michael j. glazer, lesley mendelson|Agency for Health Care A... -- eLawyers

Judges: LARRY J. SARTIN
Agency: Agency for Health Care Administration
Latest Update: May 15, 1986

Summary: The Petitioner, NME Hospital, Inc., d/b/a Hollywood Medical Center, filed an -application for a certificate of need to add short-term psychiatric beds to its existing facility. The Petitioner's application was denied by the Respondent, the Department of Health and Rehabilitative Services. The Petitioner timely requested a formal administrative hearing to review the Respondent's proposed denial of its application. Humana, Inc., d/b/a Humana Hospital Biscayne (hereinafter referred to as "Biscayne"), was granted leave to intervene by Order dated January 28, 1985. South Broward Hospital District, d/b/a Memorial Hospital (hereinafter referred to as "Memorial"), was granted leave to intervene by Order dated April 26, 1985. Charter Medical-Fort Lauderdale (hereinafter referred to as "Charter"), was granted leave to intervene by Order dated July 9, 1985. The Order granting Charter leave to intervene was based largely upon the fact that Charter was a prior-batched applicant whose application for a certificate of need had not yet resulted in final agency action by the Respondent. The Orders granting intervention were issued by William C. Sherrill, to whom this case had originally been assigned. On November 19, 1985 this case was transferred to the undersigned from Mr. Sherrill. At the final hearing, the Petitioner presented the testimony of the following witnesses, who were accepted as expert witnesses in the fields noted: Name Expertise Harry L. Berkowitz Hospital administration Dr. Joel Klass Psychiatry James Bare Health care planning Dr. James Wiener Psychiatry Howard Finkle Development and management of psychiatric units Dr. Ralph Eugene Cash Psychology Ben King Health care finance Tom Ebejer Health care facilities design and construction, including design and construction costs. The Petitioner also presented the testimony of Herbert E. Straughn. Petitioner's exhibits 1-34 and 36-38 were accepted into evidence. Petitioner's exhibit 35 was withdrawn by the Petitioner. The Respondent presented the testimony of Herbert E. Straughn, who was accepted as an expert in certificate of need analysis and health planning. Biscayne presented the testimony of the following witnesses, who were accepted as experts in the fields noted: Name Expertise Mary Jane Stromberg Nursing administration, including psychiatric departments Ernest J. Peters Traffic engineering and travel time studies Niels Vernegaard Hospital administration Daniel J. Sullivan Health care planning and health care finance Biscayne also offered Humana exhibits 1-11. All were accepted into evidence. Mr. Peters was called as a joint-witness with Memorial. Memorial presented the testimony of the following witnesses, who were accepted as experts in the fields noted: Name Expertise Kathleen DuCasse Hospital finance William O. Langley, Jr. Health care planning Dr. Anthony John Reading Administration and planning of psychiatric programs, including design of psychiatric facilities from a clinical prospective Memorial also presented the testimony of Jayne Coraggio and Larry M. Parrish. Memorial's exhibits 1-3 were accepted into evidence. Memorial's exhibit 4 was not offered into evidence. Finally, Charter presented the testimony of Douglas Holbrook, who was accepted as an expert in health planning. Charter's exhibit 1 was accepted into evidence. All of the parties submitted proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes (1985). All of the parties except the Respondent and Charter also submitted supporting memoranda. A ruling on each proposed finding of fact made by the parties in their proposed recommended orders has been made in this Recommended Order. Additionally, attached to this Recommended Order is an Appendix which indicates where proposed findings of fact which have been adopted have been made in this Recommended Order and why proposed findings of fact which have not been accepted have been rejected. The Appendix is hereby incorporated as a part of the Findings of Fact portion of this Recommended Order.Petitioner failed to prove need for 31 short-term psychiatric beds for Broward County.

84-4037

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NME HOSPITALS, INC. d/b/a )

HOLLYWOOD MEDICAL CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 84-4037

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) HUMANA, INC., d/b/a HUMANA ) HOSPITAL BISCAYNE; and )

SOUTH BROWARD HOSPITAL )

DISTRICT, d/b/a MEMORIAL )

HOSPITAL; and CHARTER )

MEDICAL-FORT LAUDERDALE, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, duly designated Hearing Officer of the Division of Administrative Hearings, on November 19 and 21, 1985, in Ft. Lauderdale, Florida, and February 24 and 25, 1986, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Michael J. Glazer, Esquire

AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR

Post Office Box 391 Tallahassee, Florida 32302

For Respondent: Lesley Mendelson, Esquire

Assistant General Counsel Department of Health and

Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard

Tallahassee, Florida 32301

For Intervenors: Humana, Inc., d/b/a Humana

Hospital Biscayne

James C. Hauser, Esquire MESSER, VICKERS, CAPARELLO,

FRENCH & MADSEN

Post Office Box 1876 Tallahassee, Florida 32302

South Broward Hospital District, d/b/a Memorial Hospital

Kenneth G. Oertel, Esquire Eleanor A. Joseph, Esquire OERTEL & HOFFMAN, P.A.

Post Office Box 6507 Tallahassee, Florida 32314-6507

Charter Medical-Fort Lauderdale

Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL SMITH & CUTLER, P.A.

Post Office Drawer 190 Tallahassee, Florida 32302

STATEMENT OF THE CASE

The Petitioner, NME Hospital, Inc., d/b/a Hollywood Medical Center, filed an -application for a certificate of need to add short-term psychiatric beds to its existing facility. The Petitioner's application was denied by the Respondent, the Department of Health and Rehabilitative Services. The Petitioner timely requested a formal administrative hearing to review the Respondent's proposed denial of its application.

Humana, Inc., d/b/a Humana Hospital Biscayne (hereinafter referred to as "Biscayne"), was granted leave to intervene by Order dated January 28, 1985. South Broward Hospital District, d/b/a Memorial Hospital (hereinafter referred to as "Memorial"), was granted leave to intervene by Order dated April 26, 1985. Charter Medical-Fort Lauderdale (hereinafter referred to as "Charter"), was granted leave to intervene by Order dated July 9, 1985. The Order granting Charter leave to intervene was based largely upon the fact that Charter was a prior-batched applicant whose application for a certificate of need had not yet resulted in final agency action by the Respondent. The Orders granting intervention were issued by William C. Sherrill, to whom this case had originally been assigned.

On November 19, 1985 this case was transferred to the undersigned from Mr.

Sherrill.

At the final hearing, the Petitioner presented the testimony of the following witnesses, who were accepted as expert witnesses in the fields noted:

Name Expertise

Harry L. Berkowitz Hospital administration

Dr. Joel Klass Psychiatry

James Bare Health care planning

Dr. James Wiener Psychiatry

Howard Finkle Development and management of psychiatric units

Dr. Ralph Eugene Cash Psychology

Ben King Health care finance

Tom Ebejer Health care facilities design and construction, including design and construction costs.

The Petitioner also presented the testimony of Herbert E. Straughn.

Petitioner's exhibits 1-34 and 36-38 were accepted into evidence. Petitioner's exhibit 35 was withdrawn by the Petitioner.

The Respondent presented the testimony of Herbert E. Straughn, who was accepted as an expert in certificate of need analysis and health planning.

Biscayne presented the testimony of the following witnesses, who were accepted as experts in the fields noted:

Name Expertise

Mary Jane Stromberg Nursing administration, including psychiatric departments

Ernest J. Peters Traffic engineering and travel time studies

Niels Vernegaard Hospital administration

Daniel J. Sullivan Health care planning and health care finance

Biscayne also offered Humana exhibits 1-11. All were accepted into evidence. Mr. Peters was called as a joint-witness with Memorial.

Memorial presented the testimony of the following witnesses, who were accepted as experts in the fields noted:

Name Expertise

Kathleen DuCasse Hospital finance William O. Langley, Jr. Health care planning

Dr. Anthony John Reading Administration and planning

of psychiatric programs, including design of psychiatric facilities from a clinical prospective

Memorial also presented the testimony of Jayne Coraggio and Larry M. Parrish. Memorial's exhibits 1-3 were accepted into evidence. Memorial's exhibit 4 was not offered into evidence.

Finally, Charter presented the testimony of Douglas Holbrook, who was accepted as an expert in health planning. Charter's exhibit 1 was accepted into evidence.

All of the parties submitted proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes (1985). All of the parties except the Respondent and Charter also submitted supporting memoranda. A ruling on each proposed finding of fact made by the parties in their proposed recommended orders has been made in this Recommended Order. Additionally, attached to this Recommended Order is an Appendix which indicates where proposed findings of fact which have been adopted have been made in this Recommended Order and why proposed findings of fact which have not been accepted have been rejected. The Appendix is hereby incorporated as a part of the Findings of Fact portion of this Recommended Order.

ISSUE

Whether there is a need for an additional 31 short-term psychiatric beds for Broward County?

FINDINGS OF FACT

I. General.

History of Case.
1. In June of 1984, the Petitioner filed an application with the Respondent for a certificate of need to add 31 short- term psychiatric beds to its existing facility. The certificate of need sought by the Petitioner was assigned certificate of need #3372 by the Respondent.
2. The Respondent denied the Petitioner's application for certificate of need #3372.
3. On October 25, 1984, the Petitioner filed a Petition for Formal Administrative Hearing with the Respondent challenging its proposed denial of the Petitioner's application. The Petition was filed with the Division of Administrative Hearings by the Respondent and was assigned case number 84-4037.
4. Biscayne, Memorial and Charter were granted leave to intervene by Orders dated January 28, 1985, April 26, 1985 and July 9, 1985, respectively.
5. The final hearing was held on November 19 and 21, 1985 in Ft. Lauderdale, Florida and February 24 and 25, 1986 in Tallahassee, Florida.
The Petitioner's Proposal.
1. The Petitioner originally sought to add 31 short-term psychiatric beds to its existing facility. If approved, the additional beds would have increased its current licensed beds from 334 to 365 beds. The Petitioner proposed to meet projected need for short-term psychiatric beds in Broward County for 1989.
2. In its original application, the Petitioner proposed to provide services to children, adolescents, adults and the elderly. No distinct psychiatric units were proposed.
3. The total cost of the original proposal was estimated to be
  $209,368.00.
4. At the final hearing, the Petitioner proposed to relinquish 31 medical/surgical beds and to add 31 short-term psychiatric beds to meet projected need for short-term psychiatric beds in Broward County for 1989. The Petitioner will end up with a total of 334 licensed beds, the same number it now has, if its application is approved.
5. The total cost of the proposal presented at the final hearing was
  $337,169.00, which is accurate and reasonable.
6. The 31 proposed beds will be divided into a 15-bed dedicated adolescent unit and a 16-bed dedicated geropsychiatric unit. Adults will generally not be treated by the Petitioner.
7. Involuntary admissions will be treated by the Petitioner, although there was some evidence to the contrary.
8. The sixth floor of the Petitioner's existing facility will be converted into space for the new psychiatric units.
9. The Petitioner changed the estimated staffing for its proposal between the time it filed its original application and the final hearing. The changes were not significant.
10. During the 1985 legislative session, the Florida Legislature enacted Section 394.4785(1)(b), Florida Statutes (1985). This,, Section requires that most adolescents be separated from other patients for purposes of psychiatric treatment. Some of the modifications of the Petitioner's application which were made at the final hearing were made in order to conform with this Section.
11. The changes in the Petitioner's proposal which were made between the time it filed its original application with the Respondent and the time of the final hearing are not substantial enough to require that the Petitioner's application, as modified, be remanded to the Respondent for further consideration.
The Parties; Standing.

The Petitioner is a 334-bed, for-profit, general acute-care hospital. The Petitioner is a full service hospital providing general medical services. The Petitioner has a medical staff of more than 400 physicians, including a department of psychiatry.
The Petitioner is owned by National Medical Enterprises, one of the largest health care providers in the country.
The Petitioner is located in Hollywood, Florida, which is located in the southern portion of Broward County, Florida.
Broward County is the only County in the Respondent's service district
10.
The Petitioner's primary service area consist of the southern portion of Broward County from State Road 84 in the North to the Broward-Dade County line in the South.
Memorial is a not-for-profit general acute care hospital located in southern Broward County.
Memorial holds License #1737, issued on June 1, 1985, which authorizes Memorial to operate 74 short-term psychiatric beds. This license is valid for the period June 1, 1985 to May 31, 1987. Memorial was also authorized to operate 74 short-term psychiatric beds in its license issued for the 2-year period prior to June 1, 1985.
Memorial is located a short distance from where the Petitioner is located in southern Broward County.
Memorial and the Petitioner share the same general primary service area. Most of the physicians on the staff at Memorial are also on the Petitioner's staff.
Memorial is subsidized by tax revenues for providing indigent care for southern Broward County. About 17 percent of Memorial's revenue is attributable to bad debt and indigent care.
If the Petitioner's application is approved it is likely that the Petitioner will take patients from Memorial. It is also likely that the patients taken from Memorial will be other than indigent patients.
If the Petitioner were to achieve a 75 percent occupancy rate and 50 percent of its patients come from Memorial, Memorial would lose a little over
$1,000,000.00 in terms of 1985 dollars. It is unlikely, however, that the Petitioner will achieve an occupancy rate of 75 percent and, more importantly, it is unlikely that 50 percent of the Petitioner's patients will come from Memorial.
The loss of patients from Memorial which would be caused by approval of the Petitioner's application will, however, result in a financial loss to Memorial which may effect its ability to provide quality care. Additionally, the loss in paying patients could increase the percentage of indigent patients at Memorial and, because a portion of the cost of caring for indigents is covered by paying patients at Memorial, could result in a further loss in revenue and an increase in tax support.
The public may have difficulty accepting a public hospital, such as Memorial, as a high-quality hospital if the public hospital is perceived to be a charity hospital. It is therefore important for a public hospital to attract a significant number of paying patients to its facility to avoid such an image.
It is unlikely that the number of patients which may be lost to the Petitioner by Memorial is sufficient to cause the public to perceive that Memorial is a charity hospital.
Biscayne is a 458-bed, general acute-care hospital located on U.S. 1 in northern Dade County, Florida, just south of the Broward County line. Biscayne's facility is located within about 5 miles of the Petitioner's facility. Biscayne is about a 5 to 10 minute drive from the Petitioner. Dade County is not in service district 10. It is in service district 11.
Of the 458 licensed beds at Biscayne, 24 are licensed as short-term psychiatric beds and 24 are licensed as substance abuse beds. The rest are licensed as medical/surgical beds. Ten of the medical/surgical beds at Biscayne are used as a dedicated 10-bed eating disorder (anoxeria nervosa and bulimirexia) unit. These 10 beds are not licensed for such use. A separate support staff is used for the 10-bed eating disorder unit.
Approximately 60 percent of Biscayne's medical staff of approximately
400 physicians are residents of Broward County. Most of these physicians are also on the medical staff of other hospitals, principally the Petitioner, Memorial and Parkway Regional Medical Center, which is located in northern Dade County. Most of its staff have their business offices in southern Broward County.
Biscayne's service area includes southern Broward County and northern Dade County. Approximately 60 percent of Biscayne's patients are residents of southern Broward County. Biscayne markets its services in southern Broward County.
Eighty percent of Biscayne's psychiatric patients are elderly. Many types of psychotic and psychiatric disorders are treated at Biscayne.
Biscayne offers psycho-diagnostic services, crisis stabilization services, shock therapy services, individual therapy services and group therapy services.
Biscayne has had difficulty in recruiting qualified staff for its psychiatric unit. Biscayne currently has 4 vacancies for registered nurses, 4 vacancies for mental health assistants and 1 vacancy for an occupational therapist in its psychiatric unit.
Biscayne recruits nurses who are certified in mental health nursing. They have not always been successful in finding such nurses. Therefore, Biscayne provides educational programs to help train its nursing staff. These programs are necessary because of the unavailability of experienced nurses for its psychiatric unit.
The Petitioner has projected that most of its patients for its proposed psychiatric units will come from southern Broward County, where Biscayne gets approximately 60 percent of its patients.
The Petitioner plans to try to convince psychiatrists currently using existing providers, except Hollywood Pavilion, to refer their patients to the proposed psychiatric units. Since Biscayne and the Petitioner share some of the same physicians, it is likely that many of the patients cared-for by the Petitioner will come form Biscayne and other providers in southern Broward County, including Memorial.
The loss of patients at Biscayne, if the Petitioner's proposal is approved, will result in a loss of revenue to Biscayne which may affect its ability to provide quality care.
Charter was an applicant for a certificate of need to construct a free-standing psychiatric facility in Broward County. In its application Charter sought approval of long-term and short-term psychiatric beds.
Charter's application was filed with the Respondent in August of 1983. It was filed for review by the Respondent in a batching cycle which preceded the batching cycle in which the Petitioner's application was filed.
In December of 1983, the Respondent proposed to approve Charter's application and authorize a project consisting of 16 short-term adolescent psychiatric beds, 16 long-term adolescent psychiatric beds, 16 long-term substance abuse beds and 12 long-term children's psychiatric beds.
The Respondent's proposed approval of Charter's application was challenged. Following an administrative hearing, it was recommended that Charter's application be denied. Final agency action had not been taken as of the commencement of the hearing in this case.
Subsequent to the date on which the final hearing of this case commenced, the Respondent issued a Final Order denying Charter's certificate of need application. This Final Order is presently pending on appeal to the First District Court of Appeal.
Charter does not have an existing facility offering services similar to those proposed by the Petitioner in Broward County or anywhere near the Petitioner's facility.
When the Orders allowing Memorial, Biscayne and Charter to intervene were issued by Hearing Officer Sherrill, Mr. Sherrill determined that if the Intervenor's could prove the facts alleged in their Petition to Intervene they would have standing to participate in this case. Memorial and Biscayne have in fact proved the allegations contained in their Petitions to Intervene. Based upon all of the evidence, it is therefore concluded that Memorial and Biscayne have standing to participate in this proceeding. Both Memorial and Biscayne will probably lose patients to the Petitioner if its proposal is approved resulting in a loss of revenue. This loss could affect quality of care at Memorial and Biscayne. Also, it is possible that both would lose some of their specialized nursing personnel to ;the Petitioner to staff its proposed psychiatric units.
Charter has failed to establish that it has standing to participate in this proceeding. The potential injury to Charter is too speculative.

II. Rule 10-5.11(25), F.A.C.

A. General.
Whether a certificate of need for short-term psychiatric beds should be approved for Broward County is to be determined under the provisions of Section 381.494(6)(c), Florida Statutes (1985), and the Respondent's rules promulgated thereunder. In particular, Rule 10-5.11(25), F.A.C., governs this case.
Under Rule 10-5.11(25)(c), F.A.C., a favorable determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under Rule 10-5.11(25)(d), F.A.C.
B. Rule 10-5.11(25)(d) , F.A.C.
Pursuant to Rule 10-5.11(25)(d)3, F.A.C., bed need is determined 5 years into the future. In this case, the Petitioner filed its application with the Respondent in 1984, seeking approval of additional short-term psychiatric beds for 1989. The Petitioner did not change this position prior to or during the final hearing. Therefore, the planning horizon for purposes of this case is 1989.
Under Rule 10-5.11(25)(d)3, F.A.C., bed need is determined by subtracting the number of "existing and approved" beds in the service 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 in the service district. 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.
Bed need is determined under the Respondent's rules on a district-wide basis unless the service district has been sub- divided by the Respondent. District 10 has not been subdivided by the Respondent. Therefore, bed need for purposes of this case under Rule 10-5.11(25)(d), F.A.C., is to be determined based upon the population projections for all of Broward County for 1989.
The projected population for Broward County for 1989 is 1,228,334 people.
Based upon the projected population for Broward County for 1989, there will be a need for 430 short-term psychiatric beds in Broward County in 1989.
The evidence at the final hearing proved that there are currently 427 licensed short-term psychiatric beds in Broward County.
During the portion of the final hearing held in November of 1985, evidence was offered that proved that there were also 16 approved short-term psychiatric beds for Broward County. These short-term beds were part of the application for the certificate of need sought by Charter. Subsequently, however, a Final Order was issued by the Respondent denying Charter's application. Therefore, the 16 short-term psychiatric beds sought by Charter do not constitute "existing and approved" short-term psychiatric beds in Broward County for purposes of this case.
Subsequent to the conclusion of the final hearing in this case, the First District Court of Appeal reversed a Final Order of the Respondent denying an application for a certificate of need for a free-standing 10 -bed psychiatric facility, including 80 additional short-term psychiatric beds, for Broward County. Balsam v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1986).
As indicated in Finding of Fact 23, Memorial is licensed to operate 74 short-term psychiatric beds. Memorial is in fact operating all 74 of these licensed beds.
Memorial filed an application with the Respondent for certificate of need #1953 in October of 1981 in which Memorial indicated that it planned to
reduce the number of short-term psychiatric beds it had available by 24 beds. Memorial's certificate of need application involved an expenditure of capital and did not specifically involve an application for a change in bed inventory at Memorial.
Memorial also represented that it would reduce the number of its available short-term psychiatric beds by 24 in a bond prospectus it issued in September of 1983.
The Respondent approved Memorial's certificate of need application.
Despite Memorial's representations that it would reduce its short-term psychiatric bed inventory, the beds are still in use in Broward County.
Memorial has no plans to close any beds and the Respondent does not plan to take any action against Memorial to require it to stop using 24 of its short-term psychiatric beds.
Hollywood Pavilion is licensed to operate 46 short- term psychiatric beds in Broward County. In 1985, 475 patients were admitted to Hollywood Pavilion and its occupancy rate was 62.3 percent. In fact, Hollywood Pavilion had more admissions than Florida Medical Center had to its psychiatric unit. It therefore appears that other physicians find Hollywood Pavilion acceptable.
Hollywood Pavilion is accredited by the Joint Commission on Accreditation of Hospitals.
The Petitioner presented the testimony of a few physicians who questioned the quality of care at Hollywood Pavilion. These physicians indicated that they did not use Hollywood Pavilion. At least one of the physicians indicated, however, that he did refer patients to other physicians whom he knew admitted patients to Hollywood Pavilion despite his feeling that the quality of care at Hollywood Pavilion was poor. This action is inconsistent with that physician's opinion as to the lack of quality of care at Hollywood Pavilion. His opinion is therefore rejected. The other physicians' opinions are also rejected because very little evidence was offered in support of their opinions and because of the contrary evidence.
Based upon a consideration of all of the evidence concerning the quality of care at Hollywood Pavilion, it is concluded that the Petitioner failed to prove that the 46 short-term psychiatric beds licensed for use and available for use at Hollywood Pavilion should not be counted as existing short- term psychiatric beds in Broward County.
Coral Ridge Hospital is licensed to operate 74 short- term psychiatric beds in Broward County. The average length of stay at Coral Ridge Hospital during 1984 and 1985 was almost 80 days. The average length of stay at Coral Ridge Hospital has been in excess of 40 days since 1980 and in excess of 60 days since 1983. The average length of stay at Coral Ridge Hospital is in excess of the average length of stay for which short-term psychiatric beds are to be used under the Respondent's rules.
Rule 10-5.11(25)(a), F.A.C., provides that short-term beds are those used for an average length of stay of 30 days or less for adults and 60 days or less for children and adolescents under 18 years of age.
Rule 10-5.11(26)(a), F.A.C., provides that long-term beds are those used for an average length of stay of 90 days or more.
The psychiatric beds at Coral Ridge Hospital, based upon an average length of stay for all of its beds, falls between the average length of stay for short-term beds and long-term beds.
The occupancy rate at Coral Ridge Hospital for 1985 was between 40 percent and 50 percent. Therefore, it is possible that a few patients at Coral Ridge Hospital with a very long length of stay could cause the overall average length of stay of the facility to be as long as it is.
Coral Ridge Hospital will probably take short-term psychiatric patients because of its low occupancy rate. Therefore, there are at least 29 to
37 short-term psychiatric beds available for use as short-term psychiatric beds at Coral Ridge Hospital.
The Petitioner failed to prove how many of the licensed short-term psychiatric beds at Coral Ridge Hospital are not being used for, and are not available for use by, short-term psychiatric patients in Broward County. It cannot, therefore, be determined how many, if any, of the licensed short-term beds at Coral Ridge Hospital should not be treated as existing short-term psychiatric beds in Broward County.
Based upon the foregoing, the 427 licensed short-term psychiatric beds in Broward County should be treated as "existing" beds for purposes of determining the need for short- term psychiatric beds under Rule 10-5.11(25)(d), F.A.C.
There is a net need for short-term psychiatric beds in Broward County for 1989 of only 3 additional beds under Rule 10- 5.11(25)(d)3, F.A.C.
If the 80 short-term psychiatric beds approved by the First District Court of Appeal in Balsam are taken into account, there will be a surplus of 77 short-term psychiatric beds in Broward County for 1989 under Rule 10- 5.11(25)(d)3, F.A.C.
Based upon an application of Rule 10-5.11(25)(d)3, F.A.C., there is no need for the additional 31 short-term psychiatric beds sought by the Petitioner.
Rule 10-5.11(25)(d)1, F.A.C., provides that a minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems.
Some patients who need psychiatric care also need other medical services which can better be obtained in an acute care hospital. This fact is taken into account by the requirement of Rule 10-5.11(25)(d)1, F.A.C.
Based upon the projected population for Broward County in 1989, there should be a minimum of 184-short-term psychiatric beds in hospitals holding a general license in Broward County.
There are currently 243 short-term psychiatric beds in hospitals holding a general license in Broward County. Therefore, the standard of Rule 10-5.11(25)(d)1, F.A.C., has been met without approval of the Petitioner's proposal.
There is no need for additional short-term psychiatric beds in general hospitals in Broward County for 1989.
Rule 10-5.11(25)(d)4, F.A.C., provides that applicants for short-term psychiatric beds must be able to project an occupancy rate of 70 percent for its adult psychiatric beds and 60 percent for its adolescent and children's psychiatric beds in the second year of operation. For the third year of operation, the applicant must be able to project an 80 percent adult occupancy rate and a 70 percent adolescent and children's occupancy rate.
The beds sought by the Petitioner will be managed by a professional psychiatric management company: Psychiatric Management Services (hereinafter referred to as "PMS"). PMS is owned by Psychiatric Institutes of America, a subsidiary of National Medical Enterprises.
Because of the lack of need for additional short-term psychiatric beds in Broward County, it is doubtful that the Petitioner can achieve its projected occupancy rates as required by Rule 10-5.11(25)(d)4, F.A.C.
Rules 10-5.11(25)(d)5 and 6, F.A.C., require that certain occupancy rates normally must have been met in the preceding 12 months before additional short-term psychiatric beds will be approved.
The facts do not prove whether the occupancy rates provided by Rule 10-5.11(25)(d)5, F.A.C., have been met because the statistics necessary to make such a determination are not available.
The evidence failed to prove that the occupancy rates of Rule 10- 5.11(25)(d)6, F.A.C. have been met. The average occupancy rate for short-term psychiatric beds in Broward County for 1985 was between 64.8 percent and 68.4 percent. Occupancy rates in Broward County for short-term psychiatric beds have not reached 71 percent since 1982. These rates are well below the 75 percent occupancy rate provided for in Rule 10-5.11(25)(d)6, F.A.C. This finding is not refuted by the fact that Florida Medical Center added 59 beds in 1984 and the fact that occupancy rates at most general hospitals exceeded 75 percent in 1985. Based upon the average occupancy rate in Broward County for 1985, there were approximately 100 empty short-term psychiatric beds in Broward County on any day.
Rule 10-5.11(25)(d)7, F.A.C. requires that short-term psychiatric services provided at an inpatient psychiatric hospital should have at least 15 designated beds in order to assure specialized staff and services at a reasonable cost. The Petitioner's proposal to add 31 short-term psychiatric beds meets this requirement of the rule.

C. Rule 10-5.11(25)(e), F.A.C.
Rule 1O-5.11(25)(e)1, F.A.C., requires that an applicant prove that its proposal is consistent with the needs in the community as set out in the Local Health Council plans, local Mental Health District Board plans, State Mental Health Plan and needs assessment data. The Petitioner has failed to meet this requirement.
The Petitioner's proposal is inconsistent with the District 10 Local Health Plan, the Florida State Health Plan and State and Local Mental Health Plans. In particular, the Petitioner's proposal is inconsistent with the following:
1. The District 10 Local Health Plan's recommendation that applications not be approved if approval would result in an excess number of beds under the Respondent's bed need methodology;
2. The District 10 Local Health Plan's recommendation concerning occupancy standards for the district (75 percent during the past 12 months);
3. The position of the Florida State Health Plan that inpatient psychiatric services are a setting of last resort;
4. The recommendation of the District 10 Mental Health Plan that alternatives to hospitalization for psychiatric services should be encouraged; and
5. The recommendation of the Florida State Mental Health Plan that less restrictive treatment alternatives should be encouraged.
Rule 10-5.11(25)(e)3, F.A.C., requires that applicants indicate the amount of care to be provided to underserved groups.
The Petitioner's representations concerning its plans to provide indigent care contained in its application are misleading, in that the Petitioner represented that it would not turn away indigents.
At the final hearing, the Petitioner indicated that it will generally provide care to indigents only on an emergency basis. Patients who need indigent care on a non-emergency basis will be referred to Memorial. Also, once an indigent patient who needs emergency care has stabilized, that patient will be transferred to Memorial for care. The Petitioner accepts few Medicaid and indigent patients.
During 1985, the Petitioner treated 21 Medicaid patients out of a total of 6,800 patients. Only 1.5 percent of its total revenue was for uncompensated care.
During 1984, the Petitioner treated 22 Medicaid patients out of a total of 7,321 patients. Only 1.2 percent of its total gross revenue was for uncompensated care.
Memorial is subsidized by tax revenues for providing indigent care, or southern Broward County. Because Memorial provides indigent care, indigent patients are usually referred to Memorial if they do not need emergency care or are transferred to Memorial after they stabilize if they do need emergency care. There are other hospitals in northern Broward County which provide similar indigent care. It is therefore common practice to refer patients to those hospitals.
Rule 10-5.11(25)(e)5, F.A.C., provides that development of new short- term psychiatric beds should be through the conversion of underutilized beds in other hospital services. The Petitioner's proposal to convert 31 medical/surgical beds for use as short-term psychiatric beds meets this provision.
Rule 10-5.11(25)(e)7, F.A.C., provides that short- term psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population.
There is no geographic access problem in Broward County. At least 90 percent of the population of Broward County is within a maximum of 45 minutes driving time under average driving conditions to existing short-term psychiatric services in Broward County.
The Petitioner's proposal will not significantly enhance geographic access in Broward County.

III. Statutory Criteria.
1. Need for Services.
The Respondent has approved two certificates of need authorizing the addition of a total of 135 long-term psychiatric beds for Broward County.
The addition of 135 long-term beds probably means that additional short-term beds in Broward County which have been used for patients requiring longer treatment will be available.
If the additional long-term beds free up short-term beds, the occupancy rate of short-term psychiatric beds in Broward County would be even less than it has been during the past 12 months, if other things remain equal.
Both Memorial and Florida Medical Center have been using short-term psychiatric beds for the care of long-term patients. Once the new long-term psychiatric beds are operational, more short-term psychiatric beds will be available in Broward County.
1. Existing Providers.
In addition to the short-term psychiatric beds available at Coral Ridge Hospital and Hollywood Pavilion, short- term psychiatric beds are available at the following existing facilities in the service district:

Ft. Lauderdale Hospital: 64 beds
Florida Medical Center: 74 beds
Imperial Point: 47 beds Broward General Medical Center: 48 beds

There is no geographic distribution problem in district 10.
Generally, the Petitioner did not prove that existing short-term psychiatric beds in Broward County are not available, efficient, appropriate, accessible, adequate or providing quality of care. The Petitioner also did not prove that existing facilities are over-utilized. No new services are proposed by the Petitioner.
The evidence did prove that there is usually a waiting list for short-term psychiatric beds at Memorial and that physicians have resorted to various devices to get their patients into short-term psychiatric beds at Memorial.
Specialized adolescent psychiatric services are available in the service district at Ft. Lauderdale Hospital and at Florida Medical Center. Ft. Lauderdale Hospital has 24 short- term psychiatric beds dedicated to the
treatment of adolescents. Florida Medical Center has 20 short-term psychiatric beds dedicated to the treatment of adolescents. Broward General Medical Center and Imperial Point also provide children/adolescent services.
Treatment for eating disorders is provided and available at Imperial Point and Florida Medical Center.
Florida Medical Center solicits patients from all parts of the service district.
Geropsychiatric short-term psychiatric beds are available in the service district at Hollywood Pavilion, Imperial Point and Ft. Lauderdale Hospital.
Florida Medical Center has a closed adult psychiatric unit and often treats persons over 60 years of age. It also has a 26-bed adult short-term psychiatric unit with 2 specialized treatment programs: one for eating disorders and the other for stress and pain management.
The Petitioner has proposed to provide a dedicated geropsychiatric unit to meet the needs of geriatric patients which are different from those of adults generally. Although there are no such dedicated geropsychiatric units in the service district, the Petitioner failed to prove that geriatrics are not receiving adequate care from existing providers.
1. Quality of Care.
The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals.
The Petitioner has established adequate quality control procedures, including educational programs and a quality assurance department. These quality control procedures will also be used to insure quality of care in the proposed psychiatric units.
The psychiatric units will be managed by PMS. PMS specializes in the management of psychiatric units in acute care hospitals. PMS has programs for adolescents and geriatrics. These programs will be available for use in the proposed psychiatric units. PMS also has a large variety of programs, services and specialists available to establish and maintain quality of care at the Petitioner.
The Petitioner will be able to provide quality of care.
1. Alternatives.
The Petitioner did not prove that available and adequate facilities which may serve as an alternative to the services it is proposing do not exist in Broward County.
1. Economies of Scale.
The Petitioner's parent corporation, National Medical Enterprises has purchasing contracts available for use by the Petitioner in purchasing items needed for the proposed psychiatric units. These contracts can result in a reduction of costs for the proposed project.
1. Staff Resources.
PMS will help in recruiting staff for the proposed psychiatric units. Recruiting will be done locally but the Petitioner also has the ability to recruit specialized staff on a broader geographic scale.
There is a shortage of nursing personnel for psychiatric services in southern Broward County and northern Dade County. Since the Petitioner plans to recruit locally, this could cause existing providers to lose specialized nursing personnel to the Petitioner. If the Petitioner causes vacancies at existing facilities, this could adversely affect quality of care.
1. Financial Feasibility.
The total projected cost of the project ($337,169.00) can easily be provided by National Medical Enterprises, the parent corporation of the Petitioner.
The Petitioner's financial projections are unrealistic to the extent of the projected utilization and revenue for the proposed psychiatric units. Based upon the projected need of only 3 short-term psychiatric beds (or possibly a surplus of 77 beds) for 1989, the Petitioner's projected utilization and revenue for its proposal is rejected.
The Petitioner has proved immediate financial feasibility but has failed to prove the proposal is financially feasible in the long-term.
1. Impact of Proposal.
The Petitioner's proposal could adversely effect the costs of providing health services in Broward County. This is especially true in light of the lack of need for additional short-term psychiatric beds in Broward County.
Because of the high quality of the services the Petitioner proposes to provide, competition in Broward County could be enhanced and ultimately benefit consumers, if there was a need for the proposed additional beds.
If a hospital has an image of being a charity hospital serving the needs of underserved groups, the hospital can experience difficulty in attracting paying patients and have difficulty in getting consumers to accept the high quality of the services of the hospital.
Although it is likely that the Petitioner will take paying patients away from Memorial, it is unlikely that the number of patients lost could substantially affect the public's image of Memorial. The effect the Petitioner's proposal will have on Memorial is limited by the fact that the Petitioner is only seeking 31 beds and they are only short-term psychiatric beds. Memorial provides a variety of services and psychiatric services are only a small part of those services.

I. Construction.
It the Petitioner's proposal is approved, 11,500 square feet on the sixth floor of the Petitioner's hospital will be renovated and converted for use for the two proposed psychiatric units. The renovations can be made quickly.
There will be space for 16 beds in a geropsychiatric unit and 15 beds in an adolescent unit. There will be a separate lobby for the psychiatric units and the elevators to the lobby will be strictly controlled. The two units will be separated and adequate security precautions will be taken to keep the two units separate. The ceilings in both units will be modified to insure security.
Nurse stations will be provided for both units. Visibility from the nurse stations will be fair.
Space is provided for a dayroom for each unit and there will be a class room and four rooms for therapy. These spaces will barely be adequate to meet the various needs of patients. With adequate planning and coordination, patients' needs can be met.
There is inadequate space in the proposed facility for physical activities for patients.

CONCLUSIONS OF LAW

I. Jurisdiction and Standing.
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes (1985).
It is clear that each party in this proceeding must prove that it is substantially affected in order to be entitled to participate in this proceeding. Sections 120.57 and 381.494(8)(e), Florida Statutes (1985). Each party must demonstrate that the tests of Agrico Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2d DCA 1983), pet. for rev. denied, 415 So.2d 1359 (Fla. 1982), have been met:

1) that he will suffer injury in fact which is of sufficient immediacy to entitle him to a section 120.57 hearing, and 2) that his substantial injury is
of a type or nature which the proceeding is designed to protect.
Charter has failed to prove that it will suffer an injury in fact which is of sufficient immediacy to entitle it to participate in this proceeding. At the commencement of the final hearing in this case no final agency action on Charter's application for short-term psychiatric beds for Broward County had been taken. Subsequent to the completion of the final hearing, however, the Respondent issued a Final Order denying Charter's application. Although Charter has appealed that decision, the possibility that Charter will suffer an injury as a result of the action taken in this case is too speculative. It is therefore concluded that Charter does not have standing to participate in this proceeding.
Both Memorial and Biscayne have demonstrated that they will suffer an injury if the Petitioner's application is approved. The injury that Memorial will suffer is of a type or nature which this proceeding is designed to protect. Although it is not as clear whether Biscayne's injury is of a type or nature which this proceeding is designed to protect, Hearing Officer Sherrill concluded that it was when Biscayne was-granted leave to intervene in this case. In light of this fact, the fact that it is not totally clear that Biscayne's injury is
not of a type which this proceeding is designed to protect and the fact that Biscayne has expended a great deal of time and effort in participating in this proceeding in reliance on Mr. Sherrills decision, it is concluded that Biscayne has standing to participate in this proceeding. Reathley v. Lawson, 348 So.2d
382 (Fla. 2d DCA 1977); City of Miami Beach v. Chadderton, 306 So.2d 558 (Fla. 3d DCA 1975).

II. Rule 10-5.11(25), F.A.C.
1. Introduction.
This case involves the question of whether the Petitioner should be granted a certificate of need to add 31 short-term psychiatric beds to its acute-care hospital in the Respondent's service district 10. The resolution of this question depends upon an application of the criteria set forth in Section 381.494(6)(c), Florida Statutes (1985), and the rules of the Respondent promulgated thereunder.
Rule 10-5.11(25), F.A.C., governs the question of whether a certificate of need for short-term psychiatric beds should be issued. In applying this rule it is clear that a balanced consideration of all the statutory criteria must be made. Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984).
Rule 10-5.11(25)(a), F.A.C., defines short-term 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 problems which are so severe and acute that they need intensive, full-time care. Acute psychiatric 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.
The Petitioner is clearly seeking a certificate of need to provide short-term hospital inpatient psychiatric services as defined in Rule 10- 5.11(25)(a), F.A.C. Section 10-5.11(25)(c), 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 Rule 10-5.11(25)(d), F.A.C., is not met, however, if Section 381.494(6)(c), Florida Statutes, and Rule 10-5.11(25)(e) F.A.C., demonstrate need. B. Rule 10-5.11(25)(d), F.A.C. Rule 10-5.11(25(d), F.A.C., provides that an applicant must meet several different tests in order to receive a favorable determination on its application. The first test relevant to this case is provided in Rule 10-5.11(25(d)1, F.A.C.:

A minimum of .15 beds per 1,000 population should be located in
hospitals holding a general license to ensure access to need services for persons with multiple health problems. These beds shall be designated as short term inpatient hospital psychiatric beds.
As will be discussed, infra, the determination of the minimum number of short-term psychiatric beds for Broward County which should be located in general hospitals such as the Petitioner is to be made based upon population projections for 1989. The projected population for Broward County for 1989 is 1,228,334. Therefore, under Rule 10-5.11(25(d)1, F.A.C., there should be a minimum of 184 short-term psychiatric beds located in general hospitals. Currently, there are 243 short-term psychiatric beds located in general hospitals. Therefore, the Petitioner's application fails to meet the requirements of Rule 10-5.11(25)(d)1, F.A.C. There is clearly no need for additional short-term psychiatric beds in general hospitals in Broward County.
The second test relevant to this proceeding is provided in Rule 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 calculated for year x, based on a bed need ration of
.35 beds per 1,000 population projected for year-x, and based on latest mid- range projections 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).
Pursuant to this test, the need for additional short term psychiatric beds is to be determined 5 years into the future. Based upon the latest mid- range projections published by the Bureau of Economic and Business Research of the University of Florida. Although there was some dispute during the final hearing of this case as to the proper planning horizon year, the parties all agreed in their proposed recommended orders that the proper planning horizon in this case is 1989.
The Petitioner filed its application with the Respondent in June of 1984. The Petitioner sought approval of its application at the time it was filed based upon an alleged need for additional beds for 1989. Although the final hearing was held in 1985 and 1986, the Petitioner did not change this position. The Petitioner has not filed an amendment to its certificate of need application pursuant to Rule 10-5.14, F.A.C. The Petitioner is therefore limited to the "fixed pool" of beds that existed when its application was filed: 1989. Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 10 FLW 1983 (Fla. 1st DCA 1985), clarified on rehearing, 11 FLW 437 (1986); and NME Hospitals, Inc. v. Department of Health and Rehabilitative Services, 10 FLW 1976 (Fla. 1st DCA 1985), rev'd in part on rehearing,
FLW (1986). Rule 10-5.11(25)(d)3, F.A.C., provides that bed need is to be determined by subtracting the number of "existing and approved" beds in the service district from the number of beds needed for the planning year based upon a ration of .35 beds per 1,000 population. This determination is to be made for the entire service district unless the district has been sub-divided by the Respondent. The pertinent district in this case is service district 10 which consist of Broward County. District 10 has not been sub-divided by the Respondent. Based upon the foregoing, the number of short-term psychiatric beds needed is to be determined based upon the projected population of Broward County in 1989: 1,228,334 people. Based upon this projected population, there will be a need for 430 short-term psychiatric beds in Broward County in 1989. The evidence presented at the final hearing proved that there are 427 licensed
short-term psychiatric beds in Broward County. Evidence was also presented during the portion of the hearing held in November of 1985 that there were 16 approved short-term psychiatric beds for Broward County. These 16 beds were part of the certificate of need the Respondent proposed to issue to Charter. Before the end of the hearing in this case a Final Order was issued by the Respondent denying Charter's application. Although Charter has appealed this Final Order to the First District Court of Appeal, the possibility that the 16 beds will be approved is too speculative. Therefore, it is concluded that the
16 short-term psychiatric beds applied for by Charter should not be counted for purposes of applying Rule 10-5.11(25)(d), F.A.C.
The Respondent and Intervenor's have argued that the 427 licensed beds in Broward County constitute "existing" beds for purposes of the Rule. This position is contrary to the decision recently made in Balsam v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1986). In Balsam, a Hearing Officer recommended approval of a 10 -bed psychiatric and substance abuse facility (80 short-term psychiatric beds and 20 short-term substance abuse beds) to be located in Broward County. The Respondent rejected the Hearing Officer's recommendation and denied the
application. The Respondent accepted the Hearing Officer's findings of fact but rejected his or her conclusions of law with regard to the number of "existing and approved," beds in Broward County. The Court determined that the Respondent had ignored the facts, proved by competent substantial evidence, showing that the actual number of short-term psychiatric and substance abuse beds was considerably different from that reflected in the Respondent's records. What the Respondent's records reflected was essentially the number of licensed beds in Broward County.
In this case, the Petitioner has attempted to prove that the number of "existing" short-term psychiatric beds in Broward County is less than the number of licensed beds. The Petitioner has failed.
The Petitioner first argues that 24 of the 74 licensed beds at Memorial should not be counted. The evidence does prove that Memorial filed an application with the Respondent for a certificate of need in October of 1981 in which Memorial indicated that it planned to reduce the number of its short-term psychiatric beds it had available by 24 beds. The Petitioner made the same representation in a bond prospectus it issued in September of 1983.
The certificate of need Memorial sought was approved. It is significant to note, however, that the certificate of need application which Memorial filed involved a request for approval of a capital expenditure and not a licensure of beds. Consequently, the certificate of need did not "approve" what Memorial had represented it would do with regard to reducing the number of its short-term psychiatric beds.
More importantly, the evidence clearly proved that Memorial has not eliminated any of its 74 licensed short-term psychiatric beds and has no plans to do so. Also, the Respondent has no plans to take any action against Memorial to require Memorial to reduce the 74 short-term psychiatric A; beds it is currently operating. Although it may be improper for the Respondent to allow Memorial to ignore its representations, under the rationale of Balsam it would be improper to ignore the fact that Memorial is operating all 74 of its licensed short-term psychiatric beds in Broward County.
The Petitioner has also argued that Coral Ridge Hospital's 74 licensed short-term psychiatric beds should not be counted. In support of this argument the Petitioner attempted to prove that the 74 beds at Coral Ridge Hospital do not in fact constitute short-term psychiatric beds as defined by Rule 10-5.11(25)(a), F.A.C. The Petitioner did prove that the overall average length of stay for all of Coral Ridge Hospital's beds exceeds the maximum length of stay for short-term psychiatric beds. What the Petitioner did not prove, however, was how many of Coral Ridge Hospital's 74 beds, if any, are being used as long-term psychiatric beds. The occupancy rate at Coral Ridge Hospital for 1985 was between 40 percent and 50 percent. Therefore, it is possible that a few patients with a very long length of stay could have caused the overall average length of stay to exceed the definition of short-term psychiatric beds. Even if it were assumed that all or most of the beds in use at Coral Ridge Hospital do not constitute short-term psychiatric beds, based upon the hospital's occupancy rate, 40 percent to 50 percent of the beds which are not being used are available for use as short-term psychiatric beds. That means that at least 29 to 37 of the beds at Coral Ridge Hospital which are not in use are available to care for short-term psychiatric patients.
It cannot be assumed that all of the beds which are occupied at Coral Ridge Hospital are not short-term psychiatric beds based solely on an average length of stay which falls somewhere between the definition of short-term and long-term psychiatric beds. Although it is possible that some of those beds- should not be counted, the Petitioner failed to present sufficient evidence for this Hearing Officer to make such a determination.
The Petitioner also has cited Balsam in support of its argument that the beds at Coral Ridge Hospital should not be counted. While it is true that the Hearing Officer and the First District Court of Appeal in Balsam concluded that the Coral Ridge Hospital licensed short-term psychiatric beds should not be taken into consideration, their determination was based upon facts which were not proved in this case. The facts in that case were determined in May and June 1984. In order for this Hearing Officer to rely on those facts it would be necessary to assume that nothing has changed in the way Coral Ridge Hospital is operated in more than 18 months. Such an assumption would not be proper.
Based upon the facts presented in this case, it is concluded that the Petitioner has failed to prove how many, if any, of the 74 licensed short-term psychiatric beds at Coral Ridge Hospital should not be counted as "existing" beds.
Finally, the Petitioner has argued that the 46 licensed short-term psychiatric beds at Hollywood Pavilion should not be counted. The Petitioner's argument is based upon its conclusion that the "unrefuted" evidence from physicians who testified at the hearing indicated that there are serious problems with Hollywood Pavilion.
It is true that a few physicians testified that they did not refer patients to Hollywood Pavilion because of their concern over the quality of care provided at Hollywood Pavilion and their preference to use hospital based psychiatric services. Their testimony was, however, insufficient to convince this Hearing Officer that the beds at Hollywood Pavilion should not be counted as existing short-term psychiatric beds.
The evidence indicated that despite the concerns of the physicians who testified, there are physicians in Broward County who still admit patients to Hollywood Pavilion. In 1985, 475 patients were admitted to Hollywood Pavilion. Hollywood Pavilion is also accredited by the Joint Commission on Accreditation of Hospitals.
Based upon a consideration of all of the evidence concerning Hollywood Pavilion, it is concluded that the Petitioner failed to prove that the quality of care at Hollywood Pavilion is so inadequate that its 46 licensed short-term psychiatric beds should not be taken into account in determining the need for short-term psychiatric beds in Broward County.
Based upon the foregoing, there is a need for only 3 additional
short-term psychiatric beds in Broward County for 1989. There is a need for 430 beds and there are 427 existing and approved beds. This need is insufficient to justify the Petitioner's application for 31 additional beds.
Additionally, the Balsam decision reversed the Respondent's decision to disapprove an application for an additional 80 short-term psychiatric beds for Broward County. These beds should be treated as "approved" beds under the Respondent's rules. Therefore, it appears that there is a surplus of 77 short- term psychiatric beds for Broward County under Rule 10-5.11(25)(d)3, F.A.C.
The third relevant test is provided in Rule 10- 5.11(25)(d)4, F.A.C. which provides:

Occupancy Standards. New facilities
must be able to project an average 70 percent occupancy 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.
The Petitioner has argued that it meets this requirement because of its perceived need for the services it is proposing and because of the proposed management of its proposed-psychiatric units by PMS. While the Petitioner is correct that the evidence proved that PMS is a capable professional psychiatric management company, the evidence does not support a finding that the proposed services are not available and accessible in Broward County. Additionally, based upon the lack of need for additional short-term psychiatric beds for Broward County and the low occupancy rate at existing facilities, it is doubtful that the Petitioner can achieve the projected occupancy rates required by Rule 10-5.11(25)(d)4, F.A.C.
The fourth relevant test is provided in Rule 10- 5.11(25)(d)5, F.A.C., which provides:
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
adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department
district is at or exceeds 70 percent for the preceding 12 month period.
The Petitioner failed to offer any evidence as to whether this test has been met. The fact that data is not collected in Broward County as to the occupancy of beds according to their use as adult beds or adolescent and children's beds has been cited as the reason why it did not provide such evidence. Although such data is not readily reported, it does not necessarily follow that no evidence was available. Therefore, it is concluded that the Petitioner has failed to prove that Rule 10-5.11(25)(d)5, F.A.C., has been met.
The Petitioner also conceded that, based upon the average occupancy rate for Broward County in 1985, Rule 10- 5.11(25)(d)5, F.A.C. has not been met. The Petitioner argues, however, that the "not normally" language of the Rule allows a consideration of other factors that may explain or supersede the "raw numbers." In particular, the Petitioner argues that the low occupancy rate is caused in part by the occupancy rate at Hollywood Pavilion and by the fact that Florida Medical Center added 59 short-term psychiatric beds to its facility in 1984. The Petitioner also points out that occupancy rates at general hospitals for 1985 exceeded the occupancy thresholds of the rule.
It has already been concluded that the Petitioner has failed to prove that the beds at Hollywood Pavilion should not be considered in this case. Therefore its low occupancy rate should not be ignored.
It has also already been concluded that there are sufficient beds in general hospitals in Broward County. Therefore, the fact that occupancy rates at existing general hospitals providing short-term psychiatric services is high does not mean that the Petitioner should somehow be immune from meeting the requirement of Rule 10-5.11(25)(d)5, F.A.C. If the Petitioner's proposal were approved it could mean that since its beds will be located in a general hospital where occupancy rates in Broward County tend to be higher, that the occupancy rates at free-standing psychiatric facilities would probably be even lower than they now are. This is the very result that Rule 10-5.11(25)(d)5, F.A.C. is intended to prevent.
As to the addition of beds at Florida Medical Center, those beds were added between a year to two years ago. Still it has not achieved acceptable occupancy rates. It therefore does not seem proper to discount the effect of Florida Medical Center's occupancy rate in this case. Even if it were, the Petitioner would still fail to meet the requirements of Rule 10-5.11(25)(d)5, F.A.C.
The fifth relevant test is provided in Rule 10- 5.11(25)(d)6, F.A.C., which provides:

Hospital seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph [five] is met and that the number of designated short term
psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year.
The evidence failed to show that the requirements of this rule have been met. The occupancy rate in Broward County during the preceeding year has been between 64.8 percent and 68.4 percent. This rate is well below the required 75 percent occupancy rate. The Petitioner's argument that other factors should be considered has already been rejected. Also, it is significant to note that this portion of the rule does not contain the "not normally" language contained in Rule 10- 5.11(25)(d)5, F.A.C.
The final relevant test is provided in Rule 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.

The Petitioner's proposal clearly meets this portion of the rule.
Based upon the foregoing it is concluded that the Petitioner's proposal clearly fails to meet the requirements of Rule 10-5.11(25(d), F.A.C. Therefore, the Petitioner's proposal should "not normally" be approved, unless a need for the proposal is shown to exist based upon an application of the criteria of Section 381.494(6)(c), Florida Statutes (1985), and Rule 10- 5.11(25)(e), F.A.C.

C. Rule 10-5.11(25)(e), F.A.C.
Rule 10-5.11(25)(e), F.A.C., provides 7 standards and criteria which are to be considered. Those standards and criteria relevant to this proceeding are quoted and applied to the Petitioner, infra.

1. 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.
The Petitioner's proposal is not consistent with the relevant plans to be considered under this portion of the rule. In particular, the proposal would result in an excess of short-term psychiatric beds in Broward County, occupancy standards for the district have not been met and the proposal is for inpatient psychiatric services which does not promote the use of alternatives to hospitalization.

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 percentage of patient days allocated to:
1. Indigent clients
2. Medicaid Clients
3. Baker Act funded clients
4. Private pay patients
5. Other.
Priority consideration of 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 provide services, to medically indigent patients, particularly Baker Act funded clients where there is an identified need an non funded indigent clients.
Although the Petitioner represented in its application that it will provided care without regard to a patient's ability to pay, the evidence proved that this was not the case. In fact, the Petitioner will generally only provide indigent care to those persons in need of emergency care. Even when a person needs emergency care, the patient will be transferred to Memorial as soon as the patient is stabilized.
Based upon these facts and the amount of indigent care and care to Medicaid patients provided by the Petitioner in the past it does not appear that the Petitioner's proposal will enhance the care of underserved groups in Broward County. This conclusion is somewhat mitigated, however, by a consideration of the realities of how indigent patients are treated in Broward County.
Memorial and other hospitals in Broward County have been given the authority to provide indigent care in Broward County for which they are subsidized by tax revenues. It is the common practice in Broward County to therefore refer indigent patients to Memorial and those other subsidized hospitals. These facts do not, however, explain why the Petitioner's care of Medicaid patients is as low as it has been at the Petitioner's facility in the past.
Based upon a consideration of all of the facts, it is concluded that the Petitioner has failed to prove that it should be given any priority consideration under Rule 10- 5.11(25)(e)3, F.A.C.
1. Applicants shall indicate the availability of other inpatient psychiatric services in the proposed service area, including the number of beds available in crisis stabilization units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not.
  
  The Petitioner did not provide sufficient evidence to conclude that this criterion has been satisfied.
2. 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 heath programs, or other local psychiatric outpatient programs.
  
  The Petitioner meets this portion of the rule.
3. 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.
  36
  
  The Petitioner's proposal clearly meets this criterion.
4. Access standard. Short term impatient hospital psychiatric service should be available within a maximum travel time of 45 minutes under average
travel conditions for a least 90 percent of the service area's population.
The evidence clearly proved that this standard has not been met. There is no geographic access problem in Broward County. At least 90 percent of the population of Broward County is within a maximum of 45 minutes driving time under average driving conditions to existing short-term psychiatric services in Broward County. The Petitioner's proposal will not significantly enhance geographic access in Broward County.
As will be discussed, infra, the Petitioner has argued that geographic accessibility will be enhanced in southern Broward County by its proposal. In effect the Petitioner has attempted to sub-district Broward County for purposes of considering its application. Broward County, however, has not been sub-districted. Geographic accessibility is to be determined on a County- wide basis.
III. Statutory Criteria.
In addition to the standards provided in Rule 10- 5.11(25)(e), F.A.C., Section 381.494(6)(c), Florida Statutes (1985), provides 13 criteria which are to be considered in determining whether a certificate of need should be issued to the Petitioner despite its failure to meet the requirements of Rule 10-5.11(25)(d), F.A.C.
The first issue to be decided under the statutory criteria is whether there is a need for the proposal despite the lack of numerical need for additional short-term psychiatric beds under the rule. Essentially, the Petitioner has argued that this determination should be made based upon the facts associated with only the southern portion of Broward County.
In support of its position, the Petitioner has argued that there are long-established referral patterns and hospital service areas that exist in Broward County that should not be ignored. While the Petitioner is correct to some extent, the evidence clearly proved that empty short- term psychiatric beds are available and accessible in Broward County. Those beds are available in northern Broward County and in southern Broward County. While it is true that there is generally a waiting list for short-term psychiatric beds at Memorial and that physicians have resorted to various schemes in order to get patients into Memorial, it also true that beds are available at other facilities in southern Broward County. Additional beds are also available at facilities located in northern Broward County. Although less convenient, the evidence did not prove that those beds were not readily available and accessible.
The Petitioner has also argued that there is a need for the specialized services it has proposed in southern Broward County it is clear that the Petitioner's proposal could be a valuable addition to the available services provided in Broward County because it is proposing to establish dedicated units and specialized programs for the care of adolescents and geriatrics. The problem, however, is that services are currently available in Broward County for the care of adolescents and geriatrics. Several hospitals throughout Broward County provide services geared toward the care of these groups. Those services are adequate and accessible.
In addition to these conclusions as to whether there is a need for the Petitioner's proposal, the evidence also proved that with the addition of approved long-term psychiatric beds in Broward County, additional short-term psychiatric beds will become available for use in Broward County.
Based upon a consideration of all of the facts it is concluded that the Petitioner has failed to prove that there is a need for additional short- term psychiatric beds for Broward County for 1989. Section 381.494(6)(c)2, Florida Statutes (1985), provides that the following is to be considered in determining whether a proposed new service should be approved:

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 existing providers of short-term psychiatric services in Broward County and the number of their existing beds includes the following:

Provider Number of Beds

Memorial

74
Hollywood Pavilion

46
Coral Ridge Hospital

74
Ft. Lauderdale Hospital

64
Florida Medical Center

74
Imperial Point

47
Broward General Medical
Center
48
Generally, the Petitioner did not prove that these existing providers are not available, efficient, appropriate, accessible, adequate or providing quality of care. The evidence also did not prove that these existing providers, with the exception of Memorial, were overutilized. The Petitioner has therefore failed to meet this criterion.
Section 381.494(6)(c)3, Florida Statutes (1985), requires a consideration of the applicant's ability to provide quality of care. The evidence clearly proved that the Petitioner will generally be able to provide quality of care.
The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals and has established adequate quality control procedures which will be used to insure quality of care in the proposed psychiatric units.
PMS' involvement in the operation of the proposed psychiatric units will also help to insure that quality of care is provided. Although the proposed space and location for the proposed units could be better, the weight of the evidence supports a conclusion that the Petitioner meets Section 381.494(6)(c)3, Florida Statutes (1985).
Section 381.494(6)(c)4, Florida Statutes (1985), requires a consideration of the availability and adequacy of other facilities and services which may serve as alternatives for the Petitioner's proposal. The Petitioner failed to prove that this provision was met by its proposal.
Section 381.494(6)(c)5, Florida Statutes (1985), requires a consideration of the probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources. Because the Petitioner's proposal will be located in an existing facility, several services provided by the Petitioner will be available for use in the operation of the proposed psychiatric units. The availability of these services and the ability of the Petitioner's parent corporation to purchase items to be used in the proposed units under its existing purchasing contracts will enhance economies and improvements in services as contemplated by this criterion. Based upon these facts, the Petitioner meets this criterion.
Section 381.494(6)(c)8, Florida Statutes (1985), requires a consideration of, among other things not relevant to this proceeding, the availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures. The Petitioner generally proved that its proposal satisfies this criterion.
Section 381.494(6)(c)7 and 8, Florida Statutes (1985), requires a consideration of education opportunities. The Petitioner has argued that the testimony of Dr. Joel Klass supports a conclusion that these requirements have been met by the Petitioner's proposal. All that Dr. Klass stated was that he would anticipate trying to establish a relationship between the University of Miami and the proposed psychiatric units. Such testimony is too speculative to conclude that the Petitioner has satisfied the provisions of the statutes concerning educational opportunities.
Section 381.494(6)(c)9, Florida Statutes (1985), requires that the proposal be financially feasible in the short-and long-term. The Petitioner has clearly proved that the proposal is financially feasible in the short-term. The Petitioner also proved that the proposal would be financially feasible in the long-term if there was adequate need for additional short-term psychiatric beds in Broward County. The evidence does not, however, support a conclusion that there is such a need. Therefore, the Petitioner's proposal does not appear to be financially feasible in the long-term.
The next relevant criterion is Section 381.494(6)(c)12, Florida Statutes (1985), which requires a consideration of the probable impact on the costs of providing short-term psychiatric services in Broward County of the Petitioner's proposal. Although it is clear that the high quality of the proposed services could improve competition in Broward County, it is more likely that the Petitioner's proposal will adversely effect the costs of providing short-term psychiatric services bin Broward County. This conclusion is based upon the fact that existing providers are experiencing low occupancy rates at their facilities and the lack of need for additional short-term psychiatric services for Broward County.
Finally, Section 381.494(6)(c)13, Florida Statutes (1985), requires a consideration of the costs and methods of construction for the proposal. It appears that the proposed renovation of the space for the proposed units meets this criterion.
Based upon a consideration of all of the requirements of Rule 10- 5.11(25)(e), F.A.C., and Section 381.494(6)(c), Florida Statutes (1985), it is concluded that the Petitioner's proposal to add 31 short-term psychiatric beds should not be approved. There simply is no need for the proposed addition of 31 beds.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application filed by the

Petitioner for certificate of need #3372 should be denied.

DONE and ENTERED this 15th day of May, 1986, 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 15th day of May, 1986.

COPIES FURNISHED:

Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE,

CAROTHERS & PROCTOR

Post Office Box 391 Tallahassee, Florida 32302

Lesley Mendelson, Esquire Assistant General Counsel

Department of Health and Rehabilitative Services Building One, Suite 407

1323 Winewood Boulevard

Tallahassee, Florida 32301

James C. Hauser, Esquire MESSER, VICHERS, CAPARELLO,

FRENCH & MADSEN

Post Office Box 1876 Tallahassee, Florida 32302

Kenneth G. Oertel, Esquire Eleanor A. Joseph, Esquire OERTEL & HOFFMAN, P.A.

Post Office Box 6507 Tallahassee, Florida 32313-6507

Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL

SMITH & CUTLER, P.A.

Post Office Drawer 190 Tallahassee, Florida 32302

Mr. William Page, Jr. Secretary

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 84-004037

Issue Date	Proceedings
May 15, 1986	Recommended Order (hearing held , 2013). CASE CLOSED.

Orders for Case No: 84-004037

Issue Date	Document	Summary
Jul. 11, 1986	Agency Final Order
May 15, 1986	Recommended Order	Petitioner failed to prove need for 31 short-term psychiatric beds for Broward County.

Source: Florida - Division of Administrative Hearings

NME HOSPITALS, INC., D/B/A WEST BOCA MEDICAL CENTER vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-004037 (1984)

Docket for Case No: 84-004037

Orders for Case No: 84-004037

Michael Joseph Glazer

Lesley Fellows Mendelson

Kenneth G Oertel

Cynthia Skelton Tunnicliff

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Memorial		74
Hollywood Pavilion		46
Coral Ridge Hospital		74
Ft. Lauderdale Hospital		64
Florida Medical Center		74
Imperial Point		47
Broward General Medical	Center	48

NME HOSPITALS, INC., D/B/A WEST BOCA MEDICAL CENTER vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-004037 (1984)

Docket for Case No: 84-004037

Orders for Case No: 84-004037

Lawyers who claimed

Michael Joseph Glazer

Lesley Fellows Mendelson

Kenneth G Oertel

Cynthia Skelton Tunnicliff

Counsels

Cites

Florida Laws (2)

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