STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GREATER NAPLES CARE CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 80-1405

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES and ) AMERICANA HEALTH CARE CORPORATION )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice hearings were held in Tallahassee, Florida, on September 4, 1980, and in Naples, Florida, on October 20 and 21, 1980, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:

APPEARANCES

For Petitioner: Karen L. Goldsmith, Esquire

A. Thomas Mihok, Esquire Harrison T. Slaughter, Esquire Suite 610, Eola Office Center 605 East Robinson Street Orlando, Florida 32801

For Respondent: Eric J. Haugdahl, Esquire Department of Department of HRS

Health and Building One, Suite 406 Rehabilitative 1323 Winewood Boulevard Services Tallahassee, Florida 32301

For Respondent: Kenneth F. Hoffman, Esquire Americana Suite 646, Lewis State Bank Building Health Care Tallahassee, Florida 32301 Corporation

This matter arose on the Petition of Greater Naples Care Center, Inc. opposing the grant of Certificate of Need No. 1288 by Respondent Department of Health and Rehabilitative Services (DHRS) to Respondent Americana Health Care Corporation (Americana). The certificate authorizes construction of a 95-bed nursing home in Naples, Florida.

The parties submitted proposed findings of fact. To the extent these proposed findings have not been adopted or are inconsistent with the findings herein, they have been specifically rejected as irrelevant or not supported by the evidence.

FINDINGS OF FACT

1. Americana operates 48 nursing homes in the United States, including three in Florida. It is a wholly-owned subsidiary of CENCO, Inc., a diversified, publicly-owned corporation. Americana's application for the certificate of need was approved by DHRS over the recommended denial of The South Central Florida Health Systems Council (HSA). The HSA has health planning responsibilities for a nine-county area which includes Naples (Collier County). See Sections 381.493(3)(h) and 381.494(6), Florida Statutes (1980). 1/

   However, DHRS has the authority to grant or deny. See Section 381.494(7), Florida Statutes (1980).

   
   

2. The HSA prepared the Health Systems Plan, which indicated a requirement for 95 additional nursing home beds in Collier County for 1980-81. However, the HSA apparently recommended denial based on a project review committee determination that cost of construction and the resulting charges to patients would be too high.

   
   

3. Americana estimates cost of construction at $1.714 million. Financing is to be arranged by the parent corporation at 11 percent annual interest (estimated) . There was no evidence to indicate that excessive charges for patient care would result from these construction and financing costs. Further, Americana, through CENCO, is now seeking to finance the project with tax-exempt bonds to be issued by the Collier County Industrial Development Authority. A

   $3.5 million bond limit and a 120-bed facility were proposed to the Authority. If these bonds are successfully issued, mortgage interest expense would be substantially below the market rate.

   
   

4. Petitioner contends that both the bond request and the proposed 120 beds violate the terms of the certificate of need. However, Americana demonstrated that the $3.5 million represents only a ceiling and that the original $1.7 million estimate remains an operative figure. The testimony of DHRS, the Collier County Development Council and bonding company witnesses established that none of these agencies were misled as to proposed costs. However, the continuing inflation and the questionable construction starting date necessitated a "cushion" to the original estimate. This was not shown to be improper but is, rather, a prudent measure to be taken during an inflationary period.

   
   

5. There was no deception involved in the 120-bed facility proposed to the Collier County Development Authority. This plan calls for construction of the 95-bed approved facility with a shelled-in area to provide for future expansion. This plan was made known to the HSA and DHRS during the processing of the application and was accepted by these agencies even though separate certification of the additional 25 beds would be required.

   
   

6. There are currently 213 extended care nursing home beds in Collier County. These are provided by Petitioner (99) and by the Gulf Drive Nursing Home (114). Both facilities are about 12 years old. In addition, there are 180 beds currently under construction. These include 120 beds at the Naples Villa, which will be available to the general public, and 60 beds at the Moorings Presbyterian. The latter will initially open its facility to the general public but will eventually restrict access to these who are residents of its affiliated congregate living community. All of these facilities are or will be licensed for skilled and intermediate care and, except for the Moorings, will offer a substantial portion of their beds to Medicare/Medicaid patients.

7. The standard used by the HSA sets the upper limit of need for nursing home beds at 27 per 1,000 persons 65 years of age or older. This standard is used by health planning agencies throughout Florida. It results in a computed requirement for 95 additional beds in Collier County which, in the view of Respondents, supports grant of the Americana application.

   
   

8. Petitioner points out that this standard produces a maximum figure, and that other factors must be considered in calculating actual need. Such other factors include projected area growth, utilization of existing nursing homes, the availability of alternate care facilities, any average or deficit in beds in surrounding counties, effect of competition on other facilities, and the cast to patients of the new service.

   
   

9. The evidence established that Collier County is a rapidly growing area and one which is attracting a substantial number of new residents age 65 or older. The two existing nursing homes average about 90 percent occupancy and regularly have patients awaiting admission during the winter months. A waiting list of Medicaid applicants, which is increasing each year, is maintained by the local DHRS office. In addition, placement inquiries are frequently received by this office from outside the area but are discouraged due to the lack of assured acceptance.

   
   

10. A significant number of patients now residing in Naples nursing homes could be cared for at other facilities such as "foster homes" if they were available. Conversely, some patients who do not require acute care must remain at the hospital due to the lack of nursing home beds. Facilities in neighboring counties are limited and offer no real alternative for Naples residents seeking nursing home care.

    
    

11. Petitioner established that a shortage of nursing personnel in the area now exists and asserted that this shortage will become severe if Americana opens a nursing home as planned. Petitioner further contends that Americana will necessarily compete for area nurse, thus driving up wages and, ultimately, the cost of care. Americana views the shortage of nurses as a national problem and has implemented an active nurse recruitment program. It has adequately considered its staffing needs and reasonably believes it will be able to attract the necessary personnel. The evidence was inconclusive as to the impact the proposed facility would have on local wages.

    
    

    CONCLUSIONS OF LAW

    
    

12. The application is governed by the Health Facilities and Health Service Planning Act. See Sections 381.493 through 381.499, Florida Statutes (1980). The criteria against which the application is evaluated are provided in Section 10-5.11, Florida Administrative Code. As the party seeking certification, Americana has the burden of proving entitlement. See Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

13. The application form provided by DHRS and completed by Americana conforms to the above referenced criteria. This application was properly prepared, with answers and data supplied on all relevant questions. The substantive issues on which the application is challenged are those of need for the service, cost of construction and availability of staff.

    
    

14. The Health Systems Plan indicates a requirement for 95 additional beds in 1980-81. These are the beds Americana will provide if the application is

    approved. Although Petitioner demonstrated the somewhat speculative nature of the 95-bed requirement, this projection is based on the most detailed and comprehensive data available and must therefore be accorded appropriate weight. Respondents established that area population is growing and includes persons currently seeking admission to nursing homes. These facts indicate that need for nursing home beds will increase rather than remain stable or decrease.

    
    

15. Americana's cost analysis lacks precision, having been based largely on estimates rather than bids or detailed studies. However, the estimates were shown to be reasonable given the current inflation, fluctuating interest rates, and lack of a known date on which construction could begin. In view of these variables, the $3.5 million industrial bond ceiling proposed by Americana is prudent and is not inconsistent with the $1.7 million estimate for construction. However, should Americana's proposed capital expenditures exceed $1.7 million, it will be required to obtain a new certificate of need. See Section 381.494(1)(n), Florida Statutes (1980).

    
    

16. The shortage of nursing home personnel in Naples is an appropriate concern, and the competition for nurses may well result in some upward wage pressure as envisioned by Petitioner. However, Americana's national recruitment program should assist in attracting nurses from outside the area, which could benefit all Collier County health service facilities. Furthermore, Americana will be required to secure and maintain adequate staff in order to be licensed for operation. See Chapter 400, Part I, Florida Statutes (1980).

RECOMMENDATION

From the foregoing, it is

RECOMMENDED that the Petition of Greater Naples Care Center, Inc. to revoke Certificate of Need No. 1288 be denied.

DONE and ENTERED this 16th day of January, 1981, in Tallahassee, Leon County, Florida.

R. T. CARPENTER Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1981.

ENDNOTE

1/ Although the application was filed prior to passage of the 1980 amendments, the parties accede to the applicability of current statutes.

COPIES FURNISHED:

Eric J. Haugdahl, Esquire Department of HRS Building One, Suite 406 1323 Winewood Boulevard

Tallahassee, Florida 32301

Karen L. Goldsmith, Esquire

A. Thomas Mihok, Esquire Harrison T. Slaughter, Esquire Suite 610, Eola Office Center 605 East Robinson Street Orlando, Florida 32801

Kenneth F. Hoffman, Esquire

Suite 646, Lewis State Bank Building Tallahassee, Florida 32301

Docket for Case No: 80-001405

Orders for Case No: 80-001405