STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COMMUNITY PSYCHIATRIC CENTERS, Petitioner, v. | ) ) ) ) ) CASE | NO. | 83-086 |
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. and HOSPITAL CORPORATION OF AMERICA AND BREVARD MENTAL HEALTH CENTERS AND HOSPITAL, INC., Intervenors. | ) ) ) ) ) ) ) ) ) ) ) |
)
) HOSPITAL CORPORATION OF AMERICA, )
)
Petitioner, )
)
) CASE NO. 83-086
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
and )
) BREVARD MENTAL HEALTH CENTERS ) AND HOSPITAL, INC., )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings, in Tallahassee, Florida, on December 1,2, 5, 6, and 7, 1983. The issue for consideration is whether Community Psychiatric Centers or Hospital Corporation of America should be licensed to construct and operate a freestanding inpatient psychiatric hospital in Melbourne, Florida.
APPEARANCES
For Petitioner: Morgan L. Staines, Esquire Community Senior Assistant General Counsel Psychiatric 2204 East Fourth Street
Centers Santa Ana, California 92705
Hospital Jon C. Moyle, Esquire Corporation of Donna H. Stinson, Esquire
America: 118 North Gadsden Street, Suite 100
Tallahassee, Florida 32301
Brevard Mental Eric B. Tilton, Esquire Health Centers 702 Lewis State Bank Building and Hospital, Tallahassee, Florida 32301 Inc.: and
John Antoon, II, Esquire
970 Michigan Avenue, Building C Cocoa, Florida 32922
Department of Claire D. Dryfuss, Esquire Health and 1317 Winewood Boulevard Rehabilitative Building 1, Room 406 Services: Tallahassee, Florida 32301
BACKGROUND INFORMATION
On August 12, 1982, Petitioner, Community Psychiatric Centers (CPC), filed an application for a Certificate of Need (CON) to construct a 60-bed adolescent psychiatric hospital in Melbourne, Brevard County, Florida. Thereafter Respondent, Department of Health and Rehabilitative Services (HRS), issued a notice of intent to deny CPC's application, whereupon, on January 4, 1983, CPC filed a Petition for Formal Administrative Hearing. This case was designated Division of Administrative Hearings (DOAH) Case File No. 83-086.
In the interim, Petitioner, Hospital Corporation of American (HCA), filed its application for a CON to construct a similar 60-bed psychiatric hospital in Brevard County, Florida, which was also denied by HRS on December 29, 1982, a decision which prompted HCA's Petition for Formal Hearing, filed with this Division on January 11, 1983, and assigned Division of Administrative Hearings Case No. 83-094.
On April 11, 1983, HCA, Petitioner in Case No. 83-094, filed a Motion to Intervene and Consolidate in Case NO. 83-086. After a hearing on the motion, the cases were consolidated under 83-086 and HCA made an Intervenor in that case. Still later, on June 1, 1983, Brevard Mental Health Centers and Hospital, Inc., (BMHC), filed its Motion to Intervene in the consolidated case, which was granted on June 18, 1983, over objection by CPC.
On August 5, 1983, HRS indicated a change in its position regarding both applications, indicating that there were now 62 additional short-term psychiatric beds available in the Brevard County Sub-District in 1988, thereby changing the nature of this hearing from two contested denials to that of a comparative hearing between two applicants.
At the hearing, CPC called Loren B. Shook, Gerald N. Hendon, William P. Travis, Samuel McClure, Bonnie Slade, Merrell Jones, Jerry Slusser, Peter Hagis, Jim Luce and Ray Johnson, and introduced CPC Exhibits 1 through 9. HCA called David L. Harris, Milton E. F. Schoeman, Bruce C. Waldo, Ed Johnson, Nat T. Winston, Jr., George I. Dobbs, Jeff C. Wagner, Rodney Van Pelt, John Anderson and David Harris, and introduced HCA Exhibits 1 through 7. BMHC offered the testimony of David Feldman, James B. Whitaker, Peter F. Wahl, Peter Hayes and
Jim Luce and BMHC Exhibits 2 and 3. HRS presented the testimony of Walter Eugene Nelson and offered one exhibit.
FINDINGS OF FACT
On August 12, 1982, CPC, a hospital-operating corporation whose home office is in California, submitted to Respondent HRS an application fee and application for a Certificate of Need to construct a 60-bed adolescent acute care psychiatric and substance abuse hospital in Melbourne, Florida. Projected cost was to be $3,571,220 of which approximately $685,000 was to be in the form of local equity and the balance of approximately $2,730,000, constituting approximately 80 percent of the total cost, was to be in the form of a 20-year loan from CPC at 12 percent annual interest. Project development costs are projected to be $30,000; architectural and soil testing fees, $109,500; construction costs, $2,452,680; land acquisition, $350,000; interest during construction, $188,856; and fixed and movable equipment, $371,965. The facility will include a 15-bed locked intensive care psychiatric unit, a 25-bed open psychiatric unit, a 17-bed substance abuse unit and a 3-bed detoxification unit. The facility will have a total of almost 35,000 square feet of which almost 23,000 square feet will be devoted to the nursing units. The facility will be situated on 17 acres of land, the site plan for which calls for outdoor eating facilities, ball fields and other athletic opportunities. The intent of the developers is to make the facility as close to the campus situation as is possible, considering the nature of the operation. The facility will be built at no more than $60 per square foot, which includes all site preparation-- clearing, building, fencing, lighting, nurses' call system--all inclusive except for furniture and professional equipment.
Staffing projections for the facility which are considered adequate by both CPC and state agencies include the following major categories:
Registered nurses (psychiatric);
Licensed practical nurses;
Mental health specialists;
Secretarial;
Alcohol and drug counselors;
Occupational therapists;
Recreational specialists;
Educational director;
Special education teachers;
Psychologists;
Social workers;
Administration;
A medical director (1/2 time); and
An alcohol and drug treatment director (1/2 time).
The projected ratio of staff to patient for the first year (66.7 staff members to 33 patients) is approximately 2.07 to 1. CPC's other hospitals in Florida, both full-service hospitals as opposed to specialty hospitals, have a staff to patient ratio somewhat lower. Personnel cost is a significant factor in budgeting for total expenses. Projected equipment costs are not considered unreasonable.
CPC operates 20 acute psychiatric facilities in nine states and the United Kingdom, and its hospitals are all accredited by the Joint Commission on the Accrediation of Hospitals. All CPC hospitals are contracting members of the Blue Cross Association. It anticipates charging $227 per day on the open
adolescent unit, $224 per day on the closed adolescent unit and $227 per day on the alcohol and drug abuse unit during the first year. CPC anticipates that in the first year of operation, it will realize 10 percent of its patient income from Medicaid (Baker Act), 80 percent from insurance and 3 percent from private pay patients, and attributes a figure equal to 5 percent of income to indigents and 2 percent to bad debts.
It is the intention of CPC to seek Baker Act patients to account for 10 percent of its patient days and will work with state and local agencies and the courts to seek patients and funds for providing care to adolescents. CPC projections, not successfully shown to be unreasonable, reflect an anticipated net income after taxes of $120,000 for the first year of operation and $335,000 for the second year. These figures are based, as was stated above, on Baker Act funding of 10 percent of the patient load. At the present time, BMHC receives all Baker Act funds in the area, and additional funds from this source may not be available. If not, the absence of Baker Act funds would have a negative impact on the local CPC facility's financial position unless those patients were replaced by patients from other programs like child services or private pay patients based on the projected need. CPC authorities feel their projected occupancy rate of plus or minus 70 percent for the second year of operation is conservative and should be higher. The lower (60 percent) occupancy rate of CPC's other two Florida hospitals, difference in program from that proposed here, nonetheless has not resulted in either being financially unfeasible.
Projected equipment for the facility, though heavily attacked by HCA as being inadequate, has not been so shown. Similarly, the testimony that it would be impossible for CPC ton construct and equip the facility for the price quoted is not persuasive. There are decided differences between the facilities in design, construction and equipment. It cannot be said, however, that either is inadequate for the purpose. The differences, where they exist, appear to be primarily related to style and preference, and do not relate directly to safety or the suitability of the facility to serve as a psychiatric hospital.
CPC proposes a highly structured program for each patient--all of whom will be adolescents. A team proposal for treatment of the individual patient will be developed when the patient is first admitted and will include several major factors. The first will be medical treatments, as necessary as well as the second, psychotherapy treatments by doctors, psychologists, and in group therapy when indicated. Also of importance is a school special education program using a curriculum from the patients' own school district. This program is important both to keep the patient's grade level up and as a support mechanism therapeutically. They propose, also, a structured recreational therapy and conjunctive therapy in which something is always happening for that patient. Finally, CPC will include a family therapy situation wherein, as is possible, the patient's family will come in for counseling to educate them as to the problem their patient has so that when the patient comes out, the family can cope with it. As the patient, here, improves, he or she is brought into group therapy with the family.
Since the purpose of all this is to get the patient back into the community when ready for that, CPC proposes to start a program of partial hospitalization that is flexible to meet the circumstances (days out--nights in/weekdays in--weekends out). The theory will be to provide whatever is best for that patient in a sequential progression with more and more freedom and a gradual transition into a course of outpatient treatment. There is not thought of developing an outpatient treatment program for use as an initial treatment. All partial patients will develop from former inpatients.
HCA, a hospital-operating corporation whose home office is in Tennessee, also submitted an application for a Certificate of Need to construct and operate a 60-bed acute care freestanding psychiatric and substance abuse hospital in Melbourne, Florida. Projected cost of the facility is to be
$5,713,998 of which 40 percent would be equity and 60 percent ($3,428,399) would be long-term debt at 13 percent interest for 20 years. Project development costs are projected to be $75,000--all in legal and accounting fees; $178,323 in architectural and engineering fees; financing costs of capitalized interest of
$198,747; construction costs of $3,430,866; equipment costs (fixed and movable) of $1,274,478; and land acquisition and other related costs of $556,584. The facility will include 20 adolescent psychiatric beds, 20 adolescent substance abuse beds and 20 adult/geriatric psychiatric beds. The facility will have a total of almost 39,000 square fee of which almost 19,000 square feet will be devoted to the nursing units. The remainder will be used by administrative, office and other services. The facility will be located on 31 acres of land which will also be the site for a proposed general hospital for which HCA intends to seek approval.
Staffing projections for this facility, which are considered adequate by both HCA and state agencies, include the following major categories:
Nursing;
Psychology;
Activities;
Social services;
Education;
Administration;
Business office;
Medical records;
Dietary;
Housekeeping; and
Engineering/maintenance.
The projected ration of staff to patient for the first year (67.4 staff members to 33 patients) is approximately 2.04 to 1, roughly equivalent to that of CPC.
HCA operates 301 hospitals throughout the United States, 23 of which are psychiatric hospitals. In addition to the psychiatric hospitals, many of its general hospitals have psychiatric units. All of its presently operating units are full accredited. It anticipates charging $260 per day during 1984-85 and $275 per day during 1985-86. HCA anticipates that during its first year of operation, it will realize 5 percent of its patient income from Medicaid, 10 percent from Medicare, 15 percent from insurance, 65 percent from private and 5 percent from other.
HCA omitted any reference to Baker Act in its application because at this time such funds are fully committed elsewhere and not available and, as a result, felt it would be imprudent to include these funds in financial projections. However, if these funds were to become available, as unlikely as that may be, HCA would consider taking these patients. In any case, HCA projections reflect an anticipated net income after taxes of $2,000 for the first year of operation and $61,000 for the second year.
Up until approximately two years ago, HCA only had two hospitals in its psychiatric program. Since that time, acquisitions and construction have brought the inventory up to its present strength. HCA acquired HCI, an
organization which has had extensive experience in operating 20 psychiatric hospitals. HCA has a large cadre of people available to help start up new hospitals and shore up existing programs. It operates a center for heal studies, and its informational branch produces its own continuing education films and other materials. Its treatment programs are developed by its local staff based on input by professionals in the local community and designed to meet the needs of the local community.
Once developed and implemented, all HCA programs are periodically evaluated by central teams who visit the local site. If a problem is found, HCA sends out experts in that problem area to fix it. It is HCA policy, however, to provide as much autonomy to the local staff as is possible, though staff, both professional and nonprofessional, are recruited locally and from other areas. HCA's position is that these factors have a major positive impact on patient care and treatment in that it insures currency of ideas and treatment modalities.
HCA's proposed treatment program was described as to each category of patient. As to adults, it follows a "therapeutic community approach" which starts with a pleasing residential building and furnishings. All persons contacting patients are trained in the patient's needs and how to react to the patient. This would include such peripheral people as maintenance and support personnel. There would be a specific treatment plan for each patient with the patient's day planned out totally for every hour of the day, including recreation designed for that patient's needs. Little time is provided for the patient to be confined to the sleeping room. HCA anticipates the average length of stay (ALOS) for an adult psychiatric patient will be 21 days.
As to the adolescent psychiatric patient, the prescribed treatment program will be basically the same as for adults except that HCA would provide an active school program, staffed by HCA employees, which would interface with the local school system. The patient day would be geared to the adolescent's needs. HCA proposes few children facilities because child programs require a specially designed program with a higher staff to patient ration than is anticipated here because of the need for play therapy and family involvement. HCA officials believer the child patient can successfully be integrated into the adolescent hospital unit without difficulty until the patient can be transferred to a specialized facility elsewhere. The ALOS for adolescent psychiatric patients will be 45 days.
The substance abuse programs will be similar to those for the psychiatric units with specialization on drug abuse counseling and interface with Alcoholics Anonymous. ALOS here is expected to be 35 days. It must be recognized, however, that theories of treatment change rapidly. That proposed in HCA's Certificate of Need would not necessarily be that ultimately used upon approval if a change is justified.
HCA's expert, Dr. Winston, contends, from a clinical standpoint, it is better to operate without locked units if possible, and categories of patients are better separated. However, he contends it is perfectly all right and may even be superior to have the different classes of patient in the same facility. This position is corroborated by other psychiatric experts who testified that one of the reasons for the need for an adolescent psychiatric hospital is the clinically undesirable requirement, currently existing in the area, for adolescent and even children psychiatric patients to be placed in units with adult psychiatric patients. It is obvious, then, that all agree that a separate
adolescent unit is clinically needed in the area. The size, configuration and location remain to be established.
The issue of need can and must be divided into two categories. One is the actual need for the implementation of psychiatric services for children and adults. The other is the need established for psychiatric beds in the area in accordance with the formulas established by HRS. First to be discussed is the actual service need.
CPC's Vice President for Psychiatric Hospital Development, in developing the proposal for this project, first did a desk audit regarding population growth potential and the like for Brevard County and the surrounding contiguous counties. Thereafter, he made a number of visits to the area during which he spoke with as many area psychiatrists as he could. He also toured the BMHC and its inpatient facility, as well as the other two hospitals in the immediate area, Holmes Regional Medical Center, which does not have a psychiatric unit, per se, and Wuesthoff Hospital, which does. He also talked with court and school officials familiar with the area's mental health problems.
From his investigation and conversations, CPC's expert found that BMHC's inpatient facility, consisting of 28 beds, was oriented primarily to adult psychiatric patients, as was Wuesthoff's 30-bed psychiatric unit. (In that regard, Wuesthoff's plan to convert five psychiatric beds to some other service, thus reducing the number of psychiatric beds in Brevard County, has been approved by HRS, if not already implemented as of this writing. From this it was concluded, and the evidence does establish, that there are no psychiatric facilities in Brevard County specifically for adolescents. The consensus among the psychiatrists and psychologists in the subject area, whose testimony was presented, was that there is a definite need in the Brevard County area for adolescent psychiatric and substance abuse beds. Adolescents requiring psychiatric or substance abuse treatment are treated on an outpatient basis if possible because of a reluctance to confine adolescents in an adult psychiatric ward. If outpatient treatment is not possible, the less than desirable alternative is to admit the adolescent patient to an adult unit for only so long as is necessary to make other arrangements for inpatient care. Currently, relatively few adolescent inpatient facilities exist. Among the better are those at the University of Florida in Gainesville, in Miami, several out of state and, while not a psychiatric hospital, a special school in Orlando--all of which have waiting lists.
Community surveys were made by both marketing representatives and by facilities experts from HCA, as well. It was their opinion that a need exists in the subject service area for both adolescent and adult psychiatric beds, and that both HCA's and CPC's proposals would fill the need for substance abuse beds. HCA's position is that not all new beds would be adolescent beds. A need exists for adult beds in Brevard County because the predictions of the Bureau of Business and Economic Research (BBER), while indicating a general population increase for the area, also indicates that the adolescent population will decline. BBER projections have not been totally accurate for Brevard County in the past because of aerospace fluctuations in the area, however. In fact, the HCA prediction is for an adult population growth rate three to four times as fast as that for children and adolescents, thereby placing a strain on the available adult psychiatric beds. HCA's expert disagreed with the CPC expert's method of establishing clinical need (interviews with practictioners). It was felt this is a supply-driven opinion as opposed to a demand-driven opinion, is unsupported by data, is imprecise and not accurate, and is therefore not reliable for health planning purposes. To the contrary, the professional
opinions stated by CPC's witnesses were equally as persuasive as those of their opponents.
The psychiatrists and psychologists referenced above unanimously concluded that professionally it is better to admit adolescents to adolescent programs and units. Mixing of patients is quite disruptive to both categories of patient. In the opinion of the experts who testified here, where adolescent psychiatric patients are confirmed with adult patients (such as at Wuesthoff), they sleep in the same room, eat with them, smoke with them and discuss adult problems all day long. The doctors feel the continued closeness of this type is not only not therapeutic, but is sometimes counter therapeutic. In the case of adolescents, a major part of therapy is re-integration of the patient into the family; and if the unit is not near the family (as is presently the case with the out-of-town and out-of-state units referenced above), this is difficult. Also, liaison between the inpatient's doctor and the outpatient therapy is difficult when the unit is not local. As a result, at least some of the practitioners in the area have stopped seeing certain categories of patients because there is no facility currently in the area who can provide the necessary environment. For example, Dr. McClure, a psychiatrist, has stopped seeing adolescent substance abuse patients. If a facility currently in the area who can provide the necessary environment. For example, Dr. McClure, a psychiatrist, has stopped seeing adolescent substance abuse patients. If a facility became available, he would resume that segment of his practice. Dr. Slade, a clinical psychologist, has stopped seeking out patients who might need hospitalization because there is currently nothing in the area available to fill that need. It one were to come, she would again start seeing that category of patient.
From the above, it can clearly be seen a clinical need for an adolescent psychiatric facility exists. Whether it should be freestanding, as proposed by both CPC and HCA, or a part of an existing hospital psychiatric unit is another question. Both proposals here are for freestanding units and, as a result, only that concept will be considered.
Turning to the issue of bed need, at the time CPC's original Certificate of Need application was submitted, the Florida State Health Plan contained no methodology for establishing bed need for psychiatric hospitals. Such as now been promulgated and shows a need for 156 short-term psychiatric beds and 44 substance abuse beds in District VII, which includes Brevard, Orange, Osceola and Seminole Counties. This is based on a projected population base for the district in 1988 of 1,230,180 people. Applying the state methodology of 0.35 beds per 1,000 population, five years into the future resulted in a total projected bed need of 431 beds. Subtracting from that the
275 existing and approved beds leaves an unsatisfied psychiatric bed need of 156 for the district.
Authority to designate subdistrict bed needs has been delegated to the district health councils. Brevard County has been subdivided into a subdistrict, but bed needs have not been allocated to the subdistricts.
However, even if the 40 (total 60 minus 20 substance abuse) psychiatric beds are approved for Brevard County, this falls well within the total need figure for the district and leaves 116 beds remaining for the other three counties. Both CPC's and HCA's proposals call for 40 psychiatric beds. Both are, therefore, compatible with the State Plan.
Rule 10-5(25)(d)5, Florida Administrative Code, states that no additional short-term inpatient hospital adult psychiatric beds shall normally
be approved unless the annual occupancy rate for all existing beds in the service district for the prior 12-month period is at or exceeds 75 percent. As to adolescent beds, the criterion is 70 percent. There is not evidence of bed utilization percentages for either category districtwide. There is however, evidence establishing that the criteria have been met since 1980 for adult beds in Brevard County, a subdistrict; and since there are currently no short-term adolescent psychiatric beds in the subdistrict, that use percentage requirement is meaningless. Also, both applicants project meeting the requirements in Rule 10-5(25)(d)4 for 70 percent occupancy rate by the third year for adolescent short-term (CPC predicts 72 percent the second year).
At the present time, two separate facilities provide adult short-term inpatient psychiatric care in Brevard County. They are Wuesthoff Memorial Hospital in Rockledge, Florida, which has 30 beds (predicted to be reduced to 25), and the Brevard Mental Health Center and Hospital, which operates an outpatient facility in Titusville and Rockledge and a 28-bed inpatient facility in Melbourne. This facility is a $2.6 million dollar facility constructed on 8 percent bond financing, and is fully accredited.
BMHC receives all Baker Act patients in Brevard County and, in addition, provides care and treatment to indigents. Of its $1,238,000 revenue for last year, it received $468,000 for Baker Act patients, $156,000 in county matching funds and $614,000 form other patient fees. Its expenses for the same period last year were $1,250,000, for a deficit of $12,000. It is, both in theory and actuality, a nonprofit operation with 78 percent of its patients being indigent.
Baker Act funds provided a total of $614,000. At $156 per day per bed, this equals 4,000 bed days, which, when divided by 365, shows that 11 paid beds are provided for Baker Act patients. In addition to Baker Act patients, BMHC also provides other beds for indigents. The terms of the Baker Act contract require all clients referred be accommodated. These additional patients provide insurance funds equivalent to 2.5 more beds, or a total of 13.5 beds provided by Baker Act matching funds and related insurance. BMHC is generally 85 percent occupied, which relates to 25.2 of the 28 beds.
Subtracting the 13.5 Baker Act beds from the 25.2 leaves 11.7 beds for private patients.
The average charge for private patients at BMHC is $230, which includes physicians' services. Their collection rate of 87.5 percent reduces that on average to an actual income of $200 per private bed day. Medicare, which accounts for 38 percent of BMHC's income, reimburses at a rate of $168 per day. If, as a result of the establishment of either of the two proposed facilities, BMHC were to lose one bed year of patients, it would represent a dollar loss of $73,000. This constitutes a serious thereat to a nonprofit organization, such as BMHC, because of the possibility of a loss of patients to a private hospital, even if its charges were higher. To some people, exclusiveness is more important than cost. A loss of one bed's revenue would jeopardize the free care presently provided by BMHC. A loss of two beds' revenue would make a reduction in the free care provided a certainty.
Brevard County has an ongoing relationship with BMHC. It provides an annual operating subsidy for the currently existing facilities and, in addition, has guaranteed a bond issue for the building of the south county facility. It also provides a number of in-kind services. If BMHC were to become financially insolvent for any reason, the county would have to step in and pay off the bonds, but it could not and would not take over the operation of the facility.
As a result of the above, the county is opposed to any threat to the financial health of BMHC. It feels that while the proposal of CPC would not constitute a threat, that of HCA would because the full range served of the latter could and probably would draw away some of the private pay patients now going to BMHC. This alternative drawing power would adversely affect BMHC's ability to stay in business eventhough, according to the HRS methodology, there is room in the county for additional adult beds for which BMHC is applying. In that regard, however, the county authorities concede that if it could be demonstrated that an additional provider could come in without adversely affecting the operation of BMHC, they would not oppose it.
The District Mental Health Board for Brevard County (DMHB) has also taken a position in this area. Created by the Legislature, DMHB is charged with identifying the need for services in the county, the resources available to satisfy them and the gaps between. To a certain extent, it also funds the operations monitors them, evaluates them and produces the District Plan for them, the latest edition of which is for the years 1983 through 1987.
This plan, which takes about a year to develop, is based on input provided by the mental health professionals, organizations and community representatives. It is used as a basis for the allocation of available funds and upon which to request funds from the Legislature. Neither CPC's nor HCA's application is contained in this plan; and though both applicants have made presentations to the Board, the Board has not taken a position favoring either.
However, the plan as it currently exists proposes an additional 20 adult psychiatric beds which, it is anticipated , would be located under BMHC's auspices at its Melbourne site and for which BMHC made timely application. BMHC provides 80 percent of the mental health services in Brevard County now in all categories--adult, child and adolescent--and is rated excellent. In the opinion of the Director of DMHB, who is aware of BMHC's financial picture, approval of either proposal would have a negative impact, but that of HCA would be worse because of the likelihood it would draw adult paying patients away from BMHC.
If that happened, it would jeopardize BMHC's financial position and its relationship with the county.
In that regard, the District Plan goal, "to provide for the availability of comprehensive community alcohol, drug abuse and mental health services to persons in Brevard County, regardless of their ability to pay, "would best be complemented by the CPC proposal because: (1) it is limited to adolescents and would not risk drawing adult pay patients from BMHC; (2) it integrates with other existing services; and (3) it has the least restrictive admissions policy.
On the other hand, in the opinion of Dr. Milton Schoeman, a health care consultant testifying on behalf of HCA, CPC's proposal, providing for adolescent beds only, will not help meet the need for general psychiatric beds projected for 1988. Of the 67 new beds needed, 40 would go to specialty hospitals, such as proposed by both CPC and HCA, and 27 would go to psychiatric units in general hospitals. These figures are for all ages of patients. Even though the HRS rules are silent on the issued of bed allocation between adults and adolescents, to permit CPC to use all 40 specialty hospital beds for adolescents would be inconsistent with the formula. He also is of the opinion that HCA's proposal will not materially affect BMHC's operation. To the contrary, according to HCA adolescents would be inconsistent with the formula. He also is of the opinion that HCA's proposal will not materially affect BMHC's operation. To the contrary, according to HCA witnesses, the HCA program would
have a positive impact on BMHC's program in that its presence will make the community more aware and conscious of the need for mental health, and by cross- cooperation with BMHC in staffing and patient split. This has been shown in other areas where HCA was first seen as a threat by the existing hospital treating Baker Act patients. However, both hospitals now work together on joint programs to do the best possible for the patients. The fear of competition, HCA contends, is normally not realized. The type of facility represented by BMHC generally operates a shorter term, crisis intervention type program, one substantially different from that of HCA. As such, it does not lose patients to the longer term program of HCA.
HRS has taken a position in opposition to HCA's proposal, concluding that CPC's application would fill the need for adolescent care with less impact on the current provider, BMHC. While HCA's programs are of high quality, they are almost identical to those currently offered by BMHC. It is unlikely that HCA will get any Baker Act funds under the current funding situation. If HCA were to be approved and built and would result in the loss to BMHC of only one bed/year in income ($73,000), this would have a severe adverse impact on BMHC's operation. On the other hand, the CPC would be less likely to duplicate services already being furnished. There are already two existing providers for adult patients; and while BMHC's utilization is high, Wuesthoff's is not, being only 62 percent after five years of operation. Under these circumstances, it would, in all probability, be a duplication of service to provide additional adult beds at this time.
In addition to the differences in building layout, construction costs and equipment costs, previously found to be satisfactory in both cases, much evidence was produced by both sides to show that their proposal was economically more feasible and would result in lower patient costs. Conversely, the proposing parties presented evidence to show that the figures and statistics relied upon by their opposition were flawed and unreliable. After thorough saturation with offer and rebuttal, it is ultimately concluded that again the difference is one of style rather than substance. Neither part has been shown, by competent convincing evidence, to be materially superior to or inferior to the other. This issue will not be decided, therefore, on the basis of the ability to provide the service since both have been shown to be fully capable of doing so in a creditable fashion.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of the proceedings.
In their prehearing stipulation, the parties agreed this was a comparative hearing to determine which of two applicants met the criteria set forth for Certificate of Need applications in Subsections 381.494(6)(c) and (d), Florida Statutes. The parties also stipulated that the above-mentioned criteria set out in Subsection (c) which are in dispute are 1; 2; 3; 4 and that portion of 8 which states: "the extent to which the proposed services will be accessible to all residents of the service area"; 9; 12 and 13. Those criteria under Subsection (d) in dispute are 1, 2 and 4. All other criteria are stipulated to, have been met by the applicants or are not relevant. Though the parties stipulated that Criteria 3 and 9 are in dispute, no evidence was introduced concerning them, and they are determined to be not relevant to this hearing.
Subsection 381.494(6)(c), Florida Statutes, states:
The department shall review applications for certificate-of-need determinations for health care facilities and services, hospices, and health maintenance organizations in context with the following criteria:
The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan, annual implementation plan, and state health plan adopted pursuant to Title XV
of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.
The state methodology for establishing bed need has resulted in a state determination that 67 psychiatric beds will be needed in this area by 1988. No breakdown was made as to adult as opposed to adolescent beds. The evidence introduced clearly indicates, however, an immediate need for adolescent beds to fill a vacuum currently satisfied to only a limited degree by short-term adolescent care available at BMHC and Wuesthoff. The evidence of record indicates CPC's adolescent facility would in all probability be utilized within the appropriate time by the required number of patients. While both applications meet the criterion here, CPC's application more closely meets the current and projected need.
The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the applicant's health service area.
Adequate adult care currently is available in the area. Adolescent care is totally inadequate. Both BMHC and Wuesthoff hospital provide adult psychiatric inpatient care. While the combined utilization figure is in excess of 70 percent, separately there is a disparity in utilization with BMHC being highly utilized and Wuesthoff not. The only viable adolescent inpatient beds available to patients from this area at the present time are at facilities outside the area and, in some cases, outside the state. While HCA's proposal would partially meet the adolescent need, it also provides some unneeded adult beds.
CPC's, related solely to the unserviced population, is more appropriate. Both would satisfy the substance abuse needs.
Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.
HCA proposes to operate joint programs with the existing provider of adult inpatient care, BMHC. No evidence was presented to show what such programs would be, nor was there any evidence of economies to be realized form the opening of another duplicative adult facility. CPC's facility, while not duplicating an existing service, and while filling a need, was not shown to generate any economies either.
The need in the applicant's health service area for special equipment and services which are not reasonable and economically accessible in adjoining areas.
This criterion was stipulated to as being met by the applicant.
The need for research and educational facilities, including, but not limited to, institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine at the
student, internship, and residency training levels.
This criterion was stipulated to as being not relevant.
The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service
area; the extent to which the services will be accessible to schools for health professions in the service area for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service area.
In their stipulation, the parties agreed Criterion 8 was not an issue except for a portion thereof which constitutes the last phrase. In reality, the parties were referring to Criterion 7, which contains that phrase. Here, both applicants have met the first portion of the criterion.
The immediate and long-term financial feasibility of the proposal.
Whether stipulated to or not, there is little doubt that the financial feasibility of both proposals has been established. As was stated, the differences relate primarily to preference and style and are not material.
The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the health service area in which the entities are located or in adjacent health service areas. Such entities
may include medical and other health professions, schools, multi-disciplinary clinics, and specialty services such as open heart surgery, radiation therapy, and renal transplantation.
The parties have stipulated that this criterion is not relevant.
The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost-effectiveness.
The parties have stipulated that this criterion either has been met or is not relevant. However, there is substantial opinion evidence to support the position that approval of the HCA proposal raises the real possibility of a serious adverse impact on the fiscal livelihood of the incumbent provider, BMHC, which, if realized, could well diminish the availability of mental health care in the service area. While still speculation, the specter of this possibility should not lightly be dismissed. CPC's proposal would not reasonably create such a problem.
The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.
Again, here, both proposals meet the criterion. HCA's strenuous attack on CPC's building and equipment proposals was not persuasive. The differences, as were stated in the Findings of Fact, are in preference and not substantial.
Since a capital expenditure is involved here, Subsection 381.494(6)(d) also applies. Its subsections are:
That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable.
Though the need for adult beds may be questioned, there is no question of the need for adolescent beds. Therefore, there appear to be no alternatives less costly than the proposals here.
That existing inpatient facilities providing inpatient services similar to those proposed are being used in an appropriate and efficient manner.
No acceptable inpatient adolescent facilities exist here. Treatment of adolescents in adult inpatient facilities is unsatisfactory. Construction of some adolescent facility is an imperative. Insofar as an adolescent facility is concerned, the criterion is met. The picture is not so clear as to an adult facility. As was stated above, BMHC's facility operates at near capacity, but Wuesthoff's does not. There is some evidence Wuesthoff has applied to reduce its authorized bed inventory from 30 to 25. The fulfillment of the terms of this criterion is not so clearly established for the adult beds as for the adolescent beds.
In the case of new construction, that alternatives to new construction, for example, modernization or share arrangements, have been considered and have been implemented to the maximum extent practicable.
The parties have stipulated that this criterion has been met so far as adolescent beds.
That patients will experience serious problems in obtaining inpatient problems
in obtaining inpatient care of the type proposed in the absence of the proposed new service.
Clearly, this criterion has been met so far as adolescent beds. The need exists and calls for expeditious rectifying. There is no evidence that adult patients are or will experience serious difficulties in obtaining inpatient psychiatric care if the facility is not built, at least in the short-term. The bed methodology formulas indicate a need for new beds, both adult and adolescent, by 1988. Based on this factor, the criterion has been met by both applicants.
In the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care services, that the addition will be consistent with the plans of other agencies of the state responsible for the provision and financing of long-
term care, including home health services.
The parties have stipulated that this criterion either is met, or is not relevant.
Comparing both applications in conjunction with the criteria set forth in the statute and discussed above, it becomes clear the application by CPC should prevail for several reasons. First, CPC has stated its willingness to take indigent and Baker Act patients and included that position in its application. HCA's repetition of that position appears more an afterthought. Second, the CPC proposal is totally for adolescents, thus fulfilling a serious need for such care for which there is currently no facility within Brevard County. Third, it is clear that both applicants could provide the needed service in a thoroughly competent, cost-efficient and professional manner. However, the evidence presented raises the substantial possibility that the proposal by HCA could and would have a substantial and adverse impact on the ability of the current provider, BMHC, to continue its operation successfully. Failure of that facility would have serious consequences for the state of mental health treatment in Brevard County and would have a definite adverse impact on county government which is, to a substantial degree, tied financially to BMHC. In that regard, a clear outpouring of community support for CPC and its proposal was demonstrated by county officials. Further, clear support for CPC's method of proposed operation was demonstrated by representatives of the professional community, as well.
The parties have submitted proposed recommended orders which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out
in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues or legally erroneous.
It is accordingly RECOMMENDED
That HRS approve Petitioner CPC's application for a Certificate of Need to construct and operate a 60-bed freestanding adolescent inpatient psychiatric facility in Brevard County, Florida, and deny the similar application of Petitioner HCA.
RECOMMENDED this 10th day of February, 1984, in Tallahassee, Florida.
COPIES FURNISHED:
Morgan L. Staines, Esq. 2204 East Fourth Street Santa Ana, California 92705
Jon C. Moyle, Esq. Donna H. Stinson, Esq.
118 North Gadsden Street Suite 100
Tallahassee, Florida 32301
Eric B. Tilton, Esq.
702 Lewis State Bank Building Tallahassee, Florida 32301
John Antoon, II, Esq. 970 Michigan Avenue Building C
Cocoa, Florida 32922
ARNOLD H. POLLOCK
Hearing Officer
Division of Administrative Hearings Department of Administration
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 1984.
Claire D. Dryfuss, Esq. Department of Health and
Rehabilitative Services 1317 Winewood Boulevard
Building 1, Room 406
Tallahassee, Florida 32301
Mr. David Pingree Secretary
Department of Health and Rehabilitative Services
1323 Winewood Boulevard
Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
COMMUNITY PSYCHIATRIC CENTERS,
Petitioner,
vs. CASE NO. 83-0086
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
and
HOSPITAL CORPORATION OF AMERICA and BREVARD MENTAL HEALTH CENTERS, INC.,
Intervenors.
/ HOSPITAL CORPORATION OF AMERICA,
Petitioner,
vs. CASE NO. 83-0094
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent,
and
BREVARD MENTAL HEALTH CENTERS AND HOSPITAL, INC.,
Intervenor.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled cases has submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.
CPC - meaning Community Psychiatric Centers - filed Exceptions to the Recommended
Order. A copy of CPC 's Exceptions is attached hereto as Exhibit A.
HCA - meaning Hospital Corporation of America - filed Exceptions to the Recommended Order. A copy of HCA's Exceptions is attached hereto as Exhibit E.
HRS STATEMENT AND RULING ON THE EXCEPTIONS
(AA) CPC Exceptions (1), (2), and (4) through (17) - These technical corrections are sustained. The substance of the Recommended Order, however, remains unchanged.
(AA) CPC Exception (3) - No modification in the Recommended Order will be made. Although Loren Shook testified that the beds would be adolescent beds five years into the future (TR, Vol. I, pages 22-23), W. Eugene Nelson testified that CPC's beds would be "adolescent beds" (TR, Vol. VIII, pages 1056, 1059, and 1061). No time limitation was stated. Under these circumstances, HRS will not modify the Recommended Order to set forth a time limitation. The Exception is denied.
(BB) HCA Exceptions (1), (2), and (3) - These Exceptions reassert contentions which have been asserted before the Hearing Officer. The findings set forth on pages 4 and 5 of the Recommended Order sufficiently address the assertions. The Hearing Officer concludes that the immediate and long term financial feasibility of both proposals has been established. The Hearing Officer is affirmed and the Exceptions denied.
(BB) HCA Exception (4) - The Exception is denied.
(BB) HCA Exceptions (5), (6), (7), and (8) - The amendments submitted by HCA are acknowledged. Testimony given by psychiatrists and psychologists was that there is a definite need for adolescent psychiatric and substance abuse beds. The Exceptions are denied.
(BB) HCA Exceptions (9), (10), and (11) - The Exceptions are denied. (BB) HCA Exceptions (12), (13), and (14) - The Hearing Officer will be
affirmed in respect to the questions raised by these Exceptions. The Exceptions are, therefore, denied.
(BB) HCA Exceptions [To Conclusions of Law] - Despite the persistent, contrary arguments submitted by HCA, the recommendation that the application filed by CPC should prevail over that of HCA will be affirmed. The Recommended Order is supported by competent, substantial evidence. The results recommended by the Hearing Officer are correct. The Exceptions are denied.
FINDINGS OF FACT
The Department hereby adopts the findings of fact made by the Hearing Officer. The inclusion of rejections or modifications set out and explained in HRS Statement and Ruling on CPC's Exceptions is also incorporated as part of the factual findings.
CONCLUSIONS OF LAW
The Department hereby adopts and incorporates by reference the conclusions of law stated by the Hearing Officer. The technical corrections set forth in HRS Statement and Ruling on CPC's Exceptions are also incorporated and made a part of the legal conclusions. Accordingly,
It is ADJUDGED that CPC's application for a Certificate of Need to construct and operate a 60-bed free-standing adolescent inpatient psychiatric facility in Brevard County is approved, and the comparative application by HCA is denied.
ORDERED this 28th day of March, 1984, in Tallahassee, Florida.
DAVID H. PINGREE
Secretary
COPIES FURNISHED:
Morgan L. Staines, Esquire 2204 East Fourth Street Santa Ana, California 92705
Jon C. Moyle, Esquire
and Donna H. Stinson, Esquire
118 North Gadsden Street, Suite 100 Tallahassee, Florida 32301
Eric B. Tilton, Esquire 702 Lewis State Bank Bldg. Tallahassee, Florida 32301
John Antoon II, Esquire 920 Michigan Avenue Building C
Cocoa, Florida 32922
Claire D. Dryfuss, Esquire Department of HRS
1323 Winewood Boulevard
Tallahassee, Florida 32301
Arnold H. Pollock, Hearing Officer Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
Harden King, Agency Clerk Department of HRS
1323 Winewood Boulevard, Suite 407
Tallahassee, Florida 32301
W. Eugene Nelson, Administrator
Office of Community Medical Facilities 1321 Winewood Blvd.
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Mar. 29, 1984 | Final Order filed. |
| Feb. 10, 1984 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 28, 1984 | Agency Final Order | |
| Feb. 10, 1984 | Recommended Order | Evidence demonstrated one applicant better met criteria for award of contract for free standing adolescent psychiatric hospital. |
