Findings Of Fact On December 6, 1975 deputies from the Lee County Sheriff's Department entered the apartment of Helen Riggin and found marijuana and prescription drugs not issued to Respondent. Respondent admitted to the deputies that the drugs were in her possession without authority and that some of them had been prescribed for patients but converted by her for her own use. Miss Riggin immediately called the hospital to advise the Assistant Vice President of Nursing that she had been arrested by the Sheriff's Department. Riggin was advised not to come to work over the weekend, but to report to the Vice President of Nursing on Monday morning. At the Monday, December 8, 1975 meeting at the hospital Miss Riggin advised the Vice President of Nursing of the facts and circumstances surrounding her arrest the previous Saturday, and of the charges preferred against her. She was then suspended from further duty at Lee County Memorial Hospital. During the next three and one half to four months Miss Riggin worked as a waitress in Ft. Myers. Prior to the time Riggin's trial in the courts of Lee County was to be heard a Motion to Suppress the Evidence Seized was granted by the Circuit Court on the ground that the search was illegal and a violation of Miss Riggin's constitutional rights. Thereafter the charges against Miss Riggin were dropped by the State Attorney's office. Immediately thereafter, on March 31, 1976, Miss Riggin was re-employed by the Lee County Memorial Hospital with full knowledge of the circumstances surrounding her encounter with the Lee County Sheriff's Department and the State Attorney's Office. The Vice President of Nursing and the Assistant Vice President of Nursing at Lee County Memorial Hospital each have been R.N.'s more than 30 years. Both were fully aware of the acts committed by Respondent at the time she was rehired by the hospital and both recommended that Miss Riggin be permitted to continue to work as a R.N. at the hospital. In addition to the two senior nurses at Lee County Memorial Hospital, supervisors and coworkers of Miss Riggin also recommended that she be permitted to continue as a R.N. at the hospital. Miss Riggin is a conscientious, capable, dedicated and serious young lady who fully realizes the magnitude of the offenses of which she has been charged. She enjoys the profession of nursing and is rated by her superiors and coworkers as a very capable young nurse they would be pleased to have work with them. At the time she took the controlled substances or drugs from the hospital she was attempting to treat herself with the medication. She now fully realizes the error of judgment she exercised in trying to medicate herself. The marijuana seized in her apartment had been in her possession for a long period of time and none had ever been used by Respondent. Miss Riggin never gave any of the medication found in her possession to anyone else.
The Issue The issues in this case are whether the statement contained in Respondent's letter dated September 9, 1997 (1997 Letter), establishing a $24.00 payment for hospital outpatient services billed as revenue code 451 constitutes a rule as defined by Subsection 120.52(15), Florida Statutes (2010),1 and, if so, whether Respondent violated Subsection 120.54(1), Florida Statutes, by not adopting the statement in accordance with applicable rulemaking procedures.
Findings Of Fact AHCA is the state agency responsible for the administration of the Florida Medicaid Program. § 409.902, Fla. Stat. Petitioners are acute care hospitals that are and were enrolled as Medicaid providers of outpatient services in Florida, at all times relevant to this proceeding. On September 9, 1997, AHCA issued a letter to hospital administrators, which provided the following: This letter is to inform you that Medicaid coverage for hospital emergency room screening and examination services is now in effect. Hospitals will be reimbursed a $24.00 flat fee for providing these services to Medipass and Medicaid fee-for-service recipients who do not require further treatment beyond the screening and examination services. This policy is retroactive to July 1, 1996. The letter further provides that the $24.00 reimbursement would be billed under the revenue code 451. The statement in the letter applies to hospitals which are Medicaid providers and, therefore, is a statement of general applicability. The statement meets the definition of a rule. AHCA concedes that the statement, which provides "payment of a $24 rate for Medicaid Hospital Outpatient Services billed under Revenue Code 451, constitutes a rule under s. 120.52(16), Fla. Stat." AHCA concedes that the statement has not been adopted as a rule by the rule adoption procedures provided in Section 120.54, Florida Statutes. AHCA has discontinued all reliance on the challenged statement.
The Issue The issue for consideration in this matter is whether Respondent, NME's application for a Certificate of Need to provide comprehensive medical rehabilitation beds in Department District X should be approved.
Findings Of Fact At all times pertinent to the allegations contained herein, the Department was the state agency with the authority to and the responsibility for evaluating and approving CON applications for health care facilities in this state. Department District X is a single county district which encompasses the whole of Broward County, Florida. Broward County consists of two distinct service areas for health care providers; the north and the south. Facilities located in the northern part of the county, for which the dividing line is accepted as State Road 84 and Interstate 595, which run east/west across the county, primarily serve the northern area of the county. By the same token, those providers located south of the dividing line are primarily in service to residents in the southern portion of the county. Legitimate basis exists for the distinction between the north and south county segments. The county is divided into two taxing districts which generally follow the service district boundaries and these taxing districts are utilized to provide and reimburse for health care services. In addition, physician practice patterns show generally that physicians stay, refer, and admit to facilities within that portion of the county where they live and practice. There is little medical intercourse between the sections. A third basis for distinction is the fact that generally patients follow physicians, and will normally present for treatment at those facilities located in the section in which they reside and their practitioner locates. At the present time, of the five providers which offer CMR services in Broward County, (District X), four are located in the northern section of the county, and the fifth, Memorial, is located in the south. Memorial currently has 22 of the 213 existing and approved CMR beds in the District. This constitutes approximately 10% of the total number or approved and existing beds in the District while 32% of the population of the District resides in that service area. By the same token, if one considers the number of CMR beds per 100,000 population, the number in the north service area is approximately 4 times that in the south. Petitioner, Memorial, is a 618 bed acute care regional public hospital providing numerous specialized acute care services to District X as well as adjoining areas in the southeast region of the state. It is operated by the South Broward Hospital District, a taxing entity created by the Florida Legislature in 1947, and has a history of being a disproportionate share provider of medical services to the indigent through Medicare and Medicaid programs as well as other charity care programs. In fact, Memorial provides the sixth highest level of indigent care in this state. Memorial currently has provided CMR services since 1985 and operates a 22 bed CMR unit. It also offers open heart surgery, neurosurgery, pediatric cardiac catheterization, pediatric trauma, pediatric open heart surgery, and pediatric oncology and hematology. The facility has recently submitted a letter of intent to the Office of Emergency Medical Services requesting to be designated as a regional adult trauma center. HMC is a 334 bed acute care hospital also located in the southern service area of District X, in a six story building containing approximately 300,000 square feet and an adjacent five story medical office building. It also offers a broad range of general acute care services as well as specialized programs in the treatment of diabetes, laser surgery, eating disorders and oncology. It also provides intensive care, coronary care, and progressive care beds, though all may not be considered as active tertiary care services. HMC has a large medical staff consisting of over 400 physicians representing almost all medical specialties. More than 90% of the staff are board certified and the rest are board eligible. The medical staff of HMC and Memorial tend to overlap almost in its entirety. HMC's medical staff also includes five physicians who specialize in physical medicine and rehabilitation, (physiatry), all of whom are board certified except for one who has recently taken the board examination. HMC is a subsidiary of NME Hospitals, Inc., a national publicly held health care company which owns, manages or operates more than 150 acute care, rehabilitation, and pediatric hospitals throughout the United States and overseas. NME has a rehabilitation division which specializes in comprehensive rehabilitation services. This division would manage the CMR unit at HMC if approved. HMC is accredited by the Joint Commission of Accreditation of Health Care Organizations and maintains extensive quality assurance activities. On March 11, 1991, HMC filed a Letter of Intent to apply for a CON to convert 30 existing acute care medical surgical beds to 30 CMR beds. Somewhat later, but still during March, 1991, both Memorial and HMC filed applications for a CON for CMR beds. Memorial's application sought the addition of 4 CMR beds to its existing 22 bed unit. Both applications were preliminarily approved by the Department. Thereafter, both Memorial and HMC filed Petitions in opposition to the preliminary approval of the other applicant's application. HMC ultimately dismissed its Petition in opposition to Memorial's 4 beds, and that application is not in issue here. Prior to hearing, the parties agreed that the provisions of Section 381.705(1)(m), Florida Statutes, as they relate to costs of construction and construction methods and itemization and costs of equipment of HMC and its application are not in issue. Memorial, however, did not waive its right to challenge the plan and design of the plan as to quality care considerations in HMC's application. The parties also agreed that Section 381.709(2)(c), Florida Statutes, was in issue but that sup-paragraphs a, b, and d of that section were not. The Hearing Officer's resolution of Petitioner's objections on this matter established that the Letter of Intent was timely filed in the appropriate place and the proper notice published. HMC's Letter of Intent included therewith a resolution of the NME Board of Directors which was accompanied by a certificate as to its accuracy. The corporate resolution certificate, dated March 5, 1991, indicating the resolution was enacted on February 19, 1991, was executed by Mr. McKay, Vice President and Assistant Secretary of NME Hospitals, Inc. Memorial questioned Mr. McKay's authority to sign the certificate as custodian of the corporate records. The evidence presented indicated, however, that Mr. McKay is a keeper of the corporate seal and custodian of corporate records pertinent to the eastern region of NME Hospitals, Inc., and as such he was an appropriate custodian of the records and competent to execute the certificate. The issue as to the date on the certificate appears to be no more than a scrivener's error. The errors which exist are harmless. The documentation contains all certification necessary for a valid Letter of Intent. Daniel J. Sullivan, a consultant in health care management, did a need analysis study of the Broward County District for HMC to determine whether a CMR facility was needed within the District and if so, where. He first looked at the planning area and what services were available, both those in existence and those approved but not yet on line. He also looked at utilization of CMR services in the area and trends toward service utilization, geographic distribution of existing services, the fixed need pool, relevant Department rules relating to numeric need and other factors, and in that connection, any other unusual factors bearing on need. Mr. Sullivan's study clearly established to his satisfaction that HMC does not serve all of Broward County - only, primarily, those patients residing in Hollywood, Hallendale, and Dania, all of which are in the southeast corner of Broward County. The secondary service area goes down into Dade county and up to Ft. Lauderdale. The data for this study and the need analysis comes from the Hospital Cost Containment Board, (HCCB), and is considered to be reliable. Mr. Sullivan also did an analysis of areas served by other providers in the county and determined that Memorial's service area is similar to that of HMC. North Broward Medical Center serves the very northeast part of the county. Holy Cross Hospital serves the lower north to northeast part of the county. Based on this, he concluded that facilities in the northern part of the county serve the northern county area. Only Petitioner and HMC serve the southern part of Broward to any measurable extent. Utilization of CMR beds is very high district-wide, both historically and currently. Occupancy in the District for the relevant period was 91.21% county-wide, with Memorial Hospital having an occupancy rate of 99.32%. This is not, in Sullivan's opinion, a historical aberration. The same trend goes back to the mid 1980's. In 1989 for example, utilization was at 89% and it has gone up since that time. In Sullivan's opinion, the system is now near capacity and the occupancy rate remains high. Both Holy Cross and North Broward Medical Center have 20 new beds each as of the last quarter of 1991. When those beds came on line, the utilization rate still remained very high NBMC's new program was at about 75% occupancy after less than one year operation. These north county beds will be used by north county patients and will not, for the most part, be available to south county residents. Rule 10-5.039, F.A.C., is the Department's rule regarding need determination, and it contains a numeric need formula for projecting future needs for service ((2)(a)). The Department publishes a fixed need pool every six months to identify need. The last one published before this application showed a zero bed need in the fixed need pool. Mr. Sullivan believes, however, this is not an accurate predictor of bed need since the realities of the market place are not related to the Department's fixed need pool. Mr. Sullivan's calculations show a gross bed need in 1990 of 88 beds considering the existing 213 licensed and approved beds. Since these are running at an occupancy rate higher than 90%, this shows the rule grossly underpredicts the need for the service. In fact, the Department has prepared State Agency Action Reports, (SAAR), in both the NBMC and St. Joseph applications and the Memorial application which reflects this trend. Mr. Sullivan believes the need formula is not a good predictor of future needs because it assumes, incorrectly, that the number of patients needing the service is directly related to acute care hospital discharges. Historically, however, this has not been the case. Since 1986, the ratio of CMR discharges to acute care discharges has grown and has never closely approximated the rule's standard ratio of 3.9. Other factors are provided for in subparagraph (2)(b) of the rule. The District's population trends show a relatively older population, (more than 20% of the population is over 64 years old), and by 1996 that percentage will increase somewhat. Since July, 1989 approximately 33% of the people with the top ten conditions utilizing CMR services were from South Broward County. Extrapolating this indicates a net need of 11 beds if an 85% occupancy rate is experienced. Since the actual occupancy rate remains, in fact, higher than 85%, Mr. Sullivan believes this method is accurate. A modification of this need, relating to discharge rates, was done in the Omissions Response herein which shows a need, by 1996, of 39 beds, not including the 4 beds approved for Memorial. As to population, the elderly are most at risk for conditions requiring CMR care since they, by far, experience the largest percentage of strokes and orthopedic related conditions. With the elderly and very elderly percentage of the total population increasing, this would tend to drive the need for CMR services and beds. Mr. Sullivan calculated need for the purposes of the application for the southern portion of the District along, utilizing a method which, though not officially recognized, uses the same criteria for analysis used in the District analysis. Doing so, he concluded there would be a 1990 need for 53 additional beds. Utilizing the 17(a) method to project into the future, he calculates a 1996 need for 57 beds. Concerning subparagraph (2)(B)3 of the rule, considering the growth rate of CMR admissions per 1,000 population, (from 1.41 to 2.24 during the period 1986 through 1990), at HMC, Mr. Sullivan also concluded that the growth rate would be plus or minus 4.5% over the next 5 years. He also concluded that the length of stay will remain at 21 days over the next 5 years and feels this is conservative when compared to the rest of the state and the 28 day figure used in the rule. There is some pressure to have patients discharged as soon as possible which impacts on length of stay. Considering all these factors, Mr. Sullivan expects a District X need as a whole of 65 beds in 1996, not including the 4 beds approved for Memorial. This would result in an actual 61 bed need by 1996. All this means that if the number needed is the same for the South County and the County as a whole, then the number is acceptable and all the need is in the South County. As to trends in the utilization by third-party payees, this factor has driven the growth. Medicare and insurance companies recognize the efficacy of CMR services as opposed to the fragmented treatment otherwise provided. They consider that every dollar spent on CMR saves money for the health care system. Subparagraph (c)1 of the rule requires a unit have at least 20 beds. In the instant application, HMC is seeking 30 beds and this clearly meets the rule criteria. The occupancy standard of 65% in the first year, as outlined in sub- paragraph (c)2 of the rule, is estimated to be met easily, and the 85% requirement for existing providers will also be met. All together, there appears to be a high demand for CMR services in Broward County in general and in the south half of the county in particular, and it is reasonable to assume that the 30 beds for HMC, as well as the additional beds sought by Memorial, could be approved without adversely affecting any existing providers. Regarding the rule's accessibility standard which requires 90% of the target population to reside within 2 hours diving time of the proposed facility, this is clearly met since all of Broward is within 2 hours driving time of both HMC and Memorial. Turning to the provisions of Section 381.705, Florida Statutes, specifically (1)(a), (b) and (2)(a),(b) and (d), all are highly interrelated. While geographic availability may not be of concern, the availability of empty beds is of great concern. Historically, the District has operated well above the 85% occupancy rate for over 3 years. The system currently is clearly inadequate and the existing alternatives, home care and outpatient services, do not replace the services in issue but supplement and are follow-ons to inpatient CMR care. Concerning economies of shared service, Mr. Sullivan feels certain economies will accrue as a result of this conversion if approved. Existing space will be used and can share administrative and overhead expenses; the contractor to be used to accomplish the project is qualified and experienced and knows how to economize. Impacts on competition will be minimal if any, given the high level of need. As to any impact on HMC, the sharing of costs and services between the integrated portions of the facility would generate economies. At the present time there is no existing competition other than the beds at Memorial. If HMC is granted its certificate and becomes an existing provider, the resultant competition should be beneficial to both institutions. There are no alternatives to this service which are less costly or more efficient. Any alternatives would be either more expensive or inappropriate. The facilities are currently being used in a very efficient manner and this would not change. If the application is not approved, according to Mr. Sullivan there are and will be patients who are in need of and who will be denied CMR services in South Broward County. He believes the 1989 Florida State Heath Plan and the District's 1990 Health Plan, those applicable here, are consistent with this application. The preferences called for in the plans will be met and satisfied. HMC agrees to accept Medicaid patients and has committed 1% of its service to the indigent. It should be noted that Memorial's projected need for CMR beds is identical to that of this applicant, and this tends to indicate Memorial also feels there is a need for additional beds in the south county. It's application was filed subsequent to the initial approval of the 30 beds in issue here. It is immaterial at this point that District X has more CMR providers and more licensed CMR beds than any other district in the state. Also not controlling is the fact that under the state's bed need methodology, as outlined in the rule, there is a 125 bed excess projected by 1996 for District X. It must be noticed here that CMR services are defined by rule as tertiary health services which are generally specialized services using specialized equipment and personnel. They should be centralized in a centralized location to encourage better utilization of resources. HMC is a community hospital which does not now have any other tertiary hospital services but Dr. Jay S. Mendelsohn, a psyiatrist testifying on behalf of HMC claims that the majority of rehab problems are not so specialized as to require tertiary services and are mainstreamed. Dr. Mendelsohn, a specialist in physical medicine and rehabilitation, as a physiatrist, coordinates care on a rehabilitation unit including actual treatment, nursing care, and social work relative to the patient's condition. A physiatrist sees, on an inpatient basis, patients with such infirmities as stroke, hip fractures, multiple sclerosis, multiple trauma, and other similar conditions. The patients are usually those with neuromuscular or musculoskeletal problems, though he does, on occasion, see those with arthritis complications. Dr. Mendelsohn has privileges at several hospitals in Broward County including both Memorial and HMC. He practices mostly at Memorial where he was, from 1985 through 1991, Medical Director of the rehabilitation unit. His associate, Dr. Novick, is the current Medical Director. CMR patients are usually referred for this service by other physicians. Hip fractures and strokes are primarily from orthopaedic surgeons and neurologists, but internists, family practitioners, and physicians practicing in other disciplines also refer as appropriate. To Dr. Mendelsohn's knowledge, South Broward County is somewhat unique. Physicians there generally stay in that area and do not practice or draw patients from north of I-595. Another group practices primarily in the northeast portion of the county and a third group practices in the northwest county. Most physicians use the hospitals in the area in which they practice. In the south county, patients needing inpatient rehabilitation can at present, from a practical standpoint, go only to Memorial Hospital since it has the only rehabilitation beds available in the area. His experience indicates substantial difficulty in getting patients admitted to that unit since it generally fills its rehabilitation beds with patients primarily from it own patients already admitted to other services. Patients from other hospitals or from the community normally have great difficulty getting admitted, and this problems has existed for quite some time, (over 5 years). He has encouraged Memorial's staff to apply for more rehabilitation beds. If a Memorial patient is unable to get into the rehabilitation unit at Memorial, that patient then has to obtain the needed rehabilitation treatment on an acute care ward. Patients at other facilities often are not admitted at all, and this situation affects the course of treatment and reduces the amount and the beneficial effects of therapy by approximately one-half. The providers in the northern part of the county are not a good source of therapy to patients from the southern portion of the county because: Since south county physicians normally do not go to the north portion of the county, the patient has to have a different physician who is not familiar with either the patient or the condition and who must, therefore, do repeat tests and other diagnostic procedures. The patients' families find it harder to visit the patients in the north part of the county and therefore do not visit as frequently. Family visits are important to the success of the therapy. When the patient goes home, his family does not know how to help out because they did not receive the training they would have ordinarily have received had they been able to visit in the inpatient facility more frequently. Older patients' spouses often do not drive or, if they do, find the extra distance to the north portion of the county too much to travel. As a result of all the above, the continuity of care concept, which is important from a medical care standpoint, is adversely affected. Patients needing treatment at HMC's facility, if approved, would be much like those treated at the currently existing Memorial facility. Dr. Mendelsohn is familiar with Rehabilitation Hospital Services Corporation, which will be contracted with to run the HMC facility if approved. To his knowledge, the quality of care provided by it is good and comparable with that provided elsewhere. Dr. Mendelsohn anticipates he would refer 5 to 10 patients a week from his and his associate's practice to HMC's CMR facility if approved. He feels he could keep the 30 beds filled without taking any patients from Memorial's unit which would still remain operating at capacity. The 21 day stay average at Memorial is shorter than he would expect to see. This is consistent with Sullivan's conclusion, supra. If more beds were available, the stay at both facilities would probably be longer. This is in part because now the patient is getting therapy on the acute care ward while waiting to get into the rehab unit. This pretreatment would be accomplished on the CMR unit if the space were available. As a result, then, the opening of HMC's CMR unit would, in his opinion, in no way adversely affect Memorial's ability to keep its unit full. Dr. Mendelsohn's comments are not biased by the fact that he is a financial investor in the corporation which will operate HMC's unit. Within the pertinent medical community there is a great deal of frustration and anger over the inability to get patients into a rehabilitation center and keep them there for the appropriate length of time. The alternatives to the proposed facility, such as inpatient treatment on other services or in other hospital facilities in the county, or in nursing homes, are not as good. By the same token, outpatient care is not as good because of the unavailability of sufficient treatment due to Medicare and other financial restraints. The difficulties experienced by physicians practicing in the southern Broward County area who desire to admit their patients for CMR service is typified by that of Dr. Jeffrey A. Crastnopol, an orthopedic surgeon practicing in Hollywood since 1984, and a member of the staff at Memorial, HMC, and other hospitals in the area. Dr. Crastnopol sees a wide range of patients from children to the elderly. His practice deals mostly with trauma in children, sports trauma, and trauma related to bone brittleness in the elderly. Almost all his patients live within the southern Broward area. All hospitals where he is on staff are in that area as well. Dr. Crastnopol has chosen not to take patients from outside his geographical area because he has sufficient patients from in his area to keep him busy. In his experience, of all the other orthopedists he knows, none practicing in the southern Broward area is on staff in any of the hospitals in the northern Broward area. Most are on staff at both Memorial and HMC. Most of Dr. Crastnopol's patients are elderly, suffering hip fractures; pelvic, lumbar and spinal fractures; herniated discs; and the complications of arthritis as well as other symptoms. He and his associate saw between 10 and 15 patients with these conditions in the two weeks prior to the hearing. Of that number, he referred at least 3 for inpatient rehabilitation at Memorial and has an additional 4 or 5 other patients now in acute care services who will need CMR services. His trauma cases usually go to the emergency room first or the patient will call him or their primary care physician. The patients frequently request a particular hospital but, if a patient is already admitted to Memorial, he would try to keep that patient there for rehabilitation services. If the patient is at HMC, and if there were a rehab unit there, he would try for admission at that facility. At the present time, only Memorial has rehab beds available for Dr. Crastnopol to refer to and he often has trouble getting a bed for a patient there since it is usually full. The wait for an opening may be from 4 to 5 days or the patient may not be admitted at all. The delay is controlled by physiatrists at Memorial and though they try to be accommodating, frequently patients from outside that facility cannot be admitted. When that happens he then has to consider other institutions further away or nursing homes with less than full rehabilitation services. According to his experience, patients at Memorial will almost always be admitted to Memorial's rehab unit. Patients at HMC may not, and he, as well as all other physicians testifying, indicate there is a difference in the waiting lists. Dr. Crastnopol believes the best thing for the patient is for the doctor to be able to treat these injuries in a rehab unit. To transfer to one where he cannot come is not as good. He believes that patients on rehab units recover faster than those who are in alternative treatment plans. He also contends that home care and outpatient care are not suitable alternatives to inpatient care, especially for the elderly. He agrees with Dr. Mendelsohn that the northern Broward facilities are generally too far from the families of patients from the south. Since he is not on staff up there, he would not be able to provide the continuity of care which he, and all other physicians testifying, feel is so important. Dr. Crastnopol contends that from a clinical standpoint there is need for additional rehab beds in south Broward County. HMC provides a good service, and he has no doubt that it would provide a rehab service of the highest quality if its unit were approved. He would refer patients to it. He treats Medicaid and indigent patients, and in all fairness to Memorial, that installation has never tried to dissuade him from admitting that category of patient to its facility. Dr. Crastnopol took time from his busy practice to travel to Tallahassee to testify here because he feels there is a need for the service applied for. He, too, is an investor in the limited partnership which owns the building in which the hospital is situated, but in no way would this interest prejudice or bias his testimony. At the present time, only between 30 and 40% of his patients are treated at HMC, whereas between 60 to 70% are treated at Memorial. Similar testimony came from Dr. Jose M. Muniz, an internal medicine specialist practicing in Hollywood, Florida for the past 17 years. Dr. Muniz is on staff at both HMC and Memorial and serves as Chief of Staff at HMC. He is also on the utilization review and quality assurance committees there. As with Dr. Crastnopol, his patients are mainly older, 70% of whom are over 65. The other 30% are adult to middle age. Ninety-eight percent of his patients come from Hollywood and the south Broward area. As a result, Dr. Muniz has no hospital affiliation in the north Broward area. Dr. Muniz refers to rehabilitation patients who experience bone fractures and strokes, and he sees patients at both hospitals. He has had some referral problems at Memorial. He feels very strongly about the necessity for continuity of care and asserts it is important for him to continue to see his patients in a rehabilitation unit because they still have an underlying medical problem which he must continue to treat. It is not good for his patients to go far afield for rehabilitation service due to a lack of availability in the immediate area. He cannot continue to treat the patient who thereby feels abandoned, and the family also has additional difficulties in getting to see the patient. Nursing homes, while an alternative to a rehab unit, are not, in Dr. Muniz' opinion, an acceptable one. They have neither the staff nor the equipment to provide the appropriate treatment, and in his opinion, placing a patient who needs rehabilitative services in a nursing home is no more than warehousing that patient. HMC's application has a high level of support in the local medical community. A second rehab unit has been sought by numerous physicians in the area, and Dr. Muniz believes there is a definite need for additional rehabilitation beds to satisfy the need for rehab availability after the acute care condition has been stabilized. He is satisfied that if HMC gets its rehabilitation unit, its quality of care will be as high as that in the other services already provided there. Dr. Jubran Hoche, a Board certified neurologist at Memorial, HMC, and other facilities in the southern Broward area, often has patients who need inpatient rehabilitation services. Most are elderly stroke victims and younger patients with multiple sclerosis, a demographic consistent with prior evidence considered. He sees between 2 and 3 such patients per week. He begins to evaluate his stroke patients for rehabilitation when they stabilize, somewhere between 7 and 10 days after suffering their stroke. He has found rehabilitation beneficial to recovery and currently refers such patients to Memorial from all facilities where he is on staff. He often has trouble getting beds there, however, and over the years has found that patients already in Memorial have a priority over outsiders when it comes to getting into the inpatient CMR unit. Patients from other facilities face a waiting list and as a result, many are transferred outside the southern part of the county for inpatient rehabilitation. This is not a good alternative because it interferes with the beneficial continuity of care cycle and raises numerous other problems. Noting that Memorial plans to open a satellite facility in southwest Broward County and shift beds there, he contends that this will still increase the need for CMR beds in the county. There is already a clear need for more inpatient CMR beds in south Broward. In his experience, HMC provides a good quality service and would provide the same in any approved CMR unit to which he would refer patients from those who presently he cannot get into Memorial's unit. As with the other physicians who testified here, he has taken the time from his practice to travel to Tallahassee on HMC's behalf because of his sincere concern with continuity of care. Testimony in the form of depositions from Drs. Klotz, Bennett, Petti, and Moskowitz, and Mr. Jensen support and reiterate, fundamentally, the direct testimony of the above physicians and administrators. According to Holly Lerner, Administrator and Chief Operating Officer at HMC for several years, NME Hospitals, Inc. is a wholly owned subsidiary of National Medical Enterprises, an international health care corporation. The local facility is a six story hospital with approximately 300,000 square feet in addition to an adjacent office building. Over 400 physicians are on staff from most medical specialties including 5 physiatrists. HMC practices on an open staff basis meaning any qualified physician can apply. Almost all physicians on staff currently are Board certified and there is an internal requirement that all be at least Board eligible. The hospital is accredited by appropriate accrediting agencies. HMC is located approximately 1 mile from Memorial Hospital. It has an active quality assurance program, and any inpatient rehabilitation unit approved would be subject to the same quality review. HMC pays property and indigent care taxes to the taxing authorities. In contrast to Memorial, however, it gets no funds from those taxing authorities for treating indigent patients. It has a Medicare contract and has never turned away a patient because of an inability to pay. If the requested rehab unit is approved, the hospital's current outpatient physical therapy program will move off-site. The new inpatient rehab unit will have physical therapy capability on site. Management of the facility will be by an experienced firm well qualified to run it. All services required for physical therapy by Department rule are currently available and will continue to be provided. The new unit, if approved, will seek CARF accreditation. All variable services are currently provided and will continue to be provided. All optional services, except therapy for children, will be provided. HMC now has transfer agreements with Memorial and various nursing homes within the area. It also has a rehab agreement with Sunrise Hospital and a contract with the state to treat patients at a Medicaid contract rate. If at all possible, management intends to continue this on an inpatient basis. Discussions have been held with the Dean of a nearby osteopathic medical school to have a residency and intern program at the hospital and though it is still in negotiation, the parties have, in essence, formulated a tentative agreement to effectuate this development. Though disputed by Memorial, manpower requirement estimates are considered adequate to properly staff the facility if approved and the personnel costs are also considered reasonable even with cost of living increases over the next 5 years. In that regard, overhead staff has surveyed salaries within the area and tried to stay at the 70% level. HMC's salary levels are somewhat lower than that of Memorial but, nonetheless, HMC has had no difficulty in getting and retaining qualified support staff. Petitioner's evidence in opposition was not persuasive. According to Paul Echelard, Administrator and Chief Executive Officer of Pincrest Rehabilitation Hospital, and Florida Vice President of Rehabilitation Hospital Service Company, (RHSC), a subsidiary of NME which manages rehab hospitals throughout the country and which will operate the rehab unit at HMC, inpatient rehabilitation assesses an individual who has had a debilitating injury, after medical stabilization, for improvement potential, and helps improve his living capabilities. Inpatient rehabilitation helps to restore both motor and cognitive functions. The minimum requirements for a CMR program include 3 hours per day of speech therapy, occupational therapy, and physical therapy, 5 days a week. The actual program administered is tailored to the patient's individual needs. If, for example, the patient cannot take 3 hours per day, it may be less, if such reduction is documented. RHSC operates 31 rehab hospitals ranging from 60 to 101 beds. The contract management division also operates hospitals for others. All are accredited except those which have not yet been open the required 6 months. The management company brings the expertise of NME's rehab division, which has access to hundreds of experts in numerous fields, and provides program management, program development, and program education. Program Management involves the day to day running of the program. Rehabilitation programs and staffing are different from acute care functions. Management personnel are supplied. Program development defines the methodology to be followed in each type of case. It works with the staff, with physicians, and with the community to develop programs designed to fit the needs of that facility and that community. The program education division provides information on benefits of rehabilitation in areas where such is not well known. It educates hospitals in the area as well as physicians and the community. For these services, the company charges a fee of $105.00 per patient per day which includes the salary of the medical director of the rehab unit and several other supervisory personnel. Though one might see complex, high level cases at HMC, where there is a need for a lot of high level supplemental medical treatment or procedures, the patient probably will not be treated at HMC. If HMC's program is approved, transfer agreements will be entered into with Sunrise or Pinecrest Rehabilitation Hospitals to take care of those patients whose conditions are too severe or too complex for the inpatient CMR unit at HMC. South Florida's normally more elderly population generates a higher need for medical rehab services. Also, medical science now saves people who, before, would not survive their basic illness, and these people generate a greater need for medical rehab services. The utilization of rehab services has increased significantly since 1988 as the result of Medicare, and due to an increased awareness of the service by physicians. Also, insurance companies now recognize the benefits of dollar savings of rehab over acute care treatment. Another factor involves the implementation of DRG's which exempted rehab, among other areas, from the DRG limits. With this development, however, services and personal criteria for inpatient rehabilitation patients were developed to insure against abuses. Not all hospitals can meet these criteria, but the number of providers has grown fivefold due to the recognition of the health and financial benefits to society. In Mr. Echelard's opinion, the payer projections by categories of payer found in the application are reasonable and based upon the applicant's experience. The personnel costs are in addition to the $105.00 per day fee charged by RHSC. The assumed 65% utilization figure for the first year can easily be accommodated by the staff which is more than adequate to meet the requirements of good quality of care. Much the same can be said for the second year with the increase in both patient census and full-time employees. The salaries projected in the application are generally reasonable, though a few may be somewhat low. RHSC would help to recruit personnel for HMC's facility. It has a national recruiting program and sends recruiters to universities and conferences across the country. All RHSC facilities are open to serve as clinical training facilities. They advertise widely for personnel though they do not "head hunt" at other hospitals. As a result, Mr. Echelard feels HMC would have no trouble getting enough qualified personnel, and it is so found. Turning to the unit itself, from a physical standpoint Mr. Echelard has no trouble with the currently existing physical therapy unit being geographically separated from the bedroom area. In fact, this may be beneficial as it tends to simulate the real world and may increase patient mobility skills. He considers the proposed layout to be acceptable and to meet accreditation standards. The proposed patient charges of $1,078 per day is considered reasonable and closely approximates the $1,050 per day charged at Pinecrest as well as other competing providers. Sharon Gordon-Girvin, a health care consultant and formerly the chief of the Department's Office of Community Health Services, reviewed HMC's instant application for Memorial. HMC's application describes it as a provider of primary and secondary services, a general description of a normal acute care hospital. It has no licensed tertiary services. Five hospitals in Broward County are licensed to offer CMR services. They include Petitioner, Holy Cross, North Broward Regional Medical Center, St. Johns Hospital and Sunrise . Only one of these, Memorial, is in the south Broward region. District X, with the 5 providers offering a total of 213 CMR beds, has more CMR beds than districts in the rest of the state with the exception of Dade County. Other districts have greater population with fewer licensed beds, but it must be noted that without information on demographics, that statistic is of little import. Under the pertinent Department rule, the planning horizon for CMR beds is 5 years into the future. Bed need determination is provided for in Rule 10- 5.039, F.A.C., and consistent therewith, the Department did a projection of bed need for 1996 which showed a new need of 88. Because the number of existing beds exceeded that figure it determined the need to be zero. Even if there is a zero need, however, the rule provides 4 other factors for consideration, (Rule 10-5.039(2)(b)1-4), but in her opinion, HMC's application is not consistent with these 4 factors. One of these deals with historic, current and projected incidents of illness. This witness does not believe there is adequate evidence or discussion in the application of any historic incidents of disease sufficient to support any future prevalence. There is no data as to sex or group of patients. The second deals with trends by categories. Here the application, she feels, contains no detail of payment trends shown as to categories of payor. As to the third criterion, dealing with existing and projected inpatients in need of rehabilitation services, the application does contain some information in its Exhibit 17. The fourth criterion relates to availability of specialized staff, and the application discusses how the staff will be recruited, but not the availability of qualified personnel to fill the positions. In that regard, it is well recognized, she contends, that this type of staff is in short supply. Other evidence of record would tend to confirm this opinion. Ms. Gordon-Girvin indicates that the 1989 State Health Plan is pertinent to this application. This plan contains 5 preferences to be used in evaluating applications. These include: Conversion of excess acute beds. Here, the application conforms but Ms. Gordon-Girvin cannot say if the per diem costs would be lower by conversion. Specialty rehab services not currently found in the District. Here, no services not already available were proposed. Teaching hospitals. This is not truly a statutorily mandated teaching hospital even though evidence shows staff may be made available as faculty at the osteopathic medical school with which HMC plans a collaboration. A disproportionate share of charity care. Here, Ms. Gordon-Girvin feels that HMC is not such a provider and that its application is not consistent with this preference. Existing comprehensive outpatient rehab facility. This, again, is not met by the applicant. These preferences are, it must be noted, not mandatory for approval. The 1990 Broward Regional Health Plan is also applicable, and it outlines 3 priorities in its review criteria. These are: The applicant agrees to cooperate and provide data on utilization. In this regard, HMC's application is consistent. Unserved populations. Here, Ms. Gordon-Girvin contends that the instant application does not meet the preference since it is not for construc- tion of a new facility. Situations where the institution's occu- pancy is greater than 85%. Here, clearly HMC does not meet this criteria because it does not have a history of 85% occupancy. Again, however, these are merely guidelines to apply among competing applications and are not preconditions to approval. Ms. Gordon-Girvin points out that the need for CMR services is not considered on a less than district-wide basis, since the rule directs an evaluation of tertiary services on a district-wide basis, and, therefore, the breaking down of the district into north and south services areas is inappropriate. She asserts that in her opinion, the existing rule based on need is not an adequate predictor of need within a district. Instead, she feels the methodology used in Exhibit 17 to the application and omissions response is reasonable. However, she disagrees with HMC's calculations therein because, while the model is credible, the wrong data (the length of stay from 1984, rather than the actual current length of stay) was used. She feels district experience for length of stay (21 days) should be used. Ms. Gordon-Girvin also feels that the methodology used on Application Exhibit 18 is also not appropriate because the variables were not kept constant. It used some date from the sub-area which should not be done because of the rule requirement to treat tertiary services on a district-wide basis. She does not explain, however, that if the rule shows a need for 88 beds and there are already 173 beds licensed, the rationale for a subsequent approval of those excess beds. In that regard, then, the question she does not answer is, if one aspect of the rule is disregarded, cannot another also be disregarded with equal validity? HMC has urged the calculation as set forth in Exhibit 20 of its application, but Ms. Gordon-Girvin does not agree with that because it uses a constant rate of increase in the admissions rate. It also does not ground its assumptions on any existing realities. The initial figure for admissions in 1991, she opines, is overstated, and it, too, does not use accurate real information. If the 3,009 figure were corrected to an "actual" figure, it would result in a net loss of 27 beds and an increase of only 9 additional beds by 1996. She contends that Exhibit 20 is not consistent with the existing rule methodology, because the proposed facility to open in 1993, not 1996. As a result, she sees no need to compute the need in 1996. As to her disagreement with the 4.5% growth in annual admissions, she claims the actual rate shows a decrease from 1990 to 1991. Therefore, the table containing that growth assumption is not justified. She also disagrees with Exhibit 21 because it is applied to a subdistrict and her other objections, (no historical basis for utilization numbers), are also pertinent here. Accepting that the current rule is not a good predictor, she looked at the dispersion of population and beds and determined that there are about twice as many elderly in the northern part of the county as there are in the south. Applying this to the southern area, there should be a total of 46 beds there. Therefore, she asserts, that while there is a need for new beds in District X, all should be in the south, but not as many as requested. If the 30 beds applied for by HMC are approved as well as those approved for Memorial, this would result in 56 beds or 10 too many. In her opinion, based on the incidence model with some adjustment, the actual need is for somewhere between 5 and 20 beds district-wide which should all be located in the south county. Her reasoning and conclusions, however, are not persuasive. Ben F. King, Vice-President for Finance of the Florida Region, Eastern Division of NME, and an expert in health care finances, is satisfied from his familiarity with the application in issue here that the project is financially feasible in both the short and long term. The proforma submitted by HMC in the application, and amended in the omissions response, refers, among other things, to patient day projections. These are converted to revenue by taking the days listed and multiplying by the charge for room and board for each year, and he is satisfied that the rates listed are reasonable. The listed revenues are not what is actually collected, however. They are reduced by deductions for Medicare, Medicaid, indigent, and write-offs (discounts) for health maintenance organizations and insurance companies. In year 1, Medicare contractual is calculated based on reimbursement founded not on cost but on DRG (diagnostic related grouping). This results in no additional reimbursement for patients already in the hospital on an admitting DRG. Therefore, the first year revenues are much lower than in the second and subsequent years. Moving on to year 2, however, the operator gets paid for costs of operation of the unit. Medicare tracks the per-diem costs and income from the hospital, and to be conservative in the preparation of this pro forma, HMC took the existing reimbursement rate of slightly more than $700.00. In calculating reductions, indigents are assumed to be a 100% write-off. Private payments are considered to be a 50% write-off, HMO's a 20% write-off, and insurance an 11% write-off. Mr. King considers all these to be reasonable and consistent with the current experience not only of HMC and NME but of other providers as well. In Broward County, indigent patients are funneled to the county hospitals which receive tax funding for that purpose. This is different from other counties which contract with hospitals to provide indigent care. HMC calculates its revenue estimate in what it considers a conservative manner. Taking off the contractual allowances for Medicare and Medicaid and the other write-offs results in a reduction of more than 50% of gross revenue, and from that figure is taken the expenses, depreciation, interest, etc. to get to the net revenue figure. All the expense categories and the factors they include are considered reasonable by Mr. King. The salary and wages figure includes an add- on of 20% for benefits, which is above the figure for salary and wages found in Table 11 of the application. Supplies includes the provision of housekeeping services, laundry and linen, and dietary services. These, too, he considers reasonable. RHSC's management fee of $105.00 per day includes the personnel provided, the marketing services, the management services, and manuals. This is considered a valuable benefit and the fee is considered comparable with other units. The personnel sent to do the actual work are RHSC employees and not hospital employees. The indigent care assessment is 1.5% of net revenue and is a tax paid to the state. Contract costs are ancillary expenses for ancillary services such as laboratory, pharmacy, etc., already provided by the hospital. The cost listed in the pro forma is only for additional patients generated on the unit in issue. General and administrative - other expenses (joint venture rent, recruitment, insurance, utilities, property taxes, maintenance, education, etc.) are also deducted, and taken together, the above results is an operating revenue net loss for the first year. Depreciation and amortization are self explanatory as is interest expense which is calculated at 10%. Interest rates are anticipated to drop in the future, however, and this will help the picture. The net loss projected for the first year does not necessarily mean that the project is not financially feasible since financial feasibility is calculated over a 5 year basis. In the second year of operation, revenues are projected to increase by 6.5%, a figure considered to be reasonable. Expenses were inflated at 5% except for those not fixed to inflation (indigent care assessment and the joint venture rent). NME has the funds to commit the initial capital and working capital for the first year. The 1989 and 1990 NME financial statements submitted with the application are those most current to filing. These statements, along with the 1991 capital budget, show more than $750,000.00 committed to the start-up of HMC's program. Much of the information presented by Mr. King in his testimony comes from the pro forma and the amendment thereto. Primarily, the difference is only in the amount provided for RHSC's management fee. Any other inconsistencies or errors shown to exist are, for the most part, minor. The entire project is based on 30 beds. The figures assumed for both revenue and expense are reasonable, considering the "other" factors testified to by the physicians and noted previously. This is so notwithstanding the fact that HMC has experienced only a 30% use rate in its acute care beds. However, in light of these other factors, there may not be any correlation between acute care and rehab either from the Medicare or other standpoints. According to Madeline Hellman, Administrative Director of Rehab Services for Memorial, CMR is a high intensity program as well as a high cost program because it uses a large number of professionals to treat the patient in a multi-disciplinary program. Memorial's existing unit has 22 beds in semiprivate rooms. It has an admissions process designed to insure that appropriate patients only are admitted. These patients are made up of a high percentage of stroke, orthopedic, and spinal cord and head injury patients. Memorial's program is a program accredited by the state and the unit is accredited by CARF, a national certifying organization dealing with quality of care. The average length of stay on Memorial's unit is presently just under 25 days which constitutes an increase over time due to the more complicated types of cases taken in. In 1991 the occupancy rate was between 98 and 99%. Memorial gets referrals from both in-house and other facilities. The patients are evaluated by the medical director for the potential to go through the rehab process. If inpatients at Memorial, they are evaluated by the therapy staff and a meeting is held to decide on admission. If the patient comes from another facility, he/she gets priority behind Memorial's patients. In order to be admitted, a patient must have a rehab diagnosis; be able to withstand the 3 hour sessions; be motivated; and have the potential to improve his/her own independence. The refusal to admit a patient does not necessarily indicate a Memorial was too full to accept that patient. It may just be the patient is not an appropriate candidate for rehab, or the patient may die or recover without rehab before getting through the admission process. Some may be referred to nursing home placement instead. Ms. Hellman's figures reflect that in 1990, approximately 42% of those referred to Memorial's unit were admitted. Approximately 35% of those referred were deemed inappropriate. Only 4% were refused admission due to bed unavailability. Many of the non- admittees went home without treatment, went to home care, or came back as outpatients. This witness examined Memorial's admissions records and determined that in 1990/1991, Dr. Hoche, who testified on behalf of HMC's application, referred 9 patients to Memorial of whom 6 were admitted. One went to another facility by choice, 1 was not appropriate, and 1 was not accounted for. Neither Dr. Klotz nor Dr. Pettie referred any patients during that period. Dr. Moscowitz referred 1 in 1990 who was admitted. One patient was referred in 1991 but was not admitted because the patient was not an appropriate candidate. Dr. Bennett referred 1 in 1990 but the patient was not an appropriate candidate. In 1991 he referred 2 but both went to nursing homes instead. During this period Dr. Mendelsohn was the medical director. Dr. Crastnopol referred 12 patients in 1990. Four were admitted; 2 were referred to other facilities; 2 were not considered appropriate candidates, and 2 were not accounted for. In 1991 he referred 17 patients, 8 of whom were admitted. Two of the remainder went to another facility by choice; 1 was refused due to no room; 1 went home; and the rest were unaccounted for. Dr. Manning referred 1 in 1990 who was admitted. Admittedly, according to Ms. Hellman, there is a waiting period of from 1 to 5 days from referral to admission - on the average, probably 3 days. This has decreased somewhat since the summer of 1991. The situation depicted by Ms. Hellman's figures differs radically from that described in the testimony of the physicians to whom she refers. On balance, the physicians' recollections and impressions of the situation are deemed of greater probative value than the bare statistics. Memorial staff salaries went up 9% last year across the board and are anticipated to go up again this year. The ancillary staff devotes 75% of its time to patient care and the other 25% to administration. This extra non- patient time is considered in assessing staffing to insure there is enough staff to do the full therapy load. There is a great deal of competition in the market for both nurses and therapists. A shortage exists which is nationwide and requires heavy recruitment efforts. At Memorial, no contract labor is used to assist in the unit. Benefits constitute an additional 24 - 25% of the salary cost and is not included in Memorial's determination of the salary and wage costs. Ms. Hellman reviewed HMC's proposed staffing as outlined in its application and feels that after taking out 25% clerical time and weekends, the social worker, for example, will only be able to handle 65% of the beds. Speech therapy would require additional people to take up the extra time on other therapies. Taken together, it is her opinion that the staff proposed by HMC is insufficient to provide a quality program. As to salaries, she feels the amount designated by HMC is low. The salaries proposed would be enough to get only new graduates and would force a high turnover. A CMR unit requires an experienced staff, (at least half of the therapy staff), to provide a quality program. Ms. Hellman is of the opinion this cannot be accomplished at the salaries proposed by HMC. In regard to both salaries and staffing level, however, Ms. Hellman's negative comments are offset by those in support of the application, and there is insufficient evidence to the negative to support a finding by a preponderance of the evidence as required that the proposed staffing levels and salaries are insufficient. HMC's 30 bed unit would compete directly with Memorial's existing unit. They are less than a mile apart and use many of the same physicians. They attract the same patients. In addition, Ms. Hellman does not believe HMC's unit will offer any new service not already offered by Memorial, nor will it operate services not already present or offered by existing providers in District X. It is her confirmed opinion that if HMC's unit is approved, it will be difficult for both facilities to attract and retain an adequate professional staff. The majority of patients that Memorial cannot accommodate are referred to Sunrise Hospital, also located in Broward County, which offers a good CMR program. Total referrals in 1990 exceeded 800 patients, and in 1991, in excess of 600 patients. The referral log maintained by Memorial does not include patients who were not referred because their physician felt there was no room anyway. Memorial's records supposedly indicate that in the last two years, only 80 to 90 referrals to its unit came from other institutions. The records were not introduced into evidence, however. Edward J. Maszak, Director of Financial Planning for Memorial, and an expert in health care financing and third party reimbursement, noted that Memorial is a disproportionate share provider under both Medicaid and Medicare. It is a taxing authority which uses funds received in taxes for the care and treatment of indigent patients. It gets $20 million in tax revenue but gives $23 million worth of indigent care in addition to taking $27 million of bad debt write-off. About $10 million of the indigent care cost is funded out of operations. The Hospital Cost Containment Board, (HCCB), statistics submitted by HMC for 1989- 1991 reflect no deduction for charity care in either the 89-90 or 90-91 time-frame. Mr. King, testifying for HMC, indicated there was no advantage to reporting charity care to the HCCB, and it is for that reason that the statistics show no deduction. Mr. Maszak disagrees with Mr. King on this point, and states that to the extent it provides any charity care at all, a facility can raise the prices it charges to some degree. Mr. Maszak reviewed HMC's application and the "incidental cost analysis" basis for the financial pro forma, and in his opinion, HMC's application does not contain a true feasibility study. The projected statement of revenue and expense in the omissions response reflect incremental costs only and do not include the actual, full costs. In a financial statement one looks at a lot of other revenue factors including operating projections and total margins, cash flows and the like, none of which are included in HMC's financial information. The financial feasibility study done by HMC here is not, in Mr. Maszak's opinion, consistent with generally accepted practices and standards. Memorial's CMR unit has lost money over the last 3 years due to the fact that it provides about 70% of its care to Medicare patients. Under that system reimbursement does not fully meet costs. Therefore, the loss has to be covered by income from other payees, (cost shifting). This is not specific to Memorial only, however. Most hospitals experience the same problem. As a result, it is hard to make up the losses from Medicare, Medicaid, and HMO operations from the 9% of patient mix representing full pay patients. In Mr. Maszak's opinion, if HMC gets its approval, in year 3 it would be subject to the same problems experienced by Memorial. Mr. Maszak asserts that with the new beds, HMC's overhead cost allocation will, under Medicare rules, increase by 19% in the first year and by 25% in the second year. This will add at least $570,000.00 additional costs in year 1 and $800,000.00 additional costs in year 2 to expenses. In year 2 the cost will be shifted to Medicare so the expense item in that year will be more by slightly more or less than $200,000.00. With regard to specific defects in HMC's proposal, Mr. Maszak points, with regard to managed care plans, to the HCCB documents which show that the HMC writes off about 65% of its revenue from HMO's. This was for 1991. Pinecrest, for example, wrote off somewhere around 38.5% that year. He believes, therefore, that HMC's figures are inaccurate. Regarding charges for CMR services in District X, HMC's 1993 charges, using its own projections, would be $1,077.00 per day. Sunrise would charge $1,765.00 per day, and Pinecrest, $1,683.00 per day. Memorial will charge $557.00 per day; Holy Cross, $747.00; and North Broward, $564.00 per day. Based on these figures, Mr. Maszak concludes that HMC's HMO estimated income is unreasonable. He contends it will be much less than estimated and more comparable to that of the other providers starting at a discount from $557.00, plus or minus, per day. Mr. Maszak is of the opinion that the insurance estimate indicated by HMC also is unreasonable. The 4% estimated by Mr. King is too low by far, and there are no national HMOs for HMC to contract with for rehab services in District X, he contends. He also believes that as to the salaries and benefits, in 1991 Memorial showed 57.8 full time employees, (FTEs), with an average nursing salary of $27.4 thousand per year. In that regard, benefits as a percent of salary was 32.2%. Sunrise showed an average nursing salary of $29.4 thousand with benefits at 27%. Pinecrest reflected $27.7 thousand and 41% respectively. Based on this, Mr. Maszak believes that the HMC projection of $22.5 thousand for salaries and benefits of 20% are far below current salaries at other NME facilities. It is unreasonable to assume, he asserts, that a provider can start up a competing unit in an open area and attract staff at those figure. Taken together, he considers that the difference between Memorial and HMC's salary figures is a $4 thousand difference for a total of $125 thousand low for HMC without considering inflation for 2 years to 1993. Turning to the issue of payor mix, according to Mr. Maszak, Medicare is reflected at 65% by HMC, but the HCCB data shows only 58% for 1991. The County reports for Memorial showed a rate of 60%. Mr. Maszak believes that HMC's estimate overstates a patient days percentage by 5% which could result in an overstatement of income revenue. Therefore, he believes the entire rehabilitative program, as suggested by HMC, is not feasible in the short term because of a number of expenses which are not figured in. He admits that HMC's current financial position is fair. It is reported to be slow in paying its bills and lost $1 million last year alone. In addition, the interest due NME has not been paid and is increasing. These claims were not supported by actual evidence, however. In addition, 65% of the population in the service area is under Medicare which limits increases to 3.2 % per year. Notwithstanding that, expenses are going up at a higher rate, (5%), and, therefore, he contends, HMC's program is not feasible as well over the long run. According to Mr. Maszak, the opening of HMC's facility would also affect Memorial's status. The staff is much the same for both facilities and many of the physician's on staff at Memorial are also investors in the HMC facility. If HMC gets its unit, Maszak feels many patients will be referred to that facility by its investors instead of to Memorial where they would now go. Based on the number of projected patients, however, this really should not result in a reduction in Memorial's numbers. The rehab service is not the only consideration, however. In addition, the admitting services , (neurology, neurosurgery and orthopedics), would also be impacted. Considering various potential scenarios, from a loss of all HMC business in all services, and no reduction of expense, through others including loss of all services with some expense reduction, loss of rehab only with some expense reduction, to a loss of 50% of all services with some expense reduction, the loss impact on Memorial would extend from a low of $264.5 thousand to $3.1 million. The most likely loss figure, he estimates, would be somewhere around $800 thousand. Therefore, approval of HMC's project, he contends, would have a large impact on Memorial's, operation because of its ongoing expansion plans and their attendant expenses, plus the recent sale of $40 million in revenue bonds. As to the latter, the underwriters of that issue are already unhappy with Memorial's financial picture. Any loss of income might likely result in a need to raise prices, but Memorial is constrained in that regard by the dictates of the HCCB. A second option is to raise taxes in the District, but there the District only has .4 of a mill leeway before reaching its limit of 2.5 mills. A third option is to cut services, but with the economy as it is, and the high level of charity care already being provided, that would be hard to do. Thomas R. Bayless, President of Future Health, Incorporated, a health care consultant and an expert in health care finance, also reviewed HMC's application and omissions response, its audited financial reports, the HCCB reports for HMC and others, and other documents. He believes the cost projections outlined in HMC's omissions response do not account for all contract costs. Thirty new beds would have a greater impact on costs than is estimated. The amount shown on the HCCB cost report for the whole hospital is more than the estimated costs for the whole hospital including the rehab unit in year 1. Mr. Bayless believes that the $366,308.00 figure for the unit in year 1 should be more than $1 million. In year 2 he sees it as $1.3 or $1.4 million as opposed to the $512,602.00 projected. By the same token, the general and administration costs reported at over $6 thousand for the whole hospital in 1991, with the 19% increase for the year, would be over $1 million and a great increase in year 2 over the $394,941.00 projected. Therefore, since all costs were not included to the appropriate degree, he contends in reality there would be a significant increase in the cost of operation of the rehab unit which would result in a much larger net loss than was projected, (plus or minus $2 million) in year 1. In year 2, due to the commencement of reimbursement from Medicare, the impact would be less. Nonetheless, the net income profit would not be as great as projected and might instead result in a loss of some $300 thousand to $400 thousand. Taken together, he concludes that expenses and some allowances are significantly understated. For example, the "other deductions" figure of $477,108.00 should be higher due to the percent of HMO discount which, in Bayless' estimate, should be 60% rather than the 20% utilized. This nearly doubles the amount of the deduction. He also disagrees with HMC's indicated deduction for rent, corporate overhead, salaries and wages, and other expense items, all of which, he believes, should be increased. The "benefits" aspect of salaries should be increased as well since the 20% projected is, in his opinion, insufficient. Memorial's figure, at 24.8%, is the standard for the area, he contends. Making those changes, the year 1 net loss for HMC's operation would be almost $3 million rather than $485,739.00. By the same token, year 2, even with Medicare cost reimbursement would result in a loss of almost $700 thousand rather than a profit of almost $1.4 million as projected. In further years out, ( years 3 - 5 ), due to the limits imposed by TEFRA and projected cost increases of 5%, the loss would be compounded somewhat. This would constitute a continuing loss and Mr. Bayless believes the project is not feasible in either the short or the long term, especially considering the fact that the hospital has been losing money without this unit and, it appears, will continue to do so. The hospital has been living on an infusion of money from the parent corporation, and this does not, to him, appear to be an appropriate use of capital. Mr. Bayless contends that most of what he said about the unit projections applies as well to the consolidated hospital rehabilitative unit projections. The losses from the operation of the rehab unit and the other defects show a loss of $7 million in year 1 and almost $6 million in year 2. Year 3 would also show a loss of almost $6 million. As another problem, Mr. Bayless opines that the statute requirement to provide information on costs during construction and the effect of the project on the applicant's and others' operations was not met. Considering the parties' respective positions, however, it is found that though subject to some debate, HMC's projections as to patient revenue, expenses, and its ability to attract a quality work force without seriously damaging Memorial's ability to provide quality care have not been shown to be unsupportable. They are, therefore, accepted. Morgan Gibson, a review consultant with the Department's Office of Community Medical Facilities, and an expert in health planning, reviewed the instant application in early 1991. When the application was deemed complete, he initiated the formal comparative review of this application and of Memorial's request for 4 beds; did an analysis; and completed the required State Agency Action Report, (SAAR), for each. A fixed need pool was published for this cycle, (January, 1996), showing a "0" numerical need. Gibson's review indicated the project was consistent with the 1990 District X Comprehensive Health Plan which establishes various priorities for the award of CONs. Priority 1 relates to an applicant who demonstrates a willingness to publish information. Both applicants met this priority. Priority 2 relates to applicants who agree to construct additional facilities to provide service to the unserved public. Here, neither application involved new construction, but both applicants were willing to provide charity care with HMC's to be at 1%. Priority 3 applies to those applicants who have a history of operating at greater than 85% utilization. HMC's hospital alone could not meet this level, but the proposed unit was projected to meet it by year 2. Priority 1 of the 1989 Florida State Health Plan relates to facilities which will convert excess beds to comprehensive beds. HMC proposes to do this which is cost effective and gets more beds to the patients. Priority 2 of this plan relates to those who propose specialty services not currently offered. HMC's answer was vague but it agreed to provide a wide range of rehab services, and the fact that it does not focus on a single specialty does not make it less desirable. Priority 3 relates to teaching hospitals. HMC is not a teaching hospital but it has agreed to affiliate with a school of osteopathic medicine in the area. Priority 4 relates to those facilities with a history of providing a disproportionate share of charity and Medicaid. HMC does not now do this but has agreed to provide 1% charity care. Priority 5 relates to those facilities showing a willingness to provide outpatient follow-up rehabilitation services, and HMC has agreed to do this. Mr. Gibson concluded that the HMC project would increase availability and access to services and would improve quality of care. He also reviewed the application against the Rule 10-5 criteria. Existing rehabilitation beds in the area are highly utilized, (Memorial is at a figure close to 100% and is the only provider in the service area). Because of this, he considered the establishment of new beds in South Broward to be better than forcing patients to go to existing beds in the North Broward area. He found that the 30 beds proposed by HMC met the unit size minimum of 20 beds and the projected utilization met the standard of 65% for the first year and 85% for the second year. He concluded that the utilization rates in the district support the program. All but one provider are operating at above 90%. In that regard, since there are only 22 beds currently existing in the south portion of the county, and all providers but one are utilized at over 90%, the new unit could not help but improve the availability to the service in the District. It is so found. The local health council data revealed to Mr. Gibson that while admissions generally decreased by 4.5% from 1985 to 1989, rehab admissions went up 189.4% in the same period. This indicated to him a potential need and increasing utilization. He also concluded that the information provided by HMC was reasonable and not fairly disputable. In that regard, Mr. Gibson concluded that HMC presented information to justify the beds regardless of the rule methodology showing "0" need. The supporting factors for this conclusion were: (1) the high current utilization; (2) the relationship of rehab admissions to discharges; (3) the service pattern; (4) the existing waiting period; (5) the elderly population in the service area; (6) the potential rehabilitation discharges; (7) the conversion of underutilized acute care beds; and (8) the maldistribution of beds between the north and south part of the county. Taken together, Mr. Gibson concluded that the addition of 30 new beds by HMC would have a positive effect, not an adverse one, on the provision of service in the community. HMC indicated its intention to seek CARF accreditation, and it appeared to meet the other quality of care standards. CARF accreditation is important. All the facilities operated by the proposed management corporation are accredited by CARF. In addition, Mr. Gibson saw no adequate alternative to the program. Maintaining the status quo was obviously not effective. Neither was building a new facility. As a result, the conversion of underutilized beds appeared to be the most appropriate resolution of the problem. He also concluded that the proposed plan was reasonable. There was a demonstrated need for additional beds and it appeared this project would meet that need without the necessity to expend millions of dollars to create a new facility. The project did not involve cooperative services or shared facilities, but this is not a disqualifier. By the same token, there is no teaching facility currently available. Neither factor really applies to this project, however. Mr. Gibson determined that HMC had the financial resources to accomplish the proposed project. Its financial statement showed that it and its parent company both were in good financial health. The project cost could easily be met by existing resources. The applicant indicated that staffing levels would be met and the retaining of a management company to operate the facility was a plus factor. Before rendering his opinion, Mr. Gibson consulted with the Department's financial consultants, and based on the applicant's projections and assumptions, if the utilization levels of 65% and 85% for years 1 and 2 respectively were met, the project would be financially feasible in both the short and the long term. Mr. Gibson concluded that the utilization projections were reasonable based on current utilization of existing beds. As to fostering competition and cost effectiveness, Mr. Gibson determined that based on the current high utilization rate, the new beds should have no impact on existing services provided by Memorial in the south and the other existing providers in the north. With regard to charity care, HMC admitted that up until this time it had reported little or no charity care provided. Because HMC admitted that, however, Mr. Gibson was willing to accept its assertion as to what it proposed to do in the area in the future. Turning to the criteria outlined in Section 381.705(2), Florida Statutes, Mr. Gibson found: (1) there was, practically, no less costly or more appropriate alternative to the proposed service; (2) the existing service was being utilized efficiently; (3) there were no reasonable alternatives to conversion; and (4) there was some showing of a shortage of available service and no showing of serious problems existing in providing those services. Based on all the above, Mr. Gibson recommended both this application and Memorial's application be approved conditioned on the provision of a certain percentage of charity care. Mr. Gibson admits there is, on balance, a general shortage of rehabilitation personnel, but cannot say whether or not there is a shortage in Broward County. His conclusion that staff was available to HMC was based on several other factors such as the management contract and the proposed recruitment - all representations by the applicant and not based on his own experience. By the same token, he did not test any of the tables for revenues, costs, salaries, etc. Here again he relied on representations by the applicant. In addition to those aforementioned statutory criteria Mr. Gibson evaluated this application against the Section 381.707 criteria as well, and determined it was complete. It is clear, however, that his evaluation was not done in great detail, nor did he attempt to verify much of the other information submitted in support of the 381.705 criteria. The financial aspects of the project were analyzed by an in-house departmental CPA, Mr. Bell. Gibson's involvement was limited to examining the projected admissions, utilization, charges and the like, and based on those, he relied on Mr. Bell's determination they are reasonable and his opinion on feasibility. Nonetheless, Gibson drew his own positive conclusion of feasibility which was cited above. There appears to be no legitimate reason to reject any of the findings of conclusions drawn by Mr. Gibson. Therefore, they are accepted. Elizabeth Dudek, the Chief of the Department's Office of Community Medical Facilities, met with Mr. Gibson, Mr. Bell, and the architect after reading both the applications and the SAAR and, thereafter recommended the project be approved. After considering the application, the projected utilization, the existing inventory, the state and local health plans, the area where the facility was to be located, and at the provisions of the pertinent statutes and rule, she believed the project proposed was justified. She concluded both HMC and Memorial should be awarded the beds requested. Her reasons therefore conform to the findings of Mr. Gibson regarding existing providers and the high utilization rate. The trade patterns support a division of service between the north and the south. She determined that because this application did not meet all preferences and priorities as outlined in the various health plans did not necessarily mean it should be denied. By the same token, the fact that comprehensive rehab services are considered by the Department to be a tertiary service does not mean that the service must be provided only in teaching hospitals. Ms. Dudek recognizes that Section 381.707(2)(d) requires a detailed statement of income and revenue which includes the two year pro forma assumptions, Table 25, and the list of capital projects. Her review of the matters provided by the applicant and the audit and source of funds referenced led her to the conclusion that requirement was met. There is no basis shown upon which to reject that conclusion or to conclude otherwise.
Recommendation Based on the foregoing Findings of fact and Conclusions of Law, it is, therefore recommended that NME Hospitals, Inc.'s application for a Certificate of Need, Number 6643, for a 30 bed inpatient comprehensive medical rehabilitation unit at Hollywood Medical Center be approved, but that its Motion For Attorney's Fees and Costs be denied. RECOMMENDED this 2nd day of June, 1992, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 2nd day of June, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-5698 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: 1. Accepted and incorporated herein. 2. - 4. Accepted and incorporated herein. 5. Accepted and incorporated herein. 6. Accepted. 7. & 8. Accepted and incorporated herein 9. Accepted and incorporated herein except for last sentence of first paragraph which is rejected as contra to the evidence. The second paragraph is accepted but is considered irrelevant to the issues. & 11. Accepted and incorporated herein. Accepted. Not a Finding of Fact but a restatement of testimony. First and third sentences are restatements of terstimony. Second and fourth sentences are accepted. Accepted. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. Rejected. Not a Finding of Fact but argument. Accepted as to witness' testimony but not as to an an evaluation of its worth. All but the last sentence is a restatement of the witness' testimony. Last sentence is accepted as Petitioner's position. First two sentences accepted and incorporated herein. Balance, though a restatement of testimony is fundamentally accurate and consistent with the evidence. Though consistent with Petitioner's position, and perhaps factually accurate,this ppoposed Findings is rejected as overlooking the "other basis" provisions of the need rule. Accepted as an accurate statement of the factors involved, but this position was rejected in the Findings of Fact portion of the Recommended Order. - 28. Rejected as contra to the weight of the evidence. All but last sentence accepted and incorporated herein. Last sentence rejected. Accepted and incorporated herein. Rejected as argument and contra to the weight of the evidence. Rejected as argument. - 37. Accepted as an accurate restatement of the evidence, but rejected as to the ultimate factual conclusions drawn. 38. - 40. See next above which is reiterated here. & 42. Accepted as to the testimony presented but rejected as to the efficacy of the analysis. Accepted as to content but not as to analysis. & 45. Contents accepted as an accurate restatement of the testimony but conclusions drawn are rejected. Rejected. First paragraph accepted. Second paragraph rejected as speculation. Accepted and incorporated herein. Accepted. First sentence accepted. Remainder rejected as speculative with no historical basis. FOR THE RESPONDENT, NME: - 8. Accepted and incorporated herein. Accepted and incorporated herein. - 14. Accepted and incorporated herein. - 19. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. & 23. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Not a finding of fact but a comment on the evidence. 27. - 29. Accepted and incorporated herein. 30. Accepted and incorporated herein. 31. Accepted. 32. - 34. Accepted and incorporated herein. 35. - 37. Accepted. 38. - 40. Accepted. 41. & 42. Accepted and incorporated herein. 43. Accepted. 44. - 46. Accepted and incorporated herein. 47. & 48. Accepted and incorporated herein. 49. Accepted. 50. - 52. Accepted. 53. & 54. Accepted and incorporater herein. 55. Accepted. 56. - 58. Accepted and incorporated herein. 59. Accepted. 60. Accepted and incorporated herein. 61. - 63. Accepted. 64. - 68. Accepted and incorporated herein. 69. - 75. Accepted and incorporated herein. 76. Accepted and incorporated herein. 77. Accepted. 78. Accepted. 79. Accepted. 80. Accepted and incorporated herein. 81. & 82. Accepted. 83. - 86. Accepted and incorporated herein. 87. Accepted and incorporated herein. 88. Accepted. 89. Accepted and incorporated herein. 90. Accepted. 91. Accepted and incorporated herein. 92. Accepted and incorporated herein. 93. Accepted and incorporated herein. 94. - 97. Accepted and incorporated herein. 98. - 100. Accepted and incorporated herein. 101. & 102. Accepted. 103. - 106. Accepted and incorporated herein. 107. Accepted and incorporated herein. 108. Accepted and incorporated herein. 109. Accepted. 110. Accepted. 111. - 114. Accepted. 115. Accepted and incorporated herein. 116. Accepted. 117. & 118. Accepted but more a comment on evidence than finding of fact. 119. & 120. Not a finding of fact but a comment on evidence. 121. Accepted. 122. - 125. Not findings of fact but comments on the evidence. 126. Accepted. 127. Not a finding of fact. 128. Accepted. 129. Not a finding of fact but more an argument. 130. Accepted. 131. Accepted. 132. - 133. Accepted and incorporated herein. 134. & 135. Accepted. Not a finding of fact but argument. Accepted. Not a finding of fact. Accepted. - 148. Not findings of fact but argument. 149. & 150. Accepted. 151. Not a finding of fact but argument. FOR THE RESPONDENT, DHRS: 1. Accepted and incorporated herein. 2. - 4. Accepted and incorporated herein. 5. - 11. Accepted and incorporated herein. 12. - 15. Accepted and incorporated herein. 16. - 19. Accepted and incorporated herein. 20. Accepted. 21. - 23. Accepted and incorporated herein. 24. Accepted and incorporated herein. 25. - 28. Accepted and incorporated herein. 29. - 35. Accepted and incorporated herein. 36. - 40. Accepted and incorporated herein. 41. Accepted. 42. Accepted and incorporated herein. 43. Accepted. 44. - 46. Accepted and incorporated herein. 47. & 48. Accepted and incorporated herein. 49. Accepted. 50. - 52. Accepted and incorporated herein 53. - 61. Accepted and incorporated herein. 62. & 63. Accepted. 64. Accepted and incorporated herein. 65. Accepted. 66. Accepted and incorporated herein. 67. Accepted. 68. - 75. Accepted and incorporated herein. 76. & 77. Accepted and incorporated herein. Not a finding of fact but a restatement of evidence. Accepted. - 84. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. & 89. Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. COPIES FURNISHED: R. Terry Rigsby, Esquire F. Philip Blank, Esquire Blank, Rigsby & Meenan, P.A. 204-B South Monroe Street Tallahassee, Florida 32301 Thomas R. Cooper, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive - Suite 103 Tallahassee, Florida 32308 C. Gary Williams, Esquire Michael Glazer, Esquire Ausley, McMullen, McGehee, Carothers & Proctor 227 South Calhoun Street Tallahassee, Florida 32302 John Slye General Counsel DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700 Sam Power Agency Clerk DHRS 1323 Winewood Blvd. Tallahassee, Florida 32399-0700
Findings Of Fact Background On July 31, 1987, the Department of Health and Rehabilitative Services (HRS) published in the Florida Administrative Weekly an announcement of the fixed need pools for the subject batching cycle, which pertained to the planning horizon of July, 1992. According to the notice, the fixed need pool, which was calculated pursuant to Rules 10-5.008(6) and 10-5.011(m), (n), (o), and (q), Florida Administrative Code, was adjusted according to the occupancy rate thresholds as prescribed by said rules. The net adjusted need for short-term psychiatric beds in District 7 was zero. By letter to HRS dated August 12, 1987, the North Brevard County Hospital District, doing business as Jess Parrish Memorial Hospital (Jess Parrish), provided notice of its intent to apply for a certificate of need to convert 16 beds from medical/surgical to psychiatric. By Application for Certificate of Need dated September 14, 1987, Jess Parrish requested that HRS grant a certificate of need for the conversion of 16 medical/surgical beds to 16 adult short-term psychiatric beds at a cost of $46,100. Jess Parrish is a tax-exempt organization whose board of directors have been authorized by law to levy ad valorem taxes in a special tax district in north Brevard County for the support of the hospital. The main hospital is located at 951 North Washington Avenue in Titusville, which is in north Brevard County. Brevard County is located in HRS District 7. By letter to Jess Parrish dated October 5, 1987, HRS requested additional information. By response dated November 9, 1987, Jess Parrish supplied the requested responses to omissions. By letter dated November 18, 1987, Jess Parrish provided additional information desired by HRS. By letter dated December 22, 1987, Wuesthoff Hospital (Wuesthoff) informed HRS that it objected to the above-described application because of absence of need. The letter states that Wuesthoff maintained an occupancy rate of 74% during the past year in its 25 short-term psychiatric beds. Wuesthoff is located in Rockledge, which is in central Brevard County. By letter and State Agency Action Report dated January 25, 1988, HRS informed Jess Parrish of its intent to issue the requested certificate of need for the conversion of the 16 beds. By Petition for Formal Administrative Hearing filed February 23, 1988, Wuesthoff challenged the intent to award the certificate of need to Jess Parrish and requested a formal hearing. The Application and Approval Process The application for the certificate of need states that Jess Parrish has a total of 210 beds, consisting of 172 medical/surgical beds, 10 obstetric beds, 20 pediatric beds, and 8 intensive care unit beds. The application contains all elements required by law, including a resolution authorizing the application and financial statements. The application and omissions response state that Jess Parrish admitted about 100 psychiatric patients in fiscal year ending 1987. The omissions response adds that Jess Parrish would offer the following programs for its short-term psychiatric patients: continual evaluation, screening, and admissions; individual, family, and group therapy; occupational, recreational, and vocational therapy; psychological and psychiatric testing and evaluation; day hospital and day clinic; family and friends education and support groups; and specialized treatment programs for geriatric psychiatric patients. The omissions response reports that the only facility with adult short-term psychiatric beds within 45 minutes of Jess Parrish is Wuesthoff. The omissions response states that Wuesthoff had experienced the following occupancy rates in its adult short-term psychiatric program: 1984--59%; 1985--66%; 1986-- 7l%; and first three quarters of 1987--71%. The omissions response acknowledges that Jess Parrish and Circles of Care, Inc. (Circles of Care) had jointly prepared the application and that Jess Parrish "plans to employ by contract, Circles of Care, Inc. to operate and manage our unit" if the application is approved. The omissions response includes a letter to HRS dated November 10, 1987, from James B. Whitaker, as president of Circles of Care. The letter describes the 12-year relationship between the two parties, which began when Circles of Care leased its first 12 beds from Jess Parrish between 1974 and 1980. Mr. Whitaker states that the two parties thus "work[ed] out a management agreement; for the new sixteen bed unit that Jess Parrish has requested." In the State Agency Action Report, HRS notes that the project does not conform with Policy 4 of the applicable District 7 Local Health Plan. This policy provides that additional short-term inpatient psychiatric beds may be approved when the average annual occupancy rate for all existing facilities in the planning area equals or exceeds the following rates: adult--75% and adolescents/children--70%. HRS reports a similar discrepancy as to the occupancy standard in the State Health Plan, which incorporates at Objective 1.2 the same 70%/75% standards. HRS states in the State Agency Action Report that the 1986 occupancy rates for short-term psychiatric beds, which averaged 69.98% in Brevard County, were 87% at Circles of Care, 70.6% at Wuesthoff, and 14% at a new facility, C. P. C.--Palm Bay. In addition, for the first six months of 1987, the report states that the occupancy rates, which averaged 63.5% in Brevard County, were 76% at Circles of Care, 71.5% at Wuesthoff, and 43% at C. P. C.--Palm Bay. In calculating numeric need under the rule, HRS concludes that there was a net need for a total of 547 beds in the district, consisting of 312 in specialty hospitals and 235 in general hospitals. Addressing the provision of the District 7 Local Health Plan focusing upon need at the county level, HRS finds that there was a net need for a total of 38 beds. Recognizing the "sub- standard utilization" of existing short-term psychiatric beds, HRS states that the application was justified "mainly because of the enhanced access to services that the project would provide." All of the other criteria were fully satisfied with one irrelevant exception, and the State Agency Action Report concludes: Although the district and county utilization of short-term psychiatric beds falls below the 70% [sic) adult standard, this project merits a Certificate of Need because there exists numeric need in the service area and because the project affords greater access and availability to psychiatric services for underserved groups. Need District and State Health Plans Part 3 of the 1985 District 7 Local Health Plan, published by The Local Health Council of East Central Florida, Inc., sets forth policies and priorities for inpatient psychiatric services. Policy 1 establishes each of the four counties of District 7 as a subdistrict for purposes of planning inpatient psychiatric services. Policy 3 of the 1985 District 7 Local Health Plan provides a specific methodology to allocate beds when the numeric need rule methodology indicates a need for inpatient psychiatric beds. A minimum of .15 beds per 1000 projected population should be allocated to hospitals holding a general license. A total of .20 beds per 1000 projected population may be located in specialty hospitals or hospitals holding a general license. The population projections are for five years into the future. Policy 4 of the 1985 District 7 Local Health Plan provides that additional short-term inpatient psychiatric beds may be approved when the average annual occupancy rates for all existing facilities in the planning area equal or exceed 75% for adult facilities and 70% for adolescents/children facilities. The policy concludes: Additional beds should not be added to the health system' until the existing facilities are operating at acceptable levels of occupancy. Good utilization of existing facilities prior to adding beds aids in cost containment by preventing unnecessary duplication. The 1988 District 7 Local Health Plan, although inapplicable to the subject proceeding, refers to the pending application of Jess Parrish. The plan states: [T]he residents of District 7 appear to be well-served by the existing providers with only a few exceptions. First, residents of north Brevard County (Titusville area) currently have no access to any certified, short-term, inpatient psych services in less than 22 miles. In many driving situations this distance takes longer than 30-45 minutes to traverse. . . . If [the CON that has been tentatively approved] is sustained through litigation and the unit is finally opened availability of these 16 beds should ameliorate, to a large degree, the potential geographic access problems for north Brevard adult/geriatric patients at least. Objective 1.1 of the 1985-1987 State Health Plan states that the ratio of short-term inpatient hospital psychiatric beds to population should not exceed .35 beds to 1000 population. Objective 1.2 states that, through 1987, additional short-term psychiatric beds should not normally be approved unless the service districts has an average annual occupancy of 75% for existing and approved adult beds and 70% for existing and approved adolescents/children beds. Numeric Need Pursuant to HRS Rules Net Need Rule 10-5.011(1)(o)4., Florida Administrative Code, sets forth the HRS numeric need methodology. The rule provides that the projected number of beds shall be determined by applying the ratio of .35 beds to 1000 population to the projected population in five years, as estimated by the Executive Office of the Governor. The relevant projected population for District 7 is 1,564,098 persons. Applying the ratio, the gross number of beds needed in District 7 is 547. The total number of existing and approved short-term psychiatric beds in District 7 in 1987 was 410. There is therefore a net need for 137 short-term psychiatric beds in District 7. The relevant projected population for Brevard County is 441,593 persons. Applying the ratio, the gross number of beds needed in Brevard County is 155. The total number of existing and approved short-term psychiatric beds in Brevard County in 1987 was 117. There is therefore a net need for 38 short- term psychiatric beds in Brevard County. A minimum of .15 beds per 1000 population should be located in hospitals holding a general license, and .20 beds per 1000 population may be located in specialty hospitals or hospitals holding a general license. The calculations disclose that, for District 7, there is a net need of 73 beds in the former category and 65 beds in the latter category. As to Brevard County, the respective numbers are 41 and 4. Rule 10-5.011(1)(o)4.d., Florida Administrative Code, provides that new facilities for adults must be able to project a 70% occupancy rate for the first year and 80% occupancy rate for the third year. Jess Parrish projects that its short-term psychiatric program will experience a utilization rate of 66% at the end of the first complete year of operation and 82% at the end of the third complete year of operation. These projections are reasonable and substantially conform with the requirements of the rule. Rule 10-5.011(1)(o)4.e., Florida Administrative Code, provides that no additional short-term inpatient beds shall normally be approved unless the average annual occupancy rate for the preceding 12 months in a "service district" is at least 75% for all existing adult short-term inpatient psychiatric beds and at least 70% for all adolescents/children short-term inpatient psychiatric beds. HRS considered the 70%/75% occupancy standards in making the July, 1987, announcement of a zero fixed need pool for short-term psychiatric beds in Brevard County. The determination of zero fixed need was a reflection that, although numeric need existed, the occupancy standards had not been satisfied. The incorporation of the occupancy standard into the July, 1987, fixed need calculation represented a deviation from nonrule policy deferring computation of the occupancy levels until the application-review process. The prior announcement of a fixed need pool on February 27, 1987, stated that a number of beds were needed even though the occupancy situation in District 7 was about the same. Subsequent announcements likewise deferred consideration of the occupancy standard. HRS has explicated its nonrule policy of excluding occupancy standards from the calculation of numeric need when publishing fixed need pools. Unlike the relatively simple task of determining the relevant population projection and multiplying it by the proper ratio, application of the occupancy standards, especially at the time in question, required numerous determinations and calculations. By attempting to incorporate the occupancy standards into the calculations upon which the fixed need pool were based, HRS increased the potential for error, which occurred in this case, rather than increased the reliability of the information. Although adequate reason exists for revising the July, 1987, published fixed need pool, Rule 10-5.008(2)(a), Florida Administrative Code, prohibits revisions to a fixed need pool based upon a change in need methodologies, population estimates, bed inventories, or other factors leading to a different projection of need, if retroactively applied. However, the revision of the July, 1987, fixed need pool does not represent a change in need methodologies, population estimates, bed inventories, or other factors leading to a different projection of need, if retroactively applied. The revision to the fixed need pool, which did not represent a change in need methodology or underlying facts, was a result of three legitimate considerations. First, HRS revised the fixed need pool to implement its policy decision to limit the fixed need pool to the numeric need calculation and reserve the calculations of occupancy standards to the application-review process. This consideration does not involve a change in the methodology of determining numeric need or applying occupancy standards. Second, HRS revised the fixed need pool to correct earlier, erroneous calculations. This consideration does not involve a change in the underlying facts, but merely in the computations based upon the same facts. Third, HRS revised the fixed need pool to reflect developing policy in the application of the occupancy standards. HRS decided to apply the more liberal 70% occupancy standard to facilities serving both adults and adolescents/children, exclude from the determination of occupancy levels any facilities serving only age cohorts not served by the applicant, and restrict the 75% occupancy standard to facilities serving adults only. HRS made these changes, which it felt would not harm existing providers, in recognition of the failure of data provided by health-care suppliers to distinguish between adult and adolescents/children admissions and patient days. These considerations approximate a change in methodology, but the revision resulting from such considerations does not violate the rule because HRS already has shown that consideration of the occupancy standards should not take place until after publication of the fixed need pool. In the present case, two facilities in District 7 serve only adolescents/children. These facilities are C. P. C.-- Palm Bay and Laurel Oaks, which is in Orange County. Eliminating their occupancy rates, the district occupancy rate in the year ending June 30, 1987, was 71.9%. Removing the occupancy rate of C. P. C.--Palm Bay from Brevard County, the county occupancy rate during the same period was over 75%. Under the revised policies, Brevard County had a net need of 38 short- term psychiatric beds, applicable occupancy standards in the county and district were satisfied, and the July, 1987, publication of a fixed need pool of zero did not preclude the finding of need under other than "not normal" circumstances. Accessibility Financial Accessibility The primary service area of Jess Parrish is north Brevard County. A higher percentage of the population of this area lives below the poverty level than does the population of any other sub-region of Brevard County. According to the 1980 Census data, the applicable percentages of area residents living below the poverty level were 12.7% in north Brevard County, 10% in central Brevard County, 8.4% in south Brevard County, and 9.6% in Brevard County overall. Partly as a reflection of the different sub-regions and partly as a reflection of the commitment of Jess Parrish to provide access to underserved populations, Jess Parrish provides considerably more services to Medicaid patients than does either of the other major general hospitals in central and south Brevard County. In 1987, 11.5% of the admissions and 8.9% of the patient days at Jess Parrish were Medicaid. The respective numbers are 7% and 6% for Wuesthoff and 5.8% and 3.9% for Holmes Regional Medical Center, which is in Melbourne. A key component of financial accessibility is the effect of the proposed program on Circles of Care. About 55% of the patients of Circles of Care are indigent. Another 17% of its patients earn between the minimum wage and $15,000 annually. Circles of Care has participated in all phases of the application process on behalf of Jess Parrish. The approval of the new program would not have an adverse effect on Circles of Care. To the contrary, the new program at Jess Parrish would provide Circles of Care with more treatment options, especially with respect to indigent patients, whose need for short-term psychiatric services has proven at times difficult to meet. These options are especially valuable at a time when there is no net need in Brevard County for any more short-term psychiatric beds in specialty hospitals, such as Circles of Care. The 52 psychiatric beds licensed to Circles of Care are in two different units contained within a single hospital facility located in Melbourne, which is in south Brevard County. Sheridan Oaks is a 24-bed, private unit, which cannot accept many Baker Act patients without adversely affecting the other patients and the psychiatrists who refer private-pay patients to this unit. The other unit is a public Baker Act receiving facility with 28 beds, for which Circles of Care receives state funds. Unlike Sheridan Oaks, the public receiving facility employs the psychiatrists who work there. About 85-90% of all Baker Act patients in Brevard County come through this public receiving facility, whose occupancy rate was 98% in the year ending June 30, 1987. In addition to these units, Circles of Care operates a mental health outpatient clinic in Titusville, an outpatient/inpatient treatment center in the Rockledge/Cocoa area, numerous social clubs throughout Brevard County for the chronic mentally ill, and numerous public education and awareness programs concerning the treatability of mental illness. Another limitation of being a specialty hospital is that Circles of Care does not qualify for Medicaid reimbursement. Jess Parrish, as a general hospital, qualifies for such reimbursement and projects in its application that 39% of its patient days will be Medicaid and 9% of its patient days will be indigent. Geographic Access Jess Parrish is located at the north end of Brevard County, which runs about 80 miles north-south. Wuesthoff is about 25 miles south of Jess Parrish, and Titusville is about 40 miles north of Melbourne. Intercity north-south traffic uses Interstate 95, which is west of the above-described cities, and U.S. Route 1, which runs through the center of each of these cities. Rule 10-5.011(1)(o)5.g., Florida Administrative Code, provides that short-term inpatient psychiatric services should be located within a maximum travel time of 45 minutes under average travel conditions for at least 90% of the population of the service area. This criterion is presently met without the addition of short-term psychiatric beds at Jess Parrish. This factor is outweighed, however, by another factor in this case. Jess Parrish projects about half of its patients will be indigent or Medicaid, and north Brevard County has a disproportionate share of the county's impoverished residents. Average travel conditions for these persons require public transportation, which, in north Brevard County, is limited to Greyhound/Trailways and local taxi companies. Exclusive of time waiting for the bus and traveling to and from the bus stations, the time for the 25-mile trip between Titusville and Rockledge, of which there are three or four trips daily (excluding off-hour trips), ranges from 25-35 minutes. There is evidence in the record that mentally ill bus passengers do not always make it to their intended destinations by way of intercity buses. The use of available public transportation is therefore problematic, but in any event adds considerable time to the travel time to Wuesthoff for those individuals who do not own a motor vehicle. Effect on Wuesthoff The effect of the conversion of medical/surgical beds to short-term psychiatric beds will have no material effect on Wuesthoff, even though it did reduce the number of short-term psychiatric beds from 30 to 25 in 1986. The occupancy rate for Wuesthoff's short-term psychiatric unit in 1987 was 70.6%. The prime service areas of Wuesthoff and Jess Parrish as to psychiatric admissions do not substantially overlap. Although Jess Parrish may be expected to draw more patients from Wuesthoff's prime service area following commencement of the new operation, many of Jess Parrish's patients will be from the indigent and Medicaid payor classes for which the competition is not intense. The addition of a 16-bed short-term psychiatric unit at Jess Parrish will not materially influence the availability of qualified personnel for Wuesthoff. It appears that Jess Parrish will be able to staff the relatively small 16-bed unit without employing significant numbers of professional employees of Wuesthoff. Some of the relatively few patients whom Wuesthoff can be expected to lose to Jess Parrish involve referrals from Titusville-area physicians, psychiatrists, and psychologists, who will place their patients in the closer facility once it is opened. The negative impact upon Wuesthoff is outweighed in these cases by gains for the patients in continuity of care and community support. Financial Feasibility The short-term financial feasibility is good. Jess Parrish has available to it sufficient funds to undertake the relatively modest capital outlay in constructing the facility, which will consist of about 8000 square feet on an existing floor of the hospital. The long-term financial feasibility is generally good. The financial projections are based on reasonable assumptions, which are largely derived from the actual experience of Circles of Care. The projections accurately estimate revenue sources and expenses. Jess Parrish reasonably projects an adequate supply of patients from a combination of sources, including Circles of Care, existing patients whose diagnoses include psychiatric components, and numerous health-care professionals in north Brevard County. The financial projections contemplate a material contribution by Circles of Care, but project no compensating expenditures. However, this deficiency is largely offset by the likelihood that the financial participation of Circles of Care will be restricted to a share of any excess of revenues over expenses of the new project, possibly excluding reimbursement of fairly minor expenses. If that is the case, the effect of any management agreement would be only to reduce the excess of revenues over expenses enjoyed by Jess Parrish from the operation of the short-term psychiatric unit. The management agreement would not expose Jess Parrish to losses that would not have otherwise existed but for the agreement to make payments to Circles of Care. Under these circumstances, the omission of the information, although material, does not seriously cast into doubt the long-term financial feasibility of the project. Quality of Care The quality of hospital care offered by Jess Parrish is excellent. The quality of the various psychiatric services offered by Circles of Care is also excellent. Both facilities are accredited by the Joint Commission on the Accreditation of Hospitals. The issue in this case involves the quality of care to be expected in the 16-bed short-term psychiatric unit for which Jess Parrish seeks a certificate of need. Circles of Care and Jess Parrish have agreed that Circles of Care will be responsible for recruiting most of the personnel for the new program and will employ the program's medical director, who will be responsible for treatment decisions. In addition, Circles of Care will advise Jess Parrish as to the adoption of policy, which will remain ultimately the responsibility of Jess Parrish. Jess Parrish will employ the head nurse and all other full-time professional staff working in the unit. The tentativeness of the arrangement between Circles of Care and Jess Parrish is partly explained by the desire of both parties to avoid the time and expense of negotiating an agreement in every detail prior to obtaining final approval of the certificate of need. In addition, both organizations were devoting substantial time to the subject litigation, for which Circles of Care was paying a portion of the expenses. In the final analysis, the failure to work out the agreement, although not a positive feature of the application, is not a serious problem for two reasons. First, Circles of Care and Jess Parrish have a long history of mutual cooperation. The relationship began when Jess Parrish leased Circles of Care 16 hospital beds for psychiatric use. Although the arrangement ended several years ago when Circles of Care constructed its Melbourne facility, the two organizations have since cooperated in several less intensive ways. Second, although Circles of Care has superior expertise in the area of mental health, Jess Parrish qualifies by itself to operate the proposed facility. Circles of Care has already provided much of the necessary technical information required for the preparation of budgets and pro formas. Recruiting would probably take somewhat longer without Circles of Care, but the modest construction budget obviously does not involve significant debt service, so that the delay would not be costly. Perhaps the most significant loss from a quality-of-care perspective would be the medical director, whose expertise will be critical. Again, this would be largely a problem of delay only, as Jess Parrish would have to find a replacement, although it appears likely that the director may be Dr. David Greenblum, who is already a member of the active medical staff at Jess Parrish. Given the quality of care provided by Jess Parrish in the past, there is no basis for any concern that, in the unlikely event that the parties fail to negotiate an agreement, Jess Parrish would jeopardize its reputation as a quality 200-bed general hospital in order to commence prematurely a 16-bed short- term psychiatric unit. Other Factors The record does not demonstrate that there are less costly, more efficient, or more appropriate alternatives to the inpatient services proposed in the subject application. There are no crisis stabilization units or short-term residential treatment programs available in Brevard County. The proposed project will have a measurable impact only upon Circles of Care, whose existing inpatient facilities will be enhanced, and Wuesthoff, whose existing inpatient facilities will not be materially affected. In general, these existing services are being used in an appropriate and efficient manner. On the other hand, the beds that Jess Parrish seeks to convert are underutilized in their present designation. The medical/surgical beds at Jess Parrish have been utilized at a rate of less than 60% over the past three years. There are no feasible alternatives to renovation of the existing facilities. The costs and methods of proposed construction are reasonable and appropriate. The approval of the application will foster healthy competition in the area of short-term psychiatric services and promote quality assurance.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Health and Rehabilitative Services enter a Final Order granting the application of Jess Parrish for a certificate of need to convert 16 medical/surgical beds to 16 short-term adult psychiatric beds. DONE and ENTERED this 30th day of June, 1989, in Tallahassee, Florida. ROBERT E. MEALE 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 30th day of June, 1989. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1220 Treatment Accorded Proposed Findings of Jess Parrish 1-6 Adopted or adopted in substance. 7-8 Rejected as irrelevant. 9-10 Adopted or adopted in substance. 11 Rejected as recitation of testimony and subordinate. 12-13 Adopted or adopted in substance. Rejected as irrelevant. Adopted to the extent of the finding in the Recommended Order that there likely will be an agreement between Circles of Care and Jess Parrish. Rejected as unsupported by the evidence that such an agreement exists already. Also rejected as unnecessary insofar as the application can stand on its own without the participation of Circles of Care. 15a Adopted or adopted in substance. 15b-15c Rejected as irrelevant. 15d-15g Adopted in substance, although certain proposed facts rejected as subordinate. However, the first sentence of Paragraph 15f is rejected as against the greater weight of the evidence. 15h Rejected as recitation of testimony. 16-18 Adopted or adopted in substance except that all but the last sentence of Paragraph 18g. is rejected as against the greater weight of the evidence and legal argument. 19 First sentence adopted. 19 (remainder) -22. Rejected as subordinate and recitation of evidence. Generally adopted, although most of the facts are rejected as subordinate in the overall finding and cumulative. Adopted except that sixth sentence is rejected as against the greater weight of the evidence and the seventh sentence is rejected as subordinate. Adopted in substance. First sentence adopted. Remainder rejected as irrelevant. Rejected as irrelevant. Adopted. 28a Rejected as unsupported by the greater weight of the evidence. 28b-28d Adopted or adopted in substance. and 31 Rejected as subordinate. Rejected as unnecessary. 32-50 Adopted or adopted in substance. Treatment Accorded Proposed Findings of HRS 1-11 Adopted or adopted in substance. & 14 Rejected as irrelevant. & 15-16 Adopted. 17 Rejected as unnecessary. 18-74 See rulings on Paragraphs 16-50 in preceding section. Treatment Accorded Proposed Findings of Wuesthoff 1-3 Adopted or adopted in substance. Rejected as irrelevant. Rejected as against the greater weight of the evidence and legal argument. 6-10 & 12 Adopted or adopted in substance. 11 Rejected as against the greater weight of the evidence. Rejected as recitation of testimony and cumulative. Rejected as cumulative except that second sentence is adopted. Rejected as recitation of testimony. Rejected as cumulative, subordinate, and legal argument. Rejected as cumulative except that second sentence is adopted. First clause rejected as against the greater weight of the evidence. Remainder rejected as irrelevant. Rejected as cumulative and subordinate. 20-23 Rejected as irrelevant and unnecessary. Rejected as against the greater weight of the evidence. Rejected as irrelevant and unnecessary. Rejected as cumulative. 27-28 Rejected as irrelevant and unnecessary. 29 Rejected as legal argument. 30-32 Rejected as irrelevant. 33-41 Rejected as against the greater weight of the evidence and subordinate. 42 and 51 Rejected as recitation of evidence. 43-45 Rejected as against the greater weight of the evidence. 46 Rejected as legal argument. 47-50 and 52-54 Rejected as subordinate. 55 Rejected as against the greater weight of the evidence. 56-59 Rejected as irrelevant. 60-66 Rejected as subordinate and recitation of testimony. 67-69 Rejected as against the greater weight of the evidence. 70-73 Rejected as against the greater weight of the evidence and subordinate. 74-78 Adopted. 79 Rejected as against the greater weight of the evidence. 80-82 Adopted. 83-85 Rejected as against the greater weight of the evidence. 86 Rejected as subordinate and against the greater weight of the evidence. 87-91 Adopted or adopted in substance. 92 Rejected as against the greater weight of he evidence. 93-94 Rejected as subordinate. Rejected as against the greater weight of the evidence. Rejected as irrelevant. 97-98 Rejected as against the greater weight of the evidence. Rejected as irrelevant. Rejected as subordinate. 101-102 Rejected as against the greater weight of the evidence. Rejected as partly cumulative and partly legal argument. Rejected as against the greater weight of the 105 evidence Rejected and irrelevant. as against the greater weight of the 106-108 evidence. Rejected as subordinate. 109 110-113 Rejected evidence. Rejected as against the greater weight of as subordinate. the 114-117 118-120 Rejected evidence. Rejected as against the greater weight of as irrelevant and subordinate. the 121-122 Rejected as subordinate. 123 124-125 First sentence adopted in substance. Remainder rejected as subordinate. Rejected as subordinate. 126-129 Rejected as unsupported by the greater weight of evidence. the COPIES FURNISHED: Anthony Cleveland W. David Watkins Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 6507 Tallahassee, Florida 32314-6507 John Rodriguez 1323 Winewood Boulevard Building 1, Room 407 Tallahassee, Florida 32399-0700 William B. Wiley Darrell White McFarlain, Sternstein, Wiley & Cassedy, P.A. Post Office Box 2174 Tallahassee, Florida 32316-2174 Stephen M. Presnell MacFarlane, Ferguson, Allison & Kelly Post Office Box 82 Tallahassee, Florida 32302 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
