STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
IN THE MATTER OF: ) APPLICATION OF ALPHA MEDICAL )
LAND, INC. FOR A 120 BED NURSING ) CASE NO. 75-2067 HOME, TO BE KNOWN AS BRADENTON )
CARE CENTER, )
)
RECOMMENDED ORDER
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, beginning at 10:30 A.M. on January 20, 1976, and continuing at 10:30 A.M. on February 19, 1976, in Room 113 of the Collins Building, Tallahassee, Florida. Upon the stipulation of the parties, the hearing was officially closed on March 8, 1976, with the receipt of the parties' written memoranda in lieu of closing arguments.
APPEARANCES
For Petitioner: Dr. E. P. Dickerson
Vice President, Alpha Medical Land, Inc.
2010 59th Street West Bradenton, Florida 33505
For Respondent: Mr. James G. Mahorner, Esquire
Department of Health and Rehabilitative Services
1323 Winewood Boulevard
Tallahassee, Florida 32301 FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following pertinent facts are found:
In June of 1975, Alpha Medical Land, Inc. (hereinafter referred to as the applicant) submitted to the Bureau of Community Medical Facilities (hereinafter referred to as the Bureau) its application for a certificate of need for the construction of a 120-bed nursing home in Bradenton, Florida. The proposed nursing facility was to be located adjacent to an existing 152-bed hospital (L. W. Blake Memorial Hospital) and a multistory medical arts facility having thirty-six doctors. The estimated capital expenditure for the project was $2,217,569.00. (Exhibit A). A revised application was submitted by the applicant on or about July 2, 1975, deleting any reference to proposed retirement apartments. (Exhibit C.)
The application was originally reviewed and analysed by the staff of the Gulf Coast Health Planning Council. At the time of this review, said Council had before it another application from the Gulf Coast Nursing and Rehabilitation Center for a certificate of need for a 120-bed nursing home in Bradenton. It was the conclusion of the staff that there was no current need
for additional nursing home beds in Manatee County. This conclusion was based on a finding that there were 515 existing nursing home beds (excluding the 78 beds of two church operated retirement centers with nursing care units) and that the twelve previous months' occupancy rate for these beds averaged 83 percent, well below the optimum average occupancy rate of 90 percent. The staff projected a 1980 need of 135 additional nursing home beds and a 1977 need of 45 additional beds, if alternatives to nursing home care are not developed before then. (Exhibit D.)
The staff analysis was presented to the Project Review Committee of the Gulf Coast Health Planning Council, which held a hearing on the two applications on July 21, 1975, in Ruskin, Florida. Both applicants were present at this hearing and Dr. Dickerson presented a report to the committee members, explaining the proposed project to be known as the Bradenton Care Center. A majority of this Committee found that there is no need for additional nursing home beds in Manatee County and disapproved the two applications for certificates of need, the vote being 3 to 2, with one abstention. (Exhibits D and F.)
The Committee instructed the staff to include among the material sent to the Planning Council members a report showing the rationale of the majority and minority opinions of the Project Review Committee. For the majority opinion (disapproval of both nursing home applications) the rationale included the following:
The empty beds showed there is no immediate need for additional nursing home beds.
Addition of nursing home beds will lower the utilization of existing nursing homes. The patient's fee must then be increased in order for the facility to meet its fixed expenses.
There are people in nursing homes that do not belong there.
Staff projected a need by 1977 only if
no alternatives to nursing homes are developed then the existing nursing homes would be able to
take care of the need generated by increasing popu- lation. Because of the flexibility of the
period we are in now and the fact that there is no immediate need for beds, we should not approve any construction now.
The rational of the minority opinion for approval of some nursing home beds was as follows:
According to staff projections, there will be a need for additional nursing home beds by 1977. We should begin to construct these beds now.
The Bradenton Care Center proposal does offer the advantages of sharing of services with an acute general hospital.
There is some question as to the uniqueness of the services to be offered at the Bradenton Care Center. These may be of great benefit to the community. (Exhibits D & F.)
The Gulf Coast Health Planning Council met on August 11, 1975, to consider the applications. The Council heard a summary of the staff report, a review of the Project Review Committee report, presentations from both applicants as to the need for additional nursing home beds in Manatee County, statements in opposition to additional nursing homes in Manatee County and discussions regarding alternatives to nursing home care. Dr. Dickerson expressed the opinion that home health agencies and other alternatives would not be adequate substitutes for the type of care that his proposed nursing home would give. As a reason for the low use rates of existing nursing homes, Dr. Dickerson suggested that physicians hesitate to refer patients to certain homes because of the poor quality of care given. The Council voted unanimously to disapprove the application of Gulf Coast Nursing and Rehabilitation Center.
With one dissenting vote, the Council also voted to disapprove the application of the Bradenton Care Center. Apparently, three members of the Council abstained in both votes. (Exhibit G.)
By "Council Certification", the Gulf Coast Health Planning Council listed the following reasons for disapproval of the present application:
There is no immediate need for additional nursing home beds in Manatee County.
At this point in time, the Council chooses to wait and see what program alternatives to facility construction develop at the state and federal levels, because such programs are receiving increased attention from these major third party payors of health care to the elderly.
Addition of nursing home beds at this time will probably increase the cost of health care in the community. It will cause lower occupancy at the existing nursing homes who must, in turn, raise
their patient fees to cover the fixed operating costs. (Exhibit H.)
The Bureau of Comprehensive Health Planning reviewed the Council's position and procedures, found them to be adequate and acceptable and concurred with the Council in recommending disapproval of a certificate of need for the applicant's proposed 120-bed nursing home. (Exhibit I.)
Medical Facilities Specialist Ray Chamblis recommended to the Chief of the Bureau of Community Medical Facilities, Mr. Art Forehand, that he deny the applicant's application. In his letter of recommendation, Mr. Chamblis noted that although the official 1975 Florida State Plan for Construction of Hospitals and Related Medical. Facilities indicates that 95 additional nursing home beds would be needed in Manatee County by 1980, the 515 beds now open to the public have not been utilized to their potential. In the alternative, Chamblis recommended that if it were determined that an additional 120-bed nursing home were needed in Bradenton, a certificate of need should be issued to the Gulf Coast facility. This recommendation was based upon the facts that Gulf Coast was the first applicant and its debt service would be considerably lower than that of Alpha Medical Land, Inc. (Exhibit J.)
The State Hospital Advisory Council held a public hearing on the instant application on October 21, 1975. At this hearing, the applicant made an oral and written presentation, the administrator of the Gulf Coast Health Planning Council explained the procedures the Council took in evaluating the application, persons associated with existing nursing care facilities spoke as to the lack of community need for additional nursing home beds and Mr. Ray Chamblis explained his recommendations, pointing out that the applicant's proposed facility would cost approximately $18,300.00 per bed, as opposed to a state average price per bed of approximately $12,000.00. The Advisory Council members also directed questions to the applicant and heard testimony regarding alternatives to nursing home care and the quality of care in existing facilities. By a vote of 5 to 3, the State Hospital Advisory Council voted to recommend that a certificate of Need for the applicant be denied. (Exhibit K.)
By letter dated October 23, 1975, Mr. Art Forehand, Chief of the Bureau of Community Medical Facilities, notified the applicant that its capital expenditure proposal was not favorably considered for two reasons. The first reason was that there is not a demonstrated need for an additional 120 nursing home beds in Manatee County. Mr. Forehand noted that although the 1975 Florida State Plan for Construction of Hospitals and Related Medical Facilities indicates a need for 95 additional nursing home beds by 1980, the 515 existing beds open to the public "have not been utilized to the extent that additional beds are required now or in the foreseeable future". Seasonal fluctuation in occupancy rates was recognized. However, it was found that, with few exceptions, on any given day during the past 2 1/2 years, nursing home beds have been available in Manatee County, with the average number of empty beds ranging daily from 88 to 112, rendering an occupancy rate of between 75 percent and 83 percent. The situation was expected to continue until 1979 or 1980 due to the development of alternatives to nursing home care.
The second reason assigned by Mr. Forehand was that the
"proposal is not conducive to cost containment especially in the area of reimbursements for services rendered to Medicare/Medicaid patients."
It was noted that the average cost throughout Florida to construct similar nursing homes is $12,000 per bed. The applicant's proposal amounts to
$18.300.00 per bed, or a total cost of approximately $756,000.00 more than that of similar nursing homes in Florida. It was determined that the resulting higher-than-average Medicare-Medicaid reimbursements were not justifiable. (Exhibit L.)
From this decision, the applicant appealed and requested a hearing. (Exhibit M.) The undersigned hearing officer with the Division of Administrative Hearings was assigned to conduct the hearing.
The applicant's presentation at the hearings held on January 20th and February 19th, 1976, made the following challenges to the methods of review allegedly utilized by the reviewing authorities:
the rigidity of formulas used by State planners;
the unilateral determination of bed needs by those having no responsibility for the actual care of the patient;
the erroneous population figures used to determine future needs of nursing home beds within Manatee County;
lack of assistance from the reviewing authorities regarding information of what would be supported by them;
lack of consideration of the quality of care offered by existing institutions;
confusion between the concepts of availability of beds in the community and accessibility of those beds to patients and doctors;
lack of consideration of patient choice in determining future need;
lack of recognition of the factors of quality of care and innovative services when considering ultimate expenses and cost containment; and
certain members of the reviewing bodies were community employees and thus community oriented and biased against the private industry of medicine.
In response to the factual challenges posed by the applicant, the evidence demonstrates that:
In arriving at its statistics with regard to bed needs in Manatee County, the staff of the Gulf Coast Health Planning Council utilized a survey sent out to nursing homes in the area requesting the number of beds and monthly occupancy thereof, and personal interviews were conducted with personnel of various nursing homes, the Manatee County Planning and Development Department, the Council on Aging, the Chamber of Commerce, and the Division of Family Services.
To the figures obtained, the staff applied the Hill-Burton formula and modified the results by adding the alternative of greater future usage of nursing homes by the elderly. The staff felt that the Hill-Burton formula was not hard and flexible and that it could be weighted to suit situations in each county. The staff found the State to be flexible in its application of the State Plan if sufficient rationale were provided at the local level.
The population figures utilized by the staff of the Gulf Coast Health Planning Council were obtained from the Manatee County Planning and Development Department, which is responsible for determining population in connection with the building of roads, sewers, etc. The staff also used figures obtained from County voting registrations. The figures obtained and utilized, both with regard to population and bed utilization, compared favorably with those reported to the Bureau by individual facilities and those set forth in the Florida State Plan.
To the staff's knowledge, no request has been made by the applicant for specific additional information regarding the criteria, standards and plans utilized in the review process. In his initial review of applications, the Medical Facilities Specialist of the Bureau of Community Medical Facilities will advise the applicant if the proposal contains the information requested. However, direct comment would not be made to the applicant regarding the merits of the proposal for fear of later charges that the Bureau had prejudged the application prior to proper review procedures.
Since all the existing nursing homes in Manatee County were duly licensed by the State, the quality of care offered by each such existing institution was not specifically analysed.
Considerable evidence was adduced at the hearings concerning the fact that one of the existing homes refused to admit the patients of two doctors affiliated with the applicant. The Vice-President of said existing nursing home has stated by letter that his nursing home would not refuse admission of patients from any physician in Manatee County. While this nursing home requested these two doctors to place their patients in other homes, it stated, that it would accept their patients if other homes would not. (Exhibit 2.)
Patient choice is considered by using the 90 percent optimum occupancy rate. The extra 10 percent gives flexibility for patient choice.
In connection with the proposed cost, there was no evidence produced by the applicant demonstrating how its proposed facility would offer a higher quality of care than existing facilities or what specific innovative services or techniques would be offered by the applicant.
Other than vague allegations on behalf of the applicant of prejudice against the private sector of medicine on the part of certain members of the reviewing bodies, there was no evidence regarding either the employment status of the various committee or Council members nor their viewpoints regarding community operated institutions as opposed to privately owned and operated institutions.
In the absence of ultimate approval of its original 120-bed nursing home proposal, the applicant stated its desire to amend its application to ask for a lesser number of beds in accordance with the State Plan at a cost of approximately $12,000.00 per bed. In the alternative, the applicant would amend its application so as to propose construction of the 120-bed facility
"with a valid Certificate of Need for 90 beds, the remainder of the beds to be warehoused pending further demonstrated need and proper restraint be placed upon the other 30 beds prohibiting their use until such time as actual need can be demonstrated."
CONCLUSIONS OF LAW
When applying for a certificate of need to construct or expand health care facilities, the applicant has the burden of demonstrating the need for such health care services in the community and that its proposed capital expenditure is justified. Section 1122 of the Social Security Act (P.L. 92-603); F.S. ss. 381.493 - 381.497; F.A.C. Ch. 10I-1 and 2.
The primary issue for the hearing officer's determination is whether the proposed expenditure is consistent with the standards, plans and criteria established by federal and state statutes, rules and regulations, and to determine the adequacy and correctness of the review which resulted in the unfavorable decision. The undersigned Hearing Officer concludes that the proposed expenditure is inconsistent with the Florida State Plan for Construction of Hospitals and Related Medical Facilities, and with the standards and criteria relating to community need and cost containment.
In determining the need of such a capital expenditure proposal, certain criteria are set forth in F.S. 381.494(A)(c) and in F.A.C. Rule 10I- 1.03(C). It appears from a review of the evidence, both oral and documentary, adduced at the hearing that the reviewing authorities' carefully considered and applied all of the applicable criteria set forth in said statute and rule. While the applicant met some of those criteria, the evidence as a whole demonstrates that there is not a presently existing need for an additional 120- bed nursing home in Manatee County and that the applicant's project as a whole will not foster principles of cost containment. The evidence clearly
establishes that on any given day over the past two and one half years, with few exceptions, there have been from 88 to 112 empty nursing home beds in Manatee County. This amounts to a utilization rate of between 75 and 83 percent, well below the optimum rate of 90 percent. The evidence presented by the applicant is not sufficient to overcome the figures utilized by the reviewing authorities.
The evidence is also undisputed that the applicant's existing proposal will cost about 33 percent more than other similar facilities constructed in Florida. The applicant introduced no evidence to justify this increased cost. While allegations were made by the applicant of a greater quality of care and the offering of innovative services, no factual evidence was produced to substantiate such allegations.
The major portion of the applicant's presentation at the hearing was directed toward a challenge of the adequacy of the established standards, plans and criteria set forth in state and federal statutes and regulations. Rather than establishing the inadequacy of the review which occurred or demonstrating nonadherence to state and federal procedures, the applicant directed its case toward a general criticism of established procedure, criteria, plans and standards. As stated in F.A.C. Rule 10I-1.03(7)(b):
"The correctness, adequacy, or appropriateness of the criteria against which the proposed expenditure was measured are NOT matters for consideration at the hearing."
Likewise, the applicant presented no evidence or argument on the issue of whether the exclusion of expenses related to the proposed expenditure would discourage the operation or expansion of the facility, or would otherwise be inconsistent with the effective organization and delivery of services or the effective administration of Medicare or Medicaid programs.
The question arose during the hearing as to whether the hearing officer could recommend that a certificate of need be issued for a lesser number of beds at a reduced cost in accordance with the Florida State Plan or findings of the reviewing authorities as to community need. The applicant offered to amend its application, in the event of an ultimate unfavorable decision, as set forth in paragraph 14 of the Findings of Fact recited above.
Upon a review of the state and federal statutes, rules and regulations, the undersigned concludes that she cannot so recommend both a reduced number of beds and a reduced cost per bed in the absence of a renewed application which travels through the appropriate local and statewide channels of review. Several provisions of the Florida Statutes and the Bureau of Community Medical Facilities Regulations, F.A.C. Ch. 10I-1, which are patterned after the federal regulations, support this conclusion. F.S. 381.494 (6)(c) provides that upon review of the application, the recommendation of the health
systems agencies and the relationship between the application and the state health plan, the Bureau "shall issue or deny certificates of need." The health systems agency may only recommend to the bureau that the application be approved in its entirety or that the application not be approved. F.S. 381.494(5)(d).
In making its recommendation to the Secretary of Health, Education and Welfare, the Bureau is to make "a clear-cut recommendation which will not contain conditions or contingencies." F.A.C. Rule 10I-1.03 (d)(5). Also, when the Secretary of HEW determines that reduced reimbursements are to be made because the capital expenditure is considered unnecessary, requests for reconsideration may be submitted when a substantial change in facilities or needs occur or after a period of three years elapses. In any event, a request for reconsideration is to be submitted and reviewed in the same format and manner as for initial applications. F.A.C. Rule 10I-1.03(F). With these provisions in mind, as well as the extensive provisions regarding the general procedures for administering 1122 of Public Law 92-603 and the functions of local and statewide health systems agencies, it is not felt that an application for a certificate of need can be amended so extensively, both as to costs and the number of beds requested, at this late stage of the review process.
However, in light of the time, effort and expense of the applicant in pursuing its application, the applicant's apparent willingness to conform its proposed facilities to the needs determined by the State Plan and the findings of the local health planning council, and the representation that other applications for nursing home facilities in Manatee County have not been filed, the following recommendation is made. Should the applicant desire to submit a new application for a certificate of need requesting a lesser number of beds at a lesser expenditure per bed, it is recommended that consideration of such application be given precedence over that of any other application filed subsequent to the date of the original application filed herein. It is further recommended that review of such new application, if filed, be expedited in accordance with the following time schedule: completion of review by the health systems agency on or before 45 days after the filing of the new application or, if already filed, after ultimate action in the present case; and action by the Bureau within 15 days from receipt of the recommendations of the health systems agency.
Based upon the findings of fact and conclusions of law recited above, it is recommended that the determination of the Bureau of Community Medical Facilities to deny the applicant's application for a certificate of need for the construction and operation of a 120-bed nursing home facility at a total capital expenditure of $2,217,569.00 be upheld and affirmed. It is further recommended that if the applicant elects to file a new application for a lesser number of beds at a reduced expenditure, said application receive consideration by the reviewing authorities within the time frames set forth above.
Respectfully submitted and entered this 18th day of March, 1976, in Tallahassee, Florida.
DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
(904) 488-9675
COPIES FURNISHED:
Dr. E. P. Dickerson Vice-President
Alpha Medical Land, Inc. 2010 59th Street West Bradenton, Florida 33505
James G. Mahorner, Esquire State of Florida, Department
of Health and Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32304
Mr. Art Forehand, Director
Bureau of Community Medical Facilities Department of Health and Rehabilitative
Services
1323 Winewood Boulevard
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| Mar. 18, 1976 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 18, 1976 | Recommended Order | Deny Certificate of Need (CON) for 120 nursing beds but allow Petitioner to reapply with less beds at lower cost. |
