The Issue Whether Gulf Coast Rehabilitative Services Limited, d/b/a North Florida Institute of Rehabilitation submitted a valid letter of intent and partnership resolution to apply for a certificate of need to construct a 40-bed inpatient comprehensive medical rehabilitation hospital in Panama City, Florida, in Department of Health and Rehabilitative Services District II. If the letter of intent and resolution are valid, whether the certificate of need application should be approved.
Findings Of Fact Respondent, Gulf Coast Rehabilitative Services Limited ("Gulf Coast"), is a Florida limited partnership which owns North Florida Institute of Rehabilitation ("NFIR") in Panama City, Florida. NFIR is a licensed comprehensive outpatient medical rehabilitation facility, opened in 1986, and accredited by the Commission on Accreditation of Rehabilitation Facilities. Respondent, Department of Health and Rehabilitative Services ("HRS") is the agency responsible for administration of the certificate of need ("CON") statutes and rules. Petitioner, Capital Rehabilitation Corporation, d/b/a Capital Rehabilitation Hospital ("Capital Rehabilitation") is an existing 40-bed inpatient comprehensive medical rehabilitation ("CMR") hospital, with CON approval for an additional 30 beds, located in Tallahassee, Florida, in HRS District 2. Capital Rehabilitation Hospital is a wholly owned subsidiary of Rehabilitation Hospital Services Corporation, a wholly owned subsidiary of National Medical Enterprises. Capital Rehabilitation's primary service area is all of HRS District 2, with additional referrals from southwest Georgia and southeast Alabama. Two acute care hospitals are located in Panama City, both of which operate generally at 90% or above occupancy. They are Bay Medical Center ("Bay Medical") with 302-beds and Hospital Corporation of America Gulf Coast ("HCA") with 176 acute care beds. Panama City, Florida is also located in HRS District 2, acute care Subdistrict One. HRS District 2 encompasses fourteen counties from the eastern boundaries of the Madison and Taylor Counties to the eastern boundary of Walton County. The acute care subdistrict includes seven of those counties, Bay, Holmes, Washington, Jackson, Calhoun, Gulf and Franklin. The Rehabilitation Institute of West Florida ("West Florida") is a 58- bed inpatient CMR hospital, located in Pensacola, Florida, in HRS District 1. HRS District 1 encompasses Escambia, Santa Rosa, Okaloosa and Walton Counties. Gulf Coast, in the application at issue in this proceeding, proposes to construct a 50,804 square foot facility with 40 beds for inpatient CMR, at a total cost of $10,009,372. The proposed facility would be connected to the existing outpatient facility which is located on an approximately 10 1/2 acre site owned by Gulf Coast. With the existing facility on the site and two acres set aside for wetlands, Gulf Coast has 5 of the 7 buildable acres remaining. The service area proposed for Gulf Coast includes Bay, Gulf, Franklin, Calhoun, Holmes, Washington, and Jackson Counties in HRS District 2, and Walton and Okaloosa Counties in HRS District 1. Gulf Coast also expects to attract patients from southeast Alabama and southwest Georgia. Letters of Intent Gulf Coast submitted a letter of intent dated October 18, 1990, notifying HRS of its intent to file its application for the proposed 40-bed CMR hospital. Attached to this first letter of intent was a resolution of the partnership, dated October 10, 1990, reciting that approval to file the CON application was given by unanimous vote of the general partners at a meeting held on October 1, 1990. Finally, a list of partners was attached. HRS notified Gulf Coast that the letter of intent did not include a statement that the attached list of partners had a controlling interest in the applicant, as required by an HRS rule which became effective on January 31, 1991. On February 7, 1991, Gulf Coast submitted a second letter of intent which included a statement that the second letter will replace the first letter and a statement that the attached list of general partners held a controlling interest in the applicant. In January 1991, one additional person became a general partner in Gulf Coast, and was included in the list submitted with the February 7, 1991, letter. This additional partner and four others, who became general partners subsequent to February 7, 1991, did not participate in the authorizing resolution of October 1990. By letter dated March 5, 1991, HRS accepted the second letter of intent. The February 7, 1991, letter of intent was accompanied by a resolution stating that the partnership secretary, not the governing body of the applicant, authorized the applicant to incur the project expenses and to accomplish the project within the allowed time at or below the costs in the application. The October 18, 1990, letter of intent had an identical resolution of the secretary attached to it, but it also had one executed on October 10, 1990, which stated that the partnership authorized the applicant's actions, as required by Section 381.709(2)(c), Florida Statutes. HRS and Gulf Coast take the position that by combining the resolution submitted with the October letter of intent with the text and partnership list of the February letter, Gulf Coast submitted a valid letter of intent with the required resolution. Capital Rehabilitation takes the position that each letter must be taken as standing alone and independent of each other, particularly because Gulf Coast stated in the February letter that it replaced the October letter. Capital Rehabilitation also relies on Florida Administrative Code Rule 10-5.008(1)(h), which provides, in relevant part, that If rejected by the department, a letter of intent may not be amended or corrected but a new letter may be submitted if time allows. and, Rule 10-5.008(1)(b): Accompanying the letter of intent must be a certified copy of a resolution by the applicant's board of directors, or other governing authority if not a corporation. (emphasis added). Capital Rehabilitation submitted evidence proving that the 1990 and 1991 annual reports of the partnership, submitted to the Department of State and dated March 19, 1990, and October 24, 1990, respectively, included the name of another general partner, whose name does not appear on either list of partners provided by Gulf Coast to HRS. By the rebuttal testimony of the partnership secretary, who is custodian of the records, and Gulf Coast's Exhibit 18, Gulf Coast demonstrated that the filings with the Department of State were in error. The exhibit, a Withdrawal, Assignment and Indemnity Agreement, shows that the interest of the general partner, whose name was never given to HRS, was not required to be listed because the interest of that partner was terminated on April 4, 1989. Capital Rehabilitation objected to the testimony of the Gulf Coast rebuttal witness, because the secretary of the partnership was not listed on Gulf Coast's witness list. Gulf Coast asserted that its listing of "rebuttal witnesses as necessary" was sufficient. Capital Rehabilitation also challenged the introduction of Gulf Coast's Exhibit 18, the Withdrawal Agreement, which was not specifically listed on Gulf Coast's exhibit list, which stated "rebuttal exhibits as necessary." The parties agree that the applicable standard, established by the Florida Supreme Court in Binger v. King Pest Control, 401 So.2d 1310 (Fla. 1981), is whether it was reasonably foreseeable that the witness would be called to testify. The rebuttal witness, Michael Rohan, was set for deposition by counsel for Capital Rehabilitation, by notice dated November 20, 1991. Capital Rehabilitation's exhibit list included the following, 21. All documents filed by Gulf Coast Rehabilitation Services, Ltd. with the Florida Department of State, including but not limited to its 1989, 1990 and 1991 Annual Reports. In addition, Capital Rehabilitation's pre-hearing statement of position included its allegation . . . that the letters of intent filed by NFIR were not in compliance with the applicable statutory and rule requirements . . . On this basis, Gulf Coast could reasonably foresee the need to call Michael Rohan, secretary of the partnership and custodian of its records, to respond to any discrepancies in those records. The description of Rohan as one of the "rebuttal witnesses as necessary" is inadequate to justify Gulf Coast's use of his testimony under Binger, supra. In the Binger case, an undisclosed privately hired accident reconstruction expert testified as an impeachment witness to contradict the testimony of another expert. As distinguished from that factual situation in this case, Rohan was known to and previously scheduled for deposition by Capital Rehabilitation. Gulf Coast's and Capital Rehabilitation's witness lists also include "any persons whose depositions were taken in this action." Because this description more narrowly includes Rohan, because Capital Rehabilitation cannot claim surprise or any unfairness in Gulf Coast's use of Rohan to explain documents submitted by the partnership, and because Capital Rehabilitation could have also called Rohan as a witness, the legal conclusion in the Binger case is not applicable to this case. The rebuttal exhibit and testimony are received into evidence and are considered in this Recommended Order. Numeric Need Using the formula in Florida Administrative Code Rule 10-5.039, HRS published its determination that no need exists for additional inpatient rehabilitation beds for the January 1996 planning horizon, for which Gulf Coast's application was filed. In fact, if the rule formula is used, Capital Rehabilitation's 40 beds which are full, at approximately 92% occupancy, would constitute a 5 bed surplus for the district. The rule also authorizes the consideration of other factors to determine need, including the historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the district population, and trends in the CMR-bed utilization. See, Rule 10-5.039(2)(b)1, Florida Administrative Code. Gulf Coast proposed to demonstrate need using the incidence and prevalence rates for illnesses and diseases which usually result in a specific percentage of patients who seek rehabilitation services. Using incidence and prevalence rates, as did Capital Rehabilitation in its September 1990 CON application number 6369 for its additional thirty beds, the parties agree that there is a need for not fewer than an additional 19-21 beds in District 2. Gulf Coast, using the incidence and prevalence methodology, asserts that a need exists for as many as an additional 53 CMR beds in District 2. To calculate bed need, Gulf Coast used the same formula as Capital Rehabilitation. However, Gulf Coast used population figures, which include all of District 2, Walton County, and ten percent of its two million tourists a year, or 200,000 people. In equating population to need for CMR beds, Gulf Coast's analysis would provide approximately 20 beds for the district residents, 28 more for 200,000 of two million tourists, and 5 for Walton County. The inclusion of Walton County population in computing District 2 bed need is inconsistent with Florida Administrative Code Rule 10-5.039(2)(b)1. which provides that (b) Other factors to be considered in determining a need for comprehensive medical rehabilitation services in addition to relevant statutory and rule criteria, include: 1. Historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the population in the Department service district by age and sex group. (emphasis added). Gulf Coast has not established that 200,000 tourists should be included within its population to compute need. Although the rule may be construed to include tourists, or seasonal residents, who are counted "in the population in the Department service district," Gulf Coast did not establish a basis to determine what, if any, percentage of injured tourists who are released from acute care hospitals may reasonably be expected to choose rehabilitation services in District 2. It is, in fact, reasonable to assume that tourists may seek CMR services closer to their permanent residences for all of the same reasons advanced by Gulf Coast regarding the inconvenience of Capital Rehabilitation's services to Panama City residents. In addition, if some tourists should be included, their average lengths of stay as tourists in the Panama City area is a factor not established, but necessary to compute accurately their impact on the need for CMR beds in the area. In order to support the addition of 28 beds for 200,000 tourists, Gulf Coast would have had to establish that the 2 million tourists stay an average of 36.5 days. Assuming, as Capital Rehabilitation demonstrated by illustration, that the 2 million tourists stay an average of 7 days, and that tourists should be added to the district population, then the total number of additional beds needed for tourists is 5, not 28. The only data provided by Gulf Coast on average lengths of stay for tourists was that 27,000 tourists stay approximately 5 months. Using that data, 6 additional beds are needed for tourists in addition to the 20 needed for the district population, still less than the 40 beds Gulf Coast is requesting. Additional Standards and Criteria in Florida Administrative Code Rule 10-5.039 Unit Size. As required by the CMR rule, Gulf Coast is proposing to construct a 40-bed facility. Occupancy Standards. In compliance with the CMR rule requiring a projected minimum first year occupancy of sixty-five percent (65%), Gulf Coast reasonably projects an occupancy rate of seventy percent (70%) in the first year. Gulf Coast's projected utilization is based on attracting patients from its primary service area, which includes all or part of the seven western counties in HRS District 2, which are in acute care subdistrict one, and from its secondary service area of Walton and Okaloosa Counties in HRS District 1, southeast Alabama and southwest Georgia. In addition, the average annual occupancy rate for the existing CMR beds in the district, those at Capital Rehabilitation, exceeds the eighty-five percent (85%) threshold used as an indicator of additional need in the rule. HRS has consistently used 85% as a threshold for existing providers in the numeric need methodology, not as an occupancy standard for new providers. Accessibility. With regard to geographic accessibility, Florida Administrative Code Rule 10-5.039(2)(c)3., provides, in relevant part, 3. Accessibility. Applicants for comprehensive rehabilitation services should demonstrate that at least 90% of the target population resides within two hours driving time under average traffic conditions of the location of the proposed facility. HRS interprets the "target population" accessibility requirement as meaning that 90% of those in an applicant's service area, which may be all or part of a district. Accepting this interpretation as reasonable and applying it to the Gulf Coast proposal, the geographic accessibility standard is met. Gulf Coast's proposed service area is within two hours driving time under average traffic conditions of the Gulf Coast facility. Programs and Services. Gulf Coast has established that it will provide the required services by either its staff or by contractual arrangement. Gulf Coast also proposes to provide vocational rehabilitation services beyond those mandated in the rule. Transfer and Referral Agreements. Gulf Coast has letters of support from acute care hospitals in Panama City and Chipley. These letters, and a mutual assistance agreement with one of the hospitals, support a finding that the Gulf Coast will enter into the necessary transfer and referral agreements with acute care facilities. Criteria of Subsection 381.705(1)(a), Florida Statutes - State Health Plan The 1989 Florida State Health Plan is applicable and includes five preferences for CMR beds. The three criteria of the state health plan which are inapplicable to the proposed project are the preferences 1) for the conversion of underutilized acute care beds, 2) for projects at teaching hospitals, and 3) for hospitals which are disproportionate share providers of indigent care. The criterion of the state health plan which is not met is the preference for proposals for rehabilitation services not currently offered within the district. The one preference in the state health plan which the Gulf Coast proposal meets is the preference for existing comprehensive outpatient rehabilitation facility, or CORF, which will provide follow-up outpatient services. Criteria of Subsection 381.705(1)(a), Florida Statutes - District Health Plan At hearing, counsel for Capital Rehabilitation objected to testimony on and challenged the applicability of the District 2 health plan because HRS has failed to adopt by rule the elements of the plan proposed to be used as criteria for review of CON applications. See, Subsection 381.703(1)(b), Florida Statutes. Gulf Coast asserts that the use of the district plan as criteria in the CON review process is mandated by Subsection 381.705(1)(a). The Gulf Coast interpretation is rejected because that reading of Subsection 381.705(1)(a), would render Subsection 381.703(1)(b) meaningless. Subsection 381.705(1)(b) - accessibility, extent of utilization and adequacy of like and existing services within district; Subsection 381.705(1)(f) - accessibility in adjoining areas; Subsection 381.705(1)(h) - accessibility to all district residents; Subsection 381.705(2)(d) - problems in obtaining inpatient care. Gulf Coast asserts that inpatient CMR services available only at Capital Rehabilitation in Tallahassee, in District 2, and West Florida in Pensacola, in District 1, are not accessible under the statutory criteria as defined by HRS. Gulf Coast is currently the only facility between Tallahassee and Pensacola which provides complex interdisciplinary medical treatment and speech, physical and occupational therapies. Accessibility to Capital Rehabilitation, according to Gulf Coast, is affected adversely by Capital Rehabilitation's high occupancy rates. Gulf Coast asserts that access to both Capital Rehabilitation and West Florida is affected adversely by their geographic distances from Panama City. Accessibility Based on Occupancy Capital Rehabilitation, in its CON application for its approved additional 30 beds, submitted in September 1990, noted that it had been averaging over 93% occupancy, with a waiting time of 8.2 days. In fact, Capital Rehabilitation described its facility as ". . . operating at maximum capacity over the last 12 months," and included a waiting list ranging from a low of 6 patients in September 1989 to a high of 48 patients in September 1990. Capital Rehabilitation asserts that its 30 additional beds should be opened before another District 2 facility is approved. In projecting utilization of its additional beds, Capital Rehabilitation expected its 30 new beds to be 50% occupied in the first year. Assuming the continued accuracy of the project completion forecast on Table 26 of the 1990 CON application, these beds became available in July 1992. With continued 95% occupancy in the existing 40 beds, 50% occupancy in year one and 65% in year two in the 30 new beds, then overall occupancy is expected to be 76% in 1992-1993, and 83% in 1993-1994. Gulf Coast's application is for the January 1996 planning horizon. Table 26 in Gulf Coast's application shows that Gulf Coast anticipated opening in December 1993, if its CON application approval had become final agency action on July 8, 1991. With an approximate two and a half year time lag from final approval to initiation of service, Gulf Coast cannot expect to open before early 1995. See, Gulf Coast Exhibit 2 at p. 114. West Florida, the 58-bed CMR hospital in Pensacola, has experienced occupancy levels of approximately 67% in 1990. Capital Rehabilitation noted that West Florida is within two hours travel time of western Bay County. In addition, Capital Rehabilitation presented evidence that facilities in Alabama and Georgia also provide inpatient CMR services. West Florida does have the bed capacity to serve Panama City residents, if it is geographically accessible to them. Accessibility Due to Distance Gulf Coast, using Governor's Office projections, demonstrated the following population trends: (1) that 34% of the district population lives in Bay, Gulf, Holmes and Washington Counties; (2) that a 13% population increase is projected from 1991-1996 for Bay County; (3) that 10% of the Bay County population is over 65 years of age; (4) by contrast, an 11% population increase is projected for Leon County, and 7.5% of the Leon County population is over 65 years of age. Gulf Coast also demonstrated that it would reasonably expect to serve a large number of military personnel and veterans in its area. The Associate Executive Director of the Big Bend Health Council and the Northwest Florida Health Council, local health councils for HRS Districts 1 and 2, respectively, testified that the map Gulf Coast included in its application, was taken from his agencies' travel time studies. The studies are based on 18 to 20 trips done by various staff members. Those studies demonstrated that 23% of the District 2 population, in portions of Holmes, Washington, Gulf and all of Bay County, is beyond two hours travel time of either West Florida or Capital Rehabilitation in 1985. Gulf Coast's expert also conducted a travel time study and concluded that the areas beyond two hours of either the Pensacola or Tallahassee facilities include all of Bay County, except a small portion in the northeast, most of Washington and Holmes and all of Gulf County. Gulf Coast concluded that well over 10% of the district population is beyond two hour access of CMR beds. Gulf Coast's expert's methods and conclusions are questionable due to its inclusion of stops for gas and food. Capital Rehabilitation's expert, who conducted a travel time study, found that a large portion of Bay County is within two hours of Capital Rehabilitation Hospital, and that significant portions of western Bay County are within two hours of West Florida. The conclusion was that virtually all of District 2 residents are within two hours of one or the other facility. This study was not conducted in compliance with recognized procedures, including having been based, in part, on one trip in which the driver left Tallahassee at 4:00 p.m. The most reliable, objective travel time information, was that provided by the Associate Executive Director of the local health councils for Districts 1 and 2. His conclusion that 23% of the District 2 population is more than two hours driving time under average traffic conditions from Capital Rehabilitation or West Florida is accepted. On this basis, the two existing facilities are geographically inaccessible for almost one fourth of the District 2 population. Capital Rehabilitation asserted that the travel time standard in combination with the "target" population standard should be read to require that a facility be located within two hours average travel time of a least 90% of the total district population, not just the facility's target population. In fact, the wording of the proposed new CMR rule will adopt this interpretation. Given the deposition testimony of the HRS staff person responsible for the new CMR rule that the standard in the new rule will be different from, not a codification of the agency's current interpretation of the existing rule, the interpretation suggested by Capital Rehabilitation is rejected. Finally, Capital Rehabilitation was allowed to cross-examine the Associate Executive Director of the local health council on contradictory statements in the local health plan. For this limited purpose, statements in the local health plan are considered in arriving at this finding. Subsection 381.705(1)(b) - Quality of Care, Efficiency, Appropriateness of Like and Existing Health Care Services in the District and Subsection 381.705(2)(b) - Appropriate and Efficient Use of Existing Inpatient Facilities There was evidence of isolated complaints from Panama City doctors regarding Capital Rehabilitation's failure to timely provide them with discharge reports on patients, and of the disadvantages to patients' relatives having to travel between Panama City and Tallahassee. In spite of such isolated complaints, the evidence demonstrates that Capital Rehabilitation, the only inpatient comprehensive rehabilitation hospital in District 2, is providing excellent quality of care. Its ability to provide services efficiently, appropriately and adequately is compromised, as noted above, only by its current high occupancy levels and relative distance from extreme western portion of the District, the Panama City area. See, Findings of Fact 36-38 and 41-45. Subsection 381.705(1)(c) - Applicant Ability and Record on Quality of Care, Subsection 381.705(1)(l) - Construction Methods; and Subsection 381.705(2)(e) - Less Costly Alternatives The evidence demonstrates that the applicant provides good quality of care as an outpatient facility, and that it has the ability to do so as an inpatient facility. Capital Rehabilitation contends that Gulf Coast's construction costs are not reasonable and that Gulf Coast cannot provide quality rehabilitative programs and therapies in the spaces allocated on its schematic design. Gulf Coast has two patient lounges designated for one 20-bed wing, but none for the other; and no separately designated space for activities of daily living. Gulf Coast's total size and project costs are conceded to be adequate for a 40-bed CMR inpatient hospital. In some instances, Capital Rehabilitation also pointed out inconsistencies in Gulf Coast's proposed staffing patterns and schematic design, including seven offices for four speech therapists, six spaces for two social worker/psychologists, space for case management with no case managers, one community relations employee in an area capable of accommodating 5 to 6 people, and an x-ray suite despite its plan to provide that service initially by contract. The Gulf Coast application is not well prepared, but the sources relied upon in projecting construction costs are reliable and the resulting projection is reasonable. In addition, the excess spaces designated for non- existent positions support the conclusion that the redesignation of spaces on the next set of HRS-required construction documents can correct any defects in Gulf Coast's schematic design. Subsections 381.705(1)(b) and (d), Florida Statutes - Availability and Adequacy of Alternatives in the District; Subsection 381.705(2)(a) - Efficient Use of Other Inpatient Services; Subsection 381.705(2)(c) - Alternatives to New Construction Capital Rehabilitation is the only available inpatient facility in the district. As previously noted, its availability and adequacy for Panama City area residents is adversely affected by its current high occupancy and distance from the Gulf Coast target area. See Finding of Fact 47. Due to the difference in the needs for non-ambulatory rehabilitation patients, the intensity of the therapy provided in inpatient rehabilitation hospitals and the savings in avoiding readmissions to acute care hospitals, outpatient facilities are not an adequate alternative for some rehabilitation patients. Similarly, although a preference is given in the state health plan for the conversion of underutilized acute care beds, the Bay County acute care hospitals could not qualify for the preference due to their high occupancy rates. Capital Rehabilitation does indicate correctly that the acute care hospitals could be approved for a minimum size of 20 rather than 40 beds, but they are not applicants in this proceeding. Whether the acute care hospitals as CON applicants would be superior to the one at issue is speculative. Subsection 381.705(1)(e) - Economies From Operation of Joint Health Care Resources The proposal to establish an inpatient CMR hospital which is connected to an outpatient rehabilitation facility, in part, offers some of the advantages of providing joint health care services which use shared resources. For example, Gulf Coast has already spent $1,200,000 in equipment for its outpatient facility and will need an additional $760,000 in equipment to accommodate the demand as an inpatient facility. The total of almost $2 million is adequate. By contrast, according to Capital Rehabilitation, if Gulf Coast were proposing to construct a 40-bed inpatient facility without the existing outpatient component, it would spend from $25,000 to $30,000 per bed for equipment. The proposal by Gulf Coast may allow the use of equipment and staff in the area of greatest need at any given time. Subsection 381.705(1)(g) - Research and Educational Facilities No research or training programs are proposed in the Gulf Coast project. There was, however, testimony of a willingness to cooperate with the Florida State University Panama City campus, and to assist in establishing a physical therapy assistants program at a community college in the area. Subsection 381.705(1)(h) - Resources, Manpower and Management Gulf Coast currently employs many categories of professionals needed for an inpatient program. Gulf Coast demonstrated that its working conditions and desirable geographic locations are advantages in recruiting capable staff and management. Capital Rehabilitation asserts that Gulf Coast will need more than one public relations/marketing person. However, Capital Rehabilitation's experience is based on recruitment throughout District 2, while Gulf Coast will target approximately one-fourth of the district population. West Florida, however, which has a similar desirable coastal location, has been unable to recruit a medical director since 1989, even with the help of three consulting firms. Gulf Coast could be more successful than West Florida if its recruiters are instructed not to be xenophobic. 1/ Subsection 381.705(1)(j) - Special Needs of Health Maintenance Organizations There was no evidence to show that health maintenance organizations are affected by Gulf Coast's proposal. Subsection 381.705(1)(h) - Funds to accomplish project; Subsection 381.705(1)(i) - immediate and long-term financial feasibility Capital Rehabilitation challenged the Gulf Coast pro forma, asserting that the bottom line would be losses of $800,000 in the first year and $200,000 in the second year rather than $157,760 loss in the first year and $288,702 profit in the second year. Inaccuracies, according to Capital Rehabilitation, include under estimated 1) deductions from revenue, 2) interest, 3) depreciation, 4) equipment and supply costs, and 5) staff requirements and salaries. Gulf Coast estimated deductions from revenue at 29% of its charges. Capital Rehabilitation estimates that Gulf Coast will not recover between 32 and 38% of its charges. Capital Rehabilitation's estimate of deductions from revenue in its pro forma for its 30-bed expansion ranged from 27% for its first year to 29% for its second year. In addition, Gulf Coast demonstrated that hospitals reasonably expect to receive more favorable Medicare and Medicaid reimbursements in the first years of operation. On this basis, Gulf Coast's estimated deductions for revenue and projected charges are reasonable. Gulf Coast failed to calculate depreciation based on the list of assets included in its CON application. Capital Rehabilitation objected that Gulf Coast impermissibly sought to amend its application at hearing by introducing testimony correcting the mathematical inconsistencies within the application. Recalculating the information provided and based on Capital Rehabilitation's experts testimony that Gulf Coast has some flexibility in determining whether items are capitalized or listed as non-capitalized minor equipment or facilities, Gulf Coast has established that its corrected estimated depreciation ($290,000 a year, rather than $265,000 in year one and $344,000 in year two) is reasonable. Similarly, Gulf Coast's calculation of interest on a total project cost at a specified interest rate (9 %) which is included in its application yields a result inconsistent with the total project cost ($10 million) which is also listed in the application at hearing. At hearing, the inconsistent was resolved by a witness recomputing interest. Corrected figures are $948,248 in year one, and $941.000 in year two at 9 %. However, with declining interest rates, as of the date of the hearing in this case, at 7 %, interest would be between $770,000-775,000 a year. Gulf Coast's corrected interest estimate is reasonable, given declining interest rates since the time the application was filed. Gulf Coast's proposed equipment costs are reasonable, based on Capital Rehabilitation's estimate of the need for $25,000 to $30,000 per bed, with equipment available at NFIR and additional equipment purchases by Gulf Coast totaling in excess of $1.9 million, or approximately $48,000 per bed. Assuming that some of the existing equipment is not appropriate for use for inpatients, Gulf Coast's per bed equipment costs significantly exceeds the necessary minimum estimated by Capital Rehabilitation. Supply costs, projected in Gulf Coast's pro forma, are higher in year one than year two. Capital Rehabilitation contends that supplies needed are always proportionate to the beds occupied and, it is therefore, impossible to have rising occupancy and decreasing supply costs. Gulf Coast has demonstrated that items, listed as supplies because the value is below that for capitalized equipment, and those purchased in the first year but continuing to be used in the second year, can account for decreasing second year costs. Projected salaries are based on those actually paid at Gulf Coast for most of the same categories of employees and are reasonable. Finally, with regard to financial feasibility, Capital Rehabilitation asserts that Gulf Coast cannot obtain 100% financing and has no partnership funds available to commit to the project. Gulf Cost does have letters of interest in the project, one for up to $14 million. In addition, the financial history of the partnership demonstrates its reliance on equity contributions of the partners, and that such contributions have been made. Given the testimony of Capital Rehabilitation's expert that first year losses are not atypical and the reasonableness of Gulf Coast's projected fill rate, Gulf Coast has demonstrated that its proposal is financially feasible in the immediate and long term. With corrected interest and depreciation, the project continues to be profitable in the second year. Subsection 381.705(1)(e) - impact on costs of providing services proposed; effects of competition Capital Rehabilitation estimates that it will lose $617,000. The projected decline in patient days is 3%, the total number of patient days attributable to the Panama City area. Capital Rehabilitation also believes it will experience difficulty in recruiting specialized staff. Capital Rehabilitation, in its 1990 CON application, described a well- developed recruitment program in conjunction with Florida State University and Florida A & M University. Gulf Coast will target the Panama City Community College and Florida State University campus in Panama City. The independent recruitment sources indicate the reasonableness of adequate staff being available to both facilities. Assuming a decline of 3% in Capital Rehabilitation's patient days, if Gulf Coast could be operational, in December 1993, as originally projected, the impact would be minimal on Capital Rehabilitation's 1993-1994 projected occupancy rate of 83% and would not affect the qualify of care provided at Capital Rehabilitation, given the fact that 85% occupancy is a prima facia numeric indicator that additional CMR beds are needed in a district. Subsection 381.705(1)(n) - Medicaid and medically indigent services Gulf Coast provides approximately 6% indigent care, and is willing to have its CON application conditioned on providing 7% charity care and 5% Medicaid.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered approving certificate of need application number 6573 of Gulf Coast Rehabilitative Services Limited, d/b/a North Florida Institute, to establish a 40-bed inpatient comprehensive medical rehabilitation hospital in Panama City, Florida, conditioned upon the provision of 5% of total annual patient days to Medicaid patients and a minimum of 7% of total annual patient days to charity care patients. DONE and ENTERED this 29th day of September, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of September, 1992.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The letter of intent and authorizing board resolution to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc., and met all statutory and rule requirements for filing. The CON application to establish a new Medicare certified home health agency filed by ABC for District Four for the September, 1989 batching cycle was timely filed with HRS and the Health Planning Council for Northeast Florida, Inc. The CON application to establish a new Medicare certified home health agency for District Four for the September, 1989 batching cycle was deemed complete and accepted for review by HRS, effective November 13, 1989. There is a numeric need for one additional Medicare certified home health agency in District Four as determined by HRS and published pursuant to Rule 10-5.011(1)(d), Florida Administrative Code. Local Health Plan The 1989-90 CON Allocation Factors Report for HRS District Four (Health Plan) is the applicable health plan with regards to this proceeding. In its application ABC addressed the recommendations found in the Health Plan. The Health Plan recognizes that under the new methodology for determining numeric need, a licensed home health agency within an HRS district could serve any and all counties within the district. However, the Health Plan contains recommendations for allocating home health agencies. The Health Plan makes the following recommendations: Geographic Preference Home health agencies should be allocated to counties on the following basis: Preference should go to applicants who will establish their program in a county which does not have any CON approved agencies or subunits based in the county. Consideration should be given to counties with a low number of Medicare visits per 1,000 persons 65 years and older. Competing Applications In the case of competing applications for the same or similar geographic area, preference should be given to those applicants which demonstrate: They will meet identified needs in the most cost-effective manner. They are addressing a current or potential geographic access problem in the district. They will serve the widest spectrum of the population, including the medically indigent. They have written agreements with a broad spectrum of local hospitals, nursing homes, mental health resources and/or other service providers in order to help ensure continuity of care. They demonstrate in their CON application how they will comply with any conditions placed on the CONs. They will serve AIDS patients. ABC proposes to locate its agency office in Duval County because it contains medical centers, hospitals with discharge planners and physician staff for referrals, and because of enhanced recruiting and retaining of appropriate staff. However, it proposes to serve all patients referred to it in all counties located throughout District Four, including Baker County. Baker County has no CON approved home health agency based within the county. However, it is presently being served by home health agencies based in Duval County. Because of its small population, with a relatively low percentage of the population being 65 years old or older, its distance from hospitals and the recruiting and staffing problems it would engender, it is doubtful that Baker County could support a main office for a home health care agency. In fact, the 1988 Local Health Plan indicated that Baker County should probably not have a home health agency physically located within the county. Baker County has the lowest number of citizens 65 years of age or older and the lowest usage rate for home health agencies. There is no data or documentation to show why the usage of home health services in Baker County is low. However, HRS makes the assumption from the usage rate only that Baker County is underserved. Duval County is not considered as being underserved in terms of Medicare units. By locating in Duval County, ABC does not specifically comply with preference 1A or 1B. However, ABC has proposed to serve all patients within District Four referred to it regardless of where the patient is located, and regardless of the patient's payor class. (Medicare, Medicaid, private pay or indigent) While 1A and 1B of the Health Plan's recommendation is concerned with geographic preferences, 2A through 2F of the Health Plan's recommendations are preferences that relate mainly to situations involving competing applications in the same batch. ABC meets a majority of those preferences, including: 1A. ABC will be among the lowest in cost of the existing providers in District Four. 1B. ABC goes to the patient and has stated it will serve all of the patients within District Four referred to it. 1C. ABC proposed to serve all patients referred to it, including the medically indigent and medicaid. Because of the situation with Medicaid patients, ABC did not project any Medicaid patients. However, ABC proposed to serve all patients on which it has referrals including Medicaid patients. 1D. ABC did not have written referrals with hospital, nursing homes and other resources for patient referrals. However, ABC stated that this was its standard operating procedure and if granted a CON they would establish written referrals. 1E. ABC does not specifically address how they would comply with any condition placed on the CON. 1F. Again, ABC proposed to serve all patients within District Four referred to it, including AIDS and HIV patients. Since ABC has no control over which patients are referred to it, then its payor mix is just a projection. Whether an AIDS or HIV patient is on Medicare, Medicaid, private pay or medically indigent ABC has proposed to served them. In fact, it has a corporate policy to train and educate its employees in this area of service. ABC has shown that it intends to serve AIDS and HIV patients on which it has referrals. State Health Plan The 1989 Florida State Health Plan is the applicable health plan in this proceeding. The State Health Plan is a comprehensive three-volume document which describes Florida's health system and the services available to Florida residents. Specifically, the State Health Plan addresses certain preferences which HRS uses in reviewing home health CON applicants. They are as follows: Preference shall be given to an applicant proposing to serve AIDS patients. Preference shall be given to an applicant proposing to provide a full range of services, including high technology services, unless these services are sufficiently available and accessible in the same service area. Preference shall be given to an applicant with a history of serving a disproportionate share of Medicaid and indigent patients in comparison with other providers within the same HRS service district and proposing to serve such patients within its market area. Preference shall be given to an applicant proposing to serve counties which are underserved by existing home health agencies. Preference shall be given to an applicant who makes a commitment to provide the department with consumer survey data measuring patient satisfaction. Preference shall be given to an applicant proposing a comprehensive quality assurance program and proposing to be accredited by the Joint Commission on Accreditation of Healthcare Organizations. As to 16A, ABC has proposed to serve all patients in District Four that are referred to it by referring agencies, including AIDS and HIV patients regardless of their of payor class. ABC has a stated commitment to serving AIDS and HIV patients. The evidence establishes that of all AIDS cases reported in District Four, Duval County has approximately 69 percent. District-wide 52 percent of all reported AIDS cases have ended in death whereas in Duval County the percentage is 56. Very few AIDS patients are medicare eligible. A higher percentage of AIDS patients in Duval County are served as indigents or under Medicaid, notwithstanding HRS' Medicaid Project AIDS Care. As to 16B, ABC proposes to provide the full range of services, including high technology services. ABC included in it application excerpts from its high tech policy manual. There was no data available from local health council on what high tech services are available from existing providers. As to 16C, while ABC's payor mix does not indicate that they would be serving a disproportionate share of Medicaid and indigent patients there is no data indicating what access problem, if any, exists for Medicaid and indigent case patients needing home health care services. ABC proposes service to all patients within District Four that are referred to it be referring agencies. As to 16D, while there is no data available that any county within District Four is in fact underserved, ABC has stated that it will serve all counties in District Four and there is no evidence to show that ABC will not serve all counties in District Four. As to 16E, ABC has indicated it will comply with this requirement and there is no evidence to show that ABC will not furnish the data in terms of consumer survey response. As to 16F, ABC has a quality assurance program in place and HRS agreed that ABC could provide quality of care to its patients. Statutory Criteria Section 381.705(1)(a), Florida Statutes - Availability and Access to Services District Four has 20 Medicare certified home health agencies, with five located in Duval County and, one approved but not yet established Medicare certified home health agency. However, as stated in the State Agency Action Report (SAAR) there is a market for another home health agency in District Four as determined by the fixed need pool. ABC's stated commitment to serve all counties in District Four and to serve all patients in those counties referred to it by referring agencies regardless of whether the patient's payor class should enhance the convenience and accessibility to patients. Section 381.705(1)(b), Florida Statutes - Quality of Care, Efficiency and Adequacy of Existing Area Providers There is no specific data available from HRS concerning the quality of care, efficiency and adequacy of services being provided by existing care providers in District Four. ABC did not conduct a survey to assess the existence of quality care problems in District Four. However, the existence of quality care problems in District Four would be difficult to gauge since the in- home provision of services makes them largely beyond public or professional scrutiny. In fact, generally, with few exceptions, application for home health agencies do not address this criterion. The parties stipulated that the provisions of Section 381.705(1)(c) through (g), Florida Statutes were deemed to have been met or otherwise not applicable. Section 381.705(1)(h), Florida Statutes - Availability of Resources and Funds and Accessibility of Service to all Residents of Service District The evidence establishes that ABC has sufficient resources and funds to accomplish what it proposes. HRS has no data suggesting significant access problems for Medicaid patients to home health care nor was there sufficient evidence that AIDS or HIV patients suffer an access problem for home health care. However, due to improvements in terms of Medicaid reimbursement any access problem that may exist should be reduced. ABC has a stated commitment to serving all patients in District Four regardless of the patient's payor class. This commitment should improve the accessibility of home health care to underserved patients if, in fact, there is an access problem for the Medicaid, AIDS, HIV or indigent patients. Section 389.705(1)(i), Florida Statutes - Financial Feasibility ABC projects it will do 12,000 home visits in year one and 14,000 home visits in year two. These projections are based on ABC's experiences in other districts, particularly District Three. These projections also represent approximately 25 and 29 percent of the new visit pool market for each year, respectively. However, ABC clients would not necessarily all come from the new visit pool. ABC's projected home care visits are reasonable based on its experience in other Florida districts and its experience in other states, notwithstanding its lack of an established referral network in District Four and being a new entrant into the District Four market. ABC's financials displayed in its application are reasonable and consistent with its Florida experience. ABC's payor mix and visit each correlate to its actual Florida experience. ABC's pro forma expenses for year one and year two are reasonable. ABC projects a first year profit of $3,914 and a second year profit of $5,010 and after the second year, ABC should continue to show a profit. ABC's proposed project will benefit ABC by allowing it to meet its long term goals. ABC's existing Florida agencies are operating in financially sound manner and there is no reason to believe that ABC's proposed agency will not operate in the same manner. ABC's liquidity ratio is 0.7 to one which means that ABC has excess current liabilities over current assets and is one factor used for determining the general health of a company. ABC has an accumulated deficit of $651,836. From all of the above, ABC's proposed agency is feasible in both the short term and the long term. It was stipulated that Section 381.705(1)(j) and (k), Florida Statutes were deemed to have been met or otherwise inapplicable. Section 381.705(1)(l), Florida Statute - Impact on Competition Since ABC has a stated commitment to serve all patients in all counties in District Four referred to it regardless of the payor class and is offering a full range of services, including high tech, its proposal should only serve to enhance competition within District Four, notwithstanding that the proposal is primarily a Medicare home health care provider which would not provide any financial competition. The parties stipulated that Section 381.705(1)(m), Florida Statutes was deemed to have been met or otherwise inapplicable. Section 381.705(1)(n), Florida Statutes - Medicaid and Indigent Care Very few medicaid and indigent patients are served by the existing agencies in District Four. Most of these patients are served by the Visiting Nurses Association (VNA) which is subsidized by United Way, local governments and other sources. There is no data or documentation that Medicaid patients do not in fact have a significant access problem. Medicare is the predominant payor source in Florida and is ABC's primary payor source even though ABC has a stated commitment to serve all patients regardless of payor class. A high percentage of Florida's Medicaid budget for home health services is used for co-insurance for medicare. Therefore, Medicaid patients that are "dually eligible" are receiving home health care under Medicare. Florida's Medicaid program does not reimburse for physical therapy, speech therapy or occupational therapy for adults. In a Medicare certificate home health agency there is only a certain pool of profit available to serve Medicaid and indigent patients. Therefore, if the percentages of Medicaid service goes up then indigent or charity cases must suffer or the agency cannot operate in the "black". While HRS usually places a condition on the CON concerning Medicaid services, a majority of the recently issued CONs for home health care had no such condition placed on them. The parties stipulated that Section 381.705(2) and (3), Florida Statutes were deemed to have been met or otherwise inapplicable. State Agency Action Report (SAAR) HRS up to and including, the home health care agency batching cycle immediately preceding the instant September 1989 batch, used not applicable (N/A) on those criteria that were not typically addressed by applicants or were not considered to be applicable to an applicant. HRS now enters a "no" in those situations but a "no" in this situation has no adverse or negative impact on HRS' decision. Typically, approved applicants do not meet all the statutory criteria. Some of the criteria may be only partially met and some may not be met at all.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered granting ABC's application for a certificate of need (CON No. 6015). DONE and ENTERED this 26th day of October, 1990, in Tallahassee, Florida. WILLIAM R. CAVE 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 26th day of October, 1990. APPENDIX TO THE RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on the proposed findings of fact submitted by the parties in this case. Specific Rulings on Proposed Findings of Fact Submitted by Petitioner, ABC 1. Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the finding of fact which so adopts the proposed finding of fact: 6(2,3); 7(8); 8(7,8,11); 9(8,10); 11(7,14); 15(4); 16(16,17,18,19); 17(16,18); 18(16,21); 19(16,22); 20- 21(23,24); 23(25); 25(4,25); 28-29(25-27); 31-38(29); 40-42(29); 45(32); 48- 52(33,34,35,36); 54-58(32,37,38,41); 61-64(43); 68-70(45,46,47); 72- 77(47,48,49); 79-81(47,49,50); 83(51); 85-87(53); 89(53); 90(54). 2. Proposed findings of fact 1-5, 10, 12-14, 22, 24, 26, 27, 30, 39, 43, 44, 46, 47, 53, 59, 60, 65-67, 71, 78, 82, 84, 88, 91 and 92 are unnecessary. Specific Rulings of Proposed Findings of Fact Submitted by Respondent, HRS Each of the following proposed findings of fact are adopted in substance as modified in the Recommended Order. The number in parentheses is the Finding of Fact which so adopts the proposed finding of fact: 3-9(5,6,7,9,12,13,14); 12- 26(14,18,19); 28-29(15,16); 44-46(32) 48-51(39,40). Findings of fact 1 and 2 are covered in the preliminary statement. Proposed findings of fact 10, 11 as to the last 2 sentences, 27, 30, 31, 32 other than last sentence, 33, 35, 36 other than last sentence, 37, 38, 39, 41, 42, 47 and 52 are not supported by substantial competent evidence in the record. The last two sentences of finding of fact 34 are adopted in finding of fact 25, otherwise not supported by substantial competent evidence in the record. Proposed finding of fact 43 is unnecessary. The first two sentences of proposed finding of fact 53 are adopted in finding of fact 36, otherwise not supported by substantial competent evidence in the record. Copies furnished to: R. Terry Rigsby, Esq. F. Philip Bank, P.A. 204-B South Monroe Street Tallahassee, FL 32301 Edward Labrador, Esq. Assistant General Counsel 2727 Mahan Drive, Suite 103 Tallahassee, FL 32308 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 Linda Harris, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700
The Issue Whether SeaView was properly issued a conditional license and should pay an administrative fine for violation of regulations at the time of surveys conducted on February 8 and February 21, 2002.
Findings Of Fact AHCA is the state agency responsible for evaluating nursing homes in Florida pursuant to Section 400.23(7). SeaView is a licensed nursing home located in Pompano Beach, Florida. AHCA conducted a survey of SeaView on February 8, 2002, and alleged that SeaView violated the standards of Section 400.022(1)(l), and Rule 59A-4.109(1)(c)2, and 3, which relate to the obligations of a nursing home to supervise residents to assure their safety. It is undisputed that during the survey period, two residents were outside the facility, out of the company of staff, for brief periods of time. AHCA contends that these incidents demonstrate that SeaView failed to adequately supervise these residents, thereby placing them, and one other resident, “at risk of serious injury, harm, impairment or death.” AHCA also asserted that SeaView failed to adequately implement policies and procedures for investigating, reporting, and preventing allegations of possible neglect in violation of Section 400.022(1)(l) and Rule 59A-4.109(1)(c)2, by failing to report an incident to the abuse registry, failing to review a resident’s records as part of its investigation, failing to interview sufficient people as part of its investigation, and failing to take corrective action. AHCA is required to rate the severity of any deficiency identified in a survey. AHCA assigned both of the identified deficiencies a Class I rating. This means that the deficiency “has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident receiving care in a facility.” Section 400.23(8)(a). On a follow-up visit on February 21, AHCA again cited the same violations as Class I deficiencies. The charges arising out of the February 8 survey revolve primarily around a resident referred to by the parties as G. D. At the time of his admission to SeaView in September 2001, G. D. suffered from Alzheimer’s disease and alcoholic dementia. It was SeaView's practice to place cognitively impaired residents such as G. D. on the second floor of the facility. SeaView's management felt that the second floor was a more secure location for individuals like G. D. who, on account of their impairments, were considered to be at risk for attempting to exit the facility without staff knowledge or supervision, also known as "elopement." Like many Alzheimer's patients, G. D. was confused, often agitated and combative, and prone to wander. His care plan therefore employed management practices typically recommended by medical professionals for the caregivers of Alzheimer's patients, i.e. checking on him every hour, encouraging his family to bring in personal possessions, and involving him in activities of his liking, etc. G. D., like many Alzheimer's patients, was unable to fully benefit from activities. He was inclined to wander in and out of activities and to verbally interrupt them. He was at times restless and resistant to care. He was on medications which produced side effects which may have negated their beneficial effects. He tended to walk around the hallways aimlessly and try to push the alarmed doors open. Staff at SeaView, aware of these behaviors, appropriately contacted G. D.’s physician in December 2001, to obtain an order for a new psychiatric consult. This resulted in the addition of a new medication. Thereafter, nursing notes on January 7, 2002, indicated that G. D. was less aggressive and less agitated. Shortly before 8:00 p.m., on January 9, 2002, G. D. was being attended to by a certified nursing assistant (CNA) who left him briefly to attend to another resident. G. D. went to the nurse’s station, interacted with the nurse there, and left in his wheelchair. Less than ten minutes later, the CNA tried unsuccessfully to locate him. The nurse and CNA looked throughout the second floor, and when they still did not find him, went downstairs where a visitor who was just leaving motioned through a window that he was outside. The staff went out and found him tipped over on his right side, in his wheelchair, about 6-8 steps from the front door and near the bottom of concrete steps leading to a second floor exit door. He was alert and spoke, and said he was fine and that he fell from “way up top.” Staff checked G. D. and called 911. G. D. was taken by ambulance to a hospital. The neurosurgeon who was consulted documented that there was no evidence of head trauma. A CT scan was performed which did show that G. D. had old, chronic subdural hematomas (internal bleeding) on both his right and left sides, with a recent bleed into the one on the left. There is no evidence regarding when or how G. D. suffered the hematoma. The evidence did establish that hematomas can occur in the absence of significant trauma, and can even result from a strong sneeze or cough. The CT scan revealed no evidence of significant head trauma, however, such as swelling, which would be expected to be present with a severe blow. G. D. died three days later of the hematoma. It is impossible to know how G. D. was able to exit the building. At first, SeaView concluded, largely on the basis of his statement, that G. D. had fallen down the outside stairs from the second floor. SeaView staff revised its opinion on further consideration, and concluded that G. D. was somehow able to make his way down the elevator to the first floor, and then exit the building unnoticed. In reaching this conclusion, SeaView noted that the upstairs door had a 15-second delay mechanism and alarm, which had to be manually turned off by staff once activated. No alarm was heard or deactivated, and a check revealed that the mechanism was working. Shortly after the incident, staff exited the upstairs door and the alarm sounded. AHCA’s investigation determined that all doors were in working order and in compliance with all life safety code requirements. Neither the stairway nor the wheelchair exhibited any damage as would be expected from a fall down the steep, concrete stairs, and G. D. himself showed no external signs of injury except a skin tear on his arm. The evidence established that the incident occurred just prior to 8:00 p.m.; a time when staff were no longer present in the common areas, as they were putting residents to bed, and just before the front door alarm was activated for the night. From those facts, SeaView reasons that "the most likely means of exit would have been for G. D. to negotiate the elevator and exit through the front door of the facility." However, as SeaView concedes, there was no evidence that G. D. had ever used the elevator before; the idea that he was able to do so on this occasion taxes credulity, and in any event is also not supported by evidence. In charging SeaView with failing to adequately supervise G. D., AHCA denies that it is advancing a strict liability standard in cases where a patient is successful in exiting a building. Rather, AHCA contends that SeaView's failure to sufficiently supervise G. D. is proven by the fact that he was outside the building long enough to allow a fall from his wheelchair. The dispute may be one of semantics. AHCA concedes that escape is a known and common risk with dementia patients in nursing homes; that the law prohibits physical or medical restraint of residents; and there is no combination of interventions which are effective in all circumstances to prevent escape; and, most significantly, that there is no standard of practice which requires one-on-one supervision. AHCA alleged that SeaView was on notice that G. D. had escaped the facility on two prior occasions. This allegation was not supported by evidence, nor was there any evidence of prior incidents of escapes by other residents at SeaView. AHCA additionally charged that SeaView violated a duty of reporting by not calling the state's elder abuse registry to report G. D.'s escape. However, the evidence established that SeaView did in fact notify AHCA and filed required reports with the agency. Sea View's administration concluded that neglect did not exist, and thus there was no need to make the additional report to the registry. The decision was based upon the short time during which G. D. was out of view of staff, and the immediate attention given to finding him. Reasonable nursing home administrators might have erred on the side of reporting, but there is no evidence to suggest that the course followed by SeaView was outside the bounds of legitimate professional judgment. Immediately following the incident involving G. D., when SeaView's administration was of the view that he might have exited from the second floor door, SeaView had an additional alarm installed to ensure audibility. AHCA cited concerns regarding two additional patients, referred to by the parties as Residents number 3 and number 4, in the February 8 survey. As to these patients, AHCA charged deficient practice in that portions of their care plans directed to the possibility of escape did not contain a time frame for monitoring their whereabouts, and the monitoring was not documented. With respect to Resident number 3, AHCA also asserted that the approach of trying to redirect the resident was faulty, as the records reflected that often he did not respond to redirection. A surveyor also testified that she noted two times when Resident number 3 was unobserved by staff, but this testimony was effectively discredited upon cross- examination. The evidence failed to establish either the insufficiency of the patient care plans or the failure by SeaView to implement appropriate care plans. The inclusion of a time frame for monitoring does not ensure that a resident will be unable to elude staff. G. D.'s care plan, for example, contained a requirement that he be checked hourly. In practice, he was in contact with staff far more often. AHCA alleged that the monitoring of residents was not adequately documented. However, the evidence failed to establish the existence of a legal or industry standard which suggests that routine observation, or monitoring, of a resident should be documented. As a result of the February 8 survey, AHCA required SeaView to move all residents who might have been at risk for elopement to the first floor. Additionally, AHCA required SeaView to place monitors at all exits to the facility, whose sole purpose was to monitor the exit doors, all of which, except the front door, were alarmed and on a delay mechanism. AHCA also required SeaView to increase the delay mechanism from 15 to 30 seconds. SeaView implemented all these measures. However, SeaView was opposed to moving dementia and wandering residents from the second floor, which was more secluded and secure than the first floor. SeaView complied against its better judgment, because AHCA threatened to take action against the administrator’s professional license if he did not comply. At the February 21 follow-up survey visit, the surveyors originally concluded that SeaView had corrected all deficiencies. However, after SeaView’s Director of Nursing informed them that a resident referred to by the parties as Resident number 7, or A. D., had been found outside a doorway the previous day. AHCA changed its conclusion and again asserted that both deficiencies remained at a level warranting conditional licensing. On February 20 A. D. was noted to be just outside the staff entry door near the laundry room. He was outside no longer than five minutes, and the evidence suggests that the housekeeping director escorted him outside. No evidence was presented to explain why the housekeeping director escorted the resident outside, or how the facility addressed this lapse. This gap in the evidence is troubling, but what is known about the incident does not support a finding of inadequate supervision inasmuch as the exit apparently took place with the assistance of staff, and was promptly remedied. The only direct evidence concerning what supervision A. D. received came from an AHCA surveyor, who testified that while she observed A. D., and he was up and about, staff would take his hand and redirect him when he approached doorways. AHCA asserted that the care plans for A. D. and a person referred to by the parties as Resident number 2 were deficient because, while there was a direction to monitor the residents, the care plans did not include the “type, frequency, and duration” of such monitoring. Again, the evidence established that monitoring involves visual or auditory contact by staff sufficient to assure that the patient's whereabouts are accounted for at reasonable intervals appropriate to the individual's circumstances. There is no regulation, and AHCA cited to no standard, which would require such information in a care plan. Significantly, similar care plans have been reviewed and approved by AHCA in subsequent surveys at SeaView.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the AHCA enter a final order dismissing the Amended Administrative Complaint with prejudice. DONE AND ENTERED this 23rd day of October, 2002, in Tallahassee, Leon County, Florida. ___ FLORENCE SNYDER RIVAS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 2002. COPIES FURNISHED: Lealand McCharen, Agency Clerk Agency for Healthcare Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Healthcare Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 Catherine B. Parks, Esquire Quintairos, McCumber, Prieto & Wood, P.A. 9200 South Dadeland Boulevard Miami, Florida 33156 Alba Rodriguez, Esquire Agency for Health Care Administration 8355 Northwest 53rd Street Miami, Florida 33166 Donna H. Stinson, Esquire Broad and Cassel 215 South Monroe Street, Suite 400 Post Office Drawer 11300 Tallahassee, Florida 32302
The Issue Whether or not the Petitioner is entitled to be issued a Certificate of Need to establish a home health agency to serve Putnam County, Florida.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, post-hearing memoranda and the entire record compiled herein, the following relevant facts are found. Family Center Home Health Care, Inc. (Petitioner), filed an application seeking to establish a home health agency to serve Putnam County, Florida. Ms. Felice M. Knotts, R.N., M.S.N., is the person who completed the application for the issuance of a Certificate of Need on behalf of Petitioner. Ms. Knotts has been a registered nurse since approximately 1966, and is a Doctoral candidate for a degree in Health Services Administration. The application was referred to the North Central Florida Health Planning Council, Inc., pursuant to Sections 381.493-.499, Florida Statutes, for review and comments. The Health Systems Agency (HSA) staff, its project review committee and its Board of Directors each recommended denial to the Department of Health and Rehabilitative Services of a Certificate of Need with the Board recommending denial by a vote of 23 to 0. Need for the proposed project is to be measured against standards found in the Local Health System's plan and Chapter 10-5, Florida Administrative Code, pursuant to Section 381.494, Florida Statutes (1979). By letter dated October 27, 1981, Petitioner was advised by the Respondent that her proposal to establish a home health agency in Putnam County had been reviewed by the North Central Florida Health Planning Council, Inc., and was denied on the basis that the proposed project was inconsistent with the HSA's health system plan and Chapter 10-5.11 (14), Florida Administrative Code. In addition, the two (2) current home health agencies operating in Putnam County, even if combined, do not reach the average daily census maximum of three hundred (300) which is required for the establishment of another home health agency. As stated, currently there are two (2) home health agencies licensed to serve Putnam County, Upjohn Health Services and Central Florida Home Health Services. During 1980, Upjohn served six (6) patients and Central Florida Home Health Services served one hundred sixty-two (162) patients. Upjohn found demand insufficient in Putnam County to establish a sub-unit. At the time that Petitioner's application was reviewed by the Department of Health and Rehabilitative Services, Upjohn had a case load of five (5) patients while Central Florida had a case load of ninety-five (95). During the hearing herein, representatives of each agency indicated that it had sufficient capacity to meet future demands. Standard 1-1 in the Health System's plan requires that the need for new home health agencies be based on home health use rates, projected population and a minimum volume of 1,200 patients per year per agency. Based on current regional use rates of six (6) patients per 1,000 population and the projected population in 1985 of some 56,800 people in Putnam County, 341 Putnam County residents would need home health care during 1985. By use of this standard, the need could exist for less than one-third (1/3) of a single home health agency. Petitioner sought to introduce into evidence a chart which would purportedly show the need as required pursuant to Chapter 10-5, Florida Administrative Code. The chart was based on Ms. Knotts' contact with numerous physicians who practice in the subject area and purportedly recorded their responses in a document designated as Petitioner's Composite Exhibit No. 3. Based on the fact that none of the physicians who purportedly relayed information to Petitioner was present to testify during the course of this hearing, information contained in petitioner's survey is hearsay. As such, that information is not, standing alone, reliable or sufficient to support a basis for which a finding of fact can be made. Chapter 120.58(1)(a), Florida Statutes. Rule 10-5.11(14)(b), Florida Administrative Code, provides that a Certificate of Need for a proposed new home health agency shall not be issued until the daily census of each of the existing home health agencies or sub-units providing services within the health service area of the proposed new home health agency has reached an average of three hundred (300) patients for the immediate preceeding calendar quarter. That rule also allows for need to be shown for a proposed new home health agency by demonstrating mitigating and extenuating circumstances as follows: That the population of a proposed service area is being denied access to home health care services because existing agencies are unable to provide service for all persons in need of home health care or that approval of the new home health agency would foster cost contain ment for all providers in the health service area. Based on the above, it is concluded that the two (2) currently licensed home health agencies in Putnam County have not obtained the average daily census of three hundred (300) patients. Likewise, there was no substantial competent evidence that the population of Putnam County is being denied home health services or that creation of Petitioner's home health agency would foster cost containment for all providers in the health service area. In this regard, officials from the existing two (2) currently licensed home health agencies testified to the extensive under-utilization of existing services which would likely have the effect of increasing charges because of the duplication of under-utilized services which cannot be demonstrated to be cost-effective. Based thereon, I shall recommend that the Petitioner's application to create a home health care agency be denied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the Respondent, State of Florida, Department of Health and Rehabilitative Services, enter a final order denying Petitioner's application for the issuance of a Certificate of Need to establish a home health agency to serve Putnam County, Florida. RECOMMENDED this 20th day of August, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, 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 20th day of August, 1982.
The Issue The issue is whether the application of A Professional Nurse, Inc., (APN) for Certificate of Need No. 4636 to operate a home health agency in HRS District IX should be granted. STIPULATION CONCERNING APPLICABLE STATUTES In the prehearing stipulation, the parties agreed that the issues to be litigated are only those relating to the need for an additional home health agency in the HRS service district. The other criteria found in Section 381.494(6)(c), Florida Statutes, which the Department is required to take into consideration in granting certificates of need, are not in dispute. The only portions of the statute and rules which must be examined here are Section 381.494(6)(c)1., 2. and 12, Florida Statutes, and Rule 10.5.011(1)(b)1., Florida Administrative Code.
Findings Of Fact APN's Applications This case arises from the application by APN for Certificate of Need No. 4636, filed in June, 1986. In 1983, APN had filed another application for a certificate of need when the Department had imposed an administrative moratorium on applications. HRS originally denied the application but during the pendency of formal proceedings, reconsidered and would have granted the application, but other parties intervened. APN failed to respond to certain discovery (it did not have an attorney) and at the final hearing therefore was not allowed to present evidence. As a result, APN's 1983 application was denied. With respect to the current application, based upon its June, 1986, filing, under Rule 10.5.008, Florida Administrative Code, a decision would have been due in October of 1986. On September 16, 1986, an employee of the Department requested an extension of time for the Department's decision until January, 1987, because the Department had no rule methodology for determining need for home health agencies, but hoped to have one by January, 1987. APN agreed to a three-week extension but did not agree to defer a decision until January, 1987. In November, 1986, the Department issued a state agency action report proposing to deny the application. At no time during the application process was APN told how need for an additional home health agency would be determined during departmental review in the absence of any need methodology adopted by departmental rule. There were no other applications in HRS District IX filed in the same batch as this application, and there have been no petitions to intervene in this proceeding. APN And Its Related Companies APN is an existing, licensed home health agency which has operated in District IX for nine years. It has applied for a certificate of need in order to qualify as a Medicare and Medicaid provider. Without the certificate of need, it cannot receive Medicare or Medicaid reimbursement for its services. Due to the recent opening of psychiatric hospitals in District IX and the need for follow-up care after such hospitalization, there is a need in District IX for psychiatric home health services. APN has particular expertise in psychiatric nursing. The requirements APN met for licensure are nearly identical to those for certification. There is no capital expenditure necessary for the Medicare and Medicaid certification. APN also started a related company, Professional Staffing Services, which provides nurses for hospitals, nursing homes and other home health agencies. These clients have called upon Professional Staffing Services when they are short of staff. APN currently receives referrals of persons who need home health services which come from hospitals, social service departments, hospital discharge planners. It also has a plan with hospitals for providing indigent care called "Patient Care Partnership Plan" under which it provides two hours of indigent care for each 40 hours of private duty care obtained through a hospital. There are people who could benefit from home health services who are unaware that they qualify to be reimbursed by Medicare for home health services. There are even some physicians who are not familiar with the availability of home health services. Because of the relatively low level of public awareness of the availability of home health services, patients are sometimes placed in nursing homes rather than deceiving health services at home, which would be less expensive and more cost-effective than nursing home care. Method For Determining Need For Home Health Services in District IX Because there is no rule methodology for determining the need for home health services, the method for determining need used by the Department is subject to de novo review in this proceeding. Section 120.57(1), Florida Statutes (1985). The Department presented no evidence of the number of home health agencies it believes are needed in District IX. In the absence of a rule it has no way of quantifying need. The Department has had difficulty in developing a methodology for determining need for home health agencies. Its first rule promulgated in 1977 was known as the Rule of Three Hundred. That rule is determined to be invalid. See Johnson and Johnson Home Health v. Department of Health and Rehabilitative Services, Final Order, DOAH Case 83-2170R, affirmed 447 So.2d 361 (Fla. 1st DCA 1984). Thereafter, the Department used a nonrule policy requiring an applicant to prove that people were not being served in order to justify a certificate of need for a new home health agency. That policy was applied by the Department at the time of the hearing in Upjohn v. Department of Health and Rehabilitative Services, 496 So.2d 147 (Fla. 1st DCA 1986) and was criticized by the court. The Department's current policy of requiring applicants to show that people are not being served is unreasonable. Existing home health agencies have the ability to expand their staff as demand increases. This would preclude the entry of any new competitor into the market if the rule for determining need for additional agencies is that there must be current potential users who are unserved. The Department's assertion that additional need can be shown by surveys of doctors or hospital discharge planners which indicate an inability to obtain home health services places an unreasonable, unattainable burden on an applicant. The expert retained by the Department to help it develop a rule methodology attempted to survey discharge planners and received only a 25 percent response rate, which is unreliable. The Department's assertion that the applicant could show a waiting list as an indication of need is also unreasonable. Those in need of home health services who cannot obtain them do not wait, they obtain alternate services, by such means as entering a nursing home. Finally, to the extent that patients or even physicians are unaware of the availability of home health services, it is not possible to structure any survey to quantify that pool of unmet need. APN's Need Methodology The testimony of the health planning expert presented by APN, Eugene Nelson, was generally persuasive. He advocated an assessment of need based upon a use rate formula. Nelson found that the patients used home health services at varying rates throughout the state, with greater use in the southeast, less use in the mid-portion of the state, and lower use in north Florida. He therefore suggested the use of different use rates in north, central and south Florida. District IX is in the southern area. The data on the use of home health services by patients is not reported to the Department or to local health councils, and is therefore not readily available. It can be obtained, however, from Medicare financial intermediaries based on reimbursement reports those intermediaries process on behalf of the federal government. Only the Department can obtain this data. Intermediaries will not supply it to CON applicants on request. The most recent data which is complete is 1984 data. When this use rate is applied to the population over age 65, one can derive the expected number of Medicare home health visits for 1987. An HRS service district is the appropriate planning unit. By multiplying the use rate in south Florida times the District IX population over 65 (2.4446 x 268,056) the total expected visits for 1987 are 655,290. Even using the lower, and therefore more conservative, statewide average use rate yields 508,154 visits (1.8957 x 268,056). Nelson then converted the number of visits to a reasonable number of agencies based upon the number of visits each agency ought to be able to perform. There is little economy of scale in home health agencies and it is therefore difficult to determine an optimum agency size. Nelson discussed data showing reasonable agency size ranges from 9,000 to 15,000 visits per year. This range of agency size is accepted as reasonable. Using 15,000 visits as the appropriate agency size (which is conservative), there would be a need for 44 agencies in District IX if the south Florida use rate is applied, and 34 agencies needed if the statewide use rate is applied to the appropriate population. There are currently 25 existing home health agencies which have certificates of need in District IX. This methodology shows a net need for between nine and 19 new home health agencies. APN's use rate formula for determining the number of home health agencies is consistent with the goals and priorities found in the State Health Plan and the Local Health Plan. In this case, one of the significant objectives of the State Health Plan is Objective 1.5 which is To assure that the number of home health agencies in each service area promote the greatest extent of competition consistent with reasonable economies of scale by 1987. RECOMMENDED ACTION: 1.5a: Develop a need methodology based on historic cost data for Florida Home Health Agencies. Because it currently has no rule methodology for determining need for home health agencies, the Department has contracted with Dr. Elton Scott to draft a formula for determining need. The preliminary report of Dr. Scott recommends a methodology based on the historical Medicare use rate and is generally similar to one presented by APN. Until it adopts a new methodology by rule, the current policy of the Department is to request extensions of time for CON review from applicants rather than process the applications. This results in a de facto moratorium. No applications have been approved under the current policy of requiring the applicant to prove unmet need. In the record of this case the Department has failed to present any qualified health care expert to give any opinion about appropriate health care planning for home health agencies or to justify its current policy of requiring applicants to present evidence of need on an anecdotal basis. The policy is unreasonable for reasons stated in Finding of Fact 15.
Findings Of Fact The Agency hereby adopts the findings of fact set forth in the Recommended Order, except where noted supra.
Conclusions This case was referred to the Division of Administrative Hearings (DOAH) where the assigned Administrative Law Judge (ALI, T. Kent Wetherell, 1, conducted a formal administrative hearing. At issue in this proceeding is whether the Agency for Health Care Administration (Agency) should issue a hospice license to Vitas Healthcare Corporation of Florida (““Vitas”) in Palm Beach County pursuant to the Agency’s change of ownership (CHOW) rule. The Recommended Order dated December 15, 2005, is incorporated herein by reference, except where noted infra.
The Issue The issue is the consideration of the validity of proposed Rule 10-5.11(14), Florida Administrative Code.
