Findings Of Fact On or before July 15, 1985 Petitioner timely filed an application for a certificate of need (CON No. 4179) to add 42 beds to an existing nursing home in Lee County, Florida. Petitioner's application was denied by Respondent, subject to the right to a hearing, by letter dated December 6, 1985 for the sole stated reason that: Application of Chapter 10-5.11(21), Florida Administrative Code, to Lee County shows no need for additional beds in the County through 1988. The letter further states that the "basis of the above decision" is contained in the State Agency Action Report. Petitioner timely sought a Section 120.57(1), Florida Statutes, hearing concerning Respondent's notice of its intention to deny this application. The parties filed a Pre-Hearing Stipulation on December 3, 1986 which states that the only statutory criteria at issue in this proceeding are those contained in Sections 381.494(6)(c)1, 2 and 12, as well as the criterion at Section 381.494(6)(c)9, Florida Statutes, insofar as it relates to the need for the proposed additional nursing home beds. Further, the parties stipulated that the only rule criteria at issue are found at Rules 10-5.11(1), (3) and (6), as well as the criterion at Rule 10-5.11(5), Florida Administrative Code, insofar as the long-term financial feasibility of the project is related to the need for the services being proposed. It is readily apparent that the parties have stipulated to issues in this proceeding which may be beyond the scope of the sole reason for denial of this CON application set forth in Respondent's letter of December 6, 1985. The parties' stipulation has been accepted, however, and will therefore define the issues to be determined in this case. Petitioner has an existing 78 bed nursing home in the vicinity of Ft. Myers, Florida. This is located in Respondent's District 8, Subdistrict Lee- County. Previously, Petitioner received approval to construct 120 beds at this facility but was only licensed to use 78 beds. In fact, Petitioner has already constructed, equipped and furnished the additional 42 beds, and now seeks approval to use these beds. No additional capital expenditures would be necessary to place these beds in service. The methodology for calculating need for community nursing home beds is set forth in Rule 10-5.l1(21)(b)1-9, Florida Administrative Code. As more particularly set forth in Findings of Fact 7 through 23, this methodology can be summarized as follows: Determine the planning horizon to which an application is directed. Determine the district's age adjusted number of beds in the horizon year by applying the current bed rates for population age groups 65-74 and 75 + to the district's horizon year population. Determine the gross allocation of beds to the applicable subdistrict by multiplying the district's age adjusted number of beds by the ratio of licensed beds in the subdistrict to licensed beds in the district, and also by the ratio of the average occupancy rate in the subdistrict to .90. For purposes of this calculation in this case, licensed beds are determined as of June 1, 1985 and occupancy rates are those that existed from October, 1984 to March, 1985. Determine the net allocation of beds to the applicable subdistrict by subtracting the total number of licensed beds in the subdistrict at the time of hearing plus 90 percent of approved beds in the subdistrict at the time of hearing from the subdistrict gross allocation. The first step in calculating need pursuant to Respondent's methodology set forth in Rule l0-5.11(21)(b)1-9, Florida Administrative Code, is to establish a planning horizon. Subparagraph (b) of the rule states: 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. (Emphasis supplied.) The Respondent interprets this to mean that the planning horizon is established by counting three years into the future from the filing deadline, established by rule, for a particular application. This is a reasonable interpretation and is consistent with the plain meaning of the rule. Thus, in this case the planning horizon to which Petitioner's application is addressed is July 15, 1988. The next step in applying the need methodology is to determine what is meant by "current population" as that term is used in Rule 10-5.11(21)(b)2. The Respondent interprets this to mean the population current on the application filing deadline which in this case was July 15, 1985. This is also a reasonable construction of the rule, and is therefore accepted. However, the Respondent further contends that the "current population" estimates to be used in applying the rule methodology are those that were available from the Office of the Governor when this application was submitted, and that more recent updates of those estimates should not be considered. Since all population estimates and projections are only approximations, rather than actual counts, it is more reasonable to use updated revisions of "current population" which may be available at the time of hearing. These are still estimates of the population current as of the date an application is filed (in this case July, 1985), but they can reasonably be expected to be more accurate than the prior estimate. In the same manner, estimates of the planning horizon year population (July, 1988) available at the time of hearing should also be used rather than July, 1985 estimates of that population. Respondent's interpretation which is hereby rejected and which would require the use of population estimates available when the application was submitted, excluding all revisions and updates, is not set forth by rule. Additionally, Respondent offered only the testimony of its consultant, Joyce Farr, to explicate this "incipient policy" but she was neither involved in, nor part of, the decision making process which lead to this announced policy. Further, the position advocated by Farr is at variance with Respondent's prior application and interpretation of its rule, and is contrary to the interpretation used when Petitioner submitted this application. At the time of hearing, Farr did not know of any Final Order of Respondent, nor was any policy memoranda introduced, which set forth and adopted the interpretation she espoused as Respondent's policy. The only explanation offered for her interpretation was that she had been told by her supervisor that Respondent would take this position in all cases as a result of the Recommended Order in Case Number 86-0051, dated October 10, 1986, but not yet acted upon by Respondent at the time of hearing. No other evidence was presented by Respondent in support of Farr's interpretation, or to otherwise explicate this non-rule policy. Before applying the need methodology rule, a determination must also be made as to how "occupancy rates" will be measured, as used in Rule 10- 5.11(21)(b)4. As recently as May 8, 1986, Respondent's Administrator of Community Medical Facilities concurred in an interpretive memo prepared by Reid Jaffe, consultant supervisor, which indicated that at the time of hearing the latest available six months occupancy rates would be used. Yet, at hearing Joyce Farr again announced a change of policy to freeze everything, including occupancy rates, to the time of the original application. Under this interpretation, "occupancy rate" in this case would be based on the six months' data for October, 1984 through March, 1985. Petitioners urge the use of "occupancy rate" data from April, 1986 to September, 1986, the latest six months' occupancy data available at the time of hearing. The interpretation announced by Farr at hearing is reasonable, and although in apparent conflict with the interpretive memo dated May 8, 1986, it is consistent with the plain meaning of Rule 10-5.11(21)(b)4 which requires the review of applications submitted for the July batching cycle (in this case July, 1985) to "be based upon occupancy rate data for the months of October through March preceding that cycle" (October, 1984 through March, 1985). Petitioner's position regarding the data to be used in determining "occupancy rate" is therefore rejected as contrary to, and inconsistent with, the plain meaning of the applicable rule. Next, the number of "licensed beds" in District 8 for purposes of subparagraphs (b)2 and 4 of the need methodology calculation must be determined. The district licensed bed figure is explained by Rule 10-5.11(21)(b)7 as follows: Review of applications submitted for the July batching cycle should be based upon the number of licenses (sic) beds (LB and LBD) as of June 1 preceding that cycle; applications for the January batching cycle shall be based upon the number of licensed beds (LB and- LBD) as of December 1 preceding that cycle. Petitioner urges that licensed beds be based on June, 1986 data and Respondent urges data from June 1, 1985. Petitioner's position is again contrary to the plain meaning of the rule, and is therefore rejected. For purposes of subparagraphs (b)2 and 4, LB and LBD are determined as of June 1, 1985. Petitioner contends that its 78 community nursing home beds previously authorized by CON 1616 were licensed on May 31, 1985, and should therefore be counted as "licensed beds." Respondent's witness testified that these beds were actually licensed on June 3, 1985, and therefore should not be considered "licensed beds" for purposes of applying subparagraphs (b)2 and 4 of the need methodology calculation in this case. Petitioner has the burden of proof, but has not offered competent substantial evidence to support its position. It has not established that these 78 beds should be considered "licensed beds" for purposes of subparagraphs (b)2 and 4 since it has not been established that they were actually licensed on or before June 1, 1985. The provisions of Rule l0-5.1l(21)(b)1-4 and 7 can therefore be applied to calculate gross bed need for Lee County using July 15, 1988 as the applicable planning horizon, updated estimates of "current population" for July 15, 1985 and for the planning horizon which were introduced by Petitioner, the "occupancy rate" as determined by data from October, 1984 through March, 1985 which was introduced through exhibit by Respondent, and the number of "licensed beds" in District 8 and the Lee County subdistrict on June l, 1985, as also introduced through exhibit by Respondent. The first step in the calculation of gross need for the horizon year is to derive BA, the current bed rate for the age group 65-74. This rate is defined by subparagraph (b)2 of Rule 10-5.11(21) as follows: BA = LB / (POPC + (6 x POPD) Where: LB is the number of community nursing home beds in the relevant district. POPC is the current population age 65-74. POPD is the current population age 75 years and over. The district licensed bed figure (LB) is then defined by subparagraph (b)7 as follows: Review of applications submitted for the July batching cycle should be based upon the number of licenses (sic) beds (LB and LBD) as of June 1 preceding that cycle; applications - for the January batching cycle shall be based upon the number of licensed beds (LB and LBD) as of December 1 preceding that cycle. Application of the methodology prescribed by subparagraph (b)2 to this case produces the following calculation: BA = LB / (POPC + (6 x POPD) BA = 4,005 / (131,642 + (6 x 79,661) BA = 4,005 / (131,642 + 477,966) BA = 4,005 / 609,608 BA = .0065698 The second step in the calculation of gross need for the horizon year is to derive "BB", the current bed rate for the population age group 75 and over. This methodology is defined by subparagraph (b)3, and calculated in this case as follows: BB = 6 x BA BB = 6 x .0065698 BB = .0394188 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 (b)1 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 . . . Application of the methodology prescribed by subparagraph (b)1 to this case produces the following calculation: A = (POPA x BA) + (POPB x BB) A = (142,791 x .0065698 + (90,467 x .0394188) A = 938.10831 + 3,566.1006 A = 4504 The final step in the calculation of gross need in the horizon year is to derive "SA", the "preliminary subdistrict allocation of community home beds" (gross bed need in this case). This calculation is defined by subparagraph (b)4 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 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 . . . . The subdistrict licensed bed figure (LBD) is defined, consistently with LB, by subparagraph (b)7, supra. Application of the methodology prescribed by subparagraph (b)4 to this case produces a gross need in July 1988 of beds, as follows: SA = A x (LBD/LB) x (OR/.90) SA = 4504 x (808/4005) x (.9689/.90) SA = 4504 x .20174 x 1.0766 SA = 978. The final step in the numeric need methodology is to derive net need from gross need. According to subparagraph (b)9, this need is derived as follows: The net bed 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 depart- mental subdistrict from the bed allocation determined under sub- paragraphs 1 through 9 (sic 8). . . (Emphasis added.) In order to apply subparagraph (b)9 and thereby determine "net" need, it is necessary to decide on what date the licensed bed inventory should be calculated. Respondent asserts that "licensed beds" for purposes of subparagraph (b)9 is the same as LB and LBD used in subparagraph (b)2 and 4, as defined in (b)7. The rule, however, is silent as to how licensed bed inventory should be calculated for purposes of subparagraph (b)8. Respondent did not explicate the reasons for its interpretation. Respondent's position that subparagraph (b)7 defines licensed bed inventory for subparagraph (b)9 ignores not only the clear link between (b)7 and the gross need methodology, but also the plain language and purpose of subparagraph (b)9 which is to derive a realistic estimate of net (or actual) need in the horizon year. Since all licensed and approved beds from previous batching cycles will serve at least a portion of the horizon population, it is only reasonable to include these beds when calculating net need. It would be unreasonable not to count any beds licensed or approved after June 1, 1985 in the calculation of net need. In fact, subparagraph (b)9 itself addresses "the total number" of licensed and approved beds, not just beds that existed on June 1 1985. Petitioner's 78 beds should therefore be counted as "licensed" for purposes of applying the net need methodology calculation in subparagraph (b)9 of Rule 10-5.11(21), and the 143 beds reserved pursuant to the decision in-Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700 (Fla. 1st DCA 1985) should be counted as "approved beds". Net need is then calculated under subparagraph (b)8 as follows: Subdistrict allocation for Lee County = 978 Less Licensed beds = 996 Less 90 percent of 143 approved beds = 129 Surplus in Lee County = 148 Therefore, according to Respondent's need methodology as established in Rule 10-5.11(21)(b) there is a surplus of beds in Lee County for the planning horizon to which Petitioner's application is directed. Petitioner has not established that there is a need for the beds sought in CON 4179 under review in this case. The source in the record of the data used in the above calculations is as follows: LB, LBD, OR - Respondent's Exhibits 1,2 POPC, POPD, POPA, POPS - Petitioner's Exhibit 4 It has not been established that persons using existing and like services are in need of nursing home care but are unable to access services currently available. The need for services which have been denied has not been documented by attending physicians' plans of care or orders, or assessments by either Respondent or attending physicians, as required by Rule 10-5.11(21)(b)10. Petitioner has not established that a geographic or economic accessibility problem exists in Lee County which would warrant approval of this application notwithstanding the lack of need under the methodology of Rule 10- 5.11(21)(b).
Recommendation Based upon the foregoing, it is recommended that Respondent issue a Final Order denying Petitioner's application for CON 4179. DONE AND ENTERED this 2nd day of March, 1987 in Tallahassee, Florida. DONALD D. CONN 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 2nd day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0047 Rulings on Petitioner's Proposed Findings of Fact: Adopted in Findings of Fact 1, 2. Adopted in Findings of Fact 1, 3, 4. Although true, rejected as unnecessary as a separate Finding of Fact. 4. Rejected in Findings of Fact 12, 13. Adopted in Finding of Fact 5. Adopted and rejected in part in Findings of Fact 6-23. Rejected as simply a quote from an exhibit and not a finding of fact. Rejected as unnecessary and not based on competent substantial evidence. 9-11 Rejected in Findings of Fact 6-23. 12-19 Rejected in Findings of Fact 26, 27 and otherwise not based on competent substantial evidence. 20 Rejected in Findings of Fact 10, 11. 21-22 Rejected as irrelevant, unnecessary and not based on competent substantial evidence. Rejected in Findings of fact 26, 27 and otherwise not based on competent substantial evidence. Although true, rejected as unnecessary as a separate finding of fact. 25-32 Rejected as irrelevant and unnecessary. 33-36 Rejected as simply a summation of testimony and statement of position rather than a finding of fact; otherwise cumulative and unnecessary. 37-38 Rejected as not based on competent substantial evidence. 39-44 Rejected as irrelevant and unnecessary. 45-47 Rejected in Findings of Fact 12, 13 and otherwise irrelevant and not based on competent substantial evidence. Rulings on Respondent's Proposed Findings of Fact: Adopted in Findings of Fact 1, 2. Adopted in Findings of Fact 1-4. Adopted in Findings of Fact 6-23. Adopted in Finding of Fact 5, but otherwise rejected in Finding of Fact 23. Rejected in Findings of Fact 7-9. Adopted in Findings of Fact 10, 11. Adopted in Findings of Fact 12, 13, but rejected in Findings of Fact 21-23. 8 Adopted in Finding of Fact 22. 9 Adopted in Finding of Fact 27. 10 Adopted in Finding of Fact 26. COPIES FURNISHED: W. David Watkins, Esquire Post Office Box 6507 Tallahassee, Fl 32314-6507 John F. Gilroy, Esquire Richard Patterson, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building One, Suite 407 Tallahassee, Fl 32399-0700 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Fl 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Fl 32399-0700
Findings Of Fact Each applicant in this proceeding submitted its application in the January, 1986 batching cycle for the January, 1989 planning horizon, each requesting a certificate of need to build a 120-bed nursing home in Brevard County, Florida. The parties have stipulated that each applicant's letter of intent and application was timely filed, that there is a need in the January, 1989 planning horizon for additional community nursing home beds, and that 120 of those beds should be awarded to one of these applicants. They further stipulated that there are sufficient professional staff available in the Brevard County area to completely staff a new nursing home facility and that each of the applicants is able to obtain the funds necessary to construct its project. Maple Leaf of Brevard County Health Care, Inc., a new corporation to be formed as a wholly-owned subsidiary of HCR proposes a 120-bed community nursing home to be located in central Brevard County in the area of Rockledge and Cocoa. In addition to traditional skilled and intermediate care, the nursing home will provide services for sub-acute patients, and a separate wing of the nursing home will be set aside for Alzheimers and related dementia disease patients (hereinafter "Alzheimers patients"). The HCR proposal includes an adult day- care unit for Alzheimers patients and respite care on a bed- availability basis. At final hearing, HCR submitted an application supplement which provided updated calculations, projections and program descriptions to account for changes occurring as a result of the elapse of time between submission of the original application and the final hearing. The application supplement does not include any programmatic changes from the original application and does not add any new concepts or elements to the original HCR proposal. The adult day-care unit will provide care to Alzheimers patients for four to eight hours a day and from one to five days a week, depending upon the needs of the patient and caregiver. The program will be staffed by a nurse director and an assistant. Patients will be provided with various activities of daily living in an environment developed for Alzheimers disease victims. This program provides placement for the patient who does not need inpatient care but whose caregiver needs rest or an opportunity to attend to matters outside of the home, such as employment. Respite care at the HCR facility is intended to provide placement for patients on a 24-hour basis while the family or caregiver attends to needs such as vacation or hospitalization incompatible with overnight care of the patient at home. Respite care provides inpatient nursing home care for short periods of time, typically a week or two. Sub-acute care is a more intensive form of skilled nursing care than typically has been provided in nursing homes. Historically, this care was provided in hospitals, but adoption of the DRG (diagnostically related group) system of acute care reimbursement has resulted in an earlier discharge from hospitals of elderly patients who continue to need an intense level of nursing care. Sub-acute care includes the provision of high-tech services such as ventilator care IV therapy, pulmonary aids, tube feeding, hyperalimentation and short- and long-term rehabilitation. HCR provides a wide variety of these sub- acute care services in its existing facilities. Hospitals in Brevard County report difficulty in placing patients who require sub-acute care and high-tech services. Particularly difficult to place are these patients whose care is reimbursed by Medicaid. The availability of sub-acute care also provides continuity of care for bedridden Alzheimers patients in the later stages of the disease when they require life support systems. HCR proposes to devote a 29-bed wing of the facility to the care of Alzheimers patients. Special design features, patient activities and programs and modified staffing will be provided to meet the special needs of Alzheimers patients. Alzheimers disease, a form of dementia, is a degenerative condition of the brain which results in a progressive dementia and loss of Previously- acquired intellectual functions and memory. Generally, the disease has three or four stages. In the earliest stages, the victims experience some mild memory loss, behavioral changes, loss of interest in previous hobbies, depression, anxiety and increased difficulty handling some routine day-to-day affairs. In the early stages, victims often are in reasonably good physical condition and symptoms tend to be fairly subtle. In stage two memory loss is much more apparent, and victims begin to have problems with the use of language. They may have increased difficulty with spatial relationships and become lost in familiar surroundings. These victims experience more noticeable problems with their memory in terms with dealing with their family and friends; as the disease progresses to stage three, those problems tend to worsen and become apparent even to people who are not otherwise familiar with the patient. The victims may have additional behavioral or psychiatric difficulties associated with depression or severe anxiety. A delusional stage is frequent. These victims experience disruption of their sleeping cycles and sleep during the day and wander during the night. Seizures may become a problem. In stage three, the victims usually require supervision. As the disease progresses through stage three, the victims have difficulty with personal hygiene, difficulty getting dressed and difficulty performing the simplest human task. As the disease progresses into stage four the victim becomes bedridden and requires total nursing care. There is no cure for the disease. It is terminal. Nursing home care is probably appropriate for everyone in stage four of Alzheimers disease. Most patients in stage three require nursing home care. Some patients in stage two may require nursing home care, depending upon the type of care that is available at home. According to some estimations, approximately 2.5 million American adults suffer from Alzheimers disease and approximately one-half of existing nursing home patients, and 15 percent of the population age 75 and over suffer from Alzheimers disease (4 - 5 percent 65 and over, 20 - 30 percent 85 and older). There are eleven nursing homes in Brevard County, but there is only one nursing home in Brevard County which provides a separate unit for Alzheimers patients. This facility is located in West Melbourne in south Brevard County. There is no nursing home which provides a separate Alzheimers program in central or north Brevard County. Historically, Alzheimers patients in nursing homes have been mixed with other patients. The Alzheimers patient in the nursing home has often created management problems because of wandering, incontinence, confusion, loss of cognitive and communicative capabilities, unusual sensitivity to normal environmental stress, and socially, unacceptable behavior. Because of these characteristics, nursing homes have sometimes avoided admitting Alzheimers patients. Often, when such patients were admitted, their behavior was controlled by sedation and physical restraints. Nursing home patients who do not suffer from Alzheimers disease are often agitated and disrupted by the Alzheimers patient. The Alzheimers patient exhibits such unacceptable social behavior as going through other patients' belongings, sleeping in other patients' beds, violent behavior, being unresponsive to attempted communications and continually wandering. A separate unit for the Alzheimers disease victim also accommodates the needs of the non- Alzheimers patient. It is medically appropriate to separate Alzheimers patients from other nursing home patients. Frequently, the Alzheimers patient is suffering from mental problems resulting in confusion and disorientation but is otherwise physically healthy and ambulatory. Other patients in the nursing home often have a variety of medical problems which require more intensive nursing care. Placing Alzheimers patients in the same area with those patients with medical problems requiring more nursing care can be disruptive to the nursing care being provided to the non- Alzheimers patient, The design of the HCR facility is intended to reduce the environmental stress on Alzheimers disease victims and allow them to maintain their cognitive capabilities for as long as possible. Special wall coverings, floor coverings, labeling and color coding features are provided. Separate dining and activities areas are provided. Wandering is permitted. A fenced courtyard is provided. A monitoring system will alert the facility staff when a patient begins to wander out of the facility. Bathrooms are designed to avoid fright and confusion by automatic lighting systems, coloring and distinctly shaped fixtures and waste baskets. Safe dinnerware and tables which enhance the Alzheimers victim's ability to continue to feed himself or herself are provided. Additional staffing in the Alzheimers unit and staff training in Alzheimers care will be provided. The goal of the Alzheimers design and program is to maintain the patient's activities of daily living and assist in the retention of the patient's cognitive capabilities for as long as possible. Separate, specialized Alzheimers care units are beneficial for several reasons. They are safer for the Alzheimers patient. They reduce the agitation and disruption of the Alzheimer's and non-Alzheimer's patient. They provide programs for Alzheimers patients which are within the patient's cognitive abilities. The units are smaller, and each patient receives more individual attention. Sedation and physical restraint is eliminated or reduced. Individual dignity is enhanced. HCR confirmed the need for an Alzheimers program in Brevard County by calculations based upon nationally-accepted statistics and contact in Brevard County with individuals knowledgeable of the availability of care being provided to Alzheimers disease patients. Special units for Alzheimers patients are a fairly new phenomenon. HCR proposes to develop Alzheimers units in other nursing homes in Florida and has submitted applications to add Alzheimers wings to existing nursing homes in Florida. HCR also proposes to convert a wing in an existing facility in Dade County to provide care for Alzheimers patients. HCR will locate its nursing home in the Rockledge- Cocoa area, about thirty miles north of Melbourne and thirty miles south of Titusville, in central Brevard County. All 120 nursing home beds in the HCR nursing home will be certified for Medicaid reimbursement. New equipment for the HCR nursing home is projected to cost $412,079. This represents an increase in cost over the original estimate of $370,000 because of a general increase in equipment cost since the original application and an allocation of approximately $13,800 for equipment for the daycare unit, a cost which was not included in the original estimate. HCR's estimate for purchase of new equipment is reasonable. Projections of payor-mix, facility utilization and revenue and expenses of a nursing home are useful to evaluate the financial feasibility of the project. All projections utilized by HCR to evaluate financial feasibility are conservative projections. The updated projections presented by HCR at final hearing are more conservative than the projections presented in HCR's original application. If the projections found in HCR's original application were realized, the facility simply would be more profitable. HCR's estimate of an 11 percent interest rate for the funds to be borrowed for this project is a reasonable and conservative estimate. HCR's estimate of 50 percent intermediate care patients and 50 percent skilled care patients is a reasonable estimate for the patients expected to be found in this facility and is a conservative estimate. No other applicant provided such an estimate. In computing revenues and expenses, HCR assumed an inflation factor of 3 percent for Medicare and Medicaid revenues, 5 percent for other revenues and 5 percent for expenses. These inflation factors are reasonable. HCR's projections of 22 percent in year one and 25 percent in year two for payroll taxes and fringe benefits are reasonable and consistent with HCR's actual experience. HCR utilized reasonable and appropriate depreciation periods of 40 years for the building and 10 years for equipment. These are the depreciation periods used by HCR in its regular course of business. The patient charges projected by HCR, including Medicaid, Medicare and private room rates and ancillary charges, are reasonable projections. HCR projected that private pay room charges at the nursing home would be $75 for a semi-private room and $85 for a private room in July, 1989. These updated projections are consistent with existing (1987) private pay rates in Brevard County, which range from $59 for a semi-private room to $90 for a private room. The HCR rates, inflated forward to 1989, are reasonable and consistent with the existing private pay charges in Brevard County. Private pay room rates charged at nursing homes tend to reflect the market for private pay rates in the vicinity of the nursing home. HCR's updated projection of payor-mix is consistent with the actual experience in central Brevard County and an open admissions policy for Medicaid patients. HCR projects that the facility will reach 95 percent occupancy within 12 months of operation. This projection is based upon HCR's experience subsequent to filing the original application. This projection is reasonable and more conservative than those of the other applicants. HCR anticipates a loss in the first year of operation of $293,885, but a profit in the second year of Operation of $241,084. These projections reveal that the project proposed by HCR is financially feasible, and these projections are reasonable. Staffing of the HCR nursing home is comprised of an administrator, a director of nursing, an assistant director of nursing, an Alzheimers program director, 8.4 FTE (full time equivalent) registered nurses, 6.3 FTE licensed practical nurses, 39.9 FTE nurse-aides, 1 full time occupational therapy aide, 1 full time recreational therapy aide, a social worker, an activities director, 10 FTE dietary personnel, 3 FTE laundry personnel, 8 FTE housekeeping personnel, a maintenance person, 2 clerical workers, and 1 medical records worker. Physical therapy, occupational therapy, recreational therapy, and speech therapy will be provided by licensed therapists on a contract basis. The updated staffing pattern represents minor changes from the staffing pattern in the original application. These changes are a direct result of HCR's experience in operating an Alzheimers wing within a nursing home. HCR's staffing level for staff who provide direct patient care (RNs, LPNs and Aides) exceeds that of Wuesthoff and Unicare. Staff levels in the HCR nursing home are designed to meet the special needs of the Alzheimers patients. An Alzheimers program director will be responsible for the Alzheimers wing and will be an advisor for the day-care facility. HCR's staffing pattern assumes 15 wandering Alzheimers patients in the Alzheimers wing. Care for Alzheimers patients requires increased staffing. Higher nurse-aides staffing is required in the Alzheimers wing during the evening and night hours than in the remainder of the nursing home because Alzheimers patients tend to wander without regard to the time of day. HCR estimates construction costs to be $2,200,000, not including site preparation, which is estimated to cost $275,000. Construction costs per square foot are estimated at $55 and $61.87 when site preparation is included. The estimates of construction cost and construction cost per square foot include an allocation of 2,000 square feet and $110,000 for the day-care unit. The cost per square foot projected in the updated application differs from that projected in the original application because the original application included site preparation, assumed a facility size of 36,000 square feet and was not changed when the original design was changed to add day- care in the original application supplement. The actual size is approximately 40,000 gross square feet. The original HCR application submitted a blueprint which is somewhat different in shape from that which HCR currently intends to build. When HCR added day-care in its Original application supplement, a change in the shape of the building was required and a new design was submitted, but cost estimates were not changed. The design which HCR will use for this facility is similar to the design being used in four ongoing HCR projects in Florida, and which, therefore, meets HRS' requirements. The design relied upon by HCR at final hearing is not substantially different from the design presented to HRS in the original application supplement. HCR's estimates of construction cost, construction cost per square foot, construction cost per bed, equipment cost per bed and total project costs are reasonable and adequate to accomplish the construction of the proposed facility. HCR's updated construction cost estimates are based upon its construction experience in Florida, its experience in having built the design proposed and its discussions with contractors and subcontractors on the east coast of Florida. HCR is currently building two facilities on the east coast of Florida. HCR does not anticipate any cost overruns on any of the facilities currently under construction. All HCR facilities under construction are being constructed within the certificate of need budgets for those facilities. HCR estimates project development costs, including feasibility studies, surveys, legal and accounting fees, planning and HRS's plan review, to be $55,000, which represents an increase over the estimate in the original application due to the passage of time. HCR estimates professional services required for the construction of the facility to cost $90,000. These services include architectural and engineering fees and a site survey and soil investigation report. These costs are approximate1y $5,000 less than the original estimate. This reduction in cost is a direct result of HCR's new staff of civil engineers. Previously, HCR had contracted for site survey work with outside engineers. Thus, while architectural and engineering fees increase, the costs for site surveys and soil investigation reports decrease. The HCR nursing home will be located on approximately 5 acres. HCR estimates land cost for the facility to be approximately $500,000. This - represents an increase over the original land cost estimate because HCR intends to acquire a site which requires less site preparation, located near a hospital. The HCR estimates for land cost are reasonable and consistent with other applicants' estimates. Site preparation costs are estimated at $275,000, a reduction from the original site preparation cost estimate of $315,000. This change is accounted for by HCR's intention to acquire a more costly site which will require less site preparation. HCR intends to build and operate the nursing home proposed for Brevard County and is willing to accept a condition to that effect on any certificate of need issued. HCR estimates a project completion schedule which will result in its nursing home being occupied and in use in July, 1989, and this project completion forecast is a reasonable forecast. HCR has taken steps to ensure that failure to initiate construction within statutory requirements will not occur. HCR has undertaken numerous nursing home projects since 1983 and has successfully constructed or initiated construction on all of those projects. At this time HCR has approximately six projects under construction, four projects have been completed, and one project is under construction for a third party. The design of the HCR facility incorporates numerous energy conservation measures and efficiencies. The HCR facility will comply with all energy code requirements. HCR owns and operates seven nursing homes in Florida. Three of these facilities have superior licenses, and the remaining facilities have standard licenses. HCR nursing homes adhere to extensive quality assurance standards and guidelines. These standards and guidelines regulate such areas as patients' rights, staff development and orientation, physician and nurses services, pharmacy services and medication administration, social services, patient activities, infection control, patient care planning, safety and the physical environmental, menus, diets, nutritional care and scheduling and staffing of dietary personnel, personal appearance and hygiene for dietary personnel, and food storage, preparation and sanitation. These standards and guidelines will be applicable to this proposed project. The standards and guidelines cover all areas of operations and patient care and incorporate survey tools used by the state of Florida and the Health Care and Finance Administration of the federal government for their annual licensure surveys. Additionally, administrators of HCR facilities have a financial incentive to optimize the performance and the quality of care of their facilities. HCR estimates that approximately 60 percent of the patient days in the facility (53 percent of the revenue) will result from Medicaid patients. This estimate is consistent with the experience in the Rockledge-Cocoa area, where one facility has a very low percentage of Medicaid patients and the remaining facilities have very high Medicaid populations (over 60 percent). HCR's estimate also takes into account HCR's recent experience in staffing a facility which includes an Alzheimers wing. HCR will not restrict the number of Medicaid patients in the Alzheimers wing or the remainder of the home. HCR's original application assumed approximately 45 percent of the patient days (42 percent of the revenues) would be accounted for by Medicaid patients. This assumption was based upon HCR's assumption at that time that, in order to cover the assumed high cost of additional staffing in the Alzheimers wing, a greater percentage of private patients (at a higher daily charge) would be required. Subsequent to submission of the original application, HCR has gained actual experience which has demonstrated that the level of staffing proposed by the original application is not necessary and that the cost of staffing can be reduced. The result is that HCR can reduce its reliance on the additional revenue generated by the private paying patient. HCR's design for its Brevard County Alzheimers unit is based upon a state-of-the-art Alzheimers wing at its facility in Perrysburg, Ohio, and HCR's experience gained there. In addition, HCR operates two other facilities which have separate units for Alzheimers patients. The HCR application is consistent with both state and local health plans. HCR projects a charge for Medicaid patients to be $60.93 and, for Medicare patients to be $76 in July, 1989. The increase in charges between the updated projections and the original projections is due to increases in costs during the passage of time since the original estimates were made. The cost of care for patients who are unable to pay is subsidized by the general revenue of the nursing home. Although HCR and Unicare have not projected a percentage of "charity" patients who will not be paying for their services, there will always be some patients who do not pay for all of their care. Patients who do not qualify for Medicaid but who cannot afford standard private pay rates are charged at lower contract rates. The loan fees projected by HCR of $57,000 for the amount of the project financed by debt are reasonable projections based upon current discussions with lenders. HCR estimates that interest during construction will cost $225,000. This amount represents the interest expense paid during the period of construction. This estimate is reasonable. HCR estimates $50,000 will be required for preopening expenses - those incurred in preparing the facility for the opening day. These expenses include marketing and the hiring of an administrator, a director of nursing, and other employees prior to opening. $50,000 is an adequate amount to cover the pre- opening expenses for the proposed facility. HCR's pro forma assumptions, proposed patient charges, projections of revenue and expense, staffing and projections of salaries are reasonable. Each HCR nursing home provides individual patient care plans for each patient, a statement of patients' rights and a resident council (which is a unit of individuals selected by the patients to afford an opportunity to have a formalized, direct method to state preferences, grievances and other opinions related to the operation of the nursing home), and each HCR nursing home has transfer agreements with local-hospitals. The planning director of the Local Health Council responsible for Brevard County performed an analysis of the need for nursing home beds in Brevard County. The results of the study demonstrate that the central part of Brevard County has a lower number of nursing home beds per thousand population over 65 than the remainder of Brevard County. If additional nursing home beds are to be approved for Brevard County, the beds should be located in the central part of the county because the need for nursing home beds in Brevard County is greatest in central Brevard. The HCR architectural design best accommodates the needs of the nursing home patient. Wuesthoff Health Services, Inc., is a non-profit corporation affiliated with Wuesthoff Hospital, Inc., a 305-bed non-profit hospital serving Brevard County, through a common parent Wuesthoff Health Systems, Inc. Wuesthoff Hospital provides some indigent medical care in central Brevard County, and the Wuesthoff nursing home certificate of need application commits to providing some indigent care at the proposed nursing home facility. Wuesthoff, through its affiliated non-profit companies, operates within Brevard County a home health agency, a hospice, four family practice clinics, Life Line for the elderly or disabled who live alone, and Brevard Medical Transport, a no- cost transportation service for the elderly. It also operates a retail pharmacy through a for-profit affiliated corporation. The hospital has for several years maintained a senior citizens' advisory council which concerns itself with the needs of the elderly in Brevard County. It also intends to compete with other businesses in operating Brevard County's Meals On Wheels due to a recent expansion of the size of the Hospital's kitchen. The proposed nursing home will be located on a tract of land owned by Wuesthoff Hospital which will make the property available to Wuesthoff Health Services, Inc., at either the nominal rental of $1 per year for the useful life of the nursing home or by outright contribution if required by HRS. The land has been owned for several years by Wuesthoff Hospital, but Wuesthoff included $48,000 for land costs in its original certificate of need application. The site for the Wuesthoff nursing home is part of a large tract of land which already has located thereon a 20,000 square feet ambulatory care center, diagnostic testing center, family practice physician, dental facility, and retail pharmacy, all of which are owned by one of the Wuesthoff corporations. The ambulatory care center includes laboratory services, physical therapy services, radiology services, two out-patient surgery suites, and 24- hour physician coverage. The nursing home will be connected to the ambulatory care center by an air conditioned, enclosed corridor through which the nursing home patients will be transported to receive any therapies or services which they require. The farthest distance from any patient room in the nursing home to the ambulatory care center, including physical therapy rooms, is approximately 400 feet. Wuesthoff's nursing home would be located in the area which the Local Health Council recognizes as having the greatest need for nursing home beds, i.e., central Brevard County in the Cocoa/Rockledge area. According to Wuesthoff's updated application the total project cost for its 120-bed nursing home would be $2,901,213, and the facility will consist of 37,500 square feet. The project size actually includes 1,000 square feet for the corridor which connects the nursing home to the ambulatory care center. Therefore, the facility itself consists of only 36,500 square feet. It is unclear whether that figure should be further reduced since Wuesthoff decreased the size of its kitchen in its amended application so that the nursing home would no longer have a full-service kitchen. Similarly, the total project cost was substantially higher in Wuesthoff's original application wherein the total project cost was given as $4,417,884. Wuesthoff made changes from its original to its updated application either because the applications were prepared by different persons or because decisions were made to change Wuesthoff's application, as follows: The original application included a full-service kitchen, while the updated application contemplates meals will be prepared at Wuesthoff Hospital and transported seven miles to the nursing home. The removal of the kitchen affects the square footage of the facility along with equipment costs, staffing costs and other costs associated with the operation of the proposed nursing home, such as the increased costs associated with transporting the food to the nursing home. In its original application, one individual was listed as both the nursing home administrator and director of nursing. In its updated application, Wuesthoff treated these as separate positions. Wuesthoff proposed $376,000 for equipment costs in its original application and projected $187,400 for equipment costs in its updated application. Wuesthoff projected 45 percent Medicaid and 15 percent Medicare in its original application and 50 percent Medicaid and 2 percent Medicare in its updated application without any evidence that the needs in the community had changed. Wuesthoff removed the debt service, in its updated application, thus reducing the financing costs. The underwriter's fees between the original and updated application were reduced based upon a dimunition of the bond size as a result of reduction of square footage in the facility and the elimination of the debt service. Wuesthoff reduced land cost from $48,000 in its original application to no cost in its updated application despite the fact that the land was owned by Wuesthoff at the time the original application was filed. Wuesthoff changed the equity contribution between its original and updated applications without any testimony of extrinsic factors while evidence showed that the funds were available to make the equity contribution at the time of the submittal of the Original certificate of need application. Although Wuesthoff's application' represents that approximately 3 percent of the revenues from private pay patients would be devoted to indigent or charity patients, the 3 percent actually applies to both charity and bad debt. Wuesthoff failed to demonstrate how much of its revenues, if any, would be allocated to charity care alone. Wuesthoff projected charges of $65 for a semi- private room for a private paying patient and $73 for a private room for a private paying patient. These charges, projected for mid-1989, are below existing (1987) charges at nursing homes in Brevard County. The projections of financial feasibility and the pro formas for the Wuesthoff facility are based upon the assumption that the Wuesthoff nursing home will be owned and operated by Wuesthoff Health Services, Inc. The only financial statements provided by Wuesthoff in support of its application are those relating to Wuesthoff Memorial Hospital. Wuesthoff Memorial Hospital is a corporation separate and distinct from Wuesthoff Health Services, Inc. Further, the financial statements of Wuesthoff Memorial Hospital provided by Wuesthoff do not include the "notes" normally appended to those statements. The "notes" to the audited financial statements are typically included in any complete financial statements and are required for a full understanding of the financial statements. The pro formas of Wuesthoff assume that 15 percent of salaries would be allocated to fringe benefits. This assumption is based upon the assumption that the employees of the nursing home will not be unionized and, therefore, their fringe benefits will not be as high as those for unionized employees. The nurses at Wuesthoff Memorial Hospital are unionized and have higher benefits than proposed for the nursing home. Unionization is a decision made by employees and not by management. Wuesthoff's assumptions for fringe benefits do not assume any increase in the fringe benefits from year to year. Wuesthoff agrees that there are required increases in fringe benefits, such as increases in required contributions to social security programs over the next few years. Thus, the amount for fringe benefits assumed by Wuesthoff understates the amount likely to be paid. A participant in the Medicaid reimbursement system is entitled to reimbursement on the basis of fair rental value of the nursing home. Although the fair rental value aspect of the reimbursement plan includes consideration of the value of land upon which a nursing home is situated, and although Wuesthoff assumes that it would receive reimbursement under this element of the plan, Wuesthoff does not include in that reimbursement any value for land value. Wuesthoff would be entitled to that form of reimbursement, but Wuesthoff was unable to specify "how that's going to be done." The Medicaid reimbursement system incorporates certain caps on reimbursement, including caps for patient care costs, operating costs and property costs. Wuesthoff is unable to specify which Medicaid reimbursement caps it utilized when calculating its Medicaid charges. It is not possible to calculate Wuesthoff's Medicaid reimbursement and Medicaid charges based upon the exhibits presented by Wuesthoff, including its applications. The Wuesthoff application does not contain any description of patient care costs or costs of operation of the Wuesthoff facility upon which Medicaid charges can be determined. Wuesthoff represented that certain services would be provided to the Wuesthoff nursing home by Wuesthoff Health Services or Wuesthoff Memorial Hospital at no charge to the nursing home. The exact nature of the services and their value are unspecified. Although Wuesthoff contends fewer staff will be needed at the nursing home, Wuesthoff has not determined how many additional staff would be required at the hospital and has not calculated the cost of transporting food to the nursing home. Ordinarily, a related entity providing services to a nursing home is entitled to reimbursement for the cost of those services under the Medicaid reimbursement system. Wuesthoff has not determined whether the Medicaid statutes and regulations will allow a related entity to waive its entitlement to such reimbursement. Wuesthoff's parent company, Wuesthoff Health Systems, and Wuesthoff Memorial Hospital will incur costs for providing those services to Wuesthoff which Wuesthoff represents will not be reimbursed. These entities' budgets and Medicaid reimbursement are regulated and audited by HRS and the Hospital Cost Containment Board. By providing services to the nursing home and no longer allocating 100 percent of costs to operation of the hospital, the hospital's reimbursement and budget will have to be adjusted. These required adjustments have not been taken into consideration by Wuesthoff. In preparing its budget to be submitted to the Hospital Cost Containment Board, the hospital will be required to allocate a certain amount of time for those persons providing services to the nursing home. The hospital will not be reimbursed for those services by Medicaid or Medicare. The total cost of providing care to nursing home residents must be reported by the nursing home in its Medicaid cost report. If a nursing home does not include allowable Medicaid costs in its cost report, HRS will include those costs when HRS audits the cost report. When those additional costs are included, the nursing home's reimbursement (Medicaid charge) will increase. It is not a generally accepted accounting principle to exclude allowable costs in a Medicaid cost report. By not including certain costs, expenses are understated and profit is overstated. Wuesthoff attempted to present evidence that a hospital-based nursing home facility maintains lower costs which can be passed on to its patients, because of an absence of taxation and the presence of group purchasing. However, this evidence also revealed that the hospital-based nursing home to which Wuesthoff sought comparison had patient care and operating costs which exceed the caps for Medicaid reimbursement. Additionally, Wuesthoff's Medicaid costs are higher than those of HCR. Wuesthoff proposes an architectural plan for its nursing home which has never been built in Florida. Wuesthoff is the only applicant which proposes three nurses' stations for 120 beds. The 120-bed nursing home with two nurses' stations is more efficient to operate than a 120-bed nursing home with three nurses' stations. Three nurses' stations result in a higher cost per patient day than two nurses' stations. Wuesthoff's architect was unable to estimate the cost of site preparation and was unable to specify the exact nature of site preparation required. However, site preparation will be required. There is confusion concerning the cost of equipment for the Wuesthoff project, particularly with regard to food service equipment. Although the Wuesthoff architect testified that Wuesthoff originally had consulted with him concerning the cost of equipment, the witness was unable to identify the equipment costs listed in the application. The equipment list relied upon by Wuesthoff and the list of used equipment and food service equipment was not prepared until the first week of the final hearing. Wuesthoff's projection of construction cost ($57 per square foot) was not prepared by Wuesthoff's architect and the source of the projection is unspecified. The project is not based upon any actual experience of nursing home construction in Florida. The original estimate was provided by the architect to Wuesthoff several years earlier and was lower than $57 per square foot. Wuesthoff proposes to connect its nursing home to a nearby ambulatory surgical center by a corridor. There are no physical therapy or Occupational therapy rooms provided at the nursing home. Although recreational therapy and speech therapy must be provided at the nursing home, only small meeting rooms are available for these purposes. A nursing home patient transported from a nursing home to a location outside the nursing home for therapies must remain in the care of nursing home staff. This mode of operation requires more staff than one in which all therapies are provided within the physical confines of the nursing home. Wuesthoff did not include in its estimate of project development cost any estimate for attorney's fees or consulting fees of the planners and financial consultants retained for the purpose of obtaining a certificate of need. The shared services referred to by Wuesthoff are not free services, and no evidence was offered to show that the sharing of those services would be cost efficient. The corridor between the ambulatory surgical center and the nursing home is estimated by Wuesthoff to be 1,000 square feet. The cost for the corridor is -included in the costs projected for the nursing home, and the corridor is included in the total size (37,500 square feet) of the nursing home. Wuesthoff proposes to equip the nursing home with used equipment and furniture. The used hospital beds which Wuesthoff proposes to use at the nursing home are eight to twelve years old. Although Wuesthoff proposes to provide therapy through professional staff from Wuesthoff Memorial Hospital, Wuesthoff could not estimate how many additional therapists must be hired by the hospital in order to provide therapy for the nursing home patients. Wuesthoff contends that it will provide a high level of charity care in its nursing home at the same level that is provided at the hospital. However, when calculating the percentage of charity care at the hospital, Wuesthoff included care provided within programs where some form of governmental funding was available to pay for care. For instance, Brevard County contributes funding toward the care of patients who are not eligible for Medicaid or Medicare reimbursement. There is also a state fund for indigent care and Wuesthoff expects to receive revenues from that fund. The total allowance for bad debt and charity care proposed by Wuesthoff is 1.1 percent of gross patient revenues. Wuesthoff will require financial screening of patients prior to admission. Unicare proposes as total project cost in both its original and updated applications the amount of $3,360,000. The project cost cannot be relied upon, however, since it will be necessary for Unicare to modify its design. As further set forth below, Unicare's projected revenues and expenses are suspect. Unicare has never constructed a new nursing home in Florida or built the design proposed. When filing a cost report and determining Medicaid reimbursement for a new nursing home, all costs incurred throughout the process of developing and constructing the project, including feasibility studies, attorney's fees, accounting fees, consulting fees and certificate of need fees must be included. Unicare failed to include all project development costs in its application. The pro formas and projections of revenues and expenses for Unicare were prepared solely by Unicare's certificate of need consultants, based upon the consultants' experience in their own nursing homes and not upon any information (other than home office costs) concerning the operation of Unicare nursing homes. Unicare's in-house financial expert agreed that it is difficult to project revenues and expenses for operation of the proposed Unicare nursing home without having knowledge of what Unicare's general costs and expenses are. Two Unicare homes have failed to comply with the isolation room requirements of Rule 10D-29, Florida Administrative Code, which governs the licensure of nursing homes. The Unicare design does not provide any single, licensed isolation room as required by HRS licensure regulations. The Unicare architectural design provides only one toilet room between two patient rooms to meet the needs of four nursing home patients. The company which designed and expects to construct the Unicare facility has not performed any nursing home construction work in Florida since 1983 or 1984 when the company remodeled a nursing home. The last nursing home which this company completed for Unicare was prior to 1985. This company did not prepare the construction cost estimates relied upon by Unicare. Calculation of the size of the Unicare facility did not include a reduction of 9 square feet for each indented, V-shaped window in the facility. There are 23 such windows proposed for the Unicare facility. Accordingly, the Unicare facility is 207 square feet smaller than represented in the application. Licensure regulations require an unobstructed view (vista) of 20 feet from the window of a nursing home resident's room. At least four Unicare patient rooms have an unobstructed view of less than 20 feet. Therefore, the design presented by Unicare at final hearing does not comply with the rules for licensure of a new nursing home, pursuant to Chapter 10D-29, Florida Administrative Code. The Unicare design has never been built, although it was prepared more than five years ago. The design was intended for patient programs not now proposed by Unicare. The original facility design accommodated residents who require a degree of care below and can participate in activities above typical nursing home residents, such as residents found in adult congregate living facilities. The design and location of the sinks in the Unicare patient rooms do not allow sufficient space for a patient in a wheelchair to have access to the sink at the same time that the door to the toilet room is open. Unicare proposes to locate its facility in the Titusville area in north Brevard County. The local health plan shows the greatest need for additional nursing home beds to be in central, not north, Brevard County. Unicare's selection of Titusville as the area for location of its nursing home was not based upon any demographic analysis or determination of need for additional nursing home beds in the Titusville area. Rather, the selection of Titusville would avoid competition with another of Unicare's facilities located in the Rockledge/Cocoa area. In determining equipment needs, Unicare's certificate of need consultants did not refer to the design of the Unicare nursing home. Unicare projects that its facility will reach 97 percent occupancy in the first nine months of operation. However, the last nursing home to open in the Titusville area, Vista Manor, did not reach 97 percent occupancy until after the first year of operation. Unicare will staff at skilled levels. Its proposed staff salaries are reasonable. Unicare has not yet settled on any site in the Titusville area although it has narrowed its search down to four sites which vary between four and seven acres with prices ranging from $25,000 to $90,000 per acre. Its current total project cost of $3,360,000 computes to a project cost per bed of exactly $28,000. Unicare's parent, United Health, Inc., is the entity that must fund this project and has, by resolution, committed to such funding "provided that said expenditure shall not exceed $28,000 per bed." Consequently, it is highly likely that the proposed design, which has never been built anywhere, which must be redone to comply with HRS codes, and which will be built on land that is yet to be acquired but which will likely require a zoning variance, will cost more than $28,000 per bed. The HCR nursing home is larger and provides more area for patient care than the facilities proposed by Wuesthoff and Unicare. The HCR facility will provide more gross square feet per bed and a larger nursing unit area (which includes patient rooms, the nursing support unit and corridor areas). The entire facility proposed by HCR will be 40,000 square feet, 2,000 of which is allocated to day-care; the day-care area will be available to nursing home residents during those hours in which the day-care area is not in use by day- care residents. The Wuesthoff facility is said to be 37,500 square feet, but 1,000 square feet consists of an outside corridor; thus, the net usable space at the Wuesthoff nursing home is only 36,5' 00 square feet. The smallest proposed facility is the Unicare facility, said to be 34,121.5 square feet, but actually less than 34,000 feet when accurately measured. The nursing homes proposed by Wuesthoff and Unicare are at or below the low gross square foot average determined by HRS. Larger patient care areas are desirable. It is not desirable to place only one toilet room between two patient rooms to accommodate four patients, as proposed by Unicare. It is a generally accepted standard for nursing home skilled nursing units to be organized in groups of 60 beds. Units of this size offer the best efficiencies of operation in terms of economics and quality of care. Each nursing unit must include, in addition to patient bedrooms, toilet rooms and bathing facilities, one nurses' station, a clean utility room, a soiled utility room, a medication preparation room, a nourishment room, a janitors closet, an equipment storage room, a stretcher and wheel chair alcove, a clean linen closet and a nurses' toilet and lavatory. By providing three nursing units, Wuesthoff must devote more space to meet these requirements than would be required for two nursing units.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS enter a Final Order: Granting HCR's application for a certificate of need; Denying Unicare's application for a certificate of need; Denying Wuesthoff's application for a certificate of need; and Dismissing the Petition to Intervene of Brevard Medical Investors, Inc. DONE and RECOMMENDED this 30th day of July, 1987, in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of July, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2686, 86-2687, 86-2688 and 86-2690 Unicare's proposed findings of fact numbered 14, 22, and 25 have been adopted either verbatim or in substance in this Recommended Order. The remainder of Unicare's proposed findings of fact have been rejected as follows: 1, 3, 8, 10, 11, and 13 as being contrary to the evidence in this cause; 2, 4-7, 12, 15-17, 19-21, 23, 24, and 26 as not being supported by the weight of the evidence in this cause; 9 and 18 as being subordinate to the issues in this cause; and 27 as not constituting a finding of fact but rather as constituting argument of counsel or a conclusion of law. Wuesthoff's proposed findings of fact numbered 2-6, 36, 39, and 40 have been adopted either verbatim or in substance in this Recommended Order. The remainder of Wuesthoff's proposed findings of fact have been rejected as follows: 31 as being contrary to the evidence in this cause; 1, 7-18, 22-30, 32, 34, and 41 as not being supported by the weight of the evidence in this cause; 19-21, 33, 35, 37 and 38 as being subordinate to the issues in this cause; and 42 - 43 as not constituting a finding of fact but rather as constituting argument of counsel or a conclusion of law. HCR's and HRS' proposed findings of fact numbered 1-66, 68, 70-81, 83, 85- 92, 94, 96-104, and 106-123 have been adopted either verbatim or in substance in this Recommended Order. The remainder of HCR's and HRS' proposed findings of fact have been rejected as follows: 67 as being subordinate to the issues in this cause; 69 as being cumulative; 82 and 95 as being irrelevant; 84 as being unnecessary; 93 as not constituting a finding of fact but rather as constituting argument of counsel or a conclusion of law; and 105 as being not supported by the weight of the evidence in this cause. COPIES FURNISHED: Harold F. X. Purnell, Esquire Kenneth Hoffman, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 Richard Patterson, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 Frank J. Santry, Esquire Post Office Box 14129 Tallahassee, Florida 3231 Jonathan S. Grout, Esquire Karen L. Goldsmith, Esquire Dempsey & Goldsmith, P.A. Post Office Box 1980 Orlando, Florida 32802 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700
Findings Of Fact Based on the stipulations of the parties, on the testimony of the witnesses, and on the exhibits received in evidence, I make the following findings of fact. By application dated April 15, 1983, Beverly Enterprises-Florida, Inc., (hereinafter "Beverly" or "Petitioner") applied to the Department of Health and Rehabilitative Services for the issuance of a certificate of need for the construction of a new 120-bed nursing home in Marco Island, Collier County, Florida. The application was deemed by HRS to be complete effective September 15, 1983. (Pet. Ex. 1) By letter dated December 5, 1983, HRS advised Beverly that its application was denied. (Pet. Ex. 2) The letter included the following reasons for denial: The proposed project is not consistent with Chapter 10-5.11(21), Florida Administrative Code, nursing home bed need methodology. With a six month occupancy of 58.2 percent in the subdistrict of Collier County, the utilization threshold of 90 percent developed from the application of Chapter 10-5.11(e), (f), and (h), Florida Administrative Code, is not satisfied and no further bed need is demonstrated for this subdistrict. There are 97 approved but unlicensed beds in the subdistrict which, when added to the existing licensed bed supply, should effectively maintain the county-wide occupancy at a reasonable level through 1986. Further explication was contained in the State Agency Action Report which accompanied the HRS letter of December 5, 1983. Florida Administrative Code Rule 10-5.11(21)(a), adopted by HRS, reads as follows: Departmental Goal. The Department will consider applications for community nursing home beds in context with the 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), (a), (f), (g), and (h) of this rule. (Pet. Ex. 3) A step-by-step application of the methodology described in Rule 10- 5.11(21)(b) through (h) to the facts in this case is as follows. Under the formula, bed need is determined by first looking at the poverty level in District VIII and in Collier County (Pet. Ex. 5, Tr.252). The poverty level is computed by comparing the number of elderly living in poverty in the district, which is 8.61, to the number of elderly living in poverty in the State, which is 12.70, resulting in a poverty ratio of .68 (Tr.252). The bed need ratio is computed by multiplying the poverty ratio of .68 times 27 beds per thousand population 65 or older, which results in a bed need ratio of 18.3 beds per thousand residents 65 years or older (Tr.252). When the bed need ratio is applied to the 65 and over population in District VIII, the total bed need is 3,858. The bed need for the subdistrict of Collier County is 514 beds (Tr.252). The number of licensed and approved beds in the district is 4,618 and the number of licensed and approved beds in the subdistrict is 429 (Tr.252). When the need for beds is subtracted from the total number of licensed and approved beds, there is a surplus of 760 beds in District VIII, but a need for 85 beds in the subdistrict of Collier County (Tr.253). When a need for beds exists in the subdistrict but not the district as a whole, subsection (g) of the rule allows new beds to be added only if existing beds are being utilized at a 90 percent or greater occupancy rate (Pet. Ex. 5, Tr.253-255). The current utilization rate for nursing home beds in Collier County is 61.1 percent (Pet. Ex. 7, Tr.255). Since the current utilization rate is less than 90 percent, no additional beds are needed in Collier County (Tr.256). Approval of the Beverly application to construct a 120-bed nursing home in Marco Island would, in the words of the applicable rule, "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), and (h) . . . " of Rule 10-5.11(21), Florida Administrative Code. (Pet. Ex. 2, 5, 6, and 7; testimony of expert witnesses Mr. Knight and Ms. Dudek.) HRS is presently considering the adoption of amendments to the nursing home need methodology provisions presently found in Florida Administrative Code Rule 10-5.11 (21)(b) through (h). If the present form of the tentative amendments to Rule 10-5.11(21)(b) through (h) were to be adopted and become effective soon enough to be applicable to Beverly's application in this case the result would be the same as under the current rule. Approval of Beverly's application would cause the number of community nursing home beds in HRS District VIII to exceed the number of community nursing home beds calculated by the methodology of both the existing rule and the tentative amendments to the rule. (Testimony of expert witness Knight.) Florida Administrative Code Rule 10-17.020(2)(b), adopted by HRS, reads as follows: (2) Policies and Priorities. In addition to the statewide criteria against which applications are evaluated, applications from District 8 will be evaluated against the following local criteria: a. * * * b. Nursing home services should be available within at least one hour typical travel time by automobile for at least 95 percent of all residents of District 8. (Pet. Ex. 3) HRS District VIII consists of seven counties. The current population estimate of these seven counties is 679,019. According to the most recent census information, the permanent population of Marco Island is 8,605. Four community nursing homes are located in Naples, which is also in Collier County. Typical travel time by automobile from the center of Marco Island to the center of Naples is approximately 30 to 45 minutes, depending on the season of the year. (Tr.59-60, 83, 118, and 151) In arriving at the current utilization rates for purposes of applying the need determination methodology, HRS relied on the latest available quarterly nursing home census reports. (Pet. Ex. 7; Tr.255-256) In compiling the Collier County average occupancy rate for purposes of applying the need determination methodology, HRS counted as existing beds all of the licensed beds of all of the community nursing homes in Collier County, which included 114 beds licensed for Gulf Drive Residence, Inc., and 120 beds for Americana Healthcare Center. (Pet. Fx. 2)
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the Department of Health and Rehabilitative Services enter a final order in this case DENYING the application of Beverly Enterprises-Florida, Inc., for a certificate of need to construct a new community nursing home in Marco Island, Collier County, Florida. DONE and ORDERED this 20th day of September, 1984 in Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of September, 1984.
Findings Of Fact Petitioners' application for a certificate of need to construct a 60- bed skilled nursing home was recommended for approval by the Health Planning Council, the health systems agency (HSA) for the five counties of Martin, Palm Beach, Volusia, Okeechobee and St. Lucie, but was denied by the Department of Health and Rehabilitative Services (HRS), Office of Community Medical Facilities. The latter agency has the ultimate responsibility for granting certificates of need. In recommending the granting of a certificate of need, HSA considered available beds in existing facilities in lieu of licensed beds, found 89.6 percent occupancy of available beds equal to or greater than 90 percent occupancy of licensed beds prescribed by the State Plan for Hospitals and Related Medical Facilities (Exhibit 2), used its own population forecasts rather than State population forecasts, and failed to consider certificates of need approval recently granted to five nursing homes in Palm Beach County, some of which were already under construction. HSA, at the time of this application had Palm Beach County divided into four regions (which has now been expanded to five) and the proposed facility is located in region three. At the time of the application there were three existing nursing homes in region three and two additional facilities had been granted certificates of need in this region. HSA normally uses licensed beds to determine the percentage of occupancy, but for reasons not explained at this hearing, HSA used available beds to determine the percentage of occupancy. Using available beds HSA found the three nursing homes in region three of Palm Beach County to have an 89.6 percent rate of occupancy. Had licensed beds been used, the percentage of occupancy would have been 83. The Office of Community Medical Facilities, in determining the need for additional medical facilities, has divided the State into 60 health care service areas and Palm Beach County is one of those areas. No evidence was submitted to indicate that the service areas so established are not reasonable. At the time of Petitioners' application, there were 1981 licensed nursing home beds in Palm Beach County; and applications had been approved, or recommended for approval and subsequently approved, for an additional 460 beds in Palm Beach County. The projected need in the State Plan for 1977 (Exhibit 2) for nursing home beds for Palm Beach County by 1982 is 2038. Accordingly, at the time of this hearing, nursing homes in Palm Beach County had received approval for 2441 beds which is 403 more nursing home beds than the forecast need for the year 1982. In determining the need for medical and health provider facilities, the usage rate of existing facilities is first determined from actual usage of the facilities. The Projected Average Daily Census is then determined by multiplying the use rate by the forecast population and dividing by 365 days per year. From this figure the bed need is determined by dividing the Projected Average Daily Census by .85 and adding 10. In this manner, HRS determined in the 1977 State Plan for Construction of Hospitals and Related Medical Facilities that Palm Beach County would have a need for 2038 nursing home beds in 1982. At the time Petitioners' application was recommended for approval by HSA, additional certificates of need had been granted for an additional 160 nursing home beds in region three of Palm Beach County. These facilities are designated as Life Care Centers because they are attached to condominiums from which their primary source of patients is expected to come. However, these facilities are essentially nursing homes and provide the same services as nursing homes. Had these authorized additional beds been included in computing the percentage of occupancy of nursing homes in region three the rate would have been approximately 60 percent, assuming no population change when these facilities become operational.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, as well as the stipulation of facts "entered into by all parties, the following relevant facts are found: Along with six other applicants, the petitioner, Health Quest Corporation, d/b/a Lake Pointe Woods Health Center, and the respondent, Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center, submitted applications for a Certificate of Need to construct and operate new nursing homes in Sarasota County, In June of 1982, the respondent Department of Health and Rehabilitative Services (HRS) determined to issue the application of Sarasota Health Care Center and deny the remaining seven applications. For the purposes of this proceeding, the parties have stipulated that there is a need for at least a 120-bed skilled and intermediate care nursing home in the Sarasota, Florida area. In November, 1982, respondent HRS adopted Rule 10- 5.11(21) , Florida Administrative Code, which provides a formula methodology for determining the number of nursing home beds needed in areas throughout the State. Briefly summarizing, this formula begins with a bed to population ratio of 27 per thousand population age 65 and over, and then modifies that ratio by applying a poverty ratio calculated for each district. The theoretical bed need ratio established for Sarasota County by this portion of the Rule's formula is 23.2 nursing home beds per thousand elderly population projected three years into the future. The population figures to be utilized in the formula are the latest mid-range projections published by the Bureau of Economic and Business Research (BEBR) at the University of Florida. After determining the theoretical need for nursing home beds in an area, the Rule purports to determine the actual demand for beds by determining the current utilization of licensed community nursing home beds, establishing a current utilization threshold and, if this is satisfied, applying a prospective utilization test too determine the number of beds at any given time. Applying the formula methodology set forth in Rule 10- 5.11(21) to Sarasota County results in a finding that there are currently 807 excess nursing home beds in that County. The need for sheltered nursing home beds within a life care facility are considered separately in Rule 10-5.11(22), Florida Administrative Code. Generally speaking, need is determined on the basis of one nursing home bed for every four residential units in the life care facility. Elderly persons 75 years of age and older utilize nursing homes to a greater extent than those persons between the ages of 65 and 74. Persons under the age of 65, particularly handicapped individuals, also utilize nursing home beds. The formula set forth in Rule 10-5.11(21) does not consider those individuals under the age of 65, and it does not provide a weighted factor for the age 75 and over population. In the past, the BEBR mid-range population projections for Sarasota County, compared with the actual census reached, have been low. Petitioner Health Quest, an Indiana corporation, currently owns and/or operates some 2,400 existing nursing home beds in approximately 13 facilities in Indiana. It holds several Certificates of Need for nursing homes in Florida and construction is under way. Petitioner owns 53 acres of land on the South Tamiami Trail in Sarasota, upon which it is constructing a 474-unit retirement center. It seeks to construct on six of the 53 acres a 120-bed nursing home adjacent to the retirement center. Of the 120 beds, it is proposed that 60 will be for intermediate care and 60 will be for skilled care. The facility will offer ancillary services in the areas of speech, hearing, physical, occupational, and recreational therapy. Thirty-five intermediate care beds would be classified as beds to be used for Medicaid recipients and the facility would be Medicare certified. Retirement center residents will have priority over nursing home beds. The total capital expenditure for the petitioner's proposed nursing home project was estimated in its application to be $3.1 million, with a cost per square foot of $46.29 and a cost per bed of approximately $26,000,00. As of the date of the hearing, the estimated capital expenditure for the petitioner's project as $3.9 million. The respondent Quality Health Facilities, Inc., d/b/a Sarasota Health Care Center (QHF), is a Mississippi corporation and owns nursing homes in Tennessee, North Carolina and Haines City, Florida, the latter site having been opened in August of 1983. It also holds three other outstanding Certificates of Need. QHF proposes to construct a 120-bed nursing home containing intermediate and skilled care beds which will be equally available to all members of the community. It is anticipated that it will have approximately 65 percent Medicaid usage and 5 percent Medicare usage. Though it has not yet selected its site, QHF plans to utilize a four-acre site near the City of Venice in Sarasota County. At the time of the application, the total capital expenditure for QHF's proposed project was estimated to be $2.3 million. Its construction costs were estimated at $1.16 million or $33.14 per square foot. QHF's recently constructed Haines City nursing home facility was completed at a construction cost of $1.22 million, or $31.00, per square foot. The Sarasota County facility will utilize the same basic design as the Haines City facility. At the current time, the cost of construction would be increased by an inflation factor of about ten percent. As of the date of the hearing, the projected capital expenditure for QHF's Sarasota County proposed facility was approximately $2.6 million or about $21,000.00 per bed. The owners of QHF are willing and able to supply the necessary working capital to make the proposed nursing home a viable operation. As depicted by the projected interest and depreciation expenses, the QHF facility will have lower operating expenses than the facility proposed by petitioner, Health Quest. In Sarasota County, there is a direct correlation between high Medicaid utilization and high facility occupancy. The long term financial feasibility of a 120-bed nursing home in Sarasota County is undisputed, as is the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing services in the health service area.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the application of Health Quest Corporation d/b/a Lake Pointe Woods Health Care, Inc. for a Certificate of Need to construct a 120-bed nursing home in Sarasota County be DENIED. It is further RECOMMENDED that the application of Quality Health Facilities Inc. d/b/a Sarasota Health Care Center for a Certificate of Need to construct a 120-bed nursing home facility in Sarasota County be GRANTED. Respectfully submitted and entered this 31st Day of October, 1983, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1983. COPIES FURNISHED: John M. Laird, Esquire 315 West Jefferson Blvd. South Bend, Indiana 46601 John T. C. Low, Esquire Paul L. Gunn, Esquire Low & McMullan 1530 Capital Towers Post Office Box 22966 Jackson, Mississippi 39205 James M. Barclay, Esquire Assistant General Counsel 1317 Winewood Blvd. Suite 256 Tallahassee, Florida 32301 David Pingree, Secretary Department of Health & Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
Findings Of Fact In April, 1984, the Petitioner, Health Care and Retirement Corporation of America d/b/a Heartland of Palm Beach, applied for a certificate of need for 120 community nursing home beds in Palm Beach County, Florida. In July, 1984, the Respondent, the Department of Health and Rehabilitative Services (HRS) gave notice of initial intention to deny the application. HRS Exhibit 5. The instant proceedings are the result of the request of the Petitioner for a formal administrative hearing from that denial. On January 22, 1986, the parties jointly moved for a continuance of the final hearing in this case then scheduled to commence on February 3, 1986, and in paragraphs 3 through 6, represented that the purpose of the requested continuance was to allow the Petitioner to gather data as to two alleged underserved groups: patients suffering from Alzheimer's disease and sub-acute care patients. The Petitioner asserted that such data would support an amended, updated application for certificate of need to be filed by the Petitioner for the purpose of showing need pursuant to the special exception allowed in the rules. In paragraph 8 of the motion, HRS agreed to give serious consideration to the updated application and supporting documents. The motion was granted by order dated February 3, 1986, and at the request of both parties, the final hearing was reset for April 3, 1986. The parties have agreed that all statutory and rule criteria have been satisfied by the Petitioner in this case except for the issue of need as determined by rule 10-5.11(21), Florida Administrative Code, and that question is the sole issue in this case. T. 5; Hearing Officer Exhibit 1. Petitioner's initial application did not mention the intention to provide special services for victims of Alzheimer's disease, and the Petitioner did not amend or update its application with HRS in that respect, except to the extent that it presented such testimony in the formal administrative hearing. T. 104. The application is not in evidence. The initial review of Petitioner's application by HRS did not consider special services to Alzheimer's patients. T. 117; HRS Exhibit 5. HRS has adopted rule 10-5.11(21), Florida Administrative Code, to determine need for additional community nursing home beds. Using a planning horizon of 1987, which is 3 years after the date of application, the rule calculates a net surplus of 511 community nursing home beds for Palm Beach County. Even using the 1989 planning horizon, there is still a net zero bed need using the rule formula for Palm Beach County. T. 100; HRS Exhibit 2; T. 97 and 102. Alzheimer's disease is a degenerative process of the brain characterized primarily by loss of memory and impairment of a variety of routine functions. T. 160-161. Diagnosis of the disease is difficult since there are related degenerative mental disorders. Moreover, positive diagnosis typically requires examination of brain tissue, and the process of obtaining brain tissue is intrusive. T. 162-163. For these reasons, the diagnosis is typically of "senile dementia of the Alzheimer-type," or Alzheimer's disease or related disorders. T. 163. The cause of the condition is not known, although research into possible surgical techniques to ameliorate the effects is being conducted in the Jupiter, Florida, area. T. 73. Alzheimer's disease primarily afflicts elderly persons, although some younger persons may also be victims. T. 163. Person suffering from Alzheimer's disease typically have memory loss, communicative problems, aphasia, trouble understanding, confusion, disorientation, inability to recognize care givers, waking at night, interrupting the care giver's sleep, wandering, mealtime problems, inappropriate sexual activity, incontinence, and social disfunctions. T. 184. Such persons exhibit negative behavior such as resistence to care, demanding, aggression, anger, emotional outbursts due to inability to perform routine tasks, and delusions. Id. Four stages of progressive degeneration are expected with Alzheimer's disease. The first is forgetfulness and loss of ability to perform complex tasks which formerly could be performed. In the second stage, communication problems occur and also loss of memory as to the names of common objects. Wandering and becoming lost also may occur. Stage three is characterized by physical deterioration such as loss of weight, incontinence, and loss of control of other bodily functions. In the fourth stage, a patient will become unable to communicate at all, and may become comatose and bedridden. The course of the disease is from 12 to 16 years or longer and can involve many of the problems described above. T. 217-218. A family member is usually the person first required to provide care for an Alzheimer's victim. T. 165. The responsibilities caused by such care, and the manner in which the symptoms of Alzheimer's disease are exhibited, cause the family care-giver to feel trapped, fatigued, depressed, angry, resentful, and frustrated. T. 167. At times, the family care-giver is elderly and can suffer health problems from the responsibility. T. 82-83. The burden upon the family member can be alleviated by day care, which involves care only during the day, and respite care, which can involve overnight care for several days. T. 167, 147-148. Day care and respite care can also serve the function of establishing a relationship with staff and collection of data and records, both of which become useful for the time when the patient's disease progresses to the point that continuous inpatient care is required. T. 83, 220-223. Alzheimer's patients in a nursing home need special care directed toward their particular disability described above. Of primary concern is that the nursing home be structured to provide an environment that minimizes confusion and compensates for the disabilities of the Alzheimer's disease victim. Separation from other elderly residents, who are not cognitively impaired, is important to prevent confusion of the Alzheimer's patient and to protect the other residents from disruptive intrusions. The physical facility should be constructed and furnished so as to minimize confusion and stimulation. Colors should be subdued, flooring should not mute the sound of footsteps, patterns should not be used, and common appliances should have distinguishing shapes and be clearly identified or labeled. Spaces for quiet and for wandering should be provided. Features to compensate for forgetfulness, such as lights which automatically turn on when a door is opened, should be provided. T. 219- 227, 57-58, 63-64, 81. Staffing must be trained to recognize and help alleviate problems that arise from behavior caused by Alzheimer's disease. T. 74-75, 234- 235, 80, 83-84. Finally, since Alzheimer's disease patients become upset with change due to recognition and memory impairment, continuity of care (staffing and physical surroundings) becomes important. T. 221, 223, 78, 82-83. Alzheimer's disease victims who need inpatient care also need all of the normal forms of skilled nursing care that other elderly persons need. This may occur over a course of years, or may be the results of a sudden injury, such as a broken hip. T. 220-223, 147-148, 79. As discussed above, it is important to be able to provide such care in the same facility since continuity of care is so important, and transfers to new surroundings are disruptive. Any current holder of a certificate of need for community nursing home beds in Palm Beach County may, if it wishes, provide special services to persons suffering from Alzheimer's disease. T. 122. Existing nursing homes in Palm Beach County accept Alzheimer's disease victims, but none provide special services for these patients except perhaps Darcy Hall, which provides adult day care. T. 143, 76, 82, 168-169, 171, 200-201, 210-211. Existing adult congregate living centers and adult day care centers in Palm Beach County similarly do not have special services or programs for victims of Alzheimer's disease. T. 145. Existing nursing homes could provide such services to Alzheimer's patients, though approval of HRS by expedited review to change substructure might be required, but none has done so. T. 154. Alzheimer's patients are often inappropriately restrained, or mixed with non-Alzheimer's disease patients. T. 77. Dr. Eugene Loeser is a physician, board certified in neurology, and is in private practice in Jupiter, Florida. T. 157-158. Dr. Loeser created a list of questions to ask physicians in Palm Beach County to explore the need for special nursing home programs for Alzheimer's disease patients, and that list of questions is HRS Exhibit 8. T. 169, 186-189. Using these questions Dr. Loeser conducted a survey of 36 physicians in Palm Beach County, which included 8 family practitioners, 10 internists, 14 neurologists, 2 neurosurgeons, and 2 psychiatrists. T. 170. There are approximately 1,000 physicians in Palm Beach County, T. 31, and Dr. Loeser admitted that his survey was only of a small percentage. T. 170. Dr. Loeser did not attempt to make the survey statistically valid. T. 178. The physicians contacted were selected from the telephone book from Jupiter in the north to Lake Worth in the south. T. 171, 183. Dr. Loeser attempted to contact representatives of several specialities. T. 181. The specialities were selected as those likely to see Alzheimer's patients. T. 170. Of the 36 physicians contacted, 35 had seen patients having Alzheimer's disease. Petitioner's Exhibit 5. Of these, 27 physicians had "difficulty in finding appropriate placement" for these patients in terms of supervision, care and treatment. Petitioner's Exhibit 5; HRS Exhibit 8. The same number of physicians felt that facilities with appropriate programs for placement of Alzheimer's disease or similar disorder patients were not presently available in Palm Beach County. Id. From the responses, Dr. Loeser estimated that these physicians had seen somewhat more than 600 patients suffering from Alzheimer's disease or related disorders in the last year. T. 171. Dr. Loeser personally estimated that he typically had difficulty finding a treatment and care facility for about 10 Alzheimer's disease patients annually. T. 185. He then estimated from responses received that the physicians surveyed were unable to find an appropriate program for about 135 patients annually. Petitioner's Exhibit 5. Dr. Loeser further estimated that among his own patients, about one or two per week needed some form of day care, T. 185, and from the responses of the physicians in the survey, estimated that such physicians annually had 150 patients needing day care. T. 175. Determination of placement problems for Alzheimer's disease patients from actual patient records or placement orders from physicians would be difficult because these records are confidential. Consent from the patient would be needed, and consent from an Alzheimer patient would be difficult due to the nature of the mental impairment caused by the disease. T. 173. The survey conducted by Dr. Loeser was not unreasonable for failure to contact more physicians. The survey accurately reflects a group of Alzheimer's disease patients treated by the physicians contacted, and does not purport to account for Alzheimer's disease patients treated by other physicians. Thus, the need identified by Dr. Loeser's survey, while underinclusive of total need, is reasonably accurate for the need identified. Palm Beach County currently has at least an estimated 16,597 persons suffering from Alzheimer's disease, and this number is expected to be 18,172 by 1988. T. 24. HRS itself estimates that the number of Alzheimer's victims in Palm Beach County in 1986 to be 27,200. Petitioner's Exhibit 6. It is further estimated that approximately 80 percent of such patients will require some sort of custodial care in the future. T. 76. Based upon the foregoing statistics, as well as the fact that existing Palm Beach County nursing homes do not provide special services or care for Alzheimer's disease patients, there is a need for the Alzheimer facility proposed by the Petitioner. The Petitioner proposes to establish a 120 bed nursing home in Palm Beach County designed and staffed to provide care and treatment to meet the special needs of persons suffering from Alzheimer's disease and related disorders. T. 45. The Petitioner, Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, is willing to have any certificate of need issued in this case to be conditioned upon it building, developing, and operating the proposed nursing home limited as it has proposed in this formal administrative hearing. T. 48-49. Thus, findings of fact 18 through 21 which follow relate to the manner in which the Petitioner proposes that a certificate of need may be conditioned and limited. The proposed physical design of the nursing facility is set forth in Petitioner's Exhibit 1. T. 49. The cost is estimated to be $3.7 million. T. The design includes a courtyard to allow patients to wander safely. T. 41. It also includes a shaded porch, an outdoor patio, and a lounge off the patio. Id. Security from wandering is proposed to be provided by a "Wanderguard" system of wristbands and sensing devices that sound an alarm as a patient passes an exit point. Id. Additionally, the proposed facility would have a therapeutic residential kitchen for patients still able to use a residential kitchen. Id. One room would be set aside as a quiet room. T. 42. It is contemplated that such a room will minimize the need for calming drugs. T. 224. Also to be provided are separate dining areas, areas for therapy, and separate nursing wings and sub-acute care wings. T. 42-43. Alzheimer patients would be separated from non-Alzheimer patients, fixtures would have shapes, colors, and labels to facilitate identification; wall and floor coverings would not use patterns, and the flooring would be vinyl or tile instead of carpet. T. 42, 225-228. The proposed plan of the facility contemplates that there be space for all stages of care for Alzheimer's patients: day care, respite care, nursing care, and sub-acute care. Petitioner's Exhibit 1; T. 221-222, 39-40, 56. The Petitioner also proposes to provide individual treatment plans, to include physical therapy, occupational therapy, social work, and recreational therapy. T. 230-231. Support groups for family members of the patient will be provided. T. 233. The Petitioner states that the staff for the proposed facility must be appropriately trained to know Alzheimer's disease and the special needs of these patients. T. 234. Ongoing education for staff is viewed as being imperative. Id. The Petitioner recognizes the need to provide greater staffing for peak periods. T. 235. Monthly in-service training will be provided by the parent corporation. T. 236. Moreover, the parent corporation, Health Care and Retirement Corporation of America, will develop and implement a program of staff training specifically for Alzheimer's disease. T. 237. Staff for the proposed facility will be adequately trained to properly deal with the problems of Alzheimer's patients. For a 24 hour period, a staff to patient ratio of 1 to 2.5 will be provided. T. 238. This ratio includes only nursing staff, aides, and activities and occupational rehabilitation staff. Id. The Petitioner proposes to designate and commit its entire facility to Alzheimer's patients. T. 60. But from a fiscal point of view, the Petitioner proposes to not deny admission to persons not having Alzheimer's disease. T. 66-68. At least 60 beds will be dedicated to patients with Alzheimer's disease, and these are expected to fill with persons in stages two and three of the disease. T. 67-68. When these patients reach more advanced stages of their disease, it is expected that they will be treated in the other 60 bed section, which is skilled nursing and sub-acute care. T. 68; Petitioner's Exhibit 1. Thus, the Petitioner expects ultimately to fill its entire facility with Alzheimer's disease patients consistent with its dedication and purpose. The facility proposed by the Petitioner would meet the unique needs of Alzheimer's disease patients and their families, and would be the only facility in Palm Beach County to provide a wide spectrum of care for Alzheimer's disease patients. Petitioner's proposal is consistent with priorities IV, V 3 and 4, and VI, Long Term Care section, District IX Health Plan (1985). T. 150-152. On March 6, 1986, the General Counsel of the Department of Health and Rehabilitative Services sent a memorandum to "all attorneys" construing and implementing the decision in the Gulf Court case, Gulf Court Nursing Center v. DHRS, 10 F.L.W. 1983 (Fla. 1st DCA 1985). On the next day, Robert E. Maryanski, Administrator, Community Medical Facilities, Officer of Health Planning and Development, sent the memorandum to his staff and told them to use the opinion as a guideline for the initial review of a CON application settlement and preparation for hearings. HRS Exhibit 6. HRS recognizes that there are three ways that an applicant for a certificate of need for nursing home beds can show need even though the rule shows a zero bed need. The third way is for "equivalent assessments" to be submitted by "attending physician." T. 113; HRS Exhibit 4, rule 10- 5.11(21)(b)10, F.A.C. HRS staff construes rule 10-5.11(21)(b)10, F.A.C., as requiring that each attending physician of each Alzheimer's patient document that his or her patient is in need of specialized services and that the patient is without access to those special services. T. 124. The issuance of certificate of need 4194 to the Joseph L. Morse Geriatric Center was issued pursuant to the special circumstances exception of rule 10-5.11(21)(b)10, F.A.C., since the rule did not show bed need. T. 127. There was nothing in the application in that case to show that elderly Jewish persons were denied access to existing nursing home facilities in Palm Beach County. Id. See also T. 130. There was, however, evidence that a large group of elderly Jewish persons were not being provided kosher dietary services at existing nursing homes. T. 129, 134. This evidence was not presented by attending physicians, however. T. 136. The certificate of need 4194 to the Joseph L. Morse Geriatric Center was also approved using priority VI, long term care section, District 9 local health plan, which provides in the second sentence for consideration of "ethnic- type services including special dietary requirements . . . ." HRS Exhibit 7; T. 134. Due to changes in federal funding, patients needing sub-acute care (less than hospital care, but more than an ordinary nursing home) do not qualify for cost reimbursement. T. 85-88. It appears that about one-half of all nursing home admissions in Palm Beach County are for three months or less. This may be a pool of persons needing sub-acute care. Petitioner's Exhibit 3, Long Term Care Section, page 4; T. 27-28. There was other general testimony that there was a "need for sub-acute care in Palm Beach County, T. 88, 146, and the local health plan, priority V 4, page 31, supports the grant of a certificate of need to an applicant that will provide such care. Petitioner Exhibit 3. There is also a need for sub-acute care in the final stages of Alzheimer's disease to provide continuity of care. T. 221. See also finding of fact 10. No one has petitioned to intervene in this case.
Recommendation Based upon the foregoing, it is recommended that the Department of Health and Rehabilitative Services, pursuant to Rule 10-5.11(21)(b)10, Florida Administrative Code, and Section 381.494(8)(c), Florida Statutes, issue a certificate of need to Health Care and Retirement Corporation of American, d/b/a Heartland of Palm Beach, for 120 community nursing home beds limited and conditioned upon all such beds being dedicated only to the provision of such services and facilities for victims of Alzheimer's disease as described by the Petitioner in this case and set forth in findings of fact 18 through 21 of this order, with 30 of such beds established for sub-acute care needs of Alzheimer's disease patients. It is further recommended that the certificate of need not contain approval for general community nursing home beds, but be limited to Alzheimer's disease patients. DONE and ORDERED this 8th day of July, 1986, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. 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 8th day of July, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3337 Pursuant to section 120.59(2), Fla. Stat., the following are specific rulings upon all proposed findings of fact submitted by the parties which have been rejected in this Recommended Order. Findings of Fact Proposed by the PETITIONER: 7. Sentences 3 and 4 have been rejected because the evidence was not sufficiently complete to describe nursing homes in Florida in general, and because the issue in this case is the need in Palm Beach County, thus making these proposed facts not relevant. 10. Sentence 3 is rejected since the testimony did not clearly show that therapeutic kitchens "should be available." 13. Sentences 9 and 10 are rejected because the evidence did not categorically show that it "would not be possible" to use actual physician orders, or that "physicians do not typically arrange their records so that orders of that kind could be extracted from their records." Similarly sentence 12 is rejected for lack of categorical evidence to prove impossibility. 17. Evidence that the entire facility is "completely fenced and enclosed" cannot be located in the record, and thus sentence 7 is rejected. The bulk of the discussion in proposed finding of fact 20 has been rejected because it is argument or conclusions of law. Those portions of this proposed finding which propose a finding that the Respondent's interpretation of rule 10-5.11(21)(b)10, Florida Administrative Code, is wrong or unreasonable are rejected as argument or conclusions of law. Most of the factual statements were adopted. Findings of Fact Proposed by the RESPONDENT: All proposed findings of fact by the Respondent have been adopted in substance. COPIES FURNISHED: Harden King, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301 Kenneth A. Hoffman, Esquire G. Steven Pfeiffer, Esquire Laramore & Clark, P.A. 325 North Calhoun Street Tallahassee, Florida 32301 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================
The Issue Whether petitioner should be granted a certificate of need to build a 120- bed nursing and extended care facility in West Palm Beach, Florida.
Recommendation Based on the foregoing, it is RECOMMENDED: That the application be denied for failure to meet licensing criteria contained in Rule 10-5.11(21), Florida Administrative Code. DONE and ENTERED this 8th day of December, 1983, in Tallahassee, Florida. R. L. CALEEN, JR. 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 8th day of December, 1983.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED That Manor Care be issued a CON for the construction of a 60 bed nursing home; Palm Bay Care Center be awarded a CON for the construction of a 60 bed nursing home; Forum Group be awarded a CON for a 40 bed nursing home and Courtenay Springs be awarded a CON for 36 nursing home beds. RECOMMENDED this 26th day of January, 1987, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-99675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of January, 1987. COPIES FURNISHED: William Page, Jr., Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Jean Laramore, Esquire Kenneth Hoffman, Esquire 325 North Calhoun Street Tallahassee, Florida 32301 Thomas B. Smith, Esquire Post Office Box 633 Orlando, Florida 32802 John Grout, Esquire Post Office Box 180 Orlando, Florida 32802 Donna H. Stinson, Esquire Suite 100 Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Susan G. Tuttle, Esquire 402 South Florida Avenue Tampa, Florida 33602 Robert D. Newell, Jr., Esquire Suite B 200 South Monroe Street Tallahassee, Florida 32301 John F. Gilroy, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 APPENDIX The following constitutes my specific rulings pursuant to Section 120.57(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties herein. 1-13 Accepted. 14 & 15 Accepted. 16-18 Rejected as a recitation of the evidence. 19-23 Accepted. 24 Accepted. 25-29 Accepted. 30 & 31 Accepted. 32 Irrelevant. 33-34 Accepted. 35-37 Accepted. 38-46 Accepted. 47 & 48 Accepted. 49 & 50 Accepted. 51 Discussion, not Finding of Fact. 52-56 Accepted. Rejected as a recitation of the evidence. Accepted. Accepted to the fact that there were no sheltered beds in existence. Irrelevant. 61-63 Accepted but not of substantial positive value. 64 & 65 Accepted. Opinion not Finding of Fact. Accepted. 68-75 Accepted. 76-80 Irrelevant based on part operation and evidence shows facility is to be sold. 81-85 Irrelevant - see next 86-90 Rejected as a conclusion of law and not a Finding of Fact. 91 Not a Finding of Fact. 92-94 Accepted. 95 Irrelevant as to local district. 96-103 Accepted. 104-105 Rejected as contrary to the weight of the evidence. Accepted as to what Dr. Hoffman supported. Accepted as to what Dr. Hoffman indicated. 108-110 Accepted. Rejected as contrary to the weight of the evidence. Accepted. Not a Finding of Fact. 114-118 Accepted. 119&120 Not a Finding of Fact. 121&122 Accepted. 123 Accepted as to the one facility currently operated. 124-127 Accepted. Speculation insufficient to support a Finding of Fact. Argument, not a Finding of Fact. Accepted. 131-133 Accepted. 134 Not a Finding of Fact. 135-137 Accepted. 138 Not supported by the weight of the evidence. 139-147 Accepted. 148&149 Not a Finding of Fact. 150-164 Accepted. Rejected as a summary of testimony, not a Finding of Fact. Irrelevant. 167-176 Accepted. Rejected as contrary to the weight of the evidence Rejected as a summary of testimony. Accepted. 180&181 Accepted. 182 Irrelevant. 183&184 Accepted. 185 Rejected as a conclusion. 186&187 Rejected as contrary to the weight of the evidence. As to Manor Care 1 Accepted. 2&3 Rejected as not a part of the case. 4 Accepted. 5-7 Accepted. Accepted. Accepted. 10-11 Accepted. 12 Accepted. 13-19 Accepted. 20-22 Accepted. As to Forum 1-13 Accepted. 14-16 Accepted. 17-22 Accepted. 23&24 Accepted. 25-27 Accepted. 28-31 Accepted. 32 Accepted. 33-35 Accepted. 36 Rejected as speculation. 37-42 Accepted. 43 Accepted. 44-47 Accepted. 48&49 Accepted. 50-55 Accepted. Rejected as a conclusion not consistent with the evidence. Accepted. 58&59 Accepted. 60-64 Accepted. 65-69 Accepted. 70&71 Irrelevant. 72&73 Accepted. 74-76 Accepted. Accepted as to the first sentence. Second sentence is not a Finding of Fact. Accepted. As to PBCC 1&2 Accepted. 3 Rejected as a Conclusion of Law. 46 Accepted. Accepted. Rejected as contrary to the weight of the evidence. Accepted. 10-12 Accepted. Rejected as contrary to the weight of the evidence except for the first sentence which is accepted. Rejected. 15-20 Accepted. 21-27 Accepted. 28 Rejected as an overstatement and not supported by the evidence. 29&30 Accepted. 31 Rejected as contrary to the weight of the evidence. 32-38 Accepted. 39-43 Accepted. 44-50 Accepted. 51-57 Accepted. Accepted except for the first sentence which is unsupported by credible evidence of record. Accepted. Rejected. Accepted. As to Courtenay This party failed to number or otherwise identify its Findings of Fact individually. Therefore, no specific ruling as to each Finding of Fact is hereby made. In light of the ultimate recommendation of the Hearing Officer that the party's CON be approved, no prejudice to this party can be said to have occurred. As to DHRS 1-4 Accepted 5 Summary of testimony and not a Finding of Fact. 6-1 Is an argument of the party's position, not a Finding of Fact. 12-14 Rejected as matters not a part of the party's position at hearing. Accepted. Accepted. Accepted. Accepted. 19-22 Accepted. Rejected as a summary of testimony and not a Finding of Fact. Accepted. 25-28 Accepted. 29-31 Accepted.
The Issue The general issue is whether Health Quest is entitled to a Certificate of Need for nursing home beds in Seminole County for the July 1985 batching cycle. The more limited issues on which this case focused are whether July 1985, or July 1987, is the appropriate release date for population data; whether the base period for "current population" is January 1985, or July 1985; and whether the applicant could, at the final hearing, scale down its request for beds to a number substantially less than the 120 beds requested in its July 1985 application.
Findings Of Fact Health Quest Corporation maintains its home office in South Bend, Indiana. As described by its Vice-President for Planning, the company is a moderately-sized, long-term care and assisted living company. Health Quest has been in existence since 1969, under its President and CEO, Larry Garratoni. The Company has approximately twelve facilities, including three Florida facilities: a 120-bed freestanding nursing home, a 107- bed nursing home with 80 attached assisted living units, and a facility in Sarasota with 300 retirement units. In July 1985, Health Quest filed its application for a new 120-bed nursing home in Seminole County, HRS District VII. After an exchange of correspondence and information relating to omissions to the application, the application was deemed complete effective September 30, 1985, and the application was denied on December 17, 1985. At the final hearing, Health Quest presented two exhibits with updated information to support its original 120-bed application, and updated information to support a scaled-down 60-bed Certificate of Need. These two exhibits, Petitioner's Exhibits 10 and 11, were admitted over HRS objection that they constituted amendments to the completed application, prohibited by HRS Rule 10- 5.008(3), Florida Administrative Code. Health Quest argued that the updates were intended to present a more current description of the cost structure and operating structure that Health Quest would be using, and to support partial approval of the original application. The relevance of these documents is addressed in my conclusions of law, below. The basis for HRS' denial of the Health Quest original application is, "... insufficient need for an additional 120 bed nursing home in the subdistrict." (Petitioner's No. 7) A determination of need in this case depends largely upon the proper application of the methodology described in HRS Rule 10-5.011(1)(k), Florida Administrative Code, which provides, in pertinent part: Community Nursing Home Beds. A community nursing home bed is a nursing home bed not located within a life care facility certified under Chapter 651, Florida Statutes. 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 sub- paragraphs (k)2., 3., and 4., 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 3 years in the future according to the methodology specified under Sub-subparagraphs 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 departmental 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 subdistrict 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 appli- cations submitted for the July batching cycle shall be based upon occupancy rate data for the months of October through March pre- ceeding that cycle; appli- cations submitted for the January batching cycle shall be based upon occu- pancy rate data for the months of April through September proceeding the cycle. For the purposes of this rule, the occupancy data 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. * * * For purposes of applying the methodology, the parties have agreed to the following factors: Occupancy rate (OR) is .9366. Licensed beds in the subdistrict (LBD) is 725. The number of approved beds in the subdistrict is 179 Licensed beds in the district (LB) is 4425. July 1988 is the planning horizon. (Petitioner's Exhibit No. 12, Respondent's Exhibit No. 1, Prehearing Stipulation filed 11/13/87). While the parties have not agreed which figures are applicable, they have stipulated to the population figures for the following periods: (1) January 1, 1988, as of July 1, 1985: Pop A: 93,987 Pop B: 56,612 (2) July 1, 1985, as of July 1, 1985: Pop C: 96,295 Pop D: 58,307 (3) July 1, 1988, as of July 1, 1985: Pop A: 110,788 Pop B: 69,020 (4) January 1, 1985, as of August 1987: Pop C: 96,741 Pop D: 57,545 (5) July 1, 1985, as of August 1987: Pop C: 100, 276 Pop D: 60,133 (6) July 1, 1988, as of August 1987: Pop A: 119, 915 Pop B: 75,704 (Prehearing Stipulation filed 11/13/87) The source of the population figures are the official estimates and projections adopted by the Office of the Governor. These are prepared by the Bureau of Economic and Business Research at the University of Florida and are released periodically. Because better data is available, the July 1987 releases of estimates and projections is more accurate than the July 1985 releases of estimates and projections. The rule does not specify which version must be used. HRS relied on the July 1985 releases that were available at the time the application was first received. HRS did not present evidence to support that policy in this proceeding. HRS does include updated data for other factors in the methodology, for example, occupancy rate and number of licensed beds. Health Quest advocates the use of the July 1987 releases that were available at the time of hearing and presented competent expert testimony from a demographer to support its position. The parties also disagree on the base period for current population, ages 65-74 and 75+ (POPC and POPD). With the exception of the January 1987 batching cycle, HRS' Certificate of Need review staff have consistently applied a three year planning horizon; that is, the base period is considered the date of the batching cycle (here, July 1985). It appears that in its state agency action report, HRS originally used January 1985 as the current population base period. HRS' Office of Comprehensive Health Planning, a separate office within the agency, uses a base period six months prior to the application date in its published semiannual bed need reports. Health Quest advocates use of the earlier base period and argues that it is consistent with good health planning because the earlier period is the midpoint of the six-month occupancy period prescribed by the rule. The rule does not explicitly state that current population is determined as of the batching cycle, but the context strongly supports that interpretation, as discussed in the conclusions of law. Health Quest submitted four iterations of the methodology, including one utilizing the July 1985 base population, a July 1987 release date, and the other values stipulated by the parties. (Petitioner's Exhibit 12). This is adopted as follows, with a resulting bed need of 53.58: NET BED ALLOCATION: SEMINOLE COUNTY, 7/88 PLANNING HORIZON (Using 7/85 base population and the 7/87 population set) 1. BA = LB + 4425 POPC + (6 X POPD) 100,276 + (6 x 60,133) = 4,425 = 9.597 Per 1000 461,074 2. BB = 6 x BA = 6 x 9.597 = 57.582 Per 1000 3. A = (POPA x BA) + (POPB x BB) = (119,915 x 9.597/K) + (75,704 x 57.582/K) = 1,150.82 + 4,359.19 = 5,510.01 4. SA = A x LBD X OR = 5,510.01 x 725 LB .90 4,425 x 0.9366 x 939.48 .90 5. Net Bed Allocation SA - (LBD + (AB x .90) = 939.48 - [725 + (179 x .90)] = 939.48 - 886.10 53.38 The Local Health Council of East Central Florida (District VII,) has adopted a standard that the minimum size of new nursing homes should be 120 beds in all counties, except Osceola, where the minimum size should be 60 beds. (Petitioner's Exhibit 26). Health Quest's expert conceded that a 120-bed home is more efficient to operate. (Transcript, p. 77) It is a generally accepted standard that nursing home units should be organized in groups of 60 beds. Health Quest's expert urged that if a need for 54 beds is found, the approved number should be rounded up to 60 beds. With the exception of need and the above-mentioned policy of the District Health Council, Health Quest's proposed facility (both 120-bed and 60- bed version) meets the applicable criteria for Certificate of Need approval, including quality of care and financial feasibility. In advance of hearing, the parties stipulated that most non-need related criteria were met. (Prehearing stipulations filed 11/13/87 and 11/16/87). In addition, .Health Quest presented perfunctory, unrebutted testimony with regard to the facility's compliance with statutory and rule criteria. Approval of either a 60-bed or 120-bed new nursing home in Seminole County would result in a surplus of beds for the July 1988 planning horizon. Health Quest did not present evidence of special circumstances to justify approval of additional beds, as provided in Rule 10-5.011(1)(k)2.j., Florida Administrative Code.
Recommendation Based upon the foregoing, it is hereby RECOMMENDED: that Health Quest's application for Certification of Need for nursing home beds in Seminole County be denied. that the applications by R. H. Little and Gulf South be dismissed, in accordance with those parties' earlier notices of voluntary dismissal. DONE and RECOMMENDED this 15th day of March, 1988, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 86-0136, 86-0355, 86-0638 The following constitute my specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings of Fact Addressed in Preliminary Statement. Addressed in paragraph's 1 and 2. Adopted in paragraph 2. 4-5. Rejected as unnecessary. 6-12. Adopted in substance in paragraph 3. 13-14. Rejected as unnecessary 15-16. Adopted in paragraph 4. 17-72. Rejected as unnecessary, except as summarized in paragraph 14. Rejected as unnecessary Adopted in paragraph 7 and 8. 75-76. Adopted in paragraph 10. 78-80. Adopted in paragraph 7. 81-82. Rejected as unnecessary. Rejected as contrary to the weight of evidence and contrary to the rule. Adopted in paragraph 11, except for the conclusion relating to "rounding-up." Rejected as unnecessary. 86-93. Adopted in substance in paragraph 9. 94. Rejected as argument. 95-96. Rejected as unnecessary. Rejected as cumulative and unnecessary. Rejected as irrelevant. Rejected as contrary to the rule. Rejected as irrelevant. Further, while HRS has used the 3-1/2 year horizon in a single batching cycle, that horizon in CON review has not been accepted by HRS. Rejected as irrelevant. Adopted in paragraph 10. Rejected as contrary to the rule. However, the sentence regarding need calculation in the SAAR is adopted in paragraph 10. Rejected as cumulative and irrelevant. 105-170. Rejected as unnecessary. That Health Quest meets the criteria except those related to need is adopted in summary, in paragraph 14. Respondent's Proposed Findings of Fact Adopted in paragraph 3. Adopted in paragraph 5. Adopted in paragraph 6. Rejected as contrary to the evidence and contrary to the rule. Rejected as contrary to the evidence. Rejected as irrelevant, except as addressed in paragraph 4. Adopted in paragraph 7. Adopted in paragraph 10. Rejected as irrelevant. Adopted in paragraph 15. COPIES FURNISHED: Robert Powell, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Steven W. Huss, Esquire 1017 Thomasville Road Tallahassee, Florida 32303 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700
The Issue Whether the application of Elysium Rehabilitation Center Inc., (“Elysium”) for a certificate of need (CON) to construct and operate a 120-bed nursing home along with a CON application for an included 20-bed subacute unit in Palm Beach County, Florida, and the application of Good Samaritan Hospital (“Good Samaritan”) for a CON to convert 27 acute care beds to a 27-bed hospital-based skilled nursing unit (SNU), also known as a “subacute unit”, should be approved or denied.
Findings Of Fact AHCA published a “Notice of Community Nursing Home Fixed Need Pool” on April 19, 1996, in the Florida Administrative Weekly, Volume 22, No. 16. In District 9, Subdistrict 4, the published numerical need, as acknowledged by the parties, was zero for the January 1999 planning horizon. The published need resulted from calculation of projected need for additional community nursing beds in accordance with need methodology contained in Rule 59C-1.036(2), Florida Administrative Code. On May 24, 1996, AHCA published a “Notice To Potential Applicants” for CONs. The notice stated the following: In the review of applicants seeking beds from the January, 1999 Nursing Home Fixed Need Pool, as published in the April 19, 1996 F.A.W., which includes the same need for long and short term beds, the agency will consider the need for short and long term beds separately. Those applicants seeking both short and long term [beds] must file applications for each type of bed. As acknowledged by the parties, the notice specifically set out a “Need For Short Term Beds” in AHCA’s Subdistrict 9-4 of zero. Neither the April 19 published fixed need pool or the May 24 notice was challenged by any of the parties. Although the term “subacute” is not defined in federal or Florida law, the weight of expert testimony in this case establishes that for health planning purposes in the current environment, measurement of Medicare certified skilled nursing days or services (“Short Term Beds”) is a fair and reasonable surrogate for “subacute” care. Good Samaritan’s Application By letter of intent and application for CON filed in the batching cycle applicable to the January, 1999 planning horizon, Good Samaritan seeks to convert 27 acute beds at its Palm Beach County facility in AHCA District 9, Subdistrict 4, to a 27-bed subacute unit or SNU. Good Samaritan has attempted to demonstrate a need for the proposed beds through the presentation of an “internal survey,” in addition to calculations under three different methodologies. The internal survey results relied upon by Good Samaritan to show the existence of need is a product of the social work staff of Good Samaritan and its affiliate, St. Mary’s Hospital. The purpose of the survey was to identify patients who could, on the day of the survey, have received subacute as opposed to acute care. The survey results were compiled from 36 patients who, at that time, were in acute care beds and, according to Rehabilitation Services Expert Joan Horvath, needed to be in a subacute program. Survey documentation includes descriptive columns documenting “Reason for SNU Potential” and “Reason for Occupying Acute Bed.” Short, non-specific statements of the “reasons” for a patient’s occupation of an acute bed are listed for most of those surveyed. Reasons are varied with some having little to do with availability of an appropriate subacute bed. Of all survey results, only one patient case arguably reports unavailability of subacute care. There is no contention that attempts were made to provide placement to the patients in the survey. Karen Rivera, AHCA’s CON review consultant testified that the survey “raised more questions than it answered.” Good Samaritan’s application confirms that most patients included in the survey were subsequently placed in free standing SNU facilities without any substantiation by Good Samaritan of unnecessary delays. Good Samaritan has failed to demonstrate or document any lack of patient access to needed services. Dr. Jeffrey Farber, slated to be the medical director of Good Samaritan’s proposed subacute unit, testified “from an anecdotal level” that certain physicians may retain patients longer than necessary in acute care because of a lack of physician comfort with available facilities. Farber is unaware of any quantification of patient need related to systematic or chronic lack of availability of subacute care services. Evidence related to physician convenience or patient preference is not responsive to the rule-based criteria which requires a finding of a lack of reasonable access to appropriate medical care. Reasons advanced by Dr. Farber to support a finding of need for additional access to subacute services are, as he conceded, “those same issues [that] would exist as to any acute care patient at any acute care facility which did not have a subacute care unit.” Several methodologies presented in Good Samaritan’s application seek to support the conclusion that the proposed project is needed. Reliance is primarily on a health planning product called the Subacute Care Market Analysis Model, developed and marketed by Dr. Harold Ting as a means to estimate demand for subacute care in a given market. A “normative” demand model, the Ting methodology attempts to project potential demand for subacute services based on a subjective ideal, the number of patients that should or could have been provided subacute care—as opposed to actual experience with patients. Without regard to any specific infirmities in the Ting theory, the Ting methodology cannot be credited as a means of determining need in this case. It is a proprietary collection of calculations which, as a result, cannot be expressly described or tested. It can be discerned, however, that the theory may be flawed in its application inasmuch as it uses an inflated average length of stay for patients in subacute facilities of 36 days for purpose of need calculation, as opposed to the median length of stay for patients in subacute units in hospitals in Florida of approximately 24 days. An adjustment to calculations for this inflation factor which were then run at the final hearing by Jay Cushman, Good Samaritan’s expert in the field of health planning, did not demonstrate any need for additional hospital-based subacute capacity. Neither of the other two numeric methodologies presented by Good Samaritan at the final hearing demonstrated need for the proposed project sufficient to warrant its approval. Hospital-based SNUs or subacute units, beyond convenience and preference issues, in relation to free standing skilled nursing facilities, offer more immediate availability of emergency and acute services and the possibility that laboratory tests are completed in a shorter time. Good Samaritan maintains that the need pool for community nursing homes published by AHCA on April 19, 1996, is inapplicable to its application, although Good Samaritan filed no challenge to that bed need pool. Since affirmation by the First District Court of Appeal in Health Care and Retirement Corp. v. Tarpon Springs, 671 So.2d 217 (Fla. App. 1st DCA 1996)of Administrative Law Judge James York’s decision invalidating Rule 59C-1.036(1), Florida Administrative Code, no comparative review of SNU beds in hospitals in relation to all community nursing home beds has been conducted and AHCA no longer conducts such reviews. Subsequent to publication of the court’s opinion in Tarpon Springs, AHCA published the fixed need pool for the planning horizon at issue in this case based upon a calculation of need using the same numeric methodology contained in Rule 59C- 1.036(2), Florida Administrative Code. The calculation includes consideration of the entire Subdistrict population, and the need for all of the various categories of services included under the heading of skilled nursing care, including subacute and Alzheimer’s care. AHCA’s calculation also accounts fully for the number and occupancy rates of skilled nursing beds within the Subdistrict’s hospitals and free standing nursing homes. The published fixed need of zero represents “overall” need for skilled nursing beds, including Medicare certified and non-Medicare certified (also referred to as “short term” and “long term”). AHCA’s expert health planner, responsible for CON rule development, testified at final hearing that the need number calculated under the methodology contained in Rule 59C-1.036(2), Florida Administrative Code, represents the “overall” need for all nursing beds except for private contract “sheltered beds” requiring entry fees which are a specific category regulated by another government agency and not available to the public at large. This need number also includes all skilled nursing facility beds, whether located in freestanding nursing homes or hospitals. After determination of overall need, AHCA determined the need for Medicare certified beds in each subdistrict, based upon existing utilization of such beds. In response to the decision in Tarpon Springs, AHCA explored options and proceeded to determine, as reflected in the April 19 and May 24, 1996 notices published in this case, the need for Medicare certified nursing home beds separately from non-Medicare certified or “long term” beds, without regard to the location of those beds in hospitals or nursing homes. AHCA segregated nursing home beds into two groups, Medicare certified and non-medicare certified, for need determinations and comparative review purposes. Under this approach, comparison of applicants is made on the character of the services being provided. Good Samaritan’s position is that AHCA’s need determination is inconsistent with the court’s holding in Tarpon Springs. As established by proof at the final hearing, there has been no showing that subdividing the applications into short-term and long-term services is flawed or irrational. Additionally, Good Samaritan has not shown any rational alternative means of creating subgroups of skilled nursing applications or determining need for short-term beds on anything broader than an institution- specific basis. AHCA’s position is that the actual need methodology in Rule 59C-1.036(2), Florida Administrative Code was not invalidated by Tarpon Springs. The court’s decision in that case is limited to a prohibition of comparative review between hospital-based SNUs or subacute care beds and all community nursing home beds. Elysium’s Application Elysium, like Good Samaritan, did not challenge the April 19, 1996, published notice of the fixed need pool for the January 1999 planning horizon. As noted above, the notice, published in the Florida Administrative Weekly, established a projected bed need of zero (0) for community nursing homes in AHCA’s planning district 9, Subdistrict 4, Palm Beach County. Elysium’s timely filed application for a CON to construct a 120 bed skilled nursing facility containing a 20 bed subacute care unit (medicare certified) and a 16 bed Alzheimer’s Disease and Related Dementia Unit, however, seeks approval pursuant to provisions of Rule 59C-1.036(2)(h) and Rule 59C- 1.030(2), Florida Administrate Code for CON issuance to meet “special circumstances” despite the lack of numeric need. It is Elysium’s contention that elderly Jews who keep kosher are an identifiable ethnic minority in Palm Beach County with unique ethnic, religious, cultural and dietary needs who will be effectively denied access to long term care absent CON issuance. However, the applicant, Elysium Rehabilitation Center, Inc., owns no nursing homes and operates no nursing homes. The applicant has virtually no operating assets and no businesses. Sole shareholder of Elysium is John Fiorella, Jr. He is not a licensed nursing home administrator. He has never worked full time in a nursing home. He has not operated or opened a nursing home. The board of directors of Elysium include Fiorella and his mother and father. Both of the parents are experienced in the nursing home industry, but stopped working in 1986. A related corporation is Elysium of Boca Raton, Inc., which owns an assisted living facility (ALF) in Boca Raton, Florida, but no nursing homes. The ALF has a kosher kitchen. Elysium proposes to locate its nursing home facility on the ALF campus. The proposed facility is a freestanding building to be connected by an enclosed walkway to the ALF operated by Elysium of Boca Raton, Inc. The proposed facility’s connection to the existing ALF is intended to allow residents of the facility to be visited by spouses who are residing in the adjacent ALF, to allow use of common staff elements, and to allow for sharing of the common space of the existing facility. The projected cost of the proposed facility approximates 7.9 million dollars and includes proposals for a 20 bed subacute care unit and a 16 bed Alizheimer’s disease/related dementia unit. Elysium projects 65 percent occupancy in year one and 90 percent occupancy in year two. The proposed payor mix is: 7.1 percent private, 16.6 percent semiprivate, 55.5 percent Medicaid, 16.7 percent Medicare, 0 percent HMO or insurance and 4.2 percent “other”. The facility will admit Jewish and non-Jewish residents. While proposing to “provide a predominantly Jewish environment and meet the dietary laws of glatt kosher for the large number of elderly Jewish citizens residing in the area”, Elysium’s application also documents that the proposed facility will have a “predominately non-Jewish staff.” The proposed nursing home will not have an in-house kosher kitchen since the kosher kitchen at the adjoining ALF has been designated as glatt kosher by the Va’ad Hakashrut section of the Rabbinical Association. Elysium also proposes to offer its residents Hebrew classes, Yiddish discussion groups, religious studies, programs at the local Jewish Community Center and holiday celebrations. Need Per Section 408.035(1)(b) and (2), Florida Statutes And Rule 59C-1036(2), Florida Administrative Code Section 408.035(1)(b) and (2) requires that consideration be given to the availability, need, accessibility, extent of utilization, and adequacy of like and existing health care services in a District. By Rule 59C-1.036(2), Florida Administrative Code, AHCA projects bed need on a county-wide basis. The need formula considers elderly population in a county, projected growth in the elderly population, the occupancy of existing nursing homes, number of licensed and CON-approved beds in a county, and other health variables. The formula projects need for all nursing home services, inclusive of custodial care, Alzheimer/related dementia disease, and subacute care. AHCA has published a zero need for additional nursing home beds in Palm Beach County. Elysium does not dispute AHCA’s finding. Additionally, there are 630 CON-approved, but not yet opened, nursing home beds in Palm Beach County. As established by the testimony at the final hearing of Dan Sullivan, an expert in health care planning and health care finance, the zero fixed need for Palm Beach County is attributable to these already approved beds. Many of the CON-approved beds will serve the same geographic area as that proposed by Elysium. Further, all nursing homes in Palm Beach County provide custodial care, Alzheimer’s care, subacute care, and Medicaid services. As conceded at final hearing by Elysium’s expert in health planning, Sharon Gordon-Girvin, custodial care, Alzheimer’s care, subacute care, and Medicaid services are provided at all nursing homes in Palm Beach County and are not unique or “not normal” services. Jewish residents in Palm Beach County currently receive Alzheimer’s services and subacute services with no problem in regard to clinical outcomes or quality of care issues. Subacute bed need is subsumed within AHCA’s need methodology. The specific subacute disorders proposed to be dealt with by Elysium are commonly provided in any subacute unit and, clinically, subacute care is the same regardless of religion. Per Rule 59C-1.036(2)(h), Florida Administrative Code, proof of need in the absence of fixed need requires proof of an access problem. Documented need means persons must be denied access or demonstrate that actual need exceeds the number of available beds. The testimony of Dan Sullivan at hearing establishes that Elysium’s allegation of unique need is not proven in that there has not been identification of “a single patient who had been denied services or refused services in nursing home” due to a lack of glatt kosher services. The lack of documentation of an “access” problem for glatt kosher food is illustrated by the lack of demand for same. Diane Karolkowski was the admissions director at Menorah House, a Jewish facility, in 1996. An in-house survey conducted by her documented that of 115 patients, only 2 preferred kosher foods. Jewish residents are adequately served at existing nursing homes in Palm Beach County. As established by testimony of Dr. Ira Sheskin, Elysium’s expert in Jewish demography, the majority of Jewish residents in south Palm Beach County nursing homes are in nursing homes other than Jewish nursing homes. About 60 percent of patients at Intervenor Manor Care’s facility are Jewish, including orthodox and conservative Jews. Kosher foods are made available to residents requesting same, but such foods are rarely requested by even the orthodox Jewish residents. Manor Care’s Boynton, Florida facility has conducted studies of residents’ food preferences with the result that residents simply do not prefer the kosher foods. The ALF owned by Elysium of Boca Raton, Inc. has a kosher kitchen. With 144 beds, the ALF averages only 55 residents—a very low occupancy demonstrative of the little demand for kosher kitchen services. Elysium’s submittal that 20 percent of elderly Jews in south Palm Beach County keep kosher does not establish a demand or need for kosher kitchen services in a nursing home. Occupancy rates are expressly incorporated in the calculation of fixed need. The occupancy rates of the two Jewish nursing homes in the area accordingly do not justify deviation from the zero fixed need. Waiting lists at nursing homes do not demonstrate need. As indicators of bed need, such list are not meaningful. Nursing homes with empty beds have waiting lists. Waiting lists can reflect patient preference for a particular accommodation such as a private room or need for a Medicaid bed, a subacute bed, an Alzheimer’s bed, or simply a desire to be with a friend. Additionally, such lists become outdated when people change their minds or develop other placement options without removing themselves from other waiting lists. Waiting for a Medicaid bed, not kosher foods, is the primary reason given by those on waiting lists. Elysium And Quality Of Care Section 408.035(1)(c), Florida Statutes. Elysium is without any record of providing quality of care. Neither owner nor operator of any nursing home, this applicant has no experience or record of nursing home operations. A premium is placed on nursing home provider experience and competence since people are discharged earlier from hospitals than in the past and are consequently sicker than in previous years. Elysium’s ability to provide quality of care is not demonstrated. Schedule 6 in Elysium’s application presents projected staffing patterns. The projected staffing is not proposed by specific unit. Staffing will vary between the proposed facility’s 20-bed subacute unit, the 16-bed Alzheimer’s unit, and the custodial care units but this variance is not indicated in the application. Also, Elysium’s sole shareholder could not testify concerning the different staffing ratios for different units. There is no indication in Elysium’s application regarding whether a dedicated staff is contemplated for the subacute or Alzheimer’s units. Lack of a dedicated staff for these units is not reasonable. A minimum of 2.7 nursing hours per day for the subacute patient is reflected by on page 1b-5 of Elysium’s application, an unreasonable number since subacute units usually require at least 4.7 nursing hours per day to properly service the complexity and acuity of subacute disorders. Special Alzheimer’s units require 2.8 nursing hours per patient day. Elysium’s application fails to state what the ratio will be for such units in its facility. Assuming a standard of 4.7 nursing hours per day for subacute, 2.8 nursing hours per day for an Alzheimer’s unit and 1.9 nursing hours per day for custodial patients, measures established at final hearing by testimony of Marta Meers, Manor Care’s expert on Nursing, Nursing Administration and Clinical Services, the nursing full time equivalency (FTEs)required per Elysium’s utilization projections in year two for Registered Nurses (RNs), Licensed Practical Nurses (LPNs), and Certified Nursing Assistants (CNAs) is as follows: UNIT RN/LPN CNA TOTAL Alzheimer’s 4.2 10 14.2 Subacute 8.2 8.2 16.4 Long-Term 6.3 24 30.3 (Custodial) TOTAL FTEs 60.9 The 30.3 FTEs for custodial beds presumes that all 72 custodial, non-specialty beds are in one contiguous unit. Under Elysium’s proposal these units are to be located on separate floors of the proposed facility and would require more FTEs. Elysium’s projections in year two show requirements for 5.6 RNs, 8.5 LPNs, and 34.1 CNAs for a total of 48.2 positions. This is at least 12.7 FTEs low, as established by testimony of expert Meers. Elysium’s professed intent, as documented on Schedule 6, to contract for therapists (physical, speech, occupational, and audiological) instead of hiring these professionals as employees does not promote quality of care or quality assurance since contract staff provides less continuity. Many companies send different therapists to nursing homes at different times. Elysium’s application fails to state the volume of therapy that will be provided to subacute patients. Normal practice is to provide three hours of physical, occupational and speech therapy to patients requiring same. While stating that subacute programmatic policies and procedures will be developed, Elysium’s application is absent any such formulated policies—evidence of an inexperienced provider. The Elysium application also projects zero HMO or insurance days for its subacute program. In Palm Beach County, 30 to 40 percent of subacute patients are managed care with the likelihood that this percentage will increase in the future. Deficiencies of the proposed facility include mixing custodial and subacute patients; location of the physical therapy room on the second floor while subacute patients are located on the first floor; and a nurses’ station layout that complicates the possibility of a dedicated staff by locating the one station to service the subacute unit, the Alzheimer’s Unit, and custodial beds. Successful subacute programs require a dedicated, trained staff who normally exhibit a higher level of skill and professionalism than the custodial bed staff. Elysium’s application lacks established protocols of care and has not identified any employee who will serve in the capacity of therapist, unit director, or nurses for the subacute program. Elysium’s proposed 16-bed Alzheimer’s unit provides no nursing station within the unit, no separate dining room, no activity space, therapy space, family visitation area or quiet time room. These spaces are necessary for a quality, operational unit. Elysium’s proposal to mainstream Alzheimer’s residents for various services and activities is at variance with the fundamental reason for a special unit, particularly in view of the special needs of latter stage Alzheimer patients which make separate services appropriate. Mainstreaming these patients does not promote quality of care or quality assurance, and the application fails to indicate what mainstreaming for what stage of disease is contemplated. Elysium’s application promotes a less than ideal bracelet security system for the Alzheimer’s unit. Patients will be fitted with bracelets that will trigger and lock doors as the patients approach them. Safer measures would include the locked ward concept where doors are locked and alarms sound when the door is opened. Adequate And Available Alternatives Section 408.035(1)(d), Florida Statutes. Consideration of adequate alternatives to the proposed project is required by Section 408.035(1)(d), Florida Statutes. The many available and accessible nursing homes already existent in the area illustrate such alternatives to Elysium’s proposal. Most of the existing nursing homes provide the same services proposed by Elysium. Additionally, many of the CON-approved beds that are still to come on line will provide further alternatives. Most of the nursing homes in the southern part of Palm Beach County admit Jewish residents, observe Jewish holidays, and allow other cultural practices and customs for the Jewish population, inclusive of religious services. Kosher foods can and are provided without kosher kitchens in many of the area nursing homes, but, as noted earlier, demand for such foods is rare. Catering kosher food, if necessary, from the under-utilized ALF which would supply Elysium’s proposed facility is a cheaper, better alternative to meeting the occasional need for kosher food than building an unneeded nursing home. Improvements In Services Through Joint Resources Section 408.035(1)(e), Florida Statutes. Section 408.035(1)(e), Florida Statutes, addresses whether improvements in services may be derived from operation of joint, cooperative, or shared health care resources. With exception of limited discussion regarding joint use of the ALF’s kosher kitchen, the Elysium application does not meet this criterion. Additionally, financial projections in the application fail to indicate any economies, reduction in staff, reduction in non-salary expense, or other expense relief resulting from locating the nursing home next to the ALF. There is no discussion in the application of shared services with other health care providers. The ALF administrator, Claire Bojanoski, even professes no knowledge of the application or involvement in discussions about coordination between the existing ALF and the proposed facility. Applicant Resources For Project Accomplishment Section 408.035(1)(h), Florida Statutes. Section 408.035(1)(h), Florida Statutes, considers whether the applicant has available resources in personnel, management, and funds for project accomplishment and operation. Elysium’s application does not meet this criterion. As noted above, Elysium neither owns or operates nursing homes. The sole shareholder has no ownership or operational experience in the field. The applicant has no employees or specific individuals employed in any key operational or management positions. With regard to funding, the applicant proposes to borrow 5.8 million in long-term debt for project development. The only evidence in the application with regard to availability of such funding are two “letters of interest” from banks. The letters are casual, in no way binding, and cannot be viewed as firm commitments to provide debt funding. The applicant does have 250,000 dollars in capital for the nearly 8 million dollar project. Such a small percentage of the initial requirement for funding, plus the need for working capital when the facility opens, necessitates a finding that Elysium has not demonstrated in its application that it can firmly secure funds for project accomplishment and operation. Project Financial Feasibility Section 408.035(1)(i), Florida Statutes. Immediate financial feasibility is the ability to finance construction and initial operations. It is similar to the criterion of funds availability for capital and operating expenditures and, based on findings set forth above in that regard, it is found that the project lacks immediate financial feasibility. Long term feasibility addresses whether a project is financially viable after two years of operation. Elysium’s position that the large and growing Jewish population in the southern part of Palm Beach County will be adequate to assure long term feasibility is not sufficient to meet this criterion, particularly in view of the present usage of the ALF (less than 40 percent occupancy) and the lack of documented need for a facility that will target primarily a Jewish population. Utilization projections advanced by Elysium in Schedule 5 of its application are not reasonable. There is inadequate demand for glatt kosher in Palm Beach County to justify the high occupancy and rapid fill up of occupancy projected by Elysium. Physical needs of patients primarily direct nursing home placement as opposed to cultural or dietary preferences, and the zero fixed need also illustrates the lack of need on that basis for the Alzheimer’s services, subacute care, Medicaid services, and custodial services associated with the typical nursing home. Elysium projects, in Schedule 10 of the application, that it will capture 6,588 Medicare days. Equated to subacute days, such a figure amounts to 337 subacute admissions for which no specific referral sources are identified. Subacute services are increasingly funded by managed care, yet Elysium projects zero days from managed care for the entire facility. With regard to projected Medicare revenues, a significant portion of total revenues, Elysium did not calculate Medicare costs on the basis of actual cost of delivering subacute services, but chose instead to assume that Medicare reimbursement would equal the average Medicare reimbursement for all Palm Beach County nursing homes. Such an assumption for an alleged unique facility is not reasonable. Additionally, projected Medicare revenues do not indicate staffing patterns or amount of therapy to be provided subacute patients. With respect to projected expenses, Elysium projected these expenses merely as a percentage of projected revenues. No consideration was given to the purported unique aspects of the proposed facility. Salary expenses, the largest expense item for a nursing home, are very understated in view of the dramatic understated number of nursing home employees required to operate the specialized units and the total facility. As established at the final hearing by testimony of the expert on health care planning and health care finance, Dan Sullivan, Elysium’s projection on Schedule 11 of $61.58 patient care costs per day in year 2000, the second year of operation, is unrealistic. Palm Beach County nursing homes averaged $61.27 in 1994. If the 1994 figure is inflated 4 percent per year, that would increase Elysium’s patient care costs by $15 per day. Multiplication of $15 per day times 39,528 patient days (utilization projections in year two) generates an additional expense of almost $600,000. Elysium projected a profit of $300,000, which, as Sullivan opined, becomes a $300,000 loss with the additional $600,000 cost. Promotion Of Competition, Quality Assurance, Or Cost-Effectiveness Section 408.035(1)(l), Florida Statutes. There are no competitive benefits associated with Elysium’s application in view of the lack of Fixed Need and the existence of many nursing homes that presently provide the same services proposed by this applicant. Additionally, Jewish residents now receive adequate, available, and accessible cultural and religious services at existing facilities. For the same facts set forth earlier, finding that Elysium’s application fails to meet the “quality of care” criterion, the criterion of quality assurance is not met. With regard to cost effectiveness, there is no specific cost savings or cost effectiveness for health care delivery systems identified by Elysium’s application. Elysium has substantially understated its expenses and has expended no effort to share costs with the ALF or to provide any meaningful economic linkage with the ALF. Reasonableness Of Project Cost And Design Section 408.035(1)(m), Florida Statutes. The layout of Elysium’s Alzheimer’s unit and subacute unit, as previously noted, are not reasonable. Additionally, Elysium’s projected “start-up” costs of $25,000 shown on Schedule 1 manifests a misapprehension of what is involved in developing and operating a nursing home. Testimony of Marta Meers establishes that start-up involves hiring an administrator and other key staff six to eight months before opening; hiring and training other staff prior to opening; marketing and promotion. A projection of $25,000 for these costs is unrealistic and fails to meet this criterion. Elysium is inconsistent with regard to whether there will be a separate kosher kitchen for the proposed facility. Page 3-16 of the application states there will not be a separate kitchen, contrary to the project architect’s testimony that the proposed facility could accommodate preparation of kosher and non-kosher foods. The architect’s testimony is not credited on this point. Applicant’s Past And Proposed Provision Of Medicaid And Indigent Services Section 408.035(1)(n), Florida Statutes. Elysium has no history and therefore has no history of providing service to Medicaid or indigent persons. Elysium projects 55 percent Medicaid which is the Palm Beach County nursing home average. Elysium makes no attempt to quantify Medicaid need for nursing home residents demanding glatt kosher foods and puts further in question whether the applicant seeks to offer a unique service. Elysium does not satisfy this criterion. Continuum Of Care In A Multi-Level Health Care System Section 408.035(1)(o), Florida Statutes. This proposed facility is not linked to any other element in the health care system of Palm Beach County with the exception of the ALF which is not particularly viable. There are no letters of support from hospitals or other nursing homes. The applicant has failed to establish that the proposed facility is an integrated part of a continuum of services. Local And State Health Plan Satisfaction Section 408.035(1)(a), Florida Statutes. Local Health Plan The District 9 Local Health Plan includes preferences for consideration in the review of applications for nursing home beds. The first preference gives priority to applicants for new nursing homes who agree to provide a minimum of 30 percent Medicaid patient days. Elysium has proposed a minimum of 55 percent Medicaid patient days and, therefore, meets this preference. The second preference contains four subparts that establish priorities for applicants: documented history of providing good residential care; staffing ratios, particularly for registered nurses and aids, that exceed staffing requirements; provision for the treatment of residents with mental health problems; and the inclusion of intensive rehabilitation services for those short stay patients requiring rehabilitation below the level of an acute care hospital. Elysium has not operated a skilled nursing facility to date and therefore does not have a rating history to report. With regard to staffing ratios, provision of treatment of residents with mental health problems, the inclusion of intensive rehabilitation services for those short stay patients requiring rehabilitation such as a subacute unit, these preferences are not met by Elysium in view of the facts found above documenting the applicant’s failure to demonstrate an ability to provide high quality of care and quality assurance for its specialized services. The third priority under the local/district health plan establishes a priority for applicants who propose to serve a distinct population that is not currently being served within the Subdistrict. As noted above, the distinct population in this instance is already well served by other nursing homes in Palm Beach County which meet the ethnic, religious, cultural and dietary needs of the elderly Jewish population who keep kosher. Florida State Health Plan The Florida State Health Plan contains twelve allocation factors for reviewing CON applications for community nursing home beds. Factor 1 provides a preference for applicants proposing to locate in subdistricts with occupancy rates exceeding 90 percent. Elysium conforms to this preference since occupancy rates in Palm Beach County have exceeded 90 percent throughout 1995. Factor 2 provides a preference to those proposing to serve Medicaid residents in proportion to the subdistrict average. At risk to its claim that it proposes a truly unique facility, Elysium conforms to this preference. Factor 3 provides a preference to applicants proposing specialized services to special care residents, including AIDS, Alzheimer’s and mentally ill residents. As previously noted above, the applicant’s failure to demonstrate an ability to provide high quality of care and quality assurance for its specialized services prevents conformance with this preference. Factor 4 provides a preference to applicants proposing a continuum of services, including but not limited to, respite care and adult day care. As previously noted, Elysium’s failure to demonstrate an ability to provide quality of care or quality assurance precludes consideration of this preference. Factor 5 of the State Health Plan is for applicants proposing reasonable facility design. As found above, Elysium’s proposal is unreasonable in design, particularly with regard to the specialized units for Alzheimer’s and subacute patients. Factor 6 provides a preference to applicants providing innovative and therapeutic programs that enhance residents’ physical and mental functional level and emphasize restorative care. Elysium’s proposed subacute program does not offer services not provided at other nursing homes in the area. Additionally, Elysium does not demonstrate an ability to provide quality of care in its programs. Factor 7 provides a preference to applicants proposing charges that do not exceed the highest Medicaid per diem rate in the Subdistrict. Elysium conforms with this preference. Factor 8 provides a preference to applicants with a history of providing superior residential care in existing facilities in Florida and other states. Elysium has not operated a skilled nursing facility to date and therefore does not have a rating history to report. Factor 9 provides a preference to applicants proposing staffing levels that exceed the minimum staffing standards contained in licensure administrative rules. The staffing ratios proposed by Elysium’s application do not meet minimum staffing ratios under the licensure rules due to understatement by the applicant of the number of nursing employees needed to operate its proposed facility. Factor 10 provides preference to applicants who will use professionals from a variety of disciplines to meet the residents’ needs for social services, specialized therapies, nutrition, recreation and spiritual guidance. Elysium minimally complies, with proposed contractual services, with requirements for this preference. Factor 11 provides a preference to applicants who document how they will ensure residents’ rights and privacy, if they use residents’ councils, and if they plan to implement a well-designed quality assurance and discharge planning program. Absent quality assurance concerns, Elysium qualifies for priority under this factor. Factor 12 provides preference to applicants proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district. Elysium does not meet this preference in that proposed patient care costs are lower than average. Adverse Impact To Other Facilities Manor Care is a 180 bed nursing home. Superior-rated, it has a 32-bed Alzheimer’s unit and provides subacute services. Service is provided to the Medicaid population and 60 percent of its residents are Jewish. It is located 1.5 miles from Elysium’s proposed site. Presuming that Elysium reached projected utilization, 20 percent of that business would come at the expense of Manor Care in an amount equal to the loss of 8,000 patient days. Currently generating a contribution margin of $60 per resident day, the loss to Manor Care would approximate $480,000 should Elysium’s application be approved. This is a substantial and adverse financial loss.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That a final order be entered denying the applications of Elysium and Good Samaritan which are at issue in this proceeding. DONE AND ENTERED this 2nd day of June, 1997, in Tallahassee, Leon County, Florida. DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1997. COPIES FURNISHED: Thomas A. Sheehan, III, Esquire Moyle, Flanigan, Katz, et al. 625 North Flagler Drive West Palm Beach, FL 33402 David K. Friedman, Esquire Weiss and Handler, P.A. 2255 Glades Road, Suite 218A Boca Raton, FL 33431 James C. Hauser, Esquire Skelding, Labasky, Corry et al. 318 North Monroe Street Tallahassee, FL 32301 John Gilroy, Esquire Agency for Health Care Administration 2727 Mahan Drive, Suite 3426 Tallahassee, FL 32308 R. Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431 Tallahassee, FL 32308-5403 Jerome W. Hoffman, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, FL 32308-5403 Douglas M. Cook, Director Agency for Health Care Administration 2727 Mahan Drive Tallahassee, FL 32308-5403
