STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, d/b/a HEARTLAND OF HILLSBOROUGH, | ) ) ) | ||
) | |||
Petitioner, | ) | ||
) | |||
vs. | ) Case | Nos. | 85-3217 |
) | 85-3362 | ||
DEPARTMENT OF HEALTH AND | ) | 85-3376 | |
REHABILITATIVE SERVICES, | ) | 85-4124 | |
) | 86-0905 | ||
Respondent. | ) | ||
) | |||
)
RECOMMENDED ORDER
The final hearing in this case was held in Tampa on July 21 and 22 and in Tallahassee on July 28 and 29, 1986. The parties ordered the preparation of a transcript of the final hearing which was filed on August 26, 1986. The parties requested and received until September 16, 1986, in which to file their proposed recommended orders, later extended to September 19, 1986, on unopposed motion.
Before the final hearing, the parties stipulated that the criteria found in Section 381.494(6)(c)6., 7., 10., and 11., Florida Statutes (1985), "are not applicable." During the final hearing, they also stipulated that criterion 13 of that statute
APPEARANCES
For Petitioner, Health Care Retirement Corporation of America:
Alfred W. Clark, Esquire
G. Steven Pfeiffer, Esquire
325 North Calhoun Street Tallahassee, Florida 32301
For Petitioner, Forum Group, Inc.:
R. Terry Rigsby, Esquire Susan Greco Tuttle, Esquire
Catherine Peek McEwen, Esquire
401 South Florida Avenue Tampa, Florida 33602
For Respondent, Department of Health and Rehabilitative Services:
B. Elaine New, Esquire Assistant General Counsel Department of Health and.
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32301 ISSUE
The issue to be determined in this case is whether Respondent, Department of Health and Rehabilitative Services, should grant the application of Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborough (HCR), Petitioner in Case No. 85-3217, or Forum Group, Inc., sponsor of Retirement Living of Hillsborough County (Forum), Petitioner in Case No. 85-3376, or both, for a certificate of need to construct and operate a 60-bed nursing home in Hillsborough County.
Paddock Meadows Convalescent Centers, Florida Convalescent Centers, Inc., and Angel1 Care, Inc., petitioners in Case Nos.
85-3362, 85-4124 and 86-0905, respectively, voluntarily dismissed their petitions shortly before the final hearing in this case. (Health Quest Corporation and Health Quest Realty (Hillsborough County), petitioners in Case No. 85-2923, voluntarily dismissed their petition on or about April 1, 1986.
FINDINGS OF FACT
The HCR Proposal.
Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborough (HCR), Petitioner in Case No. 85-3217, has been in the business of nursing home construction and operation for over 20 years. HCR currently operates approximately 10,000 beds in 17 states. It has developed over
200 facilities. HCR's proposed project would benefit financially to some extent from economies of scale of having a network of similar facilities.
HCR originally applied for a certificate of need to construct and operate a 120-bed nursing home in Hillsborough County. During the pendency of this proceeding, HCR down-sized its proposed project to 60 beds and made other amendments. The down-sizing and amendments are reflected in a supplemental application which was served on Respondent, Department of Health
and Rehabilitative Services (HRS), but was not filed with the local health council. It is not clear whether the supplemental application was filed with HRS's Office of Community Medical Facilities.
The supplemental application adopts by reference but does not re-type certain portions of the original application. Those portions of the original application were not introduced in evidence or otherwise made a part of the record of this proceeding.
In HCR's supplemental application, the down-sized 60-bed nursing home is accompanied by a 60-bed adult congregate living facility housed in the part of the building originally proposed to house another 60 nursing home beds. In addition, the supplemental application reflects a new emphasis on treatment of patients with Alzheimer's and related diseases (dementia).
HCR proposes a facility which will include a 60-bed nursing home, an adult congregate living facility, and an adult day-care component. The facility will offer programs specially designed for Alzheimer's disease victims, and, in its adult day care and assisted living areas, will provide programs which are designed to delay institutionalization as long as possible. The facility will provide staffing and special capabilities to accommodate the unique characteristics of dementia (Alzheimer's) patients, to allow the wandering Alzheimer's patient more freedom, and to shelter the non-dementia (non-Alzheimer's) patient from unnecessary contact with the dementia (Alzheimer's) patient.
Alzheimer's disease is a progressive, organic brain disease which causes brain cells to die at a rate much more rapid than in the normal aging process. As the brain slowly dies and degenerates, other functions of the body dependent upon the brain's messages begin to deteriorate. The initial effects of the disease, such as forgetfulness and disorientation, are subtle, but the disease progresses through several stages where, increasingly, the disease victim is unable to perform normal daily functions or care for himself and, ultimately, loses the ability to control basic bodily functions and becomes bedridden.
Alzheimer's disease is a disease of the elderly victims at two levels of the disease require inpatient care. Some victims develop psychiatric manifestations of the disease and short-term hospitalization or stabilization to enable the family caregiver to manage the patient still in the home setting. As victims reach the later stages of the disease, caregivers must consider institutional placement in a setting where there is a 24-hour-a-day care, seven days a week. In these later stages,
the patients require total care which usually cannot be managed on a full-time basis at home, particularly by persons without significant resources. The primary caregiver of Alzheimer's disease patients is an older spouse, but in some instances it may. be an adult child.
Ideally, inpatient programs for Alzheimer's disease victims would be designed with a continuum of care to minimize frequent changes in the victim's environment. In other words, the Alzheimer's care program would offer a range of care for patients who move through the various stages of Alzheimer's disease, from ambulatory to bed bound.
Day care is an important component of the continuum development of Alzheimer's components for day-care programs in of care in an Alzheimer's program, because it offers rest to the family by placing the victim in a special care facility for a full day. The State of Florida allocated resources for the 1985 legislative session.
Sophisticated, high-tech nursing care is required for patients in the later stages of the disease who have lost the ability to swallow, feed themselves, and perform other necessary/ bodily functions. Providing care from day care through high-tech care in the same facility minimizes frequent relocation of the Alzheimer's patient and facilitates the family coming to terms with the final outcome of the disease, where the family must relinquish total care to an institution.
Alzheimer's disease victims in the middle and late stages of the disease who are still ambulatory exhibit the tendency to wander aimlessly. Nursing home care for such victims must provide a safe and secure environment in which the Alzheimer's patients may wander without endangering themselves or others. Otherwise, these patients will wander away from the facility and get lost or wander into dangerous traffic situations.
Alzheimer's victims often disrupt the routine of non- Alzheimer's patients and the staff of the facilities by their constant wandering and by entering other patients' rooms and going through other patients' belongings. Special Alzheimer's units expect this behavior and make provisions to control it without physical or chemical constraint.
In state-of-the-art Alzheimer's care, the physical nature of the decor and design of a nursing home appropriate for Alzheimer's care ideally would provide a safe and secure environment for the wandering, unstable Alzheimer's victim and provide a pleasant, therapeutic environment which copes with the
patient's lost ability to synthesize data. Fixtures in the nursing home would be appropriately designed to enable the Alzheimer's patient to distinguish between significant fixtures, such as commodes, sinks, and wastebaskets.
Ideally, activity areas for Alzheimer's patients would be separate from other nursing home patients, because of the Alzheimer's patient's disruptive wandering, absence of inhibitions and short attention spans which require a variety of activities and programs to accommodate.
The staff of an Alzheimer's care program must be able to deal with the Alzheimer's patient. The staff will seldom see any improvement in the condition of the patient and will seldom get any positive feedback from the patient. Staffing patterns in Alzheimer's programs need to be more intense than average because the staff must deal with patients who have lost the ability to care for themselves. There is a need for closer supervision than is needed by the typical nursing home patient. Such a program also requires a social worker to develop the individual treatment plan for the patient and an occupational therapist to teach the patients those functions which the patients are continually losing.
An Alzheimer's program within an adult congregate living facility is within the continuum of care required for some patients. The care provided here is less intense than that provided in a nursing home. However, once the victim loses basic bodily functions and begins wandering, the adult congregate living facility is no longer able to deal with these patients. Adult congregate living facilities and boarding homes in Hillsborough which accept Alzheimer's victims are frequently required to discharge such victims when the care becomes too difficult.
In Hillsborough County, there are no nursing homes which provide state-of-the-art inpatient care designed for the care and treatment of Alzheimer's disease patients. Although there are two adult congregate living facilities in Hillsborough County which accept Alzheimer's disease patients, these facilities do not have safeguards for the wandering patient.
Nursing homes traditionally deal with wandering Alzheimer's patients by physically restraining the patients or by chemically restraining the patients through the use of drugs. A state-of-the-art program designed to meet the special needs of Alzheimer's disease victims eliminates or reduces the need for physical and chemical restraints.
HCR intends to offer a service, from day care through inpatient nursing care, that is designed for the needs of the typical Alzheimer's patient. In addition to the Alzheimer's patient, many patients not diagnosed as Alzheimer's disease victims but who are cognitively impaired (suffering from dementia) would also benefit from the service designed for the Alzheimer's patient. The adult day-care portion of the facility will allow the Alzheimer's victim to remain at home much of the day but allow the family and the well spouse to have time to provide for their own personal needs. The assisted living (adult congregate living) portion of the facility would be available for Alzheimer's victims not requiring advanced nursing care and would be available as a facility where the well spouse and the Alzheimer's victim could live together and both benefit from support services. The nursing home portion of the facility would offer special designs and programs to meet the needs of a maximum of 15 Alzheimer's patient in the middle stages, where wandering is a particular problem, as well as the needs of patients in the latter stages and death. The care available for the Alzheimer's disease victim in the latter stages of the disease (high-tech care) will also be available and appropriate for patients discharged from acute care hospitals who still need nursing care prior to returning home.
The level of staffing provided in the HCR facility is higher than one would expect to find in the typical nursing home. The staffing proposed assumes that 15 of the patients will be Alzheimer's wanderers. HCR proposes a staffing higher than the typical nursing home because of the personal attention required for state-of-the-art Alzheimer's patient care and HCR's intent to reduce the amount of medication and physical restraint imposed upon the Alzheimer's patient. Increased staffing will encourage the Alzheimer's patient to retain whatever cognitive capabilities they have for as long as possible and will reduce the disruption experienced in a normal nursing home when the Alzheimer's disease patients wander, disrupt other patients, and generally disrupt the nursing home.
The HCR facility will provide an area for wandering patients and a fenced courtyard which will allow wandering patients to have outside activity without danger of leaving the facility. The facility includes a therapeutic kitchen important to the Alzheimer's patient who retains some cognitive recognition of kitchen activities. A separate dining room for the Alzheimer's patient will be provided in order to accommodate the increased spillage experienced by Alzheimer's patient and the risk of incontinence, which is very disruptive and disturbing to non-Alzheimer's patients. wandering patients will be continuously monitored through the use of an electronic wristband which will prevent the patient from wandering outside of the
facility and those areas where the wandering patient could cause problems.
Dementia patients are now being cared for and treated in existing nursing homes in Hillsborough County. There was no persuasive evidence that patients have been denied access to nursing home beds in Hillsborough County. The features proposed in HCR's supplemental application would allow HCR to provide better quality care and treatment for those patients. However, HCR has only committed to treat up to 15 Alzheimer's patients in the "wandering" stage. That degree of commitment and the extent to which those special features for the care and treatment of dementia patients are needed would not themselves justify the proposed project absent an overall need for additional nursing home beds.
HCR is in the process of purchasing four existing. nursing homes from Care Corporation. HCR did not prove that it has studied whether renovation of those facilities to accommodate special features for the care and treatment of Alzheimer's patients would not be less costly, more efficient or more appropriate alternatives to this proposed project or that they are not practicable.
The project proposed in HCR's supplemental application is immediately and long-term financially feasible. HCR is a subsidiary of Owens-Illinois. On December 31, 1985, Owens- Illinois had total assets of approximately $3.3 billion, total current assets of approximately $903 million, and cash of approximately $47 million. Meanwhile, current liabilities were approximately $723 million and total shareholders' equity was approximately $1,559,000,000. In addition, HCR proved that it would be able to finance the approximately $2.2 million total project costs by borrowing 75% at favorable interest rates and funding the remaining 25% out of HCR's equity. Making reasonable, conservative assumptions--including an 11.5% interest rate, a January 1989 opening of the facility, and 40% Medicaid utilization on a patient day basis--the project can be anticipated to break even during year two of operation and earn approximately $158,000 during year two of operations.
The nursing home portion of the facility and the day- care element adjacent to the nursing home portion will comprise 25,000 square feet; the nursing home portion alone will contain 23,000 gross square feet, or 383 gross square feet per bed. The construction costs for the nursing home and day-care portion of the facility will be $1,458,000, or $58.32 per square foot for the 25,000 square foot area; the cost of construction for the 23,000 gross square foot for the nursing home portion is
$1,341,360. The cost per bed for construction of the nursing
home portion of the facility is $22,356. The total project costs for the facility estimated by HCR and the cost per bed of the facility includes both the nursing home and adult day-care portion of the facility; when the adult day-care portion of the facility (8 percent of the construction costs) is taken into consideration, the total project cost becomes $2,083.360, at a cost per bed of $34,722.
The estimated project cost for the nursing home portion of HCR's proposed facility is as follows: Feasibility studies
$15,000; legal and accounting fees $32,000; plan review $8,000; subtotal of project development costs (the foregoing three items)
$55,000; costs for financing $120,000; architectural and engineering fees $15,000; site survey and soil investigation
$5,000; subtotal of the foregoing professional services $20,000; construction costs $1,458,000 (which includes the day-care portion of the facility but would be reduced to $1,341,360 for the nursing home portion alone); equipment costs $222,000; land acquisition costs $200,000; interest during construction
$125,000; total project costs $2,200,000 ($2,083,360 when the adult day-care portion of the facility is excluded).
All 60 of the nursing home beds in HCR's proposed facility will be certified both for Medicare and Medicaid utilization. However, in its supplemental application, HCR limits its commitment to serve Medicaid patients to 40% of its patient days. The increased cost of special features for Alzheimer's patients influenced HCR's financial decision not to commit to a higher percentage of Medicaid utilization.
HCR has received approximately 13 certificates of need to develop nursing homes in Florida. HCR has completed three nursing homes, and HCR has seven projects under construction. Various difficulties prevented HCR from initiating construction of three projects for which it received certificates of need in 1981 and 1982. HCR has experienced no problems in initiating construction of its certificates of need obtained since that time, and its experience in Florida renders it unlikely that its previous failure to commence construction of facilities will reoccur.
HCR acknowledges that it has previously sold and does not now operate nursing homes for which it had obtained certificates of need in Florida. However, these sales were facilities in the same building as the nursing home. A dietician and central kitchen and central laundry will serve all three levels. Housekeeping, building supervision, building plant, and other building maintenance operations will be centralized, saving some expenses.
The Forum Proposal.
Forum Group, Inc., sponsor of Retirement Living of Hillsborough County (Forum), Petitioner in Case No. 85-3376, is a general partner in a Florida partnership named Retirement Living of Hillsborough County. Forum originally applied for and continues to apply for a certificate of need to construct and operate a 60-bed nursing home. Like the project proposed in HCR's supplemental application, Forums proposal includes aspects in addition to the nursing home. Forum's proposed nursing home would be connected to a 15-bed wing of private rooms for patients who need assistance in their personal care and access to some of the capabilities of a nursing home on an intermittent basis but do not need nursing home care full-time. This is-bed wing would have separate dining facilities. This "personal care unit" will cost patients approximately $40 to $60 a day.
In Forum's proposed nursing home, three wings, like the "personal care unit," would radiate from a hub where the nursing station would be located. Twenty of the sixty beds would be in private rooms occupied by private patients. Ten of those beds would be designated for skilled nursing care and ten for intermediate care. Of the 40 beds located in 20 semi-private rooms, 36 would be certified for Medicaid use, leaving 4 to be certified for Medicare use. Eighteen of the 40 beds would be for intermediate care, and 22 of the 40 beds would be for skilled nursing care. Forum's skilled nursing care would include "hi- tech" skilled nursing comparable to HCR's.
A central corridor with central kitchen facilities and building maintenance facilities connects the three nursing home wings and the personal care unit wing with a retirement living center. The retirement living center will be able to accommodate
120 residents. Residents will be under a one year lease arrangement instead of an endowment-type arrangement. Monthly lease payments will probably fall between $950 and $1700 per month. The rental includes one meal a day in the retirement living center's dining room, weekly house cleaning, 24-hour security, transportation by automobile to appointments, banks, and doctor's offices and by mini-bus to shopping and theatres, availability of an on-call nurse, utilities, taxes, and the. services of a social director. The retirement living center will be marketed as a luxury facility to elderly persons approximately
75 years of age with an annual income of between $15,000 and
$35,000.
Forum projects initial utilization of all 36 Medicaid certified beds by Medicaid patients, resulting in 60% Medicaid utilization by patient day. However, that percentage would change with time. At first, residents of the retirement living
apartments would not be expected to move immediately to the nursing home portion of the facility. The projected fill-up for the nursing home portion initially would not be derived from the initial fill-up of the retirement living apartments. Eventually, however, 10 to 15% of the residents of the retirement living apartments would require nursing home care, and approximately 50% of the patients in the nursing home will be, former residents of the retirement living section. In 10 to 12 years, the percentage of Medicaid utilization can be expected to drop, with a floor of approximately 45% Medicaid utilization by patient day.
Like HCR's proposed project, Forum's proposal will benefit financially to some extent from the location of other facilities in the same building as the nursing home. A dietician and central kitchen and central laundry will serve all three levels. Housekeeping, building supervision, building plant, and other building maintenance operations will be centralized, saving some expenses.
Like HCR, but probably not to the same extent, Forum would be able to benefit financially to some extent from the economies of scale of having a network of similar facilities (including approximately 11 facilities like the proposed project and approximately 20 free-standing nursing homes.)
Location of the retirement center and the personal care unit in the same building with the nursing home will afford Forum some advantages in caring for its nursing home patients. First, some of the patients can be expected to use two or all three of the levels of care available in the complex as their medical condition worsens or, in some cases, improves. This would aid in the continuity of Forum's care and reduce the emotional strain of changing levels of care (since the patients do not have to move to a totally new location and environment.) Second, to the extent nursing home patients continue to have an independent means to pay to reside in the retirement living center or the personal care unit, those patients will have an incentive to improve their health so as to be able to move back to the retirement living center or personal care unit from the nursing home unit. (Obviously, these benefits would not apply to Medicaid patients in the nursing home.) Third, general education in health and hygiene of persons residing in the retirement living center and personal care unit will help to some degree in keeping them out of the nursing home or aiding their recovery if in the nursing home for short-term care.
Like HCR, Forum also has the ability to provide quality nursing home care. However, Forum's proposal does not have the special features for care of Alzheimer's disease and other dementia patients proposed by HCR in its supplemental
application. While some of those state-of-the-art special features could be incorporated by Forum during construction of its proposed nursing home, others could not, and Forum does not have the overall emphasis or commitment to provide those special features that HCR does.
The total cost of Forum's nursing home proposal is approximately $2,200,000. This includes no interest cost during construction since Forum has decided to, and has the financial ability to, pay for the construction entirely out of its cash reserves. Forum has approximately $40,272,000 in cash assets.
It has approximately $69,210,000 worth of current assets and only approximately $23,192,000 worth of current liabilities. Its total assets are approximately $290,747,000 and it has approximately $151,155,000 worth of common shareholders' equity. Its net income for the fiscal year ending March 31, 1986, was approximately $15,012,000. As a result, Forum's nursing home proposal is immediately financially feasible.
Making reasonable, conservative assumptions including 13% interest on borrowed capital, late 1987 or early 1988 occupancy and 60% Medicaid utilization by patient day, Forum's nursing home proposal probably will break even in mid-year two and will earn approximately S69,000 net income in year two of operations.
The following are Forum's final project development costs: feasibility studies $20,000, legal and accounting fees
$30,000, development expenses $10,000, subtotal of the foregoing three categories $60,000; architectural and engineering fees
$70,000, site survey and soil investigation $15,000, for a total cost for professional services total of $85,000; site preparation work $40,000, construction costs of $1,345,598, and contingency fees of $45,661, for a total construction cost of $1,390,258; fixed equipment cost of $65,998, moveable equipment cost of
$128,850, tax-freight contingency and escalation provisions of
$44,160 for a subtotal of equipment costs of $239,000; land acquisition of costs of $400,000, no interest costs during construction, pre-opening expenses' of $25,000, and, finally, a total project cost of $2,199,258. The expected construction cost per bed comes to approximately $23,171, and the total cost per bed comes-to approximately $36,165.
HRS Rule Need Methodology.
Rule 10-5.11(21)(b), Florida Administrative Code, provides the HRS bed need rule methodology for determining projected need for new or additional community nursing home beds. The methodology provided in Rule 10-5.11(21) is as follows:
Departmental Goal. The Department will consider applications for community nursing home beds in context with applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (d), (e), (f), (g), and (h) of this rule.
Need Methodology. In addition to other relevant statutory and rule criteria to be used in considering the allocation of new or additional community nursing home beds, the Department will determine if there is a projected need for new or additional beds three years into the future according to the methodology specified under subparagraphs 1 through 10. This methodology provides for adjustments to current community nursing home bed rates based upon expected changes in the proportion of district residents age 75 + and the current utilization of community nursing home beds in the subdistricts designated by local health councils. In districts with a high proportion of elderly residents living in poverty, the methodology specifies a minimum bed rate.
A = (POPA X BA) + (POPB X BB ): Where: A is the district's age-adjusted
Number of community nursing home beds for the
review cycle for which a projection is being made.
POPA is the population age 65-74 years in relevant departmental district projected three years into the future.
BA is the estimated current bed rate for the population age 65-74 years and over in the relevant district.
BB is the estimated current bed rate for the population age 75 years and over in the relevant district.
BA=LB/POPC + (6 X POPD):
Where: LB is the number of licensed community nursing home beds in the relevant district.
POPC is the current population age 65-74 years.
POPD is the current population age 75 years and over.
BB = 6 X BA
SAA X (LBD/LB) X (OR/.90):
Where: SA is the preliminary subdistrict allocation of community nursing home beds.
LBD is the number of licensed community Nursing beds in the relevant subdistrict.
Or is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district.
Review of applications submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March preceding that cycle; applications submitted for the January batching cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle. For the purposes of this rule, the occupancy data to be considered shall be that collected by the Department's Office of Healthcare Planning and Development or a contractor assigned to collect the data.
In departmental districts where the percentage of persons age 65 and older living in poverty, according to the latest available
U.S. census, exceeds the statewide average poverty rate for the 65 and older population and the sum of the currently licensed and certificate of need approved beds for community nursing homes within a district is
less than 27 beds per thousand residents age
65 and older, the district shall be allocated a total of 27 community nursing home beds per thousand residents age 65 and older in the current year. This allocation is expressed as follows:
If (Ls + AB ) /POPE is less than 27/1000 and PBD is greater than PBS, then:
PA(27 X POPE)/1000
Where: AB is the number of certificate of need approved beds for community nursing homes in the relevant district.
PBD is the percentage of persons age 65 and older below the poverty level within the district.
PBS is the percent of persons age 65 and older below the poverty level within the state.
PA is the poverty-adjusted number of beds in the relevant district.
POPE is the sum of POPC and POPD.
* * *
9. The net bed allocation for a sub-district which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90% of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs
1 through 9 unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80%, in which case the net bed allocation is zero.
Prior to August 20, 1985, HRS had a long-standing policy interpreting the methodology as requiring use of population and occupancy rate at the time of the formal administrative hearing, if any, as the current population (POPC and POPD) and occupancy rate (OR) in the formula. HRS also subtracted the number of nursing home beds licensed and approved as of the date of the formal administrative hearing, if any, from the gross number of nursing home beds needed to determine the net
need for nursing home beds proposed in a pending certificate of need application.
Since the decision in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 483 So. 2d 700 (Fla. 1st DCA 1985), modified on rehearing (Fla. 1st DCA 1986),
HRS adopted a new policy interpreting its rule methodology and the Gulf Court decision. HRS now interprets Gulf Court's reference to a "fixed pool of beds.' available in a given
certificate of need application batching cycle to fix the health planning horizon in the rule methodology at three years into the future from the filing deadline for the certificate of need application batching cycle in question. Accordingly, POPA and POPB under the rule methodology represents the most current projection of population in the respective age cohorts on the fixed planning horizon. As before the Gulf Court decision, all other elements of the methodology including the figures for POPC, POPD, and OR are updated to the time of the formal administrative proceeding.
Under its policy interpreting the rule methodology and the Gulf Court decision, HRS obtains the subdistrict occupancy rate (OR), by taking the average occupancy rate during the most recent six-month period for which data is available--in this case, from October 1, 1985 through March 31, 1986. However, the current population figures (POPC and POPD) HRS uses are the figures available closest to the date of the formal administrative hearing in this case on July 1, 1986. Under its policy, the occupancy rate (OR) does not relate to the figures for current population (POPC and POPD) to which it logically should relate. HRS did not satisfactorily explain the rationality of its policy. Meanwhile, there was ample evidence supporting the rationality of using as POPC and POPD the population at the midpoint of the time period used force determining occupancy rate (OR). In this case, since occupancy rate (OR) is determined by averaging the occupancy rates during the period from October 1, 1985 through March 31, 1986, the current population (POPC and POPD) should be the populations of the respective age cohorts on January 1, 1986.
Otherwise, HRS' policy interpreting its rule methodology and the Gulf Court decision is a rational effort to reconcile the Gulf Court decision with the certificate of need statute, other conflicting court decisions and principles of sound health planning. It suffices here to say that, notwithstanding the Gulf Court decision, the evidence in this case does not establish the existence of a "fixed pool" of needed nursing home beds for which the applicants in this case applied. See Conclusions of Law 1 through 13 below. In addition, sound health planning not only dictates the use of the most recently
available population projections (POPA and POPB) and the most current data (POPC, POPD, and OR) for determining current bed rates (BA and BB) under the rule methodology, but also would counsel against relying on state or district health plan determinations of a "fixed pool of beds" based upon inferior data and evidence. Departure from these sound health planning principles is likely to result in certificates of need for nursing home beds that are not needed or, in some cases, the denial of certificates of need for nursing home beds that are needed. See Appendix, paragraph B.4, below.
For purposes of calculating need under the HRS rule need methodology, the appropriate health planning district is District VI, and the appropriate subdistrict is Hillsborough County.
There currently are 5,617 licensed nursing home beds in District VI (LB).
The District VI population for persons aged 65 to 74 on January 1, 1986 (POPC) is 131,501. The District VI population for persons aged over 75 for January 1, 1986 (POPD) is 91,433.
The bed rate for the portion of the current population aged 65 to 74 (BA) is 0.008259. The bed rate for the portion of the current population aged over 75 (Bs) is 0.049554.
The projected District VI population for persons aged
65 to 74 on January 1, 1988 (POPA) is 139,903. The projected District VI population for persons aged over 75 on January 1, 1988 (POPD) is 100,175.
Using the bed rates for the two age cohorts (BA
and BB) and the projected populations for those age cohorts on January 1, 1988 (POPA and POPB), the gross projected District VI nursing home bed need for January 1, 1988 (A) is 6,119.6.
The occupancy rate for District VI nursing home beds between October 1, 1985 and March 31, 1986 (OR) was 93.3646%. This was the most current figure available at the time of the hearing.
At the time of the formal administrative hearing, there were 2,512 licensed beds in Hillsborough County (LBD).
At the time of the formal administrative hearing, there were 368 approved nursing home beds for the Hillsborough County subdistrict (AB).
Using the figures for projected District VI bed need (A), licensed beds in District VI (LB), licensed beds for the Hillsborough County subdistrict (LBD) and the occupancy rate (OR), the allocation of nursing home beds for the Hillsborough County subdistrict (SA), is 2,839. The beds that will be available in Hillsborough County on January 1, 1988, is 2,843 (LBD plus .9 AB), leaving a surplus of 4 nursing home beds in Hillsborough County on January 1, 1988 under the HRS rule need methodology, as properly interpreted.
In District VI, the percentage of persons aged 65 and older living in poverty, according to the latest available. U.S. census, exceeds the statewide average poverty rate for the 65 and older population, but the sum of the currently licensed and certificate of need approved beds for community nursing homes within District VI is approximately equal to 27 beds per thousand persons aged 65 and older, and no poverty adjustment is required under Rule 10-5.11(21)(b)5., Florida Administrative Code.
State Health Plan.
The State Health Plan endorses the concept of an integrated continuum of long-term care services.
Forum's proposal integrates retirement living with minimal skilled nursing care needs, skilled and intermediate nursing care in a nursing home setting, and personal assistance care a middle ground between the two.
Similarly, HCR's proposal integrates (1) adult congregate living with minimal requirement for skilled nursing care to limited nursing care provided to an Alzheimer's patient being primarily cared for by a spouse, and (2) skilled and intermediate nursing care in a nursing home setting, and (3) a range of specialized nursing services for the Alzheimer's patient in the second and third stages of the disease. The HCR proposal also integrates day care and respite services for Alzheimer's patients being cared for primarily for by relatives in their own homes.
Addressing a related concern, the State Health Plan also endorses pre-admission screening to determine the level of care needed by a potential nursing home patient. This serves to foster a system of health care that seeks to promote "wellness" and independence of the patient.
Both applicants will have some type of pre-admission screening process. Both applicants' proposals include on-site non-nursing home living facilities, and a decision would have to be made which of those two environments are appropriate for a
particular patient. Forum also has personal assistance care which would require more precise screening, and Forum appeared more intent on establishing effective pre-admission screening procedures and cooperating with the state-sponsored CARES (Comprehensive Assessment and Review for Extended services) program aimed at diverting potential patients who do not truly need nursing home services.
Both proposals also seek to promote "wellness" and independence of the patient. Both include less restrictive settings than nursing home care for patients who do not yet need full-time nursing services. For some patients, the less restrictive setting can serve as an incentive to recover from illnesses and shorten short-term nursing home stays. Again, Forum's proposal, with its three levels of care and more attractive retirement living setting, better fosters these objectives.
Finally, the State Health Plan highlights the elderly's need for information on providers' charge structures and acceptance of Medicaid/Medicare assignment. It expresses a goal of availability of services to the medically indigent, and recommends adherence to the applicable local health plan's expectations. See Finding Of Fact 61 below.
District VI Health Plan.
As its second priority, the District VI Health Plan states that applicants for a certificate of need for nursing home services in the Northwest subdivision of the Hillsborough County subdistrict should commit, at minimum, 18.6% of its services to the care of Medicaid eligible patients. Forum's application commits 60% of its patient days to Medicaid during the first year of operation. HCR's commitment is only 40%. However, HCR's commitment is on a permanent basis, and Forum's actual Medicaid utilization can be expected to drop over the first ten years of operation with a floor of approximately 45%.
The actual percentage of Medicaid days for the period January to March 1986, for Hillsborough County was 70%.
The District VI Health Plan also ranks the Northwest subdivision of the Hillsborough County subdistrict as the first priority for location of new or additional nursing home services when needed in District VI. Both applicants propose to locate their projects in the Northwest subdivision of the Hillsborough County subdistrict.
Another priority in the District VI Health Plan is to give preference to applicants with a documented history of
implementing their certificates of need within the statutory time frames. Forum had no history in Florida but a good record of follow-through elsewhere. HCR has a history of mixed results in Florida but offered good explanations for the instances of delay in implementing certain certificates of need in earlier years, and the evidence was not persuasive that either Forum or HCR should be given a competitive advantage regarding this priority.
The District VI Health Plan sets a 90% occupancy threshold for the continuous period of six months before additional beds are approved. This threshold has been met in Hillsborough County for at least three years. Current occupancy in Hillsborough County is 93.3646%.
The District VI Health Plan states that applications for additional nursing home beds in a subdistrict should be considered against the availability of alternative forms and settings for long-term care. In this case, there was no evidence of alternatives to nursing home services other than the alternatives within the proposed projects. However, neither of the applicants will go forward with the retirement living or personal assistance care or adult congregate living alternatives without the attached nursing home. No specialized state-of-the- art Alzheimer's disease programs are now available in District
VI. See Finding Of Fact 71 below.
The District VI Health Plan states that applications should be reviewed with the goal that nursing home services be within 30 minutes travel time of 90% of urban residence and 45 minutes of 90% of rural residents. There was no evidence in this case regarding geographic access of the urban and rural populations or that the proposed projects would make
Finally, the District VI Health Plan states that applicants should be evaluated as to their achievement of superior quality ratings by HRS and other indications of quality as available. Both applicants adequately establish that they will be able to provide quality nursing home services. It can be anticipated that both will seek and obtain a superior rating for its proposed facility.
Other Pertinent Criteria.
Both applicants propose projects which will be accessible to schools for health professions in Hillsborough County, such as colleges and trade schools for training and teaching purposes.
In addition to its Medicaid utilization commitment previously discussed. Forum will establish a $10,000 fund, to be
replenished annually, for indigent patients to draw upon as necessary for payment of nursing home services. This fund is intended to address, for example, the circumstance that could arise if a private pay nursing home patient runs out of money and all 36 Medicaid-certified nursing home beds are occupied. Unless the fund pays for the patient, the patient would have to be transferred to another nursing home. However, Forum does not yet nursing home services accessible to residents now outside the applicable travel time have any guidelines or criteria for the operation of the fund.
Both Forum and HCR propose facilities to provide nursing home services. Neither applicant seeks to justify the need for its proposed nursing home on need for services that can be provided other than through a nursing home. No applicant in this batching cycle seeks to add beds as an alternative to new construction. Existing nursing home beds are alternatives to the proposals only if there is no need for additional nursing home beds.
There is no existing alternative to the special Alzheimer's program proposed by HCR. Existing nursing homes serve Alzheimer's patients but not with state-of-the-art nursing home care. However, renovation of facilities HCR is in the process of purchasing from Care Corporation to accommodate special features for the treatment of Alzheimer's patients might be an alternative to the construction of a new nursing home for the purpose of providing those services. HCR did not prove that it has studied those alternatives and found either that they would not be less costly, more efficient or more appropriate or that they would not be practicable.
Both HCR and Forum, through their network of retirement centers and nursing homes, generate economies of scale in centralized operations and management functions and in acquisition of equipment. As a larger nursing home company, HCR's economies of scale would be greater than Forum's. In addition, by combining different levels of care on one campus, both applicants can enjoy further economies in dietary, laundry, medical supply and bookkeeping operations.
Both HCR and Forum can adequately meet manpower requirements for their proposed facilities with a combination of in-house transfers and recruiting from the local community.
There was no evidence that approval of a new 60-bed nursing home facility in Hillsborough County would have a significant negative impact on the financial viability of existing nursing homes.
Current occupancy rates are high, reducing patients' choice in the selection of a nursing home. The last 240 nursing home beds
opened to patients in Hillsborough County quickly were absorbed by the demand for those services.
Neither HCR nor Forum now own or operate a nursing home in the Tampa Bay area. However, HCR is in the process of acquiring four nursing homes from Care Corporation. As a result, HCR would have more control over the market than Forum and would have the potential eventually to use its market power to decrease competition. But at this time, it can be anticipated that either proposal would foster competition and promote quality assurance and effectiveness.
Balanced Consideration of the Criteria.
HCR and Forum are worthy applicants who have conceived and proposed nursing home projects worthy of consideration. However, balancing consideration of all of the criteria, and giving due weight to the HRS rule need methodology, it is found that there is no need at this time for a new 60-bed nursing home in Hillsborough County. There is no numeric need under the rule, and no special circumstances were proved by documentation of denied access to currently licensed but unoccupied beds or of need exceeding the number of licensed unoccupied and currently approved nursing home beds. Meanwhile, the special Alzheimer's program HCR proposes does not independently support construction of a new 60-bed nursing home. Renovation of the four nursing homes HCR is in the process of purchasing from Care Corporation might be a less costly, more efficient and more appropriate alternative to construction of a new 60-bed nursing home to provide special Alzheimer's programs in Hillsborough County. However, if there were a need for 60 additional nursing home beds, HCR's Alzheimer's program would be enough to give it a competitive advantage over Forum's proposal.
CONCLUSIONS OF LAW
Overview Of Pertinent Certificate Of Need Law.
Applications for certificates of need to construct and operate nursing homes in Florida generally are governed by Section 381.493, et. seq., Florida Statutes (1985).Specifically, applications are reviewed in the context of the criteria that appear in Section 381.494(6)(c), Florida Statutes (1985). In addition, Respondent, Department of Health and Rehabilitative Services (HRS), is authorized, under Section 381.494(8)(b), Florida Statutes (1985), to promulgate "rules and minimum standards for the issuance of certificates of need." Under that authority, HRS has promulgated Rule 10-5.11, Florida Administrative Code (1984), which contains general criteria for the review of all certificate of need applications as well as a
rule bed need methodology which appears in subsection 21 of the rule. But identifying the statutes and rules that govern is easier than interpreting and applying them. Interpreting and applying the statutes and rules has become a risky business, partly because of the nature of certificate of need regulation and partly because of the appellate decisions in the area.
A desire at the federal governmental level to reduce or eliminate unnecessary duplication of health care facilities and services and to contain health care costs would appear to have been the primary motivating factor for enacting the certificate of need law. See Section 381.493(2), Florida Statutes (1985). One might therefore think that certificate of need regulation is fairly straight forward--a health care facility or service either is needed or is not needed. But this simple question does not have an easy answer. The governing Florida statute, Section 381.494(6)(c), and (d), Florida Statutes (1985), sets out thirteen criteria and five additional areas of inquiry in determining need. Some of these criteria and areas appear to overlap, some are mutually inconsistent and some are plain hard to understand. It is apparent from the statutory criteria that cost containment is not the only purpose to be served by the certificate of need statute.
Rule 10-5.11, Florida Administrative Code (1984), also reflects a view that Florida's certificate of need regulation should try to serve more than one purpose. The general criteria applicable to all applications for certificates of need reflect a desire to try to use certificate of need regulation not only to contain costs but also to ensure that health care services will be provided for Florida's indigent population. Rule 10-5.11(1) through (3), Florida Administrative Code (1984). In addition, the part of the rule establishing a specific nursing home bed need methodology cautions that HRS "will consider applications for community nursing home beds in context with applicable statutory and rule criteria" and "will not normally prove applications for new or additional community home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to exceed the number of nursing home beds calculated by the methodology. . . ." Rule 10- 5.11(21)(a), Florida Administrative Code. (Emphasis added.)
In time, the district courts of appeal were called upon for guidance in the proper interpretation and application of the certificate of need statutes and rules. Like HRS before them, the appellate courts were soon confronted with the problem of reconciling the conflicting goals and objectives of certificate of need regulation the desire for effective cost containment, the desire to provide health services for the poor, and the desire
for an efficient, effective and certain administrative processing of certificate of need applications. In Department of Health and Rehabilitative Services vs. Johnson and Johnson Home Health Care Inc., 447 So. 2d 361 (Fla. 1st DCA 1984), the court considered an HRS rule which prescribed as a minimum requirement for the issuance of a certificate of need for home health care that each existing provider must be seeing an average of 300 patients a day. It could be argued that the rule, fostered the objective of cost containment as well as the objective of efficient, effective and certain administrative processing of applications for certificates of need for home health care, but the court noted the criteria for evaluating certificate of need applications set out in Sections 381.494(6)(c), Florida Statutes (1983), and held:
The Hearing Officer correctly concluded that the rule of 300 precluded a balanced consideration of all the statutory criteria. (citation omitted.) The rule allows HRS to ignore some statutory criteria and emphasize others, contrary to the legislative purpose it is supposed to implement.
Id. at 363. The court decided that the rule exceeded delegated legislative authority and agreed with the Hearing Officer that the rule was invalid.
The courts have continued to require HRS to afford balanced consideration to all statutory and rule criteria in reviewing certificate of need applications and, as will be seen, has never totally abandoned that proposition. See Balsam vs. Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986); Humana, Inc. vs. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985); Collier Medical Center, Inc. vs. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985). But eventually, the courts also have been required to give further guidance how to apply the various HRS rule bed need methodologies.
In Turro vs. Department of Health and Rehabilitative Services, 458 So. 2d 345, 346 (Fla. 1st DCA 1984), the court accepted the proposition that the governing HRS rule need methodology "provided the only acceptable methodology for showing need 1
In Humana, Inc. vs. Department of Health and Rehabilitative Services, supra, the court was presented with a challenge to HRS' cardiac catheterization need methodology. Like the present nursing home bed need methodology, the rule being challenged contained "the proviso that the Department will not
normally approve new [cardiac catheterization] labs unless additional need is indicated by the formula methodology contained in Rule 10-5.11(15).Id. at 891. This was enough for the court to distinguish the rule under challenge in the Humana case, from rule of 300 that was under challenge in the Johnson and Johnson case:
Thus, the numerical factor does not rigidly control the granting or with-holding of approval. As pointed out by the hearing officer, should the formula methodology in Rule 10-5.11(15) result in an underestimation of the need for additional services in an area, the applicant has the opportunity to demonstrate need by showing that existing facilities are unavailable or inaccessible, the quality of care in the service area is suffering from overutilization, or by providing other information to illustrate that the situation is not "normal" in the service area.
Thus, the case law led to a series of cases raising the question what is "normal" and what is "abnormal." Some of the subsequent decisions seem to decide the question whether circumstances are "normal" by determining whether the factors relied upon to show "abnormal" circumstances already had been considered during promulgation of, and factored into, the rule need methodology under consideration. See Humana, Inc. vs. Department of Health and Rehabilitative Services, 492 So. 2d 388 (Fla. 4th DCA 1986) (also noting the absence of proof that, absent granting the application, existing facilities would be unavailable or inaccessible, that the quality of care would suffer from over-utilization, "or other evidence of that nature," citing Humana, Inc. vs. Department of Health and Rehabilitative Services, 469 So. 2d 889 (Fla. 1st DCA 1985); Health Care and Retirement Corp. of Amer. vs. Department of Health and Rehabilitative Services, 489 So. 2d 789 (Fla. 1st DCA 1986); Health Quest Realty XII vs. Department of Health and Rehabilitative Services, 477 So. 2d 576 (Fla. 1st DCA 1985).2
In the midst of these and other uncertainties in the certificate of need law, the First District entered three opinions on August 20, 1985: Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 483 So. 2d 700 (Fla. 1st DCA 1985), modified on rehearing, (Fla. 1st DCA 1986); University Medical Center, Inc., vs. Department of Health and Rehabilitative Services, 483 So. 2d 712 (Fla. 1st DCA 1985), modified on rehearing, (Fla. 1st DCA 1986); NME Hospitals, Inc.,
vs. Department of Health and Rehabilitative Services, 492 So. 2d
379 (Fla. 1st DCA 1985), modified on rehearing, (Fla. 1st DCA 1986).
In these cases, the court was analyzing the question whether an applicant in a later batching cycle was entitled to have its application reviewed comparatively against a previously batched applicant.
In Gulf Court, the court was presented a set of stipulated facts and was asked to decide whether those facts entitled the later batched applicant to comparative review with the earlier batched application. In reaching that decision, the initial opinion concluded that the applicable district and state health plans identify at the front end of the administrative process a "fixed pool" of beds or other needed health care investments for which applicants in a particular batching cycle apply. However, the court's opinion on rehearing, entered on February 14, 1986, states:
All facts and conclusions contained in our opinion were predicated on the pretrial stipulation of the parties and recommended order in the record of appeal, the agreed statement of facts in the briefs, and the applicable statutes and rules. These application for CON was addressed to an identifiable fixed pool of beds in one annual plan, while the applications of Provincial House and Beverly were originally addressed to another fixed pool of beds identified in another annual plan but were granted to meet the need described in Gulf Court's application.
* * *
Our decision is based on the federal and state statutes and rules in existence at the time the HRS order was entered. The decision concludes that such statutory language gave Gulf Court the right to a comparative hearing under the circumstances shown in this case.
The opinion should be read in this light, and the legal consequences of the decision should not be extended beyond the issues actually decided.
Substantial changes have been made to the cited Florida statutes and rules since 1982.
These changes have altered the methodology for determining bed need and may well affect the manner for determining what, if any, fixed pool of beds is involved in a particular application. We have not received briefs on any issues Concerning the effect of these subsequent statutory changes on the rights of the parties to this case and express no opinion thereon. The applicability of the changed statutes, and how the rationale of this decision must be applied in light of these statutory changes, are open questions.
Gulf Court, 483 So. 2d at 711.
The "fixed pool" concept also formed the framework for the opinion in the University Medical Center case. But the court, in its opinion on motion for rehearing entered February 13, 1986, distinguished University Medical Center from Gulf Court on the ground that the "stipulations of the parties" in Gulf Court established "the existence of the fixed pool of bed need" and the University Medical Center record did not. University Medical Center, 483 So. 2d at 717.
The opinion on rehearing in the NME Hospitals case also was decided and written upon the assumption that there existed in that case "fixed pools of beds,. for which the applicants in that case were applying. The court noted some differences between the stipulated facts in Gulf Court and the facts presented to the court in the NME Hospitals case. But the court decided:
"Nevertheless, it is similar to Gulf Court in that in both cases the applications as submitted were incomplete because the applicants failed to state how the proposed projects were consistent with the applicable health systems plans directed to the target years involved. Because the incomplete applications in both cases were never resubmitted following their denial, as provided by Rule 10-5.14, they should not have been submitted for review. As we stated in Gulf Court:
We conclude that a CON application for . . beds is required to address a specific bed need projected in the applicable district and state health plans. If the number of beds
covered by the application is not within the number identified in the plan, a decision to grant the application could not be consistent with the requirement in section 300m- 6(a)(5)(B)(ii), Title 42, U.S. Code, that each decision be consistent with the state health plan. 483 So. 2d at 706-07 (emphasis supplied).
We recognized in Gulf Court that an application may be considered complete and submitted for review only if it identifies the "plan and fixed pool of bed need on which it is based," and once "the application has been accepted as complete, it cannot thereafter be supplemented by additional information or amendment except in the special circumstances described in rule 10- 5.08(7) . . . before initial review and denial." Id. at 707.
NME Hospitals 492 So. 2d at 385-386.
In previous opinions, the court has said that applications for certificates of need must be reviewed by giving a balanced consideration to all of the statutory and rule criteria. See, for example, Department of Health and Rehabilitative Services vs. Johnson and Johnson Home Health Care, Inc., supra; Collier Medical Center, Inc. vs. Department of Health and Rehabilitative Services supra. The source of the First District's concept of a "fixed pool" of beds and other needed health care investments appears to be the applicable rule need methodology (if any) which is only one of the several criteria.
Under long-standing principles of administrative law, the criteria are balanced in a de novo administrative hearing in which the finder of fact, and therefore HRS itself, has the benefit of the best available evidence relevant to the criteria. See McDonald vs. Department of Banking and Finance, 346 So. 2d
569 (Fla. 1st DCA 1977).
The Gulf Court decision treats the implications of the McDonald decision and concludes:
The key to McDonald's holding that, evidence of changed conditions or circumstances should be considered in the 120.57 hearing is its requirement that such evidence be "relevant" to the application. Whether evidence is
relevant to a given CON application depends upon whether such evidence relates to the original fixed pool covered by that application or relates to another fixed pool identified in a subsequent amendment or update to the application.
Gulf Court, 483 So. 2d at 712. Gulf Court's interpretation of McDonald, therefore, does not itself change the long-standing principles announced in McDonald.
The First District has subsequently rendered decisions which appear to be inconsistent with the "fixed pool" concept. Balsam vs. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1986), required HRS to base its determination of the inventory of existing psychiatric beds based upon the better evidence presented at a 120.57 hearing instead of the inaccurate inventory available to HRS at the time the applications in question were filed and HRS initially denied the applications in free-form agency proceedings. obviously, existing inventory would be as important to determination of the "fixed pool" of needed beds as the determination of gross need. If the inventory can and should change as a result of the 120.57 hearing, there cannot have been a "fixed pool" of needed beds. But the Balsam decision does not distinguish the inherent conflict between it and the concept of a "fixed pool" as mentioned in the Gulf Court decision.3
The question of the correct inventory conflicts with the concept of a fixed pool. "In addition, most of the HRS rule methodologies contain language similar to that in Rule 10- 5.11(21)(a), Florida Administrative Code (1984), qualifying the conclusiveness of the rule methodology with the word "normally." As we have seen, the courts have discussed the "normally" qualification. See Conclusion of Law 6 above. But it still appears that the courts require that HRS give a balanced consideration to all of the statutory and rule criteria before determining if there is a need for the proposal in any particular certificate of need application. As a result, despite Gulf Court and the cases following it, it is questionable that there is always a "fixed pool" of beds or other health care investments which are identified at the front end of the certificate of need application process for which applications are made.
Policy Interpreting And Applying Gulf Court And Rule 10- 5.11(21), Florida Administrative code.
In face of the conflicts among the statutory and rule provisions, the Gulf Court "fixed pool" concept, the other
appellate decisions, and sound health planning principles, the primary legal question in this case is how Rule 10-5.11(21), Florida Administrative Code (Supp. 1985), and the Gulf Court decision should be interpreted and applied. In a good faith and reasonable effort to reconcile the conflicting authorities, HRS has interpreted them to fix the health planning horizon at three years into the future from the time of a nursing home certificate need application. This serves the purpose of the true holding of the Gulf Court decision that HRS should not be permitted to settle pending nursing home certificate of need litigation by awarding beds to an applicant which only become needed more than three years into the future from the filing of the application.
By fixing the planning horizon, applicants in later batching cycles can be assured that they will not be precluded from competing for the beds that become needed as a result of the later planning horizon. At the same time, HRS interpretation allows it to consider the best evidence available at the time of the formal administrative proceeding, if any, in determining the, need on the fixed planning horizon for the facility or service proposed in the application. In this way, both the purpose of the Gulf Court holding and the interests of sound health planning are served.
Contrary to the argument of HCR and Forum, HRS' interpretation does not shorten the planning horizon from three years to eighteen months. The planning horizon is fixed at the time of filing of the application at a point three years into the future. Use of the date of the formal administrative hearing in this case, eighteen months later as the data point for obtaining bed rates and occupancy rate to project need on the planning horizon does not change the planning horizon.
HRS' interpretation is not inconsistent with its rule methodology. Rather, the rule is ambiguous. Rule 10-5.11(21)(b) states in part:
(b) Need Methodology. In addition to other relevant statutory and rule criteria to be used in considering the allocation of new or additional community nursing home beds, the Department will determine if there is a projected need for new or additional beds three years into the future according to the methodology specified under subparagraphs 1 through 10. This methodology provides for adjustments to current community nursing home bed rates based upon expected changes in the proportion of district residents age 75 + and the current utilization of community nursing
home beds in the subdistricts designated by local health councils.
Under HRS' reasonable interpretation of this language, the planning horizon remains fixed while current population and occupancy rate data are updated to the time of the formal administrative hearing, if any.
On the other hand, defining OR (occupancy rate), Rule 10-5.11(21)(b)4 states in pertinent part:
OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March preceding that cycle; applications submitted for the January batching cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle.
HRS interprets the second sentence of the quoted part of Rule 10 5.11(21)(b)4 in accordance with its long-standing policy that it refers to the initial review of an application which results in preliminary, free-form agency action. This is reasonable in light of HRS' interpretation of the previously quoted part of Rule 10-5.11(21)(b) requiring "adjustments to . . . the current utilization of community nursing home bed" and in light of sound health planning principles.
Obviously, if Rule 10-5.11(21)(b) requires "adjustments to current community nursing home beds rates . . . and the current utilization of community nursing home beds." (i.e., under HRS' interpretation, updating of current bed rates and occupancy rate), current bed inventory a factor in both also would have to be updated. Accordingly, HRS also interprets Rule 10-5.11(21) (b)7 to refer only to initial review of an application again, in accordance with long-standing policy.
The courts have long recognized that they should defer to state agencies in matters of policy in areas for which an agency is responsible. Accordingly, an agency's interpretation of its own rules is entitled to great weight and persuasive force in the appellate courts. Humana, Inc. vs. Dept. Of Health and Rehabilitative Services, supra 492 So. 2d 388 392 Federal Property Mgt. Corp. vs. Dept. of Health and Rehabilitative Services, at 477; Cohen vs. School Board of Dade County, 450 So. 2d 1238, 1241 (Fla. 3rd DCA 1984); Franklin Ambulance Service vs.
Dept. of Health and Rehabilitative Services, 450 So. 2d 580 (Fla. 1st DCA 1984); Dept. of Commerce, Div. of Labor vs. Matthews Corp., 358 So. 2d 256 (Fla. 1st DCA 1978). The agency's interpretation simply may not be inconsistent with the rule, as written. Section 120.68(12)(b), Florida Statutes (1985); Kearse vs. Dept. of Health and Rehabilitative Services, 474 So. 2d 819 (Fla. 1st DCA 1985).
In this case, HRS' interpretation of the parts of Rule 10-5.11(21) discussed so far in these Conclusions Of Law not inconsistent with the language of the rule. It is a reasonable and logical interpretation of the rule, to the extent that the rule is ambiguous.
On the other hand, under HRS's proposed interpretation of Rule 10-5.11(21), Florida Administrative Code, HRS would use as the current population for purposes of determining bed rates the population at a time after the period during which data is collected for determining occupancy rate at existing nursing homes in Hillsborough County. Bed rate and occupancy rate are two important factors in application of the rule need methodology. Bed rates and occupancy rate logically relate to one another. In other words, the rule methodology inquires both into the bed rates at a particular point in time and into the occupancy rate at that time in order to reach a rational result. Bed rates and occupancy rate must therefore be calculated at the same point in time. Because it does not do so, HRS' proposed interpretation is illogical and irrational. Current population (and therefore the bed rates) should be determined at the mid- point of the period during which data is collected for determining occupancy rates in this case, January 1, 1986. In a
120.57 proceeding, it is the responsibility of the Hearing
Officer to recommend against an agency interpretation of a rule that would lead to an illogical and unreasonable result. See McDonald vs. Dept. of Banking and Finance, supra.
Under this recommended interpretation of Gulf Court and Rule 10-5.11(21), Florida Administrative Code (1984), a net surplus of four nursing home beds in District VI is calculated on the planning horizon, January 1, 1988. There are now approximately 27 nursing home beds in District VI per 1,000 population 65 and older. Therefore, no poverty adjustment is required under Rule 10-5.11(21)(b)5, Florida Administrative Code (1985 Supp.).
Balanced Consideration Of The Criteria.
Rule 10-5.11(21)(b)10, Florida Administrative Code (1985 Supp.), specifies: In the event that the net bed allocation is zero, the applicant may demonstrate that
circumstances exist to justify the approval of additional beds under the other relevant criteria, specifically contained in the Department's Rule 10-5.11." The rule goes on to specify a means by which an applicant can do this, but does not specify that it is the exclusive means. Neither HCR nor Forum proved the facts necessary to utilize the means specified in Rule 10-5.11(21) (b)10.
HCR and Forum did attempt to prove other circumstances that would justify approval, including high occupancy rates in existing nursing homes, fast growing population age 75 and above, and rapid fill-up of new nursing homes. The first two of those circumstances, among others, were held in Health Quest Realty XII vs. Department of Health and Rehabilitative Services, 477 So. 2d 576, 578-579 (Fla. 1st DCA 1985), to have been "considered in the bed need methodology" and therefore not adequate to justify approval. In Health Care and Retirement Corp. vs. Department of Health and Rehabilitative Services, 489 So. 2d 789, 792 (Fla. 1st DCA 1986), the court held that those two factors and rapid fill- up of recently licensed nursing homes all are factors "already taken into account by the bed need methodology and do not therefore warrant a deviation from the application of the methodology." In Federal Property Management Corp. vs. Department of Health and Rehabilitative Services, 482 So. 2d 475, 477 (Fla. 1st DCA 1986), the court upheld HRS' determination that the first two factors (among others) did not "reach the level of exceptional circumstances so as to justify deviation from the rule methodology. "
It is therefore concluded, as it already has been found in the Finding Of Fact, that the evidence in this case does not establish "abnormal" circumstances under Rule 10-5.11(21), Florida Administrative Code (1984). Moreover, as found, a balanced consideration of all the statutory and rule criteria lead to the conclusion that neither the new nursing home proposed by HCR nor the new nursing home proposed by Forum is needed or justified at this time.
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 applications of both Health Care and Retirement Corporation of America, Petitioner in Case No. 85-3217, CON Action No. 3818, and Forum Group, Inc., Petitioner in Case No. 85-3376, CON Action No. 3817, for a certificate of need to construct and operate a new
60-bed nursing home in Hillsborough County.
RECOMMENDED this 3rd day of November, 1986, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON, Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 3rd day November, 1986.
ENDNOTES
1/ The Turro decision also stands for, and is cited for, the proposition that an HRS rule methodology "prescribes an evidentiary standard and is thus procedural in nature." Id. Before the Turro decision, it would have seemed obvious that a rule which plays such a large part in determining whether one wins or loses one's case is substantive in nature. The notion that a rule need methodology "prescribes an evidentiary standard" appears to have been rejected by the Fourth District in Humana, Inc. vs. Department of Health and Rehabilitative Services, 492 So. 2d 388, 392 (Fla. 4th DCA 1986), which acknowledges "the use of the 1982 and 1983 utilization data is properly taken into consideration as to whether the 1981 use rate under the rule formula results in an underestimation of the need for additional [cardiac catheterization] services in the area."
2/ Some of the decisions state that the determination whether the circumstances are "abnormal" so as to justify deviation from the rule need methodology is a conclusion of law. See Federal Property Management Corp. vs. Department of Health and Rehabilitative Services, supra, at 477, Humana, Inc. vs.
Department of Health and Rehabilitative Services, 492 So. | 2d | 388 |
392 (Fla. 4th DCA 1986). On the other hand, Balsam vs. | ||
Department of Health and Rehabilitative Services, 486 So. | 2d | 1341 |
1349 (Fla. 1st DCA 1986), states: |
The criteria in Section 381.494(6)(c) involve mixed questions of fact and policy.
Therefore, HRS may not reject the Hearing Officer's findings of fact by treating the issue as solely one of policy. Its function is to apply its policy to the facts . . ."
3/ Similarly, in Federal Property Management Corp. vs. Department of Health and Rehabilitative Services, 482 So. 2d 475, 477-478 (Fla. 1st DCA 1986), the court held that HRS improperly applied the nursing home rule bed need methodology by improperly counting three providers in the inventory.
COPIES FURNISHED:
Alfred W. Clark, Esquire
G. Steven Pfeiffer, Esquire
325 North Calhoun Street Tallahassee, Florida 32301
R. Terry Rigsby, Esquire Susan Greco Tuttle, Esquire
Catherine Peek McEwen, Esquire
401 South Florida Avenue Tampa, Florida 33602
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
APPENDIX
The following are rulings on proposed findings of fact as required by Section 120.59(2), Florida Statutes (1985):
HCR's Proposed Findings Of Fact.
The following HCR Proposed Findings Of Fact are accepted as substantially factually accurate and are incorporated in the Findings Of Fact in the same or similar format to the extent necessary: 1-4, 6-9, 13, 16, 18-25, 28, 30-34, 36-37, 40, 42-45, 47, 54, 61-62, and 66.
HCR's Proposed Findings Of Fact 5, 10-11, 14-15, and 17 would have been included in Paragraph 1 above except that they do not satisfactorily distinguish between what is necessary for state-of-the-art nursing home care for Alzheimer's patients and what is necessary for traditional nursing home care for them.
HCR Proposed Finding Of Fact 12 would have been included in Paragraph 1 above except that it does not satisfactorily distinguish between the need for special qualities in the nursing staff for an Alzheimer's program and the need for special recruiting efforts to find those qualities. The former is necessary; it was not proved that the latter is necessary.
HCR Proposed Finding Of Fact 26 is rejected as irrelevant since it proposes an alternative method for determining nursing home bed need other than the HRS rule need methodology and because the evidence is not sufficient to prove that there are approximately 1,156 Alzheimer's patients who will
need nursing home care in Hillsborough County by July 1989. In addition, the relevant planning horizon is January 1988.
HCR Proposed Finding Of Fact 27 is rejected as unnecessary. In addition, there was no evidence as to the circumstances surrounding the patients referred to in the last sentence. Without evidence of the circumstances, two instances are not sufficient to establish any significant denial of access to Hillsborough County nursing home facilities.
HCR Proposed Finding Of Fact 29 would have been included in Paragraph 1 above except that the first sentence is subordinate.
HCR Proposed Finding of Fact 35 and 51 are rejected- as subordinate.
HCR Proposed Finding Of Fact 38 would have been included in Paragraph 1 above except that the first sentence is unnecessary.
HCR Proposed Finding Of Fact 39 is rejected as unnecessary.
HCR Proposed Finding Of Fact 41 would have been included in Paragraph 1 above except that the second sentence is unnecessary.
HCR Proposed Finding Of Fact 46 would have been included in Paragraph 1 above except that the second sentence is subordinate.
HCR Proposed Findings Of Fact 48 and 49 is rejected as subordinate to facts which are contrary Findings Of Fact and/or the greater weight of the evidence.
HCR Proposed Finding Of Fact 50 is rejected because the first sentence is subordinate and the rest is contrary to the Finding Of Fact and/or the greater weight of the evidence. Specifically, Forum does propose nursing home care which would provide traditional care for Alzheimer's patients. Forum does not propose state-of-the-art nursing home care for them.
HCR Proposed Findings Of Fact 52 and 53 would have been included in Paragraph 1 above except that they are subordinate and unnecessary.
HCR Proposed Findings of Fact 55-57 would have been included in Paragraph 1 above except that they are unnecessary.
HCR Proposed Finding Of Fact 58 would have been included in Paragraph 1 above except that the third sentence is subordinate and unnecessary.
HCR Proposed Finding Of Fact 63 is rejected as contrary to the Findings of Fact and/or the greater weight of the evidence. Specifically, the HRS rule need methodology, under the recommended interpretation, projects need over the three year period ending January 1988, as provided in the rule. Updated information is used, however, to make a more accurate projection.
HCR Proposed Finding Of Fact 64 would have been included in Paragraph 1 above except that the second sentence is irrelevant.
HCR Proposed Findings Of Fact 59 and 65 would have been included in Paragraph 1 above except that they are irrelevant.
HCR Proposed Finding Of Fact 60 would have been included in Paragraph 1 above except that it is subordinate and unnecessary.
HCR Proposed Findings Of Fact 67 and 69 would have been included in Paragraph 1 above except that they are subordinate and unnecessary.
HCR Proposed Finding Of Fact 68 is rejected as contrary to the greater weight of the evidence. It was not proved that HRS has discovered a "technical error." It was proved only that some HRS personnel consider the poverty adjustment in the HRS rule methodology to contain a "technical error and that HRS may consider changing the rule in a manner which would favor the applicants in this case.
Forum's Proposed Findings Of Fact.
Forum's Proposed Findings Of Fact A: and 2 are accepted as substantially factually accurate and are incorporated in the Finding Of Fact in the same or similar format to the extent necessary. But some of A1 and 2 is subordinate and unnecessary.
The following Forums Proposed Findings Of Fact are accepted as substantially factually accurate and are incorporated in the Findings Of Fact in the same or similar format to the extent necessary: B1, C2, 4 and 6, [E]1, and F2 and 5.
Forum Proposed Finding Of Fact 2 is rejected as. subordinate.
Forum Proposed Finding Of Fact B3 is rejected as a recitation of Dr. Warner's interpretation and application of the HRS rule need methodology which is rejected almost in its entirety as explained in the Findings Of Fact. Starting, as one must since this is not a rule challenge, with the premise that the HRS rule need methodology accurately projects future bed need, it makes good health planning sense to interpret and apply the rule to allow it to give the most accurate result. This requires use of updated current population data, updated license and approved bed data resulting updated current bed rates and updated occupancy bed rate data. The Gulf Court decision does not prohibit this interpretation of the HRS rule bed need methodology; nor does this interpretation alter the three year planning horizon which ends January 1988.
As reflected in the Findings Of Fact, with the exception of selecting a data point for determination of current population which does not relate to the data points used to determine occupancy rate, the HRS interpretation of its rule is reasonable and logical. Indeed, the reasonableness and logic is shown by the results of this case. Although the current population data used in his Table III, so are the number of licensed beds. As a result, the bed rates actually increase when Dr. Warner uses updated information. However, the occupancy rate has decreased from 0.9735 to 0.9564. The result is a decrease of approximately three beds needed in January 1988. The problem with Dr. Warner's projections in his Table IV is that his occupancy rate data is inaccurate. The most accurate information is that the occupancy rate from October 1985 through March 1986 actually was 0.933646. Using the most accurate occupancy rate data, there was a net surplus of four nursing home beds in District VI, as reflected in the Findings Of Fact.
It does seem that the HRS rule need methodology is very volatile, yielding substantially different results when either the current population data alone or the occupancy rate data alone is changed. As just mentioned, reducing the occupancy rate by just over two percentage points reduces the net bed need by 69 beds. Similarly, reducing the current population data from the population at the July 1986 data point to the population at the January 1986 data point reduces the calculated surplus of nursing home beds on the planning horizon by 64 beds. However, as previously stated, this is not a rule challenge proceeding, and the soundness of the HRS rule need methodology itself must be assumed.
Forum's Proposed Finding Of Fact 8 is rejected because Mr. McElreath's calculation of projected need was flawed in only one respect--use of July 1986 instead of January 1986 "current population."
Forum's Proposed Finding Of Fact B9 is rejected for the reasons already expressed. The "anamoly" referred to in the second and third sentences does not result simply from use of updated current population data, but from a combination of that and a licensed bed inventory which does not increase or does not increase fast enough to keep up with the increased current increase fast enough to keep up with the increased current population data. Dr. Warner's Tables III and IV demonstrate that, when current population data and licensed bed inventory increases approximately proportionately, the bed rates remain approximately the same. The last two sentences of Forum's Proposed Finding Of Fact B9 are accepted and are incorporated in the Findings Of Fact.
As to Forum's Proposed Finding Of Fact B10, the evidence suggested the possibility of, but was not sufficient to prove the existence of, the fact proposed. In addition, this proposed finding of fact essentially is a rule challenge which is not relevant to this proceeding.
Forum's Proposed Finding Of Fact 11 is accepted in part but rejected in part. Specifically, there has been rapid fill-up at the two newest facilities and no new nursing homes approved for Hillsborough County in more than two years. These facts may raise concerns that the HRS rule need methodology may not function as well as it could. But, again, this is not a rule challenge proceeding (or a rule adoption proceeding), and the rule must be accepted on its face. In addition, the evidence is that there has been a drop of almost 4% in occupancy rates in Hillsborough County nursing homes between March 1985 and March 1986 as new licensed beds were added to the inventory. The increased inventory of licensed beds and decreased occupancy rates are the reasons why lower bed need is now calculated under the rule methodology. These are external factors which indicate a need for fewer nursing home beds in Hillsborough County. There was no persuasive evidence that lack of high quality Medicaid beds in Hillsborough County is a concern to HRS. One witness simply rated Hillsborough County nursing homes as good to fair and made the general statement that high quality nursing home beds are desirable.
Forum's Proposed Finding Of Fact B12 is accepted in part and rejected in part as reflected in Findings Of Fact 57 through 60, where this proposed finding is covered.
Forum's Proposed Finding Of Fact B13 is accepted in part and rejected in part as reflected in Findings Of Fact 61 through 67, where this proposed finding is covered.
Regarding Forum's Proposed Finding Of Fact B14: (1) the first sentence is subordinate, unnecessary and irrelevant since there was evidence from which this fact could be inferred without explicit direct testimony; (2) the second sentence is accepted except that Forum's commitment was only for year one of operation, (3) the third and fourth sentences are rejected as contrary to the Findings Of Fact and greater weight of the evidence; and (4) the last sentence is accepted except that it is incomplete as reflected in the Findings Of Fact.
Forum's Proposed Finding Of Fact B15 would be included in Paragraph 2 above except that the last sentence is irrelevant and the second to last sentence is rejected as contrary to the Findings Of Fact and not proved by the evidence.
Forum's Proposed Finding Of Fact C1 would have been included in Paragraph 2 above except that it is in large part subordinate and unnecessary.
Forum's Proposed Findings Of Fact C3, 7 and 8 would have been included in Paragraph 2 above except that it is subordinate.
The second sentence of Forum's Proposed Finding Of Fact C5 is accepted; the first sentence was not proved.
The second sentence of Forum's Proposed Finding of Fact D1 is rejected as contrary to the Findings Of Fact and greater weight of the evidence; the rest is accepted.
Forum's Proposed Finding Of Fact [E]2 is rejected because evidence was presented from which facts in these areas reasonably could be inferred.
Forum's Proposed Finding Of Fact 1 is accepted but is in large part subordinate to Findings of Fact.
Forum's Proposed Findings Of Fact F3 and 4 are rejected as contrary to Findings Of Fact based upon sufficient proof of HCR's financial ability.
In large part, Forum's Proposed Finding Of Fact G1 is rejected as subordinate and argument; the financial feasibility of Forum's proposal is accepted as reflected in the Findings Of Fact.
As to Forum's Proposed Finding Of Fact G2, the second sentence is accepted, but the first and last sentences are rejected as contrary to the greater weight of the evidence and/or Findings Of Fact.
Forum's Proposed Finding Of Fact H1 is accepted in part and rejected in part as reflected by Findings Of Fact 73 and 74.
HRS' Proposed Findings Of Fact.
HRS Proposed Findings Of Fact 3, 4, 5, 7, 8, 9, 10, and
13 through 19 are accepted as substantially factually accurate and are incorporated in the Findings Of Fact in the same or similar format to the extent necessary.
HRS Proposed Findings Of Fact 1 and 2 would have been included in Paragraph 1 above except that they are in part subordinate and unnecessary.
HRS Proposed Findings Of Fact 11 and 12 would have been included in Paragraph 1 above except that they are irrelevant to the recommended interpretation of the HRS rule need methodology.
HRS Proposed Finding Of Fact 20 would have been included in Paragraph 1 above except that it is subordinate.
HRS Proposed Finding Of Fact 6 is rejected because it is unnecessary if the District VI methodology is the same as if the HRS rule need methodology and it is a conclusion of law if not.
HRS Proposed Finding Of Fact 21 is rejected because there is a surplus of four nursing home beds for Hillsborough County under the recommended interpretation of the HRS bed need methodology.
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, d/b/a HEARTLAND OF HILLSBOROUGH,
Petitioner,
CASE NO. 85-3217
vs. CON NO. 3818
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
/ FORUM GROUP, INC.,
Petitioner,
CASE NO. 85-3376
vs. CON NO. 3817
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Respondent.
/
FINAL ORDER
This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above styled case submitted a Recommended Order to the Department of Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto. Exceptions to the Recommended Order were filed by Petitioner, Forum Group, Inc.
RULING ON EXCEPTIONS FORUM
Exception number one is granted. During the 120.57 proceedings HCR submitted an amended CON application which addressed for the first time the alleged special needs of Alzheimer's disease patients. The amended application also proposed to include a 60 bed adult congregate living facility. This amended application substantially changed the character of the nursing home proposed by petitioner. Before Gulf Court full de novo review was allowed in a 120.57 hearing wherein an applicant challenged the denial of a CON. Applications were commonly updated and amended up to and including the time of the final 120.57 hearing; often times, changing greatly the character and scope of the original proposal. Gulf Court pointed out that this policy along with the "first in line, first in right" policy of awarding CONs encouraged the "buy a ticket and stand in line" behavior of health care providers, resulting in needless applications, administrative reviews, and litigation.
In contrast under Gulf Court the planning horizon is fixed by the filing date of the original application. Now that de novo review has been limited by Gulf Court there is no longer any authority in statute, rule, or policy permitting amendment of CON applications during 120.57 proceedings. There is no authority for amendments at any point after five (5) days from the date at which the decision is due on the application, See Rule 10- 5.08(7)(a) and (b) and Gulf Court interprets "decision" to mean that initial HRS review. Chapter 381.494, Fla. Stat. mandates a complete review by HRS on the basis of complete application. The Division of Administrative Hearings is not a forum for the introduction of additional concepts which were not initially reviewed by HRS. An applicant is not allowed to update during
120.57 proceedings by adding additional services, beds,
construction, or other concepts not initially reviewed by HRS. HCR's position in this regard ignores the message from Gulf Court, which was reiterated in NME Hospitals, Inc. vs. Dept. of Health and Rehabilitative Services, 490 So2d 1300 (Fla. 1st DCA 1986) at 1303:
Finally, Gulf Court points out the necessity for HRS's "strict adherence to[its] procedural rules governing the supplementation or amendment of
completed applications before review and after denial... tin order that] all applicants desiring to compete for the same fixed pool of beds, [may be. afforded] a clear point of entry into the system, without giving any applicant an undue advantage over a competing application.
HRS concludes that an applicant for nursing home beds is not allowed to update by adding additional services, beds, C construction, or other concepts not initially reviewed by HRS, nor is he allowed to address a planning horizon other than three
(3) years from the date the application is filed. Thus, HCR's application cannot be considered on the merits.
See Conclusions of Law for discussion of present HRS policy on "current data's at the time of 120.57 hearing.
See Conclusions of Law for discussion of present policy on "current data" at the time of 120.57 hearing.
The Hearing Officer is merely pointing out that an inflexible fixed pool is inconsistent with present law and policy. HRS does not reject Gulf Court Nursing Center vs.
Department of Health and Rehabilitative Services et. al., 483 So2d 700 (1st DCA, 1986).
Exceptions four (4) through thirteen (13) are denied.
As announced in Manor Care of Hillsborough County vs. Department of Health and Rehabilitative Services, Case number 86 0051, it is not a HRS policy to use at final 120.57 hearings the figures for estimated populations for both the time period of the initial (free form) application review and planning horizon from data available at the time of the initial (free form) review. The figures used by Forum are apparently derived from data available at the time of the final 120.57 hearing.
Exception number 14 is denied in that the Hearing Officer's finding is based on competent substantial evidence or lack thereof on the travel time access standards found in the District Plan.
Exception number 15 is granted. See Ruling on Exception number one.
Exception number 16 is granted. See the Final order issued in Manor Care of Hillsborough County vs. Department of Health and Rehabilitative Services, Case number 86-0051, filed the same date as the Final Order in this cause. See also Ruling On Exceptions four (4)thirteen (13).
FINDINGS OF FACT
HRS adopts and incorporates by reference the findings of fact set forth in the Recommended Order except as noted in the Ruling on Exception.
CONCLUSIONS OF LAW
HRS adopts and incorporates by reference the Conclusions of Law set forth in the Recommended Order except as noted in the Ruling On Exceptions and where inconsistent with the following:
In summary the need methodology [Rule l0-5.11(2l)(b)] determines need for nursing home beds in the year of the planning horizon (3 years from the filing deadline for the application) by multiplying the current District bed rate, (bed rate is a ratio of number of licensed beds divided by estimated population) times the estimated population of District in the year of the planning horizon. The policy of HRS at the time of the time of the final
120.57 hearing in the present case was to use the estimate of the population at the time of the final hearing as the denominator of the bed rate ratio. Because any change in the numerator (number of licensed beds) between the time of the initial (free form)
review and the time of the final 120.57 hearings is purely fortuitous the bed rate is likely to decline with a population increase. There is no basis in health planning for such a result. The numerator and denominator of the bed rate ratio should pertain to the same approximate time period to avoid the illogical result.
The bed rate ratio is the number of licensed beds at the time of the review cycle divided by the estimated population at the time of the review cycle. In other words the bed rate ratio is the number of current licensed beds over current population current pertaining to the time of the review cycle. It is now HRS policy to use at final 120.57 hearings the figures for estimated populations for both the time period of the initial (free form) application review and the planning horizon from data available at the time of the initial (free form) review. This is consistent with the language of the rule as opposed to Forum's suggestion that data available at the time of the 120.57 hearing be used.
Under the policy set forth above there is no numeric need for the January 1988 planning horizon. There is in fact an 88 bed surplus. Thus there is no numeric need either under the policy approved by the Hearing Officer in this case or the new policy.
Approval of CON is not justified by special circumstances. It is my conclusion based on a balanced weighing of all relevant criteria that neither HCR nor Forums proposals should be approved.
Based upon the foregoing, it is
ADJUDGED, that applications for Certificate of Need numbers 3817 and 3818 be denied.
DONE and ORDERED this 5th day of February, 1987, in Tallahassee, Florida.
GREGORY L. COLER
Secretary
Copies furnished to:
Alfred Clark, Esquire B. Elaine New, Esquire
LARAMORE & CLARK, P.A. Department of HRS
P. O. Box 11068 1323 Winewood Boulevard Tallahassee, Florida 32302 Building One, Room 407
Tallahassee, Florida 32399-0700
J. Lawrence Johnston Nell Mitchem (PDCFM)
Hearing Officer 1317 Winewood Boulevard DOAHearings, The Oakland Bldg. Building 2, Room 255
2009 Apalachee Parkway Tallahassee, FL 32399-0700
Tallahassee, Florida 32301
R. Terry Rigsby, Esquire Susan Greco Tuttle, Esquire Catherin Peek McEwen, Esquire
401 South Florida Avenue Tampa, Florida 33602
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 6th day of February, 1987.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700 904/488-2381
| Issue Date | Proceedings |
|---|---|
| Nov. 03, 1986 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 05, 1987 | Agency Final Order | |
| Nov. 03, 1986 | Recommended Order | Certificate Of Need 3818 Discusses "fixed pool" nursing home beds McDonald balanced consideration useof newest data (bed inventory occupancy and bed rates) abnormal circumstances. |
