STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA LIFE CARE, INC., )

)

Petitioner, )

)

vs. ) Case No. 85-2939

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

The issue in this case is whether Respondent, Department of Health and Rehabilitative Services (Department), should grant the application of Petitioner, Florida Life Care, Inc., (FLC), for a certificate of need to construct and operate a 120-bed skilled nursing facility in Englewood, Sarasota County, Florida.

However, the parties stipulated that only the criteria under Section 381.494(6)(c)1, 2, 6, and 8 (only as to the extent to which the proposed services will be accessible to all residents of the service district) and (d)l, 2, 4, and 5, Florida Statutes (1985), are to be considered at issue for purposes of this proceeding. The parties stipulated that the

other criteria contained in Section 381.494(6)(c) and (d) "are deemed to be either satisfied by Florida Life Care or not at issue in this hearing.

Final hearing was held in Sarasota on April 17, 1986. The parties requested and were given until June 4, 1986, in which to file their proposed recommended orders.

APPEARANCES

For Petitioner: Robert S. Cohen, Esquire

Tallahassee, Florida

For Respondent: B. Elaine New, Esquire

Tallahassee, Florida FINDINGS OF FACT

1. Petitioner, Florida Life Care, Inc. (FLC), has applied to construct and operate a 120-bed skilled nursing facility in Englewood, Florida, adjacent to the Englewood Community Hospital. Englewood is a residential community approximately seventeen miles south of Venice, Florida.

   
   

2. Approximately ten years ago, FLC joined a company known as Florida Medical Facilities, Inc. FLC purchased 60 acres in the community of Englewood and worked to have Englewood Community Hospital built. Englewood Community Hospital was finally opened in October, 1985. The hospital occupies 14 of the 60 acres owned by FLC. Another six acres has been set aside for the proposed skilled nursing facility which is the subject of this proceeding. The additional acreage is planned to be used for a rental retirement community, adult congregate living facilities and retirement centers, as well as physicians' office buildings.

   
   

3. Because of the impact of DRGs on Medicare recipients, their average length of stay in hospitals has decreased. This has increased the need for more highly skilled care in nursing homes after hospital discharge. Sub-acute skilled care such as intravenous therapy, enteral feeding, oxygen and respiratory therapy, A. B. shunt, tracheostomy care, chemotherapy, and cardiac assessment are included among these needs. Location next to a hospital would increase a nursing home's ability to provide such sub-acute care. When this care cannot be provided by home health, a nursing home is the only feasible alternative to in- patient hospital care for patients who still need the sub-acute services.

   
   

4. FLC's proposed nursing home would complement Englewood Community Hospital in terms of continuity of care, quality of care, and cost efficiency. (Continuity of care and

   quality of care go hand in hand.) Having a nursing home adjacent to Englewood Community Hospital would allow physicians to conveniently follow a patient from the hospital to the nursing home.

   
   

5. FLC has had discussions with Englewood Community Hospital to determine whether FLC's proposed nursing home could achieve economies of shared services and cost effectiveness with the hospital. These discussions have indicated that the hospital would be willing to discuss with FLC subcontracting for some services, such as pharmacy and laboratory. Englewood Community Hospital and its administrator have been generally supportive of FLC's efforts to secure certificate of need for a nursing home.

   
   

   1. Criterion Section 381.494(6) (c)l. (The need for a health care facility and services

      . . . being proposed in relation to the

      applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act . . . )

      
      

6. The District VIII Health Plan expresses concern over the impact of DRGs on hospital utilization and the need for appropriate health care after discharge from the hospital. Nursing homes are one alternative for such care, particularly when sub-acute care is needed.

   
   

7. The District VIII Health Plan also expresses concern that nursing home facilities in District VIII generally are clustered in urban areas and that persons outside of urban areas must travel a long distance and be separated from family and community ties in order to receive care. There was no evidence that the plan specified what areas are considered without reasonable access to nursing home facilities. The District VIII local health plan does suggest, however, that accessibility to nursing home care can be enhanced by giving consideration for new facilities in smaller communities presently without a nursing home. The plan also establishes an accessibility standard that 95% of the service district's population be within one hour typical drive time of a nursing home.

   
   

8. The community of Englewood currently has a nursing home. Beverly Enterprises currently operates a 120-bed nursing home located approximately four and one-half miles north of the Englewood Community Hospital. There was no evidence that physicians practicing at the Englewood Community Hospital have had any difficulty placing patients at the Beverly nursing home now operating at approximately 90% of capacity. The Beverly nursing home is the most convenient nursing home to the smaller residential communities south of Englewood in northwest Charlotte County (as well as to Boca Grande, Lee County, at the southern end of Gasparilla Island.)

   
   

9. In addition, a new 120-bed nursing home opened in January 1986 in North Port approximately 15 miles northeast of Englewood. As of the date of the final hearing, the new nursing home in North Port was operating at just 16% of capacity. The new nursing home in North Port is within 30 minutes of Englewood by automobile.

   
   

10. Five nursing homes, with a total of 592 beds, are located in Venice approximately 17 miles north of Englewood. At the time of the final hearing, the nursing homes in Venice were operating at approximately 78% of capacity, making approximately

    130 beds available. Venice is approximately 30 to 35 minutes from Englewood by automobile.

11. The 1985-1987 State Health Plan indicates that there is a critical need for nursing home beds for Medicaid patients because of the unwillingness of existing nursing homes to accept Medicaid patients.

    
    

12. The District VIII Health Plan indicates that new nursing homes should promise to utilize one-third of their proposed beds for Medicaid patients.

    
    

13. Although FLC's existing nursing homes in Sarasota County experienced an average of only approximately 28% Medicaid utilization in the year ending September 1985, it has promised in its application in this case to devote 50% of the proposed beds to Medicaid utilization.

    
    

14. Finally, the District VIII Health Plan establishes as a threshold for the addition of nursing home beds that existing nursing home beds be at least 90% occupied. In Sarasota County, only 81% of existing nursing home beds are occupied.

    
    

    1. Criterion Section 381.494(6)(c)2.(The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services . . .

       in the service district of the applicant.)

       
       

15. There currently are 2,020 licensed and 257 approved nursing home beds in Sarasota County, a subdistrict of HRS District VIII. The parties have stipulated that, under Rule 10- 5.11(21), Florida Administrative Code, there will be a need for 2,119 nursing home beds in Sarasota County in January 1988, creating a surplus of 132 beds. There was no evidence that any of these beds are unavailable. The average occupancy of nursing home beds in Sarasota County was approximately 81% at the time of the final hearing.

    
    

16. There was no evidence that any of the nursing home beds in Sarasota County provide less than quality care. (298 of the nursing home beds in Venice and 240 of the nursing home beds in Sarasota are owned and operated by FLC.)

    
    

17. Location of a nursing home next to the Englewood General Hospital would result in some efficiencies of operation. Continuity of care between nursing home and hospital, including sub-acute care, would be more convenient to the physicians and other health care professionals involved. It would also offer the opportunity and, in this case, likelihood that the nursing home could enter into sub-contracts for certain services with the hospital. To the extent it should be considered a factor, it

    also would allow the hospital to quickly refer a patient to the nursing home as soon as Medicare reimbursement expires for a particular DRG. However, it was not proven that the same or similar efficiencies do not exist at other nursing home locations, especially the Beverly Enterprises nursing home in Englewood, just four and one-half miles north of the Englewood Community Hospital.

    
    

18. Except for accessibility considerations, there was no proof that the existing and approved nursing homes in Sarasota County are not appropriate or adequate. Regarding accessibility, 95% of the residents of District VIII have access to a nursing home within 30 minutes typical driving time from their home. It was not proven that location of another nursing home in Englewood would substantially increase accessibility. Access for residents of southwest Sarasota County, northwest Charlotte County and Gasparilla Island would only improve to the extent that residents of those areas now must bypass Englewood to use nursing homes in Venice or North Port. Since the Beverly Enterprises nursing home in Englewood is only approximately 90% occupied, it is inferred that none of those residents are bypassing Englewood at this time. This also is demonstrated by the lack of any need in 1985 for additional nursing home beds in the special southwest Sarasota County/northwest Charlotte County catchment area devised by FLC to measure need in the immediate vicinity of Englewood. (The population of 33,755 in the catchment area was multiplied by the adjusted poverty bed ratio for Sarasota County of 23.1 beds per 1,000 population over 65 to yield a surplus of 51 beds in 1985.) Using projected population in the catchment area for 1987 of 42,249, the number of beds needed in 1987 is 955, yielding a net need of 123 beds after subtracting the 832 existing and approved beds located in the catchment area. But it was not proven that this special localized need could not be met by nursing home facilities located outside of, but within reasonable access to, the special catchment area. It also was not proven that the southwest Sarasota County/northwest Charlotte County residents could not continue to use the Beverly Enterprises nursing home in Englewood if current utilization of that facility by persons residing to the north and east of Englewood shifted to facilities in Venice and North Port.

19. It was not proven that access of 95% of Sarasota County residents to a nursing home within approximately 30 minutes of their homes is not reasonable.

    
    

20. It is axiomatic that location of a nursing home in one place precludes its location in another place. While a particular location might be particularly convenient to some patients and their families and friends, that location will not be the most convenient for another patient and his family and

    friends. The amount of inconvenience to be anticipated in Sarasota County is within tolerable limits. It was not proven that accessibility for residents of the catchment area will be outside tolerable limits by 1988.

    
    

    1. Criterion Section 381.494(6)(c)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.)

       
       

21. It was not proven that there is a need in District VIII for special equipment or services proposed to be offered by FLC which are not reasonably and economically accessible in adjoining areas. There was no proof of such a need in District VIII, and there was no proof of the availability or accessibility of such services in areas adjoining District VIII.

    
    

    1. Criterion Section 381.494(6)(c)8 [T]he extent to which the proposed services

    will be accessible to all residents of the service district.)

    
    

22. Geographically, FLC's proposed nursing home for Englewood would be accessible to all residents of District VIII within approximately one hour typical drive time of Englewood. It was not proven exactly how many residents or how large a part of District VIII that would include. However, it clearly would include Venice, Englewood, North Port, Port Charlotte, southwest Sarasota County, northwest Charlotte County and Gasparilla Island.

    
    

23. Economically, FLC has promised to provide 50% of its nursing home services to Medicaid patients. That percentage is substantially higher than current Medicaid utilization at FLC's nursing homes in Sarasota County.

    
    

24. FLC also anticipates that 2% of its nursing home services at the proposed facility will be for the medically indigent or will be bad debt write-offs.

    
    

    Balanced Consideration of the Criteria.

    
    

25. Giving a balanced consideration to the evidence on all of the statutory and rule criteria made applicable to this proceeding by the stipulation of the parties, it is found that there is no need or justification for FLC's proposed nursing home at this time. FLC did not prove that there will be insufficient nursing home beds available and reasonably accessible to

    residents of District VIII in 1988. Nor did FLC prove any other circumstances which would justify granting its application.

    
    

    CONCLUSIONS OF LAW

    
    

26. Section 381.494(6)(c), Florida Statutes (1985), sets out the statutory criteria for consideration of applications for certificates of need. However, in this case the parties stipulated that only the following criteria apply:

    
    

    1. The department shall review the applications and shall review applications for certificate-of-need determinations for health care facilities and services, hospices, and health maintenance organizations in context with the following criteria:

       
       

       1. The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.

          
          

       2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.

       
       

       * * *

       
       

       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.

       
       

       * * *

       
       

       8. [T] he extent to which the proposed services will be accessible to all residents of the service district.

       
       

       * * *

       The parties stipulated that the other criteria "are deemed to be either satisfied by Florida Life Care or not at issue in this hearing."

       
       

27. Rule criteria found in Rule 10-5.11, Florida Administrative Code, also are applicable to consideration of a certificate of need for nursing home beds. However, the parties stipulated that only paragraph (21) of Rule 10-5.11 is applicable in this case. Rule 10-5.11(21) sets out a methodology for quantifying the need for nursing home beds in a district or sub-district of Respondent, Department of Health and Rehabilitative Services (HRS). Under the methodology, a surplus of 132 nursing home beds in Sarasota County is projected for January 1988. Under the circumstances, Rule 10-5.11(21)(a) states that HRS "will not normally approve applications for new or additional community nursing home beds."

    
    

28. The decision in Department of Health and Rehabilitative Services vs. Johnson & Johnson, 447 So.2d 361, 363 (Fla. 1st DCA 1984), requires "a balanced consideration of all the statutory criteria." Cf. also Humana, Inc., et al. vs. Department of Health and Rehabilitative Services, 469 So.2d 889, 891 (Fla. 1st DCA 1985). The appropriate weight afforded to each criterion is not fixed, but varies on a case by case basis. Cf. Collier Medical Center, Inc. vs. Department of Health and Rehabilitative Services, 462 So.2d 83, 84 (Fla. 1st DCA 1985). As shown by the Findings Of Fact, a balanced consideration has been given to all of the statutory and rule criteria made applicable to this proceeding by the stipulation of the parties. There is no need or justification for FLC's proposed nursing home in Englewood.

    
    

29. The parties also have stipulated that Section- 381.494(6)(d)1, 2, 4, and 5, Florida Statutes (1985), is at issue. They require the following findings of fact before a certificate of need can be granted:

1. In cases of capital expenditure proposals for the provision of new health services to inpatients, the department shall also reference each as of the following in its findings of fact:

1. That less costly, more efficient, or more appropriate alternatives to. such inpatient services are not

   available and the development of such as alternatives has been studied and found

   not practicable.

   
   

2. That existing inpatient facilities providing inpatient services similar to those proposed are being used in an appropriate and efficient manner.

* * *

1. That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.

   
   

2. In the case of a proposal for the addition of beds for the provision of skilled nursing or intermediate care services, that the addition will be consistent with the plans of other agencies of the state responsible for the provision and financing of long-term care, including home health services.

As a result of the Findings Of Fact and Conclusions Of Law in this case, those facts could not be found.

RECOMMENDATION

Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a Final Order denying the application of Petitioner, Florida Life Care, Inc., for a certificate of need for a 120-bed nursing home in Englewood, Sarasota County, CON Action No. 3847.

RECOMMENDED this 21st day of July, 1986, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings

this 21st day of July, 1986.

END NOTES

1/ Originally, this proceeding was consolidated with cases entitled Health Quest Corporation and Health Quest Realty (Sarasota County) v. Department of Health and Rehabilitative Services, DOAH Case No. 85-2938, and Health Care and Retirement Corporation of America, d/b/a Heartland of Sarasota, v.

Department of Health and Rehabilitative Services, DOAH Case No 85-3241. The petitioners in those cases each filed a notice of voluntary dismissal disposing of those proceedings. On about April 10, 1986, Arbor Health Care Company, Inc., d/b/a Sarasota Health Center, served a Petition To Intervene in DOAH Case No. 85-2939, but the petition was denied.

2/ There also was insufficient proof, and the stipulation between the parties was inadequate to support, the granting of an application for a nursing home with less than 120 beds.

APPENDIX

The following are specific rulings on the parties' proposed findings of fact, as required by Section 120.59(2), Florida Statutes (1985).

RULINGS ON PETITIONER'S PROPOSED FINDINGS OF FACT

1. Petitioner's proposed findings of fact 3, 5 through 8, and 14 through 16, are accepted as substantially factually accurate and are incorporated in the findings of fact in the same or similar format to the extent necessary.

   
   

2. Petitioner's proposed findings of fact 1, 2 and 4 would have been included in paragraph 1 above, except that they are unnecessary.

   
   

3. Petitioner's proposed findings of fact 9 would have been included in paragraph 1 above, except that the evidence did not prove that the catchment area was based on having a nursing home available within a reasonable travelling distance.

   
   

4. Petitioner's proposed finding of fact 10 would have been included in paragraph 1 above, except that the drive time from Englewood to both Port Charlotte and Venice was found to be approximately 30 and 35 minutes, respectively, and the remainder is subordinate to facts found in the Findings Of Fact.

5. Petitioner's proposed finding of fact 11 would have been included in paragraph 1 above, except that it is, in part, subordinate to facts found in the Findings Of Fact.

   
   

6. Petitioner's proposed finding of fact 12 would have been included in paragraph 1 above, except that the evidence did not prove the third sentence.

   
   

7. Petitioner's proposed finding of fact 13 would have been included in paragraph 1 above, except that the evidence did not prove the last sentence.

RULINGS ON RESPONDENT'S PROPOSED FINDINGS OF FACT

1. Respondent's proposed findings of fact 3. and 5 through

   9 are accepted as substantially factually accurate and are included in the Findings Of Fact in the same or similar format to the extent necessary.

   
   

2. Respondent's proposed findings of fact 1 and 2 would have been included in paragraph 1 above, except that they are unnecessary.

   
   

3. Respondent's proposed finding of fact 4 is rejected because it is a conclusion of law.

   
   

4. Respondent's proposed finding of fact 10 is rejected as contrary to the greater weight of the evidence and/or Findings Of Fact. The evidence did not prove that any of the approved nursing home beds were in the catchment area.

COPIES FURNISHED:

Robert S. Cohen, Esquire Haben, Parker, Skelding, Costigan, McVoy & Labasky

P. O. Box 669

Tallahassee, Florida 32302

B. Elaine New, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

William Page, Jr. Secretary

Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 85-002939

Orders for Case No: 85-002939