STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BEVERLY SAVANA CAY MANOR, INC., )

)

Petitioner, )

)

vs. ) Case No. 96-5432

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION and ARBOR HEALTH ) CARE COMPANY, )

)

Respondents. )

) LIFE CARE HEALTH RESOURCES, INC., )

)

Petitioner, )

)

vs. ) Case No. 96-5437

)

AGENCY FOR HEALTH CARE ) ADMINISTRATION and ARBOR HEALTH ) CARE COMPANY, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, these consolidated cases were heard by the Division of Administrative Hearings, through its designated Administrative Law Judge, David M. Maloney, on October 14, 16, 17, 22 and 23, 1997, in Tallahassee, Florida.

APPEARANCES

For Petitioner Jay Adams, Esquire

Beverly: Douglas L. Mannheimer, Esquire

Broad and Cassell

Post Office Drawer 11300 Tallahassee, Florida 32302-1300

For Petitioner R. Bruce McKibben, Jr., Esquire Life Care: Holland & Knight, LLP

Post Office Drawer 810 Tallahassee, Florida 32302-0810

For Respondent John L. Wharton, Esquire Arbor: Diane D. Tremor, Esquire

Rose, Sundstrom & Bentley, LLP 2548 Blairstone Pines Drive Tallahassee, Florida 32301

For Respondent Richard Patterson, Esquire AHCA: Office of the General Counsel

Agency for Health Care Administration Post Office 14229

Tallahassee, Florida 32317-4229 STATEMENT OF THE ISSUES

Which one of three Certificate of Need applications for a new nursing facility in AHCA Nursing Home District 3 should be granted: Beverly Savana Cay Manor, Inc.’s; Life Health Care Resources, Inc.’s; or Arbor Health Care Company’s?

PRELIMINARY STATEMENT

Petitioners Beverly Savana Cay Manor, Inc., (Beverly); Life Care Health Resources, Inc., (Life Care); and Arbor Health Care Company (Arbor) each submitted to the Agency for Health Care Administration (the "Agency" or AHCA) applications in the same nursing home batching cycle for Certificates of Need to construct and operate new nursing facilities in AHCA’s Nursing Home District 3. The Agency preliminarily granted Arbor’s application and denied the other two.

Petitions for Formal Administrative Hearing were filed with AHCA by both Beverly and Life Care. The petitions were referred to the Division of Administrative Hearings by AHCA with a request that a Hearing Officer (Administrative Law Judge) be assigned to conduct all necessary proceedings under law. The petitions were

assigned Case Nos. 96-5432 and 96-5437 and were consolidated with a number of other cases including a challenge to AHCA’s determination of numeric need for short term nursing home beds for the first nursing home batching cycle of 1996, (DOAH Case

No. 96-3220). Eventually, all of the consolidated cases, save 96-5432 and 96-5437, were disposed of at the Division of Administrative Hearings short of reaching final hearing. These two cases ultimately proceeded to hearing during the two weeks beginning October 14, 1997.

Prior to hearing, the parties stipulated to a number of facts and to each of the three applicants’ compliance with many of the statutory and regulatory criteria for the issuance of a Certificate of Need. The parties' Prehearing Stipulation was amended at hearing to include the stipulation that each of the three applicants has a history of and can provide adequate quality of care. The stipulation was without prejudice to the introduction of evidence regarding accreditation by the Joint Commission on Accreditation for Healthcare Organizations (JCAHO). The stipulation left four issues remaining for determination in the proceeding: the most appropriate location within the district for a new nursing facility; the extent and quality of services proposed by each of the applicants; the applicants’ commitment to provide Medicaid services; and certain salary projections contained within Arbor’s application as they relate to the financial feasibility of Arbor’s proposed project.

Beverly proceeded first at hearing. It presented the testimony of Taffey Bisbee, expert in Health Planning. Beverly Exhibits 1-4 were admitted into evidence.

Life Care proceeded next. It called as witnesses: James S. Weigard, expert in Health Planning; Richard A. Stern, expert in nursing home development and financial feasibility; Carla Treggett, expert in nursing-home Alzheimers and dementia programs and procedures; and Ann P. Brown, expert in long-term care nursing, including quality of care and subacute services. Life Care’s Exhibits 1-6 were admitted into evidence.

Arbor presented the testimony of Dale S. Zaletel, expert in the operation and administration of nursing homes, including those with subacute units; Dan Sullivan, expert in health care planning and health care finance, including financial feasibility; Joe Mitchell, expert in health care finance, health care accounting, financial feasibility and Medicare reimbursement; and Yvonne Rubright, expert in long-term and subacute nursing and quality assurance and improvement. Arbor’s Exhibits 2-6 were admitted into evidence. Arbor’s Exhibit 1, an excerpt from Life Care Application 8090, was marked but not offered or admitted.

The Agency for Health Care Administration adopted the testimony and exhibits presented and offered by Arbor.

The first two volumes of the transcript were filed

October 20, 1997; the last three volumes of the five-volume transcript were filed November 20, 1997. Proposed Recommended Orders of the parties were all timely filed January 12, 1998. Beverly and Life Care filed individual proposed orders; Arbor and AHCA filed a joint proposed order.

FINDINGS OF FACT

1. The Parties and The Applications

   
   

   1. Beverly

      
      

      1. Beverly Savana Cay Manor, Inc., is a wholly-owned subsidiary of Beverly Enterprises, Inc., the largest provider of nursing-home care in the nation.

      2. Beverly is proposing to construct a 120-bed freestanding nursing home in Marion County from which it proposes to provide hospice services, respite services and, for six days a week, inpatient and outpatient therapy services. The nursing home, if constructed, will contain a 16-bed Medicare unit and a 20-bed secured Alzheimer’s unit.

      3. The Beverly application is conditioned upon providing at least 55 percent of its patient days to Medicaid patients. In addition, Beverly proposes to provide 0.2 percent of its patient days to indigent and charity patients. Beverly proposes to provide care to residents who are HIV positive or have AIDS. If the application is approved, Beverly will contribute $10,000 to a geriatric research fund.

   2. Life Care

      
      

      1. Life Care is a new, start-up corporation formed initially for the purpose of seeking a CON for a nursing home in Hernando County. Life Care’s plan is that it be operated by Life Care Centers of America, Inc. (LCCA), a privately owned Tennessee corporation authorized to business in Florida. LCCA owns, operates, or manages over 185 nursing homes with over 22,700 beds and retirement center units in 28 states. It is the largest privately owned nursing-home company in the United States.

      2. Life Care’s application proposes construction and operation of a 120-bed nursing home in Hernando County. The nursing home will include a 20-bed secured Alzheimers/dementia care unit and a state-of-the-art adult care unit. In fact, Life Care has agreed to condition approval of its application on inclusion of these two units. Additionally, it has agreed to a condition of service of Medicaid residents at the district average (69.26 percent) at least.

      3. Life Care proposes a broad range of Specialized Programs, including care of AIDS victims, respite care, and care to hospice clients and outpatient rehabilitative care. Its inpatient care will include a 20-bed Medicare unit, within which will be at least 12 beds for "subacute" services.

   3. Arbor

      
      

      1. Headquartered in Lima, Ohio, Arbor Health Care Company has 27 facilities located in five states. Twelve of the

         facilities are in Florida but none of its licensed facilities are in District 3. Of the twelve in Florida, eleven are JCAHO accredited, with the twelfth, newly-licensed, scheduled at the time of hearing for an accreditation survey in December of 1997. Ten of the eleven accredited facilities are also accredited for subacute care.

      2. Arbor’s accreditation record is outstanding compared to both the 600 nursing facilities in Florida, 93 of which are JCAHO accredited and 49 of which are accredited for subacute care, and the national record of accreditation of nursing home facilities in subacute care, 23 percent. This record, too, is demonstrative of Arbor’s progress in carrying out its corporate mission: to be the premier subacute provider of long-term care services.

      3. Consistent with its mission, Arbor proposes a distinct subacute unit to serve patients with digestive diseases and patients in need of ventilator therapy, infusion therapy, wound care, and cardiac therapy. In addition to subacute services, Arbor proposes to serve residents with dementia, including Alzheimer’s, by utilizing a strongly-developed, individualized- care plan with an interdisciplinary approach implemented upon admission and subject to continuous review and, if necessary, revision. Arbor's application, however, distinctly different from Beverly’s and Life Care’s, does not propose a secured Alzheimer’s unit.

      4. Arbor proposes comprehensive rehabilitation care for its patient and residents, as well as outpatient rehabilitation services for both former residents and residents throughout the community.

      5. Arbor proposes to provide 0.2 percent of all patient days for charity care and 69.26 percent of all patient days for Medicaid patients within its 104-bed long-term facility. Medicaid patients will also be served in the 16-bed subacute unit. In addition, Arbor proposes to provide, at a minimum, one percent of its patient days for hospice care, respite care, the

         care of AIDS patients, and the care of pediatric patients. Arbor is committed to such services, as well as the provision of both inpatient and outpatient intensive rehabilitative programs, and has agreed to condition its award of a Certificate of Need upon such commitments.

      6. Arbor is the only one of the three applicants committed to provide care and services to pediatric patients.

2. Location

   
   

   1. Introduction

      
      

      1. The issue on which these cases turn is location within District 3. (There are other issues in this case certainly. For one reason or another, their disposition will not determine the outcome of this case. Not the least among the other issues is whether Beverly or Life Care should be favored over Arbor because they propose secured Alzheimer’s units. This issue, however

         important and subject to whatever quality of debate, is not dispositive because at present it has no clear answer. See Findings of Fact Nos. 43-45, below.)

   2. District 3

      
      

      1. Comprised of 16 counties located as far north as the Georgia state line and southwest to Hernando County, District 3 is the largest AHCA Nursing Home District area-wise. The District is not divided into subdistricts for the purpose of applying the state methodology to determine numeric need of additional nursing home beds. Among the 16 counties in the district are Marion, Hernando and Citrus.

   3. The Applicant’s Proposed Locations

      
      

      1. Beverly proposes to construct its 120-bed freestanding nursing home in Marion County. The specific proposed location is south of the City of Ocala, east of State Road 200 and west of Maricamp Road. From this location, Beverly would serve primarily residents of Marion County, but would also be accessible to residents of Citrus, Lake and Sumter Counties.

      2. Life Care proposes to construct its 120-bed nursing home in the Spring Hill area of Hernando County.

      3. Arbor proposes to locate its 120-bed nursing home in Citrus County. It did not propose a specific location within the County.

   4. The Best Location

      
      

      1. Conflicting qualified opinions were introduced into evidence by each of the three applicants. Each applicant, of course, presented expert testimony that its proposed location was superior to the locations proposed by the other two.

      2. In its preliminary decision, AHCA approved Arbor’s application and denied the other two. AHCA continues to favor Citrus County as the best location for a new 120-bed nursing home in District 3. At bottom, AHCA’s preliminary decision is supported by Arbor's proposal to locate in the county among Marion, Hernando and Citrus Counties with the greatest need: Citrus.

      3. This basis underlying, and therefore, the Agency’s preliminary decision, is supported by the findings of fact in paragraphs 21-35, below.

3. Allocation of Nursing Home Beds Within AHCA Nursing Home District 3

   
   

   1. Although the district is identified as a single entity for purposes of the state methodology utilized to determine the need for additional nursing home beds, the local planning council divides the district into geographic units or planning areas in order to specify preferences for the allocation of nursing homes within the district. The North Central Florida Health Planning Council, Inc., has created seven planning areas in District 3.

   2. The local health plan utilizes a priority-setting system to identify the relative importance of adding beds to

      specific planning areas. After establishing well-defined priorities for geographically-underserved areas and designated occupancy thresholds, the priority-setting system creates a decision matrix: the Planning Area Nursing Home Bed Allocation (PANHAM). The matrix is based on the population at risk, bed supply (both licensed and approved), and occupancy levels within the planning area.

   3. The allocation factors in the local health plan are particularly significant with respect to District 3 in light of its lone stance among the Agency’s Nursing Home Districts as lacking a process for allocating number of beds needed to the individual subdistrict. The local health plan provides "the only road map or the only guidance" (Tr. 311) as to how to allocate beds within District 3.

   4. The local health plan bases its occupancy priorities upon both licensed and approved beds within each planning area. From a planning perspective, it is reasonable and appropriate to calculate occupancy rates based upon both licensed and approved beds in assessing the need for additional beds. The number of approved beds is a measure of how much additional capacity will be on line in the near future. To ignore the number of approved beds in the evaluation of where to allocate new beds is not a good health planning technique.

   5. The three counties in which Beverly, Life Care and Arbor propose to locate are each separate planning areas in the

      local health plan. Marion is Planning Area 4; Hernando and Citrus are 6 and 5, respectively.

   6. The preferences contained within the local health plan for the allocation of nursing home beds within District 3 are listed in terms of importance and priority. Allocation factors "[t]wo and three really are the basis . . . for figur[ing] out in this huge district of 16 counties, how [to] make sense of where the beds ought to go." (Tr. 312.) The first of these is for applicants proposing to develop nursing home beds in geographically-underserved areas. None of the planning areas designated by the three applicants in this proceeding meet this geographic-access priority.

   7. The second of these two allocation factors, Allocation Factor 3, assigns a number of priorities in order of significance. These priorities are based primarily upon occupancy or utilization and need determined by the number of beds per area residents of 75 years of age and older. The first priority in Allocation Factor 3 is "an acid test." (Tr. 312.)

      It states that no nursing home beds should be added in a planning area until the number of nursing home days, considering both licensed and approved beds, for the most recent six months is 80 percent. It is only when an applicant meets this threshold that the remaining priorities in Allocation Factor 3 are considered.

      If the 80-percent priority is not met in a planning area, then

      the area should be given no further consideration for the allocation of beds.

   8. The only planning area of the three at issue in this case which meets the 80-percent occupancy standard is Planning Area 5, Citrus County.

   9. At the time the original fixed need pool for District 3 was published for the batching cycle applicable to this case, Citrus County had 69-approved nursing home beds. Hernando County had 147 (including 27 hospital-based skilled nursing beds), and Marion County had 234 approved beds. The most recent data available at the time of hearing show no new beds in Citrus or Hernando Counties but 309 new beds approved for Marion County. Utilizing the most recent data regarding the number of licensed and approved beds in Citrus, Hernando and Marion Counties, Citrus County remains the only planning area of the three which meets or exceeds the 80 percent occupancy threshold.

   10. Assuming that the remaining priority factors contained within the PANHAM matrix are applicable, none of the three applicants received a priority ranking under the PANHAM methodology. Applying the most recent data available, however, only Citrus County is moving toward the highest priority of high need and high occupancy. Both Marion County and Hernando County are moving away from the highest priority.

   11. Excluding the two counties within District 3 which have no nursing home beds (Dixie and Union), Hernando County has the

       lowest bed-to-elderly population ratio in the District. Considering occupancy rates over the past three years based solely upon licensed beds, Hernando County has demonstrated a marked decrease in utilization. Thus, even though Hernando has had a growth in population and experiences a lower bed-to- population ratio than the District as a whole, there is no stress on the nursing home bed supply in Hernando County. There is, moreover, no evidence of a high need to add additional bed capacity in Hernando County. The recently opened 120-bed Beverly nursing home in Spring Hill will serve to suppress or depress the overall rate of occupancy in Hernando County, making the occupancy rate even lower.

   12. There are a number of reasons why an area that has a relatively low bed-to-population ratio may also experience low occupancy. While a county or a planning area is defined by political boundaries, people do not necessarily stay within those boundaries for nursing home services. Socio-economic factors, the quality of existing nursing home services and the existence of alternatives, such as assisted living facilities, driving times and distances, the proximity of family, all may play a role in determining occupancy rates in a particular area.

   13. With regard to Planning Area 6, Hernando County, there are five nursing homes in northern Pasco County within a 15-mile radius of the center of Spring Hill, Life Care’s proposed location. Three of the four existing nursing homes in Hernando

       County have had downward occupancy trends. Occupancy rate may be expected to further drop with the recently licensed 120-bed facility in Spring Hill.

   14. Marion County has far and away the highest number of approved beds and a very high ratio of approved beds to licensed beds, thus providing significant additional capacity in that planning area.

   15. While the local health plan for District 3 affords no priorities based upon data concerning patient origin, Beverly attempted to demonstrate a greater need for additional beds in Marion County, as opposed to Citrus County, through patient origin information reported in those two counties. Beverly concluded that while 99 percent of the Citrus County population placed in a nursing home seek care within Citrus County, only 78 percent of Marion County residents placed in a nursing home seek nursing home care in Marion County. A 1996 nursing home data report showed that 147 Marion County residents sought nursing home care outside of Marion County, primarily in adjacent Levy, Sumter and Citrus Counties.

   16. Beverly’s analysis fails to establish need in Marion greater than in Citrus. First, it fails to take into account the

       309 approved beds which will significantly add to Marion County’s capacity. Second, Citrus County’s occupancy rates are slightly higher than Marion County’s. Third, the data relied upon by Beverly’s expert performing the analysis is incomplete in that

       two or three nursing homes in Marion County did not report any data regarding patient origin. And finally, there are a number of reasons, found above, for why residents of one planning area choose a nursing home in another planning area.

4. The Extent and Quality of Services

   
   

   1. Overview

      
      

      1. The District 3 local plan expresses a preference and priority for applicants which propose specialized services to meet the needs of identified population groups. Examples of such services include care for special children, care for Alzheimer’s or dementia patients, subacute care, and adult day care.

      2. Only a small percentage of nursing home care is provided to children. Proposing such care does not in the ordinary nursing home case carry much weight. Nor was there any demonstration that there is an unmet need for pediatric nursing home services in District 3. Nonetheless, it is at least noteworthy that only Arbor proposes care for special children as part of its pediatric services; the other two do not propose pediatric care at all.

      3. Arbor is also the only applicant that demonstrated a need for subacute care in its planning area and that is committed to provide such care. Utilizing a reasonable methodology, Arbor demonstrated a need for 41 additional subacute care beds in Citrus County. Arbor’s 16-bed subacute unit is consistent with that demonstrated need. While Beverly and Life Care propose to

         offer skilled, short-term services, neither proposes a distinct subacute unit. Indeed, Beverly’s skilled Medicare unit will not provide subacute care or services. Life Care’s subacute "program" will be implemented only if management later verifies a community need for such a program.

      4. While Life Care proposes to offer adult day care for five clients, Life Care did not identify a need for such services in Hernando County.

      5. Each of the applicants proposes to offer services and programs for residents with Alzheimer’s disease or dementia and each intends to service AIDS patients, provide respite care, and offer rehabilitation therapy services.

      6. Given the mix of services proposed, as well as Arbor’s commitment to such services, Arbor best meets the local health plan’s priority for the provision of specialized services to meet the needs of identified population groups.

   2. Subacute Care

      
      

      1. Arbor will offer a full range of subacute services, programs, and staffing it in its quest to be a premier provider of subacute services. In contrast, neither Beverly nor Life Care demonstrated a need for subacute care in their districts. In keeping with this lack of demonstration, neither Beverly nor Life Care made any commitment to a dedicated and distinct subacute unit or the provision of such services.

   3. Care for Alzheimer’s and Dementia Patients

      1. Approximately 50 percent of residents within nursing homes suffer from Alzheimer’s Disease or some form of related dementia. All three applicants propose to serve such patients and offer specified programs and rehabilitative services to these patients.

      2. Arbor, however, differs from Beverly and Life Care in its approach to treating those with Alzheimer’s. Beverly and Life Care propose secured, dedicated Alzheimer’s units. Arbor, while clustering patients within the facility in terms of the level of care and resources which each requires, follows a policy of mainstreaming residents with Alzheimer’s within the general nursing home population.

      3. There is a difference of opinion in the health care community as to which approach is better: secured, dedicated Alzheimer’s units or mainstreaming. There are both positive and negative aspects to dedicated, secured Alzheimer’s units. And it may turn out that the positive aspects prevail ultimately. But, at present, the results of research are inconclusive. The conclusion cannot yet be drawn that a secured, dedicated unit provides a more effective manner, either from a clinical standpoint or a cost-effective standpoint, of treating and caring for Alzheimer’s or dementia patients.

5. Medicaid Services

   
   

   1. Florida’s State Health Plan expresses a preference for applicants proposing to serve Medicaid residents in proportion to

      the average subdistrict-wide percentage of the nursing homes in the same subdistrict. Since District 3 is not divided into subdistricts, the applicable comparison is the average District Medicaid utilization: 69.26 percent at the time the applications were filed.

   2. Beverly proposes to offer only 55 percent of its patient days to Medicaid patients. Beverly showed that Medicaid utilization has been declining in Marion County to the point at the time of hearing that it was 58 percent. But even if it were appropriate to use Marion County as the equivalent of a subdistrict, Beverly’s commitment would not match the Marion County rate, a rate lower than the district-wide rate. Beverly does not qualify for the preference.

   3. Life Care proposes 69.5 percent of its total patient days to Medicaid patients. Life Care qualifies for the preference.

   4. Arbor proposes to commit 69.26 percent of its patient days to Medicaid residents in the 104-bed long-term unit of its facility, or a minimum of 67 long-term care beds. In addition, Arbor will dually-certify some of its Medicare-certified beds for Medicaid in its subacute unit for patients who are either admitted on Medicaid or would convert of Medicaid.

   5. Typically, an applicant’s commitment to provide a certain percentage of its patient days for services to Medicaid patients is expressed in terms of patient days for the total

      facility. This batching cycle, however, was unique in that AHCA created a separate subset of nursing home beds, known as short- term beds, and required that separate applications be filed by applicants proposing both long-term and short-term beds.

   6. The partition created a problem for each applicant because it set up the possibility that one of the applicant's applications (either the short-term or the long-term) would be approved and the other denied.

   7. Arbor solved the problem by considering its 104-bed long term application as an application for a stand-alone project. Beverly and Life Care did not have the problem since they do not intend to have subacute units within their proposed facility. For facilities approved by more than one CON, AHCA uses a blended rate for monitoring compliance with CON conditions. For Arbor’s application, therefore, one could argue that a blended rate of 60.03 percent, composed of 69.23 percent for 104 beds and 0 percent for the 16 subacute beds, which is the rate Arbor proposes for the entire 120-bed facility, should apply. Whether applying a blended rate or using the rate applicable to long-term beds, Arbor is entitled to the State Health Plan preference for service to Medicaid patients.

6. Financial Feasibility

1. With one exception, all parties stipulated that each of the three applicants propose projects that are financially feasible both immediately and on a long-term basis. The

   exception relates to the listing in Arbor’s application in Schedule 6 of understated proposed wages for certified occupational therapy assistants (COTAs) and licensed physical therapy assistants (LPTAs).

2. The evidence establishes that through inadvertence, Arbor mislabeled the line item designated as COTAs and LPTAs. The item should have borne a description of therapists aides instead of licensed therapists. Had the item been correctly described, the wages listed were salary levels comparable to wages experienced in other Arbor facilities. The error is

   harmless. The licensed assistants, that is, the COTAs and LPTAs, were included under the therapist line items within Arbor’s Schedule 6. Thus, the total salary expenses reflected in the schedule are accurate and Arbor’s project is financially feasible in the second year of operation.

3. Even if Arbor has misstated the total amount of salaries for therapists and aides in Schedule 6, Arbor’s project would still be financially feasible because the majority of those costs would be allocated to the Medicare unit and would be reimbursed by the Medicare program. Arbor would continue to show a profit (approximately $189,000) in the second year of operation.

4. Arbor’s proposed project is financially feasible in both the short and long terms.

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties in this proceeding. Sections 120.569, 120.57(1) and 408.039(5), Florida Statutes.

6. The three applicants carry the burden of proving that their applications meet the statutory and rule criteria for approval of the Certificates of Need they seek. Boca Raton Artificial Kidney v. Department of Health and Rehabilitative Services, 475 So. 2d 260 (Fla. 1st DCA 1985). The award of a Certificate of Need must be based upon balanced consideration of the criteria applicable by law, including the preferences expressed in the state and local health plans. Department of Health and Rehabilitative Services v. Johnson Home Health Care, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1988). The weight to be given each criterion is not fixed but varies depending on the facts of the case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985).

7. On balance, each of the applicants meets the criteria for approval. The parties stipulated that the applicants must meet the bulk of the statutory and rule criteria for issuance of a CON. As for the litigated issues, three of them do not hurt any of the applicants. Arbor’s proposed project is financially

   feasible in the short and the long terms. Life Care and Arbor have made adequate Medicaid commitments; Beverly has not, although this shortcoming on Beverly’s part is not given much weight since its commitment is a minimum and close to the Medicaid percentage in Marion County. In actual operation, Beverly could easily meet the Medicaid needs of Marion County and perhaps the district. The three applicants have proposed adequate specific services based on extent, quality, and need.

8. The issue which is determinative in this comparative proceeding is location. Simply put, Citrus County is a better location for a new 120-bed nursing home facility than either Marion or Hernando. As the proposer of locating in Citrus County, Arbor is the prevailing applicant; Beverly and Life Care, proposing to locate in Marion and Hernando Counties, respectively, are not.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:

The applications of Arbor Health Care Company (CON Application Numbers 8471L and 8471S) to construct and operate a 120-bed nursing home facility in Citrus County be GRANTED; and the applications of Beverly Savana Cay Manor, Inc. (CON Applications Numbers 8484L and 8484S) and Life Care Health Resources, Inc. (CON Applications Numbers 8479L and 8479S) to

construct and operate 120-bed nursing home facilities in Marion and Hernando Counties, respectively, be DENIED.

DONE AND ORDERED this 17th day of February, 1998, in Tallahassee, Leon County, Florida.

DAVID M. MALONEY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 1998.

COPIES FURNISHED:

Diane D. Tremor, Esquire John L. Wharton, Esquire

Rose, Sundstrom & Bentley, LLP 2548 Blairstone Pines Drive Tallahassee, Florida 32301

R. Bruce McKibben, Esquire Holland & Knight, LLP

Post Office Box 810

Tallahassee, Florida 32301-0810 Jay Adams, Esquire

Douglas L Mannheimer, Esquire Broad & Cassel

Post Office Box 11300 Tallahassee, Florida 32302-1300

Richard A. Patterson, Esquire Office of the General Counsel

Agency for Health Care Administration Post Office 14229

Tallahassee, Florida 32317-4229

Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Sam Power, Agency Clerk

Agency for Health Care Administration Fort Knox Building 3, Suite 3431

2727 Mahan Drive

Tallahassee, Florida 32308-5403

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order must be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 96-005432CON

Orders for Case No: 96-005432CON