STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TRUSTEES OF MEASE HOSPITAL, INC. ) d/b/a MEASE HOSPITAL DUNEDIN, )
)
Petitioner, )
)
vs. ) CASE NO. 90-1524
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES and )
ADVENTIST HEALTH SYSTEM/ )
SUNBELT, INC., )
)
Respondents. )
)
RECOMMENDED ORDER
The formal administrative hearing in this case was held before J. Lawrence Johnston, Division of Administrative Hearings, on June 25-27, 1990, in Tallahassee, Florida.
APPEARANCES
The parties were represented by counsel as follows:
For Petitioner: Patricia A. Renovitch, Esq. Oertel, Hoffman, Fernandez
Trustees of Mease Hospital & Cole, P.A.
Inc. ("Mease") 2700 Blair Stone Road, Ste. C Tallahassee, Florida 32301
For Respondent: Edward T. Labrador, Esq. Department of Health and
Department of Health and Rehabilitative Services Rehabilitative Services 2727 Mahan Drive
("HRS") Tallahassee, Florida 32308
For Respondent: H. Darrell White, Jr., Esq.
McFarlain, Sternstein, Wiley &
Adventist Health Cassedy System/Sunbelt, Inc. 215 South Monroe Street ("Adventist") Suite 600
Tallahassee, Florida 32301 STATEMENT OF THE ISSUE
The issue in this case is whether HRS should issue a certificate of need authorizing the establishment of a Medicare-certified home health agency to Mease or Adventist, neither, or both.
PRELIMINARY STATEMENT
In this Recommended Order: the Petitioner, the Trustees of Mease Hospital, Inc., d/b/a Mease Hospital Dunedin, will be referred to as "Mease"; the Respondent, the Department of Health and Rehabilitative Services, will be referred to as "HRS"; and the Respondent, Adventist Health System/Sunbelt, Inc., d/b/a East Pasco Medical Center (EPMC), will be referred to as "Adventist."
Under Sections 381.701, et eq., Fla. Stat. (1989), a home health provider must obtain a certificate of need (CON) from HRS prior to offering Medicare home health services or operating a Medicare-certified home health agency. Mease (CON No. 6022) and Adventist (CON No. 6024) timely filed CON applications to establish and operate a Medicare-certified home health agency in HRS district V. These applications were comparatively reviewed, along with the application filed by ABC Home Health Services, Inc. (CON No. 6025).
On or about January 9, 1990, after a statutory and rule criteria review, HRS concluded that the Adventist application should be granted and that the ABC and Mease applications should be denied. ABC (DOAH Case No. 90-1523), Mease (DOAH Case No. 90
petitions challenging HRS' preliminary decision. Prior to final hearing, TGC and ABC voluntarily dismissed their challenges, and Case Nos. 90-1523 and 90- 1525 were severed and dismissed. On July 2, 1990, HRS entered a final order denying ABC a certificate of need.
Prior to final hearing, the parties entered into a prehearing stipulation. The parties agreed to a need for one additional home health agency in District
At final hearing, Mease presented the testimony of Michael P. Rose, Rick D. Knapp, Alex M. Barron, Gayle Peck and, through deposition, Bridget Batchik and Charles T. Frock. Mease also introduced into evidence Mease Exhibits 1-10, 12- 13, and 15-17.1 Adventist presented the testimony of Gene Nelson, Scott Miller, Robert Dodd, Kathleen Sinaguglia and, through deposition, LaDonna Blom. Adventist also introduced 14 exhibits (designated East Pasco exhibits) into evidence. HRS presented the testimony of Elizabeth Dudek.
Mease and Adventist ordered the preparation of a transcript of the formal hearing. The parties asked for 30 days from the filing of the transcript for filing proposed recommended orders. The transcript was filed on July 30, 1990, making the proposed recommended orders due on August 29, 1990. But, at HRS' request, and without objection, the deadline was extended to September 10, 1990.
Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the attached Appendix to Recommended Order, Case No. 90
FINDINGS OF FACT
Numeric Need
HRS projects a need for one additional Medicare-certified home health agency in District V for the January, 1991, planning horizon. District V includes Pinellas and Pasco counties. Mease and Adventist filed certificate of need (CON) applications in September, 1989, to meet this need. After its initial review of the applications, HRS determined that Mease's application was complete upon filing.
HRS projects that population growth in District V will generate a need for 31,000 new home health patient visits by January, 1991. HRS has determined that a cost-efficient agency should make at least 19,000 patient visits annually.
Mease's Proposal
Mease proposed a Medicare-certified home health agency to be located at Mease Hospital Dunedin. Mease proposed to provide 24,000 patient visits the first year (1991) at a projected per visit cost of $34.00 and charge of $62.00. In its second year (1992), Mease proposed to make 30,000 patient visits at a cost of $32.00 and a charge of $64.00.
Mease proposed to provide these services through hospital employees, as opposed to agency staff.
Mease's application estimated that the net income would be about
$57,000 the first year and about $86,000 the second year.
For the first and second years of operation, Mease proposed a payor mix of 85% Medicare, 13% insurance and private pay and 2% Medicaid and charity. Adventist's Proposal
Adventist proposed a Medicare-certified home health agency at the East Pasco Medical Center ("EPMC") in Zephyrhills in Pasco County. Adventist projected 11,660 patient visits in 1991 and 16,772 the following year. Adventist proposed charges ranging from $75.00 to $125.00 per hour for nursing visits and $45.00 for home health aides and projected increases of 5% in the second year. Adventist projected a loss of about $70,000 in 1991 and a profit of about $14,000 in 1992.
Adventist proposed a payor mix of 65.4% Medicare, 25.3% insurance, private pay, and HMO/PPO, and 9.3% Medicaid and charity. This payor mix was projected for both years.
Adventist proposed providing all patient services through agency staff.
Adventist did not include its average weighted costs and charges for the first two years of operation. However, the evidence was that the weighted cost is about $67-72 per patient visit.
Statement As To Adventist's Capital Projects
In its application, Adventist stated under the heading "Capital Projects":
As required by Section 381.707(2)(a), Florida Statutes, the applicant has determined that there are no projects which are applied for, pending, approved, or underway in any state as of the time of this application which would have any potential impact upon the ability of the applicant to provide the project proposed in this application.
The Adventist application also included audited financial statements as of December 31, 1988, from which the dollars Adventist had committed to construction in progress as of that date could be ascertained. As of December 31, 1988, approximately $23 million had been incurred on construction in progress, and approximately $10,065,000 was expected to be spent to finish these projects. No other information concerning capital projects is contained in the Adventist application. In fact, at the time Adventist submitted its application, it had about $40-50 million in capital projects pending or approved.
As a matter of policy, HRS does not require applicants to list all projects as of the date of the application, in addition to the impact statement required by the statute, but HRS does interpret the statute to require at least a statement of an aggregate dollar amount of the projects.
Since the capital investment required for opening a home health agency is relatively small, rarely will existing capital projects of a responsible applicant impair the financial feasibility of a home health agency CON application. But HRS interprets the statute as not providing for exceptions for home health agency CON applications.
HRS has not by rule exempted Adventist from the requirement of including statements of capital projects and their impact in Adventist CON applications.
Adventist's consultants conferred with HRS personnel concerning the "capital projects" requirement before the Adventist application was submitted. Adventist did not want to go to the effort of developing a list of all Adventist capital projects. But Adventist did not prove that HRS personnel told its consultants that it would be sufficient for Adventist to address the "capital projects" as set forth in Finding 11, above.
On reviewing the Adventist application, HRS did not notice the manner in which the application addressed the "capital projects" requirement. This is because HRS' consultants were familiar with Adventist and understood it to be sound financially, and they also knew that both the capital requirements of a home health agency and the potential for substantial operating losses were relatively small. Indeed, until the submission of its Proposed Recommended Order, HRS supported the Adventist application.
Description of Mease
Mease is a corporation comprised of two non-profit acute care hospitals and four clinics. Mease Hospital Dunedin is a 278-bed acute care hospital located in Dunedin, Florida. Mease Hospital Countryside is 100-bed acute care facility located in Safety Harbor, Florida. The four clinics are located in Dunedin, Safety Harbor, New Port Richey, and Palm Harbor. While the two acute care hospitals and three of the four clinics are located in Pinellas County, the fourth clinic is in Pasco County. The two acute care hospitals admit around 12,000 patients per year. The four clinics report approximately 320,000 patient visits per year. There are about 30,000 visits per year to the two emergency departments at the hospitals. About 210 physicians are on the staff of the hospitals and clinics.
Mease has existed as a non-profit health care facility in District V for 52 years. All profits are retained by the corporation to expand and improve services. Mease's proposed Medicare-certified home health agency is part of its plan to provide comprehensive health services.
Location of Medicare-Certified Home Health Agencies
In a home health agency, all of the patient services are provided in the patient's home. Some Medicare certified home health agencies provide all services through a headquarters office. Other Medicare-certified home health provide services through branch offices.
The primary purpose of a branch office is to provide a more convenient focus and location for an agency's field staff. TGC in Zephyrhills, for example, has an office of about 3,000 square feet with a nurses' room, supply room, kitchen, conference room, bathroom, and manager's room.
Because most referrals to home health care are by phone, a branch office does not greatly affect access to referral sources.
It is not terribly significant where a home health agency is located, as long as it has the capability of serving the patients in its service area. However, there are some benefits to the physical presence of a home health agency in the area to be served. With a physical presence in an area, a home health agency can more easily participate in community outreach and can better know the services available to its patients in the community.
Medicare Funding of Medicare-Certified Home Health Agencies
The Medicare program is funded by the federal government through tax dollars. A CON for a Medicare-certified home health agency is a permit to access the Medicare Trust Fund. Without a CON to provide home health services to Medicare patients, agencies cannot obtain any reimbursement for services to these patients.
Irrespective of the cost of providing services to Medicare patients, the Medicare program will only pay a home health agency its reasonable costs up to the Medicare cap. The Medicare cost cap for the Tampa MSA is $78.83.
Mease's actual cost per patient visit will be about $44-50, including allocated costs that were not reflected in the application, significantly below the Medicare cap.
Mease's costs are likely to be fully reimbursable by Medicare, inasmuch as they appear to be reasonable and below the Medicare cap.
Payor Mix of Medicare-Certified Home Health Agency
There is no direct correlation between an acute care hospital's payor mix and the payor mix that is predictable for a Medicare-certified home health agency.
Medicare-certified home health agencies in District V typically serve less than 2% Medicaid and charity patients. The two hospital-based agencies in District V (Morton Plant and St. Joseph's) reported serving just below 2% Medicaid and charity patients.
About 80% of Florida's home health care expenditures under the Florida Medicaid Program are for patients who are also eligible for Medicare. Since Medicare is the primary payor, these patients are ordinarily counted as Medicare, not Medicaid, patients.
The percentage of Medicaid patients typically served by a Medicare- certified home health agency is much lower than the percentage of Medicaid patients served in an acute care hospital.
Payor Mix Proposed by Mease
Historically, of Mease's discharges to home health care about 85-92% are Medicare. For the full 1988 year before its application was filed, Mease referred 85% Medicare. Mease's application reasonably proposed to serve 85% Medicare and 2% Medicaid and charity patients. These numbers are in line with District V historical data. Its payor mix is reasonably based on its referral history.
Mease will annually serve approximately between 24 and 30 Medicaid and charity patients--2% of 24,000 projected patient visits in 1991 and 30,000 projected in 1992, at 20 visits per patient. (These projections in the Mease application may be somewhat optimistic for the first two years of operation, but Mease probably can come close to that volume with its inherent referral base.)
Whether Either Applicant's Primary Service Area Will Be Unserved in 1991
TGC has operated a Medicare-certified home health agency branch office in Zephyrhills for three years. It primarily serves the Zephyrhills and Dade City areas of east Pasco County. TGC's Zephyrhills office employs 7 nurses, 4 physical therapists, 1 physical therapist assistant, 3 speech therapists, 3 home health aides, 1 occupational therapist, and a social worker. Of these 20 employees who provide home health services, only three are contract employees. About half of TGC's referrals come from East Pasco.
In addition to TGC, four other Medicare-certified home health agencies serve the east Pasco County area. Global is one of them. It is a hospital-based (Morton Plant Hospital) agency, also located in Zephyrhills. Rest Care and Gulf Coast are located in Dade City, about ten miles north of Zephyrhills. One of these has its headquarters there. The fifth agency serving the east Pasco County area is in New Port Richey. The five agencies that serve the east Pasco County area are the same number that serve the five-county Jacksonville area.
TGC is active in the community, responding positively to monthly requests to appear before the Chamber of Commerce.
TGC's Branch Manager has responsibility for the care being provided at the Zephyrhills office. TGC accepts Medicaid and charity patients. In 1989, it provided care to 22 such patients. Through the third week in June, 1990, it served 10 Medicaid and charity patients. However, Medicaid and charity patients are accepted with some reluctance, as the agencies prefer Medicare and private pay patients. The Medicaid and charity patients have theoretical access to the full range of TGC's services, and the number of visits for all patients is determined by the diagnosis. But there is a financial disincentive, to which most home health agencies respond, against providing services not reimbursed by Medicaid
East Pasco has two Medicare-certified home health agencies in the same town as the hospital and an agency with its headquarters in nearby Dade City. There are no Medicare-certified agencies headquartered in Dunedin, but there are several nearby in Clearwater and Tarpon Springs.
More growth in the Medicare population will occur in the service area of Mease than that of East Pasco. The demand for home health care services will be greater in north Pinellas County than in east Pasco County in January, 1991.
Mease, too, has had difficulty placing Medicaid and charity patients with local home health care providers. The Director of Social Services at Mease sometimes cannot successfully talk an agency into taking a purely indigent patient.
While EPMC's Home Health Liaison Discharge Planner also sometimes has difficulty in promptly making referrals for Medicaid and charity patients, she successfully placed all but two of these patients in the last two years.
The primary service area of East Pasco is not presently underserved. Medicaid and charity patients have geographic access to the full range of home health services in the East Pasco County service area, including: (a) I.V. therapy, (b) chemotherapy, (c) hyperalimentation, (d) parenteral/enteral nutrition, (e) wound care, (f) catheter and colostomy care, (g) diabetic and cardiac teaching, (h) medical supplies, (i) medical equipment, and (j) bilingual personnel. The TGC branch office in Zephyrhills provides the full range of services.
By 1991, the geographic area more likely to be underserved due to growth is that in Mease's primary service area.
Ability of Applicants to Obtain Projected Patient Volume
Adventist and Mease both reasonably project that they will be able to capture at least 60-65% of the referrals that they are now making to home health agencies. Additionally, both will draw from local sources, including nursing homes. Mease will also draw from its four clinics. Consequently, the 24,000 patients visits proposed by Mease in 1991, and the 30,000 patients visits proposed in 1992 are reasonable although on the optimistic end of the range of reasonableness.
Mease's proposal contains an estimate of 20 visits per patient. While 20-30 visits per patient is reasonable, the trend is at the lower end of that range.
Mease's proposal is within the reasonable range of five to six nursing visits a day. This number reasonably results in an acceptable quality of care. The proposal indicates that social workers would make eight visits a day, which is too high, but this could and would be adjusted when the home health agency becomes operational.
Staffing
Mease proposes to utilize full- and part-time staff, but no contract staff. There are advantages in having regular staff: (a) commitment to the agency; (b) availability during working hours when not making visits, allowing flexibility for purposes such as training; (c) willingness to see all types of patients, wherever located; (d) generally less expensive; (e) better capability to properly complete Medicare paperwork; and (f) ability to provide continuity of care, which is particularly when patients have to taught how to help care for themselves. Contract staffing, either in whole or in part, can afford financial and operational benefits for a small home health agency or one just starting up, especially if it is community based.
Mease proposes a reasonable number of staff (FTE's).
Although the proposed salary for Mease's director appears to be somewhat high, other positions' salaries appear low. Overall, Mease provides sufficient salary and benefit dollars. Mease's projected salaries are comparable to those on its own pay scale, effective through June 30, 1990.
Benefits available to Mease's full-time staff include: (a) tuition reimbursement, (b) grant and aid program, (c) interest-free scholarship loans,
(d) reimbursement for seminars, (e) affiliations with local colleges that do clinical rotations at the hospital, including Pasco Hernando Community College, St. Petersburg Junior College, and LPN students from Pinellas Technical Institute, (f) program for nursing students where they can work while going to school, and (g) internship programs so that new nurses can specialize.
Including 25% figured as benefits for its home health care staff, the total salaries in January, 1991, will be $658,640. The application proposed
$698,551. At these salaries, Mease would have no recruitment problems.
Mease would provide adequate training programs for those who provide home health services. Mease is a large health care provider that has access to many resources for purposes of training.
Mease has an active training program. There are four nurses who provide education and in-service training. Periodically, outside experts are hired to provide supplemental education. Mease has an audio-visual department that prepares training tapes and other materials.
Financial Feasibilty
The cost per patient visit of approximately $45-50 for the Mease proposal is close to the cost at a similar-sized hospital-based agency in Jacksonville.
Mease should have included in its pro forma the hospital's administrative and general costs that Medicare requires to be allocated. Inclusion of the appropriate allocation of $150,000 per year in Mease's application does not materially affect the financial feasibility of the project. There will be a direct reimbursement for those costs for Medicare patients, as Mease will be operating under the Medicare cost cap, (even with the hospital- allocated overhead.) Besides, the hospital-allocated overhead would have to be absorbed by Mease, regardless of the source of funds. Adventist's financial expert was refreshingly forthright and candid about the financial objective of a hospital-based home health agency (HHA). The object is for the hospital to
allocate as much overhead as possible to the home health agency, up to the cap. The "profitability" of a Medicare-certified HHA is in the additional hospital overhead that can be reimbursed through Medicare payments by its allocation to the HHA. Except in this way, there is no prospect of great profits or, so long as costs are within the cap, risk of great losses in the operation of a Medicare-certified HHA. Since expenses are highly variable and capital costs are low, it is relatively easy to keep costs within the cap, and financial feasibility is not even a real issue in this case.
Mease's projected travel cost are reasonable, and Mease has relatively low costs because: (a) an agency making more visits can spread fixed cost farther; (b) administrative efficiency, and (c) Mease plans to use hospital- salaried staff and no contract staff.
Mease's project is financially feasible. Its discipline-specific charges, gross revenue, Medicare contractual allowance, salaries, rent, and charity and bad debt write-offs are reasonable.
Effect of Proposed Projects on Existing Providers of Medicare-certified Home Health Services
There was no evidence from potential competitors concerning any adverse impact if Mease is awarded the CON. Mease will predictably affect the agency to which it refers most of its patients, Independent Global, the hospital-based agency operating near Morton Plant Hospital, which has a branch
office in Zephyrhills. The potential impact on Independent Global could be 10%; however, this would not reduce Global's volume below 100,000 patient visits a year.
Other Information Relevant to State, Local, and Rule Preferences
AIDS
Mease commits to serve any patients who present, including persons with AIDS. Mease has "no reluctance whatsoever" to serve AIDS patients. However, as a practical matter, since most of Mease patients will be referrals from a medical community serving a relatively affluent area, and because AIDS patients generally are Medicaid or charity patients, rather than Medicare patients, Mease cannot be expected to serve significant numbers of AIDS patients in its HHA.
Range of Services
Mease commits to offer the full range of home health care services.
Through its two hospitals and four clinics, Mease has a natural cooperative arrangement with area physicians. It also has cooperated with other area hospitals to provide non-Medicare certified home health services.
Charity Care
Physicians in the Mease system are aware of Mease's policy for treating charity patients. While Mease does not have a sliding fee scale, per se, it only seeks payment consistent with a patient's ability to pay. This policy is advertised primarily through Mease's medical staff.
Consumer data
Mease commits to continue to provide consumer data to local and state agencies.
Quality/Assurance
Mease will provide effective quality assurance programs. It must do so to retain its JCAHO accreditation. JCAHO's rigorous standards will have to be met.
Referrals
Most referrals for home health care, irrespective of the methods of advertisement, come from the medical community, not the public. Mease's medical community includes its two hospitals (378 beds) and four clinics, staffed by 210 physicians.
Disproportionate Medicaid Provider
Neither Mease nor Adventist has been designated by the state as a disproportionate Medicaid provider.
Mease's Capital Projects
The capital projects listed in Mease's application are accurate and complete. Mease has asserted and proved that its project is financially sound in spite of these obligations. The capital projects will not adversely impact Mease's proposal.
CONCLUSIONS OF LAW
Introduction
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Section 120.57(1) and 381.709(5)(b), Fla. Stat. (1989). Need is not an issue in this case. All parties agree that HRS correctly published a need for one new Medicare-certified home health agency in District V by 1991. Therefore, the issue is whether the applications are complete, and if so, which is the better applicant. See also, Manor Care, Inc.
v. Department of HRS, 558 So.2d 26 (Fla. 1st DCA 1989); and HRS v. Johnson and Johnson Home Health Care, 447 So.2d 361 (Fla. 1st DCA 1984).
Adventist's Capital Projects
The statutory minimum criteria and review standards are contained in Sections 381.705-.709, Fla. Stat. (1989). One criterion requires an applicant to supply a list of its capital projects and their related amounts of commitment. Section 381.707(2)(a), Fla. Stat. (1989), in pertinent part, provides:
An application for certificate of need shall contain:
* * *
A complete listing of all capital projects, including new health facility development projects and health facility acquisitions applied for, pending approval or underway in any state at the time of the application,
regardless of whether or not the state has a certificate-of-need program or a capital expenditure review program pursuant to Section 1122 of the Social Security Act. The department may, by rule, require less-detailed information from major health care providers. This listing shall include the applicant's actual or proposed financial commitment to those projects and an assessment of their impact on the applicant's ability to provide the proposed project.
Adventist's application does not include a listing of capital projects or their related costs. Instead, it simply states that those unnamed projects will have no impact on its proposed Medicare-certified home health agency. Information in Adventist's audited financial statements show total obligations through December 31, 1988. However, the audited financials do not reveal capital commitments made after December, 1988, and before the September, 1989, filing date for its application. Additionally, the audited financials do not show capital projects that are planned, but not yet approved.
In a recent case, an appellate court held that an applicant must satisfy all minimum statutory criteria even when application defects are relatively minor. Humhosco v. Dept. of Health, etc., 561 So.2d 388 (Fla. 1st DCA 1990). Adventist's application does not meet the minimum requirements of Section 381.707(2)(a), Fla. Stat. (1989).
The evidence in this case shows that Adventist's actual capital commitments at the time of this application was approximately $45-50 million, much more than indicated in the information submitted in its application. At the same time, the evidence shows that the statement in Adventist's application that its capital projects would not significantly impact, or be impacted by, its proposed HHA is a true statement. Nonetheless, HRS has by policy required that all CON applicants, even HHA CON applicants like Adventist, must include at least a statement as to its aggregate total capital commitments at the time of the application in order to comply with Section 381.707(2)(a). The Adventist application does not make, or purport to make, such a statement. As finally reflected in HRS' Proposed Recommended Order, it is HRS' policy that it would constitute an unacceptable amendment to the Adventist application, in violation of Section 381.707(2)(a) under the Humhosco decision, for Adventist to supply this information during formal administrative proceedings, as it has done in this case.
The application of HRS' policy to this case prevents HRS from considering the merits of the Adventist proposal, relative to the Mease proposal. The only issue is whether Mease's application meets the statutory and rule criteria and, on its own merits alone, should be granted to meet the need HRS has found to exist in District V for the July, 1991, planning horizon.
Mease's Table 11
Adventist has raised no issue as to Mease's compliance with minimal statutory criteria. However, Adventist argues that Mease's proposed staffing (Table 11) was inappropriately excluded from the application that was filed with HRS. Mease may have inadvertently left this table out of the application that was sent to HRS in September, 1989. However, Table 11 was included in the copy of Mease's application that was served simultaneously with the District V Local Health Council. See F.A.C. Rule 10-5.008(4).
HRS never asked Mease to supply it with Table 11 and did not consider the information contained in it when comparatively reviewing the applications. Adventist has demonstrated no prejudice from the table being available through the Local Health Council rather than through HRS. Consequently, Mease's application is complete, as HRS notified Mease on November 1, 1989.
Unlike the complete absence of a listing of Adventist's capital projects in its application, Mease's Table 11 was timely submitted and available. Moreover, staffing is not a statutory criterion, as is the listing of capital projects. Compare Section 381.707(2), Fla. Stat. (1989) with F.A.C Rule 10
Analysis of Statutory Criteria and State and Local Preferences Statutory Criteria -- Section 381.705(1),
Fla. Stat. (1989)
Section 381.705(1)(a), Fla. Stat. (1989), measures applications on the basis of the need for the health care facilities and services. The parties have stipulated to the need for one additional program.
Section 381.705(1)(b), Florida Statutes, considers the question of "availability, quality care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing care services and hospices in the service district of the applicant." Mease's proposal would provide quality care at a reasonable cost. Mease's proposal efficiently provides services. Mease's proposal not only will cost less, but it will result in lower charges for private pay patients. This is, in part, possibly due to the size of the agency. It is also due in part to Mease's reliance upon employed staff, as opposed to agency staff. There is no geographic accessibility problem in the service area of either Mease or Adventist.
Section 381.705(1)(c), Florida Statutes, speaks to "the ability of the applicant to provide quality of care and the applicant's record of providing quality of care." Mease clearly has quality programs as evidenced by its JCAHO accreditation. Mease would serve community well.
Section 381.705(1)(d), Florida Statutes, examines applications on the basis of "the availability and adequacy of other health care facilities and services . . . ." The parties have stipulated to the need for one additional Medicare-certified home health agency in District V.
Section 381.705(1)(e), Florida Statutes, as a review standard, deals with "probable economies and improvements in service" that may be derived from shared resources. Mease's clinic system is relevant to this criterion. A referral system that draws from four clinics, in addition to two hospitals and other local health care facilities, meets this standard.
Section 381.705(1), paragraphs (f) and (g), Florida Statutes, do not apply to home health care applications.
Section 381.705(1)(h), Florida Statutes, as a review standard, requires the consideration of available resources to accomplish proposed projects. Mease has demonstrated that there are available staff and resources within its community. Mease can obtain the needed staff and resources.
Section 381.705(1)(i), Florida Statutes, speaks to the immediate and long-term financial feasibility of proposals. Mease's proposal is financially feasible.
Section 381.705(1), paragraghs (j) and (k), Florida Statutes, do not apply.
Section 381.705(1)(l), Florida Statutes, requires a consideration of the probable impact of the proposed project, including its impact on existing providers. Most of Mease's referrals are to a large home health agency that makes over 100,000 patient visits per year. Even if Mease captured all of the patients that would otherwise be referred to Independent Global, the impact on that entity would be about of 10%. It would not reduce Global below the optimal 19,000 patient visits per year, but would reduce Global's visits to a number closer to the number HRS finds to be optimal. There is no record evidence that Mease would substantially adversely impact other agencies in its area to the extent that their costs would exceed the Medicare cap. Finally, population growth in District V is what has caused HRS to predict a need for one additional Medicare-certified home health care agency. Relatively fast growth will occur in the Mease service area.
Section 318.705(1)(m), Florida Statutes, is not applicable.
Section 381.705(1)(n), Florida Statutes, concerns the applicant's past and proposed provision of health care services to medicaid and charity patients. This criterion is discussed below inasmuch as it is also contained in the State and Local Health Plans.
State Health Plan
The 1989 State Health Plan includes six preferences. Strictly speaking, these preferences are applicable only in the evaluation of competing applicants. But an examination of them demonstrates that there is no reason why the Mease application should not be granted.
The first preference is a commitment to serve AIDS patients. Mease has made this commitment.
The second preference is to provide the full range of home health services. Again, Mease meets this preference.
The third preference is for a disproportionate share provider to Medicaid and charity patients. Neither Mease nor Adventist is a designated disproportionate Medicaid provider.
The fourth preference is to the applicant that will serve counties being underserved.
Mease and Adventist have had some difficulty referring Medicaid and charity patients. However, this difficulty does not rise to the level of the county being underserved at this time.
Neither Dunedin, where Mease is located, nor Zephyrhills, where East Pasco is located, has a headquarters for a Medicare-certified home health agency. Zephyrhills has two Medicare-certified home health agency branch offices. Dunedin has none, but there are several close by in Clearwater and Tarpon Springs.
There will be more patients needing home health care in the Mease service area in January, 1991, than in the east Pasco County area, primarily due to the greater growth there. Consequently, Mease will serve the county that will be potentially underserved in 1991.
Mease has committed to meet the fifth preference of providing HRS with consumer survey data measuring patient satisfaction.
Similarly, due to JCAHO accreditation, Mease meets its rigorous quality/assurance requirements.
District V Local Health Plan Preferences
The District V Local Health Plan also contains preferences for use in comparing competing applications, some of which duplicate the state preferences.
The first preference is given to an applicant with a documented history of, and intent to provide services to Medicaid and charity/sliding fee scale patients. Mease has a practice of providing services to all patients who present, regardless of payor status. It commits to continue this practice. Mease has in place a non-formalized charity/sliding fee scale, where patients pay as they are able.
The second preference concerns publication of a sliding fee scale for charity patients. Mease has historically publicized its commitment to the 278 physicians that staff its two hospitals and four clinics. It commits to continue this practice. Because doctors make most of the referrals to home health care, this is an effective method of publication.
The third preference is the applicant who demonstrates an intent to serve persons with AIDS. As stated above concerning the first preference in the State Health Plan, Mease makes this commitment.
Mease commits to provide the full range of services, 24 hours a day,
7 days a week, which is the fourth preference.
The fifth preference is to the applicant who has documented the most thorough orientation, in-service training and continuing education services to its staff. Mease commits to acceptable training programs. Mease's historical training program is comprehensive. Moreover, it will be easy for Mease to train its providers of home health care because they will be employees of Mease, rather than contracted staff.
Mease pledges its continued cooperation with state and local data collection efforts, the sixth preference.
Finally, the seventh preference is given to an applicant who documents its intent to coordinate efforts and develop arrangements with area hospitals, governmental agencies, and physicians. Through its clinic system, which includes 320,000 patient visits a year, and its cooperative arrangement with a non-Medicare-certified home health agency in Pinellas County, Mease does this. (East Pasco demonstrated that it cooperates with county government in establishing an obstetric clinic. However, obstetric patients are not users of home health services.)
Rule Preferences
F.A.C. Rule 10-5.011(1)(d) establishes the need methodology for Medicare-certified home health agencies. In paragraphs 3(d), (e) and (f), preferences are stated. The first preference is to the applicant proposing to provide home health care services to Medicaid and charity patients. As explained above in analyzing the State and Local Health Plan preferences, Mease does this.
The second preference in the rule is to an applicant proposing a comprehensive range of home health services. Again, as explained in analyzing the State and Local Health Plan preferences, Mease meets this standard.
Finally, the third preference in the rule is given to an applicant proposing to establish a physical preference in an underserved area of the district. Neither Mease's nor EPMC's service area is underserved at the present time. Due primarily to growth, Mease is the area that will more likely be underserved in 1991.
Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that HRS enter a final order granting the Mease application (CON Action No. 6022) and denying the Adventist application (CON Action No. 6024).
RECOMMENDED this 9th day of October, 1990, in Tallahassee, Leon County, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 1990.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-1524
To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the parties' proposed findings of fact:
Mease's Proposed Findings of Fact. 1.-2. Accepted and incorporated.
First sentence, accepted and incorporated. Second
sentence, unnecessary.
Subordinate and unnecessary. 5.-11. Accepted and incorporated.
12. First sentence, accepted and incorporated. Second sentence, accepted but subordinate to facts found.
13.-14. Accepted and incorporated. 15.-17. Accepted but unnecessary.
18.-19. Accepted and incorporated to the extent not subordinate or unnecessary.
20.-22. Rejected to the extent that it ignores and totally discounts the benefits of a physical presence in an HHA's service area; otherwise, accepted and incorporated.
23.-25. Accepted and incorporated to the extent not subordinate or unnecessary.
Accepted but unnecessary.
Accepted and incorporated to the extent necessary.
Accepted but unnecessary.
Rejected as contrary to the evidence and not proven. Once operational, all hospital-based HHAs will try to allocate as much hospital overhead to the HHA up to the cap. As a result, the size of "drinks" from the Medicare Trust Fund will tend to equalize.
First sentence, accepted and incorporated; rest, accepted but subordinate and unnecessary.
Accepted and incorporated.
Accepted but unnecessary.
Accepted and incorporated.
Accepted but subordinate to facts found. 35.-38. Accepted and incorporated.
39. Accepted but unnecessary.
40.-44. Accepted that demand for Medicaid and charity home health is being met, although not without some difficulty, but there probably is some unmet need, especially for services not covered by Medicaid.
Adventist's projection for Medicaid and charity referrals probably is too high, and Mease's projection for Medicaid and charity referrals to the proposed Adventist HHA probably is too low. But Mease's projections are tied to more timely and complete published District V data for Medicare-certified HHAs, while the Adventist projections turn to less timely and less complete data that includes non-Medicare-certified HHAs. In any event, in light of the Conclusions of Law, these facts are irrelevant and unnecessary.
45. See 40.-44., above. Otherwise, generally accepted but in part cumulative.
45. First sentence, accepted and incorporated as to Mease but unnecessary as to Adventist. Rest rejected as to Adventist as not proven by the evidence. See 40.-44., above.
46.-48. Accepted and incorporated.
49. Rejected as not proven that Medicaid and charity patients get the full range of services (in particular, services not covered by Medicaid.) Also, some difficulty is experienced in placing these patients, although virtually all eventually are placed.
50.-53. Accepted and incorporated.
54.-55. Rejected, to the extent that they infer that there are no financial barriers at all, as not proven. Accepted as to geographic accessibility.
56.-57. Accepted. As to Mease, incorporated; as to Adventist, unnecessary.
First two sentences, accepted and incorporated to the extent that they refer to nursing personnel. The evidence is that some of the other personnel may be understaffed in Mease's proposal.
Accepted and incorporated.
60.-62. Generally, accepted but unnecessary. However, there can be advantages to the use of contract staff, especially for a small HHA or one that is just starting up, especially if community-based. There is no reason to believe that Adventist would not shift to the use of hospital-employed personnel as appropriate. There also is no reason to believe that Adventist would try to operate in such a way as to make its HHA ineligible for licensure.
Accepted. Incorporated as to Mease; unnecessary as to Adventist.
Accepted but unnecessary. 65.-67. Accepted and incorporated.
First sentence, accepted and incorporated. Second sentence, rejected as not proven that Mease has access to more resource. It is clear that Mease is larger than EPMC, but it was not proven that Mease is larger than Adventist.
Accepted and incorporated.
First sentence, accepted and incorporated. Second sentence, accepted but unnecessary. Third sentence, rejected as not proven (except in the case of private pay patients.)
Accepted. Incorporated as to Mease; unnecessary as to Adventist.
72.-75. Accepted. Incorporated as to Mease; unnecessary as to Adventist.
76.-77. Rejected as not proven. (It is a "better deal" for "charge-based payors" only.)
Accepted and incorporated.
Last sentence, rejected as not proven. Rest, accepted as to the branch office only, but not as to the entity as a whole. Unnecessary.
80.-81. Accepted. Incorporated as to Mease; unnecessary as to Adventist.
82.-83. Accepted and incorporated.
84. Accepted but unnecessary.
85.-88. Accepted. Incorporated as to Mease; unnecessary as to Adventist.
89. Accepted but subordinate to facts found.
90.-95. Accepted and incorporated to the extent not subordinate or unnecessary.
96. Accepted and incorporated.
Adventist's Proposed Findings of Fact.
1.-5. Accepted and incorporated to the extent not subordinate or unnecessary.
Second sentence, rejected as not proven. Rest, accepted but unnecessary.
Accepted but subordinate and unnecessary.
8.-10. Accepted and incorporated to the extent not subordinate or unnecessary.
Accepted. First sentence, incorporated; rest, unnecessary in light of the Conclusions of Law.
Accepted but unnecessary in light of the Conclusions of Law.
First sentence, accepted and incorporated. Rest, accepted but unnecessary.
14.-18. Accepted and incorporated to the extent not subordinate or unnecessary.
19. Second and third sentences rejected as not proven. Hospital payor mix does not directly correlate to home health payor mix. Rest, accepted and incorporated to the extent not subordinate or unnecessary.
20.-21. Accepted and incorporated to the extent not subordinate or unnecessary.
Rejected as not proven.
Except as to services other than nursing, last two sentences, rejected as not proven. Rest, accepted and incorporated to the extent not subordinate or unnecessary.
24.-26. Accepted but subordinate and unnecessary.
Last sentence, unintelligible. Otherwise, accepted but subordinate and unnecessary.
Accepted but subordinate and unnecessary.
Bracketed portion, rejected as not proven. Rest, accepted but subordinate and unnecessary.
Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary. (East Pasco is not geographically underserved, either.)
31.-32. Accepted but subordinate and unnecessary.
33. Last sentence, rejected. Rest, accepted but subordinate and unnecessary.
34.-35. Accepted and incorporated to the extent not subordinate or unnecessary.
Accepted and incorporated. (Mease has the same kind of informal arrangement in the nature of a sliding fee scale as Adventist now has.)
Accepted but subordinate and unnecessary.
Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary.
Accepted and incorporated to the extent not subordinate or unnecessary.
Last sentence, rejected as not proven. Rest, accepted but subordinate and unnecessary.
Accepted and incorporated to the extent not subordinate or unnecessary.
Accepted but subordinate and unnecessary.
43.-44. Accepted but subordinate and unnecessary in light of the Conclusions of Law.
First sentence, accepted and incorporated. (However, the numbers probably are not significantly high.) Second sentence, rejected as not proven.
Accepted and incorporated.
First, sentence rejected as contrary to the evidence and not proven (although the capital costs are minimal.) Second sentence, accepted and incorporated.
Accepted and incorporated.
Accepted and incorporated to the extent not subordinate or unnecessary.
First sentence, accepted except to the extent that it may be a legal conclusion. Rest, rejected because the information that can be obtained from the application predated the application by nine months.
Accepted but subordinate and unnecessary.
Second sentence, rejected as not proven. As to the rest, Mease's proposed eight visits a day was proven only as to non-nursing personnel. Otherwise, accepted and incorporated.
First sentence, accepted but unnecessary. As to second and fourth sentences, generally accepted that contract staff can save some overhead expenses in some situations, especially in low volume (usually community- based) operations. But, in other circumstances, contract staff generally is more expensive than staff. In any event, differences in overhead expense is not as significant in the context of cost-based reimbursement of home health care under Medicare where the applicants will be comfortably within the cap, as in this case. Last sentence, accepted, but some positions are overstated. To the extent accepted, this paragraph is incorporated to the extent not subordinate or unnecessary.
HRS' Proposed Findings of Fact.
1. To the extent this is a statement of agency policy, not a conclusion of law, accepted and incorporated.
2.-5. Accepted and incorporated to the extent not subordinate or unnecessary.
6.-7. Adventist's projection on Medicaid and indigent utilization is reejected as being too high. But EPMC's Medicaid and indigent utilization probably still would exceed Mease's, both in percentages and in raw numbers. However, this is unnecessary in light of the conclusions of law.
Accepted but unnecessary.
Subordinate to facts not proven.
Accepted. (However, there also are branch offices in the East Pasco area, and the population and projected population growth is less than in Pinellas and West Pasco.
Subordinate to facts in part accepted and in part not proven. Specifically, given the population and utilization in Pinellas and West Pasco, both current and projected, it was not proven that the area is "saturated" with HHAs.
Last sentence, rejected. Rest, accepted but unnecessary in light of the conclusions of law.
Accepted and incorporated to the extent not subordinate or unnecessary.
In part accepted, and in part rejected. Specifically, rejected that Pinellas and West Pasco is "saturated" with home health agencies. A good part of the "need" for home health services calculated by HRS is generated by the population and population growth in Pinellas and West Pasco. Some of the HHAs operating in Pinellas and West Pasco operate at volumes far in excess of what HRS says is optimal. This proposed finding is not a valid basis for denying Mease's application.
Last two sentences, rejected as not proven. Mease will increase access to AIDS patients although the increase will not be large. The Mease application does not restrict access to AIDS patients. It just candidly states the fact that, as a practical matter, home health is referred by doctors and that Mease expects most of its referrals to come from doctors on staff at its hospitals and clinics. Otherwise, accepted but unnecessary.
Accepted and incorporated to the extent not subordinate or unnecessary. But the data shows that volumes in some HHAs in Pinellas far exceed the optimal level, as determined by HRS.
Accepted and subordinate to facts found.
The implication that Mease plans to "capture" 77% of the "new visits" is rejected as contrary to the greater weight of the evidence. It makes more sense that Mease plans to "capture" referrals from doctors at its hospitals and clinics now going to other providers, freeing those other providers to make some of the "new visits." For this reason, although the Mease projections for the first two years of operation may be somewhat optimistic, they probably are not too far off the mark.
Accepted and incorporated that non-nursing positions are understaffed on the pro forma. But adjustments easily can be made when the HHA becomes operational, and there is no reason to think that Mease will not make necessary adjustments to the pro forma.
Accepted and incorporated that the salary assigned to some positions by the Mease pro forma are low. But others are high. There is no reason to think that Mease will not make adjustment necessary to pay its staff reasonable salaries.
The Mease proposal is financially feasible. The visit projection may be somewhat optimistic but not so as to in any manner jeopardize financial feasibility.
COPIES FURNISHED:
Patricia A. Renovitch, Esq.
Oertel, Hoffman, Fernandez & Cole, P.A.
2700 Blair Stone Road, Ste. C Tallahassee, Florida 32301
Edward T. Labrador, Esq. Department of Health and Rehabilitative Services
2727 Mahan Drive
Tallahassee, Florida 32308
H. Darrell White, Jr., Esq.
McFarlain, Sternstein, Wiley & Cassedy
215 South Monroe Street Suite 600
Tallahassee, Florida 32301
Sam Power, Esquire Clerk
Department of Health and Rehabilitative Services
1323 Winewood Boulevard Building One, Suite 407 Tallahassee, FL 32399-0700
Linda K. Harris, Acting General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, FL 32399-0700
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
ALL PARTIES HAVE THE RIGHT TO SUBMIT TO THE DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST TEN DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONSULT WITH THE DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES CONCERNING ITS RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER.
| Issue Date | Proceedings |
|---|---|
| Oct. 09, 1990 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 19, 1990 | Agency Final Order | |
| Oct. 09, 1990 | Recommended Order | Certificate Of Need (CON) no list capital projects or aggregate total capital commitment. Unacceptable amendment, proposed staffing not filed CON, in local health's copy |
