STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TAMARAC HOSPITAL, INC., d/b/a ) UNIVERSITY COMMUNITY HOSPITAL, )

)

Petitioner, )

)

vs. ) CASE NO. 86-0924

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

APPEARANCES

For Petitioner: Thomas A. Sheehan, III, Esquire For Respondent: Richard Patterson, Esquire

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the hearing officer designated by the Division of Administrative Hearings on June 25, 1986 in Tallahassee, Florida. This application for conversion of 10 acute care beds to skilled nursing facility beds had been consolidated for hearing with another application for approval of a certificate of need for construction of a 120 bed nursing home filed in the same batching cycle, Forum Group, Inc., vs. HRS, Department of Administrative Hearings Case 86-0242, but the other applicant sought a continuance of its hearing. That applicant and Tamarac Hospital, Inc. both filed waivers of their rights to a comparative hearing on their certificate of need proposals. See Order of Severance entered June 6, 1986.

At the final hearing in this matter, two witnesses testified on behalf of the petitioner and four exhibits were admitted into evidence; one witness testified on behalf of the Department of Health and Rehabilitative Services, and two exhibits offered by the Department were admitted into evidence. A transcript was filed on July 23, 1986, and both parties submitted proposed recommended orders. Rulings on proposed findings of fact are made in the appendix to this recommended order.

ISSUE

The issue is whether a certificate of need should be issued to permit Tamarac Hospital, Inc. d/b/a University Community Hospital (Tamarac) to convert

10 acute care medical/surgical beds to skilled nursing facility beds. Based on their presentations at the final hearing and their proposed findings of fact and conclusions of law, the central issue is whether there is a need for the proposed nursing home beds.

FINDINGS OF FACT

1. Tamarac proposes to convert 10 currently licensed medical/surgical acute care beds into skilled nursing facility beds. The skilled nursing beds would be available at the hospital to treat patients who no longer require acute hospital care but do require skilled nursing services beyond those required by ordinary nursing home patients. (Tr. 15-16) 1/

   
   

2. The capital cost of the project would be approximately $20,000 for renovation to provide a private bathroom in the existing group of hospital rooms which would be converted to use as the skilled nursing facility (Tr. 25). The testimony of the petitioner with respect to the financial feasibility of the project was undisputed (Tr. 25, PX 1, p.14).

   
   

3. Tamarac has encountered problems in placing patients who no longer require acute hospital care in nursing homes in HRS District 10, Broward County, when those patients require more than normal nursing home services. These patients, due to their diagnosis or treatment, require more skilled nursing care, more technical assistance, supplies or more frequent checking than traditional nursing home patients (Tr. 15). These are patients with infectious diseases or draining wounds who require isolation; patients requiring ongoing intravenous administration of medications including antibiotics and narcotics; patients on chronic ventilator support; patients with tracheostomies requiring respiratory support, suctioning or oxygen; patients with naso-gastric feeding tubes and patients receiving total parenteral nutrition (PX 1, application, p. 2).

   
   

4. Tamarac introduced a study it had conducted concerning discharge delays for the one year period prior to its application which included 70 patients (Tr. 12, PX 3). The study is anecdotal in nature. The director of social services for Tamarac, who is in charge of discharge planning coordination, testified that the 70 cases were representative and randomly sampled (Tr. 12, 21). There was no specific evidence of the sampling methodology, however. In the absence of better evidence of the sampling methodology it is not possible to determine what inferences validly may be drawn from the information presented in PX 3. For example, the evidence fails to show whether the 70 cases included represent 1 percent or 100 percent of the instances where a discharge was delayed. All that is known is that in 53 percent of those 70 cases studied the discharge delay occurred because the patient could not be placed in a nursing home (Tr. 12). These 37 patients might have been served at Tamarac if a skilled nursing facility had been in operation. Due to the limited evidence of how the sample was chosen, the study has been given little weight.

   
   

5. In addition, the application and Tamarac's study focuses solely on the experience of Tamarac in attempting to place patients who no longer required acute care in a nursing home. There is no basis for determining whether there is a general community need for the project proposed. The narrowness of the proof offered is apparently due to the restriction Tamarac made in the application that "this project is for [Tamarac] hospitalized patients only". Application, PX 1, page 6 paragraph 4.

   
   

6. Tamarac also conducted a survey of Broward nursing homes to determine what services they provide, PX 4. That survey indicates that there are some specialized nursing services that are not available in nursing homes in Broward County, e.g., services for patients on chronic ventilators and patients with acquired immune deficiency syndrome (although Tamarac did not indicate that it proposed to offer services to AIDS patients). There are also services which are

   not commonly available. Many nursing homes will not accept patients on intravenous medication in the form of chemotherapy or narcotics or patients with draining wounds, and the few that do generally require no pathogenic organism be present as shown by negative culture test.

   
   

7. Even when some nursing home in Broward County provides a specific service, a bed at that nursing home may not be available to a patient in Tamarac Hospital ready for discharge from acute care when the bed is requested (Tr. 14- 15).

   
   

8. Tamarac's placement problem is made more difficult because it is to some extent in competition with other Broward County hospitals for the available nursing home beds for patients needing skilled, subacute nursing services (Tr. 16). This generalized evidence of competition does not rise to the level of demonstrating a need in HRS Service District 10 for the proposed skilled nursing facility.

   
   

9. Tamarac has attempted to persuade existing nursing homes to expand services to accept on a routine basis patients needing the type services which Tamarac proposes to provide, but has been unsuccessful (Tr. 16).

   
   

10. The bed need calculation methodology set out in Rule 10-5.11(21), Florida Administrative Code, for the July 1988 planning horizon shows a surplus of 92 nursing home beds in Broward County (RX 1 and 2, Tr. 32-44). Approximately 258 nursing home beds are unoccupied in Broward County on a daily basis, assuming 100 percent occupancy actually could be achieved (Tr. 39).

    
    

11. The availability of empty nursing home beds in the district does not necessarily mean that beds are available for a particular patient at Tamarac Hospital who needs more than normal nursing services on a specific day (Tr. 55). Individual patients requiring subacute care may remain in the hospital (Tr. 18).

    
    

12. Patients ready for discharge from acute care are not eligible for Medicare coverage (Tr. 17), and are potentially liable for their hospital costs incurred awaiting placement. If they were transferred to a skilled nursing facility such as that proposed by Tamarac, those patients would be eligible for the Medicare benefits for the first 20 days, with an additional 80 days of co- insurance reimbursement thereafter (Tr. 26).

    
    

13. The average hospital room, board, and ancillary charges at Tamarac is

    $900 per patient and per day. The charge to be made in Tamarac's proposed skilled nursing facility would be $115 per day (Tr. 26). According to the application (PX 1, table 7, utilization by the class of pay), 65.6 percent of its patient days of service are provided by Tamarac to Medicare patients.

    Tamarac would recover approximately $115 per patient per day for patients utilizing its skilled nursing facility, rather than writing off, as it does now, approximately $900 per day for those Medicare patients requiring subacute care who remain in Tamarac due to an inability to identify an appropriate skilled nursing facility in Broward County to accept them when their care requirements are greater than that normally provided by Broward County nursing homes (Tr.

    29).

    
    

14. Few Medicaid patients utilize the services of Tamarac because of the nature of the population surrounding the hospital. Referring again to the evidence of utilization by class of pay, only one tenth of one percent of the patient days spent at Tamarac during the period January 84 through December 84

    were days spent by Medicaid patients. There would be no restriction on access to the skill nursing facility unit if one of the rare Medicaid patients at Tamarac Hospital required those services (Tr. 27-28).

    
    

    CONCLUSIONS OF LAW

    
    

    1. Rule 10-5.11(21) Applies.

       
       

15. Tamarac contends that the methodology for allocation of community nursing home beds found in Rule 10-5.11(21) Florida Administrative Code is irrelevant. In Tamarac's view

    
    

    The definition of "nursing home" is specifically referenced to facilities licensed under Chapter 400 (see Rule

    10-5.02(11)and (12)). The proposed project however, would not be licensed under Chapter

    400. The Rule is therefore not applicable to the issue of need (or lack of need) for [skilled nursing facility] beds in a hospital. [evidentiary citations omitted] Tamarac's Proposed Conclusions of Law paragraph 2.

    
    

    In this Tamarac is in error. The definitions found in Rule 10-5.02(11) and (12) are definitions of "skilled nursing home" and "intermediate care nursing home" as used in Chapter 10-5 of the Florida Administrative Code. Those defined terms are not used in the rule establishing the criteria against which application for certificates of need are evaluated, Rule 10-5.11(21) Florida Administrative Code, and are not pertinent to the inquiry at hand. Rule 10-5.11(21) sets out a methodology for determining need for "community nursing home beds". The definition of a community nursing home bed is found within the text of Rule 10- 5.11(21) itself, rather than in the general definitional provisions which apply to all of Chapter 10-5, Florida Administrative Code. According to Rule 10- 511(21):

    
    

    "a community nursing home bed is a nursing home bed not located within a life care facility certified under Chapter 651, Florida Statutes."

    
    

    There is no evidence that Tamarac is a life care facility which falls under the provision of Chapter 651. The methodology set out in Rule 10-5.11(21) does apply to Tamarac's application.

    
    

    1. The Application does not Satisfy the Rule's Need Component.

       
       

16. There is no numeric need for the nursing home beds Tamarac proposes. See Finding of Fact 10 above. As a fall-back argument, Tamarac contends that if the rule does apply, the need methodology is not dispositive if other statutory or rule criteria justify the issuance of a certification of need when numerical need cannot be shown. Tamarac relies in part on the Final Order of the Department of Health and Rehabilitative Services in Health Quest Corporation, etc. vs. Department of HRS (6 FALR 5543,5550-51 July 23, 1984) which makes the observation

    
    

    "moreover, circumstances which are truly unique and peculiar to and application may

    justify exceptional agency action." Tamarac's Proposed Conclusions of Law paragraph 2.

    
    

17. Tamarac has shown that it encounters a problem when attempting to find places in nursing facilities for patients requiring subacute but more than ordinary nursing care in Broward County. As an applicant, its circumstances are not "unique" when compared to other Broward County hospitals. The methodology calculation under Rule 10-5.11(21)(b) shows a surplus of beds. In this circumstance the rule states

    
    

    In the event that the net bed allocation is zero, the applicant may demonstrate that circumstances exist to justify the approval of additional beds under the other relevant criteria specifically contained in the Department's Rule 10-5.11. Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access nursing homes services currently licensed or approved

    within the sub-district. Under this provision, the 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 exceeds the number of licensed unoccupied and currently approved nursing home beds.

    Existing and like services shall include the following as defined in statute or rule, adult congregate living facilities, adult foster homes, homes for special services, home health services, adult day health care, adult day care, community care for the elderly, and home care for the elderly. Patients' need for nursing home care must be documented by the attending physicians' plans 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. Rule 10-5.11(21)(b)10., Florida Administrative Code.

    
    

18. The evidence in this case does not document the need for additional nursing home services in the manner required by the rule. The record does not document any patient's need for nursing home services or care with attending physicians' plans of care or orders, assessments performed by the department, or equivalent assessments performed by attending physicians. No information from an attending physician for patients who are the subject of the discharge delay survey were offered into evidence. Tamarac has failed to make a showing of lack of access to nursing home beds in the manner required by the rule set out above.

    
    

19. Need must be determined for the Broward County HRS service district (District 10) not for those who live in the service area of Tamarac Hospital, viewed in isolation from the rest of the county. The excess of nursing home

    beds in District 10 ought to cause existing nursing homes to accept patients requiring subacute nursing services if there is a significant demand for such services.

    
    

20. This application appears to constitute an attempt by Tamarac, which has a heavy Medicaid population, to recover additional costs currently written off because some patients no longer needing acute care remain in the hospital and fail to qualify for additional Medicare benefits. If this application is approved, Tamarac would not have to write off the average charge of $900 per patient per day for patients requiring subacute care; instead it would recover from Medicaid $115 per patient per day for patients in its skilled nursing facility. 2/

    
    

21. In essence, this application is an attempt by Tamarac Hospital's administration to use the certificate of need process to increase its Medicare billings. There is nothing inherently wrong with this. There has not been a persuasive showing of need under the applicable statute, however, by showing a lack of access to nursing home beds in the manner set out in the governing rule.

    
    

    1. Economic Accessibility does not outweigh Lack of Need.

    
    

22. The Medicaid population at Tamarac Hospital is quite low. This fact, of itself, would not cause disapproval of the project if need were shown. Tamarac Hospital had not made a showing of numeric need, or the alternative to numerical need authorized by Rule 10-5.11(21)(b)10, Florida Administrative Code. Had the application proposed to serve more Medicaid patients than the .1 percent (in terms of patient days) Tamarac now serves (see Finding of Fact 14, above), that factor would have weighted in favor of the application. As matters stand, the economic accessibility factor is neutral in this case.

RECOMMENDATION

It is recommended that the application of Tamarac Hospital, Inc., d/b/a University Community Hospital to convert 10 medical/surgical beds to skilled nursing facility beds be denied.

DONE AND ORDERED this 20th day of October 1986 in Tallahassee, Leon County, Florida.

WILLIAM R. DORSEY, JR.

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 20th day of October, 1986.

ENDNOTES

1/ References to the transcript will be shown as (TR._), References to Petitioner Tamarac's exhibits as (PX_), and References to Respondent HRS's exhibits as (RX_).

2/ It is difficult to understand why the current average charge per patient per day is $900, and the charge to be made for the skilled nursing facility is placed at $115 per day. Assuming that patients needing subacute care require less intense care than medical/surgical patients, the hospital has the same fixed facilities cost such as depreciation, interest, (Tr. 26) and variable costs such as utilities expenses and staff salaries and benefits. The hospital's only explanation of the reduced cost at the facility is that "the level of nursing care required is not quite as intense as what is provided in the--on the other side [in the acute care beds]." (Tr. 26)

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0924

The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985) on the proposed findings of fact submitted by the parties.

Rulings on Proposed Findings of Fact Submitted by Petitioner

1. Accepted in Finding of Fact 1.

2. Accepted in Finding of Fact 2.

3. Accepted but supplemented in Finding of Fact 3.

4. Sentences 1 and 2 are covered in Findings of Fact

   6 and 7; sentence 3 is rejected as irrelevant, as need must be determined for community nursing home beds, not for specialized nursing services.

5. Accepted in Finding of Fact 9.

6. Rejected for the same reasons sentence 3 of Proposed Finding of Fact 4 was rejected.

7. Generally accepted in the first sentence of Finding of Fact 8.

8. Generally accepted in Finding of Fact 12.

9. Rejected because there is inadequate explanation of the reason for the great disparity in the average charges for medical surgical patients in the proposed charge for the skilled nursing facility, which can not be wholly ascribed to less intense nursing services.

10. As with the rejection to Proposed Finding of Fact 9, the reduced cost to patients in the skilled nursing facility cannot be wholly ascribed to the reduction in the intensity in nursing services, and there is inadequate evidence to determine whether the project is cost efficient; specific factual findings with regard to the charges are, however, made in Finding of Fact 13.

11. &12. Financial feasibility was not contested by the Department, see PX 2 page 3.

13.&14. Generally accepted in Finding of Fact 14.

Rulings on Proposed Findings of Fact Submitted by Respondent

1. Rejected as Conclusion of Law.

2. Accepted in Finding of Fact 10.

3. Rejected because there is no evidence that the occupancy rate of existing facilities is below 90 percent. See Tr. 38, line 24.

4. Rejected because this is no longer a comparative hearing and the relative priority of this applicant with others need not be determined. See also sub-part C of Conclusions of Law.

COPIES FURNISHED:

Richard Patterson, Esquire Department of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, FL 32301

Thomas A. Sheehan, III, Esquire MOYLE, FLANIGAN, KATZ

FITZGERALD & SHEEHAN, P.A.

Post Office Box 3888

West Palm Beach, FL 33402

Docket for Case No: 86-000924

Orders for Case No: 86-000924