STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH MANAGEMENT )

ASSOCIATES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 87-4741

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) CHARTER GLADE HOSPITAL, )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tallahassee, Florida, on March 7-11 and 16-17, 1988, before Arnold H. Pollock, Hearing Officer. The issue for consideration was whether Petitioner, Health Management Associates, Inc., should be granted a Certificate of Need to construct a freestanding, short-term psychiatric hospital in Collier County, Florida.

APPEARANCES

For Petitioner, John F. Gilroy, III, Esquire HMA: Robert S. Cohen, Esquire

Haben and Culpepper Post Office Box 10095

Tallahassee, Florida 32302

For Respondent, John Rodriguez, Esquire DHRS: Assistant General Counsel

Department of Health and Rehabilitative Services

2727 Mahan Drive

Tallahassee, Florida 32308

For Intervenor, Michael Cherniga, Esquire

Charter: Roberts, Baggett, Laface & Richards

101 East College Avenue Tallahassee, Florida 32301

BACKGROUND INFORMATION

Petitioner, Health Management Associates, Inc. (HMA) filed an application to construct a 50-bed, freestanding, short-term psychiatric hospital in Collier County, Florida, which, upon review, was assigned Certificate of Need (CON)

Number 4741 and subsequently, denied. Thereafter, on September 21, 1987, Petitioner filed a request for formal proceeding with the Department of Health and Rehabilitative Services (DHRS), which was referred to the Division of Administrative Hearings (DOAH) for appointment of a Hearing Officer on October 1, 1987.

In the same batching cycle, the Ramsey Hospital Corporation, (Ramsey) filed its application for a CON to construct a 60-bed, short-term psychiatric hospital in Lee County and the Department thereafter indicated its intention to deny this application as well. In response, on October 12, 1987, Ramsey filed its petition to contest the agency's proposed action and, on October 20, 1987, this file was forwarded to DOAH for appointment of a Hearing Officer. Various other providers, including Charter Glade Hospital, thereafter filed petitions to intervene in either or both cases. Other applicants who were notified of the Agency's intention to deny also filed petitions for formal hearing and included the Hospital Group of West Florida, Inc., Sarasota County Public Hospital Board, and PIA Psychiatric Hospital. On November 9, 1987, counsel for the Respondent, (DHRS) filed a Motion to Consolidate in the cases. On November 16, 1987, this motion was granted.

In the succeeding time period leading up to the hearing, all intervenors and parties other than the current Petitioner, Respondent and Intervenor, Charter Glade Hospital, and the Ramsey Hospital Corporation, Petitioner in the remaining consolidated case withdrew. Subsequent to the hearing, on April 18, 1988, Ramsey withdrew its Request for Hearing. Consequently, in this Recommended Order, no evidence regarding the Ramsey application will be considered.

At the hearing, HMA presented the testimony of Ryan Beatty, vice-president of psychiatric operations for HMA and an expert in the field of psychiatric hospital administration and operations; Kelly E. Curry, senior vice-president of finance for HMA and an expert in the field of health care financing; Noel Douglas Falls, a health care consultant and an expert in the field of health care planning; Bruce Hartwigsen, an architect expert in the design of health care facilities, including construction and related costs; and Pamela P. Mack, a psychiatrist. HMA also introduced HMA Exhibits 1 through 7. Respondent presented the testimony of Ronald L. Meserve, executive director of David Lawrence Mental Health Center and community mental health administrator; and Elizabeth Dudeck, a health facilities and services consultant supervisor in the Office of Regulation and Health Facilities of DHRS, and expert in the field of health planning. Respondent also introduced Respondent's Exhibits 1, 2, 4 and 5.

Intervenor Charter Glade Hospital, presented the testimony of Dr. Howard E. Fagin, a health care consultant and an expert in the field of health planning; Stanley G. Hilliard, administrator of Charter Glade Hospital; and John M. Southern, planning and development division comptroller for Charter Medical Corporation and an expert in the area of health care financial operations and feasibility. Charter also introduced Charter Exhibits 3, 7 and 9-12.

Subsequent to the hearing, the remaining parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

THE PARTIES

1. Health Management Associates, Inc. (HMA), is a publicly owned hospital corporation with corporate offices located in Naples, Florida. It owns and/or operates 17 hospitals in the United States, including 2 owned facilities in the State of Florida, and one which it operates for the State under contract. Psychiatric service is limited in scope.

   
   

2. Charter Medical Corporation, operating 66 hospitals, owns and operates Charter Glade Hospital, a 104-bed specialty psychiatric hospital located in Ft. Myers, Lee County, Florida. The facility is located approximately 2 miles west of I-75 and approximately 22 miles north of the site identified by HMA for its facility. As an existing facility in the service area, it has intervened herein to protest any award of a Certificate of Need to a competing facility, here, HMA proposed hospital.

   
   

   THE FACILITIES

   
   

3. Of Charter Glades' 104 beds, 80 are licensed as short-term psychiatric beds, of which 56 are utilized for adults and 24 for adolescents. The remaining

   24 beds are licensed as short-term substance abuse beds. It draws approximately

   91 percent of its patients from Lee County, where it is located, and the remaining 9 percent from Collier County, contiguous to the south. It also operates an outpatient program in Naples, Florida, further south in Collier County, and utilizes substantial marketing and advertising programs within Collier County to inform and attract patients from that area.

   
   

4. HMA proposes to establish a 50-bed, freestanding, psychiatric hospital in Collier County, 30 beds of which will be on a unit dedicated to adult patients and 20 beds dedicated to adolescents. The facility is designed to be built on an 8 to 10 acre tract of land and due to efforts by HMA's vice president for psychiatric operations, Mr. Beatty, who has personally surveyed the northern Collier County area, at least one adequate tract of property, already appropriately zoned, with access to adequate roads and utilities, has been identified.

   
   

5. The project was designed by Architect Bruce Hartwigson, a professional with over 20 years experience in the design of health care facilities. Construction is projected to take approximately 8 months from the beginning of construction, with the facility being ready for operations within one month after completion of construction.

   
   

6. As designed, the facility will provide a state of the art atmosphere for the psychiatric patients. Design provides for a residential appearance with allowance for quiet space, counseling offices, and recreational and therapeutic areas in addition to patient rooms. The adult and adolescent units will be physically separated and those areas scheduled for use by both categories of patient, such as dining and recreation areas, will not be utilized by both at the same time.

   
   

7. The building, consisting of approximately 47,670 square feet, will also include, in addition to those facilities described above, necessary support facilities including doctors' and nurses' offices, administrative and business offices, storage, educational and physical activities areas, a swimming pool,

   and various therapy and treatment/examination rooms, as well as a chapel, beauty and barber shops, and support activities.

   
   

8. The design proposed provides good visibility from the nurses' station to the entire unit served by that facility. All outside doors and those between units will be secured. Outdoor courtyards will be enclosed by fences or walls, and security/seclusion rooms have been designed to promote patient safety.

   
   

9. The design proposed by HMA, complies with all codes and regulations of state and local agencies, and the size and layout proposed is reasonable.

   
   

   NEED

   
   

10. HRS District 8 includes Charlotte, Collier, DeSoto, Glades, Hendry, Lee and Sarasota counties. HMA's proposed facility will serve, primarily, Collier county. Collier county is located, along with Lee county, in the southernmost of two separate marketing regions within District 8. Currently, almost all psychiatric inpatient services provided in both Lee and Collier counties are provided by Charter Glade Hospital in Lee county, and in the limited psychiatric service at Naples Community Hospital in Collier county. These two facilities are the only facilities licensed to provide hospital inpatient psychiatric services in their respective counties and the services are substantially different. Whereas Charter Glade Hospital is a freestanding psychiatric facility, Naples Community Hospital is a general, acute care hospital with a hospital-based psychiatric unit. In the Naples Community Hospital psychiatric facility, the average length of stay is 7.8 days.

    
    

11. Naples Community Hospital is currently licensed to operate a 32-bed short-term psychiatric unit, and an 11-bed substance abuse unit. Consistent with the terms of a Certificate of Need issued to Naples Community Hospital for the establishment of a satellite facility, the hospital has agreed to de-license

    9 of the 32 short-term psychiatric beds and the 11 short-term substance abuse beds. At the time of the hearing, the psychiatric unit at Naples Community Hospital had 20 beds staffed. The unit is used by area psychiatrists primarily for providing crisis intervention and the treating of immediate symptoms.

    
    

12. Crisis stabilization/intervention is a psychiatric service which in normal circumstances results in an average length of stay of between 10 and 12 days. It differs substantially from longer term care, available in a psychiatric hospital. Under the shorter term programs, the disturbed and disoriented patient does not have sufficient opportunity to benefit from the programs available in a more comprehensive long term program. In short, Naples Community Hospital's program is oriented primarily to short term treatment, and this would not be contradicted or duplicated by the proposed service to be offered by HMA in its facility.

    
    

13. Additional psychiatric care is provided by the David Lawrence Center located in Naples, which is Collier county's comprehensive community mental health center. At this facility, psychiatric care ranges from outpatient care through group and family therapy, to inpatient crisis stabilization and residential treatment programs for substance abuse or mental health problems. As a part of its inpatient program, David Lawrence operates a 12-bed crisis stabilization unit and a 12-bed short-term residential treatment program, with the former operating at an average occupancy of 66 percent and the latter at an average occupancy of 70 percent. The average length of stay at David Lawrence

    Center is generally between 5 and 7 days, at which time the patient is generally

    released and medicated for outpatient care with the opportunity then existing to obtain appropriate therapeutic care from other sources.

    
    

14. As a publicly funded facility, David Lawrence refers most paying patients to either Naples Community Hospital or Charter Glade. Little difficulty has been experienced in placing inpatient referrals with the exception of younger children.

    
    

15. There is also a community health center operating 30 crisis stabilization and short-term residential treatment service beds located in Lee County. Since this facility's mandate includes providing provision of services for all of the southwest portion of District 8, some patients come from Collier county as well as Lee county. This facility also operates an adult residential treatment service, which has been funded to add an additional 80 to 100 beds in the foreseeable future.

    
    

16. Other relevant resources, either actual or potential, include an adult residential treatment service funded to begin operation in Charlotte county, which will give access to geriatric psychiatric patients residing in Collier county, and the Naples Research and Counseling Center (The Willows), located in Collier county, whose program is primarily oriented to the treatment of bulimia and other food disorders. This facility, under the terms of its license, is primarily oriented to serving patients outside District 8, but may devote up to

    3 percent of its total patient days to District 8 patients. Though it does serve as a resource, its impact on the need for psychiatric services in the southernmost portion of District 8 is minimal.

    
    

17. Other outpatient psychiatric services available to Collier county residents include the activities of the six practicing psychiatrists located within the county, who provide outpatient services in conjunction with non- medical professionals. There is also psychologists and psychiatric social workers practicing within the county.

    
    

18. In February, 1987, DHRS published projections for the January, 1992 Planning Horizon which revealed the net need for 61 short-term psychiatric beds in District 8. It was noted at the time that the short-term psychiatric bed need projection had not yet been adjusted for occupancy rates according to the terms of Rule 10-5.011(1)(o), Florida Administrative Code. The Agency thereafter promulgated Rule 10-5.008(2), which established the "fixed pool" concept for Certificate of Need Review.

    
    

19. HMA submitted its application based on the 61-bed projection. Upon review of the applications, during which time the Agency calculated a net need numerically for 55 additional short-term psychiatric beds, DHRS denied HMA's application on September 9, 1987, even though a 55-bed need was established. Under the provisions of Rule 10-5.011(o)(4)(e), Florida Administrative Code, the Department determined the numeric need to be inapplicable, because the average annual occupancy rates for all existing adult short-term inpatient psychiatric beds in District 8 did not exceed 75 percent for the preceding 12 month period. By the same token, the same rate for adolescents and children did not exceed 70 percent for the same time period. DHRS's observation regarding occupancy rate thresholds was accepted by HMA's health planner.

    
    

20. The difference between the 61-bed need published by DHRS initially and the 55-bed projection is an award of 6 short-term psychiatric beds to Venice Hospital.

21. During the course of the hearing, and after HMA had presented its case in chief, the Department revised its numeric need calculation to reflect a 44- bed net need for January, 1992. This change was attributed to the mistaken assumption that 20 beds at Naples Community Hospital would be de-licensed. In reality, only 9 beds will actually be de-licensed. Under the terms of the Rule, gross need is calculated upon a standard of 35 beds per 1,000 population, and this figure must be reduced by the number of licensed and approved beds within the District. The proper count, therefore, should be a total of 295 beds including 23 at Naples Community Hospital instead of 12.

    
    

22. HMA objected to the introduction of evidence relating to the change in numeric bed need on the basis that it had already presented its case in chief, and had not been advised of the change in advance. The basis for the original denial of HMA's application by the Department included as a important part thereof the fact that the occupancy standards outlined in the Department's Rules had not been met regardless of the bed need established by use of the methodology. This is as much a factor with a numeric need of 44, as it was with a numeric need of 55. The evidence did not establish that the occupancy rates had increased so as to meet the Department's standards. It is nonetheless appropriate for the Department to correct, at the hearing, an obvious miscalculation which goes to the very heart of the numeric need methodology. If accurate information is not included in the calculations under the methodology, then the methodology result is totally unreliable. Consequently, it is found that the appropriate bed need for the January, 1992 Planning Horizon is 44 beds.

    
    

23. Turning to the question of occupancy levels, statistics compiled for District 8 for the years 1984 through 1987, reflect that district wide, the average occupancy for 1984 was 54.7 percent; for 1985, 69.22 percent; for 1986,

    59.29 percent; and for 1987 through October, 59.12 percent. Though the health plan does not call for sub-district districting, if one looks at the two major facilities located in the Lee and Collier counties, that is Naples Community Hospital and Charter Glade Hospital, the average for those two is 51.35 percent, with Charter Glade at 33.2 percent. For 1985, the two had an average occupancy of 55.75 percent; for 1986, an average of 49.92 percent, and for 1987, an average of 50.81 percent. Therefore, no matter how it is looked at, either on a district wide basis or considering only the two counties, the average occupancy is well below the 75 percent standard for adults or 70 percent for adolescents.

    
    

24. Under the provisions of the DHRS Rule, when numeric need has not been established, no new beds will "normally be approved." It has long been settled that this means that if other circumstances exist which indicate the need, outside of the numeric calculation, for additional beds, DHRS may consider and award them. The occupancy rates catalogued above would be one possible example of abnormal circumstances, if they had exceeded the Rule standards. Another is the access standard, contained in Rule 10-5.011(o)4g, which provides that short- term, inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes, under average travel conditions, for at least

    90 percent of the service area population. As was stated above, service area means the entire District 8.

    
    

25. It was clearly established at final hearing that more than 90 percent of the District 8 population is within a 45 minute travel time of short-term, inpatient hospital psychiatric services with only 6.3 percent falling outside that parameter. In fact, the local health plan indicates that 90 percent of the district population falls within 30 minutes travel time.

26. Other real factors which may be considered are the shortage of psychiatrists in the area, in both counties, and a definite shortage of psychiatrically trained nurses in both counties. It has been shown, however, that physicians, like nature, abhor a vacuum. If facilities are available, medically trained personnel will generally gravitate to the area of availability, and it is consequently found that these two factors are not controlling.

    
    

    OTHER FACTORS

    
    

27. The issue of the financial feasibility of the project is always pertinent. HMA proposes to develop this project, utilizing 20 percent equity contribution, and 80 percent debt financing. HMA has access to a $75,000,000.00 line of credit and financing drawn on that line would be at prime rate. It is estimated that costs and fees associated with financing will total approximately

    $57,000.00. The method of funding and the proposed interest expense and fees are considered reasonable.

    
    

28. The applicant proposes to charge an all-inclusive rate of $398.00 per patient day in the first year and $415.00 per patient day in the second year. These are not contested and are considered reasonable. During the first year, total deductions of $508,000.00 include contractual allowances of $400,000.00, plus a bad debt allowance of approximately $100,000.00. Intervenor contends that HMA's bad debt factor of 4 percent is unrealistic, and Charter Glade's experience of 5 percent would be more reasonable. An adjustment of that nature would total $41,600.00, which is not particularly significant when compared against the overall project estimated yearly income. The second year's proposed revenue deductions of $716,500.00 are also contested by the Intervenor on the basis of what it considers unrealistic projections, but again, there is insufficient evidence to indicate HMA's projections are unreasonable.

    Intervenor has contested many of the line items on HMA's pro forma statement. Whereas HMA projects a 4 to 5 percent per year inflation rate for salaries and benefits, Intervenor suggests that an inflation rate of 6 percent would be more appropriate. Supplies and expenses figures should be increased according to Intervenor, who also contends that HMA's projected depreciation and other expense is understated, as were the projected pre- opening expenses. If all adjustments suggested by the Intervenor were to be made, HMA's facility would lose $588,000.00 in its second year of operation, in the event HMA's projected second year occupancy of 55 percent were to be realized. Intervenor contests this, contending that because of lack of bed need and lack of demand, it is doubtful HMA will achieve the projected occupancy and its position is well taken. The growth rate in the two county area is projected to be a sum equivalent to 19.6 percent of the 1980 population. Applying this same figure to the average daily census for the two existing facilities reveals an additional

    12.4 patients per day available to HMA, if one assumes Naples Community Hospital and Charter Glade would continue to serve the existing population base. The

    12.4 patient census would constitute a 25 percent occupancy rate, as opposed to

    55 percent. In light of the currently existing occupancy rates, it is found that HMA's projected 55 percent occupancy rate at year two is overly generous and would likely not be achieved in light of the various factors discussed previously.

    
    

29. While the criticisms and suggested adjustments by the Intervenor as to expense and salary items are considered unconvincing, there is some question, in light of proposed occupancy rates, whether Petitioner can operate the facility feasibly within two years.

30. There is, however, little doubt that HMA would construct a quality facility and operate it in such a manner as to meet, if not exceed, all state standards. Its prior record would tend to establish that. Proposed staffing ratios are reasonable and consistent with industry standards, and the programs incorporated within the proposal are appropriate and reasonable. HMA has access to adequate capital resources to fund the construction and operate it for the first several years. There is some question, however, as to whether adequate, qualified staff can be recruited in sufficient numbers.

    
    

31. HMA proposes to serve indigent patients in numbers sufficiently high to meet its proportionate share of indigent mental health problems within the service area.

    
    

32. There was some evidence, through the deposition of Dr. Mack, which tends to indicate that from time to time, psychiatrists practicing in Collier county have difficulty from a logistical standpoints securing inpatient placement for their psychiatric patients at Charter Glade, and there can be little doubt that the distribution of psychiatric beds in District 8 is unbalanced, with far more beds in the northern portion of the district than in the south. Whether this justifies construction of a new psychiatric hospital in Collier county, however, is another matter. The evidence clearly indicates that the short- term beds at Naples Community Hospital are not fully utilized and the occupancy rates would tend to indicate that the demand within the two counties, as it currently exists and is proposed to exist within the framework of the Planning Horizon, is currently being met.

    
    

33. Another legitimate factor to be considered is the adverse impact construction of a new facility, such as proposed by HMA, would have on the existing Charter Glade facility which, more than any other existing facility, provides the same service. Evidence of record indicates that Charter Glade gets

    85 percent of its patients from Lee county, in which it is located, and 17 percent of that number comes from that area of Lee county, south of the Charter Glade facility. In addition, 9.3 percent of Charter Glade's patients come from Collier county. Adding the south Lee county patients to the north Collier county patients, accounts for approximately 23.75 percent of Charter Glade's total patients. (.17 X .85 .1445 + .093 .2375) If HMA's new facility were to draw 50 percent of that figure, approximately 12 percent of Charter Glade's total patient days would be lost. (.2375 X .50 .11875) In 1987, Charter Glade's charge per day was slightly in excess of $431.00, which resulted in a net profit of slightly over $105,000.00. Were Charter Glade to lose approximately 12 percent of its patient days, the net adverse effect to its revenue picture would be substantial.

    
    

    CONCLUSIONS OF LAW

    
    

34. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

35. The applicant in this case, HMA, has the burden of establishing its entitlement to the Certificate of Need applied for by a preponderance of the evidence. Boca Raton Artificial Kidney Center, Inc. v. Florida Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA, 1985).

    
    

36. Applications for CONs (in this case, for a short-term, inpatient psychiatric hospital), are governed by a balanced evaluation of the criteria provided in Section 381.705, Florida Statutes, and the rules of the Department

    of Health and Rehabilitative Services. In this case, the pertinent rule is Rule 10-5.011(1)(o), Florida Administrative Code. The weight to be afforded each criteria, and their balancing against each other, will vary according to the facts and circumstances of each case. However, a balanced consideration of all relevant statutory criteria must be made. Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361, 363 (Fla. 1st DCA, 1984).

    
    

37. Not all criteria listed within the statute are pertinent to each case, however. In the instant case, the criteria found in Section 381.705(1)(a), (b), (d), (h), (i), (1), and (2)(b) and (d), Florida Statutes, are appropriate and pertinent. As to the rule, the provisions of Rule 10-5.011(1)(o)3, 4, and 5, Florida Administrative Code, are also pertinent.

    
    

38. Turning to the issue of need, Section 381.705(1)(a), requires that a CON application be reviewed in the context of:

    
    

    "the need for the health care facilities and services . . . being proposed in relation to the applicable district plan and state health plan, "

    
    

39. Both the local and state health plan have as a goal the insuring of efficient utilization of existing resources and the maintaining of the cost of health care. The district health plan, as it pertains to mental health, adopts the numeric need methodology set out in the DHRS rule. Applying the numeric need methodology outlined in the agency rule, as properly amended by the Agency at the hearing, based on mistake of fact, a numeric need for 44 beds exists. However, the rule also provides in subsection (1)(o)4e that:

    
    

    "No additional short-term, inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult, short-term, inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children

    short-term hospital, inpatient, psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period."

    
    

40. The evidence offered at the hearing was abundantly clear that not only did the district as a whole fail to achieve these rule occupancy standards, but also, if it were appropriate to so extract them, the two counties in question failed to achieve the required occupancy standards by an even greater deficiency.

    
    

41. The basic need methodology is a mathematical projection of anticipated need based on projected population. It does not consider any factors other than

    those specifically delineated within the terms of the methodology. The rule, however, provides for other factors to be considered in determining whether, once a numeric need has been arrived at, this numeric need should be fulfilled by the creation of additional beds.

    
    

42. The mere fact that the application of a mathematical formula to given elements results in a demonstration of numeric need, does not necessarily justify, under the other terms of the rule, and economically, the establishment of additional facilities when a review of historical data clearly indicates that the new beds are not likely to be utilized. In the instant case, the historical data relating to occupancy makes it abundantly clear that if constructed, the HMA facility would most likely not, for a variety of reasons, attract sufficient numbers of patients to make it economically viable and to constitute an appropriate and effective expenditure of resources.

    
    

43. HMA argues extensively that the Department's inclusion of new and different inventory numbers in its calculation of need, which resulted in a reduction of bed need from 55 to 44, requires the agency to review new and additional factors to determine whether a 50-bed hospital could be approved based on a 44 bed need. In light of the conclusion drawn that the occupancy rate requirement of the agency's rule would preclude the approval of new beds, regardless of the need methodology determination, the question of re-review becomes moot. If the occupancy rate is inadequate to satisfy the terms of the rule, then whether the numeric need is 55 beds or 44 beds is immaterial, and HMA's argument that it was prejudiced by the change, is unconvincing.

44. Turning to Section 381.705(1)(b), which concerns: "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 of record indicates that within the service district there is an abundance of facilities available to satisfy the needs of the patients and the practicing psychiatrists in the service area. Charter Glade Hospital is located in the southern portion of Lee county, and adequately serves the psychiatric needs of that county. Its occupancy rate over the period of time it has been open has yet to achieve that as called for by the DHRS rule. There are other facilities in the area which provide short-term psychiatric care for both Lee and Collier counties, and while it is admitted that in some cases, the availability of inpatient facilities is inconvenient and less than optimum, and while the psychiatrists practicing in the area might like to have an additional facility, it cannot be said reasonably that this particular service is inaccessible to the population or unavailable, nor can it be said that the quality of care and appropriateness of the existing facilities is below standards. It clearly has been shown that utilization is low when compared with supply, and when this review criteria is evaluated in conjunction with the rule occupancy provisions, it becomes clear that demand, adequate to support new approval, has not been established.

45. The above analysis applies equally as well to the provisions of Section 381.705(1)(d), which relates to:

    
    

    "The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant such as outpatient care and ambulatory or home care services which may serve as alternatives for the health care facilities and services to be provided by the applicant."

    
    

46. The evidence of record establishes that in Collier County, for example, David Lawrence Mental Health Center, as well as Naples Community Hospital, both provide short-term crisis intervention and stabilization facilities. Patients needing more extensive treatment than is available on an outpatient basis are referred to Charter Glade or some other facility for treatment. There was absolutely no showing that patients are going untreated, since adequate comprehensive facilities are available within a 45 minute drive from most sections of Collier county. To provide additional services, such as proposed by HMA, which would duplicate currently existing available services that have not been shown to be inadequate, would likely increase health care costs in the area and reduce an already low occupancy rate.

    
    

47. Turning to Section 381.705(1)(i), which deals with the immediate and long term financial feasibility of the proposal and (1), which deals with the probable impact on the costs of providing services and on the competition within the area, again, there is no doubt that HMA is fully prepared to and capable of providing a quality facility as it proposes. No doubt financing is available, and the attacks by Intervenor on HMA's pro forma expenses are unpersuasive. However, it is abundantly clear that notwithstanding the numeric bed need there is simply an inadequate population of patients requiring the service proposed to justify the establishment of a new facility in the district merely on the basis of convenience. To do so would most likely increase the cost of health care and have an adverse effect on competition. Competition without a salutary effect of either increasing quality or reducing costs is of no benefit, and HMA has failed to establish that under the conditions as they exist in this district at the time in question, their proposal would generate beneficial competition so as to support entitlement to the Certificate.

    
    

48. It is also concluded that health manpower resources are currently strained and though it was found that, in all likelihood, adequate personnel would be attracted by the creation of the new facility, nonetheless, without demand, the project would have little beneficial effect on the needs of health training programs in the service district. There are few schools for health professions in the service district to take advantage of the existing, much less additional service available, and there are adequate alternative sources for provision of the service currently existing (Section 381.705(1)(h)).

    
    

49. Section 381.705(2)(b) and (d), appropriate to those cases where capital expenditures for the provision of new health services to inpatients are involved, require the consideration of whether existing inpatient facilities providing services similar to those proposed, are being used in an appropriate and efficient manner, (b), and whether patients will experience serious problems in obtaining patient care of the type proposed in the absence of the proposed

    new service (d). It is already been concluded that the existing facilities, while being utilized in an appropriate and efficient manner, are under-utilized, and it is clear that the establishment of a new facility would be totally and completely inefficient. Further, there is little chance that patients will experience any serious problem other than slight inconvenience in obtaining inpatient care if HMA's proposal is not approved.

50. Rule 10-5.011(1)o5, deals with "other standards, and criteria to be

    considered in determining approval of a Certificate of Need application for short- term, hospital inpatient psychiatric beds."

    
    

    At sub-paragraph (g), the rule provides that

    
    

    "short-term, inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population."

    
    

51. If such service were not available, consistent with the terms of that rule, that would constitute a factor tending to indicate that approval of the new service is appropriate. In this case however, the evidence clearly established that the terms of this standard were well met. Consequently, it cannot be used to support approval of HMA's application here.

    
    

52. Taken together, in this case, the criteria established for review of applications, both by statute and by rule, fail to lead to the conclusion that HMA's project should be approved. Notwithstanding the showing of some numeric bed need according to the rule methodology, and notwithstanding the fact there is some evidence that the psychiatrist community in Collier county is dissatisfied with the convenience of short-term, inpatient facilities, it is also concluded that within the district, as a whole, there is no demand sufficient to support HMA's application. Neither the state, nor the district health plan provide for sub-districting. Consequently, the fact that there may be a malassignment of beds within the district and a lack of proportion in the bed inventory does not, nonetheless, show that HMA's application meets the requirement for approval. What stands out in this case is the fact that the occupancy rate for the existing facilities, even in Collier county, where the bed inventory is the least satisfactory, is nonetheless well below that standard set by the Department in its rule as a criteria for further approval of beds of this nature. In addition, there is no showing that patients are going untreated or that a definitive void exists in the spectrum of treatment in Collier county.

    
    

53. No matter how this application is examined; no matter against what criteria it is evaluated, the application does not demonstrate need under the appropriate criteria. Further, the applicant has been unable to establish convincingly that "not normal" circumstances exist sufficient to take the application out of the need criteria. None of the above is to say that in any way HMA would not do that which is required of it in the area of quality care, appropriate facilities, adequate staffing, and provision of care to the indigent. Assuming all of these, nonetheless, the applicant has been unable to establish a requirement for the service and its entitlement to the Certificate of Need.

RECOMMENDATION

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

RECOMMENDED that Petitioner, Health Management Associates, Inc.'s application for Certificate of Need Number 5170 to establish a 50-bed, freestanding, short-term psychiatric hospital in Collier county be denied.

Recommended in Tallahassee this 30th day of June, 1988.

ARNOLD H. POLLOCK

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 30th day of June, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4741

The following constitutes my ruling on Proposed Findings of Fact submitted by the parties hereto, consistent with Section 120.59(2), Florida Statutes.

herein. Second sentence is irrelevant.

18. First and second sentences accepted and incorporated herein. Third sentence is irrelevant.

19 - 22. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Cumulative.

25 - 26. Accepted and incorporated herein.

1. Not a finding but a restatement of evidence.

2. Accepted.

3. First sentence accepted and incorporated herein.

Second sentence rejected as a restatement of evidence. 30 - 37.

Accepted and incorporated herein.

1. Rejected as a restatement of evidence.

2. Accepted.

3. Accepted.

4. Accepted and incorporated herein.

42 - 43. Accepted.

44 - 46. Accepted and incorporated herein.

84. Accepted.

85 - 87. Rejected as an overstatement of the situation as it exists.

By DHRS:

1 - 2. Accepted and incorporated herein.

3 - 6. Accepted and incorporated herein.

7 - 8. Accepted and incorporated herein.

9 - 10. Accepted.

11. Accepted and incorporated herein.

12 - 14. Accepted and incorporated herein.

By Charter Glade Hospital:

1 - 4. Not Findings of Fact but Introduction.

5 - 8. Accepted and incorporated herein.

9. Accepted.

10 - 12. Accepted and incorporated herein.

13 - 15. Accepted and incorporated herein.

16 - 17. Accepted and incorporated herein.

18 - 20. Accepted and incorporated herein.

21 - 22. Accepted.

1. Not a Finding of Fact but a comment on the evidence.

2. Accepted.

3. Not a Finding of Fact but a comment on the evidence. 26 - 27. Accepted.

28. Accepted and incorporated herein.

29 - 34. Accepted and incorporated herein.

35 - 36. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted.

39 - 40. Accepted and incorporated herein.

1. First sentence accepted and incorporated herein. Remainder is irrelevant.

2. Accepted.

1. Not a Finding of Fact.

2. Accepted.

68 - 70. Not a Finding of Fact but a comment on the evidence. 71 - 72. Accepted and incorporated herein.

1. Accepted.

2. Not a Finding of Fact but a comment on the evidence. 75. Accepted.

1. Accepted.

2. Accepted.

3. Accepted and incorporated herein.

4. Not a Finding of Fact but a recitation of and comment on the evidence.

5. Not a Finding of Fact but a restatement of and comment on the evidence.

81-83(o). Accepted in part by HMA and commented on in Recommended Order.

84 - 86. Not a Finding of Fact but a speculative projection. 87 - 89. Accepted and incorporated herein.

90. First sentence accepted - Second sentence rejected as a restatement of evidence designed to bolster first sentence.

91 - 94. Accepted and incorporated herein.

COPIES FURNISHED:

John F. Gilroy, III, Esquire Robert S. Cohen, Esquire Haben and Culpepper

Post Office Box 10095 Tallahassee, Florida 32302

John Rodriguez, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 2727 Mahan Drive

Tallahassee, Florida 32308

Michael Cherniga, Esquire Roberts, Baggett, Laface

& Richards

101 East College Avenue Tallahassee, Florida 32301

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

R. S. Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 87-004741

Orders for Case No: 87-004741