Findings Of Fact On August 12, 1982, CPC, a hospital-operating corporation whose home office is in California, submitted to Respondent HRS an application fee and application for a Certificate of Need to construct a 60-bed adolescent acute care psychiatric and substance abuse hospital in Melbourne, Florida. Projected cost was to be $3,571,220 of which approximately $685,000 was to be in the form of local equity and the balance of approximately $2,730,000, constituting approximately 80 percent of the total cost, was to be in the form of a 20-year loan from CPC at 12 percent annual interest. Project development costs are projected to be $30,000; architectural and soil testing fees, $109,500; construction costs, $2,452,680; land acquisition, $350,000; interest during construction, $188,856; and fixed and movable equipment, $371,965. The facility will include a 15-bed locked intensive care psychiatric unit, a 25-bed open psychiatric unit, a 17-bed substance abuse unit and a 3-bed detoxification unit. The facility will have a total of almost 35,000 square feet of which almost 23,000 square feet will be devoted to the nursing units. The facility will be situated on 17 acres of land, the site plan for which calls for outdoor eating facilities, ball fields and other athletic opportunities. The intent of the developers is to make the facility as close to the campus situation as is possible, considering the nature of the operation. The facility will be built at no more than $60 per square foot, which includes all site preparation-- clearing, building, fencing, lighting, nurses' call system--all inclusive except for furniture and professional equipment. Staffing projections for the facility which are considered adequate by both CPC and state agencies include the following major categories: Registered nurses (psychiatric); Licensed practical nurses; Mental health specialists; Secretarial; Alcohol and drug counselors; Occupational therapists; Recreational specialists; Educational director; Special education teachers; Psychologists; Social workers; Administration; A medical director (1/2 time); and An alcohol and drug treatment director (1/2 time). The projected ratio of staff to patient for the first year (66.7 staff members to 33 patients) is approximately 2.07 to 1. CPC's other hospitals in Florida, both full-service hospitals as opposed to specialty hospitals, have a staff to patient ratio somewhat lower. Personnel cost is a significant factor in budgeting for total expenses. Projected equipment costs are not considered unreasonable. CPC operates 20 acute psychiatric facilities in nine states and the United Kingdom, and its hospitals are all accredited by the Joint Commission on the Accrediation of Hospitals. All CPC hospitals are contracting members of the Blue Cross Association. It anticipates charging $227 per day on the open adolescent unit, $224 per day on the closed adolescent unit and $227 per day on the alcohol and drug abuse unit during the first year. CPC anticipates that in the first year of operation, it will realize 10 percent of its patient income from Medicaid (Baker Act), 80 percent from insurance and 3 percent from private pay patients, and attributes a figure equal to 5 percent of income to indigents and 2 percent to bad debts. It is the intention of CPC to seek Baker Act patients to account for 10 percent of its patient days and will work with state and local agencies and the courts to seek patients and funds for providing care to adolescents. CPC projections, not successfully shown to be unreasonable, reflect an anticipated net income after taxes of $120,000 for the first year of operation and $335,000 for the second year. These figures are based, as was stated above, on Baker Act funding of 10 percent of the patient load. At the present time, BMHC receives all Baker Act funds in the area, and additional funds from this source may not be available. If not, the absence of Baker Act funds would have a negative impact on the local CPC facility's financial position unless those patients were replaced by patients from other programs like child services or private pay patients based on the projected need. CPC authorities feel their projected occupancy rate of plus or minus 70 percent for the second year of operation is conservative and should be higher. The lower (60 percent) occupancy rate of CPC's other two Florida hospitals, difference in program from that proposed here, nonetheless has not resulted in either being financially unfeasible. Projected equipment for the facility, though heavily attacked by HCA as being inadequate, has not been so shown. Similarly, the testimony that it would be impossible for CPC ton construct and equip the facility for the price quoted is not persuasive. There are decided differences between the facilities in design, construction and equipment. It cannot be said, however, that either is inadequate for the purpose. The differences, where they exist, appear to be primarily related to style and preference, and do not relate directly to safety or the suitability of the facility to serve as a psychiatric hospital. CPC proposes a highly structured program for each patient--all of whom will be adolescents. A team proposal for treatment of the individual patient will be developed when the patient is first admitted and will include several major factors. The first will be medical treatments, as necessary as well as the second, psychotherapy treatments by doctors, psychologists, and in group therapy when indicated. Also of importance is a school special education program using a curriculum from the patients' own school district. This program is important both to keep the patient's grade level up and as a support mechanism therapeutically. They propose, also, a structured recreational therapy and conjunctive therapy in which something is always happening for that patient. Finally, CPC will include a family therapy situation wherein, as is possible, the patient's family will come in for counseling to educate them as to the problem their patient has so that when the patient comes out, the family can cope with it. As the patient, here, improves, he or she is brought into group therapy with the family. Since the purpose of all this is to get the patient back into the community when ready for that, CPC proposes to start a program of partial hospitalization that is flexible to meet the circumstances (days out--nights in/weekdays in--weekends out). The theory will be to provide whatever is best for that patient in a sequential progression with more and more freedom and a gradual transition into a course of outpatient treatment. There is not thought of developing an outpatient treatment program for use as an initial treatment. All partial patients will develop from former inpatients. HCA, a hospital-operating corporation whose home office is in Tennessee, also submitted an application for a Certificate of Need to construct and operate a 60-bed acute care freestanding psychiatric and substance abuse hospital in Melbourne, Florida. Projected cost of the facility is to be $5,713,998 of which 40 percent would be equity and 60 percent ($3,428,399) would be long-term debt at 13 percent interest for 20 years. Project development costs are projected to be $75,000--all in legal and accounting fees; $178,323 in architectural and engineering fees; financing costs of capitalized interest of $198,747; construction costs of $3,430,866; equipment costs (fixed and movable) of $1,274,478; and land acquisition and other related costs of $556,584. The facility will include 20 adolescent psychiatric beds, 20 adolescent substance abuse beds and 20 adult/geriatric psychiatric beds. The facility will have a total of almost 39,000 square fee of which almost 19,000 square feet will be devoted to the nursing units. The remainder will be used by administrative, office and other services. The facility will be located on 31 acres of land which will also be the site for a proposed general hospital for which HCA intends to seek approval. Staffing projections for this facility, which are considered adequate by both HCA and state agencies, include the following major categories: Nursing; Psychology; Activities; Social services; Education; Administration; Business office; Medical records; Dietary; Housekeeping; and Engineering/maintenance. The projected ration of staff to patient for the first year (67.4 staff members to 33 patients) is approximately 2.04 to 1, roughly equivalent to that of CPC. HCA operates 301 hospitals throughout the United States, 23 of which are psychiatric hospitals. In addition to the psychiatric hospitals, many of its general hospitals have psychiatric units. All of its presently operating units are full accredited. It anticipates charging $260 per day during 1984-85 and $275 per day during 1985-86. HCA anticipates that during its first year of operation, it will realize 5 percent of its patient income from Medicaid, 10 percent from Medicare, 15 percent from insurance, 65 percent from private and 5 percent from other. HCA omitted any reference to Baker Act in its application because at this time such funds are fully committed elsewhere and not available and, as a result, felt it would be imprudent to include these funds in financial projections. However, if these funds were to become available, as unlikely as that may be, HCA would consider taking these patients. In any case, HCA projections reflect an anticipated net income after taxes of $2,000 for the first year of operation and $61,000 for the second year. Up until approximately two years ago, HCA only had two hospitals in its psychiatric program. Since that time, acquisitions and construction have brought the inventory up to its present strength. HCA acquired HCI, an organization which has had extensive experience in operating 20 psychiatric hospitals. HCA has a large cadre of people available to help start up new hospitals and shore up existing programs. It operates a center for heal studies, and its informational branch produces its own continuing education films and other materials. Its treatment programs are developed by its local staff based on input by professionals in the local community and designed to meet the needs of the local community. Once developed and implemented, all HCA programs are periodically evaluated by central teams who visit the local site. If a problem is found, HCA sends out experts in that problem area to fix it. It is HCA policy, however, to provide as much autonomy to the local staff as is possible, though staff, both professional and nonprofessional, are recruited locally and from other areas. HCA's position is that these factors have a major positive impact on patient care and treatment in that it insures currency of ideas and treatment modalities. HCA's proposed treatment program was described as to each category of patient. As to adults, it follows a "therapeutic community approach" which starts with a pleasing residential building and furnishings. All persons contacting patients are trained in the patient's needs and how to react to the patient. This would include such peripheral people as maintenance and support personnel. There would be a specific treatment plan for each patient with the patient's day planned out totally for every hour of the day, including recreation designed for that patient's needs. Little time is provided for the patient to be confined to the sleeping room. HCA anticipates the average length of stay (ALOS) for an adult psychiatric patient will be 21 days. As to the adolescent psychiatric patient, the prescribed treatment program will be basically the same as for adults except that HCA would provide an active school program, staffed by HCA employees, which would interface with the local school system. The patient day would be geared to the adolescent's needs. HCA proposes few children facilities because child programs require a specially designed program with a higher staff to patient ration than is anticipated here because of the need for play therapy and family involvement. HCA officials believer the child patient can successfully be integrated into the adolescent hospital unit without difficulty until the patient can be transferred to a specialized facility elsewhere. The ALOS for adolescent psychiatric patients will be 45 days. The substance abuse programs will be similar to those for the psychiatric units with specialization on drug abuse counseling and interface with Alcoholics Anonymous. ALOS here is expected to be 35 days. It must be recognized, however, that theories of treatment change rapidly. That proposed in HCA's Certificate of Need would not necessarily be that ultimately used upon approval if a change is justified. HCA's expert, Dr. Winston, contends, from a clinical standpoint, it is better to operate without locked units if possible, and categories of patients are better separated. However, he contends it is perfectly all right and may even be superior to have the different classes of patient in the same facility. This position is corroborated by other psychiatric experts who testified that one of the reasons for the need for an adolescent psychiatric hospital is the clinically undesirable requirement, currently existing in the area, for adolescent and even children psychiatric patients to be placed in units with adult psychiatric patients. It is obvious, then, that all agree that a separate adolescent unit is clinically needed in the area. The size, configuration and location remain to be established. The issue of need can and must be divided into two categories. One is the actual need for the implementation of psychiatric services for children and adults. The other is the need established for psychiatric beds in the area in accordance with the formulas established by HRS. First to be discussed is the actual service need. CPC's Vice President for Psychiatric Hospital Development, in developing the proposal for this project, first did a desk audit regarding population growth potential and the like for Brevard County and the surrounding contiguous counties. Thereafter, he made a number of visits to the area during which he spoke with as many area psychiatrists as he could. He also toured the BMHC and its inpatient facility, as well as the other two hospitals in the immediate area, Holmes Regional Medical Center, which does not have a psychiatric unit, per se, and Wuesthoff Hospital, which does. He also talked with court and school officials familiar with the area's mental health problems. From his investigation and conversations, CPC's expert found that BMHC's inpatient facility, consisting of 28 beds, was oriented primarily to adult psychiatric patients, as was Wuesthoff's 30-bed psychiatric unit. (In that regard, Wuesthoff's plan to convert five psychiatric beds to some other service, thus reducing the number of psychiatric beds in Brevard County, has been approved by HRS, if not already implemented as of this writing. From this it was concluded, and the evidence does establish, that there are no psychiatric facilities in Brevard County specifically for adolescents. The consensus among the psychiatrists and psychologists in the subject area, whose testimony was presented, was that there is a definite need in the Brevard County area for adolescent psychiatric and substance abuse beds. Adolescents requiring psychiatric or substance abuse treatment are treated on an outpatient basis if possible because of a reluctance to confine adolescents in an adult psychiatric ward. If outpatient treatment is not possible, the less than desirable alternative is to admit the adolescent patient to an adult unit for only so long as is necessary to make other arrangements for inpatient care. Currently, relatively few adolescent inpatient facilities exist. Among the better are those at the University of Florida in Gainesville, in Miami, several out of state and, while not a psychiatric hospital, a special school in Orlando--all of which have waiting lists. Community surveys were made by both marketing representatives and by facilities experts from HCA, as well. It was their opinion that a need exists in the subject service area for both adolescent and adult psychiatric beds, and that both HCA's and CPC's proposals would fill the need for substance abuse beds. HCA's position is that not all new beds would be adolescent beds. A need exists for adult beds in Brevard County because the predictions of the Bureau of Business and Economic Research (BBER), while indicating a general population increase for the area, also indicates that the adolescent population will decline. BBER projections have not been totally accurate for Brevard County in the past because of aerospace fluctuations in the area, however. In fact, the HCA prediction is for an adult population growth rate three to four times as fast as that for children and adolescents, thereby placing a strain on the available adult psychiatric beds. HCA's expert disagreed with the CPC expert's method of establishing clinical need (interviews with practictioners). It was felt this is a supply-driven opinion as opposed to a demand-driven opinion, is unsupported by data, is imprecise and not accurate, and is therefore not reliable for health planning purposes. To the contrary, the professional opinions stated by CPC's witnesses were equally as persuasive as those of their opponents. The psychiatrists and psychologists referenced above unanimously concluded that professionally it is better to admit adolescents to adolescent programs and units. Mixing of patients is quite disruptive to both categories of patient. In the opinion of the experts who testified here, where adolescent psychiatric patients are confirmed with adult patients (such as at Wuesthoff), they sleep in the same room, eat with them, smoke with them and discuss adult problems all day long. The doctors feel the continued closeness of this type is not only not therapeutic, but is sometimes counter therapeutic. In the case of adolescents, a major part of therapy is re-integration of the patient into the family; and if the unit is not near the family (as is presently the case with the out-of-town and out-of-state units referenced above), this is difficult. Also, liaison between the inpatient's doctor and the outpatient therapy is difficult when the unit is not local. As a result, at least some of the practitioners in the area have stopped seeing certain categories of patients because there is no facility currently in the area who can provide the necessary environment. For example, Dr. McClure, a psychiatrist, has stopped seeing adolescent substance abuse patients. If a facility currently in the area who can provide the necessary environment. For example, Dr. McClure, a psychiatrist, has stopped seeing adolescent substance abuse patients. If a facility became available, he would resume that segment of his practice. Dr. Slade, a clinical psychologist, has stopped seeking out patients who might need hospitalization because there is currently nothing in the area available to fill that need. It one were to come, she would again start seeing that category of patient. From the above, it can clearly be seen a clinical need for an adolescent psychiatric facility exists. Whether it should be freestanding, as proposed by both CPC and HCA, or a part of an existing hospital psychiatric unit is another question. Both proposals here are for freestanding units and, as a result, only that concept will be considered. Turning to the issue of bed need, at the time CPC's original Certificate of Need application was submitted, the Florida State Health Plan contained no methodology for establishing bed need for psychiatric hospitals. Such as now been promulgated and shows a need for 156 short-term psychiatric beds and 44 substance abuse beds in District VII, which includes Brevard, Orange, Osceola and Seminole Counties. This is based on a projected population base for the district in 1988 of 1,230,180 people. Applying the state methodology of 0.35 beds per 1,000 population, five years into the future resulted in a total projected bed need of 431 beds. Subtracting from that the 275 existing and approved beds leaves an unsatisfied psychiatric bed need of 156 for the district. Authority to designate subdistrict bed needs has been delegated to the district health councils. Brevard County has been subdivided into a subdistrict, but bed needs have not been allocated to the subdistricts. However, even if the 40 (total 60 minus 20 substance abuse) psychiatric beds are approved for Brevard County, this falls well within the total need figure for the district and leaves 116 beds remaining for the other three counties. Both CPC's and HCA's proposals call for 40 psychiatric beds. Both are, therefore, compatible with the State Plan. Rule 10-5(25)(d)5, Florida Administrative Code, states that no additional short-term inpatient hospital adult psychiatric beds shall normally be approved unless the annual occupancy rate for all existing beds in the service district for the prior 12-month period is at or exceeds 75 percent. As to adolescent beds, the criterion is 70 percent. There is not evidence of bed utilization percentages for either category districtwide. There is however, evidence establishing that the criteria have been met since 1980 for adult beds in Brevard County, a subdistrict; and since there are currently no short-term adolescent psychiatric beds in the subdistrict, that use percentage requirement is meaningless. Also, both applicants project meeting the requirements in Rule 10-5(25)(d)4 for 70 percent occupancy rate by the third year for adolescent short-term (CPC predicts 72 percent the second year). At the present time, two separate facilities provide adult short-term inpatient psychiatric care in Brevard County. They are Wuesthoff Memorial Hospital in Rockledge, Florida, which has 30 beds (predicted to be reduced to 25), and the Brevard Mental Health Center and Hospital, which operates an outpatient facility in Titusville and Rockledge and a 28-bed inpatient facility in Melbourne. This facility is a $2.6 million dollar facility constructed on 8 percent bond financing, and is fully accredited. BMHC receives all Baker Act patients in Brevard County and, in addition, provides care and treatment to indigents. Of its $1,238,000 revenue for last year, it received $468,000 for Baker Act patients, $156,000 in county matching funds and $614,000 form other patient fees. Its expenses for the same period last year were $1,250,000, for a deficit of $12,000. It is, both in theory and actuality, a nonprofit operation with 78 percent of its patients being indigent. Baker Act funds provided a total of $614,000. At $156 per day per bed, this equals 4,000 bed days, which, when divided by 365, shows that 11 paid beds are provided for Baker Act patients. In addition to Baker Act patients, BMHC also provides other beds for indigents. The terms of the Baker Act contract require all clients referred be accommodated. These additional patients provide insurance funds equivalent to 2.5 more beds, or a total of 13.5 beds provided by Baker Act matching funds and related insurance. BMHC is generally 85 percent occupied, which relates to 25.2 of the 28 beds. Subtracting the 13.5 Baker Act beds from the 25.2 leaves 11.7 beds for private patients. The average charge for private patients at BMHC is $230, which includes physicians' services. Their collection rate of 87.5 percent reduces that on average to an actual income of $200 per private bed day. Medicare, which accounts for 38 percent of BMHC's income, reimburses at a rate of $168 per day. If, as a result of the establishment of either of the two proposed facilities, BMHC were to lose one bed year of patients, it would represent a dollar loss of $73,000. This constitutes a serious thereat to a nonprofit organization, such as BMHC, because of the possibility of a loss of patients to a private hospital, even if its charges were higher. To some people, exclusiveness is more important than cost. A loss of one bed's revenue would jeopardize the free care presently provided by BMHC. A loss of two beds' revenue would make a reduction in the free care provided a certainty. Brevard County has an ongoing relationship with BMHC. It provides an annual operating subsidy for the currently existing facilities and, in addition, has guaranteed a bond issue for the building of the south county facility. It also provides a number of in-kind services. If BMHC were to become financially insolvent for any reason, the county would have to step in and pay off the bonds, but it could not and would not take over the operation of the facility. As a result of the above, the county is opposed to any threat to the financial health of BMHC. It feels that while the proposal of CPC would not constitute a threat, that of HCA would because the full range served of the latter could and probably would draw away some of the private pay patients now going to BMHC. This alternative drawing power would adversely affect BMHC's ability to stay in business eventhough, according to the HRS methodology, there is room in the county for additional adult beds for which BMHC is applying. In that regard, however, the county authorities concede that if it could be demonstrated that an additional provider could come in without adversely affecting the operation of BMHC, they would not oppose it. The District Mental Health Board for Brevard County (DMHB) has also taken a position in this area. Created by the Legislature, DMHB is charged with identifying the need for services in the county, the resources available to satisfy them and the gaps between. To a certain extent, it also funds the operations monitors them, evaluates them and produces the District Plan for them, the latest edition of which is for the years 1983 through 1987. This plan, which takes about a year to develop, is based on input provided by the mental health professionals, organizations and community representatives. It is used as a basis for the allocation of available funds and upon which to request funds from the Legislature. Neither CPC's nor HCA's application is contained in this plan; and though both applicants have made presentations to the Board, the Board has not taken a position favoring either. However, the plan as it currently exists proposes an additional 20 adult psychiatric beds which, it is anticipated , would be located under BMHC's auspices at its Melbourne site and for which BMHC made timely application. BMHC provides 80 percent of the mental health services in Brevard County now in all categories--adult, child and adolescent--and is rated excellent. In the opinion of the Director of DMHB, who is aware of BMHC's financial picture, approval of either proposal would have a negative impact, but that of HCA would be worse because of the likelihood it would draw adult paying patients away from BMHC. If that happened, it would jeopardize BMHC's financial position and its relationship with the county. In that regard, the District Plan goal, "to provide for the availability of comprehensive community alcohol, drug abuse and mental health services to persons in Brevard County, regardless of their ability to pay, "would best be complemented by the CPC proposal because: (1) it is limited to adolescents and would not risk drawing adult pay patients from BMHC; (2) it integrates with other existing services; and (3) it has the least restrictive admissions policy. On the other hand, in the opinion of Dr. Milton Schoeman, a health care consultant testifying on behalf of HCA, CPC's proposal, providing for adolescent beds only, will not help meet the need for general psychiatric beds projected for 1988. Of the 67 new beds needed, 40 would go to specialty hospitals, such as proposed by both CPC and HCA, and 27 would go to psychiatric units in general hospitals. These figures are for all ages of patients. Even though the HRS rules are silent on the issued of bed allocation between adults and adolescents, to permit CPC to use all 40 specialty hospital beds for adolescents would be inconsistent with the formula. He also is of the opinion that HCA's proposal will not materially affect BMHC's operation. To the contrary, according to HCA adolescents would be inconsistent with the formula. He also is of the opinion that HCA's proposal will not materially affect BMHC's operation. To the contrary, according to HCA witnesses, the HCA program would have a positive impact on BMHC's program in that its presence will make the community more aware and conscious of the need for mental health, and by cross- cooperation with BMHC in staffing and patient split. This has been shown in other areas where HCA was first seen as a threat by the existing hospital treating Baker Act patients. However, both hospitals now work together on joint programs to do the best possible for the patients. The fear of competition, HCA contends, is normally not realized. The type of facility represented by BMHC generally operates a shorter term, crisis intervention type program, one substantially different from that of HCA. As such, it does not lose patients to the longer term program of HCA. HRS has taken a position in opposition to HCA's proposal, concluding that CPC's application would fill the need for adolescent care with less impact on the current provider, BMHC. While HCA's programs are of high quality, they are almost identical to those currently offered by BMHC. It is unlikely that HCA will get any Baker Act funds under the current funding situation. If HCA were to be approved and built and would result in the loss to BMHC of only one bed/year in income ($73,000), this would have a severe adverse impact on BMHC's operation. On the other hand, the CPC would be less likely to duplicate services already being furnished. There are already two existing providers for adult patients; and while BMHC's utilization is high, Wuesthoff's is not, being only 62 percent after five years of operation. Under these circumstances, it would, in all probability, be a duplication of service to provide additional adult beds at this time. In addition to the differences in building layout, construction costs and equipment costs, previously found to be satisfactory in both cases, much evidence was produced by both sides to show that their proposal was economically more feasible and would result in lower patient costs. Conversely, the proposing parties presented evidence to show that the figures and statistics relied upon by their opposition were flawed and unreliable. After thorough saturation with offer and rebuttal, it is ultimately concluded that again the difference is one of style rather than substance. Neither part has been shown, by competent convincing evidence, to be materially superior to or inferior to the other. This issue will not be decided, therefore, on the basis of the ability to provide the service since both have been shown to be fully capable of doing so in a creditable fashion.
Recommendation It is accordingly RECOMMENDED That HRS approve Petitioner CPC's application for a Certificate of Need to construct and operate a 60-bed freestanding adolescent inpatient psychiatric facility in Brevard County, Florida, and deny the similar application of Petitioner HCA. RECOMMENDED this 10th day of February, 1984, in Tallahassee, Florida. COPIES FURNISHED: Morgan L. Staines, Esq. 2204 East Fourth Street Santa Ana, California 92705 Jon C. Moyle, Esq. Donna H. Stinson, Esq. 118 North Gadsden Street Suite 100 Tallahassee, Florida 32301 Eric B. Tilton, Esq. 702 Lewis State Bank Building Tallahassee, Florida 32301 John Antoon, II, Esq. 970 Michigan Avenue Building C Cocoa, Florida 32922 ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings Department of Administration 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 1984. Claire D. Dryfuss, Esq. Department of Health and Rehabilitative Services 1317 Winewood Boulevard Building 1, Room 406 Tallahassee, Florida 32301 Mr. David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================
Findings Of Fact NEED FOR LONG TERM ADOLESCENT PSYCHIATRIC BEDS Both the application of PIA and that of HMA are for long term adolescent psychiatric beds in DHRS District IX. All parties to this proceeding are in agreement that there is some need in District IX for long term adolescent psychiatric beds. The need for long term adolescent psychiatric beds was analyzed in two general ways. DHRS and the applicants analyzed by an "interview analysis." This method involves interviewing key persons engaged in the provision of mental health care as it is affected by the availability of that care in District IX. In performing its interview analysis DHRS contacted several agencies; including the District IX Local Health Council, the Mental Health Board the Alcohol, Drug Abuse and Mental Health Program Office in District IX and the Children Youth and Family Program Office (CYF) in Tallahassee. All the persons contacted indicated that there was a need for long term adolescent psychiatric services in District IX. The CYF in Tallahassee indicated that 40 adolescents from District IX were being provided long term psychiatric services through POS of Payment of Services. Under the POS program, the State pays to or contracts with providers of long term psychiatric services. At present these services are being provided outside of District IX. Additionally, CYF indicated that 25 adolescents from District IX were being provided similar services out-of-State and 32 adolescents were on a waiting list to be provided with long term services. Further, 6 adolescents were receiving long term services in state hospitals; 6 in group homes; and 17 in foster homes. Phillip C. Braeuning, Director of Development for HMA, also conducted an interview analysis of District IX. He interviewed essentially the same individuals as those interviewed by DHRS and received documentation from CYF and the District IX Mental Health Board regarding the availability of long term adolescent services in District IX. All of this documentation showed a need for long term adolescent psychiatric beds. HMA Exhibit 6, entitled District IX, Children and Adolescent Services, and prepared by the District IX Mental Health Board, indicates that 359 patients in District IX need residential psychiatric care. HMA Exhibit 7, which was received from CYF in Tallahassee, shows that 27 adolescents are receiving long term psychiatric services outside of District IX, both in-state and out-of-state. There are fourteen approved long term adolescent psychiatric beds in District IX, proposed to be located in the Vero Beach area in Indian River County, the northernmost county in District IX. These beds were granted in the batching cycle subsequent' to the cycle in which the HMA and PIA applications were considered. In determining the existing need for long term adolescent psychiatric beds in District IX, the DHRS's analysis, as presented at final hearing, considered these approved beds. The DHRS analysis is that there is sufficient need in District IX for the granting of both the HMA and PIA applications in addition to the approved 14 beds. Both HMA and PIA also analyzed need according to a numerical methodology. The experts of both HMA (Noel D. Falls) and PIA (Carol Moore) applied the Graduate Medical Education National Advisory Committee (GMENAC) methodology. While both these experts utilized the GMENAC methodology, their methods of application and projected bed need numbers were significantly different. Mr. Falls assumed a targeted age group of 10-19 using the methodology. He then identified a prevalence rate for psychoses and neuroses diagnoses. The District IX population ages 10-19 was 125,561. This was multiplied by the admission rate of .00103 (103 psychoses and neuroses per hundred thousand population) to determine the projected admissions for 1989. The projected admissions of 129 was then multiplied times four different lengths of stay (90, 120, 150 and 180 days) to determine the number of patient-days projected. The number of patient days projected was then divided by 365 days and then was again divided by 80 percent(the occupancy standard required by Rule 10-5.11(26) Florida Administrative Code) to arrive at the total need for long term adolescent psychiatric beds in District IX. After performing these calculations, Mr. Falls concluded that at an average length of stay of 90 days, 40 beds would be needed; and at an average length of stay of 120 days, 53 beds would be needed; at and average length of stay 150 days, 66 beds would be needed; at an average length of stay 180 days, 80 beds would be needed. Mr. Noel did not apply any adjustments to these figures because, in his opinion, the GMENAC methodology already has an adjustment factor built into the prevalency rate to account for any difference between need and utilization or demand. Additionally, Mr. Falls has never seen anyone advocate the application of a "demand adjustment" in addition to that already built into the methodology. PIA's expert, Carol Moore, also used the GMENAC methodology to determine the need for long term adolescent psychiatric beds in District IX. Ms. Moore used a target population of ages 10-17 and used a 90 percent occupancy rate as opposed to the 80 percent occupancy rate used from Mr. Falls. Ms. Moore performed GMENAC calculations in the same manner as Mr. Falls and concluded that using a 90 percent occupancy rate, 38 beds would be needed at an average length of stay of 120 days and 57 beds would be needed at an average length of stay of 180 days. If Ms. Moore had used an 80 percent occupancy rate, 43 beds would be needed at an average length of stay of 120 days and 64 beds would be needed at an average length of stay of 180 days. Ms. Moore then applied a "demand adjustment" to these projections. In her opinion, the bed need projection needs to be reduced by 50 percent because only 50 percent of those patients who actually need care will seek or demand it. Ms. Moore did not think that a demand adjustment was built into the GMENAC methodology. If the demand adjustment is applied, however, the above projected bed need, at both 90 percent and 80 percent occupancy; would be reduced by one-half. Ms. Moore also subtracted the approved beds in Vero Beach from the projected bed need and concluded that there was a net need of 14-21 long-term adolescent psychiatric beds at 90 percent occupancy and 16-23 beds at 80 percent occupancy. In analyzing need, the primary service area for both the HMA and PIA facilities is District IX. It is recognized by all the parties that there is a secondary service area which includes District X. If the secondary service area is taken into consideration, there is a greater need than that indicated by any method. THE HMA APPLICATION In the November, 1983, batching cycle, HMA filed an application for a Certificate of Need to construct a "60-bed residential adolescent center" in Palm Beach County, Florida. Total projected cost was to be $6,307,310. HMA is a corporation with main offices in Fort Myers, Florida. It is engaged in the operation of acute care and psychiatric hospitals. HMA originally proposed to locate its facility in Boca Raton, Florida. Based on subsequent demographic data supplied to it by Noel D. Falls, HMA made a decision to move the facility to the northern part of Palm Beach County, specifically north of PGA Boulevard. However, at the time of final hearing, HMA had not selected a site for the proposed facility and did not limit itself to a location north of PGA Boulevard. The proposed HMA facility is to be patterned after a 55-bed adolescent treatment program currently operated by HMA in Arlington, Texas. At the time of final hearing, the Arlington, Texas, facility had been operating for approximately one month. The proposed treatment program will be based on a holistic concept of health care. The facility will be a long term hospital for the treatment of adolescents between the ages of ID and 19. It is anticipated that the facility will treat the whole person, not just the psychiatric conditions. In doing so, the program will look at and treat family problems, social problems, and other factors which have a bearing on the adolescent's ability to fit into society. The form of treatment proposed is based on the "levels of care" medical model of psychiatric treatment. This form of treatment is a behavior modification program wherein privileges are granted and tokens are received by the patients for specified behaviors Good behaviors are re-enforced; bad behaviors are not rewarded. Movement to the next succeeding level of privileges is permitted only after achievement of a certain behavior pattern. The ultimate goal of this model is to allow the adolescents to take on more suitable functioning and responsibility and to look after themselves once they leave the facility. The levels of care approach will require approximately 4-6 months for the patient to move from the admission level to the level of discharge. The ongoing quality of programs at the HMA facility will be monitored from a corporate level. Additionally, HMA intends to seek accreditation of its hospital from the Joint Commission on Accreditation of Hospitals. The HMA proposal anticipates a unit size of 30 adolescents, however, HMA witness, Dr. Max Sugar, does not use the treatment program proposed by HMA and believes adolescents are best treated in units of 15-20. Staffing projections for the facility, based upon the staffing structure at the Arlington, Texas, facility, call for: One Administrator Two Assistant Administrators Fourteen Registered Nurses Forty-four Mental Health Technicians Four Social Workers Two Psychologists Six Counselors Medical Director Dietician (quarter-time) Kitchen Workers Purchasing personnel Financial Manager Four Business Office Personnel Six Secretarial/Administrative Positions Two Personnel Employees Twelve Miscellaneous Other Positions. Salaries for the proposed staff are based upon information from the National Association of Private Psychiatric Hospitals and from a study done by the Florida Hospital Association. Projected salaries should therefore be adequate to attract qualified personnel. Because the proposed facility is a 60-bed facility, it is of sufficient size to allow HMA to hire the necessary staff of physicians, paraprofessionals, psychologists and social workers on a full-time basis. HMA is apparently not intending to be involved in any research or teaching endeavors at its proposed facility. HMA has not made any productive contact with any members of the local medical community or mental health community. It has not made contact with health care providers such as physicians, psychiatrists, acute care hospitals, drug abuse programs, or mental health programs as it relates to any source of referrals. HMA has no plans for joint, cooperative or shared health care resources that would result in economies or improvements in the provision of health care. HMA has not selected a site for its proposed facility. Approximately one week prior to final hearing, HMA contacted Edward Riggins, a real estate broker and agent familiar with real estate values and availability in Palm Beach County, Florida. While HMA's application calls for a site to be a minimum of 10 to 15 acres in a semi-rural area to allow for a green belt and space for outdoor activities, the instructions given to Mr. Riggins called for a parcel of 5-15 acres and emphasized a location in close proximity to major highways and interstates with utilities within economic reach. Mr. Riggins located three potential parcels prior to hearing, but HMA had not even looked at these parcels. Additionally, any location in Palm Beach County will require a special exception to zoning in order for the site to be used for a psychiatric hospital. Factors which will impact upon achieving this special exception include traffic studies, engineering studies, and a site plan which conforms to the Palm Beach County building and zoning codes. Mr. Riggins believes that he will eventually be able to find a site which meets HMA's requirements as to price, location availability of utilities, and access, and that a special exception will be achieved. A significant factor which may impact on cost is the traffic impact analysis for a particular site. Palm Beach County imposes considerable costs and fees upon the development of properties which may impact upon traffic on the major arteries in the county. Many of the major arteries in the northern portion of Palm Beach County are at or over capacity. The cost associated with traffic impact at a particular site could be great. While it appears likely that HMA can eventually find a suitable site, it is unknown what the impact of the site location will be on cost. 23 The design plans for the proposed HMA facility were characterized by John R. Chambless, HMA expert in architecture and design, as being a "first look." Numerous changes will be bade prior to completion of the "second look" and "third look." Even at final hearing it was clear that HMA was altering the design plan which accompanied its application. That design plan called for approximately 45,000 square feet and included a gymnasium and swimming pool. At hearing the proposed design plan contemplated elimination of the gymnasium and redesigning of the physical Plant to provide for square footage of approximately 50,524. Final design planning cannot be done until HMA has selected a site for its facility. Additionally, the site preparation aspect of the architectured plans could not be considered or anticipated because of lack of the site. In its application, HMA projected the total cost of the project to be $6,307,310.00. Included within this figure are project development cost of $18,000.00; financing cost, $838,010.00; architecture and soil testing fees, $204,000; construction cost, $3,750,300.00 (including contingency and inflation); land acquisition, $450,000; interest during construction, $170,000; fixed and movable equipments, $800,000; and other costs, $57,000. Mr. Chambless believed that the construction cost and other construction related project costs as reasonable even though the proposed project contemplated approximately 5,000 additional square feet. He believed that 6 percent architecture and engineering fees are reasonable, that a 7 percent contingency factor was reasonable, and that the cost of preparing the site was reasonable, assuming that the site selected did not have dramatic water problems. Mr. Chambless based his opinion testimony on his experience in the construction of health care facilities in Florida and in other states, but he had very little recent experience with psychiatric hospitals and no experience in the Palm Beach County area. In contrast, according to Tom Ebejer, an expert in health care facility design and construction, including design cost and construction cost, the proposed construction costs of HMA are considerably understated. Mr. Ebejer has extensive experience in construction costs for health care facilities and has extensive current knowledge and experience in such construction costs in Florida and, in particular, in Palm Beach County. Specifically, the HMA proposed cost of construction for a 50,000 square foot building works out to a cost of $76.72 per square foot. Mr. Ebejer proposes that such construction in Palm Beach County would cost $95.00 per square. These estimates are consistent with costs of recently constructed free standing adolescent hospitals in Citrus County ($90.77 per square foot), Orlando ($95.00 per square foot), West Palm Beach, and Miami Beach. The construction cost of the current PIA facility in Delray Beach was $91.45 per square foot. Additionally, the site preparation cost proposed by HMA ($151,000.00) is approximately 5 percent of the anticipated construction cost. In Mr. Ebejer's experience, site preparation in the Palm Beach County area would be 10 percent of total construction costs on a normal site without a lot of problems. Problems that are typically encountered will include drainage problems, swampy areas, or bay heads. With these factors considered, Mr. Ebejer projects that construction of HMA facility would cost $4,750,000.00 as compared to the proposed cost of construction of $3,836,800.00, for a understatement of the cost of construction of $913,000.00. Mr. Ebejer's projected square footage cost of construction is based upon the least expensive construction design, material, and finishes. In evaluating the testimony of Mr. Chambless and Mr. Ebejer, it is found that Mr. Ebejer's opinions regarding construction cost are based upon his extensive experience in construction cost of similar facilities in Florida and Palm Beach County. Mr. Ebejer's testimony is given greater weight than that of Mr. Chambless and it is found that HMA's construction costs as proposed are understated and not reasonable. HMA anticipates obtaining financing for its facility either through a local bond issue or through financing by a Private lending institution. According to Howard H. Weston, Senior Vice-President of the Municipal Financing Department of Arch W. Robertson and Company, an investment banking firm head quartered in St. Petersburg, Florida, financing through a bond issue can be obtained for this project. HMA may also receive a letter of credit from a lending institution, but it is probably not possible to receive such a letter of credit without an equity contribution from HMA. If a bond issue is utilized, it would be backed by revenues of the project, a first mortgage on the property and a corporate guarantee. It could also be backed by a letter of credit, but that would require some equity contribution by HMA. The interest rate anticipated by HMA, as shown in their application of 11.5 percent is unrealistic. The lowest interest rate on these types of bonds in the last 12 months has ranged from 12 1/2 percent to 13 3/4 percent. While HMA's projected financing for the project is preliminary, it is found that financing can probably be achieved through some combination of revenue bonds, a letter of credit, and a corporate guarantee. The proposed financing arrangement is reasonable, based upon HMA projected cost. It is probably also reasonable in light of the earlier finding that those cost are understated, in that Mr. Weston has contemplated financing from the issuance of six and half to seven million dollars worth of bonds. THE PIA APPLICATION In the November, 1983, batching cycle, PIA submitted a Certificate of Need application to add 15 long term and 15 short term adolescent psychiatric beds to its facility located in Delray Beach, Florida. No question involving the short term beds was involved in this proceeding. PIA's existing facility in Delray Beach is named the Psychiatric Institute of Delray and is a seventy-two bed speciality psychiatric hospital scheduled to open in early 1985. When it opens, it will consist of short term psychiatric and substance abuse beds. Psychiatric Institute of Delray is part of the Medical Center at Delray, a medical campus owned and operated by National Medical Enterprises, the parent company of PIA. PIA's home office is Washington D.C., and PIA is the psychiatric division of National Medical Enterprises, a corporation engaged in the operation of numerous hospitals throughout the country. The Medical Center at Delray contains an existing acute care hospital, a nursing home, and medical office buildings. Additionally, a Certificate of Need has been issued for the construction of a Rehabilitation Hospital; a shopping center providing support services for the medical campus is also under construction. PIA's proposed treatment program was described as a "broad-based general systems approach." This program involves examining the entire individual and trying to understand those factors that influence the patient's clinical state. The treatment model is essentially a medical model. An important part of the treatment program will be evaluation in the neuro-psychiatric evaluation unit which is a part of the existing facility at the Psychiatric Institute of Delray. Patients in the neuro-psychiatric evaluation unit, including adolescents which may eventually become long term patients, will be given a detailed battery of psychiatric, psychological and biological tests to help determine the nature and extent of their illness. Based upon this evaluation, new patients would be placed in the appropriate treatment units. PIA has already hired a medical director and clinical director for the facility as well as three other psychiatrists in charge of various aspects of the program at Psychiatric Institute of Delray. This psychiatric staffing results in 2.5 full-time equivalent psychiatrists on its medical staff. The psychiatrists are currently preparing to operate the short term psychiatric unit at Psychiatric Institute of Delray and will provide the staff psychiatric services for the proposed 15 long termadolescent psychiatric beds. The psychiatrists were trained at Yale University, are eminently qualified to provide psychiatric services, and will bring active research and teaching backgrounds to the hospital. The staffing projection for the 15-bed addition will include the following: One Social Worker One Activity Therapist Two Unit Coordinators Ten Registered Nurses Sixteen Mental Health Workers Two Group Leaders One Unit Secretary One Medical Transcriber One Admissions Employee One Secretary One Maintenance Staff k. Three Housekeeping Staff m. Three Food Service Workers PIA intends to set up a medical residency program with the University of Miami, a psychological residency with Nova University, and a nursing residency with Florida Atlantic University. The staff at PIA will be active in the area of research and education. Every patient in the PIA facility will be seen by a psychiatrist seven days a week and all psychiatrists on staff will be board certified or board eligible. There will be supervision of the clinical staff by qualified personnel, a professional activity committee and a quality assurance committee. The hospital will seek accreditation from the Joint Commission on Accreditation of Hospitals and there will be continuing education programs for the staff at all levels. PIA has been successful in recruiting qualified staff for the other units in its facility and the methods used for the recruitment are adequate for the recruitment of staff in the proposed long term adolescent unit. Psychiatric Institute of Delray has established a referral network in Palm Beach County and PIA has established contact with other components of the health care community in Palm Beach County. The hospital will be affiliated with the 800 COCAINE Program which is a national hot-line for cocaine users This affiliation will provide a referral source for the hospital and the long term adolescent unit. PIA will obtain an 80 percent occupancy in the long term adolescent unit by its third year of operation. Projected cost of the project, for both the 15 long term and 15 short term beds, is $1,360,00.00. The projected development costs are $5,000 in feasibility studies, survey and permit; $80,000 in architecture and engineering fees; construction cost of $1,030,000; equipment cost of $115,000; and land acquisition and other related costs of $115,000. The design plan and projected costs are adequate and reasonable for the proposed addition to the Psychiatric Institute of Delray.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting the Certificate of Need application of Psychiatric Institute of Delray, Inc., d/b/a Psychiatric Institute of Delray, for 15 long term adolescent psychiatric beds. Further, that a Final Order be entered denying the Certificate of Need application of Hospital Management Associates, Inc., for a 60-bed long term adolescent psychiatric hospital. DONE and ENTERED this 17th day of May, 1985, in Tallahassee, Florida. DIANE K. KIESLING 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 17th day of May, 1985.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: In November of 1983, HMA filed its application for a Certificate of Need to construct and operate a 60-bed adolescent treatment center in Orlando, Florida. An omissions response was filed by HMA in January of 1984. Thereafter, HRS issued its initial intent to grant the application and PIO requested an administrative hearing. HMA is a privately held corporation which owns or manages twelve or thirteen acute care hospitals in the States of Kentucky, West Virginia, Pennsylvania, Missouri, Texas and Florida, several of which are psychiatric hospitals. The proposed long-term psychiatric treatment facility for adolescents is patterned after a 55-bed program currently operated by HMA in Arlington, Texas. The proposed facility will be a freestanding campus-like setting located on ten to fifteen acres of land in the southern portion of Orlando. The precise site has not yet been selected. The single-story facility will have a total size of approximately 45,000 to 50,000 square feet and will be divided into two separate units which connect into a core area containing various support services, such as offices, a gymnasium, a swimming pool, a media center, and an occupational therapy area. While the location finally selected for the facility will have a bearing on the site costs of the project, the estimated construction costs of approximately 3.1 billion do contain a contingency factor and are reasonable at this stage of the project. Each unit will be served by two interdisciplinary treatment teams headed by a physician or a psychiatrist. Key personnel for the facility, such as department heads and program directors, will most likely be recruited from outside the Orlando area in order to obtain persons with experience in long-term care for adolescents. The treatment program is designed to serve adolescents between the ages of 10 and 19, though the bulk of patients will be middle school and high school individuals between the ages of 13 and 17. While the primary service area will be adolescents in District 7, the remainder of the central Florida region is identified as a secondary service area. A full educational program at the facility is proposed. The concept of the hospital will be to treat the whole person, not just his psychiatric problems, and the treatment program will include and involve family members and other factors which may have a bearing on the adolescent's ability to fit into society. The form of treatment is based upon a "levels" approach -- a form of behavior modification wherein privileges are granted for appropriate behavior and the patient is allowed to move up to the next succeeding level of privileges. It is contemplated that the average length of stay for a patient will be approximately six months -- the average time anticipated for a patient to move from the admission level to the level of discharge. HMA intends to seek accreditation of its proposed facility from the Joint Commission on Accreditation of Hospitals. The total estimated project cost for the proposed facility is $6,307,310.00. Financing is to be obtained either through a local bond issue or by a private lending institution. Based upon an evaluation of HMA's audit reports for the past three years, an expert in bond financing of health care facilities was of the opinion that HMA would be eligible either for a private placement or a bond issue to finance the proposed project. HMA intends to charge patients $325.00 per day, and projects an occupancy rate of 80 percent at the end of its second year of operation. This projection is based upon a lack of similar long-term psychiatric facilities for adolescents in the area, the anticipated, experience at the Arlington, Texas adolescent facility and the anticipated serving of clients from CYF (Children Youth and Families -- a state program which; serves adolescents with psychiatric and mental problems). Although no established indigent care policy is now in existence, HMA estimates that its indigency caseload will be between 3 and 5 percent. It is anticipated that the proposed facility will become a contract provider for CYF for the care and treatment of their clients and that this will comprise 20 percent of HMA's patient population. HRS's Rule 10-5.11(26), Florida Administrative Code, relating to long- term psychiatric beds, does not specify a numerical methodology for quantifying bed need. However, the Graduate Medical Education National Advisory Committee (GMFNAC) methodology for determining the need for these beds is generally accepted among health care planners. The GMENAC study was initially performed in order to assess the need for psychiatrists in the year 1990. It is a "needs- based" methodology, as opposed to a "demand-based" methodology, and attempts to predict the number of patients who will theoretically need a particular service, as opposed to the number who will actually utilize or demand such a service. Particularly with child and adolescent individuals who may need psychiatric hospitalization, there are many reasons why they will not seek or obtain such care. Barriers which prevent individuals from seeking psychiatric care include social stigma, the cost of care, concerns about the effectiveness of care, the availability of services and facilities and other problems within the family. Thus, some form of "demand adjustment" is necessary to compensate for the GMENAC formula's overstatement of the need for beds. The GMENAC formula calculates gross bed need by utilizing the following factors: a specific geographic area's population base for a given age group, a prevalency rate in certain diagnostic categories, an appropriate length of stay and an appropriate occupancy factor. In reaching their conclusions regarding the number of long-term adolescent psychiatric beds needed in District 7, the experts presented by HMA and PIO each utilized the GMENAC formula and each utilized the same prevalency rate for that component of the formula. Each appropriately used a five-year planning horizon. However, each expert reached a different result due to a different opinion as to the appropriate age group to be considered, the appropriate length of stay, the appropriate occupancy factor and the factoring in of a "demand adjustment." In calculating the long-term adolescent psychiatric bed need for District 7 in the year 1989, HMA's expert used a population base of ages 0 to 17, lengths of stay of 150 and 180 days, an occupancy level of 80 percent and an admissions factor of 96 percent. Utilizing those figures, the calculation demonstrates a 1989 need for 158 beds if the average length of stay is 150 days, and 189 beds if the average length of stay is 180 days. If the population base is limited to the 10 to 19 age bracket, the need for long-term psychiatric beds is reduced to between 70 and 90, depending upon the length of stay. From these calculations, HMA's expert concludes that there is a significant unmet need for long-term adolescent psychiatric beds in District 7. This expert recognizes that the numbers derived from the GMENAC formula simply depict a statistical representation or indication of need. In order to derive a more exact number of beds which will actually be utilized in an area, one would wish to consider historical utilization in the area and/or perform community surveys and examine other site-specific needs assessment data. Believing that no similar services or facilities exist in the area, HMA's need expert concluded that there is a need for a 60-bed facility in District 7. In applying the GMENAC methodology, PIO's need expert felt it appropriate to utilize a base population of ages 10 through 17, an average length of stay of 90 days and an occupancy rate of 90 percent. Her calculations resulted in a bed need of 37 for the year 1990. Utilizing a length of stay of 120, 150 and 180 days and a 90 percent occupancy rate, a need of 50, 62 and 75 beds is derived. If an occupancy rate of 80 percent is utilized, as well as a population of ages 10 - 17, the need for beds is 42, 56, 70 and 84, respectively, for a 90, 120, 150 and 180 day average length of stay. The need expert for PIO would adjust each of these bed need numbers by 50 percent in order to account for the barriers which affect the actual demand for such beds. Since the HMA proposed facility intends to provide service only to those patients between the ages of 10 and 19, use of the 0 - 17 population would inflate the need for long-term adolescent psychiatric beds. Likewise, PIO's non-inclusion of 18 and 19 year olds understates the need. PIO's use of a 90-day average length of stay would tend to understate the actual need in light of HMA's proposed treatment program which is intended to last approximately six months. While some demand adjustment is required to properly reflect the barriers which exist to the seeking of long-term adolescent psychiatric care, the rationale of reducing by one-half the number derived from the GMENAC methodology was not sufficiently supported or justified. Even if HMA's calculations were reduced by one-half, a figure of between 79 and 94 beds would be derived. The existence of other long-term adolescent psychiatric beds in District 7 was the subject of conflicting evidence. West Lake Hospital in Longwood, Seminole County, holds a Certificate of Need and a license as a special Psychiatric hospital with 80 long-term beds. However, the Certificate of Need was issued prior to the adoption of Rules 10-5.11(25) and (26), Florida Administrative Code, when anything in excess of 28-days was considered long- term. The West Lake application for a Certificate of Need referred to a four- to-six week length of stay -- or a 28 to 42 day period --for adults, and a ten week, or 70 day length of stay for children and adolescents. In preparing inventories for planning purposes, HRS considers the 40 child and adolescent psychiatric beds at West Lake Hospital to be acute or short-term beds. The West Lake facility is not included in HRS's official inventory of licensed and approved long-term care beds as of October 1, 1984. In fact, the only long-term care beds listed for District 7, in addition to HMA's proposed psychiatric facility, are beds devoted to the treatment of substance abuse. PI0 is the holder of a Certificate of Need to construct and operate a 60-bed short-term adolescent psychiatric hospital in Southwest Orange County, and is currently planning the actual development and construction of the facility. If PIO is not able to reach the census projections contained in its Certificate of Need application, its ability to generate earnings could be adversely impacted. Even a five percent decrease in PIO's census projections would require PIO to either raise its rates or make reductions in direct costs. This could include a decrease in staffing, thus affecting a reduction in the available programs, problems in attracting quality staff and ultimately a reduction in the quality of care offered at the PIO facility. In a batch subsequent to the HMA application, PIO requested the addition of 15 long-term adolescent psychiatric beds and 15 substance abuse beds. When an adolescent psychiatric patient is evaluated for placement in a hospital setting, it is generally not possible to determine how long that patient will require hospitalization. The adolescent psychiatric patient is often very guarded, distrusting both parents and other adults, and it is difficult to obtain full and necessary information from both the patient and the parents. Several weeks of both observation and the gathering of data, such as school records, are necessary in order to access the adolescent patient's degree of disturbance. With respect to treatment programs, there is no sharp medical demarcation between a 60-day period and a 90 day period. Patients in short-term facilities often stay longer than 60 days and patients in long term facilities often stay less than 90 days. The length of stay is very often determined by the parents, in spite of the treatment period prescribed by the physician. The treatment programs in both short-term and long-term psychiatric facilities are very similar, and short- and long-term patients are often treated in the same unit. Staffing for the two types of facilities would be basically the same, with the exception, perhaps, of the educational staff.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that HMA grant HMA's application for a Certificate of Need to construct and operate a 60-bed long-term adolescent psychiatric facility in Orlando, Florida. Respectfully submitted and entered this 9th day of July, 1985, 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 9th day of July, 1985. COPIES FURNISHED: C. Gary Williams and Michael J. Glazer P. O. Box 391 Tallahassee, Florida 32302 John M. Carlson Assistant General Counsel 1323 Winewood Blvd. Building One, Suite 407 Tallahassee, Florida 32301 Robert S. Cohen O. Box 669 Tallahassee, Florida 32301 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301 =================================================================
The Issue At issue in this proceeding is whether petitioner's request to modify its certificate of need from a 60-bed child/adolescent psychiatric hospital to a 45- bed child/adolescent and 15-bed adult psychiatric facility should be approved.
Findings Of Fact Case status In February 1993, petitioner, Martin H.M.A., Inc., d/b/a SandyPines Hospital (SandyPines), filed an application with the respondent, Agency for Health Care Administration (AHCA), for a modification of its certificate of need (CON) from a 60-bed child/adolescent psychiatric hospital to a 45-bed child/adolescent and 15-bed adult psychiatric hospital. Upon review, AHCA concluded that SandyPines' request could not be accommodated under the modification provisions of Rule 59C-1.019, Florida Administrative Code, and required certificate of need review. Accordingly, AHCA proposed to deny SandyPines' request, and these formal proceedings to review, de novo, the agency's decision were commenced at SandyPines' request. The applicant SandyPines is the holder of certificate of need number 4004 which authorized it to construct a 60-bed child/adolescent psychiatric facility. That facility was constructed and is currently in operation in Tequesta, Martin County, Florida. SandyPines is now, and has been since it commenced operations in January 1990, licensed as a Class III Special Psychiatric Hospital with 60 psychiatric child/adolescent beds. It has never provided adult inpatient psychiatric services and, until approximately October 18, 1993, had never provided any adult outpatient psychiatric services. The adult outpatient psychiatric services currently provided by SandyPines are not subject to CON review. SandyPines's fiscal problems When SandyPines opened in January 1990, no managed care organizations existed in its local market; however, with each passing year managed care has become more prevalent such that currently 45-50 percent of SandyPines admissions are covered by some form of managed care. This has significantly adversely affected SandyPines' revenues such that it lost approximately $600,000 last fiscal year and, absent increased occupancy levels, its continued viability is, at best, questionable. Indeed, if SandyPines continues to operate as currently configured, it projects a loss for the fiscal year ending September 30, 1994, of $1,099,777. Occupancy levels are low, however, for District IX as a whole, due in large measure to the demands for managed care. For the six-month period ending June 1993, the average occupancy rate for child/adolescent psychiatric beds was 35 percent and for adult psychiatric beds 65 percent. To address its faltering business, SandyPines has, as heretofore noted, begun to provide adult psychiatric services on an outpatient basis; however, unless it can combine inpatient adult psychiatric services with the program it is doubtful that its adult program will prove successful. In this regard, SandyPines offered proof, which is credited, that patients and their physicians are looking for what has been termed "one-stop shopping." The patient does not want to go to one facility for outpatient care and another facility for inpatient care, and the referring physicians would rather send all of their patients to one facility that offers a full spectrum of services. Therefore, from a marketing perspective, the addition of adult inpatient psychiatric services at SandyPines would have a positive effect. Whether modification of SandyPines' CON to allow inpatient adult psychiatric services will increase the hospital's daily census and utilization sufficiently to assure its viability is, at best, fairly debatable. To analyze the impact of redesignating 15 child/adolescent beds to 15 adult psychiatric beds, SandyPines made an assumption of an average daily census of 10.5 patients on the 15-bed adult psychiatric unit. Based on such assumption, SandyPines calculated a net income from that unit, for the fiscal year ending September 30, 1994, assuming it opened April 1, 1994, of $589,664, and a net loss for the facility as a whole of $510,113, as opposed to a net loss of $1,099,777 without the adult unit. Based on the same assumptions, SandyPines calculated a net income for the fiscal year ending September 30, 1985, for the adult unit at $1,111,008, and a net income for the facility as a whole with an adult unit at $44,980. As heretofore noted, SandyPines' ability to achieve an average daily census of 10.5 patients is, at best, fairly debatable. To SandyPines' credit, it has an active advertising and marketing department comprised of six people and its director of marketing and business development. This marketing group is constantly striving to develop relationships with referral sources and to develop programs to meet market needs and demands. There was, however, no proof of record to demonstrate any existent commitments in the community or any objective data to support the conclusion that SandyPines could reasonably expect to attain an average daily census of 10.5 patients. Moreover, four of SandyPines' potential competitors for adult psychiatric patients exhibited more than a 78 percent occupancy rate for the first six months of 1993, which may be reflective of among other attributes, a strong existent referral pattern, and the overall District average was only 65 percent, which reflects significant unused capacity. On balance, the proof is not compelling that SandyPines could achieve the occupancy levels it projected. Whether SandyPines achieved its projected occupancy levels for adult services or some lesser level would not, however, significantly adversely impact existing providers. Moreover, the redesignation of beds and the necessary modification of the facility to meet required legal standards of separation of adult and child/adolescent units would require no more than $50,000-$80,000; a capital expenditure well below that which would require CON review. Is modification appropriate Pertinent to this case, Rule 59C-1.109, Florida Administrative Code, provides: A modification is defined as an alteration to an issued, valid certificate of need or to the condition or conditions on the face of a certificate of need for which a license has been issued, where such an alteration does not result in a project subject to review as specified in . . . subsection 408.036(1) . . ., Florida Statutes. Subsection 408.036(1), Florida Statutes, provides in pertinent part: . . . all health-care-related projects, as described in paragraphs (a)-(n), are subject to review and must file an application for a certificate of need with the department. The department is exclusively responsible for determining whether a health-care-related project is subject to review under [ss.408.031-408.045]. * * * (e) Any change in licensed bed capacity. * * * (h) The establishment of inpatient institutional health services by a health care facility, or a substantial change in such services . . . * * * (1) A change in the number of psychiatric . . . beds. Finally, pursuant to the Legislature mandate of Section 408.034(3), Florida Statutes, to "establish, by rule, uniform need methodologies for health services and health facilities," AHCA has promulgated Rule 59C-1.040, Florida Administrative Code, which establishes discrete methodologies for calculating the need for the establishment of inpatient adult psychiatric services and inpatient child/adolescent psychiatric services, and provides for the identification of the number of hospital inpatient psychiatric beds for adults and children/adolescents by facility. As heretofore noted, SandyPines' license designates it as a "Class III Special Psychiatric hospital with 60 Psychiatric Child/Adolescent beds," and the inventory established pursuant to Rule 59C- 1.040(11), Florida Administrative Code, has identified SandyPines' beds as child/adolescent. Resolution of the parties' dispute as to whether SandyPines' proposed conversion of beds from child/adolescent to adult is subject to CON review under Section 408.036(1)(e), (h) and (l), Florida Statutes, and therefore not susceptible to modification under Rule 59C-1.109(1), resolves itself to an interpretation of Section 408.306(1), Florida statutes, and the provisions of Chapter 59C-1, Florida Administrative Code. SandyPines contends that hospital inpatient psychiatric services, as used in Chapter 408, Florida Statutes, and Chapter 59C-1, Florida Administrative Code, is a generic term for the treatment of psychiatric disorders and that its proposal to treat adults, as opposed to children/adolescents, is not a change in health services. Accordingly, SandyPines concludes that the proposed conversion does not constitute "[a] change in licensed bed capacity," "the establishment of inpatient institutional health services by a health care facility, or a substantial change in such services," or " change in the number of psychiatric beds," such that CON review would be required under Section 408.306(e), (h) and (l), Florida Statutes. Contrasted with SandyPines' position, AHCA interprets the foregoing provisions of law, when read in para materia, and with particular reference to Rule 59C-1.040, Florida Administrative Code, as establishing two discrete types of inpatient psychiatric services, to wit: child/adolescent and adult. The separate CON review criteria established by Rule 59C-1.040, Florida Administrative Code, for child/adolescent and adult inpatient psychiatric services is consistent with AHCA's interpretation. Indeed, the rule, among other things, establishes separate bed need methodologies, fixed need pools, bed inventories, utilization thresholds, and minimum unit sizes for child/adolescent and adult services. Granting SandyPines' request would run counter to these CON review criteria by, among other things, altering the District IX inventory of child/adolescent and adult psychiatric beds, as well as awarding adult psychiatric beds when there is no need under the established methodology. Finally, consistent with the provisions of Section 395.003(4), Florida Statutes, the agency has issued SandyPines a license "which specifies the service categories and the number of hospital beds in each bed category [60 psychiatric child/adolescent beds] for which [the] license [was issued]." Granting SandyPines' request would constitute a change in its "licensed bed capacity." Considering the foregoing provisions of law, it is concluded that the interpretation advanced by SandyPines is strained, and the interpretation advanced by AHCA is reasonable. Accordingly, it is found that SandyPines' proposed conversion of 15 child/adolescent psychiatric beds to 15 adult psychiatric beds is subject to CON review because such conversion constitutes "[a] change in licensed bed capacity," "the establishment of inpatient institutional health services by a health care facility, or a substantial change in such services," or "a change in the number of psychiatric beds." Section 408.036(e), (h) and (l), Florida Statutes
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered denying SandyPines' request to modify its certificate of need from a 60-bed child/adolescent psychiatric hospital to a 45-bed child/adolescent and 15-bed adult psychiatric facility. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 14th day of March 1994. WILLIAM J. KENDRICK 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 14th day of March 1994.
The Issue Which, if any, of the four certificate of need applications for short-term psychiatric beds in Department of Health and Rehabilitative Services District 9 should be approved.
Findings Of Fact Description of the Parties The Department of Health and Rehabilitative Services ("HRS") is the agency charged under Chapter 381, Florida Statutes (1991), to make decisions regarding certificate of need ("CON") applications. HRS issued its intent to approve the CON applications of Glenbeigh Hospital of Palm Beach, Inc. ("Glenbeigh"), for 45 beds, and Boca Raton Community Hospital, Inc. ("Boca"), for 15 beds, pursuant to a published fixed need for 67 beds for HRS District IX. HRS also issued its intent to deny the CON applications of Wellington Regional Medical Center, Incorporation ("Wellington") to convert 15 acute care beds to 15 short term adult psychiatric beds, and Savannas Hospital Limited Partnership ("Savannas") to convert 20 substance abuse beds to 20 short term adult psychiatric beds and to add 10 new short term adult beds. District IX includes Palm Beach, Martin, St. Lucie, Okeechobee and Indian River Counties. As a result of Glenbeigh's Notice of Withdrawal filed on April 6, 1993, CON No. 6438 is no longer under consideration in this case. Boca is an existing 394-bed acute care hospital, located one mile north of the Broward County line, and is the applicant for CON No. 6442, to convert 15 medical/surgical beds to 15 adult psychiatric beds, and to delicense an additional 6 medical/surgical beds. Wellington is an existing acute care hospital in Palm Beach County, with 104 acute care medical/surgical beds and 16 substance abuse beds, and is the applicant for CON No. 6441 to convert 15 acute care beds to 15 short term adult psychiatric beds. Savannas is an existing 70 bed child/adolescent and adult psychiatric and substance abuse hospital in St. Lucie County, about 40 miles north of Palm Beach, and is the applicant for CON No. 6444, to convert its 20 substance abuse beds to 20 adult short-term psychiatric beds, and to add 10 new adult short-term psychiatric beds. Lake Hospital and Clinic, Inc., d/b/a Lake Hospital of the Palm Beaches ("Lake"), at the time of hearing, was a 98-bed psychiatric and substance abuse hospital, with 46 adult psychiatric beds, 36 child/adolescent psychiatric beds and 16 substance abuse beds, located in Lake Worth, Palm Beach County, between Boca Raton and West Palm Beach. The parties stipulated that Lake had standing to challenge the Boca application. Community Hospital of the Palm Beaches, Inc., d/b/a Humana Hospital Palm Beaches ("Humana") is an existing 250-bed acute care hospital, with 61 adult and 27 child/adolescent psychiatric beds, and is a Baker Act receiving facility, located directly across the street from Glenbeigh in Palm Beach. Florida Residential Treatment Centers, Inc., d/b/a Charter Hospital of West Palm Beach ("Charter") is an existing 60-bed psychiatric hospital with 20 beds for children and 40 beds for adolescents, located approximately 15 minutes travel time from Glenbeigh. Martin H.M.A., Inc., d/b/a SandyPines Hospital ("SandyPines") is an existing 60 bed child and adolescent psychiatric hospital, and a Baker Act receiving facility, located in Martin County, less than one mile north of the Palm Beach County line. By prehearing stipulation, the parties agreed that the statutory review criteria applicable to the CON application of Boca are those listed in Subsections 381.705(1)(a), (b), (d), (f), (i) - (l) and (n). If Rule 10- 5.011(1)(o) is applicable, the parties stipulated that the disputed criteria are those in Subsections 4.g. and 5.g. Background and Applicability of HRS Rules and Florida Statutes Rule 10-5.011(o) and (p), Florida Administrative Code, was in effect at the time HRS published the fixed need pool and received the applications at issue in this proceeding, the September 1990 batching cycle. The rule distinguished between inpatient psychiatric services based on whether the services were provided on a short-term or long-term basis. Similarly, Rule 10- 5.011(q), Florida Administrative Code, distinguished between short-term and long-term hospital inpatient substance abuse services. On August 10, 1990, HRS published a fixed need pool for 19 short-term psychiatric beds in HRS District IX, with notice of the right to seek an administrative hearing to challenge the correctness of the fixed need pool number. See, Vol. 16, No. 32, Florida Administrative Weekly. On August 17, 1990, HRS published a revised fixed need pool for a net need of 67 additional short-term hospital inpatient psychiatric beds in HRS District IX, based on the denial of a certificate of need application, subsequent to the deadline for submission of the August 10th publication. The local health plan formula, which has not been adopted by rule, allocates 62 of the additional 67 beds needed to the Palm Beach County subdistrict. The revised pool publication did not include notice of the right to an administrative hearing to challenge the revised pool number. See, Vol. 16, No. 33, Florida Administrative Weekly. There were no challenges filed to either the original or revised fixed need pool numbers. On December 23, 1990, HRS published new psychiatric and substance abuse rules, subsequently renumbered as Rule 10-5.040 and 10-5.041, Florida Administrative Code. These new rules abolished the distinction between short- term and long-term services, and instead distinguished psychiatric and substance abuse services by the age of the patient. Pursuant to Section 14 of the new psychiatric rule, that rule does not apply to applications pending final agency action on the effective date of the new rule. HRS will, however, license any applicant approved from the September 1990 batching cycle to provide services to adults or children and adolescents, using the categories in the new rule, not based on the distinction between short and long term services which existed at the time the application was filed. Approved providers will receive separate CONs for adult and child/adolescent services. Rule 10-5.008(2)(a), Florida Administrative Code, provides that the fixed need pool shall be published in the Florida Administrative Weekly at least 15 days prior to the letter of intent deadline and . . . shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Humana, Lake, Charter and SandyPines allege that HRS incorrectly determined need under the old rule, by failing to examine occupancy rates pursuant to that rule. The rule provided, in relevant part, No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. (Emphasis added.) Rule 10-5.011(o)4(e), Florida Administrative Code. HRS' expert witness, Elizabeth Dudek, testified that the fixed need pool for 67 additional short term inpatient psychiatric beds was calculated pursuant to the formula in Rule 10-5.011(l)(o), Florida Administrative Code. Ms. Dudek also testified that since calculation resulted in a positive number, according to HRS policy, the publication of the fixed need pool indicates that the occupancy prerequisites must have also been met. To the contrary, the State Agency Action Report and the deposition of Lloyd Tribley, the HRS Health Facilities consultant who collected the data to support the publication of the fixed need pool, indicate that he did not determine existing occupancy separately for adults and for children/adolescents, as required by subsection (e) of the old rule. Rather, he determined, pursuant to subsection (f), that overall occupancy rates for licensed short-term psychiatric beds exceeded 75 percent. With the August 10, 1990 publication of the need for 19 additional short-term inpatient psychiatric beds, HRS provided a point of entry to challenge the published need, including the agency's apparent failure to make a determination of existing occupancy rates for separate age categories. No challenge was filed. In the August 17, 1990 publication, HRS failed to provide a point of entry, when it added 48 more beds to the pool as a result of the issuance of a final order denying a prior CON application. The August 10th publication of numeric need, according to HRS' representative should have been based on an analysis of separate and combined occupancy rates. There was no challenge to that publication, therefore the number of beds in the fixed need pool is not at issue in this proceeding. Like and Existing Facilities Humana, Lake and Charter assert that, as a result of the new rule abolishing separate licensure categories for short-term and long-term beds, all psychiatric providers within an applicant's service district are like and existing facilities. These parties also assert that there was not, even under the old rule, any practical difference between these categories of providers, particularly for children/adolescents. In support of this position, the evidence demonstrated that the average lengths of stay in short-term and long- term adolescent psychiatric beds in 1989 were 48.1 days and 53.02 days, respectively. In 1990, the average lengths of stay in short and long-term beds were 41.8 days and 41.9 days, respectively. The parties asserting that the effect of the new rule is to create an additional group of like and existing providers point to HRS' response to the application of Indian River Memorial Hospital in Vero Beach, Florida ("Indian River"). According to the testimony of HRS expert witness Elizabeth Dudek, Indian River was another District 9 applicant in this same batching cycle. Indian River applied for a CON to convert long-term psychiatric beds to short- term psychiatric beds. HRS denied the CON application of Indian River because, under the new rule, which had taken effect before the decisions on the batch were made, Indian River would receive a new license permitting it to treat psychiatric patients regardless of their projected lengths of stay. Glenbeigh asserted that the numeric need for 67 additional short term psychiatric beds cannot be challenged in this proceeding based on the failure of any party timely to challenge the August 10, 1990, publication of need. Similarly, Glenbeigh asserted that the comparison of "like and existing" facilities must be limited to those used in the inventory to compute need. Glenbeigh relied generally on Florida Administrative Code Rule 10-5.011(o), the old rule governing short term hospital inpatient psychiatric services, for the proposition that "like and existing" in Subsection 381.705(1)(b), Florida Statutes, is equivalent to the inventory of licensed and approved beds for short term psychiatric services, which was used in the computation of need. However, the rule also provides, in a list of "other standards and criteria to be considered in determining approval of a certificate of need application for short term hospital inpatient psychiatric beds," the following, Applicants shall indicate the availability of other inpatient psychiatric services in the proposed service area, including the number of beds available in crisis stabilization units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not. In light of the rule directive that the consideration of like and existing services is not limited to licensed provider hospitals, Glenbeigh's assertion that the statutory review criteria is more restrictive and limited to the licensed and approved beds that were used to compute numeric need is rejected. The like and existing facilities are the hospitals or freestanding facilities which are authorized to provide the same psychiatric services, as the applicants seek to provide as a result of this proceeding. It was established at hearing that the following list of District 9 facilities provide psychiatric services comparable to those which the three remaining applicants seek to provide in these consolidated cases: DISTRICT 9 Hospital PSYCHIATRIC BEDS SUBSTANCE ABUSE BEDS Adult Child and Adult Child and Adolescent Adolescent Lic. App. Lic. App. Lic. App. Lic. App. Bethesda Hospital 20 0 0 0 0 0 0 0 Charter Palm (IRTF) 0 0 60 0 0 0 0 0 Fair Oaks 36 0 49 0 14 0 3 0 Forty Fifth Street 44 0 0 0 0 0 0 0 Glenbeigh Palm Beach 0 0 0 0 30 0 30 0 Humana Palm Beach 61 0 27 15 0 0 0 0 Humana Sebastian 0 0 0 0 16 0 0 0 Indian River Mem. 16 0 38 0 0 0 0 0 J.F. Kennedy Mem. 14 0 0 0 22 0 0 0 Lake Hospital 46 0 36 0 16 0 0 0 Lawnwood Regional 36 Res. Treat. Palm 0 24 0 0 0 0 0 (IRTF) 0 0 40 0 0 0 0 0 Sandy Pines 0 0 60 0 0 0 0 0 Savannas 35 0 15 0 20 0 0 0 St. Mary Hospital 0 40 0 0 0 0 0 0 Wellington Regional 0 0 0 0 16 0 0 0 Vol. 16, No. 52, Florida Administrative Weekly, (December 28, 1990) (Humana Exhibit 26). Need For Additional Beds An analysis of need beyond that of the numeric need, requires an analysis of the availability and accessibility of the like and existing facilties. One reliable indicator of need is the occupancy levels in the like and existing facilities. In addition to providing guidelines for the publication of need, Rule 10-5.011(o)(4)(e) also mandates a consideration of occupancy levels to determine if applicants are or are not required to demonstrate "not normal circumstances" necessitating the issuance of a CON. For all child/adolescent psychiatric programs in District 9, the expert for Lake and Humana calculated total average occupancy rates at 57.6 percent in 1988, 64.2 percent in 1989, and 53.2 percent in 1990. In support of the accuracy of the expert's calculations, the District 9 Annual Report for 1990 (Lake Exhibit 4) shows occupancy at 46.80 percent in general hospitals, 88.22 percent in specialty hospitals then categorized as short term and 38.22 percent in specialty hospitals then categorized as long term. In addition, during this same period of time, average lengths of stay in District 9 child/adolescent beds also declined by approximately 10 percent. Using the guidelines of the old rule, new short term psychiatric beds should not normally be approved when the child/adolescent rate is below 70 percent. In the new rule, child/adolescent beds should not normally be approved if occupancy is below 75 percent. Therefore, under either rule, applicants who will be licensed for child/adolescent beds, must demonstrate not normal circumstances for their CON applications to be approved. The expert for Lake and Humana, also computed the adult occupancy rates for 1988-1990 in District 9 as follows: 1988- 66.5 percent; 1989 - 73.1 percent; 1990 - 68.5 percent. The occupancy rates for adult beds for the 12- month period ending March, 1990 was 70.6 percent and 69.2 percent for the twelve months ending June, 1990. In evaluating the accuracy of the expert's calculations of occupancy rates for adult beds, a comparison can be made to the District 9 Annual Report for 1990 (Lake Exhibit 4). Occupancy rates were 57.75 percent in general hospitals and 79.45 percent in specialty hospitals. This data does not include Indian River Memorial or Lawnwood Regional which were also listed on the December 1990 inventory of licensed adult beds, nor St. Mary's Hospital which was listed as having 40 approved adult beds. The comparison indicates the accuracy of concluding that the highest occupancy level for District 9 adult psychiatric beds during the period 1988 to 1990 was approximately 70 percent. Using the guidelines of the old rule, 75 percent occupancy is required before new adult beds can be approved unless there is a not normal circumstance. Boca's Proposal Boca Raton Community Hospital ("Boca") is a 394-bed not-for-profit acute care hospital, accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations, which proposes to convert 21 of its medical/surgical to 15 adult psychiatric beds and to delicense an additional 6 acute care beds. Boca's CON would be conditioned on the provision of 10.8 percent total annual patient days to Medicaid patients and a minimum of 5 percent gross revenues generated, or 2 percent total annual patient days to medically indigent patients. Boca has proposed this alternative so that, if it fails to provide direct care to indigents, it may donate the revenues to further the objectives of the state and district mental health councils. Boca Raton Community Hospital Corporation has control and manages the Boca's property, policies and funds. The Boca Raton Community Hospital Foundation raises funds for Boca and has the funds necessary to accomplish the proposed project at a cost of $932,531. Boca's application asserts that a not normal circumstance exists in the need to serve Medicaid patients in the district, and that a need exists to serve geriatric psychiatric patients in an acute care hospital, due to their general medical condition. Medicaid reimbursement for psychiatric care is only available in acute care hospitals. Boca Historically serves in excess of 70 percent Medicare (geriatric) patients. In 1990, 72 percent of Medicaid psychiatric patients residing in Boca's service area sought psychiatric services outside District 9, as compared to the outmigration of 14.7 percent Medicare patients, and 11 percent commercial insurance patients. Boca supported its proposed 10.8 percent Medicaid CON condition, with evidence that 10.8 percent of all psychiatric discharges in its market area were for Medicaid patients. Boca's opponents dispute the claim that a disproportionate outmigration of District 9 Medicaid patients is, in and of itself, a not normal circumstance. Using the travel time standard for inpatient psychiatric services of 45 minutes under average driving conditions, the opponents argue that District 10 facilities should be considered as available alternatives to additional psychiatric beds in District 9. In fact, the parties stipulated that there are no geographic access problems in District 9. In contrast to the opponents position, Subsections 381.705(a), (b)(, (d), (f) and (h), Florida Statutes (1991), indicate that need, available alternatives and accessibility are evaluated within a district, as defined by Subsection 381.702(5). Therefore, using the statutory criteria as indicative of the situation which is normal, the disproportionate outmigration of medicaid patients can be considered a not normal circumstance with a showing of access hardships for this payor group. Boca's opponents also assert general acute care adult beds are adequate. In August 1991, the occupancy rate was 56.9 percent in the 171 licensed adult psychiatric beds in District 9 general acute care hospitals which are eligible for Medicaid reimbursement. Finally, Boca's opponents argue that Boca historically has not, and will not serve Medicaid patients in sufficient number to alter the outmigration. In 1990, Boca reported 671 Medicaid inpatient days from a total of 99,955. That is equivalent to 92 of the 16,170 admissions. Because Boca has a closed medical staff, only the psychiatrists on staff would be able to admit patients to a psychiatric unit. From the testimony and depositions received in evidence, Boca's psychiatrists who discussed their service to Medicaid patients treated less than 12 Medicaid patients a year. One psychiatrist, who had previously treated Medicaid patients at a mental health center, has been in private practice since 1983-84, but was not sure he had treated a Medicaid patient in his private practice and has received a new Medicaid provider number a few weeks prior to hearing. One Boca psychiatrist does not treat Medicaid patients on an inpatient basis. Two other Boca psychiatrists reported seeing 10 and "a couple" of Medicaid patients a year, respectively. The latter of these described the Medicaid billing procedure as cumbersome. Given the unavailability of Medicaid eligible beds in the District and the nature of the practices of its closed staff of psychiatrists, Boca has failed to establish that its CON application will alleviate the outmigration for psychiatric services of District 9 Medicaid patients. This conclusion is not altered by the subsequent closure of Lake's 46 adult psychiatric beds, because Medicaid reimbursement would not have been available at Lake which was not an acute care hospital. In fact, HRS takes the position that there are no not normal circumstances in this case. Wellington's Proposal Wellington, a 120 bed hospital in West Palm Beach, Florida, proposed to convert 15 acute care beds to 15 short term adult psychiatric beds which, if approved, will be licensed as adult psychiatric beds. Wellington's acute care beds are only 28 percent occupied. Wellington is located in the western portion of Palm Beach County, where no other inpatient psychiatric facilities are located. Wellington is a wholly owned subsidiary of Universal Health Services, Inc. ("UHS"), accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations (JCAHO) and the American Osteopathic Association (AOA), and offers clinical experience for students of the Southeastern College of Osteopathic Medicine (SECOM). Internships and externships for osteopathic students are also provided at Humana's psychiatric pavilion. Wellington proposes to fund the total project cost of $920,000 from funds available to UHS and intends to become a Baker Act receiving facility. Wellington is not a disproportionate share hospital, and projects 1 percent Medicaid service in its payor mix. Wellington proposes to serve adult psychiatric patients in 15 beds, and projects 53.3 percent and 70 percent occupancy in those beds in years one and two, but does not make a third year projection of at least 80 percent occupancy as required by Paragraph 4(d) of Rule 10-5.011(o). Because the average annual adult occupancy rate in the district is less than 75 percent, any applicant proposing to serve adults must demonstrate that a not normal circumstance exists for approval of its CON application. In addition, there appears to be no shortage of psychiatric beds in acute care hospitals in District 9. See Finding of Fact 39, supra. Not Normal Circumstance Wellington has not alleged nor demonstrated that any of the factors related to its current operations, location or proposed services are not normal circumstances in support of its CON application. Absent the showing of a not normal circumstance, Wellington's proposal cannot be approved, pursuant to Paragraph 4(e) and Rule 10-5.011(o), Florida Administrative Code. Savannas Proposal Savannas Hospital Limited partnership d/b/a Savannas Hospital ("Savannas") is a JCAHO accredited 70 bed psychiatric and substance abuse hospital located in Port St. Lucie, St. Lucie County, Florida, approximately 40 miles north of Palm Beach. Savannas, a Baker Act facility, proposes to convert all 20 of its licensed substance abuse beds to psychiatric beds and to add 10 new psychiatric beds, at a total project cost of $1,444,818. Savannas also proposes to commit to providing 7 percent indigent care. While not specifically describing its circumstances as not normal, Savannas does indicate that it is (1) the only applicant in the northern sub- district of District 9, and (2) could readmit to a segregated unit low functioning neurogeriatric patients of the type it previously served. Savannas also indicated that Medicare reimbursement is not available for patients who have substance abuse, rather than psychiatric primary diagnoses. As a freestanding provider, Savannas is not eligible for Medicaid reimbursement. Savannas demonstrates what services it would provide, if its CON is approved, but fails to identify a need for the services by District 9 psychiatric patients. Within the northern sub-district, the only other facility in St. Lucie County, Lawnwood, reported an occupancy rate of 65 percent in 1989. AHCA also argued that the substance abuse beds at Savannas are needed and should not be converted to psychiatric beds. That position is supported by the fact that Savannas substance abuse beds had a higher occupancy level than its psychiatric beds in 1989. Savannas' application and the evidence presented do not support the need for the services proposed by Savannas, nor does Savannas assert that any not normal circumstances exist.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Certificate of Need Number 6438 to Glenbeigh Hospital of Palm Beach, Inc.; Certificate of Need Number 6442 to Boca Raton Community Hospital, Inc.; Certificate of Need Number 6441 to Wellington Regional Medical Center, Inc.; and Certificate of Need Number 6444 to Savannas Hospital Limited Partnership. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of June 1993. 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 18th day of June 1993. APPENDIX The following rulings are made on the parties' proposed findings of fact: Humana Adopted in Finding of Fact 1. Subordinate to Finding of Fact 2. 3-6. Issues not addressed. 7-8. Adopted in Findings of Fact 3 and 4. Subordinate to Findings of Fact 44 and 46. Subordinate to Finding of Fact 10. 11-12. Adopted in Findings of Fact 6 and 7. 13-15. Subordinate to Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 27 & 29. Issue not addressed. 20-21. Subordinate to Finding of Fact 25. 22. Issue not addressed. 23-24. Adopted in Findings of Fact 8 and 9. Accepted in relevant part in Finding of Fact 11. Accepted in relevant part in Finding of Fact 10. Subordinate to Finding of Fact 12 and Conclusions of Law 4. Subordinate to Finding of Fact 1. Adopted in Finding of Fact 22. Rejected in Finding of Fact 20. Rejected in Findings of Fact 12 and 18. Adopted in Findings of Fact 15 and 17. Rejected in Finding of Fact 38. Adopted in Findings of Fact 16 and 17. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 47. 38-47. Issues not addressed. Adopted in Findings of Fact 44 and 47. Issue not addressed. Rejected in Finding of Fact 46. Issue not addressed. 52-54. Adopted in Findings of Fact 46 and 47. 55-57. Issues not addressed. Adopted in Finding of Fact Issue not addressed. Adopted in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Finding of Fact 21. Accepted in relevant part in Finding of Fact 22. Accepted in relevant part in Finding of Fact 21. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Finding of Fact 54 Accepted in relevant part in Findings of Fact 26, 38, 39, 42, 43, 47, 48, 54, 55 and 57. Accepted in relevant part in Finding of Fact 26. Rejected in Findings of Fact 21 and 22. Accepted in relevant part in Finding of Fact 26. 74-75. Accepted in relevant part in Finding of Fact 27. 76-77. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 28. Subordinate to Finding of Fact 31. Accepted in relevant part in Finding of Fact 82. Subordinate to Finding of Fact 82. Accepted in relevant part in Finding of Fact 37. Accepted in relevant part in Finding of Fact 39. Issue not addressed. Subordinate to Finding of Fact 27 and 30. Accepted in relevant part in Findings of Fact 27, 29 and 30. Subordinate to Findings of Fact 27 and 30. Accepted in relevant part in Finding of Fact 31. Accepted in relevant part in Finding of Fact 42. Issue not addressed. Addressed in Preliminary Statement. Accepted in relevant part in Finding of Fact 1. 95-99. Issues not addressed Accepted in relevant part in Finding of Fact 10. Accepted in relevant part in Finding of Fact 25. 102-114. Issues not addressed Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 37. Issue not addressed. Accepted in relevant part in Finding of Fact 10. 121-122. Issues not addressed. Accepted in relevant part in Findings of Fact 4 and 47. Issue not addressed. Irrlevant. Issue not addressed. Accepted in relevant part in Finding of Fact 10 Accepted in relevant part in Findings of Fact 10, 25, 47 and 48. Subordinate to Finding of Fact 11. Issue not addressed. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 45. Accepted in relevant part in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Accepted in relevant part in Finding of Fact 15. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 11. Lake Adopted in Finding of Fact 1. Subordinate to Finding of Fact 1. 3-4. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 6 and 43. 11-12. Issues not addressed. 13-19. Subordinate to Findings of Fact 27-43. 20-21. Issues not addressed. 22. Adopted in Finding of Fact 10. 23. Adopted in Finding of Fact 11. 24. Adopted in Finding of Fact 12. 25-26. Adopted in Finding of Fact 13. 27-28. Adopted in Finding of Fact 1. 29-31. Adopted in Finding of Fact 22. 32. Rejected in relevant part in Finding of Fact 13. 33. Issue not addressed. 34. Accepted in relevant part in Finding of Fact 25. 35. Subordinate to Finding of Fact 25. 36-37. Accepted in relevant part in Finding of Fact 25. 38-39. Subordinate to Finding of Fact 27. 40. Accepted in relevant part in Finding of Fact 25. 41. Accepted in relevant part in Finding of Fact 30. 42-43. Subordinate to Finding of Fact 30. 44. Accepted in relevant part in Finding of Fact 25. 45. Subordinate to Findings of Fact 27 and 30. 46-47. Issues not addressed. 48. Accepted in relevant part in Findings of Fact 27 and 30. 49-52. Issues not addressed. 53. Subordinate to Finding of Fact 42. 54-56. Issues not addressed. 57. Accepted in relevant part in Conclusions of Law 4. 58-59. Accepted in relevant part in Finding of Fact 26 and in Conclusions of Law 4. Accepted in relevant part in Finding of Fact 20. Adopted in Finding of Fact 20. Adopted in Finding of Fact 15. Subordinate to Finding of Fact 1. Subordinate to Finding of Fact 17. 65-66. Adopted in Finding of Fact 17. Adopted in Findings of Fact 18, 27 and 30. Adopted in Finding of Fact 17. Adopted in Findings of Fact 27 and 29. Adopted in Finding of Fact 30. Adopted in Finding of Fact 29. Adopted in Finding of Fact 31. Adopted in Findings of Fact 28 and 31. Adopted in Finding of Fact 38. Adopted in Findings of Fact 27, 39 and 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 38. Adopted in Finding of Fact 35. Adopted in Findings of Fact 37, 39 and 42. Adopted in Finding of Fact 42. Adopted in Findings of Fact 47, 48, 49, 53 and 57. Adopted in Finding of Fact 47. Adopted in Finding of Fact 1. 84-89. Issues not addressed. Adopted in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 92-97. Issues not addressed. Subordinate to Finding of Fact 41. Subordinate to Finding of Fact 37. 100-102. Issues not addressed. Adopted in Findings of Fact 47 and 48. Adopted in Finding of Fact 26. Adopted in Finding of Fact 25. Subordinate to Finding of Fact 25. Adopted in Finding of Fact 30. Adopted in Finding of Fact 27. Subordinate to Finding of Fact 27. Adopted in Finding of Fact 27. 111-113. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Adopted in Finding of Fact 29. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Adopted. Adopted. Accepted in relevant part. Issue not addressed. Accepted in relevant part in Findings of Fact 3 and 32. Subordinate to Finding of Fact 3. Accepted in relevant part in Finding of Fact 41. Adopted in Finding of Fact 42. Subordinate to Finding of Fact 41. Issue not addressed. 128-132. Subordinate to Finding of Fact 32. 133-135. Issues not addressed. Adopted in Findings of Fact 32 and 41. Adopted in Finding of Fact 32. Subordinate to Finding of Fact 32. Issue not addressed. Adopted in Finding of Fact 10. Adopted in Finding of Fact 6. Adopted in Finding of Fact 10. Adopted in Finding of Fact 30. Adopted in Finding of Fact 44. Subordinate to Finding of Fact 45. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 46. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 44. 150-151. Adopted in Finding of Fact 46. 152-156. Issues not addressed. 157-158. Adopted in Finding of Fact 10. 159. Adopted in Findings of Fact 48 and 49. 160. Adopted in Finding of Fact 5. 161. Adopted in Finding of Fact 5. 162. Adopted in Finding of Fact 56. 163. Adopted in Finding of Fact 57. 164. Adopted in Finding of Fact 10. 165. Adopted in Finding of Fact 10. 166. Charter Adopted in Finding of Fact 57. 1. Accepted in relevant part in Finding of Fact 1. 2-3. Adopted. 4-10. Accepted in Preliminary Statement. 11. Adopted in Finding of Fact 1. 12-15. Issues not addressed. 16. Adopted in Finding of Fact 12. 17. Adopted in Finding of Fact 7. 18-19. Issues not addressed. 20. Adopted in Finding of Fact 8. 21-25. Subordinate to Finding of Fact 8. 26-38. Issues not addressed 39-40. Adopted in Finding of Fact 10. Subordinate to Finding of Fact 13. Adopted in Finding of Fact 13. 43-44. Adopted in Finding of Fact 22. Adopted in Finding of Fact 13. Adoped in Conclusion of Law 3. Adopted in Finding of Fact 13. Subordinate to Finding of Fact 25. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 23. Issue not addressed. 52-53. Adopted in Finding of Fact 25. 54-55. Issues not addressed. Adopted in Finding of Fact 26. Adopted in Finding of Fact 24. 58-73. Issues not addressed. Adopted in Finding of Fact 23. Adopted in Finding of Fact 38. Adopted in Finding of Fact 27. Adopted in Findings of Fact 27 and 30. 78-79. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 27. Issue not addressed. Adopted in Findings of Fact 27 and 30. Adopted in Finding of Fact 37. Adopted in Finding of Fact 39. Adopted in Finding of Fact 25. 86-94. Issues not addressed. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 15. Adopted in Findings of Fact 37, 39 and 42. 99-101. Issues not addressed. 102. Adopted in Finding of Fact 1. 103-134. Issues not addressed. 135. Adopted in Finding of Fact 4. 136-140. Issues not addressed. Boca Adopted in Finding of Fact 12. Adopted in Finding of Fact 11. Subordinate to Finding of Fact 11. Adopted in Finding of Fact 1. Adopted in Preliminary Statement. Adopted in Findings of Fact 3 and 32. Adopted in Finding of Fact 33. Subordinate to Finding of Fact 3. Adopted in Finding of Fact 32. 10. Subordinate to Finding of Fact 32. 11. Adopted in Finding of Fact 41. 12. Subordinate to Finding of Fact 32. 13. Adopted in Finding of Fact 32. 14. Adopted. 15-16. Subordinate to Finding of Fact 32. 17. Adopted in Finding of Fact 34. 18. Subordinate to Finding of Fact 32. 19. Issue not addressed. 20-21. Adopted in Finding of Fact 32. 22. Rejected in Finding of Fact 39. 23. Subordinate to Finding of Fact 32. 24. Adopted in Finding of Fact 32. 25. Subordinate to Finding of Fact 32. 26-27. Adopted in Finding of Fact 41. 28-30. Subordinate to Finding of Fact 41. 31. Adopted in Finding of Fact 34. 32. Adopted in Finding of Fact 39. 33. Subordinate to Finding of Fact 34. 34. Adopted in Finding of Fact 39. 35. Adopted in Finding of Fact 34. 36. Rejected in Finding of Fact 39. 37-42. Adopted in Finding of Fact 41. 43-47. Issues not addressed. 48. Subordinate to Finding of Fact 30. 49-50. Issues not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. 53-54. Rejected in Finding of Fact 30. 55-56. Issues not addressed. 57. Adopted in Finding of Fact 12. 58-59. Issues not addressed. Rejected in Findings of Fact 39 and 42. Adopted in Finding of Fact 12. Issue not addressed. Adopted in Finding of Fact 32. 64-65. Issues not addressed. Adopted in Findings of Fact 32, 35 and 38. Adopted in Finding of Fact 36. Adopted. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 12. Subordinate to Finding of Fact 32. Issue not addressed. Accepted in relevant part in Finding of Fact 34. Issue not addressed. Issue not addressed. Adopted in Finding of Fact 15. Issue not addressed. Adopted. Adopted in Finding of Fact 32. 81-82. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 37. Rejected in Findings of Fact 25 and 42. Issue not addressed. Adopted in Finding of Fact 6. 89-97. Issues not addressed. Subordinate to Finding of Fact 25. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 6. Sandy Pines 1. Issue not addressed. 2-3. Subordinate to Finding of Fact 1. 4. Issue not addressed. 5. Subordinate to Finding of Fact 9. 6-8. Adopted in Finding of Fact 9. 9-13. Subordinate to Finding of Fact 25. 14. Adopted in Finding of Fact 9. 15. Subordinate to Finding of Fact 9. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. 20-24. Subordinate to Finding of Fact 27. 25. Subordinate to Finding of Fact 9. 26-29. Issues not addressed. 30. Adopted. 31-33. Issues not addressed. Adopted in Findings of Fact 42, 43, 48, 49 and 54. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 28 and 31. Issue not addressed. 39-40. Subordinate to Findings of Fact 27 and 30. 41-42. Issues not addressed. Accepted in relevant part in Finding of Fact 12. Accepted in relevant part in Findings of Fact 12 and 17. Accepted in relevant part in Finding of Fact 17. 46-47. Accepted in relevant part in Finding of Fact 26. 48. Subordinate to Findings of Fact 25 and 26. 49-50. Issues not addressed. Adopted. Adopted. Accepted in relevant part in Finding of Fact 7. Accepted in relevant part in Finding of Fact 42. 55-56. Issues not addressed. 57. Adopted. 58-59. Issues not addressed. Accepted in relevant part in Conclusion of Law 3. Accepted in relevant part in Finding of Fact 26. 62-64. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 67. Accepted in relevant part in Finding of Fact 22. 68-69. Accepted in relevant part in Finding of Fact 21. 70. Accepted in relevant part in Finding of Fact 26. 71. Accepted in relevant part in Finding of Fact 26 and in 72. Conclusion of Law 3. Accepted in relevant part in Findings of Fact 26 and 73. 38. Accepted in relevant part in Findings of Fact 25, 27 and 30. 74-75. Not legible. 76. Subordinate to Finding of Fact 25. 77-80. Subordinate to Finding of Fact 27. 81. Subordinate to Finding of Fact 25. 82-83. Subordinate to Finding of Fact 27. 84-95. Issues not addressed. Wellington 1-2. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Adopted in Finding of Fact 44. Subordinate to Findings of Fact 4 and 44. Adopted in Finding of Fact 44. Adopted in Finding of Fact 45. 8-10. Subordinate to Finding of Fact 45. 11-12. Adopted in Finding of Fact 45. 13-19. Subordinate to Findings of Fact 4 and 44. 20. Adopted in Findings of Fact 4 and 46. 21-22. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 44 and 46. Subordinate to Findings of Fact 4 and 44. Subordinate to Finding of Fact 46. 27-28. Adopted in Finding of Fact 46. Adopted in Finding of Fact 30. Adopted in Finding of Fact 46. 31-32. Issues not addressed. Subordinate to Finding of Fact 25. Adopted. Issue not addressed. 36-37. Adopted in Finding of Fact 45. 38-42. Issues not addressed. 43. Adopted in Findings of Fact 34, 42 and 47. 44-63. Issues not addressed. 64-65. Subordinate to Finding of Fact 46. 66-67. Issues not addressed. 68. Adopted in Finding of Fact 10. 69-91. Issues not addressed. Accepted in relevant part in Finding of Fact 47. Accepted in relevant part in Finding of Fact 12. 94-103. Issues not addressed. Accepted in relevant part in Findings of Fact 1 and 44. Accepted in relevant part in Finding of Fact 45. 106-111. Issues not addressed 112. Rejected in Findings of Fact 25, 27 and 30. 113-115. Accepted in relevant part in Finding of Fact 45. Savannas Adopted in Finding of Fact 1. Adopted in Findings of Fact 2 and 7. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 5 and 50. Subordinate to Finding of Fact 5. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 53. Subordinate to Finding of Fact 56. Subordinate to Findings of Fact 5 and 50. Adopted. Issue not addressed. Adopted in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 53. Rejected in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 51. Adopted in Finding of Fact 50. Issue not addressed. Adopted in Findings of Fact 5 and 51. Subordinate to Finding of Fact 51. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 1. 30-33. Subordinate to Finding of Fact 12. 34. Adopted in Finding of Fact 12. 35-37. Issues not addressed. Adopted in Finding of Fact 53. Issue not addressed. 40-42. Rejected in Finding of Fact 54. 43. Adopted in Finding of Fact 50. 44-48. Subordinate to Finding of Fact 50. 49-51. Rejected in Findings of Fact 53 and 57. Adopted in Finding of Fact 53. Rejected in Findings of Fact 53 and 57. Adopted. Adopted. 56-57. Subordinate to Finding of Fact 50 Rejected in Findings of Fact 53 and 57. Issue not addressed. 60-61. Rejected in Findings of Fact 53 and 57. 62-63. Issues not addressed. 64. Adopted in Finding of Fact 56. 65-66. Issues not addressed. 67. Rejected in Findings of Fact 53 and 57. 68-70. Issues not addressed. 71. Adopted in Finding of Fact 52. 72-77. Issues not addressed 78. Adopted in Finding of Fact 1. 79-100. Issues not addressed. HRS Adopted in Finding of Fact 1. Adopted in Finding of Fact 11. Adopted in Finding of Fact 13. Adopted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 16 and rejected in part in Finding of Fact 17. Adopted in Finding of Fact 16. Subordinate to Finding of Fact 16. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. 10-11. Subordinate to Finding of Fact 12. Accepted in relevant part in Finding of Fact 12. Issue not addressed. Accepted in relevant part in Finding of Fact 12. Subordinate to Finding of Fact 12. 16-17. Issues not addressed. Adopted in Finding of Fact 1. Subordinate to Findings of Fact 32, 46 and 52. Adopted in Finding of Fact 20. 21. Subordinate to Finding of Fact 1. 22. Subordinate to Finding of Fact 2. 23-33. Issues not addressed. 34. Adopted in Finding of Fact 3. 35-36. Subordinate to Finding of Fact 3. 37. Accepted in relevant part in Finding of Fact 32. 38. Subordinate to Finding of Fact 32. 39. Rejected in Findings of Fact 40, 41 and 42. 40. Adopted in Finding of Fact 32. 41. Issue not addressed. 42. Adopted in Finding of Fact 42. 43. Adopted in Finding of Fact 32. 44. Issue not addressed. 45-46. Adopted in Finding of Fact 32. 47. Adopted in Finding of Fact 47. 48. Accepted in relevant part in Finding of Fact 44. 49. Issue not addressed. 50. Accepted in relevant part in Finding of Fact 46. 51. Subordinate to Finding of Fact 47. 52. Accepted in relevant part in Finding of Fact 46. 53-54. Accepted in relevant part in Finding of Fact 45. 55. Issue not addressed. 56-57. Subordinate to Finding of Fact 46. 58. Subordinate to Finding of Fact 47. 59-61. Issues not addressed. 62-64. Adopted in Findings of Fact 50 and 51. 65. Subordinate to Finding of Fact 65. 66-68. Issues not addressed. 69. Accepted in relevant part in Finding of Fact 52. 70-71. Issues not addressed. 72. Accepted in relevant part in Finding of Fact 53. 73. Accepted in relevant part in Finding of Fact 53. 74. Adopted in Finding of Fact 56. 75-77. Subordinate to Finding of Fact 56. 78-80. Issues not addressed. 81-82. Subordinate to Finding of Fact 56. 83-89. Issues not addressed. COPIES FURNISHED: Thomas Cooper, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 William B. Wiley, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 James C. Hauser, Esquire Foley & Lardner Post Office Box 508 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire David C. Ashburn, Esquire Roberts, Baggett, LaFace & Richard Post Office Drawer 1838 Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Michael J. Glazer, Esquire C. Gary Williams, Esquire Ausley, McMullen, McGehee, Carothers & Proctor Post Office Box 391 Tallahassee, Florida 32302 Robert S. Cohen, Esquire John F. Gilroy, III, Esquire Haben, Culpepper, Dunbar & French, P.A. Post Office Box 10095 Tallahassee, Florida 32302 Charles H. Hood, Jr., Esquire MONACO, SMITH, HOOD, PERKINS, ORFINGER & STOUT 444 Seabreeze Boulevard, #900 Post Office Box 15200 Daytona Beach, Florida 32115 R. S. Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether or not Halifax' Second Amended Petition has alleged sufficient standing to initiate a Section 120.57(1) F.S. formal hearing, pursuant to Subsection 381.709(5)(b) F.S., in challenge of HRS' modification of ATC's CON.
Findings Of Fact ATC is an existing 50-bed specialty psychiatric hospital with 25 short- term psychiatric beds for children or adolescents, five beds for short-term substance abuse by children or adolescents, and 20 long-term psychiatric beds for children or adolescents. ATC has operated under CON 2331 since 1984. By correspondence dated March 7, 1990, HRS issued to ATC Amended CON 2331 authorizing ATC to convert 15 of its 20 long-term psychiatric beds for children and adolescents into long-term psychiatric beds for adults in a secure unit. Petitioner Halifax is an existing 545 bed acute care hospital with adult patients in its 50-bed secure psychiatric unit. Its existing hospital license 2700 is for a short-term psychiatric program which does not specify use of the beds for either adults or for children and adolescents. Halifax does not have a CON for a long-term psychiatric program. Halifax' Second Amended Petition alleges its standing in the following terms: . . . Halifax is a 545 bed acute care hospital, licensed pursuant to Chapter 395, Florida Statutes, and located within HRS District IV. Halifax provides psychiatric services to adult patients in its 50 bed psychiatric unit. Due to the nature of the patients served, Halifax operates it (sic) psychiatric services in a secured unit. Halifax's psychiatric unit has been in operation since December 7, 1951 and is an "established program" under Section 381.709(5)(b) Fla. Stat. * * * 5. Halifax is a substantially affected party, and its substantial interest is subject to a determination in this proceeding in that: Halifax is an existing provider of acute care hospital services, located in Volusia County, Florida, and within HRS District IV. Halifax has an established program which provides psychiatric services to adult patients within HRS District IV. If the issuance of Amended CON 2331 were upheld, ATC would offer the same adult psychiatric services presently offered at Halifax' established psychiatric program. Therefore, Halifax is entitled to initiate this proceeding pursuant to Section 381.709(5)(b) F.S. (1989). The issuance of Amended CON 2331 will result in an unnecessary duplication of the same adult psychiatric services provided by Halifax in HRS District IV. Such duplication of services will result in decreased utilization of Halifax' psychiatric program, increased costs to consumers of such psychiatric health care services, and the decreased financial viability of Halifax' established psychiatric program. Additionally, the Second Amended Petition asserts that ATC's requested amendment of CON 2331 would represent a substantial change in the inpatient institutional health services offered by ATC and, thus, is subject to CON review pursuant to Section 381.706(1)(h) F.S. (1989). Further, Halifax alleges that, if approved, the amendment to CON 2331 will authorize ATC to serve an entirely new patient population that it is not authorized to serve pursuant to the original CON.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order dismissing Halifax' Second Amended Petition and affirming the agency action modifying ATC's CON 2331. DONE and ENTERED this 26th day of October, 1990, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 26th day of October, 1990. Copies furnished to: Harold C. Hubka, Esquire Black, Crotty, Sims, Hubka, Burnett, Bartlett and Samuels 501 North Grandview Avenue Post Office Box 5488 Daytona Beach, Florida 32118 Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Lesley Mendelson, Senior Attorney Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issues for consideration are related to the question of the entitlement of Petitioner, Community Psychiatric Centers of Florida, Inc., to be granted a certificate of need to construct a 45-bed addition, and gymnasium at the site of its present freestanding psychiatric hospital facility in Jacksonville, Florida which is known as CPC St. Johns River & Hospital. See Section 381.494, Florida Statutes, and Rule 10-5, Florida Administrative Code.
Findings Of Fact By application dated March 9, 1984, Petitioner, Community Psychiatric Centers of Florida, Inc., requested that the State of Florida, Department of Health and Rehabilitative Services grant a certificate of need under authority of Section 381.494, Florida Statutes, which would allow the Petitioner to add 45 psychiatric beds to an existing psychiatric and substance abuse facility located in Jacksonville, Florida. That facility is known as CPC St. Johns River Hospital. The estimated cost of the expansion was one million five hundred ninety seven thousand five hundred dollars. The expansion would include the addition of 10 short-term child or pediatric psychiatric beds; 15 short-term adolescent psychiatric beds, and 20 long-term adolescent psychiatric beds. Other significant features of the project included the construction of a gymnasium to be used by patients residing in the existing facility and those who would be treated in the new addition. A copy of the certificate of need application may be found as Petitioner's exhibit number 14 admitted into evidence. A state agency action report was made by HRS and the findings of that report may be found in HRS exhibit number 1, a copy of the state agency action report. The date of that report is June 23, 1984, and it recommends the denial of the project. In turn, the Petitioner was notified of the denial by correspondence of June 25, 1984, a copy of which may be found as HRS exhibit number 2, admitted into evidence. Having been denied the certificate, Petitioner requested a formal Subsection 120.57(1) Florida Statutes hearing. That request was timely and the formal hearing was conducted as described before. Charter Medical-Jacksonville, Inc., an applicant in a previous review cycle or batch, had attempted to intervene in this proceeding. That intervention was denied and the decision denying the intervention is pending appeal in the First District Court of Appeals. Taking the application as made, the parties to this action have stipulated that all applicable criteria involved in the review process have been satisfied with the exception of the criteria set forth in Rule 10-5.11(25), Florida Administrative Code, pertaining to short-term psychiatric beds and Rule 10- 5.11(26) Florida Administrative Code, pertaining to long-term psychiatric beds. In determining the question of the need for the additional beds sought here, Petitioner and Respondent have been afforded the opportunity to discuss the significance of the recommended award of certificates of need to applicants in a previous review cycle, namely Charter Medical-Jacksonville, Inc., and Atlantic Treatment Center, Inc., DOAH Case No. 83-335, and consolidated cases. This discussion is in terms of the number of beds that have been arguably preempted by the recommended grant of certificates of need to those other applicants in the same service district where Petitioner operates and intends to expand its services. The hearing in the previous batch had been concluded prior to the hearing dates for the present case, and the recommended order in that previous cycle was entered on March 19, 1985. That recommendation was to the effect that Charter be granted a certificate of need for the construction of a 64-bed psychiatric hospital in Jacksonville, Florida, which included 8 short- term psychiatric beds for children; 16 short-term psychiatric beds for adolescents, and 40 long-term psychiatric beds for adolescents. Additionally, a recommendation was made that Atlantic Treatment Center be allowed to construct a 50-bed psychiatric and substance abuse hospital in Daytona Beach, Florida. That hospital would include 10 beds for short-term psychiatric care for children; 5 beds for long-term psychiatric care for children; 15 adolescent beds for short- term psychiatric services; 15 adolescent beds for long-term psychiatric services and five adolescent short-term substance abuse beds. HRS District IV, includes Jacksonville Duval County, Florida, which is located in subdistrict 1, of HRS District IV. Other counties in subdistrict 1 are Nassau, Baker, and Clay. Subdistrict 2 of HRS District IV includes St. Johns and Flagler Counties. Finally, the third subdistrict of HRS District IV is Volusia County, which includes Daytona Beach, Florida. PETITIONER'S SERVICES Community Psychiatric Centers, has twenty-four operational psychiatric or chemical dependency hospitals, including St. Johns River in Jacksonville, Florida. St. Johns River Hospital is licensed as a specialty hospital by the State of Florida, with the speciality being that of psychiatry and substance abuse. The Jacksonville facility is JCAH accredited in the specialty areas of psychiatry and substance abuse. In its existing facility in Jacksonville, Petitioner offers sixty-six short-term psychiatric beds of which thirty of those beds are for adolescent patients and thirty-six of the beds are for adults. The remaining thirty-three beds are for the benefit of substance abuse patients. Twenty-seven of the adolescent psychiatric beds are used for routine short-term psychiatric care and the remaining three beds are used for seclusion of adolescent patients who have been admitted and who temporarily require a more secure environment. The normal stay of patients in the seclusion rooms is measured in hours. The seclusion rooms differ from the other patient rooms in that they are without furnishings, with the exception of a special bed which is securely mounted to the floor. The bathroom in the seclusion rooms may only be used by the patient with supervision of staff and are kept locked at other times. Due to limitations in the design of the facility those three seclusion rooms may not be utilized in the same fashion as the remaining twenty-seven patient rooms devoted to short-term psychiatric care for the benefit of adolescents. In a similar vein, of the thirty-six short-term psychiatric beds for adults, two of those beds are devoted to seclusion or isolation. Again, those two beds may not be converted for use in the fashion that the remaining thirty- four beds are used, i.e., day-to-day housing of patients in the treatment program. This limitation is also based on design problems in the facility. The units for adults and adolescent patients in the facility are separate programmatically and physically. In essence, there is no mixing of the adult and adolescent populations. Petitioner's exhibits 4 and 4a depict the design of the present facility and the appearance of that facility if a new addition were constructed in accordance with a certificate of need. The building at present is a single- story building. With the advent of the grant of a certificate of need an additional single story wing which connects with the present structure would be added to house new patients. The proposed gymnasium would be used to accommodate existing patients and the additional patients. The project also contemplates associated recreational facilities. Within the new wing, the adolescent and child- patients would he separated. Each new unit has available educational and activity areas as well as the private and semi- private rooms. By way of support there are nursing stations, storage facilities and general offices. In the course of the hearing, through Petitioner's exhibit number 12 admitted into evidence, Petitioner suggested that this project could still be feasible if the number of short-term adolescent beds was reduced from fifteen to five beds, giving a total of thirty-five beds with a projected cost of one million two hundred and eighteen thousand five hundred and thirty dollars. This amendment to the certificate, if allowed, could be accommodated by changing the design of the floor plan to shorten the reach of the wing, through the deletion of those ten short- term adolescent beds. In effect, the outer wall of the furtherest reaching extent of the L-shaped wing would be moved. In turn, the other units would be rearranged in view of this change. Although not specifically referred to in the way of a possible amendment, the Hospital Development Specialist for the Petitioner, John F. Mercer, indicated that as a second alternative the number of long-term adolescent psychiatric beds could be reduced by ten and still allow the project to be viable. These alternative suggestions were not within the stipulation of the parties pertaining to review criteria. Therefore, should these alternative plans fail to comply with other applicable criteria, in addition to the aforementioned specific criteria related to short-term and long-term psychiatric beds, in theory, these project alternatives could be denied on additional grounds as well as the particular rules dealing with short-term and long-term psychiatric beds. Notwithstanding the provision of an opportunity to the Respondent to rebut the testimony related to the alternative suggestions and to conduct cross-examination of the principal witness of Petitioner, who spoke to the issue of the alternative bed numbers, Respondent did not offer any competing viewpoint of the issue of the propriety of awarding a certificate of need based upon the two alternative plans, except as to the specific rules for psychiatric beds. Consequently, Petitioner is seen to have sustained its position vis-a-vis applicable criteria related to the issuance of a certificate of need for the alternative configurations of thirty- five to forty- five beds, assuming its ability to satisfy the needs criteria for short-term and long-term psychiatric beds, per Rules 10-5.11(25) and (26), Florida Administrative Code, respectively. SHORT TERM BEDS For purposes of short-term psychiatric bed needs assessment, the populations within subdistrict 1 and roughly half of subdistrict 2, may be served by a facility located in Duval County. On the other hand, the population in subdistrict 3, Volusia County, is not within the forty five minute travel time contemplated in the accessibility portion of Rule 10-5.11(25), Florida Administrative Code. At the time of the hearing there existed 346 licensed short-term psychiatric beds in District IV. An additional 24 beds have been recommended for approval in the proposed Charter facility in Jacksonville, and 25 beds in the proposed Atlantic Treatment Center facility in Daytona Beach, to benefit children and adolescents per the recommended order in DOAH Case No. 83- 355, and associated cases. The only licensed beds for the benefit of the younger patients, which can now be found in HRS District IV, are the 30 adolescent beds in the Petitioner's facility. When those beds recommended for recognition in the DOAH Case No. 83-335, etc., are described as approved, then the total number of licensed and approved beds in HRS District IV is 395 short-term psychiatric beds. As reflected in HRS exhibit number 1, the state agency action report related to this project, utilization of adult psychiatric services in the Petitioner's facility have ranged from a low of 39 percent in 1983 to as high as 60 percent in 1951 and 1982. By contrast, that exhibit shows the adolescent psychiatric unit, not including the ICU portion of that unit, with a 1981 utilization of 54 percent; 1982 , 51 percent; and 1983, 60 percent. In subdistrict 1, the overall percentage of occupancy for subdistrict 1, short-term psychiatric beds, was 70.7 percent for the reporting period October 1982 through September 1983. Again, these figures are taken from HRS exhibit number 1 admitted into evidence. In 1984 within the Petitioner's facility in the adolescent psychiatric units as a 1984 average for the calendar year, the percentage of occupancy for those 30 beds is 70.6 percent. The percentage of occupancy of all short-term psychiatric beds in the Petitioner's facility in that 1984 calendar year reporting period is less than 64.7 percent. This 1984 data comes from testimony of Ervin M. Funderburk, Jr., Administrator for St. Johns River and from Petitioner's exhibit number 5 admitted into evidence. In the last full reporting year, 1984, on two or three occasions as many as 13 adolescent patients have been placed upon a waiting list to receive short-term psychiatric services in the Petitioner's facility. Additional information about occupancy rates in the Petitioner's facility is found in Petitioner's exhibit number 14, at page 22, Table 6, showing occupancy rates beginning in the fiscal year 1981, through February 1984. Those rates range facility wide in the 50 percent and 60 percent bracket for the most part with a 94 percent occupancy in overall adolescent in the second quarter of 1983, and in December 1983, an 84 percent in adolescent psychiatric and 85 percent in adolescent ICU. In January, 1984 the adolescent psychiatric and ICU dropped back to 59 percent and in February, 1984 those two units within the adolescent short-term services went to 102 percent and 100 percent respectively. The adolescent short-term psychiatric beds within the Petitioner's facility, other than those used as seclusion rooms, are full 25 percent to 30 percent of the time. Having considered the presentation of the parties on the question of the appropriate planning horizon for beds sought, it is determined that the planning horizon is based upon projections for the entire year of 1989, and for one month of the year 1990. The one month of the year 1990 represents January, the month in which the final hearing was held in this case, projected five years into the future. This determination is made based upon uncertainty on the question of the effective date within 1990, at which the projected population for 1990 as found in the Petitioner's exhibit number 7, will be realized. Therefore, one-twelfth of the increase in population between 1989 and 1990 has been added to the projected population for 1989 to arrive at the overall population for HRS District IV at the end of January 1990. Using that approach approximately 1891 additional persons would be added into the projected population count for the district, attributable to the population increase for January 1990. Using the .35 per thousand standard for calculation this would add less than one bed to the overall bed count, rounded off to a one bed increase. Adding that one bed increase to the known 28 beds needed at the end of 1989, a total of 29 short-term psychiatric beds are shown as being needed at the end of January, 1990, taking into account the recommended order of a grant of certificates of need to Charter and Atlantic Treatment Center for a total of 49 short-term psychiatric beds. In effect, the number 29 is the addition of the one bed to the figures depicted in HRS exhibit number 3 admitted into evidence. As demonstrated by the witness Gene Nelson, Administrator of the Office of Community Medical Facilities, Department of Health and Rehabilitative Services, 10 of those beds at the end of 1969 could be attributed to subdistrict 1, which is accessible to patients seeking short-term psychiatric services in the location where the Petitioner has its facility. Given the distribution of beds throughout the district, the subdistrict 2 constituted of St. Johns and Flagler Counties, has the least number of beds per population. Consequently, the remaining 18 beds in 1989 are best utilized for patients within that subdistrict. Petitioner affords access to some of those patients within the subdistrict 2, which for purposes of this recommended order is determined to be approximately half of that subdistrict. Therefore, in addition to the 10 beds for subdistrict 1, 9 beds in subdistrict 2 could be given to the Petitioner and satisfy the standards related to accessibility within a forty five minute driving time. If the 1 bed for January, 1990, were added to this total, the final calculation would be as many as 20 short-term psychiatric beds which could be located in the Petitioner's facility to serve patients within HRS District IV in the planning horizon. On the subject of short-term psychiatric beds, Dr. George Michael Joseph and Dr. Pushpal L. Mehrotra, indicated the problem with placement of short-term psychiatric patients in Duval County where these physicians practice psychiatry. Their testimony does not take into account the advent of the Charter short-term psychiatric beds. On the other hand, their testimony about the difficulty of finding placements is considered in view of the waiting list previously mentioned in the recommended order. Dr. Joseph has had the experience of having to wait several weeks for the placement of a short-term adolescent psychiatric in patient. LONG TERM BEDS Petitioner's request for 20 long-term psychiatric beds is considered in keeping with the provisions set forth in Rule 10-5.11(26), Florida Administrative Code. Unlike the short-term psychiatric bed rule, there is no specific formula for determining the appropriate number of beds as a ratio of beds-to- population. There is a travel time component and an occupancy standard associated with that rule. The travel time relates to a two-hour driving time for the benefit of the population served. Having that in mind, as shown in this case, the Jacksonville area and Daytona Beach area need separate long-term psychiatric beds. Recognition has been given to that need through the recommended order in which the Charter facility in Jacksonville would receive 40 long-term psychiatric beds for the benefit of adolescent patients and the ATC facility in Daytona Beach would receive 20 long-term beds for child and adolescent patients. More specifically, on the topic of access, the Daytona Beach beds cannot be expected to serve 90 percent of the Jacksonville area population within a two-hour drive and the same would be true of a Jacksonville facility serving patients in the Daytona Beach area. On the question of the occupancy standard, related to long-term psychiatric facilities, at present there are no long-term psychiatric beds in HRS District IV. If recognized, the Charter and ATC beds would constitute the first long-term psychiatric beds located in HRS District IV. In support of its application for long-term psychiatric beds, for the benefit of adolescent patients, Petitioner relies upon the testimony of the administrator at St. Johns River Hospital, and Drs. Joseph and Mehrotra. The testimony by the physicians identifies the disruptive effect that is caused by removing patients from the community and sending them to other parts of the country to receive needed long-term psychiatric care. When this occurs, essential family involvement in the patient's treatment program is severed making the patient's recovery more difficult. Where the family can commute to other communities to participate, this creates an imposition on the adult members of that family as well as other siblings. In some instances families will withdraw those minor patients from the treatment program due to the inconvenience or perceived inability to deal with the circumstance of long-term patient care outside of the Jacksonville community. Some patients at present are being sent away for long-term care to Atlanta, Georgia; Miami, Florida; Tarpon Springs, Florida, and to Texas. When the patient is transferred to these out-of-town facilities, the primary treating physician in Jacksonville no longer is involved in the active treatment of the patient, and the patient and the new physician in the out-of-town facility must begin anew the process of dealing with the patient's condition. Dr. Joseph corroborates the idea that a Daytona Beach facility does not satisfactorily meet the needs for long-term psychiatric care of adolescent patients in Jacksonville. Dr. Mehrotra agrees with Joseph that Daytona Beach is not an appropriate alternative for long-term psychiatric care for adolescent patients in Jacksonville. The treating physician would not follow the care of the long-term psychiatric patient in institutions outside of the Jacksonville area that are as far away as Daytona Beach, because of problems with access. To the extent that long-term treatment is not readily available in the Jacksonville area, there is a tendency for physicians to keep younger patients in short-term treatment programs for a greater length of time, thereby exacerbating the situation as it pertains to the placement of short-term patients who are waiting to use the beds that are being preempted by the extended stay of the present patients. Both physicians speak in terms of the advantage of a continuum of psychiatric care from short-term to long-term within the same institution. This is an advantage for the staff of the institution, the treating physician and the family. More importantly, this is an advantage to the patient in terms of acclimation to the environment within the facility. In order of preference, continuation of a treatment program from a short-term to a long-term status is best accomplished within the same facility, followed in turn by long-term treatment in a separate facility within the same community after release from a short-term program, and finally, treatment in a long-term facility outside the community following participation in a short-term program. Petitioner in its proposed recommended order, offered by its counsel has made reference to numerous aspects of the recommended order entered in DOAH Case No. 83-355, and consolidated cases, on the matter of evidence presented in furtherance of various requests for the recognition of long-term psychiatric beds for the benefit of child and adolescent patients and the associated methodologies utilized in identifying that need, as seen by those applicants. While an opportunity was afforded the parties to the present action, to present their proposed recommended orders with appreciation for the recommended "outcome" in the previous cases, that is, the number of short-term and long-term psychiatric beds as contemplated by that recommended order, no specific authorization was requested nor granted for the use of wholesale facts taken from that recommended order in DOAH case No. 83-355, and consolidated cases. Likewise, Petitioner did not ask in the course of the formal hearing in this cause that the record of those prior cases be adopted for the purpose of the recommended order in this cause. Therefore, use of those materials from the prior cases pertaining to evidence within that long-term psychiatric bed need discussion and in particular the use of methodologies offered by the applicants in those cases is not allowed in this recommended order. In addition, Petitioner's remarks about the alleged approval of a certificate of need application filed by Daniel Memorial for the conversion of 45 residential beds to licensed long-term child and adolescent psychiatric beds, having not been part of the hearing record in this cause, is not considered. This refers to the alleged recognition of the application of Daniel Memorial for the aforementioned psychiatric beds, an application that was purportedly considered in a batch subsequent to the application offered by the present petitioner. Petitioner, having failed to specifically identify the need for additional long-term psychiatric beds in the Jacksonville area, by theory of need, the record from the point of view of this Petitioner, is the testimony of Drs. Joseph and Mehrotra and the statement of the administrator of the Petitioner's facility, that long-term psychiatric beds are needed in some unspecified number. In keeping with the testimony of Gene Nelson, Administrator of the Office of Community Medical Facilities, Department of Health and Rehabilitative Services, that need for long-term psychiatric beds could be met by the previous applicants in DOAH Case No. 83-355 and consolidated cases. This speaks to the 40 long-term psychiatric beds recommended for adolescent patients who would be treated in the Charter facility in Jacksonville. On the basis of the record presented in this hearing, those beds are found to meet the need for adolescent patients within subdistrict 1 of HRS District IV, which includes the Jacksonville area for the January 1990 planning horizon. In this connection, the suggestion by Petitioner that it can meet the 80 percent requirement for occupancy at the conclusion of 3 years of operation of its long-term psychiatric beds for adolescent patients, is not accepted. IN SUMMARY Not being entitled to any long-term psychiatric beds, the availability of 20 short-term psychiatric beds at the point of the planning horizon ending in January, 1990, may only be of benefit to the Petitioner in the event that those 20 beds are deemed to be a financially feasible addition to its existing facility. While Respondent has conceded the matter of financial feasibility of a 45-bed addition as originally proposed, assuming the need for those 45 beds, that stipulation does not pertain to the financial feasibility of 20 beds. Likewise, discussion of the financial feasibility of a 35-bed configuration, as offered by Petitioner's expert, does not vouch for the financial feasibility of a 20 short-term bed addition to the existing facility. Adding the 20 beds would exhaust the need within that part of HRS District IV constituted of subdistrict 1 and roughly half of subdistrict 2. Consequently, occupancy rates within those 20 short-term psychiatric beds would be marginally sufficient at best, taking into account past occupancy in the existing short-term facility; the advent of a new short-term facility at Charter and the exhaustion of the total number of beds indicated as being available in the short-term psychiatric bed pool. These factors taken together with the uncertainty of the implications of the bed reduction below 35 beds puts in question Petitioner's ability to meet debt obligations and realize a profit in a configuration of 20 short-term psychiatric beds, which involves ancillary costs which are to be addressed through occupancy of the 20 beds, such as fixed staff and the portion of the cost of the gymnasium attributable to new bed additions. Therefore, Petitioner has failed in this record to show financial feasibility of this project, to include the gymnasium.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Since 1976, Horizon Hospital or its predecessor has been licensed by HRS as a special psychiatric hospital with 200 beds. Its most current license, License No. 1316, authorizes Horizon to operate a special psychiatric hospital with 200 beds, and bears an expiration date of June 30, 1985. Horizon has never applied for a Certificate of Need for substance abuse beds. The 1983 session of the Legislature amended the hospital licensure law and the Certificate of Need law. Section 395.003(4), Florida Statutes, was amended, in pertinent part, to require that the number of beds for the rehabilitation or psychiatric service category for which HRS has adopted by rule a specialty bed need methodology must be specified on the face of the hospital license. Section 381.494(8)(g), Florida Statutes, was also amended to require that Certificates of Need include a statement of the number of beds approved for the rehabilitation or psychiatric service category for which HRS has adopted by rule a specialty bed need methodology. In April of 1983, HRS adopted Rules 10-5.11(25), (26) and (7), Florida Administrative Code, setting forth methodologies for determining the need for proposed new hospital beds for short-term psychiatric services, long-term psychiatric services and short- and long-term substance abuse services. The methodologies set forth in the rules for short-term psychiatric (Rule 10- 5.11(25)) and substance abuse (Rule 10-5.11(27) beds require, first, the application of a bed to population ratio to arrive at the total number of beds needed in a District, and then a subtraction of the number of existing and approved beds in that District to arrive at the number of additional beds needed at any particular time. Thus, in order to apply the methodologies and determine the actual number of beds needed in a District at any given time, the number of existing and approved beds in that District must be determined. HRS's Office of Comprehensive Health Planning therefore established an inventory of existing and approved short-term psychiatric and substance abuse beds for each of the HRS Districts. At the time of establishing its inventory, HRS hospital licenses did not distinguish between psychiatric and substance abuse beds in specialty hospitals. In order to determine the number of existing psychiatric and substance abuse beds in each District, HRS reviewed the Hospital Cost Containment Board (HCCB) reports filed on behalf of existing facilities, and also consulted a publication of the Florida Alcohol and Drug Abuse Association entitled "Alcohol and Drug Abuse Treatment-Prevention Programs in Florida, 1983 Directory." When a hospital was included in the Directory or when it reported on the HCCB form that the facility had a separately organized and staffed substance abuse program, HRS personnel called that facility to ascertain the number of beds devoted to such a program. No inquiry was made regarding the method of treating the substance abuse patient or the manner in which the substance abuse unit was staffed. The telephone conversation was then followed up with a confirmation letter. Utilizing these sources of information, as well as the definitions contained in Rules 10-5.11(25) and (27), Florida Administrative Code, HRS completed and published the results of its inventory process. The published inventory includes Horizon Hospital and categorizes its beds as 178 short term psychiatric and 22 substance abuse. The HCCB reports filed by Horizon for the years 1981, 1982 and 1983 indicate in the section entitled "Services Inventory" that Horizon's substance abuse unit bears a "Code" of "1." Code "1" is defined on the form as a "separately organized, staffed and equipped unit of hospital (discrete)." Code "2" on the HCCB form means "services maintained in hospital but not in separate unit (nondiscrete)." In its 1980 HCCB report, Horizon listed its "drug abuse care" and its "alcoholism care" as a Code "1." The 1983 Directory for "Alcohol and Drug Abuse Treatment -- Prevention Programs in Florida," published by the Florida Alcohol and Drug Abuse Association, lists Horizon Hospital as having an "alcohol and chemical abuse program," a "medical non-hospital detoxification program treatment center," "intensive/intermediate residential treatment;" and "drug abuse treatment" for all ages. The source of the information provided in this Directory was not established. Horizon Hospital has published and has distributed a pamphlet entitled "Alcohol and Chemical Abuse -- The Family Disease." This pamphlet describes the nature of alcoholism, how to recognize the symptoms, the family involvement and how Horizon can treat the total problem of alcoholism. The pamphlet describes the treatment team at Horizon to include a medical director, a psychiatrist, a nurse, nursing staff, allied therapist and a social worker. Horizon also has published and distributes a booklet advertising itself as "a private psychiatric hospital" with 200 beds, and as containing six programs -- one of which is the "addictive disease program." The program, noted as the "Horizon Hospital's Alcohol and Chemical Abuse Program of Treatment" is described as being unique in that "unlike most alcoholic rehabilitation centers, it is capable of treating the alcoholic who not only is in need of alcoholism counseling, but also has severe emotional conflicts that require psycho-therapy." Horizon Hospital does provide specialized programs for, what it describes as, subpopulations in psychiatry. These programs include an adult general psychiatric program, a crisis and intensive care program, an adolescent treatment program, an older adult treatment or geriatric program, a pain management program and an addictive disease program. Horizon emphasizes the psychiatric aspect in each program. Patients at Horizon are admitted only by psychiatrists and the bylaws of Horizon require that a psychiatrist visit a patient at least once every three days. The physical layout of Horizon's three-story facility is that two of the units, Unit 31 and Unit 32, are located on the third floor of the building. Unit 31 is known as the adolescent substance abuse unit and Unit 32 is known as the adult substance abuse unit. Each of the units at Horizon has its own staff. The Program Medical Director of Unit 32 is Dr. Vijaya Rivindran, a psychiatrist. Dr. Rivindran holds this position on a part-time basis, and is responsible for the administration of and program philosophy for patient care. As of the time of the hearing, Unit 32 had 26 beds, with a capacity for 30 beds, and Unit 31 had a capacity for 12 beds. The Program Coordinator and the Assistant Program Coordinator for Unit 32 are both psychologists. They control the day-to-day clinical activities of Unit 32 and are directly responsible for the staff supervision. The staff of Unit 32 includes mental health counselors, psychiatric nurses, a social worker and mental health technicians. Most, if not all, of the staff members of Unit 32 have special training in the area of substance abuse. The criterion for admission to Unit 32 is that the patient need psychiatric hospitalization and have some involvement with substance abuse. The average length of stay for a Unit 32 patient is 20 or 21 days. A sample of records from patients discharged from Unit 32 over a three-year period revealed that only 4.8 percent of the patients had a single diagnosis of substance abuse, and some 17 percent of the patients sampled had a primary diagnosis of substance abuse, with another secondary or tertiary diagnosis. The remainder of the patient records sampled illustrates that substance abuse was a secondary or tertiary diagnosis for the patients assigned to Unit 32. In arriving at its inventory of existing and/or approved substance abuse beds, HRS did not base its determinations upon the treatment modality provided patients. Instead, HRS counted beds as substance abuse beds only if they were located in a separately organized and staffed unit of at least ten beds, had specially trained staff and the patients had an average length of stay not exceeding 28 days.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the petition challenging that portion of the HRS inventory of short-term psychiatric and substance abuse beds relating to Horizon Hospital be DISMISSED. Respectfully submitted and entered this 27th day of March, 1985, 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 27th day of March, 1985. COPIES FURNISHED: William B. Wiley McFarlain, Bobo, Sternstein, Wiley and Cassedy, P.A. P.O. Box 2174 Tallahassee, Florida 32316 Amy M. Jones Building 1 - Room 407 1323 Winewood Blvd. Tallahassee, Florida 32301 Alan C. Sundberg and Cynthia S. Tunnicliff Carlton, Fields, Ward, Emmanuel, and Cutler, P.A. P.O. Drawer 190 Tallahassee, Florida 32302 C. Gary Williams and Michael J. Glazer Ausley, McMullen, McGehee, Carothers and Proctor P.O. Box 391 Tallahassee, Florida 32302 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
Findings Of Fact On October 15, 1985, Petitioner, Mercy Hospital, Inc. (Mercy), filed an application with Respondent, Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to convert 29 medical/surgical beds into 29 long-term substance abuse beds. On February 27, 1986, the Department denied Mercy's application, and Mercy timely petitioned for formal administrative review. Mercy is a 538-bed acute care hospital located in Miami, Dade County, Florida. Due to a declining patient census, Mercy is, however, operating only 360 of its 530 licensed beds. Mercy currently offers services in medicine, surgery, psychiatry, obstetrics, gynecology, emergency medical services and outpatient services. Need The predicate for the Department's denial of Mercy's application was a perceived lack of need for long-term substance abuse beds in District XI (Dade and Monroe Counties), and the impact such lack of need would exert on the other statutory and rule criteria. Resolution of the need issue is dispositive of Mercy's application. There currently exists no numeric need methodology for determining the need for long-term substance abuse beds. The Department has, however, adopted Rule 10-5.11(27)(h)1, Florida Administrative Code, which establishes the following occupancy standard: No additional or new hospital inpatient substance abuse beds shall normally be approved in a Department service district unless the average occupancy rate for all existing hospital based substance abuse impatient beds is at or exceeds 80 percent for the preceding 12 month period. District XI has 190 approved long-term hospital impatient substance abuse beds; however, only 30 of those beds are currently licensed. The licensed beds are located in Monroe County at Florida Keys Memorial Hospital (Florida Keys), and are operating well below the 80 percent occupancy standard established by rule. 1/ The remaining beds are to be located in Dade County where Intervenor, Management Advisory and Research Center, Inc., d/b/a Glenbeigh Hospital (Glenbeigh) holds a CON for a 100-bed unit and Mount Sinai Medical Center (Mount Sinai) holds a CON for a 60-bed unit. Glenbeigh's facility is currently under construction, and Mount Sinai is seeking licensure. While not licensed, Mount Sinai has operated its 60-bed unit under its acute care license, and for the first three quarters of 1985 reported occupancy rates of 49.7 percent, 62 percent, and 48.9 percent. While the beds approved for District XI do not demonstrate an 80 percent occupancy rate, only one unit, Florida Keys, is licensed and operational. That unit is located in Key West, serves the middle and lower keys, and is not accessible to Dade County residents. The remaining units are not licensed, and their occupancy figures are not representative of a functional substance abuse unit. Accordingly, a failure to demonstrate compliance with the 80 percent occupancy standard is not necessarily dispositive of the question of need. There currently exists, however, no recognized methodology to calculate need for long-term substance abuse services. Accordingly, to demonstrate a need in 1990 for such services, Mercy relied on a numeric need methodology devised by its health planning expert, Daniel Sullivan 2/ (Petitioner's exhibit 4). Sullivan's methodology was not, however, persuasive. The First Step in Sullivan's Methodology The first step in Sullivan's methodology was to derive an estimate of the number of substance abusers in District XI who would seek treatment in an inpatient setting. The figure he calculated (a,170) was derived-through a four- stage refinement process. Initially, Sullivan estimated the number of problem drinkers within the district for the horizon year by applying the Marden methodology. That methodology, routinely relied upon by health planners, identifies the number of problem drinkers in a given population by multiplying a probability factor to age and sex groupings. By applying the Marden methodology to the age and sex demographics of District XI, Sullivan calculated that an estimated 148,541 problem drinkers would reside within the district in 1998. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in some formal setting (network treatment). To establish that estimate, Sullivan relied on a report prepared for the National Institute on Alcohol Abuse and Alcoholism (NIAAA) entitled "Current Practices in Alcoholism Treatment Needs Estimation: A State-of-the-Art Report". According to Sullivan, that report estimates the percentage of problem drinkers who will seek network treatment to be 20 percent. Therefore, he calculated that an estimated 29,788 problem drinkers in District XI would seek such treatment in 1990. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in an inpatient setting. To establish that estimate, Sullivan relied on a survey conducted in 1982 by the NIAAA entitled National Drug and Alcoholism Treatment Utilization Survey". According to Sullivan, that survey indicated that approximately 78 percent of all problem drinkers who sought treatment did 50 on an outpatient basis. Therefore, using a factor of 22 percent, he calculated that an estimated 6,536 problem drinkers in District XI would seek such treatment in 1990. Sullivan's methodology, at stage two and three of his refinement process, was not persuasive. While Sullivan relied on the factors presented in the reports, there was no proof that health planning experts routinely relied on the reports. More importantly, there was no evidence of the type of survey conducted, the reliability of the percentage factors (i.e.: + 1 percent, 10 percent, 50 percent, etc.), or their statistical validity. In sum, Sullivan's conclusions are not credited. The final stage at step one of Sullivan's methodology, was to estimate the number of substance abusers (alcohol and drugs) who would seek treatment in an inpatient setting. To derive that estimate, Sullivan relied on a report prepared by the Department's Alcohol, Drug Abuse and Metal Health Office, contained in a draft of its 1987 state plan, which reported that 80 percent of substance abusers abuse alcohol and 20 percent abuse other drugs. Applying the assumption that 80 percent of substance abusers abuse alcohol, Sullivan estimated that 8,170 substance abusers in District XI would seek inpatient treatment in 1990. Sullivan's conclusion is again not persuasive. To credit Sullivan's methodology, one must assume that substance abusers (alcohol and drugs) seek treatments at the same rate as alcohol abusers. The record is devoid of such proof. Accordingly, for that reason and the reasons appearing in paragraph 12 supra, Sullivan's conclusions are not credited. The Second Step in Sullivan's Methodology. The second step in Sullivan's methodology was to estimate the number of hospital admissions, as opposed to other residential facility admissions, that would result from the need for substance abuse services. To quantify this number, Sullivan relied on one 1982 survey conducted by NIAAA. According to that survey, the distribution of inpatient substance abuse clients by treatment setting in 1982 was as follows: Facility Location Number Percent of Total Hospital 17,584 34.1 Quarterway House 1,410 2.7 Halfway Housed/ Recovery Home 14,648 28.4 Other Residential Facility 15,980 31.0 Correctional Facility 1,985 3.8 TOTAL 51,607 100.0 percent Therefore, using a factor of 34.1 percent, Sullivan estimated the number of substance abuse hospital admissions to be 2,784 for 1990. For the reasons set forth in paragraph 12 supra, Sullivan's conclusions are, again, not credited. The Third and Fourth Steps in Sullivan's Methodology. The third step in Sullivan's methodology was to estimate the number of substance abuse hospital admissions that would require long-term, as opposed to short-term, services. To derive this estimate, Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short-term bed need methodology (.06 beds per 1,000 population) contained in Rule 10-5.11(27)(f)1, Florida Administrative Code. Sullivan then subtracted that number (1,182) from the estimated number of substance abuse hospital admissions for 1990 (2,784), and concluded that the estimated number of hospital admissions in 1990 that would result from the need for long-term substance abuse services would be 1,602. The final step in Sullivan's methodology was to calculate the need for long-term hospital substance abuse beds. To derive this estimate, Sullivan multiplied the estimated number of long-term substance abuse admissions (1,602) by an average length of stay of 37 days, and divided that total by an occupancy standard of 292 days (80 percent of 365 days). Under Sullivan's methodology, a gross need exists for 203 long-term substance abuse beds in District XI. To establish net need, Sullivan would reduce the 203 bed district need by the 160 beds approved for Dade County, but ignore the 30-bed unit at Florida Keys because of its geographic inaccessibility. By Sullivan's calculation, a net need exists for 43 beds in Dade County. Sullivan's analysis, at steps three and four of his methodology, is not credited. Throughout his methodology Sullivan utilized District XI population figures (Dade and Monroe Counties) to develop a bed need for Dade County. Although Monroe County accounts for only 4 percent of the district's population, the inclusion of that population inflated Dade County's bed need. More demonstrative of the lack of reliability in steps three and four of Sullivan's analysis are, however, the methodologies by which he chose to calculate short- term admissions and long-term substance abuse bed need. Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short- term bed need methodology (.06 beds per 1,000 population) contained in Rule 10- 5.11(27)(f)1, Florida Administrative Code. 3/ By using a 28-day length of stay, the maximum average admission permitted for short-term beds, as opposed to the district's demonstrated average of 24-days, Sullivan inappropriately minimized the number of estimated short-term admissions and maximized the number of estimated long-term admissions. 4/ Sullivan sought to justify his use of a 28-day standard by reference to testimony he overheard in a separate proceeding. According to Sullivan, a Department representative testified that the 28-day standard was used in developing the Department's .06 short-term beds per 1,000 population rule. Sullivan's rationalization is not, however, persuasive. First, Sullivan's recitation of testimony he overheard in a separate proceeding was not competent proof of the truth of those matters in this case. Second, Sullivan offered no rational explanation of how a 28-day standard was used in developing the rule. Finally, the proof demonstrated that the average short-term length of stay in District XI is 24 days, not 28 days. The difference between a 24-day and 28-day average short-term length of stay is dramatic. Application of Sullivan's methodology to the population of Dade County, and utilizing a 24-day average, would demonstrate a need for 170 long-term beds, as opposed to Sullivan's calculated need of 203 beds. In addition to the average short-term length of stay factor, long-term bed need is also dependent on an average length of long-term admissions factor. Under Sullivan's approach, the higher the average, the higher the bed need. Accordingly, to derive a meaningful bed need requires that a reliable average length of stay be established. The data chosen by Sullivan to calculate such an average was not, however, reliable. Sullivan used a 37-day average length of stay to develop his long-term bed need. This average was developed from the CON applications of Mercy, Glenbeigh and Mount Sinai. In the applications, Mercy estimated an expected length of stay of 30-37 days, Glenbeigh 36-38 days, and Mount Sinai 28-49 days. Use of a simple average, of the expected lengths of stay contained in Mercy's, Glenbeigh's and Mount Sinai's applications, to develop an average long- term length of stay is not persuasive. The figures contained in the applications are "expected length of stay", a minimum/maximum figure. Mercy failed to demonstrate that a simple average of those figures was a reliable indicator of average length of stay. Indeed, Mercy presented evidence at hearing that its average length of stay would be 30-31 days; a figure that is clearly not a simple average of the 30-37 day expected length of stay contained in its application. Mercy's failure to demonstrate a meaningful average length of stay renders its calculated bed need unreliable. Sullivan's Methodology - An Overview Each step of Sullivan's methodology was inextricably linked to the other. Consequently, a failure of any step in his analysis would invalidate his ultimata conclusion. Notwithstanding this fundamental fact Mercy, with the exception of the Marden methodology, failed to present a reasonable evidentiary basis to demonstrate the reliability and validity of Sullivan's methodology or any of its parts. Since his methodology was not validated, or each of its inextricably linked parts validated, Sullivan's conclusions are not persuasive or credited. Other Considerations If Mercy receives a CON, it will enter into a management contract with Comprehensive Care Corporation (CompCare) to operate the substance abuse unit. The parties anticipate that Mercy will provide its existing physical plant, custodial services, support services, dietary services, complimentary medical services, medical records and pharmacy services, and that CompCare will provide the treatment team, quality assurance, public information, promotion and operational management. Under its proposed agreement with CompCare, Mercy would pay CompCare on a per patient day basis. This fee was not, however, disclosed at hearing nor were the other expenses for patient care established. 5/ Consequently, Mercy failed to establish that its proposal was financially feasible on either a short or long term basis. Mercy also proposes to provide bilingual staff, and dedicate a portion of its patient days to indigent and Medicaid patients. There was no competent proof to establish, however, that such needs were not met, or would not be met, by the existing facilities.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the application of Mercy for a certificate of need to convert 29 medical/surgical beds to 29 long-term substance abuse beds be DENIED. DONE AND ORDERED this 4th day of February, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK 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 4th day of February, 1987.
