Conclusions DOAH No. 14-248 ACHA No. 2013006534 DOAH No. 14-528 ACHA No. 2013007612 DOAH No. 14-521 ACHA No. 2013010196 Having reviewed the Administrative Complaints and Notices of Intent to Deny, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over Senior Care Group, Inc. d/b/a Lakeshore Villas Health Care Center pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaints and Notices of Intent to Deny and Election of Rights forms to Senior Care Group, Inc. d/b/a Lakeshore Villas Health Care Center. (Ex. 1) The Election of Rights forms advised of the right to an administrative hearing. 3. The parties have since entered into the attached Settlement Agreement. (Ex. 2) Based upon the foregoing, it is ORDERED: 1, The Settlement Agreement is adopted and incorporated by reference into this Final Order. The parties shall comply with the terms of the Settlement Agreement. 2. The Notice of Intent to Deny is superseded by this Agreement. 3. Senior Care Group, Inc. d/b/a Lakeshore Villas Health Care Center shall pay the Agency $25,500.00. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, MS 14 Tallahassee, Florida 32308 4. Conditional licensure status is imposed on Senior Care Group, Inc. d/b/a Lakeshore Villas Health Care Center beginning on April 12, 2013. ORDERED at Tallahassee, Florida, on this 22 day of Mace 2014, Dp Agency for Health Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy of this Final Order was served on the below-named persons by the method designated on this 3 ay of ore ‘A 2014, Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) Thomas J. Walsh II 1 Anna G. Small, Esq. Office of the General Counsel Allen Dell, P.A. Agency for Health Care Administration 202 South Rome Avenue (Electronic Mail) Tampa, Florida 33606 (U.S. Mail) Linzie F. Bogan Lynne A. Quimby-Pennock Administrative Law Judge Administrative Law Judge Division of Administrative Hearings Division of Administrative Hearings (Electronic Mail) (Electronic Mail) aA DECOY 7] Certified Article Number 7256 9008 Will see W925 SENDERS RECORD FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION aaa Better Health Care for all Floridians SEA ORETARY. EK May 22, 2013 ADMINISTRATOR minty RECERVED LAKESHORE VILLAS HEALTH CARE CENTER C!LIFY INTAKE UnpLICENSE NUMBER: 1282096 16002 LAKESHORE VILLA DR we FILE NUMBER: 62921 TAMPA, FL 33613 MAY & 2043 CASE #: 2013005471 Agency for Health NOTICE 6f INFENTIO.DENY Dear Ms. Johnson: It is the decision of this Agency that Lakeshore Villas Health Care Center’s license renewal application for a nursing home be DENIED. The specific basis for the Agency’s decision is based on the following grounds: e Pursuant to section 400.121(3)(d), F.S., the Agency shail revoke or deny a nursing home license for two class I deficiencies arising from separate surveys within a 30 month period. Lakeshore Villas Health Care Center was cited for Class I deficiencies on October 13, 2011 and November 14, 2012. e — Section 408.815(1), F.S., states that in addition to the grounds provided in authorizing statutes, grounds that may be used by the agency for denying and revoking a license or change of ownership application include any of the following actions by a controlling interest: (a) a violation of this part, authorizing statutes, or applicable rules; and (d) a demonstrated pattern of deficient performance. EXPLANATION OF RIGHTS Pursuant to Section 120.569, F.S., you have the right to request an administrative hearing. In order to obtain a formal proceeding before the Division of Administrative Hearings under Section 120.57(1), F.S., your request for an administrative hearing must conform to the requirements in Section 28-106.201, Florida Administrative Code (F.A.C), and must state the material facts you dispute. SEE ATTACHED ELECTION AND EXPLANATION OF RIGHTS FORMS. Agengy for Y) Adminjstraty Z j /¢. Berard E. Hudsda, Manager Long Term Care Unit ce: Agency Clerk, Mail Stop 3 EXHIBIT 1 Visit AHCA online at ahca.myflorida.com 2727 Mahan Drive,MS#33 Tallahassee, Florida 32308 FLORIDA AGENCY FOR HEALTH CARE ADMINISTRATION RICK SCOTT GOVERNOR July 8, 2013 LAKESHORE VILLAS HEALTH CARE CENTER 16002 LAKESHORE VILLA DR . TAMPA, FL 33613 Dear Administrator: ELIZABETH DUDEK SECRETARY RECEIVED GENERAL COUNSEL JUL 12 2013 Agency for Health Care Administration The attached license with Certificate #18248 is being issued for the operation of your facility. Please review it thoroughly to ensure that all information is correct and consistent with your records. If errors or omissions are noted, please make corrections on a copy and mail to: Agency for Health Care Administration Long Term Care Section, Mail Stop #33 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308 Issued for status change to Conditional. Sincerely, Fracey Weathewpeoan for Kathy Munn Agency for Health Care Administration Division of Health Quality Assurance Enclosure cc: Medicaid Contract Management 2727 Mahan Drive, MS#33 Tallahassee, Florida 32308 Visit AHCA online at ahca.myflorida.com CERTIFICATE #: 18248 LICENSE #: SNF1282096 State of Florida AGENCY FOR HEALTH CARE ADMINISTRATION DIVISION OF HEALTH QUALITY ASSURANCE NURSING HOME CONDITIONAL This is to confirm that SENIOR CARE GROUP, INC. has complied with the rules and regulations adopted by the State of Florida, Agency For Health Care Administration, authorized in Chapter 400, Part I, Florida Statutes, and as the licensee is authorized to operate the following: LAKESHORE VILLAS HEALTH CARE CENTER 16002 LAKESHORE VILLA DR TAMPA, FL 33613 TOTAL: 179 BEDS ~ STATUS CHANGE EFFECTIVE DATE: 06/04/2013 EXPIRATION DATE: 06/29/2013 ary fy Assurance
The Issue Whether the certificate of need (CON) applications filed by New Port Richey Hospital, Inc., d/b/a Community Hospital of New Port Richey (Community Hospital) (CON No. 9539), and Morton Plant Hospital Association, Inc., d/b/a North Bay Hospital (North Bay) (CON No. 9538), each seeking to replace and relocate their respective general acute care hospital, satisfy, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties AHCA AHCA is the single state agency responsible for the administration of the CON program in Florida pursuant to Chapter 408, Florida Statutes (2000). The agency separately reviewed and preliminarily approved both applications. Community Hospital Community Hospital is a 300,000 square feet, accredited hospital with 345 licensed acute care beds and 56 licensed adult psychiatric beds, located in southern New Port Richey, Florida, within Sub-District 5-1. Community Hospital is seeking to construct a replacement facility approximately five miles to the southeast within a rapidly developing suburb known as "Trinity." Community Hospital currently provides a wide array of comprehensive inpatient and outpatient services and is the only provider of obstetrical and adult psychiatric services in Sub-District 5-1. It is the largest provider of emergency services in Pasco County with approximately 35,000 visits annually. It is also the largest provider of Medicaid and indigent patient days in Sub-District 5-1. Community Hospital was originally built in 1969 and is an aging facility. Although it has been renovated over time, the hospital is in poor condition. Community Hospital's average daily census is below 50 percent. North Bay North Bay is a 122-bed facility containing 102 licensed acute care beds and 20 licensed comprehensive medical rehabilitation beds, located approximately one mile north of Community Hospital in Sub-District 5-1. It serves a large elderly population and does not provide pediatric or obstetrical care. North Bay is also an aging facility and proposes to construct a replacement facility in the Trinity area. Notably, however, North Bay has spent approximately 12 million dollars over the past three years for physical improvements and is in reasonable physical condition. Helen Ellis Helen Ellis is an accredited hospital with 150 licensed acute care beds and 18 licensed skilled nursing unit beds. It is located in northern Pinellas County, approximately eight miles south of Community Hospital and nine miles south of North Bay. Helen Ellis provides a full array of acute care services including obstetrics and cardiac catheterization. Its daily census average has fluctuated over the years but is approximately 45 percent. Mease Mease operates two acute care hospitals in Pinellas County including Mease Dunedin Hospital, located approximately 18 to 20 miles south of the applicants and Mease Countryside Hospital, located approximately 16 to 18 miles south of Community and North Bay. Each hospital operates 189 licensed beds. The Mease hospitals are located in the adjacent acute care sub-district but compete with the applicants. The Health Planning District AHCA's Health Planning District 5 consists of Pinellas and Pasco Counties. U.S. Highway 41 runs north and south through the District and splits Pasco County into Sub- District 5-1 and Sub-District 5-2. Sub-District 5-1, where Community Hospital and North Bay are located, extends from U.S. 41 west to the Gulf Coast. Sub-District 5-2 extends from U.S. 41 to the eastern edge of Pasco County. Pinellas County is the most densely populated county in Florida and steadily grows at 5.52 percent per year. On the other hand, its neighbor to the north, Pasco County, has been experiencing over 15 percent annual growth in population. The evidence demonstrates that the area known as Trinity, located four to five miles southeast of New Port Richey, is largely responsible for the growth. With its large, single- owner land tracts, Trinity has become the area's fuel for growth, while New Port Richey, the older coastal anchor which houses the applicants' facilities, remains static. In addition to the available land in Trinity, roadway development in the southwest section of Pasco County is further fueling growth. For example, the Suncoast Highway, a major highway, was recently extended north from Hillsborough County through Sub-District 5-1, west of U.S. 41. It intersects with several large east-west thoroughfares including State Road 54, providing easy highway access to the Tampa area. The General Proposals Community Hospital's Proposal Community Hospital's CON application proposes to replace its existing, 401-bed hospital with a 376-bed state- of-the-art facility and relocate it approximately five miles to the southeast in the Trinity area. Community Hospital intends to construct a large medical office adjacent to its new facility and provide all of its current services including obstetrical care. It does not intend to change its primary service area. North Bay's Proposal North Bay's CON application proposes to replace its existing hospital with a 122-bed state-of-the-art facility and also plans to relocate it approximately eight miles to the southeast in the Trinity area of southwestern Pasco County. North Bay intends to provide the same array of services it currently offers its patients and will not provide pediatric and obstetrical care in the proposed facility. The proposed relocation site is adjacent to the Trinity Outpatient Center which is owned by North Bay's parent company, Morton Plant. The Outpatient Center offers a full range of diagnostic imaging services including nuclear medicine, cardiac nuclear stress testing, bone density scanning, CAT scanning, mammography, ultrasound, as well as many others. It also offers general and specialty ambulatory surgical services including urology; ear, nose and throat; ophthalmology; gastroenterology; endoscopy; and pain management. Approximately 14 physician offices are currently located at the Trinity Outpatient Center. The Condition of Community Hospital Facility Community Hospital's core facilities were constructed between 1969 and 1971. Additions to the hospital were made in 1973, 1975, 1976, 1977, 1979, 1981, 1992, and 1999. With an area of approximately 294,000 square feet and 401 licensed beds, or 733 square feet per bed, Community Hospital's gross area-to-bed ratio is approximately half of current hospital planning standards of 1,600 square feet per bed. With the exception of the "E" wing which was completed in 1999, all of the clinical and support departments are undersized. Medical-Surgical Beds And Intensive Care Units Community Hospital's "D" wing, constructed in 1975, is made up of two general medical-surgical unit floors which are grossly undersized. Each floor operates 47 general medical-surgical beds, 24 of which are in three-bed wards and 23 in semi-private rooms. None of the patient rooms in the "D" wing have showers or tubs so the patients bathe in a single facility located at the center of the wing on each floor. Community Hospital's "A" wing, added in 1973, is situated at the west end of the second floor and is also undersized. It too has a combination of semi-private rooms and three-bed wards without showers or tubs. Community Hospital's "F" wing, added in 1979, includes a medical-surgical unit on the second and third floor, each with semi-private and private rooms. The second floor unit is centrally located between a 56-bed adult psychiatric unit and the Surgical Intensive Care Unit (SICU) which creates security and privacy issues. The third floor unit is adjacent to the Medical Intensive Care Unit (MICU) which must be accessed through the medical-surgical unit. Neither intensive care unit (ICU) possesses an isolation area. Although the three-bed wards are generally restricted to in-season use, and not always full, they pose significant privacy, security, safety, and health concerns. They fail to meet minimum space requirements and are a serious health risk. The evidence demonstrates that reconfiguring the wards would be extremely costly and impractical due to code compliance issues. The wards hinder the hospital's acute care utilization, and impair its ability to effectively compete with other hospitals. Surgical Department and Recovery Community Hospital's surgical department is separated into two locations including the main surgical suite on the second floor and the Endoscopy/Pain Management unit located on the first floor of "C" wing. Consequently, the department cannot share support staff and space such as preparation and recovery. The main surgical suite, adjacent recovery room, and central sterile processing are 25 years old. This unit's operating rooms, cystoscopy rooms, storage areas, work- stations, central sterile, and recovery rooms are undersized and antiquated. The 12-bay Recovery Room has no patient toilet and is lacking storage. The soiled utility room is deficient. In addition, the patient bays are extremely narrow and separated by curtains. There is no direct connection to the sterile corridor, and staff must break the sterile field to transport patients from surgery to recovery. Moreover, surgery outpatients must pass through a major public lobby going to and returning from surgery. The Emergency Department Community Hospital's existing emergency department was constructed in 1992 and is the largest provider of hospital emergency services in Pasco County, handling approximately 35,000 visits per year. The hospital is also designated a "Baker Act" receiving facility under Chapter 394, Florida Statutes, and utilizes two secure examination rooms for emergent psychiatric patients. At less than 8,000 total square feet, the emergency department is severely undersized to meet the needs of its patients. The emergency department is currently undergoing renovation which will connect the triage area to the main emergency department. The renovation will not enlarge the entrance, waiting area, storage, nursing station, nor add privacy to the patient care areas in the emergency department. The renovation will not increase the total size of the emergency department, but in fact, the department's total bed availability will decrease by five beds. Similar to other departments, a more meaningful renovation cannot occur within the emergency department without triggering costly building code compliance measures. In addition to its space limitations, the emergency department is awkwardly located. In 1992, the emergency department was relocated to the front of the hospital and is completely separated from the diagnostic imaging department which remained in the original 1971 building. Consequently, emergency patients are routinely transported across the hospital for imaging and CT scans. Issues Relating to Replacement of Community Hospital Although physically possible, renovating and expanding Community Hospital's existing facility is unreasonable. First, it is cost prohibitive. Any significant renovation to the 1971, 1975, 1977, and 1979 structures would require asbestos abatement prior to construction, at an estimated cost of $1,000,000. In addition, as previously noted, the hospital will be saddled with the major expense of complying with all current building code requirements in the 40-year-old facility. Merely installing showers in patient rooms would immediately trigger a host of expensive, albeit necessary, code requirements involving access, wiring, square footage, fireproofing columns and beams, as well as floor/ceiling and roof/ceiling assemblies. Concurrent with the significant demolition and construction costs, the hospital will experience the incalculable expense and loss of revenue related to closing major portions, if not all, of the hospital. Second, renovation and expansion to the existing facility is an unreasonable option due to its physical restrictions. The 12'4" height of the hospital's first floor limits its ability to accommodate HVAC ductwork large enough to meet current ventilation requirements. In addition, there is inadequate space to expand any department within the confines of the existing hospital without cannibalizing adjacent areas, and vertical expansion is not an option. Community Hospital's application includes a lengthy Facility Condition Assessment which factually details the architectural, mechanical, and electrical deficiencies of the hospital's existing physical plant. The assessment is accurate and reasonable. Community Hospital's Proposed Replacement Community Hospital proposes to construct a six- story, 320 licensed beds, acute care replacement facility. The hospital will consist of 548,995 gross square feet and include a 56-bed adult psychiatric unit connected by a hallway to the first floor of the main hospital building. The proposal also includes the construction of an adjacent medical office building to centralize the outpatient offices and staff physicians. The evidence establishes that the deficiencies inherent in Community Hospital's existing hospital will be cured by its replacement hospital. All patients will be provided large private rooms. The emergency department will double in size, and contain private examination rooms. All building code requirements will be met or exceeded. Patients and staff will have separate elevators from the public. In addition, the surgical department will have large operating rooms, and adequate storage. The MICU and SICU will be adjacent to each other on the second floor to avoid unnecessary traffic within the hospital. Surgical patients will be transported to the ICU via a private elevator dedicated to that purpose. Medical-surgical patient rooms will be efficiently located on the third through sixth floors, in "double-T" configuration. Community Hospital's Existing and Proposed Sites Community Hospital is currently located on a 23-acre site inside the southern boundary of New Port Richey. Single- family homes and offices occupy the two-lane residential streets that surround the site on all sides. The hospital buildings are situated on the northern half of the site, with the main parking lot located to the south, in front of the main entrance to the hospital. Marine Parkway cuts through the southern half of the site from the west, and enters the main parking lot. A private medical mall sits immediately to the west of the main parking lot and a one-acre storm-water retention pond sits to the west of the mall. A private medical office building occupies the south end of the main parking lot and a four-acre drainage easement is located in the southwest corner of the site. Community Hospital's administration has actively analyzed its existing site, aging facility, and adjacent areas. It has commissioned studies by civil engineers, health care consultants, and architects. The collective evidence demonstrates that, although on-site relocation is potentially an option, on balance, it is not a reasonable option. Replacing Community Hospital on its existing site is not practical for several reasons. First, the hospital will experience significant disruption and may be required to completely close down for a period of time. Second, the site's southwestern large four-acre parcel is necessary for storm-water retention and is unavailable for expansion. Third, a reliable cost differential is unknown given Community Hospital's inability to successfully negotiate with the city and owners of the adjacent medical office complexes to acquire additional parcels. Fourth, acquiring other adjacent properties is not a viable option since they consist of individually owned residential lots. In addition to the site's physical restrictions, the site is hindered by its location. The hospital is situated in a neighborhood between small streets and a local school. From the north and south, motorists utilize either U.S. 19, a congested corridor that accommodates approximately 50,000 vehicles per day, or Grand and Madison Streets, two-lane streets within a school zone. From the east and west, motorists utilize similar two-lane neighborhood streets including Marine Parkway, which often floods in heavy rains. Community Hospital's proposed site, on the other hand, is a 53-acre tract positioned five miles from its current facility, at the intersection of two major thoroughfares in southwestern Pasco County. The proposed site offers ample space for all facilities, parking, outpatient care, and future expansion. In addition, Community Hospital's proposed site provides reasonable access to all patients within its existing primary service area made up of zip codes 34652, 34653, 34668, 34655, 34690, and 34691. For example, the average drive times from the population centers of each zip code to the existing site of the hospital and the proposed site are as follows: Zip code Difference Existing site Proposed site 34652 3 minutes 14 minutes 11 minutes 34653 8 minutes 11 minutes 3 minutes 34668 15 minutes 21 minutes 6 minutes 34655 11 minutes 4 minutes -7 minutes 34690 11 minutes 13 minutes 2 minutes 34691 11 minutes 17 minutes 6 minutes While the average drive time from the population centroids of zip codes 34653, 34668, 34690, and 34691 to the proposed site slightly increases, it decreases from the Trinity area, where population growth has been most significant in southwestern Pasco County. In addition, a motorist's average drive time from Community Hospital's existing location to its proposed site is only 10 to 11 minutes, and patients utilizing public transportation will be able to access the new hospital via a bus stop located adjacent to the proposed site. The Condition of North Bay Facility North Bay Hospital is also an aging facility. Its original structure and portions of its physical plant are approximately 30 years old. Portions of its major mechanical systems will soon require replacement including its boilers, air handlers, and chillers. In addition, the hospital is undersized and awkwardly configured. Despite its shortcomings, however, North Bay is generally in good condition. The hospital has been consistently renovated and updated over time and is aesthetically pleasing. Moreover, its second and third floors were added in 1986, are in good shape, and structurally capable of vertical expansion. Medical Surgical Beds and ICU Units By-in-large, North Bay is comprised of undersized, semi-private rooms containing toilet and shower facilities. The hospital does not have any three-bed wards. North Bay's first floor houses all ancillary and support services including lab, radiology, pharmacy, surgery, pre-op, post-anesthesia recovery, central sterile processing and supply, kitchen and cafeteria, housekeeping and administration, as well as the mechanical, electrical, and facilities maintenance and engineering. The first floor also contains a 20-bed CMR unit and a 15-bed acute care unit. North Bay's second and third floors are mostly comprised of semi-private rooms and supporting nursing stations. Although the rooms and stations are not ideally sized, they are in relatively good shape. North Bay utilizes a single ICU with ten critical care beds. The ICU rooms and nursing stations are also undersized. A four-bed ICU ward and former nursery are routinely used to serve overflow patients. Surgery Department and Recovery North Bay utilizes a single pre-operative surgical room for all of its surgery patients. The room accommodates up to five patient beds, but has limited space for storage and pre-operative procedures. Its operating rooms are sufficiently sized. While carts and large equipment are routinely stored in hallways throughout the surgical suite, North Bay has converted the former obstetrics recovery room to surgical storage and has made efficient use of other available space. North Bay operates a small six-bed Post Anesthesia Care Unit. Nurses routinely prepare patient medications in the unit which is often crowded with staff and patients. The Emergency Department North Bay has recently expanded its emergency department. The evidence demonstrates that this department is sufficient and meets current and future expected patient volumes. Replacement Issues Relating to North Bay While it is clear that areas of North Bay's physical plant are aging, the facility is in relatively good condition. It is apparent that North Bay must soon replace significant equipment, including cast-iron sewer pipes, plumbing, boilers, and chillers which will cause some interruption to hospital operations. However, North Bay's four-page written assessment of the facility and its argument citing the need for total replacement is, on balance, not persuasive. North Bay's Proposed Replacement North Bay proposes to construct a new, state-of-the- art, hospital approximately eight miles southeast of its existing facility and intends to offer the identical array of services the hospital currently provides. North Bay's Existing and Proposed Sites North Bay's existing hospital is located on an eight-acre site with limited storm-water drainage capacity. Consequently, much of its parking area is covered by deep, porous, gravel instead of asphalt. North Bay's existing site is generally surrounded by residential properties. While the city has committed, in writing, it willingness to assist both applicants with on-site expansion, it is unknown whether North Bay can acquire additional adjacent property. North Bay's proposed site is located at the intersection of Trinity Oaks Boulevard and Mitchell Boulevard, south of Community Hospital's proposed site, and is quite spacious. It contains sufficient land for the facilities, parking, and future growth, and has all necessary infrastructure in place, including utility systems, storm- water structures, and roadways. Currently however, there is no public transportation service available to North Bay's proposed site. Projected Utilization by Applicants The evidence presented at hearing indicates that, statewide, replacement hospitals often increase a provider's acute care bed utilization. For example, Bartow Memorial Hospital, Heart of Florida Regional Medical Center, Lake City Medical Center, Florida Hospital Heartland Medical Center, South Lake Hospital, and Florida Hospital-Fish Memorial each experienced significant increases in utilization following the opening of their new hospital. The applicants in this case each project an increase in utilization following the construction of their new facility. Specifically, Community Hospital's application projects 82,685 total hospital patient days (64,427 acute care patient days) in year one (2006) of the operation of its proposed replacement facility, and 86,201 total hospital patient days (67,648 acute care patient days) in year two (2007). Using projected 2006 and 2007 population estimates, applying 2002 acute care hospital use rates which are below 50 percent, and keeping Community Hospital's acute care market share constant at its 2002 level, it is reasonably estimated that Community Hospital's existing hospital will experience 52,623 acute care patient days in 2006, and 53,451 acute care patient days in 2007. Consequently, Community Hospital's proposed facility must attain 11,804 additional acute care patient days in 2006, and 14,197 more acute care patient days in 2007, in order to achieve its projected acute care utilization. Although Community Hospital lost eight percent of the acute care market in its service area between 1995 and 2002, two-thirds of that loss was due to residents of Sub- District 5-1 acquiring services in another area. While Community Hospital experienced 78,444 acute care patient days in 1995, it projects only 64,427 acute care patient days in year one. Given the new facility and population factors, it is reasonable that the hospital will recapture half of its lost acute care market share and achieve its projections. With respect to its psychiatric unit, Community Hospital projects 16,615 adult psychiatric inpatient days in year one (2006) and 17,069 adult inpatient days in year two (2007) of the proposed replacement hospital. The evidence indicates that these projections are reasonable. Similarly, North Bay's acute care utilization rate has been consistently below 50 percent. Since 1999, the hospital has experienced declining utilization. In its application, North Bay states that it achieved total actual acute care patient days of 21,925 in 2000 and 19,824 in 2001 and the evidence at hearing indicates that North Bay experienced 17,693 total acute care patient days in 2002. North Bay projects 25,909 acute care patient days in the first year of operation of its proposed replacement hospital, and 27,334 acute care patient days in the second year of operation. Despite each applicant's current facility utilization rate, Community Hospital must increase its current acute care patient days by 20 percent to reach its projected utilization, and North Bay must increase its patient days by at least 50 percent. Given the population trends, service mix and existing competition, the evidence demonstrates that it is not possible for both applicants to simultaneously achieve their projections. In fact, it is strongly noted that the applicants' own projections are predicated upon only one applicant being approved and cannot be supported with the approval of two facilities. Local Health Plan Preferences In its local health plan for District 5, the Suncoast Health Council, Inc., adopted acute care preferences in October, 2000. The replacement of an existing hospital is not specifically addressed by any of the preferences. However, certain acute care preferences and specialty care preferences are applicable. The first applicable preference provides that preference "shall be given to an applicant who proposes to locate a new facility in an area that will improve access for Medicaid and indigent patients." It is clear that the majority of Medicaid and indigent patients live closer to the existing hospitals. However, Community Hospital proposes to move 5.5 miles from its current location, whereas North Bay proposes to move eight miles from its current location. While the short distances alone are less than significant, North Bay's proposed location is further removed from New Port Richey, is not located on a major highway or bus-route, and would therefore be less accessible to the medically indigent residents. Community Hospital's proposed site will be accessible using public transportation. Furthermore, Community Hospital has consistently provided excellent service to the medically indigent and its proposal would better serve that population. In 2000, Community Hospital provided 7.4 percent of its total patient days to Medicaid patients and 0.8 percent of its total patient days to charity patients. Community Hospital provided the highest percentage and greatest number of Medicaid patient days in Sub-District 5-1. By comparison, North Bay provided 5.8 percent of its total patient days to Medicaid patients and 0.9 percent of its total patient days to charity patients. In 2002, North Bay's Medicaid patients days declined to 3.56 percent. Finally, given the closeness and available bed space of the existing providers and the increasing population in the Trinity area, access will be improved by Community Hospital's relocation. The second local health plan preference provides that "[i]n cases where an applicant is a corporation with previously awarded certificates of need, preference shall be given to those which follow through in a timely manner to construct and operate the additional facilities or beds and do not use them for later negotiations with other organizations seeking to enter or expand the number of beds they own or control." Both applicants meet this preference. The third local health plan preference recognizes "Certificate of Need applications that provide AHCA with documentation that they provide, or propose to provide, the largest percentage of Medicaid and charity care patient days in relation to other hospitals in the sub-district." Community Hospital provides the largest percentage of Medicaid and charity care patient days in relation to other hospitals in Sub-District 5-1, and therefore meets this preference. The fourth local health plan preference applies to "Certificate of Need applications that demonstrate intent to serve HIV/AIDS infected persons." Both applicants accept and treat HIV/AIDS infected persons, and would continue to do so in their proposed replacement hospitals. The fifth local health plan preference recognizes "Certificate of Need applications that commit to provide a full array of acute care services including medical-surgical, intensive care, pediatric, and obstetrical services within the sub-district for which they are applying." Community Hospital qualifies since it will continue to provide its current services, including obstetrical care and psychiatric care, in its proposed replacement hospital. North Bay discontinued its pediatric and obstetrical programs in 2001, does not intend to provide them in its proposed replacement hospital, and will not provide psychiatric care. Agency Rule Preferences Florida Administrative Code Rule 59C-1.038(6) provides an applicable preference to a facility proposing "new acute care services and capital expenditures" that has "a documented history of providing services to medically indigent patients or a commitment to do so." As the largest Medicaid provider in Sub-District 5-1, Community Hospital meets this preference better than does North Bay. North Bay's history demonstrates a declining rate of service to the medically indigent. Statutory Review Criteria Section 408.035(1), Florida Statutes: The need for the health care facilities and health services being proposed in relation to the applicable district health plan District 5 includes Pasco and Pinellas County. Pasco County is rapidly developing, whereas Pinellas County is the most densely populated county in Florida. Given the population trends, service mix, and utilization rates of the existing providers, on balance, there is a need for a replacement hospital in the Trinity area. Section 408.035(2), Florida Statutes: The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant Community Hospital and North Bay are both located in Sub-District 5-1. Each proposes to relocate to an area of southwestern Pasco County which is experiencing explosive population growth. The other general acute care hospital located in Sub-District 5-1 is Regional Medical Center Bayonet Point, which is located further north, in the Hudson area of western Pasco County. The only other acute care hospitals in Pasco County are East Pasco Medical Center, in Zephyrhills, and Pasco Community Hospital, in Dade City. Those hospitals are located in Sub-District 5-2, east Pasco County, far from the area proposed to be served by either Community Hospital or North Bay. District 5 includes Pinellas County as well as Pasco County. Helen Ellis and Mease are existing hospital providers located in Pinellas County. Helen Ellis has 168 licensed beds, consisting of 150 acute care beds and an 18-bed skilled nursing unit, and is located 7.9 miles from Community Hospital's existing location and 10.8 miles from Community Hospital's proposed location. Access to Helen Ellis for patients originating from southwestern Pasco County requires those patients to travel congested U.S. 19 south to Tarpon Springs. As a result, the average drive time from Community Hospital's existing and proposed site to Helen Ellis is approximately 22 minutes. Helen Ellis is not a reasonable alternative to Community Hospital's proposal. The applicants' proposals are specifically designed for the current and future health care needs of southwestern Pasco County. Given its financial history, it is unknown whether Helen Ellis will be financially capable of providing the necessary care to the residents of southwestern Pasco. Mease Countryside Hospital has 189 licensed acute care beds. It is located 16.0 miles from Community Hospital's existing location and 13.8 miles from Community Hospital's proposed location. The average drive time to Mease Countryside is 32 minutes from Community Hospital's existing site and 24 minutes from its proposed site. In addition, Mease Countryside Hospital has experienced extremely high utilization over the past several years, in excess of 90 percent for calendar years 2000 and 2001. Utilization at Mease Countryside Hospital has remained over 80 percent despite the addition of 45 acute care beds in April 2002. Given the growth and demand, it is unknown whether Mease can accommodate the residents in southwest Pasco County. Mease Dunedin Hospital has 189 licensed beds, consisting of 149 acute care beds, a 30-bed skilled nursing unit, five Level 2 neonatal intensive care beds, and five Level 3 neonatal intensive care beds. Its former 15-bed adult psychiatric unit has been converted into acute care beds. It is transferring its entire obstetrics program at Mease Dunedin Hospital to Mease Countryside Hospital. Mease Dunedin Hospital is located approximately 18 to 20 miles from the applicants' existing and proposed locations with an average drive time of 35-38 minutes. With their remote location, and the exceedingly high utilization at Mease Countryside Hospital, neither of the two Mease hospitals is a viable alternative to the applicants' proposals. In addition, the construction of a replacement hospital would positively impact economic development and further attract medical professionals to Sub-District 5-1. On balance, given the proximity, utilization, service array, and accessibility of the existing providers, including the applicants, the relocation of Community Hospital will enhance access to health care to the residents. Section 408.035(3), Florida Statutes: The ability of the applicant to provide quality of care and the applicant's record of providing quality of care As stipulated, both applicants provide excellent quality of care. However, Community Hospital's proposal will better enhance its ability to provide quality care. Community is currently undersized, non-compliant with today's standards, and located on a site that does not allow for reasonable expansion. Its emergency department is inadequate for patient volume, and the configuration of the first floor leads to inefficiencies in the diagnosis and treatment of emergency patients. Again, most inpatients are placed in semi-private rooms and three-bed wards, with no showers or tubs, little privacy, and an increased risk of infection. The hospital's waiting areas for families of patients are antiquated and undersized, its nursing stations are small and cramped and the operating rooms and storage facilities are undersized. Community Hospital's deficiencies will be effectively eliminated by its proposed replacement hospital. As a result, patients will experience qualitatively better care by the staff who serve them. Conversely, North Bay is in better physical condition and not in need of replacement. It has more reasonable options to expand or relocate its facility on site. Quality of care at North Bay will not be markedly enhanced by the construction of a new hospital. Sections 408.035(4)and(5), Florida Statutes, have been stipulated as not applicable in this case. Section 408.035(6), Florida Statutes: The availability of resources, including health personnel, management personnel, and funds available for capital and operating expenditures, for project accomplishment and operation The parties stipulated that both Community Hospital and North Bay have available health personnel and management personnel for project accomplishment and operation. In addition, the evidence proves that both applicants have sufficient funds for capital and operating expenditures. Community Hospital proposes to rely on its parent company to finance the project. Keith Giger, Vice-President of Finance for HCA, Inc., Community Hospital's parent organization, provided credible deposition testimony that HCA, Inc., will finance 100 percent of the total project cost by an inter-company loan at eight percent interest. Moreover, it is noted that the amount to be financed is actually $20 million less than the $196,849,328 stated in the CON Application, since Community Hospital previously purchased the proposed site in June 2003 with existing funds and does not need to finance the land acquisition. Community Hospital has sufficient working capital for operating expenditures of the proposed replacement hospital. North Bay, on the other hand, proposes to acquire financing from BayCare Obligated Group which includes Morton Plant Hospital Association, Inc.; Mease; and several other hospital entities. Its proposal, while feasible, is less certain since member hospitals must approve the indebtedness, thereby providing Mease with the ability to derail North Bay's proposed bond financing. Section 408.035(7), Florida Statutes: The extent to which the proposed services will enhance access to health care for residents of the service district The evidence proves that either proposal will enhance geographical access to the growing population in the service district. However, with its provision of obstetrical services, Community Hospital is better suited to address the needs of the younger community. With respect to financial access, both proposed relocation sites are slightly farther away from the higher elderly and indigent population centers. Since the evidence demonstrates that it is unreasonable to relocate both facilities away from the down-town area, Community Hospital's proposal, on balance, provides better access to poor patients. First, public transportation will be available to Community Hospital's site. Second, Community Hospital has an excellent record of providing care to the poor and indigent and has accepted the agency's condition to provide ten percent of its total annual patient days to Medicaid recipients To the contrary, North Bay's site will not be accessible by public transportation. In addition, North Bay has a less impressive record of providing care to the poor and indigent. Although AHCA conditioned North Bay's approval upon it providing 9.7 percent of total annual patient days to Medicaid and charity patients, instead of the 9.7 percent of gross annual revenue proposed in its application, North Bay has consistently provided Medicaid and charity patients less than seven percent of its total annual patient days. Section 408.035(8), Florida Statutes: The immediate and long-term financial feasibility of the proposal Immediate financial feasibility refers to the availability of funds to capitalize and operate the proposal. See Memorial Healthcare Group, Ltd. d/b/a Memorial Hospital Jacksonville vs. AHCA et al., Case No. 02-0447 et seq. Community Hospital has acquired reliable financing for the project and has sufficiently demonstrated that its project is immediately financially feasible. North Bay's short-term financial proposal is less secure. As noted, North Bay intends to acquire financing from BayCare Obligated Group. As a member of the group, Mease, the parent company of two hospitals that oppose North Bay's application, must approve the plan. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Big Bend Hospice, Inc. vs. AHCA and Covenant Hospice, Inc., Case No. 02-0455. Although CON pro forma financial schedules typically show profitability within two to three years of operation, it is not a requirement. In fact, in some circumstances, such as the case of a replacement hospital, it may be unrealistic for the proposal to project profitability before the third or fourth year of operation. In this case, Community Hospital's utilization projections, gross and net revenues, and expense figures are reasonable. The evidence reliably demonstrates that its replacement hospital will be profitable by the fourth year of operation. The hospital's financial projections are further supported by credible evidence, including the fact that the hospital experienced financial improvement in 2002 despite its poor physical condition, declining utilization, and lost market share to providers outside of its district. In addition, the development and population trends in the Trinity area support the need for a replacement hospital in the area. Also, Community Hospital has benefited from increases in its Medicaid per diem and renegotiated managed care contracts. North Bay's long-term financial feasibility of its proposal is less certain. In calendar year 2001, North Bay incurred an operating loss of $306,000. In calendar year 2002, it incurred a loss of $1,160,000. In its CON application, however, North Bay projects operating income of $1,538,827 in 2007, yet omitted the ongoing expenses of interest ($1,600,000) and depreciation ($3,000,000) from its existing facility that North Bay intends to continue operating. Since North Bay's proposal does not project beyond year two, it is less certain whether it is financially feasible in the third or fourth year. In addition to the interest and depreciation issues, North Bay's utilization projections are less reasonable than Community Hospital's proposal. While possible, North Bay will have a difficult task achieving its projected 55 percent increase in acute care patient days in its second year of operation given its declining utilization, loss of obstetric/pediatric services and termination of two exclusive managed care contracts. Section 408.035(9), Florida Statutes: The extent to which the proposal will foster competition that promotes quality and cost-effectiveness Both applicants have substantial unused capacity. However, Community Hospital's existing facility is at a distinct competitive disadvantage in the market place. In fact, from 1994 to 1998, Community Hospital's overall market share in its service area declined from 40.3 percent to 35.3 percent. During that same period, Helen Ellis' overall market share in Community Hospital's service area increased from 7.2 percent to 9.2 percent. From 1995 to the 12-month period ending June 30, 2002, Community Hospital's acute care market share in its service area declined from 34.0 percent to 25.9 percent. During that same period, Helen Ellis' acute care market share in Community Hospital's service area increased from 11.7 percent to 12.0 percent. In addition, acute care average occupancy rates at Mease Dunedin Hospital increased each year from 1999 through 2002. Acute care average occupancy at Mease Countryside Hospital exceeded 90 percent in 2000 and 2001, and was approximately 85 percent for the period ending June 30, 2002. Some of the loss in Community Hospital's market share is due to an out-migration of patients from its service area to hospitals in northern Pinellas and Hillsborough Counties. Market share in Community's service area by out-of- market providers increased from 33 percent in 1995 to 40 percent in 2002. Community Hospital's outdated hospital has hampered its ability to compete for patients in its service area. Mease is increasing its efforts to attract patients and currently completing a $92 million expansion of Mease Countryside Hospital. The project includes the development of 1,134 parking spaces on 30 acres of raw land north of the Mease Countryside Hospital campus and the addition of two floors to the hospital. It also involves the relocation of 51 acute care beds, the obstetrics program and the Neonatal Intensive Care Units from Mease Dunedin Hosptial to Mease Countryside Hospital. Mease is also seeking to more than double the size of the Countryside emergency department to handle its 62,000 emergency visits. With the transfer of licensed beds from Mease Dunedin Hospital to Mease Countryside Hospital, Mease will also convert formerly semi-private patient rooms to private rooms at Mease Dunedin Hospital. The approval of Community Hospital's relocated facility will enable it to better compete with the hospitals in the area and promote quality and cost- effectiveness. North Bay, on the other hand, is not operating at a distinct disadvantage, yet is still experiencing declining utilization. North Bay is the only community-owned, not-for- profit provider in western Pasco County and is a valuable asset to the city. Section 408.035(10), Florida Statutes: The costs and methods of the proposed construction, including the costs and methods or energy provision and the availability of alternative, less costly, or more effective methods of construction The parties stipulated that the project costs in both applications are reasonable to construct the replacement hospitals. Community Hospital's proposed construction cost per square foot is $175, and slightly less than North Bay's $178 proposal. The costs and methods of proposed construction for each proposal is reasonable. Given Community Hospital's severe site and facility problems, the evidence demonstrates that there is no reasonable, less costly, or more effective methods of construction available for its proposed replacement hospital. Additional "band-aide" approaches are not financially reasonable and will not enable Community Hospital to effectively compete. The facility is currently licensed for 401 beds, operates approximately 311 beds and is still undersized. The proposed replacement hospital will meet the standards in Florida Administrative Code Rule 59A-3.081, and will meet current building codes, including the Americans with Disabilities Act and the Guidelines for Design and Construction of Hospitals and Health Care Facilities, developed by the American Institute of Architects. The opponents' argue that Community Hospital will not utilize the 320 acute care beds proposed in its CON application, and therefore, a smaller facility is a less- costly alternative. In addition, Helen Ellis' architectural expert witness provided schematic design alternatives for Community Hospital to be expanded and replaced on-site, without providing a detailed and credible cost accounting of the alternatives. Given the evidence and the law, their arguments are not persuasive. While North Bay's replacement cost figures are reasonable, given the aforementioned reasons, including the fact that the facility is in reasonably good condition and can expand vertically, on balance, it is unreasonable for North Bay to construct a replacement facility in the Trinity area. Section 408.035(11), Florida Statutes: The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Community Hospital has consistently provided the most health care services to Medicaid patients and the medically indigent in Sub-District 5-1. Community Hospital agreed to provide at least ten percent of its patient days to Medicaid recipients. Similarly, North Bay agreed to provide 9.7 percent of its total annual patient days to Medicaid and charity patients combined. North Bay, by contrast, provided only 3.56 percent of its total patient days to Medicaid patients in 2002, and would have to significantly reverse a declining trend in its Medicaid provision to comply with the imposed condition. Community Hospital better satisfies the criterion. Section 408.035(12) has been stipulated as not applicable in this case. Adverse Impact on Existing Providers Historical figures demonstrate that hospital market shares are not static, but fluctuate with competition. No hospital is entitled to a specific or historic market share free from competition. While the applicants are located in health planning Sub-District 5-1 and Helen Ellis and the two Mease hospitals are located in health planning Sub-District 5- 2, they compete for business. None of the opponents is a disproportionate share, safety net, Medicaid provider. As a result, AHCA gives less consideration to any potential adverse financial impact upon them resulting from the approval of either application as a low priority. The opponents, however, argue that the approval of either replacement hospital would severely affect each of them. While the precise distance from the existing facilities to the relocation sites is relevant, it is clear that neither applicants' proposed site is unreasonably close to any of the existing providers. In fact, Community Hospital intends to locate its replacement facility three miles farther away from Helen Ellis and 1.5 miles farther away from Mease Dunedin Hospital. While Helen Ellis' primary service area is seemingly fluid, as noted by its chief operating officer's hearing and deposition testimony, and the Mease hospitals are located 15 to 20 miles south, they overlap parts of the applicants' primary service areas. Accordingly, each applicant concedes that the proposed increase in their patient volume would be derived from the growing population as well as existing providers. Although it is clear that the existing providers may be more affected by the approval of Community Hosptial's proposal, the exact degree to which they will be adversely impacted by either applicant is unknown. All parties agree, however, that the existing providers will experience less adverse affects by the approval of only one applicant, as opposed to two. Furthermore, Mease concedes that its hospitals will continue to aggressively compete and will remain profitable. In fact, Mease's adverse impact analysis does not show any credible reduction in loss of acute care admissions at Mease Countryside Hospital or Mease Dunedin Hospital until 2010. Even then, the reliable evidence demonstrates that the impact is negligible. Helen Ellis, on the other hand, will likely experience a greater loss of patient volume. To achieve its utilization projections, Community Hospital will aggressively compete for and increase market share in Pinellas County zip code 34689, which borders Pasco County. While that increase does not facially prove that Helen Ellis will be materially affected by Community Hospital's replacement hospital, Helen Ellis will confront targeted competition. To minimize the potential adverse affect, Helen Ellis will aggressively compete to expand its market share in the Pinellas County zip codes south of 34689, which is experiencing population growth. In addition, Helen Ellis is targeting broader service markets, and has filed an application to establish an open- heart surgery program. While Helen Ellis will experience greater competition and financial loss, there is insufficient evidence to conclude that it will experience material financial adverse impact as a result of Community Hospital's proposed relocation. In fact, Helen Ellis' impact analysis is less than reliable. In its contribution-margin analysis, Helen Ellis utilized its actual hospital financial data as filed with AHCA for the fiscal year October 1, 2001, to September 30, 2002. The analysis included total inpatient and total outpatient service revenues found in the filed financial data, including ambulatory services and ancillary services, yet it did not include the expenses incurred in generating ambulatory or ancillary services revenue. As a result, the overstated net revenue per patient day was applied to its speculative lost number of patient days which resulted in an inflated loss of net patient service revenue. Moreover, the evidence indicates that Helen Ellis' analysis incorrectly included operational revenue and excluded expenses related to its 18-bed skilled nursing unit since neither applicant intends to operate a skilled nursing unit. While including the skilled nursing unit revenues, the analysis failed to include the sub-acute inpatient days that produced those revenues, and thereby over inflated the projected total lost net patient service revenue by over one million dollars.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Community Hospital's CON Application No. 9539, to establish a 376-bed replacement hospital in Pasco County, Sub- District 5-1, be granted; and North Bay's CON Application No. 9538, to establish a 122-bed replacement hospital in Pasco County, Sub-District 5- 1, be denied. DONE AND ENTERED this 19th day of March, 2004, in Tallahassee, Leon County, Florida. S WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 2004. COPIES FURNISHED: James C. Hauser, Esquire R. Terry Rigsby, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Richard M. Ellis, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Richard J. Saliba, Esquire Agency for Health Care Administration Fort Knox Building III, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Darrell White, Esquire William B. Wiley, Esquire McFarlain & Cassedy, P.A. 305 South Gadsden Street, Suite 600 Tallahassee, Florida 32301 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308
The Issue The issue is whether BayCare Long Term Acute Care Hospital, Inc.'s Certificate of Need Application No. 9753 and University Community Hospital's Certificate of Need Application No. 9754, both submitted to the Agency for Health Care Administration, should be approved.
Findings Of Fact LTCHs defined An LTCH is a medical facility which provides extended medical and rehabilitation care to patients with multiple, chronic, or clinically complex acute medical conditions. These conditions include, but are not limited to, ventilator dependency, tracheotomy care, total parenteral nutrition, long- term intravenous anti-biotic treatment, complex wound care, dialysis at bedside, and multiple systems failure. LTCHs provide an interdisciplinary team approach to the complex medical needs of the patient. LTCHs provide a continuum of care between short-term acute care hospitals and nursing homes, skilled nursing facilities (SNFs), or comprehensive medical rehabilitation facilities. Patients who have been treated in an intensive acute care unit at a short-term acute care hospital and who continue to require intensive care once stabilized, are excellent candidates for care at an LTCH. Included in the interdisciplinary approach is the desired involvement of the patient's family. A substantial number of the patients suitable for treatment in an LTCH are in excess of 65 years of age, and are eligible for Medicare. Licensure and Medicare requirements dictate that an LTCH have an average length of stay (ALOS) of 25 days. The Center for Medicare and Medicaid Services (CMS) reimburses for care received through the prospective payment system (PPS). Through this system, CMS reimburses the services of LTCHs separately from short-term acute care providers and other post acute care providers. The reimbursement rate for an LTCH under PPS exceeds that of other providers. The reimbursement rate for an LTCH is about twice that of a rehabilitation facility. The increased reimbursement rate indicates the increased cost due to the more intensive care required in an LTCH. The Agency The Agency is a state agency created pursuant to Section 20.42. It is the chief health policy and planning entity for the State of Florida. The Agency administers the Health Facility and Services Development Act found at Sections 408.031-408.045. Pursuant to Section 408.034, the Agency is designated as the single state Agency to issue, revoke, or deny certificates of need. The Agency has established 11 health service planning districts. The applications in this case are for facilities in District 5, which comprises Pinellas and Pasco counties. UCH UCH is a not-for-profit organization that owns and operates a 431-bed tertiary level general acute care hospital and a 120-bed acute care general hospital. Both are located in Hillsborough County. UCH also has management responsibilities and affiliations to operate Helen Ellis Hospital, a 300-bed hospital located in Tarpon Springs, and manages the 300-bed Suncoast Hospital. Both of these facilities are in Pinellas County. UCH also has an affiliation to manage the open heart surgery program at East Pasco Medical Center, a general acute care hospital located in Pasco County. As a not-for-profit organization, the mission of UCH is to provide quality health care services to meet the needs of the communities where it operates regardless of their patients' ability to pay. Baycare BayCare is a wholly-owned subsidiary of BayCare Healthsystems, Inc. (BayCare Systems). BayCare Systems is a not-for-profit entity comprising three members that operate Catholic Health East, Morton Plant Mease Healthcare, and South Florida Baptist. The facilities owned by these organizations are operated pursuant to a Joint Operating Agreement (JOA) entered into by each of the participants. BayCare Systems hospitals include Morton Plant Hospital, a 687-bed tertiary level facility located in Clearwater, Pinellas County; St. Joseph's Hospital, an 887-bed tertiary level general acute care hospital located in Tampa, Hillsborough County; St. Anthony's Hospital, a 407-bed general acute care hospital located in St. Petersburg, Pinellas County; and Morton Plant North Bay, a 120-bed hospital located in New Port Richey, Pasco County. Morton Plant Mease Health Care is a partnership between Morton Plant Hospital and Mease Hospital. Although Morton Plant Mease Healthcare is a part of the BayCare System, the hospitals that are owned by the Trustees of Mease Hospital, Mease Hospital Dunedin, and Mease Hospital Countryside, are not directly members of the BayCare System and are not signatories to the JOA. HealthSouth HealthSouth is a national company with the largest market share in inpatient rehabilitation. It is also a large provider of ambulatory services. HealthSouth has about 1,380 facilities across the nation. HealthSouth operates nine LTCHs. The facility that is the Intervenor in this case is a CMR located in Largo, Pinellas County. Kindred Kindred, through its parent company, operates LTCH facilities throughout Florida and is the predominant provider of LTCH services in the state. In the Tampa Bay area, Kindred operates three LTCHs. Two are located in Tampa and one is located in St. Petersburg, Pinellas County. The currently operating LTCH in District 5 that may be affected by the CON applications at issue is Kindred-St. Petersburg. Kindred-St. Petersburg is a licensed 82-bed LTCH with 52 private beds, 22 semi-private beds, and an 8-bed intensive care unit. It operates the array of services normally offered by an LTCH. It is important to note that Kindred-St. Petersburg is located in the far south of heavily populated District 5. The Applications UCH proposes a new freestanding LTCH which will consist of 50 private rooms and which will be located in Connerton, a new town being developed in Pasco County. UCH's proposal will cost approximately $16,982,715. By agreement of the parties, this cost is deemed reasonable. BayCare proposes a "hospital within a hospital" LTCH that will be located within Mease Hospital-Dunedin. The LTCH will be located in an area of the hospital currently used for obstetrics and women's services. The services currently provided in this area will be relocated to Mease Hospital- Countryside. BayCare proposes the establishment of 48 beds in private and semi-private rooms. Review criteria which was stipulated as satisfied by all parties Section 408.035(1)-(9) sets forth the standards for granting certificates of need. The parties stipulated to satisfying the requirements of subsections (3) through (9) as follows. With regard to subsection (3), 'The ability of the applicant to provide quality of care and the applicant's record of providing quality of care,' all parties stipulated that this statutory criterion is not in dispute and that both applicants may be deemed to have satisfied such criteria. With regard to subsection (4), 'The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation,' it was stipulated that both applicants have all resources necessary in terms of both capital and staff to accomplish the proposed projects, and therefore, both applicants satisfy this requirement. With regard to subsection (5), 'The extent to which the proposed services will enhance access to health care for residents of the service district,' it was stipulated that both proposals will increase access. Currently there are geographic, financial and programmatic barriers to access in District 5. The only extant LTCH is located in the southernmost part of District 5. With regard to subsection (6), 'The immediate and long-term financial feasibility of the proposal,' the parties stipulated that UCH satisfied the criterion. With regard to BayCare, it was stipulated that its proposal satisfied the criterion so long as BayCare can achieve its utilization projections and obtain Medicare certification as an LTCH and thus demonstrate short-term and long-term feasibility. This issue will be addressed below. With regard to subsection (7), 'The extent to which the proposal will foster competition that promotes quality and cost- effectiveness,' the parties stipulated that approval of both applications will foster competition that will promote quality and cost effectiveness. The only currently available LTCH in District 5, unlike BayCare and UCH, is a for-profit establishment. With regard to subsection (8), 'The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction,' the parties stipulated that the costs and methods of construction for both proposals are reasonable. With regard to subsection (9), 'the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent,' it was stipulated that both UCH and BayCare have a demonstrated history and a commitment to providing services to Medicaid, Medicaid HMO, self-pay, and underinsured payments. Technically, of course, BayCare has no history at all. However, its sponsors do, and it is they that will shape the mission for BayCare. BayCare's Medicare certification as an LTCH The evidence of record demonstrates that BayCare can comply with Medicare reimbursement regulations and therefore can achieve its utilization projections and obtain Medicare certification as an LTCH. Thus short-term and long-term feasibility is proven. Because BayCare will be situated as a hospital within a hospital, in Mease Hospital Dunedin, and because there is a relationship between that hospital and BayCare Systems, Medicare reimbursement regulations limit to 25 percent the number of patients that may be acquired from Mease Hospital Dunedin or from an organization that controls directly or indirectly the Mease Hospital Dunedin. Because of this limitation, it is, therefore, theoretically possible that the regulator of Medicare payments, CMS, would not allow payment where more than 25 percent of admissions were from the entire BayCare System. Should that occur it would present a serious but not insurmountable problem to BayCare. BayCare projects that 21 percent of its admissions will come from Mease Hospital Dunedin and the rest will come from other sources. BayCare is structured as an independent entity with an independent board of directors and has its own chief executive officer. The medical director and the medical staff will be employed by the independent board of directors. Upon the greater weight of the evidence, under this structure, BayCare is a separate corporate entity that neither controls, nor is controlled by, BayCare Systems or any of its entities or affiliates. One must bear in mind that because of the shifting paradigms of federal medical regulation, predictability in this regard is less than perfect. However, the evidence indicates that CMS will apply the 25 percent rule only in the case of patients transferring to BayCare from Mease Hospital Dunedin. Most of the Medicare-certified LTCHs in the United States operate as hospitals within hospitals. It is apparent, therefore, that adjusting to the CMS limitations is something that is typically accomplished. BayCare will lease space in Mease Hospital Dunedin which will be vacated by it current program. BayCare will contract with Mease Hospital Dunedin for services such as laboratory analysis and radiology. This arrangement will result in lower costs, both in the short term and in the long term, than would be experienced in a free-standing facility, and contributes to the likelihood that BayCare is feasible in the short term and long term. Criteria related to need The contested subsections of Section 408.035 not heretofore addressed, are (1) and (2). These subsections are illuminated by Florida Administrative Code Rule 59C- 1.008(2)(e)2., which provides standards when, as in this case, there is no fixed-need pool. Florida Administrative Code Rule 59C-1.008(2)(e)2., provides as follows: 2. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, sub district or both; Medical treatment trends; and Market conditions. Population Demographics and Dynamics The applicants presented an analysis of the population demographics and dynamics in support of their applications in District 5. The evidence demonstrated that the population of District 5 was 1,335,021 in 2004. It is anticipated that it will grow to 1,406,990 by 2009. The projected growth rate is 5.4 percent. The elderly population in the district, which is defined as persons over the age of 65, is expected to grow from 314,623 in 2004, to 340,676, in 2009, which represents an 8.3 percent increase. BayCare BayCare's service area is defined generally by the geographic locations of Morton Plant Hospital, Morton Plant North Bay Hospital, St. Anthony's Hospital, Mease Hospital Dunedin, and Mease Hospital Countryside. These hospitals are geographically distributed throughout Pinellas County and southwest Pasco County and are expected to provide a base for referrals to BayCare. There is only one extant LTCH in Pinellas County, Kindred, and it is located in the very southernmost part of this densely populated county. Persons who become patients in an LTCH are almost always moved to the LTCH by ambulance, so their movement over a long distance through heavy traffic generates little or no problem for the patient. Accordingly, if patient transportation were the only consideration, movement from the north end of the county to Kindred in the far south, would present no problem. However, family involvement is a substantial factor in an interdisciplinary approach to addressing the needs of LTCH patients. The requirement of frequent movement of family members from northern Pinellas to Kindred through congested traffic will often result in the denial of LTCH services to patients residing in northern Pinellas County or, in the alternative, deny family involvement in the interdisciplinary treatment of LTCH patients. Approximately 70 letters requesting the establishment of an LTCH in northern Pinellas County were provided in BayCare's application. These letters were written by medical personnel, case managers and social workers, business persons, and government officials. The thread common to these letters was, with regard to LTCH services, that the population in northern Pinellas County is underserved. UCH Pasco County has experienced a rapid population growth. It is anticipated that the population will swell to 426,273, in 2009, which represents a 10.1 percent increase over the population in 2004. The elderly population accounts for 28 percent of the population. This is about 50 percent higher than Florida as a whole. Rapid population growth in Pasco County, and expected future growth, has resulted in numerous new housing developments including Developments of Regional Impact (DRI). Among the approved DRI's is the planned community of Connerton, which has been designated a "new town" in Pasco County's Comprehensive Plan. Connerton is a planned community of 8,600 residential units. The plan includes space for a hospital and UCH has negotiated for the purchase of a parcel for that purpose within Connerton. The rate of growth, and the elderly population percentages, will support the proposed UCH LTCH and this is so even if BayCare establishes an LTCH in northern Pinellas County. Availability, utilization, and quality of like services in the district, sub-district, or both The Agency has not established sub-districts for LTCHs. As previously noted, Kindred is the only LTCH extant in District 5. It is a for-profit facility. Kindred was well utilized when it had its pediatric unit and added 22 additional beds. Subsequently, in October 2002, some changes in Medicare reimbursement rules resulted in a reduction of the reimbursement rate. This affected Kindred's income because over 70 percent of its patients are Medicare recipients. Kindred now uses admission criteria that have resulted in a decline in patient admissions. From 1998, the year after Kindred was established, until 2002, annual utilization was in excess of 90 percent. Thereafter, utilization has declined, the 22-bed addition has been shut down, and Kindred projects an occupancy of 55 percent in 2005. Kindred must make a profit. Therefore, it denies access to a significant number of patients in District 5. It denies the admission of patients who have too few "Medicare- reimbursable days" or "Medicaid-reimbursable days" remaining. The record indicates that Kindred only incurs charity care or Medicaid patient days when a patient admitted to Kindred with seemingly adequate funding unexpectedly exhausts his or her funding prior to discharge. Because of the constraints of PPS, Kindred has established admission criteria that excludes certain patients with conditions whose prognosis is so uncertain that it cannot adequately predict how long they will require treatment. Kindred's availability to potential patients is thus constrained. HealthSouth, a licensed CMR, is not a substitute for an LTCH. Although it is clear that there is some overlap between a CMR and an LTCH, HealthSouth, for instance, does not provide inpatient dialysis, will not accept ventilator patients, and does not treat complex wound patients. The nurse staffing level at HealthSouth is inadequate to provide for the type of patient that is eligible for treatment in an LTCH. The fact that LTCHs are reimbursed by Medicare at approximately twice the rate that a CMR is reimbursed, demonstrates the higher acuity level of LTCH services when compared to a CMR. HealthSouth is a facility which consistently operates at high occupancy levels and even if it were capable of providing the services typical of an LTCH, it would not have sufficient capacity to provide for the need. A CMR is a facility to which persons who make progress in an LTCH might repair so that they can return to the activities of daily living. SNFs are not substitutes for LTCHs although there could be some limited overlap. SNFs are generally not appropriate for patients otherwise eligible for the type of care provided by an LTCH. They do not provide the range of services typically provided by an LTCH and do not maintain the registered nurse staffing levels required for delivering the types of services needed for patients appropriate for an LTCH. LTCHs are a stage in the continuum of care. Short- term acute care hospitals take in very sick or injured patients and treat them. Thereafter, the survivors are discharged to home, or to a CMR, or to a SNF, or, if the patients are still acutely ill but stable, and if an LTCH is available, to an LTCH. As noted above, currently in northern Pinellas County and in Pasco County, there is no reasonable access to an LTCH. An intensive care unit (ICU) is, ideally, a treatment phase that is short. If treatment has been provided in an ICU and the patient remains acutely ill but stable, and is required to remain in the ICU because there is no alternative, greater than necessary costs are incurred. Staff in an ICU are not trained or disposed to provide the extensive therapy and nursing required by patients suitable for an LTCH and are not trained to provide support and training to members of the patient's family in preparation for the patient's return home. The majority of patients suitable for an LTCH have some potential for recovery. This potential is not realized in an ICU, which is often counterproductive for patients who are stabilized but who require specialized long-term acute care. Patients who remain in an ICU beyond five to seven days have an increased morbidity/mortality rate. Maintaining patients suitable for an LTCH in an ICU also results in over-utilization of ICU services and can cause congestion when ICU beds are fully occupied. UCH in Pasco County, and to a lesser extent BayCare in northern Pinellas County, will bring to the northern part of District 5 services which heretofore have not been available in the district, or, at least, have not been readily available. Persons in Pasco County and northern Pinellas County, who would benefit from a stay in an LTCH, have often had to settle for some less appropriate care situation. Medical Treatment Trends LTCHs are relatively new cogs in the continuum of care and the evidence indicates that they will play an important role in that continuum in the future. The evidence of record demonstrates that the current trend in medical treatment is to find appropriate post acute placements in an LTCH setting for those patients in need of long-term acute care beyond the stay normally experienced in a short-term acute care hospital. Market conditions The federal government's development of the distinctive PPS for LTCHs has created a market condition which is favorable for the development of LTCH facilities. Although the Agency has not formally adopted by rule a need methodology specifically for LTCHs, by final order it has recently relied upon the "geometric mean length of stay + 7" (GMLOS +7) need methodology. The GMLOS +7 is a statistical calculation used by CMS in administering the PPS reimbursement system in determining an appropriate reimbursement for a particular "diagnostic related group" (DRG). Other need methodologies have been found to be unsatisfactory because they do not accurately reflect the need for LTCH services in areas where LTCH services are not available, or where the market for LTCH services is not competitive. GMLOS +7 is the best analysis the Agency has at this point. Because the population for whom an LTCH might be appropriate is unique, and because it overlaps with other populations, finding an algebraic need expression is difficult. An acuity measure would be the best marker of patient appropriateness, but insufficient data are available to calculate that. BayCare's proposal will provide beneficial competition for LTCH services in District 5 for the first time and will promote geographic, financial, and programmatic access to LTCH services. BayCare, in conducting its need calculations used a data pool from Morton Plant Hospital, Mease Dunedin Hospital, Mease Countryside Hospital, Morton Plant North Bay Hospital, and St. Anthony's Hospital for the 12 months ending September 2003. The hospitals included in the establishment of the pool are hospitals that would be important referral sources for BayCare. BayCare then identified 160 specific DRGs historically served by existing Florida LTCHs, or which could have been served by Florida LTCHs, and lengths of stay greater than the GMLOS for acute care patients, and compared them to the data pool. This resulted in a pool of 871 potential patients. The calculation did not factor in the certain growth in the population of the geographic area, and therefore the growth of potential LTCH patients. BayCare then applied assumptions based on the proximity of the referring hospitals to the proposed LTCH to project how many of the patients eligible for LTCH services would actually be referred and admitted to the proposed LTCH. That exercise resulted in a projected potential volume of 20,265 LTCH patient days originating just from the three District 5 BayCare hospitals and the two Mease hospitals. BayCare assumes, and the assumption is found to be reasonable, that 25 percent of their LTCH volume will originate from facilities other than BayCare or Mease hospitals. Adding this factor resulted in a total of 27,020 patient days for a total net need of 82 beds at 90 percent occupancy. BayCare's GMLOS +7 bed need methodology reasonably projects a bed need of 82 beds based on BayCare's analysis of the demand arising from the three District 5 BayCare hospitals and the two Mease hospitals. UCH provided both a GMLOS +7 and a use rate analysis. The use rate analysis is suspect in a noncompetitive environment and, obviously, in an environment where LTCHs do not exist. UCH's GMLOS +7 analyses resulted in the identification of a need for 159 additional LTCH beds in District 5. This was broken down into a need of 60 beds in Pasco County and 99 additional beds in Pinellas County. There is no not-for-profit LTCH provider in District The addition of BayCare and UCH LTCHs to the district will meet a need in the case of Medicaid, indigent, and underinsured patients. Both BayCare and UCH have agreed in their applications to address the needs of patients who depend on Medicaid, or who are indigent, or who have private insurance that is inadequate to cover the cost of their treatment. The statistical analyses provided by both applicants support the proposed projects of both applicants. Testimony from doctors who treat patients of the type who might benefit from an LTCH testified that those types of facilities would be utilized. Numerous letters from physicians, nurses, and case managers support the need for these facilities. Adverse impacts HealthSouth and Kindred failed to persuade that BayCare's proposal will adversely impact them. HealthSouth provides little of the type of care normally provided at an LTCH. Moreover, HealthSouth is currently operating near capacity. Kindred is geographically remote from BayCare's proposed facility, and, more importantly, remote in terms of travel time, which is a major consideration for the families of patients. Kindred did not demonstrate that it was currently receiving a large number of patients from the geographic vicinity of the proposed BayCare facility, although it did receive some patients from BayCare Systems facilities and would likely lose some admissions if BayCare's application is approved. The evidence did not establish that Kindred would suffer a material adverse impact should BayCare establish an LTCH in Mease Dunedin Hospital. HealthSouth and Kindred conceded that UCH's program would not adversely impact them. The Agency's Position The Agency denied the applications of BayCare and UCH in the SAARs. At the time of the hearing the Agency continued to maintain that granting the proposals was inappropriate. The Agency's basic concern with these proposals, and in fact, the establishments of LTCHs throughout the state, according to the Agency's representative Jeffrey N. Gregg, is the oversupply of beds. The Agency believes it will be a long time before it can see any measure of clinical efficiency and whether the LTCH route is the appropriate way to go. The Agency has approved a number of LTCHs in recent years and is studying them in order to get a better understanding of what the future might hold. The Agency noted that the establishment of an LTCH by ongoing providers, BayCare Systems and UCH, where there are extant built-in referring facilities, were more likely to be successful than an out-of-state provider having no prior relationships with short-term acute care hospitals in the geographic vicinity of the LTCH. The Agency noted that both a referring hospital and an LTCH could benefit financially by decompressing its intensive care unit, and thus maximizing their efficiency. The Agency did not explain how, if these LTCHs are established, a subsequent failure would negatively affect the delivery of health services in District 5. The Agency, when it issued its SAAR, did not have the additional information which became available during the hearing process.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED that UCH Certificate of Need Application No. 9754 and BayCare Certificate of Need Application No. 9753 satisfy the applicable criteria and both applications should be approved. DONE AND ENTERED this 29th day of November, 2005, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 2005. COPIES FURNISHED: Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 J. Robert Griffin, Esquire J. Robert Griffin, P.A. 1342 Timberlane Road, Suite 102-A Tallahassee, Florida 32312-1762 Patricia A. Renovitch, Esquire Oertel, Hoffman, Fernandez, Cole, & Bryant P.A. Post Office Box 1110 Tallahassee, Florida 32302-1110 Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Timothy Elliott, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Mail Station 3 Tallahassee, Florida 32308 Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308 Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue presented is whether Petitioner's application for a certificate of need to establish a hospice with a six (6) bed component to be located in Dade County, Florida, should be approved.
Findings Of Fact The Parties Since 1975, Petitioner, Comprehensive Home Health Care, Inc., has been serving the elderly population of Dade County, primarily working with the Hispanic community to provide skilled nursing services and the services of physical therapy, speech pathology, occupational therapy, home health aide and medical social services. Petitioner currently provides its services as a home health care agency licensed by the Department. Respondent, Department of Health and Rehabilitative Services (Department), is a state agency which is responsible for administering Section 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for certificates of need (CON) are filed, reviewed and either granted or denied by the Department. Petitioner currently does not participate in an approved hospice program. Two hospice programs are licensed by the Department to serve Dade County: Catholic Hospice, Inc., and Hospice, Inc. Neither entity chose to intervene in the instant proceeding. The Application On or about March 27, 1989, Petitioner filed an application with the Department for a CON to implement a six (6) bed hospice service in Dade County, Florida, with no capital expenditure. The application was designated as CON Number 5871. No public hearing was requested. After the submittal of an omissions response, the Department deemed the application complete on May 16, 1989. The application was reviewed as the sole applicant in its batching cycle After review of the application, the Department issued its intent to deny the application in its state agency action report (SAAR) on June 29, 1989. In the application, Petitioner proposes to establish a not-for-profit, full service hospice which includes a six (6) bed inpatient component with beds to be located in the Northwest, Central West and Southwest Dade County, Florida, in three of the following hospitals: AMI Kendall Regional Medical Center Coral Gables Hospital North Gables Hospital Palmetto Hospital Pan American Hospital Westchester Hospital In addition to relying on its application as meeting pertinent statutory and rule criteria- Petitioner asserts that the application demonstrates mitigating and extenuating circumstances which would allow the approval of the application even if the numeric need prescribed by rule were not demonstrated by the application. Further, the application states that Hospice, Inc., as the only provider in Dade County, has a monopoly on the market in Dade County. Petitioner also intends to concentrate on providing service to the Hispanic population and those individuals suffering from AIDS. The application was not presented in the format which the Department usually receives applications for certificate of need. The usual format was not made part of the record in this proceeding. However, the application, as supported at hearing, shows Petitioner's desire to provide hospice services to the residents of Western Dade County. The witnesses testifying on behalf of Petitioner were Teresa Corba Rodriguez, Roger Lane and Rose Marie Marty. Ms. Rodriguez is an experienced registered nurse who worked for Hospice, Inc., from November, 1987, through June, 1989. She is currently employed at Victoria Hospital. Mr. Lane is the director of information and referral at Health Crisis Network in Miami, and Ms. Marty is the Vice President of Petitioner. The Department's primary bases for issuance of its intent to deny the application were the lack of need for additional inpatient hospice beds, and the failure to document sufficiently certain statutory and rule criteria, as discussed in the following paragraphs. The Department offered the testimony of Elizabeth Dudek, who is an employee of the Department, and is an expert in health planning. Compliance with Statutory Criteria In its proposed recommended order, the Department acknowledged that only six statutory criteria in Section 381.705(1), Florida Statutes (1987) are at issue, in addition to Rule 10-5.011(1)(j), Florida Administrative Code. State Health Plan Although the State Health Plan was not offered into evidence, the Department through testimony and the SAAR indicates that the Application conforms to the State Health Plan. Local Health Plan The applicable Local Health Plan is represented by the plan entitled, "1988 District XI Certificate of Need Allocation Factors", adopted on March 3, 1988. This plan, as it relates to hospice services, is composed of a Subsystem Description, a statement of Issues and of Recommendations. The SAAR chose to base its determination of Petitioner's compliance with the local health plan on an evaluation of whether the application fulfilled the several preferences within the recommendations portion of this plan. In so doing, the Department determined in its SAAR that the Petitioner was in partial compliance. The first preference reads as follows "Preference should be given to applicants having a workable plan for training and maintaining a corps of volunteers." Petitioner demonstrated its consistency with this preference by utilizing volunteers who are bilingual and who will assist in performing the clerical, visitation, counseling, public relations and community awareness aspects of the program. Petitioner also intends to rely on the volunteer efforts of the servicing hospital, churches, schools, community functions, educational efforts and media to enhance community awareness about the program. The second preference reads as follows, "Preference should be given to those applicants who propose to provide care for the indigent and medically needy." Petitioner demonstrated its consistency with this preference by proposing to provide ten (10) percent of its total patient day for Medicaid recipients, and five (5) percent of its total patient days to the medically indigent, at least, during the first year of operation. The third preference reads as follows, "Preference should be given to those applicants who propose a commitment to serving persons with AIDS." Petitioner demonstrated its consistency with this preference by stating both in the application and through the testimony of its witnesses that it intends to serve the ever-increasing number of patients diagnosed with AIDS. Further, it is one of Petitioner's long range objectives to seek funding sources and grants to provide additional services to AIDS patients. The fourth preference reads as follows: "Preference should be given to those applicants who can demonstrate or have entered contractual agreements with other community agencies to ensure a continuum of care far those in need." Petitioner's application is consistent with this preference by its claim that the hospitals set forth in paragraph 6 intend to participate in the program, and should supplement the home health care system which Petitioner currently maintains. However, no competent proof was offered in support of the proposed arrangements. The fifth preference reads as follows: "Preference should be given to those applicants who have developed specialized innovative services to special sub-population in need within the District." Petitioner demonstrated its partial consistency with this preference by showing its intent to service patients with AIDS, the elderly and the Hispanic sub-populations of Dade County. However, Petitioner failed to show that the service it would provide was different from the service provided by the existing hospices in Dade County, other than the intended geographical location of Petitioner's proposal. Siting in Western Dade County on its own was not shown to be a specialized, innovative offering. The sixth preference reads as follows: "Preference should be given to those applicants who will address specific needs of the culturally diverse minority populations in the District." Petitioner demonstrated its consistency with this preference by showing that it intends to serve the elderly, ethnic minorities, victims of AIDS, and the indigent populations of Dade County. Each of the groups Petitioner has singled out are indeed minority population groups within Dade County, and are elements of, and contribute to the cultural diversity of the area. The seventh preference reads as follows: "Preference should be given to those applicants who propose to have health care personnel on call during night and weekend hours." Petitioner demonstrated its consistency with this preference by showing its intent to provide for home care up to24 hours a day, 7 days a week, to control its patients' symptoms and respond to emergencies as needed. The eighth preference reads as follows: "Preference should be given to applicants who build quality assurance methods into the proposed program." Petitioner demonstrated its consistency with this preference by expressing its plan to install a quality assurance program which will include clinical records review by a registered nurse, ongoing clinical record review, and utilization review. On balance, the Petitioner's application is consistent with the Local Health Plan. Availability, Accessibility and Extent of Utilization Currently there are two hospices that serve the District. The two are located in the Eastern portions of the County. Petitioner intends to locate its beds in the Northwest and Southwest portions of Dade County, whereas the existing beds are housed in the Northeast and Southeast parts of the County. Thus, Petitioner's proposed beds are more geographically accessible to the residents of Western Dade County, which the application asserts is the fastest growing area of the County. By providing beds in the Western portion of the District, and in locations different from the existing beds, Petitioner would make the hospice services in the District more geographically accessible. Hospice, Inc., is currently licensed for twenty- five (25) beds, of which only between fourteen (14) to sixteen (16) are operable. The record is silent as to the availability of the thirty (30) beds approved for Catholic Hospice, Inc. The record does not indicate why the approved beds are not in service, or how the beds requested by Petitioner would improve the availability of hospice service in the District. Quality of Care, Efficiency, Appropriateness and Adequacy The Application suggested that patients suffering from acquired immune deficiency syndrome (AIDS) are underserved, and that Petitioner will fulfill that need. Testimony offered by Petitioner sought to establish that some patients suffering from AIDS, and those of Hispanic origin, had been refused service by the existing hospices, and made vague reference to some credit problems which Hospice, Inc., had experienced If proven, the statements might impact on the quality of care, efficiency, appropriateness and adequacy; however, without a more direct showing this testimony is not considered, substantial, or credible. As to other references concerning the quality of care, efficiency, appropriateness and adequacy, the record is again silent. Availability and Best Use of Resources Petitioner currently operates as a home health care agency. The hospice program would be an extension of the existing service offered by Petitioner and targeted to serve the Hispanic, elderly and terminally ill patients within the District, utilizing existing and voluntary personnel. Without demonstrating more about the current operations, and proof of the market demand for the proposed services, a determination of the best use of resources cannot be made. Financial Feasibility The application projects a financially sound forecast in the short-term through 1991 starting with $75,000 available. The Department through testimony and in the SAAR recognized the short- term financial feasibility of the project. However, the record is silent on financial projections past 1991. Accordingly, a determination of the long-term financial feasibility of the proposal has not been shown. Effects on Competition Petitioner asserted that eligible patients were not being served by the existing facilities, as discussed in above paragraph 24. To the extent these underserved patients exist and were to be provided for by the proposed program, the offering might have an impact on the costs of providing health services in the District. However, as discussed in paragraph 24, the evidence presented did not support Petitioner's claim. Compliance with Rule Criteria Rule 10-5.011(1)(j), Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for hospice services within a particular service area. Dade County is the pertinent service area for the evaluation of the application. The methodology provides a formula by which the total number of hospice patients for the planning horizon, in this case January, 1991, are to be estimated. The formula takes the cancer mortality rate in the district, and factors in a certain percentage to allow for any other types of deaths, and then factors in considerations of both long-term, and short-term hospital stays to yield the projected number of beds which will be needed in the horizon year. For the batching cycle in which Petitioner's application was reviewed, the projected bed need is fifty-nine (59). From that figure, the number of approved beds is subtracted. At the time Petitioner submitted its letter of intent, the inventory of licensed beds in the District indicated that Catholic Hospice, Inc. was approved for thirty (30) beds, and Hospice, Inc., for twenty-five (25) beds. In other words, the inventory of licensed approved beds applicable to this application is fifty-five (55) beds. Thus, the numeric need for the pertinent batching cycle is four (4) beds. As referenced in paragraph 5, Petitioner requested approval for six (6) hospice beds. The application contains no request for approval of less than six (6) beds, nor did Petitioner raise the issue of a partial award. The Department does not normally approve an application when numeric need is not met unless, in the instance of a request for hospice services, mitigating and extenuating circumstances are proven by demonstrating the following: (1) documentation that the population of the service area is being denied access to existing hospices because the existing hospices are unable to provide service to all persons in need of hospice care and service, and, (2) documentation that the proposed hospice would foster cost containment, discourage regional monopolies and promote competition for all providers in the health service area. Hospice Inc., frequently maintains a waiting list for its hospice beds; however, the reason or reasons for the list was not demonstrated. The census of the hospice beds at Catholic Hospice, Inc., was not discussed at the hearing, or in the application. All of Petitioner's witnessed testified that they believed that the existing hospices were unavailable to potential patients in need of hospice service who lived in the Western portion of the District because the existing hospices were located in the Eastern portion of the District. The travel time from the Southern portion of the District to the Northernmost existing facility can require up to two and one-half hours. The witnesses asserted that the patients and their families do not wish to travel for that period of time to receive the services or to visit patients in the existing hospices. However, no patient or family member testified that the travel time or location of the existing hospice were a hindrance to care. The testimony presented concerning the patients and their families is not competent or corroborated by competent evidence. Further, Petitioner's witnesses asserted that doctors who had treated patients eligible for hospice service had told the witnesses that the physicians hesitated to refer the patients to the existing hospices because the doctors might not have staff privileges at the hospitals which house the existing beds. Again, no physicians were available to corroborate the statements of the witnesses or offer competent testimony in support of these assertions. Although Hospice, Inc., is Licensed for twenty- five (25) beds, it has chosen to operate only between fourteen (14) to sixteen (16) of those beds. The reasons Hospice, Inc., has chosen not to operate all of its licensed beds were not offered in the record. The District has the largest number of AIDS diagnosed cases of any county in Florida. The number of cases in the District is doubling, more or less on a yearly basis. The incidence of AIDS cases adds to the number of person in need of hospice care in the District. Rule 10-5.011(1)(j) does not single out AIDS-related deaths in its calculation; however, deaths from other than cancer are factored into the formula. Again, no competent testimony was presented that the existing hospices were unable to serve patients suffering from AIDS. The methodology set out in Rule 10-5.011(1)(j) determines the initial need for hospice within the District. Once a hospice has been approved, it can increase the number of beds that it has without certificate of need approval as long as the hospice keeps a patient mix of twenty (20) percent inpatient to eighty (80) percent outpatient. The factors asserted in findings 33-37 would go to show mitigating and extenuating circumstances, if proven by competent substantial proof. However, from the evidence presented, it cannot be determined that the existing hospices are unable to provide service to those in need of hospice care. The evidence presented to document that the proposal would foster cost containment, discourage regional monopolies, and promote competition is discussed in paragraphs 25-28 above, and is lacking in substance to show the premise raised here.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Health and Rehabilitative Services issue a Final Order which denies CON Application Number 5871. DONE AND ENTERED in Tallahassee, Leon County, Florida,, this 13th day of February, 1990. JANE C. HAYMAN 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 13th day of February, 1990.
The Issue Whether Petitioner's application for a Certificate of Need for a 50-bed addition to the Ormond Beach Hospital should be approved, pursuant to Chapter 381, Florida Statutes. This case involves petitioner's application for a certificate of need to expand, renovate, and consolidate ancillary service areas, and a 50-bed addition to its hospital. Respondent approved the application and issued a certificate of need for all aspects of the project except the 50-bed addition which it found would be inconsistent with the current health systems plan of Health Systems Agency of Northeast Florida, Inc., and because it determined that there was not a need for the additional beds in Volusia County. Petitioner filed its request for a Chapter 120 hearing. Thereafter, Intervenor Daytona Beach General Hospital, Inc., an orthopedic hospital located in Daytona Beach, petitioned for and was granted intervention in the proceeding over the objection of petitioner. During the course of the extensive hearing in this case, 15 witnesses testified in behalf of Petitioner, two were called by respondent, and four by the Intervenor. Eighty-seven exhibits were admitted in evidence. Exhibit 68 was withdrawn by stipulation of the parties.
Findings Of Fact Petitioner is a licensed 81-bed non-profit osteopathic general acute care hospital located at 264 South Atlantic Avenue, Ormond Beach, Florida. It is located on a site of approximately 4.6 acres bordered by Highway A1A on the east and Ormond Parkway on the north. The hospital plant consists of three buildings which have been joined together. One is a one-story dietary building that was originally a restaurant. A two-story building was built in 1970, and a one-story structure was built in 1954 and added to in 1960 and 1967. Other buildings owned by the hospital are adjacent residential homes on the premises which are used for storage, laundry, and other purposes. (Testimony of Hull, Exhibits 1-2, 13, 30, 59, 70) By a series of letters commencing on January 25, 1979, Petitioner advised Respondent's Office of Community Medical Facilities and the Health Systems Agency of Northeast Florida Area 3, Inc. (HSA) of its intent to expand and modernize its hospital and increase bed capacity. The last letter of intent was dated July 24, 1979. On September 21, 1979, Petitioner submitted its Certificate of Need Project Review Application to Respondent which included a request to increase the hospital's bed capacity from 81 to 161 beds. By letter of September 25, 1979, Respondent requested further information and, on December 11, 1979, Petitioner complied with the request and revised its application to seek only 50 additional beds. The proposed expansion and modernization plan included construction of a two-story addition to provide approximately 39,500 additional square feet, and renovation of approximately 22,000 square feet. Completion of the project would raise the hospital's total square footage of 39,350 to approximately 79,000 square feet. Incident to its request for additional beds, Petitioner proposes to initiate a 6-bed obstetrical unit at the hospital. (Exhibits 1-2, 7, 45-48) Petitioner's application was considered by various components of the HSA in January 1980, which resulted in a report and recommendations on the application which was filed with Respondent on February 25, 1980. During the course of the HSA's consideration of Petitioner's application at its several levels, representatives of Petitioner and the Intervenor appeared at the various meetings and presented their respective views regarding the application. The HSA report recommended approval of Petitioner's application for the renovation of its existing facilities and ancillary services, and approval of 44 additional beds. It further recommended that the state should take actions necessary to delicense a like number of beds within Petitioner's service area. The recommendation of 44 instead of 50 beds resulted from a finding that the proposed 6-bed obstetrical unit was not needed in the community in view of the probability that osteopathic physicians would likely be granted obstetric privileges in the future at allopathic facilities as a result of the enactment of legislation prohibiting the discrimination by particular provider professions against osteopathic physicians. The HSA found that although "Goal" DTS 1 in its Health Service Plan (HSP) which is used as a "guide" for health planning called for less than 4.3 acute care hospital beds per 1000 population with an overall average annual occupancy rate of at least 80 percent by 1984 in Health Service Area 3, it could approve additional beds for opening prior to 1984 if "extraordinary circumstances" exist as identified in "Goal" EA 2. It further found that Area 3 then had 5255 civilian acute care hospital beds, or a rate of 5.4 beds per 1000 population, with an average occupancy of 61 percent, and that, therefore, approval of additional beds, without cause, would be contrary to "Goal" DTS 1. However, the agency determined that extraordinary circumstances existed in Petitioner's case due to the fact that it had been operating for the past several years at an average occupancy of near or above 90 percent and that within its service area there existed in excess of 200 licensed medical surgical beds which were not staffed or used. The HSA therefore concluded that the situation denied ready access to acute care facilities to the citizens residing in Petitioner's service area. The HSA also considered that approval of the project would improve the effective and geographic distribution of beds and patient and physician accessibility in Volusia County because it was the only hospital located on the beach peninsula. It further found that the great number of elderly patients living in Volusia County and seasonal population fluctuations due to large numbers of tourists living in the area could be denied access to inpatient facilities if the project was not approved. As other extenuating factors, the HSA report stated that Petitioner had been granted prior certificates of need to expand its bed capacity, but that they had expired prior to implementation, that its inpatient facilities were antiquated, that denial of the beds would serve to deny access to patients of osteopathic facilities, and that federal law (PL 96-79) recognized that the need for additional or expanded osteopathic facilities should be determined on the basis of the need for and availability in the community for such services and facilities. (Testimony of Floyd, Hull, Exhibits 4, 8-12, 14, 59) By letter of March 28, 1980, Respondent's Administrator, Office of Community Medical Facilities, informed Petitioner that its application for certificate of need to expand, renovate and consolidate ancillary service areas at a total project cost of four million dollars was approved, and Certificate of Need Number 1236 was attached. The letter further advised petitioner that the proposed 50-bed addition was denied as being inconsistent with the current Health Systems Plan of the HSA, that there was not a need for the additional 50 beds in Volusia County as evidenced by facts contained in an attached State Agency Action Report, and that the extraordinary circumstances upon which the HSA recommended approval were not valid as evidenced by the same report. However, the referenced report was not submitted in evidence at the hearing, nor was any testimony adduced as to the rationale for the agency decision. By letter of May 28, 1980, Petitioner requested Respondent to increase the amount of the issued certificate of need to ten million dollars due to anticipated additional costs of construction and, by letter of July 24, 1980, Respondent advised Petitioner that the "cost over-run" had been approved and an amended copy of the Certificate of Need Number 1236 reflecting the additional cost was attached. (Testimony of Hull, Exhibits 57-58) Volusia County has eight hospitals of which six are allopathic and two are osteopathic. There are five hospitals in the Daytona Beach/Ormond Beach "coastal area" of the county which include Petitioner, Intervenor Daytona Beach General Hospital, Inc. (osteopathic), Ormond Beach Memorial Hospital, Daytona Community Hospital, and Halifax Hospital Medical Center. Two other hospitals in the county are Fish Memorial and West Volusia located in Deland. The remaining hospital is Fish Memorial at New Smyrna Beach. Petitioner is the only hospital on the beach peninsula which is connected to the mainland by several drawbridges. Daytona Beach General Hospital and Ormond Beach Memorial Hospital are located on the mainland in the northern "coastal area" several miles in distance from Petitioner. The remaining two hospitals in the area are within an average of 30 minutes driving time from Petitioner except during the peak tourist season of February to July each year, or when undue delays are experienced at the drawbridges. The HSA recognizes Petitioner's health service area to be Volusia County. In June 1979, the eight hospitals in Volusia County had a total of 1675 licensed beds, of which 1395 were open and staffed for use. Of the 378 osteopathic beds, only 178 were open and staffed. Occupancy of the licensed beds during the period July 1978 to June 1979 ranged from a low of 13.8 percent for Daytona Beach General Hospital to a high of 92 percent for Petitioner. The average occupancy of all licensed hospital beds was 51.2 percent. For the month of July, 1980, 1418 beds were open and staffed with 65.2 percent occupancy. Fish Memorial Hospital of New Smyrna Beach has a certificate of need for an additional 45 beds. In June 1979, all of Petitioner's licensed beds were staffed, but only 97 of Daytona Beach General Hospital's 297 licensed beds were staffed and available for use. Its patient population, however, has increased during the past year. In July 1978, Volusia County had a population of approximately 230,000 and therefore had about 7 acute care beds per 1,000 population. The 1980 preliminary census figures for the county showed the population to be 249,434 and it is projected that the final census figures will increase from one to two percent which would place the county population at between 252,000 and 254,000. If the higher figure is utilized, the bed ratio for the county at the present time would still be over 6 beds per 1,000 population. It is projected that the population of Volusia County will increase to 275,900 by 1984. If the current 1675 licensed beds remain the same, there would then be approximately 6 beds per 1,000 population. Approximately 25 percent of the Volusia County population consists of individuals who are 65 years of age or older whereas only some 9 percent of the population in the other six counties in HSA Area 3 are in that category. Although the HSA's plan arrived at its goal of 4.3 beds per 1,000 population for Area 3 in accordance with federal guidelines which allowed for adjustments in areas with referral hospitals, high tourism rates, and areas with greater than 12 percent of the population being 65 years of age or older, no further adjustment was made for Volusia County in spite of the fact that the Area 3 rate of about 13 percent of elderly population is about half that of the county. Further, the seasonal fluctuation as a result of tourists was not quantified on the basis of available statistics. However, in its justification for the 4.3 beds goal, the HSP makes note of the fact that Volusia County has 22 percent more patients per day during the high tourist months than during the lowest occupancy months of he year. On an average day in 1979, 73,000 tourists were in Volusia County which equated to approximately an additional 30 percent of the county population of 240,421. During the year 1979-80, about 22 percent of Petitioner's patients were residents of places other than Volusia County. However, there are no available statistics on the numbers of such persons who were inpatients. Most of the tourists seek only outpatient treatment for sunburn and minor injuries, although some undergo surgery during the months they are visiting the coastal area. (Testimony of Schwartz, Floyd, Smith, Hull, Clapper, Exhibits 3, 5-6, 18-26, 29, 51) Petitioner's application reflected that its 81 licensed beds were then utilized as medical/surgical (69 beds), intensive care (6 beds), and pediatrics (6 beds). The proposed additional 50 patient beds would be utilized as medical/surgical (29), intensive care (6), progressive care (4), pediatrics (3), obstetrical (6), and isolation (2). However, subsequent to filing its application, Petitioner discontinued its pediatric ward, and created 3 additional medical/surgical beds from the 6 former pediatric beds. (Testimony of Hull, Exhibit 2) The need for six additional intensive care beds and the initiation of a four-bed progressive care unit is to eliminate the past practice of prematurely transferring intensive care patients to other patient beds due to an insufficient number of intensive care beds. Such transfers required the conversion of semi-private into private rooms with additional equipment and nursing care which also reduced the total number of available beds within the hospital. Transfers of this nature were made extensively during the past fiscal year. (Testimony of Hull, Schwartz, Nargelovic, D'Assaro, Exhibit 2) The request in the application for two beds to serve as isolation rooms is based upon the fact that petitioner does not maintain any such rooms at the present time and it requires them to meet acceptable standards of health care. Currently, when isolation is necessary, a semi-private room is converted for the single patient requiring isolation, thus reducing the number of available beds. (Testimony of Schwartz, Hull, Nargelovic, Exhibit 2) Petitioner's request to establish a six-bed obstetrical unit is based upon its claim that such a unit is necessary to properly provide patients of osteopathic physicians with such a service and to provide full health care services which would not only attract new physicians to the hospital, but also enable Petitioner to conduct an intern training program. In addition, Petitioner is of the opinion that such a unit is necessary to provide service to patients living on the peninsula because the closest hospital providing obstetrical care is Halifax Hospital which is located on the mainland. The other obstetrical units are located at Fish Memorial Hospital at New Smyrna Beach and West Volusia Hospital at Deland which are some thirty miles away and do not conduct approved intern or residence programs for osteopathy. Halifax Hospital restricts staff privileges to those physicians who have met American Medical Association criteria and, therefore, osteopathic physicians generally are not eligible to utilize the obstetrical unit there. The HSA found that Petitioner projected 375 deliveries in its proposed obstetrics department during the third year of operation. The agency's HSP goal DTS 4.2 provides that no additional obstetrical departments should be approved in Volusia County until each existing department in the county is performing at least 1,000 deliveries annually. Only Halifax Hospital exceeds the 1,000 annual delivery standard. The HSA disapproved the requested obstetrical beds based upon its view that obstetrical beds at Halifax Hospital would eventually become available for use by osteopathic physicians. (Testimony of Schwartz, Hull, Rees, Exhibit 2-3, 6, 14, 54-55) Petitioner primarily bases its request for the additional 29 medical/surgical beds on the fact that it is the only hospital on the peninsula, has extreme seasonal demands placed on it by tourist population, and that the hospital census has been over 92 percent average occupancy during the past fiscal year. At times, the hospital has been filled to capacity, and has found it necessary to use "hall beds" to meet the need for emergency admissions. The crowded conditions have necessitated frequent delays in patient admissions or the referral of patients to other hospitals. A patient occupancy rate averaging 80-85 percent is normally acceptable, but Petitioner experiences a certain amount of inefficiency and lessened quality of care when over 80 percent of its beds are occupied. This is reflected in the difficulty of staffing and providing support services, and possible premature patient discharge. (Testimony of Schwartz, Hull, D'Assaro, Draper, Mason, Shoemaker, Exhibits 2, 51, 69) Although approximately 80 percent of Petitioner's patients reside in the coastal area of Volusia County, only some 29 percent reside in the northeastern part of the county where Petitioner's hospital is located. Petitioner currently has 27 osteopathic physicians on its staff, 18 of whom admit their patients principally to Ormond Beach Hospital and 7 admit there exclusively. Nineteen of the osteopathic physicians have staff privileges at other hospitals. Twenty-four allopathic physicians have staff privileges at Ormond Beach Hospital, but most are specialty consultants who admit less than one percent of Petitioner's patients. (Testimony of Schwartz, Floyd, Hull, D'Assaro, Exhibits 16-17, 60, 67) The quality of care provided patients at Ormond Beach Hospital is excellent, particularly in view of the antiquated physical plant and prevailing crowded conditions. These problems have led to the existence of a number of existing beds which do not conform to state fire, safety and other standards. It is planned that the majority of the existing beds will be located in a new building to provide room in the present buildings for expansion of ancillary and support facilities. The hospital is accredited by the American Osteopathic Association and by the Joint Commission on Accreditation of Hospitals. Accreditation by the Joint Commission indicates that a hospital provides an excellent standard of Health care. (Testimony of Draper, Boxx, Hull, Wisely, Mason, Shoemaker, D. Smith, Exhibits 1-2, 28-42, 49-50, 71-77) Petitioner is an osteopathic hospital whose Board of Directors is composed of osteopathic physicians. There are no physical differences between allopathic and osteopathic hospitals with the minor exception that the latter utilizes a table for manipulative therapy for some 20 to 30 percent of the patients. The primary difference between the two concepts is philosophical in nature. Osteopathy emphasizes a "wholistic" approach to medicine which stresses the importance of the musculoskeletal structure and manipulative therapy in the maintenance and restoration of health. It is family practice-oriented with about 75 percent of osteopathic physicians engaged in general practice rather than specialty medicine. Emphasis is placed upon personal attention by the physician to the patient. These factors produce a certain amount of patient preference for treatment in an osteopathic facility. (Testimony of Floyd, Schwartz, Wisely, Hull, Mason, Shoemaker, D. Smith, D'Assaro, Exhibit 78) Although the bylaws of two of the three allopathic hospitals located in the coastal area of Volusia County have recently been amended to permit osteopathic physicians to obtain staff privileges, certain vestiges of prior discrimination still exist due to the fact that hospital control is exercised by allopathic physicians, and that board certification is required which excludes many osteopathic physicians. The third hospital, Halifax, requires board certification in an American Medical Association approved specialty or residence program. As a consequence, only one osteopathic physician is on its staff. (Testimony of Draper, Hull, Porth, Helker, Rees, D. Smith, Exhibits 54, 63, 66) Daytona Beach General Hospital, Inc. is the other osteopathic hospital in the area which is located on the mainland several miles away from Ormond Beach Hospital. It has 297 licensed beds, but only 107 were staffed and open for use in July 1980. Its rate of occupancy in June 1979 was 13.8 percent of the licensed beds. The hospital has experienced past difficulties due to a substandard physical plant and inadequate staffing in certain areas. Although many osteopathic physicians decline to admit patients to the hospital, they generally agree that the standard of care is adequate, except for critical care cases. The hospital has sought in the past to attract additional patients by accepting staff applications from qualified area physicians. Daytona Beach General is accredited by The American Osteopathic Association and has pending an application for accreditation by the Joint Commission on Accreditation of Hospitals. (Testimony of Draper, Wisely, Boxx, Hull, D. Smith, Clapper, Solomon, Exhibits 27, 29-80) Petitioner has exerted efforts to acquire licensed hospital beds from other area hospitals to alleviate its shortage, but has been unsuccessful. Hospitals are reluctant to give up licensed beds even though they are not currently being utilized because they normally anticipate a need for them in future years. Although Daytona Beach General Hospital has been the subject of negotiations for sale with various entities, including Petitioner, in recent years, they have not been successful. None of the hospitals, including Petitioner, desires to share space in other hospitals due to the resulting lack of control over operations and procedures. Petitioner held a certificate of need for 84 beds in 1976 which it was forced to relinquish when it received a certificate of need for the proposed purchase of Daytona Beach General Hospital. (Testimony of Boxx, Hull, Porth, Hilker, Clapper, Rees, Draper, Exhibits 15, 28, 21-37, 43-44, 55-56) It is estimated that the renovation and expansion of Ormond Beach Hospital will take from 18 to 24 months to complete. Approval of additional beds will result in dividing construction expenses among a greater number of patients, thus lowering costs of health care. On the other hand, without the addition of hospital beds, an increase in patient costs is to be expected. The addition of new beds will be a positive factor in Petitioner's recruitment of osteopathic physicians to the area and in initiating an intern training program. It should also serve to increase Petitioner's competitive position among other area hospitals and provide a better quality of care for its patients. (Testimony of Draper, Boxx, Hull, D. Smith, Clapper)
Recommendation That the application of Petitioner for a certificate of need for a 50 acute-care bed addition to its facility be approved in part for 38 additional acute-care beds. DONE and ENTERED this 6th day of April, 1981, in Tallahassee, Florida. THOMAS C. OLDHAM 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 6th day of April, 1981. COPIES FURNISHED: Eric J. Haugdahl, Esquire Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 Bernard H. Dempsey, Jr., Karen L. Goldsmith, Esquires Suite 610 Eola Office Center 605 East Robinson Street Orlando, Florida 32801 L. LaRue Williams, and Glenn R. Padgett, Esquires Kinsay, Vincent, Pyle, Williams and Tumbleson 52 South Peninsula Drive Daytona Beach, Florida 32018 Honorable Alvin Taylor Secretary, Department of HRS 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================
Findings Of Fact Based on the admissions and stipulations of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, the following facts are found. Admitted facts The Charter facility will have a total of 60 beds and was preliminarily approved by DHRS for the following units: (a) 16 short-term adolescent psychiatric beds; (b) 16 long-term adolescent psychiatric beds; (c) 12 long-term child psychiatric beds; and (d) 16 long-term adolescent substance abuse beds. DHRS preliminarily approved a total project cost of $7,376,843 on December 2, 1983. As part of its decision, DHRS imposed as a condition and Charter agrees to dedicate 5 percent of its patient days and revenue to Baker Act patients. The Bureau of Economic and Business Research ("BEBR") population projections for Broward County for 1988 is 1,252,660. Management personnel and funds for capital and operating expenditures are reasonably available to Charter for its proposed facility. The Charter facility will be geographically accessible to all residents of Broward County. Findings related to the application process Charter filed its application on August 15, 1983, and it was assigned to Mr. Straughn for review. On August 29, 1983, Mr. Straughn sent an "omissions" letter to Charter requesting additional information. On October 13, 1983, Charter sent a response to the "omissions" letter providing Mr. Straughn with additional information about the application. Charter's application was deemed complete on October 15, 1983. Based on information available to DHRS at that time it was impossible for DHRS to review the project because DHRS did not know what kind of beds Charter was asking for. Prior to the public hearing on November 8, 1983, Mr. Straughn was totally confused as to whether Charter wanted short-term or long-term beds. He called Mr. Holbrook at Charter and asked for clarification. By letter dated November 8, 1983, which was undoubtedly first presented to the DHRS at the public hearing held on that date, Charter explained exactly what kinds of beds it was seeking. Prior to November 8, 1983, it was not clear what kinds of beds Charter was seeking. And although the matter is still somewhat ambiguous and not completely free from doubt, careful review of the original application tends to indicate that the original application was for all short-term beds. Findings regarding the general nature of Charter's proposed facility and programs Charter is mostly interested in providing treatment to "salvageable adolescents and children." Charter is not interested in treating chronic patients. Chronically ill patients require a longer period of treatment than other patients. If Charter is not treating chronically ill patients, its treatment periods will be on the short end of the treatment spectrum. The proposed Charter programs do not contain any program which would be appropriate for the treatment of severe sociopathic patients. Although Charter contends that its 12-bed child psychiatric unit will be a long-term unit, the program it describes for the child psychiatric unit is clearly a short-term program. Charter contends that one of its proposed 16-bed adolescent units would have an average length of stay of 25 days and that the other 16-bed adolescent unit would have an average length of stay of more than 90 days. Other evidence discussed below indicates that Charter's expectations of average lengths of stay in excess of 90 days are unwarranted given the nature of the programs proposed by Charter and the experience of existing providers in Broward County and Charter's facility in Ft. Myers, Florida. The programs described in the Charter application are identical to the programs described in the earlier North Beach application. The North Beach application was for a short-term facility. There is nothing in the treatment programs described in the Charter proposal that makes them long-term programs. The proposed Charter treatment programs are identical to existing programs at Florida Medical Center and Fort Lauderdale Hospital. The diagnostic and evaluation portion of the Charter programs is no different from what is currently being done at Florida Medical Center and Fort Lauderdale Hospital. In reality, diagnosis and treatment occur simultaneously. From the day a patient is admitted he is being treated as well as diagnosed. There is no advantage in segregating patients who are being evaluated and patients who are being treated. The programs proposed by Charter are very typical of the programs used by most child and adolescent psychiatric hospitals in the United States. A condition placed on the certificate of need that Charter is seeking is that at least 5 percent of the projected patient days and projected revenues will be comprised of Baker Act patients. Long-term child and adolescent psychiatric patients are generally chronic patients. It is a contradiction in terms for Charter to say on one hand that it is a long-term facility and to then say it will not treat chronic patients. The step system is a treatment program typically used in short-term psychiatric facilities. It does not work with chronic child and adolescent patients that require long-term treatment. The Charter proposal envisions extensive cooperation and coordination with other forms of existing health care resources, particularly in discharge planning and follow-up. Given the nature of the types of patients Charter proposes to treat (acute patients) and the experience of existing providers in Broward County and in Charter's Ft. Myers facility in treating similar patients, the most reasonable expectation is that the average length of stay of patients at Charter's facility would be substantially less than the 90 days or more it projects. The most reasonable expectation is that the average length of stay of child and adolescent patients at Charter's proposed facility would be 60 days, or less. Findings regarding Charter's ability to provide quality of care Charter Medical is committed to providing a high quality of care at its facilities. It operates other psychiatric hospitals in Florida and does not appear to have experienced any quality of care problems in those facilities. Nevertheless, Charter only proposes to use 29 FTE's for its 60-bed facility in Broward County, which is a lower ratio of staff to patients than the current practice at some existing facilities. Also, Charter proposes to use some LPN's on its staff, while current practice at some existing facilities is to use only registered nurses. Findings regarding Charter's occupancy experience with other new psychiatric hospitals It has been Charter's past experience with opening new psychiatric hospitals, that the reasonable expectation for average occupancy during the first year of operation is in the neighborhood of 30 percent to 45 percent. This is true even when the facility has strong community and physician support. Of ten psychiatric hospitals opened by Charter during the past three years, most had occupancy rates during their first year of operation in the range of 30 percent to 45 percent. One was less, around 20 percent. Its best was around 60 percent, which was in Charter's home city. Charter's experience with bad debt during the first year of operation is in the range of 6 percent to 8 percent. Findings regarding one of Charter's other Florida psychiatric hospitals Charter Glade Hospital in Ft. Myers, Florida, is a psychiatric hospital with 104 beds. It offers the following programs: --adolescent programs --adolescent addictive disease program --adult addictive disease/chemical dependency program --general adult psychiatric program The average occupancy rate at Charter Glades Hospital during its first year of operation was 49 percent. A consideration which contributed to this occupancy rate is the fact that Charter Glades has no nearby competition offering psychiatric services. The average length of stay for adolescent patients at Charter Glades Hospital is between 45 and 55 days. Charter Oakdale uses the step or level system in its treatment programs for adolescents. It is a very typical form of adolescent psychiatric treatment and is essentially the same form of treatment presently used in the existing adolescent psychiatric programs in Broward County. It is also essentially the same form of treatment that is proposed for Charter's Broward County facility. Findings regarding the District and State Plans and DHRS information The applicable District Plan does not address the need for long-term psychiatric or substance abuse beds in District X. The District Plan recommends, in essence, that with regard to short-term psychiatric and substance abuse services, any new facilities should not exceed the bed need methodology set forth in Rule 10-5.11(25), Florida Administrative Code. The District Plan recommends that both psychiatric and substance abuse facilities should provide specialty services by population, age, and socioeconomic characterization. The District Plan also recommends that all psychiatric facilities should provide for a continuum of care. The District Plan recommends that inpatient psychiatric facilities have a minimum of 20 beds. The District Plan recommends a smooth transition between inpatient and outpatient services. The State Health Plan is too old and out of date to be a useful tool in the evaluation of applications for certificates of need. The District Plan does not indicate how many of the existing beds are dedicated to child or adolescent patients. Therefore, it is difficult for the DHRS to apply the separate 75 percent occupancy standard for adults and the 70 percent occupancy standard for children and adolescents. According to the best information available to the DHRS, during 1983 the combined (child, adolescent, and adult) occupancy rate in Broward County was approximately 68 percent, which is below both rule standards. (The evidence in this case indicates that the occupancy rates are somewhat lower, as noted hereinafter). The basis for the DHRS proposal to approve the short- term beds notwithstanding the fact that the occupancy standards were below those provided in the applicable rules was described as follows by Mr. Porter: However, in view of the proposal in its entirety, to include the long-term child and adolescent beds which are being proposed in this facility, and the absence of any such beds, a demonstration of need for those beds in this district, that is an overriding factor to specifically that criteria where occupancy of existing short-term beds does not exceed the standard quoted in the rule. There is no specific rule formula or methodology for determining need for long-term psychiatric or substance abuse services. The reasoning behind the DHRS proposal to approve the long-term beds included in this proposal was explained as follows by Mr. Porter: I think in combination of the fact that there were no similar and like services in this particular district, certainly through supporting documentation in the application as well as some statements which were made in the District X mental health plan, and an indication of the number of patients who were also seeking care at Grant Center Hospital. A combination of all those factors led the Department to conclude that there was, in fact, a need for long-term psychiatric and substance abuse services for children and adolescents in District X. The Bureau of Economic and Business Research ("BEBR") population projections for Broward County for 1989 is 1,264,869. Findings regarding the same or similar services in Broward County There are seven existing facilities in District X which provide inpatient psychiatric services, The DHRS regards all seven of these facilities as "short-term" psychiatric facilities, but the evidence indicates otherwise. The seven existing facilities are: Broward General Medical Center Florida Medical Center Imperial Point Memorial Hospital Coral Ridge Fort Lauderdale Mental Health Institute Broward Pavilion The DHRS Certificate of Need Review Section does not have a reliable inventory of psychiatric beds in Broward County or South Florida in general. The DHRS does not have any clear information on the number of existing psychiatric beds that are adult beds and the number that are child or adolescent beds. General hospitals do not report occupancy by service. Accordingly, the DHRS does not have available any occupancy rates for the most recent 12-month period for psychiatric beds in general hospitals in Broward County. Pursuant to the best information available to the DHRS, the occupancy of the freestanding specialty psychiatric facilities in Broward County was as follows for the most recently documented 12-month period: Coral Ridge Psychiatric 74 beds 60.0 percent Ft. Lauderdale Hospital 58 beds 40.4 percent Hollywood Pavilion 46 beds 58.1 percent TOTALS 178 beds 51.1 percent The following hospitals in Broward County offer specialized inpatient units for adolescents: Fort Lauderdale Hospital, South Florida State Hospital, Community Hospital of South Broward and Coral Ridge Hospital. South Florida State Hospital also has a specialty inpatient unit for children. Fort Lauderdale Hospital and Community Hospital of South Broward offer specialized inpatient substance abuse programs for adolescents. The following hospitals all treat adolescents, but do not have specialized units for adolescents: Broward General Hollywood Pavilion Hollywood Memorial Imperial Point Florida Medical Center has 74 approved psychiatric beds and has 54 or 59 presently in operation. There are plans to construct more physical space to move up to full authorization. They will use existing beds to increase their psychiatric beds to the full authorized number of psychiatric beds. Florida Medical Center has a closed adolescent unit of 20 beds and a closed adult unit of approximately 25 beds. It also has a small geriatric unit. Florida Medical Center does not have beds specifically designated for patients under age 11, although, on rare occasions, it treats patients under age 11. Florida Medical Center has very high quality programs for adolescent psychiatric patients. These programs are in substance no different from the programs described in Charter's application. All psychiatric hospitals treating acute patients have behavior modification programs based on rewards and punishments. Florida Medical Center offers all of the proposed Charter programs in a short-term psychiatric program. The diagnostic and evaluation program described in the Charter application is not considered a separate program at Florida Medical Center. It is a standard process of every psychiatric admission to pursue diagnosis and evaluation. One can often reach a diagnosis in 30 days, but not always. All psychiatric hospitals use a diagnostic and evaluation system, but they do not designate diagnosis and evaluation as a separate program. The average length of stay at Florida Medical Center's adolescent psychiatric unit is 64 days. The average length of stay at that unit if one takes out all patients who stay less than 30 days is 78.3 days. Nine of Florida Medical Center's 36 adolescent psychiatric patients have stayed longer than 90 days. Florida Medical Center has provided treatment of six months duration to a few of its adolescent psychiatric patients. As of the date of the hearing the total census of the Florida Medical Center psychiatric beds (adult and adolescent) was slightly less than 30 patients. As of the date of the hearing, Florida Medical Center had 8 adolescent psychiatric patients out of a capacity for 20. There has never been a waiting list for the adolescent psychiatric beds at Florida Medical Center. With regard to staffing, Florida Medical Center has 21 FTE's for its 20-bed adolescent psychiatric unit. It uses all registered nurses in its adolescent unit and has no LPN's. In the 12 month period preceding the hearing, the number of total patient days for all types of patients at Florida Medical Center has dropped 20 percent. The DRG system of reimbursement is causing a drop in patient days, which can be expected to result in excess bed capacity. The DRG system of reimbursement is not applicable to child and adolescent psychiatric services. The anticipated impact of DRG's on the delivery of psychiatric services is that DRG's will result in an excess of med/surg beds which will cause hospitals with those excess beds to try to convert them to something else, including psychiatric beds. Fort Lauderdale Hospital is a specialty psychiatric hospital and is licensed for 100 beds. It has the following programs: 18 beds -- intensive adult care (very short-term) 23 beds -- adolescent psychiatry 20 beds -- adolescent substance abuse 18 beds -- adult psychiatry (open) 16 beds -- adult substance abuse Presently Fort Lauderdale Hospital has only 95 beds set up. It could set up the other five within less than half a day if it had patients for them. For the period December 1, 1982, through November 30, 1983, the average length of stay in the Fort Lauderdale Hospital adolescent psychiatric unit was 54 days. For the period December 1, 1983, through July 30, 1984, the average length of stay in the Fort Lauderdale Hospital adolescent psychiatric unit was 48.6 days. For the period December 1, 1982, through November 30, 1983, the average length of stay in the Fort Lauderdale Hospital adolescent substance abuse unit was 44.7 days. For the period December 1, 1983, through July 30, 1984, the average length of stay in the Fort Lauderdale Hospital adolescent substance abuse unit was 45.1 days. For the 12 months ending November 30, 1983, the average length of stay for adolescent psychiatric patients who stayed 30 days or less was 13.28 days. For the 12 months ending November 30, 1983, the average length of stay for adolescent patients who stayed 31 days or longer was 74.17 days. Fort Lauderdale Hospital has some patients who stay longer than 90 days. The average daily census for the Fort Lauderdale Hospital adolescent psychiatric unit is 12.5 patients (out of 23 available beds). The average daily census for the Fort Lauderdale Hospital adolescent substance abuse unit is 10.8 patients (out of 20 available beds). Fort Lauderdale Hospital offers all of the programs described in the Charter proposal. There is nothing unusual about those programs. Fort Lauderdale Hospital is very concerned about quality of care and provides high quality of care. Fort Lauderdale Hospital is involved in numerous community activities. It has community outreach programs and community educational programs. Fort Lauderdale Hospital has been trying continuously to have the public school system provide additional hours of school at the hospital, but the school system has failed to do so. Fort Lauderdale Hospital has an open medical staff. It has about 18 psychiatrists on the staff. If it had a closed medical staff limited to 4 or 5 psychiatrists it is reasonable to expect that psychiatric admissions would be reduced by 50 percent or more. Coral Ridge Hospital is licensed for 86 psychiatric beds. It is a long-term psychiatric treatment facility. Ninety- nine percent of the patients at Coral Ridge Hospital are chronic patients. At one time Coral Ridge Hospital was a short-term facility treating primarily acute patients, but it began turning into a long-term facility in 1977-78, and is now exclusively long-term. Coral Ridge Hospital has a 12-bed unit for children and adolescents. It also has a 24-bed substance abuse unit in which it can also place adolescents. The average length of stay of patients at Coral Ridge Hospital is well in excess of six months, perhaps as much as a year. Some patients at Coral Ridge Hospital stay as long as 18 months. As of the time of the hearing, there were three patients in the 12-bed child and adolescent unit at Coral Ridge Hospital. During the previous year Coral Ridge Hospital had had as many as 8 or 10 child and adolescent patients. As of the time of the hearing Coral Ridge Hospital had 44 beds filled out of a total of 86. Its average census during the previous 12 months was around 55 patients, or about 64 percent occupancy. Charges for room and board at Coral Ridge Hospital are about $195 per day. Total charges, which includes room and board, physician and therapy fees, tests, etc., range from about $6,000 to about $10,000 per month. Coral Ridge Hospital provides between 15 percent and 20 percent free services. Broward General Medical Center is a 744-bed acute care short-term hospital located in Ft. Lauderdale, Florida. It has a psychiatric unit in which it treats patients 14 years of age and older. South Florida State Hospital in Broward County has a 50-bed children's unit and a 50-bed adolescent's unit. All of the services proposed by Charter are presently available in Broward County. There are an adequate number of existing beds available in the private sector for long-term psychiatric treatment in Broward County or close to Broward County. There is an existing good distribution of long-term inpatient psychiatric services along the southeast coast of Florida. Findings regarding the same or similar services in adjacent districts Grant Center Hospital is a 100-bed child and adolescent inpatient psychiatric hospital in Dade County which specializes in providing long-term care. Grant Center is within a two hour travel time from Broward County. A true long-term adolescent psychiatric program such as they have at Grant Center -- envisions stays of a minimum of six months, often closer to a year, and sometimes lasting as long as two years. The average length of stay at Grant Center is 290 days. The ages of patients at Grant Center range from 5 years old to 19 years old. Children up to 6 years of age make up a insignificant portion of Grant Center's patient population. Dade County is the primary service area for Grant Center. However, 12 percent of Grant Center patients come from Broward County and 6 percent of its patients come from Palm Beach County. During 1984 the occupancy level at Grant Center averaged 98 percent. The usual waiting list at Grant Center has been 5 to 12 patients. Grant Center has been granted a certificate of need to add 60 beds for long-term child and adolescent psychiatric services. Those 60 beds are under construction and will be on line by the end of 1985. The approved cost of those 60 beds was $1.7 million. The 60 new beds at Grant Center will occupy about 28,000 square feet. Every patient that comes to Grant Center receives intensive diagnosis and evaluation such as is proposed by Charter, but Grant Center does not call that a separate program. During 1984, 18 percent of Grant Center revenues were written off as either bad debt, free care, or charity cases. Highland Park is a 72-bed facility located in the center of Miami, Florida. Highland Park is owned by the same group that owns Grant Center. Highland Park has a 16-bed child and adolescent unit. It is common for children and adolescents to stay at Highland Park for over 90 days. Highland Park is within two hours travel time from Broward County. In 1983 there were 20 psychiatric beds at Biscayne Hospital with an occupancy rate of 63.9 percent. Biscayne Hospital is in north Dade County, within two hours travel time from Broward County. In 1983 there were 56 psychiatric beds at North Miami Hospital with an occupancy rate of 60.9 percent. North Miami Hospital is in north Dade County, within two hours travel time from Broward County. On February 28, 1984, a certificate of need was granted for 60 long- term adolescent psychiatric beds in Boca Raton. Boca Raton is within a two hour drive of Broward County. Psychiatric Institute of Delray was granted a certificate of need to add 15 long-term child and adolescent psychiatric beds. This is within a two hour drive of Broward County. National Medical Enterprises was granted a certificate of need to add 25 child and adolescent psychiatric beds. These beds are within a two hour drive from Broward County. Findings regarding other health care facilities and services In North Dade, South Palm Beach, and Broward County there are about 500 beds offering residential psychotherapeutic services for adolescents. Findings regarding manpower and accessibility Charter can reasonably expect to be able to secure the necessary health manpower to staff its facility at the proposed FTE level. With regard to geographic accessibility, the proposed Charter facility will be accessible to more than 90 percent of the residents of Broward County. With regard to financial accessibility, the $64,000 that Charter projects for charity care equates to three indigent patients for 60 days each per year. Findings regarding financial feasibility of the proposal Although Charter does not yet have a commitment for its proposed revenue bonds, given the financial assets of the parent company and its history of obtaining financing for other similar projects it would appear that the project is immediately financially feasible in the sense that Charter has or can obtain the financial wherewithal to pay for the cost of building the facility. The long-term financial feasibility of the project is quite another matter. For many of the reasons set forth below the long-term financial feasibility of the proposed facility looks rather bleak. Charter's pro formas and other projections for the future were prepared in large part by Mr. Follmer, but Mr. Follmer appears to have made a lot of unwarranted assumptions and guesses in the formulation of his estimates and projections. Mr. Follmer expressed confidence in the availability of private insurance to pay for a substantial amount of the services provided by the proposed facility, but Mr. Follmer has never seen a composite report showing the average psychiatric insurance coverage for adolescent patients in Broward County. In fact no more than 10 percent of the adolescent patients seen at Fort Lauderdale Hospital have private insurance coverage in excess of 90 days. Mr. Follmer projects that Charter will have occupancy at a rate of 55 percent during its first year of operation, 65 percent during its second year of operation, and 80 percent during its third year of operation. For reasons which are set forth at the end of these findings of fact, it must be concluded that these projections are totally unrealistic and without reliable factual foundation. Based on a number of factors, including specifically Charter's first year experiences with its other psychiatric hospitals, the recent experience of existing psychiatric hospitals in and near Broward County the fact that Charter will have closed medical staff, the fact that its medical staff is not presently operating in Broward County and has no established following of patients, and the fact that Charter has no agreements for the referral of psychiatric patients from general hospitals, an optimistic projection for its occupancy rate during the first year of operation would be in the range of 35 percent to 40 percent, and there is no reason to expect it would achieve better than 50 percent to 55 percent occupancy during its second year of operation. The estimate of 80 percent occupancy during the third year of operation is sheer speculation for which there is no competent substantial evidence and which is totally contraindicated by the experience of existing providers of the same or similar services. The foregoing regarding the occupancy that can realistically be expected by Charter takes into consideration only the adolescent aspect of Charter's proposed facility. When the 12-bed children's unit is taken into consideration, the reasonable occupancy expectations become bleaker yet. It is very uncommon to admit a child under 12 years of age for inpatient psychiatric hospital treatment. Families tend to resist recommendations that children under 12 be hospitalized in a psychiatric hospital. There is no measurable demand or need for long-term child psychiatric beds in Broward County. On the rare occasions when a child under 12 is hospitalized in a psychiatric hospital, most such hospitalizations are for very short periods, often only for a few days. Further, if a child under 12 must be hospitalized for psychiatric reasons it is usually better to hospitalize them in a psychiatric wing of a general hospital, due in large part to parental resistance to hospitalizing children under 12 in a psychiatric specialty hospital. Finally, South Florida State Hospital, which is an excellent facility, already has beds for children under 12. Another indicator that Charter's occupancy levels will be much lower than originally projected is that Charter's projected patient charges of $355 per day are substantially higher than the patient charges at some existing facilities providing similar services. These higher charges will have a negative impact on Charter's ability to compete effectively with existing providers of the same of similar services. Mr. Follmer's pro forma assumptions for the first year include the following: --6 percent for bad debt. --1.5 percent for indigent care. --2.5 percent contract adjustment for Baker Act. For the second year pro forma, Mr. Follmer assumes 5 percent for bad debt. These assumptions are totally unrealistic when compared to the experiences of existing providers in and near Broward County. The bad debt experience for the psychiatric unit at Florida Medical Center during the 18 months immediately preceding the hearing was approximately 16 percent of gross revenues. Coral Ridge Hospital provides between 15 percent and 20 percent free services. During 1984, 18 percent of Grant Center revenues were written off as either bed debt, free care, or charity cases. In light of these experiences, it is unrealistic for Charter to project 7.5 percent as its expected loss of revenue due to bad debts and indigent care. A much more reasonable (and still conservative) estimate would be in the range of 10 percent to 12 percent for bad debt and indigent care during its first few years of operation. Another negative impact on the revenue projections has to do with Baker Act patients. The proforma assumes that 5 percent of patient days will be made up of Baker Act patients and that the hospital will get paid approximately 50 percent of its usual charges -- thus the 2.5 percent "contract adjustment" for Baker Act patients in the pro forma. For the reasons which follow, the 2.5 percent "contract adjustment" should be a 5 percent "contract adjustment." Charter does not have any contracts for receiving any Baker Act funds ford its proposed Broward County facility. Baker Act funds are presently not available in Broward County for private psychiatric hospitals, and Mr. Follmer has no idea what the availability of Baker Act funds for Broward County will be in the future. Without any Baker Act funds there would be a loss in both of the first two years of operation per the pro forma. The Charter Glade facility had an agreement to take Baker Act patients, but never got any because the funding ran out. Findings regarding impact on existing providers If Charter's proposed facility is built, it will most likely reduce the patient census at Fort Lauderdale Hospital. A reduced census at Fort Lauderdale Hospital could require reductions in staff and programs, which would impair quality of care and could also threaten accreditation of the hospital. Florida Medical Center's existing facility is less than three miles from Charter's proposed location. It is reasonable to expect that Charter's facility would divert adolescent patients from Florida Medical Center's psychiatric unit with results similar to those described in the preceding paragraph. If Charter's proposed facility is built it is reasonable to expect that it would have a similar negative impact on other existing Broward County hospitals offering adolescent psychiatric services. Findings regarding costs and methods of construction All of Charter's proposed construction costs are reasonable estimates of the actual cost of construction. The costs proposed in this case are substantially the same as the costs which were incurred to construct Charter's Ft. Myers facility. The proposed cost of construction and site preparation of Charter's Broward County facility comes to $97 per square foot. The proposed construction cost of just the building comes to $81 per square foot. The equipment list in the Charter proposal and the amounts listed for the various items of equipment are reasonable for the type of facility Charter proposes for Broward County. Charter uses a prototype design for its psychiatric hospitals. About 8 or 9 of the prototype hospitals have been built. The Charter prototype design is the same design that is used by Charter for short-term hospitals. Charter's proposed floor plan looks like a plan for an acute care (short-term) facility. Findings regarding DHRS policies The geographic access standard for long-term psychiatric beds is that at least 90 percent of the population in the service district should be within a two hour one-way drive of existing services. In applying that travel standard the DHRS looks at services available in other districts within the two hour travel radius. The travel time standard for long-term psychiatric beds would be meaningless if applied literally because, given the size of the DHRS Districts, it would virtually always be met and would become, in essence, a nonstandard. The DHRS construction of the travel standard for long-term psychiatric beds is to consider the availability of services within a two-hour travel radius of the proposed facility. In other words, need for long-term psychiatric services in the district in which a new facility is proposed is determined in part by the availability of the same or similar services within a two-hour travel radius, regardless of whether that radius extends into other districts. A certificate of need for long-term psychiatric beds will not normally be granted if there are available underutilized beds within the two-hour travel radius, even if the available beds are in the next district. The DHRS has applied this interpretation of the travel time standard in other cases involving applications for long-term psychiatric beds. The reason DHRS crosses district boundaries in looking at need for long-term psychiatric beds is that long-term psychiatric care is a "regional" type of service. The DHRS also crosses district boundaries when looking at need for other "regional" types of services such as cardiac catherization and open heart surgery. In reviewing applications for certificates of need, the DHRS does not base its determination on a single statute or rule criterion. It uses a balancing process and considers all of the criteria in an effort to arrive at a reasonable judgment. The DHRS considers other evidence of need in addition to any indications of need found by strict application of the formulas. It is the policy at the DHRS not to do health planning on the basis of national statistics. This is because Florida's population differs in composition from the average of the national population. Florida has a large elderly population. It also has large population growth. The Florida population is less stable and more dynamic than the national population. DHRS tries to use local measures or statewide measures. Strong community support is not one of the statutory criteria for determining need for a health care facility. In determining bed need for psychiatric hospitals it is the policy of the DHRS not to consider the differences in medical opinion with regard to which of several approaches to the treatment of psychiatric patients may be the best form of medical treatment for psychiatric patients who require hospitalization. Findings required by subparagraph 1 of Sec. 381.494(6)(d), Fla. Stat. A less costly, more efficient, and more appropriate alternative would be to postpone the construction of any facilities such as those proposed by this applicant until such time as existing facilities offering the same or similar services have much higher occupancy rates. Findings required by subparagraph 2 of Sec. 381.494(6)(d), Fla. Stat. Existing inpatient facilities providing similar services are not being used in an efficient manner because they all are experiencing low utilization rates. Approval of Charter's proposed facility would cause use of existing facilities to become more inefficient. Findings required by subparagraph 3 of Sec. 381.494(6)(d), Fla. Stat. The best alternative to new construction at this time is no construction at this time, due to the underutilization of existing same or similar facilities. The best alternative in the future would appear to be to prefer conversion of underutilized med/surg beds if DRG-generated occupancy trends for those beds continue to cause those beds to be underutilized. Findings required by subparagraph 4 of Sec. 381.494(6)(d), Fla. Stat. Patients will not experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service. Existing facilities providing the sane or similar inpatient care are underutilized and have more than adequate unused capacity. Rejected proposed findings of fact I have rejected substantially all of Charter's proposed findings based on the testimony of the "community support" witnesses. This rejection is based largely on the fact that those findings are irrelevant to any determination of a need for the facilities proposed by Charter. Further, with but few exceptions, the "community support" witnesses appeared to be distinctly uninformed about either the details of the Charter proposal or details regarding the current availability of inpatient psychiatric services for children and adolescents in Broward County. Finally, most of the testimony of these witnesses relating to need for the proposed facility was contrary to the greater weight of the evidence. Included within the appellation "community support" witnesses are: Marie Reynolds, Toni Siskin, Barbara Myrick, James Deleo, Sally Cresswell, Marjorie Miller, Susan Buza, Barbara Mitchell, Anne McKenzie, and Sharon Solomon. I have rejected substantially all of Charter's proposed findings based on the opinion testimony of Mr. Fred Follmer. Mr. Folmer's estimates and projections are totally lacking in credibility. As became most evident during the devastating cross-examination, Mr. Follmer did not have information he needed to make his projections, he ignored or overlooked information he did have, he relied on information about matters which are not analogous to the subject proposal, and some of his explanations of the basis for his projections are simply illogical. With regard to the issue of whether existing inpatient psychiatric programs for children and adolescents are similar to or different from the programs proposed by Charter, I have for the most part discounted the testimony of the Charter witnesses about the "uniqueness" of the Charter programs and have tended to credit the testimony of witnesses who are personally involved in the delivery of inpatient psychiatric services to children and adolescents in Broward County. This is due in large part to the fact that Charter's witnesses did not do a very extensive job of describing the nature of the programs it proposes to offer through Dr. Schwartz' group, and particularly did not come forward with any convincing evidence of the "uniqueness" of the proposed programs. I am persuaded by the testimony on behalf of the Petitioners and Intervenor that the proposed programs are not unique. I have not made any findings based on the testimony about Charter Barclay Hospital in Chicago because that testimony is lacking in relevancy in view of the testimony in the record about Charter Glade Hospital in Ft. Myers, Florida. To the extent of any differences in Charter's experiences operating a Chicago hospital and a Ft. Myers hospital, the latter is much more relevant to any expectations or projections regarding a Broward County hospital. For the following reasons, I have not made any findings regarding the need for Charter's proposed services based on the testimony of Dr. Luke. First, Dr. Luke's conclusions are irrelevant because they purport to measure need for services having an average length of stay of 120 days based on statistics regarding numbers of admissions lasting 91 days or more. The persuasive evidence is to the effect that the most likely average length of stay at Charter's proposed facility would be similar to the average length of stay of existing facilities treating acute adolescent patients -- a length of stay substantially less than 91 or 120 days. Second, Dr. Luke's conclusions were based on a number of assumptions which were either not shown to be valid or which were shown to be contrary to the persuasive evidence. Dr. Luke assumed an unrealistic average length of stay. Dr. Luke disregarded the manner in which the DHRS interprets and applies the travel-time standard in the applicable rule. Dr. Luke assumed the OGME admission rates are valid predictors for Broward County, but I am not convinced that they are, particularly in light of the DHRS policy of attempting to use local or statewide indicators rather than national indicators Dr. Luke assumed incorrectly that there are no long-term psychiatric beds in Broward County. Finally, Dr. Luke assumed incorrectly that the Charter proposal would provide a treatment program which is not presently available in Broward County. A major portion of the need analysis expert testimony in opposition to Dr. Luke was that of Mr. Konrad. While there are some areas of Mr. Konrad's testimony that are a bit problematic, I am persuaded on the whole that Mr. Konrad's opinions are better founded than those of Dr. Luke and have resolved most differences in their opinions in favor of the testimony of Mr. Konrad. As a final matter in this regard, it should be noted that there was an enormous amount of testimony which was the foundation for an enormous number of proposed findings that are "subordinate, cumulative, immaterial or unnecessary." I have rejected all of those proposed findings because they are Immaterial and irrelevant to the disposition of the issues in this case.
Recommendation For all of the foregoing reasons it is recommended that the Department of Health and Rehabilitative Services enter a final order denying in its entirety Charter's application for a certificate of need for a 60-bed psychiatric hospital. DONE AND ORDERED this 16th day of August, 1985, at Tallahassee Florida. MICHAEL M. PARRISH, 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 16th day of August, 1985. COPIES FURNISHED: Mr. David Pingree Secretary Department of HRS 1323 Winewood Blvd. Tallahassee, Florida 32301 John Gilroy, Esquire Department of HRS 1321 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Kenneth G. Oertel, Esquire Oertel and Hoffman Suite C 2700 Blair Stone Road Tallahassee, Florida 32301 Eric B. Tilton, Esquire Post Office Box 5286 Tallahassee, Florida 32314 Morgan L. Staines 2204 East Fourth Street Santa Ana, California 92705 Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL, SMITH & CUTLER, P.A. O. Drawer 190 Tallahassee, Florida 32302 Glen A. Reed, Esquire Richard L. Shackelford, Esquire BONDURANT, MILLER, HISHON & STEPHENSON 2200 First Atlanta Tower Atlanta, Georgia 30383 =================================================================
The Issue Whether Petitioner was the subject of an unlawful employment practice based on his disability by Respondent.
Findings Of Fact Respondent, Fresenius Medical Care, provides dialysis treatment to end-stage renal disease patients. During the time relevant to this proceeding, Respondent operated 11 clinics in the Northwest Florida and South Alabama area. The Florida clinics were located in Pensacola, Navarre, Destin, Fort Walton Beach and Crestview. The South Alabama clinic was located in Andalusia. “Dialysis” is the cleansing of the body of unwanted toxins, waste products, and excess fluid by filtering the blood of patients through the artificial membrane of a dialysis machine. Purified water and dialysate are used during the process. Dialysis treatment is necessary when a patient’s kidneys are inadequate or no longer capable of acting as a filter to remove waste and fluids from a patient’s blood. While the frequency of treatment can vary for each patient, patients typically received dialysis at Fresenius’ clinics three times a week for four hours. The treatment requires piercing the skin and blood vessel so that each patient is intravenously attached to a dialysis machine. Because dialysis involves piercing the skin and blood vessels, as well as the removal and replacing of a person’s blood, patients are at an increased risk of infection. In order to protect patients from infection, proper maintenance, testing, and sanitation of the equipment used during dialysis is of primary importance. As such, dialysis is highly regulated by state and federal agencies responsible for health, safety, privacy, and reimbursement for health care. In order to fulfill its obligations to its patients and regulators, Fresenius maintained a Code of Business Conduct that outlined policies and procedures which every employee was required to follow. These policies and procedures were based on federal regulations enforced by the Centers for Medicare and Medical Services (CMS). The Code required that maintenance, sanitation, and tests for contaminants be regularly performed according to the schedules established for such procedures. The Code of Business Conduct also required all of Respondent’s employees to maintain accurate and complete records. In particular, biomedical equipment technicians were required to maintain logbooks of all the maintenance and tests done on each piece of equipment used in the dialysis process. Documentation was required to ensure that state and federal reporting requirements for maintenance and testing on dialysis machines was done. Documentation of every task performed by a biomedical technician was also required for review by Respondent’s internal and external auditors. Failure to perform these functions could subject Respondent to fines and other government actions, including loss of its Medicare certification and a shutdown of its clinics. Respondent also maintained a “Continuous Quality Improvement” (CQI) program which was designed to review indicators of the quality of treatment Respondent’s patients were receiving. These quality measures were reviewed by a CQI committee. The CQI committee was an interdisciplinary team consisting of the Medical Director, the doctor responsible for overseeing the medical care provided in a clinic; the Area Manager, the person responsible for managing all aspects of a clinic’s operations; the Clinical Manager, the registered nurse responsible for nursing care and technical services at a clinic; and the Biomedical Technician, the person responsible for maintaining, sanitizing, and testing the dialysis equipment at a clinic. Periodic meetings were held by the CQI committee to review all aspects of dialysis at a clinic. The periodic meetings included a review of machine maintenance, machine sanitation, and culture tests done on dialysis machines at a clinic, as well as a review of logbooks maintained by the biomedical technician, if necessary. The periodic meetings also included a review of all adverse events and all patient incidents that occurred at a clinic. Additionally, to ensure quality dialysis services, all of Respondent’s employees received initial and annual compliance training, which addressed relevant changes to Respondent’s policies, as well as state and federal laws. Petitioner, David J. Normandin, was a certified Biomedical Equipment Technician and nationally certified Biomedical Nephrology Technician. Petitioner received extensive training as a Biomedical Technician, including training on national standards for nephrology technicians and national protocols for testing, maintenance, and documentation of these efforts. Additionally, Petitioner received both initial and annual on-the-job training from Fresenius regarding required maintenance, sanitation, and record-keeping responsibilities. Petitioner worked for Respondent on two separate occasions. Initially, he worked at one of Respondent’s clinics in North Carolina, where he was a Chief Technician. Later, Petitioner moved to Florida and was employed by Renal Care Group as a Biomedical Technician. Eventually, Renal Care Group was purchased by Respondent in April 2006. After the purchase, Petitioner remained employed with Respondent as a Biomedical Technician until his termination on February 6, 2008. As a Biomedical Technician, Petitioner was assigned responsibility for three clinics. Petitioner’s responsibilities included providing preventive maintenance, troubleshooting, repairing, cleansing, and disinfecting of the clinic’s dialysis machines and water treatment equipment. His responsibilities also required taking water cultures and testing the water systems to ensure that the equipment and water were free from bacterial growth and pathogens. Without such maintenance, sanitation, and tests, it was dangerous for a patient to be intravenously hooked up to a dialysis machine that had not been properly tested or maintained. Every patient with whom the dialysis equipment might come into contact would be affected. Indeed, the consequences of not performing required routine testing, sanitation, maintenance, and record-keeping tasks were serious. At Fresenius’ clinics, Biomedical Technicians worked independently and were assigned to specific clinics. However, Biomedical Technicians assigned to other clinics sometimes helped other technicians when needed to complete their required duties. Such help only occurred if the foreign technician was available and not busy with meeting responsibilities for their own clinics. Petitioner admitted that the other technicians were usually “slammed” with the work at their own clinics and not generally available to help at Petitioner’s clinics. Indeed, the evidence did not demonstrate that other qualified technicians were generally or routinely available to assist Petitioner in his job duties. Similarly, the evidence did not demonstrate that it was reasonable for Respondent to hire additional technicians to help Petitioner perform his job duties. Petitioner was required to provide a monthly summary or technical report to the CQI committee for each clinic to which he was assigned. As part of the report, Petitioner was required to self-report what maintenance and tests were completed, and what maintenance and tests remained to be completed at each clinic. Petitioner was also required to self- report if he was behind in the performance of his routine job duties so that help might be provided, if it was available. If Petitioner failed to properly report any compliance deficiencies, such deficiencies would not normally be discovered until the Regional Technical Manager, Todd Parker, conducted an internal audit of the clinic or an unannounced CMS survey was performed. When he was initially hired by Respondent, Petitioner was responsible for the clinics in Fort Walton Beach, Crestview and Andalusia. At times, Petitioner assisted in or was responsible for the maintenance of two additional facilities in the area. These additional assignments generally occurred when Respondent was understaffed or training new staff. However, by April or June 2007, Petitioner was only responsible for the three clinics in Fort Walton Beach, Navarre, and Destin. The evidence did not show that Petitioner was responsible for more clinics than any other Biomedical Technician. Joan Hodson was the Clinic Manager for Respondent’s Fort Walton Beach clinic. As of April 2007, Petitioner’s direct supervisor was George Peterson, who in turn reported to Mr. Parker. Joan Dye was the Area Manager. Petitioner testified that he informed his employer in 2003 that he had a bad back. Petitioner admitted that he continued to perform his job duties without significant difficulty. There was no evidence that demonstrated his complaints were more than ordinary complaints about a sore back or that such complaints rose to the level of or were perceived as a handicap by his supervisors. However, sometime in 2007, Petitioner was diagnosed with two herniated discs and began having difficulty keeping up with his job duties. In March 2007, Petitioner was the on-call technician for emergency calls from the clinics in the area. He did not respond to several calls from the area clinics. These clinics complained about the missed calls to Ms. Dye and Mr. Parker during the March CQI meeting in Pensacola. As a consequence, Ms. Dye and Mr. Parker called Petitioner into the office to discuss the missed calls and to address the issue that his work was falling behind. They asked Petitioner if there was a problem. At the time, Petitioner was not under any medical restrictions from a healthcare provider. Petitioner informed Ms. Dye and Mr. Parker that he was on medications for his back which caused him to sleep very deeply and not hear the phone ring when clinics called. He also told them that he was having a hard time keeping up with his work because of the pain from his back. As a result of the meeting, Petitioner was taken off “call” duty and was no longer responsible for responding to other clinics’ calls for assistance. Petitioner was also informed that he would be provided help when it was available so that he could catch up on his assignments. Additionally, Petitioner was asked to provide a doctor’s note concerning his back condition and any limitations he might be under due to his back. This meeting was the first time Petitioner informed his employer that he had a serious back problem. On April 24, 2007, Petitioner provided Respondent with a doctor’s note concerning his back. The doctor’s note stated that for two months Petitioner was not to lift over 30 pounds, and was not to engage in repetitive bending, stooping, or kneeling. Petitioner was released to full duty on June 24, 2007. This is the only doctor’s note Petitioner ever provided to Respondent. Importantly, these restrictions did not impair Petitioner’s ability to document all of the jobs he had performed or to accurately self-report when specific maintenance and tests were not done or were behind. On October 3, 2007, Mr. Parker performed a technical internal audit of the Navarre clinic which was assigned to Petitioner. At the time, Petitioner was responsible for the Navarre clinic. The audit revealed that Petitioner had performed no dialysis and end toxin testing for the clinic during the year. These tests were required to be performed every six months. Moreover, Petitioner failed to disclose to anyone that he had not performed these tests even though he had the opportunity to self-report during CQI meetings or at any other time. Again, Petitioner met with Mr. Parker and Ms. Dye. When asked to explain why the tests had not been performed at the Navarre clinic, Petitioner told Mr. Parker and Ms. Dye that he “did not know” he had to do them, and that he had simply “misunderstood” the requirements. Petitioner’s claim was not credible. His supervisors found Petitioner’s explanation to be suspect, since he had previously completed dialysis and end toxin testing at both Navarre and the other clinics he was responsible for. In a memo he later prepared as to why he had not conducted the tests, Petitioner wrote: “so much to do, so far behind.” Petitioner never mentioned his back as an excuse for why he had not performed the tests in his meeting with Ms. Dye and Mr. Parker. At the hearing, Petitioner admitted that he simply “forgot” to conduct the dialysis tests. Clearly, Petitioner’s failure to perform his duties was not related to his back. Similarly, his failure to self-report with any specificity was not related to his back. Ms. Dye instructed Petitioner to complete the test samplings for the clinic that day. Ms. Dye also instructed Petitioner to maintain samplings per the policies at all of his clinics going forward. Petitioner also was instructed by Ms. Dye that he had to immediately test all of the machines at the Fort Walton Beach and Destin clinics for which he was responsible. Petitioner asked Mr. Parker for assistance in catching up on the dialysis testing at the Navarre clinic. Mr. Parker came to the clinic and performed half of the tests, while Petitioner performed the remainder. In November 2007, Petitioner saw a surgeon for his back and, for the first time, was specifically informed by a physician that he would need back surgery. It was anticipated that the surgery would be performed sometime after the first of the year. Petitioner told his employer about his need for surgery. They encouraged Petitioner to do whatever he needed to do to take care of his health, and take any necessary time off. Petitioner chose to continue to work. A CQI committee meeting for the Fort Walton Beach clinic was scheduled for Thursday, January 24, 2008. Prior to the meeting, Joan Hodson, the Clinical Manager for the clinic, asked Petitioner to meet with her early in the morning to review the clinic’s dialysis culture logbook. Petitioner missed the meeting and arrived after noon, with no explanation. He told Ms. Hodson that all cultures were good. Later, at the CQI committee meeting, Petitioner reported to the Medical Director, Dr. Reid, that all the cultures looked good. In reviewing, the printout report for the cultures, Dr. Reid noticed that one of the samples was high and asked that it be redrawn. Petitioner told Dr. Reid and the committee that he had already performed a redraw. He left the meeting to go get proof of the redrawn results. Petitioner’s claim that he did not tell the committee that he had already redrawn the culture and had the results is not credible. Petitioner left the CQI meeting and never returned. Later, Petitioner admitted he had not redrawn the sample. He was instructed to redraw the sample immediately. The day after the CQI meeting, Ms. Hodson called Petitioner asking for the redraw results. Petitioner still had not performed the redraw claiming that he was “too busy.” He was again instructed to immediately perform the redraw. Ms. Hodson called Petitioner the following day, inquiring about the redraw, but did not receive a return call. That weekend, Mr. Parker also called Petitioner to ensure that the redraw was done or would be performed immediately. During the call Mr. Parker informed Petitioner of the seriousness of his failure to redraw the culture immediately as he had been instructed to do and the inappropriateness of his actions regarding the culture before, during, and after the CQI meeting. Mr. Parker also instructed Petitioner to call Ms. Dye about the redraw results. Petitioner again did not perform the redraw as instructed. Ms. Dye also left Petitioner a voicemail to call her about the redraw. Petitioner never called Ms. Dye back. Petitioner’s repeated and willful failure to comply with his supervisors’ instructions was not related to his back. On January 30, 2008, as a consequence of Petitioner’s failure, Petitioner was relieved of his duties for the Destin clinic. He was also given a written warning in a Corrective Action Form (CAF), based on the incidents from January 24, 25, 26, and 28, 2008. The CAF specified “Expectations for Change,” which identified problems with Petitioner’s performance. Ms. Dye reviewed the CAF with Petitioner and instructed him that these problems had to be addressed immediately. These expectations included: Perform all culture draws according to FMC Technical Manual and review this with the Clinical Manager. Immediately report any cultures that are outside the FMS limits and any redraws to the CM. . . . When Dave is at the clinic, he will be expected to redraw any culture that day, if necessary; At CQI monthly meetings, will ensure that all cultures are reported correctly and proper protocol is followed. A Technical CQI summary monthly report and a Spectra monthly summary culture report must be presented to the CM and MD for review and signature; Implement a basic monthly schedule and submitted to his CM’s by the 1st day of each month, will ensure that if he is not at a specific location according to his schedule, he will contact the CM or the Charge Nurse of that clinic to inform them of his location. If called or paged by any clinic, or a member of management, he must respond within 15 minutes from the time he received the call or page; Will follow a more systemic time schedule and will incorporate his time with his monthly schedule. Will make himself readily available to be present, if one of his clinics develops a problem in the early morning hours, if necessary; and When on-call, the 15-minute rule also applies. If not on-call, no matter which clinic calls, will return the call or page and assist the clinic, inform them who is on-call and/or attempt to resolve the problem over the phone. That same day, January 30, 2008, Petitioner received a Developmental Action Plan from Mr. Peterson. Five goals and an Action Plan were identified that Petitioner had to meet within time frames set during the next 90 days. Goals in the Plan included incorporating all of his monthly cultures into the FMC (Fresenius Medical Care) logbook and developing a basic monthly preventive maintenance culture and disinfect schedule for all facilities. By March 31, 2008, the Technical Manager would evaluate and review the goals accomplished by Petitioner to determine if further action was necessary. Petitioner admitted that although he had been obligated to self-report all of the deficiencies in the Corrective Action Form at the CQI meeting in January 2008, he failed to do so. Petitioner testified that he told Ms. Hodson that he was “very much behind” on performing his job duties. He also admitted that he never provided her with any specifics as to the tasks he had not performed. Additionally, he admitted that, “I don’t even know all of the things that I was behind on” and “I don’t know which [logbooks] I’m missing.” The internal audit at the Fort Walton Beach clinic and Petitioner’s actions regarding the redraw of the culture caused Ms. Dye to be concerned about the integrity of the job Petitioner was performing at all three of his clinics. Based on Petitioner’s lack of honesty with the CQI committee, Ms. Dye was legitimately concerned that Petitioner was covering up his failure to do his work and that the safety of patients was at risk. As a result, Mr. Parker performed an audit of the Fort Walton Beach clinic on February 6, 2008. The audit revealed that no dialysate cultures had been performed since October 2007; two out of 31 machines lacked proper documentation of any preventive maintenance having been performed; no preventive maintenance logs were available for the building maintenance and ancillary equipment; two new machines had no documentation; and no electrical and safety checks had been performed since April 2007. All of these tasks were required to have been completed by Petitioner, and Petitioner’s failure to complete them was a serious violation of his job duties. Indeed, these deficiencies placed the Fort Walton Beach clinic in immediate jeopardy of being fined and shut down by CMS. A shutdown would have left 80 of Respondent’s patients without dialysis treatment and placed them at risk for illness and possibly death. The audit also uncovered that the written summaries Petitioner had submitted to the CQI committee in October, November, and December 2007, and the verbal reports he had given to the committee at those monthly meetings, indicating that the preventive maintenance logs were up to date, were in fact incorrect. Again, Petitioner’s failure to document was a serious violation of Petitioner’s job duties and was not related to his back condition. By this time, Ms. Dye had legitimately lost all faith in Petitioner’s honesty. She suspected that Petitioner had falsified certain records because he could not produce various records when he was asked to produce them and only later did the requested records appear. In short, Petitioner’s supervisors had lost faith in Petitioner and could no longer trust him to self-report or to inform others when his duties were not being performed. On February 6, 2003, Ms. Dye presented Petitioner with a second Corrective Action Form, noting the issues generated by the internal audit and suspending Petitioner from work. The CAF was reviewed and signed by Petitioner. Based on what was discovered from the Fort Walton Beach clinic audit, Ms. Dye ordered an audit of Petitioner’s other clinics, Navarre and Destin. The same issues and deficiencies were discovered at those clinics: 1) the dialysate cultures at the Navarre and Destin clinics had not been performed since October 2007; 2) no safety checks had been performed on four out of 18 machines at the Navarre clinic, and none had been performed at the Destin clinic since July 2007; and 3) preventive maintenance was late on five machines at the Navarre clinic and six at the Destin clinic. The audit confirmed once more that Petitioner had misled the CQI committee members during the January CQI meetings for those clinics by not reporting in his written summary or verbal report any deficiencies. In addition, although Ms. Dye had instructed Petitioner just the week before to immediately perform dialysate cultures at all of his clinics, Petitioner had failed to perform any of those cultures and ignored the instructions of his supervisors. Petitioner was given a final Corrective Action Form by Ms. Dye on February 8, 2008. Ms. Dye reviewed the audit results with Petitioner, as well as the Corrective Action Form, which he signed. Petitioner was terminated the same day. Petitioner was fired after being on the Developmental Action Plan for one week because he had misled the CQI committee in his reports, failed to self-report the extent of the job duties he had not performed to the committee, and had not performed any testing of his dialysate cultures and electrical safety checks or reported that he could not perform those tasks. Such reporting was not related to Petitioner’s back condition. Moreover, misleading the CQI committee was not related to any back condition Petitioner had. Both were egregious and terminable offenses by Petitioner. After Petitioner was terminated in February 2008, he applied for unemployment compensation and for multiple jobs. He never informed any prospective employer that he was disabled or needed an accommodation. Once he ultimately had surgery in March 2008, Petitioner told Respondent that he was better and could work, and he asked for his job back. Eventually, Petitioner went to massage therapy school, obtained his license, and worked sporadically as a massage therapist. Prior to the hearing, Petitioner completed work as a team leader with the Census Bureau. These facts demonstrate that Petitioner’s back condition was not a handicap. There was no evidence that Petitioner was terminated for a handicap or a perceived handicap, and the Petition for Relief should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Florida Commission on Human Relations enter a Final Order dismissing the Petition for Relief. DONE AND ENTERED this 18th day of November, 2010, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 18th day of November, 2010. COPIES FURNISHED: Richard N. Margulies, Esquire Jackson Lewis 245 Riverside Avenue, Suite 450 Jacksonville, Florida 32202 R. John Westberry, Esquire 7201 North 9th Avenue, Suite A-4 Pensacola, Florida 32504 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Larry Kranert, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
The Issue The basic issue in this case is whether, after licensing one of the Petitioner's facilities for 50 beds for numerous years, the Respondent can issue a license for only 49 beds due to Petitioner's failure to comply with the isolation room requirement. Petitioner contends that Respondent is without statutory authority to reduce the number of licensed beds at the subject facility and, alternatively, that Respondent is estopped from reducing the number of beds. Respondent's position is that its action is authorized and that there is no estoppel.
Findings Of Fact Based on the testimony of the witnesses and on the exhibits received in evidence, I make the following findings of fact: Petitioner, Unicare Health Facilities, Inc., is a corporation with its principal offices at 105 West Michigan Street, Milwaukee, Wisconsin. Petitioner is licensed to operate North Horizon Health Care Center, 1301 16th Street North, St. Petersburg, Florida, in compliance with Chapter 400, Part I, Florida Statutes, and Chapter 10D-29, Florida Administrative Code. The Department of Health and Rehabilitative Services has jurisdiction over the Petitioner by virtue of the license held by North Horizon Health Care Center under the provisions of Chapter 400, Part I, Florida Statutes. The North Horizon Health Care Center has been licensed as a 50-bed facility since it first opened eighteen or nineteen years ago. It was so licensed until 1985. When North Horizon Health Care Center applied for renewal of its license in 1985, Respondent issued a license for only 49 beds. The reason for issuing a license for only 49 beds was because the isolation room at North Horizon Health Care Center has two beds in it and the facility does not have a single-bed isolation room. In order for the isolation room at the subject facility to be in compliance with the requirements of Rule 10D-29.121(9), Table I, General Standard No. 26, one of the beds must be removed from the isolation room. If a bed is removed from the isolation room, the subject facility does not have anywhere else to put the bed which would be removed from the isolation room and still remain in compliance with other rule requirements. Rule 10D-29.121(9), Table I, General Standard No. 26, specifically requires that each nursing home have at least one single patient bedroom with private toilet and bathing facilities and scrubbable walls and ceiling. For a substantial period of time, at least 11 years, the Respondent had allowed the Petitioner to operate North Horizon Health Care Center with a license for 50 beds and no single-bed isolation room based on an understanding that in the event a resident of the subject facility required isolation, the facility would implement its "isolation policy." The "isolation policy" is to provide an isolation room on an as-needed basis at the subject facility or to transfer the patient to another facility that has an isolation room. This isolation "policy" does not comply with the requirements of Rule 10D-29.121(9), Table I, General Standard No. 26.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Department of Health and Rehabilitative Services issue a Final Order to the following effect: That Petitioner is entitled to a license for 49 beds at North Horizon Health Care Center for the period October 1, 1985, through September 30, 1986. That Petitioner's petition in this case is dismissed. DONE and ORDERED this 11th day of June, 1986, in Tallahassee, Florida. MICHAEL M. PARRISH 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 11th day of June, 1986. COPIES FURNISHED: Roch Carter, Esquire Legal Counsel Unicare Health Facilities, Inc. 105 West Michigan Street Milwaukee, Wisconsin 53203 Carol M. Wind, Esquire Assistant District Legal Counsel Department of Health and Rehabilitative Services 2255 East Bay Drive Clearwater, Florida 33546 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Steve Huss, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 APPENDIX The following are my specific rulings on each of the proposed findings of fact submitted by each of the parties Rulings on Petitioner's proposed findings: Paragraphs 1 and 2: Accepted. Paragraph 3: Accepted in substance, with additional findings for clarity. Paragraph 4: Accepted with deletion of the word "alleged." Paragraph 5: Ail but last sentence is accepted. The last sentence is rejected because it is not supported by competent substantial evidence. Paragraph 6: Rejected as irrelevant. Rulings on Respondent's proposed findings: Paragraphs 1, 2, and 4: Accepted. Paragraph 3: Accepted in substance, with additional findings for clarity. Paragraphs 5 and 6: Accepted in substance.
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.
