Findings Of Fact The parties' stipulation The parties have stipulated to the following facts: Forum and Amedex timely filed their respective letters of intent and applications with the Department and the District Local Health Council for the July 1986 batching cycle. The Department ultimately deemed the applications complete and, following review, published its notice of intent to deny the applications. Forum and Amedex each timely filed a petition requesting a formal hearing on the denial of their application. With regard to the Forum application, the Department contends that there is no need for the proposed facility, that such lack of need will render Forum's project financially unfeasible, that the project is not the best use of Forum's resources, and that Forum fails to meet the local health plan priority relating to the construction of freestanding facilities with a minimum capacity of 120 beds. All other statutory and rule criteria are satisfied, at least minimally, based on Forum's 60-bed proposal. With regard to the Amedex application, the Department contends that there is no need for the proposed facility, that such lack of need will render Amedex's project financially unfeasible, and that the project is not the best use of Amedex's resources. The Department further contends that Amedex has not demonstrated that it can provide quality of care, that it has not demonstrated that its project is financially feasible in the short or long term, that it has not provided long range plans and that, even assuming minimal need, the size of Amedex' proposed project will cause difficulty in meeting projected utilization needs based on Broward County's past utilization rates. All other statutory and rule criteria are satisfied, at least minimally, based on Amedex' 240-bed proposal. As between the applicants, they agree that a comparative review is appropriate to determine the best applicant. Further, they agree for purposes of this proceeding that the other meets all statutory and rule criteria, at least minimally, except the following: need beyond 60 beds, ability to provide quality of care, and availability of funds for project accomplishment and operation. The parties have further agreed that there are no special circumstances existent in this case upon which a certificate of need is being sought. The Amedex Proposal In July 1986 Amedex filed an application with the Department for a certificate of need to construct a 240-bed skilled and intermediate care nursing home in Broward County, Florida. The total project cost is projected to be $9,040,228. At hearing, Amedex failed to offer any competent proof to demonstrate the immediate and long-term financial feasibility of its proposed project, that it could provide quality care, or that it had available the necessary funds for project accomplishment and operation. 1/ While the Department contended that the proposed project was not the best use of Amedex's resources, it offered no proof to demonstrate what other health services would be a more appropriate use of the resources. The Forum Proposal In July 1986, Forum also filed an application with the Department for a certificate of need to construct a skilled and intermediate care nursing home in Broward County, Florida. Forum's application sought leave to construct a 60-bed facility. The estimated cost for construction of Forum's proposed nursing home is $2,39,800. Forum has the necessary resources for project accomplishment and operation. While the Department contended that the proposed project was not the best use of Forum's resources, it offered no proof to demonstrate what other health service would be a more appropriate use of such resources. Forum is a publicly held health services company which owns, develops, and operates retirement living centers and nursing homes on a national basis. Pertinent to this case, Forum proposes to develop a retirement living center in Broward County that would consist of 120 apartments for independent living, a 30-bed adult congregate living facility, and the proposed 60-bed skilled and intermediate care nursing home. Forum has packaged its centers to provide these three levels of service to meet the desires of retired persons they hope to attract to their retirement community. Each of the three components which comprise Forum's retirement living center are physically connected and share some operational functions, such as a central kitchen and heating plant. Such design provides for an efficient operation, as well as an economical distribution of costs facility wide. The nursing facility proposed by Forum would offer a wide range of services for its residents including: 24-hour skilled and intermediate nursing care, physical therapy services, and other restorative services. Additionally, Forum proposes to offer, as needed, subacute services such as: intravenous care, continuous bladder irrigation, oxygen therapy, nastrogastric tube feeding, ventilator care, insulin treatment, sterile dressing changes, and sterile care of tracheotomies. Forum also proposes to offer in the future, if need is identified and if any necessary agreements can be reached, respite care, adult day care, meals on wheels and hospice care. Forum proposes to seek medicare and medicaid certification, and will dedicate 25 of its beds to medicaid patients. Forum has a history of providing quality care at its existing facilities, and will provide quality care at the proposed facility. Forum has demonstrated the immediate and long term financial feasibility of its proposed project. Forum is a national company, with substantial experience in developing and operating nursing homes and retirement living centers. Due to the excellent growth potential in Broward County for retirement living centers, Forum should be able to capture a sufficient share of the nursing home market to render its proposed nursing home financially feasible. However, in view of the lack of numeric need for such facility as discussed infra, Forum's success will be to the detriment of existing and approved facilities. Numeric need The Department has established by rule the methodology whereby the need for community nursing home beds in a service district shall be determined. Rule 10-5.011(1)(k)2, Florida Administrative Code. The first step in calculating need pursuant to the rule methodology is to establish a "planning horizon." Subparagraph 2 of the rule provides: Need Methodology ... the Department will determine if there is a projected need for new or additional beds 3 years into the future according to the methodology specified under subparagraphs a. through i... The Department interprets subparagraph 2, and the applicants concur, as establishing a "planning horizon" in certificate of need proceedings calculated from the filing deadline for applications established by Department rule. This interpretation is consistent with the numeric methodology prescribed by subparagraph 2, and with the decision in Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1986). Applying the Department's interpretation to the facts of this case, establishes a "planning horizon" of July 1989. Pertinent to this case, subparagraphs 2 a-d provide the methodology for calculating gross bed need for the district/subdistrict (in this case the district and subdistrict are the same--Broward County) in the horizon year. The first step in the calculation of gross need for the horizon year is to derive "BA," the estimated bed rate for the population age-group 65-74. This rate is defined by subparagraph 2b as follows: BA = LB/ (POPC + (6 x POPD) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. The parties concur that the district licensed bed figure (LB) is calculated based on the number of licensed community nursing home beds as of June 1, 1986, and that there were 3,226 licensed beds in the district on that date. 2/ The parties do not, however, agree as to the date on which POPC and POPD should be derived. The formula mandated by the rule methodology for calculating BA requires that the "current population" for the two age groups be utilized. The rule does not, however, prescribe the date on which the "current population" is to be derived. Forum contends that the appropriate date to establish the "current population" for POPC and POPD is January 1, 1986. The Department contends that the appropriate date is the date of application. In the opinion of David Warner, which opinion is credited, the base for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated. For the July batching cycle, OR is based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. January 1, 1986, as the midpoint of that date, is the appropriate date to derive POPC and POPD. Supportive of Dr. Warner's opinion are the past practices of the Department. Between December 1984 and December 1986, the Department routinely used a three and one half year spread between the base population period and the horizon date for "current population" in its semiannual nursing home census report and bed need allocation. That three and one half year spread was adopted by the Department for the same reasons expressed by Dr. Warner. In the batching cycle of January 1987, which cycle immediately followed the cycle at issue in this case, the Department utilized a three and one half year spread between the base population period and the horizon date for "current population" when it awarded beds in that cycle. The Department offered no explanation of why, in this case, it proposed to use a three year spread between the base population period and the horizon date for "current population" in calculating POPC and POPD. Application of the methodology prescribed by subparagraph 2b to the facts of this case produces the following calculation: BA = 3,226 / (158,878 + (6 x 110,217) BA = 3,226 / (158,878 + 661,302) BA = 3,226 / 820,180 BA = .0039332 The second step in the calculation of gross need for the horizon year is to derive "BB," the estimated bed rate for the population age group 75 and over. This methodology is defined by subparagraph 2c, and calculated in this case as follows: BB = 6 x BA BB = 6 x .0039332 BB = .0235992 The third step in the calculation of gross need for the horizon year is to derive "A," the district's "age-adjusted number of community nursing home beds" at the horizon year. This methodology is defined by subparagraph 2a as follows: A = (POPA x BA) + (POPB x BB) Where: POPA is the population age 65-74 years in the relevant departmental district projected three years into the future. POPB is the population age 75 years and older in the relevant departmental district projected three years into the future. The parties concur that POPA and POPB are, respectively, 165,533 and 128,250 for the horizon year. Accordingly, application of the methodology prescribed by subparagraph 2a produces the following calculation: A = (165,533 x .0039332) + (128,250 x .0235992) A = 651.07439 + 3,026.5974 A = 3,677.67 The final step in the calculation of gross need in the horizon year is to derive "SA," the "preliminary subdistrict allocation of community nursing home beds" (gross bed need in this case. 3/ This calculation is defined by subparagraph 2d as follows: SA = A x (LBD/LB) x (OR/.90) Where: LBD is the number of licensed community nursing home beds in the relevant subdistrict. OR is the average 6 month occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Occupancy rates established prior to the first batching cycle shall be based upon nursing home patient days for the months of July 1 through December 31; occupancy rates established prior to the second batching cycle shall be based upon nursing home patient days for the months of January 1 through June 30. The batching cycle in which these applications were filed occurred before the Department amended its rule to include the fixed need pool concept. Accordingly, the parties agree that the six month period on which the average occupancy rate is calculated is not as set forth in subparagraph 2d, but, rather is defined by former rule 10-5.11(21)(b)4 as follows: OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy data for the months of October through March preceding that cycle... In Broward County (District X) LB and LBD are the same since the county has not been divided into subdistricts. Application of the foregoing methodology to the facts of this case produces a gross need in July 1989 of 3,453 beds, computed as follows: 4/ SA = 3,677.67 x (3226/3226) x (.845/.9) SA = 3,677.67 x 1 x .938888 SA = 3452.92 The net need calculation The final step in the numeric need methodology is to derive net reed from gross need. According to subparagraph 2i, this need is calculated as follows: The net bed need allocation for a subdistrict, which is the number of beds available for certificate of need approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental sub- district from the bed allocation determined under subparagraphs 2.a. through f. Notably, former rule 10-5.11(21)(b)9 comports with the new rule in all material respects. While the rule requires that net need be calculated by subtracting "the total number of licensed and 90 percent of the approved beds" in the subdistrict from the gross need previously calculated, it is silent as to the date that inventory should be calculated. The Department asserts, through application of "policy," that the number of licensed beds should be calculated as of June 1, 1986 (the date established by former rule 10-5.11(21)(b)7 for calculating LB and LBD), and the number of approved beds as of December 1, 1986 (the date the Department's supervisory consultant signed the state agency action report). Forum would likewise calculate licensed beds as of June 1, 1986, but would also calculate approved beds as of that date. The Department offered no proof to expose and elucidate its policy choice. As discussed below, the dates used by the Department and Forum for purposes of calculating net need were facially unreasonable. 5/ The inventory of licensed and approved beds under subparagraph 2i, as well as former rule 10-5.11(21)(b)9, are inextricably linked. As approved beds are licensed, the approved bed inventory decreases and the licensed bed inventory increases. The Department's policy choice concerning the dates at which licensed and approved beds are to be counted is neither logical nor rational since it could result in some nursing home beds not being counted as either licensed or approved. For example, if beds were approved and not yet licensed in June 1, 1986, but licensed before the supervisory consultant signed the state agency action report (SAAR), they would not be counted in either inventory. Since the purpose of subparagraph 2i is to calculate a realistic estimate of the net bed need for the horizon year, it is appropriate to use the most current inventory of licensed and approved beds at the point a decision is rendered on an application. This assures, to the greatest extent possible, that the horizon population will not be over or underserved. In those circumstances where the SAAR becomes final agency action, the Department's approach of calculating inventory on the date the supervisory consultant signs the SAAR, assuming that inventory includes licensed and approved beds on that date, might be reasonable. However, where, as here, the SAAR constitutes only preliminary agency action, and a de novo review of the application is undertaken, there is no rational basis for subsuming that inventory. The rule methodology considered, the only rational conclusion is that net need be derived on the date of de novo review, and that it be calculated by reducing the gross need calculation by the inventory of licensed and approved beds, from previous batching cycles, existent on that date. As of the date of administrative hearing, there were 3,226 licensed beds and 695 approved beds in the district/subdistrict. Applying the methodology prescribed by subparagraph 2i to the facts of this case calculates a surplus of 399 community nursing home beds in the district for the June 1989 planning horizon. Consistency with State and local health plans The parties have stipulated that both proposals are consistent with the State and local health plans except for Forum's facial failure to comply with the local health plan priority relating to the construction of freestanding facilities with a minimum capacity of 120 beds. Pertinent to this issue, the local health plan provides: In addition to controlling capacity in order to discourage the construction of unneeded beds, the certificate of need program addresses cost containment by encouraging efficiencies in operation as a criteria to certificate of need approval. A number of operational models have historically proven to be positive influences on efficiency. Licensure laws, for instance, require nursing home staffing patterns to be structured in minimum modules of 30 bed configurations. As a result, the construction of nursing homes with beds totalling numbers not divisible by 30, has the capability of encouraging over staffing. Similarly, experience has shown that freestanding nursing homes constructed at less than 120 beds also are less cost efficient compared to larger facilities. Likewise, since construction and corresponding debt service retirement is greater for freestanding facilities than for new construction on existing facilities, expansion and conversion as an alternative to new construction frequently acts to reduce costs. The basis for the 120-bed minimum size for a "freestanding" facility in the local health plan is to insure efficiency and economy of scale. The 60- bed project proposed by Forum is not "freestanding" but is an integral part of a retirement center which also includes 120 independent living units and a 30-bed adult congregate living facility. Under the circumstances, the economies and efficiencies contemplated by the local health plan will be achieved, and Forum's proposal is consistent with such plan. The local health plan also provides, as a recommendation, that: ... applications for certificates of need to construct additional nursing home beds should be approved so as to support the State policy of 27 beds/1000 population over age 65 in Broward County. Considering the population over age 65 at the applicants' planning horizon, as well as the number of licensed and approved beds in the district, calculates a 14.36 beds/1000 population over age 65 for July 1989. Accordingly, the applicants' proposal is consistent with state and local health plans regarding bed to population ratio. Comparative Review As between the competing applicants, the proof demonstrates that Forum is the superior applicant, and that were the award of a certificate of need appropriate in this case that its application would be the one of choice. Under no circumstance does the proof support an award to Amedex, since it failed to demonstrate the immediate and long-term financial feasibility of its project, failed to demonstrate that it would provide quality care, and failed to demonstrate that it had sufficient resources for project accomplishment and operation. The criteria on balance In evaluating the applications of Amedex and Forum, none of the criteria established by Section 381.705, Florida Statutes (1987), or Rule 10- 5.011(k), Florida Administrative Code, have been overlooked. In the case of Amedex, the lack of need in the district, as well as its failure to demonstrate compliance with relevant criteria as discussed in paragraph 46, demonstrates that, on balance, its application should be denied. In the case of Forum, its application meets all relevant statutory and rule criteria except need. Need is the key criteria in the instant case. Forum's failure to satisfy that criterion by proof of numeric need or special circumstances is dispositive of its application for licensure, and such failure is not outweighed by any other, or combination of any other, criteria.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the applications for certificate of need filed by Amedex and Forum be DENIED. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of February, 1988. WILLIAM J. KENDRICK 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 25th day of February, 1988.
Findings Of Fact The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.
Recommendation It is recommended that a Final Order be entered granting Kensington Manor Inc. CON No. 6430 to construct a 120 bed nursing home and to rehabilitate the existing 147 bed nursing home to an 87 bed nursing home in Sarasota County. RECOMMENDED this 14th day of March, 1991, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of March, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3665 Petitioner's proposed findings are accepted, except #5. Sentence stating "There are no laundry facilities in the nursing home." is rejected as inconsistent with proposed finding #7. Respondent's proposed findings are also accepted. Most of the defects in the application which Respondent finds to be not in compliance with the statutory requirements were corrected by the testimony at this hearing. COPIES FURNISHED: Alfred W. Clark, Esquire 1725 Mahan Drive Tallahassee, FL 32308 Richard Patterson, Esquire 2727 Mahan Drive Tallahassee, FL 32308 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda Harris General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 =================================================================
The Issue The issue presented for determination herein is whether or not F.A.C. Health Care, Inc., d/b/a Spring Hill Health Facility (Petitioner) is entitled to a Certificate of Need to establish a 60-bed nursing home to serve Hernando County.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at hearing, including the pre-hearing stipulation, the following relevant facts are found. F.A.C. Health Care, Inc. is a wholly-owned subsidiary of First American Corporation. First American Corporation has owned, operated and developed approximately 75 long-term care and retirement facilities over the past 15 years. These operations are primarily located in the southeastern United States. At present, First American Corporation operates 20 facilities and has seven Certificates of Need in the developmental stages. (TR. 35, Fulmer) On January 14, 1984, Petitioner filed an application with the Respondent for a Certificate of Need to construct and operate a community nursing home in the City of Spring Hill in Hernando County, at a total cost of $3,180,000. (Petitioner's Exhibit 1) The letter of denial accompanying the state agency action report dated April 30, 1984, noted the basis for denial as follows: Existing and approved bed capacity in Citrus/Hernando Counties is sufficient to satisfy projected need for 1986. There are 60 nursing home beds that have been approved but have not been constructed at the present time, which, when added to the existing nursing home bed supply in Citrus/Hernando Counties, will serve to satisfy a portion of the projected need for skilled nursing home beds in the sub-district through 1986. The proposed 120 beds are in excess of the 37 beds needed to reduce the prospective base utilization rate to a reasonable level by 1986. (TR. 36, Fulmer; Petitioner's Exhibit 2) On September 26, 1984, Petitioner amended its original application to reflect a reduction from 120 to 60 nursing home beds. Documents reflecting the corresponding reduction in project costs from 53,180,000 to 51,780,000 were submitted with the amended proposal. (Petitioner's Exhibit 3) FINANCIAL FEASIBILITY OF THE PROPOSED SPRING HILL FACILITY The immediate and long-term financial feasibility of a project is one criteria considered during the Certificate of Need review process. Section 381.494(6)(c)9., Florida Statutes. The total cost of the project of 51,780,000 appears reasonable and in line with similar projects. Funds for full 100 per cent financing of the project are available through industrial revenue bonds at 14 per cent interest over 30 years. In order to acquire an industrial revenue bond application, Petitioner would maintain a $150.000 debt service reserve fund. (Petitioner's Exhibit 3) Other methods of financing available to finance the subject project include conventional financing, syndicated equity programs and insurance investment programs. (Testimony of Fulmer at TR. 39-40) Due to the largely rural setting, projected utilization for the first year would be 81 per cent Medicaid, 5 per cent Medicare and 14 per cent private pay. Occupancy is projected to reach 97 per cent by the fifth full month of operation and would be supported in part by the increased utilization of nursing home beds as a direct result of the implementation of diagnostic related groupings. Pro forma statements for the first and second years of operation show a net operating profit beginning in the ninth month and continuing through the second year. The equipment costs, staffing patterns and personnel budget also appear reasonable for this type of project. METHODS AND CONSTRUCTION COSTS Another issue in this proceeding was whether Spring Hill satisfied the criteria in Section 381.494(6)(c)13., Florida Statutes, regarding the cost and methods of construction. Spring Hill's proposed facility will provide 11,981 square feet devoted to patient care and 9,710 square feet for administrative and common service areas at a construction cost of $41.50 per square foot. (Petitioner's Exhibit 3) Proposed construction costs and methods of construction efficiently minimize square footage space requirements and related construction costs and will permit the most efficient operation of the facility at a low per diem cost. The construction cost appears reasonable and is also supportive of a primarily Medicaid based facility. Finally, Respondent offered no evidence to controvert the reasonableness of construction costs and methods proposed by Petitioner. IMPACT ON HEALTH CARE COSTS Section 381.494(6)(c)12., Florida Statutes provides that as part of the Certificate of Need review, probable impact of the proposed project on the cost of providing health care services be considered. Petitioner's expert, Fulmer, urges that there would either be no impact on the cost of care or due to the availability of additional Medicaid beds, costs would be reduced since the private pay demands of family and relatives having to pay for the care of an individual rather than participating in the Medicaid program would reduce the costs of health care to the community rather than increase the financial burden. In this regard, Petitioner offered no evidence to substantiate the claim that the demand for Medicaid beds exceeded the supply, or that Medicaid patients had been refused health services by the available Medicaid health care providers. AVAILABILITY AND ACCESSIBILITY OF EXISTING SERVICES Hernando County lies within HRS District III which is composed of 16 counties in north-central Florida, stretching from the Gulf of Mexico north of Tampa to the Georgia border. (Petitioner's Exhibit 6) The District is further divided into sub-districts. Hernando County represents a separate sub-district. Petitioner's facility is proposed to be located in the City of Spring Hill, located in the fastest growing area of Hernando County. (Petitioner's Exhibits 1 and 2) The latest bulletin (No. 69) from the University of Florida, Bureau of Economic and Business Research, shows a 90 per cent projected growth between 1980 and 1990. Much of the population in the Spring Hill area falls in the 65 and older age bracket. County age group projections released by HRS on September 24, 1984, reveal that the elderly population of 65 and over in Hernando County in 1985 is projected as 17,616, or approximately 27 per cent of total population. By 1990, those projections will grow to 24,887 or approximately 29 per cent of total population. (Respondent's Exhibit 2) The growth trend in Hernando County is an extension of the rapid coastline development occurring in the New Port Richey- Clearwater areas and the counties to the south of Hernando. Previously, the only major development in Hernando County was centered in Brooksville, the middle of the county. Consequently, the existing community nursing home services in Hernando County are concentrated in the Brooksville area. Although Petitioner, through its expert (Konrad) testified that there is a mal-distribution of existing beds and community nursing home services which renders them neither available nor accessible to the rapidly growing elderly population in the southwestern Hernando County corridor and that high occupancy rates in existing community nursing homes in the area and the existence of waiting lists corroborates the lack of availability and accessibility of community nursing home services in the area, the evidence introduced herein failed to establish either the existence of waiting lists or that the existing community nursing homes in the area were overcrowded. SHELTERED VERSUS COMMUNITY NURSING HOME BEDS Petitioner contends that certain nursing home beds associated with the adult congregate living facility at Evergreen Woods in the Spring Hill area are not actually available and accessible to the general public but instead are functioning as sheltered nursing home beds. Respondent, on the other hand, considers the 60 nursing home beds associated with Evergreen Woods to be available and accessible to the general public. A review of the entire record compiled herein failed to substantiate Petitioner's claim that those beds at Evergreen Woods are unavailable and/or inaccessible to the general public. DETERMINATION OF NEED, SECTION 381.494(6)(c)1., FLORIDA STATUTES. In determining need for nursing home beds, a Certificate of Need project is reviewed on a 3-year planning horizon. In this case, predicted need for nursing home beds in District III and the sub-district of Hernando County is calculated through 1987. Hernando County is a single county sub-district located within in HRS planning District III in north central Florida. HRS has determined the overall nursing home bed need for District III as well as sub-district allocations by applying the uniform nursing home bed need methodology for community nursing home services contained in Florida Administrative Code Rule 10- 5.11(21). (Petitioner's Exhibit 5) Respondent provided a step-by-step application of the community nursing home bed need rule and introduced their exhibits supporting the calculation period (Testimony of expert medical facilities consultant, R. Jaffe and Respondent's Exhibits 1 and 2). Briefly stated, application of the pertinent rules reveals an extrapolated need for 31 beds which are available for CON approval based on data available to Respondent on June 29, 1984 and that 36 beds are available based on later data released on September 24, 1984. (TR. 91, Conrad; TR. 130, Jaffe and Petitioner's Exhibit 6) The census report applicable herein reflects that there were 360 licensed beds in the Hernando sub-districts and no approved beds for a total of 360 beds. 2/ Application of the nursing home bed need methodology is not the sole factor used in determining whether a CON application should be granted. Other factors, such as access, high occupancy rates, chronically underserved population and high Medicaid utilization are definite factors in approval of additional beds in cases where the rule shows either no need or only slight need. Respondent has, on several occasions, granted 60-bed applications where accessibility issues justified the grant of a minimum-sized facility in spite of the lesser numerical need indicated under the rules. 3/ Petitioner referred to instances wherein Respondent had granted approval for CON's in other districts where there were unusual circumstances such as accessibility issues as referred to herein above. A review of those cases reveals that a departure from the usual bed-need methodology is warranted in cases of extremely high occupancy rates (95 per cent or higher) or the facilities with lower occupancy rates, e.g. 85.7 per cent for homes in Sarasota County, which were located in inaccessible distances away from the population concentration. Petitioner has not demonstrated sufficient basis herein to warrant a departure from the usual bed need rule methodology. The instances wherein a departure from the usual bed need rule methodology has occurred are distinguishable, inasmuch as in the instant case, there are three existing facilities presently in Hernando County offering 360 nursing home beds. Current occupancy rate has been shown to be reasonable and is standing at or below average for District III. Additionally, Respondent introduced a "Stipulation of Settlement" dated September 28, 1984 which was entered into by and between Evergreen Woods Health Care Center and Respondent. The substance of that stipulation reveals that during October of 1983, Evergreen Woods Health Care Center (EWHCC) as Petitioner, filed an application with Respondent for a Certificate of Need to add 60 beds to its existing 60-bed nursing home located in Spring Hill, Hernando County, Florida. The application sought 45 community beds and 15 sheltered beds. As a means of amicably resolving that proceeding and based on available need data based on applicable quarterly census reports and application of the need criteria, EWHCC, as Petitioner in that proceeding, amended its Certificate of Need application filed October, 1983, to add a total of 60 beds to its existing facility; 31 beds to be designated as community beds and 29 to be designated as sheltered beds. A review of the public records reveal that the Certificate of Need has been issued (amended CON No. 2959 issued early October, 1984) pursuant to that stipulation of settlement. 4/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: The application of First American Corporation d/b/a Spring Hill Health Facility for establishment of a 60-bed nursing home facility in Hernando County, Florida, be DENIED. RECOMMENDED this 14th day of February, 1985, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of February, 1985.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, the stipulations of the parties and the entire record complied herein, I hereby make the following findings of fact: THE STIPULATIONS OF THE PARTIES The parties stipulated to the following facts: Forum timely filed its letter of intent and application with DHRS and the District IX Local Health Council for the July 1986 batching cycle. DHRS ultimately deemed the application complete and, following review, published its notice of intent to deny the application. Forum timely filed a petition requesting a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. The sole issue is whether there is a need for Forum's proposed services; additionally, it is DHRS's position that a lack of need for the project results in the project not being financially feasible in the short or long term. All other statutory and rule criteria were satisfied, at least minimally, except proof of need pursuant to Rule 10-5.011(1)(k) [formerly 10-5.11(21)(b)], Florida Administrative Code, and financial feasibility as it relates to need. FORUM'S PROPOSAL Forum is a publicly held health services company which owns, develops and operates retirement living centers and nursing homes on a national basis. Forum proposes to develop a retirement living center in Palm Beach County that would consist of 120 to 150 apartment units for independent living, a separate personal care unit (known in Florida as an adult congregate living facility), and a 60-bed nursing home component certified for skilled and intermediate care. Palm Beach County is in HRS Service District IX, Subdistrict 4. All three components of Forum's retirement living center would be physically connected and share some operational functions, such as dietary facilities and the heating plant. Such a design provides for an efficient operation as well as an economic distribution of costs facility wide. No specific site has been selected , although Forum has narrowed its focus to the eastern half of Palm Beach County. It is not economically feasible to acquire property or pay for an option on property until after receiving CON approval. The projected total cost of Forum's proposed 60-bed nursing home is $2,329,800. Forum has the necessary resources for project accomplishment and operation. Forum proposes to seek Medicare certification and will provide up to 25 of its beds for Medicaid patients. FINANCIAL FEASIBILITY Forum is a national company, with substantial experience in developing and operating nursing homes and retirement living centers. If need for the facility is shown, Forum would be able to capture a sufficient share of the nursing home market to render its proposed nursing home financially feasible while at the same time having no material negative impact on existing providers in the district. NUMERIC NEED Need for new or additional community nursing home beds in Florida is determined, preliminarily, by use of the methodology found in Rule 10- 5.011(1)(k), Florida Administrative Code. Additional beds normally are not approved if there is no need for beds as calculated under the rule. Pursuant to the rule, need for a defined nursing home subdivision is projected to a three- year planning horizon, in this case July 1989. The need methodology prescribed in the rule is as follows: A (POPA x BA) + (POPB x BB) or: The District's age-adjusted number of community nursing home beds for the review cycle for which a projection is being made [A] (The population age 65-74 years in the relevant departmental districts projected three years into the future [POPA] x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]) + (The population age 75 years and older in the relevant departmental district projected three years into the future [POPB] x the estimated current bed rate for the population age 75 years and over in the relevant district [BB].) BA LB/(POPC) + (6 x POPD) or: The estimated current bed rate for the population age 65-74 years in the relevant district [BA] (The number of licensed community nursing home beds in the relevant district [LB]/the current population age 65-74 years [POPC] + (6 x the current population age 75 years and over [POPD]) BB 6 x BA or: The estimated current bed rate for the population age 75 years and over in the relevant district [BB] 6 x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]. SA A x (LBD/LB) x (OR/.90) or: The preliminary subdivision allocation of community nursing home beds [SA] The district's age-adjusted number of community nursing home bids for the review cycle for which a projection is being made [A] x (The number of licensed community nursing home beds in the relevant subdistrict [LBD]/the number of licensed community nursing home beds in the relevant district [LB]) x (The average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district [OR]/.90) Rule 10-5.011(1)(k)(2)(i), Florida Administrative Code, provides that: The new bed allocation for a subdistrict, which is the number of beds available for CON approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs a. through i., unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. The appropriate planning horizon for the instant case is July 1989, corresponding to the review cycle which began July 15, 1986, and the subdistrict is Palm Beach County. THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT DISTRICT (LB)/THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT SUBDISTRICT (LBD) Rule 10-5.011(1)(k) requires that "review of applications submitted for the July batching cycle shall be based upon the number of licensed beds (LB and LBD) as of June 1 preceding this cycle..." On June 1, 1986, there were 5,459 licensed community nursing home beds in District XI (LB) and 4,084 licensed community nursing home beds in subdistrict 4 (Palm Beach County LBD). These figures include 220 licensed beds that were previously categorized as sheltered. In the instant case, the appropriate figure for LB is 5,459, and the appropriate figure for LBD is 4,084. APPROVED BEDS WITHIN THE RELEVANT DEPARTMENTAL SUBDISTRICT DHRS's interpretation of the rule is to include in the count of approved beds, those approved up to the date of the supervisor's signature on the State Agency Action Report (SAAR). In this case, there were 640 approved beds in Palm Beach County at that time. As of June 1, 1986, the same date as the licensed bed cutoff, there were 640 approved beds in the subdistrict. In Dr. Warner's opinion, approved beds should be determined as of the same time period as licensed beds in order to have consistency and avoid anomalies in the formula. This opinion is reasonable and appropriate. In the instant case, the figure to be applied in the formula for approved beds in the subdistrict is 640 approved beds. THE POPULATION AGE 65-79 YEARS IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPA). THE POPULATION AGE 75 YEARS AND OVER IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPB). The rule provides that the three year projections of population shall be based upon the official estimates and projections adopted by the Office of the Governor. For the purposes of calculating need, DHRS utilizes at the final hearing the figures for estimated population obtained from data available at the time of initial application and review. The set of population projections which were available when Petitioner's application was filed and reviewed were those published on July 1, 1986. Based on this data, which is reasonable to use, POPA 170,639; and, POPB 122,577. THE CURRENT POPULATION AGE 65-74 YEARS (POPC)/THE CURRENT POPULATION AGE 75 YEARS AND OVER (POPD). In calculating POPC and POPD, DHRS also utilizes at final hearing the most current data available at the time of initial application and review, in this case the July 1, 1986, release. Based on that data, POPC 153,005 and POPD 112,894. In the opinion of Dr. Warner, Forum's expert, the base for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated. For the July batching cycle, OR is based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. According to Warner, January 1, 1986, as the midpoint of this time period, is the appropriate date to derive POPC and POPD in this case. The formula mandated by the rule methodology for calculating the estimated current bed rate requires that the "current population" for the two age groups be utilized. It is reasonable and appropriate for the base for POPC and POPD to correspond to the period for which the average occupancy rate is calculated. Supportive of Dr. Warner's opinion are the past practices of DHRS. Between December 1984 and December 1986, DHRS routinely used a three and one half year spread between the base population period and the horizon date in determining "current population" in its semiannual nursing home census report and bed need allocation. In the January 1987 batching cycle, which cycle immediately followed the cycle at issue in this case, DHRS utilized a three and one half year spread between the base population period and the horizon data for "current population" when it awarded beds. DHRS offered In this case, it proposed to use a three year spread between the base population period and the horizon dated for "current population" in calculating POPC and POPD. Using the July 1986 population release, POPC for January 1986 is 149,821 and POPD for January 1986 is 98,933. THE AVERAGE OCCUPANCY RATE FOR ALL LICENSED COMMUNITY NURSING HOMES WITHIN THE SUBDIVISION OF THE RELEVANT DISTRICT (OR). The rule requires the use of occupancy data from the HRS Office of Health Planning and Development for the months of the previous October through March when calculating a July batch of nursing home applicants. However, the rule is not instructive as to how one calculates this number. In this case, DHRS computed average occupancy rates based on the existing occupancy rates at applicable facilities on the first day of each month. Based on this occupancy data, which includes the data for the 220 previously sheltered beds in the subdistrict, occupancy rates for the July 1986 batch of Palm Beach County nursing home applicants is 83.75 percent. Forum's witness, Dr. Warner, determined that the correct occupancy rate was 85.46 percent for Palm Beach County for the period October 1985 to March 1986. Dr. Warner arrived at this figure by including paid reservation days. A paid reservation day is a day which is paid for by the patient or the patient's intermediary during which the patient is not physically in the bed. Typically, the patient will either be in the hospital, visiting relatives or otherwise away from the facility and will continue to pay for the nursing home bed, so that they will be able to return and not have someone occupy the bed. One of the goals and objectives of the District IX Local Health Plan is that paid reservation days be considered when bed need calculations are made. Calculating prepaid reservation days is consistent with the Rule because such beds are no longer available to the public and are therefore in use. Dr. Warner determined that during the applicable period, 1.25 percent of the licensed beds in the subdistrict were paid reservation days. Although taking paid reservation days into account would not be inconsistent with the rule, Forum failed to demonstrate that the 1.25 percent figure arrived at is valid for the applicable period, i.e., October 1985 to March 1986. Dr. Warner merely calculated a two-year average number of paid reservation days, broke this figure down to a six-month average and applied this average to the six-month period specified in the Rule. Gene Nelson, an expert called on behalf of Forum, calculated the occupancy rate as 88.72 percent in Palm Beach County for the appropriate period called for in the Rule. Nelson used the average monthly occupancy data obtained from medicaid cost reports for some facilities rather than first-day of the month data as used by DHRS. In addition, Nelson did not factor in the occupancy date of licensed beds in the extreme western portion of the County based on his belief that the District IX Local Health Plan mandates that the western area not be considered in any way with the eastern coast section of Palm Beach County for purposes of determining competitiveness. While the use of average full-month occupancy data is generally more reliable than using first-day of the month data, it is best, from a health planning prospective, to be able to use either all full-month data or all first- day of the month data. In making his calculations, Mr. Nelson mixed the two types of data, using full-month data when available and in other cases using first-day of the month data when full-month data was not available. It is inappropriate to fail to consider licensed beds in the extreme western portion of the County based solely on the local health plan. Among other reasons, the rule does not provide for exclusions for any of the subdistricts licensed facilities from the methodology. The appropriate and most reasonable occupancy rate (OR) in the instant case for the applicable time period is 83.75 percent. NET NEED Applying the above-referenced variables to the Rule formula produces the following results. July, 1986. District Allocation BA LB (POPC + (6 x POPD) - 5459 [149,821 + (6 x 98,833)] - .007349 BB - 6 x BA .044094 (.007349) July, 1989 Allocation (POPA x BA) + (POPB x BB) - (170,639 x .007349) + (122,577 x .044094) - 6659 Subdivision Allocation and Need SA A x (LBD / LB) x (OR 1.9) - 6659 x (4084 / 5459) x (.8375/.9) - 6659 x .74812236673 x .93055555555 4636 Subdistrict Allocation for Palm Beach County 4084 (Licensed Beds) 576 (90 percent of 640 Approved Beds) -24 (Bed Surplus)
Recommendation Based on the foregoing Findings of Fact, and Conclusions of Law, it is, RECOMMENDED that the application for certificate of need filed by Forum be Denied. DONE AND ORDERED, this 4th day of April, 1988, in Tallahassee, Florida. W. MATTHEW STEVENSON 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 4th day of April, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0704 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in substance in Finding of Fact 2. Adopted in substance in Finding of Fact 3. Adopted in substance in Finding of Fact 4. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 7. Adopted in substance in Finding of Fact 9. Sentence 1 is rejected as contrary to the weight of the evidence. Rejected as subordinate and/or unnecessary. 11. Adopted in substance in Finding of Fact 9. 12. Adopted in substance in Finding of Fact 9. 13. Adopted in substance in Finding of Fact 10. 14. Adopted in substance in Finding of Fact 12. 15. Adopted in substance in Finding of Fact 1. 16. Adopted in substance in Finding of Fact 14. 17. Adopted in substance in Finding of Fact 21. 18. Adopted in substance in Finding of Fact 20. 19. Adopted in substance in Finding of Fact 22. 20. Adopted in substance in Finding of Fact 22. 21. Adopted in substance in Finding of Fact 18. Adopted in substance in Finding of Fact 15. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 23. Rejected as a recitation of testimony and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 24. Rejected as a recitation of testimony and/or unnecessary. Adopted in substance in Finding of Fact 25. Rejected as a recitation of testimony and/or subordinate. Adopted in substance in Finding of Fact 25. Adopted in substance in Finding of Fact 21. Rejected as contrary to the weight of the evidence. Rejected as not supported by the weight of the evidence and/or unnecessary. Rejected as subordinate and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Rejected as a recitation of testimony and/or subordinate. Rejected as misleading and/or subordinate. Rejected as subordinate and/or unnecessary. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 9. Adopted in substance in Finding of Fact 3. Rejected as contrary to the weight of evidence. Adopted in substance in Finding of Fact 13. Adopted in substance in Finding of Fact 18 and 19. Adopted in substance in Finding of Fact 16. Adopted in substance in Finding of Fact 23. Addressed in Conclusions of Law. Addressed in Conclusions of Law. Rejected as subordinate and/or unnecessary. COPIES FURNISHED: Thomas W. Stahl, Esquire 102 South Monroe Street Tallahassee, Florida 32301 R. Terry Rigsby, Esquire 325 John Knox Road Building C, Suite 135 Tallahassee, Florida 32303 Richard Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power HRS Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 =================================================================
The Issue The issue to be determined in this case is whether Respondent, Department of Health and Rehabilitative Services, should grant the application of Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborough (HCR), Petitioner in Case No. 85-3217, or Forum Group, Inc., sponsor of Retirement Living of Hillsborough County (Forum), Petitioner in Case No. 85-3376, or both, for a certificate of need to construct and operate a 60-bed nursing home in Hillsborough County. Paddock Meadows Convalescent Centers, Florida Convalescent Centers, Inc., and Angel1 Care, Inc., petitioners in Case Nos. 85-3362, 85-4124 and 86-0905, respectively, voluntarily dismissed their petitions shortly before the final hearing in this case. (Health Quest Corporation and Health Quest Realty (Hillsborough County), petitioners in Case No. 85-2923, voluntarily dismissed their petition on or about April 1, 1986.
Findings Of Fact The HCR Proposal. Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborough (HCR), Petitioner in Case No. 85-3217, has been in the business of nursing home construction and operation for over 20 years. HCR currently operates approximately 10,000 beds in 17 states. It has developed over 200 facilities. HCR's proposed project would benefit financially to some extent from economies of scale of having a network of similar facilities. HCR originally applied for a certificate of need to construct and operate a 120-bed nursing home in Hillsborough County. During the pendency of this proceeding, HCR down-sized its proposed project to 60 beds and made other amendments. The down-sizing and amendments are reflected in a supplemental application which was served on Respondent, Department of Health and Rehabilitative Services (HRS), but was not filed with the local health council. It is not clear whether the supplemental application was filed with HRS's Office of Community Medical Facilities. The supplemental application adopts by reference but does not re-type certain portions of the original application. Those portions of the original application were not introduced in evidence or otherwise made a part of the record of this proceeding. In HCR's supplemental application, the down-sized 60-bed nursing home is accompanied by a 60-bed adult congregate living facility housed in the part of the building originally proposed to house another 60 nursing home beds. In addition, the supplemental application reflects a new emphasis on treatment of patients with Alzheimer's and related diseases (dementia). HCR proposes a facility which will include a 60-bed nursing home, an adult congregate living facility, and an adult day-care component. The facility will offer programs specially designed for Alzheimer's disease victims, and, in its adult day care and assisted living areas, will provide programs which are designed to delay institutionalization as long as possible. The facility will provide staffing and special capabilities to accommodate the unique characteristics of dementia (Alzheimer's) patients, to allow the wandering Alzheimer's patient more freedom, and to shelter the non-dementia (non-Alzheimer's) patient from unnecessary contact with the dementia (Alzheimer's) patient. Alzheimer's disease is a progressive, organic brain disease which causes brain cells to die at a rate much more rapid than in the normal aging process. As the brain slowly dies and degenerates, other functions of the body dependent upon the brain's messages begin to deteriorate. The initial effects of the disease, such as forgetfulness and disorientation, are subtle, but the disease progresses through several stages where, increasingly, the disease victim is unable to perform normal daily functions or care for himself and, ultimately, loses the ability to control basic bodily functions and becomes bedridden. Alzheimer's disease is a disease of the elderly victims at two levels of the disease require inpatient care. Some victims develop psychiatric manifestations of the disease and short-term hospitalization or stabilization to enable the family caregiver to manage the patient still in the home setting. As victims reach the later stages of the disease, caregivers must consider institutional placement in a setting where there is a 24-hour-a-day care, seven days a week. In these later stages, the patients require total care which usually cannot be managed on a full-time basis at home, particularly by persons without significant resources. The primary caregiver of Alzheimer's disease patients is an older spouse, but in some instances it may. be an adult child. Ideally, inpatient programs for Alzheimer's disease victims would be designed with a continuum of care to minimize frequent changes in the victim's environment. In other words, the Alzheimer's care program would offer a range of care for patients who move through the various stages of Alzheimer's disease, from ambulatory to bed bound. Day care is an important component of the continuum development of Alzheimer's components for day-care programs in of care in an Alzheimer's program, because it offers rest to the family by placing the victim in a special care facility for a full day. The State of Florida allocated resources for the 1985 legislative session. Sophisticated, high-tech nursing care is required for patients in the later stages of the disease who have lost the ability to swallow, feed themselves, and perform other necessary/ bodily functions. Providing care from day care through high-tech care in the same facility minimizes frequent relocation of the Alzheimer's patient and facilitates the family coming to terms with the final outcome of the disease, where the family must relinquish total care to an institution. Alzheimer's disease victims in the middle and late stages of the disease who are still ambulatory exhibit the tendency to wander aimlessly. Nursing home care for such victims must provide a safe and secure environment in which the Alzheimer's patients may wander without endangering themselves or others. Otherwise, these patients will wander away from the facility and get lost or wander into dangerous traffic situations. Alzheimer's victims often disrupt the routine of non- Alzheimer's patients and the staff of the facilities by their constant wandering and by entering other patients' rooms and going through other patients' belongings. Special Alzheimer's units expect this behavior and make provisions to control it without physical or chemical constraint. In state-of-the-art Alzheimer's care, the physical nature of the decor and design of a nursing home appropriate for Alzheimer's care ideally would provide a safe and secure environment for the wandering, unstable Alzheimer's victim and provide a pleasant, therapeutic environment which copes with the patient's lost ability to synthesize data. Fixtures in the nursing home would be appropriately designed to enable the Alzheimer's patient to distinguish between significant fixtures, such as commodes, sinks, and wastebaskets. Ideally, activity areas for Alzheimer's patients would be separate from other nursing home patients, because of the Alzheimer's patient's disruptive wandering, absence of inhibitions and short attention spans which require a variety of activities and programs to accommodate. The staff of an Alzheimer's care program must be able to deal with the Alzheimer's patient. The staff will seldom see any improvement in the condition of the patient and will seldom get any positive feedback from the patient. Staffing patterns in Alzheimer's programs need to be more intense than average because the staff must deal with patients who have lost the ability to care for themselves. There is a need for closer supervision than is needed by the typical nursing home patient. Such a program also requires a social worker to develop the individual treatment plan for the patient and an occupational therapist to teach the patients those functions which the patients are continually losing. An Alzheimer's program within an adult congregate living facility is within the continuum of care required for some patients. The care provided here is less intense than that provided in a nursing home. However, once the victim loses basic bodily functions and begins wandering, the adult congregate living facility is no longer able to deal with these patients. Adult congregate living facilities and boarding homes in Hillsborough which accept Alzheimer's victims are frequently required to discharge such victims when the care becomes too difficult. In Hillsborough County, there are no nursing homes which provide state-of-the-art inpatient care designed for the care and treatment of Alzheimer's disease patients. Although there are two adult congregate living facilities in Hillsborough County which accept Alzheimer's disease patients, these facilities do not have safeguards for the wandering patient. Nursing homes traditionally deal with wandering Alzheimer's patients by physically restraining the patients or by chemically restraining the patients through the use of drugs. A state-of-the-art program designed to meet the special needs of Alzheimer's disease victims eliminates or reduces the need for physical and chemical restraints. HCR intends to offer a service, from day care through inpatient nursing care, that is designed for the needs of the typical Alzheimer's patient. In addition to the Alzheimer's patient, many patients not diagnosed as Alzheimer's disease victims but who are cognitively impaired (suffering from dementia) would also benefit from the service designed for the Alzheimer's patient. The adult day-care portion of the facility will allow the Alzheimer's victim to remain at home much of the day but allow the family and the well spouse to have time to provide for their own personal needs. The assisted living (adult congregate living) portion of the facility would be available for Alzheimer's victims not requiring advanced nursing care and would be available as a facility where the well spouse and the Alzheimer's victim could live together and both benefit from support services. The nursing home portion of the facility would offer special designs and programs to meet the needs of a maximum of 15 Alzheimer's patient in the middle stages, where wandering is a particular problem, as well as the needs of patients in the latter stages and death. The care available for the Alzheimer's disease victim in the latter stages of the disease (high-tech care) will also be available and appropriate for patients discharged from acute care hospitals who still need nursing care prior to returning home. The level of staffing provided in the HCR facility is higher than one would expect to find in the typical nursing home. The staffing proposed assumes that 15 of the patients will be Alzheimer's wanderers. HCR proposes a staffing higher than the typical nursing home because of the personal attention required for state-of-the-art Alzheimer's patient care and HCR's intent to reduce the amount of medication and physical restraint imposed upon the Alzheimer's patient. Increased staffing will encourage the Alzheimer's patient to retain whatever cognitive capabilities they have for as long as possible and will reduce the disruption experienced in a normal nursing home when the Alzheimer's disease patients wander, disrupt other patients, and generally disrupt the nursing home. The HCR facility will provide an area for wandering patients and a fenced courtyard which will allow wandering patients to have outside activity without danger of leaving the facility. The facility includes a therapeutic kitchen important to the Alzheimer's patient who retains some cognitive recognition of kitchen activities. A separate dining room for the Alzheimer's patient will be provided in order to accommodate the increased spillage experienced by Alzheimer's patient and the risk of incontinence, which is very disruptive and disturbing to non-Alzheimer's patients. wandering patients will be continuously monitored through the use of an electronic wristband which will prevent the patient from wandering outside of the facility and those areas where the wandering patient could cause problems. Dementia patients are now being cared for and treated in existing nursing homes in Hillsborough County. There was no persuasive evidence that patients have been denied access to nursing home beds in Hillsborough County. The features proposed in HCR's supplemental application would allow HCR to provide better quality care and treatment for those patients. However, HCR has only committed to treat up to 15 Alzheimer's patients in the "wandering" stage. That degree of commitment and the extent to which those special features for the care and treatment of dementia patients are needed would not themselves justify the proposed project absent an overall need for additional nursing home beds. HCR is in the process of purchasing four existing. nursing homes from Care Corporation. HCR did not prove that it has studied whether renovation of those facilities to accommodate special features for the care and treatment of Alzheimer's patients would not be less costly, more efficient or more appropriate alternatives to this proposed project or that they are not practicable. The project proposed in HCR's supplemental application is immediately and long-term financially feasible. HCR is a subsidiary of Owens-Illinois. On December 31, 1985, Owens- Illinois had total assets of approximately $3.3 billion, total current assets of approximately $903 million, and cash of approximately $47 million. Meanwhile, current liabilities were approximately $723 million and total shareholders' equity was approximately $1,559,000,000. In addition, HCR proved that it would be able to finance the approximately $2.2 million total project costs by borrowing 75% at favorable interest rates and funding the remaining 25% out of HCR's equity. Making reasonable, conservative assumptions--including an 11.5% interest rate, a January 1989 opening of the facility, and 40% Medicaid utilization on a patient day basis--the project can be anticipated to break even during year two of operation and earn approximately $158,000 during year two of operations. The nursing home portion of the facility and the day- care element adjacent to the nursing home portion will comprise 25,000 square feet; the nursing home portion alone will contain 23,000 gross square feet, or 383 gross square feet per bed. The construction costs for the nursing home and day-care portion of the facility will be $1,458,000, or $58.32 per square foot for the 25,000 square foot area; the cost of construction for the 23,000 gross square foot for the nursing home portion is $1,341,360. The cost per bed for construction of the nursing home portion of the facility is $22,356. The total project costs for the facility estimated by HCR and the cost per bed of the facility includes both the nursing home and adult day-care portion of the facility; when the adult day-care portion of the facility (8 percent of the construction costs) is taken into consideration, the total project cost becomes $2,083.360, at a cost per bed of $34,722. The estimated project cost for the nursing home portion of HCR's proposed facility is as follows: Feasibility studies $15,000; legal and accounting fees $32,000; plan review $8,000; subtotal of project development costs (the foregoing three items) $55,000; costs for financing $120,000; architectural and engineering fees $15,000; site survey and soil investigation $5,000; subtotal of the foregoing professional services $20,000; construction costs $1,458,000 (which includes the day-care portion of the facility but would be reduced to $1,341,360 for the nursing home portion alone); equipment costs $222,000; land acquisition costs $200,000; interest during construction $125,000; total project costs $2,200,000 ($2,083,360 when the adult day-care portion of the facility is excluded). All 60 of the nursing home beds in HCR's proposed facility will be certified both for Medicare and Medicaid utilization. However, in its supplemental application, HCR limits its commitment to serve Medicaid patients to 40% of its patient days. The increased cost of special features for Alzheimer's patients influenced HCR's financial decision not to commit to a higher percentage of Medicaid utilization. HCR has received approximately 13 certificates of need to develop nursing homes in Florida. HCR has completed three nursing homes, and HCR has seven projects under construction. Various difficulties prevented HCR from initiating construction of three projects for which it received certificates of need in 1981 and 1982. HCR has experienced no problems in initiating construction of its certificates of need obtained since that time, and its experience in Florida renders it unlikely that its previous failure to commence construction of facilities will reoccur. HCR acknowledges that it has previously sold and does not now operate nursing homes for which it had obtained certificates of need in Florida. However, these sales were facilities in the same building as the nursing home. A dietician and central kitchen and central laundry will serve all three levels. Housekeeping, building supervision, building plant, and other building maintenance operations will be centralized, saving some expenses. The Forum Proposal. Forum Group, Inc., sponsor of Retirement Living of Hillsborough County (Forum), Petitioner in Case No. 85-3376, is a general partner in a Florida partnership named Retirement Living of Hillsborough County. Forum originally applied for and continues to apply for a certificate of need to construct and operate a 60-bed nursing home. Like the project proposed in HCR's supplemental application, Forums proposal includes aspects in addition to the nursing home. Forum's proposed nursing home would be connected to a 15-bed wing of private rooms for patients who need assistance in their personal care and access to some of the capabilities of a nursing home on an intermittent basis but do not need nursing home care full-time. This is-bed wing would have separate dining facilities. This "personal care unit" will cost patients approximately $40 to $60 a day. In Forum's proposed nursing home, three wings, like the "personal care unit," would radiate from a hub where the nursing station would be located. Twenty of the sixty beds would be in private rooms occupied by private patients. Ten of those beds would be designated for skilled nursing care and ten for intermediate care. Of the 40 beds located in 20 semi-private rooms, 36 would be certified for Medicaid use, leaving 4 to be certified for Medicare use. Eighteen of the 40 beds would be for intermediate care, and 22 of the 40 beds would be for skilled nursing care. Forum's skilled nursing care would include "hi- tech" skilled nursing comparable to HCR's. A central corridor with central kitchen facilities and building maintenance facilities connects the three nursing home wings and the personal care unit wing with a retirement living center. The retirement living center will be able to accommodate 120 residents. Residents will be under a one year lease arrangement instead of an endowment-type arrangement. Monthly lease payments will probably fall between $950 and $1700 per month. The rental includes one meal a day in the retirement living center's dining room, weekly house cleaning, 24-hour security, transportation by automobile to appointments, banks, and doctor's offices and by mini-bus to shopping and theatres, availability of an on-call nurse, utilities, taxes, and the. services of a social director. The retirement living center will be marketed as a luxury facility to elderly persons approximately 75 years of age with an annual income of between $15,000 and $35,000. Forum projects initial utilization of all 36 Medicaid certified beds by Medicaid patients, resulting in 60% Medicaid utilization by patient day. However, that percentage would change with time. At first, residents of the retirement living apartments would not be expected to move immediately to the nursing home portion of the facility. The projected fill-up for the nursing home portion initially would not be derived from the initial fill-up of the retirement living apartments. Eventually, however, 10 to 15% of the residents of the retirement living apartments would require nursing home care, and approximately 50% of the patients in the nursing home will be, former residents of the retirement living section. In 10 to 12 years, the percentage of Medicaid utilization can be expected to drop, with a floor of approximately 45% Medicaid utilization by patient day. Like HCR's proposed project, Forum's proposal will benefit financially to some extent from the location of other facilities in the same building as the nursing home. A dietician and central kitchen and central laundry will serve all three levels. Housekeeping, building supervision, building plant, and other building maintenance operations will be centralized, saving some expenses. Like HCR, but probably not to the same extent, Forum would be able to benefit financially to some extent from the economies of scale of having a network of similar facilities (including approximately 11 facilities like the proposed project and approximately 20 free-standing nursing homes.) Location of the retirement center and the personal care unit in the same building with the nursing home will afford Forum some advantages in caring for its nursing home patients. First, some of the patients can be expected to use two or all three of the levels of care available in the complex as their medical condition worsens or, in some cases, improves. This would aid in the continuity of Forum's care and reduce the emotional strain of changing levels of care (since the patients do not have to move to a totally new location and environment.) Second, to the extent nursing home patients continue to have an independent means to pay to reside in the retirement living center or the personal care unit, those patients will have an incentive to improve their health so as to be able to move back to the retirement living center or personal care unit from the nursing home unit. (Obviously, these benefits would not apply to Medicaid patients in the nursing home.) Third, general education in health and hygiene of persons residing in the retirement living center and personal care unit will help to some degree in keeping them out of the nursing home or aiding their recovery if in the nursing home for short-term care. Like HCR, Forum also has the ability to provide quality nursing home care. However, Forum's proposal does not have the special features for care of Alzheimer's disease and other dementia patients proposed by HCR in its supplemental application. While some of those state-of-the-art special features could be incorporated by Forum during construction of its proposed nursing home, others could not, and Forum does not have the overall emphasis or commitment to provide those special features that HCR does. The total cost of Forum's nursing home proposal is approximately $2,200,000. This includes no interest cost during construction since Forum has decided to, and has the financial ability to, pay for the construction entirely out of its cash reserves. Forum has approximately $40,272,000 in cash assets. It has approximately $69,210,000 worth of current assets and only approximately $23,192,000 worth of current liabilities. Its total assets are approximately $290,747,000 and it has approximately $151,155,000 worth of common shareholders' equity. Its net income for the fiscal year ending March 31, 1986, was approximately $15,012,000. As a result, Forum's nursing home proposal is immediately financially feasible. Making reasonable, conservative assumptions including 13% interest on borrowed capital, late 1987 or early 1988 occupancy and 60% Medicaid utilization by patient day, Forum's nursing home proposal probably will break even in mid-year two and will earn approximately S69,000 net income in year two of operations. The following are Forum's final project development costs: feasibility studies $20,000, legal and accounting fees $30,000, development expenses $10,000, subtotal of the foregoing three categories $60,000; architectural and engineering fees $70,000, site survey and soil investigation $15,000, for a total cost for professional services total of $85,000; site preparation work $40,000, construction costs of $1,345,598, and contingency fees of $45,661, for a total construction cost of $1,390,258; fixed equipment cost of $65,998, moveable equipment cost of $128,850, tax-freight contingency and escalation provisions of $44,160 for a subtotal of equipment costs of $239,000; land acquisition of costs of $400,000, no interest costs during construction, pre-opening expenses' of $25,000, and, finally, a total project cost of $2,199,258. The expected construction cost per bed comes to approximately $23,171, and the total cost per bed comes-to approximately $36,165. HRS Rule Need Methodology. Rule 10-5.11(21)(b), Florida Administrative Code, provides the HRS bed need rule methodology for determining projected need for new or additional community nursing home beds. The methodology provided in Rule 10-5.11(21) is as follows: Departmental Goal. The Department will consider applications for community nursing home beds in context with applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (d), (e), (f), (g), and (h) of this rule. Need Methodology. In addition to other relevant statutory and rule criteria to be used in considering the allocation of new or additional community nursing home beds, the Department will determine if there is a projected need for new or additional beds three years into the future according to the methodology specified under subparagraphs 1 through 10. This methodology provides for adjustments to current community nursing home bed rates based upon expected changes in the proportion of district residents age 75 + and the current utilization of community nursing home beds in the subdistricts designated by local health councils. In districts with a high proportion of elderly residents living in poverty, the methodology specifies a minimum bed rate. A = (POPA X BA) + (POPB X BB ): Where: A is the district's age-adjusted Number of community nursing home beds for the review cycle for which a projection is being made. POPA is the population age 65-74 years in relevant departmental district projected three years into the future. BA is the estimated current bed rate for the population age 65-74 years and over in the relevant district. BB is the estimated current bed rate for the population age 75 years and over in the relevant district. BA=LB/POPC + (6 X POPD): Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. BB = 6 X BA SAA X (LBD/LB) X (OR/.90): Where: SA is the preliminary subdistrict allocation of community nursing home beds. LBD is the number of licensed community Nursing beds in the relevant subdistrict. Or is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March preceding that cycle; applications submitted for the January batching cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle. For the purposes of this rule, the occupancy data to be considered shall be that collected by the Department's Office of Healthcare Planning and Development or a contractor assigned to collect the data. In departmental districts where the percentage of persons age 65 and older living in poverty, according to the latest available U.S. census, exceeds the statewide average poverty rate for the 65 and older population and the sum of the currently licensed and certificate of need approved beds for community nursing homes within a district is less than 27 beds per thousand residents age 65 and older, the district shall be allocated a total of 27 community nursing home beds per thousand residents age 65 and older in the current year. This allocation is expressed as follows: If (Ls + AB ) /POPE is less than 27/1000 and PBD is greater than PBS, then: PA(27 X POPE)/1000 Where: AB is the number of certificate of need approved beds for community nursing homes in the relevant district. PBD is the percentage of persons age 65 and older below the poverty level within the district. PBS is the percent of persons age 65 and older below the poverty level within the state. PA is the poverty-adjusted number of beds in the relevant district. POPE is the sum of POPC and POPD. * * * 9. The net bed allocation for a sub-district which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90% of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs 1 through 9 unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80%, in which case the net bed allocation is zero. Prior to August 20, 1985, HRS had a long-standing policy interpreting the methodology as requiring use of population and occupancy rate at the time of the formal administrative hearing, if any, as the current population (POPC and POPD) and occupancy rate (OR) in the formula. HRS also subtracted the number of nursing home beds licensed and approved as of the date of the formal administrative hearing, if any, from the gross number of nursing home beds needed to determine the net need for nursing home beds proposed in a pending certificate of need application. Since the decision in Gulf Court Nursing Center vs. Department of Health and Rehabilitative Services, 483 So. 2d 700 (Fla. 1st DCA 1985), modified on rehearing (Fla. 1st DCA 1986), HRS adopted a new policy interpreting its rule methodology and the Gulf Court decision. HRS now interprets Gulf Court's reference to a "fixed pool of beds.' available in a given certificate of need application batching cycle to fix the health planning horizon in the rule methodology at three years into the future from the filing deadline for the certificate of need application batching cycle in question. Accordingly, POPA and POPB under the rule methodology represents the most current projection of population in the respective age cohorts on the fixed planning horizon. As before the Gulf Court decision, all other elements of the methodology including the figures for POPC, POPD, and OR are updated to the time of the formal administrative proceeding. Under its policy interpreting the rule methodology and the Gulf Court decision, HRS obtains the subdistrict occupancy rate (OR), by taking the average occupancy rate during the most recent six-month period for which data is available--in this case, from October 1, 1985 through March 31, 1986. However, the current population figures (POPC and POPD) HRS uses are the figures available closest to the date of the formal administrative hearing in this case on July 1, 1986. Under its policy, the occupancy rate (OR) does not relate to the figures for current population (POPC and POPD) to which it logically should relate. HRS did not satisfactorily explain the rationality of its policy. Meanwhile, there was ample evidence supporting the rationality of using as POPC and POPD the population at the midpoint of the time period used force determining occupancy rate (OR). In this case, since occupancy rate (OR) is determined by averaging the occupancy rates during the period from October 1, 1985 through March 31, 1986, the current population (POPC and POPD) should be the populations of the respective age cohorts on January 1, 1986. Otherwise, HRS' policy interpreting its rule methodology and the Gulf Court decision is a rational effort to reconcile the Gulf Court decision with the certificate of need statute, other conflicting court decisions and principles of sound health planning. It suffices here to say that, notwithstanding the Gulf Court decision, the evidence in this case does not establish the existence of a "fixed pool" of needed nursing home beds for which the applicants in this case applied. See Conclusions of Law 1 through 13 below. In addition, sound health planning not only dictates the use of the most recently available population projections (POPA and POPB) and the most current data (POPC, POPD, and OR) for determining current bed rates (BA and BB) under the rule methodology, but also would counsel against relying on state or district health plan determinations of a "fixed pool of beds" based upon inferior data and evidence. Departure from these sound health planning principles is likely to result in certificates of need for nursing home beds that are not needed or, in some cases, the denial of certificates of need for nursing home beds that are needed. See Appendix, paragraph B.4, below. For purposes of calculating need under the HRS rule need methodology, the appropriate health planning district is District VI, and the appropriate subdistrict is Hillsborough County. There currently are 5,617 licensed nursing home beds in District VI (LB). The District VI population for persons aged 65 to 74 on January 1, 1986 (POPC) is 131,501. The District VI population for persons aged over 75 for January 1, 1986 (POPD) is 91,433. The bed rate for the portion of the current population aged 65 to 74 (BA) is 0.008259. The bed rate for the portion of the current population aged over 75 (Bs) is 0.049554. The projected District VI population for persons aged 65 to 74 on January 1, 1988 (POPA) is 139,903. The projected District VI population for persons aged over 75 on January 1, 1988 (POPD) is 100,175. Using the bed rates for the two age cohorts (BA and BB) and the projected populations for those age cohorts on January 1, 1988 (POPA and POPB), the gross projected District VI nursing home bed need for January 1, 1988 (A) is 6,119.6. The occupancy rate for District VI nursing home beds between October 1, 1985 and March 31, 1986 (OR) was 93.3646%. This was the most current figure available at the time of the hearing. At the time of the formal administrative hearing, there were 2,512 licensed beds in Hillsborough County (LBD). At the time of the formal administrative hearing, there were 368 approved nursing home beds for the Hillsborough County subdistrict (AB). Using the figures for projected District VI bed need (A), licensed beds in District VI (LB), licensed beds for the Hillsborough County subdistrict (LBD) and the occupancy rate (OR), the allocation of nursing home beds for the Hillsborough County subdistrict (SA), is 2,839. The beds that will be available in Hillsborough County on January 1, 1988, is 2,843 (LBD plus .9 AB), leaving a surplus of 4 nursing home beds in Hillsborough County on January 1, 1988 under the HRS rule need methodology, as properly interpreted. In District VI, the percentage of persons aged 65 and older living in poverty, according to the latest available. U.S. census, exceeds the statewide average poverty rate for the 65 and older population, but the sum of the currently licensed and certificate of need approved beds for community nursing homes within District VI is approximately equal to 27 beds per thousand persons aged 65 and older, and no poverty adjustment is required under Rule 10-5.11(21)(b)5., Florida Administrative Code. State Health Plan. The State Health Plan endorses the concept of an integrated continuum of long-term care services. Forum's proposal integrates retirement living with minimal skilled nursing care needs, skilled and intermediate nursing care in a nursing home setting, and personal assistance care a middle ground between the two. Similarly, HCR's proposal integrates (1) adult congregate living with minimal requirement for skilled nursing care to limited nursing care provided to an Alzheimer's patient being primarily cared for by a spouse, and (2) skilled and intermediate nursing care in a nursing home setting, and (3) a range of specialized nursing services for the Alzheimer's patient in the second and third stages of the disease. The HCR proposal also integrates day care and respite services for Alzheimer's patients being cared for primarily for by relatives in their own homes. Addressing a related concern, the State Health Plan also endorses pre-admission screening to determine the level of care needed by a potential nursing home patient. This serves to foster a system of health care that seeks to promote "wellness" and independence of the patient. Both applicants will have some type of pre-admission screening process. Both applicants' proposals include on-site non-nursing home living facilities, and a decision would have to be made which of those two environments are appropriate for a particular patient. Forum also has personal assistance care which would require more precise screening, and Forum appeared more intent on establishing effective pre-admission screening procedures and cooperating with the state-sponsored CARES (Comprehensive Assessment and Review for Extended services) program aimed at diverting potential patients who do not truly need nursing home services. Both proposals also seek to promote "wellness" and independence of the patient. Both include less restrictive settings than nursing home care for patients who do not yet need full-time nursing services. For some patients, the less restrictive setting can serve as an incentive to recover from illnesses and shorten short-term nursing home stays. Again, Forum's proposal, with its three levels of care and more attractive retirement living setting, better fosters these objectives. Finally, the State Health Plan highlights the elderly's need for information on providers' charge structures and acceptance of Medicaid/Medicare assignment. It expresses a goal of availability of services to the medically indigent, and recommends adherence to the applicable local health plan's expectations. See Finding Of Fact 61 below. District VI Health Plan. As its second priority, the District VI Health Plan states that applicants for a certificate of need for nursing home services in the Northwest subdivision of the Hillsborough County subdistrict should commit, at minimum, 18.6% of its services to the care of Medicaid eligible patients. Forum's application commits 60% of its patient days to Medicaid during the first year of operation. HCR's commitment is only 40%. However, HCR's commitment is on a permanent basis, and Forum's actual Medicaid utilization can be expected to drop over the first ten years of operation with a floor of approximately 45%. The actual percentage of Medicaid days for the period January to March 1986, for Hillsborough County was 70%. The District VI Health Plan also ranks the Northwest subdivision of the Hillsborough County subdistrict as the first priority for location of new or additional nursing home services when needed in District VI. Both applicants propose to locate their projects in the Northwest subdivision of the Hillsborough County subdistrict. Another priority in the District VI Health Plan is to give preference to applicants with a documented history of implementing their certificates of need within the statutory time frames. Forum had no history in Florida but a good record of follow-through elsewhere. HCR has a history of mixed results in Florida but offered good explanations for the instances of delay in implementing certain certificates of need in earlier years, and the evidence was not persuasive that either Forum or HCR should be given a competitive advantage regarding this priority. The District VI Health Plan sets a 90% occupancy threshold for the continuous period of six months before additional beds are approved. This threshold has been met in Hillsborough County for at least three years. Current occupancy in Hillsborough County is 93.3646%. The District VI Health Plan states that applications for additional nursing home beds in a subdistrict should be considered against the availability of alternative forms and settings for long-term care. In this case, there was no evidence of alternatives to nursing home services other than the alternatives within the proposed projects. However, neither of the applicants will go forward with the retirement living or personal assistance care or adult congregate living alternatives without the attached nursing home. No specialized state-of-the- art Alzheimer's disease programs are now available in District VI. See Finding Of Fact 71 below. The District VI Health Plan states that applications should be reviewed with the goal that nursing home services be within 30 minutes travel time of 90% of urban residence and 45 minutes of 90% of rural residents. There was no evidence in this case regarding geographic access of the urban and rural populations or that the proposed projects would make Finally, the District VI Health Plan states that applicants should be evaluated as to their achievement of superior quality ratings by HRS and other indications of quality as available. Both applicants adequately establish that they will be able to provide quality nursing home services. It can be anticipated that both will seek and obtain a superior rating for its proposed facility. Other Pertinent Criteria. Both applicants propose projects which will be accessible to schools for health professions in Hillsborough County, such as colleges and trade schools for training and teaching purposes. In addition to its Medicaid utilization commitment previously discussed. Forum will establish a $10,000 fund, to be replenished annually, for indigent patients to draw upon as necessary for payment of nursing home services. This fund is intended to address, for example, the circumstance that could arise if a private pay nursing home patient runs out of money and all 36 Medicaid-certified nursing home beds are occupied. Unless the fund pays for the patient, the patient would have to be transferred to another nursing home. However, Forum does not yet nursing home services accessible to residents now outside the applicable travel time have any guidelines or criteria for the operation of the fund. Both Forum and HCR propose facilities to provide nursing home services. Neither applicant seeks to justify the need for its proposed nursing home on need for services that can be provided other than through a nursing home. No applicant in this batching cycle seeks to add beds as an alternative to new construction. Existing nursing home beds are alternatives to the proposals only if there is no need for additional nursing home beds. There is no existing alternative to the special Alzheimer's program proposed by HCR. Existing nursing homes serve Alzheimer's patients but not with state-of-the-art nursing home care. However, renovation of facilities HCR is in the process of purchasing from Care Corporation to accommodate special features for the treatment of Alzheimer's patients might be an alternative to the construction of a new nursing home for the purpose of providing those services. HCR did not prove that it has studied those alternatives and found either that they would not be less costly, more efficient or more appropriate or that they would not be practicable. Both HCR and Forum, through their network of retirement centers and nursing homes, generate economies of scale in centralized operations and management functions and in acquisition of equipment. As a larger nursing home company, HCR's economies of scale would be greater than Forum's. In addition, by combining different levels of care on one campus, both applicants can enjoy further economies in dietary, laundry, medical supply and bookkeeping operations. Both HCR and Forum can adequately meet manpower requirements for their proposed facilities with a combination of in-house transfers and recruiting from the local community. There was no evidence that approval of a new 60-bed nursing home facility in Hillsborough County would have a significant negative impact on the financial viability of existing nursing homes. Current occupancy rates are high, reducing patients' choice in the selection of a nursing home. The last 240 nursing home beds opened to patients in Hillsborough County quickly were absorbed by the demand for those services. Neither HCR nor Forum now own or operate a nursing home in the Tampa Bay area. However, HCR is in the process of acquiring four nursing homes from Care Corporation. As a result, HCR would have more control over the market than Forum and would have the potential eventually to use its market power to decrease competition. But at this time, it can be anticipated that either proposal would foster competition and promote quality assurance and effectiveness. Balanced Consideration of the Criteria. HCR and Forum are worthy applicants who have conceived and proposed nursing home projects worthy of consideration. However, balancing consideration of all of the criteria, and giving due weight to the HRS rule need methodology, it is found that there is no need at this time for a new 60-bed nursing home in Hillsborough County. There is no numeric need under the rule, and no special circumstances were proved by documentation of denied access to currently licensed but unoccupied beds or of need exceeding the number of licensed unoccupied and currently approved nursing home beds. Meanwhile, the special Alzheimer's program HCR proposes does not independently support construction of a new 60-bed nursing home. Renovation of the four nursing homes HCR is in the process of purchasing from Care Corporation might be a less costly, more efficient and more appropriate alternative to construction of a new 60-bed nursing home to provide special Alzheimer's programs in Hillsborough County. However, if there were a need for 60 additional nursing home beds, HCR's Alzheimer's program would be enough to give it a competitive advantage over Forum's proposal.
Recommendation Based upon the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a final order denying the applications of both Health Care and Retirement Corporation of America, Petitioner in Case No. 85-3217, CON Action No. 3818, and Forum Group, Inc., Petitioner in Case No. 85-3376, CON Action No. 3817, for a certificate of need to construct and operate a new 60-bed nursing home in Hillsborough County. RECOMMENDED this 3rd day of November, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day November, 1986.
Findings Of Fact Petitioner, Florida Convalescent Centers, Inc. (FCC), filed an application with respondent, Department of Health and Rehabilitative Services (HRS), on October 14, 1983, seeking a certificate of need authorizing the construction of a 120-bed nursing home facility in Pasco County, Florida. An amendment of an undisclosed nature was filed by FCC on August 22, 1984, but did not change the number of beds applied for. After reviewing the original application, HRS issued its proposed agency action on February 28, 1984, in the form of a state agency action report in which it advised petitioner that it intended to deny the application. The transmittal letter denying the application offered the following reasons: The nursing homes in Pasco County are being used in an appropriate and efficient manner as demonstrated by an annual occupancy rate of 90.7 percent from March through September, 1983. However, there are 240 nursing home beds that have been approved but have not been constructed at the present time. These beds, when added to the existing nursing home bed supply in Pasco County, will serve to maintain a reasonable subdistrict occupancy level through 1986. The basis for the above decision is contained in the State Agency Action Report. The service area in which FCC proposes to construct its new facility is the Pasco County subdistrict of HRS District 5. In order to determine need, HRS has adopted Rule 10-5.11(21), Florida Administrative Code, which contains a formula (or methodology) for determining need at both the district and subdistrict level. Under that formula, HRS is required to utilize the "most recent 6 month nursing home utilization in the subdistrict." In this regard, HRS prepares on an on-going basis an internal document entitled "Quarterly Report" which contains the latest available data over a six-month period. In this proceeding, HRS used a report containing data for the period October, 1983 through March, 1984. This was the most current and complete available data at the time of hearing. According to the methodology in Rule 10-5.11(21), there is a gross need in District 5 for 5,331 nursing home beds. However, there are presently 7,322 licensed and 791 approved beds in the District. Therefore, this results in an excess of 2,782 nursing home beds through the year 1987. In the event there are excessive beds on a district-wide basis, the rule provides a means for establishing a need on a subdistrict level under certain conditions. Additional beds can be added within the subdistrict if the licensed beds in the subdistrict have an average current utilization of 90 percent or higher. If they do not, additional beds cannot be authorized even if a mathematical need is shown under the rule methodology. FCC has computed need requirements for the subdistrict by eliminating the beds of two nursing homes just opened within the last six months, and by using census figures for the month of June, 1984. Based upon these calculations, it results in a need for 99 additional beds and a current utilization rate of 95.7 percent, which exceeds the 90 percent threshold requirement. However, the rule makes no provision for the use of more current data on a selective basis, or the exclusion of such beds from the calculation. FCC also contends Pasco County has an "abnormal" situation caused by an excessive availability of beds in neighboring counties (Pinellas and Hillsborough). It also points out that Pasco is far below the state average for beds per 1000 elderly population. But, again, these factors are taken into account in the agency's rule, and do not constitute special circumstances that would require an exception to the rule.
Recommendation Based on the foregoing findings of fact and conclusion of law, it is RECOMMENDED that the application of Florida Convalescent Centers, Inc., for a certificate of need to construct a 120-bed nursing home facility in Pasco County, Florida be DENIED. DONE and ORDERED this 15th day of October, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER 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 15th day of October, 1984. COPIES FURNISHED: Donna H. Stinson, Esquire The Perkins House, Suite 100 118 North Gadsden Street Tallahassee, FL 32301 John F. Gilroy, Legal Intern P.O. Drawer 11300 Tallahassee, FL 32302-3300 David Pingree, Secretary Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32301
Findings Of Fact FMCC's application is to provide a 102-bed long-term care nursing facility in Fort Myers, Florida, while AHC's and HSI's applications are to provide 120-bed long-term nursing care facilities. When each of these applications was presented to the south Central Florida Health Systems Council, Inc. (HSA), the application of FMCC was approved and forwarded to Respondent recommending approval and the other two applications were disapproved and so forwarded. The primary reason given by HSA for disapproving HSI's application was lack of firm financing and for disapproving AHC's application was cost of construction. Trained personnel to man the proposed facilities are in short supply in Lee County. Applicants' plans to import personnel, if necessary, from other parts of the country were supported by no evidence to indicate such personnel would be amenable to move to Lee County. All applications were disapproved by Respondent and each applicant requested a hearing which resulted in this consolidated hearing. At present there are 741 existing or approved long-term care nursing home beds in Lee County, Florida. A 120-bed facility at Cape Coral became operative in February, 1979 and a 60-bed addition to Beacon-Donegan Manor nursing home has also been approved. Prior to the opening of the newest 120-bed facility at Cape Coral, the occupancy rate for the other long-term care nursing homes was greater than 90 percent. Due to its recent opening, no evidence was presented as to the occupancy rate in Lee County following the opening of the Cape Coral facility. The population of Lee County in 1978 was 184,841 with 41,984 more than 65 years old, which is less than 23 percent of the population. This is in line with the population forecasts by the University of Florida and validates the estimated 1980 population figures which were used by all parties in submitting their applications. In 1978 Respondent proposed a State Health Plan which included a determination that the long-term care nursing home bed needs were 27 per 1,000 population greater than 65 years old. This determination was unacceptable to the Department of Health, Education and Welfare (HEW) whose decision is binding on Respondent. In refusing to accept this standard, HEW reaffirmed the requirement that the formula contained in the Hill-Burton Act be utilized in determining certificates of need. Following the Hill-Burton formula results in no additional long-term care nursing home beds needed in Lee County. Modification of the results produced by use of the Hill-Burton formula when extenuating and mitigating circumstances exist is authorized by the Florida Medical Facilities Plan. Accordingly, when use of Hill-Burton formula produces results contrary to obvious facts, such as a showing of no need for additional facilities when occupancy rates are high and long waiting lists for admission exists, these extenuating circumstances are considered and a finding of need is made. The parties stipulated that extenuating circumstances, notably the greater than 90 percent occupancy rate in nursing homes in 1977 and most of 1978 and the existing waiting lists created need for 100 to 120 additional beds. No evidence was presented establishing a need for more than 100-120 additional long-term care nursing home beds in Lee County. In fact, no evidence was presented showing the current occupancy rate, current waiting lists, or any other information not previously submitted to the Health Systems Agency was here presented other than the latest Census Report, which merely confirmed the accuracy of the forecasts. Even if the 27 beds per 1,000 population greater than 65 which was proposed by the South Central Florida Health Systems Agency were used to establish the number of beds needed, their limitation, that no more than 50 percent be added in the two-year planning period, would preclude approving more than one additional nursing home at this time. Absent evidence showing a need for more than one additional nursing home, the only issue remaining is which of the applicants is best qualified to provide the best service at the lowest cost for the stipulated need. HSI submitted proposed construction costs and patient charges in line with those submitted by FMCC. However, although their application states, and the Health Systems Agency apparently accepted, their allegation that an option to lease had been obtained on the property on which the proposed facility was to be erected, testimony at the hearing disclosed that only an oral agreement to lease the property had been obtained by HSI. An oral agreement affecting a long-term lease of real property comes within the Statute of Frauds and is unenforceable. This fact alone renders all cost estimates submitted by HSI suspect. Further, the financing proposed by HSI to construct the facility shows less than $200,000 equity capital available and a requirement to borrow $1,300,000. One ground noted by the Health Systems Agency for disapproving this application was the inadequacy of their financing. No evidence presented at this hearing contradicted this Health System Agency's finding. AHC operates some 50 nursing homes in 14 states with two nursing homes in the Orlando area. A certificate of need has been obtained for a third nursing home in Jacksonville. Florida Living Care, Inc., the parent corporation of FMCC, manages some 44 nursing homes and owns 25. It has certificates of need for 6 nursing homes in Florida, one of which is completed and in operation, while 3 are under construction. AHC proposes to finance 87 percent of the cost of the 120-bed project, or $2,160,000, in a 40-year loan at 8.5 percent interest. FMCC proposes to finance 80 percent of the cost of a 102-bed project, or $1,000,000, in a 25-year loan at 9.5 percent interest. Although no testimony regarding the current status of mortgage money was presented, it is recognized that interest rates are at historically high levels and that FMCC is more likely to get financing on the terms it proposed than is AHC on the terms the latter proposed. HSI proposed costs and charges result in average costs of $30.16 per patient per day. FMCC proposed costs and charges result in average costs of $30.96 per patient per day. AHC proposed costs and charges result in average costs of $34.40 per patient per day. No significant difference exists in the services proposed by each of the applicants. Savings from combined purchasing can result when numerous facilities are operated. Both AHC and FMCC are in a better position in this regard than is HSI. Additional savings in group food purchasing can result when facilities are within 200 miles of each other. The facilities FMCC's parent corporation is opening in Sebring and Port Charlotte are close enough to Fort Myers to allow group food purchasing for these facilities. AHC's construction costs are approximately 50 percent higher per bed than are the costs submitted by FMCC and HSI. This factor must result in higher charges to amortize these higher construction costs.
The Issue The general issue for determination is whether either of the petitioners should be granted a CON for community nursing home beds in Orange County, a subdistrict within HRS planning district VII. In their prehearing statement filed on November 3, 1987, the parties limited the issues as follows: As between the Petitioners and Respondent, the sole issue is whether there is a need for the proposed services; additionally, it is Respondent's position that lack of need for a project results in the projects not being financially feasible in the long term. All other statutory and rule criteria are satisfied, at least minimally, except proof of need pursuant to Rule 10- 5.011(1)(k) [formerly 10-5.11(21)(b)], F.A.C., financial feasibility as it relates to need, and as to possible approval of a 60-bed facility, as the local health plan policy favors a minimum facility size of 120 beds. As between the applicants, it is agreed that a comparative review is appropriate to determine the best applicant, but each acknowledges for this proceeding only that the other meets all statutory and rule criteria, at least on a minimal basis. The determination of need in this case involves a determination of the proper application of the need methodology described in HRS Rule 10-5.011(1)(k), More specifically, these three questions must be answered: Which data determines "current" and "projected" population, age 65-74 and 75+, the data available in July 1986, or the most recent data available at the time of hearing? When is the "current" population to be determined (the "base period"), January 1986, or July 1986? How is the occupancy rate ("OR") to be computed? If there is a need for additional beds, the remaining issue is how to apportion those beds between the applicants.
Findings Of Fact Forum and Skilled Health each filed an application for a certificate of need for community nursing home beds in Orange County, in the July, 1986, batching cycle. Forum's application proposes a retirement living facility consisting of apartment units for independent living, an adult congregate living facility (ACLF) and 60 nursing home beds certified for skilled and intermediate care. Skilled Health's application proposes to build a 120-bed nursing home. At the final hearing, Skilled Health indicated a willingness to accept approval for 60 or 90 beds, with the balance to be built as ACLF beds. Forum is a health services company based in Indianapolis. Forum owns fourteen retirement living centers throughout the United States and approximately twenty freestanding nursing homes. Skilled Health is a partnership principally owned by Stewart and Joseph Yachnowitz, a father and son. Since 1981-82, the Yachnowitz' have owned and operated three 120-bed nursing homes and one 129-bed nursing home in Missouri. In its preliminary review of Petitioners' applications, HRS denied the certificates of need primarily due to lack of need for additional community nursing home beds in Orange County. HRS found a surplus of 50 community nursing home beds in Orange County. Forum's health planner found a need for 96.5 beds, and Skilled Health's consultant found a need for 161 beds. In reaching their respective conclusions, each party applied the methodology of Rule 10-5.011(1)(k)2., F.A.C. (the rule) in a slightly different manner. The rule provides in pertinent part as follows: Need Methodology. In addition to other relevant statutory and rule criteria to be used in considering the allocation of new or additional community nursing home beds, the Department will determine if there is a projected need for new or additional beds 3 years into the future according to the methodology specified under Sub- subparagraphs a. through j. This methodology provides for adjustments to current community nursing home bed rates based upon expected changes in the proportion of district residents age 75+ and the current utilization of community nursing home beds in the subdistricts designated by local health councils. In districts with a high proportion of elderly residents living in poverty, the methodology specifies a minimum bed rate. A (POPA X BA) + (POPB X BB) Where: A is the district's age- adjusted number of community nursing home beds for the review cycle for which a projection is being made. POPA is the population age 65-74 years in the relevant departmental district projected three years into the future. POPB is the population age 75 years and older in the relevant depart- mental district projected three years into the future. BA is the estimated current bed rate for the population age 65-74 years in the relevant district. BB is the estimated current bed rate for the population age 75 years and over in the relevant district. BA LB/(POPC + (6 X POPD)) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. BB + 6 X BA SA = A X (LBD/LB) X (OR/.90) Where: SA is the preliminary sub- district allocation of community nursing home beds. LBD is the number of licensed community nursing home beds-in the relevant subdistrict. OR is the average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district. Review of applications submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March preceding that cycle; applications submitted for the January batch- ing cycle shall be based upon occupancy rate data for the months of April through September preceding that cycle. For the purposes of this rule, the occupancy date to be considered shall be that collected by the Department's Office of Health Planning and Development or a contractor assigned to collect the data. * * * In applying the methodology, the parties agreed to the following: The application date is July 1986. The horizon date is July 1989. 4801 is the correct number of licensed beds in the district (LB). 2327 is the correct number of licensed beds in the subdistrict, Orange County (LBD). 460 is the correct number of approved beds. POPULATION DATA RELEASE DATES For determination of the population factors, POPA, POPB, POBC and POPD, the parties utilized the official estimates and projections adopted by the Office of the Governor. That data is updated periodically by the Office of the Governor and the rule does not prescribe the applicable release date for those projections and estimates. HRS utilizes the data available at the time of the application review (July 1986). HRS presented no testimony supporting this practice; its witness, Dennis Halfhill, was specifically not offered for health planning expertise. (Transcript, p. 119) Donald I. Craig, Forum's witness, was qualified, without objection, as an expert in health care planning and nursing home development. (Transcript, p. 12) Dr. Elton Scott, Skilled Health's witness, was qualified, without objection, as an expert in health care economics, utilization and need analysis, and health care finance and reimbursement. (Transcript, p. 51). Both witnesses testified convincingly that the more recently released data is more accurate and, therefore, more appropriate. At the time of hearing, the official estimates and projections from July 1987 were the most recent available data. THE "BASE PERIOD" - CURRENT POPULATION The current population comprising the factors POPD and POPD in the rule is the population at the time of the application, July 1986, according to HRS' utilization of the methodology. Forum, however, selected January 1986 as the base period because it is a midpoint date for the period for which occupancy data is considered. Forum also argues that January 1986 is the base utilized by HRS' Office of Health Planning and Development in its semiannual nursing home census report and bed need allocations for the July 1986 review cycle. (HRS composite exhibit #1) No testimony or evidence was produced by HRS to explain why its Office of Health Planning and Development uses a different base for "current" population than its CON review office. However, a plain reading of the rule governing CON review supports the establishment of July 1986 as the base period. The rule uses the term, "current population," for the factors POBC and POPD. At the time of the application, "current" is July 1986. "Current" could be theoretically a later period at various relevant points in the process, i.e., date of the state agency action report or date of the hearing, but nothing in the text of the rule suggests that "current" really means a date earlier than the application batching cycle date. Moreover, the establishment of a base period six months prior to the application date violates the 3-year horizon concept inherent in the need methodology. The effect of the establishment of a January 1986 base period is to create a 3 1/2 year planning horizon. After rejecting Forum's proposed January 1986 base period, and accepting Forum's July 1987 release date, I found that the record of the proceeding did not include July 1987 data for July 1986 population. For that reason, the record was reopened for the limited purpose of receiving the data. HRS responded to the order reopening the record with the requested data and with an objection to its admissibility based on relevance, arguing, as it did at hearing, that the relevant release date for July 1986 population is July 1986. Both Forum and Skilled Health responded with stipulations that the data provided by HRS was, in fact, the requested data. However, Forum also objected to the admission of the data, as there was no testimony at final hearing supporting its use. There was, as found in paragraph 9, above, testimony supporting the use of July 1987 data. THE CALCULATION OF OCCUPANCY RATE The relevant occupancy period is October 1985, through March 1986. See Rule 10-5.011(i)(k)2.d., F.A.C., paragraph 5, above. HRS, in its calculation of need according to the rule methodology, used an occupancy rate of 86.6 percent, a slightly higher rate than the 86.2 percent used in its state agency action report. The higher rate was explained by HRS' witness as based upon the inclusion of beds of three nursing homes that had previously been considered sheltered nursing homes. The applicants, Forum and Skilled Health, in their proposed recommended orders, suggest the appropriate rate should be 90.03 percent. Both of their witnesses testified that the HRS rate was artificially depressed due to the opening of a new nursing home, Quality Health of Orange County, in October 1985. Initially, as expected, its occupancy was low, but by November 1986, the home was over 90 percent. Both applicants advocate assigning Quality Health an occupancy of 90 percent for the relevant period because if it had been only approved, but not opened, the methodology would have considered it to have an occupancy rate of 90 percent. See Rule 10-5.011(1)(k)2.i, Florida Administrative Code. The parties also argue that the home's rapid fill to over 90 percent also justifies ascribing a 90 percent rate for the October through March period. The plain language of the rule does not allow for such creative manipulation of the formula. OR is the average occupancy rate for all licensed community nursing homes within the subdistrict, for the relevant period, based on data from HRS' Office of Health Planning or its contractor. That data provides an average occupancy rate of 30.83 percent for Quality Health from October 1985 through March 1986. FINDINGS SUMMARIZED IN AN APPLICATION OF THE RULE METHODOLOGY The findings described above result in the following: Nursing Home Bed Need for District 7, Orange County Application Date: July 1986 Horizon Date: July 1989 Current population: July 1986 Office of Governor, Official population estimates and projections: July 1987 Occupancy Rate, October 1985 through March 1986: 86.6 percent BA = LB/(POPC + (6xPOPD)) = 4801/(106976 + (6x65450)) = 4801/499676 = .0096082 BB = 6xBA = .0576492 Allocation = (POPA x BA) + (POPB x BB) = 126200 x .0096082 + 80951 x .0576492 = 1212.55 + 4666.76 5879.31 Subdistrict Allocation: A x (LBD/LB) x (OR/.9) = 5879.31 x (2327/4801) x (.866/.9) = 5879.31 x .484690 x .962222 = 2741.99 or 2742 Subdistrict Allocation: 2742 Licensed Beds: - 2327 90 percent of 460 beds 415 approved: - 414 Orange County bed need: 1 18. Neither applicant presented evidence of the applicability of the poverty adjustment ratio in Rule 10-5.011(1)(k)2.3., Florida Administrative Code. Nor did the applicants present any evidence of special circumstances justifying the approval of beds as provided in Rule 10-5.011(1)(k)2.j., Florida Administrative Code. There being insufficient need for additional nursing homes in Orange County, it is unnecessary to determine an apportionment of beds between the applicants.
Recommendation Based on the foregoing, it is RECOMMENDED that the applications for certificates of need by Forum Group, Inc. and Skilled Health Facilities, Ltd., be DENIED. DONE AND RECOMMENDED this 11th day of March, 1988, in Tallahassee, Leon County, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-0688, 87-0689 The following constitute my specific rulings on the findings of fact proposed by the parties: Petitioner, Forum Groups 1. Adopted in paragraph 2. 3. Adopted in paragraph 1. 4.-9. Rejected as unnecessary. 10.-11. Adopted in paragraph 3. Rejected as unnecessary. Adopted in paragraph 1. 14.-15. Rejected as unnecessary. 16. Adopted in paragraph 1. 17.-18. Adopted in paragraph 5. Adopted in paragraph 6. Adopted in paragraph 4. Adopted in paragraph 6. Adopted in part in paragraph 7. The method of calculating occupancy is defined. Rejected as inconsistent with the rule. Those figures relate to population as of January 1986. Adopted in paragraph 17. Adopted in paragraph 9. The characterization of the testimony is adopted in paragraph 10. The conclusion IS rejected, see paragraph 23, above. Adopted in paragraph 15. Rejected as contrary to the rule. See paragraph 16. Rejected as unnecessary. Adopted in paragraph 8. Rejected as unnecessary and contrary to the evidence. See paragraph 14. Rejected as contrary to the rule and to the evidence in this case. 33.-52. Rejected as unnecessary. Petitioner, Skilled Health Facilities, Ltd. Adopted in paragraph 1. Adopted in statement of issues. Adopted in paragraph 5. Adopted in part in paragraph 7. The finding with regard to OR is rejected as contrary to the rule. Adopted in paragraph 6. Rejected as unnecessary. Rejected as contrary to the rule and to the evidence. Adopted in substance in paragraph 14. 9.-11. Adopted in part in paragraph 15 (as to the position of the parties), otherwise rejected as argument and as contrary to the rule. Adopted in substance in paragraphs 7. and 9. Adopted in substance in paragraph 8. Adopted in paragraph 9. Rejected as argument. Rejected as contrary to the rule. While not expressly stated, the values proposed for POBC and POPD are "current" population as of January 1986. This is the wrong base. See paragraphs 10.-12. Rejected as to the occupancy rate, otherwise adopted in paragraph 7. 18.-21. Rejected as an inappropriate application of the methodology. 22.-24. Rejected as unnecessary. Respondent, HRS Adopted in paragraph 1, and the background statement. Adopted in the statement of issue. Adopted in paragraph 5. Adopted in the statement of issue. Rejected as an inappropriate application of the methodology. Adopted in paragraph 6 and paragraph 14. Rejected as unsupported by the evidence, except as to the description of HRS' application of the methodology. Adopted in substance in paragraph 6. Adopted in substance in paragraph's 14 and 16. 10.-11. Adopted in paragraph 18. 12.-13. Rejected as unnecessary. COPIES FURNISHED: R. Terry Rigsby, Esquire Post Office Box 11188 Tallahassee, Florida 32302 Chris H. Bentley, Esquire 2455 Blairstone Pines Drive Tallahassee, Florida 32301 Richard A. Patterson, Esquire 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 S. Power, Esquire Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 =================================================================
Findings Of Fact The parties present at the hearing stipulated to the following facts which are hereby entered as findings of fact: All letters of intent submitted by the applicants involved herein with the exception of FCC were timely filed on or before December 15, 1984 and the relating applications by these applicants were timely filed on or before January 15, 1985. As a result, these applications addressed a January, 1988 bed need planning horizon. All applications, as mentioned above, were deemed complete by DHRS and were reviewed under a January, 1988 bed need planning horizon. All applications as cited above, were preliminarily denied by DHRS based on a lack of need and notice of these denials were timely published in the Florida Administrative Weekly. All unsuccessful applicants herein thereafter timely filed petitions for formal administrative hearing to contest the denial of their applications. The application filed by FCC for CON number 2738, filed by the applicant in July, 1983, and addressing a July, 1986 bed need was initially denied by DHRS in November, 1983. FCC thereafter timely filed a petition for formal, administrative hearing contesting the denial of this application and on January 10, 1985, DHRS and FCC entered into a stipulated settlement in which DHRS agreed to grant CON Number 2738 to FCC. This CON was issued to FCC on January 19, 1985, for 91 community nursing home beds and on March 15, 1985, a Final Order was entered by DHRS confirming the grant off CON Number 2738 to FCC. FCC's original application under CON Number 2738 was for a 120 bed community nursing home to be located in Indian River County, Florida. DHRS's initial denial of FCC's application was based on a lack of bed need at the time. When DHRS entered into the stipulation with FCC reversing its position and granting a CON to FCC for 91 community nursing home beds, it did so on the basis of bed need figures utilizing statistics relating to the subsequent January, 1988 bed need planning horizon even though FCC's application did not pertain to that planning horizon. In fact the beds taken and awarded to FCC came from the fixed pool of beds that, under the DHRS rule in effect at the time, was reserved for applicants in the January, 1985 batching cycle with a planning horizon of January, 1988. Rule 10-5.11(21)(b), F.A.C., sets out the bed need rule methodology for determining projected need for new or additional community nursing home beds. Pursuant to this rule, need is projected three years into the future. The methodology provided in this rule is clear and reasonable. If this methodology is followed precisely as set forth in the rule and utilizing the DHRS statistics available to personnel in the health care professions, such as its semi-annual nursing home census report as well as the Florida population estimates and projections by DHRS district and county, a net bed need of 116 additional beds in Indian River County is established for the period January, 1988. This figure does not, however, include an award of 91 beds to FCC under CON Number 2738 by DHRS under the terms of its settlement and those 91 beds are included within the 116. The expert testifying for the applicants herein concluded that the award of the 91 beds to FCC outside its planning horizon was erroneous and improper and based on no calculation of bed need appropriate to the applicant's original July, 1986 planning horizon and it was so found. In this case, DHRS, by awarding beds to FCC from a subsequent planning horizon is implementing a bed need policy which establishes a "planning horizon" three years from the date the Petitioners' applications were filed but updating all available data to that existing as of the date of the final hearing. This would include July, 1986 population data, current licensed beds, current approved beds, and the latest occupancy rate. The procedure followed by DHRS here is, however, a DHRS policy interpretation rather than a literal interpretation of the rule and the DHRS expert was unable to establish or in any way justify DHRS' policy of updating all data to the date of hearing in contravention of the terms of its own rule. If the unjustified and unsubstantiated DHRS policy were accepted and utilized here, calculations would reflect a surplus of 70 nursing home beds in Indian River County for the January, 1988 planning horizon as opposed to the more reasonable and rational bed need of 116.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED THAT Certificate of Need Number 2733, previously issued to Florida Convalescent Centers be rescinded and that the 91 beds relating thereto be returned to the January, 1988 planning horizon fixed pool. It is further recommended that the Secretary, Department of Health and Rehabilitative Services remand the case to the Division of Administrative Hearings for the conduct of a comparative hearing to evaluate the pending applicants within that batching cycle. RECOMMENDED this 28th day of January, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1987. APPENDIX The following constitutes my specific ruling pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by National Health Corporation, FMSC and Forum 1. Incorporated in Finding of Fact 4 except for the actual calculations outlined in the formulas which are incomplete. 2 & 3 Incorporated in Finding of Fact 5. 4-6 Incorporated in Finding of Fact 5. 7-13 Incorporated in Finding of Fact 6. 14 Not a Finding of Fact. Rulings on Proposed Findings of Fact Submitted by Health Care and Retirement Corporation Incorporated in Finding of Fact 4 except for the citation of the rule which is incomplete. Accepted. Accepted. Accepted and incorporated. 5-9 Accepted. 10 & 11 Accepted. 12 Rejected as not the best analysis. Rulings on Proposed Findings of Fact Submitted by Beverly Enterprises 1-3 Accepted. 4-6 Incorporated into Findings of Fact. 7 & 8 Accepted. Rejected as legal argument and not a Finding of Fact. & 11 Accepted. Rejected as legal argument and not a Finding of Fact. Cumulative to other findings. Rejected as legal argument and not a Finding of Fact. Incorporated in Finding of Fact. 16-20 Legal Argument not a Finding of Fact. 21-22 Cumulative to other evidence of record. Rulings on Proposed Findings of Fact Submitted by DHRS 1-3 Accepted. 4-8 Rejected as not supported by the weight of the evidence. 9 Accepted as to the calculation including the 91 beds available to FCC. Rejected as to the propriety of the award and the reason. Copies Furnished: William Page, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire 200 South Monroe Street Tallahassee, Florida 32301 Kenneth A. Hoffman, Esquire Alfred W. Clark, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 Stephen K. Boone, Esquire Post Office Box 1596 Venice, Florida 34284 R. Terry Rigsby, Esquire Post Office Box 10555 Tallahassee, Florida 32302 John Rodriguez, Esquire, Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact The Agency for Health Care Administration ("AHCA") is responsible for the administration of the Certificate of Need ("CON") program in Florida, pursuant to Section 408.034, Florida Statutes (1992 supp.) AHCA initially published a need for 313 community nursing home beds in the 16 county area encompassing District III on April 17, 1992, which was subsequently corrected and published as a revised total of 321 net bed need for District III. On September 17, 1992, with a cover letter signed by Elizabeth Dudek, AHCA issued notice that it intended to issue: CON No. 6983P to Unicare Health Facilities, Inc. ("Unicare"), for construction of a 60 bed community nursing home in Hernando County; CON No. 6985 to Beverly Enterprises-Florida, Inc. ("Beverly"), for the construction of a 120-bed community nursing home in Hernando County; and CON No. 6986 to Life Care Centers of America, Inc. ("Life Care"), for the construction of a 120-bed community nursing home in Hernando County; and, intended to deny, among others: CON 6983 to Unicare for the construction of a 120-bed community nursing home in Hernando County; CON No. 6989 to Lake Port Properties ("Lake Port") for either the conversion of 60 sheltered nursing beds to 60 community nursing home beds or the conversion of the 60 beds and the construction of an additional 60 community nursing beds to be located in Lake County; CON No. 6991 to Unicare for the addition of 51 community nursing home beds to New Horizon Rehabilitation Center, in Marion County; CON No. 6992 to Ocala Health Care Associates, G.P., for the addition of 60 community nursing home beds to TimberRidge Nursing and Rehabilitation Center in Marion County; and CON No. 6993 to Southern Medical Associates, Inc. (Southern Medical) for the addition of 60 community nursing beds to Palatka Health Care Center in Putnam County. Prior to the hearing, the parties stipulated that all participants have standing, except Heartland. Additional stipulations, accepted during the hearing, in the absence of a representative for Ocala Health Care Associates, are as follows: subsection 408.035 (1)(m) is not in dispute; proposed project costs and design are reasonable; the applicants' Schedules 1, notes and assumptions, the schematics, and the narrative responses to all of objective 4 in each application are in evidence, not in dispute, and are reasonable. The parties also stipulated to the approval of CON 6991 for Unicare to add 51 beds to its New Horizon Rehabilitation Center in Marion County, and the denial of CONS 6983 and 6983P to Unicare. LIFE CARE Life Care Centers of America, Inc. ("Life Care"), a privately-held corporation established in 1976, by its sole shareholder, Forrest L. Preston, owns, operates or manages 131 nursing homes and 14 retirement centers in 26 states. In Florida, Life Care manages four facilities with superior licenses, located in Altamonte Springs, Punta Gorda, and two in Palm Beach County, Lakeside and Darcy Hall. Life Care also owns, as well as operates, the facility in Altamonte Springs. Life Care owns and operates 28 nursing homes through leases, 6 or 7 of which are capital leases. Under the terms of the capital leases, Life Care is responsible for capital expenditures and projects. Life Care is not responsible for capital expenditures and projects at approximately 91 of its 131 facilities. Life Care proposes to construct and operate a 120-bed nursing home in the southwest section of Hernando County, near Spring Hill, and to finance the total project cost of approximately $5 1/2 million from bank loans. Life Care has not identified a specific site for its facility. Life Care has proposed to accept a CON condition to provide 75 percent of its patient days to Medicaid beneficiaries, to establish a separate 20-bed wing for Alzheimers and related dementia ("ARD") residents, and to provide intravenous therapy, inpatient and outpatient rehabilitative therapy, wound care and adult day care. Life Care's proposed Medicaid condition exceeds the 1991 district average of 73.78 percent, and is consistent with its experience in Altamonte Springs of up to 73 percent Medicaid without a CON condition, and over 80 percent Medicaid in West Palm Beach. The Medicaid percentages indicate that Life Care will offer mainly traditional nursing home services. BEVERLY Beverly Enterprises, Inc., the ultimate corporate parent of the applicant, owns 830 nursing homes, with a total of 89,000 beds in 35 states. Beverly Enterprises-Florida, Inc., the applicant in this proceeding, is a wholly-owned subsidiary of Beverly California Corporation, a wholly owned subsidiary of Beverly Enterprises, Inc. Beverly Enterprises-Florida ("Beverly") owns 41 of the total 68 nursing homes owned in Florida by Beverly-related companies. Of the 40 nursing homes owned by Beverly at the time the application was filed, 31 had superior licenses. Three facilities had moratoria within the preceding 36 months, one a facility built in 1929, another with a two-week moratorium which is now licensed superior, and a third which is still conditional while physical plant improvements are underway. See, Finding of Facts 28, infra. Beverly proposes to construct a 120-bed nursing home in Spring Hill, Hernando County, for $5,213,077, with its CON conditioned on the provision of 74 percent of annual patient days to Medicaid residents and a $10,000 grant for gerontology research at Hernando-Pasco Community College. Beverly proposes four beds for a ventilator-dependent unit, two beds for respite care, 20 beds on a separate wing for ARD residents, and to establish an adult care program. Beverly commits to group patients with ARD or other losses in cognitive functioning together in a 20-bed area, to offer subacute rehabilitative care in a 24 bed Medicare skilled nursing unit, and to provide intravenous therapy. Beverly also intends to establish a dedicated four-bed ventilator unit staffed with at least one registered nurse with a minimum of two years experience in critical care continuously on duty, a separately staffed adult day care program, and respite care. Beverly's would be the first ventilator beds other than in hospitals and the first licensed adult day care program in Hernando County. One of Beverly's existing Florida nursing homes is Eastbrooke which is also located in Hernando County, approximately 10 miles from the proposed Spring Hill site. Beverly expects its experienced personnel from Eastbrooke to train and assist in establishing Spring Hill. Beverly has identified a site for the Spring Hill facility which is across the street from an acute care hospital. Spring Hill is in southern Hernando County, near Pasco County. UNICARE By stipulation of the parties, the Unicare Health Facilities, Inc. ("Unicare") proposal to add 51 beds to New Horizon Rehabilitation Center in Marion County was recommended for approval on May 12, 1993. Unicare withdrew its requests for the approval of CONs 6983P and 6983 in Hernando County. As a result, the parties agreed that the number of beds needed was reduced from 321 beds to 270 beds. LAKE PORT Lake Port is a 60-bed licensed skilled nursing center, with a superior rating, located at the Lake Port Properties Continuing Care Retirement Community, in Leesburg, Lake County. Lake Port Properties is a partnership, for which Johnson Simmons Company serves as the managing general partner. The Lake Port community includes independent living residences, a 66-bed adult congregate living facility, and the 60 sheltered nursing beds. Among the services provided are post-operative care and orthopedic rehabilitative therapy for patients who have had knee or hip replacement surgery or shoulder injuries, neurological therapies for stroke injuries, pain management, subacute, open wound and respite care, and hospice services. Lake Port currently has 11 Medicare certified beds, and has had from 8 to 22 Medicare certified beds at a time. Lake Port has a contract with Hospice of Lake-Sumter County to provide interdisciplinary services to approximately five hospice residents a year. Rehabilitation services are also provided by contract at Lake Port. Lake Port has a relatively high volume of residents who are discharged home following intensive therapy within an average of three weeks. As an indicator of the intensity of therapeutic services, Lake Port has provided 26 percent Medicare, while the Lake/Sumter planning area average was 7.2 percent. Life Care projected a Medicare rate of 6.7 percent, Beverly projected 10 percent Medicare, and the Hernando County average is 9.3 percent. In this proceeding, Lake Port proposes either to convert the existing 60 skilled nursing beds to 60 community nursing beds at no cost, or the 60 bed conversion and the approval to construct an additional 60 community nursing home beds, for a total 120-bed community facility at a cost of $1.4 million. Lake Port proposes to have either CON, if approved, conditioned on the provision of 29.2 percent and 33.81 percent Medicaid, in years one and two, and respite, subacute, and intense rehabilitative care. Historically, the payer mix has included 25-30 percent Medicare and 30-35 percent Medicaid. All of the proposed services are provided currently at Lake Port. The effect of the change in licensure categories is to eliminate the requirement that the facility serve exclusively the retirement community residents after five years in operation, or after August 1995. Lake Port would still be obligated to provide nursing home care to Lake Port community residents at discounted costs, pursuant to the terms of their continuing care contracts. Occupancy levels at Lake Port exceed 95 percent, with 7 to 8 percent of patient days attributable to retirement community, and the remainder to patients in a service area which includes West Lake and Sumter Counties. Lake Port asserts that its financial viability depends on its ability to continue to serve all residents of its service area. SOUTHERN MEDICAL Southern Medical Associates, Inc. ("Southern Medical") is a Florida corporation which owns two nursing homes, one with 60 beds in Okaloosa County and one with 120 beds in Palatka, in Putnam County. Palatka Health Care Center opened with 60 beds in May 1989, added 60 beds in November 1990. Both nursing homes have superior licenses and are managed and staffed by National HealthCorp, L.P., which was founded in 1971, and manages 86 nursing homes, twenty-nine of those in Florida. The management fee is 6 percent of net revenues. In its application for CON number 6993, Southern Medical proposes to add 60 beds to the existing 120-bed nursing home, known as Palatka Health Care Center. Occupancy levels at the Palatka Center ranged between 96 and 99 percent in 1992-1993. Total project costs of $2.1 million will be financed by or through National HealthCorp. Southern Medical proposes that its CON be conditioned on the establishment of a 20-bed distinct Alzheimer's wing and the provision of 74 percent of total patient days to Medicaid patients. Southern Medical provides rehabilitation services in a 14-bed Medicare certified unit, antibiotic intravenous therapy, hospice and respite care. It exceeds the 73 percent Medicaid condition of its CON. SUBSECTION 408.035(1)(a) - NEED IN RELATION TO STATE AND LOCAL HEALTH PLANS The Florida State Health Plan includes 12 preferences to consider in reviewing nursing home CON applications, most of which overlap statutory review criteria in Section 408.035, Florida Statutes. Preference 1 encourages more nursing homes beds in subdistricts with 90 percent or higher occupancy in existing beds. District 3 is not subdistricted, but its nursing home bed occupancy rate was 91 percent in 1991. Therefore, all applicants for nursing homes in District 3 meet the preference. District 3 has been divided into planning areas by the local health council. The applications filed in this proceeding coincide with the planning areas for Hernando, Putnam, and Lake/Sumter Counties. In 1991, occupancy rates averaged 92 percent for Hernando, 96 percent for Putnam, and 93 percent for Lake/Sumter planning areas. Each applicant meets preference 1 using planning areas as substitutes for subdistricts. Preference 2 favors applicants whose Medicaid commitments equal or exceed the subdistrict-wide average. In the absence of subdistricts, the district wide average is used, which is 73.78 percent. Beverly's 74 percent commitment, Life Care's 75 percent commitment, and Southern Medical's 74 percent commitment, entitle them to be favored under preference 2. In addition, Beverly cites its 76.9 percent Medicaid patient days in 1991 at Eastbrooke, but it has failed to achieve its Medicaid commitment at one Florida nursing home in Cape Coral. Lake Port committed to provide a minimum of 33.81 percent Medicaid patient days and argued that it meets the exception to the preference for providing multi-level care. As described in the 1989 Florida State Health Plan, multi-level health systems offer a continuum of care which may range from acute care and ambulatory surgery centers to home health and education, including traditional nursing care. Special emphasis is placed on short-term intensive rehabilitation programs. Although Lake Port's proposal includes some of the features of a multi-level system, such as post-operative rehabilitative therapy and respite care, the Medicaid exception is inappropriate for Lake Port, because the same services are also proposed by Beverly and Southern Medical. See, also, Section 408.035(1)(n), Florida Statutes. Preference 3 relates to providing specialized services, including acquired immune deficiency syndrome ("AIDS") services to residents, ARD residents, and the mentally ill. This preference is met by Beverly, Life Care, and SMA, particularly for ARD patients for which all three applicants proposed to establish separate 20-bed units. The preference is also met by Lake Port, particularly with its emphasis on specialized, intense rehabilitative services. See, also Subsection 408.205(1)(f), Florida Statutes. Preference 4 supports applicants proposing to provide a "continuum of services to community residents," including respite and adult day care. Beverly and Life Care propose to offer both respite and adult day care. Lake Port and Southern Medical propose to provide respite and hospice care. Preference 5, for the construction of facilities which provide maximum comfort and quality of care, was stipulated as being met by all the parties. The applicants also stipulated that project costs and construction plans are reasonable. See, also, Subsection 408.035(1)(m),(2)(a) and (2)(c), Florida Statutes. Preference 6 is met by all of the applicants: . . . proposing to provide innovative therapeutic programs which have been proven effective in enhancing the residents' physical and mental functional level and which emphasize restorative care. Life Care, Beverly and Southern Medical propose to offer specialized services to ARD residents. Lake Port and Southern Medical emphasize physical rehabilitation. All of the applicants meet the requirements for preference 6. Preference 7 is for applicants whose charges do not exceed the highest Medicaid per diem rate in the subdistrict, which, for District 3, is $74.05, or $93.49 inflated at 6 percent to 1996. Life Care Care's proposed Medicaid charges are $93.69 for year 1, and $94.46 for year 2. Beverly projected that the average Medicaid per diem rate in the subdistrict will be $93.49 in 1996, its charge will be $95.00, but it will expect Medicaid reimbursement to be $93.30 for that year. Lake Port projected proposed charges to Medicaid patients as $90 to $93.92 in year one and $93 to $97.37 in year two, for the full 120 beds or the partial 60 beds, respectively. Southern Medical's Medicaid charges will be $90.22 in year one and $94.28 in year two. Preference 8 applies to applicants with a history of providing superior resident care programs, as indicated by licensure ratings. Of Beverly's 40 Florida facilities, 31 held superior licenses at the time the application was filed. Of the nine Beverly nursing homes with conditional ratings, six are now superior. Renovations or, in the case of one facility built in 1929, construction of a replacement building, are underway at the three others. Life Care, Southern Medical and Lake Port have histories of consistently superior license ratings. See, also, Subsection 408.035(1)(c), Florida Statutes. Preference 9 favors applicants proposing staffing levels exceeding minimum standards. Due to the ventilator, intravenous and rehabilitative services proposed, Beverly will staff in excess of that required by the state, with at least one registered nurse with a minimum of two years experience on all shifts and a full-time physical therapist. It intends to rely on its current Hernando County facility, Eastbrooke's relationship with Hernando-Pasco Community College, for recruitment and training of staff, although Beverly has not opened a new nursing home in Florida since 1987. Life Care similarly intends to rely on a CON approved facility in adjacent Citrus County. Southern Medical employs St. Augustine Vocational College students who are certified nurse assistants training to become licensed practical nurses, and licensed practical nurses training to become registered nurses are employed at Palatka, which also has internships for health sciences students from the University of North Florida. Its occupational, speech and physical therapists are full-time employees. Lake Port's staffing ratios will also exceed the minimums, in order to provide intensive rehabilitative therapies. See, also Subsection 408.035(1)(h), Florida Statutes. Each applicant meets preference 10 based on their proposed or current use of a variety of professional disciplines. See, Finding of Fact 29. Preference 11 seeks to ensure resident rights and privacy as well as implementing plans for quality assurance and discharge planning. All of the applicants were shown to follow well established residents' rights and privacy policies, and to have effective quality assurance programs. Pre-admission screening programs include discharge planning. Beverly has the most highly standardized corporate structure of incentives to maintain quality. Preference 12 relates to applicants proposing lower administrative costs and higher resident care costs compared to the average nursing home in the District. Average costs in District III are expected to be $54.79 for resident care and $13.97 for administrative overhead by 1996. Life Care expects resident care costs of $51.97 a day and administrative costs of $17.43 a day. Beverly projects its resident care to cost $61.89, with administrative costs of $8.86. Southern Medical proposes administrative costs of $19.88 per patient day and patient care costs of $46.23 per patient day. Lake Port's administrative costs are expected to be $27.80 for 60 beds or $22.12 for 120 beds, with patient care costs of $43.04 for 60 beds or $45.08 for 120 beds. Beverly, best meets the preference and expects enhanced economics and efficiency from combining some overhead for the operation of two nursing homes in Hernando County. Life Care, however, notes that its proposal enhances competition in view of the existence of one Beverly facility in Hernando County. See, Subsection 408.035(1)(e),(1)(h) and (1)(l), Florida Statutes, which also relate to costs, resources, and competition. District III includes 16 west central Florida counties, from Hamilton, Columbia, Union Bradford and Putnam in the North to Hernando, Sumter and Lake in the south. The allocation factors in the plan for District III are prepared by the North Central Florida Health Planning Council, the local health council for the district. The district has not been subdivided by agency rule. Using its planning areas, the local health council has given priority rankings for applicants in certain areas of the district. Dixie, Lafayette and Union Counties, which have no nursing homes, are favored by the local plan. If, as in this case, there are no applicants from these counties, Hernando should be favored, followed by Putnam County. No priority was given to Lake County. The council also quantified bed need by planning area for the January 1995 planning horizon, with additional beds needed, ranging from 120 to 180 in Hernando, and up to 60 in Putnam. The parties agree generally that the council may establish planning areas in the discharge of its duties, but they disagree whether the establishment of upper limits, or caps in numeric need by planning area is authorized by law. Section 408.034, Florida Statutes, requires a uniform need methodology, which the agency has established by enacting the nursing home rule, Rule 59C-1.036(1)(c), Florida Administrative Code. Once the agency determines numeric need for a district and the district driving time standard, the local plan cannot alter these determinations. The local plan also includes certain fundamental principles for the allocation of new beds: (1) to promote geographic access, (2) to consider the locations of at-risk population need factors, and (3) to increase supply based on demand. In order of importance, the local plan lists three allocation factors (1) for counties without nursing homes, (2) for new nursing homes 20 miles or 25 minutes drive from existing or approved beds, and (3) for locations without approved beds and with existing nursing homes averaging occupancy levels at least 95 percent for the most recent six month or 90 percent for the most recent 12 months. With respect to the specific allocation factors, Life Care, Beverly, Southern Medical and Lake Port are in areas with over 90 percent average occupancy within a 20 mile radius. Life Care, Beverly and Southern Medical are proposing to establish facilities in areas of greater need than that in the area of Lake Port. Hernando and Putnam Counties also have lower ratios of nursing home beds to population than Lake County. The local health council's determination of the greatest need in Hernando County, was confirmed by expert testimony, based on analyzing licensed and approved beds, occupancy rates, distribution of population ages 65 and older, and 75 and older, and most importantly, projected growth of population 65 and older, and of 75 and older. The bed to population ratio for Hernando was, in 1992, 15.5 percent for 65 and older, and 44.9 percent for the population 75 and older, both of which are below the ratios for any other planning areas in the District. The projected increase in population 75 and older for the state is 12 percent, in contrast to the projected increase of 38 percent for Hernando County. Expert testimony for Beverly supported the addition of up to 300 beds in Hernando County to bring Hernando County's bed distribution in line with that of the entire district. The only approved provider in the county, Hernando Health Care, has surrendered its CON to add 18 nursing home beds in Hernando County. On the contrary, Heartland's expert calculated numeric need of only 119 additional beds in Hernando County. AHCA, however, gave no consideration to the effect on occupancy, fill- up rates, or financial feasibility of it preliminarily approving all new beds in Hernando County. The experience was compared, by Southern Medical's expert, to that in Clay County, in which 555 beds were 95 percent occupied, prior to the opening of two 120-bed facilities, one in December 1989, and the other in April 1990. At the end of the first year of operation, the facility that opened first was 48.5 percent occupied, the second was 21.7 percent occupied, and district occupancy was 77.7 percent. At the end of the second year, the rates were 81 percent, 55.6 percent, and 85.6 percent. However, by 1992, the nursing homes in that subdistrict averaged 93 percent occupancy. Opponents to the AHCA proposal to locate all new facilities in Hernando County, contend that the bed-to- population ratio or "parity" approach used to support the approval of 240 beds in that county does not take into account demographic variables among the counties in the district. While the bed-to-population ratio is not reliable in and of itself, alternative analyses for the determination of the location of greatest need within the district support the same conclusions. Those analyses relied upon current nursing homes occupancy levels, poverty, and population migration trends and available alternatives to distinguish among the various proposed locations. Based on occupancy levels, the District III counties of greatest need for additional beds are Putnam, Lake and Sumter, and Hernando, in that order. Putnam County residents are being placed in facilities outside the county due to the lack of available nursing home beds. In terms of poverty level and mortality levels, the figures for Putnam and Marion Counties indicated their populations were less healthy than those in Hernando and Lake. Hernando had 6.05 percent of its over 65 population, which is 85 and older, as compared to 9.34 percent in Lake, 8 percent in Putnam, and 8.28 percent as the district average. Hernando and Putnam Counties also had lower percentages of people 75 and older than did Lake and Marion Counties. ALTERNATIVES AND EXISTING NURSING HOMES IN DISTRICT 3 Subsections 408.035(1)(b) and (d) require consideration of other like and existing facilities in the district, as well as health care services which are alternatives to nursing homes. Currently, there are 4 nursing homes in Hernando County, and 12 in Lake County. In Putnam County, there are 3 nursing homes and 15 additional "swing beds," which may be used for acute care or long term care, approved for Putnam Community Hospital. Those beds are not available to serve Medicaid patients and are not included on the inventory of community nursing home beds. In the 511 existing nursing home beds in Hernando, there is an average daily census of 45 beds occupied by residents originating from other counties, while 23 Hernando residents constituted the average daily census leaving the County. Hernando cannot expect to retain in-migrating patients with the development of nursing homes in those residents' counties of origin, particularly, Citrus and Pasco. Given the decrease in nursing home patient days form 1991 to 1992, there is also no reason to expect any significant increase in use rate for the population in Hernando. The most compelling support for need in Hernando County is that the rate of growth of its over 75 population, which is more than three times that of the State. Putnam County has the lowest migration and a greater demand for nursing home services for the population age 85 and older. Putnam County nursing homes exceed 95 percent occupancy. Lake County area nursing homes were 93 percent occupied for the same period of time, and with the relinquishment of an approved CON for 60 beds by Leesburg Regional Hospital, that occupancy rate rises to approximately 95 percent. The award to Leesburg Regional established a need for 60 beds in Lake County, but there is also an approved CON for a 120-bed facility in Mount Dora. According to Lake Port's expert witnesses, the Mount Dora nursing home will not alleviate the need for beds in western Lake County. That facility, owned by the Adventist health group, is expected to be a referral facility from the nearby Adventist Hospital in Orlando and Sanford. Based on the alternative considerations of occupancy levels, poverty and morality rates, the need for additional beds in Putnam County is greater than the need in Lake County. Projected population increases and the limited alternatives also support the conclusion that a greater need exists in Hernando than in Lake County. Heartland of Brooksville ("Heartland"), is an existing 120-bed community nursing home in Brooksville, which is licensed superior. Heartland contends that the virtually simultaneous establishment of both Beverly and Life Care will adversely impact Heartland, and make it difficult for the new nursing homes to meet their projected utilizations. The trend of twice as many people migrating to, as there are leaving Hernando County for nursing home services, will be reversed as more nursing homes are established in surrounding counties. See, Finding of Fact 45. Heartland reasonably expects gradually to lose up to 30 percent of its residents who came from the Spring Hill area, where Beverly and Life Care intend to build new nursing homes. Heartland also reasonably expects to lose Medicare patients among the group from Spring Hill. Medicare residents average 9.3 percent of the total mix in the county, but account for 15 percent of the patient mix at Heartland. Heartland will be adversely affected for at least the first two years if both Life Care and Beverly are approved. See, Finding of Fact 40, supra. FINANCIAL FEASIBILITY Heartland, Southern Medical and Lake Port assert that Beverly will be successful in Hernando County, but that Life Care will not. Beverly is already established in the county, will provide services not currently available in nursing homes, and will open its facility seven months before Life Care. Life Care projected a net loss of $589,042 in year one, and a net gain of $254,991 in year two of operation. Life Care's projections fail to consider the company's 6.5 percent management fee, income taxes, and Medicaid reimbursement rate ceilings. By contrast to the other proposals and to the Hernando County average of 9.3 percent, Life Care is relying on a payor mix of only 6.7 percent Medicare, the group for which competition will be most intense. That mix parallels its Florida experience, which has historically allowed it to achieve a profit margin of 16 to 22 percent of net revenues in the third year of operation. Life Care's experience and audited financial statements support its contention that it can borrow essentially 100 percent of the funds necessary to support the project and complete the proposed project, a debt arrangement it has successfully used in the past, without defaulting on loans. Life Care's resources are also potentially subject to a $12 to $18 million judgment, due to litigation which is on appeal. Life Care has a contingency fund of $8 million to satisfy the judgment and has sufficient equity in its properties to pay the balance through refinancing. The deficiencies in Life Care's pro forma and its potential liabilities are off-set by the size and strength of the company, and its Hernando County project is financially feasible in the short and long terms. Beverly projects opening at Spring Hill 15 1/2 months after issuance of a CON, reaching 90 percent utilization within 15 months of opening. Beverly reasonably expects an after tax profit of $239,489 in the second year of operation. Beverly estimates project costs of $5.2 million, financed by the parent corporation, Beverly-California. Beverly-California has from $35 to 45 million available to contribute a 40 percent ($2 million) equity investment, and a $35 million loan commitment from which it will draw the balance to finance the project. Southern Medical has a letter of interest for financing of the total project costs of $2.1 million at 12 percent rate of interest by National HealthCorp. During the construction period, Southern Medical estimates that the existing 120 beds will remain 94 percent full, and that the new beds once open will fill at a rate of 10 percent a month, which is consistent with the experience of the management company, National HealthCorp. Southern Medical's actual experience in Palatka was, in fact, better. The first 60 beds were filled after 5 months while the additional 60 beds were filled in 7 to 8 months. Projected revenues of $290,000 during construction, $323,000 after year one, and $488,000 after year two are reasonable. Southern Medical's balance sheet shows short term debt of approximately $1.4 million attributable to the construction of the Okaloosa nursing home. Although Southern Medical secured a $3 million loan commitment for the Okaloosa facility, it has drawn from that account $473,000. That debt will be refinanced and recategorized as long term debt. Southern Medical's project is financially feasible in the short and long term, based on its actual experience in the existing 120-bed facility. Lake Port has the financial resources to construct 60 additional beds for $1.4 million. Lake Port's proposed conversion of the licensure category for its existing 60 beds is at no cost, except for approximately $37,000 in filing and consultants fees. In its third year of operation, Lake Port has achieved 97 percent occupancy. At present, delays of up to a week may be experienced in transfering patients from acute care hospitals to nursing homes in the Leesburg area. From October to May, due to the influx of northerners, beds are generally not available in the Leesburg area of western Lake and Sumter Counties. Lake Port's projections of occupancy and its financial ability to complete either 60-bed conversion and/or 60-bed addition make either proposal financially feasible in the short or long term.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That AHCA issue CON 6985 to Beverly Enterprises-Florida, Inc. to construct a 120-bed nursing home in Hernando County, conditioned on the provision of 74 percent of total annual patient days to Medicaid residents, and the operation of a 4-bed ventilator-dependent unit, 2 beds for respite care, an adult day care program, and a 20-bed separate unit for residents with Alzheimer's and related dementia. That AHCA issue CON 6986 to Life Care Centers of America, Inc. to construct a 120-bed nursing home in Hernando County, conditioned on the provision of a minimum of 75 percent of total annual patient days to Medicaid residents, the operation of a 20-bed dedicated wing for residents with Alzheimer's and related dementia, and the operation of an adult day care. That AHCA issue CON 6993 to Southern Medical Associates, Inc. for the addition of 60 community nursing home beds at Palatka Health Care Center in Putnam County, conditioned on the provision of 74 percent of total annual patient days to Medicaid residents, and the establishment of a 20-bed district Alzheimer's wing. That AHCA deny CON 6989P and CON 6989 to Lake Port Properties. DONE AND ENTERED this 20th day of July, 1994, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of July, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6656 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner, Beverly Enterprises-Florida, Inc., d/b/a Beverly Gulf Coast-Florida, Inc.'s Proposed Findings of Fact. 1. Accepted in Preliminary Statement and Finding of Fact 3. 2-9. Accepted in or subordinate to Findings of Fact 8-10, 24 and 25. 10. Accepted in Preliminary Statement. 11-15. Accepted in relevant part in Finding of Fact 33. 16-19. Accepted in part in Findings of Fact 9, 20-21, 37-39. 20-23. Accepted in Findings of Fact 19-32. 24-30. Accepted in Findings of Fact 9, 23, 24, 29 or 30. 31. Accepted in Findings of Fact 19-32. 32-38. Accepted in Findings of Fact 9, 23, 24, 29 or 30. 39-42. Accepted in or subordinate to Finding of Fact 28. 43-48. Accepted in or subordinate to Findings of Fact 29-31. 49. Accepted in or subordinate to Findings of Fact 29-30. 50-56. Accepted in or subordinate to Findings of Fact 50-51. 57-62. Accepted in or subordinate to Findings of Fact 29 or 30. 63-64 Accepted in or subordinate to Findings of Fact 32, 39 and 46-47. Accepted in Finding of Fact 25. Accepted in Finding of Fact 22. 67-68. Accepted in Findings of Fact 9-10. 69. Subordinate to Finding of Fact 6. 70-71. Accepted in or subordinate to Findings of Fact 6, 7 and 10. 72-75. Accepted in or subordinate to Findings of Fact 5-7, 8-10 and 48-51. 76. Accepted in Finding of Fact 32. 77-79. Accepted in or subordinate to Findings of Fact 48-49. Petitioner, Southern Medical's, Proposed Findings of Fact 1-2. Accepted in Finding of Fact 16. Accepted in Finding of Fact 34. Accepted in Findings of Fact 16 and 17. 5-14. Subordinate to preliminary statement. 15. Accepted in Finding of Fact 2. 16-17. Accepted in Finding of Fact 20. 18-19. Accepted in Finding of Fact 17. 20-22. Rejected in conclusions of law 4. 23. Accepted in Finding of Fact 36. 24-41. Accepted in or subordinate to Findings of Fact 21 and 33-45. Accepted in Finding of Fact 19. Accepted in Findings of Fact 20-21. Accepted in Finding of Fact 22. Accepted in Finding of Fact 23. Accepted in Finding of Fact 24. Accepted in Finding of Fact 25. Accepted in Finding of Fact 26. Accepted in Finding of Fact 27. Accepted in Finding of Fact 28. Accepted in Finding of Fact 29. Accepted in Finding of Fact 30. Accepted in Finding of Fact 31. Accepted in part in Finding of Fact 32. Accepted in part in Findings of Fact 19-32. 56-57. Accepted in part in Findings of Fact 43-45. 58-60. Accepted in or subordinate to Finding of Fact 28. 61-62. Accepted in Findings of Fact 18, 22 and 28. Subordinate to Finding of Fact 28. Accepted in Finding of Fact 28. 65-69. Accepted in or Subordinate to Finding of Fact 34 and 43-45. 70-72. Accepted in Findings of Fact 17-18 and 22-23. 73-74. Accepted in Findings of Fact 29-30. 75. Accepted in Finding of Fact 24. 76-77. Accepted in Finding of Fact 29. 78-96. Accepted in Findings of Fact 52-53. Accepted in Finding of Fact 25. Accepted in Finding of Fact 22. Rejected in Findings of Fact 34-39 and 45. 100-101. Rejected in Findings of Fact 41-42 and 45. 102. Accepted in relevant part in Findings of Fact 43-45. 103-109. Rejected in relevant part and accepted in relevant part in Findings of Fact 41-45. 110-112. Rejected in Finding of Fact 45. Accepted in Findings of Fact 48 and 49. Rejected in Finding of Fact 45. Accepted in conclusions of law 60. 116-120. Accepted in relevant part in Findings of Fact 48 and 49. 121. Rejected in Finding of Fact 5. 122-123. Rejected in Findings of Fact 39 and 40. 124-125. Issue not addressed at hearing. Accepted in relevant part in Finding of Fact 48. Rejected in Finding of Fact 29. Petitioner, HCR Limited Partnership I d/b/a Heartland of Brooksville's Proposed Findings of Fact Accepted in part in Findings of Fact 8-10. Accepted in part in Findings of Fact 5-7. Accepted in part in Findings of Fact 12-14. Accepted in part in Findings of Fact 16-18. Accepted in Preliminary Statement and Findings of Fact 2 and 11. Accepted in Finding of Fact 40. Accepted in Finding of Fact 33. Accepted in Finding of Fact 34. 9-16. Accepted in Findings of Fact 34-38. 17. Accepted in Findings of Fact 21 and 43. 19-22. Accepted in Findings of Fact 21, 42 and 43. 23-33. Accepted in Findings of Fact 38, 42 and 43. Rejected in Finding of Fact 45. Accepted in Finding of Fact 39. 36-41. Accepted in or Subordinate to Findings of Fact 45 and 47. 42-44. Rejected in Finding of Fact 5. 45. Accepted in Findings of Fact 45, 48 and 49. Petitioner, Lake Port Properties's Proposed Findings of Fact Accepted in Finding of Fact 2. Accepted in Finding of Fact 3. Accepted in Findings of Fact 3 and 40. Accepted in preliminary statement. Accepted in Findings of Fact 4 and last sentence rejected in preliminary statement. Accepted in Preliminary Statement. 7-28. Accepted in Findings of Fact 12-15. 29. Rejected in Finding of Fact 45. 30-34. Accepted in Findings of Fact 39-43 and 46. 35. Rejected in Finding of Fact 46. 36-38. Accepted in Findings of Fact 12-15. 39-42. Facts accepted, conclusions rejected in Findings of Fact 44-46. 43-47. Accepted in Findings of Fact 33-39. 48. Rejected in Finding of Fact 39. 49-54. Conclusion in first sentence rejected in Finding of Fact 39. Facts accepted in Findings of Facts 39-45. 55-60. Not solely relied upon but not disregarded. Facts generally accepted in Findings of Fact 39-45. 61-74. Accepted in part and rejected in part in Findings of Fact 19-32. 75-82. Accepted in part in Findings of Fact 33-38. 83-93. Accepted in or subordinate to Findings of Fact 28-29. 94-100. Accepted in Findings of Fact 54-55. 101-103. Accepted in Findings of Fact 15 and 54. 104. Accepted in Finding of Fact 31. 105-106. Accepted in Finding of Fact 22. 107-111. Rejected first sentence in Findings of Fact 39 and 40. Remainder of 107-111 accepted in Findings of Fact 8-10 and 19-38. 112-113. Conclusion rejected in Findings of Fact 45, 48, and 49. 114-117. Accepted in Findings of Fact 45, 48 and 49. Rejected in Findings of Fact 45, 48 and 49. Accepted in Finding of Fact 6. 120-121. Subordinate to Finding of Fact 7. 122-125. Accepted in Findings of Fact 7 and 48. 126-130. Rejected in Finding of Fact 5. Respondent, Life Care Centers of America, Inc.'s, Proposed Findings of Fact. 1-9. Accepted in Findings of Fact 33-43. 10-12. Accepted in Findings of Fact 12-15. 13. Rejected in Finding of Fact 12. 14(a-d)-20. Accepted in Findings of Fact 33-40. 21(a-d). Accepted in Findings of Fact 19-32. 22. Accepted in Finding of Fact 34. 23-28. Accepted in Findings of Fact 44-47. Accepted in Finding of Fact 7. Accepted in Finding of Fact 39. Accepted in part or subordinate to Findings of Fact 43-45. Subordinate to Finding of Fact 45. Subordinate to Finding of Fact 17. 34-40. Accepted in relevant part or subordinate to Findings of Fact 5-7. 41(a-c). Accepted in Findings of Fact 8-10 and 29. 42. Rejected in relevant part in Finding of Fact 12. 43-45. Subordinate to Finding of Fact 17. Subordinate to Finding of Fact 17. Subordinate to Finding of Fact 17. Rejected in Findings of Fact 44. 47-48. Subordinate to Finding of Fact 45. 49-50. Accepted in Findings of Fact 5-7. 51-54. Subordinate to Finding of Fact 29. 55-62. Accepted in Findings of Fact 48-49. 63-64. Accepted in Finding of Fact 29. 65-69. Accepted in Findings of Fact 48-49. Subordinate to Findings of Fact 54-55. Subordinate to Finding of Fact 52. Subordinate to Finding of Fact 29. 73-74. Accepted. 75. Accepted in Finding of Fact 4. 76-77. Accepted in Findings of Fact 40-43. 78-79. Accepted in Finding of Fact 29. Subordinate to Finding of Fact 52. Accepted in Finding of Fact 25. 82-85. Accepted in or subordinate to Finding of Fact 22. Subordinate to Finding of Fact 47. Accepted in conclusions of law. Accepted in preliminary statement. Issue not reached. Subordinate to preliminary statement. Conclusion rejected in Finding of Fact 16. Respondent, AHCA's Proposed Findings of Fact Accepted in or subordinate to preliminary statement and Findings of Fact 1-3. Accepted in preliminary statement. Accepted in Findings of Fact 2 and 21 and conclusions of law 66. Accepted in Finding of Fact 2 and 21. Accepted in Finding of Fact 2 and 4. Accepted in preliminary statement and Finding of Fact 3. Accepted in Findings of Fact 12-15. Accepted in Findings of Fact 16-18.8. Accepted in Findings of Fact 8-10. Accepted in Findings of Fact 5-7. Subordinate to preliminary statement and Finding of Fact 3. Accepted in relevant part in Findings of Fact 5-7 and 19-33. Relevant as to availability due to occupancy ratio in Findings of Fact 37-45. Accepted in Finding of Fact 28. Accepted in Findings of Fact 48-49. Accepted, except first sentence in Findings of Fact 8-10 and 19-32. Accepted in Findings of Fact 19-20 and 44. Accepted in Findings of Fact 8-10 and 19-32. Accepted in Findings of Fact 50-51. Accepted in Findings of Fact 33-39. Conclusions rejected in Findings of Fact 19-32. Accepted facts in 19-20 and 44. Accepted in Findings of Fact 8-10. Accepted in Findings of Fact 52-53. Accepted in Findings of Fact 12-15 and 19-32. Rejected in Findings of Fact 19 and 20. Accepted in Finding of Fact 28. Accepted in Findings of Fact 54 and 55. COPIES FURNISHED: Douglas L. Manheimer, Attorney Dennis LaRosa, Attorney Broad & Cassel 215 South Monroe Street Post Office Box 11300 Tallahassee, Florida 32302 Alfred W. Clark, Attorney at Law Post Office Box 623 Tallahassee, Florida 32308 James C. Hauser, Attorney Lachlin Waldoch, Attorney Messer, Vickers, Caparello, Madsen Lewis, Goldman & Metz, P.a. Post Office Box 1876 Tallahassee, Florida 32301 Gary Anton, Attorney Stowell, Anton & Kraemer Post Office Box 11059 Tallahassee, Florida 32302 Edward Labrador, Attorney Richard Patterson, Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 W. David Watkins, Attorney Robert Downey, Attorney Oretel, Hoffman, Fernandez, et al. 2700 Blair Stone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32314-6507 R. Bruce McKibben, Jr., Attorney Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Attorney Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
