The Issue Which Certificate of Need (CON) application for a new 120- bed community nursing home in Agency for Health Care Administration, Nursing Home District 1, Subdistrict 1, should be granted: Life Care Health Resources, Inc. (CON No. 8802) or National HealthCare L.P. (CON No. 8799).
Findings Of Fact The NHC Application NHC proposes to build a new 120-bed facility. The project will have approximately 63,104 gross square feet. NHC projects the total project cost to be $8,763,625. NHC agreed to condition its application on the following: (a) a 16-bed subacute unit; (b) a 30-bed Alzheimer/Dementia services unit; (c) provision of adult day care through an existing provider; (d) respite care; and (e) care for HIV/AIDS patients. NHC further agreed to accept as a condition a Medicaid commitment of 74.5 percent of patient days. Finally, NHC offered to condition its application on the acceptance of "patients with HIV/AIDs referred by the public health unit serving the County in which the facility is or is proposed to be located." NHC agrees to be subject to monitoring and fines in the event that any of the above conditions are not met. The late Carl E. Adams, M.D., a Tennessee physician, founded NHC in 1971. From the beginning, NHC adopted innovations in nursing care which are now standard in the care of the elderly, e.g., skilled care programs, 24-hour RN coverage, computerized patient care assessment programs, and physical, occupational, and speech therapy. It is currently adopting other innovative therapies such as pet and music therapy, as well as children's visits. NHC is one of the largest owners/managers of nursing homes and assisted living facilities in the country. It has operations in 107 centers located in ten states. NHC has been operating nursing centers in Florida since 1985. At the time of its application, NCH owned nine nursing homes in the State of Florida, including five that had a superior rating. NHC manages 32 other centers in the State of Florida, the majority of which have superior ratings. NHC manages a facility in Escambia County known as FCC Palm Garden of Pensacola. Palm Garden has 180 beds. NHC does not own any facilities in the health planning District I, Subdistrict 1, which includes Santa Rosa and Escambia Counties. NHC has a well-developed corporate and regional management structure. The management structure places a significant amount of responsibility for decision-making at the facility level. The corporate and regional staff support individual facilities in the delivery of health care services to patients. At the corporate level, the following people are available to assist the local nursing homes and regional personnel in delivering high quality service: Vice President of Patient Services, Corporate Dietitian, and Coordinator of Social Services. Also, there are support service personnel for medical records, accounting and all of the therapy services, including but not limited to physical, occupational, and physical therapy. NCH has separate departments, which support nursing home development, construction, interior design, and human resources, as well as the company's retirement and assisted living facilities. At the regional level, NHC has established the following directorships to provide support personnel for the individual facilities: Regional Administrator, Regional Nurse, Regional Dietitian, Regional Social Worker, Regional Activities Coordinator, Regional Medical Records Director, Regional Accountant, Regional Physical Therapist, Regional Occupational Therapist, and Regional Speech Therapist. In addition to providing support, regional personnel actively monitor the quality of care provided at each of the NHC facilities. Annually, the NHC regional team spends two to three days in each center doing a comprehensive assessment of the delivery of care. Once a year, the Regional Nurse performs a full patient-care survey for each patient in each facility. Quarterly, the Regional Nurse reviews portions of each patient's care, so that twice a year there is a complete review of each case file. The regional team conducts Consumer View Surveys, which were developed by NHS. These surveys determine patient satisfaction with the quality of care, quality of life, and matters of patient rights which extend to family members. All of NHC's patients receive a quality control card to mail back to the home office upon admission, ninety (90) days after admission, and on each anniversary. The regional team reviews all patient care outcomes on a monthly basis. NHC's management philosophy includes a strong commitment to provide quality of care to its patients. Management strives to ensure that NHC employees have the education, training, and experience to deliver that care. Extensive corporate resources and support are provided to enable all the employees in the corporation to educate and improve themselves in the provision of long-term care. NHC has extensive programs in place to train administrators (two-year program), directors of nursing (preceptor program), dietitians, and certified nursing assistants (three levels of in-house education beyond the normal certification requirements.) NHC provides incentives to its employees to encourage their participation in educational and training programs, i.e., tuition reimbursement for college courses, in-house seminars, and annual company seminars as an entire organization and along specialty lines. NHC has developed extensive, state-of-the-art quality assurance, patient assessment and utilization programs. NHC, through its Partners in Excellence (PIE) program, Presidential Excellence Awards and CNA Awards, provides strong financial incentives to staff to maintain and improve quality care. NHC is also directly involved in community education efforts in the area of long-term care research and geriatric education. NHC founded the Foundation for Geriatric Education. This foundation has funded numerous chairs at various colleges and promotes public education on geriatric issues. Also, NHC supports and contributes to the training of LPNs, CNAs, therapists, and dietitians at local vocational schools, junior colleges, and universities. The LCHRI Application LCHRI is a Tennessee corporation, which is wholly owned by Forest L. Preston. It is not a subsidiary or an affiliate of any other corporation. LCHRI is self-described in the application as "a Tennessee corporation whose purpose is to develop and acquire high quality skilled nursing facilities." Mr. Preston is also the sole shareholder of Life Care Centers of America, Inc. (LCCA). LCCA is the largest privately held nursing home company in America. It operates approximately 25,000 nursing home beds in 200-plus facilities in 28 states. It also operates over 2,000 retirement center units. LCCA operates nine nursing homes in Florida. LCHRI intends to enter into a management arrangement with LCCA for the operation of its proposed facility. LCHRI is proposing to construct a 120-bed freestanding nursing home in the north/northeast portion of Escambia County. The facility will have approximately 57,600 gross square feet. LCHRI proposes to construct and equip the facility for the sum of $8,497,000. LCHRI conditions its application on providing at least 75 percent of its patient days to Medicaid patients. LCHRI also conditions its application on providing a 20-bed secured Alzheimer's/dementia unit and a ten-client adult day care center. LCHRI's application states that it will serve Medicare/subacute patients and HIV/AIDS patients. It will provide respite care and care to hospice patients. LCHRI's program will include a wide range of therapies, including occupational therapy, speech therapy, and physical therapy. It will provide intravenous care, wound care, and ventilator/respiratory care. However, care to these patient populations and provision of these services is not a condition of LCHRI's application, which would be subject to subsequent monitoring by the Agency. LCHRI will provide the required and necessary administrative services to its residents, including pre-admission screening services, utilization review, appropriateness review, care planning, and discharge planning services. The effectiveness of those services will be monitored through a Continuous Quality Improvement Program. LCHRI will incorporate into its project all required dietary programs, activities programs, and programs for family and community involvement. It will assure that resident's rights are protected by implementation of a Residents' Rights Policy. Resident security will be assured via use of a security council, a safety committee, and a program designed to prevent accidents. A Resident's Council will provide for the expression of grievances, offer a means of making suggestions to the nursing home, and assist management in understanding the needs and concerns of residents. COMPARATIVE FACTORS BETWEEN NHC'S AND LCHRI'S APPLICATIONS Quality of Care: Level and Extent of Services A significant comparative factor between the applicants is the level, quantity, and quality of care that both propose. The staffing and extent to which each applicant's proposal would serve various residents of the health planning district was left at issue by the parties. Likewise, the comparative quality of care of the applicants was left at issue. The parties' prehearing stipulation states as follows regarding state health plan allocation factors: Allocation Factor VIII regarding history of providing superior resident care programs is at issue, provided, however, the parties shall only introduce evidence of licensure history, JCAHO accreditation, staffing, level of service, programs and architectural matters. Allocation Factor IX regarding proposed staffing levels, all applicants meet minimum staffing levels. However, the parties retain the right to contest whether the applicants have the ability to meet the proposed staffing levels and to use the proposed staffing levels as a comparative factor. Allocation Factor XII relating to the preference for applicants proposing lower administrative costs and higher resident care costs compared to the average nursing home in the district is at issue in this proceeding. The parties' prehearing stipulation regarding the statutory review criteria located in Section 408.035(1)(c), Florida Statutes, states as follows: Subsection (c) relating to quality of care, all parties meet the criteria and it is not at issue as to past quality of care or quality of care proposed in the applications; provided, however, the parties may use this criteria as a comparative factor, but shall only introduce evidence as to licensure history, JCAHO accreditation, level of service, programs, staffing and architectural matters. Both applicants will provide staffing levels which exceed minimum standards. NHC proposes a total of 115.87 full- time equivalent (FTE) positions, with 67.2 total nursing FTEs. LCHRI proposes a total of 109.3 FTE positions, with 62.2 total nursing FTEs. Some of NHC's nursing staff will have administrative duties in addition to their direct patient care duties. The Assistant Director of Nursing, the Subacute Unit Director, and the Alzheimer's Unit Director will serve in dual roles. However, there is no persuasive evidence that serving as an RN and a unit director will detract from a nurse's direct patient care responsibilities. NHC proposes 10.37 FTEs for ancillary care (therapy) using. LCHRI proposes 8.5 FTEs for ancillary care. Both parties presented evidence that they will provide therapists for eight hours a day, five days a week. LCHRI's statement that it will be able to stagger its staff to allow for therapies up to seven days per week is not persuasive. NHC will have six more full-time persons serving its 120 beds than LCHRI will have serving its 120 beds and ten person adult day care. Five of the additional persons who will staff the NHC facility are involved in direct patient nursing care. Both applicants will provide a wide range of therapeutic programs necessary to the successful operation of a nursing home. LCHRI proposes to use in-house therapists to accentuate continuity of care. NCH's application states that it will contract with its wholly-owned subsidiary, National Health Rehab, for the services of therapists. In either case, the applicants will be able to provide patients with high-quality ancillary care. Another method of determining the relative merits of an applicant's commitment to provide patient care services is a comparison of the applicant's expenditure for administrative and patient care costs to the district average. The average administrative cost of the district is $27.91 a day per patient. NHC projects its administrative cost will be $23.37. LCHRI's administrative cost will be $24.32. The average patient care cost of the district is $58.94 a day per patient. NHC's patient care cost will be $86.46 a day per patient. LCHRI will spend $61.97 a day per patient on patient care. NHC will spend $993,115 a year more than LCHRI on patient care. NHC's greater patient care cost will provide more nursing staff, better paid nursing staff, incentives and bonuses to nursing staff for quality service, higher dietary expenditures, and more recreational and social activities. Another indicator of quality is the historical performance of an applicant pursuant to its licensure history. LCHRI has no operating history. Therefore, the operating history of LCCA, the projected operator of the LCHRI facility, must be examined here. There are three (3) types of licensure awarded by the State of Florida: Conditional, Standard, and Superior. The license categories are awarded and/or changed upon the regular bi-annual survey for licensure renewal or after a complaint investigation survey. The survey process involves grading violations as Class I, II, or III. Class I violations are the most serious and require immediate correction. A facility that receives a conditional rating at the time of its re-licensure or other survey has Class I or II deficiencies. Of the nine facilities owned and operated by NHC in Florida, seven had a superior rating and two had a standard ratings at the time of the final hearing. The facility managed by NCH in Escambia County, Palm Garden of Pensacola, was issued a conditional license on May 22, 1997. However, the Palm Garden facility corrected its deficiencies and subsequently received a standard license on June 11, 1997. As of May 5, 1998, the Palm Garden facility had a superior rating. As of July 30, 1998, LCCA had five skilled nursing facilities in the state: two with a superior rating, and three with a standard rating. Additionally, LCCA operates three nursing homes for affiliated owners in the state: one with a superior rating and two with a conditional rating. The licensure history for the ninth nursing home operated by LCCA, Life Care of Orlando, is not included in the record. At the time of the hearing, LCCA operated 60 facilities in the United States that were accredited by the Joint Commission on Accreditation of Health Care Organizations (JCAHO). LCCA operated 34 facilities nationally that had JCAHO applications pending. NHC also has significant experience with JCAHO accreditation. It operates 16 facilities in its north Florida region. One of these facilities, which is owned by NCH, is JCAHO accredited. Five of the facilities, which are managed by NHC, are accredited. One of the latter has a special accreditation for its subacute unit. Both parties have architectural features which promote quality of care. These architectural features are discussed in detail below. As to State Health Plan Allocation Factor VIII, NHC has a comparatively better history of providing superior resident care programs as evidenced by its licensure history, staffing, level of service, and programs. As to State Health Plan Allocation Factor IX, on a comparative basis, staffing levels proposed by NHC compare favorably to LCHRI's proposal. As to State Health Plan Allocation Factor XII, both applicants propose lower administrative costs and higher resident care costs compared to the average nursing home in the District. NHC compares favorably as to LCHRI in all aspects of this review criteria. It is undisputed that NHC will spend $24 per patient per day more than LCHRI on patient care. As to Statutory Review Criteria Section 408.035(1)(c), Florida Statutes, NHC's 120-bed proposal, when compared to LCHRI's 120 proposal, will provide a higher quality of care as to licensing history, level of service, programs, and staffing. Special Programs The type and nature of special programs proposed by a nursing home applicant is at issue in this proceeding. The parties' prehearing stipulation states as follows regarding the state health plan allocation factors: Allocation Factor III relating to specialized services to special care patients is not at issue in this proceeding. All applicants meet this preference, but it can be a basis for comparison. Allocation Factor VI regarding proposals to provide innovative therapeutic programs is at issue in this proceeding. The parties' prehearing stipulation states as follows regarding Section 408.035(1)(b), Florida Statutes: Subsection (b) is at issue to the extent the parties want to argue that their respective proposals better meet the need for health care services within the health planning district and as to any special programs proposed by the applicants. Alzheimer Units NHC proposes to operate a secured Alzheimer's care unit with 30 beds. The implementation of this separate unit is a condition of NHC's application. The unit has numerous amenities such as a very large dining and lounging area for the Alzheimer's patients. The unit is also specially designed to accommodate the wandering characteristics of the Alzheimer's patient. None of the corridors end in a dead end. The design of the unit allows for the circular, wandering motion of the typical Alzheimer's patient, both inside the unit and from the building to the secured courtyard. NHC's application proposes a large outdoor walled courtyard area for the Alzheimer's patients. The courtyard has a well landscaped gazebo area for the patients. NHC's staff in the Alzheimer's unit will receive specialized training for the care of this type of patient. LCHRI's facility will include a 20-bed Alzheimer's and/or dementia unit. LCHRI's Alzheimer's unit has a smaller courtyard than the one proposed by NHC. The LCHRI unit has numerous dead end corridors, which hamper the circular wandering pattern of the typical Alzheimer's patient. The floor coverings (vinyl) have a shine, which is disruptive to the Alzheimer's patient. Over the next few years, the health care planning district will need more beds for Alzheimer's patients than either of the applicants are proposing. Under these circumstances, NHC's 30-bed unit will best meet the growing need for beds that will serve people with dementia and Alzheimer's disease. Subacute Units NHC proposes a comprehensive subacute unit. The subacute unit will handle medically complex patients who require the following services: TPN, dialysis, oncology treatment, cardiac rehabilitation, ventilator use, IV care, and respiratory therapy. NHC's subacute unit will have 16 beds; its implementation is a condition of NHC's application. LCHRI asserts that it also will provide Medicare/subacute care. The LCHRI application describes a 20-bed unit. LCHRI does not condition its application on implementing this unit. NHC's subacute unit will provide a higher level of care than the unit proposed by LCHRI. Adult Day Care Both applicants condition their respective applications on the provision of adult day care. LCHRI offers to condition its CON on a 10-person in-house program which will focus on early stage Alzheimer's patients. NHC proposes to condition its CON on providing adult day care through existing providers. The in-house adult day care program suggested by LCHRI will handle persons with Alzheimer's disease and dementia. The nursing staff from the Alzheimer's unit will make rounds to the adult day care unit and be responsible for the implementation of the program, even though the two units are at the extreme opposite ends of the building. The adult day care area does not appear to be a secured area. The parties disputed whether there is a need for adult day care within the health planning district. NHC conditioned its application on the provision of adult day care services through existing providers to avoid duplication of services already in the district. Rehab and Restorative Nursing NHC has extensive, existing rehabilitative and restorative nursing programs. The goal of NHC's rehabilitative programs is to achieve and maintain the residents' highest level of functioning. NHC uses the innovative recreational and treatment therapies of children contact, music therapy and pet therapy. NHC proposes a total of 10.37 FTEs of therapists for rehabilitation care compared to 8.5 FTEs proposed by LCHRI. NHC proposes 2.8 FTEs for restorative nursing compared to 2.0 FTEs for LCHRI. As discussed above, both applicants will provide a wide range of therapeutic programs. LCHRI's proposal includes several noteworthy features relating to these therapies. They include the following: (1) an outdoor textured walking area that provides different kinds of walking environments, e.g. steps, curbs, inclines, drop ramps for wheelchairs, rough stones, grass, etc; (2) a transitional unit that is akin to a small apartment, including a kitchenette, a dining area, a regular bed (as opposed to a standard nursing home bed), and a regular bathroom; and (3) a therapy suite which allows for individualized therapy treatments and which is equipped with offices for in-house therapy professionals. However, the physical therapy unit and the specialized therapy courtyard are separated by a significant distance. The LCHRI application asserts that its facility will employ in-house therapists. Pursuant to a contract, LCCA will act as a consultant for LCHRI's therapists. However, LCCA will not be responsible for managing the clinical aspects of the LCHRI rehabilitation and restorative programs. LCCA will not be responsible for the results of the outcomes of these programs. LCHRI's claim of competency and proficiency in this area is therefore tentative. On the other hand, NHC and its wholly-owned subsidiary, National Health Rehab, will have a high level of integration in the delivery of rehabilitation services. The close corporate relationship between the two entities will minimize any managerial or clinical territorial conflicts, which might otherwise exist with an outside third party rehabilitation company. Moreover, the rehabilitation staff assigned to NHC's proposed facility will be permanently located there and not rotated among other facilities. As to State Health Plan Allocation Factor III, NHC provides superior specialized programs to residents of the health planning district. Based upon absolute numbers, NHC proposes ten (10) more Alzheimer's beds than LCHRI. NHC proposes to condition its application on the provision of Medicare subacute beds. NHC will provide a higher level in its subacute unit than LCHRI. NHC demonstrated that it has in the past, currently does, and will in the future provide care to HIV/AIDS patients. As to State Health Plan Allocation Factor VI, NHC will provide superior innovative therapeutic programs. As to Statutory Review Criteria Section 408.035(1)(b), Florida Statutes, NHC's specialized programs are superior in satisfying this requirement. ARCHITECTURAL DESIGN Architectural design remains at issue in this proceeding. The parties' prehearing stipulation states as follows regarding one of the state health plan allocation factors: Allocation Factor V regarding proposals to construct facilities which provide maximum resident comfort and quality of care is at issue in this proceeding. The parties' prehearing stipulation states as follows regarding statutory review criteria located in Sections 408.035(1)(c) and 408.035(1)(m), Florida Statutes: Subsection (c) relating to quality of care, all parties meet the criteria and it is not at issue as to past quality of care or quality of care proposed in the applications; provided however the parties may use this criteria as a comparative factor, but shall only introduce evidence as to licensure history, JCAHO accreditation, level of service, programs, and staffing and architectural matters. Subsection (m) relating to the costs and methods of proposed construction is at issue in this proceeding. A miscellaneous section of the parties' prehearing stipulation states as follows: The architectural plans and narrative contained in each application may be accepted into evidence without the need for further authentication, corroboration, or foundation. The feasibility, validity and relative merits of each party's architectural plans is at issue and are a basis of comparison between the parties applications. Architecturally, the proposed bathing facilities for residents distinguish the proposals of the applicants. NHC has 58 bathing areas, a substantial majority of which are "in room" showers. LCHRI's proposed facility has 16 bathing facilities. Two of LCHRI's bathing facilities are centralized for the general population's use. Four of LCHRI's bathing facilities are located in areas designated for special programs or patients, i.e., physical therapy, Alzheimer care, adult day care and isolation room. Ten rooms in LCHRI's Medicare certified unit have showers in individual patient rooms. Except for the bathing facilities located in the isolation room and Medicare certified unit, all of LCHRI's bathing facilities are centralized. NHC will have one bathing area for every two residents. LCHRI's ratio of bathing area per resident ranges from 1:2 to 1:40, depending on the type of unit. One of the most important daily functions performed in a nursing home is daily bathing. Good nursing home design incorporates design features that allows residents to retain their dignity while bathing. Private showers in individual rooms are a superior design alternative to enhance patient dignity and quality of life in the nursing home. A comparison of other architectural features between the two applicants is as follows: (a) NHC's total square footage for the entire facility is greater than LCHRI's total square footage; (b) NHC will have more square footage per resident than LCHRI, including LCHRI's adult day care clients; (c) NHC will have 22 private rooms compared to LCHRI's 11 private rooms; (d) NHC will have 49 semi-private rooms compared to LCHRI's 54 semi- private rooms; (e) NHC's resident rooms will be equal in size or larger than any of LCHRI's resident rooms; (f) NHC will have six dining areas compared to LCHRI's four dining areas; (g) LCHRI will have three courtyards compared to NHC's two courtyards; (h) NHC will have two screened porches compared to no screened porches for LCHRI; (i) LCHRI will have six dayrooms, activity rooms and/or lounges for residents compared to three for NCH; and (j) LCHRI will have four lounges, classrooms and/or conference rooms for staff compared to three for NHC. NHC's facility provides for carpeting in the hallways, patient rooms, dining and other common areas. NHC uses wallpaper in patient rooms and ceramic tile in the bathrooms. NHC's corridors are 9 feet wide and have cart alcoves. For heating and air conditioning, NHC uses a water source heat pump, with individual controls in the rooms. NHC's two isolation rooms have a work area between the rooms and the corridors for more separation. NHC's facility is designed to accommodate a future expansion of 120 beds. Therefore, its ancillary areas are on one side of the facility rather than in the middle. Some of NHC's resident rooms are up to 300 feet from the dining area. LCHRI's facility also provides for carpets in the corridors, patient rooms, and many of the common areas. LCHRI uses vinyl in the bathroom. LCHRI has only one isolation room, which is a standard room, not specifically designed for this function. The walls in the patient rooms are painted, except for the patient room headwall and corridors. LCHRI's hallways do not have cart alcoves. For air conditioning, LCHRI uses through-wall heat pump units. LCHRI's facility is not designed for future expansion. Therefore, its ancillary areas are located in the center of the complex, with a service corridor at the rear of the building. The total square footage devoted to dining, recreation, activities, sun porches, ice cream parlors, living rooms for NHC is 7,489 square feet. LCHRI has 7,050 square feet devoted to such spaces. The therapy areas in both plans are essentially the same size. Both facilities have an in-house classroom and training room. NHC's classroom is 888 square feet. LCHRI's classroom is 388 square feet. NHC is proposing a Type 4 construction. LCHRI will use a Type 5 construction. Type 4 construction has a higher rating for fire safety. As to State Health Plan Allocation Factor V, the NHC proposal will provide maximum resident comfort and, on a comparative basis, a better quality of care than LCHRI's proposal. The in-room showers in the NHC center are the superior alternative to the centralized bathing proposed by LCHRI. The same is true in regards to Statutory Review Criteria Section 408.035(1)(c), Florida Statutes. NHC's proposal of in-room showers provides a better quality of care as compared to the LCHRI proposal for centralized bathing. As to Statutory Review Criteria Section 408.035(1)(m), Florida Statutes, NHC's method of construction provides more resident comfort and superior amenities. SERVICE TO RESIDENTS OF THE DISTRICT (ACCESS) The extent to which the services and beds provided by each applicant are available to residents of the district is at issue in this proceeding. The parties' prehearing stipulation states as follows regarding the district health plan allocation factors: Preference should be given to a CON applicant who has a history of providing care, or who will commit to provide care for patients with HIV/AIDS . . . . [This preference, District Health Plan Allocation Factor IV is at issue.] Preference should be given to a CON applicant who agrees to accept patients with HIV/AIDS referred by the public health unit serving the county in which the facility is or is proposed to be located [This preference, District Health Plan Allocation Factor VI is at issue.] The parties prehearing stipulation states as follows regarding statutory review criteria located in Sections 408.035(1)(b), 408.035(1)(h), 408.035(1)(j), 408.035(1)(l), and 408.035(1)(n), Florida Statutes. Subsection (b) is at issue to the extent the parties want to argue that their respective proposals better meet the need for health care services within the health planning district and as to any special programs proposed by the applicants. Subsection (h) relating [to] the effects [that] the project will have on clinical needs of health professional training programs in the service district; and the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in a limited number of facilities; [and] the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district, are at issue in this proceeding. Subsection (j) relating to the special needs of and circumstances of health maintenance organizations is at issue. Subsection (l) relating to the probable impact of the proposed project on the costs of providing health care services proposed by the applicant, upon consideration of factors including, but not limited to, the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assurance and cost effectiveness, is at issue in this proceeding. Subsection (n) relating to the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent, is at issue in this proceeding. HIV/AIDS The local health plan includes two preferences which seek to foster the commitment of nursing homes to admit and care for HIV/AIDS patients. LCHRI relies upon the LCCA's history of providing care to patients with HIV/AIDS. LCCA provides approximately 1400 patient days of care per year to HIV/AIDS patients in its Orange Grove Rehabilitation Hospital. LCCA also has a facility in Tennessee that cares for HIV/AIDS patients. In contrast, NHC offers to condition its application on the acceptance of HIV/AIDS patients which are referred by the public health unit serving the Escambia County. In addition, NHC has served at least four HIV/AIDS patients in its Florida nursing homes over the past three years. At the time of the Final Hearing, NHC was providing nursing home care to one HIV/AIDS patient. Medicaid In its Florida facilities, NHC provides 47.84 percent of its patient days to Medicaid patients. Most of NHC's facilities provide more patient days of care to Medicaid patients than is required as a condition of their respective CONs. One of its facilities provides a significant number of Medicaid patient days of care even though there is no such condition on its CON. NHC conditions its application on the provision of 74.5 percent of patient days for care of Medicaid patients. LCCA has Medicaid conditions at other facilities it operates. Only one of the facilities that it is currently operating does not meet the Medicaid condition on its CON. LCHRI conditions its application on the provision of 75 percent of patient days for care of Medicaid patients. Medicare Pursuant to Schedule 7 of the respective applications, NHC proposes to provide 6,058 Medicare days in its second year of operation. LCHRI will provide 4,654 Medicare days in its second year of operation. In addition, NHC proposes to condition its application on implementing a separate subacute unit, which will take care of higher acuity patients. LCHRI's subacute and Medicare patients will be served in a combined unit. Private Pay LCHRI raised concerns over NHC's lack of semi-private rooms for private pay patients. NHC's proformas do not reflect any semi-private room revenue for private pay patients because these patients generally require private rooms. Nevertheless, NHC will make semi-private rooms available to private pay patients. HMO/Insurance NHC proposes to charge health maintenance organizations (HMOs) and insurance companies a rate of $315 a day in the second year of operation. During the same period of time, LCHRI proposes to charge HMOs and insurance companies at the rate of $372.69 per day. NHC has specialized regional case managers to handle HMO patients. Location LCHRI asserts that its facility will be located in north/northeast Escambia County to better serve the whole district. However, LCHRI does not offer to condition its application upon locating in this area. The north/northeast section of Escambia County is already well served with other nursing homes. Many of the nursing homes currently located in the county are clustered in this area. NHC may elect to locate its facility in the same geographic area as proposed by LCHRI if the market and demand conditions continue to justify such a location. As an applicant which is not bound to a site, NHC has the greater ability to respond to existing market demand at construction time. Corporate Resources and Personnel Both applicants have corporate resources to recruit and train personnel to insure quality of patient care. NHC has experience in recruiting personnel in the district through its operation of the Palm Garden of Pensacola facility. LCHRI will utilize its experience at a recently opened Florida facility to recruit personnel. In summary, District Health Plan Factors IV and VI indicate a strong preference for the applicant which indicates a commitment to HIV/AIDS patients. NHC agreed to condition its CON on the provision of care for HIV/AIDS patients. Therefore, NHC is entitled to credit for these preferences. As to Section 408.035(1)(b), Florida Statutes, NHC better meets this statutory review criteria. NHC is proposing to provide two new special programs to residents of the health planning district, a subacute care unit for medically complex patients and a dedicated Alzheimer's care unit. With respect to Section 408.035(1)(h), Florida Statutes, both applicants rely on extensive corporate resources to meet this criterion. They both have well-developed programs for the recruitment and training of qualified associates. However, NHC better meets the statutory review criteria because it will provide the residents of the district with a broader range of accessible service. With respect to Statutory Review Criteria Section 408.035(1)(j), Florida Statutes, NHC demonstrated that it will better meet the needs of HMOs because it will charge the lowest rate. With respect to Statutory Review Criteria Section 408.035(1)(l), Florida Statutes, an award of a CON to either applicant will foster competition in the district by establishing the presence of a new nursing home provider. NHC has a presence in the district through its operation of the Palm Garden of Pensacola facility, but not as an owner. With respect to Statutory Review Criteria Section 408.035(1)(n), Florida Statutes, the parties are essentially equal on this point. Both have comparable past histories in providing Medicaid and charity care. Furthermore, both propose to provide Medicaid care at essentially the subdistrict average. ECONOMIC MATTERS A few economic issues as to project costs, long-term financial feasibility, and economies of scale are at issue. These economic issues clearly distinguish the two applicants. Economies of Scale The parties' prehearing stipulation states as follows regarding Section 408.035(1)(e), Florida Statutes: Subsection (e) relating to probable economies and improvements in service that may be derived from operation of joint, cooperative or shared health care resources is at issue in this proceeding. NHC is the superior applicant as to the statutory review criteria located in Section 408.035(1)(e), Florida Statutes. Adding a facility to NHC's strong regional structure will result in economies and improvements in service in the joint operation of all of its facilities. NHC also demonstrated significant economies of scale in the joint and cooperative clinical ventures with third party health care practitioners and providers. LCCA, which will be the manager for LCHRI's project, does not claim to have a centralized or focused regional management team. Its application specifically describes a decentralized management with the focus on the individual center. LCCA's recently formed regional staff is comprised of only six individuals. Project Costs Project costs remain at issue in this proceeding. The parties' stipulation states as follows regarding estimated project costs, Schedule I: The information contained on each Schedule 1 of the applications is deemed to be correct and true and will not require further proof at hearing; provided, however, the parties may contest individual line items. The parties' stipulation regarding Section 408.035(1)(m), Florida Statutes, states as follows: Subsection (m) relating to the costs and methods of proposed construction is at issue in this proceeding. Line 12 of LCHRI's Schedule I indicates that the construction costs for its project is $5,079,000. In the notes which accompany LCHRI's Schedule 1, the cost of construction per square foot is $95.51 and the square footage is 57,576. When one multiplies these numbers, the result is $5,499,083.76, which is approximately $420,083 higher than the number on line 12 in LCHRI's Schedule 1. LCHRI's witnesses gave no explanation or reconciliation of this obvious arithmetical error. LCHRI criticized NHC's costs in Schedule 1: land costs, site preparation, moveable equipment, financing costs, and start-up costs. These criticisms are not persuasive for the following reasons: Historical Cost LCHRI's criticism is based on a comparison with LCCA's historical costs for these items. NHC provided competent evidence to verify that the costs contained in its Schedule 1 are based on NHC's actual historical costs over dozens of projects. Utilizing past cost experience of an organization is a valid technique for estimating project costs. Land Cost LCHRI plans to pay approximately $125,000 per acre for its land. NHC will pay considerable less at $75,000 per acre. LCHRI's claim that NHC's land cost is low is without merit. NHC demonstrated that its land cost is reasonable. They were determined by obtaining cost estimates from a qualified real estate broker from the Pensacola area. Site Preparation LCHRI will spend $420,000 on site preparation. NHC will spend $17,000 for the same expense. NHC included a substantial portion of its site development costs in its construction cost; these costs are reasonable and appropriate. Movable Equipment The cost of NHC's movable equipment is appropriate based upon its historical experience and as delineated in the notes and assumptions. Financing Costs By virtue of its financing affiliate, NHC is able to achieve savings in the financing of its project. The amount it projects is appropriate based upon NHC's historical experience. Start-up Costs NHC demonstrated that its start-up costs are adequately estimated based on its relevant historical experience. NHC is able to manage this cost efficiently because it uses its regional managerial and clinical staff to do many of the start-up functions and work. As to project costs, NHC demonstrated by substantial competent evidence that its project costs were reasonably determined and appropriate. In contrast, LCHRI's costs contained in arithmetic error, which remains unexplained. Long-Term Financial Feasibility The parties' prehearing stipulation states as follows regarding the statutory review criteria located in Section 408.035(1)(I), Florida Statutes: Subsection (i) relating to the long-term financial feasibility (defined as the ability to operate the facility profitably after the start-up period) is at issue. For purposes of comparative review, AHCA defines financial feasibility as having a positive net profit at the end of the second year operations. Schedule 6 (Staffing) LCHRI's proposed salaries on Schedule 6 are significantly lower than the prevailing market conditions in Escambia County. Therefore, LCHRI has underestimated its labor expense by approximately $435,868. In contrast, NHC has based its proposed salaries on its actual operating experience in the county. As stated above, NHC's Alzheimer unit director, subacute unit director and assistant director of nursing (ADON) are essentially dual designations with RNs or LPNs who are found on the staffing schedule. NHC's staff development coordinator and admissions director are included as administrative staff and the activities director. LCHRS's application does not designate any of these positions except for its ADON who will also serve as the subacute unit director. Additionally, LCHRI intends to retain a dietitian pursuant to a contract on an as-needed basis. LCHRI does not include the dietitian's salary on its Schedule 6. NHC's Schedule 6 includes an annual salary for a registered dietitian in the amount of $43,290. Routine Costs Based on the amount that each applicant will spend on nursing, dietary, other patient care, NHC proposes to spend $993,115 more on patient care than LCHRI. At a minimum, this analysis demonstrates that NHC will provide a higher level of patient care. Medicare Prospective Payment System When the parties filed their applications, the Federal Medicare Program was operating under a "cost-based" reimbursement system. On May 12, 1998, Medicare's reimbursement system changed to a Prospective Payment System (PPS). The PPS system became effective for new nursing homes in the country on July 1, 1998. Under the new system, there are 44 resource utilization groupings (RUGs), which are based upon the level of services consumed by different types of patients. Nursing homes will be required to assess their patients under a diagnostic tool containing questions. Responses to the questions will lead to the assignment of a RUG category for each patient. Each of the RUG categories correlate to a level of reimbursement received per day, regardless of the costs actually incurred by the nursing home. It is undisputed that every new project's Medicare reimbursement will be less under PPS than what it would be under the old system. It is also undisputed that the facility at issue will operate under PPS. LCHRI has been monitoring the development of the PPS system for a number of years. It has voluntarily participated in pilot projects, which utilized the PPS system. As of August 11, 1998, LCHRI had 15 facilities operating under PPS, with another 40 facilities scheduled to change over to PPS by October 1998. LCHRI proposes to use in-house therapists as a cost saving measure under PPS. NHC's application proposes to contract with a subsidiary corporation for therapeutic services. Contracting with a third party provider for rehabilitation services is more costly. LCHRI proposes less Medicare and subacute care to reduce the negative impact of PPS. LCHRI projects that 27.1 percent of its revenue will be from Medicare. NHC projects that 41.79 percent of its revenue will be from Medicare. LCHRI asserted that NHC will not achieve its pro forma Medicare rate under PPS. In response to these claims, NHC presented evidence of ways to adjust its practices to meet the requirements of PPS. NHC intends to transfer therapists currently employed by its rehabilitation subsidiary to the individual center's payroll. This change results in the same level of therapy services, yet provides enough cost savings to comply with PPS. NHC estimates the cost savings at $940,000. PPS will result in providers putting more equity into their projects. Under the cost-based reimbursement system, providers had strong incentives to finance projects with debt so that interest costs could be included in their reimbursement. However, under PPS, there is a strong incentive for providers to reduce their interest expense in projects and use more equity. NHC under this method could save $300,000 in interest expense and still achieve very competitive rates of return on the invested equity. NHC has a history of putting the needed levels of equity into its projects. The strategies of switching rehabilitation staff in- house and the funding of project costs by equity are the primary techniques by which all providers, including NHC, will meet the cost containment required by PPS. NHC will also accrue smaller cost savings available in inhalation therapy, medical supplies and other areas. NHC's project has a significant cash flow cushion before its project becomes financially unfeasible. The cushion is $600,000. Under PPS, NHC will still make a total facility profit of $16,630 and have cash flow of $283,000. It would be unreasonable to assume that NHC will do nothing to reduce costs to comply with PPS. Moreover, LCHRI's financial analysis on this point only reduced the revenue for NHC, but did not allow for any corresponding reduction in expenses. PPS is a new reimbursement system, which will have an impact only on Medicare reimbursement. Medicare is only 15 percent of NHC's anticipated patient days and only 11.6 percent of LCHRI's anticipated patient days. NHC is a financially strong company. Furthermore, NHC has been able to consistently operate its facilities profitably for over 20 years in all environments. NHC has never closed a nursing home and has only sold two or three nursing homes. NHC demonstrated here that it has the necessary management expertise and experience to construct, open, and operate its proposed nursing home after the start-up period. NHC management is aware of PPS and its impact. It is preparing a comprehensive financial analysis and response to the new realities of PPS. Regardless of what a nursing home may have assumed or anticipated during the development of PPS, the earliest that any provider could have prepared a response to the impact of PPS with any certainty was not until May of 1998. NHC began making all of its management and operations personnel aware of the potential impact of PPS in the fall of 1997. Over the course of the winter of 1997 and the spring of 1998, NHC provided several seminars to its personnel to begin preparing for PPS. By contrast, LCCA did not begin holding its formal seminars for its management and operations personnel until May of 1998. While it is undeniable that PPS will effect all providers of nursing home services, NCH demonstrated that it has several viable strategies for responding to PPS. NHC, is a financially strong and well-financed nursing home provider, with the managerial, financial ability and talent to successfully respond to PPS. LCHRI raised the issue of financial feasibility with respect to PPS. It claims that the PPS impact on its proposal will only be $4,000 compared to over a $1,000,000 on NHC. However, further examination reveals that LCHRI has underestimated the impact of PPS as to this particular project. The parties agree that bringing rehabilitation staff in-house is the most effective cost-saving technique under PPS. LCHRI has already taken this step in its application, which was filed under the old Medicare reimbursement program. Therefore, this cost-saving measure under PPS is not available to the LCHRI proposal. LCHRI does not have the ability to put more equity into this project. LCHRI is a thinly capitalized corporation with little or no borrowing ability other than reliance upon LCCA. LCCA is highly mortgaged; it engages in a scheme of financing by which it pulls all of its equity out of its facilities as quickly as it can. LCHRI presented evidence it will be able to achieve RUG reimbursement at the highest level for vitually all of its patients over the entire length of stay at the facility. In contrast, NHC reviewed the anticipated average Medicare reimbursement under the RUGs category. NHC utilized a distribution which is currently being experienced in the FCC Palm Garden of Pensacola facility and also compared it against the national distribution under the pilot project. NHC realistically expects to receive an average Medicare reimbursement under PPS of $262.20. LCHRI's expectation of receiving an average reimbursement of $352.66, which is essentially at the highest RUGs category for all patients for the entire length of stay, is not realistic. According to the anticipated national average, not more than 13 percent of the patient days will be at the highest RUGs category. LCHRI's projection does not demonstrate sufficient verification to allow the LCHRI proposal to be feasible under PPS.
Recommendation Based upon the findings of fact and conclusions of law, it is, RECOMMENDED: That the Agency for Health Care Administration issue a Final Order deeming the application of NHC superior based upon a comparative review and awarding CON No. 8799 for 120 community nursing home bed to NHC. DONE AND ENTERED this 5th day of February, 1999, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 1999. COPIES FURNISHED: Gerald B. Sternstein, Esquire Sternstein, Rainer and Clarke, P.A. 314 North Calhoun Street Tallahassee, Florida 32301 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403 R. Bruce McKibben, Jr., Esquire Post Office Box 1798 Tallahassee, Florida 32302-1798 Sam Power, Agency Clerk Agency for Health Care Administration Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Paul J. Martin, General Counsel Agency for Health Care Administration Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Ruben J. King-Shaw, Jr., Director Agency for Health Care Administration Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308
Conclusions THE PARTIES have entered into a Stipulated Settlement Agreement which resolves all disputed issues. A copy of that Stipulated Settlement Agreement is attached hereto as Exhibit “A” and the terms thereof are incorporated into this Final Order. The parties are directed to comply with the terms of the attached Stipulated Agreement. Based on the foregoing, these files are CLOSED. DONE and ORDERED on this the igh day of i) erie , 2014, in Tallahassee, Florida. f 4 . fo bf Ty a f og; . f Vif tK—- L OW ELIZABETH DYDEK, SECRETARY Agency for Health Care Administration St. Lucie County, Florida vs. AHCA Consolidated Case Nos. 13-1169; 13-2372; 13-2593; 14-0498; 14-0499; 14-0500; & Case No. 13-2040 Final Order 1 Filed March 17, 2014 2:48 PM Division of Administrative Hearings A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: Beverly H. Smith Assistant General Counsel Agency for Health Care Administration Office of the General Counsel (Interoffice Mail) Gregory T. Stewart, Esquire Carly Schrader, Esquire Nabors, Giblin and Nickerson, P.A. 1500 Mahan Drive, Suite 200 Post Office Box 11008 Tallahassee, Florida 32302 (U.S. Mail) Heather Young, Esquire St. Lucie County, Florida 2300 Virginia Avenue Fort Pierce, Florida 34982 (U.S. Mail) Richard Zenuch, Bureau Chief, Medicaid Program Integrity Finance and Accounting Health Quality Assurance Florida Department of Health St. Lucie County, Florida vs. AHCA Consolidated Case Nos, 13-1169; 13-2372; 13-2593; 14-0498; 14-0499; 14-0500; & Case No. 13-2040 Final Order 2 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addressees by U.S. Mail or other designated method on this the (iz Ty of Kberh , 2014. Richard Shoop, Esquire Agency Clerk State of Florida Agency for Health Care Administration 2727 Mahan Drive, MS #3 Tallahassee, Florida 32308-5403 (850) 412-3630/FAX (850) 921-0158 St. Lucie County, Florida vs. AHCA Consolidated Case Nos. 13-1169; 13-2372; 13-2593; 14-0498; 14-0499; 14-0500; & Case No. 13-2040 Final Order 3
The Issue Whether Proposed Rules 10N-6.002, 10N-6.003, 10N-6.004, 10N-6.005 and 10N- 6.006, constitute an invalid exercise of delegated legislative authority?
Findings Of Fact Standing. The Petitioners, Medivision, Inc., and Tampa Surgi-Center, d/b/a Ambulatory Surgery Center, have standing to challenge the proposed rules at issue in these cases. See the affidavits of Larry Cyment and Donna McMillan. Intervenor, Florida Hospital Association, Inc., has standing to participate in these cases. See the affidavit of Pat Haines. The following Intervenors have established their standing to participate as intervenors in these cases through testimony or affidavit: Cataract Surgery Center, Cortez Foot Surgery Center, Ambulatory Surgery Center of Bradenton, Tampa Outpatient Surgical Facility, Naples Day Surgery, Ambulatory Surgical Center, Specialty Surgical Center and Tallahassee Single Day Surgery. Eye Surgery Center, The Eye Associates, FW Associates and Cordova Ambulatory Surgical Center have failed to prove their standing to participate in these cases. The Proposed Rules; Purpose and Adoption. The Health Care Cost Containment Board (hereinafter referred to as the "Board"), published Rules 10N-6.002, 10N-6.003, 10N-6.004, 10N-6.005 and 10N- 6.006 (hereinafter referred to as the "Proposed Rules"), in Volume 16, Number 12, of the Florida Administrative Weekly (March 23, 1990). The purpose of the Proposed Rules is to collect data concerning the provision of ambulatory surgery services in the State of Florida. Data collected by the Board will allow a comparison of patient charges and will create an additional bases for the analysis of trends in the health care field. In particular, data collection will promote the analysis of shifts in the provision of health care from inpatient to outpatient settings. Data concerning patient identity, geographic location, diagnosis, procedures performed and charges for services is required to be collected and submitted to the Board pursuant to the Proposed Rules. In June of 1989, the staff of the Board presented a study to the Board concerning the growth of ambulatory health care services. Staff recommended that the Board direct that steps be taken to explore the possibility of collecting ambulatory surgery data. The Board accepted the recommendation and appointed a Technical Advisory Panel. The Technical Advisory Panel appointed by the Board consisted of nine representatives of various interested groups. Two members were from freestanding ambulatory surgery centers and two members were from hospitals providing ambulatory surgery services. At meetings of the Technical Advisory Panel in July, August, September and October, 1989, the collection of ambulatory surgery services data was considered. The Technical Advisory Panel discussed collection costs, the type of data to be collected, implementation dates, legislative authority, methods of submitting data and the scope of data collection. The Board was made aware of the Technical Advisory Panel's efforts through minutes of the Panel's meetings and other materials provided to the Board. The collection of ambulatory surgery services data was considered by the Board at its October, November and December, 1989, meetings. The Proposed Rules were approved by the Board at its December, 1989, meeting. There is no statutory authority which specifically provides that data may be collected by the Board from "freestanding ambulatory surgical centers." The Board cited Section 407.03, Florida Statutes (1989), as the specific authority for the Proposed Rules. The Board cited Sections 407.003, 407.03 and 407.08, Florida Statutes (1989), as the laws implemented by the Proposed Rules. Scope of the Proposed Rules. Ambulatory surgery services are provided in a variety of settings: hospitals (e.g., acute care, psychiatric and rehabilitation), licensed freestanding ambulatory surgery centers, physician offices and other unlicensed health care facilities. The Proposed Rules provide that all licensed hospitals included in Groups 1 through 10 and Group 14 of the HCCCB Florida Hospital Uniform Reporting System Manual which provide outpatient surgery services and all licensed ambulatory surgery centers in Florida are required to collect and submit 45 data elements to the Board. Psychiatric hospitals and rehabilitation hospitals are not subject to the Proposed Rules. Physicians' offices and other unlicensed health care providers are also not subject to the Proposed Rules. The Proposed Rules are limited to licensed providers of ambulatory surgery services so that the Board's staff can insure that all members of the groups selected data actually collect and report data. The Board cannot insure that all unlicensed providers of ambulatory surgery services, such as physicians' offices, comply with the Proposed Rules. Therefore, if data was required to be collected and submitted by unlicensed providers, the data would be less reliable. The weight of the evidence failed to prove that the requirement of the Proposed Rules that only hospitals included in Groups 1 and 10 and Group 14 of the HCCCB Florida Hospital Uniform Reporting System Manual and licensed freestanding ambulatory surgery centers collect and submit data constitutes an invalid exercise of delegated legislative authority. Specific Data vs. Aggregate Data. The Proposed Rules require the collection and reporting of 45 specific data elements. Aggregate data concerning ambulatory surgery services could be obtained from insurance companies and used by the Board as an alternative to the more specific data required to be collected pursuant to the Proposed Rules. Aggregate data is a compilation of specific data. Aggregate data can be used to comply with the Board's statutorily required functions. If aggregate data is used, however, it is likely that reporting will be incomplete. Not all information is reported to insurance companies concerning outpatient activity. Therefore, aggregate data obtained from insurance companies would not cover 100% of ambulatory surgery services provided by reporting entities, resulting in the potential for presenting an incomplete or inaccurate picture of ambulatory surgery services. The recommendations and conclusions which can be reached from aggregate data are limited. Specific data allows more flexibility for research purposes. Specific data will assure greater accuracy and comparability of data. Recommendations and conclusions reached from specific data should be more accurate. In order to insure comparability of data, specific data concerning patients, geographic location, diagnoses, procedures and charges must be collected. The Board collected aggregate data concerning ambulatory surgery services through a special study. The Board collected the data from hospitals and, on a voluntary basis, from licensed ambulatory surgery centers. "Typical" charges for specified ambulatory surgery procedures was collected. This collection effort was flawed by the lack of specific data. The accuracy of the reports based upon the aggregate data was criticized publicly. The reports were even criticized by one of the witnesses called to testify by Intervenors, Cataract Surgery Center, et. al. The weight of the evidence failed to prove that the requirement of the Proposed Rules that specific data be collected and submitted instead of aggregate data constitutes an invalid exercise of delegated authority. Confidential Patient Data. Some of the data elements to be reported pursuant to the Proposed Rules constitute confidential patient information. Disclosure of confidential patient information is prohibited by Florida law. The Proposed Rules do not require or authorize disclosure of confidential patient information. The manner in which the data collected will be distributed has not yet been decided upon by the Board. The evidence failed to prove that the Board will not comply with prohibitions against disclosure of confidential patient information. The weight of the evidence failed to prove that the requirement of the Proposed Rules that confidential patient information be reported to the Board constitutes an invalid exercise of delegated authority. Computer Use. The Proposed Rules require that data be submitted by computer tape or computer diskette. Therefore, data will have to be input into a computer system. The Proposed Rules specify the format data must be in when submitted. Most of the language of the Proposed Rules is computer terminology. The terminology of the Proposed Rules will require some knowledge of computers to carry out the requirements of the Proposed Rules. The language of the Proposed Rules is intentionally designed to convey technical information. The general purpose and requirements of the Proposed Rules does not take any special knowledge to understand. Requiring the submission of data by electronic means is designed to assure the accuracy and confidentiality of the data. The requirement of the Proposed Rules that data be reported in computer form and the use of computer terminology does not constitute an invalid exercise of delegated legislative authority. Errors in the Proposed Rules. Proposed Rule 10N-6.002(2) defines "Ambulatory Surgery Services" as procedures "provided in a hospital in its dedicated ASC ..." [Emphasis added]. Instead of "ASC" the Board intended to use the terms "operating room." Proposed Rule 10N-6.005 contains a list of the data elements to be collected and reported to the Board. This Proposed Rule contains the following errors or unclear language: Item 20 is "Facility Fee - Pri. Proc." "Pri. Proc." is an abbreviation for primary procedure. Items 21-24, similar to Item 20, contains the abbreviation "Sec. Proc." instead of secondary procedure. Items 25-27 contain a reference to "Page 3". As published in the Florida Administrative Weekly, there is no page 3. Item 35, which deals with expected methods of payment, refers to "Comm. Ins. (incl. BCBS)." This reference is an abbreviation for commercial insurance (Blue Cross Blue Shield). Item 44, patient birth date, uses the abbreviation "MMYYYY." This abbreviation should be "MMDDYY." Proposed Rule 10N-6.006 refers to "Primary Diagnosis Code" and "Secondary Diagnosis Code." The Rule should refer to Primary and Secondary "Procedure" Code. The mistakes identified in findings of fact 38-40 are not significant enough to characterize the rule as vague. Nor are these mistakes sufficient enough to otherwise conclude that the Proposed Rules constitute an invalid exercise of delegated legislative authority. Economic Impact. The Economic Impact Statement (hereinafter referred to as the "EIS"), issued with the Proposed Rules provided the following concerning the economic impact of the Proposed Rules on the Board: ESTIMATE OF THE COST OF IMPLEMENTATION: The agency will be affected by the costs of rule promulgation and by the demands placed upon staff time to assure compliance with the rules and to analyze the data collected. Costs for these activities are estimated to be approximately $85,000 per year. The weight of the evidence failed to prove that this portion of the Board's EIS is unreasonable. The EIS provided the following concerning the economic impact of the Proposed Rules on persons affected by the Proposed Rules: ESTIMATE OF THE COST OF IMPLEMENTATION: Implementation by affected facilities will cost approximately $2.9 to $3.1 million. These funds will be used to develop the programs necessary to collect and submit the data required. On-going compliance will have a much less significant impact. . . . . ESTIMATE OF COST TO ALL PERSONS DIRECTLY AFFECTED BY THE RULE: The initial cost to Florida hospitals and freestanding ambulatory surgery centers (ASC) would be from approximately $2.9 to $3.1 million to develop the reporting system necessary to generate the necessary data elements. On-going annual cost to the hospitals and free standing ASCs would be substantially less after the first year's start-up procedures are adopted. . . . . The EIS is insufficient because it does not adequately discuss the costs (implementation and ongoing costs) to affected persons or the impact of the Proposed Rules on small business. The weight of the evidence proved that the Proposed Rules will have an economic impact on affected persons. The weight of the evidence failed to prove that the Board did not fully consider the asserted economic factors and impact of the implementation cost affected persons can be expected to incur as a result of the Proposed Rules. As indicated in the EIS, the Board's determination of the estimate of the economic impact on affected persons was based upon surveys the Board distributed to licensed ambulatory surgery centers, an estimate of costs that hospitals incurred in implementing the Board's detailed patient data collection rule, the Board staff's experience with computer costs (including the collection and entry of data) and consultation with a computer expert familiar with the Proposed Rules. The surveys relied upon by the Board were distributed to all licensed freestanding ambulatory surgery centers. A total of 91 surveys were distributed. The Board requested that the surveys be returned within one week. Forty-one responses to the surveys were received by the Board from licensed freestanding ambulatory surgery centers. The responses constitute hearsay. Findings of fact concerning whether the information contained in the responses is correct, therefore, have not been made. The responses to the surveys have, however, been relied upon to make findings of fact concerning what information the Board based its EIS on. The Board received the following pertinent responses to the surveys from licensed freestanding ambulatory surgery centers: (1) 26 of the responders use computers, 12 have no computer capacity and 3 have some computer capacity; 17 or 18 different software programs are in use; and, (3) the costs to implement the proposed collection of data ranged from $0 to $50,000.00. Twenty- six responders indicated that they did not know how long it would take for them to implement the proposed collection of data. The Board determined that the average implementation cost for licensed freestanding ambulatory surgery centers reported in the responses to its survey was $18,975.00 and that the average implementation time was 13 weeks. The Board rounded up the average cost reported to it in the surveys and estimated that the cost of implementing the Proposed Rules at licensed freestanding ambulatory surgery centers would be $20,000.00. Based upon the existence of 85 licensed facilities, the Board estimated the total implementation cost for licensed freestanding ambulatory surgery centers to be $1,700,000.00 ($20,000.00 x 85). The Board estimated that the maximum cost of implementing the Proposed Rules at affected hospitals would be $2.00 per patient record. This estimate was based upon the Board's estimate of the cost of hospital compliance with the Board's detailed patient discharge data rule. Based upon an estimate of 600,000 patient records a year which will have to processed as a result of the Proposed Rules, the Board estimated the total cost of implementation in affected hospitals to be $1,200,000.00. The Board concluded that the total minimum cost of implementing the Proposed Rules will be $2,900,000.00 ($1,700,000.00 cost for freestanding ambulatory surgery centers plus $1,200,000.00 cost for affected hospitals). The Board discussed the cost of implementing the Proposed Rules with J. Thomas Solano, an expert in computers. Mr. Solano estimated that the cost of modifying an existing computer system (small to mid-range computer) to comply with the Proposed Rules would be $4,000.00 to $10,000.00. The Board used the highest estimate, $10,000.00, and multiplied this cost by the number of affected persons (85 freestanding ambulatory surgery centers and 220 hospitals x $10,000.00). This resulted in a rounded-up estimated implementation cost of $3,100,000.00. The Board concluded that the total maximum cost of implementing the Proposed Rules will be $3,100,000.00. Some of the data to be collected and reported pursuant to the Proposed Rules is already being collected by affected persons. Therefore, the primary cost of complying with the Proposed Rules will be associated with modifying existing computer software and/or hardware. The cost of modifying an existing computer system can fluctuate widely. As a general rule, computer users with existing software must rely upon their existing software provider to make modifications. The cost of modifying software can, therefore, be much higher than Mr. Solano estimated. As an alternative to modifying existing systems, affected persons can acquire a freestanding personal computer and software which can be used to comply with the Proposed Rules. The cost of such an acquisition should be approximately $2,500.00 to $5,600.00. Intervenor, T.S.D.S., Inc., d/b/a Tallahassee Single Day Surgery Center, estimated that it will have to spend approximately $14,000.00 to $20,000.00 to implement the Proposed Rules. This estimate is based upon a letter purportedly from the Intervenor's computer company. The information contained in the letter is hearsay. The estimated implementation costs are, therefore, not supported by admissible evidence. The estimate, even if supported by competent substantial evidence, is within the Board's estimated implementation costs and, therefore, fail to prove that the Board's EIS is unreasonable or that the Board failed to fully consider the economic factors or impact. Intervenor, Cataract Surgery Center, estimated implementation costs of $1,900.00. This amount is limited to additional maintenance fees, supplies and personnel costs. Cataract Surgery Center believes there will no charge from its computer vendor to modify its software. Cataract's estimated costs are reasonable and within the Board's estimates. Ambulatory Surgical Center of Lake County (hereinafter referred to as "Lake"), does not own a computer. It uses the computer system of its physician owners. Lake considered more than one method of complying with the Proposed Rules. It considered buying a personal computer and estimated it would cost $5,000.00. This cost is consistent with the estimates of the Board. Lake also considered purchasing an integrated hardware and software package. It estimated that such a system would cost $40,000.00 to $50,000.00. The estimate is based upon hearsay. Even if the evidence concerning the cost of an integrated system is accepted as correct, the evidence fails to prove that such costs are necessary to comply with the Proposed Rules. The estimate for this system is based upon Lake's decision that it would perform other functions with the computer system, including storing management information and performing billing functions. These functions are not required in order to comply with the Proposed Rules. Lake currently treats approximately only 300 patients annually. The weight of the evidence failed to prove that the Proposed Rules constitute an invalid exercise of delegated authority because of the implementation cost which will be incurred by affected persons. The weight of the evidence also failed to prove that the inadequate treatment of implementation costs in the EIS was fully considered by the Board. Therefore, the treatment of implementation costs in the EIS constitutes harmless error. Although the primary costs to affected persons caused by the Proposed Rules will be associated with implementation of the Proposed Rules, there will also be certain costs associated with ongoing compliance with the Proposed Rules. There will be ongoing costs for the collection of data, entry of the data into a computer and reporting data to the Board. Ongoing costs caused by the Proposed Rules will be greater if an affected person with an existing computer system acquires a freestanding computer system instead of using the existing system. The Board's statement in the EIS concerning ongoing costs was not based upon information from affected persons. The statement concerning ongoing costs does not indicate what the ongoing costs of compliance with the Proposed Rules will be. It only indicates that it will be less than the initial implementation costs associated with the Proposed Rules. Although the weight of the evidence did not prove the estimated total amount of ongoing costs to affected persons from the Proposed Rules, the weight of the evidence failed to prove that ongoing costs will be greater than the estimated total amount of implementation costs. T.S.D.S., Inc., d/b/a Tallahassee Single Day Surgery Center, estimated that it would incur ongoing costs of approximately $6,000.00. This estimate is reasonable. Cataract Surgery Center estimated that it would incur ongoing costs of $41,600.00, or $20.00 per case, to comply with the Proposed Rules. Cataract Surgery Center's estimated costs include the following costs: reel purchase; handling; reel preparation; collection of billing data; process of sending information to the Board; clarification of errors; additional record production; and response to public inquiries. Cataract Surgery Center's estimated costs are not reasonable. The estimated time to comply with the Proposed Rules is excessive and some of the tasks, i.e., collection of billing data, are not required by the Proposed Rules. Cataract Surgery Center's conclusion that it may have an increase in maintenance fees is reasonable. The weight of the evidence failed to prove that the Board did not fully consider the asserted economic factors and impact of the ongoing costs affected persons can be expected to incur as a result of the Proposed Rules. Therefore, the treatment of ongoing costs in the EIS was harmless error. The weight of the evidence also failed to prove that the Proposed Rules constitute an invalid exercise of delegated authority because of the ongoing cost which will be incurred by affected persons. The EIS contains a statement that the Proposed Rules should have no economic impact on small business. In reaching this conclusion the Board failed to take into account the legal definition of "small business" contained in Florida Statutes. The Board did, however, actually consider the impact the Proposed Rules would likely have on small ambulatory surgery centers subject to the Proposed Rules. The Board attempted to reduce the economic impact on small ambulatory surgery centers by allowing affected persons to file data on computer tape or on diskette. By allowing the use of diskettes for reporting data, the Board made it possible for affected persons to use personal computers to comply with the Proposed Rules. Delayed submission of some data elements was also allowed in order to reduce the impact on small facilities. It is unlikely that the Board would have made further modifications of the Proposed Rules had the legal definition of "small business" been considered. The weight of the evidence failed to prove what, if any, reasonable modifications should have been taken by the Board to accommodate any economic impact on small business. The weight of the evidence failed to prove whether any of the entities that participated in the proceeding were small businesses. Those entities, although meeting the definition of small business with regard to the number of employees they have and their net worth, failed to prove whether they are "independently owned and operated." See Section 288.703(1), Florida Statutes (1989). The weight of the evidence failed to prove if any person affected by the Proposed Rules is a small business. The weight of the evidence failed to prove that the Board did not fully consider the asserted economic factors and impact of small business which can be expected to incur as a result of the Proposed Rules. Therefore, the treatment of the impact on small business in the EIS was harmless error. The weight of the evidence also failed to prove that the Proposed Rules constitute an invalid exercise of delegated legislative authority because of the impact on small business. The Petitioners and Intervenors presented evidence concerning a number of actions which the Board did not take during its consideration of the economic impact and factors of the Proposed Rules and its preparation of the EIS. This evidence proved only that there were other steps which the Board could have taken during its preparation of the EIS. The Petitioners and Intervenors failed to prove, however, that the steps which the Board did take were not sufficient. The Petitioners and Intervenors therefore failed to prove that the steps which the Board did not take were required or necessary.
Findings Of Fact The Parties St. Joseph's is a tertiary care hospital located at 3001 West Buffalo Avenue, Tampa, Hillsborough County, Florida. There is spatial capacity for 703 beds at St. Joseph's, but only 649 beds are licensed, staffed and in use. It is sponsored by the Franciscan Sisters of Allegheny, and is a subsidiary of a holding company, St. Joseph's Health Care Center, Inc. Without CON approval, St. Joseph's cannot increase licensed bed capacity at its current facility on West Buffalo Avenue, or open the satellite facility which is here at issue. St. Joseph's current service area includes Hillsborough County, particularly the central and northern portions of the County. Occupancy rates for St. Joseph's in medical surgical areas have been approximately 80 percent, and at peak times have exceeded 90 percent. However during the last half of 1986, the occupancy rate fell to 74 percent. St. Joseph's provided 16.8 percent of all Medicaid care in Hillsborough County during 1982-83 and 17 percent during 1983-84. It is second to Tampa General in provision of health care to indigents in Hillsborough County. With the exception of Tampa General, St. Joseph's has the largest Medicaid patient admissions of all Hillsborough County hospitals. In 1986, the bad debt/charity care/Medicaid contractual discount for St. Joseph's was approximately $11.3 million. However, while 6.9 percent of all patient days county wide are Medicaid patient days, St. Joseph's has only 5 percent Medicaid patient days. The cost of indigent care is absorbed and offset by paying patients. St. Joseph's decision to seek approval for a satellite in the Carrollwood area is a wise business decision since there is a high percentage of paying patients residing in that area of Hillsborough County. St. Joseph's has a 23 percent market share of all patient days reported in Hillsborough County, the largest market share for all hospital medical- surgical services provided in the County, and also has the largest market share in the proposed service are of the satellite. Its market share of paying patients is much higher than for Medicaid or indigent patients. However, since 1984 St. Joseph's market share has been declining while Tampa General's has been increasing. A relatively high proportion of admissions at St. Joseph's current facility, over 40 percent, are obtained through its emergency room. The proposed satellite will have an emergency room, but it will not offer the same intensity of services as at the current facility on West Buffalo Avenue. The Department is the state agency with the authority and responsibility to consider CON applications. Intervenor Humana of Florida, d/b/a Tampa Women's Hospital (Humana) owns and operates a 192 bed women's hospital in Tampa, Florida, which includes 96 obstetrical beds. Its occupancy rate in 1986 was approximately 50 percent. Intervenor University Community Hospital (University) is an existing hospital with 404 licensed and 320 operating beds located on East Fletcher Avenue, Tampa, Florida, and offers a full range of acute care hospital services. University is located within the service area of the proposed satellite and has been experiencing a decline in patient days from 109,000 in 1983 to 84,000 in 1986. It has had to reduce its number of employees in the last three years by 15 percent-20 percent. University has a 57 percent occupancy rate. Intervenor Tampa General Hospital (Tampa General) operates a publically supported hospital in Tampa, Florida, providing a full range of acute care services, including obstetrical/gynecological services with 707 licensed and 619 operating beds. Tampa General has CON approval for 1000 beds if it completes planned renovations. It has an occupancy rate of 80 percent-82 percent and is treating 70 percent of all Medicaid patients in Hillsborough County. Tampa General has provided $70 million of indigent care, including $40 million in charity, annually. Carrollwood is within its service and marketing area. Intervenor AMI Town and Country Medical Center (Town and Country) is a 201 bed general acute care hospital located at 6001 Webb Road, Tampa, Florida. Its occupancy rate in 1986 was approximately 46 percent. There is no dispute among the parties regarding the standing of Intervenors in this proceeding. The occupancy rates at University, Town and Country and Humana are substantially below optimal levels, and substantial unused capacity exists at each of these hospitals. St. Joseph's proposed satellite will not offer any services that are not currently available to residents of the proposed service area, and will duplicate services at University, Town and Country, and Carrollwood Community Hospital, as well as services provided at St. Joseph's existing facility. The Application and Project On or about October 15, 1985 St. Joseph's filed with the Department an application for CON 4288. This application sought approval for a 150 bed general acute care satellite hospital in Carrollwood, Hillsborough County, Florida, and proposed the transfer of 150 existing licensed beds from St. Joseph's facility on West Buffalo Avenue, Tampa, to the satellite. The estimated total cost of this project was $16,775,000. Specifically, St. Joseph's proposed the transfer of 96 medical/surgical beds, including ICU, CCU and progressive care beds, 15 obstetrical beds and 39 pediatric beds, including PICU. The Department provided St. Joseph's with an omissions letter on or about November 14, 1985, to which St. Joseph's responded on or about December 30, 1985. By letter dated February 28, 1986, the Department preliminarily denied St. Joseph's application for CON 4288 stating, "The project is not justified by the 1985 District VI Health Plan or the 1985-87 Florida State Health Plan." The Department's decision to deny this application was published in Volume 12, Number 11, Florida Administrative Weekly, on March 14, 1986, and St. Joseph's filed its petition for formal administrative hearing on April 4, 1986. On or about February 18, 1987 St. Joseph's and the Department executed a Stipulation and Settlement Agreement which, in pertinent part, provides: DHRS finds and agrees that there is a need for St. Joseph's to relocate and transfer 100 acute-care beds (but not any licensed obstetrical beds) and acute-care services (but not any obstetrical services) from its existing acute-care hospital and construct a 100 bed acute-care satellite hospital in Hillsborough County in light of a balance review of all relevant criteria established by Section 381.494 Florida Statutes, including the levels of indigent and Medicaid care agreed to herein. The project will occur entirely within Hillsborough County and not result in any increase in licensed beds for St. Joseph's. DHRS agrees that a partial approval of the St. Joseph's CON Application will satisfy this need and that said application should be partially approved as hereinbelow further specified ... The agreements and commitments made by DHRS in paragraph 1 above are predicated on commitments made by St. Joseph's concerning its intention to provide certain percentages of Medicaid and indigent care in its proposed satellite hospital and to seek only partial approval of its application as specified herein... St. Joseph's commitments, which are relied upon by DHRS and which shall be set forth as conditions in said CON, are as follows: Not less than 3.5 percent of the total number of admissions at St. Joseph's satellite hospital shall be rendered to Medicaid patients. Not less than 3.0 percent of said total admissions shall be rendered to non-Medicaid "charity/uncompensated" patients whose family income as applicable for the twelve months prior to determination of eligibility is equal to or less than 150 percent of the then current Federal Poverty Guidelines. St. Joseph's shall obtain and retain sufficient information to verify this eligibility determination. The 3.0 percent "charity/uncompensated" patients shall be acknowledged as such at admission, shall not include patients receiving third party payments and shall be in addition to St. Joseph's "bad debt" patients... DHRS specifically recognizes the lengthy history and mission of St. Joseph's in providing extensive indigent care services in Hillsborough County. St. Joseph's agrees to undertake a diligent and good faith effort to encourage physicians on its medical staff to admit and treat Medicaid and charity/uncompensated care patients in such numbers as to comply with the minimum percentages established in paragraph (a)above ... (e) St. Joseph's agrees that it will request at hearing and henceforth seek only partial approval of its proposed CON Application, as follows: The satellite facility shall be reduced in scope from 150 licensed beds to 100 licensed beds. The number of licensed beds to be relocated from the existing St. Joseph's Hospital shall be reduced in scope from 150 licensed beds to 100 licensed beds. None of the licensed beds to be relocated to the satellite hospital shall include licensed obstetrical beds, nor shall the obstetrical services, if any, provided at St. Joseph's existing hospital be relocated to the satellite facility. Labor, delivery and nursery facilities shall be deleted from the satellite hospital. DHRS has consistently maintained the proposed square footage and project cost is inadequate for a 150 bed hospital and more appropriate for a 100 bed hospital. Therefore, the total square footage and total project cost shall remain unchanged... The Stipulation and Settlement Agreement referred to in Finding of Fact 21 was executed following, and in consideration of, additional information prepared and submitted by St. Joseph's to the Department on or about January 30, 1987 and February 9, 1987. At hearing, St. Joseph's and the Department sought partial approval of CON 4288 to conform to the terms of the Stipulation and Settlement Agreement. Intervenors opposed such partial approval. The partial approval sought by St. Joseph's and the Department represents an identifiable portion of St. Joseph's original CON application. Originally, St. Joseph's sought approval to transfer 150 acute care beds, including obstetrical, but at hearing St. Joseph's sought approval for a transfer of only 100 acute care beds, without obstetrical. Labor, delivery and nursery facilities have been deleted from the satellite proposal, but total square footage, physical designs and total cost of the project remain the same for the partial approval sought at hearing compared with the original application. The number of operating rooms has also remained the same. The proposed location in Carrollwood, Hillsborough County, remains unchanged. The project at issue in this case is a 100 bed acute care satellite hospital with, 96,500 total gross square footage (965 gross square feet per bed). The schematic plan submitted by St. Joseph's provides for the following beds and includes, but is not limited to, the following facilities: (72 private rooms, 2 Semi-private); pediatric beds (5 private, 5 semi-private), ICU/CCU (9 beds); space for radiology/nuclear medicine, emergency and outpatient services, laboratory, physical therapy, pharmacy, EEG/EKG, inhalation therapy, surgical suite, sterilization suite, cafeteria, laundry, storage, maintenance, chapel, nurses office, and other miscellaneous facilities. Total project costs are estimated at $16,775,000, the same as for the original 150 bed transfer proposal. The land upon which the satellite will be located was purchased for $3 million in cash. The satellite will be able to operate at a higher occupancy level than St. Joseph's existing hospital due to the larger proportion of single bed rooms and less severe cases being treated at the satellite. After review of St. Joseph's original application for the transfer of 150 acute care beds in March 1986, the Department concluded that the proposed gross square footage per bed of 643 was below the standard range of 800-1000 gross square feet per bed, and also that the total project cost estimate of $111,833 per bed was way below the average standard range of $175,000 to $200,000 per bed. After review of the identifiable portion of St. Joseph's application for which approval was sought at hearing, the Department concluded that the total gross square footage of the satellite, square footage per bed, construction estimates, and the total project cost estimates were reasonable and acceptable. The gross square footage was raised from 643 to 965, and the cost per bed was increased from $111,833 to $167,750. The Service Area The area which St. Joseph's proposes to serve with its satellite hospital is the Carrollwood area of northwest Hillsborough County which is located in the Department's District VI. This is the fastest growing area in Hillsborough County, with an average age which is lower than the rest of the County, and an average income level above the County average. Specifically, almost 35 percent of the population in the satellite's proposed primary service area was between 25 and 44 years old in 1980, compared with approximately 28 percent for the County. In the category of 65 years and older, the primary service area had 8.2 percent of its population, while the County had 11.4 percent. A higher percentage of paying patients reside within the proposed service area than for Hillsborough County as a whole. Nevertheless, 6 percent 7 percent of the service area population have incomes below the federal poverty level, compared with 16 percent for the County as a whole. The area is already served by Medicaid providers. St. Joseph's medical roster indicates over 140 of its physicians have offices in the satellite's proposed service area. However, approximately 100 of these physicians are also on the staffs of Intervenors. The site for the satellite was chosen after review of patient origin data and population growth projections for Hillsborough County. St. Joseph's is currently treating at its facility on West Buffalo avenue an average of 64 patients a day who reside within the proposed service area of the satellite and who are not cardiac, cancer or psychiatric patients. St. Joseph's has an average daily census of 519 patients and proposes to serve 64 of these patients, who reside within the satellite's primary service area, at the satellite. Stipulations The parties have stipulated that St. Joseph's is able to provide quality care at the proposed satellite, and also that St. Joseph's is not proposing or relying upon probable economies and improvements in service that may be derived from the operation of joint, cooperative, or shared health care resources, except to the extent that the project includes a satellite facility. Intervenors contend that health services will be most economically provided by not constructing the satellite facility. Finally, the parties stipulate that Section 381.494(6)(c)11., Florida Statutes, relating to the provision of a substantial portion of services or resources to individuals not residing in the service district in which the entities are located, or adjacent thereto, is not applicable in this case. Non-Rule Policy for Bed Transfers The Department currently has no rule governing the transfer of acute care beds. Rule 10-5.011(1)(m), previously Rule 10-5.11(23), does not apply to acute care transfers since it addresses new or additional beds. However, the Department has begun developing a departmental policy for review of acute care transfer applications which do not request additional beds, and is seeking industry and staff input for the concepts expressed in a draft policy. In its current conceptual form, the transfer policy follows the statutory review criteria as they might apply to transfer applications which do not request new beds. The emerging policy, urges review of acute care transfer applications with emphasis upon the following health care planning criteria: reduction of excess beds, better utilization of existing beds, the encouragement of hospital efficiency, improvement of financial and geographic access, the encouragement of quality care, and the encouragement of competition in the hospital industry. St. Joseph's partial approval request was reviewed for conformity with this emerging policy by Robert Sharpe, the Department's Director of Comprehensive Health Planning (the state's chief health planner), who is charged with development of the bed transfer policy. Bed reduction is a key element for consideration in the Department's emerging policy. However, St. Joseph's 79-80 percent occupancy is greater than the Department's 75 percent hospital occupancy threshold contained in the acute care rule (Rule 10-5.011(1)(m)). Application of a bed reduction formula is not reasonable, according to Sharpe, for a facility which is using its beds to a much greater extent than other facilities in the County. The Department's emerging policy would evaluate whether a proposed transfer of beds to a new site would encourage a better use of the beds than at the existing site. The emerging policy contemplates transfers of acute care beds within a single county or subdistrict in an effort to be responsive to the needs of communities. This concept is consistent with the District VI Local Health Plan's stated desire that planning occur on less than a county basis. The Department's emerging policy evaluates the relative efficiency of the hospital proposing a bed transfer. In evaluating the relative charges made by similar Florida hospitals, the Hospital Cost Containment Board has devised hospital groupings for evaluation purposes. Of the 23 hospitals that are characterized as "group nine" hospitals in Florida, St. Joseph's ranks 16th of those 23 and is below the 50th percentile in gross revenues per adjusted admission. This means that St. Joseph's has lower charges per adjusted admission than most of the other comparable hospitals in Florida. Despite the fact that St. Joseph's is a large tertiary facility, Hospital Cost Containment Board data establishes that St. Joseph's is an efficient hospital facility. Another aspect of the Department's emerging policy is that of improving Medicaid and indigent access for patients. Excluding Tampa General, St. Joseph's has more Medicaid patient admissions than all other hospitals in Hillsborough County. During the past four years, St. Joseph's has consistently provided approximately 17 percent of the Medicaid care to hospital patients in Hillsborough County. The Department considers St. Joseph's to be an indigent care facility in Hillsborough County. The Department also considers geographic access when reviewing transfers. The State Health Plan has an objective that 90 percent of the population in an urban area be within 30 minutes drive time to an acute care facility by 1989. The Local Health Plan has concluded that all of Hillsborough County is currently within a 30 minute drive time. The quality of care provided by a facility proposing a transfer is also considered, and the parties have stipulated that St. Joseph's will provide quality health care services. The Department examines the competitive affects of approval of a transfer of acute care beds. In this case, the charge levels, costs per admission, and current inventory of beds at Hillsborough County acute care hospitals were examined. Since St. Joseph's charges and costs are low relative to other hospitals, and since there is an excess of beds in the County, the Department assumed that there would be competition for existing patients, and further concluded that approval of the satellite facility would promote price and non-price competition among hospitals in Hillsborough County. Considering each of the outlined elements of the Department's emerging policy, the state's chief health planner testified that the emerging policy supports the requested approval of an identifiable portion of the St. Joseph's satellite application. Need And Consistency With State and Local Plans Health planning for CON purposes involves the assessment of need on a community-wide, rather, than an institution specific, basis. Planning on less than a county-wide basis is inappropriate in Hillsborough County. In 1986 there was an excess capacity of 1400 acute care beds in Hillsborough County. District VI is overbedded by nearly 700 beds. The Local Health Council projects that in 1992 there will still be a surplus of nearly 800 beds in the County. Since this application proposes the transfer of beds, it neither increases or decreases this excess capacity. The State Health Plan as well as the Department's non-rule policy recommends eliminating excess bed capacity, but this proposal is not consistent with that recommendation. Existing acute care hospitals in Hillsborough County experienced only percent occupancy in 1986, a drop from 71 percent in 1984. Patient days have declined at an average of 2.6 percent per year since 1983 while the population in Hillsborough County actually increased 11.2 percent during this time. In spite of a significant reduction in hospital utilization and average lengths of stay in the area, the number of licensed hospital beds in Hillsborough County increased from 3,028 in 1981 to 3,457 in 1986, an increase of 14.2 percent or 429 beds. The State Health Plan contains a stated goal of 80 percent occupancy by 1989. The Local Health Plan recognizes 80 percent for medical-surgical and ICU/CCU occupancy for all beds in the County and 90 percent occupancy for each institution. Only Tampa General and St. Joseph's are currently achieving these occupancy level goals. In fact, occupancy rates for the five hospitals within, or adjacent to, the proposed satellite's service area range from 40 percent to percent. Based upon review and consideration of the expert testimony and evidence presented at hearing, it is found that an acceptable hospital optimum occupancy rate would be from 75 percent to 85 percent overall, and 90 percent for medical-surgical beds. Of the 649 beds currently at St. Joseph's, on average there are 149 unoccupied beds on any given day. St. Joseph's proposal does not address the key element of the State Health Plan and the Department's non-rule policy which calls for bed reduction when transfers are considered. This failure is particularly significant in view of the substantial overbedding which currently exists in Hillsborough County and which is projected to exist through 1992. To the contrary, the proposal actually would result in a net increase of 3 coronary care unit beds and 3 pediatric intensive care unit beds. The most important stated purpose of the acute care policies in the 1985 District VI Health Plan is "optimizing utilization of existing resources", and this purpose is implemented through a policy that provides, "Suture changes in the hospital facilities and services systems should occur so as to maintain the fiscal and programmatic integrity of all institutions providing a full range of services... " This proposal is inconsistent with this aspect of the Local Health Plan since it does not reduce the number of excess beds, while at the same time it would transfer 100 beds to a predominantly affluent, young and growing area of the County from which St. Joseph's would realize a substantial number of paying, as opposed to indigent or Medicaid, patients. This could reasonably be expected to increase St. Joseph's already very strong patient payor mix, and increase occupancy rates above 80 percent while other facilities are at or below 50 percent. At the same time, this proposal could actually weaken St. Joseph's financial position since its margin of revenue over expenses was 12.5 percent in 1985 and 10 percent in 1986, and the pro forma for the satellite, although overly optimistic as discussed below, shows only a 4.8 percent margin in the second year of operation. Underutilization of existing facilities is not consistent with sound health care planning because it ultimately results in higher costs to patients. Other facilities currently serving the proposed service area will be more likely to achieve optimum occupancy levels if the satellite is not built, than if it is. Another important purpose of the Local Health Plan is "promoting access for the indigent and underserved population to adequate health care," a purpose also stated in the Department's non-rule policy. The service area of the proposed satellite has a median family income of $30,132 which is 26 percent higher than for Hillsborough County as a whole. Locating a hospital in a predominantly affluent area, does not generally increase access for indigents. In fact, by the terms of its Settlement Agreement, St. Joseph's will actually decrease its commitment to Medicaid patients from the current 5 percent to the proposed 3 percent at the satellite. The percentage of charity care to gross revenues at St. Joseph's in 1986 was .6 percent, and was budgeted at .5 percent for 1987. This is not a significant charity commitment in relation to gross revenues, and the satellite proposal will not improve this commitment. The State Health Plan states as an objective achieving a ratio of less than 4.11 beds per thousand by 1989. This proposal does not promote this objective because it does not represent any net reduction in total number of beds. This proposal is also inconsistent with the State Health Plan which recommends a minimum pediatric size of 20 beds since it will have only 18. Need In Relation to Geographic Accessibility According to the 1985 District VI Health Plan, "The geographic distribution of hospital services in Hillsborough County is such that the entire population is within the 30 minute drive time standard of adequate resources." Ernest J. Peters, who was accepted as an expert in traffic engineering, testified that the entire proposed satellite service area is within 30 minutes of at least one existing hospital. The 30 minute drive time standard is set forth as Objective 2.2 in the 1985-87 State Health Plan. Residents of the proposed service area have geographic accessibility to hospital services within a 30 minute drive time. St. Joseph's does not dispute this fact, but rather Barbara Myres-Fernandez, who was not accepted as an expert in traffic studies, testified that at peak travel times the 30 minute standard was exceeded. However, according to Robert Sharpe, the Department's Director of Comprehensive Health Planning, who was accepted as an expert in health care planning, as well as Ward Koutnik and Ernest J. Peters, who were accepted as experts in traffic engineering, all of the proposed service area is within 30 minutes of existing hospital facilities. Peters testified that if the satellite is built, travel times to the nearest hospital would only be improved by 2.77 minutes for Carrollwood residents in 1990. The weighted average travel time, according to Peters, for the entire proposed service area to the nearest acute care hospital is 13.13 minutes, which will only increase to 13.96 minutes in 1990. The evidence therefore establishes that there would be an insubstantial geographic access gain to Hillsborough County residents if the satellite is approved, and in any event need based upon a lack of geographic accessibility has not been established. Need In Relation to Financial Accessibility According to Myres-Fernandez, it is St. Joseph's contention on the issue of accessibility that approval of the satellite will improve financial accessibility to hospital services for indigent and Medicaid patients. In order to maintain its commitment to indigent, Medicare and charity care, St. Joseph's argues it must continue to attract and maintain its market share of private pay patients, and the Carrollwood area provides a growing source of such patients. However, according to St. Joseph's, 64 of the patients to be treated at the satellite are already being treated at West Buffalo Avenue. These 64 do not include cardiac, cancer or psychiatric patients. Therefore, only 16 "new" patients would be served at the satellite if it were to achieve the goal of 80 percent occupancy. Even with St. Joseph's predicted 90 percent occupancy rate, only 26 "new" patients would be served. No evidence was offered to establish that a higher level of indigents should be expected at the satellite hospital than at St. Joseph's existing facility, particularly since in its Agreement with the Department, St. Joseph's has committed to serve a lower percentage of indigents than is presently true at the main facility on West Buffalo. St. Joseph's current payor mix is very favorable, and no reasons have been shown why it should deteriorate in the foreseeable future. In fact, the mix may actually be improving, according to Hospital Cost Containment Board data. Indigent access to health care is not improved by locating a satellite hospital in a predominantly affluent area in which only 6-7 percent of the population is below the poverty level, as compared to 16 percent for the County as a whole. This proposal represents a wise business decision by St. Joseph's because it is an attempt to increase its number of private pay patients. However, it will not improve indigent access. Financial accessibility is a criteria to be evaluated under Section 381.494(6),(c), Florida Statutes, and the Department's non-rule policy. This proposal does not improve access for indigents and therefore is not consistent with this statutory and policy criterion. Availability and Adequacy of Alternatives There are five existing hospitals within, or adjacent to, the proposed service area with substantial unused capacity, including University and Carrollwood Community Hospital which is a 120 bed facility offering general acute care, emergency room and outpatient services. Carrollwood Community Hospital has an occupancy rate of approximately 50 percent, and thus has excess capacity. While one-third of its patients are osteopathic, two-thirds are allopathic; only one-fifth of its physician staff is comprised of osteopaths. The proposed service area of the satellite is within the current service areas of Intervenors. Thus, adequate alternative facilities are available to residents in the Carrollwood area. Since there are existing alternative acute care facilities within thirty minutes of the proposed service area, an ambulatory surgical center might be an appropriate alternative to the satellite proposal. However, St. Joseph's did not explore such an alternative, and presented no evidence to establish the basis for its assertion that this would not be appropriate. Such a facility could maintain and even enhance referral patterns to the main facility on West Buffalo. Additionally, it has not been shown that splitting St. Joseph's 649 beds between two locations will be more efficient than leaving all 649 beds on West Buffalo, and thereby saving the $16,775,000 in capital expense to construct the satellite. Therefore, alternatives to the construction of a satellite facility do exist, and St. Joseph's has not shown that such alternatives are less feasible or less efficient than the satellite proposal at issue. Needs For Special Equipment and Services It has not been established that any need exists within the proposed service area for special equipment and services which this proposal would provide, and which are not reasonably and economically accessible in adjoining areas. Need For Research and Educational Facilities It has not been shown that any need exists in the proposed service area for research and educational facilities which this application would address. Availability of Manpower During the hearing, the parties stipulated to the adequacy of the staffing patterns proposed by St. Joseph's for the 100 bed satellite, and also their ability to recruit and fill those staffing needs. Approval of this satellite would not have an adverse impact on Intervenors' ability to attract or retain qualified staff since the staff for the satellite would be primarily transferred from the West Buffalo Avenue facility along with the transfer of 100 beds. Since 64 patients who reside in the satellite's service area are currently being treated at the West Buffalo Avenue site, staff who serve these patients will be transferred to the satellite when it opens. Additionally, St. Joseph's conducts an extensive recruitment program outside, as well as within, the Hillsborough County area. It is therefore unlikely that staff for the satellite will come in any significant number from any of the Intervenors. It is recognized that there is almost a 20 percent vacancy level for registered nurses in District VI, and a 33 percent vacancy level for critical care nurses. However, St. Joseph's turn-over rate is relatively low, and therefore it is reasonable to expect that the satellite would be staffed predominantly with staff already employed at the West Buffalo location. Availability of Funds St. Joseph's revenues exceeded expenses by $10-$12 million for fiscal year ending June 30, 1986, and it is among the five most profitable hospitals in the State. It has no long term debt, and is the only facility of its size in Florida which has no debt. Financially, St. Joseph's is in an extremely sound position. St. Joseph's has the ability to financially support the satellite facility and to internally finance its construction. Third-party financing is also being considered. However, its operating margin will decrease slightly as a result of the construction of the satellite. Historically, it has realized an operating margin exceeding 10 percent, although it projects a profit margin of slightly under 5 percent for fiscal year 1987. Financial Feasibility St. Joseph's proposed satellite's total gross revenue for the first two years of operation was determined by multiplying the current average bed rate at the facility on West Buffalo by the expected occupancy. Proposed deductions from revenue were also based upon St. Joseph's historical experience. Assumptions utilized to prepare the satellite's pro forma relied upon St. Joseph's historical information, including but not limited to revenues, fixed expenses and variable expenses. St. Joseph's used a patient admission rate of 125 per 1,000, and a proposed average length of stay of 6 days compared with a current average length of stay at the main facility of 7-7.2 days. A basic assumption used by St. Joseph's was that on the first day of operation, 64 patients currently being treated at the main facility who reside in the Carrollwood area, will be transferred to the satellite for treatment, and thereafter an average of 64 of the satellite's beds will be occupied each day by Carrollwood residents who would have sought treatment at the West Buffalo location in the absence of the satellite. St. Joseph's assumed a case mix intensity level of 1.36 for the satellite, compared with 1.46-1.48 at the West Buffalo location. A decrease in the case mix index results in a corresponding decrease in revenues and expenses. Complex hospitalizations receive a high case mix index, and simple procedures receive a low case mix index. St. Joseph's did not conclusively establish that 64 patients presently at the main facility, except for cardiac, cancer and psychiatric patients, who reside in the service area of the satellite could be transferred on the first day of operation, or that this daily census could be maintained. Physician and patient preferences determine where a patient is admitted. Severity of illness or age of the patient are also factors. Admissions through the emergency room, which account for nearly 50 percent of the admissions on West Buffalo, cannot be redirected. It has not been shown that physicians or patients would prefer admission to a satellite, or that the very severe cases or aged patients, as well as emergency room admissions, could be redirected away from the main facility. While the satellite will have an emergency room, the satellite will not be equipped to handle the complexity of cases presently admitted on West Buffalo. Additionally, transferring 64 patients by ambulance on the first day of operation from West Buffalo to the satellite, in the middle of treatment, has not been shown to be reasonable or feasible, or that physicians and patients would tolerate such a procedure. The opening of a satellite usually begins incrementally and gradually while staff becomes familiar with the new facility and equipment. St. Joseph's has not shown that it is feasible to open the satellite with an immediate occupancy of 64 percent on day one, and 82 percent in the first year of operation. Historically, occupancy levels at satellites run between 20 percent-40 percent the first year. Forecasted revenues are unrealistic because St. Joseph's basic assumption about the transfer of 64 Carrollwood residents is unreasonable and unsubstantiated. St. Joseph's has also failed to correctly and fully estimate salary expenses at the satellite because salary estimates do not account for shift and weekend differentials paid to nurses. More than 50 percent of nurses at St. Joseph's receive shift differential pay, which is a 15 percent increase above their base hourly rate. Given the age of the service area population, a more accurate use rate for the satellite would be between 90 and 95 admissions per 1,000 population, rather than the 125 per 1,000 used by St. Joseph's. The lower use-rate reduces the available pool of patients in the service area from 136 estimated by St. Joseph's to 109. 94 Assumptions based on historical data from the main facility are inappropriate for developing the satellite's pro forma because the satellite will treat less complex cases than the main facility, and the age and income levels in the satellite's service area are significantly different from the County as a whole. Rather than a case mix index of 1.36, an average satellite and community hospital case mix index is 1.00. Using a corrected case mix index of 1.00 rather than 1.36, results in a projected loss for the satellite rather than a profit in its second year of operation. Because construction and operation of the satellite will reduce St. Joseph's overall operating margin below 5 percent-6 percent, which is a minimum standard, St. Joseph's will be less able to provide charity, indigent and Medicaid care after construction of the satellite than it is currently. Impact On Health Care Costs St. Joseph's proposal to spend approximately $16 million on construction of the satellite to serve from 16 to 26 "new" patients could reasonably be expected to adversely affect health care costs. This is exacerbated by the shelled-in space at both the satellite and the existing facility. The size of the satellite was not reduced when beds were reduced from 150 to 100, and the St. Joseph's architect testified there is enough square footage to add back the 50 beds. Despite St. Joseph's assertions that it will not increase rates to subsidize the satellite as a business investment in its own future, it appears reasonable to expect that rates would have to be increased if St. Joseph's is to maintain its historical profit margin, and to offset its failure to properly project salaries, use rates and the case mix index at the satellite. The satellite will continue to lose money through its second year of operation, and this would have to be recouped through increased charges, or reduced profit margins, which could then be expected to result in a reduced ability to fund charity, indigent and Medicaid patients. Project Costs Construction cost estimates are reasonable. The estimated cost for fixed equipment for a 150 bed satellite facility was reduced by $250,000 to reflect the decrease cost of moving 50 beds and the obstetrical surgical suite. This $250,000 savings provides an inflationary contingency in case of construction delays, and while it does increase construction costs from $9,650,000 to 9,900,000, it does not have a negative impact on the appropriateness of the proposed construction costs. Equipment cost estimates as well as total project cost estimates, with the exception of salary estimates, are reasonable. Admitting Practices St. Joseph's has a written admissions policy which requires that it receive patients regardless of their ability to pay. There is no evidence that St. Joseph has ever denied admission to any patient in a life threatening situation. It is standard practice at St. Joseph's to request a deposit on admission and to inform patients that arrangements for payment can be made upon discharge. However, inability to pay the deposit or to make financial arrangements does not result in a patient being denied admission. Patients who are unable to pay are sometimes admitted at St. Joseph's through, the emergency room when a physician sends such patients to the emergency room. Effect On Competition Enhancement of future competition is a factor which is considered under the Department's non-rule transfer policy There is substantial competition among acute care hospitals in Hillsborough County which are currently engaged in aggressive marketing campaigns. Dominance by one provider in a market can be anti-competitive, and at the present time St. Joseph's is the dominant provider for paying patients in Hillsborough County. The current market shares for hospitals already serving the satellite's proposed service area are: St. Joseph's - 33.45 percent; University - 28.92 percent; Town and Country - 17.72 percent; Tampa General - 11.06 percent; and Carrollwood Community - 8.86 percent. The satellite will allow St. Joseph's market share to increase and possibly approach 40 percent. Such market dominance is not consistent with a competitive market. St. Joseph's increase in market share will take patients away from the other hospitals now serving the Carrollwood area, particularly University which receives almost 38 percent of all its patients from this area. University is already projecting an operating loss for fiscal year 1987 of $563,000. Tampa General is a disproportionate provider of indigent services in the County. The Local Health Plan has as one of its objectives protecting such providers of indigent care. Tampa General lost $12 million in fiscal 1983, and in order to improve its financial condition embarked on a $160 million renovation and building effort. It is now indebted to bondholders in that amount. Tampa General's payor mix has begun to improve, and it is actively marketing in the proposed service area. Approval of this project will not further the Local Health Plan objective of protecting disproportionate indigent providers, because it will result in the loss to Tampa General of a significant number of paying patients.
Recommendation Based upon the foregoing, it is recommended that the Department enter a Final Order denying St. Joseph's application for CON 4288 for the establishment of a satellite hospital with the transfer of 100 acute care beds. DONE AND ENTERED this 8th day of September, 1987, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of September, 1987. APPENDIX TO RECOMMENDED ORDER Rulings on St. Joseph's Proposed Findings of Fact are as follows: Adopted in Finding of Fact 1. Rejected as unnecessary and cumulative. Adopted in Finding of Fact 1. Adopted in Findings of Fact 1, 2. Rejected as unnecessary and irrelevant. Adopted in Finding of Fact 2. Adopted in Finding of Fact 1. Adopted in Finding of Fact 8. Adopted in Finding of Fact86. Rejected as irrelevant. Adopted in Findings of Fact 3, 7. Adopted in Findings of Fact 4, 38. Adopted in Finding of Fact 4. Adopted in Findings of Fact 38, 54. Adopted in Findings of Fact 38, 6, 70, 54. Adopted in Finding of Fact 5. Adopted in Finding of Fact 5. Adopted in Finding of Fact 5. Rejected as irrelevant and not supported by competent substantial evidence. Adopted in Finding of Fact 5. Adopted in Findings of Fact 5, 44. Adopted in Finding of Fact 6. Rejected as irrelevant and unnecessary. Rejected as irrelevant and unnecessary. Rejected as unnecessary. Rejected as unnecessary. Adopted in Findings of Fact 6, 38, 70. Adopted in Finding of Fact 7. Rejected as irrelevant and unnecessary. 30-34. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 10. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Rejected as irrelevant. Adopted in Finding of Fact 108. Adopted in Finding of Fact 12. 41-43. Rejected as irrelevant and unnecessary. Rejected as cumulative and unnecessary. Rejected as speculative, irrelevent and unnecessary. Adopted in Finding of Fact 12. Adopted in Findings of Fact 21, 23, 50. Adopted in Finding of Fact 21. Rejected in Findings of Fact 59, 68. Rejected in Findings of Fact 65, 71, 97, 106. Rejected as not based on competent substantial evidence. Adopted in Findings of Fact 18, 21, 22. Adopted in Finding of Fact 24. Adopted in Finding of Fact 24. Rejected as unnecessary and cumulative. Adopted in Findings of Fact 32, 67, but rejected in 89, 90. Adopted in Findings of Fact 32, 67. Adopted in Finding of Fact 21. Adopted in Finding of Fact 26. Rejected as not based competent substantial evidence, and irrelevant. Adopted in Finding of Fact 29. 62-63. Rejected as cumulative and unnecessary. 64-65. Adopted in Finding of Fact 29. Rejected in Findings of Fact 11, 72. Rejected in Findings of Fact 65, 72. Adopted in Finding of Fact 30. Adopted in Finding of Fact 31. 70-71. Adopted in Finding of Fact 7. Rejected as unnecessary and not based competent substantial evidence. Adopted in Findings of Fact 6, 70. Rejected as irrelevant and speculative. 75-76. Adopted in Finding of Fact 7. 77-78. Adopted in Finding of Fact 6. Rejected in Findings of Fact 59, 60, 68, 70, 95. Adopted in Findings of Fact 6, 70. Rejected as irrelevant. Adopted in Finding of Fact 30. 83-91. Rejected in Findings of Fact 7, 105 and otherwise rejected as cumulative and unnecessary. Adopted in Finding of Fact 34. Adopted in Finding of Fact 35. Adopted in Finding of Fact 36. Adopted in Finding of Fact 37. Adopted in Finding of Fact 38. Adopted in part in Finding of Fact 39. Rejected as cumulative. Adopted in Finding of Fact 40. Adopted in Finding of Fact 41. Adopted in Finding of Fact 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 44 104-105. Rejected as cumulative. Adopted and rejected in part in Finding of Fact 45. Adopted in Finding of Fact 46. Adopted in Finding of Fact 47. Rejected in Findings of Fact 47, 106, 107, 108. Adopted in Finding of Fact 48. 111-122. Rejected in Findings of Fact 63, 64, 65, and otherwise irrelevant and cumulative. Rejected in Findings of Fact 68, 70, 71. Adopted in Findings of Fact 29, 70. Adopted in Finding of Fact 78. Adopted in Finding of Fact 78. Rejected as unnecessary. Adopted in Finding of Fact 80. Rejected as cumulative. Adopted in Finding of Fact 81. 131-133. Rejected as cumulative and unnecessary. 134. Adopted in Findings of Fact 78, 83, 98, 99. 135-138. Rejected in Findings of Fact 50, 56, 57, 59, 61, 62, 65, 71, 108. Rejected as unnecessary. Adopted in part in Finding of Fact 59, but otherwise rejected as unnecessary and not based competent substantial evidence. 141-146. Rejected as unnecessary and irrelevant. 147. Rejected as not based on competent substantial evidence. 148. Rejected in Findings of Fact 50, 56, 57, 59, 61, 62, 65, 71, 108. Rejected in Finding of Fact 75. Rejected in Finding of Fact 73. Rejected in Findings of Fact 72-75. 152-153. Adopted in part in Findings of Fact 89, 90 but otherwise rejected as unnecessary. 154-155. Rejected as irrelevant and unnecessary. Adopted and rejected in part in Finding of Fact 72. Rejected as irrelevant. Adopted in Finding of Fact 42. Adopted in Finding of Fact 107. Rejected as unnecessary and speculative. Rejected in Findings of Fact 87, 89. Rejected as not based on competent substantial evidence. Rejected as irrelevant and not based on competent substantial evidence. Rejected as irrelevant and unnecessary. Rejected as not based on competent substantial evidence. 166-169. Rejected as irrelevant. 170-171. Rejected in Finding of Fact 106. 172. Rejected as unnecessary. 173-174. Rejected as not based on competent substantial evidence and irrelevant. 175. Rejected as unnecessary. 176-177. Adopted in Finding of Fact 82. Rejected as unnecessary. Adopted in Finding of Fact 82. Adopted in Finding of Fact 83. Rejected as unnecessary. Rejected in Findings of Fact 91-94. Adopted and rejected in part in Finding of Fact 83. Rejected in Findings of Fact 84-95. 185-189. Adopted in part in Finding of Fact 85 but otherwise rejected as unnecessary. Rejected in Finding of Fact 97. Adopted in Finding of Fact 85. Rejected as unnecessary. Rejected as unnecessary. 194-195. Rejected in Finding of Fact 92. 196-197. Rejected as unnecessary. 198. Adopted in Finding of Fact 85. 199-200. Rejected as unnecessary and irrelevant. Adopted in Finding of Fact 86 and rejected in Finding of Fact 93. Adopted in Finding of Fact 86. Adopted in Finding of Fact 87. Rejected as not based on competent substantial evidence. Rejected in Findings of Fact 89, 90, 91. Adopted in Finding of Fact,.88. Adopted in Finding of Fact 88, but rejected in Finding of Fact 94. Adopted in Finding of Fact 88. Rejected as unnecessary and cumulative. Adopted in Finding of Fact 89. Adopted in Finding of Fact 42. Adopted in Finding of fact 43. 213-217. Rejected as unnecessary and irrelevant. 218. Adopted in part in Finding of Fact 97, but otherwise rejected as irrelevant. 219-220. Rejected as unnecessary. Rejected as cumulative. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 98. 224-233. Missing. Adopted in Finding of Fact 98. Adopted in part in Finding of Fact 24, but otherwise rejected as cumulative and unnecessary. 236-241. Adopted in Finding of Fact 28. Adopted in Finding of Fact 96. Adopted in Finding of Fact 24. Rejected as irrelevant and unnecessary. 245-246. Adopted in Finding of Fact 100. 247. Adopted in Finding of Fact 102. 248-250. Adopted in Findings of Fact 100, 101. 251. Adopted in Findings of Fact 100-102. 252-253. Adopted in Finding of Fact 101 Adopted in Finding of Fact 102. Adopted in Findings of Fact 100-102. 256-259. Rejected as cumulative. 260. Rejected as irrelevant. Rulings on Department of Health and Rehabilitative Services Proposed Findings of Fact: Adopted in Finding of Fact 34. Adopted in Finding of Fact 35. Adopted in Finding of Fact 36. Adopted in Finding of Fact 37. Adopted in Finding of Fact 38. Adopted in Finding of Fact 39. Rejected as cumulative. Adopted in Finding of Fact 40. Adopted in Finding of Fact 41. Adopted in Finding of Fact 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 44. Rejected as cumulative. Rejected as cumulative. Adopted in Finding of Fact 45. Adopted in Finding of Fact 46. Adopted in Finding of Fact 47. Adopted in Finding of Fact 47. Adopted in Finding of Fact 48. Rulings on University Community Hospital's Proposed Findings of Fact: Adopted in Finding of Fact 1. Adopted in Finding of Fact 17. Adopted in Findings of Fact 19, 20. Adopted in part in Finding of Fact 21. Adopted in Finding of Fact 49. Rejected as unnecessary and cumulative. Adopted in Findings of Fact 19, 20. Adopted in Findings of Fact 37, 48. Adopted in Findings of Fact 50, 56. Adopted in Findings of Fact 51, 52, 57. Adopted in Finding of Fact 59. Adopted in Finding of Fact 61. 13-14. Rejected as unnecessary. 15. Adopted in Finding of Fact 58, but otherwise rejected as irrelevant and unnecessary. 16-17. Adopted; in Findings of Fact 63-65. 18. Rejected as irrelevant 19-21. Adopted in Findings of Fact 68-71. Adopted in part in Finding of Fact 29. Adopted in Finding of Fact 16. Adopted in Findings of Fact 72, 76, 77, 104. Adopted in Findings of Fact 56, 81. Adopted in Findings of Fact 80, 81 and otherwise rejected as not based on competent substantial evidence. 27-35. Adopted in Findings of Fact 85-94 but otherwise rejected, as cumulative and unnecessary. 36-38. Adopted in Findings of Fact 85, 94. 39-40. Adopted in Findings of Fact 88, 94. Adopted in Finding of Fact 94. Adopted in Finding of Fact 92. Adopted in Finding of Fact 73. 44-49. Adopted in Findings of Fact 96, 97 but otherwise rejected as cumulative, irrelevant and not based on competent substantial evidence. Adopted in Finding of Fact 6. Rejected as cumulative and unnecessary. Rejected as irrelevant. Adopted in Finding of Fact 105. Adopted in Finding of Fact 69. Adopted in Finding of Fact 69, but otherwise rejected as unnecessary and cumulative. Adopted in Findings of Fact 68, 95, 97. Adopted in Finding of Fact 60. Adopted in Finding of Fact 35. Adopted in Findings of Fact 38, 50. Adopted in Finding of Fact 55, but otherwise rejected as irrelevant and unnecessary. Rejected as cumulative. Adopted in Finding of Fact 53. 63-65. Rejected as cumulative and unnecessary. Adopted in Finding of Fact 104. Adopted in Finding of Fact 105. Adopted in Findings of Fact 82, 83. Adopted in Finding of Fact 105. 70-71. Rejected as unnecessary and cumulative. 72. Adopted in part in Finding of Fact 106, but otherwise rejected as cumulative and unnecessary. 73-76. Adopted in part in Findings of Fact 96, 97, but otherwise rejected as cumulative and unnecessary. Adopted in part in Finding of Fact 95, but otherwise rejected as unnecessary. Adopted in part in Findings of Fact 91, 97, but otherwise rejected as unnecessary. Rejected as cumulative. Adopted in Findings of Fact 1,1, 107. Adopted in Finding of Fact 30. 82-84. Adopted-in Finding of Fact 107, but otherwise rejected as cumulative. Rulings on Tampa General's Proposed Findings of Fact: Adopted in Finding of Fact 17. Adopted in Finding of Fact 18. Adopted in Finding of Fact 19. Adopted in Finding of Fact 22. Adopted in Finding of Fact 21. Rejected as unnecessary. Adopted in part in Finding of Fact 33, but otherwise rejected as unnecessary. 8-9. Adopted in part in Finding of Fact 1, but otherwise rejected as unnecessary. Adopted in Findings of Fact 1, 3. Adopted in Finding of Fact 4. 12-13. Rejected as irrelevant. Adopted in part in Findings of Fact 82, 83, but otherwise rejected as unnecessary. Adopted in Findings of Fact 7, 29, 57, 69, 105. Adopted in Finding of Fact 5. Adopted in Finding of Fact 11. Adopted in Finding of Fact 13. Adopted in Finding of Fact 12. Adopted in Findings of Fact 10, 72. Adopted in Findings of Fact 10, 11, 12, 13, 15, 72. Adopted in Findings of Fact 49, 50. Adopted in part in Findings of Fact 10, 11, 12, 13, 15, 50, 51, 52, 53, 54 and 72, but otherwise rejected as cumulative. Adopted in Finding of Fact 29. 25-26. Rejected as irrelevant. 27. Adopted in Finding of Fact 16. 28-35. Adopted in part in Findings of Fact 17, 21, 24, 25, 28, but otherwise rejected as unnecessary. Adopted in Findings of Fact 83, 97. Adopted in Findings of Fact 34, 35. Rejected as cumulative and unnecessary. 39-44. Adopted in Findings of Fact 63-65, but otherwise rejected as cumulative and unnecessary. 45-51. Adopted in Findings of Fact 66-71, but otherwise rejected as cumulative and unnecessary. 52-55. Adopted in Findings of Fact 36, 38, 50, 56, but otherwise rejected as unnecessary and cumulative. Adopted in Findings of Fact 12, 104. Adopted in Findings of Fact 14, 16, 72, 106. Adopted in Finding of Fact 106. Adopted in Findings of Fact 105, 106, 107. Adopted in Finding of Fact 108. Rejected as cumulative and unnecessary. Adopted in Finding of Fact 74. Rejected as irrelevant and unnecessary. 64-65. Adopted in part in Finding of Fact 74, but otherwise rejected as irrelevant. Adopted in Finding of Fact 16 Adopted in Finding of Fact 73. 68-69. Rejected as unnecessary and without specific citations to the record. 70-73. Adopted in Findings of Fact 91, 94, 95, 97, but otherwise rejected as cumulative and unnecessary. Adopted in part in Findings of Fact 81, 97. Adopted in part in Finding of Fact 57, but otherwise rejected as cumulative. Adopted in Finding of Fact 107. 77-83. Adopted in Finding of Fact 108, but otherwise rejected as cumulative and irrelevant. Rulings on Town and Country's Proposed Findings of Fact: 1-3. Introductory matters. Adopted in Finding of Fact 1. Adopted in Finding of Fact 17. Adopted in Findings of Fact 19, 20. Adopted in Finding of Fact 21. Adopted in Findings of Fact 24, 25. Adopted in Finding of Fact 56. Rejected as cumulative and unnecessary. Rejected as unnecessary. 12-16. Adopted in Findings of Fact 87, 89, 90. 17. Adopted in Finding of Fact 8. 18-24. Rejected as unnecessary and cumulative. 25-26. Adopted in Finding of Fact 67, but otherwise rejected as unnecessary. 27. Rejected as without citation to the record and cumulative. 28-37. Adopted in Findings of Fact 86, 93, but otherwise rejected as unnecessary and cumulative. 38-39. Adopted in Findings of Fact 106-108. Rejected as without citation to record and unnecessary. Adopted in Findings of Fact 15, 50, 51. 42-44. Adopted in Finding of Fact 51. Adopted in Finding of Fact 52. Adopted in Findings of Fact 4, 12, 38. Adopted in Findings of Fact 11, 13, 72. 48. Rejected as without citation to the record and unnecessary 49-51. Rejected as unnecessary and not based on competent substantial evidence Adopted in Finding of Fact 50. Rejected as without citation to the record and unnecessary. 54-55. Adopted in Finding of Fact 53. 56. Adopted in Finding of Fact 54. 57-58. Adopted in Finding of Fact 58. Rejected as cumulative. Adopted in Finding of Fact 60. Rejected as unnecessary. Adopted in Findings of Fact 5, 60. 63-64. Rejected as cumulative and unnecessary. Adopted in Findings of Fact 29, 70. Adopted in Finding of Fact 29. Adopted in Findings of Fact 71, 95. 68-70. Adopted in Findings of Fact 45, 63-65. Rejected as irrelevant and unnecessary. Adopted in Findings of Fact 103-108. 73-74. Adopted in Finding of Fact 16. 75-77. Adopted in Findings of Fact 82, 83. Rejected as unnecessary. Adopted in Finding of Fact 82. Rejected as cumulative. Rejected as irrelevant. Adopted in Finding of Fact 105. Adopted in Finding of Fact 82. Rejected in Finding of Fact 99. 85-92. Rejected in Finding of Fact 98, and otherwise rejected as not based on competent substantial evidence. 93-96. Rejected in Finding of Fact 99, and otherwise rejected as not based on competent substantial evidence. Adopted in Finding of Fact 97. Rejected as unnecessary. 99-103. Rejected as cumulative and unnecessary. 104-105. Adopted in Findings of Fact 95, 97, but otherwise rejected as unnecessary and cumulative. Adopted in Finding of Fact 95. Rejected as cumulative. Adopted in Finding of Fact 95. Adopted in Finding of Fact 97. Adopted in Findings of Fact 95, 97. 111-114. Rejected as cumulative and unnecessary. 115-116. Adopted in Finding of Fact 97, but otherwise rejected as cumulative and unnecessary. 117. Rejected as without citations to the record. 118-119. Adopted in Finding of Fact 88. 120-122. Adopted in Finding of Fact 94. 123. Rejected as cumulative and without citations to the record. 124-128. Adopted in Finding of Fact 92, but otherwise rejected as cumulative and unnecessary. 129-130. Rejected as not based on competent substantial evidence. 131-133. Rejected as cumulative and unnecessary. 134. Adopted in Finding of Fact 14. Rulings on Humana's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 1. Adopted in Finding of Fact 17. Adopted in Finding of Fact 19. Adopted in Finding of Fact 21. Adopted in Finding of Fact 24. Adopted in Finding of Fact 25. 8-10. Adopted in Finding of Fact 16. 11-12. Adopted in Finding of Fact 3. 13-14. Rejected as cumulative. 15-17. Adopted in Finding of Fact 50. Adopted in Findings of Fact 53, 54. Adopted in Finding of Fact 51. 20-21. Adopted in Finding of Fact 52. Adopted in Finding of Fact 51. Adopted in Finding of Fact 55. 24-41. Adopted in Findings of Fact 45, 63-65, but otherwise rejected as unnecessary and cumulative. 42-46. Adopted in Finding of Fact 29. Adopted in Finding of Fact 21. Rejected as unnecessary. Adopted in part in Finding of Fact 59. 50-51. Adopted in Finding of Fact 60. 52. Rejected as unnecessary. 53-55. Adopted in Findings of Fact 85-95, but otherwise rejected as unnecessary. 56-57. Adopted in Finding of Fact 90. 58-66. Adopted in Findings of Fact 86, 93, but otherwise rejected as unnecessary. 67-71. Adopted in Findings of Fact 87, 89, 90, 91. Adopted in Finding of Fact 88. Rejected in Finding of Fact 88. Rejected as cumulative. 75-77. Adopted in Finding of Fact 94, but otherwise rejected as unnecessary. 78-81. Adopted in Finding of Fact 92. 82-85. Rejected as unnecessary. 86-92. Adopted in part in Finding of Fact 97, but otherwise rejected as cumulative and unnecessary. 93-94. Adopted in Finding of Fact 82, but otherwise rejected as unnecessary. 95. Adopted and Rejected in part in Findings of Fact 4, 12. 96-97. Adopted in Findings of Fact 105, 106, 107. Rejected as cumulative. Adopted in Finding of Fact 61. 100-101. Adopted in Findings of Fact 63-65. 102. Adopted in Finding of Fact 50. 103-104. Rejected as cumulative. 105-107. Adopted in Findings of Fact 57, 107, 108. 108-109. Adopted in Finding of Fact 60. 110-114. Adopted in Findings of Fact 82, 83, but otherwise rejected as cumulative and unnecessary. Adopted in Finding of Fact 108. Rejected as unnecessary. Rejected as cumulative. 118-119. Adopted in Finding of Fact 62. 120-121. Adopted in Findings of Fact 72-75. 122. Adopted in Findings of Fact 50, 56. 123-125. Rejected in Finding of Fact 28 and as not based competent substantial evidence. COPIES FURNISHED: Ivan Wood, Esquire WOOD, LUCKSINGER & EPSTEIN The Park in Houston Center 1221 Lamar Street, Suite 1400 Houston, Texas 77010 Howard J. Hochman, Esquire Southeast Financial Center 200 S. Biscayne Blvd, Suite 3700 Miami, Florida 33131 James C. Hauser, Esquire Post Office Box 1876 Tallahassee, Florida 32302 John Radey, Esquire 101 North Monroe Street, Suite 1000 Tallahassee, Florida 32302 Cynthia Tunnicliff, Esquire Post Office Box 190 Tallahassee, Florida 32302 Douglas L. Mannheimer, Esquire Post Office Drawer 11300 Tallahassee, Florida 32302 Theodore E. Mack, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Michael J. Cherniga, Esquire Post Office Drawer 1838 Tallahassee, Florida 32302 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
