The Issue Whether University Community Hospital should be issued Certificate of Need Number 6936 to convert 20 acute care beds to 20 comprehensive medical rehabilitation beds.
Findings Of Fact UCH is a 424 bed acute care hospital located in northern Hillsborough County. UCH is the applicant for CON Number 6936 to convert 20 medical/surgical acute care beds to 20 comprehensive medical rehabilitation ("CMR") beds. Its service area is northern Hillsborough and eastern Pasco Counties. AHCA is the successor to HRS as the designated agency to administer the CON laws. UCH currently operates 404 acute care beds and 20 skilled nursing beds. Its services include an emergency room, open heart surgery, obstetrics, and a home health agency. From 1982 to 1990, UCH operated an inpatient comprehensive rehabilitation unit, certified by HRS and recognized by the Federal Health Care Finance Administration ("HCFA") as a 9-bed unit in 1984, and as an 18-bed unit from 1985 through 1988. Substantial renovation of the unit's sixth floor south wing, in 1987 and 1988, was intended to meet the standards of the Commission on Accreditation of Rehabilitation Facilities ("CARF"). UCH was never actually CARF accredited. After the enactment of a CMR rule, HRS preliminarily determined that UCH was a "grandfathered" 9-bed provider of CMR services. That preliminary determination was successfully challenged in University Community Hospital v. Department of Health and Rehabilitative Services, 11 FALR 1150 (HRS Final Order 2/13/89), and the unit was closed in 1990. In September 1990, UCH applied for CON 6412 to convert 20 acute care beds to 20 CMR beds. That application was denied. University Community Hospital v. Department of Health and Rehabilitative Services, et al., 14 FALR 1899 (HRS Final Order 4/15/92). NEED IN RELATION TO STATE AND LOCAL HEALTH PLAN Five preferences in the 1989 Florida State Health Plan relate to CMR programs and are applicable to the review of the UCH application. The first preference relates to applicants proposing the conversion of excess acute care beds to establish a distinct rehabilitation unit within a hospital. AHCA agrees that the UCH application is consistent with this preference. The second preference, favoring applicants proposing specialty inpatient or outpatient rehabilitation services not currently offered in the district, it not met. In District VI, three CMR providers have a total of 112 licensed beds, 111 beds in operation: 59 at Tampa General Hospital in Hillsborough County, 24 at Winter Haven Hospital in Polk County, and 28 at L.W. Blake in Manatee County. The third preference applies to the teaching hospitals. UCH is not a teaching hospital although it does have contracts with teaching institutions to allow students to gain clinical experience at UCH. See, Subsection 408.035(1)(g), Fla. Stat. (1992 Supp.). The fourth preference, is for applicants with a history of providing a disproportionate share of charity care and Medicaid patient days. The preference specifically requires qualifying hospitals to meet Medicaid disproportionate share hospital criteria. UCH is not a disproportionate share provider, and does not meet this preference. The fifth preference, for applicants with an existing comprehensive outpatient rehabilitation facility ("CORF"), is met. UCH planner's testimony was not refuted and AHCA concedes that UCH offers a number of therapies to outpatients. The June 1990 District VI Allocation Factors Report, prepared by the Health Council of West Central Florida, Inc., is the local health plan applicable to the review of this application. The first preference favors disproportionate share providers, and does not support the UCH application. See, Finding of Fact 10. UCH is entitled to the second local preference for the conversion of existing medical/surgical beds. See, Finding of Fact 7. The fourth preference is for existing providers of fewer than 20 beds seeking to add more beds and is, therefore, not applicable to the UCH application. POPULATION CONDITIONS AND NEED The third local preference, for additional rehabilitation services if existing ones are not meeting community needs, is the essence of the UCH claim that its services are needed. The local factor is also directly related to the criteria of Subsection 408.035(1)(b), Florida Statutes, and Florida Administrative Code, Rule 59C-1.039(2)(b). The rule is as follows: Historic, current and projected incidence and prevalence of disabling conditions and chronic illness in the population in the Department service district by age and sex group; Trends in utilization by third party payers; Existing and projected inpatients (e.g., orthopedic, stroke and cardiac cases) in need of rehabilitation services; and The availability of specialized staff. Based on rule methodology for computing numeric need, there is zero need for additional CMR beds in District VI. That methodology is based on the assumption that there will be 3.9 CMR beds needed for every 1000 acute care discharges. In terms of population conditions, UCH has urged the consideration of the actual statewide use rate of 8.46 CMR admissions for every 1000 acute care admissions, which would equate to a need for an additional 132 beds in the District. In District VI, there are 6.67 CMR admissions for every 1000 acute care admissions which, considering projected population increases, equates to a need for 80 additional beds. According to UCH, CMR bed availability is a factor in determining utilization In District VI, there are 7 CMR beds per 100,000 people. UCH points to the actions of AHCA in approving an increase from 8 to 12 CMR beds per 100,000 people in District IX in the absence of any published numeric need. AHCA emphasizes that empty CMR beds exist in District VI, which had 1990-1991 occupancy rates of 72.07 percent, below the 85 percent minimum for approval of new beds absent not normal circumstances. Tampa General's rate was 82.77 percent, but Winter Haven's was 50.82 percent and L. W. Blake in Manatee County was 67.36 percent occupied. As AHCA also indicated, population projections and numeric need are calculated to determine future need. UCH has demonstrated that the geographic and economic accessibility of Winter Haven in Polk County is limited for patients from the UCH area. In part, the limitations result from the requirement of third party payers for CARF accredited facilities, when intense, inpatient rather than outpatient CMR services are needed. Winter Haven is not CARF accredited. In addition, during the time there was a low rate of utilization at Winter Haven, some licensed beds were not in service due to construction. Utilization in the first quarter of 1992 reached just under 80 percent at Winter Haven. UCH also claims that AHCA approved beds at Winter Haven based on the geographic inaccessibility of beds in Tampa. AHCA filed a Request for Official Recognition on February 3, 1993, which shows the award of beds to Winter Haven resulted from a stipulated settlement. UCH's Exhibit 9 does include the distance to Tampa as one of several factors considered in the agency's approval of the stipulated settlement with Winter Haven. L. W. Blake in Manatee County is also geographically inaccessible for Hillsborough County patients and their families, particularly the elderly proposed to be served by UCH. In addition, L.W. Blake's utilization increased to an average of 84 percent in the first quarter of 1992. Tampa General has 59 of its 60 CMR beds in service. All rooms at Tampa General are semi-private, necessitating same gender placements, except one isolation room. In addition, patients with similar injuries are grouped together. Tampa General is a regional referral center for vocational rehabilitation and a state designated center for head and spinal cord injuries. These factors limit the availability of Tampa General's beds to serve District VI residents, as does its occupancy rate of 85 percent. In the past, when UCH operated and then closed a CMR unit, there was no statistical impact on Tampa General. Currently, Tampa General has a waiting list and patients average a 9 day wait. For the reasons identified by UCH, including geographic and economic inaccessibility, the district incidence of CMR admissions as compared to acute care admissions, UCH has provided sufficient, credible evidence of the need for the services proposed by UCH in additional CMR beds in District VI. AHCA has amended its CMR rule to better predict need. Although it is not applicable to computing numeric need for this cycle, AHCA asserts that its new rule methodology is the alternative which should be used rather than other factors, such as the ratio of CMR beds to acute care admissions, or population. Under the new rule methodology, there is no numeric need for additional CMR beds in District VI. Assuming arguendo, that AHCA is correct, the other factors related to the accessibility and availability of services at the three existing providers could not be disregarded. PROJECT COSTS AND FINANCIAL FEASIBILITY In this application, UCH proposes to operate a 20-bed CMR unit in the renovated space of the sixth floor south wing. That space currently is being used as an overflow area for 30 medical/surgical beds. UCH estimates total project costs of $248,596, with major expenses for consulting, legal, and accounting expenses, and $67,496 of the total or $3.66 per square foot for redecorating the renovated wing. No additional construction is anticipated. AHCA acknowledges that UCH has the funds to finance the project, but asserts that the costs are understated by $150,000 due to the failure of UCH to include construction costs to bring the wing into compliance with the Americans with Disabilities ACT ("ADA"). UCH notes, and AHCA concedes, that the rule requiring compliance with ADA standards was not adopted until a year after this application was filed. In addition, ADA compliance is required for new construction, not redecorating. AHCA also criticized UCH for omiting the cost of relocating 10 medical/surgical beds, after the conversion of 20 of the existing 30 beds to CMR beds. UCH asserts that the conversion or relocation of the 10 beds is properly an expense item in the project which would utilize the 10 beds and is included in other pending CON applications for difference services. Other CON projects however, are not certain to be approved. If none are, UCH's expert planner testified that the 10 beds will be located in a general surgical area which is being redecorated. UCH also maintains that as long as it can bring the CMR beds on line within the total project costs within the application, it should be allowed to do so, even if that involves shifting amounts among the various expense items. AHCA has not estimated the cost of relocating the 10 beds, nor contradicted UCH's alternative plans for covering that cost. UCH's projected total project costs are, therefore, accepted as reasonable. AHCA agrees that UCH could profitably operate a CMR unit, particularly, as proposed to provide stroke and orthopedic services to medicare patients. When UCH operated an 18-bed unit, occupancy ranged from 77 percent to 84 percent, with 80 to 85 percent of the patients transferring from UCH acute care beds. Projected charges, deductions from revenue, payor mix, and expenses are reasonable. AHCA did not dispute UCH's assertions that its proposal is the most cost-effective alternative for increasing district CMR beds, because no other provider could initiate such services without substantial construction costs, and that utilization of CMR beds is increasing. ADDITIONAL CON CRITERIA AND CMR PROGRAM REQUIREMENTS UCH, as acknowledged by AHCA, has a history of providing quality care and is accredited by the Joint Commission on Hospital Accreditation. UCH has a staff physiatrist to serve as CMR Medical Director. The types of therapists needed to provide a coordinated multidisciplinary approach to rehabilitation are already on staff at UCH. The staffing and renovations of the wing in the late 1980's indicate that UCH will meet the requirements for CARF accreditation. UCH does not propose to offer CMR services as a joint venture with any other health care facility, nor does it propose to offer a service which is not available in adjacent districts. In fact, AHCA notes that District V providers had occupancy rates of 53.31 percent for 1990-1991. The agency's rule, however, places at issue the historic, current and projected population conditions in the Department service district by age and sex group.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered issuing Certificate of Need No. 6936 to University Community Hospital to convert 20 medical/surgical acute care beds to 20 comprehensive medical rehabilitation beds in District VI. DONE and ENTERED this 19th day of October, 1993, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 1993. APPENDIX TO CASE NO. 92-5107 University Community Hospital Accepted in Findings of Fact 1 and 3. Accepted in Finding of Fact 1. Accepted in Finding of Fact 4. Accepted in Finding of Fact 5. Accepted in Finding of Fact 5. Accepted in Finding of Fact 4. Accepted in Findings of Fact 1 and 5. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 6. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Finding of Fact 17. Accepted in Finding of Fact 18. Accepted in Finding of Fact 18. Accepted in Finding of Fact 18. Accepted in or subordinate to Finding of Fact 19. Subordinate to Finding of Fact 19. Accepted in Findings of Fact 20 through 24. Accepted in Finding of Fact 16. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 29. Accepted in part and rejected in part in Findings of Fact 6-16. Accepted in Finding of Fact 8. Accepted in Finding of Fact 20. Accepted in Finding of Fact 20. 28. Accepted in Finding of Fact 21. 29. Subordinate to Finding of Fact 21. 30. Accepted in Finding of Fact 22. 31. Accepted in Finding of Fact 22. 32. Accepted in Finding of Fact 24. 33. Subordinate to Finding of Fact 24. 34. Subordinate to Finding of Fact 24. 35. Subordinate to Finding of Fact 24. 36. Accepted in Finding of Fact 23. 37. Subordinate to Finding of Fact 23. 38. Subordinate to Finding of Fact 23. 39. Subordinate to Finding of Fact 23. 40. Subordinate to Finding of Fact 23. 41. Subordinate to Finding of Fact 23. 42. Accepted in Finding of Fact 23. 43. Subordinate to Finding of Fact 23. 44. Subordinate to Finding of Fact 23. 45. Subordinate to Finding of Fact 23. 46. Subordinate to Finding of Fact 23. 47. Subordinate to Finding of Fact 24. 48. Subordinate to Finding of Fact 24. 49. Subordinate to Finding of Fact 24. 50. Subordinate to Finding of Fact 24. Accepted in Findings of Fact 7 and 27. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 29. Accepted in Finding of Fact 30. Accepted in Finding of Fact 27. Accepted in Findings of Fact 26 and 28. Subordinate to Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Finding of Fact 27. Accepted in Findings of Fact 31 and 32. Subordinate to Finding of Fact 1. Accepted in Findings of Fact 27 and 32. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Finding of Fact 30. Accepted. Accepted in Finding of Fact 32. Accepted and subordinate to Finding of Fact 1. Agency For Health Care Administration 1. Accepted in Findings of Fact 1 and 3. 2. Accepted in Findings of Fact 1 and 3. 3. Accepted in Finding of Fact 1. 4. Accepted in Finding of Fact 4. 5. Accepted in Finding of Fact 5. 6. Accepted in Finding of Fact 6. 7. Accepted in Findings of Fact 1 and 4. Accepted in Findings of Fact 26 and 28. Accepted in Finding of Fact 27. Accepted in Finding of Fact 32. Accepted in Finding of Fact 1. Accepted in Finding of Fact 29. Accepted in Finding of Fact 5. Accepted in Finding of Fact 6. Accepted in Finding of Fact 7. Accepted in Finding of Fact 8. Accepted in Finding of Fact 9. Accepted in Finding of Fact 10. Rejected in Finding of Fact 11. Accepted in Finding of Fact 12. Rejected in Finding of Fact 16. Accepted in Finding of Fact 13. Accepted in Finding of Fact 14. Rejected in Findings of Fact 20 and 22. Accepted in Finding of Fact 15. Subordinate to Finding of Fact 32. Accepted in Finding of Fact 19. Accepted in Finding of Fact 21. Rejected in Findings of Fact 20-23. Accepted in Finding of Fact 17. Accepted in Findings of Fact 8, 17 and 19. Accepted in Finding of Fact 17. Accepted in Finding of Fact 16. Accepted in Finding of Fact 16. Rejected in Findings of Fact 20-23. Rejected in Findings of Fact 20-23. Accepted in Finding of Fact 18. Rejected in Finding of Fact 24. Accepted in Finding of Fact 18. Accepted in Finding of Fact 25. Rejected in Finding of Fact 24. Accepted in Finding of Fact 16. Accepted in relevant part in Finding of Fact 21. Accepted in Finding of Fact 16. Conclusion Rejected in Findings of Fact 20-23 and 29. Accepted in Finding of Fact 16. Accepted in Finding of Fact 32. Accepted in Finding of Fact 20. Accepted in Finding of Fact 20. Rejected in Finding of Fact 29. Accepted in Findings of Fact 29 and 4. Rejected in Finding of Fact 29. Accepted in Finding of Fact 21. Subordinate to Findings of Fact 21-24. Accepted in Findings of Fact 21-24. Accepted in Findings of Fact 21-24. Subordinate to Finding of Fact 24, and Accepted in Finding of Fact 33. Accepted in Findings of Fact 4, 21 and 32. Rejected in Findings of Fact 4, 21, and 32. Subordinate to Finding of Fact 21. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 33. Accepted in Finding of Fact 33. Accepted in Finding of Fact 9. Accepted in Finding of Fact 9. Subordinate to Finding of Fact 29. Subordinate to Finding of Fact 29. Subordinate to Finding of Fact 29. Accepted in Finding of Fact 29. Rejected in relevant part in Findings of Fact 27 and 28. Rejected in Findings of Fact 27. Subordinate to Finding of Fact 21. Accepted in Finding of Fact 23. Rejected in Finding of Fact 27. Accepted in Finding of Fact 29. Issue not reached. See Finding of Fact 27. Issue not reached. See Finding of Fact 27. Issue not reached. See Finding of Fact 27. Accepted in relevant part in Finding of Fact 28. Subordinate to Finding of Fact 29. Rejected in Findings of Fact in 21-24. Rejected in Finding of Fact 23. Accepted, except last sentence in Findings of Fact 21-24. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Lesley Mendelson, Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Cynthia S. Tunnicliff, Esquire Post Office Box 190 Tallahassee, Florida 32302
Findings Of Fact Petitioner applied to the Board of Medicine for licensure by endorsement as a physician in the State of Florida. The Board of Medicine is the regulatory agency in the State of Florida charged with the duty to regulate the practice of medicine in the state, including the licensure of physicians. Petitioner has been in psychotherapy as a patient of Dr. Stanley G. Garner since 1986. Dr. Garner was qualified and accepted as an expert witness in the speciality of psychiatric medicine. Petitioner began psychotherapy with Dr. Garner and has remained in therapy with him on a voluntary basis. The purpose and emphasis of Petitioner's psychotherapy has been the identification and resolution of ongoing family problems, including marital and divorce issues, which have been imposed upon an earlier history of being raised in a dysfunctional family. Petitioner was very upset when she first saw Dr. Garner in 1986 due to events that resulted in protracted divorce proceedings. The purpose of Petitioner's therapy has never been to assess or ensure Petitioner's fitness to practice medicine since this was never a therapeutic issue to either the Petitioner or to Dr. Garner. Petitioner's psychotherapy has been directed towards improving her comfort, happiness, and quality of life. Dr. Garner has spent over 400 hours in therapy with Petitioner and has diagnosed Petitioner as having Dysthymia, which is a fairly recent term for a depressive condition that used to be called neurotic depression or depressive neurosis. Dysthymia was described by Dr. Garner as being an extremely common condition and one that is shared by many of his physician patients without impairment of their ability to perform as physicians with reasonable care and skill. According to the Diagnostic and Statistical Manual of the American Psychiatric Association, the diagnosis of Dysthymia has to include the presence of at least two of the following conditions while depressed: (1) poor appetite or over eating, (2) insomnia or hypersomnia, (3) low energy or fatigue, (4) low self esteem, (5) poor concentration or difficulty making decisions, (6) feelings of hopelessness. Dysthymia does not usually lead to sudden changes in personality or behavior, and Dr. Garner has noted no sudden changes in Petitioner's personality during the course of his treatment of her. Petitioner's application reflected that she had undergone psychotherapy as a patient of Dr. Garner since 1986. In response to the application, Respondent required information from Dr. Garner as to Petitioner's treatment. By his letter of July 17, 1991, Dr. Garner provided Respondent with historical information as to Petitioner's condition and her psychotherapy and advised Respondent, in pertinent part, as follows: Dr. Shienvold has been in psychotherapy with me, on a regular basis, since 9/13/86 for treatment of her depressive disorder. She is currently being seen weekly in individual psychotherapy and weekly in group psychotherapy. The frequency of her visits has varied during the course of her treatment. Currently, she is taking Prozac 20 mg. each morning; this medication seems to be helping her cope with the many pressures of her current life situation. She was not on medication during most of her time in therapy. * * * Dr. Shienvold's diagnosis is Dysthymia (300.40 DSM III-R). She has never shown any evidence of a psychotic disorder and has no history of, nor propensity for, substance abuse. Her prognosis is excellent, but she definitely needs ongoing psychotherapy for the foreseeable future. There are still many current vocational, financial, familial, and parental pressures which impede her more rapid progress. I have no doubt, however, that she will overcome these obstacles and continue to be a dedicated and hard working physician. This applicant for medical licensure, in my professional opinion, will certainly be able to practice medicine with reasonable skill and safety. Given her very high level of intelligence and her rapidly increasing fund of knowledge and experience, along with her genuine caring devotion to her patients, I am convinced that Dr. Shienvold will become a truly outstanding physician and do honor to our profession. If my comments seem flowery and excessive, it is because in my almost 35 years as a physician, and as a psychiatrist to a large number of fellow physicians, I have only rarely seen someone as qualified to practice Medicine as Frances Shienvold. As part of the application process, Respondent arranged for the Physician's Recovery Network (PRN) to have Petitioner examined by an independent psychiatrist. This examination was performed in January 1992 by Dr. Burton Cahn. On February 24, 1992, Dr. Cahn submitted his report to Dr. Goetz by letter. Dr. Cahn's letter provided, in pertinent part, as follows: At the present time, I see no reason why Dr. Shienvold would be unable to practice medicine because of a mental or emotional condition. She is not psychotic. She is not a substance abuser. She is not at this time significantly depressed. She does not represent a danger to herself or to others. I therefore find no reason on a mental or emotional basis that Dr. Shienvold is unable to practice medicine. The record in this proceeding is not clear when the idea that a monitoring contract with the PRN would be deemed necessary by the Board of Medicine. It is apparent from Dr. Garner's follow-up letter to the Board of Medicine on January 16, 1992, that Petitioner was aware at that time that such a condition may be imposed on her licensure by Respondent. Dr. Garner's letter of January 16, 1992, provided, in pertinent part, as follows: It is my professional opinion that the assignment of Dr. Shienvold to the Physicians Recovery Network was an error. The requirement that she sign an Advocacy Contract with "PRN" is inappropriate for her situation, and would be for anyone else with her particular medical/psychological history. There is certainly no need for any kind of "monitoring" of her continuation in psychotherapy. . . . * * * In summary, I believe that Dr. Shienvold should be granted her Florida license to practice medicine without any special conditions or restrictions. . . . * * * Her diagnosis remains the same (Dysthymia), and her prognosis is excellent. By letter dated February 26, 1992, Dr. Goetz advised the Board of Medicine that "Dr. Cahn finds no reason why Dr. Shienvold would be unable to practice medicine with reasonable skill and safety." Dr. Goetz's letter of February 26, 1992, also provided the following: "If the Board chooses to license this applicant, I would be pleased to monitor Dr. Shienvold's continuing treatment with a PRN contract." By Order dated March 16, 1993, the Board of Medicine approved Petitioner's application for licensure by endorsement with a condition. The Board's Order provided, in pertinent part, as follows: You are hereby notified pursuant to Section 120.60(3), Florida Statutes, that the Board of Medicine voted to APPROVE with certain requirements your application for licensure as a physician by endorsement. The Board of Medicine reviewed and considered your application by endorsement on October 2, 1992, in Miami, Florida and has determined that said licensure by endorsement be APPROVED with the requirement that you establish a monitoring contract with the Physician Resource Network (PRN). The Board stated as grounds therefore: That you have a history of successful psychotherapy for a depressive disorder that requires ongoing treatment. Although your ability to practice medicine has not been compromised, it is appropriate to establish monitoring to ensure continued successful treatment. At its February 6, 1993, meeting in Jacksonville, Florida, the Board denied your request for reconsideration of this matter. The requirement set forth herein is a requirement for licensure and should not be interpreted or applied as disciplinary action by the Board. The Physician's Resources Network referred to by the foregoing Order is the same organization as the Physician's Recovery Network. The PRN is also referred to as the Impaired Practitioner Program. The purpose of the PRN program is to protect the public by assuring the health and well being of licensed health practitioners in the State of Florida. Dr. Garner's testimony at the formal hearing was consistent with the opinions he expressed in his two letters to Respondent. Petitioner has been responsible in securing appropriate medical care for herself including psychiatric care, and has been a cooperative patient while under Dr. Garner's care. For most of her psychotherapy, Petitioner has been seeing Dr. Garner twice a week. At the time of the formal hearing, she was seeing him once a week. Dr. Garner has no reason to believe that she would irresponsibly discontinue her therapy or become uncooperative in the foreseeable future. Petitioner has not suffered severe Dysthymia, but she has been at times severely depressed. Those occasions when she was severely depressed were in reaction to her mother's death and in reaction to her abandonment by her father and by her husband. Prior to entering medical school, Petitioner held a Ph.D. in cell biology and anatomy. Over the past seven years she has gone through a divorce, reconciled with her mother, suffered the death of her mother, become estranged from her father and stepmother, and completed medical school. At the time of the formal hearing, she had almost completed her residency. Petitioner has never been found to be unfit to practice medicine with requisite levels of skill and care at any time during her residency. Petitioner has participated in a residency program at Jackson Memorial Hospital for approximately three years. The residency program includes participation in out patient clinics at Mt. Sinai Hospital and service in regular hospital wards, the emergency room, intensive care units for both neonatal patients and other pediatric patients. As a resident, Petitioner worked under the general supervision of a licensed physician, but she had ample opportunity to independently exercise her professional responsibilities and judgment. Petitioner's ability to practice medicine with fitness and safety has not been impaired by Dysthymia, any other mental or emotional condition, or the medication she takes for the Dysthymia. Her memory has not been impaired. At any given time, a person suffering from depression can have difficulty in concentrating or in making decisions. The evidence in this proceeding established that Petitioner's ability to concentrate and to make decisions in the day to day practice of her profession has not been impaired. Her interest in her patients has not been impaired. She does not suffer from unusual fatigue. Petitioner has various medical conditions that add stress to her life. She suffers from sinus problems which have resulted in surgery and ongoing treatment for infections, hypertension, hyperthyroidism, gastritis which includes duodenitis, and esophageal reflux. Petitioner continues to suffer financial and family problems relating to her father, stepmother, brother, and son. Petitioner can still become very upset at times. It is anticipated that Petitioner will remain under Dr. Garner's care for at least one more year. Petitioner intends to continue in psychotherapy until her symptomology is fully resolved. Dr. Garner considers Petitioner's prognosis to be excellent, but is of the opinion that she needs ongoing psychotherapy for the foreseeable future. Dr. Garner is of the opinion that Petitioner could practice medicine with the requisite skill and safety if she were to discontinue psychotherapy completely. At the time of the formal hearing, Petitioner had been taking Prozac for approximately two years. Prozac is an antidepressant which helps Petitioner keep her mood at a high level while she deals with difficult problems in psychotherapy. Dr. Garner is of the opinion that Petitioner can practice medicine with the requisite level of skill and safety without Prozac. He is of the opinion that it is best for her to continue to take Prozac and that there are no significant side effects to the medication. Dr. Roger Goetz is the director of the PRN program and was accepted as an expert in Respondent's impaired practitioner program. The purpose of a monitoring contract with the PRN is to monitor whether there is a failure of a participant to progress in psychotherapy, if there is a change in medication, if there is any discontinuance of therapy, or if there is a change of treating professionals. Dr. Goetz considers the monitoring contract to be the least intrusive way to establish a relationship between the participant and the PRN program. Dr. Goetz is of the opinion that it is in Petitioner's best interest and the best interest of the public that she be in a monitoring contract with the PRN as a condition of her licensure because the contract would provide confirmation that Petitioner is doing well in her therapy before it became necessary to institute a disciplinary action or investigation, the contract would ensure that no abnormal transference was going on, and the contract would, in light of her psychiatric treatment, give assurance that she poses no problem to the public welfare. Dr. Goetz made it clear that he was testifying as the Director of the PRN and that he was not attempting to speak on behalf of the Board of Medicine. He also made it clear that it was the responsibility of the Board of Medicine to decide whether a practitioner needs services from the PRN and that the PRN becomes involved after the Board of Medicine determines that a practitioner needs its services. The terms and conditions of the monitoring contract would be negotiated by the parties after the Board of Medicine enters a Final Order that requires the imposition of a monitoring contract. Because those negotiations have not occurred, Dr. Goetz could only testify as to the terms he would expect to be contained in a monitoring contract. In addition to the reports required of the treating psychiatrist, the contract would confer on the PRN the authority to require Petitioner to withdraw from practice for evaluation if the PRN determines that "any problem" has developed. The monitoring contract is expected to be of at least five years duration and, according to Dr. Goetz, be imposed as long as Petitioner is in therapy without regard to the purpose or the nature of her therapy. Dr. Garner is of the opinion that PRN monitoring would impede rather than ensure Petitioner's progress in therapy because it would diminish the underlying confidentiality of therapy. From the proceedings before the Board of Medicine, it is apparent that the board considered the information contained in Petitioner's application file, including the opinions expressed by Dr. Garner and by Dr. Cahn before entering its Order of March 16, 1993. At the formal hearing, there was no articulation of the reasons the Board of Medicine had for determining that Petitioner's history of psychotherapy and the fact that the psychotherapy was ongoing justified the imposition of the monitoring contract with the PRN.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order which unconditionally grants Petitioner's application for licensure to practice medicine by endorsement. DONE AND ENTERED this 29th day of November, 1993, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-3038 The following rulings are made on the proposed findings of fact submitted by Petitioner. The proposed findings of fact in paragraphs 1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 22, 25, 26, 27, 29, 32, 33, 34, and 40 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 2 are adopted by the Recommended Order or are subordinate to the findings made. The proposed findings of fact in paragraphs 19, 20, 21, 23, 24, 28, 30, 31, 35, 36, 37, 42, and 43 are subordinate to the findings made. The proposed findings of fact in paragraphs 38 and 41 are rejected as being unnecessary as findings of fact, but are consistent with the conclusions reached. The proposed findings of fact in paragraph 39 are rejected as being speculative. The proposed findings of fact in paragraph 44 are rejected as being unnecessary to the conclusions reached. The following rulings are made on the proposed findings of fact submitted by Respondent. The proposed findings of fact in paragraphs 1, 2, 3, 4, 5, 7, 8, 10, 11, 13, and 14 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 6 and 9 are adopted in part by the Recommended Order. These proposed findings of fact are, in part, rejected as being inconsistent with the findings made. The proposed findings of fact in paragraph 12 are adopted as being opinions expressed by Dr. Goetz. COPIES FURNISHED: Howard J. Hochman, Esquire 1320 South Dixie Highway, Suite 1180 Coral Gables, Florida 33146 Claire D. Dryfuss, Esquire Assistant Attorney General Office of the Attorney General The Capitol, PL-01 Tallahassee, Florida 32399-1050 Dorothy Faircloth, Executive Director Board of Medicine Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0770 Jack McRay, Acting General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0770
Findings Of Fact At all times material hereto, Respondent has been licensed by the State of Florida to practice medicine and surgery, having been issued license number NE 14637. Respondent was born in Cuba and is a Catholic. He specializes in gynecology and obstetrics and, until March 1983, had hospital privileges at Mercy Hospital in Miami, Florida. Respondent is married and has seven children, most of whom are adults. He is supporting all of them, including grandchildren, and at the time of the formal hearing in this cause there were 12 people living in Respondent's home whom he was supporting. Respondent has not had a vacation since 1970. In approximately the late summer of 1982, Dr. Jose Carballo was walking from his office at the Mercy Hospital complex to the hospital when he encountered Respondent. Respondent grabbed Carballo's arm and appeared extremely agitated. Respondent advised Carballo that the administration at Mercy Hospital was anti-Catholic or anti-Christian, since several of the stained glass windows in the chapel in the hospital had been covered with plywood. Respondent further advised Carballo that Respondent had asked the priest in the chapel why that had been done, and the priest had advised Respondent the windows on that side of the chapel had been covered as a precaution and would remain covered until the end of the hurricane season. The windows on the side of the chapel opposite the direction of potential hurricane winds had not been covered. Although the priest had given that explanation to Respondent, Respondent still insisted that the real reason was a conspiracy on the part of the hospital administration to prevent Catholics from looking at the windows. Since Carballo had known Respondent for a number of years, he noted on that occasion that Respondent acted and appeared to be a different person. At the time, Carballo believed that Respondent was on the verge of a breakdown. During late 1982 and early 1983, both the chief of obstetrics at Mercy Hospital and the chief of the department of anesthesiology at Mercy Hospital noted a number of occasions when Respondent appeared to be engaged in bizarre behavior. They observed incidents of violent behavior and heard much talk of Communists, Zionists, and conspiracy on different occasions when they encountered Respondent. Respondent was seen in the hospital on occasions when he appeared to be very heavily medicated, and observations were made of the changes in Respondent's demeanor, in his coordination, and in his speech. Respondent appeared depressed and introverted, and even his manner of walking had slowed. Respondent's violent behavior was triggered by small incidents, and he would accuse someone of being a Communist simply if that person wore a red tie. On one occasion, Respondent accused one of the labor room nurses of poisoning his cup of tea. By late 1982, both the chief of obstetrics and the chief of the department of anesthesiology had formed the opinion that Respondent was unable to practice medicine with reasonable skill and safety. In January 1983, Respondent performed an emergency cesarean section at Mercy Hospital. During the course of that delivery, he cut the baby's ear and the area of the baby's head behind his ear. Dr. Roger Walker saw Respondent when he entered the operating room and saw him again when he left the operating room. Respondent appeared depressed, introverted, and slowed. On March 18, 1983, Respondent's hospital privileges at Mercy Hospital were suspended. During late 1982 and early 1983, Respondent realized that he was depressed and started treatment with Dr. Carlos Diaz Silvia. Diaz-Silvia believed at the time that Respondent might present a danger to himself and to others and placed him on anti psychotic drugs. Subsequent to Mercy Hospital's suspension of Respondent's staff privileges, the Department of Professional Regulation ordered Respondent to undergo a three-day evaluation at South Miami Hospital's addiction treatment program under Dr. Delores Morgan. As a result of the mental and physical examinations conducted during that three-day evaluation, it was determined that Respondent had no chemical dependency on alcohol or drugs but rather that Respondent was suffering from a major depression episode. It was further determined that the medication given to Respondent by Dr. Diaz-Silvia had been one of the major causes of the determination by the administration at Mercy Hospital that Respondent was incompetent to practice medicine. Instead, Respondent was placed on Elavil, an antidepressant drug which affects the mood centers of the brain and removes depression and allows a person to function. It was also determined that Respondent must, in addition to taking the Elavil, remove the stressors which had caused his depression by reducing his medical practice, by requiring some of his grown children and their families to begin supporting themselves so Respondent would not have to work continuously with no vacations in order to support all of the adult members of his family, and by Respondent undergoing regular therapy with a psychiatrist who could help Respondent resolve some of his problems and monitor Respondent's need for an antidepressant drug. Respondent was released from South Miami Hospital's program to the care of psychiatrist Paul Daruna. Respondent started treatment with Daruna on a weekly basis on June 1, 1983. During the next 11 sessions, Respondent showed marked improvement with the Elavil prescribed for him: his sleep pattern improved, and his mood visibly improved. It was determined that Respondent had become able to make rational decisions and presented no danger to himself or to others. By October 13, 1983, Respondent's prognosis was excellent, and Daruna believed that Respondent would be able to practice medicine with reasonable skill and safety so long as he continued his treatment regimen, including both therapy and the antidepressant drug, and so long as Respondent took whatever steps were necessary to remove the stressors in his life caused by his heavy practice and the burdensome demands of his family. Daruna has not seen Respondent since October 13, 1983, and Respondent has not been under the care of any other psychiatrist. Dr. Delores Morgan saw Respondent on February 8, 1984, two days before the formal hearing in this cause. Respondent was still taking his Elavil but was not treating with a psychiatrist. Respondent had voluntarily reduced his office practice and had relocated his office so that he was now practicing with a general practitioner, Dr. Harry Rosado, who was voluntarily monitoring Respondent's practice. Although Respondent's privileges were still under suspension at Mercy Hospital, Respondent was practicing at Baptist Hospital and had performed approximately 54 deliveries during 1983 while practicing only three days a week. Dr. Morgan noted Respondent's marked improvement and Respondent's continued cooperation. However, she determined that Respondent was still in need of psychiatric follow-up so long as he was on medication in order that he could be monitored for change. She further believed that Respondent's practice of medicine should remain restricted to the level it is at this time until his treating psychiatrist had determined that it was appropriate for him to again engage in the full-time practice of medicine. She further recommended that monitoring of Respondent's practice continue, and believed most strongly that it was still imperative that Respondent's family, comprised primarily of grown children, start to assume some responsibility for their own lives and not continue to place the total burden on their father. Although Respondent admitted at the formal hearing that he agrees with Dr. Morgan's assessment of his prognosis and that he has voluntarily restricted his practice and is voluntarily taking his medication, Respondent still does not believe that he was impaired during the approximate six-month period in question, does not believe he was "slowed down" during that time period, and does not believe that he was irrational or paranoid concerning the stained glass window episode. Accordingly, although Respondent has voluntarily imposed on himself some of the restrictions recommended in order that he continue to function well, it appears that Respondent still does not fully appreciate the extent to which his mental state had deteriorated during the time before he was involved in any treatment regimen. During late 1982 and early 1983, Respondent was mentally incompetent due to a severe depressive state and inappropriate treatment which made him more incompetent to the extent that he was unable to practice medicine with reasonable skill and safety to patients.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of the allegations contained in the Administrative Complaint filed against him and placing Respondent's license to practice medicine on probation under such terms and conditions as may be considered necessary by the Board of Medical Examiners, including continued psychiatric care and reporting to the Board of the status of the health of Respondent, with restrictions upon his medical practice as may be recommended in the future by his treating physicians in light of his mental and physical status. DONE and RECOMMENDED this 22nd day of May, 1984, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of May, 1984. COPIES FURNISHED: Joseph W. Lawrence, II, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Luis Fernandez, Esquire 2600 SW Third Avenue, Suite 203 Miami, Florida 33129 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Dorothy Faircloth, Executive Director Board of Medical Examiners 130 North Monroe Street Tallahassee, Florida 32301
The Issue In its petition, Florida Psychiatric Centers (FPC) alleges that HRS seeks to grant a CON to Florida Residential Treatment Centers, Inc. (FRTC), based on the agency's unpromulgated policy that ". . . at least one residential treatment center should be approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (Petition, page 2, paragraph 6.) FPC argues that the policy is a "rule" and is invalid as a rule because it has not been adopted pursuant to Section 120.54, F.S., and because it conflicts with Sections 381.493, F.S., and 381.494, regarding need criteria. Further, FPC argues the "rule" is arbitrary and violates due process because the agency predetermines need regardless of the availability of like and existing services. HRS and Intervenor, FRTC, argue that the policy is incipient and needs not be promulgated. Further, the policy does not obviate a determination of need. HRS and FRTC claim that FPC lacks standing to bring this action, as its facility is a hospital and not the same as an intensive residential treatment program. HRS admits that the alleged policy has not been promulgated under Section 120.54, F.S. The issues for determination in this proceeding are summarized as follows: Whether FPC has standing to bring this action; Whether HRS has a policy regarding CON approval of intensive residential treatment programs, and whether that policy is a "rule"; and If the policy is a rule, is it an invalid rule?
Findings Of Fact FPC is a partnership which has received CON #2654 to construct a 100- bed psychiatric hospital in the Plantation/Sunrise area of West Broward County. The facility is under construction and will include 80 short-term psychiatric beds (40 geriatric, 15 adolescent, and 25 adult beds) and 20 short-term substance abuse beds. FPC anticipates an average length of stay of approximately 28 days for adults and less than 60 days for adolescents. FRTC is owned by Charter Medical Corporation. It proposes to build and operate a 60-bed intensive residential treatment program for children and adolescents in Broward County. The proposed facility will treat children and adolescents in need of psychiatric services. Its anticipated average length of stay is approximately one year. If it is awarded a certificate of need, FRTC intends to obtain licensing by HRS pursuant to Chapter 395, F.S., and Chapter 10D-28 F.A.C. No other facility licensed as an intensive residential treatment program, as defined in subsection 395.002(8), F.S. (1987), is available in Broward County. On March 11, 1987, HRS issued CON #4851 to FRTC for its 60-bed facility. A challenge to that CON is pending in DOAH consolidated cases #87- 2046/87-2400/87-2401. FPC is a petitioner in the case, with Florida Medical Center and South Broward Hospital District. Section 395.002(8), F.S., defines "Intensive Residential Treatment Programs for Children and Adolescents as: . . . a specialty hospital accredited by the Joint Commission on Accreditation of Hospitals which provides 24-hour care and which has the primary functions of diagnosis and treatment of patients under the age of 18 having psychiatric disorders in order to restore such patients to an optimal level of functioning. When completed, FPC will be accredited by the Joint Commission on Accreditation of Hospitals; it will provide 24-hour care and will have the primary function of diagnosis and treatment of patients with psychiatric disorders and problems of substance abuse. Unlike the other psychiatric hospitals in Broward County, FPC will have a campus-like setting and separate buildings for the various services. FPC will not be a locked facility. With the exception of the length of stay, the services provided by FPC for its adolescent patients will be essentially the same as an intensive residential treatment program, as defined above. Until recently, HRS has had very few CON applications for intensive residential treatment programs. HRS has considered that these programs must undergo CON review only if they seek licensure as a specialty hospital. In considering need for intensive treatment programs, HRS does not consider unlicensed residential treatment programs to be like and existing services because HRS is not required to review unlicensed facilities; HRS would not have any way of knowing all the programs in operation and would have no control over the services offered. This policy is similar to the policy HRS employed in conducting CON review of ambulatory surgery centers. In those cases, HRS did not consider the outpatient surgery being performed in physicians' offices. Because the legislature has created a special definition of intensive residential treatment facility, and because the State Health Plan seeks a continuum of mental health services, HRS presumes there is a need for a reasonably sized intensive residential treatment facility in each planning district. This presumption can be rebutted with evidence in a given case, such as the fact that the district has few children with mental illnesses, or that such programs have been tried and failed, or that parents in the area prefer to send their children outside the district. Moreover, any applicant for a CON for an intensive residential treatment facility must evidence compliance with the myriad criteria in Section 381.705, F.S. (1987), and in Chapter 10-5, F.A.C. Although there is no specific bed need methodology adopted by HRS for intensive residential treatment facilities, other psychiatric services, such as long-term psychiatric care, are also evaluated without a numeric bed need methodology. HRS has applied its presumption of need policy in intensive residential treatment program CON reviews at least since 1983. One reason why the policy has not been adopted as a rule is that there have been so few applications in that category. In the experience of Elizabeth Dudek, Health Facilities and Services Consultant Supervisor, the first level supervisor for CON review, there were merely three applications of this type prior to a recent batch of three more applications. FPC's Petition to Determine Invalidity of Agency Rule(s) alleges that HRS' policy is ". . . at least one residential treatment center should be approved in each of DHRS' eleven health planning districts in Florida, regardless of the need for such facilities." (paragraph 6) FPC further alleges that HRS construes Chapter 395 as requiring it to ". . . automatically approve at least one residential treatment center in each DHRS health planning district regardless of whether the statutory criteria for need in Section 381.494(b), F.S. [renumbered and amended as Section 381.705, F.S., in 1987] would be met by the applicant." (paragraph #7) These allegations were not proven in this proceeding and are rejected in favor of the less rigid presumption of need policy described in findings of fact #7 and #8, above.
Conclusions THIS CAUSE comes before the Agency For Health Care Administration (the "Agency") concerning Certificate of Need ("CON") Application No. 10131 filed by The Shores Behavioral Hospital, LLC (hereinafter “The Shores”) to establish a 60-bed adult psychiatric hospital and CON Application No. 10132 The entity is a limited liability company according to the Division of Corporations. Filed March 14, 2012 2:40 PM Division of Administrative Hearings to establish a 12-bed substance abuse program in addition to the 60 adult psychiatric beds pursuant to CON application No. 10131. The Agency preliminarily approved CON Application No. 10131 and preliminarily denied CON Application No. 10132. South Broward Hospital District d/b/a Memorial Regional Hospital (hereinafter “Memorial”) thereafter filed a Petition for Formal Administrative Hearing challenging the Agency’s preliminary approval of CON 10131, which the Agency Clerk forwarded to the Division of Administrative Hearings (“DOAH”). The Shores thereafter filed a Petition for Formal Administrative Hearing to challenge the Agency’s preliminary denial of CON 10132, which the Agency Clerk forwarded to the Division of Administrative Hearings (‘DOAH”). Upon receipt at DOAH, Memorial, CON 10131, was assigned DOAH Case No. 12-0424CON and The Shores, CON 10132, was assigned DOAH Case No. 12-0427CON. On February 16, 2012, the Administrative Law Judge issued an Order of Consolidation consolidating both cases. On February 24, 2012, the Administrative Law Judge issued an Order Closing File and Relinquishing Jurisdiction based on _ the _ parties’ representation they had reached a settlement. . The parties have entered into the attached Settlement Agreement (Exhibit 1). It is therefore ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Agency will approve and issue CON 10131 and CON 10132 with the conditions: a. Approval of CON Application 10131 to establish a Class III specialty hospital with 60 adult psychiatric beds is concurrent with approval of the co-batched CON Application 10132 to establish a 12-bed adult substance abuse program in addition to the 60 adult psychiatric beds in one single hospital facility. b. Concurrent to the licensure and certification of 60 adult inpatient psychiatric beds, 12 adult substance abuse beds and 30 adolescent residential treatment (DCF) beds at The Shores, all 72 hospital beds and 30 adolescent residential beds at Atlantic Shores Hospital will be delicensed. c. The Shores will become a designated Baker Act receiving facility upon licensure and certification. d. The location of the hospital approved pursuant to CONs 10131 and 10132 will not be south of Los Olas Boulevard and The Shores agrees that it will not seek any modification of the CONs to locate the hospital farther south than Davie Boulevard (County Road 736). 3. Each party shall be responsible its own costs and fees. 4. The above-styled cases are hereby closed. DONE and ORDERED this 2. day of Meaich~ , 2012, in Tallahassee, Florida. ELIZABETH DEK, Secretary AGENCY FOR HEALTH CARE ADMINISTRATION
Findings Of Fact Introduction Orlando General Hospital applied in April, 1987, for a certificate of need to allow it to convert 24 existing medical-surgical beds to short term psychiatric beds. O.G. Ex. 2, p. 1. It did not explicitly apply for beds limited to serve adults. It did, however, state that adolescent care would not be provided "at this time," leaving open the use of the 24 beds in the future for possible adolescent use. Id. at p. 5. Charter Medical-Orange County, Inc., applied for a certificate of need for a 50 bed short term psychiatric specialty hospital. It explicitly applied for a specialty hospital having 50 beds of "short term adult psychiatric care." C.M. Ex. 1, application, section I. In the executive summary, it characterized its proposal as a specialty hospital "for adults." Id. at p. 1. Charter does not intend to treat child or adolescent short term psychiatric patients. T. 23. The applications were filed in early 1987 to meet need in the January, 1992, planning horizon. The rule that applies in this case is the one contained in the prehearing stipulation. T. 392. It is rule 10-5.011(1)(o), Fla. Admin. Code. A copy of the rule is contained in O.G. Ex. 7, p. 33. The provisions of the local health plan at issue in this case are accurately reproduced in the State Agency Action Report (SAAR) which is C.M. Ex. 5. Net Short Term Psychiatric Bed Need (Numeric Need) Rule 10-5.011(1)(o)4a-c, Fla. Admin. Code, provides that the projected number of beds shall be based on a bed need ratio of .35 beds per 1,000 population projected five years into the future and based, in this case, on the January, 1987, projections for January, 1992. That 1992 population for District VII is projected to be 1,505,564, and thus the gross short term psychiatric bed need is 527 beds. For this batching cycle, the inventory of licensed and approved short term psychiatric beds was 410. These were: General Hospitals Florida Hospital-Altamonte 20 Florida Hospital-Orlando 85 Orlando Regional Med. Center 32 Wuesthoff Memorial Hospital 25 Subtotal 162 Specialty Hospitals Brevard Mental Health Center 52 CPC Palm Bay (began 10/86) 40 Laurel Oaks (began 10/86) 60 Lynnhaven (approved only) 39 Park Place (approved only) 17 West Lake 40 Subtotal 248 TOTAL (Licensed and approved) 410 TOTAL (Licensed only) 354 Thus, there is a net need for 117 short term psychiatric beds In District VII by 1992. The rule further specifies that a minimum of .15 per 1,000 population should be allocated to hospitals holding a general license, and that .20 per 1,000 of the beds may be located in either speciality hospitals or hospitals holding a general license. HRS interprets the word "should" in the rule with respect to .15 per 1,000 allocated to hospitals with a general license as being mandatory. C.M. Ex. 5, pp. 13-14. This is a reasonable construction of the rule. By 1992 there must be 226 short term psychiatric beds located in hospitals holding a general license. Since currently there are 162 beds in such hospitals, there is a net need by January, 1992, for 64 short term psychiatric beds to be opened in hospitals holding a general license. The remainder of the net bed need, 53 beds, may be located in either a specialty hospital or a hospital holding a general license. T. 500-02. The Occupancy Rate for "All Existing Adult Short Term Inpatient Psychiatric Beds" Rule 10-5.011(1)(o)4e, Fla. Admin. Code, provides in part that "no additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period." (E.S.). Calendar year 1986 is the period of time accepted by all parties as the "preceding 12 month period" as specified by the rule, that is, the period of time to calculate the occupancy rate for this batching cycle. See, e.g., T. 285; C.M. Ex. 5. The State Agency Action Report Occupancy Rate The State Agency Action Report computed the occupancy rate for all licensed short term psychiatric beds in District VII in calendar year 1986 at 70.13 percent. C.M. Ex. 5, p. 10. This figure was based upon data as to patient days as reported by District hospitals to the District VII local health council and was based upon 354 licensed beds in the District during the full calendar year, but excluded 56 beds the re approved but not opened. O.G. Ex. 7, p. 6. Exclusion of CPC Palm Bay and Laurel Oaks CPC Palm Bay and Laurel Oaks have been designated by certificate of need issued by HRS to serve only children and adolescents. T. 507. Since those facilities by law cannot serve adults, their beds are not "adult beds," their patient days are not adult patient days, and their occupancy rate is not an adult occupancy rate. T. 1128. If CPC Palm Bay and Laurel Oaks were excluded from the calculation of the occupancy rate in the SAAR, the occupancy rate would be 73.7 percent. This rate is a weighted average based upon a 86,779 patient days that were possible at 100 percent occupancy of all licensed short term psychiatric beds in District VII in 1986, excluding Palm Bay and Laurel Oaks. C.M. Ex. 17, p. 11, fn. 9. How Many Adult Patient Days and Beds? HRS often issues certificates of need without age restrictions, allowing the facility to provide short term psychiatric treatment to everyone, regardless of age. Such hospitals can and do serve all ages, and their licensed short term psychiatric beds are not designated as, or restricted to, adults. T. 1128-29. With the exception of Palm Bay and Laurel Oaks, none of the other licensed short term psychiatric hospitals in the District are restricted by HRS by patient age. HRS does not have data to enable it to determine which short term psychiatric beds were used by adult patients in the District in 1986. T. 1169. Use of beds for age cohorts can dramatically and continuously change during a calendar year, and 41 has no reliable means to know about such changes. T. 1229-30. Hospitals issued certificates of need without limitation as to the age of the patient are not required by HRS to report the number of patient days served by the hospital by age or age group of the patient. See T. 1218-19; HRS Ex. 2. HRS Ex. 2. Consequently, the reported short term psychiatric patient days for District VII for calendar year 1986 mix adult patient days with patient days for children and adolescents. Thus, with the exception of Laurel Oaks and Palm Bay, it is impossible in this case for the applicants and other parties in this batching cycle to untangle pure adult psychiatric patient days from the available data. T. 392, 353, 287, 291, 371, 1169-71. It is impossible on this record to make a finding of fact as to what would happen to the mixed occupancy rate all patient days attributable to adolescents and children could be excluded from the adult patient days. The only bit of evidence is found in C.M. Ex. 17, the data from Florida Hospital, which shows for that hospital that the 16 adolescent unit in 1986 had an occupancy rate of 60.92 percent, and the open adult unit had an occupancy rate of 82.42 percent. C.M. Ex. 17, p. 3. But that percentage is more a reflection of Florida Hospital's choice in how it set up the beds in the two programs than it is a reflection of need. For example, had Florida Hospital chosen to allocate only 12 beds to its adolescent program, instead of 16, the 1986 occupancy rate for that unit, based on 3,558 patients a day, would have been 81.23 percent. One wonders why Florida Hospital did not simply allocate a lower number of beds to the adolescent unit, since it had only 13 admissions to that unit in 1986. In any event, since a hospital like Florida Hospital has discretion as to how it sets up its beds with respect to the ages of patients. In those beds, the fact that it had an occupancy rate of 60.92 percent in the subunit it called the adolescent unit in 1986 is relatively meaningless when trying to predict which way a pure adult occupancy rate might change if adolescent and child patient days could be excluded. In summary, there is no accurate count of beds licensed only as adult beds, there is no accurate count of beds used only as adult beds, and there is no accurate count of adult patient days. The Problem of West Lake Hospital The record has an additional data problem with respect to calculation of the occupancy rate of adult short term psychiatric beds. West Lake Hospital is licensed for 40 short term beds (not restricted by age), and 30 long term psychiatric beds. Data for calendar year 1986, the only year relevant in this case, is a mixture of short term and long term patient days. C.M. Ex. 17. As will be discussed ahead, additional evidence as to the patient days at West Lake Hospital was excluded from evidence for failure to comply with the prehearing order. The Problem of Short Term Psychiatric Patient Days Occurring in General Hospitals Without Licensed Short Term Psychiatric Beds A general hospital with no licensed short term psychiatric care can lawfully provide temporary and sporadic short term psychiatric care in its medical-surgical beds. T. 1191. In calendar year 1986, Orlando General Hospital reported to the Hospital Cost Containment Board that it provided 4,969 psychiatric (MDC 19) patient days of care. O.G. Ex. 7, p. 11. By 1988, it had over 30 psychiatric patients in the hospital at any given time. T. 753. Orlando General Hospital does not have any beds licensed for short term psychiatric care, or for long term psychiatric care, for that matter. Orlando General Hospital's psychiatric patients are currently receiving inpatient psychiatric care that is substantially the same as would be provided in a licensed short term psychiatric bed, with the exception that the care is osteopathic in nature. See T. 797, 1355-58, 1360-62, 788-90, 792-93. HRS Policy as to the Data Problems HRS stated that it "... would not attempt to fix a specific occupancy for a specific age cohort" in this case, T. 1220. A good faith attempt was made, however. Following a new policy, HRS argued that the adult bed occupancy rate should exclude the beds and patient days of hospitals having certificates of need explicitly limited to service of the needs of children and adolescents (Palm Bay and Laurel Oaks), but should include all of the licensed short term psychiatric beds at any other facility that is not restricted by patient age. T. 1127-29. It was acknowledged that the information is faulty, but the Department urges that it is the best that it can do under the circumstances. T. 1174. With respect to patient days, HRS also urges that only the patient days reported to the local health council by hospitals having licensed adult short term psychiatric beds should be counted in the mixed rate. In particular, HRS argues that it should not use patient day data reported to the Hospital Cost Containment Board because such data is not limited to hospitals having "designated" psychiatric units. T. 1126-27. This argument is not reasonable. Hospitals that are legally authorized to provide short term psychiatric care to adults (i.e., having a certificate of need and a license) can provide such care in any licensed bed in the hospital, even though the bed is not licensed as a psychiatric bed. Moreover, a general hospital with no licensed short term psychiatric care, according to HRS witnesses, can lawfully provide temporary and sporadic short term psychiatric care in its medical-surgical beds. It may even provide such care on a continuous, ongoing basis, as in the case of Orlando General Hospital, although the legality of doing so is questioned by HRS. The critical question is not whether these licensed hospitals have legal authority to provide short term psychiatric care, but whether the care in fact given results in a short term psychiatric patient day in the District. If the care given is essentially the same as if the patient had been in a licensed short term psychiatric bed, it would be unreasonable not to treat the resulting statistic as a short term psychiatric patient day. What is at stake is a true measurement of District capacity. If tomorrow all of the District short term psychiatric patients and the patient days generated by such patients transferred to the District licensed short term psychiatric beds, these short term psychiatric patient days would certainly be counted in the occupancy rate. When trying to assess the real extent of availability of District capacity, a false picture of excess and unused capacity would be shown if real short term psychiatric patient days are occurring somewhere in the District, but are not counted in determining the occupancy rate. On the other hand, if the facility is not even a licensed hospital, it is presumptively providing an alternative kind of inpatient psychiatric care that is different from a licensed psychiatric hospital. Thus, its patient days are irrelevant absent some specific proof that the care given in such a bed is essentially the same as a short term psychiatric patient day in a licensed general or specialty hospital. What is an "Existing" Adult Short Term Bed? Rule 10-5.011(1)(o)4e, Fla. Admin. Code, calls for the occupancy rate for "all existing" adult short term psychiatric beds in the service district, and does not define the word "existing." Petitioners assert that "existing" adult beds of the facility for purposes of determining occupancy rate is the number of beds characterized by the facility as having been in fact used for psychiatric care during the year, but only if that number is less than the number of licensed short term psychiatric beds. T. 391, 354-55. The Respondent and the Intervenor argue that "existing" adult beds is fixed by the number of licensed short term psychiatric beds granted to the facility by the state if available to serve adult patients. Normally, to be licensed a bed must be available within 24 hours. T. 1121. Orlando Regional Medical Center In calendar year 1986, Orlando Regional Medical Center had 32 licensed short term psychiatric beds. T. 348. These 32 beds were not restricted by patient age. In calendar year 1986, Orlando Regional Medical Center characterized as "in service" 32 beds for the first 7 months of 1986, 22 beds for the month of August, 18 beds for the month of September, and 12 beds for the remaining 3 months of the year. The figure of 25 beds used by the Petitioners is the weighted average. T. 348. These licensed short term psychiatric beds at Orlando Regional Medical Center were temporarily not in service because of the construction of new facilities at the hospital. Orlando Regional Medical Facility intended to reopen those beds in the future because the hospital reminded the party seeking discovery that it had 32 licensed beds, and characterized the missing beds as having been "warehoused," that is, saved for future use. T. 509-10; O.G. Ex. 7, appendix 3. Thus, all 32 of Orlando Regional Medical Center's licensed beds would be available and would be used for adult short term psychiatric care if demand existed. Florida Hospital Florida Hospital has two facilities relevant to this case, one in Orlando, in Orange County, and one in Altamonte Springs, in Seminole County. In calendar year 1986, Florida Hospital had 105 beds licensed as short term psychiatric beds. Florida Hospital would serve patients of any age in these 105 beds. C.M. Ex. 18 is a document which was obtained from Florida Hospital through discovery. T. 286. The document is entitled "Florida Hospital Center for Psychiatry Monthly Operating Statistics," and thus was assumed by Charter's expert to be Florida Hospital's characterization of its data as psychiatric data. T. 289. C.M. Ex. 18 could not have been obtained by Charter at the time it made application. It was obtainable only through the discovery process after commencement of section 120.57(1), Fla. Stat., proceedings. T. 314-16, 386-87. Florida Hospital reported in discovery that in calendar year 1986, it had 113 beds operating in its "Center for Psychiatry." Of these, 16 were substance abuse beds, 13 were beds in an eating disorders unit, and 16 were adolescent beds. That left 24 beds in the intensive care unit, 24 beds in an open unit, and 20 beds at a unit at Altamonte Springs. C.M. Ex. 18. The 16 substance abuse beds clearly were not psychiatric beds. If the 13 eating disorders beds were short term psychiatric beds, Florida Hospital had 97 of its 105 licensed short term psychiatric beds in actual operation in 1986. If they were not, Florida Hospital had 84 of its 105 licensed short term psychiatric beds in actual operation in 1986. There is no evidence in this record that Florida Hospital could not and would not have readily opened 8 more short term psychiatric beds during 1986 if demand for those beds had existed, thus having "open" all 105 of its licensed beds. There is no evidence in this record that in 1986, Florida Hospital could not have closed its 16 bed adolescent unit and devoted all of those beds to adult short term psychiatric care, had there been a need. Indeed, it appears that generally speaking, that is how Florida Hospital operates: by shifting beds to other uses within its licensed authority according to demand. See T. 1322-26. Thus, all 105 of Florida Hospital's licensed beds would have been available and would have been used for adult short term psychiatric patients if the demand existed. Counting Patient Days - Are Eating Disorder Patient Days Psychiatric Patient Days? Florida Hospital reported in discovery that it had 2,982 patient days in its eating disorder unit, and that the unit operated with 13 beds. C.M. Ex. 18, P. 3, lines 8 and 26. The eating disorder unit reports to the administrative director of the Florida Hospital Center for Psychiatry. T. 977. The administrative director could not explain why the unit reported to the Center for Psychiatry. T. 977. The unit has co-directors, one a psychiatrist, and the other a specialist in internal medicine. Id. The administrative director of the Center for Psychiatry characterizes the 13 eating disorders beds as medical-surgical beds, and classifies patients in those beds as primarily having a medical problem, T. 976, but the psychiatrist co-director of the program hedged, and would not say whether the primary diagnosis is medical or psychiatric. T. 1315. The patients typically are, however, very ill from a medical point of view. T. 1314. Florida Hospital's characterization of the nature of the care given in its eating disorders unit, as summarized in the preceding paragraph, in view of the manner in which the witnesses were unclear as to how to characterize the eating disorder unit, is not evidence that the care given in that unit is not psychiatric care in view of Florida Hospital's interest in these cases in opposition to the applications. Charter's expert concluded from C.M. Ex. 18 that Florida Hospital was serving short term psychiatric patients in its eating disorders unit at Altamonte Springs. T. 287. He characterized this as a short term psychiatric service in medical-surgical beds. T. 289. But he also characterized the 13 beds as psychiatric beds. T. 287-88. HRS has issued a certificate of need to a short term psychiatric hospital limiting that certificate of need to treatment of eating disorders, thereby recognizing treatment of eating disorders in that case as a form of psychiatric treatment. T. 1191. From testimony at the hearing, it would appear that HRS's expert would view the eating disorder unit at Altamonte Springs as a short term psychiatric program. T. 1191-1192, 1194. It is concluded that the preponderance of the evidence shows that the care rendered to patients in the eating disorders unit was psychiatric care. The unit is administratively a part of the hospital's Center for Psychiatry. While the patients are very ill, medically speaking, they also have substantial mental health problems. Finally, and most persuasive, HRS has previously characterized such care as short term psychiatric care. If these 2,982 eating disorder patient days are counted as psychiatric patient days in 1986 for District VII, and if the number of beds at Florida Hospital remains as it was in the SAAR calculation (105 licensed beds), then the total patient days for the District changes from 63,976 to 66,958. The result is that the occupancy rate for District VII for 1986 for adult and mixed short term psychiatric beds changes from 73.72 percent to 77.16 percent. C.M. Ex. 17, p. 13. This calculation is the result of a weighted average discussed above. Psychiatric Patient Days Reported to the Hospital Cost Containment Board Orlando Regional Medical Center and Florida Hospital report patient days by Medicare major diagnostic categories (MDC). MDC 19 is the category for psychiatric care. T. 512; O.G. Ex. 7. The data collected in this record was for calendar year 1986. T. 603-604. Relying upon MDC 19 statistics for calendar year 1986, Florida Hospital (Orlando and Altamonte Springs combined) had 28,372 MDC 19 patient days, and Orlando Regional Medical Center had 7,328 MDC 19 patient days. The Florida Hospital MDC 19 patient days shown in table 6, O.G. Ex. 7, are very close to the number of patient days shown on C.M. Ex. 18, the operating statistics from the "Center for Psychiatry" obtained from Florida Hospital in discovery. The MDC 19 patient days, 28,372, exceed the "Center for Psychiatry" reported data by only 452. The Orlando Regional Medical Center's MDO 19 patient days, 7,328, is 618 patient days greater than the patient days reported by Orlando Regional Medical Center to the local health council. If these MDC 19 patient days are assumed to be short term adult psychiatric patient days, following the same mathematical calculation used by HRS both in the SAAR and in testimony during the hearing (with the same weighted averages), the occupancy rate for adult and mixed short term psychiatric care in District VII, using licensed beds, was 78.39 percent in calendar year 1986. O.G. Ex. 7, table 6. This calculation uses the same weighted average (86,779 patient days at 100 percent occupancy) as used by all the other parties. C.M. Ex. 17, p. 11, fn. 9. There is no evidence in the record that the foregoing MDC 19 patient days are limited to short term psychiatric days, or the extent to which the data considers long term patient days as well. Of course, there is also no evidence available to separate the MDC 19 patient days into adult patient days and patient days attributable to children and adolescents. Westlake Hospital Data as to Short Term Psychiatric Patient Days in 1986 The Intervenor, Florida Hospital, has renewed its effort to have F.H. Ex. 3, and testimony based upon that exhibit admitted, into evidence. The exhibit and testimony involves data as to short term psychiatric patient days for 1986 at Westlake Hospital, located in Seminole County. Florida Hospital argues that the ruling excluding F.H. Ex. 3 from evidence, as well as testimony related to that exhibit, is inconsistent with the ruling that allowed Charter Medical to introduce C.M. Ex. 19. It is argued that the only difference is that in the case of Charter Medical, the witness first testified as to the contents of the exhibit, whereas in Florida Hospital's case, the exhibit was admitted, the witness testified, and then the exhibit was excluded. Florida Hospital argues that as a result of this sequence of events, its witness was not afforded an opportunity to present the same evidence from memory without the exhibit. From a review of the sequence of events, it is apparent that there is a substantial difference between the two exhibits, as well as a substantial difference in the procedures used by counsel, and that difference necessitates the two rulings. C.M. Ex. 19 is nearly identical to C.M. Ex. 17, with three exceptions. In C.M. Ex. 19 the patient days at the Florida Hospital eating disorder unit were moved from the Orlando facility to the Altamonte Springs facility. C.M. Ex. 19 also excluded adolescent patient days from the Florida Hospital count changed the number of "existing" beds at Orlando Regional Medical Center to 25 instead of 32. T. 295. C.M. Ex. 19 made no other changes to C.M. Ex. 17 with respect to patient days or number of beds. Two objections were made by Florida Hospital to the admission of C.M. Ex. 19, that C.M. Ex. 19 had not been provided to opposing counsel at the exchange of exhibits, in violation of the prehearing order, and that C.M. Ex. 19 was an impermissible amendment to Charter Medical's application for certificate of need. T. 295-296. Only the first objection is the subject of Florida Hospital's renewed argument. The Hearing Officer at the time overruled the first objection because it was determined that C.M. Ex. 19 merely summarized the testimony of Dr. Luke as to changes he would make to C.M. Ex. 17. That ruling was correct, and should not be changed at this time. All of the underlying data for the expert analysis in C.M. Ex. 19 came into evidence without objection that it had not been exchanged among the parties. C.M. Ex. 18 contained the data as to adolescent patient days and eating disorder patient days at Florida Hospital in 196. That data came into evidence without objection that it had not been exchanged. T. 316. Dr. Luke's testimony that Orlando Regional Medical Center had only 25 beds operational in 1986 came into evidence without objection. T. 292. Dr. Luke's testimony concerning the location of the eating disorders unit at Altamonte Springs came into evidence without objection. T. 287, 291. Both of these latter evidentiary matters were of a type that easily could have been known to Dr. Luke without reference to a document to refresh his memory. Additionally, the parties were well aware of the argument that Orlando Regional Medical Center had only 25 operational beds in 1986, and that Florida Hospital had only 48 adult beds in operation in 1986, since that evidence and argument was a fundamental part of Orlando General Hospital's basic bed need exhibit, O.G. Ex. 7, and the testimony of Ms. Horowitz. Moreover, the type of analysis of the data contained in C.M. Ex. 19 is the same as that of Ms. Horowitz in O.G. Ex. 7. Thus, Florida Hospital was not caught by surprise by C.M. Ex. 19. The exhibit did not contain new data or new modes of analysis. Florida Hospital's attempt to introduce data as to the actual number of short term psychiatric patient days at Westlake Hospital in 1986 was quite different. The data as to patient days at Westlake had not been produced during the deposition of Florida Hospital's witness, although similar data for 1987 and 1988 was produced. T. 867. Had it been made available in discovery, the failure to exchange the data as an exhibit as required by the prehearing order would have been less serious. But the exhibit had not been given by Florida Hospital to opposing parties, in violation of the prehearing order. T. 869. F.H. Ex. 3 did not reorganize data that otherwise was exchanged between the parties. It attempted to introduce new raw statistical data that had not been furnished opposing counsel as required by the prehearing order. The Hearing Officer initially ruled that F.H. Ex. 3 should be admitted into evidence and allowed the witness to testify concerning the data contained in the document. T. 870-871. That initial ruling was in error. The data contained in F.H. Ex. 3 is not at all simple. The document consists of four pages of numbers representing monthly statistics in 1986 at Westlake Hospital for each of its units. It is highly unlikely that a witness could have remembered all of that data presented the data in testimony without reliance upon the exhibit. Indeed, the witness testified that all of his testimony was based upon F.H. Ex. 3. T. 907. The witness had apparently given a different impression as to Westlake's occupancy rate in 1986 during his deposition, and did so without the benefit of F.H. Ex. 3. T. 910. Florida Hospital could have asked the witness if he could have presented his testimony without reference to F.H. Ex. 3, but it did not ask the witness that critical question. In sum, the witness could not have presented his analysis from memory. He had to have F.H. Ex. 3 in front of him as he testified. On December 2, 1987, an order was entered setting this case for formal administrative hearing beginning on July 11, 1988. That order established prehearing procedures. Paragraph 3 of that order requires counsel to meet no later than 10 days before the hearing to, among other things, "examine and number all exhibits and documents proposed to be introduced into evidence at the hearing." Later in the same paragraph is the requirement that the parties file a prehearing stipulation containing a list of all exhibits to be offered at the hearing. Paragraph 3D of the prehearing order states in part that failure to comply with the requirements of the order "may result in the exclusion of testimony or exhibits." The first time that opposing counsel were given the opportunity to see the data in F.H. Ex. 3 was in the middle of the formal administrative hearing. The exhibit contained detailed raw statistical data. C.M. Ex. 19 did not try to present new raw statistical data. For these reasons, F.H. Ex. 3 and all testimony related to that exhibit by Mr. Menard was excluded from evidence. Later in the hearing, Florida Hospital sought to introduce the same data through the testimony of Wendy Thomas, the planning director and data manager for the local health council. T. 1050. Counsel for Florida Hospital first attempted to show the witness the document that had been excluded from evidence, and counsel for the other parties objected. T. 1047-1049. The Hearing Officer suggested to counsel that counsel should first ask the witness whether she had made a computation and then ask what was the basis of the computation, rather than show the witness the document. T. 1049. Counsel then attempted to do that. But when counsel asked the witness for her computation, it was still unclear whether the witness based her calculation upon data in the excluded document. T. 1053. After a number of other questions, it still was unclear whether the data in the excluded document was the basis for the calculation. T. 1053-1055. The Hearing Officer then asked the witness if she could identify F.H. Ex. 3. The witness said that F.H. Ex. 3 contained the exact type of information that she had in her own files, and that her document looked like F.H. Ex. 3, except it was photocopied smaller. T. 1056. During all of this exchange, the witness was never asked by counsel for Florida Hospital if she ever had an independent memory of the details of the underlying data, or whether, if that memory now had faded, looking at F.H. Ex. 3 would refresh her memory. Since it was apparent that the basis for the witness's calculation was the same raw statistical data as contained in F.H. Ex. 3, the Hearing Officer granted the motion to exclude the testimony. Later, in cross examination of the proffered testimony, the witness testified that the basis for her calculation was the use of a document containing the same data as F.H. Ex. 3. T. 1087-1088, 1091. Thus, counsel for Florida Hospital did not lay a proper predicate for attempting to use F.H. Ex. 3 to refresh the memory of either witness. As discussed above, had it done so, it is unlikely that either witness could have testified from memory as to the statistics because the data contained in F.H. Ex. 3 was too detailed to have ever been in the memory of either witness. Florida Hospital argued that Ms. Thomas's calculation should be admitted because the raw data had been in her possession for over a year. That argument is unpersuasive. The raw data was in the possession of Westlake Hospital as well. The issue is not whether opposing parties might have discovered the data on their own, but compliance with the prehearing order requiring exchange of important exhibits. For these reasons, the Hearing Officer's rulings as to exclusion of the foregoing evidence will remain unchanged. The Local Health Plan Applicability No part of the District VII local health plan was adopted by HRS as a rule when these applications were and reviewed. T. 1214. Several years ago, with respect to applications for certificates of need for short term psychiatric beds, HRS considered need and occupancy rates only on a district-wide basis. T. 1184. See e.g. C.M. Ex. 20, where HRS did not refer to the local health plan as to these issues in District VII. HRS has now changed that policy, however, and considers need and occupancy at the district level and by portions of the District if those issues are effectively required by the local health plan. T. 1184. For purposes of planning for short term psychiatric services, the local health plan divides District VII into county "planning areas." Orange County is thus a local health plan planning area. The local health plan does not use planning areas for substance abuse planning, and it does not explain why there is a difference in planning. Orlando General and Charter both propose to locate their proposed short term adult psychiatric beds in Orange County if granted certificates of need. Counties are convenient units for health planning purposes because population data exists by county. T. 1180. Census tracts and zip code areas are also convenient geographical units for health planning. T. 1180-81. If a proposed facility is to be located very close to the county line, it would make no difference which side of the line it was on with respect to the ability of the facility to serve patients originating in either county. T. 1181. Allocation of Net Need to Orange County The local health plan, policy 3, provides that if the application of rule 10-5.011(1)(o) indicates a need (at the District level), the need is to be allocated among the counties in the district using the state numeric need method by county. T. 1027-29; C.M. Ex. 5. Applying all of the age calculations for the projected populations and bed inventory of Orange County only, the local health plan allocates 55 new short term psychiatric beds to Orange County by 1992. However, applying the allocation ratios of the rule, there is an excess of 18 short term psychiatric beds in general hospitals, and thus none of the 55 beds would be mainly allocable to a general hospital. There is, nonetheless, a potential allocation of need of 73 beds in either a specialty or a general hospital, and the net need of 55 beds could be allocated to either a specialty hospital or a general hospital. The Orange County Mixed Occupancy Rate The local health plan, policy 4, applies the 75 percent occupancy standard to the county level. The policy explicitly calls for an average annual occupancy rate for all existing facilities in the planning area with respect to adult short term psychiatric beds. C.M. Ex. 5. Relying upon the calculation in the SAAR, but deleting Laurel Oaks, the mixed occupancy rate for Grange County in 1986 was less than 58.4 percent. This calculation only includes the beds at Florida Hospital (Orlando) and Orlando Regional Medical Center. The calculation is based upon 18,696 patient days at Florida Hospital (Orlando) in 85 beds, and 6,242 patient days in Orlando Regional Medical Center in 32 beds. There were 4,969 MDC 19 patient days occurring at Orlando General Hospital in 1986. There were 7,328 MDC 19 patient days occurring at Orlando Regional Medical Center in 1986. The eating disorder patient days occurred in Seminole County (Altamonte springs) and should not be counted in an Orlando occupancy rate. The only data as to patient days at Florida Hospital, Orlando only, is that found in C.M. Ex. 18, which is the same as the SAAR, which reports 18,696 patient days. (The MDC 19 data mixes the two units.) The number of licensed short term psychiatric beds in Orange County in 1986 was 117. All of these beds were licensed the entire year, and thus there was no need to do a weighted average of potential patient days for these beds. See C.M. Ex. 17, p. 11; O.G. Ex. 7, table 6. Using all of the foregoing patient days, the number of patient days was 30,993, the number of licensed short term psychiatric beds was 117, and the mixed occupancy rate for Orange County for 1986 was 72.6 percent. If it is not appropriate to count the 4,969 patient days at Orlando General Hospital in the Orange County occupancy rate, the 1986 Orange County occupancy rate was only 60.09 percent. Conversion of Existing Beds and Service to Indigent Patients Policy 5 of the local health plan states that excess bed capacity in, among other types of beds, medical/surgical beds, should be eliminated by reallocation of beds among the services, including psychiatric services. Policy 6 of the local health plan states that primary consideration should be given for project approval to applicants who satisfy to the greatest extent the following priorities: The first priority is to applicants who commit to serving "underserved client groups," including Medicaid, Baker Act, and medically indigent patients. The second priority is to applicants who convert underutilized existing beds. As will be discussed in the conclusions of law, Orlando General's application satisfies these priorities, and Charter Medical's application does not. Other Evidence as to Future Need Historically, health care providers have been reimbursed on a fee- for-service basis. The more services provided, the greater the payment. These insurance arrangements had little incentive to decrease the level of services. T. 720. In the last three or four years, the health insurance industry has changed its methods of providing insurance. A very large percentage of insured patient care is now managed by use of flat rates based upon a per person count (capitation). The rates do not increase related to utilization. Managed health care reimbursement uses a system whereby the health care provider is paid a flat rate annually for each insured person, and agrees to provide for the health care needs of all such persons generally without considering the degree of utilization during the year. T. 722-723. Under the capitation system, the provider has the incentive to provide only such care that, in intensity or duration, is the minimum that is clinically acceptable. T. 724. Psychiatric services have been included in the movement of the industry toward managed health care reimbursement rather than fee-for-service reimbursement. T. 722. The health care industry now offers competitive managed health care plans in central Florida, and the trend is for an increase in the availability of such methods of reimbursement in central Florida. T. 726-727. It is now 40 percent of the insurance market, and in the early 1990's, the percentage of managed health care may be twice that percentage. T. 727. The effect of the new reimbursement system is to substantially lower the length of stay, and to lower the rate of admission as well, at short term psychiatric hospitals. T. 724-725, 881-882, 1319-1320. Orlando General Hospital projected that its average length of stay would be 30 days in 1992. It has discovered from current experience that its average length of stay is about 15 days. T. 433, 464. District VII has recently experienced an increase in the availability of community based mental health facilities. These facilities provide a variety of mental health services, including brief inpatient care. The facilities do not require a certificate of need. T. 1046-1047, 1319. The Nature of the Proposed Programs Orlando General Hospital General Orlando General is a 197 bed acute care general osteopathic hospital located in Orlando, Florida, in Orange County. Orlando General proposes to convert a 35 bed medical-surgical unit to 24 short term psychiatric beds at a capital cost of $689,272. It would relocate 11 of its medical-surgical beds, and convert the remainder to short term psychiatric beds. Orlando General Hospital is located in the southeast portion of Orange County. T. 1107. It is the most eastward facility in Orange County with the exception of a long term psychiatric hospital now under construction. T. 1107. The primary service area of Orlando General by location of physicians offices is the southern half of Seminole County and the northern portion of Orange County. In particular, the hospital serves northeastern Orange County through the location of its physicians' offices. T. 412; O.G. Ex. 2, p. 27. The program of treatment described in Orlando General's application is no longer an accurate description of Orlando General's current program or of the intended program. T. 453. The treatment programs planned for the new short term psychiatric unit are comparable to the programs planned by Charter Medical-Orange County, Inc., and are adequate and appropriate programs for short term psychiatric care. Psychiatric Care for the Elderly Orlando General Hospital would provide adequate and appropriate specialized short term psychiatric care for elderly patients, but would not provide such care in a unit physically separated from other patients. There currently is a split of professional opinion as to whether or not geriatric patients should be treated in a psychiatric unit separated (physically as well as programmatically) from other patients. There are benefits from both approaches. T. 1315-1317, 68, 74-76, 43-45, 770. Various Charter Medical hospitals do it both ways. T. 70. Osteopathic Medicine at Orlando General Hospital Osteopathic medicine differs from allopathic medicine in its emphasis upon viewing the interaction of all parts of the body, rather than a single part, and the use of muscular and skeletal manipulation. T. 1349, 753-754. Orlando General Hospital is an osteopathic hospital and has been osteopathic in nature since the 1960's. It was founded by osteopathic physicians, and the hospital abides by osteopathic philosophies. The Board of Trustees at the hospital are all osteopathic physicians. Although it has medical doctors on staff, the majority are osteopathic physicians Orlando General Hospital is accredited by the American Osteopathic Association to train osteopathic physicians, and has such training programs, primarily in family medicine. T. 412-414, 755. There are about 80 osteopathic physicians in Orange County, and the vast majority are on the staff at Orlando General Hospital. T. 760. Patients who prefer osteopathy, and osteopathic physicians, prefer an osteopathic hospital. Osteopathic physicians believe that they deliver better care to their patients in an osteopathic facility rather than an allopathic facility. About 30 percent of the psychiatric patients treated by Dr. Greene at Orlando General Hospital receive manipulation as a therapy. T. 1351. There is a shortage of osteopathic psychiatrists. T. 756. Other than Randall Greene, D.O., there are no osteopathic psychiatrists in the Orange County area. Id. There is a shortage of places for psychiatric resident training. There is no osteopathic psychiatric residency in Florida, and only a few in the country. T. 764, 1349. Consequently, osteopaths seeking to become psychiatrists often have to go to allopathic hospitals for residencies. T. 1349 Residency in an allopathic hospital is often not approved by the American College of osteopathic psychiatrists. Thus the osteopath who has had his or her residency in an allopathic hospital and lacks such approval will not be readily accepted as an osteopathic psychiatrist on the staff of an osteopathic hospital. T. 1350. Orlando General Intends to have a residency program in osteopathic psychiatric for at least two positions if it is granted a certificate of need. T. 762, 415. The Evolution of Osteo-Psychiatric Care at Orlando General Hospital Dr. Randall Greene came to Orlando in 1982. He is an osteopathic physician and psychiatrist. He initially was on the staff at four hospitals but soon discovered that other osteopathic physicians were referring patients needing psychiatric care to Orlando General Hospital because it was an osteopathic hospital. These physicians frequently asked Dr. Greene to provide psychiatric care at Orlando General. T. 754. Osteopathic physicians who referred their patients to Dr. Greene and to Orlando General Hospital continued to treat the physical ailments of those patients at Orlando General Hospital. T. 760. Dr. Greene now limits his psychiatric practice to Orlando General Hospital because of the large number of psychiatric patients being treated at the hospital. T. 756. Thirty to forty percent of the psychiatric patients come to Orlando General via the emergency room. T. 421, 445. Additionally, patients admitted to the new substance abuse program often need psychiatric care. T. 407. Orlando General has difficulty transferring its psychiatric patients to other hospitals. A number of the patients have no insurance or have only Medicaid coverage. T. 420. Orlando General Hospital is located in a lower economic area, and thus attracts patients of this type. Id. Patients who prefer osteopathic treatment also prefer not to be transferred to an allopathic hospital. T. 759. The increase in numbers of psychiatric patients served at Orlando General Hospital in medical-surgical beds helped to offset the hospital's loss of medical-surgical patient days during the same period. T. 452 Due to the large number of psychiatric patients, and the decline in need for medical-surgical beds, Orlando General hospital decided to apply for the instant certificate of need. Due to the osteopathic nature of the hospital, physicians, patients and the hospital prefer to keep these patients at Orlando General Hospital rather than refer them to an allopathic hospital. It is HRS's position that if a hospital does not advertise itself as having a distinct psychiatric unit and does not organize within itself a distinct psychiatric unit, the admission and treatment of psychiatric patients to medical-surgical beds on an "random" and unplanned basis is proper even the hospital does not have licensed psychiatric beds. T. 1191. Orlando General hospital does not hold itself out to the public through advertising as having a separate psychiatric unit. T. 468. Patient Mix & Commitment to Charity Care Orlando General Hospital currently provides a large portion of charity care for Orange County. T. 1100. In its 26 bed chemical dependency unit, Orlando General reserves 2 beds for indigents. T. 785. The unit also sets aside, as needed, one bed for any Florida nurse whose license is in jeopardy due to chemical dependence and who has no financial means to pay for treatment. Id. Orlando General Hospital typically has a larger amount of bad debt and charity care (for people who do not pay) than other hospitals in the area. T. 423. In 1987, Orlando General Hospital reported to the Hospital Cost Containment Board that it had $141,404 in charity care, and that it had $3,244,530 in bad debt. T. 657, 660. Bad debt constituted 9.7 percent of gross revenue. T. 660. Since it is very difficult to determine at admission whether the patient realistically can pay for services, a lot of this bad debt is, in a functional sense, charity care. T. 659-660. It is concluded from the foregoing that Orlando General Hospital has a genuine commitment to providing health care to persons who cannot pay. T. 422, 662. Orlando General Hospital projects that it will in its proposed 24 bed short term psychiatric unit 5 percent indigent patients, 8 percent Medicaid patients, 20 percent Medicare patients, 50 percent insured patients, and 17 percent private pay patients. These projections are reasonable and are consistent with Orlando General Hospital's current experience. T. 662-664; O.G. Ex. 2, p. 16. Charter Medical-Orange County, Inc. General Charter Medical proposes to construct a 50 bed free standing short term psychiatric hospital in Orange County, Florida. The capital cost of the proposed project would $5,85,000. C.M. Ex. 1. Charter Medical would offer adult and geriatric short term psychiatric services in the proposed short term beds. As a free standing specialty hospital devoted entirely to short term psychiatric care, Charter Medical's proposal should be able to provide more space and additional therapies than would typically be found at a general hospital with a short term psychiatric unit. T. 47-50, 890-91. Charter Medical would provide adequate geriatric short term psychiatric care in a separate unit with separate programs consisting of the latest techniques for caring for the mentally ill elderly patient. Charter Medical's proposed facility would not be able to treat short term psychiatric patients who also have serious medical problems, which undoubtedly will include elderly patients. Charter Medical would have adequate transfer arrangements with a general hospital to serve the medical needs of its patients, and would have adequate staffing and equipment within the free standing specialty hospital to meet the routine and emergency medical needs of its patients. Staffing Orlando General and Charter Medical would be able to recruit, train, and retain adequate staff to operate its proposed short term psychiatric unit. T. 635-648, 849-852, T. 137-143. Lone Term Financial Feasibility Orlando General Hospital Charges When these applications were filed, HRS did not have standards for the contents of a pro forma of income and expenses. Orlando General Hospital initially projected a charge rate of $350 in 1987 and $375 in 1988. This charge rate was based upon the charge rate for Orlando General's substance abuse unit at that time, compared with a survey of five other hospitals having short term psychiatric beds. T. 425; O.G. Ex. 2, p. 24, 49. As of the summer of 1988, the Medicaid program reimbursed Orlando General Hospital for its MDC 19 (psychiatric) patients at the rate of $418 per day. T. 585. Charter Medical proposes to charge $475 per day during 1988. Florida Hospital currently charges between $425 and $445 per short term psychiatric patient day, and these charges do not include ancillary charges. T. 992. Westlake Hospital currently charges about $550 per short term psychiatric patient day. T. 888. Winter Park Pavilion is a freestanding psychiatric hospital with 39 adult psychiatric beds. The record does not indicate whether it is licensed for short or long term care. The facility charges about $500 per patient day, which does not include ancillary costs. T. 913, 918. Crossroads University Behavioral Center is a freestanding 100 bed long term psychiatric hospital that is under construction. T. 808. Crossroads has considered charges in the range of $500 to $600 per day, but has not definitely settled on the rate. T. 832-833. The charges proposed by Orlando General Hospital in its application are very reasonable, if not very conservative. Projected Utilization Orlando General Hospital's MDC 19 patient days (psychiatric patient days) have increased steadily from 1986. In 1986, the hospital had 4,969 MDC 19 patient days; in 1987, it had 7,779 MDC 19 patient days; and extrapolating (multiplying by 4) from the data for the first three months of 196, Orlando General could reasonably expect 11,804 MDC 19 patient days in 1988. O.G. Ex. 2, p. 11; T. 516. Since a 24 bed unit at 100 percent occupancy would only generate 8,760 patient days, it is unreasonable to use 11,804 as the estimate of patient days in 1988. However, it is concluded that Orlando General Hospital would have no difficulty at all in very quickly filling its proposed 24 bed unit to capacity. Expenses Orlando General Hospital's application estimated that direct expenses of the proposed 24 bed short term psychiatric unit would be $801,505 in 1987, $839,080. In 1988, and $887,030 in 1989. O.G. Ex. 2. These are reasonable projections of direct expenses. The pro forma filed by Orlando General Hospital in its application did not include an estimate of allocated expenses. The allocated expenses would typically have been 60 percent of total expenses, and the direct expenses only 40 percent of total expenses. T. 698. The projected direct expenses for 1988 in Orlando General Hospital's application were $839,080. Since that is only 40 percent of the total expense, the total projected expense (including 60 percent for indirect allocated expense) would be $2,097,700. Long Term Financial Feasibility If Orlando General Hospital charged $375 per patient day in 1988, and had 8,760 patient days, as is reasonable to expect, given its actual experience, Orlando General would have $3,285,000 in gross revenue for 1988. Assuming that net revenue, after additions and after accounting for contractuals and bad debt, will be the same percentage of gross revenue as shown in Orlando General's application, which was 76.74 percent, this would generate a net revenue of $2,520,909. This net revenue would entirely cover not only the direct expenses but also the allocated expenses, and would leave profit of $423,209. All of the remaining issues raised by the parties as to the accuracy of Orlando General's estimates of nursing expense or bad debt are irrelevant given the large amount of leeway Orlando General would have, if necessary, to raise its charges from $375 to something closer to the charges of other area hospitals. In summary, Orlando General Hospital's proposal is financially feasible in the long term. Charter Medical-Orange County, Inc. Charter Medical's proposed charges include charges for physicians who admit patients, perform histories and physicals, and make daily medical rounds. The proposed charges are reasonable. If there were need, Charter Medical's proposal would be financially feasible in the long term. The need for Charter Medical's proposed facility has not been proven by a preponderance of the evidence, however. See the Conclusions of Law herein. While the numerical need rule as applied to Orange County shows a need for 55 beds, in actual practice that need is a need for osteopathic psychiatric care. The thirty or so patients currently treated on a daily basis at Orlando General Hospital ended up at that hospital, rather than Orlando Regional Medical Center or Florida Hospital, primarily because the patients preferred osteopathic care and were admitted to Orlando General Hospital by osteopathic physicians. Absent action by HRS to stop Orlando General Hospital from treating these patients, the patients would not be available to Charter Medical in its proposed facility. This would leave Charter Medical in a situation of opening a new 50 bed facility when the county occupancy rate in 1986 was 60 percent in the only two licensed facilities in the area. It would also leave Charter Medical in a situation of opening a new facility in the face of the trend to managed health care and the certainty that the average length of stay for short term psychiatric care by 1992 will decrease from current levels. For these reasons, Charter Medical has not proven financially feasibility in the long term by a preponderance of the evidence. Quality of Care Orlando General Hospital Orlando General Hospital would provide care of good quality comparable to care that would be provided by Charter Medical. Charter Medical-Orange County, Inc. Charter Medical Corporation is a large corporation that has experience in the operation of a large number of psychiatric hospitals. That expertise would be available to insure that the care provided in Orange County would be of good quality. Charter Medical-Orange County, Inc., would provide care of good quality comparable to care that would be provided by Orlando General. Comparative Review as to Important Differences The Orlando General Hospital Application Orlando General Hospital intends to convert 24 underutilized medical and surgical beds to 24 short term psychiatric beds. T. 517. Since the project calls for conversion of existing facilities, the capital cost is $700,000, and does not include the construction of new buildings. T. 517. Since the capital cost is relatively low, the project will not drain away a large amount of reimbursement from reimbursement funding sources, thus making those funds available to other health care facilities. T. 1223. As a licensed general hospital, Orlando General Hospital's patients including the patients that would be served by the proposed short term psychiatric unit, would be eligible for Medicaid reimbursement T. 1224. Orlando General Hospital has a good record in Orange County of serving indigent patients, and currently is providing care to a large portion of the indigents cared for by Orange County. T. 1099-1100. As discussed in the section concerning osteopathic care, Orlando General Hospital's proposal for a short term psychiatric unit would have a number of benefits to the practice of osteopathic medicine in the region, and the availability of osteopathic care to patients desiring that form of care. Patients in the short term psychiatric unit at Orlando General Hospital could be transferred to a medical bed when a medical need arises without having to be transported by an ambulance. The Charter Medical Application Charter Medical-Orange County, Inc., is a wholly owned subsidiary of Charter Medical Corporation. Charter Medical Corporation has been in existence for 20 years and has 81 hospitals. Of these, 68 are psychiatric or substance abuse facilities. Charter Medical thus has extensive resources and experience to provide very good psychiatric care at the proposed facility. As a free standing hospital dedicated solely to short term psychiatric care, it is reasonable to expect that Charter Medical's facility will tend to provide more space, more varied programs, and more intensive patient care than a general hospital. This would occur because in a general hospital, the psychiatric unit must compete with medical units for allocation of resources, and in some hospitals, the psychiatric unit is given a lower priority due to the tendency of such hospitals to emphasize the medical aspect of their services. T. 47-49. Charter Medical's facility would not treat Medicaid patients, and it proposes to serve a very small percentage of indigent patients. Charter proposes in future years after the second year to provide 1.5 percent of gross revenue as charity care, and 5 percent as bad debt. T. 377-79, 197. Charter Medical's facility would serve primarily private pay and insured patients, thus draining away these paying patients from other hospitals, to the detriment of other hospitals. T. 971. The Substantial Interest of Florida Hospital If a certificate of need were granted to Charter Medical, Florida Hospital would suffer an adverse impact by loss of patients and additional competition for staff. T. 971-972, 1318-1321, 1327.
Recommendation For these reasons, it is recommended in case number 87-4748 that a final order be entered denying the application of Charter Medical-Orange County, Inc., to construct and operate a new 50 bed short term psychiatric hospital, and in case number 87-4753 that a final order be entered granting the application of Orlando General Hospital to convert 24 medical-surgical beds to short term psychiatric beds. DONE and ENTERED this 28th day of November, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of November, 1988. APPENDIX 1 TO RECOMMENDED ORDER, CASE NOS. 87-4748 and 87-4753 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used by the parties. Statements of fact in this appendix or proposed findings of fact adopted by reference in this appendix are additional findings of fact. Findings of fact proposed by Charter Medical: 3-5. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The need is for beds in either a specialty or a general hospital. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The operational use of the beds is not relevant to the occupancy rate. Had the beds been restricted as a matter of licensure to children, like Palm Bay or Laurel Oaks, the beds would not have been potentially available for adults. Only in that case would exclusion of these beds have been proper. The operational use of the beds is not relevant to the occupancy rate. The testimony regarding the use of the word "existing" in the health planning field has been rejected as not persuasive. The context of such use was not explained, and thus a finding cannot be made that the use of the word is properly applicable to the way HRS intends the word to be used in its occupancy rule. The equation of "existing" with "operational" confuses capacity and need as discussed elsewhere in this recommended order. The HRS interpretation is the most reasonable construction of the word, and leads to a meaning far more consistent with the purposes of the certificate of need regulatory law than does the equation of "existing" with merely being operational. The certificate of need law is aimed at determining need five years into the future. How a hospital may temporarily operate its licensed beds during that period to respond to fluctuations in demand and operational idiosyncrasies at the particular hospital is irrelevant to the question of whether HRS should grant certificates of need and additional licensed capacity within the District. Dr. Luke's calculation was conservative and correct, but a better calculation is the one by Orlando General's expert (78 percent) that uses MDC 19 patient days. The only relevant count is 105 licensed beds at the two facilities. The last sentence is rejected for lack of credible evidence from which to draw that inference, as explained elsewhere in this recommended order. 20-21. The only relevant count is licensed beds. 22. Orlando General's average daily census was 13.6 based upon 4,969 MDC 19 patient days in 1986. 23-24. The only relevant count is licensed beds. 28. These are matters of law, and thus not appropriate as proposed findings of fact. 30. It is true that the health care needs of the metropolitan Orlando impact counties adjacent to Orange County due to the sprawl of that urban area across several county lines. But there is sufficient expert evidence in this record to conclude that generally speaking, the local health council has not acted arbitrarily and capriciously in its choices of counties as health planning areas for purposes of allocation of bed need and for purposes of applying occupancy rates. Nonetheless, the that the urban extent of the metropolitan Orlando area is important has been accepted in this recommended order with respect to the conclusion that the factor that the Orange County occupancy rate is only slightly below 75 percent is entitled to less weight in this case. 32, 33, 35, 37-63. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 64 (first sentence). It is realistically expected that Charter Medical will devote 1.5 percent of its gross patient revenue to barity care. T. 377- 379. 65-70. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 71-72. Financial feasibility has not been shown due to lack of need. Lack of need will result in insufficient occupancy and revenue. 73-74. The extrapolation from the actual trend of increase in patient days in District VII for the years 1983-1987 to create a projection of patient days in 1988 through 1992 would have been a valid and important way to show need, and would have been accepted had the projection accounted for the trend in the industry toward shorter lengths of stay due to changes in methods of payments for mental health care. The extrapolation simply assumes that the past will continue. In this case, there is substantial reason to believe that the past will not continue, that the base data, 1983-1987, is not valid for predicting patient days in 1992 because the patient days in 1992 will largely be paid for under a new system, a system that discourages inpatient stays beyond that which is absolutely necessary from a clinical point of view. Charter Medical projects that it will rely upon insurance for payment 67 percent of the time, so the changes in insurance payments will substantially affect patient days in 1992 at its proposed facility. 75-85. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 89. While osteopathic psychiatric care is essentially the same as allopathic psychiatric care, there are two critical differences. Osteopathic medicine in general emphasizes consideration of the functioning of the body as a whole; allopathic medicine does not. Secondly, osteopathic medicine utilizes muscular and skeletal manipulation in treatment, including psychiatric treatment, and allopathic medicine does not. These two differences are sufficiently marked for patients to have a preference for one or the other approach. 91-92. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 93-94. These proposed findings are true and are adopted by reference, but the findings do not prove that the quality of care at Orlando General Hospital would not be adequate in 1992. It was apparent that Dr. Greene's heavy caseload was not an optimum circumstance. However, at the time of the , Orlando General had four staff psychiatrists. T. 1355. Dr. Greene testified that the care was "basically" the same, but his testimony clearly reflected his opinion that the "deeper" differences were significant. T. 756, 1350-1354. The record cited does not support a finding that the majority of the patients transferred were indigent. That question was not asked. This proposed finding places the cart before the horse. Osteopathic physicians gravitate to Orlando General Hospital to practice osteopathy. In the practice of osteopathy, they achieve many job satisfactions, including care of patients and making money. 98-99. These proposed findings of fact are irrelevant because based upon the past, not upon a future having more staff psychiatrists. Moreover, it is clinically acceptable for other professionals to provide therapy and counseling. These proposed findings of fact are irrelevant. The program description in the application was superseded by evidence during the formal administrative hearing. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Orlando General Hospital is an existing hospital that already has these functions. It may need some augmentation of staff in these areas, but if it does, it would be an unreasonable conclusion to make that it would fail to add such 103-106. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The only exception is the last sentence in proposed finding 106. The number 18 is not supported by the record cited. This method has not been shown to be unreasonable. It is true that it was the method used. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. There was an accounting for bad debt. O.G. Ex. 2, p. 48. The point is essentially irrelevant. A 10 percent increase based upon 1987 salaries would be only about 20,000. Moreover, Charter Medical stipulated in the prehearing stipulation that the salaries of all personnel are reasonable. The proposed finding of fact is true but irrelevant. A pro forma does not have to comport with generally accepted accounting principles. Even with the addition of these charges, the resultant charge is comparable to charges of other area hospitals, including. Charter Medical's proposed charge of $475, which with inflation would increase rapidly to $500. 113-122, 124. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 125-127. Proof that an existing health care program is in sound financial condition is essentially irrelevant to the question of whether that program has a substantial interest sufficient to permit intervention into a section 120.57(1), Fla. Stat., formal proceeding. Proof of competition for the same patients in the same service area is sufficient to show that the existing program will be "substantially affected" to entitle it to intervene. Section 381.709(5)(b), Fla. Stat. (1987). Florida Hospital has proven its substantial interest by showing that the addition of new short term psychiatric beds, particularily a new facility like proposed by Charter Medical, will increase competition in Orange County for patients and staff. T. 881, 883, 649, 855-856. 128-129. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference 130. Mr. Holton's testimony was not only based upon consideration of the data mentioned in this proposed finding of fact, but also his experience in general with managed health care plans and the effect such plans have had upon the market place. The proposed finding that his testimony was not credible is rejected. 131 (first two sentences), 132-133. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Findings of Fact proposed by Orlando General Hospital: 7-12, 17, 19, 29. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The statement is true only from the perspective of the osteopathic psychiatrist and with respect to osteopathic care. Allopathic physicians disagree. The second sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 34. The second sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 38-49, 51-60. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The proposition that separate geriatric units offer no benefits to geriatric patients is contrary to the preponderance of the evidence. The proposition that there is no problem in mixing the elderly with younger patients, or that an elderly patient does much better in a mixed population, is contrary to the preponderance of the evidence. The second and third sentences are contrary to the preponderance of the evidence. 67-71, 73-80. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 86-87. While these proposed findings of fact are true, they are only marginally relevant since the ratio is measured as of 1992, not 1988. These are matters of law, and thus not appropriate as proposed findings of fact. It is unclear when Dr. Greene meant when he testified that his census was 35 to 40 patients. For the first 90 days of 1988, the hospital had 2,951 MDC 19 patient days, or 32.8 patients per day. The analysis with respect to "existing" beds and the county analysis have been rejected as explained in this recommended order. The last sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 97-102. The legal argument that beds temporarily not in operation are not "existing" has been rejected as explained in this recommended order. Thus, these findings are not relevant. 105, 107 (last sentence). These are matters of law, and thus not appropriate as proposed findings of fact. 109. The second sentence is rejected as a finding of fact because the health planning context was not adequately explained. 110-111. These are matters of law, and thus not appropriate as proposed findings of fact. 114-115. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 117. These are matters of law, and thus not appropriate as proposed findings of fact. 118-120. These proposed findings of fact are irrelevant. 122. These are matters of law, and thus not appropriate as proposed findings of fact. 123, 124, 126, 127, 129-131, 133. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The proposed finding of fact is true, but has not been shown to impact the financial feasibility of the Charter Medical proposal. The indirect costs within a single hospital are more relevant to long term financial feasibility of the proposed project than the indirect costs to a single hospital from a parent corporation that has over 60 such hospitals. 136, 147, 151, 152. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The patient body count for the first three months of 1988 was 32.8. O.G. Ex. 2, p. 11. The "consciousness" of a corporation is difficult . Orlando General Hospital was well aware that its medical-surgical census was decreasing and its psychiatric population was increasing. It is true that the increase of its psychiatric population was largely due to causes outside the control of the hospital, however, and not due to marketing efforts by the hospital. 161 (last sentence), 162. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. These are matters of law, and thus not appropriate as proposed findings of fact. This proposed finding of fact is only marginally relevant because the result could be an average caused a minority of states who do things differently. Moreover, there Is no evidence that Florida is like this. The third sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 167. The statement is true only if HRS allows Orlando General Hospital to continue to serve this large number of psychiatric patients without having a certificate of need. If the practice were discontinued, some of the patients would be served by other hospitals in the District, including Florida Hospital. These are matters of law, and thus not appropriate as proposed findings of fact. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 174, 176. These are matters of law, and thus not appropriate as proposed findings of fact. 177. The current state of access to short term psychiatric services in eastern Orange County was not credibly proven. 179. These are matters of law, and thus not appropriate as proposed findings of fact. Findings of fact proposed by HRS: 1, 2, 3, 4. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 5, 6. These are matters of law, and thus not appropriate as proposed findings of fact. 13. The number should be 64, not 63. 22. The occupancy rate is a mathematical attempt to measure the degree to which the District VII capacity to serve adult short term psychiatric patients has been used up. The theory implicit in the rule is that, with respect to adult capacity, the decision to add new capacity should be delayed until the old capacity is at least 75 percent or more used up. The rate has a numerator (patient days) and a denominator (the real capacity). Any argument that tries to ignore real patient days occurring in the District, or real capacity to serve those patients, is unreasonable. Findings of fact proposed by Florida Hospital: The second sentence is true, but the issue is not she license of the beds is, but what type of patient day is generated by that service. The preponderance of the evidence is that those were short term psychiatric patient days. The first sentence is rejected for the reasons stated above. 19-21. These are matters of law, and thus not appropriate as proposed findings of fact. 20-27. F.H. Ex. 3 was excluded from evidence, and the testimony related to that exhibit was also excluded from evidence for the reasons stated elsewhere in this recommended order. 28. This proposed finding fails to consider the MDC 19 evidence of patient days at Florida Hospital and Orlando Regional Medical Center. 29-30. These proposed findings of fact are true, and the reasoning therein is part of the reason why the denominator of the fraction that is the occupancy rate must be licensed beds. 31. A correction to the number of patient days at Westlake Hospital is legally appropriate, but the evidence for such a correction has been excluded from the record for reasons having nothing to do with the legal propriety of such a correction. 33. These are matters of law, and thus not appropriate as proposed findings of fact. 34-39. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The fact that existing facilities may have beds available to treat future patients is not inconsistent with a decision to grant a certificate of need for additional licensed beds. The occupancy rate threshold in the rule is 75 percent occupancy, not 100 percent occupancy. It is to be expected that the District will have 25 percent or less of its beds unoccupied when new beds are approved. 41, 43-44, 46-47. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. This proposed finding of fact is contrary to the credible evidence. These proposed findings of fact are irrelevant. See section 381.705(1)(g) and (h), Fla. Stat. (1987). This proposed finding of fact is contrary to the credible evidence. This proposed finding of fact is contrary to the credible evidence. To the contrary, where need exists, these are grounds for determining which of the competing applicants should be approved. 60. A conclusion that the occupancy rates are "stable" cannot be made from data based only upon calendar year 1986, which was two years ago, and six years from 1992, the time when need is projected. 61-69. These findings of fact are true. Even where there is need, the opening of the new facility normally lures some patients away from existing facilities. But if need exists sufficient to grant a certificate of need, this short term harm to existing providers is irrelevant. Finally, health care costs would not increase if there is need. While it is true that the Charter Medical utilization projections were initially prepared without a close analysis of District VII, the projections are nonetheless reasonable as discussed elsewhere in this recommenced order. Inflation of expenses without projection of inflation in revenues is an incomplete and unreasonable mode of projection. T. 229-230. Given the size of the Charter Medical Corporation and the number of hospitals it owns and operates, the condition of one more hospital will not Increase home office expenses. Those expenses will exist whether this project exists or not. The financial feasibility of the project in Orlando, therefor, need not consider home office expenses. T. 242-244. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The quantitative relevancy of this proposed finding of fact has not been shown. The proposed finding of fact is otherwise true. Orlando General Hospital's current patient census is a sufficient basis for a finding that its projected occupancy rate is reasonable. Charges proposed in an application for a certificate of need are not promises binding upon the applicant. In future years, the applicant is reasonably expected to make substantial changes in its charge structure based upon market conditions. Proposed charges, as well as proposed changes to charges to meet altered contingencies beyond the control of the applicant, is entirely appropriate for analysis in a certificate of need case. The only relevant question is whether the altered charge compares favorably with competing applicants. 81-83. Florida Hospital proved that the market for staff is competitive and that hiring staff is difficult at the moment. But it did not prove that the applicants would fail to hire adequate staff to operate their proposed facilities. T. 1327. 92-102. These proposed findings of fact summarize proposed findings of fact which have previously been addressed. APPENDIX 2 TO RECOMMENDED ORDER, CASE NOS. 87-4748 and 87-4753 Rule 10-5.008(3), Fla. Admin. Code, provides that "[s]ubsequent to an application being deemed complete by the Office of Health Planning and Development, no further information or amendment will be accepted by the Department." (E.S.) The rule states that the Department will accept no information after the application is deemed complete. The words used are not ambiguous or unclear. Thus, if normal rules of construction were to be followed, the conclusion would be drawn $ha the Department is bound by its own clear rule, and cannot, by interpretation, add exceptions. But an equally valid rule of construction is that absurd results must be avoided. Certificate of need cases, particular ones like the case at bar, are highly competitive and complicated. It would be unreasonable to require the applicants to prove applications that have become erroneous due to the passage of time. While the question is a close one, the Hearing Officer has concluded that it would be better to ignore the clear words of the rule, and attempt to apply the evolving interpretative policy of the Department to avoid an absurd result. The following appear to be the existing final orders of the Department interpreting rule 10-5.008(3), and its predecessor, published in the Florida Administrative Law Reports. Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, 8 F.A.L.R. 4650 (September 24, 1986); Arbor Health Care Company, Inc., d/b/a Martin Health Center, Inc., v. Department of Health and Rehabilitative Services et al., 9 F.A.L.R. 709 (October 13, 1986); Mease Hospital and Clinic v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 159 (October 13, 1986); Health Care and Retirement Corporation of America, d/b/a Heartland of Collier County v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 5883 (December 8, 1986); Health Care and Retirement Corporation of America, d/b/a Nursing Center of Highlands County, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1081 (December, 1986); Manatee Mental Health Center, Inc. d/b/a Manatee Crisis Center v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1430 (February 2, 1987); Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborouh, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1630 (February 5, 1987); Manor Care, Inc. v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1628 (March 2, 1987); Psychiatric Institutes of America, Inc., d/b/a Psychiatric Institute of Orlando v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1626a (March 5, 1987) ; Manor Care, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2139 (March 24, 1987); Wuesthoff Health Services, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2110 (April 17, 1987); Hialeah Hospital, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2363 (May 1, 1987); Palms Residential Treatment Center, Inc., d/b/a Manatee Palms Residential Treatment Center v. Department of Health and Rehabilitative Services, et al., 10 F.A.L.R. 1425 (February 15, 1988). These final orders contain the following statements concerning the Department's interpretation of rule 10-5.008(3) and its evolving policy with respect to changes to applications for certificates of need during section proceedings and admissibility of new information not contained in the original applications: Health Care and Retirement, supra, 8 F.A.L.R. 1081: During 120.57 proceedings, an application may be updated to address facts extrinsic to the application such as interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories. An applicant is not allowed to update by adding additional services, beds, construction, or other concepts not initially reviewed by HRS. Manatee Mental Health Center, supra, 9 F.A.L.R. at 1431: ... HRS has authority by statute to issue a CON for an identifiable portion of . Section 381.4C4(8), Florida Statutes. MMHC's "amended" proposal reduced the number of beds sought, and was properly considered during the 120.57 proceedings. Manor Care. Inc., supra, 9 F.A.L.R. at 1628: The amended applications [amended to address needs of Alzheimer's disease patients] changed the scope and character of the proposed facilities and services and thus, must be reviewed initially at HRS... [ limited the denovo concept by requiring that evidence of changed circumstances be considered only if relevant to the application. Hialeah Hospital, Inc., 9 F.A.L.R. at 2366: It is recognized that more than a year may pass between the free form decision by HRS and the final 120.57 hearing and this passage of time may require updating an application by evidence of changed circumstances such as the' effect of inflation on interest and construction costs. For the sake of clarity HRS would avoid the use of the word "amendment" to describe such updating. Such evidence of changed circumstances beyond the control of the applicant is relevant to the original application and is admissible at the 120.57 hearing. Taking the easiest first, those items explicitly listed by the Department in the first Health Care and Retirement case, "interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories," which change after the application is initially filed, are permitted. Not permitted are "additional services, beds, construction, or other concepts not initially reviewed by HRS." The remainder of the Department's incipient policy, as presently articulated, is obscure. The word "extrinsic" without the list of examples is of little guidance. The application is only an idea on paper. Anything new, other than the bare words on the paper as originally filed, is literally "extrinsic" thereto. The concept of whether the new information changes the "scope and character of the facilities and services" originally reviewed in free form action by the Department is similarly of little guidance because the phrase "scope and character" can mean practically anything. Of fundamental difficulty is whether this phrase is intended to select substantial changes to the original application, or all changes. For example, if the original application proposes separate shower stalls and tubs for double rooms, but the amended application proposes a combination shower and tub, has the "scope and character" of the "facilities and services" changed? The phrase "additional services, beds, construction, or other concepts not initially reviewed by HRS" is similarly vague. What is a service or construction or a concept not originally reviewed? Would this include the change in bathing equipment discussed above? The concept of "control" of the applicant over the information that goes into the original application is the only phrase that gives applicants any guidance. The word "control" probably is intended as a "knew or reasonably should have "known" standard. If the applicant reasonably should have known about the information and should have provided the Department with the information as a part of its original application, then the new information cannot be considered during the formal administrative hearing. The Hearing Officer will be guided, thus, by the explicit list of items provided by the Department in the Health Care and Retirement case, and by the concept of "control" provided by the Hialeah case. COPIES FURNISHED: For Agency HRS Theodore D. Mack. Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Building Tallahassee, Florida 32308 (904) 488-8673 Charter Medical-Orange County, Inc. Fred W. Baggett, Esquire Stephen A. Ecenia, Esquire Roberts, Baggett, LaFace & Richard 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 (904) 222-6891 William D. Hoffman, Jr., Esquire Deborah J. Winegard, Esquire King & Spalding 2500 Trust Company Tower Atlanta, GA 30303 (404) 572-4600 Orlando Regional Medical Center, Inc. Steven R. Bechtel, Esquire Mateer, Harbert & Bates, P. A. 100 East Robinson Street Post Office Box 2854 Orlando, Florida 32802 (305) 425-9044 Orlando General Hospital, Inc. Eric J. Haugdahl, Esquire 1363 East Lafayette Street Suite C Tallahassee, Florida 32301 (904) 878-0215 Florida Hospital Stephen K. Boone, Esquire Robert P. Mudge, Esquire Boone, Boone, Klingbeil & Boone, P. A. 1001 Avenida del Circo Post Office Box 1596 Venice, Florida 34284 (813) 488-6716 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue Whether Petitioner is entitled under Florida’s workers’ compensation laws to payment for professional services to an injured worker for the billings identified by the three notices of disallowance at issue in this consolidated proceeding.
Findings Of Fact The claimant, a male, was born July 21, 1961. On February 17, 1995, the claimant sustained a severe traumatic brain injury (TBI) and other injuries during the course of his employment with the City of Hollywood, Florida. At all times relevant to these proceedings, the claimant has been receiving benefits pursuant to the Florida workers’ compensation laws. At all times relevant to this proceeding, the carrier has been the workers’ compensation carrier for the employer. At all times relevant to this proceeding, the claimant has lived in a home purchased for him by the carrier. The claimant has a life estate in the home and the carrier has the remainder interest. The claimant lives in the home with his mother and has 24-hour attendant services paid for by the carrier. The carrier has purchased a van for the claimant, which his attendant uses to transport the claimant to therapy and other appointments. The claimant has a history of mental illness dating to his teenage years, when he was diagnosed with schizophrenia. As a result of his injury and his illness, the claimant acts out periodically and becomes physically resistive to those trying to care for him. At all times relevant to this proceeding, Petitioner has been a provider of rehabilitation services to various patients, including those with TBI. Dr. Marie DiCowden, a psychologist, is the founder and director of Petitioner. Dr. DiCowden described Petitioner as being a health care community that provides an integrated administration for a long continuum of care post acute rehabilitation through community reintegration using health promotion, prevention, and integrated primary care. Petitioner is accredited by two national accrediting organizations referred to by the acronyms CARF (Commission on Accreditation of Rehabilitation Facilities) and CORF (Commission on Outpatient Rehabilitation Facilities). Petitioner is also certified by the Florida Division of Vocational Rehabilitation (formerly housed in the Department of Labor and now housed in the Department of Education), the Florida Division of Workers’ Compensation, and by the Florida Brain and Spinal Cord Injury Program.4 As a result of his accident, the claimant was in a coma for several weeks. He was hospitalized (first in an acute care facility and subsequently in two different rehabilitation hospitals) until December 28, 1995, when he was placed in Whitehall Nursing Home. Whitehall was not an appropriate placement for the claimant because of his behavior and his need for rehabilitation services. On March 27, 1996, Yvonne Beckman, a rehabilitation nurse consultant employed by the carrier, referred the claimant to Petitioner for an evaluation. Shortly before that referral, the claimant had been evaluated by two neuropsychologists (Dr. Jorge A. Herra and Dr. Lee. H. Bukstel), who had opined that the claimant would benefit from rehabilitation services. Ms. Beckman asked Dr. DiCowden to recommend a neurologist who practiced in South Florida. In response, Dr. DiCowden gave Ms. Beckman the names of three neurologists, one of whom was Dr. Paul Wand. Ms. Beckman authorized Dr. Wand to provide services to the claimant. Dr. Wand prescribed continued rehabilitation services for the claimant at Petitioner’s facility. The services at issue in this proceeding were provided by Petitioner pursuant to prescriptions from Dr. Wand.5 Prior to accepting the claimant, Dr. DiCowden informed a representative of the carrier that Petitioner would accept the claimant as a patient in its brain injury program and estimated the annual costs to be $200,000.00. The claimant began receiving rehabilitation services from Petitioner five days a week beginning August 1, 1996. The claimant received from Petitioner’s staff physical therapy, occupational therapy, cognitive retraining, speech training, language training, psychological services, art therapy, music therapy, and yoga therapy. The claimant continued to receive those rehabilitation services from Petitioner (five days a week) from August 1996 to the date of the hearing (and presumably to date). The authorization for the provision of rehabilitation services to the claimant was periodically reviewed by the carrier. In November 1998, the carrier had the claimant examined by Dr. Richard Bailyn (a neurologist) and by Dr. Kevin Lapinski (a neuropsychologist). Those doctors opined that the claimant was not benefiting from cognitive retraining, occupational therapy, speech therapy, or language therapy at Petitioner’s facility. They further opined that the claimant required an activity program to satisfy his recreational and stimulation needs, but that such a program did not require Petitioner’s facility since the claimant’s aide could be trained to provide those services. Dr. Bailyn was of the opinion that as of November 1998 the various therapies provided by Petitioner’s facility to the claimant were not reasonable and were not medically necessary. Section 440.13(6), Florida Statutes, requires a carrier to review bills by providers of medical services as follows: (6) UTILIZATION REVIEW.--Carriers shall review all bills, invoices, and other claims for payment submitted by health care providers in order to identify overutilization and billing errors, including compliance with practice parameters and protocols of treatment established in accordance with this chapter, and may hire peer review consultants or conduct independent medical evaluations. Such consultants, including peer review organizations, are immune from liability in the execution of their functions under this subsection to the extent provided in s. 766.101. If a carrier finds that overutilization of medical services or a billing error has occurred, or there is a violation of the practice parameters and protocols of treatment established in accordance with this chapter, it must disallow or adjust payment for such services or error without order of a judge of compensation claims or the agency, if the carrier, in making its determination, has complied with this section and rules adopted by the agency. As required by Section 440.13(6), Florida Statutes, the carrier conducted a utilization review of the services provided by Petitioner to the claimant beginning in late 1999. The carrier retained Dr. Thomas G. Hoffman to review the claimant’s medical records and to express opinions pertaining to the services provided to him by Petitioner. On April 10, 2000, Dr. Hoffman submitted a report that included several conclusions, including those that follow. The claimant has severe, residual deficits as a result of his accident. He requires 24-hour attendant care. There is no reasonable expectation for further improvement. The therapy he was receiving at that time (and still receives) was not reasonable or medically necessary. The therapy was excessive in frequency and duration. Dr. Hoffman’s deposition testimony was consistent with his written report. The carrier retained Dr. Victor B. Robert to review the claimant’s medical records and to express opinions pertaining to the services provided to him by Petitioner. On June 19, 2000, Dr. Robert submitted a report that included several conclusions, including those that follow. The treatment rendered by Petitioner was excessive in frequency and duration. The claimant reached an improvement plateau in early 1997 and therapy was thereafter needed only for maintenance reasons. Dr. Robert’s testimony was consistent with his written report. The carrier retained International Assessment Systems, Inc. (IAS), a professional association of various medical practitioners, to conduct an independent neurological, neuropsychological, and psychological examination of the claimant. On September 22, 2000, IAS submitted a report (Intervenors’ Exhibit 8) based on the examinations of claimant and the review of his medical records by Dr. Kenneth C. Fischer, Dr. Alan J. Raphael, and Dr. Charles J. Golden. The report included several observations and conclusions, including those that follow. The testimony of Drs. Fischer, Raphael, and Golden was consistent with the written report they prepared for IAS. Pages 12-13 of the IAS report contain the following: [The claimant] was oriented to person, but not to place or time. He did not know the current day, date, month, or year. His sensorium was significantly impaired. His mood was volatile, ranging from normal to agitated. His affect was similarly labile, at times he was placid, laughing, and able to converse at a basic level, however he was also quite violent. Attention and concentration were significantly impaired. His receptive, expressive and fluency language capabilities were similarly impaired, although, as noted, he was capable of basic/functional [sic] communication. There were no direct indications of hallucinatory or delusional phenomena, however, based on his behavior, it is likely that some hallucinatory or delusional phenomena were present. His reality testing and insight were significantly impaired. During his repeated fits of anger, he often uttered suicidal and homicidal threats, however there was no evidence of actual intent or plan. He showed no ability to monitor his own safety. Page 15 of the IAS report contains the following: From a neuropsychological and psychological perspective, there were gross impairments noted in his cognitive abilities and emotional functioning. . . . He has been afforded considerable time to maximize his cognitive recovery at this point. It is clear that he has plateaued with regard to cognitive improvement. He will not benefit from continued rehabilitation efforts, although he will require continued stimulation to avoid further cognitive decline. His mood and labile affect may also be benefited by continued stimulation in terms of recreational activities to provide appropriate quality of life.6 Page 17 of the IAS report contains the following under the heading “Neurologic Impression”: . . . I [Dr. Fischer] would recommend that he be placed in a supervised residential setting which will give better protection for him and his caregivers than his present home setting. As the patient is four and a half years status post-injury, specific rehabilitative and therapeutic endeavors will have no benefit and are unwarranted. This would relate to hyperbaric oxygen and cognitive rehabilitation was well as any form of physical, occupational, or speech therapies. Page 19 of the IAS report contains the following: [The claimant] was certainly aided by initial removal from the nursing home and receiving cognitive and physical therapies at Biscayne. However, he has long since reached a plateau in his improvement and no further improvement can be expected at this time. Maximum medical improvement should have been reached within 18 to 24 months post-injury. Any treatment after that time would be palliative or maintenance-oriented (sic). Therefore, the treatment prescribed by Dr. Wand became unreasonable and medically unnecessary several years ago. Page 20 of the IAS report reflects the opinion that while the treatments at Petitioner’s facility were excessive in all respects, the claimant does require maintenance rehabilitation services. It is opined that cognitive retraining is no longer appropriate, but that cognitive tasks and games are appropriate in a recreational setting. By letter dated October 27, 2000, the carrier, through its counsel, advised Petitioner that based on its Utilization Review investigation, it had concluded that as to the identified dates of service “. . . there has been overutilization and/or misutilization since the treatment has been excessive and not medically necessary.” This Letter of Disallowance was the first of a series of letters sent by counsel for the carrier to Petitioner, and frames the issues for all of the disallowances at issue in this proceeding. Thereafter, Petitioner timely disputed the carrier’s basis for disallowing its services to the claimant and petitioned the Respondent to resolve the dispute. The total amount disallowed and at issue in this consolidated proceeding is $615,587.00. Respondent employed four Expert Medical Advisors (EMAs) to perform peer review and assist it in resolving the dispute involving the rehabilitation services provided the claimant by Petitioner. Respondent employed Dr. Fernando G. Miranda, Dr. Jorge Villalba, Dr. Gerard P. Garcia, and Dr. David McCraney to serve as EMAs.7 Each of these doctors prepared a report following his review and each sat for deposition. Dr. Miranda’s report, dated September 17, 2001, is attached to his deposition (Intervenors’ Exhibit 17). The report included several conclusions, including those that follow. The referral for intensive multi-disciplinary treatment at Petitioner’s facility is no longer medically necessary. The services provided by Petitioner are excessive in frequency and duration and he will not further improve with speech therapy, cognitive retraining, occupational therapy, or individual psychotherapy. Maintenance physical therapy is recommended. Dr. Miranda testified in his deposition that the recommended physical therapy could be performed by the claimant’s attendant. Dr. Miranda’s deposition testimony was consistent with his written report. Dr. Villalba’s report dated October 15, 2001, is attached to his deposition (Intervenors’ Exhibit 19). The report included several conclusions, including those that follow. The claimant reached maximum medical improvement between February 1996 and October 1997. Dr. Villalba described the services provided by Petitioner to claimant “clearly not medically necessary” after October 1997. He also opined that the claimant will require maintenance physical therapy, occupational therapy, and speech and language therapy on a continuing basis. Dr. Villalba’s deposition testimony was consistent with his written report. Dr. Garcia’s undated report was prepared during the second week of October, 2001, and is attached to his deposition (Intervenors’ Exhibit 16). The report included several conclusions, including those that follow. The claimant should be on a maintenance program and Petitioner’s treatment was excessive. The claimant is unlikely to make further neuropsychological improvement, but he should be treated by a psychiatrist for his schizophrenia. Dr. Garcia’s deposition testimony was consistent with his written report. Dr. McCraney’s report dated November 18, 2001, is attached to his deposition (Intervenors’ Exhibit 18). The report included several conclusions, including those that follow. While the care provided Petitioner appears to be excellent, the claimant is far beyond the point where Petitioner’s therapies would be reasonable or medically necessary. Dr. McCraney’s deposition testimony was consistent with his written report. Dr. DiCowden testified at length about the various services her facility provides the claimant and the records her staff generates as a result of those services. Dr. DiCowden testified that her staff is well-trained in assessing the functional status of rehabilitation patients using nationally recognized assessment methodologies. FIN-FAM, acronyms for “Functional Independence Measures” and “Functional Assessment Measures” is one assessment measure used by Petitioner’s staff. The FIN-FAM measure purports to quantify a patient’s progress or lack thereof and can be used by staff as a tool in developing treatment strategies. Dr. DiCowden presented a chart of the FIN-FAM scores for the claimant for the periods at issue in this proceeding. The chart, prepared for this litigation, reflects steady functional improvement of the claimant. Dr. DiCowden further testified that Petitioner’s staff uses a scale of cognitive functioning developed by a rehabilitation facility known as Rancho Los Amigos Hospital, which measures a patient’s response to stimuli on a scale of Ranch Level I (no response) to Ranch Level VII (appropriate response). She asserts that the measurement of the claimant’s status using the Rancho methodology reflect that the claimant has improved over the years. In support of its position that the claimant steadily progressed while undergoing therapy at its facility, Petitioner presented the testimony of Drs. Antonio Puente, Vernando Batas, and Richard Kishner who observed the claimant at Petitioner’s facility on June 23, 2003, September 13, 2003, and February 24, 2004, respectively. Each of these witnesses had the subjective impression that the claimant was benefiting from therapy at Petitioner’s facility. Petitioner asserts that the FIN-FAM scores, the Rancho Levels, and the testimony of its experts establish that the claimant is benefiting from therapy. That assertion is rejected as being contrary to the greater weight of the credible evidence. The FIN-FAM scoring and the Rancho scale depend on the subjective impressions of the various therapists who treat the claimant at Petitioner’s facility and the record reflects that the scoring was done on an irregular basis.8 Dr. DiCowden adamantly disagreed with the contention that the rehabilitation services provided by her facility is not reasonable or medically necessary. All evidence presented by Petitioner, including Dr. DiCowden’s testimony, has been carefully considered by the undersigned in resolving the conflicts in the evidence. At best, Petitioner established that the claimant made some unquantified amount of progress in the highly structured therapeutic setting at Petitioner’s facility. Intervenors’ experts clearly established that any progress made by the claimant in therapy did not transcend that therapeutic setting to the real world. Petitioner failed to establish by a preponderance of the evidence that the rehabilitation services it provided the claimant were appropriate and medically necessary. To the contrary, the greater weight of the credible evidence established that at all times relevant to this proceeding the rehabilitation services provided by Petitioner to the claimant have been excessive and that those excessive services have been neither reasonable nor medically necessary.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration issue a final order that sustains the disallowances at issue in this consolidated proceeding. DONE AND ENTERED this 15th day of June, 2004, in Tallahassee, Leon County, Florida. S CLAUDE B. ARRINGTON 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 15th day of June, 2004.
The Issue Whether the Agency for Health Care Administration should grant Mercy Medical Development Inc.'s certificate of need application to establish a 29-bed long-term acute care hospital- within-a-hospital in AHCA Health Planning Service District 11?
Findings Of Fact Long-term Acute Care Hospitals A long-term acute care hospital (an "LTACH") is an acute care hospital with an average length of stay of its patients that equals or exceeds 25 days. In contrast to an LTACH, the patients in a typical acute care hospital experience much shorter lengths of stay so that the average length of stay in a non-LTACH hospital is much less than 25 days. Characteristics of an LTACH that distinguish it from a non-LTACH acute care hospital flow from that single primary factor: prolonged length of stay. LTACH Services As to be expected from the long-lasting lengths of stay of its patients, LTACHs provide services associated with complex acute conditions that require extended care. For instance, an LTACH would typically serve patients that require ventilator assistance for a long time, in many cases, indefinitely. Other typical patients in an LTACH are those who have had procedures such as open heart surgery while medically compromised so that their recoveries take considerably longer than the average open heart surgery patient, patients with slow-healing wounds or complications arising from chronic lung disease, patients served by multiple invasive pumps, or patients in need of extended treatment by chemotherapy or intravenous antibiotic therapy. The services provided in an LTACH are distinct from those provided in a skilled nursing facility or rehabilitation unit for reasons other than the acuity level of the patient. Skilled nursing facilities generally are not oriented toward patients who need daily physician visits or intense nursing services or observation. Skilled nursing clinical personnel, moreover, are generally not experienced with long-term acute care patients' and their families' psychosocial needs demanded by acuity levels and durations of illness. Comprehensive medical rehabilitation hospitals are inappropriate venues for long-term acute care patients. Rehabilitation hospitals are geared toward the physical rehabilitation of patients. It is true that "[p]atients who have been debilitated because of their long-term illness require some physical therapy to assist in rehabilitating their muscle to get them back on their feet whenever possible." (Tr. 277). But long-term acute care patients, because of their conditions, are not able to tolerate the minimum three hours of physical rehabilitation therapy per day that is a regular part of treatment in a comprehensive medical rehabilitation hospital. In the universe of health care providers in the United States, therefore, long-term acute care hospitals are unique. "Hospital-within-a Hospital" An LTACH may be a free-standing facility or it may be located inside an existing hospital. When it is located inside an existing hospital, an LTACH is referred to as a hospital- within-a-hospital. Mercy Medical proposes that its LTACH be located within Mercy Medical Hospital in Miami, Florida. In other words, Mercy Medical proposes that the LTACH subject to CON Application 9462 be a hospital-within-a hospital. As a hospital-within-a hospital, Mercy Medical's LTACH will have an advantage over a free-standing LTACH. The location within a larger acute care hospital provides an environment in which a more intensive array of acute care services is immediately accessible to LTACH patients. For example, patients in Mercy Medical's LTACH will have immediate access to emergency services and the services of hospital-based physician specialists. The location of an LTACH within a larger acute care hospital also facilitates the appropriate utilization of LTACH services. Physicians are more comfortable transferring fragile patients into an LTACH when the transfer involves relocating the patient via hospital corridors rather than via ambulance. As a practical matter, moreover, an LTACH within a hospital makes it easier for the treating physician to continue to care for the patient following the patient's transfer from the acute care setting into the long-term acute care setting. PPS Exemption In 1982, when the prospective payment system ("PPS") was adopted by the federal government for Medicare reimbursement, long-term acute care hospitals were one of seven types of institutions exempted from the system. A decade or so later, another development occurred that is significant to this case. Regulations were promulgated defining conditions for an LTACH to operate as a hospital within a hospital as part of a continuum of care. The hospital-within-a-hospital concept was required if a hospital business organization was to receive the financial benefits of an LTACH within the setting of a larger acute care hospital (see paragraph 11, below) because long-term acute care cannot not take place within a unit in a hospital. "[T]here [is] no such thing as a long-term [acute] care hospital unit." (Tr. 575). As a specific category of hospitals under the Medicare regulations that is exempt from the DRG prospective payment system, LTACHs are attractive to hospital business organizations because the Medicaid reimbursement for LTACH services is much more favorable than the reimbursement under PPS received by acute care hospitals that are not LTACHs. Qualification for PPS Exemption To be exempt from PPS, there is a six-month period during which a prospective LTACH must show that it meets the Medicare requirements, including those related to average length of stay, for an LTACH. During these six months, the LTACH receives PPS Medicare reimbursement so that it usually operates at a loss. Other considerations related to the first two years of operation keep the LTACH from fully achieving the benefits of exemption until it has both qualified as exempt based on the initial six-month period and then completed the two full years of operation. Distribution of LTACHs There are eight LTACHs in the State of Florida, all of which are free-standing facilities. All eight are owned and operated by for-profit corporations, and seven are owned by the same for-profit corporation, Kindred Healthcare, Inc., the parent of Petitioner. The LTACHs in Florida are concentrated in areas of high population. One of 16 of AHCA's hospital health service planning districts, District 11, where Mercy Medical hopes to locate its LTACH, is the most populous health planning district in the State. Its population of "65 year of age and over" is approximately 305,000. Notwithstanding its populace, District 11 has only one LTACH, Kindred Coral Gables (one of three LTACHs operated by Kindred). Other less populated districts, District 6 and District 10 have two LTACHs. District 10, consisting of Broward County is immediately to the north of District 10. Of the two LTACHs in District 10, Kindred Hospital Fort Lauderdale and Kindred Hospital - Hollywood, the latter is the closest to Mercy Hospital. Approximately 15 to 20 miles away from each other, it takes between 30 minutes and an hour (depending on traffic) to travel the distance between Mercy Hospital and Kindred Hollywood. The Parties AHCA The Agency for Health Care Administration ("ACHA" or the "Agency") is responsible for the administration of the CON program in Florida under the Health Facility and Services Development Act," Sections 408.031-408.045, Florida Statutes. Mercy Medical Mercy Medical Development, Inc., ("Mercy Medical") is the applicant for the proposed project. Mercy Medical is a subsidiary of Mercy Medical Hospital, Inc., ("Mercy Hospital"). A not-for-profit hospital, Mercy Hospital is the sole member of Mercy Medical. As the parent of Mercy Medical and its sole corporate member, Mercy Hospital controls Mercy Medical. At the time of hearing, no effort had been made to separate Mercy Development from Mercy Hospital. For example, no action had been taken to change the bylaws of the medical staff, or to hire a chief executive officer for Mercy Medical. It is appropriate, therefore (although the two must be separated prior to operation of the LTACH under applicable regulations), to find facts with regard to Mercy Medical's sole corporate member. Mercy Hospital is located in the southeastern portion of Miami-Dade County. Founded in 1950 under the administration of the Congregation of the Sisters of St. Joseph, a Roman Catholic religious organization, Mercy Hospital is a full-service general hospital. It has 512 licensed acute care beds and is accredited by the Joint Commission on the Accreditation of Health Care Organizations. Mercy Hospital's mission is distilled into a statement of core values. Among these values is to "give priority to those whom society ignores." (Mercy Ex. 2). Together these values stand for a commitment to enhance quality of life through an integrated health care delivery system. Across its continuum of care, Mercy Hospital provides excellent quality of care for which it has been publicly recognized. Recently designated a Community Comprehensive Cancer Center by the American College of Surgeons, it was one of six hospitals in the eastern United States to win the Gallup Quality Award for inpatient satisfaction. The basis for the award was re-confirmed in the most-recent year before hearing when Mercy Hospital received the Systema Award as the hospital of choice in the community following a survey conducted by the Miami Chamber of Commerce. In furtherance of its mission and in recognition of the need for medical services across the continuum of care, Mercy Hospital operates a 15-bed inpatient hospice unit and provides home-based hospice services in affiliation with other community providers. It operates a 20-bed inpatient comprehensive medical rehabilitation unit and provides a full complement of outpatient comprehensive medical rehabilitation services. And it is part owner of a 120-bed skilled nursing facility. One full wing of Mercy Hospital is dedicated to providing acute care services to HIV-positive and AIDS patients on an outpatient basis (the "Special Immunology Unit.") All patients served in the unit have AIDS or are HIV-positive. The operation of the Special Immunology Unit illustrates the depth of Mercy Hospital's commitment to providing services to the dispossessed or patients who would otherwise be unable to obtain desperately needed medical care. In support and recognition of its commitment to AIDS and HIV-positive patients, the Ryan White Foundation has awarded Mercy Hospital funding to help support the Special Immunology Unit. The funding enables Mercy Hospital to extend its care beyond the provision of acute care in recognition that most of the patients in the Special Immunology Program have lost their jobs. As Sister Elizabeth Anne Worley explained at hearing, [I]n most cases . . . they've lost their jobs and therefore they've lost their insurance, so part of [the Ryan White] funding is used to continue to purchase insurance for them so they can remain with care. It also provides vouchers for electricity, food, transportation, to assist in home health [care and] provide medical services, and it's all part of an array of outpatient services that are managed through case managers for maximum efficiency, but providing for the patients in a setting . . . that's as appropriate and comfortable as possible. . . . [I]t has been a remarkable program for (Tr. 55). folks in our local area that did not have access to care otherwise. Beyond its Special Immunology Program, Mercy Hospital provides substantial acute and outpatient health care services to Medicaid-eligible, uninsured, under-insured, and indigent patients. Historically, Mercy Hospital has provided substantial amounts of un-reimbursed charity care though the hospital and through projects such as the St. John Bosco Clinic. In 2000, Mercy Hospital provided over $3.58 million in un-reimbursed medical care to Medicaid-eligible patients, and over $1.67 million in traditional charity care. At the time of hearing in October 2001, Mercy Hospital had provided over $4.48 million in un-reimbursed care to Medicaid-eligible patients and $947,430 in traditional charity care. To fulfill its healing mission as part of the church, Mercy Hospital strives to provide charitable community services at a level twice the value of the tax benefit derived from its not-for-profit status. In 2000, for example, it met this "challenge from the congregation" (tr. 70) it sets for itself. The value of Mercy Hospital's total tax exemption was $5.7 million. The value of its community service was $13.7 million. Kindred Kindred Hospitals East, LLC, d/b/a Kindred Hospital South Florida ("Kindred") operates three for-profit LTACHs: Kindred Hospital Coral Gables in Dade County, District 11, ("Kindred Coral Gables); Kindred Hospital Hollywood, in Broward County, District 10 ("Kindred Hollywood"); and Kindred Hospital Ft. Lauderdale, also in Broward County, District 10 ("Kindred Fort Lauderdale"). Kindred is a wholly-owned subsidiary of Kindred Healthcare, Inc., ("Kindred Healthcare") a publicly traded for- profit company. Kindred Healthcare and Kindred, together establish the majority of policies for Kindred's three South Florida LTACHs. Kindred Healthcare was formerly known as Vencor, Inc. ("Vencor"). In the fall of 1999, Vencor, Inc., and its subsidiary corporations filed a Chapter 11 bankruptcy proceeding. Vencor emerged from bankruptcy in approximately April of 2001. The name change from Vencor to Kindred was adopted by the parent and the subsidiary corporations. Various Vencor entities and individuals associated with Vencor were the subject of a recent Florida investigation into allegations that Vencor had unlawfully evicted Medicaid patients from a Vencor facility in Tampa, Florida. The allegations against Vencor included the allegation that there had been a corporate decision by Vencor to stop treating or curtail the treatment of Medicaid patients for financial reasons. The investigation ultimately resulted in a settlement pursuant to which Vencor paid a fine in the amount of $270,000 (i.e., $5,000 for each of the 54 Medicaid patients who were allegedly evicted). Vencor was also the subject of a companion federal investigation relating to such allegations, which was resolved by Vencor's payment of a fine to the federal government of $113,000. The Medicaid eviction matter also resulted in a class action lawsuit against Vencor on behalf of the families of the Medicaid patients, and a criminal investigation of high-ranking officers of Vencor, including the senior vice-president in charge of the eastern hospital division of Kindred, which includes the Florida operations, and the chairman of the board and chief executive officer of the parent corporation. Vencor and its subsidiaries were also the subject of a broad Medicare/Medicaid fraud and abuse investigation which was initiated by the Office of the Inspector General of the Department of Health and Human Services (OIG), in part as a result of a qui tam lawsuit relating to a Vencor LTACH in Tampa, Florida. The original allegations centered around Medicare cost report fraud. The investigation also included allegations that quality of care at Vencor facilities was poor. In particular, the government alleged that Kindred failed to staff its facilities adequately and failed to meet dietary needs of some of its residents. As part of the Medicare fraud and abuse investigation, the Medicare program sought to recover millions of dollars in overpayments made to Vencor facilities nationwide. As part of its bankruptcy proceeding, Vencor entered into a settlement agreement with the federal government settling the Medicare fraud and abuse allegations. Pursuant to the settlement agreement, Vencor agreed to pay the federal government $219 million, $90 million of which represented Medicare overpayments received by Vencor. As part of the settlement agreement, Vencor also entered into a corporate integrity agreement with the OIG which applies to all Kindred entities nationwide, including the Florida facilities operating under Kindred, i.e., Kindred Coral Gables, Kindred Hospital Hollywood, and Kindred Ft. Lauderdale. The corporate integrity agreement requires Kindred to educate its employees about financial and quality-of-care issues. The corporate integrity agreement also requires Kindred to put in place a comprehensive internal quality improvement program, including specific steps which must be taken to improve quality of care at Kindred facilities nationwide. Pursuant to the corporate integrity agreement, Kindred also is required to enhance its internal financial controls to promote compliance with the Medicare guidelines on hospital reimbursement. The corporate integrity agreement includes potential sanctions for failure to comply, including the exclusion of Kindred from the Medicare and Medicaid programs. Filing of Mercy Medical's LOI and CON Application Mercy Medical timely filed its letter of intent and CON application containing its proposal with AHCA and the local health council. Consolidated financial statements for Mercy Hospital, Inc., in the CON application contained separately audited financial information for Mercy Medical. The financial information submitted by Mercy Medical contained sufficient information to allow a thorough and accurate assessment of the financial viability of Mercy Medical as an applicant, as well as the feasibility of Mercy Medical's Proposal. Mercy Medical's Proposal Mercy Medical proposes to establish a 29-bed LTACH within Mercy Hospital. The LTACH is proposed to be located on the fourth floor west wing of Mercy Hospital, in a unit known as "Four West." Four West is currently a 29-bed medical-surgical unit of the existing acute care hospital. Mercy Hospital has agreed to delicense the 29 acute care beds in Four West upon approval of Mercy Medical's LTACH CON application. Additional description of the proposal is found in Section C., of Mercy Medical's application, entitled "Project Summary": The proposed long-term care hospital will be located on the fourth floor of Mercy Hospital in Miami at 3663 South Miami Avenue, Dade County, District 11. The facility will consist of approximately 12,200 square feet of unused hospital space, which is comprised of three single patient rooms, 10 semi- private rooms, two isolation rooms and a four-bed ventilator unit. The applicant agrees to condition award of the certificate of need on the following: A minimum of five percent of inpatient days will be provided for the treatment of Medicaid patients. A four-bed ventilator unit for the treatment of patients who are ventilator- dependent. The delicensure of 29 of Mercy Hospital's acute care beds upon the receipt of the CON to establish 29 long-term care beds. Edward J. Rosasco, Jr., President and CEO of Mercy Hospital provided a letter stating that should the applicant be granted the CON, the hospital would immediately seek to delicense 29 beds. The proposed project cost is $56,765 and will involve 791 GSF of renovation and $28,000 in renovation cost. (Mercy Ex. 19, p. 2). The rules of AHCA do not provide a numeric need methodology for LTACHs. An LTACH applicant, therefore, is required to submit its own methodology to support the need for its proposed project. Mercy Medical's application presents four bed need methodologies: the first, a "discharge-based" methodology; the second, a "population-based LTACH bed need" methodology; the third, that focuses on the number of LTACH patient days in Florida per 1000 age 65-and-over population; and, a fourth that uses a model assessment pioneered by the State of Tennessee. All four produced a need for beds dependent on occupancy rates that ranged from 91 to 666 beds. Subtracting the 53 existing LTACH beds at Kindred Coral Gables yields a range of new beds needed or net need derived from the four methodologies between 38 and 607. Of the four, the third methodology offered by Mercy Medical is the most conservative. It is a methodology commonly used by health planners in projecting the need for additional beds within a service category in a particular district. Kindred relied upon the same methodology in its recently filed CON application for additional LTACH beds at its facility in St. Petersburg, District 5. The third of the four methodologies derives a use rate for LTACH beds based on the utilization rates of the age 65-and- over population in those districts in which LTACH facilities are located. The methodology does not include "use rates" from districts that do not have access to LTACH services because to do so would artificially skew downward the expected use rate for LTACH beds in District 11. Deriving a utilization rate for LTACH services in the manner of the third methodology yields a realistic and meaningful utilization rate for LTACH beds. The third methodology is a reasonable methodology for determining need for LTACH beds in District 11. It reasonably produces a need for new LTACH beds in District 11 of 70, that is, the result of the subtraction of the 53 existing LTACH beds at Kindred Coral Gables from the need for 123 beds at an 85% occupancy rate in District 11 produced by the methodology. Mercy Medical hopes to meet the need for new LTACH beds in District 11 through a demonstration that its proposed 29-bed project meets CON review criteria. Kindred hopes that its case at hearing will establish that, on balance, Mercy Medical does not meet the CON review criteria or that the project is defeated by failure to comply with applicable rules. Utilization, Availability and Accessibility A review of pertinent data shows that all eight of the existing long-term acute care hospitals in Florida are well utilized. Overall, LTACH beds in the state were utilized at 76% occupancy in 1999 and close to 77% occupancy in 2000. In particular, Kindred Coral Gables in District 11 has experienced high utilization rates. Those rates have been high over an extended period of time. For some years, they have been extremely, unacceptably, high. In 1998, Kindred Coral Gables had an overall occupancy rate of 92.4% and a med-surg occupancy rate of 94%. In 1999, Kindred Coral Gables experienced 93% occupancy overall and 100% med-surg occupancy. In 2000, Kindred Coral Gables experienced 87% overall occupancy and 94% med-surg occupancy. For 2001 through the time of hearing as determined from available data, Kindred Coral Gables' occupancy rate had dropped to the 83 to 84% range. Although lower than the high occupancy rates observed over an extended period of time, such a rate is still high. There is, moreover, nothing in the health care environment in District 11 that indicates demand for LTACH services should have diminished in 2001. As Daniel Sullivan, expert in health care planning, testified in hearing when queried about the lower 2001 rate: [A]ll the indicators that I reviewed [indicated] . . . that the need is still strong. I can only assume that whatever reason the access went down is more internal to Kindred and their decisions about how they're going to utilize their facility than it does about the external needs of the population. (Tr. 402). High occupancy levels at Kindred Coral Gables limit access to LTACH services for a significant number of residents of District 11. Kindred's expected return to high occupancy rates, like the 87 to 98 percent occupancy rates experienced over an extended period of time, renders Kindred Coral Gables inadequate to absorb either the existing or reasonably anticipated demand for LTACH services in District 11. In addition, as a result of Kindred Coral Gables' admission policies, there is a significant underserved population in District 11. Underserved Populations in District 11 Although the only provider of LTACH services in Dade County, Kindred Coral Gables has consistently refused to admit patients appropriate for long-term acute care who do not have sufficient Medicare-reimbursable days remaining to cover the anticipated length of stay, or who are uninsured, underinsured, or have Medicaid as their only source of funding. Kindred Coral Gables has made it clear to discharge planners at Mercy Hospital that Kindred Coral Gables does not admit Medicaid patients who have no other source of funding. Mercy Hospital's discharge planners, therefore, typically focus their attention and resources on alternative solutions for such patients, rather than attempting to refer patients who are eligible for Medicaid, but not eligible for Medicare, to Kindred Coral Gables. The result of Kindred Coral Gables' admission practice and policies is that Mercy Hospital has had great difficulty placing numerous patients who need LTACH services at Kindred Coral Gables. The financial positions of these patients coupled with Kindred Coral Gables' admission policies constitute financial barriers that prevent access to service in District 11 for a significant population of patients. Barriers to Access for Medicaid-Eligible Patients That barriers to District 11 LTACH services exist for Medicaid patients is obvious. In 1998 and 1999, Kindred Coral Gables reported zero Medicaid revenue. In 2000, Kindred Coral Gables reported minimal Medicaid revenues. It may be comfortably predicted that these barriers will come down if Mercy Medical's proposal is approved. Mercy Medical's sole corporate member, Mercy Hospital, has demonstrated a strong commitment to serve Medicaid patients. Mercy Medical intends to extend the mission of Mercy Hospital to Mercy Medical's proposed LTACH with respect to providing care to Medicaid-eligible and indigent patients. Barriers to Access for Medicare-Eligible Patients In addition to denying admission to Medicaid patients with no other source of funding, Kindred generally does not admit Medicare patients who have used up a large portion of their allowable acute care days under Medicare. In some instances, Medicare patients admitted to Kindred Coral Gables have had lengths of stay that exceeded their allowable acute care Medicare days, leaving only Medicaid as a source of reimbursement. These patients appear to account for the very small number of Medicaid or "charity" patient days reported by Kindred Coral Gables. Barriers to Access for Uninsured, Underinsured, Or Unfunded Patients In addition to denying access to Medicaid and Medicare patients who have used up their allowable acute care days, Kindred also does not admit patients who are uninsured, underinsured, or un-funded. Discharge planners at Mercy Hospital have been unable to obtain charity approvals from Kindred Coral Gables for uninsured or un-funded patients. Barriers to Access for Patients with Managed Care Insurance Even some patients with managed care insurance cannot gain admission to Kindred Coral Gables, as some managed care companies do not want their patients referred to Kindred Coral Gables, but prefer to keep such patients in a short-term acute care setting, notwithstanding their anticipated long length of stay. Kindred's Other Restrictive Admission Criteria Consistent with its focus on reimbursement, Kindred Coral Gables generally does not admit ventilator patients who are not weanable from a ventilator within a reasonable time. In practice, Kindred Coral Gables accepts very few of a large number of ventilator patients at Mercy Hospital who are eligible for long-term acute care. Other types of patients who require long- term acute care but whom Mercy Hospital is unable to place include patients who have slow-healing wounds; diabetic patients; patients with ischemic problems who are either receiving hyperbaric therapy, or who have received it and then are requiring very aggressive or ongoing wound care; and patients with end-stage congestive heart failure who often require weeks of treatment with IV medications and fairly intensive medical monitoring. There is a significant need for Mercy Medical's proposed 29-bed LTACH in District 11. As the most populous district in the state with a large and increasing population of elderly age 65 and older, District 11 is able to support both Kindred Coral Gables and Mercy Medical's proposed 29-bed LTACH. Alternatives Kindred Coral Gables One alternative to Mercy Medical's proposal is to preserve the status quo. But, in the absence of the proposal and the competition provided by Mercy Medical to Kindred Coral Gables, significant numbers of patients in District 11 will be denied access to LTACH services. Medicare patients with inadequate reimbursement days remaining, un-funded and uninsured patients, and patients not weanable from a ventilator are held at Mercy Hospital in an acute care bed, sometimes indefinitely, because they cannot gain admission to Kindred Coral Gables. Mercy Hospital has had a significant number of long-term ventilator patients who have stayed in the hospital for months or years, including a recent example in which Mercy Hospital provided acute care to a ventilator patient for three years. Mercy Hospital absorbs the extraordinary cost of care for its patients who could be discharged to an LTACH if one were available. Conservatively stated, the annual cost of un- reimbursed care provided by Mercy Hospital to long-term acute care patients is approximately $1.5 million. This cost represents a significant inefficiency in the delivery of long- term acute care services is District 11 and lost revenue in the context of Mercy Hospital's mission to extend needed care to Medicaid, indigent and dispossessed patients in the Miami area. The suggestion that Mercy Hospital continue to keep long-term acute care patients in the hospital, notwithstanding financial loss, is unreasonable. Every dollar lost is a dollar that cannot be used to treat the next patient-in-need who presents at Mercy Hospital. Kindred Coral Gables and the status quo are not reasonable alternatives to Mercy Medical's proposal. Aside from Kindred Coral Gables' historical high occupancy levels that prevent access for prospective LTACH patients and that are likely to return in the near future, there is a significant segment of the population in District 11, as found above in this order, that does not have access to Kindred Coral Gables because of its financial criteria for admission. Broward County LTACHs Of the two Broward County LTACHs, there is no contention that Kindred Fort Lauderdale is a reasonable alternative for Mercy Hospital patients. That leaves in District 10, Kindred Hollywood as an alternative to Mercy Medical's proposal. Kindred Hollywood's occupancy rates historically have been much lower than Kindred Coral Gables. In calendar year 1999, they were just under 65%; in calendar year 2000, 72.88%. Occupancy rates, while on the rise, are not the problem with Kindred Hollywood as an alternative. Kindred Hollywood is not a reasonable alternative to Mercy Medical's proposal for Mercy Hospital patients or to other south-central Dade County patients because of travel time from that area of Dade County to Kindred Hollywood. Mercy Hospital is located in south Dade County. Interstate 95, the main automobile and vehicular conduit from Dade County to Broward County, is often congested. Travel from Mercy Hospital to Broward County is particularly difficult for the elderly. Many of the patients who require placement in an LTACH are elderly and may have an elderly spouse. Special transportation services available to the elderly in Dade County do not cross the Dade County line into Broward County. The difficulty posed by travel from south and central Dade County to Broward County presents at least two different complications that undermine the LTACH patient's chance for recovery. First, it is likely the travel to Broward County will erode the support structure offered an LTACH patient by the family if the patient is from South or Central Dade County. Patients and their families have difficulty adjusting to the patient's status as an LTACH patient, as it is. The obstacle of difficult travel can prove too much for family members who want to support the LTACH patient. Second, physician-family relationships, the quality of which significantly affects the care of the LTACH patient, are disrupted when there is transfer from one physician to another. The patient's family often resists the transfer and the physician treating the chronically ill patient with complex medical conditions may resist the transfer of the patient to another physician, as well. The associated stress within the family and in the relationship with the physicians involved would in all likelihood be detrimental to the patient whose care is required to be transferred to another physician when the patient becomes an LTACH patient in Broward County, far, under the circumstances, from Central and South Dade County. The unreasonableness of Kindred's suggestion that Kindred Hollywood constitutes an alternative to Mercy Medical's proposal is evidenced by the fact that Kindred Hollywood has never admitted a patient from Mercy Hospital. No physician has ever asked Mercy Hospital's Director of Case Management to refer a patient to Kindred Hollywood. Nor has Kindred Coral Gables proposed such an admission. For at least the last 10 years, case managers from Kindred Coral Gables have never promoted Kindred Hollywood or Kindred Ft. Lauderdale as options for Mercy Hospital patients eligible for LTACH services who were denied admission to Kindred Coral Gables. Mt. Sinai Hospital Kindred alleges that a 20-bed unit at Mt. Sinai in which ventilator patients are treated constitutes a reasonable alternative to Mercy's proposed LTACH. Other than that Mt. Sinai is not licensed as an LTACH, there was no competent evidence at final hearing regarding the nature of the unit at Mt. Sinai. Based on general health planning principles, it is not appropriate to include these beds (in a classification of beds different from LTACH beds) as an alternative for a CON LTACH proposal in determining the need for the proposed project. Financial Feasibility Short-term The short-term financial feasibility of Mercy Medical's proposal depends upon Mercy Medical's ability to provide or obtain sufficient capital to fund its proposed project through the initial implementation and start-up stage. Mercy Medical's source of funds for its proposed project and its pre-existing capital commitments are pertinent to an analysis of the short- term financial feasibility of Mercy Medical's proposal. Mercy Hospital, Inc., will loan Mercy Medical the initial sum of $56,765 and any additional monies necessary to establish and operate Mercy Medical's proposed 29-bed LTACH. Mercy Hospital, Inc., has the financial wherewithal to fund Mercy Medical's project and to provide the additional financial support promised in its Notice of Financial Solvency included in Mercy Medical's CON application. In fiscal year 2000, Mercy Hospital, Inc., had a total gain of $4.8 million, with an operating gain of $1.3 million. For the same period, Mercy Hospital, Inc., had liquid assets in the amount of $59.9 million with current liabilities of $25 million, reflecting a better than two-to-one current ratio, and solid financial health. In addition, in 2000, Mercy Hospital, Inc., had a total of $43 million in restricted and escrowed funds that are available for capital expansion. Mercy Medical's audited financial statements also reflect its financial health. For fiscal year 2000, Mercy Medical had an operating gain of $1.1 million and a total gain of $1.9 million, with liquid assets of $4.8 million and current liabilities of $1.2 million. Accordingly, there is an adequate source of funding for the implementation and start-up of Mercy Medical's proposed LTACH. Mercy Medical's Capital Commitments In its SAAR, the Agency questioned whether Mercy Medical had capital expenditure projects applied for, pending, approved or underway that were not disclosed on Schedule 2 of Mercy Medical's CON application. Mercy Medical's capital expenditure requests must be approved for execution by the finance committee. In response to AHCA's inquiry, at the final hearing Mercy Medical identified four capital project proposals for Mercy Medical which were not approved by the finance committee at the time of filing of Mercy's CON application, and not required to be disclosed on Schedule 2 of Mercy Medical's CON application. An additional, fifth project, involving renovation of a nuclear cardiology facility, was approved and completed prior to the filing of Mercy's CON application in March 2001. Subsequent to Mercy Medical's filing of its CON application, one of the other four projects involving the replacement of darkroom cabinetry at an anticipated capital expenditure of $2,161, was presented to the finance committee. The remaining three projects, totaling $240,000, remained unapproved at the time of the final hearing. Had all five of these capital projects been included in Schedule 2 of Mercy Medical's CON application, the total capital expenditure commitment, upon approval of the projects in their entirety, would have been approximately $442,000. With current assets of $4.8 million and current liabilities of $1.2 million, capital expenditure commitments in the amount of $442,000 would not materially impact Mercy Medical's financial condition or the feasibility of Mercy Medical's proposal. Mercy Hospital and Mercy Medical have adequate financial wherewithal to ensure the short-term financial feasibility of Mercy Medical's proposed LTACH and the project thus is financially feasible in the short term. Long-term Financial Feasibility Long-term financial feasibility is assessed by an analysis of whether the proposed project will sustain itself by generating revenues in excess of expenses on an ongoing basis. The reasonableness of Mercy Medical's utilization projections, project costs, and revenue and expense projections are the primary factors bearing on the long-term feasibility of Mercy Medical's proposal. Mercy Medical's utilization projections are reasonable. Mercy Medical reasonably projects that it will achieve 60% utilization in the first year of operation and 77.6% occupancy in year two. Mercy Medical's most conservative bed-need methodology, discussed above, demonstrates that there is sufficient demand for LTACH services within District 11 to enable Mercy Medical to meet its utilization projections for its proposed project. In addition, Mercy Hospital will be a primary referral source for Mercy Medical's LTACH. Mercy Hospital has a fairly geriatric patient population which typically experiences advanced cardiac problems, pulmonary problems, and oncologic problems (problems related to cancer and bone marrow disorders). Within those categories, physicians at Mercy see patients with emphysema, patients with very severe asthmas, patients with skeletal deformities causing respiratory insufficiency, patients with congestive heart failure, patients with valvular disease, and patients with all manner of cancer and chemotherapy-related complications that require long-term acute care intervention. These patients are frequently candidates for long-term acute care hospitalization. On an annual basis, there are approximately 300 to 400 pulmonary patients at Mercy Hospital alone who would be candidates for long-term care. There are additional cardiac patients who would require long-term acute care hospitalization but who do not currently have access to Kindred Coral Gables. Because Mercy Hospital has difficulty placing these patients at Kindred Coral Gables, the majority remain as acute care patients within Mercy Hospital. Based on Mercy Medical's need analysis for the District as a whole, and the volume of patients at Mercy Hospital who would be candidates for admission to Mercy Medical's proposed LTACH, Mercy Medical's utilization projections, as shown on Schedule 5 of Mercy Medical's CON application, are reasonable. Mercy Medical's projected revenues for its proposed project through the second year of operation are reasonable. Mercy Medical's revenue projections are based in part upon Mercy Medical's exemption from the acute care inpatient PPS. Mercy Medical can seek exemption from PPS after six months of operation. During the initial six months of operation, Mercy Medical will receive Medicare reimbursement under the acute care PPS system. Medicare regulations set forth alternative methods of qualification for exemption from PPS for hospital-based LTACHs. Mercy will seek to qualify for exemption by limiting the amount of services the LTACH purchases from the host hospital to 15% of the LTACH's annualized operating expenses, not including the LTACH's lease payment to the host hospital. With regard to expenses, Mercy Medical will closely monitor its financial performance to ensure compliance with the pertinent Medicare regulations. This method of ensuring compliance with the Medicare requirements for exemption has proved successful for several other LTACHs. Kindred's financial witness expressed the opinion that Mercy Medical would have to purchase certain services and supplies from Mercy Hospital. The witness acknowledged, however, that Mercy Hospital can obtain a number of the identified services and supplies from sources other than the host hospital. Mercy Medical and Mercy Hospital have pledged that they will take all steps necessary to conform to the 15% rule and other requirements for exemption and have engaged consultants with substantial experience and expertise in guiding LTACHs through the exemption process. It is reasonable to expect that Mercy Medical will be able to limit its expenses attributable to services purchased from the host in a manner that complies with the rule. Medicare regulations also provide that a hospital-based LTACH seeking exemption from PPS must have a separate governing body, separate medical staff, and separate officers, including a separate chief medical officer and separate chief executive officer. These changes will involve the identification of new officers for Mercy Medical and the restructuring of Mercy Medical's governing body such that a majority of the board positions are held by at-large numbers who have no direct relationship with Mercy Hospital, Inc. Because Mercy Medical's approval of Mercy Medical's project is delayed by this CON litigation, it is not yet practical for Mercy Medical and Mercy Hospital to implement the changes in Mercy Medical's governance structure that will be necessary for Mercy Medical's PPS exemption. It is reasonable to expect, however, that Mercy Medical will implement the necessary changes. In essence, implementation of the changes must take place if Mercy Medical is ever to operate under the CON for which it has applied. Overall, the Medicare revenues projected on Mercy Medical's Schedule 7A are comparable to and lower than Medicare revenues for existing LTACHs in Florida. As a new provider, Mercy Medical's Medicare cost-based reimbursement, i.e., TEFRA rate, will be capped at $23,500 per discharge. Mercy Medical's actual TEFRA rate will be determined following the second year of operation of Mercy Medical's LTACH. Mercy Medical reasonably anticipates that its final TEFRA rate will be capped at the $23,500 limit. Mercy Medical's pro formas conservatively incorporate a projected reimbursement rate for Mercy Medical that is $3,500 below the TEFRA cap per discharge. The Medicare reimbursement structure for long-term acute care hospitals is projected to change. By approximately 2003 or 2004, CMS is expected to implement a new prospective payment system for long-term acute care hospitals. New, (i.e., post-1997) LTACH providers, will not be substantially adversely affected by the new reimbursement system, and may even benefit. The anticipated per diem of $800 to $850 per day under the proposed LTACH prospective payment system is more than the projected cost set forth in Mercy Medical's CON application. Accordingly, the anticipated reimbursement level under the proposed prospective payment system for Medicare-certified long- term acute care hospitals is reasonably expected to exceed Mercy Medical's projected expenses as reflected on Mercy Medical's pro formas. Mercy Medical has reasonably projected an average length of stay for its LTACH of 28 days in the first year of operation and 29 days in year two. Mercy Medical's projected payor mix, as shown on Mercy Medical's Schedule 7A, is reasonably consistent with the experience of the eight existing providers of long-term acute care services in Florida. Mercy Medical's projected Medicaid utilization is higher than the state average for long-term acute care services, but Mercy Medical specifically intends to serve this currently underserved segment of the population. The projected expenses shown on Mercy Medical's Schedule 8-A are reasonably consistent with those of the existing long-term acute care hospitals in Florida and are reasonable for the project proposed. Mercy Medical's pro formas do not directly reflect any interest expense associated with Mercy Hospital, Inc.'s loan of the funds necessary to implement Mercy Medical's proposed LTACH. The loan's interest expense, however, is only $3,000 (approximately.) Such a relatively minor expense is immaterial with respect to the long-term feasibility of Mercy Medical's project. Mercy Medical's projected salaries, as shown on Schedule 6, are lower in some categories than the salaries paid by Kindred Coral Gables. Nonetheless, the salaries shown, including salaries for registered nurses, are generally reasonable for the project proposed. In general, while seeking to remain competitive, Mercy Medical does not intend to be the market leader with respect to clinical staff salaries in the Miami-Dade area. The salaries projected in Mercy Medical's Schedule 6 are based on the salaries currently paid by Mercy Hospital and are within a reasonable range for the project proposed. Recruitment of clinical personnel may be challenging in view of the current nursing shortage, but Mercy Medical will be able to recruit and retain the necessary clinical staff to implement and operate its LTACH. (See paragraphs 86 - 88, below.) Mercy Medical's expense pro forma includes a cushion of $3,500 per Medicare discharge that will allow Mercy Medical to increase its salaries for clinical personnel, if necessary, and have a substantial portion of the LTACH's salary expense reimbursed by the Medicare program. Thus, salary increases, if necessary, will not directly reduce the net income of Mercy Medical's proposed project. The categories of FTEs shown on Mercy Medical's CON Application No. 9462 Schedule 6 are reasonable for the project proposed. The projected number of full-time equivalents (FTEs) needed to implement Mercy Medical's proposed LTACH in the first two years is generally reasonable. Mercy Medical's projected utilization, revenues and expenses are reasonable for the projected proposed and the project is financially feasible in the long term. The Nursing Shortage There is a serious shortage of nurses in Dade County. The nursing vacancy rate in the County is now approximately 16 percent. With the nursing shortage comes significant competition for nurses in the Dade County market. There could be a slight impact to Kindred Coral Gables if Mercy Medical's proposal is approved. Kindred Coral Gables, however, appears to be more aggressive in its advertising and salary packages than is Mercy Hospital. Its approach to the shortage should minimize its effects on Kindred Coral Gables. Rather than for the approval of Mercy Medical to have a negative impact on Kindred, the effect of the nursing shortage is more likely to make it hard for Mercy Medical to obtain the nurses it needs. Mercy Hospital has been successful in recruiting and retaining nurses by focusing on creating a working environment that is attractive to nurses. Mercy Medical will use the same approach to combat the nursing shortage. The approach has been successful in the face of the current nursing shortage and it is reasonable to expect to continue to have success toward staffing Mercy Medical's LTACH. It is reasonable to expect that Mercy Medical will be able to staff its proposed project. The impact to Kindred, if any, will be slight. Quality of Care The approach to the nursing shortage is not the only shared characteristic between Mercy Medical and Mercy Hospital. Mercy Medical embraces Mercy Hospital's commitment to providing high quality of care. Mercy Hospital will provide the advisory support to Mercy Medical with respect to quality of care and quality assurance practices. Medicaid and Indigent Commitment Mercy Medical has conditioned approval of its proposal on the pledge that at least 5% of the LTACH's total inpatient days will be comprised of Medicaid patient days. Mercy Medical shares the commitment Mercy Hospital has to serving Medicaid- eligible, uninsured, underinsured and indigent patients in District 11 for these and other categories of patients. Mercy Medical's proposed LTACH will significantly enhance access to long-term acute care hospital services in District 11. Financial Impact of Approval Approval of Mercy Medical's proposed project will not have an adverse financial affect on Kindred Coral Gables because it is unlikely to suffer reduction in admissions as a result of approval. Historically, Kindred Coral Gables has accepted few patients from Mercy Hospital. Kindred's own estimation of patient loss is 13-15 patients annually if the project is approved at a financial loss of $775,000. Kindred Coral Gables rejects significantly more referrals of patients than it accepts. There are ample patients in the community to replace any that may be lost to Mercy Medical. In any event, it is likely that Kindred would not accept many, if any, of the patients Mercy Medical intends to serve. Kindred Coral Gables opposition to the project because approval might set a precedent that would lead to additional hospitals within hospitals in Florida is not cognizable as an adverse impact under CON review criteria. Benefits of Competition Because there is demonstrable need for Mercy Medical's proposed LTACH, approval will not result in unnecessary duplication of services. On the other hand, approval has the chance of enhancing competition. That chance is diminished since the patients Mercy Medical will serve are not likely to be patients Kindred seeks to serve. Still, there may be from time- to-time a patient that both will wish to serve and there may be some benefits from the slight increase in competition caused by approval. Managed care companies, moreover, will see Mercy Medical as an alternative to Kindred Coral Gables and may improve their negotiation position for payment rates for LTACH services in District 11. Mercy Medical's proposal also provides a lower cost alternative to Kindred Coral Gables with respect to Medicare services that benefits the health care system as a whole. Medicare cost-based reimbursement for LTACHs established prior to October 1, 1997, is capped at the rate of $41,000 per discharge. As a new provider, Mercy Medical's cost-based reimbursement ceiling will be $23,500 per discharge. Kindred Coral Gables was established prior to October 1, 1997, and therefore, operates subject to the much higher cap on Medicare reimbursement. In addition, payors who pay based on charges, or some component of charges, will also benefit because Mercy Medical's proposed changes are less than Kindred Coral Gables' current charges. Competition from the approval of Mercy Medical's proposal may also have a positive effect with respect to quality of care. In addition, the introduction of an alternative to Kindred Coral Gables represents a positive enhancement in the delivery of LTACH services in District 11. This is particularly appropriate given Kindred's recent turmoil, including bankruptcy and significant governmental investigations and settlements. Approval of Mercy Medical's proposed project will have other beneficial effects within the District. Approval of Mercy Medical's proposal will allow many patients to remain under the care of their chosen physician. The conversion of Mercy Hospital's Four West wing to a Medicare-certified LTACH also will help to alleviate patient flow issues within Mercy Hospital and enhance the hospital's ability to utilize properly its short-term acute care beds. Although Mercy Hospital has 29 licensed acute care beds available on Four West, the hospital cannot feasibly keep Four West open on a full-time basis. At times, Mercy Hospital has had to close its emergency room because of capacity issues. On any given day, Mercy Hospital may have as many as 15 to 20 patients who would be eligible for discharge to a long-term acute care hospital facility, if such a facility were accessible to the patients at issue. Because of the access problems at Kindred Coral Gables, these patients are not discharged, but instead are kept in an acute care bed at Mercy Hospital. Approval of Mercy Medical's proposal would provide a discharge venue for these patients, thus freeing short-term acute care beds at Mercy Hospital. Enhancement of Access As described above, establishment of the 29-bed LTACH proposed by Mercy Medical will enhance access to LTACH services for District 11 residents who currently encounter capacity constraints and financial barriers to access at Kindred Coral Gables. In addition, because Kindred Coral Gables is highly selective with respect to the clinical conditions of patients it admits, Mercy Medical will further enhance access by admitting a broader array of patients. Architectural Criteria and Costs Section 395.003(1)(a), Florida Statutes (2001), provides, "[n]o person shall establish, conduct or maintain a hospital . . . in this state without first obtaining a license under this part." Rule 59A-3.201(34), Florida Administrative Code, provides: "Long term care hospital" means a general hospital which: Meets the provision of s. 395.002(12), F.S.; Has an average length of inpatient stay greater than 25 days for all hospital beds; and, Meets the provisions of Paragraph 59C- 1.002, F.A.C. Rule 59A-3.202(1), Florida Administrative Code, provides: The agency [AHCA] will license four classes of facilities; (a) Class I or general hospitals which includes: * * * 2. Long term care hospitals, which meet the provisions of 59A-3.201(31). Rule 59A-3.201(31), in turn, provides: "'Inpatient beds' means accommodations with supporting services for patients who are admitted by physician order with the expectation that the patient would stay in excess of 24 hours and occupy a bed." Mercy Medical's proposed LTACH will provide "inpatient beds." It meets the definition of "long term care hospital." It will have to be licensed as a Class I or general hospital to operate if it receives a CON. Rule 59A-3.202(2), Florida Administrative Code, provides: . . . [A]ll licensed hospitals shall have at least the following: Inpatient beds; A governing authority legally responsible for the conduct of the hospital; A chief executive officer or other similarly titled official to whom the governing authority delegates the full-time authority for the operation of the hospital in accordance with the established policy of the governing authority; An organized medical staff to which the governing authority delegates responsibility for maintaining proper standards for medical and other health care; A current and complete medical record for each patient admitted to the hospital; A policy requiring that all patients be admitted on the authority of and under the care of a member of the organized medical staff; Facilities and professional staff available to provide food to patients to meet their nutritional needs; A procedure for providing care in emergency cases; A method and policy for infection control; An on-going organized program to enhance the quality of patient care and review the appropriateness of utilization services. Kindred Coral Gables, an LTACH, is licensed as a Class I hospital. All parties agree the Mercy Medical's applied-for LTACH will have to be licensed as a Class I or "general" hospital and will have to comply with the licensing requirements listed above in order to receive its license. The parties disagree over the applicability of Rule 59A-3.080(4)(f), Florida Administrative Code. The Rule has a last sentence that is a grandfather clause inapplicable to this proceeding. Otherwise, the Rule provides: An ambulatory surgical center or a birth center may not be constructed or operated on the same premises as a hospital. A facility or building used for medical care, including a medical office building which is owned and operated by the licensee of a hospital, may be fully integrated with the hospital physical plant. If a fully integrated facility or building in operation or under construction on the effective date of this rule is subsequently transferred, the hospital licensee shall be solely responsible for either physical separation or assuring full compliance with all life safety codes. Any other facility or building used for medical care, including a medical office building, must be physically separated from the hospital and have clear, visible and readable signs denoting its separateness from the hospital. Physically separate means, at a minimum, separation by fire walls and distinct mechanical and electrical systems. It is AHCA's position that Rule 59A-3.080)4)(f) "[sh]ould not, as a matter of policy, [be applied] in this case." (Tr. 766). The purpose of the Rule is to prevent a non-licensed medical service provider, such as a medical office building, from being located on a hospital campus as part of the hospital, that is, without physical separation. That concern is alleviated with regard to Mercy Medical's LTACH operating as a hospital-within-a- hospital because AHCA will have direct licensure authority over the LTACH as a Class I or general hospital. Mercy Medical's LTACH, moreover, is subject to the same life safety codes as its host hospital. Furthermore, the proposed location of the LTACH is Four West of Mercy Hospital. Four West already complies with the applicable licensure codes for Class I or general hospitals found in Chapter 59A-3, Florida Administrative Code. Along the same lines, Mercy Medical's LTACH will satisfy the state and federal handicap accessibility requirements for general hospitals. The federal ADA and Florida Accessibility code both require that 10% of the patient rooms and toilets in a general hospital be handicap-accessible. Mercy Medical reasonably proposes to satisfy this requirement through renovation of two of the patient rooms on Four West. The projected costs on Mercy Medical's Schedule 1, including renovation cost, are reasonable for the proposed project. The timetable for completion of Mercy Medical's proposed renovations is reasonable for the project proposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration: Dismiss the Petition of Kindred Hospitals East, LLC d/b/a Kindred Hospital South Florida for lack of standing; and, Approve Mercy Medical Development, Inc.'s CON Application 9462 to establish a 29-bed long-term acute care hospital-within-a-hospital in AHCA Health Planning Service District 11. DONE AND ENTERED this 23rd day of July, 2002, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July, 2002. COPIES FURNISHED: W. David Watkins, Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 Jonathan L. Rue, Esquire Parker, Hudson, Rainer & Dobbs, LLP 1500 Marquis Two Tower 285 Peachtree Center Avenue, Northeast Atlanta, Georgia 30303 Gerald L. Pickett, Esquire Agency for Health Care Administration 525 Mirror Lake Drive, North Sebring Building, Suite 310K St. Petersburg, Florida 33701 Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue Whether there is a need for an additional 31 short-term psychiatric beds for Broward County?
Findings Of Fact I. General. History of Case. In June of 1984, the Petitioner filed an application with the Respondent for a certificate of need to add 31 short- term psychiatric beds to its existing facility. The certificate of need sought by the Petitioner was assigned certificate of need #3372 by the Respondent. The Respondent denied the Petitioner's application for certificate of need #3372. On October 25, 1984, the Petitioner filed a Petition for Formal Administrative Hearing with the Respondent challenging its proposed denial of the Petitioner's application. The Petition was filed with the Division of Administrative Hearings by the Respondent and was assigned case number 84-4037. Biscayne, Memorial and Charter were granted leave to intervene by Orders dated January 28, 1985, April 26, 1985 and July 9, 1985, respectively. The final hearing was held on November 19 and 21, 1985 in Ft. Lauderdale, Florida and February 24 and 25, 1986 in Tallahassee, Florida. The Petitioner's Proposal. The Petitioner originally sought to add 31 short-term psychiatric beds to its existing facility. If approved, the additional beds would have increased its current licensed beds from 334 to 365 beds. The Petitioner proposed to meet projected need for short-term psychiatric beds in Broward County for 1989. In its original application, the Petitioner proposed to provide services to children, adolescents, adults and the elderly. No distinct psychiatric units were proposed. The total cost of the original proposal was estimated to be $209,368.00. At the final hearing, the Petitioner proposed to relinquish 31 medical/surgical beds and to add 31 short-term psychiatric beds to meet projected need for short-term psychiatric beds in Broward County for 1989. The Petitioner will end up with a total of 334 licensed beds, the same number it now has, if its application is approved. The total cost of the proposal presented at the final hearing was $337,169.00, which is accurate and reasonable. The 31 proposed beds will be divided into a 15-bed dedicated adolescent unit and a 16-bed dedicated geropsychiatric unit. Adults will generally not be treated by the Petitioner. Involuntary admissions will be treated by the Petitioner, although there was some evidence to the contrary. The sixth floor of the Petitioner's existing facility will be converted into space for the new psychiatric units. The Petitioner changed the estimated staffing for its proposal between the time it filed its original application and the final hearing. The changes were not significant. During the 1985 legislative session, the Florida Legislature enacted Section 394.4785(1)(b), Florida Statutes (1985). This,, Section requires that most adolescents be separated from other patients for purposes of psychiatric treatment. Some of the modifications of the Petitioner's application which were made at the final hearing were made in order to conform with this Section. The changes in the Petitioner's proposal which were made between the time it filed its original application with the Respondent and the time of the final hearing are not substantial enough to require that the Petitioner's application, as modified, be remanded to the Respondent for further consideration. The Parties; Standing. The Petitioner is a 334-bed, for-profit, general acute-care hospital. The Petitioner is a full service hospital providing general medical services. The Petitioner has a medical staff of more than 400 physicians, including a department of psychiatry. The Petitioner is owned by National Medical Enterprises, one of the largest health care providers in the country. The Petitioner is located in Hollywood, Florida, which is located in the southern portion of Broward County, Florida. Broward County is the only County in the Respondent's service district 10. The Petitioner's primary service area consist of the southern portion of Broward County from State Road 84 in the North to the Broward-Dade County line in the South. Memorial is a not-for-profit general acute care hospital located in southern Broward County. Memorial holds License #1737, issued on June 1, 1985, which authorizes Memorial to operate 74 short-term psychiatric beds. This license is valid for the period June 1, 1985 to May 31, 1987. Memorial was also authorized to operate 74 short-term psychiatric beds in its license issued for the 2-year period prior to June 1, 1985. Memorial is located a short distance from where the Petitioner is located in southern Broward County. Memorial and the Petitioner share the same general primary service area. Most of the physicians on the staff at Memorial are also on the Petitioner's staff. Memorial is subsidized by tax revenues for providing indigent care for southern Broward County. About 17 percent of Memorial's revenue is attributable to bad debt and indigent care. If the Petitioner's application is approved it is likely that the Petitioner will take patients from Memorial. It is also likely that the patients taken from Memorial will be other than indigent patients. If the Petitioner were to achieve a 75 percent occupancy rate and 50 percent of its patients come from Memorial, Memorial would lose a little over $1,000,000.00 in terms of 1985 dollars. It is unlikely, however, that the Petitioner will achieve an occupancy rate of 75 percent and, more importantly, it is unlikely that 50 percent of the Petitioner's patients will come from Memorial. The loss of patients from Memorial which would be caused by approval of the Petitioner's application will, however, result in a financial loss to Memorial which may effect its ability to provide quality care. Additionally, the loss in paying patients could increase the percentage of indigent patients at Memorial and, because a portion of the cost of caring for indigents is covered by paying patients at Memorial, could result in a further loss in revenue and an increase in tax support. The public may have difficulty accepting a public hospital, such as Memorial, as a high-quality hospital if the public hospital is perceived to be a charity hospital. It is therefore important for a public hospital to attract a significant number of paying patients to its facility to avoid such an image. It is unlikely that the number of patients which may be lost to the Petitioner by Memorial is sufficient to cause the public to perceive that Memorial is a charity hospital. Biscayne is a 458-bed, general acute-care hospital located on U.S. 1 in northern Dade County, Florida, just south of the Broward County line. Biscayne's facility is located within about 5 miles of the Petitioner's facility. Biscayne is about a 5 to 10 minute drive from the Petitioner. Dade County is not in service district 10. It is in service district 11. Of the 458 licensed beds at Biscayne, 24 are licensed as short-term psychiatric beds and 24 are licensed as substance abuse beds. The rest are licensed as medical/surgical beds. Ten of the medical/surgical beds at Biscayne are used as a dedicated 10-bed eating disorder (anoxeria nervosa and bulimirexia) unit. These 10 beds are not licensed for such use. A separate support staff is used for the 10-bed eating disorder unit. Approximately 60 percent of Biscayne's medical staff of approximately 400 physicians are residents of Broward County. Most of these physicians are also on the medical staff of other hospitals, principally the Petitioner, Memorial and Parkway Regional Medical Center, which is located in northern Dade County. Most of its staff have their business offices in southern Broward County. Biscayne's service area includes southern Broward County and northern Dade County. Approximately 60 percent of Biscayne's patients are residents of southern Broward County. Biscayne markets its services in southern Broward County. Eighty percent of Biscayne's psychiatric patients are elderly. Many types of psychotic and psychiatric disorders are treated at Biscayne. Biscayne offers psycho-diagnostic services, crisis stabilization services, shock therapy services, individual therapy services and group therapy services. Biscayne has had difficulty in recruiting qualified staff for its psychiatric unit. Biscayne currently has 4 vacancies for registered nurses, 4 vacancies for mental health assistants and 1 vacancy for an occupational therapist in its psychiatric unit. Biscayne recruits nurses who are certified in mental health nursing. They have not always been successful in finding such nurses. Therefore, Biscayne provides educational programs to help train its nursing staff. These programs are necessary because of the unavailability of experienced nurses for its psychiatric unit. The Petitioner has projected that most of its patients for its proposed psychiatric units will come from southern Broward County, where Biscayne gets approximately 60 percent of its patients. The Petitioner plans to try to convince psychiatrists currently using existing providers, except Hollywood Pavilion, to refer their patients to the proposed psychiatric units. Since Biscayne and the Petitioner share some of the same physicians, it is likely that many of the patients cared-for by the Petitioner will come form Biscayne and other providers in southern Broward County, including Memorial. The loss of patients at Biscayne, if the Petitioner's proposal is approved, will result in a loss of revenue to Biscayne which may affect its ability to provide quality care. Charter was an applicant for a certificate of need to construct a free-standing psychiatric facility in Broward County. In its application Charter sought approval of long-term and short-term psychiatric beds. Charter's application was filed with the Respondent in August of 1983. It was filed for review by the Respondent in a batching cycle which preceded the batching cycle in which the Petitioner's application was filed. In December of 1983, the Respondent proposed to approve Charter's application and authorize a project consisting of 16 short-term adolescent psychiatric beds, 16 long-term adolescent psychiatric beds, 16 long-term substance abuse beds and 12 long-term children's psychiatric beds. The Respondent's proposed approval of Charter's application was challenged. Following an administrative hearing, it was recommended that Charter's application be denied. Final agency action had not been taken as of the commencement of the hearing in this case. Subsequent to the date on which the final hearing of this case commenced, the Respondent issued a Final Order denying Charter's certificate of need application. This Final Order is presently pending on appeal to the First District Court of Appeal. Charter does not have an existing facility offering services similar to those proposed by the Petitioner in Broward County or anywhere near the Petitioner's facility. When the Orders allowing Memorial, Biscayne and Charter to intervene were issued by Hearing Officer Sherrill, Mr. Sherrill determined that if the Intervenor's could prove the facts alleged in their Petition to Intervene they would have standing to participate in this case. Memorial and Biscayne have in fact proved the allegations contained in their Petitions to Intervene. Based upon all of the evidence, it is therefore concluded that Memorial and Biscayne have standing to participate in this proceeding. Both Memorial and Biscayne will probably lose patients to the Petitioner if its proposal is approved resulting in a loss of revenue. This loss could affect quality of care at Memorial and Biscayne. Also, it is possible that both would lose some of their specialized nursing personnel to ;the Petitioner to staff its proposed psychiatric units. Charter has failed to establish that it has standing to participate in this proceeding. The potential injury to Charter is too speculative. II. Rule 10-5.11(25), F.A.C. A. General. Whether a certificate of need for short-term psychiatric beds should be approved for Broward County is to be determined under the provisions of Section 381.494(6)(c), Florida Statutes (1985), and the Respondent's rules promulgated thereunder. In particular, Rule 10-5.11(25), F.A.C., governs this case. Under Rule 10-5.11(25)(c), F.A.C., a favorable determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under Rule 10-5.11(25)(d), F.A.C. B. Rule 10-5.11(25)(d) , F.A.C. Pursuant to Rule 10-5.11(25)(d)3, F.A.C., bed need is determined 5 years into the future. In this case, the Petitioner filed its application with the Respondent in 1984, seeking approval of additional short-term psychiatric beds for 1989. The Petitioner did not change this position prior to or during the final hearing. Therefore, the planning horizon for purposes of this case is 1989. Under Rule 10-5.11(25)(d)3, F.A.C., bed need is determined by subtracting the number of "existing and approved" beds in the service district from the number of beds for the planning year based upon a ratio of .35 beds per 1,000 population projected for the planning year in the service district. The population projection is to be based on the latest mid-range projections published by the Bureau of Economic and Business Research at the University of Florida. Bed need is determined under the Respondent's rules on a district-wide basis unless the service district has been sub- divided by the Respondent. District 10 has not been subdivided by the Respondent. Therefore, bed need for purposes of this case under Rule 10-5.11(25)(d), F.A.C., is to be determined based upon the population projections for all of Broward County for 1989. The projected population for Broward County for 1989 is 1,228,334 people. Based upon the projected population for Broward County for 1989, there will be a need for 430 short-term psychiatric beds in Broward County in 1989. The evidence at the final hearing proved that there are currently 427 licensed short-term psychiatric beds in Broward County. During the portion of the final hearing held in November of 1985, evidence was offered that proved that there were also 16 approved short-term psychiatric beds for Broward County. These short-term beds were part of the application for the certificate of need sought by Charter. Subsequently, however, a Final Order was issued by the Respondent denying Charter's application. Therefore, the 16 short-term psychiatric beds sought by Charter do not constitute "existing and approved" short-term psychiatric beds in Broward County for purposes of this case. Subsequent to the conclusion of the final hearing in this case, the First District Court of Appeal reversed a Final Order of the Respondent denying an application for a certificate of need for a free-standing 10 -bed psychiatric facility, including 80 additional short-term psychiatric beds, for Broward County. Balsam v. Department of Health and Rehabilitative Services, So.2d (Fla. 1st DCA 1986). As indicated in Finding of Fact 23, Memorial is licensed to operate 74 short-term psychiatric beds. Memorial is in fact operating all 74 of these licensed beds. Memorial filed an application with the Respondent for certificate of need #1953 in October of 1981 in which Memorial indicated that it planned to reduce the number of short-term psychiatric beds it had available by 24 beds. Memorial's certificate of need application involved an expenditure of capital and did not specifically involve an application for a change in bed inventory at Memorial. Memorial also represented that it would reduce the number of its available short-term psychiatric beds by 24 in a bond prospectus it issued in September of 1983. The Respondent approved Memorial's certificate of need application. Despite Memorial's representations that it would reduce its short-term psychiatric bed inventory, the beds are still in use in Broward County. Memorial has no plans to close any beds and the Respondent does not plan to take any action against Memorial to require it to stop using 24 of its short-term psychiatric beds. Hollywood Pavilion is licensed to operate 46 short- term psychiatric beds in Broward County. In 1985, 475 patients were admitted to Hollywood Pavilion and its occupancy rate was 62.3 percent. In fact, Hollywood Pavilion had more admissions than Florida Medical Center had to its psychiatric unit. It therefore appears that other physicians find Hollywood Pavilion acceptable. Hollywood Pavilion is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner presented the testimony of a few physicians who questioned the quality of care at Hollywood Pavilion. These physicians indicated that they did not use Hollywood Pavilion. At least one of the physicians indicated, however, that he did refer patients to other physicians whom he knew admitted patients to Hollywood Pavilion despite his feeling that the quality of care at Hollywood Pavilion was poor. This action is inconsistent with that physician's opinion as to the lack of quality of care at Hollywood Pavilion. His opinion is therefore rejected. The other physicians' opinions are also rejected because very little evidence was offered in support of their opinions and because of the contrary evidence. Based upon a consideration of all of the evidence concerning the quality of care at Hollywood Pavilion, it is concluded that the Petitioner failed to prove that the 46 short-term psychiatric beds licensed for use and available for use at Hollywood Pavilion should not be counted as existing short- term psychiatric beds in Broward County. Coral Ridge Hospital is licensed to operate 74 short- term psychiatric beds in Broward County. The average length of stay at Coral Ridge Hospital during 1984 and 1985 was almost 80 days. The average length of stay at Coral Ridge Hospital has been in excess of 40 days since 1980 and in excess of 60 days since 1983. The average length of stay at Coral Ridge Hospital is in excess of the average length of stay for which short-term psychiatric beds are to be used under the Respondent's rules. Rule 10-5.11(25)(a), F.A.C., provides that short-term beds are those used for an average length of stay of 30 days or less for adults and 60 days or less for children and adolescents under 18 years of age. Rule 10-5.11(26)(a), F.A.C., provides that long-term beds are those used for an average length of stay of 90 days or more. The psychiatric beds at Coral Ridge Hospital, based upon an average length of stay for all of its beds, falls between the average length of stay for short-term beds and long-term beds. The occupancy rate at Coral Ridge Hospital for 1985 was between 40 percent and 50 percent. Therefore, it is possible that a few patients at Coral Ridge Hospital with a very long length of stay could cause the overall average length of stay of the facility to be as long as it is. Coral Ridge Hospital will probably take short-term psychiatric patients because of its low occupancy rate. Therefore, there are at least 29 to 37 short-term psychiatric beds available for use as short-term psychiatric beds at Coral Ridge Hospital. The Petitioner failed to prove how many of the licensed short-term psychiatric beds at Coral Ridge Hospital are not being used for, and are not available for use by, short-term psychiatric patients in Broward County. It cannot, therefore, be determined how many, if any, of the licensed short-term beds at Coral Ridge Hospital should not be treated as existing short-term psychiatric beds in Broward County. Based upon the foregoing, the 427 licensed short-term psychiatric beds in Broward County should be treated as "existing" beds for purposes of determining the need for short- term psychiatric beds under Rule 10-5.11(25)(d), F.A.C. There is a net need for short-term psychiatric beds in Broward County for 1989 of only 3 additional beds under Rule 10- 5.11(25)(d)3, F.A.C. If the 80 short-term psychiatric beds approved by the First District Court of Appeal in Balsam are taken into account, there will be a surplus of 77 short-term psychiatric beds in Broward County for 1989 under Rule 10- 5.11(25)(d)3, F.A.C. Based upon an application of Rule 10-5.11(25)(d)3, F.A.C., there is no need for the additional 31 short-term psychiatric beds sought by the Petitioner. Rule 10-5.11(25)(d)1, F.A.C., provides that a minimum of .15 beds per 1,000 population should be located in hospitals holding a general license to ensure access to needed services for persons with multiple health problems. Some patients who need psychiatric care also need other medical services which can better be obtained in an acute care hospital. This fact is taken into account by the requirement of Rule 10-5.11(25)(d)1, F.A.C. Based upon the projected population for Broward County in 1989, there should be a minimum of 184-short-term psychiatric beds in hospitals holding a general license in Broward County. There are currently 243 short-term psychiatric beds in hospitals holding a general license in Broward County. Therefore, the standard of Rule 10-5.11(25)(d)1, F.A.C., has been met without approval of the Petitioner's proposal. There is no need for additional short-term psychiatric beds in general hospitals in Broward County for 1989. Rule 10-5.11(25)(d)4, F.A.C., provides that applicants for short-term psychiatric beds must be able to project an occupancy rate of 70 percent for its adult psychiatric beds and 60 percent for its adolescent and children's psychiatric beds in the second year of operation. For the third year of operation, the applicant must be able to project an 80 percent adult occupancy rate and a 70 percent adolescent and children's occupancy rate. The beds sought by the Petitioner will be managed by a professional psychiatric management company: Psychiatric Management Services (hereinafter referred to as "PMS"). PMS is owned by Psychiatric Institutes of America, a subsidiary of National Medical Enterprises. Because of the lack of need for additional short-term psychiatric beds in Broward County, it is doubtful that the Petitioner can achieve its projected occupancy rates as required by Rule 10-5.11(25)(d)4, F.A.C. Rules 10-5.11(25)(d)5 and 6, F.A.C., require that certain occupancy rates normally must have been met in the preceding 12 months before additional short-term psychiatric beds will be approved. The facts do not prove whether the occupancy rates provided by Rule 10-5.11(25)(d)5, F.A.C., have been met because the statistics necessary to make such a determination are not available. The evidence failed to prove that the occupancy rates of Rule 10- 5.11(25)(d)6, F.A.C. have been met. The average occupancy rate for short-term psychiatric beds in Broward County for 1985 was between 64.8 percent and 68.4 percent. Occupancy rates in Broward County for short-term psychiatric beds have not reached 71 percent since 1982. These rates are well below the 75 percent occupancy rate provided for in Rule 10-5.11(25)(d)6, F.A.C. This finding is not refuted by the fact that Florida Medical Center added 59 beds in 1984 and the fact that occupancy rates at most general hospitals exceeded 75 percent in 1985. Based upon the average occupancy rate in Broward County for 1985, there were approximately 100 empty short-term psychiatric beds in Broward County on any day. Rule 10-5.11(25)(d)7, F.A.C. requires that short-term psychiatric services provided at an inpatient psychiatric hospital should have at least 15 designated beds in order to assure specialized staff and services at a reasonable cost. The Petitioner's proposal to add 31 short-term psychiatric beds meets this requirement of the rule. C. Rule 10-5.11(25)(e), F.A.C. Rule 1O-5.11(25)(e)1, F.A.C., requires that an applicant prove that its proposal is consistent with the needs in the community as set out in the Local Health Council plans, local Mental Health District Board plans, State Mental Health Plan and needs assessment data. The Petitioner has failed to meet this requirement. The Petitioner's proposal is inconsistent with the District 10 Local Health Plan, the Florida State Health Plan and State and Local Mental Health Plans. In particular, the Petitioner's proposal is inconsistent with the following: The District 10 Local Health Plan's recommendation that applications not be approved if approval would result in an excess number of beds under the Respondent's bed need methodology; The District 10 Local Health Plan's recommendation concerning occupancy standards for the district (75 percent during the past 12 months); The position of the Florida State Health Plan that inpatient psychiatric services are a setting of last resort; The recommendation of the District 10 Mental Health Plan that alternatives to hospitalization for psychiatric services should be encouraged; and The recommendation of the Florida State Mental Health Plan that less restrictive treatment alternatives should be encouraged. Rule 10-5.11(25)(e)3, F.A.C., requires that applicants indicate the amount of care to be provided to underserved groups. The Petitioner's representations concerning its plans to provide indigent care contained in its application are misleading, in that the Petitioner represented that it would not turn away indigents. At the final hearing, the Petitioner indicated that it will generally provide care to indigents only on an emergency basis. Patients who need indigent care on a non-emergency basis will be referred to Memorial. Also, once an indigent patient who needs emergency care has stabilized, that patient will be transferred to Memorial for care. The Petitioner accepts few Medicaid and indigent patients. During 1985, the Petitioner treated 21 Medicaid patients out of a total of 6,800 patients. Only 1.5 percent of its total revenue was for uncompensated care. During 1984, the Petitioner treated 22 Medicaid patients out of a total of 7,321 patients. Only 1.2 percent of its total gross revenue was for uncompensated care. Memorial is subsidized by tax revenues for providing indigent care, or southern Broward County. Because Memorial provides indigent care, indigent patients are usually referred to Memorial if they do not need emergency care or are transferred to Memorial after they stabilize if they do need emergency care. There are other hospitals in northern Broward County which provide similar indigent care. It is therefore common practice to refer patients to those hospitals. Rule 10-5.11(25)(e)5, F.A.C., provides that development of new short- term psychiatric beds should be through the conversion of underutilized beds in other hospital services. The Petitioner's proposal to convert 31 medical/surgical beds for use as short-term psychiatric beds meets this provision. Rule 10-5.11(25)(e)7, F.A.C., provides that short- term psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90 percent of the service area's population. There is no geographic access problem in Broward County. At least 90 percent of the population of Broward County is within a maximum of 45 minutes driving time under average driving conditions to existing short-term psychiatric services in Broward County. The Petitioner's proposal will not significantly enhance geographic access in Broward County. III. Statutory Criteria. Need for Services. The Respondent has approved two certificates of need authorizing the addition of a total of 135 long-term psychiatric beds for Broward County. The addition of 135 long-term beds probably means that additional short-term beds in Broward County which have been used for patients requiring longer treatment will be available. If the additional long-term beds free up short-term beds, the occupancy rate of short-term psychiatric beds in Broward County would be even less than it has been during the past 12 months, if other things remain equal. Both Memorial and Florida Medical Center have been using short-term psychiatric beds for the care of long-term patients. Once the new long-term psychiatric beds are operational, more short-term psychiatric beds will be available in Broward County. Existing Providers. In addition to the short-term psychiatric beds available at Coral Ridge Hospital and Hollywood Pavilion, short- term psychiatric beds are available at the following existing facilities in the service district: Ft. Lauderdale Hospital: 64 beds Florida Medical Center: 74 beds Imperial Point: 47 beds Broward General Medical Center: 48 beds There is no geographic distribution problem in district 10. Generally, the Petitioner did not prove that existing short-term psychiatric beds in Broward County are not available, efficient, appropriate, accessible, adequate or providing quality of care. The Petitioner also did not prove that existing facilities are over-utilized. No new services are proposed by the Petitioner. The evidence did prove that there is usually a waiting list for short-term psychiatric beds at Memorial and that physicians have resorted to various devices to get their patients into short-term psychiatric beds at Memorial. Specialized adolescent psychiatric services are available in the service district at Ft. Lauderdale Hospital and at Florida Medical Center. Ft. Lauderdale Hospital has 24 short- term psychiatric beds dedicated to the treatment of adolescents. Florida Medical Center has 20 short-term psychiatric beds dedicated to the treatment of adolescents. Broward General Medical Center and Imperial Point also provide children/adolescent services. Treatment for eating disorders is provided and available at Imperial Point and Florida Medical Center. Florida Medical Center solicits patients from all parts of the service district. Geropsychiatric short-term psychiatric beds are available in the service district at Hollywood Pavilion, Imperial Point and Ft. Lauderdale Hospital. Florida Medical Center has a closed adult psychiatric unit and often treats persons over 60 years of age. It also has a 26-bed adult short-term psychiatric unit with 2 specialized treatment programs: one for eating disorders and the other for stress and pain management. The Petitioner has proposed to provide a dedicated geropsychiatric unit to meet the needs of geriatric patients which are different from those of adults generally. Although there are no such dedicated geropsychiatric units in the service district, the Petitioner failed to prove that geriatrics are not receiving adequate care from existing providers. Quality of Care. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals. The Petitioner has established adequate quality control procedures, including educational programs and a quality assurance department. These quality control procedures will also be used to insure quality of care in the proposed psychiatric units. The psychiatric units will be managed by PMS. PMS specializes in the management of psychiatric units in acute care hospitals. PMS has programs for adolescents and geriatrics. These programs will be available for use in the proposed psychiatric units. PMS also has a large variety of programs, services and specialists available to establish and maintain quality of care at the Petitioner. The Petitioner will be able to provide quality of care. Alternatives. The Petitioner did not prove that available and adequate facilities which may serve as an alternative to the services it is proposing do not exist in Broward County. Economies of Scale. The Petitioner's parent corporation, National Medical Enterprises has purchasing contracts available for use by the Petitioner in purchasing items needed for the proposed psychiatric units. These contracts can result in a reduction of costs for the proposed project. Staff Resources. PMS will help in recruiting staff for the proposed psychiatric units. Recruiting will be done locally but the Petitioner also has the ability to recruit specialized staff on a broader geographic scale. There is a shortage of nursing personnel for psychiatric services in southern Broward County and northern Dade County. Since the Petitioner plans to recruit locally, this could cause existing providers to lose specialized nursing personnel to the Petitioner. If the Petitioner causes vacancies at existing facilities, this could adversely affect quality of care. Financial Feasibility. The total projected cost of the project ($337,169.00) can easily be provided by National Medical Enterprises, the parent corporation of the Petitioner. The Petitioner's financial projections are unrealistic to the extent of the projected utilization and revenue for the proposed psychiatric units. Based upon the projected need of only 3 short-term psychiatric beds (or possibly a surplus of 77 beds) for 1989, the Petitioner's projected utilization and revenue for its proposal is rejected. The Petitioner has proved immediate financial feasibility but has failed to prove the proposal is financially feasible in the long-term. Impact of Proposal. The Petitioner's proposal could adversely effect the costs of providing health services in Broward County. This is especially true in light of the lack of need for additional short-term psychiatric beds in Broward County. Because of the high quality of the services the Petitioner proposes to provide, competition in Broward County could be enhanced and ultimately benefit consumers, if there was a need for the proposed additional beds. If a hospital has an image of being a charity hospital serving the needs of underserved groups, the hospital can experience difficulty in attracting paying patients and have difficulty in getting consumers to accept the high quality of the services of the hospital. Although it is likely that the Petitioner will take paying patients away from Memorial, it is unlikely that the number of patients lost could substantially affect the public's image of Memorial. The effect the Petitioner's proposal will have on Memorial is limited by the fact that the Petitioner is only seeking 31 beds and they are only short-term psychiatric beds. Memorial provides a variety of services and psychiatric services are only a small part of those services. I. Construction. It the Petitioner's proposal is approved, 11,500 square feet on the sixth floor of the Petitioner's hospital will be renovated and converted for use for the two proposed psychiatric units. The renovations can be made quickly. There will be space for 16 beds in a geropsychiatric unit and 15 beds in an adolescent unit. There will be a separate lobby for the psychiatric units and the elevators to the lobby will be strictly controlled. The two units will be separated and adequate security precautions will be taken to keep the two units separate. The ceilings in both units will be modified to insure security. Nurse stations will be provided for both units. Visibility from the nurse stations will be fair. Space is provided for a dayroom for each unit and there will be a class room and four rooms for therapy. These spaces will barely be adequate to meet the various needs of patients. With adequate planning and coordination, patients' needs can be met. There is inadequate space in the proposed facility for physical activities for patients.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the certificate of need application filed by the Petitioner for certificate of need #3372 should be denied. DONE and ENTERED this 15th day of May, 1986, in Tallahassee, Florida. LARRY J. SARTIN 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 15th day of May, 1986. COPIES FURNISHED: Michael J. Glazer, Esquire AUSLEY, McMULLEN, McGEHEE, CAROTHERS & PROCTOR Post Office Box 391 Tallahassee, Florida 32302 Lesley Mendelson, Esquire Assistant General Counsel Department of Health and Rehabilitative Services Building One, Suite 407 1323 Winewood Boulevard Tallahassee, Florida 32301 James C. Hauser, Esquire MESSER, VICHERS, CAPARELLO, FRENCH & MADSEN Post Office Box 1876 Tallahassee, Florida 32302 Kenneth G. Oertel, Esquire Eleanor A. Joseph, Esquire OERTEL & HOFFMAN, P.A. Post Office Box 6507 Tallahassee, Florida 32313-6507 Cynthia S. Tunnicliff, Esquire CARLTON, FIELDS, WARD, EMMANUEL SMITH & CUTLER, P.A. Post Office Drawer 190 Tallahassee, Florida 32302 Mr. William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue The issue is whether Respondent is guilty of being unable to practice as a physician assistant with reasonable skill and safety due to illness or use of alcohol or drugs, in violation of Section 458.331(1)(s); inappropriately prescribing medicine to family members by using the name of his supervising physician, in violation of Section 458.331(1)(q); and engaging in fraud in the practice of medicine by obtaining controlled substances through fraudulent means, in violation of Section 458.331(1)(k). If so, an additional issue is what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed as a physician assistant, holding license number PA 0002975. When applying for his license, Respondent supplied the Board of Medicine with certain information that resulted in a referral of Respondent to the Physician’s Recovery Network (PRN) for a psychiatric evaluation. The initial evaluation was completed on May 5, 1995. The evaluating psychiatrist determined that Respondent suffered from opiate dependency, probably as a result of some injuries that he had suffered years earlier. The psychiatrist concluded that Respondent could undergo outpatient treatment in an intensive program where he would be seen 3-5 times weekly. At the end of May, on the advice of the evaluating psychiatrist, Respondent entered a six-week intensive outpatient treatment in a chemical dependency program at Charter Glade Hospital. He also commenced attending meetings of Alcoholics Anonymous and Narcotics Anonymous and undergoing random drug screens. For the summer of 1995, Respondent had drug-free urine and seemed to be doing well. The evaluating psychiatrist informed the PRN that Respondent could safely return to practice, and the Board of Medicine certified Respondent to practice as a physician assistant. By early summer, 1996, the evaluating psychiatrist, who had continued seeing Respondent, began to suspect that something was not quite right with him. Respondent had begun acting hypomanically, developing, for example, a get-rich-quick scheme that was not well-founded in reality. During the summer of 1996, Respondent began using the name of his supervising physician to call in prescriptions for Vicodin, Trimox, and Ultram in the name of Respondent’s wife. These were fraudulent acts to gain possession of these narcotics for use by Respondent. Respondent’s physician employer terminated Respondent’s employment in June 1996 following bizarre behavior on Respondent’s part in professional settings involving patients and prospective patients. Respondent resisted all efforts by his evaluating psychiatrist to undergo reevaluation and retreatment, if necessary. Instead, Respondent became highly suspicious and unstable. On October 4, 1996, Petitioner entered an order of emergency suspension of Respondent’s license.
Recommendation It is RECOMMENDED that the Board of Medicine enter a final order revoking Respondent’s certificate as a physician assistant. ENTERED in Tallahassee, Florida, on June 4, 1997. ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings on June 4, 1997. COPIES FURNISHED: Joseph S. Garwood Senior Attorney Agency for Health Care Administration Post Office Box 14229 Tallahassee, Florida 32317-4229 Daniel Kulick 4641 Southwest Santa Barbara Place Cape Coral, Florida 33914 Dr. Marm Harris, Executive Director Board of Medicine 1940 North Monroe Street Tallahassee, Florida 32399-0792 Jerome Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403
