STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

LAKE SHORE HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 88-0392

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES AND )

VISITING NURSE ASSOCIATION OF )

NORTH FLORIDA, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on June 1, 1988, in Lake City, Florida, before Jose A. Diez- Arguelles, a hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner William C. Andrews, Esquire Lake Shore Hospital: One Southeast First Avenue

Post Office Drawer C Jacksonville, Florida 32602

For Respondent Richard A. Patterson, Esquire Department of Health Assistant General Counsel

and Rehabilitative Fort Knox Executive Center Services: 2727 Mahan Drive, Suite 309

Tallahassee, Florida 32308

For Respondent Nathan H. Wilson, Esquire Visiting Nurse 1600 First Union Building Association of North Jacksonville, Florida 32202 Florida, Inc.:

BACKGROUND

This case deals with an application for a Certificate of Need (CON) for a home health agency filed by Respondent, Visiting Nurse Association of North Florida, Inc., (VNA). The Department of Health and Rehabilitative Services (HRS) proposed to grant the CON and Petitioner, Lake Shore Hospital (LSH), filed a Petition for Formal Hearing to contest the grant of the CON. HRS forwarded the Petition to the Division of Administrative Hearings and this proceeding ensued.

At the hearing, LSH presented the testimony of Cheryl Gormley, Katherine Mansuco, Sharon Stucky, Peggy Rodebush and Jeffrey M. Judd, and offered eight exhibits which were accepted into evidence. VNA presented the testimony of

Cindy Howard, Kim Allen, Joanne Kriesel, Janet Tyre, and Dorcas Hartman, and offered three exhibits which were accepted into evidence. HRS presented the testimony of Sharon Gordon-Girvin.

After the hearing, all three parties filed Proposed Recommended Orders containing proposed findings of fact. The proposed findings of fact are addressed in the Appendix which is attached to this Recommended Order.

ISSUE

Whether VNA should be awarded a certificate of need to establish a home health agency in Hamilton, Suwannee and Columbia Counties?

FINDINGS OF FACT

1. VNA is a medicare-certified home health agency which currently provides services in Duval, Clay, Baker, Nassau and St. Johns Counties.

   
   

2. In June, 1986, VNA applied for a CON to establish a home health agency subunit to serve Columbia, Hamilton and Suwannee Counties.

   
   

3. On December 1, 1987, HRS issued its notice of intent to award the CON to VNA.

   
   

4. LSH, the operator of a home health agency in Columbia County, timely filed a Petition for Formal Hearing to challenge the award of the CON to VNA. LSH is only challenging the award of the CON to serve Columbia County.

   
   

   District III Health Plan

   
   

5. The District III Health Plan for 1985 is the Health Plan applicable to this case. The Health Plan sets forth guidelines which should be used when considering whether to award a CON. Additionally, the Health Plan sets forth recommendations which should be pursued in order to improve home health services in the District.

   
   

6. Applicable to this case are the following Review Guidelines and Recommendations contained in the Health Plan:

   
   

   REVIEW GUIDELINES

   
   

   1. District III is comprised of 16 planning areas for home health agencies following the boundaries of the 16 counties located in District III: Alachua, Bradford, Citrus, Columbia, Dixie, Gilchrist, Hamilton, Hernando, Lafayette, Lake, Levy, Marion, Putnam, Sumter, Suwannee, and Union Counties.

      
      

   2. Applicants for new home health services must document their willingness and ability to provide at least four core services. Preference should be given to applicants, who, in a competitive situation, document a willingness and ability to provide the full range of services.

   3. A new home health agency shall not be approved to serve a District III county which has sufficient licensed home health agency(ies) in that county unless one of the following circumstances is documented (Sufficient is defined in Recommendation 11. See Table HmHlth-6):

      
      

      1. Residents of a specific geographic area within that county have not had access to home health services for the past calendar year preceding the proposal for new services; or,

      2. Less than four home health services have been provided on a regular basis by the licensed home health agency(ies) in that county for that past calendar year preceding the proposed new service, and the proposed new home health agency has a documented ability to provide the full range of service as defined in Planning Guideline 2; or,

         
         

      3. Residents of that county have not had access to home health services for the past calendar year preceding the proposed new service due to the patient's ability to pay or source of payment, and the applicant documents an ability and willingness to accept patients regardless of payment source or ability to pay.

         * * * RECOMMENDATIONS

         * * *

         1. In the Certificate of Need Rule, DHRS should consider defining "sufficient" licensed home health agencies (Review Guideline 3 above) for a primarily rural, sparsely populated district as follows:

            
            

            1. For counties with less than 800 people in need of home health services by 1986, no more than one home health agency should be licensed for that county, except as specified in Review Guideline 3;

               
               

            2. For counties with 800 to 1600 people in need of home health services by 1986, no more than two home health agencies should be licensed for that county, except as specified in Review Guideline 3;

            3. For counties with 1600 to 2400 people in need of home health services by 1986, no more than three home health agencies should be licensed for that county, except as specified in Review Guideline 3;

               
               

            4. For counties with more than 2400 people in need of home health services by 1986, no more than four home health agencies should be licensed for that county, except as specified in Review Guideline 3; and,

               
               

            5. The population thresholds and number of agencies in Table HmHlth-6 should be re- evaluated in 1986.

               
               

         2. Home health services should be

            approved for Hamilton County either through a hospital-based program or by the expansion of a home health agency in an adjacent county. (PRIORITY)

            
            

         3. The range of home health services in Columbia and Suwannee Counties should be expanded in 1984. (PRIORITY)

         
         

         * * *

         
         

7. The Health Plan's estimates of the population in need of home health services in Hamilton, Suwannee and Columbia counties for 1984 and 1989 are as follows:

   
   

   	1984	1989
   Columbia	326	380
   Hami1ton	88	90
   Suwannee	265	305

   
   

8. Based on these estimates and its definition of "sufficient" (See Finding of Fact 6, supra), the Health Plan determined that no additional home health agencies were needed in Columbia and Suwannee Counties and that one was needed in Hamilton.

   
   

   Existing Providers

   
   

9. LSH is the provider of home health services in Columbia County. The Health Plan shows LSH as providing three services in Columbia County: skilled nursing, home health aide and physical therapy. This information, however, is in error. Since September, 1985, LSH has provided six services to its patients: in addition to the three shown in the Health Plan, LSH provided speech therapy, occupational therapy and medical social services.

   
   

10. At the time of the hearing, LSH also provided high tech home health services, e.g., phototherapy, hyperalimentation and intravenous therapy.

    
    

11. No home health agency is currently providing services in Hamilton County.

12. The Health Plan shows the Suwannee County Health Unit as providing skilled nursing, home health aide and physical therapy in Suwannee County. After the Health Plan was issued, however, Upjohn began providing a full range of home health services in Suwannee County.

    
    

13. In addition to the existing providers, VNA of Orange County, a separate and distinct organization from VNA, holds a valid CON to provide home health services in Hamilton, Suwannee and Columbia Counties. VNA of Orange County has no plan to provide services to these counties in the next four to five years. If it wanted to, however, it could begin providing services immediately.

    
    

    The Application

    
    

14. VNA proposes to offer a full array of home health services in the three counties.

    
    

15. VNA's project will be cost effective only if it can serve all three counties.

    
    

16. While the project will be financially feasible, the projections of the number of visits VNA expects to conduct are overly optimistic.

    
    

17. When compared with the rest of the state, especially urban areas, home health services are underutilized in Columbia County. This underutilization is due to many factors, including the cautious approach used by local physicians and the fact that a large number of households are not able to provide the care and services which would be needed in addition to home health services.

    
    

18. VNA bases its projections of the number of visits it will conduct on its ability to increase utilization by education and competition. However, it is doubtful that education and competition will result in an increase in utilization of the magnitude advocated by VNA.

    
    

19. Because home health agencies do not require large capital expenditures and operating costs can be managed to match up with income, even if VNA serves less patients than anticipated, the project will be financially feasible.

    
    

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding. Sections 120.57(1) and 381.709(5), Florida Statutes.

    
    

21. VNA, being the applicant, has the burden of establishing that it is entitled to the CON. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981)

    
    

22. Section 381.705, Florida Statutes, sets forth the criteria to be reviewed by HRS in determining whether to award a CON. HRS must make a balanced consideration of all relevant criteria. Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984). The appropriate weight to be given to each individual criterion is not fixed, but varies, from case to case, depending on the facts presented in each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

23. In this case, the parties stipulated that at issue are the criteria set forth in paragraphs (a), (b), (h), (i) and (1) of Section 381.705(1), Florida Statutes, which provide:

    
    

    1. 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.

    2. 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.

    * * *

    1. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district.

    2. The immediate and long-term financial feasibility of the proposal.

       * * *

       1. The probable impact of the proposed project on the costs of providing health services proposed by the applicant, upon consideration of facts including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost- effectiveness.

    * * *

    (n) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent.

    
    

    The remaining criteria are either not applicable or not at issue in this case. For the reasons set forth below, a balanced consideration of the applicable

    criteria leads to the conclusion that VNA's application should be denied. A discussion of each applicable criterion follows.

    
    

    Paragraph (a)

    
    

24. On the issue of need, VNA based its application, and HRS based its proposed award, on the priority recommendations of the District III Health Plan which called for a home health agency to be established in Hamilton County and for the expansion of services offered in Columbia and Suwannee Counties.

    
    

25. If the Health Plan described a true picture of the situation in Columbia County at the time the Health Plan was issued, and if it described a true picture of the services now available in Suwannee County, then VNA would meet this criterion. However, the fact is that the Health Plan was erroneous when it called for the expansion of services in Columbia County, since LSH offered more than the number of services deemed adequate under the Health Plan. Therefore, the recommendation by the Health Plan should have been that no additional services were needed in Columbia County.

    
    

26. At the time the Health Plan was issued only one provider, offering two services, existed in Suwannee County. However, after the Health Plan was issued, another provider began offering the full array of home health services in Suwannee County.

    
    

27. Based on this, there is no need for additional providers in either Columbia or Suwannee Counties.

    
    

    Paragraph (b)

    
    

28. VNA satisfies this criterion only as to Hamilton County where no provider exists. VNA did not offer any evidence that the two existing providers in Suwannee County and LSH in Columbia County are not providing services in a manner which satisfies this criterion. VNA and HRS presented evidence tending to show that there may be low utilization of services in Columbia County. This, however, cannot be blamed on the existing provider, since it is caused by societal reasons.

    
    

    Paragraph (h)

    
    

29. VNA meets the relevant portions of this criterion.

    
    

    Paragraph (i)

    
    

30. The project will be financially feasible, both immediately and long- term, even though the projections of the number of visits which VNA will perform are overly optimistic.

    
    

    Paragraph (1)

    
    

31. The provision of services by VNA will not have much effect on reducing the cost of health care to the majority of persons, due to the medicare reimbursement methods. For private pay patients, the addition of another provider in Columbia County will probably reduce prices. The addition of another provider in Columbia County may have the effect of making more services available in the county. No evidence was presented to establish what the effect of another provider would be in Suwannee County.

    Paragraph (n)

    
    

32. VNA meets this criterion.

    
    

    Conclusion

    
    

33. There is no need for this project in either Suwannee or Columbia County. As admitted by VNA, the project would not be cost effective if issued for less than the three counties. VNA needs to provide services in Columbia County, with its higher population, in order to have a viable project. VNA, however, has failed to establish that another provider is needed in either Columbia or Suwannee Counties.

    
    

34. The absence of need in two of the three counties, and the failure to present competent evidence that the citizens of Suwannee and Columbia Counties are not adequately served, overrides the other criteria at issue in this case. Also, this conclusion is consistent with the recommendations of the Health Plan as those recommendations would be if they were updated to reflect the services that exist in the three counties.

    
    

35. At the hearing, HRS tried to establish that it can ignore the Health Plan's recommendations on the issues of need and access. This proposition is contrary to the mandate contained in Sections 381.703, 381.704(1) and 381.705(1)(a) Florida Statutes, and HRS offered no valid policy reason to deviate from this mandate. Finally, HRS argues that Rule 10- 5.011(1)(b)4., Florida Administrative Code, controls the access issue and overrides the Health Plan's recommendations on the issue of need. As LSH argues in its Proposed Recommended Order, the issues of need and access are different, and the provisions of the Rule apply only to VNA's proposed services and not LSH's.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services issue

a final order denying VNA's application for a certificate of need to establish a home health agency in Columbia, Hamilton and Suwannee Counties.

DONE and ENTERED this 14th day of March, 1989, in Tallahassee, Leon County, Florida.

JOSE A. DIEZ-ARGUELLES

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-0392

Rulings on LSH's Proposed Findings of Fact 1.-6. Accepted.

1. Accepted that LSH currently offers these services. However, no evidence was presented to establish that these services were offered at the time VNA filed its application.

2. Accepted as to LSH's recruiting. However, this does not establish that the addition of VNA will exacerbate the situation.

9.-19. Accepted. Some of these proposed findings of fact are subordinate to facts found.

20. Irrelevant. This is a de novo proceeding.

21.-23. True that this was HRS's basis for its proposed award, but irrelevant since this is a de novo proceeding.

24.-25. Rejected as argument. 26.-27. Accepted generally.

28. Irrelevant.

Rulings on VNA's Proposed Findings of Fact

1.-8. Accepted generally as set forth in this Recommended Order. Some of these facts are subordinate to facts found.

9. Accepted that this is what the Health Plan recommended. However, the Health Plan was wrong when it listed LSH as providing only three services and services in Suwannee County have been expanded.

10.-16. True, but irrelevant. Also, some of these guidelines are meant to apply where there are competing applicants, not to compare an applicant with an existing provider.

17.-24. Accepted.

25.-26. True that this is the testimony, but see Conclusions of Law. Also, this is irrelevant since this is a de novo proceeding.

1. Rejected as recitation of testimony.

2. Rejected as not supported by the weight of the evidence.

3. Irrelevant.

4. Rejected.

5. True that this is what HRS concluded, but irrelevant. Last sentence accepted.

Rulings on HRS's Proposed Findings of Fact 1.-6. Accepted.

1. Accepted that this is what the Health Plan states. However, services in Suwannee County have already been expanded and the Health Plan was in error in listing LSH as only offering three services.

2. True, but irrelevant.

3. Rejected.

4. Rejected. "May" and "not necessarily" do not

   establish a fact.

5. Accepted.

6. Rejected. The evidence does not establish this one way or another.

COPIES FURNISHED:

Richard A. Patterson, Esquire Assistant General Counsel Department of HRS

Fort Knox Executive Center 2727 Mahan Drive

Tallahassee, Florida 32308

William C. Andrews, Esquire One Southeast First Avenue Post Office Drawer C Gainesville, Florida 32602

Nathan H. Wilson, Esquire 1600 First Union Building Jacksonville, Florida 32201

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

R.S. Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 88-000392

Orders for Case No: 88-000392