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FIRST AMERICAN CORPORATION, D/B/A SPRING HILL HEALTH vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-002206 (1984)
Division of Administrative Hearings, Florida Number: 84-002206 Latest Update: Apr. 01, 1985

The Issue The issue presented for determination herein is whether or not F.A.C. Health Care, Inc., d/b/a Spring Hill Health Facility (Petitioner) is entitled to a Certificate of Need to establish a 60-bed nursing home to serve Hernando County.

Findings Of Fact Upon consideration of the oral and documentary evidence adduced at hearing, including the pre-hearing stipulation, the following relevant facts are found. F.A.C. Health Care, Inc. is a wholly-owned subsidiary of First American Corporation. First American Corporation has owned, operated and developed approximately 75 long-term care and retirement facilities over the past 15 years. These operations are primarily located in the southeastern United States. At present, First American Corporation operates 20 facilities and has seven Certificates of Need in the developmental stages. (TR. 35, Fulmer) On January 14, 1984, Petitioner filed an application with the Respondent for a Certificate of Need to construct and operate a community nursing home in the City of Spring Hill in Hernando County, at a total cost of $3,180,000. (Petitioner's Exhibit 1) The letter of denial accompanying the state agency action report dated April 30, 1984, noted the basis for denial as follows: Existing and approved bed capacity in Citrus/Hernando Counties is sufficient to satisfy projected need for 1986. There are 60 nursing home beds that have been approved but have not been constructed at the present time, which, when added to the existing nursing home bed supply in Citrus/Hernando Counties, will serve to satisfy a portion of the projected need for skilled nursing home beds in the sub-district through 1986. The proposed 120 beds are in excess of the 37 beds needed to reduce the prospective base utilization rate to a reasonable level by 1986. (TR. 36, Fulmer; Petitioner's Exhibit 2) On September 26, 1984, Petitioner amended its original application to reflect a reduction from 120 to 60 nursing home beds. Documents reflecting the corresponding reduction in project costs from 53,180,000 to 51,780,000 were submitted with the amended proposal. (Petitioner's Exhibit 3) FINANCIAL FEASIBILITY OF THE PROPOSED SPRING HILL FACILITY The immediate and long-term financial feasibility of a project is one criteria considered during the Certificate of Need review process. Section 381.494(6)(c)9., Florida Statutes. The total cost of the project of 51,780,000 appears reasonable and in line with similar projects. Funds for full 100 per cent financing of the project are available through industrial revenue bonds at 14 per cent interest over 30 years. In order to acquire an industrial revenue bond application, Petitioner would maintain a $150.000 debt service reserve fund. (Petitioner's Exhibit 3) Other methods of financing available to finance the subject project include conventional financing, syndicated equity programs and insurance investment programs. (Testimony of Fulmer at TR. 39-40) Due to the largely rural setting, projected utilization for the first year would be 81 per cent Medicaid, 5 per cent Medicare and 14 per cent private pay. Occupancy is projected to reach 97 per cent by the fifth full month of operation and would be supported in part by the increased utilization of nursing home beds as a direct result of the implementation of diagnostic related groupings. Pro forma statements for the first and second years of operation show a net operating profit beginning in the ninth month and continuing through the second year. The equipment costs, staffing patterns and personnel budget also appear reasonable for this type of project. METHODS AND CONSTRUCTION COSTS Another issue in this proceeding was whether Spring Hill satisfied the criteria in Section 381.494(6)(c)13., Florida Statutes, regarding the cost and methods of construction. Spring Hill's proposed facility will provide 11,981 square feet devoted to patient care and 9,710 square feet for administrative and common service areas at a construction cost of $41.50 per square foot. (Petitioner's Exhibit 3) Proposed construction costs and methods of construction efficiently minimize square footage space requirements and related construction costs and will permit the most efficient operation of the facility at a low per diem cost. The construction cost appears reasonable and is also supportive of a primarily Medicaid based facility. Finally, Respondent offered no evidence to controvert the reasonableness of construction costs and methods proposed by Petitioner. IMPACT ON HEALTH CARE COSTS Section 381.494(6)(c)12., Florida Statutes provides that as part of the Certificate of Need review, probable impact of the proposed project on the cost of providing health care services be considered. Petitioner's expert, Fulmer, urges that there would either be no impact on the cost of care or due to the availability of additional Medicaid beds, costs would be reduced since the private pay demands of family and relatives having to pay for the care of an individual rather than participating in the Medicaid program would reduce the costs of health care to the community rather than increase the financial burden. In this regard, Petitioner offered no evidence to substantiate the claim that the demand for Medicaid beds exceeded the supply, or that Medicaid patients had been refused health services by the available Medicaid health care providers. AVAILABILITY AND ACCESSIBILITY OF EXISTING SERVICES Hernando County lies within HRS District III which is composed of 16 counties in north-central Florida, stretching from the Gulf of Mexico north of Tampa to the Georgia border. (Petitioner's Exhibit 6) The District is further divided into sub-districts. Hernando County represents a separate sub-district. Petitioner's facility is proposed to be located in the City of Spring Hill, located in the fastest growing area of Hernando County. (Petitioner's Exhibits 1 and 2) The latest bulletin (No. 69) from the University of Florida, Bureau of Economic and Business Research, shows a 90 per cent projected growth between 1980 and 1990. Much of the population in the Spring Hill area falls in the 65 and older age bracket. County age group projections released by HRS on September 24, 1984, reveal that the elderly population of 65 and over in Hernando County in 1985 is projected as 17,616, or approximately 27 per cent of total population. By 1990, those projections will grow to 24,887 or approximately 29 per cent of total population. (Respondent's Exhibit 2) The growth trend in Hernando County is an extension of the rapid coastline development occurring in the New Port Richey- Clearwater areas and the counties to the south of Hernando. Previously, the only major development in Hernando County was centered in Brooksville, the middle of the county. Consequently, the existing community nursing home services in Hernando County are concentrated in the Brooksville area. Although Petitioner, through its expert (Konrad) testified that there is a mal-distribution of existing beds and community nursing home services which renders them neither available nor accessible to the rapidly growing elderly population in the southwestern Hernando County corridor and that high occupancy rates in existing community nursing homes in the area and the existence of waiting lists corroborates the lack of availability and accessibility of community nursing home services in the area, the evidence introduced herein failed to establish either the existence of waiting lists or that the existing community nursing homes in the area were overcrowded. SHELTERED VERSUS COMMUNITY NURSING HOME BEDS Petitioner contends that certain nursing home beds associated with the adult congregate living facility at Evergreen Woods in the Spring Hill area are not actually available and accessible to the general public but instead are functioning as sheltered nursing home beds. Respondent, on the other hand, considers the 60 nursing home beds associated with Evergreen Woods to be available and accessible to the general public. A review of the entire record compiled herein failed to substantiate Petitioner's claim that those beds at Evergreen Woods are unavailable and/or inaccessible to the general public. DETERMINATION OF NEED, SECTION 381.494(6)(c)1., FLORIDA STATUTES. In determining need for nursing home beds, a Certificate of Need project is reviewed on a 3-year planning horizon. In this case, predicted need for nursing home beds in District III and the sub-district of Hernando County is calculated through 1987. Hernando County is a single county sub-district located within in HRS planning District III in north central Florida. HRS has determined the overall nursing home bed need for District III as well as sub-district allocations by applying the uniform nursing home bed need methodology for community nursing home services contained in Florida Administrative Code Rule 10- 5.11(21). (Petitioner's Exhibit 5) Respondent provided a step-by-step application of the community nursing home bed need rule and introduced their exhibits supporting the calculation period (Testimony of expert medical facilities consultant, R. Jaffe and Respondent's Exhibits 1 and 2). Briefly stated, application of the pertinent rules reveals an extrapolated need for 31 beds which are available for CON approval based on data available to Respondent on June 29, 1984 and that 36 beds are available based on later data released on September 24, 1984. (TR. 91, Conrad; TR. 130, Jaffe and Petitioner's Exhibit 6) The census report applicable herein reflects that there were 360 licensed beds in the Hernando sub-districts and no approved beds for a total of 360 beds. 2/ Application of the nursing home bed need methodology is not the sole factor used in determining whether a CON application should be granted. Other factors, such as access, high occupancy rates, chronically underserved population and high Medicaid utilization are definite factors in approval of additional beds in cases where the rule shows either no need or only slight need. Respondent has, on several occasions, granted 60-bed applications where accessibility issues justified the grant of a minimum-sized facility in spite of the lesser numerical need indicated under the rules. 3/ Petitioner referred to instances wherein Respondent had granted approval for CON's in other districts where there were unusual circumstances such as accessibility issues as referred to herein above. A review of those cases reveals that a departure from the usual bed-need methodology is warranted in cases of extremely high occupancy rates (95 per cent or higher) or the facilities with lower occupancy rates, e.g. 85.7 per cent for homes in Sarasota County, which were located in inaccessible distances away from the population concentration. Petitioner has not demonstrated sufficient basis herein to warrant a departure from the usual bed need rule methodology. The instances wherein a departure from the usual bed need rule methodology has occurred are distinguishable, inasmuch as in the instant case, there are three existing facilities presently in Hernando County offering 360 nursing home beds. Current occupancy rate has been shown to be reasonable and is standing at or below average for District III. Additionally, Respondent introduced a "Stipulation of Settlement" dated September 28, 1984 which was entered into by and between Evergreen Woods Health Care Center and Respondent. The substance of that stipulation reveals that during October of 1983, Evergreen Woods Health Care Center (EWHCC) as Petitioner, filed an application with Respondent for a Certificate of Need to add 60 beds to its existing 60-bed nursing home located in Spring Hill, Hernando County, Florida. The application sought 45 community beds and 15 sheltered beds. As a means of amicably resolving that proceeding and based on available need data based on applicable quarterly census reports and application of the need criteria, EWHCC, as Petitioner in that proceeding, amended its Certificate of Need application filed October, 1983, to add a total of 60 beds to its existing facility; 31 beds to be designated as community beds and 29 to be designated as sheltered beds. A review of the public records reveal that the Certificate of Need has been issued (amended CON No. 2959 issued early October, 1984) pursuant to that stipulation of settlement. 4/

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: The application of First American Corporation d/b/a Spring Hill Health Facility for establishment of a 60-bed nursing home facility in Hernando County, Florida, be DENIED. RECOMMENDED this 14th day of February, 1985, in Tallahassee, Florida. JAMES E. BRADWELL 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 14th day of February, 1985.

Florida Laws (1) 120.57
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HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, D/B/A HEARTLAND OF PALM BEACH COUNTY vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-003337 (1984)
Division of Administrative Hearings, Florida Number: 84-003337 Latest Update: Jul. 08, 1986

Findings Of Fact In April, 1984, the Petitioner, Health Care and Retirement Corporation of America d/b/a Heartland of Palm Beach, applied for a certificate of need for 120 community nursing home beds in Palm Beach County, Florida. In July, 1984, the Respondent, the Department of Health and Rehabilitative Services (HRS) gave notice of initial intention to deny the application. HRS Exhibit 5. The instant proceedings are the result of the request of the Petitioner for a formal administrative hearing from that denial. On January 22, 1986, the parties jointly moved for a continuance of the final hearing in this case then scheduled to commence on February 3, 1986, and in paragraphs 3 through 6, represented that the purpose of the requested continuance was to allow the Petitioner to gather data as to two alleged underserved groups: patients suffering from Alzheimer's disease and sub-acute care patients. The Petitioner asserted that such data would support an amended, updated application for certificate of need to be filed by the Petitioner for the purpose of showing need pursuant to the special exception allowed in the rules. In paragraph 8 of the motion, HRS agreed to give serious consideration to the updated application and supporting documents. The motion was granted by order dated February 3, 1986, and at the request of both parties, the final hearing was reset for April 3, 1986. The parties have agreed that all statutory and rule criteria have been satisfied by the Petitioner in this case except for the issue of need as determined by rule 10-5.11(21), Florida Administrative Code, and that question is the sole issue in this case. T. 5; Hearing Officer Exhibit 1. Petitioner's initial application did not mention the intention to provide special services for victims of Alzheimer's disease, and the Petitioner did not amend or update its application with HRS in that respect, except to the extent that it presented such testimony in the formal administrative hearing. T. 104. The application is not in evidence. The initial review of Petitioner's application by HRS did not consider special services to Alzheimer's patients. T. 117; HRS Exhibit 5. HRS has adopted rule 10-5.11(21), Florida Administrative Code, to determine need for additional community nursing home beds. Using a planning horizon of 1987, which is 3 years after the date of application, the rule calculates a net surplus of 511 community nursing home beds for Palm Beach County. Even using the 1989 planning horizon, there is still a net zero bed need using the rule formula for Palm Beach County. T. 100; HRS Exhibit 2; T. 97 and 102. Alzheimer's disease is a degenerative process of the brain characterized primarily by loss of memory and impairment of a variety of routine functions. T. 160-161. Diagnosis of the disease is difficult since there are related degenerative mental disorders. Moreover, positive diagnosis typically requires examination of brain tissue, and the process of obtaining brain tissue is intrusive. T. 162-163. For these reasons, the diagnosis is typically of "senile dementia of the Alzheimer-type," or Alzheimer's disease or related disorders. T. 163. The cause of the condition is not known, although research into possible surgical techniques to ameliorate the effects is being conducted in the Jupiter, Florida, area. T. 73. Alzheimer's disease primarily afflicts elderly persons, although some younger persons may also be victims. T. 163. Person suffering from Alzheimer's disease typically have memory loss, communicative problems, aphasia, trouble understanding, confusion, disorientation, inability to recognize care givers, waking at night, interrupting the care giver's sleep, wandering, mealtime problems, inappropriate sexual activity, incontinence, and social disfunctions. T. 184. Such persons exhibit negative behavior such as resistence to care, demanding, aggression, anger, emotional outbursts due to inability to perform routine tasks, and delusions. Id. Four stages of progressive degeneration are expected with Alzheimer's disease. The first is forgetfulness and loss of ability to perform complex tasks which formerly could be performed. In the second stage, communication problems occur and also loss of memory as to the names of common objects. Wandering and becoming lost also may occur. Stage three is characterized by physical deterioration such as loss of weight, incontinence, and loss of control of other bodily functions. In the fourth stage, a patient will become unable to communicate at all, and may become comatose and bedridden. The course of the disease is from 12 to 16 years or longer and can involve many of the problems described above. T. 217-218. A family member is usually the person first required to provide care for an Alzheimer's victim. T. 165. The responsibilities caused by such care, and the manner in which the symptoms of Alzheimer's disease are exhibited, cause the family care-giver to feel trapped, fatigued, depressed, angry, resentful, and frustrated. T. 167. At times, the family care-giver is elderly and can suffer health problems from the responsibility. T. 82-83. The burden upon the family member can be alleviated by day care, which involves care only during the day, and respite care, which can involve overnight care for several days. T. 167, 147-148. Day care and respite care can also serve the function of establishing a relationship with staff and collection of data and records, both of which become useful for the time when the patient's disease progresses to the point that continuous inpatient care is required. T. 83, 220-223. Alzheimer's patients in a nursing home need special care directed toward their particular disability described above. Of primary concern is that the nursing home be structured to provide an environment that minimizes confusion and compensates for the disabilities of the Alzheimer's disease victim. Separation from other elderly residents, who are not cognitively impaired, is important to prevent confusion of the Alzheimer's patient and to protect the other residents from disruptive intrusions. The physical facility should be constructed and furnished so as to minimize confusion and stimulation. Colors should be subdued, flooring should not mute the sound of footsteps, patterns should not be used, and common appliances should have distinguishing shapes and be clearly identified or labeled. Spaces for quiet and for wandering should be provided. Features to compensate for forgetfulness, such as lights which automatically turn on when a door is opened, should be provided. T. 219- 227, 57-58, 63-64, 81. Staffing must be trained to recognize and help alleviate problems that arise from behavior caused by Alzheimer's disease. T. 74-75, 234- 235, 80, 83-84. Finally, since Alzheimer's disease patients become upset with change due to recognition and memory impairment, continuity of care (staffing and physical surroundings) becomes important. T. 221, 223, 78, 82-83. Alzheimer's disease victims who need inpatient care also need all of the normal forms of skilled nursing care that other elderly persons need. This may occur over a course of years, or may be the results of a sudden injury, such as a broken hip. T. 220-223, 147-148, 79. As discussed above, it is important to be able to provide such care in the same facility since continuity of care is so important, and transfers to new surroundings are disruptive. Any current holder of a certificate of need for community nursing home beds in Palm Beach County may, if it wishes, provide special services to persons suffering from Alzheimer's disease. T. 122. Existing nursing homes in Palm Beach County accept Alzheimer's disease victims, but none provide special services for these patients except perhaps Darcy Hall, which provides adult day care. T. 143, 76, 82, 168-169, 171, 200-201, 210-211. Existing adult congregate living centers and adult day care centers in Palm Beach County similarly do not have special services or programs for victims of Alzheimer's disease. T. 145. Existing nursing homes could provide such services to Alzheimer's patients, though approval of HRS by expedited review to change substructure might be required, but none has done so. T. 154. Alzheimer's patients are often inappropriately restrained, or mixed with non-Alzheimer's disease patients. T. 77. Dr. Eugene Loeser is a physician, board certified in neurology, and is in private practice in Jupiter, Florida. T. 157-158. Dr. Loeser created a list of questions to ask physicians in Palm Beach County to explore the need for special nursing home programs for Alzheimer's disease patients, and that list of questions is HRS Exhibit 8. T. 169, 186-189. Using these questions Dr. Loeser conducted a survey of 36 physicians in Palm Beach County, which included 8 family practitioners, 10 internists, 14 neurologists, 2 neurosurgeons, and 2 psychiatrists. T. 170. There are approximately 1,000 physicians in Palm Beach County, T. 31, and Dr. Loeser admitted that his survey was only of a small percentage. T. 170. Dr. Loeser did not attempt to make the survey statistically valid. T. 178. The physicians contacted were selected from the telephone book from Jupiter in the north to Lake Worth in the south. T. 171, 183. Dr. Loeser attempted to contact representatives of several specialities. T. 181. The specialities were selected as those likely to see Alzheimer's patients. T. 170. Of the 36 physicians contacted, 35 had seen patients having Alzheimer's disease. Petitioner's Exhibit 5. Of these, 27 physicians had "difficulty in finding appropriate placement" for these patients in terms of supervision, care and treatment. Petitioner's Exhibit 5; HRS Exhibit 8. The same number of physicians felt that facilities with appropriate programs for placement of Alzheimer's disease or similar disorder patients were not presently available in Palm Beach County. Id. From the responses, Dr. Loeser estimated that these physicians had seen somewhat more than 600 patients suffering from Alzheimer's disease or related disorders in the last year. T. 171. Dr. Loeser personally estimated that he typically had difficulty finding a treatment and care facility for about 10 Alzheimer's disease patients annually. T. 185. He then estimated from responses received that the physicians surveyed were unable to find an appropriate program for about 135 patients annually. Petitioner's Exhibit 5. Dr. Loeser further estimated that among his own patients, about one or two per week needed some form of day care, T. 185, and from the responses of the physicians in the survey, estimated that such physicians annually had 150 patients needing day care. T. 175. Determination of placement problems for Alzheimer's disease patients from actual patient records or placement orders from physicians would be difficult because these records are confidential. Consent from the patient would be needed, and consent from an Alzheimer patient would be difficult due to the nature of the mental impairment caused by the disease. T. 173. The survey conducted by Dr. Loeser was not unreasonable for failure to contact more physicians. The survey accurately reflects a group of Alzheimer's disease patients treated by the physicians contacted, and does not purport to account for Alzheimer's disease patients treated by other physicians. Thus, the need identified by Dr. Loeser's survey, while underinclusive of total need, is reasonably accurate for the need identified. Palm Beach County currently has at least an estimated 16,597 persons suffering from Alzheimer's disease, and this number is expected to be 18,172 by 1988. T. 24. HRS itself estimates that the number of Alzheimer's victims in Palm Beach County in 1986 to be 27,200. Petitioner's Exhibit 6. It is further estimated that approximately 80 percent of such patients will require some sort of custodial care in the future. T. 76. Based upon the foregoing statistics, as well as the fact that existing Palm Beach County nursing homes do not provide special services or care for Alzheimer's disease patients, there is a need for the Alzheimer facility proposed by the Petitioner. The Petitioner proposes to establish a 120 bed nursing home in Palm Beach County designed and staffed to provide care and treatment to meet the special needs of persons suffering from Alzheimer's disease and related disorders. T. 45. The Petitioner, Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, is willing to have any certificate of need issued in this case to be conditioned upon it building, developing, and operating the proposed nursing home limited as it has proposed in this formal administrative hearing. T. 48-49. Thus, findings of fact 18 through 21 which follow relate to the manner in which the Petitioner proposes that a certificate of need may be conditioned and limited. The proposed physical design of the nursing facility is set forth in Petitioner's Exhibit 1. T. 49. The cost is estimated to be $3.7 million. T. The design includes a courtyard to allow patients to wander safely. T. 41. It also includes a shaded porch, an outdoor patio, and a lounge off the patio. Id. Security from wandering is proposed to be provided by a "Wanderguard" system of wristbands and sensing devices that sound an alarm as a patient passes an exit point. Id. Additionally, the proposed facility would have a therapeutic residential kitchen for patients still able to use a residential kitchen. Id. One room would be set aside as a quiet room. T. 42. It is contemplated that such a room will minimize the need for calming drugs. T. 224. Also to be provided are separate dining areas, areas for therapy, and separate nursing wings and sub-acute care wings. T. 42-43. Alzheimer patients would be separated from non-Alzheimer patients, fixtures would have shapes, colors, and labels to facilitate identification; wall and floor coverings would not use patterns, and the flooring would be vinyl or tile instead of carpet. T. 42, 225-228. The proposed plan of the facility contemplates that there be space for all stages of care for Alzheimer's patients: day care, respite care, nursing care, and sub-acute care. Petitioner's Exhibit 1; T. 221-222, 39-40, 56. The Petitioner also proposes to provide individual treatment plans, to include physical therapy, occupational therapy, social work, and recreational therapy. T. 230-231. Support groups for family members of the patient will be provided. T. 233. The Petitioner states that the staff for the proposed facility must be appropriately trained to know Alzheimer's disease and the special needs of these patients. T. 234. Ongoing education for staff is viewed as being imperative. Id. The Petitioner recognizes the need to provide greater staffing for peak periods. T. 235. Monthly in-service training will be provided by the parent corporation. T. 236. Moreover, the parent corporation, Health Care and Retirement Corporation of America, will develop and implement a program of staff training specifically for Alzheimer's disease. T. 237. Staff for the proposed facility will be adequately trained to properly deal with the problems of Alzheimer's patients. For a 24 hour period, a staff to patient ratio of 1 to 2.5 will be provided. T. 238. This ratio includes only nursing staff, aides, and activities and occupational rehabilitation staff. Id. The Petitioner proposes to designate and commit its entire facility to Alzheimer's patients. T. 60. But from a fiscal point of view, the Petitioner proposes to not deny admission to persons not having Alzheimer's disease. T. 66-68. At least 60 beds will be dedicated to patients with Alzheimer's disease, and these are expected to fill with persons in stages two and three of the disease. T. 67-68. When these patients reach more advanced stages of their disease, it is expected that they will be treated in the other 60 bed section, which is skilled nursing and sub-acute care. T. 68; Petitioner's Exhibit 1. Thus, the Petitioner expects ultimately to fill its entire facility with Alzheimer's disease patients consistent with its dedication and purpose. The facility proposed by the Petitioner would meet the unique needs of Alzheimer's disease patients and their families, and would be the only facility in Palm Beach County to provide a wide spectrum of care for Alzheimer's disease patients. Petitioner's proposal is consistent with priorities IV, V 3 and 4, and VI, Long Term Care section, District IX Health Plan (1985). T. 150-152. On March 6, 1986, the General Counsel of the Department of Health and Rehabilitative Services sent a memorandum to "all attorneys" construing and implementing the decision in the Gulf Court case, Gulf Court Nursing Center v. DHRS, 10 F.L.W. 1983 (Fla. 1st DCA 1985). On the next day, Robert E. Maryanski, Administrator, Community Medical Facilities, Officer of Health Planning and Development, sent the memorandum to his staff and told them to use the opinion as a guideline for the initial review of a CON application settlement and preparation for hearings. HRS Exhibit 6. HRS recognizes that there are three ways that an applicant for a certificate of need for nursing home beds can show need even though the rule shows a zero bed need. The third way is for "equivalent assessments" to be submitted by "attending physician." T. 113; HRS Exhibit 4, rule 10- 5.11(21)(b)10, F.A.C. HRS staff construes rule 10-5.11(21)(b)10, F.A.C., as requiring that each attending physician of each Alzheimer's patient document that his or her patient is in need of specialized services and that the patient is without access to those special services. T. 124. The issuance of certificate of need 4194 to the Joseph L. Morse Geriatric Center was issued pursuant to the special circumstances exception of rule 10-5.11(21)(b)10, F.A.C., since the rule did not show bed need. T. 127. There was nothing in the application in that case to show that elderly Jewish persons were denied access to existing nursing home facilities in Palm Beach County. Id. See also T. 130. There was, however, evidence that a large group of elderly Jewish persons were not being provided kosher dietary services at existing nursing homes. T. 129, 134. This evidence was not presented by attending physicians, however. T. 136. The certificate of need 4194 to the Joseph L. Morse Geriatric Center was also approved using priority VI, long term care section, District 9 local health plan, which provides in the second sentence for consideration of "ethnic- type services including special dietary requirements . . . ." HRS Exhibit 7; T. 134. Due to changes in federal funding, patients needing sub-acute care (less than hospital care, but more than an ordinary nursing home) do not qualify for cost reimbursement. T. 85-88. It appears that about one-half of all nursing home admissions in Palm Beach County are for three months or less. This may be a pool of persons needing sub-acute care. Petitioner's Exhibit 3, Long Term Care Section, page 4; T. 27-28. There was other general testimony that there was a "need for sub-acute care in Palm Beach County, T. 88, 146, and the local health plan, priority V 4, page 31, supports the grant of a certificate of need to an applicant that will provide such care. Petitioner Exhibit 3. There is also a need for sub-acute care in the final stages of Alzheimer's disease to provide continuity of care. T. 221. See also finding of fact 10. No one has petitioned to intervene in this case.

Recommendation Based upon the foregoing, it is recommended that the Department of Health and Rehabilitative Services, pursuant to Rule 10-5.11(21)(b)10, Florida Administrative Code, and Section 381.494(8)(c), Florida Statutes, issue a certificate of need to Health Care and Retirement Corporation of American, d/b/a Heartland of Palm Beach, for 120 community nursing home beds limited and conditioned upon all such beds being dedicated only to the provision of such services and facilities for victims of Alzheimer's disease as described by the Petitioner in this case and set forth in findings of fact 18 through 21 of this order, with 30 of such beds established for sub-acute care needs of Alzheimer's disease patients. It is further recommended that the certificate of need not contain approval for general community nursing home beds, but be limited to Alzheimer's disease patients. DONE and ORDERED this 8th day of July, 1986, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3337 Pursuant to section 120.59(2), Fla. Stat., the following are specific rulings upon all proposed findings of fact submitted by the parties which have been rejected in this Recommended Order. Findings of Fact Proposed by the PETITIONER: 7. Sentences 3 and 4 have been rejected because the evidence was not sufficiently complete to describe nursing homes in Florida in general, and because the issue in this case is the need in Palm Beach County, thus making these proposed facts not relevant. 10. Sentence 3 is rejected since the testimony did not clearly show that therapeutic kitchens "should be available." 13. Sentences 9 and 10 are rejected because the evidence did not categorically show that it "would not be possible" to use actual physician orders, or that "physicians do not typically arrange their records so that orders of that kind could be extracted from their records." Similarly sentence 12 is rejected for lack of categorical evidence to prove impossibility. 17. Evidence that the entire facility is "completely fenced and enclosed" cannot be located in the record, and thus sentence 7 is rejected. The bulk of the discussion in proposed finding of fact 20 has been rejected because it is argument or conclusions of law. Those portions of this proposed finding which propose a finding that the Respondent's interpretation of rule 10-5.11(21)(b)10, Florida Administrative Code, is wrong or unreasonable are rejected as argument or conclusions of law. Most of the factual statements were adopted. Findings of Fact Proposed by the RESPONDENT: All proposed findings of fact by the Respondent have been adopted in substance. COPIES FURNISHED: Harden King, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301 Kenneth A. Hoffman, Esquire G. Steven Pfeiffer, Esquire Laramore & Clark, P.A. 325 North Calhoun Street Tallahassee, Florida 32301 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================

Florida Laws (1) 120.57
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ST. JOSEPH`S HOSPITAL, INC. vs AGENCY FOR HEALTH CARE ADMINISTRATION, 94-006236CON (1994)
Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Nov. 04, 1994 Number: 94-006236CON Latest Update: Mar. 18, 1997

The Issue The central issue for disposition is whether Certificate of Need no. 7750, for 24 hospital-based skilled nursing unit beds should be awarded to Petitioner, St. Joseph’s Hospital, Inc. (St. Joseph’s). To resolve that issue it is necessary to resolve factual issues regarding the need for the proposed beds and a legal issue regarding the impact of Health Care and Retirement Corp. of America v. Tarpon Springs Hospital Foundation, Inc. 671 So.2d 217 (Fla 1st DCA 1996) (Tarpon Springs) on the fixed need pool published in the first nursing home batching cycle of 1994 in Hillsborough County, District 6, Subdistrict 1.

Findings Of Fact The Parties St. Joseph’s Hospital, Inc. (St. Joseph’s) is a not- for-profit hospital which has operated in the Tampa, Florida area for over fifty years. It is currently licensed for 883 acute- care beds; it owns John Knox Village, which includes an adult congregate living facility and medical center nursing home; and it offers other services in a continuum of health care. St. Joseph’s also has a 19-bed, in-hospital skilled nursing care unit which became operational in early 1995. The Agency for Health Care Administration (agency or AHCA) is the state agency responsible for administering and enforcing the certificate of need (CON) process described in sections 408.031 through 408.045, Florida Statutes (“the Health Facility and Services Development Act”). The Process The fixed need pool published by AHCA in vol. 20, number 15, April 15, 1994, Florida Administrative Weekly, projected a need for 94 additional nursing home beds in Hillsborough County, District 6, Subdistrict 1, for the January 1997 planning horizon. There is no evidence that this fixed need pool was challenged. Approximately eleven health care providers, including St. Joseph’s, responded to the fixed need pool notice with applications for CON’s ranging from 10 to 94 beds. Some of those applicants, like St. Joseph’s, were hospitals seeking hospital- based skilled nursing beds. After comparative review of the applications, AHCA issued its state agency action report (SAAR) on September 16, 1994, denying some and granting others, and explaining the basis for its intended actions. Some of the beds were awarded for a hospital-based skilled nursing unit; St. Joseph’s application for 24 in-hospital beds was denied in the comparative review that determined St. Joseph’s application was inferior to others in meeting statutory and rule criteria. The applicants’ petitions for formal hearing were forwarded to the Division of Administrative Hearings by AHCA and were consolidated in a single proceeding relating to the 94 beds in District 6, Subdistrict 1. On October 19, 1995, during the pendancy of appeal of the DOAH Final Order in Tarpon Springs, all of the parties in the consolidated cases executed and filed a stipulation which disposes of 93 out of the 94 available beds in the fixed need pool. The stipulation provides that all of the applicants, except St. Joseph’s, withdrew their petitions for formal hearing. As to St. Joseph’s, the stipulation provides: St. Joseph’s has previously withdrawn its opposition to the applications of all other parties to this proceeding by its Notice of Voluntary Dismissal of Petitions for Administrative Hearing and Notice of Lack of Opposition, dated September 13, 1995. St. Joseph’s and AHCA stipulate that Case No. 94-6236, wherein St. Joseph’s challenged the denial of its application for certificate of need 7750 to add 24 skilled nursing unit beds, should be held in abeyance pending the final judicial determination of Tarpon Springs Hospital Foundation, et al. v. Agency for Health Care Administration, et al. (Proceeding below DOAH Case Nos. 94-0958RU and 94-1165RU, reported at 16 FALR 3420, presently on appeal before the First District Court of Appeal). St. Joseph’s acknowledges that the terms of this settlement will deplete the fixed bed need pool determined to be available for this application cycle, assents to the same, and maintains its position that its application should be approved notwithstanding the lack of availability of community nursing home beds within the fixed bed need pool. All other parties to this agreement except for AHCA hereby withdraw their petitions filed in this proceeding in opposition to the application of St. Joseph’s for certificate of need 7750 and waive any challenge or protest that they may have to the issuance of certificate of need 7750. St. Joseph’s hereby agrees not to oppose the transfer of up to seven (7) beds from this application cycle to TGH. After remand of all of the consolidated cases except St. Joseph’s (DOAH no. 94-6236), AHCA entered its final order on December 13, 1995, awarding CON’s for 93 beds to various of the applicants. Some of those 93 beds were awarded for hospital- based skilled nursing units. This final order depleted the fixed need pool of all but one bed. In their prehearing stipulation filed on August 29, 1996, AHCA and St. Joseph’s admitted these relevant facts: The appropriate planning area is Hillsborough County; The appropriate planning horizon for the application is January 1997. Rule 59C-1.036, Florida Administrative Code was appropriately used in determining the bed need for Hillsborough County, District 6, Subdistrict 1, for the first nursing home batching cycle of 1994; and The numbers used to derive the project pool of 94 beds in Hillsborough County, District 6, Subdistrict 1 for the January 1997 planning horizon were accurate and appropriate. At the hearing and in its proposed recommended order, St. Joseph’s concedes that it did not apply for beds under “not normal” circumstances. The Project St. Joseph’s proposes to establish a 24 bed, hospital- based skilled nursing unit in an area of its main hospital building by converting 24 acute care beds to this use. The project involves 19,600 square feet of renovation at a total project cost of $684,731, including conversion costs of $331,940. Actual out-of-pocket costs for the project are $352.791. The skilled nursing beds within the hospital facility are intended to contribute to St. Joseph’s goal of providing a full continuum of care for its patients, with services provided at different levels for a medically-appropriate and cost- effective outcome. St. Joseph’s anticipates that the patient using the skilled nursing (also called “subacute care”) unit would be one coming from the acute care setting and requiring less-acute care, but a more intensive level of care and a shorter length of stay than generally offered in a typical nursing home. All ancillary services and therapies will be available at the hospital seven days a week. Rehabilitative services, which are critical to the patient likely to use the skilled nursing beds, include physical therapy, occupational therapy, speech and language therapy, and recreation therapy. Need Analysis/Impact on Existing Programs Virtually all of the referrals to the proposed new beds will come from within St. Joseph’s. This is the experience of the new 19 bed unit. The hospital’s doctors and their patients prefer to not transfer to an outside facility and they plan in advance, as part of their treatment goals, that the subacute rehabilitative phase of treatment will be in St. Joseph’s own skilled nursing unit. The multi-discipline health care team evaluates and identifies patients who will benefit from such treatment; patients are not automatically shifted down to the unit. The existing unit enjoys a near-100 percent occupancy rate and has a waiting list for patients. Sometimes patients are held in an acute care bed while awaiting transfer to a vacant bed in the skilled nursing unit. This is an inappropriate use of the acute care bed. Few, if any patients would come from other hospitals. Since many hospitals now have their own skilled nursing units, there is little exchange of patients. In the experience of St. Joseph’s staff, other hospitals generally fill their own units from within in their own “continuum of care” system. John Knox Village is not an alternative for patients who need to “step-down” from acute to subacute care. John Knox is eleven miles from St. Joseph’s and does not provide the intensity of care that is offered in the hospital-based skilled nursing unit. There are subacute care, or skilled nursing care, beds in Hillsborough County in free-standing, not hospital-based units. These alternative facilities are not all fully occupied and some offer similar services and treat patients comparable to those treated in the hospital-based units. Evidence that the free-standing skilled nursing facilities are not appropriate alternatives to St. Joseph’s new beds was largely anecdotal. Although Dr. Wasylik, St. Joseph’s chief of orthopedics, is generally familiar with facilities in which he has patients, his observation that transfer of patients from St. Joseph’s would not be appropriate is based on his concern that the “continuity of care” would be disrupted. In other words, even before surgery and admission to an acute care bed, a “critical pathway” in the patient’s rehabilitation is developed. Another facility might have a different pathway that would disrupt the rehabilitative process. Better continuity of care, in Wasylik’s view, translates into quicker, and thereby more cost-effective, recovery. Financial Considerations Although the agency found some inconsistencies in the financial data included in St. Joseph’s application, those inconsistencies affected only the scoring of the application in a competitive batching cycle. The agency witness who provided financial review of the application conceded there was no problem with funding the project, and due to the small size of the project in relation to the size of St. Joseph’s, the project would not have a significant impact on the cost of other services provided by St. Joseph’s. The proposed project would generate a positive financial return for St. Joseph’s. In the proforma financial statement included with the application, the hospital used an occupancy rate of 74%; the actual occupancy rate experienced in the new 19 bed unit is higher. Some of the problems the agency found when reviewing St. Joseph’s application were adequately explained at hearing. For example, the actual cost of the project is less than what the agency found in the financial projections in the application. Also, if, as the agency contends, St. Joseph’s has over-stated its projection of Medicaid patients, a lower Medicaid utilization rate will actually inure to the benefit of St. Joseph’s, since the Medicaid reimbursement rate is lower than for other payor sources. While not obvious on the face of the application, the financial assumptions provided by St. Joseph’s were sufficient to extrapolate valid projected salary expenses in the second year of operation. In summary, a CON application, by necessity, includes estimates and projections of expenses and revenue generated by the proposed project. St. Joseph’s now has the experience, which it did not have when the application was prepared, of the actual expenses and revenue from its 19 bed unit. That actual experience helps validate its prediction of financial feasibility for the proposed 24 beds. Architectural Issues At hearing, St. Joseph’s clarified its intent to not delicense nor relocate acute care beds to make room for the proposed 24 bed skilled nursing unit. Nor does it intend to “phase in” the skilled nursing beds, if approved. Neither of these intentions is clear from the face of the application and the architectural review by the agency raised questions on these issues. The questions affected St. Joseph’s overall standing in a competitive review process, but are not serious enough to foreclose approval if the application is considered on its own merit. The application states that the new beds would be co- located with the existing 19 beds. But if there is not sufficient room, as long as St. Joseph’s can accomplish the project at or below the approved project cost, and as long as St. Joseph’s obtains agency approval for placing the beds elsewhere (which approval is routinely granted), the precise location of the beds within St. Joseph’s facility is not a problem. The beds may not, nor are they intended to be, co-mingled with acute care beds in the hospital. Upon construction, the 24 beds will meet all of the licensure, building code and other regulations applicable to a skilled nursing unit within an acute care hospital. Balancing the Criteria and Summary of Findings There is little dispute that St. Joseph’s has the financial resources to complete the approved project and to operate it successfully. Nor is quality of care, either in the existing facility and projected in the future, an issue of dispute. The questions raised in the financial review and architectural review are not impediments to approval. There are two significant problems with St. Joseph’s proposal. St. Joseph’s serves the entire planning district, and the impact of new beds must be considered in that district-wide health-planning perspective. St. Joseph’s generates enough patients from within its own hospital to fill the beds close to capacity. Other facilities providing similar services in the district are not at full capacity. The possibility of those existing facilities serving as an alternative to new beds was not adequately explored by St. Joseph’s, but was rejected out of an abundance of pride in its own fine services, or physician and patient loyalty. Patient and physician preference does impact “real world” utilization of health care facilities but cannot drive the health planning decisions that are made in the CON process. The second, and most significant impediment to St. Joseph’s application is that only one bed remains in the fixed need pool established for the relevant planning horizon. As discussed below, Tarpon Springs did not invalidate that fixed need pool. St. Joseph’s application does not reflect a willingness to accept any fewer than the requested beds, much less an award of only one single bed. (See, Respondent’s Exhibit 12, CON application, p. 34)

Recommendation Based on the foregoing, it is hereby, RECOMMENDED: that the Agency for Health Care Administration enter its final order denying CON number 7750 to St. Joseph’s Hospital, Inc. DONE and ENTERED in Tallahassee, Leon County, Florida, this 23rd day of January 1997. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of January, 1997. COPIES FURNISHED: Ivan Wood, Esquire Baker & Hostetler Suite 2000 100 Louisiana Houston, Texas 77002 Steven A. Grigas, Esquire Agency for Health Care Administration 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 Jerome W. Hoffman, Esquire General Counsel 2727 Mahan Drive Tallahassee, Florida 32308-5403

Florida Laws (5) 120.57408.031408.035408.039408.045 Florida Administrative Code (5) 59C-1.00259C-1.00859C-1.03059C-1.03659C-1.044
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HILL-GUTHRIE PROPERTIES vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 83-000610 (1983)
Division of Administrative Hearings, Florida Number: 83-000610 Latest Update: Apr. 18, 1985

Findings Of Fact I. BACKGROUND HILL-GUTHRIE, also known as Hill Guthrie Realty Company, is a wholly- owned subsidiary of First American Corporation, in Huntsville, Alabama. During the past 17 years, First American Corporation has developed, owned, and operated approximately 80 nursing homes and health care facilities. On October 15, 1982, HILL-GUTHRIE filed an application with HRS for a CON to construct and operate a community nursing home in the City of Niceville, in Okaloosa County, Florida. The original application sought authorization for a 120-bed nursing home, to be known as "Twin Cities Health Facility." Estimated cost of construction was $3,180,000. By its "State Agency Action Report," dated January 28, 1983, HRS preliminarily denied the application, stating: The proposed project is not consistent with Chapter 10-5.11, Florida Administrative Code, Nursing Home Bed Need Methodology. A need does not exist to add any nursing home beds to Okaloosa County through 1985. There are 70 approved but not constructed beds in the county. The bed need methodology produces an excess of 10 nursing home beds in the county through 1985. (emphasis included) [Respondent's Ex. 3.]. HILL-GUTHRIE contested the denial, resulting in this proceeding. At final hearing, HILL-GUTHRIE amended its earlier application, reducing the number of nursing home beds, from 120 to 60. Other changes to the application were made to reflect the reduction in beds. The estimated cost of construction was reduced from $3,180,000 to $1,780,000. [Petitioner's Ex. 2]. HRS did not seek a continuance or additional time to evaluate the newly amended application. Rather, it represented that it was prepared to proceed. II. APPLICATION OF THE NURSING HOME BED-NEED METHODOLOGY Both parties agree that HILL-GUTHRIE'S application is governed by the licensing criteria contained in Rule 10-5.11(21) Florida Administrative Code, and Section 381.494(6)(c), Florida Statutes. Generally, the rule provides that applications for community nursing home beds will be considered "in context with applicable statutory and rule criteria"; that applications will "not normally [be] approve[d] . . . if approval . . . would cause the number of community beds in that departmental service district to exceed the number of beds calculated by the methodology described in [the rule]"; and that this methodology, consisting of several numerical formulae, will be used to evaluate applications "in addition to relevant statutory and rule criteria." Section 5.11(21)(a), (b), Fla. Admin. Code. The statute being implemented, Section 381.494(6)(c), Florida Statutes, enumerates a myriad of criteria, including availability, accessibility, extent of utilization, quality of care and adequacy of like and existing health care services in the area to be served. Section 381.494(6)(c), Fla. Stat. (1983). It has been construed to require a balanced consideration of these factors. HRS cannot ignore some factors and emphasize others. 1/ The HRS methodology--consisting of formulae which do not take into account all criteria listed in the statute--comports with this requirement by incorporating, by reference, all other relevant statutory or rule criteria, and recognizing that new beds may be permitted even though such approval would cause the number of beds to exceed the number allowed by the formulae. Section 5.11(21)(a), (b), Fla. Admin. Code. The HRS bed need methodology, at least that part consisting of the various formulae, establishes a 3-step analysis. First, theoretical bed need for the relevant district and sub-district is calculated using an area's particular poverty ratio, a statewide bed-need ratio of 27 beds per 1,000 elderly population, and the area's elderly population projected three years into the future. "Existing and approved" beds in the sub-district area are then subtracted to arrive at the number of additional beds needed in the district and sub-district. In the instant case, it is undisputed that this first step in the analysis is satisfied. The formulae, when "run," indicate a 1987 theoretical bed-need of at least 250 additional beds in District 1, the relevant district, and 58 additional beds in Okaloosa County, the relevant sub-district. Respondent's Ex. 1, 2). The remaining two steps involve applying current and prospective utilization formulae. When, as here, both district and subdistrict show a theoretical need for additional beds, a specific bed need/availability relationship is identified, which correlates with specific current and prospective utilization thresholds. Section 5.11(21)(e)1., (f), (g), Fla. Admin. Code. Normally, if both thresholds are satisfied, "need" is indicated and the application approved. If either threshold is not met, thus indicating "no need," HRS must decide whether, on balance, this failure is outweighed by favorable findings under other criteria made relevant by rule or statute. If so, approval is justified, or even required. HRS describes this inquiry as one of determining whether there are unusual, or extenuating and mitigating circumstances in a case which would justify approving an application, notwithstanding failure to satisfy the formulae. In the instant case, the applicable utilization thresholds are that average current utilization rate in the sub-district must exceed 85 percent, and any additional beds must not cause the prospective utilization rate in the sub- district to drop below 80 percent. Section 10-5.11(f), (g), Fla. Admin. Code. [Respondent's Ex. 1.] According to the June, 1984 HRS Semiannual Census Report, the nursing home bed utilization rate for Okaloosa County was 97.1 percent from October, 1983 through March, 1984. More recent nursing home data filed with HRS, on a quarterly basis, indicates a current utilization rate of 96.5 percent. Thus, using either data base, the 85 percent current utilization threshold is satisfied--a conclusion agreed to by both parties. The prospective utilization threshold, however, permits additional beds only to the point at which further beds would drop the sub-district prospective utilization rate below 80 percent. HILL-GUTHRIE, using the HRS Semiannual Census Report, the number of existing and approved beds in the sub-district, and the projected elderly population, concludes that the sub-district (Okaloosa County) could be allowed an additional 16 beds before the prospective utilization falls below 80 percent. HRS, using the quarterly census data, finds need for an additional 13 beds. As conceded by the HRS expert--the 3-bed difference is insignificant. More importantly, as both parties agree, the granting of HILL-GUTHRIE'S 60-bed application would drop the projected utilization rate below the required 80 percent. (A nursing home of less than 60 beds is not considered financially feasible.) Thus, the formulae indicate "no- need" for the proposed 60-bed nursing home. The inquiry, then, must turn to whether failure to satisfy the formulae is, on balance, outweighed by other rule or statutory criteria, or extenuating and mitigating circumstances unique to this case. III. APPLICATION OF OTHER STATUTORY AND RULE CRITERIA The HRS bed-need formulae are useful tools to evaluate CON applications: they are objective, abstract, and can be applied with ease; they enhance consistency, uniformity, and predictability of decision. But these formulae are rudimentary, inexact tools which, though useful, are incomplete. They do not take into account numerous criteria which, by statute and rule, also apply to CON applications. For instance, they do not take into account, in any direct and meaningful way, factors such as financial feasibility, accessibility, quality of care, efficiency, and impact on cost of care. See, Section 10- 5.11(3), (5), (6), and (2)(b), Fla. Admin. Code; Section 381.494(6)(c)1., 2., 9., and 12., Fla. Stat. (1983). It is the measurement of HILL-GUTHRIE'S application by these criteria which is at issue here. The power of HRS to find that failure to satisfy the formulae is outweighed, or overridden, by other factors is not at issue. HRS has, in the past, granted numerous CON's (despite failure to satisfy the formulae) based on favorable findings under other criteria, such as accessibility. Petitioner's Ex.`s 3, 5, 7, 53. Without a bona fide evidentiary basis, agencies cannot treat similarly situated applicants in an inconsistent manner. 2/ A. Accessibility of Existing Nursing Homes To Niceville Area Residents Currently, four nursing homes providing a total of 355 beds--are located in Okaloosa County (the relevant sub-district). The majority of these beds (295) are found in three of the nursing homes located in the more heavily populated and faster growing coastal area of the county. The remaining beds (60) are located in a nursing home in Crestview, a city north of Niceville, in the central part of the county. This nursing home has an additional 60 beds which have been under renovation for a considerable time. HRS has no projected completion date for this renovation. The date of completion is, apparently, a matter within the sole discretion of the nursing home and its contractors. The Crestview nursing home primarily serves residents of the northern and central portion of Okaloosa County. Since it is the northernmost nursing home in the county, it also receives patients from South Alabama. Existing nursing homes in the county have a high rate of utilization. Occupancy rates in the four existing nursing homes average 97.1 percent for the six month period ending March, 1984; 96.5 percent for the six months ending June, 1984. Recent data compiled by the Local Health Council indicate a 98.8 percent utilization rate for the nine months preceding hearing. Nursing home occupancy rates in adjoining counties approach 95 percent, no doubt contributing to the high rate of utilization in Okaloosa County Some nursing homes have lengthy waiting lists. 3/ One patient, although ninth on the waiting list, has waited 3 years for placement in the Westwood Nursing Home, located in the coastal part of the county. The Crestview nursing home has a waiting list of more than 60 persons, making it unlikely that-- even after the renovations are completed--further beds will be available. It is reasonably anticipated that the recently enacted Medicare hospital reimbursement system, based on diagnostic-related guidelines (DRG's), will increase the demand for nursing home beds, thereby aggravating the shortage. With Medicare hospital payments tied to the diagnosis of illness, rather than the length of patient stay, hospitals will have increased economic incentives to discharge patient earlier. Some local hospitals have had to retain patients, who no longer require acute care, because nursing home beds are unavailable. At Crestview Community Hospital, hospital patients have had to wait or face delays of from one week to 63 days during the period from May to August, 1984. During that time period, 43 patients were eligible for nursing home placement. Eleven spent a combined total of 271 hospital days awaiting placement. Three of the 11 were eventually discharged, but (at time of hearing) were still awaiting placement. At Twin Cities Hospital, in Niceville, two or three patients (at time of hearing) required but could not obtain nursing home placement. In August, 1984, five patients were ready for early discharge, but could not be placed in nursing homes because of crowded conditions. In May, 1984, three Twin Cities Hospital patients were placed in a Panama City nursing home, over one and one half hours travel time from Niceville, because of crowded local conditions. Local physicians have had similar difficulties finding nursing home placements during the past year. Robert S. Ellis, M.D., a Niceville physician, could not obtain prompt nursing home placement for from eight to ten of his patients. They faced waits ranging from ten days to two months. Many of his patients were finally placed in nursing homes outside the county; recently, he had no choice but to place a patient in a Gulf Breeze nursing home, approximately 50 miles away. He has never been successful in placing a patient in the Crestview nursing home, primarily because Crestview residents are given priority consideration. His experience is shared by other local physicians. Existing nursing homes in the county are a considerable distance from Niceville. Given the existing road system and traffic conditions in the coastal area, it has become increasingly burdensome for Niceville residents to visit their friends and relatives in coastal nursing homes. Frequent visits and contacts with friends and relatives is recognized as beneficial to nursing home residents. It is important that residents maintain their ties to the community, and their relationships with friends and relatives outside the nursing home. For Niceville residents, it takes 20-30 minutes to drive to nursing homes located in the coastal area, 45 minutes to drive to the Crestview nursing home. This burden, which affects nursing home residents as well as their families and friends, is real and significant. It is established not only by the testimony of area physicians, hospital administrators, and Niceville residents, but it is convincingly corroborated by the testimony of three Niceville city council members, and by petitions signed by over 480 elderly citizens in the Niceville area. [Public Ex.'s 1-3]. The HRS bed-need formulae do not take geographic accessibility of existing nursing homes into account, and no minimum access/travel time has been established by rule. Before adoption of the bed-need formulae, HRS had relied on a 30-minute standard set by the Local Health Council. A health care expert who, in 1982, conducted the HRS public hearing on the HILL- GUTHRIE application concluded that access times (for Niceville area residents) to existing nursing homes bordered on or exceeded this ad hoc 30-minute standard. HRS has not established, by competent evidence, a travel/access standard for use in this proceeding. More importantly, HRS concedes that initial denial of the HILL-GUTHRIE application is due, in large part, to the delay in completing renovations to the Crestview nursing home which, when complete, will provide an additional 60 beds. [Transcript, p. 232]. As conceded by HRS's expert and sole witness, if the 60 renovated beds were available, they would "probably be well utilized." [Transcript, p. 232]. (Given the lengthy witness list, it is likely that, within a short time, the additional 60 beds would be filled.) The expert further concluded that, should the 60 beds be filled, the bed-need formulae would indicate need" and--provided other standards were met--HRS would be able to approve the HILL-GUTHRIE application. [Transcript, p. 234]. B. Financial Feasibility of the Proposed Nursing Home The proposed nursing home is financially feasible, both in the short and long-term. The revised total cost of the nursing home is 51,780,000, which is reasonable, given the nature and size of the project. It will be 100 percent financed through the issuance of industrial revenue bonds at an interest rate of 14 percent over 30 years. The assets of the parent company, First American Corporation, would be available, if needed, to help construct and operate the nursing home. Projected utilization of the nursing home during the first year will be 81 percent Medicaid, 5 percent Medicare, and 14 percent private pay. [Petitioner's Ex. 2]. Occupancy is projected to reach 97 percent by the fifth month of operation, and would be supported, in part, by increased demand for nursing home beds resulting from implementation of DRG's. These projections are based on HILL-GUTHRIE's experience in northwest Florida, and are accepted as reasonable. Pro forma statements for the first and second years of operation show a net operating profit, beginning in the ninth month, and continuing through the second year. For overall operations during the first year, a net loss of $40,082 is projected; in the second year, a net gain of $122,200 is projected. [Petitioner's Ex. 2]. These projections--together with equipment and construction costs, staffing patterns and personnel budget, square footage and space requirements--are accepted as reasonable, and have not been refuted by HRS. If approved, HILL-GUTHRIE's proposed nursing home should be constructed and available for occupancy by the end of 1985. C. Impact (of the Proposed Nursing Home) On Cost of Health Care, and Efficiency and Utilization of Existing Nursing Homes Construction of the proposed nursing home should help relieve the existing financial burden on hospital acute care patients who, because of lack of available nursing home beds, must remain in hospitals, where daily charges far exceed those of nursing homes. Similarly, hospitals would less likely have to absorb the cost of Medicare patients (beyond DRG payment limits) because nursing home beds were unavailable. Hospitals, with their highly specialized staffs, could be used more efficiently, in that patients not requiring acute medical care would not be retained in acute care beds. The proposed nursing home, if constructed, should not adversely impact existing nursing homes in the county. With present occupancy rates in excess of 95 percent, with waiting lists and increasing demand for nursing home beds, no significant drop in occupancy rates should occur. The only evidence HRS presented on possible adverse impact was a conditional statement made by its health care expert: If there were a surplus of beds, nursing homes might be forced to increase the rates to their private `pay' patients . . . they may have to try to cover their expenses. (e.s.) [Transcript, p. 186]. The evidence, however, indicates that there will not be a surplus of beds. Furthermore, at hearing, no opposition to the proposed nursing home was offered by any existing nursing home in the county. D. Balancing the Factors On balance, HILL-GUTHRIE's failure to satisfy all aspects of the bed- need formulae is outweighed by favorable findings made under other criteria equally applicable by rule and statute. In particular, nursing homes in the county are overcrowded, and--without the proposed facility--most likely will continue to be so. There are no nursing homes in Niceville and it is a significant hardship for Niceville residents to visit their friends and relatives in existing nursing homes. Such visits are a positive benefit to nursing home residents. Construction of the proposed nursing home would reduce costs now imposed on hospitals and their patients due to lack of available nursing home beds, and would not adversely impact the occupancy rates of existing nursing homes.

Recommendation Based on the foregoing, it is RECOMMENDED: That HILL-GUTHRIE's application for a CON to build and operate a 60-bed nursing home in Niceville, Florida, be granted. DONE and ORDERED this 16th day of January, 1985, in Tallahassee, Florida. R.L. CALEEN, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 16th day of January, 1985

Florida Laws (3) 120.52120.57120.68
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HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, INC., D/B/A HEARTLAND OF VOLUSIA COUNTY vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-003235 (1985)
Division of Administrative Hearings, Florida Number: 85-003235 Latest Update: Oct. 14, 1986

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.

Florida Laws (2) 105.08120.57
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AMERICANA HEALTHCARE CORPORATION vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 77-002243 (1977)
Division of Administrative Hearings, Florida Number: 77-002243 Latest Update: Jun. 20, 1978

Findings Of Fact Petitioner proposes to construct a 90 bed long term skilled facility near a hospital complex on University Boulevard in Jacksonville, and to offer beds to medicare patients immediately upon opening the facility Only one of the four existing nursing homes on the east side of the St. Johns River in Jacksonville has medicare certification. The existing nursing home in Jacksonville with the greatest number of vacant beds does not yet have medicare certification. Petitioner submitted its application for certificate of need on July 1, 1977. Between July 1, 1970, and July 1, 1977, overall occupancy of available nursing home beds in Jacksonville was between 95 and 97 percent. In April of 1977, Riverside Nursing Home had made 58 new beds available, 95 percent of which were occupied within two and a half months, in August of 1977, Riverside Nursing Home made an additional 58 now beds available. The following month 94.4 percent of the beds at Riverside Nursing Home were occupied. On September 19, 1977, a new 180-bed nursing home, Turtle Creek, opened its doors. At the time of the hearing, 82 of Turtle Creek's beds were occupied, although Turtle Creek, which is located on the northern periphery of Jacksonville, had not received medicare certification. Notwithstanding the filling of these new beds, the number of patients in other Jacksonville nursing homes did not decline appreciably. At the time of the hearing, 90.3 percent of all nursing home beds in Jacksonville were occupied, and all authorized beds were available for occupancy. It takes approximately 22 months after the start of construction to make a nursing home like petitioner proposes to build ready for occupancy. Stays in hospital beds are three or four times more expensive than stays in nursing home beds. At the time of the hearing, some medicare patients were staying in hospitals up to a week and a half after their physicians had authorized their discharge to a nursing home, because beds in medicare certified nursing homes were unavailable. This situation should be ameliorated, at least temporarily, if Turtle Creek obtains medicare certification before its beds are filled by non-medicare patients. On the other hand, social workers employed by Memorial Hospital and Riverside Hospital testified to recently increased numbers of persons requiring placement in nursing homes, upon discharge from their respective hospitals. In the four to six months next preceding the hearing, the number of persons requiring nursing home care when discharged by Memorial Hospital doubled. At the time of the hearing, persons otherwise ready to be discharged from hospitals remained hospitalized for lack of available beds in medicare certified nursing homes. Proximity of nursing homes to their residents' families and friends facilitates visiting, which has a beneficial effect on the health of persons confined to nursing homes. The southeast section of Jacksonville, in which petitioner proposes to construct a nursing home, has a large and growing population. Turtle Creek, which has the biggest block of vacant nursing home beds in Jacksonville, is 15 miles north of petitioner's proposed site. Relevant portions of the 1977 State Medical Facilities Plan (the Plan) were received in evidence as petitioner's exhibit No. 6. The Plan utilizes projected population increases in Duval County in projecting how many nursing home beds will be necessary in order to accommodate everybody who will need one, at a 90 percent occupancy rate. On this basis, a projected need by 1982, of 1,845 nursing home beds for Duval County was incorporated into the Plan. After adoption of the Plan, but before August 10, 1977, the 1,845 figure was changed to 1,921 at the instance of Lloyd Bulme end Ronald Fehr Floyd, employees 01 the Health Systems Agency of Northeast Florida Area 3, Inc. (HSA). At the time of the hearing, 1,912 or 1,914 nursing home beds, all that had been authorized, were available for occupancy in Duval County. While embodying projections as to how many nursing home beds would be needed in the future so as to assure a 90 percent occupancy rate, the Plan provides for the possibility of error in these projections. Specifically, the Plan allows for the consideration of "extenuating and mitigating circumstances," including "availability": Availability In those instances whereby a capital expenditure/certificate of need proposal is made for a new or expanded facility and whereby it can be demonstrated and documented by the applicant and verified by the HSA and/or OCMF that: similar facilities in the documented service area have been utilized at an optimum rate (85 percent occupancy for acute general hospitals and 90 percent occupancy for nursing homes) for the previous 12 month period; and, there exists a current, unduplicated waiting list within the documented service area for the services to be offered by the new or expanded facility; these factors will be considered in making a determination on the capital expenditure/ certificate of need proposal. Petitioner's exhibit No. 6. In applying the Plan's 90 percent optimum rate formula, the Office of Community Medical Facilities "would certainly consider the open beds, the occupancy during the preceding twelve months of the open, available for use beds, tempered certainly by beds which have been approved but are not yet available." (T1231) Fifty-nine of the nursing home beds in Jacksonville require "[m]odernization," according to the Plan. Petitioner's application for a certificate of need was initially reviewed by a committee" of the HSA. On August 25, 1977, the Health Needs and Priorities Committee voted to recommend approval of petitioner's application, on condition that Jacksonville's nursing homes' occupancy rate not fall below 90 percent for four months once all the authorized nursing home beds became available for occupancy. This consideration was consistent with the local Health Systems Plan's requirement of 90 percent or better occupancy, calculated the basis of all authorized beds, for four months preceding the grant of a certificate of need for additional nursing home beds. Before the Executive Committee of the HSA acted on the Recommendation of the HSA's Health Needs and Priorities Committee, HSA staff were advised by the Office of Community Medical Facilities in Tallahassee that "December 19, 1977 . . . . [was] the latest possible time for a decision Petitioner's exhibit No. 17. Inasmuch as Turtle Creek began operation on September 19, 1977, only three months before "the latest possible time for a decision," there was not to be a four months' trial with all authorized beds available, before HSA's Executive Committee passed on petitioner's application. Instead, HSA staff calculated the occupancy rate by adding all existing nursing home beds in Jacksonville, and all other authorized nursing home beds expected to become available in Jacksonville, and dividing the sum into the number of occupied nursing home beds in Jacksonville less the number of occupied beds in Regency House Center (because the HSA staff did not have Regency House Center "patient data." Petitioner's exhibit No. 6.) This calculation yielded an occupancy rate of 84.4 percent for the four months preceding the date on which petitioner filed its application. Because 84.4 percent was less than 90 percent called for by the Health Systems Plan, the HSA's Executive Committee disapproved petitioner's application. Subsequently, the Office of Community Medical Facilities also acted unfavorably on petitioner's application, for reasons which the evidence adduced at the hearing did not make entirely clear. The foregoing findings of fact should be road in conjunction with the statement required by Stuckey's of Eastmam, Georgia v. Department of Transportation, 340 So.2d 119 (Fla 1st DCA 1976) , which is attached as an appendix to the recommended order.

Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent grant petitioner's application for certificate of need. DONE AND ENTERED this 23rd day of March, 1978, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 77-2243 Paragraphs one, two, five, six, seven, nine, ten, eleven, thirteen, fourteen, sixteen, seventeen and eighteen of petitioner's proposed findings of fact accurately report the evidence adduced at the hearing and have been adopted, in substance, insofar as relevant. Paragraphs three and four and most of paragraph nineteen of petitioner's proposed findings of fact are actually proposed conclusions of law. Paragraph eight of petitioner's proposed findings of fact overstates slightly the number of existing nursing home beds in Jacksonville. The discrepancy between the Health Systems Plan and the State Medical Facilities Plan was 146 beds for the entire area. Paragraph twelve of petitioner's proposed findings or fact has been largely rejected. The evidence did not establish that all 35 beds at Regency House Center were probably full. The charges to the state plan were apparently called to the attention of federal bureaucrats in Atlanta. (T254) Paragraph fifteen of petitioner's proposed findings of fact overstates slightly the number of existing nursing home beds in Jacksonville; end is otherwise supported only by the speculative testimony of one witness. COPIES FURNISHED: Kenneth F. Hoffman, Esq. Rogers, Towers, Dailey, Jones & Gay Post Office Box 1872 Tallahassee, Florida 32302 Robert M. Eisenberg, Esquire 5920 Arlington Expressway Post Office Box 2417 F Jacksonville, Florida 32231

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HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, D/B/A HEARTLAND OF MANATEE vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-003336 (1984)
Division of Administrative Hearings, Florida Number: 84-003336 Latest Update: Aug. 02, 1985

The Issue Whether there is a need for a 120 bed nursing home in Manatee County?

Findings Of Fact HCR is a health care corporation. Its sole business is designing and constructing nursing homes. During the twenty years it has been in the business, HCR has built approximately 180 nursing homes. HCR currently operates approximately 10,000 nursing home beds in twelve states including Florida. HCR filed an application for a certificate of need to construct a 120 bed nursing home in Manatee County. The Department denied this request. The only issue in this case is whether there is a need for a 120 bed nursing home facility in Manatee County. If such a need exists, the Department has agreed that HCR "meets all applicable statutory and rule criteria." The need for nursing home beds is determined under Rule 10-5.11(21), Florida Administrative Code. Rule 10-5.11(21)(a), Florida Administrative Code, contains the following Department goal: The Department will consider applications for community nursing home beds in context with applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to exceed the number of community nursing home beds calculated by the methodology described in subsections (21)(b), (c), (d), (e), (f), (g), and (h) of this rule. Rule 10-5.11(21)(b), Florida Administrative Code, provides for a determination of bed need three years into the future "according to the methodology specified under subparagraphs 1 through 10." Under the methodology provided in subparagraphs 1 through 10, need is determined on a subdistrict basis if a departmental service district has been divided into subdistricts. Manatee County is located in District 6. District 6 has been divided into subdistricts for purposes of determining nursing home bed need. Manatee County has been designated as a subdistrict. Rule 10-17.018, Florida Administrative Code. Therefore, nursing home bed need is to be determined under the methodology of Rule 10-5.11(21), Florida Administrative Code, for Manatee County. The parties have agreed and the evidence proves that there is no need for nursing home beds in Manatee County based upon an application of the methodology of Rule 10-5.11(21), Florida Administrative Code (hereinafter referred to as the "Formula"). In fact, an application of the Formula indicates that there will be an excess of 105 nursing home beds in Manatee County three years into the future based upon the following: 876 nursing home beds needed - (765 existing beds + 90 percent of 240 approved beds) = (105). Based upon an application of the Formula, there is clearly no need for any additional nursing home beds in Manatee County. This determination, however, does not totally resolve the issue in this case. Rule 10-5.11(21)(b), Florida Administrative Code, provides that the Department is to determine bed need according to the Formula "[i] n addition to other statutory and rule criteria . . . " Also, Rule 10-5.11(21)(b)10, Florida Administrative Code, provides in relevant part, the following: In the event that the net bed allocation is zero, the applicant may demonstrate that circumstances exist to justify the approval of additional beds under the other relevant criteria specifically contained in the Department's Rule 10-5.11. Based upon these provisions of the Department's rules, it appears clear that if no nursing home bed need is shown to exist based upon an application of the Formula, other statutory and rule criteria should be considered, i.e., are there adequate like and existing services in the subdistrict? Rule 10-5.11(21)(b)10, Florida Administrative Code, however, goes on to provide: Specifically, the applicant may show that persons using existing and like services are in need of nursing home care but will be unable to access nursing home services currently licensed or approved within the subdistrict. Under this provision, the applicant must demonstrate that those persons with a documented need for nursing home services have been denied access to currently licensed but unoccupied beds or that the number of persons with a documented need exceeds the number of licensed, unoccupied and currently approved nursing home beds. Existing and like services shall include the following as defined in statute or rule, adult congregate living facilities, adult foster homes, homes for special services, home health services, adult day health care, adult day care, community care for the elderly, and home care for the elderly. Patients' need for nursing home care must be documented by the attending physicians' plans of care or orders, assessments performed by staff of the Department of Health and Rehabilitative Services, or equivalent assessments performed by attending physicians indicating need for nursing home care. As discussed under the Conclusions of Law, infra, this portion of the Department's rule (hereinafter referred to as the "Specific Exception") is not the only alternative method of demonstrating a need for nursing home beds when there appears to be no need based upon an application of the Formula. A need for nursing home beds can be demonstrated even if there is no need indicated under the Formula and the Specific Exception is not complied with based upon a consideration of other statutory and rule criteria. The Specific Exception is, however, the only method by which an applicant can demonstrate the need for a new nursing home facility based upon an access problem in the relevant service district. HCR has attempted to prove there is a need for its proposed 120 bed facility based in part upon a consideration of Rule 10-5.11(3)(a)-(d), Florida Administrative Code. This rule provides generally for a consideration of the extent to which all residents of the service area and, in particular, low income persons, the elderly and others, can access existing nursing home beds. In particular, HCR has attempted to prove that there is a need for a 120 bed nursing home because of alleged access problems under Rule 10- 5.11(3)(a)-(d), Florida Administrative Code, during the "peak season" in Manatee County and alleged access problems of Medicaid patients, Alzheimer patients and respite care patients. As discussed under Conclusions of Law, infra, HCR has failed to comply with the Specific Exception in attempting to demonstrate need for its proposal under Rule 10- 5.11(3)(a)-(d), Florida Administrative Code. Therefore, any evidence concerning access problems cannot be considered. HCR has also attempted to demonstrate need for its proposal based upon an application of Rules 10-5.11(4) and (6), Florida Administrative Code. These rules require a consideration of the availability of alternative, less costly, or more effective methods of providing the proposed health services and the availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing services. In particular, HCR has attempted to prove that like and existing services in Manatee County are not meeting the needs of Alzheimer patients and respite care patients and that there are no alternative, less costly or more effective methods of providing HCR's proposed services. If HCR had succeeded in demonstrating need for its proposal under these rules, a certificate of need would have been recommended even though the Specific Exception was not complied with. HCR has agreed that its proposed facility will meet the alleged need for Medicaid patients, Alzheimer patients and respite care patients in Manatee County by dedicating a thirty- bed wing to the care of Alzheimer patients, a thirty-bed wing to respite care patients and guaranteeing access to fifty percent of its beds to Medicaid patients. The following findings of fact are made with regard to the specific categories of persons allegedly in need of nursing home care. Although HCR's proposed findings of fact concerning access problems of these groups are not relevant because of its failure to comply with the Specific Exception, findings are made in an abundance of caution in case the Department or a Court ultimately determines that need can be demonstrated based upon access problems even when the Specific Exception is not complied with. Medicaid Patients. Manatee County generally experiences a "peak season" from November to March during which time nursing home bed use increases. The peak season in 1984-1985, however, was only about seven weeks. During the peak season there is some difficulty in placing Medicaid patients in nursing home beds in Manatee County. Between January, 1985 and March, 1985, the Department's Manatee County office placed twenty-two Medicaid patients in nursing home beds located outside of Manatee County. Some Medicaid patients have also been placed in adult congregate living facilities even though such placements are contrary to the prohibition against placing patients in need of skilled nursing home services in such facilities. L. W. Blake Memorial Hospital has also had to place patients in nursing homes on a temporary basis outside of Manatee County. During the past year, only twenty-four patients were placed in nursing homes outside Manatee County. The evidence does not establish how many of those patients were Medicaid patients, however. Alzheimer Patients. Alzheimer's disease is a disease which primarily afflicts persons in their 50's and 60's. It can, however, afflict younger persons also. The disease progresses through three stages and has no cure. During the first stage, the afflicted person experiences forgetfulness, impairment of judgement and inability to perform routine tasks. During the second stage, the afflicted person begins to wander. During the third and final stage, the afflicted person becomes dependent and incontinent. Currently there are approximately 160 Alzheimer patients in the five existing nursing homes in Manatee County. None of these nursing homes has a special program designed for Alzheimer patients. The evidence does not, however, support a finding that Alzheimer patients are not being adequately cared for. The evidence also does not establish how many persons in Manatee County are afflicted by Alzheimer's disease or the number of persons so afflicted who are in need of nursing home care. Generally, it is not until the third stage of the disease that nursing home care becomes necessary. Even then some Alzheimer patients are cared for in the home, private boarding facilities, or mental hospitals. The evidence does establish that no person afflicted with Alzheimer's disease has been refused admittance to a nursing home bed in Manatee County. The evidence also establishes that there is a 303 bed nursing home located in neighboring Hillsborough County which treats only Alzheimer patients. Hillborough County is located in District 6. Finally, the evidence demonstrates that Alzheimer patients would benefit from a special wing dedicated to the care of Alzheimer's disease in its final stages. Respite Care Patients. Respite care is the placement of a person in need of care under the supervision of another person for a short period of time. One purpose of this care is to free-up the primary care giver for a short period of time. The patient needs supervision or may need skilled nursing care. The length of the care can vary from a few hours to several weeks. HCR has proposed to establish a thirty-bed wing in its proposed facility that will be dedicated solely to the care of respite care patients in need of skilled nursing care for a period of one to eight weeks. None of the existing nursing homes in Manatee County provides the type of specialized wing HCR in proposing. The evidence establishes that there is a need for such a service in Manatee County. The evidence does not establish, however, how many nursing home beds are needed. There was testimony that there was a need for fifty nursing home beds. This testimony was, however, purely a "guess". Additionally, this estimate was not limited to the type of respite care HCR proposes to provide; the respite care giving rise to this guess included respite care for as short a period as three to five days. Short-term respite care needs are currently being met by existing programs in Manatee County. DHRS Exhibit 4 does not corroborate the fifty bed estimate because it is not at all clear what the data on this Exhibit means. Based upon the foregoing, there is a need for nursing home beds for Medicaid patients during the "peak season" and for respite care patients in need of skilled nursing care for a period of one to eight weeks because of an access problem. The need of these patients, however, has not been properly demonstrated pursuant to the Specific Exception and therefore cannot be considered. If this need could be considered even though the Specific Exception has not been complied with, the evidence fails to demonstrate how many additional beds are needed. Additionally, two new nursing homes have been approved for construction which will add 240 nursing home beds in Manatee County. The addition of these beds will eliminate some, if not all, of the need of Medicaid patients. There is a need for nursing home beds for respite care patients in need of skilled nursing care for a period of one to eight weeks because of the lack of adequate like and existing services. HCR has, however, failed to prove that this need is sufficient to justify its proposal. The evidence fails to demonstrate a need for Alzheimer patients sufficient to justify HCR's proposal based upon the care presently being given to Alzheimer patients in Manatee County. Although the ability of Alzheimer patients to access beds is not relevant because of HCR's failure to comply with the Specific Exception, the evidence also fails to demonstrate any access problem of Alzheimer patients. Alzheimer patients would benefit from a dedicated nursing home wing. This finding, however, based upon the other findings of fact in this case, does not justify HCR's proposal. Even if it were concluded that HCR does not need to comply with the Specific Exception in this case, the evidence does not support a finding that a 120 bed facility should be approved. The only evidence as to the total number of nursing home beds allegedly needed in Manatee County was presented by Mr. Jay Cushman, an expert in the field of health planning. According to Mr. Cushman there is a need for a minimum of 193 additional nursing home beds in Manatee County. Mr. Cushman's opinion was based upon the criteria of Rules 10- 5.11(3)(a)-(d), (4) and (6), Florida Administrative Code. In particular, Mr. Cushman relied upon the effect on nursing home bed use of Manatee County's peak season and the needs of Alzheimer patients, respite care patients and Medicaid patients. Mr. Cushman's opinion was based upon his determination that there is a need for a total of 1,174 nursing home beds in Manatee County. This figure was arrived at by adding Mr. Cushman's projected need for Medicaid patients (40 beds), Alzheimer patients (121 beds), respite care patients (50 beds) and the current peak census of nursing homes in Manatee County (718 beds). The sum of these figures was multiplied by 1.137 (to account for population growth in Manatee County over the next three years) and the result was divided by ninety percent (to account for a maximum occupancy rate of ninety percent). Mr. Cushman's determination of need, to the extent his figures are based upon purported access problems associated with Medicaid patients, Alzheimer patients, respite care patients and persons in need of care during the peak season, should not and cannot be considered because of the lack of compliance with the Specific Exception. Since Mr. Cushman did take into account alleged access problems without complying with the Specific Exception in arriving at his conclusion that 193 nursing home beds are needed in Manatee County, Mr. Cushman's opinion of need is rejected. Even if it was proper for Mr. Cushman to consider access problems despite the failure to comply with the Specific Exception, the weight of the evidence does not support Mr. Cushman's opinion. In arriving at his estimate of the need for Medicaid patients, Mr. Cushman relied in part upon the fact that twenty-four patients (twenty-five according to Mr. Cushman) had been placed in nursing homes located out of Manatee County by L. W. Blake Memorial Hospital personnel. The evidence, however, does not prove that all of these patients were Medicaid patients. Mr. Cushman's determination that 50 beds are needed for respite care patients was based upon on the opinion of Mr. Russell Kitching. Mr. Kitching's estimate was rejected, supra. The most significant problem with Mr. Cushman's determination of bed need is his estimate of the need for Alzheimer's patients. The evidence does not support a conclusion that there is a need for additional nursing home beds for Alzheimer's patients. The evidence proved that no Alzheimer's patient in Manatee County has been denied access to a nursing home. Finally, Mr. Cushman's opinion is contrary to, and did not take into account, the fact that Manatee County is projected to have an excess of 105 nursing home beds under the Formula. Based upon the foregoing, it is concluded that HCR has failed to prove that there is a need for a 120 bed nursing home in Manatee County.

Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application filed by HCR for a 120-bed nursing home to be located in Manatee County be denied. DONE and ENTERED this 2nd day of August, 1985, in Tallahassee, Florida. LARRY J. SARTIN 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 2nd day of August, 1985. COPIES FURNISHED: Jean Laramore, Esquire G. Steven Pfeiffer, Esquire LARAMORE & CLARK, P.A. The Bowen House 325 N. Calhoun Street Tallahassee, Florida 32301 John F. Gilroy, Esquire CULPEPPER, TURNER & MANNHEIMER P. O. Drawer 11300 Tallahassee, Florida 32302 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301

Florida Laws (1) 120.57
# 7
FORUM GROUP, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 87-000704 (1987)
Division of Administrative Hearings, Florida Number: 87-000704 Latest Update: Apr. 01, 1988

Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, the stipulations of the parties and the entire record complied herein, I hereby make the following findings of fact: THE STIPULATIONS OF THE PARTIES The parties stipulated to the following facts: Forum timely filed its letter of intent and application with DHRS and the District IX Local Health Council for the July 1986 batching cycle. DHRS ultimately deemed the application complete and, following review, published its notice of intent to deny the application. Forum timely filed a petition requesting a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. The sole issue is whether there is a need for Forum's proposed services; additionally, it is DHRS's position that a lack of need for the project results in the project not being financially feasible in the short or long term. All other statutory and rule criteria were satisfied, at least minimally, except proof of need pursuant to Rule 10-5.011(1)(k) [formerly 10-5.11(21)(b)], Florida Administrative Code, and financial feasibility as it relates to need. FORUM'S PROPOSAL Forum is a publicly held health services company which owns, develops and operates retirement living centers and nursing homes on a national basis. Forum proposes to develop a retirement living center in Palm Beach County that would consist of 120 to 150 apartment units for independent living, a separate personal care unit (known in Florida as an adult congregate living facility), and a 60-bed nursing home component certified for skilled and intermediate care. Palm Beach County is in HRS Service District IX, Subdistrict 4. All three components of Forum's retirement living center would be physically connected and share some operational functions, such as dietary facilities and the heating plant. Such a design provides for an efficient operation as well as an economic distribution of costs facility wide. No specific site has been selected , although Forum has narrowed its focus to the eastern half of Palm Beach County. It is not economically feasible to acquire property or pay for an option on property until after receiving CON approval. The projected total cost of Forum's proposed 60-bed nursing home is $2,329,800. Forum has the necessary resources for project accomplishment and operation. Forum proposes to seek Medicare certification and will provide up to 25 of its beds for Medicaid patients. FINANCIAL FEASIBILITY Forum is a national company, with substantial experience in developing and operating nursing homes and retirement living centers. If need for the facility is shown, Forum would be able to capture a sufficient share of the nursing home market to render its proposed nursing home financially feasible while at the same time having no material negative impact on existing providers in the district. NUMERIC NEED Need for new or additional community nursing home beds in Florida is determined, preliminarily, by use of the methodology found in Rule 10- 5.011(1)(k), Florida Administrative Code. Additional beds normally are not approved if there is no need for beds as calculated under the rule. Pursuant to the rule, need for a defined nursing home subdivision is projected to a three- year planning horizon, in this case July 1989. The need methodology prescribed in the rule is as follows: A (POPA x BA) + (POPB x BB) or: The District's age-adjusted number of community nursing home beds for the review cycle for which a projection is being made [A] (The population age 65-74 years in the relevant departmental districts projected three years into the future [POPA] x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]) + (The population age 75 years and older in the relevant departmental district projected three years into the future [POPB] x the estimated current bed rate for the population age 75 years and over in the relevant district [BB].) BA LB/(POPC) + (6 x POPD) or: The estimated current bed rate for the population age 65-74 years in the relevant district [BA] (The number of licensed community nursing home beds in the relevant district [LB]/the current population age 65-74 years [POPC] + (6 x the current population age 75 years and over [POPD]) BB 6 x BA or: The estimated current bed rate for the population age 75 years and over in the relevant district [BB] 6 x the estimated current bed rate for the population age 65-74 years in the relevant district [BA]. SA A x (LBD/LB) x (OR/.90) or: The preliminary subdivision allocation of community nursing home beds [SA] The district's age-adjusted number of community nursing home bids for the review cycle for which a projection is being made [A] x (The number of licensed community nursing home beds in the relevant subdistrict [LBD]/the number of licensed community nursing home beds in the relevant district [LB]) x (The average occupancy rate for all licensed community nursing homes within the subdistrict of the relevant district [OR]/.90) Rule 10-5.011(1)(k)(2)(i), Florida Administrative Code, provides that: The new bed allocation for a subdistrict, which is the number of beds available for CON approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs a. through i., unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. The appropriate planning horizon for the instant case is July 1989, corresponding to the review cycle which began July 15, 1986, and the subdistrict is Palm Beach County. THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT DISTRICT (LB)/THE NUMBER OF LICENSED COMMUNITY NURSING HOME BEDS IN THE RELEVANT SUBDISTRICT (LBD) Rule 10-5.011(1)(k) requires that "review of applications submitted for the July batching cycle shall be based upon the number of licensed beds (LB and LBD) as of June 1 preceding this cycle..." On June 1, 1986, there were 5,459 licensed community nursing home beds in District XI (LB) and 4,084 licensed community nursing home beds in subdistrict 4 (Palm Beach County LBD). These figures include 220 licensed beds that were previously categorized as sheltered. In the instant case, the appropriate figure for LB is 5,459, and the appropriate figure for LBD is 4,084. APPROVED BEDS WITHIN THE RELEVANT DEPARTMENTAL SUBDISTRICT DHRS's interpretation of the rule is to include in the count of approved beds, those approved up to the date of the supervisor's signature on the State Agency Action Report (SAAR). In this case, there were 640 approved beds in Palm Beach County at that time. As of June 1, 1986, the same date as the licensed bed cutoff, there were 640 approved beds in the subdistrict. In Dr. Warner's opinion, approved beds should be determined as of the same time period as licensed beds in order to have consistency and avoid anomalies in the formula. This opinion is reasonable and appropriate. In the instant case, the figure to be applied in the formula for approved beds in the subdistrict is 640 approved beds. THE POPULATION AGE 65-79 YEARS IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPA). THE POPULATION AGE 75 YEARS AND OVER IN THE RELEVANT DEPARTMENTAL DISTRICT PROJECTED THREE YEARS INTO THE FUTURE (POPB). The rule provides that the three year projections of population shall be based upon the official estimates and projections adopted by the Office of the Governor. For the purposes of calculating need, DHRS utilizes at the final hearing the figures for estimated population obtained from data available at the time of initial application and review. The set of population projections which were available when Petitioner's application was filed and reviewed were those published on July 1, 1986. Based on this data, which is reasonable to use, POPA 170,639; and, POPB 122,577. THE CURRENT POPULATION AGE 65-74 YEARS (POPC)/THE CURRENT POPULATION AGE 75 YEARS AND OVER (POPD). In calculating POPC and POPD, DHRS also utilizes at final hearing the most current data available at the time of initial application and review, in this case the July 1, 1986, release. Based on that data, POPC 153,005 and POPD 112,894. In the opinion of Dr. Warner, Forum's expert, the base for POPC and POPD should correspond to the period for which the average occupancy rate (OR) is calculated. For the July batching cycle, OR is based upon the occupancy rates of licensed facilities for the months of October through March preceding that cycle. According to Warner, January 1, 1986, as the midpoint of this time period, is the appropriate date to derive POPC and POPD in this case. The formula mandated by the rule methodology for calculating the estimated current bed rate requires that the "current population" for the two age groups be utilized. It is reasonable and appropriate for the base for POPC and POPD to correspond to the period for which the average occupancy rate is calculated. Supportive of Dr. Warner's opinion are the past practices of DHRS. Between December 1984 and December 1986, DHRS routinely used a three and one half year spread between the base population period and the horizon date in determining "current population" in its semiannual nursing home census report and bed need allocation. In the January 1987 batching cycle, which cycle immediately followed the cycle at issue in this case, DHRS utilized a three and one half year spread between the base population period and the horizon data for "current population" when it awarded beds. DHRS offered In this case, it proposed to use a three year spread between the base population period and the horizon dated for "current population" in calculating POPC and POPD. Using the July 1986 population release, POPC for January 1986 is 149,821 and POPD for January 1986 is 98,933. THE AVERAGE OCCUPANCY RATE FOR ALL LICENSED COMMUNITY NURSING HOMES WITHIN THE SUBDIVISION OF THE RELEVANT DISTRICT (OR). The rule requires the use of occupancy data from the HRS Office of Health Planning and Development for the months of the previous October through March when calculating a July batch of nursing home applicants. However, the rule is not instructive as to how one calculates this number. In this case, DHRS computed average occupancy rates based on the existing occupancy rates at applicable facilities on the first day of each month. Based on this occupancy data, which includes the data for the 220 previously sheltered beds in the subdistrict, occupancy rates for the July 1986 batch of Palm Beach County nursing home applicants is 83.75 percent. Forum's witness, Dr. Warner, determined that the correct occupancy rate was 85.46 percent for Palm Beach County for the period October 1985 to March 1986. Dr. Warner arrived at this figure by including paid reservation days. A paid reservation day is a day which is paid for by the patient or the patient's intermediary during which the patient is not physically in the bed. Typically, the patient will either be in the hospital, visiting relatives or otherwise away from the facility and will continue to pay for the nursing home bed, so that they will be able to return and not have someone occupy the bed. One of the goals and objectives of the District IX Local Health Plan is that paid reservation days be considered when bed need calculations are made. Calculating prepaid reservation days is consistent with the Rule because such beds are no longer available to the public and are therefore in use. Dr. Warner determined that during the applicable period, 1.25 percent of the licensed beds in the subdistrict were paid reservation days. Although taking paid reservation days into account would not be inconsistent with the rule, Forum failed to demonstrate that the 1.25 percent figure arrived at is valid for the applicable period, i.e., October 1985 to March 1986. Dr. Warner merely calculated a two-year average number of paid reservation days, broke this figure down to a six-month average and applied this average to the six-month period specified in the Rule. Gene Nelson, an expert called on behalf of Forum, calculated the occupancy rate as 88.72 percent in Palm Beach County for the appropriate period called for in the Rule. Nelson used the average monthly occupancy data obtained from medicaid cost reports for some facilities rather than first-day of the month data as used by DHRS. In addition, Nelson did not factor in the occupancy date of licensed beds in the extreme western portion of the County based on his belief that the District IX Local Health Plan mandates that the western area not be considered in any way with the eastern coast section of Palm Beach County for purposes of determining competitiveness. While the use of average full-month occupancy data is generally more reliable than using first-day of the month data, it is best, from a health planning prospective, to be able to use either all full-month data or all first- day of the month data. In making his calculations, Mr. Nelson mixed the two types of data, using full-month data when available and in other cases using first-day of the month data when full-month data was not available. It is inappropriate to fail to consider licensed beds in the extreme western portion of the County based solely on the local health plan. Among other reasons, the rule does not provide for exclusions for any of the subdistricts licensed facilities from the methodology. The appropriate and most reasonable occupancy rate (OR) in the instant case for the applicable time period is 83.75 percent. NET NEED Applying the above-referenced variables to the Rule formula produces the following results. July, 1986. District Allocation BA LB (POPC + (6 x POPD) - 5459 [149,821 + (6 x 98,833)] - .007349 BB - 6 x BA .044094 (.007349) July, 1989 Allocation (POPA x BA) + (POPB x BB) - (170,639 x .007349) + (122,577 x .044094) - 6659 Subdivision Allocation and Need SA A x (LBD / LB) x (OR 1.9) - 6659 x (4084 / 5459) x (.8375/.9) - 6659 x .74812236673 x .93055555555 4636 Subdistrict Allocation for Palm Beach County 4084 (Licensed Beds) 576 (90 percent of 640 Approved Beds) -24 (Bed Surplus)

Recommendation Based on the foregoing Findings of Fact, and Conclusions of Law, it is, RECOMMENDED that the application for certificate of need filed by Forum be Denied. DONE AND ORDERED, this 4th day of April, 1988, in Tallahassee, Florida. W. MATTHEW STEVENSON 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 4th day of April, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0704 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in substance in Finding of Fact 2. Adopted in substance in Finding of Fact 3. Adopted in substance in Finding of Fact 4. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 5. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 6. Adopted in substance in Finding of Fact 7. Adopted in substance in Finding of Fact 9. Sentence 1 is rejected as contrary to the weight of the evidence. Rejected as subordinate and/or unnecessary. 11. Adopted in substance in Finding of Fact 9. 12. Adopted in substance in Finding of Fact 9. 13. Adopted in substance in Finding of Fact 10. 14. Adopted in substance in Finding of Fact 12. 15. Adopted in substance in Finding of Fact 1. 16. Adopted in substance in Finding of Fact 14. 17. Adopted in substance in Finding of Fact 21. 18. Adopted in substance in Finding of Fact 20. 19. Adopted in substance in Finding of Fact 22. 20. Adopted in substance in Finding of Fact 22. 21. Adopted in substance in Finding of Fact 18. Adopted in substance in Finding of Fact 15. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 17. Adopted in substance in Finding of Fact 23. Rejected as a recitation of testimony and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 24. Rejected as a recitation of testimony and/or unnecessary. Adopted in substance in Finding of Fact 25. Rejected as a recitation of testimony and/or subordinate. Adopted in substance in Finding of Fact 25. Adopted in substance in Finding of Fact 21. Rejected as contrary to the weight of the evidence. Rejected as not supported by the weight of the evidence and/or unnecessary. Rejected as subordinate and/or unnecessary. Rejected as subordinate and/or unnecessary. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Adopted in substance in Finding of Fact 27. Adopted in substance in Finding of Fact 28. Rejected as a recitation of testimony and/or subordinate. Rejected as misleading and/or subordinate. Rejected as subordinate and/or unnecessary. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 1. Adopted in substance in Finding of Fact 9. Adopted in substance in Finding of Fact 3. Rejected as contrary to the weight of evidence. Adopted in substance in Finding of Fact 13. Adopted in substance in Finding of Fact 18 and 19. Adopted in substance in Finding of Fact 16. Adopted in substance in Finding of Fact 23. Addressed in Conclusions of Law. Addressed in Conclusions of Law. Rejected as subordinate and/or unnecessary. COPIES FURNISHED: Thomas W. Stahl, Esquire 102 South Monroe Street Tallahassee, Florida 32301 R. Terry Rigsby, Esquire 325 John Knox Road Building C, Suite 135 Tallahassee, Florida 32303 Richard Patterson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Tallahassee, Florida 32308 Gregory L. Coler Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 John Miller, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power HRS Clerk Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 =================================================================

Florida Laws (1) 120.57
# 8
MANOR CARE, INC. vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 85-002937 (1985)
Division of Administrative Hearings, Florida Number: 85-002937 Latest Update: Dec. 23, 1986

Findings Of Fact HCR initially applied for a CON to construct a 120-bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action 3854, which it denied. Manor Care also initially applied for a CON to construct a 120- bed nursing home facility in Lee County, DHRS District VIII. DHRS assigned this application CON Action No. 3850, which it denied. Manor Care and HCR timely filed petitions for formal administrative hearings which resulted in the DOAH Consolidated Case Nos. 85-2937 and 85-3240. During the hearing, Manor Care and HCR offered updated CON applications (respectively MCI and HCRS). While the Manor Care proposal is a "scale-down" to 60 beds (HCR still proposes 120 beds. both applications propose nursing home beds be set aside to offer a therapeutic environment for patients with Alaheimer's Disease and patients with related disorders. Manor Care's update also provides for an attached 60-bed adult congregate living facility (ACLF), which does not require a certificate of need. DHRS objected to the admission in evidence of the respective applications but did not move for relinquishment of jurisdiction to the agency for consideration by its experts of the updated material in lieu of formal hearing (Vol. III p. 54). Both applications had been submitted to the DHRS attorney prior to hearing. Upon the Hearing Officer's own motion, an evidentiary hearing was conducted prior to the taking of other evidence solely on the propriety of consideration of the updated applications without resubmittal to DHRS. The HCR update did not change the number of beds, nor the patient mix. The Manor Care update was downsized to 60 beds, and this is permitted as a matter of law. Neither update requires amendment of the District Health Plan or the same fixed pool; neither attempts to alter the January 1988 planning horizon contemplated by the original January 1985 applications. The other changes contained in the updated applications relate to a description of the Alzheimer's Disease (AD) program and design of the AD unit for each application, or other changes such as increase or decrease in costs due to inflation and the passage of time, including particularly, the fact that subsequent to the filing of the original application there was a recognition in the District Health Plan and the State Health Plan of the special needs of AD patients, which was contained in the 1985-87 State Health Plan, Vol. III, p. 109. (T-73-74, Vol. II - testimony of HCR expert, Milo Bishop; DHRS Exhibit 5), and the subsequent Local District VIII Health Plan also identified the concern of availability of beds for Medicaid patients. Specifically, the District VIII Health Plan recommends priority consideration for nursing home beds to be given to applicants that will propose to accept a proportion of Medicaid eligible patients that is at least equal to the most recent quarterly figure of Medicaid occupancy in the district. (T-75, Vol. III, DHRS Exhibit 5). The updated application of HCR was filed to reflect these recently identified needs of the AD patients, sub- acute patients and Medicaid patients. The update of each Petitioner also clarifies assurances of Medicaid availability. The updated applications of both Manor Care and HCR proposed special programs for AD patients and a separate wing which appears now to be a treatment of choice for these types of patients. Awareness of AD and its ramification has increased significantly in the recent past. Recognition of the special needs of these patients in the respective updated CON applications constitutes refined material describing the current state of knowledge in medical care. The proposals by Manor Care and HCR to designate separate units and programs for AD patients does not constitute a substantial change in the applications for all of the foregoing reasons but also because any nursing home may admit and treat AD, related disorders, and sub-acute care patients without obtaining a specialized CON and because these types of patients could have been treated in the nursing homes described in the original applications. As far as the identification of newly available information on AD and related disorder patients are concerned, the updates are clearly encouraged within the purview of Balsam v. Department of Health and Rehabilitative Services, 486 So. 2d 1341 (Fla. 1st DCA 1986). Over all, none of the amendments of the Petitioners are substantial and the updated applications of both Manor Care and HCR are proper amendments permitted in these de novo proceedings pursuant to McDonald v. Department of Banking & Finance, 346 So. 2d 569 (Fla. 1st DCA 1977); and Gulf Court Nursing Center v. DHRS, 483 So. 2d 700 (Fla. 1st DCA 1985), Motion for Rehearing (Feb. 14, 1986). The ruling that both amended applications were not substantial amendments and therefore no remand to the agency was necessary was entered on the record (Vol. III, p. 103 and is accordingly reiterated and confirmed here, within the Recommended Order. During the hearing, all the parties stipulated to the reasonableness of construction (and equipment) cost, and financial feasibility of both projects. DHRS (but not the Petitioners) stipulated that both Petitioners projects satisfied all quality of care considerations. Upon all the evidence (oral, documentary, and demonstrative) including but not limited to the testimony of Loma Overmeyer, Charlotte Young, Tal Widdes, and John Lee, it is found that both Petitioners have affirmatively demonstrated their respective abilities to provide satisfactory quality of care to their patients through these respective proposed projects. Rule 10-5.11(21), Florida Administrative Code, contains DHRS' methodology for computing nursing home bed need. The need methodology provides that the need for proposed new community nursing home beds is to be determined 3 years into the future. Here, the applicable planning horizon is January, 1988, which is 3 years from the time the initial applications were filed. Applications for new community nursing home beds will not normally be approved if such approval would cause the number of community nursing home beds in an area to exceed the bed need calculated pursuant to Rule 10-5.11(21)(b) 1-10 Florida_ Administrative Code. Applications for community nursing home facilities are normally approved for a minimum of 60 beds. All need experts utilized current population figures provided July 1, 1986 by the Office of the Governor. However, DHRS has arrived at a 37 bed surplus. The DHRS expert, Joyce Farr, testified she used the date of hearing (July 1986) as a basis and current population figures, rendering a gross need of 1,089 beds. If current population figures are used and the January 1985 (initial application date) is used, there is a gross bed need of 1,204 beds. There are 996 licensed nursing home beds in Lee County as of June 1, 1986. Applying the rule to either gross bed need leaves 93 (1089 minus 996) net need or 208 (1204 minus 996) net need. Manor Care calculated both ways and would qualify by either method if it were the sole applicant, but the net bed need by either calculation greatly exceeds the beds proposed by Manor Care. The latter calculation, based on January 1985 instead of the 1986 population projections is urged by HCR as preserving the sanctity and logic of batching cycles and planning horizons. Such an application of the rule's methodology would clearly permit a CON for 60 nursing home beds to be issued to Manor Care and also permit a CON for 120 nursing home beds to be issued to HCR, with a surplus of 28 beds. This solution of awarding a total of 180 beds (60 plus 120) would not offend DHRS established policy that applications for community nursing home facilities are normally approved for a minimum of 60 beds. Nonetheless, HCR's reading of the rule mixes 1985 and current figures without adequate justification in the record and is neither literal nor in conformity with the agency policy and interpretation which witness Farr testified has been applied by her on behalf of DHRS in at least 100 contested CON formal hearings. Further, it is clearly logical and in the best interests of the public and the health planning professions, and in accord with the intent of Chapter 381 F.S. to apply those figures which will most accurately reflect the bed need at the projected (January 1988) planning horizon. In this instance, that set of figures renders the net general community nursing home bed need as 93. However, Joyce Farr also testified that she had been instructed by her supervisor not to apply the rule as promulgated but instead to reserve 143 beds for Lee County and to subtract these beds as if they were already approved. The "reserved" 143 beds represent DHRS' interpretation of Gulf Court v. DHRS. Pursuant to directions in the opinion of the First District Court of Appeal in that case, DHRS has received, for comparative review, CON applications from the three party applicants in that case. Those parties' applications were originally filed in 1981 and 1982, and are for nursing home beds in Lee County. As of date of formal hearing in the instant cause, none of the "Gulf Court" parties' applications had been approved. The Department's stated intention regarding the three "Gulf Court" applications is to award 143 beds to one or more of the party applicants in that case. This intention is based upon the Department's interpretation of the Gulf Court case, and not upon any calculation of need for a planning horizon. As of date of hearing, DHRS had not given any consideration to the effect of changed statutes, regulations, facts, or circumstances on the "fixed pool" of beds applied for by the "Gulf Court" applicants. In her calculation of net need for the sub-district of Lee County, the DHRS witness counted the 143 beds set aside for the "Gulf Court" applicants as "approved" beds. Other than those beds, there are no other approved beds, nor any applications pending from prior batches. The DHRS methodology used to subtract 143 beds is not consistent with the provisions of Rule 10-5.11(21), Florida Administrative Code. (See Conclusions of Law). If the DHRS bed need formula contained in Rule 10- 5.11(21), Florida Administrative Code, is used, the correct number of beds needed for the planning horizon of January 1985 through January 1988 is 93 general community nursing home beds. Each applicant has included, in the updated applications presented at hearing, a number of beds set aside in a unit for Alaheimer's Disease (AD) patients. Manor Care has indicated that 18 beds would be so designated. HCR proposes to establish a 30 bed unit for both "Alzheimer's and the related disorders"' including 15 beds "just for wanderers." AD "is a degenerative process of the brain, characterized by memory impairment and impairment in several mental and physical functions." The disease progresses at certain levels or stages. There are four progressively worsening stages of this disease. In the first stage, the patient starts to forget names and facts in the recent past, and also begins to be unable to perform some complex tasks that the patient was able to perform before the disease began. In stage two, the impairment in memory increases. The patient starts to forget common names of objects usually used in daily living, and the patient starts to wander. There are often behavioral problems, such as agitation or depression. In stage three, there is. physical impairment, including incontinency, speech disturbances, and problems with communication. In stage four, the patient most of the time is confined to a bed, and largely unaware of his_ environment. He is incontinent. Without adequate care, he has sores on his back. He is nearing death at that point. AD is irreversible and the cause is unknown. Diagnosis is very difficult. The only positive method of diagnosis is by brain biopsy. The most common method of diagnosis is by a process of elimination and this often fails in the early stages of AD. Incidence of AD increases in the over 65 population but there are cases of some patients as young as 30. A large percentage of any nursing home is suffering from some form of dementia. The estimated need of "irreversible dementia" patients in nursing homes in Lee County for the year 1988 is 2,189. Out of this number of patients, 60% would be specifically AD patients or 1,313. Dr. Baquero presently has 100 AD patients in existing area nursing homes. AD patients are cared for in almost all nursing homes, but usually there is no separate area or program. There are no specialized programs or units for AD patients currently established in Lee County. The existing facilities in Lee County do not provide adequate care to persons suffering from AD. Because of the lack of facilities, AD patients are often kept at home until families are to the pint of desperation. Care of the AD patient is an enormous, 24 hour-a-day burden on the care-givers. Additional stress is caused by personality changes that often accompany the disease. Most facilities in Lee County will not accept a difficult patient. Families of AD patients have placed patients in facilities out of country, out of state, and out of country, because of the lack of facilities in Lee County. Dr Baquero, practicing medical physician in Ft. Myers, who is experienced in treating AD patients and who has knowledge gained as Medical Director for two existing nursing homes, was qualified as an expert in the care and treatment of AD patients. Upon his evidence and upon evidence of the representatives of the Alzheimer's Disease and Related Disorders Association (ADRDA), it is found that AD patients frequently have to be placed outside Lee County, as far as 60 to 70 miles from home. Approximately 50% of AD patients consulting ADTDA return to northern home states or go to foreign countries rather than awaiting long- delayed Lee County placement. Placement of AD patients also on Medicaid or needing sub-acute care is even more difficult. The Petitioners further demonstrated that other patients in addition to AD patients are not adequately served by the existing facilities in Lee County. It is extremely difficult in Lee County to place a patient who is in need of high technology or "sub-acute" care. Such patients include those in need of intravenous antibiotic therapy, ventilators, oxygen, feeding tubes or pumps, decubitus ulcer care (bed sores), etc. Feeding pumps and bed sores may eventually become a way of life for AD patients. AD patients may also require other forms of sub acute care and can be on Medicaid. Many of the existing nursing homes are not capable of handling such patients who often must be placed out of county. These difficult patients are frequently placed out of county or at great distance from their homes within the county, creating added burdens on elderly spouses and family members. The burden of out of county placement has created or intensified "separation syndrome" accidents and death for such patients elderly spouses. Implementation of the Diagnostic Related Grouping (DRG) system of Medicare reimbursement has been an incentive for hospitals to release patients as soon as they are no longer in need of "acute care," but due to the inability to place these patients, they stay in hospitals longer than necessary, resulting in a much higher expense than would be the case if a nursing home placement could be achieved. Additionally "cost shifting' to private and third party insurance payments may be inferred from the DRG statistics admitted. Both Lee Memorial Hospital and Ft. Myers Community Hospital experience difficulty in placing sub-acute care patients, especially those on Medicaid. Fifty per cent or more of Ft. Myers Community Hospital referrals are of sub-acute care patients. Ft. Myers Community Hospital records reflect an increase in hold-overs due to unavailability of nursing home beds. Since October, 1984, Lee Memorial Hospital has had to place 75 out of 941 discharge patients out of county. Only one of these patients was private pay. The majority of Lee Memorial discharges to nursing homes are Medicaid and Medicare patients; 48.3% are Medicare and 22.6% are Medicaid patients for a total of 70.9% of the total discharges to nursing homes. Only 29% of Lee Memorial discharges-to nursing homes are private pay patients. Twenty per cent of all of Lee Memorial's Medicaid discharges to nursing homes are required to be placed out of county and 11.2% of their Medicare discharges are placed out of the County. Mary Shell, the DHRS District Human Services Coordinator confirmed the difficulty of placing Medicaid patients in the county as sub-district and testified to a serious but unquantified shortage of both Medicaid and sub-acute nursing home beds in Lee County. Mr. Dennis Eskew, Supervisor of the DHRS Adult Payments Unit, which determines the eligibility for Medicaid nursing home programs, presented a chart (HCR 15) showing 20% of 203 approved Medicaid patients (41) had to be placed out of county during the immediately preceding six months because of unavailability of such beds in Lee County. Existing nursing homes in Lee County are almost always full. Hospital discharge planners, families, and medical physicians seeking placement of patients uniformly testified that there is a shortage of beds and long waiting periods, even for non-problematic patients and that there is a need for additional nursing home beds for all types of patients including Medicare/Medicaid patients, sub-acute patients, AD patients and routine nursing home patients. However, these witnesses did not attempt to quantify the number of beds needed. There is strong evidence that recently opened nursing homes are not making available promised Medicaid beds and there have been no DHRS enforcement procedures. Although minimally demonstrated, it may be inferred from the foregoing type of testimony that the absence of competition has reduced the incentive of existing local nursing homes to accept those out of the "walkie talkie" category, those still cognitive, ambulatory patients who are able to feed and care for themselves to a large degree. Both Petitioners meet the guidelines in the local health plan that applicants should provide at least 33 1/3% of beds available to Medicaid patients. HCR agreed to provide 46% Medicaid beds (55 beds out of 120) which was the prevailing district rate. The plan gives priority to those applicant who meet this percentage. Manor agrees only to provide 35% Medicaid beds. Both Petitioners indicate a willingness to treat sub- acute patients, but neither seeks a specific number of beds for this purpose. Sub-acute care is considered within the designation of skilled care. Manor Care's emphasis on rehabilitation in its existing facilities has had significant results. Manor Care's historical Medicare percentage is above the industry average. Both Petitioners are in the forefront of developing programs for the diagnosis and treatment of AD disease. Manor Care is prepared to totally commit 18 beds exclusively to AD and related diseases and 21 beds to Medicaid. These may overlap. HCR is prepared to totally commit 32 beds exclusively to AD and related diseases and 55 beds to Medicaid. These may overlap. The special attributes of each proposed AD unit (30 beds by HCR and 18 beds by Manor Care) include a higher staff-to- patient ratio, which is needed to supervise and assist confused and wandering patients and a great deal of attention to the physical environment, from a home-like atmosphere and certain relaxing shades of pink, to special furnishing and fixtures. Particular care is necessary in preparation and serving of food, to allow patients with AD and related disorders to eat adequately and without assistance and to prevent considerable weight loss in the wandering stage which can result in further rapid debilitation. One of the goals of AD programs is to reduce the need for traditionally utilized physical restraints or heavy sedation, and to promote prolonged individual functioning. There is no competent expert testimony contrary to the theme that AD patients require special care and special programs designed to meet their unique medical and custodial needs. The experts with any personal background in the area also uniformly agreed that a separate wing or another isolated area of the nursing home facility is most desirable because of the wandering tendencies of these patients, their hostile, unpredictable, and bizarre behavior, and the other special needs specific to this type of brain degeneration. HCR's Wander Guard security system is viewed as superior by some witnesses.

Recommendation Based on the foregoing, it is RECOMMENDED: That DHRS enter a Final Order approving HCR's updated application for a 120 nursing home bed facility in Lee County limited and conditioned upon HCR's updated application's specific provision for 46% Medicaid beds and upon 30 beds being dedicated as set out in the application and evidence at formal hearing for the specific for treatment of AD patients, and denying the application of Manor Care for a 60 bed facility. DONE and Ordered this 23rd day of December, 1986 in Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32309 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December 1986. COPIES FURNISHED: Jean Laramore, Esquire Kenneth A. Hoffman, Esquire 325 North Calhoun Street Tallahassee, Florida 32302 Donna H. Stinson, Esquire The Perkins House, Suite 100 118 North Gadaden Street Tallahassee, Florida 32301 John Rodriguez, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building One, Room 407 Tallahassee, Florida 32399-0700 William Page, Jr., Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 APPENDIX_ The following paragraphs constitute specific rulings upon the parties' respective proposed findings of fact as required by Section 120.59(2) F.S. Petitioner Manor Care's Proposals: Covered in Findings of Fact 1, 3. Covered in Findings of Fact 3 and 12. Covered in Finding of Fact 8. Covered in Findings of Fact 3, 9-12. Sentence 1 is covered in Finding of Fact 4; remainder rejected as taken out of context and not clear from the record as a whole. Covered in Finding of Fact 9. Covered in Finding of Fact 12. Covered in Finding of Fact 9-12. Covered in Findings of Fact 9-12. Up to the comma covered in Findings of Fact 12; after the comma accepted but not adopted as unnecessary. Covered in part in Finding of Fact 12; remainder accepted but unnecessary. Covered in Findings of Fact 12. 16-19. Covered in Finding of Fact 6. 20. Covered in Findings of Fact 9-12. Proposals 9, 14, and 15 are accepted but not adopted because subordinate and unnecessary. Petitioner Health Care and Retirement Corporation of America's_ Proposals: Covered in Finding of Fact 1. Covered in Findings of Fact 2. sentence 1 is covered in Finding of Fact remainder rejected as subordinate and unnecessary. Covered in Finding of Fact 3. Covered in Finding of Fact 3. Covered in Finding of Fact 3. Covered in Finding of Fact 3 Covered in Finding of Fact 3. 10-12. Covered in Findings of Fact 3 and 12. Covered in Finding of Fact 12.a. Covered in Findings of Fact 3 and 10. 16. Covered in Finding of Fact 3. 19. Covered in Finding of Fact 3. 20-22. Covered in Finding of Fact 4; rejected in part as not supported by the record. 23-24. Covered in Finding of Fact 4. Covered in Findings of Fact 8 and 9. Covered in Finding of Fact 12. 27-32. Covered in Finding of Fact 8. Covered in Findings of Fact 5 and 6. Covered in Finding of Fact 8. 38-39. Are accepted in principle but rejected in their specificity as subordinate, unnecessary and cumulative. To a large degree the same subject matter is covered in Findings of Fact 8-12. Covered in Findings of Fact 9 and 12. Covered in Finding of Fact 8. Covered in Findings of Fact 9 and 12. 43-49. Covered in Findings of Fact 9-12. What is not covered is rejected as subordinate, unnecessary, and cumulative. Covered in Findings of Fact 9-10. Covered in Findings of Fact 9-12, particularly lOe. Covered in Findings of Fact 10-11. Accepted in principle but as stated is too broad and applies to situations outside of nursing home beds. Rejected in part as taken out of context and with insufficient predicate and in part as subordinate and unnecessary. What is accepted is covered in Finding of Fact 11. 60. Covered in Findings of Fact 10-11, particularly 10. 64. Covered in Findings of Fact 10-11, particularly 10. 66. Covered in Findings of Fact 9-12, particularly lOd. 67-69. Covered in Findings of Fact 10-11, what is rejected is rejected as unnecessary, subordinate and/or cumulative. 70. Covered in Finding of Fact 11. 71-73. Covered in Findings of Fact 10-11, what is rejected is rejected as unnecessary, subordinates and/or cumulative. Covered in Findings of Fact 10-11. Covered in Findings of Fact 9-12. Covered in Findings of Fact 6 and 11-12. 77-90. Covered in Finding of Fact 6. Matters rejected are rejected as not supported by the record or as contrary to the appropriate application of law and incipient policy. See Conclusions of Law. Represents the sum total of all the Findings of Fact made and is more in the nature of a conclusion of law. See Conclusions of Law. Rejected as covered in Finding of Fact 6, and the Conclusions of Law. 93-95. Accepted and incorporated in Finding of Fact 12. 96. Covered in Findings of Fact 6, 11, and 12. Proposals 3, 15, 17, 18, 35, 36, 37, 55, 56, 57, 58, 59, 61, 62, 63, 65, are accepted but not adopted because subordinate and unnecessary. Respondent Department of Health and Rehabilitative Services' Proposals: 1-2. Covered in Finding of Fact 1. 3. Covered in Finding of Fact 2. 4. Covered in Finding of Fact 4. 5. Covered in Findings of Fact 3 and 12. 6. Covered in Finding of Fact 3. 7-9. Covered in Findings of Fact 3, 5, and 6._ 10. Covered in Finding of Fact 6. 11. Accepted but not specifically set out in Findings of Fact. Sentences 1-2 are accepted and sentence 3 is rejected in Finding of Fact 6 and in the Conclusions of Law. Rejected for the reasons set out in Finding of Fact 6 and Conclusions of Law. Covered in Findings of Fact 5 and 6 and Conclusions of Law. Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law. Rejected as out of context and immaterial to the facts as found. Similar material is covered in Findings of Fact 6 and 9-12. Rejected as set out in Findings of Fact 6, and 9-12 and as a conclusion of law. ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES MANOR CARE, INC., Petitioner, CASE NO. 85-2937 vs. CON NO. 3850 DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. / HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA, d/b/a HEARTLAND OF LEE, Petitioner, vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, Respondent. / CASE NO. 85-3240 CON NO. 3854

Florida Laws (1) 120.57
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HEALTH QUEST CORPORATION, D/B/A REGENTS PARK OF DADE COUNTY vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 84-003297 (1984)
Division of Administrative Hearings, Florida Number: 84-003297 Latest Update: Nov. 06, 1985

Findings Of Fact The Petitioner originally applied for a certificate of need to construct and operate a 180 bed community nursing home in Broward County, Florida. By stipulation, the Petitioner's application was amended to be an application for a certificate of need for 120 nursing home beds at a cost of $4,600,000. Stipulation filed August 9, 1985. The only issue in this case is whether there is a need for 120 nursing home beds in Broward County. T. 25. The parties agree that need is to be determined in this case by application of rule 10-5.11(21), Florida Administrative Code. Prehearing Stipulation, pp. 2-3. In the case at bar, the relevant district is District X, which is Broward County and is not subdivided into subdistricts. T. 147. Rule 10-5.11(21)(b)1-4, which is applicable to this case, requires use of the following data and abbreviations: The number of licensed beds ("LB"). The current district population age 65-74 (POPC"). The current district population age 75+ ("POPD"). The district population age 65-74 projected three years ahead ("POPA"). The district population age 75+ projected three years ahead ("POPB"). The average occupancy rate for licensed nursing home beds in the district ("OR"). The number of nursing home beds in the district which have received CON approval but are not yet licensed ("approved beds"). HRS gathers data-from local health councils as to the number of patients in a given nursing home on the first day of each month, and this data, collected in six month segments, is compiled into a semiannual occupancy report. T. 145-46. Joint Exhibit 17 is the semiannual census report and bed need allocation published June 3, 1985, and contains data collected on the first days of the months of October-December 1984 and January-March, l98. T. 147; Joint Exhibit 17. The population figures to be used in this case are from the office of the Governor, and neither party disputes the accuracy of these figures. Relying upon the data in Joint Exhibit 17, HRS concluded that there is only a net need for 11 community nursing home beds in District X on the date of the hearing. Joint Exhibit 17, Joint Exhibit 15, T. 150. This was correctly calculated in Petitioner's proposed finding of fact 20: Underlying data: LB = 2,875 POPC = 157,371 POPD = 104,860 POPA = 168,793 POPB = 124,570 OR = 87.59 percent Approved beds = 415 Calculations: Bed rates: BA = LB POPC + (6 x POPD) = 2,875 157,371 + (6 x 104,860) = 2,765 786,531 = 3.65/1,000 BB = 6 x BA = 6 x 3.65/1,000 = 21.93/1,000 Age-adjusted bed total: A = (POPA x BA) + (POPB x BB) = (168,793 x 3.65) + (124,570 x 21.93) 1,000 ( 1,000) = (168.793 x 3.65) + (124,570 x 21.93) = 617 + 2,732 = 3,349 Occupancy-adjusted total: SA = A x OR 90 = 3,349 x 87.59 90 = 3,259 Deduction for licensed & approved beds: Net beds = SA - LB - .9 (approved beds) = 3,259 - 2,875 - .9 (415) = 384 - 373 Net beds = 11 Beverly Manor was licensed as a community nursing home for 120 beds on May 13, 1985. T. 140-41, 151; Petitioner's Exhibit 16. The Department of Health and Rehabilitative Services has a policy to use May 1, 1985, as the cutoff date for Counting licensed nursing home beds for the June 1985 semiannual report, and based on that policy, did not consider the licensed beds at Beverly Manor in calculating bed need in Joint Exhibit 17 and 15. T. 149, 151-52. The Department of Health and Rehabilitative Services uses a variety of other cutoff dates in compiling the semiannual report. Poverty data is from 1980. Approved bed count is from May 1, 1985. Population data is from January 1985. T. 148-50. The reason offered by HRS for using May 1, 1985, for a cutoff date for counting licensed nursing home beds was to give HRS employees enough time to put all the data together t issue the semiannual report on the due date, June 1985. T. 159-60. Daystar, Inc., is reported to be a 44 bed nursing home in District X on Joint Exhibit 17. The Department of Health and Rehabilitative Services includes in the semiannual report all nursing homes that are licensed by the HRS office of licensure and certification. T. 152. HRS included Daystar, Inc., on the semiannual report. Id. Daystar, Inc., operates a 44 bed facility far Christian Scientists that does not offer medical treatment or medication of any kind, but relies solely upon spiritual healing. T. 36-37. On September 29, 1981, certificate of need number 1746 was issued to Colonial Palms Nursing Home East. Petitioner's Exhibit 18. The termination date was extended to March 27, 1983. Id. Three days before the termination date, HRS issued an amended certificate of need number 1746, to Colonial Palms, Inc. to construct the 120 beds in two phases. Phase I was the addition of 46 beds to an existing facility, which HRS did not name, and phase II was to construct a new 74 bed nursing home facility. Petitioner's Exhibit 19. On April 5, 1983, a Robert T. Held wrote to HRS on "Colonial Palms Nursing Home" letterhead stating that construction regarding certificate of need 1746 had commenced. On June 3, 1985, a William R. Meyer spoke with a Ruth Dixon, Control Clerk, Broward County Permit Bureau, and Ms. Dixon advised Mr. Meyer that no building permit had been issued to Colonial Palms West at 51 West Sample Road, Pompano Beach, Florida 33064 or to Bodee Construction Company for 74 beds. Ms. Dixon further advised Mr. Meyer that "Colonial Palms" has not been issued a building permit since 1983, and that she checked both addresses of Colonial Palms and under the construction company in her investigation. HRS takes the position that the Colonial Palms Certificate of need for 74 new beds is still valid since it is still on its approved list and has not been taken off as void. T. 156-57. The foregoing evidence is not sufficient to conclude that certificate of need lumber 1746 is void in whole or in part due to failure to commence construction. The evidence is ambiguous as to which entity holds the certificate of need or which entity was checked for construction permits, and there is no evidence as to whether construction could have been initiated without a construction permit on file in Broward County. Moreover, the Broward County evidence is hearsay, and although there has been no objection to it, the Hearing Officer independently does not regard it to be sufficient, pursuant to section 120.58(1)(a), Fla. Stat., to be relied upon. Finally, it is entirely unclear what type of construction, undertaken by what entity, would be required for this certificate of need to satisfy the "commence construction" requirement. Colonial Palms was not licensed for an additional 46 beds until January 18, 1985, and thus it had only 81 licensed beds on the first of January, 1985; thus, the occupancy report for Colonial Palms for January, 1985, should have been 83 patients in 81 licensed beds. T. 154; Petitioner's Exhibit 13. The "occupancy rate" contained in the semiannual reports, Joint Exhibit 17 and Petitioner's Exhibit 9, is calculated by dividing the total of the patient census in all nursing homes on the first of each month for the six month reporting period by the total of all licensed nursing home beds for those same facilities during the same months. T. 161. Petitioner's Exhibit 10 is an example of how HRS makes this calculation. Id. As a result of adding the 120 licensed beds at Beverly Manor, the "licensed beds" (LB) figure in the formula increases to 2,995, and "approved beds" changes from 415 to 295. The correction to the January 1985 licensed beds at Colonial Palms (corrected to 81 licensed beds), results in a change to the "occupancy rate" from 87.59 percent as reported in Joint Exhibit 17, to 88.06 percent. This calculation is derived from Petitioner's Exhibits 12, 13, and 14. The patient census for October 1984 through March 1985 was 13,051. The licensed beds total for the same months, however, would be 14,820, which is the result of subtracting 46 beds from Colonial Palms for January 1985. The result, 13,051 divided by 14,820, is 88.06 percent. In the past, HRS has granted partial approval of a lesser number of beds than sought by the applicant for a certificate of need. T. 142. The computations contained in conclusion of law paragraph 10 are found to be the correct computation of need pursuant to the rule, and are hereby incorporated by reference as a finding of fact.

Recommendation It is therefore recommended, subject to paragraph 12 above, that the Department of Health and Rehabilitative Services issue to the Petitioner, Health Quest Corporation d/b/a Regents Park of Broward, a certificate of need to construct and operate 120 community nursing home beds in District X. DONE and ORDERED this 6th day of November 1985, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. 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 6th day of November, 1985. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 84-3297 The following proposed findings of fact by Petitioner are adopted herein, if these proposed findings have not already been adopted in the findings of fact: 1, 2, 3, 4, 5, 6, 7, 8, 13, 14, 17, 19, 20 and 21. The following proposed findings were concerned with the December 1984 semiannual report, and thus are not relevant since better and more current data, the June 1985 semiannual report, exists: 9, 10, 11, 15, and 16. See conclusions of law 2-6. The following proposed findings are rejected to the extent that they concern exclusion of Daystar, Inc., data, or to the extent that they are based upon exclusion of Colonial Palms data due to the theory that the Colonial Palms certificate of need is void due to failure to commence construction: 18, 22, and 23. The rejection of these factual matters has been explained in findings of fact 14-16 and conclusions of law 7-9. Proposed finding 24 is rejected as irrelevant, since a net bed need is shown by the rule formula. See rule 10- 5.11(21)(b)10. Moreover, even if the net bed need, which is called the "net bed allocation" by the rule, were zero, the facts proposed in finding of fact 24 are not of the type permitted under this exception of the rule. COPIES FURNISHED: Paul V. DeBianchi, P.A. 2601 East Oakland Park Blvd. Suite #500 Fort Lauderdale, Florida 33306 Charles M. Loeser, Esquire Assistant General Counsel Health Quest Corporation 315 W. Jefferson Blvd. South Bend, Indiana 46601-1586 Harden King, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================

Florida Laws (1) 120.57
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