The Issue Which, if any, of the four certificate of need applications for short-term psychiatric beds in Department of Health and Rehabilitative Services District 9 should be approved.
Findings Of Fact Description of the Parties The Department of Health and Rehabilitative Services ("HRS") is the agency charged under Chapter 381, Florida Statutes (1991), to make decisions regarding certificate of need ("CON") applications. HRS issued its intent to approve the CON applications of Glenbeigh Hospital of Palm Beach, Inc. ("Glenbeigh"), for 45 beds, and Boca Raton Community Hospital, Inc. ("Boca"), for 15 beds, pursuant to a published fixed need for 67 beds for HRS District IX. HRS also issued its intent to deny the CON applications of Wellington Regional Medical Center, Incorporation ("Wellington") to convert 15 acute care beds to 15 short term adult psychiatric beds, and Savannas Hospital Limited Partnership ("Savannas") to convert 20 substance abuse beds to 20 short term adult psychiatric beds and to add 10 new short term adult beds. District IX includes Palm Beach, Martin, St. Lucie, Okeechobee and Indian River Counties. As a result of Glenbeigh's Notice of Withdrawal filed on April 6, 1993, CON No. 6438 is no longer under consideration in this case. Boca is an existing 394-bed acute care hospital, located one mile north of the Broward County line, and is the applicant for CON No. 6442, to convert 15 medical/surgical beds to 15 adult psychiatric beds, and to delicense an additional 6 medical/surgical beds. Wellington is an existing acute care hospital in Palm Beach County, with 104 acute care medical/surgical beds and 16 substance abuse beds, and is the applicant for CON No. 6441 to convert 15 acute care beds to 15 short term adult psychiatric beds. Savannas is an existing 70 bed child/adolescent and adult psychiatric and substance abuse hospital in St. Lucie County, about 40 miles north of Palm Beach, and is the applicant for CON No. 6444, to convert its 20 substance abuse beds to 20 adult short-term psychiatric beds, and to add 10 new adult short-term psychiatric beds. Lake Hospital and Clinic, Inc., d/b/a Lake Hospital of the Palm Beaches ("Lake"), at the time of hearing, was a 98-bed psychiatric and substance abuse hospital, with 46 adult psychiatric beds, 36 child/adolescent psychiatric beds and 16 substance abuse beds, located in Lake Worth, Palm Beach County, between Boca Raton and West Palm Beach. The parties stipulated that Lake had standing to challenge the Boca application. Community Hospital of the Palm Beaches, Inc., d/b/a Humana Hospital Palm Beaches ("Humana") is an existing 250-bed acute care hospital, with 61 adult and 27 child/adolescent psychiatric beds, and is a Baker Act receiving facility, located directly across the street from Glenbeigh in Palm Beach. Florida Residential Treatment Centers, Inc., d/b/a Charter Hospital of West Palm Beach ("Charter") is an existing 60-bed psychiatric hospital with 20 beds for children and 40 beds for adolescents, located approximately 15 minutes travel time from Glenbeigh. Martin H.M.A., Inc., d/b/a SandyPines Hospital ("SandyPines") is an existing 60 bed child and adolescent psychiatric hospital, and a Baker Act receiving facility, located in Martin County, less than one mile north of the Palm Beach County line. By prehearing stipulation, the parties agreed that the statutory review criteria applicable to the CON application of Boca are those listed in Subsections 381.705(1)(a), (b), (d), (f), (i) - (l) and (n). If Rule 10- 5.011(1)(o) is applicable, the parties stipulated that the disputed criteria are those in Subsections 4.g. and 5.g. Background and Applicability of HRS Rules and Florida Statutes Rule 10-5.011(o) and (p), Florida Administrative Code, was in effect at the time HRS published the fixed need pool and received the applications at issue in this proceeding, the September 1990 batching cycle. The rule distinguished between inpatient psychiatric services based on whether the services were provided on a short-term or long-term basis. Similarly, Rule 10- 5.011(q), Florida Administrative Code, distinguished between short-term and long-term hospital inpatient substance abuse services. On August 10, 1990, HRS published a fixed need pool for 19 short-term psychiatric beds in HRS District IX, with notice of the right to seek an administrative hearing to challenge the correctness of the fixed need pool number. See, Vol. 16, No. 32, Florida Administrative Weekly. On August 17, 1990, HRS published a revised fixed need pool for a net need of 67 additional short-term hospital inpatient psychiatric beds in HRS District IX, based on the denial of a certificate of need application, subsequent to the deadline for submission of the August 10th publication. The local health plan formula, which has not been adopted by rule, allocates 62 of the additional 67 beds needed to the Palm Beach County subdistrict. The revised pool publication did not include notice of the right to an administrative hearing to challenge the revised pool number. See, Vol. 16, No. 33, Florida Administrative Weekly. There were no challenges filed to either the original or revised fixed need pool numbers. On December 23, 1990, HRS published new psychiatric and substance abuse rules, subsequently renumbered as Rule 10-5.040 and 10-5.041, Florida Administrative Code. These new rules abolished the distinction between short- term and long-term services, and instead distinguished psychiatric and substance abuse services by the age of the patient. Pursuant to Section 14 of the new psychiatric rule, that rule does not apply to applications pending final agency action on the effective date of the new rule. HRS will, however, license any applicant approved from the September 1990 batching cycle to provide services to adults or children and adolescents, using the categories in the new rule, not based on the distinction between short and long term services which existed at the time the application was filed. Approved providers will receive separate CONs for adult and child/adolescent services. Rule 10-5.008(2)(a), Florida Administrative Code, provides that the fixed need pool shall be published in the Florida Administrative Weekly at least 15 days prior to the letter of intent deadline and . . . shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Humana, Lake, Charter and SandyPines allege that HRS incorrectly determined need under the old rule, by failing to examine occupancy rates pursuant to that rule. The rule provided, in relevant part, No additional short term inpatient hospital adult psychiatric beds shall normally be approved unless the average annual occupancy rate for all existing adult short term inpatient psychiatric beds in a service district is at or exceeds 75 percent for the preceding 12 month period. No additional beds for adolescents and children under 18 years of age shall normally be approved unless the average annual occupancy rate for all existing adolescent and children short term hospital inpatient psychiatric beds in the Department district is at or exceeds 70 percent for the preceding 12 month period. Hospitals seeking additional short term inpatient psychiatric beds must show evidence that the occupancy standard defined in paragraph six is met and that the number of designated short term psychiatric beds have had an occupancy rate of 75 percent or greater for the preceding year. (Emphasis added.) Rule 10-5.011(o)4(e), Florida Administrative Code. HRS' expert witness, Elizabeth Dudek, testified that the fixed need pool for 67 additional short term inpatient psychiatric beds was calculated pursuant to the formula in Rule 10-5.011(l)(o), Florida Administrative Code. Ms. Dudek also testified that since calculation resulted in a positive number, according to HRS policy, the publication of the fixed need pool indicates that the occupancy prerequisites must have also been met. To the contrary, the State Agency Action Report and the deposition of Lloyd Tribley, the HRS Health Facilities consultant who collected the data to support the publication of the fixed need pool, indicate that he did not determine existing occupancy separately for adults and for children/adolescents, as required by subsection (e) of the old rule. Rather, he determined, pursuant to subsection (f), that overall occupancy rates for licensed short-term psychiatric beds exceeded 75 percent. With the August 10, 1990 publication of the need for 19 additional short-term inpatient psychiatric beds, HRS provided a point of entry to challenge the published need, including the agency's apparent failure to make a determination of existing occupancy rates for separate age categories. No challenge was filed. In the August 17, 1990 publication, HRS failed to provide a point of entry, when it added 48 more beds to the pool as a result of the issuance of a final order denying a prior CON application. The August 10th publication of numeric need, according to HRS' representative should have been based on an analysis of separate and combined occupancy rates. There was no challenge to that publication, therefore the number of beds in the fixed need pool is not at issue in this proceeding. Like and Existing Facilities Humana, Lake and Charter assert that, as a result of the new rule abolishing separate licensure categories for short-term and long-term beds, all psychiatric providers within an applicant's service district are like and existing facilities. These parties also assert that there was not, even under the old rule, any practical difference between these categories of providers, particularly for children/adolescents. In support of this position, the evidence demonstrated that the average lengths of stay in short-term and long- term adolescent psychiatric beds in 1989 were 48.1 days and 53.02 days, respectively. In 1990, the average lengths of stay in short and long-term beds were 41.8 days and 41.9 days, respectively. The parties asserting that the effect of the new rule is to create an additional group of like and existing providers point to HRS' response to the application of Indian River Memorial Hospital in Vero Beach, Florida ("Indian River"). According to the testimony of HRS expert witness Elizabeth Dudek, Indian River was another District 9 applicant in this same batching cycle. Indian River applied for a CON to convert long-term psychiatric beds to short- term psychiatric beds. HRS denied the CON application of Indian River because, under the new rule, which had taken effect before the decisions on the batch were made, Indian River would receive a new license permitting it to treat psychiatric patients regardless of their projected lengths of stay. Glenbeigh asserted that the numeric need for 67 additional short term psychiatric beds cannot be challenged in this proceeding based on the failure of any party timely to challenge the August 10, 1990, publication of need. Similarly, Glenbeigh asserted that the comparison of "like and existing" facilities must be limited to those used in the inventory to compute need. Glenbeigh relied generally on Florida Administrative Code Rule 10-5.011(o), the old rule governing short term hospital inpatient psychiatric services, for the proposition that "like and existing" in Subsection 381.705(1)(b), Florida Statutes, is equivalent to the inventory of licensed and approved beds for short term psychiatric services, which was used in the computation of need. However, the rule also provides, in a list of "other standards and criteria to be considered in determining approval of a certificate of need application for short term hospital inpatient psychiatric beds," the following, Applicants shall indicate the availability of other inpatient psychiatric services in the proposed service area, including the number of beds available in crisis stabilization units, short term residential treatment programs, and other inpatient beds whether licensed as a hospital facility or not. In light of the rule directive that the consideration of like and existing services is not limited to licensed provider hospitals, Glenbeigh's assertion that the statutory review criteria is more restrictive and limited to the licensed and approved beds that were used to compute numeric need is rejected. The like and existing facilities are the hospitals or freestanding facilities which are authorized to provide the same psychiatric services, as the applicants seek to provide as a result of this proceeding. It was established at hearing that the following list of District 9 facilities provide psychiatric services comparable to those which the three remaining applicants seek to provide in these consolidated cases: DISTRICT 9 Hospital PSYCHIATRIC BEDS SUBSTANCE ABUSE BEDS Adult Child and Adult Child and Adolescent Adolescent Lic. App. Lic. App. Lic. App. Lic. App. Bethesda Hospital 20 0 0 0 0 0 0 0 Charter Palm (IRTF) 0 0 60 0 0 0 0 0 Fair Oaks 36 0 49 0 14 0 3 0 Forty Fifth Street 44 0 0 0 0 0 0 0 Glenbeigh Palm Beach 0 0 0 0 30 0 30 0 Humana Palm Beach 61 0 27 15 0 0 0 0 Humana Sebastian 0 0 0 0 16 0 0 0 Indian River Mem. 16 0 38 0 0 0 0 0 J.F. Kennedy Mem. 14 0 0 0 22 0 0 0 Lake Hospital 46 0 36 0 16 0 0 0 Lawnwood Regional 36 Res. Treat. Palm 0 24 0 0 0 0 0 (IRTF) 0 0 40 0 0 0 0 0 Sandy Pines 0 0 60 0 0 0 0 0 Savannas 35 0 15 0 20 0 0 0 St. Mary Hospital 0 40 0 0 0 0 0 0 Wellington Regional 0 0 0 0 16 0 0 0 Vol. 16, No. 52, Florida Administrative Weekly, (December 28, 1990) (Humana Exhibit 26). Need For Additional Beds An analysis of need beyond that of the numeric need, requires an analysis of the availability and accessibility of the like and existing facilties. One reliable indicator of need is the occupancy levels in the like and existing facilities. In addition to providing guidelines for the publication of need, Rule 10-5.011(o)(4)(e) also mandates a consideration of occupancy levels to determine if applicants are or are not required to demonstrate "not normal circumstances" necessitating the issuance of a CON. For all child/adolescent psychiatric programs in District 9, the expert for Lake and Humana calculated total average occupancy rates at 57.6 percent in 1988, 64.2 percent in 1989, and 53.2 percent in 1990. In support of the accuracy of the expert's calculations, the District 9 Annual Report for 1990 (Lake Exhibit 4) shows occupancy at 46.80 percent in general hospitals, 88.22 percent in specialty hospitals then categorized as short term and 38.22 percent in specialty hospitals then categorized as long term. In addition, during this same period of time, average lengths of stay in District 9 child/adolescent beds also declined by approximately 10 percent. Using the guidelines of the old rule, new short term psychiatric beds should not normally be approved when the child/adolescent rate is below 70 percent. In the new rule, child/adolescent beds should not normally be approved if occupancy is below 75 percent. Therefore, under either rule, applicants who will be licensed for child/adolescent beds, must demonstrate not normal circumstances for their CON applications to be approved. The expert for Lake and Humana, also computed the adult occupancy rates for 1988-1990 in District 9 as follows: 1988- 66.5 percent; 1989 - 73.1 percent; 1990 - 68.5 percent. The occupancy rates for adult beds for the 12- month period ending March, 1990 was 70.6 percent and 69.2 percent for the twelve months ending June, 1990. In evaluating the accuracy of the expert's calculations of occupancy rates for adult beds, a comparison can be made to the District 9 Annual Report for 1990 (Lake Exhibit 4). Occupancy rates were 57.75 percent in general hospitals and 79.45 percent in specialty hospitals. This data does not include Indian River Memorial or Lawnwood Regional which were also listed on the December 1990 inventory of licensed adult beds, nor St. Mary's Hospital which was listed as having 40 approved adult beds. The comparison indicates the accuracy of concluding that the highest occupancy level for District 9 adult psychiatric beds during the period 1988 to 1990 was approximately 70 percent. Using the guidelines of the old rule, 75 percent occupancy is required before new adult beds can be approved unless there is a not normal circumstance. Boca's Proposal Boca Raton Community Hospital ("Boca") is a 394-bed not-for-profit acute care hospital, accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations, which proposes to convert 21 of its medical/surgical to 15 adult psychiatric beds and to delicense an additional 6 acute care beds. Boca's CON would be conditioned on the provision of 10.8 percent total annual patient days to Medicaid patients and a minimum of 5 percent gross revenues generated, or 2 percent total annual patient days to medically indigent patients. Boca has proposed this alternative so that, if it fails to provide direct care to indigents, it may donate the revenues to further the objectives of the state and district mental health councils. Boca Raton Community Hospital Corporation has control and manages the Boca's property, policies and funds. The Boca Raton Community Hospital Foundation raises funds for Boca and has the funds necessary to accomplish the proposed project at a cost of $932,531. Boca's application asserts that a not normal circumstance exists in the need to serve Medicaid patients in the district, and that a need exists to serve geriatric psychiatric patients in an acute care hospital, due to their general medical condition. Medicaid reimbursement for psychiatric care is only available in acute care hospitals. Boca Historically serves in excess of 70 percent Medicare (geriatric) patients. In 1990, 72 percent of Medicaid psychiatric patients residing in Boca's service area sought psychiatric services outside District 9, as compared to the outmigration of 14.7 percent Medicare patients, and 11 percent commercial insurance patients. Boca supported its proposed 10.8 percent Medicaid CON condition, with evidence that 10.8 percent of all psychiatric discharges in its market area were for Medicaid patients. Boca's opponents dispute the claim that a disproportionate outmigration of District 9 Medicaid patients is, in and of itself, a not normal circumstance. Using the travel time standard for inpatient psychiatric services of 45 minutes under average driving conditions, the opponents argue that District 10 facilities should be considered as available alternatives to additional psychiatric beds in District 9. In fact, the parties stipulated that there are no geographic access problems in District 9. In contrast to the opponents position, Subsections 381.705(a), (b)(, (d), (f) and (h), Florida Statutes (1991), indicate that need, available alternatives and accessibility are evaluated within a district, as defined by Subsection 381.702(5). Therefore, using the statutory criteria as indicative of the situation which is normal, the disproportionate outmigration of medicaid patients can be considered a not normal circumstance with a showing of access hardships for this payor group. Boca's opponents also assert general acute care adult beds are adequate. In August 1991, the occupancy rate was 56.9 percent in the 171 licensed adult psychiatric beds in District 9 general acute care hospitals which are eligible for Medicaid reimbursement. Finally, Boca's opponents argue that Boca historically has not, and will not serve Medicaid patients in sufficient number to alter the outmigration. In 1990, Boca reported 671 Medicaid inpatient days from a total of 99,955. That is equivalent to 92 of the 16,170 admissions. Because Boca has a closed medical staff, only the psychiatrists on staff would be able to admit patients to a psychiatric unit. From the testimony and depositions received in evidence, Boca's psychiatrists who discussed their service to Medicaid patients treated less than 12 Medicaid patients a year. One psychiatrist, who had previously treated Medicaid patients at a mental health center, has been in private practice since 1983-84, but was not sure he had treated a Medicaid patient in his private practice and has received a new Medicaid provider number a few weeks prior to hearing. One Boca psychiatrist does not treat Medicaid patients on an inpatient basis. Two other Boca psychiatrists reported seeing 10 and "a couple" of Medicaid patients a year, respectively. The latter of these described the Medicaid billing procedure as cumbersome. Given the unavailability of Medicaid eligible beds in the District and the nature of the practices of its closed staff of psychiatrists, Boca has failed to establish that its CON application will alleviate the outmigration for psychiatric services of District 9 Medicaid patients. This conclusion is not altered by the subsequent closure of Lake's 46 adult psychiatric beds, because Medicaid reimbursement would not have been available at Lake which was not an acute care hospital. In fact, HRS takes the position that there are no not normal circumstances in this case. Wellington's Proposal Wellington, a 120 bed hospital in West Palm Beach, Florida, proposed to convert 15 acute care beds to 15 short term adult psychiatric beds which, if approved, will be licensed as adult psychiatric beds. Wellington's acute care beds are only 28 percent occupied. Wellington is located in the western portion of Palm Beach County, where no other inpatient psychiatric facilities are located. Wellington is a wholly owned subsidiary of Universal Health Services, Inc. ("UHS"), accredited by the Joint Commission for the Accreditation of Hospitals and Health Organizations (JCAHO) and the American Osteopathic Association (AOA), and offers clinical experience for students of the Southeastern College of Osteopathic Medicine (SECOM). Internships and externships for osteopathic students are also provided at Humana's psychiatric pavilion. Wellington proposes to fund the total project cost of $920,000 from funds available to UHS and intends to become a Baker Act receiving facility. Wellington is not a disproportionate share hospital, and projects 1 percent Medicaid service in its payor mix. Wellington proposes to serve adult psychiatric patients in 15 beds, and projects 53.3 percent and 70 percent occupancy in those beds in years one and two, but does not make a third year projection of at least 80 percent occupancy as required by Paragraph 4(d) of Rule 10-5.011(o). Because the average annual adult occupancy rate in the district is less than 75 percent, any applicant proposing to serve adults must demonstrate that a not normal circumstance exists for approval of its CON application. In addition, there appears to be no shortage of psychiatric beds in acute care hospitals in District 9. See Finding of Fact 39, supra. Not Normal Circumstance Wellington has not alleged nor demonstrated that any of the factors related to its current operations, location or proposed services are not normal circumstances in support of its CON application. Absent the showing of a not normal circumstance, Wellington's proposal cannot be approved, pursuant to Paragraph 4(e) and Rule 10-5.011(o), Florida Administrative Code. Savannas Proposal Savannas Hospital Limited partnership d/b/a Savannas Hospital ("Savannas") is a JCAHO accredited 70 bed psychiatric and substance abuse hospital located in Port St. Lucie, St. Lucie County, Florida, approximately 40 miles north of Palm Beach. Savannas, a Baker Act facility, proposes to convert all 20 of its licensed substance abuse beds to psychiatric beds and to add 10 new psychiatric beds, at a total project cost of $1,444,818. Savannas also proposes to commit to providing 7 percent indigent care. While not specifically describing its circumstances as not normal, Savannas does indicate that it is (1) the only applicant in the northern sub- district of District 9, and (2) could readmit to a segregated unit low functioning neurogeriatric patients of the type it previously served. Savannas also indicated that Medicare reimbursement is not available for patients who have substance abuse, rather than psychiatric primary diagnoses. As a freestanding provider, Savannas is not eligible for Medicaid reimbursement. Savannas demonstrates what services it would provide, if its CON is approved, but fails to identify a need for the services by District 9 psychiatric patients. Within the northern sub-district, the only other facility in St. Lucie County, Lawnwood, reported an occupancy rate of 65 percent in 1989. AHCA also argued that the substance abuse beds at Savannas are needed and should not be converted to psychiatric beds. That position is supported by the fact that Savannas substance abuse beds had a higher occupancy level than its psychiatric beds in 1989. Savannas' application and the evidence presented do not support the need for the services proposed by Savannas, nor does Savannas assert that any not normal circumstances exist.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Certificate of Need Number 6438 to Glenbeigh Hospital of Palm Beach, Inc.; Certificate of Need Number 6442 to Boca Raton Community Hospital, Inc.; Certificate of Need Number 6441 to Wellington Regional Medical Center, Inc.; and Certificate of Need Number 6444 to Savannas Hospital Limited Partnership. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of June 1993. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of June 1993. APPENDIX The following rulings are made on the parties' proposed findings of fact: Humana Adopted in Finding of Fact 1. Subordinate to Finding of Fact 2. 3-6. Issues not addressed. 7-8. Adopted in Findings of Fact 3 and 4. Subordinate to Findings of Fact 44 and 46. Subordinate to Finding of Fact 10. 11-12. Adopted in Findings of Fact 6 and 7. 13-15. Subordinate to Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 27 & 29. Issue not addressed. 20-21. Subordinate to Finding of Fact 25. 22. Issue not addressed. 23-24. Adopted in Findings of Fact 8 and 9. Accepted in relevant part in Finding of Fact 11. Accepted in relevant part in Finding of Fact 10. Subordinate to Finding of Fact 12 and Conclusions of Law 4. Subordinate to Finding of Fact 1. Adopted in Finding of Fact 22. Rejected in Finding of Fact 20. Rejected in Findings of Fact 12 and 18. Adopted in Findings of Fact 15 and 17. Rejected in Finding of Fact 38. Adopted in Findings of Fact 16 and 17. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 47. 38-47. Issues not addressed. Adopted in Findings of Fact 44 and 47. Issue not addressed. Rejected in Finding of Fact 46. Issue not addressed. 52-54. Adopted in Findings of Fact 46 and 47. 55-57. Issues not addressed. Adopted in Finding of Fact Issue not addressed. Adopted in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Finding of Fact 21. Accepted in relevant part in Finding of Fact 22. Accepted in relevant part in Finding of Fact 21. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Finding of Fact 54 Accepted in relevant part in Findings of Fact 26, 38, 39, 42, 43, 47, 48, 54, 55 and 57. Accepted in relevant part in Finding of Fact 26. Rejected in Findings of Fact 21 and 22. Accepted in relevant part in Finding of Fact 26. 74-75. Accepted in relevant part in Finding of Fact 27. 76-77. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 28. Subordinate to Finding of Fact 31. Accepted in relevant part in Finding of Fact 82. Subordinate to Finding of Fact 82. Accepted in relevant part in Finding of Fact 37. Accepted in relevant part in Finding of Fact 39. Issue not addressed. Subordinate to Finding of Fact 27 and 30. Accepted in relevant part in Findings of Fact 27, 29 and 30. Subordinate to Findings of Fact 27 and 30. Accepted in relevant part in Finding of Fact 31. Accepted in relevant part in Finding of Fact 42. Issue not addressed. Addressed in Preliminary Statement. Accepted in relevant part in Finding of Fact 1. 95-99. Issues not addressed Accepted in relevant part in Finding of Fact 10. Accepted in relevant part in Finding of Fact 25. 102-114. Issues not addressed Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. Subordinate to Finding of Fact 25. Accepted in relevant part in Finding of Fact 37. Issue not addressed. Accepted in relevant part in Finding of Fact 10. 121-122. Issues not addressed. Accepted in relevant part in Findings of Fact 4 and 47. Issue not addressed. Irrlevant. Issue not addressed. Accepted in relevant part in Finding of Fact 10 Accepted in relevant part in Findings of Fact 10, 25, 47 and 48. Subordinate to Finding of Fact 11. Issue not addressed. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 45. Accepted in relevant part in Finding of Fact 46. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Issue not addressed. Accepted in relevant part in Findings of Fact 47 and 48. Accepted in relevant part in Finding of Fact 15. Accepted in relevant part in Findings of Fact 47, 48 and 49. Accepted in relevant part in Finding of Fact 11. Lake Adopted in Finding of Fact 1. Subordinate to Finding of Fact 1. 3-4. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 6 and 43. 11-12. Issues not addressed. 13-19. Subordinate to Findings of Fact 27-43. 20-21. Issues not addressed. 22. Adopted in Finding of Fact 10. 23. Adopted in Finding of Fact 11. 24. Adopted in Finding of Fact 12. 25-26. Adopted in Finding of Fact 13. 27-28. Adopted in Finding of Fact 1. 29-31. Adopted in Finding of Fact 22. 32. Rejected in relevant part in Finding of Fact 13. 33. Issue not addressed. 34. Accepted in relevant part in Finding of Fact 25. 35. Subordinate to Finding of Fact 25. 36-37. Accepted in relevant part in Finding of Fact 25. 38-39. Subordinate to Finding of Fact 27. 40. Accepted in relevant part in Finding of Fact 25. 41. Accepted in relevant part in Finding of Fact 30. 42-43. Subordinate to Finding of Fact 30. 44. Accepted in relevant part in Finding of Fact 25. 45. Subordinate to Findings of Fact 27 and 30. 46-47. Issues not addressed. 48. Accepted in relevant part in Findings of Fact 27 and 30. 49-52. Issues not addressed. 53. Subordinate to Finding of Fact 42. 54-56. Issues not addressed. 57. Accepted in relevant part in Conclusions of Law 4. 58-59. Accepted in relevant part in Finding of Fact 26 and in Conclusions of Law 4. Accepted in relevant part in Finding of Fact 20. Adopted in Finding of Fact 20. Adopted in Finding of Fact 15. Subordinate to Finding of Fact 1. Subordinate to Finding of Fact 17. 65-66. Adopted in Finding of Fact 17. Adopted in Findings of Fact 18, 27 and 30. Adopted in Finding of Fact 17. Adopted in Findings of Fact 27 and 29. Adopted in Finding of Fact 30. Adopted in Finding of Fact 29. Adopted in Finding of Fact 31. Adopted in Findings of Fact 28 and 31. Adopted in Finding of Fact 38. Adopted in Findings of Fact 27, 39 and 42. Adopted in Finding of Fact 43. Adopted in Finding of Fact 38. Adopted in Finding of Fact 35. Adopted in Findings of Fact 37, 39 and 42. Adopted in Finding of Fact 42. Adopted in Findings of Fact 47, 48, 49, 53 and 57. Adopted in Finding of Fact 47. Adopted in Finding of Fact 1. 84-89. Issues not addressed. Adopted in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 92-97. Issues not addressed. Subordinate to Finding of Fact 41. Subordinate to Finding of Fact 37. 100-102. Issues not addressed. Adopted in Findings of Fact 47 and 48. Adopted in Finding of Fact 26. Adopted in Finding of Fact 25. Subordinate to Finding of Fact 25. Adopted in Finding of Fact 30. Adopted in Finding of Fact 27. Subordinate to Finding of Fact 27. Adopted in Finding of Fact 27. 111-113. Subordinate to Finding of Fact 27. Subordinate to Finding of Fact 30. Adopted in Finding of Fact 29. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Adopted. Adopted. Accepted in relevant part. Issue not addressed. Accepted in relevant part in Findings of Fact 3 and 32. Subordinate to Finding of Fact 3. Accepted in relevant part in Finding of Fact 41. Adopted in Finding of Fact 42. Subordinate to Finding of Fact 41. Issue not addressed. 128-132. Subordinate to Finding of Fact 32. 133-135. Issues not addressed. Adopted in Findings of Fact 32 and 41. Adopted in Finding of Fact 32. Subordinate to Finding of Fact 32. Issue not addressed. Adopted in Finding of Fact 10. Adopted in Finding of Fact 6. Adopted in Finding of Fact 10. Adopted in Finding of Fact 30. Adopted in Finding of Fact 44. Subordinate to Finding of Fact 45. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 46. Subordinate to Finding of Fact 47. Adopted in Finding of Fact 44. 150-151. Adopted in Finding of Fact 46. 152-156. Issues not addressed. 157-158. Adopted in Finding of Fact 10. 159. Adopted in Findings of Fact 48 and 49. 160. Adopted in Finding of Fact 5. 161. Adopted in Finding of Fact 5. 162. Adopted in Finding of Fact 56. 163. Adopted in Finding of Fact 57. 164. Adopted in Finding of Fact 10. 165. Adopted in Finding of Fact 10. 166. Charter Adopted in Finding of Fact 57. 1. Accepted in relevant part in Finding of Fact 1. 2-3. Adopted. 4-10. Accepted in Preliminary Statement. 11. Adopted in Finding of Fact 1. 12-15. Issues not addressed. 16. Adopted in Finding of Fact 12. 17. Adopted in Finding of Fact 7. 18-19. Issues not addressed. 20. Adopted in Finding of Fact 8. 21-25. Subordinate to Finding of Fact 8. 26-38. Issues not addressed 39-40. Adopted in Finding of Fact 10. Subordinate to Finding of Fact 13. Adopted in Finding of Fact 13. 43-44. Adopted in Finding of Fact 22. Adopted in Finding of Fact 13. Adoped in Conclusion of Law 3. Adopted in Finding of Fact 13. Subordinate to Finding of Fact 25. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 23. Issue not addressed. 52-53. Adopted in Finding of Fact 25. 54-55. Issues not addressed. Adopted in Finding of Fact 26. Adopted in Finding of Fact 24. 58-73. Issues not addressed. Adopted in Finding of Fact 23. Adopted in Finding of Fact 38. Adopted in Finding of Fact 27. Adopted in Findings of Fact 27 and 30. 78-79. Subordinate to Findings of Fact 27 and 30. Subordinate to Finding of Fact 27. Issue not addressed. Adopted in Findings of Fact 27 and 30. Adopted in Finding of Fact 37. Adopted in Finding of Fact 39. Adopted in Finding of Fact 25. 86-94. Issues not addressed. Adopted in Finding of Fact 26. Issue not addressed. Adopted in Finding of Fact 15. Adopted in Findings of Fact 37, 39 and 42. 99-101. Issues not addressed. 102. Adopted in Finding of Fact 1. 103-134. Issues not addressed. 135. Adopted in Finding of Fact 4. 136-140. Issues not addressed. Boca Adopted in Finding of Fact 12. Adopted in Finding of Fact 11. Subordinate to Finding of Fact 11. Adopted in Finding of Fact 1. Adopted in Preliminary Statement. Adopted in Findings of Fact 3 and 32. Adopted in Finding of Fact 33. Subordinate to Finding of Fact 3. Adopted in Finding of Fact 32. 10. Subordinate to Finding of Fact 32. 11. Adopted in Finding of Fact 41. 12. Subordinate to Finding of Fact 32. 13. Adopted in Finding of Fact 32. 14. Adopted. 15-16. Subordinate to Finding of Fact 32. 17. Adopted in Finding of Fact 34. 18. Subordinate to Finding of Fact 32. 19. Issue not addressed. 20-21. Adopted in Finding of Fact 32. 22. Rejected in Finding of Fact 39. 23. Subordinate to Finding of Fact 32. 24. Adopted in Finding of Fact 32. 25. Subordinate to Finding of Fact 32. 26-27. Adopted in Finding of Fact 41. 28-30. Subordinate to Finding of Fact 41. 31. Adopted in Finding of Fact 34. 32. Adopted in Finding of Fact 39. 33. Subordinate to Finding of Fact 34. 34. Adopted in Finding of Fact 39. 35. Adopted in Finding of Fact 34. 36. Rejected in Finding of Fact 39. 37-42. Adopted in Finding of Fact 41. 43-47. Issues not addressed. 48. Subordinate to Finding of Fact 30. 49-50. Issues not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Issue not addressed. 53-54. Rejected in Finding of Fact 30. 55-56. Issues not addressed. 57. Adopted in Finding of Fact 12. 58-59. Issues not addressed. Rejected in Findings of Fact 39 and 42. Adopted in Finding of Fact 12. Issue not addressed. Adopted in Finding of Fact 32. 64-65. Issues not addressed. Adopted in Findings of Fact 32, 35 and 38. Adopted in Finding of Fact 36. Adopted. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 12. Subordinate to Finding of Fact 32. Issue not addressed. Accepted in relevant part in Finding of Fact 34. Issue not addressed. Issue not addressed. Adopted in Finding of Fact 15. Issue not addressed. Adopted. Adopted in Finding of Fact 32. 81-82. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Finding of Fact 32. Adopted in Finding of Fact 37. Rejected in Findings of Fact 25 and 42. Issue not addressed. Adopted in Finding of Fact 6. 89-97. Issues not addressed. Subordinate to Finding of Fact 25. Rejected in Finding of Fact 42. Issue not addressed. Adopted in Findings of Fact 25 and 26. Adopted in Finding of Fact 6. Sandy Pines 1. Issue not addressed. 2-3. Subordinate to Finding of Fact 1. 4. Issue not addressed. 5. Subordinate to Finding of Fact 9. 6-8. Adopted in Finding of Fact 9. 9-13. Subordinate to Finding of Fact 25. 14. Adopted in Finding of Fact 9. 15. Subordinate to Finding of Fact 9. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. Adopted in Finding of Fact 25. Adopted in Finding of Fact 27. 20-24. Subordinate to Finding of Fact 27. 25. Subordinate to Finding of Fact 9. 26-29. Issues not addressed. 30. Adopted. 31-33. Issues not addressed. Adopted in Findings of Fact 42, 43, 48, 49 and 54. Issue not addressed. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 28 and 31. Issue not addressed. 39-40. Subordinate to Findings of Fact 27 and 30. 41-42. Issues not addressed. Accepted in relevant part in Finding of Fact 12. Accepted in relevant part in Findings of Fact 12 and 17. Accepted in relevant part in Finding of Fact 17. 46-47. Accepted in relevant part in Finding of Fact 26. 48. Subordinate to Findings of Fact 25 and 26. 49-50. Issues not addressed. Adopted. Adopted. Accepted in relevant part in Finding of Fact 7. Accepted in relevant part in Finding of Fact 42. 55-56. Issues not addressed. 57. Adopted. 58-59. Issues not addressed. Accepted in relevant part in Conclusion of Law 3. Accepted in relevant part in Finding of Fact 26. 62-64. Accepted in relevant part in Finding of Fact 25. Accepted in relevant part in Findings of Fact 27 and 30. Subordinate to Findings of Fact 27 and 30. 67. Accepted in relevant part in Finding of Fact 22. 68-69. Accepted in relevant part in Finding of Fact 21. 70. Accepted in relevant part in Finding of Fact 26. 71. Accepted in relevant part in Finding of Fact 26 and in 72. Conclusion of Law 3. Accepted in relevant part in Findings of Fact 26 and 73. 38. Accepted in relevant part in Findings of Fact 25, 27 and 30. 74-75. Not legible. 76. Subordinate to Finding of Fact 25. 77-80. Subordinate to Finding of Fact 27. 81. Subordinate to Finding of Fact 25. 82-83. Subordinate to Finding of Fact 27. 84-95. Issues not addressed. Wellington 1-2. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Adopted in Finding of Fact 44. Subordinate to Findings of Fact 4 and 44. Adopted in Finding of Fact 44. Adopted in Finding of Fact 45. 8-10. Subordinate to Finding of Fact 45. 11-12. Adopted in Finding of Fact 45. 13-19. Subordinate to Findings of Fact 4 and 44. 20. Adopted in Findings of Fact 4 and 46. 21-22. Adopted in Findings of Fact 4 and 44. Adopted in Finding of Fact 45. Subordinate to Findings of Fact 44 and 46. Subordinate to Findings of Fact 4 and 44. Subordinate to Finding of Fact 46. 27-28. Adopted in Finding of Fact 46. Adopted in Finding of Fact 30. Adopted in Finding of Fact 46. 31-32. Issues not addressed. Subordinate to Finding of Fact 25. Adopted. Issue not addressed. 36-37. Adopted in Finding of Fact 45. 38-42. Issues not addressed. 43. Adopted in Findings of Fact 34, 42 and 47. 44-63. Issues not addressed. 64-65. Subordinate to Finding of Fact 46. 66-67. Issues not addressed. 68. Adopted in Finding of Fact 10. 69-91. Issues not addressed. Accepted in relevant part in Finding of Fact 47. Accepted in relevant part in Finding of Fact 12. 94-103. Issues not addressed. Accepted in relevant part in Findings of Fact 1 and 44. Accepted in relevant part in Finding of Fact 45. 106-111. Issues not addressed 112. Rejected in Findings of Fact 25, 27 and 30. 113-115. Accepted in relevant part in Finding of Fact 45. Savannas Adopted in Finding of Fact 1. Adopted in Findings of Fact 2 and 7. Adopted in Finding of Fact 3. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. Adopted in Findings of Fact 5 and 50. Subordinate to Finding of Fact 5. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 53. Subordinate to Finding of Fact 56. Subordinate to Findings of Fact 5 and 50. Adopted. Issue not addressed. Adopted in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 53. Rejected in Finding of Fact 56. Issue not addressed. Adopted in Finding of Fact 51. Adopted in Finding of Fact 50. Issue not addressed. Adopted in Findings of Fact 5 and 51. Subordinate to Finding of Fact 51. Adopted in Finding of Fact 53. Subordinate to Finding of Fact 1. 30-33. Subordinate to Finding of Fact 12. 34. Adopted in Finding of Fact 12. 35-37. Issues not addressed. Adopted in Finding of Fact 53. Issue not addressed. 40-42. Rejected in Finding of Fact 54. 43. Adopted in Finding of Fact 50. 44-48. Subordinate to Finding of Fact 50. 49-51. Rejected in Findings of Fact 53 and 57. Adopted in Finding of Fact 53. Rejected in Findings of Fact 53 and 57. Adopted. Adopted. 56-57. Subordinate to Finding of Fact 50 Rejected in Findings of Fact 53 and 57. Issue not addressed. 60-61. Rejected in Findings of Fact 53 and 57. 62-63. Issues not addressed. 64. Adopted in Finding of Fact 56. 65-66. Issues not addressed. 67. Rejected in Findings of Fact 53 and 57. 68-70. Issues not addressed. 71. Adopted in Finding of Fact 52. 72-77. Issues not addressed 78. Adopted in Finding of Fact 1. 79-100. Issues not addressed. HRS Adopted in Finding of Fact 1. Adopted in Finding of Fact 11. Adopted in Finding of Fact 13. Adopted in Finding of Fact 12. Accepted in relevant part in Finding of Fact 16 and rejected in part in Finding of Fact 17. Adopted in Finding of Fact 16. Subordinate to Finding of Fact 16. Adopted in Finding of Fact 8. Adopted in Finding of Fact 9. 10-11. Subordinate to Finding of Fact 12. Accepted in relevant part in Finding of Fact 12. Issue not addressed. Accepted in relevant part in Finding of Fact 12. Subordinate to Finding of Fact 12. 16-17. Issues not addressed. Adopted in Finding of Fact 1. Subordinate to Findings of Fact 32, 46 and 52. Adopted in Finding of Fact 20. 21. Subordinate to Finding of Fact 1. 22. Subordinate to Finding of Fact 2. 23-33. Issues not addressed. 34. Adopted in Finding of Fact 3. 35-36. Subordinate to Finding of Fact 3. 37. Accepted in relevant part in Finding of Fact 32. 38. Subordinate to Finding of Fact 32. 39. Rejected in Findings of Fact 40, 41 and 42. 40. Adopted in Finding of Fact 32. 41. Issue not addressed. 42. Adopted in Finding of Fact 42. 43. Adopted in Finding of Fact 32. 44. Issue not addressed. 45-46. Adopted in Finding of Fact 32. 47. Adopted in Finding of Fact 47. 48. Accepted in relevant part in Finding of Fact 44. 49. Issue not addressed. 50. Accepted in relevant part in Finding of Fact 46. 51. Subordinate to Finding of Fact 47. 52. Accepted in relevant part in Finding of Fact 46. 53-54. Accepted in relevant part in Finding of Fact 45. 55. Issue not addressed. 56-57. Subordinate to Finding of Fact 46. 58. Subordinate to Finding of Fact 47. 59-61. Issues not addressed. 62-64. Adopted in Findings of Fact 50 and 51. 65. Subordinate to Finding of Fact 65. 66-68. Issues not addressed. 69. Accepted in relevant part in Finding of Fact 52. 70-71. Issues not addressed. 72. Accepted in relevant part in Finding of Fact 53. 73. Accepted in relevant part in Finding of Fact 53. 74. Adopted in Finding of Fact 56. 75-77. Subordinate to Finding of Fact 56. 78-80. Issues not addressed. 81-82. Subordinate to Finding of Fact 56. 83-89. Issues not addressed. COPIES FURNISHED: Thomas Cooper, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, Florida 32308 William B. Wiley, Esquire McFARLAIN, STERNSTEIN, WILEY & CASSEDY, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 James C. Hauser, Esquire Foley & Lardner Post Office Box 508 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire David C. Ashburn, Esquire Roberts, Baggett, LaFace & Richard Post Office Drawer 1838 Tallahassee, Florida 32301 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Michael J. Glazer, Esquire C. Gary Williams, Esquire Ausley, McMullen, McGehee, Carothers & Proctor Post Office Box 391 Tallahassee, Florida 32302 Robert S. Cohen, Esquire John F. Gilroy, III, Esquire Haben, Culpepper, Dunbar & French, P.A. Post Office Box 10095 Tallahassee, Florida 32302 Charles H. Hood, Jr., Esquire MONACO, SMITH, HOOD, PERKINS, ORFINGER & STOUT 444 Seabreeze Boulevard, #900 Post Office Box 15200 Daytona Beach, Florida 32115 R. S. Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether a certificate of need to construct a 60-bed short-term inpatient psychiatric hospital should be granted to CPC and whether a certificate of need to construct a 24-bed short-term inpatient psychiatric hospital should be granted to Apalachee?
Findings Of Fact Introduction. CPC. Community Psychiatric Centers, Inc., a proprietary corporation, was formed in 1968 by the merger of 2 existing psychiatric hospitals. It now consists of 24 psychiatric hospitals, two of which are located in Florida, and two subsidiary corporations. On December 16, 1983, CPC submitted to the Department an application for a certificate of need to construct and operate a 60-bed inpatient psychiatric hospital. The 60-beds are to consist of 15 beds for adolescents, 20 beds for adults in an open unit, 10 beds for adults in an intensive care unit and 15 beds for geriatric patients. Apalachee. Apalachee is a not-for-profit corporation. It began approximately 30 years ago as a small clinic. It was incorporated as the Leon County Mental Health Clinic in the 1960's and later changed its name to Apalachee Community Mental Health Services, Inc. Apalachee presently serves over 7,000 clients a year, has a $6,500,000.00 budget and 300 employees. It provides services to 8 north Florida counties: Gadsden, Liberty, Franklin, Leon, Wakulla, Madison, Jefferson and Taylor. Apalachee provides specialized continuums of care for substance abuse, children and geriatrics and basic generic services, including a 24-hour, 365 days-a-year emergency telephone and/or face-to-face evaluations. It also provides a full range of case management, day treatment and residential care primarily aimed at the acute and chronically mentally ill and specific programs for children, such as an adolescent day treatment program and an adolescent residential facility. Apalachee's residential programs include a program called Positive Alternatives to Hospitalization (hereinafter referred to as "PATH"). Apalachee also operates an 8-bed non-hospital medical detoxification program in conjunction with PATH. This program is operated in the same building as PATH. It also operates 3 group homes (an adult, an alcohol abuse and an adolescent half-way house) with 10 clients each (these houses will be expanded to 16 clients each), a geriatric residential facility with 60 to 70 beds and cater Oaks, a long-term residential treatment facility for adolescents. On November 15, 1983, Apalachee applied to the Department for a certificate of need for 24 short-term inpatient psychiatric beds. In its application filed during the final hearing of these cases, Apalachee proposed to construct a facility to house the 24-beds adjacent to its current "Eastside" facility. Its Eastside facility currently houses Emergency Services, PATH and its non-hospital medical detoxification programs. All adult mental health programs of Apalachee will also be located on the site in order to consolidate the full continuum of adult psychiatric care provided by Apalachee. Statutory Criteria. The following findings of fact are made as they pertain to the criteria included in Section 381.494(6)(c) and (d), Florida Statutes (1983), and Section 10-5.11(25), F.A.C. The Need for Psychiatric Services Florida State Health Plan and the District 2 Health Plan. General. The Florida State Health Plan is outdated and the District 2 Health Plan does not contain specific goals as to the need for short-term psychiatric care for District 2, the District the facilities would be constructed in. CPC and Apalachee did, however, address both plans, to the extent applicable, in their applications. The relationship of "need" to these plans, as agreed to by the Department, is not relevant to this proceeding, however. CPC also indicated that it evaluated local bed need by studying socioeconomic, population and employment data and by interviewing local practicing psychiatrists. CPC concluded that additional services were needed and filed its application. Although the Florida State Health Plan and the District 2 Health Plan do not address the question of need, need as determined under the Department's rules is crucial. Section 10-5.11(25), F.A.C., provides that a favorable need determination will "not normally" be given on applications for short-term psychiatric care facilities unless bed need exists under paragraph (25)(d). Under Section 10-5.11(25)(d)(3), F.A.C., bed need is to be determined 5 years into the future by subtracting the number of existing and approved beds in the 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. 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. The Department has projected a need for 185 total short-term psychiatric beds for District 2 for 1989. There are 82 currently licensed and 35 approved short-term psychiatric beds in District 2. Therefore, for 1989 there is a net short-term psychiatric bed need projected of 68 beds. Based upon the projected population of District 2 for 1990 (537, 567), which is 5 years from 1985, the total bed need is 188 beds. The net bed need for 1990 is 71 beds (188 total beds less 117 licensed and approved beds). The Department did not use this figure because the calculation for bed need for 1990 will not be made by the Department until July of 1985. Pursuant to Section 10-17.003, F.A.C., the total projected short-term psychiatric bed need for District 2 is allocated among 2 subdistricts. Subdistrict 2 consist of Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor and Wakulla Counties. CPC's and Apalachee's proposed facility will be located in Subdistrict 2. Subdistrict 2 is the same area designated by CPC as its "primary" service area. This rule, which is to be "used in conjunction with Rule 10-5.11(25)(c)(d)(e)" allocates the 1988 short-term inpatient psychiatric and substance abuse projected bed need as follows: Subdistrict 1: 75 Subdistrict 2: 104 Total 179 Because the projected bed need for Subdistrict 2 under this rule is based upon 1988 projections, it is clearly in conflict with the requirement of Section 10-5.11(25)(d)(3), F.A.C., that bed need is to be projected 5 years into the future. The total bed need projected for the District for 1988 is 179 beds; for 1990, the total is 188 beds. Based upon the allocation of total bed need in Section 10- 17.003, F.A.C., the net bed need for Subdistrict 2 for 1988 is 44 beds: 104 total beds less 60 licensed and approved beds in Subdistrict 2. If it is assumed that the 9 additional total beds projected for 1990 should be allocated to Subdistrict 2, the net bed need for 1990 in Subdistrict 2 would be 53 beds (100 beds less 50 licensed and approved beds). No evidence was presented, however, to support the assumption that all 9 additional total beds will be allocated to Subdistrict 2. It is more likely that only 1 or 2 additional beds will be allocated to Subdistrict 2. Based upon the foregoing, the total net bed need for District 2 projected to 1990 is 71 beds and for Subdistrict 2 it is between 44 and 53 beds. CPC. CPC attempted at the hearing to show that its proposal is consistent with the bed need for District 2 as determined under Section 10-5.11(25)(d)(3), F.A.C. In the alternative, CPC has attempted to prove that there is a sufficient need in District 2 for additional short-term psychiatric beds based upon other methodologies and the state of psychiatric care currently being provided in Subdistrict 2. Sources of referral to the proposed CPC facility, according to Mr. John Mercer, will include physicians, the judiciary and legal system, the school system, employers and law enforcement. Referrals are inspected by Mr. Mercer based upon his conversations with physicians (Mr. Mercer did not interview persons from the other referral sources) , his personal experience and the fact that there will be a community relations or marketing position at the proposed facility. Local psychiatrists did testify that they would refer patients to CPC if its facility is approved. They did not, however, testify that they would refer all of their patients to CPC. They also testified that the CPC facility is needed. The local psychiatrists did not, however, indicate that they were aware of all of the facts as established during the proceeding. CPC, in its application, projected, based upon conversations with local physicians, that the facility will serve most of the area designated by the Department as District 2. District 2 is subdivided by CPC into a primary service area, consisting of Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor and Wakulla Counties, and a secondary service area, consisting of Clay, Calhoun, Gulf and Jackson Counties in Florida and several counties located in extreme southwest Georgia. In Mr. Mercer's opinion, the proposed facility will serve persons from southwest Georgia; specifically, Brook, Decatur, Grady, Seminole and Thomas Counties. Mr. Mercer's opinion was based upon the availability of services in Georgia and conversations he had with Tallahassee physicians. Mr. Mercer's opinion, however, has been given little weight in determining the need for additional short-term psychiatric beds in District 2 based upon the testimony of Jay D. Cushman, an expert in health planning and development. Mr. Mercer's opinion that southwest Georgia residents will use the proposed CPC facility implies that there may be a need for additional short-term psychiatric beds. Mr. Mercer, however, failed to consider travel time and barriers to travel, patient origins or the effect, if any, of outmigration--the number of persons in District 2 who may leave the District for treatment outside the District. Although Mr. Mercer's conversations with local physicians are relevant and of some supportive weight, the local physicians' opinions should have been supported with other evidence. They were not. CPC, in its exhibit 3, projected a bed need of 14.67 beds attributable to southwest Georgia. This figure was arrived at by first assuming a bed need in the area of .35 beds per 1,000 population (119,051). This results in a gross bed need in southwest Georgia of 41.67 beds. From the gross number of beds, 27 existing beds were subtracted to arrive at a net bed need in District 2 attributable to southwest Georgia residents of 14.67 beds. No evidence supporting a conclusion that such a bed need exists in District 2 was presented at the hearing other than Mr. Mercer's opinion that the proposed facility will serve residents from southwest Georgia. It is therefore concluded that there is not a need for 14.67 beds in District 2 attributable to southwest Georgia residents. In its application, CPC projected a need for an additional 195 short- term psychiatric inpatient beds for District 2. This figure was based upon an average of bed need projected by using three different bed need methodologies. The three different methods resulted in a projected bed need of 64 beds, 266 beds and 255 beds. Application of the method which resulted in a bed need of 266 was modified during the hearing. The modification resulted in a bed need of 75.8 beds. Therefore, the bed need based upon the average of all 3 methodologies, as amended would be 131.6 beds. The three methods used by CPC in its application are different than the method used by the Department. None of the methods, based upon Mr. Cushman's testimony, are sound; they are structurally unsound, applied in an unsound manner or both. Under Method I, CPC starts with a projected short-term psychiatric bed need of 1988 of 44 beds, the net bed need as determined in Section 10-17.003, F.A.C. This figure is then increased by 9.44 beds for in-migration and 11 beds attributable to an adjustment for "desired occupancy level." As clearly established by Mr. Cushman's testimony, neither of the adjustments are sound. The projected bed need of 64 beds for 1988 pursuant to method I is therefore not a reliable figure. Pursuant to Method II, as modified during the hearing, CPC projected a bed need of 75.8 beds. Method III resulted in a projected net bed need of 255 beds. These projections are based upon a projected average length of stay of 30 days. No evidence was presented to support this projection; in fact, it is unrealistic when compared with the average length of stay of 16 days at similar facilities in Florida. CPC's Florida facilities have also not been able to achieve an average length of stay of 30 days. These formulas are also unrealistic because population figures used were for all of District 2. But existing beds taken into account only included the beds in Subdistrict 2. Finally, occupancy was not taken into account in either of the methods. CPC's Methods II and III are not sound, based upon the foregoing. Apalachee. Apalachee's application is for only 24 inpatient psychiatric beds, which is well below the bed need projected under the Department's methodologies for the District and the Subdistrict. Apalachee has projected that its proposed facilities will serve persons in the 8 counties it currently serves. These counties are the same counties which make up Subdistrict 2. Apalachee has not assumed that any patients will come from outside of the Subdistrict. Apalachee has shown that the patients who will use its facility are clients within its own present system, based upon historical data. This historical data establishes that an average of 10 to 12 Baker Act patients have been admitted to Tallahassee Memorial's psychiatric facility during past years. These persons would be admitted to Apalachee's new facility. Additional patients would consist of Apalachee clients which Tallahassee Memorial's facility will not admit and clients currently going into other Apalachee programs. Accessibility to Underserved Groups. CPC is willing to provide care for Baker Act patients. It has been projected that 5 percent of the proposed facility's patient days will be attributable to Baker Act patients. CPC is also willing to treat Medicaid patients and has again projected that 5 percent of the facility's days will be attributable to Medicaid patients. In addition, CPC has projected that 5 percent of its gross revenue will be set aside for the care of indigent patients which consist of those persons who are unable, at the time of admission, to pay all or a part of the charges attributable to their care. Indigent care may not be provided, however, if the facility is losing money. The provision of indigent care is based upon a CPC policy which was recently agreed upon and applies to new CPC facilities. The policy does not apply at the two existing CPC Florida psychiatric hospitals since they were established before the policy was adopted. Pursuant to the Florida Mental Health Act, Chapter 394, Part II, Florida Statutes, the Department's district administrator designates a facility in the district as the public receiving facility for Baker Act patients. In Subdistrict 2 of District 2, Apalachee has been designated as the public receiving facility. Apalachee is therefore responsible for ensuring that emergency care, temporary detention for diagnosis and evaluation and community inpatient care is available to Baker Act clients. As the public receiving facility in Subdistrict 2, Apalachee will clearly serve Baker Act patients. It has projected that in the first year of operation 40 percent (39.7 percent in the second year) of its patients at the new facility will be indigent and that the indigent patients will be primarily Baker Act patients. Seventy percent of Apalachee's clients are persons who need some type of financial assistance; Medicare, Medicaid and Baker Act. Apalachee has proposed to continue to serve these persons in the new facility. Apalachee's purpose in requesting a certificate of need is to allow Apalachee to provide a continuum of care for more Apalachee clients. In the past, Apalachee has experienced difficulty in obtaining inpatient care for certain Baker Act clients. Additionally, even though those problems have been minimal in the past year, there are some Baker Act clients who need inpatient care who are not appropriate patients for Tallahassee Memorial's psychiatric hospital. These patients are sometimes violent and "acting out." Although Tallahassee Memorial is providing adequate care for most Baker Act patients, some Baker Act patients are not admitted. Additionally, removal of Baker Act patients who are admitted by Tallahassee Memorial from Tallahassee Memorial's facility, as discussed infra, will improve the quality of care at Tallahassee Memorial. The cost of providing inpatient care to Baker Act patients will be less if Apalachee is granted a certificate of need for the requested 24 beds. At present, because of limited Baker Act funds, some Baker Act clients who need inpatient care are placed in other programs. With reduced cost for inpatient care, these clients will be able to receive the inpatient care they need. Additionally, Apalachee will serve forensic clients -- those mental health clients with criminal charges. A full-time forensic psychologist has been provided by Apalachee at the Leon County jail to facilitate this type service. The psychologist also evaluates for Baker Act qualification. According to the Director of the Leon County jail, persons in the jail with psychiatric problems are placed in a single "bull pen." Apalachee's work with forensics has been helpful. Like and Existing Psychiatric Services. The only "like and existing" psychiatric health care services in Subdistrict 2 are provided by Tallahassee Memorial. Tallahassee Memorial is a not-for-profit corporation. It currently owns an existing 60-bed short-term inpatient psychiatric facility located in Subdistrict 2. The facility is operated as a separate department of Tallahassee Memorial. Tallahassee Memorial's psychiatric facility has been continuously operated by or for Tallahassee Memorial since 1979. It was initially known as Goodwood Manor. In 1983, however, the management of the facility was taken over by, and its name was changed to, Behavioral Medical Care (Tallahassee Memorial's facility will be hereinafter referred to as "BMC"). From 1977 to 1979, the facility was owned and operated by Tallahassee Psychiatric Center, Inc., which failed for financial reasons. Prior to 1977 Tallahassee Memorial operated a small psychiatric unit as pert of its hospital. The occupancy rate at BMC for the 12-month period ending September, 1984, was 37 percent. The occupancy rate since 1979 has been consistently low and is low at the present time. There are a number of reasons for the low occupancy rate: a) The physical location and physical plant of BMC. BMC is located in a 2-story building near Tallahassee Memorial. BMC occupies the top floor of the building and a nursing home is located on the first floor. In order to get to BMC, it is necessary to travel through the nursing home. Also, the building is surrounded by a parking lot so there is inadequate outdoor and recreational space around the facility. The facility, which was originally designed as a nursing home, presently consists of one closed unit and one open unit. Patients of all ages and with various problems have to be housed in these 2 units together. Because of the physical plant, patients cannot be separated into adult, adolescent and geriatric units. There also is not enough space for therapy rooms and common areas. b) The reputation of the facility. The reputation in the community of Goodwood Manor has carried over to BMC. The facility is perceived by some as a "crazies place," a place "where violent people go." This reputation is partly attributable to the lack of credibility that psychiatry as a discipline enjoys. It is also partly attributable to the operation of BMC as Goodwood Manor prior to 1982 when Behavioral Medical Care took over management of BMC. c) The type of programs offered. To date, no program has been separately offered and provided or adolescents, children, substance, alcohol and drug abuse patients, or geriatrics. Basically only one structured program has been provided which has been more suited to adult psychotic patients. Closely related to this problem is the fact that BMC has had a poor patient mix. This has been caused in part by the physical plant and in part by the type of patients BMC has had to take in. Some of those patients have been suffering from problems other than psychiatric problems, i.e., persons suffering from DT's, which is a medical disorder, and persons suffering from organic problems which cause behavioral difficulties. d) Marketing. There has been a lack of an effort to market the availability of the facility. e) Training. The programs offered are not as advanced because of the lack of necessary training. f) Practice patterns. Practice patterns of psychiatrists in the community have contributed to the low occupancy. Because there are only a few psychiatrists in the area and the fact that the Tallahassee Memorial facility has primarily been involved in crisis intervention, the average length of stay (6 to 7 days) is much lower than the average length of stay in other parts of the country. This average length of stay has also, however, been caused by the shortage of Baker Act funds. Closely related to this problem is the fact that there are a large number of nonphysicians providing mental health services in Tallahassee who do not admit patients to the hospital and a large number of health maintenance organizations. g) Communication. The low occupancy rate has also been caused, at least in the minds of Drs. Speer, Sebastian and Moore, by the lack of solicitation of their input into the operation of the facility. At least partly because of the problems at BMC, a few patients have been referred to facilities outside of District 2 for care. Tallahassee Memorial has committed itself to eliminating the low occupancy rate at BMC. In 1982, the administration of Tallahassee Memorial felt it had to decide whether it was going to make a commitment to the facility or get out of psychiatric care. It opted for the former. After making the commitment, 2 primary actions were taken. One was to contract for the services of Behavioral Medical Care; the other was to apply for a certificate of need to replace its 60-bed facility with a new one. Behavioral Medical Care is a joint venture formed by 2 corporations, Comprehensive Health Corporation and Voluntary Health Enterprises. Comprehensive Health Corporation is the largest private provider of chemical dependency rehabilitation services in the country. Voluntary Health Enterprises is an affiliate of Voluntary Hospitals of America which services 70 of the nation's largest not-for-profit hospitals, including Tallahassee Memorial. Behavioral Medical Care was formed to provide the highest quality, lowest cost psychiatric and chemical dependency rehabilitation programs possible. Behavioral Medical Care provides consultation services and/or actually carries out programs and is now providing 20 different programs at 16 different facilities. Of these 20 programs, 5 to 8 are psychiatric programs. The first consultation concerning the psychiatric program at Tallahassee Memorial began in the late winter or early spring of 1983. This consultation was provided by Dr. Russell J. Ricci, now chairman of the board and medical director of Behavioral Medical Care. Dr. Ricci reviewed the status of Tallahassee Memorial's program at that time and recommended significant changes be made in 2 phases: one phase to begin immediately and the second to begin after construction of a new psychiatric hospital. Tallahassee Memorial agreed with Dr. Ricci's proposal and contracted with Behavioral Medical Care to carry out the proposal. Behavioral Medical Care began BMC with an orientation period during which time the existing staff was analyzed, new staff members were hired and the entire staff was trained to implement the new program. During this period, admitting physicians were invited to participate in the implementation program. A new inpatient psychiatric program at BMC was then begun. The program was established to achieve the following goals: to restore patients to their optimum mental health; to make patients as comfortable as possible; to maintain the patients' sense of dignity and self worth; to maintain modern and efficient treatment modalities through research and education; to provide maximum freedom of patients to interact with family and community; and to educate the community. The program was established along interdisciplinary lines and is basically an adult program. It includes individual and group therapy, lectures and seminars, social and nursing assessments, physical examination and psychological testing. The ultimate program provided for a patient, however, depends upon the treatment plan prescribed by the attending physician. The program is, however, limited because of the type of patients at BMC and especially because of the physical plant, which consists of only an open unit and a locked unit. Separation of patients for specialized treatment based upon other factors, such as age, is not achievable in the existing facility. The program at BMC is an adequate program but can be improved. The program is, however, intended only as an interim type program. Treatment of geriatrics and adolescents is available but specialized programs for these groups are not available. Dr. Sebastian agreed that since Behavioral Medical Care had begun managing BMC, the programs had improved. Dr. Moore testified that BMC had attempted to change. As part of the interim program, BMC has established more restrictive admission guidelines; not based upon ability to pay but upon clinical needs. Attempts have been made to eliminate psychotics, geriatrics and persons with significant medical problems. These restrictions on admission are designed to limit admission to persons who will benefit from the new program and are consistent with the existing physical plant. The existing staff, established by Behavioral Medical Care, is adequate. Training of the staff began during the orientation period at BMC and continues today. Educational activities have also been directed toward the medical profession in the community in order to gain more credibility for the discipline of psychiatry. Other steps to improve BMC which have been or will soon be taken include the reclassification of BMC as a department of Tallahassee Memorial and the initiation of a crisis intervention and liaison service in the emergency room of Tallahassee Memorial's main hospital. This new service in the emergency room is designed to identify persons being admitted to the hospital with a need for psychiatric services. As a department, BMC conducts formal monthly meetings of physicians at which input into the operation of BMC may be made. Input by psychiatrists is therefore possible at BMC. The second phase of the changes recommended by Dr. Ricci will begin after completion of the second action to be taken by Tallahassee Memorial as part of its commitment to a psychiatric program: the construction of a new 60- bed facility. Tallahassee Memorial filed an application to replace its present facility with a new 64-bed facility. That application was ultimately granted but for only 60 beds. An application to build another facility considered at the same time was denied. As a result of the issuance of the certificate of need to Tallahassee Memorial, construction of a new psychiatric facility has begun and should be completed in the summer of 1985. The total cost of this new facility is $7,225,000.00. This amount, plus the cost of new programs and staff, has been committed by Tallahassee Memorial to BMC. The facility, a two-level structure, is being constructed on a wooded, sloping site next to the present building BMC is located in. Each level will have 30 beds. It will be a state-of-the-art facility and was designed by architects who specialize in the design of psychiatric facilities. The building was designed with input from the medical staff and Behavioral Medical Care. It is being constructed to accommodate separate psychiatric programs and allows flexibility to accommodate changes in the type of programs offered. Once the new facility is completed, BMC will initiate the second phase of Dr. Ricci's proposal. This phase will consist of the implementation of separate specialized psychiatric programs not available at BMC today. Dr. Ricci has recommended the offering of adult, adolescent, geriatric and chemical dependency programs. Tallahassee Memorial has decided to add an adult program, an adolescent program and will probably add a geriatric program. Other programs, such as a chemical dependency program will be considered. The geriatric program will be added if there are a sufficient number of patients in need of such a program admitted to BMC. Based upon the testimony of Dr. Sebastian, there are a sufficient number of patients who need a geriatric program. Assuming that Dr. Sebastian is correct, a geriatric program should be added to BMC. Even if a separate program is not added, geriatric psychiatric services will be available at the new facility. The construction of the new facility will not eliminate all of the problems which have contributed to the low occupancy at BMC. Phase 2 of Dr. Ricci's proposal to Tallahassee Memorial and the other actions which Tallahassee Memorial has indicated they plan to take should, however, eliminate or at least reduce most of the problems. Dr. Sebastian testified that there will not be enough open space around the new facility The new facility will, however, have 2 open court yards, woods on 3 sides of the building and a greenhouse. The reputation of BMC as being a "crazies place" should be improved with the opening of the new facility and the providing of new, more advanced programs. Efforts to educate the medical community will also help. Also, if Apalachee is granted its certificate of need, the elimination of some of the Baker Act patients cared for by BMC who will be cared for by Apalachee should help improve the reputation of BMC. Finally, BMC has already taken some steps to improve its reputation by initiating an interim program, hiring new staff and limiting its admissions. Instituting specialized programs will also help alleviate the low occupancy problem at BMC. The new facility will allow BMC to establish programs which are needed by allowing the separation of patients which could not be accomplished in the existing facility. Again, eliminating some Baker Act patients will help reduce the problems created by the poor patient mix at BMC. Efforts are being made to market BMC's services. Establishing a liaison in Tallahassee Memorial's emergency room, which is planned, should contribute to increasing occupancy. Tallahassee Memorial projected that sizeable numbers of patients in the general hospital need psychiatric services. This program could reach those patients. BMC, however, needs to institute marketing efforts to reach the general public. Formal training of the staff at BMC was started with Behavioral Medical Care's orientation phase and has continued since that time. Not much can be done directly by BMC to improve the practice patterns of psychiatrists in the community. The new facility and improved programs may help. Transfering Baker Act patients to a new facility operated by Apalachee should allow for more economical treatment of those patients and thus allow for longer lengths of stay. Providing specialized programs also should promote longer lengths of stay. Converting BMC to department status and the holding of monthly meetings of admitting physicians has improved the ability of psychiatrists in the community to have a voice in the operation of BMC. Not enough of an effort is being made in this area, however. Three psychiatrists testified about the lack of solicitation of their input. They are obviously dissatisfied. Despite this fact, Dr. Brodsky, the Medical Director of BMC, testified that BMC was working cooperatively with psychiatrists in the community. In the undersigned's opinion, BMC, Tallahassee Memorial and the psychiatrists in the community need to continue to work toward resolving their differences and to work together to improve the occupancy and the psychiatric care provided at BMC. The perceived effect of CPC's proposal and Apalachee's proposal of the various witnesses was mixed. Drs. Speer, Sebastian and Moore all testified that they supported the CPC proposal. Dr. Speer indicated that she supported CPC's proposal over that of Apalachee and that she thought there was a need for CPC. Dr. Speer's opinion was based almost exclusively on a brochure provided to her by CPC. She did not have any familiarity with existing CPC hospitals. She also had only "some familiarity" with Apalachee's programs. The only reason Dr. Speer specifically gave for supporting CPC was the amount of effort CPC had exerted to solicit physician input and the need for cohesiveness among psychiatrists which she felt was promoted by support of the CPC proposal. Dr. Sebastian testified that he supported the CPC proposal because a new hospital would promote competition which would in turn improve the quality of care. Dr. Moore testified that he was familiar with CPC's and Apalachee's proposals and that he supported CPC's. He also stated that the addition of another psychiatric hospital would improve the availability of medical care because of competition. Dr. Moore also testified that a new facility was needed to provide care for the "private segment" which he described as "those people who choose not to go to the local mental health center for treatment, those people who choose to go to psychiatrists for treatment. " Dr. Brodsky testified that the addition of a new facility to the community might improve BMC because of the added competition. Mr. Honaman and Dr. Ricci both agreed that, if CPC's proposal was approved, a new facility could have an adverse impact on BMC which has been operating at a loss of $300,000.00 a year. Dr. Ricci explained that in order to have specialized programs a hospital must have a sufficient number of patients who need the specialized program. Because of the low occupancy rate at BMC, there is concern as to whether a sufficient number of patients will be available to warrant the specialized programs BMC plans to start if the CPC proposal is approved. Apalachee's proposal will not adversely effect BMC. In fact, Mr. Honaman and Ms. Pamela McDowell, both of whom testified on behalf of Tallahassee Memorial, indicated that if Apalachee's facility was approved BMC's ability to provide quality care would be enhanced. Tom Porter, testifying on behalf on the Department, indicated that CPC's and Apalachee's proposals should both be denied because of the low occupancy at BMC and the adverse effect approval of either proposal would have on BMC. Mr. Porter's opinion, however, was based only upon his review of the Petitioners' applications. Mr. Porter made no independent studies as to the impact of the proposals on BMC and was not aware of most of the evidence presented at the hearing. The Ability of the Applicant to Provide Quality of Care. CPC. The services to be available at or provided by the proposed CPC facility include psycho-physiological diagnosis and evaluation, emergency service, milieu therapy (immersion into the clinical environment for structured daily treatment), individual and group therapy, family therapy, occupational therapy, an adolescent school program, a partial hospitalization program, aftercare, community education and related medical services (which will be provided by contracting with other area health care providers). Actual programs to be provided at the facility are to be developed by the physicians who join the medical staff of the facility with the assistance of CPC which has developed model programs which may be used. The staffing projections for the facility are adequate. The manpower projected can provide quality of care and will comply with the standards of the Joint Commission on Accreditation of Hospitals. CPC's experience in operating its 24 existing psychiatric facilities and its philosophy that it will provide quality of care support a finding that CPC does have the ability to provide quality of care. 1/ CPC's proposed physical facility is designed to provide quality of care. The facility will be located in northeast Tallahassee. It will be constructed on a little less than one acre of a 10-acre parcel of land which CPC has a contract to purchase for $400,000.00. Part of the remaining 9-plus acres will be used for parking and recreational space and a substantial portion will be left in its natural state as a buffer. The hospital building itself will consist of a one-story structure with a separate section for each category of proposed beds, a lobby, business and general offices and storage rooms. One section will be used as a 20-bed open adult unit. Another section will be used as a 10-bed adult intensive care unit. This section will be locked. A nursing station will separate the adult intensive care unit and the open adult unit and is designed for visibility down the halls of both units. Two seclusion rooms will be located at the nursing station also to allow for observation from the nursing station. The location of the nursing station will reduce staff responsibility thus reducing the cost of operating the facility. The other two units will consist of a 15-bed adolescent open unit and a 15-bed geriatric unit. These units will be separated by a nursing station designed in the same manner as the nursing station separating the adult units. These units will also be separated by a locked door. There will also be a support structure built next to the hospital which will contain a kitchen, dining hall for all patients, 4 classrooms, 4 multi-purpose rooms, an occupational therapy room and a half-court gymnasium. There is no covered access from the main building to the support structure. The floor plan for the facility is similar to the floor plans used for other CPC hospitals. Therefore, the design costs of the facility will be less than for a new one-of-a-kind facility. Apalachee. In order to ensure quality of care, Apalachee has established a Quality Assurance Committee. Additionally, Apalachee is inspected by the Department and is accredited by the Joint Committee on Accreditation of Hospitals. No evidence was submitted which raises any question as to Apalachee's ability to provide quality of care. The existing building to which Apalachee's proposed facility will be added is located at Apalachee's Eastside facility. Eastside is located on 10 acres of land in northeast Tallahassee. Eastside presently consists of a building in which PATH, the detoxification program and emergency services is located. The building has 12 semi-private rooms and 24 beds. The new facility will be added to the existing building. A total of 13,000 square feet will be added. It will consist of an 18-bed open unit and a 6-bed closed unit. Also to be located at the Eastside facility is a 16-bed long-term adolescent psychiatric hospital which the Department has indicated it will approve. If this facility and the proposed 24-bed facility are built, Apalachee will have a total of 96 beds providing a variety of services. The Availability and Adequacy of Other Psychiatric Services. Apalachee currently provides a wide range of psychiatric health services in Subdistrict 2, including a crisis stabilization unit and short-term residential treatment programs. These services have been used as an alternative to inpatient care in some cases. CPC gave no consideration to these programs in its application. Apalachee did consider these programs and showed that its proposal would compliment its existing programs. As suggested by CPC in its proposed recommended order, Apalachee's existing programs are not a substitute for acute inpatient psychiatric services. Joint, Cooperative and Shared Psychiatric Services. CPC. CPC's operation of 24 psychiatric hospitals provides the potential for joint, cooperative or shared health resources in the operation of its proposed facility. Very little evidence was presented, however, that such potential would be realized if CPC's proposed facility is approved. Evidence was presented that model programs will be "available" for use in developing programs for the proposed facility. CPC also showed that standardized equipment selection and purchasing, and standardized floor plans would be used in establishing the facility. This will effect the short-term financial feasibility of the proposal. Apalachee. By placing the facility at the same location of other Apalachee programs, Apalachee will be able to share some services among programs and thereby reduce costs. For example, kitchen and dining services, staffing, security, purchasing, and maintenance and administrative services will be shared. The integration of Apalachee's existing programs with the proposed facility will promote a continuum of care and thus improve the quality of care. The Need for Research and Education Facilities. 106. Apalachee currently provides training to practitioners pursuant to an agreement with the School of Social Welfare at Florida State University. It also provides internship programs for psychology majors at Florida State University and nursing students at Florida State University and Florida A&M University. It is probable, therefore, that the new facility will be available for training purposes. No proof was offered, however, that indicates there is a need for training programs not being currently met which will be met if either of the proposed facilities is approved. Availability of Resources. 107. Health manpower and management personnel are available to staff the CPC or the Apalachee proposal. CPC and Apalachee also have adequate funds to build the proposed facilities. The adequacy of funds to build and operate the facilities is discussed further, infra. The Immediate and Long-Term Financial Feasibility of the Proposal. CPC. The projected cost of CPC's facility was $5,086,000.00. This amount will be increased for inflation if the facility is delayed another year. CPC will contribute 20 percent of the projected cost of the facility in the form of cash and liquid assets CPC has on hand. Eighty percent of the projected cost will constitute debt of the facility to CPC payable at a 12 percent interest rate over a 20-year period. The immediate financial feasibility of CPC's proposal has clearly been shown. In its application, CPC projected that its facility would generate a net income after taxes in each of the first 2 years of its operation. In its proforma, patient revenues were based upon the following charges per patient day: Adolescent $225.00 Adult, I.C.U. 215.00 Adult Open Unit 210.00 Geriatric 200.00 These projected rates were based upon a 1985 opening date. The rates will therefore be higher if the facility opens in 1987, but, according to Mr. Mercer, the bottom line profitability of the facility will not change. The projected rates, according to Mr. Mercer, are based upon rates charged at other CPC hospitals in Atlanta, New Orleans, Jacksonville and Ft. Lauderdale and interviews with Tallahassee physicians. According to Alton Scott, an expert in health care finance and financial feasibility, the proposed rates are considerably lower than the average rate at CPC's Jacksonville and Ft. Lauderdale hospitals, which was $240.00 for their fiscal year ending in 1984. Mr. Scott did not indicate that he considered the rate at CPC's Atlanta or New Orleans facility, however, which Mr. Mercer also considered in projecting rates for the proposed facility. Mr. Scott's testimony, however, raises a question as to the reasonableness of the proposed facility's rates. CPC's projected gross patient revenue is based upon an occupancy rate of 53 percent in the first year of operation and 75 percent in the second year. CPC projects $2,476,160.00 of gross patient revenue in the first year (an average $212.00 per day rate x 11,680 patient days) and $3,597,075.00 of gross patient revenue in the second year (an average $219.00 per day rate x 16,425 patient days). CPC's average occupancy rates are directly related to the number of admissions and the average length of stay of a patient. In support of the number of admissions projected by CPC, CPC offered the 3 need methodologies discussed, supra. Those methodologies have, however, been rejected as unsound. CPC's admission rates are based only on an assumed census. The assumed census is based upon conversations with physicians and the corporate experience of CPC. Although conversations with physicians and the corporate experience of CPC should be considered, these factors should be considered as support for other evidence as to possible admissions which has not been presented by CPC. What physicians have told Mr. Mercer is not alone sufficient to support assumed admissions. There is no guarantee that local physicians will refer clients only to CPC's facility or that their case load will remain the same. CPC's corporate experience as to length of stay does not add much support since the overall corporate experience of CPC's facilities for the year ending November 20, 1983, shows that the overall occupancy (excluding its Valley Vista facility) was 56.3 percent. This rate of occupancy is well below CPC's projected second year occupancy rate for the Tallahassee facility. The occupancy rate of CPC's Ft. Lauderdale and Jacksonville hospitals was 50.6 percent and 60 percent respectively, which is low for the State. Of all of CPC's psychiatric hospitals only 1 has an occupancy rate over 80 percent. Another problem with CPC's projected occupancy rate is that CPC has projected that 5 percent of its patient days will be attributable to Baker Act patients and 5 percent will be attributable to Medicaid Patients. In order for the proposed facility to receive Baker Act patients it will be necessary that it enter into a contract with Apalachee. No evidence was presented that such a contract could be obtained from Apalachee. As to the percentage of Medicaid patients, it is clear that CPC would not be entitled to receive reimbursement from Medicaid for these patients since its facility will be a free-standing facility and Medicaid does not reimburse for inpatient psychiatric services at free-standing hospitals. Based upon these facts, it appears that the assumption of CPC that a total of 10 percent of its patient days will be attributable to Baker Act and Medicaid patients is of questionable validity. Mr. Mercer's testimony that, even without the Baker Act and Medicaid patients, the projected occupancy could be met is illogical. If the projected revenue attributable to Baker Act and Medicaid patients is eliminated along with the projected expenses attributable thereto, CPC still projected a net after tax profit for its first two years of operation. CPC offered no evidence, however, sufficient to conclude that its projections as to occupancy of other types of patients can be achieved. CPC's projected average length of stay of 30 days is also suspect. It is not consistent with the average length of stay locally, in Florida, nationwide or in CPC's experience. Based upon the foregoing, CPC's projected occupancy levels are not realistic. This directly effects the projected revenues for the proposed facility. Salary and other expenses projected for the facility are also questionable. Nonsalary expenses are significantly lower than CPC's existing Florida facilities which are the lowest in Florida. Salary expenses, projected 2 years in the future, are also lower than present salary levels at CPC's Florida facilities. Again, the salary levels at CPC's 2 Florida hospitals are among the lowest for the 10 Florida facilities providing similar services. These low salaries are also based upon projections for a project which will not open for 2 more years. Despite this fact, they are lower than current salaries at CPC's existing Florida facilities and salaries being paid locally. Apalachee. The projected cost of the addition of the 24-bed facility to Apalachee's existing PATH and detoxification facility is $1,114,339.00. Apalachee will provide $114,339.00 of the necessary funds from its operating fund and the remaining $1,000,000.00 will be obtained from the sale of industrial revenue bonds. The bonds will be 15-year bonds, with a 7 year balloon and were projected at a 10.75 percent annual interest rate (75 percent of the Chase Manhattan Bank prime interest rate). First National Bank has committed to purchase $3,000,000.00 of industrial revenue bonds, which includes the $1,000,000.00 for this project. The immediate financial feasibility of Apalachee's proposal has clearly been shown. In projecting its gross charges for the first 2 years of operation, Apalachee has predicted an occupancy rate of 62.5 percent in the first month of operation increasing to 87.4 percent in the last month of operation of the second year. Gross charges are projected at $1,557,940.00 the first year (6,385 patient days x $244.00 per day rate) and $1,883,648.00 the second year (7,358 patient days x $256.00 per day rate). Apalachee' s projections are reasonable. Although it will be a free-standing psychiatric facility, Apalachee will be able to receive some Medicaid funding under the Department's "centers and clinics" option. Apalachee's projections as to gross charges, deductions from gross charges, and operating expenses are reasonable. Based upon its projections, Apalachee will realize a profit from the new facility in each of its first 2 years of operation. Competition. CPC. The addition of CPC's facility will promote competition in Subdistrict 2, as testified to by Dr. Brodsky, the Medical Director of BMC, among others. Because of the low occupancy at BMC, however, such competition at this time would be harmful. Apalachee. Apalachee's proposed facility will not compete with BMC. Although Apalachee's facility will initially reduce BMC's occupancy, removing the patients Apalachee will serve from BMC will improve the quality of care provided at BMC. Construction. CPC Construction and related costs of the CPC facility will consist of the following: Parking $27,500.00 Project development costs 22,000.00 Architectural/engineering fees 135,000.00 Site survey and soil investigation report 25,000.00 Construction supervision 10,000.00 Construction manager 4,000.00 Site preparation 100,000.00 Construction 3,000,000.00 Contingency 100,000.00 Inflation 270,000.00 These costs are all adequate to cover the cost of these items. These amounts will also be adequate even if construction does not begin until the end of 1985. The projected cost of equipment and furnishings was $500,000.00. This amount is adequate to equip the facility properly. In fact, the projected cost is probably substantially overstated. 2/ Although CPC failed to list in its application all of the equipment and furnishings (only major movable equipment was listed) necessary to equip the facility, adequate equipment and furnishings will be provided. Apalachee. The projected cost of constructing Apalachee's facility consists of the following: Architectural/engineering fees Site survey and soil investigation $75,740.00 report 2,000.00 Construction 876,620.00 Contingency 43,831.00 Inflation 26,298.00 These amounts are sufficient to construct the facility. The cost per square foot of the construction will be $60.00. The cost of equipment needed to equip the new facility is projected at $53,850.00. This amount is adequate for the purchase of the equipment listed in Apalachee's application.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the certificate of need application filed by CPC, case number 84-1614, be denied. It is further RECOMMENDED: That the certificate of need application, as amended, filed by Apalachee, case number 84-1820, be approved. DONE and ENTERED this 10th day of April, 1985, 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 10th day of April, 1985.
Findings Of Fact NEED FOR LONG TERM ADOLESCENT PSYCHIATRIC BEDS Both the application of PIA and that of HMA are for long term adolescent psychiatric beds in DHRS District IX. All parties to this proceeding are in agreement that there is some need in District IX for long term adolescent psychiatric beds. The need for long term adolescent psychiatric beds was analyzed in two general ways. DHRS and the applicants analyzed by an "interview analysis." This method involves interviewing key persons engaged in the provision of mental health care as it is affected by the availability of that care in District IX. In performing its interview analysis DHRS contacted several agencies; including the District IX Local Health Council, the Mental Health Board the Alcohol, Drug Abuse and Mental Health Program Office in District IX and the Children Youth and Family Program Office (CYF) in Tallahassee. All the persons contacted indicated that there was a need for long term adolescent psychiatric services in District IX. The CYF in Tallahassee indicated that 40 adolescents from District IX were being provided long term psychiatric services through POS of Payment of Services. Under the POS program, the State pays to or contracts with providers of long term psychiatric services. At present these services are being provided outside of District IX. Additionally, CYF indicated that 25 adolescents from District IX were being provided similar services out-of-State and 32 adolescents were on a waiting list to be provided with long term services. Further, 6 adolescents were receiving long term services in state hospitals; 6 in group homes; and 17 in foster homes. Phillip C. Braeuning, Director of Development for HMA, also conducted an interview analysis of District IX. He interviewed essentially the same individuals as those interviewed by DHRS and received documentation from CYF and the District IX Mental Health Board regarding the availability of long term adolescent services in District IX. All of this documentation showed a need for long term adolescent psychiatric beds. HMA Exhibit 6, entitled District IX, Children and Adolescent Services, and prepared by the District IX Mental Health Board, indicates that 359 patients in District IX need residential psychiatric care. HMA Exhibit 7, which was received from CYF in Tallahassee, shows that 27 adolescents are receiving long term psychiatric services outside of District IX, both in-state and out-of-state. There are fourteen approved long term adolescent psychiatric beds in District IX, proposed to be located in the Vero Beach area in Indian River County, the northernmost county in District IX. These beds were granted in the batching cycle subsequent' to the cycle in which the HMA and PIA applications were considered. In determining the existing need for long term adolescent psychiatric beds in District IX, the DHRS's analysis, as presented at final hearing, considered these approved beds. The DHRS analysis is that there is sufficient need in District IX for the granting of both the HMA and PIA applications in addition to the approved 14 beds. Both HMA and PIA also analyzed need according to a numerical methodology. The experts of both HMA (Noel D. Falls) and PIA (Carol Moore) applied the Graduate Medical Education National Advisory Committee (GMENAC) methodology. While both these experts utilized the GMENAC methodology, their methods of application and projected bed need numbers were significantly different. Mr. Falls assumed a targeted age group of 10-19 using the methodology. He then identified a prevalence rate for psychoses and neuroses diagnoses. The District IX population ages 10-19 was 125,561. This was multiplied by the admission rate of .00103 (103 psychoses and neuroses per hundred thousand population) to determine the projected admissions for 1989. The projected admissions of 129 was then multiplied times four different lengths of stay (90, 120, 150 and 180 days) to determine the number of patient-days projected. The number of patient days projected was then divided by 365 days and then was again divided by 80 percent(the occupancy standard required by Rule 10-5.11(26) Florida Administrative Code) to arrive at the total need for long term adolescent psychiatric beds in District IX. After performing these calculations, Mr. Falls concluded that at an average length of stay of 90 days, 40 beds would be needed; and at an average length of stay of 120 days, 53 beds would be needed; at and average length of stay 150 days, 66 beds would be needed; at an average length of stay 180 days, 80 beds would be needed. Mr. Noel did not apply any adjustments to these figures because, in his opinion, the GMENAC methodology already has an adjustment factor built into the prevalency rate to account for any difference between need and utilization or demand. Additionally, Mr. Falls has never seen anyone advocate the application of a "demand adjustment" in addition to that already built into the methodology. PIA's expert, Carol Moore, also used the GMENAC methodology to determine the need for long term adolescent psychiatric beds in District IX. Ms. Moore used a target population of ages 10-17 and used a 90 percent occupancy rate as opposed to the 80 percent occupancy rate used from Mr. Falls. Ms. Moore performed GMENAC calculations in the same manner as Mr. Falls and concluded that using a 90 percent occupancy rate, 38 beds would be needed at an average length of stay of 120 days and 57 beds would be needed at an average length of stay of 180 days. If Ms. Moore had used an 80 percent occupancy rate, 43 beds would be needed at an average length of stay of 120 days and 64 beds would be needed at an average length of stay of 180 days. Ms. Moore then applied a "demand adjustment" to these projections. In her opinion, the bed need projection needs to be reduced by 50 percent because only 50 percent of those patients who actually need care will seek or demand it. Ms. Moore did not think that a demand adjustment was built into the GMENAC methodology. If the demand adjustment is applied, however, the above projected bed need, at both 90 percent and 80 percent occupancy; would be reduced by one-half. Ms. Moore also subtracted the approved beds in Vero Beach from the projected bed need and concluded that there was a net need of 14-21 long-term adolescent psychiatric beds at 90 percent occupancy and 16-23 beds at 80 percent occupancy. In analyzing need, the primary service area for both the HMA and PIA facilities is District IX. It is recognized by all the parties that there is a secondary service area which includes District X. If the secondary service area is taken into consideration, there is a greater need than that indicated by any method. THE HMA APPLICATION In the November, 1983, batching cycle, HMA filed an application for a Certificate of Need to construct a "60-bed residential adolescent center" in Palm Beach County, Florida. Total projected cost was to be $6,307,310. HMA is a corporation with main offices in Fort Myers, Florida. It is engaged in the operation of acute care and psychiatric hospitals. HMA originally proposed to locate its facility in Boca Raton, Florida. Based on subsequent demographic data supplied to it by Noel D. Falls, HMA made a decision to move the facility to the northern part of Palm Beach County, specifically north of PGA Boulevard. However, at the time of final hearing, HMA had not selected a site for the proposed facility and did not limit itself to a location north of PGA Boulevard. The proposed HMA facility is to be patterned after a 55-bed adolescent treatment program currently operated by HMA in Arlington, Texas. At the time of final hearing, the Arlington, Texas, facility had been operating for approximately one month. The proposed treatment program will be based on a holistic concept of health care. The facility will be a long term hospital for the treatment of adolescents between the ages of ID and 19. It is anticipated that the facility will treat the whole person, not just the psychiatric conditions. In doing so, the program will look at and treat family problems, social problems, and other factors which have a bearing on the adolescent's ability to fit into society. The form of treatment proposed is based on the "levels of care" medical model of psychiatric treatment. This form of treatment is a behavior modification program wherein privileges are granted and tokens are received by the patients for specified behaviors Good behaviors are re-enforced; bad behaviors are not rewarded. Movement to the next succeeding level of privileges is permitted only after achievement of a certain behavior pattern. The ultimate goal of this model is to allow the adolescents to take on more suitable functioning and responsibility and to look after themselves once they leave the facility. The levels of care approach will require approximately 4-6 months for the patient to move from the admission level to the level of discharge. The ongoing quality of programs at the HMA facility will be monitored from a corporate level. Additionally, HMA intends to seek accreditation of its hospital from the Joint Commission on Accreditation of Hospitals. The HMA proposal anticipates a unit size of 30 adolescents, however, HMA witness, Dr. Max Sugar, does not use the treatment program proposed by HMA and believes adolescents are best treated in units of 15-20. Staffing projections for the facility, based upon the staffing structure at the Arlington, Texas, facility, call for: One Administrator Two Assistant Administrators Fourteen Registered Nurses Forty-four Mental Health Technicians Four Social Workers Two Psychologists Six Counselors Medical Director Dietician (quarter-time) Kitchen Workers Purchasing personnel Financial Manager Four Business Office Personnel Six Secretarial/Administrative Positions Two Personnel Employees Twelve Miscellaneous Other Positions. Salaries for the proposed staff are based upon information from the National Association of Private Psychiatric Hospitals and from a study done by the Florida Hospital Association. Projected salaries should therefore be adequate to attract qualified personnel. Because the proposed facility is a 60-bed facility, it is of sufficient size to allow HMA to hire the necessary staff of physicians, paraprofessionals, psychologists and social workers on a full-time basis. HMA is apparently not intending to be involved in any research or teaching endeavors at its proposed facility. HMA has not made any productive contact with any members of the local medical community or mental health community. It has not made contact with health care providers such as physicians, psychiatrists, acute care hospitals, drug abuse programs, or mental health programs as it relates to any source of referrals. HMA has no plans for joint, cooperative or shared health care resources that would result in economies or improvements in the provision of health care. HMA has not selected a site for its proposed facility. Approximately one week prior to final hearing, HMA contacted Edward Riggins, a real estate broker and agent familiar with real estate values and availability in Palm Beach County, Florida. While HMA's application calls for a site to be a minimum of 10 to 15 acres in a semi-rural area to allow for a green belt and space for outdoor activities, the instructions given to Mr. Riggins called for a parcel of 5-15 acres and emphasized a location in close proximity to major highways and interstates with utilities within economic reach. Mr. Riggins located three potential parcels prior to hearing, but HMA had not even looked at these parcels. Additionally, any location in Palm Beach County will require a special exception to zoning in order for the site to be used for a psychiatric hospital. Factors which will impact upon achieving this special exception include traffic studies, engineering studies, and a site plan which conforms to the Palm Beach County building and zoning codes. Mr. Riggins believes that he will eventually be able to find a site which meets HMA's requirements as to price, location availability of utilities, and access, and that a special exception will be achieved. A significant factor which may impact on cost is the traffic impact analysis for a particular site. Palm Beach County imposes considerable costs and fees upon the development of properties which may impact upon traffic on the major arteries in the county. Many of the major arteries in the northern portion of Palm Beach County are at or over capacity. The cost associated with traffic impact at a particular site could be great. While it appears likely that HMA can eventually find a suitable site, it is unknown what the impact of the site location will be on cost. 23 The design plans for the proposed HMA facility were characterized by John R. Chambless, HMA expert in architecture and design, as being a "first look." Numerous changes will be bade prior to completion of the "second look" and "third look." Even at final hearing it was clear that HMA was altering the design plan which accompanied its application. That design plan called for approximately 45,000 square feet and included a gymnasium and swimming pool. At hearing the proposed design plan contemplated elimination of the gymnasium and redesigning of the physical Plant to provide for square footage of approximately 50,524. Final design planning cannot be done until HMA has selected a site for its facility. Additionally, the site preparation aspect of the architectured plans could not be considered or anticipated because of lack of the site. In its application, HMA projected the total cost of the project to be $6,307,310.00. Included within this figure are project development cost of $18,000.00; financing cost, $838,010.00; architecture and soil testing fees, $204,000; construction cost, $3,750,300.00 (including contingency and inflation); land acquisition, $450,000; interest during construction, $170,000; fixed and movable equipments, $800,000; and other costs, $57,000. Mr. Chambless believed that the construction cost and other construction related project costs as reasonable even though the proposed project contemplated approximately 5,000 additional square feet. He believed that 6 percent architecture and engineering fees are reasonable, that a 7 percent contingency factor was reasonable, and that the cost of preparing the site was reasonable, assuming that the site selected did not have dramatic water problems. Mr. Chambless based his opinion testimony on his experience in the construction of health care facilities in Florida and in other states, but he had very little recent experience with psychiatric hospitals and no experience in the Palm Beach County area. In contrast, according to Tom Ebejer, an expert in health care facility design and construction, including design cost and construction cost, the proposed construction costs of HMA are considerably understated. Mr. Ebejer has extensive experience in construction costs for health care facilities and has extensive current knowledge and experience in such construction costs in Florida and, in particular, in Palm Beach County. Specifically, the HMA proposed cost of construction for a 50,000 square foot building works out to a cost of $76.72 per square foot. Mr. Ebejer proposes that such construction in Palm Beach County would cost $95.00 per square. These estimates are consistent with costs of recently constructed free standing adolescent hospitals in Citrus County ($90.77 per square foot), Orlando ($95.00 per square foot), West Palm Beach, and Miami Beach. The construction cost of the current PIA facility in Delray Beach was $91.45 per square foot. Additionally, the site preparation cost proposed by HMA ($151,000.00) is approximately 5 percent of the anticipated construction cost. In Mr. Ebejer's experience, site preparation in the Palm Beach County area would be 10 percent of total construction costs on a normal site without a lot of problems. Problems that are typically encountered will include drainage problems, swampy areas, or bay heads. With these factors considered, Mr. Ebejer projects that construction of HMA facility would cost $4,750,000.00 as compared to the proposed cost of construction of $3,836,800.00, for a understatement of the cost of construction of $913,000.00. Mr. Ebejer's projected square footage cost of construction is based upon the least expensive construction design, material, and finishes. In evaluating the testimony of Mr. Chambless and Mr. Ebejer, it is found that Mr. Ebejer's opinions regarding construction cost are based upon his extensive experience in construction cost of similar facilities in Florida and Palm Beach County. Mr. Ebejer's testimony is given greater weight than that of Mr. Chambless and it is found that HMA's construction costs as proposed are understated and not reasonable. HMA anticipates obtaining financing for its facility either through a local bond issue or through financing by a Private lending institution. According to Howard H. Weston, Senior Vice-President of the Municipal Financing Department of Arch W. Robertson and Company, an investment banking firm head quartered in St. Petersburg, Florida, financing through a bond issue can be obtained for this project. HMA may also receive a letter of credit from a lending institution, but it is probably not possible to receive such a letter of credit without an equity contribution from HMA. If a bond issue is utilized, it would be backed by revenues of the project, a first mortgage on the property and a corporate guarantee. It could also be backed by a letter of credit, but that would require some equity contribution by HMA. The interest rate anticipated by HMA, as shown in their application of 11.5 percent is unrealistic. The lowest interest rate on these types of bonds in the last 12 months has ranged from 12 1/2 percent to 13 3/4 percent. While HMA's projected financing for the project is preliminary, it is found that financing can probably be achieved through some combination of revenue bonds, a letter of credit, and a corporate guarantee. The proposed financing arrangement is reasonable, based upon HMA projected cost. It is probably also reasonable in light of the earlier finding that those cost are understated, in that Mr. Weston has contemplated financing from the issuance of six and half to seven million dollars worth of bonds. THE PIA APPLICATION In the November, 1983, batching cycle, PIA submitted a Certificate of Need application to add 15 long term and 15 short term adolescent psychiatric beds to its facility located in Delray Beach, Florida. No question involving the short term beds was involved in this proceeding. PIA's existing facility in Delray Beach is named the Psychiatric Institute of Delray and is a seventy-two bed speciality psychiatric hospital scheduled to open in early 1985. When it opens, it will consist of short term psychiatric and substance abuse beds. Psychiatric Institute of Delray is part of the Medical Center at Delray, a medical campus owned and operated by National Medical Enterprises, the parent company of PIA. PIA's home office is Washington D.C., and PIA is the psychiatric division of National Medical Enterprises, a corporation engaged in the operation of numerous hospitals throughout the country. The Medical Center at Delray contains an existing acute care hospital, a nursing home, and medical office buildings. Additionally, a Certificate of Need has been issued for the construction of a Rehabilitation Hospital; a shopping center providing support services for the medical campus is also under construction. PIA's proposed treatment program was described as a "broad-based general systems approach." This program involves examining the entire individual and trying to understand those factors that influence the patient's clinical state. The treatment model is essentially a medical model. An important part of the treatment program will be evaluation in the neuro-psychiatric evaluation unit which is a part of the existing facility at the Psychiatric Institute of Delray. Patients in the neuro-psychiatric evaluation unit, including adolescents which may eventually become long term patients, will be given a detailed battery of psychiatric, psychological and biological tests to help determine the nature and extent of their illness. Based upon this evaluation, new patients would be placed in the appropriate treatment units. PIA has already hired a medical director and clinical director for the facility as well as three other psychiatrists in charge of various aspects of the program at Psychiatric Institute of Delray. This psychiatric staffing results in 2.5 full-time equivalent psychiatrists on its medical staff. The psychiatrists are currently preparing to operate the short term psychiatric unit at Psychiatric Institute of Delray and will provide the staff psychiatric services for the proposed 15 long termadolescent psychiatric beds. The psychiatrists were trained at Yale University, are eminently qualified to provide psychiatric services, and will bring active research and teaching backgrounds to the hospital. The staffing projection for the 15-bed addition will include the following: One Social Worker One Activity Therapist Two Unit Coordinators Ten Registered Nurses Sixteen Mental Health Workers Two Group Leaders One Unit Secretary One Medical Transcriber One Admissions Employee One Secretary One Maintenance Staff k. Three Housekeeping Staff m. Three Food Service Workers PIA intends to set up a medical residency program with the University of Miami, a psychological residency with Nova University, and a nursing residency with Florida Atlantic University. The staff at PIA will be active in the area of research and education. Every patient in the PIA facility will be seen by a psychiatrist seven days a week and all psychiatrists on staff will be board certified or board eligible. There will be supervision of the clinical staff by qualified personnel, a professional activity committee and a quality assurance committee. The hospital will seek accreditation from the Joint Commission on Accreditation of Hospitals and there will be continuing education programs for the staff at all levels. PIA has been successful in recruiting qualified staff for the other units in its facility and the methods used for the recruitment are adequate for the recruitment of staff in the proposed long term adolescent unit. Psychiatric Institute of Delray has established a referral network in Palm Beach County and PIA has established contact with other components of the health care community in Palm Beach County. The hospital will be affiliated with the 800 COCAINE Program which is a national hot-line for cocaine users This affiliation will provide a referral source for the hospital and the long term adolescent unit. PIA will obtain an 80 percent occupancy in the long term adolescent unit by its third year of operation. Projected cost of the project, for both the 15 long term and 15 short term beds, is $1,360,00.00. The projected development costs are $5,000 in feasibility studies, survey and permit; $80,000 in architecture and engineering fees; construction cost of $1,030,000; equipment cost of $115,000; and land acquisition and other related costs of $115,000. The design plan and projected costs are adequate and reasonable for the proposed addition to the Psychiatric Institute of Delray.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting the Certificate of Need application of Psychiatric Institute of Delray, Inc., d/b/a Psychiatric Institute of Delray, for 15 long term adolescent psychiatric beds. Further, that a Final Order be entered denying the Certificate of Need application of Hospital Management Associates, Inc., for a 60-bed long term adolescent psychiatric hospital. DONE and ENTERED this 17th day of May, 1985, in Tallahassee, Florida. DIANE K. KIESLING 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 17th day of May, 1985.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Since 1976, Horizon Hospital or its predecessor has been licensed by HRS as a special psychiatric hospital with 200 beds. Its most current license, License No. 1316, authorizes Horizon to operate a special psychiatric hospital with 200 beds, and bears an expiration date of June 30, 1985. Horizon has never applied for a Certificate of Need for substance abuse beds. The 1983 session of the Legislature amended the hospital licensure law and the Certificate of Need law. Section 395.003(4), Florida Statutes, was amended, in pertinent part, to require that the number of beds for the rehabilitation or psychiatric service category for which HRS has adopted by rule a specialty bed need methodology must be specified on the face of the hospital license. Section 381.494(8)(g), Florida Statutes, was also amended to require that Certificates of Need include a statement of the number of beds approved for the rehabilitation or psychiatric service category for which HRS has adopted by rule a specialty bed need methodology. In April of 1983, HRS adopted Rules 10-5.11(25), (26) and (7), Florida Administrative Code, setting forth methodologies for determining the need for proposed new hospital beds for short-term psychiatric services, long-term psychiatric services and short- and long-term substance abuse services. The methodologies set forth in the rules for short-term psychiatric (Rule 10- 5.11(25)) and substance abuse (Rule 10-5.11(27) beds require, first, the application of a bed to population ratio to arrive at the total number of beds needed in a District, and then a subtraction of the number of existing and approved beds in that District to arrive at the number of additional beds needed at any particular time. Thus, in order to apply the methodologies and determine the actual number of beds needed in a District at any given time, the number of existing and approved beds in that District must be determined. HRS's Office of Comprehensive Health Planning therefore established an inventory of existing and approved short-term psychiatric and substance abuse beds for each of the HRS Districts. At the time of establishing its inventory, HRS hospital licenses did not distinguish between psychiatric and substance abuse beds in specialty hospitals. In order to determine the number of existing psychiatric and substance abuse beds in each District, HRS reviewed the Hospital Cost Containment Board (HCCB) reports filed on behalf of existing facilities, and also consulted a publication of the Florida Alcohol and Drug Abuse Association entitled "Alcohol and Drug Abuse Treatment-Prevention Programs in Florida, 1983 Directory." When a hospital was included in the Directory or when it reported on the HCCB form that the facility had a separately organized and staffed substance abuse program, HRS personnel called that facility to ascertain the number of beds devoted to such a program. No inquiry was made regarding the method of treating the substance abuse patient or the manner in which the substance abuse unit was staffed. The telephone conversation was then followed up with a confirmation letter. Utilizing these sources of information, as well as the definitions contained in Rules 10-5.11(25) and (27), Florida Administrative Code, HRS completed and published the results of its inventory process. The published inventory includes Horizon Hospital and categorizes its beds as 178 short term psychiatric and 22 substance abuse. The HCCB reports filed by Horizon for the years 1981, 1982 and 1983 indicate in the section entitled "Services Inventory" that Horizon's substance abuse unit bears a "Code" of "1." Code "1" is defined on the form as a "separately organized, staffed and equipped unit of hospital (discrete)." Code "2" on the HCCB form means "services maintained in hospital but not in separate unit (nondiscrete)." In its 1980 HCCB report, Horizon listed its "drug abuse care" and its "alcoholism care" as a Code "1." The 1983 Directory for "Alcohol and Drug Abuse Treatment -- Prevention Programs in Florida," published by the Florida Alcohol and Drug Abuse Association, lists Horizon Hospital as having an "alcohol and chemical abuse program," a "medical non-hospital detoxification program treatment center," "intensive/intermediate residential treatment;" and "drug abuse treatment" for all ages. The source of the information provided in this Directory was not established. Horizon Hospital has published and has distributed a pamphlet entitled "Alcohol and Chemical Abuse -- The Family Disease." This pamphlet describes the nature of alcoholism, how to recognize the symptoms, the family involvement and how Horizon can treat the total problem of alcoholism. The pamphlet describes the treatment team at Horizon to include a medical director, a psychiatrist, a nurse, nursing staff, allied therapist and a social worker. Horizon also has published and distributes a booklet advertising itself as "a private psychiatric hospital" with 200 beds, and as containing six programs -- one of which is the "addictive disease program." The program, noted as the "Horizon Hospital's Alcohol and Chemical Abuse Program of Treatment" is described as being unique in that "unlike most alcoholic rehabilitation centers, it is capable of treating the alcoholic who not only is in need of alcoholism counseling, but also has severe emotional conflicts that require psycho-therapy." Horizon Hospital does provide specialized programs for, what it describes as, subpopulations in psychiatry. These programs include an adult general psychiatric program, a crisis and intensive care program, an adolescent treatment program, an older adult treatment or geriatric program, a pain management program and an addictive disease program. Horizon emphasizes the psychiatric aspect in each program. Patients at Horizon are admitted only by psychiatrists and the bylaws of Horizon require that a psychiatrist visit a patient at least once every three days. The physical layout of Horizon's three-story facility is that two of the units, Unit 31 and Unit 32, are located on the third floor of the building. Unit 31 is known as the adolescent substance abuse unit and Unit 32 is known as the adult substance abuse unit. Each of the units at Horizon has its own staff. The Program Medical Director of Unit 32 is Dr. Vijaya Rivindran, a psychiatrist. Dr. Rivindran holds this position on a part-time basis, and is responsible for the administration of and program philosophy for patient care. As of the time of the hearing, Unit 32 had 26 beds, with a capacity for 30 beds, and Unit 31 had a capacity for 12 beds. The Program Coordinator and the Assistant Program Coordinator for Unit 32 are both psychologists. They control the day-to-day clinical activities of Unit 32 and are directly responsible for the staff supervision. The staff of Unit 32 includes mental health counselors, psychiatric nurses, a social worker and mental health technicians. Most, if not all, of the staff members of Unit 32 have special training in the area of substance abuse. The criterion for admission to Unit 32 is that the patient need psychiatric hospitalization and have some involvement with substance abuse. The average length of stay for a Unit 32 patient is 20 or 21 days. A sample of records from patients discharged from Unit 32 over a three-year period revealed that only 4.8 percent of the patients had a single diagnosis of substance abuse, and some 17 percent of the patients sampled had a primary diagnosis of substance abuse, with another secondary or tertiary diagnosis. The remainder of the patient records sampled illustrates that substance abuse was a secondary or tertiary diagnosis for the patients assigned to Unit 32. In arriving at its inventory of existing and/or approved substance abuse beds, HRS did not base its determinations upon the treatment modality provided patients. Instead, HRS counted beds as substance abuse beds only if they were located in a separately organized and staffed unit of at least ten beds, had specially trained staff and the patients had an average length of stay not exceeding 28 days.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the petition challenging that portion of the HRS inventory of short-term psychiatric and substance abuse beds relating to Horizon Hospital be DISMISSED. Respectfully submitted and entered this 27th day of March, 1985, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 1985. COPIES FURNISHED: William B. Wiley McFarlain, Bobo, Sternstein, Wiley and Cassedy, P.A. P.O. Box 2174 Tallahassee, Florida 32316 Amy M. Jones Building 1 - Room 407 1323 Winewood Blvd. Tallahassee, Florida 32301 Alan C. Sundberg and Cynthia S. Tunnicliff Carlton, Fields, Ward, Emmanuel, and Cutler, P.A. P.O. Drawer 190 Tallahassee, Florida 32302 C. Gary Williams and Michael J. Glazer Ausley, McMullen, McGehee, Carothers and Proctor P.O. Box 391 Tallahassee, Florida 32302 David Pingree Secretary Department of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, Florida 32301
Findings Of Fact The application and project On October 15, 1986, Respondent, Florida Residential Treatment Centers, Inc. (FRTC), filed a timely application with the Respondent, Department of Health and Rehabilitative Services (Department), for a certificate of need to construct a 60-bed specialty hospital to be licensed as an intensive residential treatment program for children and adolescents in Broward County, Florida. On March 11, 1987, the Department proposed to grant FRTC's application, and petitioners, Florida Psychiatric Centers (FPC) and South Broward Hospital District (SBHD), timely petitioned for formal administrative review. FRTC is a wholly-owned subsidiary of Charter Medical Corporation (Charter). Currently, Charter owns, operates or has under construction 85 hospitals within its corporate network. Of these, 13 are general hospitals, and 72 are psychiatric hospitals. Notably, Charter now operates residential treatment programs in Newport News, Virginia, Provo, Utah, and Mobile, Alabama; and, is developing such a program in Memphis, Tennessee. Within the State of Florida, Charter operates psychiatric hospitals in Tampa, Jacksonville, Fort Myers, Miami, and Ocala. In connection with the operation of these facilities, Charter has established satellite counseling centers to screen patients prior to admission and to provide aftercare upon discharge. Of 20 such centers operated by Charter, one is located in Broward County and two are located in Dade County. The facility proposed by FRTC in Broward County (District X) will treat seriously emotionally disturbed children and adolescents under the age of 18. The patients admitted to the facility will have the full range of psychiatric diagnoses, with the probable exception of serious mental retardation and severe autism. FRTC will not treat patients who present themselves with a primary substance abuse diagnosis, nor will it admit patients who are actively dangerous. This distinguishes FRTC from an acute psychiatric hospital where actively dangerous patients requiring immediate medical intervention are often admitted. The anticipated length of stay at FRTC will vary depending upon the patient's responsiveness to treatment, but is reasonably expected to range between 6 months to 2 years, with an average of 1 year. The treatment programs to be offered at FRTC will be based upon a bio- psychosocial treatment model. This model assumes that the biological component of a patient's condition has been stabilized and that psychiatric medication will be administered solely to maintain this stabilized condition. The social component of the model is designed to resolve problems in interpersonal, family and peer relationships through educational groups, psychiatric co-therapeutic groups and family group therapy. The psychological component focuses primarily on developing personal understanding and insight to guide the patient toward self-directed behavior. Among the therapies to be offered at FRTC are individual, family, recreational, group and educational. Group therapy will be designed to resolve interpersonal problems and relationships, and focuses primarily on building trust among group members. Some group therapy sessions will also cover specific issues such as sex education, eating disorders, self-image and social skills. The goal of recreational therapy will be to teach patients to play appropriately, showing them how to give, take and share, and to follow and to lead. Recreational activities will be available both on and off campus. The goal of occupational therapy will be to develop skills used in work. For a child whose work is school, this often involves using special education techniques. For teenagers, occupational therapy also develops work skills, and prepares them for vocational training or employment. Family therapy is crucial because the family is she core of child development. Families will be invited to spend days with their children at FRTC where they will learn behavioral management techniques, and participate in parent education activities and multifamily groups. The school component of the program includes development of an individualized educational plan for each child. School will be conducted 4-5 hours a day. FRTC will utilize the level system as a behavioral management tool This system provides incentives for learning responsibility for one's own behavior and for functioning autonomously. The typical progress of a patient at FRTC will be as follows. First, a team which includes a psychiatrist, social worker, psychologist and teacher will decide, based upon available information, whether admission is appropriate. If admitted, a comprehensive assessment will be conducted within 10 days, a goal- oriented treatment program will be developed for each patient, designed to remedy specific problems. Discharge planning will begin immediately upon admission. A case manager will be involved to assure that the treatment modalities are well-coordinated. Finally, FRTC will provide aftercare upon discharge. Should any FRTC patients experience acute episodes, they will be referred to acute care psychiatric hospitals with which FRTC has entered into transfer agreements. Likewise, patients who require other medical attention will be referred to appropriate physicians Consistency with the district plan and state health plan. While the local health plan does not specifically address the need for intensive residential treatment programs (IRTPs) for children and adolescents, it does contain several policies and priorities that relate to the provision of psychiatric services within the district. Policy 2 contains the following relevant priorities when an applicant proposes to provide a new psychiatric service: ... Each psychiatric inpatient unit shall provide the following services: psychological testing/assessment, psychotherapy, chemotherapy, psychiatric consultation to other hospital departments, family therapy, crisis intervention, activity therapy, social services and structured education for school age patients, and have a minimum patient capacity of 20 and a relationship with the community mental health center. Facilities should be encouraged to provide for a separation of children, adolescents, adults, and geriatric patient' where possible. Greater priority should be given to psychiatric inpatient programs that propose to offer a broad spectrum of continuous care. ... Applicants should be encouraged to propose innovative treatment techniques such as, complementing outpatient and inpatient services or cluster campuses, that are designed to ultimately reduce dependency upon short term psychiatric hospital beds. New facilities should be structurally designed for conducive recovery, provide a least restrictive setting, provide areas for privacy, and offer a wide range of psychiatric therapies. Applicants should be encouraged to offer intermediate and follow-up care to reduce recidivism, encourage specialty services by population and age, engage in research, and offer a full range of complete assessment (biological and psychological). Additionally, the local plan contains the following policies and priorities which warrant consideration in this case: POLICY #3 Services provided by all proposed and existing facilities should be made available to all segments of the resident population regardless of the ability to pay. Priority #1 - Services and facilities should be designed to treat indigent patients to the greatest extend possible, with new project approval based in part on a documented history of provision of services to indigent patients. Priority #2 - Applicants should have documented a willingness to participate in appropriate community planning activities aimed at addressing the problem of financing for the medically indigent. POLICY #4 Providers of health services are expected to the extent possible to insure an improvement of the quality of health services within the district. Priority #1 - Applicants for certificate of need approval should document either their intention or experience in meeting or exceeding the standards promulgated for the provision of services by the appropriate national accreditation organization. Priority #2 - Each applicant for certificate of need approval should have an approved Patient Bill of Rights' `as part of the institution's internal policy. POLICY #5 Specialized inpatient psychiatric treatment services should be available by age, group and service type. For example, programs for dually diagnosed mentally ill substance abusers, the elderly, and children, should be accessible to those population groups. Priority #1 - Applicants should be encouraged to expand or initiate specialized psychiatric treatment services. The FRTC application is consistent with the local health plan. FRTC's program elements and facility design are consistent with those mandated by the local plan for mental health facilities, and its proposal offers a wide range of services, including follow-up care. FRTC intends to provide a minimum of 1.5 percent of its patient day allotment to indigent children and adolescents, and will seek JCAH accreditation and CHAMPUS approval. The state health plan addresses services similar to those being proposed by FRTC, and contains the following pertinent policies and statements: Mental health services are designed to provide diagnosis, treatment and support of individuals suffering from mental illness and substance abuse. Services encompass a wide range of programs which include: diagnosis and evaluation, prevention, outpatient treatment, day treatment, crisis stabilization and counseling, foster and group homes, hospital inpatient diagnosis and treatment, residential treatment, and long term inpatient care. These programs interact with other social and economic services, in addition to traditional medical care, to meet the specific needs of individual clients. STATE POLICIES As the designated mental health authority' for Florida, HRS has the responsibility for guiding the development of a coordinated system of mental health services in cooperation with local community efforts and input. Part of that responsibility is to develop and adopt policies which can be used to guide the development of services such that the needs of Florida residents are served in an appropriate and cost effective manner. Policies relating to the development of mental health services in Florida are contained in Chapter 394 and Chapter 230.2317, F.S. The goal of these services is: '... reduce the occurrence, severity, duration and disabling aspects of mental, emotional, and behavioral disorders.' (Chapter 394, F.S.) '... provide education; mental health treatment; and when needed, residential services for severely emotionally disturbed students.' (Chapter 230.2317, F.S.) Within the statutes, major emphasis has also been placed on patient rights and the use of the least restrictive setting for the provision of treatment. 'It is further the policy of the state that the least restrictive appropriate available treatment be utilized based on the individual needs and best interests of the patient and consistent with optimum improvement of the patient's condition.' (Chapter 394.459(2)(b), F.S.) 'The program goals for each component of the network are'... 'to provide programs and services as close as possible to the child's home in the least restrictive manner consistent with the child's needs.' (Chapter 230.2317(1)(b), F.S.) Additional policies have been developed in support of the concept of a 'least restrictive environment' and address the role of long and short term inpatient care in providing mental health services for severely emotionally disturbed (SED) children. These include: 'State mental hospitals are for those adolescents who are seriously mentally ill and who have not responded to other residential treatment programs and need a more restrictive setting.' (Alcohol, Drug Abuse and Mental Health Program Office, 1982) 'Combined exceptional student and mental health services should be provided in the least restrictive setting possible. This setting is preferably a school or a community building rather than a clinical or hospital environment.' (Office of Children Youth and Families, 1984) 'Alternative, therapeutic living arrangements must be available to SED students in the local areas, when family support is no longer possible, so that they may continue to receive services in the least restrictive way possible.' (Office of Children Youth and Families, 1984) 'SED students should not be placed in residential schools or hospitals because of lack of local treatment resources, either educational or residential.' (Office of Children Youth and Families, 1984). * * * Sufficient funding for the development of residential treatment and community support is necessary if the state is to fulfill its commitment to providing services for long term mentally ill persons. These services provide, in the long run, a more humane and cost effective means of meeting the mental health needs of Florida residents. Community services have been shown to be effective in rapidly returning the majority of individuals to their productive capacity and reducing the need for costly long term, institutional mental health services. There is, therefore, a need to proceed as rapidly as possible with the development of publicly funded services in those districts which are currently experiencing problems resulting from gaps in services. * * * Services for Adolescents and Children An additional issue which has been identified as a result of increased pressures for development of hospital based programs is the need to differentiate between services for adults and those for children and adolescents. Existing policy supports the separation of services for children and adolescents from those of adults and requires the development of a continuum of services for emotionally disturbed children. The actual need for both long and short term inpatient services for children and adolescents is relatively small compared to that of adults but is difficult to quantify. Providers, however, continue to request approval for long and short term adolescent and children services as a means of gaining access to the health care market. Continued development of long and short term inpatient hospital programs for the treatment of adolescents and children is contrary to current treatment practices for these groups and is, therefore, inappropriate without local data to support the need for these services. Such development can contribute to inappropriate placement, unnecessary costs of treatment, and divert scarce resources away from alternative uses. In addition, the following pertinent goals are contained in the state health plan: GOAL 1: ENSURE THE AVAILABILITY OF MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES TO ALL FLORIDA RESIDENTS IN A LEAST RESTRICTIVE SETTING. * * * GOAL 2: PROMOTE THE DEVELOPMENT OF A CONTINUUM OF HIGH QUALITY, COST EFFECTIVE PRIVATE SECTOR MENTAL HEALTH AND SUBSTANCE ABUSE TREATMENT AND PREVENTIVE SERVICES. * * * GOAL 3: DEVELOP A COMPLETE RANGE OF ESSENTIAL PUBLIC MENTAL HEALTH SERVICES IN EACH HRS DISTRICT. * * * OBJECTIVE 3.1.: Develop a range of essential mental health services in each HRS district by 1989. * * * OBJECTIVE 3.2.: Place all clients identified by HRS as inappropriately institutionalized in state hospitals in community treatment settings by July 1, 1989. RECOMMENDED ACTIONS: 3.2a.: Develop a complete range of community support services in each HRS district by July 1, 1989. * * * OBJECTIVE 3.3.: Develop a network of residential treatment settings for Florida's severely emotionally disturbed children by 1990. The FRTC application is consistent with the state health plan which emphasizes the trend toward deinstutionalization, and the importance of education, treatment and residential services for severely emotionally disturbed children and adolescents rather than the traditional approach of institutional placement. Deinstutionalization assures more appropriate placement and treatment of patients, and is less costly from a capital cost and staffing perspective. The FRTC application also promotes treatment within the state, and will assist in reducing out-of-state placements. Need for the proposed facility The Department has not adopted a rule for the review of applications for IRTPs, and has no numeric need methodology to assess their propriety. Rather, because of the paucity of such applications and available data, the Department reviews each application on a case by case basis and, if it is based on reasonable assumptions and is consistent with the criteria specified in Section 381.705, Florida Statutes, approves it. In evaluating the need for an IRTP, the Department does not consider other residential treatment facilities in the district, which are not licensed as IRTP's and which have not received a CON, as like and existing health care services because such facilities are subject to different licensure standards. Under the circumstances, the Department's approach is rational, and it is found that there are no like and existing health care services in the district. While there are no like and existing health care services in the district, there are other facilities which offer services which bear some similarity to those being proposed by FRTC. These facilities include short-term and long-term residential treatment facilities, therapeutic foster homes and therapeutic group homes. These facilities are, however, operating at capacity, have waiting lists, and do not in general offer the breath or term of service proposed by FRTC. There are also short-term and long-term psychiatric hospitals within the district that include within their treatment modalities services similar to those proposed by the applicant. The short-term facilities are not, however, an appropriate substitute for children and adolescents needing long-term intensive residential treatment and neither are the long-term facilities from either a treatment or cost perspective. Notably, there are only 15 long term psychiatric beds in Broward County dedicated to adolescents, and none dedicated to children. In addition to the evident need to fill the gap which exists in the continuum of care available to emotionally disturbed children and adolescents in Broward County, the record also contains other persuasive proof of the reasonableness of FRTC's proposal. This proof, offered through Dr. Ronald Luke, an expert in health planning whose opinions are credited, demonstrated the need for and the reasonableness of FRTC's proposed 60-bed facility. Dr. Luke used two persuasive methodologies which tested the reasonableness of FRTC's 60-bed proposal. The first was a ratio of beds per population methodology similar to the rule methodology the Department uses for short-term psychiatric beds. Under this methodology, approval of FRTC's proposal would result in 25.47 beds per 100,000 population under 18 in District X. This ratio was tested for reasonableness with other available data. Relevant national data demonstrates an average daily census of 16,000 patients in similar beds. This calculates into 24.01 beds per 100,000 at a 90 percent occupancy rate and 25.93 beds per 100,000 at an 85 percent occupancy rate. Additionally, Georgia has a category of beds similar to IRTP beds. The Georgia utilization data demonstrates a pertinent ratio of 27.05 beds per 100,000 population. The second methodology used by Dr. Luke to test the reasonableness of FRTC's proposal, was to assess national utilization data for "overnight care in conjunction with an intensive treatment program." The national census rate in such facility per 100,000 population for persons under 18 was 21.58. Multiplying such rate by the district population under 18, derives an average daily census of 52. Assuming an optimal occupancy rate of 85 percent, which is reasonable, this demonstrates a gross need for 61 IRTP beds in District X. Dr. Luke's conclusions not only demonstrate the reasonableness of FRTC's proposal, but corroborate the need for such beds within the district. This proof, together with an analysis of existing or similar services, existing waiting lists for beds at similar facilities, and the placement by the Department of 28 children from Broward County outside the county in 1986 for long-term residential treatment, demonstrates the need for, and reasonableness of, FRTC's proposal. Quality of care The parties have stipulated that Charter and its hospitals provide quality short and long term psychiatric care. All of Charter's psychiatric hospitals are JCAH accredited, and Charter will seek JCAH accreditation and CHAMPUS approval for the proposed facility. Based on Charter's provision of quality psychiatric care, its experience in providing intensive residential treatment, and the programs proposed for the Broward County facility, it is found that quality intensive residential treatment will be provided at the FRTC facility. The availability of resources, including health manpower, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. The parties have stipulated that FRTC has available resources, including management personnel and funds for capital and operating expenditures, for project accomplishment and operation. The proof further demonstrates that FRTC will be able to recruit any other administrative, clinical or other personnel needed for its facility. 1/ Accessibility to all residents FRTC projects the following utilization by class of pay: Insurance 66.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 7 percent. While this is an insignificant indigent load, FRTC has committed to accept state-funded patients at current state rates. FRTC's projected utilization by class of pay is reasonable. The evident purpose of FRTC's application is to permit its licensure as a hospital under Section 395.002, Florida Statutes, and thereby permit it to be called a "hospital." If a residential treatment facility is licensed as a hospital it has a significant advantage over unlicensed facilities in receiving reimbursement from third party payors. Therefore, accessibility will be increased for those children and adolescents in need of such care whose families have insurance coverage since it is more likely that coverage will be afforded at an IRTP licensed as a "hospital" than otherwise. Design considerations The architectural design for the FRTC facility was adopted from a prototype short-term psychiatric hospital design which Charter has constructed in approximately 50 locations. This design contains the three essential components for psychiatric facilities: administration, support and nursing areas. The floor plan allows easy flow of circulation, and also allows for appropriate nursing control through visual access to activities on the floor. This design is appropriate for the purposes it will serve, and will promote quality residential care. As initially proposed, the facility had a gross square footage of 31,097 square feet. At hearing, an updated floor plan was presented that increased the gross square footage by 900 square feet to 32,045, an insignificant change. In the updated floor plan the recreational component was increased from a multipurpose room to a half-court gymnasium, an additional classroom was added, and the nursing unit was reduced in size to create an assessment unit. The updated floor plan is an enhancement of FRTC's initial proposal, and is a better design for the provision of long-term residential care to children and adolescents than the initial design. While either design is appropriate, acceptance of FRTC's updated floor plan is appropriate where, as here, the changes are not substantial. Financial feasibility As previously noted, the parties have stipulated that FRTC has the available funds for capital and operating expenses, and that the project is financially feasible in the immediate term. At issue is the long-term financial feasibility of the project. FRTC presented two pro forma calculations to demonstrate the financial feasibility of the project. The first pro forma was based on the application initially reviewed by the Department. The second was based on the proposal presented at hearing that included the changes in staffing pattern and construction previously discussed. Both pro formas were, however, based on the assumption than the 60-bed facility would achieve 50 percent occupancy in the first year of operation and 60 percent occupancy in the second year of operation, that the average length of stay would be 365 days, and that the daily patient charge in the first year of operation would be $300 and in the second year of operation would be $321. These are reasonable assumptions, and the proposed charges are reasonable. The projected charges are comparable to charges at other IRTP's in Florida, and are substantially less than those of acute psychiatric hospitals. For example, current daily charges at Charter Hospital of Miami are $481, and FPC anticipates that its average daily charge will be $500. FRTC projects its utilization by class of pay for its first year of operation to be as follows: Insurance (commercial insurance and CHAMPUS) 65.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 8 percent. The projection by class of pay for the second year of operation changes slightly based on the assumption that, through experience, the bad debt allowance should decrease. Consequently, for its second year of operation FRTC projects its utilization by class of pay to be as follows: Insurance (commercial insurance and CHAMPUS) 66.5 percent, private pay 25 percent, indigent 1.5 percent, and bad debt 7 percent. These projections of utilization are reasonable. FRTC's pro forma for the application initially reviewed by the Department demonstrates an estimated net income for the first year of operation of $97,000, and for the second year of operation $229,000. The updated pro forma to accommodate the changes in staffing level and construction, demonstrates a $102,000 loss in the first year of operation and a net income in the second year of operation of $244,000. The assumptions upon which FRTC predicated its pro formas were reasonable. Accordingly, the proof demonstrates that the proposed project will be financially feasible in the long-term. Costs and methods of construction The estimated project cost of the FRTC facility, as initially reviewed by the Department, was $4,389,533. The estimated cost of the project, as modified at hearing, was $4,728,000. This increase was nominally attributable to the change in architectural design of the facility which increased the cost of professional services by approximately $7,500 and construction costs by $139,322. Of more significance to the increased cost of the project was the increase in land acquisition costs which raised, because of appreciation factors, from $750,000 to $1,000,000. The parties stipulated to the reasonableness of the majority of the development costs and most of the other items were not actively contested. Petitioners did, however, dispute the reasonableness of FRTC's cost estimate for land acquisition and construction supervision. The proof supports, however the reasonableness of FRTC's estimates. FRTC has committed to construct its facility south of State Road 84 or east of Interstate 95 in Broward County, but has not, as yet, secured a site. It has, however, allocated $1,000,000 for land acquisition, $200,281 for site preparation exclusive of landscaping, and $126,000 for construction contingencies. The parties have stipulated to the reasonableness of the contingency fund, which is designed as a safety factor to cover unknown conditions such as unusually high utility fees and unusual site conditions. Totalling the aforementioned sums, which may be reasonably attributable to land acquisition costs, yields a figure of $1,326,281. Since a minimum of 6 acres is needed for project accomplishment, FRTC's estimate of project costs contemplates a potential cost of $221,047 per acre. In light of the parties' stipulation, and the proof regarding land costs in the area, FRTC's estimate for land acquisition costs is a reasonable planning figure for this project. FRTC budgeted in its estimate of project costs $6,000 for the line item denoted as "construction supervision (Scheduling)." Petitioners contend that construction supervision will far exceed this figure, and accordingly doubt the reliability of FRTC's estimate of project costs. Petitioners' contention is not persuasive. The line item for "Construction supervision (Scheduling)" was simply a fee paid to a consultant to schedule Charter's projects. Actual on site supervision will be provided by the construction contractor selected, Charter's architect and Charter's in-house construction supervision component. These costs are all subsumed in FRTC's estimate of project cost. FRTC's costs and methods of proposed construction, including the costs and methods of energy efficiency and conservation, are reasonable for the facility initially reviewed by the Department and the facility as modified at hearing. The petitioners FPC, a Florida partnership, received a certificate of need on May 9, 1986, to construct a 100-bed short term psychiatric and substance abuse hospital in Broward County. At the time of hearing, the FPC facility was under construction, with an anticipated opening in May 1988. Under the terms of its certificate of need, the FPC facility will consist of 80 short-term psychiatric beds (40 geriatric, 25 adult, and 15 adolescent) and 20 short-term substance abuse beds. Whether any of the substance abuse beds will be dedicated to adolescent care is, at best, speculative. The principals of FPC have opined at various times, depending on the interest they sought to advance, that 0, 5, or 20 of such beds would be dedicated to adolescent care. Their testimony is not, therefore, credible, and I conclude that FPC has failed to demonstrate than any of its substance abuse beds will be dedicated to adolescent care and that none of its treatment programs will include children. As a short term psychiatric hospital, FPC is licensed to provide acute inpatient psychiatric care for a period not exceeding 3 months and an average length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years. Rule 10-5.011(1)(o), Florida Administrative Code. While its treatment modalities and programs may be similar to those which may be employed by FRTC, FPC does not provide long-term residential treatment for children and adolescents and its services are not similar to those being proposed by FRTC. Notably, FPC conceded that if the patients admitted by FRTC require treatment lasting from 6 months to 2 years, there will be no overlap between the types of patients treated at the two facilities. As previously noted, the proof demonstrates that the length of stay at the FRTC facility was reasonably estimated to be 6 months to 2 years, with an average length of stay of 1 year. Under the circumstances, FPC and FRTC will not compete for the same patients. As importantly, there is no competent proof that FRTC could capture any patient that would have been referred to FPC or that any such capture, if it occurred, would have a substantial impact on FPC. Accordingly, the proof fails to demonstrate that FPC will suffer any injury in fact as a consequence of the proposed facility. SBHD is an independent taxing authority created by the legislature. Pertinent to this case, SBHD owns and operates the following facilities in Broward County: Memorial Hospital of Hollywood, 1011 North 35th Avenue, Hollywood, Florida, and Memorial Hospital Share Program, 801 S.W. Douglas Road, Pembroke Pines, Florida. Memorial Hospital of Hollywood is a general acute care hospital, with 74 beds dedicated to short-term psychiatric care. These beds are divided between three units: two closed units for acute care (42 beds) and one open unit (32 beds). There is no unit specifically dedicated to the treatment of adolescents, and Memorial does not admit any psychiatric patient under the age of 14. When admitted, adolescents are mixed with the adult population. From May 1987 through January 1988, Memorial admitted only 5-10 adolescents (ages 14-18). Their average length of stay was 12-14 days. Memorial Hospital Share Program is a 14-bed inpatient residential treatment program for individuals suffering from chemical dependency. No patient under the age of 18 is admitted to this program, which has an average length of stay of 27 days. SBHD contends that its substantial interests are affected by this proceeding because approval of FRTC's facility would result in the loss of paying psychiatric and residential treatment patients that would erode SBHD's ability to provide services to the indigent, and would, due to a shortage of nursing, recreational therapy and occupational therapists who are skilled and trained in the care of psychiatric patients, affect the quality of care at its facility and increase costs for recruiting and training staff. Due to the paucity of competent proof, SBHD's concerns are not credited, and it has failed to demonstrate that its interests are substantially affected by these proceedings. Succinctly, SBHD offered no proof concerning any staffing problems it was encountering and no proof of any disparity that might exist between wages and benefits it offers its employees and those to be offered at the FRTC facility. In sum, it undertook no study from which it could be reasonably concluded that the FRTC facility would adversely impact its staffing or otherwise increase the cost of recruiting and training staff. Likewise, SBHD undertook no study and offered no credible proof that the FRTC facility would adversely impact it financially. In fact, the FRTC facility will not treat the same patient base that is cared for by SBHD.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that FRTC's application for certificate of need, as updated, be granted, subject to the special condition set forth in conclusions of law number 12. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 7th day of September, 1988. WILLIAM J. KENDRICK 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 7th day of September, 1988.
The Issue The issue is whether Hialeah Hospital, Inc. may be licensed for a 21-bed psychiatric unit, without first obtaining a certificate of need, on the basis that it provided psychiatric services before a certificate of need was statutorily required.
Findings Of Fact Background of the Controversy The Parties The Department of Health and Rehabilitative Services (the Department) is responsible for determining whether health care projects are subject to review under the Health Facility and Services Development Act, Sections 381.701- 381.715, Florida Statutes. It also licenses hospitals under Chapter 395, Florida Statutes. The Department's Office of Community Medical Facilities renders decisions about requests for grandfather status which would exempt a psychiatric service offered at hospital from certificate of need review. The Department's Office of Licensure and Certification issues licenses but does not grant grandfather exemptions. A hospital will not receive separate licensure for psychiatric beds unless a certificate of need has been obtained for those beds, or the beds are in a psychiatric unit which had been organized before certificate of need review was required. See Section 381.704(2), Florida Statutes (1987). A hospital can provide inpatient psychiatric services to a patient in one of three ways: a) as a patient housed among the general hospital population, b) as a patient housed in a special unit organized within the hospital and staffed by doctors, nurses and other personnel especially to serve patients with psychiatric diagnoses, or c) in a hospital organized as a psychiatric specialty hospital. Serving patients through methods b and c requires special certificate of need approval and licensure. Most community hospitals place psychiatric patients among the general patient population; few hospitals create a distinct psychiatric unit; fewer hospitals still specialize as psychiatric hospitals. Hialeah Hospital, Inc. is a 411-bed general hospital in Hialeah, Florida. It does not currently hold a certificate of need for licensure of a distinct psychiatric unit. As a result, its reimbursement for psychiatric services from the Federal government for Medicare patients is limited. The Health Care Finance Administration (HCFA) generally reimburses hospitals for services based upon flat rates which are paid according to categories known as diagnostic related groups. Hialeah Hospital now receives reimbursement for services it renders to psychiatric patients on this basis. If it is entitled to a grandfather exemption from certificate of need review, and its distinct psychiatric unit is separately licensed by the Department, Hialeah Hospital will receive cost-based reimbursement for services to psychiatric patients, which will result in higher income to the hospital. Approval of the grandfathering request will not result in a) any capital expenditure by the hospital, b) the addition of staff, or c) a change in the type of services currently offered at the hospital. Just before July 1, 1983, the hospital had an average daily census of 16-17 psychiatric patients. If the psychiatric services the hospital has offered do not qualify for grandfathering, Hialeah Hospital may apply for a certificate of need for a distinct psychiatric unit. Even without a psychiatric certificate of need, Hialeah is still entitled to continue to serve patients with psychiatric diagnoses among its general population, and to receive the lower diagnostic related group reimbursement for those services from HCFA. Palmetto General Hospital is a licensed general hospital with 312 acute care beds and 48 separately licensed psychiatric short-term beds operated as a distinct psychiatric unit. It is located near Hialeah Hospital, and both hospitals serve the same geographic area. The primary markets of both hospitals overlap. They compete for patients, including psychiatric patients. Agency Action Under Review From 1973 to 1979 the license issued to Hialeah Hospital by the Department bore a designation for 21 psychiatric beds, based on information submitted in the hospital's licensure application. The hospital then dropped the psychiatric bed count from its licensure applications. This change probably was caused by a problem generated by an announcement from the Northwest Dade Community Health Center, Inc., the receiving facility for psychiatric emergencies in northwestern Dade County, which includes Hialeah. That center had written to the Hialeah Police Department, informing the police that when the center was not open, it had a crisis worker at the Hialeah Hospital emergency room, and that persons needing involuntary psychiatric hospitalization should be taken to the Hialeah Hospital emergency room. The only other hospital in Hialeah treating psychiatric patients was Palmetto General Hospital, which did not accept, as a general rule, patients who could not pay for care. The Hialeah Police Department thereafter began dropping psychiatric patients at Hialeah Hospital, much to the distress of the Hialeah Hospital emergency room staff. The Hospital thereafter dropped the designation of any of its beds as psychiatric beds on its annual licensure applications. It still received psychiatric patients from Jackson Memorial Hospital when that hospital reached its capacity for psychiatric patients. On its 1980 licensure application Hialeah Hospital collapsed all of its medical, surgical and psychiatric beds into a single figure. This was consistent with its practice of serving medical, surgical and psychiatric patients throughout the hospital. Hialeah Hospital filed similar licensure applications in 1981, 1982, 1983. In 1984 there was a dispute over the total number of beds to be licensed, which was resolved in early 1985. In 1985, after a change in the licensing statute which is discussed below, the Department informed Hialeah Hospital that its application for licensure was incomplete and could not be processed until Hialeah explained its basis for seeking separate licensure for 20 short-term psychiatric beds. In its response, Hialeah's Vice President stated: [W]e felt it was appropriate to indicate that Hialeah Hospital did accept psychiatric admissions. These patients have been randomly placed in the institution, many times based on other primary or secondary diagnoses. The application indicates bed usage, not that it is currently a discrete unit. Hialeah Hospital does currently have a Letter of Intent [on file] for establishment of a discrete med/psych unit. Hialeah Ex. 24a On August 1, 1985, the Department's Office of Licensure and Certification informed Hialeah Hospital by certified mail that the application for licensure of 20 short-term psychiatric beds was denied for failure to have obtained a certificate of need for them or to have obtained an exemption from review [both could only come from the Department's Office of Community Medical Facilities]. The hospital was provided a clear point of entry to challenge this determination through a proceeding under Chapter 120, Florida Statutes, but Hialeah filed no petition for review of that decision. Instead, Hialeah pursued the certificate of need application which it had filed in April, 1985 for separately licensed psychiatric beds. There was no reason to challenge the August 1, 1985, denial because the factual bases alleged by the Department were true--the hospital had no certificate of need for psychiatric beds and had not yet asked the Department's Office of Community Health Facilities to decide whether Hialeah qualified for grandfathered beds. On October 21 and 23, 1986, Hialeah Hospital wrote to the Office of Community Health Facilities seeking a determination that it was entitled to have 21 pyschiatric beds grandfathered on its license. In certificate of need application 4025 Hialeah Hospital sought the establishment of a distinct 69 bed psychiatric unit at Hialeah, with separately licensed beds. The application went to hearing and was denied on its merits on February 17, 1987, in DOAH Case 85-3998. In his recommended order, the Hearing Officer discussed the issue of whether Hialeah Hospital was exempt from certificate of need review because it already had a psychiatric unit. He found that the issue was not appropriately raised in the proceeding before him, which was Hialeah Hospital's own application for a certificate of need to establish a psychiatric unit. He therefore found he lacked jurisdiction to consider the grandfathering issue. Hialeah Hospital v. HRS, 9 FALR 2363, 2397, paragraph 5 (HRS 1987). The Department adopted that ruling in its May 1, 1987, final order. Id. at 2365. A letter dated December 5, 1986, from the Office of Community Medical Facilities denied Hialeah's request to grandfather 21 short-term psychiatric beds on its license and thereby exempt them from certificate of need review, as requested in Hialeah's letters of October 21 and 23, 1986. The Department denied the grandfathering request for four reasons: When the Department conducted a physical plant survey on June 1, 1980, there were no psychiatric beds in operation at the hospital; The hospital bed count verification form returned to the Department on January 31, 1984 by the Director of Planning for Hialeah, Gene Samnuels, indicated that the hospital had no psychiatric beds; An inventory of psychiatric beds had been published by the Department in the Florida Administrative Weekly on February 17, 1984 which showed that Hialeah Hospital had no psychiatric beds, and Hialeah never contested that inventory; The Department had not received evidence demonstrating that psychiatric services were provided "in a separately set up and staffed unit between 1980 and 1985." This letter again gave Hialeah a point of entry to challenge the Department's decision to deny licensure of psychiatric beds and it was the genesis of Hialeah's petition initiating this case. It is significant that the Department's Office of Community Health Facilities gave Hialeah a clear point of entry to challenge the December 5, 1986, grandfathering denial with full knowledge that the Department's Office of Licensure and Certification had denied a request from Hialeah Hospital on August 1, 1985, to endorse psychiatric beds on Hialeah's 1985 license. The Departmental personnel knew that those two denials involved different issues. Once the Office of Licensure and Certification told the hospital it had to produce either a certificate of need or a grandfathering approval to have psychiatric beds endorsed on its license, the hospital had to turn to the Office of Community Health Facilities to get a ruling on its grandfathering claim. The letter of December 5, 1986, was the first ruling on the merits of Hialeah Hospital's claim that it was entitled to have 21 beds grandfathered. History of the Department's Specialty Bed Recognition Psychiatric Beds in Florida Hospitals Before July 1, 1983 Before April 1, 1983 no state statute or Department rule required that psychiatric beds in a hospital be located in physically distinct units. Psychiatric patients could be located throughout a hospital. They were not required to be placed in rooms having distinguishing characteristics, or to use group therapy rooms, dining rooms, or other rooms exclusively dedicated to use by psychiatric patients. There were, of course, hospitals that had distinct psychiatric units, and some entire hospitals which were specifically licensed as psychiatric hospitals. After 1983, a hospital had to obtain a certificate of need to organize what had previously been diffuse psychiatric services into a distinct unit dedicated to serving patients with psychiatric diagnoses. Today no special certificate of need is required to serve psychiatric patients in the general hospital population, but without separate licensure the hospital receives Medicare reimbursement from the federal government for psychiatric patients at the level established by the diagnostic related groups, not cost based reimbursement. Before July 1, 1983 annual hospital licensure application forms asked hospitals to identify their number of psychiatric beds as an item of information. The hospital licenses issued, however, were based on the hospital's total number of general medical-surgical beds, a category which included psychiatric beds. The 1983 Amendments to the Florida Statutes and the Department's Rules on Specialty Beds In April of 1983, the Department adopted a rule which established a separate need methodology for short-term psychiatric beds, Rule 10-5.11(1)(o), Florida Administrative Code. Thereafter, the Legislature amended the statutes governing the hospital licensing, Section 395.003, Florida Statutes (1983) by adding a new subsection (4) which read: The Department shall issue a license which specifies the number of hospital beds on the face of the license. The number of beds for the rehabilitation or psychiatric service category for which the Department has adopted by rule a specialty bed need methodology under s. 381.494 shall be specified on the face of the hospital license. All beds which are not covered by any specialty bed need methodology shall be specified as general beds. Section 4, Chapter 83-244, Laws of Florida (underlined language was added). In the same Act, the Legislature amended the planning law to require hospitals to apply for certificates of need to change their number of psychiatric and rehabilitation beds. Section 2, Chapter 83-244, Laws of Florida, codified as Section 381.494(1)(g), Florida Statutes (1983). The Department's rules defined short-term psychiatric services as: [A] category of services which provide a 24- hour a day therapeutic milieu for persons suffering from mental health problems which are so severe and acute that they need intensive, full-time care. Acute psychiatric inpatient care is defined as a service not exceeding three months and averaging a length of stay of 30 days or less for adults and a stay of 60 days or less for children and adolescents under 18 years. Rule 10- 5.11(25)(a), Florida Administrative Code (1983), effective April 7, 1983. A minimum size for any new psychiatric unit was prescribed in Rule 10- 5.11(25)(d)7., which states: In order to assure specialized staff and services at a reasonable cost, short-term inpatient psychiatric hospital based services should have at least 15 designated beds. Applicants proposing to build a new but separate psychiatric acute care facility and intending to apply for a specialty hospital license should have a minimum of 50 beds. After the effective date of the rule, April 7, 1983, no hospital could organize its psychiatric services into a distinct psychiatric unit using specialized staff unless the unit would have at least 15 beds. This did not mean that a hospital which already had organized a distinct psychiatric unit using specialized staff had to have at least 15 beds in its unit to continue operation. Whatever the number of beds, whether fewer or greater than 15, that number had to appear on the face of the hospital's license. Section 395.003(4), Florida Statutes (1983). To change that number, the hospital had to go through the certificate of need process. Section 381.494(1)(g) Florida Statutes (1983). Those hospitals whose pre-existing units were endorsed on their licenses can be said to have had those units "grandfathered". There is no specific statutory exemption from certificate of need review for pre-existing units, but such treatment is implicit in the regulatory scheme. The Department's Grandfather Review Process To know which hospitals were entitled to continue to operate discrete psychiatric units without obtaining a certificate of need, the Department's Office of Community Medical Facilities had to identify hospitals which had separate psychiatric units before the July 1, 1983, effective date of Section 395.003(4), Florida Statutes (1983). An inventory of beds in the existing psychiatric units also was necessary to process new certificate of need applications. The Department's rule methodology authorized additional beds in psychiatric units based upon a projected need of 15 beds per 10,000 population. Rule 10-5.11(25)(d)1., Florida Administrative Code (1983). The Legislature approved the psychiatric service categories which the Department had already adopted by rule when it enacted Section 4 of Chapter 83- 244, Laws of Florida. The Legislature thereby validated a process the Department had initiated in 1976 with its Task Force on Institutional Needs. That group had developed methodologies to be used throughout the state to determine the need for different types of medical services, because local health systems agencies were reviewing CON applications based upon idiosyncratic methodologies. To develop review criteria for psychiatric services, the Task Force had to both define psychiatric services and determine how it should measure them. In doing so, the Department looked for assistance to publications of entities such as the American Hospital Association and the Joint Commission on Accreditation of Hospitals. According to the American Hospital Association, psychiatric services are services delivered in beds set up and staffed in units specifically designated for psychiatric services. In the Task Force report, a psychiatric bed was defined as: A bed in a clinical care unit located in a short-term, acute care hospital or psychiatric hospital which is not used to provide long-term institutional care and which is suitably equipped and staffed to provide evaluation, diagnosis, and treatment of persons with emotional disturbances. An inpatient care unit or clinical care unit is a group of inpatient beds and related facilities and assigned personnel in which care is provided to a defined and limited class of patients according to their particular care needs. HRS Exhibit 14 at 92 and 1-5. The definition of a psychiatric bed in the Report of the Department Task Force on Institutional Needs is compatible with the requirements of the Florida Hospital Cost Containment Board in its Florida Hospital Uniform Reporting Manual. Reports made by hospitals to the Hospital Cost Containment Board include information about services provided in separately organized, staffed and equipped hospital units. The information provided to the Board assisted the Department in determining which Florida hospitals already were providing psychiatric services in separately organized, staffed and equipped hospital units before separate licensure became necessary. The Department surveyed hospitals to determine the number of existing beds in distinct psychiatric units. It also looked to old certificates of need which referenced psychiatric services at hospitals, reports hospitals had made to the Florida Hospital Cost Containment Board, to past licensure applications the Department had received from hospitals, and to the Department's 1980 physical plant survey. These sources of information were, however, imperfect, for the reasons which follow: 1. Certificates of Need Issued 22. Before July 1, 1983, certificates of need were required for the initiation of new services which involved capital expenditures above a certain threshold dollar amount. Hospitals which had a long-standing psychiatric units would have had no occasion to request a certificate of need for psychiatric services. Review of certificates issued would not turn up a hospital with a mature psychiatric service. 2. Hospital Cost Containment Board Information 23. The reports from hospitals during the early years of the Hospital Cost Containment Board are not entirely reliable, because the hospitals did not yet have uniform accounting systems in place, despite the Board's attempt to establish uniform accounting methods through its reporting system manual. Hospitals commonly made errors in their reports. If the reports were prepared correctly, they would identify hospitals with discrete psychiatric units. Hialeah's HCCB Reports for 1981, 1982 and 1983 indicated that the hospital had no active psychiatric staff, no psychiatric beds and no psychiatric services. 3. Departmental Survey Letters 24. In Spring, 1983, the Department tried to verify the existing inventory of beds for specialty services such as psychiatric services, comprehensive medical rehabilitation services and substance abuse services. There is no record, however, that this survey letter was sent to Hialeah Hospital. In late 1983 or early 1984, the Department again attempted to establish inventories for psychiatric beds and rehabilitation beds. It distributed a cover letter and a form entitled "Hospital Bed Count Verification", which asked hospitals to confirm the Department's preliminary count of the hospital's "number of licensed beds". Hialeah's planner returned the form verifying that Hialeah Hospital was licensed for 411 "acute general" beds and that it had no short or long term psychiatric beds. The answer was correct, for that is the figure which appeared on Hialeah's license at that time. The Department did not ask the hospitals for an average daily census of short-term psychiatric patients. The cover letter for the survey form told hospital administrators that the Department was seeking to verify its preliminary bed count for services for which a special bed need methodology had been established, viz., long and short term psychiatric beds, substance abuse beds and comprehensive medical rehabilitation beds. The cover letter drew attention to the Department's intention to use the data collected from the responses to the form as a beginning inventory for short-term psychiatric beds. The cover letter also cautioned hospitals that when completing the form, they should "keep in mind the service definitions". Copies of the definitions were attached to the form. The appropriate inference to be drawn from the answer given by Hialeah Hospital to the survey form was that in January, 1984, the hospital had no beds organized into a short term psychiatric unit. This is consistent with the later letter from the hospital's vice president quoted in Finding of Fact 6, above. The Department published on February 17, 1984, its base inventory of psychiatric and rehabilitation beds in the Florida Administrative Weekly. The publication stated that "any hospital wishing to change the number of beds dedicated to one of the specific bed types listed will first be required to obtain a certificate of need." 10 Florida Administrative Weekly at 493. Hialeah was shown as having no psychiatric beds. Id. at 498. The notice did not specifically inform the hospitals of the right to petition for a formal hearing to challenge the inventory figures published. 4. Licensure Files 25. Although, the Department's licensure application form listed "psychiatric" as a possible hospital bed utilization category before 1983, these categories were set up for informational purposes only. No definitions were given to hospitals describing how beds should be allocated among the categories available on the form, making those figures unreliable. Before 1980 Hialeah Hospital had listed psychiatric beds on its licensure applications, see Finding of Fact 5, above. Since 1980 it listed no psychiatric beds. 5. Physical Plant Survey The Department performed a physical plant survey in 1980 to determine the total number of beds in service at each hospital. That survey did not attempt to make distinctions between different types of services listed on the survey form. The Department's architect who performed the survey did not attempt to evaluate the quality or intensity of the psychiatric services provided at any hospital. Each of the types of information the Department examined to determine the existing inventory of short-term psychiatric beds in 1983 had weaknesses, and no single source is dispositive. It is difficult to credit the assertion that Hialeah Hospital had a distinct psychiatric unit before July, 1983 which was not reflected in any of these sources of information. The use of multiple sources of information served as a cross-check on information from each source. It is understandable that Hialeah would not have applied for a certificate of need to operate a separate psychiatric unit. Before 1983, no such application was needed if the establishment of the unit entailed an expenditure of money below a threshold amount. All of its reports to the Hospital Cost Containment Board, however, indicate that there was no separate psychiatric service at the hospital and that the hospital had no active psychiatric staff. With respect to the Department's survey letters, while the 1984 survey form itself did not specifically inform hospital administrators that their responses would be used to establish a base inventory of psychiatric beds, the cover letter did make that clear. This should have put the hospital's planner, who filled out the form, on notice that if Hialeah had a discrete, short-term psychiatric service the number of beds in that unit should be listed. What is perhaps the most significant point is that the hospital reported no psychiatric beds on its licensure application at all from 1980 to 1985. Medical doctors in general practice can and do treat psychiatric patients, in addition to doctors who specialize in psychiatry. No doubt patients commonly were admitted to the hospital who had primary diagnoses of psychiatric illnesses. The hospital's licensure filings, however, since 1979 fail to record any psychiatric beds. This is important evidence that the hospital did not regard itself as having any distinct unit organized to provide psychiatric care. The Hospital's 1985 correspondence from the Hospital's vice president to the Department, quoted in Finding of Fact 6 confirms this. The failure to list any psychiatric beds at Hialeah on the Department's 1980 physical plant survey is not significant, since determining the number of psychiatric beds was not the focus of that survey. It is true that the Department never conducted site visits at all hospitals to determine whether they had a) distinct psychiatric units, b) psychiatric medical directors, c) written psychiatric admission and treatment policies, or d) psychiatric policy and procedures manuals. The efforts the Department did make to establish the beginning inventory of psychiatric beds were reasonable, however Hialeah Hospital's Licensure History and Efforts to Obtain Grandfather Status The entries on Hialeah's applications for annual licensure from the Department are cataloged above, and need not be repeated. During the years 1980-84, after it ceased listing psychiatric beds on its licensure application, psychiatric services were still being provided to patients throughout the hospital. In 1984, the hospital engaged in correspondence with the Department over the appropriate number of licensed beds for the hospital as a whole. Ultimately the hospital and the Department agreed that 411 beds should be licensed. In its 1985 licensure application, Hialeah then requested that 20 short-term psychiatric beds be listed on the license. The Office of Licensure and Certification questioned this. Ultimately, the Office of Licensure and Certification refused to endorse those 20 psychiatric beds on the license because there was no certificate of need on file for them, nor any statement from the Office of Community Medical Facilities granting the hospital an exemption from that licensure requirement. Hialeah Hospital did not challenge that decision in a proceeding under Chapter 120, Florida Statutes. The discussions between the hospital and the Department's Office of Community Medical Facilities continued, and by late October, 1986, Hialeah requested the Department to approve 21 short-term psychiatric beds at the facility, and sent the Department backup material which it believed justified a grandfather determination. After review, the Department denied the grandfather request by letter dated December 5, 1986. The Department's Action Regarding Other Grandfathering Requests Hialeah's is not the first request the Department received for grandfathering beds. After June of 1983, when the Legislature required CON approval for hospitals to change their number of psychiatric or rehabilitation beds, a number of institutions made similar requests. 1. Comprehensive Medical Rehabilitation Beds The rule on comprehensive medical rehabilitation beds was developed by the Department at the same time as the rule on psychiatric beds. The Department used a similar process to determine the existing inventory of both types of beds. The Department determined that preexisting comprehensive medical rehabilitation units at Parkway General Hospital, Naples Community Hospital, Orlando Regional Medical Center, Holy Cross Hospital, and University Community Hospital entitled those facilities to grandfathering of their comprehensive medical rehabilitation services. The Department has also determined that a preexisting distinct psychiatric unit at Palmetto General Hospital entitled that institution to grandfather status for its psychiatric beds. Parkway General Parkway General Hospital did not specify rehabilitation beds on its licensure applications for the years 1980 through 1984. The Department denied Parkway's request for endorsement of 12 comprehensive medical rehabilitation beds on its 1985 license because Parkway had not obtained a certificate of need for them or an exemption from review. The Department thereafter determined that Parkway had been providing comprehensive medical rehabilitation services before June, 1983 in a physically distinct and separately staffed unit consisting of 12 beds. It then endorsed 12 beds on Parkway's license, even though the rule which became effective in July, 1983 would require a minimum unit size of 20 beds for any hospital organizing a new comprehensive medical rehabilitation unit. See Rule 10-5.011(24), Florida Administrative Code. Naples Community Hospital The Department granted Naples Community Hospital a grandfather exemption for its rehabilitation beds in February, 1987. In had not listed the rehabilitation beds on its license application for the years 1983-1985, had not returned the Department's bed count verification form, nor did it challenge the bed count which the Department published in the Florida Administrative Weekly. The hospital had applied for and received a certificate of need in January of 1981 to establish a 22-bed rehabilitation unit and that unit began operation in late 1982. The Department ultimately determined that the hospital had provided rehabilitation services in a physically distinct unit and the services were organized and delivered in a manner consistent with applicable regulatory standards. It granted a grandfather request in February, 1987. Orlando Regional Medical Center A grandfather exemption for 16 rehabilitation beds was granted to Orlando Medical Center in 1986. The 16-bed brain injury unit had been authorized by the Department through certificate of need number 2114 before the Department had adopted its rule governing comprehensive medical rehabilitation beds in 1983. The services were provided in a physically distinct unit. The Department determined the 20-bed minimum size for a new unit did not apply to a unit which qualified for grandfathering. Holy Cross Hospital The Department granted a grandfather exemption for comprehensive medical rehabilitation beds to Holy Cross Hospital after a proceeding was filed with the Division of Administrative Hearings to require the Department to recognize the existence of a 20-bed comprehensive medical rehabilitation center. The Department determined by a site visit that Holy Cross had established a separate unit, probably in 1974, long before the Department's comprehensive medical rehabilitation unit rule became effective in July, 1983. The unit had its own policy manual, quality assurance reports, patient screening criteria, and minutes of multidisciplinary team staff conferences. The hospital had neglected to report the unit in its filings with the Hospital Cost Containment Board but the hospital contended that it never treated the unit as a separate unit for accounting purposes, and had not understood the need to report the unit as a distinct one under Hospital Cost Containment Board reporting guidelines. The hospital corrected its reporting oversight. The grandfathering is consistent with the hospital's actual establishment of the unit long before the Department's rules went into effect. University Community Hospital A dispute over whether to grandfather a comprehensive medical rehabilitation unit which went through a Chapter 120 administrative hearing and entry of a final order involved University Community Hospital (UCH). The Department initially determined that the nine comprehensive medical rehabilitation beds at UCH had been in existence before July, 1983 and were exempt from certificate of need review. That decision was challenged in a formal administrative proceeding by a competing hospital, Tampa General. The competitor was successful, for both the Hearing Officer in the recommended order and the Department in the final order determined that University Community Hospital's 9 bed rehabilitation unit was not entitled to be grandfathered. University Community Hospital v. Department of Health and Rehabilitative Services, 11 FALR 1150 (HRS Feb. 14, 1989). In determining that grandfathering was inappropriate, the Department found that the hospital had not prepared separate policies and procedures for its rehabilitation unit before the rule on comprehensive medical rehabilitation beds became effective, and that the unit did not have a physical therapy room on the same floor as the patients. The beds supposedly dedicated to rehabilitative care were mixed with non- rehabilitative beds, so that a semiprivate room might have one bed used for rehabilitative care and another for an unrelated type of care. This conflicted with the requirement that the rehabilitation unit be physically distinct, with all patients and support services located on the same area or floor, rather than scattered throughout the hospital. The Department also determined that many hospitals offer physical therapy, occupational therapy, or speech therapy, but that to qualify as a comprehensive medical rehabilitation center, these services had to be coordinated in a multidisciplinary approach to the patient's needs, which had not been the case at University Community Hospital. The common strand running through the grandfathering decisions on comprehensive medical rehabilitation beds is that grandfathering is appropriate when a hospital demonstrates that before the comprehensive medical rehabilitation rule became effective in July, 1983, it had a separate unit which met the standards and criteria for a comprehensive medical rehabilitation unit (other than the minimum size for new units). Psychiatric Beds Tampa General Hospital Only two cases involve a decision on whether psychiatric services at a hospital qualify for grandfathering. Tampa General Hospital, which was owned by the Hillsborough County Hospital Authority, operated 93 psychiatric beds in 1981, 71 at Hillsborough County Hospital and 22 at Tampa General Hospital. A certificate of need granted in 1981 authorized the expenditure of $127,310,000 for the consolidation of both hospitals and an overall reduction of 14 psychiatric beds after the hospitals were integrated. When the Hillsborough County Hospital Authority obtained its certificate of need, it was not necessary to differentiate between general acute care beds and psychiatric beds for licensure purposes. Increased demand for acute care beds led Tampa General to close its psychiatric unit and make those 22 beds available for ordinary acute care. After the 1983 statutory and rule changes regarding the separate licensure of psychiatric beds, the Hillsborough County Hospital Authority told the Department that Tampa General had no psychiatric beds in operation. On its 1985 licensure application, the Hillsborough County Hospital Authority applied for licensure for 22 psychiatric beds at Tampa General and 77 at Hillsborough Hospital. The Department denied the request for the psychiatric beds at Tampa General. The Final Order entered in Hillsborough County Hospital Authority v. HRS, 8 FALR 1409 (Feb. 16, 1986), determined that there had been a discontinuation in the use of psychiatric beds at Tampa General, and that to allow Tampa General to add psychiatric beds after the statutory and rule changes in 1983 would frustrate the certificate of need process and would be detrimental to good health care planning. Palmetto General Hospital Palmetto General Hospital participated in an administrative hearing in 1975 regarding the disapproval of its proposed expansion, which included the dedication of one floor and 48 beds as a psychiatric unit. The Hearing Officer found that there was a need for psychiatric beds in the community and recommended that the Secretary of the Department issue a certificate of need "for that portion of the applicant's proposed capital expenditures relating to the addition of a 48 bed psychiatric unit". Palmetto General Exhibit 32, at 12, paragraph 2. The order of the Hearing Officer was affirmed by the District Court of Appeal in Palmetto General Hospital, Inc. v. Department of HRS, 333 So.2d 531 (Fla. 1st DCA 1976). The approval of the 48 psychiatric beds is clear only from a review of the Hearing Officer's order. Certificate of Need 292X was issued for the 48 psychiatric beds. Palmetto General exhibit 45. Palmetto received Medicare certification for its psychiatric inpatient unit, and listed 48 short-term psychiatric beds on its licensure applications each year from 1979 to 1983. It failed to show its psychiatric beds on the bed count verification survey form sent by the Department. Palmetto General's chief financial officer told the Department on June 10, 1983 that Palmetto General did not have psychiatric beds in a separately organized and staffed unit. This resulted in the issuance of a license which showed no psychiatric beds. The Department itself wrote to the administrator of Palmetto to learn why the 48 short-term psychiatric beds had not been listed on Palmetto's application for licensure in 1985. Palmetto wrote back and acknowledged that it did have 48 short-term psychiatric beds. A license showing those 48 beds was then issued. Thereafter, staff from the HRS Office of Comprehensive Health Planning took the position that the 48 short-term psychiatric beds should not have been listed on the license, and the Department's Office of Licensure and Certification requested that the 1985 license containing the endorsement for those 48 psychiatric beds be returned to the Department for cancellation. Palmetto then sought an administrative hearing on the attempted cancellation of the license. Palmetto and the Department entered into a Final Order dated March 9, 1986 which agreed that Palmetto met all the requirements for the designation of 48 short-term psychiatric beds on its license. Palmetto, had, in fact, operated a 48 bed psychiatric unit on its third floor since 1981, but moved that unit to the sixth floor in 1985. It was dedicated exclusively to psychiatric patients and there were specific policy and procedure manuals developed and used in dealing with psychiatric patients since 1981. The history of Palmetto's licensure is certainly one replete with contradictions. It is inexplicable that the chief financial officer of the hospital would have told the Department in 1983 that it had no separately organized and staffed psychiatric unit when, in fact, it had such a unit. It was also unclear why it would have shown no psychiatric beds on the bed count verification form returned in late December or early January, 1984, or why its April, 1983, and its 1985/1986 license application forms listed no psychiatric beds. Nonetheless, it had obtained a certificate of need for a psychiatric unit after administrative litigation and an appeal to the District Court of Appeal. The unit was opened and remained continuously in existence. It had appropriate policies and procedures in place for a distinct psychiatric unit as the 1983 statutory and rule amendments required for separate licensure of psychiatric beds. History of Psychiatric Bed Services at Hialeah Hospital Since at least 1958, Hialeah Hospital has had psychiatrists on its medical staff, and the number of psychiatric physicians on staff has increased. Thirteen psychiatrists had admitting privileges at the hospital by 1983; there are now 23 psychiatrists with privileges. As is true with most community hospitals, physicians specializing in psychiatry would admit patients to the general population at Hialeah Hospital if they needed intensive psychotherapy or medication which needed to be monitored by nurses. Patients who were homicidal, suicidal or intensely psychotic were not admitted to Hialeah Hospital. Those patients need a more intensive psychiatric environment, either in a locked psychiatric unit or in a psychiatric specialty hospital. The persons physicians placed at Hialeah through 1983 did not need the intensive services of a discrete psychiatric unit. Hialeah Hospital indicated on its licensure application to the Department that it had 21 psychiatric beds throughout the 1970's, but ceased this listing in the 1980's as set forth in Finding of Fact 5 above. The nature of the services available at the hospital had remained constant. Under the psychiatric diagnosis coding system published in the Diagnostic Statistical Manual III, (which is commonly used by psychiatrists) Hialeah Hospital had an average daily census of 25 patients with primary or secondary psychiatric diagnoses in 1980, and 18 in 1981. Only about 25 percent of those patients had a primary psychiatric discharge diagnosis. The additional patients had secondary psychiatric diagnoses. Hialeah must rely on these secondary diagnoses to argue that its average daily census for psychiatric patients approached 21 beds. It was not until 1985 that Hialeah consolidated its psychiatric services to a medical/psychiatric unit. That unit serves patients with medical and psychiatric diagnosis as well as patients with solely psychiatric diagnoses. Before 1983, there was no medical director of psychiatry at Hialeah Hospital, and no separate policies and procedures for the admission of patients to a psychiatric unit, nor any staff dedicated to the care of psychiatric patients. To be sure, the hospital was in a position to provide quality psychiatric care to patients whose needs were psychotherapy, monitored medication, or individual counseling by psychiatric physicians and nurses. This reflects the reality that not all patients who need to be placed in the hospital for psychiatric care require the services of a separate medical/psychiatric unit. Patients with more acute psychiatric illness do need interdisciplinary approaches to their care. These interdisciplinary approaches are more expensive than serving psychiatric patients in the general hospital population. This is why the Federal government provides higher, cost-based reimbursement to the hospitals with specialty psychiatric licenses. Hialeah has not proven that the psychiatric services it was providing before 1983 were significantly different from those provided in typical community hospitals which did not have distinct psychiatric units. Hialeah's long-standing relationship with the Northwest Community Mental Health Center is not especially significant. Certainly, the Center was aware that Hialeah was a potential source of psychiatric care. Baker Act patients who needed hospitalization were taken there between 1980 and 1983. There was a flow of patients back and forth between the Center and the hospital's inpatient population, and discharge plans by Hialeah's social workers included referrals back to the Mental Health Center for follow-up and outpatient care. Similarly, the Dade-Monroe Mental Health Board knew that Hialeah was a potential provider of inpatient psychiatric services. The predecessor to the current local health council, the health systems agency of South Florida, recorded that there were psychiatric admissions at Hialeah Hospital in the early 1980's, and the health systems agency recommended a conversion of existing beds to psychiatric services because of a need for additional psychiatric services in the area. None of this, however, means that Hialeah had operated a distinct psychiatric unit before 1983 which entitles it to grandfather status.
Recommendation It is recommended that the application of Hialeah Hospital for grandfather status for 21 short-term psychiatric beds, and the inclusion of those short-term psychiatric beds on its license and on the Department's bed inventory be denied. DONE AND ENTERED this 6th day of October, 1989, in Tallahassee, Leon County, Florida. WILLIAM R. DORSEY Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of October, 1989.
Findings Of Fact Based upon the documents filed herein and the stipulations and arguments of counsel at the telephonic hearing, the following Findings of Fact are determined: Respondent, DePoo Memorial Doctor's Hospital (DEPOO) applied for a Certificate of Need for the establishment of a 15-bed short-term psychiatric service. CON #3248 was granted DEPOO for 15 short-term psychiatric beds on June 23, 1984, and noticed in the Florida Administrative Weekly of July 6, 1984. Petitioner Florida Keys Memorial Hospital (FKM) alleges issuance of CON #3248 to DEPOO affects their substantial interests. FKM admits that it did not, prior to receipt by DHRS of the DEPOO proposal being reviewed, formally indicate an intention to provide such similar services in the future, i.e. short-term psychiatric beds. FKM is an established acute care hospital which, among other obvious services of an acute care facility, currently provides psychiatric care as patients are admitted for that purpose or, if a patient is admitted for another purpose, FKM may provide additional care for a psychiatric condition tangential to the purpose or treatment for which that patient is initially admitted. No beds are allocated specifically for short-term psychiatric care at FKM. Indeed, FKM has no license to perform the health care services of a short- term psychiatric hospital and thus no short-term psychiatric beds. Its performance of any psychiatric services is, essentially, ad hoc and the extent thereof is fully described in Paragraph 4, above. It was stipulated among the parties that there was no licensed short- germ psychiatric facility in the Key West area of Monroe County, Florida at the time DEPOO's application for a CON for a 15 bed short-term psychiatric facility was reviewed; that FKM was granted a prior CON for short-term psychiatric beds, which CON of FKN had expired without being implemented by FKM prior to the agency's review of DEPOO's application; and that currently there still is no facility licensed in the Key West area of Monroe County for short-term psychiatric care. Rule 10-5.11(25), F.A.C. provides a methodology for short-term psychiatric bed need determination which is separate and distinct from that bed need methodology applicable to FKM as an acute care hospital. See Rule 10- 5.11(23), F.A.C. Further, application for acute care CONs and short-term psychiatric CONs are reviewed separately by DHRS. Since the services offered by FKM [acute care] and by those proposed by DEPOD [short-term psychiatric] are the subject of separate and distinct need methodologies, they are not "similar."
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the petition for Formal Hearing be dismissed with prejudice. DONE and ORDERED this 29th day of October, 1984, in Tallahassee, Florida. ELLA JANE P. DAVIS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of October, 1984. COPIES FURNISHED: Donna H. Stinson, Esquire The Perkins House, Suite 100 118 N. Gadsden Street Tallahassee, Florida 32301 Douglas L. Mannheimer, Esquire 318 North Calhoun Street P. O. Box 11300 Tallahassee, Florida 32302-3300 Richard C. Klugh, Jr., Esquire Southeast Financial Center 200 South Biscayne Boulevard Miami, Florida 33131 David Pingree, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301
The Issue Whether or not Halifax' Second Amended Petition has alleged sufficient standing to initiate a Section 120.57(1) F.S. formal hearing, pursuant to Subsection 381.709(5)(b) F.S., in challenge of HRS' modification of ATC's CON.
Findings Of Fact ATC is an existing 50-bed specialty psychiatric hospital with 25 short- term psychiatric beds for children or adolescents, five beds for short-term substance abuse by children or adolescents, and 20 long-term psychiatric beds for children or adolescents. ATC has operated under CON 2331 since 1984. By correspondence dated March 7, 1990, HRS issued to ATC Amended CON 2331 authorizing ATC to convert 15 of its 20 long-term psychiatric beds for children and adolescents into long-term psychiatric beds for adults in a secure unit. Petitioner Halifax is an existing 545 bed acute care hospital with adult patients in its 50-bed secure psychiatric unit. Its existing hospital license 2700 is for a short-term psychiatric program which does not specify use of the beds for either adults or for children and adolescents. Halifax does not have a CON for a long-term psychiatric program. Halifax' Second Amended Petition alleges its standing in the following terms: . . . Halifax is a 545 bed acute care hospital, licensed pursuant to Chapter 395, Florida Statutes, and located within HRS District IV. Halifax provides psychiatric services to adult patients in its 50 bed psychiatric unit. Due to the nature of the patients served, Halifax operates it (sic) psychiatric services in a secured unit. Halifax's psychiatric unit has been in operation since December 7, 1951 and is an "established program" under Section 381.709(5)(b) Fla. Stat. * * * 5. Halifax is a substantially affected party, and its substantial interest is subject to a determination in this proceeding in that: Halifax is an existing provider of acute care hospital services, located in Volusia County, Florida, and within HRS District IV. Halifax has an established program which provides psychiatric services to adult patients within HRS District IV. If the issuance of Amended CON 2331 were upheld, ATC would offer the same adult psychiatric services presently offered at Halifax' established psychiatric program. Therefore, Halifax is entitled to initiate this proceeding pursuant to Section 381.709(5)(b) F.S. (1989). The issuance of Amended CON 2331 will result in an unnecessary duplication of the same adult psychiatric services provided by Halifax in HRS District IV. Such duplication of services will result in decreased utilization of Halifax' psychiatric program, increased costs to consumers of such psychiatric health care services, and the decreased financial viability of Halifax' established psychiatric program. Additionally, the Second Amended Petition asserts that ATC's requested amendment of CON 2331 would represent a substantial change in the inpatient institutional health services offered by ATC and, thus, is subject to CON review pursuant to Section 381.706(1)(h) F.S. (1989). Further, Halifax alleges that, if approved, the amendment to CON 2331 will authorize ATC to serve an entirely new patient population that it is not authorized to serve pursuant to the original CON.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order dismissing Halifax' Second Amended Petition and affirming the agency action modifying ATC's CON 2331. DONE and ENTERED this 26th day of October, 1990, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 26th day of October, 1990. Copies furnished to: Harold C. Hubka, Esquire Black, Crotty, Sims, Hubka, Burnett, Bartlett and Samuels 501 North Grandview Avenue Post Office Box 5488 Daytona Beach, Florida 32118 Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 North Gadsden Street Tallahassee, Florida 32301 Lesley Mendelson, Senior Attorney Department of Health and Rehabilitative Services 2727 Mahan Drive, Suite 103 Tallahassee, Florida 32308 Robert D. Newell, Jr., Esquire Newell & Stahl, P.A. 817 North Gadsden Street Tallahassee, Florida 32303-6313 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact GENERAL In November 1983, Pasco filed an application with DHRS to build and operate a freestanding psychiatric and substance abuse facility in Pasco County. Pasco is a Florida corporation and is a wholly owned subsidiary of Florida Health Facilities, Inc., which is a wholly owned subsidiary of United Medical Corporation (UMC). DHRS' initial notice of intent to deny Pasco's application was issued on April 13, 1984. On May 3, 1984, Pasco timely filed its petition for formal administrative hearing. (DOAH Case No. 84-1933). Thereafter, DHRS reconsidered its initial decision, and on November 20, 1984, DHRS and Pasco entered into a Stipulation, and DHRS issued CON No. 3053 to Pasco in February 1985. (DOAH Case No. 84-1933 was subsequently, dismissed as the result of this reconsideration.) Following publication of DHRS' decision to issue the CON, petitions for formal hearing were filed by Horizon and Hernando, UPC, CHNPR, and Harborside Hospital, Inc., and petitions to intervene were filed by Community Care, Morton Plant and PIA Medfield, Inc., d/b/a Medfield Center. The petitions were consolidated and resulted in the cases at bar--DOAH Consolidated Case Nos. 85-0780, 85-1513 and 85-2346. Harborside Hospital, Inc., Petitioner in Case No. 85-2392, and PIA Medfield, Inc., d/b/a Medfield Center, Intervenor in Case No. 85-0780, subsequently voluntarily dismissed their petitions and are not parties to this proceeding. Horizon is a freestanding psychiatric facility located at 11300 U.S. 19 South, Clearwater, in Pinellas County, in District V. Hernando is an approved, as of September 1984, but as yet unopened 50-bed freestanding psychiatric facility to be located at the intersection of S.R. 50 and Clay Street in Brooksville, Hernando County. Hernando County is in District III. Hernando's bed complement will consist of 35 short-term psychiatric beds, 15 short-term substance abuse beds and a 10-bed crisis stabilization unit. UPC is an approved but yet unopened 114-bed psychiatric teaching facility to be located on the campus of the University of South Florida in Hillsborough County, in District VI. Its bed complement does not include licensed substance abuse beds. CHNPR is a 414-bed acute care hospital located in Pasco County, Florida, in District V. As part of its bed complement, the hospital operates a 46-bed psychiatric unit. Its complement does not include licensed substance abuse beds. Morton Plant is a 745-bed acute care hospital located in Pinellas County, District V. As part of its bed complement, the hospital operates a 42-bed psychiatric unit. Its bed complement does not include licensed substance abuse beds. Community Care is an approved but as yet unopened 88-bed psychiatric facility to be located in Citrus County in District Its bed complement includes 51 short-term psychiatric beds and 37 long-term substance abuse beds. Its bed complement does not include licensed short-term substance abuse beds. Pasco originally proposed to construct and develop an 80-bed short-term psychiatric and substance abuse facility, composed of 60 general adult beds, 10 adolescent beds and 10 substance abuse beds (Exhibit 4). As a result of negotiations with DHRS, Pasco revised its proposal to a 72-bed facility composed of 35 general adult beds, 20 adolescent beds and 17 substance abuse beds (Exhibit 4, paragraph 1; Exhibit 11). As a condition to DHRS' agreement to grant the Certificate of Need, Pasco has agreed to provide at least 10 percent of its patient days to residents of Pasco County eligible under the provisions of the Baker Act or who are indigent, and to locate its facility no less than five miles east of the intersection of U.S. Highway 19 and County Road 587 (Exhibit 4, paragraphs 3, 4). The revised project cost, excluding working capital, totals $6,328,981.00 (Exhibit 6). BED NEEDS Applications for certificates of need must be consistent with criteria contained in Section 381.494(6)(c) as well as applicable rules of the agency. Subsection 1 of Section 381.494(6)(c) requires DHRS determine the proposal is consistent with: The need for the health care facilities and services and hospices being proposed in relation to the applicable district plan and State Health Plan adopted pursuant to Title XV of the Public Health Service Act except in emergency circumstances which pose a threat to the public health. The State Health Plan adopted addresses need through the year 1987, which is not the target year applicable to this case. The Plan indicates the need for short-term psychiatric and substance abuse beds should be determined based on the need methodologies found in Chapter 10-5.11(25) and 10-5.11(27) (Exhibit 27, page 6). DHRS' rules establish specific criteria to be used in evaluating and acting on CON applications for psychiatric and substance abuse services and facilities. Chapter 10-5.11(25) and 3-5.11(27), Florida Administrative Code. Psychiatric Bed Need In District V Rule 5-11.25, Florida Administrative Code, allocates .35 beds per 1,000 population in each district for psychiatric beds. Of those, not less than .15 per 1,000 population may be allocated within acute care general hospital settings and no more than .20 per 1,000 population may be located in freestanding psychiatric facilities. The differentiations recognize Medicaid reimburses facilities for psychiatric services provided in the acute hospital setting, but not in the freestanding setting, assuring at least some financial access to services for Medicaid patients and allows the agency, from a policy standpoint, to weigh the cost and benefits of building new facilities on one hand against adding additional beds at existing facilities (Exhibit 26, page 3). The Office of Comprehensive Health Planning, under the signature of the Deputy Assistant Secretary of Health Planning and Development, has published the agency's Short-Term Psychiatric Bed Counts and Projected Bed Needs for 1990. On a district wide basis, the agency's document indicates a total gross need for 401 beds. There exist 372 licensed beds and no CON approved but unlicensed beds in District V. Morton Plant received preliminary approval for 22 beds but its application was subsequently denied by Final Order. See, Morton F. Plant Hospital Assn., Inc. v. DHRS, DOAH Case No. 83-1275, Final Order Oct. 8, 1985. Therefore, there currently exists a net projected need for 29 short-term psychiatric beds in District V for 1990. Final approval of the application here would result in a district surplus of 26 beds, an increase in beds of less than 7 percent over the projected 1990 numerical need. This 26-bed surplus would replace the 29-bed need after the 55 beds granted to Pasco are considered (Exhibit 27, pages 15-16). The projected numerical surplus for psychiatric beds in District V is due to an excess of 114 beds located in South Pinellas County. However, access problems to Pasco residents may, in fact, be one of the reasons for this excess (Exhibit 10, page 3). Rule 10-5.11(25) projects the need at the district level, leaving the specific allocation to the agency and to the Local Health Council by identifying particular areas within the district that may need additional beds through use of the Local Health Plan (Exhibit 26, page 3). The Local Health Council's 1985 plan projects needed beds to the target year 1990 and projects need by subdividing District V on a geographic basis of East and West Pasco and North and South Pinellas Counties (Exhibit 8, page 110, Tables 8 and 11; Exhibit 10, page 2). The Plan establishes subdistricts identical to those subdistricts which have been designated for acute care beds (Exhibit 8, page 110, Tables 8 and 11; Exhibit 10, page 2; Exhibit 27, page 8). The subdistrict concept evidences a rational division of the District's population and healthcare communities (Exhibit 10, page 2; Exhibit 27, page 8). In view of the poor transportation situation in Pasco County as well as traffic congestion along U.S. Highway 19, especially during the tourist period, an access problem exists for patients and their families seeking psychiatric and substance abuse inpatient services (Exhibit 10, page 2). In 1990, Pasco County's population will reach 286,488. This total is broken down into East and West Pasco County, with population projected to be 88,811 and 197,677, respectively. Application of the numerical need methodology to the Pasco population indicates a projected need for 101 psychiatric beds in Pasco County, allocating 70 beds to West Pasco and 31 beds to East Pasco, to insure adequate services are provided to all residents of the County (Exhibit 26, page 3). Recognizing the existence of 46 psychiatric beds at Community in West Pasco, there remains a projected need for 24 psychiatric beds in West Pasco County. With no existing psychiatric beds being located in East Pasco County, between the two areas there is an estimated need for 55 psychiatric beds in the County as a whole, the precise number of short-term psychiatric inpatient beds sought for approval by Pasco (Exhibit 26, page 3). Applying the allocation portion of the rule for freestanding facilities to Pasco County residents, there is indicated a net need for beds in freestanding settings of 58 beds by the year 1990. The grant of 55 beds to the applicant in this case is, therefore, consistent with the provision of the rule (Exhibit 26, pages 3, 4). Rule 10-5.11(25)(d)7 recognizes that an applicant proposing to build a new but separate short-term psychiatric facility should have a minimum of 50 beds. There is no practical manner within which to approve a facility in East Pasco County at the present time, based solely on the East Pasco population, since the numerical need is only 31 (Exhibit 26, page 3). From a health planning standpoint, it is practical to build a facility in the middle of the County, as proposed here. The impact upon existing providers is lessened by its location while at the same time the facility has the ability to obtain patients from all portions of the County. A facility located farther east would not be financially feasible as a result of the low base population (Exhibit 26, page 3). According to Rule 10-5.11(25)(e)7, "short term inpatient hospital psychiatric services should be available within a maximum travel time of 45 minutes under average travel conditions for at least 90% of the service area's population." Conversely stated, not more than 10% of the Pasco service area population should be outside this time/travel standard. The Pasco proposed project meets the objectives of this criterion and improves geographic access to psychiatric care for Pasco County residents (Exhibit 28, page 3). Unlike a psychiatric unit in a general acute care medical hospital, it is not possible for the psychiatric beds proposed here to be used for acute medical purposes. The concept of a focused, single-purpose facility is also in keeping with the goal of the District Mental Health Board Plan which indicates the need to develop centralized inpatient services in Pasco County. Rule 10-5.11(25) (e)1 (Exhibit 28, page 5). The Local Health Plan notes that it would be cost effective to apply a 75 percent average occupancy threshold for psychiatric and substance abuse services within the service area when considering additional inpatient facilities or services of this type. It also indicates that facts such as patient origin and accessibility should be considered within the need for beds. The plan notes that individuals from Pasco County have had to seek Baker Act services outside of the County and even the District. Thus, access to inpatient care for the indigent psychiatric patient is recognized to be a problem in Pasco County (Exhibit 8; Exhibit 27, pages 11-12; TR-84, lines 16-25; TR-85, lines 16-25; TR-93, lines 23-25; TR-94, line 1). According to the-plan, Baker Act and indigent residents of Pasco County must travel to facilities in District VI to obtain these services. Additionally, with respect to the need for beds, the Local Health Plan indicates that if the subdistrict analysis is accepted, then the need for psychiatric and substance abuse beds is greatest in Pasco County. The plan also notes that while past utilization of the psychiatric unit which exists in West Pasco County would seem to suggest low demand in the County, the low utilization stems in part from the restriction of access to private pay and involuntary patients (Exhibit 27, page 12). According to the plan, services are only being provided to private pay, voluntary patients; consequently, indigent patients are not being served. Baker Act patients who are involuntarily admitted have not been served (Exhibit 27, pages 12-13; TR-374, lines 2-25; TR-376, lines 21-25; TR-377, lines 1- 11). The applicant is proposing to allocate a combined total of at least 10 percent of its patient days to Baker Act and indigent patients, clearly assisting in meeting this need (Exhibit 27, pages 17-18). The Local Health Plan represents local statements and input addressing the needs within the community. The application meets and is consistent with the standards noted in the existing and approved Local Health Plan for District V (Exhibit 10, page 3), a specific requirement of Rule 10-5. 11(25 (e) 1. The applicant initially projected an occupancy rate of 71 percent of the second year and approximately 83 percent of the third year of operation satisfying the criterion contained in Rule 10-5.11.(25)(d), Florida Administrative Code. Subsection (d)(5) recommends that a project would normally not be approved unless the average annual occupancy rate for all existing short- term inpatient psychiatric beds in the district is at or exceeds 75 percent for the preceding 12-month period. DHRS has interpreted this to be the average annual occupancy rate for all facilities for the short-term psychiatric beds within the service district, because the rule refers to the annual occupancy rate for existing beds in the service district, rather than to facilities (Exhibit 27, page 16). During the 12-month period July 1, 1984 through June 30, 1985 the existing short-term psychiatric facilities in District V reported an average of 75 percent occupancy level (Exhibit 27, page 17). Rule 10-5.11(25), Florida Administrative Code, indicates that a favorable determination may be made even when criteria other than those specified in the numeric need methodology, as provided further in Subsection (e) of Chapter 10- 5.11(25), are not met. This would also be true when applying the other criteria utilized in Section 381.494(6)(c) (Exhibit 27, page 13). Considering all these factors and the benefits that the proposed project would bring, there is a projected need for the 55 proposed short-term psychiatric beds shown under Rule 10- 5.11(25) (Exhibit 27, pages 22-23). Substance Abuse Bed Need In District V Rule 10-5.11(27) establishes a bed-to-population ratio of .06 beds per 1,000 population for the projected year in question (Exhibit 26, page 4). The need methodology, as applied to District V for 1990, shows a total need for 69 short-term substance abuse beds in District V. There are presently 74 licensed short-term substance abuse beds in District V and no additional CON approval. This results in a surplus of five beds in the district, without including the 17 beds approved for Pasco Psychiatric Center. (Exhibit 10, page 3, Exhibit 27, pages 23- 24). The Local Health Council has projected a need through 1990 for 17 substance abuse beds, using the State's formula contained in Rule 10-5.11(25) and 10.5.11(27) and applying the formula on a subdistrict basis (Exhibit A, page 118, table 11; Exhibit 10, page 2). Subsection (h)(l) contains a suggested standard of 80 percent occupancy rate in the District for the past 12 months. During the period from July 1, 1984 through June 30, 1985 reporting substance abuse bed facilities reported an average occupancy level of 88 percent. DHRS has determined there exist 22 short-term substance abuse beds at Horizon Hospital. However, Horizon does not report its utilization of those beds separately, but includes them within its reported short-term psychiatric beds (Exhibit 27, page 25). Much in the same manner as the short-term psychiatric rule, Rule 10-5.11(27)(h)3 refers to the Local Health Plan and consistency with local need determinations. According to the plan, there is a projected need in the two Pasco subdistricts for 17 short-term substance abuse beds by application of the numerical methodology .06 beds per 1,000 population to Pasco County. There are no short-term substance abuse beds available or approved in the Pasco County subdistricts (Exhibit 27, pages 11, 25-26). Rule 10-5.11(27)(h)4 establishes a minimum unit size of 10 designated beds. Additional calculation reveals that the numerical need for 17 beds is broken down into 12 beds in the . West Pasco area and five in East Pasco. Because of the minimum size requirement, there is no reasonable way for a unit to be built solely based on the East county portion of the numerical need. Consequently, a proper health planning alternative is to approve the 17-bed unit, which will be centrally located to serve both portions of the County (Exhibit 26, page 4). A Certificate of Need may be approved where need is determined through criteria other than the numeric need methodology. For example, criteria in Section 381.494(6)(c) and in subparagraph (f) of Rule (27) may indicate that need is demonstrated for the project beyond the numerical formula (Exhibit 27, page 23). Upon analysis of all the factors contained within the rule, the applicant meets the need for the Pasco subdistricts. AREAS OF CONSIDERATION IN ADDITION TO BED NEEDS A. Availability, Utilization, Geographic Accessibility And Economic Accessibility The availability, quality of care, efficiency, appropriateness, accessibility, extent of utilization and adequacy of like and existing health care services and hospices in the service district of the applicant. Section 381.494 (6) (c) 2 A number of hospital facilities serve District V's residents in need of psychiatric and substance abuse health care services (Exhibit 10, page 16 and 17, tables 9 and 10). Of these, Anclote Manor's patients have an average length of stay of more than two years. Anclote is licensed as a long-term care facility (Ibid., Exhibit 28, page 3) St. Anthony's Hospital, Mease Hospital and Suncoast Hospital have not contested the agency's initial decision to grant this application, leaving only Morton Plant and Horizon in Pinellas County and CHNPR in Pasco County as District V parties objecting to the application. CHNPR's patients are predominantly geriatric (Exhibit 28, page 3). During 1984 the utilization of psychiatric beds at Morton Plant was 137 percent. Hospitals in North Pinellas County show an average 100 percent utilization of their psychiatric beds for the period (Exhibit 35, pages 10 and 11). However, for the same period, utilization of CHNPR's psychiatric unit was 50 percent. Ibid. During the last available 12-month period of information (July 1, 1984 through June 30, 1985), the existing short-term psychiatric facilities in District V reported an average occupancy level of 75 percent (Exhibit 27, pages 16-17). Based upon utilization of less than 75 or 80 percent, there may exist underutilized beds for psychiatric services at Horizon Hospital (TR-798, lines 19-20). However, this conclusion is based upon the assumption that Horizon is licensed for 200 psychiatric beds (TR-798, lines 21-23). DHRS however, considers that Horizon is licensed (License 1809) for 178 psychiatric beds (TR-800, lines 10-15). Consequently, the number of licensed psychiatric beds affects the occupancy rates at Horizon. In order to determine access or demand within a community, factors besides utilization must be looked at (TR-887, lines 13-21). A number of other factors may and in this case do, in fact, affect occupancy rates (TR-887, lines 13-21). In addition to location, the existence of semi-private rooms, sex and age segregation policies adopted by various facilities, and corporate decisions artifically impede access and thus affect utilization and occupancy rates (TR-431, lines 9-13; TR-883, lines 12-24, 25; TR-884, lines 1-10). CHNPR's low occupancy rates are affected by the facility's location, lack of a commitment to indigents medically underserved patients, as well as its lack of segregation of psychiatric beds between adults and children (TR-392, lines 24- 25; TR-393, lines 1-9; TR-397, lines 13-19; TR-398, lines 4- 10).and 13; TR 883, lines 12-24, 25; TR-884, lines 4-10). Pasco residents have been forced to seek inpatient psychiatric and substance abuse services outside the County for years (Exhibit 21, page 1). The location of CHNPR in the western part of the county makes services inaccessible to residents of the eastern part of the county (TR-397, lines 1319; TR-398, lines 4-10). No facility exists in Pasco County that contains the proper housing for adolescents who need psychiatric services (Exhibit 21, page 2). Rainbow House, an adolescent residential care center in Dade City, can accommodate a very limited number of children and is not prepared to handle acutely ill children (TR-399, lines 5- 9). While CHNPR's psychiatric unit is designated for 46 beds, only 26 beds are available for psychiatric services. The dramatic changes in occupancy at Community Hospital of New Port Richey from 80 percent to 40 percent indicate the psychiatric beds are used for acute medical purposes (Exhibit 22, page 2). Without a public transportation system in Pasco County, travel time for Pasco residents and their families is a problem (TR-401, lines 14-25; TR-402, lines 1-23). A major portion of Pasco residents who have been provided inpatient services are provided those services by facilities located one hour away (Exhibit 22, page 2; Exhibit 23, pages 1-2; TR-397, lines 7-16). The access problem is more acute for the elderly, which comprise 32.7 percent of Pasco's population compared to 19.3 percent for all of Florida projected to 1990 (Exhibit 26, page 2). The distance to facilities serving Pasco County residents is sufficiently great as to make follow-up care very difficult, preventing family involvement, and making treatment inefficient (TR-325, lines 7-25; TR-408, lines 1-8; TR-436, lines 12-25). Based upon a July 1985 population of 240,204 approximately 13 percent of Pasco County residents are not within a 45-minute total travel time to a psychiatric facility in District V. This number is expected to increase to 19 percent of the County's population by 1990 (Exhibit 18, page 17, figures 10 and 11; page 14 and figure 13, page 15). United Medical Corporation (UMC), which owns Pasco, has a history of providing services to indigents and medically underserved (Exhibit 13, page 2) and in particular to residents of Pasco County. Ibid. This is based upon UMC's former ownership of Tampa Heights Hospital. At that time it was the facility that admitted Baker Act patients from Pasco County (Exhibit 10, page 3; Exhibit 13, page 2). CHNPR's recent corporate decision to take Baker Act patients is not persuasive as to the issue of access to indigents and medically under served (Exhibit 27, pages 19-20). The timing of the agreement with the Pasco and Hernando Human Development Councils during the pendency of these proceedings indicates, at a minimum, that the application here has already favorably affected access to these citizens. CHNPR's policy with respect to indigents, Medicaid and the medically underserved residents reduces the accessibility of these patients to its facility. See Turro v. DHRS and CHNPR v. DHRS, DOAH Case Nos. 83-005 and 83- 092, Recommended Order September 7, 1983, Final order October 25, 1983, 6 FALR 336, et seq. The proposed project will be accessible to residents in need of psychiatric and substance abuse services in District V. NEED FOR SPECIAL EQUIPMENT The need in the service district of the applicant for special equipment and services which are not reasonably and economically accessible in adjoining areas. Section 381.494 (6) (c) 6. Although an issue in this proceeding, no evidence was presented as to the applicability of this criterion or the applicant's consistency or inability to meet this criterion. It is thus specifically found that this criterion is not applicable. NEED FOR RESEARCH AND EDUCATIONAL FACILITIES The need for research and educational facilities including but not limited to institutional training programs and community training programs for health care practitioners and for doctors of osteopathy and medicine at the student internship and residency training level. Section 381.494(6)(c)7,. Although an issue in this proceeding, no evidence was presented as to the applicability of this criterion or the applicant's consistency or inability to meet this criterion. It is specifically found that this criterion is not applicable. AVAILABILITY OF RESOURCES The ability of the applicant to provide quality of care. Section 381.494(6) (c)3. The availability of resources including health manpower, management personnel and funds for capital and operating expenditures for project accomplishment and operation; the effects the project will have on clinical needs of health professional training programs in the service district; the extent to which the services will be accessible to schools for health professions in the service district for training purposes if such services are available in the limited number of facilities; the availability of alternative uses of such resources for the provision of other health services; and the extent to which the proposed services will be accessible to all residents of the service district. Section 381.494 ( 6) (c) 8. Management and Quality of Care UMC, the parent corporation, has at its disposal management personnel and will be able to obtain health manpower to accomplish the project (Exhibit 12, page 2; Exhibit 13, pages 1-2). UMC presently owns and operates three psychiatric hospitals (Exhibit 11, page 1). The facility will have at its disposal UMC's services in the areas of management and recruitment. UMC has successfully recruited physicians and other health care providers in the past (Exhibit 13, page 1) lines 1-5; TR-332, lines 19-21). The applicant will be able to adequately staff and, manage the facility and provide quality care to its patients in the service area. Funds for Capitol and Operating Expenditure UMC has obtained a commitment from Freedom Savings & Loan Association to finance the project (Exhibit 14, page 2) and will therefore be able to obtain the financing necessary to build and operate the facility. No evidence was presented to show the project will have a detrimental effect on clinical needs of health professional training programs in the district for training. Financial Feasibility The facility will be financed through a construction loan with a 5-year permanent financing package at a rate of prime plus one and one-half percent floating and a two percent fee (Exhibit 14, page 1). The projections contained in Exhibit 7 and Exhibit 5 as well as the underlying assumptions indicate the figures represent reasonable and accurate estimates of income and expenses that will be incurred in the event the Certificate of Need is issued (Exhibit 9, page 1; Exhibit 11, pages 2-3; Exhibit 12, pages 1-2; Exhibit 13, pages 1-2; Exhibit 15, page 2; Exhibit 17, pages 1-2; Exhibit 25, pages 6-9). Note: See also, Hoefle's testimony. CHNPR contends that the projected ALOS should be considered at CHNPR's level. However, the ALOS at CHNPR's psychiatric unit is directly affected by the influx of Baker Act patients and contractual limitations (TR-921, lines 19-25; TR- 922, lines 1-2; TR-452, lines 14-17; TR-453, lines 5-12). In the final analysis the financial feasibility of the proposal will depend to a large degree on whether physicians will admit patients to the facility. Doctors Vesley and Rudajev will support the facility when built and their projections as to the numbers of patients and ALOS are reasonable (TR-292, lines 17-18; TR-293, lines 4-7; TR-293, lines 12-15; TR-295, line 16; TR-317, lines 19-24; TR-324, lines 13-24; TR-325, lines 1-2; TR-336, lines 19-22; TR-332, lines 19-21). It is reasonable that other physicians in Pasco County will locate in the area surrounding the hospital and will support the facility once it is opened (TR- 413, lines 7-17; TR-792, lines 2-9). The needs and circumstances of those entities which provide a substantial portion of their services or resources or both to individuals not residing in the service district in which the entities are located or in adjacent service districts. Such entities may include medical and other health professions, schools, multi-disciplinary clinics and specialty services such as open-heart surgery, radiation therapy and renal transplantation. Section 381.494 (6) (c) 11. No evidence was presented indicating the applicability of this criterion or the applicant's ability or inability to meet this criterion. I find this criterion not applicable. AVAILABILITY OF HEALTH CARE ALTERNATIVES The availability and adequacy of other health care facilities and services and hospices in the service district of the applicant, such as outpatient care and ambulatory or home care services which may serve as alternatives for the health care facilities and services to be provided by the applicant. Section 381.494 (6) (c) 4. At the time of hearing, no alternatives to the application proposed were presented. Nor was other evidence presented to indicate alternatives to the proposed facility and services are, in fact, available at the time of this proceeding. Other than CHNPR no facilities located in Pasco County provides inpatient psychiatric services (TR-400, lines 21 25; TR- 4 01, lines 1-3). Probable economies and improvements in service that may be derived from operation of joint, cooperative or shared health care resources. Section 381.494 (6) (c) 5. The facility will share resources with other facilities owned or operated by UMC such as common training and joint purchasing (Exhibit 11, page 1); financial management (Exhibit 12); financing (Exhibit 14); and recruitment and marketing (Exhibit 13). These shared resources will provide economies and improve services presently available in District V. IMPACT UPON EXISTING FACILITIES AND COSTS AND COMPETITION The probable impact of the proposed project on the cost of providing health services proposed by the applicant upon consideration of factors including but not limited to the effects of competition on the supply of health services being proposed and the improvements or innovations in the financing and delivery of health services which foster competition and service to promote quality assuance and cost effectiveness. Section 381.494 (6) (c) 12. Two hospitals in Pasco County in relatively close proximity to each other are owned by Hospital Corporation of America--Community Hospital of New Port Richey and Bayonet Point Medical Center--giving HCA 86 percent of all hospital beds in the West Pasco service area. The applicant's expert, Dr. Scott, compared statewide HCA hospital averages and daily pre-tax profits based on adjusted patient days with those at CHNPR and Bayonet Point, using 1982 actual hospital data reported to the Hospital Cost Containment Board. The data indicates a much higher than HCA average operating margin, total margin, daily gross revenues and daily pre-tax profits. In Pasco County, HCA shows profitability roughly double that of its statewide averages (Exhibit 25, pages 3-4). HCA has now acquired the nearby freestanding psychiatric hospital at the University of South Florida (Exhibit 25, pages 3-4; TR-854, lines 14-18). Without competition, HCA will not be required to compete in Pasco County for price or quality of care. Approval of the application should significantly reduce HCA's share of the Pasco-Hillsborough market in terms of beds and would positively affect competition and the delivery of health care services (Exhibit 25, page 5; Exhibit 27, pages 29-30). In 1985 CHNPR psychiatric unit's occupancy rate was 41 percent (Exhibit 41, page 4). Following execution of its Baker Act agreements, occupancy rose to 49.7 percent (TR-921, pages 5- 18). CHNPR is a large institution which grossed more than $1 million in pre-tax income based on 50 percent utilization (TR-998, lines 21-25). CHNPR projects that in 1987, 1988 and 1989 only 1 percent of its revenues will be derived from Medicaid patients and .9 percent will be derived from indigents (TR-915, lines 18- 25; TR-916, lines 1-5). Left without competition, HCA will continue to dominate the health care delivery system in Pasco County, a situation which should not be continued. (TR-620, lines 24-25; TR-621; TR- 622). Morton Plant's witness agreed there exists a need for additional psychiatric and substance abuse beds in Pinellas and Pasco Counties in District V (TR-829, lines 15-25; TR-833, lines 3-6). In 1984, approximately 4 percent of Morton Plant's psychiatric patients resided in Pasco County (TR-837, lines 14- 17). Morton Plant's psychiatric unit's occupancy rates have consistently exceeded 100 percent (TR-838, lines 3-6) and there is a waiting list at Morton Plant's adolescent unit (TR-843, lines 2-4). Morton Plant presented no evidence that issuing this CON to Pasco would substantially affect its psychiatric unit (TR- 826, line 25; TR-827, lines 1-25; TR-828, lines 1-9). UPC, now owned by HCA, is located outside District V. UPC, as a university hospital, is different from any other in Florida (TR-860, lines 17-24). It was UPC's mission as a research and teaching facility, and its regional concept of .referrals extending over 17 counties, that led to the grant of its application by DHRS (TR-860, line 25; TR-861, lines 1-21). UPC projected 30 percent of its patients would be referred from outside the area including Pasco County (TR-856, lines 6-11). This limitation was not considered by Dr. Fernandez in concluding that UPC would be adversely affected by the grant of the CON to Pasco. The effect upon UPC is further lessened when one considers the general availability of UPC's facility to the Pasco/District V community. In order to admit patients to the UPC facility, physicians must be members of the UPC faculty (TR- 857, lines 5-11). Eight of UPC's beds will be subject to admissions restricted to only two physicians (TR-857, line 25; TR-858, lines 1-25; TR-859, lines 1-20). Horizon and Hernando are owned by PIA. Horizon receives approximately 5 percent of its patients from Pasco County (TR-787, lines 23-25; TR-788, lines 1- 2). Approval of the Pasco facility may cause Horizon to lose 80 to 90 percent of its total 137 admissions from Pasco--109 to 123 admissions; however, this loss may occur with or without approval of this application (TR-792, lines 17-25; TR-793, lines 1-9). Horizon's expert's testimony regarding utilization was based upon Horizon being licensed for 200 psychiatric beds (TR- 798, lines 1-24); however, DHRS considers Horizon licensed for 178 (TR-798, lines 25; TR-799, lines 1-25; TR-800, lines 1-25; TR-801, lines 1-4). Hernando, located in District III, relied upon a need argument based solely on District III, not District V, in pursuing its CON application (TR-770, lines 18-25; TR-771, line 1). Hernando has previously defined its primary service area as only including Citrus and Hernando Counties, both in District III, and did not include Pasco County within its secondary service area, or for purposes of projecting its admission rates or feasibility (TR-771, lines 14-22; TR-772 lines 10-15; TR-775, lines 20-25; TR-776, lines 1-2; TR-777, lines 5- 16). Community Care has not determined a site for its facility in Citrus County (Exhibit 29, page 6, lines 9-11). Community Care opposes the application because its main concern is the reduction in market share that may be available to its facility (Exhibit 29, page 27, lines 2-6). In its CON application in 1983, Community Care relied only upon District III as its population base (Exhibit 29, page 8, lines 18-21; page 9, lines 19-25). Community Care relief upon the Local Health Plan in District III in establishing need (Exhibit 29, page 10, lines 1- 10) and relied solely upon Citrus and District III population growth as its patient base (Exhibit 29, page 10, lines 10-15). Community Care will not provide short-term substance abuse services (Exhibit 29, page 20, lines 12-18; page 25, lines 11-25). Approval of the Pasco facility will not increase the cost of health services in District V and will favorably affect present services, promoting more efficiency in the health delivery system. The effect of the approval, with its related conditions, will assure access to underserved residents who otherwise will continue at the mercy of the HCA facilities. 110. Approval will not substantially adversely affect providers within or outside District V. CAPITAL EXPENDITURE PROPOSALS The costs and methods of proposed con- struction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. Section 381.49 (6) (c)13. In cases of capital expenditure proposals for the provision of new health services to inpatients, the department shall also reference each of the following its findings of fact: That less costly, more efficient, or more appropriate alternatives to such inpatient services are not available and the development of such alternatives has been studied and found not practicable. That existing inpatient facilities providing inpatient services similar to those proposed are being used in an appropriate and efficient manner. In the case of new construction, for example, modernization or sharing arrangements, have been considered and have been implemented to the maximum extent practicable. That patients will experience serious problems in obtaining inpatient care of the type proposed, in the absence of the proposed new service. Section 381.494 ( 6) (d) 1-4. The evidence indicates the costs and methods of the proposed construction are reasonable. The normal percentage of architectural and engineering fees are in the range of 5 percent to 7 percent of construction costs; in this case the architectural and engineering fees are approximately 6 percent. The construction costs of approximately $78 to $80 per square foot are reasonable for this type facility (Exhibit 15, page 2; Exhibit 17, pages 1-2). See also footnotes to paragraphs 86 and 87. Less costly, more efficient or more appropriate alternatives to the services proposed here are not available. No existing facility or applicant has filed an application seeking to provide services similar to those sought to be provided by this applicant for the target population year 1990. Existing inpatient facilities providing services similar to those proposed are being used in an appropriate and efficient manner. Utilization rates at existing district facilities when considered in light of accessibility including artificial barriers, indicate the facilities are being used in an appropriate and efficient manner. As noted earlier, alternatives to the project here at issue are not present. The lack of access, geographical, financial and artificial, to residents of Pasco County in need of psychiatric and substance abuse services, as well as the numerical need evidenced by application of the state-mandated need methodologies indicate that, absent the proposed service, patients will experience serious problems in obtaining psychiatric and substance abuse inpatient care.
The Issue Whether the certificate of need application to convert 30 acute care beds to 30 adult psychiatric beds at Broward General Medical Center meets the statutory and rule criteria for approval.
Findings Of Fact The North Broward Hospital District (NBHD) is a special taxing district established by the Florida Legislature in 1951 to provide health care services to residents of the northern two-thirds of Broward County. NBHD owns and operates four acute care hospitals: Coral Springs Medical Center, North Broward Medical Center, Imperial Point Medical Center (Imperial Point), and Broward General Medical Center (Broward General). NBHD also owns and/or operates primary care clinics, school clinics, urgent care centers, and a home health agency. FMC Hospital, Ltd., d/b/a Florida Medical Center (FMC) is a 459-bed hospital with 74 inpatient psychiatric beds, 51 for adults separated into a 25-bed adult unit and a 26-bed geriatric psychiatric unit, and 23 child/adolescent psychiatric beds. FMC is a public Baker Act receiving facility for children and adolescents and operates a mental health crisis stabilization unit (CSU) for children and adolescents. FMC also operates separately located facilities which include a partial hospitalization program, an adult day treatment program, and a community mental health center. At Florida Medical Center South, FMC operates another day treatment program and partial hospitalization program. The Agency for Health Care Administration (AHCA) is the state agency which administers the certificate of need (CON) program for health care services and facilities in Florida. The NBHD applied for CON Number 8425 to convert 30 acute care beds to 30 adult psychiatric beds at Broward General. Broward General operates approximately 550 of its total 744 licensed beds. It is a state Level II adult and pediatric trauma center and the tertiary referral center for the NBHD, offering Level II and III neonatal intensive care, pediatric intensive care, cardiac catheterization and open heart surgery services. Broward General has 68 adult psychiatric beds and is a public Baker Act receiving facility for adults. Public Baker Act receiving facilities have state contracts and receive state funds to hold involuntarily committed mental patients, regardless of their ability to pay, for psychiatric evaluation and short-term treatment. See Subsections 394.455(25) and (26), Florida Statutes. Although they serve different age groups, both FMC and Broward General are, by virtue of contracts with the state, public Baker Act facilities. When a Baker Act patient who is an indigent child or adolescent arrives at Broward General, the patient is transferred to FMC. FMC also typically transfers indigent Baker Act adults to Broward General. At Broward General, psychiatric patients are screened in a separate section of the emergency room by a staff which has significant experience with indigent mental health patients. If hospitalization is appropriate, depending on the patient's physical and mental condition, inpatient psychiatric services are provided in either a 38-bed unit on the sixth floor or a 30- bed unit on the fourth floor of Broward General. In July 1995, Broward General also started operating a 20-bed mental health CSU located on Northwest 19th Street in Fort Lauderdale. Prior to 1995, the County operated the 19th Street CSU and 60 CSU beds on the grounds of the South Florida State Hospital (SFSH), a state mental hospital. Following an investigation of mental health services in the County, a grand jury recommended closing the 60 CSU beds at SFSH because of "deplorable conditions." In addition, the grand jury recommended that the County transfer CSU operations to the NBHD and the South Broward Hospital District (SBHD). As a result, the SBHD assumed the responsibility for up to 20 CSU inpatients a day within its existing 100 adult psychiatric beds at Memorial Regional Hospital. The NBHD assumed the responsibility for up to 40 CSU inpatients a day, including 20 at the 19th Street location. The additional 20 were to be redirected to either the 68 adult psychiatric beds at Broward General or the 47 adult psychiatric beds at Imperial Point. CSU services for adult Medicaid and indigent patients in the NBHD service area were transferred pursuant to contracts between the NBHD and Broward County, and the NBHD and the State of Florida, Department of Children and Family Services (formerly, the Department of Health and Rehabilitative Services). Based on the agreements, the County leases the 19th Street building in which Broward General operates the CSU. The County also pays a flat rate of $1.6 million a year in monthly installments for the salaries of the staff which was transferred from the County mental health division to the NBHD. The County's contract with the NBHD lasts for five years, from December 1995 to September 2000. Either party may terminate the contract, without cause, upon 30 days notice. The State contract, unlike that of Broward County, does not provide a flat rate, but sets a per diem reimbursement rate of approximately $260 per patient per day offset by projected Medicaid revenues. The State contract is renewable annually, but last expired on June 30, 1997. The contract was being re-negotiated at the time of the hearing in November 1997. Based on actual experience with declining average lengths of stay for psychiatric inpatients, the contract was being re-negotiated to fund an average of 30, not a maximum of 40 patients a day. If CON 8425 is approved, NBHD intends to use the additional 30 adult psychiatric beds at Broward General to meet the requirements of the State and County contracts, while closing the 19th Street CSU and consolidating mental health screening and stabilization services at Broward General. NBHD proposes to condition the CON on the provision of 70 percent charity and 30 percent Medicaid patient days in the 30 new beds. By comparison, the condition applicable to the existing 68 beds requires the provision of 3 percent charity and 25 percent Medicaid. When averaged for a total of 98 beds, the overall condition would be 23.5 percent charity and 26.5 percent Medicaid, or a total of 51 or 52 percent. The proposed project will require the renovation of 10,297 gross square feet on the fourth floor of Broward General at a cost of approximately $450,000. The space is currently an unused section of Broward General which contains 42 medical/surgical beds. Twelve beds will be relocated to other areas of the hospital. The renovated space will include seclusion, group therapy, and social rooms, as well as 15 semi- private rooms. Twelve of the rooms will not have separate bathing/showering facilities, and seven of those will also not have toilets within the patients' rooms. Need in Relation to State and District Health Plans - Subsection 408.035(1)(a), Florida Statutes The District 10 allocation factors include a requirement that a CON applicant demonstrate continuously high levels of utilization. The applicant is given the following evidentiary guidelines: patients are routinely waiting for admissions to inpatient units; the facility provides significant services to indigent and Medicaid individuals; the facility arranges transfer for patients to other appropriate facilities; and the facility provides other medical services, if needed. Broward General does not demonstrate continuously high utilization by having patients routinely waiting for admission. Broward General does meet the other criteria required by allocation factor one. The second District 10 allocation factor, like criterion (b) of the first, favors an applicant who commits to serving State funded and indigent patients. Broward General is a disproportionate share Medicaid provider with a history of providing, and commitment to continue providing, significant services to Medicaid and indigent patients. In fact, the NBHD provides over 50 percent of both indigent and Medicaid services in District 10. See also Subsection 408.035(1)(n), Florida Statutes. Allocation factor three for substance abuse facilities is inapplicable to Broward General which does not have substance abuse inpatient services. Allocation factor 4 for an applicant with a full continuum of acute medical services is met by Broward General. See also Rule 59C-1.040(3)(h), Florida Administrative Code. Broward General complies with allocation factor 5 by participating in data collection activities of the regional health planning council. The state health plan includes preferences for (1) converting excess acute care beds; (2) serving the most seriously mentally ill patients; (3) serving indigent and Baker Act patients; (4) proposing to establish a continuum of mental health care; (5) serving Medicaid-eligible patients; and (6) providing a disproportionate share of Medicaid and charity care. Broward General meets the six state health plan preferences. See also Rule 59C-1.040(4)(e)2., Florida Administrative Code, and Subsection 408.035(1)(n), Florida Statutes. Broward General does not meet the preference for acute care hospitals if fewer than .15 psychiatric beds per 1000 people in the District are located in acute care hospitals. The current ratio in the District is .19 beds per 1,000 people. Rule 59C-1.040(4)(3)3, Florida Administrative Code, also requires that 40 percent of the psychiatric beds needed in a district should be allocated to general hospitals. Currently, approximately 51 percent, 266 of 517 licensed District 10 adult inpatient psychiatric beds are located in general acute care hospitals. On balance, the NBHD and Broward General meet the factors and preferences of the health plans which support the approval of the CON application. See also Rule 59C- 1.040(4)(e)1. and Rule 59C-1.030, Florida Administrative Code. Numeric Need The parties stipulated that the published fixed need pool indicated no numeric need for additional adult inpatient psychiatric hospital beds. In fact, the numeric need calculation shows a need for 434 beds in District 10, which has 517 beds, or 83 more than the projected numeric need. In 1994- 1995, the District utilization rate was approximately 58 percent. The NBHD asserts that the need arises from "not normal" circumstances, specifically certain benefits from closing the 19th Street CSU, especially the provision of better consolidated care in hospital-based psychiatric beds, and the establishment of a County mental health court. The NBHD acknowledges that AHCA does not regulate CSU beds through the CON program and that CSU beds are not intended to be included in the calculation of numeric need for adult psychiatric beds. However, due to the substantial similarity of services provided, NBHD contends that CSU beds are de facto inpatient psychiatric beds which affect the need for CON- regulated psychiatric beds. Therefore, according to the NBHD, the elimination of beds at SFSH and at the 19th Street CSU require an increase in the supply of adult psychiatric beds. The NBHD also notes that approval of its CON application will increase the total number of adult psychiatric hospital beds in Broward County, but will not affect the total number of adult mental health beds when CSU and adult psychiatric beds are combined. After the CSU beds at SFSH closed, the total number of adult mental health beds in the County has, in fact, been reduced. NBHD projected a need to add 30 adult psychiatric beds at Broward General by combining the 1995 average daily census (ADC) of 48 patients with its assumption that it can add up to 10, increasing the ADC to 58 patients a day in the existing 68 beds. Based on its contractual obligation to care for up to 40 CSU inpatients a day, the NBHD projects a need for an additional 30 beds. The projection assumed that the level of utilization of adult inpatient psychiatric services at Broward General would remain relatively constant. With 40 occupied beds added to the 48 ADC, NBHD predicted an ADC of 88 in the new total of 98 beds, or 90 percent occupancy. The assumption that the ADC would remain fairly constant is generally supported by the actual experience with ADCs of 48.1, 51.5, and 45.8 patients, respectively, in 1995, 1996, and the first seven months of 1997. NBHD's second assumption, that an ADC of 40 CSU patients will be added is not supported by the actual experience. Based on the terms of the State and County contracts, up to 20 CSU patients have already been absorbed into the existing beds at the Imperial Point or Broward General, which is one explanation for the temporary increase in ADC in 1996, while up to 20 more may receive services at the 19th Street location. In 1996 and 1997, the ADC in the 19th Street CSU beds was 15.3 and 14.2, respectively, with monthly ranges in 1997 from a high of 17 in April to a low of 12 in June. The relatively constant annual ADCs in psychiatric and CSU beds are a reflection of increasing admissions but declining average lengths of stay for psychiatric services. The NBHD also projects that it will receive referrals from the Broward County Mental Health Court, established in June 1997. The Court is intended to divert mentally ill defendants with minor criminal charges from the criminal justice system to the mental health system. Actual experience for only three months of operations showed 7 or 8 admissions a month with widely varying average lengths of stay, from 6 to 95 days. The effect of court referrals on the ADC at Broward General was statistically insignificant into the fall of 1997. Newspaper reports of the number of inmates with serious mental illnesses do not provide a reliable basis for projecting the effect of the mental health court on psychiatric admissions to Broward General, since it is not equipped to handle violent felons. One of Broward General's experts also compared national hospital discharge data to that of Broward County. The results indicate a lower use rate in Broward County in 1995 and a higher one in 1996. That finding was consistent with the expert's finding of a growth in admissions and bed turnover rate which measures the demand for each bed. The expert also considered the prevalence of mental illness and hospitalization rates. The data reflecting expected increases in admissions, however, was not compared to available capacity in the County nor correlated with declining lengths of stay. The District X: Comprehensive Health Plan 1994 includes an estimate of the need for 10 CSU beds per 100,000 people, or a total of 133 CSU beds needed for the District. FMC argues that the calculation is incorrect because only the adult population should be included. Using only adults, FMC determined that 116 CSU beds are needed which, when added to 434 adult psychiatric beds needed in the February 1996 projection, gives a bed need for all mental health beds of 550. That total is less than the actual combined total number of 567 mental health beds, 517 adult psychiatric beds plus 50 CSU beds in 1995. Whatever population group is appropriate, the projection of the need for CSU beds is not reliable based on the evidence that, since the end of 1995, CSU services have been and, according to NBHD, should continue to be absorbed into hospital- based adult psychiatric units. For the same reason, the increase in adult psychiatric bed admissions from 1995 to 1996 does not establish a trend towards increasing psychiatric utilization, but is more likely attributable to the closing of CSU beds at SFSH. FMC's expert's comparison of data from three selected months in two successive years is also not sufficient to establish a downward trend in utilization at the 19th Street CSU, neither is the evidence of a decline in ADC by one patient in one year. Utilization is relatively static based on ADCs in existing Broward County adult psychiatric beds and in CSU beds. FMC established Broward General's potential to decrease average lengths of stay by developing alternative non-inpatient services as FMC has done and Broward General proposes to do. See Finding of Fact 37. Based on local health council reports, FMC's data reflects a rise in the ADC at Broward General to 52.7 in 1996, and a return to 46 in the first seven months of 1997. Using a 14.2 ADC for the 19th Street CSU, FMC projects that Broward General will reach an ADC of approximately 60 in the first year of operations if the CON is approved, not 88 as projected. Broward General acknowledged its capacity to add 10 more patients to the ADC without stress on the system. Having already absorbed 20 of up to 40 CSU patients at Imperial Point and Broward General in 1996 and 1997 resulting in an ADC of 48, and given the capacity to absorb 10 more, the NBHD has demonstrated a need to accommodate an ADC of 10 more adult psychiatric patients at Broward General, or a total ADC of 68 patients. The need to add capacity to accommodate an additional 10 patient ADC was not shown to equate to a need for 30 additional beds, which would result in an ADC of 68 patients in 98 beds, or 69 or 70 percent occupancy. Special Circumstances - Rule 59C-1.040(4)(d) The psychiatric bed rule provides for approval of additional beds in the absence of fixed numeric need. The "special circumstance" provision applies to a facility with an existing unit with 85 percent or greater occupancy. During the applicable period, the occupancy at Broward General was 74.15 percent. However, occupancy rates have exceeded 95 percent in the CSU beds on 19th Street. If up to 20 patients on 19th Street are added to the 48 ADC at Broward General, the result is that the existing 68 beds will be full. A full unit is operationally not efficient or desirable and allows no response to fluctuations in demand. Therefore, the state has established a desirable standard of 75 percent occupancy for psychiatric units, a range which supports the addition of 10 to 15 psychiatric beds at Broward General. Available Alternatives - Subsection 408.035(1)(b) and (d), Florida Statutes, and Rule 59C-1.040(4)(e)4., Florida Administrative Code The psychiatric bed rule provides that additional beds will "not normally" be added if the district occupancy rate is below 75 percent. For the twelve months preceding the application filing, the occupancy rate in 517 adult psychiatric beds in District 10 was approximately 58 percent. FMC's expert noted that each day an average of 200 adult psychiatric beds were available in District 10. Broward General argues that the occupancy rate is misleading. Five of the nine facilities with psychiatric beds are freestanding, private facilities, which are ineligible for Medicaid participation. Historically, the freestanding hospitals have also provided little charity care. One facility, University Pavilion, is full. Of the four acute care hospitals with adult psychiatric beds, Memorial Hospital in the SBHD, is not available to patients in the NBHD service area. Imperial Point, the only other NBHD facility with adult psychiatric beds, is not available based on its occupancy rate for the first seven months of 1997 of approximately 81 percent, which left an average of 9 available beds in a relatively small 47-bed unit. That leaves only Broward General and FMC to care for Medicaid and indigent adult psychiatric patients. FMC is the only possible alternative provider of services, but Broward General was recommended by the grand jury and was the only contract applicant. The occupancy rate in FMC's 51 adult beds was approximately 80 percent in 1995, 73 percent in 1996, and 77 percent for the first seven months in 1997. FMC has reduced average lengths of stay by having patients "step down" to partial hospitalization, day treatment and other outpatient services of varying intensities. The same decline in average lengths of stay is reasonably expected when Broward General implements these alternatives. Adult psychiatric services are also accessible in District 10 applying the psychiatric bed rule access standard. That is, ninety percent of the population of District 10 has access to the service within a maximum driving time of forty- five minutes. The CSU license cannot be transferred to Broward General. Broward County holds the license for CSU beds which, by rule, must be located on the first floor of a building. Although Broward General may not legally hold the CSU license and provide CSU services on the fourth floor of the hospital, there is no apparent legal impediment to providing CSU services in psychiatric beds. Quality of Care - Subsection 408.035(1)(c), Florida Statutes and Rule 1.040(7), Florida Administrative Code Broward General is accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties stipulated that Broward General has a history of providing quality care. Broward General provides the services required by Rule 59C-1.040(3)(h), Florida Administrative Code. Services Not Accessible in Adjoining Areas; Research and Educational Facilities; Needs of HMOs; Services Provided to Individuals Beyond the District; Subsections 408.035(1)(f),(g),(j), and (k), Florida Statutes Broward General does not propose to provide services which are inaccessible in adjoining areas nor will it provide services to non-residents of the district. Broward General is not one of the six statutory teaching hospitals nor a health maintenance organization (HMO). Therefore, those criteria are of no value in determining whether this application should be approved. Economics and Improvements in Service from Joint Operation - Subsection 408.035(1)(e), Florida Statutes The consolidation of the psychiatric services at Broward General is reasonably expected to result in economies and improvements in the provision of coordinated services to the mentally ill indigent and Medicaid population. Broward General will eliminate the cost of meal deliveries and the transfer of medically ill patients, but that potential cost-saving was not quantified by Broward General. Staff and Other Resources - Subsection 408.035(1)(h), Florida Statutes The parties stipulated that NBHD has available the necessary resources, including health manpower, management personnel, and funds to implement the project. Financially Feasibility - Subsection 408.035(1)(h) and (i), Florida Statutes The parties stipulated that the proposed project is financially feasible in the immediate term. The estimated total project cost is $451,791, but NBHD has $500,000 in funds for capital improvements available from the County and $700,000 from the Florida Legislature. As stipulated by the parties, NBHD has sufficient cash on hand to fund the project. Regardless of the census, the County's contractual obligation to the NBHD remains fixed at $1.6 million. The State contract requires the prospective payment of costs offset by expected Medicaid dollars. If the number of Medicaid eligible patients decreases, then state funding increases proportionately. The state assumed that 20 percent of the patients would qualify for Medicaid, therefore it reimburses the per diem cost of care for 80 percent of the patients. One audit indicated that 30 percent of the patients qualified for Medicaid, so that State payments for that year were higher than needed. The State contract apparently makes no provision to recover excess payments. The application projects a net profit of $740,789 for the first year of operations, and a net profit of $664,489 for the second year. If the State contract with NBHD is renewed to contemplate an average of 30 patients per day as opposed to up to 40 patients per day, then annual revenue could be reduced up to $400,000. Projected net profit will, nevertheless, exceed expenses when variable expenses are reduced correspondingly. If 20 state funded patients are already in psychiatric beds, and 20 more could be transferred from 19th Street, the result is an ADC of 68. Based on the funding arrangements, there is no evidence that the operation of a total of 98 beds could not be profitable, even with an ADC of 68, although it would be wasteful to have 30 extra beds. Impact on Competition, Quality Assurance and Cost-Effectiveness - Subsection 408.035(1)(l), Florida Statutes With a maximum of 68 inpatients or more realistically, under the expected terms of a renegotiated State contract, 58 to 60 inpatients in 98 beds, Broward General will reasonably attempt to expand the demand for its inpatient psychiatric services. Within the NBHD's legal service area, one-third of adult psychiatric patients not admitted to Broward General are admitted to FMC. Assuming a proportionate impact on competitors, FMC's expert projected that one-third of approximately 30 unfilled beds at Broward General will be filled by patients who would otherwise have gone to FMC. The projection of a loss of 9 patients from the ADC of FMC is reasonably based on an analysis showing comparable patient severity in the most prevalent diagnostic category. Given the blended payor commitment of approximately 51 or 52 percent total for Medicaid and charity in 98 beds, Broward General will be able to take patients from every payor category accepted at FMC. The loss of 9 patients from its ADC can reduce revenues by $568,967 at FMC. The impact analysis is reasonably based on lost patient days since most payers use a per diem basis for compensating FMC. For example, although Medicare reimbursement is usually based on diagnosis regardless of length of stay, it is cost-based for the geriatric psychiatric unit. Net profit at FMC, for the year 1996-1997, was expected to be approximately $4.5 million. FMC will also experience increased costs in transporting indigent patients from FMC to Broward General for admission and treatment. Because of the additional distance, the cost to transfer indigent patients is $20 more per patient from FMC to Broward General than it is from FMC to the 19th Street CSU. FMC typically stabilizes indigent adult psychiatric inpatients, then transfers them to either the 19th Street CSU or Broward General. From March through September of 1997, FMC transported approximately 256 indigent patients from FMC to the 19th Street CSU. In terms of quality assurance, the consolidation of psychiatric services at Broward General will allow all patients better access to the full range of medical services available at Broward General. The NBHD's operation of the 19th Street CSU is profitable. Approval of the CON application should reasonably eliminate all costs associated with operation of the 19th Street facility, and shift more revenues from the State and County contracts to Broward General. Some savings are reasonably expected from not having meal deliveries to 19th Street or patient transfers for medical care. The NBHD did not quantify any expected savings. Costs and Methods of Construction - Subsection 408.035(1)(m), Florida Statutes Broward General will relocate 12 of 42 medical/surgical beds and convert 30 medical/surgical beds to 30 adult psychiatric beds on one wing of the fourth floor, which is currently unused. Fifteen semi-private medical/surgical patient rooms will be converted into semi-private adult psychiatric rooms. Existing wards will be converted to two social rooms, one noisy and one quiet. With the removal of the walls of some offices, the architect designed a group therapy room. An existing semi-private room will be used as a seclusion room. Of the fifteen semi-private rooms, twelve will not have bathing or showering facilities and seven will not have toilets within the patients' rooms. At the time the hospital was constructed, the state required only a lavatory/sink in each patient room. AHCA's architect agreed to allow Broward General to plan to use central bathing and toilet facilities to avoid additional costs and diminished patient room sizes. Because the plan intentionally avoids construction in the toilets, except to enlarge one to include a shower, there is no requirement to upgrade to Americans With Disabilities Act (ADA) standards. Therefore, the $23,280 construction cost contingency for code compliance is adequate. Although the projected construction costs are reasonable and the applicable architectural code requirements are met, the design is not the most desirable in terms of current standards. Patient privacy is compromised by the lack of toilets for each patient room. Past and Proposed Provision of Services to Promote a Continuum of Care in a Multi-level System - Subsection 408.035(1)(o), Florida Statutes Broward General is a tertiary acute care facility which provides a broad continuum of care. Because it already operates the CSU and provides CSU services in adult psychiatric beds, the proposal to relocate patients maintains but does not further promote that continuum of care. Broward General's plan to establish more alternatives to inpatient psychiatric care does promote and enhance its continuum of care. Capital Expenditures for New Inpatient Services - Subsection 408.035(2), Florida Statutes Broward General is not proposing to establish a new health service for inpatients, rather it is seeking to relocate an existing service without new construction. The criteria in this Subsection are inapplicable. Factual Conclusions Broward General did not establish a "not normal" circumstance based on the grand jury's findings and recommendations. The grand jury did not recommend closing 19th Street facility. Broward General did generally establish not normal circumstances based on the desirability of consolidating mental health services at Broward General to provide a single point of entry and to improve the quality of care for the 19th Street facility patients. Broward General failed to establish the need to add 30 beds to accomplish the objective of closing the 19th Street facility. Although the existing beds at Broward General may reasonably be expected to be full as a result of the transfer of 19th Street patients, the addition of 30 beds without sufficient demand results in an occupancy rate of 69 or 70 percent, from an ADC of 68 patients in 98 beds. Broward General has requested approximately twice as many beds as it demonstrated it needs. Broward General's CON application on balance satisfies the local and state health plan preferences. In general, FMC is the only alternative facility in terms of available beds, but is not the tax-supported public facility which the grand jury favored to coordinate mental health services. Broward General meets the statutory criteria for quality of care, improvements from joint operations, financial feasibility, quality assurance, cost-effectiveness, and services to Medicaid and indigent patients. The proposal is not the most desirable architecturally considering current standards. More importantly, Broward General did not demonstrate that it can achieve its projected occupancy without an adverse impact on FMC. The NBHD proposal will add too many beds to meet the targeted state occupancy levels in relatively a static market. Broward General's application does not include a partial request for fewer additional beds which would have allowed the closing of 19th Street, while maintaining some empty beds for demand fluctuations and avoiding an adverse impact on FMC.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration deny the application of the North Broward Hospital District for Certificate of Need Number 8425 to convert 30 medical/surgical beds to 30 adult psychiatric beds at Broward General Medical Center. DONE AND ENTERED this 21st day of April, 1998, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1998. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul J. Martin, General Counsel Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Paul Vazquez, Esquire Agency For Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308-5403 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Underwood, Purnell & Hoffman, P.A. Post Office Box 551 Tallahassee, Florida 32302-0551 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301
