STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HEALTH CARE AND RETIREMENT )

CORPORATION OF AMERICA, )

)

Petitioner, )

)

vs. ) CASE NO. 92-2879

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION and MANOR )

CARE OF FLORIDA, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard by Eleanor M. Hunter, the Hearing Officer designated by the Division of Administrative Hearings, on September 8-11, 1992, and September 14-15, 1992, in Tallahassee, Florida.

APPEARANCES

For Petitioner, Health Alfred W. Clark, Esquire Care and Retirement 1725 East Mahan Drive Corporation: Tallahassee, Florida 32308

For Respondent, Manor James C. Hauser, Esquire Care of Florida, Inc.: Messer, Vickers, Caparello,

Madsen, Lewis, Goldman & Metz

215 South Monroe Street Post Office Box 1876

Tallahassee, Florida 32302-1876

For Respondent, Agency Lesley Mendelson, Esquire for Health Care Agency for Health Care Administration: Administration

Atrium Building, Suite 101

325 John Knox Road Tallahassee, Florida 32303

STATEMENT OF THE ISSUES

Which, if either, of the mutually exclusive applications of Manor Care of Florida, Inc., and Health Care and Retirement Corporation of America should be approved for the issuance of a Certificate of Need to construct a 120 bed community nursing home in District 9, Subdistrict 4, for Palm Beach, County, Florida.

PRELIMINARY STATEMENT

In December 1991, Manor Care of Florida, Inc. ("Manor Care"), Health Care and Retirement Corporation of America ("HCR"), and others, submitted applications to the predecessor of the Agency for Health Care Administration /1 ("AHCA") in response to the published need for 160 additional community nursing home beds in Palm Beach County, Florida. Volume 17, Number 42, Florida Administrative Weekly, (October 18, 1991).

Manor Care and HCR each proposed to construct a 120 bed community nursing home in Palm Beach County. Among the other applicants were Consolidated Resources Health Care Fund I ("Consolidated") and Marriott Retirement Communities, Inc. ("Marriott"), for 10 and 30 nursing home beds, respectively. AHCA published its notice of intent to approve the applications of Manor Care, Consolidated, and Marriott. A number of petitions were filed to challenge AHCA's preliminary action. Following several voluntary dismissals of petitions, including all of those challenging the approval of Consolidated's 10 bed application, the formal hearing commenced. On the first day of the hearing, all challenges to the approval of Marriott's 30 bed application were also voluntarily dismissed.

At the final hearing, Manor Care presented the testimony of Richard N. Carey, expert in nursing home development; Susan Myers, expert in Alzheimer's care and programs; George Seifert, expert in nursing home architecture and design; Rita Nacken Gugel, Ph.D., expert in gerontology and Alzheimer's care; Larry Godla, expert in nursing home construction and costs; James MacCutcheon, expert in nursing home finance, accounting and financial feasibility; Robert J. Hoffman, Jr.; Francine Kwiatkowski, R.N., expert in nursing home care and quality assurance; Robert P. Christiansen, expert in geriatric rehabilitation and skilled rehabilitation services; Marta Meers, R.N., expert in nursing home administration, and Daniel Sullivan, expert in health care planning, health care finance and financial feasibility. Manor Care's Exhibits 1-47 were received into evidence.

On rebuttal, Manor Care presented the testimony of Larry Godla; Paul Echelard, expert in rehabilitation hospital administration and operation; John

R. Cochran, Jr., expert in nursing home architecture and project cost estimation; and Daniel Sullivan. Manor Care Exhibits 48-50 were also proffered during rebuttal. Ruling was reserved on HCR's objection to Manor Care's proffered rebuttal testimony of witnesses Echelard, Cochran, and Sullivan and exhibits 48-50, to determine if the evidence should have been presented in Manor Care's case-in-chief. There was no objection to the rebuttal testimony of Larry Godla which responded to the HCR expert's testimony regarding Manor Care's compliance with construction codes and prior cost overruns. By contrast the testimony of Paul Echelard was directed towards rebutting HCR's proposal to serve as a step-down unit from a rehabilitation hospital. That proposal was included in the portions of the HCR application cited by the witness at page

1. of the transcript. John Cochran, an architect, was proffered to testimony on the reasonableness of HCR's design and construction costs, examined the schematics and costs schedules filed in the original HCR application, and compared those to two existing Manor Care facilities. Dan Sullivan was called during rebuttal to compare HCR's underlying financial assumptions in an attempt to discredit statements in HCR's application regarding the extent of therapy services available to rehabilitation patients. Following the hearing, HCR filed written objections to Manor Care's proferred rebuttal evidence, citing as improper rebuttal the testimony on transcript pages 808-814, 826-832, 843-863, and 882-894. Those pages are disregarded, as are Manor Care's Exhibits 48, 49,

   and 50. In each instance, the issues addressed by these witnesses, while purporting to respond to HCR's case-in-chief and on rebuttal, were also directed towards challenging information in the HCR application.

   
   

   HCR presented the testimony of Susan Borchers, expert in health care market management; Bruce Schroeder, expert in nursing home financial feasibility and financial analysis; Paul Sieben, expert in nursing home development, design and construction; Francis Joseph Schmitt, expert in nursing home administration; and Milo Bishop, expert in health planning. HCR also introduced Exhibits 1-27 and 29-32, which were received in evidence.

   
   

   AHCA presented the testimony of Morgan Riley Gibson, expert in health planning, and Exhibits 1 and 2, which were received in evidence.

   
   

   The transcript of the final hearing was filed with the Division of Administrative Hearings on September 30, 1992. Proposed Recommended Orders were filed by AHCA on November 10, 1992, and by Manor Care and HCR on November 18, 1992.

   
   

   FINDINGS OF FACT

   
   

   1. There is a need for 160 additional community nursing home beds in Agency for Health Care Administration ("AHCA") District 9, Subdistrict 4, Palm Beach County, for the July 1994 planning horizon. After stipulated approval of

      10 beds for Consolidated Resources Health Care Fund I and 30 beds for Marriott Retirement Communities, Inc., there remains a need for 120 community nursing home beds in Palm Beach County.

      
      

   2. AHCA is the state agency designated to administer the Certificate of Need ("CON") laws.

      
      

   3. Manor Care of Florida, Inc. ("Manor Care") is the applicant for CON number 6872 to construct a 51,000 square foot, single story community nursing home on 4 to 5 acres in the West Palm Beach area of Palm Beach County. The applicant is a subsidiary of Manor Health Care Corporation, which operates 167 nursing homes, 10 of those in Florida. Two of Manor Healthcare's nursing homes are also in Palm Beach County, one of 120 beds in Boca Raton and another 180 beds in Boynton Beach. Manor Care projects total project costs of $6,164,000. Manor Care also proposes to have its CON conditioned on (1) providing 30 percent of its patient days for Medicaid, (2) establishment of a separate unit in 30 of the 120 beds for residents diagnosed with Alzheimer's and related dementia, and

      (3) staffing of the Alzheimer's unit with 2.8 nursing hours per patient day.

      
      

   4. Health Care and Retirement Corporation of America ("HCR") is the applicant for CON number 6879 to construct a 53,000 gross square foot, 120 bed community nursing home on 10 acres in the West Palm Beach area of Palm Beach County, Florida. Total project costs are estimated to be $7,900,000. HCR agreed to have its CON conditioned on (1) providing 30 percent Medicaid patient days, (2) establishment of separate rehabilitation and high acuity transitional care units, and (3) providing respite care. HCR intends to use its experience operating two other nursing homes in Palm Beach County, a 120 bed nursing home in Boynton Beach, which is totally dedicated to Alzheimer's and dementia residents, and a 120 bed general nursing home, Prosperity Oaks, in Palm Beach Gardens. HCR also has an approved CON to construct a third 120 bed nursing home to be in southern Palm Beach County. HCR operates 130 nursing homes in 18 states.

   5. By prehearing stipulation, the parties agreed that the requirements for letters of intent, corporation resolutions, newspaper notices, and application deadlines were met. The parties also agreed that review criteria not in dispute are those in Subsection 408.035(2), Florida Statutes, related to available alternatives to new construction of inpatient facilities, and Rule 10-5.036(1)- (3), Florida Administrative Code. Disputed statutory review criteria are those in Subsections 408.035(1)(a), (b), (c), (h) regarding accessibility for all district residents, (i), (l), (m) and (n), Florida Statutes.

      
      

      Subsection 408.035(1)(a) and (b) - District and State Health Plans and Related Statutory Criteria; Available or Needed Services.

      
      

   6. Subsection 408.035(1)(a), Florida Statutes, requires an evaluation of proposals in relation to district and state health plans. The applicable district health plan is that of the Treasure Coast Health Council for 1990. The 1989 State Health Plan is also applicable to the review of these applications.

      
      

   7. The District 9, 1990 Allocation Factors have the following preferences related to long term care:

      
      

      1. In the case of proposals to expand existing nursing homes of less than 120 beds, priority should be given to applicants whose proposed total capacity will not exceed 120 beds. The applicant should be able to demonstrate a licensed bed occupancy rate within the existing home greater than 90 percent for the prior calendar year.

      2. All new nursing homes and expansions to existing facilities should agree that a minimum of 30 percent of its patient days will be Medicaid.

      3. Priority should be given to applicants who demonstrate the following:

         1. Documented history of providing good residential care;

         2. Staffing ratios, particularly for registered nurses and aides, that exceed minimum requirements;

         3. Provisions for the treatment of residents with mental health problems; and

         4. The inclusion of intensive rehabilitation services for those short stay patients requiring rehabilitation below the level of an acute care hospital.

      4. Priority should be given to those applicants who propose to serve a distinct patient population that is currently not being served within the subdistrict. The proposal should address patient's special dietary needs or the need for bilingual personnel, when applicable.

         
         

   8. The 1989 State Health Plan preferences related to nursing homes are as follows:

      
      

      1. Preference shall be given to an applicant proposing to locate a nursing home in areas within the

         subdistrict with occupancy rates exceeding 90 percent.

      2. Preference shall be given to an applicant who

         proposes to serve some Medicaid residents in proportion to the average subdistrict-wide percentage of the

         nursing homes in the same subdistrict. Exceptions shall be considered for applicants who propose to exclusively serve persons with similar ethnic and cultural backgrounds, or propose the development of multi-level care systems.

      3. Preference shall be given to an applicant proposing to provide specialized services to special care residents including AIDS residents, Alzheimer's residents, and the mentally ill.

      4. Preference shall be given to an applicant proposing to provide a continuum of services to community residents including, but not limited to, respite care and adult day care.

      5. Preference shall be given to an applicant proposing

         to construct facilities which provide maximum resident comfort and quality of care. These special features may include, but are not limited to, larger rooms, individual room temperature controls, visitors' rooms, recreation rooms, outside landscaped recreation areas, physical therapy rooms and equipment, and staff lounges.

      6. Preference shall be given to applicants proposing

         to provide innovative therapeutic programs which have been proven effective in enhancing the residents' physical and mental functional level and emphasize restorative care.

      7. Preference shall be given to an applicant proposing charges which do not exceed the highest Medicaid per diem rate in the subdistrict. Exceptions shall be considered for facilities proposing to serve upper income residents.

      8. Preference shall be given to an applicant with a record of providing superior resident care programs in existing facilities in Florida or other states as determined by the department. The evaluation of existing facilities shall consider, but not be limited to, current ratings of licensure facilities located in Florida.

      9. Preference shall be given to an applicant proposing staffing levels which exceed the minimum staffing standards contained in licensure administrative rules. Applicants proposing higher ratios of RN and LPNs to residents than other applicants shall be given preference.

      10. Preference shall be given to an applicant who will

          use professionals from a variety of disciplines to meet the resident needs for social services, specialized therapies, nutrition, recreation activities, and spiritual guidance. These professionals shall include physical therapists, mental health nurses, and social workers.

      11. Preference shall be given to an applicant who

          provides documentation how they will ensure residents' rights, and residents' privacy, use resident councils, and implement a well designed quality assurance and discharge planning program.

      12. Preference shall be given to an applicant

proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district.

Occupancy Levels

1. The first local preference, for expansion of existing facilities, is inapplicable to the proposals of both Manor Care and HCR to construct new nursing homes. Both meet the first state preference, by proposing to locate in the district in which nursing home occupancies exceed 90 percent.

   Medicaid Services

   
   

2. The second local preference is met by the proposals of both Manor Care and HCR to have CONs conditioned on providing 30 percent of total patient days to Medicaid patients, the minimum set in the local plan. HCR's commitment is to be evaluated one year after 80 percent occupancy or 18 months of operation. Subsection 408.035(l)(n), Florida Statutes, requires an examination of applicants' past and proposed services to Medicaid and the medically indigent. The second state preference also applies to proposals to serve Medicaid patients in proportion to the average subdistrict wide percentages.

   
   

3. Neither Manor Care nor HCR proposes to serve Medicaid patients in proportion to the average subdistrict percentage of 53.84 percent.

   
   

4. Manor Care of Florida Inc., operates two existing nursing homes in Florida, one of 180 beds in Pinellas County, and one of 120 beds in Hillsborough County. The two Manor Care facilities had 32 percent of the payor mix for Medicaid at the time of the hearing. At the time the applications were filed, Manor Care's Pinellas facility was 15 percent Medicaid and the one in Hillsborough County was 19 percent Medicaid, and its statewide Medicaid rate was below the state average.

   
   

5. HCR operates 18 Florida nursing homes, all of which are Medicaid certified. The two HCR facilities in Palm Beach County, Boynton and Prosperity Oaks, provided .37 percent and zero Medicaid patient days respectively in their first 12 months of operation. HCR's CON Medicaid conditions at Boynton Beach and Prosperity Oaks were 37 percent and 42 percent, respectively. AHCA has reduced the Prosperity Oaks commitment to 33 percent Medicaid. HCR, however, asserts that its average statewide Medicaid days is 69 percent, as compared to a

   64 percent average for all Florida nursing homes.

   Subsection 408.025(1)(c) - Quality of Care and Special Services

   
   

6. Local health plan preference three relates to quality of care issues, including the applicant's history, staffing ratios for nurses and aides, mental health services, and rehabilitation therapies. Related state preferences include 3 -special services for AIDS, Alzheimer's and mentally ill residents, 6

   - innovative therapeutic programs for physical and mental restorative care, 8 - current and historic licensure ratings, and 9 - higher staffing levels of registered nurses and licensed practical nurses. Related statutory criteria in Subsections 408.035(1)(c), Florida Statutes, are ability and record of providing quality care.

   
   

7. Manor Care's two Florida facilities have held superior licenses as long as they have been eligible for the rating. For 1992, HCR notes that Manor Care and its parent corporation, Manor Health Care Corporation, operated a total of 10 Florida nursing homes, with two conditional, two standard, and six superior licenses. Manor Care has the ability and experience to provide quality

   nursing home care including assuring residents' rights and otherwise meeting the requirements of state health plan preference number 11.

   
   

8. HCR is a publicly traded corporation, which operates 133 nursing homes in 18 states, and 18 nursing homes in Florida, 11 of which were built in the last five years. Fourteen of HCR's eighteen Florida nursing homes are currently licensed superior, four are standard. For the prior licensure period, there were eight superior, eight standard, and one conditional. HCR has the ability and experience to provide quality nursing home care, including assuring residents' rights and otherwise meeting the requirements of state health plan preference number 11.

   
   

9. Manor Care proposes an interdisciplinary therapy team, using a dedicated staff which will include mental health professionals for a 30-bed specialized unit for residents with Alzheimer's and related dementia. Using the experiences of its two other related corporation's Palm Beach facilities as models, Manor Care intends to provide interdisciplinary rehabilitation therapies, and has proposed a Medicare payor mix of 15 percent. HCR does not propose an Alzheimer's unit, preferring instead to refer such residents to one of its three other Palm Beach facilities with a total of 140 existing and 20 approved Alzheimer's beds. HCR identified 237 existing or approved Alzheimer's beds in Palm Beach County, including a 30 bed unit operated by Manor Care.

   HCR's expert in health planning agreed, however, that the need for Alzheimer's beds is greater than the available supply, in view of the fact that 50 percent of nursing home residents suffer from some mental decline.

   
   

10. HCR's proposal includes interdisciplinary mental health services and services to AIDS residents. HCR also proposes 20 percent Medicare to residents in need of subacute skilled nursing and rehabilitative therapies. Manor Care takes the position that there is no need in Palm Beach County for HCR's proposed

    20 bed subacute unit or its 20 bed short stay rehabilitation unit. According to Manor Care, each of its Palm Beach nursing homes provides those same services. HCR, however, proposed to offer complex medical services, including IV and other therapies for various DRG's, which are beyond those provided at many but not all nursing homes. The services proposed by HCR are also comparable to those at hospital nursing home beds.

    
    

11. Using the District 9 preferences as indicative of the services needed in the area, it is clear that the local health council expressed the need for both mental health services including those for Alzheimer's residents, as proposed by Manor Care, and for subacute rehabilitation services, as proposed by HCR. Similarly, state health plan preferences 3 - on Alzheimer's and 6 - on therapeutic programs are given equal importance in the state health plan. Neither Manor Care and HCR has shown that services they propose are not available within the subdistrict, but both have established that more of those services are needed.

    
    

12. Manor Care and HCR include rehabilitative and respite care in their proposals. HCR intends to make referrals for adult day care to its two existing Palm Beach nursing homes. Manor Care also intends to rely on programs at its existing facilities to provide the continuum of services desirable, as expressed in state health plan preference 4. Consistent with the nature for the rehabilitative services it proposes and this preference, HCR's services will also include outpatient therapies.

    
    

13. It is impossible, in view of the number of Palm Beach Alzheimer's beds and nursing homes providing rehabilitative therapies, to determine that either

    Manor Care or HCR will serve totally unserved population groups, nor do the applications address special dietary, foreign language, ethnic or cultural needs. See 1990 District 9 Allocation Factor Number 4, and 1989 State Health Plan Preference Number 2.

    
    

14. Staffing proposals are specifically recognized as indicative of the quality of care to be expected, with special emphasis on the ratio of nurses to patients. See, 1989 State Health Plan, preference 9; District 9 Allocation Factor 3(6).

    
    

15. Manor Care proposes 2.075 hours per patient day for nurses. HCR proposes 3.4 hours per patient day, and 24 hour registered nurse staffing. Both exceed the state required minimum staffing levels. Both proposals indicate that optimum staffing levels will be reached before the corresponding patient occupancy levels are reached. In addition, HCR's proposed 24 hour registered nurse coverage is consistent with its proposal to administer rehabilitation and subacute services.

    
    

    Subsection 408.035(1)(h) - Accessibility to Residents of the Service District

    
    

16. The parties have disagreed over the criterion in Subsection 408.035(1)(h) related to whether the proposed services will be accessible to all residents of the service district. HCR asserts that Manor Care's payor mix, which includes higher precentages of private pay patients, will limit accessibility and lower projected occupancy.

    
    

17. Based on the performance of Manor Care - Boca Raton, which also has

    120 beds and has reported in excess of 90 percent occupancy since 1989, HCR's assertion that a new Manor Care facility would be inaccessible because it would be underutilized is rejected. See, District IX Health Plan, Vol. II (1990).

    
    

    Subsection 408.035(1)(m) - Physical Design Features and Construction Costs

    
    

18. State Health Plan preference number 5 for maximum resident comfort, and Subsection 408.035(1)(m) includes costs and methods of construction as criteria for the comparison of CON applications.

    
    

19. Manor Care proposes to construct a 51,000 gross square footage structure on 4 to 5 acres at a cost of $6.1 million.

    
    

20. HCR proposes to construct a 53,000 gross square footage structure on

    10 acres at a cost of $7.9 million. While Manor Care states that the projected costs are too high, it also criticizes HCR for past underestimates and cost overruns. HCR has proposed reasonable construction costs to avoid overruns in this project.

    
    

21. HCR takes the position that Manor Care has underestimated land costs in the Palm Beach area, used outdated construction codes, and underestimated construction costs. Manor Care has supported the reasonableness of its estimate of the land costs, and code compliance through expert testimony. In addition, HCR's proposal to purchase 10 acres at $1.8 million supports Manor Care's claim that it can purchase 4 to 5 acres at $900,000. Manor Care's experience, with construction costs of $60 a square foot in building the same prototype in 1990 in Hillsborough and Pinellas Counties, demonstrates the reasonableness of its proposed construction costs of $65.40 a square foot for this proposed Palm Beach Facility.

22. Manor Care criticized HCR for proposing the use of too much land, and for several design features, including the proposed location for therapy services in one wing, rather than in spaces more central to the entire building. For the types of services emphasized by HCR, the space arrangement provides more appropriate, separate access for outpatients participating in follow-up therapies. The HCR design, including its acreage, and proposed costs of $80 a square foot are appropriate, reasonable and consistent with it programmatic plans. Manor Care also suggested that HCR is likely to transfer rather than develop and operate its nursing home. There is no evidence to suggest that is HCR's intention in this case.

    
    

    Subsection 408.035(1)(l) - Proposed Costs and Charges, and Probable Impacts on Costs

    
    

23. Preference number 7 of the state health plan applies to proposed charges not exceeding the highest Medicaid per diem rate in the subdistrict. Related preference number 12 applies to applicants proposing lower administrative costs and higher residential costs as compared to the district averages.

    
    

24. Manor Care's proportion of costs attributable to administrative expenses is higher than that proposed by HCR. Manor Care asserts that its costs are higher because of the inclusion of fringe benefits and because of the plan to have a separate director for the Alzheimer's unit.

    
    

25. For projected charges, the situation is the opposite. Manor Care's projected charges are lower than those of HCR, which HCR asserts is due to the more intense level of services HCR proposes to offer. AHCA determined that HCR's charges are in line with higher charges in Palm Beach County. Therefore, neither Manor Care nor HCR will adversely impact nursing home costs in the district.

    
    

26. Both Manor Care and HCR have reasonable proposed costs, cost ratios, and charges, consistent with their respective proposals.

    
    

    Subsection 408.035(1)(i) - Immediate and long - term financial feasibility

    
    

27. Immediate financial feasibility and the ability to finance the projects are not in dispute, by prehearing stipulation.

    
    

28. The dispute over long term financial feasibility is, in substantial portion, a disagreement over the reasonableness of expected occupancy rates after two years of operation. In addition, Manor Care asserts that its financing using cash flow provides an advantage over HCR's likely debt financing.

    
    

29. HCR opened one Palm Beach facility in May 1991, and another in September 1991, which were not yet mature and profitable. By contrast, the expert for Manor Care testified that Manor Health Care's two Palm Beach facilities had been operational longer and had become profitable.

    
    

30. Based on its experience, Manor Care's expert expects a new Manor Care nursing home to be 80 to 95 percent occupied by the second year of operation, and to be at a financial break even point at 65 percent occupancy. HCR established that 95 percent is probably an overestimate, but that lower in the

    80 to 95 percent range is accurate.

31. HCR projects 26 percent utilization in the first year, and 74 percent in the second year. For its Boynton Beach facility, HCR had projected 94 percent for the second year, but only achieved 74 percent occupancy. In light of that experience, HCR's projected 74 percent occupancy in the second year of this project is supported by its prior experience and is reasonable.

    
    

32. Both Manor Care and HCR have established the financial feasibility of their proposals.

    Criteria On Balance

    
    

33. As AHCA's expert witness opined, "they were both very good applications," which makes the choice between Manor Care and HCR difficult.

    Both proposals are financially feasible, appropriately designed, offer excellent quality of care including care to Medicaid patients, and meet the needs of the community.

    
    

34. HCR's proposal meets an unquantified, but established need for additional rehabilitation and subacute services. Manor Care's proposal is superior because it addresses the uncontroverted need for additional Alzheimer's beds, although unquantified regarding the levels of the disease in need of service, and because of its lower total cost, lower charges, and the quality care which can be provided in a dedicated Alzheimer's unit.

    
    

    CONCLUSIONS OF LAW

    
    

35. The recommendation of the approval of a CON application must be based on a balanced consideration of all statutory and rule criteria. Department of HRS v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984). Based upon the evidence adduced at final hearing, the applications of Manor Care and HCR, on balance, meet or exceed the review criterion.

    
    

36. Paragraph (a) of Subsection 408.035(1), on needs in relation to the State and District IX Health Plan, is met by both applicants. Manor Care has proposed to address more directly, the uncontroverted need for Alzheimer's care.

    
    

37. Paragraph (c) of Subsection 408.035(1), on quality of care, is also met by both applicants. For services to Alzheimer's patients, Manor Care's proposal offers superior quality of care in a distinct unit devoted to Alzheimer's sufferers.

    
    

38. Both Manor Care and HCR, consistent with Paragraph (h) of Subsection 408.035(1), would provide proposed services accessible to all service district residents. Any access limitations due to proposed Manor Care's patient mix with more private pay patients, is offset by HCR's generally higher charges.

    
    

39. Manor Care and HCR have both satisfied the disputed criterion of Paragraph (i) and (l) Subsection 408.035(1), by demonstrating long-term financial feasibility. Manor Care and HCR have excellent quality assurance programs, and, although their proposals duplicate services that exist in the district, either would foster competition because the demand for the services exceeds the available supply. Manor Care, with lower charges, and its responsiveness to the uncontroverted demand for additional Alzheimer's services is the preferred applicant.

    
    

40. Paragraph (m) of Subsection 408.035(1), on the reasonableness of methods of construction is satisfied by both Manor Care and HCR. The proposed

    designs and project costs are reasonable and appropriate for the services each proposes.

    
    

41. Paragraph (n) of Subsection 408.035(1) requires consideration of the applicant's past and proposed provision of services to Medicaid patients. Both Manor Care and HCR satisfy this criterion, although Manor Care's record of servicing Medicaid patients in Palm Beach County is more well established, based on its facilities having been operational longer.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Certificate of Need Application Number 6879 for Health

Care and Retirement Corporation of America be denied; and that Certificate of

Need Application Number 6872 for Manor Care of Florida, Inc., to construct a 120 bed community nursing home in Palm Beach County be approved, conditioned on Manor Care's (1) providing 30 percent of total patient days to Medicaid patients, (2) establishing of a 30-bed separate unit for patients with Alzheimer's and related dementia, and (3) staffing of the Alzheimer's unit at no less than 2.8 nursing hours per patient day.

DONE AND ENTERED this 22nd day of July, 1993, in Tallahassee, Leon County, 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 22nd day of July, 1993.

ENDNOTES

/1 The responsibility for the administration of certificate of need laws was transferred from the Department of Health and Rehabilitative Services to the Agency for Health Care Administration pursuant to Chapter 92-33, Laws of Florida, effective July 1, 1992.

/2 Renumbered as Rule 59C - 1.036(1) - (3), Florida Administrative Code.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-2879

The following rulings are made on the parties' proposed findings of fact: Health Care and Retirement Corporation of America:

1. Accepted in Finding of Fact 1.

2. Accepted in Finding of Fact 4.

3. Accepted in Finding of Fact 18.

4. Accepted in Finding of Facts 4, 10 and 13.

5. Accepted in Finding of Fact 18.

6. Accepted in Finding of Fact 18.

7. Accepted in Finding of Facts 4 and 18.

8. Accepted in Finding of Facts 4 and 18.

9. Accepted in Finding of Fact 18.

10. Rejected, last sentence in Finding of Fact 17.

11. Accepted in Finding of Fact 3.

12. Accepted in Finding of Facts 7 and 8.

13. Accepted in Finding of Fact 9.

14. Accepted in relevant parts in 10, 11 and 12.

15. Accepted in Finding of Fact 14.

16. Accepted in Finding of Facts 17 and 18.

17. Accepted in Finding of Fact 18.

18. Accepted in Finding of Fact 17.

19. Accepted in Finding of Fact 17.

20. Accepted in Finding of Fact 20.

21. Accepted in Finding of Fact 30.

22. Accepted in Finding of Facts 17 and 18.

23. Accepted in Finding of Facts 15 and 16.

24. Accepted in Finding of Fact 23.

25. Accepted in part in Finding of Fact 23.

26. Accepted in Finding of Facts 31 and 32.

27. Accepted in Finding of Fact 18.

28. Accepted in Finding of Fact 18.

29. Accepted in Finding of Fact 18.

30. Accepted in Finding of Fact 18.

31. Accepted in Finding of Fact 18.

32. Accepted in Finding of Fact 18.

33. Rejected in part in Finding of Fact 17.

34. Rejected in Finding of Fact 25.

35. Accepted in Finding of Fact 35.

36. Accepted in Finding of Fact 39.

37. Accepted in Finding of Fact 37.

38. Accepted in Finding of Fact 34.

39. Accepted in relevant part in Finding of Fact 38.

40. Subordinate to Finding of Fact 33.

41. Rejected in Finding of Fact 32.

42. Accepted in part in Finding of Fact 38.

43. Accepted in Finding of Fact 18.

44. Accepted in relevant part in Finding of Fact 34.

45. Accepted in Finding of Fact 28.

46. Accepted in Finding of Fact 30.

47. Accepted in Finding of Fact 30.

48. Accepted in Finding of Facts 27 and 29.

49. Rejected conclusion in Finding of Fact 29.

50. Rejected conclusion in Finding of Fact 42.

51. Rejected last sentence in Finding of Facts 34 and 40.

Manor Care of Florida, Inc.

1. Accepted in Preliminary Statement.

2. Accepted in Finding of Fact 3.

3. Accepted in Finding of Facts 3 and 15.

4. Accepted in Finding of Fact 3.

5. Subordinate to Finding of Fact 3.

6. Subordinate to Finding of Fact 3.

7. Accepted in Finding of Fact 3.

8. Accepted in Finding of Fact 3.

9. Subordinate to Finding of Fact 3.

10. Accepted in Finding of Facts 3 and 10.

11. Accepted in Finding of Fact 17.

12. Accepted in general in Finding of Fact 7.

13. Rejected in Finding of Fact 9.

14. Accepted in Finding of Fact 10.

15. Accepted in Finding of Facts 15 and 17.

16. Accepted in Finding of Fact 23.

17. Accepted in Finding of Fact 17.

18. Accepted in Finding of Fact 17.

19. Rejected fourth sentence only in Finding of Fact 21.

20. Accepted in general.

21. Accepted in Finding of Fact 9.

22. Rejected in Finding of Fact 11.

23. Accepted in Finding of Facts 17 and 19.

24. Accepted in Finding of Fact 20.

25. Accepted in Finding of Fact 26.

26. Accepted in Finding of Fact 17.

27. Accepted in Finding of Fact 33.

28. Accepted in general in Finding of Fact 15.

29. Accepted in Finding of Facts 22 and 23.

30. Accepted in Finding of Fact 17.

31. Accepted in Finding of Fact 15.

32. Rejected second sentence in Finding of Fact 32.

33. Accepted in general in Finding of Fact 15.

34. Accepted in Finding of Facts 15, 17 and 23.

35. Accepted in Finding of Fact 20.

36. Accepted in Finding of Fact 20.

37. Accepted in Finding of Fact 17.

38. Accepted in Finding of Fact 17.

39. Accepted in Finding of Fact 17.

40. Subordinate to Finding of Fact 17.

41. Subordinate to Finding of Fact 17.

42. Subordinate to Finding of Fact 17.

43. Subordinate to Finding of Fact 17.

44. Subordinate to Finding of Fact 17.

45. Subordinate to Finding of Fact 17.

46. Accepted in Finding of Facts 24 and 25.

47. Accepted in Finding of Fact 40.

48. Accepted in Finding of Fact 40.

49. Accepted in Finding of Fact 38.

50. Accepted in Finding of Fact 38.

51. Accepted in Finding of Fact 36.

52. Accepted in Finding of Fact 40.

53. Accepted in Finding of Facts 34 and 40.

54. Accepted in general in Finding of Fact 38.

55. Accepted in general in Finding of Fact 38.

56. Accepted in Finding of Fact 34.

57. Subordinate to Finding of Fact 17.

58. Accepted in Finding of Fact 34.

59. Accepted in Finding of Fact 34.

60. Accepted in Finding of Fact 29.

1. Rejected, except last sentence as improper rebuttal.

2. Rejected in Finding of Facts 18 and 19.

3. Rejected in Finding of Fact 18.

4. Rejected in Finding of Facts 18 and 19.

5. Rejected as improper rebuttal.

6. Rejected as improper rebuttal.

7. Rejected as improper rebuttal.

8. Rejected as improper rebuttal.

9. Accepted in Finding of Fact 40.

Agency for Health Care Administration

1. Accepted in Preliminary Statement and Finding of Fact 1.

2. Accepted in Preliminary Statement.

3. Accepted in Finding of Fact 5.

1. Rejected in part and accepted in part in Finding of Facts 11,

   18 and 20.

2. Rejected in Finding of Fact 21.

3. Accepted in Finding of Fact 17.

4. Accepted in Finding of Fact 20.

5. Accepted in Finding of Fact 20.

6. Accepted in Finding of Fact 20.

7. Accepted in Finding of Fact 20.

8. Rejected conclusion in Finding of Fact 18.

9. Subordinate to Finding of Fact 18.

10. Subordinate to Finding of Facts 18 and 19.

11. Subordinate to Finding of Fact 18.

12. Accepted in Finding of Fact 1.

COPIES FURNISHED:

Lesley Mendelson, Esquire

Agency for Health Care Administration Atrium Building, Suite 101

325 John Knox Road Tallahassee, Florida 32303

Alfred W. Clark, Esquire

P. O. Box 623

Tallahassee, Florida 32302

James C. Hauser, Esquire Messer, Vickers, Caparello

P. O. Box 1876

Tallahassee, Florida 32302-1876

R. S. Powers, Agency Clerk

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, Esquire

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

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 ten 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.

Docket for Case No: 92-002879CON

Orders for Case No: 92-002879CON