STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMENDED RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Administrative Law Judge, J.D. Parrish, held a final hearing in the above-styled case on June 2-15, 2009, in Tallahassee, Florida.

APPEARANCES

For Petitioner Punta Gorda HMA, LLC d/b/a Charlotte

Regional Medical Center:

Geoffrey D. Smith, Esquire Susan C. Smith, Esquire Smith & Associates

2873 Remington Green Circle Tallahassee, Florida 32308

For Respondent Agency for Health Care Administration:

Lorraine Novak, Esquire

Agency for Health Care Administration Office of the General Counsel

2727 Mahan Drive, Suite 3431

Fort Knox Building 3, Mail Station 3 Tallahassee, Florida 32308

For Respondent The Pavilion at Healthpark, LLC:

Cynthia Tunnicliff, Esquire Brian Newman, Esquire Brandice D. Dickson, Esquire Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

Whether CON application No. 10034, for a new psychiatric hospital to be constructed in Agency for Health Care Administration Health Planning District 8, should be approved.

PRELIMINARY STATEMENT

Petitioner, Punta Gorda HMA, LLC d/b/a Charlotte Regional Medical Center (Petitioner or Charlotte), has challenged the preliminary approval of Certificate of Need (CON) Application No. 10034 (the application). The application at issue was filed by Respondent, The Pavilion at HealthPark, LLC (The Pavilion), on or about September 10, 2008. The Pavilion seeks to construct a new psychiatric hospital in Lee County, Florida (AHCA Health Planning District 8). Its CON application was reviewed and preliminarily approved by Respondent, Agency for Health Care Administration (AHCA or the Agency). AHCA issued its State Agency Action Report (SAAR) granting preliminary approval for the new hospital on December 11, 2008. The SAAR outlined AHCA's reasons and explanations for the approval.

Section 408.039, Florida Statutes (2009), details the review process by which this case is governed. The Florida Legislature has directed AHCA, by rule, to provide for CON applications to be submitted on a timetable or cycle basis. Applications should be reviewed timely and applications pertaining to similar types of services or facilities are to be comparatively considered in relation to each other. In this case, however, the Pavilion is the sole competitor for the facility sought. The approval of the CON application is opposed by Petitioner who is an existing provider within the same AHCA health planning district. Charlotte timely filed its petition to oppose the new psychiatric hospital proposed by the Pavilion.

The case was forwarded to the Division of Administrative Hearings (DOAH) to conduct formal proceedings in connection with the dispute. In accordance with the dates proposed by counsel for the parties, the case was scheduled for hearing as stated above.

As presented in the parties' Pre-hearing Stipulation, the statutory criteria applicable to this proceeding are found in Chapter 408, Florida Statutes; Florida Administrative Code Chapter 59C-1; Chapter 394, Florida Statutes; and Chapter 395, Florida Statutes (see paragraph 6 of Pre-hearing Stipulation filed June 2, 2009). Section 408.035, Florida Statutes (2009), sets forth the CON review criteria.

The parties have stipulated that a timely and complete letter of intent, CON application, and omissions response were filed by the Pavilion. Further, the parties agreed that Charlotte timely filed a petition to challenge the preliminary approval of the CON application at issue.

At the final hearing, the Pavilion presented the testimony of the following witnesses: David Winters; James Harper; Jim Nathan; Sally Jackson; Michael Metcalf; Ted Sottong; David Mulholland; Darryl Weiner; Ivan Mazzorana, and Sharon Gordon- Girvin. The deposition testimonies of Stanley Appelbaum; Sandra Dzielawa; Elizabeth Givens; Steven Machlin; Carmen Miletti; Angela Monterosso; Casey Moore; Chris Nesheim; Elton Scott, and Scott Waltz were received in evidence for the Pavilion.

Additionally, the Pavilion's Exhibits numbered 1, 2, 2a, 4, 5,

7, 10, 12, 16 through 23, 25, 25A, 26, 26A, 32-34, 38, 40, 45,

47, 49, 50 through 52, 58, 61 through 63, 66, 68, 70, 83, 84-1,

1. , and 84-3 were entered into evidence.

   
   

   The Agency presented the testimony of Jeffrey N. Gregg, Bureau Chief of Health Facility Regulation, who was accepted as an expert in health planning and CON review. AHCA Exhibits numbered 1 through 7 were received in evidence.

   Petitioner presented the testimony of Patricia Greenberg; Bradley Kevin Nurkin; Emil Dameff; Joshua Putter; Martha Lenderman, and Kerry Blind. Petitioner's Exhibits numbered 1,

   2-1, 2-12, 2-14 through 2-21, 2-23 through 2-39, 2-42 through

   
   

   2-44, 2-46 through 2-79, 3 through 9, 14, 16, 17, 20, 21 through

   
   

   29, 32, 33, 36, 37, 39, 40, 43, 44, 62, 66, 75 through 112, 161,

   
   

   and 168 through 172 were accepted into evidence.

   
   

   The 16-volume Transcript of the final hearing was filed with the Division of Administrative Hearings on July 21, 2009. The parties timely filed their Proposed Recommended Orders on July 31, 2009. The Proposed Recommended Orders have been fully considered in the preparation of this Recommended Order.

   FINDINGS OF FACT

   
   

   The Parties

   
   

   1. AHCA is the state agency charged with the responsibility of administering the CON program for the state of Florida. The Agency serves as the state heath planning entity. See § 408.034, Fla. Stat. (2009). As such, it was charged to review the CON application at issue in this proceeding. AHCA has preliminarily approved the Pavilion's CON application

      No. 10034.

   2. Petitioner is an existing provider who opposes the approval of the subject CON. Petitioner is a subsidiary of Health Management Associates (HMA). It owns and operates a

      208-bed hospital located in Punta Gorda, Florida. Petitioner's site is part of AHCA Health Planning District 8 and is located in Charlotte County, Florida. Petitioner has demonstrated a history of providing quality care in the programs and services it offers, including psychiatric services.

   3. Petitioner offers its psychiatric services in a separate unit located across the street from its main acute care facility. This behavioral health unit, called Riverside Behavioral Health or Riverside in the record, is a 52-bed unit licensed as part of the general acute care hospital operated by Petitioner. At the time of the hearing, Riverside was licensed for 42 adult psychiatric beds and 10 adult substance abuse beds. Patients at Riverside requiring acute care hospital services or care are easily transported from the Riverside campus across the street to the main hospital facility.

   4. The Pavilion seeks approval of a CON in order to construct and operate a new psychiatric hospital to be located in AHCA Health Planning District 8. The new entity would be located in Lee County, Florida.

   5. The Pavilion is a new entity founded by James Harper and Dan Page. These men have many years of experience in developing and operating psychiatric healthcare facilities. In order to fund their venture, Harper and Page have joined forces with three principal investors: Rogers Wells, Gary Bell, and Michael Metcalf. This trio of experienced business individuals formed American Healthcare Holdings, LLC (AHH), with Harper and Page. For convenience sake, Harper and Page (the experienced side of the venture) own JHDP Holdings, LLC, which in turn owns 40% of AHH; Wells, Bell, and Metcalf (the finance side of the venture) own Behavioral Health Company, LLC, which in turn owns 60% of AHH. All together, AHH is well-positioned to fund, complete and operate the proposed project.

      The Proposed Project

      
      

   6. The Pavilion seeks to construct a new 76 bed inpatient psychiatric hospital to be located in the existing HealthPark Florida campus in Fort Myers, Florida. This location is approximately 1,500 feet from an existing acute care hospital operated by Lee Memorial Health System. The acute care hospital, HealthPark Medical Center, would provide support services and programs for the proposed psychiatric hospital. In fact, Lee Memorial Health System supports the proposed project.

   7. The HealthPark Florida campus is located within a development of regional impact (DRI) that is governed by local and state regulations pertaining to such entities. The DRI terms for the HealthPark Florida site were amended in

      September 2008 to allow for a specialty hospital. As a result, the proposed project would come within the allowable DRI uses.

   8. The proposed project will feature four units of 19 beds each. The rooms will be private and will be located above the first level. No patient care will be provided on the ground floor. The configuration of the structure will allow for security and entryways that consider patient safety and convenience. The Pavilion proposes to be a Baker Act receiving facility for AHCA Health Planning District 8 and the architecture of the proposed project should readily allow for that intended use.

   9. The proposed project will comply with all applicable building codes and will address the 100-year floodplain and hurricane category 3 surge inundation zone considerations as required by law. If utilities and patient care facilities are located above the ground floor, any concerns regarding floodplain or inundation issues should be appropriately addressed. The Pavilion has agreed to meet these architectural considerations.

   10. The existing acute care hospital nearby has been able to address similar floodplain and inundation concerns without concern from AHCA. Similarly, it is anticipated that the proposed project will be able to address any AHCA concerns in this regard.

   11. The size of the parcel is adequate to construct the proposed psychiatric hospital.

   12. As previously stated, the proposed project is located in AHCA Health Planning District 8. That district comprises Sarasota, Lee, Collier, Glades and Hendry Counties. The proposed site is within the largest of those counties (population-wise). Of the 1,568,462 persons in AHCA Health Planning District 8, Lee County had 608,182 residents in 2008.

   13. In reaching its decision to seek the approval of the new psychiatric hospital, the Pavilion considered input from many sources, including, but not limited to: physicians who practice

in Lee County; experts who deal with the needs of the mental health community in Lee County; the vicinity of the proposed psychiatric hospital and its access to acute care services at the nearby hospital; experts in health care planning and finance; and various persons from the public who vocally and enthusiastically supported the proposed project. According to AHCA personnel, the community support for the proposed project has been unparalleled in recent history for any new psychiatric hospital.

History and Current Providers

1. AHCA Health Planning District 8 has a number of providers who have attempted to meet the psychiatric needs of the community.

2. Historically, there were two additional hospitals that had provided psychiatric services to Lee County and AHCA Health Planning District 8 that are no longer available to address inpatient needs. One, a state hospital, closed when the State of Florida elected to abandon the facility. The second, known as "Charter" in the record, closed when the parent company failed financially. Since the closure of the two psychiatric hospitals, local health care professionals have had to muster assistance and support from day programs and crisis services to carry the bulk of the weight of providing psychiatric services to Lee County residents. Extended wait times for residential placements may be common. Moreover, the admission of

   psychiatric patients to acute care hospitals for stabilization and care is also common.

3. As of the time of hearing, the breakdown of psychiatric beds in AHCA Health Planning District 8 was as follows: in Sarasota County, Sarasota Memorial Hospital operated a 49-bed adult inpatient psychiatric unit; in Charlotte County, the Riverside facility operated as previously described; and in Collier County, there were two facilities, a 23-bed adult inpatient psychiatric unit located at Naples Community Hospital and a facility called "The Willough," a 42-bed freestanding inpatient psychiatric hospital. Although technically Lee Memorial Hospital recently opened a 15-bed psychiatric unit in Lee County, it opened as an accommodation to the Pavilion and will close once the proposed project comes on line to provide services.

4. Finally, as it relates to existing providers, it is important to note the role of Lee Mental Health in connection with existing providers. Lee Mental Health is the only Baker Act receiving facility in the county. It has two campuses and operates a 30-bed adult crisis stabilization unit (CSU). The CSU is operated to stabilize patients who are a danger to themselves or others, to assist with patient medication management, and to facilitate discharge planning for those who are going to transition to outpatient programs. Lee Mental

   Health and the CSU seek to coordinate outpatient services and programs to enhance patient access to those opportunities in a non-residential setting. The Pavilion is supported by Lee Mental Health, as it will operate in conjunction with the county-wide mental health system to emphasize outpatient care. Baker Act admissions can be processed through the Pavilion psychiatric hospital, be stabilized, and referred to the outpatient services Lee Mental Health provides. The Lee County patients will have a continuum of care at a level and quality not now available. Further, it is expected that Lee Mental Health will grow its revenues and programs through a more efficient use of inpatient admissions and outpatient services. The CSU was never intended to serve as a long-term admission facility.

   Review Criteria

   
   

5. Every new hospital project in Florida must be reviewed pursuant to the statutory criteria set forth in Section 408.035, Florida Statutes (2009). Accordingly, the ten subparts of that provision must be weighed to determine whether or not a proposal meets the requisite criteria. Subsection 408.035(1)(a), Florida Statutes (2009), provides that the Agency must review a CON application and make its determination based upon the need for health care facilities and health services being proposed.

6. Florida Administrative Code Rule 59C-1.040 sets forth the criteria related to hospital inpatient general psychiatric services pertinent to this case. Pursuant to that rule (and the provisions of Florida Administrative Code Rule 59C-1.008(2)), AHCA found that there is no fixed bed need for the applicable planning horizon for AHCA Health Planning District 8. Since AHCA addresses need on a district basis, the mathematical result is that under the computations used by the Agency (as described by the rule), no new psychiatric beds are needed in AHCA Health Planning District 8. Nevertheless, after reviewing the "not normal" circumstances presented by The Pavilion, the Agency submitted its SAAR recommending approval of the instant CON application.

7. To wade through the "special circumstances" that were considered material by the Agency requires a look back at the history of CON review in Florida. Jeffrey Gregg is the Chief of the Bureau of Health Facilities Regulation, the section that evaluates CON applications and makes determinations pertinent to the statute and rules. According to Gregg, since the year 2000, existing hospitals have been permitted to add beds without going through the CON review process. Because of this, the numeric need calculations previously meaningful to determine if beds are needed in a health planning district are no longer viable or significant as a measure of whether or not there is a "need" for

   additional hospital beds. Gregg opined that although the change in CON bed addition did not encompass psychiatric hospital beds, with a few exceptions not related to AHCA Health Planning District 8, it is generally presumed that the numeric need methodology will result in no new beds needed. Existing acute care providers can always add beds to their inventory.

   Transitioning added beds to psychiatric use for existing providers is also an option. Further, as a practical matter, most beds now approved through the CON process are reviewed and evaluated via the "special circumstances" route.

8. So the ultimate question becomes: are there truly "special circumstances" to warrant the approval of the instant CON application? According to Gregg, the instant CON application was "one of the easiest decisions for us to make." Lee County is the most populous county in AHCA Health Planning District 8, and it has no inpatient psychiatric services. This is a concern to AHCA; a county as large as Lee County should be served. According to Gregg, a growing urban population with no established inpatient psychiatric facility creates a health care deficit.

9. Additionally, because AHCA Health Planning District 8 as a whole has one of the lowest utilization rates when compared to the state as a whole suggests that something is amiss. The trend in psychiatric care is to shift effort to outpatient

   treatment options. Nevertheless, it would normally be expected that the need of the district would be similar to, and not so disparate with, the rest of the state. The "if you build it, they will come," mentality is not truly the picture of why inpatient psychiatric beds are needed. More accurate would be the fact that the outpatient resources in Lee County (who support the proposed project) are making a Herculean effort to address the mental health needs of the community. The approval of the instant CON will work to alleviate some of the pressures felt at the local level and will coordinate a continuum of care not now available.

10. AHCA Health Planning District 8 has the lowest availability of adult inpatient psychiatric beds in the state.

11. From a health planning perspective, it is likely that a significant number of patients who would otherwise use adult inpatient psychiatric beds are currently being served at acute care hospitals in AHCA Health Planning District 8. The Pavilion documented many instances in which patients treated with psychosis and other mental disease disorders were discharged from institutions not specialized to provide treatment for such illnesses. As acute care hospitals that operate without licensed psychiatric beds are not considered "existing providers" under the need formula, the data from these discharges is lost in the computation of numeric need for the

    health planning district. Thus, even the mathematical need calculation is artificially suppressed.

12. Given the history of the hospital closings and the population for Lee County, AHCA Health Planning District 8 is unique in its provision of psychiatric services.

13. The existing providers of psychiatric services in AHCA Health Planning District 8 have not attempted to establish an inpatient facility for Lee County. Moreover, they are not growing the number of beds at their facilities. The use rate declined when the Lee County facilities closed; therefore, it can be reasonably presumed that the existing beds are not fully serving the Lee County need.

14. Subsection 408.035(1)(b), Florida Statutes (2009), requires the consideration of the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. In this case, Petitioner has a proven record of quality of care. Moreover, Riverside has a strong utilization record suggesting it is financially viable and well-established. It has demonstrated 100 percent occupancy on a consistent basis. It serves the greater Charlotte County area well. It has not, however, attempted to fully address the needs of Lee County.

    For AHCA Health Planning District 8, the existing providers, while meeting the needs of their target market, have not

    expanded to grow the markets to reach the state utilization levels, nor attempted to grow their Lee County utilization. For AHCA Health Planning District 8 as a whole, this means the needs of the residents of the district are being addressed in a manner inconsistent with the rest of the state. Were the proposed project approved, AHCA Health Planning District 8 would more closely resemble the rest of the state in how psychiatric services are made available to the district.

15. Subsection 408.035(1)(c), Florida Statutes (2009), dictates that the ability of the applicant to provide quality of care and the applicant's record of providing quality of care must be considered. In this instance, the applicant is a new entity created to establish the proposed psychiatric hospital. It does not have a record of providing quality of care. The principals of the company, however, have long careers of participation with providers that were able to provide quality of care. Moreover, they have demonstrated that the temporary

    15-bed unit that they are managing for an acute care hospital meets all expected levels of quality of care. In short, the applicant should be well-able to provide quality of care at the proposed project.

16. Subsection 408.035(1)(d), Florida Statutes (2009), cites the availability of resources, including health personnel, management personnel, and funds for capital and operating

    expenditures, for project accomplishment and operation must be evaluated to determine whether a project should be approved.

    The Pavilion has demonstrated it will be able to meet these criteria.

17. The proposed staffing patterns are sufficient to address the patient need and will meet or exceed the industry standard in this regard. Moreover, the availability of health and management personnel will also meet any patient need.

18. Subsection 408.035(1)(e), Florida Statutes (2009), notes the extent to which the proposed services will enhance access to health care for residents of the service district should be considered when evaluating a CON. In this regard, access for residents of AHCA Health Planning District 8 will be enhanced. Residents of Lee County in particular will have an inpatient psychiatric option not now available. As the health planning district grows with new bed opportunity, psychiatric utilization will likely grow to approach the state utilization and be closer to the use norm found in other health planning districts with adequate coverage.

19. Subsection 408.035(1)(f), Florida Statutes (2009), requires the consideration of the immediate and long-term financial feasibility of the proposal in order to fully evaluate the CON application. In this case, the proposed project has been demonstrated to be financially feasible in both the short

    and long terms. The Pavilion will obtain funds from its investors to meet the construction and short term needs. Moreover, the financial schedules produced with the application adequately outline the project's needs and proposed funding.

    Funding to cover the proposed project's needs until the "break even" point of its operation should be achieved without difficulty based upon the project's projections and reasonable assumptions.

20. The project construction costs and start-up expenses are within the industry standard and were approximated using standard data. The construction estimates are reasonable and will allow the project to be built within the estimates projected for the facility.

21. The Pavilion has demonstrated its proposed project is also financially feasible in the long term. If the need and utilization projections prove correct (and the record amply supports those assumptions), the project should achieve occupancy rates to support the financial feasibility of the project in the long term. Based upon the historical use (discharges evidencing mental health admissions), the projected population growth for AHCA Health Planning District 8, the likelihood that residents of Lee County will access inpatient services locally, and the additional cases that can reasonably be expected for the planning district, it is likely The Pavilion

    will achieve its projections in the second year of operation. Thus the project should be easily financially feasible in the long as well as short term.

22. Subsection 408.035(1)(g), Florida Statutes (2009), specifies that the extent to which the proposal will foster competition that promotes quality and cost-effectiveness be considered in the CON review process. As previously noted, there will be no comparable inpatient psychiatric competition in Lee County. In AHCA Health Planning District 8, the other providers will continue to market their beds as they do now without significant impact from the approval of the proposed project. To the extent that patients will have an option and the assumption that an option promotes competition, the approval of the proposed project should promote quality and cost- effectiveness as they will seek the best option for their healthcare dollar. In truth however, there is no assurance that the proposed project would promote competition leading to quality and cost-effectiveness. Riverside provides quality care and is well-established in its community. On a district-wide basis the approval of the instant new hospital should not adversely affect Riverside's market or ability to provide care as it has in the past. Therefore it cannot be concluded that this approval, in itself, will affect the overall market for competition and cost-effectiveness.

23. Subsection 408.035(1)(h), Florida Statutes (2009), addresses the costs and methods of the proposed construction, including the cost and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction in the review of the CON application. In accordance with the findings of the Agency in its SAAR, the construction proposed is appropriate. No more cost-effective means of construction for the proposed site has been supported by the record in this case. Accordingly, the cost and methods of construction are deemed reasonable and within the financial schedules presented in this cause.

24. Subsection 408.035(1)(i), Florida Statutes (2009), provides for consideration of the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent in evaluating the CON application. The Pavilion does not have a track record of providing care to Medicaid patients and the medically indigent as it is a new entity that will own and operate a new facility. Nevertheless, The Pavilion has agreed to condition its CON on the provision of charity and indigent care. The Pavilion estimates that it will provide indigent care to not fewer than 30 people during its first year of operation, 41 people during the second year, and

    64 people during its third year. The Agency has found the level of care proposed for charity and indigent care as proposed by

    the applicant to be acceptable for AHCA Health Planning District 8.

25. Subsection 408.035(1)(j), Florida Statutes (2009), relates to nursing home beds and is not applicable to the instant case.

26. The Pavilion has agreed to the following conditions for the CON:

    1. A commitment to become a Baker Act receiving facility.

       
       

    2. A commitment to provide outpatient services.

       
       

    3. A commitment to provide indigent and charity care as a percentage of its total patient days equal to or greater than the average percent in AHCA Health Planning District 8.

       
       

27. There is no financial barrier to access psychiatric hospital services by the residents of AHCA Health Planning District 8.

28. The quality of care rendered by all psychiatric facilities in the district is acceptable.

29. Although there may be some impact on the admissions and utilization at Riverside, the impact is not of such a magnitude so as to adversely impact the quality of care and provision of health services at that facility.

    Other Considerations

30. The Pavilion has demonstrated that access to psychiatric services will be enhanced by the establishment of the new hospital in Lee County. The target population (adults and the elderly) is growing in AHCA Health Planning District 8. The programs The Pavilion intends to provide will be especially helpful to address the mental health needs of the district. More specifically, The Pavilion will offer a seniors transition program, a seniors intervention program, an adult psychiatric intensive care unit, and a full range of adult treatment

    programs. The Pavilion will continue to work cooperatively with other providers in Lee County to provide a full continuum of services to the mental health patients of the district.

31. The Pavilion has also established the travel times for residents of AHCA Health Planning District 8 will be enhanced and dramatically improved with the establishment of the proposed project. Florida Administrative Code Rule 59C-1.040(6) provides:

    Access Standard. Hospital inpatient general psychiatric services should be available within a maximum ground travel time of

    45 minutes under average travel conditions for at least 90 percent of the district’s total population.

    
    

32. According to the traffic study completed by an engineering firm, the AHCA access travel standard would not be met in AHCA Health Planning District 8 absent the 15-bed unit at

    Lee Memorial. Since that unit was opened in anticipation of the proposed project, it should not be considered in determining whether the travel time standard is met. That is to say, without that unit, the standard is not met. Therefore, the proposed project will allow for the standard to be met. For example, that someone traveling to a fishing hole at an unspecified time of day might be able to meet the travel time standard does not refute the evidence that is more persuasively established by the expert engineering study.

33. In this case, the proposed psychiatric hospital will provide a convenience to residents of Lee County. Further, physicians serving the mental health patient population will have the convenience of admitting patients closer to their residences. Many of these professionals actively support the Pavilion's CON application. In fact, the public and professional support of the instant application has been unparalleled in the Agency's experience. The families of patients seeking psychiatric services will also have the convenience of the hospital closer to Lee County.

34. In connection with improved access for the health planning district, the proposed project will offer inpatient and outpatient psychiatric programs that will seek accreditation by the Joint Commission on the Accreditation of Healthcare Organizations. These programs will provide a structured

    therapeutic environment. The Pavilion will partner with Lee Mental Health to cross-refer patients to best address the inpatient and outpatient needs.

35. Lee County has a significant elderly population (over 65). It is anticipated that the programs tailored to those individuals will enhance the delivery of mental health services to the elderly of AHCA Health Planning District 8.

36. In addition to the intervention, counseling and other behavioral programs, the Pavilion will offer therapeutic programs through a range of activities such as art, occupation therapy, and group therapy.

37. Although the overall length of stay for the patient is projected at 7.3 days (an assumption supported by the evidence), the mental health care expected for the patient will extend beyond that time frame and will be supported by a team of mental health professionals who will follow-up and engage the patient to remain under the direction and assistance of mental health providers so that no one should "fall through the cracks" of care.

38. The Pavilion will be licensed as a specialty hospital.

    
    

    As such, it is ineligible to participate in the fee for service aspect of the Florida Medicaid Program. It will, however, seek to contract with Medicaid Health Maintenance Organizations and Preferred Provider Organizations. It will provide charity care

    of 2 percent of total cases or 1.5 percent of total days. Further, it will become a Baker Act receiving facility and will become the emergency access point for the most seriously ill mental patients in the health planning district.

39. The psychiatric beds in AHCA Health Planning District 8 are not located where they are available to large segments of the adult population.

40. Given the range of psychiatric disorders specified by the Diagnostic and Statistical Manual of Mental Disorders and the related psychiatric disorders associated with the codes of diagnosis, the psychiatric facilities in AHCA Health Planning District 8 are insufficient to address the myriad of services needed for mental health patients in the district, especially those patients in Lee County.

41. Historically AHCA Health Planning District 8 has not established coordinated and centralized services to support psychiatric services of a larger and more diverse nature. The establishment of The Pavilion will allow for a fuller range of services to be established for the planning district.

    The Agency's Rationale

    
    

42. The SAAR set forth the Agency's rationale for the proposed approval of the CON application. The SAAR acknowledged that the proposed project received varied support from numerous sources. Further, the SAAR acknowledged that funding for the

    project would be available; that the short-term position,

    
    

    long-term position, capital requirements, and staffing for the proposed project were adequate; that the project was financially feasible if the applicant meets its projected occupancy levels; and that the construction schedule is appropriate.

43. The SAAR also recognized the improved access for residents of Lee County. This recognizes that the proposed project assures that the travel time standard of the rule would be met.

    Impact on Existing Providers

    
    

44. The likely impact on existing providers has been considered and weighed in the findings reached. To that end, potential loss of admissions, shortened length of stay, and loss of outpatient care have been reviewed. The persuasive weight of the evidence finds that Riverside has enjoyed occupancy rates over 75 percent for a prolonged period of time. Despite enjoying such success, Riverside has not attempted to provide Lee County with needed inpatient services to address the disparate utilization seen when comparing AHCA Health Planning District 8 to the state as a whole. This health planning district has the lowest availability of adult inpatient psychiatric beds in the state. When that deficiency is coupled with Riverside's high use rate, it demonstrates that patients cannot access psychiatric beds. Using modest market share

    allocations, Riverside will continue to see utilization rates that will allow it to profit. More important to AHCA, however, Lee County will have a provider seeking to provide a full continuum of services to the planning district.

45. Existing providers are not guaranteed any set market share. In this case, Riverside has enjoyed a favorable reputation in AHCA Health Planning District 8. There is no evidence that a new provider will detract from that reputation or that the referral system that Riverside has utilized to achieve its market success will diminish. In short, the psychiatric market is and will continue to be great enough for all providers.

    CONCLUSIONS OF LAW

    
    

46. DOAH has jurisdiction over the parties to and the subject matter of these proceedings. §§ 120.569 and 120.57(1), Fla. Stat. (2009).

47. The Pavilion has the burden to prove by a preponderance of the evidence that its CON application should be approved. See, e.g., Boca Raton Artificial Kidney Center, Inc. v. Dept. of Health and Rehabilitative Servs., 475 So. 2d 260, 263 (Fla. 1st DCA 1985); § 120.57(1)(j), Fla. Stat. (2009).

48. The Agency's preliminary decision and the findings in the SAAR are not entitled to a presumption of correctness in this de novo proceeding. See generally Dept. of Transportation

    v. J.W.C. Co., Inc., 396 So. 2d 778, 787 (Fla. 1st DCA 1981).

    
    

    The Agency's construction and interpretation of its rules and the statutes that it is charged to implement, however, are entitled to deference. See, e.g., State Contracting &

    Engineering Corp., v. Dept. of Transportation, 709 So. 2d 607, 610 (Fla. 1st DCA 1998); § 120.57(1)(l), Fla. Stat. (2007).

49. The decision of whether to approve a CON application must be based on a balanced consideration of all statutory and rule criteria. St. Joseph's Hospital v. Department of Health and Rehabilitative Services, 536 So. 2d 346 (Fla. 1st DCA 1988); Department of Health and Rehabilitative Services v. Johnson & Johnson Home Healthcare, Inc., 447 So. 2d 361 (Fla. 1st DCA 1984); Balsam v. Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986). The weight to be given to each criterion is not fixed, but depends on the facts and circumstances of each case. Collier Medical Center, Inc. v. Department of Health and Rehabilitative Services, 462 So. 2d 83 (Fla. 1st DCA 1985).

50. All parties in this cause have the requisite standing to participate in this proceeding pursuant to Subsection 408.039(5)(c), Florida Statutes (2009).

51. In this case The Pavilion has presented a need methodology that argues the new psychiatric hospital should be approved. The Agency supports that conclusion and the rationale

    for its preliminary decision of approval is cogently articulated in the SAAR. The opponent disagrees (for the most part) based upon the perception that the assumptions relied upon by the applicant are incorrect, that the approval will unduly harm existing providers, and that a presumption of no need cannot be overcome based upon the evidence presented in this case.

52. As to The Pavilion's methodology, this applicant has demonstrated a new psychiatric hospital will enhance access and provide an access to those residing in Lee County that will enhance psychiatric services to all persons of the health planning district. Further, the new psychiatric hospital will provide patients with a meaningful option for inpatient services for persons in Lee County. And finally, it will offer reduced travel times for patients and their families using the facility. Conveniences of access have been established. Additionally, The Pavilion has shown that although there is no numeric need, AHCA Health Planning District 8 is unique and should, with the approval of the instant CON application, be able to grow its psychiatric market to a utilization level more in line with the rest of the state.

53. As to Petitioner's concern that the new hospital will siphon patients from existing providers, the projected population and utilization figures in AHCA Health Planning District 8 should adequately generate sufficient patient days to

    alleviate such fears. Competition for patient days dictates that all providers offer quality programs and services to address the population needs. In this instance the people of Lee County have no local inpatient provider to address their needs. With continuing population growth and utilization, all psychiatric providers will compete for the patients on a more even playing field. Balancing the applicable statutory and rule criteria does not give an existing provider an unfair advantage. There is no market share monopoly in health care. Since Petitioner has a reputation for quality of care, its market share in the planning district should not be adversely affected.

54. Improving access to psychiatric services including emergency stabilization and Baker Act admissions in an under served urban area is a laudable goal. The addition of the subject hospital will provide such services.

55. Psychiatric patients requiring acute care hospital services will be easily treated at the nearby hospital. On balance the Pavilion has established need for its proposed new hospital based upon its methodology and all pertinent rules and statutes.

56. The opponent argues that the Pavilion inappropriately amended its CON application in this proceeding. It is concluded that any updates to the data and materials presented in this cause did not constitute an unlawful amendment. Moreover, The

Pavilion has demonstrated a significant public interest in the approval of the new hospital. The population, utilization, demographics and needs of Lee County all support the approval of the new psychiatric hospital. AHCA Health Planning District 8 will be better served as a result of the approval of the CON application and the applicant has adequately demonstrated the evidence supports that approval.

RECOMMENDATION

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

RECOMMENDED that a final order be entered by the Agency for Health Care Administration that approves CON Application

No. 10034, with the conditions noted in the SAAR.

DONE AND ENTERED this 19th day of October, 2009, in Tallahassee, Leon County, Florida.

S

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 2009.

COPIES FURNISHED:

Holly Benson, Secretary

Agency for Health Care Administration Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308-5403

Justin Senior, Acting General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308-5403

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308-5403

Lorraine M. Novak, Esquire

Agency for Health Care Administration Fort Knox Building III, Mail Stop 3 2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

Susan C. Smith, Esquire Smith & Associates, P.A. 2873 Remington Green Circle Tallahassee, Florida 32308

Cynthia S. Tunnicliff, Esquire Pennington, Moore, Wilkinson,

Bell & Dunbar, P.A.

215 South Monroe Street, Second Floor Post Office Box 10095

Tallahassee, Florida 32302-2095

Shaddrick Haston, Esquire

Agency for Health Care Administration Fort Knox Building, Mail Stop 3

2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308

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 should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 09-000696CON

Orders for Case No: 09-000696CON