance for trouble-free

execution of the work.

\(c\) Upon completion of the working drawings, a revised

estimate of cost for the work should be prepared

by the architect to alert the applicant on the

amount of financial obligation he must be able

to meet.

d\. Contract Specifications.

Content of specifications. The title sheet shall contain

the name of the project, its location, type of work, name

and address of the owner, the architect, the consultant (if

applicable), the date of specifications, a brief description

of the work, and shall indicate whether public advertisement

or selective bidding is to be used. An index should be

included.

\(1\) Instructions to Bidders. The instructions to bidders

shall include detailed information regarding various

legal or established requirements in connection with

the preparation, submission, and consideration of

proposals, and for the construction of the project. Time

for completion, liquidated damages, if specified, the

handling and return of bid deposits, and details relating

to bidding and contract award shall also be included.

If the Schedule of Drawings is not set forth as a separate

section of the specifications, it should be included

in these instructions.

\(2\) Bid forms. A separate bid form shall be included for

each part of the work for which a bid is requested.

The bid forms shall contain all pertinent agreements

including all addenda relative to the contract which

the bidder should acknowledge when filing his proposal.

When alternate bids and/or unit prices are required,

they should be made a part of the proposal. The amount

and type of bid deposit should also be stated.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

1/73 Page 2-14

HUD-Wash., D. C.

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4615.1

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(2-5) (3) Form of contractor-owner agreement. For the advance

information and knowledge of bidders, the construction

contract form which must be a \"lump sum\" type shall be

contained in the specifications.

\(4\) Supplemental general conditions. General conditions

should be supplemented when exceptions or additional

information are required in connection with the project

and may include such items as conditions relating to the

geographical area, laws, codes, and regulations of area

in which the building is located.

\(5\) Alternates. A reasonable number of alternate prices

may be requested in the bidding documents. The reason

for requesting alternate prices are (1) to allow a decision

between two materials or methods of different value

and (2) to adjust the bids received so that the contract

sum will fit within the budget.

\(6\) Technical specifications. The technical portions of

the specifications are the requirements and instructions

for all trade sections or divisions of the work describing

the materials, workmanship, and equipment required

for the construction of the project.

\(7\) Addenda. Addenda to the drawings and specifications

consist of notices or bulletins sent to bidders to

notify them of any necessary corrections, interpretations,

or changes in the requirements of the drawings

and specifications. Addenda must have the approval of

the State agency and the regional office and be issued

in time to reach bidders prior to their submission of

bids.

\(8\) Approval and format. The Public Health Service Regulations

\--Part 53, require an assurance that the applicant

will obtain approval of final working drawings and

specifications from the Public Health Service before

the project is advertised or placed on the market for

bidding.

e\. Mandatory Requirements to be Specified.

\(1\) Time for completion. The specifications must stipulate

a time of completion, either in calendar days or as a

fixed date, for each construction contract included in

the project. This is an important item and is used,

among other things, to assure that all bidders are

competing on an equal basis.

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Page 2-15 1/73

HUD-Wash., D. C.

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4615.1

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(2-5) (2) Labor standards. The Labor Standards which include the

Copeland Act, Anti-Kickback Regulations, the Davis-Bacon

Act, and the assurance of non-discrimination in

contract employment for all contractors, subcontractors,

and vendors as required by Executive Order 11246, dated

September 24, 1965, shall be incorporated in the

specifications without change.

\(3\) Wage determination applicability. Applicants must

obtain wage determinations for inclusion in the bidding

documents. The request should be submitted through the

State agency to the regional office six weeks before

the bid opening date.

\(a\) The request should contain the following

information:

1 Name of facility, project number and location

including county;

2 Type of project, i.e., new hospital, nursing

home;

3 Estimated value of construction contracts;

4 Description of project, type of building, number

of stories, number of elevators, and whether

the building is air conditioned;

5 Name and address of project architect;

6 Approximate date project will be advertised for

bids, bid opening date, and proposed date for

award of contract;

7 Listing of other projects that are under

construction of have recently been constructed in

the area, including type of building, cost and

the contractor\'s name and address.

\(b\) The wage determinations are effective for 120 days

from date of issuance. If not used within that

time period, a redetermination must be requested.

\(4\) General conditions. The Public Health Service General

Conditions, AIA Document 201-/SC, Federal Supplement to

General Conditions, or any other general conditions

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1/73 Page 2-16

HUD-Wash., D. C.

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4615.1 CHG 7

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(2-5) developed by an acceptable organization are to be

made a part of the specifications. Public Health

Service General Conditions are available from the

State agency. If they are not used, the following

must be incorporated into the general conditions:

\(a\) The paragraph quoted below must be incorporated

into the general conditions and also appear at

the beginning of each section or division of the

specifications:

\"Notwithstanding any reference in the specifications

to any article, device, product, material,

fixture, form, or type of construction by name,

make or catalog number, such reference shall be

interpreted as establishing a standard of quality

and shall not be construed as limiting completion;

and the Contractor, in such cases, may at his option

use any article, device, product, material, fixture,

form or type of construction which in the judgment

of the Architect expressed in writing is equal

to that specified.\"

\(b\) Representatives of the Secretary, HHS, and the

State agency shall have access to the work site.

\(c\) The following requirements apply to the Section

242 Hospital Program:

1 When the estimated cost of construction or

rehabilitation is \$500,000 or less and no

Hill-Burton Grant or HHS guaranteed loan is

involved, the mortgagor shall furnish assurance

of completion of the project in the form of a

personal indemnity agreement (Personal Undertaking

Form FHA 2459), signed by the principal

individual(s) responsible for construction

or rehabilitation of the project.

\* 2 In the absence of personal indemnity agreement

when the estimated cost of construction or

rehabilitation is more than \$500,000 and in

all cases involving Hill-Burton Grants or HHS

guaranteed loans, the mortgagor shall furnish

payment and performance bonds each in the

minimum amount of 100 percent of the accepted

price. The standard forms to be used are No.

2452, Performance Bond-Dual Obligee and No.

2452-A, Payment Bonds. \*

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5/84

2-17

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4615.1 CHG 7

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(2-5) (d) The contractor shall obtain and maintain insurance

for himself and all subcontractors to include

coverage for:

1 Statutory workmen\'s compensation and employer\'s

liability.

2 Bodily injury liability (\$300,000/\$500,000).

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Page 2-17A 5/84

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4615.1

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3 Property damage (\$100,000/\$300,000).

4 Owner\'s protective liability for bodily injury

(\$300,000/\$500,000), property damage liability

(\$100,000/\$300,000).

\(5\) Fire and extended coverage. The contractor shall insure

the building or other work included in the contract

against loss or damage by fire and against loss or

damage covered by the standard extended coverage insurance

endorsement. The policies shall have attached thereto

a standard mortgage clause making loss payable to the

mortgagee and the secretary as their interests may

appear, and certificates of the insurance company as to

the amount and type of coverage, and the terms of policies

shall be delivered to the owner before any partial

payment is made. The policy shall provide for the

inclusion of all other contractors, subcontractors, and

others employed on the premises as named insured.

\(6\) Competitive specifying. All manufacturers of materials

and equipment of comparable quality should have an

opportunity to receive consideration under competitive

bidding conditions that are fair to the manufacturer,

the owner, and the contractor. All bidders must be

offered a definite basis for competitive bidding. The

project specifications shall describe each item of

material and equipment in terms sufficiently clear to

assure that all bids made in compliance therewith will

be for products of substantially the same quality.

Conditions or limitations within the specifications

which are designed to limit bidding to only one of

several known sources of supply may violate the

principles of competition. The HEW regional office should

be consulted for further information regarding acceptable

methods of specifying materials and equipment.

2-6. BIDS, AWARDS, CONTRACTS, AND MODIFICATIONS.

a\. Bidding procedures. Construction contract awards shall be

based on competitive bids. In obtaining competitive bids,

either of the following methods may be used:

\(1\) Open bidding: public advertisement in suitable newspapers

(advertisements must appear prior to the release

of bidding material to any bidder).

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1/73 Page 2-18

HUD-Wash., D. C.

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4615.1

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(2-6) (2) Selective bidding: selection of and invitation to three

or more competent bidders to submit bids. When bids

are obtained from a selective list, care should be taken

to ensure that each of the invited bidders is willing to

bid.

THERE CAN BE NO IDENTITY OF INTEREST BETWEEN THE SPONSOR/

MORTGAGOR AND THE CONTRACTOR.

b\. Bid openings. Bids shall be opened publicly at the time and

place stated in the invitation for bids, and the owner shall

furnish the HUD Regional Office with three copies of a

tabulation of all bids received.

c\. Inspection of bids. The applicant shall make the original

bidding documents available for inspection by authorized

representatives of the Secretary, HEW.

d\. Low bid exceeds application estimate of eligible costs.

When the bids received are higher than the estimated cost

shown in the approved application, the applicant may:

\(1\) Demonstrate to the satisfaction of the Secretary, HEW,

that additional financial resources are available to

pay the increased cost.

\(2\) On the basis of revised plans and specifications,

solicit bids from the original contractors; however, prior

to readvertising, the revisions must have the approval

of HEW.

\(3\) Negotiate, within reasonable limits; i.e., approximately

five percent with the low bidders on items of construction.

The negotiations can be at the discretion of the

applicant; however, the State agency and the HUD Regional

Office should approve all such negotiations since they

could, if extensive enough, change the project concept.

e\. Contracts. Construction work shall be performed by the \"lump

sum\" (fixed price) method. The work may be let under one

contract, or bids may be received separately for major

branches of the work. In either case, the contract shall

be awarded to the responsible bidder submitting the lowest

acceptable bid.

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Page 2-19 1/73

HUD-Wash., D. C.

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4615.1

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f\. Submission of bids and contracts for approval. No award of

contract shall be made until the final part of the application

has received the approval of the HUD Regional Office.

g\. Disqualification of certain bidders. Anyone furnishing

design and/or supervisory services on a project must be

disqualified as a bidder on such projects. The acceptance of

such a bid would be in violation of the requirements of

competitive bidding since the firm or individual providing

such service is in a preferred position.

h\. Preaward conference. Prior to award, the low bidder and

known subcontractors may be required to attend a preaward

conference for the purpose of formulating an affirmative

action program relating to equal employment opportunity

during the construction of the project. Applicants are

advised to contact the HEW Regional Office before taking

bids or awarding contracts for any project to determine

whether a preaward conference should be held. This

requirement may be accomplished at the time as the

Preconstruction Conference (Paragraph 2-9 below).

2-7. PROPRIETARY FACILITIES. Proprietary facilities are required to

make payments into a reserve fund for replacements of equipment.

To calculate the annual payment to the reserve, HEW will take

10% of the amount of the equipment included in the replacement

cost. This figure will be stated to the HUD office in the HEW

Final Approval Letter.

2-8. CONSTRUCTION OF THE BUILDING. The applicant is responsible, for

completing the work in accordance with the approved plans and

specifications and for securing compliance with labor standards.

A full-time applicant\'s (or architect\'s) representative is

recommended; the cost of his service is allowable for Federal

participation.

2-9. PRECONSTRUCTION CONFERENCE. Immediately after signing all building

construction contracts, the applicant should arrange for a

meeting of the Regional Office personnel with the architect,

clerk-of-the-works, consultant, prime contractor, and the principal

subcontractors. This discussion of the responsibilities

of the various parties will help to overcome misunderstandings

and problems which may arise during construction. On joint

projects, representatives of other agencies may wish to attend

the meeting. (The purposes of the Preaward Conference may be

accomplished prior to these Preconstruction Conference items,

at the same meeting.)

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1/73 Page 2-20

HUD-Wash., D. C.

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4615.1

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2-10. ALLOWABLE AND NONALLOWABLE COSTS. Summarized in Appendix 4.

A necessary modification of Item 12 of this Appendix (Space for

Private Practice of Medicine) to be consonant with a specified

intent of Section 242 of the National Housing Act as added by

Section 1501 of the Housing and Urban Development Act of 1968,

i.e., to encourage the group practice of medicine, is reflected

therein.

2-11. LABOR STANDARDS. Securing compliance with labor standards will

require the applicant to:

a\. Check weekly payrolls to assure that they contain the required

information and that Labor Standards are properly certified

and are accompanied by the required Anti-Kickback affidavits.

b\. Verify that wages are not less than those shown on the wage

determination, that all classifications employed are listed

therein, and that the requirements are met if apprentices

are employed.

c\. Assure that a copy of the wage determination is posted at the

site in a place where it can be easily seen by the workers.

d\. Maintain and preserve all payrolls, affidavits, and other

pertinent data during the life of the contract and for five

years after completion of construction or until a Federal

audit is made.

e\. Withhold sufficient payment from the contractor, in the event

of an alleged labor standards violation, in accordance with

the provisions of the labor standards.

f\. In the case of a violation, submit a report describing the

violation and its settlement to the HEW Regional Office (in

accordance with the labor standards).

2-12. COMPLETION DATE. The date of completion for determination of

actual costs is established by HEW. The mortgagor must submit

to HEW a revised Hill-Burton application reflecting the final,

actual, project costs including all carrying charges, and financing

and discounts up to the date of completion as established by

HEW. These costs will be reviewed by HEW. (See Paragraph 3-4.b.

(2).)

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Page 2-21 1/73

HUD-Wash., D. C.

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4615.1

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2-13. POSTCONSTRUCTION OPERATIONS. The applicant shall arrange for a

final inspection by submitting a request to the Regional Office

when the construction work is complete.

a\. As-built drawings, showing all changes, deviations, and

corrections, particularly relocations of electrical,

mechanical, and other utility services, should be prepared

and maintained by the applicant.

b\. The applicant shall inspect the project prior to the expiration

of the guarantees contained in construction contracts

so that any defects resulting from the use of inferior

materials, equipment, or workmanship may be corrected.

c\. ATTENTION IS DIRECTED TO THE ASSURANCES SET FORTH IN THE

APPLICATION REGARDING COMPLIANCE WITH MINIMUM STATE STANDARDS

FOR MAINTENANCE AND OPERATION AND FOR THE PROVISION OF

FREE PATIENT CARE TO THE EXTENT FEASIBLE.

2-14. INCOMPLETE OFF-SITE AND ON-SITE FACILITIES. In the case of

incomplete on-site and off-site facilities, approval of the final

advance of mortgage proceeds may be given when the incomplete

items are minor in nature, all off-site utilities such as sewer,

water, electrical and gas facilities are installed and connected,

and adequate facilities for ingress and egress are provided, and

a cash escrow for completion of the facilities is deposited with

the mortgagee under an appropriate agreement. Except for

landscaping and exterior improvements which cannot be completed

because of weather, the amount of the escrow must be at least

twice the HEW Regional Office\'s estimated cost of completion to

assure an incentive to complete the work taking into consideration

a possible rise in cost. The escrow for landscaping and

exterior improvements must not be less than the estimate of cost

of completion by the HEW Regional Office. It is not anticipated

that there will be changes during construction. If the applicant

desires to make a change which constitutes a significant betterment

on HUD insured mortgage projects, the change order must be

reviewed and approved by the HEW Regional Office.

2-15. EQUIPMENT.

a\. Applicant\'s responsibility. It shall be the responsibility

of the applicant to prepare a list of and to select and

purchase all necessary equipment for the complete functioning

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1/73 Page 2-22

HUD-Wash., D. C.

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4615.1

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(2-15) of all services included in the project. Consumable items,

disposable items, and items of current operating expense

such as fuel, food, and drugs are considered supplies and

shall not be included in the project equipment list.

b\. Classification. Equipment items shall be classified in two

main groups:

\(1\) Fixed (realty) equipment is defined as equipment which

is permanently affixed to the building or which must be

connected to a service distribution system designed and

installed during construction for the specific use of

the equipment. It includes items such as extractors,

walk-in refrigerators, inter-communication systems,

and built-in casework.

\(2\) Movable (nonrealty) equipment is defined as all items

of equipment which are not considered to be fixed

equipment. It includes items such as operating tables,

obstetrical tables, anesthesia apparatus, wheeled

equipment, portable paging systems, etc.

c\. Purchase. Items of fixed equipment not included in the

construction contract are to be purchased competitively,

except where justification is submitted in writing by the

applicant and approved by the State agency and the HEW

Regional Office.

\(1\) Movable equipment may be purchased on the open market,

by securing quotations, or through competitive bidding

procedures.

\(2\) Applicants who do not include all fixed equipment in

the construction contract and let separate contracts

for furnishing and installing certain items of fixed

equipment must include in such separate contracts all

provisions for contract security, insurance, and

compliance with labor standards except that labor

standards need not be included for contracts under \$2,000.

d\. Equipment lists. Separate lists of equipment are to be

submitted by the applicant as soon as possible after the award

of the construction contract for (a) all fixed equipment

purchased outside the construction contracts, and (b) all

movable equipment.

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Page 2-23 1/73

HUD-Wash., D. C.

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4615.1

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(2-15) (1) Fixed equipment which is not to be included in the

construction contract shall be shown on the preliminary

stage of the plans (second stage) to ensure its

coordination with the architectural, mechanical, and

electrical phases of the work.

\(2\) The purposes of the equipment lists are:

\(a\) To provide the applicant with a mechanism for

systematically determining the equipment needed

for the facility; and

\(b\) To provide the HEW Regional Office with the

information necessary to determine that the

equipment is essential to and adequate for the

services provided by the facility, and that the

items to be purchased are of reasonable cost and

allowable for inclusion in the estimated replacement

cost.

\(3\) The approved equipment lists shall not be used as a

means of policing the selection and purchase of equipment

by applicants. In the purchase of equipment, the

applicant may make substitutions, omissions, or changes

in quantity of items, provided that the nature and

extent of the services are not materially affected by

the changes.

\(4\) The cost of all movable equipment should include equipment

on hand and equipment to be purchased. Costs shall

be shown for all equipment except equipment on hand or

equipment purchased through the construction contract.

\(5\) When rooms, such as bedrooms, are to be identically

equipped, the equipment list should show the equipment

planned for one room only and identify the additional

rooms which are to be so equipped. Cost estimates

should be projected for equipment to be purchased for

all rooms. A recapitulation for equipment items by

departments should also be submitted.

\(6\) If more than one project is involved in the approved

application, the equipment list should be prepared for

the entire facility under construction. If an item of

equipment will serve more than one project, the total

cost of the item is to be shown, and the amount to be

charged to each project shown in the designated columns.

The applicant shall indicate by attachment to the equipment

list the basis for the proration of the cost among

projects.

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1/73 Page 2-24

HUD-Wash., D. C.

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4615.1

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(2-15) e. Amending the equipment list. The applicant should amend

the equipment list for either of the following purposes:

\(1\) To add additional items not included on the original

approved list.

\(2\) To reflect a change in the list made necessary by a

change in the scope of the project or a change in the

services to be provided.

Equipment lists may be amended by submitting revised pages

showing the items deleted, changed, or added.

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Page 2-25 (and 26) 1/73

HUD-Wash., D. C.