STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTHSOUTH OF TREASURE COAST, ) INC., d/b/a HEALTHSOUTH TREASURE ) COAST REHABILITATION HOSPITAL, )

)

Petitioner, )

)

vs. ) Case No. 97-4356

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

) PINECREST REHABILITATION HOSPITAL ) INC., d/b/a PINECREST )

REHABILITATION HOSPITAL, )

)

Petitioner, )

)

vs. ) Case No. 97-4357

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on December 15-17, 1998, in Tallahassee, Florida, before Eleanor

1. Hunter, a duly designated Administrative Law Judge of the Division of Administrative Hearings.

   APPEARANCES

   
   

   For Petitioner Healthsouth of

   Treasure Coast, Inc.: Jennifer Kujawa Graner, Esquire

   Craig Smith, Esquire Panza, Maurer, Maynard

   & Neel

   
   

   For Petitioner

   Pinecrest Rehabilitation

   NationsBank Building, 3rd Floor 3600 North Federal Highway

   Fort Lauderdale, Florida 33308

   Hospital: Michael J. Glazer, Esquire

   C. Gary Williams, Esquire Ausley & McMullen, P.A. Post Office Box 391 Tallahassee, Florida 32302

   
   

   For Respondent

   Agency for Health Care

   Administration: Mark Thomas, Esquire Agency for Health Care

   Administration Fort Knox Building 3

   2727 Mahan Drive, Suite 3431

   Tallahassee, Florida 32308-5403 STATEMENT OF THE ISSUES

   Whether or not there is a need for additional CMR beds at Pinecrest Rehabilitation Hospital based on the special circumstances provision of Rule 59C-1.039 and whether or not, on balance, the application for CON No. 8770 meets the other applicable criteria of the rules and statutes.

   PRELIMINARY STATEMENT

   Pinecrest Rehabilitation Hospital is the applicant for a certificate of need to expand from 90 to 115 comprehensive medical rehabilitation beds in Delray Beach, Florida, Agency for Health Care Administration ("AHCA") District 9. The application was preliminarily denied by AHCA, a position which is supported by Healthsouth of Treasure Coast Rehabilitation Hospital in Vero Beach, Florida. The formal hearing was held on December 15-17, 1997, in Tallahassee, Florida.

   Pinecrest presented the testimony of Paul Echelard, expert in rehabilitation hospital administration; Marc Levinson, M.D., expert in physical medicine and rehabilitation; and Daniel J. Sullivan, expert in health care planning and health care finance. Pinecrest's Exhibits 1-11 and 14, were received in evidence.

   Relevant portions of Exhibits 11 and 12 were read into the record or summarized in testimony. Exhibit 15 was not received in evidence, but considered more appropriate for legal argument.

   Pinecrest's Exhibits 16-21 were received in evidence over objection to any discussion related to travel times.

   Healthsouth presented the testimony of Mark Richardson, expert in health care planning; Denise McGrath, the Healthsouth Treasure Coast hospital administrator; and Rick Knapp, expert in health care finance. Healthsouth's Exhibits 1-13 were received in evidence.

   AHCA presented the testimony of Elfie Stamm, expert in health planning. AHCA's Exhibits 1 and 2 were received in evidence.

   The transcript of the hearing was received on January 13, 1998. After Healthsouth's Motion for Extension of Time to File Proposed Recommended Orders ("PROs") was granted, the PROs were received on January 30, 1998.

   FINDINGS OF FACT

   
   

   1. Pinecrest Rehabilitative Hospital ("Pinecrest") is a 90-bed comprehensive medical rehabilitation ("CMR") hospital

      which is physically connected to the Delray Medical Center ("Delray") in Delray Beach, Palm Beach County, Florida.

      Pinecrest, Delray, a 120-bed nursing home, and a 102-bed psychiatric hospital are located on the Delray medical campus and are subsidiaries of Tenet Healthcare Corporation ("Tenet").

      Tenet owns 131 acute care hospitals and 25 specialty hospitals in the United States.

   2. Delray, a 235-bed acute care hospital, is the designated trauma center for southern Palm Beach County. Unlike most acute care hospitals which average occupancy rates of 50 percent, Delray reports 85 to 90 percent occupancy. Catering to an older population within its service area, Delray's services include cardiac and orthopedic surgery, but not obstetrics.

   3. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of the certificate of need ("CON") program. After determining that no need exists for additional CMR beds in District 9, AHCA preliminarily denied Pinecrest's application for CON 8770. Palm Beach County is located in AHCA District 9, which also includes to the north, Martin, Indian River, St. Lucie and Okeechobee Counties. Approximately 80 percent of the population in District

      9 is concentrated in Palm Beach County.

      
      

   4. The existing District 9, CMR service providers are St. Mary's Hospital ("St. Mary's"), Lawnwood Regional Medical Center ("Lawnwood"), and Healthsouth of Treasure Coast ("Healthsouth"). At the time Pinecrest filed the application for CON 8770, there were 183 licensed and 73 approved CMR beds at the existing District 9 facilities.

   5. Like Delray, St. Mary's is an acute care hospital which is a county-designated trauma center. St. Mary's is located in

      the City of West Palm Beach, approximately 25 miles north of Delray Beach. St. Mary's has recently expanded from 23 CMR beds to 50 beds, and is accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF) as a comprehensive inpatient category one hospital.

   6. Lawnwood is a 365-bed acute care hospital in Fort Pierce, in St. Lucie County. Lawnwood recently opened a 26-bed CMR unit.

   7. Healthsouth is a specialty rehabilitation hospital which, like Pinecrest, was previously owned by National Medical Enterprises ("NME"). NNE operated the facility as Treasure Coast Hospital before selling it to the Healthsouth Corporation. It is located in Vero Beach, in Indian River County, approximately a two-hour drive north of Delray Beach. Healthsouth has recently increased its capacity from 70 to 90 beds. Healthsouth treats some brain and spinal cord patients and is accredited by CARF as a comprehensive inpatient category one hospital. Primarily, Healthsouth treats stroke and orthopedic patients, along with some cardiac, neurological and ventilator patients. Healthsouth, as described by its expert, is primarily an Indian River provider with a market presence in the remaining three northern counties.

   8. Pinecrest opened in April 1986, with 60 beds, and expanded to 90 beds in August 1993. Within ten days of opening the additional 30 beds, Pinecrest exceeded and has continued to exceed 90 percent occupancy. The existing 90 beds are organized

      into a 30-bed stroke unit, a 30-bed orthopedic and pain unit, and a 30-bed medically complex patient unit. Separate therapy and treatment pods serve the different kinds of patients. The facility includes an outpatient unit, one of seven operated by Pinecrest. Each of the remaining outpatient centers is located in approximately 15-minute driving increments from the hospital with the most distant from Pinecrest located on the same street as St. Mary's, in West Palm Beach. Pinecrest is a state- designated vocational rehabilitation facility, with CARF accreditation in categories one (medical rehabilitation programs) and three (skilled nursing), and for specialized rehabilitation programs for spinal cord injuries, pain management, and brain injuries.

   9. The staff at Pinecrest includes speech, respiratory, occupational and physical therapists. The medical staff at Pinecrest has approximately 250 physicians, sixteen specializing in physical medicine and rehabilitation, or physiatry.

   10. Pinecrest's inpatients have an average length of stay (ALOS) of 14 to 15 days. Occupancy levels ranged from 93.7 percent in 1994 to 94.6 percent in 1996. At the reported occupancy levels in the mid-90 percent, Pinecrest is effectively full, taking into consideration the logistics of discharge planning and admissions, and the need to place patients of the same gender together. In addition, Health Care Finance Administration ("HCFA") rules dictate the appropriate diagnoses

       for 75 percent of the patients in CMR hospitals. Approximately,

       
       

       80 percent of the Pinecrest patients reside in southern Palm Beach County, in general in the areas of Delray Beach, Boynton Beach, and Boca Raton. In 1996, a total of 4,790 patients were referred to Pinecrest, of which 2,078 were admitted. In the same year, 119 patients were refused admissions to Pinecrest due to a lack of an available bed, in addition to those whose admissions were delayed and those who were rejected to maintain compliance with HCFA guidelines.

   11. Healthsouth and AHCA contend that no need exists for Pinecrest's proposed expansion based on zero numeric need using the CMR rule methodology, a failure to meet special circumstances listed in the CMR rule, recent openings of new beds in the District, and projected future constraints on CMR utilization.

       Numeric Need

       
       

   12. For the 1997 batching cycle in which the application for CON 8770 was filed, AHCA published a fixed need for zero additional CMR beds in AHCA District 9. The need formula indicated a need for 234 CMR beds for the July 2002 planning horizon, as compared to 183 licensed and 73 approved, or a total of 256 CMR beds in February 1997. In the 183 existing CMR beds, historically occupancy rates have averaged 94 percent.

       Special Circumstances

       
       

   13. Rule 59C-1.039(5)(e), Florida Administrative Code, lists special circumstances for the issuance of a CON to expand

       an existing facility in the absence of numeric need, as follows:

       
       

       . . . if the occupancy rate of the hospital's licensed comprehensive medical rehabilitation inpatient beds was at least 90 percent for at least two consecutive calendar quarters during the 12-month period ending 6 months prior to the beginning date of the quarter of the publication of the fixed bed need pool; and at least one of the following conditions is also met:

       
       

       1. The applicant submits evidence that it has a specialty inpatient rehabilitation service, accredited as a specialty by the Commission on Accreditation of Rehabilitation Facilities (CARF), that is not available elsewhere in the district, and the applicant's high occupancy occurred in the specialty rehabilitation service beds; or

          
          

       2. The applicant is a disproportionate share hospital as determined consistent with the provisions of section 409.911, Florida Statutes, and the applicant submits evidence that it has been providing both Medicaid and charity care days in its comprehensive medical rehabilitation inpatient beds. (Emphasis added).

   14. The three requirements related to occupancy rate, CARF accreditation, and high occupancy in specialty rehabilitation service beds are at issue in this proceeding. The alternative provision related to disproportionate share providers, does not apply to Pinecrest, since CMR hospitals cannot participate in the disproportionate share program.

   15. Pinecrest meets the requirement of having an occupancy rate of at least 90 percent for at least two consecutive quarters in the year ending 6 months before the fixed need publication.

       In fact, Pinecrest has exceeded 90 percent occupancy for the last

       20 consecutive quarters.

       
       

   16. The parties agree that Pinecrest also meets the accreditation requirement by having CARF-accredited programs to treat traumatic brain injuries and spinal cord injuries, the only ones in the District.

   17. The parties disagree over the appropriate interpretation of the phrase in the rule which requires that

       ". . . the applicant's high occupancy occurred in the specialty rehabilitation service beds." Healthsouth and AHCA interpret the provision as requiring high occupancy in the CARF-accredited services beds, consistent with the requirement that the applicant provide CARF-accredited services not otherwise available in the district. AHCA's expert testified that the provision is meaningless unless the occupancy occurs in CARF-specialty beds and the additional beds will be allocated to the specialty services. AHCA determined that relatively few patients, an average daily census (ADC) of approximately 5 to 10 patients at the time of hearing, are brain and spinal cord injury patients.

       In fact, the experts agreed that fortunately, largely due to the use of seat belts, such injuries are declining. At most, approximately 4 percent of total Pinecrest patients have brain injuries and 8 to 10 percent have spinal cord injuries.

   18. The uncertainty in the interpretation of the rule arises because CARF accredits programs but does not designate beds. Pinecrest typically treats brain and spinal cord injury

       patients within its 30-bed medically complex patient unit. It is mathematically impossible to calculate an occupancy rate without a defined universe of brain and spinal cord beds. However, like CARF's accreditation of programs, Florida also issues CONS or licenses for general CMR beds and services but not for any CARF- accredited CMR subspecialties. Pinecrest's administrator was asked if he could designate certain beds for brain or spinal cord patients and conceded that he could. However, by doing so he could also manipulate the occupancy rate which would not assist in a rational application of the provision.

   19. Healthsouth's expert planner relied on the declining incidence of serious brain and spinal cord injuries, decreasing lengths of stay, and the proliferation of CMR and other categories of subacute beds in the District as evidence of the absence of need for Pinecrest's proposal. The trend towards a younger and younger population mix in Palm Beach County, although the number of people over 65 years old is growing, was also suggested as an indication of no need. Pinecrest's financial forecast also confirms an expected decline in ALOS from 14 to 15 days to 12 to 13 days in the second year of operating the additional CMR beds.

   20. The special circumstances rule does not require applicants to show need for the CARF sub-specialty services. Nothing in the rule establishes a means to determine the need for CARF program beds. Similarly, Subsection (b) of the special

       circumstances provisions does not require disproportionate share hospitals to show need based solely on Medicaid and charity care. In addition, the CMR rule defines "specialty bed" as "a category of hospital inpatient beds for which the agency has promulgated a separate rule specifying need determination criteria, including

       . . . comprehensive medical rehabilitation inpatient beds regulated under the rule."

   21. The special circumstances rule, by title and content, applies to the demand for additional beds in both general and CMR hospitals. One reasonable, although redundant interpretation is that the bed occupancy provision applies to general acute care hospitals. That is, general acute care hospitals must show a high occupancy in CMR beds in order to demonstrate a demand for additional CMR beds. Alternatively, as suggested by the expert for Pinecrest the requirement is satisfied by the uniformly high utilization of the facility as a whole, including the unit in which the subspecialty services are provided. Brain and spinal cord injury patients are contributing to the high occupancy in the medically complex unit to the potential detriment of other patients of the same type who seek admission to Pinecrest.

   22. Pinecrest meets the requirements of the special circumstances rule because of its occupancy rate in excess of 90 percent and its CARF-accredited specialty services which are not otherwise available in the district. The fact that Pinecrest is full is, in and of itself, a limitation on its ability to provide

       additional brain and spinal cord rehabilitation services.

       
       

   23. Pinecrest also showed a maldistribution of CMR beds in District 9. For example, Palm Beach County, with approximately 1 million people has 143 of the total, while the four northern counties, with approximately 400,000 people have 116 CMR beds. Constraints on available capacity are reflected by the fact that the lowest use rates in the District are in Palm Beach County.

       Number of Additional Beds

       
       

   24. The past increases in District 9 use rates whenever CMR beds are added to the District 9 inventory is further evidence of unmet demand due to capacity constraints. In adjacent District

       10 for Broward County, the bed-to-population ratio is 102 as compared to 73.5 in District 9, and 74.5 state-wide. The population 65 and over has a use rate which is approximately 33 percent higher in District 10 than in District 9, and 50 percent higher than state-wide. The population of District 9 is approximately 1.45 million as compared that of District 10 which is approximately 1.42 million. In 1997, the 65 and over population of District 9 was 348,122, and 269,331 in District 10.

   25. Once the special circumstances threshold is met, the maximum number of additional beds is determined by a formula in the CMR rule. The formula calculates the facility's historical percentage of the total district CMR patient days applied to the total projected future CMR patient days. Since Pinecrest provided approximately 40 percent of total District 9 CMR patient

       days in 1995 to 1996 (for the time periods specified in the rule), the rule assumes that it will also do approximately the same proportion of the projected 72,600 CMR days in the planning horizon year of 2002. The result is a need for an additional

       25 beds at Pinecrest.

       
       

   26. The approach used in the formula is also consistent with the use of total CMR bed occupancy rather than CARF- specialty program occupancy to determine special circumstances.

       Adverse Impact

       
       

   27. District 9 CMR providers have the following primary service areas (from North to South) as determined by the origin of 85 percent of their patients:

       Healthsouth - southern Brevard, Indian River, Okeechobee, St. Lucie, and Martin Counties;

       
       

       Lawnwood (using the acute care service area to estimate the CMR service area) - St. Lucie and Okeechobee Counties;

       
       

       St. Mary's - northern Palm Beach County; and Pinecrest - southern Palm Beach County

   28. The service area overlap between St. Mary's and Pinecrest is attributable to fewer than 10 percent of total patients. Pinecrest averages an admission of one patient a month from the trauma center at St. Mary's. Over 60 percent of the referrals to Pinecrest originate at Delray and Boca Raton Community Hospital (BRCH), which is approximately five to eight miles from the Delray campus. BRCH has 394 licensed beds, with approximately 70 percent of its patients age 65 and over. For patients referred for rehabilitation, stays at BRCH are lengthened as a result of beds being unavailable at Pinecrest. The BRCH Director of Social Services concludes that, despite an approved CON to add 10 skilled nursing beds at BRCH, a need exists to treat patients requiring more intense therapy at Pinecrest. An annualized number of approximately 4 to 5 Palm Beach County residents are treated at Healthsouth. The primary service area for Pinecrest is southern Palm Beach County, an area generally bound on the north by Okeechobee Boulevard and on the south by the Palm Beach/Broward County line. No overlap exists between service areas of Pinecrest and Lawnwood or Healthsouth. Pinecrest does not have any residents of either Indian River or St. Lucie Counties on staff and does not specifically recruit in those Counties.

   29. Although conceding that it does not currently have an overlapping service area with Pinecrest, Healthsouth assumes that Pinecrest will expand into its service area, particularly into

       Martin County, in order to fill new beds. Healthsouth projected a loss of 64 to 136 patients per year due to the addition of 25 beds at Pinecrest. The volume loss is equivalent, according to Healthsouth's expert, to approximately $285,000, or the loss of a contribution margin of $163.00 per patient day in the second year of operation. The impact analysis is based on the assumption that Pinecrest can achieve a major expansion in service area crossing northern Palm Beach County and reaching into Martin or St. Lucie Counties. It is not reasonable to expect Pinecrest to achieve such expansion into Martin County with St. Mary's and Lawnwood having geographically intervening service areas.

   30. Healthsouth also raises questions whether the demand for new beds exists in Pinecrest services area and whether the pool of CMR patients will stay constant or decline. The demand in the Pinecrest service area is established based on its referrals from Delray and BRCH, the suppressed demand due to capacity constraints, and the maldistribution of beds in the District. Based on projected growth in the population 65 and over, it is reasonable to conclude that the demand for CMR services will also increase over time.

   31. In March 1997, Indian River Memorial opened a 20-bed skilled nursing unit within a city block of Healthsouth. At the same time, Healthsouth maintained an ADC of 69.81 patients in 70 beds. In September 1997, Healthsouth increased from 70 to 90 beds and projected 93.2 percent overall occupancy for 1997. The

       ADC at Healthsouth for November 1997 was over 75 patients. At the time of the final hearing, Healthsouth had a census of 84 patients in the 90 beds.

   32. A total of 256 CMR beds were licensed and operational, at the time of the hearing, with no effect on the occupancy at Pinecrest.

   33. Based on the historical experience with the addition of new skilled nursing units and CMR beds in District 9 and the demand for services at Pinecrest, the projections of any adverse impact on Healthsouth are rejected as remote and highly speculative.

       Local and State Health Plans

       
       

   34. The local health plan factors favor applicants with support from other health care providers and who show a commitment to Medicaid/Indigent and handicapped population groups. Pinecrest's proposal has the support of unrelated and potentially competitive providers as well as the large network of other Tenet subsidiaries. Pinecrest's existing Medicaid and charity commitment of 2.67 percent has been met and is proposed to be extended to the additional 25 beds if CON 8770 is approved. Approximately 75 percent of Pinecrest's patients are participants in the Medicare program, but Pinecrest also treats patients funded by the health care district and the county division of vocational rehabilitation.

   35. The state health plan preference for the conversion of excess acute care beds and for disproportionate share hospitals are inapplicable. Pinecrest does not meet the preference for teaching hospitals, although it has numerous teaching

       affiliations, or for proposing to offer services not currently offered in the District, although it is the only CARF-accredited

       provider. Pinecrest meets the preference for operating existing outpatient facilities.

       Other Statutory Criteria

       
       

   36. Judging by the demand as demonstrated by the suppressed use rate and the historical failure of SNU's to affect the demand for CMR beds in the district, Pinecrest's proposal will increase the availability and accessibility to CMR services in the district. Additional beds at Pinecrest will increase its efficiency and utilization. ACHA and Healthsouth argue that since CMR is a tertiary service with a two-hour travel standard, which is met in District 9, existing CMR programs are accessible. In fact, they are not accessible because of high utilization and distinct medical services area patterns in the district.

   37. Healthsouth maintains that additional CMR beds and hospital-based SNUs offer alternatives to the Pinecrest proposal. The separate and distinct service areas of the existing CMR providers and their occupancy rates demonstrate that they are not viable alternatives. For example, discharge planners at Tenet- owned Palm Beach Gardens, an acute care hospital in northern Palm Beach County, typically refer rehabilitation patients to St. Mary's, not to Pinecrest despite common ownership. Pinecrest also presented evidence of the differing intensities of therapies provided at Pinecrest and at Tenet-owned Largo Vista, a 120-bed skilled nursing facility on the Delray campus. Pinecrest admits approximately half of the 4,000 patients referred to it each

       year.

   38. The parties stipulated that Pinecrest satisfies the criteria related to quality of care. As one indication of the quality of its programs, Pinecrest discharges 92 percent of its patients to their homes while nationwide 70 percent of rehabilitation patients are discharged home.

   39. Considering its position as a referral hospital in the Tenet organization and its location on a medical campus, Pinecrest plays a central role in offering a continuum of care within the multilevel system. That position will be enhanced by the addition of beds to assure its continued availability and the efficiency of its operation.

   40. The services proposed by Pinecrest are needed in Palm Beach County and are not intended to serve residents of adjoining areas or outside the district.

   41. The expected cost of the Pinecrest addition, a third floor to its existing two-story building, is $3,253,710. Pinecrest will add more private rooms to accommodate more medically complex patients and the equipment needed in their care and treatment. The parties stipulated that Pinecrest has the funds necessary to accomplish the project and that the project will be financially feasible.

   42. Although Pinecrest included in its application a substantial list of affiliations with health maintenance organizations ("HMOs"), Pinecrest is not itself a HMO.

   43. The parties stipulated that the construction plans and

       costs for CON Number 8770 are reasonable. No less costly or more appropriate alternative to the expansion of Pinecrest is available. Without the expansion of Pinecrest, problems in the availability of CMR services for all types of patients treated at Pinecrest, including those with brain or spinal cord injuries, are reasonably anticipated due to high rates of utilization.

       Other Rule Criteria

       
       

   44. Requirements in the rules related to quality of care, including organization, staffing, and services are met based on the stipulation that Pinecrest meets the statutory quality of care criterion. In addition, with the correction of transposed staffing numbers in the application, proposed staffing is reasonable.

   45. Pinecrest also included in its application the data required by rule and necessary for the agency to determine its compliance with existing agency rules. The rule giving a preference for a trauma center is not met by Pinecrest, although adjacent Delray is a trauma center.

       Factual Conclusion

       
       

   46. Pinecrest has demonstrated that 25 additional CMR beds are needed at Pinecrest to serve District residents, that its proposal complies with most of the applicable review criteria, and that no adverse effects will result from the approval of CON 8770.

       CONCLUSIONS OF LAW

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

   48. Pinecrest, as the applicant, has the burden of proving its entitlement to a certificate of need (CON), based on a balanced consideration of the criteria. Boca Raton Artificial Kidney Center, Inc. v. Department of Health Rehabilitative Services, 475. So. 2d 260 (Fla. 1st DCA 1985); Florida Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981).

   49. One of the significant disputed issues in this case is the interpretation and application of Rule 59C-1.039(5)(e), Florida Administrative Code, and, in particular, that portion of the rule dealing with the occupancy of "specialty rehabilitation service beds." Pinecrest contends that this provision is satisfied by the utilization of its spinal cord and head injury patients, along with other patients in the medically complex unit and the overall extremely high utilization throughout every unit in the hospital. AHCA contends that high utilization must occur in beds specifically designated for CARF accredited specialty services, although neither the State of Florida nor CARF designates or licenses beds for specialized services within a CMR hospital. AHCA's contention that this portion of the CMR rule is only intended to result in the approval of beds for specialized

       CMR services is contrary to the plain language of the rule that imposes no such limitation. AHCA's interpretation is also inconsistent with the subsection of the rule which applies to disproportionate share hospitals. Despite any deference that may be given to an agency's interpretation of its own rule, the CMR rule cannot be read in the manner contended by the Agency in this case. Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 493 So. 2d 1055 (Fla. 1st DCA 1986).

   50. The Agency's interpretation is mathematically impossible to determine and no applicant can ever satisfy the provision in a rational manner. More rational interpretations are either (1) the provision applies to general acute care hospitals which have some CMR beds, or (2) an applicant successfully demonstrates consistency, by meeting the overall occupancy and unique CARF-specialties requirements, and by demonstrating the need, as prescribed by the methodology in the rule, for a specific number of additional CMR beds.

   51. Even if this "subspecialty bed" provision is not satisfied and despite the absence of any numeric need under the CMR rule methodology, Pinecrest has clearly and convincingly demonstrated the need for the 25 additional CMR beds based on the distinct markets for CMR services in District 9, the maldistribution of CMR beds within the district, the extremely high historical utilization at Pinecrest, delays in admissions,

and the lack of appropriate available or accessible alternatives. These "not normal" factors establish a need for the additional 25 beds proposed by Pinecrest. The Petitioner in this case has a very similar situation as that of the Petitioner based on the reported facts, in Healthsouth Rehabilitation of Florida, Inc. v. Agency for Health Care Administration, DOAH Case No. 92-5099 (R.O. 5/20/93), although no final agency action on the Recommended Order is available due to a settlement agreement.

1. Despite the two-hour travel time standard contained in the CMR rule, which is a maximum objective, not a minimum, it is appropriate to consider the actual market areas for CMR services given the particular factual circumstances of each case. See Subsection 408.035(1)(b), Florida Statutes; and South Broward Hospital District d/b/a Memorial Hospital v. Agency for Health Care Administration et al., DOAH Case No. 93-4881 (R.O. January 20, 1992).

2. It is also appropriate to consider, as a "not normal" circumstance, high utilization at an existing provider despite the existence of other either recently opened or approved beds at other providers. Bethesda Memorial Hospital, Inc. v. Agency for Health Care Administration, et al., 18 FALR 2330, DOAH Case No. 95-0730, (AHCA December 13, 1995).

3. Pinecrest's application satisfies the need-related criteria found in Subsections 408.035(1)(a), (b), (d), and (f), Florida Statutes.

4. Pinecrest is not a teaching hospital nor an HMO, therefore, not favored as a provider pursuant to Subsections 408.035(1)(g), and (j), Florida Statutes.

5. Pinecrest has the resources, including a reasonable staffing plan and the ability to recruit staff, to meet the requirements of Subsection 408.035(1)(h), Florida Statutes.

6. Pinecrest has provided evidence of the adequacy of its past and proposed commitment to Medicaid and indigent patients, satisfying the criteria in Subsection 408.035(1)(n), Florida Statutes.

7. Based on the scope of services and facilities provided by Pinecrest and its sister facilities, approval of this application satisfies the criteria related to a continuum of care and the economies of joint operations in Subsection 408.035(1)(e),and (o), Florida Statutes.

8. The criteria in Subsection 408.035(2), Florida Statutes, for new inpatient services are arguably not applicable, but are satisfied by the Pinecrest application.

9. The application satisfies the remaining criteria in Rules 59C-1.030 and 59C-1.039, Florida Administrative Code, except that Pinecrest is not a trauma center.

10. On balance, the addition of 25 CMR beds at Pinecrest is justified by the "special circumstances" portion of the CMR rule and by other "not normal" circumstances that exist in the district.

11. Subsection 408.039(5)(b), Florida Statutes, restricts standing to applicants in the same batching cycle, or existing health care facilities with an established program that will be substantially affected by the issuance of the CON. To be substantially affected, Healthsouth had to demonstrate that it will suffer injury in fact of sufficient immediacy, and that the injury is within the zone of interest to be protected by this proceeding. Agrico Chemical Company v. Department of Environmental Regulation, 406 So. 2d 478 (Fla. 2nd DCA 1981), pet. for rev. den., 415 So. 2d 1361 (Fla. 1982). Based on the evidence produced at the final hearing, Healthsouth has failed to demonstrate that it will be substantially affected by the addition of 25 beds to Pinecrest, based on speculative evidence of an adverse impact. Consequently, Healthsouth has failed to demonstrate its standing in this proceeding.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered approving the issuance of Certificate of Need Number 8770 for the addition of 25 comprehensive medical rehabilitation beds at Pinecrest Rehabilitation Hospital, and dismissing Healthsouth of Treasure Coast, Inc.'s Petition for Formal Administrative Hearing for failure to establish its standing in this proceeding.

DONE AND ENTERED this 22nd day of April, 1998, in Tallahassee, Leon County, Florida.

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of April, 1998.

COPIES FURNISHED:

Sam Power, Agency Clerk

Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

Paul J. Martin, General Counsel Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Mark Thomas, Esquire

Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Jennifer Kujawa Graner, Esquire Thomas Panza, Esquire

Panza, Maurer, Maynard & Neel NationsBank Building, 3rd Floor 3600 North Federal Highway

Fort Lauderdale, Florida 33308

Michael J. Glazer, Esquire

C. Gary Williams, Esquire Ausley & McMullen, P.A. Post Office Box 391 Tallahassee, Florida 32302

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.

Docket for Case No: 97-004356CON

Orders for Case No: 97-004356CON