STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BAPTIST HOSPITAL OF MIAMI, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 91-5705

)

DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES and ) HEALTHSOUTH REHABILITATION )

CORPORATION, )

)

Respondents. )

)

RECOMMENDED ORDER

This case, which was one of two cases consolidated for hearing, was heard by Eleanor M. Hunter, the Hearing Officer designated by the Division of Administrative Hearings, on February 18, 21, and 24 - 28, 1992, in Tallahassee, Florida.

APPEARANCES

In Case No. 91-5704

For Petitioner, South Jean Laramore, Esquire Miami Hospital, Inc.: JEAN LARAMORE, P.A.

7007 McBride Pointe

Tallahassee, Florida 32312

For Respondent, South Gerald Sternstein, Esquire Dade Nursing Home, Ltd., Ruden, Barnett, Smith, d/b/a West Gables Schuster & Russell, P.A. Rehabilitation Hospital: 101 North Monroe Street

Suite 1010

Tallahassee, Florida 32301

In Case No. 91-5705

For Petitioner, Baptist Jay Adams, Esquire Hospital of Miami, Inc.: JAY ADAMS, P.A.

418 East Virginia Street Tallahassee, Florida 32301

For Respondent, Thomas Panza, Esquire

HealthSouth Susan Horovitz Maurer, Esquire

Rehabilitation PANZA, MAURER, MAYNARD, Corporation: PLATOW & NEEL, P.A.

3081 East Commercial Blvd. Fort Lauderdale, Florida 33308

In Case Nos. 91-5704 and 91-5705

For Respondent, Edward Labrador, Esquire Department of Health 2727 Mahan Drive

and Rehabilitative Tallahassee, Florida 32308 Services:

STATEMENT OF THE ISSUE

Whether the Department of Health and Rehabilitative Services should issue certificates of need, in District 11, for the addition of 33 comprehensive medical rehabilitation beds to West Gables Rehabilitation Hospital, and/or for the establishment of a 45-bed comprehensive medical rehabilitation hospital to HealthSouth Rehabilitation Corporation.

PRELIMINARY STATEMENT

After filing and acceptance of appropriate letters of intent for the February 1991 hospital and other projects batching cycle, on or about March 25, 1992, South Dade Nursing Home, Ltd., d/b/a West Gables Rehabilitation Hospital ("West Gables") and HealthSouth Rehabilitation Corporation, d/b/a HealthSouth Regional Rehabilitation Center ("HealthSouth") filed certificate of need ("CON") applications with the Department of Health and Rehabilitative Services ("HRS") for the addition of 33 comprehensive medical rehabilitation ("CMR") beds (No.

6655) and to establish a new 45 bed CMR unit (No. 6654) in HRS District II, respectively. On July 18, 1991, HRS issued a State Agency Action Report ("SAAR") stating its intent to grant both the West Gables and HealthSouth CON applications. South Miami Hospital, Inc., filed a petition challenging HRS' decision to grant West Gables' CON 6655. Baptist Hospital of Miami, Inc., filed a petition challenging HRS' decision to grant HealthSouth's CON 6654.

Pursuant to Subsection 381.709(5)(b), Florida Statutes, HRS assigned both cases to the Division of Administrative Hearings to conduct formal administrative proceedings in accordance with Section 120.57, Florida Statutes. Both cases were consolidated for hearing pursuant to an Order dated September 9, 1991, and the final hearing was scheduled to commence on February 17, 1992. The parties requested and were granted a one day continuance and the hearing began on February 18, 1992, at which time South Miami Hospital, Inc., filed a notice of voluntary dismissal of its petition in Case No. 91-5704. A summary recommended order was entered on March 6, 1992, recommending the closing of Case No. 91-5704 and entry of a final order approving the issuance of CON No. 6655 to West Gables, which HRS adopted in its final order of April 22, 1992.

By prehearing stipulation, the remaining parties, HealthSouth, Baptist and HRS, agreed that Subsections 381.705(1)(e), (f), (g), (j), (k) and (2)(e), Florida Statutes, were not at issue. They further stipulated that there was no issue raised as to the adequacy of funds for capital operations under Subsection 381.701(1)(h), no issue raised as to the immediate financial feasibility under Subsection 381.705(1)(i), the only issue raised with regard to the adequacy of the proposed construction related to the projected costs thereof under Subsection 381.705(1)(m), and the historical utilization data provided by the applicant was not at issue in Subsection 381.705(1)(n). Otherwise, all other criteria of Section 381.705, Florida Statutes, remained at issue. The parties also stipulated that Baptist's standing was not contested.

HealthSouth presented the testimony of Jennifer Jones; Les Scott Alt; Anthony John Tanner; adverse witness Janice Guzman; Ray Lopez, M.D., expert in

neurology and rehabilitation; Brandon Hale; Murray Rolnick, M.D., expert in physical medicine and rehabilitation (physiatry); Deborah Trachy; Lawrence Foreman; James Bennett; Margo Kelley, expert in health care planning and finance; Robert Gower and Jack F. Chamblee, Jr., both experts in architecture; Carmen Velez; and adverse witness Michael Belbeck, Jr. HealthSouth also submitted its Exhibits 1 - 50, which were received into evidence, except Exhibit 21, which was withdrawn.

Baptist presented the testimony of Wendy Greenleaf, Bradley Aiken, M.D., expert in physical medicine and rehabilitation, and Daniel Sullivan, expert in health care planning and health care finance. Baptist's Exhibits 1 - 8 were submitted, and with the exception of Exhibit 4, were received into evidence.

HRS presented the testimony of Elizabeth Dudek and Exhibits 1 - 3, which were received into evidence.

The transcript of the hearing was received on April 6, 1992. The date for filing proposed findings of fact, originally due 45 days from the date of the transcript was filed, was extended upon Baptist's Motion for Extension of Time, to June 1, 1992, when they were received.

On June 1, 1992, Baptist also filed a Request for Official Recognition of the final order in South Miami Hospital, Inc. v. Department of Health and Rehabilitative Services, et al., previously consolidated DOAH Case No. 91-5704. HealthSouth filed a Motion to Strike Petitioner's Request for Official Recognition. On June 15, 1992, Baptist filed a Response to the Motion to Strike. The Request for Official Recognition is granted. The Motion to Strike the Request for Official Recognition is denied.

FINDINGS OF FACT

1. HealthSouth filed CON Application No. 6654 on March 25, 1991, to convert space in HealthSouth Regional Rehabilitation Center for use as a 45-bed inpatient comprehensive medical rehabilitation ("CMR") unit. The parties stipulated that HealthSouth filed an adequate letter of intent, corporate resolution, notice of publication, and a complete application.

   
   

2. HealthSouth is an eight-year old proprietary company specializing in the provision of rehabilitative services through the ownership and operation of inpatient and outpatient rehabilitation facilities across the United States, and some acute care hospitals specializing in orthopedic and neurological conditions.

   
   

3. HealthSouth Regional, a 180-bed facility, presently licensed as a skilled nursing facility ("SNF"), was acquired by HealthSouth in September, 1986. Of the 180 beds, 120 beds function as a skilled nursing facility providing long-term care, skilled nursing care and subacute medical light rehabilitation care. HealthSouth has received HRS approval to delicense the remaining 60 nursing home beds and is seeking, in this application, to renovate that space to accommodate a 45-bed inpatient CMR unit with ancillary support space for the CMR programs, for a total project cost of $2,079,000.

   
   

4. HealthSouth presently has modified its space and provides inpatient rehabilitation services in its 45 bed rehabilitation unit. These include 10 dedicated head trauma beds and four dedicated pediatric rehabilitation beds. HealthSouth also provides outpatient rehabilitation services.

5. HealthSouth is located in south Dade County, in HRS District 11, for Dade and Monroe Counties. If approved, it would be the southern-most inpatient CMR provider in District 11 and the State. Its service area includes central and Southwest Dade County, and Monroe County.

   
   

6. The parties stipulated to HealthSouth's accreditation history, as follows:

   
   

   HealthSouth although licensed as a SNF, was first accredited by the Commission on Accreditation of Rehabilitation Facilities ("CARF") in 1989, for one year, for acute inpatient and outpatient medical rehabilitation. That accreditation was again awarded in 1990, for three years. In 1991, CARF accredited HealthSouth's brain injury acute rehabilitation and work hardening rehabilitation programs for three years. CARF applies the same standards to SNF and CMR licensed facilities. In December 1991, HealthSouth was surveyed by the Joint Commission on the Accreditation of Health Care Organizations ("JCAHO"), and accredited as an acute comprehensive medical rehabilitation unit.

   
   

7. Baptist is a 513-bed acute care hospital located in southern Dade County, approximately 15 to 30 minutes from HealthSouth. Baptist's services include the Davis Rehabilitation facility with a 36 bed inpatient CMR unit, distributed in three "pods", one each for brain injury services, orthopedic rehabilitation, and stroke and general rehabilitation services. Baptist has 10 beds designated for treatment of head trauma. Baptist employs 170 to 180 persons in its rehabilitation program. Baptist is CARF accredited for inpatient and outpatient rehabilitation services and has JCAHO hospital accreditation. Baptist has not sought CARF specialty accreditation for its head injury program, but has used CARF guidelines in establishing the program.

   
   

   Disputed CMR Rule Criteria

   
   

   A. Need Under Rule Formula

   
   

8. There is no numeric need for additional CMR beds in HRS District 11, using the methodology of the formula in Florida Administrative Code Rule 10-

   5.039. The bed need methodology formula in the rule indicates a need for 142 beds. It is a poor indicator of need since this projection of 1996 need, is fewer beds than are currently in use, with an average daily census of 232 patients in the 288 licensed beds in the district. In addition, while the rule formula assumes a correlation in the growth of acute care and CMR admission, acute care admissions have decreased, while CMR admissions have increased. District 11 utilization and bed capacity have increased 46% from 1986 to 1990. In part, due to the short-comings of the existing rule, HRS had published a proposed CMR rule revision, which was the subject of an administrative challenge at the time of this hearing. Testimony regarding the effect of the proposed rule was proffered at hearing. Notice has been given that, subsequent to the conclusion of these proceedings, a Final Order was entered upholding the new CMR rule, and on that basis Baptist requests that the proffer of evidence regarding the effect of the new rule be received into evidence. The proffer is rejected based on the inapplicability of the new rule to this batching cycle.

9. Notwithstanding a zero fixed need pool, based on the rule formula, HRS has a history of approving CMR beds when other statutory and rule criteria indicate need, and where special circumstances exist in a district.

   
   

   District Occupancy

   
   

10. New rehabilitation units will not normally be approved unless average annual occupancy for existing CMR beds exceeds eighty-five percent (85%) for the most recent 12 months available three weeks prior to HRS' publication of the fixed need pool. Florida Administrative Code Rule 10-5.039(2)(c)2.

    
    

11. There are 288 licensed CMR beds in District 11, 20 more approved at Mercy Hospital, and 33 more approved at West Gables, as a result of South Miami's voluntary dismissal of consolidated Case No. 91-5704, for a total of 341 CMR licensed beds.

    
    

12. Existing CMR beds at District 11 have occupancy levels of 87%, 89%, 92%, 97% and 99%, at Baptist, Mount Sinai Medical Center, South Miami Hospital, West Gables Rehab, and Parkway Regional Medical Center, respectively. Overall district utilization has increased proportionate to the increase in available CMR beds. Two facilities operating at approximately 60 and 70% are Jackson Memorial Hospital and Bon Secours Hospital.

    
    

13. HealthSouth has demonstrated that Jackson Memorial and Bon Secours Hospitals have historically had lower occupancy levels, which have skewed district-wide occupancy rates downward. Jackson Memorial operates 78 of its 80 CMR beds, and maintains 15 beds in designated units for its regional spinal cord and trauma center, serving 43% of patients who come from beyond the district, but with an overall occupancy consistently below 70%. Similarly, while district occupancy has increased, Bon Secours Hospital's occupancy has steadily declined since approximately 1988. In addition, due to its location in the extreme northeast of Dade County, and relative distance from HealthSouth, in the extreme southwest of Dade County, Bon Secours does not offer a reasonable alternative to CMR services at HealthSouth.

    
    

14. Considering the special circumstances at Jackson Memorial and Bon Secours Hospitals, a need is shown for additional CMR beds as determined by the threshold consideration of the CMR rule occupancy standard. In addition, as stated by the district health plan ". . . the special status of Jackson Memorial's rehabilitation unit as a regional spinal cord center and teaching hospital seems to set most of its beds outside the available pool for the South Florida Community." Regrettably, the district plan does not quantify "most", although it does go on to state that the CMR bed supply is adequate through 1993. If "most" is equated to only 51%, then only 38 of Jackson Memorial's 78 operational beds are available for district use. This would be consistent with the data showing the 43% of Jackson Memorial's patients come from beyond the district and it is reasonable that District 11 patients in need of the types of services provided at a regional facility would also be treated at Jackson. With a total district inventory of licensed and approved beds of 341, but with two Jackson Memorial beds not in use, and at least 40 not available to serve district CMR bed need, then the available licensed and approved district bed inventory is reduced to 299.

    
    

    Alternative CMR rule factors - historic, current, and projected incidence; trends in utilization; existing and projected inpatients

15. The expert health planners who testified for HealthSouth and Baptist disagree on the extent of the need beyond the existing District 11 CMR beds. Various alternative methodologies resulted in projections for a gross need ranging from 295 to 441 CMR beds. The estimates for pediatric bed need ranged from 14 to 17, and for brain injury beds from 38 to 41.

    
    

16. HealthSouth's alternative methodology for the determination of need, based on actual district utilization for the year ending June 30, 1991, projected forward to 1996, with the assumption that the rate of utilization remains constant, showed a gross need exists for 295 rehabilitation beds in District 11. HealthSouth's expert also calculated need using the "Orange County" methodology. This has been a widely used health planning tool, although it is based on somewhat dated 1982 data from Virginia. It also uses a 30.3 day average length of stay (ALOS), although Rule 10-5.039 contains a 28 day ALOS and the District 11 actual ALOS was 33.1 days in 1989, 26.9 in 1991 and below 26 in 1991. This methodology projected a gross rehabilitation bed need of 314 beds, of which 41 beds would be required for head injury patients and 17 beds needed for pediatric patients. These categories overlap, because some pediatric patients require rehabilitation for head injuries. Therefore, the total number of head injury and pediatric beds required could be less than 58. HealthSouth's expert also prepared a projection based on District 11 incidence rates, which projected a gross rehabilitation bed need of 342, using a 36 day ALOS. Another HealthSouth incidence rate analysis, using Florida incidence rates projecting the incidence of conditions resulting in the need for inpatient rehabilitation to increase at a rate of 4% per year from 1991 to 1996, resulted in a projected need for 441 rehabilitation beds.

    
    

17. Baptist's expert prepared a bed need projection also using an incidence analysis, which showed a gross bed need for 1996 District 11 rehabilitation beds of 321 beds, of which 38 would be for brain injury patients and 14 beds would be for pediatrics. Baptist suggests that the methodologies used by the two experts which resulted in the most similar numbers should be accepted, and that the correct projection of gross need ranges from 310 to 325 beds, 38-41 for brain injury and 14-17 pediatrics.

    
    

18. Using 299 as the actual number of available District 11 CMR beds, rather than 277 used by HealthSouth, but accepting HealthSouth's use of District

    11 incidence rate methodology which results in a gross need for 342 beds, the net need for new District 11 CMR beds is in the range of 40 to 45 beds. The district incidence rate is accepted as the most accurate indicator of need, in part, due to the following statements in the 1990-92 District XI Health Plan

    
    

    According to the state formula (3.9 rehabilitation admissions per 1,000 acute care discharges with a 28 day ALOS), 136 rehab beds will be needed in District XI in 1993. Despite the fairly restrictive formula, additional beds have been licensed and approved in District XI by exception. Occupancy rates continued to increase until 1987 when there was some decrease.

    Experience in South Florida has always been very different from the HRS rule criteria. That is, even in 1984, rehab admissions were 4.4 per 1,000 acute care discharges. This rate has increased steadily since that time.

    and, at p. 9.,

    
    

    South Florida is an area that has a growing need for rehabilitation services. One third of all functionally disabled people are age 65 and over. In District XI, there are 286,863 people in this age group. [footnote omitted]

    
    

    at p. 14, and

    
    

    The greater Miami community and the Keys are areas in which sporting accidents occur. These accident victims are often left with disabling conditions as a result of their injury(s). In addition, there is a large number of motor vehicle accidents contributing to the incidence of trauma cases in the area. As a result, South Florida has a higher incidence of spinal cord injuries than the national rate.

    
    

    at p. 15.

    
    

    These statements emphasizing the differences in South Florida support HealthSouth's use of the district incidence rate, including the use of an average length of stay which is consistent with that associated with more severe CMR cases, such as spinal cord injuries. Finally, the district plan concedes that to varying degrees rehabilitation services are being offered in other settings, such as nursing homes or by home health agencies, but with Medicaid and Medicare constraints which limit the number of therapy sessions.

    HealthSouth's census of 29 to 34 CMR patients is consistent with the fact that alternatives are being sought as a result of demand exceeding the supply of licensed CMR beds.

    
    

19. Jackson Memorial with 10 beds and HealthSouth with 10 beds, are the only CARF accredited brain injury programs in District 11. 1/ Jackson refers brain injury patients to HealthSouth in cases in which the patients have low levels of cognitive functioning, as measured on the RANCHO scale. Because a low level on the scale is indicative of the need for a longer stay, Jackson Memorial, as a regional trauma center, seeks to move long term patients to other facilities to keep its beds available. Jackson also transfers patients funded by the state impaired drivers and speeders trust fund and others with similarly managed care requirements to HealthSouth, because those funds pay for vocational rehabilitation only in CARF accredited brain injury programs. Baptist asserts that the total District 11 brain injury CMR bed inventory is sufficient, with 10 at Jackson, 10 at Bon Secours, 21 at West Gables, 6 at Baptist, and an anticipated brain injury program at Mercy Hospital. Baptist also asserts that CARF specialty accreditation is not required and is not a basis to determine that these programs are not capable of providing the same services as Jackson and HealthSouth provide. Even assuming that all providers are capable of providing quality care to the same patients, Rule 10-5.039(2)(b)2., Florida Administrative Code, includes trends by third party payors as a consideration of need. On that basis, distinctions made by the State of Florida Division of Vocational Rehabilitation for the Impaired Drivers and Speeders Trust Fund and other managed care payors are factors contributing to the need for CMR beds at a CARF accredited brain injury unit such as that at HealthSouth.

    
    

20. All parties agree that it has been necessary to transfer pediatric patients out of the district for services, and that this was a critically unmet

    need in District 11. Only Jackson Memorial offered pediatric services, in 12 beds. Baptist asserts that an additional 6-bed pediatric unit at West Gables, which became available approximately four months prior to hearing, and Baptist's own ability to accommodate up to 4 pediatric beds in its CMR unit, have now satisfied the need. Baptist does not have a designated pediatric unit and only served one pediatric patient in 1991. West Gables and Jackson Memorial combined total of 18 beds is consistent with the projected gross need for 14 - 17 pediatric CMR beds made by experts for HealthSouth and Baptist. The calculation was made by HealthSouth using the conservative and dated Orange County methodology, which was rejected in favor of the district incidence rate as an indicator of total CMR bed need. However, HealthSouth failed to provide adequate information from which a determination of pediatric need can be made using the district incidence rate. In addition, the expert doctors who testified that pediatric needs were not being met, as of February, were generally unfamiliar with the unit recently established at West Gables.

    Therefore, HealthSouth has failed to provide evidence that the need for District

    11 pediatric CMR services is still not met, due to numeric need or third party payor constraints.

    
    

    State and District Health Plans

    
    

21. HealthSouth asserted that it meets the spirit of the applicable state and district health plans preferences for conversion of acute care beds to CMR beds; for special services not available within the district to the pediatric and brain injured patients in specialty distinct programs; to further teaching activities by its university internship site affiliations; for the provision of services to the Medicaid and medically indigent population by its commitment to 5% Medicaid, 2% indigent and by its history of commitment to Medicaid in its SNF units; and for the provision of discharge planning and comprehensive outpatient rehabilitation services through its CARF specialty accredited outpatient CMR center.

    
    

22. HealthSouth does not meet the preference in the state health plan for the conversion of acute care beds to rehabilitation beds. While HealthSouth's proposed conversion of nursing home beds to rehabilitation beds is preferable to new construction, the state health plan preference is specific in its emphasis on acute care bed conversion.

    
    

23. The preference in the state health plan for providers proposing specialty services not currently available in the district, is met, in part, by HealthSouth's proposal to provide specialty programs for CARF accredited brain injury, but the need for HealthSouth's pediatric rehabilitation services was not established. See, Findings of Fact 19 and 20.

    
    

24. The third preference in the state health plan for teaching hospitals, is not met by HealthSouth.

    
    

25. The fourth preference in the state health plan, for disproportionate share providers, is, in part, inapplicable to HealthSouth, because HealthSouth is not licensed as a hospital. The preference also applies to providers who have historically provided Medicaid and indigent care. Based on the prehearing stipulation that Baptist did not challenge the historical provision of such services, HealthSouth is determined to meet this preference. See, also, 381.705(1)(n).

26. The final preference in the state health plan, for providers who coordinate inpatient rehabilitation services with outpatient follow-up, is met by HealthSouth.

    
    

27. In addition to containing CON allocation factors, the local health plan contains two applicable elements, one for additional pediatric rehabilitation beds, and a second for high quality rehabilitation programs in SNF. Baptist suggests that the pediatric element is no longer a priority due to the opening of the pediatric unit at West Gables, and HealthSouth failed to provide evidence of additional pediatric CMR bed need. The element favoring high quality rehabilitation programs in skilled nursing homes, is consistent with the state health plan statement that head trauma and other specialty services in nursing homes will increase competition to existing rehabilitation hospitals. Because HealthSouth can meet CMR needs in 45 beds, with the remaining 120 SNF beds, at generally lower costs than acute care CMR hospitals, this application is consistent with the element. HealthSouth's application also meets the continuum of care and cost containment goals of the local health plan.

    
    

28. Two of the elements of the local health plan are the same as the state health plan. There is a preference for applications proposing to convert acute care beds to rehabilitation beds and a preference for disproportionate share Medicaid and indigent providers. As was discussed above, the HealthSouth proposal does not meet those preferences. See, Findings of Fact 22 and 25.

    
    

29. The local health plan includes a preference for rehabilitation providers whose occupancy exceeds 85%, when the District's average occupancy exceeds 80%. HealthSouth cannot meet the first part of this standard because it does not have licensed rehabilitation beds. The average utilization for the licensed rehabilitation beds in District 11 for the application based period was 74.9%. However, excluding Jackson Memorial and Bon Secours Hospitals, as special circumstances justify in this case, occupancy levels for District 11 average over 92%. See, Findings of Fact 13 and 14.

    
    

30. HealthSouth meets the local health plan element preference for programs which meet CARF standards, as is evident from its CARF accreditation.

    
    

31. HealthSouth meets the local health plan element favoring comprehensive discharge planning, as a part of its service.

    
    

    Availability, quality of care, accessibility and utilization of like and existing services, Subsection 381.705(1)(b), Florida Statutes

    
    

32. HealthSouth, if approved, will be the southernmost provider of CMR services in District 11. The only two CARF brain injury programs in the District, are the ten beds at Jackson Memorial Hospital and the ten beds at HealthSouth.

    
    

33. HealthSouth, Jackson Memorial and West Gables offer the distinct CMR pediatric programs. Baptist acknowledged that at the time the Applicant filed its application, Baptist had no pediatric rehabilitation program or patients and that it had only one pediatric admission in 1991.

    
    

34. Based upon the only need calculations for pediatric beds made by both HealthSouth and Baptist, there is a gross need for 14-17 pediatric beds in District XI, which is satisfied by the 18 beds at Jackson Memorial and West Gables.

35. There are only 20 CARF accredited brain injury beds in the District,

    10 at Jackson and 10 at HealthSouth and, based upon the need for brain injury beds calculated by experts for both HealthSouth and Baptist, there is a net need in the range of 38-41 beds for brain injury patients. Based on payor trends, however, some of these beds need to be CARF accredited.

    
    

36. No evidence was provided that existing providers do not provide adequate quality inpatient rehabilitation care, except that which results from over-utilization of all except two facilities, which operate inconsistently with the district trends.

    
    

    Applicant's record of and ability to provide quality care. Subsection 381.705(1)(c), Florida Statutes, and Florida Administrative Code Rule 10- 5.039(2)(c)4. and (d) 1.

    
    

37. HealthSouth meets the Commission on Accreditation of Rehabilitation Facilities (CARF) standards for hospital based acute care comprehensive medical rehabilitation services. It is CARF accredited for comprehensive in-patient rehabilitation, out-patient rehabilitation, acute brain injury rehabilitation and work injury rehabilitation. HealthSouth is accredited as an acute care hospital by the Joint Commission on Accreditation of Health Care Organizations.

    
    

38. The evidence demonstrates that HealthSouth provides quality care, with the appropriate medical specialists and adequate staff working as an interdisciplinary team, and meets or exceeds all program requirements.

    
    

    Availability of alternatives. Subsection 381.705(1)(d), Florida Statutes.

    
    

39. HealthSouth has failed to establish that the specialized needs of children for CMR services are not currently met in the district. HealthSouth has established that individuals needing catastrophic acute CMR care for head and spinal cord injuries, particularly those with lower RANCHO Levels, or those whose third party payors require CARF accreditation do not have adequate district services.

    
    

40. Jackson Memorial is not an available alternative to its designation as a regional trauma and spinal cord center. See, Finding of Fact 19.

    
    

41. Jackson Memorial is also not an available alternative for vocational rehabilitation services funded by the Impaired Drivers and Speeders Fund. HealthSouth was requested by the Division of Vocational Rehabilitation, Impaired Drivers and Speeders Fund to obtain CARF specialty accreditation in CMR inpatient brain injury and thereby become an alternative provider in District XI due to limitations on patient access to Jackson Memorial. Baptist is also not an available alternative. Although Baptist provides CMR services, its lack of CARF accredited specialties prohibits its' admission of vocational rehabilitation-funded brain injury patients. All parties stipulated that outpatient CMR does not provide the intense therapy need for some CMR patients.

    
    

    Resources and funds for project accomplishment and operation; impact on clinical needs of health professional training programs; accessibility to district residents. Subsection 381.705(1)(h), Florida Statutes.

    
    

42. HealthSouth has adequate specialized staffing to run its acute care CMR program as currently operated. Its staffing patterns meet CARF standards, are consistent with industry standards for acute care CMR hospitals and are appropriate to its patient mix.

43. HealthSouth has adequate international, national and state recruitment processes. HealthSouth also participates as an internship site for clinical training programs, which allows HealthSouth to attract new employees from the students who intern at HealthSouth for six weeks to three months.

    
    

44. HealthSouth's manpower and staffing proposals, based upon a projected licensure change, are reasonable. HealthSouth has demonstrated that it has the ability to recruit the additional staff required. See, also Florida Administrative Rule 10-5.039(2)(b)4.

    
    

    Costs and methods of construction. Subsection 381.705(1)(m), Florida Statutes. Renovation as an alternative to new construction. Subsection 381.705(2)(c), Florida Statutes.

    
    

45. HealthSouth presented evidence that the construction costs of $95.00 per square foot are reasonable, based upon prior recent construction experience within South Florida, familiarity with design and construction standards for specialty hospitals in Florida, prior design and construction experience with other HealthSouth facilities. Detail plans for phasing construction were not presented, although a general description of the proposed phasing is included in the application.

    
    

46. Overall project costs of $2,079,000 including permitting fees are reasonable. HealthSouth will be renovating the interior, but will not be making exterior wall changes, will not have to replumb or rewire the 1983 structure, but only relocate connections and will not have to purchase any equipment. HealthSouth's construction will occur to up-grade its facility from nursing home to hospital licensure construction standards. The contingency fee of 10% identified for unforeseen expenses during construction is the industry standard and is reasonable.

    
    

47. Demolition costs of $3.50/SF for the partial demolition of the existing building are accurately projected and reasonable based upon demolition project costs experienced by HealthSouth in Dade County.

    
    

48. Based upon the assessment of patient needs and by the occupancy experienced in HealthSouth's CMR unit, discontinuation or a reduction of the service was an option which would exacerbate the need for CMR beds in the district. The construction of a new facility is more costly than the alternative of renovating a current facility. The schematic plan for the proposed renovation meets the code and licensure requirements.

    
    

    Immediate and long-term financial feasibility. Subsection 381.705(1)(i), Florida Statutes. Impact on competitors and costs. Subsection 381.705(1)(e).

    
    

49. The parties stipulated that the HealthSouth proposal is financial feasibly in the short term and that HealthSouth has adequate resources to fund capital operations.

    
    

50. Interest on the total debt will, at current rates result in reducing projected project costs by approximately $70,000, and HealthSouth has the ability to finance the proposed renovations.

    
    

51. Income and expense projections are reasonable, based on HealthSouth's experience in other CMR facilities.

52. Because HealthSouth currently serves acute care CMR patients, its actual historical utilization data is a reasonable basis for projecting future utilization. Baptist noted that HealthSouth's RANCHO level II patients and others currently admitted after stays in other CMR units, would not qualify for admission to HealthSouth's CMR unit, if approved. Baptist's Exhibit 3 demonstrates Baptist's assertion that 13 patients in 1990, and 12 patients in 1991 at HealthSouth were not appropriate candidates for inpatient rehabilitation services. Given the need for 40 - 45 beds in the district, appropriate CMR patient demand should exceed any inappropriate CMR patients. Baptist has sent some of these patients to HealthSouth's SNF. These patients will continue to be able to use the SNF and have the advantage of a continuum of rehabilitation care in the same facility. Finally, non-CMR patients reasonably can be expected to be offset by those CMR patients HealthSouth has previously been unable to attract due to its SNF licensure. HealthSouth will be able to meet the CMR rule occupancy standards. See, also, Florida Administrative Code Rule 10- 5.039(2)(c)2.

    
    

53. HealthSouth projects that charges per patient day and its fee structure for CMR patients currently treated at HealthSouth will remain the same. The projected in-patient revenue per patient day of $874.00 for 1992 is the current rate at HealthSouth for CMR patients. While the charges HealthSouth projects are, in general, among the lower charges in the district, they are not all inclusive. Ancillary charges, drugs, therapies and supplies would be billed to patients above the per diem charge.

    
    

54. The salary expense projections made at the time of the application are consistent with those paid in the industry and those currently paid by HealthSouth, and are reasonable.

    
    

55. According to Baptist, HealthSouth's expenses are understated on its pro forma projections. Although Baptist concedes that these errors do not affect the long term financial feasibility of the project, Baptist contends that the errors do affect the patient charges and costs. Specifically, Baptist asserts that it is unlikely that HealthSouth can complete its renovations within the budgeted project costs and that HealthSouth failed to include in the pro forma a management fee of 5% of gross revenues which must be paid to its parent corporation. HealthSouth's proposed charge structure should reflect the costs of the management fee. When the pro forma is corrected to included the management fee, the proposal is still financially feasible.

    
    

56. If HealthSouth's 5% management fee is passed directly to patients, then recalculating HealthSouth Exhibit 22, revenue per patient day would increase from $874 to $926. As ranked on HealthSouth's Exhibit 38, at $926 per patient day, HealthSouth would continue to be below the district average of

    $1,004 and still be second lowest charge provider in the district. Baptist's assertion that the inclusion of the management fee negates HealthSouth's ability to be a lower cost provider is rejected.

    
    

57. HealthSouth's proposal will have little or no impact on existing providers because HealthSouth already has a CMR average daily census of 29 historically, and 34 currently. In addition, Baptist Exhibit 3 shows that Baptist transferred 8 patients to HealthSouth in 1991 due to the absence of available beds at Baptist.

    
    

58. The approval of HealthSouth's proposal will foster competition through the availability of a lower charge provider and ultimately benefit consumers and employers by offering its lower health care costs.

    Past and proposed provision of services to Medicaid and medically indigent. Section 381.705(1)(n), Florida Statutes.

    
    

59. The Applicant made a 5% and 2% commitment respectively as part of its CON application to serve Medicaid and medically indigent patients. The Medicaid commitment is 4.1% higher than the district-wide average of patient days available and will improve access within the district. There is no clear showing, however, of the lack of services to Medicaid CMR patients, except as may be assumed based on statutory and health plan preferences.

    
    

    Availability of less costly, more efficient, or more appropriate alternatives. Section 381.705(2)(a), Florida Statutes.

    
    

60. HealthSouth's proposal was the most efficient, least costly alternative based on the determination of need for additional CARF accredited brain injury CMR beds in the district XI, and the lower cost of renovating a facility which is already providing these services.

    
    

61. CMR services, due to high occupancy rates, are not reasonably available at other inpatient facilities in the district, or at Bon Secours or Jackson Memorial Hospitals. See, Finding of Fact 19.

    
    

    Appropriateness and efficiency of existing facilities providing similar services. Section 381.705(2)(b), Florida Statutes.

    
    

62. The district occupancy excluding Jackson Memorial and Bon Secours Hospitals is in excess of 85% which is beyond that considered an efficient or optimal operating levels.

    
    

    Probability of serious access problems in the absence of proposed services. Section 381.705(2)(d), Florida Statutes.

    
    

63. Jackson Memorial is the only hospital licensed CMR provider with a CARF accredited brain injury service with only 10 beds available. This creates a serious access problem for patients with third party payors requiring their treatment in CARF accredited brain injury units.

    
    

    CONCLUSIONS OF LAW

    
    

64. The Division of Administrative Hearings has jurisdiction over this matter. Subsections 120.57(1) and 381.709(5), Florida Statutes.

    
    

65. Case No. 91-5704. The inclusion in the number of District 11 licensed and approved beds of the 33 beds awarded to West Gables as the result of South Miami's ore tenus voluntary dismissal, is not inconsistent with the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services,

    483 So.2d 700 (Fla. 1st DCA 1985). Unlike Gulf Court, HealthSouth never challenged the HRS intent to approve the West Gables' application. HealthSouth never took the position that the approval of West Gables' and HealthSouth's applications were, in fact, mutually exclusive. In short, HealthSouth never sought comparative review with West Gables in the Section 120.57 review of the preliminary agency action. In addition the final order which is the subject of Baptist's Request for Official Recognition, merely memorializes the ore tenus action taken on February 18, at the commencement of the hearing, and at that time, with the acquiescence of all of the parties. For these reasons, Baptist's

    Request for Official Recognition is granted, and HealthSouth's Motion to Strike the Request for Official Recognition is denied.

    
    

    In addition, for the reasons given in the Gulf Court decision, the Baptist proffer of testimony regarding the effect of the subsequently adopted CMR rule need methodology is rejected.

    
    

66. Need. As the applicant, HealthSouth bears the burden of proof that it is entitled to the issuance of a certificate of need pursuant to Section 381.705, Florida Statutes. Boca Raton Artificial Kidney Center v. Department of Health and Rehabilitative Services, 475 So.2d 260 (Fla. 1st DCA 1985). In the absence of numeric need pursuant to HRS rules, it is the obligation of the applicant to show that ". . . without the requested [program], the existing facilities are (or will be) unavailable or inaccessible, or that the quality of care is (or will be) suffering from overutilization, or other evidence of that nature." Humana, Inc., d/b/a Cypress Community Hospital v. Department of Health and Rehabilitative Services, 8 FALR 2273 (Fla. 4th DCA 1986). The evaluation of certificate of need applications requires balanced consideration of all relevant criteria. North Ridge General Hospital, Inc. v. NME Hospitals, Inc., 478 So.2d

    438 (Fla. 1st DCA 1985).

    
    

67. In the instant case, there was no determination of need pursuant to the rule governing inpatient CMR services. There was, however, a demonstration of bed need pursuant to the reasonable alternative bed need methodology, based on district incidence rates, presented by HealthSouth. HealthSouth was in partial compliance with the elements of the state and local health plans. The existing providers of inpatient CMR services, which could be available, accessible, and appropriate alternatives to the HealthSouth proposal are overutilized. HealthSouth is presently providing a needed service in the district in its SNF, but would be providing a needed service with a continuum of care with 45 CMR hospital beds.

    
    

68. The high occupancy of like providers of CMR services and the reasonably projected growth in utilization and population within the district coupled with HealthSouth's current provision of acute CMR services support the need for the Applicant's proposal.

    
    

69. HealthSouth demonstrated that the current availability of specialized CARF accredited brain injury services in the district are inadequate. HealthSouth failed to overcome the presumption, based on the experts projections, that pediatric bed need is now met.

    
    

70. Other rule criteria. HealthSouth demonstrated that it can meet the occupancy standard of 65%, based on its CMR unit's average daily census of 29 patients during 1991 and 34 for the first quarter of 1992. Rule 10- 5.039(2)(c)2, Florida Administrative Code.

    
    

71. HealthSouth demonstrated that it currently provides and will continue to provide all of the programs and services set forth in the criteria. Rules 10-5.039(2)(c)4 and 10-5.039(2)(d)1-12, Florida Administrative Code.

    
    

72. Other statutory criteria. HealthSouth demonstrated that it has a record of providing high quality acute CMR services, based on its CARF general and specialty accreditations and JCAHO three-year accreditation.

    
    

73. The Applicant demonstrated that it will need minimal additional professional resources and equipment for project accomplishment and operation.

74. HealthSouth's projected utilization is reasonable, it has sufficient funds to pay for all expenses of the project, and its income and expense projections were reasonable, all of which support a conclusion that the project is financially feasible in the short and long-term.

    
    

75. HealthSouth demonstrated that it is the second lowest cost provider of CMR services in the District and, therefore, provides a cost-effective alternative, which, if it has any effect at all, would be positive. However, due to the high occupancy of other providers in the district, HealthSouth's CMR services will not negatively impact its competitors.

    
    

76. HealthSouth demonstrated that its proposed construction costs are reasonable and that the proposed project will make use of the least costly, most effective methods of construction through the use of standardized construction plans and lower professional service costs. The renovations proposed by HealthSouth are a reasonable alternative to new construction.

    
    

77. HealthSouth demonstrated a commitment to the provision of health care services to the medically indigent through a 2% commitment and to Medicaid patients through at 5% commitment which is 4.1% higher than the District-wide average and that its projections are reasonable.

    
    

78. Balancing the applicable statutory and rule criteria, HealthSouth has demonstrated that its CON application to establish a 45-bed CMR hospital unit should be granted.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Health and Rehabilitative Services issue a Final Order approving Certificate of Need application number 6654 for the establishment of a 45-bed comprehensive medical rehabilitation unit and program by HealthSouth Rehabilitation Corporation, d/b/a HealthSouth Regional Rehabilitation Center.

RECOMMENDED this 23rd day of June, 1992, at Tallahassee, Florida.

ELEANOR M. HUNTER

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 Division of Administrative Hearings this 23rd day of June, 1992.

ENDNOTES

1/ Baptist's proposed recommended order, in Finding of Fact 13, lists Jackson, West Gables, and HealthSouth as programs "with specialty accreditation for their

head injury units," relying on the testimony of a witness who said "it is my understanding that West Gables has one, as well." (Tr. 16) HealthSouth, in proposed Finding of Fact 18, and HRS, in proposed Finding of Fact 8, state that the only such programs are at HealthSouth and Jackson Memorial, relying on Baptist's expert's testimony, which was as follows:

Q How many in Dade County are CARF accredited?

A To my knowledge, the Jackson beds, the 10 beds at Jackson, and the 10 beds at HealthSouth have CARF accreditation.

Q What about West Gables? You said that they were interested in putting in 21 beds or something. Are they there? Are they on line?

A I don't believe they are yet.

Q Were they at the time of the application, or was it just something that they were proposing to do?

A Something they were proposing to do. Q They may or may not do it; isn't that correct?

A They state that in their application. I assume HRS will try to hold them to the statements in their application.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-5705

Rulings on findings proposed by Department of Health and Rehabilitative Services:

1. Accepted in Finding of Fact 21.

2 and 3. Rejected, in part, and accepted, in part, in Findings of Fact 22 - 31.

1. Accepted in Finding of Fact 8.

2. Accepted in Findings of Fact 5 and 32.

3. Accepted in Finding of Fact 8.

4. Accepted in Findings of Fact 12 and 13.

5. Accepted in Findings of Fact 19, 33 - 35.

6. Accepted in Findings of Fact 6 and 35.

7. Accepted in Findings of Fact 6 and 38.

8. Subordinate to Findings of Fact 6 and 38.

12 and 13. Subordinate to Findings of Fact 37 and 38.

1. Accepted in Finding of Fact 41.

2. Subordinate to Finding of Fact 39.

3. Accepted in Finding of Fact 60.

4. Accepted in Finding of Fact 49.

5. Accepted in Finding of Fact 42.

19 and 20. Accepted in Finding of Fact 43.

21. Accepted in Finding of Fact 49.

22 and 23. Accepted in Finding of Fact 50.

1. Accepted in Finding of Fact 51.

2. Accepted in Finding of Fact 54.

3. Accepted in Finding of Fact 53.

4. Accepted in Findings of Fact 52 and 57.

5. Accepted in Findings of Fact 53 and 58.

6. Accepted in Finding of Fact 45.

7. Accepted in Finding of Fact 46.

8. Accepted in Finding of Fact 48.

9. Accepted in Finding of Fact 25.

10. Accepted in Findings of Fact 25 and 59.

11. Accepted in Finding of Fact 59.

12. Accepted, in part, in Finding of Fact 60.

13. Accepted in Finding of Fact 20, as to past history.

14. Accepted in Finding of Fact 58.

15. Accepted in Finding of Fact 62.

39 and 40. Accepted in Finding of Fact 48.

1. Rejected in Finding of Fact 20.

2. Accepted in Finding of Fact 20, as to past history.

3. Accepted in Finding of Fact 63.

4. Rejected in Finding of Fact 20.

45 and 46. Accepted in Finding of Fact 8.

1. Accepted in Finding of Fact 8 and subordinate to Finding of Fact 12.

2. Accepted in Finding of Fact 18.

3. Accepted in Finding of Fact 52.

Rulings on findings proposed by HealthSouth Rehabilitation Corporation:

1. Accepted in Finding of Fact 1.

2. Accepted in Finding of Fact 2.

3 - 5. Accepted in Finding of Fact 3.

1. Accepted in Finding of Fact 5.

2. Accepted in Finding of Fact 3.

3. Accepted in Finding of Fact 4.

4. Accepted in Findings of Fact 4 and 18.

5. Subordinate to Finding of Fact 6.

6. Accepted in Finding of Fact 4.

7. Accepted in Finding of Fact 21.

8. Accepted, in part, and rejected, in part, in Findings of Fact 22 - 31.

9. Accepted, in part, and rejected, in part, in Findings of Fact 22 - 27.

10. Accepted in Finding of Fact 32.

11. Accepted in Findings of Fact 32 and 33.

12. Accepted in Finding of Fact 32.

13. Accepted in Findings of Fact 13 and 14.

14. Accepted in Findings of Fact 8 and 12.

15. Subordinate to Findings of Fact 8 and 12.

16. Accepted in Findings of Fact 8 and 12.

17. Accepted in Finding of Fact 21.

18. Rejected in Finding of Fact 20.

19. Accepted in Findings of Fact 20 and 33.

20. Subordinate to Findings of Fact 20 and 33.

21. Accepted in Findings of Fact 20 and 34.

22. Accepted in Findings of Fact 19 and 35.

23. Subordinate to Findings of Fact 19 and 35.

24. Accepted in Finding of Fact 52.

25. Accepted in Findings of Fact 6 and 37.

31 and 32. Accepted in Findings of Fact 6 and 37.

33 - 38. Subordinate to Findings of Fact 6, 37, 38 and 42.

39. Accepted in Finding of Fact 38.

40 - 43. Subordinate to Findings of Fact 6 and 38.

44. Accepted in Findings of Fact 6 and 38.

45 and 46. Subordinate to Findings of Fact 6 and 38.

47 and 48. Accepted in Finding of Fact 19 and Subordinate to Finding of Fact 35.

49 - 51. Subordinate to Findings of Fact 6, 19 and 35.

1. Accepted in Finding of Fact 14.

2. Accepted in Findings of Fact 13 and 14.

3. Rejected in Finding of Fact 20.

4. Accepted in Finding of Fact 4.

5. Accepted in Finding of Fact 20.

6. Accepted in Finding of Fact 19.

7. Accepted in Finding of Fact 32.

8. Accepted in Finding of Fact 21.

9. Accepted in Finding of Fact 18.

61 and 62. Accepted in Finding of Fact 19.

63. Accepted in Finding of Fact 27.

64 and 65. Accepted in Finding of Fact 42.

66 - 69. Accepted in Finding of Fact 43 and Subordinate to Finding of Fact 44.

1. Subordinate to Findings of Fact 43 and 44.

2. Accepted in Finding of Fact 43 and Subordinate to Finding of Fact 44.

3. Accepted in Finding of Fact 38.

73 and 74. Subordinate to Findings of Fact 43 and 44.

75 - 77. Subordinate to Finding of Fact 57.

1. Accepted in Finding of Fact 44.

2. Subordinate to Finding of Fact 44.

3. Accepted in Finding of Fact 50.

4. Accepted in Finding of Fact 51.

82 - 85. Accepted in Finding of Fact 52.

1. Accepted in Finding of Fact 53.

2. Accepted in Finding of Fact 54.

3. Accepted in Finding of Fact 55.

4. Accepted in Finding of Fact 53.

5. Subordinate to Finding of Fact 53.

6. Accepted in Finding of Fact 57.

92 - 97. Subordinate to Finding of Fact 57.

98. Accepted in Finding of Fact 58.

99 and 100. Subordinate to Finding of Fact 58.

1. Accepted in Finding of Fact 45.

2. Accepted in Finding of Fact 46.

3. Accepted in Finding of Fact 47.

4. Subordinate to Finding of Fact 46.

105 - 111. Subordinate to Findings of Fact 45 and 46.

1. Subordinate to Finding of Fact 51.

2. Subordinate to Findings of Fact 49 and 50.

3. Accepted in Finding of Fact 25.

4. Accepted in Findings of Fact 21 and 54.

116 - 119. Subordinate to Finding of Fact 59.

120. Accepted in Finding of Fact 60.

121 and 122. Subordinate to Finding of Fact 60.

1. Accepted in Finding of Fact 61.

2. Accepted in Finding of Fact 62.

3. Accepted in Finding of Fact 48.

4. Rejected in Finding of Fact 20.

5. Accepted in Findings of Fact 19 and 63.

6. Subordinate to Findings of Fact 19 and 20.

7. Subordinate to Finding of Fact 17.

8. Accepted in Finding of Fact 13.

9. Accepted in Findings of Fact 12 and 18.

10. Accepted in Finding of Fact 8.

133 - 135. Accepted in Finding of Fact 9.

136. Accepted in Finding of Fact 8.

137 and 138. Accepted in Finding of Fact 13.

1. Accepted in Finding of Fact 12.

2. Subordinate to Finding of Fact 12.

3. Subordinate to Findings of Fact 8 and 12.

4. Accepted in Finding of Fact 15.

5. Accepted in Findings of Fact 17 and 18.

6. Subordinate to Finding of Fact 18.

7. Accepted in Findings of Fact 16 - 18.

146 - 149. Accepted in Finding of Fact 18.

150 and 151. Subordinate to Finding of Fact 18.

1. Rejected as not relevant.

2. Subordinate to Findings of Fact 17 and 18.

154 and 155. Accepted in Finding of Fact 19.

156. Subordinate to Findings of Fact 19 and 47.

157 and 158. Subordinate to Findings of Fact 16 and 18.

159. Accepted in Finding of Fact 18.

160 and 161. Accepted in Finding of Fact 44.

1. Accepted in Finding of Fact 48.

2. Accepted in Findings of Fact 12 - 14.

3. Subordinate to Finding of Fact 18.

4. Accepted in Finding of Fact 48.

5. Accepted in Finding of Fact 38.

6. Accepted in Findings of Fact 18 and 35.

7. Accepted in Finding of Fact 19.

169 - 171. Accepted in Finding of Fact 20.

172 - 177. Accepted in Findings of Fact 19 and 20.

Rulings on findings proposed by Baptist Hospital of Miami, Inc.:

1. Accepted in Findings of Fact 1 - 3.

2. Accepted in Finding of Fact 3.

3. Accepted in Finding of Fact 4.

4. Accepted in Finding of Fact 5.

5. Accepted in Finding of Fact 6.

6 and 7. Accepted in Finding of Fact 7.

1. Accepted in Finding of Fact 8.

2. Accepted in Findings of Fact 16 and 17.

3. Accepted in Finding of Fact 11.

4. Conclusion rejected in Finding of Fact 18.

5. Conclusion rejected in Finding of Fact 19.

6. Accepted in Finding of Fact 19.

7. Accepted in Finding of Fact 20.

8. Accepted in Finding of Fact 22.

9. Rejected in Finding of Fact 23.

10. Accepted in Finding of Fact 24.

11. Accepted, in part, and rejected, in part, in Finding of Fact 25.

12. Accepted in Finding of Fact 26.

13. Rejected in Findings of Fact 22 - 26.

14. Accepted, in part, and rejected, in part, in Finding of Fact 27.

15. Accepted in Finding of Fact 28.

16. Rejected, in relevant part, in Finding of Fact 29.

17. Accepted in Finding of Fact 30.

18. Accepted in Finding of Fact 31.

19. Accepted, in part, and rejected, in part, in Findings of Fact 27 - 31.

20. Accepted in Finding of Fact 12.

21. Accepted, as modified, in Finding of Fact 36.

29 and 30. Conclusion rejected in Finding of Fact 29.

1. Conclusion rejected in Finding of Fact 27.

2. Accepted in Finding of Fact 27.

33 and 34. Conclusion rejected in Finding of Fact 27.

1. Accepted in Finding of Fact 49.

2. Accepted in Finding of Fact 43.

3. Rejected in Finding of Fact 60.

4. Accepted in Findings of Fact 5 and 59 and accepted as not determinative.

5. Rejected in Findings of Fact 49 and 54.

6. Accepted in Findings of Fact 53, 57 and 58.

7. Accepted in Findings of Fact 5 and 59 as not determinative.

8. Accepted in Finding of Fact 53.

9. Rejected in Findings of Fact 53 and 56.

10. Accepted in Findings of Fact 53.

11. Accepted in Finding of Fact 45.

46 and 47. Subordinate to Findings of Fact 46 and 47.

1. Rejected in Finding of Fact 45.

2. Rejected in Findings of Fact 45 - 47.

50 and 51. Rejected in Finding of Fact 25.

1. Accepted as not determinative in Finding of Fact 59.

2. Rejected in Finding of Fact 19.

3. Rejected in Finding of Fact 62.

4. Rejected in Finding of Fact 63.

5. Rejected with regard to payor trends in Findings of Fact 19 and 63.

6. Conclusion rejected in Findings of Fact 19 and 52.

7. Rejected in Findings of Fact 12 - 14.

8. Accepted in Finding of Fact 59.

9. Rejected in Finding of Fact 52.

10. Rejected in Findings of Fact 18 and 19.

11. Accepted in Findings of Fact 18 and 19 as not determinative.

COPIES FURNISHED:

Edward Labrador, Esquire Department of Health and

Rehabilitative Services 2727 Mahan Drive

Fort Knox Executive Center Tallahassee, Florida 32308

Jay Adams, Esquire 1519 Big Sky Way

Tallahassee, Florida 32311

Susan Horovitz Maurer, Esquire Panza, Maurer, Maynard,

Platow & Neel, P.A. Suite 200

3081 East Commercial Boulevard Fort Lauderdale, Florida 33308

Sam Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Slye, General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

BAPTIST HOSPITAL OF MIAMI, INC.,

Petitioner,

CASE NO.: 91-5705

vs. CON NO.: 6654

RENDITION NO.:

AGENCY FOR HEALTH CARE AHCA-92-35-FOF-CON ADMINISTRATION and HEALTHSOUTH

REHABILITATION CORPORATION,

Respondents.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered June 23, 1992, by Hearing Officer Eleanor M. Hunter is incorporated by reference.

RULING ON EXCEPTIONS FILED BY BAPTIST HOSPITAL OF MIAMI (BAPTIST)

In exceptions number 1 through 3, Baptist challenges the probative value of the need methodologies presented by Healthsouth. The weight to be given to this evidence is properly an issue for the Hearing Officer. The findings are

supported by competent, substantial evidence; therefore the exceptions are denied.

In exceptions 4 and 11 Baptist challenges the Hearing Officer's findings that the occupancy threshold for existing facilities required by the need rule 1/ was met. This is not a question of fact as the only issue is whether the Hearing Officer violated the rule by excluding occupancy data for two district facilities, Jackson Memorial Hospital and Bon Secours Hospital.

The language of the rule is not ambiguous. The average annual occupancy rate "... for all existing comprehensive rehabilitation facilities and units within the department service district..." must exceed 85% for the preceding calendar year. An agency has no authority to disregard its rule; therefore, the exception is granted. The occupancy threshold was not met in this case. 2/

In exceptions 5 through 7 and 12 Baptist challenges findings of fact contained in paragraphs 19, 20, 23, 33, 35, and 63. These findings are supported by competent, substantial evidence; therefore, the exceptions are denied.

In exception 8, Baptist challenges the Hearing Officer's finding that Healthsouth's application is consistent with the local health plan which favors CMR services which are provided under a nursing home license. Healthsouth concedes in its response that this is a legal conclusion. I concur with Baptist. Healthsouth's current program of CMR services is more consistent with the local health plan, than its proposed conversion of its CMR program to a hospital unit.

Baptist's exceptions numbers 9 and 10 to findings of fact 57 and 60 are denied as the findings are supported by competent, substantial evidence.

Exception 13 is a summary in the nature of a final argument. It is rejected.

Except as follows, Baptist's exceptions to the conclusions of law are denied.

In exception number 15, Baptist maintains that the Hearing Officer erred in rejecting Baptist's proffer that under the amended need formula (Section 10- 5.039, Florida Administrative Code), there is no need for Healthsouth's proposal.

In certificate of need law, a great deal of importance is attached to a calculation of need or lack thereof under a promulgated numeric need formula. A lack of numeric need under such a rule establishes a rebuttable presumption of no need. 3/

Baptist concedes that the amended rule is not applicable to Healthsouth's proposal because Healthsouth's application pre-dated the amended rule. Thus, there is no presumptive effect to a showing of no need under the amended rule. Whether the calculation under the amended rule has evidentiary value is a different matter. I conclude that the calculation under the amended rule is at least as relevant as the need numbers calculated under the non-rule methodologies tendered by Healthsouth and Baptist and thus should have been received as evidence.

FINDINGS OF FACT

The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where modified by the ruling on the exceptions.

CONCLUSIONS OF LAW

The department hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where modified by the ruling on the exceptions.

When there is no numeric need under the rule formula, a CON application may nevertheless be approved if there are special circumstances justifying approval. The decision on whether to approve on the basis of special circumstances is a conclusion of law and thus a matter of agency discretion. Humana vs. Department of Health and Rehabilitative Services, 492 So2d 388, 392 (Fla. 4th DCA 1986),

Federal Property Management, 382 So2d 475, 477 (Fla. 1st DCA 1986).

Having considered the Recommended Order, the exceptions and response thereto, the high occupancy statistics for existing CMR facilities except for Bon Secours located in the opposite end of the district and Jackson Memorial, and the other review criteria, I conclude that approval of Healthsouth's proposal is justified.

Based upon the foregoing, it is

ADJUDGED, that the application of Healthsouth Rehabilitation Corporation for CON 6654 be APPROVED.

DONE and ORDERED this 4th day of October, 1992, in Tallahassee, Florida.

Douglass M. Cook, Director Agency for Health Care Administration

ENDNOTES

1/ Rule 10-5.039, formerly Rule 10-5.022(1)(n)

2/ It is arguable that the exclusion of Jackson Memorial is required by Balsam vs. Department of Health and Rehabilitative Services, 486 So2d 1341 (Fla. 1st DCA 1986) because it was shown that some of Jackson Memorial's CMR beds are not readily available to district residents. However, Healthsouth's health planning expert conceded that if only Jackson Memorial's beds were excluded the district occupancy was 82% (T 484).

3/ The presumptive effect of such rules has been judicially approved in Humhosco vs. Department of Health and Rehabilitative Services, 476 So2d 258, 261 (Fla.

1st DCA 1985). A conclusive presumption is not permissible. See Department of Health and Rehabilitative Services vs. Johnson and Johnson, 447 So2d 361 (Fla. 1st DCA 1984).

COPIES FURNISHED:

Jean Laramore, Esquire JEAN LARAMORE, P. A.

7007 McBride Pointe

Tallahassee, Florida 32312

Jay Adams, Esquire

418 East Virginia Street Tallahassee, Florida 32301

Gerald Sternstein, Esquire RUDEN, BARNETT, SMITH,

SCHUSTER & RUSSELL, P. A.

101 North Monroe Street Suite 1010

Tallahassee, Florida 32301

Eleanor M. Hunter, Hearing Officer

DOAH, The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Thomas Panza, Esquire Susan Horovitz, Esquire PANZA, MAURER, MAYNARD PLATOW & NEEL, P. A.

3081 East Commercial Blvd. Fort Lauderdale, Florida 33308

Edward Labrador, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Suite 103

Fort Knox Executive Center Tallahassee, Florida 32308

Jim Konish (FALR)

Florida Administrative Law Reports Post Office Box 385

Gainesville, Florida 32602 Wayne McDaniel (AHCA) Wendy Thomas (AHCA)

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of the foregoing was sent to -the above named people by U. S. Mail this 9th day of October, 1992.

R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700

(904)488-23816

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 91-005705

Orders for Case No: 91-005705