69O-193.006. Financial Viability

(1) In addition to days cash on hand, debt service coverage ratio, and occupancy as defined in Section 651.011, F.S., the Office may utilize measures set forth in this rule to assess the financial viability of a provider. 

(2) The Office may analyze trends in performance of a provider or facility using the information filed pursuant to Rule 69O-193.005, F.A.C., and any other relevant information available to the Office pursuant to Chapter 651, F.S., Chapter 69O-193, F.A.C., or an order of the Office.

(3) Prior to making a determination regarding the financial viability of a facility or provider, the Office shall consider the impact of any extraordinary or unusual occurrences affecting the facility or provider.

(4) The Office may seek the assistance of members of the Continuing Care Advisory Council or other experts in reviewing and evaluating information regarding a facility or provider.

(5) In the event that additional information is necessary to assess the financial viability of a provider, the Office may request and consider such additional information. Additional information includes information, reports, data, and documentation related to the following:

(a) The governing body of the provider, its financial statements, and its financial policies;

(b) The management or management company;

(c) The organization’s financial plans;

(d) Financial feasibility studies, projections, examinations, professional studies, opinions, reports, or other similar documents prepared by or on behalf of a provider;

(e) Compliance with local, state and federal laws, rules, or ordinances;

(f) Marketing plans;

(g) Continuing care contract benefits and services;

(h) Pricing;

(i) Commitment of financial support from other organizations; and,

(j) Other information;

(6) The Office may consider Net Operating Margin – Adjusted Ratio set forth in this subsection in assessing the financial viability of a provider.  In calculating the ratio, the Office may use data pertaining to either the facility or provider, as appropriate, based upon the debt and operating structure of a provider. In addition to calculating the ratio, the Office will consider the relevance of the ratio to a provider based on the provider’s debt and operating structure. The ratio will be calculated using corresponding line items in the reports adopted pursuant to Rule 69O-193.005, F.A.C., and based on Generally Accepted Accounting Principles (GAAP) using the accrual method (unless otherwise defined) except that ratios related to revenue are adjusted and calculated on a basis excluding amortized entrance fees as revenue and including actual entrance fees received net of refunds paid during the period under review.

(a) NET OPERATING MARGIN – ADJUSTED RATIO – The Net Operating Margin – Adjusted Ratio is a measure of the operating performance calculated by dividing operating revenue plus net proceeds from entrance fees minus operating expenses by operating revenue plus net proceeds from entrance fees.

Net Operating Margin – Adjusted Ratio	=	Operating Revenue + Net Proceeds from Entrance Fees - Operating Expenses
		Operating Revenue + Net Proceeds from Entrance Fees

(b) DEFINITIONS:

As used in this rule, the following terms shall have the following meanings:

1. NET PROCEEDS FROM ENTRANCE FEES means actual entrance fees received under the period under review less actual entrance fees refunded during the same period.

2. OPERATING EXPENSES means all expenses for the period under review less interest expense, depreciation, amortization, and other non-cash expenses including a change in the future service obligation.

3. OPERATING REVENUE means all revenues for the period under review excluding earned/amortized entrance fees, non-cash revenue, and a change in the future service obligation.

Rulemaking Authority 651.015(3), 651.026(3) FS. Law Implemented 651.026 FS. History–New 1-5-93, Amended 5-10-94, Formerly 4-193.006, Amended 3-12-20.