STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ADVENTIST HEALTH SYSTEM/ SUNBELT ) INC., d/b/a FLORIDA HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2397

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

) ADVENTIST HEALTH SYSTEM/ SUNBELT ) INC., d/b/a FLORIDA HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2398

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION and RHA/PRINCETON ) HOSPITAL, INC., )

)

Respondents. )

) HEALTH CARE AND RETIREMENT )

CORPORATION OF AMERICA, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2400

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION, RHA/PRINCETON ) HOSPITAL, INC., and ADVENTIST ) HEALTH SYSTEM/ SUNBELT, INC., )

)

Respondents. )

) LIFE CARE CENTERS OF AMERICA, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2401

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

) RHA/PRINCETON HOSPITAL, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2830

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Richard Hixson, held a formal hearing in this case on January 17-20, 23-27, and February 3, 1995 in Tallahassee, Florida.

APPEARANCES

For Petitioner Stephen K. Boone, Esquire Adventist Health BOONE, BOONE & BOONE, P.A. System/Sunbelt Post Office Box 1596

Inc.: Venice, Florida 34284

For Petitioner Alfred W. Clark, Esquire Heath Care and 117 South Gadsden, Suite 201 Retirement Corp. Tallahassee, Florida. 32301 of America:

For Petitioner R. Bruce McKibben, Jr., Esquire Life Care Robert Cohen, Esquire

Centers of PENNINGTON & HABEN, P.A.

America, Inc.: 215 South Monroe Street, 2nd Floor

Post Office Box 10095 Tallahassee, Florida 32301

For Petitioner Michael J. Glazer, Esquire RHA/Princeton MACFARLANE, AUSLEY, FERGUSON

Hospital, Inc.: & MCMULLEN, P.A.

Post Office Box 391 Tallahassee, Florida 32301

For Respondent Samuel Dean Bunton, Esquire Agency for Senior Attorney

Health Care Atrium Building, Suite 301 Administration: 325 John Knox Road

Tallahassee, Florida 32303-4131 STATEMENT OF THE ISSUES

The issue for determination in this matter is which of the below- referenced applications should be approved for the issuance of a Certificate of Need (CON) for nursing home beds in District 7, Subdistrict 2, Orange County, Florida.

PRELIMINARY STATEMENT

HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA (HCR), LIFE CARE CENTERS OF AMERICA (LIFE CARE), ADVENTIST HEALTH SYSTEM/SUNBELT, INC., d/b/a FLORIDA HOSPITAL (ADVENTIST), and RHA/PRINCETON HOSPITAL, INC. (RHA), each timely filed

a CON application pursuant to a valid Letter of Intent, with the AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), in the December 1993 nursing home batching cycle. The fixed need pool for community nursing home beds for the December 1993 batching cycle established a need for 98 beds.

HCR filed an application (CON No. 7530) proposing to construct a 98-bed freestanding nursing home dedicated to the care of Alzheimer's and dementia patients. LIFE CARE filed an application (CON No. 7534) to build a 98-bed freestanding skilled care nursing home, and a partial request (CON No. 7534P) to build a 60-bed freestanding nursing home. ADVENTIST filed an application (CON No. 7528) proposing to add 38 beds to an existing freestanding community nursing home, Sunbelt Living Center-East Orlando. RHA filed an application (CON No.

7538) to construct a 60-bed freestanding nursing home on the campus of its existing acute care hospital. AHCA granted preliminary approval to the applications of ADVENTIST and RHA. The applications of HCR and LIFE CARE were denied.

All petitions were consolidated for final hearing by Order of the Hearing Officer dated May 31, 1994.

HCR presented the testimony of eight (8) witnesses. HCR's exhibits 1-12 were received into evidence. Testifying for HCR were: Bonnie Parker, Milo Bishop, Pat Jimison, Dorothy Kuhl, Paul Sieben, Ronald Knause, M.D., Sherry Reid and Richard Nelson, M.D.

LIFE CARE presented the testimony of four (4) witnesses. LIFE CARE's exhibits 1-3 were received into evidence. Testifying for LIFE CARE were: Bo Russ, James Weigard, Clint Davis and Richard Stern.

ADVENTIST presented the testimony of six (6) witnesses. ADVENTIST's exhibits 1-8 were received in evidence. Testifying for ADVENTIST were: John W. Anderson, Jean Castleberg, Patricia Whitfield, Margo Kelly, Glen Choban and Thomas E. Sutton.

RHA presented the testimony of nine (9) witnesses. RHA's exhibits 1-13 were received in evidence. Testifying for RHA were: Willie Stokes, Mark Druash, Jerome H. Modell, Joseph Mitchell, Michael Saul, John Hupp, Bryant Coats, Teresa Soderlund and Patricia Rycraft. RHA also presented the depositions of the following witnesses: William J. Robbins, M.D., Robert Roberts, M.D., Juan Herron, M.D., Amy Dorn, M.D. and Steve Wyndham.

AHCA presented the testimony of Elizabeth Dudek. AHCA's exhibits 1-8 were received in evidence.

By Prehearing Stipulation, the parties agreed as follows: that each of the CON applications was timely filed pursuant to a valid letter of intent and was properly noticed in a newspaper of general circulation in Orange County, Florida; that there is a need for 98 additional community nursing home beds in District 7, Subdistrict 2, Orange County, Florida; that the statutory criteria set forth in Sections 408.035(1) (d) and 1(j), and (2)(a),(2)(c),(2)(d) and (2)(e), Florida Statutes, have been satisfied or are inapplicable; that each applicant has adequate funds available for capital and operating expenses as

required by Section 408.035(1)(h), Florida Statutes; that the applications submitted by HCR, ADVENTIST, and RHA contain a complete listing of all capital projects as required by Section 408.037(2)(a) and (2)(b), Florida Statutes; that the failure to provide a complete listing of all capital projects is grounds for dismissal on the CON application; and that each application contains the required elements set forth in Sections 408.037(1),(2)(c), (3) and (4), Florida Statutes.

All other issues of law and fact with regard to application content as set forth in Section 408.037, Florida Statutes, and the review criteria set forth in Section 408.035(1) and (2), Florida Statutes, and Rule 59C-1.036, Florida Administrative Code, remain at issue.

On May 1, 1995, each applicant submitted a Proposed Recommended Order. AHCA, except as otherwise stated, joined in the Proposed Recommended Orders submitted by ADVENTIST and RHA. Specific rulings on the proposed findings of fact submitted by the applicants are set forth in the Appendix attached hereto.

The parties in their Proposed Recommended Orders briefed the issue of whether the LIFE CARE application met minimum CON application content requirements. For the reasons set forth below, the LIFE CARE application is deemed complete, and is accordingly considered on its merits.

FINDINGS OF FACT

CON APPLICATIONS HCR-CON No.7530

1. HCR is a publicly owned, for-profit corporation which operates approximately 25 nursing homes in Florida.

   
   

2. HCR filed an application, CON No. 7530, to construct a 98-bed freestanding nursing home. HCR proposes to locate the nursing home in the northwest part of Orange County, Florida.

   
   

3. HCR proposes that the entire 98-bed facility will be dedicated to the care of patients with Alzheimer's Disease and related dementias.

   
   

4. The total cost of the HCR project is $7,132,000 for 47,750 square feet, or $472,776 per bed.

   
   

5. The HCR proposal is modeled after an HCR 120-bed nursing home facility in Boynton Beach, Florida. The Boynton Beach facility is entirely dedicated to the treatment of patients with Alzheimer's Disease or related dementias. The proposed HCR facility in Orange County would be identical to the Boynton Beach facility less one patient wing.

   
   

6. HCR's Boynton Beach facility, as well as HCR's existing Orange County nursing home facility, have superior licensure ratings.

   
   

7. HCR's Boynton Beach facility received accreditation with commendation from the Joint Commission on the Accreditation of Health Care Organizations (JCAHCO), a national accreditation body which has established standards to measure the quality of care in dementia care units.

8. Dementia is a complex of symptoms that can be caused by many different underlying diseases. Alzheimer's disease is one cause of dementia. Alzheimer's disease is the most common cause of dementia. Significant research is being conducted into the cause and treatment of Alzheimer's disease.

   
   

9. Dementia is defined as a decline in intellectual function; global cognitive impairment, that is memory impairment and at least one of the following: impairment of abstract thinking; impairment of judgment; impairment of other complex capabilities such as language use, ability to perform complex physical tasks, ability to recognize objects or people, or to construct objects; and, personality change.

   
   

10. The Reisberg Cognitive Rating Scale (RCS) classifies the stages of Alzheimer's disease from 1 to 7, with a rating of 7 being most severe. The rating scale is based on 10 axes: concentration, recent memory, past memory, orientation, functioning and self-care, speech, motor functioning, mood and behavior, practice of an art or skill, and calculation ability.

    
    

11. The Global Deterioration Scale (GDS) for Age-Associated Cognitive decline and Alzheimer's Disease also defines seven stages of deterioration ranging from no cognitive decline to very severe cognitive decline.

    
    

12. Persons suffering from Alzheimer's disease generally cannot survive without assistance upon reaching early dementia or level five on both the RCS and GDS.

    
    

13. Approximately 50-58 percent of persons currently residing in community nursing homes suffer from some form of dementia.

    
    

14. There is a need for community nursing home beds for persons suffering from the latter stages (levels 5-7) of Alzheimer's disease in Orange County.

    
    

15. It is particularly difficult to place in nursing homes in Orange County, persons suffering from the latter stages of Alzheimer's disease (levels 5-7) who also have displayed a history of disruptive behavior patterns.

    
    

16. Persons suffering from the latter stages of Alzheimer's disease have specific needs for care and treatment in nursing homes. Alzheimer's victims tend to wander and should have areas set aside for secured walking. The movement of Alzheimer's victims should also be carefully monitored.

    
    

17. HCR's Boynton Beach facility, which is the prototype for HCR's proposed Orange County facility, has specific design features to accommodate the needs of patients suffering from the latter stages (levels 5-7) of Alzheimer's disease. HCR proposes a pod design of five residential pod units each with a central living area, also called the atrium area. The resident rooms open to the central living area. Each pod has an enclosed courtyard. Access to the courtyards is controlled. The two nursing stations are centrally located in each wing of the facility. Each central living area, or atrium, is visible from one or the other of the nursing stations. HCR provides specific staff training in the care and treatment of Alzheimer's disease and related dementias.

    
    

18. A unit or a facility dedicated to the treatment of dementia patients may reduce the need for psychotropic medication of the patients.

19. On a long-term basis, there may be some staff burnout in a facility or unit dedicated solely to the care and treatment of victims of Alzheimer's disease or related dementias.

    
    

20. HCR proposes that its CON be conditioned upon locating in northwest Orange County, providing at least 30 percent of its patient days to Medicaid eligible persons, providing respite care, and dedicating all 98 beds to the care and treatment of persons suffering from Alzheimer's disease and related dementias. HCR currently meets its Medicaid commitment in the Boynton Beach facility.

    
    

    LIFE CARE

    CON Nos. 7534 and 7534P

    
    

21. LIFE CARE is a for-profit corporation which owns and operates two nursing homes in Florida. LIFE CARE also operates three other nursing homes in Florida. As of September 1993, LIFE CARE had a net worth of approximately $50 million.

    
    

22. LIFE CARE proposes to construct a freestanding 98-bed nursing home (CON No. 7534) in southwest Orange County, at a total cost of $5,988,000. The LIFE CARE 98-bed facility proposal includes a 20-bed unit dedicated to the care and treatment of persons suffering from Alzheimer's disease, a 20-bed subacute unit, an adult day care center, mental health services, and services to persons suffering from AIDS/HIV. LIFE CARE also made a partial request (CON No. 7534P) for a 60-bed facility which would be constructed at the same site and would include the same features.

    
    

23. For economic reasons, patients are being released from acute care hospital settings at earlier stages of recovery and there is a need for subacute nursing home services in Orange County.

    
    

24. The incidence of AIDS/HIV is increasing and there is a need for nursing home services for persons suffering from AIDS/HIV in Orange County.

    
    

25. The 20-bed unit proposed by LIFE CARE for the care and treatment of Alzheimer's patients will be a distinct part of the facility, separate from other residents. The Alzheimer's unit has its own dining area and activity area, a centrally located bathing facility, and a secured courtyard for wandering space.

    
    

26. The 20-bed LIFE CARE subacute unit will also be separate. The subacute unit will have two ventilator areas and be contiguous to a therapy area.

    
    

27. The LIFE CARE design includes outdoor courtyards, a library, gift shop, and ice cream parlor.

    
    

28. Pursuant to Sections 408.037(2)(a) and (b), Florida Statutes, one of the required elements of a CON application is the listing of capital projects, which is presented in Schedule 2 of the CON application. The Schedule 2 filed by LIFE CARE in these proceedings is identical to the Schedule 2 filed by LIFE CARE in the December 1993 batching cycle for LIFE CARE'S proposed Clay County Project, CON No. 7501. It has been held that Schedule 2 of the LIFE CARE Clay County Project CON application No. 7501 met minimum CON application content requirements. Life Care Centers of America, Inc. v. State of Florida, Agency for Health Care Administration, 20 F.L.W. 1435 (Fla. 1st DCA June 12, 1995).

29. During November of 1993, a LIFE CARE nursing home located in Altamonte Springs was downgraded from a superior to a conditional licensure rating due to a deficiency related to outdated medication. The conditional rating given to the facility was in effect for approximately fifty days. The facility was then given a standard rating, and upon the annual survey in the fall of 1994, the facility has been recommended for a superior rating. All other LIFE CARE facilities have superior ratings.

    
    

30. LIFE CARE proposes to condition its CON application upon providing Medicaid participation of 65 percent in the 98-bed facility, and 43 percent in the 60-bed facility.

    
    

    ADVENTIST CON No. 7528

    
    

31. ADVENTIST is a not-for-profit corporation that owns and operates nursing homes, hospitals, and other health care related enterprises. ADVENTIST is a wholly owned subsidiary of Adventist Health System/Sunbelt Health Care Corporation, which owns and operates hospitals and health care facilities throughout the United States.

    
    

32. ADVENTIST has operated health care facilities in Orange County since the early 1900s when Florida Hospital was founded. ADVENTIST is the largest hospital system in Orange County, with more than 1,400 beds located on five campuses.

    
    

33. ADVENTIST proposes to add 38 beds to an existing freestanding 80-bed community nursing home, Sunbelt Living Center-East Orlando (SLC), which is directly adjacent to Florida Hospital's East Orlando campus. The ADVENTIST proposal would include a 20-bed subacute unit and also an 18-bed skilled nursing unit. This addition to SLC would be accomplished by constructing two new wings to the existing facility. The projected cost of the ADVENTIST addition is

    $1,386,500, or approximately $36,000 per bed.

    
    

34. SLC is an 80-bed skilled nursing facility which opened in January of 1993. SLC has a superior licensure rating. SLC provides nursing home service to a variety of residents, including persons with AIDS/HIV, as well as persons with a primary diagnosis of Alzheimer's disease and related dementia. SLC does not have a distinct Alzheimer's unit, but is equipped with security features to accommodate Alzheimer's patients. SLC staff is trained in the care and treatment of all its residents, including those with dementia.

    
    

35. SLC reached an occupancy rate of 96 percent-97 percent capacity in its first ten months of operation.

    
    

36. The SLC design is based on a residential model. The intent of the design is to create a residential community, and to encourage the interaction among the residents, and also between the residents and staff.

    
    

37. The residential wings contain twelve rooms with private and semiprivate accommodations. Each room has its own toilet facilities.

    
    

38. The support facilities, food service, therapy areas, administrative offices, visitor and welcoming areas, are located in the center of the facility. The residential wings are clustered on each side of the facility. The facility also features outdoor courtyards and walkways adjacent to the residential wings.

39. ADVENTIST proposes to condition its CON application on providing a Medicaid commitment of 65 percent of total patient days in the non-subacute wing of the 38-bed expansion. The ADVENTIST proposal also features an AIDS program and respite care. ADVENTIST currently meets it Medicaid commitment at SLC.

    
    

40. As indicated above, there is a need for subacute nursing home beds in Orange County.

    
    

41. There is a need for nursing home beds for persons suffering from AIDS/HIV in Orange County.

    
    

42. In the 20-bed subacute unit ADVENTIST proposes that each room will include wall-mounted suction and gases to accommodate ventilator dependent patients, which will enable ADVENTIST to provide more intensive subacute care.

    
    

    RHA/PRINCETON CON No.7538

    
    

43. RHA is the owner and operator of Princeton Hospital, located on the west side of Orlando. Princeton Hospital is situated on 32 acres bordering Lake Lawne.

    
    

44. Princeton Hospital has 150 beds, including 24 psychiatric beds, a multipurpose intensive care unit, a 13-bed progressive care unit, a nursery, pediatric services, women's services, an obstetrical unit and an inpatient cardiac catheterization lab. The psychiatric unit at Princeton Hospital treats a wide range of mental disorders, including those afflicting the elderly population. The hospital also operates a senior psychiatric partial hospitalization program which serves geriatric patients, including persons suffering from Alzheimer's disease and related dementias. Princeton Hospital currently provides care and treatment to persons suffering from AIDS/HIV.

    
    

45. Princeton Hospital is accredited by the Joint Commission on Accreditation of Health Care Organizations.

    
    

46. On August 1, 1994, subsequent to the filing of CON application No. 7538, Princeton Hospital entered into a wide-ranging affiliation agreement with the University of Florida, College of Medicine and Shands Hospital. The agreement provides for extensive reciprocal training and educational programs between Princeton Hospital and the College of Medicine, as well as Shands Hospital. The agreement also provides for priority transfer of patients between Princeton and Shands hospitals. RHA proposes to include its nursing home facility within the scope of the affiliation agreement. The nursing home staff would benefit from the training and educational opportunities, and the nursing home patients would have access to priority reciprocity with the College of Medicine and Shands Hospital as provided for in the agreement.

    
    

47. During fiscal years 1993 and 1994 Princeton Hospital had a Medicaid patient ratio of approximately 40 percent. Princeton Hospital also provides indigent care.

    
    

48. RHA proposes to construct a freestanding 60-bed Medicaid certified skilled nursing facility on the campus of Princeton Hospital at a cost of

    $4,991,961 for 43,741 square feet, or $83,199 per bed. The services that are proposed include subacute care, a 15-bed unit for persons suffering from

    Alzheimer's disease and related dementias, long term care, and two pediatric beds. Respite care will also be provided.

    
    

49. RHA proposes that its subacute care unit would provide step-down care for patients referred from acute care hospital settings. RHA also proposes to provide rehabilitative therapies to serve patients suffering from fractured hips and joint replacements as well as other patients needing more intensive physical therapy. Cardiac and respiratory patients will also be served in the subacute unit.

    
    

50. As indicated above, there is a need for subacute nursing home beds in Orange County.

    
    

51. RHA's proposed 15-bed Alzheimer's unit will be a distinct and secured part of the facility. The unit will have its own enclosed courtyard and activities area.

    
    

52. As indicated above, there is a need for nursing home beds for persons suffering from Alzheimer's disease and related dementias in Orange County.

    
    

53. RHA also proposes a program dedicated to the care and treatment of persons suffering from AIDS/HIV. This program will provide long-term care, and will include psychiatric, as well as subacute services.

    
    

54. As indicated above, there is a need for nursing home beds for persons suffering from AIDS/HIV in Orange County.

    
    

55. The RHA proposal includes two pediatric nursing home beds. It is not uncommon to provide pediatric nursing home beds in a small unit within a nursing home facility. These beds will provide subacute care to pediatric patients referred from acute care hospital settings. It is anticipated that the pediatric unit will serve patients with respiratory problems and other multiple system failures. RHA has experienced difficulty in placing pediatric patients discharged from Princeton Hospital.

    
    

56. The RHA facility is designed in a series of modules. There are four patient wings located around a single nursing station. The Alzheimer's wing is distinct and secured. The pediatric beds are located in a single semiprivate room close to the nursing station. The subacute unit includes six beds with wall-mounted medical gases and vacuums. Each residential room has approximately

    272 net square feet, and features its own handicapped toilet and bathing facilities. The facility includes a chapel, convenience store, laundry, ice cream shop, and beauty shop, designed in a mall concept. The corridors are ten feet in width instead of the standard eight feet. The intent of the design concept is to encourage social interaction.

    
    

57. As designed, the location of the soiled utility room in the facility does not comply with applicable Florida code regulations; however, a proposed minor change in the design will move the soiled utility room approximately twenty feet to bring the facility into compliance with Florida code regulations.

    
    

    ALLOCATION FACTORS

    Relationship to District and State Health Plans Section 408.035(1)(a), Florida Statutes

    District Health Plan

    
    

58. Allocation Factor 1 of the District Health Plan provides a priority for an applicant proposing to locate in the northwest Orange County population center. This preference will continue to be given applicants until a total of

    120 beds is obtained. HCR is the only applicant proposing to locate in the northwest Orange County population center; however, in January of 1993, Sunbelt Living Center, a 120-bed community nursing home opened in Apopka, Florida, which is located in the northwest Orange County population center. Accordingly, the total bed number for this preference has been obtained, and this district allocation factor is inapplicable to these proceedings.

    
    

59. Allocation Factor 2 of the District Health Plan provides a preference for applicants developing specific services for newborn and/or pediatric patients. RHA is the only applicant proposing specific services which include a unit for the care and treatment of pediatric patients. Accordingly, RHA is the only applicant which meets this allocation factor.

    
    

60. Allocation Factor 3 of the District Health Plan provides a preference for an applicant proposing to develop a specific specialty service (or services), such as a unit for medically complex patients, a unit dealing with psychiatric disorders as a primary diagnosis, or services for persons suffering from AIDS/HIV. This preference is also provided to an applicant which commits to working with, or in conjunction with, an existing provider of a specialty service, such as hospices, or mental health providers.

    
    

61. RHA is the applicant which best meets this allocation factor. The RHA proposal provides for specialty services for medically complex patients, provides for services to persons suffering from AIDS/HIV, and RHA specifically commits to working with mental health providers, including working with the psychiatric unit at Princeton Hospital. ADVENTIST and LIFE CARE also propose to provide specialty services to medically complex patients in subacute units; however, the ADVENTIST facility is better equipped in this regard and is designed with piped in medical gases, vacuum, and expanded electrical capacity will have the capability to provide more extensive services. LIFE CARE also proposes to treat persons suffering from AIDS/HIV and persons with mental disorders. The LIFE CARE proposal, however, is not as specific in this regard as that of RHA. HCR proposes to provide specialty services to persons suffering from Alzheimer's disease and related dementias, and is in general compliance with this allocation factor.

    
    

    State Health Plan Allocation Factors

    
    

62. Each applicant meets the first State Health Plan allocation factor which provides a preference for an applicant proposing to locate in areas within the subdistrict with occupancy rates exceeding 90 percent. The occupancy rate in Orange County exceeds 90 percent.

    
    

63. RHA and LIFE CARE meet the second State Health Plan allocation factor which provides a preference for an applicant proposing to serve Medicaid patients in proportion to the average subdistrict-wide percentage of nursing homes. In Orange County the average is 65 percent for Medicaid service. ADVENTIST meets this preference with regard to its non-subacute unit. HCR which proposes a 30 percent Medicaid service does not meet this preference.

    
    

64. The third State Health Plan allocation factor provides a preference to an applicant proposing specialized services to special care residents,

    including AIDS residents, Alzheimer's residents, and the mentally ill. Each applicant generally complies with this allocation factor and offers specialty services; however, RHA with its broader spectrum of specialty services, including services to AIDS/HIV residents, Alzheimer's residents, and its specific commitment to working with residents suffering from psychiatric disorders best meets this preference.

    
    

65. The fourth State Health Plan allocation factor provides a preference to an applicant proposing to provide a continuum of services to community residents including, but not limited to, respite care and adult day care. RHA and ADVENTIST best meet this preference. RHA and ADVENTIST have a history of providing quality health care service to the community. RHA and ADVENTIST have extensive ongoing relationships with acute care hospitals. HCR and LIFE CARE have also established relationships which will address providing a continuum of care, but not to the extent proposed by RHA and ADVENTIST.

    
    

66. The fifth State Health Plan allocation factor provides a preference to an applicant proposing to construct facilities which provide maximum resident comfort and quality of care. Each applicant proposes facilities designed to provide resident comfort and quality care. Each design has comfortable resident rooms, spacious activities areas, recreation areas, courtyards, landscaping, therapy rooms, and staff lounge areas. Each applicant meets this preference.

    
    

67. The sixth State Health Plan allocation factor provides a preference for an applicant proposing innovative therapeutic programs which have proven effective in enhancing the residents' physical and mental functioning level and which emphasize restorative care. Each of the applicants' proposals feature specific elements of innovative therapeutic programs. HCR has received an award for its innovative design of the Boynton Beach Alzheimer's unit. RHA offers a multi-discipline approach with a psychiatric program. ADVENTIST offers an intensive subacute care unit, and LIFE CARE offer a well-balanced approach with intensive staff training.

    
    

68. The seventh State Health Plan allocation factor provides a preference for an applicant proposing charges which do not exceed the highest Medicaid per diem rate in the subdistrict. In this respect, HCR projects Medicaid charges of

    $96.20 per patient day in Year 1, and $93.32 in Year 2. LIFE CARE projects Medicaid charges of $104.74 per patient day in Year 1, and $106.20 in Year 2. ADVENTIST projects Medicaid charges of $106.00 per patient day in Year 1, and

    $111.30 in Year 2. RHA projects Medicaid charges of $107.02 per patient day in Year 1, and $109.24 in Year 2. While HCR projects the lowest Medicaid per diem charges and appears to best meet this allocation factor, all applicants have agreed to a specified Medicaid utilization rate, and will accept the appropriate Medicaid reimbursement levels.

    
    

69. The eighth State Health Plan allocation factor provides a preference for an applicant with a history of providing superior resident care in Florida or other states. HCR has maintained superior licensure ratings, and its prototype Boynton Beach facility currently is rated superior. LIFE CARE in 1993 experienced a conditional rating for its Altamonte Springs facility; however, the facility, upon evaluation in the fall of 1994, is now recommended for a superior licensure rating. RHA does not currently operate nursing homes; however, RHA has a history of providing quality care in its Princeton Hospital. ADVENTIST is the only applicant proposing to add nursing home beds to an existing facility that currently has a superior licensure rating, and in this respect, ADVENTIST best meets this allocation factor.

70. The ninth State Health Plan allocation factor provides a preference to an applicant proposing staff levels which exceed minimum staffing standards contained in licensure administrative rules. Applicants proposing higher ratios of RNs- and LPNs-to-residents shall be given preference. All applicants meet this factor; however a comparison of the nursing staffing patterns of the applicants reflects that HCR (45.40 nursing FTE) and LIFE CARE (45.30 nursing FTE) have a higher than the minimum required ratio of nursing staff to residents for their proposed 98-bed facilities. RHA has proposed 35.30 nursing FTE for its 60-bed facility. ADVENTIST proposes a total 62.40 nursing FTE for its facility after the proposed 38-bed addition.

    
    

71. The tenth State Health Plan allocation factor provides a preference for an applicant who will use professionals from a variety of disciplines to meet the residents' needs for social services, specialized therapies, nutrition, recreational activities, and spiritual guidance. These professionals shall include physical therapists, mental health nurses, and social workers. All the applicants offer a wide range of social, spiritual, nutritional, and recreational services. RHA, however, also proposes specific utilization of mental health care professionals, and a specific affiliation with the psychiatric care professionals from Princeton Hospital, and best meets this factor.

    
    

72. The eleventh State Health Plan allocation factor provides a preference for an applicant who ensures the residents' rights and privacy, and who implements a well-designed quality assurance and discharge planning program. Each applicant has documented specific plans for quality assurance and ensuring the residents' rights and privacy are protected. Accordingly, each applicant meets this factor.

    
    

73. The final State Health Plan allocation factor provides for a preference to an applicant proposing lower administrative costs, and higher resident care costs compared to the average nursing home in the district. HCR has the lowest projected administrative and overhead costs ($18.28 per patient day as of Year 2), and best meets this allocation factor.

    
    

    Statutory Review Criteria, Section 408.035(1), F.S.

    
    

    Section 408.035(1)(b): The availability, quality

    of care, efficiency, appropriateness, accessibility, extent of utilization, inadequacy of like and existing health care services and hospices in the service district of the applicant.

    
    

74. HCR, LIFE CARE, and RHA each proposes a unit dedicated to the care and treatment of persons suffering from Alzheimer's disease and related dementias (HCR 98-bed facility, LIFE CARE 20-bed unit, and RHA 15-bed unit). ADVENTIST, while currently providing care for Alzheimer's patients at SLC, does not propose a distinct Alzheimer's unit in its 38-bed addition.

    
    

75. There are currently at least five nursing homes in the service district, and two others in close proximity, which feature dedicated Alzheimer's units, with a total of at least 345 nursing home beds serving Alzheimer's patients. There is a high utilization rate of Alzheimer's nursing home beds in the district.

    
    

76. While there is an established need for more beds to serve Alzheimer's patients, particularly Alzheimer's patients with a history of disruptive

    behavior, there are additional needs in the service district to provide care and treatment for subacute patients, and for persons suffering from AIDS/HIV.

    
    

77. It is difficult to quantify the need for subacute nursing home beds due to the differing professional definitions of what constitutes subacute care; however, acute care hospitals in Orange County are, for cost-effective reasons, now releasing patients on an earlier basis, and there is an established need for nursing home beds to accommodate persons released from acute care hospitals. There is a high utilization rate of subacute beds in the district.

    
    

78. There has also been an increase in the incidence of AIDS/HIV patients, and in the need for nursing home beds for persons suffering from AIDS/HIV in the service district.

    
    

    Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant's record of providing quality of care.

    
    

79. Each applicant has the ability to provide quality of care, and each applicant has a history of providing quality of care. The distinguishing factors in this regard are that LIFE CARE is the only applicant that has experienced a downgrading of a nursing home facility from a superior to a conditional licensure rating, and ADVENTIST is the only applicant that proposes to add nursing home beds to a facility that currently has a superior licensure rating. In comparison, ADVENTIST best meets this factor, and LIFE CARE least meets this factor.

    
    

    Section 408.035(1)(e): Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.

    
    

80. ADVENTIST and RHA both have specific proposals to work with, and share services with acute care hospitals. Both are in close proximity to acute care hospitals which will expedite sharing of medical resources. RHA will also share dietary services with Princeton Hospital. The freestanding facilities proposed by HCR and LIFE CARE do not have this advantage.

    
    

    Section 408.035(1)(f): The need in the service district for special equipment and services which are not reasonably and economically accessible in adjoining areas.

    
    

81. This factor is inapplicable to the proposals. No specific need was established as to special services and equipment not reasonably and economically accessible in adjoining areas. There are dedicated Alzheimer's units and dementia services for persons in adjoining areas.

    
    

    Section 408.035(1)(g): The need for research and educational facilities, including but not limited to, institutional training programs and community training programs for health care practitioners.

    
    

82. RHA has an extensive proposal for the participation and training of health care practitioners in conjunction with Princeton Hospital and best meets this criterion. RHA's affiliation with the University of Florida College of

    Medicine, Shands Hospital, and the Brain Institute at the University of Florida enhances this proposal. ADVENTIST shares a similar educational and training relationship with Florida Hospital, and with Florida Hospital's registered nurse baccalaureate degree program through Southern College. LIFE CARE proposes to establish relationships with local community colleges and education centers to sponsor nursing programs.

    
    

    Section 408.035(1)(h): The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures for project accomplishment

    
    

83. As stipulated, each applicant meets this criterion. Each applicant also has substantial personnel and management resources available for project accomplishment.

    
    

    Section 408.035(1)(i): The immediate and long- term financial feasibility of the proposal.

    
    

84. LIFE CARE, ADVENTIST and RHA meet this criterion, and reasonably project positive cash flows by the second year of operation. RHA a not-for- profit corporation, projects a net loss of $114,000 in Year 1 of operation, and an excess of revenues over expenses of $53,000 in Year 2 of operation. LIFE CARE projects a net loss of $440,496 in Year 1 and a net gain of $145,085 in Year 2 for the 98-bed facility, and a net loss of $259,971 in Year 1 and a net gain of $54,920 in Year 2 for the 60-bed facility. HCR projects an after-tax profit of $25,000 in Year 2; however, in order to attain a level of profitability HCR must meet its projected 65 percent private pay utilization. This is a very high private payor mix, and there is a significant question as to whether this payor mix is attainable in the subdistrict; however, as proposed, HCR meets this factor.

    
    

    Sections 408.035(1)(k)(l) and (m): Impact of the project on cost of health services; cost effective- ness; construction costs.

    
    

85. ADVENTIST proposes the most cost-effective project by adding beds to an existing facility (SLC). The addition of 38 beds to SLC will promote and maximize the overall efficiency of the facility which was originally designed with core support features to accommodate 120 residents. The proposed 38-bed addition to SLC will also lower the costs per patient day of the entire facility. The ADVENTIST proposal adds nursing home beds at the lowest per bed cost ($36,000 per bed) of all applicants. Similarly, RHA is located on the campus of an existing acute care hospital owned by the applicant and, unlike HCR and LIFE CARE, projects no actual cash expenditure for land acquisition.

    
    

86. Each applicant has proposed a reasonable design of its proposed facility and reasonable construction costs, and taken into consideration applicable costs and methods of energy provision and conservation. Each applicant meets this criterion.

    
    

87. Each applicant has also proposed a very high quality of care facility that will foster competition and promote quality assurance and cost- effectiveness. Each applicant meets this criterion.

    
    

    Section 408.035(1)(n): The applicant's past and proposed provision of health care services to

    Medicaid patients and the medically indigent.

    
    

88. RHA, ADVENTIST and LIFE CARE have proposed providing health care services to Medicaid patients at rates at, or in excess of, the district average. HCR proposes the lowest Medicaid service rate at 30 percent. RHA also has a strong record of providing Medicaid services and service to the medically indigent at Princeton Hospital. All applicants except HCR meet this factor.

    
    

    Section 408.035(1)(o): The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system.

    
    

89. The RHA and ADVENTIST proposals best meet this criterion. Both the RHA and the ADVENTIST proposals are closely associated with existing hospitals, and emphasize a continuum of care from the acute hospital setting to a nursing home facility. The RHA and ADVENTIST proposals promote the interaction of health care professionals in a multilevel health care system. The HCR and LIFE CARE proposals do not reflect such an extensive interconnection with other aspects of the health care system, and do not promote a continuum of care to the extent proposed by RHA and ADVENTIST.

    
    

    Section 408.035(2)(b): Whether existing inpatient facilities providing inpatient services similar to those being proposed are being used in an appropriate and efficient manner.

    
    

90. The evidence reflects that the existing inpatient facilities in, or adjacent to, the district which offer subacute and AIDS services, as well as services dedicated to the care and treatment of persons suffering from Alzheimer's disease and related dementias are operating at, or near, capacity, and are being used in an appropriate and efficient manner.

    
    

    CONCLUSIONS OF LAW

    
    

91. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Section 120.57(1), Florida Statutes.

    
    

92. The LIFE CARE application CON No. 7534, and the partial application CON No. 7534P are complete and meet the statutory requirements of Section 408.037(2), Florida Statutes. Life Care Centers of America, Inc. v. State of Florida, Agency for Health Care Administration, 20 F.L.W. 1435 (Fla. 1st DCA June 12, 1995).

    
    

93. The minor adjustment of the RHA application with regard to the placement of the soiled utility area is a permissible amendment to the application. Palms Residential Treatment Center Inc. v. Department of Health and Rehabilitative Services, 10 F.A.L.R. 1425 (February 15, 1988). Similarly, the RHA change in management and the execution of the affiliation agreement between Princeton Hospital and the University of Florida College of Medicine and Shands Hospital constitute matters that are permissible updates. Manor Care, Inc. v. Department of Health and Rehabilitative Services, 558 So.2d 26 (Fla. 1st DCA 1990).

    
    

94. An applicant for a Certificate of Need has the burden to demonstrate entitlement to an award of the certificate. Florida Department of Transportation v. J.W.C. Co., 396 So.2d 778 (Fla. 1st DCA 1981); Boca Raton

    Artificial Kidney Center v. Department of Health and Rehabilitative Services,

    475 So.2d 260 (Fla. 1st DCA 1985). A balanced consideration of applicable statutory and rule criteria must be made. Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985). Such consideration requires that varying weight be accorded each criterion, depending upon the facts of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985).

    
    

95. Section 408.035, Florida Statutes, sets forth specific statutory review criteria for determination of the award of a CON application. By stipulation of the parties, the following criteria are not at issue in this proceeding: Sections 408.035(1)(d),(j), and (2)(a),(c),(d), and (e). The parties further agree that each applicant has the necessary funds available for capital and operating expenses necessary for project accomplishment and operation, as required by Section 408.035(1)(h), Florida Statutes; however the remaining provisions of Section 408.035(1)(h), Florida Statutes, are at issue.

    
    

96. Applying the statutory and rule criteria to the facts presented in this proceeding, it is clear that each applicant has proposed a financially viable, well-conceived project which will provide a high quality of care by a trained staff. Each applicant has also demonstrated a need for the services proposed. Upon balancing the statutory and rule criteria, however, the distinguishing factors are that the RHA and ADVENTIST proposals not only provide the district with a broad range of services, but also provide for a clearly identified continuum of care. Furthermore, the ADVENTIST proposal is the only proposal adding beds to a superior rated nursing home, and is the most cost- effective of the proposals. ADVENTIST will provide nursing home beds most economically, and the addition of 38 beds will maximize the efficiency of its existing SLC nursing home. RHA similarly has utilized existing Princeton Hospital land and services to reduce costs. Moreover, the RHA and ADVENTIST proposals benefit from extensive ongoing training and educational programs with other health care providers to a greater extent than HCR and LIFE CARE.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that:

1. RHA's application for CON No. 7538 be APPROVED.

   
   

2. ADVENTIST'S application for CON No. 7528 be APPROVED.

   
   

3. HCR's application for CON No. 7530 be DENIED.

   
   

4. LIFE CARE'S applications for CON Nos. 7534 and 7534P be DENIED.

RECOMMENDED in Tallahassee, Leon County, Florida, this 27th day of July, 1995.

RICHARD HIXSON

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 27th day of July, 1995.

APPENDIX

HCR's Proposed Findings

1-5. Accepted in substance.

6. Rejected, insofar as quantification of need for subacute services, while not readily ascertainable, was demonstrated by other applicants.demonstrated need existed in district

7-8. Accepted in substance.

9. See Number 6.

10-14. Accepted in substance, but disposed of by ruling in Clay County case.

15-27. Accepted in substance.

28-36. Rejected insofar as quantification of need for subacute services is not readily accessible; however, need for such services was established.

1. Accepted, except that need for 120 beds has been met.

2. Accepted, except that RHA proposes specific pediatric services and is entitled to preference.

3. Accepted in substance, except last sentence is rejected.

4. Accepted.

5. Accepted, except that ADVENTIST meets preference as to the non- subacute unit.

42-43. Accepted in substance. 44-45. Rejected.

1. Accepted in substance.

2. Accepted, except that ADVENTIST and RHA also meet this factor, and ADVENTIST is adding beds to an existing superior-rated facility.

48-50. Accepted in part, other applicants meet these factors.

51-65. Accepted in substance; however other services are also needed in the district.

66-67. Rejected.

68-73. Accepted in substance.

74-76. Accepted; however other services are also needed in the district.

77. Rejected.

78-86. Accepted in substance.

87-94. Accepted only to the extent that the HCR proposal meets the minimum requirements to demonstrate financial feasibility.

95-103. Accepted in substance; however each applicant's proposal also meets this factor.

design.

LIFE CARE's Proposed Findings

1-3. Accepted in substance.

4. Accepted, except that district plan includes consideration of pediatric population.

5-7. Accepted; however other applicants also meet these factors.

1. See Finding No. 4.

2. Rejected to the extent that it is not uncommon for pediatric care to be provided in a nursing home setting.

10-38. Accepted in substance.

39-40. Rejected to the extent that RHA and ADVENTIST have competitive staff salaries and have experienced no difficulty in hiring qualified staff.

41-57. Accepted in substance. 58-59. Rejected.

1. Accepted; however RHA proposes a minor change to correct this design.

2. Rejected.

62-65. Accepted in substance.

66-69. Disposed of by Clay County case.

1. Accepted; however ADVENTIST meets this factor in the non-subacute unit.

2. Accepted in substance.

ADVENTIST's Proposed Findings

1-4. Accepted in substance.

5. Accepted only to the extent that HCR does not propose a specific subacute care unit.

6-13. Accepted in substance.

1. Rejected to the extent that HCR's proposal meets minimum financial feasibility requirements.

2. Accepted.

16-17. Rejected.

1. Accepted.

2. Accepted to the extent that RHA and ADVENTIST best meet this criterion.

20-21. Accepted in substance.

22-26. Disposed of by Clay County case. 27-29. Accepted in substance

30-31. Rejected.

32-35. Accepted in substance.

36. Rejected; see No. 19.

37-106. Accepted in substance.

107. Accepted; see No. 19.

RHA's Proposed Findings

1-21. Accepted in substance.

22. Accepted; however other applicants also meet these factors. 23-54. Accepted in substance.

55. Accepted to the extent that there are at least seven nursing homes with dedicated Alzheimer's units in or near the service area.

56-92. Accepted in substance.

93-96. Accepted; however HCR meets minimum financial feasibility requirements.

97-102. Accepted; however LIFE CARE meets minimum financial feasibility requirements.

103. Rejected.

104-122. Accepted in substance.

123. Rejected.

124-135. Accepted in substance.

136. Rejected to the extent that all applicants have met the design criterion.

137-140. Accepted in substance.

141. Rejected.

142-145. Accepted in substance.

146. Accepted to the extent that RHA and ADVENTIST best meet this criterion.

COPIES FURNISHED:

Stephen K. Boone, Esquire BOONE, BOONE & BOONE, P.A.

Post Office Box 1596 Venice, Florida 34284

Alfred W. Clark, Esquire

117 South Gadsden, Suite 201 Tallahassee, Florida. 32301

R. Bruce McKibben, Jr., Esquire PENNINGTON & HABEN, P.A.

215 South Monroe Street, 2nd Floor Post Office Box 10095

Tallahassee, Florida 32301

Michael J. Glazer, Esquire MACFARLANE, AUSLEY, FERGUSON

& MCMULLEN, P.A.

Post Office Box 391 Tallahassee, Florida 32301

Samuel Dean Bunton, Esquire Senior Attorney, AHCA Atrium Building, Suite 301

325 John Knox Road

Tallahassee, Florida 32303-4131

Steven R. Bechtel, Esquire MATEER, HARBERT & BATES, P.A.

Post Office Box 2854 Orlando, Florida 32802

James M. Barclay, Esquire COBB, C0LE & BELL

131 North Gadsden Street Tallahassee, Florida 32301

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the Final Order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 94-002397CON

Orders for Case No: 94-002397CON