STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARE FIRST, INC., )

)

Petitioners, )

)

vs. ) Case Nos. 96-4053

) 96-4054

AGENCY FOR HEALTH CARE ) 96-4055

ADMINISTRATION, ) 96-4056

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Administrative Law Judge, David M. Maloney, conducted an administrative hearing in these consolidated cases on December 2-6, 1996, in Tallahassee Florida.

APPEARANCES

For Petitioner W. David Watkins, Esquire

Care First, Inc.: Watkins, Tomasello & Calleen, P.A.

1315 East Lafayette Street, Suite B Tallahassee, Florida 32301

For Petitioner, Sean Frazier, Esquire

Home Health Integrated Panza, Maurer, Maynard & Neel Health Services of NationsBank Building, 3rd Floor Florida, Inc.: 3600 North Federal Highway

Ft. Lauderdale, Florida 33308

For Petitioner Paul Amundsen, Esquire

Putnam Home Amundsen & Moore Health Care, Inc.: 502 East Park Avenue

Tallahassee, Florida 32301

For Petitioner Theodore E. Mack, Esquire

RHA/Florida Cobb Cole & Bell, Operations, Inc.: 131 North Gadsden Street

Tallahassee, Florida 32301

For Respondent Richard M. Ellis, Esquire Agency for Health Care

Administration

2727 Mahan Drive, Building 3

Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

Whether the applications for certificate of need numbers 8380, 8381, 8382 and 8383, filed by Petitioners RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., ("IHS of Florida,") and Putnam Home Health Services, Inc., meet, on balance, the statutory and rule criteria required for approval?

PRELIMINARY STATEMENT

The Agency for Health Care Administration ("AHCA" or the "agency,") reviewed and preliminarily denied the applications of the four petitioners in this case for certificates of need to establish Medicare-certified home health agencies in AHCA District

2. In this proceeding, the four petitioners challenge the preliminary action.

Putnam proceeded first at the final hearing, and presented the testimony of Michael L. Schwartz, expert in health care planning, health care administration, and health care finance; Linda Jackson, expert in home health care finance; Kevin Green, C.P.A., expert in home health care finance; Nora Rowsey, R.N. expert in home health services and home health nursing; and Alan E. Anderson, president of Putnam. Putnam's Exhibits 1-3, and 5 were admitted into evidence.

RHA proceeded second. It presented the testimony of Michael Foxworthy, Vice-President of Health Prime, Inc.; Ronald J. Swartz,

C.P.A., expert in health care accounting; and Jim White, expert in health care planning and CON review. RHA's Exhibit 1, consisting of its entire CON application, including the letter of intent and omissions response, was admitted into evidence.

IHS of Florida proceeded third. It presented the testimony of two witnesses, Patricia Greenberg, expert in health care planning and health care finance, and Pernille Ostberg, Senior Vice- President of the Eastern Division of Symphony Home Care, Inc., and expert in home health administration. IHS of Florida's Exhibits 1,

2 and 4 were admitted into evidence.

Care First proceeded last. It presented the testimony of five witnesses: Lynne Mulder, expert in health care planning; Joseph Mitchell, C.P.A., expert in health care finance; Freddie Franklin,

President of Health Care First and expert in administration of

long-term care; Earl B. Britt, M.D., expert in medicine; and Joseph

1. Webster, Sr., M.D., expert in medicine.

   The agency presented the testimony of Elizabeth Dudek, AHCA Chief of the agency's Certificate of Need Unit and expert in the fields of CON policy and procedure and health care planning; and, Roger Bell, AHCA audit evaluation and review analyst and expert in accounting and health care finance. AHCA's exhibits 1, 4, and 7-13 were admitted into evidence. Official recognition, pursuant to the agency's request, was taken of 42 CFR, Part 484.

   The transcript of the final hearing was filed on January 28, 1997. Proposed recommended orders originally due February 11,

   1997, were filed by each of the parties on February 19, 1997, pursuant to an order entered at the request of the parties to extend the time for filing.

   
   

   FINDINGS OF FACT

   1. Care First

      1. The Proposal

         1. Care First, the holder of a non-Medicare-certified home health agency license, was established in March of 1996. Owned by Mr. Freddie L. Franklin, Care First is the successor to another non-Medicare-certified home health agency also owned by Mr. Franklin: D. G. Anthony Home Health Agency ("D. G. Anthony").

         2. Established in May of 1995, D. G. Anthony provided over 10,000 visits in its first 10 months of operation mostly in Leon and Wakulla Counties, pursuant to a contract with Calhoun-Liberty Hospital Association, Inc. Very few of the 10,000 patients were referred to D. G. Anthony by Calhoun-Liberty; they became D. G. Anthony's patients through community-based networks, including physicians, created through the efforts of Mr. Franklin and D. G. Anthony itself.

         3. D. G. Anthony was dissolved in 1996. Both its patient census and its staff of 45 were absorbed by Care First. D. G. Anthony's contract with Calhoun-Liberty was substantially assumed by Care First so that it provided service to Medicare patients as Calhoun-Liberty's subcontractor. From the point of view of the federal government, the Medicare patients served by Care First were Calhoun-Liberty's patients, even those who had not been referred to

            Care First by Calhoun Liberty and who had been referred from other community sources. Care First, therefore, was simply a sub- contractor providing the services on Calhoun-Liberty's behalf.

         4. The contract was terminated effective December 1, 1996. Calhoun-Liberty was free to terminate Care First with 30 days notice, a peril that motivated Mr. Franklin to seek the CON applied for in this proceeding. With the termination of the contract, Care First ceased serving Medicare patients, "because Mr. Franklin did not want to enter into another subcontractor arrangement because of all the issues and problems," (Tr. 934,) associated with such an arrangement.

         5. Mr. Franklin is involved with nursing homes as the administrator at Miracle Hill Nursing Home in Tallahassee. He is an owner of Wakulla Manor Nursing Home in Wakulla County, and he owns a 24 bed CLF, Greenlin Villa, also in Wakulla County. Miracle Hill has the highest Medicaid utilization of any nursing home in District 2. Both Miracle Hill and Wakulla Manor are superior rated facilities. On the strength of Mr. Franklin's extensive experience with community-based organizations and health care services, as well as Care First's succession to D. G. Anthony and other historical information and data. Care First decided to proceed with its application.

         6. In the application, Care First proposes to establish a home health agency that, at first, will serve primarily Franklin, Gadsden, Jefferson, Leon, Liberty and Wakulla Counties. It plans to expand into Madison and Taylor Counties in its second year of operation. Five of these eight counties have high levels of

            poverty; six of the eight are very rural, with the population spread widely throughout the county.

         7. Ninety-six percent of Care First's patients are over age

         1. Minority owned, approximately 65% of the patients are members of minorities. Many of the patients live in rural areas and are Medicaid recipients or are uninsured low income persons who do not qualify for Medicaid but cannot afford home health care. Since it will be serving the same patient base as a Medicare-certified agency, Care First has committed to the provision of 7% of its visits to Medicaid patients and 1% of its visits to patients requiring charity/uncompensated care.

            1. Care First projects 18,080 visits in its first year and 29,070 in its second year. Care First will promote efficiency through the use of a case management approach. Each patient will be assigned a case manager who will act as the patient advocate to provide care required and to identify and assist the patient with access to other "quality of life" enhancing services.

            2. Care First proposes an appropriate mix of services, including skilled nursing, physical therapy, speech and language therapy, occupational therapy, home health aide services and social services.

            3. Care First estimates its total project cost at $25,808. Of this amount, $2,000 is indicated as "start-up cost", with nothing allocated to salaries. Care First indicates no "capital projects" other than its proposal for the home health agency in District 2.

            4. Care First's proposal would be funded from a $60,000 bank line of credit.

      2. Projected Utilization

      1. Potential patients will be able to gain access to Care First through several avenues, including physician referral, hospital referral, nursing home discharge, assisted living referrals from community agencies and organizations such as Big Bend Hospice and through private referral.

      2. In addition, there are several natural linkages to the community for Care First. Wakulla Manor and Miracle nursing facilities offer Care First's services to discharged residents in need. Very often, residents and families choose Mr. Franklin's agency because they are familiar with him, staff or the quality of care provided. Residents of Greenlin Villa, owned by Mr. Franklin, frequently chose Care First when in need of home health agency services.

      3. Mr. Franklin's civic, church, and community involvement is impressive. He is president of the Florida Health Care Association, chairman of the board of the Tallahassee Urban League, superintendent of the Wakulla County Union Church Group, and serves on the advisory board for the Allied Health Department for Florida A&M University. In the past, he has served on the Board of Trustees of Tallahassee Community College. He was accepted as an expert in long-term care administration in this proceeding based in part on his service on the Governor's Long Term Care Commission.

      4. Miracle Hill has held a "Superior" licensure rating for the last ten consecutive years. It is the highest rating awarded

         by the AHCA licensure office and is intended to blazon the high quality of care provided by the facility.

      5. Although reported through Calhoun-Liberty, very few of D.

         1. Anthony's and Care First's past referrals have been generated through that affiliation. Rather, they have come through community contacts and getting the referrals from "talking with physicians," (Tr. 922), in Tallahassee and the surrounding areas, many of whom Mr. Franklin has gotten to know through his post as Administrator of Miracle Hill Nursing Home.

      6. By far, it is through physician referrals that Care First receives most of its patients. Care First's physician referral list includes 47 doctors who referred patients to D. G. Anthony since May, 1995. These doctors practice in urban areas and some have rural clinic offices which they staff on certain days of the week. Physicians are willing to refer patients to Care First because of the quality of care which has been provided by Care First, as well as the reputation of its owners.

      7. The Care First application included letters of support from eight physicians who have referred patients to Care First in the past and state that they will continue to support Care First with referrals in the future.

      8. Among the letters included are those from Dr. Earl Britt, a practitioner of internal medicine and cardiology in Tallahassee, and Dr. Joseph Webster, who practices internal medicine and gastroenterolgy in Tallahassee. Many of the patients of these two physicians are elderly. Dr. Britt's patients often have chronic hypertension or heart disease, are diabetic or suffer strokes.

      9. These two physicians provided over half the total number of patient referrals to D.B. Anthony and Care First. Dr. Britt and Dr. Webster established through testimony that Freddie Franklin and Care First have an excellent reputation for provision of quality of care and enjoy significant support among physicians within the service area. Moreover, Dr. Britt, although based in Tallahassee, stressed the importance of Care First's proven ability to provide home health services in the rural setting both from the standpoint of understanding the needs of the rural patient and from being able to travel over rural terrain in order to deliver services. (Tr. 1151, 1152, 1154).

      10. Approximately 11,500 visits were performed by D. G. Anthony staff from the period of May 1995, through April 1996, before they became the staff of Care First. Since the agency has established a presence in the district and has physician and other referral mechanisms in place, it is reasonable to project that Care First will continue to grow and will experience between 18,000 and 20,000 visits in its first year and 28,000 to 31,000 visits in year two as a Medicare-certified home health agency. These projections stem from the historical and very recent monthly growth of D. G. Anthony, as well as demand it is experiencing from Franklin and Jefferson Counties, two counties it does not serve regularly at present but plans to serve regularly in the future.

      11. The reasonableness of Care First's projections is bolstered by the conservative number of visits per patient the projections assume, 35, when typically Medicare-certified agencies average at least 35 visits and as many as 60 visits per patient.

      12. Care First's utilization projections are reasonable. It enjoys an excellent reputation for quality of care and ability to deliver services. Together with its predecessor, D. G. Anthony, it has a proven track record and has benefited from a referral network that remains in place. These factors, together with the conservative assumptions upon which its projected utilization is based demonstrate that its projected utilization is reasonable.

          1. Financial Feasibility of Care First

      13. The total project cost for the Care First agency is projected to be $25,808. The majority of the costs are reasonable for this type of health care project. The majority of the project development costs, the application fee and much of the cost of the consultant and legal fees, have already been paid by Care First.

      14. Care First's Schedule 2 was prepared in conformance with the requirements of the agency and accurately lists all anticipated capital projects of Care First.

      15. The necessary funding for the Care First project will come from Care First's existing $60,000 line of credit with Premier Bank, in Tallahassee. This method of funding the project is reasonable, appropriate, and adequate. Care First has demonstrated the short term financial feasibility of its project.

      16. Care First's schedule 6 presents the anticipated staffing requirements for its home health agency. The staffing projections are based upon the historical experience of D. G. Anthony and Care First, taking into consideration the projected start-up and utilization of the agency. The projected salaries are based upon current wages being paid to Care First employees, adjusted for

          future inflation. Care First's schedule 6 assumptions and projections are reasonable, and adequate for the provision of high quality care. The staffing proposed by Care First is sufficient to provide an RN or an LPN and an aide in each of the eight counties Care First proposes to serve in District 2.

      17. Care First's schedule 7 includes the payor mix assumptions and projected revenue for the first two years of operation. Medicare reimburses for home health agency services based upon the allowable cost for providing services, with certain caps. The Care First revenues by payor type were based upon the historical experience of D. G. Anthony and Care First, as well as the preparation of an actual Medicare cost report. The Care First payor mix assumptions and revenue assumptions are reasonable.

      18. Care First's projection of operating expenses in Schedule 8A is also based on the historical experience of D. G. Anthony and Care First, as modified for the mix of services to be offered and the projected staffing requirements. The use of historical data to project future expenses adds credibility to the projections. Care First's projected expenses for the project are reasonable.

      19. The Care First application presents a reasonable projection of the revenues and expenses likely to be experienced by the project. Care First has reasonably projected a profit of

          $8,315 for the first two year of operation. Care First's proposal is financially feasible in the long term.

      20. As the result of its community contacts, Care First has been offered the use of donated office space in Franklin, Jefferson, Wakulla, and Gadsden counties. The use of donated

          office space will decrease the cost of establishing a physical presence and providing services in those counties since Care First will not have a lease cost for a business office and a place to keep supplies.

          1. Quality of Care

      21. Through the experience of D. G. Anthony, Care First has identified the particular needs of the community it served. This experience has been carried over into Care First's provision of services.

      22. In the 9 months of Care First's existence at the time of hearing, it provided quality of care. Its predecessor, D. G. Anthony, also provided quality of care. While Care First's experience is relatively limited, there is no reason to expect, based on the experience of both Care First and its predecessor D.

          G. Anthony, that quality of care will not continue should its application be granted.

   2. IHS of Florida

      1. The Application

         1. IHS of Florida is a wholly-owned subsidiary of Integrated Health Services, Inc. ("IHS") formed for the specific purpose of filing CON applications.

         2. IHS operates other home health agencies under other subsidiary names.

         3. Pernille Ostberg is a senior vice president of the Eastern Home Care Division of Symphony Home Care Services, Integrated Health Services. In that capacity she oversees nearly

            195 operations in six states, including Florida. Her operations

            include home health agencies, durable and medical equipment distributions, and infusion therapy offered by pharmacists. Under Ms. Ostberg's guidance, IHS has grown to its current roster of 195 agencies in only three years, from a beginning of only five agencies.

         4. IHS first acquired Central Park Lodges, primarily a nursing home company which also owned five home health agencies. Once these agencies became Medicare certified, IHS made a corporate decision to acquire additional Medicare certified home health agencies.

         5. Beginning approximately three years ago, IHS undertook a series of acquisitions which included Central Health Services, Care Team, ProCare/ProMed, and Partners Home Health. More recently, IHS has acquired the Signature Home Health and Century Home Health Companies. And, immediately prior to the final hearing in this matter, IHS acquired First American Home Health Care, making IHS the fourth largest provider of home health services in America. Of all the home health agencies overseen by IHS, 95% are Medicare certified, and 62-63 are located in Florida. IHS now has a presence in all districts except District 1 and 2.

         6. IHS personnel also have extensive experience in starting up new home health agencies. IHS personnel have opened over 40 locations across the United States.

         7. IHS employees have extensive experience bringing new home health agencies through successful surveys by the Joint Commission on the Accreditation of Hospital Organizations ("JCAHO") recommendations. Of 18 branches personally taken through initial

            survey by IHS's Pernille Ostberg, none were recommended to change their operations and none were cited for a deficiency.

         8. IHS has recently opened, licensed, and certified new home health agencies in AHCA Service District 5, 6, and 10. They have also received licensure in District 7, 8, and 11.

         9. Based on the extensive expensive of IHS personnel, a start up home health agency typically experiences 8,000 - 15,000 visits per first year. Opening a new program requires two months for licensure. It will require a registered nurse for three months to make certain all manuals are in place and that quality personnel are recruited. After achieving licensure, one must wait for a certification survey, which may take as long as six months. The three IHS home health agencies that became certified recently have experienced 200 visits in the first month, a good sign of growth.

         10. IHS' umbrella organization for home health organizations is Symphony. Most of their home health companies retained their original names.

         11. Other IHS home health companies include ProCare, Central Health Services, Partners Home Health, Nurse Registry, and First American.

         12. IHS of Florida has applied for applications in other districts. This applicant filed applications in District 7, 8 and

             10 and each were approved.

         13. IHS of Florida's CON application number 8382 was prepared by Patti Greenberg with the significant input of IHS and IHS of Florida's operational experts. Ms. Greenberg has prepared 75-100 CON applications, 20-25 of which sought approval for Medicare

             Certified Home Health Agencies. Each of these prior applications had been approved or otherwise reached settlement before litigation.

      2. The Proposed Project

         1. Once the needs analysis was complete, IHS examined geographic issues within the 14 county district.

         2. IHS examined where the populations required home health agencies and what niche of the market IHS could expect to achieve.

         3. Projected visits were determined by examining month by month, how this agency would grow.

         4. This projected utilization was subdivided among sub-visit types. Existing IHS home health agencies visit mix (skilled nursing as opposed to home health aide or therapy visits) was used to estimate skill type of the projected total volume.

         5. The projected utilization was also subdivided by payor class. This payor class projection was derived specifically for District 2, its poverty levels and its managed care penetration.

         6. In the aggregate, IHS projects 7,650 visits in year one and 17,100 visits in year two. This projection is reasonable and achievable. Witnesses for the Agency agreed that IHS of Florida's projected number of visits was "definitely attainable".

      3. Past and Proposed Service to Medicaid Patients and for Medically Indigent

         1. The payor class analysis allowed IHS to conclude it should condition its approval of its application under the performance of 5% Medicaid and 1% charity care.

         2. The balance of the population served by an IHS Medicare Certified Home Health agency would be covered by Medicare.

         3. The condition is important as it is a requirement which, if not achieved, will subject IHS of Florida to fines and penalties by the agency.

      4. Improved Accessibility

         1. The applicant will improve the efficacy, appropriateness, accessibility, effectiveness and efficiency of home health services in District 2 if approved.

         2. IHS of Florida will provide good quality of care, should its application be granted.

      5. Quality of Care

         1. Through competitive forces, the applicant's approval will also improve the quality of care offered by home health agencies in District 2. The approval of IHS of Florida's application will also comply with the need evidenced by the extent of utilization of like and existing services in District 2.

      6. Economies from Joint Operations

         1. Certain economies derived from the operation of joint projects are achieved by IHS of Florida's proposal.

         2. IHS has a home office and corporate umbrella which oversees all of its operations for home health services.

         3. This master office offers economies of sale by sharing

            resources across a wide array of home health agencies in Florida and other states.

         4. Thus, the incremental expense for corporate overhead is reduced as compared to a free-standing home health agency.

         5. Additionally, this national oversight provides better economies to provide the most recent policies and procedures, billing systems, and other systems of business operation.

      7. Financial Feasibility

      1. IHS of Florida has the resources to accomplish the proposed project.

      2. As demonstrated on schedule 1, and schedule 3 of IHS exhibit 1, the budget for the project is only $144,000.

      3. This budget includes all appropriate equipment for both the initial and satellite offices.

      4. Budgeted amounts include all required lease expenses, equipment costs and even start-up costs such as salaries for the recruitment of training and staff prior to opening.

      5. In total, $52,000 of pre-opening expenses are projected, which is reasonable.

      6. IHS of Florida filed applications for other home health agency start-ups in three different districts. The applicant had more than $180,000 in cash on hand and an additional $226,000 assured from a commitment letter from IHS which was also contained in the application.

      7. A letter of commitment from Mark Levine, a director and executive vice president of IHS, indicated IHS will provide

         $250,000 in capital for this specific project.

      8. Additionally, IHS will provide up to $1 million in working capital loan to assure no cash flow problems ever arise.

      9. A similar letter of commitment appears in each of the CON applications which IHS of Florida has filed.

      10. IHS has committed to fund each of the CON applications applied for by IHS of Florida.

      11. Each of these letters of commitment for the various CON applications sought by this applicant are on file with the AHCA.

      12. In total, the applicant projects $600,000 in capital commitments assured.

      13. IHS' balance sheet, reveals access to $60 million in cash and cash equivalent. The record clearly demonstrates an ability of IHS to fund all capital contributions required by the applicant.

      14. The current assets of IHS approximate $240 million.

      15. In addition to having cash in the bank, IHS is a growing concern and is, in fact, a Fortune 500 company that is publicly traded on the New York Stock Exchange.

      16. IHS generates revenues which exceed its annual expenses. In the last year, IHS derived $30 million more than it experienced in expenses.

      17. The application is financially feasible in the short-

          
          

          term.

          
          

      18. IHS' application is also feasible in the long-term.

      19. IHS of Florida's utilization projections are reasonable.

      20. Budgeted staffing and salaries are reasonable.

      21. The cost limit calculation and reimbursement calculation

          
          

          by payor source, which is provided in great detail in Schedule 5 of

          IHS of Florida's application, is reasonable.

      22. Projected expenses associated with this project were reasonably calculated based on the actual experience of other IHS Home Health operations.

      23. The reasonableness of these costs are also demonstrated when compared with the cost per visit by existing agencies in District 2. In fact, IHS of Florida predicted it would be a lower cost provider than the expected cost of existing agencies at the time IHS of Florida's operations would begin.

      24. IHS of Florida's proposal will have a healthy, competitive effect on the cost of providing services by other providers.

   3. Putnam

      1. The Proposal

         1. Putnam proposes to establish a Medicare-certified home health agency with its primary office located in Bay County. Bay County was selected as the primary office based upon the locations of existing and approved agencies in District 2, the aggregate utilization of each, and the number of individuals aged 65 and over distributed among the existing District 2 counties and agencies.

         2. Mr. Alan Anderson is Putnam's sole stockholder, Director, and President. Under the ownership and administration of Alan Anderson, Putnam has provided Medicare-certified home health services in AHCA District 3 continuously since 1986.

         3. Mr. Anderson is also the sole owner, director, and president of Anderson Home Health, Inc., a Medicare-certified home health agency serving AHCA District 4 since 1992. Anderson Home

            Health's CON was obtained by Putnam through the same process undertaken by the prospective applicants in this proceeding.

         4. Putnam's District 3 agency has successfully served District 3 residents since 1986 at first through its Palatka office, then growing to its current size of four offices. In District 4, Anderson Home Health, Inc. has also experienced successful operations having grown from its principal office in Duval County to a total of four offices.

         5. Putnam's District 3 home health agency began with the original office located in Palatka, followed by offices opened in Gainesville, Ocala and Crystal River.

         6. Anderson Home Health, Inc.'s District 4 operation began with the original office located in Jacksonville; the second office was opened in Daytona Beach, followed by the opening of the third office in Orange Park; and the fourth office was opened in Macclenny.

         7. Putnam's District 3 agency is JCAHO accredited "with commendation."

         8. As part of CON application No. 8383, Putnam has agreed to certain conditions upon award. First, the proposed project will locate its primary office in Bay County. Putnam also conditions its approval with the provision that 0.25% of its admissions will be persons infected with the HIV virus. Four percent of its patients will be Medicaid or indigent patients. Finally, Putnam has conditioned its approval upon the provision of various special programs such as high tech home health services, a volunteer program, and the establishment of a rural health care clinic.

      2. History or Commitment to Provide Services to Medicaid and Indigent Patients

         1. For Medicare reimbursement purposes, Putnam proposes to maintain a Medicare-only agency and private sister agency which provides services to non-Medicare patients. The private sister agency will provide service to the Medicaid and indigent patients. The costs of providing services to these non-paying or partial paying patients will be absorbed by the agency as a contribution to the community.

         2. The establishment of a private sister agency to handle the non-Medicare patients is common in the home health industry.

         3. As a condition in the application, Putnam will accept up to 3.0% Medicaid patients. Although it stated in its application that it would accept between .5%-1.0% indigent patients, its conditioning of the application on 4.0% Medicaid and indigent patients would necessitate that it accept at least 1.0% indigent (if not more, should the Medicaid patients fall below 3%) in order to meet the 4.0% Medicaid and indigent care condition. The percentages proposed by Putnam are consistent with the statewide average (approximately 95% Medicare) and the District average (approximately 92.1% Medicare). Bay County's average of Medicare patients is approximately 96.4% Medicare. To meet the 4.0% Medicaid and indigent condition, Putnam's average of Medicare patients might have to be less than the Bay County average but not by much. Certainly, meeting the condition is achievable.

         4. The agency's position is that Putnam's Medicaid/indigent

            commitment is not a ground for denial of the application.

      3. Quality of Care

         1. Putnam has continuously owned and operated a licensed Medicare-certified home health agency in District 3 since 1986 and has been JCAHO accredited with commendation status since 1994.

         2. In an effort to continuously provide quality care, Putnam has developed a comprehensive set of policies and procedures to guide its staff, its physicians, volunteers, patients, as well as patients families.

         3. No evidence was presented to suggest that Putnam does not have a history or ability to provide quality care.

      4. Availability of Resources, Including Health Manpower,

         Management Personnel and Funds for Capital and Operating Expenditures

         1. Putnam has provided Medicare-certified home health service to the residents of District 3 for ten years. Putnam will be able to share its existing personnel and operations expertise with the proposed District 2 agency.

      5. Administrative, Managerial, and Operational Personnel

         1. Putnam intends to utilize existing administrative personnel in the start up and overall operation of the proposed agency. These management personnel include the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Data Processing Director, Director of Volunteers, Personnel Director. These experienced personnel will be available to provide valuable management support to the proposed agency.

         2. The proposed agency will be operated by an administrator who will report directly to Putnam's CEO, Alan Anderson. The agency's administrator will be actively involved in budget

            preparation, physician relations, community education, and preparation for regulatory agency surveys.

         3. The proposed agency will rely upon the demonstrated experience of key personnel in its initiation. Ms. Nora Rowsey, experienced in the start-up phases of home health agencies, will personally supervise and implement the start up phase of the proposed District 2 agency.

         4. Putnam intends to hire individuals to work within the proposed agency who already have experience in the provision of the necessary services. Current employees of Putnam's as well as contract personnel of the District 3 agency have indicated a willingness to provide services in Bay County once the application is approve.

      6. Funding and Capital Resources

         1. Putnam projects the total costs of initiating the proposed agency to be approximately $70,000. Putnam has simultaneously applied for two other Medicare-certified home health agencies, in Districts 6 and 7. Each of these projects area also projected to cost approximately $70,000.

         2. Putnam, therefore, has projected costs associated with all three projects of approximately $210,000. Additionally, there is a $10,000 contingency cost related to the District 3 offices bringing the total expenditure for all capital projects of

            $220,000.

         3. Putnam's application includes two letters from First Union National Bank of Florida which substantiate that there are

            funds on hand to finance all of Putnam's capital expenditures, including the District 2 proposed agency.

         4. As of April 18, 1996, Putnam's bank account had a twelve month average balance of $245,949.02. As of April 18, 1996 the accounts of both Putnam and Anderson Home Care Inc., had a combined twelve month average balance of $676,656.93. The evidence established that these funds exist and are available for all proposed capital projects.

         5. In the two years prior to hearing, Putnam showed sound management, significant growth, and a strong financial position. It continues to do so.

         6. In an interoffice memorandum dated May 28, 1996, from Roger L. Bell to Richard Kelly, Health Services and Facilities Consultant, Putnams' financial position was described as follows:

            The current ratio of .62 indicates the current assets are not adequate to cover short term liabilities. The long term debt to equity

            and equity to assets ratios are very weak. This, along with the negative equity make a weak financial position. The profit margin at

            .1% is also very weak, and raises some concern with the applicant's ability to cover operating expenses .

            Putnam Ex. No. 4. This criticism was answered by Putnam. The agency may not have considered certain factors applicable to a predominantly Medicare-reimbursed home health agency. Putnam's current liabilities are payable in a longer term than the receivables are collectible. Furthermore, with provision of 98% Medicare services, which is solely cost reimbursed, there remains only two percent of the operation left to make a profit. A .1%

            profit from the small amount of insurance and private pay patients indicated financial health.

         7. Putnam, moreover, is a viable operation because of its historical success, its knowledge of the industry, its expansion to six locations, its growth in staff, and its growth in patient visits.

         8. Putnam has the resources available to provide the necessary administrative, managerial, and operational manpower needed by the proposed home health agency. AHCA's financial criticisms are unfounded; Putnam has on hand the capital necessary for the accomplishment of the proposed project. Putnam has the experience and know-how to make the proposed project work in District 2's rural areas.

      7. Financial Feasibility

         1. Putnam has the resources to implement this project if approved. Putnam has the same capability that existed when three offices were opened during the period from April 1992 through February 1993, and the same resources when four offices were opened in 1995. In every instance, the new offices were started up with cash on hand from operation.

         2. Mr. Anderson, Putnam's President and sole shareholder and director, testified that he spends much time in the financial area of the operations. As of November 29, 1996, after deducting all accounts payable, Putnam has a cash balance of approximately

            $390,000. Anderson Home Health, Inc. had a balance of approximately $425,000. Mr. Anderson testified that the First Union letters in the application at pages 231 and 232 were correct

            and that Putnam is in even better shape now than when the letters were written.

         3. Putnam is financially feasible in the short term.

         4. AHCA contends Putnam's project is not financially feasible in the long term because the projected visits stay the same in the second year and because it does not project a profit in year two of operation. This fails to take into account Putnam's performance over the past ten years which, as the agency conceded at hearing, is an important consideration .

         5. Mr. Anderson purchased Putnam in 1986. At that time the agency had a single office in Palatka doing 4,000 visits.

            Following Mr. Anderson's purchase of the agency it had grown to over 55,000 visits and close to a hundred employees.

         6. After the success experienced by Mr. Anderson in Palatka, Putnam filed a CON application for District 4, with a proposed principle site in Jacksonville. The District 4 CON was approved by the agency--without any concerns for financial feasibility nor with any concerns for Putnam's cash flows. Without having any experience or referral sources in Jacksonville, Putnam began doing approximately 7,000 visits. The number of visits jumped to 45,000 in the second fiscal year, 123,000 in the third fiscal year, and as of September 30, 1996 the Jacksonville office performed 158,000 visits.

         7. Aside from the extraordinary growth experienced in the Palatka and Jacksonville offices, already discussed, Putnam has opened rural offices also doing very well. The Macclenny office in rural Baker County had over 15,000 visits in the first twelve

            months and is currently averaging over 1800 visits. The Crystal River office in rural Citrus County made over 12,000 visits in its first year and is currently doing approximately 1400 visits a month.

         8. Every new office opened by Putnam or Anderson Home Health since 1991 has been break even or better. Putnam has a proven track record for the successful and profitable operation of new Medicare-certified home health agencies.

         9. Putnam's project is financially feasible in the long

            
            

            term.

      8. Utilization Projections

      1. The application sets forth reasonable utilization

         
         

         projections. Based on Putnam's utilization in the past, there is no reason to believe the projections set forth in the application are or unreasonable or will not be achieved.

         1. Impact on Costs

      2. Putnam is a high tech provider of home health services and will provide some services not currently available or available only in a limited number of agencies.

      3. The impact of approval of Putnam's application on costs in the District will be minimal due to the reimbursement issues associated with Medicare which is cost based.

   4. RHA

      1. A Not-for-Profit Corporation in District II

         1. RHA is not-for-profit corporation whose purpose is to provide a continuum of care to the community. All profits are

            returned to its nursing homes or agencies as a way of continuing to build the programs.

         2. RHA owns two nursing homes in AHCA District II; Riverchase Care Center in Gadsden County and Brynwood Center in Jefferson County. If approved, RHA is proposing to locate its Medicare certified home health agency in existing space within the Riverchase and Brynwood nursing facilities. Both of these facilities are managed and operated by HealthPrime, Inc., a company which operates approximately 40 facilities in 13 states. While RHA is technically the owner and therefore applicant for this CON, HealthPrime would operate the proposed Medicare certified home health agency within the nursing homes.

         3. RHA's home health agency would have two offices. The office located in the Riverchase facility would serve Gadsden, Liberty, Franklin, Gulf, Wakulla, Jackson, Calhoun, Washington, Holmes and Bay Counties. The office located in the Brynwood facility would serve Leon, Jefferson, Madison and Taylor Counties.

      2. Financial Feasibility

         1. The only questions raised by AHCA concerning RHA's financial feasibility went to the ability of RHA to fund this project in conjunction with other CON projects listed on Schedule 2 of its CON application.

         2. The largest project on Schedule 2 of RHA's application was a CON application for a 20 bed addition to Riverchase Care Center. At hearing it was determined that since the filing of the instant home health CON application, the 20 bed application had

            been withdrawn, was no longer viable, and was not being pursued by RHA.

         3. Once AHCA's financial expert learned that the 20 bed addition to the Riverchase Care Center had been administratively withdrawn and that its costs should therefore no longer appear on Schedule 2, questions about the financial feasibility of the project were resolved.

         4. RHA's project was shown to be financially feasible in the short term based upon the financing commitment of HealthPrime.

         5. RHA proved that its assumptions and projections made in its financial analysis are reasonable. These assumptions were based on actual experience in the operation of similar skilled nursing facility based home health agencies, as well as prior experience of other home health agencies in their first two years of operation.

         6. RHA's proposed project shows a net income in years one and two and is financially feasible in both the short and long term.

      3. Availability and Access of Services

         1. To the extent that the number of people needing home health care will increase in the future, there is need for new providers of home health services to provide such availability and access. RHA's willingness to condition its application on service to AIDS, indigent and Medicaid patients can only improve the availability and access to services in the district. In addition, RHA's approval to provide nursing home based home health services is unique to the provision of home health services in District II.

      4. Efficiency

         1. RHA's proposal, which would place its home health agency within its nursing homes, is unique among the applicants in this proceeding. Such an arrangement provides not only an efficient continuum of care to the patients, it also provides efficiencies and cost savings in the sharing of resources.

         2. RHA's proposed project is cost effective because it utilizes existing space and equipment in its nursing homes.

         3. Skilled nursing home based Medicare certified home health agencies are specifically recognized by the Federal Medicare program in their cost reports. Home health reports are filed as a part of the nursing home cost report and there is an allocation of the nursing home's cost to the home health agency. This benefits both the provider and the Medicare program through cost savings.

         4. RHA's cost per visit to the Medicare program of $48 will be substantially less than the District II average of $66 per visit projected for the time RHA will be operational under the applied- for CON.

         5. RHA's proposed project will have no impact on its costs of providing other health care services.

      5. Appropriateness and Adequacy

         1. RHA proposes to provide the entire range of home health services throughout the district. Given the project need in the planning horizon, RHA's proposal is more than adequate to meet the demand for such services.

      6. Quality of Care

         1. An applicant's ability to provide quality care is another important factor in statutory and rule criteria. RHA and HealthPrime have shown, through operation of their nursing homes in Florida, all of which have superior ratings, that they have the ability to provide quality health care.

         2. In addition, HealthPrime, which will actually operate the home health agency, has experience operating four other nursing home based home health agencies.

         3. HealthPrime will utilize its quality assurance programs already in place in its other home health agencies and will seek JCAHO accreditation of this proposed agency.

         4. By combining a home health agency with its existing nursing homes, RHA will improve the case management of its patients by providing vertical integration of its services in a continuum of care. Such continuum of care provides a stability in personnel and providers that are working with the patient.

      7. Economies and Improvements from Joint or Shared Services

         1. As previously discussed, RHA's unique proposal to operate a nursing home based home health agency not only offers a continuum of care for the patient, it also provides fiscal economies to the agency as well as the Medicare program.

      8. Resource Availability

      1. Based on RHA's experience of hiring personnel for its existing nursing homes in the district, there will be no problem in hiring sufficient personnel for RHA's agency.

         1. Fostering Competition

      2. The addition of other Medicare certified home health agencies in a district consisting of 10 counties and only 23 providers will promote increased competition and more options for patients.

   5. Findings Applicable to All Four Applicants

      1. No Fixed Need Pool

         1. The agency has no rule methodology to determine the need for Medicare-certified home health agencies. The agency's most recent home health need methodology was invalidated in Principal Nursing vs. Agency for Health Care Administration, DOAH Case No.

            93-5711RX, reversed in part, 650 So.2d 1113 (Fla. 1st DCA 1995). There is, therefore, no numeric need determination, or "fixed need pool", established by the agency applicable in this proceeding.

      2. District 2

         1. AHCA District 2 is composed of 14 counties. The applicants propose to concentrate their service in various, different parts of the district.

      3. Local and State Health Plan Preferences

         1. District 2 Health Plan

            1. Services to Medicaid and Medically Indigent

               1. The first preference under the District 2 Health Plan provides a preference to applicants with a history of providing services to Medicaid or medically indigent patients or commitment to provide such services in the future.

               2. Mr. Franklin of Care First has such a history. He is an owner of Wakulla Manor, which had a Medicaid occupancy rate of

                  88.09% for the period of July-December, and the administrator of Miracle Hill Nursing Home which had a Medicaid occupancy rate of 95.74% for the same period. In the face of such a record, Care First’s commitment of 7% Medicaid and 1% uncompensated/charity patients might seem to pale. But it is a significant commitment, given the nature of the home health agency business, and one upon which Care First agrees its application should be conditioned.

               3. IHS conditioned its application on 5% Medicaid and 1% charity care.

               4. Putnam conditioned its application on an “Indigent and Medicaid participation equal[ling] 4.0%.” Putnam Ex. No. 1, pg. 51.

               5. Putnam, moreover, proposes a Medicare-only agency. Establishment of a private sister agency, a practice common in the home health care industry, will allow Putnam to provide service to the Medicaid and indigent patients separate from its Medicare-only agency.

               6. RHA has provided a high percentage of Medicaid/charity days at its Riverchase facility (92.10%) and at its Brynwood facility (90.24%). In addition, RHA is willing to condition its CON on the provision of a minimum of 1% of annual visits to indigent care and 5% to Medicaid.

            2. Service to Unserved Counties.

               1. Preference 2 states that “[p]reference should be given to any home health services CON applicant seeking to provide home health care services in any county within the District which is not presently served by a home health agency.” There are no counties

                  within District 2 that are not presently served by a home health agency.

            3. Service Through a County Public Health Unit

               1. Preference 3 states that “[p]reference should be given to a home health services CON applicant seeking to develop home health care services to be provided through a county public health unit in the district in order to more adequately serve the elderly and medically indigent patients who are isolated or unable to travel to permanent health care sites."

               2. Of the four applicants, only IHS of Florida’s application is conditioned on working with public health units.

                  IHS has experience working with public health units, working with them currently in Martin County, Manatee County and Broward County.

                  Nonetheless, IHS of Florida will not be providing its services “through” a public health unit.

            4. Public Marketing Program

               1. Preference 4 states, “[p]reference should be given to a home health services applicant who has a history of providing, or will commit to provide, a public marketing program for services which included pamphlets, public service announcements, and various other community awareness activities. These commitments should be included on the granted CON as a condition of that CON.”

               2. Care First currently markets its services to the community and commits to a public marketing program in the future as a condition of its CON.

               3. IHS of Florida committed to performing at least one community awareness activity per calendar quarter as a condition of

                  its application. It also indicated, moreover, that it would work to develop public service announcements and marketing programs with the help of public health units or any other appropriate vehicle.

                  The latter indication, however, was not made a condition of the application.

               4. Putnam provides educational services to the community, its employees, patients and patients’ families, including the provision of pamphlets, and presenting audio and video tapes as appropriate to the patient and their families. Putnam, however, did not condition its application on a commitment to a public marketing program or commit to such a program in any other way in its application.

               5. RHA stated it would accept a condition on its CON to provide a public marketing program for services, including pamphlets, public service announcements and other community awareness activities. It did not reflect such a condition on the “Conditions” page of the application, but, given its statement that it would accept such a condition, there is nothing to prevent the agency from imposing such a condition should it grant RHA’s application.

            5. Access Requirements

            1. Preference 5 is, “[p]reference should be given to a home health services CON applicant who agrees, as a condition of the CON, to meet the following access requirements for each county in which services are provided: 1) 24 hour local telephone call (or toll-free) contact. 2) 24 hour call/response capability. 3) Maximum on one (1) hour response time following call.

            2. Care First currently meets the requirements of Preference 5 in the counties in which it now provides services, and has committed to continue to meet these requirements as a Medicare certified home health agency in all counties in which it will provide services. Care First has made as conditions of its CON, provision for 24-hour accessibility by answering service and installation of a toll-free access line and maintenance of a log of calls during the hours the agency is closed, including documenting of response time to each call.

            3. IHS of Florida conditioned grant of its CON on a 30 minute response time, and 24-hour phone availability on a toll-free hot line.

            4. Putnam presently provides the services in this preference in its District 3 Medicare certified home health agency and agrees to meet this preference within 90 days of initiating services. It did not, however, make a commitment to meet this preference on the “conditions,” page of its application. There is nothing to prevent the agency from making Putnam’s CON, if granted, conditional upon compliance with this preference.

            5. RHA has agreed to have its CON conditioned to meet the access requirements of Preference 5.

               2. State Health Plan

               1. Service to Patients with AIDS

            6. The first preference under the State Health Plan is that “[p]reference shall be given to an applicant proposing to serve AIDS patients.”

            7. All four applicants are committed to serving AIDS patients.

               1. Full Range of Services.

            8. Preference 2 of the State Health Plan is “[p]reference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area."

            9. There are currently 11 hospital-based Medicare certified home health agencies in District 2. Several of them provide the high tech services which are sometimes needed by discharged hospital patients. Very few referrals for high tech care have been received by D. G. Anthony or Care First since May, 1995, and there is no indication such services are not available in District 2. Care First has identified, however, an unmet need for the pediatric and pre-hospice home health agency services and has conditioned its application on the provision of those services to the community.

            10. IHS of Florida proposes, among other high tech services, infusion therapies, pain management therapies and chemotherapy. There is no evidence, however, that these therapies are not available in District 2.

            11. The same is true of Putnam as to the high tech therapies it proposes to provide. There is no evidence that they are not available in District 2.

            12. Although RHA indicated in its application that it intended to provide the entire range of services that a home health agency can provide, again, there is not evidence that they are not

                available in District 2.

                1. Disproportionate Share Provider History

            13. Preference 3 is “[p]reference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same AHCA service district and proposing to serve such patients within its market area."

            14. Care First, having been formed in March, 1996, did not have a history of providing Medicaid and indigent patients. Care First has committed to 7% of its visits to Medicaid patients, well above the average of existing District 2 agencies of 2-3% Medicaid.

                Care First has committed to 1% of its visits to charity/uncompensated care.

            15. IHS of Florida has committed to 5% Medicaid and 1% charity care. Like Care First, IHS of Florida, as a newly formed corporation, does not have a history of serving a disproportionate share of Medicaid/indigent care patients.

            16. Putnam’s commitment is 3% to Medicaid and 1% to charity care. This commitment will be met through its sister home health agency and not the Medicare-certified home health agency for which the CON is sought.

            17. RHA has committed to set aside 5% total annual visits to Medicaid patients and 1% of annual visits to indigent care. It has a history of providing a disproportionate share of services to Medicaid patients at its two skilled nursing facilities in District 2, Riverchase Care Center in Quincy and Brynwood Center in Monticello.

                1. Underserved Counties

            18. Preference 4 is [p]reference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies.

            19. The rural areas of District 2 are traditionally underserved. Putnam will serve Bay County, an underserved county; the three other applicants will serve rural areas of more than one county in District 2.

                1. Consumer Survey Data

            20. Preference 5 is "[p]reference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction."

            21. Care First has committed to providing such data to the agency.

            22. IHS of Florida will maintain a data base of results of patient satisfaction surveys and make them available to the agency, just as it already does.

            23. Putnam will make available to the agency the results of surveys similar to surveys measuring patient satisfaction Putnam has already developed. Putnam has conditioned its application on providing these surveys to the agencies as well as surveys measuring physician satisfaction.

            24. RHA has cited on its “Conditions” page, “. . . (it) will provide the Agency for Health Care Administration with consumer survey data.”

                1. Quality Assurance Program and Accreditation

            25. The State Health Plan’s Sixth Preference is “[p]reference shall be given to an applicant proposing a comprehensive quality-assurance program and proposing to be accredited by either the National League for Nursing or the Joint Commission on Accreditation of Healthcare Organizations."

            26. Care First included in its application a copy of its Quality Assurance Program which has been in use since May, 1995. The program meets the state and federal licensure and certification requirement and the stringent requirements of JCAHO. Moreover, Care First has conditioned its application upon JCAHO accreditation.

            27. IHS of Florida submitted documentation regarding its Quality Assurance Program through initiatives such as Total Quality Management and Continuous Quality Improvement. It will seek accreditation from JCAHO within one year of receiving its CON.

            28. Putnam, an existing home health agency in District 3 since 1986, has over the years developed and refined a comprehensive quality assurance program which is above the industry standard. The District 3 agency, using its quality assurance program, has attained its JCAHO accreditation “with commendation,” a distinction received by less than 4% of all applicants. Putnam will seek accreditation from JCAHO for its District 2 operation within one year of receiving its CON.

            29. RHA is willing to condition its CON on the provision of a comprehensive quality assurance program and accreditation by the JCAHO.

      4. Need

1. Numeric Need

1. Since there is no published fixed need pool applicable to this proceeding, the parties, other than the agency, developed their own methodologies for determining numeric need. Each of the methodologies employed by the parties was reasonable.

2. After taking note of the statistics for actual patient visit growth in District 2 from 1991 to 1994, Michael Schwartz began with a conservative number of 60,000 new patient visits per year, a number half of the growth for the lowest growth year of that time period. Multiplying that number times the three horizon years of 1994-97 equals 180,000 new patient visits from 1994 which yields a need for 5.2 agencies.

3. The reasonableness of numeric need in excess of four is supported by other factors.

4. After the filing of the four applications at issue in this proceeding, there are two fewer Medicare-certified home health agencies with certificates of need in District 2.

5. At the same time, home health care visits have been on the increase not only in the district as discussed, above, but in the state as well. Statewide, home health care visits grew from 18 million to 22 million between 1991 and 1994.

6. The utilization of home health care agencies is

   increasing because of population growth and an increase in the number of visits per patient.

7. The amount of time spent by patients in the hospital is decreasing. The decrease translates into increased need by patients for visits from home health agencies.

8. The need for home health is going to continue to increase because it is a cost-effective alternative to nursing home placement and hospital care.

9. From 1991 to 1994, the number of home health visits more than doubled: from 369,396 to 869,893. This trend continued in 1995. The recent significant growth in the utilization of home health agencies in District 2 is expected to continue. The growth is attributable not only to a population increase in the district but to increase in the use rate for home health agency services as well.

10. The growth in use rates can be explained, in part, by

    the increase in the senior population (65 and older) and the pressure exerted by managed care for earlier hospital discharges and home health agency services as a viable alternative in some cases to inpatient treatment.

11. The senior population in District 2 is reasonably expected to grow approximately 8% in the five years after 1996, with 15% growth expected reasonably in the 75 to 84 year old population and even higher growth, 25%, in the population over 84 years old.

    2. Other Indications of Need

12. Local physicians have experienced difficulty arranging for the existing home health agencies to provide services to patients located in remote areas of District 2.

13. Specialized groups, such as AIDS patients, would, in all likelihood, benefit from additional home health agencies in District 2. Furthermore, a study conducted by IHS of Florida showed that the district has an unusually high rate of diabetes and in four counties has a diabetes death rate 100% greater than the statewide average.

14. Well Springs home health agency is one of the two Medicare-certified home health agencies to cease providing Medicare-certified home health services after the four applicants in this proceeding filed the applications at issue here. Well Springs was licensed in all 14 counties of District 2 and had physical locations in Franklin, Gadsden, Bay, Leon, Liberty, Taylor and Madison Counties. It had a significant share of the District 2 Medicare certified home health agency market with 13.1% of the 1994 visits, the second highest in the District.

15. With Well Springs discontinuing Medicare-certified home health agency services, a void was left for such services in District 2, particularly in those counties in which Well Springs had a physical presence.

    CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case pursuant to Section 120.57(1) and 408.039(5), Florida Statutes.

17. The applicants have the burden of demonstrating that their applications should be granted. Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985). The award of a Certificate of Need must be based on a balanced consideration of statutory and rule criteria. Department of Health and Rehabilitative Services v. Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1994); Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1988). The weight to be given each criterion is not fixed but varies depending on the facts of each case. Collier Medical Center, Inc., 462 So.2d 83 (Fla. 1st DCA 1985).

18. The Agency argues that the applicants failed to prove that home health services were inaccessible to patients in District 2 in need of those services and, therefore, their applications must be turned down for lack of need. Indeed, the applicants did not prove an accessibility problem. In the absence of rules on the subject of accessibility and a methodology for determining need, however, it was established by reasonable methodology proposed by the applicants, themselves, that there is a need in District 2 for more than four Medicare- certified home health agencies. The need methodologies employed by the applicants were undertaken prior to Well Springs ceasing to operate in District 2 as a Medicare-certified home health agency and the withdrawal of another approved Medicare-certified home health agency, factors which bolster the need established by the applicants for at least four new Medicare-certified home

    health agencies. There are other factors, as well, which bolster the need for at least four Medicare-certified home health agencies in District 2.

19. Application of the legal CON criteria to each of the applicants leads to the conclusion that each proposed project is financially feasible in the short and long term and, on balance, each applicant has established entitlement to a CON for a Medicare-certified home health agency in District 2.

RECOMMENDATION

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

That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8384 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively.

DONE AND ENTERED this 9th day of June, 1997, in Tallahassee, Florida.

DAVID M. MALONEY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1997.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5408

Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5403

Richard Ellis, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5408

W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A.

1315 East Lafayette Street, Suite B Tallahassee, Florida 32301

Mark Emanuel, Esquire

Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway

Fort Lauderdale, Florida 33308

Paul Amundsen, Esquire Amundsen & Moore

502 East Park Avenue Tallahassee, Florida 32301

Theodore E. Mack, Esquire Cobb Cole & Bell

131 North Gadsden Street Tallahassee, Florida 32301

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARE FIRST, INC., )

)

Petitioners, )

)

vs. ) Case Nos. 96-4053

) 96-4054

AGENCY FOR HEALTH CARE ) 96-4055

ADMINISTRATION, ) 96-4056

)

Respondent. )

)

ORDER CORRECTING RECOMMENDED ORDER

Pursuant to Rule 60Q-2.032(2), the Recommended Order rendered in this case on June 9, 1997, is corrected as follows:

That the Agency for Health Care Administration enter its final order granting CON Nos. 8380, 8381, 8382 and 8383 to RHA/Florida Operations, Inc., Care First, Inc., Home Health Integrated Health Services of Florida, Inc., and Putnam Home Health Services, Inc., respectively.

The remainder of the Recommended Order remains unchanged. DONE AND ENTERED this 11th day of June, 1997, in

Tallahassee, Florida.

DAVID M. MALONEY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 11th day of June, 1997.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5408

Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5403

Richard Ellis, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Building III Tallahassee, Florida 32308-5408

W. David Watkins, Esquire Watkins, Tomasello & Caleen, P.A.

1315 East Lafayette Street, Suite B Tallahassee, Florida 32301

Mark Emanuel, Esquire

Panza, Maurer, Maynard & Neel NationsBank Building, Third Floor 3600 North Federal Highway

Fort Lauderdale, Florida 33308

Paul Amundsen, Esquire Amundsen & Moore

502 East Park Avenue Tallahassee, Florida 32301

Theodore E. Mack, Esquire Cobb Cole & Bell

131 North Gadsden Street Tallahassee, Florida 32301

Docket for Case No: 96-004055CON

Orders for Case No: 96-004055CON