The Issue At issue in this proceeding is whether petitioner's request to modify its certificate of need from a 60-bed child/adolescent psychiatric hospital to a 45- bed child/adolescent and 15-bed adult psychiatric facility should be approved.
Findings Of Fact Case status In February 1993, petitioner, Martin H.M.A., Inc., d/b/a SandyPines Hospital (SandyPines), filed an application with the respondent, Agency for Health Care Administration (AHCA), for a modification of its certificate of need (CON) from a 60-bed child/adolescent psychiatric hospital to a 45-bed child/adolescent and 15-bed adult psychiatric hospital. Upon review, AHCA concluded that SandyPines' request could not be accommodated under the modification provisions of Rule 59C-1.019, Florida Administrative Code, and required certificate of need review. Accordingly, AHCA proposed to deny SandyPines' request, and these formal proceedings to review, de novo, the agency's decision were commenced at SandyPines' request. The applicant SandyPines is the holder of certificate of need number 4004 which authorized it to construct a 60-bed child/adolescent psychiatric facility. That facility was constructed and is currently in operation in Tequesta, Martin County, Florida. SandyPines is now, and has been since it commenced operations in January 1990, licensed as a Class III Special Psychiatric Hospital with 60 psychiatric child/adolescent beds. It has never provided adult inpatient psychiatric services and, until approximately October 18, 1993, had never provided any adult outpatient psychiatric services. The adult outpatient psychiatric services currently provided by SandyPines are not subject to CON review. SandyPines's fiscal problems When SandyPines opened in January 1990, no managed care organizations existed in its local market; however, with each passing year managed care has become more prevalent such that currently 45-50 percent of SandyPines admissions are covered by some form of managed care. This has significantly adversely affected SandyPines' revenues such that it lost approximately $600,000 last fiscal year and, absent increased occupancy levels, its continued viability is, at best, questionable. Indeed, if SandyPines continues to operate as currently configured, it projects a loss for the fiscal year ending September 30, 1994, of $1,099,777. Occupancy levels are low, however, for District IX as a whole, due in large measure to the demands for managed care. For the six-month period ending June 1993, the average occupancy rate for child/adolescent psychiatric beds was 35 percent and for adult psychiatric beds 65 percent. To address its faltering business, SandyPines has, as heretofore noted, begun to provide adult psychiatric services on an outpatient basis; however, unless it can combine inpatient adult psychiatric services with the program it is doubtful that its adult program will prove successful. In this regard, SandyPines offered proof, which is credited, that patients and their physicians are looking for what has been termed "one-stop shopping." The patient does not want to go to one facility for outpatient care and another facility for inpatient care, and the referring physicians would rather send all of their patients to one facility that offers a full spectrum of services. Therefore, from a marketing perspective, the addition of adult inpatient psychiatric services at SandyPines would have a positive effect. Whether modification of SandyPines' CON to allow inpatient adult psychiatric services will increase the hospital's daily census and utilization sufficiently to assure its viability is, at best, fairly debatable. To analyze the impact of redesignating 15 child/adolescent beds to 15 adult psychiatric beds, SandyPines made an assumption of an average daily census of 10.5 patients on the 15-bed adult psychiatric unit. Based on such assumption, SandyPines calculated a net income from that unit, for the fiscal year ending September 30, 1994, assuming it opened April 1, 1994, of $589,664, and a net loss for the facility as a whole of $510,113, as opposed to a net loss of $1,099,777 without the adult unit. Based on the same assumptions, SandyPines calculated a net income for the fiscal year ending September 30, 1985, for the adult unit at $1,111,008, and a net income for the facility as a whole with an adult unit at $44,980. As heretofore noted, SandyPines' ability to achieve an average daily census of 10.5 patients is, at best, fairly debatable. To SandyPines' credit, it has an active advertising and marketing department comprised of six people and its director of marketing and business development. This marketing group is constantly striving to develop relationships with referral sources and to develop programs to meet market needs and demands. There was, however, no proof of record to demonstrate any existent commitments in the community or any objective data to support the conclusion that SandyPines could reasonably expect to attain an average daily census of 10.5 patients. Moreover, four of SandyPines' potential competitors for adult psychiatric patients exhibited more than a 78 percent occupancy rate for the first six months of 1993, which may be reflective of among other attributes, a strong existent referral pattern, and the overall District average was only 65 percent, which reflects significant unused capacity. On balance, the proof is not compelling that SandyPines could achieve the occupancy levels it projected. Whether SandyPines achieved its projected occupancy levels for adult services or some lesser level would not, however, significantly adversely impact existing providers. Moreover, the redesignation of beds and the necessary modification of the facility to meet required legal standards of separation of adult and child/adolescent units would require no more than $50,000-$80,000; a capital expenditure well below that which would require CON review. Is modification appropriate Pertinent to this case, Rule 59C-1.109, Florida Administrative Code, provides: A modification is defined as an alteration to an issued, valid certificate of need or to the condition or conditions on the face of a certificate of need for which a license has been issued, where such an alteration does not result in a project subject to review as specified in . . . subsection 408.036(1) . . ., Florida Statutes. Subsection 408.036(1), Florida Statutes, provides in pertinent part: . . . all health-care-related projects, as described in paragraphs (a)-(n), are subject to review and must file an application for a certificate of need with the department. The department is exclusively responsible for determining whether a health-care-related project is subject to review under [ss.408.031-408.045]. * * * (e) Any change in licensed bed capacity. * * * (h) The establishment of inpatient institutional health services by a health care facility, or a substantial change in such services . . . * * * (1) A change in the number of psychiatric . . . beds. Finally, pursuant to the Legislature mandate of Section 408.034(3), Florida Statutes, to "establish, by rule, uniform need methodologies for health services and health facilities," AHCA has promulgated Rule 59C-1.040, Florida Administrative Code, which establishes discrete methodologies for calculating the need for the establishment of inpatient adult psychiatric services and inpatient child/adolescent psychiatric services, and provides for the identification of the number of hospital inpatient psychiatric beds for adults and children/adolescents by facility. As heretofore noted, SandyPines' license designates it as a "Class III Special Psychiatric hospital with 60 Psychiatric Child/Adolescent beds," and the inventory established pursuant to Rule 59C- 1.040(11), Florida Administrative Code, has identified SandyPines' beds as child/adolescent. Resolution of the parties' dispute as to whether SandyPines' proposed conversion of beds from child/adolescent to adult is subject to CON review under Section 408.036(1)(e), (h) and (l), Florida Statutes, and therefore not susceptible to modification under Rule 59C-1.109(1), resolves itself to an interpretation of Section 408.306(1), Florida statutes, and the provisions of Chapter 59C-1, Florida Administrative Code. SandyPines contends that hospital inpatient psychiatric services, as used in Chapter 408, Florida Statutes, and Chapter 59C-1, Florida Administrative Code, is a generic term for the treatment of psychiatric disorders and that its proposal to treat adults, as opposed to children/adolescents, is not a change in health services. Accordingly, SandyPines concludes that the proposed conversion does not constitute "[a] change in licensed bed capacity," "the establishment of inpatient institutional health services by a health care facility, or a substantial change in such services," or " change in the number of psychiatric beds," such that CON review would be required under Section 408.306(e), (h) and (l), Florida Statutes. Contrasted with SandyPines' position, AHCA interprets the foregoing provisions of law, when read in para materia, and with particular reference to Rule 59C-1.040, Florida Administrative Code, as establishing two discrete types of inpatient psychiatric services, to wit: child/adolescent and adult. The separate CON review criteria established by Rule 59C-1.040, Florida Administrative Code, for child/adolescent and adult inpatient psychiatric services is consistent with AHCA's interpretation. Indeed, the rule, among other things, establishes separate bed need methodologies, fixed need pools, bed inventories, utilization thresholds, and minimum unit sizes for child/adolescent and adult services. Granting SandyPines' request would run counter to these CON review criteria by, among other things, altering the District IX inventory of child/adolescent and adult psychiatric beds, as well as awarding adult psychiatric beds when there is no need under the established methodology. Finally, consistent with the provisions of Section 395.003(4), Florida Statutes, the agency has issued SandyPines a license "which specifies the service categories and the number of hospital beds in each bed category [60 psychiatric child/adolescent beds] for which [the] license [was issued]." Granting SandyPines' request would constitute a change in its "licensed bed capacity." Considering the foregoing provisions of law, it is concluded that the interpretation advanced by SandyPines is strained, and the interpretation advanced by AHCA is reasonable. Accordingly, it is found that SandyPines' proposed conversion of 15 child/adolescent psychiatric beds to 15 adult psychiatric beds is subject to CON review because such conversion constitutes "[a] change in licensed bed capacity," "the establishment of inpatient institutional health services by a health care facility, or a substantial change in such services," or "a change in the number of psychiatric beds." Section 408.036(e), (h) and (l), Florida Statutes
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered denying SandyPines' request to modify its certificate of need from a 60-bed child/adolescent psychiatric hospital to a 45-bed child/adolescent and 15-bed adult psychiatric facility. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 14th day of March 1994. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of March 1994.
Findings Of Fact A not for profit 520-bed acute care hospital in Pensacola, Baptist primarily serves not only residents of Escambia and Santa Rosa Counties, within Florida's HRS Service District I, but also patients from Escambia and Baldwin Counties in Alabama. The other two counties in District I, Okaloosa and Walton, lie outside Baptist's primary service area, but within a secondary service area, as does Covington County, Alabama. Baptist proposes to convert twelve medical/ surgical beds to a children's psychiatric service, to complement an existing 38-bed psychiatric service housed in the Behavioral Medical Center across the street from Baptist's main campus. On average, eighty percent of Baptist's existing psychiatric beds are occupied at any one time. Of four separate, psychiatric treatment programs Baptist now offers, all accredited by the Joint Commission on Accreditation for Health Care Organizations, none is designed for children below the age of 13. Seldom, and only in an emergency, has a child below this age been accepted into Baptist's program for adolescents, which is operated separately from any adult treatment program. Baptist has treated indigent and medicaid patients in its psychiatric programs, as well as patients for whose treatment it has received greater remuneration. Hospital-wide, Baptist has had "medicaid utilization" of between six and nine percent. "Baptist was willing to do Baker Act patients." Farr deposition, p. 17. Rollins deposition, p. 30. Other Resources Pensacola and Escambia County have extensive outpatient psychiatric services for children, offering a broad range of options, short of inpatient care in a treatment facility. Rollins deposition, pp. 15-16. Lakeview Community Health Center offers outpatients treatment, as do a number of private providers. The Children's Intervention Project System conducts home visits. Day care and therapeutic foster homes are also available. Professionals distinguish between "crisis stabilization" which does not "focus on treatment" and even short-term psychiatric care. Lakeview Community Health Center has a 31-bed crisis stabilization unit, which was full as of the week before the hearing. Ten of the 31 beds are reserved for children, aged 9- 17, but children's beds are not segregated from beds for adolescents. Treating children and adolescents together (if not stabilizing their crises in the same facility) is inappropriate. They have different needs and require different structures. Adolescents require more autonomy; children need more supervision. See deposition of Cruz. Farr deposition, p. 21. Rollins deposition, p. 22. Only Harbor Oaks, a free-standing facility more than 45 minutes from Pensacola and Gulf Breeze, accepts children as psychiatric patients. Harbor Oaks has 19 children's beds but does not accept medicaid patients. The children's unit at Harbor Oaks experienced an occupancy rate of approximately 74 percent in 1988. Occasionally, girls were put on waiting lists. University hospital does not accept children as psychiatric patients. It rarely accepts adolescents. West Florida Hospital, which has a program for adolescents, refuses child psychiatric patients admission. West Florida Community Center accepts no children. Nor does Humana Hospital in Ft. Walton. Play Therapy Rather than convert a part of an existing medical or surgical ward to a children's psychiatric ward, Baptist proposes to spend $565,660 to construct a facility abutting but distinct from its Behavioral Medical Center. Lakeview Medical Health Center is nearby. Farr deposition, p. 32. The parties have stipulated that "the costs and method of proposed construction, including ... energy provision and the availability of alternative, less costly or more effective methods of construction" are not in dispute, and that "the facility design schematic is reasonable and appropriate." Baptist would hire a child psychiatrist to head up to the children's psychiatric unit. Treatment teams for existing programs also include psychologists, psychiatric social workers, occupational therapists, certified recreational therapists, and nursing staff. Dr. DeMaria recommends that "somebody in the creative arts therapy," (T.99) be hired for the children's unit, as well. The parties agree that "the availability of resources, including health manpower, management personnel, and funds ... are not at issue." The plan is to create a homelike environment where children will sleep two to a room and eat together family style in a dining room. A living room, at least one classroom, a playroom and a playground out of doors are to be the situs of art, dance, music and play therapy, individual, group, and family, all in a "therapeutic milieu." Baptist intends that the children's psychiatric unit be the least restrictive inpatient facility for children possible and has given assurances that the same rigorous review now taking place in its existing psychiatric programs would see to it that children are discharged to a still less restrictive environment as soon as their conditions permitted. In large part, Baptist is counting on medical staff at the Lakeview Community Health Center, all of whom have admitting privileges at Baptist, to identify children who will need inpatient care but cannot afford to pay. Baptist has committed to reserve two beds in the proposed unit for patients who are indigent, or eligible for medicaid benefits. Baptist has also undertaken "not [to] turn away patients," Farr deposition, p. 49, needing psychiatric care. Baptist has agreed to accept a requirement that it honor this commitment, as a condition to any certificate of need it obtains. Less than 20 percent of the children seen by 19 of the 55 child psychologists practicing within Baptist's service area who responded to a survey seemed to require inpatient care, but only 60 percent of this group actually received such care. Baptist's Exhibit No. 30. A survey of referral agencies indicated some 80 children in Baptist's service area needing inpatient psychiatric care in 1988 did not receive it. Projected daily charges of $390 in Baptist's second year of operating the children's psychiatric unit are less than the $450 a day now charged by Harbor Oaks. The parties stipulated that "the pro forma income and expense statement relating to the children's short-term psychiatric beds is reasonable and requires no further proof except for validation of the number of patients days." Assuming admission rates comparable to elsewhere in the South, children in Baptist's service area would keep ten children's psychiatric beds at 70 percent average occupancy. Baptist's Exhibit No. 26. Twelve beds would make it economically feasible to serve the medically indigent as well as other children needing inpatient care. The first seven days following a child's admission staff would devote to evaluating the child. Children not discharged to a less restrictive situation by the end of the evaluation period, Baptist projects, would have an average stay totalling 28 days, as compared to the 35- to 40-day average length of stay harbor Oaks has reported. Not Normal District I has a total of 240 short-term psychiatric beds. According to the state agency action report, short-term psychiatric bed utilization was 88.9 percent at Harbor Oaks for 1987, 73.5 percent at Ft. Walton's Humana Hospital, 59.4 percent at University Hospital and 58.1 percent at West Florida. Baptist's recent experience of psychiatric bed utilization in excess of 80 percent dates to January of 1988, and is a substantial increase over the 55.8 percent reported for the period July 1986 to June 1987. Baptist's Exhibit No. 9. Projected 1993 population for District I is 601,559. Baptist's Exhibit No. 23. The parties agree that the formula set out in Rule 10- 5.011(1)(o), Florida Administrative Code, for determining "numeric need" for acute care, short-term, general psychiatric beds does not indicate a need for additional acute care short-term general psychiatric beds in District I. But 53 percent of the District's population resides in Escambia County where no treatment facility has any children's psychiatric beds. A significant number (compare Baptist's Exhibit No. 23 with T. 133) of Baptist's psychiatric admissions are patients who reside in Alabama. Although Escambia County has 52 percent of the District I population, between ages 1-12, it has none of the children's psychiatric beds. More than half the District's population lives more than 45 minutes travel time from Harbor Oaks, complicating arrangements for family therapy, often essential in these cases, Rollins deposition, pp. 28-29, and for other conferences, including discharge conferences, where parents and community-based professionals work out details necessary to effect a smooth transition from inpatient to something less restrictive. The District I Health Plan, approved on June 1, 1988, provides: The following policies and priorities are to be used in CON review in tandem with the bed need numbers on the preceding pages. POLICIES AND PRIORITIES FOR PSYCHIATRIC AND SUBSTANCE ABUSE BEDS Psychiatric or substance abuse beds which are not used by residents of the District shall not be included in the resource inventory count of the District. [NOTE: There have in the past, been facilities in another district treating patients originating solely from outside of that district. The facility's intake policies precluded the treatment of "local" district residents. In addition, the facility's marketing effort was directed entirely out- of-state. A local marketing effort plus treatment of patients originating within the district can easily be demonstrated.] Priority will be given to applicants who can demonstrate that all existing short term inpatient psychiatric beds in the subdistrict have had an average annual occupancy rate equal to or greater than 70% for the preceding year. Priority will be given to applicants who can demonstrate that all existing short term inpatient substance abuse beds in the subdistrict have had an average annual occupancy rate equal to or greater than 80% for the preceding year. Proposals for new facilities, expansions, conversions and additional services will be given priority for applicants who agree to continue or enter into Baker Act, Medicaid, Medicare and other medically indigent contracts for the provision of services to qualifying patients. Among the goals, objectives, and recommended actions set out in the 1985-1987 State Health Plan, now expired but not replaced, is a goal that short-term inpatient hospital psychiatric beds not exceed .35 per thousand population. HRS Exhibit No. 1. In requiring that .15 (of a total of .35) short-term psychiatric beds per 1,000 population be located in general hospitals eligible for medicaid reimbursement, HRS's rules do not distinguish between children and adults. But no children's psychiatric beds in Distract I are located in a facility that accepts medicaid patients. If the ratio prescribed for psychiatric beds generally applied specifically to children's psychiatric beds, District I would already have at least eight such beds: Multiplying the 19 existing beds by .15/.35 yields 8.14. Applying the rule's .15 beds per 1,000 population methodology to the 111,211 children projected to be in District I by 1993, see Baptist's Exhibit No. 23, yields a need for 16.68 children's psychiatric beds in facilities that accept medicaid patients.
Recommendation It is, accordingly, RECOMMENDED: That HRS grant Baptist's application for certificate of need No. 5669, on condition that Baptist honor its commitments to care for medically indigent and medicaid-eligible children in need of inpatient psychiatric care. DONE and ENTERED this 2nd day of November, 1989, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1989. APPENDIX Petitioner's proposed findings of fact Nos. 1 through 6, 8 through 21, 28 through 35, 40, 44, 45, 47 through 50, 60, 61, 64, 69, 72, 73, 75, 76, 78, 79, 81 and 82 have been adopted in substance as fare as material. With respect to petitioner's proposed finding of fact No. 7, either a music therapist or an art therapist is contemplated. With respect to petitioner's proposed finding of fact No. 22, children in Escambia and Santa Rosa counties can go to Harbor Oaks. Petitioner's proposed findings of fact Nos. 23 through 26 here not established by the evidence. With respect to petitioner's proposed finding of fact No. 27 at least one eleven-year-old was also admitted. Petitioner's proposed findings of fact Nos. 36 and 37 are immaterial. Petitioner's proposed findings of fact Nos. 37, 39, 42, 43, 46, 51 through 59, 62, 63, 65, 67, 70, 71, 74, 77 and 80 relate to subordinate matters. With respect to petitioner's proposed finding of fact No. 41, the evidence did not show that everybody living in Escambia and Santa Rosa counties was more than 45 minutes from Harbor Oaks. Petitioner's proposed finding of fact No. 66 is properly a proposed conclusion of law. Respondent's proposed findings oil fact Nos. 1, 2, 5 through 8, 11, 14 and 15 have been adopted in substance insofar as material. With respect to respondent's proposed finding of fact No. 3, the petitioner's stipulation further narrowed the issues. Respondent's proposed findings of fact Nos. 4 and 17 are properly proposed conclusions of law. Respondent's proposed findings of fact Nos. 9, 10, 21, and 23 have been reject in whole or in part as unsupported by the evidence. Respondent's proposed findings of fact Nos. 12, 13, 16, 18, 20 and 22 pertain to subordinate matters. With respect to respondent's proposed finding of fact No. 19, whether institutionalizing of children is ever a good idea is not at issue in this proceeding. The question is whether services available to others should also be available to indigent patients. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Stephen A. Ecenia Roberts, Baggett, LaFace, and Richard 101 East College Avenue Post Office Drawer 1838 Tallahassee, FL 32302 Richard A. Patterson Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, FL 32308 =================================================================
The Issue Which, if any, of the four certificate of need applications for short-term psychiatric beds in Department of Health and Rehabilitative Services District 9 should be approved.
Findings Of Fact Description of the Parties The Department of Health and Rehabilitative Services ("HRS") is the agency charged under Chapter 381, Florida Statutes (1991), to make decisions regarding certificate of need ("CON") applications. HRS issued its intent to approve the CON applications of Glenbeigh Hospital of Palm Beach, Inc. ("Glenbeigh"), for 45 beds, and Boca Raton Community Hospital, Inc. ("Boca"), for 15 beds, pursuant to a published fixed need for 67 beds for HRS District IX. HRS also issued its intent to deny the CON applications of Wellington Regional Medical Center, Incorporation ("Wellington") to convert 15 acute care beds to 15 short term adult psychiatric beds, and Savannas Hospital Limited Partnership ("Savannas") to convert 20 substance abuse beds to 20 short term adult psychiatric beds and to add 10 new short term adult beds. District IX includes Palm Beach, Martin, St. Lucie, Okeechobee and Indian River Counties. As a result of Glenbeigh's Notice of Withdrawal filed on April 6, 1993, CON No. 6438 is no longer under consideration in this case. Boca is an existing 394-bed acute care hospital, located one mile north of the Broward County line, and is the applicant for CON No. 6442, to convert 15 medical/surgical beds to 15 adult psychiatric beds, and to delicense an additional 6 medical/surgical beds. Wellington is an existing acute care hospital in Palm Beach County, with 104 acute care medical/surgical beds and 16 substance abuse beds, and is the applicant for CON No. 6441 to convert 15 acute care beds to 15 short term adult psychiatric beds. Savannas is an existing 70 bed child/adolescent and adult psychiatric and substance abuse hospital in St. Lucie County, about 40 miles north of Palm Beach, and is the applicant for CON No. 6444, to convert its 20 substance abuse beds to 20 adult short-term psychiatric beds, and to add 10 new adult short-term psychiatric beds. Lake Hospital and Clinic, Inc., d/b/a Lake Hospital of the Palm Beaches ("Lake"), at the time of hearing, was a 98-bed psychiatric and substance abuse hospital, with 46 adult psychiatric beds, 36 child/adolescent psychiatric beds and 16 substance abuse beds, located in Lake Worth, Palm Beach County, between Boca Raton and West Palm Beach. The parties stipulated that Lake had standing to challenge the Boca application. Community Hospital of the Palm Beaches, Inc., d/b/a Humana Hospital Palm Beaches ("Humana") is an existing 250-bed acute care hospital, with 61 adult and 27 child/adolescent psychiatric beds, and is a Baker Act receiving facility, located directly across the street from Glenbeigh in Palm Beach. Florida Residential Treatment Centers, Inc., d/b/a Charter Hospital of West Palm Beach ("Charter") is an existing 60-bed psychiatric hospital with 20 beds for children and 40 beds for adolescents, located approximately 15 minutes travel time from Glenbeigh. Martin H.M.A., Inc., d/b/a SandyPines Hospital ("SandyPines") is an existing 60 bed child and adolescent psychiatric hospital, and a Baker Act receiving facility, located in Martin County, less than one mile north of the Palm Beach County line. By prehearing stipulation, the parties agreed that the statutory review criteria applicable to the CON application of Boca are those listed in Subsections 381.705(1)(a), (b), (d), (f), (i) - (l) and (n). If Rule 10- 5.011(1)(o) is applicable, the parties stipulated that the disputed criteria are those in Subsections 4.g. and 5.g. Background and Applicability of HRS Rules and Florida Statutes Rule 10-5.011(o) and (p), Florida Administrative Code, was in effect at the time HRS published the fixed need pool and received the applications at issue in this proceeding, the September 1990 batching cycle. The rule distinguished between inpatient psychiatric services based on whether the services were provided on a short-term or long-term basis. Similarly, Rule 10- 5.011(q), Florida Administrative Code, distinguished between short-term and long-term hospital inpatient substance abuse services. On August 10, 1990, HRS published a fixed need pool for 19 short-term psychiatric beds in HRS District IX, with notice of the right to seek an administrative hearing to challenge the correctness of the fixed need pool number. See, Vol. 16, No. 32, Florida Administrative Weekly. On August 17, 1990, HRS published a revised fixed need pool for a net need of 67 additional short-term hospital inpatient psychiatric beds in HRS District IX, based on the denial of a certificate of need application, subsequent to the deadline for submission of the August 10th publication. The local health plan formula, which has not been adopted by rule, allocates 62 of the additional 67 beds needed to the Palm Beach County subdistrict. The revised pool publication did not include notice of the right to an administrative hearing to challenge the revised pool number. See, Vol. 16, No. 33, Florida Administrative Weekly. There were no challenges filed to either the original or revised fixed need pool numbers. On December 23, 1990, HRS published new psychiatric and substance abuse rules, subsequently renumbered as Rule 10-5.040 and 10-5.041, Florida Administrative Code. These new rules abolished the distinction between short- term and long-term services, and instead distinguished psychiatric and substance abuse services by the age of the patient. Pursuant to Section 14 of the new psychiatric rule, that rule does not apply to applications pending final agency action on the effective date of the new rule. HRS will, however, license any applicant approved from the September 1990 batching cycle to provide services to adults or children and adolescents, using the categories in the new rule, not based on the distinction between short and long term services which existed at the time the application was filed. Approved providers will receive separate CONs for adult and child/adolescent services. Rule 10-5.008(2)(a), Florida Administrative Code, provides that the fixed need pool shall be published in the Florida Administrative Weekly at least 15 days prior to the letter of intent deadline and . . . shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Humana, Lake, Charter and SandyPines allege that HRS incorrectly determined need under the old rule, by failing to examine occupancy rates pursuant to that rule. The rule provided, in relevant part, No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. (Emphasis added.) Rule 10-5.011(o)4(e), Florida Administrative Code. HRS' expert witness, Elizabeth Dudek, testified that the fixed need pool for 67 additional short term inpatient psychiatric beds was calculated pursuant to the formula in Rule 10-5.011(l)(o), Florida Administrative Code. Ms. Dudek also testified that since calculation resulted in a positive number, according to HRS policy, the publication of the fixed need pool indicates that the occupancy prerequisites must have also been met. To the contrary, the State Agency Action Report and the deposition of Lloyd Tribley, the HRS Health Facilities consultant who collected the data to support the publication of the fixed need pool, indicate that he did not determine existing occupancy separately for adults and for children/adolescents, as required by subsection (e) of the old rule. Rather, he determined, pursuant to subsection (f), that overall occupancy rates for licensed short-term psychiatric beds exceeded 75 percent. With the August 10, 1990 publication of the need for 19 additional short-term inpatient psychiatric beds, HRS provided a point of entry to challenge the published need, including the agency's apparent failure to make a determination of existing occupancy rates for separate age categories. No challenge was filed. In the August 17, 1990 publication, HRS failed to provide a point of entry, when it added 48 more beds to the pool as a result of the issuance of a final order denying a prior CON application. The August 10th publication of numeric need, according to HRS' representative should have been based on an analysis of separate and combined occupancy rates. There was no challenge to that publication, therefore the number of beds in the fixed need pool is not at issue in this proceeding. Like and Existing Facilities Humana, Lake and Charter assert that, as a result of the new rule abolishing separate licensure categories for short-term and long-term beds, all psychiatric providers within an applicant's service district are like and existing facilities. These parties also assert that there was not, even under the old rule, any practical difference between these categories of providers, particularly for children/adolescents. In support of this position, the evidence demonstrated that the average lengths of stay in short-term and long- term adolescent psychiatric beds in 1989 were 48.1 days and 53.02 days, respectively. In 1990, the average lengths of stay in short and long-term beds were 41.8 days and 41.9 days, respectively. The parties asserting that the effect of the new rule is to create an additional group of like and existing providers point to HRS' response to the application of Indian River Memorial Hospital in Vero Beach, Florida ("Indian River"). According to the testimony of HRS expert witness Elizabeth Dudek, Indian River was another District 9 applicant in this same batching cycle. Indian River applied for a CON to convert long-term psychiatric beds to short- term psychiatric beds. HRS denied the CON application of Indian River because, under the new rule, which had taken effect before the decisions on the batch were made, Indian River would receive a new license permitting it to treat psychiatric patients regardless of their projected lengths of stay. Glenbeigh asserted that the numeric need for 67 additional short term psychiatric beds cannot be challenged in this proceeding based on the failure of any party timely to challenge the August 10, 1990, publication of need. Similarly, Glenbeigh asserted that the comparison of "like and existing" facilities must be limited to those used in the inventory to compute need. Glenbeigh relied generally on Florida Administrative Code Rule 10-5.011(o), the old rule governing short term hospital inpatient psychiatric services, for the proposition that "like and existing" in Subsection 381.705(1)(b), Florida Statutes, is equivalent to the inventory of licensed and approved beds for short term psychiatric services, which was used in the computation of need. However, the rule also provides, in a list of "other standards and criteria to be considered in determining approval of a certificate of need application for short term hospital inpatient psychiatric beds," the following, Applicants shall indicate the availability of other inpatient psychiatric services in the proposed service area, including the number of beds available in crisis stabilization units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not. In light of the rule directive that the consideration of like and existing services is not limited to licensed provider hospitals, Glenbeigh's assertion that the statutory review criteria is more restrictive and limited to the licensed and approved beds that were used to compute numeric need is rejected. The like and existing facilities are the hospitals or freestanding facilities which are authorized to provide the same psychiatric services, as the applicants seek to provide as a result of this proceeding. It was established at hearing that the following list of District 9 facilities provide psychiatric services comparable to those which the three remaining applicants seek to provide in these consolidated cases: DISTRICT 9 Hospital PSYCHIATRIC BEDS SUBSTANCE ABUSE BEDS Adult Child and Adult Child and Adolescent Adolescent Lic. App. Lic. App. Lic. App. Lic. App. Bethesda Hospital 20 0 0 0 0 0 0 0 Charter Palm (IRTF) 0 0 60 0 0 0 0 0 Fair Oaks 36 0 49 0 14 0 3 0 Forty Fifth Street 44 0 0 0 0 0 0 0 Glenbeigh Palm Beach 0 0 0 0 30 0 30 0 Humana Palm Beach 61 0 27 15 0 0 0 0 Humana Sebastian 0 0 0 0 16 0 0 0 Indian River Mem. 16 0 38 0 0 0 0 0 J.F. Kennedy Mem. 14 0 0 0 22 0 0 0 Lake Hospital 46 0 36 0 16 0 0 0 Lawnwood Regional 36 Res. Treat. Palm 0 24 0 0 0 0 0 (IRTF) 0 0 40 0 0 0 0 0 Sandy Pines 0 0 60 0 0 0 0 0 Savannas 35 0 15 0 20 0 0 0 St. Mary Hospital 0 40 0 0 0 0 0 0 Wellington Regional 0 0 0 0 16 0 0 0 Vol. 16, No. 52, Florida Administrative Weekly, (December 28, 1990) (Humana Exhibit 26). Need For Additional Beds An analysis of need beyond that of the numeric need, requires an analysis of the availability and accessibility of the like and existing facilties. One reliable indicator of need is the occupancy levels in the like and existing facilities. In addition to providing guidelines for the publication of need, Rule 10-5.011(o)(4)(e) also mandates a consideration of occupancy levels to determine if applicants are or are not required to demonstrate "not normal circumstances" necessitating the issuance of a CON. For all child/adolescent psychiatric programs in District 9, the expert for Lake and Humana calculated total average occupancy rates at 57.6 percent in 1988, 64.2 percent in 1989, and 53.2 percent in 1990. In support of the accuracy of the expert's calculations, the District 9 Annual Report for 1990 (Lake Exhibit 4) shows occupancy at 46.80 percent in general hospitals, 88.22 percent in specialty hospitals then categorized as short term and 38.22 percent in specialty hospitals then categorized as long term. In addition, during this same period of time, average lengths of stay in District 9 child/adolescent beds also declined by approximately 10 percent. Using the guidelines of the old rule, new short term psychiatric beds should not normally be approved when the child/adolescent rate is below 70 percent. In the new rule, child/adolescent beds should not normally be approved if occupancy is below 75 percent. Therefore, under either rule, applicants who will be licensed for child/adolescent beds, must demonstrate not normal circumstances for their CON applications to be approved. The expert for Lake and Humana, also computed the adult occupancy rates for 1988-1990 in District 9 as follows: 1988- 66.5 percent; 1989 - 73.1 percent; 1990 - 68.5 percent. The occupancy rates for adult beds for the 12- month period ending March, 1990 was 70.6 percent and 69.2 percent for the twelve months ending June, 1990. In evaluating the accuracy of the expert's calculations of occupancy rates for adult beds, a comparison can be made to the District 9 Annual Report for 1990 (Lake Exhibit 4). Occupancy rates were 57.75 percent in general hospitals and 79.45 percent in specialty hospitals. This data does not include Indian River Memorial or Lawnwood Regional which were also listed on the December 1990 inventory of licensed adult beds, nor St. Mary's Hospital which was listed as having 40 approved adult beds. The comparison indicates the accuracy of concluding that the highest occupancy level for District 9 adult psychiatric beds during the period 1988 to 1990 was approximately 70 percent. Using the guidelines of the old rule, 75 percent occupancy is required before new adult beds can be approved unless there is a not normal circumstance. Boca's Proposal Boca Raton Community Hospital ("Boca") is a 394-bed not-for-profit acute care hospital, accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations, which proposes to convert 21 of its medical/surgical to 15 adult psychiatric beds and to delicense an additional 6 acute care beds. Boca's CON would be conditioned on the provision of 10.8 percent total annual patient days to Medicaid patients and a minimum of 5 percent gross revenues generated, or 2 percent total annual patient days to medically indigent patients. Boca has proposed this alternative so that, if it fails to provide direct care to indigents, it may donate the revenues to further the objectives of the state and district mental health councils. Boca Raton Community Hospital Corporation has control and manages the Boca's property, policies and funds. The Boca Raton Community Hospital Foundation raises funds for Boca and has the funds necessary to accomplish the proposed project at a cost of $932,531. Boca's application asserts that a not normal circumstance exists in the need to serve Medicaid patients in the district, and that a need exists to serve geriatric psychiatric patients in an acute care hospital, due to their general medical condition. Medicaid reimbursement for psychiatric care is only available in acute care hospitals. Boca Historically serves in excess of 70 percent Medicare (geriatric) patients. In 1990, 72 percent of Medicaid psychiatric patients residing in Boca's service area sought psychiatric services outside District 9, as compared to the outmigration of 14.7 percent Medicare patients, and 11 percent commercial insurance patients. Boca supported its proposed 10.8 percent Medicaid CON condition, with evidence that 10.8 percent of all psychiatric discharges in its market area were for Medicaid patients. Boca's opponents dispute the claim that a disproportionate outmigration of District 9 Medicaid patients is, in and of itself, a not normal circumstance. Using the travel time standard for inpatient psychiatric services of 45 minutes under average driving conditions, the opponents argue that District 10 facilities should be considered as available alternatives to additional psychiatric beds in District 9. In fact, the parties stipulated that there are no geographic access problems in District 9. In contrast to the opponents position, Subsections 381.705(a), (b)(, (d), (f) and (h), Florida Statutes (1991), indicate that need, available alternatives and accessibility are evaluated within a district, as defined by Subsection 381.702(5). Therefore, using the statutory criteria as indicative of the situation which is normal, the disproportionate outmigration of medicaid patients can be considered a not normal circumstance with a showing of access hardships for this payor group. Boca's opponents also assert general acute care adult beds are adequate. In August 1991, the occupancy rate was 56.9 percent in the 171 licensed adult psychiatric beds in District 9 general acute care hospitals which are eligible for Medicaid reimbursement. Finally, Boca's opponents argue that Boca historically has not, and will not serve Medicaid patients in sufficient number to alter the outmigration. In 1990, Boca reported 671 Medicaid inpatient days from a total of 99,955. That is equivalent to 92 of the 16,170 admissions. Because Boca has a closed medical staff, only the psychiatrists on staff would be able to admit patients to a psychiatric unit. From the testimony and depositions received in evidence, Boca's psychiatrists who discussed their service to Medicaid patients treated less than 12 Medicaid patients a year. One psychiatrist, who had previously treated Medicaid patients at a mental health center, has been in private practice since 1983-84, but was not sure he had treated a Medicaid patient in his private practice and has received a new Medicaid provider number a few weeks prior to hearing. One Boca psychiatrist does not treat Medicaid patients on an inpatient basis. Two other Boca psychiatrists reported seeing 10 and "a couple" of Medicaid patients a year, respectively. The latter of these described the Medicaid billing procedure as cumbersome. Given the unavailability of Medicaid eligible beds in the District and the nature of the practices of its closed staff of psychiatrists, Boca has failed to establish that its CON application will alleviate the outmigration for psychiatric services of District 9 Medicaid patients. This conclusion is not altered by the subsequent closure of Lake's 46 adult psychiatric beds, because Medicaid reimbursement would not have been available at Lake which was not an acute care hospital. In fact, HRS takes the position that there are no not normal circumstances in this case. Wellington's Proposal Wellington, a 120 bed hospital in West Palm Beach, Florida, proposed to convert 15 acute care beds to 15 short term adult psychiatric beds which, if approved, will be licensed as adult psychiatric beds. Wellington's acute care beds are only 28 percent occupied. Wellington is located in the western portion of Palm Beach County, where no other inpatient psychiatric facilities are located. Wellington is a wholly owned subsidiary of Universal Health Services, Inc. ("UHS"), accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations (JCAHO) and the American Osteopathic Association (AOA), and offers clinical experience for students of the Southeastern College of Osteopathic Medicine (SECOM). Internships and externships for osteopathic students are also provided at Humana's psychiatric pavilion. Wellington proposes to fund the total project cost of $920,000 from funds available to UHS and intends to become a Baker Act receiving facility. Wellington is not a disproportionate share hospital, and projects 1 percent Medicaid service in its payor mix. Wellington proposes to serve adult psychiatric patients in 15 beds, and projects 53.3 percent and 70 percent occupancy in those beds in years one and two, but does not make a third year projection of at least 80 percent occupancy as required by Paragraph 4(d) of Rule 10-5.011(o). Because the average annual adult occupancy rate in the district is less than 75 percent, any applicant proposing to serve adults must demonstrate that a not normal circumstance exists for approval of its CON application. In addition, there appears to be no shortage of psychiatric beds in acute care hospitals in District 9. See Finding of Fact 39, supra. Not Normal Circumstance Wellington has not alleged nor demonstrated that any of the factors related to its current operations, location or proposed services are not normal circumstances in support of its CON application. Absent the showing of a not normal circumstance, Wellington's proposal cannot be approved, pursuant to Paragraph 4(e) and Rule 10-5.011(o), Florida Administrative Code. Savannas Proposal Savannas Hospital Limited partnership d/b/a Savannas Hospital ("Savannas") is a JCAHO accredited 70 bed psychiatric and substance abuse hospital located in Port St. Lucie, St. Lucie County, Florida, approximately 40 miles north of Palm Beach. Savannas, a Baker Act facility, proposes to convert all 20 of its licensed substance abuse beds to psychiatric beds and to add 10 new psychiatric beds, at a total project cost of $1,444,818. Savannas also proposes to commit to providing 7 percent indigent care. While not specifically describing its circumstances as not normal, Savannas does indicate that it is (1) the only applicant in the northern sub- district of District 9, and (2) could readmit to a segregated unit low functioning neurogeriatric patients of the type it previously served. Savannas also indicated that Medicare reimbursement is not available for patients who have substance abuse, rather than psychiatric primary diagnoses. As a freestanding provider, Savannas is not eligible for Medicaid reimbursement. Savannas demonstrates what services it would provide, if its CON is approved, but fails to identify a need for the services by District 9 psychiatric patients. Within the northern sub-district, the only other facility in St. Lucie County, Lawnwood, reported an occupancy rate of 65 percent in 1989. AHCA also argued that the substance abuse beds at Savannas are needed and should not be converted to psychiatric beds. That position is supported by the fact that Savannas substance abuse beds had a higher occupancy level than its psychiatric beds in 1989. Savannas' application and the evidence presented do not support the need for the services proposed by Savannas, nor does Savannas assert that any not normal circumstances exist.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Certificate of Need Number 6438 to Glenbeigh Hospital of Palm Beach, Inc.; Certificate of Need Number 6442 to Boca Raton Community Hospital, Inc.; Certificate of Need Number 6441 to Wellington Regional Medical Center, Inc.; and Certificate of Need Number 6444 to Savannas Hospital Limited Partnership. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of June 1993. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of June 1993. APPENDIX The following rulings are made on the parties' proposed findings of fact: Humana Adopted in Finding of Fact 1. Subordinate to Finding of Fact 2. 3-6. Issues not addressed. 7-8. Adopted in Findings of Fact 3 and 4. Subordinate to Findings of Fact 44 and 46. Subordinate to Finding of Fact 10. 11-12. Adopted in Findings of Fact 6 and 7. 13-15. Subordinate to Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 27 & 29. Issue not addressed. 20-21. Subordinate to Finding of Fact 25. 22. Issue not addressed. 23-24. Adopted in Findings of Fact 8 and 9. Accepted in relevant part in Finding of Fact 11. Accepted in relevant part in Finding of Fact 10. Subordinate to Finding of Fact 12 and Conclusions of Law 4. Subordinate to Finding of Fact 1. Adopted in Finding of Fact 22. Rejected in Finding of Fact 20. Rejected in Findings of Fact 12 and 18. Adopted in Findings of Fact 15 and 17. Rejected in Finding of Fact 38. Adopted in Findings of Fact 16 and 17. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 47. 38-47. Issues not addressed. Adopted in Findings of Fact 44 and 47. Issue not addressed. Rejected in Finding of Fact 46. Issue not addressed. 52-54. Adopted in Findings of Fact 46 and 47. 55-57. Issues not addressed. Adopted in Finding of Fact Issue not addressed. Adopted in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Finding of Fact 21. Accepted in relevant part in Finding of Fact 22. Accepted in relevant part in Finding of Fact 21. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Finding of Fact 54 Accepted in relevant part in Findings of Fact 26, 38, 39, 42, 43, 47, 48, 54, 55 and 57. Accepted in relevant part in Finding of Fact 26. Rejected in Findings of Fact 21 and 22. Accepted in relevant part in Finding of Fact 26. 74-75. Accepted in relevant part in Finding of Fact 27. 76-77. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 28. Subordinate to Finding of Fact 31. Accepted in relevant part in Finding of Fact 82. Subordinate to Finding of Fact 82. Accepted in relevant part in Finding of Fact 37. Accepted in relevant part in Finding of Fact 39. Issue not addressed. Subordinate to Finding of Fact 27 and 30. Accepted in relevant part in Findings of Fact 27, 29 and 30. Subordinate to Findings of Fact 27 and 30. Accepted in relevant part in Finding of Fact 31. Accepted in relevant part in Finding of Fact 42. Issue not addressed. Addressed in Preliminary Statement. Accepted in relevant part in Finding of Fact 1. 95-99. Issues not addressed Accepted in relevant part in Finding of Fact 10. Accepted in relevant part in Finding of Fact 25. 102-114. Issues not addressed Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 37. Issue not addressed. Accepted in relevant part in Finding of Fact 10. 121-122. Issues not addressed. Accepted in relevant part in Findings of Fact 4 and 47. Issue not addressed. Irrlevant. Issue not addressed. Accepted in relevant part in Finding of Fact 10 Accepted in relevant part in Findings of Fact 10, 25, 47 and 48. Subordinate to Finding of Fact 11. Issue not addressed. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 45. Accepted in relevant part in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Accepted in relevant part in Finding of Fact 15. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 11. Lake Adopted in Finding of Fact 1. Subordinate to Finding of Fact 1. 3-4. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 6 and 43. 11-12. Issues not addressed. 13-19. Subordinate to Findings of Fact 27-43. 20-21. Issues not addressed. 22. Adopted in Finding of Fact 10. 23. Adopted in Finding of Fact 11. 24. Adopted in Finding of Fact 12. 25-26. Adopted in Finding of Fact 13. 27-28. Adopted in Finding of Fact 1. 29-31. Adopted in Finding of Fact 22. 32. Rejected in relevant part in Finding of Fact 13. 33. Issue not addressed. 34. Accepted in relevant part in Finding of Fact 25. 35. Subordinate to Finding of Fact 25. 36-37. Accepted in relevant part in Finding of Fact 25. 38-39. Subordinate to Finding of Fact 27. 40. Accepted in relevant part in Finding of Fact 25. 41. Accepted in relevant part in Finding of Fact 30. 42-43. Subordinate to Finding of Fact 30. 44. Accepted in relevant part in Finding of Fact 25. 45. Subordinate to Findings of Fact 27 and 30. 46-47. Issues not addressed. 48. Accepted in relevant part in Findings of Fact 27 and 30. 49-52. Issues not addressed. 53. Subordinate to Finding of Fact 42. 54-56. Issues not addressed. 57. Accepted in relevant part in Conclusions of Law 4. 58-59. Accepted in relevant part in Finding of Fact 26 and in Conclusions of Law 4. Accepted in relevant part in Finding of Fact 20. Adopted in Finding of Fact 20. Adopted in Finding of Fact 15. Subordinate to Finding of Fact 1. Subordinate to Finding of Fact 17. 65-66. Adopted in Finding of Fact 17. Adopted in Findings of Fact 18, 27 and 30. Adopted in Finding of Fact 17. Adopted in Findings of Fact 27 and 29. Adopted in Finding of Fact 30. Adopted in Finding of Fact 29. Adopted in Finding of Fact 31. Adopted in Findings of Fact 28 and 31. Adopted in Finding of Fact 38. Adopted in Findings of Fact 27, 39 and 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 38. Adopted in Finding of Fact 35. Adopted in Findings of Fact 37, 39 and 42. Adopted in Finding of Fact 42. Adopted in Findings of Fact 47, 48, 49, 53 and 57. Adopted in Finding of Fact 47. Adopted in Finding of Fact 1. 84-89. Issues not addressed. Adopted in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 92-97. Issues not addressed. Subordinate to Finding of Fact 41. Subordinate to Finding of Fact 37. 100-102. Issues not addressed. Adopted in Findings of Fact 47 and 48. Adopted in Finding of Fact 26. Adopted in Finding of Fact 25. Subordinate to Finding of Fact 25. Adopted in Finding of Fact 30. Adopted in Finding of Fact 27. Subordinate to Finding of Fact 27. Adopted in Finding of Fact 27. 111-113. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Adopted in Finding of Fact 29. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Adopted. Adopted. Accepted in relevant part. Issue not addressed. Accepted in relevant part in Findings of Fact 3 and 32. Subordinate to Finding of Fact 3. Accepted in relevant part in Finding of Fact 41. Adopted in Finding of Fact 42. Subordinate to Finding of Fact 41. Issue not addressed. 128-132. Subordinate to Finding of Fact 32. 133-135. Issues not addressed. Adopted in Findings of Fact 32 and 41. Adopted in Finding of Fact 32. Subordinate to Finding of Fact 32. Issue not addressed. Adopted in Finding of Fact 10. Adopted in Finding of Fact 6. Adopted in Finding of Fact 10. Adopted in Finding of Fact 30. Adopted in Finding of Fact 44. Subordinate to Finding of Fact 45. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 46. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 44. 150-151. Adopted in Finding of Fact 46. 152-156. Issues not addressed. 157-158. Adopted in Finding of Fact 10. 159. Adopted in Findings of Fact 48 and 49. 160. Adopted in Finding of Fact 5. 161. Adopted in Finding of Fact 5. 162. Adopted in Finding of Fact 56. 163. Adopted in Finding of Fact 57. 164. Adopted in Finding of Fact 10. 165. Adopted in Finding of Fact 10. 166. Charter Adopted in Finding of Fact 57. 1. Accepted in relevant part in Finding of Fact 1. 2-3. Adopted. 4-10. Accepted in Preliminary Statement. 11. Adopted in Finding of Fact 1. 12-15. Issues not addressed. 16. Adopted in Finding of Fact 12. 17. Adopted in Finding of Fact 7. 18-19. Issues not addressed. 20. Adopted in Finding of Fact 8. 21-25. Subordinate to Finding of Fact 8. 26-38. Issues not addressed 39-40. Adopted in Finding of Fact 10. Subordinate to Finding of Fact 13. Adopted in Finding of Fact 13. 43-44. Adopted in Finding of Fact 22. Adopted in Finding of Fact 13. Adoped in Conclusion of Law 3. Adopted in Finding of Fact 13. Subordinate to Finding of Fact 25. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 23. Issue not addressed. 52-53. Adopted in Finding of Fact 25. 54-55. Issues not addressed. Adopted in Finding of Fact 26. Adopted in Finding of Fact 24. 58-73. Issues not addressed. Adopted in Finding of Fact 23. Adopted in Finding of Fact 38. Adopted in Finding of Fact 27. Adopted in Findings of Fact 27 and 30. 78-79. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 27. Issue not addressed. Adopted in Findings of Fact 27 and 30. Adopted in Finding of Fact 37. Adopted in Finding of Fact 39. Adopted in Finding of Fact 25. 86-94. Issues not addressed. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 15. Adopted in Findings of Fact 37, 39 and 42. 99-101. Issues not addressed. 102. Adopted in Finding of Fact 1. 103-134. Issues not addressed. 135. Adopted in Finding of Fact 4. 136-140. Issues not addressed. Boca Adopted in Finding of Fact 12. Adopted in Finding of Fact 11. Subordinate to Finding of Fact 11. Adopted in Finding of Fact 1. Adopted in Preliminary Statement. Adopted in Findings of Fact 3 and 32. Adopted in Finding of Fact 33. Subordinate to Finding of Fact 3. Adopted in Finding of Fact 32. 10. Subordinate to Finding of Fact 32. 11. Adopted in Finding of Fact 41. 12. Subordinate to Finding of Fact 32. 13. Adopted in Finding of Fact 32. 14. Adopted. 15-16. Subordinate to Finding of Fact 32. 17. Adopted in Finding of Fact 34. 18. Subordinate to Finding of Fact 32. 19. Issue not addressed. 20-21. Adopted in Finding of Fact 32. 22. Rejected in Finding of Fact 39. 23. Subordinate to Finding of Fact 32. 24. Adopted in Finding of Fact 32. 25. Subordinate to Finding of Fact 32. 26-27. Adopted in Finding of Fact 41. 28-30. Subordinate to Finding of Fact 41. 31. Adopted in Finding of Fact 34. 32. Adopted in Finding of Fact 39. 33. Subordinate to Finding of Fact 34. 34. Adopted in Finding of Fact 39. 35. Adopted in Finding of Fact 34. 36. Rejected in Finding of Fact 39. 37-42. Adopted in Finding of Fact 41. 43-47. Issues not addressed. 48. Subordinate to Finding of Fact 30. 49-50. Issues not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. 53-54. Rejected in Finding of Fact 30. 55-56. Issues not addressed. 57. Adopted in Finding of Fact 12. 58-59. Issues not addressed. Rejected in Findings of Fact 39 and 42. Adopted in Finding of Fact 12. Issue not addressed. Adopted in Finding of Fact 32. 64-65. Issues not addressed. Adopted in Findings of Fact 32, 35 and 38. Adopted in Finding of Fact 36. Adopted. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 12. Subordinate to Finding of Fact 32. Issue not addressed. Accepted in relevant part in Finding of Fact 34. Issue not addressed. Issue not addressed. Adopted in Finding of Fact 15. Issue not addressed. Adopted. Adopted in Finding of Fact 32. 81-82. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 37. Rejected in Findings of Fact 25 and 42. Issue not addressed. Adopted in Finding of Fact 6. 89-97. Issues not addressed. Subordinate to Finding of Fact 25. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 6. Sandy Pines 1. Issue not addressed. 2-3. Subordinate to Finding of Fact 1. 4. Issue not addressed. 5. Subordinate to Finding of Fact 9. 6-8. Adopted in Finding of Fact 9. 9-13. Subordinate to Finding of Fact 25. 14. Adopted in Finding of Fact 9. 15. Subordinate to Finding of Fact 9. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. 20-24. Subordinate to Finding of Fact 27. 25. Subordinate to Finding of Fact 9. 26-29. Issues not addressed. 30. Adopted. 31-33. Issues not addressed. Adopted in Findings of Fact 42, 43, 48, 49 and 54. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 28 and 31. Issue not addressed. 39-40. Subordinate to Findings of Fact 27 and 30. 41-42. Issues not addressed. Accepted in relevant part in Finding of Fact 12. Accepted in relevant part in Findings of Fact 12 and 17. Accepted in relevant part in Finding of Fact 17. 46-47. Accepted in relevant part in Finding of Fact 26. 48. Subordinate to Findings of Fact 25 and 26. 49-50. Issues not addressed. Adopted. Adopted. Accepted in relevant part in Finding of Fact 7. Accepted in relevant part in Finding of Fact 42. 55-56. Issues not addressed. 57. Adopted. 58-59. Issues not addressed. Accepted in relevant part in Conclusion of Law 3. Accepted in relevant part in Finding of Fact 26. 62-64. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 67. Accepted in relevant part in Finding of Fact 22. 68-69. Accepted in relevant part in Finding of Fact 21. 70. Accepted in relevant part in Finding of Fact 26. 71. Accepted in relevant part in Finding of Fact 26 and in 72. Conclusion of Law 3. Accepted in relevant part in Findings of Fact 26 and 73. 38. Accepted in relevant part in Findings of Fact 25, 27 and 30. 74-75. Not legible. 76. Subordinate to Finding of Fact 25. 77-80. Subordinate to Finding of Fact 27. 81. Subordinate to Finding of Fact 25. 82-83. Subordinate to Finding of Fact 27. 84-95. Issues not addressed. Wellington 1-2. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Adopted in Finding of Fact 44. Subordinate to Findings of Fact 4 and 44. Adopted in Finding of Fact 44. Adopted in Finding of Fact 45. 8-10. Subordinate to Finding of Fact 45. 11-12. Adopted in Finding of Fact 45. 13-19. Subordinate to Findings of Fact 4 and 44. 20. Adopted in Findings of Fact 4 and 46. 21-22. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 44 and 46. Subordinate to Findings of Fact 4 and 44. Subordinate to Finding of Fact 46. 27-28. Adopted in Finding of Fact 46. Adopted in Finding of Fact 30. Adopted in Finding of Fact 46. 31-32. Issues not addressed. Subordinate to Finding of Fact 25. Adopted. Issue not addressed. 36-37. Adopted in Finding of Fact 45. 38-42. Issues not addressed. 43. Adopted in Findings of Fact 34, 42 and 47. 44-63. Issues not addressed. 64-65. Subordinate to Finding of Fact 46. 66-67. Issues not addressed. 68. Adopted in Finding of Fact 10. 69-91. Issues not addressed. Accepted in relevant part in Finding of Fact 47. Accepted in relevant part in Finding of Fact 12. 94-103. Issues not addressed. Accepted in relevant part in Findings of Fact 1 and 44. Accepted in relevant part in Finding of Fact 45. 106-111. Issues not addressed 112. Rejected in Findings of Fact 25, 27 and 30. 113-115. Accepted in relevant part in Finding of Fact 45. Savannas Adopted in Finding of Fact 1. Adopted in Findings of Fact 2 and 7. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 5 and 50. Subordinate to Finding of Fact 5. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 53. Subordinate to Finding of Fact 56. Subordinate to Findings of Fact 5 and 50. Adopted. Issue not addressed. Adopted in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 53. Rejected in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 51. Adopted in Finding of Fact 50. Issue not addressed. Adopted in Findings of Fact 5 and 51. Subordinate to Finding of Fact 51. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 1. 30-33. Subordinate to Finding of Fact 12. 34. Adopted in Finding of Fact 12. 35-37. Issues not addressed. Adopted in Finding of Fact 53. Issue not addressed. 40-42. Rejected in Finding of Fact 54. 43. Adopted in Finding of Fact 50. 44-48. Subordinate to Finding of Fact 50. 49-51. Rejected in Findings of Fact 53 and 57. Adopted in Finding of Fact 53. Rejected in Findings of Fact 53 and 57. Adopted. Adopted. 56-57. Subordinate to Finding of Fact 50 Rejected in Findings of Fact 53 and 57. Issue not addressed. 60-61. Rejected in Findings of Fact 53 and 57. 62-63. Issues not addressed. 64. Adopted in Finding of Fact 56. 65-66. Issues not addressed. 67. Rejected in Findings of Fact 53 and 57. 68-70. Issues not addressed. 71. Adopted in Finding of Fact 52. 72-77. Issues not addressed 78. Adopted in Finding of Fact 1. 79-100. Issues not addressed. HRS Adopted in Finding of Fact 1. Adopted in Finding of Fact 11. Adopted in Finding of Fact 13. Adopted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 16 and rejected in part in Finding of Fact 17. Adopted in Finding of Fact 16. Subordinate to Finding of Fact 16. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. 10-11. Subordinate to Finding of Fact 12. Accepted in relevant part in Finding of Fact 12. Issue not addressed. Accepted in relevant part in Finding of Fact 12. Subordinate to Finding of Fact 12. 16-17. Issues not addressed. Adopted in Finding of Fact 1. Subordinate to Findings of Fact 32, 46 and 52. Adopted in Finding of Fact 20. 21. Subordinate to Finding of Fact 1. 22. Subordinate to Finding of Fact 2. 23-33. Issues not addressed. 34. Adopted in Finding of Fact 3. 35-36. Subordinate to Finding of Fact 3. 37. Accepted in relevant part in Finding of Fact 32. 38. Subordinate to Finding of Fact 32. 39. Rejected in Findings of Fact 40, 41 and 42. 40. Adopted in Finding of Fact 32. 41. Issue not addressed. 42. Adopted in Finding of Fact 42. 43. Adopted in Finding of Fact 32. 44. Issue not addressed. 45-46. Adopted in Finding of Fact 32. 47. Adopted in Finding of Fact 47. 48. Accepted in relevant part in Finding of Fact 44. 49. Issue not addressed. 50. Accepted in relevant part in Finding of Fact 46. 51. Subordinate to Finding of Fact 47. 52. Accepted in relevant part in Finding of Fact 46. 53-54. Accepted in relevant part in Finding of Fact 45. 55. Issue not addressed. 56-57. Subordinate to Finding of Fact 46. 58. Subordinate to Finding of Fact 47. 59-61. Issues not addressed. 62-64. Adopted in Findings of Fact 50 and 51. 65. Subordinate to Finding of Fact 65. 66-68. Issues not addressed. 69. Accepted in relevant part in Finding of Fact 52. 70-71. Issues not addressed. 72. Accepted in relevant part in Finding of Fact 53. 73. Accepted in relevant part in Finding of Fact 53. 74. Adopted in Finding of Fact 56. 75-77. Subordinate to Finding of Fact 56. 78-80. Issues not addressed. 81-82. Subordinate to Finding of Fact 56. 83-89. Issues not addressed. COPIES FURNISHED: Thomas Cooper, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 William B. Wiley, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 James C. Hauser, Esquire Foley & Lardner Post Office Box 508 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire David C. Ashburn, Esquire Roberts, Baggett, LaFace & Richard Post Office Drawer 1838 Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Michael J. Glazer, Esquire C. Gary Williams, Esquire Ausley, McMullen, McGehee, Carothers & Proctor Post Office Box 391 Tallahassee, Florida 32302 Robert S. Cohen, Esquire John F. Gilroy, III, Esquire Haben, Culpepper, Dunbar & French, P.A. Post Office Box 10095 Tallahassee, Florida 32302 Charles H. Hood, Jr., Esquire MONACO, SMITH, HOOD, PERKINS, ORFINGER & STOUT 444 Seabreeze Boulevard, #900 Post Office Box 15200 Daytona Beach, Florida 32115 R. S. Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
Findings Of Fact The application and project On October 15, 1986, Respondent, Florida Residential Treatment Centers, Inc. (FRTC), filed a timely application with the Respondent, Department of Health and Rehabilitative Services (Department), for a certificate of need to construct a 60-bed specialty hospital to be licensed as an intensive residential treatment program for children and adolescents in Broward County, Florida. On March 11, 1987, the Department proposed to grant FRTC's application, and petitioners, Florida Psychiatric Centers (FPC) and South Broward Hospital District (SBHD), timely petitioned for formal administrative review. FRTC is a wholly-owned subsidiary of Charter Medical Corporation (Charter). Currently, Charter owns, operates or has under construction 85 hospitals within its corporate network. Of these, 13 are general hospitals, and 72 are psychiatric hospitals. Notably, Charter now operates residential treatment programs in Newport News, Virginia, Provo, Utah, and Mobile, Alabama; and, is developing such a program in Memphis, Tennessee. Within the State of Florida, Charter operates psychiatric hospitals in Tampa, Jacksonville, Fort Myers, Miami, and Ocala. In connection with the operation of these facilities, Charter has established satellite counseling centers to screen patients prior to admission and to provide aftercare upon discharge. Of 20 such centers operated by Charter, one is located in Broward County and two are located in Dade County. The facility proposed by FRTC in Broward County (District X) will treat seriously emotionally disturbed children and adolescents under the age of 18. The patients admitted to the facility will have the full range of psychiatric diagnoses, with the probable exception of serious mental retardation and severe autism. FRTC will not treat patients who present themselves with a primary substance abuse diagnosis, nor will it admit patients who are actively dangerous. This distinguishes FRTC from an acute psychiatric hospital where actively dangerous patients requiring immediate medical intervention are often admitted. The anticipated length of stay at FRTC will vary depending upon the patient's responsiveness to treatment, but is reasonably expected to range between 6 months to 2 years, with an average of 1 year. The treatment programs to be offered at FRTC will be based upon a bio- psychosocial treatment model. This model assumes that the biological component of a patient's condition has been stabilized and that psychiatric medication will be administered solely to maintain this stabilized condition. The social component of the model is designed to resolve problems in interpersonal, family and peer relationships through educational groups, psychiatric co-therapeutic groups and family group therapy. The psychological component focuses primarily on developing personal understanding and insight to guide the patient toward self-directed behavior. Among the therapies to be offered at FRTC are individual, family, recreational, group and educational. Group therapy will be designed to resolve interpersonal problems and relationships, and focuses primarily on building trust among group members. Some group therapy sessions will also cover specific issues such as sex education, eating disorders, self-image and social skills. The goal of recreational therapy will be to teach patients to play appropriately, showing them how to give, take and share, and to follow and to lead. Recreational activities will be available both on and off campus. The goal of occupational therapy will be to develop skills used in work. For a child whose work is school, this often involves using special education techniques. For teenagers, occupational therapy also develops work skills, and prepares them for vocational training or employment. Family therapy is crucial because the family is she core of child development. Families will be invited to spend days with their children at FRTC where they will learn behavioral management techniques, and participate in parent education activities and multifamily groups. The school component of the program includes development of an individualized educational plan for each child. School will be conducted 4-5 hours a day. FRTC will utilize the level system as a behavioral management tool This system provides incentives for learning responsibility for one's own behavior and for functioning autonomously. The typical progress of a patient at FRTC will be as follows. First, a team which includes a psychiatrist, social worker, psychologist and teacher will decide, based upon available information, whether admission is appropriate. If admitted, a comprehensive assessment will be conducted within 10 days, a goal- oriented treatment program will be developed for each patient, designed to remedy specific problems. Discharge planning will begin immediately upon admission. A case manager will be involved to assure that the treatment modalities are well-coordinated. Finally, FRTC will provide aftercare upon discharge. Should any FRTC patients experience acute episodes, they will be referred to acute care psychiatric hospitals with which FRTC has entered into transfer agreements. Likewise, patients who require other medical attention will be referred to appropriate physicians Consistency with the district plan and state health plan. While the local health plan does not specifically address the need for intensive residential treatment programs (IRTPs) for children and adolescents, it does contain several policies and priorities that relate to the provision of psychiatric services within the district. Policy 2 contains the following relevant priorities when an applicant proposes to provide a new psychiatric service: ... Each psychiatric inpatient unit shall provide the following services: psychological testing/assessment, psychotherapy, chemotherapy, psychiatric consultation to other hospital departments, family therapy, crisis intervention, activity therapy, social services and structured education for school age patients, and have a minimum patient capacity of 20 and a relationship with the community mental health center. Facilities should be encouraged to provide for a separation of children, adolescents, adults, and geriatric patient' where possible. Greater priority should be given to psychiatric inpatient programs that propose to offer a broad spectrum of continuous care. ... Applicants should be encouraged to propose innovative treatment techniques such as, complementing outpatient and inpatient services or cluster campuses, that are designed to ultimately reduce dependency upon short term psychiatric hospital beds. New facilities should be structurally designed for conducive recovery, provide a least restrictive setting, provide areas for privacy, and offer a wide range of psychiatric therapies. Applicants should be encouraged to offer intermediate and follow-up care to reduce recidivism, encourage specialty services by population and age, engage in research, and offer a full range of complete assessment (biological and psychological). Additionally, the local plan contains the following policies and priorities which warrant consideration in this case: POLICY #3 Services provided by all proposed and existing facilities should be made available to all segments of the resident population regardless of the ability to pay. Priority #1 - Services and facilities should be designed to treat indigent patients to the greatest extend possible, with new project approval based in part on a documented history of provision of services to indigent patients. Priority #2 - Applicants should have documented a willingness to participate in appropriate community planning activities aimed at addressing the problem of financing for the medically indigent. POLICY #4 Providers of health services are expected to the extent possible to insure an improvement of the quality of health services within the district. Priority #1 - Applicants for certificate of need approval should document either their intention or experience in meeting or exceeding the standards promulgated for the provision of services by the appropriate national accreditation organization. Priority #2 - Each applicant for certificate of need approval should have an approved Patient Bill of Rights' `as part of the institution's internal policy. POLICY #5 Specialized inpatient psychiatric treatment services should be available by age, group and service type. For example, programs for dually diagnosed mentally ill substance abusers, the elderly, and children, should be accessible to those population groups. Priority #1 - Applicants should be encouraged to expand or initiate specialized psychiatric treatment services. The FRTC application is consistent with the local health plan. FRTC's program elements and facility design are consistent with those mandated by the local plan for mental health facilities, and its proposal offers a wide range of services, including follow-up care. FRTC intends to provide a minimum of 1.5 percent of its patient day allotment to indigent children and adolescents, and will seek JCAH accreditation and CHAMPUS approval. The state health plan addresses services similar to those being proposed by FRTC, and contains the following pertinent policies and statements: Mental health services are designed to provide diagnosis, treatment and support of individuals suffering from mental illness and substance abuse. Services encompass a wide range of programs which include: diagnosis and evaluation, prevention, outpatient treatment, day treatment, crisis stabilization and counseling, foster and group homes, hospital inpatient diagnosis and treatment, residential treatment, and long term inpatient care. These programs interact with other social and economic services, in addition to traditional medical care, to meet the specific needs of individual clients. STATE POLICIES As the designated mental health authority' for Florida, HRS has the responsibility for guiding the development of a coordinated system of mental health services in cooperation with local community efforts and input. Part of that responsibility is to develop and adopt policies which can be used to guide the development of services such that the needs of Florida residents are served in an appropriate and cost effective manner. Policies relating to the development of mental health services in Florida are contained in Chapter 394 and Chapter 230.2317, F.S. The goal of these services is: '... reduce the occurrence, severity, duration and disabling aspects of mental, emotional, and behavioral disorders.' (Chapter 394, F.S.) '... provide education; mental health treatment; and when needed, residential services for severely emotionally disturbed students.' (Chapter 230.2317, F.S.) Within the statutes, major emphasis has also been placed on patient rights and the use of the least restrictive setting for the provision of treatment. 'It is further the policy of the state that the least restrictive appropriate available treatment be utilized based on the individual needs and best interests of the patient and consistent with optimum improvement of the patient's condition.' (Chapter 394.459(2)(b), F.S.) 'The program goals for each component of the network are'... 'to provide programs and services as close as possible to the child's home in the least restrictive manner consistent with the child's needs.' (Chapter 230.2317(1)(b), F.S.) Additional policies have been developed in support of the concept of a 'least restrictive environment' and address the role of long and short term inpatient care in providing mental health services for severely emotionally disturbed (SED) children. These include: 'State mental hospitals are for those adolescents who are seriously mentally ill and who have not responded to other residential treatment programs and need a more restrictive setting.' (Alcohol, Drug Abuse and Mental Health Program Office, 1982) 'Combined exceptional student and mental health services should be provided in the least restrictive setting possible. This setting is preferably a school or a community building rather than a clinical or hospital environment.' (Office of Children Youth and Families, 1984) 'Alternative, therapeutic living arrangements must be available to SED students in the local areas, when family support is no longer possible, so that they may continue to receive services in the least restrictive way possible.' (Office of Children Youth and Families, 1984) 'SED students should not be placed in residential schools or hospitals because of lack of local treatment resources, either educational or residential.' (Office of Children Youth and Families, 1984). * * * Sufficient funding for the development of residential treatment and community support is necessary if the state is to fulfill its commitment to providing services for long term mentally ill persons. These services provide, in the long run, a more humane and cost effective means of meeting the mental health needs of Florida residents. Community services have been shown to be effective in rapidly returning the majority of individuals to their productive capacity and reducing the need for costly long term, institutional mental health services. There is, therefore, a need to proceed as rapidly as possible with the development of publicly funded services in those districts which are currently experiencing problems resulting from gaps in services. * * * Services for Adolescents and Children An additional issue which has been identified as a result of increased pressures for development of hospital based programs is the need to differentiate between services for adults and those for children and adolescents. Existing policy supports the separation of services for children and adolescents from those of adults and requires the development of a continuum of services for emotionally disturbed children. The actual need for both long and short term inpatient services for children and adolescents is relatively small compared to that of adults but is difficult to quantify. Providers, however, continue to request approval for long and short term adolescent and children services as a means of gaining access to the health care market. Continued development of long and short term inpatient hospital programs for the treatment of adolescents and children is contrary to current treatment practices for these groups and is, therefore, inappropriate without local data to support the need for these services. Such development can contribute to inappropriate placement, unnecessary costs of treatment, and divert scarce resources away from alternative uses. In addition, the following pertinent goals are contained in the state health plan: GOAL 1: ENSURE THE AVAILABILITY OF MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES TO ALL FLORIDA RESIDENTS IN A LEAST RESTRICTIVE SETTING. * * * GOAL 2: PROMOTE THE DEVELOPMENT OF A CONTINUUM OF HIGH QUALITY, COST EFFECTIVE PRIVATE SECTOR MENTAL HEALTH AND SUBSTANCE ABUSE TREATMENT AND PREVENTIVE SERVICES. * * * GOAL 3: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT. * * * OBJECTIVE 3.1.: Develop a range of essential mental health services in each HRS district by 1989. * * * OBJECTIVE 3.2.: Place all clients identified by HRS as inappropriately institutionalized in state hospitals in community treatment settings by July 1, 1989. RECOMMENDED ACTIONS: 3.2a.: Develop a complete range of community support services in each HRS district by July 1, 1989. * * * OBJECTIVE 3.3.: Develop a network of residential treatment settings for Florida's severely emotionally disturbed children by 1990. The FRTC application is consistent with the state health plan which emphasizes the trend toward deinstutionalization, and the importance of education, treatment and residential services for severely emotionally disturbed children and adolescents rather than the traditional approach of institutional placement. Deinstutionalization assures more appropriate placement and treatment of patients, and is less costly from a capital cost and staffing perspective. The FRTC application also promotes treatment within the state, and will assist in reducing out-of-state placements. Need for the proposed facility The Department has not adopted a rule for the review of applications for IRTPs, and has no numeric need methodology to assess their propriety. Rather, because of the paucity of such applications and available data, the Department reviews each application on a case by case basis and, if it is based on reasonable assumptions and is consistent with the criteria specified in Section 381.705, Florida Statutes, approves it. In evaluating the need for an IRTP, the Department does not consider other residential treatment facilities in the district, which are not licensed as IRTP's and which have not received a CON, as like and existing health care services because such facilities are subject to different licensure standards. Under the circumstances, the Department's approach is rational, and it is found that there are no like and existing health care services in the district. While there are no like and existing health care services in the district, there are other facilities which offer services which bear some similarity to those being proposed by FRTC. These facilities include short-term and long-term residential treatment facilities, therapeutic foster homes and therapeutic group homes. These facilities are, however, operating at capacity, have waiting lists, and do not in general offer the breath or term of service proposed by FRTC. There are also short-term and long-term psychiatric hospitals within the district that include within their treatment modalities services similar to those proposed by the applicant. The short-term facilities are not, however, an appropriate substitute for children and adolescents needing long-term intensive residential treatment and neither are the long-term facilities from either a treatment or cost perspective. Notably, there are only 15 long term psychiatric beds in Broward County dedicated to adolescents, and none dedicated to children. In addition to the evident need to fill the gap which exists in the continuum of care available to emotionally disturbed children and adolescents in Broward County, the record also contains other persuasive proof of the reasonableness of FRTC's proposal. This proof, offered through Dr. Ronald Luke, an expert in health planning whose opinions are credited, demonstrated the need for and the reasonableness of FRTC's proposed 60-bed facility. Dr. Luke used two persuasive methodologies which tested the reasonableness of FRTC's 60-bed proposal. The first was a ratio of beds per population methodology similar to the rule methodology the Department uses for short-term psychiatric beds. Under this methodology, approval of FRTC's proposal would result in 25.47 beds per 100,000 population under 18 in District X. This ratio was tested for reasonableness with other available data. Relevant national data demonstrates an average daily census of 16,000 patients in similar beds. This calculates into 24.01 beds per 100,000 at a 90 percent occupancy rate and 25.93 beds per 100,000 at an 85 percent occupancy rate. Additionally, Georgia has a category of beds similar to IRTP beds. The Georgia utilization data demonstrates a pertinent ratio of 27.05 beds per 100,000 population. The second methodology used by Dr. Luke to test the reasonableness of FRTC's proposal, was to assess national utilization data for "overnight care in conjunction with an intensive treatment program." The national census rate in such facility per 100,000 population for persons under 18 was 21.58. Multiplying such rate by the district population under 18, derives an average daily census of 52. Assuming an optimal occupancy rate of 85 percent, which is reasonable, this demonstrates a gross need for 61 IRTP beds in District X. Dr. Luke's conclusions not only demonstrate the reasonableness of FRTC's proposal, but corroborate the need for such beds within the district. This proof, together with an analysis of existing or similar services, existing waiting lists for beds at similar facilities, and the placement by the Department of 28 children from Broward County outside the county in 1986 for long-term residential treatment, demonstrates the need for, and reasonableness of, FRTC's proposal. Quality of care The parties have stipulated that Charter and its hospitals provide quality short and long term psychiatric care. All of Charter's psychiatric hospitals are JCAH accredited, and Charter will seek JCAH accreditation and CHAMPUS approval for the proposed facility. Based on Charter's provision of quality psychiatric care, its experience in providing intensive residential treatment, and the programs proposed for the Broward County facility, it is found that quality intensive residential treatment will be provided at the FRTC facility. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. The parties have stipulated that FRTC has available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation. The proof further demonstrates that FRTC will be able to recruit any other administrative, clinical or other personnel needed for its facility. 1/ Accessibility to all residents FRTC projects the following utilization by class of pay: Insurance 66.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 7 percent. While this is an insignificant indigent load, FRTC has committed to accept state-funded patients at current state rates. FRTC's projected utilization by class of pay is reasonable. The evident purpose of FRTC's application is to permit its licensure as a hospital under Section 395.002, Florida Statutes, and thereby permit it to be called a "hospital." If a residential treatment facility is licensed as a hospital it has a significant advantage over unlicensed facilities in receiving reimbursement from third party payors. Therefore, accessibility will be increased for those children and adolescents in need of such care whose families have insurance coverage since it is more likely that coverage will be afforded at an IRTP licensed as a "hospital" than otherwise. Design considerations The architectural design for the FRTC facility was adopted from a prototype short-term psychiatric hospital design which Charter has constructed in approximately 50 locations. This design contains the three essential components for psychiatric facilities: administration, support and nursing areas. The floor plan allows easy flow of circulation, and also allows for appropriate nursing control through visual access to activities on the floor. This design is appropriate for the purposes it will serve, and will promote quality residential care. As initially proposed, the facility had a gross square footage of 31,097 square feet. At hearing, an updated floor plan was presented that increased the gross square footage by 900 square feet to 32,045, an insignificant change. In the updated floor plan the recreational component was increased from a multipurpose room to a half-court gymnasium, an additional classroom was added, and the nursing unit was reduced in size to create an assessment unit. The updated floor plan is an enhancement of FRTC's initial proposal, and is a better design for the provision of long-term residential care to children and adolescents than the initial design. While either design is appropriate, acceptance of FRTC's updated floor plan is appropriate where, as here, the changes are not substantial. Financial feasibility As previously noted, the parties have stipulated that FRTC has the available funds for capital and operating expenses, and that the project is financially feasible in the immediate term. At issue is the long-term financial feasibility of the project. FRTC presented two pro forma calculations to demonstrate the financial feasibility of the project. The first pro forma was based on the application initially reviewed by the Department. The second was based on the proposal presented at hearing that included the changes in staffing pattern and construction previously discussed. Both pro formas were, however, based on the assumption than the 60-bed facility would achieve 50 percent occupancy in the first year of operation and 60 percent occupancy in the second year of operation, that the average length of stay would be 365 days, and that the daily patient charge in the first year of operation would be $300 and in the second year of operation would be $321. These are reasonable assumptions, and the proposed charges are reasonable. The projected charges are comparable to charges at other IRTP's in Florida, and are substantially less than those of acute psychiatric hospitals. For example, current daily charges at Charter Hospital of Miami are $481, and FPC anticipates that its average daily charge will be $500. FRTC projects its utilization by class of pay for its first year of operation to be as follows: Insurance (commercial insurance and CHAMPUS) 65.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 8 percent. The projection by class of pay for the second year of operation changes slightly based on the assumption that, through experience, the bad debt allowance should decrease. Consequently, for its second year of operation FRTC projects its utilization by class of pay to be as follows: Insurance (commercial insurance and CHAMPUS) 66.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 7 percent. These projections of utilization are reasonable. FRTC's pro forma for the application initially reviewed by the Department demonstrates an estimated net income for the first year of operation of $97,000, and for the second year of operation $229,000. The updated pro forma to accommodate the changes in staffing level and construction, demonstrates a $102,000 loss in the first year of operation and a net income in the second year of operation of $244,000. The assumptions upon which FRTC predicated its pro formas were reasonable. Accordingly, the proof demonstrates that the proposed project will be financially feasible in the long-term. Costs and methods of construction The estimated project cost of the FRTC facility, as initially reviewed by the Department, was $4,389,533. The estimated cost of the project, as modified at hearing, was $4,728,000. This increase was nominally attributable to the change in architectural design of the facility which increased the cost of professional services by approximately $7,500 and construction costs by $139,322. Of more significance to the increased cost of the project was the increase in land acquisition costs which raised, because of appreciation factors, from $750,000 to $1,000,000. The parties stipulated to the reasonableness of the majority of the development costs and most of the other items were not actively contested. Petitioners did, however, dispute the reasonableness of FRTC's cost estimate for land acquisition and construction supervision. The proof supports, however the reasonableness of FRTC's estimates. FRTC has committed to construct its facility south of State Road 84 or east of Interstate 95 in Broward County, but has not, as yet, secured a site. It has, however, allocated $1,000,000 for land acquisition, $200,281 for site preparation exclusive of landscaping, and $126,000 for construction contingencies. The parties have stipulated to the reasonableness of the contingency fund, which is designed as a safety factor to cover unknown conditions such as unusually high utility fees and unusual site conditions. Totalling the aforementioned sums, which may be reasonably attributable to land acquisition costs, yields a figure of $1,326,281. Since a minimum of 6 acres is needed for project accomplishment, FRTC's estimate of project costs contemplates a potential cost of $221,047 per acre. In light of the parties' stipulation, and the proof regarding land costs in the area, FRTC's estimate for land acquisition costs is a reasonable planning figure for this project. FRTC budgeted in its estimate of project costs $6,000 for the line item denoted as "construction supervision (Scheduling)." Petitioners contend that construction supervision will far exceed this figure, and accordingly doubt the reliability of FRTC's estimate of project costs. Petitioners' contention is not persuasive. The line item for "Construction supervision (Scheduling)" was simply a fee paid to a consultant to schedule Charter's projects. Actual on site supervision will be provided by the construction contractor selected, Charter's architect and Charter's in-house construction supervision component. These costs are all subsumed in FRTC's estimate of project cost. FRTC's costs and methods of proposed construction, including the costs and methods of energy efficiency and conservation, are reasonable for the facility initially reviewed by the Department and the facility as modified at hearing. The petitioners FPC, a Florida partnership, received a certificate of need on May 9, 1986, to construct a 100-bed short term psychiatric and substance abuse hospital in Broward County. At the time of hearing, the FPC facility was under construction, with an anticipated opening in May 1988. Under the terms of its certificate of need, the FPC facility will consist of 80 short-term psychiatric beds (40 geriatric, 25 adult, and 15 adolescent) and 20 short-term substance abuse beds. Whether any of the substance abuse beds will be dedicated to adolescent care is, at best, speculative. The principals of FPC have opined at various times, depending on the interest they sought to advance, that 0, 5, or 20 of such beds would be dedicated to adolescent care. Their testimony is not, therefore, credible, and I conclude that FPC has failed to demonstrate than any of its substance abuse beds will be dedicated to adolescent care and that none of its treatment programs will include children. As a short term psychiatric hospital, FPC is licensed to provide acute inpatient psychiatric care for a period not exceeding 3 months and an average length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years. Rule 10-5.011(1)(o), Florida Administrative Code. While its treatment modalities and programs may be similar to those which may be employed by FRTC, FPC does not provide long-term residential treatment for children and adolescents and its services are not similar to those being proposed by FRTC. Notably, FPC conceded that if the patients admitted by FRTC require treatment lasting from 6 months to 2 years, there will be no overlap between the types of patients treated at the two facilities. As previously noted, the proof demonstrates that the length of stay at the FRTC facility was reasonably estimated to be 6 months to 2 years, with an average length of stay of 1 year. Under the circumstances, FPC and FRTC will not compete for the same patients. As importantly, there is no competent proof that FRTC could capture any patient that would have been referred to FPC or that any such capture, if it occurred, would have a substantial impact on FPC. Accordingly, the proof fails to demonstrate that FPC will suffer any injury in fact as a consequence of the proposed facility. SBHD is an independent taxing authority created by the legislature. Pertinent to this case, SBHD owns and operates the following facilities in Broward County: Memorial Hospital of Hollywood, 1011 North 35th Avenue, Hollywood, Florida, and Memorial Hospital Share Program, 801 S.W. Douglas Road, Pembroke Pines, Florida. Memorial Hospital of Hollywood is a general acute care hospital, with 74 beds dedicated to short-term psychiatric care. These beds are divided between three units: two closed units for acute care (42 beds) and one open unit (32 beds). There is no unit specifically dedicated to the treatment of adolescents, and Memorial does not admit any psychiatric patient under the age of 14. When admitted, adolescents are mixed with the adult population. From May 1987 through January 1988, Memorial admitted only 5-10 adolescents (ages 14-18). Their average length of stay was 12-14 days. Memorial Hospital Share Program is a 14-bed inpatient residential treatment program for individuals suffering from chemical dependency. No patient under the age of 18 is admitted to this program, which has an average length of stay of 27 days. SBHD contends that its substantial interests are affected by this proceeding because approval of FRTC's facility would result in the loss of paying psychiatric and residential treatment patients that would erode SBHD's ability to provide services to the indigent, and would, due to a shortage of nursing, recreational therapy and occupational therapists who are skilled and trained in the care of psychiatric patients, affect the quality of care at its facility and increase costs for recruiting and training staff. Due to the paucity of competent proof, SBHD's concerns are not credited, and it has failed to demonstrate that its interests are substantially affected by these proceedings. Succinctly, SBHD offered no proof concerning any staffing problems it was encountering and no proof of any disparity that might exist between wages and benefits it offers its employees and those to be offered at the FRTC facility. In sum, it undertook no study from which it could be reasonably concluded that the FRTC facility would adversely impact its staffing or otherwise increase the cost of recruiting and training staff. Likewise, SBHD undertook no study and offered no credible proof that the FRTC facility would adversely impact it financially. In fact, the FRTC facility will not treat the same patient base that is cared for by SBHD.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that FRTC's application for certificate of need, as updated, be granted, subject to the special condition set forth in conclusions of law number 12. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 7th day of September, 1988. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of September, 1988.
The Issue Whether the Agency for Health Care Administration (AHCA or the Agency) should approve the application for certificate of need (CON) 7700 filed by Miami Beach Healthcare Group, LTD. d/b/a Miami Heart Institute (Miami Heart or MH).
Findings Of Fact The Agency is the state agency charged with the responsibility of reviewing and taking action on CON applications pursuant to Chapter 408, Florida Statutes. The applicant, Miami Heart, operates a hospital facility known as Miami Heart Institute which, at the time of hearing, was comprised of a north campus (consisting of 273 licensed beds) and a south campus (consisting of 258 beds) in Miami, Florida. The two campuses operate under a single license which consolidated the operation of the two facilities. The consolidation of the license was approved by CON 7399 which was issued by the Agency prior to the hearing of this case. The Petitioner, Mount Sinai, is an existing health care facility doing business in the same service district. On February 4, 1994, AHCA published a fixed need pool of zero adult inpatient psychiatric beds for the planning horizon applicable to this batching cycle. The fixed need pool was not challenged. On February 18, 1994, Miami Heart submitted its letter of intent for the first hospital batching cycle of 1994, and sought to add twenty adult general inpatient psychiatric beds at the Miami Heart Institute south campus. Such facility is located in the Agency's district 11 and is approximately two (2) miles from the north campus. Notice of that letter was published in the March 11, 1994, Florida Administrative Weekly. Miami Heart's letter of intent provided, in pertinent part: By this letter, Miami Beach Healthcare Group, Ltd., d/b/a Miami Heart Institute announces its intent to file a Certificate of Need Application on or before March 23, 1994 for approval to establish 20 hospital inpatient general psychiatric beds for adults at Miami Heart Institute. Thus, the applicant seeks approval for this project pursuant to Sections 408.036(1)(h), Florida Statutes. The proposed capital expenditure for this project shall not exceed $1,000,000 and will include new construction and the renovation of existing space. Miami Heart Institute is located in Local Health Council District 11. There are no subsdistricts for Hospital Inpatient General Psychiatric Beds for Adults in District 11. The applicable need formula for Hospital General Psychiatric Beds for Adults is contained within Rule 59C-1.040(4)(c), F.A.C. The Agency published a fixed need of "0" for Hospital General Psychiatric Beds for Adults in District 11 for this batching cycle. However, "not normal" circumstances exist within District which justify approval of this project. These circumstances are that Miami Beach Community Hospital, which is also owned by Miami Beach Healthcare Group, Ltd., and which has an approved Certificate of Need Application to consol- idate its license with that of the Miami Heart Institute, has pending a Certificate of Need Application to delicense up to 20 hospital inpatient general psychiatric beds for adults. The effect of the application, which is the subject of this Letter of Intent, will be to relocate 20 of the delicensed adult psychiatric beds to the Miami Heart Institute. Because of the "not normal" circumstances alleged in the Miami Heart letter of intent, the Agency extended a grace period to allow competing letters of intent to be filed. No additional letters of intent were submitted during the grace period. On March 23, 1994, Miami Heart timely submitted its CON application for the project at issue, CON no. 7700. Notice of the application was published in the April 8, 1994, Florida Administrative Weekly. Such application was deemed complete by the Agency and was considered to be a companion to the delicensure of the north campus beds. On July 22, 1994, the Agency published in the Florida Administrative Weekly its preliminary decision to approve CON no. 7700. In the same batch as the instant case, Cedars Healthcare Group (Cedars), also in district 11, applied to add adult psychiatric beds to Cedars Medical Center through the delicensure of an equal number of adult psychiatric beds at Victoria Pavilion. Cedars holds a single license for the operation of both Cedars Medical Center and Victoria Pavilion. As in this case, the Agency gave notice of its intent to grant the CON application. Although this "transfer" was initially challenged, it was subsequently dismissed. Although filed at the same time (and, therefore, theoretically within the same batch), the Cedars CON application and the Miami Heart CON application were not comparatively reviewed by the Agency. The Agency determined the applicants were merely seeking to relocate their own licensed beds. Based upon that determination, MH's application was evaluated in the context of the statutory criteria, the adult psychiatric beds and services rule (Rule 59C-1.040, Florida Administrative Code), the district 11 local health plan, and the 1993 state health plan. Ms. Dudek also considered the utilization data for district 11 facilities. Mount Sinai timely filed a petition challenging the proposed approval of CON 7700 and, for purposes of this proceeding only, the parties stipulated that MS has standing to raise the issues remaining in this cause. Mount Sinai's existing psychiatric unit utilization is presently at or near full capacity, and MS' existing unit would not provide an adequate, available, or accessible alternative to Miami Heart's proposal, unless additional bed capacity were available to MS in the future through approval of additional beds or changes in existing utilization. Miami Heart's proposal to establish twenty adult general inpatient psychiatric beds at its Miami Heart Institute south campus was made in connection with its application to delicense twenty adult general inpatient psychiatric beds at its north campus. The Agency advised MH to submit two CON applications: one for the delicensure (CON no. 7474) and one for the establishment of the twenty beds at the south campus (CON no. 7700). The application to delicense the north campus beds was expeditiously approved and has not been challenged. As to the application to establish the twenty beds at the south campus, the following statutory criteria are not at issue: Section 408.035(1)(c), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o) and (2)(b) and (e), Florida Statutes. The parties have stipulated that Miami Heart meets, at least minimally, those criteria. During 1993, Miami Heart made the business decision to cease operations at its north campus and to seek the Agency's approval to relocate beds and services from that facility to other facilities owned by MH, including the south campus. Miami Heart does not intend to delicense the twenty beds at the north campus until the twenty beds are licensed at the south campus. The goal is merely to transfer the existing program with its services to the south campus. Miami Heart did not seek beds from a fixed need pool. Since approximately April, 1993, the Miami Heart north campus has operated with the twenty bed adult psychiatric unit and with a limited number of obstetrical beds. The approval of CON no. 7700 will not change the overall total number of adult general inpatient psychiatric beds within the district. The adult psychiatric program at MH experiences the highest utilization of any program in district 11, with an average length of stay that is consistent with other adult programs around the state. Miami Heart's existing psychiatric program was instituted in 1978. Since 1984, there has been little change in nursing and other staff. The program provides a full continuum of care, with outpatient programs, aftercare, and support programs. Nearly ninety-nine percent of the program's inpatient patient days are attributable to patients diagnosed with serious mental disorders. The Miami Heart program specializes in a biological approach to psychiatric cases in the diagnosis and treatment of affective disorders, including a variety of mood disorders and related conditions. The Miami Heart program is distinctive from other psychiatric programs in the district. If the MH program were discontinued, the patients would have limited alternatives for access to the same diagnostic and treatment services in the district. There are no statutes or rules promulgated which specifically address the transfer of psychiatric beds or services from one facility owned by a health care entity to another facility also owned by the same entity. In reviewing the instant CON application, the Agency determined it has the discretion to evaluate each transfer case based upon the review criteria and to consider the appropriate weight factors should be given. Factors which may affect the review include the change of location, the utilization of the existing services, the quality of the existing programs and services, the financial feasibility, architectural issues, and any other factor critical to the review process. In this case, the weight given to the numeric need criteria was not significant. The Agency determined that because the transfer would not result in a change to the overall bed inventory, the calculated fixed need pool did not apply to the instant application. In effect, because the calculation of numeric need was inapplicable, this case must be considered "not normal" pursuant to Rule 59C-1.040(4)(a), Florida Administrative Code. The Agency determined that other criteria were to be given greater consideration. Such factors were the reasonableness of the proposal, the ability to afford access, the applicant's ability to provide a quality program, and the project's financial feasibility. The Agency determined that, on balance, this application should be approved as the statutory and other review criteria were met. Although put on notice of the other CON applications, Mount Sinai did not file an application for psychiatric beds at the same time as Miami Heart or Cedars. Mount Sinai did not claim that the proposed delicensures and transfers made beds available for competitive review. The Agency has interpreted Rule 59C-1.040, Florida Administrative Code, to mean that it will not normally approve an application for beds or services unless the statutory and rule criteria are met, including the need determination criteria. There is no list of circumstances which are routinely considered "not normal" by the Agency. In this case, the proposed transfer of beds was, in itself, considered "not normal." The approval of Miami Heart's application would allow an existing program to continue. As a result, the overhead to maintain two campuses would be reduced. Further, the relocation would allow the program to continue to provide access, both geographically and financially, to the same patient service area. And, since the program has the highest utilization rate of any adult program in the district, its continuation would be beneficial to the area. The program has an established referral base for admissions to the facility. The transfer is reasonable for providing access to the medically under-served. The quality of care, while not in issue, would be expected to continue at its existing level or improve. The transfer would allow better access to ancillary hospital departments and consulting specialists who may be needed even though the primary diagnosis is psychiatric. The cost of the transfer when compared to the costs to be incurred if the transfer is not approved make the approval a benefit to the service area. If the program is not relocated, Medicaid access could change if the hospital is reclassified from a general facility to a specialty facility. The proposed cost for the project does not exceed one million dollars. If the north campus must be renovated, a greater capital expenditure would be expected. The expected impact on competition for other providers is limited due to the high utilization for all programs in the vicinity. The subject proposal is consistent with the district and state health care plans and the need for health care facilities and services. The services being transferred is an existing program which is highly utilized and which is not creating "new beds." As such, the proposal complies with Section 408.035(1)(a), Florida Statutes. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization, and adequacy of like and existing services in the district will not be adversely affected by the approval of the subject application. The proposed transfer is consistent with, and appropriate, in light of these criteria. Therefore, the proposal complies with Section 408.035(1)(b), Florida Statutes. The subject application demonstrates a full continuum of care with safeguards to assure that alternatives to inpatient care are fully utilized when appropriate. Therefore, the availability and adequacy of other services, such as outpatient care, has been demonstrated and would deter unnecessary utilization. Thus, Miami Heart has shown its application complies with Section 408.035(1)(d), Florida Statutes. Miami Heart has also demonstrated that the probable impact of its proposal is in compliance with Section 408.035(1)(l), Florida Statutes. The proposed transfer will not adversely impact the costs of providing services, the competition on the supply of services, or the improvements or innovations in the financing and delivery of services which foster competition, promote quality assurance, and cost-effectiveness. Miami Heart has taken an innovative approach to promote quality assurance and cost effectiveness. Its purpose, to close a facility and relocate beds (removing unnecessary acute care beds in the process), represents a departure from the traditional approach to providing health care services. By approving Miami Heart's application, overhead costs associated with the unnecessary facility will be eliminated. There is no less costly, more efficient alternative which would allow the continuation of the services and program Miami Heart has established at the north campus than the approval of transfer to the south campus. The MH proposal is most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. The renovation of the medical surgical space at the south campus to afford a location for the psychiatric unit is the most practical and readily available solution which will allow the north campus to close and the beds and services to remain available and accessible. In totality, the circumstances of this case make the approval of Miami Heart's application for CON no. 7700 the most reasonable and practical solution given the "not normal" conditions of this application.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Agency for Health Care Administration enter a final order approving CON 7700 as recommended in the SAAR. DONE AND RECOMMENDED this 5th day of April, 1995, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-4755 Note: Proposed findings of fact are to contain one essential fact per numbered paragraph. Proposed findings of fact paragraphs containing multiple sentences with more than one statement of fact are difficult to review. In reviewing for this case, where all sentences were accurate and supported by the recorded cited, the paragraph has been accepted. If the paragraph contained mixed statements where one sentence was an accurate statement of fact but the others were not, the paragraph has been rejected. Similarly, if one sentence was editorial comment, argument, or an unsupported statement to a statement of fact, the paragraph has been rejected. Proposed findings of fact should not include argument, editorial comments, or statements of fact mixed with such comments. Rulings on the proposed findings of fact submitted by Petitioner, Mount Sinai: Paragraphs 1 through 13 were cited as stipulated facts. Paragraph 14 is rejected as irrelevant. With regard to paragraph 15 it is accepted that Miami Heart made the business decision to move the psychiatric beds beds from the north campus to the south campus. Any inference created by the remainder of the paragraph is rejected as irrelevant. Paragraph 16 is rejected as irrelevant. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraph 20 is rejected as contrary to the weight of the credible evidence. Paragraph 21 is rejected as contrary to the weight of the credible evidence. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is accepted. Paragraph 25 is rejected as repetitive, or immaterial, unnecessary to the resolution of the issues. Paragraph 26 is rejected as irrelevant or contrary to the weight of the credible evidence. Paragraph 27 is rejected as comment or conclusion of law, not fact. Paragraph 28 is accepted but not relevant. Paragraphs 29 and 30 are accepted. Paragraphs 31 through 33 are rejected as argument, comment or irrelevant. Paragraph 34 is rejected as comment or conclusion of law, not fact. Paragraph 35 is rejected as comment or conclusion of law, not fact, or irrelevant as the FNP was not in dispute. Paragraph 36 is rejected as irrelevant. Paragraph 37 is rejected as repetitive, or comment. Paragraph 38 is rejected as repetitive, comment or conclusion of law, not fact, or irrelevant. Paragraph 39 is rejected as argument or contrary to the weight of credible evidence. Paragraph 40 is accepted. Paragraph 41, 42, and 43 are rejected as contrary to the weight of the credible evidence and/or argument. Paragraph 44 is rejected as argument and comment on the testimony. Paragraph 45 is rejected as argument, irrelevant, and/or not supported by the weight of the credible evidence. Paragraph 46 is rejected as argument. Paragraph 47 is rejected as comment or conclusion of law, not fact. Paragraph 48 is rejected as comment, argument or irrelevant. Paragraph 49 is rejected as comment on testimony. It is accepted that the proposed relocation or transfer of beds is a "not normal" circumstance. Paragraph 50 is rejected as argument or irrelevant. Paragraph 51 is rejected as argument or contrary to the weight of credible evidence. Paragraph 52 is rejected as argument or contrary to the weight of credible evidence. Paragraph 53 is rejected as argument, comment or recitation of testimony, or contrary to the weight of credible evidence. Paragraph 54 is rejected as irrelevant or contrary to the weight of credible evidence. Paragraph 55 is rejected as irrelevant, comment, or contrary to the weight of credible evidence. Paragraph 56 is rejected as irrelevant or argument. Paragraph 57 is rejected as irrelevant or argument. Paragraph 58 is rejected as contrary to the weight of credible evidence. Paragraph 59 is rejected as irrelevant. Paragraph 60 is rejected as contrary to the weight of credible evidence. Paragraph 61 is rejected as argument or contrary to the weight of credible evidence. Paragraph 62 is rejected as argument or contrary to the weight of credible evidence. Paragraph 63 is accepted. Paragraph 64 is rejected as irrelevant. Mount Sinai could have filed in this batch given the not normal circumstances disclosed in the Miami Heart notice. Paragraph 65 is rejected as irrelevant. Paragraph 66 is rejected as comment or irrelevant. Paragraph 67 is rejected as argument or contrary to the weight of credible evidence. Paragraph 68 is rejected as argument or irrelevant. Paragraph 69 is rejected as argument, comment or irrelevant. Paragraph 70 is rejected as argument or contrary to the weight of credible evidence. Rulings on the proposed findings of fact submitted by the Respondent, Agency: Paragraphs 1 through 6 are accepted. With the deletion of the words "cardiac catheterization" and the inclusion of the word "psychiatric beds" in place, paragraph 7 is accepted. Cardiac catheterization is rejected as irrelevant. Paragraph 8 is accepted. The second sentence of paragraph 9 is rejected as contrary to the weight of credible evidence or an error of law, otherwise, the paragraph is accepted. Paragraph 10 is accepted. Paragraphs 11 through 17 are accepted. Paragraph 18 is rejected as conclusion of law, not fact. Paragraphs 19 and 20 are accepted. The first two sentences of paragraph 21 are accepted; the remainder rejected as conclusion of law, not fact. Paragraph 22 is rejected as comment or argument. Paragraph 23 is accepted. Paragraph 24 is rejected as argument, speculation, or irrelevant. Paragraph 25 is accepted. Rulings on the proposed findings of fact submitted by the Respondent, Miami Heart: Paragraphs 1 through 13 are accepted. The first sentence of paragraph 14 is accepted; the remainder is rejected as contrary to law or irrelevant since MS did not file in the batch when it could have. Paragraph 15 is accepted. Paragraph 16 is accepted as the Agency's statement of its authority or policy in this case, not fact. Paragraphs 17 through 20 are accepted. Paragraph 21 is rejected as irrelevant. Paragraph 22 is rejected as irrelevant. Paragraphs 23 through 35 are accepted. Paragraph 36 is rejected as repetitive. Paragraphs 37 through 40 are accepted. Paragraph 41 is rejected as contrary to the weight of the credible evidence to the extent that it concludes the distance to be one mile; evidence deemed credible placed the distance at two miles. Paragraphs 42 through 47 are accepted. Paragraph 48 is rejected as comment. Paragraphs 49 through 57 are accepted. COPIES FURNISHED: Tom Wallace, Assistant Director Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 R. Terry Rigsby Geoffrey D. Smith Wendy Delvecchio Blank, Rigsby & Meenan, P.A. 204 S. Monroe Street Tallahassee, Florida 32302 Lesley Mendelson Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Stephen Ecenia Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. 215 South Monroe Street Suite 420 Tallahassee, Florida 32302-0551
Findings Of Fact NEED FOR LONG TERM ADOLESCENT PSYCHIATRIC BEDS Both the application of PIA and that of HMA are for long term adolescent psychiatric beds in DHRS District IX. All parties to this proceeding are in agreement that there is some need in District IX for long term adolescent psychiatric beds. The need for long term adolescent psychiatric beds was analyzed in two general ways. DHRS and the applicants analyzed by an "interview analysis." This method involves interviewing key persons engaged in the provision of mental health care as it is affected by the availability of that care in District IX. In performing its interview analysis DHRS contacted several agencies; including the District IX Local Health Council, the Mental Health Board the Alcohol, Drug Abuse and Mental Health Program Office in District IX and the Children Youth and Family Program Office (CYF) in Tallahassee. All the persons contacted indicated that there was a need for long term adolescent psychiatric services in District IX. The CYF in Tallahassee indicated that 40 adolescents from District IX were being provided long term psychiatric services through POS of Payment of Services. Under the POS program, the State pays to or contracts with providers of long term psychiatric services. At present these services are being provided outside of District IX. Additionally, CYF indicated that 25 adolescents from District IX were being provided similar services out-of-State and 32 adolescents were on a waiting list to be provided with long term services. Further, 6 adolescents were receiving long term services in state hospitals; 6 in group homes; and 17 in foster homes. Phillip C. Braeuning, Director of Development for HMA, also conducted an interview analysis of District IX. He interviewed essentially the same individuals as those interviewed by DHRS and received documentation from CYF and the District IX Mental Health Board regarding the availability of long term adolescent services in District IX. All of this documentation showed a need for long term adolescent psychiatric beds. HMA Exhibit 6, entitled District IX, Children and Adolescent Services, and prepared by the District IX Mental Health Board, indicates that 359 patients in District IX need residential psychiatric care. HMA Exhibit 7, which was received from CYF in Tallahassee, shows that 27 adolescents are receiving long term psychiatric services outside of District IX, both in-state and out-of-state. There are fourteen approved long term adolescent psychiatric beds in District IX, proposed to be located in the Vero Beach area in Indian River County, the northernmost county in District IX. These beds were granted in the batching cycle subsequent' to the cycle in which the HMA and PIA applications were considered. In determining the existing need for long term adolescent psychiatric beds in District IX, the DHRS's analysis, as presented at final hearing, considered these approved beds. The DHRS analysis is that there is sufficient need in District IX for the granting of both the HMA and PIA applications in addition to the approved 14 beds. Both HMA and PIA also analyzed need according to a numerical methodology. The experts of both HMA (Noel D. Falls) and PIA (Carol Moore) applied the Graduate Medical Education National Advisory Committee (GMENAC) methodology. While both these experts utilized the GMENAC methodology, their methods of application and projected bed need numbers were significantly different. Mr. Falls assumed a targeted age group of 10-19 using the methodology. He then identified a prevalence rate for psychoses and neuroses diagnoses. The District IX population ages 10-19 was 125,561. This was multiplied by the admission rate of .00103 (103 psychoses and neuroses per hundred thousand population) to determine the projected admissions for 1989. The projected admissions of 129 was then multiplied times four different lengths of stay (90, 120, 150 and 180 days) to determine the number of patient-days projected. The number of patient days projected was then divided by 365 days and then was again divided by 80 percent(the occupancy standard required by Rule 10-5.11(26) Florida Administrative Code) to arrive at the total need for long term adolescent psychiatric beds in District IX. After performing these calculations, Mr. Falls concluded that at an average length of stay of 90 days, 40 beds would be needed; and at an average length of stay of 120 days, 53 beds would be needed; at and average length of stay 150 days, 66 beds would be needed; at an average length of stay 180 days, 80 beds would be needed. Mr. Noel did not apply any adjustments to these figures because, in his opinion, the GMENAC methodology already has an adjustment factor built into the prevalency rate to account for any difference between need and utilization or demand. Additionally, Mr. Falls has never seen anyone advocate the application of a "demand adjustment" in addition to that already built into the methodology. PIA's expert, Carol Moore, also used the GMENAC methodology to determine the need for long term adolescent psychiatric beds in District IX. Ms. Moore used a target population of ages 10-17 and used a 90 percent occupancy rate as opposed to the 80 percent occupancy rate used from Mr. Falls. Ms. Moore performed GMENAC calculations in the same manner as Mr. Falls and concluded that using a 90 percent occupancy rate, 38 beds would be needed at an average length of stay of 120 days and 57 beds would be needed at an average length of stay of 180 days. If Ms. Moore had used an 80 percent occupancy rate, 43 beds would be needed at an average length of stay of 120 days and 64 beds would be needed at an average length of stay of 180 days. Ms. Moore then applied a "demand adjustment" to these projections. In her opinion, the bed need projection needs to be reduced by 50 percent because only 50 percent of those patients who actually need care will seek or demand it. Ms. Moore did not think that a demand adjustment was built into the GMENAC methodology. If the demand adjustment is applied, however, the above projected bed need, at both 90 percent and 80 percent occupancy; would be reduced by one-half. Ms. Moore also subtracted the approved beds in Vero Beach from the projected bed need and concluded that there was a net need of 14-21 long-term adolescent psychiatric beds at 90 percent occupancy and 16-23 beds at 80 percent occupancy. In analyzing need, the primary service area for both the HMA and PIA facilities is District IX. It is recognized by all the parties that there is a secondary service area which includes District X. If the secondary service area is taken into consideration, there is a greater need than that indicated by any method. THE HMA APPLICATION In the November, 1983, batching cycle, HMA filed an application for a Certificate of Need to construct a "60-bed residential adolescent center" in Palm Beach County, Florida. Total projected cost was to be $6,307,310. HMA is a corporation with main offices in Fort Myers, Florida. It is engaged in the operation of acute care and psychiatric hospitals. HMA originally proposed to locate its facility in Boca Raton, Florida. Based on subsequent demographic data supplied to it by Noel D. Falls, HMA made a decision to move the facility to the northern part of Palm Beach County, specifically north of PGA Boulevard. However, at the time of final hearing, HMA had not selected a site for the proposed facility and did not limit itself to a location north of PGA Boulevard. The proposed HMA facility is to be patterned after a 55-bed adolescent treatment program currently operated by HMA in Arlington, Texas. At the time of final hearing, the Arlington, Texas, facility had been operating for approximately one month. The proposed treatment program will be based on a holistic concept of health care. The facility will be a long term hospital for the treatment of adolescents between the ages of ID and 19. It is anticipated that the facility will treat the whole person, not just the psychiatric conditions. In doing so, the program will look at and treat family problems, social problems, and other factors which have a bearing on the adolescent's ability to fit into society. The form of treatment proposed is based on the "levels of care" medical model of psychiatric treatment. This form of treatment is a behavior modification program wherein privileges are granted and tokens are received by the patients for specified behaviors Good behaviors are re-enforced; bad behaviors are not rewarded. Movement to the next succeeding level of privileges is permitted only after achievement of a certain behavior pattern. The ultimate goal of this model is to allow the adolescents to take on more suitable functioning and responsibility and to look after themselves once they leave the facility. The levels of care approach will require approximately 4-6 months for the patient to move from the admission level to the level of discharge. The ongoing quality of programs at the HMA facility will be monitored from a corporate level. Additionally, HMA intends to seek accreditation of its hospital from the Joint Commission on Accreditation of Hospitals. The HMA proposal anticipates a unit size of 30 adolescents, however, HMA witness, Dr. Max Sugar, does not use the treatment program proposed by HMA and believes adolescents are best treated in units of 15-20. Staffing projections for the facility, based upon the staffing structure at the Arlington, Texas, facility, call for: One Administrator Two Assistant Administrators Fourteen Registered Nurses Forty-four Mental Health Technicians Four Social Workers Two Psychologists Six Counselors Medical Director Dietician (quarter-time) Kitchen Workers Purchasing personnel Financial Manager Four Business Office Personnel Six Secretarial/Administrative Positions Two Personnel Employees Twelve Miscellaneous Other Positions. Salaries for the proposed staff are based upon information from the National Association of Private Psychiatric Hospitals and from a study done by the Florida Hospital Association. Projected salaries should therefore be adequate to attract qualified personnel. Because the proposed facility is a 60-bed facility, it is of sufficient size to allow HMA to hire the necessary staff of physicians, paraprofessionals, psychologists and social workers on a full-time basis. HMA is apparently not intending to be involved in any research or teaching endeavors at its proposed facility. HMA has not made any productive contact with any members of the local medical community or mental health community. It has not made contact with health care providers such as physicians, psychiatrists, acute care hospitals, drug abuse programs, or mental health programs as it relates to any source of referrals. HMA has no plans for joint, cooperative or shared health care resources that would result in economies or improvements in the provision of health care. HMA has not selected a site for its proposed facility. Approximately one week prior to final hearing, HMA contacted Edward Riggins, a real estate broker and agent familiar with real estate values and availability in Palm Beach County, Florida. While HMA's application calls for a site to be a minimum of 10 to 15 acres in a semi-rural area to allow for a green belt and space for outdoor activities, the instructions given to Mr. Riggins called for a parcel of 5-15 acres and emphasized a location in close proximity to major highways and interstates with utilities within economic reach. Mr. Riggins located three potential parcels prior to hearing, but HMA had not even looked at these parcels. Additionally, any location in Palm Beach County will require a special exception to zoning in order for the site to be used for a psychiatric hospital. Factors which will impact upon achieving this special exception include traffic studies, engineering studies, and a site plan which conforms to the Palm Beach County building and zoning codes. Mr. Riggins believes that he will eventually be able to find a site which meets HMA's requirements as to price, location availability of utilities, and access, and that a special exception will be achieved. A significant factor which may impact on cost is the traffic impact analysis for a particular site. Palm Beach County imposes considerable costs and fees upon the development of properties which may impact upon traffic on the major arteries in the county. Many of the major arteries in the northern portion of Palm Beach County are at or over capacity. The cost associated with traffic impact at a particular site could be great. While it appears likely that HMA can eventually find a suitable site, it is unknown what the impact of the site location will be on cost. 23 The design plans for the proposed HMA facility were characterized by John R. Chambless, HMA expert in architecture and design, as being a "first look." Numerous changes will be bade prior to completion of the "second look" and "third look." Even at final hearing it was clear that HMA was altering the design plan which accompanied its application. That design plan called for approximately 45,000 square feet and included a gymnasium and swimming pool. At hearing the proposed design plan contemplated elimination of the gymnasium and redesigning of the physical Plant to provide for square footage of approximately 50,524. Final design planning cannot be done until HMA has selected a site for its facility. Additionally, the site preparation aspect of the architectured plans could not be considered or anticipated because of lack of the site. In its application, HMA projected the total cost of the project to be $6,307,310.00. Included within this figure are project development cost of $18,000.00; financing cost, $838,010.00; architecture and soil testing fees, $204,000; construction cost, $3,750,300.00 (including contingency and inflation); land acquisition, $450,000; interest during construction, $170,000; fixed and movable equipments, $800,000; and other costs, $57,000. Mr. Chambless believed that the construction cost and other construction related project costs as reasonable even though the proposed project contemplated approximately 5,000 additional square feet. He believed that 6 percent architecture and engineering fees are reasonable, that a 7 percent contingency factor was reasonable, and that the cost of preparing the site was reasonable, assuming that the site selected did not have dramatic water problems. Mr. Chambless based his opinion testimony on his experience in the construction of health care facilities in Florida and in other states, but he had very little recent experience with psychiatric hospitals and no experience in the Palm Beach County area. In contrast, according to Tom Ebejer, an expert in health care facility design and construction, including design cost and construction cost, the proposed construction costs of HMA are considerably understated. Mr. Ebejer has extensive experience in construction costs for health care facilities and has extensive current knowledge and experience in such construction costs in Florida and, in particular, in Palm Beach County. Specifically, the HMA proposed cost of construction for a 50,000 square foot building works out to a cost of $76.72 per square foot. Mr. Ebejer proposes that such construction in Palm Beach County would cost $95.00 per square. These estimates are consistent with costs of recently constructed free standing adolescent hospitals in Citrus County ($90.77 per square foot), Orlando ($95.00 per square foot), West Palm Beach, and Miami Beach. The construction cost of the current PIA facility in Delray Beach was $91.45 per square foot. Additionally, the site preparation cost proposed by HMA ($151,000.00) is approximately 5 percent of the anticipated construction cost. In Mr. Ebejer's experience, site preparation in the Palm Beach County area would be 10 percent of total construction costs on a normal site without a lot of problems. Problems that are typically encountered will include drainage problems, swampy areas, or bay heads. With these factors considered, Mr. Ebejer projects that construction of HMA facility would cost $4,750,000.00 as compared to the proposed cost of construction of $3,836,800.00, for a understatement of the cost of construction of $913,000.00. Mr. Ebejer's projected square footage cost of construction is based upon the least expensive construction design, material, and finishes. In evaluating the testimony of Mr. Chambless and Mr. Ebejer, it is found that Mr. Ebejer's opinions regarding construction cost are based upon his extensive experience in construction cost of similar facilities in Florida and Palm Beach County. Mr. Ebejer's testimony is given greater weight than that of Mr. Chambless and it is found that HMA's construction costs as proposed are understated and not reasonable. HMA anticipates obtaining financing for its facility either through a local bond issue or through financing by a Private lending institution. According to Howard H. Weston, Senior Vice-President of the Municipal Financing Department of Arch W. Robertson and Company, an investment banking firm head quartered in St. Petersburg, Florida, financing through a bond issue can be obtained for this project. HMA may also receive a letter of credit from a lending institution, but it is probably not possible to receive such a letter of credit without an equity contribution from HMA. If a bond issue is utilized, it would be backed by revenues of the project, a first mortgage on the property and a corporate guarantee. It could also be backed by a letter of credit, but that would require some equity contribution by HMA. The interest rate anticipated by HMA, as shown in their application of 11.5 percent is unrealistic. The lowest interest rate on these types of bonds in the last 12 months has ranged from 12 1/2 percent to 13 3/4 percent. While HMA's projected financing for the project is preliminary, it is found that financing can probably be achieved through some combination of revenue bonds, a letter of credit, and a corporate guarantee. The proposed financing arrangement is reasonable, based upon HMA projected cost. It is probably also reasonable in light of the earlier finding that those cost are understated, in that Mr. Weston has contemplated financing from the issuance of six and half to seven million dollars worth of bonds. THE PIA APPLICATION In the November, 1983, batching cycle, PIA submitted a Certificate of Need application to add 15 long term and 15 short term adolescent psychiatric beds to its facility located in Delray Beach, Florida. No question involving the short term beds was involved in this proceeding. PIA's existing facility in Delray Beach is named the Psychiatric Institute of Delray and is a seventy-two bed speciality psychiatric hospital scheduled to open in early 1985. When it opens, it will consist of short term psychiatric and substance abuse beds. Psychiatric Institute of Delray is part of the Medical Center at Delray, a medical campus owned and operated by National Medical Enterprises, the parent company of PIA. PIA's home office is Washington D.C., and PIA is the psychiatric division of National Medical Enterprises, a corporation engaged in the operation of numerous hospitals throughout the country. The Medical Center at Delray contains an existing acute care hospital, a nursing home, and medical office buildings. Additionally, a Certificate of Need has been issued for the construction of a Rehabilitation Hospital; a shopping center providing support services for the medical campus is also under construction. PIA's proposed treatment program was described as a "broad-based general systems approach." This program involves examining the entire individual and trying to understand those factors that influence the patient's clinical state. The treatment model is essentially a medical model. An important part of the treatment program will be evaluation in the neuro-psychiatric evaluation unit which is a part of the existing facility at the Psychiatric Institute of Delray. Patients in the neuro-psychiatric evaluation unit, including adolescents which may eventually become long term patients, will be given a detailed battery of psychiatric, psychological and biological tests to help determine the nature and extent of their illness. Based upon this evaluation, new patients would be placed in the appropriate treatment units. PIA has already hired a medical director and clinical director for the facility as well as three other psychiatrists in charge of various aspects of the program at Psychiatric Institute of Delray. This psychiatric staffing results in 2.5 full-time equivalent psychiatrists on its medical staff. The psychiatrists are currently preparing to operate the short term psychiatric unit at Psychiatric Institute of Delray and will provide the staff psychiatric services for the proposed 15 long termadolescent psychiatric beds. The psychiatrists were trained at Yale University, are eminently qualified to provide psychiatric services, and will bring active research and teaching backgrounds to the hospital. The staffing projection for the 15-bed addition will include the following: One Social Worker One Activity Therapist Two Unit Coordinators Ten Registered Nurses Sixteen Mental Health Workers Two Group Leaders One Unit Secretary One Medical Transcriber One Admissions Employee One Secretary One Maintenance Staff k. Three Housekeeping Staff m. Three Food Service Workers PIA intends to set up a medical residency program with the University of Miami, a psychological residency with Nova University, and a nursing residency with Florida Atlantic University. The staff at PIA will be active in the area of research and education. Every patient in the PIA facility will be seen by a psychiatrist seven days a week and all psychiatrists on staff will be board certified or board eligible. There will be supervision of the clinical staff by qualified personnel, a professional activity committee and a quality assurance committee. The hospital will seek accreditation from the Joint Commission on Accreditation of Hospitals and there will be continuing education programs for the staff at all levels. PIA has been successful in recruiting qualified staff for the other units in its facility and the methods used for the recruitment are adequate for the recruitment of staff in the proposed long term adolescent unit. Psychiatric Institute of Delray has established a referral network in Palm Beach County and PIA has established contact with other components of the health care community in Palm Beach County. The hospital will be affiliated with the 800 COCAINE Program which is a national hot-line for cocaine users This affiliation will provide a referral source for the hospital and the long term adolescent unit. PIA will obtain an 80 percent occupancy in the long term adolescent unit by its third year of operation. Projected cost of the project, for both the 15 long term and 15 short term beds, is $1,360,00.00. The projected development costs are $5,000 in feasibility studies, survey and permit; $80,000 in architecture and engineering fees; construction cost of $1,030,000; equipment cost of $115,000; and land acquisition and other related costs of $115,000. The design plan and projected costs are adequate and reasonable for the proposed addition to the Psychiatric Institute of Delray.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting the Certificate of Need application of Psychiatric Institute of Delray, Inc., d/b/a Psychiatric Institute of Delray, for 15 long term adolescent psychiatric beds. Further, that a Final Order be entered denying the Certificate of Need application of Hospital Management Associates, Inc., for a 60-bed long term adolescent psychiatric hospital. DONE and ENTERED this 17th day of May, 1985, in Tallahassee, Florida. DIANE K. KIESLING Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1985.
Findings Of Fact The Parties FRTC is a wholly-owned subsidiary of Charter Medical Corporation (Charter) which proposes to construct and operate a freestanding, 60 bed, 24- hour-a-day, Intensive Residential Treatment Program for children between the ages of 6 and 18 in Palm Beach County within HRS District IX, pursuant to Rule 10-28.152(8), F.A.C. and Chapter 395, F.S. Although FRTC represents it will construct its proposed facility with or without CON licensure, which it is entitled to do, given the peculiarities of this type of health care entity, it is clear that a prime motivator in FRTC's CON application is that with CON licensure, FRTC potentially will have greater access to insurance reimbursement because it may then call itself a "hospital." FRTC will seek JCAH accreditation. HRS is the state agency with the authority and responsibility to consider CON applications, pursuant to Chapter 10-5.011, F.A.C. and Sections 381.701-381.715, F.S. (1987). HRS preliminarily approved FRTC's application, and supported it through formal hearing and post-hearing proposals. RTCPB is an existing 40 bed residential treatment center for adolescents between the ages of 12 and 18, located in Palm Beach County, on the campus of Lake Hospital of the Palm Beaches. It provides services similar or identical to those services proposed to be offered by FRTC. It is JCAH accredited through an extension of Lake Hospital's accreditation and is close to JCAH accreditation in its own right. RTCPB is a subsidiary of Psychiatric Hospitals, Inc. (PIA) . PIA operates two residential treatment centers in Florida. RTCPB is not CON licensed as an IRTP, under Chapters 381 and 395, F.S., but is licensed as a child care facility under Chapter 395, F.S., as a provider of services to HRS under Chapters 10M-9 and 10E-10, F.A.C. RTCPB accepts substance abusers in residency. RTCPB has also applied for CON licensure as an IRTP in a batching cycle subsequent to the present one. That application has been preliminarily denied by HRS and RTCPB is awaiting a Section 120.57(1), F.S., formal administrative hearing thereon. RTCPB now estimates its current patients' average length of stay (ALOS) as 106 days but projects a 315 day (10 1/2 months) ALOS in its subsequent CON application. RTCPB is charging $185 per day or HRS patients and $255 with $23-26 ancillaries [sic] per day for private pay patients. Like FRTC, it uses a "levels" system of behavior modification and patient control. Humana is a 250 bed JCAH accredited hospital located in Palm Beach County, Florida. Of Humana's 250 beds, 162 are traditional acute care beds and 88 are psychiatric beds. The 88 psychiatric beds are administratively divided into different units, one of which is a 27 bed adolescent psychiatric unit; this unit opened January 20, 1987, and has an average length of stay of nine months. Humana's existing CONs are for short-term adult psychiatric beds and do not authorize an adolescent unit with an average length of stay of over 30 days. Ninety days is the demarcation, by rule, between short- and long-term psychiatric beds. Humana recently applied for a CON for more psychiatric beds and also applied for an IRTP CON in a subsequent batch to the present one. Humana's present 27 bed adolescent psychiatric unit provides grossly similar services to those proposed to be offered by FRTC, but its emphasis is more medical-psychiatric than emotional-behavioral. Like FRTC, Humana does not accept in residency adolescents with a primary diagnosis of substance abuse. Like FRTC and RTCPB, Humana uses a "levels" system. Eighty percent of Humana's patient mix are commercial pay, and the unit is running at a 15 to 20 percent profit margin. Humana usually charges $325 per day on their adolescent unit plus ancillaries [sic] amounting to 10 percent of the patient's bill, but HRS contract patients pay only $225 per day. Humana has lost a number of adolescent unit referrals to RTCPB since RTCPB opened June 1, 1987, but the unit continues to be almost fully occupied. Humana's main referral asset, as well as the source of the confusion of referring entities, appears to be the reputation of its director, Dr. Kelly. Dr. Kelly previously directed a program at Lake Hospital which was identical to the program that he now directs at Humana. Lake Hospital currently has RTCPB operating under its auspices, but not Dr. Kelly. Nature of the FRTC Program FRTC's proposed program is designed to serve those persons in the designated age group who have psychiatric diagnoses of a severity requiring a long-term approach in a multidisciplinary structured living setting to facilitate recovery. It will not, however, treat adolescents with an active diagnosis of chemical dependency or substance abuse. It also only commits to 1.5 percent indigent care. The proposed FRTC program differs from an acute care setting in significant quantitative and qualitative ways, the most visible of which is that acute care psychiatric settings (either long- or short-term) are geared toward dealing with patients actively dangerous to property, themselves, or others, but patients whom it is reasonably assumed will respond primarily to physiologically-oriented physicians and registered nurses administering daily medication, treatment, and monitoring, as opposed to a long-term living arrangement emphasizing behaviorally-oriented group interaction as an alternative to parental care at home. FRTC will, however, accept patients with psychiatric diagnoses of effective disorders, depression, schizophrenia and impulse disorders and those who may be potentially harmful to themselves, others, or property for whom no other less intensive or less restrictive form of treatment would be predictably helpful. FRTC would fall on the continuum of care below an acute psychiatric facility such as Humana. Assessment of such a target group on a patient by patient basis is obviously subject to a wide variation of interpretation by qualified health care professionals, but FRTC anticipates both verifying referral diagnoses and assuring quality of care by insuring that each new patient is seen by a psychiatrist within 24 hours of admission, and by having each case reviewed by an independent utilization review committee. FRTC also plans to complete appropriate patient assessments and develop and update individual, integrated treatment programs. FRTC will provide, where appropriate, for continuity of care from previous acute care institutions through the FRTC program and out into more normal individual or family living arrangements. Parents will have to consent to their child's placement at FRTC. FRTC's program proposes an average length of stay of 365 days (one year) with a range of six months to two years. Based upon all the credible record evidence as a whole, including, but not limited to, the protestants' respective ALOS, this is a reasonable forecast despite contrary evidence as to Charter's experience at its "template" Virginia institution, Charter Colonial. FRTC's program components will include individual therapy, recreational therapy, occupational therapy, and general education. The general education component in FRTC's proposed program is more general and more open than that offered in acute care settings, such as Humana. FRTC's overall program will utilize a "levels" system of behavioral management based upon patients earning privileges, which levels system has a good patient rehabilitation and functional administrative track record in many different kinds of psychiatric health care facilities, including Humana and RTCPB. FRTC intends that each patient's program will be individualized according to age and program component directed to his/her diagnosis and each patient will receive individual, resident group, and family therapies. As to assessment, types of therapy, continuity of care, and general education provisions, FRTC's proposal is grossly consistent with that of its "template." To the extent there is evidence of inconsistencies between the two programs in the record, the FRTC proposal represents either improvements over, or refinements of, its template program which have been developed as Charter/FRTC has learned more about what actually "works" for the IRTP form of health care, or it represents changes to accommodate Florida's perception of what less restrictive but still intensive residential treatment should be, or it anticipates local community needs. Quality of Care The applicant's parent corporation is an experienced provider of many types of accredited psychiatric facilities. The type of quality assurance program proposed and the staff mix provide reasonable quality care assurances. Design, Construction, and Personnel Refinements to FRTC's original schematic take into consideration the influence that physical structure has on an Intensive Residential Treatment Program. Those refinements include modification of a multipurpose room into a half-court gymnasium, addition of a classroom, addition of a mechanical room, modification of the nursing station to decrease the amount of space, and the deletion of one seclusion room and addition of a four to six bed assessment unit. The modifications resulted in the addition of approximately 1,000 square feet to the original design. A minimum of four to six acres would be necessary to accommodate the modified design which totals approximately 32,000 square feet. Public areas, such as administration and support services, dining room, and housekeeping areas, are to the front; private areas, such as the nursing units, are to the back. The facility's middle area houses gym, classrooms, and occupational therapy areas. The location encourages residential community involvement. Each of three, 20-bed units is made up of a group of two consultation rooms, a galley, a laundry, a day room and core living space located directly across from the nursing station for maximum observation and efficiency. Each unit comprises a separate wing. Six handicapped accessible patient beds are contemplated; the building will be handicapped-accessible. The staffing projections have increased and the pattern has been minimally altered in the updates. The updated pro forma also modified the initial financial projections so as to increase salary expense and employee benefits based on this change in staffing. An increase in the total project cost impacted on depreciation, and interest expense changed with time. All these changes are reasonable and insubstantial. FRTC's design is adequate for providing a suitable environment for intensive residential treatment for children and adolescents even though it is not identical to Charter's "template" for residential treatment and even though Charter's extensive experience with acute care facilities has focused these changes in its residential treatment concepts. The parties stipulated to the adequacy of FRTC's proposed equipment list and costs. Total construction cost was demonstrated to be reasonably estimated at $2,078,000. The square footage costs of $64.86 per square foot represet an increase from the square footage costs contained in the original CON application. The original budget was updated based upon a three percent inflation factor and the addition of the approximately 1,000 square feet. The additional space is not a significant construction change. The total project costs of $4,728,000 are reasonable. The testimony of HRS Deputy Assistant Secretary for Regulation and Health Facilities, John Griffin, who testified by deposition, (RTCPB's Exhibit 8, pp. 21-22) revealed no firm policy on what the agency, within its expertise, views as substantial and impermissible amendments to a CON application; HRS did not move at hearing to remand for further review; and the undersigned concludes that the changes in facility design, costs, and staffing do not represent significant changes which would be excludable as evidence and that they do represent permissible minor modifications and refinements of the original FRTC application. Site Availability No party contended that FRTC's application was a "site specific" application, that a residential treatment program is otherwise required to be "site specific," or that an IRTP CON is governed by a "site specific" rule or by "site specific" statutory criteria. Therefore, it was only necessary for FRTC in this noncomparative proceeding to establish that several suitable sites were available within the required geographic parameters at the financial amount allotted in FRTC's projections. FRTC did establish financially and geographically available and suitable sites through the testimony of Robert H. Ellzey, a qualified expert in commercial real estate values. The Non-Rule Need Policy There are no hospital licensed Intensive Residential Treatment Programs in Palm Beach County or in District IX. IRTPs are in a separate licensure category by law from psychiatric beds, acute care beds, and rehabilitation beds. There is a separate need methodology for long-term psychiatric beds and there are no CON licensed long-term psychiatric programs for children and adolescents in District IX, unless one considers Humana which is treating adolescents well beyond 30 or 90 days residency. HRS has no promulgated rule predicting need for IRTPs seeking specialty hospital licensure under Chapter 395, F.S. Subsequent to advice of its counsel that a CON must be obtained as a condition of IRTP licensure pursuant to Chapter 395, F.S., HRS elected to evaluate all IRTP CON applications in the context of the statutory criteria of Chapter 381, F.S., and in the context of HRS' non-rule policy establishing a rebuttable presumption of need for one "reasonably sized" IRTP in each HRS planning district. The May 5, 1988 Final Order in Florida Psychiatric Centers v. HRS, et al., DOAH Case No. 88- 0008R, held this non-rule policy invalid as a rule due to HRS' failure to promulgate it pursuant to Section 120.54, F.S., but that order also held the policy not to be invalid as contrary to Chapter 381, F.S. That Final Order intervened between the close of final hearing in the instant case and entry of the instant Recommended Order, however, it does not alter the need for the agency to explicate and demonstrate the reasonableness of its non-rule policy on a case by case basis. HRS was unable to do so in the formal hearing in the instant case. Notwithstanding the oral testimony of Robert May and Elizabeth Dudek, and the deposition testimony of John Griffin, it appears that the non- rule policy is not based upon generally recognized health planning considerations, but solely on the agency's statutory interpretation of recent amendments to Chapter 395 and some vague perception, after internal agency discussions, that the policy is consistent with certain promulgated need rules and with certain other non-rule policies for other types of health care entities, which other non-rule policies were never fully enunciated or proved up in this formal hearing. The HRS non-rule policy was also not affirmatively demonstrated to be rational because it does not take into account the reasonableness of a proposed facility's average length of stay, referral sources, geographic access, or other factors common to duly promulgated CON rules. Numerical Need and Conformity to Applicable Health Plans FRTC sought to support HRS' non-rule policy on numerical need for, and definition of, a "reasonably sized" IRTP through the testimony of Dr. Ronald Luke, who was qualified as an expert in health planning, development of need methodologies, health economies, survey research, and development of mental health programs. In the absence of a finding of a rational non-rule policy on numerical need, Dr. Luke's evidence forms the cornerstone of FRTC's demonstration of numerical need. Through the report and testimony of Dr. Luke, and despite contrary expert health planning testimony, FRTC established the numerical need for, and reasonableness of, its 60 licensed IRTP beds in District IX with projected 60 percent occupancy in the first year and 50 percent in the second year of operation using two bed need methodologies. Dr. Luke ultimately relied on a utilization methodology based upon 1991 population projections. Dr. Luke used a census rate per 100,000 population of 21.58. This is appropriately and reasonably derived from national data for residential treatment patients aged 0-17, regardless of the fact that the types of residential treatment considered by the NIMH data base employed by Dr. Luke greatly vary in concept and despite HRS having not yet clearly defined the nature of the programs and services it expects to be offered by a Florida specialty hospital licensed IRTP. Therefrom, Dr. Luke derived an average daily census of 52 in 1991. That figure yields a bed sizing of between 58 and 61 beds, depending on whether an 85 percent or 90 percent occupancy factor is plugged in. Either 58 or 61 beds is within the range of ratios calculated by Dr. Luke's other methodology for currently licensed Florida IRTPs in other districts. Assuming a target occupancy rate of 85 percent and an ALOS of one year, Dr. Luke considered the gross District IX IRTP bed need to be 60. In the absence of any like program to assess occupancy for and in the presence of similar programs such as Humana operating at nearly full occupancy now and RTCPB forecasting its occupancy at 88 percent in 1990 if it were IRTP-licensed, it is found that 60 beds are justified. Since there are no IRTP beds licensed as specialty hospitals in the current district bed inventory, no adjustment of this figure must be made to account for existing licensed IRTP beds. Simply stated, this is a CON application for an IRTP, nothing more and nothing less, and the subtrahend to be subtracted from gross district bed need is zero when there is a zero specialty hospital licensed IRTP bed inventory. Luke's calculated gross need of 60 bed is also his net need and is accepted. Fifty beds is generally the minimum size HRS will approve to be feasible for any free standing facility to be eonomically efficient and to be able to benefit from economies of scale. This 50 bed concept is within the wide range of bed ratios that HRS implicitly has found reasonable in, previously- licensed IRTP CON approvals. Conformity With Applicable Health Plans Section 38l.705(1)(a), F.S., requires HRS to consider CON applications against criteria contained in the applicable State and District Health Plans. In this regard, neither the applicable State Health Plan nor the applicable District IX Local Health Plan make any reference to a need for intensive residential treatment facilities. The District IX Health Plan addresses the need for psychiatric and substance abuse services to be available to all individuals in District IX. FRTC's project addresses this goal only in part. The District Health Plan states that priority should be given to CON applicants who make a commitment to providing indigent care. FRTC proposes only 1.5 percent indigent care which works out to only 1/2 of the ALOS of one patient at the proposed facility and is hardly optimum, but in a noncomparative hearing, it stands alone as advancing the given accessibility goal within the plan. Objective 1.3 of the State Health Plan provides: Through 1987, additional long-term inpatient psychiatric beds should not normally be approved unless the average annual occupancy for all existing and approved long-term hospital psychiatric beds in the HRS District is at least 80 percent. FRTC's project is neutral as to this goal. The District Plan also contains a goal for a complete range of health care services for the population of the district. FRTC advances this goal. The State Health Plan further provides: Goal 10: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT OBJECTIVE 10.1: Develop a range of essential mental health services in each HRS district by 1989. OBJECTIVE 10.3: Develop a network of residential treatment settings for Florida's severely emotionally disturbed children by 1990. RECOMMENDED ACTION: 1.03A: Develop residential placements within Florida for all SED children currently receiving ing treatment in out-of-state facilities by 1990. The FRTC project advances these goals in part. To the extent SED patients placed outside the state for residential treatment services are HRS patients whom FRTC as yet has not contracted to treat, the FRTC project does not advance this goal. However, increased insurance reimbursement will advance accessibility for those SED children and adolescents in need of this type of care whose families have insurance coverage. The State Plan also emphasizes a goal for a continuum of care. The FRTC plan advances this goal. Financial Feasibility William S. Love, Senior Director of Hospital Operations for Charter, was accepted as an expert in health care finance. Mr. Love prepared the pro forma financial statement contained in the original CON application and the update of the pro forma in response to HRS' completeness questions. Mr. Love also had input into the updated financial information which increased salary and benefit expense. (See FOF No. 11). The revised pro forma utilized an assumption of gross patient revenues of $300 per day and a 365 day ALOS, both of which are reasonable and both of which support the rest of FRTC's assumptions (See FOF No. 9). Routine revenues are based on the types of routine services patients normally receive on a daily basis. Ancillary revenues are support revenues such as pharmacy charges, X-rays, lab charges, and other charges not generally utilized on a routine basis. The only charges to patients at the proposed FRTC facility are the routine and ancillary charges. The assumptions with regard to contractual adjustments are that there will be no Medicare utilization since the facility is projected for children and adolescents and no Medicaid since freestanding facilities in Florida are not eligible for Medicaid. Two percent of gross patient revenues are estimated to be contractual adjustments which relate to HMOs and PPOs. FRTC addresses indigent care by 1.5 percent of gross revenues which will be dedicated to Charter Care which is free care. The assumptions with regard to bad debt are that 8 percent of gross revenue will be the allowance for bad debt. An assumption of 20 percent of salaries was used for employee benefits which include the FICA tax, health insurance, dental insurance, retirement plans, and other benefits. Supplies and expenses were calculated as a function of patient day with a $90 per day estimate. Included in supplies and expenses are supplies utilized in the delivery of health care services as well as medical professional fees such as the half-time medical director and purchased services such as laundry, linen, speech and hearing services, utilities, telephone, malpractice insurance, repairs and maintenance. The depreciation assumptions are that the building would be depreciated over 40 years, fixed equipment over 20 years and major movable equipment over 10 years. Pre-opening expenses for the first 45 days of operation have been capitalized over 60 months with low amortization costs over 15 years. There is no income tax assumed in the first year but the assumption in subsequent years is that the tax rate will be 38 percent. The failure to assume a hospital tax is inconsequential. The assumptions for the second fiscal year are basically the same. Although staffing remained the same, the FTEs per occupied bed increased, and a 7 percent inflation factor was added. The project will be financially feasible even though the facility is pessimistically projecting a loss of $102,000 for the first year because a facility can suffer a loss in its first year of operation and remain financially feasible. The facility projects a $286,000 profit in its second year of operation. With regard to utilization by class of pay, FRTC has assumed that the insurance category represents 65.5 percent of total revenues projected and includes such things as commercial insurance, Blue Cross and any third party carrier other than Medicare and Medicaid. Assumptions with regard to the private pay are that 25 percent of the total revenues will be generated by private pay patients and would include the self pay portions of an insurance payor's bill, such as deductible and co-insurance. Bad debt was assumed to be 8 percent, and Charter Care or free care, 1.5 percent. FRTC's projected utilization by class of pay is reasonable and is supported by the protestants' current experience with commercial insurance utilization and reimbursement and the predicted recoveries if RTCPB were IRTP-licensed. In the second year of operation, the assumptions with regard to utilization by class of pay demonstrated an increase in the insurance category from 65.5 to 66.5 percent with everything else remaining the same except for a decrease in bad debt to 7 percent. The assumption with regard to a decrease in bad debt is based upon the establishment of referral patterns from acute psychiatric facilities, outpatient programs, mental health therapists, and miscellaneous programs. The assumption is that 65 percent of the patients would be covered by insurance, not that 65 percent of each bill would be paid by insurance. Charter's experience has been that a good portion of the deductible and co-insurance payments are collectible. FRTC did not assume payment from any governmental contracts or HRS reimbursement. FRTC's projected self pay percentages assumption reasonably contemplates the percentage of households in the district which can afford its projections for self pay. For purposes of evaluating the financial feasibility of this proposal, a management fee was not included because in looking at the financial feasibility of a facility the expenses of a corporate home office are incurred whether or not the facility is built. It was not appropriate to allocate a management fee to the hospital because it showed a loss in its first year of operation and a profit in its second. When the facility becomes profitable, FRTC anticipates passing the profit through to the corporation to help reduce the corporate overhead. If a management fee had been allocated to this facility, allocations would have had to have been made to the other Charter facilities to show where their management expense had decreased and their profitability increased. It would have been inappropriate to take these fixed expenses and allocate a portion of them to the proposed FRTC facility. In addition to the fact that the failure to include a management fee in the pro forma should not affect the feasibility of the project, Charter has good cause not to apply a $44 per patient day management fee in its IRTP. FRTC's categories of payor class are generally reasonable based in part on the results of a survey performed in Florida. FRTC's assumptions and calculations are reasonable, based upon the testimony of William S. Love and Dr. Ronald Luke, notwithstanding the testimony of Dan Sullivan, Donald Wilson, and Christopher Knepper, also qualified as experts. Specifically, it is found that Dr. Luke's assessment that the designation of a facility as a licensed specialty hospital has a beneficial effect on its ability to obtain insurance reimbursement for services, that reimbursement impacts to increase ALOS, and that the breakdown of sources of payment that FRTC has used is reasonable, is a credible assessment, supported elsewhere in the record. It is also found that Mr. Knepper's assessment for bad debt is inadequately supported and inconsistent with other evidence, and therefore not credible. Mr. Sullivan's testimony is not persuasive. Staffing and Recruitment Dr. Brett, a Charter regional director for hospital operations, was accepted as an expert in staffing psychiatric facilities including residential treatment centers. His distinctions between the acute care and residential types of facilities are corroborated and explained by other witnesses and evidence. Mr. Joyner was accepted as Charter's expert recruiter. Although the depth of Mr. Joyner's hands-on involvement in active recruitment is not extensive, the Charter network of manpower referrals and "head hunting" will obviously support this project. Upon the combined testimony of Dr. Brett, Mr. Joyner, and Paul Bodner, Charter's senior director of physician relations, there is sufficient evidence that FRTC can recruit a suitable staffing pattern to ensure quality of care (see FOF Nos. 9 and 10) in its proposed program, even if it has to hire from out of state and pay somewhat higher salaries due to some qualified manpower shortages in certain categories in Palm Beach County. In making this finding, the undersigned has considered the testimony of Donald Wilson concerning certain institution-specific recruiting problems of his principal, RTCPB, and the "step down" status of residential treatment as testified by Mary Certo, of Humana. Impact on Costs and Competition The FRTC project can reasonably be expected to attract patients with insurance coverage who would otherwise go to existing facilities for care, however, in light of the relatively consistent occupancy rates at Humana and RTCPB despite both their geographical proximity and the unique confusion of referrals arising over the relocation of Dr. Kelly, this impact is not altogether clear. Dr. Kelly's reputation will not be impacted by granting of a CON to FRTC. It is also not possible upon the basis of the record created in this hearing to factor out reimbursement differences inherent in Humana's current CON classification and RTCPB's circumstance as an unlicensed intensive residential treatment center. In any case, the negative impact upon Humana must be measured against the health planning goals expressed by several witnesses that it is desirable to substitute more suitable, less restrictive facilities for institutionalization of the severely emotionally disturbed child and adolescent whenever possible and that it is also desirable to encourage residential treatment upon a continuum of care basis after acute psychiatric care. The FRTC project will obviously increase the accessibility to this type of treatment for young people who have the appropriate insurance coverage. These goals are in conformity with the applicable health plans. The FRTC project can reasonably be expected to initially increase some costs of health services throughout the district because it will inflate some salary costs due to competition, but the negative impact will probably be short term.
Recommendation Upon a balanced consideration of all relevant criteria it is RECOMMENDED that HRS enter a Final Order approving FRTC's CON application for an IRTP, as updated, for licensure as a specialty hospital. DONE and ORDERED this 28th day of June, 1988, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 28th day of June, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-2037 & 87-2050 The following constitute specific rulings pursuant to Section 120.59(2), F.S., with regard to the parties' respective Proposed Findings of Fact. Proposed Findings of Fact (PFOF) of FRTC: Covered in "issue" and FOF 1. Covered in FOF 1 and 2. 3-7. Except as subordinate or unnecessary, accepted in "procedural and evidentiary matters" and FOF 11. 8. Accepted in FOF 12. 9-12. Except as subordinate, unnecessary, or cumulative, accepted in FOF 7-9. 13. Accepted in FOF 10. 14-17. Accepted in part and rejected in part in FOF 7-11, 30. Although portions of the underlying data referred to in proposal 16 and by Mr. Joyner in his testimony was excluded from evidence, he was qualified as a recruitment expert and for the reasons set forth in FOF 30, his opinion is accepted. 18-19. Accepted in FOF 21. Accepted in FOF 22, 26, 29. Accepted in FOF 23. Accepted in FOF 24. Accepted in FOF 25 and 29. Accepted in FOF 26 and 29. Except as subordinate or unnecessary, covered in FOF 27. Except as mere argument or statement of position, accepted in FOF 26-27, and 29. 27-29. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 26-29. 30-31. Accepted in FOF 28. 32-40. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found; in part rejected as mere argument or recital of testimony, not distinguishing opinion from fact. To the degree adopted or accepted upon the record as a whole, see FOF 9, 11, 21, 26-29. 41-44. Accepted in part and rejected in part as unnecessary and cumulative to the facts as found in FOF 29-32. 45-47. Rejected, as recital or summation of testimony and as part of preliminary agency review not relevant to this de novo proceeding. 48. Covered in FOF 7, 18-20, 22, and 26. 49-52. dejected as set out in "organic law and legislative background," "procedural and evidentiary matters," FOF 13-15. See also COL. 53. Accepted in FOF 16. 54-58. Rejected in part and accepted in part as set out in FOF 14-15. Rejected where not supported in full by the record as a whole, where subordinate, unnecessary or cumulative to the facts as found and where mere recital of testimony. 59. Accepted in principle and modified to conform to the record in FOF 18-20, 31. 60-61. Accepted in part and rejected in part as stated in "procedural and evidentiary matters" and in FOF 14-16 and the COL. Accepted in FOF 15 and COL. Accepted in FOF 18-20, 31. 64-68. Rejected as unnecessary to the facts as found in FOF 1, 7, 13-15 and 29, also in part as not supported by the record as a whole, and as primarily legal argument and recitation of testimony. Accepted in FOF 3-4 and 30. Accepted in part and rejected in part in FOF 3-4, 7, 26, and 29. 71-74. Except as subordinate or unnecessary, accepted in FOF 5-9 and 30-32. HRS' Proposed Findings of Fact (PFOF): 1-3. Accepted in "organic law and legislative background." 4. (Two paragraphs) Accepted FOF 3-4. Accepted in "issue" and FOF 3-4. Accepted, FOF 29-32. Rejected as unnecessary. Accepted, FOF 1. 10-18 & 20. Except as subordinate or unnecessary, accepted in FOF 5, 6, 15, 26, 31. 19. Rejected as irrelevant. 21-28. Accepted in part as modified to conform to the record as a whole in FOF 6-9, 30-31. The irrelevant, unnecessary or subordinate material has also been rejected. 29-31. Accepted in FOF 4, 9, 21, 26, 29-31. 32-35. Accepted in FOF 7-9. 36-41. Accepted in FOF 7-9 as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application, in "procedural and evidentiary matters" and FOF 11. 42-45. Accepted as modified to conform to the record as a whole, to eliminate subordinate and irrelevant matters and to comport with the rulings on the insubstantiality of updates to the CON application in "procedural and evidentiary matters" and FOF 9-11, 21, 23, 30 and 32. Accepted in FOF 22, 26, 29. Accepted in FOF 7, 20, 22, 26. 49-52. Accepted in FOF 3, 4, 21-29. Assuming, based on the transcript reference, that this proposal refers to FRTC's pro forma, this proposal is accepted but unnecessary for the reasons set forth in rulings on HRS' PFOF 36-45. See FOF 11 and 21-29. Accepted in FOF 13-15. 55-58. Rejected as unnecessary. 59. Accepted but not dispositive of any material issue at bar. See FOF 13-15. 60-62. Accepted in part and rejected in part in FOF 13-14, as mere recital of testimony and statements of position. 63. Accepted in FOF 29. 64-65. Accepted in FOF 5-9. Accepted in FOF 7-9. Accepted that HRS made this assumption but it fails to explicate the non-rule policy. See FOF 13-14. Accepted in FOF 16. Rejected as a statement of position or COL. Peripherally, see COL. Accepted in FOF 13-14 but not dispositive of any material issue at bar. Rejected in FOF 13-14. 72-74. Rejected as preliminary agency action, irrelevant to this de novo proceeding. 75-76. Accepted in FOF 17-20. This is a subordinate definition and not a FOF. See FOF 30-31 and COL. Rejected in part and accepted in part in FOF 17-20, 31. Accepted in FOF 10. Accepted in FOF 13-15. Accepted as stated in the "procedural and evidentiary matters," FOF 13-15 and in the COL. 82-85. Covered in FOF 3-6, 13-15. 86. Rejected as preliminary agency action, irrelevant to this de novo proceeding. 87-88. Rejected as subordinate or unnecessary. 89. Accepted in FOF 29. 90-96. Accepted as modified to conform to the record evidence as a whole and FOF 15-16 and to reject subordinate and unnecessary material. Accepted without any connotations of the word "therefore" in FOF 4, 7-9, 21 and 29. Rejected as unnecessary and cumulative. Accepted in "organic and legislative background" and FOF 13-15. Rejected as not established upon the record as a whole; unnecessary. Rejected as a statement of position only. Joint Proposed Findings of Fact of RTCPB and Humana 1-2 Accepted in FOF 1. 3-4. Accepted in FOF 2. 5-6. Accepted in "issue" and FOF 3-4. 7. Accepted in "issue" and FOF 5-6. 8-13. Accepted in part and rejected in part as set out under "procedural and evidentiary matters," FOF 3-6, 13-15, and the COL. 14-18. Except as subordinate or unnecessary, accepted in FOF 1, 7-9, 11, 21-29. 19-27. Rejected as irrelevant preliminary action to this de novo proceeding. 28-36. Rejected in part and accepted in part upon the compelling competent, substantial evidence in the record as a whole as set forth in FOF 13-14. Also as to 33 see FOF 15. 37-52. Accepted in part and rejected in part in FOF 13-16 upon the greater weight of the credible evidence of record as a whole. Irrelevant, unnecessary and subordinate material has been rejected, as has mere argument of counsel. Accepted in FOF 17. Rejected in FOF 20, 31. Accepted as modified in FOF 20, 31. Excepting the mere rhetoric, accepted in FOF 18, 31. Accepted as modified in FOF 7, 18-20, 26, 31. 58-59. Accepted in part and rejected in part in FOF 17-20, 26, Rejected as subordinate. Rejected as recital of testimony and argument 62-63. Rejected as unnecessary. 64-67. Accepted in FOF 3-4, 6-9. The first sentence is rejected as cumulative to the facts as found in FOF 3-4, 6-9. The second sentence is rejected as not supported by the greater weight of the evidence as a whole. Rejected in FOF 4, 21. Accepted in FOF 4 and 21, 29. Rejected as unnecessary Accepted in FOF 26. Rejected in FOF 15-20, 31. Rejected as unnecessary in a noncomparitive hearing. 75-87. Except as irrelevant, unnecessary, or subordinate, accepted in FOF 5-9, 30, 31. Rejected in part as unnecessary and in part as not comporting with the greater weight of the evidence in FOF 7-10 and 30. Accepted in FOF 1, 5-9. 90-92. Accepted in FOF 5-9. Rejected in FOF 5-6. Rejected as subordinate. 95-98. Accepted in FOF 5-9. 99-102. Rejected as unnecessary. 103. Except as subordinate or unnecessary, accepted in FOF 5-9. 104-118. Except as unnecessary, subordinate, or cumulative to the facts as found, these proposals are covered in FOF 5-9, 30-31. Except as Subordinate, covered in FOF 6 and 31. Accepted in part in FOF 5-9, 21-29, otherwise rejected as misleading. Except as subordinate, accepted in FOF 6. Rejected as unnecessary. Accepted in FOF 21. Accepted in FOF 21-29. Rejected in part and accepted in part in FOF 21-29. Rejected as subordinate and unnecessary in part and not supported by the greater weight of the credible evidence in 21-29. 127-128. These proposals primarily recite testimony by Mr. Grono, an administrator of a psychiatric hospital for very severely disturbed persons (Grant Center). This evidence by itself is not persuasive in light of Dr. Luke's study and other admissions of the parties referenced in FOF 21-29. Upon the greater weight of contrary evidence, it is rejected. 129. Rejected as subordinate except partly accepted in FOF 29. 130-133. Rejected upon the greater weight of the evidence in FOF 9, 11 and 21-29. 134, 139. Rejected as legal argument without citation. 135-138. Rejected in FOF 21-29. 140-144. Rejected as stated as not supported by the greater weight of the credible evidence and as partly mere legal argument. See FOF 9, 21-29. 145. The first sentence is rejected upon the reference to PFOF 140-144 for the same reasons given above and the remainder is rejected as subordinate. 146. Rejected in FOF 21-29. 147. Rejected as mere legal argument without citation. 148-149. Rejected in FOF 21-29, particularly 27 upon the greater weight of the credible evidence. The mere legal argument is also rejected. 150-157. Rejected as set out in FOF 28 upon the greater weight of the credible evidence. Uncited argument and statements of position have likewise bean rejected. 158, 160. Rejected as mere argument without citation. 159. Rejected as subordinate and not dispositive of any material issue at bar in FOF 23. 161. Rejected as mere argument. 162-167. Rejected as not supported by the greater weight of the credible evidence in FOF 30-32. Also 167 is rejected as mere argument without citation. 168. Accepted in part and rejected in part in FOF 30-32. 169. Accepted but subordinate. 170. Rejected as unnecessary and cumulative to the facts as found in FOF 31. 171-180. Covered in FOF 30-32. 181-185. Rejected as contrary to the evidence in part and in part unnecessary and cumulative to the ruling in "procedural and evidentiary matters" and FOF 7, 10-11, 21, 23, 30-32. 186-188. Rejected in FOF 7, 10 and 30 upon the greater weight of the credible evidence. 189. Rejected as unnecessary 190. Rejected in FOF 30. 191-392. Accepted but not dispositive of any material issue at bar. See FOF 30-32. 193. Rejected in FOF 30-32. 194-195. Except as subordinate or unnecessary, rejected in the several references to future establishment of referral networks. See FOF 21, 27. 196-197 & 199. Rejected as unnecessary 198. Rejected as irrelevant in part and immaterial in part upon the rulings in "procedural and evidentiary matters" and FOF 11. 200. Rejected as unnecessary 201-202. Accepted in FOF 7, 20, 26-27 and 31, but cumulative. 203. Covered in the COL. Rejected in FOF 21-22. 204. Rejected as mere argument without citation. COPIES FURNISHED: Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 John T. Brennan, Jr., Esquire BONNER & O'CONNEL 900 17th Street, N.W. Washington, D.C. 20006 James C. Hauser, Esquire Joy Heath Thomas, Esquire MESSER, VICKERS, CAPARELLO, FRENCH & MADSEN 215 South Monroe Street Post Office Box 1876 Tallahassee, Florida 32302 Fred W Baggett, Esquire Stephen A. Ecenia, Esquire ROBERTS, BAGGETT, LaFACE & RICHARD 101 East College Avenue Tallahassee, Florida 32301 Lesley Mendelson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
