Findings Of Fact The Ambrosia Home, Inc. is a nursing home approved as a provider of health care to Medicaid recipients. This case involves a claim for the reservation of a bed for Leo LaPorte. LaPorte was an elderly male who was in poor condition and whose application for Medicaid benefits had been pending for some time. After preliminary medical approval, LaPorte was tentatively approved for Medicaid benefits. His placement in Ambrosia was discussed between the caseworker assigned to LaPorte's case and the staff of Ambrosia. LaPorte was admitted to Ambrosia on January 21, 1980, but was hospitalized on January 22, 1980. An on-site visit of a Medicaid recipient in the provider facility is necessary to the final approval of the recipient's benefits. Final approval of LaPorte's application for Medicaid benefits was impossible due to his hospitalization, and therefore his application was not approved until after his discharge from the hospital, at which time he was placed in Havana Villas Nursing Home. Upon LaPorte's hospitalization on January 22, 1980, LaPorte's caseworker was notified by telephone of his hospitalization, and the staff of Ambrosia prepared an HRS Form 227 on LaPorte as though he were an approved recipient. This form was forwarded to DHRS and eventually came into the possession of LaPorte's caseworker. LaPorte's HRS Form 227 was introduced as Exhibit 1. This form addressed to the Social and Economic Services' Assistance Payments Section from Ambrosia, Provider #0200999, advised that Leo LaPorte had been admitted to Brandon Community Hospital on January 22, 1980. The specific portion of the form which was not completed is contained in Paragraph 2 of the form and provides as follows: "...we (a) are ....(b)are not ....reserving a bed." Subsequent to LaPorte's hospitalization, there were several conversations between the Administrator of Ambrosia who had filled out the HRS Form 227 and LaPorte's caseworker regarding approval of LaPorte's application for Medicaid benefits. These conversations continued until approximately February 26, 1980, two weeks after LaPorte's release from the hospital and placement in Havana Villas Nursing Home. On or about that date LaPorte's caseworker conducted an on-site visit of LaPorte, and his application for Medicaid benefits was approved. During the conversations between LaPorte's caseworker and the staff member at Ambrosia responsible for completion of the HRS Form 227, the fact that Paragraph 2 of the form was not completed was never raised by the caseworker. On February 26, 1980, DHRS denied the reimbursement of Ambrosia for the bed reserved for 15 days for Leo LaPorte on the basis that Paragraph 2 of HRS Form 227 had not been completed to indicate whether or not Ambrosia was reserving a bed for LaPorte. Ambrosia controverted the denial of its claim in a timely fashion. No evidence was presented that the bed reserved by Ambrosia for LaPorte was not reserved.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer recommends that the agency head approve the claim of The Ambrosia Home, Inc. for reimbursement for 15 days of benefits for a bed reservation for Leo LaPorte. DONE AND ORDERED this 3rd day of October, 1980 in Tallahassee, Leon County, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of October, 1980. COPIES FURNISHED: Janice Sortor, Esquire Department of HRS W. T. Edwards Facility 4000 W Buffalo Avenue Tampa, Florida 33614 Willard Roth, Administrator The Ambrosia Home, Inc. 1709 Taliaferro Avenue Tampa, Florida 33602
Findings Of Fact Status of the case South Broward Hospital District (SBHD) is a special taxing district created in 1947 by a special act of the Florida Legislature to provide health services to the residents of South Broward County and surrounding areas. SBHD is a designated disproportionate share provider of medical services to the indigent, and currently operates two Class I General Hospitals in Broward County, to wit: Memorial Hospital, located in Hollywood, and Memorial Hospital West, located in Pembroke Pines. Pertinent to this case, SBHD was authorized to establish Memorial Hospital West by Certificate of Need (CON) number 4019 issued by the Department of Health and Rehabilitative Services (the predecessor to respondent, Agency for Health Care Administration) on December 21, 1988. The certificate's project description read as follows: Construction of a new 100 bed satellite hospital facility, which will be composed of 92 medical surgical and 8 intensive care beds, in southwestern Broward County, HRS District 10, via the transfer of 100 beds from an existing facility, Memorial Hospital, Hollywood, and retiring an additional 25 medical/surgical beds from the existing facility upon the opening of the satellite facility . . . . By letter of June 3, 1992, respondent forwarded to SBHD License No. 3288, effective May 12, 1992, which authorized it to operate Memorial Hospital West as a Class I General hospital with 100 acute care beds. Contemporaneously, respondent forwarded to SBHD License No. 3289, effective May 12, 1992, which reduced Memorial Hospital's licensed acute care beds to 489, "reflecting the transfer of 100 acute beds to Memorial Hospital West, and the delicensure of 25 additional acute care beds," "[p]ursuant to Certificate of Need Number 4019." SBHD filed a timely petition challenging the respondent's issuance of License No. 3289, and, more particularly, the provision in such license reflecting "the delicensure of 25 additional acute care beds." It was SBHD's position that the provision of CON 4019 which required the retirement of the additional 25 beds upon the opening of Memorial Hospital West was invalid or, alternatively, that the CON should be modified to delete such requirement. Respondent disagreed with SBHD's assertion that the provision of the CON requiring retirement of the additional 25 beds was invalid and contended that SBHD's request for modification could not be accommodated under the modification provisions of Rule 59C-1.019, Florida Administrative Code, but required certificate of need review. Accordingly, these formal proceedings to review, de novo, the agency's decision were commenced at SBHD's request. The quest for CON 4019 The quest by SBHD to construct a satellite hospital in southwest Broward County had its genesis in January 1984 when the Department of Health and Rehabilitative Services (HRS) evidenced its intention to deny SBHD's application for CON 2834 and SBHD requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. That matter was referred to the Division of Administrative Hearings (DOAH) for the assignment of a Hearing Officer and designated DOAH Case No. 84-0235. Thereafter, in 1985, SBHD filed another application with HRS, designated as CON application No. 4019, for authorization to develop and operate a 100-bed satellite hospital in southwest Broward County by transferring 100 beds from Memorial Hospital. After HRS's initial denial of that application, SBHD requested a formal hearing and the matter was referred to DOAH. That case was assigned DOAH Case No. 85-3940, and was consolidated with the other application of SBHD, DOAH Case No. 84-0235. On April 11, 1986, SBHD updated its two applications to construct the satellite hospital, by proposing to transfer 100 beds from Memorial Hospital to the new facility, which would be composed of 92 medical/surgical beds and 8 intensive care beds. Subsequently, SBHD agreed to the retirement of 25 additional medical/surgical beds from Memorial Hospital upon the opening of its satellite facility, HRS agreed to support such project, and SBHD's application was duly updated. Accordingly, when the final hearing was held in DOAH Case Nos. 84-0235 and 85-3940 on September 12-16, 1986, October 22, 1986, and December 1, 1986, the issue was: . . . whether South Broward Hospital District's (District) application for a certificate of need to build and operate a satellite facility in southwest Broward County by transferring 100 beds and retiring 25 medical/surgical beds from its existing facility should be granted. On August 4, 1987 a recommended order was rendered in DOAH Case Nos. 84-0235 and 85-3940, which recommended that SBHD's application be denied. While recommending denial, such order ultimately metamorphosed into a final order, discussed infra, granting SBHD's application, and adopting a number of the findings of fact set forth in the recommended order. Those findings adopted included the recognition of the agency's evolving policy relating to bed transfers and relocation, as well as its consideration of a reduction of excess capacity within the district as affecting its decision to support such transfer. Specifically, the order noted: The Department has formulated a draft policy with respect to standards for evaluating applications to transfer beds or convert facilities. This policy was first written on August 7, 1986, and is based on the agency's prior experience in health planning. The Department's general policy for transfers and conversions is to try to "work off" any overbedding in a service district when approving transfers by requiring bed retirement as a condition to the approval of transfers. This strategy is the Department's attempt to reduce the excess of licensed and approved medical/surgical beds. The Department does not believe it possesses statutory authority to delicense acute care beds or retire acute care beds. Voluntary reduction of surplus beds in conjunction with applications to transfer beds or convert facilities provides one means for reduction of the number of beds in a service district. While the hearing officer observed that the agency did not believe it possessed the statutory authority to require the retirement or delicensure of acute care beds as a precondition for approval of a CON application, such observation, considering other findings of the hearing officer and the proof in this case, does not suggest that a proposed reduction in beds was not a legitimate factor for the agency to consider when evaluating an application and deciding whether it does or does not, on balance, satisfy relevant statutory and rule criteria. 1/ Indeed, one criteria to be considered in evaluating a CON application is its consistency with the State and Local Health Plan. At the time SBHD's application was reviewed, the State Health Plan set an appropriate ratio of medical/surgical beds to the population as a ratio of 4.11 to 1,000. Broward County (District X) was significantly overbedded at the time, with a medical/surgical bed ratio of approximately 5.1 to 1,000 and the Local Health Plan encouraged a reduction of licensed beds to achieve a ratio of 4.5 to 1,000 by 1988. Moreover, a proposed reduction in beds could also influence other criteria, such as, access, efficiency, and utilization. Following rendition of the recommended order on August 4, 1987, SBHD's pursuit of CON 4019 to final order took a tortuous route. In this regard, a final order of the agency dated August 18, 1988 observed: A prior invalid order of October 7, 1987, was vacated by order of February 29, 1988. After the order of February 29 was submitted to the First District Court of Appeal pursuant to relinquishment of its jurisdiction, the appeal of the final order was dismissed. Petitioner [SBHD] then moved for entry of a new final order. By order of June 27, 1988, the case was then remanded to the Division of Administrative Hearings for reevaluation of the merits of the application and additional findings based on the existing record, consistent with the rulings on exceptions by the Department contained in the Order of Remand. The Division of Administrative Hearings, by order of July 26, 1988, declined remand and ordered that the record be returned to the Department for entry of final order. The order then proceeded to adopt, except as specifically noted, the findings of fact and conclusions of law set forth in the recommended order, and granted SBHD's application for CON 4019. SBHD's pursuit of its CON had not, however, met fruition. The final order of August 18, 1988, "was quashed on procedural grounds by the First District Court of Appeal in an Order dated September 15, 1988". Subsequently, by "order dated December 13, 1988, the District Court dismissed [the case] on the basis of a voluntary dismissal by the parties". The agency then observed that "it is now time for the disposition of the application for CON 4019." Accordingly, by final order rendered December 21, 1988, the agency resolved: . . . I conclude that CON 4019 should be approved for the reasons set forth in the Order rendered August 18, 1988. Therefore, the Order rendered August 18, 1988, is incorporated by reference. Based on the foregoing, it is ADJUDGED that the application of South Broward Hospital District for certificate of need number 4019 to construct a satellite facility in south- western Broward County be APPROVED. Consistent with that final order, CON 4019, dated December 29, 1988, with an issue date of December 21, 1988, was granted to SBHD. As heretofore noted, the certificate, consistent with SBHD's updated application, included the requirement that an additional 25 medical/surgical beds would be retired at Memorial Hospital upon the opening of Memorial Hospital West. The validity of the provision of CON 4019 requiring retirement of 25 medical/surgical beds. Here, SBHD has challenged the propriety of respondent's delicensure of 25 medical/surgical beds at Memorial Hospital based on the contention that the provision of CON 4019, which provided for the retirement of 25 medical/surgical beds upon the opening of Memorial Hospital West, was invalid. SBHD's contention, as well as the proof offered to support it, is unpersuasive. In support of its contention, SBHD offered proof a hearing that it was HRS that initiated the proposal to retire beds, and that HRS did not have the unilateral authority to "require" the retirement or delicensure of beds as a prerequisite or condition for approval of a CON application. 2/ Accepting that HRS initiated the dialogue, as well as the fact that HRS could not unilaterally require SBHD to retire beds, does not, however, compel the conclusion that the provision for the retirement of beds was invalid. To the contrary, as heretofore discussed, overbedding in District X was of legitimate concern to HRS, a reduction of beds was an appropriate consideration in the course of CON review, and SBHD elected to update/amend its application to include such a reduction and thereby garner HRS support in the face of opposition from other competitors. Accordingly, that HRS could not "require" SBHD to retire beds is irrelevant. SBHD updated/amended its application and affirmatively proposed, as part of its project, a reduction of beds. Such reduction was an integral part of the project reviewed and ultimately approved, and was a factor appropriately considered by the agency in evaluating the application. Finally, to support its contention that the provision of CON 4019 requiring the retirement of 25 beds was invalid, SBHD suggests, essentially, that the update/amendment of its application to include such a proposal was inappropriate or contrary to law. Such contention, as well as the proof offered to support it, is likewise unpersuasive. Rather, the credible proof demonstrates that, at all times material to the subject application, HRS had no policy and there existed no rule or statute, that precluded an update or an amendment to an application for a CON during the course of an administrative proceeding. Accordingly, the amendment by SBHD of its application to include a provision for the retirement of 25 medical/surgical beds was not improper, and such provision can hardly be characterized as invalid. 3/ The request to modify CON 4019 to delete the requirement that 25 medical/surgical beds be retired. Accepting the validity of the provision of CON 4019 requiring the retirement of 25 medical/surgical beds, and therefore the propriety of the agency's decision to delicense those beds, SBHD has requested that the CON be modified to delete such requirement due to changed circumstances since its issuance. The agency opposes SBHD's request, contending that the change in bed capacity requires CON review. Pertinent to this case, Rule 59C-1.019, Florida Administrative Code, establishes the procedure and the circumstances under which a certificate of need holder may seek a "modification" of a certificate of need. For purposes of the rule, "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. Rule 59C-1.019(1), Florida Administrative Code. 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. 381.701-381.715. * * * (e) Any change in licensed bed capacity. In this case, the agency contends that the CON cannot be modified to delete the 25-bed retirement provision because such alteration would result in a "change in licensed bed capacity," and therefore a project subject to CON review. Contrasted with the agency's position, SBHD contends that it timely challenged the agency's decision to delicense the 25 beds, based on its contention that the provision requiring the retirement of beds was invalid, and "there can be no actual change in licensed bed capacity at Memorial Hospital prior to final resolution of . . . this proceeding." [SBHD proposed recommended order, at p.17]. As stated by SBHD, Rather than seeking to change its licensed bed capacity, SBHD is opposing a change in its licensed bed capacity in order to maintain the status quo. [SBHD proposed recommended order, at p. 17]. Considering the provisions of law and analysis, as discussed in the conclusions of law infra, it is concluded that the agency's position is founded upon a reasonable interpretation of law and is, therefor, accorded deference. 4/
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered dismissing SBHD's protest to the delicensure of 25 acute care beds at Memorial Hospital, and denying SBHD's request to modify certificate of need number 4019 to delete the requirement that 25 acute care beds be retired. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 23rd day of September 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 23rd day of September 1994.
Findings Of Fact Harbour Shores is a 60-bed psychiatric facility located in Fort Pierce, St. Lucie County, Florida. Harbour Shores began operation in October, 1985, pursuant to licensure as part of Lawnwood Regional Medical Center, a general acute care hospital. Harbour Shores is located near Lawnwood Regional Medical Center and functions as a part of that hospital. Lawnwood Regional Medical Center, Inc., is a wholly owned subsidiary of Hospital Corporation of America (hereinafter "HCA"), a private, for-profit corporation. HCA Psychiatric Company manages and provides services to Harbour Shores pursuant to a management agreement. HCA Psychiatric Company has experience owning and/or operating approximately 54 psychiatric facilities, with 6,000 beds, nationwide. Services provided by HCA to Harbour Shores include a quality assurance surveying process to assure that the HCA facilities maintain high standards of care, continuing education and training seminars, professional staff including psychiatrists available to assist the individual facilities, computer services, and bulk purchasing. The Harbour Shores 60-bed psychiatric facility is divided into two patient care units: a 24-bed adolescent unit and a 36-bed adult unit. Within the adult unit, Harbour Shores operates three distinct patient care programs: a therapeutic community open unit for higher functioning adult psychiatric patients, a senior adult program for elderly adult psychiatric patients, and an intensive treatment or acute care program for lower functioning, violent, or suicidal psychiatric patients who are in need of closer monitoring and more intensive treatment than the other higher functioning patients. All of the Harbour Shores beds fall in the short-term inpatient psychiatric category, with an average length of stay of three to four weeks. The Harbour Shores facility is well-designed for the treatment of psychiatric patients. It is a one-floor design, with admissions and administrative spaces upon entry, the two separate patient care units for the adults and adolescents, each with separate entry, and ample program and activity space. Harbour Shores has a gymnasium, classrooms for the adolescents, occupational therapy and activities therapy rooms, seclusion rooms in each patient care unit, dining room and outpatient areas. There are courtyards and a swimming pool, outside of the patient care areas. All of these areas play an important clinical role in the treatment of the psychiatric patients. For example, the gymnasium has a basketball and volleyball court and exercise equipment such as punching bags. These activities are useful for getting rid of aggression in socially acceptable ways, instead of through physical confrontations. The activities and occupational therapy rooms, including a greenhouse, provide opportunities for development of job and social skills. Harbour Shores is located in a pleasant, professional neighborhood, without security or crime problems that could hinder therapy of patients and the ability or willingness of family or others to visit and participate in therapy. Harbour Shores' relationship with Lawnwood Regional Medical Center provides benefits to the psychiatric patients who need medical services not normally offered in a psychiatric hospital. Harbour Shores is able to quickly transport a psychiatric patient to the acute care hospital for emergency room care, if necessary, or for diagnostic laboratory services. Harbour Shores and Lawnwood Regional Medical Center have a single medical staff, and a full array of medical specialists other than psychiatrists are available for consultation at Harbour Shores. Harbour Shores seeks to provide a full continuum of care to its psychiatric patients. This goal is accomplished by the provision at Harbour Shores of a full array of short-term inpatient psychiatric services and also outpatient services. Harbour Shores also has in place transfer agreements for when the psychiatric facility or the Lawnwood acute care hospital are not appropriate for a patient, including an agreement with HCA Medical Center of St. Lucie and Indian River Estates in Vero Beach, a nursing home. The typical adult patient coming to Harbour Shores generally goes through an admissions process first for screening to determine whether inpatient treatment, instead of outpatient care, is necessary. The patient and family are given an overview of the program, and then the patient is taken onto the unit where the initial nursing assessment is performed, usually by the charge nurse. The attending psychiatrist sees the patient within 24 hours of admission, and the preliminary treatment plan is formulated. That plan is revised in three days, based upon information gathered from the family and through observation and treatment. The treatment team who formulate the plan include the psychiatrist, who is in charge of the team, clinical social worker, unit coordinator, the charge nurse or attending nurse, psychologist and mental health technicians. Simultaneous with the formulation of treatment plans, the team formulates and revises the patient's discharge plan. After ten days, a master treatment plan is prepared, comprehensively addressing the patient's problem, changes in the previous treatment plan, discharge plan and follow-up care plan. After the patient is discharged, the psychiatrist will often follow up with the patient on an outpatient basis. Harbour Shores has in place a number of quality assurance monitoring techniques to ensure that it will maintain a high level of quality care for its patients and will improve its care where improvement is possible. Harbour Shores has an ongoing quality assurance committee, and subcommittees, that meet regularly to assess patient care. Harbour Shores has accepted and implemented the recommendations of its committees. There is also a less formal quality assurance mechanism called patient care monitoring, whereby any time a staff member feels that there is a patient care problem, he or she can call up the staff group responsible for that patient, together with a professional not involved in that case, for a review and resolution of the problem. Harbour Shores provides very good overall quality of care to its patients. Harbour Shores' quality care has been formally recognized through its achievement of Joint Commission on Accreditation of Healthcare Organizations (hereinafter "JCAHO") accreditation, a voluntary accreditation process based on many standards judged through formal surveys and information gathering. JCAHO accreditation is recognized as the standard in the industry. Harbour Shores has also been awarded membership in the National Association of Private Psychiatric Hospitals. Like JCAHO, it requires a facility to undergo a quality assurance survey. Becoming a member demonstrates a level of quality of a facility that is well-recognized in the industry. One result of the careful monitoring of patient care at Harbour Shores was the recognition early on in its operation that the general open adult unit was not serving the combined needs of higher functioning and intensive treatment patients in the most beneficial way possible. The difference between general short-term psychiatric care and intensive treatment in a psychiatric hospital can be analogized to the difference between an acute care hospital's general medical-surgical care and its critical care. Because of the extra care and monitoring required for the intensive treatment patients, they were consuming the open unit staff's attention to the detriment of the higher functioning patients, and they could also be disruptive and dangerous. The more acutely disturbed patients also tended to become more agitated with the higher levels of stimulation they experienced when they were mixed with higher functioning patients. Therefore, Harbour Shores began taking steps to follow the medical staff's recommendation to separate the two patient populations into distinct subunits. In April, 1986, Harbour Shores filed a certificate of need application seeking approval for an addition of 30 beds to its facility: twelve beds to accommodate a separate intensive treatment unit and eighteen beds for a geriatric unit. At the final hearing, Harbour Shores sought approval of only its 12-bed intensive treatment unit. Harbour Shores did not offer evidence at hearing to support the 18-bed geriatric unit. After submitting its application and before hearing, a period of 26 months, and while its certificate of need application was undergoing preliminary review and the administrative hearing process, Harbour Shores made stopgap changes to address, at least in part, the needs of its patients requiring intensive, critical care. Pursuant to a certificate of need exemption recognized by HRS in October, 1987, Harbour Shores added two patient therapy rooms and one activity room to serve an 8-bed area in which it placed intensive treatment patients. The CON exemption was awarded because the capital expenditure was below the threshold dollar amount that would trigger CON review, and no new beds were being added. That project was an interim measure to relieve immediate problems in treating intensive treatment patients at Harbour Shores, independent of this CON project, although Harbour Shores prudently designed that addition to be convertible to patient rooms in the future. Part of Harbour Shores' proposal under review in this case involves a conversion of the added space to patient rooms, which is why the project is now required to undergo CON review. The addition will continue to serve as non-patient rooms unless and until a CON is granted. The intensive treatment area that has been in operation since January, 1988, does not fully meet the needs of patients at Harbour Shores. While there is now some physical separation of patients and staff, it is not complete. Some of the remaining problems to be addressed include the need for a separate nurse's station, complete with charting area and secure medicine area, a separate seclusion room for the exclusive use of the intensive treatment patients, and direct access to and from the unit without passage through other units. Without a separate nurse's station, the staff cannot be exclusively focused on the intensive treatment unit, and there is incomplete separation of staff. Similarly, without its own seclusion room and direct access, the intensive treatment unit fails to achieve complete separation of patients. The intensive treatment patients now have to pass through the open adult unit to get to their unit and have to leave their unit if they are required to utilize the seclusion room which is on the general adult open unit. This is disruptive to both groups of patients. Utilization of Harbour Shores has been steadily growing since its opening in October, 1985. Harbour Shores has experienced the typical start-up phasing in of patients experienced by psychiatric hospitals. Thus, in 1986, when HRS reviewed utilization at Harbour Shores during 1985, it had only three months of data to consider, and the average utilization was 42 percent. Harbour Shores made progress in 1986, with an average utilization of 60 percent. In 1987, its adult unit achieved a 73.3 percent utilization rate, and it has been holding steady for the first five months of 1988. Harbour Shores has a reasonable expectation that utilization of its facility, especially with respect to intensive treatment services, will materially increase because of its recent designation as a private Baker Act receiving facility. The Baker Act, Part I of Ch. 394, Florida Statutes, is a legal procedure for involuntarily committing someone to a psychiatric facility for treatment. A psychiatric hospital must apply to and be approved by HRS before it can treat Baker Act patients. Designation of facilities to treat Baker Act patients is not a ministerial step, but rather, involves a lengthy application submission and site visit and survey by HRS. Baker Act patients are by definition involuntary, are generally more acutely sick than the voluntary patient, and are proportionately more in need of intensive treatment. HRS District 9 consists of a large geographic area, stretching from Sebastian to the north to Boca Raton to the south, with the Atlantic Ocean as the eastern boundary. District 9 is divided into two subdistricts: subdistrict 1 includes the four northern counties: Indian River, St. Lucie, Okeechobee and Martin; and subdistrict 2 is Palm Beach County. Subdistricts 1 and 2 function primarily as distinct, separate markets for short-term psychiatric care. Harbour Shores primarily serves patients from subdistrict 1, the four- county area surrounding the hospital--St. Lucie County, Indian River County to the north, Okeechobee County to the west and Martin County to the south. Harbour Shores is the only designated private Baker Act receiving facility in subdistrict 1, and it is the only facility with licensed inpatient short-term psychiatric beds that is authorized to treat Baker Act patients. The only other facility authorized to treat Baker Act patients in subdistrict 1 is the Indian River Community Mental Health Center (hereinafter "IRCMHC"), a public receiving facility. The IRCMHC received between 680 and 750 Baker Act patients in 1987. The IRCMHC is not licensed to provide short-term inpatient psychiatric services. It has 15 crisis stabilization beds, which do not serve the same needs as short-term inpatient psychiatric beds. Crisis stabilization beds provide a very short-term service, intended to stabilize emergency patients who are then referred to appropriate facilities. The average length of stay is typically less than one week. The IRCMHC is not a reasonable alternative to provide all needed psychiatric services to Baker Act and other patients, in part because of the limited services that can be provided in crisis stabilization beds, and also in part because the Center is not in very good condition and is in a poor part of Fort Pierce, known for its crime and security problems. When patients or their families have a choice of facilities, it can be reasonably expected that they would choose Harbour Shores. The physical environment of a psychiatric facility plays a role in the patient's therapy, and the Harbour Shores environment is preferable. Until shortly before hearing, another psychiatric hospital in subdistrict 1, the Savannas Hospital, was treating Baker Act patients by referral from the IRCMHC with which it is affiliated, perhaps as many as 5500 patient days in 1987. However, in late May, 1988, the IRCMHC was notified by HRS to cease and desist from referring patients to the Savannas because the Savannas was not approved to serve Baker Act patients; instead, those patients were to be referred to Harbour Shores. Harbour Shores has a working relationship with the IRCMHC, and they receive and give referrals back and forth. As the only authorized Baker Act inpatient psychiatric facility in subdistrict 1, Harbour Shores can reasonably expect to serve those Baker Act patients who were being improperly referred to the Savannas. Harbour Shores' good start-up utilization of its eight intensive treatment beds of nearly 70 percent for the first five months of 1988 indicates the need for those eight beds, with the impact of the Baker Act population first beginning to be realized. Realization of the full Baker Act patient load would overload the intensive treatment unit. If Harbour Shores captures only 50 percent of the subdistrict 1 Baker Act patient market as reflected by the IRCMHC's 1987 patient days, assuming no growth of Harbour Shores' 1987 adult patient census, it would achieve an adult average daily census of approximately 39.8 in the adult (including the intensive treatment) unit, while it currently only has 36 beds. Comparing the quality of Harbour Shores with the IRCMHC, Harbour Shores could capture as much as 80-90 percent of the area's Baker Act patients. Using a conservative 50 percent Baker Act patient projection and projecting no growth of the current adult patient census, Dr. Luke, an expert in health planning and design and operation of mental health programs, projected a need for 47 adult beds with an 85 percent occupancy rate, or 50 beds with an 80 percent occupancy rate. Increased utilization of an expanded intensive treatment unit will also have a secondary impact of increased utilization of the rest of the Harbour Shores facility. Often, patients who are admitted to the intensive treatment unit will progress to a point where they qualify as higher functioning patients appropriate for transfer to the open unit. Establishment of a 12-bed intensive treatment unit that will be highly utilized should also increase utilization of the other 36 adult beds. While it is physically possible for Harbour Shores to put the 12-bed intensive treatment unit in place without adding any new beds, that would not be feasible because it would reduce the number of beds in the rest of the adult unit. With the reasonable expectation that Harbour Shores would achieve increased utilization of its whole expanded facility with approval of this project, and reasonably utilize 48 adult beds, it would be most efficient for Harbour Shores to add beds while it is renovating the facility anyway for the intensive treatment unit so as to avoid piecemeal, disruptive construction projects. Approval of the expansion project will allow Harbour Shores to provide a higher level of quality care through better segregation of the different patient groups and will also allow for accommodation of the reasonably expected utilization of intensive treatment and general adult psychiatric services. Harbour Shores has demonstrated that there is a need for its expansion project because of its unique position in subdistrict 1 as a Baker Act patient provider, the lack of alternatives for those patients, and the tendency of that patient group to need intensive treatment. Patients in the Harbour Shores service area will experience serious problems obtaining inpatient care of the type proposed by Harbour Shores in the absence of the proposed project. Subdistrict 2, Palm Beach County, has been demonstrated to be a geographically distant, separate market for short-term psychiatric services and is not an appropriate alternative for patients in subdistrict 1 needing short-term, especially intensive, psychiatric services, in light of the state health plan's goal of community-based mental health services. In addition to the special circumstance of need demonstrated at Harbour Shores, need for the additional beds is supported by the general need methodologies applied by HRS in its bed need rule for short-term inpatient psychiatric beds, Rule 10-5.011(1)(o), Florida Administrative Code, and by the local health council for HRS District 9 in its local health plan. The HRS rule methodology calculates the need for short-term psychiatric beds in an HRS district by applying a formula of .35 beds per 1,000 population projected five years into the future. Since the applications were filed in April, 1986, in its preliminary review HRS looked to the most recent population projections issued in January, 1986, for five years into the future, January, 1991. The January, 1986, District 9 population projection for January, 1991, was 1,235,361, and .35/1,000 yielded a gross need of 432 beds. Licensed and approved short-term psychiatric beds at the time of application submittal according to HRS totaled 404 beds, yielding a net bed need for the district of 28 beds. Some relevant facts external to the certificate of need applications at issue in this proceeding have changed since the applications were submitted and should be taken into account. One such fact is the more recent population projection issued for the January, 1991, planning horizon, released by the state in January, 1988. The revised District 9 population projection is 1,274,865, increasing the district bed need by 14. Another external change involves an HRS settlement with an existing provider in subdistrict 2, JFK Hospital. This settlement recognized the historic use of beds at JFK in a manner different from their licensed designation; rather than 36 short-term psychiatric beds as licensed, JFK had for many years been utilizing 22 of those beds as substance abuse beds, a different HRS bed category, and only 14 beds as short-term psychiatric beds. The HRS final order agreeing to change JFK's license to align it with JFK's actual usage was issued in March, 1988. It is, however, appropriate to correct the HRS inventory in this case to recognize the actual use of beds since by 1984, well before the applications at issue in this case were filed, HRS knew that JFK was using 22 of its 36 short-term psychiatric beds for substance abuse treatment and that those 22 beds should not be carried in the short-term psychiatric bed inventory. Additional adjustments to correct the inventory are appropriate. The Savannas Hospital's certificate of need generally indicates 70 short-term psychiatric beds; its license shows 50 short-term psychiatric beds and 20 substance abuse beds. The HRS inventory reflects the licensed bed breakdown. However, the Savannas has been reporting to the local health council that it has actually been operating only 40 short-term psychiatric beds and 30 substance abuse beds. Therefore, 10 additional beds should be subtracted from the short-term psychiatric bed inventory. There have also been questions about another District 9 facility's bed use. The average length of stay for 26 of Lake Hospital's short-term psychiatric beds is reported by Lake Hospital to be between 250 and 300 days, by definition not short-term beds. HRS admits that its inventory of beds for District 9 is not as reliable as one would hope (or expect). By making the first two adjustments (the original HRS calculation plus the JFK correction plus use of the updated population projections) to the HRS calculations, the total District 9 bed need is 64. By making all of the foregoing adjustments (the original HRS calculation plus the JFK correction plus use of the updated population projections plus the Savannas correction plus the Lake Hospital correction) to the HRS calculations, the total District 9 bed need is 100. There is no statute, and HRS has no rule or policy regulating how beds should be allocated between subdistricts. The 1985 local health plan, as updated in 1986, recommended that the district bed need be allocated between the two subdistricts in proportion to their population, i.e., .35 beds per 1,000 population projected for each subdistrict. After these applications were filed and deemed complete, the local health council approved its 1987 local health plan, in July, 1987. This new plan changed the recommended subdistrict allocation from the population-based method to a new utilization-based method. The utilization method seeks to equalize bed use in the two subdistricts in the future by applying historic utilization of existing beds to future population projections and assumes that the use pattern in each subdistrict will remain the same. In 1987, there were no more than two short-term inpatient psychiatric providers at any one time in subdistrict 1. The IRCMHC had been operating 15 inpatient psychiatric beds at capacity for some time, showing a 106.83 occupancy rate for 1986; Harbour Shores was in its second year of operation; and the Savannas Hospital first opened in March, 1987, when it began operating the 15 beds that were transferred to it from the IRCMHC and then phased in the rest of its seventy beds during the year. Essentially all of the short-term psychiatric beds in subdistrict 1, then, were in a start-up phase, utilized less than they would naturally be after a normal period of operation. Given the start-up nature of the subdistrict 1 facilities, and the corresponding 40 percent difference in use rate between subdistricts 1 and 2, it is reasonable to infer that the 1987 use rate for subdistrict 1 is artificially low, reflecting the historic forced outmigration of subdistrict 1 patients due to lack of nearby providers. The only other theory for the dramatic difference in use rates in the two subdistricts, offered by St. Mary's need witness--that subdistrict 2's population is more elderly--is rejected. No evidence was presented to substantiate that a more elderly population has a higher use rate of psychiatric services. The subdistrict allocation method in the 1987 health plan should not be applied in this case based on sound health planning principles of not changing the criteria in the middle of the application process. Further, although the new methodology might in theory be a better measure of local needs by addressing actual use patterns, in this particular case, for the data base year of 1987, the methodology is inappropriate and would perpetuate disproportionate allocation between the subdistricts. Although it is HRS's position that the 1985 local health plan (as updated in 1986) is the version that should be applied in this case, the 1985 plan should not be applied either. The plan itself states that its allocation methodology is weak at best and must be revised. Further, the Executive Director, testifying on behalf of the District 9 Health Council, stated that the 1985 allocation methodology should not be used in this case. Accordingly, no subdistrict allocation is appropriate in this case. At final hearing, Harbour Shores presented updated financial projections--pro forma statement of revenue and expenses, utilization projections, payor mix, charges and manpower salary requirements--to account for the passage of time from initial application submission and to address only the 12-bed portion of the original application for which approval is sought. The financial projections constitute an identifiable portion of the original projections, appropriately updated to take into account only factors external to the application. The financial projections provide a reasonable basis upon which to assess the financial feasibility of the proposed expansion project, and Harbour Shores has adequately demonstrated that the 12-bed expansion proposal would be financially feasible. Additionally, the parties have stipulated that Harbour Shores has the resources to fund the project and its operation if it is approved. The project cost, as updated with revised construction cost estimates, is $1,079,165. Projected utilization of the 12-bed unit is reasonable and conservative in light of the reasonable expectation of Baker Act patients who will use the intensive treatment unit. With the 12-bed expansion, Harbour Shores should easily achieve and exceed 70 percent utilization by the second year of operating a 72-bed facility, and 80 percent utilization by the third year. A reasonable projection from existing adult use and expected Baker Act utilization would be an adult average daily census of 39.8; an 80 percent facility-wide utilization would result with a minor increase in adolescent average daily census from 14.8 in 1987 to 17.8, or an adult increase in utilization. The projected charges for the intensive treatment unit, while higher than charges for general psychiatric units, are reasonable in light of the higher level of service provided in the unit, including more staff. The reasonableness of the charge is confirmed by the fact that the projected charge is the same as the Harbour Shores current charge that it is receiving for its intensive care services, i.e., $680. The projected patient mix by payor class is reasonable and reflective of the facility's actual experience. Harbour Shores includes a projection of 15 percent Medicaid patient days and 2 percent indigent days. The indigent care projection is reflective of true charity care, meaning those patients who present themselves for treatment with no means of pay. Harbour Shores has historically proven its commitment to providing care to medically indigent patients. Harbour Shores reasonably projects that it will serve a substantial percentage of those patients in its intensive treatment unit. Projected manpower for the 12-bed unit will well-serve the needs of the intensive treatment patients, and Harbour Shores should have no difficulty recruiting and securing the projected needed staff at the indicated salary levels. The projected salaries are reasonable and consistent with Harbour Shores' experience. The pro forma statement of revenues and expenses, taking into account the projected utilization, payor class breakdown and projected charges on the revenue side, and manpower salary requirements, depreciation and other expenses attributable to the 12-bed expansion, is a reasonable projection based on the facility's actual experience and future expectations; is a reasonable summary of the expected direct financial impact of the 12-bed expansion, and shows that the expansion project will be financially feasible. Additional financial benefits may accrue as a result of the secondary increase of utilization of the existing beds. The proposed 12-bed expansion project will include some new construction to create an expanded facility that will be appropriate from an architectural standpoint for the treatment of psychiatric patients, including intensive treatment patients. The construction plan is an identifiable portion of the plan presented in the original application. The only changes to the original plan are the deletion of the new geriatric wing and a change from new construction to renovation for the new patient therapy wing constructed in 1987 pursuant to a CON exemption. The construction changes necessary to accommodate the 12-bed intensive treatment unit include renovation of the central core of the facility where the classrooms are currently located for the addition of a nurse's station, creation of an entrance directly onto the unit from the central patient control corridor, creation of a charting and medicine work area directly on the unit, and installation of a separate group therapy room and a seclusion room dedicated to the intensive treatment patients. The project will also include construction of a new classroom building, required by the displacement of the existing classroom space. Construction costs for the 12-bed expansion project have been updated to reflect expected 1989 costs. Harbour Shores reasonably projects those costs to be $628,466. Expending these costs will enable Harbour Shores to complete its project in a manner that will exceed minimum licensure standards in Chapter 10D-28, Florida Administrative Code, and will fall in the upper quadrant of construction quality typical in the industry. Rule 10-5.08, Florida Administrative Code, as it existed when the letters of intent and applications were due for the batching cycle at issue in this case, established an application filing deadline of April 15, 1986, and an initial letter of intent deadline of 30 days before the application deadline, or March 16, 1986. However, paragraph (e) provided that where the ... initial letter of intent for a specific type of project has been filed with the department less than 38 days prior to the appropriate application filing due date ... a grace period shall be established to provide an opportunity for a competing applicant to file a letter of intent. The grace period, where applicable, allows letters of intent to be filed up to 16 days prior to the application due date. In this case, if a grace period were applicable the deadline for letters of intent would be March 31, 1986. Harbour Shores filed its letter of intent on March 28, 1986, and St. Mary's filed its letter of intent on March 27, 1986. Bethesda has raised the issue of whether Harbour Shores' and St. Mary's letters of intent were timely filed. Only one letter of intent related to an application that was included by HRS in the group of applications considered in the State Agency Action Report was filed with HRS 38 days or more before the application due date--the letter of intent filed by Martin Memorial Hospital. That letter of intent states that it is for 22 "short-term psychiatric/substance abuse" beds. There is no such combined category of beds. According to the State Agency Action Report, Martin Memorial's application was in fact for 22 substance abuse beds. As such, it was not a competing applicant with Harbour Shores or St. Mary's or Bethesda, and all other letters of intent were filed less than 38 days before the application due date. Accordingly, Harbour Shores' and St. Mary's letters of intent were timely filed. Bethesda filed its application with HRS on April 15, 1986. Bethesda filed its response to the HRS letter of omission on June 30, 1986, and HRS deemed Bethesda's application complete effective June 30, 1986. By letter dated July 18, 1986, received by HRS prior to the August 6, 1986, public hearing, Bethesda submitted additional information reflecting its intent to utilize and renovate existing space in its hospital instead of utilizing construction of a new wing for its psychiatric unit, as originally proposed. These three submissions constitute Bethesda's application reviewed by HRS in the State Agency Action Report. Bethesda's certificate of need application is for a 20-bed adult short-term inpatient psychiatric unit at Bethesda Memorial Hospital. Bethesda proposes to convert 20 existing licensed medical/surgical beds to short-term inpatient psychiatric beds. The beds will be placed in existing space, and there will be no new construction of space. Bethesda is a 362-bed community medical/surgical hospital licensed as a general hospital. It is a not-for-profit hospital and has served the southern portion of Palm Beach County for almost 30 years. It is accredited by the JCAHO. Bethesda has recognized from its beginning that the entire population of its service area needed to be served without regard to financial ability to pay, and the ability to pay is not a primary concern of the hospital when a patient is first admitted. The evidence is undisputed that Bethesda is committed to and provides excellent quality of care and will continue to provide excellent quality of care in the proposed psychiatric unit. The St. Mary's application seeks to place short-term psychiatric beds on a campus in the northern half of Palm Beach County, in West Palm Beach, and Bethesda Memorial Hospital is located in southern Palm Beach County, in Boynton Beach. Bethesda is the only applicant that proposes to convert underutilized medical/surgical beds into 20 short-term psychiatric beds. This factor significantly distinguishes Bethesda's proposal from that of the other applicants because there have been unused medical/surgical beds in Palm Beach County for approximately the last two years. Bethesda's proposal would take some of those unused resources and put them to more efficient and appropriate use. Historically, Bethesda has been recognized as a cost-effective hospital, not only in Palm Beach County, but throughout the State. Bethesda's projected charge per patient day, including ancillaries, is $349. This charge is reasonable. Bethesda proposes a rate significantly lower than any other applicant, making Bethesda's proposal more cost effective and competitive for patients. Bethesda's original proposed project cost was $85,000. That project cost has been updated to $88,100. This update was required primarily because of changes in the proposed floor plan necessitated by new licensure requirements imposed by HRS in Rule 10D-28.0816 adopted January 16, 1987, after the filing of Bethesda's application. The $3,100 increase in the total project cost is not a substantial change in the application. The proposed construction cost of Bethesda for renovation of $37,100 is a reasonable estimate. The movable equipment cost is a reasonable estimate. The project development cost of $20,000 is reasonable. In terms of project cost, the Bethesda application is significantly more cost effective than the St. Mary's application. The St. Mary's proposed project cost for 30 beds is $1,457,150. That is the equivalent of $48,571.67 per bed, contrasted against Bethesda's project cost of $4,405 per bed. Bethesda's project cost is also considerably lower than that of Harbour Shores. The schematic floor plan of Bethesda's proposed unit was updated due to the HRS adoption of the licensure minimum standards, which were not in existence at the time of the original application and, therefore, the original schematic did not comply with those standards. In fact, there is no significant physical difference between the updated schematic and that contained in the original application. Indeed, the space already exists in essentially the same configuration as that proposed and was in existence at the time of the filing of Bethesda's application. The proposed unit can reasonably be expected to meet licensure requirements. The Committee on Health Facilities Construction of the American Institute of Architects has set standards for the design of psychiatric facilities. They are acceptable, reasonable standards. Those standards prescribe one seclusion room for 24 beds or major fraction thereof. Bethesda's proposed facility complies with that standard. HRS has no standard for seclusion rooms. From the perspective of a practicing psychiatrist, the existing Bethesda facility with the proposed modifications meets the requirements for a facility for use in the treatment of inpatient psychiatric patients quite well. It is likely that psychiatrists in the general area surrounding Bethesda will seek to admit patients to the unit when it is in place. In addition, it is reasonable to assume that Bethesda Memorial Hospital itself will be a referral source to its psychiatric unit. The evidence also establishes that the South County Mental Health Center, Inc., a community mental health center, will be a significant referral source of patients to Bethesda's psychiatric unit. Bethesda has sufficient funds committed to cover the cost of its proposed project. The Southeast Palm Beach County Hospital District has already committed and approved $85,000 in capital expenditure funds for Bethesda's project. Bethesda has sufficient operating funds to provide the remaining $3,100. Indeed, Bethesda has sufficient operating funds to fund the entire project out of operating funds, if necessary. The Southeast Palm Beach County Hospital District has historically not used ad valorem tax revenues to subsidize the operations of Bethesda. Funds generated by the District have been used primarily for capital expenditures for Bethesda. Bethesda does not anticipate receiving any operational revenues from the Southeast Palm Beach County Hospital District for patients that might be eligible or meet some criteria established by the District for reimbursement. The projected utilization by class of pay, or payor mix, is consistent with the payor mix at Bethesda Memorial Hospital. It is reasonable to expect that the payor mix in the proposed psychiatric unit will be reflective of the payor mix at Bethesda. It was necessary for Bethesda to update its projected payor mix because the original projection reflected the 1986 payor mix of Bethesda and, primarily as a result of the extrinsic circumstance of the prospective pricing system, there has been a dramatic change in payor mix at Bethesda. Bethesda's projections include a category entitled "Baker Act/Medicaid." This category has combined Medicaid patients and those patients who would otherwise qualify as Baker Act patients who are indigent based upon their ability to pay. In the 7.7 percent for the "Baker Act/Medicaid" category, there is included 1.2 percent for indigent patients without any source of funds. It is reasonable to project that the Bethesda psychiatric unit will operate at 70 percent occupancy for the first year and 80 percent occupancy for the second year and beyond. The manpower requirements projected by Bethesda are sufficient to properly staff the proposed psychiatric unit. Bethesda has projected reasonable annual salaries. It is very likely that Bethesda will be able to recruit necessary manpower to staff its proposed facility. It was necessary for Bethesda to update its manpower requirements from these contained in its original application because of a management agreement entered into between Bethesda and Mental Health Management, Inc., on May 5, 1988. The updated manpower requirements reflect the staffing standard to be implemented by Mental Health Management, Inc., pursuant to the management agreement and the proposed treatment program. Mental Health Management, Inc., is a health care management firm that owns psychiatric and substance abuse hospitals as well as manages psychiatric and substance abuse hospital programs for client hospitals. It is a reputable and experienced management firm. No significant work, if any, was done on behalf of Bethesda by Mental Health Management, Inc., with regard to this project prior to the date of the management agreement. Bethesda's project completion forecast is reasonable. Bethesda is financially a healthy, viable institution. It is reasonable for Bethesda to project gross patient revenues in its first year of $1,783,390 and in its second year of $2,038,160. Further, it is reasonable after considering deductions from revenue for Bethesda to project net revenue in its first year of operation of $1,392,186 and in its second year of operation of $1,591,069. Bethesda has reasonably projected that its total expenses in the first year of operation will be $1,286,090 and in the second year of operation will be $1,379,362. The net result is that in the first year of operation there will be projected incremental revenue over expenses of $106,096 and in the second year of operation, incremental revenue over expenses of $211,707. In both the short term and long term, the psychiatric unit proposed by Bethesda is financially feasible. South County Mental Health Center, Inc., a community mental health center, has had a successful working relationship with Bethesda since approximately 1974. It has been a positive relationship and one which should continue with the inception of a psychiatric unit at Bethesda. Indeed, the only problem that has existed between South County Mental Health Center, Inc., and Bethesda is the lack of a psychiatric unit at Bethesda. South County Mental Health Center, Inc., presently has many patients that are not being referred for psychiatric care because there is no facility that will take them. Bethesda would, at least in part, remedy that problem. South County Mental Health Center, Inc., would primarily utilize Bethesda instead of St. Mary's because St. Mary's is in the northern part of Palm Beach County and the Center is in the southern part as is Bethesda, although it would also utilize St. Mary's. There is presently no written agreement between Bethesda and South County Mental Health Center, Inc. However, this would not be a hindrance to a relationship between Bethesda and the Center because the Center presently has no written contracts with any providers and does not anticipate any working relationship being contingent on a written contract. The service area of Bethesda Memorial Hospital includes from Southern Boulevard in Palm Beach County on the north to the Broward County line on the south, the Atlantic Ocean on the east and State Road 7 on the west. Bethesda's proposed project is consistent with the 1985, 1986 and the 1987 local District 9 health plans. The HRS rules governing amendment of applications in effect at the time the applications in this cause were filed allowed the submission of additional information without copying other applicants. HRS accepted Bethesda's July 18, 1986, application amendment letter and reviewed it as part of Bethesda's original application in its initial decision making set forth in the State Agency Action Report. HRS has never required applicants to submit copies of their applications or any supplemental or amendatory information to other applicants after the completion date but prior to the public hearing on those applications. No applicant was prejudiced by the information submitted by Bethesda to HRS in July of 1986. Indeed, the information was published at the public hearing held by HRS on August 6, 1986. All applicants knew or should have known at least by August 6 that Bethesda had changed its application to reflect use of existing space for its psychiatric unit instead of use of new construction. Yet, no applicant took any action in response to this information, even though a decision was not rendered by HRS in review of the applications until September 23, 1986, and any applicant could have changed its application up to five days prior to September 23, 1986. The changes submitted by Bethesda did not change the scope of its application. The amendment did not change the type of beds sought, the number of beds sought, the service area for those beds, the conversion of unused medical/surgical beds to psychiatric beds, or any other matter of substance. Rather, with everything else remaining essentially constant, Bethesda merely stated its intent to place the proposed unit in existing underutilized space at a cost of $85,000 instead of constructing new space at a cost of $1,391,165. Such a change is not of such a substantial nature as to improperly prejudice other applicants. There is a lack of availability in District 9 of other inpatient psychiatric services such as crisis stabilization units, short-term residential treatment programs and other inpatient beds whether licensed as a hospital facility or not. Bethesda will be linked with South County Mental Health Center, Inc., as well as practicing psychiatrists, for the provision of outpatient services. For fiscal year 1986, Bethesda gave $2,247,047 in charity care. That was 4.2 percent of its gross patient revenue for the year. In 1987, Bethesda increased its charity care to $3,615,324 which was 5.2 percent of its gross patient revenue. In fiscal 1986, St. Mary's provided $3,211,021 in charity which was 3.7 percent of its gross patient revenue. In 1987, St. Mary's provided $3,404,820 in charity care which was 3.8 percent of its gross patient revenue. As a function of percentage of gross patient revenue, Bethesda for fiscal years 1986 and 1987, provided more charity care than St. Mary' s. The average net operating revenue per adjusted admission for fiscal years 1986 and 1987, for St. Mary's was $3,120. The average net revenue per adjusted admission for the same time period for Bethesda was $3,089.50. Thus, it appears that for the years 1986 and 1987, St. Mary's effective charges for patient operations were slightly higher than Bethesda's. St. Mary's Hospital, Inc., is a 358-bed nonprofit acute care hospital located in West Palm Beach, Florida. The hospital is a wholly-owned subsidiary of St. Mary's Medical Center, Inc., which is owned by the Franciscan Sisters of Allegheny. The Franciscan mission is to provide quality health services to everyone, with a special emphasis on serving the poor and the disadvantaged. St. Mary's has been providing acute care to the medically indigent and traditionally underserved in Palm Beach County since 1938. St. Mary's contracts with the Palm Beach County Health Department to provide Palm Beach County with acute care services for the medically indigent, from prenatal to adults. Historically, St. Mary's has been the most heavily utilized hospital in the West Palm Beach area. St. Mary's has the largest market share of any hospital and serves Medicaid, uncompensated, and partially compensated patients in the area. St. Mary's has not, however, certified or committed to the provision of any specific percentage of care for Medicaid or indigent patients in this application. St. Mary's admits and treats an increasing number of AIDS patients. Because of the need to isolate AIDS patients and because of the number of indigent patients that St. Mary's treats, St. Mary's often does not have beds available for private pay patients. During the peak season, St. Mary's is unable to admit some private pay patients and must physically turn them away. Because of St. Mary's reduced ability to admit private pay patients, St. Nary's does not have a broad-based revenue source with which to cross-subsidize the cost of providing care to indigent patients. The 45th Street Mental Health Center is a not-for-profit corporation located in West Palm Beach which provides a full range of adult and older adult psychiatric services, serving primarily the indigent population. The 45th Street Center is a designated Baker Act receiving facility and, as such, it provides services without regard to the ability to pay. St. Mary's has a long-standing working relationship with the 45th Street Center and is a contracting service to the 45th Street Center. St. Mary's staff evaluates patients at both the 45th Street Center and at the St. Mary's emergency room. St. Mary's and the 45th Street Center provide referrals to each other and transfer patients between the two facilities. From 50 to 75 patients are referred from the 45th Street Mental Health Center each month to St. Mary's for medical clearance. An organized system of follow-up care exists for patients who are seen at both St. Mary's and the 45th Street Center. System protocol agreements exist between the two facilities. These agreements define the information that will be exchanged at a given clinical juncture and set forth procedures to ensure that all necessary medical and psychiatric follow-up care will take place. The demand for indigent care has become so large in the last several years that indigent patients typically occupy all of the available bed capacity at the 45th Street Center. Because it is usually fully occupied, the Center cannot always be responsive to a request from St. Mary's to accommodate psychiatric patients. In March, 1988, the 45th Street Center turned away 51 people who were in need of psychiatric treatment but for whom there were no available beds. St. Mary's filed its application for 30 short-term psychiatric beds in April, 1986. St. Mary's application was submitted by St. Mary's Hospital, Inc. The cover page of the application and the HRS CON remittance form clearly indicate that the applicant is St. Mary's Hospital, Inc. The letter from HRS to St. Mary's requesting responses to certain omissions from the application is addressed to St. Mary's Hospital, Inc., and was completed and returned by St. Mary's Hospital, Inc. The Board of Trustees of St. Mary's Hospital, Inc., adopted a Resolution authorizing the filing of the CON application by St. Mary's Hospital, Inc. The Resolution is signed by the Assistant Secretary of St. Mary's Hospital, Inc. The certification page at the end of St. Mary's application is signed by John Fidler, President of St. Mary's Hospital, Inc. Prior to submitting its CON application, St. Mary's considered converting some of its existing medical/surgical beds to short-term psychiatric beds, rather than engage in new construction. The cost of renovations, together with the compromises which would exist in the recreational and programmatic areas needed for psychiatric treatment, resulted in St. Mary's decision that it would be more appropriate to build a separate psychiatric pavilion than to convert existing medical/surgical beds to psychiatric beds. The psychiatric pavilion will not be a free-standing facility. The full services of St. Mary's acute care hospital will be available to the patients in the psychiatric unit. A continuum of care will be provided to the psychiatric patients through the use of St. Mary's existing psychiatrists, social workers, recreational therapists, psychologists, and other related therapy and support personnel. Clinical support personnel will be available to address the psycho-social problems of patients in the psychiatric unit. The psychiatric unit would be a distinct unit for reimbursement purposes, but would be licensed under St. Mary's hospital license. St. Mary's proposed psychiatric unit will use the existing food services at St. Mary's and will not require the construction of a new kitchen. The existing kitchen at St. Mary's is immediately adjacent to the planned psychiatric unit. The existing kitchen and food preparation area is currently operating at only 40 to 60 percent of capacity and is adequate for the proposed psychiatric unit. St. Mary's offers a full range of dietary products and specialized menus. The existing laundry facility at St. Mary's has sufficient capacity to support the planned psychiatric unit. St. Mary's submitted updated information at the Final Hearing relating to its original application for 30 short-term psychiatric beds. Several factors contributed to St. Mary's decision to update its original application. When the original application was prepared in April, 1986, St. Mary's had a CON application pending before HRS for a 20-bed rehabilitation unit. St. Mary's received approval from HRS for a 20-bed rehabilitation unit after the filing of this application. A portion of the existing emergency room space at St. Mary's intended for use by the psychiatric pavilion will be used as part of the 20-bed rehabilitation unit. Another factor was the promulgation of the new HRS minimum standards rule, which requires the addition of several service areas not required when St. Mary's submitted its original application. The new HRS rule requires a separate head nurse's office, separate charting areas, and more square footage in the activity areas. In addition, the new rule requires a second occupational therapy area, natural light in the seclusion rooms, and requires public toilets to be handicapped accessible. Because of the nature of St. Mary's original schematic, it was impossible to add square footage to the design, and St. Mary's therefore developed a new schematic to incorporate the various changes required by the new HRS rule and by the new rehabilitation unit. The JCAHO standards for hospital design specifically address the issue of having non-institutional architectural design in psychiatric units. The design of a psychiatric facility has a very definite affect on the patterns of behavior of psychiatric patients. The updated architectural schematic contained in St. Mary's application is highly conducive and therapeutically appropriate to a psychiatric program. The St. Mary's schematic is non- institutional in design and has a number of open spaces and clear vistas, with immediate access to outdoor recreational areas. St. Mary's proposal is designed to provide security surveillance of the exits while at the same time providing privacy for personal interaction between patients and staff. The more vistas and the more access to sunlight and open spaces a facility has, the less likely it is that systemic institutional responses and behavior will be produced. The enclosed open courtyard contemplated in the St. Mary's design has the advantage of providing open space while also providing a high level of security. The proposal by St. Mary's would be in substantial compliance with the JCAHO standards of providing a therapeutic environment. The proposed construction costs for St. Mary's psychiatric unit will be $85 per square foot. These costs are reasonable for the type of construction and design proposed by St. Mary' s. The staffing proposed by St. Mary's is sufficient to operate a 30-bed short-term psychiatric unit and is sufficient to address the clinical needs of the projected patient population. St. Mary's proposed admissions policy, clinical elements, and psychiatric program are appropriate for the treatment of psychiatric patients. St. Mary's proposed gero-psychiatric program is a logical extension of the services currently being provided by the 45th Street Mental Health Center. The Center has a geriatric residential treatment service, funded by the Legislature and HRS, which serves a relatively high percentage of gero- psychiatric patients. Many of the patients at the 45th Street Center have both psychiatric conditions and medical complications, and the St. Mary's psychiatric unit would be available for patients discharged from the 45th Street Center. The South County Mental Health Center, located 30 minutes from St. Mary's, will be willing to use St. Mary's proposed psychiatric unit. The total cost of St. Mary's proposal is $1,457,150. St. Mary's has a Foundation responsible for raising money for the various St. Mary's corporations. The present donated Foundation Fund balance as of April, 1988, is $12,486,566. Of the Fund balance, approximately $1.9 million is unrestricted and is available to construct the proposed 30-bed short-term psychiatric unit. St. Mary's proposes a per diem patient charge of $368 per day for the first year of operation and $398 per day for the second year of operation. This is an increase from the patient charges contained in St. Mary's original application, but the increase is attributable to the fact that salary levels at both St. Mary's and in the hospital industry as a whole have increased over the last several years. St. Mary's projects ancillary charges of $70.72 per day for the first year of operation and $76.51 per day for the second year of operation. The proposed room rates for St. Mary's are reasonable based on a market survey of room rates in the Palm Beach County area. The St. Mary's proposal is financially feasible on a long-term basis because there are adequate revenues to cover operating expenses. St. Mary's will assure high quality of care at its proposed 30-bed psychiatric unit through the existing medical information system at St. Mary's. The medical information system coordinates quality assurance, medical records, utilization, and medical staff office functions. With the system, all patient records at St. Mary's are screened on a daily basis against set indicators of care. If certain criteria are met, that patient record is automatically referred to an Evaluation Committee. There are four separate Evaluation Committees at St. Mary's, each composed of physicians who conduct peer review. The recommendation of the Evaluation Committee is forwarded to the Medical Executive Committee, which has the authority to act based upon the recommendation of the Evaluation Committee. The patient record review process at St. Mary's is part of a quality assurance umbrella, which includes infection control, utilization review, and discharge planning. The purpose of utilization review is to determine whether a given patient should be receiving the level of care being provided or if a lesser level of care could be provided on a more cost-effective basis. The quality assurance utilization review at St. Mary's is approved by the JCAHO.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a Final Order be entered: Granting Harbour Shores' application for a certificate of need for 12 short-term psychiatric beds; Granting Bethesda's application for a certificate of need for 20 short-term psychiatric beds; and Granting St. Mary's application for a certificate of need for 30 short-term psychiatric beds. DONE and RECOMMENDED this 7th day of October, 1988, at Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1988. APPENDIX TO RECOMMENDED ORDER CASE NOS. 86-4354, 86-4356, 86-4358 Harbour Shores' proposed findings of fact numbered 1-42, and 44-55 have been adopted either verbatim or in substance in this Recommended Order. Harbour Shores' proposed findings of fact numbered 43, 56, 57, and 58 have been rejected as being unnecessary for determination of the issues in this proceeding. Bethesda's proposed findings of fact numbered 1-4, 6-30, 32-47, 49, 51, 52, 64, 66, 69-71, 73-75, 78, and 83 have been adopted either verbatim or in substance in this Recommended Order. Bethesda's proposed findings of fact numbered 48, 67, 76, and 77 have been rejected as being unnecessary for determination of the issues in this proceeding. Bethesda's proposed findings of fact numbered 5, 54, 63, and 65 have been rejected as being contrary to the weight of the totality of credible evidence in this cause. Bethesda's proposed findings of fact numbered 31, 50, 53, 55-62, 68, 72, and 80-82 have been rejected as not constituting findings of fact but rather as constituting argument of counsel or conclusions of law. Bethesda's proposed finding of fact numbered 79 has been rejected as not being supported by the weight of the evidence in this cause. St. Mary's proposed findings of fact numbered 1-3, 5-29, 34, 36-38, and 40-53 have been adopted either verbatim or in substance in this Recommended Order. St. Mary's proposed findings of fact numbered 4, 30, 35, 39, 54, and 55 have been rejected as not being supported by the weight of the evidence in this cause. St. Mary's proposed findings of fact numbered 31-33 have been rejected as being unnecessary for determination of the issues in this proceeding. HRS' proposed findings of fact numbered 1, 2, 4, 6-9, 12-15, 20-22, 24, 32-34, 36-43, 45-48, 50-56, 59, 65, 67, 78-81, 85, 89, 99, and 101 have been adopted either verbatim or in substance in this Recommended Order. HRS' proposed findings of fact numbered 3, 17-19, 35, 57, 58, and 62- 64 have been rejected as being unnecessary for determination of the issues in this proceeding. HRS' proposed findings of fact numbered 5, 10, 11, 44, 49, 72, 74-77, 82-84, 95-97, 100, and 104 have been rejected as being subordinate to the issues in this proceeding. HRS' proposed findings of fact numbered 16, 23, 25, 28, 29, 31, 66, 69-71, 73, 90, and 103 have been rejected as being contrary to the weight of the evidence in this cause. HRS' proposed findings of fact numbered 26, 27, 30, 60, 61, and 86-88 have been rejected as not being supported by the weight of the evidence in this cause. HRS' proposed findings of fact numbered 68, and 91-93 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. HRS' proposed findings of fact numbered 94, 98, and 102 have been rejected as being irrelevant to the issues under consideration herein. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Robert D. Newell, Jr., Esquire Thomas W. Stahl, Esquire 102 South Monroe Street Tallahassee, Florida 32301 Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Chris H. Bentley, Esquire 2544 Blairstone Pines Drive Tallahassee, Florida 32301 John Radey, Esquire Elizabeth W. McArthur, Esquire 101 North Monroe Street Tallahassee, Florida 32301 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact On October 15, 1985, Petitioner, Mercy Hospital, Inc. (Mercy), filed an application with Respondent, Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to convert 29 medical/surgical beds into 29 long-term substance abuse beds. On February 27, 1986, the Department denied Mercy's application, and Mercy timely petitioned for formal administrative review. Mercy is a 538-bed acute care hospital located in Miami, Dade County, Florida. Due to a declining patient census, Mercy is, however, operating only 360 of its 530 licensed beds. Mercy currently offers services in medicine, surgery, psychiatry, obstetrics, gynecology, emergency medical services and outpatient services. Need The predicate for the Department's denial of Mercy's application was a perceived lack of need for long-term substance abuse beds in District XI (Dade and Monroe Counties), and the impact such lack of need would exert on the other statutory and rule criteria. Resolution of the need issue is dispositive of Mercy's application. There currently exists no numeric need methodology for determining the need for long-term substance abuse beds. The Department has, however, adopted Rule 10-5.11(27)(h)1, Florida Administrative Code, which establishes the following occupancy standard: No additional or new hospital inpatient substance abuse beds shall normally be approved in a Department service district unless the average occupancy rate for all existing hospital based substance abuse impatient beds is at or exceeds 80 percent for the preceding 12 month period. District XI has 190 approved long-term hospital impatient substance abuse beds; however, only 30 of those beds are currently licensed. The licensed beds are located in Monroe County at Florida Keys Memorial Hospital (Florida Keys), and are operating well below the 80 percent occupancy standard established by rule. 1/ The remaining beds are to be located in Dade County where Intervenor, Management Advisory and Research Center, Inc., d/b/a Glenbeigh Hospital (Glenbeigh) holds a CON for a 100-bed unit and Mount Sinai Medical Center (Mount Sinai) holds a CON for a 60-bed unit. Glenbeigh's facility is currently under construction, and Mount Sinai is seeking licensure. While not licensed, Mount Sinai has operated its 60-bed unit under its acute care license, and for the first three quarters of 1985 reported occupancy rates of 49.7 percent, 62 percent, and 48.9 percent. While the beds approved for District XI do not demonstrate an 80 percent occupancy rate, only one unit, Florida Keys, is licensed and operational. That unit is located in Key West, serves the middle and lower keys, and is not accessible to Dade County residents. The remaining units are not licensed, and their occupancy figures are not representative of a functional substance abuse unit. Accordingly, a failure to demonstrate compliance with the 80 percent occupancy standard is not necessarily dispositive of the question of need. There currently exists, however, no recognized methodology to calculate need for long-term substance abuse services. Accordingly, to demonstrate a need in 1990 for such services, Mercy relied on a numeric need methodology devised by its health planning expert, Daniel Sullivan 2/ (Petitioner's exhibit 4). Sullivan's methodology was not, however, persuasive. The First Step in Sullivan's Methodology The first step in Sullivan's methodology was to derive an estimate of the number of substance abusers in District XI who would seek treatment in an inpatient setting. The figure he calculated (a,170) was derived-through a four- stage refinement process. Initially, Sullivan estimated the number of problem drinkers within the district for the horizon year by applying the Marden methodology. That methodology, routinely relied upon by health planners, identifies the number of problem drinkers in a given population by multiplying a probability factor to age and sex groupings. By applying the Marden methodology to the age and sex demographics of District XI, Sullivan calculated that an estimated 148,541 problem drinkers would reside within the district in 1998. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in some formal setting (network treatment). To establish that estimate, Sullivan relied on a report prepared for the National Institute on Alcohol Abuse and Alcoholism (NIAAA) entitled "Current Practices in Alcoholism Treatment Needs Estimation: A State-of-the-Art Report". According to Sullivan, that report estimates the percentage of problem drinkers who will seek network treatment to be 20 percent. Therefore, he calculated that an estimated 29,788 problem drinkers in District XI would seek such treatment in 1990. Sullivan then strove to estimate the number of problem drinkers who would seek treatment in an inpatient setting. To establish that estimate, Sullivan relied on a survey conducted in 1982 by the NIAAA entitled National Drug and Alcoholism Treatment Utilization Survey". According to Sullivan, that survey indicated that approximately 78 percent of all problem drinkers who sought treatment did 50 on an outpatient basis. Therefore, using a factor of 22 percent, he calculated that an estimated 6,536 problem drinkers in District XI would seek such treatment in 1990. Sullivan's methodology, at stage two and three of his refinement process, was not persuasive. While Sullivan relied on the factors presented in the reports, there was no proof that health planning experts routinely relied on the reports. More importantly, there was no evidence of the type of survey conducted, the reliability of the percentage factors (i.e.: + 1 percent, 10 percent, 50 percent, etc.), or their statistical validity. In sum, Sullivan's conclusions are not credited. The final stage at step one of Sullivan's methodology, was to estimate the number of substance abusers (alcohol and drugs) who would seek treatment in an inpatient setting. To derive that estimate, Sullivan relied on a report prepared by the Department's Alcohol, Drug Abuse and Metal Health Office, contained in a draft of its 1987 state plan, which reported that 80 percent of substance abusers abuse alcohol and 20 percent abuse other drugs. Applying the assumption that 80 percent of substance abusers abuse alcohol, Sullivan estimated that 8,170 substance abusers in District XI would seek inpatient treatment in 1990. Sullivan's conclusion is again not persuasive. To credit Sullivan's methodology, one must assume that substance abusers (alcohol and drugs) seek treatments at the same rate as alcohol abusers. The record is devoid of such proof. Accordingly, for that reason and the reasons appearing in paragraph 12 supra, Sullivan's conclusions are not credited. The Second Step in Sullivan's Methodology. The second step in Sullivan's methodology was to estimate the number of hospital admissions, as opposed to other residential facility admissions, that would result from the need for substance abuse services. To quantify this number, Sullivan relied on one 1982 survey conducted by NIAAA. According to that survey, the distribution of inpatient substance abuse clients by treatment setting in 1982 was as follows: Facility Location Number Percent of Total Hospital 17,584 34.1 Quarterway House 1,410 2.7 Halfway Housed/ Recovery Home 14,648 28.4 Other Residential Facility 15,980 31.0 Correctional Facility 1,985 3.8 TOTAL 51,607 100.0 percent Therefore, using a factor of 34.1 percent, Sullivan estimated the number of substance abuse hospital admissions to be 2,784 for 1990. For the reasons set forth in paragraph 12 supra, Sullivan's conclusions are, again, not credited. The Third and Fourth Steps in Sullivan's Methodology. The third step in Sullivan's methodology was to estimate the number of substance abuse hospital admissions that would require long-term, as opposed to short-term, services. To derive this estimate, Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short-term bed need methodology (.06 beds per 1,000 population) contained in Rule 10-5.11(27)(f)1, Florida Administrative Code. Sullivan then subtracted that number (1,182) from the estimated number of substance abuse hospital admissions for 1990 (2,784), and concluded that the estimated number of hospital admissions in 1990 that would result from the need for long-term substance abuse services would be 1,602. The final step in Sullivan's methodology was to calculate the need for long-term hospital substance abuse beds. To derive this estimate, Sullivan multiplied the estimated number of long-term substance abuse admissions (1,602) by an average length of stay of 37 days, and divided that total by an occupancy standard of 292 days (80 percent of 365 days). Under Sullivan's methodology, a gross need exists for 203 long-term substance abuse beds in District XI. To establish net need, Sullivan would reduce the 203 bed district need by the 160 beds approved for Dade County, but ignore the 30-bed unit at Florida Keys because of its geographic inaccessibility. By Sullivan's calculation, a net need exists for 43 beds in Dade County. Sullivan's analysis, at steps three and four of his methodology, is not credited. Throughout his methodology Sullivan utilized District XI population figures (Dade and Monroe Counties) to develop a bed need for Dade County. Although Monroe County accounts for only 4 percent of the district's population, the inclusion of that population inflated Dade County's bed need. More demonstrative of the lack of reliability in steps three and four of Sullivan's analysis are, however, the methodologies by which he chose to calculate short- term admissions and long-term substance abuse bed need. Sullivan calculated admissions to short-term beds by applying a 28-day length of stay and an 80 percent occupancy standard to the Department's short- term bed need methodology (.06 beds per 1,000 population) contained in Rule 10- 5.11(27)(f)1, Florida Administrative Code. 3/ By using a 28-day length of stay, the maximum average admission permitted for short-term beds, as opposed to the district's demonstrated average of 24-days, Sullivan inappropriately minimized the number of estimated short-term admissions and maximized the number of estimated long-term admissions. 4/ Sullivan sought to justify his use of a 28-day standard by reference to testimony he overheard in a separate proceeding. According to Sullivan, a Department representative testified that the 28-day standard was used in developing the Department's .06 short-term beds per 1,000 population rule. Sullivan's rationalization is not, however, persuasive. First, Sullivan's recitation of testimony he overheard in a separate proceeding was not competent proof of the truth of those matters in this case. Second, Sullivan offered no rational explanation of how a 28-day standard was used in developing the rule. Finally, the proof demonstrated that the average short-term length of stay in District XI is 24 days, not 28 days. The difference between a 24-day and 28-day average short-term length of stay is dramatic. Application of Sullivan's methodology to the population of Dade County, and utilizing a 24-day average, would demonstrate a need for 170 long-term beds, as opposed to Sullivan's calculated need of 203 beds. In addition to the average short-term length of stay factor, long-term bed need is also dependent on an average length of long-term admissions factor. Under Sullivan's approach, the higher the average, the higher the bed need. Accordingly, to derive a meaningful bed need requires that a reliable average length of stay be established. The data chosen by Sullivan to calculate such an average was not, however, reliable. Sullivan used a 37-day average length of stay to develop his long-term bed need. This average was developed from the CON applications of Mercy, Glenbeigh and Mount Sinai. In the applications, Mercy estimated an expected length of stay of 30-37 days, Glenbeigh 36-38 days, and Mount Sinai 28-49 days. Use of a simple average, of the expected lengths of stay contained in Mercy's, Glenbeigh's and Mount Sinai's applications, to develop an average long- term length of stay is not persuasive. The figures contained in the applications are "expected length of stay", a minimum/maximum figure. Mercy failed to demonstrate that a simple average of those figures was a reliable indicator of average length of stay. Indeed, Mercy presented evidence at hearing that its average length of stay would be 30-31 days; a figure that is clearly not a simple average of the 30-37 day expected length of stay contained in its application. Mercy's failure to demonstrate a meaningful average length of stay renders its calculated bed need unreliable. Sullivan's Methodology - An Overview Each step of Sullivan's methodology was inextricably linked to the other. Consequently, a failure of any step in his analysis would invalidate his ultimata conclusion. Notwithstanding this fundamental fact Mercy, with the exception of the Marden methodology, failed to present a reasonable evidentiary basis to demonstrate the reliability and validity of Sullivan's methodology or any of its parts. Since his methodology was not validated, or each of its inextricably linked parts validated, Sullivan's conclusions are not persuasive or credited. Other Considerations If Mercy receives a CON, it will enter into a management contract with Comprehensive Care Corporation (CompCare) to operate the substance abuse unit. The parties anticipate that Mercy will provide its existing physical plant, custodial services, support services, dietary services, complimentary medical services, medical records and pharmacy services, and that CompCare will provide the treatment team, quality assurance, public information, promotion and operational management. Under its proposed agreement with CompCare, Mercy would pay CompCare on a per patient day basis. This fee was not, however, disclosed at hearing nor were the other expenses for patient care established. 5/ Consequently, Mercy failed to establish that its proposal was financially feasible on either a short or long term basis. Mercy also proposes to provide bilingual staff, and dedicate a portion of its patient days to indigent and Medicaid patients. There was no competent proof to establish, however, that such needs were not met, or would not be met, by the existing facilities.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the application of Mercy for a certificate of need to convert 29 medical/surgical beds to 29 long-term substance abuse beds be DENIED. DONE AND ORDERED this 4th day of February, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of February, 1987.
The Issue Whether or not Halifax' Second Amended Petition has alleged sufficient standing to initiate a Section 120.57(1) F.S. formal hearing, pursuant to Subsection 381.709(5)(b) F.S., in challenge of HRS' modification of ATC's CON.
Findings Of Fact ATC is an existing 50-bed specialty psychiatric hospital with 25 short- term psychiatric beds for children or adolescents, five beds for short-term substance abuse by children or adolescents, and 20 long-term psychiatric beds for children or adolescents. ATC has operated under CON 2331 since 1984. By correspondence dated March 7, 1990, HRS issued to ATC Amended CON 2331 authorizing ATC to convert 15 of its 20 long-term psychiatric beds for children and adolescents into long-term psychiatric beds for adults in a secure unit. Petitioner Halifax is an existing 545 bed acute care hospital with adult patients in its 50-bed secure psychiatric unit. Its existing hospital license 2700 is for a short-term psychiatric program which does not specify use of the beds for either adults or for children and adolescents. Halifax does not have a CON for a long-term psychiatric program. Halifax' Second Amended Petition alleges its standing in the following terms: . . . Halifax is a 545 bed acute care hospital, licensed pursuant to Chapter 395, Florida Statutes, and located within HRS District IV. Halifax provides psychiatric services to adult patients in its 50 bed psychiatric unit. Due to the nature of the patients served, Halifax operates it (sic) psychiatric services in a secured unit. Halifax's psychiatric unit has been in operation since December 7, 1951 and is an "established program" under Section 381.709(5)(b) Fla. Stat. * * * 5. Halifax is a substantially affected party, and its substantial interest is subject to a determination in this proceeding in that: Halifax is an existing provider of acute care hospital services, located in Volusia County, Florida, and within HRS District IV. Halifax has an established program which provides psychiatric services to adult patients within HRS District IV. If the issuance of Amended CON 2331 were upheld, ATC would offer the same adult psychiatric services presently offered at Halifax' established psychiatric program. Therefore, Halifax is entitled to initiate this proceeding pursuant to Section 381.709(5)(b) F.S. (1989). The issuance of Amended CON 2331 will result in an unnecessary duplication of the same adult psychiatric services provided by Halifax in HRS District IV. Such duplication of services will result in decreased utilization of Halifax' psychiatric program, increased costs to consumers of such psychiatric health care services, and the decreased financial viability of Halifax' established psychiatric program. Additionally, the Second Amended Petition asserts that ATC's requested amendment of CON 2331 would represent a substantial change in the inpatient institutional health services offered by ATC and, thus, is subject to CON review pursuant to Section 381.706(1)(h) F.S. (1989). Further, Halifax alleges that, if approved, the amendment to CON 2331 will authorize ATC to serve an entirely new patient population that it is not authorized to serve pursuant to the original CON.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order dismissing Halifax' Second Amended Petition and affirming the agency action modifying ATC's CON 2331. DONE and ENTERED this 26th day of October, 1990, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 1990. Copies furnished to: Harold C. Hubka, Esquire Black, Crotty, Sims, Hubka, Burnett, Bartlett and Samuels 501 North Grandview Avenue Post Office Box 5488 Daytona Beach, Florida 32118 Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Lesley Mendelson, Senior Attorney Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact Introduction Orlando General Hospital applied in April, 1987, for a certificate of need to allow it to convert 24 existing medical-surgical beds to short term psychiatric beds. O.G. Ex. 2, p. 1. It did not explicitly apply for beds limited to serve adults. It did, however, state that adolescent care would not be provided "at this time," leaving open the use of the 24 beds in the future for possible adolescent use. Id. at p. 5. Charter Medical-Orange County, Inc., applied for a certificate of need for a 50 bed short term psychiatric specialty hospital. It explicitly applied for a specialty hospital having 50 beds of "short term adult psychiatric care." C.M. Ex. 1, application, section I. In the executive summary, it characterized its proposal as a specialty hospital "for adults." Id. at p. 1. Charter does not intend to treat child or adolescent short term psychiatric patients. T. 23. The applications were filed in early 1987 to meet need in the January, 1992, planning horizon. The rule that applies in this case is the one contained in the prehearing stipulation. T. 392. It is rule 10-5.011(1)(o), Fla. Admin. Code. A copy of the rule is contained in O.G. Ex. 7, p. 33. The provisions of the local health plan at issue in this case are accurately reproduced in the State Agency Action Report (SAAR) which is C.M. Ex. 5. Net Short Term Psychiatric Bed Need (Numeric Need) Rule 10-5.011(1)(o)4a-c, Fla. Admin. Code, provides that the projected number of beds shall be based on a bed need ratio of .35 beds per 1,000 population projected five years into the future and based, in this case, on the January, 1987, projections for January, 1992. That 1992 population for District VII is projected to be 1,505,564, and thus the gross short term psychiatric bed need is 527 beds. For this batching cycle, the inventory of licensed and approved short term psychiatric beds was 410. These were: General Hospitals Florida Hospital-Altamonte 20 Florida Hospital-Orlando 85 Orlando Regional Med. Center 32 Wuesthoff Memorial Hospital 25 Subtotal 162 Specialty Hospitals Brevard Mental Health Center 52 CPC Palm Bay (began 10/86) 40 Laurel Oaks (began 10/86) 60 Lynnhaven (approved only) 39 Park Place (approved only) 17 West Lake 40 Subtotal 248 TOTAL (Licensed and approved) 410 TOTAL (Licensed only) 354 Thus, there is a net need for 117 short term psychiatric beds In District VII by 1992. The rule further specifies that a minimum of .15 per 1,000 population should be allocated to hospitals holding a general license, and that .20 per 1,000 of the beds may be located in either speciality hospitals or hospitals holding a general license. HRS interprets the word "should" in the rule with respect to .15 per 1,000 allocated to hospitals with a general license as being mandatory. C.M. Ex. 5, pp. 13-14. This is a reasonable construction of the rule. By 1992 there must be 226 short term psychiatric beds located in hospitals holding a general license. Since currently there are 162 beds in such hospitals, there is a net need by January, 1992, for 64 short term psychiatric beds to be opened in hospitals holding a general license. The remainder of the net bed need, 53 beds, may be located in either a specialty hospital or a hospital holding a general license. T. 500-02. The Occupancy Rate for "All Existing Adult Short Term Inpatient Psychiatric Beds" Rule 10-5.011(1)(o)4e, Fla. Admin. Code, provides in part that "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." (E.S.). Calendar year 1986 is the period of time accepted by all parties as the "preceding 12 month period" as specified by the rule, that is, the period of time to calculate the occupancy rate for this batching cycle. See, e.g., T. 285; C.M. Ex. 5. The State Agency Action Report Occupancy Rate The State Agency Action Report computed the occupancy rate for all licensed short term psychiatric beds in District VII in calendar year 1986 at 70.13 percent. C.M. Ex. 5, p. 10. This figure was based upon data as to patient days as reported by District hospitals to the District VII local health council and was based upon 354 licensed beds in the District during the full calendar year, but excluded 56 beds the re approved but not opened. O.G. Ex. 7, p. 6. Exclusion of CPC Palm Bay and Laurel Oaks CPC Palm Bay and Laurel Oaks have been designated by certificate of need issued by HRS to serve only children and adolescents. T. 507. Since those facilities by law cannot serve adults, their beds are not "adult beds," their patient days are not adult patient days, and their occupancy rate is not an adult occupancy rate. T. 1128. If CPC Palm Bay and Laurel Oaks were excluded from the calculation of the occupancy rate in the SAAR, the occupancy rate would be 73.7 percent. This rate is a weighted average based upon a 86,779 patient days that were possible at 100 percent occupancy of all licensed short term psychiatric beds in District VII in 1986, excluding Palm Bay and Laurel Oaks. C.M. Ex. 17, p. 11, fn. 9. How Many Adult Patient Days and Beds? HRS often issues certificates of need without age restrictions, allowing the facility to provide short term psychiatric treatment to everyone, regardless of age. Such hospitals can and do serve all ages, and their licensed short term psychiatric beds are not designated as, or restricted to, adults. T. 1128-29. With the exception of Palm Bay and Laurel Oaks, none of the other licensed short term psychiatric hospitals in the District are restricted by HRS by patient age. HRS does not have data to enable it to determine which short term psychiatric beds were used by adult patients in the District in 1986. T. 1169. Use of beds for age cohorts can dramatically and continuously change during a calendar year, and 41 has no reliable means to know about such changes. T. 1229-30. Hospitals issued certificates of need without limitation as to the age of the patient are not required by HRS to report the number of patient days served by the hospital by age or age group of the patient. See T. 1218-19; HRS Ex. 2. HRS Ex. 2. Consequently, the reported short term psychiatric patient days for District VII for calendar year 1986 mix adult patient days with patient days for children and adolescents. Thus, with the exception of Laurel Oaks and Palm Bay, it is impossible in this case for the applicants and other parties in this batching cycle to untangle pure adult psychiatric patient days from the available data. T. 392, 353, 287, 291, 371, 1169-71. It is impossible on this record to make a finding of fact as to what would happen to the mixed occupancy rate all patient days attributable to adolescents and children could be excluded from the adult patient days. The only bit of evidence is found in C.M. Ex. 17, the data from Florida Hospital, which shows for that hospital that the 16 adolescent unit in 1986 had an occupancy rate of 60.92 percent, and the open adult unit had an occupancy rate of 82.42 percent. C.M. Ex. 17, p. 3. But that percentage is more a reflection of Florida Hospital's choice in how it set up the beds in the two programs than it is a reflection of need. For example, had Florida Hospital chosen to allocate only 12 beds to its adolescent program, instead of 16, the 1986 occupancy rate for that unit, based on 3,558 patients a day, would have been 81.23 percent. One wonders why Florida Hospital did not simply allocate a lower number of beds to the adolescent unit, since it had only 13 admissions to that unit in 1986. In any event, since a hospital like Florida Hospital has discretion as to how it sets up its beds with respect to the ages of patients. In those beds, the fact that it had an occupancy rate of 60.92 percent in the subunit it called the adolescent unit in 1986 is relatively meaningless when trying to predict which way a pure adult occupancy rate might change if adolescent and child patient days could be excluded. In summary, there is no accurate count of beds licensed only as adult beds, there is no accurate count of beds used only as adult beds, and there is no accurate count of adult patient days. The Problem of West Lake Hospital The record has an additional data problem with respect to calculation of the occupancy rate of adult short term psychiatric beds. West Lake Hospital is licensed for 40 short term beds (not restricted by age), and 30 long term psychiatric beds. Data for calendar year 1986, the only year relevant in this case, is a mixture of short term and long term patient days. C.M. Ex. 17. As will be discussed ahead, additional evidence as to the patient days at West Lake Hospital was excluded from evidence for failure to comply with the prehearing order. The Problem of Short Term Psychiatric Patient Days Occurring in General Hospitals Without Licensed Short Term Psychiatric Beds A general hospital with no licensed short term psychiatric care can lawfully provide temporary and sporadic short term psychiatric care in its medical-surgical beds. T. 1191. In calendar year 1986, Orlando General Hospital reported to the Hospital Cost Containment Board that it provided 4,969 psychiatric (MDC 19) patient days of care. O.G. Ex. 7, p. 11. By 1988, it had over 30 psychiatric patients in the hospital at any given time. T. 753. Orlando General Hospital does not have any beds licensed for short term psychiatric care, or for long term psychiatric care, for that matter. Orlando General Hospital's psychiatric patients are currently receiving inpatient psychiatric care that is substantially the same as would be provided in a licensed short term psychiatric bed, with the exception that the care is osteopathic in nature. See T. 797, 1355-58, 1360-62, 788-90, 792-93. HRS Policy as to the Data Problems HRS stated that it "... would not attempt to fix a specific occupancy for a specific age cohort" in this case, T. 1220. A good faith attempt was made, however. Following a new policy, HRS argued that the adult bed occupancy rate should exclude the beds and patient days of hospitals having certificates of need explicitly limited to service of the needs of children and adolescents (Palm Bay and Laurel Oaks), but should include all of the licensed short term psychiatric beds at any other facility that is not restricted by patient age. T. 1127-29. It was acknowledged that the information is faulty, but the Department urges that it is the best that it can do under the circumstances. T. 1174. With respect to patient days, HRS also urges that only the patient days reported to the local health council by hospitals having licensed adult short term psychiatric beds should be counted in the mixed rate. In particular, HRS argues that it should not use patient day data reported to the Hospital Cost Containment Board because such data is not limited to hospitals having "designated" psychiatric units. T. 1126-27. This argument is not reasonable. Hospitals that are legally authorized to provide short term psychiatric care to adults (i.e., having a certificate of need and a license) can provide such care in any licensed bed in the hospital, even though the bed is not licensed as a psychiatric bed. Moreover, a general hospital with no licensed short term psychiatric care, according to HRS witnesses, can lawfully provide temporary and sporadic short term psychiatric care in its medical-surgical beds. It may even provide such care on a continuous, ongoing basis, as in the case of Orlando General Hospital, although the legality of doing so is questioned by HRS. The critical question is not whether these licensed hospitals have legal authority to provide short term psychiatric care, but whether the care in fact given results in a short term psychiatric patient day in the District. If the care given is essentially the same as if the patient had been in a licensed short term psychiatric bed, it would be unreasonable not to treat the resulting statistic as a short term psychiatric patient day. What is at stake is a true measurement of District capacity. If tomorrow all of the District short term psychiatric patients and the patient days generated by such patients transferred to the District licensed short term psychiatric beds, these short term psychiatric patient days would certainly be counted in the occupancy rate. When trying to assess the real extent of availability of District capacity, a false picture of excess and unused capacity would be shown if real short term psychiatric patient days are occurring somewhere in the District, but are not counted in determining the occupancy rate. On the other hand, if the facility is not even a licensed hospital, it is presumptively providing an alternative kind of inpatient psychiatric care that is different from a licensed psychiatric hospital. Thus, its patient days are irrelevant absent some specific proof that the care given in such a bed is essentially the same as a short term psychiatric patient day in a licensed general or specialty hospital. What is an "Existing" Adult Short Term Bed? Rule 10-5.011(1)(o)4e, Fla. Admin. Code, calls for the occupancy rate for "all existing" adult short term psychiatric beds in the service district, and does not define the word "existing." Petitioners assert that "existing" adult beds of the facility for purposes of determining occupancy rate is the number of beds characterized by the facility as having been in fact used for psychiatric care during the year, but only if that number is less than the number of licensed short term psychiatric beds. T. 391, 354-55. The Respondent and the Intervenor argue that "existing" adult beds is fixed by the number of licensed short term psychiatric beds granted to the facility by the state if available to serve adult patients. Normally, to be licensed a bed must be available within 24 hours. T. 1121. Orlando Regional Medical Center In calendar year 1986, Orlando Regional Medical Center had 32 licensed short term psychiatric beds. T. 348. These 32 beds were not restricted by patient age. In calendar year 1986, Orlando Regional Medical Center characterized as "in service" 32 beds for the first 7 months of 1986, 22 beds for the month of August, 18 beds for the month of September, and 12 beds for the remaining 3 months of the year. The figure of 25 beds used by the Petitioners is the weighted average. T. 348. These licensed short term psychiatric beds at Orlando Regional Medical Center were temporarily not in service because of the construction of new facilities at the hospital. Orlando Regional Medical Facility intended to reopen those beds in the future because the hospital reminded the party seeking discovery that it had 32 licensed beds, and characterized the missing beds as having been "warehoused," that is, saved for future use. T. 509-10; O.G. Ex. 7, appendix 3. Thus, all 32 of Orlando Regional Medical Center's licensed beds would be available and would be used for adult short term psychiatric care if demand existed. Florida Hospital Florida Hospital has two facilities relevant to this case, one in Orlando, in Orange County, and one in Altamonte Springs, in Seminole County. In calendar year 1986, Florida Hospital had 105 beds licensed as short term psychiatric beds. Florida Hospital would serve patients of any age in these 105 beds. C.M. Ex. 18 is a document which was obtained from Florida Hospital through discovery. T. 286. The document is entitled "Florida Hospital Center for Psychiatry Monthly Operating Statistics," and thus was assumed by Charter's expert to be Florida Hospital's characterization of its data as psychiatric data. T. 289. C.M. Ex. 18 could not have been obtained by Charter at the time it made application. It was obtainable only through the discovery process after commencement of section 120.57(1), Fla. Stat., proceedings. T. 314-16, 386-87. Florida Hospital reported in discovery that in calendar year 1986, it had 113 beds operating in its "Center for Psychiatry." Of these, 16 were substance abuse beds, 13 were beds in an eating disorders unit, and 16 were adolescent beds. That left 24 beds in the intensive care unit, 24 beds in an open unit, and 20 beds at a unit at Altamonte Springs. C.M. Ex. 18. The 16 substance abuse beds clearly were not psychiatric beds. If the 13 eating disorders beds were short term psychiatric beds, Florida Hospital had 97 of its 105 licensed short term psychiatric beds in actual operation in 1986. If they were not, Florida Hospital had 84 of its 105 licensed short term psychiatric beds in actual operation in 1986. There is no evidence in this record that Florida Hospital could not and would not have readily opened 8 more short term psychiatric beds during 1986 if demand for those beds had existed, thus having "open" all 105 of its licensed beds. There is no evidence in this record that in 1986, Florida Hospital could not have closed its 16 bed adolescent unit and devoted all of those beds to adult short term psychiatric care, had there been a need. Indeed, it appears that generally speaking, that is how Florida Hospital operates: by shifting beds to other uses within its licensed authority according to demand. See T. 1322-26. Thus, all 105 of Florida Hospital's licensed beds would have been available and would have been used for adult short term psychiatric patients if the demand existed. Counting Patient Days - Are Eating Disorder Patient Days Psychiatric Patient Days? Florida Hospital reported in discovery that it had 2,982 patient days in its eating disorder unit, and that the unit operated with 13 beds. C.M. Ex. 18, P. 3, lines 8 and 26. The eating disorder unit reports to the administrative director of the Florida Hospital Center for Psychiatry. T. 977. The administrative director could not explain why the unit reported to the Center for Psychiatry. T. 977. The unit has co-directors, one a psychiatrist, and the other a specialist in internal medicine. Id. The administrative director of the Center for Psychiatry characterizes the 13 eating disorders beds as medical-surgical beds, and classifies patients in those beds as primarily having a medical problem, T. 976, but the psychiatrist co-director of the program hedged, and would not say whether the primary diagnosis is medical or psychiatric. T. 1315. The patients typically are, however, very ill from a medical point of view. T. 1314. Florida Hospital's characterization of the nature of the care given in its eating disorders unit, as summarized in the preceding paragraph, in view of the manner in which the witnesses were unclear as to how to characterize the eating disorder unit, is not evidence that the care given in that unit is not psychiatric care in view of Florida Hospital's interest in these cases in opposition to the applications. Charter's expert concluded from C.M. Ex. 18 that Florida Hospital was serving short term psychiatric patients in its eating disorders unit at Altamonte Springs. T. 287. He characterized this as a short term psychiatric service in medical-surgical beds. T. 289. But he also characterized the 13 beds as psychiatric beds. T. 287-88. HRS has issued a certificate of need to a short term psychiatric hospital limiting that certificate of need to treatment of eating disorders, thereby recognizing treatment of eating disorders in that case as a form of psychiatric treatment. T. 1191. From testimony at the hearing, it would appear that HRS's expert would view the eating disorder unit at Altamonte Springs as a short term psychiatric program. T. 1191-1192, 1194. It is concluded that the preponderance of the evidence shows that the care rendered to patients in the eating disorders unit was psychiatric care. The unit is administratively a part of the hospital's Center for Psychiatry. While the patients are very ill, medically speaking, they also have substantial mental health problems. Finally, and most persuasive, HRS has previously characterized such care as short term psychiatric care. If these 2,982 eating disorder patient days are counted as psychiatric patient days in 1986 for District VII, and if the number of beds at Florida Hospital remains as it was in the SAAR calculation (105 licensed beds), then the total patient days for the District changes from 63,976 to 66,958. The result is that the occupancy rate for District VII for 1986 for adult and mixed short term psychiatric beds changes from 73.72 percent to 77.16 percent. C.M. Ex. 17, p. 13. This calculation is the result of a weighted average discussed above. Psychiatric Patient Days Reported to the Hospital Cost Containment Board Orlando Regional Medical Center and Florida Hospital report patient days by Medicare major diagnostic categories (MDC). MDC 19 is the category for psychiatric care. T. 512; O.G. Ex. 7. The data collected in this record was for calendar year 1986. T. 603-604. Relying upon MDC 19 statistics for calendar year 1986, Florida Hospital (Orlando and Altamonte Springs combined) had 28,372 MDC 19 patient days, and Orlando Regional Medical Center had 7,328 MDC 19 patient days. The Florida Hospital MDC 19 patient days shown in table 6, O.G. Ex. 7, are very close to the number of patient days shown on C.M. Ex. 18, the operating statistics from the "Center for Psychiatry" obtained from Florida Hospital in discovery. The MDC 19 patient days, 28,372, exceed the "Center for Psychiatry" reported data by only 452. The Orlando Regional Medical Center's MDO 19 patient days, 7,328, is 618 patient days greater than the patient days reported by Orlando Regional Medical Center to the local health council. If these MDC 19 patient days are assumed to be short term adult psychiatric patient days, following the same mathematical calculation used by HRS both in the SAAR and in testimony during the hearing (with the same weighted averages), the occupancy rate for adult and mixed short term psychiatric care in District VII, using licensed beds, was 78.39 percent in calendar year 1986. O.G. Ex. 7, table 6. This calculation uses the same weighted average (86,779 patient days at 100 percent occupancy) as used by all the other parties. C.M. Ex. 17, p. 11, fn. 9. There is no evidence in the record that the foregoing MDC 19 patient days are limited to short term psychiatric days, or the extent to which the data considers long term patient days as well. Of course, there is also no evidence available to separate the MDC 19 patient days into adult patient days and patient days attributable to children and adolescents. Westlake Hospital Data as to Short Term Psychiatric Patient Days in 1986 The Intervenor, Florida Hospital, has renewed its effort to have F.H. Ex. 3, and testimony based upon that exhibit admitted, into evidence. The exhibit and testimony involves data as to short term psychiatric patient days for 1986 at Westlake Hospital, located in Seminole County. Florida Hospital argues that the ruling excluding F.H. Ex. 3 from evidence, as well as testimony related to that exhibit, is inconsistent with the ruling that allowed Charter Medical to introduce C.M. Ex. 19. It is argued that the only difference is that in the case of Charter Medical, the witness first testified as to the contents of the exhibit, whereas in Florida Hospital's case, the exhibit was admitted, the witness testified, and then the exhibit was excluded. Florida Hospital argues that as a result of this sequence of events, its witness was not afforded an opportunity to present the same evidence from memory without the exhibit. From a review of the sequence of events, it is apparent that there is a substantial difference between the two exhibits, as well as a substantial difference in the procedures used by counsel, and that difference necessitates the two rulings. C.M. Ex. 19 is nearly identical to C.M. Ex. 17, with three exceptions. In C.M. Ex. 19 the patient days at the Florida Hospital eating disorder unit were moved from the Orlando facility to the Altamonte Springs facility. C.M. Ex. 19 also excluded adolescent patient days from the Florida Hospital count changed the number of "existing" beds at Orlando Regional Medical Center to 25 instead of 32. T. 295. C.M. Ex. 19 made no other changes to C.M. Ex. 17 with respect to patient days or number of beds. Two objections were made by Florida Hospital to the admission of C.M. Ex. 19, that C.M. Ex. 19 had not been provided to opposing counsel at the exchange of exhibits, in violation of the prehearing order, and that C.M. Ex. 19 was an impermissible amendment to Charter Medical's application for certificate of need. T. 295-296. Only the first objection is the subject of Florida Hospital's renewed argument. The Hearing Officer at the time overruled the first objection because it was determined that C.M. Ex. 19 merely summarized the testimony of Dr. Luke as to changes he would make to C.M. Ex. 17. That ruling was correct, and should not be changed at this time. All of the underlying data for the expert analysis in C.M. Ex. 19 came into evidence without objection that it had not been exchanged among the parties. C.M. Ex. 18 contained the data as to adolescent patient days and eating disorder patient days at Florida Hospital in 196. That data came into evidence without objection that it had not been exchanged. T. 316. Dr. Luke's testimony that Orlando Regional Medical Center had only 25 beds operational in 1986 came into evidence without objection. T. 292. Dr. Luke's testimony concerning the location of the eating disorders unit at Altamonte Springs came into evidence without objection. T. 287, 291. Both of these latter evidentiary matters were of a type that easily could have been known to Dr. Luke without reference to a document to refresh his memory. Additionally, the parties were well aware of the argument that Orlando Regional Medical Center had only 25 operational beds in 1986, and that Florida Hospital had only 48 adult beds in operation in 1986, since that evidence and argument was a fundamental part of Orlando General Hospital's basic bed need exhibit, O.G. Ex. 7, and the testimony of Ms. Horowitz. Moreover, the type of analysis of the data contained in C.M. Ex. 19 is the same as that of Ms. Horowitz in O.G. Ex. 7. Thus, Florida Hospital was not caught by surprise by C.M. Ex. 19. The exhibit did not contain new data or new modes of analysis. Florida Hospital's attempt to introduce data as to the actual number of short term psychiatric patient days at Westlake Hospital in 1986 was quite different. The data as to patient days at Westlake had not been produced during the deposition of Florida Hospital's witness, although similar data for 1987 and 1988 was produced. T. 867. Had it been made available in discovery, the failure to exchange the data as an exhibit as required by the prehearing order would have been less serious. But the exhibit had not been given by Florida Hospital to opposing parties, in violation of the prehearing order. T. 869. F.H. Ex. 3 did not reorganize data that otherwise was exchanged between the parties. It attempted to introduce new raw statistical data that had not been furnished opposing counsel as required by the prehearing order. The Hearing Officer initially ruled that F.H. Ex. 3 should be admitted into evidence and allowed the witness to testify concerning the data contained in the document. T. 870-871. That initial ruling was in error. The data contained in F.H. Ex. 3 is not at all simple. The document consists of four pages of numbers representing monthly statistics in 1986 at Westlake Hospital for each of its units. It is highly unlikely that a witness could have remembered all of that data presented the data in testimony without reliance upon the exhibit. Indeed, the witness testified that all of his testimony was based upon F.H. Ex. 3. T. 907. The witness had apparently given a different impression as to Westlake's occupancy rate in 1986 during his deposition, and did so without the benefit of F.H. Ex. 3. T. 910. Florida Hospital could have asked the witness if he could have presented his testimony without reference to F.H. Ex. 3, but it did not ask the witness that critical question. In sum, the witness could not have presented his analysis from memory. He had to have F.H. Ex. 3 in front of him as he testified. On December 2, 1987, an order was entered setting this case for formal administrative hearing beginning on July 11, 1988. That order established prehearing procedures. Paragraph 3 of that order requires counsel to meet no later than 10 days before the hearing to, among other things, "examine and number all exhibits and documents proposed to be introduced into evidence at the hearing." Later in the same paragraph is the requirement that the parties file a prehearing stipulation containing a list of all exhibits to be offered at the hearing. Paragraph 3D of the prehearing order states in part that failure to comply with the requirements of the order "may result in the exclusion of testimony or exhibits." The first time that opposing counsel were given the opportunity to see the data in F.H. Ex. 3 was in the middle of the formal administrative hearing. The exhibit contained detailed raw statistical data. C.M. Ex. 19 did not try to present new raw statistical data. For these reasons, F.H. Ex. 3 and all testimony related to that exhibit by Mr. Menard was excluded from evidence. Later in the hearing, Florida Hospital sought to introduce the same data through the testimony of Wendy Thomas, the planning director and data manager for the local health council. T. 1050. Counsel for Florida Hospital first attempted to show the witness the document that had been excluded from evidence, and counsel for the other parties objected. T. 1047-1049. The Hearing Officer suggested to counsel that counsel should first ask the witness whether she had made a computation and then ask what was the basis of the computation, rather than show the witness the document. T. 1049. Counsel then attempted to do that. But when counsel asked the witness for her computation, it was still unclear whether the witness based her calculation upon data in the excluded document. T. 1053. After a number of other questions, it still was unclear whether the data in the excluded document was the basis for the calculation. T. 1053-1055. The Hearing Officer then asked the witness if she could identify F.H. Ex. 3. The witness said that F.H. Ex. 3 contained the exact type of information that she had in her own files, and that her document looked like F.H. Ex. 3, except it was photocopied smaller. T. 1056. During all of this exchange, the witness was never asked by counsel for Florida Hospital if she ever had an independent memory of the details of the underlying data, or whether, if that memory now had faded, looking at F.H. Ex. 3 would refresh her memory. Since it was apparent that the basis for the witness's calculation was the same raw statistical data as contained in F.H. Ex. 3, the Hearing Officer granted the motion to exclude the testimony. Later, in cross examination of the proffered testimony, the witness testified that the basis for her calculation was the use of a document containing the same data as F.H. Ex. 3. T. 1087-1088, 1091. Thus, counsel for Florida Hospital did not lay a proper predicate for attempting to use F.H. Ex. 3 to refresh the memory of either witness. As discussed above, had it done so, it is unlikely that either witness could have testified from memory as to the statistics because the data contained in F.H. Ex. 3 was too detailed to have ever been in the memory of either witness. Florida Hospital argued that Ms. Thomas's calculation should be admitted because the raw data had been in her possession for over a year. That argument is unpersuasive. The raw data was in the possession of Westlake Hospital as well. The issue is not whether opposing parties might have discovered the data on their own, but compliance with the prehearing order requiring exchange of important exhibits. For these reasons, the Hearing Officer's rulings as to exclusion of the foregoing evidence will remain unchanged. The Local Health Plan Applicability No part of the District VII local health plan was adopted by HRS as a rule when these applications were and reviewed. T. 1214. Several years ago, with respect to applications for certificates of need for short term psychiatric beds, HRS considered need and occupancy rates only on a district-wide basis. T. 1184. See e.g. C.M. Ex. 20, where HRS did not refer to the local health plan as to these issues in District VII. HRS has now changed that policy, however, and considers need and occupancy at the district level and by portions of the District if those issues are effectively required by the local health plan. T. 1184. For purposes of planning for short term psychiatric services, the local health plan divides District VII into county "planning areas." Orange County is thus a local health plan planning area. The local health plan does not use planning areas for substance abuse planning, and it does not explain why there is a difference in planning. Orlando General and Charter both propose to locate their proposed short term adult psychiatric beds in Orange County if granted certificates of need. Counties are convenient units for health planning purposes because population data exists by county. T. 1180. Census tracts and zip code areas are also convenient geographical units for health planning. T. 1180-81. If a proposed facility is to be located very close to the county line, it would make no difference which side of the line it was on with respect to the ability of the facility to serve patients originating in either county. T. 1181. Allocation of Net Need to Orange County The local health plan, policy 3, provides that if the application of rule 10-5.011(1)(o) indicates a need (at the District level), the need is to be allocated among the counties in the district using the state numeric need method by county. T. 1027-29; C.M. Ex. 5. Applying all of the age calculations for the projected populations and bed inventory of Orange County only, the local health plan allocates 55 new short term psychiatric beds to Orange County by 1992. However, applying the allocation ratios of the rule, there is an excess of 18 short term psychiatric beds in general hospitals, and thus none of the 55 beds would be mainly allocable to a general hospital. There is, nonetheless, a potential allocation of need of 73 beds in either a specialty or a general hospital, and the net need of 55 beds could be allocated to either a specialty hospital or a general hospital. The Orange County Mixed Occupancy Rate The local health plan, policy 4, applies the 75 percent occupancy standard to the county level. The policy explicitly calls for an average annual occupancy rate for all existing facilities in the planning area with respect to adult short term psychiatric beds. C.M. Ex. 5. Relying upon the calculation in the SAAR, but deleting Laurel Oaks, the mixed occupancy rate for Grange County in 1986 was less than 58.4 percent. This calculation only includes the beds at Florida Hospital (Orlando) and Orlando Regional Medical Center. The calculation is based upon 18,696 patient days at Florida Hospital (Orlando) in 85 beds, and 6,242 patient days in Orlando Regional Medical Center in 32 beds. There were 4,969 MDC 19 patient days occurring at Orlando General Hospital in 1986. There were 7,328 MDC 19 patient days occurring at Orlando Regional Medical Center in 1986. The eating disorder patient days occurred in Seminole County (Altamonte springs) and should not be counted in an Orlando occupancy rate. The only data as to patient days at Florida Hospital, Orlando only, is that found in C.M. Ex. 18, which is the same as the SAAR, which reports 18,696 patient days. (The MDC 19 data mixes the two units.) The number of licensed short term psychiatric beds in Orange County in 1986 was 117. All of these beds were licensed the entire year, and thus there was no need to do a weighted average of potential patient days for these beds. See C.M. Ex. 17, p. 11; O.G. Ex. 7, table 6. Using all of the foregoing patient days, the number of patient days was 30,993, the number of licensed short term psychiatric beds was 117, and the mixed occupancy rate for Orange County for 1986 was 72.6 percent. If it is not appropriate to count the 4,969 patient days at Orlando General Hospital in the Orange County occupancy rate, the 1986 Orange County occupancy rate was only 60.09 percent. Conversion of Existing Beds and Service to Indigent Patients Policy 5 of the local health plan states that excess bed capacity in, among other types of beds, medical/surgical beds, should be eliminated by reallocation of beds among the services, including psychiatric services. Policy 6 of the local health plan states that primary consideration should be given for project approval to applicants who satisfy to the greatest extent the following priorities: The first priority is to applicants who commit to serving "underserved client groups," including Medicaid, Baker Act, and medically indigent patients. The second priority is to applicants who convert underutilized existing beds. As will be discussed in the conclusions of law, Orlando General's application satisfies these priorities, and Charter Medical's application does not. Other Evidence as to Future Need Historically, health care providers have been reimbursed on a fee- for-service basis. The more services provided, the greater the payment. These insurance arrangements had little incentive to decrease the level of services. T. 720. In the last three or four years, the health insurance industry has changed its methods of providing insurance. A very large percentage of insured patient care is now managed by use of flat rates based upon a per person count (capitation). The rates do not increase related to utilization. Managed health care reimbursement uses a system whereby the health care provider is paid a flat rate annually for each insured person, and agrees to provide for the health care needs of all such persons generally without considering the degree of utilization during the year. T. 722-723. Under the capitation system, the provider has the incentive to provide only such care that, in intensity or duration, is the minimum that is clinically acceptable. T. 724. Psychiatric services have been included in the movement of the industry toward managed health care reimbursement rather than fee-for-service reimbursement. T. 722. The health care industry now offers competitive managed health care plans in central Florida, and the trend is for an increase in the availability of such methods of reimbursement in central Florida. T. 726-727. It is now 40 percent of the insurance market, and in the early 1990's, the percentage of managed health care may be twice that percentage. T. 727. The effect of the new reimbursement system is to substantially lower the length of stay, and to lower the rate of admission as well, at short term psychiatric hospitals. T. 724-725, 881-882, 1319-1320. Orlando General Hospital projected that its average length of stay would be 30 days in 1992. It has discovered from current experience that its average length of stay is about 15 days. T. 433, 464. District VII has recently experienced an increase in the availability of community based mental health facilities. These facilities provide a variety of mental health services, including brief inpatient care. The facilities do not require a certificate of need. T. 1046-1047, 1319. The Nature of the Proposed Programs Orlando General Hospital General Orlando General is a 197 bed acute care general osteopathic hospital located in Orlando, Florida, in Orange County. Orlando General proposes to convert a 35 bed medical-surgical unit to 24 short term psychiatric beds at a capital cost of $689,272. It would relocate 11 of its medical-surgical beds, and convert the remainder to short term psychiatric beds. Orlando General Hospital is located in the southeast portion of Orange County. T. 1107. It is the most eastward facility in Orange County with the exception of a long term psychiatric hospital now under construction. T. 1107. The primary service area of Orlando General by location of physicians offices is the southern half of Seminole County and the northern portion of Orange County. In particular, the hospital serves northeastern Orange County through the location of its physicians' offices. T. 412; O.G. Ex. 2, p. 27. The program of treatment described in Orlando General's application is no longer an accurate description of Orlando General's current program or of the intended program. T. 453. The treatment programs planned for the new short term psychiatric unit are comparable to the programs planned by Charter Medical-Orange County, Inc., and are adequate and appropriate programs for short term psychiatric care. Psychiatric Care for the Elderly Orlando General Hospital would provide adequate and appropriate specialized short term psychiatric care for elderly patients, but would not provide such care in a unit physically separated from other patients. There currently is a split of professional opinion as to whether or not geriatric patients should be treated in a psychiatric unit separated (physically as well as programmatically) from other patients. There are benefits from both approaches. T. 1315-1317, 68, 74-76, 43-45, 770. Various Charter Medical hospitals do it both ways. T. 70. Osteopathic Medicine at Orlando General Hospital Osteopathic medicine differs from allopathic medicine in its emphasis upon viewing the interaction of all parts of the body, rather than a single part, and the use of muscular and skeletal manipulation. T. 1349, 753-754. Orlando General Hospital is an osteopathic hospital and has been osteopathic in nature since the 1960's. It was founded by osteopathic physicians, and the hospital abides by osteopathic philosophies. The Board of Trustees at the hospital are all osteopathic physicians. Although it has medical doctors on staff, the majority are osteopathic physicians Orlando General Hospital is accredited by the American Osteopathic Association to train osteopathic physicians, and has such training programs, primarily in family medicine. T. 412-414, 755. There are about 80 osteopathic physicians in Orange County, and the vast majority are on the staff at Orlando General Hospital. T. 760. Patients who prefer osteopathy, and osteopathic physicians, prefer an osteopathic hospital. Osteopathic physicians believe that they deliver better care to their patients in an osteopathic facility rather than an allopathic facility. About 30 percent of the psychiatric patients treated by Dr. Greene at Orlando General Hospital receive manipulation as a therapy. T. 1351. There is a shortage of osteopathic psychiatrists. T. 756. Other than Randall Greene, D.O., there are no osteopathic psychiatrists in the Orange County area. Id. There is a shortage of places for psychiatric resident training. There is no osteopathic psychiatric residency in Florida, and only a few in the country. T. 764, 1349. Consequently, osteopaths seeking to become psychiatrists often have to go to allopathic hospitals for residencies. T. 1349 Residency in an allopathic hospital is often not approved by the American College of osteopathic psychiatrists. Thus the osteopath who has had his or her residency in an allopathic hospital and lacks such approval will not be readily accepted as an osteopathic psychiatrist on the staff of an osteopathic hospital. T. 1350. Orlando General Intends to have a residency program in osteopathic psychiatric for at least two positions if it is granted a certificate of need. T. 762, 415. The Evolution of Osteo-Psychiatric Care at Orlando General Hospital Dr. Randall Greene came to Orlando in 1982. He is an osteopathic physician and psychiatrist. He initially was on the staff at four hospitals but soon discovered that other osteopathic physicians were referring patients needing psychiatric care to Orlando General Hospital because it was an osteopathic hospital. These physicians frequently asked Dr. Greene to provide psychiatric care at Orlando General. T. 754. Osteopathic physicians who referred their patients to Dr. Greene and to Orlando General Hospital continued to treat the physical ailments of those patients at Orlando General Hospital. T. 760. Dr. Greene now limits his psychiatric practice to Orlando General Hospital because of the large number of psychiatric patients being treated at the hospital. T. 756. Thirty to forty percent of the psychiatric patients come to Orlando General via the emergency room. T. 421, 445. Additionally, patients admitted to the new substance abuse program often need psychiatric care. T. 407. Orlando General has difficulty transferring its psychiatric patients to other hospitals. A number of the patients have no insurance or have only Medicaid coverage. T. 420. Orlando General Hospital is located in a lower economic area, and thus attracts patients of this type. Id. Patients who prefer osteopathic treatment also prefer not to be transferred to an allopathic hospital. T. 759. The increase in numbers of psychiatric patients served at Orlando General Hospital in medical-surgical beds helped to offset the hospital's loss of medical-surgical patient days during the same period. T. 452 Due to the large number of psychiatric patients, and the decline in need for medical-surgical beds, Orlando General hospital decided to apply for the instant certificate of need. Due to the osteopathic nature of the hospital, physicians, patients and the hospital prefer to keep these patients at Orlando General Hospital rather than refer them to an allopathic hospital. It is HRS's position that if a hospital does not advertise itself as having a distinct psychiatric unit and does not organize within itself a distinct psychiatric unit, the admission and treatment of psychiatric patients to medical-surgical beds on an "random" and unplanned basis is proper even the hospital does not have licensed psychiatric beds. T. 1191. Orlando General hospital does not hold itself out to the public through advertising as having a separate psychiatric unit. T. 468. Patient Mix & Commitment to Charity Care Orlando General Hospital currently provides a large portion of charity care for Orange County. T. 1100. In its 26 bed chemical dependency unit, Orlando General reserves 2 beds for indigents. T. 785. The unit also sets aside, as needed, one bed for any Florida nurse whose license is in jeopardy due to chemical dependence and who has no financial means to pay for treatment. Id. Orlando General Hospital typically has a larger amount of bad debt and charity care (for people who do not pay) than other hospitals in the area. T. 423. In 1987, Orlando General Hospital reported to the Hospital Cost Containment Board that it had $141,404 in charity care, and that it had $3,244,530 in bad debt. T. 657, 660. Bad debt constituted 9.7 percent of gross revenue. T. 660. Since it is very difficult to determine at admission whether the patient realistically can pay for services, a lot of this bad debt is, in a functional sense, charity care. T. 659-660. It is concluded from the foregoing that Orlando General Hospital has a genuine commitment to providing health care to persons who cannot pay. T. 422, 662. Orlando General Hospital projects that it will in its proposed 24 bed short term psychiatric unit 5 percent indigent patients, 8 percent Medicaid patients, 20 percent Medicare patients, 50 percent insured patients, and 17 percent private pay patients. These projections are reasonable and are consistent with Orlando General Hospital's current experience. T. 662-664; O.G. Ex. 2, p. 16. Charter Medical-Orange County, Inc. General Charter Medical proposes to construct a 50 bed free standing short term psychiatric hospital in Orange County, Florida. The capital cost of the proposed project would $5,85,000. C.M. Ex. 1. Charter Medical would offer adult and geriatric short term psychiatric services in the proposed short term beds. As a free standing specialty hospital devoted entirely to short term psychiatric care, Charter Medical's proposal should be able to provide more space and additional therapies than would typically be found at a general hospital with a short term psychiatric unit. T. 47-50, 890-91. Charter Medical would provide adequate geriatric short term psychiatric care in a separate unit with separate programs consisting of the latest techniques for caring for the mentally ill elderly patient. Charter Medical's proposed facility would not be able to treat short term psychiatric patients who also have serious medical problems, which undoubtedly will include elderly patients. Charter Medical would have adequate transfer arrangements with a general hospital to serve the medical needs of its patients, and would have adequate staffing and equipment within the free standing specialty hospital to meet the routine and emergency medical needs of its patients. Staffing Orlando General and Charter Medical would be able to recruit, train, and retain adequate staff to operate its proposed short term psychiatric unit. T. 635-648, 849-852, T. 137-143. Lone Term Financial Feasibility Orlando General Hospital Charges When these applications were filed, HRS did not have standards for the contents of a pro forma of income and expenses. Orlando General Hospital initially projected a charge rate of $350 in 1987 and $375 in 1988. This charge rate was based upon the charge rate for Orlando General's substance abuse unit at that time, compared with a survey of five other hospitals having short term psychiatric beds. T. 425; O.G. Ex. 2, p. 24, 49. As of the summer of 1988, the Medicaid program reimbursed Orlando General Hospital for its MDC 19 (psychiatric) patients at the rate of $418 per day. T. 585. Charter Medical proposes to charge $475 per day during 1988. Florida Hospital currently charges between $425 and $445 per short term psychiatric patient day, and these charges do not include ancillary charges. T. 992. Westlake Hospital currently charges about $550 per short term psychiatric patient day. T. 888. Winter Park Pavilion is a freestanding psychiatric hospital with 39 adult psychiatric beds. The record does not indicate whether it is licensed for short or long term care. The facility charges about $500 per patient day, which does not include ancillary costs. T. 913, 918. Crossroads University Behavioral Center is a freestanding 100 bed long term psychiatric hospital that is under construction. T. 808. Crossroads has considered charges in the range of $500 to $600 per day, but has not definitely settled on the rate. T. 832-833. The charges proposed by Orlando General Hospital in its application are very reasonable, if not very conservative. Projected Utilization Orlando General Hospital's MDC 19 patient days (psychiatric patient days) have increased steadily from 1986. In 1986, the hospital had 4,969 MDC 19 patient days; in 1987, it had 7,779 MDC 19 patient days; and extrapolating (multiplying by 4) from the data for the first three months of 196, Orlando General could reasonably expect 11,804 MDC 19 patient days in 1988. O.G. Ex. 2, p. 11; T. 516. Since a 24 bed unit at 100 percent occupancy would only generate 8,760 patient days, it is unreasonable to use 11,804 as the estimate of patient days in 1988. However, it is concluded that Orlando General Hospital would have no difficulty at all in very quickly filling its proposed 24 bed unit to capacity. Expenses Orlando General Hospital's application estimated that direct expenses of the proposed 24 bed short term psychiatric unit would be $801,505 in 1987, $839,080. In 1988, and $887,030 in 1989. O.G. Ex. 2. These are reasonable projections of direct expenses. The pro forma filed by Orlando General Hospital in its application did not include an estimate of allocated expenses. The allocated expenses would typically have been 60 percent of total expenses, and the direct expenses only 40 percent of total expenses. T. 698. The projected direct expenses for 1988 in Orlando General Hospital's application were $839,080. Since that is only 40 percent of the total expense, the total projected expense (including 60 percent for indirect allocated expense) would be $2,097,700. Long Term Financial Feasibility If Orlando General Hospital charged $375 per patient day in 1988, and had 8,760 patient days, as is reasonable to expect, given its actual experience, Orlando General would have $3,285,000 in gross revenue for 1988. Assuming that net revenue, after additions and after accounting for contractuals and bad debt, will be the same percentage of gross revenue as shown in Orlando General's application, which was 76.74 percent, this would generate a net revenue of $2,520,909. This net revenue would entirely cover not only the direct expenses but also the allocated expenses, and would leave profit of $423,209. All of the remaining issues raised by the parties as to the accuracy of Orlando General's estimates of nursing expense or bad debt are irrelevant given the large amount of leeway Orlando General would have, if necessary, to raise its charges from $375 to something closer to the charges of other area hospitals. In summary, Orlando General Hospital's proposal is financially feasible in the long term. Charter Medical-Orange County, Inc. Charter Medical's proposed charges include charges for physicians who admit patients, perform histories and physicals, and make daily medical rounds. The proposed charges are reasonable. If there were need, Charter Medical's proposal would be financially feasible in the long term. The need for Charter Medical's proposed facility has not been proven by a preponderance of the evidence, however. See the Conclusions of Law herein. While the numerical need rule as applied to Orange County shows a need for 55 beds, in actual practice that need is a need for osteopathic psychiatric care. The thirty or so patients currently treated on a daily basis at Orlando General Hospital ended up at that hospital, rather than Orlando Regional Medical Center or Florida Hospital, primarily because the patients preferred osteopathic care and were admitted to Orlando General Hospital by osteopathic physicians. Absent action by HRS to stop Orlando General Hospital from treating these patients, the patients would not be available to Charter Medical in its proposed facility. This would leave Charter Medical in a situation of opening a new 50 bed facility when the county occupancy rate in 1986 was 60 percent in the only two licensed facilities in the area. It would also leave Charter Medical in a situation of opening a new facility in the face of the trend to managed health care and the certainty that the average length of stay for short term psychiatric care by 1992 will decrease from current levels. For these reasons, Charter Medical has not proven financially feasibility in the long term by a preponderance of the evidence. Quality of Care Orlando General Hospital Orlando General Hospital would provide care of good quality comparable to care that would be provided by Charter Medical. Charter Medical-Orange County, Inc. Charter Medical Corporation is a large corporation that has experience in the operation of a large number of psychiatric hospitals. That expertise would be available to insure that the care provided in Orange County would be of good quality. Charter Medical-Orange County, Inc., would provide care of good quality comparable to care that would be provided by Orlando General. Comparative Review as to Important Differences The Orlando General Hospital Application Orlando General Hospital intends to convert 24 underutilized medical and surgical beds to 24 short term psychiatric beds. T. 517. Since the project calls for conversion of existing facilities, the capital cost is $700,000, and does not include the construction of new buildings. T. 517. Since the capital cost is relatively low, the project will not drain away a large amount of reimbursement from reimbursement funding sources, thus making those funds available to other health care facilities. T. 1223. As a licensed general hospital, Orlando General Hospital's patients including the patients that would be served by the proposed short term psychiatric unit, would be eligible for Medicaid reimbursement T. 1224. Orlando General Hospital has a good record in Orange County of serving indigent patients, and currently is providing care to a large portion of the indigents cared for by Orange County. T. 1099-1100. As discussed in the section concerning osteopathic care, Orlando General Hospital's proposal for a short term psychiatric unit would have a number of benefits to the practice of osteopathic medicine in the region, and the availability of osteopathic care to patients desiring that form of care. Patients in the short term psychiatric unit at Orlando General Hospital could be transferred to a medical bed when a medical need arises without having to be transported by an ambulance. The Charter Medical Application Charter Medical-Orange County, Inc., is a wholly owned subsidiary of Charter Medical Corporation. Charter Medical Corporation has been in existence for 20 years and has 81 hospitals. Of these, 68 are psychiatric or substance abuse facilities. Charter Medical thus has extensive resources and experience to provide very good psychiatric care at the proposed facility. As a free standing hospital dedicated solely to short term psychiatric care, it is reasonable to expect that Charter Medical's facility will tend to provide more space, more varied programs, and more intensive patient care than a general hospital. This would occur because in a general hospital, the psychiatric unit must compete with medical units for allocation of resources, and in some hospitals, the psychiatric unit is given a lower priority due to the tendency of such hospitals to emphasize the medical aspect of their services. T. 47-49. Charter Medical's facility would not treat Medicaid patients, and it proposes to serve a very small percentage of indigent patients. Charter proposes in future years after the second year to provide 1.5 percent of gross revenue as charity care, and 5 percent as bad debt. T. 377-79, 197. Charter Medical's facility would serve primarily private pay and insured patients, thus draining away these paying patients from other hospitals, to the detriment of other hospitals. T. 971. The Substantial Interest of Florida Hospital If a certificate of need were granted to Charter Medical, Florida Hospital would suffer an adverse impact by loss of patients and additional competition for staff. T. 971-972, 1318-1321, 1327.
Recommendation For these reasons, it is recommended in case number 87-4748 that a final order be entered denying the application of Charter Medical-Orange County, Inc., to construct and operate a new 50 bed short term psychiatric hospital, and in case number 87-4753 that a final order be entered granting the application of Orlando General Hospital to convert 24 medical-surgical beds to short term psychiatric beds. DONE and ENTERED this 28th day of November, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of November, 1988. APPENDIX 1 TO RECOMMENDED ORDER, CASE NOS. 87-4748 and 87-4753 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used by the parties. Statements of fact in this appendix or proposed findings of fact adopted by reference in this appendix are additional findings of fact. Findings of fact proposed by Charter Medical: 3-5. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The need is for beds in either a specialty or a general hospital. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The operational use of the beds is not relevant to the occupancy rate. Had the beds been restricted as a matter of licensure to children, like Palm Bay or Laurel Oaks, the beds would not have been potentially available for adults. Only in that case would exclusion of these beds have been proper. The operational use of the beds is not relevant to the occupancy rate. The testimony regarding the use of the word "existing" in the health planning field has been rejected as not persuasive. The context of such use was not explained, and thus a finding cannot be made that the use of the word is properly applicable to the way HRS intends the word to be used in its occupancy rule. The equation of "existing" with "operational" confuses capacity and need as discussed elsewhere in this recommended order. The HRS interpretation is the most reasonable construction of the word, and leads to a meaning far more consistent with the purposes of the certificate of need regulatory law than does the equation of "existing" with merely being operational. The certificate of need law is aimed at determining need five years into the future. How a hospital may temporarily operate its licensed beds during that period to respond to fluctuations in demand and operational idiosyncrasies at the particular hospital is irrelevant to the question of whether HRS should grant certificates of need and additional licensed capacity within the District. Dr. Luke's calculation was conservative and correct, but a better calculation is the one by Orlando General's expert (78 percent) that uses MDC 19 patient days. The only relevant count is 105 licensed beds at the two facilities. The last sentence is rejected for lack of credible evidence from which to draw that inference, as explained elsewhere in this recommended order. 20-21. The only relevant count is licensed beds. 22. Orlando General's average daily census was 13.6 based upon 4,969 MDC 19 patient days in 1986. 23-24. The only relevant count is licensed beds. 28. These are matters of law, and thus not appropriate as proposed findings of fact. 30. It is true that the health care needs of the metropolitan Orlando impact counties adjacent to Orange County due to the sprawl of that urban area across several county lines. But there is sufficient expert evidence in this record to conclude that generally speaking, the local health council has not acted arbitrarily and capriciously in its choices of counties as health planning areas for purposes of allocation of bed need and for purposes of applying occupancy rates. Nonetheless, the that the urban extent of the metropolitan Orlando area is important has been accepted in this recommended order with respect to the conclusion that the factor that the Orange County occupancy rate is only slightly below 75 percent is entitled to less weight in this case. 32, 33, 35, 37-63. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 64 (first sentence). It is realistically expected that Charter Medical will devote 1.5 percent of its gross patient revenue to barity care. T. 377- 379. 65-70. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 71-72. Financial feasibility has not been shown due to lack of need. Lack of need will result in insufficient occupancy and revenue. 73-74. The extrapolation from the actual trend of increase in patient days in District VII for the years 1983-1987 to create a projection of patient days in 1988 through 1992 would have been a valid and important way to show need, and would have been accepted had the projection accounted for the trend in the industry toward shorter lengths of stay due to changes in methods of payments for mental health care. The extrapolation simply assumes that the past will continue. In this case, there is substantial reason to believe that the past will not continue, that the base data, 1983-1987, is not valid for predicting patient days in 1992 because the patient days in 1992 will largely be paid for under a new system, a system that discourages inpatient stays beyond that which is absolutely necessary from a clinical point of view. Charter Medical projects that it will rely upon insurance for payment 67 percent of the time, so the changes in insurance payments will substantially affect patient days in 1992 at its proposed facility. 75-85. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 89. While osteopathic psychiatric care is essentially the same as allopathic psychiatric care, there are two critical differences. Osteopathic medicine in general emphasizes consideration of the functioning of the body as a whole; allopathic medicine does not. Secondly, osteopathic medicine utilizes muscular and skeletal manipulation in treatment, including psychiatric treatment, and allopathic medicine does not. These two differences are sufficiently marked for patients to have a preference for one or the other approach. 91-92. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 93-94. These proposed findings are true and are adopted by reference, but the findings do not prove that the quality of care at Orlando General Hospital would not be adequate in 1992. It was apparent that Dr. Greene's heavy caseload was not an optimum circumstance. However, at the time of the , Orlando General had four staff psychiatrists. T. 1355. Dr. Greene testified that the care was "basically" the same, but his testimony clearly reflected his opinion that the "deeper" differences were significant. T. 756, 1350-1354. The record cited does not support a finding that the majority of the patients transferred were indigent. That question was not asked. This proposed finding places the cart before the horse. Osteopathic physicians gravitate to Orlando General Hospital to practice osteopathy. In the practice of osteopathy, they achieve many job satisfactions, including care of patients and making money. 98-99. These proposed findings of fact are irrelevant because based upon the past, not upon a future having more staff psychiatrists. Moreover, it is clinically acceptable for other professionals to provide therapy and counseling. These proposed findings of fact are irrelevant. The program description in the application was superseded by evidence during the formal administrative hearing. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Orlando General Hospital is an existing hospital that already has these functions. It may need some augmentation of staff in these areas, but if it does, it would be an unreasonable conclusion to make that it would fail to add such 103-106. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The only exception is the last sentence in proposed finding 106. The number 18 is not supported by the record cited. This method has not been shown to be unreasonable. It is true that it was the method used. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. There was an accounting for bad debt. O.G. Ex. 2, p. 48. The point is essentially irrelevant. A 10 percent increase based upon 1987 salaries would be only about 20,000. Moreover, Charter Medical stipulated in the prehearing stipulation that the salaries of all personnel are reasonable. The proposed finding of fact is true but irrelevant. A pro forma does not have to comport with generally accepted accounting principles. Even with the addition of these charges, the resultant charge is comparable to charges of other area hospitals, including. Charter Medical's proposed charge of $475, which with inflation would increase rapidly to $500. 113-122, 124. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 125-127. Proof that an existing health care program is in sound financial condition is essentially irrelevant to the question of whether that program has a substantial interest sufficient to permit intervention into a section 120.57(1), Fla. Stat., formal proceeding. Proof of competition for the same patients in the same service area is sufficient to show that the existing program will be "substantially affected" to entitle it to intervene. Section 381.709(5)(b), Fla. Stat. (1987). Florida Hospital has proven its substantial interest by showing that the addition of new short term psychiatric beds, particularily a new facility like proposed by Charter Medical, will increase competition in Orange County for patients and staff. T. 881, 883, 649, 855-856. 128-129. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference 130. Mr. Holton's testimony was not only based upon consideration of the data mentioned in this proposed finding of fact, but also his experience in general with managed health care plans and the effect such plans have had upon the market place. The proposed finding that his testimony was not credible is rejected. 131 (first two sentences), 132-133. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Findings of Fact proposed by Orlando General Hospital: 7-12, 17, 19, 29. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The statement is true only from the perspective of the osteopathic psychiatrist and with respect to osteopathic care. Allopathic physicians disagree. The second sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 34. The second sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 38-49, 51-60. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The proposition that separate geriatric units offer no benefits to geriatric patients is contrary to the preponderance of the evidence. The proposition that there is no problem in mixing the elderly with younger patients, or that an elderly patient does much better in a mixed population, is contrary to the preponderance of the evidence. The second and third sentences are contrary to the preponderance of the evidence. 67-71, 73-80. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 86-87. While these proposed findings of fact are true, they are only marginally relevant since the ratio is measured as of 1992, not 1988. These are matters of law, and thus not appropriate as proposed findings of fact. It is unclear when Dr. Greene meant when he testified that his census was 35 to 40 patients. For the first 90 days of 1988, the hospital had 2,951 MDC 19 patient days, or 32.8 patients per day. The analysis with respect to "existing" beds and the county analysis have been rejected as explained in this recommended order. The last sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 97-102. The legal argument that beds temporarily not in operation are not "existing" has been rejected as explained in this recommended order. Thus, these findings are not relevant. 105, 107 (last sentence). These are matters of law, and thus not appropriate as proposed findings of fact. 109. The second sentence is rejected as a finding of fact because the health planning context was not adequately explained. 110-111. These are matters of law, and thus not appropriate as proposed findings of fact. 114-115. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 117. These are matters of law, and thus not appropriate as proposed findings of fact. 118-120. These proposed findings of fact are irrelevant. 122. These are matters of law, and thus not appropriate as proposed findings of fact. 123, 124, 126, 127, 129-131, 133. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The proposed finding of fact is true, but has not been shown to impact the financial feasibility of the Charter Medical proposal. The indirect costs within a single hospital are more relevant to long term financial feasibility of the proposed project than the indirect costs to a single hospital from a parent corporation that has over 60 such hospitals. 136, 147, 151, 152. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The patient body count for the first three months of 1988 was 32.8. O.G. Ex. 2, p. 11. The "consciousness" of a corporation is difficult . Orlando General Hospital was well aware that its medical-surgical census was decreasing and its psychiatric population was increasing. It is true that the increase of its psychiatric population was largely due to causes outside the control of the hospital, however, and not due to marketing efforts by the hospital. 161 (last sentence), 162. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. These are matters of law, and thus not appropriate as proposed findings of fact. This proposed finding of fact is only marginally relevant because the result could be an average caused a minority of states who do things differently. Moreover, there Is no evidence that Florida is like this. The third sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 167. The statement is true only if HRS allows Orlando General Hospital to continue to serve this large number of psychiatric patients without having a certificate of need. If the practice were discontinued, some of the patients would be served by other hospitals in the District, including Florida Hospital. These are matters of law, and thus not appropriate as proposed findings of fact. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 174, 176. These are matters of law, and thus not appropriate as proposed findings of fact. 177. The current state of access to short term psychiatric services in eastern Orange County was not credibly proven. 179. These are matters of law, and thus not appropriate as proposed findings of fact. Findings of fact proposed by HRS: 1, 2, 3, 4. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 5, 6. These are matters of law, and thus not appropriate as proposed findings of fact. 13. The number should be 64, not 63. 22. The occupancy rate is a mathematical attempt to measure the degree to which the District VII capacity to serve adult short term psychiatric patients has been used up. The theory implicit in the rule is that, with respect to adult capacity, the decision to add new capacity should be delayed until the old capacity is at least 75 percent or more used up. The rate has a numerator (patient days) and a denominator (the real capacity). Any argument that tries to ignore real patient days occurring in the District, or real capacity to serve those patients, is unreasonable. Findings of fact proposed by Florida Hospital: The second sentence is true, but the issue is not she license of the beds is, but what type of patient day is generated by that service. The preponderance of the evidence is that those were short term psychiatric patient days. The first sentence is rejected for the reasons stated above. 19-21. These are matters of law, and thus not appropriate as proposed findings of fact. 20-27. F.H. Ex. 3 was excluded from evidence, and the testimony related to that exhibit was also excluded from evidence for the reasons stated elsewhere in this recommended order. 28. This proposed finding fails to consider the MDC 19 evidence of patient days at Florida Hospital and Orlando Regional Medical Center. 29-30. These proposed findings of fact are true, and the reasoning therein is part of the reason why the denominator of the fraction that is the occupancy rate must be licensed beds. 31. A correction to the number of patient days at Westlake Hospital is legally appropriate, but the evidence for such a correction has been excluded from the record for reasons having nothing to do with the legal propriety of such a correction. 33. These are matters of law, and thus not appropriate as proposed findings of fact. 34-39. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The fact that existing facilities may have beds available to treat future patients is not inconsistent with a decision to grant a certificate of need for additional licensed beds. The occupancy rate threshold in the rule is 75 percent occupancy, not 100 percent occupancy. It is to be expected that the District will have 25 percent or less of its beds unoccupied when new beds are approved. 41, 43-44, 46-47. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. This proposed finding of fact is contrary to the credible evidence. These proposed findings of fact are irrelevant. See section 381.705(1)(g) and (h), Fla. Stat. (1987). This proposed finding of fact is contrary to the credible evidence. This proposed finding of fact is contrary to the credible evidence. To the contrary, where need exists, these are grounds for determining which of the competing applicants should be approved. 60. A conclusion that the occupancy rates are "stable" cannot be made from data based only upon calendar year 1986, which was two years ago, and six years from 1992, the time when need is projected. 61-69. These findings of fact are true. Even where there is need, the opening of the new facility normally lures some patients away from existing facilities. But if need exists sufficient to grant a certificate of need, this short term harm to existing providers is irrelevant. Finally, health care costs would not increase if there is need. While it is true that the Charter Medical utilization projections were initially prepared without a close analysis of District VII, the projections are nonetheless reasonable as discussed elsewhere in this recommenced order. Inflation of expenses without projection of inflation in revenues is an incomplete and unreasonable mode of projection. T. 229-230. Given the size of the Charter Medical Corporation and the number of hospitals it owns and operates, the condition of one more hospital will not Increase home office expenses. Those expenses will exist whether this project exists or not. The financial feasibility of the project in Orlando, therefor, need not consider home office expenses. T. 242-244. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The quantitative relevancy of this proposed finding of fact has not been shown. The proposed finding of fact is otherwise true. Orlando General Hospital's current patient census is a sufficient basis for a finding that its projected occupancy rate is reasonable. Charges proposed in an application for a certificate of need are not promises binding upon the applicant. In future years, the applicant is reasonably expected to make substantial changes in its charge structure based upon market conditions. Proposed charges, as well as proposed changes to charges to meet altered contingencies beyond the control of the applicant, is entirely appropriate for analysis in a certificate of need case. The only relevant question is whether the altered charge compares favorably with competing applicants. 81-83. Florida Hospital proved that the market for staff is competitive and that hiring staff is difficult at the moment. But it did not prove that the applicants would fail to hire adequate staff to operate their proposed facilities. T. 1327. 92-102. These proposed findings of fact summarize proposed findings of fact which have previously been addressed. APPENDIX 2 TO RECOMMENDED ORDER, CASE NOS. 87-4748 and 87-4753 Rule 10-5.008(3), Fla. Admin. Code, provides that "[s]ubsequent to an application being deemed complete by the Office of Health Planning and Development, no further information or amendment will be accepted by the Department." (E.S.) The rule states that the Department will accept no information after the application is deemed complete. The words used are not ambiguous or unclear. Thus, if normal rules of construction were to be followed, the conclusion would be drawn $ha the Department is bound by its own clear rule, and cannot, by interpretation, add exceptions. But an equally valid rule of construction is that absurd results must be avoided. Certificate of need cases, particular ones like the case at bar, are highly competitive and complicated. It would be unreasonable to require the applicants to prove applications that have become erroneous due to the passage of time. While the question is a close one, the Hearing Officer has concluded that it would be better to ignore the clear words of the rule, and attempt to apply the evolving interpretative policy of the Department to avoid an absurd result. The following appear to be the existing final orders of the Department interpreting rule 10-5.008(3), and its predecessor, published in the Florida Administrative Law Reports. Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, 8 F.A.L.R. 4650 (September 24, 1986); Arbor Health Care Company, Inc., d/b/a Martin Health Center, Inc., v. Department of Health and Rehabilitative Services et al., 9 F.A.L.R. 709 (October 13, 1986); Mease Hospital and Clinic v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 159 (October 13, 1986); Health Care and Retirement Corporation of America, d/b/a Heartland of Collier County v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 5883 (December 8, 1986); Health Care and Retirement Corporation of America, d/b/a Nursing Center of Highlands County, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1081 (December, 1986); Manatee Mental Health Center, Inc. d/b/a Manatee Crisis Center v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1430 (February 2, 1987); Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborouh, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1630 (February 5, 1987); Manor Care, Inc. v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1628 (March 2, 1987); Psychiatric Institutes of America, Inc., d/b/a Psychiatric Institute of Orlando v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1626a (March 5, 1987) ; Manor Care, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2139 (March 24, 1987); Wuesthoff Health Services, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2110 (April 17, 1987); Hialeah Hospital, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2363 (May 1, 1987); Palms Residential Treatment Center, Inc., d/b/a Manatee Palms Residential Treatment Center v. Department of Health and Rehabilitative Services, et al., 10 F.A.L.R. 1425 (February 15, 1988). These final orders contain the following statements concerning the Department's interpretation of rule 10-5.008(3) and its evolving policy with respect to changes to applications for certificates of need during section proceedings and admissibility of new information not contained in the original applications: Health Care and Retirement, supra, 8 F.A.L.R. 1081: During 120.57 proceedings, an application may be updated to address facts extrinsic to the application such as interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories. An applicant is not allowed to update by adding additional services, beds, construction, or other concepts not initially reviewed by HRS. Manatee Mental Health Center, supra, 9 F.A.L.R. at 1431: ... HRS has authority by statute to issue a CON for an identifiable portion of . Section 381.4C4(8), Florida Statutes. MMHC's "amended" proposal reduced the number of beds sought, and was properly considered during the 120.57 proceedings. Manor Care. Inc., supra, 9 F.A.L.R. at 1628: The amended applications [amended to address needs of Alzheimer's disease patients] changed the scope and character of the proposed facilities and services and thus, must be reviewed initially at HRS... [ limited the denovo concept by requiring that evidence of changed circumstances be considered only if relevant to the application. Hialeah Hospital, Inc., 9 F.A.L.R. at 2366: It is recognized that more than a year may pass between the free form decision by HRS and the final 120.57 hearing and this passage of time may require updating an application by evidence of changed circumstances such as the' effect of inflation on interest and construction costs. For the sake of clarity HRS would avoid the use of the word "amendment" to describe such updating. Such evidence of changed circumstances beyond the control of the applicant is relevant to the original application and is admissible at the 120.57 hearing. Taking the easiest first, those items explicitly listed by the Department in the first Health Care and Retirement case, "interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories," which change after the application is initially filed, are permitted. Not permitted are "additional services, beds, construction, or other concepts not initially reviewed by HRS." The remainder of the Department's incipient policy, as presently articulated, is obscure. The word "extrinsic" without the list of examples is of little guidance. The application is only an idea on paper. Anything new, other than the bare words on the paper as originally filed, is literally "extrinsic" thereto. The concept of whether the new information changes the "scope and character of the facilities and services" originally reviewed in free form action by the Department is similarly of little guidance because the phrase "scope and character" can mean practically anything. Of fundamental difficulty is whether this phrase is intended to select substantial changes to the original application, or all changes. For example, if the original application proposes separate shower stalls and tubs for double rooms, but the amended application proposes a combination shower and tub, has the "scope and character" of the "facilities and services" changed? The phrase "additional services, beds, construction, or other concepts not initially reviewed by HRS" is similarly vague. What is a service or construction or a concept not originally reviewed? Would this include the change in bathing equipment discussed above? The concept of "control" of the applicant over the information that goes into the original application is the only phrase that gives applicants any guidance. The word "control" probably is intended as a "knew or reasonably should have "known" standard. If the applicant reasonably should have known about the information and should have provided the Department with the information as a part of its original application, then the new information cannot be considered during the formal administrative hearing. The Hearing Officer will be guided, thus, by the explicit list of items provided by the Department in the Health Care and Retirement case, and by the concept of "control" provided by the Hialeah case. COPIES FURNISHED: For Agency HRS Theodore D. Mack. Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Building Tallahassee, Florida 32308 (904) 488-8673 Charter Medical-Orange County, Inc. Fred W. Baggett, Esquire Stephen A. Ecenia, Esquire Roberts, Baggett, LaFace & Richard 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 (904) 222-6891 William D. Hoffman, Jr., Esquire Deborah J. Winegard, Esquire King & Spalding 2500 Trust Company Tower Atlanta, GA 30303 (404) 572-4600 Orlando Regional Medical Center, Inc. Steven R. Bechtel, Esquire Mateer, Harbert & Bates, P. A. 100 East Robinson Street Post Office Box 2854 Orlando, Florida 32802 (305) 425-9044 Orlando General Hospital, Inc. Eric J. Haugdahl, Esquire 1363 East Lafayette Street Suite C Tallahassee, Florida 32301 (904) 878-0215 Florida Hospital Stephen K. Boone, Esquire Robert P. Mudge, Esquire Boone, Boone, Klingbeil & Boone, P. A. 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284 (813) 488-6716 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
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 The issue in this case is whether the allegations set forth in the First Corrected Amended Administrative Complaint filed by the Department of Health (Petitioner) against Deshon A. Davis, CNA (Respondent), are correct, and, if so, what penalty should be imposed.
Findings Of Fact The Petitioner is the state agency charged by statute with regulating the practice of nursing assistance. At all times material to this case, the Respondent was licensed as a CNA in the State of Florida, holding license no. CNA 274735. At all times material to this case, the Respondent was employed as a CNA by Health First Cape Canaveral Hospital (hereinafter “Hospital”) in Cocoa Beach, Florida. On April 23, 2014, Patient K.H. (hereinafter “patient”) was admitted to the Hospital. The patient was discharged from the Hospital on May 1, 2014. During the time the patient was admitted to the Hospital, he was able to speak; able to get out of his bed and exit the room; and able to use the bathroom without assistance. On April 25, 2014, the patient contacted Hospital authorities and reported that on the two previous days, the Respondent had committed sexual misconduct. At the hearing, the patient testified that on April 23, 2014, the Respondent entered the room and stated that he needed to bathe the patient. The Respondent testified that the patient had soiled his clothing, and that he entered the room to remove the clothing, clean the patient, and provide fresh clothing to the patient. At the time, the patient was in a semi-private room, with another patient in the other bed. The Respondent pulled the privacy curtain around the patient’s bed to separate the beds and to shield the patient from view. The patient testified that the Respondent removed the patient’s clothing, applied an unidentified lotion to the patient’s penis, and roughly manipulated the patient’s penis in a masturbatory manner for at least five minutes until the patient ejaculated. The patient testified that the Respondent then exited the room, leaving the patient to wipe off the ejaculate. Although the patient testified that he requested that the Respondent cease the manipulation, the patient made no apparent effort to get out of the bed or to contact anyone for assistance during the alleged event. The Respondent denied that he applied a lotion to the patient’s penis or that any sexual contact occurred on April 23, 2014. The Respondent testified that while he was cleaning the patient, he observed a “rash” on the patient’s thigh, and that he applied a “barrier cream” to the rash. Although the Respondent testified that he informed the Hospital nursing staff about the rash on April 23, 2014, the registered nurses assigned to care for the patient testified that they had no recollection that the Respondent advised them that the patient had a rash. The patient’s medical records contain no documentation of a rash or of the application of any medication related to a rash. No nurse approved or directed the application of any substance to the patient for a rash. The patient testified that the second incident occurred on or about April 24, 2014. Although the patient had been moved to another semi-private room, only the Respondent and the patient were present in the room at the time of the alleged event. The patient testified that the Respondent entered the room, made a comment about the patient “bringing in rashes,” exposed the patient’s genital area, and then again, after applying a lotion to his penis, roughly manipulated the patient’s penis in a masturbatory manner for approximately ten minutes until the patient ejaculated. The patient testified that the Respondent left the room, and the patient had to again clean himself. Again, although the patient testified that he asked the Respondent to cease the sexual manipulation, the patient made no apparent effort to get out of the bed or to contact anyone for assistance. The Respondent denied the alleged sexual contact. The Respondent testified that he entered the patient’s room because the patient’s “call light” was on. The Respondent testified he heard the patient say “ouch” while using a plastic urinal. The Respondent testified that he thereafter observed a “cut” on the patient’s penis. He also testified that the thigh rash was still visible. The Respondent suggested that abrasions caused by plastic urinals are not uncommon. There is no credible evidence that the patient’s penis was injured on April 24, 2014, whether by a plastic urinal or otherwise. The Respondent testified that after he obtained the patient’s consent, he applied the “barrier cream” to the patient’s penis and thigh. There is no evidence that the Respondent advised the Hospital nursing staff about any injury to the patient’s penis. The patient’s medical records contain no documentation of a wound or abrasion on the patient’s penis or of a rash on his thigh. No nurse approved or directed the application of any substance to the patient for a wound or a rash. On April 25, 2014, the patient contacted Hospital authorities and reported the alleged sexual improprieties. The patient’s medical records indicate that from the time of the patient’s Hospital admission on April 23, 2014, until April 25, 2014, the patient had been resting and calm. According to the Hospital’s representatives who spoke to the patient on April 25, 2014, he was emotional and “very distraught” while describing the alleged activities. A physical examination of the patient was conducted on April 25, 2014, during which no visible rash on the thigh or injury to the penis was observed. According to the expert testimony of Lynda Tiefel, R.N., a CNA must report the presence of a wound or a rash on a patient to a registered nurse. It is the responsibility of the registered nurse to assess the condition and determine whether a physician referral should occur. Other than reporting the condition to the nurse, a CNA should take no action unless directed to do so by the nurse. Ms. Tiefel’s testimony was persuasive and has been credited. According to the expert testimony of Victor Mendez, C.N.A., a CNA is not qualified to diagnose a medical condition. A CNA is required to document the presence of a rash or wound, and advise the appropriate registered nurse of the condition. The CNA may apply medication to a rash or wound only after receiving direction to do so from the registered nurse, and such application should take no more than 15 seconds. Mr. Mendez’s testimony was persuasive and has been credited. The Hospital conducted an internal investigation regarding the allegations, and subsequently terminated the Respondent’s employment.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Health, Board of Nursing, enter a final order: finding the Respondent guilty of violating sections 464.204(1)(b) and 456.072(1)(o); placing the Respondent on probation for a period of one year, during which the Respondent shall complete such continuing education courses as specified by the Petitioner; and imposing an administrative fine of $125.00. DONE AND ENTERED this 11th day of September, 2015, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of September, 2015. COPIES FURNISHED: Deshon A. Davis, C.N.A. 3620 East Powder Horn Road Titusville, Florida 32796 Lucas Lawrence May, Esquire Department of Health Prosecution Services Unit Bin C-65 4052 Bald Cypress Way Tallahassee, Florida 32399 (eServed) Judson Searcy, Esquire Department of Health Prosecution Services Unit Bin C-65 4052 Bald Cypress Way Tallahassee, Florida 32399 (eServed) Ann L. Prescott, Esquire Department of Health Bin C-65 4052 Bald Cypress Way Tallahassee, Florida 32399 (eServed) Jamison Jessup, Qualified Representative 557 Noremac Avenue Deltona, Florida 32738 (eServed) Joe Baker, Jr., Executive Director Board of Nursing Department of Health Bin C-02 4052 Bald Cypress Way Tallahassee, Florida 32399 (eServed) Ann-Lynn Denker, PhD, ARNP, Chair Board of Nursing Department of Health Bin C-02 4052 Bald Cypress Way Tallahassee, Florida 32399
