STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN THE MATTER OF: ) CASE NOS. 87-3447

) 87-3448

Nursing Home Certificate of ) 87-3449

Need Applications, Pinellas ) 87-3453

County, January 1987 Batching ) 87-3455

Cycle. ) 87-3456

) 87-3463

87-3465

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on April 18-22, April 25-29, May 2-6, June 20 and June 21, 1988, in Tallahassee, Florida. The issues for determination in this proceeding are whether the applications submitted by the parties for Certificates of Need to construct and operate community nursing home beds in Pinellas County should be granted.

APPEARANCES

For Health Quest: Steven W. Huss, Esquire

1017 Thomasville Road, Suite C Tallahassee, Florida 32303

For Florida Douglas L. Mannheimer, Esquire Country Place: Sandra P. Stockwell, Esquire

820 East Park Avenue, Building F Tallahassee, Florida 32301

For Forum: R. Terry Rigsby, Esquire

J. David Holder, Esquire

325 John Knox Road, Suite C-135 Tallahassee, Florida 32303

For CSI: W. David Watkins, Esquire Harold F. X. Purnell, Esquire Post Office Box 6507 Tallahassee, Florida 32314

For Mediplex: Karen L. Goldsmith, Esquire

Jonathan S. Grout, Esquire Post Office Box 10651 Tallahassee, Florida 32302

For Manor Care: James C. Hauser, Esquire

Joy Heath Thomas, Esquire

215 South Monroe Street, Suite 701 Tallahassee, Florida 32301

For HCR: Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302

For VHA/Oxford: Paul Amundsen, Esquire

Guy Collier, Esquire Byron B. Mathews, Esquire Vicki Kaufman, Esquire 700 Brickell Avenue

Miami, Florida 33131-2802

For HRS: Edgar Lee Elzie, Esquire

215 South Monroe Street, Suite 804 Tallahassee, Florida 32301

INTRODUCTION

In January of 1987, each of the following parties in this proceeding submitted an application for a Certificate of Need to Construct and operate community nursing home beds in Pinellas County, Florida: Health Quest Corporation, d/b/a Regents Park of St. Petersburg ("Health Quest"); Florida Country Place Limited Partnership, d/b/a Pinellas Country Place ("Florida Country Place"); Forum Group, Inc., Sponsor of Retirement Living of Pinellas County ("Forum"); Pinellas Healthcare, Ltd., d/b/a Convalescent Nursing Center of Pinellas County ("CSI"); The Mediplex Group, Inc., d/b/a Florida Convalescent Associates of Pinellas County ("Mediplex"); Manor Care of Florida, Inc., d/b/a Manor Care of Pinellas County ("Manor Care"); Health Care and Retirement of America, d/b/a Pasadena Manor ("HCR"); and VHA/Oxford Senior Living Ventures, d/b/a Oxford Pinellas Nursing Associates ("VHA/Oxford"). The respondent, Department of Health and Rehabilitative Services ("HRS"), initially proposed to grant Certificates of Need to Mediplex for 120 beds, to Manor Care for 120 beds, to HCR for a 58-bed addition to its existing nursing home facility and to VHA/Oxford for 120 beds, and to deny the remaining applicants. Arbor Health Care Company, d/b/a Pinellas Health Care ("Arbor"), Health Quest, Florida Country Place, Forum and CSI requested an administrative hearing. After the first day of hearing, Arbor voluntarily dismissed its petition for an administrative hearing.

In support of its application for a Certificate of Need, Health Quest presented the testimony of Kevin Krisher, accepted as an expert in the area of health care planning; Fran Meuse, accepted as an expert in the areas of gerontologicl nursing, quality of care and quality assurance; Paul Reilly, accepted as an expert in medical facility design, architecture, construction and related costs; and Robert A. Beiseigel, accepted as an expert in financial analysis and feasibility, with emphasis upon the provision of health care services. Health Quest's Exhibits 1 through 7, 9 through 24 and 26 through 29 were received into evidence.

In support of its application, Florida Country Place presented the testimony of Charles Dennis, accepted as an expert in nursing home administration, including nursing home operations, development, staffing salaries, equipment, quality of care and marketing; Kim Phillips, accepted as an expert in architecture and construction cost estimating with respect to nursing home and multi-family design; Kenneth Whisenand; Scott Phillips, accepted as an expert in nursing home and senior housing budgeting, financial feasibility, financial operations and financial management; Donald M. Dahlfues, accepted as an expert in nursing home and retirement community planning and financial

feasibility; and Gene Nelson, accepted as an expert in health care planning. Florida Country Place Exhibits 1 through 7, 9 through 11, 13, 15, 25 through 30,

33 through 38, 40 through 43, 46, 48 through 51 and 53 through 59 were received into evidence.

Forum presented the following witnesses in support of its application: Donald I. Craig, Jr., accepted as an expert in the areas of health care planning and nursing home development; David Warner, accepted as an expert in health care planning, including need analysis and health care finance; Rita McDonald, accepted as an expert in nursing home operations, including staffing and quality assurance; Raymond G. Lewis, accepted a an expert in the area of third party reimbursement; David J. Kantner, accepted as an expert in long-term health care finance, including financial feasibility analysis; and David Reynolds, accepted as an expert in architecture, including the design and cost management of nursing homes and construction cost estimating, including equipment costs.

Forum's Exhibits 1 through 16 were received into evidence.

CSI presented the testimony of Deborah P. Kennedy, accepted as an expert in health-care planning and nursing home development; Mike Wilson, accepted as an expert in nursing home construction, design, pricing and equipment; Rick A. Winkler, accepted as an expert in nursing home administration and operations; Rosemary Lane, accepted as an expert in the areas of nursing and quality assurance programming; Merrill T. Jones, accepted as an expert in nursing home design and construction, including construction cost estimating; Joseph V. Lennartz, accepted as an expert in nursing home finance, including budgeting, financial feasibility analysis and third party reimbursement; Arnold M. Braaten, accepted as an expert in nursing home finance; Judith Saikley, accepted as an expert in marketing programs, community relations and activities programming; and Michael Douglas Jernigan, accepted as an expert in health care planning.

CSI's Exhibits 1 through 12 and 14, 18 and 19 were received into evidence.

In support of its application, Mediplex presented the testimony of Jeffrey Minez; Leonard J. Denenberg, Michael B. Gruby, accepted as an expert in the area of health care facility construction costs and scheduling; Ray Bolt, accepted as an expert in health care accounting, including Medicaid reimbursement, financial feasibility and projection of nursing home revenue and expenses; John Clees, accepted as an expert in health care facility architecture and design, including nursing homes; Harold Albert Knight, III, accepted as an expert in health care planning; Elizabeth O'Malley; Rosemary Clark, accepted as an expert in nursing home staffing and quality assurance; James L. Dupes, accepted as an expert in nursing home administration; and Cynthia Peters. Received into evidence were Mediplex Exhibits 1 through 4 and 6 through 8, which included the deposition testimony of John E. Donaldson, Jr., the vice president and treasurer of Avon Products, Inc., and Patrick B. Styer, the vice- President and chief financial officer of the Mediplex Group, Inc.

Manor Care presented the following witnesses in support of its application: Rachelle Walter, accepted as an expert in the area of health care planning; Rene Owens; Karen Caldwell, accepted as an expert in the area of quality assurance; John R. Downey, Jr., accepted as an expert in the area of nursing home equipment and equipment costs; Alex R. Boyer, accepted as an expert in nursing home finance and financial feasibility; Jack L. Bowersox, accepted as an expert in nursing home architecture, design and cost estimation; and John Lee, accepted as an expert in nursing home administration and operations. Manor Care's Exhibits

1 through 14, and 16 through 20 were received into evidence.

In support of its application, HCR presented the testimony of Paul Sieben, accepted as an expert in the field of architecture, including design, construction cost and equipment cost; Milo Bishop, accepted as an expert in health care planning; and Emmy Filetti, accepted as an expert in financial analysis of the development and operations of nursing homes. By stipulation of all parties, HCR also presented the prior written testimony of Richard Giles, accepted as an expert in nursing home administration, and Carolyn Lookabill, accepted as an expert in the design and development of programs for the treatment of Alzheimer's Disease and related disorder victims. HCR's Exhibits 1 through 21 were received into evidence.

VHA/Oxford presented the following witnesses in support of its application: Reatha Clark, accepted as an expert in financial feasibility; Michael Lanahan, accepted as an expert in health care facility finance; Albert Diehl, accepted as an expert in real estate development with emphasis on the development of housing for the elderly; Judy Ullery, accepted as an expert in nursing home operations, which includes operational expenses, staffing, programming and quality assurance; David Sain, accepted as an expert in nursing home equipment purchasing; Gary R. Wagoner, accepted as an expert in nursing home architecture; and Maria M. Sheats. VHA/Oxford's Exhibits 1 through 4 were received into evidence.

The Department of Health and Rehabilitative Services presented the testimony of Reid Jaffe, accepted as an expert in health planning as related to Certificate of Need review in Florida, and Elizabeth Dudek. HRS's Exhibits 1 through 3 and 6 were received into evidence.

Subsequent to the hearing, each of the parties filed proposed findings of fact and proposed conclusions of law. CSI moved to strike two findings of fact submitted by VHA/Oxford and Manor Care moved to strike from the findings of fact submitted by Mediplex any objection to an exhibit received into evidence on behalf of Manor Care. The undersigned has considered said motions to strike as well as the responses filed thereto, and hereby denies both motions to strike.

The motions to strike are more in the nature of responses to the proposed recommended orders submitted by other parties, and the substance of the motions are addressed in the Findings of Fact and Conclusions of Law set forth in this Recommended Order. The parties' proposed recommended orders have been fully reviewed and considered. To the extent that the parties' proposed findings of fact are not included or summarized in this Recommended Order, they are rejected for the reasons set forth in the Appendix hereto.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

Health Quest Corporation

1. Health Quest Corporation has been in operation for approximately 20 years and currently operates 11 nursing centers in the States of Indiana, Illinois and Florida. Its three existing Florida facilities are located in Jacksonville, Boca Raton and Sarasota. It also has nursing centers under construction in Winter Park, Kendall and Sunrise, Florida, as well as four more in Indiana. Health Quest has a Certificate of Need to build a new 180-bed nursing center in Sarasota County, and that project is currently under development. Health Quest also holds Certificates of Need for nursing centers in Pembroke Pines, Duval County and Safety Harbor. The Safety Harbor approved

   Certificate of Need for 120 beds is in Pinellas County. Due to a revision of its development plans for Florida, Health Quest now plans to transfer or sell its CONs and sites in Pembroke Pines, Duval County and Safety Harbor. Whereas the company had formerly planned to build seven new Florida facilities simultaneously, it has now decided to build only four facilities in each generation of Florida projects. The decision to trim its development schedule is based upon Health Quest's reluctance to temporarily expand its present staff of management personnel and its refusal to compromise its quality standards for the sake of developing a larger quantity of new facilities. It is contemplated that the proposed facility in Pinellas County would be built after the completion of its nursing and retirement centers in Winter Park and Sunrise.

   
   

2. The Letter of Intent filed with HRS noticed Health Quest's intent to request a Certificate of Need for 120 community nursing home beds in Pinellas County. However, the actual application filed with HRS, and the project being pursued in this proceeding, is for a 180-bed nursing center. HRS accepted the 180-bed application, and no party has demonstrated prejudice from the discrepancy between Health Quest's Letter of Intent and its application.

   
   

3. The nursing center is proposed for the northern area of Pinellas County and is to be integrated with a 124-apartment assisted living residence. The nursing center will contain a specialized 60-bed unit for the care of residents suffering from organic brain syndrome, which includes Alzheimer's disease and related dementias. Health Quest currently operates organic brain syndrome units at two of its Indiana nursing centers. In this unit, Health Quest proposes a nursing staff ratio of 3.5 hours per patient day. A non-supervisory nursing staff ratio of approximately 3.0 hours per patient day is proposed for the remaining 120 beds. Its proposed staffing is sufficient to provide 24-hour registered nursing coverage on each of the three proposed nursing units, and its staffing level is slightly higher than that proposed by the other applicants in this proceeding.

   
   

4. Health Quest intends to offer sub-acute care, including hyperalimentation and intravenous treatment, respite care and vacation care and, possibly, adult day care. Therapy treatment, including physical, occupational, speech, audiology and psychosocial, will be provided through an affiliate of the Health Quest Corporation, known as Achievement Rehabilitation Corporation.

   
   

5. Health Quest maintains a quality assurance program based on a system of peer review. Its Jacksonville and Boca Raton nursing centers hold superior licenses. Its Sarasota nursing center is not yet eligible for a superior license because it has only been open since November of 1986. It also offers orientation and staff training programs and participates in education programs in conjunction with local schools of nursing.

   
   

6. As did many of the applicants in this proceeding, Health Quest updated its application at the hearing. The updates were based upon a survey of existing facilities in Pinellas County, which survey was not completed at the time its application was reviewed; additional beds having been approved in Pinellas County as a result of a Settlement Agreement executed subsequent to the review date of this batching cycle; the effects of inflation; and the passage of time. Also, Health Quest determined subsequent to the filing of its application to build all its resident rooms at 216 net square feet, rather than some at 216 and others at 200. Its architectural and engineering fees were increased to reflect the fact that it now contracts out more of its design tasks than it did

   at the time the original application was reviewed. Its equipment costs were updated because it was decided that the original estimate was unrealistically low.

   
   

7. Health Quest estimates the total costs of the nursing home center to be

   $5,546,812. Health Quest did not include a set of floorplans with its application, nor did it offer any at the hearing. The one-story design of its proposed nursing center is described in narrative form in Section III.G. of its application and the tables in the application form requesting the square footage of certain areas were completed. HRS did not request floorplans or any kind of schematic drawings in its notification of omissions, and HRS deemed the Health Quest application complete. While the application form contains a space for the inclusion of "schematic/diagrammatic drawings," and it is common practice to include such drawings with a Certificate of Need application, neither the statutes governing application content nor HRS's rules specifically require the submission of floorplans or drawings.

   
   

8. Health Quest plans a facility with 71,142 total square feet, at a cost of $30,816 per bed and a total of 395 square feet per bed. With the exception of VHA/Oxford, Health Quest projects the lowest cost per bed. The patient rooms will each encompass 216 square feet, thereby exceeding the minimum requirements for room sizes. The facility will have 18 single rooms and 81 semi-private rooms. The reasonableness of the Health Quest project completion schedule is questionable inasmuch as Table 26 calls for a one-month period from the time it contracts with an architect to HRS approval of final plans for licensure purposes.

   
   

9. Health Quest projects that 30 percent of its patient days will be Medicaid, that 4.1 percent will be Medicare and that 65.9 percent will be private pay. The Medicaid projection is comparable to that experienced at its Jacksonville nursing home facility, but much higher than that experienced at its Boca Raton and Sarasota facilities.

   
   

10. The total project cost of $5.5 million is comparable to other similar- sized nursing hones. While Health Quest's financial analysis and feasibility expert testified as to the reasonableness of Health Quest's pro formas, which show the project as breaking even at 54 percent occupancy at the beginning of the second year of operation, this witness had not conducted an independent analysis of the individual items upon which the pro formas were based. Instead, he relied upon the contents of the application and its updates, neither of which were prepared by him. The witness had not reviewed the 1987 or 1988 quarterly audited financial statements of Health Quest. The data reviewed was for the year ending March 31, 1986. The witness did not know whether Health Quest had money in hand to make the 10 percent equity contribution, nor whether it had $5 million assured but not in hand for conventional financing for this project. It is therefore difficult to assess the short and long-term financial feasibility of the project proposed by Health Quest.

    
    

    Florida Country Place Limited Partnership

    
    

11. Florida Country Place Limited Partnership is a foreign limited partnership authorized to do business in Florida. The general partners are Scott Phillips and Kim Phillips and the limited partner is the Jack E. Phillips Trust. The managing entity will be Phillips Florida Healthcare, Inc., a foreign corporation authorized to do business in Florida. The principals of Country Place have been involved in designing, constructing and operating nursing homes, apartment complexes and other health related facilities for over 15 years. The

    family now owns and operates three multilevel delivery of care facilities such as the one proposed herein. These include a 170-bed facility in Cuyahoga Falls, Ohio, a 109-bed facility in Wickliffe, Ohio, and a 103-bed facility in Clearwater, Florida. The long range plans of Country Place are to develop homes in clusters, currently concentrating on the central west coast area of Florida, and eventually to develop a southern headquarters. It has previously been granted Certificates of Need in Lee County and Polk County and has been recommended by HRS for a Certificate of Need in Hillsborough County.

    
    

12. The current proposal is for the construction of a 30-bed nursing unit, consisting of 14 new community nursing home beds and the transfer of 16 existing beds, as part of a 120-unit continuum of care facility for the elderly. The facility would also contain 60 independent living apartments and 30 adult congregate living units. The 16-bed transfer from Florida Country Place's existing facility in Pinellas County would allow the conversion of triple- occupancy rooms to double occupancy, thus enhancing the living environment for the residents of that facility. The site and design of the existing facility, known as Country Place of Clearwater (and formerly known as Druid Hills), renders it impossible to eliminate the 3-bed wards through new construction of replacement bed space. While the owner of the existing nursing home in Clearwater did not join in the application filed with HRS for the current proposal, one of the general partners of both the transferor facility and the applicant is authorized by the transferor to seek the proposed transfer. HRS never sought additional or clarifying information about the transfer proposal in its omissions request, and its authorized representative deemed the application complete.

    
    

13. Florida Country Place made some revisions in its application at the time of the hearing. The changes included a reduction in the common area space in its facility design, changes resulting from an inflation adjustment and a change in the way the common costs and expenses among the three components of the project were allocated in order to conform to HRS's allocation methodology, which was first revealed in the State Agency Action Report.

    
    

14. Florida Country Place proposes a three-story facility designed with a residential appearance to implement the philosophy of deinstitutionalization. There are many support services and activities areas, and the exterior amenities include a pond, an exercise course, a sitting deck and a putting green. The center core is designed to encourage interaction among the residents of all the different levels of care. The 30-bed size is designed to enable more personalized care and a more family- type personal concept.

    
    

15. The 3-story design has as its purpose minimizing the amount of travel distance for the resident at the farthest unit to the amenities of the center core and its services. The first floor will consist of independent living apartments and the second floor will be adult congregate living units and the laundry. The 30-bed nursing unit is on the smallest floor, the third and top floor, so that travel distance to the central core is the shortest while still providing the nursing home residents with the greatest amount of privacy and quiet time. The plans for the nursing home include semi-private rooms with a permanent partial partition separating the two beds so as to effectively create two private rooms. Each resident will have his or her own thermostat, window, storage space, television and telephone accommodation. The total project cost allocated to the nursing home component of the project is $1,605,113, or $53,504 per bed. This cost per bed is far greater than the other applicants propose, as is the square feet per bed of 603. Even with the higher cost per bed, construction and development costs are reasonable. Some economies of scale will

    be realized through the sharing of administration, common areas, maintenance and the kitchen and laundry. The design of the entire facility will conform with state regulations for mixed use facilities and will utilize energy conservation measures.

    
    

16. Services and programs, in addition to the continuum of care concept proposed for this facility, include adult day care, respite care, intensive rehabilitative services, community involvement, care for Alzheimer's patients and subacute care. Ease of movement through the facility from less to more intensive levels of care, and vice versa, is anticipated. Numerous physical and recreational activities will be offered. The proposed staffing levels exceed the minimum required. Florida Country Place encourages the hiring of elderly workers in every area of their nursing home facilities, and it has an active recruitment program to attract sufficient qualified staff. The projected salaries are reasonable. The proposed facility will be available for pharmacology and nurse training.

    
    

17. Florida Country Place has not yet selected a site for its proposed facility, but desires to locate in north Pinellas County, wish Dunedin or Palm Harbor being the target area. It proposes to provide 45 percent of its patient days to Medicaid patients. The principals' Ohio nursing home facilities do not participate in Medicaid because they believe that the reimbursement mechanism is unfair and would require a reduction in services to avoid an economic burden on private pay patients. The per diem charges proposed are at the high end of the scale of reasonableness. Private pay patient charges will be individualized based upon need and level of care required, and the charges will be revised on an ongoing basis.

    
    

18. The proposed nursing home project can be successfully financed, and the required equity contribution is available. While the total project will have a loss in it second year of operation, it will be profitable thereafter. The nursing home component will be viable in its first year and thereafter.

    
    

19. During 1986 and 1987, the existing Clearwater facility (formerly Druid Hills) was experiencing low occupancy, in part because of the three-bed wards and in part because of the negative reputation of the previous ownership. A public relations marketing program was instituted, and the census increased from

    70 percent to 90 percent in the early part of 1988. An in-house survey revealed that key personnel were not keeping staff recruitment and development in step with the rapid census growth. At about the same time, a new staff development coordinator and new nursing staff were hired. During the training of new personnel, the HRS audit team arrived for the annual survey. The facility did not have adequate trained staff to handle the increased census and, on May 20, 1988, HRS imposed a moratorium on new admissions. At the time of the hearing, Country Place had recruited new staff for that facility, believed it was now ready to accept new admissions and had requested a resurvey by HRS. There is a structural deficiency at the existing Clearwater facility, which was built in the early 1960s and purchased by the Phillips in the early 1980s. This deficiency is currently undergoing repair, and review for a superior rating will be requested after completion of the repairs.

    
    

    The Forum Group, Inc.

    
    

20. The Forum Group, Inc. is a national, publicly held company which started in 1981 and currently owns, develops and operates sixteen retirement living centers and twenty freestanding nursing homes in a number of states. Forum has sold or transferred many of its acute care, psychiatric and smaller

    nursing home facilities so that it can concentrate on the retirement living center concept. It currently has only one other operating facility in Florida. This facility is Park Summit, which consists of 200 independent living apartments and 35 nursing home beds. Park Summit currently has a standard rating and has only two Medicaid-approved beds. The Park Summit facility is not typical of the facility proposed for Pinellas County in that it contains no adult congregate living facility units. Some of Forum's facilities in other states hold superior license ratings, and it has never had a license denied, revoked or suspended.

    
    

21. The 120-bed nursing home facility proposed by Forum for Pinellas County will be part of a total retirement living center containing two other levels of care--assisted living (or adult congregate living facility units) and independent apartment units. There will be 30 assisted living units and 120 to

    150 independent apartment units. While a specific site has not yet been selected for the project, Forum is focusing its attention on the eastern portion of Pinellas County.

    
    

22. The total cost of the nursing home component of Forum's proposed retirement living center is estimated to be $5,053,301. This figure is the highest for those applicants proposing 120-bed nursing homes, but is consistent with similar projects recently developed by Forum. Forum is a solvent company and has the financial resources to finance the construction and initial operation of the proposed facility. While the price of Forum stock has declined in the past year, this does not affect the intrinsic value of the company, whose cash alone exceeds its liabilities and which has a 3 to 1 ratio of assets to liabilities. The revenues and expenses projected by Forum are reasonable and are based upon Forum's corporate experience. Forum projects a positive net income in its second year of operation and thereafter, and has demonstrated the financial feasibility of the project on both a short-term and long-term basis.

    
    

23. Forum's nursing home project will encompass approximately 49,000 square feet, with a cost per bed of $42,111. Its proposed estimate of equipment and construction costs are reasonable and consistent with other Forum projects. By combining the nursing home project with the remainder of the proposed retirement living center, Forum will realize some operating efficiencies and economies through the use of common heating and cooling, kitchens, laundry and maintenance. Forum provided single-line drawings with its original application, indicating the general arrangement of spaces for the proposed nursing home facility. While the corridor length in the drawings did exceed state requirements, a slight modification to the configuration can be made to cure this problem without exceeding the estimated project cost by more than ten percent and without exceeding the proposed total square footage of the project. Forum's project will involve a two-story structure, will be finally designed to comply with all licensure requirements and will not create a safety hazard for patients. Forum may ultimately utilize an architectural plan different than the single-line drawings submitted with its application. The project would have energy conservation features such as heavy roof insulation, double glazed insulated windows and heat pumps.

    
    

24. Forum projects a utilization of 28.5 percent Medicaid patient days, which is the lowest projection of all applicants. It projects a utilization of

    66.7 percent private pay patient days, with private room rates being $110.00 per day and semi-private room rates being $85.00 per day. Its proposed design contemplates about 40 private rooms. Contrary to a statement in Forum's application, Forum no longer maintains a separate fund for indigent care. Its

    projected patient charges for Medicaid and Medicare are somewhat low, inasmuch as there have been increases since January of 1987. An update to account for this would create an increase in the total revenues projected by Forum.

    
    

25. Forum's proposed staffing and salaries are consistent with Forum's other facilities, and are comparable to those proposed by the other applicants. Forum has a quality assurance program with written standards for monitoring resident care. It has a staff training program, with pre-service and in-service training, and utilizes a prescreening procedure to assure it hires competent, trained staff. Twenty-four hour coverage by registered nurses and licensed practical nurses will be provided. Forum's solution to the nursing shortage is to pay higher wages with greater benefits, to provide higher quality surroundings and to utilize re-entry nurses. In the event of a nursing deficit, Forum would utilize as a source of staffing the personnel available from the home health care that will be provided to the apartment residents of the retirement living facility.

    
    

26. Forum will offer all services required under skilled and intermediate care, as well as respite care. Forum makes its facilities available to educational institutions for community training programs.

    
    

    Pinellas Healthcare, Ltd./Convalescent Services, Inc.

    
    

27. Pinellas Healthcare, Ltd. (PHL) is a Georgia Limited partnership owned by Stiles A. Kellett, Jr. and Samuel B. Kellett. Although PHL will own the proposed facility, it will be managed and operated by Convalescent Services, Inc. (CSI). CSI is also 100 percent owned by Stiles A. Kellett, Jr. and Samuel

    B. Kellett. CSI was formed in 1978 for the purpose of operating extended care facilities, including nursing homes and retirement centers. It currently operates 21 nursing homes and 3 retirement centers located in 7 states. Six of the nursing homes, including one 120-bed facility in Pinellas County, and two of the retirement centers (adult congregate living facilities) are located in Florida. It also has another Certificate of Need approval to establish 120 community nursing home beds in Pinellas County. It is the Company's plan to gear its growth toward those markets where CSI already operates facilities or has a management network in place, thus allowing CSI to provide high quality care both more effectively and more efficiently than if development took place in new markets without existing resources.

    
    

28. After receipt of its initial Certificate of Need application, HRS notified CSI that certain elements had been omitted from the proposal, and requested CSI to provide the number of registered nurses per shift and the patient bill of rights. In response thereto, CSI submitted another entire application which varied, in some respects, from the initial application filed. The revisions involved a reduction in the square footage of the proposed facility and an increase in the project costs associated with financing. HRS accepted the revised application and deemed the application complete. There was no evidence adduced to demonstrate that the revisions resulted from a review of the applications submitted by the other parties in this proceeding.

    
    

29. The project proposed herein is a free-standing 120-bed nursing facility in Pinellas County. A site has not yet been selected. A utilization of 45 percent Medicaid, 4 percent Medicare and 51 percent private pay is anticipated. These projections are based upon a review of historical occupancy data in Pinellas County as well as CSI's own experience in Pinellas County and at its other existing facilities. Medicaid utilization within its existing certified nursing home beds currently averages approximately 40 percent of all

    patient days. The nursing home would offer a comprehensive range of services, including subacute, skilled and intermediate care; respite care; hospice care; special services for patients with Alzheimer's and related disorders; physical, speech, occupational and recreational therapy; social services; case management services and counseling services. The charge for respite care will be the same as for regular admissions. CSI does not intend to segregate its Alzheimer's patients in a separate and distinct unit, and is of the philosophy that such patients do better in an integrated environment whereby the more alert patients tend to prevent the Alzheimer's sufferers from deteriorating as quickly. A "wander guard" system will be installed to monitor the Alzheimer's patients.

    CSI has developed a manual containing standards of nursing care for Alzheimer's patients, and its nursing personnel will be specially trained to provide services to such patients. Due to its management of an existing facility in Pinellas County, CSI has existing agreements with the providers of services and transfer agreements with area hospitals. CSI has existing affiliations with the Pinellas County School Board and St. Petersburg Junior College, and intends to enter into educational relationships with these and other institutions to ensure the continuing education of its own staff and to serve as a clinical training ground for faculty and students. CSI intends to implement numerous activity programs especially tailored to the needs of the individual residents, to encourage volunteer participation and to engage its nursing home residents in various community service projects.

    
    

30. The proposed nursing home facility would be comprised of twelve

    single-bed rooms and 54 two-bed rooms. The nursing home would consist of 37,700 total gross square feet, and the total facility gross square feet per bed will be 314 feet. The one-bed rooms would consist of 159 net square feet and the double bed rooms would consist of 191 net square feet. The most energy efficient equipment available will b installed in the facility. The total project cost is estimated to be $3,900,000, or $32,500 per bed. The projected costs for construction, professional services, equipment and site preparation are consistent with its past experience.

    
    

31. CSI's quality assurance program includes the employment of a nursing services coordinator responsible for ensuring the quality of care provided at its facilities, a quality assurance manual which contains standards covering all departments within each facility, a resident care plan, resident counsels and pre-service and in-service training for nursing personnel. Of the 21 nursing homes currently managed by CSI, 17 are located in states which utilize a superior rating system. Of those facilities eligible to receive superior licenses, CSI maintains superior ratings in over 80 percent of its beds. Only one of its 6 Florida nursing homes is eligible for a licensure rating, and that facility currently holds a standard rating. Several deficiencies have been cited against the Centerville Care Center in Tallahassee. In March 1988, HRS imposed a moratorium on admissions to that facility, partly because the minimum standards for nursing staff were not being met. That moratorium on admissions was administratively challenged by CSI and had not been finally resolved as of the time of the hearing. CSI's nursing staff proposal in the instant proceeding is on the low range of all the applicants, though the numbers and classifications of positions meet or exceed state licensing requirements.

    
    

32. The tables in the application, as revised, were updated at the hearing to account for "skyrocketing" nursing salaries and recent salary changes in the marketplace (which also necessitated an adjustment in the Medicaid and Medicare rates), inflation, and a new Medicaid payment system adopted on January 1, 1988.

33. The pro formas project a loss during the first year of operation and a profit during the second year of operation with a 95 percent occupancy rate.

    The project is to be financed through a 25 percent equity contribution provided by the general partners and a 75 percent commercial financing arrangement for a period of 30 years. This proposed method of financing is consistent with past CSI experience in Florida and elsewhere. The Kelletts have a $40 million renewable credit facility through a series of banks, with $13-$14 million currently available.

    
    

    The Mediplex Group, Inc.

    
    

34. The Mediplex Group, Inc. was formed about 25 years ago, and is now, since April of 1986, a wholly-owned subsidiary of Avon Products, Inc. Avon is a multi-million dollar national corporation which had $73.8 million cash on hand as of December 31, 1987. The Board of Directors of Avon has approved the instant proposed project and Avon will provide the long-term financing for this project. The applicant, through Mediplex, has the funds available to make the

    10 percent equity contribution for the proposed project. Mediplex currently has approximately 18 to 22 projects in various stages of development and construction, which represent approximately $125 million. It has never defaulted or become delinquent on payments due on any of the loans associated with these projects.

    
    

35. The applicant, Florida Convalescent Associates of Pinellas County, is a partnership of Mediplex Management of Pinellas County, Inc., which is a wholly-owned subsidiary of The Mediplex Group, Inc. The Mediplex Group will develop and manage the facility on behalf of the partnership. Mediplex currently manages one other nursing home facility in Florida -- Manatee Springs in Bradenton.

    
    

36. Mediplex now seeks a Certificate of Need for a 120-bed nursing home facility to be located in northern Pinellas county. It intends to offer a continuum of care, and will include respite care and adult day care among its services. It will accept Alzheimer's patients and integrate them into the system with other patients. A "wander guard" system will be utilized to protect such patients and other dementia patients from wandering. There will be no subacute care unit, per se.

    
    

37. The facility proposed by Mediplex contains 44,722 total square feet and 369 square feet per bed. There will be 8 private rooms and 56 semi-private rooms, several multi-use rooms and two dining rooms. There will be two central bathing areas in each nursing unit. The design of the facility incorporates energy saving features. The schematic floorplans do not show toilet facilities in the kitchen, and do not indicate a quiet lounge, sunroom or chapel as represented in the Certificate of Need application. The total cost of the proposed project is estimated to be $4,550,879, or $37,924 per bed.

    
    

38. The Mediplex philosophy of care is to bring each patient up to his or her maximum level of participation, and to accomplish this through a continuum of care policy. Each Mediplex facility must comply with policy standards which comport with the highest minimum standards of the states in which Mediplex facilities exist. Mediplex employs a national director of quality assurance who is responsible for overseeing the operations of the various facilities, as well as the quality of care offered. When new facilities are opened, key employees of other Mediplex facilities go to the new facility to assist in orientation. There will be an infection control program at the facility, and it will be Mediplex's policy to always have a registered nurse on duty in the building.

    Mediplex will attempt to involve residents in community activities. The hiring and training of appropriate employees will be emphasized. Recognizing that there is a shortage of nurses, Mediplex has, in the past, successfully recruited nurses from Ireland and England.

    
    

39. An HRS survey of Mediplex's Manatee Springs nursing home facility in Bradenton, Florida, conducted in March, 1987, resulted in a finding that 6 licensing standards had not been met. This facility currently holds a standard rating. Several of its facilities in Massachusetts and Connecticut have been cited for deficiencies relating to patient care and proper infection control techniques.

    
    

40. The proposed facility will provide 52 percent of its patient days for Medicaid residents, and has a policy of accepting any resident regardless of the source of payment.

    
    

41. The total staff per patient day proposed by Mediplex is higher than that proposed by the other applicants. While the salaries listed in the application were consistent with Mediplex current policies, no witness called by Mediplex was familiar with salaries in Pinellas County, and thus their reasonableness was not established.

    
    

42. A pro forma statement of revenues and expenses for the first year of operation of the proposed facility has never been submitted by Mediplex, though there was testimony that Mediplex would suffer a loss of approximately $300,000 after its first year of operation. Section 381.494(4)(e), Florida Statutes, in effect at the time the current applications were filed (as well as the current Section 381.707(2)(c)) requires a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. The pro formas submitted by Mediplex encompass years two and three of operation, and appear to be stated in terms of current dollars. In preparing the pro formas, Mediplex relied on the average of all Mediplex Group facilities companywide, and not upon information relevant to either Pinellas County or Florida. Although Medicaid and Medicare per diems are computed by different reimbursement methodologies, Mediplex's second year per diem for Medicare and Medicaid are projected as identical. The inflation assumptions appearing on the updated pro formas were not established or substantiated. In summary, while Mediplex established that its financial projections were consistent with its experience in constructing and operating other nursing home facilities around the country, it did not establish that the projections were reasonable for a facility to be opened in Pinellas County in the year 1990.

    
    

    Manor Care of Florida, Inc.

    
    

43. Manor Care of Florida, Inc., is a wholly-owned subsidiary of Manor HealthCare Corporation, a publicly held corporation which owns and operates about 150 nursing homes in 26 or 27 states. Manor HealthCare Corporation is the fifth largest nursing home provider in the country, and has been in business for approximately 30 years. Manor Care owns and operates nine nursing homes and three adult congregate living facilities in Florida. It currently has a 120-bed nursing home in Pinellas County, as well as approval for 60 more beds. Three of its Florida nursing homes opened within the last three years were built without a cost overrun, are operating profitably and are superior rated. Manor Care has never sold a Certificate of Need or a nursing home in Florida. Each of its five Certificates of Need received since 1981 has been timely implemented. In order to have greater control over operations, Manor Care owns and manages all its Florida nursing home facilities.

44. Manor Care now proposes to establish a 120-bed nursing home in Northern Pinellas County at a total project cost of $4,821,150. A five acre parcel of band in Palm Harbour, just east of Highway 19, has been purchased for this purpose. The initial design of the facility was revised to reflect HRS's preliminary intention to grant a certificate of Need to Manor Care upon the condition that there be no 3-bed rooms and to comply with some of the comments contained in the HRS architectural report which accompanied the State Agency Action Report. The present facility design contains one story with four wings all connected to a common area. There will be two nurses stations, with 60-beds each. The central area of the facility contains the administrative area, the dining room, kitchen, laundry and facility support area. The facility will have

    30 private rooms and 45 semi-private rooms, and will contain 46,850 gross square feet, and 390 square feet per bed. The total cost per bed is $46,850.

    
    

45. One of the four wings will house a separate and distinct 30-bed area specially designed for Alzheimer's patients. That area will be divisioned off from the rest of the facility by double doors, and will have its own separate dining room, activity area and outdoor garden area. This design will allow patients to wander within a restricted area and reduce concern over patients leaving the facility. Manor Care has been developing dedicated Alzheimer's units within its nursing homes around the country for the past two and a half years, and currently operates 16 Alzheimer's units. Its program is geared toward treating middle stage Alzheimer's disease, which is characterized by combative behavior, incontinence, gait disturbances and eating problems. The goal of Manor Care's program is to provide a comforting environment in which residents and families can cope with the mental and physical deterioration associated with the disease. The Manor Care Alzheimer's program emphasizes five components of care: environment, specialized staffing and training (with a higher nurse to resident ratio than the rest of the facility), programming, specialized medical services through the use of consultants, and family support. The A.D.R.D.A. (Alzheimer's Disease and Related Disorders Association) has officially recognized that the most appropriate treatment and care of Alzheimer's patients is accomplished in a dedicated and separate unit.

    
    

46. In addition to its Alzheimer's program, Manor Care intends to offer programs in the areas of respite care (a short-term nursing home stay designed to give the caregiver a rest), chaplaincy (whereby chaplains from all different faiths are recruited to serve as liaisons for the religious and spiritual needs of the residents), and an "In Touch Program" to help patients and families upon admission into the nursing home. It also provides a comprehensive corporate- wide quality assurance program which audits the services provided at all Manor Care nursing homes and provides follow-up and education for staff. The inter- disciplinary quality assurance team is comprised of professionals in nursing, rehabilitative therapy, activities, dietary and environmental services. Annual unannounced assessments are conducted in every Manor Care nursing home and action plans are developed and implemented. In addition, each facility conducts ongoing self-assessments. Manor Care uses a corporate quality assurance manual which contains standards based on federal regulations and the most stringent state regulations in the country. It provides mandatory in-service training for staff and emphasizes promotion within the company. Manor Care has a regional office in Orlando to serve its Florida nursing homes, and a regional nurse works with the Florida directors of nursing and nursing departments and acts as a quality assurance liaison to conduct mini-quality assurance reviews upon visits to the facilities.

47. Manor Care will provide 46 percent of its patient days to Medicaid patients. Its proposed patient charges are reasonable, as is its projections for utilization. Its projected expenses are based upon actual experience at its existing Dunedin facility, and are reasonable. Discounts from retail purchasing are realized by Manor Care through volume purchasing. It is projected that the proposed facility would incur a first year loss of $305,500 and a second year profit of $89,000. The project will be funded by working capital and senior subordinated notes. The funds for the project are currently available. The project is financially feasible in both the short and long-term.

    
    

    Health Care and Retirement of America

    
    

48. HCR currently owns and operates 127 nursing home facilities containing 16,000 beds in 19 different states. It has designed and built over 200 nursing homes and related health care facilities, along with 10 nursing home facilities in Florida, with 6 more in various stages of design and construction.

    
    

49. HCR's current proposal consists of a 60-bed addition to its existing Pasadena Manor 126-bed nursing home located in southwestern Pinellas County, which is within the area designated by the local health council as the East Subdivision. Pasadena Manor, consisting of approximately 34,280 gross square feet, has been rated by HRS as a superior nursing home for several years and had no deficiencies on its most recent licensure survey.

    
    

50. The 60-bed addition will be a two-story structure connected to the existing building by a corridor. It will have 30 beds on each floor, two nurses' stations, two dining rooms, two multi-purpose rooms, two physical therapy areas and the standard functional elements required to meet licensure standards. The first floor will have a 15-bed dedicated Alzheimer's Disease wing, as well as space for adult day care. The second floor will have 30 beds, including a dedicated 10 to 15-bed subacute unit. The subacute care provided will include high tech services and ventilator care, I-V therapy, pulmonary aids, tube feeding and hyperalimentation. Due to the impacts of the federal DRG (diagnostically related group) system which encourages hospitals to discharge patients earlier, there is a need for nursing home beds and services available to patients requiring subacute care. The 60-bed addition will contain 4 private rooms and 28 semi-private rooms. Respite care will also be offered when beds are available. Adult day care and respite care provide alternatives to institutional long-term care in a nursing home. Such services aid in preventing premature nursing home admissions and promote cost containment.

    
    

51. There is no known nursing home in Pinellas County which provides a distinct and separate care unit for patients suffering from Alzheimer's Disease and related disorders. Alzheimer's Disease is a brain disorder that results in gradual memory loss and, as memory loss progresses, the need for ever-increasing personal care is required. Victims encounter more serious physical problems and exhibit symptoms such as wandering, significant weight loss, clumsiness, incontinence and antisocial behavior. Intense medical attention is required in the last stages of the disease. Historically, Alzheimer's patients have been mixed with other patients nursing homes, often disrupting other patients and presenting problems of control for the staff. Because of behavior problems, some nursing homes avoid admitting Alzheimer patients and others control problem behavior with sedation and physical restraint. A separate Alzheimer's care unit enables the nursing home to utilize special techniques to manage the patient and allows the patient to maintain his cognitive capabilities for as long as possible without restraint and sedation. A separate unit provides a smaller, safer, specially designed area with specially trained staff to address the

    unique needs of the Alzheimer's Disease and related disorders victim. The proposed Alzheimer's special care unit will incorporate special design features, patient activities and programs and higher staffing levels to meet the unique needs of the patients. The architectural design of the addition will accommodate the tendency of Alzheimer's victims to wander and will prevent inadvertent exit from the nursing home.

    
    

52. HCR facilities, including Pasadena Manor, are subject to extensive quality assurance standards and guidelines utilized to cover all areas of operation and patient care. The level of staffing proposed for the 60-bed addition exceeds state licensure requirements, and the staffing is designed to accommodate the needs of the skilled and intermediate care patients, as well as the special needs of the Alzheimer's and subacute patients. The projected salaries and benefits are reasonable.

    
    

53. HCR's projections of a payor mix of 45 percent Medicaid, 51 percent private pay and 4 percent Medicare are reasonable. Its fill-up and occupancy projections and its projections of revenues and expenses are also reasonable.

    
    

54. The total project cost for the 60-bed addition to Pasadena Manor is estimated to be $2,054,000. The components making up the total are reasonable and consistent with HCR's prior experience. The entire addition, including the 2,000 square feet adult day care center, consists of approximately 24,000 square feet, providing 367 square feet per bed. Construction of an addition is more efficient and cost effective than construction of a new, free-standing facility because it will not be necessary to duplicate ancillary spaces, such as laundry and administrative areas. The current operations of Pasadena Manor will benefit from improvements in services, special programs and the high level of staffing.

    
    

55. HCR has available the financial resources necessary to accomplish the 60-bed addition to Pasadena Manor. If HCR does not finance the project internally, it has the ability to obtain financing from a commercial lender.

    Its pro formas for the proposed project are reasonable and are indicative of the financial feasibility of the project both immediately and in the long term.

    While the addition itself would show a loss the first year of operation, the total facility would show a profit the first year. The addition would show a second year profit, as would the entire Pasadena Manor facility.

    
    

    VHA/Oxford Senior Living Ventures

    
    

56. The applicant is VHA/Oxford Senior Living Ventures, d/b/a Oxford- Pinellas Nursing Associates. The joint venture partners of VHA/Oxford are VHA Development Company and Oxford Development Enterprises, Inc. No copy of the joint venture agreement between these two entities was produced at the hearing, though it is apparently a 50-50 joint venture. Oxford's parent company is Oxford Development Corporation, a national real estate services company. Oxford Development Enterprises, Inc., with offices in Maitland, Florida, has developed about 2,000 apartment units and two senior living communities in Florida. VHA Development Company is one of the many subsidiaries of VHA Enterprises, Inc.

    VHA Enterprises also has a consulting company, a behavioral medical care company involved in substance abuse and psychiatric care, an ambulatory services company and a long term care company (VHA Long Term Care) that develops and manages nursing homes. The parent company, VHA, Inc. (Voluntary Hospitals of America) is a for-profit cooperative owned by the VHA shareholder hospitals. There are approximately 900 hospitals nationally affiliated with VHA.

57. The applicant VHA/Oxford proposes a 120-bed nursing home in southeastern Pinellas County in affiliation with an acute care hospital, Bayfront Medical Center, which is a VHA affiliate. The proposal contemplates that the applicant VHA/Oxford will hold the real estate and lease the nursing home to Bayfront. The only revenues to be received by the joint venture would be the lease payments. Bayfront would, according to the application, engage VHA Long Term Care to manage the facility on the hospital's behalf. Although witnesses employed by VHA Long Term Care testified that the proposed facility would be managed by VHA Long Term Care on behalf of the hospital sponsor, witnesses testifying on behalf of the applicant, the joint venture, expressed some confusion as to whether the day-to-day operation of the nursing home would be the responsibility of the leasing hospital or VHA Long Term Care. VHA Long Term Care does have a quality assurance program and a staff training program that it implements at all nursing homes managed by it.

    
    

58. At the time of the hearing, no formal relationship between Bayfront Medical Center and the applicant was established and no lease agreement with Bayfront had been prepared. Bayfront has, however, "expressed an interest in" having a relationship with a nursing home because they are having difficulty in placing patients. Some 600 to 800 patients a year discharged from Bayfront, a 518-bed acute care hospital, are discharged to nursing homes. Approximately 47 to 50 percent of the total Medicaid patients in southeast Pinellas County are treated at Bayfront Medical Center. The advantages of operating a nursing home in conjunction with a hospital include the quick and cost-effective availability of ancillary services, such as physical therapy, speech therapy, occupational therapy, respiratory therapy and other services, as well as the ability to care for patients who require a heavier degree of care. As recognized by other applicants, VHA Long Term Care recognizes that the acuity level of patients has increased as a result of DRGs. The applicant proposes to designate 30 of its

    120 beds for skilled nursing care.

    
    

59. The present proposal by VHA/Oxford contemplates, in its first phase, to establish 30 skilled beds and 90 intermediate-level care beds within the nursing home component of the project. The second phase of the project would add independent and assisted living units to the project. While VHA/Oxford states that its proposed nursing home facility would include 12 private rooms and 54 semi-private rooms, the drawings submitted in support of its application provide for only 12 private rooms and 50 semi-private rooms, thus accommodating only 112 patients. The drawings also fail to show a toilet facility in the kitchen and showers near the nurses' stations. Four of the patient rooms do not have the twenty-foot vista required by applicable regulations. The floor plan for the nursing home is square, with an enclosed courtyard, and includes two patient care units. It will have 41,380 gross square feet, or 345 square feet per bed. The total cost of the project is estimated to be $3,579,680 or $29,830 per bed.

    
    

60. The proposed nursing home would include traditional nursing home care, physical therapy, occupational therapy and respite care. While it will accept Alzheimer's patients, its approach is to "mainstream" (or not segregate) such patients, so that the more alert patients in the facility will assume some responsibility for the confused patients and, hopefully, slow their deterioration.

    
    

61. It is difficult to assess the financial feasibility of the proposed project. While many of its projected revenues and expenses are similar to those of the other applicants, the witnesses called upon to establish the reasonableness of the financial projections were not familiar with nursing staff

    salaries in Pinellas County or with current Florida Medicaid or Medicare reimbursement. The applicant proposes that over 54 percent of its patient days will be attributable to Medicaid patients. Updated Tables 7 and 8 suffer from internal inconsistencies with regard to Medicaid and Medicare charges and revenues. There was confusion as to which years the pro formas were based upon. There appears to be an inadequate number of registered nurses available to provide 24-hour nursing coverage. The opinions offered by the applicant were based upon many unsubstantiated assumptions, such as a leasing arrangement with Bayfront Medical Center, the validity of room rates, and staffing salaries. The total project costs are considerably less than the other applicants proposing 120-bed facilities. In addition, this joint venture has never financed any project. The VHA subsidiary responsible for financing its half of the project does not have any lines of credit and has never itself financed a project.

    Oxford Development Corporation is experiencing some financial problems, and is presently undergoing a restructuring. The President of the VHA joint venture is not familiar with Oxford's financial statements. The applicant projects no preopening expenses in its total project cost. In any event, if the assumptions made are valid, the applicant projects a first year loss of 142,714 and a second year profit of $241,967.

    
    

62. At the time of the hearing in this proceeding, VHA/Oxford Senior Living Venture had a preliminary approval from HRS for a 120-bed nursing home facility in Hillsborough county. This proposed facility was almost identical to the facility proposed for Pinellas County. The Senior Development Manager for Oxford Development and a member of the executive committee of the joint venture testified that the Hillsborough County Certificate of Need had not been offered for sale. When confronted with a letter written by him to National Facilities Corporation stating that "VHA/Oxford has made the decision to seek a purchaser for the [Hillsborough County] CON," the witness attempted to explain the discrepancy by stating that he was offering to sell only a completed and licensed facility. This testimony is not credible. The letter, received into evidence as CSI's Exhibit 18, clearly proposes that VHA/Oxford would transfer the CON, if awarded, at the earliest possible date following final award and certification and would seek, as compensation therefore, $400,000. It defies logic to assume that a completed and licensed facility would be sold for

    $400,000. The letter also offered to allow the purchaser to be in control of the appeal process.

    
    

    Department of Health and Rehabilitative Services

    
    

63. Other than its counsel, no representatives from HRS attended the three and a half week-long hearing except for the time during which the two HRS witnesses provided testimony. The opinions offered by HRS's one expert health care planner were based upon the information available to him on June 18, 1987, the date upon which the State Agency Action Report (SAAR) was signed. This report encompassed a comparative review of 12 applications submitted in January of 1987 for community nursing home beds in Pinellas County and announced HRS's intent to grant four of the applications. HRS admits that the report contains errors regarding the services to be provided by some of the applicants, the licensed beds counted and the occupancy rates utilized in the need methodology, and the number of new beds sought by one applicant.

    
    

64. At the time of the initial agency review (the SAAR) and at the time of the hearing, HRS was of the opinion that all the applicants were in substantial compliance with the State Health Plan, the District Health Plan and the applicable statutory and regulatory criteria for review of Certificate of Need applications. It was determined that all the applicants in this proceeding

    would increase availability and access to the services being proposed, would improve the quality of care, efficiency, appropriateness and adequacy of nursing home services in the area, would promote access to underserved groups, would provide quality care, would have sufficient manpower and financial resources to accomplish and operate the project, proposed reasonable costs and methods of construction, and would be financially feasible in the short and long-term.

    However, since HRS calculated the need for new nursing home beds in Pinellas County to be substantially less than the total number of beds for which these applicants were seeking, HRS proposed to grant only the Certificate of Need applications submitted by HCR (for 58 of the 60 beds), Mediplex (120 beds), Manor Care (120 beds) and VHA/Oxford (120 beds). These applicants were chosen because they were deemed the best overall, offering the most services and programs for patients and their projects were within the parameters of size and cost that HRS felt would be most suitable. In addition, at the time of initial review HRS was sensitive to criticism that only existing Florida entities were receiving Certificates of Need from HRS. Consequently, additional consideration was given to those applicants who had not previously done business in Florida and whose proposals were worthy.

    
    

65. Throughout the hearing, counsel for HRS objected to evidence from any of the applicants regarding updates to their applications as they were deemed complete by HRS prior to its initial review. It was the position of the HRS counsel that the only appropriate evidence of changed conditions after the date the application was deemed complete are those changes which relate to or result from extrinsic circumstances beyond the control of the applicant, such as inflation add other current circumstances external to the application.

    
    

66. The majority of the "updated" material offered by the applicants at the hearing did result from the effects of inflation, the passage of time between the application preparation and the dates of the final hearing, changes in the marketplace regarding nursing salaries, changes in the Medicaid and Medicare reimbursement system and typographical errors in the application. Some changes in design were offered as a result of the applicants' experience with other construction projects and in order to comply with licensing regulations. There were also some changes which resulted from better information having been secured through market surveys conducted after the applications were deemed complete. None of the applicants attempted to change their planning horizon, the number of beds proposed, the proposed location of the facility or the services to be offered.

    
    

67. As noted above, HRS's position at the time of the hearing was the same as it was at the time of the initial review and does not take into account any information not available at the time of initial review. It was the opinion of HRS's expert in health planning as it relates to Certificate of Need review that if the initial agency review (SAAR) contained errors, at least with respect to a listing of the services or programs intended to be offered by the various applicants, this would be minimal and its initial decision would not be in error. HRS did not object to evidence concerning Manor Care's redesign of its facility because HRS had conditioned its initial approval upon two-bed rooms rather than three-bed rooms.

    
    

    The Need for Nursing Home Beds in Pinellas County

    
    

68. No documentation of need other than that established by the numeric need methodology set forth in Rule 10-5.011(1)(k)(1), Florida Administrative Code, was offered by any applicant. HRS normally will not approve applications for new or additional community nursing home beds in a service district if

    approval would cause the number of beds in that district to exceed the number calculated by use of the rule methodology. It is the appropriate application of the formula, along with the issue of the applicability of Florida Statutes, Section 381.713(4), which produced a range of expert opinion regarding the number of beds needed in Pinellas County. The range was from a low of 440 beds to a high of 860 beds needed in Pinellas County for the planning horizon of January, 1990.

    
    

69. In its application of the numeric need formula, HRS initially determined a need for 434 new beds. Shortly before the hearing, HRS changed its opinion and found a need for 391 beds. At the hearing, HRS found a need For 440 beds. The various changes resulted from an adjustment in the number of licensed beds to include sheltered beds which were converted to community beds by Chapter 651, Florida Statutes, and to exclude beds in a Christian Science facility, and a revision of the occupancy rate utilized in the formula. The evidence supports the HRS final revisions of these two components of the formula, and establishes that the overall number of beds needed in Pinellas County for January of 1990 is 8,292. From this figure, the number of licensed beds and 90 percent of the number of approved beds must be subtracted in order to determine the net bed need. The evidence establishes that, as of December 1, 1986, there were 7,394 licensed beds in Pinellas County. The dispute in this proceeding concerns the appropriate number of approved beds to be counted.

    
    

70. Rule 10-5.011(1)(k), Florida Administrative Code, is silent as to the cutoff date for counting approved beds. HRS interprets the rule to use the date that the supervisor signs the State Agency Action Report as the cutoff date for counting the number of approved beds. In counting approved beds, HRS included an approved Certificate of Need for 60 beds granted to Careage (CON No. 4691). Based upon the testimony of HRS's expert health planner as to the definition of an "approved" bed, the 60 beds awarded to Careage should not have been counted as approved beds. The witness stated that in order for approved but unlicensed beds to be included in the bed need calculation, the Certificate of Need authorizing such beds must have been "received" at the time that the supervisor signed off on the State Agency Action Report. "Approved" beds to be counted were further described as those "which have been issued their Certificate of Need," those "which have received initial approval," those for which HRS "has entered into stipulated agreements," and those "which have final orders." The series of events regarding Careage's CON Number 4691 are as follows: In the January 23, 1987, edition of the Florida Administrative Weekly, HRS published notice that on January 7, 1987, it had made a decision to grant a Certificate of Need to Careage to construct a 60-bed nursing home in Pinellas County. The evidence demonstrates that the "decision to grant" was simply a tentative or proposed decision, and that such a decision was internally reviewed by HRS subsequent to January 7, 1987. Indeed, the CON to Careage was not "issued" until July 30, 1987. The State Agency Action Report stating the basis for the approval of CON 4691 was not issued until August of 1987, and the CON was not actually transmitted to Careage until September of 1987. It is the practice of HRS, as apparently required by Rule 10-5.010, Florida Administrative Code, to provide its notice of intent to issue or deny a Certificate of Need through the vehicle of the State Agency Action Report. Thus, Careage had not "received initial approval," and the Careage 60-bed Certificate of Need was not received, issued, the subject of a stipulated settlement or a final order as of the date the State Agency Action Report was prepared in this proceeding, which was June 18, 1987. The 60 beds awarded to Carriage should not have been included in the inventory of "approved" beds with respect to the January, 1987, batching cycle.

71. Certificates of Need Numbers 2379, 2976 and 2978, each for 120-bed nursing home facilities in Pinellas County, were issued by HRS prior to February 14, 1986. Each of the three CON holders had expended at least $50,000 in reliance upon their CONs prior to June 16, 1987. A petition challenging the validity of CONs 2379, 2976 and 2978 was filed with HRS on June 16, 1987. None of the beds authorized by such CONs were licensed as of June 17, 1987.

    According to Section 381.713(4), Florida Statutes (1987), these 360 beds should not have been considered or utilized in the determination of need or included in the inventory of approved nursing home beds by HRS. HRS's rationale for including the 360 beds as "approved" beds was that the petition challenging their validity was not "effective" for purposes of Section 381.713(4) because it was dismissed by HRS as being untimely and was never referred to the Division of Administrative Hearings. This interpretation of the statute was not sufficiently explicated by HRS at the hearing. It is clear from a reading of the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA, 1986), and subsequent cases holding that later-batched applicants should have availed themselves of the proper remedy of challenging previously-issued CONS belatedly, as well as the language of Section 381.713(4), that the "initiation of proceedings" referred to in the new statute was intended to refer to petitions which HRS viewed as "untimely."

    
    

72. Another reason for excluding the beds approved by CONS 2379, 2976 and 2978 from the inventory of approved beds for this batching cycle is the stipulation by HRS in Hillhaven, et al. v. DHRS, (DOAH Case No. 86-0132) that once Section 381.713(4) is applied in a given subdistrict, it must be similarly applied in every review cycle in that subdistrict up through and including the January, 1987, review cycle. This recognition has been applied by HRS in at least two other cases -- Forum Group , Inc. v. DHRS (DOAH Case No. 87-0722) and Manor Care, Inc., et al. v. DHRS (DOAH Case No. 87-3471). In order to accept the testimony presented by HRS that Section 381.713(4) has never been applied in Pinellas County, one would have to assume that HRS grants Certificates of Need in a vacuum and without reference to the bed need calculation rule. Without unduly lengthening this Recommended Order by a discussion of the events which led to a settlement in the case of Imperial Palms Apartments, et al. v. DHRS (DOAH Case No. 85-2639), it is found that HRS's settlement of that case was in fact based upon the recognition that Section 381.713(4) required exclusion of CONS 2379, 2976 and 2978 for purposes of need calculations under Rule 10- 5.011(1)(k), Florida Administrative Code. (For an accurate discussion of the facts involved in the Imperial Palms proceeding, see the Recommended Order entered on October 18, 1988, by Hearing Officer Linda M. Rigot in Health Quest Corporation, d/b/a Regents Park of Dade County v. DHRS, DOAH Case No. 86-1351.) Having once applied Section 381.713(4) to Pinellas County, HRS is bound to apply it in this January, 1987, review cycle. Accordingly, the 360 beds must be excluded from the inventory of approved beds.

    
    

73. The number of additional community nursing home beds needed in Pinellas County for the planning horizon of January, 1990, is 818. This figure is derived by an acceptance of HRS's calculation of bed need under the formula up to the calculation of the appropriate number of "approved" beds. The Careage CON (60 beds) and CONs No. 2379, 2976 and 2978 (360 beds) should be excluded from the inventory of approved beds, leaving 78 beds to be counted as approved. After adding the number of licensed beds and 90 percent of the number of approved beds existing in Pinellas County, and subtracting that number from the total bed need in the County, there is a net need for 818 beds.

    CONCLUSIONS OF LAW

    
    

74. An applicant for a Certificate of Need carries the burden of establishing that its proposal substantially meets the statutory and regulatory review criteria. By prehearing stipulation, the parties have agreed that letters of intent and original Certificate of Need applications were timely filed with, HRS and the local health council and that their applications were subsequently deemed complete by HRS. The parties further agree that the criteria contained in Florida Statutes, Section 381.705(1) and (2) are applicable and in dispute, with the exceptions of subsections (1)(d), (1)(j) and (2)(d).

    
    

75. Florida Statutes, Section 381.705(1)(a) requires a consideration of the need for the facilities and services in relation to the State Health Plan and the local district plan. The State Health Plan does not specifically address the numerical need for nursing homes, but does express concerns for resource supply, cost containment and accessibility. Each of the eight applicants in this proceeding satisfies those concerns.

    
    

76. The local District V Health Plan contains priority need rankings with regard to the proposed location of new nursing home beds. For Pinellas County, the first priority area is the east area, the second priority is the north area and the third priority is the southwest area of the County. Only two applicants have actually selected specific sites for their proposed facilities -- Manor Care in the northern area and HCR in the east area. VHA/Oxford and Forum express a preference for an eastern location in Pinellas County and Florida Country Place, Health Quest and Mediplex desire a northern location. CSI expressed no preference as to location.

    
    

77. The local health plan's requirement that applicants commit, at a minimum, to serve Medicaid-eligible patients in proportion to the representation of elderly poor in the various priority areas has been met and far exceeded by all the applicants. The 1980 elderly poverty rate for the three Pinellas County areas ranges between 5.8 and 11.5 percent. The applicants propose to devote the following percentages of their patient days to Medicaid patients: Health Quest

    - 30 percent, Florida Country Place - 45 percent, Forum - 28.5 percent, CSI - 45 percent, Mediplex - 52 percent, Manor Care - 46 percent, HCR - 45 percent and VHA/Oxford - 54 percent.

    
    

78. The remaining local district health council's criteria or priorities have been met by each of the applicants or, as in the case of quality of care considerations, are discussed below insofar as they are similar to the State's criteria.

    
    

79. Section 381.705(1)(b) requires a consideration of the availability, efficiency, accessibility and adequacy of like and existing services in the area. The evidence establishes that the existing nursing homes in the area are, as a whole, operating at almost a 90 percent occupancy rate. Since there is a large need for additional beds in Pinellas County, each of the applicants will improve services in the area and fulfill this statutory criteria for review. There are no dedicated and specialized units for Alzheimer's patients in existing Pinellas County nursing home facilities. Therefore, the proposals of Health Quest, Manor Care and HCR, which each include a dedicated and separate wing or unit for Alzheimer's patients, are superior in the offering of new and needed services or programs in Pinellas County.

80. Section 381.705(1)(c) requires a consideration of an applicant's ability to provide quality of care and the applicant's record n this regard. Each of the applicants have an excellent quality assurance program on paper, and each of the applicants adduced testimony regarding their commitment to provide an excellent level of quality care in their proposed facilities. Health Quest holds superior ratings in its two Florida facilities eligible for such a rating, and Manor Care holds three superior ratings in Florida. The facility for which HCR seeks an addition currently holds a superior license. There was no evidence to suggest that Forum or VHA/Oxford had quality of care problems in other facilities. On the other hand, CSI has experienced difficulties at its Tallahassee facility, as has Florida Country Place at its Clearwater facility and Mediplex at its Bradenton facility and at several of its facilities in Connecticut and Massachusetts. Insofar as estimated costs per bed and square feet per bed can be considered as indicative of the quality of care intended at the proposed facilities, Florida Country Place far exceeds the figures proposed by the other applicants. Forum then follows on the list, with VHA/Oxford, CSI and Health Quest being on the lower ends of the comparison. A comparative review of the proposed total staffing per patient day again finds Florida Country Place on the top of the list, with HCR and VHA/Oxford on the bottom.

    The nursing staff per patient day proposed by all the applicants are fairly comparable.

    
    

81. Section 38l.705(1)(e), Florida Statutes, requires a consideration of whether there will be probable economies and improvements in service that may be derived from the operation of joint, cooperative or shared health services.

    Each of the applicants measure up well to this statutory criterion due to their affiliation with national health care corporations and/or their proposed affiliation with existing providers in the area.

    
    

82. Although none of the applicants propose a "teaching nursing home," Health Quest, Florida Country Place, Forum, CSI and VHA/Oxford have emphasized their willingness to make their facilities available to educational institutions for community training programs, thus satisfying Section 381.705(1)(g).

    
    

83. There was no evidence to suggest that any of the applicants would be unable to recruit the manpower necessary to operate the proposed facility. VHA/Oxford's proposed affiliation with an existing hospital and HCR's addition to its existing nursing home would provide the best, and perhaps the easiest, access to a full range of health care professionals. Florida Country Place's proposal to recruit the elderly in staffing its facility and Mediplex's proposal to recruit nursing staff from abroad are innovative approaches to the nursing manpower shortages experienced in some areas.

    
    

84. A projection of the immediate and long-term financial feasibility of each of the applicant's proposals, as required by Section 381.705(1)(i), and a comparison between the applicants in this regard is, perhaps, the most difficult assessment to make amongst the criteria for review. While the other applicants demonstrated their ability to initially finance the development of their projects, the evidence from Health Quest and VHA/Oxford was not convincing in this regard. Indeed, the credibility of VHA/Oxford with respect to its proposal was called into question as a result of statements made under oath regarding the VHA/Oxford Hillsborough County Certificate of Need. All the applicants project a positive net income during their second year of operation. Their daily patient charges do not significantly differ. Some of the line-item projections in the pro formas were based upon assumptions that were not substantiated at the hearing. This is particularly true in the cases of Health Quest, Mediplex and VHA/Oxford. However, in comparing the different projected costs associated with

    construction and equipment and the different revenues and expenses projected by the applicants, the differences are not of such a magnitude as to establish the unreasonableness of any one of the applicant's projections. Absent a demonstration that the projected financial feasibility of a project is totally unreasonable, one must assume that each applicant anticipates and has the ability to assume that the operation of their proposed facility will be profitable.

    
    

85. As indicated above, Manor Care, Health Quest and HCR will improve the delivery of health services and foster competition in Pinellas County by offering a new service or program -- the separate and dedicated Alzheimer's units in their facilities. Unlike the other applicants who have either approved or operational nursing homes in Pinellas County, Forum, Mediplex and VHA/Oxford would be new to Pinellas County and thus foster competition. This is a factor for consideration pursuant to Section 381.705(1)(l)

    
    

86. Section 381.705(1)(m) requires a consideration of the costs and methods of the proposed construction, including energy provisions, and the availability of alternative, less costly, or more effective methods of construction. Also, subsection (2)(c) of Section 381.705 requires a determination as to whether alternatives to new construction have been considered and implemented. HCR's proposed addition to its existing nursing home facility is the most cost-effective of the proposals. Florida Country Place's construction costs, while higher per bed than the other proposals, will actually benefit two facilities by the removal of 16 triple-bed rooms from its existing facility. All the applicants propose energy efficient features in their designs. Many of the schematic drawings or floor plans presented by the applicants contained some flaws and deficiencies. This is not fatal to a Certificate of Need application. At later stages of the development process, the nursing home facility licensing laws require adherence to minimum standards and criteria. Any demonstrated deficiencies in the plans can be corrected before construction begins. Indicative of HRS's practice and policy regarding modifications to preliminary line drawings is the fact that HRS, in this proceeding, conditioned Manor Care's approval on the deletion of its initially proposed three-bed rooms, which, obviously, causes a modification of its plans.

    
    

87. In considering alternatives to new construction and less costly methods of construction, the one applicant who falls short in meeting this criterion is Health Quest. First of all, but perhaps not fatal in itself, Health Quest failed to provide any drawings or floor plans in support of its application. Its narrative description of the project renders it difficult to assess the reasonableness of the "costs and methods" of construction. More important, however, is the fact that Health Quest had an alternative to filing the instant application for construction of a new 180-bed facility. It could have continued to develop, and/or sought an addition to, its approved 120-bed Certificate of Need it had previously been awarded in Pinellas County. Health Quest failed to adequately explain why it had sold or is attempting to sell a number of its approved Certificates of Need in Florida, including one in Pinellas County, and yet, at the same time, is seeking an additional 180-bed facility in Pinellas County. However, Health Quest's proposal to offer sub- acute care and to provide a separate 60-bed unit for the care of patients suffering from organic brain syndrome, as well as its superior licensure ratings at two other Florida facilities, are considered as outweighing the criterion of alternatives and less costly construction methods.

    
    

88. Section 381.705(1)(n) requires a consideration of the applicant's past and proposed provision of services to Medicaid and the medically indigent.

    While some of the applicants' past practices are not as generous as their current proposals in this regard, each of the applicants has indicated their commitment to the percentages of Medicaid discussed above and are willing to have their Certificates of Need conditioned upon the percentages proposed herein.

    
    

89. There is a need in Pinellas County for the January 1990 planning horizon of 818 community nursing home beds. The total number of beds applied for by the eight applicants in this proceeding is 854 beds. Therefore, a comparative ranking amongst the applicants is required. Based upon the Findings of Fact recited herein, and a balancing of the various criteria and standards for review, the following ranking is made:

    
    

    1. HCR - 60 beds

    2. Manor Care - 120 beds

    3. Forum - 120 beds

    4. Florida Country Place - 14 new & 16 transfer beds

    5. CSI - 120 beds

    6. Mediplex - 20 beds

    7. Health Quest - 130 beds

    8. VHA/Oxford - 120 beds

       
       

       An award of Certificates of Need to the first seven applicants would total 734 beds, leaving an unmet need of 84 beds. No evidence was presented by VHA/Oxford that an 84-bed nursing home facility could provide the services intended or could be operated efficiently, cost effectively and profitably. Indeed VHA/Oxford's evidence regarding the operation and financing of the 120-bed proposal submitted was the weakest of all the applicants.

       
       

90. As a final matter, it is concluded that the updates to the applications of offered in this proceeding should be considered in evaluating the merits of each application. The applications were filed and supplemented or revised in January and March of 1987. The final hearing in these consolidated proceedings commenced in May of 1988. The "updates" offered and received into evidence at the hearing resulted from the effects of inflation, the passage of time, changes in the marketplace regarding the availability and salaries of nursing and other personnel, additional beds having been approved in Pinellas County by a stipulated settlement agreement, changes in the Medicaid and Medicare systems of reimbursement, business decisions based upon a longer period of experience, better knowledge of the area based upon more recent surveys, and, in some instances, knowledge gained from the State Agency Action Report and attachments thereto regarding appropriate allocation methodologies and the preferences of HRS regarding room configurations and architectural plans. As stated in the Findings of Fact, none of the applicants changed the sizes of their proposed facilities with respect to the number of beds requested, the proposed location of their facilities, the services proposed or the planning horizon upon which their proposals were based. It would appear inconsistent and incongruous to allow HRS to make changes in its State Agency Action Report and to state its intent to impose conditions on a proposed approval without allowing the applicants the opportunity to make changes based upon better and more recent information and to respond to the proposed conditions to be imposed. None of the changes or updates offered at the hearing constituted substantial amendments to the original applications deemed complete by HRS.

RECOMMENDATION

Based upon the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that Certificates of Need for the establishment of community nursing home beds in Pinellas County be GRANTED to HCR for 60 beds, Manor Care for 120 beds, Forum for 120 beds, Florida Country Place for 14 new beds and 16 transfer beds, CSI for 120 beds, Mediplex for 120 beds, and Health Quest for 180 beds. It is further RECOMMENDED that the application of VHA/Oxford for 120 beds be DENIED.

Respectfully submitted and entered this 3rd day of November, 1988, in Tallahassee, Florida.

DIANE D. TREMOR

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 3rd day of November, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3447, 87-3448, 87-3449, 87-3453, 87-3455, 87-3456,

87-3463, and 87-3465

The proposed findings of fact submitted by each of the parties have been carefully considered and are accepted, incorporated and/or summarized in this Recommended Order, with the following exceptions:

Health Quest

63. Rejected insofar as the evidence demonstrates that Health Quest is selling or transfering 3 of its Florida nursing home CONs.

1. Rejected as to individual line items.

2. Rejected factually as unsupported by competent, substantial evidence (but see Conclusions of law regarding financial feasibility.)

140. Rejected as contrary to the greater weight of the evidence.

149. Second sentence rejected as unsupported by the evidence.

1. All but first sentence rejected as improper factual findings.

2. Last sentence rejected as unsupported by competent, substantial evidence.

162. Last sentence rejected as argumentative.

176. Second sentence rejected as unsupported by competent, substantial evidence.

1. Figure $3(0,000 rejected as unsupported by the evidence.

2. Rejected. See Conclusions of Law.

Florida Country Place

51. Rejected as to range of need. See Finding of Fact 68.

58. Rejected as an improper factual finding.

Forum

20. Rejected. See Finding of Fact 73.

CSI

19(i) Accepted, with the exception of CSI's Tallahassee facility.

47. The words "do better" rejected as unsupported by the greater weight of

the evidence.

120. As noted in Finding of Fact 57, there was some discrepancy in the testimony as to which entity would manage the day-to-day operations of the facility.

Mediplex

7. Second sentence rejected as unsubstantiated by competent evidence. See Findings of Fact 41 and 42.

11. Rejected. See Finding of Fact 42.

13, 18, and 21 - 23. Rejected. See Findings of Fact 41 and 42.

43. Accepted, except with regard to toilet facilities in kitchen.

63. Rejected as unsupported by substantial competent evidence.

71. Last sentence rejected as unsupported by the evidence.

1. Partially rejected. See discussion in Conclusions of Law regarding preliminary plans or drawings.

2. Rejected as contrary to the evidence.

97. Rejected as contrary to the evidence.

Manor Care

129 - 131. Rejected. See Findings of Fact 68 - 73.

HCR

4 and 9. Rejected as to the number of beds awarded to Careage; contrary to

the evidence.

VHA/Oxford

12. Figure of 860 rejected. See Finding of Fact 73.

14 and 42. As noted in Finding of Fact 57, there was some discrepancy in the testimony as to which entity would manage the day-to-day operations of the facility.

30. The number of private rooms on the floor-plan is rejected as contrary to the evidence.

50. Rejected as not supported by competent substantial evidence.

56. Rejected. The testimony demonstrates 600 to 800 patients.

59. Rejected. The evidence demonstrates that the total project cost is

$3,579,680.

63 - 66. Rejected as not sufficiently established by the evidence of record.

73. Rejected if the statements are intended to apply to salaries in Pinellas County.

76 and 78. Last sentences rejected as unsupported by competent substantial evidence

81. Accepted only if other assumptions in pro formas are reasonable.

87. Rejected as an improper factual finding.

90. The words "tremendous" and "terrible hindrance" are rejected as unsupported by competent substantial evidence.

1. First sentence rejected as unsupported by the evidence.

2. Rejected insofar as it is intended to imply that review of other applications did occur.

HRS

6 - 9. Rejected. See Findings of Fact 68 - 73.

1. Rejected insofar as it purports to state anything other than HRS's position in this proceeding.

2. (the first 14) Factually accepted, but irrelevant to the application at issue.

15 - 38. The changes stated are factually accepted; however, see Finding of Fact 66 and discussion of "updates" in Conclusions of Law.

COPIES FURNISHED:

Gregory Coler, Secretary

Department of Health and Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

R. S. Powers, Agency Clerk

Department of Health and Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

Steven W. Huss, Esquire

1017 Thomasville Road, Suite C Tallahassee, Florida 32303

Douglas L. Mannheimer, Esquire Sandra P. Stockwell, Esquire 820 East Park Avenue, Bldg. F Tallahassee, Florida 32301

R. Terry Rigsby, Esquire

J. David Holder, Esquire

325 John Knox Road Suite C-135

Tallahassee, Florida 32303

W. David Watkins, Esquire Harold F. X. Purnell, Esquire Post Office Box 6507 Tallahassee, Florida 32314

Karen L. Goldsmith, Esquire Jonathan S. Grout, Esquire Post Office Box 10651 Tallahassee, Florida 32302

James C. Hauser, Esquire Joy Heath Thomas, Esquire

215 South Monroe Street Suite 701

Tallahassee, Florida 32301

Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302

Paul Amundsen, Esquire Guy Collier, Esquire Byron E. Mathews, Esquire Vicki Kaufman, Esquire 700 Brickell Avenue

Miami, Florida 33131-2802

Edgar Lee Elzie, Esquire

215 South Monroe Street Suite 804

Tallahassee, Florida 32301

Docket for Case No: 87-003447

Orders for Case No: 87-003447