STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MANOR HEALTHCARE CORPORATION d/b/a AMERICANA HEALTHCARE CENTER OF JACKSONVILLE, | ) ) ) | |
) | ||
Petitioner, | ) | |
) | ||
vs. | ) CASE NO. | 87-3477 |
) CON NO. | 4952 | |
BUREAU OF COMMUNITY MEDICAL | ) | |
FACILITIES and DEPARTMENT | ) | |
OF HEALTH AND REHABILITATIVE | ) | |
SERVICES, | ) | |
) | ||
Respondent. | ) | |
) | ||
MANOR HFALTHCARE CORPORATION | ) | |
d/b/a AMERICANA HEALTHCARE | ) | |
CENTER OF JACKSONVILLE, | ) | |
) | ||
Petitioner, | ) | |
) | ||
vs. | ) CASE NO. | 87-3479 |
) CON NO. | 4956 | |
OFFICE OF COMMUNITY MEDICAL | ) | |
FACILITIES, DEPARTMENT OF | ) | |
HEALTH AND REHABILITATIVE | ) | |
SERVICES, and ALL SAINTS | ) | |
NURSING HOME, | ) | |
) | ||
Respondents. | ) | |
) | ||
JACKSONVILLE HEALTH AND | ) | |
RETIREMENT d/b/a MANDARIN MANOR | ) | |
NURSING CENTER, | ) | |
) | ||
Petitioner, | ) | |
) | ||
vs. | ) CASE NO. | 87-3481 |
) CON NO. | 4956 | |
ALL SAINTS NURSING HOME and | ) | |
DEPARTMENT OF HEALTH AND | ) | |
REHABILITATIVE SERVICES, | ) | |
) | ||
Respondents. | ) | |
) | ||
RECOMMENDED ORDER
Notice was provided in accordance with Section 120.57(1), Florida Statutes, and a hearing was held on February 15-17, 1988 to consider the matters in dispute in these actions. The location of the hearing was the office of the
Division of Administrative Hearings, 2009 Apalachee Parkway, Tallahassee, Florida. A further hearing opportunity was sought following a motion to reopen the record to allow the presentation of additional evidence. On May 31, 1988, at the same place as previously described, consideration was given the request to entertain additional evidence. That request was not granted.
The parties who participated in this hearing were Manor Healthcare Corporation d/b/a Americana Healthcare Center of Jacksonville (Manor Care), the State of Florida, Department of Health and Rehabilitative Services (HRS), All Saints Nursing Home (All Saints) and Jacksonville Health and Retirement d/b/a Mandarin Manor Nursing Center (Mandarin Manor). Each of these parties has presented a proposed recommended order setting forth factual proposals. These factual proposals have been examined and in some instances utilized in the preparation of the fact finding in this recommended order. On those occasions where the proposed facts were not acceptable the reason for rejecting the proposed facts or modifying them may be found in an appendix attached to this recommended order as exhibit "A." The transcript of hearing and exhibits have also been reviewed in anticipation of the entry of the recommended order.
APPEARANCES
For Manor Care: James C. Hauser, Esquire
Joy Heath Thomas, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN
Post Office Box 1876 Tallahassee, Florida 32302-1876
For HRS: Richard A. Patterson, Esquire
Assistant General Counsel Building One, Room 407 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
For All Saints: James M. Barclay, Esquire
Suite 200, Cambridge Center
215 East Virginia Street Tallahassee, Florida 32301
For Mandarin William E. Williams, Esquire Manor: Rex D. Ware, Esquire
Post Office Box 1739 Tallahassee, Florida 32302
WITNESSES AND EXHIBITS
Manor Care offered the testimony of Donald Reppy, an expert in health planning, and Jane D. Christiansen, an expert in nursing home administration. Manor Care presented fourteen exhibits which were received. Exhibit 15 as proposed for admission was denied admission for reasons as set forth in an order entered contemporaneously with the entry of this recommended order, which order denies Manor Care's motion to reopen the record and the HRS motion to amend its position relating to numeric need. A copy of that order denying the motion to reopen and the HRS request to amend its position is attached to this recommended order as exhibit "B."
HRS presented the testimony of Reid Jaffe, an expert in health planning and consultant supervisor with HRS. In addition, HRS presented two exhibits which were admitted.
All Saints presented the testimony of Edward J. Flynn, an expert in nursing home administration; Margaret Heeth, Director of Nursing at All Saints; Gayle Buck, an expert in health planning; Vasant Bhide, an architect specializing in nursing; and Edward L. Meadows, an architect employed by HRS whose duties include the examination of applications for certificate of need related to architectural compliance. In addition, All Saints presented one composite exhibit which included the testimony of Wendall Hall, an architect who specializes in architectural design for nursing homes.
STIPULATIONS
By various combinations, the parties to this cause have entered into prehearing stipulations designed to limit the scope of this inquiry. First, HRS and Manor Care agreed as follows:
Section 381.705(1)(a)-(n) , Florida Statutes, and Rule 10-5, Florida Administrative Code, are the statutory and rule provisions which set forth the issues of law relevant to the Manor Care application (CON No. 4952) which is the subject of the above-referenced proceeding.
HRS and Manor Care stipulate that the only issues which are both applicable and in dispute in regard to the Manor Care application (CON No. 4952) are those statutory and rule criteria which pertain to need. Specifically, HRS and Manor Care stipulate that only the following criteria are in dispute in regard to the Manor Care application (CON No. 4952): Section 381.705(1)(a) as this criterion relates to need and local health plan recommended allocation priority; Section 381.705(1)(b) and Section 381.705(1)(i) only as this criterion relates to need; Rule 10-5.011(1)(k) only as it relates to need. HRS stipulates that the Manor Care application (CON No. 4952) satisfies all other statutory and rule criteria.
Second, All Saints and Manor Care entered into stipulations that:
All Saints and Manor Care hereby stipulate and agree that Section 381.705(1)(1)-(n), Florida Statutes, and Rule 10-5, Florida Administrative Code, are the statutory and rule provisions which set forth the issues of law relevant to the Manor Care application (CON No. 4952) and the All Saints application (CON No. 4956) which are the subjects of the above-referenced proceeding.
All Saints takes the position that its proposed facility (CON No. 4956) should be finally approved as a relocation facility based on the rationale set forth in the State Agency Action Report.
Manor Care takes the position that the All Saints proposal (CON No. 4956) seeks to add 60 new beds to Subdistrict 3. Manor Care takes the position that the All Saints CON Application No. 4956 should not be granted unless there is sufficient numeric need in Subdistrict 3 to approve both the Manor Care and the All Saints applications. Manor Care takes the position that if there is a numeric need in Subdistrict 3, those beds should first go to Manor Care for the addition proposed in the Manor Care CON Application No. 4952.
All Saints stipulates that the Manor Care application (CON No. 4952) meets all of the statutory criteria specified in Section 381.705, Florida
Statutes, and Rule 10-5, Florida Administrative Code, except those criteria which directly and indirectly relate to need in Subdistrict 3 of HRS District IV and those criteria relating to available alternatives.
Manor Care stipulates that the All Saints application (CON No. 4956) meets all of the statutory criteria specified in Section 381.705, Florida Statutes, and Rule 10-5, Florida Administrative Code, except those criteria which directly and indirectly relate to need in Subdistrict 3 of HRS District IV and those criteria relating to available alternatives.
By so stipulating, the parties hereto agree and understand that each may fully cross-examine the witnesses of the other. Third, Mandarin Manor and Manor Care stipulate and agree to the following:
Section 381.705(1)(a)-(n), Florida Statutes, and Rule 10-5.001(1)(k), Florida Administrative Code, are the statutory and rule provisions which set forth the issues of law relevant to the Manor Care application (CON No. 4952) which is the subject of the above-referenced proceeding.
Mandarin Manor and Manor Care stipulate that the only issues which are applicable and in dispute in regard to the Manor Care application (CON No. 4952) are those statutory and rule criteria which pertain to numeric need. For the purpose of this case, numeric need is defined as and Mandarin Manor will present testimony concerning the numeric need methodology, its origin and purpose, the factors comprising the policy behind the need methodology and general testimony concerning the factors as they relate to the applicable district and subdistrict.
Mandarin Manor may also cross-examine Manor Care's witnesses.
Manor Care stipulates that Mandarin Manor has standing as a party intervenor in this case. Fourth, Mandarin Manor and All Saints stipulated as follows:
Section 381.705(1)(a)-(n), Florida Statutes, in [and] Rule 10-5.01 1(1)(k), Florida Administrative Code, are the statutory and rule provisions which set forth the issues of law relevant to the All Saints' application (CON No. 4956) which is the subject of the above referenced proceeding.
Mandarin Manor and All Saints stipulate that the only issues which are applicable and in dispute in regard to the All Saints' application (CON No. 4956) are those statutory and rule criteria which pertain to numeric need and HRS' policy concerning the transfer and/or relocation of nursing homes across subdistrict lines. For the purpose of this proceeding, Mandarin Manor will present testimony concerning the numeric need methodology, its origin and purpose, the factors comprising the policy behind the need methodology and general testimony concerning the factors as they relate to the applicable district and subdistrict. Mandarin Manor will also present testimony relating to HRS' policy regarding transfers or relocation of nursing home facilities between subdistricts within an HRS district.
Mandarin Manor will be allowed to cross examine All Saints' witnesses at hearing.
All Saints stipulates that Mandarin Manor has standing as a party in this proceeding.
Through its counsel, Mandarin Manor offered a stipulation to the other parties as set forth on page 321 of the transcript of proceedings held on February 17, 1988. That stipulation pertained to the standing of Mandarin Manor to participate as a substantially affected party within the meaning of Chapters
120 and 381, Florida Statutes, to include the hearing before the Division of Administrative Hearings and subsequent proceedings before the department or on an appeal from any final order issued by the department. That stipulation was accepted by counsel for all other parties and by the Hearing Officer.
OTHER PRELIMINARY MATTERS
At the inception of these actions, the case of Florida Convalescent Centers, Inc., petitioner, vs. Department of Health and Rehabilitative Services and All Saints Nursing Home, respondents, DOAH Case No. 87-3480, was consolidated with the cases that remain. During the course of the participation by Florida Convalescent Centers, Inc., a motion by All Saints was made to dismiss that Petitioner. That motion was denied. Subsequently, Florida Convalescent Centers, Inc., in the person of its counsel, noticed the voluntary dismissal of Case No. 87-3480 and that dismissal was accepted and the case is no longer viable.
Mandarin Manor had also sought leave to intervene in DOAH Case No. 87-3477.
That request was favorably responded to and Mandarin Manor is considered to be an intervenor in DOAH Case No. 87-3477.
ISSUES
The issues raised concern the questions of whether Manor Care should be entitled to the grant of a certificate of need for the addition of 31 nursing home beds to its existing facility which presently houses 89 beds, in Subdistrict 3 to HRS District IV, and whether All Saints should be granted permission to transfer its existing 60 bed nursing home facility from Subdistrict 2 to Subdistrict 3 within HRS District IV by grant of a certificate of need.
FINDINGS OF FACT INTRODUCTORY FACTS
HRS is the regulatory agency responsible for reviewing applications submitted for purpose of obtaining permission to provide various forms of health care in Florida. This includes nursing home care. Consideration of the applications is given in accordance with Sections 381.701 - 381.715, Florida Administrative Code. Those sections are known as the "Health Facility and Services Development Act." A successful application leads to the grant of a certificate of need issued by HRS evidencing need for a new or expanded health care facility or service in the given community. In these cases two applicants have requested the grant of a certificate of need for nursing home beds. Those applicants are All Saints Nursing, which wishes to relocate or transfer a 60 bed facility in Subdistrict 2 of HRS District IV to Subdistrict 3 of HRS District
IV. The CON action number related to that application is No. 4956. Manor Care, which presently has an 89 bed facility in Subdistrict 3 of HRS District IV, wishes to add 31 additional beds. The CON action number for the Manor Care request is No. 4952.
The two applications described were reviewed by HRS in the same cycle. As a consequence, they have been considered in the hearing de novo
comparatively, the possibility existing that there is insufficient need for the addition of nursing home beds to meet the requirements of both applicants.
In its initial assessment of this case and statement of decision, HRS favored the grant of a certificate of need to All Saints and denied the Manor Care application. Manor Care made a timely request to challenge the grant of the certificate of need to All Saints and to the denial of its request for certificate of need. Likewise, Mandarin Manor has timely opposed the grant of a certificate of need to All Saints and timely intervened in the case related to Manor Care's challenge to the denial of its requested certificate of need.
Mandarin Manor is an existing nursing home facility in Subdistrict 3 of HRS District IV and gains its standing to participate in this action by that reality. Mandarin Manor will be substantially affected if the applications are approved for the addition of nursing home beds to Subdistrict 3 of HRS District IV.
Both applicants and Mandarin Manor are specifically referred in the certificate of need process as "skilled nursing facilities" as defined in Section 381.702(17), Florida Statutes.
The rationale for the preliminary choices of HRS concerning the intent to grant the certificate of need to All Saints and to deny Manor Care was that All Saints is presently housed within a facility whose physical state is such that it no longer suffices and needs to be replaced and can be replaced in Subdistrict 3 of HRS District IV at low cost through an arrangement which affords increased access to the support system of the diocese of the Catholic Church in this area, whereas the numeric need formula found within Rule 10- 5.011(1)(k), Florida Administrative Code, for the pertinent planning horizon of January 19, 1990, shows a surplus of community nursing home beds in Subdistrict
3 of HRS District IV and would not allow the grant of beds to Manor Care. In essence, the All Saints situation is seen as an exceptional circumstance which in the analysis made by HRS warrants the grant of certificate of need. Manor Care's request, according to HRS, is not so compelling and without demonstrated need through the use of the formula for deriving projected need may not be favorably responded to. The question of need as it involves the two applicants will be discussed more comprehensively in subsequent findings in this recommended order.
THE ALL SAINTS APPLICATION
The All Saints application dates from January, 1987.
All Saints is located in the downtown area of Jacksonville, Florida within Subdistrict 2 of HRS IV. It sits back about 250 feet from Riverside Avenue and has a parking area that accommodates 25 to 30 cars.
All Saints is owned and controlled by the Catholic Church through the Bishop of the Diocese of St. Augustine which is a corporate entity under Florida law.
The facility itself is very old and its inner spaces are very confining. The facility is located on property one and one-half acres in size and is bordered by Riverside Avenue and the St. Johns River on two sides and other enterprises on the remaining sides. Ingress and egress to the facility is awkward.
Parking is a problem in that two hospital parking lots are located nearby All Saints. Those parking lots are associated with Riverside Hospital. As a consequence, it makes it difficult to find parking at All Saints because of utilization patterns by persons visiting the hospital. In addition, the All Saints parking lot, even if available for visitors to that facility alone is inadequate.
The size of the site of the present facility precludes outdoor activities for patients.
Given the age of the facility, a significant amount of capital budget or operating expenses have been devoted to capital improvements and repairs routinely since 1981.
One problem within the facility concerns the location of the nurses station. It is located in the center of the facility in a design in which the patient wings run to the east and west from that nursing station. This thwarts the attempts of the nurses to observe the patient rooms from the nursing station.
The nursing home has problems with its ceilings and does not have a fire sprinkling system.
16, The corridors within the nursing home are confining, creating problems for the transport of patients in and out of their rooms and providing difficulty for the staff to render care.
The kitchen area is inadequate and needs to be replaced.
The windows in the facility are an old style crank-out type which cannot be replaced and, given their poor state of repair, provide problems with heating and cooling in the patient rooms.
The laundry area is very small and the laundry cannot be divided into soiled and clean areas.
The roof over the west wing has numerous leaks and a decision must be reached soon on replacing the roof.
Problems exist with the plumbing at the nursing home. Problems exist with the heating, ventilation and air conditioning system, leading to an expenditure of $52,000.00 in 1986 to build a new generator and cooling tower for the air conditioning system. Replacement parts for some of the system are unavailable due to the age of the system.
The patient rooms generally present problems with heating and cooling due to the age of the facility.
The kitchen hood is in a state of disrepair.
The electrical system presents problems, among them the fact that only one switch is available to turn on the emergency generator if emergency lighting were to be needed. The better arrangement is to have two switches.
A problem is presented in that the receiving room is outside of the physical space of the facility.
The patient rooms are confining.
The hot water system has broken down at times causing the hot water temperature to exceed allowable limits.
The problems that are being described are not such as to cause the decertification of the facility or to place the license of the facility in jeopardy, in that the facility has been "grandfathered" in terms of the need to comply with code requirements related to the items described.
An architectural survey conducted at the facility led to the conclusion that an expansion within this facility is not practical.
In addition to the price of the purchase of air conditioning, between 1982 and 1986 the nursing home has spent $60,000 to replace stoves, refrigerators and a freezer unit in the kitchen, and approximately $22,000 to put a new roof on the east wing. Other refurbishments have also been made.
The nature of the physical plant is as such to interfere with the care rendered to the patients; however, the facility has afforded quality care to its patient in spite of these impediments. In particular, the spatial inadequacies have made it difficult to provide physical, speech and occupational therapies and for the nurses to carry out some of their duties.
The circumstances of the physical plant have interfered to some extent with the ability to recruit and keep staff members and at times to attract patients, although the occupancy rates at the facility have remained high.
The license of the nursing home has never been revoked. In the years 1984 and 1985 the facility had a superior rating. In 1985, for a period of 35 days, the hot water problem caused the superior rating to be downgraded to conditional. In 1986 the facility received a standard rating due to a combination of problems within the physical plant, as to the layout of the kitchen, and the menu selection. On the dates of the hearing the facility had a superior rating.
The gravest concerns about the physical plant have to do with patient safety, especially as it relates to not having a sprinkler system and the size of doors within corridors, and diverse floor finishes.
If the facility were to attempt to gain compliance with present codes, the cost would be approximately $500,000. In this connection, if more than fifty percent of the value of the building was expended in making these upgrades, it would be necessary to bring the entire building into compliance with the current codes and this may not be done because the corridors are not subject to those corrections, given their design. Under the circumstances, to bring the nursing home into compliance the better choice would be to construct a new home. By constructing a new home the defects could be cured.
HRS has concluded, in its review of the application, that the construction of a new home is the most cost effective solution to remedy the problems.
In the face of the problems described, All Saints hired architects who are expert in nursing home design and had them evaluate the possibility of using the existing structure and property for improving the situation and alternatives
at other locations for the construction of a new facility. In particular, the alternatives under consideration included:
Vertical expansion of the existing facility.
Horizontal expansion within the existing facility.
Constructing a new facility at a new site.
Acquiring additional property at the existing site.
Completely demolishing the existing facility and reconstructing a new two story home at the current site.
In examining the idea of the demolition of the existing facility, while it was considered to be advantageous in that it would allow the facility to remain near existing hospitals and existing staffing patterns, the disadvantages related to inadequate size of the lot were felt to outweigh the advantages and that alternative was discarded.
The idea of keeping the current facility and building and bringing on an additional home with additional beds at a new site was not deemed feasible because two nursing homes could not be operated with one central administration.
The idea of construction or renovation within the facility and the employment of a parking garage as part of this revitalization was felt not to be cost effective and was further hindered in that the construction would have presented additional burdens in providing patient care in the construction phase. Renovation to add a second floor presented the same sorts of problems.
The purchase of additional property for expansion is not easily available and was considered to be too expensive, nor was the purchase of additional parking within the general area of the facility felt to be within a suitable price range.
Eventually the provider decided that the best choice for the provider was to relocate and undertake new construction, this being the most cost efficient choice in providing the best opportunity for the delivery of quality care. With this relocation it hopes to gain a state of the art design of the facility.
To this end it went about finding a site and examined several properties belonging to the diocese of St. Augustine. In looking at these properties the size of the land, the general location, the effect on safety of patients and the proximity of a Catholic church were matters of importance to the provider.
Two of the sites which were examined were located within Subdistrict 2 of HRS District IV. One of those sites was Dunn Avenue. While considered to be large enough, it was not felt to be acceptable because of the volume of commercial traffic on that road. The Dunn Avenue facility is between five and one- half acres and six acres of land 10 miles from the current facility. A site known as St. Catherine's presented approximately three acres of property. In addition to believing that the acreage was inadequate the selection committee was concerned that a church was not on the site and it did not have adequate
utilities available. The St. Catherine's location would provide sufficient acreage for the 60 bed nursing facility, even though not considered adequate for the proposal for the nursing facility and a 60 bed Adult Congregate Living Facility planned to be part of the project.
An additional site owned by the St. Augustine Diocese that was examined was located near Bishop Kenny High School, a Catholic high school which had about four acres of property available. It was felt to be inadequate in size and to be too near a main thoroughfare.
Finally, the site which was chosen as being the best alternative was a site known as San Jose in Duval County which is in Subdistrict 3 of HRS District IV . It has a campus type environment and is nearby the second or third oldest established Catholic church in the area, The San Jose Parish. It is located in a residential area. It makes available approximately eight acres out of a total acreage of approximately 13 to 14 acres. It has a church school on the location. This arrangement would also be more beneficial to the applicant in installing a 60 bed Adult Congregate Living Facility as well as the relocation of its 60 nursing home beds at the same facility in the San Jose area. As stated, justification for locating in San Jose was urged because of the proximity to the Catholic church. In this connection only 40 percent of the present patient population in the facility is Catholic and the Catholic percentage of population has declined in recent years.
If built, the facility would be a one story facility. Given the acreage available, it will allow for outside activities in a setting which is not interfered with by heavy traffic conditions.
The patients who are presently residing in the Riverside Avenue facility will be allowed to move to the new location at their election.
The new facility would provide a kiln room, physical therapy and a multipurpose room. It provides a better dining area and a secured courtyard area with a gazebo. The nurses station would be in the center of patient wings designed to allow observation of all corridors and to supervise the patients. It would also have a separate medicine preparation room.
Overall, the construction would remedy the problems inherent in the present facility.
The facility would have 24,000 square feet. The square footage per patient in the new home would be approximately 400, with a cost of construction of $65.00 per square foot.
The total project cost is estimated at $2,117,000.00. The construction and total project cost of this plant are reasonable. The equipment is adequate and no leased or donated equipment will be required at the new home. No question has been raised concerning the schematics of the replacement facility.
Should All Saints select property not already owned by the St. Augustine Diocese this would increase the project costs. In this regard, the possibility of selling the existing property would offset to some extent the purchase price of new property for relocation to a new site. In effect, if All Saints relocated, the value of the real property on which the CON facility is located now is approximately $1.2 million, which would be available to defray
the expense of the purchase price of property if they were unable to use property already owned by the St. Augustine Diocese.
The occupancy at All Saints at the time of the hearing was at 100 percent with 55 percent of those patients being private pay and 45 percent Medicaid. The estimate of the applicant concerning its first year of operation of a new home would be expected at 97 to 98 percent, with 50 percent private pay, 45 percent Medicaid and 5 percent Medicare. Between 1985 and 1986, the home averaged about 99 to 100 percent occupancy. Projected utilization within the new nursing home facility was based on the assumption that utilization historically having been 99 to 100 percent, it would not drop dramatically upon relocation. No specific surveys have been conducted to ascertain whether the present patients would transfer to the new location. Nonetheless, given the constituency of the patient population within the present facility, it would not be unexpected to see a substantial number of those patients relocate to the new facility. This does not address the death rate of that very elderly population and trying to determine who the new patients might be by age cohort and where they might come from. The average age of the residents at All Saints approaches
90 years and within the typical year approximately one third of the patient population changes.
All Saints has referral agreements from St. Vincent's Medical Center and Riverside Hospital. They would maintain these referral agreements on relocation and would hope to make agreements with new hospitals after relocation, to include St. Luke's Hospital which is located in Subdistrict 3 of HRS District IV. Although St. Luke's will continue their referral agreements with Riverside and St. Vincent's, In all likelihood, according to All Saints, it does not expect this to be an active referral agreement given the distances between those facilities and the new site location for All Saints. Any arrangement with St. Luke's Hospital for referral has yet to be consummated.
Patient charges at the nursing home are $53.00 per day for room and board without regard for whether a patient is located in a 2, 3 or 4 bed room. Upon relocation it is expected that the charge would be $65.00 per day in the first year regardless of type of payor, with a $70.00 charge in the second year.
The patient origin at present is from within Duval County, Florida where the nursing home is located and from surrounding counties and to some extent other areas within the state. The applicant does not expect that this circumstance would change with relocation. At present 50 percent approximately of the patients in the facility have been referred from St. Vincent's and Riverside Hospitals. At present 30 to 35 percent of the patients in the facility are residents from inside Subdistrict 2 of HRS District IV and approximately 30 to 35 percent of the current residents are from Subdistrict 3 of HRS District IV. Based upon a patient origin study of 1983 and updates to that study, there appears to be an equitable distribution of the existing patients in terms of origins throughout Duval County. About a third of those patients came from Subdistrict 3 and about 30 to 40 percent from Subdistrict 2 within HRS District IV. The remaining patients came from other parts of Duval County and throughout the state. All Saints has assumed that there is no primary detriment for All Saints in terms of patient origins which is associated with the location of the facility and cites a patient origin study done by the local health planning council referencing or containing a statement that said that religiously oriented facilities were less subject to geographic areas of concentration of their patients than would be the case for other facilities. Given the trends in All Saints away from the number of Catholic patients, it is
not concluded that All Saints is necessarily one of the religiously oriented facilities spoken of.
Upon reflection, the information presented concerning patient origin's for the present All Saints facility affords limited insight in trying to ascertain the patient origin for a relocated facility and the anticipated occupancy rates associated with that information. From the record these projections cannot be satisfactorily determined.
There have also been admissions to All Saints from Baptist Hospital, St. Luke's Hospital and Orange Park Hospital.
Currently the nursing home has 55 employees on staff and would not expect to add additional staff for the nursing home component if allowed to relocate. The turnover rate in nursing staff has been low and the nursing home has generally been able to fill vacancies. The nursing salaries compare favorably with salaries for nurses in the Jacksonville area.
The new facility would take approximately one year to construct.
The desire to move from Subdistrict 2 to Subdistrict 3 within HRS District IV is more related to a business choice than to health planning. Notwithstanding this fact, the underlying reason for relocation is to escape the conditions that exist within the inadequate physical plant that now serves the patients.
The local health plan that was in effect at the time of the All Saints application, and which is to be applied, recommends that modernization or replacement of an existing nursing home be made within the same general geographic area. That is not seen as being a recommendation which would contemplate separate subdistricts as being within the same general geographic area. It is taken to mean replacement within the same subdistrict, although HRS seems to hold a contrary viewpoint about the term "general geographic area."
In its preliminary assessment and preference for All Saints, HRS felt that the replacement facility was a low cost alternative and was struck by the fact that the replacement would increase access to the support of the St. Augustine Diocese and she organizations within the Catholic Church. Although the present facility is not on the immediate grounds of a Catholic Church, there is no contention that it has not received the support needed from that church.
As alluded to before, All Saints has made a commitment to make services available to the underserved patients such as Medicaid and indigent care patients. Being a religiously affiliated nursing home and not-for-profit has allowed All Saints to make more of an effort to serve the medically underserved groups. If relocated, All Saints would continue this effort.
Having been in existence since 1956, All Saints is considered as having existed for a long time as a health care system.
A new physical plant would improve the competitive standing of All Saints in the marketplace.
Among observations by HRS in its analysis of the application, it felt that All Saints would conform to needs and policies and priorities within the district plan and concluded that All Saints could increase availability and access to services while improving quality of care, efficiency, and adequacy of
services to be provided. Its opinion is correct with the exception of availability and access which criteria are being satisfied at present in the facility and in Subdistrict 3 to HRS District IV.
HRS principally justified its opinion of the need for certificate of need based upon the structural deficiencies of the physical plant at All Saints.
HRS believed in its review that the All Saints proposal would be consistent with plans for providing and financing long-term care. All Saints could provide long-term care at the new facility and can finance the venture.
The purpose of the Adult Congregate Living Facility component of the new facility would be to speak to what all Saints considers as being necessary for three retirement centers around the area in addressing the independent living stage before nursing home care is indicated.
THE MANOR CARE APPLICATION
The Manor Care application was made in January, 1987.
Manor Care is the fifth largest provider of long-term care beds in the United States. It owns approximately 104 nursing homes in 22 separate states. Nine of those nursing homes are located in Florida.
At present, Manor Care has an 89 bed nursing home located in Jacksonville, Duval County, Florida, within Subdistrict 3 of HRS District IV. That facility holds a superior license rating and has maintained that rating over the past five years. At the time of the hearing the occupancy rates for Manor Care were at 95 percent.
The addition of the 31 beds sought for approval would bring the facility to 120 beds. If allowed this increase in beds, the addition would complement the range of long-term care services being offered at the existing facility, to include skilled nursing services, rehabilitative therapy, intermediate nursing care, respite care, and community outreach.
The patients in the additional beds would be provided homelike residential surroundings, with well balanced nutritional meals, diversity in recreational programs, entertainment, and rehabilitative services. Each individual would be the subject of a planned rehabilitative program. The project contemplates a full range of restorative therapies through a full-time therapeutic staff and fully equipped therapy units.
The addition contemplates the expansion of the number of Medicaid beds available in the community.
The proposal, in addition to the 31 bed increase, would eliminate 3 bed rooms and provide additional therapy space for existing residents.
With the increase in beds to 120 operational efficiencies would improve.
The total project cost of Manor Care's proposal is $1, 436,267.
Manor Care projects an occupancy level at 65 percent in year one and
95 percent in year two. This evaluation is premised upon typical start-up occupancy rates experienced in several of Manor Care's facilities opened in the last five years.
In year one, Manor Care anticipates the addition to provide 35 percent of Medicaid patients days and 65 percent of private pay patient days. Manor Care hopes to have the new beds available for occupancy by June 1990.
HRS REVIEW CRITERIA INCLUDING NUMERIC NEED
Chapter 381, Florida Statutes, and Rule 10-5.011, Florida Administrative Code, establish the review criteria that HRS utilizes in assessing nursing home applications. Among those criteria are ones which examine availability of services, quality of care, and cost of providing services. Another item prominent in this inquiry concerns the basic issue of the need for those services by way of deciding if additions should be made to the beds in the inventory in the pertinent service area. That service area in these cases is Subdistrict 3 of HRS District IV. The question of need constitutes the pivotal issue in this dispute.
Rule 1O-17.016(1)(c), Florida Administrative Code, designates Subdistrict 3 within HRS District IV to consist of St. Johns County and that portion of Duval County which lies south and east of the St. Johns River. This is distinguished from Subdistrict 2 within HRS District IV identified in Rule
10- 17.016(1)(b), Florida Administrative Code, which includes southwestern Duval County.
Rule 10-5.011(1)(k), Florida Administrative Code, when applied to derive any need for the planning horizon in this case, January 1990, related to community nursing home beds reveals that Subdistrict 3 within HRS District IV will have a surplus of 72 beds at that juncture. This number is a product of the use of the needs calculation formula. The use of that rule is more comprehensively described in HRS exhibit 1 admitted into evidence. By contrast, the use of that formula demonstrates a net need in Subdistrict 2 for 278 additional beds in January 1990.
Within the calculation related to need for the planning horizon for Subdistrict 3 of HRS District IV are beds approved for and attributed to Beverly Gulfcoast of Florida, 100 beds pursuant to CON No. 2732; to Florida Convalescent Center, 106 beds pursuant to CON No. 2969; and to River Garden Hebrew Home, 180 beds pursuant to CON No. 4678. These beds related to those three entities are felt by Manor Care to be inappropriately included within the need calculation for Subdistrict 3 within HRS District IV at the January 1990 planning horizon. Thus, according to Manor Care, it was inappropriate for HRS to reject its request for the grant of a certificate of need in that when the aforementioned beds are excluded the formula identifies a need for additional beds at the planning horizon.
The Manor Care assertion that the previously described approved beds within Subdistrict 3 of HRS District IV should not be included in calculating need is rejected. To begin with, Rule 10-5.011(1)(k) , Florida Administrative Code, identifies that the Department would not normally approve applications for new or additional community nursing home beds in a service district if approval of that application would cause the number of community nursing home beds to exceed the number derived through the use of the needs formula. To acquiesce in the choice of Manor Care would cause the number of beds to further exceed those
calculations in a subdistrict in which a surplus already exists by the use of the formula. Additionally, Manor Care dose not vie for the exception to need calculation as announced at Rule 10-5.011(1)(k)2.j., Florida Administrative Code. This latter provision deals with the granting of a certificate of need based upon exceptional circumstances related to problems of accessibility to nursing home services within the subdistrict. Nor do any of the beds associated with those three aforementioned entities fall into the category of Christian Science nursing home beds which are deleted or excluded from the inventory of beds in calculating need. In essence, Manor Care is desirous of putting in place its own explanation of entitlement to the granting of a certificate of need outside the rule formula which has been promulgated to examine that issue and this is not allowed. All Saints has made that attempt as well but for reasons which are different and will be described subsequently.
On the topic of the Beverly beds, HRS in its assessment of the certificate of need applications under consideration in this instance felt that those Beverly beds should be counted in the inventory of approved beds in Subdistrict 3 of HRS District IV . Counsel, in the course of the hearing in these cases, did not see fit to ask HRS witnesses why they had made that determination and no reason is stated in this record through written pronouncements made by HRS and offered and admitted as evidence. Nonetheless, Manor Care has attempted to depart from the choice expressed by HRS and bore the burden of explaining the flaw in the HRS logic without ever having sought the explanation from HRS. In this regard, Manor Care pointed out that the certificate of need given to Beverly was under a scheme in which Duval County constituted a sole subdistrict. Consequently, Beverly was given a certificate of need which would allow the placement of that 100 bed nursing home facility in any location within Duval County. By contrast, at the time of the cases that are examined in this dispute, parts of Duval County were found in Subdistricts 1, 2, and 3 to HRS District IV. Under those circumstances Manor Care did not believe it was appropriate to carry the 100 beds as approved in inventory in Subdistrict 3 alone. Instead it indicated that no portion of those beds should be attributed to Subdistrict 3, thereby subtracting the entire 100 bed complement from the inventory of approved beds in Subdistrict 3 for purposes of utilizing the formula to calculate need.
Manor Care, through its presentation on February 15-17, 1988, which constitutes the hearing de novo for considering this dispute, urged that in examining HRS records no determination could be made as to Beverly's choice of sites for construction of the facility and this led Manor Care to its argument set forth in the preceding paragraph. As with the circumstance of failing to ask HRS why it sought to carry the 100 beds in the inventory for Subdistrict 3, Manor Care did not inquire of Beverly concerning where it would place its facility and promote that explanation in the course of the hearing session described in this paragraph. Moreover, an examination of the Manor Care exhibit
4 admitted into evidence, information pertaining to the Beverly application, contains correspondence by signature of E. G. Boone, Esquire, counsel to Beverly, in Certificate of Need No. 2732, in response to Herbert E. Straughn, medical facilities consultant for HRS. In the reply to the Straughn letter of July 28, 1982, also found in the composite exhibit 4, attorney Boone states that Beverly, though it has not signed a contract for the purchase of a site in Duval County, will be locating in south Jacksonville near St. Luke's Hospital. St. Luke's Hospital is in Subdistrict 3 to HRS District IV. As a consequence although no one found it necessary to ask HRS why it would attribute the beds to Subdistrict 3 or ask Beverly, this correspondence tends to offer justification for the HRS choice of inventory location and suffices as an explanation.
The River Garden Hebrew Home, and its 180 beds, is primarily intended to be a Jewish nursing home having in mind an attempt to meet the needs of that community for nursing home services. This is not to say that the nursing home would refuse to serve non-Jewish patients. River Garden had been granted a certificate of need to transfer from Subdistrict 2 to Subdistrict 3 within HRS District IV in recent times. So recent, in fact, that the patients still reside in Subdistrict 2 and the 192 beds that are involved in the River Garden facility in Subdistrict 2 are shown as licensed beds in the inventory for that subdistrict, although in view of their pending relocation to Subdistrict 3, the
192 beds had been subtracted from the inventory of approved beds in Subdistrict
This information is found in HRS exhibit 1 admitted into evidence along with the 180 beds approved to be transferred to Subdistrict 3. The relocation of beds was without regard for the numeric needs formula. It was attributable to a sociological premise pertaining to River Garden's service to the Jewish community. This special circumstance approach to allowing beds for Jewish nursing homes notwithstanding use of the numeric need formula has been carried forward in Palm Beach County in several other Jewish nursing facilities. Nonetheless, HRS has consistently depicted those nursing home beds for Jewish nursing homes in the overall inventory as it has generally done following the granting of a certificate of need based upon exceptional circumstances. To carry forward this policy choice with the River Garden beds as they affect the question of need in the present cases would be to act consistently. No compelling reason has been given for departing from that approach.
As an alternative theory, Manor Care has expressed the belief that only 79 of the 180 beds for River Garden should be counted in the approved bed inventory. The theory here is that the state agency action report which approved the River Garden relocation noted that if River Garden was allowed to relocate from Subdistrict 2 to Subdistrict 3, the effect of that move should be taken into account for later batched applicants. Neither the HRS staff nor the local planning council has suggested the out and out exclusion of the 180 beds for River Garden from the Subdistrict 3 inventory of approved beds as Manor Care urges. Whatever the perceptions held in the HRS staff review, the ultimate portrayal of the River Garden beds is as expressed in the HRS exhibit 1 in which an essentially zero balance is attempted in describing the River Garden beds in Subdistrict 2 and those beds are shown as a net increase in Subdistrict 3.
In summary, it is not available to the present parties to relitigate the question of the granting of a certificate of need to River Garden for relocation, and the inclusion of those beds through the inventory is consistent with previous practices and it has not been shown that HRS acted unreasonably in counting all beds in the inventory of approved beds for Subdistrict 3, as opposed to only 79 beds.
Next, Manor Care expresses the belief that the Florida Convalescent Center beds, 106 in number, should not be included in the approved bed count because that entity meets the requirements of the so-called Health Quest Amendment set forth in Section 381.713(4), Florida Statutes, which states:
VALIDITY OF CERTIFICATE OF NEED--A
certificate of need issued by the department for nursing home facilities of 100 beds or more prior to February 14, 1986, is valid, provided that such facility has expended at least $50,000 in reliance upon such certificate of need, excluding legal fees, prior to the initiation of proceedings under
the Administrative Procedure Act subsequent to February 14, 1986, contesting the validity of the certificate of need. If such nursing home certificate of need includes beds that have not yet been licensed as of June 17, 1987, such beds shall not be considered or utilized in the determination of need or included in the inventory of licensed or approved nursing home beds by the department, with respect to applications filed before June 17, 1987. This subsection shall only apply to nursing home beds. Nothing contained herein shall be construed to deny action pursuant to s. 120.69, or to eliminate any conditions of the certificate of need or time requirements to commence construction, including any authorized extensions.
As contended, a certificate of need was issued for Florida Convalescent Center to construct a nursing home facility of 100 more beds and that certificate issued prior to February 14, 1986. On the other hand, sufficient proof was not offered that it had expended at least $50,000 in reliance upon that certificate to exclude legal fees prior to the initiation of proceedings under the Administrative Procedure Act, such action taking place subsequent to February 14, 1986, and designed to contest the validity of the certificate of need issued to Florida Convalescent Centers. Methodist Regional Hospital System, Inc. d/b/a Methodist Manor Nursing Home, by petition of March 7, 1985, had challenged the grant of a certificate of need to Florida Convalescent Center for the project related to that latter corporation.
However, that action was prior to February 14, 1986, and cannot satisfy that condition of Section 381.713(4), Florida Statutes, which makes it incumbent that the challenge come about subsequent to February 14, 1986. A further challenge was offered by the Forum Group, Inc., designed to oppose the granting of the certificate of need to Florida Convalescent Center. Although this petition occurred after February 14, 1986, it was ruled to be untimely. A final order was entered to that effect by HRS. See HRS exhibit 2 admitted into evidence.
Under those circumstances, the Forum Group, Inc., challenge is not seen as being the type of petitioner initiated in challenge to the Florida Convalescent Center certificate of need application which is contemplated under the terms of Section 381.713(4), Florida Statutes. It is not necessary to further examine the requirements set forth in that statute for determining whether the 106 beds for Florida Convalescent Center should be excluded from the inventory. Based upon the problems with this theory already identified, they should not be.
In examining the All Saints proposal, it does not rely on demonstrated need through use of the formula. Furthermore, there is no specific reference to the accessibility exception found within Rule 10-5.011(1)(k)2.j., Florida Administrative Code. It is not a case in which exception from the use of the formula is urged based upon the rationalization in the River Garden circumstance of the transfer of beds from Subdistrict 2 to Subdistrict 3 within HRS District IV to accommodate a religious community. It is a circumstance which is best described as being one in which HRS believes that there are compelling reasons to abandon the physical plant that now houses all Saints and wherein HRS is willing to allow this transfer across subdistrict lines to accomplish that outcome, with some regard being afforded for placement near a Catholic church. The approval contemplated for All Saints is one which necessarily recognizes the economic advantage of All Saints in which it Is allowed to locate at a place
that does not include the purchase of property and to have available the opportunity to sell property that it now holds at which the All Saints physical plant is found.
The supervising health planning consultant for HRS who is the principal advisor to the agency concerning the All Saints application, Reid Jaffe, gave testimony at hearing. He appears to think that the placement of the new facility in Subdistrict 3 would be activity in the same service area, assuming that a certificate of need is issued and construction takes place and that patients within the facility would be transferred to the new facility. As described before, the exact number of patients to be transferred is not known and even if they all transferred, the focus of this case contemplates future planning and more particularly, future planning within Subdistrict 3 to HRS District IV and information about future patients is sketchy. This realization, taken together with a higher turnover rate of patients within the All Saints facility, puts to question whether the service area as spoken to by the local planning council of Subdistrict 2 and Subdistrict 3 can be considered as being synonymous. As already stated, this would not appear to be a reasonable construction and Subdistrict 2 and Subdistrict 3 are found to be discrete service areas.
While the All Saints relocation does not increase beds within the district, it does increase beds at the subdistrict level which is the level of bed assignment within HRS District IV. As such, the relocation is tantamount to the promotion of a new certificate of need within Subdistrict 3 to HRS District IV.
Having chosen the alternative that it did, All Saints is not entitled to the exception to application for certificate of need for replacement on its existing land.
Although HRS concedes that it would have been less complicated if All Saints had rebuilt its nursing home in Subdistrict 2, no particular inquiry was conducted to follow up on this observation and HRS does not feel that it could mandate that All Saints rebuild in Subdistrict 2. Basically, the applicant did not feel that Subdistrict 2 was a viable alternative and HRS did not press the point with the applicant, leaving the case in a posture wherein consideration of Subdistrict 2 is excluded.
On the whole, it would seem that HRS looked favorably upon the All Saints application because of the basic impression that it would improve quality of care and that the building most assuredly needs to be replaced.
HRS further concedes that its ideas about intra- district transfer of nursing home beds is not firm and the approach to examining these requests is case by case, with close scrutiny being given to each request in this respect. By response, even though HRS was thorough in its acquisition of information about the proposed project, it has failed to justify its choice.
While the local health plan applicable at the time of the applications under question tended to identify a lesser ratio of beds per thousand elderly in Subdistrict 2 when compared to the ratio statewide, this does not appear to be the justification for movement from Subdistrict 2 to Subdistrict 3 expressed either by the applicant All Saints or HRS and there is still the problem of bringing beds into a surplus situation in Subdistrict 3. Although Subdistrict 3 has a somewhat lower ratio of beds per elderly population, in contrast both Subdistrict 2 and Subdistrict 3 have relatively
high occupancy rates. Regardless of the result of comparing Subdistrict 2 to Subdistrict 3 in the terms expressed in this paragraph, the fact remains that in keeping the beds in Subdistrict 2, the status quo remains and to move them to Subdistrict 3 would promote a significant change in the status quo contrary to established procedures for determining need.
The change in the makeup of the patient population at All Saints in the direction of less Catholic patients has been conceded by HRS in the course of the hearing as diminishing the value of having the nursing home installed near the support systems of the Catholic church.
Generally, HRS concedes that it is not advantageous to transfer beds from what, by the need calculation, is an underbedded condition in Subdistrict 2 and into an over-bedded subdistrict, and that to do so would have a short-term adverse competitive impact on existing providers such as Mandarin Manor.
All Saints, while improving the quality of care in its transfer for patients in its facility, would not be responding to any need for the improvement of quality of care that now exists within the Subdistrict 3 or cost effectiveness or other criteria related to that subdistrict which criteria are used in deciding whether to grant a certificate of need.
On balance, the opportunity afforded All Saints is contrary to basic policy within the statutes and rules under which HRS considers the granting of a certificate of need and the explanation for allowing this arrangement on this occasion is insufficient. There is no question that All Saints needs a new facility, but to allow it to transfer its facility from Subdistrict 2 to Subdistrict 3 for what are principally economic reasons, when this arrangement is contrary to established health planning principles is wrong.
It is the local plan in existence at the time the applications were filed that is controlling.
Both applicants have problems with meeting the consistency requirements of the local health plan in that priority is recommended for the placement of nursing home beds in St. Johns County within Subdistrict 3 if additional nursing home beds are granted.
The local plan calls for approximately 25 percent of patients to be Medicaid patients within the nursing home and for the accessibility and availability and equal distribution of that care. All Saints' proposal meets this requirement and Manor Care makes an effort.
The state health plan in effect at the time of this case does not speak in specific terms to the relocation of health care facilities.
The applications tend to address the general goals of the state health plan. The state health plan addresses Medicaid recipients in particular, and All Saints particularly and Manor Care to a lesser extent address the nursing home care needs of Medicaid recipients.
The suggestion by Manor Care that the 31 bed addition is preferable to the status quo because of needs in the community is rejected. Under the circumstances wherein there is no need for additional beds it is not necessary to consider whether it is more cost effective to put the 31 beds in an existing facility or build a new facility or whether greater economies of scale are derived with the increase of beds from 89 to 120, even though 120 bed nursing
homes are deemed most efficient in an academic sense. Finally, while it would be a better arrangement to have two patients per room than three patients, the vehicle to accomplish that end that has been sought by Manor Care is unacceptable.
The Manor Care utilization projections in the face of no identified need are not tenable in describing proposed occupancy levels in its facility with the advent of the 31 additional beds. Likewise the projected utilization rates of All Saints upon the relocation of its facility are not found to be accurate in that they are based upon assumptions not supported by hard data.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has juris- diction of the subject matter and the parties to this proceeding in accordance with Section 120.54(1) and Sections 381.701 - 381.715, Florida Statutes.
HRS is required to review and make decisions upon the applications for certificates of need made by All Saints and Manor Care. This obligation is set forth in Section 381.704, Florida Statutes. HRS carried forward those duties and having determined that it would grant a certificate of need to All Saints and to deny a certificate of need to Manor Care, Mandarin Manor timely challenged that determination to grant to All Saints, and Manor Care timely challenged that grant and its denial. This was followed by a timely intervention by Mandarin Manor into the Manor Care case challenging the denial of the Manor Care application for certificate of need. These actions were consolidated based on the need for comparative consideration of the applications.
This dispute is resolved by reference to certain statutory criteria within 381.705, Florida Statutes, and the relevant rules set forth in Chapter 10-5, Florida Administrative Code. The prehearing stipulations which have been alluded to in the introduction to this Recommended Order identify the legal provisions that must be examined. All others are conceded. The statutory references are as follows:
381.705 Review Criteria
The department shall determine the reviewability of applications and shall review applications for certificate-of-need determinations for health care facilities and services, hospices, and health maintenance organizations in context with the following criteria:
The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan, except in emergency circumstances which pose a threat to the public health.
The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.
(i) The immediate and long-term financial
feasibility of the proposal.
In cases of capital expenditure proposals for the provision of new health services to inpatients, the department shall also reference each of the following in its findings of fact:
That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable.
In addition to the statutory references the calculation of projected need is as carried forward under the formula announced in Rule 10-5.011(1)(k), Florida Administrative Code.
All Saints and Manor Care as applicants have the burden of proving that they are entitled to be granted certificates of need. See Florida Dept. of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981) and Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985).
The All Saints theory of its entitlement is based upon what it considers to be, and the department joins in that suggestion, an exceptional circumstance. That circumstance relates to the state of disrepair and architectural inadequacy of its existing physical plant and the need to replace that structure. All Saints, for reasons related to its financial well-being and the desire to locate a new facility near support services provided by the Catholic Church and give adequate space for an attendant Adult Congregate Living Facility, seeks to move from Subdistrict 2 to Subdistrict 3 within HRS District
IV. HRS has acquiesced in this choice. In seeking to relocate or transfer its
60 nursing home beds, All Saints is not entitled to this arrangement and does not vie for that outcome through the employment of the needs formula set forth in Rule 10-5.011(1)(k), Florida Administrative Code or the exception to the rule. When that rule is exercised for the pertinent planning horizon of January, 1990, which corresponds to the applications in these cases dating from January, 1987, it reveals that there is a surplus of 72 beds in Subdistrict 3 to HRS District IV at January, 1990. Within that same rule is announced an opportunity for granting a certificate of need under an identified exceptional circumstance. That circumstance has to do with the lack of access for patients and is set forth in Rule 10- 5.01l(1)(k)2.j., Florida Administrative Code.
Under the theory of the rule, this is the only exception to the grant of a certificate when the net need demonstrated is zero or in this instance a surplus is shown of 72 beds. Therefore, if HRS is to act contrary to the policy announced in that rule which identifies the limited opportunity to be granted a certificate of need based upon a lack of accessibility for patients when there is no net need demonstrated, the reason for departing from the limited opportunity or exception to the general rule must be compelling. It makes it incumbent upon All Saints and HRS to be convincing in a setting where they wish to act contrary to the HRS rule and allow the relocation out of Subdistrict 2 into Subdistrict 3 of HRS District IV. This opportunity is contingent upon the presentation of evidence which clearly exposes and elucidates the policy reasoning for the departure. See, MacDonald v. Dept. of Banking and Finance,
346 So.2d 569 (Fla. 1st DCA 1977), Florida Cities Water Company v. Public Serv., 384 So.2d 1280 (Fla. 1980) and Home Health Prof. v. Department of HRS, 463 So.2d 345 (Fla. 1st DCA 1985).
The problems related to the building, while they need to be rectified, are not such as to justify the movement or relocation of the facility from Subdistrict 2 to Subdistrict 3 within HRS District IV. There is an existing need in the subdistrict where the facility is now found. That need does not exist in the subdistrict where All Saints would move. It would be beneficial to this applicant financially if it could utilize existing property held by the Catholic Church in its relocation efforts; however, this is not vital to health planning, and it is health planning which is the primary event pursued in these proceedings.
HRS, in the course of its presentation at hearing, alluded to the belief and expressed its opinion that it could not force All Saints to elect to relocate within its present subdistrict. That idea is sound but it is not responsible for HRS having expressed that opinion to ignore the implications of allowing the applicant to relocate into a subdistrict which does not need the additional beds. The system of certificate of need review works best when the framework for considering the applications is set forth in a statute or rule as it is in Rule 10-5.011(1)(k), Florida Administrative Code. Departure from that script, as would be engendered with a grant of a certificate of need to All Saints, has not been justified.
All Saints has complied with concepts of health planning, as to the state and local plan having to do with the provision of services to Medicaid patients. It has also been argued that All Saints is in compliance with the concept of modernization or replacement of existing nursing home facilities within the same general area as described in the local plan. This idea of service area is not held to mean Subdistrict 2 and 3 of Duval County. It is concluded that the reference is confined to modernization and replacement within the subdistrict where the nursing home is now located. Finally, All Saints by its relocation would be acting contrary to the local plan which contemplates the placement of new beds in Subdistrict 3 to HRS District IV in St. Johns County as opposed to southwest Duval County where All Saints would relocate.
Manor Care is not in the same position as All Saints as to the provision of 25 percent of care for Medicaid patients set forth in the local plan. Its proposal does not qualify in that regard. It attempts to meet that requirement and the state plan for Medicaid. It has the same difficulty as All Saints, reference the placement of additional beds in Southwest Duval County as opposed to St. Johns County as contemplated by the local plan.
On the subject of the needs formula set forth in Rule 10-5.011(1)(k), Florida Administrative Code, Manor Care does not disagree with the numbers derived by use of the formula. It does disagree with inclusion within the approved beds for inventory purposes related to Beverly Enterprises, River Garden Hebrew Home and Florida Convalescent Center. It expressed the argument that if those beds are excluded there will be a net need as opposed to the 72 bed surplus.
Taking those arguments in turn, the Beverly circumstance for those
100 beds is not as Manor Care depicts it. HRS chose to include the beds in Subdistrict 3 for reasons that no one sought to have explained. Nonetheless, it was the burden of Manor Care to prove that the choice by HRS to include those beds within the inventory of approved beds for Subdistrict 3 was inappropriate. That proof was not forthcoming. The only evidence of record would tend to describe the choice indicated for placement of the Beverly facility within Subdistrict 3 and that evidence is found within the Manor Care composite exhibit
4 admitted into evidence. This circumstance was made the more bewildering given
that Manor Care did not inquire of Beverly and present proof at the appropriate time from that entity's viewpoint concerning the placement of the nursing home beds. As a consequence, the proper conclusion is that the beds should be counted in Subdistrict 3 as HRS has done.
Concerning the River Garden Hebrew Home, those 180 beds are shown as approved in Subdistrict 3 and 192 beds are shown as licensed within Subdistrict
2 but are subtracted from the approved category within Subdistrict 2. This choice by HRS in characterizing those beds is justified. This arrangement recognizes the intervening circumstance related to the continuing provision of patient care in the facility within Subdistrict 2 and the pendency of those beds being placed within Subdistrict 3. This policy choice is consistent with the approach which the agency has used in that the reference made to the Palm Beach County Jewish nursing homes is not one in which it has been shown that those nursing home beds in that county were not carried in the inventory.
In advancing the argument to exclude the beds from the inventory the River Garden Hebrew Home nursing home beds from the inventory of approved beds in Subdistrict 3 to HRS District IV, Manor Care relies on the case, University Comm. Hosp. v. Department of Health, 472 So.2d 756 (Fla. 2nd DCA 1985). That case was one in which the court expressed the opinion that if HRS intended to grant a certificate of need to Tampa Heart Institute to serve a patient population which was principally constituted of Latin Americans and in doing so did not rely upon indigenous population figures for making that choice, it would be patently whimsical for HRS to incorporate the existence of that facility in deciding need that might be available to another applicant for the same service in that district. The services being sought were for cardiac care and not nursing home beds. That difference is not important. What is important, however, is the fact that the present case is one in which River Garden Hebrew Home is not serving an alien population and is not being removed as a competitor for patients found within the service area. Therefore it cannot be said that including its beds in the inventory of approved beds for Subdistrict 3 to HRS District IV is a whimsical act by HRS. Under the circumstances the analogy is not available as a basis for excluding the nursing home beds from the inventory.
The Florida Convalescent Center's 106 beds in the inventory were said to be a topic for exclusion from the inventory of approved beds in Subdistrict 3 to HRS District IV based upon the so-called Health Quest Amendment set forth in Section 381.713(4), Florida Statutes. That exception does not pertain. Florida Convalescent Center was issued a certificate of need for 100 beds or more prior to February 14, 1986. It has not been shown that it expended $50,000 in reliance upon the certificate of need excluding legal fees, nor has it been shown that a challenge was initiated under the Administrative Procedure Act subsequent to February 14, 1986. Forum Group, the challenger to the grant of a certificate of need to Florida Convalescent Center, did not offer that challenge in a timely fashion and cannot be seen as having initiated proceedings within the meaning of the statute. Under the circumstances it is not necessary to examine the balance of the remaining language within that provision to ascertain whether there is compliance with its terms. Florida Convalescent Center's beds not being subject to the Health Quest Amendment are included in the inventory of approved beds for Subdistrict 3 to HRS District IV.
The theories for excepting certain beds from the inventory of approved beds for Subdistrict 3 of HRS District IV having been unavailing and there being no alternative theory advanced or apparent for granting Manor Care its 31 beds, those beds should not be granted in the face of a 72 bed surplus at the planning horizon date.
In looking at the two applications a balance is made of all review criteria at issue in this case. See North Ridge General Hospital, Inc. v. Capital NME Hospitals, Inc., 478 So.2d 1138 (Fla. 1st DCA 1985). That balancing does not favor these applications. In addition to noncompliance with Rule 10- 5.011(1)(k) , Florida Administrative Code, the applications do not satisfy Section 381.705(1)(a), (b) and (i) and (2)(a), Florida Statutes, and should be rejected.
Manor Care on April 18, 1988, beyond the time allowed for filing written legal argument filed what it referred to as supplemental authority by attaching a copy of Harborside Hospital, Inc. v. Department of Health and Rehabilitative Services, et al., DOAH Case No. 84-4368. All Saints objected in writing and moved to strike. This case referenced predates the due date for written proposals and is not supplemental in the sense of new information; it is an afterthought and promotes an advantage not granted the other parties. Nonetheless, a similar result has been reached without the necessity to refer to that case, and the issue of supplemental authority is moot.
Based upon consideration of the facts found and the conclusions of law reached, it is
That a final order be entered which denies the application of All Saints for the transfer of its nursing home from Subdistrict 2 to Subdistrict 3 within HRS District IV and denies Manor Care the right to add 31 beds to its existing nursing home within Subdistrict 3 to HRS District IV.
DONE AND ENTERED this 24th day of June, 1988, in Tallahassee, Leon County, Florida.
CHARLES C. ADAMS
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 24th day of June, 1987.
APPENDIX TO RECOMMENDED ORDER
The following constitutes a response to the proposed findings of fact of the parties.
ALL SAINTS
Paragraphs 1 and 2 are subordinate to facts found.
Paragraph 3 is not necessary to the resolution of the dispute. Paragraph 4 is subordinate to facts found.
Paragraphs 5 and 6 are not necessary to the resolution of the dispute. Paragraphs 7 through 11 are subordinate to facts found.
Paragraph 12 is not necessary to resolution of the dispute. Paragraphs 13 through 35 are subordinate to facts found.
Paragraph 36 is subordinate to facts found with the exception of the next to the last sentence which is contrary to facts found.
Paragraphs 37 through 57 are subordinate to facts found.
Paragraph 58 with the exception of the last sentence issubordinate to facts found. That sentence suggests that historical patterns of utilization within the facility would not drop drastically with the relocation and that contention is contrary to facts found.
Paragraphs 59 and 60 are subordinate to facts found.
Paragraph 61 is subordinate to facts found with the exception of the next to the last sentence which is contrary to facts found.
Paragraphs 62 through 65 are subordinate to facts found. Paragraph 66 is not necessary to the resolution of the dispute. Paragraphs 67 and 68 are subordinate to facts found.
Paragraphs 69 and 70 are not necessary to resolution of the dispute. Paragraph 71 is subordinate to facts found.
EXHIBIT A
Paragraph 72 is not necessary to resolution of the dispute.
Paragraph 73 in those sentences other than the last two are subordinate to facts found. The last two sentences are not necessary to resolution of the dispute.
Paragraph 74, the last sentence is not utilized in that HRS was not bound to accept the suggestion by the local health council to modify the HRS existing needs formula. Otherwise, paragraph 74 is subordinate to facts found.
Paragraph 75 is subordinate to facts found.
Paragraph 76 is contrary to the factual and legal outcome within the recommended order.
Paragraphs 77 through 84 are subordinate to facts found. Paragraph 85 is contrary to facts found.
Paragraphs 86 and 87 are subordinate to facts found. Paragraph 88 is not necessary to resolution of the dispute. Paragraphs 89 through 104 are subordinate to facts found.
Paragraph 105 is not necessary to resolution of the dispute. Paragraphs 106 through 109 are subordinate to facts found.
Paragraphs 110 and 111 are not necessary to the resolution of the dispute. MANOR CARE
Paragraphs 1 through 25 are subordinate to facts found.
Paragraph 26 is subordinate to facts found with the exception of the last sentence which is contrary to facts found, as are paragraphs 27 and 28.
Paragraphs 29 and 30 are subordinate to facts found. Paragraphs 31 and 32 are contrary to facts found.
Paragraphs 33 through 37 are subordinate to facts found. Paragraph 38 is contrary to facts found.
Paragraph 39 is not necessary to the resolution of the dispute and is legal argument.
Paragraph 40 is contrary to facts found.
Paragraphs 41 through 43 are subordinate to facts found.
Paragraphs 43 and 44 suggest that HRS had placed the recommendations of its staff into effect which would tend to exclude the River Garden Hebrew Home from
approved nursing home beds within Subdistiict 3 to HRS District IV, are inaccurate and contrary to facts found.
Paragraphs 45 through 47 are subordinate to facts found. Paragraphs 48 through 63 are contrary to facts found.
Paragraphs 64 through 67 are not necessary to resolution of the dispute. Paragraphs 68 through 71 are subordinate to facts found.
Paragraphs 72 through 77 are contrary to facts found. Paragraphs 78 through 96 are subordinate to facts found. Paragraph 97 is not necessary to resolution of the dispute. Paragraph 98 is subordinate to facts found.
HRS
Paragraphs 1 through 14 are subordinate to facts found. Paragraph 15 is not necessary to resolution of the dispute. Paragraphs 16 through 20 are subordinate to facts found.
MANDARIN MANOR
Paragraphs 1 through 17 and the first sentence of paragraph 18 are subordinate to facts found. The last sentence in that paragraph is contrary to facts found.
Paragraph 19 is subordinate to facts found.
The first sentence of paragraph 20 is subordinate to facts found. The remaining sentence within that paragraph is not necessary to resolution of the dispute.
Reference paragraph 21 to the transcript is a reference to facts not found within those pages.
The first sentence within paragraph 22 is subordinate to facts found. The remaining sentence within that paragraph does not depict facts within the transcript references cited.
The first sentence of paragraph 23 is not necessary to the resolution of the dispute. The second sentence suggesting that All Saints could have as easily constructed a new facility in Subdistrict as Subdistrict 3 is not clear from the record; however, it has been determined that the construction should not take place in Subdistrict 3.
Paragraphs 24 through 36 and all sentences but the last within paragraph 37 are subordinate to facts found. The last sentence within paragraph 37 is not necessary to the resolution of the dispute.
Paragraphs 38 through 53 are subordinate to facts found.
COPIES FURNISHED:
James C. Hauser, Esquire Joy Heath Thomas, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN
Post Office Box 1876 Tallahassee, Florida 32302-1876
Richard A. Patterson, Esquire Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
William E. Williams, Esquire Rex D. Ware, Esquire
Post Office Box 1739 Tallahassee, Florida 32302
James M. Barclay, Esquire
215 East Virginia Street Suite 200
Tallahassee, Florida 32301
R. S. Power, Esquire Agency Clerk
Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700
Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
| Issue Date | Proceedings |
|---|---|
| Jun. 24, 1988 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 17, 1988 | Agency Final Order | |
| Jun. 24, 1988 | Recommended Order | Nursing home bed applications involves attempt to move to new sub-district where beds are not needed. Recommend denial. |
