STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BEVERLY ENTERPRISES - FLORIDA, ) INC., d/b/a BEVERLY GULF )
COAST - FLORIDA, INC., )
)
Petitioner, )
)
vs. ) Case No. 97-5432
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; REGENTS PARK, ) INC.; and WHITEHALL BOCA, an )
Illinois Limited Partnership, )
)
Respondents. )
) HEALTH CARE AND RETIREMENT )
CORPORATION OF AMERICA, )
)
Petitioner, )
)
vs. ) Case No. 97-5434
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; WHITEHALL BOCA, ) d/b/a WHITEHALL BOCA RATON; and ) REGENTS PARK, INC., )
)
Respondents. )
) HEALTH CARE AND RETIREMENT ) CORPORATION OF AMERICA, d/b/a ) HEARTLAND HEALTH CARE AND ) REHABILITATION CENTER-BOCA RATON, )
)
Petitioner, )
)
vs. ) Case No. 97-5435
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; WHITEHALL BOCA, ) d/b/a WHITEHALL BOCA RATON; and ) REGENTS PARK, INC., )
)
Respondents. )
)
HERITAGE PARK OF WEST )
DELRAY, LTD., )
)
Petitioner, )
)
vs. ) Case No. 97-5436
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent. )
) HERITAGE PARK OF WEST )
DELRAY, LTD., )
)
Petitioner, )
)
vs. ) Case No. 97-5437
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent. )
) LIFE CARE HEALTH RESOURCES, INC., )
)
Petitioner, )
)
vs. ) Case No. 97-5438
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION and REGENTS )
PARK, INC., )
)
Respondents. )
) MANOR CARE OF BOYNTON BEACH, ) INC., )
)
Petitioner, )
)
vs. ) Case No. 97-5439
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; WHITEHALL BOCA, )
an Illinois Limited Partnership; ) and REGENTS PARK, INC., )
)
Respondents. )
)
MARRIOTT SENIOR LIVING SERVICES, ) INC., )
)
Petitioner, )
)
vs. ) Case No. 97-5441
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; MARINER HEALTH ) CARE OF ORANGE COUNTY, INC.; ) NATIONAL HEALTHCARE, INC.; ) HERITAGE PARK OF WEST DELRAY, ) LTD.; BEVERLY ENTERPRISES - ) FLORIDA, INC.; VANTAGE ) HEALTHCARE CORPORATION; WHITEHALL )
BOCA, an Illinois Limited ) Partnership; ARBOR HEALTH CARE ) CORPORATION; HEALTH CARE AND ) RETIREMENT CORPORATION OF ) AMERICA; MANOR CARE OF BOYNTON ) BEACH, INC.; FIRST HEALTHCARE ) CORPORATION; LIFE CARE HEALTH ) RESOURCES, INC.; and REGENTS ) PARK, INC., )
)
Respondents. )
) VANTAGE HEALTHCARE CORPORATION, )
)
Petitioner, )
)
vs. ) Case No. 97-5443
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; REGENTS PARK, ) INC.; and WHITEHALL BOCA, an )
Illinois Limited Partnership, )
)
Respondents. )
)
REGENTS PARK, INC., )
)
Petitioner, )
)
vs. ) Case No. 97-5698
)
AGENCY FOR HEALTH CARE ) ADMINISTRATION; WHITEHALL BOCA, )
an Illinois Limited Partnership; ) MANOR CARE OF BOYNTON BEACH, ) INC.; HERITAGE PARK OF WEST ) DELRAY, LTD.; HEALTH CARE AND ) RETIREMENT CORPORATION OF )
AMERICA; HEALTH CARE AND )
RETIREMENT CORPORATION OF ) AMERICA, d/b/a HEARTLAND HEALTH ) CARE AND REHABILITATION CENTER - ) BOCA RATON; MARINER HEALTH CARE ) OF ORANGE CITY, INC.; ARBOR ) HEALTH CARE COMPANY; LIFE CARE ) HEALTH RESOURCES, INC.; MARRIOTT ) SENIOR LIVING SERVICES, INC.; ) NATIONAL HEALTH CARE, L.P.; ) BEVERLY ENTERPRISES-FLORIDA, ) INC.; and VANTAGE HEALTHCARE ) CORPORATION, )
)
Respondents. )
)
WHITEHALL BOCA, an Illinois ) Limited Partnership, d/b/a )
WHITEHALL BOCA RATON, )
)
Petitioner, )
)
vs. ) Case No. 97-5699
) MARINER HEALTH CARE OF ORANGE, ) INC.; NATIONAL HEALTHCARE, L.P.; ) HERITAGE PARK OF WEST DELRAY, ) LTD.; BEVERLY ENTERPRISES- ) FLORIDA, INC.; VANTAGE HEALTHCARE ) CORPORATION; ARBOR HEALTH CARE ) COMPANY; HEALTH CARE AND )
RETIREMENT CORPORATION OF ) AMERICA; MANOR CARE OF BOYNTON ) BEACH, INC.; LIFE CARE HEALTH ) RESOURCES, INC.; HEALTH CARE AND ) RETIREMENT CORPORATION OF ) AMERICA, d/b/a HEARTLAND HEALTH ) CARE AND REHABILITATION CENTER- ) BOCA RATON; and MARRIOTT SENIOR ) LIVING SERVICES, INC., )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on May 6-8, 11-14, 18-22, 26-29, and June 2, 1998, at the Division of Administrative Hearings, before Eleanor M. Hunter, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioners Beverly Enterprises - Florida, Inc.,
and Vantage Healthcare Corporation:
Douglas L. Mannheimer, Attorney Jay Adams, Attorney
Broad & Cassel
215 South Monroe Street, Suite 400
Tallahassee, Florida 32301
For Petitioners Health Care and Retirement Corporation of America, d/b/a Heartland Health Care and Rehabilitation Center-Boca Raton:
Alfred W. Clark, Attorney
117 South Gadsden Street, Suite 201 Tallahassee, Florida 32301
For Petitioner Heritage Park of West Delray, Ltd.:
Robert G. Schemel, General Partner 5858 Heritage Park Way
Delray Beach, Florida 33484
For Petitioner Life Care Health Resources, Inc.:
R. Bruce McKibben, Attorney Michael Ross, Attorney
Post Office Box 1798 Tallahassee, Florida 32302-1798
For Petitioner Manor Care of Boynton Beach, Inc.:
James C. Hauser, Attorney Skelding, Labasky, Corry, Eastman,
Hauser, Jolly & Metz, P.A. Post Office Box 669 Tallahassee, Florida 32302
For Petitioner Marriott Senior Living Services, Inc.:
Robert D. Newell, Attorney Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
For Petitioner Regents Park, Inc.:
Theodore Mack, Attorney Powell & Mack
803 North Calhoun Street Tallahassee, Florida 32303
and
W. David Watkins, Attorney Watkins, Tomasello & Caleen, P.A. Post Office Box 15828 Tallahassee, Florida 32317-5828
For Petitioner Whitehall Boca:
R. Terry Rigsby, Attorney Blank, Rigsby & Meenan, P.A.
204 South Monroe Street Tallahassee, Florida 32301
For Respondent Agency for Health Care Administration:
Richard M. Ellis, Attorney
Agency for Health Care Administration Fort Knox Building 3
2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308-5403 STATEMENT OF THE ISSUES
Which, if any, of the proposals of the co-batched applicants meet the criteria for the issuance of certificate(s) of need in response to the projected need for 168 additional community nursing home beds in Palm Beach County, for the year 2000 planning horizon.
PRELIMINARY STATEMENT
In 1997, the Agency for Health Care Administration (AHCA) published a fixed need for 168 additional community nursing home beds in Palm Beach County. In response, AHCA received a number of applications for certificates of need (CONs). Proposals included the construction of new facilities, the addition of beds to existing facilities, the conversion of other types of beds to nursing beds, and combinations of those. The following applications were the subject of the comparative review administrative hearing:
CON Number 8861 to Marriott Senior Living Services, Inc. (Marriott), to construct a 45-bed skilled nursing home within a senior living community which will also have 119 assisted living
beds;
CON Number 8850 to Heritage Park of West Delray, Ltd. (Heritage Park) to convert assisted living beds into 31 nursing beds at Liberty Inn, a 63-bed facility, currently licensed for 29 nursing and 34 assisted living beds;
CON Number 8850P to Heritage Park, to convert 20 assisted living beds into 17 nursing beds at Liberty Inn;
CON Number 8853 to Whitehall Boca, an Illinois Limited Partnership (Whitehall Boca) to convert existing nursing rooms from private to semi-private and existing assisted living space into a total of 48 additional skilled nursing beds in a facility which currently has 106 skilled nursing and 56 assisted living beds;
CON Number 8853P to Whitehall Boca to add 14 community nursing home beds by converting existing assisted living space;
CON Number 8851 to Beverly Enterprises-Florida, Inc. (Beverly), to construct a 48-bed addition to the existing 120 beds at Beverly Health and Rehabilitation Center-Royal Palm;
CON Number 8860 to Health Care and Retirement Corporation of America (HCR) to add 10 community nursing home beds by converting
10 private rooms to semi-private rooms at Heartland Health Care and Rehabilitation Center-Boca Raton;
CON Number 8855 to HCR to construct a new 120-bed nursing home;
CON Number 8852 to Vantage Healthcare Corporation (Vantage) to construct a new 120-bed nursing home;
CON Number 8859 to Life Care Health Resources, Inc. (Life Care), to construct a new 120-bed community nursing home;
CON Number 8856 to Manor Care of Boynton Beach, Inc. (Manor Care), to construct a new 120-bed community nursing home;
CON Number 8856P to Manor Care to construct a new 90-bed community nursing home; and
CON Number 8862 to Regents Park, Inc. (Regents Park), to construct a new 120-bed community nursing home.
The parties stipulated, prior to the hearing, that Subsections 408.035(1)(g), (j), and (k), Florida Statutes, are
not in dispute or not applicable. During the hearing, the parties stipulated that Whitehall Boca also meets the criteria in Subsection 408.035(1)(c), Florida Statutes.
At the final hearing, Marriott presented the testimony of the following witnesses with the designated areas of expertise: Carolyn Handlen, corporate finance; Alan Smeaton, construction estimating and quantity survey; Cornelia Hodgson, architecture with special expertise in gerontological design; Vera Reublinger, R.N., gerontology and geriatrics; Robert A. Beiseigel, health care financial analysis and financial feasibility; and Rachelle Bernstecker, health planning.
Marriott's Exhibits 1-8, 10 and 25A were received in evidence. Ruling was reserved on the appropriateness and relevance of portions of the rebuttal testimony and the admissibility of Marriott's Exhibits 27 and 28, as rebuttal exhibits, which are received and considered as explained in the Conclusions of Law.
Heritage Park presented the testimony of Robert G. Schemel, its General Partner and an expert in development, design and construction, finance, and operation of long-term health care facilities, and related services; and Ronald J. Swartz, C.P.A., an expert in CON financial cost projections, cost reimbursements and financial feasibility of nursing homes. Heritage Park's Exhibits 2-3, 5-11, and 13 were received in evidence.
Whitehall Boca presented the testimony of the following witnesses with their respective designated areas of expertise:
Steven Mulder, nursing home administration; Steven R. Jones, C.P.A., long-term care accounting, reimbursements and feasibility analysis; Steven Sussholz, health care architecture; and
W. Eugene Nelson, health planning and CON review. Whitehall Boca's Exhibits 1-7 were received in evidence.
Beverly presented the testimony of the following witnesses each with the area of expertise indicated: Guy Provenzano, nursing home administration; Maryanne Salerni, nursing and nursing clinical services; Bobby Stephens, nursing home development; John Fletcher, nursing home architecture, construction and equipment cost estimation; Armand Balsano, health care finance and financial feasibility; and Taffey Bisbee, health planning. Beverly's Exhibits 1-4 were received in evidence.
Regents Park presented the testimony of the following witnesses in the following areas of expertise: E. Wendell Hall, nursing home design, construction and fixed equipment costs; Donna Cohen, Ph.D., aging and long-term mental health care; Merrill H. Epstein, M.D., geriatric psychiatry; Patricia Evans, R.N.; Aaron Hollander, nursing home equipment purchasing; Judith Ann Lievens, R.N., geriatric psychiatric nursing; Michael Taylor, R.N., psychiatric nursing; Stanley Sternefeld, nursing home administration and operations; Joseph D. Mitchell, health care financing, accounting, Medicare and Medicaid reimbursement and generally accepted accounting principles; and Lynn Mulder, health
planning. Regents Park's Exhibits 1-8 were received in evidence.
HCR presented the testimony of Kevin McFeely, expert in nursing home operations and administration; and Milo Bishop, expert in health planning. HCR's Exhibits 1-4 and 6 were received in evidence.
Life Care presented the testimony of the following witnesses with their designated areas of expertise: Don R. Kirkman, nursing home design and construction; Gregory Doyon; Lane Bowen, nursing home specialty programs, quality assurance, and Medicare guidelines and coverage; Logan Sexton, nursing home operations and administration; Carla Treggett, nursing home Alzheimers' and dementia programs; James S. Wiegard, health planning; and Richard A. Stern, nursing home development, financial feasibility, and nursing home finance. On rebuttal, Life Care presented the testimony of John Patrick O'Brien. Life Care's Exhibits 1-3 were received in evidence.
Manor Care presented the testimony of the following witnesses in the areas of expertise noted: Don Feltman, nursing home development and land acquisition; Toni Robinson, nursing home equipment and equipment costs; Linda Ward, Alzheimers' and related dementia special care units, programs, and services; Marta Meers, clinical and nursing home services and nursing home administration; George Seifert, nursing home architecture and design; Regina Robertson; Larry Godla, nursing home construction, construction costs and project development costs; and Daniel J.
Sullivan, health care planning, health care finance and financial feasibility. Manor Care's Exhibits 1-3, 5-10, 11A, 12A, 12B,
, 26-27, 29 and 30 were received in evidence. Manor Care's Exhibits 18-24 and 28 were proffered but not received in evidence.
AHCA's Exhibit 1, received in evidence upon the stipulation of the parties, is the agency's decision letter of September 19, 1997. At the final hearing, AHCA's Motion for Official Recognition of Rule 59C-1.036, Florida Administrative Code, as published on February 7, 1997, was granted without opposition.
Marriott's Motion for Recognition of Section 400.401, Florida Statutes, the Assisted Livings Facilities Act, was also granted. AHCA's Motion for Official Recognition of Rule 59C-1.036, as adopted on May 22, 1998, is granted.
During the final hearing, Heritage Park withdrew both its Petition challenging the denial of its 31-bed application, and its Exhibit 10 (the 31-bed application). Vantage withdrew its application for CON No. 8852 to construct a 120-bed nursing home. HCR withdrew its application for CON 8855 to construct a 120-bed nursing home. Whitehall Boca withdrew its petition for approval of CON 8853P, to add 14 beds.
On May 1, 1998, Life Care filed a Motion for Summary Recommended Order Dismissing Regents Park. Life Care asserted that the letter of intent filed by Regents Park to give notice that it would file a CON application was defective. Regents
Park's Response to Life Care's Motion for Summary Recommended Order was filed on May 7, 1998, noting that Life Care's factual allegations were unsupported. The matter was left pending for resolution in this Recommended Order based on the evidence presented at the final hearing.
The last six of the twenty-eight volumes of the final hearing transcript were filed on July 1, 1998. After brief extensions of time were granted, proposed recommended orders were received on August 6 and 7, 1998.
FINDINGS OF FACT
The Agency for Health Care Administration (AHCA) is the state agency which administers the certificate of need (CON) program for health care services and facilities in Florida. In April 1997, AHCA published a need for an additional 168 nursing home beds in District 9, Subdistrict 4, for Palm Beach County, by the January 2000 planning horizon. AHCA reviewed the applications and preliminarily approved the issuance of two CONs: CON 8853 to Whitehall Boca, an Illinois Limited Partnership, d/b/a Whitehall Boca Raton (Whitehall Boca), to convert
48 assisted living beds to 48 skilled nursing beds; and CON 8862 to Regents Park, Inc. (Regents Park), to construct a new 120-bed community nursing home.
Regents Park's Letter of Intent
In advance of filing for CONs, applicants give notice of impending applications by filing letters of intent (LOI). The information required in the LOI is specified in the CON statute and rules. Failure to meet mandatory LOI requirements has resulted in the rejection of CON applications. See e.g., Humhosco, Inc. v. DHRS, 561 So. 2d 388 (Fla. 1st DCA 1990); and Vantage Healthcare Corporation v. AHCA, 687 So. 2d 306 (Fla. 1st DCA 1997).
At the time these applications were filed, the statutory requirement was as follows:
Letters of intent shall describe the proposal with specificity, including proposed capital
expenditures, number of beds sought, if any, services, specific subdistrict location, identification of the applicant, including the names of those with controlling interest in the applicant, and such other information as the department may by rule
prescribe . . . .
(Emphasis added.) Subsection 408.039(2)(c), Florida Statutes (1995).
In a Motion for Summary Recommended Order, filed on May 1, 1998, Life Care Health Resources, Inc. (Life Care), maintained that Regents Park's petition should be dismissed because its LOI failed to include the information required to identify the applicant. Life Care cites the omission of the names of those with controlling interest in the applicant, not only as required by the statute, but as further described by rule:
For an applicant which is a corporation not publicly held, a listing of each person with 10% or more ownership interest will satisfy this requirement provided the applicant identifies itself as a non-publicly held corporation. A list of the person or persons will not be construed by the agency to be an identification of the controlling interest of the applicant unless so described.
(Emphasis added.) Rule 59C-1.008(1)(f)2., Florida Administrative Code (1/95). The rule also included a more general statement that the agency will not assume facts not clearly stated in the LOI.
The parties agree that Regents Park is and identified itself as a non-public for-profit corporation. Regents Park attached to its LOI a list naming as its directors: Bernard B.
Hollander and Jack L. Rajchenbach, and a list of officers: President Bernard B. Hollander, Secretary Jack L. Rajchenbach, and Treasurer Aaron Hollander. At the hearing, Aaron Hollander testified that Bernard B. Hollander and Jack L. Rajchenbach each own 26 percent of the stock in the Regents Park corporation, and that three other persons own 16 percent interest each. The names of the other three people, each of whom has an ownership interest in Regents Park in excess of 10 percent were not provided with the LOI. The LOI included statements that "Regents Park, Inc., is a Florida for-profit corporation which is governed and controlled by its Board of Directors. . . A current listing of the applicant's board members and officers is also
attached. "
Beverly Enterprises - Florida, Inc., d/b/a Beverly Gulf Coast - Florida, Inc. (Beverly), supports Life Care's position that Regents Park's LOI is fatally flawed. In its August 7, 1998 Motion for Summary Recommended Order Dismissing Regents Park, Inc., Beverly noted that the rule distinguished between the requirements for public and non-public corporations. A listing of directors, which was provided by Regents Park, satisfied the requirements for public, but not for non-public corporations. Beverly also asserted that Regents Park failed to specify that the names it listed were those of persons with controlling interest and that AHCA cannot construe or assume facts not clearly stated.
Regents Park, supported by AHCA, argued that the rule never mandated disclosure of persons with 10 percent or greater interest. Although such disclosure "will satisfy" the requirement, Regents Park claims to have satisfied the statutory requirement in a different permissible manner. In addition, the statutory reference to "controlling interest" was repealed effective July 1, 1997. Subsequently, the reference in the rule to the 10 percent or more controlling interest disclosure requirement was repealed in November 1997, prior to the time of the final hearing. Vol. 23, No. 43, Florida Administrative Weekly (October 24, 1997). Regents Park acknowledged its continuing need to comply with the statute which was in effect when the LOI was filed, but not the rule which was no longer in effect at the time of the hearing.
The 1997 statute included a provision that the LOI amendment would not apply to applications filed prior to
July 1, 1997, but it also provided that AHCA's CON rules would remain in effect until repealed or amended. See Section 14, Ch. 97-270, Laws of Florida, and Section 408.0455, Florida Statutes (1997). At the time of the final hearing, only the general rule that the agency shall not assume facts not clearly stated was the same as it was at the time the LOI was filed.
At the hearing, Aaron Hollander identified the two members of the Board who were listed in the LOI as having the controlling interest in Regents Park. For the reasons given in
the Conclusions of Law, the Regents Park application is not dismissed and is considered on its merits.
Applicants For Fewer Than 90 Beds
Marriott Senior Living Services, Inc. (Marriott), is a wholly-owned subsidiary of Marriott International, Inc. Marriott owns and operates 94 senior living communities throughout the United States, 32 of those are multi-level care facilities, known as Brighton Gardens. In Palm Beach County, Marriott owns Brighton Gardens of West Palm Beach and Brighton Gardens of Boynton Beach which are 2 of 7 Florida Brighton Gardens.
Marriott operates a total of 10 senior living communities in Florida. Marriott proposes to develop another multi-level senior living community, Brighton Gardens of North Palm Beach (Brighton Gardens) on a 6-acre site in the area of the City of Jupiter. In addition to 45 CON-approved nursing home beds, it will include
119 assisted living beds, 25 of those divided into two separate sections within a special care center for residents with Alzheimer's disease and other related dementia (ARD). If issued CON 8861, Marriott will commit to providing 30 percent of total patient days in the nursing beds to Medicaid-reimbursed residents, and will offer respite and hospice care. The capital cost for the nursing home component is approximately $3.4 million of the total $14.7 million cost for the development of the entire Brighton Gardens community.
Heritage Park of West Delray, Ltd. (Heritage Park), is
the applicant for CON 8850P to convert 20 assisted living beds to
17 nursing home beds in an existing facility, Liberty Inn. Liberty Inn has a total of 63 beds, 34 assisted living beds and
29 recently licensed nursing beds, all for ARD residents. In addition to Liberty Inn, the Heritage Park West retirement community campus includes a 196-apartment building. A related company also owns and operates Heritage Park East, which has 145 assisted-living apartments, and Colonial Inn, a 60-bed licensed extended congregate care facility. Another Heritage Park company operates a home health agency, established to serve only its 500 residents. Heritage Park proposes to condition its CON on maintaining a minimum Medicaid occupancy of 54.8 percent in the
17 new beds, and a minimum ARD occupancy of 67.7 percent. If CON 8850P is approved, Heritage Park's construction cost will be approximately $150,000 of the $576,394 in total project cost.
Whitehall Boca, an Illinois Limited Partnership, d/b/a Whitehall Boca Raton (Whitehall Boca) is an existing 155-bed superior licensed facility with 99 operational and 7 approved nursing beds, providing subacute and assisted living care in Boca Raton, in southern Palm Beach County. Whitehall Boca is seeking CON 8853 to convert existing private rooms and assisted living space into 48 additional skilled nursing beds, including a 27-bed subacute unit. Although Whitehall Boca estimated a total of
$1.6 million in project costs, approximately $1.3 million is attributable to prior expenditures, including the original land
purchase and the construction costs for the 82,000 square foot building proportionately allocated to this project. Having originally been built to skilled nursing standards, the proposed conversion of beds at Whitehall Boca will, in fact, require approximately $350,000.
Beverly Enterprises Florida, Inc., d/b/a Beverly Gulf Coast-Florida, Inc. (Beverly) which owns and operates approximately 45 facilities in Florida, is a wholly-owned subsidiary of Beverly Health and Rehabilitation Services, Inc., a wholly-owned subsidiary of Beverly Enterprises, Inc. The Beverly companies operate 61 facilities in Florida and in excess of 600 nursing homes and related businesses in the United States. Beverly Health and Rehabilitation Center - Royal Palm (Royal Palm) is an existing 120-bed nursing home, with 31 short-term, Medicare-certified rehabilitation beds. As the applicant for CON 8851, Beverly proposed to add approximately 18,500 gross square feet to Royal Palm for 48 additional beds, 28 of those for long- term care and 20 for a secure ARD unit. Located in western Palm Beach County, the City of Royal Palm is a developing community, which is 12 to 13 miles west of the City of West Palm Beach. If CON 8851 is approved, Beverly will commit to provide 53.8 percent of total patient days in the 48 new beds to Medicaid and
.2 percent of annual gross revenues to indigent resident care, to provide respite care, and to award a $10,000 grant to a state university genotological research/scholarship fund. Beverly also
agreed to accept residents who have mental health disorders, and those with AIDS. The total project cost is approximately
$2.7 million.
Health Care and Retirement Corporation of America, d/b/a Heartland Health Care and Rehabilitation Center - Boca Raton (HCR) is an existing 110-bed facility in Boca Raton in southern Palm Beach County. If issued CON 8860, HCR proposes to increase its capacity by 10 beds by converting 10 private rooms to semi-private rooms. Currently, 31 of the 110 beds are used for long-term care, with the remainder divided into the following services: 20 beds for an ARD unit, 40 beds for subacute care and
19 beds for progressive or step-down care. An additional 10 beds will increase the capacity for short stay, specialty rehabilitation, which is a proposed condition for the issuance of the CON. HCR will also commit to providing 5 percent of total patient days to post-acute care for persons recovering for coronary artery bypasses grafts (CABG), chronic obstructive pulmonary disease (COPD), total joint replacements, and other orthopedic conditions. HCR will commit to providing blood transfusions at the nursing home. The total project cost for HCR's proposal is $279,050.
The 90- or 120-Bed Applicants
Regents Park, which currently operates Regents Park of Boca Raton, is the applicant for CON 8862 to construct a new 120-bed nursing home for geriatric psychiatric residents, those
who physically need nursing home care, but who also have secondary psychiatric diagnoses. Regents Park intends to have its staff trained in geriatric psychiatry and proposed, as other conditions for CON 8862, to accept transfers of geriatric psychiatric residents from other nursing homes, to provide at least 30 percent of its resident days to Medicaid residents, and to locate in southern Palm Beach County. In addition, Regents Park will commit to providing specialized diets, such as Kosher food. One-half of the beds, intended for short rehabilitative stays of approximately 60 days or less, will be built in an Extended Care Unit (ECU). Residents with longer expected lengths of stays, from 90 days to one year, will be housed in the half of the facility designated as an Aging Adult Services Unit (AASU).
Regents Park proposes to construct the 64,000 gross square foot, 120-bed nursing home for the total projected cost of
$8.5 million.
Manor Care of Boynton Beach, Inc. (Manor Care), is the applicant for CON 8856 to construct a 120-bed nursing home or, alternatively, for CON 8856P to construct a 90-bed nursing home. Manor Care is a wholly-owned subsidiary of a subsidiary of a public corporation traded on the New York Stock Exchange. The Manor Care companies own and operate over 200 nursing homes in
29 states, including 13 nursing homes in Florida. In Palm Beach County, Manor Care owns and operates 180-bed facilities in Boca Raton and Boynton Beach, a new 120-bed facility in West Palm
Beach, and a 120-bed facility which is under construction in West Delray. Manor Care proposes to condition its CON on locating the facility in the Jupiter area of northern Palm Beach County, and on providing 40 percent of total resident days to Medicaid,
5 percent of total resident days to hospice patients, 1,100 annual resident days for respite care and adult day care for 2 participants a day. Manor Care will also commit to establish a 20-bed Medicare unit and a 30-bed ARD unit in a 120-bed facility or a 34-bed ARD unit in a 90-bed facility. Manor Care will donate $15,000 to a Palm Beach County ARD association. The total project cost is approximately $8.5 million for the 120-bed 52,328 gross square foot facility, or $7.3 million for the 90-bed project of 41,452 gross square feet.
Life Care Centers of America, Inc., a Tennessee Subchapter S corporation operates approximately 220 nursing facilities and other retirement centers in 28 states. In this case, the CON applicant is Life Care Health Resources, Inc. (Life Care), which is owned by the same sole shareholder as the other related Life Care entities. In Florida, Life Care affiliates have nine existing and one approved nursing home. Two of the Florida facilities, Darcy Hall Nursing Center and Lakeside Health Center, are located in West Palm Beach. As the applicant for CON No. 8859, Life Care proposes to construct a 120-bed nursing home of 57,500 gross square feet on approximately 6 acres in north central Palm Beach County. Life Care will condition the CON on
the provision of 54 percent of total patient days to Medicaid residents, and the establishment of a 20-bed secure ARD unit and an adult day care center for 10 clients. Life Care will also provide respite and hospice care. The plans also include a
20-bed subacute unit with an adjacent therapy wing and an interior physical therapy courtyard. The projected total cost is
$8.9 million.
408.035(1)(a) - need in relation to district and state health plans
The state health plan directs AHCA to give preferences for applicants proposing the following:
to locate in areas with nursing home occupancy rates exceeding 90 percent;
to serve Medicaid residents in proportion to the subdistrict average with exceptions for special cultural, ethnic or multi-level care systems;
to offer specialized care, as for residents with AIDS, ARD or mental illnesses;
to provide a continuum of services, such as respite or adult day care;
to maximize residential features within long-term care facilities;
to provide innovative therapeutic and restorative care;
to propose charges not exceeding the highest subdistrict Medicaid per diem rate except to serve an upper income population;
to offer historically superior resident care;
to staff, particularly nurses, at levels above minimum requirements;
to use multi-disciplinary professional staff;
to document protections for residents rights and privacy, and established protocols for quality assurance and discharge planning; and
to implement lower administrative, but higher residential care costs than the district average.
The district health plan is the 1996 Certificate of Need Allocation Factors Report of the Treasure Coast Health Council. It includes recommendations for approval of applicants who:
agree to serve a minimum of 30 percent of total patient days for Medicaid;
have a history of good care, higher staffing ratios, mental health and subacute rehabilitative care; and
propose to serve a distinct, needy population in the subdistrict, such a those requiring special diets or bilingual staff.
The state (SHP) and district (DHP) health plans are discussed in detail, as indicated below, with related statutory criteria.
In general, Marriott qualifies for the district health plan allocation factors, with emphasis on the continuum of multi- level care to allow residents to "age in place." Marriott has also demonstrated compliance with the state health plan, except that Marriott's per diem charges exceed the highest Medicaid per diem, and it has lower than average resident care costs. Based
on the geographical description in its CON, Marriott could locate in areas in which nursing homes do not meet the 90 percent occupancy level set in state health plan preference one, but its expressed intention to locate in the Jupiter area complies with the preference.
Heritage Park complies with the factors and preferences in both the state and district health plans, except it has no history of operating nursing beds. Heritage Park emphasizes the needs of Medicaid residents who require a Kosher diet as a distinct population group.
Whitehall Boca meets all of the local health allocation factors except the Medicaid minimum of 30 percent. Whitehall Boca also meets all of the state health plan preferences except that it does not propose to provide Medicaid in proportion to the subdistrict average and will exceed certain Medicaid charges. Whitehall Boca, however, qualifies for the exceptions for offering multi-level care to upper income residents. Whitehall Boca also partially meets the preference for higher residential care costs, but not for lower administrative costs.
Beverly meets the local allocation factors, with emphasis on a broad range of services needed in its area of the County. Approximately half of its Florida facilities were rated superior at the time of hearing and Beverly's resident care costs are lower than the district average.
In general, HCR meets the preferences of the state
health plan, including the Medicaid exceptions for multi-level providers to upper income residents. With the exception of the priority for applicants providing a minimum of 30 percent Medicaid, HCR also meets the allocation factors in the local health plan, particularly to serve residents needing high technology post-acute skilled nursing care.
Regents Park meets all of the local health plan factors, with emphasis on the needs of geriatric psychiatric residents. It also meets all of the state health plan preferences, except for the provision of Medicaid in proportion to the subdistrict average (proposing 30 percent as compared to
53.7 percent).
Life Care qualifies for all of the local health plan factors, having identified Medicaid residents as a distinctly needy population group. Of the 120-bed applicants, only Life Care will equal the existing subdistrict Medicaid utilization. Life Care meets the state health plan preferences, except for its lack of specificity needed to determine that its location will be one in which nursing homes exceed 90 percent occupancy, its unimpressive history of care with only one of four clearly eligible Florida nursing homes licensed superior, and its lower resident care costs than the district average ($70.87 as compared to $77.40 to $88.33).
Manor Care meets the local and state health plan preferences, except the Medicaid subdistrict average (proposing
40 percent as compared to 53.7 percent). Manor Care proposed to offer a full range of services with an ARD unit, and AIDS, Medicare, respite, hospice and adult day care in the Jupiter area.
408.035(1)(b) - availability, quality of care, efficiency appropriateness, accessibility, extent of
utilization, adequacy of like and existing facilities, and
services in the district;
408.035(2)(b) and (d) - efficient and appropriate use of existing facilities and patients' problems; and
SHP 1 - over 90 percent occupancy
All of the applicants propose to add beds or to construct facilities in the subdistrict for Palm Beach County, which had an average subdistrict occupancy of 88.8 percent from July to December 1996. The parties agree that 168 additional nursing home beds are needed. Each described the need for its proposal in terms of increasing the availability and appropriateness of the services currently provided in the existing 51 nursing homes in Palm Beach County.
To enhance availability and accessibility geographically, Marriott, Life Care and Manor Care maintain that additional beds are needed in northern Palm Beach County.
Beverly argued that the beds are needed at its location in the west central Palm Beach County community of Royal Palm. Heritage Park, Whitehall Boca, HCR and Regents Park presented evidence of need in southern Palm Beach County.
Northern Palm Beach County is generally the area from Palm Beach Gardens north to Jupiter. At the time the CON
applications were filed, 7 of the 51 nursing homes in the County were located in the Jupiter area. The occupancy levels of those nursing homes ranged from 91 to 94 percent. Life Care proposes generally to locate in north central Palm Beach County, using Lake Worth as the dividing line. That would include areas ranging in occupancy rates from 79.03 percent (Palm Beach Gardens/Lake Park) to 91.6 percent (Jupiter). Only Manor Care proposed to condition approval of its CON on locating the facility in the north, specifically north of North Lake Boulevard.
Marriott argued the need for its project because the north also appears under-served by combined assisted living and skilled nursing retirement communities. Marriott would locate, in general, north of the West Palm Beach airport. Of the 51 existing nursing facilities in the County, 13 also have assisted living beds. Only 3 of the 13 multi-level communities with 300 nursing and 200 assisted living beds, are located in the northern areas of the County, all in the City of West Palm Beach. By comparison, the remaining 10 retirement communities, in southern areas, have 900 nursing and 800 assisted living beds.
In support of Beverly's proposed expansion, the relative isolation of the facility west of the Turnpike, and its
96 to 97 percent occupancy rates were considered. Beverly's Royal Palm is the only facility located within a five mile radius of the Royal Palm community. Subacute care services at Royal
Palm are provided to patients discharged from two area acute care providers, Wellington Regional Hospital and Columbia Palms Hospital. The proposal does not, however, include expansion of Beverly's 31-bed short-term rehabilitation unit so that cannot be a primary factor supporting its need.
Dividing Palm Beach County at Southern Boulevard, which is also known as U.S. 441 or State Road 80, other expert health planners testified that the need for additional beds was greater in the southern areas of the County. The dividing line reasonably coincides with that used by the Treasure Coast Health Council for acute care hospitals. Using only the population 65 and over, the bed-to-population ratios are 36.4 in the north and
20.8 in the south for every 1,000 people. That analysis suggests an under-supply of nursing home beds in the south. Assuming that all 168 beds are approved in southern Palm Beach County, Regents Park's health planning expert determined that the imbalance in the bed-to-population ratios will continue with 35.58 beds per thousand in the north and 19.38 beds per thousand in the south in the year 2000.
The need in the south is also reflected in occupancy rates for southern areas. Nursing homes in Boca Raton, for example, have a higher occupancy rate than those in other areas of the County, except the remote area of Pahokee located between the Everglades and Lake Okeechobee. Occupancy rates were 85 percent in the north, with some new startup facilities, and 91.99
percent in the south, from July to November 1996. By calendar year 1997, the occupancy levels were 88.07 percent in the north and 91.32 percent in the south. HCR in Boca Raton, at the time of hearing, had a census of 103 in 110 beds or 93 percent occupancy, despite a disproportionately large turnover for short stay rehabilitative, up from 86.23 percent occupancy in 1997.
Within an 8-mile radius of Heritage Park, occupancy rates exceeded 91 percent in 19 nursing homes. That area corresponds to the southern one-third of Palm Beach County, in which Whitehall Boca is also located. Whitehall Boca had an occupancy rate of about 92.45 percent at the time the applications were filed. At the time of hearing, Whitehall Boca was fully occupied, at approximately 96 or 97 percent. In addition, Whitehall Boca usually has approximately 20 people on its waiting list at any time, and typically rejects 40 or 50 referrals a month.
Arguing that the existing nursing beds are well distributed geographically, one expert proposed approvals of new beds that would also be well dispersed. Testifying on behalf of Beverly, that expert suggested a need for the combination of Beverly's 48-bed addition, Heritage Park's 17-bed conversion, Marriott's 45-bed new construction, Whitehall Boca's 48-bed conversion, and HCR's conversion of 10 private to semi-private rooms.
In general, geographically, the demonstrated need for
additional nursing beds is greatest in the area of Pahokee, followed by Boca Raton in the south, then by the northern community of Jupiter, and the central area of Royal Palm, in that order. In each of these areas, nursing home occupancy rates exceed the 90 percent threshold favored in state health plan preference one. If the Town of Royal Palm is considered a part of the West Palm Beach service area, however, with an average overall occupancy rate of 88.6 percent, then it does not meet the location needs test in state health plan preference. In general, the location of Royal Palm, separate and distinct from West Palm Beach, as indicated in part by the differences in nursing home utilization, justifies some separate consideration of the need for additional beds at Royal Palm.
SHP 3 - specialized ARD, AIDS or mental illness care;
DHP 2 (c) mental health and subacute care;
SHP 6 - innovative therapies; and DHP 3 - distinct needy population group
The parties distinguished the need for their proposals on the basis of programmatical and cultural considerations, as well as geographical differences. In fact, as noted in Beverly's description of its geographical location, a related consideration is its availability for residents discharged from area acute care hospitals. Manor Care also presented evidence of the need for more ARD units in the northern areas of the county. The experts agree that at least 50 percent of nursing home residents have some ARD. Based on the information gathered by Manor Care's
expert planner, there was only one 20-bed ARD unit in the Jupiter area at the time Manor Care prepared its CON application.
In addition to its location in southern Palm Beach County, Heritage Park asserted a need for its service based on cultural considerations. Heritage Park, which is 90 percent Jewish, offers Kosher food and celebrates Jewish holidays. Two other facilities within the district also provide the same special services for Jewish residents, Menorah House in Boca Raton and Joseph Morris Geriatrics in West Palm Beach. The high occupancy rates and difficulty in getting Medicaid beds in facilities catering to Jewish residents are, in part, the basis for the asserted need for additional nursing beds at Heritage Park. While some other facilities may not provide the same cultural environment as those which are considered "Jewish" nursing homes, it is important to note that Kosher food is widely available and provided at other facilities, if necessary, through contractual arrangements.
The most unique proposal is that of Regents Park to serve exclusively a population described as geriatric psychiatric residents. There is no facility in existence anywhere which treats exclusively the conceptually targeted population. Geriatric psychiatric residents are defined as those who are nursing home eligible medically, but who also have a secondary diagnosis of a mental illness, such as acute depression, schizophrenia, bipolar disorders and some forms of reversible
dementias. Targeted residents do not include those with Alzheimer's or other non-reversible dementias, but only those with treatable chronic mental illnesses. Regents Park suggests that these residents are currently in nursing homes, inappropriately placed in ARD units and/or inadequately treated for their mental illnesses. Using acute care hospital discharge data for Palm Beach County for the twelve months ending September 30, 1996, Regents Park identified a total of 8,848 patients aged 65 and over with primary medical and secondary
psychiatric diagnoses. Of these, 2,364 with an average age of 69 years, were discharged to nursing homes. Regents Park intends to train its multi-disciplinary staff, including nurses aides, to manage and treat mentally ill residents. The care proposed is intended to respond to the failure of nursing home residents to thrive as well as to managing disruptive, behavioral consequences of mental illnesses.
To some extent, all of applicants already do or expect to care for mentally ill residents. It is typical for the physical conditions of nursing home residents to coincide with depression or anxiety. Behavior modification and appropriate medications are used to treat mental illnesses in all nursing homes. Employees are trained, in general, to handle behavioral problems. When the problem is recognized as psychiatric or the resident becomes too difficult to handle, the resident is generally transferred to an acute care or psychiatric hospital.
Within the nursing homes, mental health services are usually provided through contractual agreements with psychologists or psychiatrists. Some facilities, such as Heritage Park, also use the services of psychiatric nurses provided through its home health agency.
Limitations and uncertainties exist, however, concerning Regents Park's ability to attract and treat targeted residents differently from any other nursing home. Only a person with a medical need for help with certain activities of daily living may lawfully be admitted to a nursing home. Regents Park is also excluding residents with ARDs which are not reversible, and those who are violent or dangerous.
Assuming all of the 2,364 medical/psychiatric discharges to nursing homes in 1995-1996 met the other criteria for admissions and treatment at Regents Park, it is impossible to determine whether those residents and their families would have chosen or been directed to Regents Park as compared to any other nursing homes. Regents Park intends to rely on linkages with mental health professionals, but expert testimony about nursing home placements included various other considerations, including proximity to an acute care provider and proximity to families, as well as the nature of the services provided.
A combination of small projects was suggested because of the range of services offered at different locations throughout the County. Marriott's continuum of care, with
assisted living and skilled nursing beds, would be introduced in the north, for example. Beverly, in the west central, would add general care and dementia unit beds. In the south, Heritage Park would give special care for ARD residents. HCR would do the same for post-acute rehabilitative services, including apparently introducing blood transfusions to skilled nursing services.
Whitehall Boca would expand an existing facility which already has a broad range of services. In general, that combination increases existing beds by 45 in the north, 48 in the west central area, and 75 in the south.
Another combination intended to distribute beds geographically and programmatically was Manor Care's 90 beds in the north with a 34-ARD unit, Beverly's 48 beds in the west central area with a new ARD unit, HCR's 10 and Heritage Park's 17 beds in the south with more subacute and ARD care, for a total of
165 beds. This combination has the disadvantage of new construction of the largest number of beds in the areas of lesser relative need, which is also the disadvantage of combining Manor Care's and Life Care's 120-bed proposals with either of the
48-bed proposals. More beds can be shifted to the south by substituting Whitehall Boca for Beverly as the 48-bed provider. The combination of Manor Care's 90-bed project with the three smaller southern projects has the disadvantage of creating three beds fewer than needed, but introduces another ARD unit and a broader range of services to the Jupiter area. That combination
increases ARD beds by 51 and Medicare by 57 beds.
408.035(1)(c) - ability and record on quality of care, SHP 8 - historically superior care,
and DHP 2(a) history of good care
Marriott held 6 superior, 2 standard and 1 conditional Florida nursing home license at the time it filed this application. Heritage Park has had deficiency-free or relatively minor, Class 3 deficiencies cited during state inspections. Heritage Park has never had a moratorium on a facility. Although it has never operated licensed nursing beds, Heritage Park's experience, since 1986, operating licensed assisted living facilities with extended congregate care, has been sufficiently similar to establish its ability to provide good care. Whitehall Boca and HCR hold superior state licenses and are accredited by the Joint Commission on Accreditation of Health Care Organizations (JCAHO). Whitehall Boca's accreditation includes its subacute care program. The parties stipulated that Whitehall Boca meets the criteria related to quality of care. With an average of 20 surveys a year, HCR has had one survey in the last three years in which the state noted a condition of immediate jeopardy to residents. Regents Park operates Regents Park of Boca Raton, a superior licensed facility which has had
deficiency-free resident care surveys for five years. That facility has JCAHO accreditation. In general, Whitehall Boca and Regents Park have had the most successful records on quality of care, followed by impressive survey results at HCR and Heritage
Park. Two-thirds of the Marriott facilities in Florida are licensed superior.
For nine consecutive years, Beverly's Royal Palm has held superior licenses. It has been JCAHO-accredited since 1995. As of May 1997, twenty-two of Beverly's forty-five Florida facilities or approximately one-half were licensed superior.
At the time of the final hearing, Life Care affiliates operated 9 nursing homes in Florida with 3 more under-development and another CON-approved. Of the 9 operational facilities, one is licensed superior, 2 are standard but eligible for superior licenses, 2 are standard because they have not been operational long enough to qualify for superior licenses, and four are standard. One of the standard operations is being relocated to a replacement building. Life Care has never had a license denied, revoked or suspended due to issues related to quality of care.
In Florida, Manor Care had 11 superior nursing homes,
1 standard but not yet eligible to be superior, and 1 standard at the time of hearing. In 1997 and 1998, two of the three Manor Care facilities in Palm Beach County had conditional ratings, each for approximately six weeks, because one resident in each developed pressure ulcers. In general, Manor Care, then Marriott have better licensure ratings than Beverly, followed by Life Care.
SHP 11 - to ensure residents rights and privacy, quality assurance
and discharge planning
The applicants have documented procedures to ensure residents rights and privacy protections, as required by law. All allow for some input by resident councils, ombudsman oversight and/or family council representation for residents, as noted by Heritage Park especially for those in more advanced stages of dementia. Each applicant has appropriate, established quality assurance and discharge planning procedures.
408.035(1)(d) - availability and adequacy of alternatives to nursing beds
The parties agree that 168 additional nursing beds are needed in Palm Beach County. There was no evidence of available alternatives. Heritage Park is the only applicant participating in a pilot project to determine the feasibility of diverting Medicaid residents from nursing homes to assisted living facilities. There was no evidence of results or any new policy directives based on the pilot project.
408.035(1)(e) - economies and improvements from operation of joint or shared health care resources
All of the applicants have existing health care operations in the County. Regents Park, Life Care and Manor Care can benefit from locating a new 120-bed facility, or 90-bed for Manor Care, near their existing operations, drawing on established relationships in the health care network. Marriott, although proposing new construction, will also have some economies in nursing costs as a result of shared operations with the assisted living portion of its retirement community.
Beverly's new construction of 48 additional beds on adjacent vacant land, using the existing kitchen and recently enlarged therapy spaces enhances efficiencies at Royal Palm. The economies and efficiencies of operations at HCR, Whitehall Boca and Heritage Park will be improved by their planned conversions of existing spaces to more intensive uses. Strictly construed, however, none of the applicants proposes to operate jointly with or to share facilities with a different health care provider.
408.035(1)(f) - need for special equipment and services not accessible in adjoining areas
None of the proposals addresses a need beyond the service area. To the extent that its services are unique, Regents Park expects but is not relying on drawing residents from Broward County.
408.035(1)(g) - need for research and educational facilities
The needs of research and educational facilities are inapplicable to this proceeding.
408.035(1)(h) - personnel and staffing; SHP 9 - higher RN and LPN ratios; SHP 10 - interdisciplinary professional staff, SHP 12 - lower administrative, higher
residential care costs than district average; and DHP 2(b) - higher staffing ratios
All of the applicants propose staffing ratios that are higher than minimum state requirements. They all use or will use various therapists, social workers, and mental health care professionals in addition to medical doctors and nurses. Because their services differ, the staffing patterns also differ
appropriately. In general, of the 120-bed applicants, Regents Park proposes the largest number of employees devoted to patient care, including twice the number of certified nurse assistants (CNAs) as required. Regents Park will retain the services of a psychiatrist as one of its two medical directors.
Life Care believes that its continuity of care is enhanced by using in-house rather than contract therapists. At its existing Palm Beach County facilities, Life Care provides 2.8 to 3.05 nursing hours per resident day, as compared to the state requirement of a minimum of 2.2 hours per resident day. Manor Care proposed to provide 3.4 nursing hours per resident day, including an average of 4.7 hours in the Medicare unit, 2.8 to
3 hours in the ARD unit, and 3.28 in the rest of the nursing home. Beverly will have 3.6 hours of nursing care per resident day, including a registered nurse 24 hours a day, seven days a week, and employs in-house therapists. HCR proposes the highest ratio of licensed nurses to residents. With a physiatrist and a pulmonologist as medical directors, HCR offers extensive rehabilitation and complex clinical services. Because Marriott plans less intense subacute care in only 8 Medicare beds, it will not have 24-hour RN coverage, but will offer 3.11 hours of nursing care per resident day. Although it subcontracts for occupational and speech therapists, Whitehall Boca has three
full-time in-house physical therapists in a 10-person department. Whitehall Boca also has a pulmonologist on staff to provide
intense respiratory and ventilator therapy to higher acuity residents, as recognized, in part, by Whitehall Boca's Health Care Finance Administration (HCFA) rate exception. In response to the needs of residents with ARD, Heritage Park employs fewer nurses, but more people for longer hours for its activities' staff which has 5 full-time equivalent employees (FTEs), including a clinical social worker.
Using different base years and inflation rates ranging from 3.5 percent to 6.29 percent, the parties estimated resident care costs and administrative costs per resident day for the year 2000. The result is a range in the estimated year 2000 district averages which compares to the applicants' projected costs as shown below:
Resident Care Cost Administrative Costs District Average ($) 77.40-88.33 36.48-41.95
Beverly 67.34 20.00
Life Care 70.87 26.76
Marriott 77.39 32.47
Manor Care (120 beds) 77.75 33.93
Manor Care (90 beds) 81.46 37.57
Heritage Park 89.63 31.76
HCR 108.28 28.50
Whitehall Boca 115.29 58.72
Regents Park 117.97 37.95
Whitehall Boca attributes its non-compliance with the portion of the preference related to administrative costs to higher salaries and fringe benefits, but not owners' profit. The higher, preferable resident care costs at Regents Park, Whitehall Boca and HCR reflect not just higher quality, but is consistent with higher resident acuity levels requiring more intense
therapies, including mental health therapy at Regents Park. In general, the projected lower administrative costs indicate more operational efficiencies and lower profit-making than average at
Beverly, Life Care and HCR. HCR is the preferable applicant in both categories, followed by Heritage Park.
408.035(1)(h) and (i) - immediate and long-term financial feasibility
Heritage Park, Whitehall Boca, Beverly and HCR established the ability to fund, and the short and long-term financial feasibility of their proposals.
Marriott
The parties stipulated to the ability to fund and the short-term but not the long-term financial feasibility of Marriott's proposal. At issue are Marriott's projected occupancy level and experiences at other facilities. Marriott projected
93 percent utilization in year 2. By comparison, the weighted average occupancy was 86.7 percent in 1997 in Marriott's three Palm Beach County facilities, with overall district occupancy just over 90 percent. For example, Marriott's Brighton Gardens of Boynton Beach reported 89.14 percent occupancy and $167,000 in losses in 1997. Another Marriott facility in Palm Beach, Stratford Court Health Care Center averaged 86.15 percent occupancy in 1997.
Using the rate of qualified people, those needing help with instrumental activities of daily living, multiplied by the number of single households of persons aged 75 and over, Marriott assessed the need for its assisted living beds. If it attracts 6 percent of those in need in northern Palm Beach County, then Marriott's occupancy will be 111 in 119 assisted living beds or
93 percent. Based on its projected occupancy, Marriott's pro
forma shows profits in the nursing beds of $353,000 and $491,000 for the entire operation.
The most comparable facilities to that proposed by Marriott are the existing Brighton Gardens in Palm Beach County. In the published data supporting the need for 168 additional beds, the utilization is 87.91 percent for Boynton Beach and
93.46 percent for the West Palm Beach Brighton Gardens. Marriott considers those facilities to be an earlier generation model which is smaller, with 29 and 30 nursing beds and 102 assisted living beds, than the current model. Marriott reasonably expects better economies in the larger facility it has more recently designed to accommodate 45 nursing beds and 119 assisted living beds. Marriott's financial feasibility is demonstrated based on that distinction and expectation.
Manor Care
Manor Care expects to generate a profit of 7 percent for 120 beds, or 3 percent for 90 beds. Nationally, Manor Care's profit margin from all its operations is 13 percent. Manor Care could seek to increase the profits from this proposal by applying for a reduction in the Medicaid condition on its CON. Manor Care has had Medicaid conditions reduced from 43.3 to 28.3 percent at a Palm Harbor nursing home, and from 34.3 to 20.61 percent in Sarasota. There is, however, no evidence to support the assumption that Manor Care requires each entity within its huge system to achieve a 13 percent profit margin within two years,
nor that demographic conditions will justify reductions in its Medicaid commitment.
Manor Care has included revenues but not expenses for an outpatient clinic in its pro forma. There is also evidence that Manor Care should have included more interest expense, but there is no testimony that Manor Care's proposal is rendered infeasible if outpatient clinic revenues of $116,900 for 90 beds or $241,000 for 120 beds are deleted and interest increased, but only that its profit margin could be further reduced.
Life Care
Based on lending commitments, funds are available to complete Life Care's project. The six Life Care nursing homes in Florida showed expenses exceeding revenue, or net losses, in 1996. In 1997, six of seven Life Care facilities showed losses, raising doubts about the long-term financial feasibility of this proposal.
Life Care explained that losses have resulted from refinancing facilities to withdraw cash for reinvestment or further development. As a private company, Life Care relies on debt to raise capital. Life Care also noted that it has had a positive cash flow from operations at its facilities. The losses are shown on revenue and expense statements taking into account non-cash items, such as depreciation and amortization.
In determining long-term financial feasibility, it is appropriate to consider non-cash items included in revenue and
expense statements prepared according to generally accepted accounting principles. Otherwise, there is no measure of the financial ability to generate sufficient revenue to cover expenses over time, including necessary replacements of assets. Using these pro forma financial statements, Life Care has not shown that its proposal is financially feasible in the long-term.
Regents Park
The immediate financial feasibility of Regents Park's proposal was criticized because of discrepancies in available funds for all projects, and underestimated land and movable equipment costs. Since the other project listed on Schedule 2 has, in fact, been completed, the mathematic discrepancy in total projects and available funds does not affect financial feasibility. Regents Park's projected purchase price for land was $400,000, as compared to $975,000 by Manor Care, and
$1,050,000 by Life Care. In general, land values are higher and fewer sites are available in the southern area, where Regents Park expects to locate. Although there was testimony that a Regents Park officer has found some parcels for $60,000 an acre, the size of the tracts was not established. Considering the substantial, credible undisputed expert testimony that zoning or county commission requirements will have to be met on any parcel developed, Regents Park's estimate is unrealistically low. In addition, of the applicants in this case, Regents Park plans to build the largest 120-bed facility with 64,000 square feet, which
exceeds that designed for Life Care by over 6,500 square feet and the Manor Care 120-bed building by over 10,000 square feet.
Expert estimates that the land cost is underestimated by approximately $500,000 are reasonable.
There was also expert testimony that Regents Park underestimated the cost of equipment, at $2,000 per bed, by at least $2,500 to $5,000 per bed. That conclusion was based on an estimate of the need for equipment valued at approximately
$140,000 for the kitchen, $75,000 for therapy equipment and office furnishings, $100,000 for 10 lounges, $60,000 for dining areas, $50,000 for other offices, $50,000 for nurse stations,
$20,000 for laundry equipment, plus $60,000 for freight and taxes. The experts differ, to some extent, over the classification of various items, whether appropriately included in construction costs, furnishings or equipment. Regents Park failed to establish that all the necessary items are included in any of the categories. Regents Park's total equipment cost of
$440,000 is unreasonably low, when compared to Life Care's estimate of $750,000 (all of which it included in building costs, but also listed separately) or Manor Care's estimated
$1.3 million. Regents Park concedes that its movable equipment estimate is too low when, by comparison, its existing facility has an inventory of $852,000 in equipment and furnishings, or
$7,100 per bed.
Regents Park will finance its project with a Department
of Housing and Urban Development (HUD) insured loan. HUD loans require owners to make a 20 percent contribution to equity.
Regent Park's owners intend to borrow that 20 percent which is apparently permitted under HUD rules as long as there are no other mortgages or liens on the property. Regents Park, therefore, established the short-term financial feasibility of its proposal only in terms of the availability of funds, but not considering the reasonableness of estimated project costs.
Regents Park's projection of 95 percent occupancy in year two, higher than the current district average, is reasonable for two years from now. That does not, however, reflect more selective screening for geriatric psychiatric patients who are estimated to be approximately 60 percent of the current census at the existing Regents Park.
Of greater concern with respect to long-term financial feasibility is Regents Park's projected payer mix, which is not supported by its experience. For example, managed care averages
2 to 5 percent in nursing homes and 1.9 percent at the existing Regents Park facility, but is estimated to increase to 17 percent at the new facility. Regents Park failed to establish that its project can attract the payer mix it proposed, particularly from the relative high reimbursement sources, such as Medicare and managed care. Therefore, Regents Park failed to demonstrate the long-term financial feasibility of its proposal.
EFFECT OF PPS
In 1997, Congress enacted the Balanced Budget Act which included revisions to the Medicare system. During the final hearing, on May 12, 1998, some of the regulations implementing the new Medicare payment system were adopted. The new prospective payment system (PPS) will provide a flat per diem rate of reimbursement for services provided to residents based on their diagnoses, as classified into resource utilization groups (RUGs). Nursing homes will be responsible for containing costs within that per diem rate. All of the applications were submitted with revenues calculated under the cost-based system, which allows nursing homes to contract with therapists who bill Medicare directly for actual costs. With PPS limiting reimbursement, it is reasonable to expect all providers to respond by limiting costs accordingly. At the time of the hearing, however, it was impossible to determine exactly what their rates will be or how each provider will respond.
Therefore, it is impossible to determine the impact of PPS on the financial feasibility of any of the applicants' proposals. The experts seemed to agree only that the three-year phase in period for facilities with established, 1995 rates, will benefit existing providers.
408.035(1)(j) - special needs of HMOs
As stipulated by the parties, the criterion is inapplicable. The applicants are not health maintenance organizations.
408.035(1)(k) - needs of entities serving non-residents
The parties agree that the criterion is inapplicable to these proposals.
408.035(1)(l) - impact on costs; effect of competition 408.035(1)(m) - cost and methods of construction;
408.035(2)(a) and (c) - less costly, more efficient or appropriate arrangements and alternatives to new services and new construction;
SHP 7 - charges not exceeding highest Medicaid
Manor Care operates 480 licensed and 120 approved beds in Palm Beach County, which is approximately 10 percent of the total in the County. Life Care currently operates 327 beds in Palm Beach County, 107 at Lakeside Health Center and 220 at Darcy Hall. HCR operates 350 nursing beds in the County, while Marriott operates 119 nursing beds and 204 assisted living beds. Beverly, the testimony established, operates at least 240 beds in the County, at Royal Palm and Haverhill. Regents Park has one 120-bed facility with 60 additional approved beds, and Whitehall Boca has 99 operational and 7 approved nursing beds. Competition is, therefore, theoretically enhanced by bringing Heritage Park into the nursing home arena with more approved nursing beds and by increasing the number of beds at Whitehall Boca.
As evaluated using state health plan preference 7, proposed charges should not exceed highest subdistrict Medicaid per diem rate, except to serve upper income residents. Whitehall Boca and HCR will serve upper income residents. The highest projected Medicaid rate for the year 2000 is approximately
$136.97, which is exceeded only marginally by Marriott at
$137.61. In terms of Medicare, the projected rate of $325.40 in year 2 is exceeded in all of the proposals except Manor Care, and by relatively small increments by Heritage Park, Life Care and HCR, in that order.
There is no evidence that existing nursing beds are not used efficiently and appropriately, or any doubt that additional beds are needed. Construction costs are summarized as follows:
Number of beds | Square Feet | $(000s) | Total $(millions) | |
Marriott | 45 | 18,436/81,800* | 51 | 1.9 |
Heritage Park | 17 | (existing beds) | 22 | .150 |
Whitehall Boca | 48 | (existing beds) | 27 | .178 |
Beverly | 48 | 18,500 | 42 | 1.7 |
HCR | 10 | (existing space) | 21 | .200 |
Regents Park | 120 | 64,000 | 55 | 5.8 |
Manor Care | 120 | 52,328 | 41 | 3.9 |
Manor Care | 90 | 41,452 | 44 | 3.1 |
Life Care | 120 | 57,500 | 47 | 5.2 |
* combined skilled nursing and assisted living beds.
In terms of lowest total construction costs and the more efficient utilization of existing beds and spaces, the proposals of HCR, Heritage Park, and Whitehall Boca are preferable to add 75 beds for an approximate total building cost of $600,000. With 10 additional beds, HCR can also, for example, reduce operating costs by $22 per patient day. Once the three are combined for a total of 75 beds, all new beds are in the southern area, the area of greatest need in Palm Beach County. With only 93 remaining beds, it is mathematically impossible to recommend approval of Regents Park, Life Care or Manor Care's
120-bed application. Manor Care's 90-bed proposal in the north
or Marriott's 45 in the north combined with Beverly's 48 in west central Palm Beach County are the remaining competing applicants which can be approved, if they otherwise meet the CON criteria.
Separately and independently considering the least costly means for the addition of 168 beds, assuming all other factors were equal, the result is the combination of Marriott, Heritage Park, Whitehall Boca, HCR and Beverly for a total of approximately $4 million. Leaving out 48 beds to make a more direct comparison to the 120-bed proposals, the 120-bed combination of smaller projects with Whitehall Boca costs
$2.43 million, or with Beverly $3.95 million in building costs. Except Manor Care's 120-bed cost of $3.9 million, either combination of smaller projects is preferable, in terms of cost alone, to over $5 million for the construction of new 120-bed nursing homes by Life Care or Regents Park. Similarly, comparing
only building costs, the combination of Marriott and Beverly adds
93 beds for approximately $3.6 million, while the cost of Manor Care's 90-bed proposal is approximately $3.1 million.
The need for 168 additional beds can also be met by a combination of a 120-bed applicant with either of the two 48-bed applicants. Construction costs range from approximately
$7.5 million for Regents Park and Beverly, to $4.1 million for Manor Care and Whitehall Boca. In terms of cost, quality of care, and need, including the single geographical area of greatest need, the combination of Regents Park and Whitehall Boca is the most desirable, if any new 120-bed facility is constructed.
The reasonableness of Life Care's estimates of construction costs using the same cost plus system as proposed in this case, has been significantly undermined based on the past need to file for cost overruns. The following Life Care projects have received CONs for cost overruns:
No. of beds (Location) Initial Final
Estimate* Cost*
111 (Citrus County) 4.7 5.6
120 (Orange Park) 5.4 7.8
60 addition (Orange Park) 2.2 3.9
77 (Wells Crossing) | 4.5 | 5.4 |
34 addition | .8 | 2.4 |
*All amounts are in millions of dollars SHP 5 - residential design features,
including landscaping
Marriott features five landscaped courtyards around a "T" shaped building. Resident rooms have a toe-to-toe furniture
arrangements with an oversized window for each resident. Bathroom and residents room doors are aligned to ensure privacy and safety if a resident falls. Marriott plans to use wallpaper and carpeting to enhance the residential character of the building.
Heritage Park uses Queen Anne furniture because it is sturdy and upright, and also recognizable as having been fashionable during the lifetime of the elderly residents. Heritage Park features crown molding in hallways and carpeted, oversized resident rooms, each with a bathroom large enough to accommodate a 3 foot by 6 1/2 foot shower.
Whitehall Boca also has oversized rooms and features wide, carpeted hallways and 9 foot high ceilings. The award- winning design of the center core of the building resembles a street market.
Beverly's resident rooms exceed minimum size requirements and have room temperature controls, telephone and cable television connections. The proposed addition will increase the number of enclosed courtyards from two to four, with one for ARD residents adjacent to their separate dining and activity areas.
HCR will convert an existing 50-bed nursing care unit to a 60-bed unit. The ten private rooms which will become semiprivate have a minimum of 182.5 square feet, as compared to the state minimum requirement of 160 square feet. HCR uses
lighting and different color schemes to create a residential atmosphere.
Life Care's design was criticized as an "institutional" rectangular building with long corridors, but that also provides good visual monitoring from nurses stations in the center of the corridors. Windows from 32 rooms look out on other portions of the building. Life Care has attempted to minimize the institutional effect with a vaulted ceiling entrance and courtyards on two sides of the dining room. Life Care has separate entrances for physical therapy and adult day care.
Manor Care has developed a prototype nursing home, which evolves from staff feedback each time a new facility is built. Manor Care uses "jogged" corridors, skylights, recessed areas to minimize the institutional effect of relatively long corridors.
Regents Park plans to create a central core of offices, therapy spaces, and laundry and kitchen areas. Adjacent to and on each side of the central core are the two main dining rooms. The 60 beds on each side of the facility are divided into "X" shaped corridors, with 15 beds in 3 private and 6 semiprivate rooms on each wing, and nurses' stations in the center of each "X." Regents Park's plan is the most residential of the 120-bed designs. The corridors are short with skylights, and every resident room window has an unobstructed view beyond the building. To accommodate psychiatric residents, lighting is
hardwired to avoid exposed cords, and electrical outlets are recessed into boxes. For safety, beds are hand-cranked, not electric, and window shade cords are breakaway plastic.
408.035(1)(n) - past and proposed Medicaid, SHP 2 - Medicaid proportionate to subdistrict average except multi-level systems, and
DHP 1 - minimum of 30 percent Medicaid
With the exception of Whitehall Boca and HCR, the applicants propose to participate in the Medicaid program and agree to provide at least 30 percent of total patient days to Medicaid, as suggested in district health plan allocation factor one. The proposed Medicaid commitments are as follows:
Whitehall Boca 0 percent
HCR 0 percent
Marriott 30 percent
Regents Park 30 percent
Manor Care 40 percent
Beverly 53.8 percent
Life Care 54 percent
Heritage Park 54.8 percent
The nursing homes in the Palm Beach County subdistrict had an average of 53.7 percent of total resident days for Medicaid in the last 6 months of 1996, and 53.9 percent for the same period in 1997. Therefore, Beverly, Life Care and Heritage Park also meet the Medicaid standard established in state health plan preference two.
HCR, Marriott and Whitehall Boca are entitled to an exception from the state health plan preference as multi-level health care systems. Marriott combines nursing and assisted living care. In addition to long-term nursing care, Whitehall
Boca offers adult day care. HCR will provide nursing and home health care, and owns a physician group practice in Palm Beach County. Heritage Park is also a multi-level provider, offering nursing, assisted living and home health care but, nevertheless, complies with state health plan preference two. Regents Park and Manor Care do not meet the state health plan preference for providing Medicaid in proportion to the district average.
In terms of total number of Medicaid beds, the combination of HCR, Marriott, Beverly, and Heritage Park was suggested by Beverly's expert as a means for providing 120 beds with more Medicaid days than any of the 120-bed applicants except Life Care.
All of the proposals are generally consistent with the applicants past Medicaid performances. Heritage Park has 29 nursing beds with a 65 percent Medicaid commitment which, when combined with 17 additional beds at 54.8 percent, gives a blended rate of 61.5 percent in 46 beds. Heritage Park has served over
90 percent of the Medicaid waiver program participants in the district.
With the proposed addition, Beverly will have a blended Medicaid commitment of 43.9 percent in 168 beds. Beverly currently provides an average of 67 percent of total care to Medicaid at Royal Palm, and 65 to 70 percent Medicaid in all Beverly nursing homes.
Manor Care's proposed Medicaid commitment of 40 percent
is slightly above the applicant's 1994-1997 experiences of
33.28 percent Medicaid at Boynton Beach and 39.88 percent in Collier County. Manor Care projected a decline in the Medicaid subdistrict average due to the nursing home diversion pilot project.
Life Care serves from 65 to 70 percent Medicaid in its facilities, including the existing ones in Palm Beach County. The approvals of Beverly and Life Care would result in the
largest total Medicaid commitment in 168 beds, but would not increase capacity in southern Palm Beach County.
408.035(l)(o) - continuum of care;
SHP 4 - including respite and adult day care
In the continuum of care ranging from skilled nursing, including a special ARD unit, subacute, respite, hospice to adult day care, Manor Care proposes all of the services with minimum conditions. Life Care will provide the same services with more adult day care then Manor Care, for 10 rather the 2 persons a day, but fewer ARD beds, 20 as compared to 30 or 34 in the two Manor Care proposals. Life Care does not offer any conditions on proposed levels of respite or hospice care. Regents Park will offer respite and subacute care in addition to the traditional long-term care.
Marriott, Beverly and HCR offer long-term, specialized ARD, subacute, respite and hospice care, although Marriott's ARD unit is only in assisted living beds. HCR also owns a physicians' practice and operates a home health agency. The owners of Heritage Park and Whitehall Boca also own home health agencies, and provide a range of services which includes ARD, subacute, respite and adult day care.
408.035(2)(a) - additions of beds consistent with plans of other state agencies
responsible for providing and financing long-term care
Heritage Park participates in a Medicaid waiver program to divert residents from nursing homes to assisted living at substantial savings of $750 a month as compared to over $3,000
a month for nursing home residents. The pilot projects, including the expanded use of home health services, are promoted by the State Department of Elder Affairs. Other applicants argued that the trend should encourage applicants, such as Heritage Park, not to convert from assisted living to skilled nursing beds.
Review of Applications on Balance
Both Life Care and Regents Park failed to demonstrate the financial feasibility of their projects. In addition to not demonstrating long-term financial feasibility, Life Care was not sufficiently specific about its proposed location and has a less than superior architectural design and history of quality of care, as determined by licensure rating. Regents Park underestimated land and equipment costs, adversely affecting short-term financial feasibility, and lacked sufficient data to support its admittedly unique conceptual plan selectively to attract and serve geriatric psychiatric patients in a manner different from other nursing homes, particularly considering its proposed payer mix.
On balance, the most efficient, least costly increase in the number beds in the geographical area of greatest need, in existing, high quality providers will result from the issuance of CONS to Whitehall Boca, HCR and Heritage Park. That results in a total of 75 beds in southern Palm Beach County. Whitehall Boca is the preferable 48-bed applicant over Beverly based on quality
of care and location. Combining Manor Care's 120-bed proposal with Whitehall Boca's 48-bed proposal adds the largest number of beds to the northern area at greater cost than the smaller bed
combinations, and excludes the efficient space conversions proposed by HCR and Heritage Park.
The remaining choices are Marriott and Beverly, or Manor Care's 90-bed proposal. Of these choices, Manor Care is the more expensive total project at $7.3 million as compared to
$6.1 million, but Manor Care is approximately $300,000 lower in construction costs. In addition, Manor Care offers to condition its proposal on providing the broadest range of services. Manor Care also has the higher resident care cost at $81.46, as compared to $67.34 for Beverly, and $77.39 for Marriott.
In direct one-on-one comparisons, Manor Care better meets the state and local health plans preferences and related statutory criteria than Marriott, with distinctions based on location, charges, costs and proportion of total facilities licensed superior. In a similar comparison with Beverly, Manor Care's better record of superior care, creation of more ARD unit beds, and higher resident care costs outweigh Beverly's higher Medicaid commitment. Manor Care has demonstrated that no anti- competitive effects on costs or charges can reasonably be expected as a result of the establishment of another Manor Care facility in Palm Beach County. The three bed numeric need shortage is outweighed by the experts' unanimous agreement that ARD unit beds are needed and by Manor Care's history of providing superior care.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and parties to this proceeding pursuant to Subsections 120.57(1) and 408.039(5), Florida Statutes.
Each applicant has the burden of proving entitlement to a certificate of need based upon a weighing and balancing of all the relevant criteria. Florida Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984). With the exception of financial feasibility, no single criterion is determinative. Suburban Medical Hospital, Inc. v. DHRS, 600 So. 2d 1195 (Fla. 3d DCA 1992); First Hospital Corporation of Florida v. DHRS, 589 So. 2d 310 (Fla. 1st DCA 1991).
Ruling was reserved on the admissibility of Marriott's Exhibits 27 and 28, as rebuttal exhibits, based on Manor Care's reliance on Rhodes v. Asplundh Tree Expert Company, 528 So. 2d
459 (Fla. 3d DCA 1988) for the proposition that the evidence was cumulative and should have been presented in Marriott's case-in- chief. Based on a review of case law, the evidence is found appropriate to rebut evidence challenging the accuracy of Marriott's projected occupancy rates and thus, financial feasibility. Therefore, Manor Care's motion to strike is denied.
In order to qualify for comparative review, applicants
are required, preliminarily, to satisfy statutory and rule prerequisites related to the form and content of letters of intent (LOI). The statute in effect at the time the applications were filed is still controlling, but the rule is not. Although the statutory requirements were amended in 1997, Section 408.0455, Florida Statutes, provides that "[t]he rules of the agency in effect on June 30, 1997, shall remain in effect and shall be enforceable by the agency with respect to ss. 408.031-
408.045 until such rules are repealed or amended by the agency. .
. ." Rule 59C-1.008(1)(f), Florida Administrative Code, was amended on November 4, 1997, eliminating the language regarding a listing of those with 10 percent or more ownership interest. See Florida Administrative Weekly Vol. 23, No. 37, dated
September 12, 1997 (containing the Notice of Changes to the proposed rule); and Florida Administrative Weekly Vol. 23,
No. 43, dated October 24, 1997 (containing the index indicating the filing of the rule with the Secretary of State).
As provided in Section 408.0455, Florida Statutes, the language rule in effect at the time of hearing is applicable. AHCA v. Mt. Sinai Medical Center Of Greater Miami, 690 So. 2d 689 (Fla. 1st DCA 1977). By identifying in its LOI, the board members who are the only persons who control the corporation, Regents Park satisfied the applicable, amended provisions of Subsection 408.039(2)(c), Florida Statutes, and Rule 59C- 1.008(1)(f)-2., Florida Administrative Code.
At the request of AHCA, the following conclusion of law is adopted:
The Agency for Health Care Administration's April 18, 1997 fixed-need determination of
168 additional beds for skilled-nursing facilities licensed under Chapter 400, F.S., is binding in this case. The rule need methodology by which the fixed-need determination was made, Rule 59C-1.036(4), F.A.C., was published in the February 7, 1997 Florida Administrative Weekly and was filed for adoption with the Department of State on May 22, 1998. None of the applicants suggested a need for more than 168 additional beds in Palm Beach County. On these facts, there can be no consideration of an aggregate award of more than 168 beds. See e.g., Turro v. Department of Health and Rehabilitative Services, 458 So. 2d 345, 346 (Fla. 1st DCA 1984).
In addition, none of the parties contested the accuracy of the fixed need pool nor established any special circumstances for approval of proposals without regard to the numeric need determination.
All of the applicants meet the requirements of Subsection 408.035(1)(a), Florida Statutes, to a greater or lesser extent. Whitehall Boca, HCR, Heritage Park and Beverly demonstrated a significant demand for their proposed services to be located in highly occupied existing facilities.
113. Subsections 408.035(1)(b), (1)(d), (1)(o), (2)(b), and (2)(d), Florida Statutes, require assessments of alternatives to the services which the applicants propose to provide. The need for 168 additional nursing facility beds in Palm Beach County is not in dispute. There is no evidence of alternatives to meet
that need. All of the services proposed by the applicants are needed, in general, within the geographic areas designated for their projects. In terms of location, Life Care and Marriott are the least specific. The programmatic needs of the community based on the demand at existing facilities, are best met by expanding the services provided at HCR (subacute), Whitehall Boca (subacute) and Heritage Park (ARD). In addition, Manor Care's 120-bed and 90-bed proposals (ARD, subacute, respite, hospice, and long-term care) offer the broadest range of services with minimum conditions followed by Beverly, Life Care and Marriott, in that order. Regents Park proposed a unique service emphasis, but failed to present a viable means to attract different residents with a special need for that service.
114. Subsection 408.035(1)(c), quality of care is best established, in order, by Whitehall Boca, Regents Park, HCR, Heritage Park, Manor Care, Marriott, Beverly and Life Care.
115. Subsection 408.035(1)(e), (1)(f), (1)(g), (1)(j) and (1)(k) are not in dispute or are not criteria which are helpful in distinguishing among these applicants.
116. Subsections 408.035(1)(h) and (1)(i), related to staffing, funding, and financial feasibility are best met by HCR, Heritage Park, Manor Care and Whitehall Boca. Beverly and Marriott also meet the criteria, while Life Care and Regents Park failed to demonstrate financial feasibility.
117. Subsections 408.035(1)(e), (1(m), (2)(a), and (2)(c)
relate to construction, costs, and competition. Heritage Park and Whitehall Boca, are the least costly and most likely to enhance competition. HCR's conversion is also a low-cost means for adding beds, followed by Beverly's addition. Marriott, Manor Care, Life Care and Regents Park are the most costly proposals.
Pursuant to Subsection 408.035(1)(n) the largest number of Medicaid resident hours are proposed by Heritage Park, Life Care, Beverly and Manor Care.
On balance, considering the most distinguishing factors, financial feasibility, quality of care, location, proposed services, and costs, the applications filed by Whitehall Boca, HCR, Heritage Park and Manor Care (for 90 beds) best meet the applicable CON criteria.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED
That the application of Whitehall Boca for certificate of need 8853, the application of Heritage Park for certificate of need 8850P, the application of Health Care and Retirement Corporation for certificate of need 8860, and the application of Manor Care for certificate of need 8856P be approved; and that all other comparatively reviewed co-batched applications for certificates of need be denied.
DONE AND ENTERED this 9th day of November, 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 9th day of November, 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
Richard Ellis, Attorney
Agency for Health Care Administration Fort Knox Building 3
2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308-5403
Douglas L. Mannheimer, Attorney Jay Adams, Attorney
Broad & Cassel
Post Office Drawer 11300 Tallahassee, Florida 32302
Alfred W. Clark, Attorney Post Office Box 623 Tallahassee, Florida 32302
Robert G. Schemel, General Partner Heritage Park of West Delray, Ltd. 5858 Heritage Park Way
Delray Beach, Florida 33484
R. Bruce McKibben, Jr., Attorney Post Office Box 1798 Tallahassee, Florida 32302-1798
Robert Newell, Jr., Attorney Newell & Terry, P.A.
817 North Gadsden Street Tallahassee, Florida 32303-6313
Theodore Mack, Attorney Powell & Mack
803 North Calhoun Street Tallahassee, Florida 32303
R. Terry Rigsby, Attorney Geoffrey D. Smith, Attorney Blank, Rigsby & Meenan, P.A.
204 South Monroe Street Tallahassee, Florida 32301
James C. Hauser, Attorney Skelding, Labasky, Corry, Eastman,
Hauser, Jolly & Metz, P.A. Post Office Box 669 Tallahassee, Florida 32302
W. David Watkins, Attorney Watkins, Tomasello & Caleen, P.A. Post Office Box 15828 Tallahassee, Florida 32317-5828
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.
| Issue Date | Proceedings |
|---|---|
| Feb. 05, 1999 | Final Order rec`d |
| Nov. 09, 1998 | Recommended Order sent out. CASE CLOSED. Hearing held May 6-8. 11-14, 18-22, 26-29, 1998. |
| Aug. 21, 1998 | Correction and Amendment of Marriott`s Proposed Recommended Order filed. |
| Aug. 14, 1998 | Regents Park Inc.`s Response to Petition Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast Florida, Inc.`s Motion for Summary Recommended Order Dismissing Regents Park, Inc. (filed via facsimile). |
| Aug. 07, 1998 | Order Granting, In Part, Motion for Extension of Time to File Proposed Recommended Orders sent out. (PRO`s due by 8/7/98 at 5:00pm) |
| Aug. 07, 1998 | Life Care Health Resources, Inc.`s Proposed Recommended Order filed. |
| Aug. 07, 1998 | Marriott`s Proposed Recommended Order filed. |
| Aug. 07, 1998 | (J. Adams) Proposed Recommended Order filed. |
| Aug. 07, 1998 | Petitioner Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast-Florida, Inc.`s Motion for Summary Recommended Order Dismissing Regents Park, Inc. filed. |
| Aug. 07, 1998 | Letter to EMH from J. Adams Re: Proposed Recommended Order filed. |
| Aug. 07, 1998 | Proposed Recommended Order of Regents Park, Inc. filed. |
| Aug. 07, 1998 | Regents Park`s Memorandum of Law in Support of Conclusions of Law filed. |
| Aug. 07, 1998 | Respondent Agency for Health Care Administration`s Notice of Joinder in Proposed Recommended Orders and in Memorandum of Law, and Additional Proposed Conclusion of Law filed. |
| Aug. 07, 1998 | (Whitehall Boca) Proposed Recommended Order filed. |
| Aug. 06, 1998 | Proposed Findings of Fact, Conclusions of Law, and Recommended Order of Manor Care of Boynton Beach, Inc. filed. |
| Aug. 06, 1998 | Proposed Recommended Order of Health Care and Retirement Corporation of America filed. |
| Aug. 05, 1998 | Regents Park`s Response in Opposition to Motion for Extension of Time filed. |
| Aug. 05, 1998 | Respondent`s Request for Ruling on Respondent`s Second Motion for Official Recognition filed. |
| Aug. 05, 1998 | (J. Adams) Motion for Extension of Time to File Proposed Recommended Orders filed. |
| Jul. 28, 1998 | (W.David Watkins) Notice of Appearance as Co-Counsel (filed via facsimile). |
| Jul. 24, 1998 | Order Granting Motion for Extension of Time to File Proposed Recommended Orders sent out. (PRO`s due by 8/7/98) |
| Jul. 22, 1998 | Life Cafe Health Resources, Inc.`s Response in Opposition to Manor Care`s Request for an Extension of Time to File Proposed Recommended Orders (filed via facisimile) filed. |
| Jul. 20, 1998 | Manor Care`s Request for Two-Week Extension of time to File Proposd Recommended Orders (filed via facisimile) filed. |
| Jul. 01, 1998 | Notice of Filing; (Volumes 23-28) DOAH Court Reporter Final Hearing Transcript filed. |
| Jun. 25, 1998 | Notice of Filing; (Volumes 19-22) DOAH Court Reporter Final Hearing Transcript; Disk filed. |
| Jun. 19, 1998 | Notice of Filing; (Volumes 13-18 Only) DOAH Court Reporter Final Hearing Transcript filed. |
| Jun. 10, 1998 | Notice of Filing; (Volumes 7-12 Only) DOAH Court Reporter Final Hearing Transcript filed. |
| Jun. 04, 1998 | Notice of Filing; DOAH Court Reporter Final Hearing Transcripts (volumes 1-6 W/Disk, tagged) filed. |
| Jun. 02, 1998 | CASE STATUS: Hearing Held. |
| May 07, 1998 | Regents Park, Inc.`s Response to Life Care`s Motion for Summary Recommended Order filed. |
| May 06, 1998 | CASE STATUS: Hearing Partially Held, continued to 6/2/98; 5:00pm; Tallahassee. |
| May 05, 1998 | Order Closing File (case 97-5440 ONLY) sent out. |
| May 05, 1998 | Case No/s: unconsolidated. 97-005440 |
| May 05, 1998 | Case No/s: unconsolidated. 97-005431 |
| May 05, 1998 | Case No/s: unconsolidated. 97-002187 |
| May 05, 1998 | Case No/s: unconsolidated. 97-002588 |
| May 04, 1998 | Order Closing Files (97-2187 & 97-5431 ONLY) sent out. |
| May 04, 1998 | (Order Closing File in Case No 97-2588 ONLY) sent out. |
| May 04, 1998 | Mariner Health of Orange City, Inc.`s Notice of Voluntary Dismissal filed. |
| May 01, 1998 | (Joint) Prehearing Stipulation filed. |
| May 01, 1998 | (Life Care) Motion for Summary Recommended Order Dismissing Regents Park, Inc filed. |
| May 01, 1998 | (Arbor) Notice of Voluntary Dismissal filed. |
| May 01, 1998 | (Healthsouth) Notice of Limited Voluntary Dismissal (filed via facsimile). |
| Apr. 30, 1998 | Order Closing File (Case 97-5442 ONLY Closed) sent out. |
| Apr. 30, 1998 | Case No/s: unconsolidated. 97-005442 |
| Apr. 29, 1998 | (Beverly) Notice of Taking Deposition filed. |
| Apr. 28, 1998 | (Petitioner) Notice of Voluntary Dismissal filed. |
| Apr. 27, 1998 | Marriott Seniro Living Services, Inc.`s Witness and Exhibit Lists filed. |
| Apr. 24, 1998 | Respondent`s First Motion for Official Recognition filed. |
| Apr. 09, 1998 | Marriott`s Notice of Service of Answers to Regents Park`s Interrogatories; Marriott`s Response to Regents Park`s First Request for Production of Documents filed. |
| Apr. 08, 1998 | Manor Care of Boynton Beach, Inc.`s Notice of Service of Answers to Regents Park`s First Set of Interrogatories filed. |
| Apr. 08, 1998 | Manor Care`s Written Response and Legal Objections to Written Discovery Requests Served by Regents Park, Inc. filed. |
| Apr. 06, 1998 | (Petitioner) Notice of Taking Deposition filed. |
| Apr. 03, 1998 | (Petitioner) Response to Request for Production of Documents filed. |
| Apr. 02, 1998 | (Petitioner) Notice of Service of Answers to Interrogatories filed. |
| Mar. 25, 1998 | Healthcare and Retirement Corporation of America`s Preliminary Expert Witness and Exhibit Lists filed. |
| Mar. 23, 1998 | Respondent Arbor Health Care Company`s Preliminary Disclosure of Witnesses and Documents filed. |
| Mar. 23, 1998 | Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall Boca Raton`s Notice of Filing Witness List and Exhibit List filed. |
| Mar. 23, 1998 | (National) Witness and Exhibit List filed. |
| Mar. 23, 1998 | Manor Care Witness and Exhibit List (filed via facisimile) filed. |
| Mar. 23, 1998 | Marriott Senior Living Services, Inc.`s Witness and Exhibit Lists filed. |
| Mar. 20, 1998 | Manor Care`s First Request for Production of Documents to Regents Park; Certificate of Service of Manor Care`s First Set of Interrogatories to Regents Park; Manor Care of Boyton Beach, Inc.`s First Set of Interrogatories to Regents Park, Inc filed. |
| Mar. 18, 1998 | (R. Bruce McKibben) Notice of Appearance filed. |
| Mar. 13, 1998 | Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall boca Raton`s First Request for Production of Documents to Marriott Senior Living Services, Inc. filed. |
| Mar. 13, 1998 | Notice of Service of Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall Boca Raton`s First Set of Interrogatories to Marriott Senior Living Services, Inc. filed. |
| Mar. 13, 1998 | Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall Boca Raton`s First Request for Production of Documents to Heritage Park of West Delray, Ltd. filed. |
| Mar. 13, 1998 | Notice of Service of Whitehall Boca, an Illinois Limited partnership d/b/a Whitehall Boca Raton`s First Set of Interrogatories to Heritage Park of West Delray, Ltd. filed. |
| Mar. 13, 1998 | Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall Boca Raton`s First Request for Production of Documents to Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast-Florida, Inc. filed. |
| Mar. 13, 1998 | Notice of Service of Whitehall Boca, an Illinois Limited Partnership d/b/a Whitehall boca Raton`s First Set of Interrogatories to Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast-Florida, Inc. filed. |
| Mar. 12, 1998 | (From A. Clark) Notice of Service of Interrogatories filed. |
| Mar. 12, 1998 | Health Care and Retirement Corporation of America`s First Request for Production of Documents to Regents Park, Inc. filed. |
| Mar. 11, 1998 | (From J. Wharton) Notice of Service of Interrogatories; Arbor Health Care Company First Request for Production of Documents Upon Regents Park, Inc. filed. |
| Mar. 10, 1998 | Prehearing Order sent out. |
| Mar. 10, 1998 | Case No/s: unconsolidated. 97-005433 |
| Mar. 06, 1998 | (Intervenor) Amended Notice of Voluntary Dismissal (filed via facsimile). |
| Mar. 03, 1998 | (Integrated) Notice of Voluntary Dismissal (case no. 97-5433) (filed via facsimile). |
| Feb. 16, 1998 | Order Cancelling and Rescheduling Hearing sent out. (hearing reset for May 6-8, 11-15, 18-22 & 26-29, 1998; 10:00am; Tallahassee) |
| Feb. 12, 1998 | (Regents Park) Notice of Hearing; (Regents Park) Motion to Reconsider Rescheduling Final Hearing filed. |
| Feb. 09, 1998 | Order Cancelling and Rescheduling Hearing sent out. (97-5431-97-5443 hearing cancelled; hearing rescheduled for July 6-10, 13-17, 27-31, 1998, at 10:00 am; Tallahassee) |
| Feb. 09, 1998 | Order of Consolidation sent out. (Consolidated cases: 97-2187, 97-2588, 97-5431-97-5443, 97-5698 and 97-5699) (NOTE: New CN # is CN-2725) |
| Jan. 21, 1998 | (Respondent) Renewed Motion for Consolidation With DOAH Cases No. 97-5431 Through 97-5443 and Suggestion of Mootness as to All Subdistricts Other Than District 9, Subdistrict 4 filed. |
| Jan. 06, 1998 | Order Denying Motion to Consolidate sent out. |
| Dec. 15, 1997 | (Respondent) Motion for Consolidation With DOAH Cases No. 97-5431 Through 97-5443 and Suggestion of Mootness as to All Subdistricts Other Than District 9, Subdistrict 4 filed. |
| Dec. 14, 1997 | Order sent out. (Cases Consolidated: 97-5431, 97-5432, 97-5433, 97-5434, 97-5435, 97-5436, 97-5437, 97-5438, 97-5439, 97-5440, 97-5441, 97-5442 & 97-5443) . CONSOLIDATED CASE NO - CN002844 |
| Dec. 09, 1997 | (AHCA) Notice of Filing; (AHCA) Motion for Consolidation and for Extension of Time to File Joint Response to Initial Order filed. |
| Dec. 05, 1997 | (AHCA) Notice of Related Petitions filed. (for 97-5431 - 97-5443, 97-5698 & 97-5699) |
| Nov. 25, 1997 | Initial Order issued. |
| Nov. 20, 1997 | Notice Of Related Petitions (Doah Relations Petitions are 97-5431 thru 97-5443); Notice; Petition for Formal Administrative Hearing filed. |
| Sep. 23, 1997 | Order of Abeyance sent out. (petitioner to respond within 60 days) |
| Sep. 19, 1997 | (Healthsouth) Motion for Abeyance of Action (filed via facisimile) filed. |
| Jun. 30, 1997 | Order Granting Consolidation sent out. (Consolidated cases are: 97-002187 & 97-002588) . CONSOLIDATED CASE NO - CN002725 |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 03, 1999 | Agency Final Order | |
| Nov. 09, 1998 | Recommended Order | Letter of Intent rule at time of hearing applies; financial unfeasibility disqualifies applicants; costs, location, services and quality of care (superior licenses) determinative of most qualified Certificate of Need. |
