STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMMUNITY HOSPITAL OF COLLIER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-0744

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) DOCTORS' OSTEOPATHIC MEDICAL CENTER, ) INC. d/b/a GULF COAST HOSPITAL and ) LEE MEMORIAL HOSPITAL, )

)

Intervenors. )

) COMMUNITY HOSPITAL OF COLLIER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-0907

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

) NAPLES COMMUNITY HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-0909

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) COMMUNITY HOSPITAL OF COLLIER, INC., ) DOCTORS' OSTEOPATHIC MEDICAL CENTER, ) INC. d/b/a GULF COAST HOSPITAL, INC., ) and LEE MEMORIAL HOSPITAL, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, this consolidated proceeding came on for formal hearing before P. Michael Ruff, duly designated Hearing Officer, commencing on October 29, 1984 in Naples, Florida. The hearing was recessed on November 2, 1984 and reconvened in Tallahassee, Florida on November 5, 1984 and concluded on November 6, 1984. The appearances were as follows:

APPEARANCES

For Petitioner: Robert D. Newell, Jr., Esquire and Naples Community Kenneth F. Hoffman, Esquire Hospital, Inc. OERTEL & HOFFMAN, P.A.

2700 Blair Stone Road, Suite C Tallahassee, Florida 32301

For Petitioner: C. Gary Williams, Esquire and Community Hospital Steve Emanuel, Esquire

of Collier, Inc. AUSLEY, MCMULLEN, MCGEHEE,

CAROTHERS & PROCTOR

Post Office Box 391 Tallahassee, Florida 32302

For Respondent: Douglas L. Mannheimer Esquire Department of Health CULPEPPER, TURNER & MANNHEIMER and Rehabilitative 318 North Calhoun Street Services Tallahassee, Florida 32301

For Intervenor: John D. C. Newton, II, Esquire Gulf Coast CARSON & LINN, P.A.

Community Hospital 253 East Virginia Street

Tallahassee, Florida 32301

For Intervenor: Ivan Wood, Esquire

Lee Memorial WOOD, LUCKSINGER & EPSTEIN

Hospital 1600 One Houston Center Houston, Texas 77010

PROCEDURAL BACKGROUND

This proceeding was initiated upon the submission of applications for Certificates of Need by Naples Community Hospital (Naples)(NCH) and Community Hospital of Collier, Inc. (Community)(NME). Those entities seek the licensing of acute care hospital beds and attendant facilities, to be located in Collier County, Florida.

Naples' application for a Certificate of Need (CON 2856) originally contemplated the addition of 30 beds to its existing hospital campus in Naples, Florida. Community's application (CON 2810), as modified at the outset of the hearing, contemplates the construction of a new 150-bed, freestanding acute care hospital to be located in the northern region of Collier County. After concluding its review process, the Department of Health and Rehabilitative Services (HRS) noticed its intention to grant the Naples' application and deny Community's. Community challenged that decision in Case No. 84-0744. It challenged HRS' notice of intent to grant the 30-bed Certificate of Need application of Naples in Case No. 84-0907. Naples had also filed an application for CON 2853 seeking authorization to construct a 50-bed satellite hospital in

northern Collier County. That application was denied by HRS in the same batching cycle as the Naples' 30-bed application and the Community 150-bed application. Naples challenged that "intent to deny" in Case No. 84-0909. Upon the convening of the formal hearing, however, Naples announced its abandonment of its application for the 50-bed satellite facility in Case No. 84-0909, and the matter proceeded to hearing on Naples' 30-bed application and Community's 150-bed application.

Gulf Coast Community Hospital (Gulf Coast) has received authorization by a final order of HRS to construct a 60-bed osteopathic hospital in the southern portion of Lee County. Lee Memorial Hospital is an acute care, public not-for- profit hospital located in Lee County, Florida, which has a Certificate of Need application pending seeking authorization for 19 new acute care beds to be located in a 100-bed satellite facility located also in southwest Lee County, Florida, 81 beds of which will be transferred from its main campus facility.

The Lee County application has been recommended to be granted by Recommended Order entered June 26, 1985 in Case No. 84-0840. Both Gulf Coast and Lee Memorial (Lee) submitted timely petitions for intervention in this proceeding and such intervention was granted.

At the outset of the hearing, HRS moved to remand Case No. 84-0744, involving Community's challenge of HRS' intent to deny its application, back to HRS for further review on the ground that due to a stock purchase agreement entered into in August, 1984 between Community and National Medical Enterprises (NME), NME had inaugurated such pervasive amendments to the Community CON application that, in effect, it was a new application which HRS had not had an opportunity to review. Petitioner Naples and Intervenors Gulf Coast and Lee Memorial joined in that motion. That motion was denied at the outset of the hearing on the basis that this is a de novo proceeding and as such, the possibility of amendments to the application was not terminated at the point that HRS issued its notice of intended agency action, and that Hearing Officers of the Division do not sit in a review posture over an agency's free-form review process which occurs prior to petitions for Section 120.57(1) formal proceedings. Additionally, on or about September 25, 1984, while pretrial discovery was still proceeding in this case, the parties had actual notice of the likelihood of NME becoming involved on behalf of Community and prosecuting its CON application to the extent of providing financial and other resources necessary to establish entitlement to and to operate the Certificate of Need.

The other parties did not avail themselves of opportunities created by this knowledge to initiate further discovery efforts to ascertain the effect NME's support of Community's application would have on the content of the application, and Community's formulation of its proof to be presented at formal hearing.

Accordingly, unavoidable prejudice not being demonstrated, the hearing was conducted as scheduled. During the course of the hearing, Naples made an ore tenus amendment to its application such that it now seeks approval of only 20 beds to be added to its main campus facility instead of the original 30-bed application in Case No. 84-0907.

At the hearing, witnesses Donald Davis and A. Joseph Piccola were called by Community, as well as the following expert witnesses who were accepted as experts in the fields indicated:

Frank Tidikis Hospital Administration

Donald Rob Hospital Construction and Equipment Costs

Michael S. Dudek Traffic Engineering Michael William Gallo Health Care Finance Stanley K. Smith Demography

Brad Sexauer Health Care Planning

Charles E. Phelps Health Care Economics &

Organization of Industry

Naples called Mr. William H. Compt as a lay witness and in addition called the following expert witnesses who were accepted as experts in the fields indicated below:

J. W. Barr Traffic Engineering Miles A. Price, Jr. Architecture

Jane Polkowski Public Health and Health Care Needs of the Indigent

Edward Morton Hospital Finance Analysis

Larry Bebe Health Care Planning & Public Health Administration

Michael Jernigan Health Care Planning &

Hospital Financial Management

HRS called Mr. Thomas R. Porter who was accepted as an expert in the field of health care planning in Florida. Community exhibits one through 24 were offered and received into evidence. Naples offered exhibits 2, 3, 4, 6, 78, 7C,

7D, 8A, 12, 23, 24, 25, 28, 30, 31 and 32, which were received into evidence. Lee Memorial called no witnesses, but offered Community's Exhibit No. 1 consisting of certain patient origin information, as its own exhibit as well, which was received into evidence on behalf of Lee Memorial. Gulf Coast called as its sole witness, Dr. A. Joseph Piccola, D.O.

The parties elected to avail themselves of the right to file proposed findings of fact and conclusions of law subsequent to the hearing, concomitantly requesting and receiving an extended briefing schedule and waiving the requirements of Rule 28-5.402, Florida Administrative Code. All proposed findings of fact, conclusions of law, and supporting arguments have been considered. To the extent that they are in accordance with the findings, conclusions and views stated herein, they are accepted. To the extent that the proposed findings, conclusions and arguments asserted are inconsistent herewith, they are rejected. Certain proposed findings and conclusions are omitted as not relevant nor as necessary to a proper determination of the material issues presented. To the extent that the testimony of various witnesses is not in accord with the findings herein, it is not credited. See, Sonny's Italian Restaurant v. Department of Business Regulation, 414 So.2d, 1156, 1157 (Fla. 3rd DCA 1982); Sierra Club v. Orlando Utilities Commission, 436 So.2d 383 (Fla. 5th DCA 1983).

The ultimate issue to be resolved in this proceeding concerns whether the applicants have sufficiently demonstrated compliance with the criteria of Section 381.494(6)(c), Florida Statutes and Rule 10-5.11, Florida Administrative Code so as to justify the grant of a Certificate of Need to each of them, or to either of them.

FINDINGS OF FACT

1. Donald Davis is the promoter behind the formation of Community Hospital of Collier, Inc. He is a health care management consultant and a principal of the firm Health Research and Planning Associates, Inc. In his profession he concentrates on the promotion and development of health care facilities. He has engaged previously in the business of forming corporations for the purpose of submitting applications and obtaining Certificates of Need. He also provides consulting services to health service corporations. Neither Davis nor the other principals of the applicant corporation, including his wife, have any experience or expertise in constructing or operating hospitals, and Davis admitted that the sole purpose for forming the entity known as Community Hospital of Collier, Inc. was for the purpose of submitting an application and prosecuting it in order to obtain a Certificate of Need for an acute care hospital for District VIII.

   
   

2. Mr. Davis' own company, Health Research and Planning Management Associates, Inc. was paid $15,000 by Community Hospital of Collier, Inc. to develop the Certificate of Need application at issue. Community has "a couple of thousand dollars" in its own bank account. The officers and directors of Health, Research and Planning Management Associates, Inc. are the same as those of Community Hospital of Collier, Inc.

   
   

3. On June 15, 1983, after having previously filed a letter of intent, Mr. Davis filed an application for a Certificate of Need for a 152-bed acute care hospital on behalf of Community Hospital of Collier, Inc. Mr. Davis is an officer and director of that corporation. The articles of incorporation for Community Hospital of Collier, Inc. which gave it its de jure status were not signed until July 29, 1983 and were not filed with the Secretary of State until August 19, 1983. Be that as it may, Mr. Davis maintains that the Board of Directors of Community ratified the filing of the application. That authorization found at page 44 of the application, however, refers to the Board of Directors of Community Health Care of Okaloosa/Walton. The resolution was dated June 7, 1983 and Mr. Davis testified that the use of the name Community Health Care of Okaloosa/Walton in the caption of that Board of Director's resolution was a "typographical error." In any event, the applicant corporation had no legal existence at the time the application was filed on June 15, 1983, however, by its later acts in filing and prosecuting the application it implicitly, at least, ratified the action of its promoter, Mr. Davis, in filing the application since the officers and directors consisted of Mr. Davis, his wife and a third individual.

   
   

4. Be that as it may, Community negotiated a stock purchase agreement with National Medical Enterprises (NME) on August 15, 1984. Pursuant to this agreement, NME is obligated to purchase all capital stock of Community if a Certificate of Need for 100 beds or more is awarded. In return for the sale of the stock of the applicant corporation to NME, Mr. Davis and the other two board

   members of Community will receive a total of $600,000 in addition to the $15,000 Mr. Davis has already received for his efforts in preparing and prosecuting the Certificate of Need application. The only asset of Collier is the inchoate Certificate of Need. Upon consummation of the stock purchase agreement, Mr.

   Davis will resign from the Board of Directors and presumably NME will appoint its own board.

   
   

5. Community has given full authority to NME to prosecute the application as it sees fit, including making certain changes NME deemed appropriate to the application, including seeking 150 beds instead of 152 and changing the method and means of financing the project (mostly equity instead of debt). Additional changes in NME's approach to prosecution of the application include the proposed method of recruitment of personnel and management of the hospital. Community has no agreements with any other group, entities or individuals to provide financial, personnel and other resources necessary to construct, manage and operate an acute care hospital and did not demonstrate that it has any such resources in its own right.

   
   

6. Mr. Frank Tidikis, Vice-President for Operations for the eastern region for National Medical Enterprises, testified concerning the financial and management resources and staffing arrangement NME proposes for the new hospital should it be authorized. He enumerated many medical specialties that NME intends to place on the staff of the hospital, but neither Community nor NME have done any studies revealing what types of medical specialties are presently available in the Collier County area, how many physicians in those specialties are available and what ratio exists or is appropriate for various types of physicians to the community population. The proposed staffing pattern, sources and method of recruitment was predicated solely on NME's past experience in obtaining hospital staff in other areas of the nation, and not upon any study or other investigation showing the availability of appropriate types of trained staff people in reasonable commuting distances of the proposed hospital, which would be located in northern Collier County. If NME consummates the purchase agreement, the hospital would be locally managed by a board of directors consisting of 51 per cent of the hospital's own medical staff and 49 per cent lay members chosen from the community at large.

   
   

   FINANCING

   
   

7. Mr. Michael Gallo was Community/NME's expert in the area of health care finance, being NME's Vice-President for Finance. It was thus established that the total cost of the project, if approved, would be approximately $23,600,000. This amount would be financed by NME which proposes to make a 35 per cent equity contribution in the amount of approximately $8,500,000 and which will finance the balance of the project cost at a rate of approximately 13 per cent interest for 20 years. NME projects that an average daily patient census of 45 would be necessary to "break even." A daily census of 45 would yield 6,425 patient days per year, with the facility projected to break even in its first year of operation. NME projects that by the third year of operation, a return on investment of 10 to 12 per cent would be achieved. NME's projections are based on an assumed average length of stay per patient of 5.6 days. NME allocated two and sone-half per cent of its projected gross revenues for indigent patient care, and four per cent of projected gross revenues allocated to bad debt, that is, uncollectible hospital bills, not necessarily related to indigent patients. The $600,000 which NME must pay Community Hospital of Collier and Mr. Davis in order to acquire the assets of that corporation (i.e. the CON) will be treated as a project cost and will be depreciated as though it were a part of the buildings. Community/NME projects its total revenue per adjusted patient

   admission to amount to $4,843, with projected total revenue per adjusted patient day at $865. It predicts these figures will increase by about five per cent for successive years as a factor of inflation.

   
   

8. The proposed hospital site consists of approximately 12 acres, available at a price of $30,000 to $50,000 per acre. The application itself originally proposed a location in the central or southern portion of Collier County. However, after NME entered into the agreement with the applicant corporation for the stock purchase and became involved in the prosecution of the application, the location was changed. Thus, it was discovered at the outset of the hearing that indeed, the proposed location of Community of Collier's hospital would be in the northern portion of Collier County in close proximity to Lee County. 1/ The proposed $360,000 to $600,000 land cost would of course, be added to the total cost of Community's proposed project. It has not been demonstrated what use would be made of the entire 12 acres, nor that the entire

   12 acres is required for the hospital, its grounds, parking and ancillary facilities.

   
   

   STAFFING

   
   

9. One of the reputed benefits of Community's proposed project is that it would afford a competitive hospital in the Collier County health services market to counter what Community contends is a virtual monopoly held by Naples Community Hospital, as well as to promote the attraction of more qualified medical staff to that "market". In this context, Community contends that its facility, by being built and operating as an alternative acute care hospital, would attract more physicians to the Collier County area and thus, arguably, render health services more readily available. Community thus decries the supposed "closed staff" plan of Naples, contending that Community offers an "open" staffing plan, which would serve to attract more physicians to the geographical area involved and enhance Community's ability to appropriately staff its hospital. Naples Community Hospital, on the other hand, experiences numerous physicians vacationing in the area requesting staff privileges. Many of these physicians apparently do not have any intention of permanently locating in the Naples/Collier County area, however, and therefore in order to determine which physicians are seriously interested in locating there, Naples has a screening procedure which includes an interview with the Chief of Staff, the Assistant Director for Staff Development, and the chief of the service for which a physician is applying for privileges. This preliminary screening procedure is not tantamount to a closed staffing situation, which only exists where a fixed number of physicians are permitted on a hospital staff, with others waiting until an opening occurs. In the open staff situation, as exists at Naples, no matter how rigorous the screening process, there is not a finite number of staff physicians available. Any physician who qualifies under the hospital bylaws and assures the screening committee of his intention to locate in the area served by the hospital is admitted to the staff. Thus, the staffing pattern for physicians at Naples Community Hospital augurs just as well for the attraction of physicians to the Collier County vicinity as does the staffing method proposed by Community. In that vein Naples has granted privileges to 13 new physicians in the preceding calendar year and had 8 applications pending at the time of hearing. Only one applicant was denied privileges during that year.

   
   

10. Additional factors which must be considered in the context of staffing such a hospital concern the ability of the applicant to provide quality of care and appropriate, available resources including health care and management personnel to operate the facility. Aside from demonstrating that NME, through the stock purchase agreement, may obligate itself to provide ample funds and

    other resources to fund, staff and operate the project, and that it has successfully staffed and operated hospitals in numerous locales, Community did not demonstrate what likely sources would be drawn upon for nurses and other staff members to staff its hospital in order to avoid recruiting most of them from nearby facilities, including Naples Community, which could precipitate a diminution in the quality of health care at these other facilities. In short, other than showing that NME's management has the financial resources and experience to accomplish the staffing and operation of the hospital, there was no demonstration by Community which would establish the availability of sufficient health care personnel to operate and manage its hospital at adequate levels of care.

    
    

    COMPETITION

    
    

11. Community contends that its facility should be built in order to foster competition in the provision of health care services in Collier County. It took the position, through its expert witness, Dr. Charles Phelps, that the Naples hospital holds a monopolistic position in Collier County inasmuch as it is the only hospital in the county. It should be pointed out somewhat parenthetically, however, that this "County market area" theme ignores the fact that this application is for an acute care hospital in District VIII, which is not subdivided by rule into County sub-districts for health care planning purposes. Further, Community originally proposed locating its hospital in the central or southerly portion of Collier County, but as of the time of the hearing, proposed to locate its hospital in the northerly portion of Collier County with a service area it itself proposed which will include the southerly portion of Lee County. This area is also within the service areas of Naples Community Hospital, Lee Memorial Hospital, Fort Myers Community Hospital and the soon to be constructed Gulf Coast Osteopathic Acute Care Hospital. Thus, in its attempt to establish Naples Community Hospital as occupying a monopolistic position in the "Collier County health care market", Community did not establish that Collier County either legally or practically is a separate health care market demarcated by the county boundary with Lee and Hendry Counties, such that Naples' status as the sole acute care hospital within the legal boundaries of Collier County is monopolistic. Indeed, it competes for patients with the Lee County hospitals named above in the northern Collier-southern Lee County market area involved.

    
    

12. Community attempted to demonstrate a monopolistic situation in favor of Naples Community Hospital by comparing its relative increase in costs per day and costs per patient stay with Fort Myers Community Hospital and Lee Memorial Hospital. Naples Community Hospital did indeed exhibit the largest rate of cost increase in both those categories. Community's expert, Dr. Phelps, opined that lack of competition in the Naples area caused the disparity in rate of increase in costs between Lee County hospitals and the Collier County hospital.

    
    

13. Naples called Ed Morton, who was accepted as an expert witness in hospital financial analysis, reimbursement, hospital auditing and accounting, financial feasibility and corporate finance. It was thus established that Naples does not occupy a monopoly position and provides health care at lower costs than would be the case should the Community Hospital facility be constructed. Mr. Morton demonstrated that analyzing total costs per adjusted patient day does not reliably indicate the efficiency of a hospital, since such daily costs fluctuate with the average length of stay. A better indicator for determining hospital efficiency is to analyze total revenue per adjusted admission. A comparison of Lee Memorial, Naples Community Hospital, Fort Myers Community Hospital and NME's six Florida hospitals was employed based on data

    provided to the hospital cost containment board for the years 1980 through 1983, in order to show which hospital operated more efficiently and tended less toward monopolistic market positions. In making this comparison, Mr. Morton employed the "total revenue per adjusted admission" and "total revenue per adjusted patient day" methods of comparing the hospitals. He used this approach because it reduces to a common denominator the various values and statistics utilized in the hospital cost containment board formulas. It was thus established that Naples has the lowest total revenue per adjusted admission and lowest total revenue per adjusted patient day of all the hospitals depicted in the comparison study (Naples Exhibit 23).

    
    

14. Naples total revenue per adjusted admission is $400 to $1,900 less than each of the other hospitals. One reason Naples experiences less total revenue is because its charges are lower, since it employs some 1,600 volunteer workers. If these workers were paid at a minimum wage they would reflect a cost of approximately $600,000 per year. Further, the hospital over the years has obtained large donations of money and labor through funding drives, all of which have enabled it to keep charges down for its patients and to continue to operate certain services at a deficit. For instance, Naples has a discreet pediatric unit, which means a physically separate, self-contained pediatric care unit, with specialized staff, who perform no other services than those they are designated to perform in pediatrics. That unit operates at a deficit repeatedly since 40 per cent of the Naples pediatric patients originate from the Immokalee area, which is characterized by an extremely high percentage of indigent persons.

    
    

15. Naples' witness Morton performed a patient origin study which shows that approximately 84 per cent of Naples' patients originate in Collier County,

    12 per cent originate in Lee County, particularly southern Lee County, and two per cent originate from unrelated areas. The Naples Community Hospital is located in Naples, approximately in the mid-section of Collier County and a significantly greater distance from the northern Collier/Lee County line than will be the Community facility, if built. Community expects to draw approximately one-half, or six per cent, of the 12 per cent of Naples' patient load which is derived from Lee County. NCH however, at the present time, competes with Fort Myers Community Hospital and Lee Memorial Hospital, in particular, for patients from both southern Lee County and northern Collier County, Community's proposed service area. Thus, NCH does not maintain a monopoly serving Collier County or Community's proposed service area to the exclusion of these other hospitals. The placement of Community's facility at a point much closer to the Lee County border than is Naples' present facility would result in the injection of a fourth or fifth strong competitor into the Collier County-southern Lee County patient origin and health service market area, rather than merely the addition of a second competitor for Naples Community Hospital.

    
    

    ADVERSE COMPETITIVE EFFECTS

    
    

16. Both Lee Memorial Hospital and Fort Myers Community Hospital already draw a substantial number of patients from southern Lee County, as well as northern Collier County. Gulf Coast Osteopathic Hospital, after protracted litigation, has secured approval of a Certificate of Need to build an osteopathic acute care hospital in the southerly portion of Lee County. That Final Order authorizes 60 beds.

    
    

17. It is fair to assume, inasmuch as these hospitals are already drawing from southerly Lee County, that the capture of the patient market in southern

    Lee County will be made much more pervasive with the addition of the Gulf Coast Osteopathic acute care facility. That being the case, insofar as the 1989 horizon year is concerned, far less than 12 per cent of the Lee County origin patient days now available to hospitals located in Collier County will actually be available. Community will thus draw even less than its own projected six per cent of its patient days from Lee County. In any event, it is logical to conclude that substantially all the patient days resultantly available to a Collier County situated facility will be derived from Collier County upon the advent of the Gulf Coast Hospital. Thus, any patients drawn to Community, if its facility were built, would be at the direct expense of NCH. That being the case, it is reasonable to conclude that the analyses performed by Mr. Morton, Naples' expert, which reveal that Community Hospital will potentially siphon off as many as 80 patient days per day from Naples Community Hospital, is accurate. If this occurs, it would mean that approximately 29,200 annual patient days would be garnered by Community.

    
    

18. Mr. Morton's analysis established that a resultant raising of rates by Naples would have to occur in the amount of $240 per patient day. Failure of Naples to so raise its rates to patients, would cause an annual revenue deficiency of 6.5 million dollars. This increase of $240 per patient day would result in a $1,536 increase in the average charge per adjusted admission, based upon the average length of stay at Naples which is 6.2 days. Even if Community obtained only half its patients from the Naples Community Hospital, (a likely understatement of its patient market impact), the resulting loss to Naples per patient day would be $220 with a concomitant necessary increase, in average patient charges per admission in the amount of $768, in order for NCH to remain financially viable. If Naples were unable to raise its charges to compensate for this loss of patients to the Community facility, then it would have to curtail services currently rendered on a deficit basis, such as its discrete pediatric unit, which experiences a 40 per cent indigent patient utilization.

    
    

19. Community's own projections show that it expects to garner 27,790 patient days, which for the above reason, are likely to all be gained at the expense of NCH. This will result in the loss to NCH of at least 76 patient days per day with a resultant revenue shortfall nearly as high as that postulated by Morton as a result of his patient origin study and adverse impact analysis. Thus, in terms of lost patient days and lost revenue, both the figures advanced by Naples and those advanced by Community reveal that a substantial adverse impact will be occasioned to Naples by the installation of Community's hospital, especially in view of its location at approximately the midpoint between the Lee County boundary and NCH's facility in Naples.

    
    

20. Naples derives approximately 54 per cent of its gross patient revenues from Medicare reimbursement. Four per cent of its revenues are represented by Medicaid patient reimbursement. Eight to nine per cent of its billings are not collected because of non-reimbursable, indigent patient care and bad debts. Community will obtain from 76 to 80 patient days per day case load now enjoyed by Naples Community Hospital. Community projects that its billable case load will be characterized by four per cent Medicaid reimbursable billings, and six and one- half per cent of its annual case load will be represented by indigent and bad debt uncollectible billings. Forty-six per cent of NCH's indigent and bad debt cases come from the Immokalee area lying east of State Road 887 and north of State Road 846, and the Community Hospital would be built approximately midway between that area and the location of NCH. Therefore, based upon Community's own projection of total billings for 27,790 patient days, or at most, 29,200 days per year, (according to NCH's figures which depict the loss to NCH of 80 patient days instead of 76) it becomes obvious that Community's bad

    debt, indigent case billings would actually be in the neighborhood of 17 per cent of its total, billable case load, rather than the six and one-half per cent it projects in its application and evidence. This would render the bad debt, indigent patient-based uncollectibles of Community to be on the order of four million dollars per year. Such a high magnitude of bad debt, uncollectible billing experience can reasonably be expected since Community's Hospital would be constructed between the source of most of the indigent bad debt case load and NCH's location. This location is also in the center of the most affluent, rapidly developing residential area of Collier County.

    
    

21. Given the fact that Community-NME's proposed location is likely to attract a high indigent, bad debt case load from the economically depressed Immokalee area, approaching the magnitude of 17 per cent of total case load, if a policy of freely accepting indigent, uncollectible cases were followed by Community-NME, but considering also the fact that Community proposes to locate its hospital in the service area it has delineated to include the most concentrated source of more affluent, privately paying patients available to these competing hospitals, it cannot be concluded that Community-NME plans to incur such a high financial risk by free acceptance of indigent, charity cases. Rather it seeks to largely serve the collectible, private-paying patient source of northwestern Collier County, hence its recently altered proposed location. This determination is borne out by the experience of NME's other Florida hospitals, which are characterized by a very low percentage acceptance of indigent, bad debt, patient service. Thus, it is quite likely that NCH would be relegated to continued service of this large number of indigent, nonpaying patients while Community/NME would serve a patient base composed of largely private-paying and Medicare reimbursed patients drawn primarily from NCH, a significant financial detriment to that entity, which at present experiences a rather precarious operating ratio, characterized by, at best, a three per cent profit margin. Such an eventuality would force upon NCH the choice of raising its rates substantially or curtailing services, or both, with the probable alternative of seeking taxpayer subsidization of such an increased charity case load.

    
    

22. NCH effectively competes with the pertinent hospitals in Lee County for the same patient base, due to its lower charges, as shown by the fact that Naples has the lowest revenue per adjusted admission and per adjusted patient day of the hospitals in Collier and Lee Counties. Thus, any increase in charges at Naples necessitated by the adverse effect of the installation of Community's hospital would put it at a distinct additional disadvantage in competing with the Lee County hospitals. A similar financial resultant adverse impact would be imposed on Lee Memorial, Fort Myers Community and Gulf Coast in terms of declining utilization and revenues. It is further noteworthy that Community's own projection of annual patient days reveals that it will experience an occupancy rate of approximately 50 per cent. It has not been established how 27 to 29 thousand patient days with a concomitant occupancy rate of only SO to 51 per cent can support a 150-bed free standing, acute care hospital with a full complement of ancillary services, which fact renders the financial feasibility of Community's proposed hospital substantially in doubt.

    
    

23. In terms of the relationship of adverse impacts on existing hospitals to the legislative goals of hospital cost and rate containment, it should be pointed out that the current utilization rate of all hospitals in this area District VIII are declining, partly as a result of the impact of the "diagnostic related groups" (DRG) method of reimbursement. The utilization at NCH for the first six months of 1984 has dropped to 62.3 per cent. The utilization rate of the Lee County hospitals has been reduced to approximately 65.4 per cent. The

    addition of another acute care hospital to this area, which is established to likely experience a utilization of only 50 to 51 per cent itself, would only cause the current low utilization rates to plummet more drastically. This situation would substantially impair the financial viability of all existing hospitals in the relevant area of District VIII, and Community, as well. Thus, if the proposed Community Hospital were added to this area, it would only aggravate the problem the CON approval process is designed to prevent, that of avoiding escalating health care rates and costs, concomitant decline in adequate levels of service and unnecessary duplication of services.

    
    

    GEOGRAPHIC ACCESSIBILITY

    
    

24. In support of its assertion that by 1989 a portion of its service area will not be accessible within 30 minutes driving time of an existing hospital, Community adduced the testimony of Mr. Michael Dudek, accepted as an expert traffic engineer. Mr. Dudek plotted the time and distance of travel from NCH, Cape Coral Hospital, Lee Memorial Hospitals Fort Myers Community Hospital, Eastpoint Hospital, the future Gulf Coast Hospital and proposed Lee Memorial

    100-bed satellite facility. He employed the "floating car method" in determining travel times from each hospital to points 30 minutes from the hospital. He projected future travel times along the same routes with a view toward growth in traffic volume based upon population growth. Mr. Dudek opined that in 1989 there will be, under average traffic conditions, a portion of northern Collier and southern Lee Counties which will not be within 30 minutes average travel time of any existing hospital. In his own opinion, in peak travel seasons, coextensive with seasonal, winter population peaks in this geographic area, the situation will be aggravated such that the territory where residents are more than 30 minutes driving time from existing hospitals will expand.

    
    

25. Mr. Dudek conceded that vehicles on roads adjacent to main artery roads would reach various main arteries at different times, depending on the density of the population in the residential neighborhoods between those main traffic arteries. He did not map his proposed 30-minute driving time contour lines to indicate these variables. Further, he acknowledged that even during the 1989 projected peak traffic season, the geographical triangle in which Community-NME will locate its proposed hospital, was not outside the driving time projected for Naples Community Hospital. He apparently based his conclusions on the premise that road and traffic improvements would not occur so as to significantly compensate for the population and traffic growth posed by various real estate developments of regional impact which have been filed and proposed for north Collier and south Lee Counties.

    
    

26. Naples, presented the testimony of Mr. Jack Barr, also accepted as an expert traffic engineer. Mr. Barr used the "average car method" in conducting a travel-time study to determine the points on arterial roads 30-minutes distance from all existing hospitals in Lee and Collier Counties as well as from the proposed Lee Memorial Satellite Hospital. (Naples Exhibit 76). The distances between those points are interpolated and plotted on the basis of estimated average speeds on the non- arterial segments of the roadways that would be traversed by people making their way to the arterial roads. Mr. Barr also surveyed proposed road improvements in the Collier and Lee County areas (Naples Exhibit 7C). He predicated this survey on the most recent Department of Transportation traffic maps. He performed his original field study during a four-week period in December and January, 1982. The travel times for Collier County were then revised and updated on October 24, 1984 with a field survey and for Lee County on August 14 through 23, 1984. Mr. Barr was unable to determine

    any significant statistical difference between the contours he plotted in his 1982-83 survey and those plotted in the 1984 updated survey. Mr. Barr employed information obtained from the Southwest Florida Regional Planning Council, the Lee County Planning Department and the Collier County Traffic Planner, as well as information from his own files on proposed residential building projects with which he has been associated professionally or become aware of in the area.

    
    

27. It was thus established that that portion of north Collier County and southern Lee County, where most of the proposed residential development will occur, and which is in Community's proposed service area, is currently partially or totally within 30-minutes driving time of three existing and one approved hospital. All the proposed major residential developments in the north Collier/south Lee County area are within 30 minutes travel time of at least one existing hospital and most lie within the 3 minute contour lines for the proposed Lee Memorial Satellite Hospital. The travel time contours will remain substantially unchanged for the next ten years based upon major road improvements planned in the next ten years. Information as to road improvements was obtained from the approved Collier County Comprehensive Plan, from average daily traffic counts on U.S. 41 conducted by the Department of Transportation and Collier County, from the Lee County Transportation and Improvement Program which shows the status of road improvements for 1985 through 1989, and from the Department of Transportation Road Improvement Program extending through the fiscal year 1989 for Lee and Collier Counties. All the roads included in the DOT projection for the next five years are committed and will be built.

    Although there will not be a decrease in traffic along U.S. 41, rather the increase in traffic that would normally occur on U.S. 41 will be largely offset by traffic shifting over to parallel routes which are to be developed through the road improvement programs established by Mr. Barr. There has been a steady decrease in use of the formerly highly congested U.S. 41 artery because of the development of parallel highways such as Airport Road. Mr. Barr established that the road improvements upon which his opinion is partly based are being implemented, and since most are funded by gasoline tax monies earmarked for that purpose, it is reasonable to assume that the DOT sponsored improvements will continue to be made.

    
    

28. Further, although Community sought to show that a portion of the population of its service area is beyond a 30- minute travel time from existing acute care hospitals, it did not demonstrate that that population now or in 1989 amounts to more than 10 per cent of the Collier County population.

    
    

29. In his capacity as a traffic-engineer, Mr. Barr has worked in Lee and Collier Counties for approximately seven years, representing public and private clients. He has monitored the implementation of the Collier Comprehensive Plan as it relates to roadways and real estate development and established that road improvements are indeed being implemented. His testimony and opinion, predicated on more accurate surveying techniques, supported by local planning and Department of Transportation documentation, is better corroborated and more competent than that of Mr. Dudek and is accepted. Thus, it has not been shown that the 30 minute travel time points and distances attributable to existing hospitals will recede sufficiently to create the new service area contemplated by Community.

    
    

    EXISTING SERVICE - AVAILABILITY, QUALITY,

    
    

    ADEQUACY OF CARE, ACCESSIBILITY To ALL, INCLUDING INDIGENTS

30. NCH affords adequate availability and access to acute care services for patients in Collier and southern Lee Counties, including indigent patients. Community's proposed facility would not have a level 2 or 3 nursery, and would not have a discreet pediatric unit, both of which Naples has. Thus, access to pediatric, as well as obstetric services, would not be enhanced by the advent of Community's hospital, for indigent or other patients originating in Community's proposed service area. Additionally, inasmuch as NCH's pediatric unit operates at a deficits the addition of such services, even of their limited scope, by Community may, for financial reasons, result in the curtailment of such services, especially for indigent, in view of the considerations expressed above.

    
    

31. The physician-director of the Collier County Health Department, Dr. Polkowski was called and accepted as an expert witness on behalf of Naples in the area of public health, for the purpose of discussing the distribution of medically indigent persons and availability of services in Collier County. Her work requires her to routinely review U.S. Bureau of Census data on age and health characteristics of the population of Collier County and to travel throughout the county to acquire knowledge of the health characteristics of the population.

    
    

32. It was thus established that the highest concentration of poverty level patients occurs in Census Tracts 112, 113, 114 and 104, with a particularly high concentration in Census Tract 112 which comprises the Immokalee area in northeastern Collier County. A particular health problem in that area is teenage pregnancy, with 90 births to females under 19 years of age in 1983 out of a county-wide statistic for such births of 172. Eleven per cent of the babies born to women under 19 years of age in Collier County are low birth weight babies, which typically necessitate higher levels of neonatal, specialized care because of the increased chances of serious health problems occasioned by low birth weight.

    
    

33. There are three recognized levels of care for newborn babies in Florida. Naples Community Hospital has a Level 1 and 2 nursery. Level 1 represents babies who have no exceptional conditions. Level 2 is for those babies with respiratory and other serious problems requiring enhanced levels of care and is characterized by such special equipment as isolettes, intensive care bassinets with respirators, cardiac monitors, apnea monitors, resuscitation and cardiac resuscitation equipment. The staffing level of the Level 2 nursery is at a ratio of one neonatal specialized nurse to three babies rather than the one nurse per six babies of the Level 1 nursery. The Level 2 and 3 babies have serious and frequently chronic health conditions for the short, and sometimes the long-term, often characterized by quite high patient costs.

    
    

34. The Immokalee area has the highest poor as well as non white concentration in the bounty. There are approximately 14,000 permanent residents, but during the wintertime the population swells to over 20,000 when predominantly Mexican American migrant farm workers arrive in the area. The poor population has a higher mortality rate for infants and manifests more serious medical problems on a greater per capita basis than does the more affluent population lying to the west and southwest. The Immokalee area population has a high rate of tuberculosis, venereal disease, parasites and hepatitis. The current level of services provided to the indigent population by Naples Community Hospital however, is of a high quality.

    
    

35. Richard Akin is the Director of the Collier Health Services, a private, nonprofit primary health care organization which offers primary medical

    and dental care services to the rural, poor population of northeast Collier County. Most of these patients are migrant farm workers who have absolutely no means of paying their own medical bills. Collier Health Services provides primary medical care at three locations in the county with the largest center being at Immokalee. The Immokalee facility has seven staff positions which include such specialties as pediatrics, family practice, internal medicine and obstetrics. The Immokalee facility records approximately 60-thousand patient visits per year. Seventy-five per cent of these are represented by Mexican- American farm workers who are employed in the area seasonally. Another 10 to 12 per cent per year are Haitian immigrants employed in agriculture. Between 60 and 80 per cent of all patient visits are not paid for by the patient. The Immokalee primary care facility refers 4,000 to 4,500 patients to a hospital annually, with about 12 to 15 such referrals per day. These are for normal,

    non-emergency care situations. Additionally, between 400 and 450 patients are referred to a hospital for emergency care per year.

    
    

36. All the primary care center's emergency and non emergency patients are referred to NCH. Mr. Akin has attempted to refer patients from the Immokalee facility to other area hospitals such as in Lee County, but without success. NCH is located in fairly close proximity to the Immokalee Primary Care Center, and, even though most patients have no means of paying for medical care, NCH treats and admits them without questioning them in advance concerning their ability to pay, insurance, Medicaid and the like. Mr. Akin has previously attempted to refer his indigent patients to the Fort Myers area hospitals with little success in having them admitted. LeHigh Acres Hospital is considerably closer, being 24 miles away, but Mr. Akins has had little success in having the indigent patients he serves admitted there. Instead, he refers to Naples since

    the patients are treated with the same dignity and decency as paying patients at that hospital. In excess of 50 per cent of the patients he refers from the primary health center to Naples never pay anything for the services received.

    
    

37. Approximately 30 per cent of the non-emergency patients referred to Naples annually are pediatric referrals. About 30 per cent of the emergency referrals are also pediatric patients. Four hundred to four-hundred fifty non- emergency patients annually are obstetric patients who come to full term and are delivered. It is unlikely that any of the pediatric patients would be referred to a hospital, such as the proposed Community facility, which does not have a discreet pediatric unit with a specialized staff and equipment, since the primary care center in Immokalee has the capability of treating any overnight, routine pediatric problem itself, and any pediatric patient that cannot be handled on a one-day admission at the facility, can be sent to the discreet, specialized pediatric unit at Naples Community Hospitals which Community of Collier will not offer.

    
    

38. The standard procedure at Naples Community Hospital for admitting patients who do not have a private physician or a private physician referral, is nondiscriminatory. That is, in the triage process, when a patient arrives at the emergency room, for instance, only the patient's name, address, age, date of birth and questions eliciting his medical status are asked upon his arrival. Depending on the nature of the injury involved, the on-call medical specialist for that type of injury is then summoned to the emergency room. If it appears necessary to admit the patient to the hospital, the on-call specialist authorizes the admission. When the admission determination is made, there is no information available on the admitting documents and no questions are asked to indicate whether the patient is a paying patient, a nonpaying migrant worker, an insured patient, or a Medicare patient.

39. Naples presently has a labor and delivery area with a birthing room and a three-stage cohort type of nursery. Infants move through three different stages in the nursery depending on age, so as to reduce infections. Seventeen of the 24 beds on the floor are designated as OB beds. Whenever more than 17 patients must use that floor, they are able to expand to gynecological medical surgical beds on the same floor which thus gives a total capacity for OB patients of 24 beds. The OB services as proposed by Community are essentially duplicative of the services in existence at Naples Community Hospital, although with a less intensive level of care for 08 and pediatric patients. Essentially all the other services proposed by Community duplicate these services already available to area residents at NCH and the other pertinent hospitals.

    
    

40. Thus, it is apparent that if Community's facility is located where proposed, it will actually serve an area that is more elongated north to south rather than east to west, and will in reality serve the more affluent, private- paying patient origin areas lying in west-central and northwest Collier County. The reason for this is that most of the indigent patient population will bypass Community of Collier's Hospital and go to Naples for the above delineated reasons, and Community would then tend to draw patients from the more populated, wealthier areas on a north-south line from the Naples area up to and across the Lee County line rather than on an east-west axis. The fact that Community/NME would serve primarily privately-paying patients is exemplified by the fact that NME's other Florida hospitals typically have no (or very minimal) Medicaid patient days, such that that parent company's policy is not one of encouraging service to Medicaid or indigent patients.

    
    

41. It is thus apparent that with the advent of Community/NME's hospital that there would be created two different patient bases or patient markets, with Naples continuing to serve the vast majority of the indigent, Medicaid, or bad- debt patient base. Community/NME would garner its patient base largely from private-paying, more affluent patients with substantially less bad debt ratio. This would siphon off much of Naples's private paying base, such that, with its already slim or sometimes nonexistent profit margin, its financial viability would become more and more in doubt. This would raise the alternative mentioned above of either raising its rates substantially, causing health care costs for the consuming public to rise significantly, seeking relief from the taxpayers of Collier County, or curtailment of available services to indigents and all other patients, especially GE and pediatrics; possibly even all three cost coverage alternatives. Such an eventuality would ultimately result in a reduction in the quality of health care afforded the patient public.

    
    

    NAPLES AVAILABLE AND PROPOSED SERVICES

    
    

42. Mr. Mike Jernigan was tendered by NCH and accepted as an expert in health care planning and hospital financial management. Mr. Jernigan is employed as Director of Planning at Naples and prepared the instant Certificate of Need application seeking 30 beds. Naples has recently added 43 psychiatric beds under previously issued Certificates of Need. The instant application contemplates relocation of the 43 psychiatric beds to the fourth floor of a support building, there creating a discrete psychiatric care unit. Naples amended its request at hearing so as to seek 20 instead of 30 medical/surgical beds to be added to the space to be vacated by the 43 psychiatric beds. No significant construction will be required in the vacated space, rather semiprivate rooms will be converted to private rooms. The 1.7 million dollar project cost is chiefly attributable to the construction of the facility which will house the licensed 43 psychiatric beds. Thus, the reduction in the number of acute care beds sought from 30 to 20 will not significantly alter the 1.7

    million dollar project cost. Naturally, the minor project costs attributable to installation of 10 acute care beds in the vacated, former psychiatric bed space will be lessened by an amount attributable to 10 beds. In any event, NCH has been demonstrated to have adequate financial resources to undertake the project outlined in its application and has those funds committed. Naples can add these

    20 proposed beds and successfully operate them as a minor addition to its now feasibly operating acute care hospital.

    
    

43. Naples has recently opened a free standing, primary care center called North Collier Health Center, in the vicinity of the proposed site of Community/NME's hospital. That facility includes a radiology room, laboratory and emergency medical service station, in addition to offering normal, primary care services. It is staffed 24 hours a day, seven days a week with a physician, but does not have inpatient beds. A similar primary care center has been constructed on Marco Island. Both of these centers have been added to Naples complement of facilities and services in implementation of a long-range health care expansion plan designed to make Naples' services more accessible and available to the public throughout its Collier County, southern Lee County service area. Given Naples low and sometimes non existent margin of revenue over expenses, the construction of these two facilities was rendered largely financially feasible through the donation of the land for both of them through community fund raising efforts, and the construction of the Marco Island facility was accomplished with entirely donated funds.

    
    

44. The EMS substation at the North Collier Primary Care Center is operated and financed by the county, and the sleeping quarters at that sub station and at the Naples main campus facility for EMS personnel are provided free of charge at some financial loss to the hospital. Such an arrangement constitutes good health care planning, even though it results in some financial detriment to Naples, since it makes the emergency medical technicians immediately available to assist emergency patients who are transported to the primary care centers by their own means, and shortens the reaction time for emergency personnel since they are not located at separate locations from the hospital or primary care centers. These arrangements further Naples' long range goal in making its emergency primary care and primary care services more available and accessible to the public in its service area, which goal receives strong public support as evidenced by the large public donations which largely made the installation and operation of these facilities possible. Since Naples is a not-for-profit hospital, any excess of revenue over expenses it experiences is used to acquire new and needed equipment or expand facilities, including facilities and services such as these. The installation of Community/NME's hospital at its proposed locations especially, would duplicate the services offered at North Collier Primary Care Center and to a great extent those offered at the main campus of NCH in Naples.

    
    

45. It was established through the testimony of Miles Price, an architect specializing in hospital design, that the construction costs, architectural costs and related inflation factors depicted in Naples' application are reasonable and accurate with regard to the relocation and construction for the psychiatric beds, which are to be moved, and the installation of the 20 acute care beds proposed. Acquisition of equipment necessary for the operation of the

    20 proposed beds will be financially assisted by its present shared purchasing arrangements, whereby it is able to obtain resultant discounts in acquisition of the necessary equipment needed for installation and operation of the new beds.

    BED NEED AND BED ALLOCATION

    
    

46. Thomas Porter was tendered and accepted as an expert in health care planning in Florida. Subpart (23) of Rule 10-5.11, F.A.C. is the acute care bed need determination methodology. It is the policy of HRS in accordance with the legal mandate referenced herein to facilitate the use of subpart (23) of the rule by regularly compiling and disseminating district bed need information, including that depicted in Community's Exhibit 16, which includes a memorandum from Phil Rond, the Administrator of the Office of Comprehensive Health Planning of HRS.

    
    

47. If the formula at subpart (23) of the above rule is employed using historical utilization data from the years 1981 through 1982, a net bed need of

    375 for all of District VIII results and that is the current bed need status of the district advocated by Community. However, as established by the memorandum from Mr. Rond incorporated in Exhibit 16, the most recent utilization data includes that for the year 1983, which is the most recent hospital reporting period envisioned by the formula and above rule. When the 1983 utilization data is added to the 1981-1982 information, a drop in total bed need for District VIII occurs from a figure of 4,147 beds to 3,654 beds. When licensed and approved beds are subtracted from that figure, a minus bed need results and District VIII has an excess of 118 beds. The rule formula at subpart (23)(g) dictates that the three most recent annual hospital licensure reporting periods must be used for the utilization data necessary to operate the need determination formula. 2/ The use of the most recent utilization data, including 1983, for District VIII causes the overall projected occupancy level contemplated in the methodology (at 10.5.11(23)(g)(2)) to fall below 75 per cent, when the bed need calculation is carried out to its conclusion. Given the projected occupancy falling below 75 per cent, the end result is that gross bed need in District VIII is 3,654 beds, rather than 4,147 beds as postulated by Community. Community contends that the 1983 utilization data should not be used since it was not available for Districts I and II and should not be used for any district until it is available and disseminated for all districts 3/

    
    

48. The reason the department promulgated Mr. Rond's special memorandum with regard to the bed need projections for District VIII, was to alert users of that information that in that particular district the drop in the most recent utilization data triggered the rule mechanism of subpart (23)(g)(2) because it revealed that the overall projected occupancy levels would fall below 75 per cent, all of which showed on a district-wide basis an over-bedding of 118 acute care beds.

    
    

49. Mr. Larry Bebe is Acting Executive Director and Planner for the District VIII Health Council. He was accepted as an expert witness in health care planning and public health administration. Mr. Bebe considers the local health council plan to be a valuable planning tool for purposes of allocating beds in District VIII on a less than district-wide basis. The plan was adopted in March, 1984, but has not yet been adopted as a rule by HRS. According to the District VIII Health Council Plan, that district is sub-districted by counties, except for Glades and Hendry Counties which are combined in a two-county sub- district. This form of sub-districting has been done for approximately seven years.

    
    

50. District VIII is sub-districted on a county basis rather than on other geographical boundaries, because population data, useful in planning allocation of beds, is only available in the form of county-based population projections by age-specific cohorts from the Bureau of Economic and Business Research at the

    University of Florida (BEBR). Further, in considering the location of existing hospitals, the greatest proportion of people in the seven county area of District VIII can be located within a reasonable time and access to health care services by allocating the beds on a county sub-district basis. The population data promulgated by the BEBR is employed by HRS, is generally accepted as authoritative in Certificate of Need proceedings, and is herein. It is not available by age-specific cohort in the census tract geographical subdivisions attempted to be used by Community in 4 in delineating its purported service area. 4/ Performance of population based health care planning must be done consistently and future need must be projected based upon preparing utilization rates predicated on the same population geographical area each time. A common geographical basis for allocation of beds, such as counties, is most appropriate since that is the basis on which the most accurate population data is available.

    
    

51. The bed allocation methodology used by the local health council to allocate beds by county sub-districts is contained in Naples Exhibit No. 35. Bed allocation on a county sub-district basis is determined by taking the overall bed number available from the state methodology rule formula and

    breaking it down into county sub-districts according to the District VIII health plan methodology. This methodology takes into account existing hospital utilization and location, changes in population, and projected patient days.

    All items of information to operate the allocation formula are obtained on a county basis. Under the District VIII health plan methodology, when existing beds are subtracted from needed beds, a projected need for 20 medical/surgical beds in Collier County results with an excess of 41 existing beds in Lee County for the horizon year of 1989. Mr. Porter corroborated Mr. Bebe's testimony and established that, although not adopted by HRS rule, the sub-districting of District VIII by county for health planning purposes conforms with HRS policy in terms of population and geographical criteria and constitutes a reasonable and rational health planning tool. The methodology used by the local health councils to allocate beds to the counties incorporates standard, accepted health planning practices and HRS' policy is not to interfere with that allocation of beds on a sub-district basis, so long as the subdistricting allocation does not exceed the bed need number for the district as a whole.

    
    

52. Mr. Porter demonstrated that it is possible under the state Subpart

    (23) methodology to find no need or excessive beds at a district level, however, by applying the local health council methodology a positive mathematical need might be shown in one or more county sub-districts. Thus, it has been shown that the local health council allocation method which reveals a 20-bed need for Collier County is the result of a rational, standard, accepted health planning practice with regard to determining projected bed need on a less than district- wide basis. However, although that methodology shows a formula-based "need" in Collier County, the above findings reflecting the severely declining utilization experience in Collier County at NCH, together with its already scant operating ratio, when considered with the future effect on its utilization rate caused by the advent of Gulf Coast Hospital, show that no true need for any beds exists. Bed need projections are not the only pivotal considerations in determining entitlement to a CON. Brown and Kendall Lakes Hospital, Inc., Humana, Inc. d/b/a Kendall Community Hospital v. HRS, 4 FALR 2452A, (Final Order entered October 6, 1982).

    
    

    SUMMARY

    
    

53. It has been shown that the Community/NME proposal will not enhance geographical accessibility nor will the Naples proposal. There are no present financial barriers to patients seeking acute care beds at the Naples facility at

    the present time, and accessibility to the indigent and traditionally medically underserved, is good and will continue to be so through the auspices of NCH and its expanded facilities and present mode of providing services. The quality of care at the existing hospitals in Collier and Lee Counties is adequate and doubtless, if Community/NME's facility were in place, its quality of care would be adequate as well, but it will not enhance the present quality of care afforded by existing facilities and its advent will ultimately result in increased health care rates, and concomitant reduction in quality of service to the public.

    
    

54. The primary care centers located in Immokalee and recently opened by Naples Community Hospital in north Collier County and in Marco Island, present viable alternative services complementing the present level and quality of care offered by NCH at its main campus. These represent less expensive, more efficient alternatives to the institution of the acute care facility proposed by Community/NME. Further, the construction of the 150-bed facility proposed by Community/NME would not enhance availability of services to all area residents, since, when the numerical methodology and declining utilization rates clearly show the lack of need for the facility, its installation will have a heightened adverse financial impact on existing hospitals' ability to continue to provide the level of Medicaid and indigent care historically provided, because the competition of this new hospital would be only for the paying patients and not for the indigent patients. The loss of revenue producing patients at the existing facilities requires the spreading of fixed costs to fewer patients. This exacerbates the likelihood of increased charges to patients and, over the long term, a curtailment of the scope and quality of services to all patients.

    
    

55. In short, there has been established no need for the 150-bed acute care hospital advocated by Community/NME. Although Naples meets most of the relevant criteria, in the statute and Rule 10-5.11, inasmuch as there has been no actual bed need proven for Collier County because of the above considerations, in spite of the bare calculation of a 20 bed "need" based upon the local health council's non-rule allocation methodology, Naples has not demonstrated a need for any beds.

    
    

    CONCLUSIONS OF LAW

    
    

56. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. Section 120.57, Florida Statutes (1983).

    
    

57. The parties stipulated that Gulf Coast Hospital and Lee Memorial Hospital have standing to intervene in these proceedings. Naples and Community have standing both as an existing hospital in the case of Naples and as comparative, competing applicants pursuant to Section 381.494(8)(e), Florida Statutes and Bio-Medical Applications of Clearwater v. DHRS, 370 So.2d 19 (Fla. 2nd DCA 1979).

    
    

58. The substantive criteria against which applications for Certificates of Need are to be evaluated are set forth in Section 381.494(6)(c)(1)-(13), Florida Statutes (1983) as follows:

    
    

    The department shall determine the reviewability of applications and 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:

    1. The need for the health care facilities and services and hospices being proposed in relation to the applicable district 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.

    2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health

       care services and hospices in the service district of the applicant.

    3. The ability of the applicant to provide quality of care.

    4. The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as out- patient care and ambulatory or home care services, which may serve as alter- natives for the health care facilities and services to be provided by the applicant.

    5. Probable economies and improve- ments in service that may be derived from operation of joint, cooperative, or shared health care resources.

    6. The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas.

    7. 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.

    8. 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 district; the extent to which the services will be accessible to schools for health professions in the service district 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 district.

    9. The immediate and long-term financial feasibility of the proposal.

    10. The special needs and circum- stances of health maintenance organizations.

    11. The needs and circumstances of those entities which provide a substan- tial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. 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 transplan- tation.

    12. The probable impact of the pro- posed project on the costs of providing health services proposed by the appli- cant, 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.

    13. 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. . . .

        
        

59. The above criteria for reviewing Certificate of Need applications must be weighed and considered in the light of the facts of each case. Collier Medical Center, Inc. v. The Department of Health and Rehabilitative Services, 10 FLW 133 (Fla. 1st DCA 1985). Rule 10-5.11(23) establishes a precise method for calculating bed need for each district. As demonstrated by the Findings of Fact and evidence of record, the application of that rule shows no need exists in District VIII and indeed, District VIII is substantially over-bedded. Community/NME's attempt to show a need for a 150-bed acute care hospital turns upon Subsection (g) of Rule 10-5.11(23) which establishes the district bed allocation adjustment. That adjustment factors into the bed need determination the historic utilization rate for hospitals in the district. Subsection (g) bases the historic utilization rate upon the "total patient days of care delivered by acute care hospitals in the district for the three most recent annual hospital licensure reporting periods and district population estimates

    for that three year period." At the time of the hearing, the three most recent annual hospital licensure reporting periods were 1981, 1982 and 1983. The use of this most recent utilization data in District VIII causes the overall projected occupancy level contemplated in the rule methodology at 10-5.11(g)(2) to fall below 75 per cent. When this most recent utilization data is factored into the rule methodology, the number of beds actually needed is 3,654 in the 1989 horizon year, not 4,147 as contended by Community/NME. A net excess of 118 beds results. Rule 10-5.11(23) mandates the use of the most recent utilization data. Humana, Inc., et al. v. DHRS, Supra. Although Community/NME maintains that since the 1983 utilization data is not available for Districts I and II, it should not be used in the bed need calculation for District VIII, that position ignores the fact that the most recent, relevant data must be used in calculating bed need for the district involved in the applications at issue, for the reasons delineated above (see footnote 3, Supra). There simply has been no need shown for any additional acute care beds in District VIII.

    
    

60. In this connection, although Naples presented expert testimony which established that the local health plan methodology indicates that a 20 bed need exists in Collier County as a de facto sub-district of District VIII that local health council methodology has not been adopted in a rule by HRS. Section 381.494(7)(b), Florida Statutes provides:

    
    

61. The local health council shall:

    
    

    (1) Develop a district plan using uniform methodology as set forth by the department, which will permit each local health council to develop goals and criteria based on its unique local health needs, such as the special health needs of rural areas and medi- cally underserved communities. The district plan shall be submitted to the department and updated periodically and shall be in a form prescribed by the department. The elements of an approved district plan which are neces- sary to the review of any certificate- of-need application shall be adopted by the department as a part of its

    rules. . . . (Emphasis supplied)

    
    

62. Thus, although the local health plan methodology and its result indicating a possible need of 20 beds for Collier County may be weighed in considering whether any beds are needed in Collier County, the absence of a rule mandating the use of the local health council bed need allocation is not mandatory. In fact, although witnesses Porter and Bebe established that the local health council methodology is a rational and useful health planning tool in determining a proper allocation of bed need for District VIII to the county sub-districts and Collier County in particular, that testimony is belied by the fact that the utilization rate for Collier County has declined to slightly over

    62 per cent. These markedly declining utilization rates render the results of the local health council methodology which show a 20 bed need for Collier County to be unreliable and that result is not accepted. There has clearly been established no need for any additional beds for Collier County standing alone or for District VIII as a whole.

63. Rule 10-5.11(23) at paragraph (b) states:

    
    

    The department will not normally approve applications for new or additional acute care hospital beds in any departmental service district if approval of an application would cause the number of beds in that district to exceed the number of beds calculated to be needed according to the methodology included in paragraphs (f),(g) and (h). A favorable certificate-of-need deter- mination may be made when the criteria, other than bed need, as provided for in section 381.494(6)(c), Florida Statutes demonstrate need.

    
    

    See also, Brown and Kendall Lakes Hospital, Inc; Humana, Inc. d/b/a Kendall Community Hospital v. HRS, Supra. A consideration of the remaining criteria of Section 381.494(6)(c) in light of the evidence presented in support of these applications does not reveal special circumstances which justify granting the Certificate of Need applications at issue. Some of those criteria are not in dispute or are not applicable to the applications involved in this proceeding.

    
    

64. The second above statutory criteria involves availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing health care services. There has been no evidence adduced to indicate that the citizens of Collier and Lee Counties are not already receiving appropriate, efficient and adequate health care service from the competing hospitals in Lee and Collier Counties whose services are discussed in the above Findings of Fact. Although Community/NME attempted to create an illusion of acute health care being somewhat inaccessible, with evidence that some areas of Collier County might be more than 30 minutes average travel time from an acute care hospital in the horizon year 1989, that evidence was belied by the expert testimony and evidence adduced through Mr. Barr, who established that indeed all of Collier and southern Lee Counties would be within an average 30-minute travel time from an acute care hospital in the year 1989 without the addition of Community/NME's facility. In that connection, Rule 10-5.11(23)(i) requires that acute care hospitals be available and accessible within 30 minutes average travel time to at least 90 per cent of the population of an urban area sub-district. Although Community/NME adduced evidence that not all of its contemplated service area population would be within 30 minutes average travel time of an acute care hospital in 1989, Community did not adduce evidence of the size of that population vis-a-vis the greater-than-ID percent requirement of the rule. Thus, even if Community's evidence were accepted to that effect, it would not meet the geographical accessibility standard imposed by the rule.

    
    

65. There is likewise no evidence to indicate that utilization in the district is so great that an additional hospital is required. The evidence established that hospitals in Lee and Collier County have not reached the 85 per cent occupancy standard which is optimal for health planning purposes and operating efficiency. Utilization has sharply declined in the most recent 1983 reporting year as delineated above. The present quality of care, availability and adequacy of existing acute care health services in Collier and Lee Counties is good.

66. With regard to the third criteria concerning the ability of the applicant to provide quality health care, although there is little doubt that Community/NME and NCH can provide quality health care in terms of the equipment, facilities, expertise and staffing they could offer with the proposed services, such ability to provide quality health care is not sufficient reason to justify constructing and operating a hospital in the absence of a showing of need.

    
    

67. The fourth criteria at issue involves the consideration of whether adequate alternative health care services are available in Collier County and southern Lee County where Community Hospital intends to operate its facility and where Naples Community Hospital seeks to add additional beds. The evidence clearly reveals that adequate alternative health care services are already available or will be available through the operation of Lee Memorial Hospital the addition of the Gulf Coast Osteopathic Hospital. Further, Naples Community Hospital itself already operates an ambulatory/surgical center and primary health care centers which enhance its ability to provide rapid response, emergency medical service, and more readily available and accessible, non- overnight, primary care services than was formerly the case when it depended solely on its main campus facility.

    
    

68. Concerning the fifth criteria there is no evidence to show that economies and improvements in service from shared resources will result if Community/NME's facility is built. There is no evidence that by constructing an additional acute care hospital, or the expansion of NCH's facility, that health care costs will be reduced. Indeed, the evidence reveals that health care costs will likely increase since Community Hospital will siphon revenue-producing patients from Naples, which will significantly reduce its ability to provide medical services for the indigent patients, which it must continue to serve. There is no showing that improvements in service will result if Community/NME builds and operates its facility, indeed, the reverse may prove true since Community will siphon off largely private-paying, revenue-producing patients from NCH, causing it to have a reduced ability to bear its indigent case load. The resulting revenue shortfall may indeed result in cutbacks in service at NCH and indeed, possibly at Community Hospital as well, as a result of reduced revenues caused by the dilution of the paying patient base of each by the other.

    
    

69. The sixth criteria in the above section does not apply. There is no evidence of a need for special equipment or services in the district. The seventh and eighth criteria are similarly not at issue in this case.

    
    

70. The ninth criteria concerning financial feasibility has not been met. The evidence establishes that indeed Community Hospital, as shown by its own testimony and evidence, will likely operate at about 50 to 51 per cent occupancy which renders the financial viability of that facility, if built, quite dubious. In the case of Naples, although it might feasibly operate the additional 20 beds in the short term, the fact that it already experiences a utilization rate of

    62.3 per cent renders the financial viability of that institution less certain if it is the recipient of 20 additional beds, the fixed costs of which it must bear when its utilization rate is already down to 62.3 per cent. Given the effects of the "DRG" method of reimbursement, there is little likelihood that Naples can add those beds on a financially viable basis in the longer term, based upon declining occupancy rates through the horizon year of 1989.

71. The tenth criteria concerning the special needs or circumstances of health maintenance organizations is not truly at issue in this case. There is no evidence to reflect that a health maintenance organization has been unable to begin operations in Collier County, nor that the approval of either application at issue will enhance the operations of a health maintenance organization.

    
    

72. The eleventh criteria is not in dispute in this proceeding. The twelfth criteria concerns the probable impact of the proposed projects on the cost of providing the type of health services proposed by the applicants, including consideration of the effects of competition on the supply of services being proposed and improvements or innovations in financing and delivery of health services, which will foster competition and promote quality assurance and cost effectiveness. The evidence reflects that in terms of health care costs, Naples Community Hospital already efficiently provides health care services to the citizens in the proposed service area at competitive rates, it has the lowest ratio of revenue over expenses of any of the hospitals involved in this proceeding, and lower than other hospitals operated by NME. Community/NME did not prove that health care costs would be reduced by the addition of its hospital to the area. The Lee County hospitals already compete actively with Naples for patients in northern Collier and southern Lee Counties, and this competition will increase when the Gulf Coast Hospital is built in close proximity to Collier County. In fact, the evidence reveals that the addition of a 150-bed acute care hospital in close proximity to Naples, will likely draw significant numbers of paying patients away from Naples Community Hospital without also drawing substantial numbers of non-revenue-producing indigent patients from Naples. In short, the probable impact of the proposed projects were shown to likely result in increased costs of health services, and, in the face of the lack of a showing of any need for additional beds and a low and declining utilization rate currently experienced in Collier County, the considerations of quality assurance and cost effectiveness will be best served by not authorizing any additional acute care beds in Collier County.

    
    

73. The thirteenth criteria in the above section is not at issue in this proceeding.

    
    

74. Finally, although the benefits to the health care system and health care recipients from the installation of the Community/NME facility would be negligible, the costs associated to the health care using public would ultimately be great. The diversion of paying patients from Naples Community Hospital to Community/NME would further exacerbate the already narrow margin of revenue over expenses experienced by Naples as well as its declining utilization rate. See generally Collier Medical Inc. v. DHRS and Naples Community Hospital, Inc. et al., 10 FLW 133 (Fla. 1st DCA 1985); Farmworker Rights Organization, Inc. v. State Department of Health and Rehabilitative Services,

430 So.2d 1 (Fla. 1st DCA 1983). Accordingly, in view of the lack of any clear showing of a need for any additional acute care beds in District VIII and Collier County, or any exceptional circumstances justifying the addition of such beds, it is concluded that both applications at issue should be denied.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore

RECOMMENDED:

That the application for a Certificate of Need submitted by Community Hospital of Collier, Inc. for 150-beds for northern Collier County be DENIED, and that the application for a Certificate of Need submitted by Naples Community Hospital, Inc. for the addition, as amended, for 20 beds be DENIED, and that, in view of the application involved in Case No. 84-0909 having been withdrawn, that that case be CLOSED.

DONE and ENTERED this 16th day of August, 1985 in Tallahassee, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of August, 1985.

ENDNOTES

1/ Certificate of Need applications are not "site specific." Thus, the changing of the proposed location of the facility is not such a major alteration of the application as to, in effect, render it a new application, in a new batching cycle, requiring re-review by HRS and notice of agency intent before transmission to the Division of Administrative Hearings. From a strictly legal viewpoint, the applicant can choose to locate the facility anywhere in the service district or sub-district (where such subdistricts are applicable).

However, as will be seen, the changed location of the applicant's facility in this case, is germane to the issue of competition with Naples Community Hospital, other hospitals and other issues.

2/ See Humana, Inc. et al. v. DHRS, DOAH Case No. 83-3887R (Final Order entered May 22, 1984).

3/ This argument fails to take into account that Certificate of Need review, Certificate of Need application filings and proceedings conducted as a result thereof, are on a "district specific" basis. Although the rule embodies a statewide, generally applicable methodology, it is not intended that bed need should be calculated on a statewide basis. Rather it is calculated on a district or subdistrict specific basis as are all other criteria involved in the determination of whether Certificates of Need should be issued. The availability of data used in calculating need in any other district has no relevance to a determination of the issues in this case. See American Medical International, Inc. and Brookwood Community Hospital v. H.R.S., DOAH Case No.

83-3092R (Final Order entered September 28, 1984) and, generally, Turro v. D.H.R.S., 458 So.2d 345 (Fla. 1st DCA 1984).

4/ See American Medical International and Brookwood Community Hospital v. H.R.S., Supra.

COPIES FURNISHED:

Robert D. Newell, Jr., Esquire Kenneth F. Hoffman, Esquire OERTEL & HOFFMAN, P.A.

2700 Blair Stone Road, Suite C Tallahassee, Florida 32301

C. Gary Williams, Esquire Steve Emanuel, Esquire AUSLEY, MCMULLEN, MCGEHEE,

CAROTHERS & PROCTOR

Post Office Box 391 Tallahassee, Florida 32302

Douglas L. Mannheimer, Esquire CULPEPPER, TURNER & MANNHEIMER

318 North Calhoun Street Tallahassee, Florida 32301

John D. C. Newton, II, Esquire CARSON & LINN, P.A.

253 East Virginia Street Tallahassee, Florida 32301

Ivan Wood, Esquire

WOOD, LUCKSINGER & EPSTEIN

1600 One Houston Center Houston, Texas 77010

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 HOSPITAL OF COLLIER, INC.,

Petitioner,

vs. CASE NO. 84-0744

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

DOCTORS' OSTEOPATHIC MEDICAL CENTER, INC. d/b/a GULF COAST HOSPITAL and LEE MEMORIAL HOSPITAL,

Intervenors.

/ COMMUNITY HOSPITAL OF COLLIER, INC.,

Petitioner,

CASE NO. 84-0907

vs. CON NO. 2810

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/ NAPLES COMMUNITY HOSPITAL, INC.,

Petitioner,

vs. CASE NO. 84-0909

CON NO. 2856

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent,

and

COMMUNITY HOSPITAL OF COLLIER, INC., DOCTORS' OSTEOPATHIC MEDICAL CENTER, INC. d/b/a GULF COAST HOSPITAL, INC., and LEE MEMORIAL HOSPITAL,

Intervenors.

/

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 case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto. Exceptions were filed by Community Hospital of Collier, Inc. (hereinafter "Collier").

RULING ON EXCEPTIONS

1. The record will show who called A. Joseph Piccolla as a witness. Background will not be adopted in this Final Order. Collier's 1st exception is denied.

   
   

2. There is competent substantial evidence to support the Findings of Fact concerning Staffing in the Recommended Order. Collier's 2nd and 3rd exceptions are denied.

   
   

3. There is competent substantial evidence to support the Findings of Fact in the Recommended Order concerning Competition. Collier's 4th exception is denied.

   
   

4. There is competent substantial evidence to support the Findings of Fact in the Recommended Order concerning Adverse Competitive Effects. Collier's 5th, 6th, 7th, 8th, 9th and 10th exceptions are denied.

   
   

   FINDINGS OF FACT

   
   

5. The Findings of Fact contained in the Recommended Order concerning geographic accessibility are based upon competent substantial evidence. Collier's 11th exception is denied.

   
   

6. The Findings of Fact contained in the Recommended Order regarding Existing Service are based upon competent substantial evidence. Collier's 12th and 13th exceptions are denied.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Conclusions of Law are supported by the Findings of Fact which are based upon competent substantial evidence. Collier's 14th-20th exceptions are denied.

Based upon the foregoing, it is ADJUDGED,

1. that the application of Collier (2810) for a Certificate of Need for 150 beds for northern Collier County is DENIED,

   
   

2. the application of Naples for a Certificate of Need to add 20 beds is DENIED,

   
   

3. Case No. 84-0909 is closed, the application therein has been withdrawn.

DONE and ORDERED this 2nd day of December, 1985, in Tallahassee, Florida.

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Copies furnished to:

P. Michael Ruff John D. C. Newton, II, Esq.

Hearing Officer CARSON & LINN, P.A.

DOAH 253 East Virginia Street

The Oakland Building Tallahassee, Florida 32301 2009 Apalachee Parkway

Tallahassee, Florida 32301

Ivan Wood, Esq.

WOOD, LUCKSINGER & EPSTEIN

Robert D. Newell, Jr., Esquire 1600 One Houston Center Kenneth F. Hoffman, Esquire Houston, Texas 770l0 OERTEL & HOFFMAN, P.A.

2700 Blair Stone Road, Suite C Tallahassee, Florida 32301

C. Gary Williams, Esquire Steve Emanuel, Esq. AUSLEY, McMULLEN, McGEHEE,

CAROTHERS & PROCTOR

Post Office Box 391 Tallahassee, Florida 32302

Douglas L. Mannheimer, Esquire CULPEPPER, TURNER & MANNHEIMER

318 North Calhoun Street Tallahassee, Florida 32301

Docket for Case No: 84-000744

Orders for Case No: 84-000744