STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BEVERLY ENTERPRISES-FLORIDA, INC. ) d/b/a BEVERLY GULF COAST-FLORIDA, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 93-6280
) AGENCY FOR HEALTH CARE ADMINISTRATION ) and MANOR CARE OF BOYNTON BEACH, INC., )
)
Respondents. )
) JFK MEDICAL CENTER, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 93-6284
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent. )
) MANOR CARE OF BOYNTON BEACH, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 93-6811
) AGENCY FOR HEALTH CARE ADMINISTRATION ) and BEVERLY ENTERPRISES-FLORIDA, INC. ) d/b/a BEVERLY GULF COAST-FLORIDA, INC., )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on October 3-17, 1994, in Tallahassee, Florida.
APPEARANCES
For Petitioners: James C. Hauser, Esquire
Manor Care of Parker, Skelding, Labasky, Corry, Boynton Beach, Eastman & Hauser, P.A.
Inc. 318 North Monroe Street Tallahassee, Florida 32301
Beverly Enter- Douglas L. Mannheimer, Esquire prises-Florida, Broad & Cassel
Inc. d/b/a 215 South Monroe Street, Suite 400 Beverly Gulf Post Office Drawer 11300
Coast-Florida, Inc. Tallahassee, Florida 32302
JFK Medical Robert A. Weiss, Esquire
Center, Inc. 118 North Gadsden Street, Suite 200
The Perkins House Tallahassee, Florida 32301
For Respondent: Lesley Mendelson, Esquire
Agency for Health Care Administration
325 John Knox Road
Atrium Building, Suite 301 Tallahassee, Florida 32303-4131
STATEMENT OF THE ISSUE
The issue presented is whether the applications for certificates of need filed by Petitioners Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast- Florida, Inc.; JFK Medical Center, Inc.; and Manor Care of Boynton Beach, Inc., should be granted.
PRELIMINARY STATEMENT
Petitioners Beverly Enterprises-Florida, Inc. d/b/a Beverly Gulf Coast- Florida, Inc., Manor Care of Boynton Beach, Inc., and other health care providers filed applications for certificates of need authorizing the construction or expansion of community nursing homes pursuant to the Agency for Health Care Administration's determination that there is a need for 128 additional beds in District 9, Subdistrict 4, Palm Beach County. Petitioner JFK Medical Center, Inc., filed an application for a certificate of need to convert
24 adult psychiatric and 12 adult substance abuse beds at its facility to a 20- bed hospital-based skilled nursing unit pursuant to the Agency's determination of need and, alternatively, pursuant to the Agency's "special circumstances" exception. The Agency comparatively reviewed all applications and made a preliminary determination that the application of Petitioner Manor Care of Boynton Beach, Inc., should be granted and that the applications of Beverly Enterprises-Florida, Inc., of JFK Medical Center, Inc., and of others should be denied. A certificate of need for 8 of the additional beds was awarded and is not at issue in this proceeding.
Petitions for a formal administrative hearing regarding the Agency's preliminary determination were filed by the three Petitioners herein and by a number of the other applicants. Those Petitions were transferred to the Division of Administrative Hearings, assigned separate case numbers, and consolidated for hearing. Prior to and during the formal hearing the Petitions of all applicants but the three Petitioners herein were withdrawn. Also prior to the formal hearing, Petitioner JFK Medical Center, Inc., dismissed that portion of its Petition seeking approval of its application pursuant to the fixed need pool and elected to proceed solely on its application pursuant to the special circumstances exception. JFK's case was thereafter severed from the remainder of the consolidated cases since it was no longer seeking beds from the fixed need pool and comparative review of its application with the applications
of those seeking beds from the fixed need pool was unnecessary. The Agency filed an appeal from that determination, and the final hearing scheduled in this cause was postponed.
The parties subsequently agreed, in order to avoid further delay, that JFK's amended petition seeking beds solely pursuant to the special circumstances exception should again be consolidated with the cases of the remaining applicants and JFK should participate in the final hearing in this cause to determine which applications should be approved. All parties further agreed that JFK would not participate in that portion of the proceeding involving Beverly's and Manor Care's applications and that Manor Care and Beverly would not participate in that portion of the proceeding involving JFK's application.
The formal hearing was conducted in compliance with that stipulation.
The parties have stipulated that there are 120 community nursing home beds remaining in the fixed need pool for Palm Beach County for the batching cycle at issue to be awarded in this proceeding. The parties have also stipulated that the letters of intent, the certificate of need applications, and the omissions responses of all parties were timely filed with the Agency and with the District
9 Local Health Council. The parties have further stipulated that each of the applicants can secure the financing for their proposed project costs as stated in their applications. It was further stipulated during a portion of the proceeding when JFK was not present that both Beverly and Manor Care could recruit and hire the necessary staff as represented in their applications at the salaries represented in their applications and that both Beverly and Manor Care have good career ladder programs for their staff as described in their applications.
Petitioner Beverly Enterprises-Florida, Inc., d/b/a Beverly Gulf Coast- Florida, Inc., presented the testimony of Kelly Gill; Marie Cowart; Cheryl Kelsch; John Fletcher; James Pietrzak; Schuyler Hollingsworth, Jr.; Armand E. Balsano; Eugene Clarke; John H. Williams, Jr.; and Collene W. Walter.
Additionally, Beverly's exhibits numbered 1-15, 19-21, 24, and 29 were admitted in evidence. Beverly's exhibits marked numbers 22 and 23 for identification were specifically rejected.
Petitioner Manor Care of Boynton Beach, Inc., presented the testimony of Gregory D. Miller; Charlene McCoy; Susan R. Myers; George L. Seifert; Philip D. Sloane, M.D.; Larry Godla; Donald E. Feltman; Karen A. Chamberlain; Marta Meers; and Daniel J. Sullivan. Additionally, Manor Care's exhibits numbered 1-13 were admitted in evidence.
Petitioner JFK Medical Center, Inc., presented the testimony of Richard Cascio; Robert Collins, M.D.; Matthew Lewis Zaltzman, M.D.; Randy J. Gershwin, M.D.; Linda Anderson; Rick Knapp; and Mark Richardson. Additionally, JFK's exhibits 1-6 were admitted in evidence.
Respondent Agency for Health Care Administration presented the testimony of Elizabeth Dudek. Additionally, the Agency's exhibits numbered 1 and 2 were admitted in evidence.
All parties submitted post-hearing proposed findings of fact in the form of proposed recommended orders. A specific ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.
FINDINGS OF FACT
Petitioner Beverly Enterprises-Florida, Inc., d/b/a Beverly Gulf Coast- Florida, Inc. (hereinafter "Beverly"), is a wholly-owned subsidiary of Beverly- California Corporation which is a wholly-owned subsidiary of Beverly Enterprises, Inc., one of the largest providers of long-term care services in the country. Beverly operates 41 nursing homes in the state of Florida, with all of these facilities receiving substantial financial, managerial, operational, and program support from Beverly's Florida regional office. Three of those nursing homes are located in Palm Beach County, Florida.
Beverly proposes in its certificate of need (hereinafter "CON") application #7372 to construct a 120-bed community nursing home in zip code 33414, which is the Wellington area of Palm Beach County, to be known as Wellington Terrace. The facility would provide high acuity nursing services with an emphasis on rehabilitation. The proposed special programs include an adult day care program, respite care services, and an Alzheimer's unit, and the facility will accept patients with AIDS. The proposed facility will encompass 53,348 square feet and will have a total project cost of approximately $5.6 million.
The facility is designed to minimize institutional effects and emphasize a home-like atmosphere for residents, featuring such amenities as a large day room with an aquarium and wide-screen television and VCR, a screened gazebo, and a greenhouse. Quality of life enhancements will be a consideration in all aspects of the facility. The building will meet or exceed all licensure requirements for construction and safety codes. Beverly's goal is to achieve a superior-rated facility.
Beverly has agreed, if it is awarded a CON in this proceeding, that its CON for this facility will be conditioned upon the facility having a 25-bed Medicare-certified sub-acute unit which will include 4 beds dedicated to ventilator-dependent care. Wellington Terrace's CON will also be conditioned upon the provision of 56 percent of its annual patient days to Medicaid patients, and Beverly will give Florida State University's Institute on Aging a grant in the amount of $10,000 to be used for gerontological research.
Petitioner Manor Care of Boynton Beach, Inc. (hereinafter "Manor Care"), is a Florida-based operating subsidiary of Manor Care Healthcare Corporation, one of the largest operators of nursing homes in the country. Manor Care Healthcare Corporation is a wholly-owned subsidiary of Manor Care, Inc., a publicly-traded company listed on the New York Stock Exchange. Through its corporate structure, Manor Care, Inc., devotes substantial financial, manpower, and other resources to its individual nursing homes. The individual facilities are directed by corporate policies in the areas of finance, quality
of care, quality assurance, prototype services, structural design, and all areas of nursing home operations.
Manor Care's parent owns 10 nursing homes and 4 adult congregate living facilities in Florida. Two additional nursing homes are under construction in Florida, including one in Palm Beach County. In the last 4 years, Manor Care has constructed and opened 2 nursing homes in Florida, and both received superior-rated licenses as soon as they were eligible.
Manor Care seeks in its CON application #7375 to construct a 120-bed community nursing home in the Lake Worth area of Palm Beach County. The facility is a one-story fully equipped nursing center, using a design which
conforms with all federal, state, and local regulations. It incorporates residential features to meet the physical, social, and psychological needs of the residents and promote independence. The space-efficient design emphasizes a home-like atmosphere which ensures quality of care and quality of life.
The design is patterned after Manor Care's "prototype" facility and is very similar to Manor Care's two newest Florida nursing centers in Hillsborough and Pinellas Counties. The facility encompasses approximately 49,500 square feet and has a total project cost of approximately $6.8 million. The facility will contain 16 private rooms and 52 semi-private rooms.
The proposed facility includes a 30-bed self-contained unit for residents with Alzheimer's disease and a 15-bed self-contained sub-acute unit. The sub-acute unit will be adjacent to speech, physical and occupational therapy/rehabilitation/dining spaces to facilitate patient recovery. The therapy spaces are 50 percent larger than Manor Care's standard therapy spaces to better accommodate the sub-acute patients.
Like Beverly's, the proposed facility will offer skilled care, intermediate care, rehabilitative care, respite care, restorative care, sub- acute care, and specialized care for Alzheimer's disease and related dementia. It will also provide the following support services: pre-admission screening, appropriateness review, resident care plans, discharge plans, quality assurance, pharmacy, consulting (for physician visits, and dental, radiology, podiatry, and other diagnostic evaluations), community outreach, family programs, and chaplaincy. Beverly offers similar support services.
Manor Care has agreed, if it is awarded a CON in this proceeding, to condition its CON on its 30-bed dedicated, secured Alzheimer's unit and its 15- bed sub-acute unit. Manor Care has also agreed to condition its project on providing a minimum of 55.5 percent of its total patient days to Medicaid residents, and on providing an adult Alzheimer's day-care program, a respite care program, and 2.8 nursing hours per patient day for the Alzheimer's unit.
Petitioner JFK Medical Center, Inc. (hereinafter "JFK"), is a general acute care hospital located in the Atlantis/Lake Worth area, in central Palm Beach County. It is licensed to operate 369 beds. JFK enjoys tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.
JFK provides services to patients of high acuity. Its overall case mix index, which serves to measure acuity, is 1.56. The normal case mix for acute care hospitals is 1.0. JFK's case mix index places it among the top five percent of all hospitals in the state.
JFK focuses its acute care services in three specific areas. It serves as a regional referral center for cardiovascular services. It serves as a regional referral center for oncology and is the only hospital in Palm Beach County accredited by the American College of Surgeons as a comprehensive cancer center. JFK also has a large orthopedic surgery program.
JFK serves predominantly an elderly patient population. Approximately
75 percent of its patients exceed 65 years of age. JFK's patient population includes many patients with multiple system medical problems. Such patients are more difficult to care for than patients with single system problems.
In addition to acute care services, JFK provides a full range of outpatient and ambulatory services. JFK operates a diagnostic breast institute, an ambulatory surgery center, an outpatient cancer center, and a home health agency. JFK also employs twenty-three primary care physicians. JFK's outpatient and physician services constitute a portion of JFK's continuum of care, as do its acute care services. Sub-acute services are the only link missing from JFK's continuum of care.
By its CON application #7374, JFK seeks authority to convert 26 existing adult psychiatric and substance abuse beds to establish a 20-bed sub- acute skilled nursing unit. JFK proposes to treat patients: (1) who have experienced an episode of acute care; (2) who no longer have need for acute care; and, (3) whose medical needs require higher intensity of care than is provided in a community nursing home. These "sub-acute care" patients fit somewhere in the continuum between acute care and nursing home care. The project involves 14,100 square feet of renovated space, a capital expenditure of
$633,285 to be funded from internal sources, and the conversion of underutilized beds to a highly-utilized service.
Sub-acute care is a comprehensive inpatient care program designed for patients who have experienced an acute illness or injury. Sub-acute care is designed to treat complex medical conditions through coordinated complex medical treatments. The rendition of sub-acute care requires an interdisciplinary team of professionals and paraprofessionals.
In order to render sub-acute care to its patient population, the JFK program will provide the following staffing and service components:
24-hour registered nurse coverage;
5-6 hours of hands-on nursing care daily per patient, which is twice the care required of a community nursing home; and,
7 day/week, 24-hour access to all of JFK's ancillary services, including laboratory, pharmacy, respiratory therapy, blood transfu-
sions, emergency services, and physician services.
The JFK program will provide a full range of rehabilitative, restorative, and therapeutic services to patients, including radiation therapy, intravenous therapy, chemotherapy, complex tracheotomy, ventilator, and hyperalimentation care.
JFK will provide services to the following patient groups:
orthopaedic patients including joint replacement, fracture or amputation patients,
cerebrovascular patients including stroke and other CVA accident patients,
post-operative open-heart surgery patients requiring transitional care,
oncology/radiation therapy patients requiring high level sub-acute care,
pulmonary disorder patients including respiratory/ventilator dependent or other chronic pulmonary disease patients,
patients with drug resistant infections including MRSA or tuberculosis patients,
HIV-infected patients,
patients with severe decubitus ulcers, and
psychiatric patients with skilled medical care requirements.
The JFK program is not designed to compete with community nursing homes. JFK proposes in its application a condition that 90 percent of the patients served in the sub-acute unit will originate from within JFK. JFK also proposes a condition that 90 percent of the patient days provided in the unit be provided to Medicare patients, or non-Medicare patients requiring physician certified rehabilitative or restorative care. JFK also proposes a condition that it serve high acuity or "heavy care" patients.
In order to be awarded a CON, an application must be evaluated to determine compliance with the priorities or preferences stated in the appropriate District or Local Health Plan and in the State Health Plan. The District 9 Local Health Plan includes 3 allocation factors to be used in evaluating nursing home applications. The first states that priority should be given to applicants for new nursing homes or expansion of existing homes who agree to provide a minimum of 30 percent Medicaid days to their patients. Both Manor Care and Beverly comply with this priority in that they have committed to a minimum of 55.5 percent and 56 percent, respectively. The slight difference in their commitments does not give Beverly an advantage.
JFK is not specifically proposing to provide care to Medicaid patients in its sub-acute unit. JFK's proposal is to serve primarily Medicare patients with the remaining patients being without resources or having other insurance. Medicaid-eligible patients occasionally need sub-acute services, and Medicaid does reimburse currently for nursing services provided in hospital-based skilled nursing beds. However, at the time that JFK filed its CON application, Medicaid did not reimburse hospitals for such services. More importantly, the allocation factor does not apply to JFK's application since it only applies to applicants for new nursing homes or expansion of existing homes, and JFK is neither.
The second allocation factor in the District 9 Local Health Plan provides that priority shall be given to applicants who demonstrate (a) a documented history of providing good residential care; (b) staffing ratios, particularly for registered nurses and aides, that exceed the minimum requirements; (c) provision for the treatment of residents with mental health problems; and (d) the inclusion of intensive rehabilitation services for those short-stay patients who require rehabilitation below the level of an acute care hospital. Manor Care meets this allocation factor better than Beverly.
As to the first criterion in the second allocation factor, during some of the 36 months prior to the filing of its application, two of Manor Care's ten Florida nursing homes held a conditional license. Currently, nine of those ten nursing homes hold superior licenses, and the other holds a standard license. Manor Care's two nursing homes opened most recently received superior licenses as soon as they were eligible. On the other hand, during some of the 36 months prior to the filing of its application, 17 of Beverly's 41 Florida facilities held a conditional license. Beverly's most recent composite shows that 31 of its 41 Florida facilities are superior-rated, with three of those 41 facilities rated conditional. Hospitals do not provide residential care, and JFK, therefore, has no history of "residential care" to evaluate; however, JFK has met stringent quality of care requirements by obtaining accreditation by the Joint Commission on Accreditation of Healthcare Organizations.
The second criterion in the second allocation factor is met by the staffing ratios of all three applicants. Similarly, all three applicants will treat residents with mental health problems, the third criterion.
The last criterion of the second allocation factor seeks applicants offering intensive rehabilitation services below the level of an acute care hospital. All three applicants comply with this criterion since JFK's application is for a sub-acute unit including intensive rehabilitation services, and Manor Care and Beverly each include such a unit within their proposed nursing home facilities.
The Local Health Plan's third allocation factor seeks applicants proposing to serve a distinct population that is currently not being served within the subdistrict, Palm Beach County. As written, none of the applicants meets the third allocation factor since none has identified a distinct patient population that is not being served. However, the Agency interprets this allocation factor as being fulfilled by an applicant who addresses a distinct population which is being underserved rather than unserved. As interpreted by the Agency, all three applicants meet this allocation factor, Manor Care and Beverly with their Alzheimer's units, and all three applicants with their sub- acute units. Both services are greatly needed by Palm Beach County residents.
Beverly suggests that it meets the third allocation factor as it is written because it will provide Jewish services, Kosher food, care to AIDS patients, and bi-lingual services. However, there are facilities with bi- lingual and multi-lingual employees, and patients with AIDS are receiving services. Further, there are dedicated Jewish nursing homes in Palm Beach County, and Beverly's project design does not include a Kosher kitchen.
Beverly also suggests that its application is more consistent with the Local Health Plan than Manor Care's. Beverly relies on language within the Plan which states an interest in increasing access to nursing home services to the westernmost region of Palm Beach County. First, that language is not contained in any of the allocation factors utilized by the Agency in reviewing CON applications. Second, Beverly does not include the westernmost regions of the county in its primary service area for the proposed facility. Third, Beverly's Royal Manor facility is already serving the area which Beverly proposes as the primary service area for its Wellington Terrace facility.
The State Health Plan contains 12 allocation factors. The first states that preference shall be given to applicants proposing to locate a nursing home in areas within the subdistrict with occupancy rates exceeding 90 percent. Palm Beach County has an occupancy rate in excess of 90 percent, and all applicants meet this preference.
The second allocation factor states that preference shall be given to an applicant who proposes to serve Medicaid residents in proportion to the average subdistrict-wide percentage of the nursing homes in the same subdistrict. It further provides that exceptions shall be considered for applicants who propose to exclusively serve persons with similar ethnic and cultural backgrounds, or who propose the development of multi-level care systems. The average percentage of nursing home Medicaid patients in the Palm Beach County subdistrict is 55.44 percent. Since Manor Care proposes a minimum of 55.5 percent and Beverly proposes a minimum of 56 percent, they both meet this preference. Beverly's reliance on a higher state-wide average to obtain an advantage over Manor Care as to this factor is misplaced since the factor does not call for any statewide average but rather speaks to the Medicaid commitment
of the specific facility being proposed. Although JFK, as a hospital, does not meet the average subdistrict-wide percentage of Medicaid usage, JFK is still entitled to preference under this allocation factor since its proposal is specifically for the development of a multi-level care system. JFK specifically proposes its sub-acute unit to fill in the only gap in its vertical continuum of care.
The third allocation factor in the State Health Plan gives preference to an applicant proposing to provide specialized services to special care residents, including AIDS residents, Alzheimer's residents, and the mentally ill. All applicants meet this allocation factor. JFK meets this factor with its unique hospital-based sub-acute unit proposal. Manor Care meets this factor with its dedicated, secured Alzheimer's unit, sub-acute unit, and comprehensive rehabilitation program. Beverly meets this factor with its sub-acute unit and comprehensive rehabilitation program and its Alzheimer's unit. Further, all three applicants will provide services to AIDS patients and to the mentally ill.
Factor four gives preference to applicants proposing a continuum of services to community residents including, but not limited to, respite care and adult day care. Manor Care will provide Alzheimer's adult day care, respite care, a 30-bed Alzheimer's unit, and a 15-bed sub-acute unit. It will provide skilled and intermediate care, rehabilitative care, hospice care, restorative care, telephone re-assurance, referral and counseling services, and various community outreach programs. Manor Care meets this allocation factor.
Beverly proposes a continuum of services, including its sub-acute unit, Alzheimer's unit, adult day care, and respite care. Beverly proposes an outpatient adult day care program for up to eight guests, with services available five days a week. The Wellington Terrace design allocates 735 square feet to multi-purpose space for adult day care. Direct care staff, consisting of a nursing assistant and a part-time activity aide along with volunteer programs staff, meals, and snacks will be offered in conjunction with the full array of recreational, personal care, therapeutic, and social services activities available at the facility. Manor Care also offers a full array of services to the participants in its Alzheimer's day care program. Although Manor Care has fewer slots available, its program will operate seven days a week.
The respite care programs offered by both Beverly and Manor Care provide short-term nursing and therapeutic care for elderly adults who require care currently provided by family and other caretakers but whose caretakers require relief from their care-giving activities. All of the services available to in-patients will be available to respite residents.
Although JFK's proposal does not include respite care or day care, its proposal would result in a continuum of services to community residents ranging from acute care services through home health care services. JFK, accordingly, also meets this preference.
The fifth allocation factor gives preference to applicants proposing to construct facilities which provide maximum residents' comfort and quality of care. The factor states that the special features may include, but are not limited to, larger rooms, individual rooms, temperature control, visitors' rooms, recreation rooms, outside landscaped recreation areas, physical therapy rooms and equipment, and staff lounges. This allocation factor envisions services offered in a traditional community nursing home rather than services provided in a hospital-based skilled nursing unit. JFK, like any hospital,
cannot meet the portion of this preference which evaluates the level of comfort in a residential, custodial setting, but it does meet the portion relating to quality of care.
Beverly's facility seeks to minimize the effects of institutionalization on residents through patient rooms which exceed state requirements, private toilets in each room, a physical therapy suite with a physical therapy gym and hydrotherapy area, an outdoor ambulation court, outside courtyard with screened gazebo, and a solarium/greenhouse. Private dining space and separate areas for visitation are provided, and thermostat controls are placed in every room. Its Wellington Terrace facility will feature 50 semi- private rooms and 20 private resident rooms in a single-story structure. Manor Care's facility would have many of these amenities. Its design incorporates residential features that support the physical, social, and psychological needs of the residents and which emphasizes a comfortable atmosphere that ensures quality of care and quality of life for the residents. Both Beverly and Manor Care meet this factor.
The sixth allocation factor in the State Health Plan gives preference to applicants proposing to provide innovative therapeutic programs which have been proven effective in enhancing the residents' physical and mental functional level and which emphasize restorative care. All three applicants meet this preference.
Beverly's comprehensive rehabilitation program at Wellington Terrace will encompass physical therapy, occupational therapy, and speech/language pathology. Rehabilitation programs will be offered seven days per week in order to provide continuity, decrease the time associated with recovery and rehabilitation, and serve the increased needs for rehabilitation services attendant to the sub-acute patient. Upon admission, every resident will be screened by all therapies to assess the need for specific services with periodic screenings during all stays. Out-patient rehabilitation services will be offered to the community in a physical therapy suite with a separate entrance.
Manor Care envisions a similar comprehensive rehabilitation program offering the same therapies with the same intended results. Its rehabilitation program for its sub-acute unit offers one advantage not proposed by Beverly, i.e., the patients in the sub-acute unit will receive care under the supervision of a physiatrist. Manor Care's physical and occupational therapy will be designed to increase tolerance and maximize function in relation to the disease process. The frequency and duration of therapy will increase as the patient's tolerance, skill level, and confidence improve.
Manor Care will provide a restorative and normalizing program to enable each resident to achieve maximum functioning and independence. An inter- disciplinary team of specialists will develop an individualized resident care plan. Restorative care for sub-acute patients will incorporate the same approach and will focus on achieving medical stability and discharging patients to their homes.
Beverly's Wellington Terrace will provide therapeutic programs which enhance the residents' physical and mental functioning and emphasize restorative care. Specialized rehabilitation programs, a restorative nursing program, and normalizing activities are three main components of Beverly's approach. Its therapists work as a team to develop a treatment program designed to improve the residents' ability. Training is provided in the use of prostheses, pain management, rehabilitative dining, and other restorative therapies.
Allocation factor number seven gives preference to applicants 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. Both Manor Care and Beverly meet this preference. JFK has not proposed a specific charge for Medicaid patients since it expects to serve few of them, and it is anticipated that its Medicaid charges would be higher than those in a community nursing home. JFK does not meet this factor in that it will be serving Medicare patients, and the cost of providing care to Medicare skilled patients is higher than the cost of providing services to Medicaid patients.
Allocation factor number eight gives preference to applicants with a record of providing superior resident care programs in existing facilities in Florida or other states and calls for consideration of the current licensure ratings of Florida facilities. Nine of the ten Manor Care facilities in Florida are rated superior, and its two newest facilities received superior ratings as soon as they were eligible. Accordingly, Manor Care has a documented history of providing superior resident care programs to its residents in Florida.
On the other hand, Beverly has a superior rating for 31 of its 41 Florida facilities, and three of the facilities are rated conditional. Manor Care better meets this allocation factor than Beverly. JFK does not have a record of providing residential nursing home care, but JFK does provide a high quality of patient care as evidenced by its accreditation by the Joint Commission on Accreditation of Healthcare Organizations.
The ninth allocation factor gives a preference to applicants proposing staffing levels which exceed the minimum staffing standards contained in licensure administrative rules and further provides that applicants proposing higher ratios of RNs and LPNs to residents than other applicants shall be given preference. All three applicants propose staffing levels exceeding state minimum standards. As to the higher ratios, Manor Care's Schedule 6 for Year 2 shows 8.4 RNs and 14.9 LPNs. In comparison, Beverly's schedule 6 for Year 2 shows 8 RNs and 10 LPNs. Thus, Manor Care has a greater number of RNs and LPNs even though Beverly projects more utilization than Manor Care, and Manor Care is entitled to preference over Beverly on this factor.
Allocation factor number ten gives preference to applicants 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. It provides that the professionals used shall include physical therapists, mental health nurses, and social workers. All three applicants propose an interdisciplinary approach to meet the residents' needs in nursing, all therapies, nutrition, social services, and spiritual guidance, and JFK is likely to have a wider variety of professionals available than the two community nursing home applicants.
The eleventh allocation factor of the State Health Plan states that preference shall be given to an applicant who provides documentation as to how it will ensure residents' rights and privacy, use resident councils, and implement a well-designed quality assurance and discharge planning program. All three applicants ensure residents' rights and privacy, and all have a well- designed quality assurance program in addition to a detailed discharge planning program. All three applicants meet this preference.
The twelfth allocation factor gives preference to an applicant proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district. This factor is difficult to accurately assess because the terms "administrative costs" and "resident care costs" are not defined, and there is no uniformity in reporting by county nursing homes. For example, some facilities such as Manor Care include salary benefits as an administrative cost, while others such as Beverly include that considerable expense as a resident care cost. Although it is also unknown how those costs are reported by the "average nursing home" or even what an average nursing home is, it is apparent that this factor seeks to encourage nursing homes to devote resources for direct delivery of care. Manor Care and Beverly comply with this preference. However, their applications in Schedule 6 reflect that Manor Care will have more staff for nursing, ancillary, and dietary services than Beverly and that Manor Care will have overall more full-time employees than Beverly. JFK will have higher resident care costs than the average nursing home, but any hospital-based program will have higher administrative costs than a free-standing nursing home because of the infrastructure required to operate a hospital. To the extent that this factor is intended to apply to a hospital-based skilled nursing unit, JFK cannot meet this factor.
There is a need for the proposed Manor Care facility in Palm Beach County. First, Manor Care proposes to locate its facility in the west Lake Worth area of Palm Beach County. This area has a very high concentration of elderly people. In zip code 33467 (the western Lake Worth area), 14.7 percent of the projected 1997 population will be 75 years of age or older. It is good health planning to locate a new facility there. Second, there is a great need for additional Alzheimer's nursing home beds in a dedicated, secured unit. While the demand for Alzheimer's beds is substantially increasing, there are only a few dedicated Alzheimer's units in the entire county. Manor Care's 30- bed unit would help meet this need. Third, there is a need for additional sub- acute beds. Manor Care's proposed 15-bed unit will help meet this need particularly where Manor Care proposes to locate its facility. Fourth, Manor Care's commitment to provide a minimum of 55.5 percent Medicaid will enhance access to nursing home services. Fifth, Manor Care's application includes many letters of support from health care providers and practitioners, which substantiate the need and demand for another Manor Care nursing home in the county.
It is not required for a CON applicant to propose a specific site for its facility. However, Beverly's application asserts that its proposed facility, Wellington Terrace, will be located in zip code 33414, which is the zip code for Wellington, a planned unit development. Beverly's witnesses also asserted that the facility would be built in Wellington, and Beverly's vice president in charge of nursing home development offered in his testimony to add as a condition for the award of a CON in this proceeding that Beverly would build its facility in Wellington. Beverly's proposed facility is not needed in the Wellington area of Palm Beach County.
First, Beverly's proposed facility would not promote Medicaid access. Zip code 33414 has the highest income per elderly resident in Palm Beach County. Locating nursing home beds in the wealthiest elderly section of the county does not promote Medicaid access. Second, the small elderly population in Wellington does not show need for a new nursing home. The 75+ age cohort is that population group which truly demands nursing home services. Only 2.5 percent of the zip code 33414 residents are 75+. In comparison, the Palm Beach County average is 10.8 percent and the Lake Worth area where Manor Care proposes to
locate is 14.7 percent. The other four zip codes in Beverly's primary service area (33414, 33411, 33470, 33467, and 33413) do not show need for the facility in Wellington. Zip codes 33470 and 33413 are scantly populated. Zip code 33411 is where Beverly's Royal Manor facility is located. Zip code 33467 is where Manor Care proposes to locate.
Third, the closest nursing home to the proposed Beverly facility is Beverly's Royal Manor facility, which is only five miles from the proposed facility. Royal Manor already serves the Wellington area. The two Beverly facilities would be inappropriately competing with each other and duplicating each other's services, which is not logical given the limited elderly population in that area of the county. Fourth, Beverly is currently developing a sub- acute unit at Royal Manor and has indicated that unit might include ventilator- dependent beds. Royal Manor, therefore, already serves the limited sub-acute care and ventilator-dependent needs of elderly patients in that area. There is no need for an additional 25-bed sub-acute unit just five miles from Royal Manor. Also, Royal Manor currently has in place the same rehabilitative program proposed by Beverly in its new facility. Fifth, maximizing the resources at Royal Manor is a better alternative than building a new facility in zip code 33414. Notably, Beverly's application includes letters of support for a bed addition at Royal Manor, not the new proposed facility at Wellington.
Beverly proposes a condition of a 25-bed Medicare-certified sub-acute level unit as a integral part of its project, following a company-wide focus which began in 1991. The goal for sub-acute residents is functional improvement rather than wellness. The majority of sub-acute patients will be discharged home or into an assisted living center.
Beverly describes its sub-acute program as a level of medical/rehabilitative health services rendered to individuals who have completed the acute phase of recovery. The individual is medically stable, but continues to require complex medical intervention from nurses and therapists. Frequent diagnoses/conditions include post-operative fractured hip, renal failure (dialysis), cardiac rehabilitation, spinal cord injury, and respiratory conditions. Many patients will need IV therapy, parenteral nutrition and chemotherapy. A physician specializing in pulmonary medicine serves as medical director of the unit. That physician supervises a unit staff consisting of an RN, clinical coordinator, licensed nurses with critical care experience, and respiratory services contractual staff.
As a condition to the award of a CON in this proceeding, Beverly will dedicate four of its sub-acute beds to a respiratory recovery program for ventilator-dependent patients. An RN with critical care/ventilator experience and a respiratory therapist will be on duty at the facility seven days per week,
24 hours per day. The ventilator-dependent residents will be those with a strong potential for being weaned from the respirator, with an average length of stay from four to six months. The goal is to discharge these patients to their homes or to a setting offering a lower level of care. The four rooms in the
sub-acute unit closest to the nursing station will be equipped with headwall units, containing oxygen, vacuum, and compressed air systems. Four beds for ventilator-dependent patients is a good aspect of Beverly's application but does not approach the need of Palm Beach County residents for ventilator beds.
The proposed 15-bed sub-acute unit at Manor Care is patterned on its "prototype" sub-acute program. This prototype provides a progressive therapeutic environment for patients who require medical monitoring along with an aggressive rehabilitation program. The interdisciplinary approach
establishes measurable functional outcomes while avoiding re-hospitalization. The program is individualized and geared toward assisting patients and their families in coping with traumatic injury and disease to assist them in their return home.
There are six primary features to Manor Care's prototype. First is a special physical layout of the unit, including a separate entrance, which creates an atmosphere for short-term stay. The second is a separate unit director who has both clinical and administrative experience. The third feature is the staffing model of the unit, which provides a minimum of 5.0 nursing hours per patient day. Most of the nursing hours are provided by licensed staff. The fourth feature is a case manager who is assigned to insure individualized treatment for each resident. The fifth feature is a dedicated staff for the unit, who have specific education and background in sub-acute care. The sixth feature is a physiatrist who oversees the operation of the unit.
Manor Care's clinical profile of diagnoses to be treated in its sub- acute include: cardiac disorders, wound/skin care, renal disorders, general rehabilitation needs, pulmonary disease, brain injury, neurological disorder, medical, post-surgical, and orthopedic.
Manor Care's prototype has been very successful; 83 percent of all sub-acute residents are discharged directly home. Many of Manor Care's sub-
acute units are accredited by the Commission for Accreditation of Rehabilitation Facilities. On the other hand, Beverly's witnesses did not even know that CARF accreditation was available for comprehensive rehabilitation services in nursing homes. Further, while Beverly is still in the development stages of its sub- acute program, Manor Care has an established prototype with measured outcome.
Lastly, Beverly's prototype does not include a physiatrist, and Manor Care's does.
Alzheimer's disease affects the ability to remember, to communicate properly, and to perform activities of daily living. The needs of Alzheimer's patients are distinct from other nursing home residents. Their special needs require them to be treated in specialized units.
Beverly will offer Alzheimer's services in an 18-bed area specifically designed for Alzheimer's patients. The unit includes separate dining and activity areas with an enclosed courtyard. This design allows for controlled wandering, with Wanderguard alarms placed on all exit doors throughout the facility. The goal of the program is to maintain the resident's sense of dignity and improve his or her quality of life. Mealtimes and therapeutic activities will be focused in small groups and will allow for individual assistance and partialization of activities. The program will have its own dedicated staff, trained to understand the symptoms and manifestations of Alzheimer's residents. Beverly currently operates similar Alzheimer's programs in Florida.
Manor Care created a task force which lead to the development of Manor Care's prototype Alzheimer's unit. Currently, the Manor Care group operates over 90 dedicated units throughout the country. Manor Care's prototype encompasses five components: environment, staffing and training, programming, specialized medical services, and family support.
The proposed 30-bed unit is self-contained, with its own dining room, activities room, lounge, quiet/privacy room, nurses' sub-station, director's office, day care lounge, and outdoor courtyard. A separate lounge area is
provided for family visits. The enclosed, outdoor courtyard allows residents to walk outside freely. The unit is especially designed to reduce environmental stress.
Manor Care's Alzheimer's unit has specialized staff including a unit director, activities director, and nursing staff. The unit is staffed with a high "nurse to resident" ratio. The staffing patterns emphasize continuity to ensure that residents receive individualized care. The goal of programming and activities is to improve quality of life. This specialized programming results in reducing the use of medications and restraints necessary to manage these residents. The activity program is success-oriented. The use of consultant medical specialists is an integral part of Manor Care's program. Specialists provide diagnostic treatment services for the Alzheimer's resident upon admission to the unit and thereafter when deemed medically appropriate.
Families are very supportive of the unit programming and have benefited from the understanding and support available to them. The benefits of Manor Care's prototype Alzheimer's unit include: minimizing the use of physical restraints, decreasing the use of medications, improvement in residents' nutrition, reduction in agitation and combative behavior, a freer and safer living environment, an increase in independence and functional abilities, enhancement of family involvement, and better guarantor satisfaction.
The uncontroverted medical evidence is that Manor Care's Alzheimer's unit is state-of-the-art and Beverly's is not. In addition to being dedicated and self-contained, Manor Care's unit is secured, i.e., the doors are locked, preventing the Alzheimer's patients from leaving that unit unaccompanied. On the other hand, Beverly proposes to use the Wanderguard system which sounds an alarm when an Alzheimer's patient leaves the unit or facility. The alarm alerts staff that they must stop what they are doing and go after the Alzheimer's resident to return the patient to the proper location. Although other nursing homes use the Wanderguard system, such is done only when Alzheimer's patients are distributed throughout the facility. It is not used in conjunction with a dedicated unit where all the Alzheimer's residents are located in one area. Accordingly, Manor Care's Alzheimer's unit is superior to Beverly's.
Manor Care establishes links with state and local health care providers to maintain a continuum of care for admissions, treatment, referral, and discharge coordination. In addition to building upon the linkages already established by Manor Care's two facilities in Palm Beach County, Manor Care will pursue working relationships, referral arrangements, and transfer agreements with advocacy groups, adult day care groups, home health services, hospitals, recreational and senior citizen organizations, and respite care centers.
Beverly establishes similar links and can utilize the linkages already established by its nearby Royal Manor facility.
Manor Care will affiliate with local nursing schools, such as the South County Vocational Technical Center, Palm Beach County Community College, and the North County Vocational Technical Center to promote clinical rotations and internship programs at its facility. Through working relationships with health professional training programs, students will benefit from the training and practical experience gained within an operating facility. The proposed facility will offer the advantage of training in specialty Alzheimer's care and sub-acute care programs.
Additionally, the research programs at Manor Care's parent company will assist the proposed facility in its provision of nursing home services, particularly in the areas of Alzheimer's care and sub-acute care, by developing
new programs and services for its nursing centers. Manor Care has a team of staff, outside consultants, and other research entities conducting studies of health care needs, including studies on rehabilitation programs, sub-acute programs, diabetes programs, wound care management, adult day care, and Alzheimer's disease. This multi-disciplinary task force researches new technologies, with the ultimate goal of providing the highest quality of care.
Beverly will also use Wellington Terrace as a clinical rotation training site for long-term care nursing students. Arrangements for training rotations have been made with the Institute on Aging and School of Nursing at Florida State University. Further, if Beverly is awarded a CON in this proceeding, it will establish a research fund of $10,000 allocated to a long- term care issue to be determined in conjunction with the Institute on Aging.
Manor Care's project cost of $6,835,130 is reasonable. The costs and methods of construction, including energy provision, are reasonable and appropriate. There are no less costly or more effective methods of construction available. Its project cost is similar to the cost of a 120-bed facility that Manor Care currently has under construction in Palm Beach County, which gives Manor Care a credible benchmark for estimating its project cost.
The estimated project cost is broken out by cost items, which, in turn, are reasonable. Manor Care estimates a total land cost of $1.42 million. Of this, $900,000 is for the purchase of land, and $520,000 is for land improvement costs. In evaluating land, Manor Care considers the distribution of other Manor Care nursing homes in the county, whether there are utilities available to service the land, and whether there is sufficient zoning and land use approval to develop the land for a nursing home. There are several available 5-acre sites in the west Lake Worth area that meet these land eligibility requirements, all in the range of $900,000. The estimate of
$520,000 for land improvement is based on Manor Care's experience in Palm Beach County. These improvement costs include water and sewer hook-up.
Manor Care estimates approximately $3.87 million for the building cost and $840,000 for total equipment costs: $150,000 for fixed equipment and
$690,000 for movable equipment. These costs are reasonable and based on Manor Care's experience in Florida, including the facility under construction in Palm Beach County. Equipping a sub-acute unit is more expensive than regular residents' rooms. It requires more expensive beds, diagnostic machines, special support tables, and expensive nurse station equipment. Manor Care's total equipment cost includes appropriate equipment for its 15-bed sub-acute unit.
Manor Care reasonably projects $67,000 for development costs and
$339,000 for construction interest. It estimates $300,000 in start-up costs:
$125,000 for pre-opening salaries and recruitment, $125,000 for marketing, and
$50,000 for pre-opening inventories and miscellaneous costs. The expenses are reasonable and consistent with Manor Care's recent experience in opening two nursing homes in Florida.
To the contrary, Beverly's projected project cost is likely understated due to the questionable reasonableness of several components.
First, Beverly commits to locating its facility in zip code 33414. There is no land available in that zip code with the necessary zoning and the necessary land use designation for nursing home development. Beverly would have to obtain a change in zoning and may also have to obtain a change in the land use designation which requires a modification of the Palm Beach County Comprehensive Land Use Plan, which requires approval of both the county and the state.
Beverly's chances for success are speculative. Further, of the four sites which Beverly has considered for locating its facility, one of those sites is smaller than the five acres which Beverly requires to develop its facility. Another of those sites does not have utilities in place to service the site, an expense Beverly has not included in its projected costs. Two of the sites are not located in zip code 33414. Even if land is available in Beverly's selected zip codes, Beverly's estimate of $350,000 for the purchase of land is unreasonably low.
Second, Beverly underestimated its land development costs. For example, Beverly included no monies for water, sewer, or utility hook-up. In comparison, Manor Care assumed $165,000 for such hook-ups. Third, Beverly's total equipment cost appears understated. Equipping a sub-acute room is substantially more expensive than a normal room. Beverly proposed ten more sub- acute beds than Manor Care, yet its total equipment cost is almost $200,000 less.
Fourth, Beverly's building cost per square foot is significantly less than Manor Care's. In three applications for a CON filed six months later than the one involved in this proceeding, Beverly estimates its construction cost as being $400,000 greater than the instant project for the same nursing home design. In explanation of this disparity, Beverly presented evidence that the subsequent applications were for an improved facility which would have a steel frame instead of the wood frame to be utilized at Wellington Terrace, and the HVAC system would be enhanced. Constructing its intended facility at Wellington rather than using the improved construction materials Beverly will use elsewhere is not a reason to approve Beverly's CON application in this proceeding.
Fifth, Beverly's start-up cost of $75,000 is unreasonably low. That figure does not represent a calculation of specific items; rather, it is simply an aggregate figure which Beverly used. Beverly did not adequately explain the disparity between its start-up cost and Manor Care's $300,000 start-up cost, which is a reasonable figure. Finally, Beverly's construction period interest has not been shown to be reasonable and its application is not consistent with regard to financing and equity contribution.
Although the Agency can authorize a cost overrun of up to 10 percent of an applicant's project cost, it is uncertain that Beverly has underestimated its project cost by only 10 percent. It is not good health planning to approve a project which will, in turn, require further Agency approval to implement. Further, this proceeding is a comparative review of the applications filed and the representations made therein. It would be inappropriate to approve an application containing projections which are suspect.
Since both Manor Care and Beverly are able to secure the financing necessary for project accomplishment, both of their proposals have immediate financial feasibility. Manor Care's proposal also has long-term financial feasibility. The financial projections for Years 1 and 2 are based on reasonable utilization, revenue, and expense assumptions. Manor Care reasonably projects that it will be profitable in Year 2 of operation. Beverly is a large corporation with substantial resources. Because of this, it can be expected that Beverly's project, which will likely cost substantially more than Beverly projected, will be financially feasible in the long term although perhaps not as early as Year 2.
Either Manor Care's or Beverly's project would enhance the existing long-term care system in Palm Beach County by providing needed skilled nursing services, services for Alzheimer's and related dementia disorders, sub-acute services, respite care, and adult day care. Both applicants have a corporate quality assurance program which is utilized and implemented at all nursing homes operated by that applicant. Those programs are intended to promote quality of life and quality of care for the residents. Both facilities would enjoy high utilization, and both proposed charges which are reasonable. Both projects will utilize corporate resources in a cost-efficient and cost-effective manner.
Both Manor Care and Beverly have committed as a condition to the award of a CON to provide more Medicaid patient days than the nursing home average for Palm Beach County. Thus, both proposals promote access to Medicaid residents for nursing home services. Although Beverly's county-wide and statewide Medicaid averages are higher than Manor Care's, each facility of either applicant has met its CON condition regarding its Medicaid commitment.
As required, JFK's application has been reviewed against the state and local health plan allocation factors as set forth in this Recommended Order.
Its application meets the majority of those allocation factors. Moreover, some of those factors require that preference be given to programs which are of the specific nature proposed by JFK.
Patients with a documented need for sub-acute skilled nursing services of the type proposed by JFK have been denied access to licensed but unoccupied skilled community nursing home beds in Palm Beach County. Those patients' needs for sub-acute skilled nursing services are documented in physician orders and plans of care contained in the patients' medical records. Generally, patients requiring a high level of nursing and restorative care have been denied access. Further, there are several specific categories of patients who have been unable to obtain timely discharges to skilled nursing facilities in Palm Beach County. These categories include:
patients with chronic illness;
patients who are ventilator dependent;
diabetic patients;
terminally ill patients;
patients who require chemotherapy;
AIDS patients; and
patients with chronic obstructive lung disease.
The difficulty in discharging these patients is a "daily to weekly" issue at JFK.
Ventilator-dependent patients requiring skilled nursing care are routinely denied access to licensed but unoccupied skilled nursing beds in Palm Beach County. There are no long-term care beds in Palm Beach County that provide ventilator services, although some purport to do so.
Palm Beach County patients who require long-term ventilator care must seek admission to Vencor Hospital in Fort Lauderdale, which is approximately forty-five miles from JFK. During peak season, Vencor generally does not have beds readily available. Patients who require long-term ventilator care often remain in acute care beds at JFK longer than warranted by their medical condition because there are not available appropriate facilities in Palm Beach County for their post-acute care.
Patients discharged from JFK to Vencor for long-term ventilator care lose contact with their attending physicians, which impairs the continuity of care rendered to those patients. Patients placed at Vencor are further compromised by their family and friends' inability to travel to Fort Lauderdale to visit them. The support of family and friends is important in helping ventilator-dependent patients to wean themselves from the ventilator.
JFK has experienced and anticipates it will continue to experience a significant increase in the number of its patients whose care is reimbursed under managed care plans. JFK's 1995 budget projects that 33 percent of the hospital's patient days will be attributable to managed care patients. Managed care plans have exerted pressure on JFK physicians to discharge patients as quickly as possible. Accordingly, patients discharged from JFK are often in a more acute phase of illness or injury than were comparable patients in past years.
Patients discharged from JFK who require a heavier level of care have not, as a rule, been adequately served by Palm Beach County skilled nursing facilities. Community nursing homes in Palm Beach County do not offer sub-acute care of the nature proposed by JFK. As a result of patients being discharged "quicker and sicker" from JFK to community nursing facilities, JFK has experienced an increase in the rate of readmissions from community nursing facilities to JFK. The number of readmissions has grown from 115 in JFK's fiscal year 1991 to greater than 200 during its fiscal year 1993. This evidence confirms that existing community nursing home facilities do not serve as adequate or appropriate discharge alternatives for many JFK patients who require sub-acute care.
JFK has the ability to provide a high quality of care to patients requiring sub-acute services. The Agency has determined JFK's quality assurance, utilization review, and resident care plans to be acceptable. JFK proposes a substantially higher number of nursing hours than required by licensure rules. Moreover, JFK proposes to provide RNs on a 24-hour basis, and to make available on a 24-hour basis to sub-acute patients its full panoply of ancillary and support services. The development of JFK's sub-acute unit will enhance the post-acute care provided to patients discharged from JFK's acute care beds.
JFK has available the financial resources necessary to implement its sub-acute program and will be able to recruit the nursing and technical staff necessary. There is sufficient demand for the JFK program to assure that the program will be highly utilized. JFK's project will be financially feasible in the immediate and in the long-term.
JFK's program will result in several cost related benefits, both to JFK and to the community it serves. First, because JFK will be able to discharge certain patients more rapidly to the sub-acute unit, it will avoid substantial operational expenses associated with caring for those patients in acute care beds. Based solely on the sample of patients referenced in JFK Exhibit 5, JFK would have avoided approximately $600,000 in annual operational expenses had a sub-acute unit been available at the hospital during 1992 and 1993.
A contractual adjustment is the difference between the amount a hospital charges for a service and the amount it actually receives in payment for the service. The contractual adjustment is exacerbated where a patient's acute care length of stay extends beyond the number of days necessary to care
for the acute needs of the patient. During the period March 1992-March 1994, JFK experienced a contractual adjustment of approximately $3,000,000 relative to the sample of 287 patients reflected in JFK Exhibit 5. That contractual adjustment is significant from a health care reimbursement perspective. JFK's contractual adjustments relative to patients who require post-discharge sub- acute care would be reduced if JFK were to establish a sub-acute unit, which would ameliorate JFK's financial losses associated with that category of patients.
The development of a sub-acute program at JFK will benefit the Palm Beach County health care delivery system. The marginal or operational cost per day of providing acute care services at JFK is $350-$400 higher than the projected marginal cost per day of providing sub-acute care services. For every day that a JFK patient receives services in JFK's sub-acute unit, rather than in an acute care unit, the health care delivery system will save money.
As JFK will incur significantly less expense in providing services to patients in a sub-acute unit, JFK will not have to subsidize the care it currently provides to sub-acute patients in the acute care setting. Accordingly, the development of JFK's sub-acute unit will have a downward pressure on future JFK rate increases, promoting cost containment, and will lower the cost of providing the sub-acute care services proposed by JFK. The development of JFK's sub-acute unit will allow the hospital to allocate its resources more efficiently, which further promotes cost containment. Further, the development of JFK's sub-acute unit constitutes an innovation in the delivery of health care services, which innovation will have a positive effect on competition.
JFK is a not-for-profit hospital. It is JFK's policy to care for all persons regardless of financial condition, and JFK has outreach programs for persons with limited financial resources. While JFK's general admissions policy will apply to the sub-acute unit, JFK does not propose to serve a large number of Medicaid and indigent patients in that unit. JFK anticipates that Medicare will be the primary payor for approximately 90 percent of the patients served in the unit, given the unit's emphasis on restorative and rehabilitative care. Beverly or Manor Care will provide a majority of its services to Medicaid patients, thereby complementing JFK's proposal.
JFK provides a full array of inpatient and outpatient health care services, including a diagnostic breast institute, an ambulatory surgery center, an outpatient comprehensive cancer center, primary care physician services, and home health services. Each of those services constitutes part of JFK's continuum of care. Sub-acute care services are the only link missing. The approval of its application will allow JFK to achieve full "vertical integration" i.e., a multi-level health care system, in that JFK will be able to provide its patients with services appropriate to their needs from pre-admission to JFK through post-discharge.
Achieving vertical integration will enhance JFK's ability to contract with managed care companies, who endeavor to contract with organizations that offer a full continuum of care. JFK's establishment of a sub-acute unit will allow it to meet managed care companies' demand for capitated relationships, wherein the insurer pays an organization a flat amount, per covered life, to provide complete health care to its insured. The establishment of a sub-acute unit at JFK will allow the organization to reduce the cost of providing health care services to patients throughout its multi-level health care system and allow it to respond to the growing capitation market. Placing patients in the
sub-acute environment, where they will consume fewer resources, will enable JFK to decrease the cost of providing health care to managed care companies and their subscribers.
Finally, approval of JFK's application will allow JFK's patients to be followed by the same physicians who attended to them during their acute care hospitalization. Those patients who are capable of being transported elsewhere and are transferred to a sub-acute unit at a nursing home will seldom receive follow-up care from the physicians who performed their surgeries and otherwise attended to them during their acute episode. The overwhelming support of JFK's proposed sub-acute unit by the primary care and other specialized physicians at JFK, as evidenced by their testimony during the final hearing or by deposition admitted in evidence, is based upon their concern for their inability to follow up on their patient's care if those patients are elsewhere than in JFK. Those doctors who run office practices and work at JFK cannot spend a great deal of their day traveling around Palm Beach County from nursing home to nursing home to assure that their patients' recovery is progressing in addition to the time they spend visiting patients in the hospital and performing surgery and otherwise treating patients. Those physicians do not favor retaining the patients in acute care beds longer than is necessary, and that concern is not a result of concern for their personal incomes as was suggested by the Agency. Physicians are reimbursed at a higher rate for hospital visits than for visits to patients in skilled nursing units. Both continuity of care and successful outcome for the patient relate to continued care by the same physician.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Section 120.57(1), Florida Statutes.
The law is well settled that the award of a CON must be based on a balanced consideration of relevant statutory and rule criteria, and no single criterion is necessarily determinative. See, for example, Department of Health and Rehabilitative Services v. Johnson & Johnson Home Health Care, Inc., 447 So.2d 361 (Fla. 1st DCA 1984). The appropriate weight to be given to each individual criterion is not fixed, but rather must vary on a case-by-case basis, depending on the facts in each case. North Ridge General Hospital, Inc. v. NME Hospital, Inc., 478 So.2d 1138 (Fla. 1st DCA 1985).
By stipulation, only some of the review criteria contained in Section 408.035(1), Florida Statutes, are at issue in this proceeding. Subparagraph (a) addresses the consistency of an application with the Local Health Plan and the State Health Plan. As to the Local Health Plan, JFK does not meet allocation factor one requiring a commitment of 30 percent Medicaid patient days for its sub-acute unit which will serve primarily Medicare patients. JFK meets all other Local Health Plan allocation factors. Similarly, both Manor Care and Beverly meet all Local Health Plan allocation factors, but Manor Care better meets allocation factor (2)(a) as to its history of providing good residential care than Beverly. As to the State Health Plan, JFK, as a hospital, does not meet allocation factor seven requiring charges which do not exceed the highest nursing home Medicaid per diem rate or allocation factor twelve requiring low administrative costs compared to the average nursing home. Manor Care and Beverly meet all State Health Plan allocation factors, but Manor Care better meets factor eight with its record of superior care and factor nine with its higher staffing levels than Beverly.
Subsection (b) of Section 408.035(1), Florida Statutes, addresses the need for a proposal in view of the availability and adequacy of like and existing services. There is a need for Manor Care's proposed facility particularly in the western Lake Worth area of the county. In contrast, there is no need for Beverly's proposed facility in the Wellington area. There is an insufficient elderly population in that area to support Beverly's facility, and, approval, therefore, would not promote Medicaid access. Approval would unnecessarily duplicate Beverly's Royal Manor Nursing Home which serves the Wellington area and which will offer sub-acute, and possibly ventilator, services. JFK has also established that its project meets the statutory criterion and that existing health care services are not available or adequate. Further, the Agency has made the determination that like and existing services are not available and adequate by establishing a fixed need pool of 120 beds.
Subsection (c) of Section 408.035(1), Florida Statutes, and Rule 59C- 1.036(3) and (4), Florida Administrative Code, consider the ability of the applicant to provide quality of care and the applicant's record of doing so. Manor Care better meets this requirement than Beverly. Nine out of ten Manor Care facilities hold a superior license, and the other holds a standard license. Beverly has achieved superior licenses for 31 of its 41 facilities, but three of its facilities are in a conditional licensure status. JFK's quality of care is not in dispute, and it enjoys Joint Commission accreditation.
Subsection (g) of Section 408.035(1), Florida Statutes, addresses research, training, and educational programs. Both Manor Care and Beverly intend to establish affiliations with nursing schools for clinical rotations and internships at their facilities. Manor Care's parent company conducts research regarding nursing home services. Beverly offers a $10,000 research fund in conjunction with approval of its CON application in this proceeding. Both applicants meet this criterion. JFK did not specifically address this criterion which also concerns training programs for health care practitioners and doctors of medicine at the internship and residency training levels. However, JFK is a regional referral center for cardiovascular services, a regional referral center for oncology, and is the only hospital in Palm Beach County accredited by the American College of Surgeons as a comprehensive cancer center. It is reasonable to assume JFK meets this criterion.
Subsection (h) of Section 408.035(1), Florida Statutes, addresses the applicant's resources for project accomplishment, clinical programs to be offered, and whether the proposed services will be accessible to all residents. All three applicants have available and adequate manpower, management, and financial resources for project accomplishment. Clinical programs will be incorporated. Manor Care and Beverly offer a substantial commitment to Medicaid patients, and JFK cares for all persons regardless of their financial condition.
Subsection (i) of Section 408.035(1), Florida Statutes, considers whether a proposal has immediate and long-term financial feasibility. All three applicants meet this criterion.
Subsection (l) of Section 408.035(1), Florida Statutes, considers whether a proposal fosters competition, promotes quality assurance, and promotes cost-effectiveness. All three applicants meet this criterion although Beverly's intended location within five miles of, and utilizing the same service area of, another Beverly facility which offers the same services may not foster competition within that area of Palm Beach County.
Subsection (m) of Section 408.035(1), Florida Statutes, addresses whether the cost and methods of construction are reasonable, and whether there are alternative or less costly methods of construction. Manor Care's project design and project costs are reasonable and appropriate, and it satisfies this criterion. In contrast, Beverly's project cost is unreasonably understated, and Beverly fails to meet this criterion. JFK's conversion of existing underutilized beds to a highly utilized service fully meets this criterion.
Section 408.036(1)(k), Florida Statutes, requires CON review of a "cost overrun" application if a project cost exceeds the CON-approved amount by
10 percent. There is a real possibility that Beverly may experience a cost overrun sufficient to require another CON review if its application is approved in this proceeding. It is illogical to approve an application which may require yet another full review while denying competitive applications that meet statutory criteria.
Subsection (n) of Section 408.035(1), Florida Statutes, and Rule 59C- 1.030, Florida Administrative Code, involve an applicant's past and proposed provision of services to Medicaid patients and the medically indigent. As set forth above, all three applicants meet these criteria.
Subsection (o) of Section 408.035(1), Florida Statutes, considers an applicant's past and proposed provision of services which promote a continuum of care in a multi-level healthcare system. Both Manor Care and Beverly offer a continuum of nursing care in their proposed facilities. JFK's proposal, however, would promote a continuum of care, not just for a variety of nursing services, but by filling in the missing link in JFK's multi-level care system which ranges from acute care through home health care services and includes a full array of inpatient and outpatient health care services, such as a diagnostic breast institute, an ambulatory surgery center, an outpatient comprehensive cancer center, and primary care physician services. JFK, accordingly, fully meets this statutory criterion.
Manor Care and Beverly are the only applicants competing for the fixed need pool of 120 community nursing home beds for Palm Beach County. As between the two of them, Manor Care's application is superior for several reasons. First, Manor Care's secured Alzheimer's unit is state of the art, and Beverly's unit will use the Wanderguard system. The medical evidence is uncontroverted that using the Wanderguard system for a dedicated Alzheimer's unit is not medically appropriate. Second, Manor Care's sub-acute unit will be overseen by a physiatrist, which is more likely to promote the goal of comprehensive rehabilitation than Beverly's proposal to have its sub-acute unit overseen by a physician specializing in pulmonary medicine. Further, Manor Care's prototype sub-acute unit has been CARF-accredited, and Beverly's program is in its development stage. Third, the licensure ratings for Manor Care's facilities evidence a higher quality of care than those of Beverly. Of Manor Care's ten facilities in Florida, nine of them hold a superior license, and one holds a standard license. Of Beverly's 41 facilities in Florida, 31 are rated superior, and three hold only a conditional license. Fourth, Manor Care proposes a higher ratio of licensed staff than Beverly. Although Beverly has argued its licensed staff level is higher than Manor Care's, the inconsistencies in Beverly's application regarding its staffing pattern does not afford a measure of confidence. Fifth, Manor Care's projected project costs are reasonable and Beverly's are not. It is not likely that Beverly can build and open its facility for the total project cost projected by it in the location it has specified. Further, locating its facility in Wellington, as it proposes, will likely result in duplication of the services it provides in its near-by
facility in an area with a small elderly population. Upon a balanced consideration of all statutory and rule criteria, Manor Care's application should be approved, and Beverly's application should be denied.
A balanced consideration of the statutory and rule criteria leads to the conclusion that JFK's application should also be granted. It is instructive that Section 408.035(1)(o), Florida Statutes, prescribes a review criterion not present in the statute prior to 1993. That Subsection provides as follows:
(o) The applicant's past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and adult congregate living facilities.
The addition of this criterion reflects the intention of the Legislature to encourage the development of multi-level healthcare systems, and JFK's proposal uniquely meets this goal as it also meets the statutory goal of cost-containment by the conversion of underutilized beds to a highly utilized service. The evidence demonstrates that the JFK project will confer substantial benefits upon the District 9 health care delivery system.
Unlike Manor Care and Beverly, JFK does not seek to be awarded beds pursuant to the fixed need pool. JFK's position is that it is entitled to convert 26 existing beds into a 20-bed sub-acute unit in its hospital because special circumstances exist which warrant the approval of its CON application. JFK's evidence in support of its position is highly persuasive, and the Agency's change in its interpretation of its rules in this proceeding is not persuasive.
Rule 59C-1.008(2)(d)3, Florida Administrative Code, provides as follows:
3. If a qualified applicant exists but the proposed project exceeds the beds or services identified in the fixed need pool, the agency may award beds or services in excess of the pool when warranted by special circumstances as defined in the applicable section of Rule 59C-1, F.A.C., for the particular type of bed or service.
Thus, the Agency is authorized by its own rules to approve an application which seeks beds in excess of the number identified in the fixed need pool when special circumstances warrant for the type of bed or service sought.
Rule 59C-1.036, Florida Administrative Code, regulates the approval of community nursing home beds. Rule 59C-1.036(2)(h), Florida Administrative Code, provides as follows:
(h) Access Criteria. In the event that the net bed need allocation is zero, the applicant may demonstrate that circumstances exist to justify the approval of additional beds under the other relevant criteria specifically contained in subsection 59C-1.030(2), Florida
Administrative Code. Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access community nursing home beds currently licensed or approved within the subdistrict. Under this provision, the applicant must demonstrate that those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied community nursing home beds or that the number of persons with a documented need exceeds the number of licensed but unoccupied
and currently approved community nursing home beds. Existing and like services shall include the following as defined in statute or rule:
adult congregate living facilities, adult foster homes, homes for special services, home health services, adult day health care, adult day care, community care for the elderly, and home care for the elderly. Patients' need for nursing home care must be documented by the attending physicians' plans of care or orders, assessments performed
by staff of the agency or equivalent assessments performed by attending physicians indicating need for nursing home care. [Emphasis added.]
The credible evidence of record demonstrates, without question, that persons receiving acute care services at JFK have been denied access to currently licensed but unoccupied community nursing home beds in Palm Beach County because existing Palm Beach County skilled nursing facilities do not offer sub-acute services of the nature and intensity proposed by JFK. JFK presented the testimony of several physicians and other health care professionals, each of whom testified to the above based upon personal knowledge and experience. The Agency's sole evidence regarding this issue is the testimony of one witness, neither a physician or other healthcare professional, regarding hearsay data contained in a document that was not offered in evidence. That hearsay evidence may not serve to support a finding of fact. Section 120.58(1)(a), Florida Statutes. Even if that testimony were competent, its substance was only that certain Palm Beach County nursing homes purport to offer sub-acute services of the nature proposed by JFK. That testimony does not rebut the direct testimony presented by JFK that patients have in fact been denied access to sub-acute skilled nursing services. Moreover, the Agency's suggestion that the word "or" contained in Rule 59C-1.036(2)(h) means "and" is disingenuous. Lastly, the Agency's argument that the fact that patients are inappropriately being retained for extended periods of time in JFK's acute care beds is irrelevant because JFK is still providing care for them, albeit without compensation, merits no discussion.
Notwithstanding the record, the Agency took the position at hearing that JFK's application does not qualify for consideration under Rule 59C- 1.036(2)(h) for the following reasons:
The "net bed allocation" for the relevant batching cycle is greater than zero; and,
The persons who have been denied access to "licensed but unoccupied community
nursing home beds" were not shown to be using "existing and like services", as defined by the Rule.
As to the first reason, the Agency's position is unpersuasive because:
The Agency's application form invites applicants to address the access criteria contained in the Rule where the "net bed allocation" is greater than zero;
JFK's application expressly addressed the access criteria contained in the Rule;
The Agency reviewed and evaluated the application in the context of the access criteria contained in the Rule; and,
The Agency's position is inconsistent with its prior administrative orders.
The Agency's application form requires that an applicant state whether it is "applying for more beds than contained in the published fixed need pool". If an applicant is seeking more beds than contained in the pool, the Agency requires the applicant to address Rule 59C-1.036(2)(h). If, in fact, the Agency will consider an application under the Rule only where the "net bed need allocation is zero", its application form would not invite an applicant to address the Rule where the net bed allocation is greater than zero. The record demonstrates, however, that the application form invites and permits an applicant to address the Rule even where a published bed need exists.
In its application, JFK expressly advised the Agency that it sought approval both under the published fixed need pool and under the Rule. In response to Question IB2 of the application form, JFK provided a narrative of four pages. The narrative contained a specific reference to "actual discharge problems" for JFK patients. Moreover, it informed the Agency of "limitations in the level of care actually available in local nursing facilities."
The Agency's review of the application is memorialized in its State Agency Action Report (hereinafter "SAAR"). The record reflects that the Agency expressly reviewed and evaluated the application in the context of the Rule. Moreover, the Agency observed in its SAAR that:
The applicant indicates compliance with the fixed need pool (Item 1A), but is also requesting consideration of special circumstances (Item 1B) in support of the proposed 20 beds. It appears that the applicant's primary emphasis on need is contained in Item 1B.
Following discussion of JFK's narrative response, the Agency concluded that JFK had "not demonstrated that a specific access problem exists for subacute care patients . . . ." If the Rule in fact precludes consideration of the application, the Agency would have so stated in its SAAR. Rather, the Agency's review record demonstrates that it did consider the application in the specific context of the access criteria contained in the Rule.
Finally, the Agency's position is inconsistent with the final order in HCA West Florida Regional Medical Center vs. Dept. of Health and Rehabilitative Services, 11 FALR 3143 (DHRS 1989). In that case, the Department of Health and Rehabilitative Services, the predecessor to the Agency, noticed its intent to deny an application filed by West Florida seeking authority to add beds to its existing sub-acute care unit. West Florida sought approval under the access criteria contained in the Rule, although the Department had projected a fixed need pool of 120 beds for the batching cycle at issue. Although the "net bed allocation" in that cycle was greater than zero, the Department reviewed the West Florida application pursuant to the Rule. In this proceeding, however, the Agency argues that the JFK application is not eligible for consideration under the Rule because the "net bed allocation" is greater than zero. In the absence of a reasonable explanation, which the Agency failed to offer in this proceeding, it may not enter inconsistent orders based on similar facts. Section 120.68(12)(c), Florida Statutes; North Miami General Hospital, Inc. v. Dept. of Health and Rehabilitative Services, 355 So.2d 1272 (Fla. 1st DCA 1978). Therefore, the Agency's position that it may not consider the application pursuant to the Rule because the "net bed allocation" is greater than zero is contrary to existing law.
The Agency also argued for the first time at final hearing that the application does not qualify for consideration under the Rule because the persons JFK proved to have been denied access to "currently licensed but unoccupied community nursing home beds" were acute care patients. The Agency argued that an applicant must demonstrate that persons shown to be using "existing and like services" have been denied access to community nursing homes. First, the Agency's position overlooks that it expressly reviewed the application pursuant to the Rule. Second, that interpretation of the Rule is inconsistent with how the Rule has been interpreted in the past.
The West Florida order addresses in detail the applicant's allegation that patients receiving services in acute care hospital beds had been denied access to currently licensed but unoccupied community nursing home beds because the patients required services more intensive than those offered at community nursing homes. A recommended order was issued approving the West Florida application, and the Department issued a final order adopting that recommendation. Neither the recommended nor final orders held that the Rule is intended to preclude consideration of applications of the nature submitted by West Florida, and by JFK in this proceeding. Neither order even suggests that the definition of "existing and like services" contained in the Rule is intended to deny hospital applicants the opportunity to obtain approval under the Rule's access criteria. If the Rule were to be applied as urged by the Agency, hospital applicants, who are required to file in the nursing home batching cycle applications to convert acute care beds to sub-acute status, could never obtain approval under the Rule. Yet, hospital applicants have obtained such approval in the past, and the Agency has offered no explanation for its change in interpretation or for its deviation from existing law.
Similarly, in Miami Heart Institute, Inc. v. Dept. of Health and Rehabilitative Services, 13 FALR 1916 (DHRS 1991), Miami Heart Institute, Inc., submitted an application seeking authority to convert 20 licensed acute care beds to establish a 20-bed sub-acute nursing unit. The application alleged that persons using Miami Heart's acute care services had experienced difficulty in obtaining admission to community nursing home facilities. The Department noticed its intent to deny the application, and Miami Heart requested an administrative hearing to contest the Department's intended action. In its final order, the Department held that where an applicant seeks approval for
nursing home beds on the basis of special circumstances, the applicant must conform its proof to Rule 10-5.011(1)(k), now codified at Rule 59C-1.036(2)(h), Florida Administrative Code. In its final order, the Department evaluated the Miami Heart application in the context of the access criteria contained in the Rule. Again, it did not suggest that Miami Heart's application could not qualify for approval under the Rule because the application did not allege that persons using "existing and like services" as defined in the Rule had been denied access to currently licensed but unoccupied community nursing home beds.
Accordingly, the Agency has consistently applied the Rule in its final orders to permit consideration under the Rule of applications which allege that persons receiving acute care services have been denied access to licensed but unoccupied community nursing home beds. In this proceeding, however, the Agency argues that JFK's application is not entitled to consideration under the Rule. Regulated entities, such as JFK, have the right to examine Agency precedent and the right to know the factual basis and policy reasons for Agency action. Amos v. Dept. of Health and Rehabilitative Services, 444 So.2d 43 (Fla. 1st DCA 1983); State ex. rel. Dept. of General Services v. Willis, 344 So.2d 580 (Fla. 1st DCA 1977). The Agency may not treat disparately applications based upon similar facts, absent a reasonable explanation therefor. North Miami General Hospital, supra. The Agency has not offered in this proceeding any explanation for its deviation from prior practice.
The Agency's attempt to treat JFK's application differently from those which preceded it is violative of the concept of stare decisis. The Fourth District Court of Appeals underscored the importance of that concept in Gessler v. Dept. of Business and Professional Regulation, 627 So.2d 501 (Fla. 4th DCA 1993), and held that the concept applies to administrative agencies.
Finally, the Agency's position that the application may not be considered in the context of the access criteria contained in the Rule is further belied by its recent review and approval of the application submitted by Hospital Corporation of Lake Worth d/b/a Palm Beach Regional Hospital. Palm Beach Regional sought approval to convert 12 acute care beds to sub-acute beds at its hospital facility in Lake Worth, Florida, under the access criteria contained in the Rule. Palm Beach Regional offered documentation proving that persons receiving acute care services at Palm Beach Regional had been denied access to licensed but unoccupied community nursing home beds. It also submitted an exhibit to the application which offered a sample of specific acute care patients at Palm Beach Regional who had been denied timely access to community nursing home beds due to the lack of sub-acute services. Palm Beach Regional's exhibit is identical in nature to JFK's Exhibit 5, which was admitted in evidence in this proceeding. Both exhibits demonstrate that acute care patients requiring sub-acute services in Palm Beach County have been denied access to currently licensed but unoccupied community nursing home beds. The Agency considered and relied upon Palm Beach Regional's exhibit in its review and approval of the Palm Beach Regional application.
Most importantly, the record reflects that the Palm Beach Regional application made no reference to persons using "existing and like services", as defined in the Rule, having been denied access to community nursing home beds. Moreover, the record demonstrates that the Agency reviewed and evaluated the Palm Beach Regional application pursuant to the access criteria contained in the Rule. In summary, the Agency's application of the Rule in its reported administrative orders and its review of the Palm Beach Regional application is patently inconsistent with the application of the Rule it urged at final hearing
in this proceeding. As the Agency offered no explanation for its deviation from established precedent, the Agency's position in this proceeding is unpersuasive and is contrary to the law.
As to JFK's application, the record demonstrates that persons with a documented need for sub-acute skilled nursing services have been denied access to currently licensed but unoccupied community nursing home beds in Palm Beach County. The credible evidence of record further establishes that there is sufficient demand by JFK patients for sub-acute services to assure full utilization of the JFK project. Finally, JFK has demonstrated that its medical staff strongly supports and intends to utilize the services it proposes. In addition to meeting a demonstrated community need, the record establishes that the JFK project will confer substantial economic benefits upon JFK and upon the Palm Beach County health care delivery system. The uncontroverted evidence further establishes that the JFK project will have a positive effect on competition and will lower the costs of providing sub-acute care services in Palm Beach County. In sum, a balanced consideration of all applicable statutory and rule criteria dictates approval of JFK's application.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered
Granting Manor Care's CON application # 7375;
Denying Beverly's CON application # 7372; and
Granting JFK's CON application # 7374.
DONE and ENTERED this 7th day of March, 1995, at Tallahassee, Florida.
LINDA M. RIGOT
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 7th day of March, 1995.
APPENDIX TO RECOMMENDED ORDER
Beverly's proposed findings of fact numbered 5, 6, 8, 9, 13-19, 21, 23, 25-27, 31, 32, 34-43, 45-47, 51-54, 57, 60, 61, and 81 have been adopted either verbatim or in substance in this Recommended Order.
Beverly's proposed findings of fact numbered 1, 3, 4, 63, and 67 have been rejected as not constituting findings of fact.
Beverly's proposed findings of fact numbered 2, 24, 28, and 80 have been rejected as being irrelevant.
Beverly's proposed findings of fact numbered 7, 22, 44, 48, 59, 64-66, 69-72, 75, 76, 82, and 84 have been rejected as not being supported by the weight of the evidence.
Beverly's proposed findings of fact numbered 10, 11, 20, 29, 30, 33, 49, 50, 55, 56, 58, 62, 68, 73, 74, 77, and 78 have been rejected as being subordinate to the issues to be determined.
Beverly's proposed findings of fact numbered 12, 79, and 83 have been rejected as being unnecessary.
JFK's proposed findings of fact numbered 14-59 have been adopted either verbatim or in substance in this Recommended Order.
JFK's proposed findings of fact numbered 1-13 have been rejected as being unnecessary.
Manor Care's proposed findings of fact numbered 1-6, 13-42, 44-57, 59- 78, 82, 83, 89-114, 116, 118-120, 122-125, and 128-131 have been adopted either verbatim or in substance in this Recommended Order.
Manor Care's proposed findings of fact numbered 8-12, 43, 115, and 117 have been rejected as not constituting findings of fact.
Manor Care's proposed findings of fact numbered 7, 79, 80, 87, and 88 have been rejected as being unnecessary.
Manor Care's proposed finding of fact numbered 58 has been rejected as not being supported by the weight of the evidence.
Manor Care's proposed findings of fact numbered 81, 84-86, 121, 126, and 127 have been rejected as being subordinate to the issues to be determined.
The Agency's proposed findings of fact numbered 1-6, 9-26, 28, 34, 38, 39, 53, 54, 57-61, and 65-69 have been adopted either verbatim or in substance in this Recommended Order.
The Agency's proposed findings of fact numbered 7, 41, 55, 62, and 63 have been rejected as being subordinate to the issues to be determined.
The Agency's proposed finding of fact numbered 8 has been rejected as being unnecessary.
The Agency's proposed findings of fact numbered 27, 29-33, 35-37, 40, 42-46, 48-52, 56, and 70 have been rejected as not being supported by the weight of the evidence.
The Agency's proposed finding of fact numbered 47 has been rejected as not constituting a finding of fact.
The Agency's proposed finding of fact numbered 64 has been rejected as being irrelevant.
COPIES FURNISHED:
James C. Hauser, Esquire
Parker, Skelding, Labasky, Corry, Eastman & Hauser, P.A.
318 North Monroe Street Tallahassee, Florida 32301
Douglas L. Mannheimer, Esquire Broad & Cassel
215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302
Robert A. Weiss, Esquire
118 North Gadsden Street, Suite 200 The Perkins House
Tallahassee, Florida 32301
Lesley Mendelson, Esquire
Agency for Health Care Administration The Atrium Building, Suite 301
325 John Knox Road
Tallahassee, Florida 32303-4131
Sam Power, Agency Clerk
Agency for Health Care Administration The Atrium Building, Suite 301
325 John Knox Road
Tallahassee, Florida 32303-4131
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
BEVERLY ENTERPRISES-FLORIDA, INC. d/b/a BEVERLY GULF COAST FLORIDA INC. and JFK MEDICAL | CASE | NO.: | 93-6280 |
CENTER, INC., | 93-6284 | ||
93-6811 | |||
Petitioners, | CON | NO.: | 7372 |
7374 |
vs. 7375
RENDITION NO: AHCA-95-990-
STATE OF FLORIDA, AGENCY FOR FOF-CON HEALTH CARE ADMINISTRATION and
MANOR CARE OF BOYNTON BEACH, INC.,
Respondents.
/
FINAL ORDER PRELIMINARY STATEMENT
Having published a fixed need pool of 128 beds available for approval in Palm Beach County, the agency received and comparatively reviewed a number of proposals seeking approval to provide some or all of the needed beds. The initial decisions were challenged by requests for Section 120.57 proceedings. The applicants remaining in this proceeding are Manor Care, whose application to construct a new 120 bed nursing home was initially approved; Beverly, whose application to construct a new 120 bed nursing home was initially denied; and finally, JFK Medical Center, whose application for a 20 bed hospital based nursing unit was initially denied. An application for 8 beds of the 128 bed pool was approved and is not at issue in this proceeding; thus, 120 beds remain for possible approval in this batching cycle. JFK asserts that its application should be approved based on "not normal" circumstances. The hearing officer recommends approval of Manor Care's proposal for 120 beds from the 120 beds remaining in the fixed need pool and JFK's proposal for 20 beds on the basis of "not normal" circumstances. 1/
RULING ON EXCEPTIONS FILED BY AHCA
Counsel excepts to comments by the hearing officer in her preliminary statement that the parties stipulated to a consolidated hearing to avoid delay and further that JFK would not participate in that portion of the proceeding involving Beverly's and Manor Care's applications and that Manor Care and Beverly would not participate in the portion of the proceeding involving JFK's application. Having reviewed the pleadings, it is clear the agency did not enter into such a stipulation. The exception is granted.
Counsel excepts to the findings in paragraphs 16 and 37 that implementation of JFK's proposal would provide a continuum of care from acute care to home health care. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied. Counsel excepts to the implication of paragraph 17 that sub-acute care is a service which is not provided in nursing homes. In its response JFK suggests that paragraph 17 may be modified to state that some nursing homes do provide this service. It is noted that both Beverly and Manor Care's applications propose distinct units for sub-acute care in their proposed nursing homes. The hearing officer praised the merits of Manor Care's proposed 15 bed unit for sub-acute care in paragraphs 59 through 62. The exception is granted.
Counsel excepts to the finding in paragraph 23 that the preference in the local health plan for applicants proposing to serve Medicaid residents at a level of at least 30 percent is not applicable to JFK. Applicants agreeing to the 30 percent Medicaid service level are entitled to preference. Because Medicaid does not cover sub-acute care provided in a hospital based nursing unit, JFK cannot receive this preference. Counsel's objection appears to be only a matter of semantics.
Counsel excepts to the hearing officer's characterization of JFK's proposed sub-acute unit as unique. Use of the word "unique" appears to be innocuous hyperbole. JFK is the only applicant who proposes a hospital based unit in this proceeding. The exceptions to findings in paragraphs 38, 49, and 68 are denied as the challenged portions are supported by competent, substantial evidence.
Counsel excepts to the findings of fact in paragraphs 85 through 101 on the grounds that the findings are tainted by the hearing officer's legal conclusion that JFK's proposal need not be comparatively reviewed with Beverly's and Manor Care's proposals. The issue is whether an applicant may seek a CON on the basis of "not normal" circumstances in a batching cycle where there is a fixed need pool it could have addressed. Comparative review on the basis of a fixed need pool is the keystone of the reforms implemented after the decision of the First District Court of Appeals in Gulf Court vs. Department of Health and Rehabilitative Services, 483 So2d 700 (Fla. 1st DCA 1985). Rule 59C-1.008 (2)(d) states as follows:
The agency will follow these procedures when awarding beds or services identified in a fixed need pool:
Beds or services will be awarded based on the availability of a qualified applicant and proposed project which meets statutory review criteria.
In the absence of a qualified applicant and a project which meets statutory review criteria, the agency may elect not to approve any applicants for beds or services.
If a qualified applicant exists but the proposed project exceeds the beds or services identified in the fixed need pool, the agency may award beds
or services in excess of the pool when warranted by special circumstances as defined in the applicable section of Rule 59C-1, F.A.C., for the particular type of bed or service. (emphasis added).
The particular type of beds sought in this proceeding is nursing home beds so the relevant section 2/ of Rule 59C-1 is found at Section 59C-1.036 Community Nursing Home Beds. Subsection (2)(h) reads in pertinent part as follows:
(h) Access criteria. In the event that the net bed allocation is zero, the applicant may demonstrate that circumstances exist to justify the approval of additional beds under other relevant criteria . . Under this provision, the applicant must demonstrate that those persons with a documented need for nursing home services have been denied access
to currently licensed but unoccupied community nursing home beds or that the number of persons with a documented need exceeds the number of licensed but unoccupied and currently approved community nursing home beds
When need is determined based on a fixed need pool the plain language of both the general and specific rule subsections cited above mandate that a proposal for hospital based nursing beds be comparatively reviewed with other proposals for nursing beds in the batch. The exception allowed for "not normal" circumstances is a safety valve which is operative when the rule formula has failed to predict need. When the need formula has functioned as designed, to allow the need pool to be fully awarded and then approve another proposal for more beds, the result may be overbedding, excessive investment, and attendant inflationary pressure on costs. 3/
JFK relies on the case of HCA West Florida vs. Department of Health and Rehabilitative Services, 11 FALR 3143 (HRS 1989). Based on their reliance on this precedent the hearing officer's recommendation for approval of JFK's proposal is accepted. The implications of allowing an applicant to avoid comparative review and seek approval under the "not normal" exception where the need formula has functioned as designed were not sufficiently considered in the HCA West Florida order. To the extent that HCA West Florida is inconsistent with conclusions expressed above, it was improvidently decided. This order is notice that henceforth a proposal will not be approved on the basis of "not normal" circumstances where there is a fixed need pool which the applicant could have addressed.
The hearing officer's reiteration of her factual findings that JFK's proposal is unique and will offer services which cannot be provided in a nursing home is rejected.
RULING ON EXCEPTIONS FILED BY BEVERLY
Beverly excepts in whole or in part to findings of fact in paragraphs 26, 27, 28, 30, 32, 33, 34, 39, 40, 42, 43, 45, 47, 48, 49, 51, 52, 53, 54, 55, 58,
77, 78, 79, 80, 81, and 82. Manor Care filed a detailed response to the exceptions. As to each challenged finding there is competent, substantial evidence supporting it. It is fundamental that an agency has no authority to reweigh the evidence, to substitute its judgment in lieu of the trier of fact, or to reject recommended findings of fact supported by competent, substantial evidence. 4/ Section 120.57(1)(b)10, Florida Statutes; Heifetz vs. Department
of Business Regulation, 475 So2d 1277 (Fla. 1st DCA 1985). Therefore, the exceptions are denied. Beverly also excepts to findings of fact reiterated in the conclusions of law. These exceptions are likewise denied.
Beverly excepts to evidentiary rulings of the hearing officer regarding the rebuttal testimony of Ms. Walter. Evidentiary rulings fall within the sound discretion of the trier of fact. Absent gross abuse of discretion, such rulings should not be overturned. I find no abuse of discretion so the exception is denied. The exceptions by Beverly to the hearing officer's rulings on its proposed findings of fact are denied.
FINDINGS OF FACT
The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.
CONCLUSIONS OF LAW
The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.
Based upon the foregoing, it is
ADJUDGED, that the application of Manor Care of Boynton Beach for CON 7375 and the application of JFK Medical Center for CON 7374 are APPROVED. The application of Beverly Enterprises-Florida for CON 7372 is DENIED.
DONE and ORDERED this 13th day of July, 1995, in Tallahassee, Florida.
Douglas M. Cook, Director
Agency for Health Care Administration
ENDNOTES
1/ The agency has appealed the order of the Division of Administrative Hearings which found the requirement for comparative review of proposals for hospital based nursing homes with proposals for nursing home beds to be invalid; thus, the effect of that order is stayed pursuant to Rule of appellate Procedure 9.310(b)(2), see Tarpon Springs Hospital vs. Agency for Health Care Administration, 16 FALR 3420 (DOAH 8/22/94).
2/ See Miami Heart Institute vs. Department of Health and Rehabilitative Services, 13 FALR 1916 at 1928,1929 (HRS 1991).
3/ The primary goal of the CON regulation is cost containment. See Morton F. Plant Hospital vs. Department of Health and Rehabilitative Services, 491 So2d 586, 588 (Fla. 1st DCA 1986); Bio Medical vs. Department of Health and Rehabilitative Services, 370 So2d 19, 25 (Fla. 2nd DCA 1979).
4/ Competent, substantial evidence is evidence of sufficient relevance and materiality that a reasonable mind could accept it to support the conclusion reached. DeGroot vs. Sheffield, 95 So2d 912 (Fla. 1957).
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 AHCA, 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.
COPIES FURNISHED:
Lesley Mendelson, Esquire Senior Attorney, Agency for Health Care Administration 2727 Mahan Drive
Fort Knox 3, Suite 3431
Tallahassee, Florida 32308-5403
Stephen A. Ecenia, Esquire RUTLEDGE, ECENIA, UNDERWOOD PURNELL & HOFFMAN, P. A.
215 South Monroe Street, #420 Post Office Box 551
Tallahassee, Florida 32302-0551
Linda Rigot Hearing Officer
The DeSoto Building 1230 Apalachee Parkway
Tallahassee, Florida 32399-1550 Elizabeth Dudek (AHCA/CON) Alberta Granger (AHCA/CON)
Douglas Mannheimer, Esquire BROAD & CASSEL
215 South Monroe Street Tallahassee, Florida 32301
James Hauser, Esquire
318 North Monroe Street Tallahassee, Florida 32301
Robert Weiss, Esquire PARKER, HUDSON, PAINER & DOBBS
The Perkins House
118 North Gadsden Street Tallahassee, Florida 32302
Elfie Stamm (AHCH/CON)
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 14th day of July, 1995.
R. S. Power, Agency Clerk State of Florida, Agency for Health Care Administration
325 John Knox Road
The Atrium Building, Suite 301 Tallahassee, Florida 32303
(904)922-3808
| Issue Date | Proceedings |
|---|---|
| Dec. 03, 1995 | JFK Medical Center,s Inc`s Proposed Recommended Order; Recommended Order Proposed by Agency for Health Care Administration filed. |
| Aug. 24, 1995 | Final Order filed. |
| Jul. 18, 1995 | Final Order filed. |
| Mar. 07, 1995 | Recommended Order sent out. CASE CLOSED. Hearing held 10/03-17/94. |
| Jan. 03, 1995 | Beverly Enterprises-Florida, Inc`s Proposed Findings of Fact, Conclusions of Law, and Recommended Order filed. |
| Jan. 03, 1995 | Proposed Findings of Fact, Conclusions of Law, and Recommended Order of Manor are of Boynton Beach, Inc. filed. |
| Dec. 23, 1994 | Letter to LMR from R. Weiss (RE: request for extension of time) filed. |
| Dec. 15, 1994 | Letter to Hearing Officer from J. Hauser (Re: 2-day Extension of time for proposed recommended order) filed. |
| Nov. 21, 1994 | (JFK) Notice of Filing; Deposition of Cynthia Godfrey, R.N. filed. |
| Nov. 02, 1994 | Amended Notice of Taking Deposition (from R. Weiss) filed. |
| Oct. 27, 1994 | Notice of Taking Video Taped Deposition (from J. Knight) filed. |
| Oct. 12, 1994 | (JFK Medical Center) Motion for Official Recognition filed. |
| Oct. 10, 1994 | JFK'S Final Exhibit List filed. |
| Oct. 06, 1994 | Order of Consolidation sent out. (Consolidated cases are: 93-6280, 93-6284) |
| Oct. 06, 1994 | Case No/s 93-6005, 93-6280, 93-6284: unconsolidated. |
| Oct. 05, 1994 | Order of Consolidation sent out. (Consolidated cases are: 93-6005, 93-6280, 93-6284) |
| Oct. 05, 1994 | Case No/s 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6283, 93-6284, 93-6285: unconsolidated. |
| Oct. 03, 1994 | CASE STATUS: Hearing Held. |
| May 13, 1994 | Order of Consolidation sent out. (Consolidated cases are: 93-6005, 93-6006, 93-6280, 93-6811) |
| May 13, 1994 | Case No/s 93-6005, 93-6006, 93-6280, 93-6282, 993-6811: unconsolidated. |
| May 11, 1994 | Order of Consolidation sent out. (Consolidated cases are: 93-6005, 93-6006, 93-6282, 93-6811) |
| May 11, 1994 | Case No/s 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6284, 93-6811: unconsolidated. |
| Apr. 26, 1994 | Order of Consolidation sent out. (Consolidated cases are: 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6284, 93-6811) |
| Apr. 26, 1994 | Case No/s 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6284, 93-6285, 93-6811: unconsolidated. |
| Dec. 09, 1993 | Order of Consolidation sent out. (Consolidated cases are: 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6284, 93-6285, 93-6811) |
| Dec. 09, 1993 | Case No/s 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6283, 93-6284, 92-6285, 93-6811: unconsolidated. |
| Dec. 01, 1993 | Order Consolidating Cases and Requesting Information sent out. (Consolidated cases are: 93-6005, 93-6006, 93-6280, 93-6281, 93-6282, 93-6283, 93-6284, 93-6285, 93-6811) |
| Nov. 05, 1993 | Notification card sent out. |
| Nov. 03, 1993 | Notice Of Related Petition(93-6006-93-6005, 93-6280-93-6285); Notice;Petition For Formal Administrative Hearing filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Jul. 13, 1995 | Agency Final Order | |
| Mar. 07, 1995 | Recommended Order | Comparative review of nursing home applications; additional certificate of need awarded to hospital applicant for conversion of beds based on special circumstances. |
