STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA CONVALESCENT CENTERS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-1456

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on September 27, 1984, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Donna H. Stinson, Esquire

The Perkins House, Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

For Respondent: Richard A. Patterson, Esquire and

David P. Gauldin, Esquire Building One, Room 406 1323 Winewood Boulevard

Tallahassee, Florida 32301 BACKGROUND

This proceeding was initiated when respondent, Department of Health and Rehabilitative Services, issued its proposed agency action on February 15, 1984, advising that it intended to deny an application for a certificate of need filed by petitioner, Florida Convalescent Centers, Inc., wherein petitioner sought authorization to construct a 120-bed nursing home facility in Manatee County, Florida.

Petitioner thereafter filed a petition for formal administrative proceeding pursuant to Subsection 120.57(1), Florida Statutes, to contest the denial of its application. The matter was forwarded by respondent to the Division of Administrative Hearings on April 23, 1984, with a request that a Hearing Officer be assigned to conduct a hearing.

By order dated July 5, 1984, a final hearing was scheduled on September 27, 1984, in Tallahassee, Florida. The same order granted a motion to consolidate this cause with Case No. 84-1511. A motion to continue the final hearing filed on behalf of petitioner in Case No. 84-1511 was denied on September 25, 1984.

Thereafter, the petitioner in that case filed a notice of voluntary dismissal.

At the final hearing petitioner presented the testimony of Donald E. Davis, who was accepted as an expert in the field of health planning and health finance. Petitioner also offered petitioner's exhibits 1-4; all were received in evidence. Respondent presented the testimony of C. Edwin Carter, Jr., who was accepted as an expert in the field of health care planning, and offered respondent's exhibit 1 which was received in evidence.

The transcript of hearing was filed on October 10, 1984. Proposed findings of fact and conclusions of law were filed by respondent and petitioner on October 22 and 25, 1984, respectively, and have been considered by the undersigned in the preparation of this order. Proposed findings of fact not included in this order were considered irrelevant to the issues, immaterial to the results reached, or were not supported by competent and substantial evidence.

The parties have stipulated that all statutory and rule criteria have been satisfied by petitioner except as to need and the resulting impact on long-term financial feasibility. Accord ingly, the issue is whether petitioner has demonstrated a need to construct a 120-bed nursing home facility in Manatee County, Florida.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner, Florida Convalescent Centers, Inc. (FCC), filed an application with respondent, Department of Health and Rehabilitative Services (HRS), on October 14, 1983, seeking a certificate of need authorizing the construction of a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida. /1 The proposed project carries an estimated cost of

   $3,530,000.

   
   

2. After reviewing the application, HRS issued its proposed agency action on February 21, 1984, in the form of a state agency action report in which it advised petitioner that it intended to deny the application. The report stated in part that "(e)xisting and approved bed capacity in Manatee County... is sufficient to satisfy projected need for 1986," that 240 nursing home beds had just been approved for the county, and when added to the existing nursing home supply, would "maintain a reasonable subdistrict occupancy level through 1986 and satisfy the need for additional beds in Manatee County."

   
   

3. The service area in which FCC proposes to construct its new facility is the Manatee County subdistrict of HRS District 6. That district contains five counties, including Manatee. In order to determine need, HRS has adopted Rule 10-5.11(21), Florida Administrative Code, which contains a formula (or methodology) for determining need at both the district and subdistrict level. Under that formula, HRS is required to utilize the "most recent 6 month nursing

   home utilization in the subdistrict." In this regard, HRS prepares on an on- going basis an internal document entitled "Quarterly Report" which contains the latest available data over a six-month period. In this proceeding, HRS used a report containing data for the period October, 1983, through March, 1984. This was the most current and complete available data at the time of hearing.

   
   

4. According to the methodology in Rule 10-5.11(21), there is a gross need in District 6 for 7,336 nursing home beds. At the same time, there are presently 4,910 licensed and 960 approved beds in the District. Therefore, this results in a district-wide shortage of 1,466 nursing home beds through the year 1987, which is the three year planning horizon used by HRS in determining need.

   
   

5. Evidenced introduced by HRS indicated there are presently 765 licensed and 240 approved beds in Manatee County. Under the rule, the methodology reflects a need for 1,518 beds, or a subdistrict deficiency of 513 beds through the year 1987. But even if beds are mathematically required under the formula at the subdistrict level, the rule requires that the current utilization of existing facilities be at least 85 percent, and the prospective utilization rate exceed 80 percent. If they do not, no additional beds may be authorized. The current utilization rate in Manatee County is 91.7 percent which meets the 85 percent threshold. However, the prospective utilization rate for the existing and approved operating nursing homes within the county is 69.8 percent, or substantially less than the minimum threshold of 80 percent called for by the rule. If petitioner's proposed beds are added to the calculation, the prospective utilization rate drops to 62.9 percent, or far below the requisite minimum rate. Therefore, there is no need for additional beds in Manatee County.

   
   

6. FCC points out that special circumstances are present which justify a deviation from the rule. These include the allocation under the rule of only 15 percent of the district beds to Manatee County even though 21 percent of the elderly population (over 65 years) resides within the county, and the fact that Manatee has the highest percentage of people over 75 years of age of any county within the district. FCC also contends that the county has more persons in poverty than the statewide average, and that it will dedicate some 50 percent of its beds to Medicaid patients if the application is approved. However, these factors are taken into account in the formula devised by HRS, and do not constitute special circumstances that would warrant a departure from the need calculation encompassed in the rule.

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

8. The parties have stipulated that all statutory criteria have been met by the applicant except those criteria relating to need and the resulting impact on long-term financial feasibility. These are codified in Subsection 381.494(6)(c) 1. and 9., Florida Statutes, and require HRS to consider the following when evaluating applications for certificates of need:

   
   

   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 circum stances which pose a threat to the public health.

      * * *

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

      
      

      In addition, the applicant must also meet the criteria imposed by Rule 10- 5.11(21), Florida Administrative Code. That rule contains the formula by which bed need for nursing homes is determined. The rule is binding as to need, and HRS is bound to observe it in administering its certificate of need program.

      Page v. Capitol Medical Center, Inc., 371 So.12d 1087, 1091 (Fla. 1st DCA 1979); The Jose M. Turro and Holiday General Hospital, Inc. v. Department of Health and Rehabilitative Services, et. al., So.2d (Fla. 1st DCA 1984, op. filed

      10-12-84).

      
      

9. Under the formula prescribed by Rule 10-5.11(21), there is no need for additional beds in Manatee County, Florida through 1987. Although petitioner contends that need is shown due to "unusual" poverty and elderly population conditions in Manatee County, these factors have been considered in the rule's calculations and do not justify a deviation from the rule.

   
   

10. It is concluded that no need for additional nursing home beds in Manatee County, Florida has been shown, and that the application should be denied.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Florida Convalescent Centers, Inc., for

a certificate of need to construct a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida be DENIED.

DONE and ORDERED this 31st day of October, 1984, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 31st day of October, 1984.

ENDNOTE

1/ This is but one of twenty-eight certificate of need applications filed by FCC seeking to establish nursing home facilities throughout the State.

COPIES FURNISHED:

Donna H. Stinson, Esquire The Perkins House, Suite 100

118 North Gadsden Street Tallahassee, Florida 32301

Richard A. Patterson, Esquire Building One, Room 406

1323 Winewood Boulevard

Tallahassee, Florida 32301

David Pingree, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 84-001456

Orders for Case No: 84-001456