STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
PSYCHIATRIC INSTITUTE OF DELRAY,INC. ) d/b/a/ PSYCHIATRIC INSTITUTE OF DELRAY, )
)
Petitioner, )
)
vs. ) CASE NO. 84-1829
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, AND ) HOSPITAL MANAGEMENT ASSOCIATES, INC., )
)
Respondent. )
) HOSPITAL MANAGEMENT ASSOCIATES, INC., )
)
Petitioner, )
)
vs. ) CASE No. 84-1830
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent, )
and )
) PSYCHIATRIC INSTITUTE OF DELRAY, ) d/b/a PSYCHIATRIC INSTITUTE OF DELRAY, )
)
Intervenor. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held in these cases on December 3, 4 and 5, 1984, in West Palm Beach, Florida, before Diane K. Kiesling, the duly designated Hearing Officer of the Division of Administrative Hearings.
APPEARANCES
For Psychiatric Institute C. Gary Williams and of Delray, Inc., d/b/a Michael J. Glazer
Psychiatric Institute of Ausley, McMullen, McGehee, Delray ("PIA") Carothers and Proctor
Post Office Box 391 Tallahassee, Florida 32302
and
John T. Brennan, Jr.
Bonner, O'Connell and Scheininger 900 Seventeenth Street, Northwest Washington, D.C. 20006
For Hospital Management Robert S. Cohen Associates, Inc.("HMA"') Madigan, Parker, Gatlin,
Swedmark and Skelding Post Office Box 669 Tallahassee, Florida 32302
For Department of Health John Gilroy
and Rehabilitative Culpepper, Turner and Mannheimer Services 318 North Calhoun Street
Tallahassee, Florida 32301
The issue for determination in this proceeding is whether Psychiatric Institute of Delray Inc., d/b/a Psychiatric Institute of Delray (PIA), is entitled to a Certificate of Need (CON) to add 15 long term adolescent psychiatric beds to its psychiatric hospital located in Delray Beach, Florida, and also whether Hospital Management Associates, Inc., is entitled to a CON to construct a 60-bed long term adolescent psychiatric hospital in Palm Beach County, Florida.
By Stipulation the order of presentation was established, with the Department of Health and rehabilitative Services (DHRS) presenting its case-in- chief first followed by HMA and then PA. DHRS presented the testimony of Elizabeth Dudek and introduced one exhibit into evidence. HMA presented the testimony of Noel D. Falls, Phillip C. Braeuning, Max Sugar, M.O., Edward Riggins, an John R. Chambless, together with nine exhibits. PIA presented the testimony of Roy Chernoff, David A. Gross, M.D., Irl Extein, M.D., Russell C. Scott, Carol Moore, and Tom Ebejer, together with fourteen exhibits.
The parties stipulated that the following criteria are either not applicable or are satisfied by the HMA and PIA applications:
Section 381.494(6)(c)(4), (9)(except as to
the section regarding total project costs and the components of total project costs of the HMA application), (10) and (12), Florida Statutes.
The parties further stipulated that PIA has sufficient funds available for capital and
operating expenditures and for project accomplishment and operations thereby satisfying a portion of the criteria contained in Section 381.494(6)(c)(8), Florida Statutes.
Section 381.494 (6)(d)(2)(5), Florida Statutes.
Rule 10-5.11(26)(c)(1) and (e), Florida Administrative Code.
At hearing the parties also stipulated that Rule
10-5.11(26)(c)3 contains a criteria that is not at issue in the case.
The parties filed proposed findings of fact and conclusions of law as permitted by law. All proposed findings of fact an conclusions of law have been considered. To the extent that the
proposed findings and conclusions submitted are in accordance
with the Findings, Conclusions, and views set forth herein, they shave been accepted and adopted in substance. Those findings not adopted are considered to be subordinate, cumulative, immaterial, unnecessary, or not supported by the evidence. 1/
FINDINGS OF FACT
NEED FOR LONG TERM ADOLESCENT PSYCHIATRIC BEDS
Both the application of PIA and that of HMA are for long term adolescent psychiatric beds in DHRS District IX. All parties to this proceeding are in agreement that there is some need in District IX for long term adolescent psychiatric beds.
The need for long term adolescent psychiatric beds was analyzed in two general ways. DHRS and the applicants analyzed by an "interview analysis."
This method involves interviewing key persons engaged in the provision of mental health care as it is affected by the availability of that care in District IX.
In performing its interview analysis DHRS contacted several agencies; including the District IX Local Health Council, the Mental Health Board the Alcohol, Drug Abuse and Mental Health Program Office in District IX and the Children Youth and Family Program Office (CYF) in Tallahassee. All the persons contacted indicated that there was a need for long term adolescent psychiatric services in District IX. The CYF in Tallahassee indicated that 40 adolescents from District IX were being provided long term psychiatric services through POS of Payment of Services. Under the POS program, the State pays to or contracts with providers of long term psychiatric services. At present these services are being provided outside of District IX. Additionally, CYF indicated that 25 adolescents from District IX were being provided similar services out-of-State and 32 adolescents were on a waiting list to be provided with long term services. Further, 6 adolescents were receiving long term services in state hospitals; 6 in group homes; and 17 in foster homes.
Phillip C. Braeuning, Director of Development for HMA, also conducted an interview analysis of District IX. He interviewed essentially the same individuals as those interviewed by DHRS and received documentation from CYF and the District IX Mental Health Board regarding the availability of long term adolescent services in District IX. All of this documentation showed a need for long term adolescent psychiatric beds. HMA Exhibit 6, entitled District IX, Children and Adolescent Services, and prepared by the District IX Mental Health Board, indicates that 359 patients in District IX need residential psychiatric care. HMA Exhibit 7, which was received from CYF in Tallahassee, shows that 27 adolescents are receiving long term psychiatric services outside of District IX, both in-state and out-of-state.
There are fourteen approved long term adolescent psychiatric beds in District IX, proposed to be located in the Vero Beach area in Indian River County, the northernmost county in District IX. These beds were granted in the batching cycle subsequent' to the cycle in which the HMA and PIA applications were considered. In determining the existing need for long term adolescent psychiatric beds in District IX, the DHRS's analysis, as presented at final hearing, considered these approved beds. The DHRS analysis is that there is sufficient need in District IX for the granting of both the HMA and PIA applications in addition to the approved 14 beds.
Both HMA and PIA also analyzed need according to a numerical methodology. The experts of both HMA (Noel D. Falls) and PIA (Carol Moore) applied the Graduate Medical Education National Advisory Committee (GMENAC) methodology. While both these experts utilized the GMENAC methodology, their methods of application and projected bed need numbers were significantly different.
Mr. Falls assumed a targeted age group of 10-19 using the methodology. He then identified a prevalence rate for psychoses and neuroses diagnoses. The District IX population ages 10-19 was 125,561. This was multiplied by the admission rate of .00103 (103 psychoses and neuroses per hundred thousand population) to determine the projected admissions for 1989. The projected admissions of 129 was then multiplied times four different lengths of stay (90, 120, 150 and 180 days) to determine the number of patient-days projected. The number of patient days projected was then divided by 365 days and then was again divided by 80 percent(the occupancy standard required by Rule 10-5.11(26) Florida Administrative Code) to arrive at the total need for long term adolescent psychiatric beds in District IX. After performing these calculations, Mr. Falls concluded that at an average length of stay of 90 days, 40 beds would be needed; and at an average length of stay of 120 days, 53 beds would be needed; at and average length of stay 150 days, 66 beds would be needed; at an average length of stay 180 days, 80 beds would be needed. Mr. Noel did not apply any adjustments to these figures because, in his opinion, the GMENAC methodology already has an adjustment factor built into the prevalency rate to account for any difference between need and utilization or demand. Additionally, Mr. Falls has never seen anyone advocate the application of a "demand adjustment" in addition to that already built into the methodology.
PIA's expert, Carol Moore, also used the GMENAC methodology to determine the need for long term adolescent psychiatric beds in District IX.
Ms. Moore used a target population of ages 10-17 and used a 90 percent occupancy rate as opposed to the 80 percent occupancy rate used from Mr. Falls. Ms. Moore performed GMENAC calculations in the same manner as Mr. Falls and concluded that using a 90 percent occupancy rate, 38 beds would be needed at an average length of stay of 120 days and 57 beds would be needed at an average length of stay of
180 days. If Ms. Moore had used an 80 percent occupancy rate, 43 beds would be needed at an average length of stay of 120 days and 64 beds would be needed at an average length of stay of 180 days. Ms. Moore then applied a "demand adjustment" to these projections. In her opinion, the bed need projection needs to be reduced by 50 percent because only 50 percent of those patients who actually need care will seek or demand it. Ms. Moore did not think that a demand adjustment was built into the GMENAC methodology. If the demand adjustment is applied, however, the above projected bed need, at both 90 percent and 80 percent occupancy; would be reduced by one-half. Ms. Moore also subtracted the approved beds in Vero Beach from the projected bed need and concluded that there was a net need of 14-21 long-term adolescent psychiatric beds at 90 percent occupancy and 16-23 beds at 80 percent occupancy.
In analyzing need, the primary service area for both the HMA and PIA facilities is District IX. It is recognized by all the parties that there is a secondary service area which includes District X. If the secondary service area is taken into consideration, there is a greater need than that indicated by any method.
THE HMA APPLICATION
In the November, 1983, batching cycle, HMA filed an application for a Certificate of Need to construct a "60-bed residential adolescent center" in Palm Beach County, Florida. Total projected cost was to be $6,307,310.
HMA is a corporation with main offices in Fort Myers, Florida. It is engaged in the operation of acute care and psychiatric hospitals.
HMA originally proposed to locate its facility in Boca Raton, Florida. Based on subsequent demographic data supplied to it by Noel D. Falls, HMA made a decision to move the facility to the northern part of Palm Beach County, specifically north of PGA Boulevard. However, at the time of final hearing, HMA had not selected a site for the proposed facility and did not limit itself to a location north of PGA Boulevard.
The proposed HMA facility is to be patterned after a 55-bed adolescent treatment program currently operated by HMA in Arlington, Texas. At the time of final hearing, the Arlington, Texas, facility had been operating for approximately one month.
The proposed treatment program will be based on a holistic concept of health care. The facility will be a long term hospital for the treatment of adolescents between the ages of ID and 19. It is anticipated that the facility will treat the whole person, not just the psychiatric conditions. In doing so, the program will look at and treat family problems, social problems, and other factors which have a bearing on the adolescent's ability to fit into society. The form of treatment proposed is based on the "levels of care" medical model of psychiatric treatment. This form of treatment is a behavior modification program wherein privileges are granted and tokens are received by the patients for specified behaviors Good behaviors are re-enforced; bad behaviors are not rewarded. Movement to the next succeeding level of privileges is permitted only after achievement of a certain behavior pattern. The ultimate goal of this model is to allow the adolescents to take on more suitable functioning and responsibility and to look after themselves once they leave the facility. The levels of care approach will require approximately 4-6 months for the patient to move from the admission level to the level of discharge.
The ongoing quality of programs at the HMA facility will be monitored from a corporate level. Additionally, HMA intends to seek accreditation of its hospital from the Joint Commission on Accreditation of Hospitals.
The HMA proposal anticipates a unit size of 30 adolescents, however, HMA witness, Dr. Max Sugar, does not use the treatment program proposed by HMA and believes adolescents are best treated in units of 15-20.
Staffing projections for the facility, based upon the staffing structure at the Arlington, Texas, facility, call for:
One Administrator
Two Assistant Administrators
Fourteen Registered Nurses
Forty-four Mental Health Technicians
Four Social Workers
Two Psychologists
Six Counselors
Medical Director Dietician (quarter-time)
Kitchen Workers
Purchasing personnel
Financial Manager
Four Business Office Personnel
Six Secretarial/Administrative Positions
Two Personnel Employees
Twelve Miscellaneous Other Positions.
Salaries for the proposed staff are based upon information from the National Association of Private Psychiatric Hospitals and from a study done by the Florida Hospital Association. Projected salaries should therefore be adequate to attract qualified personnel. Because the proposed facility is a 60-bed facility, it is of sufficient size to allow HMA to hire the necessary staff of physicians, paraprofessionals, psychologists and social workers on a full-time basis.
HMA is apparently not intending to be involved in any research or teaching endeavors at its proposed facility.
HMA has not made any productive contact with any members of the local medical community or mental health community. It has not made contact with health care providers such as physicians, psychiatrists, acute care hospitals, drug abuse programs, or mental health programs as it relates to any source of referrals.
HMA has no plans for joint, cooperative or shared health care resources that would result in economies or improvements in the provision of health care.
HMA has not selected a site for its proposed facility. Approximately one week prior to final hearing, HMA contacted Edward Riggins, a real estate broker and agent familiar with real estate values and availability in Palm Beach County, Florida. While HMA's application calls for a site to be a minimum of 10 to 15 acres in a semi-rural area to allow for a green belt and space for outdoor activities, the instructions given to Mr. Riggins called for a parcel of 5-15 acres and emphasized a location in close proximity to major highways and interstates with utilities within economic reach. Mr. Riggins located three potential parcels prior to hearing, but HMA had not even looked at these parcels. Additionally, any location in Palm Beach County will require a special exception to zoning in order for the site to be used for a psychiatric hospital. Factors which will impact upon achieving this special exception include traffic studies, engineering studies, and a site plan which conforms to the Palm Beach County building and zoning codes. Mr. Riggins believes that he will eventually be able to find a site which meets HMA's requirements as to price, location availability of utilities, and access, and that a special exception will be achieved.
A significant factor which may impact on cost is the traffic impact analysis for a particular site. Palm Beach County imposes considerable costs and fees upon the development of properties which may impact upon traffic on the major arteries in the county. Many of the major arteries in the northern portion of Palm Beach County are at or over capacity. The cost associated with traffic impact at a particular site could be great. While it appears likely that HMA can eventually find a suitable site, it is unknown what the impact of the site location will be on cost.
23 The design plans for the proposed HMA facility were characterized by John R. Chambless, HMA expert in architecture and design, as being a "first look." Numerous changes will be bade prior to completion of the "second look" and "third look." Even at final hearing it was clear that HMA was altering the design plan which accompanied its application. That design plan called for approximately 45,000 square feet and included a gymnasium and swimming pool. At hearing the proposed design plan contemplated elimination of the gymnasium and redesigning of the physical Plant to provide for square footage of approximately 50,524. Final design planning cannot be done until HMA has selected a site for its facility. Additionally, the site preparation aspect of the architectured plans could not be considered or anticipated because of lack of the site.
In its application, HMA projected the total cost of the project to be
$6,307,310.00. Included within this figure are project development cost of
$18,000.00; financing cost, $838,010.00; architecture and soil testing fees,
$204,000; construction cost, $3,750,300.00 (including contingency and inflation); land acquisition, $450,000; interest during construction, $170,000; fixed and movable equipments, $800,000; and other costs, $57,000. Mr. Chambless believed that the construction cost and other construction related project costs as reasonable even though the proposed project contemplated approximately 5,000 additional square feet. He believed that 6 percent architecture and engineering fees are reasonable, that a 7 percent contingency factor was reasonable, and that the cost of preparing the site was reasonable, assuming that the site selected did not have dramatic water problems. Mr. Chambless based his opinion testimony on his experience in the construction of health care facilities in Florida and in other states, but he had very little recent experience with psychiatric hospitals and no experience in the Palm Beach County area.
In contrast, according to Tom Ebejer, an expert in health care facility design and construction, including design cost and construction cost, the proposed construction costs of HMA are considerably understated. Mr. Ebejer has extensive experience in construction costs for health care facilities and has extensive current knowledge and experience in such construction costs in Florida and, in particular, in Palm Beach County. Specifically, the HMA proposed cost of construction for a 50,000 square foot building works out to a cost of $76.72 per square foot. Mr. Ebejer proposes that such construction in Palm Beach County would cost $95.00 per square. These estimates are consistent with costs of recently constructed free standing adolescent hospitals in Citrus County ($90.77 per square foot), Orlando ($95.00 per square foot), West Palm Beach, and Miami Beach. The construction cost of the current PIA facility in Delray Beach was $91.45 per square foot. Additionally, the site preparation cost proposed by HMA ($151,000.00) is approximately 5 percent of the anticipated construction cost. In Mr. Ebejer's experience, site preparation in the Palm Beach County area would be 10 percent of total construction costs on a normal site without a lot of problems. Problems that are typically encountered will include drainage problems, swampy areas, or bay heads. With these factors considered, Mr. Ebejer projects that construction of HMA facility would cost
$4,750,000.00 as compared to the proposed cost of construction of $3,836,800.00, for a understatement of the cost of construction of $913,000.00. Mr. Ebejer's projected square footage cost of construction is based upon the least expensive construction design, material, and finishes.
In evaluating the testimony of Mr. Chambless and Mr. Ebejer, it is found that Mr. Ebejer's opinions regarding construction cost are based upon his extensive experience in construction cost of similar facilities in Florida and Palm Beach County. Mr. Ebejer's testimony is given greater weight than that of Mr. Chambless and it is found that HMA's construction costs as proposed are understated and not reasonable.
HMA anticipates obtaining financing for its facility either through a local bond issue or through financing by a Private lending institution. According to Howard H. Weston, Senior Vice-President of the Municipal Financing Department of Arch W. Robertson and Company, an investment banking firm head quartered in St. Petersburg, Florida, financing through a bond issue can be obtained for this project. HMA may also receive a letter of credit from a lending institution, but it is probably not possible to receive such a letter of credit without an equity contribution from HMA. If a bond issue is utilized, it would be backed by revenues of the project, a first mortgage on the property and a corporate guarantee. It could also be backed by a letter of credit, but that would require some equity contribution by HMA. The interest rate anticipated by HMA, as shown in their application of 11.5 percent is unrealistic. The lowest interest rate on these types of bonds in the last 12 months has ranged from 12 1/2 percent to 13 3/4 percent. While HMA's projected financing for the project is preliminary, it is found that financing can probably be achieved through some combination of revenue bonds, a letter of credit, and a corporate guarantee.
The proposed financing arrangement is reasonable, based upon HMA projected cost. It is probably also reasonable in light of the earlier finding that those cost are understated, in that Mr. Weston has contemplated financing from the issuance of six and half to seven million dollars worth of bonds.
THE PIA APPLICATION
In the November, 1983, batching cycle, PIA submitted a Certificate of Need application to add 15 long term and 15 short term adolescent psychiatric beds to its facility located in Delray Beach, Florida. No question involving the short term beds was involved in this proceeding.
PIA's existing facility in Delray Beach is named the Psychiatric Institute of Delray and is a seventy-two bed speciality psychiatric hospital scheduled to open in early 1985. When it opens, it will consist of short term psychiatric and substance abuse beds. Psychiatric Institute of Delray is part of the Medical Center at Delray, a medical campus owned and operated by National Medical Enterprises, the parent company of PIA. PIA's home office is Washington D.C., and PIA is the psychiatric division of National Medical Enterprises, a corporation engaged in the operation of numerous hospitals throughout the country. The Medical Center at Delray contains an existing acute care hospital, a nursing home, and medical office buildings. Additionally, a Certificate of Need has been issued for the construction of a Rehabilitation Hospital; a shopping center providing support services for the medical campus is also under construction.
PIA's proposed treatment program was described as a "broad-based general systems approach." This program involves examining the entire individual and trying to understand those factors that influence the patient's clinical state. The treatment model is essentially a medical model.
An important part of the treatment program will be evaluation in the neuro-psychiatric evaluation unit which is a part of the existing facility at the Psychiatric Institute of Delray. Patients in the neuro-psychiatric
evaluation unit, including adolescents which may eventually become long term patients, will be given a detailed battery of psychiatric, psychological and biological tests to help determine the nature and extent of their illness.
Based upon this evaluation, new patients would be placed in the appropriate treatment units.
PIA has already hired a medical director and clinical director for the facility as well as three other psychiatrists in charge of various aspects of the program at Psychiatric Institute of Delray. This psychiatric staffing results in 2.5 full-time equivalent psychiatrists on its medical staff. The psychiatrists are currently preparing to operate the short term psychiatric unit at Psychiatric Institute of Delray and will provide the staff psychiatric services for the proposed 15 long termadolescent psychiatric beds. The psychiatrists were trained at Yale University, are eminently qualified to provide psychiatric services, and will bring active research and teaching backgrounds to the hospital.
The staffing projection for the 15-bed addition will include the following:
One Social Worker
One Activity Therapist
Two Unit Coordinators
Ten Registered Nurses
Sixteen Mental Health Workers
Two Group Leaders
One Unit Secretary
One Medical Transcriber
One Admissions Employee
One Secretary
One Maintenance Staff
k. Three Housekeeping Staff
m. Three Food Service Workers
PIA intends to set up a medical residency program with the University of Miami, a psychological residency with Nova University, and a nursing residency with Florida Atlantic University. The staff at PIA will be active in the area of research and education.
Every patient in the PIA facility will be seen by a psychiatrist seven days a week and all psychiatrists on staff will be board certified or board eligible. There will be supervision of the clinical staff by qualified personnel, a professional activity committee and a quality assurance committee. The hospital will seek accreditation from the Joint Commission on Accreditation of Hospitals and there will be continuing education programs for the staff at all levels.
PIA has been successful in recruiting qualified staff for the other units in its facility and the methods used for the recruitment are adequate for the recruitment of staff in the proposed long term adolescent unit.
Psychiatric Institute of Delray has established a referral network in Palm Beach County and PIA has established contact with other components of the health care community in Palm Beach County. The hospital will be affiliated with the 800 COCAINE Program which is a national hot-line for cocaine users This affiliation will provide a referral source for the hospital and the long term adolescent unit.
PIA will obtain an 80 percent occupancy in the long term adolescent unit by its third year of operation.
Projected cost of the project, for both the 15 long term and 15 short term beds, is $1,360,00.00. The projected development costs are $5,000 in feasibility studies, survey and permit; $80,000 in architecture and engineering fees; construction cost of $1,030,000; equipment cost of $115,000; and land acquisition and other related costs of $115,000. The design plan and projected costs are adequate and reasonable for the proposed addition to the Psychiatric Institute of Delray.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.
By pre-hearing stipulation, the parties agreed that this was a comparative hearing to determine whether the applicants meet the criteria for issuance of Certificates of Need. The parties that certain of the criteria are not at issue. Those criteria still at issue in this proceeding are Subsections 381.494(6)(c)1, 2, 3, 5, 6,7 8,9(only in so far as HMA's ability to finance its proposal and HMA's projections regarding total project costs and the components of total project cost), 11, and 13; Subsections 381.494(6)(d)1, 3, 4. At issue also are criteria set forth in Rule 10-5.11(26)(a),(b),(c)2 and 4, and (d)1, 2, 3, 4, and 5, Florida Administrative Code.
THE NEED FOR LONG-TERM ADOLESCENT PSYCHIATRIC BEDS IN THE DHRS DISTRICT IX
The so called "need" criteria are among the criteria at issue in this proceeding. Relevant to need, Subsections 1381.494(6)(c)1,6 and 11, Florida Statutes, provide as follow:
1. The need for health care facilities and services and hospices being proposed in relation to the applicable district plan and state health plan adopted pursuant to Title XV of the Public Health Service Act, except in emergency circumstances which pose a threat to the public health.
6. The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas.
11. The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district
which the entities are located or in adjacent service districts. Such entities may include medical and other
health professions, schools, multi- disciplinary clinics, and specialty services such as open heart surgery, radiation therapy and renal transplantation.
Section 381.494(6)(d)4, Florida Statutes, also applies to need, and it states:
(d) In cases of capital
expenditure proposals for the provision of new health service to inpatients, the department shall also reference each of the following in its findings of fact:
4. That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.
Finally, Rule 10-5.11(26)(c)4, Florida Administrative Code, sets forth the method by which DHRS will determine need. This rule provides:
Applicants for long term hospital inpatient psychiatric services shall show evidence that the type service and number of proposed beds are consistent with the need in the community as
perceived by the local health council, the Mental Health District Board, the State Mental Health Plan and other available needs assessment data.
In the present case, it is undisputed that there is a need for adolescent long term psychiatric beds in District IX. At present there are no existing facilities providing such services. In applying the above-cited need criteria, the question is not whether a need exists, but how great the need is. Substantial evidence was presented that satisfies the provisions of 381.494(6)(c)1, 6, and 11, and (d)4, Florida Statutes. Application of the department need criteria is not inconsistent with provisions of the state health plan. There is clear evidence of unavailability of long term adolescent psychiatric services to the residents of District IX and some patients will also be drawn from District X. Patients are currently experiencing hardship in obtaining these services because they are forced to travel outside of District IX to receive these services.
The critical question is whether need has been shown under Rule 10- 5.11(26)(c)4, Florida Administrative Code, and if so, whether sufficient need had been shown to justify the number of beds sought by these applicants. It is clear that DHRS followed its "need" criteria as set forth in this rule. The necessary interview analysis was performed and the facts established by this analysis are sufficient to show a need for both HMA's 60-bed facility and PIA's 15-bed addition. The rule does not require that need for these services be assessed by a specific numerical methodology which will result in an exact number of beds needed. It is concluded that under the needs assessment mandated by Rule 10-5.11(26)(c)4 sufficient need has been established to justify issuance of a certificate of need to both applicants.
Both applicants introduced evidence regarding a numerical bed need calculation over and above the analysis required by rule. Both PIA and HMA urged usage of the GMENAC methodology for computing need. However, the rule
regarding need for long term psychiatric services does not consider or require usage of a numerical methodology. In this regard, it concluded that the method of determining need set forth in the rule is adequate and that application of the GMENAC methodology is not only unnecessary, but it contrary to the rule.
This is particularly true when it is recognized that two experts in the GMENAC methodology expressed greatly divergent opinions as to the numerical need in District IX. Where a numerical need methodology is to be used, the mechanics of its application and the method of performing the required calculations should be provided for by rule, in order that the application of the methodology may be definite and that consistent results may be reached. Where, as here, no numerical methodology is provided for, the need analysis provided for by rule is adequate and does not need to be supplemented. A review of Chapter 10-5.11 makes it clear that DHRS is knowledgeable in the use of numerical need methodologies. Where the department has determined that such numerical need methodology is not necessary to an adequate needs determination, the needs assessment method provided for by rule must prevail and be followed. No supplementation is necessary.
In summary, it is concluded that the statutes and rule regarding need have been satisfied and that sufficient need exists in District IX to justify addition of the beds sought by both applicants.
APPLICATION OF THE OTHER STATUTORY AND RULE CRITERIA
Section 381.494(6)(c)2, Florida Statutes provides:
2. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing health care services and hospices in the service district of the applicant.
The evidence is clear that there are no existing services available in District IX and only 14 long term adolescent psychiatric beds have been approved for the district. Numerous adolescents are currently receiving treatment out of District IX and the unavailability of these services in District IX has been adequately shown. It is therefore concluded that this criteria has been satisfied, to the extent that it is relevant, by both applicants.
Section 381.494(6)(d)3, Florida Statutes provides:
3. The ability of the applicant to provide quality of care.
Both applicants demonstrated that their programs will be adequate and they have the ability to provide quality of care. Both intend to seek accreditation by the Joint Commission on Accreditation of Hospitals and both will utilize internal review procedures which will assure maintenance of quality programs. While each applicant anticipates utilization of differing treatment
programs, there was sufficient evidence of the substance of each approach to establish that the different programs will satisfy the quality of care criteria. It is therefore concluded that both applicants satisfy this criteria.
Section 381.494(6)(c)5, Florida Statutes, provides:
5. Probable economies and improvements in service that may be derived from operation of joint, cooperative, or shared health care resources.
Since there are no existing similar services available in the district, this criteria is of questionable application. Neither HMA nor PIA can rely on the existing facilities for joint, cooperative or shared programs as they relate to long term adolescent psychiatric services. PIA did established that it will rely on Psychiatric Institute of Delray and services already available at the Medical Center of Delray in the area of certain shared aspects of services, such as advantages in purchasing contracts and provision of medical services of a non-psychiatric nature. To this extent, PIA satisfies this criteria, if the criteria is relevant. It is concluded, however, that this criteria is of questionable applicability to these applications and that both applications are at least adequate as it relates to this criteria.
Section 381.494(6)(c)7, Florida Statutes, provides:
7. The need for research and educational facilities, including, but not limited to, institutional training programs and community training programs for health care practitioners and doctors of osteopathy and medicine at the student, internship, and residency training levels.
The evidence shows that PIA intends to set up some form of residency programs with the University of Miami, Nova University and Florida Atlantic University. There was no evidence to indicate that these arrangements have been formalized. HMA presented no evidence in this regard. It is recognized criteria is not generally applicable to most certificate of need cases, but that involvement in these types of activities is a plus. In this regard, it is concluded that the PIA application satisfies the above cited provision and, therefore, is superior to HMA's application.
Section 381.494(6)(c)8, Florida Statutes, provides:
8. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operations; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such
services are available in a limited number of facilities; the availability of alternative uses of such resources for the provisions of other health services; and the extent to which the proposed services will be accessible to all residents of the service district.
This criteria is comprehensive and includes more than one consideration. As to health manpower and management personnel, the evidence was adequate to show that both applicants are adequately able to recruit appropriate staff. The staffing projections of both applicants indicate an appropriate utilization of health manpower. As it relates to funds for capital and operating expenditures for project accomplishment, and for operations, the evidence presented by PIA was clearly adequate to meet this criteria. HMA presented evidence to substantiate that adequate financing is available to proceed with its project. While the evidence presented by HMA was not conclusive as to the exact details of financing, it did present adequate evidence to establish its financial ability. HMA did indicate in its application a bond issue with no equity investment at an interest rate of 11.5 percent as its method of financing. The evidence presented did not show that this exact method of financing is available, however, the evidence presented was adequate to establish that some method of financing, which would be a variation, is available.
It is concluded that both applicants satisfy the criteria of this subsection, although the application of PIA is superior to that of HMA in this regard.
Section 381.494(6)(c)9, Florida Statutes provides:
9. The immediate and long-term financial feasibility of the proposal.
The financial feasibility of PIA's application was not at issue in this proceeding. HMA's ability to finance its proposal and HMA's projections regarding total project costs and components of total project cost were at issue. The evidence shows that HMA has underestimated its project cost by approximately one million dollars. As set forth in the Findings of Fact, the evidence in this regard was in conflict, but greater weight was given to evidence supporting a finding of understatement of cost. It is therefore concluded that HMA has not adequately demonstrated that its proposed project is financially feasible and therefore HMA has not met this criteria.
Section 381.494(6)(c)11, Florida Statutes provides:
11. The needs and circumstances of those entities which provide a substantial portion of their services or resources, or both, to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical or other
health professions, schools,
multi-disciplinary clinics, and speciality services such as open heart surgery, radiation therapy, and renal transplantation.
Evidence was presented on behalf of both applicants that a portion of their patients would be attracted from outside the district. However, no evidence was produced concerning any resulting special needs or circumstances. It is concluded that this criteria is of questionable relevance to these proceeding and is not applicable to these applications.
Section 381.494(6)(c)13, Florida Statutes, provides:
13. The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction.
PIA presented adequate testimony to substantiate that its design and construction, including design costs and construction costs are adequate and comport with this criteria. It is concluded that PIA meets this criteria.
It is concluded, however, that HMA has failed to meet this criteria. The HMA design plans are termed to be a "first look." It was clear from the testimony that changes in these plans have already been made, that the gymnasium will probably be omitted and some areas redesigned, and that no further design work could be done until a site has been selected. The design plans of HMA are therefore very preliminary and lack concreteness sufficient to meet this criteria. Even assuming the design plans as they existed, it has been found that the projected construction costs additional costs will be encountered. HMA also underestimated its site preparation costs and the proposed site preparation costs are inadequate for the type of land available in Palm Beach County. In addition to the understatement of construction costs and site preparation costs, HMA presented insufficient evidence to show that its costs for the site, the traffic impact, and utility fees are adequate, since virtually no effort had been expended in even locating an appropriate site. For these reasons, it is concluded that HMA has failed to satisfy the above cited criteria.
Section 381.494(6)(d)1, and 3; Florida Statutes, provides:
1. That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the
development of such alternatives has been studied and found not practicable.
3. In the case of new construction, that alternatives to new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable.
Because there are no facilities for the provision of long term adolescent psychiatric care currently existing in District IX, it appears that these criteria are inapplicable to these proceedings. Alternatives have been
explored, there is a need, and there are no existing providers It is concluded that the criteria, if applicable, have been met.
Section 381.494(6)(d)4, Florida Statutes, provides:
4. Patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service.
The evidence clearly substantiates that adolescents are currently experiencing hardship in obtaining these services. New services will meet the need of these underserved adolescent patients and the applications of HMA and PIA both meet this criteria.
Applicable portions of Rule 10-5.11(26), Florida Administrative Code, which have not already been addressed but are relevant to these proceedings, state:
Long term psychiatric services means a category of services which provides hospital based inpatient services averaging a length of stay of 90 days.
Long term inpatient hospital psychiatric services may be provided in specifically designated beds in a hospital holding a general license, or in a facility holding a speciality hospital license.
Applications for proposed long term inpatient hospital psychiatric beds will be reviewed according to relevant statutory and rule criteria. A favorable need determination for long term hospital inpatient psychiatric beds will not normally be given to an applicant unless the following criteria and standards are met:
2. An applicant Proposing additional long term psychiatric hospital inpatient services must be able to project an annual average
occupancy rate of 80 percent for the third year of operation.
Applicants applying for long term hospital inpatient psychiatric beds shall identify:
The target population to be served
Service area
Expected source of referrals
Expected average length of stay
The relationship of the proposed services to other components of Use community mental health system within the defined service area.
In regard to these rule requirements, HMA and PIA both proposed facilities which will average a length of stay in excess of 90 days and both should be able to receive required licenses and accreditation for their facilities. Additionally, both HMA and PIA projected an annual average occupancy rate of 80 percent and these projections are reasonable. Both
applicants identified their target population to be served, the service area, any expected source of referrals, the expected average length of stay, and their relationship, if any, to other components of the community mental health system. While PIA presented more evidence in regard to its expected sources of referrals and its relationship to other components of the community mental health system, HMA presented adequate information to show that it satisfies the requirements of this rule. It is therefore concluded that both applicants satisfy the relevant portions of Rule 5-11(26) as set forth above,
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
That the Department of Health and Rehabilitative Services enter a Final Order granting the Certificate of Need application of Psychiatric Institute of Delray, Inc., d/b/a Psychiatric Institute of Delray, for 15 long term adolescent psychiatric beds. Further, that a Final Order be entered denying the Certificate of Need application of Hospital Management Associates, Inc., for a 60-bed long term adolescent psychiatric hospital.
DONE and ENTERED this 17th day of May, 1985, in Tallahassee, Florida.
DIANE K. KIESLING
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1985.
ENDNOTE
1/ Specifically PIA proposed findings 1, 12, and 13 and DHRS proposed findings
2 and 3 are adopted in substance. PIA's 10, 24, 26, 27, and 30 are rejected as not supported by the competent evidence. PIA's 11 is rejected as unnecessary. PIA's 2-9,14-23, 25, 28, 29, and 31-36, and DHRS 1 and 4-7 are modified. All of HMA's proposed findings 1-24 are modified because the form of the proposed findings of fact are such that numerous facts are set forth in each numbered paragraph, thereby rendering it impossible to make a specific ruling on each numbered paragraph.
COPIES FURNISHED:
Robert S. Cohen, Esquire Madigan, Parker, Gatlin, Swedmark and Skelding Post Office Box 669
Tallahassee, Florida 32302
John Gilroy, Esquire Culpepper, Turner and Mannheimer
318 North Calhoun Street Tallahassee, Florida 32301
C. Gary Williams and Michael J. Glazer of Ausley, McMullen, McGehee Carothers and Proctor Post Office Box 391
Tallahassee, Florida 32302
John T. Brennan, Jr., Esquire Bonner, O'Connell and Scheininger
900 Seventeenth Street, N.W. Washington, D.C. 20006
David Pingree Secretary
1323 Winewood Boulevard
Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| May 17, 1985 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| May 17, 1985 | Recommended Order | Application for Certificate of Need (CON) to poerate fifteen-bed adolescent psychiatric hospital should be approved. The CON for sixty-bed facility should be approved, as well. |
