STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MANOR CARE OF HILLSBOROUGH COUNTY, )
)
Petitioner, )
)
vs. ) CASE NO. 86-0051
)
BUREAU OF COMMUNITY MEDICAL )
FACILITIES, DEPARTMENT OF )
HEALTH AND REHABILITATIVE )
SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
The final hearing in this case was held on July 22, 1986, in Tampa, Florida. At issue is whether the Department of Health and Rehabilitative Services (HRS) should partially approve the application of the Petitioner, Manor Care of Hillsborough County, for a 60-bed community nursing home in Hillsborough County, Florida. Appearing for the parties were:
For Petitioner: James C. Hauser, Esquire
Messer, Vickers, Caparello, French & Madssen
First Florida Bank Building, Suite 701 Post Office Box 1876
Tallahassee, Florida 32302-1876
For Respondent: Richard Patterson, Esquire
Assistant General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard Building One, Room 406 Tallahassee, Florida 32301
The Petitioner presented testimony from Rachelle Walter, John D. Lee, III, Joyce C. Smith, Donna Morgan, Craig D. Thornton, and Herbert E. Straughn, and 24 exhibits, including exhibit 24 which was submitted following the close of the hearing. The Respondent presented the testimony of Herbert E. Straughn and two exhibits. Three Hearing Officer Exhibits were marked and admitted into evidence. After proposed findings of fact and conclusions of law were submitted, it became apparent that the record did not have any evidence as to LB and LBD, licensed beds in the district and subdistrict, as of June 1, 1985, as required by the rule. The Hearing Officer on his own motion reopened the record to permit the parties to submit these figures. The parties did so, and the document submitted, an excerpt from the "Semi-annual nursing home census report
and bed need allocations, review cycle: July 1985" has been marked as Hearing Officer Exhibit 4 and is admitted into evidence. This exhibit also contains a notice published in the Florida Administrative Weekly that a proposed amendment to rule 10-5.11(21) has been withdrawn.
FINDINGS OF FACT
Manor Care properly and timely filed with HRS its certificate of need application in July 1985. Hearing Officer's Ex. 2, T. 163.
On July 15, 1986, Health Care and Retirement Corporation of America timely filed a petition to intervene alleging that its substantial interests would be affected by this case because it was an earlier batched applicant for the same health services in the same service district. On July 21, 1986, counsel for HRS wrote to counsel for Health Care and Retirement Corporation of America confirming that it is the position of HRS that "non-final CON approval of a subsequent application does not count against a prior application when that prior application proceeds to administrative hearing." Hearing Officer's Ex. 1. No ruling has been made on the petition to intervene due to this letter, and there has been no further request by Health Care and Retirement Corporation of America to have its petition to intervene ruled upon. The petition to intervene therefore remains pending.
The only criterion at issue in this case is need. T. 145-6. Criteria 3, 4, 5, 6, 7, 10, 11, 12 and 13 of section 381.494(6)(c)m, Fla. Stat., are not in dispute in this case. Financial feasibility is not in dispute except for the dispute as to need. Criterion 8 is in dispute only with respect to "the availability of alternative uses of such resources for the provision of other health services, and the extent to which the proposed services will be accessible to all residents of the service district." Criterion 9 is in dispute only with respect to whether Manor Care can achieve its projected utilization and Medicare projected utilization. Hearing Officer Ex. 2.
Manor Care has sufficient and available health manpower resources, management personnel resources, and capital and operating expenditures for project accomplishment and operation. Hearing Officer Ex. 2.
The costs and methods of the Manor Care proposed construction are reasonable, and there are no alternative, less costly, or more effective methods of construction available. Hearing Officer Ex. 2.
Manor Care proposes to develop 60 community nursing home beds as a skilled nursing facility. T. 17. Some of the skilled nursing services that it would offer include intravenous therapy, hyperalimentation therapy, nasogastric feeding, gastroscopy feeding, tracheostomy care, and bowel and bladder training. Id. Additionally, the proposed 60 beds would be supported by intermediate nursing services, rehabilitation services, physical therapy, occupational speech therapy, respiratory therapy, recreational therapy, and community programs.
Id., Manor Care Ex. 1, p. 2. Manor Care also proposes to offer respite nursing care, which is short-term inpatient nursing care. T. 18.
In addition to the 60 community nursing home beds which are the subject of these proceedings, Manor Care proposes to provide an attached 60 bed adult congregate living facility (ACLF). T. 18. An ACLF may be operated without a certificate of need. The ACLF will be in an attached wing of the building. Id.
The ACLF wing is intended to provide services for persons not needing skilled nursing care. The 60 community nursing home beds would be used for acutely ill persons in need of skilled nursing care. T. 23. The ACLF would provide assistance in daily activities and one hour a day of personal care, but would not involve nursing care. T. 18, 23. Having the ACLF attached to a nursing home will allow for easier transitions for patients from one level of care to another (ACLF to nursing, and return) and will give ACLF residents access to therapies in the nursing wing. T. 24. An ACLF may also be useful to allow a spouse to be closer to a patient in the nursing wing where the at-home spouse needs assistance with daily activities. T. 80.
Manor Care proposes to locate the facility in west Tampa, Florida. T.
26.
Manor Care projects a payor mix of 60 percent private pay, 30 percent
Medicaid, and 10 percent Medicare. T. 26. The Medicare average in Hillsborough County is 4 percent. T. 27. About one-third of the nursing homes in Hillsborough County do not participate in Medicare, T. 28, and these would not be able to take Medicare patients needing skilled nursing services. Id.
District VI has about 58 percent Medicaid beds. Manor Care Ex. 4.
Manor Care projects an occupancy of 60 percent on the average in the first year, and 90 percent average in the second year. T. 28. The two nursing facilities that opened in Hillsborough County in 1985 achieved 90 percent occupancy in less than a year. T. 22. Given the findings of need and occupancy levels elsewhere in this recommended order, it is reasonable to believe that the projections of occupancy are reasonable and will occur.
The projected opening date for the proposed facility is December 1988. T. 29.
Petitioner's proposed facility will be consistent with the following criteria contained in the local health plan applicable to Hillsborough County:
The local plan ranks Hillsborough County, northwest, as priority 1 among 6 regional priorities. This proposal is consistent with this criterion.
T. 30, Manor Care Ex. 1.
The local plan provides that applicants should at a minimum serve Medicaid patients in proportion to the representation of elderly poor in the subdistrict. T. 30. The subdistrict of Hillsborough County, northwest, has
18.6 percent persons age 65+ in poverty. Manor Care Ex. 1. The proposed facility is consistent with this criterion.
The local plan provides preference to applicants who historically complete projects on time. Manor Care's record on this point is consistent with this criterion. T. 31. See also paragraph 3 above.
The local plan requires that existing nursing homes must have been at an average rate of 90 percent occupancy or greater for the six months prior to new beds being approved. Manor Care Ex. 1. The occupancy rate has been over
95 percent since October 1985, T. 31, so this criterion is satisfied.
The local plan requires that available alternatives be considered. Manor Care Ex. 1. There are no available alternatives.
The local plan requires as a goal that the nursing home be within
30 minutes travel time of 90 percent of the urban residents and 45 minutes travel time of 90 percent of the rural residents. Manor Care Ex. 1. There is unrebutted evidence that this proposal will be consistent with that criterion. T. 32.
The local plan requires evaluation of the proposal against the achievement of the applicant of superior quality of care. Manor Care Ex. 1. Quality of care has not been questioned by HRS in this case. See finding of fact 5. Moreover, Manor Care has presented sufficient evidence that it will provide care of good quality. T. 45-9, 59-82.
The proposal is consistent with the state health plan since there is a need for the project, and the state health plan goals of consistency with state methodology and accessibility of services, are primarily related to need. T.
The services will be accessible to those with need. T. 33.
The Department of Health and Rehabilitative Services relies upon rule 10-5.11(21), Florida Administrative Code, to calculate bed need in this case. Hearing Officer Ex. 2, p. 2. All parties have calculated need using Hillsborough County as the proper subdistrict in District IV. Manor Care Ex. 14 accurately summarizes the mathematical method of the rule. Manor Care Ex. 6.
The method of calculation relied upon by HRS in this case depends upon application of incipient policy which seeks to implement the decision in the Gulf Court case. T. 154-5. That policy is initially contained in HRS Ex. 2, which is a memorandum from Steven W. Huss, General Counsel, dated March 6, 1986, and adopted as policy by the Administrator of Community Medical Facilities, Office of Health Planning and Development. The memorandum states that the "planning horizon" applicable to all applications for certificates of need shall be projected from the filing deadline of the application, but that "applications shall be evaluated using current or available data for projecting need for the applicable horizon. . . ." HRS Ex. 2. Included in the definition of "current health planning information" is "population." Id. The policies are not rules. T. 159.
The Department of Health and Rehabilitative Services put on no evidence to demonstrate the reasonableness of these policies as applied to the Petitioner in this case. T. 160.
In the case at bar, HRS proposes to implement the foregoing policy by establishing a "planning horizon" three years from the date that Petitioner's application was date-stamped in, but using "current data," meaning data as of the date of the formal administrative hearing. T. 154. The application was received in July 1985, and thus HRS proposes to establish July 1988 as the planning horizon. T. 163. It also proposes to use population estimates, the number of licensed and approved beds in the subdistrict, and the occupancy levels, from the most recent semiannual community nursing home report as of the date of the formal administrative hearing. T. 163-4. Thus, for "current populations," HRS proposes to use 1986 estimates of 1986 populations. T. 165.
Following rule 10-5.11(21) and applying the foregoing incipient policy, the Department calculates a need for 51 community nursing home beds in subdistrict Hillsborough County in the horizon year, July 1988. HRS Ex. 1, T.
154. This calculation is identical to Manor Care Ex. 16. T. 154. The Department proposes to deny Petitioner's application because this calculation does not show at least 60 beds needed. T. 145.
20. Following essentially the same mathematical formula contained in the rule, but with a single critical difference, the Petitioner calculates net bed need in Hillsborough County in July 1988 as 184 beds. T. 105, Manor Care Ex.
The critical difference is that Manor Care Ex. 15 uses a July 1, 1986 estimate of 1985 population in calculating "bed rate" within the mathematical formula of the rule. As stated above, HRS proposes to use the 1986 estimate of the 1986 population. Compare Manor Care Ex. 23 with Manor Care Ex. 15 and HRS Ex. 1. It should be noted that this distinction is not at all clear from an examination of Manor Care Ex. 15, which erroneously refers to the ages 65-74 population of 129,366 as "July 1, 1986," population, and the ages 75+ population of 89,297 as population of "July 1, 1986," also. These populations, however, are actually 1986 estimates of 1985 populations. See Manor Care Ex. 23. Manor Care's expert witness did not clearly make this distinction either, calling these "July 1, 1986," population projections, and referring to a "base period of July 1, 1985," without defining what he meant by "base period." T. 103-4.
The difference of 133 beds (184 compared to 51) in the two calculations proposed by the parties is caused by the fact that the so-called "bed rate" in the rule is inversely proportional to the population which is assumed to need the nursing home beds. Rule 10-5.11(21)(b) employs a "bed rate" defined as the number of licensed beds divided by the population ages 65 and older, presumably the primary users of nursing home beds. This so-called "bed rate" is then multiplied against the future population of expected users to obtain a bed need figure. (In effect the rule projects the status quo into the future.) If licensed beds, the numerator of the fraction, remains constant (as it does in the two methods discussed above), but the denominator increases (as it does when HRS uses 1986 populations instead of 1985), then the so-called "bed rate" decreases.
This result can be traced mathematically for the two methods. Rule
10-5.11(21)(b) calculates a "bed rate" for the population ages 65-74 (called BA) and 75+ (called BB). The number of licensed beds in the district, 5,617, remains constant in both methods. But in Manor Care Ex. 15, the 1986 estimates of 1985 population are 129,366 for the population ages 65-74, and 80,297 for the population ages 75+. In HRS Ex. 1 (and Manor Care Ex. 16) the 1986 estimate of 1986 population ages 65-74 is 133,730 and population ages 75+ is 93,666. The bed rate using the lower population figures (Manor Care Ex. 15) is 104.596 percent of the bed rate using 1986 estimates of 1986 population. In step 4 of the formula as presented in Manor Care Exs. 15 and 16, the preliminary subdistrict bed allocation (SA) is a result of multiplying the bed rate times the licensed beds. Consequently, the result using 1985 populations is a preliminary subdistrict bed allocation of 3,031. Using 1986 populations, the preliminary subdistrict bed allocation is 2,898. The expected difference is
104.596 percent of 2,898, or 133 beds.
Manor Care's expert witness presented an alternative calculation of bed need which used 1986 estimates of 1986 population to derive the bed rates BA and BB, but used 1989 as the planning horizon. T. 110. In this manner, the three-year period specified in the rule commences from the date of the formal administrative hearing. Everything else was the same as HRS Ex. 1. This method results in a subdistrict bed need in Hillsborough County of 162. T. 110, Manor Care Ex. 17.
The difference of 111 net beds between the method in HRS Ex. 1 and Manor Care Ex. 17 is the result of the increase of population in the two age groups projected between 1988 and 1989. Although the bed rates in HRS Ex. 1 and
Manor Care Ex. 17 are lower than the bed rates in Manor Care Ex. 15, these bed rates are multiplied directly against the projected populations in the horizon year. Rule 10-5.11(27)(b)1, Florida Administrative Code. The increase in projected population in 1989, compared to 1988, results in a need for 111 more beds despite the fact that both methods (HRS Ex. 1 and Manor Care Ex. 17) use the same bed rate.
In summary, comparing Manor Care Exs. 15 and 17 and HRS Ex. 1, it must be concluded that the effect in HRS Ex. 1 of using population data as of the time of the formal administrative hearing, but projecting need for a three-year period commencing before the formal administrative hearing, causes a diminution of projected need in all cases where the relevant population is increasing. On the one hand, the increase in populations used to compute bed rate results in a lower rate. On the other hand, the use of a horizon year that is less than the full three years from the date that the bed rate is calculated results in a lower horizon year population, and thus ultimately a lower net bed need. In effect, if the term "planning horizon" means a future date to which need is to be projected, beginning from a base date and using a need rate current as of the base date, then the method in HRS Ex. 1, which uses a 1986 bed rate projected to a 1988 population, is actually using only a two year "planning horizon."
As will be discussed in the conclusions of law, the method used by HRS to calculated bed need is not legally correct because it does not use data current as of the date of the application. The method proposed by the Petitioner using a 1989 planning horizon is not legally correct because the Petitioner cannot apply for beds in that horizon without amending its application and changing to a later batching cycle. The method proposed by the Petitioner in Manor Care Ex. 15 is essentially correct in method. However, it uses the wrong data because it fails to use data for licensed beds and occupancy rates preceding the batching cycle as required by the rule.
The correct calculation of need is the calculation found in Manor Care Ex. 15, but substituting the following data in the formula as indicated:
LB 5,270
LBD 2,392
AB 824
ABD 488 (approved beds in the subdistrict) OR 0.962
POPA 141,736
POPB 102,242
POPC 129,366
POPD 89,297
LB and LBD are supposed to be as of June 1, 1985, according to the rule. At the conclusion of the hearing and after receipt of post hearing proposed findings it was discovered that the record did not contain these figures. Thus, an order was entered reopening the record for the limited purpose of having the parties submit this data as of June 1, 1985. The parties did so, but the only data in existence was as of May 1, 1985. There is no reason in this record to believe that the figures LB and LBD changed in the 30 days to June 1, 1985, and thus the figures provided are accepted as June 1, 1985, totals for LB and LBD. Further, if LB and LBD are to be derived from the figures from Hearing Officer's Ex. 4, which are May 1, 1986, figures, the number of approved beds for the district (AB) and subdistrict (to be termed ABD in this order) should also be from the exhibit. AB and ABD above thus are from Hearing Officer's Ex. 4. The occupancy rate, however, has been derived from Manor Care Ex. 22 for the reasons stated in
finding of fact 32. LB, LBD, AB, ABD, and OR are new figures, and differ from Manor Care Ex. 15. All else in the computation which follows is the same as Manor Care Ex. 15. In this regard, POPA and POPB are 1986 estimates of 1985 populations, and POPC and POPD are 1986 estimates of 1988 populations. Strictly speaking, the rule seems to require 1985 estimates, but, as discussed in the conclusions of law, there seems to be little reason not to use the most recent estimates of these populations, which presumably would be more accurate.
Substituting the above figures in the formula found in Manor Care Ex. 15, the following is the proper calculation of net bed need in this case:
Step 1: A = (POPA x BA) + (POPB x BB)
A = (141,736 x BA) + (102,242 x BB)
A = (141, 736 x 0.007923) + (102,242 x
0.047538)
Step | 2: | A BA | = = | 1123 + 4860 5983 LB (FOPC + (6 x POPD) | |
BA | = | 5,270 | 5,270 | ||
BA | = | (129,366 + (6 x 89,297) 0.007923 | 665,148 | ||
Step | 3: | BB | = | 6 x BA | |
BB | = | 6 x 0.007923 | |||
BB | = | 0.047538 | |||
Step | 4: | SA SA SA | = = = | A x LBD x OR LB 0.90 5983 x 2,392 x 0.962 5,270 0.90 5983 x 0.4538899 x 1.0688889 |
SA 2903
Step 5: If LB + AB is less than 27
POPE 1,000
and PDB is greater than PBS, than PA 27 x POPE
1,000
If 5,270 + 824 = 0.0278694 is greater than 0.027, 218,663 then the poverty adjustment does
not apply.
Step 6: Not applicable because 0.0278694 is greater than 0.027
Step 7: LB 5,270 as of June 1, 1985
LBD 2,392 as of June 1, 1985
Step 8: Projections based on 3-year period from July 1, 1985 to July 1, 1988.
Step 9: NH = need SA - LB - (0.90 x ABD)
NH = need 2903 - 2392 - (0.90 x 488)
NH = need 2903 - 2392 - 439
NET NEED 72 beds
In January 1983, nursing homes in Hillsborough County were experiencing an occupancy rate of 91 percent on the average. Manor Care Ex. 22. In about July 1983, hospitals began to be affected by the new federal prospective payment system and diagnostic related groups (DRO's). T. 125-6.
The federal DRG system of Medicare reimbursement results in flat rate payments for specified numbers of days of hospital care. T. 50. Since the purpose of the system is to lower cost by decreasing the length of hospital stays, the result has been to produce a greater need for skilled nursing centers to care for sicker patients needing higher levels of care. Id., T. 88, 50. This increases the demand for short term skilled nursing placements. T. 88. As a result, there was greater utilization of existing nursing home beds in Hillsborough County, and by August 1983, the occupancy rate went to 96 percent on the average. Manor Care Ex. 22. By November 1983, it was at 97 percent.
Id.
In 1984, nursing homes in Hillsborough County averaged 97 percent occupancy. Manor Care Ex. 22.
In the first two months of 1985, existing nursing homes in Hillsborough County continued to experience a 97 percent occupancy. Manor Care Ex. 22. In March 1985, 120 new nursing home beds in Hillsborough County were opened, and the occupancy rate average dropped to 92 percent, but by July 1985 the average had climbed again to 95 percent. Id. In October 1985, another 120 beds were opened, and the rate again dropped to 91 percent, but by December 1985, it had increased to 94 percent. Id. The rate has been steady at 94 percent to March 1986, the last month for which there is data in the record.
Id. See also Manor Care Ex. 21. It should also be noted that the facility that opened in October 1985 had achieved an occupancy level of 95 percent in six months. T. 129.
The occupancy rate for subdistrict Hillsborough County for the period October 1984 through March 1985 was 96.2 percent. This is derived from Manor Care Ex. 22. The exhibit shows that the occupancy rate for the months of October 1984 through February 1985 was 97 percent. In March 1985, the rate dropped to 92 percent. The average of these six figures is 96.2 percent. It should be noted that this occupancy rate was used in findings of fact 26 and 27 instead of the lower occupancy rate found in Hearing Officer Ex. 4. The occupancy rate of 96.2 percent is more credible for several reasons. First, it was presented by a witness who was subject to cross-examination. If there had been a problem with the rate as depicted in Manor Care Ex. 22, the problem might have been exposed in cross examination. Second, it is based on a more detailed (month by month) set of data. Finally, it is consistent with the trend shown by Manor Care Ex. 22. The lower rate contained in Hearing Officer Ex. 4 is out-of- line from this trend, and therefore apparently in error.
Persons who most need nursing home services are 65 years or older, and these groups are projected to increase faster than the population ages 0-64 in Hillsborough County to the year 1990. Manor Care Ex. 23. From 1986 to 1990, the total population of Hillsborough County is estimated to grow each year at between 1.7 percent and 2.2 percent compared to the previous year. Manor Care Ex. 23. In the same four years, it is projected that the Hillsborough County age group 75+ will grow on the average at 4.6 percent each year, and the age group 65-74 will grow on the average at 2.7 percent each year. Id.
As discussed above, the change in the federal method of reimbursing hospital costs has resulted in sicker patients needing nursing care outside the hospital.
Florida sets a higher staffing requirement for skilled nursing care than other nursing facilities. T. 51. Skilled nursing care usually requires more staff, better trained staff capable of coping with multiple health problems, closer monitoring of patients, closer communication with physicians and hospitals, and more supplies. T. 61-2. Skilled nursing is more expensive. Id.
A nursing home may elect not to provide skilled nursing because its current staff lacks sufficient training, because of exposure to greater liability, and because skilled nursing care is more difficult. T. 51.
Nursing homes that can achieve high occupancy levels without skilled nursing care have less incentive to provide such care. T. 34. Hillsborough County appears to have such high occupancy levels that there may be less incentive for existing nursing homes to provide skilled nursing care. Id.
Ten of the nursing homes in Hillsborough County each provide less then
1 percent of their services to Medicare patients. T. 130. Of these, six provide no Medicare services. Id. Thus, about one-half of the nursing homes in Hillsborough County provide no Medicare skilled nursing. Id.
The three largest hospitals in Tampa currently have waiting lists for placement of patients needing skilled nursing care. T. 22. These hospitals have trouble placing patients after hospitalization, and demand for nursing home services exceeds availability. Manor Care Ex. 24, p. 7, T. 84. This often results in such patients having to stay longer in the hospital. T. 85.
The following skilled nursing services are not adequately available in Hillsborough County: intravenous therapy, hyperalimentation therapy, and tracheostomy care. T. 24-5, 84-6, 89-90.
Intravenous therapy involves the injection of fluids directly into a vein. T. 66. This therapy requires close monitoring by trained staff. T. 68. Manor Care proposes to provide intravenous therapy for up to four patients a day. T. 70.
A tracheostomy is an opening at the base of the neck into which a tube is inserted to create an open airway. T. 70-1. Patients needing this type of care include neurological traumas, stroke patients, and head trauma victims. T.
These patients are usually unstable and the tracheostomy requires close attention, sterility, and suction. T. 71-2. Manor Care proposes to provide tracheostomy care. Manor Care Ex. 1, section III, paragraph 5.
Hyperalimentation therapy is either tube feeding through the gastro- intestinal tract, or through a vein. T. 73-4. Until about two years ago, this therapy was not typically provided in a nursing home. T. 74. Patients requiring this therapy are those with problems with excessive vomiting, diarrhea, bowel obstructions or cancer, and massive gastro-intestinal surgery. Id. Hypralimentation therapy may be short-term or long-term. Id. The procedure requires great care, caution, and specially trained staff. T. 75.
There is a need in Hillsborough County for additional respite care.
T. 87. The same admission paperwork is needed for a patient coming for only two days for respite care as for a patient that is to be a long-term patient, T. 54, and this acts as a disincentive to providing such care.
There are two adult congregate living facilities in the Tampa community now. T. 89. One is associated with sheltered nursing home beds, and the other is associated with nursing home beds that are partially available to persons not residing in the ACLF. T. 91.
Manor HealthCare Corporation has nine nursing centers in Florida. T.
All are certified for Medicare. T. 49-50. Medicare has high criteria for skill level, and thus a nursing home that is certified for Medicare is capable of treating patients needing higher nursing skills. T. 50.
Manor HealthCare has contracted with three health maintenance organizations to provide skilled nursing care, and is negotiating with four others for the same services. T. 44. These contracts enable the health maintenance organizations to move patients from acute care in a hospital to a lower cost skilled nursing care. T. 45.
District VI, which includes Hillsborough County, has a higher poverty level for persons 65 years of age and over than Florida as a whole. T. 117. However, the poverty adjustment does not apply in this case. See finding of fact 28, steps 5 and 6.
Subparagraph (b)5 of the rule provides a "poverty adjustment" to allocate at least 27 beds per 1,000 residents 65 years of age or older "in the current year." T. 112. Thus, the adjustment does not project a number of beds into the future. Id. Manor Care demonstrated that it would make a significant difference if this adjustment were based upon the number of residents 65 years of age and older in the horizon year. Applying the rule as currently written, HRS Ex. 1 and Manor Care Ex. 16, which are identical, show net need of 51. Using this same method if the population age 65+ in the horizon year (1988) is used, the net need is 99. T. 111-9, Manor Care Ex. 19.
On August 22, 1986, the Department of Health and Rehabilitative Services published notice of intent to amend subparagraph (b)5 of rule 10- 5.11(27) to provide that the poverty adjustment would allocate no less than 27 nursing home beds per 1,000 population 65 years of age or over projected three years into the future. Vol. 12, No. 34, p. 3060, Florida Administrative Weekly. The proposed rule was withdrawn on September 12, 1986. Vol. 12, No. 37, p. 3384, Florida Administrative Weekly, Hearing Officer Ex. 4.
HRS has previously approved certificate of need applications for nursing home beds despite lack of numerical need. T. 141-2. Apparently HRS construes rule 10-5.11(21)(b)10 as not constituting an exclusive list of exceptions justifying grant of a certificate of need despite lack of numerical need. T. 142.
There is a need for the 60 bed skilled nursing facility as proposed in this formal administrative hearing by the Petitioner. Existing facilities do not fulfill this need, and there are no adequate alternatives.
CONCLUSIONS OF LAW
Jurisdiction exists pursuant to section 120.57(1), Fla. Stat. (1985).
The central issue is calculation of need pursuant to Rule 10- 5.11(21)(b), Florida Administrative Code. The first problem encountered in the rule is the underlined section in subparagraph (b):
(b) Need Methodology [T]he
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. (E.S.)
A projection into the future has to start somewhere, and the rule does not identify the starting point.
The Department now follows an incipient policy seeking to implement the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1986). The first part of that incipient policy is that the "planning horizon" in all certificate of need proceedings will be calculated from the filing deadline for applications established by HRS rule.
The incipient policy provides a reasonable basis for interpreting the quoted portion of subparagraph (b) above to mean that projected need "three years into the future" starts from the date that the Petitioner filed its application for community nursing home beds, July 1985. The rule is obviously written to guide staff in the review of applications. The date of the application triggers the beginning of that review process. To construe subparagraph (b) as intending commencement of the three-year period at some later date would leave staff adrift since there is no other logical date ascertainable at the time initial review begins. Certainly staff could not then know if or when the application might be considered at a formal administrative hearing. Moreover, such a construction of the rule is mandated by Gulf Court since that decision clearly establishes the application as the vehicle which creates priority rights among competing applicants for certificates of need. Indeed, the Gulf Court rationale was extended by University Medical Center, Inc.
v. Department of Health and Rehabilitative Services, 483 So.2d 712 (Fla. 1st DCA 1986), which applied the acute care hospital bed need rule using the date of the application as the date for establishing the date for projecting need.
The next problem in the application of rule 10-5.11(21) to the Petitioner in this case is to determine whether the bed rates BA and BB in subparagraphs (b)1 and 2 are to be calculated using populations at the time of the application or at the time of the formal administrative hearing. The rule demands "current" data, but does not say whether such data is to be current as of the date of the application or the date of the formal administrative hearing.
That "current" data is required to be gleaned from several places in the rule. The bed rates themselves, BA and BB in the formula, See subparagraph (b)1, are defined as the estimated "current bed rate." The formula which is provided to calculate BA and BB uses the "current population" for the two age groups. See subparagraph (b)2. And finally, the second sentence of subparagraph (b), which announces what the rule is supposed to be doing, states that "[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 "
However, the rule must be construed in its entirety, and all parts of the rule must be given a construction so as to work harmoniously with other parts of the rule. When this is done, "current" data must mean current as of the date of the application. The bed rate for the age group 65-74, BA, which is the only relevant one (since BB is simply 6 x BA), is defined by paragraph (b)2 of the rule as follows:
BA LB/ (POPC + (6 x POPD)
where:
LB is the number of licensed community nursing beds in the relevant district.
POPC is the current population age 65-74 years.
POPD is the current population age 75 years and over.
The "licensed beds" figure (LB) is then defined by paragraph (b)7 as follows:
7. Review of applications submitted for the July batching cycle shall be based upon the number of licenses [sic) beds (LB and LBD) as of June 1 preceding that cycle, applications for the January batching cycle shall be based upon the number of licensed beds (LB and LBD) as of December 1 preceding that cycle. (E.S.)
The "batching cycle" for the Petitioner's application was established by rule 10-5.08, and the date of the cycle (in this case, July) was established by the date of the application. See rule 10-5.08.
Thus, pursuant to rule 10-5.11(27)(b)7, LB (the number of licensed beds in the formula) is ascertained in the case at bar with reference to the date of the batching cycle, which is July 1985 in this case. The number of licensed beds, LB, is fixed pursuant to rule 10-5.11(27)(b)7, as of June 1, 1985. Determination of LB at another time is contrary to the rule.
If the numerator of the fraction BA, the bed rate for the population age 65-74, is LB, and LB is derived from June 1, 1985, data, it seems only logical and reasonable that the denominator will be derived from data from the same general time. Otherwise, the "bed rate" will be a mongrel combination of data from different periods of time. This would make no sense because then the fraction would be composed of the inventory of licensed beds in 1985 divided by the presumed using population at a later time, which by definition could not have actually been the using population in 1985. The bed rate thus would not be an actual use rate at all, nor would it be a ratio of licensed beds to using population both in existence at the same time. Of course, there may be a health planning reason for mixing data bases, but the record is devoid of explanation for such a construction of the rule. Absent a record basis, such a facially illogical mixing of data will not be presumed to have been intended by the Department.
Thus, when HRS specified in subparagraph (b)2 that "current" populations be used, it must have meant current as of the date that the Petitioner filed its application in July 1985. Since the source of the population data is the Office of the Governor, see subparagraph (b)8 of the rule, the word "current" must also mean the most current population estimates from the Office of the Governor immediately preceding the batching cycle.
It must be remembered, however, that all populations are only estimates rather than actual counts, in contrast to the licensed bed count and the occupancy rates. For this reason it would be reasonable to use the latest estimates of 1985 estimated populations rather than the estimates that were available at the time of application. In this case, this means using 1986 estimates of July 1985 populations. These are still "current" as of July 1985 since it is still the July 1985 populations which are to be estimated. But presumably an estimate of this data as of the date of the formal administrative hearing would be more accurate. (In the same manner, 1986 estimates of horizon year 1988 populations would also logically be used rather than 1985 estimates of 1988 populations.) In summary, as long as the date of the population data to be estimated is established as "current" by the date of application, the estimation might just as well be the latest available estimation as of the date of the formal hearing.
The Department in this case however, proposes to approach the problem of what is meant by "current" population data by application of phase two of its incipient policy implementing the Gulf Court case. That incipient policy would have HRS use data "current" as of the date of the formal administrative hearing in all cases. From this, HRS argues, "current" populations used in rule 10- 5.11(21)(b) must be estimates of 1986 populations.
In the ordinary certificate of need case, the failure of HRS to establish its reasons for its new Gulf Court incipient policy is of little importance because the policy as applied often is facially reasonable. In this case, the policy produces a facially unreasonable result: the more the elderly population increases in an area, the fewer nursing home beds HRS will allow. It does not take much analysis to see that this is wrong, at least facially. Had the Department presented evidence to show the basis for this result in this case, perhaps the policy as applied in this case could be found to be reasonable. On this record, however, it must be concluded that application of the Gulf Court incipient policy to construe the rule to require population data in subparagraph (b)2 of the rule to mean population as of the date of the formal administrative hearing is unreasonable, and not supported by record evidence.
The poverty adjustment does not apply in this case. If the poverty adjustment is to be made, however, rule 10-5.11(27)(b)5 states that "the district shall be allocated a total of 27 community nursing home beds per thousand residents age 65 and older in the current year." It is very plain that this rule does not allow use of the 65+ population projected to the horizon year as proposed by the Petitioner, and no amount of construction can give it that meaning.
It is also apparent that "current" year as used in the poverty adjustment must mean the year of filing of the application, not the year of formal administrative hearing. This follows because the formula used in the poverty adjustment also used LB, licensed beds in two places, see subparagraphs (b)5 and 6, and as discussed above, LB is ascertained immediately preceding the batching cycle, i.e., immediately preceding the filing of the application. For the reasons already discussed above, the Department could not have intended to mix data in the formula from different years. Moreover, this construction is required because POPE, which is used in subparagraph (b)5 of the rule for the poverty adjustment, is defined therein to be the sum of POPC and POPD. POPC and POPD are the populations of the groups ages 65-74 and 75+, respectively, used to find the bed rate in subparagraphs (b)1 and 2, and are populations as of the date of the application as discussed above. Thus, POPE itself means populations
as of the date of the application. Finally, AB, the number of approved beds used in the poverty adjustment, must mean as of the same time as LB is ascertained, June 1 preceding the cycle, since all of the other data in the formula is as of that date.
The foregoing interpretation of rule 10-5.11(21)(b) reaches a bizarre but unavoidable result: if the poverty adjustment is to be based upon estimated populations as of the time of the application, the adjustment may operate to allocate fewer nursing home beds rather than more. This occurs, however, due to the wording of the rule itself. Both the bed rates, BA and BB, and the poverty adjustment, are driven by "current" populations. If BA and BB are construed to give full effect, logic, and reasonable meaning to the concept of a three year projection of need using a historic use rate at the beginning of the three year period, then the poverty adjustment suffers. The result is inevitable, however, since the concept of a full three year planning horizon and the bed rates, BA and BB, are far more important features of the rule than the poverty adjustment, and the correct interpretation of these portions of the formula must override the poverty adjustment.
It thus must be concluded that the only correct calculation of need pursuant to the formula of rule 10-5.11(21)(b) is that found in findings of fact
27 and 28, and all others in the record are irrelevant. There is a net need of
72 community nursing home beds in Hillsborough County by July 1988, the horizon year.
Since there is a need for the 60 nursing home beds sought by the Petitioner, there is little reason to base need in this case upon other evidence of need. The conclusion of net need is bolstered, however, by the very high occupancy rates in the county, see findings of fact 29-32, and the proportionally larger expected increase projected in the populations of persons who will need nursing home care, see finding of fact 33.
Petitioner has also presented an unrebutted case of need in Hillsborough County in 1988 for skilled nursing home care, see findings of fact 34-45, and has adequately demonstrated that Manor Care would fulfill that need. See findings of fact 4, 6, 46, and 47.
For these reasons, the application of the Petitioner for 60 skilled nursing home beds as described in the record of this case by the Petitioner should be granted.
Ruling was reserved upon the admissibility of Manor Care Exhibits 15, 17, 18, 19, and 20. Exhibits 15 and 17 are relevant to issues presented in this case and are admitted into evidence. Exhibits 18, 19, and 20 calculate need based upon the proposed amendment to rule 10-5.11(21) which would have calculated the poverty adjustment based on horizon year populations. Since the proposed amendment has been withdrawn, and since the rule as currently in effect clearly uses current populations, these three exhibits are irrelevant. The objections to these exhibits are sustained, and the exhibits are not admitted into evidence.
RECOMMENDED ORDER
Upon consideration of the foregoing, it is recommended that the Department of Health and Rehabilitative Services enter its final order granting a certificate of need to Manor Care of Hillsborough County for 60 skilled community nursing home beds as described by the Petitioner in the record of this case, except that such final order should give proper consideration to the priorities that may exist in favor of earlier batched applicants for community nursing home beds in the same subdistrict.
DONE and ORDERED this 10th day of October 1986, in Tallahassee, Florida.
WILLIAM C. SHERRILL, JR.
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
FILED with the Clerk of the Division of Administrative Hearings this 10th day of October 1986.
APPENDIX ONE
TO RECOMMENDED ORDER IN DOAH CASE NUMBER 86-0051
The following, using the numbers used by each party, are specific rulings upon each finding of fact proposed by each party which has been rejected in this Recommended Order.
Findings of fact proposed by the Petitioner, Manor Care of Hillsborough County.
The only criterion at issue is need. See findings of fact 3-5. Thus, this proposed finding is not relevant.
Irrelevant. See 1 above. Performance in other areas is not proof of need in Hillsborough County.
Rejected as not supported by the record cited.
7. Irrelevant. See 1 above.
12. Rejected because the record does not support the conclusion that the "Reach" program is an insurance mechanism and because the testimony was too general to be relevant to the application in this case.
16. The second sentence is rejected because the testimony cited was not specific for this project.
23. Rejected because the underlying reasons that motivated Manor Care to apply for a certificate of need are not relevant. The only issue in the case is whether need exists.
27. The second sentence is rejected as cumulative and unnecessary.
30. This proposed finding has been adopted in the findings of fact in various places, but not in summary fashion as proposed.
35. This proposed finding has been adopted except that the 1985 licensed beds (LB and LBD) and occupancy rates preceding the batching cycle must be used rather than the date in Manor Care Ex. 15.
37. The second sentence is rejected as an argument of law.
The first sentence is an issue of law.
Rejected as irrelevant since the poverty adjustment in the rule is clear and must be applied as it is written.
Rejected as irrelevant since the poverty adjustment in the rule is clear and must be applied as it is written.
Irrelevant. See conclusion of law 22.
Irrelevant. See conclusion of law 22.
51. The second sentence is rejected because not supported by the record cited.
56. The first sentence is rejected because the adjective "most" is not supported by the record cited.
61. Rejected as cumulative and not needed.
65. Irrelevant as discussed in proposed finding of fact 1, supra.
Irrelevant, see proposed finding of fact 1, supra.
In the second sentence, the phrase "in those areas where no other home offers this service" is not supported by the record cited.
74. Irrelevant, see proposed finding of fact 1, supra.
79. Not supported by the record cited.
Irrelevant, see proposed finding of fact 1, supra.
The first sentence is not supported by the record cited. The second sentence is irrelevant.
Irrelevant.
Not clearly established by the record.
87. The record does not say whether there are "only" two ACLF's in Hillsborough County.
892. The proposed finding appears to be taken out of context. See T. 141-
2. The witness appears to have been speaking of the policy of HRS to take a single position at the formal administrative hearing, not the policy of HRS to consider the results of the formal administrative hearing in formulating its final order.
93. Irrelevant since the witness based his opinion solely upon lack of numerical need.
100. The record does not support the conclusion that Mr. Maryanski is not an expert in health care planning. It is true that Steve Huss is not an expert in health care planning, and irrelevant since his memorandum is only legal interpretation of the Gulf Court decision.
112. The record cited does not support the conclusion that Manor Care has "superior" quality of care ratings. B. Findings of fact proposed by the Respondent, the Department of Health and Rehabilitative Services.
4. The second sentence is a question of law.
COPIES FURNISHED:
Richard A. Patterson, Esquire Assistant General Counsel Department of Health and
Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard
Tallahassee, Florida 32301
James C. Hauser, Esquire Messer, Vickers, Caparello,
French & Madsen Post Office Box 1876
Tallahassee, Florida 32302
Alfred W. Clark, Jr., Esquire Laramore & Clark, P.A.
325 N. Calhoun Street Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
MANOR CARE OF HILLSBOROUGH COUNTY,
Petitioner,
vs. CASE NO. 86-0051
CON NO. 4155
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 Respondent, Department of Health and Rehabilitative Services.
RULING ON EXCEPTIONS FILED BY HRS
Exception number one (1) is denied as the Hearing Officer is merely referring dates and data obtained from Hearing Officer exhibit number four (4).
Exception number two (2) is granted in that the sentence objected to is a conclusion of law.
Exception number three (3) is granted in that there is no substantial competent evidence supporting the Hearing Officer's conclusion that 1986 estimates of 1985 and 1988 populations are more accurate than 1985 estimates of 1985 and 1988 populations.
Exception number four (4) is granted. The number of approved beds is counted as of the date of approval of the State Agency Action Report.
RULING ON EXCEPTIONS FILED BY HEALTH CARE AND RETIREMENT CORPORATION
HCR's petition to intervene is granted in order to confer party status for purposes of judicial review. If this c order were reversed by an appellate court and beds awarded to Manor Care, the inventory of approved beds would increase. Conversely the fixed pool available in HCRs planning horizon would be decreased. HCR, an earlier batched application is a substantially affected person.
RULING ON EXCEPTIONS FILED BY MANOR CARE
Exception number one (1) is denied for the reasons stated by the Hearing Officer.
Exception number two (2) is denied for the reasons stated by the Hearing Officer.
Exception number three (3) is denied. See Ruling on HCR exceptions.
Exception number four (4) is granted. "West" is correct to "Northwest".
Exception number five (5) is denied. The Hearing Officers observation is a fair comment on the record.
Exception number 6 is denied. Gulf Court Nursing Center vs. Dept. of HRS, et al., 483 So.2d 700 (1st DCA 1986).
Exception number seven (7) is denied on the basis of the conclusions of law set forth in this order.
Exception number eight (8) is denied for the reasons set forth in this order's conclusions of law.
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 Exceptions.
CONCLUSIONS OF LAW
HRS hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order. Because this order approves an important change in HRS policy an data to be used in computing need under the nursing home need, I will elaborate further.
In summary the need methodology 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 the estimated population divided by the number of licensed beds) times the estimated population of the District in the year of the planning horizon. The
Hearing Officer correctly pointed out that the prior policy of HRS of using the estimate of the population at the time of the 120.57 hearing as the denominator of the bed rate ratio was contrary to mathematical logic in that the bed rate would decrease as the population increases. Any change in the numerator (number of licensed beds) between the time of initial review and time of the final
120.57 hearing would be purely fortuitous. There is no basis in health planning for a declining bed rate where the population is increasing. The numerator and denominator of the bed rate should pertain to the same approximate time period to avoid the illogical result.
The Hearing Officer also correctly pointed out that Rule 10-5.11(21)(b) uses a three (3) year planning horizon and that the bed rate ratio is properly the number of licensed beds at the time of the review cycle when the application is reviewed divided by the estimated population at the time of the review cycle when the application is reviewed. 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. In this case the Petitioner's application was reviewed in July
1985 so the current bed rate is the number of licensed beds as of July 1985 over the estimated population as of July 1985.
It is now the HRS policy to use at final 120.57 hearing 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. As noted in the ruling on exceptions HRS rejects the Hearing Officer's conclusion that the population estimates available at the time of the 120.57 hearing are more accurate than the estimates available at the time of initial (free form) review. Using data available at the time of initial review there is a net need of 3 beds for the July 1988 planning horizon. There are no special circumstances justifying approval of the CON sought here.
It is my conclusion based on a balanced weighing of all relevant criteria that petitioner's proposal should not be approved.
Based upon the foregoing, it is
ADJUDGED, that petitioner's application for certificate of need number 4155 be denied.
DONE and ORDERED this 5th day of February 1987, in Tallahassee, Florida.
GREGORY L. COLER
Secretary
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 TO:
Alfred W. Clark, Esquire James C. Hauser, Esquire
325 North Calhoun Street First Florida Bank Building Tallahassee, Florida 32301 P.O. Box 1876, Ste. 701
Tallahassee, Florida 32302-1876
Richard A. Patterson, Esquire William C. Sherrill, Jr. Assistant General Counsel Hearing Officer Department of Health and DOAH, The Oakland Bldg.
Rehabilitative Services 2009 Apalachee Parkway 1323 Winewood Blvd. Tallahassee, Florida 32301 Building One, Room 407
Tallahassee, Florida 32399-0700
Nell Mitchem (PDCFM) 1317 Winewood Boulevard
Building 2, Room 255
Tallahassee, Florida 32399-0700
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 |
|---|---|
| Oct. 10, 1986 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 05, 1987 | Agency Final Order | |
| Oct. 10, 1986 | Recommended Order | Certificate Of Need denied. Current population and bed rate estimates pertain to time of review cycle, not time of hearing. HRS policy change in computations approved. |
