STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AV-MED, INC. HEALTH PLAN, )

)

Petitioner, )

)

vs. ) Case No. 85-4194

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held on May 9, 1986, before the Division of Administrative Hearings by its designated Hearing Officer Diane K. Kiesling.

APPEARANCES

For Petitioner Robert D. Newell, Jr., Esquire AV-MED, Inc. 200 South Monroe Street, Suite B (AV-MED): Tallahassee, Florida 32301

For Respondent, John F. Gilroy, Esquire Department of Health Steven W. Huss, Esquire And Rehabilitative Department of Health and Services: Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

This issue is whether AV-MED's proposed HMO hospital is exempt from Certificate of Need application and review pursuant to Section 381.495(4), Florida Statutes.

AV-MED presented the testimony of Robert T. Jones and John

1. Barr and had Exhibits 1-19 admitted in evidence. DHRS presented the testimony of Daniel J. Sullivan, Miles E. Moss, and Robert Maryanski, and had Exhibits 1-5 admitted in evidence.

   
   

   The parties filed proposed findings of fact and conclusions of law on July 1, 1986. All proposed findings of fact and conclusions of law have been considered. A ruling has been made on each proposed finding of fact in the Appendix attached hereto and made a part hereof.

   FINDINGS OF FACT

   
   

   1. A Health Haintenance Organization (HMO) is a managed health care delivery system that offers to the public a prepaid health care product for a specific geographic area through designated providers, including physicians and hospitals.

      
      

   2. The difference between an HMO delivery system, and health insurance, is that the HMO is at full risk for the delivery of the health care, unlike the insurance company which is only at risk for the payment.

      
      

   3. Typically, an individual joining an HMO is required to select a primary health care physician (general practitioner). These primary care physicians manage the health care of the individual and are the first point of access for the delivery system, except in the instance of an emergency of a life or limb- threatening nature. The non-emergency patient is referred by the primary care physician to designated hospitals based on the patient's diagnosis and need.

      
      

   4. Structurally speaking, there are generally four model types of HMO's. Only the IPA model is relevant to this hearing. An IPA model HMO is one in which the primary care physicians are in private practice and are not direct employees of the HMO. AV- MED is an IPA model HMO.

      
      

   5. The principal contractual relationships in an IPA model HMO are those between the enrollee (or enrollee's employer) and the HMO: the independent physician and the HMO: and, the contract between the HMO and the participating hospitals.

      
      

   6. An HMO cannot provide in-patient institutional health care without using hospital beds.

      
      

   7. AV-MED is obligated under the terms of its enrollee/HMO contracts to provide in-patient institutional health care to its enrollees.

      
      

   8. AV-MED is an existing HMO which has a certificate of authority, issued by the Florida Department of Insurance, authorizing it to operate a Health Maintenance Organization in Dade and Broward Counties.

      
      

   9. AV-MED is a federally qualified HMO. As a consequence of federal qualification, AV-MED can enroll Medicare members in its licensed service area.

      
      

   10. On May 20 and July 22, 1985, AV-MED submitted letters to DHRS, requesting exemption from the certificate of need

       application and review process described in Section 381.494(1), et seq., and Rule 10-5.11, F.A.C.

       
       

   11. The project for which AV-MED sought exemption was a 200-bed acute care hospital to be located near the intersection of the Florida Turnpike and Kendall Boulevard in southwest Dade County. On September 24, 1985, AV-MED submitted supporting documentation which had been requested by DHRS.

       
       

   12. On October 9, 1985 DHRS denied AV-MED's requested exemption. DHRS gave the following reasons for denial:

       
       

       Chapter 381.494(1)(a) provides that the addition of beds by new construction or alteration shall be subject to review. In addition Chapter 38l.494(1)(b) provides that the construction or establishment of additional health care facilities shall be subject to review. New beds and construction of additional health care facilities are not specifically exempted by state or federal law.

       
       

   13. Exemptions are provided for in Section 381.495(4), Florida Statutes, which states:

       I

       1. A certificate of need shall not be required for the offering of an inpatient institutional health service, the acquisition of major medical equipment, or the obligation of a capital expenditure by an entity described in paragraph (a) or paragraph (b), provided that an application for exemption from review has been submitted in such form, manner, and content as prescribed by the department and has been approved by the department:

          
          

          1. A health maintenance organization or a combination of health maintenance organizations when:

             
             

             1. The health maintenance organization or the combination of health maintenance organizations has in its service area an enrollment of at least 50,000 individuals;

                
                

             2. The facility in which the service will be provided is geographically located so that

                the service will be reasonably accessible to such enrolled individuals; and

                
                

             3. At least 75 percent of the patients who can reasonably be expected to receive the institutional health service will be enrolled individuals.

             
             

             * * *

             
             

   14. As of January 31, 1986, AV-MED had 78,156 enrollees in its federally certified and licensed service area of Dade and Broward Counties, as shown in a computer printout of members by zip code. Of these members, 16,075 resided in Broward County.

       
       

   15. DHRS has used enrollment area as synonymous with service area for purposes of determining compliance with the enrollment criteria of Section 381.495(4)(a)(1) in an exemption approved for Miami General (an existing HMO hospital) for major medical equipment.

       
       

   16. AV-MED has more than 50,000 enrollees in its service area.

       
       

   17. The site selected by AV-MED for the facility is located in southwest Dade County, at the intersection of Kendall Boulevard and the Florida Turnpike. AV-MED has identified a parcel of 18 acres at that location. The parcel is of sufficient size to accommodate the proposed facility and it is available for purchase.

       
       

   18. DHRS does not have an existing rule or policy for determining reasonable geographical accessibility for HMO hospitals. However, 30 minutes driving time is the access standard routinely used by DHRS as relates to acute care services and this standard has been adopted as a rule for determining geographic access to acute care services.

       
       

   19. In the absence of any rule or policy specific to HMO hospitals, AV-MED contended that an appropriate driving time standard for determining reasonable geographic accessibility would be 45 minutes for an HMO, since HMO members are contractually "locked in" to using the in-patient facility designated by the HMO. However, AV-MED also introduced evidence of accessibility based on 30 minutes driving time. Additionally, AV-MED assumed that reasonable access is defined as less than a 30-minute drive (See Petitioner Exhibit 4 at p. 12).

       
       

   20. The 45 minutes or 1 hour average drive time proposed by AV-MED is not reasonable as it relates to accessibility to acute

       care services. The only incentive is economic: that is that members are locked-in and must use the AV-MED service delivery system if they want their services paid for by AV-MED. However, members can disenroll. Therefore, the economic incentive is inadequate to establish reasonability.

       
       

   21. Jack Barr, P.E., was tendered and accepted as an expert in traffic engineering and planning. In addition to co-authoring the Transportation and Traffic Engineering Handbook, published by the Institute of Transportation Engineers, Mr. Barr helped, prepare the original base study for the Miami Urban/ Transportation Plan and is currently retained by Metropolitan Dade County to perform a feasibility study for the new toll expressway in Dade County.

       
       

   22. Mr. Barr's firm used the average car method. Barr's engineer drove all "links" of all of the arterial roads leading from the proposed hospital site at what the engineer perceived to be the prevailing speed of traffic flow. Each link was driven at least six times, with two of the times being at peak traffic hours. The times of all of the links were averaged. The average times for the links were totalled to determine the locus of points that were an average 30 minutes driving time from the proposed hospital site.

       
       

   23. Each arterial route was comprised of ten to twenty links. It took seven days of field work to collect the data.

       
       

   24. Mr. Barr's contour has the shape of an amoeba, since the numerous points actually plotted are connected by lines which are an interpolation based on the density of population and the complexity of neighborhood roads connecting the arterials.

       
       

   25. Mr. Barr actually plotted no less than 32 final terminus points.

       
       

   26. Mr. Barr used a DOT scaled map to depict his contour, which allows a determination of the actual distance from the proposed site to any point within the 30-minute contour. Mr. Barr used the January 1985 U.S. Postal Service (Miami Sectional Center) Directory to correlate the location of zip code areas to his map. He used street names contained in the January 1985 edition of the postal directory to confirm the location of zip code boundaries on the map.

       
       

   27. Mr. Barr used grid squares as a basis to determine the percent of geographical area within those zip code areas which were partially within the 30-minute driving time contour.

   28. DHRS called Mr. Miles Moss, P.E., to testify. Mr. Moss was tendered and accepted as an expert witness. Mr. Moss's firm conducted a timed travel study relating to AV-MED's hospital location, and purportedly used the floating car method. Mr. Moss preselected six routes, usually expressways. His engineer drove each route in its entirety six times, including four trips during peak hours. The average time to drive each route was then plotted to determine the 30-minutes driving time point along each preselected route. His field work took three days.

       
       

   29. Mr. Moss connected his six points on the preselected routes with straight lines, making no effort to interpolate the average driving time between actually plotted points.

       
       

   30. Mr. Moss gave no source information for either the map or the zip code locations, other than to say he obtained the zip codes from "the U.S. Post Office." It cannot be determined from Mr. Moss's exhibits what the actual mileage is, or whether the zip codes are accurately overlaid on his map. Mr. Moss offered no testimony regarding any effort to ensure or confirm the correctness of zip code locations relative to the display map.

       
       

   31. Mr. Moss admitted Barr's method of using grid squares was more accurate than his approach, which consisted of merely including 1003 of the zip codes areas which were intersected by the driving time contour.

       
       

   32. Moss gave incorrect or conflicting instructions to his engineer who drove and timed the routes. Moss indicated that the floating car method would require the driver to stay "under local speed limits." (HRS Ex. 4, p.3). However, by definition, the floating car method requires a driver to pass one car for every car that posses him. The two requirements cannot both be followed.

       
       

   33. Citing the Traffic Engineer's Handbook, Barr testified that the average car (average speed) method is more accurate than the floating car method because it has an excellent correlation with actual speeds. According to the Traffic Engineer's Handbook, an engineer employing the average car method should drive at all times at the perceived average speed of surrounding traffic. An engineer employing the floating car method is instructed to pass one car for each car which passes him. The average car or average speed method is the preferred method among experts in the field.

       
       

   34. It is concluded that Moss's testimony and exhibits do not depict the actual average driving time for all arterials. Mr. Moss, preselected six routes which "in his judgment" he considered to be the most "logical" or "practical." Each of the

       six routes was driven six times and averaged. The data was plotted as one point. Mr. Moss used the floating car method improperly, and did not interpolate or use grids to accurately determine the land mass included within those zip code areas intersected by the time contour.

       
       

   35. Mr. Barr's 30-minute driving time contour is found to be the more comprehensive and accurate statement of the location of that contour line.

       
       

   36. Mr. Jones is the Senior Vice President (for development) of the holding company which is responsible for AV- MED's operation and the administration of AV-MED's health maintenance plan. He testified he was authorized to speak on behalf of AV-MED and to bind AV-MED by his testimony.

       
       

   37. Mr. Jones was tendered and accepted as an expert in health care planning and in HMO delivery systems. Among his other qualifications, he has a Master's degree in public health administration and has served over ten years as an Executive Director of health systems agencies, including the South Florida agency. In his capacity as Executive Director, he had the opportunity to directly participate in health care planning in the Metropolitan Dade County area.

       
       

   38. In Mr. Jones' opinion, the geographical location selected for the proposed hospital was reasonably accessible to AV-MED's enrollees in the service area.

       
       

   39. Based on data contained in AV-MED Exs. 8 and 12 and Mr. Barr's 30-minute driving time study, Mr. Jones concluded that 58% of AV-MED's enrolled members and 46.4% of all of AV-MED's participating physicians would be within an average 30-minute driving time of the proposed site. This means that 45,401 enrollees reside within a 30-minute drive time from the proposed location.

       
       

   40. AV-MED has demonstrated, by clear and convincing evidence, that the proposed facility will be geographically located so that it will be reasonably accessible to enrolled individuals. Obviously, as Mr. Jones pointed out, no one site within Dade County would be within 30-minute driving time of all enrollees and doctors. However, AV-MED's 30 minute driving time study, when correlated to enrollment of AV-MED members by zip code, shows that 58% of all currently enrolled members in Dade and Broward Counties would be within 30 minutes driving time for non-emergency treatment. The evidence also showed that 46% of all doctors (approximately 930 doctors) would be within 30 minutes driving time of the proposed site.

   41. AV-MED wants to build a 200-bed acute care hospital which will provide, at a minimum, general medical and surgical services, obstetrical services, pediatric services, psychiatric, ICU and emergency room services. It may offer Coronary Care (CCU) services and is still undecided about provision of certain services.

       
       

   42. In order to prove that at least 75% of the patients who can reasonably be expected to receive the institutional health services at the AV-MED facility will be enrolled individuals, AV- MED proposed a formula based on four assumptions: 15% annual growth rate in enrollment: utilization rates of 450 bed days/1000 commercial members and 2,253 bed days/1000 Medicare members a capture rate of 82.6% of general patient days and 60% occupancy rate.

       
       

   43. By applying the formula and these assumptions to the membership within a 30-minute drive time, AV-MED proposed that members would utilize 77% of the occupied hospital beds in 1989, 81% in 1990, and 86% in 1991.

       
       

   44. Conceptually, AV-MED used a 30-minute driving time to determine how many enrollees lived within the 30-minute driving time area. AV-MED then factored out those categories of admissions which, based on historical data of the incidence of such admission, it believed would not be captured by the HMO hospital. Finally, AV-MED used a projected growth rate and assumptions about operational occupancy levels to compute the number of member patient days it would ultimately capture in the horizon year 1989 and thereafter.

       
       

   45. To factor out the number of member patient days it would not capture, AV-MED's Medical Department reviewed every reimbursed hospital admission for a three-month period between January and March of 1985, identifying by diagnosis every admission of the type which it believed an HMO member would not receive in its own hospital. The Medical Department then assigned patient days to those admissions. Days assigned included neonatal intensive care--499, cardiac surgery--355, burns--53, spinal cord--20, patients that are out of the area when they are taken ill and need hospitalization--40, and emergency989 patient days. AV-MED did not exclude coronary care even though it has not decided whether such services will be provide at the proposed facility.

       
       

   46. The total number of patient days for its own members which AV-MED did not capture in the three-month period was 1,956 days. When annualized and applied against total patient days, it was concluded by AV-MED that it would not capture 17.4% of general patient days annually and that it would capture 82.6% of

       all patient days. AV-MED assumes that it will capture every patient day except those excluded above (neonatal intensive care, cardiac surgery, burns, spinal cord, patients out of the area, and emergency). However, this assumption is not reasonable. The capture rate is overstated to the extent that it includes services which AV-MED may not even provide (such as coronary care) and that it includes every single patient day except those six areas specifically excluded. In its July 22, 1985 proposal, AV-MED proposed a capture rate of 80%. The proposed captive rate of 80% is more reasonable.

       
       

   47. AV-MED assumed an overall operational occupancy rate of 60% (with 75% being its own member patients) for the first year of hospital operation. This overall rate was anticipated based on the Hospital Cost Containment Board data showing the3 prevailing occupancy rates in existing Dade County non-HMO proprietary hospitals.

       
       

   48. It was assumed that commercial membership would grow at a rate of 15% per year and that Medicare (individual) membership would grow at a rate of 15% per year.

       
       

   49. The 15% growth rate was selected as a reasonable projected rate by AV-MED because: historical growth rate for AV- MED enrollment has been in excess of 35% per year (2) there is growing competition within the geographical area: (3) the 15% figure represents an effort to be totally conservative and demonstrate that the growth rate would have to be at least 15%

       (4) AV-MED is a mature HMO, its current license being issued in 1979. This assumption is reasonable and results in the following projections as to enrollment within 30-minute drive time.

       
       

       	Commercial	Medical	Total
       1986	46,263	2,543	48,806
       1987	53,202	2,924	56,126
       1988	61,182	3,363	64,545
       1989	70,359	3,867	74,226
       1990	80,913	4,447	85,360
       1991	93,050	5,114	98,164

       
       

   50. For the past twelve months, AV-MED showed that it had average utilization rates of 450 beds days per thousand for commercial members and 2,253 days per thousand for Medicare members.

       
       

   51. AV-MED characterized its utilization rates for 1985 as "stable" and therefore used the 1985 utilization rates. However, this assumption does not accord with industry experience or AV- MED's own experience. In its documentation furnished to DHRS on July 22, 1985, AV-MED showed that it experienced utilization

       rates of 430/1000 for commercial and 2100/1000 for Medicare members. The variations in the utilization rates do not, in fact, support the characterization that the rate is stable.

       
       

   52. Additionally, nationally HMO utilization rates have decreased by approximately 4% per year. IPA model HMO's, like AV-MED, have experienced even greater declines in utilization.

       
       

   53. In point of fact, AV-MED's utilization was not stable, but rather, has dropped dramatically. AV-MED provided actual documentation that its patient days for January, February, and March, 1986 was 7,727 for Commercial members. During that period, it reported an enrollment of 72,195 Commercial enrollees. One would multiply the patient days per quarter times 4 to arrive at the annual rate or 7,727 x 4 = 30,908 patient days projected for the year. Dividing this number by the 72,195 enrollees = 428 patient days per 1000 enrollees. Yet for this same period, AV- MED claimed a stable rate of 450/000. AV-MED's projection is unreasonably high. This is the same utilization rate for Commercial members that AV-MED projected in July, 1985. It is therefore concluded that AV-MED's reliance on the utilization rate of 450/1000 is not reasonable.

       
       

   54. If one reworks the formula used by AV-MED to show that at least 75% of the utilization of its proposed facility is reasonably expected to be by enrollees (see paragraph 15, supra) and leaves everything as AV-MED proposed and assumed, except for using the Commercial utilization rate of 430/1000, AV-MED cannot show 75% member utilization for 1989.

       
       

       70,359 Commercial members x 430 patient days per 1000 Commercial member/1000/365 = 83 Commercial members hospitalized per day

       
       

       3,867 Medicare members x 2,250 patient days per Medicare member/1000/365 = 24

       
       

       83 Commercial + 24 Medicare = 107 total members hospitalized per day

       
       

       107 members x 0.826 capture rate = 88 members admitted to the AV-MED facility per day

       
       

       88 members/120 average daily census = 73% enrollees utilization

       
       

   55. Using the above formula and figures except using a capture rate of 80%, an enrollee utilization rate of 71% results (107 x .80= 85.6 divided by 120 = 71.3%)

   56. Using the above formula with the utilization rate proposed by AV-MED of 450/1000 Commercial members, but applying a capture rate of 80% results in an enrollee utilization rate of 74.6%. (70,359 x 450/1000/365 = 88 88 + 24 = 112 112 x .80 = 89.6 89.6/12074.6%).

       
       

   57. A relatively minor change in one of two assumptions (commercial utilization rate or capture rate) results in an enrollee utilization rate of below 75%.

       
       

   58. AV-MED failed to prove that at least 75% of the patients who can reasonably be expected to receive services at the proposed hospital will be enrollees.

       
       

       CONCLUSIONS OF LAW

       
       

   59. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.

       
       

   60. Section 381.495(4), Florida Statutes, provides:

       
       

       (4) A certificate of need shall not be required for the offering of an inpatient institutional health service, the acquisition of major medical equipment, or the obligation of a capital expenditure by an entity described in paragraph (a) or paragraph (b), provided that an application for exemption from review has been submitted in such form, manner, and content as prescribed by the department and has been approved by the department:

       
       

       (a) A health maintenance organization or a combination of health maintenance organizations when:

       
       

       1. The health maintenance organization or the combination of health maintenance organizations has in its service area an enrollment of at least 50,000 individuals

          
          

       2. The facility in which the service will be provided is geographically located so that the service will be reasonably accessible to such enrolled individuals and

          
          

       3. At least 75 percent of the patients who can reasonably be expected to receive the

       institutional health service will be enrolled individuals.

       
       

       * * *

       
       

   61. Rule 10-5.05, F.A.C., implements Section 381.495(4), and provides in pertinent part:

       
       

       1. In cases of a health maintenance organization or combination of health maintenance organizations applying for exemption from review for the proposed offering of an inpatient institutional health service, acquisition of a major medical equipment item or obligation of a capital expenditure, the following actions shall be accomplished:

          
          

          1. The health maintenance organization or combination of health maintenance organization shall submit a request for exemption from review to the department providing documentation that the organization or combination of organizations has in its or their service area an enrollment of at least 50,000 individuals, that the health care facility in which the service will be provided is geographically located so that the service will be reasonably accessible to such enrolled individuals and that at least

             75 percent of the patients who can reasonably be expected to receive the inpatient institutional health service will be enrolled individuals.

             
             

          2. Upon receipt of such request for exemption, the department shall verify the documentation supporting the request. If such documentation is verified, the department shall approve the request for exemption from review. If such documentation is not verified, the department shall deny the request for shall deny the request for exemption from review and provide the applicant with specific reasons for such denial.

       
       

   62. AV-MED carried its burden of proof as to the criteria in 381.495(4)(a) 1 and 2. It has an enrollment of at least 50,000 individuals in its service area of Dade and Broward

       Counties. It even has more than 50,000 members in Dade County alone. AV-MED also has proposed a location which is within 30 minutes driving time of 58% of its members. It is concluded that

       30 minutes driving time is the most reasonable standard for determining accessability to acute care services. Within 30 minutes drive time from the proposed location, 45,401 of AV-MED's enrollees reside. This is sufficient to show that the location is reasonably accessible to AV-MED's enrollees.

       
       

   63. AV-MED has failed to meet the criteria of Section 381.495(4)(a)3. It has been found that both the commercial utilization rate and the capture rate proposed by AV-MED are overstated. Using more reasonable figures results in an enrollee utilization rate below 75%. Accordingly, it is concluded that less than 75% of the patients who can be expected to receive services at the proposed acute can hospital will be AV-MED- enrollees.

       
       

   64. The parties presented extensive arguments on the question of whether the Section 381.495(4) exemption applies to construction- of an acute care hospital. Because AV-MED failed to meet the clear criteria, it is unnecessary to reach the issues involving the statutory interpretation of and Legislative intent behind Section 381.495(4).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order denying the request of AV-MED, Inc., for an exemption from Certificate of Need and review.

DONE and ORDERED this 31st day of July, 1986, in Tallahassee, Florida.

DIANE K. KIESLING, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 1986.

COPIES FURNISHED:

Robert D. Newell, Jr., Esquire

200 South Monroe Street Suite B

Tallahassee, Florida 32301

John F. Gilroy, Esquire Steven W. Huss, Esquire Department of HRS

1323 Winewood Boulevard

Tallahassee, Florida 32301

William Page, Jr. Secretary

1323 Winewood Boulevard

Tallahassee, Florida 32301

APPENDIX

The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all proposed findings of fact submitted by the parties to this case.

Rulings on Proposed Findings of Fact of Petitioner.

1. Proposed Finding of Fact 1 is adopted in substance in Finding of Fact 10.

2. Proposed Finding of Fact 2 is adopted in substance in Finding of Fact 11.

3. Proposed Finding of Fact 3 is adopted in substance in Finding of Fact 12.

4. Proposed Finding of Fact 10 is adopted in substance in Finding of Fact 1.

5. Proposed Finding of Fact 11 is adopted in substance in Finding of Fact 2.

6. Proposed Finding of Fact 12 is adopted in substance in Finding of Fact 3.

7. Proposed Finding of Fact 13 is adopted in substance in Finding of Fact 4.

8. Proposed Finding of Fact 14 is adopted in substance in Finding of Fact 5.

9. Proposed Finding of Fact 15 is adopted in substance in Finding of Fact 6.

10. Proposed Finding of Fact 16 is adopted in substance in Finding of Fact 7.

11. Proposed Finding of Fact 17 is adopted in substance in Finding of Fact 8.

12. Proposed Finding of Fact 18 is adopted in substance in Finding of Fact 9.

13. Proposed Finding of Fact 19 is adopted in substance in Finding of Fact 14.

14. Proposed Finding of Fact 20 is adopted in substance in Finding of Fact 14.

15. Proposed Finding of Fact 22 is adopted in substance in Finding of Fact 15.

16. Proposed Finding of Fact 23 is adopted in substance in Finding of Fact 16.

17. Proposed Finding of Fact 24 is adopted in substance in Finding of Fact 17.

18. Proposed Finding of Fact 25 is adopted in substance as modified in Finding of Fact 18.

19. Proposed Finding of Fact 26 is adopted in substance as modified in Finding of Fact 19.

20. Proposed Finding of Fact 27 is adopted in substance in Finding of Fact 21.

21. Proposed Finding of Fact 28 is adopted in substance in Finding of Fact 22.

22. Proposed Finding of Fact 29 is adopted in substance in Finding of Fact 23.

23. Proposed Finding of Fact 30 is adopted in substance in Finding of Fact 24.

24. Proposed Finding of Fact 31 is adopted in substance in Finding of Fact 25.

25. Proposed Finding of Fact 32 is adopted in substance in Finding of Fact 26.

26. Proposed Finding of Fact 33 is adopted in substance in Finding of Fact 27.

27. Proposed Finding of Fact 34 is adopted in substance in Finding of Fact 33.

28. Proposed Finding of Fact 35 is adopted in substance in Finding of Fact 36.

    of	Fact	36	is	adopted	in	substance	in
    of	Fact	37	is	adopted	in	substance	in
    of	Fact	38	is	adopted	in	substance	in
    of	Fact	43	is	adopted	in	substance	in
    of	Fact	44	is	adopted	in	substance	in
    of	Fact	46	is	adopted	in	substance	in
    of	Fact	47	is	adopted	in	substance	in
    of	Fact	48	is	adopted	in	substance	as

29. Proposed Finding Finding of Fact 37.

30. Proposed Finding Finding of Fact 38.

31. Proposed Finding Finding of Fact 39.

32. Proposed Finding Finding of Fact 40.

33. Proposed Finding Finding of Fact 41.

34. Proposed Finding Finding of Fact 44.

35. Proposed Finding Finding of Fact 45.

36. Proposed Finding

    modified in Finding of Fact 46.

37. Proposed Finding of Fact 49 is adopted in substance as modified in Finding of Fact 47.

38. Proposed Finding of Fact 50 is adopted in substance as modified in Finding of Fact 48.

39. Proposed Finding of Fact 51 is adopted in substance as modified in Finding of Fact 49.

40. Proposed Finding of Fact 52 is adopted in substance as modified in Finding of Fact 50.

41. Proposed Finding of Fact 56 is adopted in substance in Finding of Fact 28.

42. Proposed Finding of Fact 57 is adopted in substance in Finding of Fact 28.

43. Proposed Finding of Fact 58 is adopted in substance in Finding of Fact 29.

44. Proposed Finding of Fact 59 is adopted in substance in Finding of Fact 30.

45. Proposed Finding of Fact 60 is adopted in substance in Finding of Fact 31.

46. Proposed Finding of Fact 61 is adopted in substance in Finding of Fact 32.

47. Proposed Finding of Fact 62 is adopted in substance in Finding of Fact 34.

48. Proposed Finding of Fact 63 is adopted in substance in Finding of Fact 35.

49. Proposed Findings of Fact 4, 5, 6, 7, 8, 9, 21, 39, 40, 42,

54, 55, 65, 66, and 67 are irrelevant and unnecessary to the resolution of the matter.

1. Proposed Findings of Fact 41, 45 and 53 are subordinate to the facts found.

2. Proposed Findings of Fact 64 and 68 are argumentative and unnecessary.

Rulings on Proposed Findings of Fact of Respondent.

1. Proposed Finding of Fact 1 is adopted in substance in Findings of Fact 8 and 9.

2. Proposed Finding of Fact 2 is adopted in substance in Findings of Fact 10, 11 and 12.

3. Proposed Finding of Fact 5 is adopted in substance in Findings of Fact 1-7.

4. Proposed Finding of Fact 6 is adopted in substance in Findings of Fact 1-7.

5. Proposed Finding of Fact 7 is adopted in substance in Findings of Fact 1 and 2.

6. Proposed Finding of Fact 9 (1st sentence) is adopted in substance in Finding of Fact 14.

7. Proposed Finding of Fact ll(a) is adopted in substance as modified in Finding of Fact 18.

8. Proposed Finding of Fact ll(b) is adopted in substance as modified in Finding of Fact 18.

9. Proposed Finding of Fact ll(c) is adopted in substance as modified in Finding of Fact 19.

10. Proposed Finding of Fact 13 is adopted in substance as modified in Finding of Fact 39.

11. Proposed Finding of Fact 18 is adopted in substance as modified in Finding of Fact 53.

12. Proposed Finding of Fact 19 is adopted in substance as modified in Finding of Fact 54.

13. Proposed Finding of Fact 20 is adopted in substance as modified in Finding of Fact 46.

14. Proposed Finding of Fact 22 is adopted in substance as modified in Finding of Fact 58.

15. Proposed Findings of Fact 3, 4, 12, 12(a), 12(b), 12(c), 12(d), 12(e), and 23 are irrelevant and unnecessary to the resolution of the matter.

16. Proposed Findings of Fact 8, 10, 14(a), 14(b), 14(c), 14(d), 15, 16, 17, and 21 are subordinate to the facts found.

17. Proposed Finding of Fact 9 (2nd sentence) is unsupported by the competent, substantial evidence.

18. Proposed Finding of Fact 11 is subordinate to the facts found and is unsupported by the competent substantial evidence.

19. Proposed Finding of Fact ll(d) is argumentative and conclusory.

    ================================================================= AGENCY FINAL ORDER

    =================================================================

    
    

    STATE OF FLORIDA

    DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

    
    

    AV-MED, INC. HEALTH PLAN,

    
    

    Petitioner,

    
    

    vs. CASE NO. 85-4194

    
    

    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, Av-Med, Inc.

    
    

    RULING ON PETITIONER'S EXCEPTIONS

    
    

    1. Exception number 1 is granted to the extent that the hospital utilization rate of 430/1000 was the rate estimated by petitioner in petitioner's exhibit 4, page 19. Petitioner's utilization rate for the year 1984 was 456.3/1000. Nevertheless, the Hearing Officer's conclusion, that petitioner's reliance on a "stable" rate of 450/1000 is unreasonable, remains valid. Petitioner's exhibit 4, page 20 shows a dramatic drop in utilization since the year 1979. This data strongly supports the finding of a downward trend in utilization even though the year 1984 showed a slight increase in utilization. The existence of a downward trend is also supported by petitioner's data for January, February, and March, 1986. During that 3 month period the rate was 428/1000. A downward utilization rate is also consistent with national statistics. Thus, the misstatement of fact excepted to by petitioner does not substantially affect the Hearing Officer's analysis and findings.

    2. Exception number 2 is denied in that the facts found by the Hearing Officer are supported by substantial competent evidence.

       
       

    3. Exception number 3 is granted. Certificate of need approval is required before an HMO may construct a hospital or add new beds to an existing HMO hospital. The exemption provision of Chapter 381.495(4)(a) is not applicable to the construction of a hospital or addition of hospital beds by an HMO.

       
       

    4. Exception number 4 is denied. It is the duty of the Hearing Officer to enter a Recommended Order on the basis of the applicants proposal and evidence presented. It is not the duty of the Hearing Officer to settle cases.

       
       

    5. Exception number 5 is denied. See the comment in the previous paragraph.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except as discussed in paragraph number one of the rulings on exceptions.

CONCLUSIONS OF LAW

The exemption provision of Chapter 381.494(4)(a) is not applicable to the construction of a hospital or addition of hospital beds by an HMO. The basis for this conclusion was discussed at length in a previous Final Order in which Av-Med was a party. Av-Med, Inc., vs. Department of Health and_ Rehabilitative Services, Case #86-306PH, Final Order entered March 5, 1987.

Based on the foregoing, it is ADJUDGED that Av-Med's request for exemption of its proposed acute care hospital from CON review be DENIED.

DONE and ORDERED this 5th day of 1987, in Tallahassee, Florida.

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services By K. W._D.

(for) Assistant Secretary for Programs

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.

COPIES FURNISHED:

Robert D. Newell, Jr., Esquire

102 South Monroe Street Tallahassee, FL 32301

John F. Gilroy, Esguire Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Building One, Room 407 Tallahassee, FL 32399-0700

Diane K. Kiesling Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, FL 32301

Larry Carnes, Esquire

515 E. Park Avenue Tallahassee, FL 32301

FALR

Post Office Box 385 Gainesville, FL 32602

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 7th day of May, 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

Docket for Case No: 85-004194

Orders for Case No: 85-004194