STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSITY HOME FOUNDATION, INC.,)

)

Petitioner, )

)

vs. ) CASE NO. 77-1590

) OFFICE OF COMMUNITY MEDICAL ) FACILITIES, DEPARTMENT OF HEALTH ) AND REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on November 8, 1977, in Tallahassee, Florida. The hearing was originally scheduled for September 27, 1977, but was continued until November 8, 1977, at the request of the petitioner. The parties stipulated that the hearing officially closed forty-five (45) days after the receipt of the transcript, which occurred on December 2, 1977.

APPEARANCES

For Petitioner: Selig I. Goldin, Esquire

Post Office Box 1251 Gainesville, Florida 32602

For Respondent: James Mahorner, Esquire

1323 Winewood Boulevard

Tallahassee, Florida 32301 INTRODUCTION

The issue in this proceeding is whether petitioner is entitled to a certificate of need to construct and operate an 83-bed skilled care nursing home in Gainesville, Alachua County, Florida. In support of its position, petitioner presented the testimony of Mr. Paul C. Allen, petitioner's president and administrator and Exhibits 1 through 5. Respondent presented the testimony of Robert Green, Director of Project Review for the North Central Florida Health Planning Council, Inc.; Ray Chamblis, respondent's medical facilities specialist; and Art Forehand, respondent's administrator. Respondent's Exhibits A through F were received.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. From 1968 to the present time, petitioner University Home Foundation, Inc. has owned and operated the Convalescent Center of Gainesville, a 119-bed skilled care nursing home. In early 1977, petitioner submitted an application for a certificate of need to construct and operate a new 120-bed skilled care nursing home in Gainesville, Florida. Due to the bed need projection of the 1976 Florida State Plan for Construction of Hospitals and Related Medical Facilities, petitioner submitted a revised application for an 83-bed skilled care facility. It is petitioner's intention, should a certificate of need be issued, to downgrade the present Convalescent Center of Gainesville to an intermediate care nursing facility and to build the new facility as an 83-bed skilled facility. Petitioner's revised and completed application was acknowledged by respondent effective June 3, 1977.

   
   

2. In the latter part of October, 1976, the respondent denied an application for a certificate of need for a 91-bed nursing home in Gainesville, Florida, proposed by Hill-Guthrie Associates. This adverse determination by respondent resulted in an administrative hearing. On June 8, 1977, the Hearing Officer entered an order finding that the procedural deficiencies surrounding the timeliness of the review process on the Hill-Guthrie application should be construed as an approval of the proposal to construct the 91-bed nursing home. On July 28, 1977, respondent issued a certificate of need to Hill-Guthrie Associates.

   
   

3. The 1975 Florida State Plan projected a bed need for Alachua County of

91. The 1976 Plan projected a need for 83 long term care beds for the year 1981. The 1977 Plan, which was not accepted by the Department of Health, Education and Welfare until July 19, 1977, calls for a long term bed need of 106 by the year 1982. These plans do not distinguish between skilled and intermediate care bed needs. Due to federal regulations, the projected need figures do not include patients under 65 years of age. Testimony at the hearing indicated that between 10 and 14 percent of patients in nursing homes are under

1. The figures in the State Plans are derived by subtracting from the projected number of beds needed for the area's population the number of beds presently existing in the area. In this instance, Alachua County presently has three existing nursing homes with a capacity of 332 beds. The projected number of beds needed in the 1976 and 1977 Plans (83 and 106, respectively) do not take into consideration the 91 bed proposal of Hill-Guthrie Associates, for which a certificate of need was issued on July 28, 1977. If the Hill-Guthrie home is completed, Alachua County would be overbedded by eight beds under the 1976 Plan and underbedded by fifteen beds under the 1977 Plan.

   
   

   1. On June 23, 1977, the North Central Florida Health Planning Council, Inc. (HPC), which serves a sixteen county area, held a public hearing to receive comments on the petitioner's revised proposal for an 83-bed skilled care nursing home. Among the items discussed at the hearing were the effects of the Hill- Guthrie decision and the correctness of the figures contained in the State Plan. (Exhibit No. 2)

      
      

   2. The Staff of the HPC prepared a report on petitioner's application and recommended that a certificate of need be denied. The Staff Report considered the twelve criteria suggested by respondent and found that the proposal was not in conformity with plans, standards and criteria; that there are less costly alternatives to the proposed project; that the proposal would not promote cost containment; and that there was no documented need for the project. More specifically, the Staff found that the Hill-Guthrie approval for 91 beds would exceed by eight the 83 beds needed in Alachua County under the 1976 State Plan. Since Hill-Guthrie proposed construction at a cost of $11,407.00 per bed and

      petitioner's proposed cost was $13,614.00 per bed, the Staff determined that it would be less costly to utilize existing facilities and to construct the Hill- Guthrie Nursing Home than to build a more expensive facility that would create an overbedded situation. (Exhibit D)

      
      

   3. The HPC Project Review Committee held its hearing on July 14, 1977, and petitioner's president, Mr. Paul Allen, presented his comments in response to the Staff Report. He contested the population and bed need projections contained in the State Plan, and the Hill-Guthrie decision was discussed. The Committee voted to follow the Staff's recommendation to deny the petitioner a certificate of need. (Exhibits No. 3 and D)

      
      

   4. The HPC's Executive Committee meeting was held on July 25, 1977. Mr. Allen spoke to the committee, disagreeing with the figures contained in the State Plan and requesting the committee to vote only on his application and disregard the Hill-Guthrie proposal since a certificate of need to Hill-Guthrie had not yet been issued. Thereafter, the HPC voted to recommend to respondent denial of petitioner's application for a certificate of need for the same reasons set forth in the Staff Report. (Exhibits No. 4 and D)

      
      

   5. By letter dated August 23, 1977, respondent's administrator, Art Forehand, notified petitioner that its project proposal was not in conformity with established standards, plans and criteria. The 1976 State Plan was specifically referenced, but respondent stated that it also considered petitioner's proposal in accordance with the recently adopted 1977 State Plan (Exhibit No. 1) At the hearing, Mr. Forehand testified that his decision was based upon nonconformity with the State Plan without a detailed showing that a need existed irrespective of said Plan. The issuance of a certificate of need to Hill-Guthrie played a large role in Forehand's decision.

      
      

      CONCLUSIONS OF LAW

      
      

   6. The evidence adduced at the hearing illustrates that petitioner gave timely written notice of its intention to make a capital expenditure and that respondent timely complied with the procedural review requirements of federal and state law. Throughout the review process, petitioner has sought to have its application considered separate and apart from any pending applications - specifically the Hill-Guthrie proposal to construct a 91-bed nursing home in Gainesville, Florida. To have ignored the Hill-Guthrie proposal would have constituted error on the part of the local health planning agency and the respondent. The prime purpose of state and federal certificate of need laws is to preclude government funding and reimbursement of unneeded hospital facilities and equipment. Thus, an application may not be considered in isolation from the community and the need for facilities in that community. Here, the order resulting from the fair hearing on the Hill-Guthrie application was entered on June 8, 1977. The local public hearings and recommendations occurred after this date, and the respondent's denial followed the date of the actual issuance of the certificate of need to Hill-Guthrie Associates. This 91-bed proposal has a significant impact upon the nursing home bed need in Alachua County and thus must be considered when reviewing the need for petitioner's capital expenditure proposal.

      
      

   7. The remaining issue is whether the petitioner's proposal to construct an 83-bed skilled care nursing home in Alachua County is consistent with existing plans, standards and criteria developed pursuant to the Public Health Service Act. When applying for a certificate of need to construct and operate new health care facilities, it is the applicant's burden to demonstrate the need

      for such facilities in the community and that its proposed capital expenditure is justified. In an effort to meet this burden regarding the need for more nursing home beds, petitioner attempted to disregard the approved Hill-Guthrie proposal, to challenge the figures set forth in the State Plans and to show that by the time its proposed facility was completed and operational, the bed need would be greatly increased.

      
      

   8. The propriety and necessity of considering the Hill-Guthrie proposal has previously been discussed. Among the factors against which capital expenditures are to be judged by respondent is the need for beds as outlined by the current Florida State Plan for Construction of Hospitals and Related Medical Facilities. F.S. 381.494(6)(c) and F.A.C. Ch. 10-5.11. The correctness, adequacy or appropriateness of the criteria against which capital expenditure proposals are measured are not to be considered at the hearing. This criteria for review is further set forth in the federal guidelines and procedures for states in administering Section 1122 of the Social Security Act. Thus, an applicant is not permitted to attack the correctness of said Plan.

      
      

   9. Petitioner asserts that by the time its proposed facility becomes operational, there will be a greater bed need in Alachua County than that projected in the 1976 and 1977 State Plans. This argument overlooks the fact that the State Plans contain figures based upon projected population figures for a seven-year period. Respondent's medical facilities specialist, Ray Chamblis, testified that the 1977 State Plan projects the bed need for Alachua County for the year 1982, and not just for the year 1977. The 1976 Plan, likewise, projects the bed need for the year 1981.

      
      

   10. From the evidence adduced at the hearing, both oral and documentary, it appears that the reviewing authorities carefully considered and applied all of the applicable criteria set forth in the federal and state statutes and rules in implementation thereof. Petitioner has failed to demonstrate a need for additional nursing home beds in Alachua County in accordance with the State Plan. Nor has petitioner offered sufficient proof of extenuating circumstances which would illustrate that a need for additional beds existed irrespective of the State Plan. This, in addition to the higher cost per bed of petitioner's proposed project, was sufficient grounds for denial of the application for a certificate of need.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited above, it is recommended that the determination of the respondent Office of Community Medical Facilities to deny petitioner's application for a certificate of need to construct and operate an 83-bed skilled care nursing home in Alachua County be upheld and affirmed.

Respectfully submitted and entered this 13th day of January, 1978, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Art Forehand Administrator

Office of Community Medical Facilities 1323 Winewood Boulevard

Tallahassee, Florida 32301

Selig I. Goldin, Esquire Post Office Box 1251 Gainesville, Florida 32602

James Mahorner, Esquire 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 77-001590

Orders for Case No: 77-001590