STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ARBOR HEALTH CARE COMPANY, INC., ) d/b/a INDIAN RIVER HEALTH CENTER, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-0247

)

STATE OF FLORIDA, DEPARTMENT ) OF HEALTH AND REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled case on September 11, 1986, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Jay Adams, Esquire

BARCLAY & ADAMS, P.A.

215 East Virginia Street Tallahassee, Florida 32301

For Respondent: Richard A. Patterson, Esquire

Department of Health and Rehabilitative Services

Building One, Room 407 1323 Winewood Boulevard

Tallahassee, Florida 32301 PRELIMINARY STATEMENT

Petitioner, Arbor Health Care Company, Inc., d/b/a Indian River Health Care Center, Inc., contests the decision of the Respondent, Department of Health and Rehabilitative Services, to deny its application for a certificate of need to construct a 60 bed nursing home in Indian River County, Florida. The central issue in this case is whether there is a need for 60 community nursing home beds in Indian River County pursuant to Rule 10- 5.11(21), Florida Administrative Code.

At hearing Petitioner called as witnesses: Ward M. Koutnik, accepted as an expert in time/travel studies; Harold E. Knight, accepted as an expert in health planning; and, Gail Breck. Petitioner's Exhibits 1-5 were received into evidence, as well as Petitioner's Exhibit 6 (mistakenly identified as Petitioner's Exhibit 5 at page 23 of the transcript) and Petitioner's Exhibit 7, a time/travel study consisting of Figures 1-5 as testified to by Mr. Koutnik (mistakenly not referenced as an exhibit in the transcript). Respondent called

as a witness Joyce M. Farr, accepted as an expert in the Florida certificate of need review process, and its Exhibits 1 and 3 were received into evidence.

The transcript of hearing was filed October 22, 1986. The parties waived the requirement set forth in Rule 28-5.402, Florida Administrative Code, that a Recommended Order be entered within 30 days after the transcript is filed. See: Rule 22I- 6.31, Florida Administrative Code.

The parties have submitted Proposed Findings of Fact, and they have been reviewed and considered. The findings have been addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. On July 15, 1985, Petitioner, Arbor Health Care Company, Inc., d/b/a Indian River Health Care Center, Inc. (Arbor) filed an application with Respondent, Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to construct a 60-bed nursing home in Indian River County, Florida. 1/ That application was deemed complete on September 30, 1985. On December 11, 1985, the Department denied Arbor's application, and Arbor timely petitioned for formal administrative review.

   
   

2. The facility proposed by Arbor would offer a wide range of services for its residents, including: 24-hour skilled and intermediate nursing care, full- time recreational, physical, speech, hearing and occupational therapy services, as well as psychological and social services. Additionally, Arbor proposes to offer subacute services, such as intravenous care and forced feeding, as needed.

   
   

3. The parties agree that Arbor meets all statutory and rule criteria for issuance of a certificate of need for additional nursing hone beds in Indian River County (a subdistrict of District IX) except need and the impact such lack of need would exert on the other criteria.

   
   

4. The Department has adopted Rule 10-5.11(21), Florida Administrative Code, to determine need for additional community nursing home beds. Using a planning horizon of July 1988, which is three years after the date of application, the rule calculates a net surplus of 61 community nursing home beds for Indian River County.

   
   

5. Existing nursing home beds in Indian River County are underutilized and there are a number of nursing home beds available to the public. For the six month period ending June 30, 1986, Indian River County nursing homes were reporting an average occupancy of 85.5 percent, which reflects an average vacancy rate of approximately 47 licensed beds per day. 2/

   
   

6. Arbor concedes that there is no numeric need for additional nursing home beds in Indian River County under the need methodology prescribed by Rule 10-5.11(21), Florida Administrative Code, but contends that special circumstances exist which warrant the issuance of the requested certificate of need. The gravamen of Arbor's assertion is that existing facilities are not geographically accessible to the patients it proposes to serve, that the present patient base is unable to access currently licensed and approved facilities, and that existing facilities do not provide needed services. Arbor's assertions are unpersuasive.

   
   

7. Rule 10-5.11(21)(b)10, Florida Administrative Code, establishes a methodology whereby an applicant can establish the existence of special

   circumstances which could warrant the issuance of a certificate of need when no numeric need is demonstrated. Under the provisions of that subsection, an applicant must demonstrate that:

   
   

   ... those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons with a documented need exceed the number of licensed unoccupied and currently approved nursing home beds....Patients' need for nursing home care must be documented by the attending physician's plan of care or orders, assessments performed by staff of the Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care. (Emphasis added.)

   
   

   Arbor failed to establish by competent evidence ("document") through any of the methods mandated by the rule, or their equivalent, that any person in need of nursing home services has been denied access to currently licensed but unoccupied beds, that the number of persons with a documented need exceeds the number of licensed unoccupied and approved beds, or that any patient has been denied needed services. Further, the proof offered by Arbor was inadequate, as discussed infra, to demonstrate any special circumstances which would support approval of its application.

   
   

   Geographic accessibility.

   
   

8. Arbor proposes to locate its nursing home in the Sebastian area of Indian River County. Currently, all licensed and approved nursing homes are located in Vero Beach, 16 miles south of Sebastian. To support its claim of geographic inaccessibility, Arbor commissioned a time/distance study to identify its potential patient base for the year 1988 that would be outside a 30-minute drive time to existing and approved facilities in 1988. As commissioned, Arbor's study identifies approximately 9,000 residents of north Indian River County, slightly more than 10 per cent of the County's population, who will be outside a 30-minute drive time to existing and approved facilities in 1988. Of that population, Arbor estimates that approximately 2,250 people will be 65 years of age or older.

   
   

9. While Arbor offered proof which would, if accepted, support recognition of a 30-minute drive time standard for patients needing to access nursing home beds, it offered no proof of what portion of the identified population in north Indian River County that was 65 years of age or older would need such services. Accordingly, the most favorable conclusion that can be drawn from Arbor's proof is that the number of such persons will be proportionate to the relationship that exists between the identified population (9,000 residents) and the County's population as a whole; approximately ten percent. Applying that percentage to the number of beds numerically needed in the County in 1988 (347 beds) could austensibly demonstrate a need for 35 beds in Sebastian. However, Arbor offered no proof that its proposed 60-bed facility would be financially feasible in either the short term or long term in the face of such limited need, nor did it propose a facility of less than the 60-bed standard established by the local health plan.

10. Concerning the 30-minute drive time standard advocated by Arbor, it is worthy of note that the local health plan contains no such standard. While it is true, as noted by Arbor, that the local health plans for District III and District VI contain a 25 and 30 minute standard respectively, it is also true that the local health plan for District VIII contains a one hour drive time standard. Accordingly, reference to the standards established in other districts is not germane to an evaluation of the needs of District IX, or the Indian River subdistrict.

    
    

11. While Arbor did submit proof which established the reasonableness of a 30-minute drive time standard, it is worthy of note that not one patient, family member, physician, or provider offered any evidence that geographic accessibility was a problem in Indian River County. Accordingly, while a 30- minute drive time standard may be reasonable, the proof does not establish an accessibility problem in Indian River county if that standard is exceeded. Patient access to current facilities.

    
    

12. To support its assertion that patients were being denied access to current facilities, Arbor offered the testimony of its health planning expert, Harold E. Knight. Mr. Knight testified that he spoke with the discharge planner of Humane Hospital Sebastian and was advised that she had experienced difficulty in placing three nursing `home candidates in January 1986, two in February, four in March, two in April, zero in May, three in June, and zero in July. According to the planner it took, on average, one week to place these candidates. Mr. Knight also spoke with the discharge planner of Indian River Memorial Hospital who advised him that she was having difficulty placing five to eight nursing home candidates each month, and that their average wait for admission was three weeks.

    
    

13. While Arbor's proof demonstrated some delay in placing potential nursing home candidates, it failed to offer competent evidence to establish the cause of such delay. Since a delay in placement can result from the personal preference of a patient for a particular nursing home, as easily as it can from a lack of available facilities, Arbor's proof was inadequate to establish that residents were being denied, pertinent to Arbor's claim of special circumstances, access to needed services.

    
    

14. Arbor also suggests that Medicaid patients are being denied admission to the Vero Beach nursing homes, thereby creating an economic access barrier. To support its assertion, Arbor offered proof that two of the nursing homes did not accept Medicaid patients, that Medicaid utilization in District IX was the second lowest in the State at 44.9 percent, and that the Indian River

    subdistrict utilization rate was at 32.52 percent. Such facts are not, however, sufficient to support a finding that Medicaid access is unavailable in the County.

    
    

15. The two nursing homes which do not admit Medicaid patients account for only 96 beds out of the 326 licensed beds in the County. Additionally, there are 91 approved beds in the County. Lack of utilization, absent competent proof of its cause, does not establish a lack of accessibility. Arbor failed to establish that a Medicaid access problem existed in Indian River County.

Lack of needed services.

1. Finally, Arbor suggested that its agreement to provide subacute services as needed, such as intravenous care and forced feeding, would alleviate a problem of accessibility to and availability of needed services. While the

   implementation of diagnostically related groups (DRGs) has resulted in the release from hospitals of patients requiring more acute nursing care services, Arbor failed to establish that the existing nursing homes did not, or would not if needed, supply such services.

   
   

   Other considerations.

   
   

2. In evaluating Arbor's application none of the criteria established by Section 381.494, Florida Statutes, have been overlooked. However, need is the key criteria in the instant case and Arbor's failure to satisfy that criteria is, on balance, dispositive of its application for licensure.

   
   

   CONCLUSIONS OF LAW

   
   

3. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

   
   

4. Pertinent to this proceeding, Section 381.494(6)(c), Florida Statutes, and Rule 10-5.11(21), Florida Administrative Code, establish the criteria which must be considered in evaluating applications for a certificate of need. See: Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1986) and Department of Health and Rehabilitative Services v. Johnson and Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984). The weight to be accorded each criteria and the consequent balancing of the criteria will vary, however, depending on the facts and circumstances of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So.2d 83 (Fla. 1st DCA 1985). See: Graham v. Estuary Properties, Inc., 399 So.2d 1374 (Fla. 1981).

   
   

5. In the instant case, need as contemplated by Section 381.494(6)(c) 1, 2, 9, and 12, Florida Statutes, and rule 10-5.11(21), Florida Administrative Code, are the key criteria in evaluating the proposal of Arbor. Arbor's failure to satisfy those criteria is dispositive of its request for licensure, and such failure is not outweighed by any other, or combination of any other, criteria.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the application of Arbor for a certificate of need to establish a 60- bed nursing home in Indian River County, Florida, be DENIED.

DONE and ORDERED this 25th day of November, 1986 in Tallahassee, Florida.

WILLIAM J. KENDRICK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 25th day of November, 1986.

ENDNOTES

1/ As an adjunct to the proposed nursing home, but not at issue in this proceeding, Arbor proposes to provide a 45-bed adult congregate living facility (ACLF). While the existence of such ACLF would provide a continuum of care, the availability of such service is not germane to a determination of the need for Arbor's proposed nursing home.

2/ There are currently four nursing homes in Indian River County, and 326 licensed nursing home beds. Additionally, there are currently 91 approved but unlicensed beds in Indian River County. For the six month period ending March 31, 1986, Indian River County nursing homes reported an average occupancy of

1. per cent. The evidence suggests that there is some seasonal fluctuation of the County's occupancy rate; however, at maximum utilization there still exists an average vacancy rate of approximately 37 beds per day.

   
   

   APPENDIX TO RECOMMENDED ORDER IN CASE NOS. 86-0247 & 86-0912

   
   

   The Department's Proposed Findings of Fact are addressed as follows:

   
   

   1. Addressed in Paragraph 1.

   2. Addressed in Paragraph 3.

3-4. Addressed in Paragraphs 4-5.

5-6. Addressed in Paragraphs 6 & 8.

1. Addressed in Paragraph 15.

2. Addressed in Paragraph 7.

Arbor's Proposed Findings of Fact are addressed as follows: 1-2. Addressed in Paragraph 1.

1. Not a Finding of Fact.

2. Addressed in Paragraphs 3 & 6. 5-6. Addressed in Paragraphs 1-2 & 8.

7-17. To the extent relevant, addressed in Paragraphs 8-11. Reference to the population or needs of

Brevard County, which is not located within District IX, is not relevant.

18-19. To the extent relevant, addressed in Paragraphs 12-13. The fact that the nursing homes located in Brevard County are operating at a high

occupancy rate is not relevant to a determination of need in District IX.

20-24. To the extent relevant, addressed in Paragraphs 14-15. The uncorroborated hearsay referenced in Paragraph 23 cannot form the basis of a Finding of Fact any more than the hearsay evidence offered by Arbor (Paragraph 22) that difficulty was occasioned in placing patients because they were Medicaid patients.

25-28. Addressed in Paragraph 14.

29-35. Addressed in Paragraphs 1-3, 5 & 9.

36. Addressed in Paragraphs 6-14.

37-43. Addressed in Paragraphs 1-3, 5 & 9.

COPIES FURNISHED:

Jay Adams, Esquire BARCLAY & ADAMS, P.A.

215 East Virginia Street Tallahassee, Florida 32301

Richard A. Patterson, Esquire Department of Health and

Rehabilitative Services Building One, Room 407 1323 Winewood Boulevard

Tallahassee, Florida 32301

William Page, Jr., Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Steven W. Huss, Esquire General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 86-000247

Orders for Case No: 86-000247