STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NME HOSPITALS, INC., d/b/a ) HOLLYWOOD MEDICAL CENTER, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1369

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case at Tallahassee, Florida, on August 28, 29, and 30, 1989, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings.

Appearances for the parties at the hearing were as follows:

APPEARANCES

For NME Hospital, Inc., C. Gary Williams, Esquire Hollywood Medical Center: Stephen C. Emmanuel, Esquire

Ausley, McMullen, McGehee, Carothers & Proctor

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

For Department of Health Deanna Eftoda

and Rehabilitative Department of Health and Services: Rehabilitative Services

2727 Mahan Drive

Suite 103

Fort Knox Executive Center Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issue for determination in this proceeding is whether NME Hospitals, Inc., d/b/a Hollywood Medical Center (HMC), is entitled to a certificate of need to convert 30 existing medical-surgical beds to 30 short term psychiatric beds at its hospital located in Hollywood, Florida.

PRELIMINARY STATEMENT

At the beginning of the final hearing, the Department of Health and Rehabilitative Services (HRS) stipulated that the following statutory criteria were not applicable to the subject application: Subsections 381.705(1)(e) , (1)(f) , (1)(g) , (1)(j) (1)(k), (2)(c), (2)(e), and the portions of (1)(h)

relating to the training of professionals and the extent to which the services proposed will be accessible to schools for health professionals. In addition, HRS stipulated that HMC's application met the following statutory criteria: Sections 38l.705(1)(c) and (1)(m), the portions of (1)(h) relating to the availability of health resources, including health manpower, management personnel, and funds for capital and operating expenditures and for project accomplishment and operation, and with respect to (1)(i), that if the project is approved and achieves its projected utilization levels it will be financially feasible.

At the hearing, the Petitioner presented the testimony of the following witnesses who were accepted as experts in the following fields:

Name Expertise

Arthur Hoey Health care facilities design and construction, including construction and equipment costs

Ben King Health Care Finance

Janet Knotts Psychiatric Nursing and the Management of Psychiatric Programs in Acute Care Hospitals

Holly Lerner Hospital Administration Jeffrey D. Ehrlich, M.D. Internal Medicine and as a

physician practicing in south Broward County

Joel Victor Klass, M.D. Psychiatry

Carol Bryden Moore Health Care Planning

In addition, Petitioner's exhibits 1-13 and 15-22 were received into evidence.

The Department of Health and Rehabilitative Services presented the testimony of Elizabeth Dudek who was accepted as an expert in health planning and in the evaluation of CON applications in Florida. In addition, HRS' exhibits 1, 3, 5, 6, and 9 were received into evidence.

A transcript of the proceedings at hearing was filed on September 14, 1989, and the parties were allowed 15 days from that date within which to file their proposed recommended orders. Both parties filed proposed recommended orders; the Petitioner on September 29, 1989, and the Department on October 2, 1989. All findings of fact proposed by both parties are specifically addressed in the appendix to this Recommended Order.

FINDINGS OF FACT

Background Information

1. Hollywood Medical Center (HMC) is owned and managed by its parent company, NME Hospitals, Inc. NME Hospitals, Inc., is a wholly owned subsidiary of National Medical Enterprises, Inc. (NME), a Nevada corporation headquartered in California. HMC is a 334-bed acute care hospital located in Hollywood, Florida. HMC is a full service hospital with an emergency room, a nine-suite operating unit, an intensive care unit, a coronary care unit, a 40-bed telemetry unit, a progressive care unit, and a dedicated oncology unit. HMC has a medical staff of more than 400 physicians with virtually every medical specialty represented, including psychiatrists. In addition, it is accredited by the Joint Commission on Accreditation of Healthcare Organizations.

   
   

2. Hollywood is in the southern portion of Broward County, which is the only county in HRS Service District 10. The primary service area of HMC is the southern portion of Broward County, generally described as between State load 84 on the north and the Broward/Dade County line on the south.

   
   

3. HMC is located in a peaceful and serene residential area. A high percentage of elderly people reside in condominiums which surround the hospital. One of the largest condominium developments in South Broward County is located within walking distance of HMC. Almost all of the programs at HMC are geared toward elderly patients; HMC does not even offer pediatric or obstetrical services.

   
   

4. In September 1988, HMC filed a CON application to convert 30 of its existing medical-surgical beds to short term psychiatric beds. The proposal calls for the conversion of existing space on the sixth floor of the hospital. The total project cost is $864,545.00.

   
   

5. HMC's application was comparatively reviewed by HRS with an application by the South Broward Hospital District d/b/a Memorial Hospital ("Memorial") to add 30 additional short term psychiatric beds to its facility which is also located in Hollywood, Florida. In its State Agency Action Report ("SAAR"), HRS preliminarily denied both applications.

   
   

6. Both HMC and Memorial filed Petitions for Formal Administrative Hearings challenging their respective denials. These Petitions were referred to the Division of Administrative Hearings and consolidated by Order dated March 28, 1989.

   
   

7. On August 17, 1989, Memorial voluntarily dismissed its petition for Formal Administrative Hearing.

   
   

   HMC's Proposal

   
   

8. The elderly have unique psychiatric as well as medical needs. For example, the elderly have a much higher incidence of medically related nervous system disorders. In addition, the elderly experience certain psychiatric syndromes such as bipolar and manic depressive disorders and organic brain syndrome much more commonly than the rest of the population.

   
   

9. Many of the elderly with psychiatric disorders have concomitant physical or medical problems such as cerebral vascular problems, arteriosclerosis, pulmonary problems, arthritic problems, physical disabilities,

   and mental impairments caused by senile dementia. The availability of medical treatment is a significant consideration in the selection of the appropriate treatment setting of elderly psychiatric patients who also suffer from one or more physical or medical problems.

   
   

10. HMC believes there is a need for additional short term psychiatric services in its service area. In keeping with its goal of being a full service hospital capable of providing a full continuum of care to the patients in its service area, HMC seeks to fill this perceived need by offering such services at its own facility. The need perceived by HMC was based in large part on in-house physicians informing HMC's hospital administration that the physicians felt there was a need for such services.

    
    

11. In its application, HMC proposes a separate geri- psychiatric unit with programs focused on the specific needs of geriatric psychiatric patients with multi-medical problems. The principal difference between such a specialized unit and an ordinary psychiatric unit is in the nature of the staffing and the training given to staff. Staff in a geri-psychiatric unit need to be prepared to address more multi-medical problems than are customarily encountered in a general psychiatric unit.

    
    

12. Rather than proposing to add new beds to the facility, HMC decided it would be much more economical and cost efficient to convert some of its existing and unused medical- surgical beds to short term psychiatric beds. In this regard, a high percentage of HMC's licensed medical-surgical beds are empty, with the facility experiencing an average daily census of only 110 patients in its 334 licensed beds.

    
    

    Findings Regarding Section 381.705(1)(a), F.S.

    
    

13. Section 381.705(1)(a), Florida Statutes, requires HRS to review applications for CONs in relation to the applicable district plan and state health plan.

    
    

14. The State Health Plan in effect at the time HMC's application was filed (and as of the date of final hearing) was published in 1985 and established goals for 1987. Because the planning horizon applicable to HMC's application is 1993, the goals of the applicable State Health Plan are not particularly relevant to HMC's application.

    
    

15. HMC's application is consistent with several of the goals contained in the Local Health Plan. Specifically, the Local Health Plan identifies the elderly as an under-served group and encourages the conversion of under-utilized medical-surgical beds to other needed services. HMC's application is consistent with these goals because it proposes the conversion of under- utilized medical- surgical beds to a geri-psychiatric unit. In this regard, according to HRS' acute care bed need methodology, in 1993 District 10 will have over 1,200 excess medical-surgical beds.

    
    

16. HMC's application is not consistent with that portion of the Local Health Plan which states that planning should be on a district-wide basis.

    
    

    Findings Regarding Sections 381.705(1)(b) and (2)(d), F.S. Existing Providers

    
    

17. Section 381.705(1)(b), Florida Statutes, requires HMC's application to be reviewed against the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and

    existing health care services in the service district of the applicant. In this regard, there are eight existing providers of short term psychiatric services in Broward County. Four of these providers are free-standing psychiatric hospitals. They are: Coral Ridge Psychiatric Hospital ("Coral Ridge"), CPC Fort Lauderdale Hospital, The Retreat, and Hollywood Pavilion Psychiatric Hospital ("Hollywood Pavilion"). Coral Ridge and CPC Fort Lauderdale Hospital are located north of State Road 84 in northern Broward County. The Retreat is located in western Broward County, south of State Road 84 Hollywood Pavilion is located in southern Broward County, across the street from the applicant, HMC.

    
    

18. The existing acute care hospitals in Broward County that have psychiatric units are: Broward General Medical Center ("Broward General") , Florida Medical Center, Imperial Point Hospital, and Memorial Hospital. Broward General, Florida Medical Center, and Imperial Point Hospital are all located north of State Road 84. Memorial Hospital is located in southern Broward County, about a half mile from HMC.

    
    

19. The existing providers of short term psychiatric services in Broward County have a total of 507 existing short term psychiatric beds, distributed as follows:

    
    

    South Broward

    Memorial Hospital 74

    Hollywood Pavilion 46

    The Retreat 80 (of which 24 are geriatric) North Broward

    Coral Ridge 74

    Fla. Medical Center 74 (of which 10 are geriatric) CPC Ft. Lauderdale 64

    Broward General 48

    Imperial Point 47 (of which 8 are geriatric)

20. The utilization or occupancy rates (expressed in percentages) for the seven Broward County providers of short term psychiatric services which were in

Public Facilities

issued a certificate of need to construct a 100-bed facility in Broward County consisting of 80 short term psychiatric beds and 20 short term substance abuse beds. The 80 psychiatric beds were divided into 40 geriatric beds, 15 adolescent beds, and 25 adult beds. The Retreat began operation in late September of 1988. By mid-March of 1989, the Retreat was requesting that HRS grant it a modification of its certificate of need to reduce the number of geriatric beds from 40 to 24 and to redesignate the remaining 16 beds for short term psychiatric services for children under the age of 12. The Retreat's request to reduce the number of geriatric beds appears to have been motivated in large part by the fact that the occupancy rate for those beds from October 1988 through March 1989 never exceeded one percent, even though the Retreat's pro forma had projected 70 percent occupancy after six months of operation. During the same six-month period in which the Retreat achieved only one percent occupancy in its geriatric psychiatric unit, it achieved occupancy rates of 77 percent in its adolescent unit and 86 percent in its adult unit. The Retreat is a private facility.

1. For some elderly psychiatric patients it is advantageous to provide in-patient psychiatric care in an acute care facility rather than in a free- standing facility. This is because many geriatric patients have a variety of, or multiple levels of, health care needs. An acute care facility that offers

   psychiatric services can take higher acute types of psychiatric patients because it has the resources, support, and back-up should a patient become medically unstable. In this regard, geriatric psychiatric patients often do not have a pure psychiatric illness. Rather, their psychiatric condition is often accompanied by a medical condition requiring medical coverage. These considerations are addressed in HRS' need determination rule. North/South Division

2. HRS recognizes that there tends to be a north/south division in Broward County with respect to the delivery of acute care health services. In this regard, HRS acknowledges that individuals in South Broward County who are in need of acute care services will generally not travel to acute care hospitals located in north Broward County and vice versa.

   
   

3. Broward County has been divided into two political taxing subdivisions, the North Broward Hospital District and the South Broward Hospital District, for purposes of providing tax revenues for the provision of health care services to the indigent. Memorial is the only district hospital located in the South Broward Hospital District. Memorial has a rule requiring physicians on staff at Memorial to both reside within the boundaries of the South Broward Hospital District and to have their offices located within said district.

   
   

4. As a general rule, psychiatric patients residing south of State Road

   84 tend to stay in southern Broward County for purposes of obtaining psychiatric services and psychiatric patients residing north of that line tend to stay in northern Broward County for purposes of obtaining psychiatric services. This appears to be due in large part to the fact that psychiatrists tend to obtain staff privileges and practice only at hospitals in southern Broward County or northern Broward County, but not both.

   
   

5. If a physician is not on the staff of a facility, he or she cannot admit a patient to that facility. Therefore, the numerous psychiatrists who reside in southern Broward County and who are only on the staff of facilities located in southern Broward County generally cannot admit their patients to facilities located in northern Broward County.

   
   

   Unavailability of beds at Memorial and Hollywood Pavilion

   
   

6. South of State Road 84 there are three available alternatives for inpatient psychiatric care for the elderly residents of southern Broward County; The Retreat, Hollywood Pavilion, and the 74-bed short term psychiatric unit at Memorial Hospital. Hollywood Pavilion and Memorial Hospital accept geriatric psychiatric patients, but neither has a designated geri-psychiatric unit. The Retreat started operations with a 40- bed geri-psychiatric unit, which has since been reduced to a 24- bed unit.

   
   

7. The 74 psychiatric beds at Memorial are, for all practical purposes, operating at full capacity. Memorial has maintained waiting lists for its psychiatric unit for the last seven or eight years and the number of people on the waiting lists has been increasing.

   
   

8. The 46 psychiatric beds at Hollywood Pavilion, which is located across the street from Memorial, have recently been operating at about sixty percent of capacity.

   
   

9. It is often clinically desirable to treat geriatric psychiatric patients on a different unit from younger psychiatric patients. This consideration is reflected in the fact that The Retreat was originally approved for three distinct units, adolescent, adult, and geriatric, and has more recently been permitted to redesignate a unit of beds for short term psychiatric services for children under the age of 12. The 24- bed geriatric psychiatric unit at The Retreat has recently been operating at about two percent of capacity.

   Findings Regarding Section 381.705(1)(d), F.S.

   
   

10. Section 381.705(1)(d), Florida Statutes, requires consideration of the availability and adequacy of other health care services such as outpatient care and ambulatory or home care services which may serve as alternatives for the services proposed by the applicant. On this issue, there was no real dispute that outpatient care and ambulatory or home care services were not viable alternatives for persons in need of short term inpatient psychiatric services.

    
    

    Findings regarding Section 381.705(1)(i), F.S.

    
    

11. As noted above, HRS stipulated that if HMC's project was approved and met the occupancy projections contained in its application it would be financially feasible. The financial break-even point for the 30 psychiatric beds proposed by HMC is an average daily census of only 9 patients, which would constitute 30 percent occupancy.

    
    

12. The psychiatric unit at HMC would be managed by a professional psychiatric management company, Psychiatric Management Services. Psychiatric Management Services is a company that specializes in the management of psychiatric units in acute care hospitals. It has already developed psychiatric programs for geriatric patients that would be utilized at HMC. In addition, Psychiatric Management Services has a large variety of programs, services and specialists available to assist HMC in establishing the proposed unit. Through Psychiatric Management Services, the proposed unit will have access to a wide variety of services, including but not limited to, marketing, community liaison development, sophisticated policies and procedures manuals, accreditation services, licensure, staffing and community education seminars.

    
    

13. Approval of HMC's application would also give HMC an opportunity to attempt to broaden its base of business and thereby possibly increase the overall profitability of the hospital. This would, if successful, help relieve the cost pressures from the acute care side of the hospital and potentially lower future increases in acute care patient charges.

    
    

14. Moreover, by expanding the services offered at HMC, approval of HMC's applications would allow HMC to compete more effectively for health maintenance organizations (HMOs) and preferred provider organizations (PPOs) agreements. Currently, HMC is precluded from competing for some HMOs and PPOs such as SIGNA and Health Options because HMC does not offer a full array of services. Approval of HMC's application would also have the effect of adding 30 more beds to the existing pool of under- utilized short term psychiatric beds in Broward County.

    
    

    Findings regarding Section 381.705(1)(n), F.S.

    
    

15. In its application, HMC projects a higher Medicaid utilization rate in its psychiatric unit than for its hospital overall because Medicaid services can only be provided to psychiatric patients in an acute care hospital setting and the psychiatric beds at Memorial, the only acute care facility in South Broward County presently authorized to provide psychiatric services, are full. In this regard, HMC has a Medicaid contract with the State of Florida. It is reasonable to anticipate that HMC would encourage Medicaid business at its facility and achieve the Medicaid projection contained in its application because HMC receives more from the State of Florida under its Medicaid contract than it would from an HMO or PPO.

16. It is HMC's policy to treat all patients, regardless of their ability to pay. If HMC's application is approved, this policy would apply to psychiatric patients admitted to the hospital. During the first six months of 1988, 2.2 percent of HMC's patient days were provided to indigents. HMC currently averages 60 to 70 percent Medicare utilization. For its proposed

    geri-psychiatric unit, HMC projects 70 percent Medicare utilization. Given that the proposed unit would be geared toward the elderly, it is reasonable to project that 70 percent of HMC's geri-psychiatric utilization would be Medicare patients, regardless of what the total utilization rate might be.

    
    

    Findings regarding Section 381.705(2)(a), F.S.

    
    

17. The design of HMC's proposed geri-psychiatric unit conforms to the requirements contained in Chapter 10D-28, Florida Administrative Code. As noted above, HRS stipulated that the costs and proposed methods of construction are reasonable. The psychiatric unit at HMC would occupy existing space on the sixth floor of the hospital. The renovations can be made quickly and at substantially less expense than the cost of new construction. Nevertheless, a less costly, more efficient, and more appropriate alternative would be to make greater use of existing under- utilized short term psychiatric beds in Broward County, particularly the beds in the privately owned facilities, which are Florida Medical Center, CPC Ft. Lauderdale, Coral Ridge, Hollywood Pavilion, and the Retreat.

    
    

    Findings regarding Section 381.705(2)(b), F.S.

    
    

18. To the extent the three publicly owned providers of short term psychiatric services are being operated at or near their optimal capacity, they are being used in an appropriate and efficient manner. To the extent some of such facilities, like Memorial Hospital, appear to be operating above their optimal capacity, some inefficiencies necessarily result. Similarly, inefficiencies necessarily result from the substantial under- utilization of beds in privately owned short term psychiatric units. Approval of a new psychiatric unit at an existing acute care hospital in southern Broward County might help alleviate the waiting list and over crowding at Memorial, but it would do so at the expense of adding to the inefficiencies that result from current under-utilization of other existing facilities. Further, in light of recent utilization trends in Broward County, if short term psychiatric beds were to be added in Broward County, it would appear to be more appropriate to add them at publicly owned facilities.

    
    

    Findings regarding Rule 1O-5.O11(1)(o)3 and 4, F.A.C.

    
    

19. Rule 10-5.011(1)(o), Florida Administrative Code, provides that a CON application for short term psychiatric beds will "not normally" be approved unless need is indicated in accordance with the mathematical need formula contained in the short term psychiatric rule. That rule allocates .35 beds per 1,000 population based on a five-year planning horizon.

    
    

20. Since the application was submitted in 1988, the five-year planning horizon requires that HMC's application be reviewed against the need projected for 1993. The parties agreed that the numerical bed need methodology projects a gross bed need for 458 short term psychiatric beds in Broward County in 1993. However, the parties disagreed on the inventory of beds that should be subtracted from this figure.

21. The inventory of 507 existing and approved short term psychiatric beds relied upon by HRS includes the 74 beds at Coral Ridge Hospital. The beds at Coral Ridge are licensed as short term psychiatric beds. The average length of stay of psychiatric patients at Coral Ridge has usually been in excess of 30 days, but substantially less than 90 days. The average length of stay at Coral Ridge does not appear to result from treatment of adolescent patients.

    
    

22. Subpart 4a of Rule 10-5.011(1)(o) provides that a minimum of .15 beds per 1,000 population shall be in hospitals holding a general license and Subpart 4b provides that .20 beds per thousand may be in specialty hospitals. The .15 standard is currently met in Broward County.

    
    

23. The short term psychiatric rule requires applicants to be able to project occupancy rates of 70 percent for adults in the second year of operation and 80 percent for adults by the third year of operation. In light of the utilization rates of existing privately owned providers of short term psychiatric services, and especially in light of the most recent utilization rates in the geriatric psychiatric unit at The Retreat, it is unlikely that HMC would achieve these occupancy rates.

    
    

24. The short term psychiatric bed need rule also considers the occupancy of existing psychiatric beds. In this regard, HRS agreed that a 70 percent occupancy figure was the appropriate figure to be applied in this case. As noted in paragraph 20 of these findings of fact, during the twelve-month period prior to submission of HMC's application, the average occupancy of short term psychiatric beds in Broward County was only 66 percent.

    
    

25. Subpart 4g of Rule 10-5.011(1)(o) provides that short term inpatient psychiatric hospital based services should have at least 15 designated beds. By proposing to convert 30 beds, HMC's application meets this criterion of the Rule.

    
    

    Findings regarding Rule 1O-5.O11(1)(o), F.A.C.

    
    

26. Regarding Subpart 5e of Rule 10-5.011(1)(o), Florida Administrative Code, an important component of the proposed psychiatric unit would be the community education and outreach services described in HMC's application. These services, which would be provided at no cost to local residents, are representative of HMC's commitment to developing a cooperative relationship with existing providers.

    
    

27. As an existing hospital, HMC has already established linkages with numerous health care providers. If its application were to be approved, HMC would expand its existing network to include community mental health centers and other local providers of mental health services.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

29. An application for a certificate of need for short term psychiatric beds is governed by a balanced consideration of the criteria contained in Sections 381.705(1) and (2), Florida Statutes, and Rule 10-5.011(1)(o), Florida Administrative Code. Balsam v. Department of Health and Rehabilitative Services,

    486 So.2d 1341 (Fla. 1st DCA 1986); 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 criterion 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).

    
    

30. The applicant in this case, HMC, 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. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985).

    
    

31. The Petitioner first argues that here, as in Balsam v. Department of Health and Rehabilitative Services, 486 So.2d 1341 (Fla. 1st DCA 1986), the short term psychiatric beds licensed to Coral Ridge should be deleted from the inventory of existing beds. The argument fails because of differences in the proof here and the proof in Balsam, which is described as follows at page 1347 of the Balsam opinion:

    
    

    Evidence presented by appellants at the hearing indicated, however (and the hearing officer so found), that Coral Ridge "offers a unique long-term care known as `ortho- molecular' treatment to patients who are substantially drawn from across the nation and abroad (Recommended Order, p. 13-14).

    This treatment "typically continues for a year or more and is given patients who have not responded to conventional treatment." Id. Very few patients at Coral Ridge come from Broward County, and "short-term patients who seek admission are referred to...other local facilities." Id.

    ***

    In light of the hearing officer's finding of fact that Coral Ridge has been and is using all of its beds for long-term treatment and, further, that most of its patients come from outside Broward County, to count such beds in the inventory of "existing and approved" beds in the local area is so arbitrary it cannot stand. The eighty-six beds at Coral Ridge must be deleted from the HRS inventory of short-term beds.

    
    

32. There is no evidence in the record in this case that the current treatment programs at Coral Ridge are the same as or similar to the programs described in the foregoing quotation from Balsam. Further, there is no evidence in this case that Coral Ridge is providing any "long term psychiatric services," as that term is defined in Rule 10-5.011(1)(p)1, Florida Administrative Code, because the average length of stay at Coral Ridge is only slightly more than 30 days. There being no evidence that Coral Ridge is currently providing long term psychiatric services, there is no basis for excluding the 74 licensed short term psychiatric beds at that facility from the inventory of existing beds.

    
    

33. Application of the numerical need projection methodology in Rule 10- 5.011(1)(o)4, Florida Administrative Code, results in a projected need of 458 short term psychiatric beds in Broward County for the five-year planning horizon

    of 1993. The current inventory of existing and approved beds is 507. Accordingly, there is already a surplus of 49 short term psychiatric beds, rather than a need for 30 more.

    
    

34. Rule 10-5.011(1)(o), Florida Administrative Code, as applied by HRS, also includes a provision that no additional beds will normally be approved unless the occupancy of existing short term psychiatric beds exceeds 70 percent for the 12-month period proceeding the filing of the application. During the 12-month period applicable to this application, the average annual occupancy of

    existing short term psychiatric beds in Broward County was only 66 percent. For this additional reason, there is no need for the proposed additional beds.

    
    

35. Part 4.d, of Rule 10-5.011(1)(o), Florida Administrative Code, provides that new facilities of the type proposed here must be able to project an average of 70 percent occupancy in the second year of operation and an average of 80 percent occupancy in the third year. In view of the occupancy rates of existing facilities in recent years, it is most unlikely that HMC could achieve occupancy rates of 70 percent and 80 percent in its second and third years of operation. This is especially true when note is taken of the fact that HMC's occupancy rate for its medical surgical beds is only 30 percent, that since 1987 all privately owned facilities offering short term psychiatric services have operated at less than 70 percent occupancy, and that during the first six months of operation, the geriatric psychiatric unit at The Retreat achieved an occupancy rate of less than 2 percent. These reasons demonstrate that there is no need for the additional beds sought by HMC.

    
    

36. Normally, there is no need to inquire further once it is shown that there is no numerical need and that occupancy rates indicate no need. However, where, as here, the applicant asserts that there are unusual reasons that create a need, further inquiry must be made into the basis for the applicant's assertion of unusual need. The burden of demonstrating any unusual need is, of course, on the applicant. One basis for the need asserted by HMC is the difficulty that patients experience when they attempt to obtain beds in the short term psychiatric unit at Memorial Hospital. From the evidence in this case, there is no doubt that the psychiatric unit at Memorial Hospital is overcrowded, but the significance of that overcrowding is offset by the fact that immediately across the street from HMC, Hollywood Pavilion is operating a short term psychiatric unit at approximately 60 percent of capacity, and another south Broward facility, The Retreat, is operating a geriatric psychiatric unit at less that 2 percent occupancy. HMC argues that the apparent availability of beds at Hollywood Pavilion should be discounted on the basis that the quality of care at Hollywood Pavilion is substandard or otherwise unacceptable. The argument fails because there is no persuasive evidence in the record of any specific shortcoming in the quality of care at Hollywood Pavilion. And even if such evidence had been presented, it would not have supported an addition of 30 beds to the already over- bedded inventory in Broward County. If all of the 48 beds at Hollywood Pavilion were treated as stricken from the inventory, there would still be one surplus short term psychiatric bed in Broward County before adding the beds proposed by HMC.

    
    

37. HMC also argues that there is an unusual need for geriatric psychiatric services in southern Broward County because none of the psychiatric facilities in southern Broward County have a specialized geriatric psychiatric unit. Accepting for the moment HMC's argument that it is difficult for residents of south Broward to obtain access to psychiatric facilities in north Broward, the fact remains that The Retreat, in south Broward, offers specialized

    geriatric psychiatric services in a virtually unused 24-bed unit, described in Balsam, supra, as

    
    

    . . . designed to have a flexible admissions policy which would permit it to focus on the need for treatment of geriatric patients; and the unique open design and holistic treatment approach of the proposed facility would be unique to the area and provide quality of care superior to that being provided by the current facilities.

    
    

    There is nothing in the record in this case sufficient to show that the high quality services described in the Balsam opinion are not being offered by The Retreat; only that there seems to be precious little demand for them. In view of the specialized services available from The Retreat, there is nothing particularly unique about HMC's proposal. And, although HMC argues that the facilities at The Retreat are not reasonably accessible to residents of southern Broward County, the preponderance of the evidence is to the effect that The Retreat is a reasonable alternative for residents of southern Broward County.

    Specifically, there is no showing that access to The Retreat by south Broward residents exceeds the 45-minute travel time standard set forth in part 5.g. of Rule 10-5.011(1)(o), Florida Administrative Code.

    
    

38. In brief summary, HMC has failed to establish any unique or "not normal" circumstances sufficient to warrant adding more beds to an already over- bedded inventory. HMC has not identified any specific unmet need that would be resolved by its proposal. And while HMC's proposal appears to offer a high quality geriatric psychiatric program, it does not appear to propose anything particularly unique. At best, it would merely duplicate the under-used facilities recently placed into operation at The Retreat. Given all of the foregoing, there is simply no demonstrated need, "not normal" or otherwise, for the 30 beds proposed by HMC. This lack of need makes it most unlikely that HMC could generate a sufficient volume of utilization to be profitable, and, if did so, it would most likely be at the expense of the other under-utilized facilities in Broward County.

RECOMMENDATION

For all of the foregoing reasons, it is RECOMMENDED:

That the application by NME Hospitals, Inc., d/b/a Hollywood Medical Center, to convert 30 medical-surgical beds to 30 short term psychiatric beds be DENIED.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of November 1989.

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Divisions of Administrative Hearings this 22nd day of November 1989.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 89-1369

The following are my specific rulings on all findings of fact proposed by both parties.

Findings proposed by Petitioner:

Paragraphs 1 and 2: Accepted.

Paragraph 3: Rejected as not supported by persuasive competent substantial evidence and as, in any event, unnecessary.

Paragraphs 4, 5, 6, 7, 8, 9 and 10: Accepted. Paragraphs 11 and 12: Accepted in substance. Paragraphs 13, 14, and 15: Accepted.

Paragraph 16: Rejected as unnecessary and as not fully consistent with the greater weight of the evidence.

Paragraphs 17 and 18: Accepted.

Paragraph 19: First sentence accepted. Last sentence rejected as constituting argument rather than findings of fact.

Paragraph 20: Rejected as constituting a proposed conclusion of law rather than a proposed finding of fact.

Paragraphs 21, 22, and 23: Accepted in substance.

Paragraph 24: Rejected as not supported by persuasive competent substantial evidence. Although there is expert witness testimony in the record to the effect proposed in paragraph 24, I do not find that testimony to be persuasive. Specifically, I am not persuaded that the relationship between a patient and the patient's regular medical doctor is more severely impacted in a freestanding psychiatric facility than in a psychiatric facility located in an acute care facility. There are advantages and disadvantages to both types of psychiatric facilities.

Paragraph 25: Rejected as repetitious.

Paragraph 26: Rejected as subordinate and unnecessary details. Also, see comments above regarding paragraph 24.

Paragraph 27: Rejected as constituting argument or proposed conclusions of law, rather than proposed findings of fact.

Paragraph 28: Accepted.

Paragraph 29: Rejected as constituting subordinate and unnecessary details.

Paragraph 30: Accepted.

Paragraph 31: First sentence rejected as constituting a broader statement than is supported by the competent substantial evidence. The remainder of this paragraph is accepted in substance.

Paragraphs 32 and 33: Rejected as constituting subordinate and unnecessary details.

Paragraph 34: Accepted.

Paragraph 35: Rejected as irrelevant and as based on unpersuasive evidence. Although there is testimony to the effect that the considerations recited are significant considerations, it appears from the totality of the evidence that considerations of treating physician convenience (or efficiency) and where the treating physician has admitting privileges, are the primary determinants of patient placement.

Paragraph 36: Rejected because this is a conclusion that does not necessarily follow from the evidence. [See Transcript, page 263, lines 5 to 10.] Paragraph 37: Rejected as not supported by persuasive competent substantial evidence. Although the record does contain opinion testimony to the general effect proposed here, the scope of that opinion testimony is more narrow than the fact proposed in paragraph 37. The testimony would support a finding that the Retreat is inconveniently located for some South Broward psychiatrists.

Paragraph 38: First sentence rejected as not supported by persuasive competent substantial evidence. Second sentence rejected as contrary to the greater weight of the evidence.

Paragraph 39: Accepted in substance.

Paragraph 40: All but last sentence accepted in substance. Last sentence rejected as subordinate and unnecessary details.

Paragraph 41: Rejected as quotation of testimony rather than proposed finding of fact. Also rejected as subordinate and unnecessary details.

Paragraphs 42, 43 and 44: Rejected as subordinate and unnecessary details. Paragraph 45: First two sentences accepted. The remainder of this paragraph is rejected as not supported by competent substantial evidence. Although statements in the transcript, in depositions, and in affidavits contain opinions that Hollywood Pavilion offers quality of care that is "unacceptable" or "substandard," none of those opinions includes any factual basis for the opinion. (Ironically, the record contains more information about shortcomings in the psychiatric unit at Memorial Hospital; the unit with the highest occupancy rate and, therefore, presumably the most popular.)

Paragraph 46: Rejected as not supported by persuasive competent substantial evidence. See comments above regarding paragraph 45.

Paragraphs 47, 48, 49, 50, 51 and 52: Rejected as subordinate and unnecessary details.

Paragraphs 53 and 54: Accepted.

Paragraph 55: Rejected as irrelevant and unnecessary details, not all of which are fully supported by the evidence. For example, while the last sentence of paragraph 55 is sometimes true, it is not always true because if it were always true there would be precious little need for free standing psychiatric facilities.

Paragraphs 56 and 57: Accepted.

Paragraph 58: Accepted in substance with many subordinate and unnecessary details omitted.

Paragraph 59: All but last sentence accepted. Last sentence rejected as contrary to the greater weight of the evidence.

Paragraph 60: First sentence rejected as subordinate and unnecessary. Remainder of paragraph rejected as contrary to the greater weight of the evidence.

Paragraph 61: Rejected as irrelevant and as not supported by persuasive competent substantial evidence. The testimony on this subject was too vague and generalized to form a basis for meaningful fact finding relevant to any issue in this case.

Paragraphs 62 and 63: Accepted in substance.

Paragraph 64: Rejected as contrary to the greater weight of the evidence. Paragraphs 65, 66, 67 and 68: Accepted.

Paragraph 69: Accepted in substance.

Paragraph 70: First two sentences accepted in substance. Last two sentences rejected as irrelevant as well as subordinate and unnecessary details.

Paragraph 71: Rejected as contrary to the greater weight of the evidence. Paragraph 72: First sentence rejected as over broad and, therefore, not supported by competent substantial evidence. Also rejected as containing a conclusion not warranted by the evidence.

Paragraph 73: Accepted.

Paragraph 74: All but last sentence accepted. Last sentence rejected as constituting incomplete summary of rule definition.

Paragraph 75: Accepted in substance.

Paragraph 76: Rejected as constituting argument or conclusions of law rather than proposed findings of fact.

Paragraph 77: Rejected as contrary to the greater weight of the evidence. Paragraph 78: Rejected as irrelevant in view of conclusion that the beds at Coral Ridge should be included in the inventory.

Paragraph 79: Rejected as contrary to the greater weight of the evidence. Second sentence also rejected as constituting argument, rather than proposed findings of fact.

Paragraph 80: Rejected as irrelevant, except for proposed findings regarding occupancy at The Retreat.

Paragraph 81: Accepted.

Paragraph 82: First sentence accepted. Last sentence rejected as contrary to the greater weight of the evidence.

Paragraph 83: First two sentences accepted. Last sentence rejected as irrelevant because there is no demonstrated reason to exclude Coral Ridge. Paragraph 84: Accepted in substance.

Paragraph 85: Rejected as not supported by competent substantial evidence. Paragraph 86: Rejected as contrary to the greater weight of the evidence. Paragraph 87: Accepted.

Paragraph 88: Rejected as repetitious. Further, last sentence is not fully consistent with the greater weight of the evidence.

Paragraphs 89 and 90: Accepted.

Paragraph 91: Rejected as constituting a conclusion of law rather than a proposed finding of fact.

Paragraphs 92 and 93: Rejected as constituting argument about the sufficiency of the evidence, rather than proposed findings of fact.

Findings proposed by Respondent:

Paragraphs 1, 2 and 3: Rejected as constituting subordinate procedural details which have been addressed in the Preliminary Statement.

Paragraph 4: First two sentences accepted. The remainder is rejected as subordinate and unnecessary details.

Paragraph 5: Rejected as constituting subordinate and unnecessary details or constituting argument and proposed conclusions of law.

Paragraph 6: Rejected as constituting primarily argument and proposed ultimate conclusions rather than proposed findings of fact.

Paragraph 7: First two lines of first sentence accepted. Remainder of first sentence rejected as argument. Second sentence rejected as irrelevant in view of HRS agreement that 70 percent occupancy was the appropriate standard. Third sentence accepted. Fourth sentence rejected as irrelevant. Fifth and sixth sentences rejected as argument.

Paragraph 8: First and last sentences rejected as argument. Remainder rejected as subordinate and unnecessary details.

Paragraph 9: First two sentences rejected as argument. Third and fourth sentences rejected as subordinate and unnecessary. Fifth and sixth sentences rejected as argument and comment on the testimony. Seventh, eight, and ninth sentences rejected as subordinate and unnecessary. Tenth sentence accepted in substance. Eleventh and twelfth sentences rejected as commentary on the evidence. Last sentence rejected as argument or ultimate conclusion.

Paragraphs 10 and 11: Rejected as constituting primarily argument rather than proposed findings of fact.

Paragraph 12: Rejected as constituting conclusion of law rather than proposed findings of fact.

Paragraph 13 and the unnumbered paragraph following paragraph 13: Rejected as constituting discussion of the issues rather than proposed findings of fact.

Paragraph 14: First two sentences rejected as discussion of issues, rather than proposed findings of fact. The remainder of this paragraph is accepted in substance, but with many unnecessary details omitted.

Paragraph 15 and the unnumbered paragraph following paragraph 15: Rejected as constituting discussion of the issues, rather than proposed findings of fact. Paragraph 16 and 17: Accepted in substance with many unnecessary details omitted.

Paragraph 18: First two sentences accepted in substance. The remainder of this paragraph is rejected as constituting discussion of issues or conclusions of law.

Paragraph 19: Accepted in substance with many unnecessary details omitted.

Paragraph 20: Rejected as constituting an amalgamation

of conclusions of law, discussions of the issues, and argument.

COPIES FURNISHED:

C. Gary Williams, Esquire Stephen C. Emmanuel, Esquire Ausley, McMullen, McGehee,

Carothers & Proctor

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

Deanna Eftoda

Department of Health and Rehabilitative Services

2727 Mahan Drive

Suite 103

Fort Knox Executive Center Tallahassee, Florida 32308

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Miller General Counsel

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 89-001369

Orders for Case No: 89-001369