STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
COMMUNITY PSYCHIATRIC CENTERS, ) INC., and COMMUNITY PSYCHIATRIC ) CENTERS OF FLORIDA, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 84-1614
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
) TALLAHASSEE MEMORIAL REGIONAL ) MEDICAL CENTER, AND APALACHEE ) COMMUNITY MENTAL HEALTH )
SERVICES, INC., )
)
Intervenors. )
) APALACHEE COMMUNITY MENTAL )
HEALTH SERVICES, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 84-1820
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
) COMMUNITY PSYCHIATRIC CENTERS, ) INC., and COMMUNITY PSYCHIATRIC ) CENTERS OF FLORIDA, INC., )
)
Intervenors. )
)
RECOMMENDED ORDER
Pursuant to written notice a final hearing was held before Larry J. Sartin, duly designated Hearing Officer of the Division of Administrative Hearings on December 19-21, 1984 and January 2-4, 1985 in Tallahassee, Florida.
APPEARANCES
FOR PETITIONERS: COMMUNITY PSYCHIATRIC CENTERS
Morgan Staines, Esquire
Senior Assistant General Counsel 2204 East Fourth Street
Santa Ana, California 92705
APALACHEE COMMUNITY MENTAL HEALTH SERVICES, INC.
Donna Stinson, Esquire Moyle, Jones & Flanigan
The Perkins House, Suite 100
118 North Gadsden Street Tallahassee, Florida 32301
and
Ronald Brooks, Esquire
Brooks, Callahan & Phillips Chartered 863 East Park Avenue
Tallahassee, Florida 32301
FOR RESPONDENT: DEPARTMENT OF HEALTH AND
REHABILITATIVE SERVICES
John M. Carlson, Esquire Assistant General Counsel Department of Health and
Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard
Tallahassee, Florida 32301
FOR INTERVENOR: TALLAHASSEE MEMORIAL REGIONAL
MEDICAL CENTER
Jean S. Laramore, Esquire Alfred W. Clark, Esquire Steven G. Pfeiffer, Esquire Laramore & Clark
325 North Monroe Street Tallahassee, Florida 32301
STATEMENT OF THE CASE
On November 15, 1983, Apalachee Community Mental Health Services, Inc. (hereinafter referred to as "Apalachee"), filed an application with the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department") for a certificate of need to construct a 24-bed free-standing acute care psychiatric facility in Leon County, Florida. Apalachee also filed an application for a certificate of need to construct a 16-bed psychiatric facility in Leon County.
On December 16, 1983, Community Psychiatric Center, Inc. and Community Psychiatric Centers of Florida, Inc. (hereinafter collectively referred to as
"CPC"), filed an application for a certificate of need to construct a 60-bed free-standing acute care psychiatric facility in Leon County.
All three applications were reviewed by the Department. Subsequently the Department indicated its intent to deny the applications. As a consequence thereof, CPC and Apalachee filed Petitions for Formal Administrative Hearing. CPC's Petition was assigned Division of Administrative Hearings' case number 84-1614. Apalachee's Petition on the 24-bed facility was assigned case number 84-1820 and its Petition on the 16-bed facility was assigned case number 84- 1821.
By Order dated May 5, 1984, CPC's case was consolidated with case number 84-0237, Psychiatric Hospitals of America, Inc. v. Department of Health and Rehabilitative Services. Psychiatric Hospitals of America, Inc. (hereinafter referred to as "PHA"), had filed an application for a certificate of need to construct a 60-bed free-standing acute care psychiatric facility in Leon County on August 12, 1983. Its application had also been denied by the Department.
In addition to consolidating CPC's and PHA's case, the Order allowed CPC and Tallahassee Memorial Regional Medical Center (hereinafter referred to as "Tallahassee Memorial"), the owner of an existing free-standing psychiatric facility in Leon County, to intervene in PHA's case. By Order dated June 12, 1984, Tallahassee Memorial was allowed to intervene in CPC's case.
On June 28, 1984, an Order was issued consolidating Apalachee's 2 cases with CPC's and PHA's case. This Order also allowed Apalachee to Intervene in CPC's and PHA's case and allowed CPC to intervene in Apalachee's 2 cases.
PHA's case involved an application reviewed in a batching cycle preceding the batching cycle in which CPC's and Apalachee's applications were reviewed. Therefore, by Order dated September 7, 1984, PHA's case was severed from case numbers 84-1614, 84-1820 and 84-1821. PHA was, however, granted leave to intervene in CPC's and Apalachee's cases on December 13, 1984.
On November 1, 1984, all four cases were transferred to the undersigned. On December 2, 1984, the undersigned commenced the final hearing of CPC's case and Apalachee's cases. Upon commencing the hearing, Apalachee informed the undersigned that Apalachee's dispute in case number 84-1821 had been settled
with the Department. Therefore, case number 84-1821 (incorrectly referred to as case number 84-1820 at the hearing) was continued by agreement of the parties.
Case numbers 84-1614 and 84-1820 proceeded to final comparative hearing, with CPC as the Petitioner in case number 84-1614 and Apalachee as the Petitioner in case number 84-1820. PHA, Tallahassee Memorial and Apalachee were intervenors in case number 84-1614 and PHA, Tallahassee Memorial and CPC were intervenors in case number 84-1820.
PHA subsequently dismissed its case. PHA therefore lost standing to intervene in CPC's case and Apalachee's cases. Accordingly, PHA has been severed as an intervenor in these cases by Order dated March 9, 1985.
At the final hearing, CPC presented the testimony of John Mercer, CPC's Vice President for Development, Jerry Hendon, an employee of CPC involved in construction and purchasing, Connie L. Speer, M.D., a Tallahassee psychiatrist,
Sebastian, M.D., a Tallahassee psychiatrist, J. David Moore, M.D., a Tallahassee psychiatrist, Merrill A. Jones, an architect and engineer, and Ray Johnson, Vice President of CPC. CPC also submitted the deposition testimony of James Smith, Senior Vice President of Finance and Treasurer of CPC.
CPC also offered CPC Exhibits 1-11. CPC Exhibits 1, 3, 5, 6, 9, 10 and 11 were accepted into evidence.
The following CPC witnesses were accepted as expert witnesses in the fields noted:
NAME EXPERTISE
John Mercer Psychiatric hospital development. Dr. Speer Psychiatry.
Dr. Sebastian Psychiatry.
Dr. Moore Psychiatry.
Merrill A. Jones Health care facility design.
Ray Johnson Psychiatric hospital administration. James Smith Hospital finance.
Apalachee presented the testimony of Chris Gosen, Apalachee Director of Operations, Jim W. Hines, Apalachee Director of Management and Budget, Carl Mahler, Apalachee Director of Adult Mental Health Programs, John Clemons, an architect, Joe Davis, Leon County Sheriff's Department Captain and Director of the Leon County Jail, Steven Meisburg, Apalachee Director of Associate and Consultation Services, and Alton Scott, an associate fiance professor at Florida State University and a financial consultant.
Apalachee's witnesses who were accepted as experts and their expertise are as follows:
NAME EXPERTISE
Jim W. Hines Accounting.
Carl Mahler Mental health counseling and program administration.
Joe Clemons Architecture with emphasis on health
care facility design.
Alton Scott Utilization and need analysis, and
health care finance and financial feasibility.
Apalachee submitted Apalachee Exhibits 1-4; all were received into evidence.
Tallahassee Memorial presented the following witnesses: Jay D. Cushman, a health planning and hospital development consultant, Lewis Brodsky, M.D., a psychiatrist and Medical Director of Tallahassee Memorial's psychiatric facility, Henry Mann, an architect, Russell J. Ricci, M.D., a psychiatrist and Behavioral Medical Care's Chairman of the Board and Medical Director, J. Craig Honaman, Tallahassee Memorial's Executive Vice President and Chief Operations Officer, and Pamela McDowell, Program Manager of Tallahassee Memorial's psychiatric facility.
Tallahassee Memorial witnesses accepted as experts and their expertise are as follows:
NAME EXPERTISE
Jay D. Cushman Health planning and development.
Dr. Brodsky Psychiatry and the implementation and
operation of psychiatric programs.
Henry Mann Architectural design of health facilities and psychiatric facilities.
Dr. Ricci Psychiatry and the evaluation of psychiatric programs.
Pamela McDowell Psychiatric program planning.
Tallahassee Memorial offered TMRMC Exhibits 1-7. TMRMC Exhibits 1, 2, 4,
5, 6 and 7 were accepted into evidence.
Finally, the Department presented the testimony of Thomas F. Porter. Mr. Porter is the Department's Certificate of Need Application Review Coordinator and was accepted as an expert in health planning in Florida certificate of need reviews. The Department's exhibits included HRS Exhibits 1-5; all were accepted into evidence.
All of the parties have submitted proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes (1983). A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.
ISSUE
Whether a certificate of need to construct a 60-bed short-term inpatient psychiatric hospital should be granted to CPC and whether a certificate of need to construct a 24-bed short-term inpatient psychiatric hospital should be granted to Apalachee?
FINDINGS OF FACT
Introduction.
CPC.
Community Psychiatric Centers, Inc., a proprietary corporation, was formed in 1968 by the merger of 2 existing psychiatric hospitals. It now consists of 24 psychiatric hospitals, two of which are located in Florida, and two subsidiary corporations.
On December 16, 1983, CPC submitted to the Department an application for a certificate of need to construct and operate a 60-bed inpatient psychiatric hospital. The 60-beds are to consist of 15 beds for adolescents, 20 beds for adults in an open unit, 10 beds for adults in an intensive care unit and 15 beds for geriatric patients.
Apalachee.
Apalachee is a not-for-profit corporation. It began approximately 30 years ago as a small clinic. It was incorporated as the Leon County Mental Health Clinic in the 1960's and later changed its name to Apalachee Community Mental Health Services, Inc.
Apalachee presently serves over 7,000 clients a year, has a
$6,500,000.00 budget and 300 employees. It provides services to 8 north Florida counties: Gadsden, Liberty, Franklin, Leon, Wakulla, Madison, Jefferson and Taylor. Apalachee provides specialized continuums of care for substance abuse, children and geriatrics and basic generic services, including a 24-hour, 365 days-a-year emergency telephone and/or face-to-face evaluations. It also provides a full range of case management, day treatment and residential care primarily aimed at the acute and chronically mentally ill and specific programs for children, such as an adolescent day treatment program and an adolescent residential facility.
Apalachee's residential programs include a program called Positive Alternatives to Hospitalization (hereinafter referred to as "PATH"). Apalachee also operates an 8-bed non-hospital medical detoxification program in conjunction with PATH. This program is operated in the same building as PATH. It also operates 3 group homes (an adult, an alcohol abuse and an adolescent half-way house) with 10 clients each (these houses will be expanded to 16 clients each), a geriatric residential facility with 60 to 70 beds and cater Oaks, a long-term residential treatment facility for adolescents.
On November 15, 1983, Apalachee applied to the Department for a certificate of need for 24 short-term inpatient psychiatric beds. In its application filed during the final hearing of these cases, Apalachee proposed to construct a facility to house the 24-beds adjacent to its current "Eastside" facility. Its Eastside facility currently houses Emergency Services, PATH and its non-hospital medical detoxification programs. All adult mental health programs of Apalachee will also be located on the site in order to consolidate the full continuum of adult psychiatric care provided by Apalachee.
Statutory Criteria.
The following findings of fact are made as they pertain to the criteria included in Section 381.494(6)(c) and (d), Florida Statutes (1983), and Section 10-5.11(25), F.A.C.
The Need for Psychiatric Services Florida State Health Plan and the District 2 Health Plan.
General.
The Florida State Health Plan is outdated and the District 2 Health Plan does not contain specific goals as to the need for short-term psychiatric care for District 2, the District the facilities would be constructed in. CPC and Apalachee did, however, address both plans, to the extent applicable, in their applications. The relationship of "need" to these plans, as agreed to by the Department, is not relevant to this proceeding, however.
CPC also indicated that it evaluated local bed need by studying socioeconomic, population and employment data and by interviewing local practicing psychiatrists. CPC concluded that additional services were needed and filed its application.
Although the Florida State Health Plan and the District 2 Health Plan do not address the question of need, need as determined under the Department's rules is crucial.
Section 10-5.11(25), F.A.C., provides that a favorable need determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under paragraph (25)(d). Under Section 10-5.11(25)(d)(3), F.A.C., bed need is to be determined 5 years into the future by subtracting the number of existing and approved beds in the District from the number of beds for the planning year based upon a ratio of .35 beds per 1,000 population projected for the planning year. The population projection is to be based on the latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida.
The Department has projected a need for 185 total short-term psychiatric beds for District 2 for 1989. There are 82 currently licensed and
35 approved short-term psychiatric beds in District 2. Therefore, for 1989 there is a net short-term psychiatric bed need projected of 68 beds.
Based upon the projected population of District 2 for 1990 (537, 567), which is 5 years from 1985, the total bed need is 188 beds. The net bed need for 1990 is 71 beds (188 total beds less 117 licensed and approved beds). The Department did not use this figure because the calculation for bed need for 1990 will not be made by the Department until July of 1985.
Pursuant to Section 10-17.003, F.A.C., the total projected short-term psychiatric bed need for District 2 is allocated among 2 subdistricts. Subdistrict 2 consist of Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor and Wakulla Counties. CPC's and Apalachee's proposed facility will be located in Subdistrict 2. Subdistrict 2 is the same area designated by CPC as its "primary" service area. This rule, which is to be "used in conjunction with Rule 10-5.11(25)(c)(d)(e)" allocates the 1988 short-term inpatient psychiatric and substance abuse projected bed need as follows:
Subdistrict 1: 75
Subdistrict 2: 104
Total 179
Because the projected bed need for Subdistrict 2 under this rule is based upon 1988 projections, it is clearly in conflict with the requirement of Section 10-5.11(25)(d)(3), F.A.C., that bed need is to be projected 5 years into the future. The total bed need projected for the District for 1988 is 179 beds; for 1990, the total is 188 beds.
Based upon the allocation of total bed need in Section 10-
17.003, F.A.C., the net bed need for Subdistrict 2 for 1988 is 44 beds: 104
total beds less 60 licensed and approved beds in Subdistrict 2. If it is assumed that the 9 additional total beds projected for 1990 should be allocated to Subdistrict 2, the net bed need for 1990 in Subdistrict 2 would be 53 beds (100 beds less 50 licensed and approved beds). No evidence was presented, however, to support the assumption that all 9 additional total beds will be allocated to Subdistrict 2. It is more likely that only 1 or 2 additional beds will be allocated to Subdistrict 2.
Based upon the foregoing, the total net bed need for District 2 projected to 1990 is 71 beds and for Subdistrict 2 it is between 44 and 53 beds.
CPC.
CPC attempted at the hearing to show that its proposal is consistent with the bed need for District 2 as determined under Section 10-5.11(25)(d)(3),
F.A.C. In the alternative, CPC has attempted to prove that there is a sufficient need in District 2 for additional short-term psychiatric beds based upon other methodologies and the state of psychiatric care currently being provided in Subdistrict 2.
Sources of referral to the proposed CPC facility, according to Mr. John Mercer, will include physicians, the judiciary and legal system, the school system, employers and law enforcement. Referrals are inspected by Mr. Mercer based upon his conversations with physicians (Mr. Mercer did not interview persons from the other referral sources) , his personal experience and the fact that there will be a community relations or marketing position at the proposed facility.
Local psychiatrists did testify that they would refer patients to CPC if its facility is approved. They did not, however, testify that they would refer all of their patients to CPC. They also testified that the CPC facility is needed. The local psychiatrists did not, however, indicate that they were aware of all of the facts as established during the proceeding.
CPC, in its application, projected, based upon conversations with local physicians, that the facility will serve most of the area designated by the Department as District 2. District 2 is subdivided by CPC into a primary service area, consisting of Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor and Wakulla Counties, and a secondary service area, consisting of Clay, Calhoun, Gulf and Jackson Counties in Florida and several counties located in extreme southwest Georgia.
In Mr. Mercer's opinion, the proposed facility will serve persons from southwest Georgia; specifically, Brook, Decatur, Grady, Seminole and Thomas Counties. Mr. Mercer's opinion was based upon the availability of services in Georgia and conversations he had with Tallahassee physicians. Mr. Mercer's opinion, however, has been given little weight in determining the need for additional short-term psychiatric beds in District 2 based upon the testimony of Jay D. Cushman, an expert in health planning and development. Mr. Mercer's opinion that southwest Georgia residents will use the proposed CPC facility implies that there may be a need for additional short-term psychiatric beds. Mr. Mercer, however, failed to consider travel time and barriers to travel, patient origins or the effect, if any, of outmigration--the number of persons in District 2 who may leave the District for treatment outside the District. Although Mr. Mercer's conversations with local physicians are relevant and of some supportive weight, the local physicians' opinions should have been supported with other evidence. They were not.
CPC, in its exhibit 3, projected a bed need of 14.67 beds attributable to southwest Georgia. This figure was arrived at by first assuming a bed need in the area of .35 beds per 1,000 population (119,051). This results in a gross bed need in southwest Georgia of 41.67 beds. From the gross number of beds, 27 existing beds were subtracted to arrive at a net bed need in District 2 attributable to southwest Georgia residents of 14.67 beds. No evidence supporting a conclusion that such a bed need exists in District 2 was presented at the hearing other than Mr. Mercer's opinion that the proposed facility will serve residents from southwest Georgia. It is therefore concluded that there is not a need for 14.67 beds in District 2 attributable to southwest Georgia residents.
In its application, CPC projected a need for an additional 195 short- term psychiatric inpatient beds for District 2. This figure was based upon an average of bed need projected by using three different bed need methodologies. The three different methods resulted in a projected bed need of 64 beds, 266 beds and 255 beds. Application of the method which resulted in a bed need of
266 was modified during the hearing. The modification resulted in a bed need of
75.8 beds. Therefore, the bed need based upon the average of all 3 methodologies, as amended would be 131.6 beds.
The three methods used by CPC in its application are different than the method used by the Department. None of the methods, based upon Mr. Cushman's testimony, are sound; they are structurally unsound, applied in an unsound manner or both.
Under Method I, CPC starts with a projected short-term psychiatric bed need of 1988 of 44 beds, the net bed need as determined in Section 10-17.003,
F.A.C. This figure is then increased by 9.44 beds for in-migration and 11 beds attributable to an adjustment for "desired occupancy level." As clearly established by Mr. Cushman's testimony, neither of the adjustments are sound. The projected bed need of 64 beds for 1988 pursuant to method I is therefore not a reliable figure.
Pursuant to Method II, as modified during the hearing, CPC projected a bed need of 75.8 beds. Method III resulted in a projected net bed need of 255 beds. These projections are based upon a projected average length of stay of 30 days. No evidence was presented to support this projection; in fact, it is unrealistic when compared with the average length of stay of 16 days at similar facilities in Florida. CPC's Florida facilities have also not been able to achieve an average length of stay of 30 days. These formulas are also unrealistic because population figures used were for all of District 2. But existing beds taken into account only included the beds in Subdistrict 2. Finally, occupancy was not taken into account in either of the methods.
CPC's Methods II and III are not sound, based upon the foregoing.
Apalachee.
Apalachee's application is for only 24 inpatient psychiatric beds, which is well below the bed need projected under the Department's methodologies for the District and the Subdistrict.
Apalachee has projected that its proposed facilities will serve persons in the 8 counties it currently serves. These counties are the same counties which make up Subdistrict 2. Apalachee has not assumed that any patients will come from outside of the Subdistrict.
Apalachee has shown that the patients who will use its facility are clients within its own present system, based upon historical data. This historical data establishes that an average of 10 to 12 Baker Act patients have been admitted to Tallahassee Memorial's psychiatric facility during past years. These persons would be admitted to Apalachee's new facility. Additional patients would consist of Apalachee clients which Tallahassee Memorial's facility will not admit and clients currently going into other Apalachee programs.
Accessibility to Underserved Groups.
CPC is willing to provide care for Baker Act patients. It has been projected that 5 percent of the proposed facility's patient days will be attributable to Baker Act patients. CPC is also willing to treat Medicaid patients and has again projected that 5 percent of the facility's days will be attributable to Medicaid patients. In addition, CPC has projected that 5 percent of its gross revenue will be set aside for the care of indigent patients which consist of those persons who are unable, at the time of admission, to pay all or a part of the charges attributable to their care. Indigent care may not be provided, however, if the facility is losing money.
The provision of indigent care is based upon a CPC policy which was recently agreed upon and applies to new CPC facilities. The policy does not apply at the two existing CPC Florida psychiatric hospitals since they were established before the policy was adopted.
Pursuant to the Florida Mental Health Act, Chapter 394, Part II, Florida Statutes, the Department's district administrator designates a facility in the district as the public receiving facility for Baker Act patients. In Subdistrict 2 of District 2, Apalachee has been designated as the public receiving facility. Apalachee is therefore responsible for ensuring that emergency care, temporary detention for diagnosis and evaluation and community inpatient care is available to Baker Act clients.
As the public receiving facility in Subdistrict 2, Apalachee will clearly serve Baker Act patients. It has projected that in the first year of operation 40 percent (39.7 percent in the second year) of its patients at the new facility will be indigent and that the indigent patients will be primarily Baker Act patients. Seventy percent of Apalachee's clients are persons who need some type of financial assistance; Medicare, Medicaid and Baker Act. Apalachee has proposed to continue to serve these persons in the new facility.
Apalachee's purpose in requesting a certificate of need is to allow Apalachee to provide a continuum of care for more Apalachee clients. In the past, Apalachee has experienced difficulty in obtaining inpatient care for certain Baker Act clients. Additionally, even though those problems have been minimal in the past year, there are some Baker Act clients who need inpatient care who are not appropriate patients for Tallahassee Memorial's psychiatric hospital. These patients are sometimes violent and "acting out." Although Tallahassee Memorial is providing adequate care for most Baker Act patients, some Baker Act patients are not admitted. Additionally, removal of Baker Act patients who are admitted by Tallahassee Memorial from Tallahassee Memorial's facility, as discussed infra, will improve the quality of care at Tallahassee Memorial. The cost of providing inpatient care to Baker Act patients will be less if Apalachee is granted a certificate of need for the requested 24 beds. At present, because of limited Baker Act funds, some Baker Act clients who need inpatient care are placed in other programs. With reduced cost for inpatient care, these clients will be able to receive the inpatient care they need.
Additionally, Apalachee will serve forensic clients -- those mental health clients with criminal charges. A full-time forensic psychologist has been provided by Apalachee at the Leon County jail to facilitate this type service. The psychologist also evaluates for Baker Act qualification. According to the Director of the Leon County jail, persons in the jail with psychiatric problems are placed in a single "bull pen." Apalachee's work with forensics has been helpful.
Like and Existing Psychiatric Services.
The only "like and existing" psychiatric health care services in Subdistrict 2 are provided by Tallahassee Memorial. Tallahassee Memorial is a not-for-profit corporation. It currently owns an existing 60-bed short-term inpatient psychiatric facility located in Subdistrict 2. The facility is operated as a separate department of Tallahassee Memorial.
Tallahassee Memorial's psychiatric facility has been continuously operated by or for Tallahassee Memorial since 1979. It was initially known as Goodwood Manor. In 1983, however, the management of the facility was taken over by, and its name was changed to, Behavioral Medical Care (Tallahassee Memorial's facility will be hereinafter referred to as "BMC"). From 1977 to 1979, the facility was owned and operated by Tallahassee Psychiatric Center, Inc., which failed for financial reasons. Prior to 1977 Tallahassee Memorial operated a small psychiatric unit as pert of its hospital.
The occupancy rate at BMC for the 12-month period ending September, 1984, was 37 percent. The occupancy rate since 1979 has been consistently low and is low at the present time. There are a number of reasons for the low occupancy rate:
a) The physical location and physical plant of BMC. BMC is located in a 2-story building near Tallahassee Memorial. BMC occupies the top floor of the building and a nursing home is located on the first floor. In order to get to BMC, it is necessary to travel through the nursing home. Also, the building is surrounded by a parking lot so there is inadequate outdoor and recreational space around the facility.
The facility, which was originally designed as a nursing home, presently consists of one closed unit and one open unit. Patients of all ages and with various problems have to be housed in these 2 units together. Because of the physical plant, patients cannot be separated into adult, adolescent and geriatric units. There also is not enough space for therapy rooms and common areas.
b) The reputation of the facility. The reputation in the community of Goodwood Manor has carried over to BMC. The facility is perceived by some as a "crazies place," a place "where violent people go." This reputation is partly attributable to the lack of credibility that psychiatry as a discipline enjoys. It is also partly attributable to the operation of BMC as Goodwood Manor prior to 1982 when Behavioral Medical Care took over management of BMC.
c) The type of programs offered. To date, no program has been separately offered and provided or adolescents, children, substance, alcohol and drug abuse patients, or geriatrics. Basically only one structured program has been provided which has been more suited to adult psychotic patients. Closely related to this problem is the fact that BMC has had a poor patient mix. This has been caused in part by the physical plant and in part by the type of patients BMC has had to take in. Some of those patients have been suffering from problems other than psychiatric problems, i.e., persons suffering from DT's, which is a medical disorder, and persons suffering from organic problems which cause behavioral difficulties.
d) Marketing. There has been a lack of an effort to market the availability of the facility.
e) Training. The programs offered are not as advanced because of the lack of necessary training.
f) Practice patterns. Practice patterns of psychiatrists in the community have contributed to the low occupancy. Because there are only a few psychiatrists in the area and the fact that the Tallahassee Memorial facility has primarily been involved in crisis intervention, the average length of stay (6 to 7 days) is much lower than the average length of stay in other parts of the country. This average length of stay has also, however, been caused by the shortage of Baker Act funds. Closely related to this problem is the fact that there are a large number of nonphysicians providing mental health services in Tallahassee who do not admit patients to the hospital and a large number of health maintenance organizations.
g) Communication. The low occupancy rate has also been caused, at least in the minds of Drs. Speer, Sebastian and Moore, by the lack of solicitation of their input into the operation of the facility.
At least partly because of the problems at BMC, a few patients have been referred to facilities outside of District 2 for care.
Tallahassee Memorial has committed itself to eliminating the low occupancy rate at BMC. In 1982, the administration of Tallahassee Memorial felt it had to decide whether it was going to make a commitment to the facility or get out of psychiatric care. It opted for the former.
After making the commitment, 2 primary actions were taken. One was to contract for the services of Behavioral Medical Care; the other was to apply for a certificate of need to replace its 60-bed facility with a new one.
Behavioral Medical Care is a joint venture formed by 2 corporations, Comprehensive Health Corporation and Voluntary Health Enterprises.
Comprehensive Health Corporation is the largest private provider of chemical dependency rehabilitation services in the country. Voluntary Health Enterprises is an affiliate of Voluntary Hospitals of America which services 70 of the nation's largest not-for-profit hospitals, including Tallahassee Memorial.
Behavioral Medical Care was formed to provide the highest quality, lowest cost psychiatric and chemical dependency rehabilitation programs possible. Behavioral Medical Care provides consultation services and/or actually carries out programs and is now providing 20 different programs at 16 different facilities. Of these 20 programs, 5 to 8 are psychiatric programs.
The first consultation concerning the psychiatric program at Tallahassee Memorial began in the late winter or early spring of 1983. This consultation was provided by Dr. Russell J. Ricci, now chairman of the board and medical director of Behavioral Medical Care. Dr. Ricci reviewed the status of Tallahassee Memorial's program at that time and recommended significant changes be made in 2 phases: one phase to begin immediately and the second to begin after construction of a new psychiatric hospital. Tallahassee Memorial agreed with Dr. Ricci's proposal and contracted with Behavioral Medical Care to carry out the proposal.
Behavioral Medical Care began BMC with an orientation period during which time the existing staff was analyzed, new staff members were hired and the entire staff was trained to implement the new program. During this period, admitting physicians were invited to participate in the implementation program.
A new inpatient psychiatric program at BMC was then begun. The program was established to achieve the following goals:
to restore patients to their optimum mental health;
to make patients as comfortable as possible;
to maintain the patients' sense of dignity and self worth;
to maintain modern and efficient treatment modalities through research and education;
to provide maximum freedom of patients to interact with family and community; and
to educate the community.
The program was established along interdisciplinary lines and is basically an adult program. It includes individual and group therapy, lectures and seminars, social and nursing assessments, physical examination and psychological testing. The ultimate program provided for a patient, however, depends upon the treatment plan prescribed by the attending physician. The program is, however, limited because of the type of patients at BMC and especially because of the physical plant, which consists of only an open unit and a locked unit. Separation of patients for specialized treatment based upon other factors, such as age, is not achievable in the existing facility.
The program at BMC is an adequate program but can be improved. The program is, however, intended only as an interim type program. Treatment of geriatrics and adolescents is available but specialized programs for these groups are not available.
Dr. Sebastian agreed that since Behavioral Medical Care had begun managing BMC, the programs had improved. Dr. Moore testified that BMC had attempted to change.
As part of the interim program, BMC has established more restrictive admission guidelines; not based upon ability to pay but upon clinical needs. Attempts have been made to eliminate psychotics, geriatrics and persons with significant medical problems. These restrictions on admission are designed to limit admission to persons who will benefit from the new program and are consistent with the existing physical plant.
The existing staff, established by Behavioral Medical Care, is adequate. Training of the staff began during the orientation period at BMC and continues today. Educational activities have also been directed toward the medical profession in the community in order to gain more credibility for the discipline of psychiatry.
Other steps to improve BMC which have been or will soon be taken include the reclassification of BMC as a department of Tallahassee Memorial and the initiation of a crisis intervention and liaison service in the emergency room of Tallahassee Memorial's main hospital. This new service in the emergency room is designed to identify persons being admitted to the hospital with a need for psychiatric services.
As a department, BMC conducts formal monthly meetings of physicians at which input into the operation of BMC may be made. Input by psychiatrists is therefore possible at BMC.
The second phase of the changes recommended by Dr. Ricci will begin after completion of the second action to be taken by Tallahassee Memorial as part of its commitment to a psychiatric program: the construction of a new 60- bed facility.
Tallahassee Memorial filed an application to replace its present facility with a new 64-bed facility. That application was ultimately granted but for only 60 beds. An application to build another facility considered at the same time was denied.
As a result of the issuance of the certificate of need to Tallahassee Memorial, construction of a new psychiatric facility has begun and should be completed in the summer of 1985. The total cost of this new facility is
$7,225,000.00. This amount, plus the cost of new programs and staff, has been committed by Tallahassee Memorial to BMC.
The facility, a two-level structure, is being constructed on a wooded, sloping site next to the present building BMC is located in. Each level will have 30 beds. It will be a state-of-the-art facility and was designed by architects who specialize in the design of psychiatric facilities.
The building was designed with input from the medical staff and Behavioral Medical Care. It is being constructed to accommodate separate psychiatric programs and allows flexibility to accommodate changes in the type of programs offered.
Once the new facility is completed, BMC will initiate the second phase of Dr. Ricci's proposal. This phase will consist of the implementation of separate specialized psychiatric programs not available at BMC today. Dr. Ricci has recommended the offering of adult, adolescent, geriatric and chemical dependency programs. Tallahassee Memorial has decided to add an adult program, an adolescent program and will probably add a geriatric program. Other programs, such as a chemical dependency program will be considered.
The geriatric program will be added if there are a sufficient number of patients in need of such a program admitted to BMC. Based upon the testimony of Dr. Sebastian, there are a sufficient number of patients who need a geriatric program. Assuming that Dr. Sebastian is correct, a geriatric program should be added to BMC. Even if a separate program is not added, geriatric psychiatric services will be available at the new facility.
The construction of the new facility will not eliminate all of the problems which have contributed to the low occupancy at BMC. Phase 2 of Dr. Ricci's proposal to Tallahassee Memorial and the other actions which Tallahassee Memorial has indicated they plan to take should, however, eliminate or at least reduce most of the problems.
Dr. Sebastian testified that there will not be enough open space around the new facility The new facility will, however, have 2 open court yards, woods on 3 sides of the building and a greenhouse.
The reputation of BMC as being a "crazies place" should be improved with the opening of the new facility and the providing of new, more advanced programs. Efforts to educate the medical community will also help.
Also, if Apalachee is granted its certificate of need, the elimination of some of the Baker Act patients cared for by BMC who will be cared for by
Apalachee should help improve the reputation of BMC. Finally, BMC has already taken some steps to improve its reputation by initiating an interim program, hiring new staff and limiting its admissions.
Instituting specialized programs will also help alleviate the low occupancy problem at BMC. The new facility will allow BMC to establish programs which are needed by allowing the separation of patients which could not be accomplished in the existing facility. Again, eliminating some Baker Act patients will help reduce the problems created by the poor patient mix at BMC.
Efforts are being made to market BMC's services. Establishing a liaison in Tallahassee Memorial's emergency room, which is planned, should contribute to increasing occupancy. Tallahassee Memorial projected that sizeable numbers of patients in the general hospital need psychiatric services. This program could reach those patients. BMC, however, needs to institute marketing efforts to reach the general public.
Formal training of the staff at BMC was started with Behavioral Medical Care's orientation phase and has continued since that time.
Not much can be done directly by BMC to improve the practice patterns of psychiatrists in the community. The new facility and improved programs may help. Transfering Baker Act patients to a new facility operated by Apalachee should allow for more economical treatment of those patients and thus allow for longer lengths of stay. Providing specialized programs also should promote longer lengths of stay.
Converting BMC to department status and the holding of monthly meetings of admitting physicians has improved the ability of psychiatrists in the community to have a voice in the operation of BMC. Not enough of an effort is being made in this area, however. Three psychiatrists testified about the lack of solicitation of their input. They are obviously dissatisfied. Despite this fact, Dr. Brodsky, the Medical Director of BMC, testified that BMC was working cooperatively with psychiatrists in the community. In the undersigned's opinion, BMC, Tallahassee Memorial and the psychiatrists in the community need to continue to work toward resolving their differences and to work together to improve the occupancy and the psychiatric care provided at BMC.
The perceived effect of CPC's proposal and Apalachee's proposal of the various witnesses was mixed. Drs. Speer, Sebastian and Moore all testified that they supported the CPC proposal. Dr. Speer indicated that she supported CPC's proposal over that of Apalachee and that she thought there was a need for CPC. Dr. Speer's opinion was based almost exclusively on a brochure provided to her by CPC. She did not have any familiarity with existing CPC hospitals. She also had only "some familiarity" with Apalachee's programs. The only reason Dr. Speer specifically gave for supporting CPC was the amount of effort CPC had exerted to solicit physician input and the need for cohesiveness among psychiatrists which she felt was promoted by support of the CPC proposal.
Dr. Sebastian testified that he supported the CPC proposal because a new hospital would promote competition which would in turn improve the quality of care.
Dr. Moore testified that he was familiar with CPC's and Apalachee's proposals and that he supported CPC's. He also stated that the addition of another psychiatric hospital would improve the availability of medical care because of competition. Dr. Moore also testified that a new facility was needed
to provide care for the "private segment" which he described as "those people who choose not to go to the local mental health center for treatment, those people who choose to go to psychiatrists for treatment. "
Dr. Brodsky testified that the addition of a new facility to the community might improve BMC because of the added competition.
Mr. Honaman and Dr. Ricci both agreed that, if CPC's proposal was approved, a new facility could have an adverse impact on BMC which has been operating at a loss of $300,000.00 a year. Dr. Ricci explained that in order to have specialized programs a hospital must have a sufficient number of patients who need the specialized program. Because of the low occupancy rate at BMC, there is concern as to whether a sufficient number of patients will be available to warrant the specialized programs BMC plans to start if the CPC proposal is approved.
Apalachee's proposal will not adversely effect BMC. In fact, Mr. Honaman and Ms. Pamela McDowell, both of whom testified on behalf of Tallahassee Memorial, indicated that if Apalachee's facility was approved BMC's ability to provide quality care would be enhanced.
Tom Porter, testifying on behalf on the Department, indicated that CPC's and Apalachee's proposals should both be denied because of the low occupancy at BMC and the adverse effect approval of either proposal would have on BMC. Mr. Porter's opinion, however, was based only upon his review of the Petitioners' applications. Mr. Porter made no independent studies as to the impact of the proposals on BMC and was not aware of most of the evidence presented at the hearing.
The Ability of the Applicant to Provide Quality of Care.
CPC.
The services to be available at or provided by the proposed CPC facility include psycho-physiological diagnosis and evaluation, emergency service, milieu therapy (immersion into the clinical environment for structured daily treatment), individual and group therapy, family therapy, occupational therapy, an adolescent school program, a partial hospitalization program, aftercare, community education and related medical services (which will be provided by contracting with other area health care providers). Actual programs to be provided at the facility are to be developed by the physicians who join the medical staff of the facility with the assistance of CPC which has developed model programs which may be used.
The staffing projections for the facility are adequate. The manpower projected can provide quality of care and will comply with the standards of the Joint Commission on Accreditation of Hospitals.
CPC's experience in operating its 24 existing psychiatric facilities and its philosophy that it will provide quality of care support a finding that CPC does have the ability to provide quality of care. 1/
CPC's proposed physical facility is designed to provide quality of care. The facility will be located in northeast Tallahassee. It will be constructed on a little less than one acre of a 10-acre parcel of land which CPC has a contract to purchase for $400,000.00. Part of the remaining 9-plus acres will be used for parking and recreational space and a substantial portion will be left in its natural state as a buffer.
The hospital building itself will consist of a one-story structure with a separate section for each category of proposed beds, a lobby, business and general offices and storage rooms. One section will be used as a 20-bed open adult unit. Another section will be used as a 10-bed adult intensive care unit. This section will be locked. A nursing station will separate the adult intensive care unit and the open adult unit and is designed for visibility down the halls of both units. Two seclusion rooms will be located at the nursing station also to allow for observation from the nursing station. The location of the nursing station will reduce staff responsibility thus reducing the cost of operating the facility.
The other two units will consist of a 15-bed adolescent open unit and a 15-bed geriatric unit. These units will be separated by a nursing station designed in the same manner as the nursing station separating the adult units. These units will also be separated by a locked door.
There will also be a support structure built next to the hospital which will contain a kitchen, dining hall for all patients, 4 classrooms, 4 multi-purpose rooms, an occupational therapy room and a half-court gymnasium. There is no covered access from the main building to the support structure.
The floor plan for the facility is similar to the floor plans used for other CPC hospitals. Therefore, the design costs of the facility will be less than for a new one-of-a-kind facility.
Apalachee.
In order to ensure quality of care, Apalachee has established a Quality Assurance Committee. Additionally, Apalachee is inspected by the Department and is accredited by the Joint Committee on Accreditation of Hospitals.
No evidence was submitted which raises any question as to Apalachee's ability to provide quality of care.
The existing building to which Apalachee's proposed facility will be added is located at Apalachee's Eastside facility. Eastside is located on 10 acres of land in northeast Tallahassee. Eastside presently consists of a building in which PATH, the detoxification program and emergency services is located. The building has 12 semi-private rooms and 24 beds.
The new facility will be added to the existing building. A total of 13,000 square feet will be added. It will consist of an 18-bed open unit and a 6-bed closed unit.
Also to be located at the Eastside facility is a 16-bed long-term adolescent psychiatric hospital which the Department has indicated it will approve. If this facility and the proposed 24-bed facility are built, Apalachee will have a total of 96 beds providing a variety of services.
The Availability and Adequacy of Other Psychiatric Services.
Apalachee currently provides a wide range of psychiatric health services in Subdistrict 2, including a crisis stabilization unit and short-term residential treatment programs. These services have been used as an alternative to inpatient care in some cases. CPC gave no consideration to these programs in its application. Apalachee did consider these programs and showed that its proposal would compliment its existing programs.
As suggested by CPC in its proposed recommended order, Apalachee's existing programs are not a substitute for acute inpatient psychiatric services.
Joint, Cooperative and Shared Psychiatric Services.
CPC.
CPC's operation of 24 psychiatric hospitals provides the potential for joint, cooperative or shared health resources in the operation of its proposed facility. Very little evidence was presented, however, that such potential would be realized if CPC's proposed facility is approved.
Evidence was presented that model programs will be "available" for use in developing programs for the proposed facility.
CPC also showed that standardized equipment selection and purchasing, and standardized floor plans would be used in establishing the facility. This will effect the short-term financial feasibility of the proposal.
Apalachee.
By placing the facility at the same location of other Apalachee programs, Apalachee will be able to share some services among programs and thereby reduce costs. For example, kitchen and dining services, staffing, security, purchasing, and maintenance and administrative services will be shared. The integration of Apalachee's existing programs with the proposed facility will promote a continuum of care and thus improve the quality of care.
The Need for Research and Education Facilities.
106. Apalachee currently provides training to practitioners pursuant to an agreement with the School of Social Welfare at Florida State University. It also provides internship programs for psychology majors at Florida State University and nursing students at Florida State University and Florida A&M University. It is probable, therefore, that the new facility will be available for training purposes. No proof was offered, however, that indicates there is a need for training programs not being currently met which will be met if either of the proposed facilities is approved.
Availability of Resources.
107. Health manpower and management personnel are available to staff the CPC or the Apalachee proposal. CPC and Apalachee also have adequate funds to build the proposed facilities. The adequacy of funds to build and operate the facilities is discussed further, infra.
The Immediate and Long-Term Financial Feasibility of the Proposal.
CPC.
The projected cost of CPC's facility was $5,086,000.00. This amount will be increased for inflation if the facility is delayed another year. CPC will contribute 20 percent of the projected cost of the facility in the form of cash and liquid assets CPC has on hand. Eighty percent of the projected cost will constitute debt of the facility to CPC payable at a 12 percent interest rate over a 20-year period.
The immediate financial feasibility of CPC's proposal has clearly been shown.
In its application, CPC projected that its facility would generate a net income after taxes in each of the first 2 years of its operation. In its proforma, patient revenues were based upon the following charges per patient day:
Adolescent | $225.00 |
Adult, I.C.U. | 215.00 |
Adult Open Unit | 210.00 |
Geriatric | 200.00 |
These projected rates were based upon a 1985 opening date. The rates will therefore be higher if the facility opens in 1987, but, according to Mr. Mercer, the bottom line profitability of the facility will not change.
The projected rates, according to Mr. Mercer, are based upon rates charged at other CPC hospitals in Atlanta, New Orleans, Jacksonville and Ft. Lauderdale and interviews with Tallahassee physicians.
According to Alton Scott, an expert in health care finance and financial feasibility, the proposed rates are considerably lower than the average rate at CPC's Jacksonville and Ft. Lauderdale hospitals, which was
$240.00 for their fiscal year ending in 1984. Mr. Scott did not indicate that he considered the rate at CPC's Atlanta or New Orleans facility, however, which Mr. Mercer also considered in projecting rates for the proposed facility. Mr. Scott's testimony, however, raises a question as to the reasonableness of the proposed facility's rates.
CPC's projected gross patient revenue is based upon an occupancy rate of 53 percent in the first year of operation and 75 percent in the second year. CPC projects $2,476,160.00 of gross patient revenue in the first year (an average $212.00 per day rate x 11,680 patient days) and $3,597,075.00 of gross patient revenue in the second year (an average $219.00 per day rate x 16,425 patient days).
CPC's average occupancy rates are directly related to the number of admissions and the average length of stay of a patient. In support of the number of admissions projected by CPC, CPC offered the 3 need methodologies discussed, supra. Those methodologies have, however, been rejected as unsound.
CPC's admission rates are based only on an assumed census. The assumed census is based upon conversations with physicians and the corporate experience of CPC. Although conversations with physicians and the corporate experience of CPC should be considered, these factors should be considered as support for other evidence as to possible admissions which has not been presented by CPC. What physicians have told Mr. Mercer is not alone sufficient
to support assumed admissions. There is no guarantee that local physicians will refer clients only to CPC's facility or that their case load will remain the same. CPC's corporate experience as to length of stay does not add much support since the overall corporate experience of CPC's facilities for the year ending November 20, 1983, shows that the overall occupancy (excluding its Valley Vista facility) was 56.3 percent. This rate of occupancy is well below CPC's projected second year occupancy rate for the Tallahassee facility.
The occupancy rate of CPC's Ft. Lauderdale and Jacksonville hospitals was 50.6 percent and 60 percent respectively, which is low for the State. Of all of CPC's psychiatric hospitals only 1 has an occupancy rate over 80 percent.
Another problem with CPC's projected occupancy rate is that CPC has projected that 5 percent of its patient days will be attributable to Baker Act patients and 5 percent will be attributable to Medicaid Patients. In order for the proposed facility to receive Baker Act patients it will be necessary that it enter into a contract with Apalachee. No evidence was presented that such a contract could be obtained from Apalachee. As to the percentage of Medicaid patients, it is clear that CPC would not be entitled to receive reimbursement from Medicaid for these patients since its facility will be a free-standing facility and Medicaid does not reimburse for inpatient psychiatric services at free-standing hospitals.
Based upon these facts, it appears that the assumption of CPC that a total of 10 percent of its patient days will be attributable to Baker Act and Medicaid patients is of questionable validity. Mr. Mercer's testimony that, even without the Baker Act and Medicaid patients, the projected occupancy could be met is illogical.
If the projected revenue attributable to Baker Act and Medicaid patients is eliminated along with the projected expenses attributable thereto, CPC still projected a net after tax profit for its first two years of operation. CPC offered no evidence, however, sufficient to conclude that its projections as to occupancy of other types of patients can be achieved.
CPC's projected average length of stay of 30 days is
also suspect. It is not consistent with the average length of stay locally, in Florida, nationwide or in CPC's experience.
Based upon the foregoing, CPC's projected occupancy levels are not realistic. This directly effects the projected revenues for the proposed facility.
Salary and other expenses projected for the facility are also questionable. Nonsalary expenses are significantly lower than CPC's existing Florida facilities which are the lowest in Florida.
Salary expenses, projected 2 years in the future, are also lower than present salary levels at CPC's Florida facilities. Again, the salary levels at CPC's 2 Florida hospitals are among the lowest for the 10 Florida facilities providing similar services. These low salaries are also based upon projections for a project which will not open for 2 more years. Despite this fact, they are lower than current salaries at CPC's existing Florida facilities and salaries being paid locally.
Apalachee.
The projected cost of the addition of the 24-bed facility to Apalachee's existing PATH and detoxification facility is $1,114,339.00. Apalachee will provide $114,339.00 of the necessary funds from its operating fund and the remaining $1,000,000.00 will be obtained from the sale of industrial revenue bonds. The bonds will be 15-year bonds, with a 7 year balloon and were projected at a 10.75 percent annual interest rate (75 percent of the Chase Manhattan Bank prime interest rate). First National Bank has committed to purchase $3,000,000.00 of industrial revenue bonds, which includes the $1,000,000.00 for this project.
The immediate financial feasibility of Apalachee's proposal has clearly been shown.
In projecting its gross charges for the first 2 years of operation, Apalachee has predicted an occupancy rate of 62.5 percent in the first month of operation increasing to 87.4 percent in the last month of operation of the second year. Gross charges are projected at $1,557,940.00 the first year (6,385 patient days x $244.00 per day rate) and $1,883,648.00 the second year (7,358 patient days x $256.00 per day rate). Apalachee' s projections are reasonable. Although it will be a free-standing psychiatric facility, Apalachee will be able to receive some Medicaid funding under the Department's "centers and clinics" option.
Apalachee's projections as to gross charges, deductions from gross charges, and operating expenses are reasonable. Based upon its projections, Apalachee will realize a profit from the new facility in each of its first 2 years of operation.
Competition.
CPC.
The addition of CPC's facility will promote competition in Subdistrict 2, as testified to by Dr. Brodsky, the Medical Director of BMC, among others. Because of the low occupancy at BMC, however, such competition at this time would be harmful.
Apalachee.
Apalachee's proposed facility will not compete with BMC. Although Apalachee's facility will initially reduce BMC's occupancy, removing the patients Apalachee will serve from BMC will improve the quality of care provided at BMC.
Construction.
CPC
Construction and related costs of the CPC facility will consist of the following:
Parking | $27,500.00 | |
Project development costs | 22,000.00 | |
Architectural/engineering | fees | 135,000.00 |
Site survey and soil | ||
investigation report | 25,000.00 | |
Construction supervision | 10,000.00 |
Construction manager | 4,000.00 |
Site preparation | 100,000.00 |
Construction | 3,000,000.00 |
Contingency | 100,000.00 |
Inflation | 270,000.00 |
These costs are all adequate to cover the cost of these items. These amounts will also be adequate even if construction does not begin until the end of 1985.
The projected cost of equipment and furnishings was $500,000.00. This amount is adequate to equip the facility properly. In fact, the projected cost is probably substantially overstated. 2/ Although CPC failed to list in its application all of the equipment and furnishings (only major movable equipment was listed) necessary to equip the facility, adequate equipment and furnishings will be provided.
Apalachee.
The projected cost of constructing Apalachee's facility consists of the following:
Architectural/engineering fees Site survey and soil investigation | $75,740.00 |
report | 2,000.00 |
Construction | 876,620.00 |
Contingency | 43,831.00 |
Inflation | 26,298.00 |
These amounts are sufficient to construct the facility. The cost per square foot of the construction will be $60.00.
The cost of equipment needed to equip the new facility is projected at $53,850.00. This amount is adequate for the purchase of the equipment listed in Apalachee's application.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes (1983).
This dispute involves the question of whether CPC or Apalachee, or both, should be granted a certificate of need to construct a new short-term inpatient psychiatric hospital. The resolution of this dispute depends upon the application of the criteria set forth in Section 381.494(6)(c) & (d), Florida Statutes (1983), and the rules of the Department promulgated thereunder.
In particular, Section 10-5.11(25), F.A.C., provides rules governing the issuance of a certificate of need for short-term inpatient psychiatric services. Section 10-5.11 (25)(a), F.A.C., defines short-term hospital inpatient psychiatric services as follows:
Short term hospital inpatient psychiatric services means a category of services which provides a 24-hour a day therapeutic milieu for persons suffering from mental health pro- blems which are so severe and acute that they
need intensive, full-time care. Acute psychia
-tric inpatient care is defined as a service not exceeding three months and averaging a length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years.
CPC and Apalachee are both seeking a certificate of need to provide the services defined in this portion of the rule. The Department does not dispute this fact.
138. Section 10-5.11(25)(b), F.A.C., proves:
Short term hospital inpatient psychiatric services may be provided in specifically designated beds in a hospital holding a general license, or in a facility holding a specialty hospital license.
CPC and Apalachee both propose to provide services in a facility holding a specialty hospital license.
Section 10-5.11(25)(b), F.A.C., provides that a favorable need determination for psychiatric inpatient services "will not normally be given to an applicant unless a bed need exists according to paragraph (25)(d) of this rule." [Emphasis added]. This portion of the rule goes on to provide that a favorable determination may be made if Section 10-5.11(25)(d), F.A.C., is not met, however, if Section 381.494(6)(c), Florida Statutes, and Section 10- 5.11(25)(e), F.A.C., demonstrate need.
Section 10-5.11(25)(d), F.A.C., requires that an applicant meet several different tests. The first test relevant to this proceeding is Section 10-5.11(25)(d)3, F.A.C.:
The short term inpatient psychiatric bed need for a Department service district five years into the future shall be calculated by subtracting the number of existing and
approved beds from the number of beds calcula- ted for year x, based on a bed need ratio of
.35 beds per 1,000 population projected for year x, and based on latest mid-range projec- tions published by the Bureau of Economic and Business Research at the University of Florida. These beds are allocated in addition to the total number of general acute care hospital beds allocated to each Department District established in Rule 10-5.11(23).
Under this test, bed need is to be determined 5 years into the future (1990) based upon the latest mid-range projections published by the Bureau of Economic and Business Research of the University of Florida. The Departments has applied the formula provided is this portion of the rule but only 4 years into the future: to 1989. This has resulted in a determination that there is a net bed need for District 2 for 1989 of 68 beds (185 total beds less 117 licensed and approved beds).
The 1990 projected total bed need is 188 beds. The 1990 net bed need is 71 beds (188 total beds less 117 licensed and approved beds). This is the correct number of needed beds in District 2 pursuant to the Department's rules regardless of the fact that the Department has not actually made the calculations.
Section 10-17.003, F.A.C., allocates the total projected bed need for District 2 among 2 subdistricts. CPC and Apalachee are both proposing to build their facilities in Subdistrict 2. Under this rule, 104 total beds have been allocated to Subdistrict 2. The net bed need is 44 beds. The problem with these figures is that they are based on the 1988 projected bed need of 179 beds. The use of 1988 projections is in conflict with the requirement of Section 10- 5.11(25)(d)3, F.A.C., that bed need be projected to 1990.
Section 10-17.003, F.A.C., is to be "used in conjunction with Rule 10-5.11(15)(c), (d), (e)." [Emphasis added.] It does not supercede the provisions of Section 10-5.11 (25), F.A.C. Therefore, it is the opinion of the undersigned that the allocation of 44 beds to Subdistrict 2 only provides guidance as to the number of beds needed in Subdistrict 2.
If it is assumed that the additional beds projected for 1990 over the projection for 1988 should be allocated to Subdistrict 2, the net beds needed for 1990 in Subdistrict 2 would be 53 beds. The evidence does not support this assumption, however. In fact the only evidence presented at the hearing as to the possible increase in beds to be allocated to Subdistrict 2 was that 1 or 2 additional needed beds would be allocated to Subdistrict 2. It therefore appears that the net bed need in Subdistrict 2 for 1990 is at least 44 beds, no greater than 53 beds and probably only 45 to 46 beds.
CPC has proposed a 60-bed facility and Apalachee has proposed a 24- bed facility. Based upon the bed need in Subdistrict 2 as determined under Section 10-5.11(25)(d)3, F.A.C., and Section 10-17.003, F.A.C., CPC's proposal is greater than the projected bed need and Apalachee's is within the projected bed need.
The second test of Section 10-5.11(25)(d), F.A.C., is as follows:
Occupancy Standards. New facilities must be able to project an average 70 percent occu- pancy rate for adult psychiatric beds and 60 percent for children and adolescent beds in the second year of operation, and must be able to project an average 80 percent occupancy rate for adult beds and 70 percent for children and adolescent short term psychiatric inpatient hospital beds for the third year of operation.
Section 10-5.11(25)(d)4, F.A.C.
Both applicants have projected occupancy rates which meet the requirements of this test. CPC's projections are not, however, supported by the facts. CPC, therefore, does net meet this test.
Apalachee's projections, on the other hand, are supported by the facts. Apalachee meets this test.
The third test of Section 10-5.11(25)(d), F.A.C., is as fellows:
No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term
inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding
12 month period. No additional beds for ado- lescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adole- scent and children short term hospital in- patient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period.
Section 10-5.11(25)(d)5, F.A.C.
The facts clearly show that Tallahassee Memorial's occupancy rate for the 12-month period ending September, 1984, was only 37 percent.
Both CPC and Apalachee have sought to establish that the low occupancy rate at BMC is not a "normal" situation. A number of problems have in fact contributed to BMC's low occupancy rate. Taking into consideration only the problems which have contributed to BMC's low occupancy supports a conclusion that this is not a normal situation. The efforts to correct those problems and the impact of CPC's new facility would have on those efforts, however, cannot be ignored. CPC therefore does not meet this test. Apalachee's proposal, on the ether hand, will assist BMC in correcting its problems.
The final test of Section 10-5.11(25)(d), F.A.C., applicable to these applicants is Section 10-5.11(25)(d)7, F.A.C.:
Unit size. In order to assure specialized staff and services at a reasonable cost, short term inpatient psychiatric hospital based services should have at least 15 designated beds. Applicants proposing to build a new but separate psychiatric acute care facility and intending to apply for a specialty hospital license should have a minimum of 50 beds.
CPC is an applicant proposing to build a new and separate psychiatric facility. It proposes to apply for a specialty hospital license for more than
50 beds. CPC therefore meets this test.
Apalachee also proposes to build a new psychiatric facility and will apply for a specialty hospital license. The license will not be for a minimum of 50 beds. Apalachee argues, however, that it is not building a "separate" facility and therefore is not subject to the last sentence of this test. Instead, Apalachee has argued that it comes within the first sentence of the test. There is no doubt that Apalachee's proposal will promote economies of scale, which this test is designed to promote, by sharing the cost of some services with existing programs. Despite this fact, it is the undersigned's opinion that Apalachee does not meet this test
Section 10-5.11(25)(b), F.A.C., provides that short-term hospital inpatient psychiatric services may be provided by specifically designated beds in a general licensed hospital or in a facility holding a specialty hospital license. Section 10-5.11(25)(d)7, F.A.C., must be read in conjunction with Section 10-5.11(25)(b), F.A.C. Only a licensed hospital or specialty licensed hospital can provide the "specialized staff and services" contemplated by the first sentence of Section 10-5.11(25)(d)7, F.A.C. If a licensed hospital or a speciality licensed hospital wants to add less than 50 short-term inpatient psychiatric beds, it can do so under the rule and it is assumed that those specialized staff and specialized services will be provided at reasonable cost. The economy of scale contemplated by the rule cannot be provided by Apalachee -- its existing programs are not provided by a licensed hospital or specialty licensed hospital. Apalachee does not therefore meet this test.
Based upon the foregoing, neither CPC nor Apalachee meet all of the requirements of Section 10-5.11(25)(d), F.A.C. Section 10-5.11(25)(c), F.A.C., provides, however, that applications will not "normally" be approved if Section 10-5.11(25)(d), F.A.C., is not met. In my opinion, this is not a normal situation. Especially with regard to Apalachee's proposal. Apalachee's proposal only fails to meet Section 10-5.11(25)(d)7, F.A.C.
The primary reason for concluding this is not a normal situation is the problems associated with BMC's low occupancy. Those problems are at least sufficient to warrant the application of all of the statutory criteria to these applicants.
Additionally, there are persons in need of short-term psychiatric care in Subdistrict 2 whose needs are not being met: there is a need for at least 44 new beds based upon the Department's own methodology, and forensic patients, violent Baker Act patients and some geriatrics are not receiving needed services.
Since this is not a normal situation, the provisions of Section 10- 5.11(25)(e), F.A.C., and Section 381.494(6)(c), Florida Statutes (1983), must be applied. Section 10-5.11(25)(e), F.A.C., provides 7 standards and criteria which are to be considered. Those standards and criteria are quoted and applied to CPC and Apalachee below.
Applicants shall show evidence that the type of service and the number of proposed beds are consistent with the needs in the community stated in the Local Health Council plans, local Mental Health District Board plans, State Mental Health Plan, and local needs assessment data.
This standard is not applicable since bed need is not provided for in Local Health Council plans, local Mental Health District Board plans, the State Mental Health Plan or local needs assessment data.
2. Applicants shall indicate in their appli- cation for new or expanded short term hospital inpatient psychiatric services:
Expected source of referral
Service area
Expected average length of stay
The relationship of the proposed services to other components of the community mental health system within the proposed service area.
CPC has complied with most of this standard. It did not, however, sufficiently indicate in its application "[t]he relationship of the proposed services to other components of the community mental health system within the proposed service area." CPC failed to take into consideration in its application the mental health services being provided by Apalachee.
Apalachee has complied with this standard.
3. In order for the Department to ensure that short term hospital inpatient psychiatric service needs of all segments of the population in a given service area are adequately met, the applicant shall indicate the precentage of patient days allocated to:
Indigent clients
Medicaid clients
Baker Act funded clients
Private pay patients
Other.
Priority consideration for initiation of new short-term hospital inpatient psychiatric services or capital expenditures should be given to applicants with a documented history of providing services, or a commitment to pro- vide services, to medically indigent patients, particularly Baker Act funded clients where there is an identified need and non-funded indigent clients.
Both applicants have indicated the percentage of patients allocated to the groups listed in this standard. The facts do not indicate that CPC has a "documented history" of providing services to medically indigent patients. CPC has made a commitment to provide such services but its ability to meet that commitment is questionable.
Apalachee has a documented history of providing service to medically indigent patients, especially Baker Act patients. Apalachee has also made a commitment to provide such services.
Both applicants meet this standard; Apalachee more so than CPC because of the doubt as to CPC's ability to meet its commitments.
4. Applicants shall indicate the avail- ability of other inpatient psychiatric ser- vices in the proposed service area, including the number of beds available in crisis stabili-
zation units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not.
CPC did not provide all of the information required by this standard in its application. Apalachee did.
5. Hospital based psychiatric services must provide outpatient services or must be formally linked with community outpatient programs, such as local psychiatrists, local psychologist, community mental health programs, or other local psychiatric outpatient programs.
This standard is not applicable.
6. Development of new short term hospital inpatient psychiatric beds shall be through conversion of underutilized beds in other hospital services, unless conversion costs are prohibitive when compared with development of new facilities, or other factors to be specified by the applicant prohibit such conversion.
This standard is not applicable.
7. Access standard. Short term inpatient hospital psychiatric service should be avail- able within a maximum travel time of 45 minutes under average travel conditions for a least
90 percent of the service area's population.
This standard has generally been met by both applicants. CPC, however, provided no proof that this standard would be met with regard to southwest Georgia. To that extent, CPC has not complied with this standard.
Turning to Section 381.494(6)(c), Florida Statutes (1983), there are
13 criteria which are to be considered. Each criteria is quoted and applied to CPC and Apalachee below.
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.
District and State health plans do not discuss bed need. As discussed, supra, however, the Department's rules establish that there is a net bed need in Subdistrict 2 for 1990 of at least 44 beds, no more than 53 beds and probably only 45 to 46 beds.
CPC's proposal is greater than the projected bed need for Subdistrict
2. CPC's proposal therefore does not meet this criterion.
183. Apalachee's proposal is well below the Department's projected bed need for Subdistrict 2 for 1988, 1989 and 1990. Apalachee satisfies this criteria.
184.
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.
The facility provided by Tallahassee Memorial is seriously underutilized. BMC's low occupancy rate has been caused by a number of problems. Tallahassee Memorial has, however, taken most of the steps necessary to correct those problems. Some of those steps have been completed, others have just begun and still others will begin in the not too distant future.
The single most important step Tallahassee Memorial has taken to correct the problems associated with BMC is the commitment to construct a
$7,225,000.00 facility. The facility has not yet opened but, once it does, most of the actions which need to be taken by BMC to increase its occupancy can be taken.
Approval of the CPC facility will clearly undermine Tallahassee Memorial's efforts. Approval of the Apalachee facility, however, will in fact enhance Tallahassee Memorial's efforts. Apalachee's proposal will also enhance the accessibility to short-term psychiatric services of certain groups net being met by BMC, i.e., forensic patients and violent Baker Act patients.
3. The ability of the applicant to provide quality of care.
Both applicants meet this criterion.
4. The availability and adequacy of other health care facilities and services and hos- pices 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.
Other psychiatric services provided by Apalachee are being used in Subdistrict 2 as an alternative to inpatient care; especially for violent
patients and, because of the lack of funds, some nonviolent Baker Act patients. This has the effect of reducing the need for inpatient services in Subdistrict
Apalachee's proposal, however, will compliment the use of Apalachee's existing services.
192.
5. Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.
CPC has not shown that there will be any significant operation of joint, cooperative or shared health care resources. CPC has shown there will be economies and improvements in service through the availability of model programs and the use of standardized equipment selection and purchasing and standardized floor plans.
Apalachee has shown that its facility will be operated jointly, cooperatively and with shared health resources. Apalachee, therefore, satisfies this criteria more so than CPC.
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.
This criterion is not applicable.
7. The need for research and educational facilities, including, but not limited to, institutional training programs and community training programs for health care practition- ers and for doctors of osteopathy and medicine at the student, internship, and residency training levels.
This criterion is not applicable.
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 avail- able in a limited number of facilities; the availability of alternative uses of such re-
sources 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.
Both applicants have shown the availability of resources to construct their proposed facilities. Apalachee has shown that its facility will probably be available or training purposes. Both applicants have shown that their facilities can be accessible by all residents.
9. The immediate and long-term financial feasibility of the proposal.
Both facilities will be immediately financially feasible. Apalachee's facility also appears to be financially feasible in the long run because its projected occupancy is based upon historical data and its expenses are reasonable. The greater weight of the evidence indicates that CPC's proposal has failed to show that it will be financially feasible in the long run. Its occupancy is based upon assumed facts with no historical back-up data and its expenses are not realistic.
10. The special needs and circumstances of health maintenance organizations.
This criterion is not applicable.
11. The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other health profes- sions, schools, multidisciplinary clinics, and specialty services such as open-heart surgery, radiation therapy, and renal transplantation.
This criterion is not applicable.
12. The probable impact of the proposed project on the costs of providing health ser- vices proposed by the applicant, upon consid- eration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the im- provements or innovations in the financing and delivery of health services which foster com- petition and service to promote quality assurance and cost effectiveness.
CPC's proposal will promote competition but competition between BMC and CPC at this time would be harmful.
Apalachee's proposal will not adversely affect existing services. Instead, Apalachee's proposal will tend to benefit BMC and will improve the continuum of psychiatric care currently provided by Apalachee.
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.
Both applicants have proposed reasonable methods and costs of construction.
The final statutory provision to be considered in these cases is found in Section 381.494(6)(d), Florida Statutes (1983). This provision applies where new services to inpatients are being proposed.
As required by Section 381.494(6)(d)1, Florida Statutes (1983), it is concluded that there are no less costly, more efficient or more appropriate alternatives to Apalachee's proposal or CPC's proposal. Apalachee's proposal may be less costly than CPC's but they are actually proposing to primarily serve different portions of the Subdistrict's population.
As required by Section 381.494(6)(d)2, Florida Statutes (1983), it is concluded that BMC is not being used in an appropriate and efficient manner. BMC, however, can and will be used in an appropriate and efficient manner because of the efforts it has begun.
CPC's proposal will only hamper efforts to improve BMC. Apalachee, on the ether hand, will tend to compliment BMC's efforts.
Alternatives to the new construction proposed by CPC and Apalachee have not been shown to exist. Section 381.494(6)(d)3, Florida Statutes (1983).
There are persons in need of short-term psychiatric care who are not presently receiving it, i.e., forensic patients, violent Baker Act patients and some geriatrics. See Section 381.494(6)(d)4, Florida Statutes (1983). CPC's proposal would serve geriatrics. There are not enough geriatric patients alone to justify its proposal, however. Apalachee's proposal will serve forensic and violent Baker Act patients.
Based upon the foregoing, it is clear that Apalachee's application and proposal is the only application and proposal which meets the requirements of Section 381.494 (6)(c) & (d), Florida Statutes (1983), and Section 10- 5.11(25), F.A.C. Apalachee's proposal does not technically meet Section
10-5.11(25)(d), F.A.C. This is not, however, a normal situation. Applying Section 381.494(6)(c) & (d), Florida Statutes (1983), and Section 10- 5.11(25)(e), F.A.C., to Apalachee leads to the conclusion that there is a need for a least 44 beds in Subdistrict 2 and a need to serve forensic patients and violent Baker Act patients. Apalachee's proposal is consistent with this need. Apalachee's proposal will also enhance the services provided by BMC, it is
financially feasible in the short and long run, it will operate cooperatively and jointly with existing Apalachee services, thus promoting economies of scale, and it otherwise complies with the applicable criteria.
CPC's application and proposal do not warrant approval. There is insufficient bed need to approve a 60-bed facility or even a 50-bed facility. Even if there was a sufficient bed need to warrant a 50-bed facility, CPC's proposal will adversely affect the efforts of BMC to provide improved quality of care, it will promote harmful competition with BMC and it is has not been shown that it will be financially feasible in the long run.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
That the certificate of need application filed by CPC, case number 84-1614, be denied. It is further
RECOMMENDED:
That the certificate of need application, as amended, filed by Apalachee, case number 84-1820, be approved.
DONE and ENTERED this 10th day of April, 1985, in Tallahassee, Florida.
LARRY J. SARTIN
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 10th day of April, 1985.
ENDNOTES
1/ Tallahassee Memorial's findings of fact concerning CPC's incentive bonus system are not relevant. It was not shown that the fact that CPC encouraged profitability at its hospitals reduced the quality of care provided by CPC.
2/ CPC's proposed finding of fact that "[t]his creates an additional contingency fund for the project" is not supported by the record. No evidence was presented as to what would happen to any funds not used in constructing and equipping the facility.
COPIES FURNISHED:
Thomas D. Watry, Esquire 1200 Carnegie Bldg.
133 Carnegie Way Atlanta, Georgia 30303
Morgan L. Staines, Esquire Senior Assistant Counsel 2204 E. Fourth Street
Santa Ana, California 92705
Steven Pfeiffer, Esquire
325 N. Calhoun Street Tallahassee, Florida 32301
Donna H. Stinson, Esquire
118 N. Gadsden Street, Suite 100 The Perkins House
Tallahassee, Florida 32301
John M. Carlson, Esquire Assistant General Counsel
Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
Ronald Brooks, Esquire 863 East Park Avenue
Tallahassee, Florida 32301
Mr. David H. Pingree, Secretary
Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Apr. 10, 1985 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 10, 1985 | Recommended Order | Sufficient need for construction of twenty-four bed psychiatric hospital, but not for construction of sixty-bed psychiatric hospital. |
