The Issue Which, if any, of the four certificate of need applications for short-term psychiatric beds in Department of Health and Rehabilitative Services District 9 should be approved.
Findings Of Fact Description of the Parties The Department of Health and Rehabilitative Services ("HRS") is the agency charged under Chapter 381, Florida Statutes (1991), to make decisions regarding certificate of need ("CON") applications. HRS issued its intent to approve the CON applications of Glenbeigh Hospital of Palm Beach, Inc. ("Glenbeigh"), for 45 beds, and Boca Raton Community Hospital, Inc. ("Boca"), for 15 beds, pursuant to a published fixed need for 67 beds for HRS District IX. HRS also issued its intent to deny the CON applications of Wellington Regional Medical Center, Incorporation ("Wellington") to convert 15 acute care beds to 15 short term adult psychiatric beds, and Savannas Hospital Limited Partnership ("Savannas") to convert 20 substance abuse beds to 20 short term adult psychiatric beds and to add 10 new short term adult beds. District IX includes Palm Beach, Martin, St. Lucie, Okeechobee and Indian River Counties. As a result of Glenbeigh's Notice of Withdrawal filed on April 6, 1993, CON No. 6438 is no longer under consideration in this case. Boca is an existing 394-bed acute care hospital, located one mile north of the Broward County line, and is the applicant for CON No. 6442, to convert 15 medical/surgical beds to 15 adult psychiatric beds, and to delicense an additional 6 medical/surgical beds. Wellington is an existing acute care hospital in Palm Beach County, with 104 acute care medical/surgical beds and 16 substance abuse beds, and is the applicant for CON No. 6441 to convert 15 acute care beds to 15 short term adult psychiatric beds. Savannas is an existing 70 bed child/adolescent and adult psychiatric and substance abuse hospital in St. Lucie County, about 40 miles north of Palm Beach, and is the applicant for CON No. 6444, to convert its 20 substance abuse beds to 20 adult short-term psychiatric beds, and to add 10 new adult short-term psychiatric beds. Lake Hospital and Clinic, Inc., d/b/a Lake Hospital of the Palm Beaches ("Lake"), at the time of hearing, was a 98-bed psychiatric and substance abuse hospital, with 46 adult psychiatric beds, 36 child/adolescent psychiatric beds and 16 substance abuse beds, located in Lake Worth, Palm Beach County, between Boca Raton and West Palm Beach. The parties stipulated that Lake had standing to challenge the Boca application. Community Hospital of the Palm Beaches, Inc., d/b/a Humana Hospital Palm Beaches ("Humana") is an existing 250-bed acute care hospital, with 61 adult and 27 child/adolescent psychiatric beds, and is a Baker Act receiving facility, located directly across the street from Glenbeigh in Palm Beach. Florida Residential Treatment Centers, Inc., d/b/a Charter Hospital of West Palm Beach ("Charter") is an existing 60-bed psychiatric hospital with 20 beds for children and 40 beds for adolescents, located approximately 15 minutes travel time from Glenbeigh. Martin H.M.A., Inc., d/b/a SandyPines Hospital ("SandyPines") is an existing 60 bed child and adolescent psychiatric hospital, and a Baker Act receiving facility, located in Martin County, less than one mile north of the Palm Beach County line. By prehearing stipulation, the parties agreed that the statutory review criteria applicable to the CON application of Boca are those listed in Subsections 381.705(1)(a), (b), (d), (f), (i) - (l) and (n). If Rule 10- 5.011(1)(o) is applicable, the parties stipulated that the disputed criteria are those in Subsections 4.g. and 5.g. Background and Applicability of HRS Rules and Florida Statutes Rule 10-5.011(o) and (p), Florida Administrative Code, was in effect at the time HRS published the fixed need pool and received the applications at issue in this proceeding, the September 1990 batching cycle. The rule distinguished between inpatient psychiatric services based on whether the services were provided on a short-term or long-term basis. Similarly, Rule 10- 5.011(q), Florida Administrative Code, distinguished between short-term and long-term hospital inpatient substance abuse services. On August 10, 1990, HRS published a fixed need pool for 19 short-term psychiatric beds in HRS District IX, with notice of the right to seek an administrative hearing to challenge the correctness of the fixed need pool number. See, Vol. 16, No. 32, Florida Administrative Weekly. On August 17, 1990, HRS published a revised fixed need pool for a net need of 67 additional short-term hospital inpatient psychiatric beds in HRS District IX, based on the denial of a certificate of need application, subsequent to the deadline for submission of the August 10th publication. The local health plan formula, which has not been adopted by rule, allocates 62 of the additional 67 beds needed to the Palm Beach County subdistrict. The revised pool publication did not include notice of the right to an administrative hearing to challenge the revised pool number. See, Vol. 16, No. 33, Florida Administrative Weekly. There were no challenges filed to either the original or revised fixed need pool numbers. On December 23, 1990, HRS published new psychiatric and substance abuse rules, subsequently renumbered as Rule 10-5.040 and 10-5.041, Florida Administrative Code. These new rules abolished the distinction between short- term and long-term services, and instead distinguished psychiatric and substance abuse services by the age of the patient. Pursuant to Section 14 of the new psychiatric rule, that rule does not apply to applications pending final agency action on the effective date of the new rule. HRS will, however, license any applicant approved from the September 1990 batching cycle to provide services to adults or children and adolescents, using the categories in the new rule, not based on the distinction between short and long term services which existed at the time the application was filed. Approved providers will receive separate CONs for adult and child/adolescent services. Rule 10-5.008(2)(a), Florida Administrative Code, provides that the fixed need pool shall be published in the Florida Administrative Weekly at least 15 days prior to the letter of intent deadline and . . . shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Humana, Lake, Charter and SandyPines allege that HRS incorrectly determined need under the old rule, by failing to examine occupancy rates pursuant to that rule. The rule provided, in relevant part, No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. (Emphasis added.) Rule 10-5.011(o)4(e), Florida Administrative Code. HRS' expert witness, Elizabeth Dudek, testified that the fixed need pool for 67 additional short term inpatient psychiatric beds was calculated pursuant to the formula in Rule 10-5.011(l)(o), Florida Administrative Code. Ms. Dudek also testified that since calculation resulted in a positive number, according to HRS policy, the publication of the fixed need pool indicates that the occupancy prerequisites must have also been met. To the contrary, the State Agency Action Report and the deposition of Lloyd Tribley, the HRS Health Facilities consultant who collected the data to support the publication of the fixed need pool, indicate that he did not determine existing occupancy separately for adults and for children/adolescents, as required by subsection (e) of the old rule. Rather, he determined, pursuant to subsection (f), that overall occupancy rates for licensed short-term psychiatric beds exceeded 75 percent. With the August 10, 1990 publication of the need for 19 additional short-term inpatient psychiatric beds, HRS provided a point of entry to challenge the published need, including the agency's apparent failure to make a determination of existing occupancy rates for separate age categories. No challenge was filed. In the August 17, 1990 publication, HRS failed to provide a point of entry, when it added 48 more beds to the pool as a result of the issuance of a final order denying a prior CON application. The August 10th publication of numeric need, according to HRS' representative should have been based on an analysis of separate and combined occupancy rates. There was no challenge to that publication, therefore the number of beds in the fixed need pool is not at issue in this proceeding. Like and Existing Facilities Humana, Lake and Charter assert that, as a result of the new rule abolishing separate licensure categories for short-term and long-term beds, all psychiatric providers within an applicant's service district are like and existing facilities. These parties also assert that there was not, even under the old rule, any practical difference between these categories of providers, particularly for children/adolescents. In support of this position, the evidence demonstrated that the average lengths of stay in short-term and long- term adolescent psychiatric beds in 1989 were 48.1 days and 53.02 days, respectively. In 1990, the average lengths of stay in short and long-term beds were 41.8 days and 41.9 days, respectively. The parties asserting that the effect of the new rule is to create an additional group of like and existing providers point to HRS' response to the application of Indian River Memorial Hospital in Vero Beach, Florida ("Indian River"). According to the testimony of HRS expert witness Elizabeth Dudek, Indian River was another District 9 applicant in this same batching cycle. Indian River applied for a CON to convert long-term psychiatric beds to short- term psychiatric beds. HRS denied the CON application of Indian River because, under the new rule, which had taken effect before the decisions on the batch were made, Indian River would receive a new license permitting it to treat psychiatric patients regardless of their projected lengths of stay. Glenbeigh asserted that the numeric need for 67 additional short term psychiatric beds cannot be challenged in this proceeding based on the failure of any party timely to challenge the August 10, 1990, publication of need. Similarly, Glenbeigh asserted that the comparison of "like and existing" facilities must be limited to those used in the inventory to compute need. Glenbeigh relied generally on Florida Administrative Code Rule 10-5.011(o), the old rule governing short term hospital inpatient psychiatric services, for the proposition that "like and existing" in Subsection 381.705(1)(b), Florida Statutes, is equivalent to the inventory of licensed and approved beds for short term psychiatric services, which was used in the computation of need. However, the rule also provides, in a list of "other standards and criteria to be considered in determining approval of a certificate of need application for short term hospital inpatient psychiatric beds," the following, Applicants shall indicate the availability of other inpatient psychiatric services in the proposed service area, including the number of beds available in crisis stabilization units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not. In light of the rule directive that the consideration of like and existing services is not limited to licensed provider hospitals, Glenbeigh's assertion that the statutory review criteria is more restrictive and limited to the licensed and approved beds that were used to compute numeric need is rejected. The like and existing facilities are the hospitals or freestanding facilities which are authorized to provide the same psychiatric services, as the applicants seek to provide as a result of this proceeding. It was established at hearing that the following list of District 9 facilities provide psychiatric services comparable to those which the three remaining applicants seek to provide in these consolidated cases: DISTRICT 9 Hospital PSYCHIATRIC BEDS SUBSTANCE ABUSE BEDS Adult Child and Adult Child and Adolescent Adolescent Lic. App. Lic. App. Lic. App. Lic. App. Bethesda Hospital 20 0 0 0 0 0 0 0 Charter Palm (IRTF) 0 0 60 0 0 0 0 0 Fair Oaks 36 0 49 0 14 0 3 0 Forty Fifth Street 44 0 0 0 0 0 0 0 Glenbeigh Palm Beach 0 0 0 0 30 0 30 0 Humana Palm Beach 61 0 27 15 0 0 0 0 Humana Sebastian 0 0 0 0 16 0 0 0 Indian River Mem. 16 0 38 0 0 0 0 0 J.F. Kennedy Mem. 14 0 0 0 22 0 0 0 Lake Hospital 46 0 36 0 16 0 0 0 Lawnwood Regional 36 Res. Treat. Palm 0 24 0 0 0 0 0 (IRTF) 0 0 40 0 0 0 0 0 Sandy Pines 0 0 60 0 0 0 0 0 Savannas 35 0 15 0 20 0 0 0 St. Mary Hospital 0 40 0 0 0 0 0 0 Wellington Regional 0 0 0 0 16 0 0 0 Vol. 16, No. 52, Florida Administrative Weekly, (December 28, 1990) (Humana Exhibit 26). Need For Additional Beds An analysis of need beyond that of the numeric need, requires an analysis of the availability and accessibility of the like and existing facilties. One reliable indicator of need is the occupancy levels in the like and existing facilities. In addition to providing guidelines for the publication of need, Rule 10-5.011(o)(4)(e) also mandates a consideration of occupancy levels to determine if applicants are or are not required to demonstrate "not normal circumstances" necessitating the issuance of a CON. For all child/adolescent psychiatric programs in District 9, the expert for Lake and Humana calculated total average occupancy rates at 57.6 percent in 1988, 64.2 percent in 1989, and 53.2 percent in 1990. In support of the accuracy of the expert's calculations, the District 9 Annual Report for 1990 (Lake Exhibit 4) shows occupancy at 46.80 percent in general hospitals, 88.22 percent in specialty hospitals then categorized as short term and 38.22 percent in specialty hospitals then categorized as long term. In addition, during this same period of time, average lengths of stay in District 9 child/adolescent beds also declined by approximately 10 percent. Using the guidelines of the old rule, new short term psychiatric beds should not normally be approved when the child/adolescent rate is below 70 percent. In the new rule, child/adolescent beds should not normally be approved if occupancy is below 75 percent. Therefore, under either rule, applicants who will be licensed for child/adolescent beds, must demonstrate not normal circumstances for their CON applications to be approved. The expert for Lake and Humana, also computed the adult occupancy rates for 1988-1990 in District 9 as follows: 1988- 66.5 percent; 1989 - 73.1 percent; 1990 - 68.5 percent. The occupancy rates for adult beds for the 12- month period ending March, 1990 was 70.6 percent and 69.2 percent for the twelve months ending June, 1990. In evaluating the accuracy of the expert's calculations of occupancy rates for adult beds, a comparison can be made to the District 9 Annual Report for 1990 (Lake Exhibit 4). Occupancy rates were 57.75 percent in general hospitals and 79.45 percent in specialty hospitals. This data does not include Indian River Memorial or Lawnwood Regional which were also listed on the December 1990 inventory of licensed adult beds, nor St. Mary's Hospital which was listed as having 40 approved adult beds. The comparison indicates the accuracy of concluding that the highest occupancy level for District 9 adult psychiatric beds during the period 1988 to 1990 was approximately 70 percent. Using the guidelines of the old rule, 75 percent occupancy is required before new adult beds can be approved unless there is a not normal circumstance. Boca's Proposal Boca Raton Community Hospital ("Boca") is a 394-bed not-for-profit acute care hospital, accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations, which proposes to convert 21 of its medical/surgical to 15 adult psychiatric beds and to delicense an additional 6 acute care beds. Boca's CON would be conditioned on the provision of 10.8 percent total annual patient days to Medicaid patients and a minimum of 5 percent gross revenues generated, or 2 percent total annual patient days to medically indigent patients. Boca has proposed this alternative so that, if it fails to provide direct care to indigents, it may donate the revenues to further the objectives of the state and district mental health councils. Boca Raton Community Hospital Corporation has control and manages the Boca's property, policies and funds. The Boca Raton Community Hospital Foundation raises funds for Boca and has the funds necessary to accomplish the proposed project at a cost of $932,531. Boca's application asserts that a not normal circumstance exists in the need to serve Medicaid patients in the district, and that a need exists to serve geriatric psychiatric patients in an acute care hospital, due to their general medical condition. Medicaid reimbursement for psychiatric care is only available in acute care hospitals. Boca Historically serves in excess of 70 percent Medicare (geriatric) patients. In 1990, 72 percent of Medicaid psychiatric patients residing in Boca's service area sought psychiatric services outside District 9, as compared to the outmigration of 14.7 percent Medicare patients, and 11 percent commercial insurance patients. Boca supported its proposed 10.8 percent Medicaid CON condition, with evidence that 10.8 percent of all psychiatric discharges in its market area were for Medicaid patients. Boca's opponents dispute the claim that a disproportionate outmigration of District 9 Medicaid patients is, in and of itself, a not normal circumstance. Using the travel time standard for inpatient psychiatric services of 45 minutes under average driving conditions, the opponents argue that District 10 facilities should be considered as available alternatives to additional psychiatric beds in District 9. In fact, the parties stipulated that there are no geographic access problems in District 9. In contrast to the opponents position, Subsections 381.705(a), (b)(, (d), (f) and (h), Florida Statutes (1991), indicate that need, available alternatives and accessibility are evaluated within a district, as defined by Subsection 381.702(5). Therefore, using the statutory criteria as indicative of the situation which is normal, the disproportionate outmigration of medicaid patients can be considered a not normal circumstance with a showing of access hardships for this payor group. Boca's opponents also assert general acute care adult beds are adequate. In August 1991, the occupancy rate was 56.9 percent in the 171 licensed adult psychiatric beds in District 9 general acute care hospitals which are eligible for Medicaid reimbursement. Finally, Boca's opponents argue that Boca historically has not, and will not serve Medicaid patients in sufficient number to alter the outmigration. In 1990, Boca reported 671 Medicaid inpatient days from a total of 99,955. That is equivalent to 92 of the 16,170 admissions. Because Boca has a closed medical staff, only the psychiatrists on staff would be able to admit patients to a psychiatric unit. From the testimony and depositions received in evidence, Boca's psychiatrists who discussed their service to Medicaid patients treated less than 12 Medicaid patients a year. One psychiatrist, who had previously treated Medicaid patients at a mental health center, has been in private practice since 1983-84, but was not sure he had treated a Medicaid patient in his private practice and has received a new Medicaid provider number a few weeks prior to hearing. One Boca psychiatrist does not treat Medicaid patients on an inpatient basis. Two other Boca psychiatrists reported seeing 10 and "a couple" of Medicaid patients a year, respectively. The latter of these described the Medicaid billing procedure as cumbersome. Given the unavailability of Medicaid eligible beds in the District and the nature of the practices of its closed staff of psychiatrists, Boca has failed to establish that its CON application will alleviate the outmigration for psychiatric services of District 9 Medicaid patients. This conclusion is not altered by the subsequent closure of Lake's 46 adult psychiatric beds, because Medicaid reimbursement would not have been available at Lake which was not an acute care hospital. In fact, HRS takes the position that there are no not normal circumstances in this case. Wellington's Proposal Wellington, a 120 bed hospital in West Palm Beach, Florida, proposed to convert 15 acute care beds to 15 short term adult psychiatric beds which, if approved, will be licensed as adult psychiatric beds. Wellington's acute care beds are only 28 percent occupied. Wellington is located in the western portion of Palm Beach County, where no other inpatient psychiatric facilities are located. Wellington is a wholly owned subsidiary of Universal Health Services, Inc. ("UHS"), accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations (JCAHO) and the American Osteopathic Association (AOA), and offers clinical experience for students of the Southeastern College of Osteopathic Medicine (SECOM). Internships and externships for osteopathic students are also provided at Humana's psychiatric pavilion. Wellington proposes to fund the total project cost of $920,000 from funds available to UHS and intends to become a Baker Act receiving facility. Wellington is not a disproportionate share hospital, and projects 1 percent Medicaid service in its payor mix. Wellington proposes to serve adult psychiatric patients in 15 beds, and projects 53.3 percent and 70 percent occupancy in those beds in years one and two, but does not make a third year projection of at least 80 percent occupancy as required by Paragraph 4(d) of Rule 10-5.011(o). Because the average annual adult occupancy rate in the district is less than 75 percent, any applicant proposing to serve adults must demonstrate that a not normal circumstance exists for approval of its CON application. In addition, there appears to be no shortage of psychiatric beds in acute care hospitals in District 9. See Finding of Fact 39, supra. Not Normal Circumstance Wellington has not alleged nor demonstrated that any of the factors related to its current operations, location or proposed services are not normal circumstances in support of its CON application. Absent the showing of a not normal circumstance, Wellington's proposal cannot be approved, pursuant to Paragraph 4(e) and Rule 10-5.011(o), Florida Administrative Code. Savannas Proposal Savannas Hospital Limited partnership d/b/a Savannas Hospital ("Savannas") is a JCAHO accredited 70 bed psychiatric and substance abuse hospital located in Port St. Lucie, St. Lucie County, Florida, approximately 40 miles north of Palm Beach. Savannas, a Baker Act facility, proposes to convert all 20 of its licensed substance abuse beds to psychiatric beds and to add 10 new psychiatric beds, at a total project cost of $1,444,818. Savannas also proposes to commit to providing 7 percent indigent care. While not specifically describing its circumstances as not normal, Savannas does indicate that it is (1) the only applicant in the northern sub- district of District 9, and (2) could readmit to a segregated unit low functioning neurogeriatric patients of the type it previously served. Savannas also indicated that Medicare reimbursement is not available for patients who have substance abuse, rather than psychiatric primary diagnoses. As a freestanding provider, Savannas is not eligible for Medicaid reimbursement. Savannas demonstrates what services it would provide, if its CON is approved, but fails to identify a need for the services by District 9 psychiatric patients. Within the northern sub-district, the only other facility in St. Lucie County, Lawnwood, reported an occupancy rate of 65 percent in 1989. AHCA also argued that the substance abuse beds at Savannas are needed and should not be converted to psychiatric beds. That position is supported by the fact that Savannas substance abuse beds had a higher occupancy level than its psychiatric beds in 1989. Savannas' application and the evidence presented do not support the need for the services proposed by Savannas, nor does Savannas assert that any not normal circumstances exist.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Certificate of Need Number 6438 to Glenbeigh Hospital of Palm Beach, Inc.; Certificate of Need Number 6442 to Boca Raton Community Hospital, Inc.; Certificate of Need Number 6441 to Wellington Regional Medical Center, Inc.; and Certificate of Need Number 6444 to Savannas Hospital Limited Partnership. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of June 1993. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of June 1993. APPENDIX The following rulings are made on the parties' proposed findings of fact: Humana Adopted in Finding of Fact 1. Subordinate to Finding of Fact 2. 3-6. Issues not addressed. 7-8. Adopted in Findings of Fact 3 and 4. Subordinate to Findings of Fact 44 and 46. Subordinate to Finding of Fact 10. 11-12. Adopted in Findings of Fact 6 and 7. 13-15. Subordinate to Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 27 & 29. Issue not addressed. 20-21. Subordinate to Finding of Fact 25. 22. Issue not addressed. 23-24. Adopted in Findings of Fact 8 and 9. Accepted in relevant part in Finding of Fact 11. Accepted in relevant part in Finding of Fact 10. Subordinate to Finding of Fact 12 and Conclusions of Law 4. Subordinate to Finding of Fact 1. Adopted in Finding of Fact 22. Rejected in Finding of Fact 20. Rejected in Findings of Fact 12 and 18. Adopted in Findings of Fact 15 and 17. Rejected in Finding of Fact 38. Adopted in Findings of Fact 16 and 17. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 47. 38-47. Issues not addressed. Adopted in Findings of Fact 44 and 47. Issue not addressed. Rejected in Finding of Fact 46. Issue not addressed. 52-54. Adopted in Findings of Fact 46 and 47. 55-57. Issues not addressed. Adopted in Finding of Fact Issue not addressed. Adopted in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Finding of Fact 21. Accepted in relevant part in Finding of Fact 22. Accepted in relevant part in Finding of Fact 21. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Finding of Fact 54 Accepted in relevant part in Findings of Fact 26, 38, 39, 42, 43, 47, 48, 54, 55 and 57. Accepted in relevant part in Finding of Fact 26. Rejected in Findings of Fact 21 and 22. Accepted in relevant part in Finding of Fact 26. 74-75. Accepted in relevant part in Finding of Fact 27. 76-77. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 28. Subordinate to Finding of Fact 31. Accepted in relevant part in Finding of Fact 82. Subordinate to Finding of Fact 82. Accepted in relevant part in Finding of Fact 37. Accepted in relevant part in Finding of Fact 39. Issue not addressed. Subordinate to Finding of Fact 27 and 30. Accepted in relevant part in Findings of Fact 27, 29 and 30. Subordinate to Findings of Fact 27 and 30. Accepted in relevant part in Finding of Fact 31. Accepted in relevant part in Finding of Fact 42. Issue not addressed. Addressed in Preliminary Statement. Accepted in relevant part in Finding of Fact 1. 95-99. Issues not addressed Accepted in relevant part in Finding of Fact 10. Accepted in relevant part in Finding of Fact 25. 102-114. Issues not addressed Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 37. Issue not addressed. Accepted in relevant part in Finding of Fact 10. 121-122. Issues not addressed. Accepted in relevant part in Findings of Fact 4 and 47. Issue not addressed. Irrlevant. Issue not addressed. Accepted in relevant part in Finding of Fact 10 Accepted in relevant part in Findings of Fact 10, 25, 47 and 48. Subordinate to Finding of Fact 11. Issue not addressed. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 45. Accepted in relevant part in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Accepted in relevant part in Finding of Fact 15. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 11. Lake Adopted in Finding of Fact 1. Subordinate to Finding of Fact 1. 3-4. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 6 and 43. 11-12. Issues not addressed. 13-19. Subordinate to Findings of Fact 27-43. 20-21. Issues not addressed. 22. Adopted in Finding of Fact 10. 23. Adopted in Finding of Fact 11. 24. Adopted in Finding of Fact 12. 25-26. Adopted in Finding of Fact 13. 27-28. Adopted in Finding of Fact 1. 29-31. Adopted in Finding of Fact 22. 32. Rejected in relevant part in Finding of Fact 13. 33. Issue not addressed. 34. Accepted in relevant part in Finding of Fact 25. 35. Subordinate to Finding of Fact 25. 36-37. Accepted in relevant part in Finding of Fact 25. 38-39. Subordinate to Finding of Fact 27. 40. Accepted in relevant part in Finding of Fact 25. 41. Accepted in relevant part in Finding of Fact 30. 42-43. Subordinate to Finding of Fact 30. 44. Accepted in relevant part in Finding of Fact 25. 45. Subordinate to Findings of Fact 27 and 30. 46-47. Issues not addressed. 48. Accepted in relevant part in Findings of Fact 27 and 30. 49-52. Issues not addressed. 53. Subordinate to Finding of Fact 42. 54-56. Issues not addressed. 57. Accepted in relevant part in Conclusions of Law 4. 58-59. Accepted in relevant part in Finding of Fact 26 and in Conclusions of Law 4. Accepted in relevant part in Finding of Fact 20. Adopted in Finding of Fact 20. Adopted in Finding of Fact 15. Subordinate to Finding of Fact 1. Subordinate to Finding of Fact 17. 65-66. Adopted in Finding of Fact 17. Adopted in Findings of Fact 18, 27 and 30. Adopted in Finding of Fact 17. Adopted in Findings of Fact 27 and 29. Adopted in Finding of Fact 30. Adopted in Finding of Fact 29. Adopted in Finding of Fact 31. Adopted in Findings of Fact 28 and 31. Adopted in Finding of Fact 38. Adopted in Findings of Fact 27, 39 and 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 38. Adopted in Finding of Fact 35. Adopted in Findings of Fact 37, 39 and 42. Adopted in Finding of Fact 42. Adopted in Findings of Fact 47, 48, 49, 53 and 57. Adopted in Finding of Fact 47. Adopted in Finding of Fact 1. 84-89. Issues not addressed. Adopted in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 92-97. Issues not addressed. Subordinate to Finding of Fact 41. Subordinate to Finding of Fact 37. 100-102. Issues not addressed. Adopted in Findings of Fact 47 and 48. Adopted in Finding of Fact 26. Adopted in Finding of Fact 25. Subordinate to Finding of Fact 25. Adopted in Finding of Fact 30. Adopted in Finding of Fact 27. Subordinate to Finding of Fact 27. Adopted in Finding of Fact 27. 111-113. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Adopted in Finding of Fact 29. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Adopted. Adopted. Accepted in relevant part. Issue not addressed. Accepted in relevant part in Findings of Fact 3 and 32. Subordinate to Finding of Fact 3. Accepted in relevant part in Finding of Fact 41. Adopted in Finding of Fact 42. Subordinate to Finding of Fact 41. Issue not addressed. 128-132. Subordinate to Finding of Fact 32. 133-135. Issues not addressed. Adopted in Findings of Fact 32 and 41. Adopted in Finding of Fact 32. Subordinate to Finding of Fact 32. Issue not addressed. Adopted in Finding of Fact 10. Adopted in Finding of Fact 6. Adopted in Finding of Fact 10. Adopted in Finding of Fact 30. Adopted in Finding of Fact 44. Subordinate to Finding of Fact 45. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 46. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 44. 150-151. Adopted in Finding of Fact 46. 152-156. Issues not addressed. 157-158. Adopted in Finding of Fact 10. 159. Adopted in Findings of Fact 48 and 49. 160. Adopted in Finding of Fact 5. 161. Adopted in Finding of Fact 5. 162. Adopted in Finding of Fact 56. 163. Adopted in Finding of Fact 57. 164. Adopted in Finding of Fact 10. 165. Adopted in Finding of Fact 10. 166. Charter Adopted in Finding of Fact 57. 1. Accepted in relevant part in Finding of Fact 1. 2-3. Adopted. 4-10. Accepted in Preliminary Statement. 11. Adopted in Finding of Fact 1. 12-15. Issues not addressed. 16. Adopted in Finding of Fact 12. 17. Adopted in Finding of Fact 7. 18-19. Issues not addressed. 20. Adopted in Finding of Fact 8. 21-25. Subordinate to Finding of Fact 8. 26-38. Issues not addressed 39-40. Adopted in Finding of Fact 10. Subordinate to Finding of Fact 13. Adopted in Finding of Fact 13. 43-44. Adopted in Finding of Fact 22. Adopted in Finding of Fact 13. Adoped in Conclusion of Law 3. Adopted in Finding of Fact 13. Subordinate to Finding of Fact 25. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 23. Issue not addressed. 52-53. Adopted in Finding of Fact 25. 54-55. Issues not addressed. Adopted in Finding of Fact 26. Adopted in Finding of Fact 24. 58-73. Issues not addressed. Adopted in Finding of Fact 23. Adopted in Finding of Fact 38. Adopted in Finding of Fact 27. Adopted in Findings of Fact 27 and 30. 78-79. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 27. Issue not addressed. Adopted in Findings of Fact 27 and 30. Adopted in Finding of Fact 37. Adopted in Finding of Fact 39. Adopted in Finding of Fact 25. 86-94. Issues not addressed. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 15. Adopted in Findings of Fact 37, 39 and 42. 99-101. Issues not addressed. 102. Adopted in Finding of Fact 1. 103-134. Issues not addressed. 135. Adopted in Finding of Fact 4. 136-140. Issues not addressed. Boca Adopted in Finding of Fact 12. Adopted in Finding of Fact 11. Subordinate to Finding of Fact 11. Adopted in Finding of Fact 1. Adopted in Preliminary Statement. Adopted in Findings of Fact 3 and 32. Adopted in Finding of Fact 33. Subordinate to Finding of Fact 3. Adopted in Finding of Fact 32. 10. Subordinate to Finding of Fact 32. 11. Adopted in Finding of Fact 41. 12. Subordinate to Finding of Fact 32. 13. Adopted in Finding of Fact 32. 14. Adopted. 15-16. Subordinate to Finding of Fact 32. 17. Adopted in Finding of Fact 34. 18. Subordinate to Finding of Fact 32. 19. Issue not addressed. 20-21. Adopted in Finding of Fact 32. 22. Rejected in Finding of Fact 39. 23. Subordinate to Finding of Fact 32. 24. Adopted in Finding of Fact 32. 25. Subordinate to Finding of Fact 32. 26-27. Adopted in Finding of Fact 41. 28-30. Subordinate to Finding of Fact 41. 31. Adopted in Finding of Fact 34. 32. Adopted in Finding of Fact 39. 33. Subordinate to Finding of Fact 34. 34. Adopted in Finding of Fact 39. 35. Adopted in Finding of Fact 34. 36. Rejected in Finding of Fact 39. 37-42. Adopted in Finding of Fact 41. 43-47. Issues not addressed. 48. Subordinate to Finding of Fact 30. 49-50. Issues not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. 53-54. Rejected in Finding of Fact 30. 55-56. Issues not addressed. 57. Adopted in Finding of Fact 12. 58-59. Issues not addressed. Rejected in Findings of Fact 39 and 42. Adopted in Finding of Fact 12. Issue not addressed. Adopted in Finding of Fact 32. 64-65. Issues not addressed. Adopted in Findings of Fact 32, 35 and 38. Adopted in Finding of Fact 36. Adopted. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 12. Subordinate to Finding of Fact 32. Issue not addressed. Accepted in relevant part in Finding of Fact 34. Issue not addressed. Issue not addressed. Adopted in Finding of Fact 15. Issue not addressed. Adopted. Adopted in Finding of Fact 32. 81-82. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 37. Rejected in Findings of Fact 25 and 42. Issue not addressed. Adopted in Finding of Fact 6. 89-97. Issues not addressed. Subordinate to Finding of Fact 25. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 6. Sandy Pines 1. Issue not addressed. 2-3. Subordinate to Finding of Fact 1. 4. Issue not addressed. 5. Subordinate to Finding of Fact 9. 6-8. Adopted in Finding of Fact 9. 9-13. Subordinate to Finding of Fact 25. 14. Adopted in Finding of Fact 9. 15. Subordinate to Finding of Fact 9. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. 20-24. Subordinate to Finding of Fact 27. 25. Subordinate to Finding of Fact 9. 26-29. Issues not addressed. 30. Adopted. 31-33. Issues not addressed. Adopted in Findings of Fact 42, 43, 48, 49 and 54. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 28 and 31. Issue not addressed. 39-40. Subordinate to Findings of Fact 27 and 30. 41-42. Issues not addressed. Accepted in relevant part in Finding of Fact 12. Accepted in relevant part in Findings of Fact 12 and 17. Accepted in relevant part in Finding of Fact 17. 46-47. Accepted in relevant part in Finding of Fact 26. 48. Subordinate to Findings of Fact 25 and 26. 49-50. Issues not addressed. Adopted. Adopted. Accepted in relevant part in Finding of Fact 7. Accepted in relevant part in Finding of Fact 42. 55-56. Issues not addressed. 57. Adopted. 58-59. Issues not addressed. Accepted in relevant part in Conclusion of Law 3. Accepted in relevant part in Finding of Fact 26. 62-64. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 67. Accepted in relevant part in Finding of Fact 22. 68-69. Accepted in relevant part in Finding of Fact 21. 70. Accepted in relevant part in Finding of Fact 26. 71. Accepted in relevant part in Finding of Fact 26 and in 72. Conclusion of Law 3. Accepted in relevant part in Findings of Fact 26 and 73. 38. Accepted in relevant part in Findings of Fact 25, 27 and 30. 74-75. Not legible. 76. Subordinate to Finding of Fact 25. 77-80. Subordinate to Finding of Fact 27. 81. Subordinate to Finding of Fact 25. 82-83. Subordinate to Finding of Fact 27. 84-95. Issues not addressed. Wellington 1-2. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Adopted in Finding of Fact 44. Subordinate to Findings of Fact 4 and 44. Adopted in Finding of Fact 44. Adopted in Finding of Fact 45. 8-10. Subordinate to Finding of Fact 45. 11-12. Adopted in Finding of Fact 45. 13-19. Subordinate to Findings of Fact 4 and 44. 20. Adopted in Findings of Fact 4 and 46. 21-22. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 44 and 46. Subordinate to Findings of Fact 4 and 44. Subordinate to Finding of Fact 46. 27-28. Adopted in Finding of Fact 46. Adopted in Finding of Fact 30. Adopted in Finding of Fact 46. 31-32. Issues not addressed. Subordinate to Finding of Fact 25. Adopted. Issue not addressed. 36-37. Adopted in Finding of Fact 45. 38-42. Issues not addressed. 43. Adopted in Findings of Fact 34, 42 and 47. 44-63. Issues not addressed. 64-65. Subordinate to Finding of Fact 46. 66-67. Issues not addressed. 68. Adopted in Finding of Fact 10. 69-91. Issues not addressed. Accepted in relevant part in Finding of Fact 47. Accepted in relevant part in Finding of Fact 12. 94-103. Issues not addressed. Accepted in relevant part in Findings of Fact 1 and 44. Accepted in relevant part in Finding of Fact 45. 106-111. Issues not addressed 112. Rejected in Findings of Fact 25, 27 and 30. 113-115. Accepted in relevant part in Finding of Fact 45. Savannas Adopted in Finding of Fact 1. Adopted in Findings of Fact 2 and 7. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 5 and 50. Subordinate to Finding of Fact 5. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 53. Subordinate to Finding of Fact 56. Subordinate to Findings of Fact 5 and 50. Adopted. Issue not addressed. Adopted in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 53. Rejected in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 51. Adopted in Finding of Fact 50. Issue not addressed. Adopted in Findings of Fact 5 and 51. Subordinate to Finding of Fact 51. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 1. 30-33. Subordinate to Finding of Fact 12. 34. Adopted in Finding of Fact 12. 35-37. Issues not addressed. Adopted in Finding of Fact 53. Issue not addressed. 40-42. Rejected in Finding of Fact 54. 43. Adopted in Finding of Fact 50. 44-48. Subordinate to Finding of Fact 50. 49-51. Rejected in Findings of Fact 53 and 57. Adopted in Finding of Fact 53. Rejected in Findings of Fact 53 and 57. Adopted. Adopted. 56-57. Subordinate to Finding of Fact 50 Rejected in Findings of Fact 53 and 57. Issue not addressed. 60-61. Rejected in Findings of Fact 53 and 57. 62-63. Issues not addressed. 64. Adopted in Finding of Fact 56. 65-66. Issues not addressed. 67. Rejected in Findings of Fact 53 and 57. 68-70. Issues not addressed. 71. Adopted in Finding of Fact 52. 72-77. Issues not addressed 78. Adopted in Finding of Fact 1. 79-100. Issues not addressed. HRS Adopted in Finding of Fact 1. Adopted in Finding of Fact 11. Adopted in Finding of Fact 13. Adopted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 16 and rejected in part in Finding of Fact 17. Adopted in Finding of Fact 16. Subordinate to Finding of Fact 16. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. 10-11. Subordinate to Finding of Fact 12. Accepted in relevant part in Finding of Fact 12. Issue not addressed. Accepted in relevant part in Finding of Fact 12. Subordinate to Finding of Fact 12. 16-17. Issues not addressed. Adopted in Finding of Fact 1. Subordinate to Findings of Fact 32, 46 and 52. Adopted in Finding of Fact 20. 21. Subordinate to Finding of Fact 1. 22. Subordinate to Finding of Fact 2. 23-33. Issues not addressed. 34. Adopted in Finding of Fact 3. 35-36. Subordinate to Finding of Fact 3. 37. Accepted in relevant part in Finding of Fact 32. 38. Subordinate to Finding of Fact 32. 39. Rejected in Findings of Fact 40, 41 and 42. 40. Adopted in Finding of Fact 32. 41. Issue not addressed. 42. Adopted in Finding of Fact 42. 43. Adopted in Finding of Fact 32. 44. Issue not addressed. 45-46. Adopted in Finding of Fact 32. 47. Adopted in Finding of Fact 47. 48. Accepted in relevant part in Finding of Fact 44. 49. Issue not addressed. 50. Accepted in relevant part in Finding of Fact 46. 51. Subordinate to Finding of Fact 47. 52. Accepted in relevant part in Finding of Fact 46. 53-54. Accepted in relevant part in Finding of Fact 45. 55. Issue not addressed. 56-57. Subordinate to Finding of Fact 46. 58. Subordinate to Finding of Fact 47. 59-61. Issues not addressed. 62-64. Adopted in Findings of Fact 50 and 51. 65. Subordinate to Finding of Fact 65. 66-68. Issues not addressed. 69. Accepted in relevant part in Finding of Fact 52. 70-71. Issues not addressed. 72. Accepted in relevant part in Finding of Fact 53. 73. Accepted in relevant part in Finding of Fact 53. 74. Adopted in Finding of Fact 56. 75-77. Subordinate to Finding of Fact 56. 78-80. Issues not addressed. 81-82. Subordinate to Finding of Fact 56. 83-89. Issues not addressed. COPIES FURNISHED: Thomas Cooper, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 William B. Wiley, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 James C. Hauser, Esquire Foley & Lardner Post Office Box 508 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire David C. Ashburn, Esquire Roberts, Baggett, LaFace & Richard Post Office Drawer 1838 Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Michael J. Glazer, Esquire C. Gary Williams, Esquire Ausley, McMullen, McGehee, Carothers & Proctor Post Office Box 391 Tallahassee, Florida 32302 Robert S. Cohen, Esquire John F. Gilroy, III, Esquire Haben, Culpepper, Dunbar & French, P.A. Post Office Box 10095 Tallahassee, Florida 32302 Charles H. Hood, Jr., Esquire MONACO, SMITH, HOOD, PERKINS, ORFINGER & STOUT 444 Seabreeze Boulevard, #900 Post Office Box 15200 Daytona Beach, Florida 32115 R. S. Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact A not for profit 520-bed acute care hospital in Pensacola, Baptist primarily serves not only residents of Escambia and Santa Rosa Counties, within Florida's HRS Service District I, but also patients from Escambia and Baldwin Counties in Alabama. The other two counties in District I, Okaloosa and Walton, lie outside Baptist's primary service area, but within a secondary service area, as does Covington County, Alabama. Baptist proposes to convert twelve medical/ surgical beds to a children's psychiatric service, to complement an existing 38-bed psychiatric service housed in the Behavioral Medical Center across the street from Baptist's main campus. On average, eighty percent of Baptist's existing psychiatric beds are occupied at any one time. Of four separate, psychiatric treatment programs Baptist now offers, all accredited by the Joint Commission on Accreditation for Health Care Organizations, none is designed for children below the age of 13. Seldom, and only in an emergency, has a child below this age been accepted into Baptist's program for adolescents, which is operated separately from any adult treatment program. Baptist has treated indigent and medicaid patients in its psychiatric programs, as well as patients for whose treatment it has received greater remuneration. Hospital-wide, Baptist has had "medicaid utilization" of between six and nine percent. "Baptist was willing to do Baker Act patients." Farr deposition, p. 17. Rollins deposition, p. 30. Other Resources Pensacola and Escambia County have extensive outpatient psychiatric services for children, offering a broad range of options, short of inpatient care in a treatment facility. Rollins deposition, pp. 15-16. Lakeview Community Health Center offers outpatients treatment, as do a number of private providers. The Children's Intervention Project System conducts home visits. Day care and therapeutic foster homes are also available. Professionals distinguish between "crisis stabilization" which does not "focus on treatment" and even short-term psychiatric care. Lakeview Community Health Center has a 31-bed crisis stabilization unit, which was full as of the week before the hearing. Ten of the 31 beds are reserved for children, aged 9- 17, but children's beds are not segregated from beds for adolescents. Treating children and adolescents together (if not stabilizing their crises in the same facility) is inappropriate. They have different needs and require different structures. Adolescents require more autonomy; children need more supervision. See deposition of Cruz. Farr deposition, p. 21. Rollins deposition, p. 22. Only Harbor Oaks, a free-standing facility more than 45 minutes from Pensacola and Gulf Breeze, accepts children as psychiatric patients. Harbor Oaks has 19 children's beds but does not accept medicaid patients. The children's unit at Harbor Oaks experienced an occupancy rate of approximately 74 percent in 1988. Occasionally, girls were put on waiting lists. University hospital does not accept children as psychiatric patients. It rarely accepts adolescents. West Florida Hospital, which has a program for adolescents, refuses child psychiatric patients admission. West Florida Community Center accepts no children. Nor does Humana Hospital in Ft. Walton. Play Therapy Rather than convert a part of an existing medical or surgical ward to a children's psychiatric ward, Baptist proposes to spend $565,660 to construct a facility abutting but distinct from its Behavioral Medical Center. Lakeview Medical Health Center is nearby. Farr deposition, p. 32. The parties have stipulated that "the costs and method of proposed construction, including ... energy provision and the availability of alternative, less costly or more effective methods of construction" are not in dispute, and that "the facility design schematic is reasonable and appropriate." Baptist would hire a child psychiatrist to head up to the children's psychiatric unit. Treatment teams for existing programs also include psychologists, psychiatric social workers, occupational therapists, certified recreational therapists, and nursing staff. Dr. DeMaria recommends that "somebody in the creative arts therapy," (T.99) be hired for the children's unit, as well. The parties agree that "the availability of resources, including health manpower, management personnel, and funds ... are not at issue." The plan is to create a homelike environment where children will sleep two to a room and eat together family style in a dining room. A living room, at least one classroom, a playroom and a playground out of doors are to be the situs of art, dance, music and play therapy, individual, group, and family, all in a "therapeutic milieu." Baptist intends that the children's psychiatric unit be the least restrictive inpatient facility for children possible and has given assurances that the same rigorous review now taking place in its existing psychiatric programs would see to it that children are discharged to a still less restrictive environment as soon as their conditions permitted. In large part, Baptist is counting on medical staff at the Lakeview Community Health Center, all of whom have admitting privileges at Baptist, to identify children who will need inpatient care but cannot afford to pay. Baptist has committed to reserve two beds in the proposed unit for patients who are indigent, or eligible for medicaid benefits. Baptist has also undertaken "not [to] turn away patients," Farr deposition, p. 49, needing psychiatric care. Baptist has agreed to accept a requirement that it honor this commitment, as a condition to any certificate of need it obtains. Less than 20 percent of the children seen by 19 of the 55 child psychologists practicing within Baptist's service area who responded to a survey seemed to require inpatient care, but only 60 percent of this group actually received such care. Baptist's Exhibit No. 30. A survey of referral agencies indicated some 80 children in Baptist's service area needing inpatient psychiatric care in 1988 did not receive it. Projected daily charges of $390 in Baptist's second year of operating the children's psychiatric unit are less than the $450 a day now charged by Harbor Oaks. The parties stipulated that "the pro forma income and expense statement relating to the children's short-term psychiatric beds is reasonable and requires no further proof except for validation of the number of patients days." Assuming admission rates comparable to elsewhere in the South, children in Baptist's service area would keep ten children's psychiatric beds at 70 percent average occupancy. Baptist's Exhibit No. 26. Twelve beds would make it economically feasible to serve the medically indigent as well as other children needing inpatient care. The first seven days following a child's admission staff would devote to evaluating the child. Children not discharged to a less restrictive situation by the end of the evaluation period, Baptist projects, would have an average stay totalling 28 days, as compared to the 35- to 40-day average length of stay harbor Oaks has reported. Not Normal District I has a total of 240 short-term psychiatric beds. According to the state agency action report, short-term psychiatric bed utilization was 88.9 percent at Harbor Oaks for 1987, 73.5 percent at Ft. Walton's Humana Hospital, 59.4 percent at University Hospital and 58.1 percent at West Florida. Baptist's recent experience of psychiatric bed utilization in excess of 80 percent dates to January of 1988, and is a substantial increase over the 55.8 percent reported for the period July 1986 to June 1987. Baptist's Exhibit No. 9. Projected 1993 population for District I is 601,559. Baptist's Exhibit No. 23. The parties agree that the formula set out in Rule 10- 5.011(1)(o), Florida Administrative Code, for determining "numeric need" for acute care, short-term, general psychiatric beds does not indicate a need for additional acute care short-term general psychiatric beds in District I. But 53 percent of the District's population resides in Escambia County where no treatment facility has any children's psychiatric beds. A significant number (compare Baptist's Exhibit No. 23 with T. 133) of Baptist's psychiatric admissions are patients who reside in Alabama. Although Escambia County has 52 percent of the District I population, between ages 1-12, it has none of the children's psychiatric beds. More than half the District's population lives more than 45 minutes travel time from Harbor Oaks, complicating arrangements for family therapy, often essential in these cases, Rollins deposition, pp. 28-29, and for other conferences, including discharge conferences, where parents and community-based professionals work out details necessary to effect a smooth transition from inpatient to something less restrictive. The District I Health Plan, approved on June 1, 1988, provides: The following policies and priorities are to be used in CON review in tandem with the bed need numbers on the preceding pages. POLICIES AND PRIORITIES FOR PSYCHIATRIC AND SUBSTANCE ABUSE BEDS Psychiatric or substance abuse beds which are not used by residents of the District shall not be included in the resource inventory count of the District. [NOTE: There have in the past, been facilities in another district treating patients originating solely from outside of that district. The facility's intake policies precluded the treatment of "local" district residents. In addition, the facility's marketing effort was directed entirely out- of-state. A local marketing effort plus treatment of patients originating within the district can easily be demonstrated.] Priority will be given to applicants who can demonstrate that all existing short term inpatient psychiatric beds in the subdistrict have had an average annual occupancy rate equal to or greater than 70% for the preceding year. Priority will be given to applicants who can demonstrate that all existing short term inpatient substance abuse beds in the subdistrict have had an average annual occupancy rate equal to or greater than 80% for the preceding year. Proposals for new facilities, expansions, conversions and additional services will be given priority for applicants who agree to continue or enter into Baker Act, Medicaid, Medicare and other medically indigent contracts for the provision of services to qualifying patients. Among the goals, objectives, and recommended actions set out in the 1985-1987 State Health Plan, now expired but not replaced, is a goal that short-term inpatient hospital psychiatric beds not exceed .35 per thousand population. HRS Exhibit No. 1. In requiring that .15 (of a total of .35) short-term psychiatric beds per 1,000 population be located in general hospitals eligible for medicaid reimbursement, HRS's rules do not distinguish between children and adults. But no children's psychiatric beds in Distract I are located in a facility that accepts medicaid patients. If the ratio prescribed for psychiatric beds generally applied specifically to children's psychiatric beds, District I would already have at least eight such beds: Multiplying the 19 existing beds by .15/.35 yields 8.14. Applying the rule's .15 beds per 1,000 population methodology to the 111,211 children projected to be in District I by 1993, see Baptist's Exhibit No. 23, yields a need for 16.68 children's psychiatric beds in facilities that accept medicaid patients.
Recommendation It is, accordingly, RECOMMENDED: That HRS grant Baptist's application for certificate of need No. 5669, on condition that Baptist honor its commitments to care for medically indigent and medicaid-eligible children in need of inpatient psychiatric care. DONE and ENTERED this 2nd day of November, 1989, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1989. APPENDIX Petitioner's proposed findings of fact Nos. 1 through 6, 8 through 21, 28 through 35, 40, 44, 45, 47 through 50, 60, 61, 64, 69, 72, 73, 75, 76, 78, 79, 81 and 82 have been adopted in substance as fare as material. With respect to petitioner's proposed finding of fact No. 7, either a music therapist or an art therapist is contemplated. With respect to petitioner's proposed finding of fact No. 22, children in Escambia and Santa Rosa counties can go to Harbor Oaks. Petitioner's proposed findings of fact Nos. 23 through 26 here not established by the evidence. With respect to petitioner's proposed finding of fact No. 27 at least one eleven-year-old was also admitted. Petitioner's proposed findings of fact Nos. 36 and 37 are immaterial. Petitioner's proposed findings of fact Nos. 37, 39, 42, 43, 46, 51 through 59, 62, 63, 65, 67, 70, 71, 74, 77 and 80 relate to subordinate matters. With respect to petitioner's proposed finding of fact No. 41, the evidence did not show that everybody living in Escambia and Santa Rosa counties was more than 45 minutes from Harbor Oaks. Petitioner's proposed finding of fact No. 66 is properly a proposed conclusion of law. Respondent's proposed findings oil fact Nos. 1, 2, 5 through 8, 11, 14 and 15 have been adopted in substance insofar as material. With respect to respondent's proposed finding of fact No. 3, the petitioner's stipulation further narrowed the issues. Respondent's proposed findings of fact Nos. 4 and 17 are properly proposed conclusions of law. Respondent's proposed findings of fact Nos. 9, 10, 21, and 23 have been reject in whole or in part as unsupported by the evidence. Respondent's proposed findings of fact Nos. 12, 13, 16, 18, 20 and 22 pertain to subordinate matters. With respect to respondent's proposed finding of fact No. 19, whether institutionalizing of children is ever a good idea is not at issue in this proceeding. The question is whether services available to others should also be available to indigent patients. COPIES FURNISHED: Sam Power Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Gregory Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John Miller General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Stephen A. Ecenia Roberts, Baggett, LaFace, and Richard 101 East College Avenue Post Office Drawer 1838 Tallahassee, FL 32302 Richard A. Patterson Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, FL 32308 =================================================================
Findings Of Fact Background On September 28, 1988, First Hospital Corporation of Florida d/b/a First Hospital of Palm Beach County (First Hospital) filed a timely application for the July 1993 planning horizon with the Department of Health and Rehabilitative Services (Department) for a certificate of need (CON) to construct a 48- bed short-term psychiatric specialty hospital, dedicated to the care of children and adolescents, in District IX. 1/ District IX is comprised of Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties. On February 3, 1989, the Department published notice in the Florida Administrative Weekly of its intent to grant First Hospital's application. Petitioners, Lake Hospital & Clinic, Inc. d/b/a Lake Hospital of the Palm Beaches (Lake Hospital), and Community Hospital of the Palm Beaches, Inc. d/b/a Humana Hospital Palm Beaches (Humana), existing providers of psychiatric services to adolescents in Palm Beach County, filed timely petitions for a formal administrative hearing to oppose the grant of the subject application. The matter was referred to the Division of Administrative Hearings for the assignment of a hearing officer to conduct a formal hearing pursuant to section 120.57(1), Florida Statutes, and Savannas Hospital Limited Partnership (Savannas), an existing provider of psychiatric services to adolescents in St. Lucie County, was granted leave to intervene. 2/ The proposed facility At issue in this proceeding is the application of First Hospital for a CON to construct a 48-bed short-term psychiatric specialty hospital dedicated to the care of children and adolescents. This project is, however, only a portion of an 80-bed facility that First Hospital proposes to construct on a 30-acre parcel of land adjacent to Wellington Regional Memorial Hospital in western Palm Beach County. As sited, the proposed facility would be located west of the Florida Turnpike; on the west side of State Road 7 and approximately .2 miles north of Forest Hills Boulevard. The 80-bed facility that First Hospital proposes to construct would consist of a central core area and three attached wings or units. Two of the wings, each containing 24 beds, will be dedicated as short-term psychiatric beds, with one wing for young adolescents (10-14 years of age) and one wing for older adolescents (14-18 years of age). The third wing, consisting of 32 beds, will be dedicated as a residential treatment center (RTC) for adolescents. The central core area would include administrative, therapy, kitchen and dining, gymnasium classroom areas and other support functions, and is essential to the operation of the psychiatric units, but will be shared with the residential treatment unit. A therapeutic preschool program, for children 3-5 years of age, as well as a partial hospitalization program for adolescents, are also proposed to be offered, and will be located in the central core area. 3/ The psychiatric program proposed by First Hospital for its 48-bed short-term psychiatric facility will address emotional and behavioral disorders that may affect adolescents, and which require admission to a short-term acute care facility for treatment. In its application, First Hospital estimates an average length of stay of 45 to 60 days. The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing health card services in the service district As a touchstone for assessing need within a service district, the Department has established a short-term psychiatric bed need methodology that must normally be satisfied before a favorable need determination will be found. That methodology, codified in Rule 10-5.011(1)(0)(4), Florida Administrative Code, contains two identifiable parts. The first part deals with the mathematical derivation of a net bed need for the planning horizon by assuming a gross bed need ratio of .35 beds per 1,000 population, and reducing that figure by the number of existing and approved beds. Based on the population projections of the Executive Office of the Governor, July 1988 release, application of this methodology derives a net need for 48 short-term psychiatric beds for the July 1993 planning horizon (gross bed need of 480- existing and approved beds of 432 = 48 net bed need. 4/ The second part of the Department's need methodology addresses occupancy standards for existing facilities that must be satisfied before a favorable need determination will normally be found. For short-term child and adolescent beds, the rule mandates an average annual occupancy rate of not less than 70 percent for all such existing facilities for the preceding 12- month period. Here, the proof demonstrates an average annual occupancy rate in excess of 70 percent for the 12-month period preceding the Department's need calculation, and satisfaction of the second part of the Department's need methodology. On August 12, 1988, the Department, pursuant to Rule 10-5.008(2)(a), Florida Administrative Code, published notice of the hospital fixed need pool for the July 1993 planning horizon in the Florida Administrative Weekly. Pertinent to this case, such notice erroneously established a net need for 33 short-term psychiatric beds in District IX. Following publication of the fixed need pool, the Department received information that its calculation of the net need for short-term psychiatric beds in District IX was erroneous. Upon review, the Department established that its initial calculation was in error, and on August 26, 1988, the Department published a notice of correction in the Florida Administrative Weekly, which correctly established a net need for 48 short-term psychiatric beds in District IX for the July 1993 planning horizon. This adjustment to the fixed need pool did not result from any intervening changes in population estimates, bed inventories, or other factors which would lead to different projections of need, but from an error in the Department's mathematical calculation. Under the circumstances, the Department's correction of the fixed need pool was appropriate and timely, and a need for 48 short-term child and adolescent psychiatric beds for the July 1993 planning horizon has been demonstrated. Of the 432 short-term psychiatric beds approved and existing within the district on August 17, 1988, 119 beds were reported to the local health council as dedicated to short-term child and adolescent psychiatric services, and the balance of 313 beds as dedicated to adult psychiatric services. Allocation of the 119 short-term child and adolescent beds was reported as follows: Lake Hospital 26 beds, Fair Oaks 27 beds, Humana 27 beds, Savannas 15 beds, and Lawnwood (Harbour Shores) 24 beds. Lake Hospital is a 98-bed freestanding psychiatric specialty hospital located in Lake Worth, Palm Beach County, Florida, that treats adolescents and adults for psychiatric disorders and substance abuse. As of August 17, 1988, Lake Hospital was licensed to operate 56 short-term psychiatric beds, 26 long- term psychiatric beds, and 16 short-term substance abuse beds. Of the 56 short- term psychiatric beds, 26 beds were approved for adolescent care and 30 beds were approved for adult care. During calendar year 1987, Lake Hospital enjoyed an occupancy rate of 91.8 percent for its 26 short-term psychiatric beds, which were dedicated to the care of adolescents, ages 12- 17. In January 1988, Lake Hospital opened a replacement facility on its campus consisting of a two-story structure with four 18- bed units, and reported to the local health council that two of those units (36 beds) were dedicated to short-term adolescent care in January and February 1988, and that thereafter only 18 beds were dedicated to short-term adolescent care. Based on such utilization, Lake Hospital enjoyed an occupancy rate of 95 percent for the first four months of 1988 and a 93.9 percent occupancy rate for calendar year 1988 for its adolescent beds. 5/ Fair Oaks is a 102-bed free standing psychiatric specialty hospital located in Delray Beach, Palm Beach County, Florida, that treats children, adolescents, and adults for psychiatric disorders and substance abuse. As of August 17, 1988, Fair Oaks was licensed to operate 70 short-term psychiatric beds, 15 long-term psychiatric beds, and 17 short-term substance abuse beds. Of the 70 short-term psychiatric beds, 27 beds were approved for child and adolescent care and 43 beds for adult care. During the calendar year 1987, Fair Oaks' second year of operation, it achieved an occupancy rate of 73.1 percent for its 27 short-term child and adolescent psychiatric beds. For the first four months of calendar year 1988, Fair Oaks enjoyed an occupancy rate of 99.7 percent, and for all of calendar year 1988 an occupancy rate of 91 percent. 6/ Humana is a 250-bed general hospital located in West Palm Beach, Florida. Of its existing beds, 162 are dedicated as medical/surgical beds, and 88 as short-term psychiatric beds. For calendar year 1987, Humana reported to the local health council that 27 of its 88-bed complement of psychiatric beds were dedicated to short- term adolescent services, but declined or neglected to report its utilization so that an average length of stay could be calculated. In fact, Humana did not operate a short-term adolescent program for 1987, but operated a long-term program without Department approval. Pertinent to this conclusion, the proof demonstrated that Humana applied for the development of an 88-bed psychiatric pavilion in 1983. Certificate of Need No. 2647 was issued to Humana on November 17, 1983, for 80 short-term psychiatric beds consisting of 48 adult psychiatric beds, 24 geriatric beds, and 8 adult special beds; and, on January 8, 1985, Humana received CON No. 3237 for the additional 8 short-term adult psychiatric beds. Humana opened its psychiatric pavilion in November 1986, and by January 1987 was serving adolescents, ages 13 through 18, in a 27-bed unit notwithstanding the absence of Department approval. As to the services provided in that unit, the proof is compelling that it was dedicated to long-term adolescent psychiatric services with an average length of stay of approximately 280 days. At some point thereafter, but not earlier than July 1989, Humana also began providing short-term adolescent psychiatric services at its facility. 7/ Following the Department's investigation into Humana's operation of a long-term adolescent psychiatric program, Humana applied for a modification of its CON Nos. 2647 and 3237 to allow it to operate a district adolescent unit. On July 14, 1989, Humana received Department approval, and such CON's were modified to allow 15 short-term adolescent psychiatric beds. This modification is, however, currently the subject of an appeal to the District Court. In the interim, on December 14, 1988, Humana received CON No. 5294 for the addition of 15 short-term beds for adolescents and adults, and on February 25, 1989, Humana received CON No. 5722 for the redesignation of 15 short-term psychiatric beds to 15 long-term beds. Currently, Humana has available 30 short-term psychiatric beds for adolescent use, and 15 long-term beds, but its short-term program is in a start-up mode. Savannas is a 70-bed freestanding psychiatric hospital located in Port St. Lucie, St. Lucie County, Florida, approximately 40 miles north of Palm Beach County, that treats adolescents and adults for psychiatric disorders and substance abuse. As of August 17, 1988, Savannas was licensed to operate 50 short-term psychiatric beds and 20 short-term substance abuse beds. Of the 50 short-term psychiatric beds, 15 beds were approved for adolescent care and dedicated to patients ages 14- 17, and 35 beds were approved for adult care. Savannas opened its facility in October 1987, and for that calendar year reported 1,215 patient days for its short- term adolescent unit, For calendar year 1988, its first full year of operation, Savanna's adolescent unit achieved 3,589 patient days, or an occupancy rate of 65.5 percent. Lawnwood (Harbour Shores) is a general hospital located in Fort Pierce, St. Lucie County, Florida, that, as of August 17, 1988, was licensed to operate 60 short-term psychiatric beds. Of the 60 short-term psychiatric beds, 24 beds were approved for child and adolescent care, and 36 for adult care. The date Lawnwood commenced operations does not appear of record; however, during calendar year 1987, it achieved a 62 percent occupancy rate for its 24-bed adolescent unit. For calendar year 1988, Lawnwood maintained a similar occupancy rate even though Savannas was drawing patients from the same service area to its new facility. Considering the availability, accessibility, extent of utilization and adequacy of short-term child and adolescent beds in the service district at all times pertinent to this case, there exists a need for the 48 beds requested by First Hospital, and such beds should be located in Palm Beach County consistent with the local health plan, discussed infra. The need for the proposed facility in relation to the district plan and state health plan Applicable to this case is the 1985-87 state health plan, which contains the following goals and objectives pertinent to short-term inpatient psychiatric beds: GOAL 1: ENSURE THE AVAILABILITY OF MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES TO ALL FLORIDA RESIDENTS IN A LEAST RESTRICTIVE SETTING. OBJECTIVE 1.1: The ratio of short term inpatient hospital psychiatric beds to Florida's population should not exceed .35 beds per 1000 population thru 1987. RECOMMENDED ACTIONS: a: Restrain increases in the supply of short term inpatient hospital psychiatric beds to no more than .35 beds per 1000 population. OBJECTIVE 1.2: Through 1987, additional short term inpatient hospital psychiatric beds should not normally be approved unless the average annual occupancy rate for all existing and approved adult short term inpatient psychiatric beds in the service district is at least 75% and average annual occupancy for existing and approved adolescent and children beds is at least 70%. RECOMMENDED ACTIONS: a. Restrict approval of additional short term inpatient psychiatric beds to these service districts which have an average annual occupancy of 75% for existing and approved adult beds and 70% for existing and approved adolescent and children beds. GOAL 2.: PROMOTE THE DEVELOPMENT OF A CONTINUUM OF HIGH QUALITY, COST EFFECTIVE PRIVATE SECTOR MENTAL HEALTH AND SUBSTANCE ABUSE TREATMENT AND PREVENTIVE SERVICES. OBJECTIVE 2.1: Define, develop and implement policy regarding the appropriate treatment settings and the role of each setting in the delivery of mental health and substance abuse services by 1987. GOAL 3: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT. First Hospital's application is consistent with the goals and objectives of the state health plan. Here, First Hospital proposes to provide a 24-hour-a-day therapeutic milieu, with an average length of stay of 60 days or less, for children and adolescents suffering from mental health problems which are so severe and acute that they need intensive, full-time care. As such, First Hospital will offer care for those individuals for whom short-term inpatient psychiatric care is the least restrictive setting appropriate, and which care, consistent with the Department's need methodologies, will complement the range of mental health services needed in the district. Also applicable to this case, is the 1988 District IX local health plan. Pertinent to this case, the local health plan divides District IX into two subdistricts when planning for short-term psychiatric beds. Subdistrict one consists of Indian River, Martin, St. Lucie and Okeechobee Counties, and subdistrict two consists of Palm Beach County. In allocating short-term psychiatric beds between subdistricts, the local plan provides: When bed need is shown in District IX for either short-term psychiatric services or substance abuse services in accordance with Chapter 10-5.11 of the Florida Administrative Code, the method for allocating beds among subdistricts shall be based upon projected subdistrict occupancy figures as determined by use-rates during the most recent calendar year in combination with projected subdistrict population figures. New beds shall be allocated to the subdistrict showing the highest projected percent occupancy, to the extent that the projected percent occupancy equal that of the other subdistrict. When projected occupancy figures show parity, any remaining beds shall be allocated based upon each subdistrict's percentage of projected patient days for District IX. All projections shall be five years into the future to correspond with the planning horizon governing the addition of psychiatric and substance abuse beds as set forth in state rule. Applying the local plan's methodology to the facts of this case demonstrates that the beds identified by the Department's need methodology should be allocated to subdistrict two, Palm Beach County, which is the county within which First Hospital proposes to locate. The local plan also requires an examination of an applicant's commitment or record of service to medicaid/indigent and underserved population groups. The First Hospital facility will be a specialty hospital and therefore not eligible to provide medicaid services; however, First Hospital has committed to dedicate 8 percent of its patient days to indigent care. Under such circumstances, First Hospital's application is, on balance, consistent with the local plan. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care First Hospital is a wholly owned subsidiary of First Hospital Corporation, an established provider of psychiatric services to children and adolescents since 1983. As of this date, First Hospital Corporation owns and operates 15 hospitals nationally, and has demonstrated the commitment and ability to provide quality care to its patients. Here, First Hospital's staffing is reasonable, and while the program proposed by First Hospital is generic in nature, and similar to that offered by other short-term providers of such services, it will assure, in light of demonstrated need, that patients needing acute short-term psychiatric services in the district will continue to receive quality care. To the extent that the needs of the district may subsequently evidence the need for more specialized programs, First Hospital has demonstrated its ability to address such needs, and to provide quality programs and services. The availability and adequacy of other health care facilities and services in the service area which may serve as alternatives for the health care facilities and services proposed by the applicant The Department's short-term psychiatric bed rule addresses the need for psychiatric facilities that will treat emotional and behavioral disorders which require admission to a short-term acute care facility for treatment. Where such short- term psychiatric care is indicated, any other type of placement would not be appropriate under existing rules (not long-term, residential treatment, group home, or out-patient care), and there are no alternatives for the services proposed by First Hospital. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation First Hospital has demonstrated that it either has or can obtain all resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. As heretofore noted, First Hospital Corporation, the parent of the applicant, has provided psychiatric services to children and adolescents since 1983, and currently owns and operates 15 hospitals nationally. It has never experienced any serious difficulty in financing its operations, either start-up or operational, and has in place an existing program for the recruitment and training of medical, administrative, clerical and other personnel that might be needed for the proposed facility. First Hospital Corporation has no other new projects pending at this time, and has committed itself to the project proposed by its subsidiary. Additionally, Dr. Ronald Dozoretz, who is president, chairman of the board, and the principal stockholder of First Hospital Corporation, has the available resources to finance the subject project, and has also committed to do so if necessary. 8/ The extent to which the proposed services will be accessible to all residents of the service district, and the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent As a freestanding psychiatric facility, First Hospital is not eligible to receive Medicaid funds for the treatment of psychiatric disorders; however, it has committed to provide 8 percent of its patient days to the care of patients who qualify as indigent, and has agreed that its CON be so conditioned. In view of this commitment, as well as the demonstrated need within the district for the proposed services, approval of First Hospital's application will increase accessibility to all residents of the district. The probable impact of the proposed project on the costs of providing health services proposed by the applicant. The proof demonstrates that existent facilities in Palm Beach County are operating near capacity, and that to meet expected demand at the planning horizon an additional 48 short- term psychiatric beds are needed. Under such circumstances, approval of First Hospital's application will stimulate competition and promote quality assurance and cost-effectiveness. While the proof establishes the need for 48 additional beds at the horizon year, the protestants to First Hospital's application contend that, due to the finite number of qualified professionals within the area to staff the facility and the finite number of patients requiring such care, they will be adversely impacted if the application is approved. Succinctly, they contend that they may lose staff or be compelled to pay higher salaries, and that they may lose patients and therefore revenue, if the facility is approved. The protestants' proof regarding potential impact to their existing staff or competition for staff was unpersuasive. In light of the number of existing facilities that already offer mental health type services within the district, and therefore currently compete for the same professionals, First Hospital's entry into the market should not significantly impact existing competition. As importantly, the protestants failed to quantify any such impact or otherwise persuasively demonstrate that, assuming they were compelled to pay more to retain or attract competent staff, such increased expense would adversely affect their operation. With regard to the protestants' concerns regarding lost patient days and revenue, the demonstrated need for the additional 48 beds at the horizon year mitigates the potential for any adverse impact to existent providers in the long term. However, this does suggest that First Hospital's application, as proposed, does not demonstrate a potential to significantly adversely affect existent providers in the short term. To the contrary, should First Hospital achieve the level of utilization it projects in its application, its facility would have a significant adverse impact on existing programs. In this regard, First Hospital's application projects that it will achieve 8,956 patient days in 1991, its first year of operation, and 13,193 patient days in 1992, its second year of operation. Through 1991, there will only be a growth of approximately 3,498 patient days over those that were served by existing facilities in 1988, and through 1992, there will only be a growth of approximately 4,664 patient days over those that were served by existing facilities in 1988. Therefore, to achieve it's projected occupancy levels, First Hospital would have to capture 5,458 patient days in 1991 and 8,529 patient days in 1992 from the patient base that had previously been served at existing facilities. Such impact to those facilities, should First Hospital be able to achieve its projected levels of occupancy, would be significant and adverse. 9/ The costs and methods of the proposed construction As heretofore discussed, First Hospital proposes to construct an 80- bed facility on approximately 30 acres of land in Palm Beach County, Florida, which will include the 48 short-term psychiatric beds which are the subject of this proceeding, as well as the 32 residential treatment beds which the Department concluded were not subject to CON review. The 80-bed facility proposed, at 49,142 gross square feet, will consist of a central core area of approximately 25,000 square feet, which includes three wings; an education and activity wing, a food service wing, and an administrative wing. These wings will house the therapy, kitchen and dining, gymnasium, classrooms, administrative offices, and other services necessary to support the psychiatric facility. Attached to the core area, are two psychiatric wings, at 7,592 square feet each, which will each contain 24 beds dedicated to short-term psychiatric care, and one wing, at 8,944 square feet, which will contain 32 beds dedicated as residential treatment beds. On the adjacent grounds, First Hospital also proposed a swimming pool, tennis courts, baseball field, and sports filed. In its application, First Hospital estimated its total project cost for the proposed psychiatric facility at $4,213,522. This project cost was composed of development cost of $61,500, financing/refinancing costs of $259,800, professional services of $162,000, construction costs of $2,503,162, equipment costs of $480,000, and other related costs of $150,000. But for the construction cost category ($2,503,162), First Hospital derived its estimate of total project costs by allocating 60 percent of the cost of each component of the total cost to the psychiatric facility and 40 percent to the residential treatment facility (the 60/40 methodology). In the case of construction costs, First Hospital based its estimate on the square footage of the psychiatric wings and 60 percent of the core area, which derived a gross square footage for this cost item based on 30,184 square feet, to which it added 60 percent of its estimated costs for site preparation and contingency of construction. Based on this premise, First Hospital's proposal is driven by a $76.33 per square foot cost of construction. 10/ Assuming the propriety of First Hospital's 60/40 allocation of costs, its estimate of project costs is still significantly understated. Here, the proof demonstrates that, as opposed to the $76.33 per square foot cost for construction and site preparation costs estimated by First Hospital, the cost for such work will be $105 per square foot, inclusive of construction and site preparation costs. Based on the 30,184 square feet First Hospital allocated to the project, such cost will amount to $3,169,320, which, when added to the 5 percent contingency factor, the $96,000 allocated for the proposed pool, and the addition of 460 square feet to patient rooms needed to meet Department standards, derives a construction cost figure of $3,472,086, as opposed to the $2,503,162 estimated by First Hospital. In addition to straight construction costs, First Hospital also underestimated its equipment costs. In this regard, First Hospital's equipment list omits many necessary items, including: nurse call equipment, a security system, an emergency generator, therapy and recreational equipment, gym equipment, ice machines, defibrillators, crashcarts, educational materials, media equipment, graphic artwork, interior design items, shelving/lockers for staff and patients, housekeeping items, medication carts, and other necessary equipment. Had First Hospital properly calculated its equipment costs, it would have derived a cost of at least $1 million for movable equipment and at least $150,000 for fixed equipment for the 80--bed facility as opposed to the $700,000 for movable equipment and $100,00 for fixed equipment it estimated. Under such circumstances, applying First Hospital's 60/40 methodology would establish an equipment cost for the subject project at $690,000, as opposed to the $480,000 estimated by First Hospital. 11/ Since financing costs and professional services fees would also require an upward adjustment because of the increase in construction and equipment costs, the total cost for the subject project, utilizing First Hospital's 60/40 methodology, would reach at least $5,488,843, as opposed to the $4,213,522 estimated by First Hospital. 12/ The foregoing analysis of construction costs assumed the reasonableness of First Hospital's 60/40) allocation methodology. For reasons discussed infra, First Hospital's allocation methodology is not reasonable, and its construction costs are therefore dramatically understated. In this regard, the proof demonstrated that the core area, consisting of 25,000 square feet, would be necessary to support the 48-bed psychiatric units whether the 32-bed residential treatment unit were built or not, and that it would be more appropriate to combine the core area and the psychiatric area to assess the subject application. When this is done, the construction cost alone for the project calculates to $4,638,501. 13/ In addition to straight construction costs, all of the other estimated project costs appearing on Table 25 of First Hospital's exhibit 1 are also suspect because of its 60/40 methodology; however, for purposes of this analysis item a, project development costs, and item f, other related costs are assumed accurate, as are construction supervision costs and loan fees. Notably, capitalized interest would increase to at least $355,621, architectural/engineering fees would increase to approximately $242,969, and equipment costs would increase to approximately $726,000. With these adjustments alone, the cost of the 48-bed psychiatric project, which includes the core area, comes to approximately $6,821,000, or over $2,607,000 more than First Hospital estimated. 14/ The unreasonableness of First Hospital's 60/40 methodology To assess the financial feasibility of the proposed project, First Hospital's pro formas address only the expected financial performance of the 48 psychiatric beds and ignore the financial feasibility of the 32-bed residential treatment unit, even through First Hospital postulates that such unit will support 40 percent of the cost of the hospital's core area. At hearing, the explanation offered by First Hospital and the Department for not addressing the financial feasibility of the residential treatment unit, as well as the out-patient services, was their contention that such services are not CON reviewable because First Hospital, as regards the residential treatment unit, is not yet a "health care facility" and, as regards the outpatient services, that such services are exempt from review. In this regard, they point to the provisions of Section 381.706(1), Florida Statutes, which provides; . . . all health-care-related projects, as described in paragraphs (a)-(n), shall be subject to review and shall file an application for a certificate of need with the department . . . (c) A capital expenditure of $1 million or more by or on behalf of a health care facility . . . for a purpose directly related to the furnishing of health services at such facility; provided that a Certificate of Need shall not be required for an expenditure to provide an outpatient health service . . . (Emphasis added) They also point to the provision of Section 381.702, Florida Statutes, which contains the following definitions: (7) "Health care facility" means a hospital. . . . (12) "Hospital" means a health care facility licensed under chapter 395. Based on these statutory provisions, First Hospital and the Department conclude that the residential treatment unit and the outpatient services are not CON reviewable because First Hospital is not yet licensed or the outpatient services are exempt. While the logic of First Hospital's and the Department's conclusion seems questionable where, as here, the projects are proposed to be integrated and constructed simultaneously, the Department's reading of the statute comports with its literal reading and is accepted. However, although the residential treatment unit and outpatient services may not be subject to CON review does not suggest that their financial feasibility is not relevant to this proceeding. To the contrary, their financial feasibility is critical if First Hospital's 60/40 methodology is to be considered rational. Here, the 48-bed psychiatric facility proposed by First Hospital is comprised of two 24-bed units and a core unit that provides all necessary support functions, including administrative, therapy, kitchen and dining, gymnasium and classroom areas, for those units. That core area, of 25,000 square feet, is an essential part of the proposed psychiatric hospital; without it there would be no psychiatric hospital, and at a lesser square footage the project would be lacking sufficient space to provide necessary services. When licensed by the Department, the two 24-bed units and the core area will be licensed as a psychiatric hospital. Notwithstanding, the fact that the 25,000 square foot support area is an integral and essential part of the proposed hospital, the Department chose to ignore 40 percent of its costs and expenses in assessing the financial feasibility of the project. The basis for the Department's action was its conclusion that the non-CON reviewable residential treatment unit comprised 40 percent of the overall population of the entire facility (80-beds overall), and that since it would share the core area, 40 percent of the costs of constructing that area, as well as subsequent operating expenses, were not pertinent to an evaluation of the proposed hospital. Here, the Department's reasoning and its conclusion, be they incipient policy, do not have evidentiary support. The psychiatric hospital proposed by First Hospital is, as heretofore noted, the two 24-bed units and the core area. This is the only portion of the project over which the Department has control, and necessarily the only portion that it can assure will be built as proposed; it has no control over whether the residential treatment unit will ever be built or be built as proposed. Therefore, since the core unit is an essential part of the psychiatric hospital, and the residential treatment unit is exempt from CON review, an assessment of the subject application must consider the cost of the entire core area as part of the project under review. While economies of scale permit utilization of the core unit by the residential treatment unit without additional space, this does not detract from the conclusion that the cost of the core is a cost of the hospital. Rather, such excess capacity is fortuitous for First Hospital, and may permit it to spread the expenses of its operation over a larger population base if the residential treatment unit is built. However, to reasonably assess whether those expenses of operation can be spread to or supported by the residential treatment unit to any extent, much less 40 percent, requires an analysis of the financial feasibility of those services. Here, First Hospital offered no proof of the financial feasibility of the residential treatment unit, and there is no rational basis on which any allocation of operating expenses for the core area can be demonstrated to be supportable by it. Accordingly, to assess the financial feasibility of the proposed psychiatric hospital it is necessary to attribute the cost of the core area to the proposed project, as well as the costs of carrying and operating that part of the proposed hospital. 15/ The immediate and long-term financial feasibility of the proposal To assess the financial feasibility of the proposed project, First Hospital's pro forma assumes that it will achieve 8,956 patient days in its first year of operation and 13,193 patient days in its second year of operation, with a per diem patient charge of $500 in year one and $525 in year two, and that it will thereby achieve a gross revenue of $4,478,000 in its first year of operation and a gross revenue of $6,926,325 in its second year of operation. While the proposed patient charges are reasonable, First Hospital's occupancy projections are not supported by persuasive proof and, therefore, it has failed to demonstrate what revenues it could reasonably expect to generate. A facility's projected patient days are typically a product of an informed analysis of projected admissions and projected average length of stay. Here, First Hospital undertook no such analysis, but simply assumed a number of patient days, without any rational predicate in an effort to demonstrate financial feasibility. Notably, there is a clear trend toward shorter lengths of stay in psychiatric hospitals, which was even recognized by First Hospital's Dr. Dozoretz who reasonably expected an average length of stay at the proposed facility of 30 to 40 days. However, First Hospital assumed in its pro forma an average length of stay ranging from 45 to 60 days. Such assumption could not have been the basis for any considered analysis of utilization since it is excessive, as well as too imprecise. Moreover, in testing the reasonableness of a utilization projection, it is also important to consider physician support, the extent of waiting lists, community support, the extent of competition, and the depth of local needs assessment. Here, there is no persuasive proof that First Hospital enjoys any support from local physicians, that there are any waiting lists, that the market is not competitive, that there is any community support for the project, or that it undertook any reasonable assessment of local need. In addition to its failure to demonstrate what utilization level it could reasonably achieve in its first two years of operation, and therefore establish a reasonable estimate of its gross revenue, First Hospital's pro forma also, significantly underestimated building depreciation, equipment depreciation, and interest expense because of its failure to adequately address construction and equipment costs, discussed supra. Had First Hospital properly assessed such costs, by subsuming the psychiatric hospital to include 100 percent of the psychiatric wings and core area, it would have calculated building depreciation at $176,230 per annum, equipment depreciation at $72,600 per annum, and interest at $750,360 per annum. At these rates, assuming the validity of First Hospital's projection of gross revenue, the facility's projected loss in year one would increase from $115,629 to $529,848, and its projected profit in year two of $442,184 would be reduced to $27,965. 16/ As well as underestimating the foregoing expenses, First Hospital's pro forma also significantly underestimates a number of other expenses, including deductions from gross revenue, supplies and other expenses, and the indigent care tax assessment. In this regard, the proof demonstrates that First Hospital underestimated its deductions from revenue by $367,000 in year one and $214,000 in year two; underestimated its supplies and other expenses in year one by at least $645,000, and in year two by at least $561,000; and omitted the indigent care tax assessment of $56,000 in year one and $75,000 in year two. Considering these additional adjustments, First Hospital's project, even assuming its gross revenue projections are reasonable, is not financially feasible in either the short-term or long-term. 17/ The criteria on balance In evaluating the application at issue in this proceeding, none of the criteria established by Section 381.705, Florida Statutes, or Rule 10- 5.011(1)(o), Florida Administrative Code, has been overlooked. First Hospital's failure to demonstrate the financial feasibility of its proposal is, however, dispositive of its application, and such failure is not outweighed by any other, or combination of any other, criteria.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: As to Case NO. 89-1415, that a final order be entered denying First Hospital's application for Certificate of Need. As to Case NO. 89-1438, that a final order be entered dismissing Humana's petition for formal hearing. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 23rd day of May 1990. 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 May 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 =================================================================
The Issue Whether the certificate of need application to convert 30 acute care beds to 30 adult psychiatric beds at Broward General Medical Center meets the statutory and rule criteria for approval.
Findings Of Fact The North Broward Hospital District (NBHD) is a special taxing district established by the Florida Legislature in 1951 to provide health care services to residents of the northern two-thirds of Broward County. NBHD owns and operates four acute care hospitals: Coral Springs Medical Center, North Broward Medical Center, Imperial Point Medical Center (Imperial Point), and Broward General Medical Center (Broward General). NBHD also owns and/or operates primary care clinics, school clinics, urgent care centers, and a home health agency. FMC Hospital, Ltd., d/b/a Florida Medical Center (FMC) is a 459-bed hospital with 74 inpatient psychiatric beds, 51 for adults separated into a 25-bed adult unit and a 26-bed geriatric psychiatric unit, and 23 child/adolescent psychiatric beds. FMC is a public Baker Act receiving facility for children and adolescents and operates a mental health crisis stabilization unit (CSU) for children and adolescents. FMC also operates separately located facilities which include a partial hospitalization program, an adult day treatment program, and a community mental health center. At Florida Medical Center South, FMC operates another day treatment program and partial hospitalization program. The Agency for Health Care Administration (AHCA) is the state agency which administers the certificate of need (CON) program for health care services and facilities in Florida. The NBHD applied for CON Number 8425 to convert 30 acute care beds to 30 adult psychiatric beds at Broward General. Broward General operates approximately 550 of its total 744 licensed beds. It is a state Level II adult and pediatric trauma center and the tertiary referral center for the NBHD, offering Level II and III neonatal intensive care, pediatric intensive care, cardiac catheterization and open heart surgery services. Broward General has 68 adult psychiatric beds and is a public Baker Act receiving facility for adults. Public Baker Act receiving facilities have state contracts and receive state funds to hold involuntarily committed mental patients, regardless of their ability to pay, for psychiatric evaluation and short-term treatment. See Subsections 394.455(25) and (26), Florida Statutes. Although they serve different age groups, both FMC and Broward General are, by virtue of contracts with the state, public Baker Act facilities. When a Baker Act patient who is an indigent child or adolescent arrives at Broward General, the patient is transferred to FMC. FMC also typically transfers indigent Baker Act adults to Broward General. At Broward General, psychiatric patients are screened in a separate section of the emergency room by a staff which has significant experience with indigent mental health patients. If hospitalization is appropriate, depending on the patient's physical and mental condition, inpatient psychiatric services are provided in either a 38-bed unit on the sixth floor or a 30- bed unit on the fourth floor of Broward General. In July 1995, Broward General also started operating a 20-bed mental health CSU located on Northwest 19th Street in Fort Lauderdale. Prior to 1995, the County operated the 19th Street CSU and 60 CSU beds on the grounds of the South Florida State Hospital (SFSH), a state mental hospital. Following an investigation of mental health services in the County, a grand jury recommended closing the 60 CSU beds at SFSH because of "deplorable conditions." In addition, the grand jury recommended that the County transfer CSU operations to the NBHD and the South Broward Hospital District (SBHD). As a result, the SBHD assumed the responsibility for up to 20 CSU inpatients a day within its existing 100 adult psychiatric beds at Memorial Regional Hospital. The NBHD assumed the responsibility for up to 40 CSU inpatients a day, including 20 at the 19th Street location. The additional 20 were to be redirected to either the 68 adult psychiatric beds at Broward General or the 47 adult psychiatric beds at Imperial Point. CSU services for adult Medicaid and indigent patients in the NBHD service area were transferred pursuant to contracts between the NBHD and Broward County, and the NBHD and the State of Florida, Department of Children and Family Services (formerly, the Department of Health and Rehabilitative Services). Based on the agreements, the County leases the 19th Street building in which Broward General operates the CSU. The County also pays a flat rate of $1.6 million a year in monthly installments for the salaries of the staff which was transferred from the County mental health division to the NBHD. The County's contract with the NBHD lasts for five years, from December 1995 to September 2000. Either party may terminate the contract, without cause, upon 30 days notice. The State contract, unlike that of Broward County, does not provide a flat rate, but sets a per diem reimbursement rate of approximately $260 per patient per day offset by projected Medicaid revenues. The State contract is renewable annually, but last expired on June 30, 1997. The contract was being re-negotiated at the time of the hearing in November 1997. Based on actual experience with declining average lengths of stay for psychiatric inpatients, the contract was being re-negotiated to fund an average of 30, not a maximum of 40 patients a day. If CON 8425 is approved, NBHD intends to use the additional 30 adult psychiatric beds at Broward General to meet the requirements of the State and County contracts, while closing the 19th Street CSU and consolidating mental health screening and stabilization services at Broward General. NBHD proposes to condition the CON on the provision of 70 percent charity and 30 percent Medicaid patient days in the 30 new beds. By comparison, the condition applicable to the existing 68 beds requires the provision of 3 percent charity and 25 percent Medicaid. When averaged for a total of 98 beds, the overall condition would be 23.5 percent charity and 26.5 percent Medicaid, or a total of 51 or 52 percent. The proposed project will require the renovation of 10,297 gross square feet on the fourth floor of Broward General at a cost of approximately $450,000. The space is currently an unused section of Broward General which contains 42 medical/surgical beds. Twelve beds will be relocated to other areas of the hospital. The renovated space will include seclusion, group therapy, and social rooms, as well as 15 semi- private rooms. Twelve of the rooms will not have separate bathing/showering facilities, and seven of those will also not have toilets within the patients' rooms. Need in Relation to State and District Health Plans - Subsection 408.035(1)(a), Florida Statutes The District 10 allocation factors include a requirement that a CON applicant demonstrate continuously high levels of utilization. The applicant is given the following evidentiary guidelines: patients are routinely waiting for admissions to inpatient units; the facility provides significant services to indigent and Medicaid individuals; the facility arranges transfer for patients to other appropriate facilities; and the facility provides other medical services, if needed. Broward General does not demonstrate continuously high utilization by having patients routinely waiting for admission. Broward General does meet the other criteria required by allocation factor one. The second District 10 allocation factor, like criterion (b) of the first, favors an applicant who commits to serving State funded and indigent patients. Broward General is a disproportionate share Medicaid provider with a history of providing, and commitment to continue providing, significant services to Medicaid and indigent patients. In fact, the NBHD provides over 50 percent of both indigent and Medicaid services in District 10. See also Subsection 408.035(1)(n), Florida Statutes. Allocation factor three for substance abuse facilities is inapplicable to Broward General which does not have substance abuse inpatient services. Allocation factor 4 for an applicant with a full continuum of acute medical services is met by Broward General. See also Rule 59C-1.040(3)(h), Florida Administrative Code. Broward General complies with allocation factor 5 by participating in data collection activities of the regional health planning council. The state health plan includes preferences for (1) converting excess acute care beds; (2) serving the most seriously mentally ill patients; (3) serving indigent and Baker Act patients; (4) proposing to establish a continuum of mental health care; (5) serving Medicaid-eligible patients; and (6) providing a disproportionate share of Medicaid and charity care. Broward General meets the six state health plan preferences. See also Rule 59C-1.040(4)(e)2., Florida Administrative Code, and Subsection 408.035(1)(n), Florida Statutes. Broward General does not meet the preference for acute care hospitals if fewer than .15 psychiatric beds per 1000 people in the District are located in acute care hospitals. The current ratio in the District is .19 beds per 1,000 people. Rule 59C-1.040(4)(3)3, Florida Administrative Code, also requires that 40 percent of the psychiatric beds needed in a district should be allocated to general hospitals. Currently, approximately 51 percent, 266 of 517 licensed District 10 adult inpatient psychiatric beds are located in general acute care hospitals. On balance, the NBHD and Broward General meet the factors and preferences of the health plans which support the approval of the CON application. See also Rule 59C- 1.040(4)(e)1. and Rule 59C-1.030, Florida Administrative Code. Numeric Need The parties stipulated that the published fixed need pool indicated no numeric need for additional adult inpatient psychiatric hospital beds. In fact, the numeric need calculation shows a need for 434 beds in District 10, which has 517 beds, or 83 more than the projected numeric need. In 1994- 1995, the District utilization rate was approximately 58 percent. The NBHD asserts that the need arises from "not normal" circumstances, specifically certain benefits from closing the 19th Street CSU, especially the provision of better consolidated care in hospital-based psychiatric beds, and the establishment of a County mental health court. The NBHD acknowledges that AHCA does not regulate CSU beds through the CON program and that CSU beds are not intended to be included in the calculation of numeric need for adult psychiatric beds. However, due to the substantial similarity of services provided, NBHD contends that CSU beds are de facto inpatient psychiatric beds which affect the need for CON- regulated psychiatric beds. Therefore, according to the NBHD, the elimination of beds at SFSH and at the 19th Street CSU require an increase in the supply of adult psychiatric beds. The NBHD also notes that approval of its CON application will increase the total number of adult psychiatric hospital beds in Broward County, but will not affect the total number of adult mental health beds when CSU and adult psychiatric beds are combined. After the CSU beds at SFSH closed, the total number of adult mental health beds in the County has, in fact, been reduced. NBHD projected a need to add 30 adult psychiatric beds at Broward General by combining the 1995 average daily census (ADC) of 48 patients with its assumption that it can add up to 10, increasing the ADC to 58 patients a day in the existing 68 beds. Based on its contractual obligation to care for up to 40 CSU inpatients a day, the NBHD projects a need for an additional 30 beds. The projection assumed that the level of utilization of adult inpatient psychiatric services at Broward General would remain relatively constant. With 40 occupied beds added to the 48 ADC, NBHD predicted an ADC of 88 in the new total of 98 beds, or 90 percent occupancy. The assumption that the ADC would remain fairly constant is generally supported by the actual experience with ADCs of 48.1, 51.5, and 45.8 patients, respectively, in 1995, 1996, and the first seven months of 1997. NBHD's second assumption, that an ADC of 40 CSU patients will be added is not supported by the actual experience. Based on the terms of the State and County contracts, up to 20 CSU patients have already been absorbed into the existing beds at the Imperial Point or Broward General, which is one explanation for the temporary increase in ADC in 1996, while up to 20 more may receive services at the 19th Street location. In 1996 and 1997, the ADC in the 19th Street CSU beds was 15.3 and 14.2, respectively, with monthly ranges in 1997 from a high of 17 in April to a low of 12 in June. The relatively constant annual ADCs in psychiatric and CSU beds are a reflection of increasing admissions but declining average lengths of stay for psychiatric services. The NBHD also projects that it will receive referrals from the Broward County Mental Health Court, established in June 1997. The Court is intended to divert mentally ill defendants with minor criminal charges from the criminal justice system to the mental health system. Actual experience for only three months of operations showed 7 or 8 admissions a month with widely varying average lengths of stay, from 6 to 95 days. The effect of court referrals on the ADC at Broward General was statistically insignificant into the fall of 1997. Newspaper reports of the number of inmates with serious mental illnesses do not provide a reliable basis for projecting the effect of the mental health court on psychiatric admissions to Broward General, since it is not equipped to handle violent felons. One of Broward General's experts also compared national hospital discharge data to that of Broward County. The results indicate a lower use rate in Broward County in 1995 and a higher one in 1996. That finding was consistent with the expert's finding of a growth in admissions and bed turnover rate which measures the demand for each bed. The expert also considered the prevalence of mental illness and hospitalization rates. The data reflecting expected increases in admissions, however, was not compared to available capacity in the County nor correlated with declining lengths of stay. The District X: Comprehensive Health Plan 1994 includes an estimate of the need for 10 CSU beds per 100,000 people, or a total of 133 CSU beds needed for the District. FMC argues that the calculation is incorrect because only the adult population should be included. Using only adults, FMC determined that 116 CSU beds are needed which, when added to 434 adult psychiatric beds needed in the February 1996 projection, gives a bed need for all mental health beds of 550. That total is less than the actual combined total number of 567 mental health beds, 517 adult psychiatric beds plus 50 CSU beds in 1995. Whatever population group is appropriate, the projection of the need for CSU beds is not reliable based on the evidence that, since the end of 1995, CSU services have been and, according to NBHD, should continue to be absorbed into hospital- based adult psychiatric units. For the same reason, the increase in adult psychiatric bed admissions from 1995 to 1996 does not establish a trend towards increasing psychiatric utilization, but is more likely attributable to the closing of CSU beds at SFSH. FMC's expert's comparison of data from three selected months in two successive years is also not sufficient to establish a downward trend in utilization at the 19th Street CSU, neither is the evidence of a decline in ADC by one patient in one year. Utilization is relatively static based on ADCs in existing Broward County adult psychiatric beds and in CSU beds. FMC established Broward General's potential to decrease average lengths of stay by developing alternative non-inpatient services as FMC has done and Broward General proposes to do. See Finding of Fact 37. Based on local health council reports, FMC's data reflects a rise in the ADC at Broward General to 52.7 in 1996, and a return to 46 in the first seven months of 1997. Using a 14.2 ADC for the 19th Street CSU, FMC projects that Broward General will reach an ADC of approximately 60 in the first year of operations if the CON is approved, not 88 as projected. Broward General acknowledged its capacity to add 10 more patients to the ADC without stress on the system. Having already absorbed 20 of up to 40 CSU patients at Imperial Point and Broward General in 1996 and 1997 resulting in an ADC of 48, and given the capacity to absorb 10 more, the NBHD has demonstrated a need to accommodate an ADC of 10 more adult psychiatric patients at Broward General, or a total ADC of 68 patients. The need to add capacity to accommodate an additional 10 patient ADC was not shown to equate to a need for 30 additional beds, which would result in an ADC of 68 patients in 98 beds, or 69 or 70 percent occupancy. Special Circumstances - Rule 59C-1.040(4)(d) The psychiatric bed rule provides for approval of additional beds in the absence of fixed numeric need. The "special circumstance" provision applies to a facility with an existing unit with 85 percent or greater occupancy. During the applicable period, the occupancy at Broward General was 74.15 percent. However, occupancy rates have exceeded 95 percent in the CSU beds on 19th Street. If up to 20 patients on 19th Street are added to the 48 ADC at Broward General, the result is that the existing 68 beds will be full. A full unit is operationally not efficient or desirable and allows no response to fluctuations in demand. Therefore, the state has established a desirable standard of 75 percent occupancy for psychiatric units, a range which supports the addition of 10 to 15 psychiatric beds at Broward General. Available Alternatives - Subsection 408.035(1)(b) and (d), Florida Statutes, and Rule 59C-1.040(4)(e)4., Florida Administrative Code The psychiatric bed rule provides that additional beds will "not normally" be added if the district occupancy rate is below 75 percent. For the twelve months preceding the application filing, the occupancy rate in 517 adult psychiatric beds in District 10 was approximately 58 percent. FMC's expert noted that each day an average of 200 adult psychiatric beds were available in District 10. Broward General argues that the occupancy rate is misleading. Five of the nine facilities with psychiatric beds are freestanding, private facilities, which are ineligible for Medicaid participation. Historically, the freestanding hospitals have also provided little charity care. One facility, University Pavilion, is full. Of the four acute care hospitals with adult psychiatric beds, Memorial Hospital in the SBHD, is not available to patients in the NBHD service area. Imperial Point, the only other NBHD facility with adult psychiatric beds, is not available based on its occupancy rate for the first seven months of 1997 of approximately 81 percent, which left an average of 9 available beds in a relatively small 47-bed unit. That leaves only Broward General and FMC to care for Medicaid and indigent adult psychiatric patients. FMC is the only possible alternative provider of services, but Broward General was recommended by the grand jury and was the only contract applicant. The occupancy rate in FMC's 51 adult beds was approximately 80 percent in 1995, 73 percent in 1996, and 77 percent for the first seven months in 1997. FMC has reduced average lengths of stay by having patients "step down" to partial hospitalization, day treatment and other outpatient services of varying intensities. The same decline in average lengths of stay is reasonably expected when Broward General implements these alternatives. Adult psychiatric services are also accessible in District 10 applying the psychiatric bed rule access standard. That is, ninety percent of the population of District 10 has access to the service within a maximum driving time of forty- five minutes. The CSU license cannot be transferred to Broward General. Broward County holds the license for CSU beds which, by rule, must be located on the first floor of a building. Although Broward General may not legally hold the CSU license and provide CSU services on the fourth floor of the hospital, there is no apparent legal impediment to providing CSU services in psychiatric beds. Quality of Care - Subsection 408.035(1)(c), Florida Statutes and Rule 1.040(7), Florida Administrative Code Broward General is accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties stipulated that Broward General has a history of providing quality care. Broward General provides the services required by Rule 59C-1.040(3)(h), Florida Administrative Code. Services Not Accessible in Adjoining Areas; Research and Educational Facilities; Needs of HMOs; Services Provided to Individuals Beyond the District; Subsections 408.035(1)(f),(g),(j), and (k), Florida Statutes Broward General does not propose to provide services which are inaccessible in adjoining areas nor will it provide services to non-residents of the district. Broward General is not one of the six statutory teaching hospitals nor a health maintenance organization (HMO). Therefore, those criteria are of no value in determining whether this application should be approved. Economics and Improvements in Service from Joint Operation - Subsection 408.035(1)(e), Florida Statutes The consolidation of the psychiatric services at Broward General is reasonably expected to result in economies and improvements in the provision of coordinated services to the mentally ill indigent and Medicaid population. Broward General will eliminate the cost of meal deliveries and the transfer of medically ill patients, but that potential cost-saving was not quantified by Broward General. Staff and Other Resources - Subsection 408.035(1)(h), Florida Statutes The parties stipulated that NBHD has available the necessary resources, including health manpower, management personnel, and funds to implement the project. Financially Feasibility - Subsection 408.035(1)(h) and (i), Florida Statutes The parties stipulated that the proposed project is financially feasible in the immediate term. The estimated total project cost is $451,791, but NBHD has $500,000 in funds for capital improvements available from the County and $700,000 from the Florida Legislature. As stipulated by the parties, NBHD has sufficient cash on hand to fund the project. Regardless of the census, the County's contractual obligation to the NBHD remains fixed at $1.6 million. The State contract requires the prospective payment of costs offset by expected Medicaid dollars. If the number of Medicaid eligible patients decreases, then state funding increases proportionately. The state assumed that 20 percent of the patients would qualify for Medicaid, therefore it reimburses the per diem cost of care for 80 percent of the patients. One audit indicated that 30 percent of the patients qualified for Medicaid, so that State payments for that year were higher than needed. The State contract apparently makes no provision to recover excess payments. The application projects a net profit of $740,789 for the first year of operations, and a net profit of $664,489 for the second year. If the State contract with NBHD is renewed to contemplate an average of 30 patients per day as opposed to up to 40 patients per day, then annual revenue could be reduced up to $400,000. Projected net profit will, nevertheless, exceed expenses when variable expenses are reduced correspondingly. If 20 state funded patients are already in psychiatric beds, and 20 more could be transferred from 19th Street, the result is an ADC of 68. Based on the funding arrangements, there is no evidence that the operation of a total of 98 beds could not be profitable, even with an ADC of 68, although it would be wasteful to have 30 extra beds. Impact on Competition, Quality Assurance and Cost-Effectiveness - Subsection 408.035(1)(l), Florida Statutes With a maximum of 68 inpatients or more realistically, under the expected terms of a renegotiated State contract, 58 to 60 inpatients in 98 beds, Broward General will reasonably attempt to expand the demand for its inpatient psychiatric services. Within the NBHD's legal service area, one-third of adult psychiatric patients not admitted to Broward General are admitted to FMC. Assuming a proportionate impact on competitors, FMC's expert projected that one-third of approximately 30 unfilled beds at Broward General will be filled by patients who would otherwise have gone to FMC. The projection of a loss of 9 patients from the ADC of FMC is reasonably based on an analysis showing comparable patient severity in the most prevalent diagnostic category. Given the blended payor commitment of approximately 51 or 52 percent total for Medicaid and charity in 98 beds, Broward General will be able to take patients from every payor category accepted at FMC. The loss of 9 patients from its ADC can reduce revenues by $568,967 at FMC. The impact analysis is reasonably based on lost patient days since most payers use a per diem basis for compensating FMC. For example, although Medicare reimbursement is usually based on diagnosis regardless of length of stay, it is cost-based for the geriatric psychiatric unit. Net profit at FMC, for the year 1996-1997, was expected to be approximately $4.5 million. FMC will also experience increased costs in transporting indigent patients from FMC to Broward General for admission and treatment. Because of the additional distance, the cost to transfer indigent patients is $20 more per patient from FMC to Broward General than it is from FMC to the 19th Street CSU. FMC typically stabilizes indigent adult psychiatric inpatients, then transfers them to either the 19th Street CSU or Broward General. From March through September of 1997, FMC transported approximately 256 indigent patients from FMC to the 19th Street CSU. In terms of quality assurance, the consolidation of psychiatric services at Broward General will allow all patients better access to the full range of medical services available at Broward General. The NBHD's operation of the 19th Street CSU is profitable. Approval of the CON application should reasonably eliminate all costs associated with operation of the 19th Street facility, and shift more revenues from the State and County contracts to Broward General. Some savings are reasonably expected from not having meal deliveries to 19th Street or patient transfers for medical care. The NBHD did not quantify any expected savings. Costs and Methods of Construction - Subsection 408.035(1)(m), Florida Statutes Broward General will relocate 12 of 42 medical/surgical beds and convert 30 medical/surgical beds to 30 adult psychiatric beds on one wing of the fourth floor, which is currently unused. Fifteen semi-private medical/surgical patient rooms will be converted into semi-private adult psychiatric rooms. Existing wards will be converted to two social rooms, one noisy and one quiet. With the removal of the walls of some offices, the architect designed a group therapy room. An existing semi-private room will be used as a seclusion room. Of the fifteen semi-private rooms, twelve will not have bathing or showering facilities and seven will not have toilets within the patients' rooms. At the time the hospital was constructed, the state required only a lavatory/sink in each patient room. AHCA's architect agreed to allow Broward General to plan to use central bathing and toilet facilities to avoid additional costs and diminished patient room sizes. Because the plan intentionally avoids construction in the toilets, except to enlarge one to include a shower, there is no requirement to upgrade to Americans With Disabilities Act (ADA) standards. Therefore, the $23,280 construction cost contingency for code compliance is adequate. Although the projected construction costs are reasonable and the applicable architectural code requirements are met, the design is not the most desirable in terms of current standards. Patient privacy is compromised by the lack of toilets for each patient room. Past and Proposed Provision of Services to Promote a Continuum of Care in a Multi-level System - Subsection 408.035(1)(o), Florida Statutes Broward General is a tertiary acute care facility which provides a broad continuum of care. Because it already operates the CSU and provides CSU services in adult psychiatric beds, the proposal to relocate patients maintains but does not further promote that continuum of care. Broward General's plan to establish more alternatives to inpatient psychiatric care does promote and enhance its continuum of care. Capital Expenditures for New Inpatient Services - Subsection 408.035(2), Florida Statutes Broward General is not proposing to establish a new health service for inpatients, rather it is seeking to relocate an existing service without new construction. The criteria in this Subsection are inapplicable. Factual Conclusions Broward General did not establish a "not normal" circumstance based on the grand jury's findings and recommendations. The grand jury did not recommend closing 19th Street facility. Broward General did generally establish not normal circumstances based on the desirability of consolidating mental health services at Broward General to provide a single point of entry and to improve the quality of care for the 19th Street facility patients. Broward General failed to establish the need to add 30 beds to accomplish the objective of closing the 19th Street facility. Although the existing beds at Broward General may reasonably be expected to be full as a result of the transfer of 19th Street patients, the addition of 30 beds without sufficient demand results in an occupancy rate of 69 or 70 percent, from an ADC of 68 patients in 98 beds. Broward General has requested approximately twice as many beds as it demonstrated it needs. Broward General's CON application on balance satisfies the local and state health plan preferences. In general, FMC is the only alternative facility in terms of available beds, but is not the tax-supported public facility which the grand jury favored to coordinate mental health services. Broward General meets the statutory criteria for quality of care, improvements from joint operations, financial feasibility, quality assurance, cost-effectiveness, and services to Medicaid and indigent patients. The proposal is not the most desirable architecturally considering current standards. More importantly, Broward General did not demonstrate that it can achieve its projected occupancy without an adverse impact on FMC. The NBHD proposal will add too many beds to meet the targeted state occupancy levels in relatively a static market. Broward General's application does not include a partial request for fewer additional beds which would have allowed the closing of 19th Street, while maintaining some empty beds for demand fluctuations and avoiding an adverse impact on FMC.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration deny the application of the North Broward Hospital District for Certificate of Need Number 8425 to convert 30 medical/surgical beds to 30 adult psychiatric beds at Broward General Medical Center. DONE AND ENTERED this 21st day of April, 1998, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER 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 Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1998. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul J. Martin, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul Vazquez, Esquire Agency For Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: In November of 1983, HMA filed its application for a Certificate of Need to construct and operate a 60-bed adolescent treatment center in Orlando, Florida. An omissions response was filed by HMA in January of 1984. Thereafter, HRS issued its initial intent to grant the application and PIO requested an administrative hearing. HMA is a privately held corporation which owns or manages twelve or thirteen acute care hospitals in the States of Kentucky, West Virginia, Pennsylvania, Missouri, Texas and Florida, several of which are psychiatric hospitals. The proposed long-term psychiatric treatment facility for adolescents is patterned after a 55-bed program currently operated by HMA in Arlington, Texas. The proposed facility will be a freestanding campus-like setting located on ten to fifteen acres of land in the southern portion of Orlando. The precise site has not yet been selected. The single-story facility will have a total size of approximately 45,000 to 50,000 square feet and will be divided into two separate units which connect into a core area containing various support services, such as offices, a gymnasium, a swimming pool, a media center, and an occupational therapy area. While the location finally selected for the facility will have a bearing on the site costs of the project, the estimated construction costs of approximately 3.1 billion do contain a contingency factor and are reasonable at this stage of the project. Each unit will be served by two interdisciplinary treatment teams headed by a physician or a psychiatrist. Key personnel for the facility, such as department heads and program directors, will most likely be recruited from outside the Orlando area in order to obtain persons with experience in long-term care for adolescents. The treatment program is designed to serve adolescents between the ages of 10 and 19, though the bulk of patients will be middle school and high school individuals between the ages of 13 and 17. While the primary service area will be adolescents in District 7, the remainder of the central Florida region is identified as a secondary service area. A full educational program at the facility is proposed. The concept of the hospital will be to treat the whole person, not just his psychiatric problems, and the treatment program will include and involve family members and other factors which may have a bearing on the adolescent's ability to fit into society. The form of treatment is based upon a "levels" approach -- a form of behavior modification wherein privileges are granted for appropriate behavior and the patient is allowed to move up to the next succeeding level of privileges. It is contemplated that the average length of stay for a patient will be approximately six months -- the average time anticipated for a patient to move from the admission level to the level of discharge. HMA intends to seek accreditation of its proposed facility from the Joint Commission on Accreditation of Hospitals. The total estimated project cost for the proposed facility is $6,307,310.00. Financing is to be obtained either through a local bond issue or by a private lending institution. Based upon an evaluation of HMA's audit reports for the past three years, an expert in bond financing of health care facilities was of the opinion that HMA would be eligible either for a private placement or a bond issue to finance the proposed project. HMA intends to charge patients $325.00 per day, and projects an occupancy rate of 80 percent at the end of its second year of operation. This projection is based upon a lack of similar long-term psychiatric facilities for adolescents in the area, the anticipated, experience at the Arlington, Texas adolescent facility and the anticipated serving of clients from CYF (Children Youth and Families -- a state program which; serves adolescents with psychiatric and mental problems). Although no established indigent care policy is now in existence, HMA estimates that its indigency caseload will be between 3 and 5 percent. It is anticipated that the proposed facility will become a contract provider for CYF for the care and treatment of their clients and that this will comprise 20 percent of HMA's patient population. HRS's Rule 10-5.11(26), Florida Administrative Code, relating to long- term psychiatric beds, does not specify a numerical methodology for quantifying bed need. However, the Graduate Medical Education National Advisory Committee (GMFNAC) methodology for determining the need for these beds is generally accepted among health care planners. The GMENAC study was initially performed in order to assess the need for psychiatrists in the year 1990. It is a "needs- based" methodology, as opposed to a "demand-based" methodology, and attempts to predict the number of patients who will theoretically need a particular service, as opposed to the number who will actually utilize or demand such a service. Particularly with child and adolescent individuals who may need psychiatric hospitalization, there are many reasons why they will not seek or obtain such care. Barriers which prevent individuals from seeking psychiatric care include social stigma, the cost of care, concerns about the effectiveness of care, the availability of services and facilities and other problems within the family. Thus, some form of "demand adjustment" is necessary to compensate for the GMENAC formula's overstatement of the need for beds. The GMENAC formula calculates gross bed need by utilizing the following factors: a specific geographic area's population base for a given age group, a prevalency rate in certain diagnostic categories, an appropriate length of stay and an appropriate occupancy factor. In reaching their conclusions regarding the number of long-term adolescent psychiatric beds needed in District 7, the experts presented by HMA and PIO each utilized the GMENAC formula and each utilized the same prevalency rate for that component of the formula. Each appropriately used a five-year planning horizon. However, each expert reached a different result due to a different opinion as to the appropriate age group to be considered, the appropriate length of stay, the appropriate occupancy factor and the factoring in of a "demand adjustment." In calculating the long-term adolescent psychiatric bed need for District 7 in the year 1989, HMA's expert used a population base of ages 0 to 17, lengths of stay of 150 and 180 days, an occupancy level of 80 percent and an admissions factor of 96 percent. Utilizing those figures, the calculation demonstrates a 1989 need for 158 beds if the average length of stay is 150 days, and 189 beds if the average length of stay is 180 days. If the population base is limited to the 10 to 19 age bracket, the need for long-term psychiatric beds is reduced to between 70 and 90, depending upon the length of stay. From these calculations, HMA's expert concludes that there is a significant unmet need for long-term adolescent psychiatric beds in District 7. This expert recognizes that the numbers derived from the GMENAC formula simply depict a statistical representation or indication of need. In order to derive a more exact number of beds which will actually be utilized in an area, one would wish to consider historical utilization in the area and/or perform community surveys and examine other site-specific needs assessment data. Believing that no similar services or facilities exist in the area, HMA's need expert concluded that there is a need for a 60-bed facility in District 7. In applying the GMENAC methodology, PIO's need expert felt it appropriate to utilize a base population of ages 10 through 17, an average length of stay of 90 days and an occupancy rate of 90 percent. Her calculations resulted in a bed need of 37 for the year 1990. Utilizing a length of stay of 120, 150 and 180 days and a 90 percent occupancy rate, a need of 50, 62 and 75 beds is derived. If an occupancy rate of 80 percent is utilized, as well as a population of ages 10 - 17, the need for beds is 42, 56, 70 and 84, respectively, for a 90, 120, 150 and 180 day average length of stay. The need expert for PIO would adjust each of these bed need numbers by 50 percent in order to account for the barriers which affect the actual demand for such beds. Since the HMA proposed facility intends to provide service only to those patients between the ages of 10 and 19, use of the 0 - 17 population would inflate the need for long-term adolescent psychiatric beds. Likewise, PIO's non-inclusion of 18 and 19 year olds understates the need. PIO's use of a 90-day average length of stay would tend to understate the actual need in light of HMA's proposed treatment program which is intended to last approximately six months. While some demand adjustment is required to properly reflect the barriers which exist to the seeking of long-term adolescent psychiatric care, the rationale of reducing by one-half the number derived from the GMENAC methodology was not sufficiently supported or justified. Even if HMA's calculations were reduced by one-half, a figure of between 79 and 94 beds would be derived. The existence of other long-term adolescent psychiatric beds in District 7 was the subject of conflicting evidence. West Lake Hospital in Longwood, Seminole County, holds a Certificate of Need and a license as a special Psychiatric hospital with 80 long-term beds. However, the Certificate of Need was issued prior to the adoption of Rules 10-5.11(25) and (26), Florida Administrative Code, when anything in excess of 28-days was considered long- term. The West Lake application for a Certificate of Need referred to a four- to-six week length of stay -- or a 28 to 42 day period --for adults, and a ten week, or 70 day length of stay for children and adolescents. In preparing inventories for planning purposes, HRS considers the 40 child and adolescent psychiatric beds at West Lake Hospital to be acute or short-term beds. The West Lake facility is not included in HRS's official inventory of licensed and approved long-term care beds as of October 1, 1984. In fact, the only long-term care beds listed for District 7, in addition to HMA's proposed psychiatric facility, are beds devoted to the treatment of substance abuse. PI0 is the holder of a Certificate of Need to construct and operate a 60-bed short-term adolescent psychiatric hospital in Southwest Orange County, and is currently planning the actual development and construction of the facility. If PIO is not able to reach the census projections contained in its Certificate of Need application, its ability to generate earnings could be adversely impacted. Even a five percent decrease in PIO's census projections would require PIO to either raise its rates or make reductions in direct costs. This could include a decrease in staffing, thus affecting a reduction in the available programs, problems in attracting quality staff and ultimately a reduction in the quality of care offered at the PIO facility. In a batch subsequent to the HMA application, PIO requested the addition of 15 long-term adolescent psychiatric beds and 15 substance abuse beds. When an adolescent psychiatric patient is evaluated for placement in a hospital setting, it is generally not possible to determine how long that patient will require hospitalization. The adolescent psychiatric patient is often very guarded, distrusting both parents and other adults, and it is difficult to obtain full and necessary information from both the patient and the parents. Several weeks of both observation and the gathering of data, such as school records, are necessary in order to access the adolescent patient's degree of disturbance. With respect to treatment programs, there is no sharp medical demarcation between a 60-day period and a 90 day period. Patients in short-term facilities often stay longer than 60 days and patients in long term facilities often stay less than 90 days. The length of stay is very often determined by the parents, in spite of the treatment period prescribed by the physician. The treatment programs in both short-term and long-term psychiatric facilities are very similar, and short- and long-term patients are often treated in the same unit. Staffing for the two types of facilities would be basically the same, with the exception, perhaps, of the educational staff.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that HMA grant HMA's application for a Certificate of Need to construct and operate a 60-bed long-term adolescent psychiatric facility in Orlando, Florida. Respectfully submitted and entered this 9th day of July, 1985, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1985. COPIES FURNISHED: C. Gary Williams and Michael J. Glazer P. O. Box 391 Tallahassee, Florida 32302 John M. Carlson Assistant General Counsel 1323 Winewood Blvd. Building One, Suite 407 Tallahassee, Florida 32301 Robert S. Cohen O. Box 669 Tallahassee, Florida 32301 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301 =================================================================
Findings Of Fact At all times relevant hereto Respondent was licensed as a physician in the State of Florida having been issued license number ME0040318. Respondent completed a residency in internal medicine and later was a nephrology fellow at Mayo Clinic. He was recruited to Florida in 1952 by Humana. In 1984 he became associated with a Health Maintenance Organization (HMO) in an administrative position but took over treating patients when the owner became ill. This HMO was affiliated with IMC who assimilated it when the HMO had financial difficulties. At all times relevant hereto Respondent was a salaried employee of IMC and served as Assistant Medical DIRECTOR in charge of the South Pasadena Clinic. On October 17, 1985, Alexander Stroganow, an 84 year old Russian immigrant and former cossack, who spoke and understood only what English he wanted to, suffered a fall and was taken to the emergency Room at a nearby hospital. He was examined and released without being admitted for inpatient treatment. Later that evening his landlady thought Stroganow needed medical attention and again called the Emergency Medical Service. When the ambulance with EMS personnel arrived they examined Stroganow, and concluded Stroganow was no worse than earlier when he was transported to the emergency Room, and refused to again take Stroganow to the emergency Room. The landlady then called the HRS hotline to report abuse of the elderly. The following morning, October 18, 1985, an HRS case worker was dispatched to check on Stroganow. Upon arrival, she was admitted by the landlady and found an 84 year old man who was incontinent, incoherent, and apparently paralyzed from the waist down, with whom she could not engage in conversation to determine his condition. She called for a Cares Unit team to come and evaluate Stroganow. An HRS Cares Unit is a two person team consisting of a social worker and nurse whose primary function is to screen clients for admission to nursing homes and adult congregate living facilities (ACLF). The nurse on the team carries no medical equipment such as stethoscope, blood pressure cuff, or thermometer, but makes her evaluation on visual examination. Upon arrival of the Cares Unit, and, after examining Stroganow, both members of the team agreed he needed to be placed where he could be attended. A review of his personal effects produced by his landlady revealed his income to be above that for which he could qualify for medicaid placement in a nursing home; that he was a member of IMC's Gold-Plus HMO; his social security card; and several medications, some of which had been prescribed by Dr. Dayton, Respondent, a physician employed by IMC at the South Pasadena Clinic. The Cares team ruled out ACLF placement because Stroganow was not ambulatory, but felt he needed to be placed in a hospital or nursing home and not left alone with the weekend approaching. To accomplish this, they proceeded to the South Pasadena HMO clinic of IMC to lay the problem on Dr. Dayton, who was in charge of the South Pasadena Clinic, and, they thought, was Stroganow's doctor. Stroganow had been a client of the South Pasadena HMO for some time and was well known at the clinic as well as by EMS personnel. There were always two, and occasionally three, doctors on duty at South Pasadena Clinic between 8:00 and 5:00 daily and, unless the patient requested a specific doctor he was treated by the first available doctor. Stroganow had not specifically requested to be treated by Respondent. When the Cares unit met with Respondent they advised him that Stroganow had been taken to Metropolitan General Hospital Emergency Room the previous evening but did not advise Respondent that the EMS squad had refused to return Stroganow to the emergency Room when they were recalled for Stroganow the same evening. Respondent telephoned the Metropolitan General Emergency Room and had the emergency Room medical report on Stroganow read to him. With the information provided by the Cares unit and the hospital report, Respondent concluded that Stroganow needed emergency medical treatment and the quickest way to obtain such treatment would be to call the EMS and have Stroganow taken to an emergency Room for evaluation. When the Cares unit arrived, Respondent was treating patients at the clinic. A clinic, or doctors office, is not a desirable or practical place to have an incontinent, incoherent, and non-ambulatory patient brought to wait with other patients until a doctor is free to see him. Nor is the clinic equipped to perform certain procedures that may be required for emergency evaluation of an ill patient. At a hospital emergency Room such equipment is available. EMS squads usually arrive within minutes of a call being placed to 911 for emergency medical treatment and it was necessary that someone be with Stroganow when the EMS squad arrived. Accordingly, Respondent suggested that the Cares team return to Stroganow and call 911 to transport Stroganow to an emergency Room for an evaluation. Upon leaving the South Pasadena clinic the Cares team returned to Stroganow. Enroute they stopped to call a supervisor at HRS to report that the HMO had not solved their problem with Stroganow. The supervisor then called the Administrator at IMC Tampa Office to tell them that one of their Gold-Plus HMO patients had an emergency situation which was not being property handled. Respondent left the South Pasadena Clinic around noon and went to IMC's Tampa Office where he was available for the balance of the afternoon. There he spoke with Dr. Sanchez, the INC Regional Medical Director, but Stroganow was not deemed to be a continuing problem. By 2:00 p.m. when no ambulance had arrived the Cares Unit called 911 for EMS to take Stroganow to an emergency Room. Upon arrival shortly thereafter the EMS squad again refused to transport Stroganow. The Cares team communicated this to their supervisor who contacted IMC Regional Office to so advise. At this time Dr. Sanchez authorized the transportation of Stroganow to Lake Seminole Hospital for admission. Although neither Respondent nor Sanchez had privileges at Lake Seminole Hospital, IMC had contracted with Lake Seminole Hospital to have IMC patients admitted by a staff doctor at Lake Seminole Hospital. Subsequent to his meeting with the Cares team Respondent received no further information regarding Stroganow until well after Stroganow was admitted to Lake Seminole Hospital. No entry was made on Stroganow's medical record at IMC of the meeting between Respondent and the Cares Unit. Respondent was a salaried employee whose compensation was not affected by whether or not he admitted an IMC Gold-Plus patient to a hospital.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: The petitioner Hillsborough County Hospital Authority, a public body corporate, owns and operates two public hospitals - Tampa General Hospital and Hillsborough County Hospital. In 1981, the Authority received Certificate of Need Number 1784 which authorized an expenditure of $127,310,000 for the consolidation of the two hospitals. The project involved new construction and renovation at Tampa General, delicensure of beds at Hillsborough County Hospital and the transfer of those beds to Tampa General. The Certificate provided for a total of 1,000 licensed beds at Tampa General Hospital and for the "renovation, new construction, consolidation and expansion of service per application." The completion of the total project was projected to occur by October, 1987, but is presently running about four months behind schedule. When the Authority received its Certificate of Need in 1981, it was then operating a total of 93 psychiatric beds between the two hospitals -- 71 at County Hospital and 22 at Tampa General. The plan for consolidation and the 1981 Certificate of Need called for an overall reduction of 14 psychiatric beds - from 93 total beds between the two facilities to 79 total consolidated psychiatric beds, at the conclusion of the project. At the time the Authority obtained its Certificate of Need in 1981, there was no differentiation between determinations of need for general acute care beds and psychiatric beds. The number of psychiatric beds operated by a hospital were not separately listed on a hospital's license. As noted above, Tampa General was operating 22 psychiatric beds when it received its 1981 Certificate of Need. Because of an increased demand for acute care beds (non- psychiatric medical and surgical beds) in late 1982, Tampa General closed the psychiatric unit and made those 22 beds available for acute care. In the Authority's 1983-85 license for Tampa General, those 22 beds were included in the 637-bed total, which was not broken down by bed type. An attachment to the license indicates that the total bed count should read 671. In the space designated for "hospital bed utilization," the figure "O" appears after the word "psychiatric." (Respondent's Exhibit 1) In 1983, the statutory and regulatory law changed with regard to the separate licensure and independent determination of need for psychiatric beds. Section 395.003(4), Florida Statutes, was amended to provide, in pertinent part, that the number of psychiatric beds is to be specified on the face of the license. Rule 10-5.11(25), Florida Administrative Code, adopted in 1983, set forth a specific psychiatric bed need methodology for use in future Certificate of Need decisions. In order to implement its new 1983 policy and rule with regard to the separate licensure and determination of need for psychiatric beds, HRS conducted a survey to determine the number of existing psychiatric beds in the State. Hospitals then had the opportunity to indicate whether their existing beds were to be allocated or designated as acute care beds or psychiatric beds. HRS conducted the survey by directly contacting each hospital which had previously indicated it was operating a psychiatric unit and then contacting by telephone any facility not answering the initial inquiry. In August and September of 1983, the Authority indicated to HRS that Tampa General did not have any psychiatric beds in operation. HRS published the results of its survey and final hospital bed counts in the February 17, 1984 edition of the Florida Administrative Weekly, Volume 10, Number 7. The inventory listed Hillsborough County Hospital as having 77 psychiatric beds and Tampa General Hospital as having O psychiatric beds. The notice in the Weekly advised that hospital licenses would be amended in accordance with the published inventory to reflect each hospital's count of beds by bed type. Hospitals were further notified that "Any hospital wishing to change the number of beds dedicated to one of the specific bed types listed will first be required to obtain a certificate of need." (Respondent's Exhibit 2). For economic and business reasons, and in order to accomplish a more orderly consolidation of the two hospitals, the Authority now desires to re-open a small, self-funding psychiatric unit at Tampa General Hospital. It wishes to utilize the maximum number of psychiatric beds designated in its 1981 Certificate of Need application (93), including the beds which had been temporarily changed in late 1982 to acute care beds, while gradually phasing out a sufficient number of beds at the County Hospital to bring the total number of psychiatric beds down to 79 by late 1987. In order to implement this plan, the Authority applied to the office of Licensure and Certification in 1985 for the licensure of 77 psychiatric beds at County Hospital and 22 psychiatric beds at Tampa General Hospital. The Authority acknowledges that it should have applied for only 16 psychiatric beds at Tampa General Hospital to meet the 1981 figure of a total of 93 beds. HRS issued a license for the 77 requested psychiatric beds at County Hospital, but issued a license for only 2 psychiatric beds at Tampa General. The record does not adequately reflect the rationale for licensing even 2 beds at Tampa General. It is not economically or practically feasible for a hospital to operate a separate 2-bed psychiatric unit. The rationale for refusing to license the remaining psychiatric beds requested is the change in the statutory and regulatory law occurring in 1983 and the survey results published in 1984 illustrating Tampa General to have no psychiatric beds in operation at that time. The stated reason for denial is "because you have failed to obtain a Certificate of Need or exemption from [CON] review . . . ." (Petitioner's Exhibit 3).
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the request of the Hillsborough County Hospital Authority for the licensure of 16 short-term psychiatric beds at Tampa General Hospital be DENIED. Respectfully submitted and entered this 24th day of December, 1985, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of December, 1985. APPENDIX-CASE NO. 85-3109 The proposed findings of fact submitted by the petitioner and the respondent have been approved and/or incorporated in this Recommended Order, except as noted below. Petitioner Page 3, last sentence and Page 4, first sentence Rejected, not supported by competent, substantial evidence. Page 6, first full paragraph Rejected, not a finding of fact. Page 6, second paragraph Rejected, not a finding of fact. Page 7, Reject those findings based upon a conclusion that Tampa General has Certificate of Need approval for psychiatric beds. Respondent 9. Second and third sentences Rejected, irrelevant and immaterial to issue in dispute. COPIES FURNISHED: William S. Josey, Esquire Allen, Dell, Frank and Trinkle P. O. Box 2111 Tampa, Florida 33601 R. Bruce McKibben, Jr., Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 ================================================================ =
Findings Of Fact The Application West Florida Regional Medical Center is a 400-bed acute care hospital in Pensacola, Escambia County, Florida. The hospital is located in a subdistrict which has the greatest population aged 65 and over who are living in poverty. That group constitutes the population qualified for Medicare. Some 17 percent of Escambia County's population falls into the medicare category. Prior to October, 1987, HRS had determined that there was a fixed pool need in the Escambia County area for 120 nursing home or extended care beds. Several hospitals in the Escambia County area applied for the 120 nursing home beds. Those beds were granted to Advocare (60 beds) and Baptist Manor (60 beds). The award of the 120 beds to Baptist Manor and Advocare is not being challenged in this action. West Florida, likewise, filed an application for an award of nursing home beds in the same batch as Advocare and Baptist Manor. However, Petitioner's application sought to convert 8 acute care beds to nursing home or extended care beds. West Florida's claim to these beds was not based on the 120 bed need established under the fixed need pool formula. West Florida's application was based on the unavailability of appropriately designated bed space for patients who no longer required acute care, but who continued to require a high skill level of care and/or medicare patients. The whole purpose behind West Florida's CON application stems from the fact that the federal Medicare system will not reimburse a hospital beyond the amount established for acute care needs as long as that bed space is designated as acute care. However, if the patient no longer requires acute care the patient may be re-designated to a skilled care category which includes nursing home or extended care beds. If the patient is appropriately reclassified to a skilled care category, the hospital can receive additional reimbursement from Medicare above its acute care reimbursement as long as a designated ECF bed is available for the patient. Designation or re-designation of beds in a facility requires a Certificate of Need. Petitioner's application for the 8 beds was denied. When the application at issue in this proceeding was filed Petitioner's 13-bed ECF unit had been approved but not yet opened. At the time the State Agency Action Report was written, the unit had just opened. Therefore, historical data on the 13 bed unit was not available at the time the application was filed. Reasons given for denying West Florida's application was that there was low occupancy at Baptist Hospital's ECF unit, that Sacred Heart Hospital had 10 approved ECF beds and that there was no historical utilization of West Florida 13 beds. At the hearing the HRS witness, Elizabeth Dudek stated that it was assumed that Baptist Hospital and Sacred Heart Hospital beds were available for West Florida patients. In 1985 West Florida applied for a CON to establish a 21-bed ECF unit. HRS granted West Florida 13 of those 21 beds. The 8 beds being sought by West Florida in CON 5319 are the remaining beds which were not granted to West Florida in its 1985 CON application. In order to support its 1985 CON application the hospital conducted a survey of its patient records to determine an estimate of the number of patients and patient days which were non acute but still occupied acute care beds. The hospital utilized its regularly kept records of Medicare patients whose length of stay or charges exceeded the Medicare averages by at least two standard deviations for reimbursement and records of Medicare patients whose charges exceed Medicare reimbursement by at least $5,000. These excess days or charges are known as cost outliers and, if the charge exceeds the Medicare reimbursement by $5000 or more, the excess charge is additionally known as a contractual adjustment. The survey conducted by the hospital consisted of the above records for the calendar year 1986. The hospital assumed that if the charges or length of stay for patients were excessive, then there was a probability that the patient was difficult to place. The above inference is reasonable since, under the Medicare system, a hospital's records are regularly reviewed by the Professional Review Organization to determine if appropriate care is rendered. If a patient does not meet criteria for acute care, but remains in the hospital, the hospital is required to document efforts to place the patient in a nursing home. Sanctions are imposed if a hospital misuses resources by keeping patients who did not need acute care in acute care bed spaces even if the amount of reimbursement is not at issue. The hospital, therefore goes to extraordinary lengths to place patients in nursing home facilities outside the hospital. Additionally, the inference is reasonable since the review of hospital records did not capture all non-acute patient days. Only Medicare records were used. Medicare only constitutes about half of all of West Florida's admissions. Therefore, it is likely that the number of excess patient days or charges was underestimated in 1986 for the 1985 CON application. The review of the hospital's records was completed in March, 1987, and showed that 485 patients experienced an average of 10.8 excess non-acute days at the hospital for a total of 5,259 patient days. The hospital was not receiving reimbursement from Medicare for those excess days. West Florida maintained that the above numbers demonstrated a "not normal need" for 21 additional ECF beds at West Florida. However as indicated earlier, HRS agreed to certify only 13 of those beds. The 13 beds were certified in 1987. The 13-bed unit opened in February, 1988. Since West Florida had planned for 21 beds, all renovations necessary to obtain the 8-bed certification were accomplished when the 13- bed unit was certified in 1987. Therefore, no capital expenditures will be required for the additional 8 beds under review here. The space and beds are already available. The same study was submitted with the application for the additional eight beds at issue in these proceedings. In the present application it was assumed that the average length of stay in the extended care unit would be 14 days. However, since the 13 bed unit opened, the average length of stay experienced by the 13-bed unit has been approximately 15 days and corroborates the data found in the earlier records survey. Such corroboration would indicate that the study's data and assumptions are still valid in reference to the problem placements. However, the 15- day figure reflects only those patients who were appropriately placed in West Florida's ECF unit. The 15-day figure does not shed any light on those patients who have not been appropriately placed and remain in acute care beds. That light comes from two additional factors: The problems West Florida experiences in placing sub-acute, high skill, medicare patients; and the fact that West Florida continues to have a waiting list for its 13 bed unit. Problem Placements Problem placements particularly occur with Medicare patients who require a high skill level of care but who no longer require an acute level of care. The problem is created by the fact that Medicare does not reimburse medical facilities based on the costs of a particular patients level of care. Generally, the higher the level of care a patient requires the more costs a facility will incur on behalf of that patient. The higher costs in and of themselves limit some facilities in the services that facility can or is willing to offer from a profitability standpoint. Medicare exacerbates the problem since its reimbursement does not cover the cost of care. The profitability of a facility is even more affected by the number of high skill Medicare patients resident at the facility. Therefore, availability of particular services at a facility and patient mix of Medicare to other private payors becomes important considerations on whether other facilities will accept West Florida' s patients. As indicated earlier, the hospital goes to extraordinary lengths to place non- acute patients in area nursing homes, including providing nurses and covering costs at area nursing homes. Discharge planning is thorough at West Florida and begins when the patient is admitted. Only area nursing homes are used as referrals. West Florida's has attempted to place patients at Bluff's and Bay Breeze nursing homes operated by Advocare. Patients have regularly been refused admission to those facilities due to acuity level or patient mix. West Florida also has attempted to place patients at Baptist Manor and Baptist Specialty Care operated by Baptist Hospital. Patients have also been refused admission to those facilities due to acuity level and patient mix. 16 The beds originally rented to Sacred Heart Hospital have been relinquished by that hospital and apparently will not come on line. Moreover the evidence showed that these screening practices would continue into the future in regard to the 120 beds granted to Advocare and Baptist Manor. The president of Advocare testified that his new facility would accept some acute patients. However, his policies on screening would not change. Moreover, Advocare's CON proposes an 85 percent medicaid level which will not allow for reimbursement of much skilled care. The staffing ratio and charges proposed by Advocare are not at levels at which more severe sub-acute care can be provided. Baptist Manor likewise screens for acuity and does not provide treatment for extensive decubitus ulcers, or new tracheostomies, or IV feeding or therapy seven days a week. Its policies would not change with the possible exception of ventilated patients, but then, only if additional funding can be obtained. There is no requirement imposed by HRS that these applicants accept the sub-acute-patients which West Florida is unable to place. These efforts have continued subsequent to the 13-bed unit's opening. However, the evidence showed that certain types of patients could not be placed in area nursing homes. The difficulty was with those who need central lines (subclavian) for hyperalimentation; whirlpool therapy such as a Hubbard tank; physical therapy dither twice a day or seven days a week; respiratory or ventilator care; frequent suctioning for a recent tracheostomy; skeletal traction; or a Clinitron bed, either due to severe dicubiti or a recent skin graft. The 13-bed unit was used only when a patient could not be placed outside the hospital. The skill or care level in the unit at West Florida is considerably higher than that found at a nursing home. This is reflected in the staffing level and cost of operating the unit. Finally, both Advocare and Baptist Manor involve new construction and will take approximately two years to open. West Florida's special need is current and will carry into the future. The Waiting List Because of such placement problems, West Florida currently has a waiting list of approximately five patients, who are no longer acute care but who cannot be placed in a community nursing home. The 13-bed unit has operated at full occupancy for the last several months and is the placement of last resort. The evidence showed that the patients on the waiting list are actually subacute patients awaiting an ECF bed. The historical screening for acuity and patient mix along with the waiting list demonstrates that currently at least five patients currently have needs which are unmet by other facilities even though those facilities may have empty beds. West Florida has therefore demonstrated a special unmet need for five ECF beds. Moreover, the appropriate designation and placement of patients as to care level is considered by HRS to be a desirable goal when considering CON applications because the level of care provided in an ECF unit is less intense than the level of care required in an acute care unit. Thus, theoretically, better skill level placement results in more efficient bed use which results in greater cost savings to the hospital. In this case, Petitioner offers a multi-disciplinary approach to care in its ECF unit. The approach concentrates on rehabilitation and independence which is more appropriate for patients at a sub-acute level of care. For the patients on the awaiting proper placement on the waiting list quality of care would be improved by the expansion of the ECF unit by five beds. Finally, there are no capital costs associated with the conversion of these five beds and no increase in licensed bed capacity. There are approximately five patients on any given day who could be better served in an ECF unit, but who are forced to remain in an acute care unit because no space is available for them. This misallocation of resources will cost nothing to correct.
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 CON to Petitioner for five ECF beds. DONE and ORDERED this 30th day of March, 1989, in Tallahassee, Florida. DIANE CLEAVINGER Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of March, 1989. APPENDIX The facts contained in paragraph 1-29 of Petitioner's proposed Findings of Fact are adopted in substance, insofar as material. The facts contained in paragraph 1, 2, 3, 4, 5, 6, 8, 12, 15, 16, 20, 27, 28, 29, 31 and 33 of Respondent's Proposed Findings of Fact are subordinate. The first sentence of paragraph 7 of Respondent's Proposed Findings of Fact was not shown to be the evidence. Strict compliance with the local health plan was not shown to be an absolute requirement for CON certification. The remainder of paragraph 7 is subordinate. The facts contained in paragraph 9, 10, 11 and 30 of Respondent's Proposed Findings of Fact were not shown by the evidence. The first part of the first sentence of paragraph 13 of Respondent's Proposed Findings of Fact before the semicolon is adopted. The remainder of the sentence and paragraph is rejected. The first sentence of paragraph 14 of Respondent's Proposed Findings of Fact was not shown by the evidence. The remainder of the paragraph is subordinate. The facts contained in paragraph 17, 26 and 32 of Respondent's Proposed Findings of Fact are adopted in substance, insofar as material. The acts contained in paragraph 18 are rejected as supportive of the conclusion contained therein. The first (4) sentences of paragraph 19 are subordinate. The remainder of the paragraph was not shown by the evidence. The first (2) sentences of paragraph 21 are adopted. The remainder of the paragraph is rejected. The facts contained in paragraph 22 of Respondent's Proposed Findings of Fact are irrelevant. The first sentence of paragraph 23 is adopted. The remainder of paragraph 23 is subordinate. The first sentence of paragraph 24 is rejected. The second, third, and fourth sentences are subordinate. The remainder of the paragraph is rejected. The first sentence of paragraph 25 is subordinate. The remainder of the paragraph is rejected. COPIES FURNISHED: Lesley Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Donna H. Stinson, Esquire MOYLE, FLANIGAN, KATZ, FITZGERALD & SHEEHAN, P.A. The Perkins House - Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
