The Issue Whether there was negligence involved in treating Lewis Dougal, a patient in the Miracle Hill Nursing and Convalescent Home. Whether the Respondent kept records in compliance with the statutes and the requirements of Chapter 10D-29 of the Florida Administrative Code.
Findings Of Fact The Miracle Hill Nursing and Convalescent Home had Lewis Dougal, an adult mentally retarded male, as a patient in January of 1976. On Thursday, January 29, 1976, Mr. Dougal was taken to Tallahassee Memorial Hospital for a neurological brain scan. His exact whereabouts have not been established during the period of time from 10:00 a.m. until 3:00 p.m. on that day, but he was in the emergency room area or in the radiology area of the hospital. At approximately 3:00 p.m. he was returned to the Respondent nursing home. At approximately 7:00 p.m. on January 30, a nurses aide discovered that Lewis Dougal had a reddened and swollen penis, a swollen scrotum and red marks on the buttocks. She called the charge nurse, an L.P.N., who did not call the doctor, but noted on the "nurse's log" that the patient should see a doctor the following day. No notation was made on the patient's individual medical record at that time. Mr. Dougal was transferred to Tallahassee Memorial Hospital late in the morning of January 31, 1976, whereupon he received a 50 mm injection of demerol for pain upon his admission to the hospital. He was released February 25, 1976. An investigative team from the Office of Health Facilities of the Department of Health and Rehabilitative Services, which consisted of a Hospital Nursing Home Consultant and a Registered Nurse, investigated the circumstances surrounding the incident on February the 25th and 27th, 1976. The injuries sustained by Mr. Dougal and his hospital records from the date of his admission, January 31, 1976, to the hospital, to the date of his release, February 25, 1976, were reviewed. The investigative team thereupon visited the Miracle Hill Convalescent and Nursing Home on February 27, 1976 and requested all medical records of the patient, Lewis Dougal. No medical records had been kept and the only reference to the incident was made on the "nurse's log" January 30 and 31, 1976. These entries were made subsequent to the dates thereof. Other information was placed on the records long after the incident occurred. On March 26, 1976, Petitioner State of Florida, Department of Health and Rehabilitative Services, issued an order charging Respondent with two violations: The first being in violation of Section 400.102(1)(a), Florida Statutes, and Chapter 10D-29.11(7), Florida Administrative Code, to-wit: "1. That the facility failed to protect a patient from neglect and abuse, in that a mentally retarded patient, incontinent of bowel and bladder, was allowed to acquire burns of the scrotal area, genitalia and buttocks, of sufficient severity to require hospitilization, such burns being caused by inadequate and improper nursing care on the part of the nursing service staff of the facility. As a result of the subject burns, the patient was hospitalized for treatment and care during the period January 31, 1976, and February 25, 1976, at Tallahassee Memorial Hospital. The admission diagnosis for this patient at the hospital in part was, "burns of the genitalia and buttocks." The admitting physician further noted that the admission examination revealed an obvious burn in the skin from the scrotum which had already desquamated indicating the burn had occurred some time previously, maybe as much as a couple of days. Further, a circular burn involving the buttocks was observed with the notation that it appeared the patient had been sitting in some very hot solution. The second charge was alleged to be in violation of Chapter 10D- 29.11(10) and (13) 1.(c), of the Florida Administrative Code in the following language: "(2) In that the required medical record documentation concerning how or when the above injuries occurred to this particular patient was lacking, and the investigating team was unable to determine just how or when the burns occurred or the specific person responsible for this."
Recommendation Section 400.121(1) (8), Florida Statutes, Denial, suspension, revocation of license; procedure.- (1) "The [department] may deny, revoke, or suspend a license or impose an administrative fine for a violation of any provision of s. 400.102 only after written notice to the applicant or licensee setting forth the particular grounds for the proposed action and a hearing, if demanded by the applicant or licensee." (8) The [department], as a part of any final order issued by it under the provisions of this chapter, may impose such fine as it deems proper, except that such fine shall not exceed $500 for each violation. Each day a violation of this chapter occurs shall constitute a separate violation and shall be subject to separate fine. An action for recovery of the fine may be maintained in the circuit court of the county in which the facility is located, and appeal from any judgment rendered shall be in the manner and within the time provided by the Florida Appellate Rules for reviewing judgments rendered by circuit courts in action at law." Record keeping is such an important and necessary adjunct to nursing home care the Respondent should suffer a fine of at least $200 for violation of the foregoing statutes and rules. DONE and ORDERED this 10th day of January, 1977 in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Robert M. Eisenberg, Esquire Health Program Office Department of Health and Rehabilitative Services Post Office Box 210 Jacksonville, Florida 32201 John K. Folsom, Esquire 122 South Calhoun Street Tallahassee, Florida 32301
Findings Of Fact NATURE OF THE CONTROVERSY In response to a 144 nursing home bed need for southeast Duval County, Florida, Subdistrict 3, HRS Service District IV, several applicants filed nursing home bed certificate of need applications for the review cycle triggered by a December 5, 1990 deadline, including; CVI for a 60-bed addition to an existing 60-bed facility authorized by Certificate of Need No. 5602; Atrium for an 84-bed facility; Marriott for a 30-bed facility; Health Quest for a 41-bed renovation and conversion of assisted-living facility beds, or 24-bed addition to the existing nursing home. Two other applicants, Health Care and Retirement Corporation of America for a 120-bed facility and Health Care Properties of St. Augustine for a 60-bed facility, did not pursue administrative appeals of their applications. HRS found all of the applications to be complete and all proposals were comparatively reviewed on their merits, with the exception of the MCRI 24-bed proposal which HRS found was untimely. The Department noticed its intent to approve the applications filed by CVI and Atrium. MRCI and HQR are Petitioners contesting the HRS intent because their applications were denied. HQR also claimed standing as an alleged substantially affected existing facility; however, HQR did not present any evidence in support of its standing on these grounds. THE HRS REVIEW HRS required the applicants to submit their proposals on an application form designated "HRS Form 1455, Oct.`88". [CVI Ex. 8; Tr. 2461. This application form is not a rule. [E.D. Tr. 1618]. A work group consisting of HRS and nursing home industry representatives developed the application form and HRS review procedures. [S.G., Q. 14; CVI Ex. 10; ANH Ex. 8]. Criteria at Section 381.705, Florida Statutes, form the basis for 13 goals of the HRS review process. (Id. S.G. pp. 4-15, Q. 14-39; ANH Ex. 8, p. 4). The goals are as follows: The first goal promotes the establishment of facilities to provide services when and where needed, intended to implement Sections 381.705(l) (a), (b), (d), (e), (j), (l), (2)(a), (b), (d) and (e) The second goal promotes special resident programs for special population groups, intended to implement Sections 381.705(1)(a), (b), (c), (f), (j), (l), (2) (a), (b) and The third goal promotes the establishment of continuing care-type communities, intended to implement Sections 381.705(1)(a), (b), (d), (e), (j), (2)(a), (b) and (d). The fourth goal promotes use of professionals in a variety of disciplines to meet resident needs, intended to implement Sections 381.705(1)(b),(c), (f), (g), (h), (j), (1) and (n). The fifth goal promotes the establishment of well-designed, comfortable facilities, intended to implement Sections 381.705(1)(b), (c), (m) and (2)(c). The sixth goal promotes residents' rights and residents' quality of life, intended to implement Sections 381.705(1)(b), (c), (f), (j), (l) and (2)(b). The seventh goal promotes a full range of social services for nursing home residents, intended to implement Sections 381.705(1)(b), (c), (f), (j), (l) and (2)(b) and (d). The eighth goal promotes provision of services to Medicaid eligible residents, intended to implement Sections 381.705(1)(a), (h), (n) and (2) (e) The ninth goal promotes the establishment of nursing homes which do not intend to secure significant profits at the expense of resid ent care programs and facility design, intended to implement Sections 381.705(1)(b), (e), (h), (i), (l), (2)(a), (c) and (e) The tenth goal promotes nursing home locations which achieve a geographic distribution of nursing home beds, intended to implement Sections 381.705(1)(a), (b), (d), (e), (h), (j), (2) (a), (b) and (d). The eleventh goal promotes proper projection of construction costs, intended to implement Sections 381.705(1)(b), (e), (i) , (l), (m) , (2)(a) and (c) The twelfth goal promotes the establishment of nursing homes which have a record of implementing superior resident care programs and providing superior quality of care, intended to implement Sections 38 1.705(1) (b), (c), (f), (h), (j), (l), (n) and (2) (b); and The thirteenth goal promotes nursing home charges consistent with industry trends and Medicaid charges which are within Medicaid upper limits, intended to implement Sections 381.705(1)(b), (e), (h), (i), (l), (m), (2)(a) and (e) The working group identified the goals as representing desirable outcomes under the statute to be attained by successful applicants if specific objectives are achieved. Eight objectives, each relating to one or more of the goals are then utilized, with each operationally defined by several items of information. Scoring points are divided among the various items of information solicited under each objective. [SAG. p. 3, Q. 14, p. 17, 18, Q. 45; A.G. Tr. 1330]. The scoring system is not a rule; HRS utilizes it on a case-by-case basis to aid in decision-making. [A.G. Tr. 1273, 1274; S.G. Q. 43, 45, 46]. An application was measured by assessing the responses provided in the application against the point system. [ANH Ex. 8, p. 4; S.G. Q. 43, 45, 46]. The scoring system is a means to accomplish an evaluation of information--the process of forming, qualifying, verifying, and establishing judgments. Applicants are asked to specify concrete procedures or steps that, when implemented, are likely to result in a clear and predictable outcome. [S.G. Q. 44; A.G. Tr. 1320, 1321]. Thus, both operational features and the implementation process for those features are sought. All of the foregoing evaluation procedures, including the goals, objectives, review protocols and scoring system were disclosed to the applicants prior to application preparation and filing. [S.G. Q. 14; CVI Ex. 10; ANH Ex. 8; J.B. Q. 24]. Two HRS review consultants, a primary and a secondary reviewer, assigned a number to each application item which represented that consultant's assessment of how well the applicant's response addressed the particular item. [S.G. Q. 42, 43, 45; ANH Ex. 8, p. 4]. The ultimate score was calculated by a combination of manual and computer scoring which assigned the points available for each item number. [ANH Ex. 8 p. 4; S.G. Q. 45]. The scores assigned by each of the two consultants were then averaged. [ANH Ex. 8, p. 4; S.G. Q. 45]. A statistical reliability analysis of the consultants' assessments was then conducted before further evaluation proceeded. The work group also established protocols for evaluating the information provided by applicants. [S.G. Q. 14, 45]. The protocols utilized by the HRS provide a methodology which results in predictability, uniformity and commonality of judgment in the review of each application insofar as that is possible with subjective judgments of facts [S.G. Q. 42, 43, 45, 46]. Upon completion of the scoring, a final assessment was conducted by HRS managers who evaluated the overall presentation of information in the application available to make a judgment--the application of functional aspects with program components, whether the integration of the elements was internally consistent, and the likelihood that the proposal will have the success predicted by the applicant. [S.G. Q. 43, 46]. These elements serve as verification of the reviewer's actions and reflect the decision-making that occurs when the preliminary decision is made. Under the HRS evaluation system, there is no particular "passing" score. [S.G. Q. 45, 46]. The scores attained were utilized as an aid to evaluating the applications. [A.G. Tr. 1273, 1274]. The goal is to attain the highest possible percentage score possible based upon a potential base score of 1500 points. A successful applicant should demonstrate a consistently high number on each of the eight rated objectives. Reviewer judgment dictates the score; the score does not dictate the judgment. A display of the scores will quickly reveal weak points and inconsistencies in the application which assist HRS in exercising its decision- making discretion in weighing and balancing the statutory criteria. [A.G. Tr. 1273, 1274]. HRS prepared a "State Agency Action Report" which explained the evaluation, summarized the HRS findings, provided the scoring results, and stated HRS' intent to approve the CVI and ANH applications. [ANH Ex. 8]. 22. The scoring results Primary were: Secondary Average Percent of Reviewer Reviewer Score Maximum Atrium 1196.9 1274.33 1235.61 82.37 CVI 1175.28 1178.77 1177.03 78.47 Health Care & Retirement Corp. 1113.92 1185.4 1149.66 76.64 Health Care 1119.25 Properties of St . Augustine Marriott 1110.58 1150.90 1143.67 1135.08 1127.12 75.64 75.14 Health Quest (41 beds) 1079.46 1109.05 1094.26 72.95 Health Quest 1079.46 (24 beds) 1109.05 1094.26 72.95 The staff consultant with primary review responsibility exercised her professional judgment in reviewing the applications. [A.G. Tr. p. 1272]. /1 There was no evidence that approval of any of the four applicants would have an adverse impact on the costs of providing health services, especially in light of the numeric need and the high occupancy rates within the subdistrict. There were no alternatives within the subdistrict for the providing the type of care required except construction of additional beds or renovation of existing beds of a similar type. Both of these alternatives were presented by the various applicants. THE CVI APPLICATION CVI is a not-for-profit Florida corporation. [CVI Ex. 3, iiia, iiic; J.B. Q. 28; CVI Ex. 8]. It is a local service unit of the National Benevolent Association of the Christian Church (Disciples of Christ), a Missouri not-for-profit corporation. The NBA was founded in 1887, and is one of the general administrative units of the General Assembly of the Christian Church (Disciples of Christ). The NBA provides care at numerous facilities to older adults, children and persons with developmental disabilities. [Id.; L.W. Q. 14]. Through local service units, (not including the CVI project), the NBA currently operates 13 nursing homes in 8 states. [Id.] CVI is developing a 65-acre adult retirement community on a site adjacent to the Mayo Clinic Jacksonville in southeast Duval County. [Id.]. Construction has been completed on all individual residential components of Phase I. [P.R. Tr. 200, 205, 206; K.V. Tr. 53; J.B. Tr. 311, 312; J.B. Q. 19]. The 60 bed addition will be part of Phase 11. [CVI Ex 3, PT 1, p. iiia; J.B. Q. 28]. Phase I consists of independent living apartments, an adult congregate living facility ("ACLF"), a 60-bed skilled nursing facility specifically designed for and dedicated to the care of persons afflicted with Alzheimer's disease and related dementia, and a core service building which contains administrative and other support facilities- [P.R. Tr. 200, 205, 206; K.V. Tr. 53; J.B. Tr. 311, 312; J.B. Q 19; CVI Ex. 3, PT II, p. 50a, supp. after p. 72a]. These elements, as required, have already been granted CON's. Phase I also included a maintenance building which in turn includes a laundry to serve the campus. [Id.; J.B. Q. 78, 79; CVI Ex. 3, PT I, p. 40a]. The Alzheimer's facility was authorized pursuant to Certificate of Need No. 5602 issued to CVI in 1989. [CVI Ex. 9; J.B. Q. 18]. The Alzheimer's facility consists of a 60-bed unit connected to the core service building. The 60 beds proposed by CVI herein will be located in a new nursing unit a.ii so to be /2 connected to the core service center. [Id.; P.R.Q. 12, 13, 14; P.R. Tr. 188, 189]. The Alzheimer's unit will also serve as a research center. [CVI Ex. 3, PT II, p. 71a, 71b; T.W. Q. 46, 47; K.V. Q. 17, 18]. All residents will participate in low-risk research such as diagnostic assessments, tracking the degenerative process through the collection of clinical data, behavioral observation and modification, activity-based therapy, and the use of environmental cues. [Id.; T.W. Q. 13]. Ultimately, dietary and drug therapies will also be the subject of research. [T.W. Q. 13]. The Mayo Clinic Jacksonville has a special Alzheimer's disease research team which will actively participate in the CVI research. [Id.]. CVI will be the only applicant licensed by HRS to operate the Alzheimer's unit. [F.D. Tr. 1565, 1566]. The Alzheimer's unit constitutes the nursing facility to which the proposed 60 nursing unit beds will be added.. [Id.]. CVI PROPOSED NURSING UNIT PROGRAM/QUALITY OF CARE CVI seeks a CON for a 60-bed nursing home addition to the ACLF mentioned above. The majority of the residents for the proposed nursing unit will come from the adult community developed by CVI which will be occupied by residents from within the total district. However, it is not anticipated that the adult community will be a direct source for nursing home residents for at least five years after the nursing unit is opened. [J.B. Q. 52, 103]. The CVI nursing unit will provide nursing care of a more generalized nature compared to the Alzheimer's unit. [J.B. Q. 26; K.V. Q. 28; CVI Ex. 3, PT II, p. iiia]. Consistent with CVI's plan for a continuum of care, the proposed nursing unit beds will also serve residents initially admitted to the Alzheimer's unit but whose disease has progressed to the point where the medical diagnosis becomes primary and, therefore, skilled nursing care becomes the primary need for that resident. [CVI Ex. 3, PT I, iiia; J.B. Q. 26; CVI Ex. 3, PT II, pp. 46a-46c; K.V. Q. 26, 27, 28]. However, utilizing existing Alzheimer's unit resources, these former Alzheimer's unit residents will still receive specialized care and participate in research; CVI Ex. 3, PT II, pp. 71a, 71b; T.W. Q. 46, 47]. CVI defines a "program" as those services designed to correct a resident's problem or condition. [CVII Ex. 3, PT I, p. 46a-46c; K.V. Q. 26, 27, 28]. The CVI nursing unit will offer three different specialized programs: (a) Alzheimer's care offering specific therapies for residents with Alzheimer's disease or related dementias; (b) a medically complex program offering restorative, therapeutic care for residents with acute, medically complex conditions; and (c) an inter-generational enrichment program for the purpose of stimulating nursing residents by daily interaction with children in a structured therapeutic activity. [Id.] Given the experience of the NBA at other local service units, CVI can reasonably be expected to provide excellent quality of care through the support and resources of NBA. [CVI Ex. 3, PT ii, pp. 24a-24c; T.W. Q. 29, 30; K.V. Q. 54]. CVI PROPOSED NURSING UNIT DESIGN SUPPORT FEATURES The nursing unit will comprise 18,720 square feet of new construction, with 28 semiprivate rooms, 3 private rooms, and one isolation room. [CVI Ex. 3, iiia; P.R. Q. 14-16]. The nursing unit will include an activity room, a day room/lounge with an outside activity deck, a nourishment station, and three garden recreation areas. [Id.]. The quality of life and care of the CVI nursing unit resident will be enhanced by resources available in the adjacent core service building which include a kitchen, a large, dividable dining area, activity rooms, physical and occupational therapy areas, beauty and barber shops, administration areas offices, medical treatment rooms, and a visitor lounge. [CVI Ex. 3, PT I, p. iiia; J.B. Q. 28]. Construction of the core service building was completed as part of the construction for the Alzheimer's unit. [P.R. Tr. 205-208]. When HRS reviewed the feasibility of the certificate of need application for the Alzheimer's unit, it also reviewed plans for the core service building. [P.R. 196-203, 207, 208; HQR Ex. 44; J.B. Tr. 255, 256]. The Alzheimer's unit was approved as a 60-bed alternative to a 120-bed nursing home proposed in CVI's earlier application for Certificate of Need No. 5602. [Id.]. Approval of the 60-bed Alzheimer's unit did not change the design nor reduce the total space planned far the core service building. [Id.]. The CVI nursing unit addition will not require the conversion, through renovation or new constructions of any area within the core service building. [P.R. pp. 200-206; J.B. Tr. 311, 312]. After the Alzheimer's unit project construction was underway, HRS allocated 7741 square feet of the core service building to represent the amount of core service area space under HRS nursing home jurisdiction. [P.R. Tr. 196, 199; HQR Ex. 42]. It is unrebutted that this allocated space will be sufficient to support both the proposed nursing unit beds and the Alzheimer's unit. [J.B. Tr. 311, 312; P.R. Tr. 196-203, 205, 206]. The allocated core space includes an allocation for the main dining room. Use of this main dining area is optional for residents of the Alzheimer's unit and the proposed nursing unit, since each unit has its own adequate dining facilities. [P.R. Tr. 188-191, 229; K.V. pp. 59, 60]. CVI will provide child day care for employees, and these children will participate inn the inter-generational enrichment program. [CVI Ex. 3,PT II, pp. 46a, 60a, 60b; K.V. 27, 28, 33, 34]. Ultimately, the child day care center will be located within a new apartment building, but will be temporarily housed in the core service building. [K.V. Tr. 52, 58]. CVI will also eventually construct a chapel to be located on the campus. [CVI Ex. 3, PT II, p. 66b; K.V. Q. 43, 44]. Until then, the nursing home residents will be able to utilize a chapel area located in one of the lounge areas in the existing apartment building. [K.V. Tr. p. 56]. CVI's semiprivate rooms are specially designed to provide a physical separation, through the use of a dividing wall, that approaches the privacy of a single room with the economizes of a semiprivate room, while still allowing each resident to have the very important contact with another person. [CVI Ex. 3, PT I, p. iiia, Appendix 11(4B); P.R. Q. 14-16; P.R. Tr. 182-186]. Each bed will overlook an individual adjacent window. [Id.]. CVI PROJECT COSTS CVI reasonably projects that the nursing unit will involve a total project cost of $3,286,258 - ($301,175 land, $2,174,108 (including $79,880 fixed equipment) building construction, $231,525 moveable equipment, and $571,450 intangible asset and deferred) [CVI Ex. 3, PT I, 24-27c; J.B. Q. 37-39, 41; P.R. Q. 8; T.W. Q. 19-21]. CVI's capital budget also includes the possible development of additional ACLF units on a second floor of the nursing unit building as part of Phase II. [CVI Ex. 3, PT I, pp. 28, 28a; J.B. Q. 42; J.B. Tr. 303, 304]. However, the CVI nursing unit construction cost was conservatively projected on the basis that the nursing unit would, like the Alzheimer's unit, be a one-story building. [P.R. Tr. 193-195]. It thereby accounts for all construction, including the roof, necessary to build the 18,720 square foot nursing unit. [Id.]. CVI's projected construction costs for the proposed nursing unit are reasonable and conservative. [CVI Ex. 3, PT 1, p. 27a; J.B. Q. 38, 39, 40; P.R. Q. 6; P.R. Tr. 210-212; CVI Ex. 34]. In the application, they were premised upon the Alzheimer's unit costs as known at the time the application was submitted. [Id.]. The reasonableness of the proposed nursing unit construction cost projections was again verified by the time of hearing in August, 1991. [J.B. Q. 41]. For construction (labor, materials, overhead, construction management, and profit) CVI projected a cost of $1,825,144, or $97.50 per square foot [CVI Ex. 3 PT 1, p. 27a; J.B. Q. 38, 39, 40; P.R. Q. 6; P.R. Tr. 210-212; CVI Ex. 34]. CVI certified to HRS that the final construction cost for the Alzheimer's unit under Certificate of Need No. 5602, including fixed equipment, was $76.33 per square foot. [CVI Ex. 34]. Adding the construction management fee, the final cost was $81.30 per square foot. [Id.]. If CVI's fixed equipment costs of $79,880 were added to the $1,825,144 projected construction cost for CVI's nursing unit, the result would be $101.74 per square foot. If the comparable Alzheimer's unit cost of $81.30 per square foot was conservatively inflated for a two year period (to allow adequate construction commencement after final agency action, see CVI Ex. 3, PT II, p. 57; P.R. 1. 25, 26) the result of $89.63 per square foot again reveals the reasonableness of CVI's projected construction costs. The CVI proposed nursing unit will occupy approximately 3 acres of the total 65 acre campus. [CVI Ex. 3, PT I, pp. iiia, 27a; J.B. Q. 28,38, 39, 46]. CVI reasonably allocated, pursuant to generally accepted accounting principles, a portion of the land's fair market value and land improvement costs to the proposed nursing unit 60-bed project. [CVI Ex. 3, PT I, p. 27a; J.B. Q. 38, 39; J.B. Tr. 294-296]. CVI's ABILITY TO FINANCE THE PROJECT CVI has the ability to finance the nursing unit project. [ANH Ex. 8, p. 22]. Phase I, including: the Alzheimer's unit, of the CVI campus was financed through a $21,960,000 tax exempt bond issue through the Jacksonville Health Facilities Authority. [CVI Ex. 3, PT I, p. 28a, 1990 Audited: Financial Statement, p. 10; CVI Ex. 8; R.B. Tr. 241, 242]. CVI intends to secure the same type of financing for the proposed nursing unit. [CVI Ex. 3, PT I, pp. 30, 30a; J.B. Q. 44-46; CVI Ex. 3, Appendix 5(2.c.1); L.W. Q. 8-10; R.B. Q. 5-13; R.B. Tr. 241,: 242]. The Jacksonville Health Facilities Authority provided the tax exempt bond issue through the authority of Chapter 159, Part II, Florida Statutes. [CVI Ex. 8, p. 1]. Thus, pursuant to the provisions of the statute, CVI Phase I project in its entirety (which includes the core service building and the ACLF) necessarily was found to be financially feasible. See Section 159.29, Florida Statutes. CVI will be primarily responsible for repayment of the bond proceeds but the NBA will guarantee the bond issue, as it did for Phase I. [Id.; M.G. Q. 26]. The NBA has significant financial strength. In 1988, it had total assets of $145,493,840. [CVI Ex. 8; L.W. Q. 16]. In 1989, the total grew to $168,507,027. [Id.]. In 1988, it realized a net income (revenue over expenditures) of $5,670,754. [Id.]. In 1989, the income increased to $11,563,778. [Id.] The NBA has secured third party financing for its local service units on numerous other occasions. [L.W. Q. 7; R.B. pp. 241, 242]. The most recent occasion involved tax exempt bond financing immediately prior to the hearing, ore July 31, 1991. [L.W. Q. 7]. The investment banking firm which has worked on several tax exempt bond financing projects with the NBA, and which handled the financing for Phase I of CVI, has reviewed the financing proposal for the CVI nursing unit and has found it to be reasonable and achievable. [R.B. Q. 1-13]. Raising charitable funds has been a regular activity of the NBA and its local service units. [L.W. Q. 11, 13]. To date, CVI has raised $4,000,000. [Id.]. As of June 30, 1991, $1,327,589 in cash from donations was still available for the proposed nursing unit. [Id.; J.B.Q. 44-46]. The CVI application revealed $24 million in assets consisting primarily of bond issue proceeds. [CVI Ex. 3, PT I, pp. 28-28(b); J.B. Q. 42, 43]. CVI STAFF AND INDEPENDENT CONTRACTORS The staff proposed for CVI's nursing unit significantly exceeds minimum requirements, and would meet the criteria in Florida for a superior rating. [CVI Ex. 3, PT I, pp. 36, 37, 37a, 38, 39; K.V. Tr. 31, 32, 39, 40; K.V. Q. 49-53; T.W. Q. 23-26; J.B. Q. 54-63]. The superior rating indicates a higher level, and higher quality, of care. [Id.]. Because of the nursing intensity required for Alzheimer's and related dementia patients, the Alzheimer's units staff nursing to patient ratio will be 1:5 or 1:6. [K.V. Tr. 63, 66]. The CVI nursing unit will have a 1:8. The typical ratio for nursing homes in the Jacksonville, Florida area is 1:10. [K.V. Tr. p. 66]. The CVI application presented reasonable levels of anticipated salaries and fringe benefits. [CVI Ex 3, PT I, pp. 36, 37, 37a, 38, 39; K.V. Tr. 31, 32, 39, 40; K.V. Q. 49-53; T.W. Q. 23-26; J.B. Q. 54-63]. CVI accounted for employees, such as the administrator and director of nursing, who were full-time and on a fixed salary. (Id.]. CVI also accounted for those staff who are to be paid on the basis of an hourly wage, such as nurses, calculated according to the number of work hours expected (based on full-time equivalent factors). [Id.]. Under this approach, the CVI salary projections account for vacation, overtime, and sick leave. [Id.; K.V. Tr. 45, CVI did not directly reflect revenues nor expenses attendant to the activities of therapists, pharmacists, dentists, podiatrists, a medical director, for other such consultants because they would serve as independent contractors. [CVI Ex. 3, PT I, pp. 40a, 46b; J.B. Q. 66, Instead, CVI indirectly accounted for the independent contractors by utilizing a "net methodology" pursuant to which the anticipated consulting fees are included within a base rate for private pay residents along with a markup. [Id., Tr. 312-314, 339, 340]. The markup covers the cost to provide the contractual services to Medicaid or Medicare reimbursed residents. [Id.]. In this regard, CV followed the customary accounting approach taken by a not-for-profit nursing home whereby the facility does not attempt to profit from the provision of such contractual services. [Id.] FINANCIAL FEASIBILITY OF CVI'S NURSING; UNIT By the end of the second year of proposed nursing unit operations, it is reasonably anticipated that the 120-bed CVI nursing home will realize a net income of at least $275,300 at 95 percent occupancy. [CVI Ex. 3, PT I, pp. 35 35a, 47-49a (Schedule 18); J.B. Q. 77-81; J.B. Tr. 274, 275]. By the second year of operation, CVI's revenues per patient day will be $99.25, compared to $116.16 for HQR's 24 bed proposal, $117.45 for HQR's 41 bed proposal, $118.15 for Atrium's proposal, and $126.03 for MRCI's proposal. [Comparison of Schedule 18 of applications]. The nursing unit is feasible on an immediate and long-term basis. [J.B. Q. 27]. CVI did not rely upon any non-nursing home revenues to demonstrate feasibility for the nursing unit. [Id.; J.B. Tr. p. 305]. CVI demonstrated nursing home feasibility as a stand-alone project. [Id.] Schedule 18 of the application contains space for the applicant to enter non-nursing home revenues and costs, such as those items associated with the operation of a co-located ACLF. Under HRS policy, the applicant has the option as to whether or not to provide these projections. [E.D. Tr. 1551-1559]. CVI proposes a 35 percent Medicaid utilization condition for the nursing unit which, with a 50 percent rate in the Alzheimer unit, results in a 42.5 percent Medicaid rate for the 120 bed facility. [CVI Ex. 3, PT I, p.iv, p. 46a; H.B. Q. 31, 33, 73-75; A.G. Tr. 1260, 1261, 1320]. Of the completing applicants, only CVI showed all it beds will be Medicaid certified. [J.B. Tr. 263, 265]. It is the financial feasibility of the specific certificate of need being reviewed which is assessed by HRS. [Id.]. HRS does not review the financial feasibility of any other operations of the applicant which are not part of the nursing home certificate of need application. [Id.]. VALIDITY OF CVI'S AUDITED FINANCIAL STATEMENTS The completeness deadline for applications was January 18, 1991. However, the completeness determination for CVI was delayed by approximately one month because, initially, HRS withdrew the CVI application from review. HRS' action was based upon an audited financial statement of CVI covering the first 10 months of 1990. HRS acted upon an apparent non-rule policy that a "combined" audited financial statement would not be `accepted, and the conclusion that the 1990 10-month CVI audit was a "combined" statement. No evidence was adduced at hearing to demonstrate what HRS specifically defined to be a "combined" statement, or specifically why the Department initially felt the 10-month 1990 audit was not an audited financial statement of Cypress Village, Inc. Upon reconsideration, the HRS reinstated the CVI application, specifically finding that another audited financial statement, covering the full 1989. The purpose of an audit is to fairly present, in all material respects, an entity's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles (GAAP). [M.G. Q. 11; M.F. Tr. p. 1813]. This conclusion may be expressed only when the auditor has formed such an opinion on the basis of an audit performed in accordance with general accepted accounting principles which govern auditing standards. [Id.] The certified public accountant has a duty to exercise independent professional judgment with due professional care in preparing the audit and preparing the report. [Id.; M.F., Tr. p. 1811; M.G. Q. 35]. Within the accounting profession, because independent judgment is to be utilized, reasonable persons can disagree on a professional basis as to whether, how, and why certain items should or should not be included in, or appear in, audited financial statements under GAAP for any particular entity. [M.F. Tr. 1918]. The CVI auditors found that `failure to account for all assets, regardless of legal title, exclusively utilized by CVI for its economic benefit would violate the completeness requirement. [M.G. Q. 16, 17, 33]. [M.G.Q. 26]. If CVI's auditors had not reflected the assets to which that liability applies, notwithstanding titled ownership, the audited statements would not have been complete and would not have fairly represented the financial position of CVI. [Id.]. Both CVI audited financial statements meet the test of fairly presenting CVI's financial position results of its operations, and cash flows in conformity with GAAP. [M.G. Q. 1-39]. The CVI auditors exercised independent professional judgment with due care. [Id.; M.G. 34, 36]. Even if reasonable persons disagreed with the results, the application's requirements were met and HRS had information presented to it upon which to base its decision. The balance sheet and income statements contained in both the 1989 and 1990 CVI audited financial statements are based upon the "fund balance" accounting approach. [CVI Ex. 3, p. 9, 1990 audit; M.G. Q. 28, 30; Burcham Q. 11]. Fund balance accounting is unique to not-for- profit and governmental entities. [M.G. Q. 31]. The CVI audit balance sheets and income statements represent the combination of funds from two sources, both directly related to CVI operations and both of which have a material influence upon CVI's financial position, cash flows, and operational results. [M.G. Q. 26, 27, 28, 29, 32, 33, 36]. The 1990 statement is only different from the 1989 audit in terms of the form of presentation and because the passage of time resulted in updated financial information being available to reflect the more mature status of CVI in its development activities. [M.G. Tr. 1536; CVI Ex. 3 1989 & 1990 audits]. The characterization of the audited financial statement as a "combined statement" has no significance from an accounting standpoint because "combined statement" is not a term of art in accounting and has no precise meaning. [Id.; M.F. Tr. 1825, 1826]. To the extent the CVI statements may be deemed "combined", they do portray CVI as a distinct legal entity and do not distort the financial ability of the applicant [M.G.Q. 1-39; M.G.Q. 16, 27-29]. To the extent that CVI's 1990 audited financial statements make a specific reference to "combined financial statements", this reference is not a term of art and does not effect the validity of the audited financial statement. [M.G.Q. 27; Burcham Tr. 330, 331]. The financial statements account for the assets and liabilities shared with the NBA as required by GAAP. [Id.; and M.F. Tr. 1333-1334]. The American Institute of Certified Public Accountant's Technical Division concurs in the type of presentation utilized by CVI's auditors. [I.B.Q. 17]. The Technical Division was asked to comment on an audit for another NBA local which utilized the fund balance presentation. [Burcham Q. 5- 18]. The Division concurred that NBA's assets dedicated to that service unit's retirement program (similar to CVI's) should be included on the audit given the unit's debt and other obligations and economic benefit derived from those assets. [Id.; M.F. Tr. 1744, 1745]. VALIDITY OF CVI'S LETTER OF INTENT NOTICE OF PUBLICATION CVI timely published notice of its letter of intent in the Jacksonville Times Union. The contents of the publication are set forth in Rule 10-5.008(1)(i), Florida Administrative Code. Due to an error which was solely the fault of the newspaper, the newspaper left a zero off the total project costs so that the publication actually said "$30,000.00" instead of $3,000,000. [CVI Ex. 4]. Prior to the application completeness deadline, CVI provided an affidavit to the HRS which revealed that the error was not due to any fault of CVI. [CVI Ex. 4; A.G. Tr. 1266, 1267; E.D. Tr. 1569-1571]. Consistent with its existing policy, HRS found that since the publication error was not the fault of or within the control of the applicant, CVI had satisfied the legal requirements for publication. [Id.; A.G. Tr. 1269-1270]. The rationale for the HRS policy was that it would not be fair to punish an applicant for the `mistake of the newspaper as long as the applicant fulfilled its responsibility to demonstrate that it had no part in creating the error. [Id.]. At the time of the CVI application, this policy had been consistently applied by HRS for numerous other applicants who were found to be in compliance with the law as long as the publication error was not their fault. [Id.]. CONFORMITY WITH THE LOCAL HEALTH PLAN All four applicants conformed generally to the applicable local health plan. The applications of CVI and Atrium were determined by HRS to meet the elements of the local plan better than did the applications of Health Quest and MRCI. Atrium and CVI were the only applicants which provided specialized programs for Alzheimer's patients, a preference for applicants in the local health plan. [Atrium/Nelson PF, pp. 20- 28; Atrium Ex. 8, p. 10-11; HRS/Granger PF, pp. 6-8; ANH Ex 16; A.G. Tr. 1323]. Atrium and CVI had the lowest costs per bed of the applicants. [See p. 249 below]. MCRI failed to address the current District Health Plan (1990-91) and instead used the 1989-90 plan. [Atrium/Nelson PF, p.9]. MRCI proposes to serve the lowest percentage of Medicaid patients in proportion to the average subdistrict-wide experience of nursing homes. Health Quest's existing facility, already at 120 beds, would be substantially over optimal size at 161 beds, if its proposed project is approved. Furthermore, Health Quest was not in compliance with regard to special programs and commitment to serve hard-to-place patients. [Atrium/Nelson PF, pp. 9-20; Atrium Ex. 8; HRS/Granger PF, pp.: 9-10]. There was no evidence that approval of any of the four applicants would have an adverse impact on the costs of providing health services, especially in light of the numeric need and high occupancy rates of the subdistrict. ATRIUM'S APPLICATION The proposed Atrium 84-bed nursing home will be constructed in close proximity to The Atrium Retirement Community of Jacksonville, an existing 176 unit retirement and assisted- living community. The Atrium will be a new facility constructed and developed by owners new to construction and operation of health care facilities. The applicant is a "shell" corporation with assets of $50,000.00 owned by Jack and William Deinetree, two brothers, who have also provided financial data and letters from their bank indicating their financial ability and intent to complete this project. The applicant filed an audited financial statement as required by statute although it revealed a shell corporation waiting CON approval for the infusion of dollars by the shareholders, Jack and William Demetree. HRS does not limit an applicant's documentation in demonstrating how it will be able to finance its project, if approved. Atrium's letter of intent was clearly indicated as such within its application. Atrium's application was deemed complete. [Vol. 15, pp. 1616-17; Atrium Ex. 2, p.123; Atrium Ex. 5]. Personal financial statements of the Demetrees, prepared by their longtime CPA, were also included in Atrium's application. [Atrium/Schramm PF, pp. 10-11]. The Demetrees' financial statements were "compiled" statements. [Vol. 16, p. 1678]. A CPA will not even prepare a compiled statement unless he has personal knowledge of the individual involved and his business operations. [Vol. 16, p. 1678]. `The financial statements of the Demetrees were provided as supplementary material. There is no statutory or rule requirement that they be in a certain form. [Vol. 16, p. 1694] After assessing their financial net worth, DHRS concluded that the Demetrees have more than sufficient liquid assets to make the equity contribution required in Atrium's application. It is a matter of the general business philosophy of the Demetrees that they put equity into all their development projects. [Atrium/Schramm PF, p. 11]. The nursing home application form does not require audited financial statements of stockholders in order to support their ability to make equity contributions. Neither the application Form 1455A, October 1988, nor the instructions thereto, dictate such a requirement. [Atrium Ex. 2, p. 24; Healthy Quest Ex. 9, p. 1-6; MRCI/Beiseigel PF, p. 6; Vol. 1, p. 75; Vol. 5, p. 444]. The ability of the Demetrees to obtain construction and permanent financing, as well as contribute substantial equity and operating capital was demonstrated by competent, substantial evidence. The $100,000 note payable to owners that appears in Schedule 15 of Atrium's application will be a line of credit, used for working capital during the first year of operation, before the cash flow picks up. It is fairly customary in the industry to provide such financing during the initial year or so of operations. (Vol. 6, p. 569; Vol. 16, p. 1682). The Atrium will have the resources available to complete the proposed project if the Demetrees provide the financing. Because the Atrium is a shell corporation in which the Demetrees own all the stock, it is logically assumed that they will provide the financing to the extent they are able. [Vol. 16, p. 1682; p. 1716; p. 1723; HRS/Granger PF, p. 13]. Their ability to finance the project is discussed above, and no evidence was introduced to show they could not finance the project. As a shell corporation, the Atrium currently has no other capital projects or expenditures under development or in the planning stage. Because it has very little capital and is totally dependent upon the infusion of capital by the Demetrees, existence of other project and expenditures is absolutely irrelevant. [Atrium/Schramm PF, pp. 5, 7]. Recent borrowings in amounts of from 3 to 8 million dollars by companies in which the Demetrees are major owners indicate their ability to obtain capital at rates from prime plus one-half to prime plus one. [Vol. 16, pp. 1680-1]. In its application, Atrium provided a letter of interest from First Union National Bank to finance the project, if approved. The Demetrees have a long-standing relationship with the bank, which has financed numerous large scale developments for the Demetrees through construction loans, working capital lines and permanent financing. The Demetrees have a 40-year, unblemished lender-borrower relationship with First Union (formerly Atlantic National Bank); there was no competent substantial testimony to the contrary. [Atrium/Schramm PF, pp. 8-9; Vol. 6, p. 549; Atrium Ex. 2, App.; Vol. 16, pp. 1679-81; Vol. 5, p. 445]. The Atrium's proposed plan is designed to develop innovative quality of life enhancements to minimize the institutional setting characteristic of some nursing homes. The plan utilizes a staggered semiprivate room design that increases residents' privacy and allows each resident to have a window to the exterior. The facility will-meet social needs of the residents, as well as their need for privacy. It is supported by a resident room design as well as a variety of activity and support spaces. (Atrium/Bhide PF, p. 3; Atrium Ex. 8, p. 18) The Atrium's proposed design is both appropriate and reasonable in light of state and local construction standards for a freestanding nursing home. (Atrium/Bhide PF, p. 3-7) The projected construction costs are based on Vasant Bhide's experience with designing and working on at least five (5) nursing home projects in the North Florida area in the past two years. According to Bhide, the proposed project cost estimates (construction costs, fees and equipment) are reasonable, and include almost $200,000 in contingency funds. Bhide's representations are disputed by other equally knowledgeable and experienced builders and architects whose costs estimates on similar facilities exceed Bhide's estimates. (Vol. 7, p. 644; Atrium/Bhide PF, p. 4; Atrium Ex. 3, p. 49; Atrium/Downs PF, p. 6-7) The Atrium's project costs compare favorably with HRS experience, and the actual costs may be lower due to the impact of the current recession. (Vol. 5, P. 434). (Vol. 7, p.644; Atrium/Bhide PF, p. 4-7; Atrium Ex. 3, p. 4-7) The total project cost of Atrium, which is just under $4 million, is deemed reasonable. (Atrium/Nelson PF, p. 29; Atrium/Downs PF, p. 6; Vol. 6, p.570, 572; Vol. 6, p. 552; Vol. 16, p. 1699-1703). The Atrium's projected bed utilization for the first two years is both reasonable and appropriate. (Atrium/Nelson PF, p. 6; Atrium/Downs PF, p. 4) The Atrium's proposed patient charges and expenses are reasonable. (Atrium/Nelson PF, p. 29, 31; Atrium/Mitchell PF, p. 4-6) Although acknowledging he had seen Medicare rates as high as $270 per patient day, Mark Fall challenged the Medicare rates projected by Atrium. (Vol. 18, p. 1888) If Mr. Fall's opinion were credited, Atrium's net income in year two would still exceed $260,000. (Atrium Ex. 4, Sch. 18) reasonable and conservative, based on actual recent financing of other Demetree projects. (Atrium/Schramm PF, p.12) The Atrium's assumptions on Schedule 11, especially regarding fringe benefits, were shown to be reasonable. The total dollar amount of salaries and wages and benefits for Schedule 11 were compared to other historical operations, inflated forward, and found to be well within the reasonable range by Joseph Mitchell, Atrium's expert in Medicaid and Medicare reimbursement and nursing home accounting. (Vol. 6, p. 563-565) The Atrium's proforma assumptions, using fringe benefits of 22 percent, were reasonable. (Vol. 6, p. 565) The Atrium's projected Medicare per diem revenues are reasonable considering this is a start up facility. One cannot compare a start up facility's Medicare rates with those of a long-standing facility, as Medicare imposes a limitation on Medicare rates after the first three (3) years of operation. (Vol. 6, p. 568) Atrium's proposed project is feasible in both the short and long term. Mr. Mitchell tested the reasonableness of the proforma assumptions based on his experience working with 125 to 150 nursing homes on an operational basis. (Atrium/Mitchell PF, p. 9; Vol. 6, p. 578) The Atrium's projected debt schedule is reasonable and conservative based upon recent financing of projects by the Demetrees. (Atrium/Schramm PF, p. 12.) The Atrium's design meets all codes, including building and life safety, energy code, handicap accessibility code, etc. (Atrium/Bhide PF, p. 6) HRS' architects ranked Atrium's plans first among the applicants in this hearing. (Atrium Ex. 8, p. 17-19; HRS/Granger PF, p. 14) The Atrium's application notes a willingness to take AIDS patients and will be bringing on-line 84 beds in a high occupancy subdistrict, which will promote better geographic accessibility. [Atrium/Nelson PF, p. 31]. The Atrium proposes to commit to 61% Medicaid, the most of any applicant. This commitment is attainable in light of the actual experience in the subdistrict (62.1% average) and the overall state average (60.6%). [Atrium/Nelson PF, p. 8- 9]. The proposed operations and quality assurance program submitted by Atrium meet or exceed Florida regulatory standards. [Atrium/Fitzpatrick PF, p.5, 14; Atrium/Downs PF, pp. 4-6; HRS/Granger PF, p. 11]. The Atrium's proposed staffing levels are reasonable and meet or exceed Florida standards. [Atrium/Fitzpatrick PF, p. 7; Health Quest Ex. 11]. The Atrium will develop and implement a training/staff development/internship program, to include students residing in Duval County. [Atrium Ex. 4, p. 70 A-C]. The Atrium will also be associated with an existing 176-unit retirement community known as The Atrium Retirement Community of Jacksonville, through their common ownership. The experience gained, in the five years of operating The Atrium Retirement Community of Jacksonville will be beneficial to the Atrium nursing home project, especially in the areas of housing for elderly residents, security, housekeeping, dietary and nutritional services, activities and counseling. (Atrium Ex. 2, p. 24B) Atrium will have established linkages with its sister retirement community and thereby offer a continuum of care. [Atrium Ex. 4, p. 46 A-c; 58A]. Atrium will have a good recruitment and career ladder programs. The Atrium's description of its patient assessment and care plan, utilization review program, quality assurance program, operations and dietary programs were comprehensive and explicit. The Atrium described very good activities programs, family involvement, mental conditions of residents, restoration/normalization programs and quality of life enhancement programs. [Atrium Ex. 8, p. 15; HRS/Granger PF, pp. 11-12]. Overall, the presentation was consistent and thorough and stated the services to be offered by the applicant. [Atrium Ex. 8, p. 15; HRS/Granger PF, pp. 11-12]. However, Atrium has never built or operated a nursing home. The Atrium's inexperience is demonstrated by its failure to properly plan for the cleaning of soiled laundry. The Atrium indicated it may send out the patients' laundry or use the laundry of a nearby retirement community. (T. 171, 549; Atrium Exhibit 4) As additional evidence of its inexperience in operating nursing homes, the Atrium proposes to use a non- wheelchair accessible van for transportation of it's residents, pulling a U-Haul with the wheelchairs. (Atrium Exhibit 4) When the matter was raised at hearing, its representative indicated that Atrium would rent a wheelchair accessible van, and private medical providers might be called on to transport Medicare and Medicaid residents to doctors' appointments, therapy sessions, and related activities. [Atrium Ex. 4, p. 61A; Atrium/Downs PF, p. 9]. Atrium intends to draw upon the management skills of the American Retirement Corporation (ARC) of Nashville, Tennessee. ARC is a national management services company which operates 21 retirement communities in 14 states. Most of the programmatic features set forth in Atrium's application are already utilized successfully at ARC facilities around the country. (Atrium Ex. 2, p. 24 A-B) For more than 10 years, ARC has employed its standard operating methods at a nursing home located at the Burcham Hills Retirement Community in East Lansing, Michigan. (Atrium Exhibit 13, p. 2; T. 520) ARC has been found to be in violation of several nursing home standards at its facility at Burcham Hills, Michigan, including serious failures to provide appropriate care to residents. (Health Quest Exhibit 26, pp. 3-7) The Senior Vice President of Operations for ARC plans to manage Atrium's nursing home using ARC's "`standard operating methods," to describe the programs that would be offered. (Downs PT, pp. 5-12) He asserted that ARC's lack of experience in managing a nursing facility of this size, type, and location is irrelevant because, among other reasons, "a patient is a patient." (T. 618) The Atrium, through its proposed management contract with American Retirement Corporation (ARC), will attempt to provide quality care to its patients. [Atrium/Fitzpatrick PF, p. 3]. MCRI'S APPLICATION FOR CON The MRCI CON is for a 30-bed nursing home. MRCI filed a proper letter of intent and audited financial statement for this CON. (T. 1608, 1609, 1611, 1613). MRCI also filed a CON for a 24 bed nursing home which HRS rejected as incomplete and untimely. Because the completeness issue of the 24 bed CON was undecided, MRCI presented evidence that included the feasibility, etc., of the 24 bed CON. In summary, there were no significant differences between the two CONs, and both were equally feasible. MRCI has developed a prototype facility called "Brighton Gardens". An MRCI Brighton Gardens facility typically includes 30 nursing home beds and 120 ACLF `beds. (Walter PT, p. 5). The concept anticipates carrying for the elderly from their need for an ACLF through nursing home care with minimum disruptions due to changes in environment. MRCI's research has indicated that as people get older, changes become more difficult and residents do not want to transfer back and forth between facilities. (T. 909) MRCI's project minimizes transfer trauma. The more unfamiliar the situation the more serious the transfer trauma. Transfer trauma manifests itself by despair, isolation, a change in a person's behavior and the way they deal with ordinary situations. Some states require transfer trauma plans before a resident is moved out of a facility. (T. 910, 911) At a Brighton Gardens facility, when a resident moves from the ACLF to the nursing home, friends in the ACLF can visit the nursing home on a regular basis. This is particularly beneficial for spouses to be able to visit back and forth without the need for transportation. (T. 907, 908) All of the beds are contained within the same building, although the nursing home is a self-contained unit with its own separate entrance for privacy and ease of access by residents, staff and visitors. (Walter PT, pp. 5, 6). Marriott and Marriott Retirement Communities, Inc. currently own and operate ten retirement centers and manage two other. (Evans PT, p. 4) MRCI operates two Brighton Gardens in Arizona and one in Virginia Beach and one in Houston, Texas. (Evans PT, p. 6) Five retirements communities are currently under construction and are all scheduled to open within 18 months (Evans PT, p. 4). MRCI already operates one facility in Florida which is a full service retirement community and has a superior rating. (Walter PT, p. 18) MRCI has demonstrated that it has the ability to provide superior care at its Brighton Garden facility. MRCI has demonstrated that it can provide the quality and types of programs equal to or exceeding any of the other applicants. MRCI has demonstrated that it can improve the quality of care in existing institutions and successfully operate nursing homes. For example, MRCI began managing a property in Canton, Ohio in June, 1988, when occupancy was less than 50%. When it discontinued management in early 1991, occupancy was approximately 90%. The net loss in income for the property had been reduced substantially from $2.3 million in 1988 to $900,000 in 1990. Reduction in cash loss was even more significant. (T. 874-875) MRCI managed property known as Towne Center, beginning in June, 1988, and discontinued management in early 1991. When MRCI began managing the property occupancy was approximately 55%. Occupancy had increased to over 90% by the time MRCI discontinued management. Efforts to discredit Marriott's management were unsuccessful and rebutted by its representatives. The design of MRCI's proposed project lends itself to quality of care because residents will not be expected to transfer from one entity to another as their needs change and because the small size of the unit allows for more individualized care. (Evans PT, pp. 28, 29; T. 1315) MRCI's proposal provides sufficient staff to provide top quality care. (Evans PT, p. 6) MRCI is proposing to provide 3.0 nursing hours per patient day for the 30-bed project. This does not include direct nursing hours which could be provided by the director of nursing. If you include those hours, direct nursing hours increased to 3.21 nursing hours per patient day. For the 24-bed project, if you include direct nursing hours provided by the director of nursing, 3.25 nursing hours per nursing hours per patient day will be provided. (T. 922-923, 954) There will be a full time administrator on the property of Brighton Gardens of Jacksonville. (T. 872) The administrator will be responsible, for the entire property. (T. 872) MRCI's proposed staffing exceeds the regulations of the State of Florida. In fact, MRCI proposes to provide four licensed nurses five days per week. By regulation, MRCI is required to provide only three licensed nurses. (Evans PT, p. 7) MRCI has an excellent recruitment plan and has designed a variety of enhancement programs for its employees. Some of these programs include a profit sharing program, the employee stock ownership plan, and a benefit trade system. MRCI offers an employee credit union, employee discounts at Marriott Hotels, continuing education, as well as additional training for employees to advance in their areas. MRCI has a working family life program, offers family life-counseling programs and has a guaranteed right to fair treatment policy within the company. MRCI recruitment efforts have been very successful. (Evans PT, p. 10) MRCI has developed a superb quality assurance program which exceeds the federal OBRA requirements and exceeds state requirements for quality assurance committees. (Evans PT, pp. 11, 12, 13-19) The wage assumptions and salary assumptions of both MRCI applications are reasonable projections. (Huber PT, p. 11) The staffing assumptions in both Schedules 11 are reasonable assumptions. The proposed Medicaid rate is reasonable and consistent with the Medicaid requirement in Florida. (Huber PT, p. 13) MRCI has demonstrated that its proposed 30-bed project is a financially feasible project. (Huber PT, p. 6) The proposed capital expenditure is $1,901,507 and first year operating expenses are projected-to be $1,065,108. MRCI has demonstrated that its Jacksonville Brighton Gardens project will be profitable in Year 2 of operation. This is true for the 30-bed application and for the 24-bed application. (Huber PT, pp. 14, 15) The ACLF revenues are a reasonable estimate of revenues for the Duval project. (Huber PT, p. 17) MRCI's land cost is based upon an option contract it entered into in 1989. The land cost for the project is reasonable and based upon a reasonable allocation of cost to the nursing home. (T. 1237, 1238, 12 41) MRCI intends to develop the entire Brighton Gardens of Jacksonville, which includes the ACLF and the nursing home. (T. 800) In conjunction with this type of facility, a nursing home this size is a viable alternative to "optimal sized" facilities because the small complement of beds is offset as part of the larger facility. The data provided attest to the financial feasibility of such a concept. MIRCI does not intend to build a stand-alone 30-bed nursing home. They will only be built in conjunction with the ACLF. (T. 861) The costs of construction for the MRCI proposals are reasonable and are allocated appropriately between the nursing facility and the ACLF. (McPhail PT, p. 20, 21, 22) MRCI allocated the costs of construction of the 30-bed project between the nursing home portions and the ACLF portions. This allocation was performed by determining the cost of the entire Brighton Gardens and conducting an allocation of those costs directly related to the nursing home portion of the building, including construction costs, fixed and movable equipment. Shared area costs, such as those associated with the kitchen, laundry, circulation, beauty-barber, and administrative areas, were allocated on a proportional basis. The kitchen was allocated on a proportion of meals served to the nursing center residents. The construction, site development costs and equipment costs of other shared areas were estimated by function, and these costs were then allocated on the basis of a square footage ratio of the nursing center to the ACLF portion of the building. (McPhail PT, pp. 20, 21) MRCI has three other Brighton Gardens projects which have been constructed. Those projects have been constructed at a cost within 1% of the original cost assumptions prepared at Marriott. (McPhail PT, p. 9) The Brighton Gardens design and schematic plans are consistent with the requirements contained in Chapter 10D-29 and local building codes for the 30-bed project and the 24-bed project. (McDowell PT, p. 5) Marriott has developed a bi-axial room which is one of the best semiprivate rooms available. The residents are situated so that they each have a privacy curtain and each resident still has a window. Semiprivate rooms are more affordable than a private room. Private rooms often lead to a resident feeling isolated, thereby leading to depression. (T. 915, 916, 1012) MRCI's design provides certain advantages for residents of both the ACLF and the nursing components. The bi- axial semiprivate rooms are quite large; there is significant amount of storage space; all resident's bathrooms are handicapped accessible. Residents will be able to take advantage of some of the ACLF common spaces at will, and MRCI's project will have a courtyard which will allow residents to do some secure wandering. The buildings are residential in nature, both in the exterior and interior architecture. (McDowell PT, p. 7) MRCI anticipated that the duration of construction for the Brighton Gardens of Jacksonville will be 12 months. This is a reasonable estimate. (McPhail PT, p. 22) The Brighton Gardens project in Southeast Duval County will be located on an 11 acre parcel on San Jose Boulevard which has ready access to public transportation and is convenient to the elderly population in the service area. (Walter PT, p. 19). MRCI will accept the following conditions on its certificate of need: MRCI will make at least 30% of its patient days available to Medicaid eligible patients, will donate 20 prepared meals per day to a local Meals-on-Wheels program for distribution to elderly residents and will provide respite care at both the nursing home and ACLF levels of care. MRCI will implement its special Homeward Bound Program. (Walter PT, pp. 16, 17, 30; Evans PT, pp. 22, 23,). MRCI has a history of providing nursing care services to Medicaid eligible residents. For example, although MRCI's Calusa Harbour facility carries no Medicaid, condition, approximately 31% of its community patient days were provided to Medicaid residents in 1990. (Walter PT, p. 18). MRCI will provide' services to ACLF residents requiring AIDS care or Alzheimer's care. (Walter PT, p. 19, T 915). MRCI filed an audited financial statement as required by the statute. Nationwide, Marriott has designated approximately $90 million for the development of retirement projects for 1991 and has designated $70 to $80 million for 1992. (T. 1020). Marriott has the resources to fund Brighton Gardens. [Handlon, p. 2]. Schedules 2A and 2B of MRCI's CON application contain a list of other planned capital projects of MRCI. This list of projects changes on a regular basis as projects are either added or rejected from the development process. This list includes projects in the very preliminary stages of planning. (Handlon PT, p. 3). No project has been dropped from Schedule 2 for financial feasibility problem's. (T. 1246). Typically, projects are deleted because of difficulty obtaining suitable property or problems with zoning or other regulatory hurdles. (T. 1253). Furthermore, certain projects listed on the capital project list in Schedule 2 identify expenditures which will occur as late as, or later than, 1998. (T. 798). An omission by MCI of approximately $7 million relating to a Boynton Beach project will have no effect on Marriott's ability to finance these projects. The amount omitted is inconsequential when considering Marriott's total development plans. Furthermore, MRCI has included projects on Schedule 2 which will be financed beyond the' next five years, well after the proposed project is operational and has demonstrated financial feasibility. (Handlon PT, p. 3; T. 1040, 1042). No MRCI or Marriott retirement housing project under construction has been slowed down or stopped for economic reasons. (T. 893). No retirement housing project which has been presented to the Executive Committee of Marriott has been denied or delayed. No project will be delayed once a CON has been issued or if another government timetable requires construction by a particular time. (T. 1223). MRCI is a subsidiary of Marriott Corporation, and the board of MRCI filed a proper letter of intent. Marriott has proven that it is committed to constructing, licensing and operating the project at issue iii this proceeding. MRCI operates five facilities that have had deficiency-free surveys under the new Omnibus Budget Reconciliation Act ("OBRA") guidelines. It is unusual to have no deficiencies found by the survey-team. Under the OBRA guidelines there are 710 elements in the program and surveyors evaluate compliance with the regulations by looking at each item. For each of these facilities, surveyors found that all 710 elements were in compliance with the guidelines and there were no deficiencies. (T. 905, 906). HQR'S APPLICATION Health Quest Realty II, Ltd. ("HQR II") is an Indiana limited partnership, first created prior to March 30, 1987 and authorized to transact business in the State of Florida on July 11, 1991. (HQR II Exhibit 7). HQR II is the authorized licensee of Regents Park of Jacksonville, a 120-bed community nursing home located in Duval County, Florida. HQR II has been the licensee of this facility since it first opened in 1986. HQR II's CON proposes to convert a portion of Regents Woods of Jacksonville, and existing Adult Congregate Living Facility, and thereby add nursing beds to an existing and co-located 120-bed nursing facility licensed as Regents Park of Jacksonville by HQR II. Alternatively, HQR II's CON proposed a 24 beds addition to Regents Park of Jacksonville. The 41-bed addition proposed by HQR II would involve 16,025 gross square feet at an estimated total project cost of approximately $2.6 million. The 24-bed partial request would involve 10,405 gross square feet at an estimated total project cost of $1.76 million. (HQR II App.) Health Quest Management Corporation IV ("HQMC IV") is an Indiana corporation, which filed, on October 3, 1984, a notice of doing business in Jacksonville as Regents Park in compliance with the fictitious name law. On February 12, 1986, HQR II filed a notice under Florida's "fictitious name" law, Section 865.09, Florida Statutes, in the public records of Duval County, Florida, giving notice of doing business as "Regents Park" in Jacksonville. CVI 33 (exhibit indicates document recorded at Duval County Official Records Vol. 6084, Pg. 1948). According to filings in the official records of Duval County, Florida, on September 25, 1987, the persons having an interest in HQR II were Lawrence H. Garatoni, holding a 90% interest, and Judith A. Garatoni,, holding a 10% interest. HQ 41 (exhibit indicates document recorded at Duval County Public Records Vol. 6402, Pg. 1466). An affidavit was filed in the official records of Duval County, Florida, that identified Lawrence H. Garatoni as owning a 190% interest in HQR IV, an Indiana corporation. HQ 40 (exhibit indicates document recorded at Duval County Official Records: Vol. 5860, Pg. 1904). Regents Park of Jacksonville actually is owned by Health Quest Realty XXII, another Indiana general partnership ("HQR XXII") (Krisher 7). The construction of Regents Park was financed by industrial revenue bonds issued by the City of Jacksonville on November 1, 1984. CVI 210. HQR XXII leased the property to HQR IV, which operates the facility. As part of the bond transaction, HQR XXII gave the City of Jacksonville a collateral assignment of its rights as lessor in its lease of the property to HQMC IV. All the Health Quest entities are controlled by one man, Lawrence Garatoni. Mr. Garatoni is the sole general partner of HQR II and owns 90% in that partnership, T. 1908 (Fall); HQ 41. Mr. Garatoni also owns 90% of the stock of HQMC IV, HQ 40, and owns 95% of HQR XXII partnership. T. 1780 (Fall). CVI 32, p. 7. The original CON for Regents Park was issued to HQR II. T. 1381. When Regents Park was first licensed in February of 1986, the license was issued to HQR II. T. 1382 (Krisher). In the process of obtaining renewal of the license for Regents Park in January of 1987 Mr. Krisher realized that the licensee, HQR II, in facet held no interest in the facility; HQR XXII was the owner of the property and HQMC IV the lessee/operator. Mr. Krisher brought this to the attention of Bruce Henderson of the HRS Office of Licensure and Certification ("OLC"). In an attempt to rectify the problem, HQR XXII entered an agreement to retain HQR II, the licensee to provide management services for the facility operated by HQR IV. CVI 23; T. 1382. This agreement was not rescinded. HRS advised that it would not issue a license to HQR II based on HQR II being a management agent because only the owner or lessee of a nursing home was eligible to be licensed. T. 1383. HQR II then approached HRS about obtaining approval for HQR IV to be the licensee of tie facility. HRS indicated to Mr. Krisher that to have the license issued to HQR IV would require a change of ownership. T. 1383. Mr. Garatoni did not want to go through a "change of ownership" since a new licensee could not retain the superior license, which Regents Park had received in December of 1986. T. 1384 (Krisher). In order to enable HQR II to obtain renewal of the license, HQR IV assigned its leasehold to HQR II. T. 1383. However, all profits and losses of Regents Park were recorded in the books of HQR IV because Mr. Garatoni did not wish to change the internal accounting structure of the Jacksonville operation. CVI 32, Wright deposition, p. 25. Conversely, there is only one set of books and records for HQR II, and they related only to the facility located in Merrillville, Indiana. T. 1861 (Fall). Disclosure of all material transactions and circumstances affecting the entity being audited is a key requirement (i.e., "completeness") in order to properly present an audited financial statement under GAAP. (Vol. 14, p. 1534; Vol. 17, p. 1840; Vol. 18, p. 1920). Since the Regents Park began operation in 1986, HQR IV has had and continues to have full operational and financial responsibility for the nursing home. (CVI Ex. 22; Vol. 13, p. 1394; Vol. 14, p. 1455; Vol. 18, p. 1883-4). HQR IV took the benefit of all profits and the risk of all losses from the operation of a nursing home licensed to HQR II and owned by Health Quest Realty XXII. (CVI Ex. 21a, 21b, 21c; Vol. 13, p. 1384, 1407-11; Vol. 14, p. 1430) HQR II claims these circumstances relieved its auditors from any responsibility to even mention, much less adequately disclose, financial data or other disclosure information pertaining to Regents Park. (Vol. 17, p. 1830-1). Neither the 1988 nor 1989 audited financial statements submitted by HQR II with its CON fairly present, in all material respects, the financial position, cash flow and results of operations of Regents Park of Jacksonville under GAAP. To the contrary, both financial statements were the result of a "special audit" of property located in Merrillville, Indiana, which is owned by HQR II and leased to a third party for a retirement community. (HQR II App,.; Vol. 17 p. 1824; Vol. 13, p. 1404-5) Although an audit of the applicant and licensee, HQR II, was presented, the operation of the nursing home upon which determinations of financial feasibility would be based never occurred. When each audit was conducted, HQR II's auditors had no knowledge of the Jacksonville operation. (Vol. 14, p. 1445-46; Vol. 18, p. 1877). The purpose of requiring audited financial statements is to provide HRS with reasonable assurances that an appropriate audit, with all necessary field work, was conducted. (Vol. 15, p. 1563; Vol. 15, p. 1619-22). HQR II did not provide financial statements which reasonably represented and presented the financial status of the applicant because HQR II did not tell the auditors about its Jacksonville operations. If complete field work and independent evaluation by the auditors had been performed, the auditors would have discovered the relationship between Health Quest Realty XXII, HQR II and HQR IV. In considering disclosure of related party transactions, the auditors would have had to reconcile the relationships between the various entities, and present a accurate picture of the finances of the applicant. The Health Quest nursing home has not made a profit in its five years of existence. (Vol. 17, p. 1798, 1799; Vol. 14, p. 1444, 1445) For example, in 1989 it suffered a net loss of $114,000. (Vol. 17, p. 1)98) In 1990, it suffered a net loss of $107,000. (Id.) Health Quest's past history of consistent losses was not disclosed anywhere in its application. (Vol. 14, p. 1444, 1445) Such information is relevant to the financial feasibility of a CON, and is revealed in a proper audited financial statement. (Vol. 12, p. 1324, 1325; Vol. 15, p. 1560- 61) Health Quest projects a profit for its bed addition alternatives. (Health Quest App. Sch. 18) Given the past history of losses, Health Quest did not provide any explanation as to how a profit should now be expected. (Health Quest App.) Health Quest is a foreign limited partnership which did not register to conducts business in the State of Florida until July 11, 1991. (Health Quest Ex. 7) Its petitions for formal administrative proceedings were filed in March and April of this year. Some scores in HRS' s system are objective, i.e., based on specific facts. Other scores in HRS's system are subjective, i.e., based on the reviewer's opinion. On the objective items, Health Quest received 480.3 points, 80% of the possible 602; Atrium received 47911 (80%). MRCI 397.3,7 (66%), and CVI 374.55 (62%). At. 8. On the subjective items, Health Quest received 442.94 points, 68%, of the possible 654; Atrium received 575.61 (88%); MRCI 566.7:5 (87%); and CVI 621.47 (95%). At. 8. Health Quest finished highest among the applicants on the items scored objectively add lowest among the applicants (by a gap of 19% of the maximum s1core available) on the items scored subjectively. Health Quest's is the only nursing home in Duval County that has had a "superior" licensure rating since 1986. Krisher 8. Only about a third of Florida's nursing homes have superior licenses. Brockish 4; HQ 2. Health Quest's facility is considered excellent by local physicians, hospital discharge planners, and home health agencies. HQ 38. The chairman of the District IV Long-Term Care Ombudsman Council described Regent's Park as having a "solid reputation," and as having been identified by the University of Northern Florida as "a model facility and primary site for its newly developed Administrator-in-training program."' 6513, PT 2, Item 3M (1/14/91 letter). A high level of staffing, measured by the ratio of full-time equivalent ("FTE") staff to patients, generally correlates to high quality care. T. 40, 42 (Vroman). Health Quest's existing total direct care staffing pattern, at 3.49 hours per patient day, exceeds the levels proposed by the other applicants. Health Quest's proposed staffing, measured by licensed staff (i.e., RNs & LPNs) or by total direct care staff (i.e., including nursing aides), is higher than that of any other applicant except MRCI's 24-bed proposal. HQ 11. Health Quest provides a broader range of services than most nursing homes, including subacute care such as intravenous antibiotics, respiratory care and tracheostomy care. T. 757, 59 (Janesky). Regents Park provides more physical therapy ("PT") than most nursing homes. Provision of PT is related to Medicare utilization because Medicare residents are the primary recipients of PT in nursing homes. 6513, PT 2, Only one other facility in Duval County provides the type of subacute care which Regents Park provides, and that facility is not an applicant for beds in this cycle, [T. 775 (Janesky), H31] although CVI states that it too will serve high acuity patients. Vroman 6-7. Although the CON application form asks for a description of "specialized programs," HRS has not defined "specialized program" in the application instructions. T. 394 (Gordon-Girvin). HRS gave Health Quest no credit for providing subacute care because subacute care was not considered a "specialized program" although HRS had considered subacute care a specialized program in the past. T. 1286-87 (Granger). The Office of Licensure and Certification, which licenses and monitors nursing homes, recognizes 11 categories of "special care." Regents Park provides all of them. Although Health Quest referred to this in `,its application, HRS gave Health Quest zero points in this category. At. 8 (Ex. B, p. 22). HRS gives the same weight to its consideration of a proposal to provide a particular service and type of care that it gives to actually providing the service or care. The application evaluation process does not differentiate between the promise to perform by a entity which has never engaged in the nursing home business and actual performance by an existing provider with an excellent track record. T. 1295 (Granger). The success of Regents Park in restoring residents to health is objectively demonstrated by the high ratio of patients discharged from Regents Park rather than remaining as residents until death. As reflected in HCCCB reports for 7/89- 6/90, Regents Park discharged 179 patients, i.e., 1.49 times its licensed beds, which was more than twice the rate for all other District IV facilities. 6513, PT 2, p. 43E Health Quest's actual resident care cost per resident day is the highest in the Southeast Duval County, which is considered a favorable factor under State Health Plan Preference #12. Nursing care cost for resident day for Regents Park for fiscal year 1989, per HCCCB reports, at $30.64 was higher than that for any of the other nine Southeast Duval County facilities reporting. 6513, PT 2, p. 45F. Similarly, Regents Park's dietary cost per patient day, at $8.69, exceeded any of the other nine facilities. 6513, PT 2, p. 48C. Health Quest proposes that all but four of its new beds are to be in private rooms. There would be two rooms, each with two beds, sharing an entrance to the hallway but otherwise private. T. 1155. CVI, MRCI and Atrium each plan to provide four to twelve beds in private rooms. HQ 10. Health Quest agreed to condition an approval on the following: The proposed site would be 7130 Southside Boulevard, Jacksonville, Florida. A minimum of 50% of patient days will be devoted to Medicaid patients for the proposed new unit. The facility will continue to use only certified nursing aides ("CNA's"). (Health Quest App.) The conditions, above, to which Health Quest committed are largely redundant. As an existing provider, Health Quest is limited to expansion at its existing site, 7130 Southside Boulevard, and it must use trained personnel. Health Quest listed as special care restraint reduction, and weight maintenance. HRS found that the these programs constitute services which every nursing home must provide, or should provide, as standard care. (Atrium Ex. 8, p. 17; Vol. 8, p. 753-63) Health Quest did not characterize its services to Alzheimer's residents as a special program within its application. (Vol. 12, p. 1288) The care for Alzheimer's patients becomes a special program when it is offered in a discrete unit or when some other unique feature is present, such as a facility design, which specifically takes into account and benefits the needs of residents with Alzheimer's. (Vol. 12, p. 1319, 1323) Health Quest's application did not present any such unique features. Health Quest's willingness to accept hard-to-place patients is reflected its practice of accepting Medicaid residents requiring skilled rather than intermediate care. Per 1989 HCCCB data, the proportion of Medicaid patients receiving skilled care at Regents Park (31.5%) was more than twice the average (11.6%) for other reporting Southeast Duval County facilities. 6513, PT 2, p. 45F. However, the percentage of Medicaid utilization to which Health Quest is committed is ambiguous because its application states: It should be noted that Medicaid residents are to be placed in the facility according to the wishes of the residents themselves, their attending physicians, and the staff. The Agreement on page 6 should not be misconstrued as evidencing an intention to operate the new unit at 50% Medicaid occupancy [sic]. (Health Quest App., Sch. 17, Footnote #16) The reference to "page 6" is the application page wherein the applicant can expressly agree to a particular Medicaid utilization condition. Given its proposal to convert ACLF space, the remoteness of the proposed Health Quest unit from its existing skilled nursing facility will not lend itself to optimal efficiency in utilizing existing nursing home support areas. (Atrium Ex. 8, p. 19) Almost all of the proposed Health Quest beds will be located in private rooms. (Vol. 9, p. 915) The isolation of the elderly in a private room can cause problems with depression. (Id.) Health Quest was deficient in describing how it would measure the outcomes for its programs. (Atrium Ex. 8, p. 21) Health Quest description of its residential quality assurance program was weak. [ANH Ex. 8, pp. 16, 17]. Health Quest was the only applicant proposing renovation rather than new construction. The instructions to the CON application form state: If currently owned land is going to be converted from some other use to be used for this project, the land's original cost plus past improvements made must be included. If the purchase price of the land was previously approved in CON review by this department, it must be excluded when calculating the application fee. * * * The same treatment applies to donated and converted buildings (including partial bed conversion) as apply to donated and converted land, except that cost less accumulated depreciation must be used. Health Quest followed the instructions and included the depreciated cost of the existing ACLF area to be converted to nursing beds. 6513, 6513-P, Sch. 1. HRS in its cost comparisons used the "total cost" figures given by the applicants. Using those figures, the cost per bed were as follows: CON Total Cost Cost Per Bed HQ 41-bed $2,608,646 $63,625 HQ 24-bed $1,765,482 $73,562 CVI $3,286,258 $54,771 Atrium $3,944,324 $46,956 MRCI 30-bed $1,891,507 $63,050 See State Agency Action Report, At. 8, pp. 2-3.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED, in the absence of reconsideration by the Department, that: The application of Health Quest be denied for failure to file a properly audited financial statement and establish its financial feasibility; The CON of Cypress Village be approved for 60 beds; The CON of Atrium be approved for 84 beds; and The beds sought by MRCI should be denied. DONE AND ENTERED this 11 day of February, 1992, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11 day of February, 1992.
Findings Of Fact Petitioners' application for a certificate of need to construct a 60- bed skilled nursing home was recommended for approval by the Health Planning Council, the health systems agency (HSA) for the five counties of Martin, Palm Beach, Volusia, Okeechobee and St. Lucie, but was denied by the Department of Health and Rehabilitative Services (HRS), Office of Community Medical Facilities. The latter agency has the ultimate responsibility for granting certificates of need. In recommending the granting of a certificate of need, HSA considered available beds in existing facilities in lieu of licensed beds, found 89.6 percent occupancy of available beds equal to or greater than 90 percent occupancy of licensed beds prescribed by the State Plan for Hospitals and Related Medical Facilities (Exhibit 2), used its own population forecasts rather than State population forecasts, and failed to consider certificates of need approval recently granted to five nursing homes in Palm Beach County, some of which were already under construction. HSA, at the time of this application had Palm Beach County divided into four regions (which has now been expanded to five) and the proposed facility is located in region three. At the time of the application there were three existing nursing homes in region three and two additional facilities had been granted certificates of need in this region. HSA normally uses licensed beds to determine the percentage of occupancy, but for reasons not explained at this hearing, HSA used available beds to determine the percentage of occupancy. Using available beds HSA found the three nursing homes in region three of Palm Beach County to have an 89.6 percent rate of occupancy. Had licensed beds been used, the percentage of occupancy would have been 83. The Office of Community Medical Facilities, in determining the need for additional medical facilities, has divided the State into 60 health care service areas and Palm Beach County is one of those areas. No evidence was submitted to indicate that the service areas so established are not reasonable. At the time of Petitioners' application, there were 1981 licensed nursing home beds in Palm Beach County; and applications had been approved, or recommended for approval and subsequently approved, for an additional 460 beds in Palm Beach County. The projected need in the State Plan for 1977 (Exhibit 2) for nursing home beds for Palm Beach County by 1982 is 2038. Accordingly, at the time of this hearing, nursing homes in Palm Beach County had received approval for 2441 beds which is 403 more nursing home beds than the forecast need for the year 1982. In determining the need for medical and health provider facilities, the usage rate of existing facilities is first determined from actual usage of the facilities. The Projected Average Daily Census is then determined by multiplying the use rate by the forecast population and dividing by 365 days per year. From this figure the bed need is determined by dividing the Projected Average Daily Census by .85 and adding 10. In this manner, HRS determined in the 1977 State Plan for Construction of Hospitals and Related Medical Facilities that Palm Beach County would have a need for 2038 nursing home beds in 1982. At the time Petitioners' application was recommended for approval by HSA, additional certificates of need had been granted for an additional 160 nursing home beds in region three of Palm Beach County. These facilities are designated as Life Care Centers because they are attached to condominiums from which their primary source of patients is expected to come. However, these facilities are essentially nursing homes and provide the same services as nursing homes. Had these authorized additional beds been included in computing the percentage of occupancy of nursing homes in region three the rate would have been approximately 60 percent, assuming no population change when these facilities become operational.
The Issue The central issue for disposition is whether Certificate of Need no. 7750, for 24 hospital-based skilled nursing unit beds should be awarded to Petitioner, St. Joseph’s Hospital, Inc. (St. Joseph’s). To resolve that issue it is necessary to resolve factual issues regarding the need for the proposed beds and a legal issue regarding the impact of Health Care and Retirement Corp. of America v. Tarpon Springs Hospital Foundation, Inc. 671 So.2d 217 (Fla 1st DCA 1996) (Tarpon Springs) on the fixed need pool published in the first nursing home batching cycle of 1994 in Hillsborough County, District 6, Subdistrict 1.
Findings Of Fact The Parties St. Joseph’s Hospital, Inc. (St. Joseph’s) is a not- for-profit hospital which has operated in the Tampa, Florida area for over fifty years. It is currently licensed for 883 acute- care beds; it owns John Knox Village, which includes an adult congregate living facility and medical center nursing home; and it offers other services in a continuum of health care. St. Joseph’s also has a 19-bed, in-hospital skilled nursing care unit which became operational in early 1995. The Agency for Health Care Administration (agency or AHCA) is the state agency responsible for administering and enforcing the certificate of need (CON) process described in sections 408.031 through 408.045, Florida Statutes (“the Health Facility and Services Development Act”). The Process The fixed need pool published by AHCA in vol. 20, number 15, April 15, 1994, Florida Administrative Weekly, projected a need for 94 additional nursing home beds in Hillsborough County, District 6, Subdistrict 1, for the January 1997 planning horizon. There is no evidence that this fixed need pool was challenged. Approximately eleven health care providers, including St. Joseph’s, responded to the fixed need pool notice with applications for CON’s ranging from 10 to 94 beds. Some of those applicants, like St. Joseph’s, were hospitals seeking hospital- based skilled nursing beds. After comparative review of the applications, AHCA issued its state agency action report (SAAR) on September 16, 1994, denying some and granting others, and explaining the basis for its intended actions. Some of the beds were awarded for a hospital-based skilled nursing unit; St. Joseph’s application for 24 in-hospital beds was denied in the comparative review that determined St. Joseph’s application was inferior to others in meeting statutory and rule criteria. The applicants’ petitions for formal hearing were forwarded to the Division of Administrative Hearings by AHCA and were consolidated in a single proceeding relating to the 94 beds in District 6, Subdistrict 1. On October 19, 1995, during the pendancy of appeal of the DOAH Final Order in Tarpon Springs, all of the parties in the consolidated cases executed and filed a stipulation which disposes of 93 out of the 94 available beds in the fixed need pool. The stipulation provides that all of the applicants, except St. Joseph’s, withdrew their petitions for formal hearing. As to St. Joseph’s, the stipulation provides: St. Joseph’s has previously withdrawn its opposition to the applications of all other parties to this proceeding by its Notice of Voluntary Dismissal of Petitions for Administrative Hearing and Notice of Lack of Opposition, dated September 13, 1995. St. Joseph’s and AHCA stipulate that Case No. 94-6236, wherein St. Joseph’s challenged the denial of its application for certificate of need 7750 to add 24 skilled nursing unit beds, should be held in abeyance pending the final judicial determination of Tarpon Springs Hospital Foundation, et al. v. Agency for Health Care Administration, et al. (Proceeding below DOAH Case Nos. 94-0958RU and 94-1165RU, reported at 16 FALR 3420, presently on appeal before the First District Court of Appeal). St. Joseph’s acknowledges that the terms of this settlement will deplete the fixed bed need pool determined to be available for this application cycle, assents to the same, and maintains its position that its application should be approved notwithstanding the lack of availability of community nursing home beds within the fixed bed need pool. All other parties to this agreement except for AHCA hereby withdraw their petitions filed in this proceeding in opposition to the application of St. Joseph’s for certificate of need 7750 and waive any challenge or protest that they may have to the issuance of certificate of need 7750. St. Joseph’s hereby agrees not to oppose the transfer of up to seven (7) beds from this application cycle to TGH. After remand of all of the consolidated cases except St. Joseph’s (DOAH no. 94-6236), AHCA entered its final order on December 13, 1995, awarding CON’s for 93 beds to various of the applicants. Some of those 93 beds were awarded for hospital- based skilled nursing units. This final order depleted the fixed need pool of all but one bed. In their prehearing stipulation filed on August 29, 1996, AHCA and St. Joseph’s admitted these relevant facts: The appropriate planning area is Hillsborough County; The appropriate planning horizon for the application is January 1997. Rule 59C-1.036, Florida Administrative Code was appropriately used in determining the bed need for Hillsborough County, District 6, Subdistrict 1, for the first nursing home batching cycle of 1994; and The numbers used to derive the project pool of 94 beds in Hillsborough County, District 6, Subdistrict 1 for the January 1997 planning horizon were accurate and appropriate. At the hearing and in its proposed recommended order, St. Joseph’s concedes that it did not apply for beds under “not normal” circumstances. The Project St. Joseph’s proposes to establish a 24 bed, hospital- based skilled nursing unit in an area of its main hospital building by converting 24 acute care beds to this use. The project involves 19,600 square feet of renovation at a total project cost of $684,731, including conversion costs of $331,940. Actual out-of-pocket costs for the project are $352.791. The skilled nursing beds within the hospital facility are intended to contribute to St. Joseph’s goal of providing a full continuum of care for its patients, with services provided at different levels for a medically-appropriate and cost- effective outcome. St. Joseph’s anticipates that the patient using the skilled nursing (also called “subacute care”) unit would be one coming from the acute care setting and requiring less-acute care, but a more intensive level of care and a shorter length of stay than generally offered in a typical nursing home. All ancillary services and therapies will be available at the hospital seven days a week. Rehabilitative services, which are critical to the patient likely to use the skilled nursing beds, include physical therapy, occupational therapy, speech and language therapy, and recreation therapy. Need Analysis/Impact on Existing Programs Virtually all of the referrals to the proposed new beds will come from within St. Joseph’s. This is the experience of the new 19 bed unit. The hospital’s doctors and their patients prefer to not transfer to an outside facility and they plan in advance, as part of their treatment goals, that the subacute rehabilitative phase of treatment will be in St. Joseph’s own skilled nursing unit. The multi-discipline health care team evaluates and identifies patients who will benefit from such treatment; patients are not automatically shifted down to the unit. The existing unit enjoys a near-100 percent occupancy rate and has a waiting list for patients. Sometimes patients are held in an acute care bed while awaiting transfer to a vacant bed in the skilled nursing unit. This is an inappropriate use of the acute care bed. Few, if any patients would come from other hospitals. Since many hospitals now have their own skilled nursing units, there is little exchange of patients. In the experience of St. Joseph’s staff, other hospitals generally fill their own units from within in their own “continuum of care” system. John Knox Village is not an alternative for patients who need to “step-down” from acute to subacute care. John Knox is eleven miles from St. Joseph’s and does not provide the intensity of care that is offered in the hospital-based skilled nursing unit. There are subacute care, or skilled nursing care, beds in Hillsborough County in free-standing, not hospital-based units. These alternative facilities are not all fully occupied and some offer similar services and treat patients comparable to those treated in the hospital-based units. Evidence that the free-standing skilled nursing facilities are not appropriate alternatives to St. Joseph’s new beds was largely anecdotal. Although Dr. Wasylik, St. Joseph’s chief of orthopedics, is generally familiar with facilities in which he has patients, his observation that transfer of patients from St. Joseph’s would not be appropriate is based on his concern that the “continuity of care” would be disrupted. In other words, even before surgery and admission to an acute care bed, a “critical pathway” in the patient’s rehabilitation is developed. Another facility might have a different pathway that would disrupt the rehabilitative process. Better continuity of care, in Wasylik’s view, translates into quicker, and thereby more cost-effective, recovery. Financial Considerations Although the agency found some inconsistencies in the financial data included in St. Joseph’s application, those inconsistencies affected only the scoring of the application in a competitive batching cycle. The agency witness who provided financial review of the application conceded there was no problem with funding the project, and due to the small size of the project in relation to the size of St. Joseph’s, the project would not have a significant impact on the cost of other services provided by St. Joseph’s. The proposed project would generate a positive financial return for St. Joseph’s. In the proforma financial statement included with the application, the hospital used an occupancy rate of 74%; the actual occupancy rate experienced in the new 19 bed unit is higher. Some of the problems the agency found when reviewing St. Joseph’s application were adequately explained at hearing. For example, the actual cost of the project is less than what the agency found in the financial projections in the application. Also, if, as the agency contends, St. Joseph’s has over-stated its projection of Medicaid patients, a lower Medicaid utilization rate will actually inure to the benefit of St. Joseph’s, since the Medicaid reimbursement rate is lower than for other payor sources. While not obvious on the face of the application, the financial assumptions provided by St. Joseph’s were sufficient to extrapolate valid projected salary expenses in the second year of operation. In summary, a CON application, by necessity, includes estimates and projections of expenses and revenue generated by the proposed project. St. Joseph’s now has the experience, which it did not have when the application was prepared, of the actual expenses and revenue from its 19 bed unit. That actual experience helps validate its prediction of financial feasibility for the proposed 24 beds. Architectural Issues At hearing, St. Joseph’s clarified its intent to not delicense nor relocate acute care beds to make room for the proposed 24 bed skilled nursing unit. Nor does it intend to “phase in” the skilled nursing beds, if approved. Neither of these intentions is clear from the face of the application and the architectural review by the agency raised questions on these issues. The questions affected St. Joseph’s overall standing in a competitive review process, but are not serious enough to foreclose approval if the application is considered on its own merit. The application states that the new beds would be co- located with the existing 19 beds. But if there is not sufficient room, as long as St. Joseph’s can accomplish the project at or below the approved project cost, and as long as St. Joseph’s obtains agency approval for placing the beds elsewhere (which approval is routinely granted), the precise location of the beds within St. Joseph’s facility is not a problem. The beds may not, nor are they intended to be, co-mingled with acute care beds in the hospital. Upon construction, the 24 beds will meet all of the licensure, building code and other regulations applicable to a skilled nursing unit within an acute care hospital. Balancing the Criteria and Summary of Findings There is little dispute that St. Joseph’s has the financial resources to complete the approved project and to operate it successfully. Nor is quality of care, either in the existing facility and projected in the future, an issue of dispute. The questions raised in the financial review and architectural review are not impediments to approval. There are two significant problems with St. Joseph’s proposal. St. Joseph’s serves the entire planning district, and the impact of new beds must be considered in that district-wide health-planning perspective. St. Joseph’s generates enough patients from within its own hospital to fill the beds close to capacity. Other facilities providing similar services in the district are not at full capacity. The possibility of those existing facilities serving as an alternative to new beds was not adequately explored by St. Joseph’s, but was rejected out of an abundance of pride in its own fine services, or physician and patient loyalty. Patient and physician preference does impact “real world” utilization of health care facilities but cannot drive the health planning decisions that are made in the CON process. The second, and most significant impediment to St. Joseph’s application is that only one bed remains in the fixed need pool established for the relevant planning horizon. As discussed below, Tarpon Springs did not invalidate that fixed need pool. St. Joseph’s application does not reflect a willingness to accept any fewer than the requested beds, much less an award of only one single bed. (See, Respondent’s Exhibit 12, CON application, p. 34)
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: that the Agency for Health Care Administration enter its final order denying CON number 7750 to St. Joseph’s Hospital, Inc. DONE and ENTERED in Tallahassee, Leon County, Florida, this 23rd day of January 1997. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of January, 1997. COPIES FURNISHED: Ivan Wood, Esquire Baker & Hostetler Suite 2000 100 Louisiana Houston, Texas 77002 Steven A. Grigas, Esquire Agency for Health Care Administration 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 Jerome W. Hoffman, Esquire General Counsel 2727 Mahan Drive Tallahassee, Florida 32308-5403
Findings Of Fact Floridean Nursing Home is a licensed 52-bed skilled nursing facility (SNF) which has been in continuous operation since 1944, long prior to any state licensing requirements and Medicaid certification requirements. Since the inception of licensure requirements by the State of Florida, Floridean Nursing Home (hereinafter "Floridean") has been licensed as a skilled nursing home facility. Respondent is the state survey agency authorized by the federal government to administer the Medicaid program. Since the inception of the Medicaid program, Floridean has obtained certification by Respondent to receive Medicaid funds. Floridean has been operated by the same ownership and management since 1944. Staff employees enjoy an excellent longevity record. The patients have an excellent longevity record, with patients residing there 14 and 22 years. The facility has operated on an approximately 98 percent occupancy rate since its inception. Respondent has stipulated that the facility provides excellent care to its patients, that no question of safety is involved, and that the facility has been designated by the State as a Class "A" care facility. Additionally, a grand jury investigating nursing homes in Dade County concluded that the Floridean consistently provides a very good quality of care. The State has further stipulated that the Floridean meets all staffing requirements. Unlike many nursing homes, the Floridean only admits private patients, and does not admit Medicaid patients. The only exception to this policy occurred during 1981 when the Floridean admitted three Medicaid patients at the request of those patients' doctors and Congressman Pepper, since the nursing home in which they had resided was being closed and there was no other home in which those patients could have been placed at the time. Other than this one exception, Floridean's participation in the Medicaid program arises solely when one of its private patients runs out of funds and therefore becomes a recipient of Medicaid benefits. The patient can reside at the Floridean for years prior to such an event. A Medicaid certification requirement prohibits more than four beds in any room and further requires that each patient in a multi-bed room be provided with not less than 80 square feet of space. The State of Florida has a similar requirement for licensure. Since nursing homes were in operation in the State of Florida prior to the inception of the State's licensure program, a "grandfather" clause was included in the legislation. The "grandfather" clause applies to the Floridean. Accordingly, the Floridean is not required to provide more than 80 square feet of space to each patient and is not required to limit the number of beds per room to four beds insofar as state licensure is concerned. Respondent stipulates that if the Floridean only had private patients as residents, the space requirements would not apply, and the Floridean could continue to operate with 52 patients. If Respondent imposes on the Floridean the minimum space requirements for certification by Respondent under the Medicaid program, the Floridean would be required to remove three beds from its dormitory and one bed each from a substantial number of its other patient rooms. Accordingly, the Floridean would be licensed to operate as a 52-bed facility under its state licensure, but only 37 beds could be utilized so long as some of its private patients require Medicaid assistance after depletion of their personal funds. The Floridean Nursing Home is located in the city of Miami in a residential district. The Floridean is classified as a nonconforming use under the city's zoning ordinances. As a nonconforming use, the Floridean cannot obtain a building permit to enlarge its structure and cannot obtain a variance from the city for such enlargement. Further, since the South Florida Building Code and the Fire and Safety Code require a minimum width for interior corridors, no building permit can be obtained to enlarge the rooms within the structure. The Floridean does not discriminate in room assignment between solvent and insolvent patients. No separate section in the facility is maintained for Medicaid recipients only. Rather, room assignments are made based upon similarity of patient needs; for example, an alert patient is not placed in a room where the other resident(s) suffer from senility. If a patient's condition changes, then relocation of that patient might be made. Medical testimony on behalf of the Petitioner explained Petitioner's policy against relocating patients. Patients in nursing homes become very possessive of their beds and develop a sense of ownership for their individual portions of a room. They become very disturbed when they are moved and become aggressive. There have been incidents where nursing homes have been closed; and after their long-term residents have been moved to another facility, those patients have become overly passive, have failed to thrive, and have died within a short period of time. The same phenomena apply even when patients are moved around within the same room. A division within the Respondent Department is responsible for placing persons needing nursing home beds. Dade County has more requests for beds in nursing homes than the number of beds available. As of two weeks prior to the hearing in this cause, there were approximately 100 patients with pending requests for placement. At the time of the hearing, the Floridean had 18 Medicaid patients, with two additional residents becoming Medicaid patients later that month. If the Floridean were to reduce its patient census from its 52 licensed beds to the 37 allowable beds if the Respondent enforces the Medicaid minimum footage requirement, the Floridean would have to discharge its Medicaid patients even though no other beds might be available to them. Due to staffing requirements and fixed expenses, the Floridean would be forced to cease operation if its patient census were reduced to 37 patients. In addition to being medically inadvisable, relocation of patients within the facility is not possible, since all rooms at the Floridean are the same size except for the dormitory. In 1977, Respondent's employees cited Petitioner for violation of the minimum footage requirements and proposed denial of Petitioner's certification to participate in the Medicaid program. Petitioner requested a formal hearing, and the matter was referred to the Division of Administrative Hearings. A Recommended Order was entered by the presiding hearing officer recommending that Petitioner be granted a variance from the Medicaid minimum space requirement so that Petitioner continues to be certified to participate in the Medicaid program. By Final Order entered February 6, 1978, the Secretary of the Department of Health and Rehabilitative Services adopted the Recommended Order and granted a variance. Floridean Nursing Home v. Department of Health and Rehabilitative Services, DOAH Case No. 77-1413. Since a variance must be renewed each year, the variance granted by the Secretary of the Department of Health and Rehabilitative Services, the agency head, was valid through the period ending December, 1978. In November, 1978, the Department's certification employees renewed Petitioner's variance until December, 1979, but added a condition that as a patient left a room, no new admission to that room be made. On December 10, 1979, the certification employees again granted a variance with the same condition for the period ending December, 1980. On December 1, 1980, the certification personnel advised Floridean that the Floridean had violated the terms of the two prior variances by admitting new patients as beds were vacated and that the Floridean would be required to meet federal minimum space requirements or certification would be withheld. The formal hearing in this cause involves Petitioner's request for relief from the proposed agency action contained in that December 1, 1980, letter. The facts and the law between the entry of the Final Order by the Secretary of the Department of Health and Rehabilitative Services approving that request for variance with no conditions and the entry of this Recommended Order have remained the same. Petitioner's medical testimony that the particular needs of the patients at Floridean are well met and that the provision of minimum square footage per patient less than the requirement in no way adversely affects their health and safety is uncontroverted. Rather, Respondent has stipulated that the patients receive excellent care even though the dormitory contains seven beds rather than four and even though many patients are provided less than 80 square feet of space. There is no evidence that the federal government has disputed the variances granted to Petitioner by the Respondent. There is no evidence that the federal government has disputed the certification of Petitioner's eligibility to receive Medicaid funds. There is no evidence that Medicaid funds have been withheld from Petitioner during the years that Petitioner has received a variance from the Respondent.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED THAT; A final order be entered granting Petitioner's request for variance from the requirements of Section 405.1134(e), Code of Federal Regulations, and certifying Petitioner under the Medicaid program. RECOMMENDED this 20th day of September, 1982, in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of September, 1982, in Tallahassee, Florida. COPIES FURNISHED: Jack R. Rice, Jr., Esquire Mr. David Pingree Post Office Box 350838 Secretary Miami, Florida 33135 Department of Health and Rehabilitative Services Martha F. Barrera, Esquire 1323 Winewood Boulevard Office of Long Term Care Tallahassee, Florida 32301 Department of Health and Rehabilitative Services 1320 South Dixie Highway 11th Floor Coral Gables, Florida 33146
Findings Of Fact At all times material hereto, Plantation was a licensed nursing home facility and participated in the Medicaid program. A nursing home that receives a superior rating is entitled to incentives based on the Florida Medicaid Reimbursement Plan. Plantation has met all the requirements for a superior rating that are enumerated in Rule lOD-29.128, Florida _Administrative Code. The only reason Plantation was not granted a superior rating was based on the Medicaid Inspection of Care, Team report. (stipulated facts) From August 21 through August 31, 1984, Plantation underwent a routine inspection by the HRS Medicaid Inspection of Care (IOC) Team. The purpose of the inspection was to review the care and treatment of Medicaid recipient patients in accordance with state and federal standards in order for the facility to receive Medicaid payment for those individuals. During the course of the inspection, several deficiencies were found by IOC Team. The deficiencies were summarized in the Medicaid Inspection of Care Team report, entitled Facility Evaluation Summary, prepared by Ms. Tranger. The report listed the deficiencies as follows: Fifteen skilled and two intermediate out of 46 medical records reviewed failed to have medication revalidated by the attending physician within the proper time frame Four of forty-six records reviewed failed to have available documentation that laboratory tests were completed in accordance with doctors' orders and medication regimen, Fourteen skilled and thirteen intermediate out of 46 medical records reviewed failed to have the Plan of Care reviewed within the proper time frame: Ten medical records were not certified within the proper time frames and fifteen medical records were not current for recertification. As to the first deficiency noted, the problem was not that the physician failed to revalidate medication, but that Ms. Tranger did not think that the physician appropriately dated the revalidation. In almost all of the cases, the problem was that Ms. Tranger did not think that the physician had personally entered the date because the date was written with a different color of ink than the doctor's signature or the handwriting appeared to be different. Ms. Tranger did not know whether the dates were written by someone in the physician's office or someone at the nursing home. It is very difficult for a nursing home to get a physician to sign and date orders properly. Plantation had a procedure for securing the doctor's signature and having records dated. When a record was received that was not properly signed and dated, Plantation returned the record to the doctor with a letter or note telling the doctor what needed to be done. When returned by the doctor to Plantation, the record would bear the later date, which caused some records to be out of' compliance with the required time frames. The return to the doctor of records that were not properly dated may also explain why some of he dates were written in a different color ink than the doctor's signature. In those few cases where the dates on the report were not within the proper time frame, the dates were only a few days off. In one case a 34 day period, from July 7, 1984 to August 10, 1984, elapsed before the medication was revalidated. In another case, there were 33 days between the dates. In both cases the medication should have been revalidated every 30 days. The problem with the revalidation dates was strictly a paperwork problem and not one that affected the care of the patients. As stated before, in the majority of the cases the medication was revalidated within the proper time frame. The problem was simply that it appeared that someone other than the doctor had written down the date. The second deficiency was a finding by the surveyors that 4 of the 46 medical records reviewed failed to have available documentation regarding laboratory tests being completed in accordance with doctors' orders. However, Jean Bosang, Administrator of Plantation, reviewed all of the records cited by the IOC Team as the basis for these deficiencies and could only find two instances in which laboratory tests were not performed. HRS did not present any evidence to establish the two other alleged instances. Dr. Lopez reviewed the medical records of the two residents in question and determined that there was no possibility of harm to the patient as a result of failure to perform these tests. One of the two residents is Dr. Lopez' patient, and he normally sees her every day. He stated that the test, an electrolyte examination, was a routine test, that the patient had had no previous problems, and if any problem had developed, she would have had symptoms which would have been observable to the nurses. The tests performed before and after the test that was missed were normal, and the failure to perform the one test had absolutely no effect on the patient. Dr. Lopez was familiar with the other resident upon whom a test was not performed and had reviewed her records. This resident was to have a fasting blood sugar test performed every third month. Although this test was not performed in April of 1984, it was performed timely in every other instance. All tests were normal, and the failure to perform this test did not have any effect on the resident. Had she been suffering from blood sugar problems, there would have been physical signs observable to the nurses. The fourth deficiency listed in the report was a paperwork problem similar to the first deficiency. Patients in a nursing home are classified by level of care and must be recertified from time to time. Certification does not affect the care of the resident. The recertification must be signed and dated by the physician. Again, there was a problem on the recertification because some of the dates were in a different color ink than the physician's signature. Again, the problem was primarily caused by difficulty in getting proper physician documentation. The deficiency did not affect the care of the residents. Mr. Maryanski, who made the decision not to give Plantation a superior rating, testified that of the four deficiencies cited in the IOC report, he believed that only the third deficiency listed, in and of itself, would have precluded a superior rating. An analysis of that deficiency, however, shows that it also was mainly a paperwork deficiency and had no impact on patient care. The third deficiency listed involved a purported failure to have the plans of care reviewed within the proper time frames. Patient care plans are to be reviewed every 60 days for "skilled" patients, those that need the most supervision, and every 90 days for "intermediate" patients, those that need less supervision. A patient's plan of care is a written plan establishing the manner in which each patient will be treated and setting forth certain goals to be reached. A discharge plan is also established, which is basically what the nursing home personnel believe will be the best outcome for the patient if and when he or she leaves the hospital. The patient plan of care is established at a patient care plan meeting. Patient care plan meetings are held by the various disciplines in the nursing home, such as nursing, dietary, social work and activities, to review resident records and discuss any problems with specific residents. The manner in which the problem is to be corrected is determined and then written down on the patient's plan of care record. The evidence revealed that the basis of the deficiency was not a failure to timely establish or review a plan of care, but a failure to timely write down and properly date the plan of care. During the time in question, care plan meetings were held every Wednesday, and all of the disciplines attended the meetings. However, all disciplines did not write their comments on the patients' records at the meeting; some wrote them later. Usually, when they were added later, the comments were dated on the day they were written, rather than on the day the meetings were held. The evidence presented did not show any case in which all disciplines were late in making notes, but revealed only that specific disciplines were tardy. Since all the disciplines attended one meeting, it is apparent that when the date for any discipline was timely, the later dates of other disciplines merely reflected a documentation or paperwork problem. In late 1984 or early 1985, Plantation changed its system to avoid the problem in the future. There appeared to be problems with some of the discharge plans being untimely. The discharge plan is not utilized in the day-to-day care of the resident. Discharge plans at Plantation were kept in two places, and Ms. Tranger recognized that she may have overlooked some plans if they had been written only on the separate discharge sheet. The four deficiencies cited all involved time frames. There are innumerable time frames that must be met by a nursing home. The great majority of the deficiencies involved a failure to properly document. None of the deficiencies affected the care of the patients. Indeed, Ms. Tranger indicated that the patients were all receiving proper nursing care. The decision to give Plantation a standard rating was made by Mr. Maryanski based solely on the IOC report. He relied upon section 400.23,(3) Florida Statutes, which states: "The department shall base its evaluation on the most recent annual inspection report, taking into consideration findings from other official reports, surveys, interviews, investigations and inspections." There are no regulations or written or oral policies implementing this provision. Mr. Maryanski looked solely at the face of the IOC report and did not do any independent investigation. He never visited the nursing home, and he never talked to the on-site surveyors to determine whether the deficiencies cited by the IOC Team were significant. He never saw the underlying documentation which formed the basis of the report. Mr. Maryanski has no background either in nursing or medicine and had no knowledge of purpose the tests that were allegedly not performed. On October 4, 1984, the HRS Office of Licensure and Certification (OLC) conducted the annual survey of the facility. Mr. Maryanski did not determine whether the deficiencies found by the IOC Team had been corrected at the time of the annual survey. An IOC Team surveyor returned on November 21, 1984, and found that all of the deficiencies cited during the IOC inspection had been corrected. A resurvey of the facility was conducted on December 27, 1984, by OLC. All deficiencies noted in OLC's original inspection had been corrected. All nursing home facilities in Florida are rated by HRS as conditional, standard, or superior. In addition to its financial significance, the rating of a facility is important because it affects the facility's reputation in the community and in the industry. The rating for a facility goes into effect on· the day of the follow-up visit of OLC if all deficiencies have been corrected. Therefore, Plantation would have received a superior rating, effective December 27, 1984, had it not been for the IOC report Mr. Maryanski never tried to determine whether the deficiencies in the IOC report had been corrected subsequent to the report being issued. Under rule lOD-29.128, Florida Administrative Code, there are extensive regulatory and statutory requirements which must be met for a facility to be granted a superior rating. Plantation met all of the enumerated requirements, yet it received only a standard rating. Mr. Maryanski based his determination on the IOC report despite the fact that it was outdated and the deficiencies in that report were corrected by November, 1984, prior to the December, 1984, resurvey by the OLC. There was nothing in the annual survey report of the OLC to preclude a superior rating. This is the first time a facility has been denied a superior rating based upon a report other than the annual report.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Plantation Nursing Home be given a superior rating. DONE AND ENTERED this 3rd day of March, 1986, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1986. COPIES FURNISHED: Jonathan S. Grout, Esquire Post Office Box 1980 Orlando, Florida 32802 Harold Braynon; Esquire District X Legal Counsel, 201 West Broward Boulevard Ft. Lauderdale, Florida 33301 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings On Proposed Findings of Fact Submitted by the Petitioner Accepted in Finding of Fact 1. 2-3. Accepted in Finding of Fact 2. 4. Accepted as set forth in Finding of Fact 21. 5-6. Accepted in Findings of Fact 22-23. 7-9. Accepted in Finding of Fact 24. 10. Rejected as immaterial. 11-12. Accepted in Findings of Fact 24-25. Accepted in Finding of Fact 19. Accepted in Finding of Fact 26. 15-16. Accepted generally in Findings of Fact 20 and 24. 17-19. Accepted generally as set forth in Finding of Fact 26. In Background section. Cumulative. Accepted in Finding of Fact 18. Accepted in Finding of Fact 12. 25-31. Accepted in substance in Findings of Fact 4-7. 32-43. Accepted in substance in Findings of Fact 8-10. 44. Rejected as not supported by the evidence. 45-46. Accepted in Finding of Fact 11. 47. Accepted in Finding of Fact 3. 48-49. Accepted in Finding of Fact 3. 50-57. Accepted in general in Findings of Fact 13-16. 58. Accepted in Finding of Fact 17. Rulings On Proposed Findings of Fact Submitted by the Respondent Accepted in Finding of Fact 1. Accepted generally in Findings of Fact 1, 20, 24. Accepted in Finding of Fact 1. Accepted generally in Finding of Fact 19 and Background. 5-8. Accepted in Finding of Fact 3. Accepted in substance in Finding of Fact 2. Accepted in Finding of Fact 2. Accepted in Finding of Fact 3. Accepted in Finding of Fact 13 except as to time frame for intermediate patients which should be 90 days. Accepted that the documentation showed a gap, but proposed finding rejected in that the evidence did not show that, in fact, the patient was not reviewed with the proper time frame. Accepted, without naming the patients, and explained in Finding of Fact 6.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the stipulation of facts "entered into by all parties, the following relevant facts are found: Along with six other applicants, the petitioner, Health Quest Corporation, d/b/a Lake Pointe Woods Health Center, and the respondent, Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center, submitted applications for a Certificate of Need to construct and operate new nursing homes in Sarasota County, In June of 1982, the respondent Department of Health and Rehabilitative Services (HRS) determined to issue the application of Sarasota Health Care Center and deny the remaining seven applications. For the purposes of this proceeding, the parties have stipulated that there is a need for at least a 120-bed skilled and intermediate care nursing home in the Sarasota, Florida area. In November, 1982, respondent HRS adopted Rule 10- 5.11(21) , Florida Administrative Code, which provides a formula methodology for determining the number of nursing home beds needed in areas throughout the State. Briefly summarizing, this formula begins with a bed to population ratio of 27 per thousand population age 65 and over, and then modifies that ratio by applying a poverty ratio calculated for each district. The theoretical bed need ratio established for Sarasota County by this portion of the Rule's formula is 23.2 nursing home beds per thousand elderly population projected three years into the future. The population figures to be utilized in the formula are the latest mid-range projections published by the Bureau of Economic and Business Research (BEBR) at the University of Florida. After determining the theoretical need for nursing home beds in an area, the Rule purports to determine the actual demand for beds by determining the current utilization of licensed community nursing home beds, establishing a current utilization threshold and, if this is satisfied, applying a prospective utilization test too determine the number of beds at any given time. Applying the formula methodology set forth in Rule 10- 5.11(21) to Sarasota County results in a finding that there are currently 807 excess nursing home beds in that County. The need for sheltered nursing home beds within a life care facility are considered separately in Rule 10-5.11(22), Florida Administrative Code. Generally speaking, need is determined on the basis of one nursing home bed for every four residential units in the life care facility. Elderly persons 75 years of age and older utilize nursing homes to a greater extent than those persons between the ages of 65 and 74. Persons under the age of 65, particularly handicapped individuals, also utilize nursing home beds. The formula set forth in Rule 10-5.11(21) does not consider those individuals under the age of 65, and it does not provide a weighted factor for the age 75 and over population. In the past, the BEBR mid-range population projections for Sarasota County, compared with the actual census reached, have been low. Petitioner Health Quest, an Indiana corporation, currently owns and/or operates some 2,400 existing nursing home beds in approximately 13 facilities in Indiana. It holds several Certificates of Need for nursing homes in Florida and construction is under way. Petitioner owns 53 acres of land on the South Tamiami Trail in Sarasota, upon which it is constructing a 474-unit retirement center. It seeks to construct on six of the 53 acres a 120-bed nursing home adjacent to the retirement center. Of the 120 beds, it is proposed that 60 will be for intermediate care and 60 will be for skilled care. The facility will offer ancillary services in the areas of speech, hearing, physical, occupational, and recreational therapy. Thirty-five intermediate care beds would be classified as beds to be used for Medicaid recipients and the facility would be Medicare certified. Retirement center residents will have priority over nursing home beds. The total capital expenditure for the petitioner's proposed nursing home project was estimated in its application to be $3.1 million, with a cost per square foot of $46.29 and a cost per bed of approximately $26,000,00. As of the date of the hearing, the estimated capital expenditure for the petitioner's project as $3.9 million. The respondent Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center (QHF), is a Mississippi corporation and owns nursing homes in Tennessee, North Carolina and Haines City, Florida, the latter site having been opened in August of 1983. It also holds three other outstanding Certificates of Need. QHF proposes to construct a 120-bed nursing home containing intermediate and skilled care beds which will be equally available to all members of the community. It is anticipated that it will have approximately 65 percent Medicaid usage and 5 percent Medicare usage. Though it has not yet selected its site, QHF plans to utilize a four-acre site near the City of Venice in Sarasota County. At the time of the application, the total capital expenditure for QHF's proposed project was estimated to be $2.3 million. Its construction costs were estimated at $1.16 million or $33.14 per square foot. QHF's recently constructed Haines City nursing home facility was completed at a construction cost of $1.22 million, or $31.00, per square foot. The Sarasota County facility will utilize the same basic design as the Haines City facility. At the current time, the cost of construction would be increased by an inflation factor of about ten percent. As of the date of the hearing, the projected capital expenditure for QHF's Sarasota County proposed facility was approximately $2.6 million or about $21,000.00 per bed. The owners of QHF are willing and able to supply the necessary working capital to make the proposed nursing home a viable operation. As depicted by the projected interest and depreciation expenses, the QHF facility will have lower operating expenses than the facility proposed by petitioner, Health Quest. In Sarasota County, there is a direct correlation between high Medicaid utilization and high facility occupancy. The long term financial feasibility of a 120-bed nursing home in Sarasota County is undisputed, as is the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing services in the health service area.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Health Quest Corporation d/b/a Lake Pointe Woods Health Care, Inc. for a Certificate of Need to construct a 120-bed nursing home in Sarasota County be DENIED. It is further RECOMMENDED that the application of Quality Health Facilities Inc. d/b/a Sarasota Health Care Center for a Certificate of Need to construct a 120-bed nursing home facility in Sarasota County be GRANTED. Respectfully submitted and entered this 31st Day of October, 1983, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1983. COPIES FURNISHED: John M. Laird, Esquire 315 West Jefferson Blvd. South Bend, Indiana 46601 John T. C. Low, Esquire Paul L. Gunn, Esquire Low & McMullan 1530 Capital Towers Post Office Box 22966 Jackson, Mississippi 39205 James M. Barclay, Esquire Assistant General Counsel 1317 Winewood Blvd. Suite 256 Tallahassee, Florida 32301 David Pingree, Secretary Department of Health & Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
The Issue The broad issue in this proceeding is whether either of the petitioners should be granted a community nursing home CON. The parties disagree as to the appropriate application of the need methodology described in Rule 10-5.011(1)(k), F.A.C. Both Petitioners argue that the approved bed inventory should be determined as of December 1, 1986, at the same time that the number of licensed beds was determined for the January 1987 batching cycle. HRS computed approved beds as of the date that the supervisor signed its State Agency Action Report (SAAR), in May 1987. The parties further disagree as to the effect of subsequent changes to a Final Order in Wuesthoff Health Services, Inc., et al. v. HRS, cited above, originally entered in April 1987.
Findings Of Fact BMI's application number 5010, and Manor's application number 5022, were timely filed for review by HRS in the January 1987 batching cycle. Both applications were denied in HRS' State Agency Action Report (SAAR) dated May 19, 1987. BMI previously received a CON for 73 nursing home beds in Brevard County. Its current application is for 47 additional beds, to create a single 120-bed facility. The entire facility is currently under construction, with the intention that the portion unlicensed as nursing home beds will be utilized as a distinct section of adult congregate living facility (ACLF) beds. Manor also previously received a CON for 60 nursing home beds in Brevard County. CON number 3828 was granted in a prior batching cycle after the current application for 120 beds was filed. At the final hearing, Manor explained that it is now seeking only 60 more beds as it intends to construct a 120-bed facility in Brevard County. In their pre-hearing stipulation the parties agreed that if numeric need is demonstrated, numeric need would first be met through partial or total approval of BMI's application. If the need exceeds 47 beds, the excess should be applied toward determination of approval of Manor's application. The parties also stipulated that all criteria, except those directly related to numeric need for the projects, have either been satisfied by both applicants or are not applicable to this proceeding. In calculating bed need for Brevard County, the parties have agreed, through their exhibits and testimony, that the first portion of the need methodology in Rule 10-5.011(1)(k), F.A.C., yields a subdistrict allocation of 1560 community nursing home beds. It is further undisputed that the relevant number of licensed beds for the period in question is 1,180 beds. The version of Rule 10-5.011(1)(k) F.A.C. in effect at the time of review requires that licensed beds be counted as of December 1, 1986, for the January 1987 batching cycle. The rule is silent as to when approved beds should be counted. Both applicants argue that approved beds should be counted at the same time as licensed beds for consistency and planning purposes. The current version of Rule 10-5.011(1)(k) F.A.C., known as the fixed pool rule, establishes a bed need for each batching cycle, thus providing the certainty and consistency sought by Petitioners' health planners. Prior to its adoption of the fixed pool rule, HRS experimented with various policies as to the determination of "current" data utilized in the need methodology. At the time of the January 1987 batching cycle, HRS' non-rule policy regarding approved beds was to count those beds as of the date that health services and facilities consultant supervisor signs off on the SAAR. In this case, that individual was Reid Jaffe, and the date was May 11, 1987. At the hearing, Mr. Jaffe explained the policy was an attempt to reach a balance between deriving a proper number of beds and minimizing the duplication of services and overbedding. Because the need for future beds is partially predicated on how many beds have already been approved, the Department felt it necessary to take into consideration all those beds which had been approved up until its decision time. Generally the difference between the number of beds published in initial projections of need by HRS' Office of Comprehensive Health Planning and the number of approved beds considered at the time of the decision, are those beds which were approved in final orders issued during that period. Contrary to Petitioners'assertions, those beds which became licensed after the December 1st cut-off date, but before the SAAR sign off, were not lost, but rather were computed by HRS as "approved" beds under the policy. The policy described by Reid Jaffe in his testimony at final hearing is also reflected in HRS' Final Order in Broward Healthcare, Ltd., d/b/a Broward Convalescent Center v. Department of Health and Rehabilitative Services, 9 FALR 1974 (DOAH #86- 2708, Order dated March 21, 1987), aff. per curiam, without opinion, January 21, 1988, 1st DCA case no. BT-258. Utilizing the HRS policy of counting approved beds at the time the supervisor signs the SAAR yields the following total: Approved Facilities Beds Date Approved West Melbourne Health Care 60 7/27/84 Unicare Health Facility of Brevard 120 5/30/86 Brevard Medical Investors 73 9/02/86 Meridian 60 2/ /87 Palm Bay Care Center 60 4/17/87 Forum Group 60 4/17/87 Courtney Springs 36 4/17/87 Total 469 In its SAAR, HRS neglected to include the 60 beds approved for Meridian. These beds were properly included by the applicants' health care planner in her adjustment to the SAAR count and HRS agrees the beds should be included. (See transcript, p. 20 and HRS proposed finding of fact #6.) In June 1985, Courtney Springs received a CON for 36 beds in Broward County. The action was challenged, and the proceeding was consolidated with challenges by other applicants who were denied CONs in the same batching cycle. Wuesthoff Health Services, Inc., et al. v. Department of Health and Rehabilitative Services and Courtney Springs, consolidated cases #85-2868, 85- 2936, 85-2934, 85-3243, 85-3322, 85-3365, 85-3366. In its Final Order, filed on April 17, 1987, HRS granted 60 beds each to Palm Bay Care Center, Forum Group and Courtney Springs. The Final Order was corrected on May 19, 1987, to provide that the award to Courtney Springs was 36, rather than 60 beds, as there was no intent to award the facility more beds than originally provided. In all other respects the final order of April 17, 1987, remained in full force and effect. On July 6, 1987, another order was entered and styled "Amended Final Order." The stated purposes of the amendment were to correct a scrivener's error in failing to serve the final order on a moving party, Brevard Medical Investors, Ltd., (BMI) and to give that party an "opportunity to exercise its right to judicial review." The Amended Final Order addressed BMI's lack of standing for failure to file a timely petition to intervene in the consolidated Wuesthoff cases. This is the only subject of the amended final order. The original final order, dated April 17, 1987, did not address this subject. It is not at all clear that the "Amended Final Order" dated July 6, 1987, amends the April 17, 1987, Final Order, since it references only an April 9th Final Order, not the April 17th Final Order. The record in this proceeding does not include a subsequent correction of "scriveners error", if indeed the referenced date was an error. The applicants argue that the 120 beds awarded to Forum Group and Palm Care should not be regarded as ?approve even under HRS' policy, since the amended final order was dated in July 1987, well after the SAAR was signed by Reid Jaffe in May. Application of this theory would result in 349 approved beds, and a net bed need of 66 beds in the January 1990 planning horizon. (Manor Care, exhibit #5) Application of Petitioners' theory that approved beds should be counted on December 1, 1986, results in 289 approved beds, and a need for 120 beds in the January 1990 planning horizon. HRS' application of its policy regarding the time at which approved beds are to be counted results in 469 approved beds, and a surplus of 42 beds in the January 1990 planning horizon. There is no evidence in this proceeding of circumstances which would justify the approval of beds in excess of a net bed allocation derived through the bed need methodology in Rule 10-5.011(1)(k), F.A.C.
Recommendation Based on the foregoing, it is, hereby RECOMMENDED: That the CON applications by BMI and Manor for nursing home beds in Brevard County be denied DONE and RECOMMENDED this 1st day of April, 1988, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of April, 1987. APPENDIX TO RECOMMENDED ORDER The following reflect on my specific rulings on the findings of fact proposed by the parties: Petitioners' Proposed Findings Adopted in paragraph 1. Adopted in paragraph 5. Adopted in paragraph 4. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Reid Jaffe testified that need for 12 beds exists, but this conclusion did not include the 60 beds approved for Meridian in February 1987. Rejected as contrary to the weight of evidence and to the legal effect of the changes to HRS' April 1987 Final Order. Adopted, as to the characterization of applicants' position, in paragraph 7. Adopted in paragraph 7. Rejected as contrary to the weight of evidence. Rejected as unnecessary. 11-12. Adopted in paragraph 8. Rejected as contrary to the evidence and law. Rejected as contrary to the evidence. Rejected as unnecessary. Rejected as immaterial. Rejected as irrelevant. 18-19. Rejected as immaterial. Adopted in paragraph 7. Adopted in paragraph 3. 22-26. Rejected as immaterial and irrelevant. Respondents' Proposed Findings 1-2. Adopted in paragraph 1. Adopted in paragraph 3. Adopted in paragraph 2. Addressed in paragraph 11. Adopted in paragraphs 9 and 10. Adopted in paragraph 8. Adopted in paragraph 10. 9-11. Rejected as unnecessary. Adopted in paragraph 6. Adopted in paragraph 9. Adopted in paragraph 15. COPIES FURNISHED: W. David Watkins, Esquire Oertel & Hoffman, P. A. Post Office Box 6507 Tallahassee, Florida 32314-6507 Donna H. Stinson, Esquire Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P. A. The Perkins House Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 Theodore E. Mack, Esquire Department of Health and Rehabilitative Services Regulation and Health Facilities 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Esquire General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 =================================================================
