STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEVERLY ENTERPRISES-FLORIDA, INC., ) d/b/a BEVERLY GULF COAST-FLORIDA, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2452

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION, and DIXIE HEALTH ) CARE CENTER, L.P., )

)

Respondent. )

) HILLIARD HEALTHCARE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2453

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, BEVERLY ) ENTERPRISES-FLORIDA, INC., d/b/a ) BEVERLY GULF COAST-FLORIDA,INC., ) and DIXIE HEALTH CARE CENTER, L.P. )

)

Respondents. )

) LIFE CARE CENTERS OF AMERICA, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 94-2462

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, BEVERLY ) ENTERPRISES-FLORIDA, INC., d/b/a ) BEVERLY GULF COAST-FLORIDA,INC.; )

)

Respondents. )

) UNICARE HEALTH FACILITIES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2467

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, and BEVERLY ) ENTERPRISES-FLORIDA, INC., d/b/a ) BEVERLY GULF COAST-FLORIDA,INC., )

)

Respondents. )

) BEVERLY ENTERPRISES-FLORIDA, INC., ) d/b/a BEVERLY GULF COAST-FLORIDA, ) INC., )

)

Petitioner, )

vs. ) CASE NO. 94-2971

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION, and HILLIARD ) HEALTHCARE, INC.; ) UNICARE HEALTH FACILITIES, INC.; ) LIFE CARE CENTERS OF AMERICA INC.; ) DIXIE HEALTH CARE CENTER, L.P.; )

)

Respondents. )

)

RECOMMENDED ORDER

This case was heard by Eleanor M. Hunter, the Hearing Officer designated for the Division of Administrative Hearings, on January 9-13, 16-20, 25, 30, 31,

February 1-3, and February 6, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioner, Douglas L. Mannheimer, Attorney-At-Law

Jay Adams, Attorney-At-Law

Beverly Broad & Cassel Enterprises - Post Office Box 11300

Florida, Inc.: Tallahassee, Florida 32302

For Petitioner: Theodore E. Mack, Attorney-At-Law Hilliard COBB, COLE & BELL

Healthcare, 131 North Gadsden Street Inc.: Tallahassee, Florida 32301

For Petitioner, W. David Watkins, Attorney-At-Law Unicare Health Patricia Renovitch, Attorney-At-Law Facilities, Oertel, Hoffman, Fernandez & Cole Inc.: 2700 Blair Stone Road, Suite C

Post Office Box 6507 Tallahassee, Florida 32314-6507

For Petitioners, R. Bruce McKibben, Jr., Attorney-At-Law Life Care Pennington, Haben, Wilkinson,

Centers of Culpepper, Dunlap, Dunbar, America Richmond & French, P.A.

and 215 South Monroe Street, 2nd Floor Dixie Health Post Office Box 10095

Center, L.P. Tallahassee, Florida 32302

For Respondent, Lesley Mendelson, Attorney-At-Law Agency For Senior Attorney

Health Care Agency for Health Care Administration Administration: 325 John Knox Road, Suite 301

Tallahassee, Florida 32303-4131 STATEMENT OF THE ISSUES

Which applicants best meet the statutory and rule criteria for the issuance of certificates of need in response to the projected numeric need for an additional 295 community nursing home beds in Agency For Health Care Administration District 3.

PRELIMINARY STATEMENT

The Agency For Health Care Administration ("AHCA") calculated and published a need for 295 community nursing home beds in District 3 for the July 1996 planning horizon. AHCA reviewed a number of certificate of need ("CON") applications filed in response to the need determination, and published its preliminary decision on March 25, 1994, in the Florida Administrative Weekly.

AHCA preliminarily approved, among others, the following proposals:

1. the addition of 24 beds to the skilled nursing unit at HCA North Florida Regional Medical Center ("HCA"), in Gainesville, Alachua County (CON 7499);

   
   

2. the construction of a 60-bed community nursing home by Dixie Health Care Center, L.P. ("Dixie") in Cross City, Dixie County, (CON 7492);

   
   

3. the construction of a 120-bed community nursing home by Beverly Enterprises - Florida, Inc. ("Beverly"), in Lake County (CON 7488);

   
   

4. the establishment of a 15-bed hospital-based skilled nursing unit (by converting 15 and delicensing 10 existing acute care beds) at Alachua General Hospital, Gainesville, Alachua County (CON 7500P); and

   
   

5. the addition of 40 nursing home beds by Southern Medical Associates ("SMA") at Palatka Health Care Center in Palatka, Putnam County (CON 7487).

AHCA preliminarily denied, among others, applications for the following projects:

1. the construction of a 60-bed nursing home by Hilliard Healthcare, Inc. ("Hilliard"), in Bushnell, in Sumter County (CON 7485);

   
   

2. the conversion of 55 of 60 licensed sheltered beds to 55 community nursing home beds and the addition of 60 new beds (CON 7494), or the addition of

   55 community nursing home beds to the existing 60 licensed sheltered beds at Lake Port Properties, d/b/a Lake Port Nursing Center ("Lake Port"), in Leesburg, Lake County (CON 7494P);

   
   

3. the construction of a 115 or a 120-bed community nursing home by Life Care Centers of America, Inc. ("Life Care"), in Lake County (CON 7491); and

4. the construction of either a 115 or a 120-bed community nursing home by Unicare Health Facilities, Inc. ("Unicare"), in Lake County (CON 7489P and 7489).

   
   

   This case arises from challenges to AHCA's preliminary decision. Pending at the time of the final hearing for resolution in this Recommended Order were Unicare's Motion to Dismiss Life Care and Hilliard's Motion For Summary Recommended Order Dismissing Dixie Health Care. Unicare's Motion asserts that Life Care has failed to list its total potential financial liability for its capital projects, as required by subsection 408.037(2(a), Florida Statutes.

   Unicare's Motion is supported by AHCA's final order in Life Care Centers of America, Inc. v. Agency For Health Care Administration, DOAH Case NO. 94-2409 (F.O. 10/24/94).

   
   

   Hilliard's Motion claims fatal defects in Dixie's application because the partnership resolution fails to "certify" that it will accomplish, license, or operate the project, but instead states "Resolved, the Applicant . . . shall accomplish the proposed project . . ." and "Resolved, the applicant shall license and operate . . ." A second defect, in the required publication in the Gainesville Sun newspaper, by Dixie, was the erroneous notice of intent to file for a CON for Levy, rather than for Dixie County. During his testimony at the final hearing, Hilliard's president also found an error in a copy of Hilliard's notice, which was published in the Sumter County Times. The notice, published in November 1993, stated that the application would be filed in December 1992, not December 1993. The effect of the defect in Hilliard's published notice must also be determined in this order.

   
   

   At the final hearing, Dixie presented the testimony of Charles Trefzger, expert in nursing home development and financing; Andrea Burr, expert in health care planning; Harold L. Stewart, expert in nursing home operations; James A. Norman, Jr., expert in nursing home finance and reimbursement; E. Wendell Hall; expert in nursing home design, construction and costs; and Jerry Walker.

   Dixie's exhibits 1-8 and 18 were received into evidence.

   
   

   Hilliard presented the testimony of Steven W. Sell, Hilliard's president and expert in nursing home business management, development and land acquisition; Dennis O'Keefe, expert in construction, construction costs, land costs, furnishings costs, and construction scheduling; Bruce McCorkle, expert in nursing home administration; Ronald Schwartz, expert in nursing home accounting; and Lynne M. Mulder, expert in health care planning. Hilliard's exhibits 1, 2 and 9-18 were received in evidence.

   
   

   Unicare presented the testimony of W. Eugene Nelson, expert in health planning; Gerald Bodalski, expert in nursing home administration and operations; David Hammonds, expert in nursing home construction management and equipment; Christine Osterberg, R.N., expert in Alzheimer's and related dementia programs, and their administration; Robert Abramowski, expert in health care finance; Sharon Schott, expert in nursing, nursing administration and quality assurance; Joseph Wuchterl, expert in nursing home architecture, design, construction, and construction cost estimating; and Darryl Weiner, expert in health care finance and financial feasibility analysis. Unicare's exhibits 1 - 4 were received in evidence.

   
   

   Life Care presented the testimony of Clinton Davis, expert in nursing home administration and operations; Richard A. Stern, expert in nursing home development, finance, and financial feasibility; James S. Weigard, expert in

   health care planning; and Bo Russ, expert in nursing home design and construction. Life Care's exhibits 1-6 were received in evidence.

   
   

   Beverly presented the testimony of James R. Pietrzak, expert in nursing home development; Schyler Hollingsworth, expert in nursing home finance; Marie Cowart, R.N.; Alvin Taylor, expert in human resources with emphasis on nursing facilities; John Fletcher, expert in nursing home architecture and construction cost estimation; Kelly Gill, expert in nursing home administration and operations, including staffing and equipment costs; Mia Moore, expert in nursing, including nursing administration and nursing quality assurance; Cheryl Kelsch, expert in rehabilitation therapies; and Armand E. Balsano, expert in health care planning and financial feasibility. Beverly's exhibits 1-13b, 18-22 and 31 were received in evidence.

   
   

   AHCA presented the testimony of Robert Garland, expert in architecture and construction; and Alberta Granger, expert in health planning and nursing home financial feasibility. AHCA's exhibits 1-6 were received in evidence.

   
   

   Prior to the final hearing, severances and remands were entered in cases involving Arbor Health Care Company, Lake Care Systems, Inc., LTCS, L.P., North Florida Retirement Village, Rebound, Inc., and Wildwood Healthcare, Inc. As a result of the remands, Wildwood Healthcare was issued CON No. 7486 to add 30 beds to WeCare Nursing Home in Sumter County. During the final hearing, Alachua General Hospital and HCA Health Services of Florida, Inc., d/b/a HCA North Florida Regional Medical Center filed Motions to Dismiss, Sever, and Remand consideration of their certificates of need to AHCA for final agency action.

   All parties except Lake Port, filed notices of voluntary dismissals of their petitions against the two hospitals. At hearing, Lake Port conceded that its only remaining issue was the effect of the hospitals' dismissals on the number of remaining nursing home beds available in the fixed need pool, and the motions to dismiss were granted.

   
   

   During the final hearing, Lake Port also voluntarily dismissed its petition. The remaining parties voluntarily dismissed the portions of their petitions which challenged AHCA's preliminary approval of CON 7487 to Southern Medical. By Order dated January 31, 1995, the petitions of Lake Port and Southern Medical were remanded to AHCA for final agency action. As a result of the remand, AHCA issued CON 7487 to Southern Medical to add 40 beds to Palatka Health Care Center in Putnam County.

   
   

   After the approval of 30 beds to WeCare, 15 to Alachua General Hospital, 24 to HCA North Florida Regional, and 40 to Southern Medical, the projected need for 295 beds is reduced to 186 beds which remain available for the issuance of CONs in this cycle. The parties stipulated to the admissibility of audited financial statements and that dietary plans are not in dispute.

   
   

   The transcript of the final hearing was filed on February 28, 1995.

   Following a brief extension of time, the proposed recommended orders were filed on April 25, 1995.

   FINDINGS OF FACT

   
   

   1. The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws. In this case, AHCA projected a need for an additional 295 community nursing home beds in District 3 for the July 1996 planning horizon, and reviewed the applications submitted in response to the published need. A numeric need for 186 beds remains.

      
      

   2. CON applications are evaluated according to applicable statutory and rule criteria and, as required by Section 408.035(1)(a), Florida Statutes, the preferences and factors in the state and local health plans. The applicable state plan is Toward A Healthier Future - The 1993 State Health Plan. The applicable local health plan is the District Three Health Plan for 1992, with 1993 Allocation Factors, prepared by the North Central Florida Health Planning Council in Gainesville.

      
      

   3. AHCA has not promulgated a rule subdividing District 3. However, the local planning council has divided the sixteen counties into nursing home planning areas, as follows:

      
      

      1. Columbia, Hamilton, Suwannee, Bradford, Union and Lafayette Counties;

      2. Alachua, Dixie, Gilchrist, and Levy Counties;

      3. Putnam County;

      4. Marion County;

      5. Citrus County;

      6. Hernando County;

      7. Lake and Sumter Counties.

         
         

   4. In this case, one applicant, Dixie Health Care Center, L.P., ("Dixie") proposes to locate in Dixie County in planning area 2 or (b). Hilliard HealthCare, Inc., ("Hilliard"), Unicare Health Facilities, Inc., ("Unicare"), Life Care Centers of America, Inc., ("Life Care") and Beverly Enterprises- Florida, Inc., ("Beverly") propose to construct nursing homes in planning area 7 or (g). Within planning area 7, Hilliard would build a nursing home in Sumter County, while Unicare, Life Care, and Beverly would build in Lake County.

      
      

   5. The total population in planning area 2 is approximately 230,000, and in planning area 7, approximately 180,000. More relevant to a determination of need for a nursing home, the population age 65 and over in planning area 2 is approximately 25,000, as compared to 49,000 in planning area 7. Within planning area 2, the projected Dixie County population over 65 in the year 2000 is 2,211, while the Sumter County projection is 9,824 residents. The actual 1994 population age 75 and over was 644 in Dixie, and 3,296 in Sumter County, and over 20,000 in Lake County.

      
      

   6. Currently, there are 1,238 licensed and approved beds in planning area 2, and 1,391 in planning area 7. For planning area 2, which includes Dixie County, there are 22 people age 65 and over for each nursing home bed. In planning area 7, the ratio is 41.1 to one. If 120 beds are added in Lake County, the comparable county ratio will decrease from 41.4 to 37.6 persons 65 and over to a bed. The addition of 60 beds in Sumter County will result in a decline in the county from 39.5 to ratio of 30.7 to 1. The district-wide ratio for District 3 is 34.5 persons 65 and over for every nursing home bed.

   7. The local planning council has compared the relative need for nursing home beds by planning area, according to a Planning Area Nursing Home Bed Allocation Matrix ("PANHAM"). Using a comparison of the percent of population age 75 and over to the percent of district beds in each planning area, the local health council describes planning area 7 as high need/moderate occupancy. It is ranked the planning area of greatest need for this CON application cycle. Planning area 2 is described as an area of low need/high occupancy. It also ranked as an area of priority in this cycle, although lower than planning area 7.

      
      

   8. The local health council has adopted three factors for use in making more specific determinations of locations which will best meet unmet needs within a planning area. Ranked in order of priority, the factors are: the absence of nursing homes in the same county, a location more than 20 miles or 25 minutes drive from any other nursing home, and an area in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months or 95 percent for the most recent six months. There is no evidence that construction of new nursing home beds is not needed or that the need is based on any inefficiency or quality of care problems in existing nursing homes. Consideration of the availability, utilization, and adequacy of other nursing homes and alternative health care providers in the district is also mandated by statute. See, e.g. Subsections 408.035(1)(b), (1)(d), (2)(a), (2)(b), (2)(c), and (2)(d), Florida Statutes.

      
      

   9. In this group of applicants, only Dixie is favored by the first local health council factor for proposing to locate in a county in which there are no existing or approved nursing homes. Dixie does not meet the preference for a location more than 20 miles or a 25 minute drive from the closest nursing home. Dixie's expert witness who believed the drive took more than 25 minutes lacked direct knowledge of the road conditions. By contrast, the deposition testimony of the administrator of Tri-County Nursing Home established that the drive from Tri-County to Cross City takes about 15 minutes, most of it on a four lane highway, U.S. 27. Tri-County in Wilcox near Fanning Springs, and Medic-Ayers in Trenton are both within 20 miles or 25 minutes drive of the proposed Dixie site. Their occupancy rates for the first six months of 1993 were 94.41 percent and

      95.85 percent, respectively, or an average of 95.13 percent. Therefore, Dixie is extremely close to meeting the local allocation factor related to existing nursing home occupancies in excess of 95 percent for the January-June 1993. By contrast, there are 12 existing and approved nursing homes in Lake County, and one in Sumter County. Occupancy rates in Lake County averaged 91.7 percent, but the facility in Sumter County reported 99.13 percent occupancy in the 1992-1993 reporting period. Applicants in Lake and Sumter Counties are not favored for proposing locations in counties without nursing homes, or for locations more than 20 miles or 25 minutes drive from existing nursing homes. Lake County applicants also do not meet the preference for an area defined by a 20-mile radius in which average occupancy rates exceeded 95 percent for the most recent six months or 90 percent for the most recent 12 months. The Sumter County applicant, Hilliard, does meet the occupancy requirement for a location in which nursing homes within a 20 mile radius exceeded 90 percent occupancy for the most recent twelve months.

      
      

   10. Because the state rule methodology results in a positive need calculation, the local health council factor related to special circumstances in the absence of numeric need is inapplicable to this case.

       Dixie Health Care Center, L.P., Cross City, Dixie County

       
       

   11. Dixie is seeking AHCA's issuance of CON 7492 to construct a 60-bed nursing home in Cross City, Dixie County, which is in planning area 2. If issued a CON, Dixie offers to be bound by the following conditions:

       
       

       to construct the nursing home on a specific site in Cross City;

       
       

       to provide 80 percent of its total resident days to Medicaid-reimbursed residents by the

       second year, with all beds certified for Medicaid and 9 beds certified for Medicare reimbursement;

       
       

       to provide rehabilitative, respite, and adult day care, with transportation for some day care participants;

       
       

       and not to deny HIV+ admissions.

       
       

   12. At the time that Dixie filed the letter of intent for the 60-bed project in Dixie County, it also submitted three others for contiguous areas of District 3. Thus, four legal notices, for projects in Alachua, Gilchrist, Levy and Dixie Counties were submitted by fax and then by mail to the Gainesville Sun newspaper for publication. All four legal notices, when published, referred to Levy County, as the proposed location of the nursing home. The proof of publication sent by the newspaper to the applicant and included in the CON application states that the notice published was for Dixie County, although the notice itself states that the project will be in Levy County. Dixie's health care planning expert requested the publication of a corrected notice, but there is no evidence that one ever appeared in the newspaper. AHCA accepts CON applications, despite publication errors, if the error is made by a newspaper, not by the applicant.

       
       

   13. Dixie is a partnership formed to file the application for CON 7492. The project will be funded by Smith/Packett Med-Com, Inc. Smith/Packett is owned by James R. Smith, who with Herbert H. Frazier, is a general partner in Dixie Health Care Center, Limited Partnership. Herbert Frazier is an employee of a Florida licensed general contractor, MB Conn Construction, and president of its Frazier Division which oversees the construction of nursing homes. Separately, the two general partners in Dixie own over 20 nursing homes, and jointly own one in Virginia and one in North Carolina. The partners owned, but, in February 1994, sold a Lake City nursing home. The estimated total project cost is approximately $3,000,000, of which the general partners will provide

       $250,000 in cash for project development costs and initial cash flow requirements, as noted in the application in the schedule 3 assumptions. Dixie included in its application a letter of interest in financing the project from Colonial Bank, Alabama. Dixie has a contract to purchase a two acre site for the project for $33,000.

       
       

   14. As previously noted, Dixie meets the highest priority local allocation factor for proposing to locate in a county which has no nursing homes, and is close to the factor for over 95 percent average occupancy rates in the nearest nursing homes. Dixie is also favored by the local plan for proposing to construct at least 60 beds, for improving access within the planning area, and for proposing respite care, adult day care, and rehabilitative therapies.

   15. Dixie meets state health plan preferences for proposing the following:

       
       

       1. to locate in a subdistrict with over

          90 percent occupancy (93.42 percent for plan- ning area 2);

       2. to serve 80 percent Medicaid, which is in excess of the subdistrict average of 79.37 percent in the first six months of 1993,

       3. for specialized services to AIDS, Alzheimers' and mentally ill patients,

       4. to provide a continuum of services including long term, respite, and adult day care;

       5. to construct a well-designed facility to maximize resident comfort and quality or care, which is a reasonable size and meets all licensure requirements;

       6. to provide rehabilitative and restorative therapies,

       7. to establish a Medicaid reimbursement rate of $91.75 in year one and $94.65 in year two, as compared to the projected subdistrict high of

       $92.83 in 1995 and $96.54 in 1996 (using an annual

       4 percent inflation rate from the January 1994 rate);

       * * *

       1. to offer multi-disciplinary services to residents, with the various therapist, social workers, and counselors;

       2. to document protection for residents rights and privacy, and to establish resident's councils, quality assurance and discharge planning programs, as SunQuest and all other nursing homes operating in Florida must do by state laws;

       3. to operate with lower administrative costs and higher patient care costs than the average in the district ($21.61 and $51.33 respectively in year two (1996), in contrast to $22.02 and $41.62 in 1992 for the respective average district per diem costs);

       
       

   16. Questions were raised about Dixie's compliance with state factors (8) for providing superior resident care in existing facilities, and (9) for staffing ratios which exceed minimum state requirements and are appropriate for proposed special services.

       
       

   17. The proposal is substantially based on the assumption that the applicant will contract with SunQuest for management services. Although the application refers to a management contract with SunQuest, no contract has been executed, which is not unusual prior to the issuance of a CON. At the final hearing, however, Dixie contended that SunQuest is only one of the candidates for a management contract, while conceding that the management policies and procedures in its application are those of SunQuest. In fact, the Dixie application states in response to state allocation factor (9) that SunQuest will be the management company.

   18. SunQuest manages 10 and leases an additional 10 long term care facilities in the United States, two in Florida. One of the Florida nursing homes, Bayshore Convalescent Center in North Miami Beach, has a superior license. SunQuest also manages the Lake City Extended Care Center, which was built by the company which employs Mr. Frazier, began accepting residents in December 1993, and was sold by the Dixie general partners in approximately February 1994. The original holder of the Lake City CON became unable to develop the proposal and contacted Mr. Smith and Mr. Frazier just prior to the expiration of the CON. They acquired the CON, financed, designed, and constructed the nursing home. Lake City currently operates with a conditional license, as a result of medical record-keeping deficiencies.

       
       

   19. The testimony, by Dixie's corporate representative, that SunQuest is merely one management company candidate along with Senior Care Properties, is inconsistent with the totality of the proposal, which renders significantly less reliable the program descriptions in the original application.

       
       

   20. Dixie's intent to provide van transportation for adult day care participants was also questioned, due to the absence of any provision for the service in the financial schedules to the application.

       
       

   21. The financial feasibility of Dixie's proposal is also a matter at issue. Although Dixie has a contract to purchase a two acre site, the architect who designed the facility testified he had constructed a 120-bed two-story nursing home on less than two acres, but that two and a half to three acres are generally needed to construct a 60-bed facility. Dixie projected a net loss of

       $201,813 in the first year of operation and a net profit of $55,123 by the end of the second year. The general partners have committed to provide $250,000 to cover the first year negative cash flow. However, the average annual salaries projected when multiplied by number of full time equivalent ("F.T.E.") positions listed on schedule 6 of its application exceeds salaries listed in the projected income and expenses on schedule 11 by approximately $219,866 in year one and

       $51,694 in year two. Including the underestimate of related benefits, the loss expected in the second year is $8,759. Dixie maintains that the staffing on schedule 6 cannot be compared to the pro forma, because the staffing and related expenses in the pro forma will increase over the first year as the census increases, while the staffing schedule is a snapshot at the end of the first year. The same is not true for the second year, since the facility is projected to be full after 8 months. Dixie's expert on finance described the second year discrepancy between a $50,000 profit and an $8,700 loss as insignificant in determining the financial viability of a $2 million project which, taking into consideration depreciation, amortization, and noncash related items, still results in a positive cash flow.

       
       

   22. Dixie's financial feasibility also depends on its reaching 96 percent occupancy by the fourth quarter of the first year. One witness for Dixie has achieved 93 percent occupancy in similar facilities in a county he deemed comparable, but has operated his facilities since 1989. Dixie also has to contend with competition for residents and staff from a relatively new facility within 20 miles and a 25 minute drive, Tri-County Nursing Home. Tri-County Nursing Home in Gilchrist County opened in May 1992, close to the Gilchrist- Dixie line, serving residents of Levy, Gilchrist and Dixie Counties. Approximately 30 of its 60 beds are occupied by Dixie County residents, all of whom rely on Medicaid reimbursement. Tri-County is also establishing a 25 person adult day care, having completed the required state inspection and awaiting the issuance of its license. After 8 months of operation, 51 of the 60 beds were filled. In June of 1993, Tri-County was full, with 98 percent

       occupancy. Approximately 40 percent of Tri-County's staff resides in Dixie County. There was testimony that 41 registered nurses reside in Dixie County, but with no information concerning their distribution within the county, current employment, or ages, their availability to work at a new nursing home could not be evaluated. In Gilchrist County, the ratio of persons 65 and over to nursing home beds is 8.7 to 1, in contrast to 31.46 for Levy County, and 34.5 for the district. The data supports the conclusion that Tri-County relies on service to Dixie County residents, clearly has an insufficient population base within Gilchrist County to fill its beds, and even when combined with Levy County is below the district ratio of 34.5 persons over 65 per nursing home bed. AHCA's expert in health planning and nursing home financial feasibility testified that Tri-County has had financial difficulties.

       
       

   23. On balance, Dixie has failed to demonstrate that it has estimated reasonable land requirements and costs, and that it can meet the required occupancy and staffing levels to survive financially, without adversely affecting Tri-County.

       
       

       Hilliard Healthcare, Inc., Bushnell, Sumter County

       
       

   24. Hilliard is the applicant for CON 7485 to construct a 60-bed nursing home in Bushnell, Sumter County, which is in planning area 7. Hilliard's CON, if issued, will commit to construction of Osprey Point Nursing Center on a specific five acre site on State Road 475, and to the establishment of a 10-bed Medicare unit, and a 20-bed secure Alzheimers' unit, with all beds Medicare and Medicaid certified. Hilliard commits to providing 64 percent of total resident days for Medicaid. The total estimated project cost is $2,650,000, funded by

       $650,000 cash from stockholders and $2,000,000 in loans from Bankers First.

       
       

   25. Hilliard, formed in 1987, currently owns a superior licensed 120-bed facility in Nassau County, having completed a 60-bed expansion in September 1994. The Nassau County nursing home is managed by Health Care Managers ("HCM"), which is owned by Steven Sell, Hilliard's president and founder. Mr. Sell, in partnership with three others, first acquired a 55-bed facility in Jacksonville in 1984, expanded it to 120 beds in 1988, and sold it in 1994 for a profit of approximately $2.5 million. In 1991, Hilliard's president also received a CON to construct a 60-bed nursing home in Clay County, which was sold without a profit, but at a break-even point, while it was under construction. HCM is the intended manager of the Bushnell facility, if the CON is approved.

       
       

   26. Hilliard submitted a notice of its intent to file a CON application to the Sumter County Times newspaper for publication. The notice, published in November of 1993, stated erroneously that the application would be filed on December 1, 1992, rather than December 1, 1993. Hilliard's president testified that he knows for a fact that he submitted the notice with the correct date, but no document in evidence establishes what Hilliard submitted to the Sumter County Times.

       
       

   27. Hilliard's proposal does not meet the local health council factors for a location in a county without nursing homes, nor is Bushnell more than a 20 mile radius or 25 minute drive from existing nursing homes. It does merit consideration under the factor which relates to the occupancy of nursing homes within a 20 mile radius, all of which exceeded 90 percent from July 1992 - June 1993, ranging from 90.89 to 99.13 percent. The highest rate was at WeCare, the only other nursing home in Sumter County, which is located in Wildwood, in the northern area of Sumter County. WeCare has two fifteen-bed Alzheimers' units, and unchallenged CON approval to add 30 beds. The approval of the 30 additional

       beds at WeCare raises the bed to population ratio of Sumter County from 20.2 to

       23.5 per 1000, in contrast to the current Lake County ratios of 22.4. With the approval of 60 beds at Hilliard and another 120 beds in Lake County, the ratios are increased to 30.2 in Sumter and 24.7 in Lake County. After approval of WeCare's addition, the need in Sumter County has been decreased. Hilliard, by its proposal to serve central and southern sections of Sumter County, would improve access within the planning area.

       
       

   28. The occupancy rate for Medicare patients at WeCare was 1.1 percent. Hilliard contends that the relatively low percentage of Medicare services indicates a need for short-term, post-hospitalization rehabilitation services, as proposed in its 10-bed Medicare unit. Hilliard demonstrated that average lengths of hospital stays for Sumter County residents for certain procedures exceed national Medicare reimbursement averages, but there was no comparison to average lengths of stay within the district or the state.

       
       

   29. Other local health council allocation factors which apply to and favor Hilliard's proposal are those for:

       
       

       1. establishing a facility of at least 60 beds,

       2. improving access within a planning area with over 80 percent occupancy, and

       3. serving Alzheimers' and dementia patients.

          
          

   30. Hilliard's proposal meets state preferences for:

       
       

       1. locating in a subdistrict exceeding 90 percent occupancy (95.42 percent for planning area 7);

          * * *

          1. providing specialized services to Alzheimers' residents;

          2. offering respite care (although limited to hospice services);

          3. designing a comfortable facility, with short corridor segments, relatively large therapy areas, and a separate enclosed courtyard for the Alzheimers' unit;

          4. proposing occupational, speech and physical therapies, particularly to enhance the functioning of Alzheimers' residents;

          5. setting Medicaid rates of $101.90 for 1996 and $104.13 for 1998, in contrast to the highest rates projected for the same time, $107.89 and

             $113.28, respectively (using 5 percent inflation);

          6. providing superior resident care at its existing Nassau County Nursing home;

          7. proposing staffing ratios in excess of

             minimum state requirements, with reasonable salaries;

          8. including multi-disciplinary staff, including occupational, speech, and physical therapists, as well as nurses and an activities director;

          9. protecting residents' rights and privacy, and developing quality assurance and discharge planning programs; and

          10. proposing lower administrative costs ($26.35) with higher patient care costs ($64.30) than the district average of $26.63 and $54.67, respectively (1977 projection with 5 percent inflation).

          
          

   31. Hilliard does not meet state preference 2 for service to Medicaid proportionate to the subdistrict average, which is 69.95 percent, in contrast to Hilliard's proposed commitment of 64 percent. Under the preference, Hilliard's proposal to emphasize Medicare reimbursed therapies does not relieve it of the obligation to serve a proportionate share of Medicaid. Hilliard's proposal does not meet the specific exceptions allowed in preference 2 for applicants proposing to serve particular ethnic or cultural groups, and those developing multi-level care systems.

       
       

   32. Hilliard has a commitment letter from Banker's First to provide a $2 million loan for a fee of 1 1/2 to 2 percent of the principal loan amount, or

       $30,000 to $40,000. In schedule 1 of the application Hilliard's estimate of closing costs in $10,000, with $4,120 in legal fees. Dixie's expert claimed that the closing cost was inconsistent with the Banker's First letter and unreasonably low. By contrast for a $3 million loan, Dixie estimated $10,000 for loan closing costs, $30,000 for legal fees, $10,000 for recording fees and taxes, and $60,000 in loan origination fees. Dixie's expert apparently overlooked an additional $20,000 in origination fees, which was included on Hilliard's schedule 1.

       
       

   33. Hilliard projects a loss of $177,000 in year one, and income from nursing home operations of $114,690 in year two. In the first year, a loan of

       $271,660 is expected to cover the losses in year one. In the second year, a pay off of $154,940 on the loan is expected.

       
       

   34. The financial ability of Hilliard's shareholders to provide the initial $650,000 equity contribution and $271,660 to cover first year losses was questioned. Hilliard's president noted that the shareholders previously raised in excess of $600,000 to develop the Nassau County facility and have received

       $2.5 million in profits from the sale of the Jacksonville nursing home.

       
       

   35. Personal financial statements of three of the six stockholders were included in Hilliard's application. The personal financial statements were incomplete, omitting referenced attachments. The statements were also inaccurate or inconsistent, with missing liabilities, discrepancies regarding property values, and including the total value of some property which was not owned by the shareholders individually. Nevertheless, the statements do, according to Dixie's expert, show that the shareholders could provide over

       $900,000 in capital needed for Hilliard to be financially feasible, although that would take virtually all of the liquid assets, unless they assumed some additional individual debts.

       
       

   36. On balance, Hilliard has shown that Sumter County is more likely than not in need of additional Medicare-reimbursed subacute services, and that its proposal is financially feasible based on the shareholders' history of being able to raise capital for similar development projects.

       Lake County Applicants

       
       

   37. Three applicants in this batch seek to construct new 115 or 120-bed nursing homes in Lake County. Given the remaining numeric need for 186 beds, only one of the applicants can be approved. See, Beverly Enterprises-Florida, Inc., et al. v. AHCA, et al., DOAH Case No. 92-6656 (F.O. 10/17/94).

       
       

   38. In addition, the District 3 Allocation Factors Report Preferences includes the following guideline:

       
       

       To the extent possible, all planning areas ranked in one of the four categories of priority established in subparagraph d above should be approved to add some new beds.

       
       

       Unicare Health Facilities, Inc., Lady Lake, Lake County

       
       

   39. Unicare Health Facilities, Inc. ("Unicare") is an applicant for a CON to construct a 120-bed nursing home or to receive a partial award to construct a 115-bed community nursing home in the town of Lady Lake, in northwest Lake County. Unicare proposes to have its CON conditioned on the establishment of a 20-bed Alzheimers' and related dementia unit, an adult day care to accommodate an additional 20 Alzheimers' sufferers for half day care, and on providing 73 percent of total resident days to Medicaid residents. Unicare also plans to include a 10-bed subacute unit, and to offer rehabilitative therapies, respite and hospice care. The total size of the building is 58,700 square feet.

       
       

   40. Unicare is a subsidiary of United Health, Inc., which is committed to finance the project by providing an equity contribution of 60 percent and drawing on its available line of credit for the remaining 40 percent of the total projected cost of $5,754,983.

       
       

   41. Unicare owns and operates 45 nursing homes in 7 states, has been in business for 28 years and in Florida since 1982, and currently owns and operates

       13 Florida nursing homes.

       
       

       Life Care Centers of America

       
       

   42. Life Care Centers of America, Inc. ("Life Care") proposes to establish a 120-bed community nursing home of 53,175 square feet, in west central Lake County, in the areas of Lady Lake, Tavares, or Leesburg, for a total project cost of $5,906,000. Life Care's CON, if issued, will include its commitment to provide 73 percent of total resident days to Medicaid residents, to establish a 20-bed Alzheimers/dementia unit, to offer adult day care services, and to include a 20-bed sub-acute unit.

       
       

   43. Life Care is a privately held company operating 150 nursing homes in

       27 states. Life Care owns two and operates three other nursing homes in Florida.

       
       

   44. Life Care proposes to fund the Lake County nursing home from $206,000 cash-on-hand and $5,700,000 in financing from a non-related company. With its application, Life Care submitted letters of interest from potential lenders with interest rates ranging from 9 to 12 percent, and a 25 year amortization schedule.

   45. In reviewing other Life Care applications, AHCA has considered and rejected as incomplete a list of capital projects identical to that included in this Lake County application. Specifically, Life Care listed projects by county name, although the total amount of capital obligations, according to AHCA, was significantly underestimated.

       
       

   46. Life Care submitted, at hearing, its exhibit 6, a stipulation to certain facts and, through the testimony of its Vice President for Development, established that the facts related to the schedule 2 issues in this case are identical to those considered in Life Care Centers of America, Inc. v. Agency For Health Care Administration, DOAH Case No. 94-2409 (F.O. 10/24/94), which is pending on appeal in the district court.

       
       

       Beverly Enterprises

       
       

   47. Beverly Enterprises-Florida, Inc. ("Beverly") is a wholly owned subsidiary of Beverly Corporation-California, a subsidiary of Beverly Enterprises, Inc. Beverly proposes to construct a 120-bed community nursing home in Lady Lake or Leesburg, in Lake County, with a commitment to provide 73 percent of total annual resident days for Medicaid, to establish a 20-bed Medicare-certified subacute unit with 4 beds for ventilator-dependent patients, an 18-bed Alzheimers' wing, an adult day care for 8 clients, respite care, and to accept and care for residents who are HIV positive, or have mental health disorders. Beverly also will commit to donate $10,000 for gerontological research.

       
       

   48. Beverly Enterprises companies operate 720 nursing homes, 70 in Florida. Of the 70, 41 are operated by the applicant.

       
       

   49. Beverly's proposal to establish Lake Beverly Terrace has a total project cost of $5,421,372, for 48,969 square feet.

       
       

       Existing Nursing Home and Alternatives - Sections 408.035(1)(b), and (2), Florida Statutes.

       
       

   50. As of January 1994, there were 460 nursing home beds in Leesburg, 142 in Clermont, 236 in Mount Dora and 377 in Eustis. All of the facilities, exceeded the average Lake County occupancy of approximately 92 percent in 1992- 1993, except two, Waterman Hospital Extended Care Center in Eustis and Edgewater in Mount Dora. All of the parties agreed that additional subacute and Alzheimers' beds, and adult day care spaces are needed in Lake County.

       
       

       Local and State Health Plans - Sections 408.035(1)(a), Florida Statutes.

       
       

   51. Unicare, Life Care, and Beverly propose to locate in Lake County, within planning area 7 for Lake/Sumter Counties. The planning area has a higher priority need ranking than planning area 2, as determined by the local health plan council. Local allocation factors 1 - 5 apply equally, or are inapplicable to the three proposals. There are existing nursing homes in the county, which are within 20 miles or 25 minutes all of the proposed locations, and which exceeded 90 percent occupancy.

       
       

   52. Unicare distinguishes its proposal based on its intention to locate in the town of Lady Lake, rather than further contributing to the concentration of nursing homes in Leesburg. Lady Lake was, in 1990, the third largest municipality in Lake County, and projected to be the largest in 2000. The 1990- 2000 projected growth rate is over 100 percent, in contrast to 13 percent for

       Leesburg, 50 percent for Tavares, and 37 percent for the entire county. Lady Lake was also mentioned in the Life Care and Beverly applications as a possible location for their facility, along with other towns in Lake County. Beverly's Vice President has investigated the cost of sites only in Leesburg, Fruitland Park, and Eustis, but concedes that Leesburg is a desirable location due to its proximity to the hospital. Without a CON condition, which AHCA could impose, all three applicants could locate anywhere within Lake County. Although Lady Lake is only 8 miles from Leesburg, Unicare's proposal, all other factors being equal, would be favored as more consistent with local allocation factor 6, which discourages the concentration of nursing homes in one community within a multi- county planning area.

       
       

   53. The final local allocation factor, 7 (as related to Alzheimers' and adult day care), as well as state health plan factors 3 (as related to Alzheimers') and 4 (as related to adult day care), and subsection 408.035(1)(o), Florida Statutes, favor applicants proposing specialized care or therapies to meet the needs of community and nursing home residents suffering from Alzheimers' and related forms of dementia. Unicare's 20-bed Alzheimers' unit and programs, and half day adult day care for 20 additional Alzheimers' sufferers are consistent with the specialized services that are needed. Life Care also proposes, as conditions for its CON, that it will establish a 20-bed Alzheimers/dementia unit and an adult day care center to accommodate 10 participants a day, between 7:00 a.m. and 6:00 p.m. Beverly proposes to provide services in an 18-bed Alzheimers' wing, and an 8-person adult day care program.

       
       

   54. State health plan allocation factors met by all of the Lake County applicants include the following:

       
       

       1. locating in a subdistrict exceeding 90 percent occupancy (approximately 92 percent for planning area 7 for January-June 1993); see, also Subsection 408.035(1)(b), (d), and (2) (a) - (d);

       2. proposing to serve 73 percent Medicaid- reimbursed residents in comparison to the subdistrict average of 72.65 percent in the first six month of 1993; and

          * * *

          (11) documenting measures and procedures to protect resident's rights and privacy, and the use of resident councils, quality assurance and discharge planning programs.

          
          

   55. The Lake County applicants' proposals differ more when compared in accordance with state health plan factors and related statutory criteria, for:

       
       

       1. services to AIDS residents and the mentally ill;

       2. respite care, adult day care, and other services in a continuum of care (Sections 408.035(1)(o), F.S.);

       3. facilities with designs which maximize residents' comfort and the quality of care, and the costs and methods of construction (Sections 408.035(l)(m), F.S.);

       4. innovative therapeutic programs to enhance mental and physical functioning;

       5. charges which do not exceed the highest Medicaid per diem rate in the subdistrict (Sections 408.035(2)(e), F.S.);

       6. a record of providing superior care in existing nursing homes (Sections 408.035)(1)(c), F.S.);

       7. staffing in excess of minimum requirements, with the highest ratio of registered and licensed practical nurses to residents (Sections 408.035)(1)(h), F.S. - availability of staff and personnel);

       8. use of professionals from a variety of disciplines; and

       * * *

       (12) administrative cost which are lower patient care costs which are higher than the district average.

       
       

   56. State health plan preference 3 is given to applicants for care to AIDS residents and the mentally ill, and state health plan 4, in part, applies to respite care. Beverly points to its increase in service to HIV positive patients from 39 patients for 124 patient days in 1993 to 3500 patient days in 1994. Unicare also has served AIDS residents. All of the Lake County applicants plan to offer respite care. Beverly offers a wider array of specialized services. By providing a range of levels of care to inpatients and outpatients, including adult day care and respite care, the applicants also, in part, meet the criterion of subsection 408.035(1)(o), Florida Statutes.

       
       

   57. Nursing homes with more features to enhance resident comfort and quality of care are given state health plan preference 5. Unicare's 58,720 square foot plan, includes semi-private patient rooms designed for the placement of the heads of residents' beds on opposite walls, each side with a window, rather than the alignment of beds next to each other, typical of semi-private hospital rooms. The plan includes indoor wandering space for Alzheimers' residents in a loop around an activity and recreation area, separated by a 3 to

       4 foot wall. The Alzheimers' unit has a separate dining room with access to a secured courtyard, which, in turn, connects with the day care center. AHCA's architectural report notes that the construction cost of $60 per gross square foot is below the median cost projection, because Unicare will use a design/build contract. The design/build contract provides for one contractor to provide all of the services, including architectural and design, engineering and construction management, which saves time and money. Unicare's contractor, KM Development Corporation, has been in business since 1977, and has renovated and enlarged Unicare's facilities in Florida without cost overruns, and has done residential construction in the state. Unicare's design, based on the AHCA architectural review and the contractor's testimony, meets requirements for licensure and safety, and is a one-hour fire safety protected structure with a stucco finish, and brick and wood trim. Although skeptical and concerned that the design/build contract can be manipulated to cut corners to stay within budget, AHCA's expert in architecture testified that it is possible for Unicare to build the facility at the projected cost, but he would expect a cost over- run.

       
       

   58. Life Care's 53,175 square foot building will cost $75 a square foot. AHCA's architects described it as wings organized around a central courtyard, providing good visual control of short corridors. Life Care's design also includes a gift shop, library, and ice cream parlor. A separate wing for Alzheimers residents is adjacent to the adult day care center, with a separate

       dining room and courtyard. The institutional effect of corridors is decreased by using recessed entrances and doors to residents' rooms. There were no concerns expressed by architectural experts with the appropriateness of the design for the functions in each wing, the adequacy of the project cost, or the safety of the structure.

       
       

   59. Beverly's construction cost per gross square feet, listed as $63 on line I in response to question 4A was challenged as too low by Life Care's experts. Beverly's construction cost plus a 10 percent contingency or $70 a square foot for 48,969 square feet is considered reasonable by AHCA, although that eliminates the availability of the contingency for unknown conditions on an unselected site. Beverly's design is organized generally around a core area of courtyards with therapy space in the center. Beverly's Alzheimers' unit has a separate courtyard which allows wandering residents to exit a door near one end of the corridor and return by a door near the opposite end. AHCA's architectural review concludes that Beverly's design meets licensure and safety requirements.

       
       

   60. In general, Unicare's design better meets the preference for enhancing resident comfort and quality of care with rooms over 30 percent larger than required, four outside landscaped areas, physical therapy rooms, and three staff lounges, and an in-service training area, but its cost may be underestimated. Life Care's design is second in terms of accommodating program needs with space arrangements. Adult day care clients with Alzheimers, for example, are located adjacent to the area for Alzheimers residents' programs and activities. Life Care's projected construction costs are also the highest.

       
       

   61. Innovative therapeutic programs effective in enhancing physical and mental functions are favored in state health plan preference 6. Unicare will provide physical, occupational, and speech therapy and has developed special programs to serve Alzheimers's and related dementia residents and day care clients. Life Care and Beverly will offer IV therapy, wound care, and ventilator and respiratory therapy in addition to other therapies offered by Unicare. Beverly's therapy programs are more innovative and intense, based on the staffing and level of detail provided in describing the proposed services.

       
       

   62. Preference 7 is given for proposed charges not exceeding the highest Medicaid per diem in the subdistrict. Unicare proposes a Medicaid per diem rate for $86.57 for 120 beds in the second year while at least one provider in the subdistrict for 1997 will be charging $95.27.

       
       

   63. Unicare computed projected future rates by using 9.1 percent inflation of the Medicaid rate at one facility, which is not necessarily the highest existing provider, which results in a $98.44 rate. Unicare criticized Beverly's use of a 5 percent inflation rate of the highest current provider resulting in a projected rate of $99.47.

       
       

   64. The highest Medicaid rate in the district, inflated forward to 1997, was $99.31 at the time the application was submitted, so that Beverly's proposed charge of $99.00 is lower, as is Life Care's projected $97.11 and Unicare's

       $86.57.

       
       

   65. Preference 8 and subsection 408.035(1)(c) require a comparison of the applicants' records in terms of the quality of care provided in their existing nursing homes, as indicated partly by licensure ratings over the last 36 months. During that time, Unicare's 13 nursing homes have had 468 months of operation at approximately 63 percent superior, 29 percent standard, and 9 percent

       conditional. Beverly has had a total of 976 months of operations, 67 percent superior, 25 percent standard, and 7 percent conditional. Beverly has also paid a fine to the State of Oregon to settle claims related to patient care problems. The two Florida nursing homes owned by Life Care are rated standard, one in Citrus County opened in November, 1994 and is not yet eligible for a superior license. The other, in Altamonte Springs has been in operation for over 36 months, 29 of those with a superior licensure rating. The three applicants generally have operated and have the capacity to continue to operate superior facilities.

       
       

   66. Preference 9, on proposed staffing ratios and preference 10 related to the use of varied professional staff are also indications of the quality of care. AHCA requires one registered nurse on the day shift and none on the night shift in a 120-bed nursing home. All of the applicants exceed the minimum. The number of nursing hours per patient day will be 3.2 at Unicare, 3.35 at Life Care, and 3.85 at Beverly. One of four registered nurses on the day shift at Beverly will always be in the subacute unit. However, the ratio outside the unit, for the remaining 100 residents, still exceeds the minimum and meets the preference requirements. All three companies have existing Florida facilities available to provide training and, if needed, transfers of experienced staff to a new nursing home. They currently use and are proposing to continue to use professional staff from a variety of disciplines to meet residents' and clients' needs.

       
       

   67. Average administrative costs in the district, inflated forward, will be $24.58 and average patient care costs will be $49.49. The applicants report their comparable projections on Schedule 11. Unicare's projected costs are

       $27.80 and $50.59, respectively. Life Care's costs are $24.84 and $65.94, respectively. Beverly's are $24.44 and $62.30, respectively. With erroneously omitted laundry costs added to administrative costs, Beverly's administrative costs increase to $26.52. All three applicants propose higher administrative costs than the district average, but Life Care's are the lowest. All three have higher than average patient care costs, with Life Care favored as the highest.

       
       

   68. The following subsections of the CON statutory review criteria do not apply, in this case, to distinguishing among the Lake County applicants:

       
       

       1. - availability or adequacy of alternatives, such as outpatient care or home care;

       2. - economics of joint or shared resources;

       3. - need for equipment or services not accessible in adjoining areas;

* * *

1. - special needs of health maintenance organizations;

2. - needs of entities which provide substantial services beyond the district; and

3. - impacts on costs and effects of competition.

Subsection 408.035(1)(g) - research and educational facilities needs

1. Unicare and Life Care have established foundations to foster education and research in gerontology and health care. Beverly will commit, as a condition for the issuance of its CON, to providing a $10,000 research grant for a gerontological studies to Florida State University. All three companies assist in providing clinical experiences for nursing and therapy students in

   technical schools, community colleges, and universities, and benefit by recruiting employees from the programs.

   
   

   Subsection 408.035(1)(h) - availability of funds to establish and operate project, and Subsection 408.045(1)(i) - immediate and long-term financial feasibility

   
   

2. Unicare has $5 million in available cash and a $30 million line of credit. Unicare, using costs from other facilities adjusted to take into consideration geographical differences, projects a net loss of $250,672 in the first year and a profit of $50,482 in the second year. Unicare failed to include $3,000 in housekeeping equipment in its projected expenses, but can more than cover that omission with a $75,000 contingency. Life Care had a net worth of $50 million in 1993. For calendar year 1992, its audited financial statement shows over $10 million in net earnings and $4.5 million in cash on hand. Life Care projects a net loss of $548,190 in year one and a net profit of $236,022 in year two. Beverly has access to over $200 million for project development, combining its cash, cash equivalents, commercial paper and lines of credit. Beverly projects a pre-tax loss of $314,000 in the first year and a net profit of $214,000 in the second year. Beverly's figures were questioned based on its use of the experience of a Tampa area facility to determine some costs and expenses, its assumption that Medicare will be 13 percent of its patient mix, and its projected lengths of stay and revenues from Medicare. Beverly's use of unit-costs from existing facilities with modifications to fit the specific proposal is reasonable. Although the district Medicare rate is 5.7 percent and Lake County's is 6.1 percent, Beverly's higher proportion of Medicare is consistent with the level of subacute services it proposes in 20 of its 120 beds. After the maximum of 100 days of Medicare coverage, Beverly will have weaned or will transfer ventilator patients who do not have private insurance.

   
   

   Subsection 408.035(1)(n) - past and proposed Medicaid participation

   
   

3. Unicare has no nursing homes with CON conditions requiring a specified level of Medicaid participation, having purchased older, existing facilities in Florida. Nevertheless, eleven of its thirteen facilities exceed the Medicaid average in their respective subdistricts. For the first six months of 1993, Life Care's Medicaid resident days were 78 percent in Altamonte Springs (with no CON condition), 70 percent in Punta Gorda, 88 percent and 68 percent, respectively, in the two West Palm Beach nursing homes. Beverly's percent of patient days for Medicaid increased 63.3 percent to 66.8 percent from 1993 to 1994 for facilities in Florida. Beverly paid a $1500 fine to the state for falling below its Medicaid commitment in one of 17 state facilities with such conditions, Coral Trace in Lee County. AHCA agreed to reduce the Coral Trace medicaid condition from 78 percent to 53.3 percent to reflect the subdistrict average. In 1994, at Coral Trace, 49.5 percent of total patient days were Medicaid. All three Lake County applicants have demonstrated strong compliance with Medicaid participation criterion.

   
   

   Comparison of Lake County Applicants

   
   

4. On balance, the Lake County applications are all more in compliance than not with statutory review criteria, with varying strengths and weaknesses. They are financially sound, experienced nursing home owners and operators.

   
   

5. Unicare will improve access within the planning area. The demographic data on the municipality of Lady Lake shows significant growth. Unicare also will build a better designed and larger facility, and will focus its programs on

   meeting the needs of Alzheimers' residents and day care participants. Unicare's weaknesses are AHCA's architect's expectation that it will experience cost- overruns and the absence of ventilator services. Unicare relies on its actual experience with Florida construction projects to support the reasonableness of its projections. Unicare also projects the lowest Medicaid per diem rate.

   
   

6. Life Care proposes to offer a wider range of specialized programs and therapies than Unicare, a design second to Unicare's in terms of size and residential amenities. Life Care's project costs are the highest of the Lake County applicants, but Life Care, when operational, will have the highest proportion of its costs applied to patient care.

   
   

7. Beverly offers a range of programs comparable to those offered by Life Care, with greater emphasis on subacute care, and less emphasis than Unicare on Alzheimers' services. Beverly will build the smallest nursing home at the lowest cost, but is highest in projected Medicaid per diem rate.

   
   

8. Unicare is recommended for CON approval due to its superior design, and superior Alzheimers' and day care services, and proposed location. Because the proposed location is a factor in Unicare's favor, it is recommended that Unicare's CON be conditioned on its obtaining a site in Lady Lake. Absent Unicare's agreement to a condition on location, Beverly is recommended for approval based primarily on its lower project cost, scope and intensity of subacute of services, and higher staffing levels.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding, pursuant to subsections 120.57(1) and 408.039(5), Florida Statutes.

   
   

10. Each applicant has the burden of proving entitlement to a CON. Boca Raton Artificial Kidney Center, Inc. v. Department of Health and Rehabilitative Services, 475 So.2d 360 (Fla. 1st DCA 1985); Florida Department of Transportation v. J.W.C., Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

11. Life Care failed to comply with the requirements of subsection 408.037(2), Florida Statutes, as interpreted by AHCA. Life Care Centers of America, Inc. v. AHCA, DOAH Case No. 94-2409 (F.O. 10/24/94). Unicare's Motion to Dismiss Life Care is, however, denied on the authority of Arbor Health Care Company v. AHCA and Manor Care, DOAH Case No. 93-2562 (Fla. 1st DCA 5/16/95), in which the court reversed a decision requiring preliminarily denied, but appealed projects to be listed as capital projects which have been applied for, pending, approved, or underway, as defined by AHCA rule.

    
    

12. Rule 59C-1.008(i) requires that AHCA deem an application incomplete when newspaper publication requirements are not met, ". . .except where the failure is due to documented error by the newspaper." In its proposed recommended order, AHCA takes the position that Hilliard's error is not excused

    . . . "since the error was not timely documented to be that of the newspaper." AHCA gives no consideration, in applying the rule, to the fact that the error in the date, even if made by Hilliard, is an obvious one.

    
    

13. Dixie established that its newspaper publication resulted from the exception in the rule, having been made by the newspaper not the applicant. Dixie's resolution is also valid, and Hilliard's Motion For Summary Recommended Order is denied. A resolution clause stating that the applicant "shall" perform

    as required by statute means substantially the same thing as a statement that the applicant "certifies that it shall" perform. Martin Memorial Hospital v. DHRS, 584 So.2d 39 (Fla. 4th DCA 1991).

    
    

14. On the merits of the application, Dixie failed to establish the reliability of the programs described in its application, with no historical record or set management plan. Dixie also failed to establish the reasonableness of its occupancy projections and its long term financial feasibility.

    
    

15. Hilliard has shown that its proposal for subacute care is probably needed in Sumter County and that its proposed location will improve access within the planning area. Hilliard does not meet the preference for proposing to serve the subdistrict Medicaid average, and the need for Hilliard's proposal has been reduced by the approval of 30 additional beds at WeCare. The local planning council directive to disperse new beds among all priority planning areas suggests that, in the absence of another qualified applicant in a different priority planning area, Hilliard's application would, on the merits, be approved.

    
    

16. Unicare, Life Care and Beverly meet the requirements of subsection 408.035(1)(a) and (n) by proposing to locate in an area in need of 120 additional community nursing home beds, and the specialized services they proposed. All three will provide 73 percent of resident days to Medicaid- reimbursed residents and have a history of generally meeting or exceeding Medicaid commitments and/or the subdistrict averages. The three companies have sophisticated quality assurance and discharge planning programs, and comply with state and national laws to protect residents' rights and to provide a level of patient care exceeding minimum state requirements. All of the applicants meet the requirements of the state and local health plans, although Unicare is superior in physical design and proposed location. Unicare and Beverly also provided information on their ability and history of care to residents with AIDS.

    
    

17. Considering the criterion in subsection 408.035(1)(b), there was no evidence of problems in the existing providers, except their 92 percent occupancy rates and absence of any facilities in Lady Lake, the fastest growing municipality.

    
    

18. All of the Lake County applicants can and do, each with very limited exceptions, provide superior quality of care in their existing facilities, a criterion to be evaluated pursuant to subsection 408.035(1)(c).

    
    

19. Unicare, Life Care and Beverly have supported education and research in health care, and provide clinical experiences for interns, pursuant to 408.035(1)(g), although only Beverly will make a specific $10,000 grant based on the approval of its CON in this case.

    
    

20. The three applicants have the resources, personnel, management experience, and funds to construct and operate a 120-bed nursing home in Lake County, which will be financially feasible in the short and long term, in compliance with subsection 408.035(1)(h) and (i).

    
    

21. The applicants for Lake County all offer a continuum of care with, for example, adult day care rather than solely traditional long-term resident care. See, subsection 408.035(1)(0).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that AHCA issue CON No. 7489 to Unicare to construct a 120-bed

community nursing home in District III, conditioned on the establishment of a 20-bed unit for residents with Alzheimers and related dementia and an adult day care providing half day care for 20 clients, the provision of 73 percent of total resident days to Medicaid residents, and the selection of a site for the facility in the municipality of Lady Lake, Florida.

DONE AND ENTERED this 9th day of June, 1995, in Tallahassee, Leon County, Florida.

ELEANOR M. HUNTER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1995.

APPENDIX TO RECOMMENDED ORDER, CASES NOs.

94-2452, 94-2453, 94-2462, 94-2467 and 94-2971

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

Petitioner, Dixie's Proposed Findings of Fact.

1. Accepted in Findings of Fact 3 and 8.

2. Accepted in Findings of Fact 3 and 4.

3. Accepted in Findings of Fact 8 and 9.

4. Accepted in Findings of Fact 7.

5. Accepted in general in Findings of Fact 7-9 and 14.

6. Rejected conclusions in Findings of Fact 15-19.

7. Subordinate to Findings of Fact 14.

8. Accepted in Findings of Fact 11 and 24.

9. Accepted in Findings of Fact 7-9.

10. Accepted in or subordinate to Findings of Fact 9.

11. Accepted in part in Findings of Fact 7, rejected in part in Findings of Fact 9.

12. Accepted first sentence in Findings of Fact 9. Rejected second sentence in Findings of Fact 9.

13. Rejected in part in Findings of Fact 9.

14. Rejected in Findings of Fact 9.

15. Accepted in Findings of Fact 9.

16. Subordinate to Findings of Fact 8.

17. Accepted in Findings of Fact 13.

18. Accepted in general in Findings of Fact 13. 19-22. Accepted in Findings of Fact 17-19.

23-24. Accepted in or subordinate to Findings of Fact 15.

1. Accepted in or subordinate to Findings of Fact 30.

2. Accepted in part in Findings of Fact 9.

3. Accepted in Findings of Fact 28.

28-30. Accepted in or subordinate to Findings of Fact 25. 31-32. Accepted in or subordinate to Findings of Fact 30. 33-34. Rejected in Findings of Fact 8 and 22.

35-36. Accepted in or subordinate to Findings of Fact 13.

1. Accepted in Findings of Fact 9.

2. Accepted in or subordinate to Findings of Fact 15.

3. Accepted in Findings of Fact 13.

40-41. Accepted in part in or subordinate to Findings of Fact 13. 42-46. Accepted in Findings of Fact 24 and 35.

47. Rejected in general in Findings of Fact 22.

48-49. Accepted in or subordinate to Findings of Fact 21.

50. Rejected in Findings of Fact 23.

51-52. Rejected in Findings of Fact 21-23. 53-54. Accepted.

55-57. Accepted in Findings of Fact 9 and 22.

1. Accepted in or subordinate to Findings of Fact 21.

2. Accepted in or subordinate to Findings of Fact 15.

3. Rejected in Findings of Fact 21.

4. Accepted in or subordinate to Findings of Fact 13. 62-63. Accepted in Findings of Fact 15.

1. Accepted in Findings of Fact 24 and 31.

2. Accepted in Findings of Fact 11.

3. Accepted in or subordinate to Findings of Fact 9.

4. Accepted in or subordinate to preliminary statement. 68-69. Accepted in Findings of Fact 4 and 9.

70-76. Accepted in Findings of Fact 12. 77-78. Accepted in Findings of Fact 26.

79-80. Accepted in or subordinate to Findings of Fact 12.

Petitioner, Life Care's Proposed Findings of Fact.

1. Accepted in Findings of Fact 2 and 3.

2. Accepted in Findings of Fact 2-4. 3-4. Accepted in Findings of Fact 7.

1. Accepted in or subordinate to Findings of Fact 4.

2. Accepted, except 6, in Findings of Fact 51-53.

3. Accepted in general in Findings of Fact 56-67.

4. Accepted in or subordinate to Findings of Fact 53.

5. Accepted in or subordinate to Findings of Fact 61.

1. Accepted in or subordinate to Findings of Fact 54.

2. Accepted in or subordinate to Findings of Fact 65.

3. Accepted in Findings of Fact 43 and 65.

4. Accepted in or subordinate to Findings of Fact 43.

5. Accepted in or subordinate to Findings of Fact 70.

6. Accepted in or subordinate to Findings of Fact 53 and 56.

7. Accepted in or subordinate to Findings of Fact 58.

8. Accepted in or subordinate to Findings of Fact 54 and 65.

9. Accepted in or subordinate to Findings of Fact 65.

10. Accepted in or subordinate to Findings of Fact 68.

32-34. Accepted in or subordinate to Findings of Fact 66.

35. Accepted in or subordinate to Findings of Fact 68.

36-38. Accepted in or subordinate to Findings of Fact 69. 39-42. Accepted in or subordinate to Findings of Fact 7. 43-44. Accepted in or subordinate to Findings of Fact 66. 45-53. Accepted in or subordinate to Findings of Fact 70.

1. Accepted in or subordinate to Findings of Fact 66.

2. Rejected in Findings of Fact 70.

56-59. Accepted in Findings of Fact 68.

60. Accepted in or subordinate to Findings of Fact 66.

61-65. Accepted in or subordinate to Findings of Fact 58. 66-67. Accepted in or subordinate to Findings of Fact 57.

1. Accepted in Findings of Fact 54.

2. Accepted in or subordinate to Findings of Fact 71.

3. Accepted in Findings of Fact 54.

4. Accepted in Findings of Fact 42.

Petitioner, Hilliard Health Care's Proposed Findings of Fact.

1-2. Accepted in Findings of Fact 1.

3-4. Accepted in Preliminary Statement.

1. Accepted in Findings of Fact 13.

2. Subordinate to Findings of Fact 13 and 21.

3. Accepted in Findings of Fact 13.

8-9. Accepted in Findings of Fact 11.

1. Accepted in Findings of Fact 15.

2. Accepted.

12-15. Accepted in Findings of Fact 24.

1. Accepted in Findings of Fact 24 and 31.

2. Accepted in Findings of Fact 31.

3. Accepted in or subordinate to Findings of Fact 8.

4. Accepted in or subordinate to Findings of Fact 15 and 30.

5. Accepted in or subordinate to Findings of Fact 3, 4 and 9.

6. Accepted in Findings of Fact 15 and 30.

7. Accepted in Findings of Fact 15.

8. Accepted in or subordinate to Findings of Fact 28 and 31.

9. Accepted in or subordinate to Findings of Fact 24 and 31.

10. Accepted in Findings of Fact 16, 24 and 30.

26-27. Accepted in or subordinate to Findings of Fact 11, 15 and 22.

1. Accepted in or subordinate to Findings of Fact 30.

2. Accepted in or subordinate to Findings of Fact 16 and 30.

3. Accepted in Findings of Fact 30.

31-34. Accepted in part in Findings of Fact 17-19.

1. Accepted in Findings of Fact 30.

2. Accepted in relevant part in Findings of Fact 17-19. 37-38. Accepted in Findings of Fact 30.

1. Accepted in Findings of Fact 16 and 30.

2. Accepted in Findings of Fact 30.

3. Accepted in Findings of Fact 16-19.

4. Accepted in Findings of Fact 30.

5. Accepted in Findings of Fact 16-19.

6. Accepted in Findings of Fact 30.

7. Rejected in Findings of Fact 15.

8. Accepted in Findings of Fact 3.

9. Accepted in general in Findings of Fact 7 and 8. 48-49. Accepted in Findings of Fact 9.

1. Accepted in Findings of Fact 7.

2. Rejected as "lowest need" in Findings of Fact 7.

52-61. Accepted in or subordinate to Findings of Fact 5, 6 and 22. 62-65. Accepted in or subordinate to Findings of Fact 14-16 and 23.

1. Accepted.

2. Rejected in Findings of Fact 8.

3. Accepted in general in Findings of Fact 5-9.

4. Accepted in Findings of Fact 9.

5. Accepted in Findings of Fact 5-9.

6. Accepted in Findings of Fact 5-9 and 24.

7. Accepted in Findings of Fact 25.

8. Accepted in general in Findings of Fact 16-19.

9. Rejected as not at issue.

10. Accepted in Findings of Fact 28.

11. Subordinate to Findings of Fact 30.

77-79. Accepted in or subordinate to Findings of Fact 24 and 30. 80-85. Accepted in or subordinate to Findings of Fact 31-36.

1. Rejected except first sentence in Findings of Fact 21.

2. Rejected in Findings of Fact 21.

88-91. Accepted in or subordinate to Findings of Fact 21-22.

92. Accepted in Findings of Fact 8.

Respondent, AHCA's Proposed Findings of Fact

1. Accepted in Findings of Fact 13.

2-6. Accepted in or subordinate to Findings of Fact 11.

7. Accepted in Findings of Fact 12.

8-9. Accepted in or subordinate to Findings of Fact 47-49. 10-12. Accepted in or subordinate to Findings of Fact 39-41. 13-16. Accepted in or subordinate to Findings of Fact 24-26.

1. Accepted in or subordinate to Findings of Fact 42-44.

2. Accepted.

20-23. Accepted in or subordinate to Findings of Fact 4-9.

24. Accepted.

25-26. Accepted in Findings of Fact 15.

27-28. Accepted in Findings of Fact 15, 24-30 and 54.

1. Accepted in or subordinate to Findings of Fact 67.

2. Accepted in preliminary statement and Finding of Fact 1.

3. Accepted in Findings of Fact 15, 31, and 54.

4. Accepted in or subordinate to Findings of Fact 15, 30 and 55. 33-35. Accepted in or subordinate to Findings of Fact 16-19.

1. Rejected in Findings of Fact 22.

2. Accepted in Findings of Fact 66.

3. Accepted in Findings of Fact 61.

39-40. Accepted in or subordinate to Findings of Fact 56.

1. Accepted in Findings of Fact 60.

2. Accepted in or subordinate to Findings of Fact 54.

3. Accepted in or subordinate to Findings of Fact 53 and 56.

4. Accepted in or subordinate to Findings of Fact 47 and 61.

5. Accepted in or subordinate to Findings of Fact 47 and 56. 46-48. Accepted in or subordinate to Findings of Fact 66.

1. Accepted in or subordinate to Findings of Fact 65.

2. Accepted in or subordinate to Findings of Fact 69.

51-52. Accepted in or subordinate to Findings of Fact 13 and 21.

Conclusion rejected in Findings of Fact 21 and 23.

53-55. Accepted in or subordinate to Findings of Fact 13.

56. Rejected in Findings of Fact 22.

57-58. Accepted in or subordinate to Findings of Fact 15 and 21.

59. Rejected in Findings of Fact 22 and 23.

60-64. Accepted in or subordinate to Findings of Fact 49 and 70.

65-66. Rejected in Findings of Fact 70 and in conclusions of law 76.

67. Accepted in Findings of Fact 67.

68-69. Accepted in or subordinate to Findings of Fact 15.

70-75. Accepted in or subordinate to Findings of Fact 57-60, except "probable" in last sentence of proposed findings of fact 74. (See, T-p 2197.)

1. Accepted in Findings of Fact 30.

2. Accepted in Findings of Fact 11 and 15.

3. Accepted in Findings of Fact 54 and 71.

4. Accepted in Findings of Fact 54.

5. Accepted in Findings of Fact 31.

Petitioner/Respondent, Beverly's Proposed Findings of Fact.

1. Accepted in preliminary statement and Findings of Fact 1.

2. Accepted in preliminary statement and Findings of Fact 1 and 37.

3. Accepted in preliminary statement and Findings of Fact 1.

4. Accepted in Findings of Fact 45 and 46.

5. Accepted in preliminary statement.

6. Accepted in Findings of Fact 48.

7. Accepted in Findings of Fact 47.

1. Accepted in Findings of Fact 43.

2. Accepted in Findings of Fact 42.

3. Accepted in Findings of Fact 51.

4. Accepted in Findings of Fact 6.

5. Accepted in Findings of Fact 27.

6. Accepted in or subordinate to Findings of Fact 37 and 50. 16-17. Accepted in or subordinate to Findings of Fact 51.

1. Accepted in or subordinate to Findings of Fact 52.

2. Rejected in general in Findings of Fact 52.

20,22. Accepted in or subordinate to Findings of Fact 51 and 54.

23-24. Accepted in or subordinate to Findings of Fact 39, 42 and 47.

25 Accepted in Findings of Fact 39, 42, 47 and 56.

1. Accepted in or subordinate to Findings of Fact 56.

2. Accepted in Findings of Fact 56.

28-29. Accepted in relevant part in Findings of Fact 59 and 60.

30. Accepted in Findings of Fact 61.

31-32. Accepted in or subordinate to Findings of Fact 62, 63 and 64.

1. Accepted in Findings of Fact 65.

2. Subordinate to Findings of Fact 65.

3. Rejected as speculative.

4. Rejected conclusion in Findings of Fact 65.

5. Accepted in general in Findings of Fact 65.

6. Accepted in Findings of Fact 66.

7. Accepted in general except conclusion in Findings of Fact 66. 40-42. Accepted in or subordinate to Findings of Fact 66.

1. Accepted in or subordinate to Findings of Fact 54.

2. Accepted in Findings of Fact 67.

3. Accepted in Findings of Fact 50.

4. Rejected conclusion in Findings of Fact 65.

5. Accepted in Findings of Fact 68.

6. Accepted in or subordinate to Findings of Fact 66 and 68.

7. Accepted in Findings of Fact 68.

50-51. Accepted in Findings of Fact 69.

1. Accepted in Findings of Fact 66.

2. Accepted in Findings of Fact 70.

54-55. Accepted in or subordinate to Findings of Fact 70. 56-58. Accepted in or subordinate to Findings of Fact 70.

1. Rejected, as irrelevant based on previous interpretations by AHCA, in Findings of Fact 68.

2. Accepted in Findings of Fact 68.

3. Accepted in or subordinate to Findings of Fact 54.

62-64. Accepted in or subordinate to Findings of Fact 57-60.

65-66. Accepted in or subordinate to Findings of Fact 54 and 71.

67. Accepted, but list not construed as exclusive in Findings of Fact 56. 68-69. Accepted in Findings of Fact 50.

1. Accepted in preliminary statement and subordinate to Findings of Fact

   50.

2. Accepted in Findings of Fact 50.

3. Accepted in or subordinate to Findings of Fact 54 and 71.

Petitioner, Unicare's Proposed Findings of Fact.

1. Accepted in Findings of Fact 37 and 39. 2-3. Accepted in Findings of Fact 39.

1. Accepted in Findings of Fact 40, 41, and 66.

2. Subordinate to preliminary statement.

3. Accepted in Findings of Fact 1.

7-8. Accepted in or subordinate to Findings of Fact 5-8 and 51.

1. Accepted in Findings of Fact 39.

2. Accepted in Findings of Fact 40.

3. Subordinate to preliminary statement and Findings of Fact 39. 12-13. Accepted in or subordinate to Findings of Fact 70.

14-16. Accepted in relevant part in Findings of Fact 52.

17. Accepted in or subordinate to Findings of Fact 66.

18-22. Accepted in or subordinate to Findings of Fact 70.

1. Accepted in Findings of Fact 54 and 71.

2. Accepted.

3. Subordinate to Findings of Fact 65.

26-27. Accepted in or subordinate to Findings of Fact 54.

1. Accepted in preliminary statement.

2. Accepted in or subordinate to Findings of Fact 56.

3. Accepted in or subordinate to Findings of Fact 65.

31-32. Accepted in or subordinate to Findings of Fact 66.

1. Accepted in Findings of Fact 57.

2. Accepted in Findings of Fact 66.

3. Subordinate to Findings of Fact 54.

36-39. Accepted in or subordinate to Findings of Fact 53.

40-41. Accepted in or subordinate to Findings of Fact 57 and 60.

1. Accepted in or subordinate to Findings of Fact 69.

2. Accepted in or subordinate to Findings of Fact 57 and 60. 44-48. Accepted in Findings of Fact 39 and 61.

49-52. Accepted in or subordinate to Findings of Fact 53 and 56.

53-62. Accepted in or subordinate to Findings of Fact 57 and 60. 63-68. Accepted in or subordinate to Findings of Fact 70.

1. Accepted in or subordinate to Findings of Fact 66.

2. Accepted in Findings of Fact 70.

71-75. Accepted in or subordinate to Findings of Fact 7 and 51. 76-78. Accepted in or subordinate to Findings of Fact 52.

79. Accepted in Findings of Fact 53.

80-81. Accepted in or subordinate to Findings of Fact 54. 82-83. Accepted in or subordinate to Findings of Fact 56.

84. Accepted in or subordinate to Findings of Fact 57 and 60. 85-86. Accepted in or subordinate to Findings of Fact 61.

1. Accepted in Findings of Fact 64.

2. Accepted in Findings of Fact 65.

89-90. Accepted in or subordinate to Findings of Fact 66.

1. Accepted in Findings of Fact 54.

2. Accepted in Findings of Fact 67.

93-94. Accepted in or subordinate to Findings of Fact 57, 59 and 60.

95. Accepted in or subordinate to Findings of Fact 70.

96-103. Rejected as having been modified and adjusted in Findings of Fact

70.

1. Accepted in Findings of Fact 64.

2. Rejected in Findings of Fact 64.

3. Accepted in general in Findings of Fact 67.

4. Rejected in Findings of Fact 66 and 67.

5. Accepted in Findings of Fact 52.

6. Accepted in or subordinate to Findings of Fact 65.

7. Accepted in or subordinate to Findings of Fact 60.

8. Accepted in Findings of Fact 57-60.

9. Accepted in Findings of Fact 42 and 44.

10. Accepted in Findings of Fact 42.

11. Rejected as not supported by the record.

12. Accepted in Findings of Fact 45 and 46.

13. Accepted in Findings of Fact 64.

14. Accepted in or subordinate to Findings of Fact 66.

15. Accepted in Findings of Fact 61.

16. Accepted in Findings of Fact 57.

COPIES FURNISHED:

Douglas L. Mannheimer, Esquire Jay Adams, Esquire

Broad & Cassel

Post Office Box 11300 Tallahassee, Florida 32302

Theodore E. Mack, Esquire Cobb, Cole & Bell

131 North Gadsden Street Tallahassee, Florida 32301

W. David Watkins, Esquire Patricia Renovitch, Esquire Oertel, Hoffman, Fernandez & Cole 2700 Blair Stone Road, Suite C Post Office Box 6507

Tallahassee, Florida 32314-6507

R. Bruce McKibben, Jr., Esquire Pennington, Haben, Wilkinson,Culpepper,

Dunlap, Dunbar, Richmond & French, P.A.

215 South Monroe Street, 2nd Floor Post Office Box 10095

Tallahassee, Florida 32302

Lesley Mendelson, Esquire

Agency for Health Care Administration

325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131

R. S. Power, Agency Clerk

Agency for Health Care Administration Atrium Building, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Tom Wallace Assistant Director

Agency For Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

Petitioners, 7488P, 7489

7491, 7492

vs. RENDITION NO.: AHCA-95-FOF-CON

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION AND DIXIE HEALTH CARE CENTER, L. P.,

Respondents.

/

FINAL ORDER PRELIMINARY STATEMENT

The agency published a need for 295 nursing home beds in District 3 for the second batching cycle of 1993. Petitions challenging the agency's initial decisions were referred to DOAH, consolidated, and the competing proposals to meet the need were comparatively reviewed in a 17 day hearing. At issue are five proposals competing for 186 beds of the 295 bed fixed need pool; the difference is the number of beds initially approved and no longer subject to challenge. Three applicants propose to establish 120 bed facilities in Lake County. One applicant proposes a 60 bed facility in Sumter County. The local health council rated the planning area of Lake and Sumter Counties as having the greatest need. One applicant proposes to establish a 60 bed facility in Dixie County. The planning area of Alachua, Dixie, Gilchrist, and Levy Counties was also given a priority rating by the local council. The hearing officer recommends approval of Unicare's proposal to establish a 120 bed facility in or near Lady Lake, the municipality with the fastest rate of population increase in Lake County, but with no existing or approved nursing home beds. The hearing officer's recommendation that the other applications be denied would leave 66 of the 186 need pool unawarded. It is relevant that the hearing officer found in paragraph 8 that there is no evidence that new beds are not needed or that the need is based on any inefficiency or quality of care problems in existing nursing homes.

RULING ON EXCEPTIONS FILED BY AHCA

Counsel excepts to the finding in paragraph 73 that Unicare's proposal would improve access within the planning area. The record supports Unicare's commitment to locating a nursing home in or adjacent to the municipality of Lady

Lake. The data cited by the hearing officer regarding the dispersal of nursing homes in the planning area (Lake and Sumter Counties) is compelling. As of January 1994 there were 460 beds in Leesburg, 142 in Clermont, 236 in Mount Dora and 377 in Eustis, and none in Lady Lake. The local plan favors the dispersal of nursing homes. The hearing officer notes that Lady Lake is the third largest municipality in Lake County, and is projected to be the largest by the year 2000. See paragraphs 50, 52, and 85. The exception is denied.

Counsel excepts to paragraph 76 as implying that the weighing of the review criteria is a matter of ordinary fact finding reviewable by the agency only under the competent, substantial evidence rule. The weighing of the review criteria established by the Health Facility and Services Development Act, Section 408.031 - 408.045, Florida Statutes, is a policy making function which is the responsibility of AHCA. Thus, the weighing of the criteria is a discretionary matter for AHCA. The exception is granted.

Regarding paragraph 80, counsel suggests that an obvious and harmless error in the newspaper notice required by Rule 59C-1.008(i), is not fatal to an application. I concur.

RULING ON EXCEPTIONS FILED BY BEVERLY

Counsel requests correction of the name of applicant's parent corporation in paragraph 47. The applicant is Beverly Enterprises - Florida, Incorporated. The parent is Beverly California Corporation. Regarding paragraph 65, the entity fined by the State of Oregon was Beverly Enterprises - Oregon, Incorporated, another subsidiary of Beverly California Corporation.

Beverly excepts to the finding that Unicare would locate its proposed nursing home in Lady Lake. The hearing officer recognizes that Unicare's intention is not limited to locations within the municipal boundaries of Lady Lake. Unicare acknowledges that a site selection is not final, but intends to locate within Lady Lake or in one of the development communities adjacent to Lady Lake. The exception is denied.

Beverly excepts to the hearing officer's conclusion that AHCA could require Unicare to locate in or adjacent to Lady Lake. Section 408.040(1)(a), Florida Statutes, provides in relevant part as follows:

The department may issue a certificate of need predicated upon statements of intent expressed by an applicant in the application for a certificate of need.

The application form requires the applicant to certify that it will accept a CON conditioned on any statement of intent expressed in the application. The agency's statutory authority to condition a CON on the applicant's statement of intent is clear, and the agency can hold Unicare to its commitment to a location in or adjacent to Lady Lake. As an alternative position, Beverly requests that it now be allowed to commit itself to a Lady Lake location. Beverly did not commit in its application to a Lady Lake location, and its application cannot now be so amended because to allow amendment would violate the principles of comparative review enunciated in Gulf Court vs. Department of Health and Rehabilitative Services, 483 So2d 700 (Fla. 1st DCA 1985). Subsequent to the application being deemed complete by the agency, no further application information or amendment may be accepted by the agency, Rule 59C-1.01 0(2)(b).

Beverly excepts to the omission of laundry costs from Life Care's administrative costs per patient day. The correction is made; the correct amount is $26.89. It is noted that with this correction, Beverly's administrative costs are lower than Life Care and Unicare. Beverly excepts to paragraph 76. See the ruling on the agency's exception to paragraph 76.

Beverly challenges the hearing officer's finding that Unicare's projected construction costs are reasonable. The hearing officer credited Unicare's evidence on this issue including Unicare's experience with its contractor. See paragraphs 57 and 73. The finding is supported by competent, substantial evidence; therefore, the exception is denied.

Beverly excepts to the hearing officer's analysis and recommendation in weighing the review criteria. I concur with both the analysis and recommendation. As found by the hearing officer, the three companies competing for a CON for Lake County are experienced providers and propose to establish nursing homes exceeding the minimum standards. See paragraphs 72 and 84. Each company has, with limited exceptions, a record of providing superior quality of care in existing facilities. See paragraph 65. Unicare established that the greatest need for nursing home services in Lake County exists in Lady Lake.

Thus, the proposed location and the superior features in the design of the proposed nursing home tip the scales in favor of Unicare.

RULING ON EXCEPTIONS FILED BY DIXIE

Dixie challenges in whole or in part the findings of fact in paragraphs 9, and 16 through 23. The challenged findings are relevant and are supported by competent, substantial evidence. At this level of review the agency has no authority to reweigh the evidence; therefore, the exceptions are denied.

Heifetz vs. Department of Business Regulation, 475 So2d 1277, 1281 (Fla. 1st DCA 1985).

RULING ON EXCEPTIONS FILED BY HILLIARD

Hilliard's exception to paragraph 80 is addressed in the ruling on exceptions by AHCA. Having concluded that the publication error is harmless, and having accepted the hearing officer's findings that Dixie's application is not credible and its proposal is not financially feasible, I conclude that Hilliard's proposal for a 60 bed nursing home in Sumter County should be approved.

RULING ON EXCEPTIONS FILED BY LIFE CARE

Life Care points out that the issue regarding its capital projects list was resolved favorably to Life Care in Life Care vs. Agency for Health Care Administration, 1st DCA Number 94-3565, opinion of June 12,1995, motion for rehearing denied. Life Care challenges the findings that Unicare's intended location for its proposal is Lady Lake and that Unicare's projected construction costs are reasonable. The same issues were raised by Beverly and are addressed above. Life Care excepts to findings of fact in paragraphs 60, 73, and 76, that Unicare's and Beverly's proposals are better in certain respects than Life Care's. The findings are supported by competent, substantial evidence; therefore, the exceptions are denied.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of facts set forth in the Recommended Order except for the corrections made in 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 Unicare Health Facilities, Incorporated for CON 7489 to construct a 120 bed community nursing home be approved subject to the conditions recommended by the hearing officer and the condition that the nursing home be located in or adjacent to the municipality of Lady Lake. The application of Hilliard Healthcare, Incorporated, for CON 7485 to construct a 60 bed nursing home in Sumter County is approved. The applications of Beverly Enterprises - Florida, Incorporated; Life Care Centers of America, Incorporated; and Dixie Health Care Center, Limited Partnership, for CONs 7488 and 7488P, 7491, and 7492 respectively, are denied.

DONE and ORDERED this 13th day of September, 1995, in Tallahassee, Florida.

Douglas M. Cook, Director

Agency for Health Care Administration

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 to: Lesley Mendelson, Esquire

Senior Attorney, Agency for Health Care Administration 2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

Douglas L. Mannheimer, Esquire BROAD & CASSEL

215 S. Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302

Theodore E. Mack, Esquire COBB, COLE & BELL

131 North Gadsden Street Tallahassee, Florida 32301

W. David Watkins, Esquire OERTEL, HOFFMAN, FERNANDEZ & COLE, P. A.

Post Office Box 6507 Tallahassee, Florida 32314-6507

R. Bruce McKibben, Jr., Esquire PENNINGTON & HABEN, P. A.

Post Office Box 10095 Tallahassee, Florida 32302-2095

Eleanor M. Hunter Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550 Elizabeth Dudek (AHCA/CON) Alberta Granger (AHCA/CON)

Elfie Stamm (AHCA/CON)

CERTIFICATE OF SERVICE

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 September,1995.

R. S. Power, Agency Clerk State of Florida, Agency for

Health Care Administration 2727 Mahan Drive

Fort Knox 3, Suite 3431

Tallahassee, Florida 32308-5403

(904)922-3808

Docket for Case No: 94-002452CON

Orders for Case No: 94-002452CON