STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMMUNITY PSYCHIATRIC CENTERS, )

)

Petitioner, )

)

vs. ) CASE NO. 84-1471

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES and ) ORLANDO GENERAL HOSPITAL, )

)

Respondents, )

and )

) FLORIDA HOSPITAL and WEST LAKE ) HOSPITAL, )

)

Intervenors. )

)

RECOMMENDED ORDER

This matter came on for hearing in Orlando, Florida, on September 19, 20 and 21, 1984, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:

For Petitioner Morgan Staines, Esquire Community Psychiatric 2204 East Fourth Street Centers: Santa Ana, California 92705

For Respondent John F. Gilroy, Esquire Department of Health and Post Office Drawer 11300 Rehabilitative Services: Tallahassee, Florida 32302-3300

For Respondent Steven R. Bechtel, Esquire

Orlando General Post Office Box 2854

Hospital: Orlando, Florida 32802

For Intervenor E. G. Boone, Esquire Florida Hospital: Stephen K. Boone, Esquire

Post Office Box 1596 Venice, Florida 34284

For Intervenor Thomas A. Sheehan, III, Esquire West Lake Hospital: Robert M. Gross, Esquire

707 North Flagler Drive West Palm Beach, Florida

This case arose from the proposed denial by HRS of a Certificate of Need (CON) application filed by Community Psychiatric Centers (CPC) to construct a 105-bed short term psychiatric facility (75 psychiatric and 30 substance abuse beds) in the Orlando area, and the proposed grant of a CON application filed by

Orlando General Hospital (OGH) to add 26 substance abuse beds to its existing facility. Since the substance abuse bed applications may be mutually exclusive, the need for additional substance abuse beds has been evaluated on a comparative basis.

The parties submitted proposed findings of fact pursuant to Section 12O.57(1)(b)4, Florida Statutes (F.S.). A ruling on each proposed finding of fact has been made either directly or indirectly herein, except where such proposed findings have been rejected as subordinate, cumulative, immaterial, or unnecessary.

FINDINGS OF FACT

1. CPC is an international health care company specializing in psychiatric care. It operates 25 hospitals in the United States and three in Great Britain. Its proposed Orlando hospital would be its fourth Florida facility.

   
   

2. CPC has not yet selected a site for the proposed facility, but anticipates a South Orange County or Osceola County location. Site factors such as cost, services and zoning are obviously not determined and the estimated project cost of $6,776,125 is subject to substantial change. It has prepared basic architectural plans, however, which were shown to provide adequate space and necessary health care features for its proposal.

   
   

3. The CPC facility would be "freestanding" and not a part of any larger medical complex. It would provide a range of psychiatric and substance abuse services for adolescent and adult patients, emergency evaluation, family therapy and follow-up care.

   
   

4. CPC policy provides that up to 5 percent of gross annual revenue may be allocated for indigent care. Thus, some indigent patients could be treated. However, no specific commitment in this regard was made.

   
   

5. CPC has adequate funds to finance this project "in-house" and anticipates no difficulty in obtaining necessary medical staffing. In view of this company's resources and experience, its ability to fund this project and adequately staff it are reasonably certain.

   
   

6. OGH is a nonprofit 171-bed osteopathic acute care facility located in Orange County, seven miles east of downtown Orlando. It has been operated as a nonprofit facility since 1945, and has existed at its present location since 1960. In 1981, HRS issued a Certificate of Need authorizing OGH to add 70 medical-surgical beds to its facility by constructing four new floors to an existing building, including a top (sixth) floor which is now proposed for the OGH substance abuse program. The additional cost of construction is estimated to be $500,000.

   
   

7. OGH proposes to apply osteopathic principles to its substance abuse program. Of the approximately 60 doctors of osteopathy in Orange County, most are admitted to the staff of OGH and not to the allopathic facilities in Orange County, which require that doctors of osteopathy have postgraduate training in an allopathic residency program. The proposed OGH facility would thus be the only one available to these physicians and would provide an opportunity for osteopathic practice and training in substance abuse. This would also be the only program of this type available to substance abuse patients who seek osteopathic treatment in Orange County.

8. There are patient care advantages to locating a substance abuse program within an acute care hospital such as OGH, since patients who require substance abuse treatment frequently require other services provided by a general hospital. The program proposed by OGH would have such auxiliary hospital services readily available where the CPC program would not.

   
   

9. OGH has made tentative arrangements for the additional health care and management personnel required by its proposal. OGH will provide some indigent care and anticipates that it will continue to experience a "bad debt" rate of about 9 per cent, which includes indigent care costs.

   
   

10. Intervenor, Florida Hospital (FH), consists of three major campuses in the Orlando metropolitan area, (Orlando, Orange County; Altamonte Springs, Seminole County; and Apopka, Orange County). FH is a not-for-profit tertiary care hospital owned by the Seventh Day Adventist Church. It has been in operation for approximately 75 years and currently has 943 beds. As of the date of the hearing, FH had 99 beds in its facility dedicated to psychiatric and substance abuse services with 2 in Altamonte Springs, 51 in the main Orlando campus building and 24 in a building adjacent to the Orlando campus main hospital building. FH has been providing psychiatric and substance abuse services for approximately 25 years, but does not currently have any beds designated specifically for substance abuse patients.

    
    

11. At the time of the hearing, FH had under construction and scheduled to be completed in October, 1984, a 56-bed, freestanding psychiatric facility which is to be located approximately 600 feet from the main Orlando campus building, consisting of 24 adult general psychiatric beds, 16 substance abuse beds and 16 adolescent psychiatric beds.

    
    

12. During FH's current fiscal year, which began January 1, 1981, there has been a decrease in patient days in the hospital in general and a decline in occupancy in the psychiatric treatment program. At the time of the hearing, the occupancy level for the pregram was approximately 60 percent and had been less than 75 per cent during the calendar years 1982, 1983 and 1981 (through August), with a projection of 62 percent for all of 1984. The opening of the facility by Intervenor, West Lake Hospital (WLH) in May, 1984, has had the effect of reducing the number of patient days and percentage of occupancy at FH.

    
    

13. Intervenor, WLH, is located in Longwood, Seminole County, Florida, (HRS District VII) and provides psychiatric and substance abuse treatment. Forty-eight percent of its patients come from Orange County and it estimates that as many as 60 percent of those patients would go to another facility in Orange County, were one available. Since its opening in May, 1984, the WLH facility has had an occupancy level of less than 75 per cent for its 80-bed facility. Both intervenors oppose grant of the CPC application, but neither opposes grant of the OGH application.

    
    

14. HRS Rules 10-5.11(25)(d) and 27(f), Florida Administrative Code (FAC), set forth the methodology to be used in computing bed need for short term psychiatric and substance abuse treatment. Beds are allocated within each health planning district on the basis of a five year projection.

    
    

15. The proposed facilities would be located in HRS Health Planning District VII. Thus, projections, allocations and computations are based on health planning data applicable to this district. Although CPC seeks to create

    a sub-district consisting of Orange and Osceola Counties for evaluation of its application, there is no basis in these rules or in existing health plans for this proposed subdivision.

    
    

16. The projected bed need for District VII (1989) is as follows:

    
    

    A. Short term psychiatric Existing and approved beds	368
    Tentatively approved beds	60	1/
    Total existing and approved	428
    Total need	454	2/
    Net need	26
    B. Short term substance abuse
    Existing and approved beds	40
    Tentatively approved beds	26	3/
    Total existing and approved	66
    Total need	78	4/
    Net need	12

    
    

17. The above referenced rules, while providing for a minimum number of psychiatric beds in general hospitals, require no corresponding minimum number of beds in freestanding specialty hospitals, nor do they establish any preference for freestanding hospital beds. Should a freestanding facility be viewed as desirable, the new psychiatric treatment center at Florida Hospital is essentially freestanding, and would meet any such need. Further, the inventory of short term psychiatric beds indicates that the limited existing need is within the category of general hospital beds, rather than the specialty hospital category.

    
    

18. HRS Rule 10-5.11(25)(d)5, F.A.C. provides that no additional short term psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing psychiatric beds in the district exceeds 75 percent (for adult services) or 70 percent (for adolescent and children's services) for the preceding twelve months. Virtually all of the psychiatric beds in District VII have been for adult services.

    
    

19. For calendar year 1983, the occupancy rate for short term psychiatric beds in District VII was approximately 73.5 percent. For the 12-month period from July, 1983 through June, 1984 the occupancy rate had declined to 71.7 percent. Thus, the occupancy standard for short term psychiatric beds was not met.

    
    

20. Similarly, Rule 10-5.11(27)(h)1, F.A.C. provides that no additional inpatient substance beds will normally be approved unless the average occupancy rates for all existing hospital based substance abuse inpatient beds is at or exceeds 80 percent for the preceding twelve months. Since the occupancy rate for substance abuse beds during the 12-month period of July, 1983 through June, 1984 was in the low sixties, this standard was not met.

    
    

    CONCLUSIONS OF LAW

    
    

21. Subsection 382.494(c), F.S. sets forth the criteria under which CPC's application is to be evaluated. Subsection 381.494(2), F.S. applies only to the OGH application and provides:

    When an application is made for a certificate of need to construct or to expand an osteopathic facility, the need for such facility shall be determined on the basis of the need for and availability of osteopathic services and facilities in the community.

    
    

22. Since HRS has not differentiated between osteopathic substance abuse bed need and allopathic bed need, no methodology is available to allocate beds between these differing disciplines. However, no substance abuse facilities are currently available in the Orlando community where patients can seek osteopathic treatment, nor are facilities available for doctors of Osteopathy to practice medicine in the field of substance abuse treatment. Therefore, consideration must be given to such non-availability of osteopathic substance abuse treatment beds. 5/

    
    

23. The criteria set forth in Subsection 381.94(c), F.S., strongly emphasize cost considerations. The per bed cost for the OGH proposal is only about one-third that of the per bed cost estimated by CPC. Thus, the OGH proposal has a marked cost advantage over the CPC proposal. 6/

    
    

24. The feasibility of the CPC proposal depends on the grant of 75 psychiatric and 30 substance abuse beds, where the OGH proposal involves only the 26 substance abuse beds sought. Utilizing the above discussed rule standards, only 26 short term psychiatric beds and 38 substance abuse beds are available for allocation in this proceeding. 7/ Thus, only the OGH application is capable of favorable consideration here.

    
    

25. Neither application meets rule standards regarding past year occupancy rates (also discussed above). However, these standards are outweighed in the case of OGH by the current lack of osteopathic substance abuse beds.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting the application of Orlando General Hospital to establish a 26-bed substance abuse treatment program and denying the application of Community Psychiatric Centers to construct a 105-bed short term psychiatric and substance abuse facility in District VII.

DONE and ENTERED this 20th day of December, 1984 in Tallahassee, Florida.

R. T. CARPENTER Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 1984.

ENDNOTES

1/ These beds were approved by HRS in an earlier batching cycle, but are subject to challenge in other proceedings under Subsection 120.57(1)(b), F.S.

2/ Pursuant to Rule 10-5.11(25), F.A.C.

3/ These beds have been tentatively allocated to OGH and are under challenge here by CPC.

4/ Pursuant to Rule 10-5.11(27), F.A.C.

5/ See Gulf Coast Hospital, Inc. v. DHRS, 424 So.2d 86 (Fla. 1st DCA 1982) and

So.2d (Fla. 1st DCA 1984).

6/ This cost advantage would be less dramatic if earlier costs for construction of the OGH sixth floor to be utilized here were included.

7/ The 60 psychiatric beds tentatively approved in an earlier batching cycle are not available for allocation in the instant proceeding. The 26 substance abuse beds tentatively granted to OGH are available here as well as 12 substance abuse beds which have not been otherwise allocated.

COPIES FURNISHED:

Morgan L. Staines, Esquire Community Psychiatric Centers 2204 East Fourth Street

Santa Ana, California 92705

John F. Gilroy, Esquire Culpepper, Turner and Mannheimer Post Office Drawer 11300 Tallahassee, Florida 32302-3300

Steven R. Bechtel, Esquire Post Office Box 2854 Orlando, Florida 32802

E. O. Boone, Esquire and

Stephen K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284

Thomas A. Sheehan, III, Esquire and

Robert M. Gross, Esquire 707 North Flagler Drive West Palm Beach, Florida

Docket for Case No: 84-001471

Orders for Case No: 84-001471