The Issue The issues under consideration are those associated with applications filed by the aforementioned private parties seeking certificates of need for skilled nursing home beds based on a fixed need pool of May, 1989, which identified 261 beds for the January, 1992 planning horizon. The beds are available in HRS District III. The applications are for: CON Action No. 5987 Inverness--20 beds; CON Action No. 5912 Suwannee--60 beds; CON Action No. 5913 McCoy-- 60 beds; CON Action No. 5962 Starke--120 or 60 beds; and CON Action N. 5905 Regency--120 beds.
Findings Of Fact Related to the May, 1989 batching cycle HRS has identified a need for 261 nursing home beds in District III. The applicants accept that determination of the pool of beds, that is to say no applicant has sought beds over and above the 261 beds identified by HRS. Further, the parties have expressed their agreement to allow Regency to be granted CON 5905 to construct a new nursing home facility in Lake County, Florida, which will have 120 beds. The written stipulation sets out the parties belief that all applicable criteria for obtaining a certificate of need as set out in Section 381.705, Florida Statutes, have been met. That stipulation is accepted, provided the following conditions are met in issuing the certificate of need: The annual resident population of the facility shall include at least 62% of Medicaid patient days. Two beds shall be dedicated to the care of Alzheimer and respite care residents. The facility shall be a one story design consisting of 43,000 square feet in size. Likewise, the parties have agreed to allow the issuance of CON 5987 to Inverness to add 20 community nursing beds to its existing facility in Inverness, Florida. That written stipulation points out the agreement by the parties concerning the Inverness compliance with all applicable criteria set out in Section 381.705, Florida Statutes as well as any implementing rules set forth in Chapter 10-5, Florida Administrative Code. The arrangement is one by which existing ACLF beds are converted to nursing home beds. That stipulation is accepted, upon condition that Inverness commit to provide a minimum of 75.2% of total patient days for Medicaid patients. The Inverness stipulation which reiterates Inverness' lack of opposition to the grant of a certificate of need to Regency also withdraws its opposition to McCoy, Starke and Suwannee. By the terms of the stipulation's 140 of the 261 beds in the pool are spoken for. This leaves for consideration the applications of Suwannee, Starke and McCoy. In the absence of subdistricting, District III is divided into seven planning areas. The planning areas are as established by the North Central Florida Health Planning Council, Inc. Planning Area l is constituted of Hamilton, Suwannee, Lafayette, Columbia, Union and Bradford counties. Suwannee intends to place its facility in Suwannee County. Starke intends to place its facility in Columbia County. The expansion of the McCoy facility would occur in Marion County which is the sole county in Planning Area 4. By resort to the North Central Florida Health Planning Council District III Health Plan preferences can be seen concerning the allocation of beds among the applicants within the various planning areas. A copy of that plan is HRS Exhibit No. 2. Under this scheme the McCoy application to add 60 additional nursing home beds to its existing facility in Marion County, Florida, is considered a third priority. A third priority would allow the addition of at least 60 beds and no more than 120 beds. The Suwannee and Starke applications are a fourth priority under the local plan which allows for an addition of up to 60 beds. The McCoy application as presented at hearing responds adequately to all applicable criteria set out in Section 381.705, Florida Statutes, to include the State Health Plan and District III Health Plan. McCoy holds a superior license rating at present and has a proposed capital expenditure for this project of $1,568,000. Taking into consideration the proposed allocation of beds set forth in the local health plan, the distance between the McCoy facility and the proposed facilities in Suwannee and Columbia counties by the applicants Suwannee and Starke and absent proof which clearly identifies that Suwannee and Starke are meaningful competitors against McCoy and its attempt to gain a certificate of need calling for expansion of its facility, the McCoy application should be granted. That grant should be conditioned upon a willingness to serve Alzheimer patients in the proposed 14 bed unit and the commitment to provide Medicaid at a 60% level as a minimum commitment. This arrangement would bring the total number of nursing home beds at McCoy to 120, a desirable number when considering economies of scale. What must be resolved by comparative analysis of the applications of Suwannee and Starke, is which of those competitors for 60 beds out of the 61 beds remaining in the pool should be granted a certificate of need, if any. Starke had noticed its intention to apply for 120 beds and made application for 120 beds and in the alternative for 60 beds. The decision to notice its intent to apply for 120 beds was not misleading nor inconsistent with HRS policy in a circumstance where the application was stated in the alternative for 120 beds or 60 beds. The significant point is that Starke explained its alternatives of 120 beds or 60 beds in detail in the course of the application. HRS perceives that the 120 bed notice of intent took into account a lesser number of beds being applied for on the due date for applications and that perception is reasonable. Suwannee noticed the intent to apply for 60 beds and applied for that many. Both Suwannee and Starke met all procedural requirements for consideration of their applications for nursing home beds. In determining the disposition of the 60 nursing home beds needed for Planning Area l within District III, it is noted that Suwannee and Columbia counties are contiguous. Columbia is east of Suwannee. While the main emphasis by these applicants is to serve the needs of residents within the two counties where the facilities would be located, given their contiguity there is a potential for either applicant to serve needs within both counties. Columbia county is the more populous county. However, in the two counties the age cohorts in the 65 and over group and 75 and over group are similar, especially in the 75 and over group. Occupancy rates in the existing nursing homes within the two counties are also similar. The J. Ralph Smith Health Center in Suwannee County has 107 existing beds and 54 beds approved. Those additional 54 beds were designated for residents of the Advent Christian Village exclusively; however, the residents of that village constitute part of the population base in Suwannee county. Therefore this limited utilization of that resource still benefits citizens within Suwannee county. Surrey Place in Suwannee county has 60 beds and the Suwannee Health Care Center has 120 beds with 60 more approved. The 60 additional beds may not be constructed in that the applicant failed to proceed to construction in the time contemplated by CON 3746 and may lose the beds. Columbia County has Tanglewood Care Center with 95 beds. It has Lake City Medical Center with 5 beds associated with a hospital. Palm Garden of Columbia has approval for 60 beds. On balance there would not appear to be an advantage to placing the 60 beds at issue in either Suwannee or Columbia counties when considering the population to be served, present occupancy rates for existing nursing bomes and geographic accessibility to the proposed nursing homes. Suwannee is a wholly owned subsidiary of Santa Fe Health Care, Inc. The parent corporation filed the application with the permission of Suwannee. The 60 bed nursing home facility is part of an overall project which includes the replacement of an existing 60 bed acute care hospital with a 30 bed acute care hospital. If the proposals are accepted the hospital and 60 bed nursing home would be located on a common parcel. HRS has granted CON 6179 to decertify 30 beds. The approved cost of the delicensure and establishment of the new hospital is $6,752,824. The nursing home component of this project is stated to cost $3,408,100 in the way of capital expenditures with an operating equity in the amount of $300,000. The overall health care delivery system contemplated in the hospital and nursing home project includes the replacement hospital, the new nursing home, an out patient diagnostic center, home health care, hospice and adult day care services. Suwannee has the financial backing of its parent corporation which owns a number of health care facilities including six hospitals, two health maintenance organizations and six other health related corporations. Both Suwannee and the parent corporation Santa Fe Health Care, Inc. are not for profit. The Santa Fe operations are in Florida and its hospital holdings include other rural hospitals in addition to Suwannee which is a rural hospital. Before filing the application for the 60 bed nursing home neither Suwannee nor the Santa Fe parent corporation had any involvement in long term health care delivery. Suwannee intends to serve the needs of Alzheimer patients and to provide services to persons needing subacute care. In its present hospital facility in Suwannee County it has 24 swing beds with which it serves patients needing subacute care and which beds are seen as an alternative to nursing home beds. That alternative has limited utility. Although swing beds may serve nursing home patients they are not an alternative for long term care in lieu of community nursing home beds. To the extent that Suwannee Hospital has tried to place patients in nursing homes needing a high level of skilled care, described as subacute care, it has experienced problems. Existing nursing homes in Suwannee County have not accepted the placement of those patients. It is unclear from the record what portion of subacute care needed in the service area will continue to be met in the hospital proper with the advent of delicensure of 30 beds. There was testimony to the affect that the hospital has the option to request swing beds in its remaining 30 bed hospital facility, but it has not been shown that the hospital will avail itself of that opportunity and through the use of the swing beds be able to render subacute care. The description by Suwannee of the subacute patients that it is contemplating serving through its nursing home are those who require a shorter stay in nursing facilities, who are said to have fragile medical condition and require intensive licensed nursing care. In the application, it states that the Medicare patients contemplated as being served by this prospective nursing home would be the principal users of the subacute care. There patients would have an average length of stay of 15 days with 12 patients per month being served. The Medicare per diem charge of $130 for the first year of operation is said to include the cost of care given to these patients who are said to be heavy users of subacute care. That per diem charge reflects ancillaries such as the various therapies as well. Having considered the explanation of this application, it is less than apparent what the difference would be between the subacute care services now being provided by the hospital in its swing beds and those contemplated by its nursing home application. In a similar vein, it is unclear what the distinction would be between the subacute care rendered in the proposed nursing home when contrasted with the subacute care being provided in swing beds that might be available in the 30 bed replacement hospital. If granted a certificate of need Suwannee is committed to serving AIDS patients. Suwannee intends to serve Medicaid patients and it projects a percentage of patient days attributable to Medicaid patients in the first two years of operation to approximate 73%. This is contrasted with experience statewide of 62%, within District III of 75% and within the planning area of 81%. Projected per diem rate for Medicaid reimbursement within the first year of operation is $68. The financial expert presented by Suwannee said that the applicant could charge as much as $10 to $12 more, making the Medicaid rate $78 to $80 per day. This increase contemplates raising the present caps on reimbursement. The record does not support increases in the caps of $10 to $12 in the relevant planning period. In the first year of operation the private room, private pay per diem rate at Suwannee reflects $97 as the charge and $80 as the charge for semiprivate room, private pay. This is as compared to $130 for Medicare per diem. Although it is unacceptable to charge more for Medicare than private pay, Schedule 12 within the application shows the inclusion of ancillaries for the Medicare patient and the exclusion of ancillaries for private pay. Under the circumstances it is difficult to tell whether the Medicare per diem charges exceed the private pay per diem charges as has been contended by Starke. The inclusion of the therapies as ancillary costs is shown on page 39 at Schedule 12 of the application of Suwannee. On Schedule 17 in the first operating year the therapies as ancillary costs are not broken out as individual items such as physical therapy, speech therapy and occupational therapy separate and apart from routine services. Instead an aggregate figure is given. That precludes an understanding of what portion of the per diem charge for Medicare patients is attributable to those ancillary costs. The circumstance is made more bewildering in that the financial expert presented by Suwannee stated that the $130 per diem charge had application to residents who were receiving subacute care. What portion of the per diem charge for Medicare residents is attributable to the subacute care component is not revealed in the application. Neither, is it explained in the testimony. Notwithstanding the assurance of the Suwannee financial planner that the Medicare rate projected for the first year of operation is in keeping with the Hospital Cost Containment Board's data on the average rate structure, that comment and his other explanations failed to establish the reasonableness of that charge. This is especially true when considering the fact that the Medicaid charges, even accepting an adjusted rate of $80 per day, are also indicated at Schedule 12 as including therapies and are far less than the Medicare per diem. Schedule 17 shows the Medicaid without reference to the therapies as an aggregate item in the same fashion as described with the Medicare category of reimbursement. Further, evidence of the fact that private room, private pay, does not exceed the Medicare per diem charge is related at Schedule 12 where it describes the subacute private room, private pay patient as paying $150 and the semiprivate, room private pay as paying $130. Again, in the Suwannee application in the first year of operation for both Medicaid and Medicare therapies are said to be included in the basic charges of $68 and $130 respectively shown at Schedule 12 and carried forward in the aggregate on Schedule 17. From the explanations stated by the financial planner, the projected costs for therapies by those two categories of patients is not reflected in the ancillary cost centers for physical therapy, speech therapy and occupational therapy found at lines 11-13 of Schedule 18. Instead, they are reflected at line 39 under other costs centers in the amount of $80,900. Moreover the $80,900 is said to include subacute services as well as the therapies. Having considered Schedules 12, 17 and 18 for the first operating year, together with the other evidence presented in the course of the hearing, the estimate at line 39 of Schedule 18 of $80,900 is unreliable. The Suwannee project contemplates a facility of approximately 24,370 square feet. The construction cost estimate is $62.44 per square foot. The total project cost per bed is $56,802. That far exceeds the caps for the property cost component related to Medicaid residents which is presently $30,350 per bed. Put another way, that translates to a differential of $11.64 per patient day above present reimbursement levels for Medicaid residents. That differential cannot be made up by resort to payments for ancillary services for that category of resident. The shortfall attributable to the costs per bed differential in the application of $56,802 compared to $30,350 per bed plus ancillaries is not expected to be made up by resort to other revenue sources within this proposal either, nor can it be properly be. This is particularly true when approximately 70% of the patient days are expected to be provided by Medicaid residents. Even if Suwannee were able to obtain reimbursement for the per bed cost of $56,802, this is much more than the Starke cost per bed which is approximately $30,000 as built. The cap that has been mentioned is the one effective July 1, 1990. Nothing in the testimony would suggest that the caps would approach $56,802 within the planning horizon for this review cycle. In summary, the financial feasibility of the Suwannee proposal has not been established. While the parent corporation, Santa Fe Health Care, Inc., is strong financially and able to sustain Suwannee in its nursing home operation in the short term, even with expected losses, the losses will be extraordinary and the long term feasibility has not been demonstrated either. Simply stated, too much money is being expended to establish this facility and it may not be recouped by resort to the reimbursement scheme identified in the application. Under the circumstances, the nursing home is not perceived as a means of promoting the financial well being of the overall project constituted of the nursing home, relocated hospital and associated services. It is not accepted that the manner and quality of care proposed to be delivered by Suwannee is so superior that it justifies the inordinate expense in delivering the care. In other particulars Suwannee has shown that it meets all applicable criteria for granting it a certificate of need, but the overall costs are so exorbitant that they preclude financial success in the project. In addition, even if the project met the criteria its costs compared to the Starke proposal are so much more that the Suwannee proposal should be rejected in favor of the Starke proposal. It is not accepted that a hospital based nursing home is superior to a freestanding nursing home as urged by the presentation made by Suwannee. Starke had applied for a 120 bed nursing home, with a separate request explaining its proposal to construct a 60 bed nursing home. It is that latter proposal that fits the need in Planning Area I of District III. The total capital expenditure for that alternative proposal is $1,882,713. The cost per square foot is approximately $60 in the 22,500 square foot facility. The per bed costs is in the neighborhood of $30,000. In the first year of operation the private room, private pay is $89; the semiprivate room, private pay rate is $79; the Medicaid rate is $69.50 and the Medicare rate is $69.50. These rates do not include ancillary charges for therapies. The Starke proposal will include a unit for Alzheimer, subacute care, adult day care and respite care. Starke will provide 80% of its patient days for Medicaid residents and 10% of its patient days for Medicare residents. The Medicaid performance exceeds that of Suwannee. That rate is consistent with the experience which Starke has in the operation of its Whispering Pines Care Center in Starke, Florida, a 120 bed nursing home facility which has held a superior license rating over the three years preceding the application. Starke as a corporation would own both the Starke, Florida facility and the proposed Lake City, Florida facility. The principals in that corporation with 50% ownership are J. D. Griffis and George R. Grosse, Jr. The subacute care that is to be provided is in patient rooms which are directly adjacent to the nursing station. It is the intention of the applicant to build these rooms to allow support for medical equipment needed in the treatment of those residents. Although some criticism has been directed to the architectural design of the proposed nursing home facility, Starke has committed itself to meet all applicable codes. Under the circumstances it does not appear that this application presents significant problems associated with resident safety or inordinate costs in making necessary adjustments to comply with applicable codes. The Starke application was prepared by Jerry L. Keach, the then administrator for University Nursing Care Center in Gainesville, Florida, operated by Covenant Care Corporation. By the comments found in the application it was contemplated that the Covenant Care group would manage the Starke facility in Lake City, Florida, which would do business as Lake City Care Center. No contract has been executed between Starke and Covenant Care Corporation to allow the latter entity to manage the Lake City facility assuming the grant of the certificate of need to that applicant. At hearing the principals for Starke indicated that Covenant Care together with other unnamed organizations would be considered as management for the nursing home in Lake City. Although this issue of management is unresolved, reservations about the project are overcome in recognition of the success of the Starke corporation in the operation of the Whispering Pines Care Center in Starke, Florida. That suffices as an indication that Starke is capable of installing appropriate personnel to operate the Lake City facility, and provide quality care. The assumptions concerning the various aspects of the proposals set forth in the Starke application are sufficiently explained in the course of the final hearing and those explanations are accepted. It is reasonable to expect that the nursing home could be constructed, staffed and operated in a manner consistent with the explanations found in the application and through testimony at hearing. A successful outcome is anticipated whether the Covenant Care Corporation is employed to operate the facility or not. The favorable impression of the Starke proposal is held notwithstanding the criticism directed to the financial feasibility by remarks offered by Suwannee. In particular the Suwannee Exhibit No. 11 admitted into evidence questioning the assumptions of the Starke applicant concerning income projections for the first two years have been taken into account. Whispering Pines Care Center presently offers care for Alzheimer patients and subacute services. Therefore problems are not anticipated in the provision of those services in the proposed facility. With due regard for the criticisms that have been directed to the financial ability of Starke to maintain its Whispering Pines Nursing Center and the proposed project in Lake City, Florida, it is found that the applicant has the ability to conduct those businesses. As with the matter of financial feasibility, Starke has satisfied all other applicable criteria for the grant of a certificate of need to construct the 60 bed nursing home.
Recommendation Based upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That a Final Order be entered which requires all CONs granted to be consistent with the applications and in keeping with that intention: Grants CON 5987 to Inverness for the addition of 20 community nursing home beds to its existing facility upon condition that those beds be constituted of a minimum of 75.2% total patient days for Medicaid patients; Grants CON 5962 to Starke for construction of a nursing home in Columbia County, Florida, constituted of a minimum of 80% total patient days for Medicaid patients, that provides Alzheimer services, subacute care, day care and respite care; Grants CON 5910 to McCoy for the addition of 60 beds upon condition that 60% of the patient days be devoted to Medicaid patients; Grants CON 5905 to Regency for construction of a 120 nursing home facility with 62% of its patient dads being devoted to Medicaid patients, 2 beds dedicated to Alzheimer patients, provision of respite care and that the facility shall be a one-story design consisting of 43,000 gross square feet in size; and Denies the application for a 60 bed nursing home in Suwannee County made by Suwannee under CON Action No. 5912. DONE and ENTERED this 19th day of September, 1990, in Tallahassee, Florida. CHARLES C. ADAMS, 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 19th day of September, 1990. APPENDIX CASE NOS. 90-0043 and 90-0045 The following discussion is given concerning the proposed facts of the parties: Inverness Paragraphs 1 through 3 are subordinate to facts found. Paragraph 4 is not necessary to the resolution of the dispute. Suwannee Paragraphs 1 through 7 are subordinate to facts found. Paragraph 8 is contrary to facts found in that the Starke application can be advanced without a resort to an affiliation with Covenant Care Corporation. Paragraph 9 is accepted; however, those facts do not cause the rejection of the Starke proposal. Paragraphs 10 and 11 are not necessary to the resolution of the dispute. Paragraph 12 is accepted as factually correct; however, this is not crucial in determining the outcome of this case. Concerning Paragraph 13, while the record reveals that Mr. Keach was responsible at a time moratorium had been placed on admissions into University Nursing Care Center in Gainesville, Florida, the record was not detailed enough to ascertain what influence that might have on his ability to act as an administrator at the Starke facility proposed in this instance or his competence in preparing the application. The representations found in Paragraph 14 do not preclude the consideration of the Starke application. Concerning Paragraph 15, the first sentence is rejected as fact. The second and third sentences are not necessary to the resolution of the dispute. Concerning Paragraph 16, those items which are mentioned did not cause the rejection of the Starke application in that Starke is committed to abide by all applicable codes to insure control over the patients. Paragraphs 17 through 21 are contrary to facts found. Concerning Paragraphs 22-24, the Starke proposal is found to be financially feasible. Paragraph 25-27 are subordinate to facts found. Concerning Paragraph 28, notwithstanding economies of scale they will not overcome the inherent extravagance in the costs associated with bringing the Suwannee project on line. Concerning Paragraph 29, while diversification for rural hospitals is desirable, the present attempt by Suwannee is unacceptable. Paragraph 30 is subordinate to facts found. Concerning Paragraph 31 see comment on Paragraph 29. Paragraph 32 is subordinate to facts found. Paragraph 33 is accepted; however, the principal service area would appear to be Suwannee County. The existence of service over to Hamilton, Madison, Lafayette and Columbia Counties does not change the perception of this case. Paragraph 34 is subordinate to facts found. Paragraph 35 is contrary to facts found as are Paragraphs 36 and 37. Concerning Paragraph 38, the affiliation of Suwannee with the Santa Fe Health Care system does not overcome the lack of financial feasibility. Paragraphs 39 and 40 are subordinate to facts found. Paragraph 41 is contrary to facts found. Paragraph 42 is not necessary to the resolution of the dispute. Paragraph 43 is contrary to facts found. Paragraphs 44 and 45 are subordinate to facts found. Paragraph 46 is contrary to facts found. Paragraphs 47-55 are subordinate to facts found. Paragraph 56 is not necessary to the resolution of the dispute. Paragraphs 57-60 are subordinate to facts found. Paragraph 61 is contrary to facts found. Paragraph 62 is subordinate to facts found. Paragraph 63 is contrary to facts found. Paragraph 64 is subordinate to facts found. Concerning Paragraph 65, notwithstanding these observations they do not justify the rate structure or per diem charges set out in the Suwannee application. Paragraph 66 is subordinate to facts found as are the first two sentences of Paragraph 67. The last sentence to Paragraph 67 is rejected. Paragraphs 68 and 69 are contrary to facts found. The first sentence of Paragraph 70 is subordinate to facts found. The second sentence is not relevant. Paragraphs 71 through the first sentence of Paragraph 73 is contrary to facts found. Concerning the last sentence of Paragraph 73, Starke is found to be financially feasible and Suwannee is not. Paragraph 74 is subordinate to facts found. Paragraphs 75 and 76 have been taken into account in deciding that there are no particular advantages to placing the 60 beds in Columbia County as opposed to Suwannee County. Paragraph 77 in all sentences save the last is accepted. The last sentence is contrary to facts found in that subacute care will be rendered in the Starke facility. Paragraphs 78 through 80 are contrary to facts found. Paragraph 81 is subordinate to facts found. Paragraph 82 is accepted in the premise, but use of Suwannee as the facility to serve this population is rejected based upon the lack of financial feasibility. Paragraph 83 is subordinate to facts found with the exception that the subacute patients would not be best placed with Suwannee. Paragraph 84 and 85 are subordinate to facts found. Paragraph 86 is contrary to facts found. Paragraphs 1-5 with the exception of the last sentence in Paragraph 5 are subordinate to facts found. Concerning that latter sentence it is clear that Suwannee would intend to build the nursing home facility together with the hospital or exclusive of the hospital project. Paragraphs 6-8 are not necessary to the resolution of the dispute. Paragraph 9 is subordinate to facts found. Paragraph 10 is accepted and it is acknowledged that the applicants can approximate that average. Paragraphs 11 and 12 are subordinate to facts found. Concerning Paragraph 13 Suwannee did establish its percentage of commitment to Medicaid through proof at hearing. Paragraphs 14 through 23 are subordinate to facts found. Paragraph 24 is contrary to facts found in that Starke offers no greater enhancement than Suwannee in terms of geographic accessibility and is not really a competitor in this criterion with McCoy. Paragraphs 25 through 27 are subordinate to facts found. Paragraph 28 is contrary to facts found in that Suwannee did identify the programs that it intends to offer. Paragraphs 29 through 36 are subordinate to facts found. Paragraph 37 in the first sentence is subordinate to facts found. The second sentence is not necessary to the resolution of the dispute. Paragraph 38 is subordinate to facts found. Paragraph 39 is not necessary to the resolution of the dispute. Concerning Paragraph 40 while it is agreed that swing beds are skilled level of nursing home care they do not constitute reasonable alternatives to long term care. Paragraph 41 is subordinate to facts found in the first sentence. The second sentence in its suggestion that there is no significance to the lack of provision of these types of services under subacute care in area nursing homes is rejected. Paragraph 42 is rejected. Paragraph 43 is subordinate to facts found. Paragraph 44 is contrary to facts found. Paragraphs 45 through 52 are subordinate to facts found. Paragraph 53 is contrary to facts found. Paragraph 54 is subordinate to facts found with the exception that the reason that the Suwannee project is not found to be financially feasible does not include reference to a higher charge for Medicare patients than the charge to private pay patients. Paragraphs 55 through 60 with the exception of the last sentence in Paragraph 60 are subordinate to facts found. The nursing home is intended to be built whether the replacement hospital is built or not. Paragraphs 61 through 65 are subordinate to facts found. Starke Paragraphs 1 through 5 with the exception of the latter two sentences in Paragraph 5 are subordinate to facts found. Concerning the next to the last sentence, it was made clear that the intentions on the part of Suwannee were to build the nursing home. The last sentence to the extent that it is intended to suggest that this applicant is incapable of offering long term care services is rejected. Paragraphs 6 through 8 are not necessary to the resolution of the dispute. Paragraphs 9 through 11 are subordinate to facts found. Concerning Paragraph 12 to the extent that it suggests that Suwannee is not willing to provide services to Medicaid recipients, it is rejected. Paragraphs 13 through 21 are subordinate to facts found. Paragraph 22 is contrary to facts found in that Starke is not seen as enhancing geographic accessibility to a greater extent than Suwannee its true competitor. Paragraphs 23 and 24 are subordinate to facts found. Paragraph 25 is contrary to facts found ih that Suwannee has identified its special programs. Paragraphs 26 through 33 are subordinate to facts found. Paragraph 34 is subordinate to facts found in the first sentence. The second sentence is not necessary to the resolution of the dispute. Paragraph 35 is subordinate to facts found. Paragraph 36 is not necessary to the resolution of the dispute. Concerning Paragraph 37 while it is agreed that swing beds are skilled level of nursing home care they do not constitute reasonable alternatives to long term care. Paragraph 38 is subordinate to facts found in the first sentence. The second sentence in its suggestion than there is no significance to the lack of provision of these types of services under subacute care in area nursing homes is rejected. Paragraph 39 is rejected. Paragraphs 40 and 41 are subordinate to facts found. Paragraph 42 is contrary to facts found. Paragraphs 43 through 50 are subordinate to facts found. Paragraph 51 is contrary to facts found. Paragraph 52 is subordinate to facts found except as it suggests that the difference in rate between Medicaid patients and private pay patients in the Suwannee proposal forms the basis for the criticism that the Suwannee project is not financially sound. Paragraphs 53 through the first two sentence of Paragraph 59 are subordinate to facts found. Related to the latter sentences in Paragraph 59 it is clear that the schematic pertains to the basic design of the Suwannee facility whether attached to a new hospital or free standing. Paragraphs 60 through 64 are subordinate to facts found. McCoy Paragraph 1 is subordinate to facts found. Paragraphs 2 and 3 are not necessary to the resolution of the dispute. Paragraph 4 is subordinate to facts found. Paragraph 5 is not necessary to the resolution of the dispute. Paragraphs 6 through 83 are subordinate to facts found. Regency Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3 through 5 are subordinate to facts found. COPIES FURNISHED: Sam Power, Department Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Elizabeth McArthur, Esquire Jeffrey Frehn, Esquire Aurell, Radey, Hinkle and Thomas 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, FL 32302 W. David Watkins, Esquire Oertel, Hoffman, Fernandez and Cole, P.A. Post Office Box 6507 2700 Blair Stone Road Tallahasee, FL 32314-6507 Leslie Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, FL 32308 James C. Hauser, Esquire F. Phillip Blank, Esquire R. Terry Rigsby, Esquire Julie Gallagher, Esquire F. Philip Blank, P.A. 204-B South Monroe Street Tallahassee, FL 32301 Grafton B. Wilson, II, Esquire 711 North 23rd Avenue, Suite 4 Post Office Box 1292 Gainesville, FL 32602 R. Bruce McKibben, Esquire Dempsey and Goldsmith, P.A. 307 West Park Avenue Tallahassee, FL 32301
Findings Of Fact Petitioner, Florida Convalescent Centers, Inc. (FCC), filed an application with respondent, Department of Health and Rehabilitative Services (HRS), on October 14, 1983, seeking a certificate of need authorizing the construction of a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida. /1 The proposed project carries an estimated cost of $3,530,000. After reviewing the application, HRS issued its proposed agency action on February 21, 1984, in the form of a state agency action report in which it advised petitioner that it intended to deny the application. The report stated in part that "(e)xisting and approved bed capacity in Manatee County... is sufficient to satisfy projected need for 1986," that 240 nursing home beds had just been approved for the county, and when added to the existing nursing home supply, would "maintain a reasonable subdistrict occupancy level through 1986 and satisfy the need for additional beds in Manatee County." The service area in which FCC proposes to construct its new facility is the Manatee County subdistrict of HRS District 6. That district contains five counties, including Manatee. In order to determine need, HRS has adopted Rule 10-5.11(21), Florida Administrative Code, which contains a formula (or methodology) for determining need at both the district and subdistrict level. Under that formula, HRS is required to utilize the "most recent 6 month nursing home utilization in the subdistrict." In this regard, HRS prepares on an on- going basis an internal document entitled "Quarterly Report" which contains the latest available data over a six-month period. In this proceeding, HRS used a report containing data for the period October, 1983, through March, 1984. This was the most current and complete available data at the time of hearing. According to the methodology in Rule 10-5.11(21), there is a gross need in District 6 for 7,336 nursing home beds. At the same time, there are presently 4,910 licensed and 960 approved beds in the District. Therefore, this results in a district-wide shortage of 1,466 nursing home beds through the year 1987, which is the three year planning horizon used by HRS in determining need. Evidenced introduced by HRS indicated there are presently 765 licensed and 240 approved beds in Manatee County. Under the rule, the methodology reflects a need for 1,518 beds, or a subdistrict deficiency of 513 beds through the year 1987. But even if beds are mathematically required under the formula at the subdistrict level, the rule requires that the current utilization of existing facilities be at least 85 percent, and the prospective utilization rate exceed 80 percent. If they do not, no additional beds may be authorized. The current utilization rate in Manatee County is 91.7 percent which meets the 85 percent threshold. However, the prospective utilization rate for the existing and approved operating nursing homes within the county is 69.8 percent, or substantially less than the minimum threshold of 80 percent called for by the rule. If petitioner's proposed beds are added to the calculation, the prospective utilization rate drops to 62.9 percent, or far below the requisite minimum rate. Therefore, there is no need for additional beds in Manatee County. FCC points out that special circumstances are present which justify a deviation from the rule. These include the allocation under the rule of only 15 percent of the district beds to Manatee County even though 21 percent of the elderly population (over 65 years) resides within the county, and the fact that Manatee has the highest percentage of people over 75 years of age of any county within the district. FCC also contends that the county has more persons in poverty than the statewide average, and that it will dedicate some 50 percent of its beds to Medicaid patients if the application is approved. However, these factors are taken into account in the formula devised by HRS, and do not constitute special circumstances that would warrant a departure from the need calculation encompassed in the rule.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of Florida Convalescent Centers, Inc., for a certificate of need to construct a 120-bed skilled and intermediate care nursing home facility in Manatee County, Florida be DENIED. DONE and ORDERED this 31st day of October, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1984.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: Case background and the parties: The Department is the state agency charged with the responsibility of issuing, revoking, or denying certificates of need for health care facilities or services. In that regard the Department has promulgated a rule for computing the need for new or additional community nursing home beds. The methodology of the rule (now Rule 10-5.036, Florida Administrative Code) calculates a specific number of beds anticipated to be needed for a given planning horizon. Once calculated, the Department publishes the calculated need for the district/subdistrict. Additional beds are generally not authorized if their approval would cause the total number of beds approved to exceed the number of beds calculated to be needed under the rule. The Department is not, however, obligated to approve beds so that the total number of beds calculated to be needed are approved, i.e. the Department may, as in this case, approve only a portion of those beds thought to be needed. In this case, the Department published a projected need for 165 additional beds in Orange County, Florida. That bed pool was calculated for the January, 1993 planning horizon and was published in the Florida Administrative Weekly on April 13, 1990. The calculated need published in this case has not been challenged and, therefore, was not at issue in these proceedings. At the time need was computed, there were 2,797 licensed beds in Orange County with an additional 505 approved nursing beds. The occupancy rate for the county was just under 93 percent. Following the publication of the need figures, letters of intent and applications were filed by health care providers seeking to obtain approvals for the available nursing beds. Coordinated Care, Inc. filed an application (CON #6287) for approval to develop a new, freestanding 120 bed community nursing home. The project was estimated to require a capital expenditure of $6,000,000 and would provide 24 beds in a subacute care unit. Florida Convalescent Centers, Inc. filed an application (CON #6292) for approval to develop a 60 bed addition to its existing facility known as Palm Garden of Orlando (CON #2991). If approved, the total number of nursing beds for that facility would then be 120 beds. The project cost for the expansion was estimated at $1,648,638. It was proposed that financing and management for the facility would be provided by National HealthCorp., Ltd. Marriott Retirement Communities, Inc. filed an application (CON #6290) for approval of a 39 bed community nursing home facility to be built as a component of a retirement community to be known as Brighton Gardens Nursing Center. The project cost for the Marriott proposal was $2,613,919. The Department's preliminary action in this case was to grant the CONs requested by Marriott and Florida Convalescent and to deny the application filed by Coordinated Care. Health Quest Management Corporation VII (Health Quest) operates an existing 120 bed nursing home in Orange County, Florida. That nursing home is known as Regents Park. Health Quest also operates Regents Woods, an adult congregate living facility, in Orange County. Health Quest opposes the proposed approval of CON #6290 for Marriott. Coordinated Care opposes the proposed approval of CON #6292 for Florida Convalescent and affirmatively alleges it is entitled, as the superior co-batched applicant, to the approval of its application. The petitions filed by Coordinated Care and Health Quest challenging the Department's preliminary action were timely. As to Case no. 90-7563: At the outset of the hearing, the parties stipulated that the following review criteria found in Section 381.705, Florida Statutes, were not at issue or were inapplicable to this case: Subsections 381.705(1)(d),(e),(f),(g),(j),(k),(m), and (2)(b) and (c). As to all other relevant criteria, Florida Convalescent and Coordinated Care were comparatively reviewed for CON approval by the Department and are so reviewed in this order. Florida Convalescent is a nursing home company currently operating twelve nursing homes in Florida, including Palm Garden of Orlando (Palm Garden). Palm Garden is a 60 bed facility that was constructed according to a 120 bed prototype. The facility was designed to have three sections: two 60 bed patient wings and a center, nonliving area for the operations of the facility. The kitchen, dining room area, therapy spaces, office spaces and open areas have already been constructed and are currently utilized for the existing 60 bed unit. The approval of the CON here would allow the completion of the final 60 bed wing. Palm Garden is managed by National Healthcorp, Ltd. (National), a nursing home company headquartered in Murfreesboro, Tennessee. National provides financial, developmental, and management services to nursing home companies in nine states. National prepared the CON application in this case on behalf of Florida Convalescent. If approved, National will continue to manage the Palm Garden facility in Orlando. As part of the 60 bed extension, Palm Garden will have specialized programs for Alzheimer's patients, subacute care, and special respite care. The approval of the 60 extension will allow these programs to be expanded and Florida Convalescent has indicated its willingness to accept as a condition of its CON an obligation to provide such special care programs. Currently, the profile of Palm Garden patients can be summarized as follows: 70 percent Medicaid, 25 percent private pay, and 5 percent Medicare. Florida Convalescent has agreed to commit to providing 58 percent of its services to Medicaid patients, and has indicated its willingness to accept as a condition of its CON such a provision. National has agreed to finance 1.6 million dollars of expenses for the Florida Convalescent proposal. The total project cost associated with the proposal is $3,333,119. Coordinated Care is a management company whose principals, Fred A. Lane and Patricia Lane, his wife, operate four nursing home facilities in Volusia County, Florida. If approved, Mr. Lane will administer Coordinated Care's facility in Orange County. It is proposed that the Coordinated Care facility will have 120 beds with a 24 bed subacute unit. The subacute unit will provide care for AIDS patients, ventilator dependent patients, and IV therapy. Additionally, the Coordinated Care proposal offers a program for mentally impaired patients including those with Alzheimer's and will also offer a respite care program. Coordinated Care is willing to accept as conditions on its certificate of need the following commitments: to exceed minimums on direct care staff to patient ratios by 10 percent; to provide service to AIDS patients; to offer 48 percent Medicaid and 15 percent Medicare; and to provide the subacute programs previously described. The Department's District 7, subdistrict Orange County, has a need for additional nursing home beds. The District 7 Local Health Plan cites recommendations regarding new nursing home beds for the District. Those recommendations speak to the needs of the District as a whole and are not ranked by priority of interest. In this case, both applicants, Coordinated Care and Florida Convalescent, will provide nursing services to AIDS patients. The Coordinated Care application recognized the need for a staff education program to provide AIDS training and committed the applicant to provide care for AIDS patients. The Florida Convalescent application did not address AIDS patients specifically because no AIDS patient has sought admission at the existing facility. Florida Convalescent will conduct staff education for AIDS patients, however, and will not deny admission to AIDS patients. Both Coordinated Care and Florida Convalescent will provide, and will commit to provide, specific levels of Medicaid patients. In this context, Florida Convalescent's history (63 percent) and proposed commitment (58 percent) to Medicaid utilization is greater than that offered by Coordinated Care (48 percent). With regard to indigent or charity care, Florida Convalescent currently provides such care at Palm Garden of Orlando. Both Coordinated Care and Florida Convalescent have demonstrated a commitment to high quality nursing home care. Palm Garden of Orlando is a superior rated nursing home and has, additionally, established a high quality service rating among homes managed by National. Similarly, the Lane family homes have experienced superior ratings and are committed to quality care. Both Coordinated Care and Florida Convalescent have demonstrated good track records for employee recruitment, training, and benefits. Additionally, the salary and bonus offers make both providers an attractive employer. Palm Garden of Orlando currently has ties to nursing programs in the Orlando area and is close geographically to Valencia Community College and the University of Central Florida. It is anticipated that Coordinated Care will be able to establish such ties in the Orlando area since it has done so in Volusia County. Both Florida Convalescent and Coordinated Care have demonstrated that their proposals in Orange County meet the State Health Plan preferences. By virtue of it being an existing provider, it is anticipated that Florida Convalescent will lower its administrative costs with the addition of 60 beds since there is recognized an economy of scale at that level. There is no demonstrated problem related to availability, accessibility, extent of utilization, or adequacy of nursing care services in this case. It is likely that resources, including health care manpower, will be available for project accomplishment and operation. Both applicants have demonstrated the immediate and long-term financial feasibility of the proposals. It is anticipated that the addition of 60 beds to the Florida Convalescent facility will have the least impact on the costs of providing health services and will promote cost-effectiveness. It is anticipated that the Florida Convalescent's proposal will best provide services to Medicaid patients and the medically indigent. The Florida Convalescent expansion is the most efficient and more appropriate alternative for providing nursing home services. The Florida Convalescent expansion will minimize the numbers of patients who were not admitted because of lack of beds at the Palm Garden facility. The Florida Convalescent expansion is consistent with other agencies and is in compliance with the local plans for providing long term care. The application submitted by Florida Convalescent was complete and its consolidated financial statement was consistent with the Department's rules and policies. The consolidated financial statement submitted by Florida Convalescent was prepared in accordance with generally accepted accounting principles and is sufficient for all purposes for which such statements are required by the Department. Florida Convalescent has demonstrated it has the financial resources to accomplish the project expansion and that the methods of construction, including equipment costs, are reasonable. On balance, when comparatively reviewed, the application submitted by Florida Convalescent is superior to the proposal submitted by Coordinated Care. As to Case No. 90-7565 Marriott filed an application for a certificate of need, designated by the Department CON # 6290, to construct a 39 bed nursing unit to be built in conjunction with an 133 bed adult congregate living facility (ACLF) in Orange County, Florida. The Marriott proposal in this case is based upon a design it has utilized before and is commonly known as a "Brighton Gardens" project. In accordance with Department statutes and rules, a certificate of need (CON) is necessary in order for Marriott to pursue the nursing component of its project. A CON is not required for the ACLF component. The Marriott project will be financed by its parent company. That Marriott entity has $400 million in cash or cash equivalents, generates $600 million annually in cash flow, and can easily afford the project addressed by this application. The Marriott proposal substantially meets the preferences and recommendations of the State and Local Health Plans. The Marriott proposal specifies 30 percent of its patient days will be available for Medicaid patients. Marriott is able to provide a high quality of care. The Marriott proposal will establish links with the nursing school community so that recruitments and staffing may be enhanced. Additionally, Marriott will offer continuing education for staff with reasonable salary and benefit opportunities. The costs of construction for the Marriott proposal are reasonable, allocated appropriately between the nursing facility and the ACLF, and meet or exceed all applicable code requirements. Both as to the manner of allocation and costs of allocation, Marriott has disclosed sufficient detail to adequately assess the nursing component of its proposed development. Marriott's proposed project both in the immediate and long-term is financially feasible. The granting of Marriott's proposal will not adversely affect Health Quest's ability to recruit personnel. The granting of Marriott's proposal will not adversely affect Health Quest's rate of occupancy. If Health Quest's occupancy should decrease following the approval of Marriott's request, such result is not attributable to the approval since Health Quest currently has a lower than district average for occupancy and since Health Quest currently charges more than the average amount charged by other nursing facilities. The number of beds requested by Marriott represents approximately 1 percent of the total number of beds currently approved in Orange County. Marriott's application substantially complies with all review criteria set forth in Chapter 381, Florida Statutes.
Recommendation Based on the foregoing, it is recommended that the Department of Health and Rehabilitative Services enter a final order approving the applications filed by Marriott and Florida Convalescent, denying the application of Coordinated Care, and dismissing the petition filed by Health Quest. RECOMMENDED this 31st day of October, 1991, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 90-7563 and 90-7565 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT: Paragraphs 1 through 5 are accepted. The first sentence of paragraph 6 is accepted; the remainder of the paragraph is not a statement of fact. Paragraphs 7 through 13 are accepted. With the deletion of the word "well" in the last sentence, paragraph 14 is accepted. Paragraph 15 is accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY MARRIOTT: Paragraphs 1 through 3 are accepted. With the clarification that at most 120 beds are in dispute, paragraph 4 is accepted. With regard to paragraph 5 it is accepted that Marriott's application is consistent with the state and local health plans; otherwise rejected as irrelevant. Paragraphs 6 through 8 are accepted. With regard to paragraph 9, it is rejected as argument or response to a position argued by Health Quest. The weight of the credible evidence showed that Marriott appropriately disclosed its projects and that it will be able to finance the project which is at issue. Paragraphs 10 through 19 are accepted. With the exception of the last sentence which is accepted; paragraph 20 is rejected as irrelevant. Paragraphs 21 through 23 are accepted. The first sentence of paragraph 24 is accepted, the remainder rejected as irrelevant. The first two sentences of paragraph 25 are accepted; the remainder rejected as irrelevant or argument. With the deletion of the words "by far" which are rejected as argument, paragraph 26 is accepted. With the deletion of the words "serious" and "numerous" which are rejected as contrary to the weight of the evidence, paragraph 27 is accepted. Paragraph 28 is rejected as contrary to the weight of the evidence. Paragraphs 29 and 30 are accepted. Paragraphs 31 through 33 are rejected as argument, contrary to the weight of the evidence, or irrelevant. It is not found, however, that Health Quest will suffer adversely from the approval of Marriott's application, to the contrary it will not. Paragraph 34 is accepted. Paragraphs 35 and 36 are rejected as argument. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY HEALTH QUEST: Paragraphs 1 through 3 are accepted. Paragraph 4 (a) is accepted. Paragraphs 4 (b), 4 (c), and 4 (d) are rejected as contrary to the weight of the evidence. Paragraphs 5 and 6 are accepted. With regard to paragraph 7, it is rejected as irrelevant or argument; in this case Marriott has allocated and identified appropriately to establish the support areas needed for the nursing component of its proposal. Those areas have been computed in the cost and fairly and reasonably been considered in the financial feasibility of the project. To the extent addressed in the findings of fact or as accepted elsewhere in this appendix, paragraphs 8 through 36 are accepted, otherwise rejected as contrary to the weight of the evidence or irrelevant. It is specifically found that Marriott appropriately and accurately disclosed and allocated costs of the nursing facility and that those costs fairly depict the expenses reasonably expected to be incurred by this project. As to the suggestion by Health Quest that Marriott's proposal could not survive as a stand alone facility, such suggestion is rejected as irrelevant given the total circumstances and financial disclosures made in this case. Paragraph 37 is accepted. Paragraph 38 is rejected as contrary to the weight of the evidence, hearsay, or not supported by the evidence in this case. Paragraphs 39 through 147 are rejected as recitation of testimony, irrelevant, argument, contrary to the weight of credible evidence or not supported by the evidence in this case. Paragraph 148 is accepted. Paragraph 149 is rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 150 through 169 are rejected as irrelevant, contrary to the weight of the evidence, or not supported by the evidence. Paragraphs 170 through 179 are accepted. Paragraph 180 is rejected as irrelevant. Paragraphs 181 through 185 are rejected as irrelevant, argument, or contrary to the weight of the evidence. Paragraph 186 is accepted. Paragraph 187 is rejected as irrelevant. Paragraph 188 is accepted. Paragraphs 189 through 199 are rejected as contrary to the weight of the evidence, irrelevant, or argument. It is found that the allocations of space and costs in this case accurately describe the project and would allow for the financial feasibility of the nursing component. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY COORDINATED CARE: Paragraphs 1 through 3 are accepted. With regard to paragraph 4 it is accepted that the mathematical calculations are correct but such are not depositive of this case. Paragraph 5 is accepted. With the deletion of the phrase "Contrasted to the management style of FCC, which does not manage any of its facilities," which is rejected as argument or irrelevant, paragraph 6 is accepted. Paragraphs 7 through 21 are accepted. Paragraph 22 is rejected as contrary to the weight of the evidence. Paragraph 23 is rejected as irrelevant. Paragraph 24 is rejected as irrelevant. The first two sentences of paragraph 25 are accepted; the remainder is rejected as contrary to the weight of the evidence presented, irrelevant, or unsupported by the record. Paragraphs 26 through 31 are accepted. Paragraph 32 is rejected as repetitive. Paragraph 33 is rejected as repetitive. Paragraphs 34 through 36 are accepted. Paragraph 37 is rejected as repetitive. Paragraphs 38 through 44 are rejected as contrary to the weight of the evidence, irrelevant, or, where accurate as to fact, considered to be not dispositive of the issues of this case. Paragraph 45 is accepted. Paragraph 46 is accepted (assuming numbers have been rounded off). Paragraph 47 is rejected as contrary to the weight of the evidence. Paragraphs 48 and 49 are accepted. Paragraphs 50 through 64 are rejected as irrelevant, contrary to the weight of the evidence presented or argument. Paragraphs 65 and 66 are accepted. Paragraphs 67 through 72 are rejected as argument, irrelevant, or contrary to the weight of the evidence. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY FLORIDA CONVALESCENT CENTERS: Paragraphs 1 through 19 are accepted. Paragraph 20 is rejected as argument. Paragraphs 21 through 24 are accepted. Paragraph 25 and 26 are rejected to the extent that they suggest the Palm Garden facility enjoys a higher quality of care than the Lane family facilities. Both applicants provide a high quality of care and must be ranked equally in this regard. It is expected that the expansion of Palm Garden will assure that facility's continued high care and only to that extent has Palm Garden been considered the better applicant in this batch. Paragraph 27 is accepted to the extent it details the history of Florida Convalescent, otherwise rejected as irrelevant or contrary to the weight of the evidence. Paragraphs 28 and 29 are rejected as irrelevant. Paragraph 30 is accepted to the extent that it suggests both Florida Convalescent and Coordinated Care have established good recruitment and training programs, etc. To the extent that Florida Convalescent is already established in the Orlando community it is advantaged; but, it is expected that Coordinated Care will be able to duplicate its efforts and successes (as in Volusia) in the Orange County venue. It is because it has an established program that Florida Convalescent gets the nod in this category. Paragraphs 31 through 38 are accepted. Paragraph 39 is accepted to the extent that it states both applicants have superior programs and quality of care; otherwise, rejected as contrary to the weight of the evidence. With regard to paragraphs 40 through 42 it is found that both applicants meet the preferences addressed in the state health plan and that neither ranks higher in the categories listed in these paragraphs. Paragraphs 43 through 45 are accepted. Paragraph 46 is rejected as contrary to the weight of the evidence. Paragraphs 47 (all subparts) through 52 are accepted. The first sentence of paragraph 53 is accepted; the remainder is rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 54 through 74 are accepted. Paragraphs 75 through 91 are rejected as contrary to the weight of the evidence or irrelevant. Paragraphs 92 through 109 are accepted. COPIES FURNISHED: James M. Barclay Theodore E. Mack Cobb Cole & Bell 315 South Calhoun Street Suite 500 Tallahassee, Florida 32301 Elizabeth McArthur Aurell, Radey, Hinkle & Thomas 101 N. Monroe Street Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 Charles M. Loeser 315 West Jefferson Boulevard South Bend, Indiana 46601 Darrell White Gerald B. Sternstein McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 Donna Stinson Thomas M. Beason Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P.A. 118 North Gadsden Street Suite 100 Tallahassee, Florida 32301 Richard Patterson Assistant General Counsel Department of Health and Rehabilitative Services Fort Knox Executive Center 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Slye, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issue is whether Respondent properly changed Petitioner's licensure status to conditional on June 23, 1997.
Findings Of Fact Petitioner owns and operates a nursing home in Venice, Florida. Respondent conducted a relicensure survey of Petitioner's nursing home on June 12, 1997. On June 23, 1997, Respondent issued Petitioner a new license, effective June 12, 1997, through October 31, 1997, for a skilled nursing facility. However, as a result of the deficiencies found in this survey, Respondent rated the renewal license as conditional. A resurvey on August 6, 1997, revealed that Petitioner had corrected all of the cited deficiencies, so Respondent issued a standard license, effective August 6. There are three ratings for a license: superior, standard, and conditional. Prior to the June 12 renewal, Petitioner's license was rated superior. The issuance of a conditional license adversely affects a licensee in one and possibly two ways. First, the conditional license hinders marketing and employee recruiting and retention. Second, the conditional license may affect Medicaid reimbursement levels. Even though Respondent rerated the nursing home as standard, the earlier conditional rating remains meaningful because it means that Petitioner cannot gain a superior rating for the next licensing period. Another factor militating against a determination that the present proceeding is moot is Respondent's procedure by which it does not provide licensees with an opportunity for a hearing prior to changing the rating of their nursing home licenses. As an incidental complaint to the issuance of a conditional license, Petitioner also complains of the procedure by which this Respondent issues this conditional license. Without having given Petitioner an opportunity for a hearing based on a proposed or tentative decision to change Petitioner's rating, Respondent simply issued the conditional license and gave Petitioner an opportunity to challenge this action, after the fact, in a formal administrative hearing. A mootness determination on these facts would insulate Respondent's initial action from effective challenge, despite the obvious economic impacts of the initial action. The June 12 survey reports cites three sets of Class II deficiencies, which were identified as Tags F 225, F 309, and F 314. These three tags were the sole bases for the issuance of a Conditional license. Tag F 225 concerns the investigation and documentation of an alleged incident of abuse of a resident by one of Petitioner's employees. The survey report asserts that Petitioner did not satisfy applicable legal requirements by failing, in violation of its own policies, to document in the resident's file the results of an abuse investigation report. Tag F 225 and the testimony of Respondent's witnesses at the hearing are vague as to whether the issue under Tag F 225 is that Petitioner failed to conduct an appropriate investigation or failed to document adequately that it had conducted an investigation. When pressed, Respondent's witnesses chose failure to document, perhaps in deference to the fact that Petitioner's employees clearly conducted an investigation. The alleged incident underlying this issue did not constitute abuse. A staffperson grabbed a resident's arm for an appropriate purpose and did not injure or harm the resident. Petitioner's investigation properly concluded that there was no abuse. As discussed under the conclusions of law, the subsubsubparagraph of the federal regulation allegedly violated under this tag requires only that Petitioner report to appropriate authorities any knowledge of actions by a "court of law" against an employee suggestive of unfitness to serve as facility staff. There is no proof of action by a court of law; this missing fact alone ends the inquiry under this tag. Additionally, Petitioner nonetheless reported the unfounded allegations to the state agency charged with investigating allegations of abuse, and the state agency concluded that the charge was unfounded. Tag F 309 concerns the quality of care received by six residents. As to Resident Number 6, who was in the final stages of a terminal illness, the survey report asserts that Petitioner kept him in isolation and did not offer him opportunities for socialization. Testimony at the hearing revealed that the resident was dying and did not want to socialize, but Respondent's witness opined that this was not an appropriate option. No evidence suggested that the dying resident suffered any diminution of ability to eat or use language. Respondent's witness labored under the misconception that the cited federal regulation addresses socialization (as opposed perhaps to the role of socialization in facilitating the more specific activities actually mentioned by the regulation, which is discussed in the conclusions of law). Even if the federal regulation were so broad, which it is not, the evidence certainly suggests that any diminution in socialization was unavoidable due to the resident's terminal clinical condition. The evidence reveals that Resident Number 6, who had had a gangrenous foot, suffered a staph infection of his gangrenous right foot. He was depressed, fatigued, and in pain; however, he was freely visited by staff and family. As to Resident Number 8, who had had a stroke, the survey report asserts that Petitioner failed to provide him his restorative therapy of walking and failed to document this therapy. At the time of the survey, Petitioner was short of restorative staff due to a scheduled vacation and an unscheduled bereavement absence due to the suicide of an employee's brother. When a restorative aide, who was on vacation, appeared at the nursing home and attempted to provide Respondent's surveyor with documentation concerning the therapy administered to Resident Number 8, the surveyor rejected the documentation on the grounds that it did not sufficiently identify the resident or therapist. Resident Number 8 suffered some loss of functioning--i.e., the ability to walk 400 feet--but the record does not link this loss of functioning to any brief interruption in his restorative therapy. As to Resident Number 9, the survey report states that, during the two days that surveyors were at the facility, she did not ambulate, even though her restorative nursing plan called for daily ambulation. However, she suffered no harm during this insignificant interruption in her program, from which she was successfully discharged a couple of weeks after the survey. As to Resident Number 13, who was 102 years old, the survey report notes that he was supposed to ambulate in a wheelchair. One of Respondent's surveyors noticed that a staffperson was pushing this resident's wheelchair. However, staff had assumed the responsibility of pushing this resident's wheelchair for him after he had developed pressure sores on his heels. The evidence fails to show that Petitioner's care for the treatment of Resident Number 13 had anything to do with his loss of function. As to Resident Number 26, the survey report asserts that his physician had ordered an increase in dosage of Prilosec, which aids digestion by treating the acidity associated with peptic ulcers. Three weeks passed before Petitioner's staff noticed that the change, which was on the resident's chart, had not yet been implemented. They implemented the change prior to the survey, and notified the resident's physician of the error in medication administration a couple of days later. The survey report states that Petitioner's staff documented, on May 30, 1997, that Resident Number 26 had lost 4.8 pounds, or 5.7 percent of his body weight, in one week. This weight loss occurred during the latter part of the period during which Resident Number 26 was receiving less than his prescribed amount of medication. Two of Petitioner's witnesses testified, without elaboration, that the medication error did not cause the weight loss. The survey report implies otherwise, although Respondent's witnesses were not as pronounced as Petitioner's witnesses in dealing with any link between the medication error and the weight loss. Absent the weight loss, the medication error-- consisting of a failure to raise a digestive medication--would have been insignificant and insufficient grounds for a Class II deficiency on the cited basis. However, there was a serious weight loss while the resident was undermedicated. The lack of evidence in the record proving that there was or was not a causal link between the weight loss and undermedication means that the party bearing the risk of nonpersuasion loses on this issue. As discussed in the conclusions of law, Respondent has the burden of proof; thus, for this reason alone, Petitioner prevails on this issue. As to the last resident under Tag F 309, who was not identified, the survey asserts that a restorative aide commented that he used to walk 440 feet, but does not anymore because he thinks that he does not have to. This scanty allegation provides no basis for citing Petitioner with a deficiency, even if it applies to Resident Number 8, as appears probable. Tag F 314 also concerns a quality-of-care issue-- specifically, the development and treatment of pressure sores in three residents. As to Resident Number 1, who had been in the nursing home for three years, the survey report states that, on May 12, 1997, he had developed a Stage II pressure sore on his right outer ankle. The survey report asserts that Petitioner failed to provide sufficient care to prevent the development of this pressure sore, that Resident Number 1 had suffered pressure sores in 1995, and that Petitioner should have known and treated Resident Number 1 on the basis of his being at risk for developing pressure sores. Despite a failure to document, Petitioner's staff adequately treated Resident Number 1 once the pressure sore developed. Nursing assistants required that he wear silicone pressure booties and that lotion be rubbed on the irritated skin. In addition, Petitioner has shown that the clinical condition of Resident Number 1 made pressure sores unavoidable. One of Petitioner's Assistant Directors of Nursing testified that Resident Number 1 had poor pedal pulses, indicative of poor circulation, and a history of peripheral neuropathy. The resulting decreased sensation in his feet would prevent him from feeling increased pressure and thus the need to move his feet. Despite preventative measures, Resident Number 1 developed pressure sores due to these clinical conditions. As to Resident Number 7, who had been in the nursing home for six years, the survey report asserts that she had a Stage II pressure sore--meaning that the skin was broken--but was allowed to remained seated in the same position for two hours in a position in which the pressure on the sore on her buttock was not relieved. The survey report does not allege that this pressure sore developed while Resident Number 7 resided in the nursing home. Resident Number 7 had severe dementia and was a total-care patient. She could not move independently. In fact, she sat, unmoved, in a chair for at least 4 and 3/4 hours on one of the days of the survey. The failure to move Resident Number 7 raises serious questions about the adequacy of Petitioner's treatment. However, Petitioner's Assistant Director of Nursing answered these questions when she testified that the one- centimeter pressure sore healed five days after the survey. Thus, Petitioner provided Resident Number 7 with the necessary treatment and services to promote healing. As to Resident Number 13, who had been in the nursing home for less than three months, the survey report alleges that he had developed pressure sores while in the nursing home. Resident Number 13 was the 102-year-old resident who is also discussed in Tag F 309. The survey report alleges that, on April 24, 1997, Resident Number 13 had a red left heel, red right foot, and pink right heel; on May 1, 1997, he had soft and red heels; on May 7 and 14, 1997, his pressure sores could not be staged due to dead tissue surrounding the sores; on May 20, 1997, his left heel was documented as a Stage II pressure sore, but the right heel could not be staged due to dead tissue; and Petitioner's staff did not implement any treatment until May 12, 1997. Respondent proved the allegations cited in the preceding paragraph except for the last concerning a failure to implement any treatment until May 12. Petitioner's Assistant Director of Nursing testified that Patient Number 13 was frail and debilitated. If this is a clinical condition, it is the only statement of Patient Number 13's clinical condition contained in the record. The Assistant Director of Nursing testified that the pressure sore on the left heel healed by June 3 after the usual treatment measures of turning and repositioning and heel protectors. She testified that the pressure sore on the right heel improved somewhat, but had not healed by the time of his death in January 1998 of presumably unrelated causes. The testimony of the Assistant Director of Nursing rebuts any evidence concerning inadequate treatment of Resident Number 13, but does not establish that the development of his pressure sores was clinically unavoidable. Her testimony as to Resident Number 1 identified clinical conditions that, when coupled with the early implementation of preventative measures, established that Resident Number 1's pressure sore was unavoidable. As to Resident Number 13, the Assistant Director of Nursing also testified of early implementation of preventative measures, but, in contrast to her testimony concerning Resident Number 1, she described little, if anything, of any clinical condition making the pressure sores unavoidable. If the intent of the Assistant Director of Nursing was to imply that old age coupled with frailty and debilitation provide the necessary clinical justification, she failed to establish the necessary causal relationships among pressure sores, advanced age, and frailty and debilitation-- even if the frailty and debilitation were relative to other 102-year-olds, which the record does not reveal, as opposed to the frailty and debilitation, relative to the general population, that one might expect in a 102-year-old. Without more detailed evidence concerning Resident Number 13's clinical condition, Petitioner effectively invites the creation of a safe harbor from liability for the development of pressure sores in 102-year-olds or even 102-year-olds who are frail and debilitated for their age, and the administrative law judge declines either invitation.
Recommendation It is RECOMMENDED that the Agency for Health Care Administration enter a final order dismissing the petition filed by Petitioner and rating Petitioner's license as conditional for the relevant period. DONE AND ENTERED this 7th day of July, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 7th day of July, 1998. COPIES FURNISHED: Donna H. Stinson Broad and Cassell Post Office Drawer 11300 Tallahassee, Florida 32302-1300 Karel Baarslag Agency for Health Care Administration State Regional Service Center 2295 Victoria Avenue Fort Myers, Florida 33901 Paul J. Martin, General Counsel Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Sam Power, Agency Clerk Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Douglas M. Cook, Director Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229
Findings Of Fact The Parties Manor-Sarasota Manor Health Care Corporation operates 140 nursing centers throughout the country with nine nursing homes and three adult congregate living facilities (ACLF) in Florida. Seven of the nine Florida nursing homes are rated superior and two are standard. Manor-Sarasota is a wholly-owned subsidiary of Manor Health Care Corporation, and currently owns and operates a 120 bed nursing home, with a 120 bed ACLF, at 5511 Swift Road, Sarasota, Florida. The facility opened in December, 1983 and currently has a standard license, although for a period in 1986 its license was conditional. Manor-Sarasota is currently licensed as a skilled nursing home providing trach care, nasogastric feedings, wound care, physical, speech and occupational therapy, as well as Clinatron beds for patients with severe decubitus ulcers. On or about January 15, 1987, Manor-Sarasota filed CON application number 5050 for the addition of sixty community nursing home beds at its facility. The proposed additional beds will include a separate 30-bed specialized unit for elderly persons suffering from Alzheimer's Disease and related disorders. Manor Health Care Corporation currently operates 13 to 15 Alzheimer's units within their existing centers. Between 30 percent - 50 percent of Manor-Sarasota's current patients are diagnosed as having Alzheimer's or related disorders. There are no specialized facilities for Alzheimer's patients in Sarasota at the current time. The current facility is a two-story nursing home, and the additional beds would be configured in a two-story addition of thirty-five beds on the first floor and twenty-five beds on the second floor. The thirty-bed Alzheimer's unit would be located on the first floor. A separate dining room for Alzheimer's patients will also be provided. An additional nurse's station would be added to provide 4 nurse's stations for 180 beds. Total project costs are reasonably projected at $1.85 million, with construction costs of $1.26 million, equipment costs of approximately $170,000, professional services of approximately $137,000 and related costs of approximately $253,000. The proposal would add 16,683 gross square feet to the existing 49,454 gross square feet. The total project cost per additional bed would be $30,872, while the construction cost per square foot would be $55.00. The gross square footage per bed would be 278 feet. Manor-Sarasota projects a 40 percent Medicaid and 60 percent private pay utilization for the 60 bed addition, although its Medicaid utilization at the existing facility has only been between 15 percent and 24 percent. Since there is an upward trend in Medicaid utilization, Manor-Sarasota would accept a 40 percent Medicaid condition on its CON, if approved. Medicare patients will continue to be served within the existing facility. The project will be funded through 25 percent equity and 75 percent financing. Manor Health Care Corporation will finance the project internally through the sale of assets, and the sale of senior subordinated notes and convertible subordinated debentures, and this financing proposal is reasonable and realistic. In Manor-Sarasota's original application, six 3-bed wards were proposed. As a result of criticism of 3-bed wards in the Department's State Agency Action Report (SAAR) concerning this application as well as other facilities, the applicant modified its proposed design to eliminate all 3-bed wards and to include 24 semiprivate and 12 private rooms. The square footage of the addition was also increased by 21 percent from 13,750 to 16,683 square feet. This modification was presented at hearing and was filed subsequent to the application being deemed complete, and the SAAR being prepared. Competent substantial evidence in support of the original application was not offered, but rather evidence was presented in support of the substantially modified proposal. The applicant's existing 120-bed nursing home has experienced over 90 percent occupancy for the months of November, 1987 to the date of hearing, and also experienced an average occupancy of approximately 86 percent for 1986 and the first ten months of 1987. During the first year of operation, 65 percent occupancy is projected for the 60 new beds which are now being sought, and 95 percent occupancy is projected for the second year of operation. Sarasota Healthcare Sarasota Healthcare, Ltd., is a Georgia limited partnership whose general partners are Stiles A. Kellett, Jr. and Samuel B. Kellett. Sarasota Healthcare proposes to enter into a management agreement with Convalescent Services, Inc., (CSI) for the operation and administration of their proposed facility. The Kelletts, as 100 percent owners, comprise the Board of Directors of CSI and also serve as its Chairman and President. CSI operates 21 nursing homes in seven states, and 85 percent of its beds have superior licenses. There are 6 CSI operated nursing homes in Florida, one of which, Pinebrook Place, is located in Sarasota County in the City of Venice. Pinebrook Place is a 120 bed nursing home and has a superior license. Sarasota Healthcare does not own or operate any other nursing homes. A new 120 bed freestanding nursing home is proposed by Sarasota Healthcare in CON application 5025, which was filed with the Department in January, 1987. The project would be located in Sarasota County at a specific site which has not yet been identified. Sarasota Healthcare projects a utilization of 40 percent Medicaid, 5 percent Medicare and 55 percent private pay at its proposed facility, and would accept a 40 percent Medicaid condition of this CON, if approved. The proposed facility would offer skilled, intermediate, respite and hospice care; specialized services for Alzheimer's patients; physical, occupational, speech and rehabilitative therapy; counseling; and social services. Alzheimer's patients will not be located in a separate unit but will be intermingled with other patients while receiving specialized services and protections for their disease. Sarasota Healthcare proposes a 120 bed nursing home comprised of 12 private and 54 semiprivate rooms, 37,7000 gross square feet and a total project cost of $3.9 million The proposed size and cost of this facility are reasonable. The cost per bed would be $32,500 and the construction cost per square foot would be $58.00. Total project costs are reasonable and consist of approximately $2.45 million in construction costs, $385,000 in equipment costs, $145,000 for professional services, land acquisition of $600,000 for 3 to 5 acres, and $324,000 in related costs. The gross square footage per bed would be 314 feet. The project will be funded with 25 percent equity funding from the general partners, Stiles and Samuel Kellett, and 75 percent from a commercial bank, assuming a 9.5 percent interest rate with 1 percent discount point. The proposal is reasonable, but is dependent upon the general partners' ability to personally fund 25 percent of the costs of the project through an equity contribution, and on their ability to obtain commercial financing for the remaining project costs. Financial statements of the Kelletts provided in the record of this proceeding are unaudited, and were not prepared in accordance with generally accepted accounting principles. The Kelletts have 15 CON applications currently pending, and 4 have already been approved. They have a 6 to 1 debt to equity ratio. Health Quest On or about January 15, 1987, Health Quest corporation submitted an application for CON number 5046 on behalf of Regents Park of Lake Pointe Woods for the addition of 58 new beds to its existing 53 sheltered bed nursing home at a projected cost of approximately $1.29 million. The existing sheltered nursing home facility is known as Regents Park of Sarasota which is part of the Lake Point Woods Retirement Center containing a 110 bed ACLF and 212 retirement apartment units. The sheltered nursing home opened in November, 1986, and has achieved 90 percent occupancy since October, 1987. It is licensed under Chapter 651, Florida Statutes, as a continuing care facility. Health Quest owns and operates nine nursing centers in three states, and has received CON approval for 12 additional facilities in three states, including four in Florida. One of these Florida CONs is for 180 new community nursing home beds in Sarasota County. Health Quest's existing Regents Park of Sarasota nursing home is located at 7979 South Tamiami Trail, Sarasota, Florida. Although it is a sheltered nursing home, only one or two beds are generally occupied by Lake Point Woods residents at any one time. During 1987, only 26 admissions to Regents Park came from Lake Pointe Woods, and most of these admissions were for episodic illnesses of less than 30 days rather than for longer term care. Thus, the vast majority of admissions at Regents Park have been from the community, including admissions directly from home, hospitals and other nursing homes, rather than from the retirement center, Lake Pointe Woods, of which Regents Park is a part. However, since existing beds at Regents Park are sheltered, community patients will not be able to be admitted there beyond November, 1991, the expiration of five years from its opening. During its year and a half of operation, Regents Park has not shown a profit, despite original projections of profitability after only one year. In response to the Department's omissions letter dated February 19, 1987, Health Quest notified the Department, by letter dated March 27, 1987, of its amendment to CON application 5046. Rather than pursuing its request for 58 new community nursing home beds, Health Quest amended the application to seek conversion of the 53 sheltered beds to community beds and to add 7 new community nursing home beds. Since no new space is proposed for construction under the amendment, and since virtually all equipment is already in place, Health Quest projected no cost associated with the amended project. However, there would be some minor costs to equip seven new beds, as well as legal and consulting costs associated with this application and hearing. Currently, the Regents Park nursing home has approximately 31,000 total gross square feet, which would result in 520 gross square feet per bed if its application is approved. On April 10, 1987, the Department published its notice of completeness regarding Health Quest's amended CON application 5046 at Florida Administrative Weekly, Volume 13, No. 15, p. 1365. The Department reviewed and evaluated Health Quest's amended application, rather than the original application, in preparing its SAAR on the applications at issue in this case dated June 15, 1987. Despite this notice of completeness, the record shows that Health Quest's conversion proposal was incomplete since no balance sheet, profit and loss statement for precious fiscal years of operation, detailed statement of financial feasibility or pro forma were introduced. Although sheltered beds can be certified to accept Medicaid patients, Health Quest has not sought such certification for any of the 53 existing beds at Regents Park. Health Quest proposes to seek Medicaid certification for 5 beds, and to serve 8 percent Medicaid patients if CON 5046 is approved. Health Quest does not propose a separate unit for Alzheimer's patients, but would offer special outdoor activities for these patients as well as an Alzheimer's club for patients with this primary diagnosis. Health Quest specializes in caring for patients with hip fractures, and offers a wheelchair mobility and ambulation program, rehabilitation and occupational therapy, bowel and bladder rehabilitation, as well as physical and horticulture therapy. Regents Park has patients on intravenous therapy and who require hyperalimentation and total parenteral nutrition. LPN and nurse's aide students from Sarasota Vo/Tech School receive training at the Regents Park nursing home. HCR In 1986, HCR purchased, and currently owns and operates a 147 bed nursing home located at 3250 12th Street, Sarasota, Florida, known as Kensington Manor, which holds a standard license. HCR is a wholly owned subsidiary of Owens-Illinois, a publicly held corporation, and has built over 200 nursing homes in the last 25 years. At the present time, HCR operates approximately 125 facilities with approximately 16,000 beds in 19 States. HCR owns and operates a total of 9 nursing homes in Florida, and has about 10 nursing home projects under development which it intends to operate upon completion. On or about January 14, 1987, HCR filed CON application 5049 with the Department. This application seeks approval of 60 new community nursing home beds at Kensington Manor, at a currently projected cost of $1.82 million, which is a reasonable projection. The cost per new bed would be $30,030. HCR proposes to finance to project with a 25 percent equity contribution, and 75 percent internally financed by HCR through its parent company, Owens-Illinois, and this proposal is realistic and reasonable. Throughout 1986, Kensington Manor had an occupancy level of between 85 percent - 95 percent and is currently operating at 95 percent - 96 percent occupancy. HCR reasonably projects 95 percent occupancy for the 60 new beds in the second year of operation. HCR reasonably proposes a patient mix in the new addition of 45 percent Medicaid, 4 percent Medicare and 51 percent private pay. Kensington Manor is currently 75 percent - 80 percent Medicaid, 1 percent Medicare, and the remainder is private pay, but its proposed patient mix for the new addition is realistic because there will be no three-bed wards in the addition, and sub- acute services will be provided, thereby increasing the Medicare percentage. The HCR proposed addition at Kensington Manor provides a distinct 29 bed wing for Alzheimer's patients where a special care program and special staffing can be made available. Additionally, a 12 person Alzheimer's adult day care center will be physically attached to the new addition where a less intense level of care outside the home can be made available to these patients. Respite care and sub-acute care will also be provided. The project will add a 60 bed, single story addition to Kensington Manor, with a special Alzheimer unit consisting of 1 private and 14 semiprivate rooms, an enclosed courtyard and porch. A second dining room will be added, as well as 2 central bathing areas, multipurpose and physical therapy rooms. The addition would total 18,000 gross square feet, or 267 gross square feet per bed in the new addition. Kensington Manor currently has approximately 30,000 gross square feet, with 1 private and 52 semiprivate rooms, and 14 three-bedroom wards. Therefore with the addition, Kensington Manor would have approximately 48,000 gross square feet which would be approximately 223 square feet per bed for the entire facility. Sisters of Bon Secours The Sisters of Bon Secours, a Catholic religious order, are currently responsible for the operation and ownership, through not-for-profit corporations, of a JCAH accredited 272 community bed nursing home in North Miami having a superior license, a nursing home in Port Charlotte, Charlotte County, and they also have a CON for an additional nursing home to be located in Collier County. On or about January 15, 1987, Sisters filed CON application 5039 for a new 120 community bed nursing home to be located in Sarasota County, and to be known as Villa Maria of Sarasota County. Sisters is the only applicant involved in this case which is not already providing services in Sarasota County. The proposal calls for the development of a teaching nursing home to be designated as a center for training and research in the study of gerontology and long term care. Affiliations with schools and universities will be developed to allow health care administrators, social workers, medical and nursing students, and practitioners interested in developing a specialization to fulfill their clinical studies and requirements. There will be an emphasis on restorative and rehabilitative care, with 20 percent of the beds being designated for sub-acute care patients who could return home after 30-45 days of therapy and transitional care. Sisters will develop a continuum of care by networking in the community. It is the only applicant that proposes to provide a site for education and research in Sarasota County. The proposed facility is intended to serve the needs of members of the Venice Diocese who reside in Sarasota County, where there is currently no Catholic nursing home. The Venice Diocese is now served by the Sisters' nursing home in Charlotte County, and will also be served by the facility to be located in Collier County, for which a CON has already been issued. However, treatment at these nursing homes, including the proposed Villa Maria of Sarasota County, is not limited to Catholics; the Sisters accept, treat and care for persons in need from all religions backgrounds and denominational affiliations. Total project costs are estimated at $6.64 million, including $3.86 million for construction, approximately $592,000 for equipment, $762,000 to acquire a seven acre site, $237,000 for professional services, $888,000 for financing costs and approximately $300,000 in other related costs. The project would encompass almost 60,000 gross square feet, and would cost approximately $55,300 per bed and $64.50 per square foot. Almost 500 gross square feet would be available per bed, which represents the most square footage per bed of any application under consideration. The proposed facility would have 8 private and 56 semiprivate rooms, with in-room tubs and showers, 3 patient lounges, and a 100 seat dining room. Due to the large size of the proposal, some patient rooms exceed 120 feet from nurse's stations. However, this licensure requirement can easily be met with minor design modifications during the licensure process. Sisters project a 33.3 percent Medicaid, 17.6 - 19.7 percent Medicare, 4 percent indigent and 43 percent - 45 percent private pay utilization for the 120 bed nursing home in its first two years of operation. While Medicaid utilization in Dade County during 1987 rose to 68 percent as a county-wide average, Sisters' Dade County nursing home experienced a drop in Medicaid to 14.6 percent. The high Medicare utilization level which has been projected is consistent with, and based on, the experience of the Sisters at their Dade County nursing home which currently has 21 percent Medicare utilization. However, due to the greater number of hospital referral sources, as well as the larger population and fewer competing nursing homes in Dade County compared with Sarasota County, Medicare utilization projections may be overstated, and actually fall between the 3-4 percent historical utilization in the Sarasota area and Sisters' projection. It will be somewhat above 3-4 percent due to the fact that this will be a teaching nursing home which will attract more Medicare patients. The project will be funded with an equity contribution of 10.6 percent ($635,455) and the remaining 89.4 percent ($6 million) will be funded through the issuance of tax exempt bonds. This financing proposal is realistic and reasonable. The proposed nursing home is intended to offer services to AIDS patients, adult day care, and a meals-on-wheels program. However, it was not established at hearing that such patients would definitely be served, or that space would be available at this facility for these services until the Sisters can determine the actual level of need for these services in Sarasota County, if this CON is approved. Department of HRS On or before January 15, 1987, the Department received the CON applications at issue in this case for additional community nursing home beds in Sarasota County. As it relates to this case, the Department issued its SAAR on June 15, 1987, in which the application of HCR (CON 5049) for a 60 community nursing home bed addition to Kensington Manor was approved, and all other applications in this case were denied. In addition to the HCR application, the Department also supported at hearing the applications of Manor Care (CON 5050) for a 60 bed addition to Manor-Sarasota and Sisters of Bon Secours (CON 5039) for a new 120 bed community bed nursing home to be known as Villa Maria of Sarasota County. The Department opposed the issuance of a CON to the remaining applicants. It is the position of the Department that changes or updates to CON applications made after an application has been deemed complete and reviewed in a SAAR, cannot be considered at hearing if such changes or updates are the result of matters or events within the control of the applicant, and which therefore could have been foreseen and considered at the time the application or responses to omissions were filed. However, matters involving payor mix, salaries and charges could result from changes in demographics and economic factors outside of the applicants' control. In such instances, updates or changes to an application based upon current demographics or economics can, and should be, considered at hearing. The updated pro forma submitted by Sarasota Healthcare at hearing resulted from the applicant's desire to reflect current salaries in the Sarasota County labor market, which have increased dramatically since the original application was submitted. As a result of updating salary expense projections, Medicaid and Medicare rates also had to be updated. Associated projections throughout the pro forma which are dependent upon these reimbursement rates, as well as salary expense projections, also had to be updated. The updated pro forma presented by Sarasota Healthcare results from a factor outside of the control of the applicant, inflation, which could not have been foreseen or predicated with certainty in January, 1987. To ignore actual, current inflation data in Sarasota County is to ignore reality. This update is permissible and has been considered. Manor-Sarasota's application presented at hearing includes changes in its proposed payor mix, charges and salaries, as well as its pro forma. These updates are permissible since they result from changes in demographics and inflation outside of the applicant's control which could not have been foreseen in January 1987. However, a 21 percent increase in square footage and elimination of three-bed wards, with associated changes in proposed staffing, capital costs and equipment, while certainly having a positive effect on quality of care, is nevertheless a matter totally within the control of the applicant. The desireability of these changes could have been foreseen at the time the application was filed, and therefore these substantial changes in design represent impermissible amendments to Manor-Sarasota's application. Stipulations The appropriate planning area for these applications is Sarasota County, and the appropriate planning horizon is January, 1990. Sarasota County is in subdistrict 6 of the Department's service district 8. The parties have stipulated that there is a need for 240 additional community nursing home beds in the January, 1990, planning horizon in Sarasota County, in accordance with the bed need formula in Rule 10-5.011(1)(k), Florida Administrative Code. The parties have agreed that Section 381.705(1)(d) and (j), Florida Statutes (1987), have been met, or are not applicable to this case. This statutory criteria deals with the adequacy and availability of alternative health care facilities and the special needs and circumstances of health maintenance organizations. All remaining criteria found at Section 381.705(1) and (2), Florida Statutes (1987), are at issue in this case. Further, the parties stipulate that 1987 amendments to Chapter 381, Florida Statutes, relating to the content of applications, are inapplicable in this proceeding since these applications were filed prior to the effective date of said law. Therefore, application content provisions of Section 381.494(4), Florida Statutes, govern. State and Local Health Plans The 1985 Florida State Health Plan, Volume II, Chapter 8, identifies areas of concern relating to the provision of long-term care services in Florida, which traditionally has been synonymous with nursing home care. These concerns include resource supply, cost containment and resource access. The State Health Plan seeks a reduction in the fragmentation of services and encourages development of a continuum of care. These proposals are consistent with, or do not conflict with, the State Health Plan. The 1984 District Eight Local Health Plan for Nursing Home Care is applicable to these applications for community nursing home beds in Sarasota County. The Local Health Plan contains the following pertinent criteria and standards for review of these applications: Community nursing home services should be available to the residents of each county within District Eight. At a minimum community nursing home facilities should make available, in addition to minimum statutory regulation, in the facility or under contractual arrangements, the following services: pharmacy h. occupational therapy laboratory i. physical therapy x-ray j. speech therapy dental care k. mental health visual care counseling hearing care l. social services diet therapy m. medical services New and existing community nursing home bed developments should dedicate 33 1/3 percent of their beds to use for Medicaid patients. Community nursing home (skilled and intermediate care) facilities in each county should maintain an occupancy rate of at least 90 percent. New community nursing home facilities may be considered for approval when existing facilities servicing comparable service areas cannot reasonably, economically, or geographically provide adequate service to these service areas. No new community nursing home facility should be constructed having less than 60 beds. However, less than 60 beds may be approved as part of an established acute care hospital facility. Each nursing home facility should have a patient transfer agreement with one or more hospitals within an hour's travel time, or the nearest hospital within the same community. The proposed project should have a formal discharge planning program as well as some type of patient follow-up services with discharge/transfer made available seven days a week. Community nursing homes should be accessible to residents throughout District Eight regardless of their ability to pay. All community nursing homes and applicants for community nursing homes should document their history of participation in Medicaid and Medicare programs, and provide data on an ongoing basis to the District Eight Local Health Council as requested. The specifically stated goal of the Local Health Plan is to develop new community nursing home facilities in which at least 33 1/3 percent of the total beds should be Medicaid. The impact of this long range recommended action is stated as follows: The provision of Medicaid care beds in existing nursing homes would assure continuity of care for nursing home patients, and should improve placement in appropriate levels of care by hospitals, physicians, social services, health departments, and other referral groups. The provision for Medicaid beds would reduce cost to patients, utilizing skilled care beds, who could adequately be served by Medicaid. With the exception of Health Quest's application, all other applicants meet the above stated standards and criteria contained in the Local Health Plan. Health Quest's application does not conform to the Local Health Plan. All applicants in this proceeding have indicated that they will provide therapies and services recommended in the Local Health Plan. All applicants, except Health Quest, indicate a commitment to dedicate at least 33 1/3 percent of their beds for Medicaid patients. The new nursing home facilities proposed by Sisters and Sarasota Healthcare would each be for 120 beds, consistent with the Local Health Plan standard that new facilities have at least 60 beds. Health Quest has proposed a 60 bed community nursing home through conversion of 53 sheltered nursing home beds and the addition of 7 new community beds. As existing providers, Manor-Sarasota, HCR band Health Quest have patient transfer agreements with one or more hospitals, as well as formal discharge planning programs and patient follow-up services, as recommended in the Local Health Plan. The applications for new facilities of Sarasota Healthcare and Sisters indicate they will also comply with these priorities if approval is granted and their facilities are opened. By virtue of its existing service and transfer agreements through the CSI facility in Sarasota County, Pinebrook Place, Sarasota Healthcare will be able to obtain these necessary agreements. Based upon Sisters' experience in Dade County at Villa Maria, as well as the fact that this will be a teaching nursing home, Sisters will also be able to obtain such agreements. Data has been provided by the existing nursing homes (Manor-Sarasota, HCR and Health Quest) which documents the history of their participation in the Medicaid and Medicare programs. The other applicants (Sarasota Healthcare and Sisters) have provided Medicaid/Medicare data for other existing facilities with which they are affiliated or upon which their application at issue in this case is based. Based upon this data, Pinebrook Place in Sarasota County, which is owned and operated by Sarasota Healthcare's general partners has not met the Medicaid condition on its CON, and the existing Manor-Sarasota facility has had only 24.8 percent Medicaid utilization in fiscal year 1988: Availability, Accessibility and Adequacy of Like and Existing Services HCR and Manor-Sarasota would increase the availability and adequacy of existing services they are now offering with the 60 bed additions each is seeking. The separate 30-bed specialized unit proposed by Manor-Sarasota and the 29-bed wing proposed by HCR for Alzheimer's patients will clearly increase the availability of specialized services for persons with Alzheimer's and related disorders, as well as their families. HCR will also dedicate 10 beds for sub-acute care, while Manor-Sarasota will offer community outreach, as well as respite care. Sarasota Healthcare, Sisters and Health Quest do not propose special units for Alzheimer's patients, but would offer special programs and services for them and their families. It was established that there is a need for additional services and programs to serve nursing home patients with Alzheimer's and related disorders in Sarasota County, as well as a special need for sub-acute, restorative, hospice, respite, and adult day care in the County. It was not established that there is a need for additional Medicare beds in Sarasota County. Sisters have indicated an interest in offering services to patients with AIDS and patients in need of adult day care, for which there is also a need in Sarasota County. In addition, their application will enhance the availability of sub-acute nursing home services, restorative and rehabilitative care, and respite care in Sarasota County. While it would serve patients of all denominations and religious affiliations, it would be the only Catholic nursing home in Sarasota County. The teaching component of the Sisters' application would provide access for students and other health professionals seeking to further their professional training. The Sarasota Healthcare proposal also places special emphasis on increasing the availability of sub-acute services in Sarasota County. Quality of Care The Sisters will seek JCAH accreditation of the proposed facility if their CON is approved, just as their nursing home in North Miami is currently accredited. The proposed affiliation with a college of medicine and nursing school, and the intent to operate this facility as a teaching nursing home will insure quality of care at this nursing home by utilizing state-of-the-art treatment and therapy programs. Florida nursing homes currently owned or operated by each of the applicants or their affiliated corporations have standard or superior licenses which means they meet or exceed State Standards. Licensure status of facilities owned or operated in other states by the applicants, or their affiliated companies, has not been considered since it was not established that licensure standards in other states are similar, or even comparable, to those in Florida. Each applicant has significant experience rendering quality nursing home care, and each has proposed a reasonable and comprehensive quality assurance program which will insure that quality nursing home services will be provided to their residents. The architectural design proposed by each applicant is reasonable and sufficient to allow quality care to be provided at each facility. All instances where an applicant's design fails to meet final construction standards are relatively minor, and can easily be met during the licensure process with slight modifications and adaptations in design. Staffing proposals by each, while different, will all insure that adequate medical, nursing, counseling and therapeutic staff will be trained and available either on-staff or through contract, to implement quality care programs at each facility. Manor-Sarasota's past reliance on temporary nursing services is decreasing and this will have a positive effect on quality of care. HCR has just completed extensive repairs and renovations costing $350,000 at Kensington Manor which will improve the atmosphere, living conditions and overall quality of care at the facility. Sisters' educational affiliations will aid in recruiting and retaining well-trained staff for its facility. Each facility will be equipped to provide quality care. There was extensive testimony about the advantages and disadvantages of central bathing facilities compared with private baths or showers in patient rooms. Sisters and Health Quest would provide private bathing facilities in patient rooms, while the others would have central facilities. Obviously, individual bathing facilities in patient rooms offer more privacy than central facilities, but privacy can also be achieved in a central bathing area by taking only a single, or limited number of patients to a partitioned central facility at any one time. The central facility is less costly than bathing facilities in each room, and also requires less staff time and involvement to assist with, and insure safety in, the patients' bathing. It has not been shown that one type of bathing facility provided in a nursing home, to the exclusion of all others, affects the quality of care in a positive or adverse manner. Quality care can be, and is, provided under both designs. The elimination of 3-bed wards from Manor-Sarasota's application would have a positive impact on quality of care, and be consistent with the Department's position of discouraging the creation of additional 3-bed wards in nursing homes. However, such elimination was proposed after this application was deemed complete by the Department. Patients suffering from Alzheimer's and related disorders can benefit from programs and treatment conducted in separate units, or while comingled with other patients, particularly in the early and middle phases of the disease. In the later phase of the disease it may be less disruptive to other patients if Alzheimer patients reside in a separate wing or unit of the nursing home. Quality care can be rendered through separate or integrated programming, and all applicants in this case that propose to offer specialized services to these patients have proposed programs and facility designs which will provide quality care to persons with Alzheimer's and related disorders. While there are differences in facility design, such as the two-story construction of Manor-Sarasota compared with the single level construction of all other applicants, and the central heating and cooling proposed by Sisters compared with individual wall units to be used by Sarasota Healthcare, the proposed designs of all applicants allow for the rendering of quality care to patients. Access for Chronically Underserved The Health Quest proposal is inconsistent with the Local Health Plan policy that 33 1/3 percent of all nursing home beds should be dedicated for Medicaid patients since it proposes that only 5 of its 60 beds (8 percent) will be certified for Medicaid patients if CON 5046 is approved. Although Medicaid utilization at Manor-Sarasota has not been consistent with the Local Health Plan, it is projected that if CON 5050 is approved Medicaid utilization will rise to 40 percent. Sarasota Healthcare, HCR and Sisters propose to meet or exceed this Local Health Plan policy. HCR has experienced a 75-80 percent Medicaid utilization at Kensington Manor, and proposes a 45 percent Medicaid level in the new addition if CON 5049 is approved. Financial Feasibility The proposals of Manor-Sarasota, HCR and Sisters are financially feasible. Health Quest did not file a pro forma and has not shown a profit in its year and a half of operation at Regents Park. Based upon its actual per patient operating expense at Pinebrook Place, Sarasota Healthcare has underestimated expenses in its second year of operation by approximately $8 per patient day. Its projection of a profit in the second year of operation is questionable due to this underestimation. Manor-Sarasota, HCR and Sisters have established their ability to finance, through equity and debt, the construction, equipment, supplies, and start-up costs associated with their proposals. Health Quest will have no construction costs, and only very minor costs to equip and supply seven new beds it is requesting. The entire financial structure of CSI and Sarasota Healthcare is dependent upon the financial strength of their general partners, the Kelletts, who currently have $76 million in long term debt and $12 million in equity. This is a relatively high debt to equity ratio of 6 to 1 which makes them susceptible to adverse impacts from any downturn in the economy, especially since they have 15 additional CON applications pending in Florida, totaling $60 million in construction costs. In contrast to the Kelletts' high debt to equity ratio, Sisters have $159 million in long term debt and $160 million in equity for a very secure 1 to 1 debt to equity ratio. Projections of revenue and expense, as well as assumptions concerning projected utilization, Medicaid and Medicare rates, private pay rates, and patient mix used by Manor-Sarasota, HCR and Sisters in their pro forma are reasonable, based upon that applicant's experience and the services proposed in their applications at issue. Adequacy of Staffing All proposals have adequate and reasonable staffing patterns, as well as staff training programs, to insure that quality care is provided. Proposed salaries are reasonable and will allow qualified staff to be hired, based upon the recruiting experience and salaries currently offered by Sarasota nursing homes. Adequate staff resources exist in the area. I. Most Effective and Less Costly Alternative Since it is generally not necessary to construct support areas for storage, laundry, kitchen and administration, adding additional beds to existing facilities is a less costly alternative to an entirely new facility. Health Quest, HCR and Manor-Sarasota are, therefore, less costly per bed than Sarasota Healthcare and Sisters' proposals to construct new 120 bed nursing homes. Specifically, there are only minor costs associated with Health Quest's proposal, while the cost per bed of the Manor-Sarasota and HCR proposals are $30,872 and $30,030, respectively, compared with $32,500 per bed for Sarasota Healthcare and $55,295 for Sisters. Health Quest's application is the least costly alternative since it involves no construction costs to add seven beds to the existing 53 sheltered beds which would be converted to community nursing home beds, although minor costs for equipping seven new beds would be incurred. Effect on Costs and Charges Sisters and Health Quest have proposed, or actually experienced, the highest costs and charges of all applicants. Health Quest has not shown any basis upon which it can be reasonably expected that room rates will decrease, as it asserts, if this CON is approved. Due to the large size of its proposed building, higher food costs and number of staff, Sisters projects the highest operating expense per patient day in the second year of operation. Sisters will provide almost 500 gross square feet per bed, while Manor-Sarasota, HCR, and Sarasota Healthcare will provide 278, 267 and 314 gross square feet per bed, respectively. Enhanced Competition Since the other applicants are already represented in the service area, the approval of Sisters' application would enhance competition by adding another provider to Sarasota County. This will provide more choices to nursing home residents, and should increase the quality of long term care in the community with the added emphasis this proposal will place on rehabilitative programming. Costs and Methods of Construction The costs and methods of construction proposed by the applicants are reasonable, as well as energy efficient.
Recommendation Based upon the foregoing, it is recommended that the Respondent enter a Final Order, as follows: Approving HCR's application for CON 5049; Approving Sisters' application for CON 5039; Denying the application of Manor-Sarasota, Sarasota Healthcare and Health Quest for CONs 5050, 5025 and 5046, respectively. DONE AND ENTERED this 9th day of August, 1988, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of August, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 87-3471, 87-3473, 87-3475, 87-3478 and 87-3491 Rulings on the Department's Proposed Findings of Fact Adopted in Findings of Fact 3, 12, 17, 19, 24, 30, 37. Adopted in Finding of Fact 37. 3-4. Adopted in Finding of Fact 43. 5. Adopted in Finding of Fact 42. 6-10. Rejected as irrelevant and unnecessary since the parties have stipulated to need. Adopted in Findings of Fact 37, 38. Adopted in Findings of Fact 26, 27, 55, 69, 70. Adopted in Findings of Fact 30, 56, 58, 60. Adopted in Findings of Fact 3, 55. Rejected as irrelevant since the parties have stipulated to need. Rejected in Findings of Fact 48, 57. Rulings on Manor-Sarasota's Proposed Findings of Fact: Adopted in Findings of Fact 3, 12, 17, 19, 24, 30. Adopted in Findings of Fact 37, 38, 43. Adopted in Findings of Fact 15, 30, 32. Rejected in Finding of Fact 17 and Adopted in Finding of Fact 19. Adopted in Findings of Fact 3, 5, 24. Adopted in Finding of Fact 38. Adopted in Findings of Fact 13, 14 but Rejected in Findings of Fact 71, 73. Adopted in Findings of Fact 29, 31. Adopted in Finding of Fact 34. Adopted in part in Finding of Fact 35, but otherwise Rejected as unnecessary. Adopted in Finding or Fact 2. Rejected as unsupported and unnecessary. Adopted in Findings of Fact 29, 60, 61 but also Rejected in part in Finding of Fact 60. Adopted in Finding of Fact 31. Adopted and. Rejected in Finding of Fact 60, and otherwise Rejected as irrelevant and unsupported in the record. Adopted in Finding of Fact 29 but otherwise Rejected as unsupported argument on the evidence, without any citation to the record, rather than a proposed finding of fact. Rejected in Findings of Fact 63, 76. Adopted in Findings of Fact 32, 33, 82 but Rejected in part in Finding of Fact 33. Rejected as unsupported by the record. Adopted in Findings of Fact 33, 64 in part, but otherwise. Rejected in Finding of Fact 64 and as not supported by the record. Rejected as unnecessary and without citation to the record. Adopted and. Rejected in Findings of Fact 33, 63. Rejected as cumulative and unnecessary. Rejected in Findings of Fact 33, 63. Rejected in Findings of Fact 17. Adopted in Finding of Fact 17, but otherwise Rejected as irrelevant. Adopted in Finding of Fact 18. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 17, 18. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 20, 71. Rejected as cumulative and unnecessary. 33-34. Rejected as irrelevant and unnecessary. 35-36. Adopted in Finding of Fact 81. Adopted in Finding of Fact 21. Rejected as speculative. Adopted in Finding of Fact 18 but otherwise Rejected as irrelevant and unnecessary. Rejected as unnecessary and irrelevant. 41-43. Rejected as not supported by the record and speculative. Adopted in Findings of Fact 19, 80. Adopted in Findings of Fact 48, 51, but Rejected in Finding of Fact 21. Rejected in Findings of Fact 63, 76 and otherwise as unnecessary and irrelevant. Adopted in Findings of Fact 24-26. Adopted in Finding of Fact 23. Adopted in Finding of Fact 79. Adopted in Finding of Fact 27. Adopted in Finding of Fact 1. Adopted in Findings of Fact 61, 63 and otherwise Rejected as unnecessary. Rejected as unnecessary. Adopted in Findings of Fact 5, 81. Adopted in Findings of Fact 71, 75. 56-57. Adopted in Finding of Fact 63, but otherwise Rejected as irrelevant and unnecessary. 58. Adopted in Findings of Fact 3, 55, 56. 59-61. Rejected as irrelevant, unnecessary and cumulative. Rejected in Finding of Fact 66. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 63, 76. Adopted in Findings of Fact 4, 6. Adopted in Finding of Fact l. Adopted in Finding of Fact 81 but otherwise Rejected as unnecessary. Rulings on HCR's Proposed Findings of Fact: 1-2. Adopted in Findings of Fact 42, 43. 3-4. Rejected as unnecessary and irrelevant. 5. Adopted in Finding of Fact 57. 6-7. Rejected as unnecessary. 8-9. Adopted in Finding of Fact 57. 10-15. Rejected in Finding of Fact 66 and otherwise as unnecessary and cumulative. Adopted in Finding of Fact 57. Adopted in Findings of Fact 27, 55. Rejected as unnecessary. Adopted in Finding of Fact 57. Adopted in Findings of Fact 23, 28, 63. Adopted in Finding of Fact 23. Adopted in Findings of Fact 25, 26, 28. Adopted in Findings of Fact 24, 27, 28. 24-25. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary. 26-27. Adopted in Finding of Fact 27, but otherwise Rejected as unnecessary. 28-29. Adopted in Finding of Fact 66, but otherwise Rejected as unnecessary. 30. Adopted in Findings of Fact 46-49. 31-37. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary. Rejected as unnecessary and irrelevant. Adopted in Finding of Fact 24. 40-42. Adopted in Findings of Fact 25, 26, 71, 75. Adopted in Finding of Fact 71. Rejected as unnecessary. 45-46. Rejected as cumulative and unnecessary. Adopted in Findings of Fact 63, 81. Adopted in Finding of Fact 24. Adopted in Finding of Fact 28, but otherwise Rejected as cumulative and unnecessary. Adopted in Finding of Fact 79. 51-54. Adopted in part in Finding of Fact 24, but otherwise Rejected as unnecessary. 55. Adopted in Finding of Fact 37, but otherwise Rejected as unnecessary and cumulative. 56-57. Rejected as unnecessary. Adopted in part in Finding of Fact 17, but otherwise Rejected as unnecessary. Adopted in Finding of Fact 19. Adopted in part in Findings of Fact 18, 42. Adopted in Finding of Fact 18. 62-63. Adopted in Finding of Fact 20. Adopted in Findings of Fact 22, 55. Adopted in Findings of Fact 21, 49, 51. Adopted in Findings of Fact 32, 33. Adopted and. Rejected in Finding of Fact 33. Adopted in Finding of Fact 82. 69-70. Adopted in Finding of Fact 63. Adopted in Finding of Fact 56. Adopted and Rejected in part in Finding of Fact 34. Rulings on Sisters' Proposed Findings of Fact: Adopted in Findings of Fact 3, 12, 17, 19, 24, 30. Rejected as unnecessary as a Finding of Fact. Adopted in Finding of Fact 43. Rejected as unnecessary as a Finding of Fact. Adopted in Finding of Fact 30. Adopted in Findings of Fact 12, 14, but otherwise Rejected as irrelevant. Adopted in Finding of Fact 3. Adopted in Findings of Fact 24, 29. Adopted in Finding of Fact 19, but otherwise Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 37, 38. 11-12. Adopted in Finding of Fact 46. 13-15. Adopted in Findings of Fact 47-54. Rejected as unnecessary and not supported by the record. Adopted in Finding of Fact 30. 18-22. Adopted in Finding of Fact 57, but otherwise Rejected as unnecessary and cumulative. 23. Adopted in Finding of Fact 34. 24-26. Adopted in Finding of Fact 57, but otherwise Rejected as unnecessary and cumulative. Adopted in Finding of Fact 34. Adopted in Finding of Fact 57, but Rejected in Finding of Fact 34. Adopted in part in Finding of Fact 30, but otherwise Rejected as argument unsupported by any citation to the record. 30-38. Adopted in part in Finding of Fact 63, but otherwise Rejected as unnecessary, irrelevant and as argument on the evidence rather than a Finding of Fact. Adopted in Finding of Fact 40. Rejected in Finding of Fact 40. 41-51. Adopted in Findings of fact 60, 63, but otherwise Rejected as unnecessary, irrelevant and as argument on the evidence rather than a Finding of Fact. 52-58. Adopted in Findings of Fact 29, 60, 61, but otherwise Rejected as unnecessary and irrelevant. 59. Adopted in Finding of Fact 11, but otherwise Rejected as irrelevant. 60-75. Rejected as unnecessary irrelevant, and cumulative. Rejected as unnecessary. Adopted in Finding of Fact 82. Rejected as unnecessary. Adopted in Findings of Fact 33, 82. Adopted in Findings of Fact 33, 82. Adopted in Finding of Fact 33, but Rejected in Finding of Fact 64. 82-83. Rejected as unnecessary. 84. Adopted in Finding of Fact 9. 85-86. Rejected as unnecessary. 87-88. Adopted in Findings of Fact 9, 41. 89. Adopted in Finding of Fact 4, but otherwise Rejected as not supported by the record. 90-91. Rejected in Finding of Fact 63 and otherwise not supported by the record. 92-105. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary, cumulative and irrelevant. Rejected as unsupported in the record and otherwise unnecessary. Adopted in Finding of Fact 29. Adopted in Finding of Fact 11. Rejected as irrelevant, unnecessary and speculative. Rejected as unnecessary. 111-112. Adopted in Finding of Fact 30. 113. Adopted in Finding of Fact 63. 114-115. Rejected as unnecessary and cumulative. 116-120. Adopted in Findings of Fact 60, 63, but otherwise Rejected as unnecessary and cumulative. 121. Adopted in Finding of Fact 30. 122-123. Adopted in Finding of Fact 63, but otherwise Rejected as cumulative. 124. Adopted in Findings of Fact 31, 34, but otherwise Rejected as unsupported in the record. 125-126. Adopted in Finding of Fact 35. 127-129. Rejected as unnecessary and irrelevant since no applicant has locked in interest rates, and therefore these rates will vary and are speculative. Rejected as speculative and irrelevant. Rejected as irrelevant. 132-135. Adopted in Finding of Fact 73. 136. Adopted in Finding of Fact 74. 137-139. Adopted in Finding of Fact 71, but otherwise Rejected as unnecessary and cumulative. 140. Rejected as unnecessary and irrelevant. 141-145. Adopted in Finding of Fact 71. 146-147. Adopted in Finding of Fact 83. Adopted in part in Finding of Fact 71, 84, but Rejected in Findings of Fact 81, 82. Adopted in Finding of Fact 63. Rejected in Finding of Fact 67. Rejected as irrelevant and unnecessary. Rejected as unnecessary and cumulative. Adopted in Finding of Fact 34. Rejected as cumulative and unsupported by the record. 155-158. Adopted in Finding of Fact 54. 159. Rejected as irrelevant and unnecessary. Rulings on Sarasota Healthcare's Proposed Findings of Fact: Adopted in Findings of Fact 3, 12, 17, 19, 24, 30. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 37, 38, 43. 4-6. Adopted in Finding of Fact 11, but otherwise Rejected as unnecessary and irrelevant. 7-13. Adopted in Findings of Fact 12-16, but otherwise Rejected as unnecessary and irrelevant. 14-17. Adopted in Finding of Fact 46. Adopted in Finding of Fact 47. Adopted in Finding of Fact 49. Adopted in Finding of Fact 63, but otherwise Rejected as cumulative and unnecessary. Adopted in Findings of Fact 11, 61. 22-23. Rejected as cumulative and unnecessary. 24-41. Adopted in Finding of Fact 63, but otherwise Rejected as cumulative and unnecessary. Adopted in part in Findings of Fact 14, 57, but otherwise. Rejected in Finding of Fact 83 and as unsupported in the record. Rejected in Finding of Fact 54, and otherwise as irrelevant. Adopted in Findings of Fact 13, 51, but Rejected in Finding of Fact 54. Adopted in Finding of Fact 13. Adopted in Findings of Fact 14, 57. 47-49. Adopted in Findings of Fact 56, 66. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 14. Adopted in Finding of Fact 57. 53-58. Adopted in Finding of Fact 63, but otherwise Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 14. Adopted in Finding of Fact 57. Adopted in Finding of Fact 14. Adopted in Finding of Fact 53. Adopted in Finding of Fact 81. Adopted in Finding of Fact 63, but otherwise Rejected as cumulative and unnecessary. 65-78. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary and cumulative. 79-85. Adopted in Findings of Fact 76, 77, but otherwise Rejected as unnecessary and irrelevant. 86-97. Adopted in Findings of Fact 15, 63, 84, but otherwise Rejected as cumulative and unnecessary. Adopted and. Rejected in Finding of Fact 64. Rejected as unsupported in the record. Rejected as cumulative and unnecessary. 101-103. Adopted in Findings of Fact 15, 84. 104. Rejected as unnecessary and cumulative. 105-109. Adopted in Findings of Fact 63, 84, but otherwise Rejected as irrelevant and unnecessary. Rejected as unsupported in the record. Adopted in part in Finding of Fact 16, but Rejected in Finding of Fact 73. 112-116. Adopted and Rejected in part in Findings of Fact 71, 73, 75, but otherwise. Rejected as irrelevant and unnecessary. 117. Adopted in Finding of Fact 16. 118-119. Adopted in Finding of Fact 75. 120-121. Rejected in Finding of Fact 71. 122-126. Adopted in Finding of Fact 40. 127-128. Adopted in Findings of Fact 30, 32. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 31. Adopted in Finding of Fact 33. Adopted and Rejected in Finding of Fact 67. 133-135. Adopted and Rejected in part in Findings of Fact 33, 63, and otherwise. Rejected as irrelevant since all licensure requirements can easily be met with minor modifications. Adopted in Finding of Fact 36. Rejected as unsupported in the record. Adopted in Findings of Fact 15, 30, 32, 33. Adopted in Finding of Fact 31, but otherwise Rejected as simply a summation of testimony. 140-142. Adopted in Finding of Fact 36. Rejected as irrelevant. Adopted in Finding of Fact 34, but Rejected in Finding of Fact 51. 145-146. Adopted in Finding of Fact 34, but otherwise Rejected as unnecessary. 147-148. Adopted in Finding of Fact 30, but Rejected in Finding of Fact 57 and as unsupported in the record. 149-150. Adopted in Finding of Fact 34. Adopted in Finding of Fact 57. Rejected as unnecessary and cumulative 153-156. Rejected in Findings of Fact 63, 76, 77 and otherwise not supported in the record. Rejected as unnecessary. Adopted in Finding of Fact 36. Adopted in Finding of Fact 82. Rejected as unnecessary. Adopted in Finding of Fact s. Adopted in Findings of Fact 17, 19. Adopted in Finding of Fact 71, but otherwise Rejected as cumulative and unnecessary. Rejected as cumulative and unnecessary. Adopted in Finding of Fact 18, but otherwise Rejected as irrelevant and unsupported in the record. Adopted in Findings of Fact 17, 18, but otherwise Rejected as cumulative and as argument on the evidence. Adopted in Findings of Fact 48, 49, 51. Rulings on Health Quest's Proposed Findings of Fact: Adopted in Finding of Fact 24. Adopted in Finding of Fact 3. Adopted in Findings of Fact 17, 19. Adopted in Finding of Fact 12. Adopted in Finding of Fact 30. 6-10. Adopted in Finding of Fact 37. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 42, 43. Adopted in Finding of Fact 20. Adopted in Findings of Fact 19, 20, 39. Adopted in Finding of Fact 18. Adopted in Findings of Fact 61, 63. Adopted in Finding of Fact 61, but otherwise Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 17. Adopted in Finding of Fact 18. Rejected as argument on the evidence rather than a proposed finding of fact. Rejected as speculative and unsupported in the record. Adopted in Findings of Fact 19, 80. Rejected as argument on the evidence rather than a proposed finding of fact. Adopted in Finding of Fact 80. Rejected in Finding of Fact 71. Rejected as irrelevant. 27-34. Adopted in Findings of Fact 22, 63, 76, but otherwise Rejected as unnecessary and cumulative. 35-39. Adopted in Finding of Fact 22. 40. Adopted in Finding of Fact 66. 41-58. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary and cumulative. Adopted in Finding of Fact 61, but otherwise Rejected as irrelevant. Rejected as simply a statement on the evidence rather than a proposed finding of fact and otherwise irrelevant. Adopted in Finding of Fact 17, but otherwise Rejected as unnecessary. 62-63. Adopted in Finding of Fact 18. Rejected as unnecessary and cumulative. Adopted in Finding of Fact 80. Adopted in Finding of Fact 63. Adopted in Findings of Fact 19, 80. 68-70. Adopted in Finding of Fact 63, but otherwise Rejected as unnecessary and cumulative. 71. Adopted in Finding of Fact 21. 72-74. Rejected in Findings of Fact 48, 49, 51 and otherwise as irrelevant. 75-76. Rejected as unnecessary, although it is agreed that these matters are irrelevant and speculative. Adopted in Findings of Fact 63, 80. Adopted in Finding of Fact 9. Rejected as argument on the evidence rather than a proposed finding of fact. Adopted in Finding of Fact 9. 81-82. Adopted in Finding of Fact 39. 83. Rejected in Finding of Fact 39. 84-88. Adopted in Finding of Fact 41. Adopted in Finding of Fact 9. Rejected as argument on the evidence and as legal argument rather than a proposed finding of fact. Rejected as unnecessary. 92-94. Adopted in Finding of Fact 41. 95. Adopted and. Rejected in part in Finding of Fact 41. 96-101. Rejected in Findings of Fact 63, 76 and otherwise as irrelevant. 102. Rejected as cumulative. 103-104. Adopted in Finding of Fact 1. Rejected in Findings of Fact 61, 63. Rejected as simply a summation of testimony. 107-109. Rejected in Finding of Fact 63. 110-111. Rejected as unsupported in the record and irrelevant. 112-114. Adopted in Finding of Fact 9, but otherwise Rejected as unsupported by the record. 115. Adopted in Finding of Fact 41. 116-117. Rejected as unnecessary. 118-120. Rejected in Finding of Fact 66 and otherwise simply as a summation of testimony. 121-122. Rejected as irrelevant and as argument on the evidence. Adopted in Finding of Fact 38. Rejected as a conclusion of law rather than a proposed finding of fact. 125-127. Rejected as argument on the evidence and as a summation of testimony. 128. Rejected as cumulative. 129-131. Rejected as simply a summation of testimony rather than a proposed finding of fact. 132-134. Rejected in Findings of Fact 61, 63 and otherwise as irrelevant. 135. Rejected in Findings of Fact 43, 48, 57 and otherwise as irrelevant. 136-142. Rejected as irrelevant. The issue in this case is not the accuracy of the SAAR, but rather whether applicants have sustained their burden of establishing entitlement to a CON based on the record established at hearing. COPIES FURNISHED: Richard A. Patterson, Esquire Department of HRS 2727 Mahan Drive, 3rd Floor Tallahassee, Florida 32308 Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302 Donna H. Stinson, Esquire The Perkins House - Suite 100 118 North Gadsden Street Tallahassee, Florida 32301 David Watkins, Esquire Harry F. X. Purnell, Esquire Post Office Box 6507 Tallahassee, Florida 32314-6507 Byron B. Matthews, Jr., Esquire Vicki Gordon Kaufman, Esquire 700 Brickell Avenue Miami, Florida 33131-2802 Steven W. Huss, Esquire 1017 Thomasville Road, Suite C Tallahassee, Florida 32303 Gregory Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 =================================================================
Findings Of Fact The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.
Recommendation It is recommended that a Final Order be entered granting Kensington Manor Inc. CON No. 6430 to construct a 120 bed nursing home and to rehabilitate the existing 147 bed nursing home to an 87 bed nursing home in Sarasota County. RECOMMENDED this 14th day of March, 1991, in Tallahassee, Florida. K. N. AYERS 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 14th day of March, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-3665 Petitioner's proposed findings are accepted, except #5. Sentence stating "There are no laundry facilities in the nursing home." is rejected as inconsistent with proposed finding #7. Respondent's proposed findings are also accepted. Most of the defects in the application which Respondent finds to be not in compliance with the statutory requirements were corrected by the testimony at this hearing. COPIES FURNISHED: Alfred W. Clark, Esquire 1725 Mahan Drive Tallahassee, FL 32308 Richard Patterson, Esquire 2727 Mahan Drive Tallahassee, FL 32308 Sam Power Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Linda Harris General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 =================================================================
The Issue In their Prehearing Stipulation the original parties described the background and general nature of the controversy as follows: In January, 1985, HCR filed an application for certificate of need to develop a new 120 bed nursing home in Collier County, Florida. By notice dated June 28, 1985, HRS stated its intention to deny HCR's application. HCR timely filed a request for formal administrative proceeding, and the proceeding was forwarded to the Division of Administrative Hearings. By application supplement dated May 15, 1986, HCR has reduced this application to a 90-bed new nursing home. The nursing home will provide skilled nursing care to Alzheimer's patients and to patients discharged from hospitals in need of additional intensive nursing care, in addition to the typical nursing home patient. HRS has denied HCR's application because, pursuant to Rule 10-5.11(21), Florida Administrative Code there is insufficient need for the additional nursing home beds proposed by HCR. In the Prehearing Statement the Petitioner described its position as follows: HCR contends that there is an identifiable need for a nursing home in Collier County, Florida, to serve the needs of patients who suffer from Alzheimer's disease and similar disorders and patients who are discharged from hospitals with a continuing need for a high level of intensive care, often provided through sophisticated technical or mechanical means. Existing nursing homes in Collier County do not offer adequate facilities for such patients and refuse admission to such patients. These patients have experienced an inability to obtain such care in Collier County. HCR's proposed nursing home will provide needed care which is otherwise unavailable and inaccessible in Collier County. The application meets all criteria relevant to approval of a certificate of need. HCR further contends that the nursing home formula shows a need for additional nursing home beds in Collier County. Previously, in circumstances where a need for additional nursing home services has been identified, HRS has approved certificates of need even though the nursing home formula showed a need for zero additional beds or a small number of additional beds. In the Prehearing Statement the Respondent described its position as follows: HRS contends, pursuant to the formula contained in Rule 10-5.11(21), Florida Administrative Code, that there is insufficient need in the January, 1988 planning horizon demonstrated for additional nursing home beds in Collier County to warrant approval of a-new nursing home. Therefore, HRS contends that the HCR application should be denied. Further in its original application, HCR did not identify services proposed specially for Alzheimer's disease patients or "sub-acute" patients. HCR did not and has not complied with provision of Chapter 10-5.11(21)(b 10., Florida Administrative Code, regarding mitigated circumstances. The Respondent also identified the following as an issue of fact to be litigated. "HRS contends that it should be determined whether HCR's supplement dated May 15, 1986, is a significant change in scope for which the application was originally submitted." Because of its late intervention into this case, the Intervenor's position is not described in the Prehearing Statement. In general, the Intervenor urges denial of the application on the same grounds as those advanced by the Respondent. The Intervenor did not attempt to become a party to this case until the morning of the second day of the formal hearing. Respondent had no objection to the Petition To Intervene. The original Petitioner objected on the grounds that the effort at intervention was untimely and that the Intervenor was without standing. The objection to intervention was overruled and the Intervenor was granted party status subject to taking the case as it found it. Accordingly, intervention having been granted at the conclusion of the evidentiary presentation of the other parties, the Intervenor was not permitted to call any witnesses or offer any exhibits. Intervenor's participation before the Division of Administrative Hearings was limited to an opportunity to file proposed findings of fact and conclusions of law. Following the hearing a transcript of proceedings was filed on July 8, 1986. Thereafter, all parties filed Proposed Recommended Orders containing proposed findings of fact. Careful consideration has been given to all of the Proposed Recommended Orders in the formulation of this Recommended Order. A specific ruling on all proposed findings of fact proposed by all parties is contained in the Appendix which is attached to and incorporated into this Recommended Order. The Petitioner also filed an unopposed post-hearing motion requesting that its name be corrected in the style of this case. The motion is granted.
Findings Of Fact Based on the stipulations of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact. Findings based on admitted facts The parties agree that HCR properly filed a letter of intent and application for certificate of need for a new nursing home to be located in Collier County. The application was reviewed by HRS in the ordinary course of its activities, and HRS initially denied the application. HRS continues to oppose issuance of a CON because (a) there is an insufficient need, pursuant to Rule 10-5.11(21), Florida Administrative Code, for additional nursing home beds to warrant approval of a new nursing home [Section 381.494(6)(c)1., Florida Statutes]; (b) the long term financial feasibility and economic impact of the proposal is questionable because of low occupancy being experienced by existing nursing homes "Section 381.494(6)(c)9., Florida Statutes]. HRS proposes no other basis for denial of the application. The parties agree that HCR meets all criteria for a certificate of need, with the exception of those two criteria listed in the immediately foregoing paragraph relating to need and financial feasibility/economic impact (relevant to low occupancy), which HRS contends have not been met. The parties agree that HCR would provide good quality care to patients, that the project would be financially feasible if the occupancy projections asserted by HCR were obtained, that the costs and methods of proposed construction are appropriate and reasonable, and that the proposed facility would be adequately available to underserved population groups. The rest of the findings In January 1985, HCR filed an application for a certificate of need to develop a new 120-bed nursing home facility in Collier County, Florida. The original application described a traditional approach to nursing home care. By notice dated June 28, 1985, HRS stated its intention to deny HCR's application. HCR timely filed a request for formal administrative proceedings and this proceeding ensued. By application supplement dated May 15, 1986, HCR made certain changes to its original application. These changes included reducing the size of the proposed nursing home from 120 to go beds and changing the-concept of the nursing home from a traditional nursing home to one specifically designed to address the treatment of Alzheimer's disease patients and sub-acute care patients. The supplement specifically provided that 30 of the 90 proposed beds would be "set aside to offer a therapeutic environment for patients with Alzheimer's or similar disorders." The project description in the original application contained no such provision. HCR's proposed facility would consist of 90 nursing home beds, 30 assisted living beds, and an adult day care facility located adjacent to the nursing home portion of the facility. Those portions of the facility relating to assisted living and adult day care do not require certificate of need review. The estimated cost of the portion of the project which requires certificate of need review is $3.5 million. HCR estimates that approximately 33 1/3 per cent of the patients in the facility will be Medicaid reimbursed. It is proposed that 30 of the 90 nursing home beds be designed and staffed specifically to provide care and treatment necessary to meet the special needs of certain patients who suffer from Alzheimer's disease and dementia and exhibit need for care different from that found in the typical nursing home. It is proposed that another 30-bed wing be staffed and equipped to provide sub-acute, high-tech services such as ventilator, I.V. therapy, pulmonary aids, tube feeding, hyperalimentation and other forms of care more intensive than those commonly found in a nursing home and necessary for the care of patients discharged from hospitals and patients in the last stages of Alzheimer's disease. The remaining 30-bed wing would be devoted to traditional nursing home care. HRS has adopted a rule which establishes a methodology for estimating the numeric need for additional nursing home beds within the Department's districts or subdistricts. This methodology is set out in Rule 10-5.11(21), Florida Administrative Code. This rule determines historic bed rates and projects those bed rates to a three-year planning horizon. Allocation to a subdistrict such as Collier County is adjusted by existing occupancy in the subdistrict and the subdistrict's percentage of beds in relationship to the total number of beds in the district. Additional beds normally are not authorized if there is no need for beds as calculated under the rule. HRS calculated need utilizing current population estimates for January 1986 and projected need for the population estimated for January 1988, arriving at a need of approximately 16 additional nursing home beds for the January 1988 planning horizon. HCR projected need to the January 1989 planning horizon and projected a numeric need of approximately 38 additional nursing home beds. There are no applicants for additional nursing home beds in the January 1989 planning horizon (batching cycle). Alzheimer's disease is a primary degenerative disease of the central nervous system which results in a breakdown of the nerve cells in the brain. The disease is progressive, in that it begins subtly, often with forgetfulness or simple personality changes, and ultimately results in death following a phase in which the patient is bedridden and totally dependent upon others for survival. The cause of the disease is not known. The disease is much more common in the older age groups and is very common in the southwest Florida area. (However, nothing in the evidence in this case suggests that Alzheimer's disease is more common in southwest Florida than in other parts of the state.) There is no known cure for Alzheimer's disease. Alzheimer's disease patients are characterized by such symptoms as memory loss, communication problems, difficulty understanding, confusion, disorientation, inability to recognize care givers, waking at night, wandering, inability to socialize appropriately, and incontinence. The progress of the disease can be divided into stages. During the initial stage, the patients will display forgetfulness and subtle personality changes. As the disease progresses, the patients encounter increasing difficulty performing more than simple tasks, tend to be more emotional, become more confused, encounter difficulty with concentration and retaining thoughts, and often display poor judgment and a denial of the significance of their actions. In the next stage, the patients begin to require assistance to survive. Forgetfulness and disorientation increase and wandering patients are often unable to find their way. The patients become incontinent, experience sleep disturbances, become restless at night, and wander during the day, leading to considerable family distraction and difficulties for the care givers. The patients encounter difficulty recognizing family members and often become paranoid and fearful of those family members within the house. violence and aggressive outbursts may occur. Finally, the patients progress to a stage in which they are totally inattentive to their features physical needs, requiring total care. These Patients are totally incontinent, experience frequent falls, develop seizures, and eventually become bedridden, going into a fetal position and becoming totally unable to provide any care for themselves. Traditionally, most nursing homes offer no special programs for patients who suffer from Alzheimer's disease and mix these patients with other patients in the nursing home. There is no nursing home in Collier County which provides program specifically designed for the treatment of Alzheimer's disease patients. The nearest nursing home where such care can be found is in Venice, some 92 miles from Naples. The total facility proposed by HCR is designed to provide a continum of care for Alzheimer's disease patients and their family care givers. The adult day care portion of the facility would enable family members to place Alzheimer's disease patients in day care for a portion of the day in order for the family care givers to maintain employment, perform normal household chores, and find relief from the extremely demanding task of constantly supervising and caring for an Alzheimer's disease victim. The adult day care portion of the facility would be designed and staffed to provide a therapeutic program for the Alzheimer's disease patient and the patient's family. The assisted living portion of the facility would allow an Alzheimer's disease patient in the early stages of the disease to live in an environment, with his or her spouse if desired, where immediate care and routine supervision at a level lower than that required by a nursing home patient would be provided. Thirty nursing home patient and who do not display those characteristics which are disruptive to non-Alzheimer's patients, such as wandering, combativeness, and incontinence. For those Alzheimer's patients who should not be mixed with other nursing home patients because of their disruptive routines and who require unique programs and facility design features to meet their specific needs, a 30-bed wing would be set aside. Finally, for Alzheimer's patients in the final stages of the disease who require total care and are bedridden, and for patients discharged from local hospitals who require high-tech services, a 30-bed wing designed, staffed and equipped to provide such services would be set aside. The facility would provide a high level of staffing to meet the demanding, personal care needs of Alzheimer's patients and would provide 24-hour nursing supervision in that portion of the facility dedicated to intensive services for the bedridden and high-tech patient. The design and equipment of the proposed facility are particularly addressed to the needs of Alzheimer's disease patients. Physically, the facility would allow patients freedom of movement both inside the facility and in an outside courtyard with porches, but the facility would be sufficiently secure to prevent the patient from wandering away from the facility. There would be amenities such as therapeutic kitchens which would allow patients still able to cook to do so. Fixtures in the facility would be designed so that the Alzheimer's disease patients could easily identify the functions of fixtures such as wastebaskets, toilets, and sinks. Features such as low frequency sound systems, lever door knobs, square instead of round tables, barrier-free doorways, special floor coverings, appropriate labeling, automatic bathroom lighting, and provisions for seating small groups of patients together would all provide the special care required by the Alzheimer's patient. The concept of a separate unit for Alzheimer's disease patients is a new one, growing out of increased medical awareness of the disease. The proposed unit would be a prototype for the Petitioner. There are four nursing homes in Collier County and 413 licensed nursing home beds. There are no approved but unlicensed nursing home beds in Collier County. At the time that HRS initially reviewed the HCR application, Collier County nursing homes were reporting an average occupancy of approximately 70 percent. At the time of the hearing, average occupancy of existing nursing home beds in Collier County was 83.5 per cent. Existing nursing home beds in Collier County are underutilized and there are a number of nursing home beds available to the public. Also there are available alternatives to nursing homes in Collier County. HCR has projected reaching 95 per cent occupancy within one year of opening. This projection seems overly optimistic and unwarranted by prior history, as only one existing facility has an occupancy rate that high. HCR's occupancy projections are based on assumptions that the future growth will be similar to that experienced between 7/1/85 and 12/1/85. But more recent data shows that growth has been decreasing and that there was no growth for the most recent period prior to the hearing. If projected occupancy is not met, projected revenues will not be realized, and projections of financial feasibility will not materialize. The record in this case does not contain evidence of patients' need for nursing home care documented by the attending physicians' plans of care or orders, assessments performed by the staff of the Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care. The local health plan (Policy 1, priority 4) requires an occupancy level of at least 90 per cent before new nursing homes can be approved. The local health plan (Policy 1, priority 6) also provides, "No new community nursing home facility should be constructed having less than 60 beds. However, less than 60 beds may be approved as part of an established acute care hospital facility."
Recommendation For all of the foregoing reasons, it is recommended that the Department of Health and Rehabilitative Services issue a Final Order in this case denying the Petitioner's application for a certificate of need to construct either its original proposal or its supplemented proposal. DONE AND ENTERED this 14th day of October, 1986, at Tallahassee, Florida. MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1986.
The Issue Which one of three Certificate of Need applications for a new nursing facility in AHCA Nursing Home District 3 should be granted: Beverly Savana Cay Manor, Inc.’s; Life Health Care Resources, Inc.’s; or Arbor Health Care Company’s?
Findings Of Fact The Parties and The Applications Beverly Beverly Savana Cay Manor, Inc., is a wholly-owned subsidiary of Beverly Enterprises, Inc., the largest provider of nursing-home care in the nation. Beverly is proposing to construct a 120-bed freestanding nursing home in Marion County from which it proposes to provide hospice services, respite services and, for six days a week, inpatient and outpatient therapy services. The nursing home, if constructed, will contain a 16-bed Medicare unit and a 20-bed secured Alzheimer’s unit. The Beverly application is conditioned upon providing at least 55 percent of its patient days to Medicaid patients. In addition, Beverly proposes to provide 0.2 percent of its patient days to indigent and charity patients. Beverly proposes to provide care to residents who are HIV positive or have AIDS. If the application is approved, Beverly will contribute $10,000 to a geriatric research fund. Life Care Life Care is a new, start-up corporation formed initially for the purpose of seeking a CON for a nursing home in Hernando County. Life Care’s plan is that it be operated by Life Care Centers of America, Inc. (LCCA), a privately owned Tennessee corporation authorized to business in Florida. LCCA owns, operates, or manages over 185 nursing homes with over 22,700 beds and retirement center units in 28 states. It is the largest privately owned nursing-home company in the United States. Life Care’s application proposes construction and operation of a 120-bed nursing home in Hernando County. The nursing home will include a 20-bed secured Alzheimers/dementia care unit and a state-of-the-art adult care unit. In fact, Life Care has agreed to condition approval of its application on inclusion of these two units. Additionally, it has agreed to a condition of service of Medicaid residents at the district average (69.26 percent) at least. Life Care proposes a broad range of Specialized Programs, including care of AIDS victims, respite care, and care to hospice clients and outpatient rehabilitative care. Its inpatient care will include a 20-bed Medicare unit, within which will be at least 12 beds for "subacute" services. Arbor Headquartered in Lima, Ohio, Arbor Health Care Company has 27 facilities located in five states. Twelve of the facilities are in Florida but none of its licensed facilities are in District 3. Of the twelve in Florida, eleven are JCAHO accredited, with the twelfth, newly-licensed, scheduled at the time of hearing for an accreditation survey in December of 1997. Ten of the eleven accredited facilities are also accredited for subacute care. Arbor’s accreditation record is outstanding compared to both the 600 nursing facilities in Florida, 93 of which are JCAHO accredited and 49 of which are accredited for subacute care, and the national record of accreditation of nursing home facilities in subacute care, 23 percent. This record, too, is demonstrative of Arbor’s progress in carrying out its corporate mission: to be the premier subacute provider of long-term care services. Consistent with its mission, Arbor proposes a distinct subacute unit to serve patients with digestive diseases and patients in need of ventilator therapy, infusion therapy, wound care, and cardiac therapy. In addition to subacute services, Arbor proposes to serve residents with dementia, including Alzheimer’s, by utilizing a strongly-developed, individualized- care plan with an interdisciplinary approach implemented upon admission and subject to continuous review and, if necessary, revision. Arbor's application, however, distinctly different from Beverly’s and Life Care’s, does not propose a secured Alzheimer’s unit. Arbor proposes comprehensive rehabilitation care for its patient and residents, as well as outpatient rehabilitation services for both former residents and residents throughout the community. Arbor proposes to provide 0.2 percent of all patient days for charity care and 69.26 percent of all patient days for Medicaid patients within its 104-bed long-term facility. Medicaid patients will also be served in the 16-bed subacute unit. In addition, Arbor proposes to provide, at a minimum, one percent of its patient days for hospice care, respite care, the care of AIDS patients, and the care of pediatric patients. Arbor is committed to such services, as well as the provision of both inpatient and outpatient intensive rehabilitative programs, and has agreed to condition its award of a Certificate of Need upon such commitments. Arbor is the only one of the three applicants committed to provide care and services to pediatric patients. Location Introduction The issue on which these cases turn is location within District 3. (There are other issues in this case certainly. For one reason or another, their disposition will not determine the outcome of this case. Not the least among the other issues is whether Beverly or Life Care should be favored over Arbor because they propose secured Alzheimer’s units. This issue, however important and subject to whatever quality of debate, is not dispositive because at present it has no clear answer. See Findings of Fact Nos. 43-45, below.) District 3 Comprised of 16 counties located as far north as the Georgia state line and southwest to Hernando County, District 3 is the largest AHCA Nursing Home District area-wise. The District is not divided into subdistricts for the purpose of applying the state methodology to determine numeric need of additional nursing home beds. Among the 16 counties in the district are Marion, Hernando and Citrus. The Applicant’s Proposed Locations Beverly proposes to construct its 120-bed freestanding nursing home in Marion County. The specific proposed location is south of the City of Ocala, east of State Road 200 and west of Maricamp Road. From this location, Beverly would serve primarily residents of Marion County, but would also be accessible to residents of Citrus, Lake and Sumter Counties. Life Care proposes to construct its 120-bed nursing home in the Spring Hill area of Hernando County. Arbor proposes to locate its 120-bed nursing home in Citrus County. It did not propose a specific location within the County. The Best Location Conflicting qualified opinions were introduced into evidence by each of the three applicants. Each applicant, of course, presented expert testimony that its proposed location was superior to the locations proposed by the other two. In its preliminary decision, AHCA approved Arbor’s application and denied the other two. AHCA continues to favor Citrus County as the best location for a new 120-bed nursing home in District 3. At bottom, AHCA’s preliminary decision is supported by Arbor's proposal to locate in the county among Marion, Hernando and Citrus Counties with the greatest need: Citrus. This basis underlying, and therefore, the Agency’s preliminary decision, is supported by the findings of fact in paragraphs 21-35, below. Allocation of Nursing Home Beds Within AHCA Nursing Home District 3 Although the district is identified as a single entity for purposes of the state methodology utilized to determine the need for additional nursing home beds, the local planning council divides the district into geographic units or planning areas in order to specify preferences for the allocation of nursing homes within the district. The North Central Florida Health Planning Council, Inc., has created seven planning areas in District 3. The local health plan utilizes a priority-setting system to identify the relative importance of adding beds to specific planning areas. After establishing well-defined priorities for geographically-underserved areas and designated occupancy thresholds, the priority-setting system creates a decision matrix: the Planning Area Nursing Home Bed Allocation (PANHAM). The matrix is based on the population at risk, bed supply (both licensed and approved), and occupancy levels within the planning area. The allocation factors in the local health plan are particularly significant with respect to District 3 in light of its lone stance among the Agency’s Nursing Home Districts as lacking a process for allocating number of beds needed to the individual subdistrict. The local health plan provides "the only road map or the only guidance" (Tr. 311) as to how to allocate beds within District 3. The local health plan bases its occupancy priorities upon both licensed and approved beds within each planning area. From a planning perspective, it is reasonable and appropriate to calculate occupancy rates based upon both licensed and approved beds in assessing the need for additional beds. The number of approved beds is a measure of how much additional capacity will be on line in the near future. To ignore the number of approved beds in the evaluation of where to allocate new beds is not a good health planning technique. The three counties in which Beverly, Life Care and Arbor propose to locate are each separate planning areas in the local health plan. Marion is Planning Area 4; Hernando and Citrus are 6 and 5, respectively. The preferences contained within the local health plan for the allocation of nursing home beds within District 3 are listed in terms of importance and priority. Allocation factors "[t]wo and three really are the basis . . . for figur[ing] out in this huge district of 16 counties, how [to] make sense of where the beds ought to go." (Tr. 312.) The first of these is for applicants proposing to develop nursing home beds in geographically-underserved areas. None of the planning areas designated by the three applicants in this proceeding meet this geographic-access priority. The second of these two allocation factors, Allocation Factor 3, assigns a number of priorities in order of significance. These priorities are based primarily upon occupancy or utilization and need determined by the number of beds per area residents of 75 years of age and older. The first priority in Allocation Factor 3 is "an acid test." (Tr. 312.) It states that no nursing home beds should be added in a planning area until the number of nursing home days, considering both licensed and approved beds, for the most recent six months is 80 percent. It is only when an applicant meets this threshold that the remaining priorities in Allocation Factor 3 are considered. If the 80-percent priority is not met in a planning area, then the area should be given no further consideration for the allocation of beds. The only planning area of the three at issue in this case which meets the 80-percent occupancy standard is Planning Area 5, Citrus County. At the time the original fixed need pool for District 3 was published for the batching cycle applicable to this case, Citrus County had 69-approved nursing home beds. Hernando County had 147 (including 27 hospital-based skilled nursing beds), and Marion County had 234 approved beds. The most recent data available at the time of hearing show no new beds in Citrus or Hernando Counties but 309 new beds approved for Marion County. Utilizing the most recent data regarding the number of licensed and approved beds in Citrus, Hernando and Marion Counties, Citrus County remains the only planning area of the three which meets or exceeds the 80 percent occupancy threshold. Assuming that the remaining priority factors contained within the PANHAM matrix are applicable, none of the three applicants received a priority ranking under the PANHAM methodology. Applying the most recent data available, however, only Citrus County is moving toward the highest priority of high need and high occupancy. Both Marion County and Hernando County are moving away from the highest priority. Excluding the two counties within District 3 which have no nursing home beds (Dixie and Union), Hernando County has the lowest bed-to-elderly population ratio in the District. Considering occupancy rates over the past three years based solely upon licensed beds, Hernando County has demonstrated a marked decrease in utilization. Thus, even though Hernando has had a growth in population and experiences a lower bed-to- population ratio than the District as a whole, there is no stress on the nursing home bed supply in Hernando County. There is, moreover, no evidence of a high need to add additional bed capacity in Hernando County. The recently opened 120-bed Beverly nursing home in Spring Hill will serve to suppress or depress the overall rate of occupancy in Hernando County, making the occupancy rate even lower. There are a number of reasons why an area that has a relatively low bed-to-population ratio may also experience low occupancy. While a county or a planning area is defined by political boundaries, people do not necessarily stay within those boundaries for nursing home services. Socio-economic factors, the quality of existing nursing home services and the existence of alternatives, such as assisted living facilities, driving times and distances, the proximity of family, all may play a role in determining occupancy rates in a particular area. With regard to Planning Area 6, Hernando County, there are five nursing homes in northern Pasco County within a 15-mile radius of the center of Spring Hill, Life Care’s proposed location. Three of the four existing nursing homes in Hernando County have had downward occupancy trends. Occupancy rate may be expected to further drop with the recently licensed 120-bed facility in Spring Hill. Marion County has far and away the highest number of approved beds and a very high ratio of approved beds to licensed beds, thus providing significant additional capacity in that planning area. While the local health plan for District 3 affords no priorities based upon data concerning patient origin, Beverly attempted to demonstrate a greater need for additional beds in Marion County, as opposed to Citrus County, through patient origin information reported in those two counties. Beverly concluded that while 99 percent of the Citrus County population placed in a nursing home seek care within Citrus County, only 78 percent of Marion County residents placed in a nursing home seek nursing home care in Marion County. A 1996 nursing home data report showed that 147 Marion County residents sought nursing home care outside of Marion County, primarily in adjacent Levy, Sumter and Citrus Counties. Beverly’s analysis fails to establish need in Marion greater than in Citrus. First, it fails to take into account the 309 approved beds which will significantly add to Marion County’s capacity. Second, Citrus County’s occupancy rates are slightly higher than Marion County’s. Third, the data relied upon by Beverly’s expert performing the analysis is incomplete in that two or three nursing homes in Marion County did not report any data regarding patient origin. And finally, there are a number of reasons, found above, for why residents of one planning area choose a nursing home in another planning area. The Extent and Quality of Services Overview The District 3 local plan expresses a preference and priority for applicants which propose specialized services to meet the needs of identified population groups. Examples of such services include care for special children, care for Alzheimer’s or dementia patients, subacute care, and adult day care. Only a small percentage of nursing home care is provided to children. Proposing such care does not in the ordinary nursing home case carry much weight. Nor was there any demonstration that there is an unmet need for pediatric nursing home services in District 3. Nonetheless, it is at least noteworthy that only Arbor proposes care for special children as part of its pediatric services; the other two do not propose pediatric care at all. Arbor is also the only applicant that demonstrated a need for subacute care in its planning area and that is committed to provide such care. Utilizing a reasonable methodology, Arbor demonstrated a need for 41 additional subacute care beds in Citrus County. Arbor’s 16-bed subacute unit is consistent with that demonstrated need. While Beverly and Life Care propose to offer skilled, short-term services, neither proposes a distinct subacute unit. Indeed, Beverly’s skilled Medicare unit will not provide subacute care or services. Life Care’s subacute "program" will be implemented only if management later verifies a community need for such a program. While Life Care proposes to offer adult day care for five clients, Life Care did not identify a need for such services in Hernando County. Each of the applicants proposes to offer services and programs for residents with Alzheimer’s disease or dementia and each intends to service AIDS patients, provide respite care, and offer rehabilitation therapy services. Given the mix of services proposed, as well as Arbor’s commitment to such services, Arbor best meets the local health plan’s priority for the provision of specialized services to meet the needs of identified population groups. Subacute Care Arbor will offer a full range of subacute services, programs, and staffing it in its quest to be a premier provider of subacute services. In contrast, neither Beverly nor Life Care demonstrated a need for subacute care in their districts. In keeping with this lack of demonstration, neither Beverly nor Life Care made any commitment to a dedicated and distinct subacute unit or the provision of such services. Care for Alzheimer’s and Dementia Patients Approximately 50 percent of residents within nursing homes suffer from Alzheimer’s Disease or some form of related dementia. All three applicants propose to serve such patients and offer specified programs and rehabilitative services to these patients. Arbor, however, differs from Beverly and Life Care in its approach to treating those with Alzheimer’s. Beverly and Life Care propose secured, dedicated Alzheimer’s units. Arbor, while clustering patients within the facility in terms of the level of care and resources which each requires, follows a policy of mainstreaming residents with Alzheimer’s within the general nursing home population. There is a difference of opinion in the health care community as to which approach is better: secured, dedicated Alzheimer’s units or mainstreaming. There are both positive and negative aspects to dedicated, secured Alzheimer’s units. And it may turn out that the positive aspects prevail ultimately. But, at present, the results of research are inconclusive. The conclusion cannot yet be drawn that a secured, dedicated unit provides a more effective manner, either from a clinical standpoint or a cost-effective standpoint, of treating and caring for Alzheimer’s or dementia patients. Medicaid Services Florida’s State Health Plan expresses a preference for applicants proposing to serve Medicaid residents in proportion to the average subdistrict-wide percentage of the nursing homes in the same subdistrict. Since District 3 is not divided into subdistricts, the applicable comparison is the average District Medicaid utilization: 69.26 percent at the time the applications were filed. Beverly proposes to offer only 55 percent of its patient days to Medicaid patients. Beverly showed that Medicaid utilization has been declining in Marion County to the point at the time of hearing that it was 58 percent. But even if it were appropriate to use Marion County as the equivalent of a subdistrict, Beverly’s commitment would not match the Marion County rate, a rate lower than the district-wide rate. Beverly does not qualify for the preference. Life Care proposes 69.5 percent of its total patient days to Medicaid patients. Life Care qualifies for the preference. Arbor proposes to commit 69.26 percent of its patient days to Medicaid residents in the 104-bed long-term unit of its facility, or a minimum of 67 long-term care beds. In addition, Arbor will dually-certify some of its Medicare-certified beds for Medicaid in its subacute unit for patients who are either admitted on Medicaid or would convert of Medicaid. Typically, an applicant’s commitment to provide a certain percentage of its patient days for services to Medicaid patients is expressed in terms of patient days for the total facility. This batching cycle, however, was unique in that AHCA created a separate subset of nursing home beds, known as short- term beds, and required that separate applications be filed by applicants proposing both long-term and short-term beds. The partition created a problem for each applicant because it set up the possibility that one of the applicant's applications (either the short-term or the long-term) would be approved and the other denied. Arbor solved the problem by considering its 104-bed long term application as an application for a stand-alone project. Beverly and Life Care did not have the problem since they do not intend to have subacute units within their proposed facility. For facilities approved by more than one CON, AHCA uses a blended rate for monitoring compliance with CON conditions. For Arbor’s application, therefore, one could argue that a blended rate of 60.03 percent, composed of 69.23 percent for 104 beds and 0 percent for the 16 subacute beds, which is the rate Arbor proposes for the entire 120-bed facility, should apply. Whether applying a blended rate or using the rate applicable to long-term beds, Arbor is entitled to the State Health Plan preference for service to Medicaid patients. Financial Feasibility With one exception, all parties stipulated that each of the three applicants propose projects that are financially feasible both immediately and on a long-term basis. The exception relates to the listing in Arbor’s application in Schedule 6 of understated proposed wages for certified occupational therapy assistants (COTAs) and licensed physical therapy assistants (LPTAs). The evidence establishes that through inadvertence, Arbor mislabeled the line item designated as COTAs and LPTAs. The item should have borne a description of therapists aides instead of licensed therapists. Had the item been correctly described, the wages listed were salary levels comparable to wages experienced in other Arbor facilities. The error is harmless. The licensed assistants, that is, the COTAs and LPTAs, were included under the therapist line items within Arbor’s Schedule 6. Thus, the total salary expenses reflected in the schedule are accurate and Arbor’s project is financially feasible in the second year of operation. Even if Arbor has misstated the total amount of salaries for therapists and aides in Schedule 6, Arbor’s project would still be financially feasible because the majority of those costs would be allocated to the Medicare unit and would be reimbursed by the Medicare program. Arbor would continue to show a profit (approximately $189,000) in the second year of operation. Arbor’s proposed project is financially feasible in both the short and long terms.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that: The applications of Arbor Health Care Company (CON Application Numbers 8471L and 8471S) to construct and operate a 120-bed nursing home facility in Citrus County be GRANTED; and the applications of Beverly Savana Cay Manor, Inc. (CON Applications Numbers 8484L and 8484S) and Life Care Health Resources, Inc. (CON Applications Numbers 8479L and 8479S) to construct and operate 120-bed nursing home facilities in Marion and Hernando Counties, respectively, be DENIED. DONE AND ORDERED this 17th day of February, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY 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 17th day of February, 1998. COPIES FURNISHED: Diane D. Tremor, Esquire John L. Wharton, Esquire Rose, Sundstrom & Bentley, LLP 2548 Blairstone Pines Drive Tallahassee, Florida 32301 R. Bruce McKibben, Esquire Holland & Knight, LLP Post Office Box 810 Tallahassee, Florida 32301-0810 Jay Adams, Esquire Douglas L Mannheimer, Esquire Broad & Cassel Post Office Box 11300 Tallahassee, Florida 32302-1300 Richard A. Patterson, Esquire Office of the General Counsel Agency for Health Care Administration Post Office 14229 Tallahassee, Florida 32317-4229 Jerome W. Hoffman, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403
