Findings Of Fact Manor Care properly and timely filed with HRS its certificate of need application in July 1985. Hearing Officer's Ex. 2, T. 163. On July 15, 1986, Health Care and Retirement Corporation of America timely filed a petition to intervene alleging that its substantial interests would be affected by this case because it was an earlier batched applicant for the same health services in the same service district. On July 21, 1986, counsel for HRS wrote to counsel for Health Care and Retirement Corporation of America confirming that it is the position of HRS that "non-final CON approval of a subsequent application does not count against a prior application when that prior application proceeds to administrative hearing." Hearing Officer's Ex. 1. No ruling has been made on the petition to intervene due to this letter, and there has been no further request by Health Care and Retirement Corporation of America to have its petition to intervene ruled upon. The petition to intervene therefore remains pending. The only criterion at issue in this case is need. T. 145-6. Criteria 3, 4, 5, 6, 7, 10, 11, 12 and 13 of section 381.494(6)(c)m, Fla. Stat., are not in dispute in this case. Financial feasibility is not in dispute except for the dispute as to need. Criterion 8 is in dispute only with respect to "the availability of alternative uses of such resources for the provision of other health services, and the extent to which the proposed services will be accessible to all residents of the service district." Criterion 9 is in dispute only with respect to whether Manor Care can achieve its projected utilization and Medicare projected utilization. Hearing Officer Ex. 2. Manor Care has sufficient and available health manpower resources, management personnel resources, and capital and operating expenditures for project accomplishment and operation. Hearing Officer Ex. 2. The costs and methods of the Manor Care proposed construction are reasonable, and there are no alternative, less costly, or more effective methods of construction available. Hearing Officer Ex. 2. Manor Care proposes to develop 60 community nursing home beds as a skilled nursing facility. T. 17. Some of the skilled nursing services that it would offer include intravenous therapy, hyperalimentation therapy, nasogastric feeding, gastroscopy feeding, tracheostomy care, and bowel and bladder training. Id. Additionally, the proposed 60 beds would be supported by intermediate nursing services, rehabilitation services, physical therapy, occupational speech therapy, respiratory therapy, recreational therapy, and community programs. Id., Manor Care Ex. 1, p. 2. Manor Care also proposes to offer respite nursing care, which is short-term inpatient nursing care. T. 18. In addition to the 60 community nursing home beds which are the subject of these proceedings, Manor Care proposes to provide an attached 60 bed adult congregate living facility (ACLF). T. 18. An ACLF may be operated without a certificate of need. The ACLF will be in an attached wing of the building. Id. The ACLF wing is intended to provide services for persons not needing skilled nursing care. The 60 community nursing home beds would be used for acutely ill persons in need of skilled nursing care. T. 23. The ACLF would provide assistance in daily activities and one hour a day of personal care, but would not involve nursing care. T. 18, 23. Having the ACLF attached to a nursing home will allow for easier transitions for patients from one level of care to another (ACLF to nursing, and return) and will give ACLF residents access to therapies in the nursing wing. T. 24. An ACLF may also be useful to allow a spouse to be closer to a patient in the nursing wing where the at-home spouse needs assistance with daily activities. T. 80. Manor Care proposes to locate the facility in west Tampa, Florida. T. 26. Manor Care projects a payor mix of 60 percent private pay, 30 percent Medicaid, and 10 percent Medicare. T. 26. The Medicare average in Hillsborough County is 4 percent. T. 27. About one-third of the nursing homes in Hillsborough County do not participate in Medicare, T. 28, and these would not be able to take Medicare patients needing skilled nursing services. Id. District VI has about 58 percent Medicaid beds. Manor Care Ex. 4. Manor Care projects an occupancy of 60 percent on the average in the first year, and 90 percent average in the second year. T. 28. The two nursing facilities that opened in Hillsborough County in 1985 achieved 90 percent occupancy in less than a year. T. 22. Given the findings of need and occupancy levels elsewhere in this recommended order, it is reasonable to believe that the projections of occupancy are reasonable and will occur. The projected opening date for the proposed facility is December 1988. T. 29. Petitioner's proposed facility will be consistent with the following criteria contained in the local health plan applicable to Hillsborough County: The local plan ranks Hillsborough County, northwest, as priority 1 among 6 regional priorities. This proposal is consistent with this criterion. T. 30, Manor Care Ex. 1. The local plan provides that applicants should at a minimum serve Medicaid patients in proportion to the representation of elderly poor in the subdistrict. T. 30. The subdistrict of Hillsborough County, northwest, has 18.6 percent persons age 65+ in poverty. Manor Care Ex. 1. The proposed facility is consistent with this criterion. The local plan provides preference to applicants who historically complete projects on time. Manor Care's record on this point is consistent with this criterion. T. 31. See also paragraph 3 above. The local plan requires that existing nursing homes must have been at an average rate of 90 percent occupancy or greater for the six months prior to new beds being approved. Manor Care Ex. 1. The occupancy rate has been over 95 percent since October 1985, T. 31, so this criterion is satisfied. The local plan requires that available alternatives be considered. Manor Care Ex. 1. There are no available alternatives. The local plan requires as a goal that the nursing home be within 30 minutes travel time of 90 percent of the urban residents and 45 minutes travel time of 90 percent of the rural residents. Manor Care Ex. 1. There is unrebutted evidence that this proposal will be consistent with that criterion. T. 32. The local plan requires evaluation of the proposal against the achievement of the applicant of superior quality of care. Manor Care Ex. 1. Quality of care has not been questioned by HRS in this case. See finding of fact 5. Moreover, Manor Care has presented sufficient evidence that it will provide care of good quality. T. 45-9, 59-82. The proposal is consistent with the state health plan since there is a need for the project, and the state health plan goals of consistency with state methodology and accessibility of services, are primarily related to need. T. The services will be accessible to those with need. T. 33. The Department of Health and Rehabilitative Services relies upon rule 10-5.11(21), Florida Administrative Code, to calculate bed need in this case. Hearing Officer Ex. 2, p. 2. All parties have calculated need using Hillsborough County as the proper subdistrict in District IV. Manor Care Ex. 14 accurately summarizes the mathematical method of the rule. Manor Care Ex. 6. The method of calculation relied upon by HRS in this case depends upon application of incipient policy which seeks to implement the decision in the Gulf Court case. T. 154-5. That policy is initially contained in HRS Ex. 2, which is a memorandum from Steven W. Huss, General Counsel, dated March 6, 1986, and adopted as policy by the Administrator of Community Medical Facilities, Office of Health Planning and Development. The memorandum states that the "planning horizon" applicable to all applications for certificates of need shall be projected from the filing deadline of the application, but that "applications shall be evaluated using current or available data for projecting need for the applicable horizon. . . ." HRS Ex. 2. Included in the definition of "current health planning information" is "population." Id. The policies are not rules. T. 159. The Department of Health and Rehabilitative Services put on no evidence to demonstrate the reasonableness of these policies as applied to the Petitioner in this case. T. 160. In the case at bar, HRS proposes to implement the foregoing policy by establishing a "planning horizon" three years from the date that Petitioner's application was date-stamped in, but using "current data," meaning data as of the date of the formal administrative hearing. T. 154. The application was received in July 1985, and thus HRS proposes to establish July 1988 as the planning horizon. T. 163. It also proposes to use population estimates, the number of licensed and approved beds in the subdistrict, and the occupancy levels, from the most recent semiannual community nursing home report as of the date of the formal administrative hearing. T. 163-4. Thus, for "current populations," HRS proposes to use 1986 estimates of 1986 populations. T. 165. Following rule 10-5.11(21) and applying the foregoing incipient policy, the Department calculates a need for 51 community nursing home beds in subdistrict Hillsborough County in the horizon year, July 1988. HRS Ex. 1, T. 154. This calculation is identical to Manor Care Ex. 16. T. 154. The Department proposes to deny Petitioner's application because this calculation does not show at least 60 beds needed. T. 145. 20. Following essentially the same mathematical formula contained in the rule, but with a single critical difference, the Petitioner calculates net bed need in Hillsborough County in July 1988 as 184 beds. T. 105, Manor Care Ex. The critical difference is that Manor Care Ex. 15 uses a July 1, 1986 estimate of 1985 population in calculating "bed rate" within the mathematical formula of the rule. As stated above, HRS proposes to use the 1986 estimate of the 1986 population. Compare Manor Care Ex. 23 with Manor Care Ex. 15 and HRS Ex. 1. It should be noted that this distinction is not at all clear from an examination of Manor Care Ex. 15, which erroneously refers to the ages 65-74 population of 129,366 as "July 1, 1986," population, and the ages 75+ population of 89,297 as population of "July 1, 1986," also. These populations, however, are actually 1986 estimates of 1985 populations. See Manor Care Ex. 23. Manor Care's expert witness did not clearly make this distinction either, calling these "July 1, 1986," population projections, and referring to a "base period of July 1, 1985," without defining what he meant by "base period." T. 103-4. The difference of 133 beds (184 compared to 51) in the two calculations proposed by the parties is caused by the fact that the so-called "bed rate" in the rule is inversely proportional to the population which is assumed to need the nursing home beds. Rule 10-5.11(21)(b) employs a "bed rate" defined as the number of licensed beds divided by the population ages 65 and older, presumably the primary users of nursing home beds. This so-called "bed rate" is then multiplied against the future population of expected users to obtain a bed need figure. (In effect the rule projects the status quo into the future.) If licensed beds, the numerator of the fraction, remains constant (as it does in the two methods discussed above), but the denominator increases (as it does when HRS uses 1986 populations instead of 1985), then the so-called "bed rate" decreases. This result can be traced mathematically for the two methods. Rule 10-5.11(21)(b) calculates a "bed rate" for the population ages 65-74 (called BA) and 75+ (called BB). The number of licensed beds in the district, 5,617, remains constant in both methods. But in Manor Care Ex. 15, the 1986 estimates of 1985 population are 129,366 for the population ages 65-74, and 80,297 for the population ages 75+. In HRS Ex. 1 (and Manor Care Ex. 16) the 1986 estimate of 1986 population ages 65-74 is 133,730 and population ages 75+ is 93,666. The bed rate using the lower population figures (Manor Care Ex. 15) is 104.596 percent of the bed rate using 1986 estimates of 1986 population. In step 4 of the formula as presented in Manor Care Exs. 15 and 16, the preliminary subdistrict bed allocation (SA) is a result of multiplying the bed rate times the licensed beds. Consequently, the result using 1985 populations is a preliminary subdistrict bed allocation of 3,031. Using 1986 populations, the preliminary subdistrict bed allocation is 2,898. The expected difference is 104.596 percent of 2,898, or 133 beds. Manor Care's expert witness presented an alternative calculation of bed need which used 1986 estimates of 1986 population to derive the bed rates BA and BB, but used 1989 as the planning horizon. T. 110. In this manner, the three-year period specified in the rule commences from the date of the formal administrative hearing. Everything else was the same as HRS Ex. 1. This method results in a subdistrict bed need in Hillsborough County of 162. T. 110, Manor Care Ex. 17. The difference of 111 net beds between the method in HRS Ex. 1 and Manor Care Ex. 17 is the result of the increase of population in the two age groups projected between 1988 and 1989. Although the bed rates in HRS Ex. 1 and Manor Care Ex. 17 are lower than the bed rates in Manor Care Ex. 15, these bed rates are multiplied directly against the projected populations in the horizon year. Rule 10-5.11(27)(b)1, Florida Administrative Code. The increase in projected population in 1989, compared to 1988, results in a need for 111 more beds despite the fact that both methods (HRS Ex. 1 and Manor Care Ex. 17) use the same bed rate. In summary, comparing Manor Care Exs. 15 and 17 and HRS Ex. 1, it must be concluded that the effect in HRS Ex. 1 of using population data as of the time of the formal administrative hearing, but projecting need for a three-year period commencing before the formal administrative hearing, causes a diminution of projected need in all cases where the relevant population is increasing. On the one hand, the increase in populations used to compute bed rate results in a lower rate. On the other hand, the use of a horizon year that is less than the full three years from the date that the bed rate is calculated results in a lower horizon year population, and thus ultimately a lower net bed need. In effect, if the term "planning horizon" means a future date to which need is to be projected, beginning from a base date and using a need rate current as of the base date, then the method in HRS Ex. 1, which uses a 1986 bed rate projected to a 1988 population, is actually using only a two year "planning horizon." As will be discussed in the conclusions of law, the method used by HRS to calculated bed need is not legally correct because it does not use data current as of the date of the application. The method proposed by the Petitioner using a 1989 planning horizon is not legally correct because the Petitioner cannot apply for beds in that horizon without amending its application and changing to a later batching cycle. The method proposed by the Petitioner in Manor Care Ex. 15 is essentially correct in method. However, it uses the wrong data because it fails to use data for licensed beds and occupancy rates preceding the batching cycle as required by the rule. The correct calculation of need is the calculation found in Manor Care Ex. 15, but substituting the following data in the formula as indicated: LB 5,270 LBD 2,392 AB 824 ABD 488 (approved beds in the subdistrict) OR 0.962 POPA 141,736 POPB 102,242 POPC 129,366 POPD 89,297 LB and LBD are supposed to be as of June 1, 1985, according to the rule. At the conclusion of the hearing and after receipt of post hearing proposed findings it was discovered that the record did not contain these figures. Thus, an order was entered reopening the record for the limited purpose of having the parties submit this data as of June 1, 1985. The parties did so, but the only data in existence was as of May 1, 1985. There is no reason in this record to believe that the figures LB and LBD changed in the 30 days to June 1, 1985, and thus the figures provided are accepted as June 1, 1985, totals for LB and LBD. Further, if LB and LBD are to be derived from the figures from Hearing Officer's Ex. 4, which are May 1, 1986, figures, the number of approved beds for the district (AB) and subdistrict (to be termed ABD in this order) should also be from the exhibit. AB and ABD above thus are from Hearing Officer's Ex. 4. The occupancy rate, however, has been derived from Manor Care Ex. 22 for the reasons stated in finding of fact 32. LB, LBD, AB, ABD, and OR are new figures, and differ from Manor Care Ex. 15. All else in the computation which follows is the same as Manor Care Ex. 15. In this regard, POPA and POPB are 1986 estimates of 1985 populations, and POPC and POPD are 1986 estimates of 1988 populations. Strictly speaking, the rule seems to require 1985 estimates, but, as discussed in the conclusions of law, there seems to be little reason not to use the most recent estimates of these populations, which presumably would be more accurate. Substituting the above figures in the formula found in Manor Care Ex. 15, the following is the proper calculation of net bed need in this case: Step 1: A = (POPA x BA) + (POPB x BB) A = (141,736 x BA) + (102,242 x BB) A = (141, 736 x 0.007923) + (102,242 x 0.047538) Step 2: A BA = = 1123 + 4860 5983 LB (FOPC + (6 x POPD) BA = 5,270 5,270 BA = (129,366 + (6 x 89,297) 0.007923 665,148 Step 3: BB = 6 x BA BB = 6 x 0.007923 BB = 0.047538 Step 4: SA SA SA = = = A x LBD x OR LB 0.90 5983 x 2,392 x 0.962 5,270 0.90 5983 x 0.4538899 x 1.0688889 SA 2903 Step 5: If LB + AB is less than 27 POPE 1,000 and PDB is greater than PBS, than PA 27 x POPE 1,000 If 5,270 + 824 = 0.0278694 is greater than 0.027, 218,663 then the poverty adjustment does not apply. Step 6: Not applicable because 0.0278694 is greater than 0.027 Step 7: LB 5,270 as of June 1, 1985 LBD 2,392 as of June 1, 1985 Step 8: Projections based on 3-year period from July 1, 1985 to July 1, 1988. Step 9: NH = need SA - LB - (0.90 x ABD) NH = need 2903 - 2392 - (0.90 x 488) NH = need 2903 - 2392 - 439 NET NEED 72 beds In January 1983, nursing homes in Hillsborough County were experiencing an occupancy rate of 91 percent on the average. Manor Care Ex. 22. In about July 1983, hospitals began to be affected by the new federal prospective payment system and diagnostic related groups (DRO's). T. 125-6. The federal DRG system of Medicare reimbursement results in flat rate payments for specified numbers of days of hospital care. T. 50. Since the purpose of the system is to lower cost by decreasing the length of hospital stays, the result has been to produce a greater need for skilled nursing centers to care for sicker patients needing higher levels of care. Id., T. 88, 50. This increases the demand for short term skilled nursing placements. T. 88. As a result, there was greater utilization of existing nursing home beds in Hillsborough County, and by August 1983, the occupancy rate went to 96 percent on the average. Manor Care Ex. 22. By November 1983, it was at 97 percent. Id. In 1984, nursing homes in Hillsborough County averaged 97 percent occupancy. Manor Care Ex. 22. In the first two months of 1985, existing nursing homes in Hillsborough County continued to experience a 97 percent occupancy. Manor Care Ex. 22. In March 1985, 120 new nursing home beds in Hillsborough County were opened, and the occupancy rate average dropped to 92 percent, but by July 1985 the average had climbed again to 95 percent. Id. In October 1985, another 120 beds were opened, and the rate again dropped to 91 percent, but by December 1985, it had increased to 94 percent. Id. The rate has been steady at 94 percent to March 1986, the last month for which there is data in the record. Id. See also Manor Care Ex. 21. It should also be noted that the facility that opened in October 1985 had achieved an occupancy level of 95 percent in six months. T. 129. The occupancy rate for subdistrict Hillsborough County for the period October 1984 through March 1985 was 96.2 percent. This is derived from Manor Care Ex. 22. The exhibit shows that the occupancy rate for the months of October 1984 through February 1985 was 97 percent. In March 1985, the rate dropped to 92 percent. The average of these six figures is 96.2 percent. It should be noted that this occupancy rate was used in findings of fact 26 and 27 instead of the lower occupancy rate found in Hearing Officer Ex. 4. The occupancy rate of 96.2 percent is more credible for several reasons. First, it was presented by a witness who was subject to cross-examination. If there had been a problem with the rate as depicted in Manor Care Ex. 22, the problem might have been exposed in cross examination. Second, it is based on a more detailed (month by month) set of data. Finally, it is consistent with the trend shown by Manor Care Ex. 22. The lower rate contained in Hearing Officer Ex. 4 is out-of- line from this trend, and therefore apparently in error. Persons who most need nursing home services are 65 years or older, and these groups are projected to increase faster than the population ages 0-64 in Hillsborough County to the year 1990. Manor Care Ex. 23. From 1986 to 1990, the total population of Hillsborough County is estimated to grow each year at between 1.7 percent and 2.2 percent compared to the previous year. Manor Care Ex. 23. In the same four years, it is projected that the Hillsborough County age group 75+ will grow on the average at 4.6 percent each year, and the age group 65-74 will grow on the average at 2.7 percent each year. Id. As discussed above, the change in the federal method of reimbursing hospital costs has resulted in sicker patients needing nursing care outside the hospital. Florida sets a higher staffing requirement for skilled nursing care than other nursing facilities. T. 51. Skilled nursing care usually requires more staff, better trained staff capable of coping with multiple health problems, closer monitoring of patients, closer communication with physicians and hospitals, and more supplies. T. 61-2. Skilled nursing is more expensive. Id. A nursing home may elect not to provide skilled nursing because its current staff lacks sufficient training, because of exposure to greater liability, and because skilled nursing care is more difficult. T. 51. Nursing homes that can achieve high occupancy levels without skilled nursing care have less incentive to provide such care. T. 34. Hillsborough County appears to have such high occupancy levels that there may be less incentive for existing nursing homes to provide skilled nursing care. Id. Ten of the nursing homes in Hillsborough County each provide less then 1 percent of their services to Medicare patients. T. 130. Of these, six provide no Medicare services. Id. Thus, about one-half of the nursing homes in Hillsborough County provide no Medicare skilled nursing. Id. The three largest hospitals in Tampa currently have waiting lists for placement of patients needing skilled nursing care. T. 22. These hospitals have trouble placing patients after hospitalization, and demand for nursing home services exceeds availability. Manor Care Ex. 24, p. 7, T. 84. This often results in such patients having to stay longer in the hospital. T. 85. The following skilled nursing services are not adequately available in Hillsborough County: intravenous therapy, hyperalimentation therapy, and tracheostomy care. T. 24-5, 84-6, 89-90. Intravenous therapy involves the injection of fluids directly into a vein. T. 66. This therapy requires close monitoring by trained staff. T. 68. Manor Care proposes to provide intravenous therapy for up to four patients a day. T. 70. A tracheostomy is an opening at the base of the neck into which a tube is inserted to create an open airway. T. 70-1. Patients needing this type of care include neurological traumas, stroke patients, and head trauma victims. T. These patients are usually unstable and the tracheostomy requires close attention, sterility, and suction. T. 71-2. Manor Care proposes to provide tracheostomy care. Manor Care Ex. 1, section III, paragraph 5. Hyperalimentation therapy is either tube feeding through the gastro- intestinal tract, or through a vein. T. 73-4. Until about two years ago, this therapy was not typically provided in a nursing home. T. 74. Patients requiring this therapy are those with problems with excessive vomiting, diarrhea, bowel obstructions or cancer, and massive gastro-intestinal surgery. Id. Hypralimentation therapy may be short-term or long-term. Id. The procedure requires great care, caution, and specially trained staff. T. 75. There is a need in Hillsborough County for additional respite care. T. 87. The same admission paperwork is needed for a patient coming for only two days for respite care as for a patient that is to be a long-term patient, T. 54, and this acts as a disincentive to providing such care. There are two adult congregate living facilities in the Tampa community now. T. 89. One is associated with sheltered nursing home beds, and the other is associated with nursing home beds that are partially available to persons not residing in the ACLF. T. 91. Manor HealthCare Corporation has nine nursing centers in Florida. T. All are certified for Medicare. T. 49-50. Medicare has high criteria for skill level, and thus a nursing home that is certified for Medicare is capable of treating patients needing higher nursing skills. T. 50. Manor HealthCare has contracted with three health maintenance organizations to provide skilled nursing care, and is negotiating with four others for the same services. T. 44. These contracts enable the health maintenance organizations to move patients from acute care in a hospital to a lower cost skilled nursing care. T. 45. District VI, which includes Hillsborough County, has a higher poverty level for persons 65 years of age and over than Florida as a whole. T. 117. However, the poverty adjustment does not apply in this case. See finding of fact 28, steps 5 and 6. Subparagraph (b)5 of the rule provides a "poverty adjustment" to allocate at least 27 beds per 1,000 residents 65 years of age or older "in the current year." T. 112. Thus, the adjustment does not project a number of beds into the future. Id. Manor Care demonstrated that it would make a significant difference if this adjustment were based upon the number of residents 65 years of age and older in the horizon year. Applying the rule as currently written, HRS Ex. 1 and Manor Care Ex. 16, which are identical, show net need of 51. Using this same method if the population age 65+ in the horizon year (1988) is used, the net need is 99. T. 111-9, Manor Care Ex. 19. On August 22, 1986, the Department of Health and Rehabilitative Services published notice of intent to amend subparagraph (b)5 of rule 10- 5.11(27) to provide that the poverty adjustment would allocate no less than 27 nursing home beds per 1,000 population 65 years of age or over projected three years into the future. Vol. 12, No. 34, p. 3060, Florida Administrative Weekly. The proposed rule was withdrawn on September 12, 1986. Vol. 12, No. 37, p. 3384, Florida Administrative Weekly, Hearing Officer Ex. 4. HRS has previously approved certificate of need applications for nursing home beds despite lack of numerical need. T. 141-2. Apparently HRS construes rule 10-5.11(21)(b)10 as not constituting an exclusive list of exceptions justifying grant of a certificate of need despite lack of numerical need. T. 142. There is a need for the 60 bed skilled nursing facility as proposed in this formal administrative hearing by the Petitioner. Existing facilities do not fulfill this need, and there are no adequate alternatives.
The Issue The issues under consideration are those associated with applications filed by the aforementioned private parties seeking certificates of need for skilled nursing home beds based on a fixed need pool of May, 1989, which identified 261 beds for the January, 1992 planning horizon. The beds are available in HRS District III. The applications are for: CON Action No. 5987 Inverness--20 beds; CON Action No. 5912 Suwannee--60 beds; CON Action No. 5913 McCoy-- 60 beds; CON Action No. 5962 Starke--120 or 60 beds; and CON Action N. 5905 Regency--120 beds.
Findings Of Fact Related to the May, 1989 batching cycle HRS has identified a need for 261 nursing home beds in District III. The applicants accept that determination of the pool of beds, that is to say no applicant has sought beds over and above the 261 beds identified by HRS. Further, the parties have expressed their agreement to allow Regency to be granted CON 5905 to construct a new nursing home facility in Lake County, Florida, which will have 120 beds. The written stipulation sets out the parties belief that all applicable criteria for obtaining a certificate of need as set out in Section 381.705, Florida Statutes, have been met. That stipulation is accepted, provided the following conditions are met in issuing the certificate of need: The annual resident population of the facility shall include at least 62% of Medicaid patient days. Two beds shall be dedicated to the care of Alzheimer and respite care residents. The facility shall be a one story design consisting of 43,000 square feet in size. Likewise, the parties have agreed to allow the issuance of CON 5987 to Inverness to add 20 community nursing beds to its existing facility in Inverness, Florida. That written stipulation points out the agreement by the parties concerning the Inverness compliance with all applicable criteria set out in Section 381.705, Florida Statutes as well as any implementing rules set forth in Chapter 10-5, Florida Administrative Code. The arrangement is one by which existing ACLF beds are converted to nursing home beds. That stipulation is accepted, upon condition that Inverness commit to provide a minimum of 75.2% of total patient days for Medicaid patients. The Inverness stipulation which reiterates Inverness' lack of opposition to the grant of a certificate of need to Regency also withdraws its opposition to McCoy, Starke and Suwannee. By the terms of the stipulation's 140 of the 261 beds in the pool are spoken for. This leaves for consideration the applications of Suwannee, Starke and McCoy. In the absence of subdistricting, District III is divided into seven planning areas. The planning areas are as established by the North Central Florida Health Planning Council, Inc. Planning Area l is constituted of Hamilton, Suwannee, Lafayette, Columbia, Union and Bradford counties. Suwannee intends to place its facility in Suwannee County. Starke intends to place its facility in Columbia County. The expansion of the McCoy facility would occur in Marion County which is the sole county in Planning Area 4. By resort to the North Central Florida Health Planning Council District III Health Plan preferences can be seen concerning the allocation of beds among the applicants within the various planning areas. A copy of that plan is HRS Exhibit No. 2. Under this scheme the McCoy application to add 60 additional nursing home beds to its existing facility in Marion County, Florida, is considered a third priority. A third priority would allow the addition of at least 60 beds and no more than 120 beds. The Suwannee and Starke applications are a fourth priority under the local plan which allows for an addition of up to 60 beds. The McCoy application as presented at hearing responds adequately to all applicable criteria set out in Section 381.705, Florida Statutes, to include the State Health Plan and District III Health Plan. McCoy holds a superior license rating at present and has a proposed capital expenditure for this project of $1,568,000. Taking into consideration the proposed allocation of beds set forth in the local health plan, the distance between the McCoy facility and the proposed facilities in Suwannee and Columbia counties by the applicants Suwannee and Starke and absent proof which clearly identifies that Suwannee and Starke are meaningful competitors against McCoy and its attempt to gain a certificate of need calling for expansion of its facility, the McCoy application should be granted. That grant should be conditioned upon a willingness to serve Alzheimer patients in the proposed 14 bed unit and the commitment to provide Medicaid at a 60% level as a minimum commitment. This arrangement would bring the total number of nursing home beds at McCoy to 120, a desirable number when considering economies of scale. What must be resolved by comparative analysis of the applications of Suwannee and Starke, is which of those competitors for 60 beds out of the 61 beds remaining in the pool should be granted a certificate of need, if any. Starke had noticed its intention to apply for 120 beds and made application for 120 beds and in the alternative for 60 beds. The decision to notice its intent to apply for 120 beds was not misleading nor inconsistent with HRS policy in a circumstance where the application was stated in the alternative for 120 beds or 60 beds. The significant point is that Starke explained its alternatives of 120 beds or 60 beds in detail in the course of the application. HRS perceives that the 120 bed notice of intent took into account a lesser number of beds being applied for on the due date for applications and that perception is reasonable. Suwannee noticed the intent to apply for 60 beds and applied for that many. Both Suwannee and Starke met all procedural requirements for consideration of their applications for nursing home beds. In determining the disposition of the 60 nursing home beds needed for Planning Area l within District III, it is noted that Suwannee and Columbia counties are contiguous. Columbia is east of Suwannee. While the main emphasis by these applicants is to serve the needs of residents within the two counties where the facilities would be located, given their contiguity there is a potential for either applicant to serve needs within both counties. Columbia county is the more populous county. However, in the two counties the age cohorts in the 65 and over group and 75 and over group are similar, especially in the 75 and over group. Occupancy rates in the existing nursing homes within the two counties are also similar. The J. Ralph Smith Health Center in Suwannee County has 107 existing beds and 54 beds approved. Those additional 54 beds were designated for residents of the Advent Christian Village exclusively; however, the residents of that village constitute part of the population base in Suwannee county. Therefore this limited utilization of that resource still benefits citizens within Suwannee county. Surrey Place in Suwannee county has 60 beds and the Suwannee Health Care Center has 120 beds with 60 more approved. The 60 additional beds may not be constructed in that the applicant failed to proceed to construction in the time contemplated by CON 3746 and may lose the beds. Columbia County has Tanglewood Care Center with 95 beds. It has Lake City Medical Center with 5 beds associated with a hospital. Palm Garden of Columbia has approval for 60 beds. On balance there would not appear to be an advantage to placing the 60 beds at issue in either Suwannee or Columbia counties when considering the population to be served, present occupancy rates for existing nursing bomes and geographic accessibility to the proposed nursing homes. Suwannee is a wholly owned subsidiary of Santa Fe Health Care, Inc. The parent corporation filed the application with the permission of Suwannee. The 60 bed nursing home facility is part of an overall project which includes the replacement of an existing 60 bed acute care hospital with a 30 bed acute care hospital. If the proposals are accepted the hospital and 60 bed nursing home would be located on a common parcel. HRS has granted CON 6179 to decertify 30 beds. The approved cost of the delicensure and establishment of the new hospital is $6,752,824. The nursing home component of this project is stated to cost $3,408,100 in the way of capital expenditures with an operating equity in the amount of $300,000. The overall health care delivery system contemplated in the hospital and nursing home project includes the replacement hospital, the new nursing home, an out patient diagnostic center, home health care, hospice and adult day care services. Suwannee has the financial backing of its parent corporation which owns a number of health care facilities including six hospitals, two health maintenance organizations and six other health related corporations. Both Suwannee and the parent corporation Santa Fe Health Care, Inc. are not for profit. The Santa Fe operations are in Florida and its hospital holdings include other rural hospitals in addition to Suwannee which is a rural hospital. Before filing the application for the 60 bed nursing home neither Suwannee nor the Santa Fe parent corporation had any involvement in long term health care delivery. Suwannee intends to serve the needs of Alzheimer patients and to provide services to persons needing subacute care. In its present hospital facility in Suwannee County it has 24 swing beds with which it serves patients needing subacute care and which beds are seen as an alternative to nursing home beds. That alternative has limited utility. Although swing beds may serve nursing home patients they are not an alternative for long term care in lieu of community nursing home beds. To the extent that Suwannee Hospital has tried to place patients in nursing homes needing a high level of skilled care, described as subacute care, it has experienced problems. Existing nursing homes in Suwannee County have not accepted the placement of those patients. It is unclear from the record what portion of subacute care needed in the service area will continue to be met in the hospital proper with the advent of delicensure of 30 beds. There was testimony to the affect that the hospital has the option to request swing beds in its remaining 30 bed hospital facility, but it has not been shown that the hospital will avail itself of that opportunity and through the use of the swing beds be able to render subacute care. The description by Suwannee of the subacute patients that it is contemplating serving through its nursing home are those who require a shorter stay in nursing facilities, who are said to have fragile medical condition and require intensive licensed nursing care. In the application, it states that the Medicare patients contemplated as being served by this prospective nursing home would be the principal users of the subacute care. There patients would have an average length of stay of 15 days with 12 patients per month being served. The Medicare per diem charge of $130 for the first year of operation is said to include the cost of care given to these patients who are said to be heavy users of subacute care. That per diem charge reflects ancillaries such as the various therapies as well. Having considered the explanation of this application, it is less than apparent what the difference would be between the subacute care services now being provided by the hospital in its swing beds and those contemplated by its nursing home application. In a similar vein, it is unclear what the distinction would be between the subacute care rendered in the proposed nursing home when contrasted with the subacute care being provided in swing beds that might be available in the 30 bed replacement hospital. If granted a certificate of need Suwannee is committed to serving AIDS patients. Suwannee intends to serve Medicaid patients and it projects a percentage of patient days attributable to Medicaid patients in the first two years of operation to approximate 73%. This is contrasted with experience statewide of 62%, within District III of 75% and within the planning area of 81%. Projected per diem rate for Medicaid reimbursement within the first year of operation is $68. The financial expert presented by Suwannee said that the applicant could charge as much as $10 to $12 more, making the Medicaid rate $78 to $80 per day. This increase contemplates raising the present caps on reimbursement. The record does not support increases in the caps of $10 to $12 in the relevant planning period. In the first year of operation the private room, private pay per diem rate at Suwannee reflects $97 as the charge and $80 as the charge for semiprivate room, private pay. This is as compared to $130 for Medicare per diem. Although it is unacceptable to charge more for Medicare than private pay, Schedule 12 within the application shows the inclusion of ancillaries for the Medicare patient and the exclusion of ancillaries for private pay. Under the circumstances it is difficult to tell whether the Medicare per diem charges exceed the private pay per diem charges as has been contended by Starke. The inclusion of the therapies as ancillary costs is shown on page 39 at Schedule 12 of the application of Suwannee. On Schedule 17 in the first operating year the therapies as ancillary costs are not broken out as individual items such as physical therapy, speech therapy and occupational therapy separate and apart from routine services. Instead an aggregate figure is given. That precludes an understanding of what portion of the per diem charge for Medicare patients is attributable to those ancillary costs. The circumstance is made more bewildering in that the financial expert presented by Suwannee stated that the $130 per diem charge had application to residents who were receiving subacute care. What portion of the per diem charge for Medicare residents is attributable to the subacute care component is not revealed in the application. Neither, is it explained in the testimony. Notwithstanding the assurance of the Suwannee financial planner that the Medicare rate projected for the first year of operation is in keeping with the Hospital Cost Containment Board's data on the average rate structure, that comment and his other explanations failed to establish the reasonableness of that charge. This is especially true when considering the fact that the Medicaid charges, even accepting an adjusted rate of $80 per day, are also indicated at Schedule 12 as including therapies and are far less than the Medicare per diem. Schedule 17 shows the Medicaid without reference to the therapies as an aggregate item in the same fashion as described with the Medicare category of reimbursement. Further, evidence of the fact that private room, private pay, does not exceed the Medicare per diem charge is related at Schedule 12 where it describes the subacute private room, private pay patient as paying $150 and the semiprivate, room private pay as paying $130. Again, in the Suwannee application in the first year of operation for both Medicaid and Medicare therapies are said to be included in the basic charges of $68 and $130 respectively shown at Schedule 12 and carried forward in the aggregate on Schedule 17. From the explanations stated by the financial planner, the projected costs for therapies by those two categories of patients is not reflected in the ancillary cost centers for physical therapy, speech therapy and occupational therapy found at lines 11-13 of Schedule 18. Instead, they are reflected at line 39 under other costs centers in the amount of $80,900. Moreover the $80,900 is said to include subacute services as well as the therapies. Having considered Schedules 12, 17 and 18 for the first operating year, together with the other evidence presented in the course of the hearing, the estimate at line 39 of Schedule 18 of $80,900 is unreliable. The Suwannee project contemplates a facility of approximately 24,370 square feet. The construction cost estimate is $62.44 per square foot. The total project cost per bed is $56,802. That far exceeds the caps for the property cost component related to Medicaid residents which is presently $30,350 per bed. Put another way, that translates to a differential of $11.64 per patient day above present reimbursement levels for Medicaid residents. That differential cannot be made up by resort to payments for ancillary services for that category of resident. The shortfall attributable to the costs per bed differential in the application of $56,802 compared to $30,350 per bed plus ancillaries is not expected to be made up by resort to other revenue sources within this proposal either, nor can it be properly be. This is particularly true when approximately 70% of the patient days are expected to be provided by Medicaid residents. Even if Suwannee were able to obtain reimbursement for the per bed cost of $56,802, this is much more than the Starke cost per bed which is approximately $30,000 as built. The cap that has been mentioned is the one effective July 1, 1990. Nothing in the testimony would suggest that the caps would approach $56,802 within the planning horizon for this review cycle. In summary, the financial feasibility of the Suwannee proposal has not been established. While the parent corporation, Santa Fe Health Care, Inc., is strong financially and able to sustain Suwannee in its nursing home operation in the short term, even with expected losses, the losses will be extraordinary and the long term feasibility has not been demonstrated either. Simply stated, too much money is being expended to establish this facility and it may not be recouped by resort to the reimbursement scheme identified in the application. Under the circumstances, the nursing home is not perceived as a means of promoting the financial well being of the overall project constituted of the nursing home, relocated hospital and associated services. It is not accepted that the manner and quality of care proposed to be delivered by Suwannee is so superior that it justifies the inordinate expense in delivering the care. In other particulars Suwannee has shown that it meets all applicable criteria for granting it a certificate of need, but the overall costs are so exorbitant that they preclude financial success in the project. In addition, even if the project met the criteria its costs compared to the Starke proposal are so much more that the Suwannee proposal should be rejected in favor of the Starke proposal. It is not accepted that a hospital based nursing home is superior to a freestanding nursing home as urged by the presentation made by Suwannee. Starke had applied for a 120 bed nursing home, with a separate request explaining its proposal to construct a 60 bed nursing home. It is that latter proposal that fits the need in Planning Area I of District III. The total capital expenditure for that alternative proposal is $1,882,713. The cost per square foot is approximately $60 in the 22,500 square foot facility. The per bed costs is in the neighborhood of $30,000. In the first year of operation the private room, private pay is $89; the semiprivate room, private pay rate is $79; the Medicaid rate is $69.50 and the Medicare rate is $69.50. These rates do not include ancillary charges for therapies. The Starke proposal will include a unit for Alzheimer, subacute care, adult day care and respite care. Starke will provide 80% of its patient days for Medicaid residents and 10% of its patient days for Medicare residents. The Medicaid performance exceeds that of Suwannee. That rate is consistent with the experience which Starke has in the operation of its Whispering Pines Care Center in Starke, Florida, a 120 bed nursing home facility which has held a superior license rating over the three years preceding the application. Starke as a corporation would own both the Starke, Florida facility and the proposed Lake City, Florida facility. The principals in that corporation with 50% ownership are J. D. Griffis and George R. Grosse, Jr. The subacute care that is to be provided is in patient rooms which are directly adjacent to the nursing station. It is the intention of the applicant to build these rooms to allow support for medical equipment needed in the treatment of those residents. Although some criticism has been directed to the architectural design of the proposed nursing home facility, Starke has committed itself to meet all applicable codes. Under the circumstances it does not appear that this application presents significant problems associated with resident safety or inordinate costs in making necessary adjustments to comply with applicable codes. The Starke application was prepared by Jerry L. Keach, the then administrator for University Nursing Care Center in Gainesville, Florida, operated by Covenant Care Corporation. By the comments found in the application it was contemplated that the Covenant Care group would manage the Starke facility in Lake City, Florida, which would do business as Lake City Care Center. No contract has been executed between Starke and Covenant Care Corporation to allow the latter entity to manage the Lake City facility assuming the grant of the certificate of need to that applicant. At hearing the principals for Starke indicated that Covenant Care together with other unnamed organizations would be considered as management for the nursing home in Lake City. Although this issue of management is unresolved, reservations about the project are overcome in recognition of the success of the Starke corporation in the operation of the Whispering Pines Care Center in Starke, Florida. That suffices as an indication that Starke is capable of installing appropriate personnel to operate the Lake City facility, and provide quality care. The assumptions concerning the various aspects of the proposals set forth in the Starke application are sufficiently explained in the course of the final hearing and those explanations are accepted. It is reasonable to expect that the nursing home could be constructed, staffed and operated in a manner consistent with the explanations found in the application and through testimony at hearing. A successful outcome is anticipated whether the Covenant Care Corporation is employed to operate the facility or not. The favorable impression of the Starke proposal is held notwithstanding the criticism directed to the financial feasibility by remarks offered by Suwannee. In particular the Suwannee Exhibit No. 11 admitted into evidence questioning the assumptions of the Starke applicant concerning income projections for the first two years have been taken into account. Whispering Pines Care Center presently offers care for Alzheimer patients and subacute services. Therefore problems are not anticipated in the provision of those services in the proposed facility. With due regard for the criticisms that have been directed to the financial ability of Starke to maintain its Whispering Pines Nursing Center and the proposed project in Lake City, Florida, it is found that the applicant has the ability to conduct those businesses. As with the matter of financial feasibility, Starke has satisfied all other applicable criteria for the grant of a certificate of need to construct the 60 bed nursing home.
Recommendation Based upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That a Final Order be entered which requires all CONs granted to be consistent with the applications and in keeping with that intention: Grants CON 5987 to Inverness for the addition of 20 community nursing home beds to its existing facility upon condition that those beds be constituted of a minimum of 75.2% total patient days for Medicaid patients; Grants CON 5962 to Starke for construction of a nursing home in Columbia County, Florida, constituted of a minimum of 80% total patient days for Medicaid patients, that provides Alzheimer services, subacute care, day care and respite care; Grants CON 5910 to McCoy for the addition of 60 beds upon condition that 60% of the patient days be devoted to Medicaid patients; Grants CON 5905 to Regency for construction of a 120 nursing home facility with 62% of its patient dads being devoted to Medicaid patients, 2 beds dedicated to Alzheimer patients, provision of respite care and that the facility shall be a one-story design consisting of 43,000 gross square feet in size; and Denies the application for a 60 bed nursing home in Suwannee County made by Suwannee under CON Action No. 5912. DONE and ENTERED this 19th day of September, 1990, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of September, 1990. APPENDIX CASE NOS. 90-0043 and 90-0045 The following discussion is given concerning the proposed facts of the parties: Inverness Paragraphs 1 through 3 are subordinate to facts found. Paragraph 4 is not necessary to the resolution of the dispute. Suwannee Paragraphs 1 through 7 are subordinate to facts found. Paragraph 8 is contrary to facts found in that the Starke application can be advanced without a resort to an affiliation with Covenant Care Corporation. Paragraph 9 is accepted; however, those facts do not cause the rejection of the Starke proposal. Paragraphs 10 and 11 are not necessary to the resolution of the dispute. Paragraph 12 is accepted as factually correct; however, this is not crucial in determining the outcome of this case. Concerning Paragraph 13, while the record reveals that Mr. Keach was responsible at a time moratorium had been placed on admissions into University Nursing Care Center in Gainesville, Florida, the record was not detailed enough to ascertain what influence that might have on his ability to act as an administrator at the Starke facility proposed in this instance or his competence in preparing the application. The representations found in Paragraph 14 do not preclude the consideration of the Starke application. Concerning Paragraph 15, the first sentence is rejected as fact. The second and third sentences are not necessary to the resolution of the dispute. Concerning Paragraph 16, those items which are mentioned did not cause the rejection of the Starke application in that Starke is committed to abide by all applicable codes to insure control over the patients. Paragraphs 17 through 21 are contrary to facts found. Concerning Paragraphs 22-24, the Starke proposal is found to be financially feasible. Paragraph 25-27 are subordinate to facts found. Concerning Paragraph 28, notwithstanding economies of scale they will not overcome the inherent extravagance in the costs associated with bringing the Suwannee project on line. Concerning Paragraph 29, while diversification for rural hospitals is desirable, the present attempt by Suwannee is unacceptable. Paragraph 30 is subordinate to facts found. Concerning Paragraph 31 see comment on Paragraph 29. Paragraph 32 is subordinate to facts found. Paragraph 33 is accepted; however, the principal service area would appear to be Suwannee County. The existence of service over to Hamilton, Madison, Lafayette and Columbia Counties does not change the perception of this case. Paragraph 34 is subordinate to facts found. Paragraph 35 is contrary to facts found as are Paragraphs 36 and 37. Concerning Paragraph 38, the affiliation of Suwannee with the Santa Fe Health Care system does not overcome the lack of financial feasibility. Paragraphs 39 and 40 are subordinate to facts found. Paragraph 41 is contrary to facts found. Paragraph 42 is not necessary to the resolution of the dispute. Paragraph 43 is contrary to facts found. Paragraphs 44 and 45 are subordinate to facts found. Paragraph 46 is contrary to facts found. Paragraphs 47-55 are subordinate to facts found. Paragraph 56 is not necessary to the resolution of the dispute. Paragraphs 57-60 are subordinate to facts found. Paragraph 61 is contrary to facts found. Paragraph 62 is subordinate to facts found. Paragraph 63 is contrary to facts found. Paragraph 64 is subordinate to facts found. Concerning Paragraph 65, notwithstanding these observations they do not justify the rate structure or per diem charges set out in the Suwannee application. Paragraph 66 is subordinate to facts found as are the first two sentences of Paragraph 67. The last sentence to Paragraph 67 is rejected. Paragraphs 68 and 69 are contrary to facts found. The first sentence of Paragraph 70 is subordinate to facts found. The second sentence is not relevant. Paragraphs 71 through the first sentence of Paragraph 73 is contrary to facts found. Concerning the last sentence of Paragraph 73, Starke is found to be financially feasible and Suwannee is not. Paragraph 74 is subordinate to facts found. Paragraphs 75 and 76 have been taken into account in deciding that there are no particular advantages to placing the 60 beds in Columbia County as opposed to Suwannee County. Paragraph 77 in all sentences save the last is accepted. The last sentence is contrary to facts found in that subacute care will be rendered in the Starke facility. Paragraphs 78 through 80 are contrary to facts found. Paragraph 81 is subordinate to facts found. Paragraph 82 is accepted in the premise, but use of Suwannee as the facility to serve this population is rejected based upon the lack of financial feasibility. Paragraph 83 is subordinate to facts found with the exception that the subacute patients would not be best placed with Suwannee. Paragraph 84 and 85 are subordinate to facts found. Paragraph 86 is contrary to facts found. Paragraphs 1-5 with the exception of the last sentence in Paragraph 5 are subordinate to facts found. Concerning that latter sentence it is clear that Suwannee would intend to build the nursing home facility together with the hospital or exclusive of the hospital project. Paragraphs 6-8 are not necessary to the resolution of the dispute. Paragraph 9 is subordinate to facts found. Paragraph 10 is accepted and it is acknowledged that the applicants can approximate that average. Paragraphs 11 and 12 are subordinate to facts found. Concerning Paragraph 13 Suwannee did establish its percentage of commitment to Medicaid through proof at hearing. Paragraphs 14 through 23 are subordinate to facts found. Paragraph 24 is contrary to facts found in that Starke offers no greater enhancement than Suwannee in terms of geographic accessibility and is not really a competitor in this criterion with McCoy. Paragraphs 25 through 27 are subordinate to facts found. Paragraph 28 is contrary to facts found in that Suwannee did identify the programs that it intends to offer. Paragraphs 29 through 36 are subordinate to facts found. Paragraph 37 in the first sentence is subordinate to facts found. The second sentence is not necessary to the resolution of the dispute. Paragraph 38 is subordinate to facts found. Paragraph 39 is not necessary to the resolution of the dispute. Concerning Paragraph 40 while it is agreed that swing beds are skilled level of nursing home care they do not constitute reasonable alternatives to long term care. Paragraph 41 is subordinate to facts found in the first sentence. The second sentence in its suggestion that there is no significance to the lack of provision of these types of services under subacute care in area nursing homes is rejected. Paragraph 42 is rejected. Paragraph 43 is subordinate to facts found. Paragraph 44 is contrary to facts found. Paragraphs 45 through 52 are subordinate to facts found. Paragraph 53 is contrary to facts found. Paragraph 54 is subordinate to facts found with the exception that the reason that the Suwannee project is not found to be financially feasible does not include reference to a higher charge for Medicare patients than the charge to private pay patients. Paragraphs 55 through 60 with the exception of the last sentence in Paragraph 60 are subordinate to facts found. The nursing home is intended to be built whether the replacement hospital is built or not. Paragraphs 61 through 65 are subordinate to facts found. Starke Paragraphs 1 through 5 with the exception of the latter two sentences in Paragraph 5 are subordinate to facts found. Concerning the next to the last sentence, it was made clear that the intentions on the part of Suwannee were to build the nursing home. The last sentence to the extent that it is intended to suggest that this applicant is incapable of offering long term care services is rejected. Paragraphs 6 through 8 are not necessary to the resolution of the dispute. Paragraphs 9 through 11 are subordinate to facts found. Concerning Paragraph 12 to the extent that it suggests that Suwannee is not willing to provide services to Medicaid recipients, it is rejected. Paragraphs 13 through 21 are subordinate to facts found. Paragraph 22 is contrary to facts found in that Starke is not seen as enhancing geographic accessibility to a greater extent than Suwannee its true competitor. Paragraphs 23 and 24 are subordinate to facts found. Paragraph 25 is contrary to facts found ih that Suwannee has identified its special programs. Paragraphs 26 through 33 are subordinate to facts found. Paragraph 34 is subordinate to facts found in the first sentence. The second sentence is not necessary to the resolution of the dispute. Paragraph 35 is subordinate to facts found. Paragraph 36 is not necessary to the resolution of the dispute. Concerning Paragraph 37 while it is agreed that swing beds are skilled level of nursing home care they do not constitute reasonable alternatives to long term care. Paragraph 38 is subordinate to facts found in the first sentence. The second sentence in its suggestion than there is no significance to the lack of provision of these types of services under subacute care in area nursing homes is rejected. Paragraph 39 is rejected. Paragraphs 40 and 41 are subordinate to facts found. Paragraph 42 is contrary to facts found. Paragraphs 43 through 50 are subordinate to facts found. Paragraph 51 is contrary to facts found. Paragraph 52 is subordinate to facts found except as it suggests that the difference in rate between Medicaid patients and private pay patients in the Suwannee proposal forms the basis for the criticism that the Suwannee project is not financially sound. Paragraphs 53 through the first two sentence of Paragraph 59 are subordinate to facts found. Related to the latter sentences in Paragraph 59 it is clear that the schematic pertains to the basic design of the Suwannee facility whether attached to a new hospital or free standing. Paragraphs 60 through 64 are subordinate to facts found. McCoy Paragraph 1 is subordinate to facts found. Paragraphs 2 and 3 are not necessary to the resolution of the dispute. Paragraph 4 is subordinate to facts found. Paragraph 5 is not necessary to the resolution of the dispute. Paragraphs 6 through 83 are subordinate to facts found. Regency Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraphs 3 through 5 are subordinate to facts found. COPIES FURNISHED: Sam Power, Department Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 Elizabeth McArthur, Esquire Jeffrey Frehn, Esquire Aurell, Radey, Hinkle and Thomas 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, FL 32302 W. David Watkins, Esquire Oertel, Hoffman, Fernandez and Cole, P.A. Post Office Box 6507 2700 Blair Stone Road Tallahasee, FL 32314-6507 Leslie Mendelson, Esquire Department of Health and Rehabilitative Services 2727 Mahan Drive Fort Knox Executive Center Tallahassee, FL 32308 James C. Hauser, Esquire F. Phillip Blank, Esquire R. Terry Rigsby, Esquire Julie Gallagher, Esquire F. Philip Blank, P.A. 204-B South Monroe Street Tallahassee, FL 32301 Grafton B. Wilson, II, Esquire 711 North 23rd Avenue, Suite 4 Post Office Box 1292 Gainesville, FL 32602 R. Bruce McKibben, Esquire Dempsey and Goldsmith, P.A. 307 West Park Avenue Tallahassee, FL 32301
The Issue The issue in this proceeding is whether DHRS should approve the application for certificate of need of any one or more of the January, 1987, applicants for community nursing home beds in Hillsborough County. STIPULATIONS The parties stipulated to the following facts: All applicants timely filed their respective letters of intent, applications and omission responses with DHRS and the appropriate local health council for the January, 1987, batching cycle. The petitioners each timely filed a petition requesting a Section 120.57(1) hearing and have standing in this proceeding. The parties agree the Division of Administrative Hearings has jurisdiction over this matter and the parties. The CON application content requirements of Section 381.494, Florida Statutes (1985), apply as that was the statute in effect at the time the applications were filed. The review criteria in Section 381.705(1) and (2), Florida Statutes (1987), apply to this proceeding. The following statutory criteria have been met orare not applicable in this proceeding: Section 381.705(1)(d), (f), (g), (j) and (k) and all of Section 381.705(2), Florida Statutes (1987). Except for the effects the project will have on clinical needs of health professional training programs, the extent to which services will be accessible to schools for health professionals and the availability of alternative uses of such resources for the provision of other health services, Section 381.705(1)(h) is in dispute and remains to be litigated.
Findings Of Fact SUMMARY DESCRIPTION OF THE PARTIES. HCR's application (CON Action No. 5000) is to construct a 120-bed nursing home consisting of 40,000 square feet at a cost of $3,964,000.00, or $33,033 per bed (including adult day care; $32,1127 when the cost for day care is excluded.) The HCR application describes special programs and services for Alzheimer's Disease and related disorder patients in a distinct special care unit and an Alzheimer's day care center, both Identified in the plans submitted by HCR showing special design elements. HCR also proposes to offer sub-acute care and respite care. The HCR nursing home will have 2.08 (120/57.6) patients per staff, which includes the assistant director of nursing and occupational therapy and recreational therapy aides listed by HCR in its application. FCP submitted an application for 30 nursing home beds to be constructed as a part of a retirement facility (CON Action NO. 4993). The 30 beds will comprise approximately 17,558 square feet at a cost of $1,549,599.00, or $51,653 per bed. The Florida Country Place application proposes a patient staff ratio of approximately 2.3 (30/13). Palm Court submitted an application for a 60-bed addition to its existing 120-bed facility (CON Action No. 4987). The 60-bed addition would consist of 15,260 square feet at a cost of $1,472,435.00, or $24,571 per bed. The Palm Court facility is located in Plant City in the far eastern portion of Hillsborough County, near the Polk County line. Palm Court proposed a ratio of 2.31 (60/26) patients per nursing staff. Manor Care submitted an application (CON Action No. 5006) to add 60 beds to an approved certificate of need for 60-beds for which construction has not yet begun. The area to be added would consist of 19,000 square feet at a cost of $2,187,045.00, or $36,451 per bed. The Manor Care addition would include a distinct special care unit for Alzheimer's Disease and related disorder victims and the 60-bed addition would provide a patient staff ratio of 1.98 (60/30.3), which includes a half-time physical therapy aide, a half-time recreational therapy assistant and an assistant director of nursing. Forum submitted an application (CON Action No. 4999) to construct a 120-bed nursing home as a part of a retirement complex. The nursing home element will consist of 49,283 square feet at a cost of $5,053,301.00, or $42,111 per bed. Forum proposes a staffing ratio of 3.0 patients per staff FTE. Forum proposed to provide respite care and hospice care, and adult day care and meals on wheels during or after the second year of operation. HHL submitted an application (CON Action No. 4978) for 120-bed nursing home consisting of 37,700 square feet at a cost of $3,900,000.00, or $32,500 per bed. The HHL facility proposes 2.27 (120/52.8) patients per staff, which includes the rehabilitation assistants and the assistant director of nursing listed by HHL. HHL proposes sub-acute care, respite care, programs for Alzheimer's Disease victims (but not a distinct special care unit) and an Alzheimer's adult day care program of from four to six patients. Cypress submitted an application (CON Action No. 5004) to construct a 60-bed nursing home in Sun City Center in southeastern Hillsborough County. The nursing home described in the application would contain 24,069 square feet at a cost of $2,125,000.00, or $35,419 per bed. But Cypress' estimated construction cost per square foot of $49.81 does not account for inflation and is unreasonably low. Median cost of nursing home construction in Florida is $55 per square foot. It is estimated that Cypress' construction cost estimate is 10-15 percent too low. Assuming that the cost estimate is 12.5 percent too low, the cost of construction would increase to approximately $2,274.485 or $37,914 per bed. Cypress did not detail any special programs in its application and proposed 2.45 (60/24.5) patients per staff. However, this ratio is questionable in view of the confusion surrounding Cypress' evidence regarding staffing and the apparent inaccuracy of the staffing presented by the application. DHRS is the state agency that preliminarily reviewed and passed on the applications and is responsible for final agency action on them. DHRS PRELIMINARY REVIEW AND ACTION. HCR, FCP, Palm Court, Manor Care, Forum, HHL, Cypress, and others filed their applications for community nursing home bed certificates of need for Hillsborough County in the January, 1987, batching cycle. On June 18, 1987, DHRS issued its State Agency Action Report (SAAR), in which it denied all of the applications except HCR's, FCP's and VHA/Oxford's (for 120 beds). Review of the SAAR in light of the evidence introduced at the final hearing indicates that DHRS erred in reviewing the applications in at least the following respects: Manor Care. -- The SAAR indicates that DHRS was not cognizant that Manor Care had a final approval for a 60-bed nursing home CON (No. 4155) to which to add the 60 beds applied for in this case, CON Action No. 5006. The SAAR was somewhat critical of the Manor Care proposal for being a two-story structure. It appears that DHRS confused the proposal to add 60-beds (CON Action No. 5006) with a parallel contingent proposal to build a new 120-bed facility (CON Action No. 5005), which Manor Care eventually withdrew during the final hearing. Actually, CON Action No. 5006, added to the approved CON No. 4155 for a new 60-bed nursing home, would result in a one-story 120-bed nursing home. On page 7 of the SAAR, DHRS indicated its understanding that Manor Care had not specified a location for its proposal. Later, on page 11, the SAAR acknowledges the true fact that Manor Care's proposed nursIng home would be located in the Northwest Hillsborough County subdistrict, which is the Local Health Plan's first priority for location of additional nursing home beds in DHRS District 6. HHL. The SAAR (p. 13) states that Convalescent Services, Inc. (CSI), the management corporation HHL and other limited partnerships for which the Kellett Brothers are the general partners, has no other nursing homes in Florida. While technically correct, Kellett limited partnerships do have other nursing homes in Florida. Staffing tables on page 17 of the SAAR are incorrect, attributing no LPNs to the HHL proposal instead of 6 and only 36 aides instead of 38. On page 18 of the SAAR, the table of patient privileges incorrectly states that the HHL applications had no patients' bill of rights. Also on page 18 of the SAAR, DHRS incorrectly omitted adult day care and community outreach from the table of programs provided by HHL. On page 26 of the SAkR, it gives HHL's private pay private room rate ($101) as its semi-private room rate (actually $69.92) The SAAR Review Matrix incorrectly omits adult day care, community outreach and sub-acute care from HHL's proposed programs and omits HHL's patients' bill of rights. Forum. -- The SAAR starts out on page 3 by misidentifying Forum as being affiliated with Hospital Corporation of America. On pages 4, 6 and 15, the SAAR incorrectly fails to recognize that a retirement living center (apartments) is part of the overall development Forum proposes. The semi-private room rate of $110 attributed to Forum's application on page 26 of the SAAR is wrong; it should have been $85. Cypress. -- The Review Matrix in the SAAR failed to identify several services and programs Cypress stated in its application that it would offer. The matrix did not recognize that Cypress would offer social activity functions within the community, would offer rehabilitation, would provide some Alzheimer's type services, (which Cypress called supportive care and mentally frail services) and physically frail services. Cypress also spoke of hospice care and respite care in its application, as well as specialized rehabilitation, physical therapy, and speech therapy. Cypress also spoke of community outreach programs, psychiatric services, home health agencies, and numerous other areas that were not recognized by DHRS in its matrix. However, there are valid reasons for some of these omissions. On May 9, 1988, the first day of the final hearing, VHA/Oxford withdrew its application. On the afternoon of May 17, 1988, DHRS announced it was supporting the grant of Palm Court's application since VHA/Oxford had withdrawn. But the only evidence to support the new DHRS position was through the testimony of Reid Jaffe, DHRS Health Services and Facilities Consultants Supervisor, who did not express a personal opinion but acted as a messsenger to relay the positions taken by others at DHRS who did not testify. NUMERIC NEED. Rule 10.5.011(1)(k), Florida Administrative Code, is a methodology for calculating net numeric need for nursing home beds. Under the methodology, gross numeric need is calculated essentially by multiplying the population of two age cohorts projected on the planning horizon by a use rate. The use rate is calculated by divIding current population by the current number of licensed beds. To obtain net need in a health planning sub-district, the methodology first prorates the gross need in the entire district, using the proportion of current licensed beds in the subdistrict to the current licensed beds in the district, and adjusts the resultant by a current occupancy rate factor (occupancy rate /0.90); then, the number of licensed beds, plus 90 percent of the number of approved beds in the subdistrict, are subtracted from the adjusted gross need in the subdistrict. With three exceptions, the parties agree on how net numeric need is calculated under the rule methodology. The parties disagree only on the current licensed bed count, the current approved bed count, and the occupancy rate at one facility that has both community nursing home beds and sheltered nursing home beds. (Sheltered nursing home beds generally are not factored into the formula.) As for the licensed bed count, the issue is whether The Home Association, a 96-bed facility in Hillsborough County, should be included as a licensed community nursing home facility or excluded as a sheltered facility. At hearing, all of the parties presenting evidence on the issue except Forum counted The Home Association's 96 beds as licensed community beds. Forum excluded The Home Association from the licensed bed count because it was not listed on the Department's Community Nursing Home Report for January 1, 1988. This same report reflects three other facilities in Hillsborough County in which the beds were formerly sheltered but as of August 1, 1987, began to be counted by the Department as community beds. Forum conceded, however, that if the Department recognizes The Home Association as a community facility, then it would be appropriate to include those beds in the licensed bed count under the rule formula. In its proposed recommended order, even Forum agrees that The Home Association beds are included in the licensed bed count. Two issues are presented relating to the inventory of approved beds under the rule formula: the date at which approved beds are to be counted; and whether the 120 beds under Careage CON #4714 and Manor Care's 60 beds under CON #4155 were approved at the pertinent time. On the first question, Forum again stands alone. In the face of a rule which is silent as to the date on which approved beds are to be counted, Forum suggests that they be counted cn the same day licensed beds are counted, December 1, 1986, for this batch. All other interested parties follow the Department's general practice of counting approved beds as of the date the State Agency Action Report for this batch was executed, June 18, 1987. Forum supports its position on the ground that use of the same date for both licensed and approved beds avoids the prospect that beds may be "lost" from the calculation if they are not licensed as of December 1, 1986, but become licensed before June 18, 1987, and therefore are no longer approved beds on that latter date. The argument is meritless. There is no evidence of any "lost" beds under this policy for this batch. Indeed, the evidence is that such beds are not lost: 120 beds at Carrollwood were licensed on December 15, 1986, after the December 1 licensed bed cut-off and before the June 18, 1987, SAAR date. These beds were included in the approved bed inventory on June 18, 1987. The Department's policy under its numeric need rule is to count approved beds as of the execution date of the SAAR. Under this policy, the need for beds in the future is predicated on the number of beds currently or soon to be available to meet the need. When more than seven months can elapse after licensed beds are counted but before the agency decision is formulated, it makes sense to count beds approved during this intervening period. A 120-bed award to Careage in the prior batch was published by DHRS in the Florida Administrative Weekly of January 23, 1987, reflecting approval on January 7, 1987. However, DHRS then received criticism.of the approval, and a new supervisor in charge initiated a second review of the circumstances and of the Careage approval. The second review did not conclude until after June 18, 1987. When it did, DHRS re- affirmed its decision to approve Careage and issued a CON for 120 beds on August 18, 1987. Although the Careage CON was issued after June 18, 1987, DHRS proved that there is a rational basis for including it in the approved bed count under these unusual circumstances. The Careage CON represents 120 beds approved in the batching cycle preceding the one at issue in this case. Counting the 120 beds as approved promotes sound health planning. The projection of net need on the planning horizon is predicated on the most accurate count of approved beds from prior batching cycles that can be anticipated to come on line in the near future. As of June 18, 1987, there were 308 other beds approved but not yet licensed in Hillsborough County. Included among these 308 approved beds are 60 beds awarded to Manor Care under CON 4155 by Stipulation dated March 30, 1987. By mistake, DHRS did not count Manor Care's 60-bed CON in the SAAR. This mistake was not discovered, and DHRS served discovery responses and took a final position on need, as required by prehearing orders, that did not count the Manor Care CON. But this mistake f fact should now be corrected, even if it could have been discovered earlier through the use of due diligence, so that the health planning decision resulting from these de novo proceedings will be predicated on the correct facts. See Gulf Court Nursing Center v. HRS, 483 So.2d 700, 712 (Fla. 1st DCA 1986). It is appropriate to include Manor Care's finally approved 60 beds in the rule formula. Adding Careage's 120 beds, the total approved bed count is 428. The final variation accounting for the differences in the parties' calculations under the formula is the manner in which the occupancy rate should be computed at John Knox Village, a facility containing both community and sheltered beds. The issue is whether the patient days in this mixed facility should be prorated between the two types of beds or whether the full patient days for both types of beds should be used in calculating the occupancy rate in the facility. There is no separate report of occupancy by bed type for this mixed facility. The number of patient days delivered in the community beds at John Knox is not known. If the patient days for the entire facility are prorated according to the percentage the community beds bear to the total number of beds, there is a necessary but wholly unsupported and speculative assumption that the proportion of patient days delivered in community beds is identical to the proportion of community beds. DHRS historically has been unwilling to make this assumption and has always included the total number of beds and patient days in mixed facilities to determine the occupancy rate under the community bed rule. The rationale supporting this policy has been appropriately explicated on the record. The use of prorated patient days to determine occupancy in mixed facilities, as suggested by DHRS for the first time at final hearing, also is a change from the position the Department took when exhibits were exchanged and the prehearing stipulation was executed and then relied on by the parties. Because the Department, as a party litigant, did not prorate in its prehearing submissions, it cannot do so at hearing in the absence of fraud, mistake of fact, or newly discovered evidence. No evidence of any such extenuating circumstances was presented. The only explanation DHRS gave for changing its treatment of the John Knox occupancy data was that more accurate recent data (using daily census data instead of first day of the month census data) furnished by the Local Health Council was prorated. But DHRS just as easily could have prorated the older, less accurate data if it had chosen to take that position at the time the parties were required to take final positions in prehearing procedures. The Department, therefore, is precluded from adopting a posture at hearing relating to the treatment of patient days in mixed facilities which is different from that reflected in the Department's prehearing stipulation and exchanged exhibits. In summary, the appropriate numeric need calculation must include The Home Association in licensed beds, count both Careage's 120-bed CON and Manor Care's 60-bed CON in the approved bed count, and use the full John Knox bed complement and patient days in determining the Hillsborough County occupancy rate. Using these factors in the rule methodology, the net need for community nursing home beds in Hillsborough County for the January, 1990, planning horizon is 231, as reflected in the calculation included in the attached Appendix To Recommended Order, Case Nos. 87-3409, etc. Rule 10-5.011(1)(k), Florida Administrative Code, provides that DHRS normally may not approve more beds than the numeric net need calculated under rule methodology. In this case, none of the circumstances specified in the rule that would justify exceeding the numeric net need were proven by the evidence. At the same time, the rule does not require DHRS to fill all, or as much as possible, of the numeric net need by attempting to "mix and match" applications to come as close as possible to the calculated number. LOCAL GEOGRAPHIC NEED PRIORITIES. The current, 1985 District VI Local Health Plan provides that, after consideration of numeric bed need under the rule need methodology, its "priority need rankings" should be considered in the competitive review for new nursing homes. Hil1sborough County, Northwest, is priority rank number one. HCR, FCP, Manor Care, Forum and HHL all propose to locate their nursing homes there. Cypress proposes to locate in Sun City Center and Palm Court is in Plant City, both in Hillsborough County, Southeast, an area ranked fifth in priority in District VI. Plant City is close to Polk County, which the Local Health Plan designates as the fourth ranked area in priority. Cypress proposes its 60-bed nursing home approximately 1/4 mile down the road from an existing nursing home called Sun Terrace, operated by CSI. Quality of care concerns have arisen due to rapid fill-up of 60 additional beds recently licensed at Sun Terrace and opened in September, 1987. See Findings of Fact 83-87, below. As a result, Sun Terrace has imposed on itself a moratorium on new admissions until quality of care concerns can be addressed. In part as a result of the moratorium, Sun Terrace's occupancy rate at the time of the final hearing was only approximately 65 percent, leaving 42 empty beds. MEDICAID NEED. One of the three major considerations for competitive review of nursing home CON applications in the Longterm Care section of the 1985-1987 State Health Plan is "resource access." Except as reflected in the priority rankings, geographic access is not an issue in this proceeding. (Priority/Policy 7 of the Local Health Plan, setting a goal of providing for nursing home services within 30 minutes travel time of 90 percent of urban residents and within 45 minutes travel time of 90 percent of rural residents, already has been achieved in District VI.) But, to address concern for financial access, Priority/Policy 2 of the Local Health Plan provides that applicants "should commit, at a minimum, to serve Medicaid eligible patients in proportion to the representation of elderly poor in the subdistrict." In Hillsborough County, Northwest, where all but two of the applicants propose to locate, the elderly poverty rate is 18.6; in Hillsborough County, Southeast, where Cypress and Pal:n Court would be located, the elderly poverty rate is 15.6 percent. The applicants propose to commit the following percentages of their nursing home beds to the care of Medicaid- 4 eligible patients: HCR, 70 percent; FCP, 70 percent; Manor Care, 30 percent; HHL, 45 percent; Palm Court, 70 percent; and Cypress, approximately 10 percent. Cypress proposed in its application to commit 10 percent of its beds for Medicaid use. It attempted to update its application to provide for a 15 percent Medicaid commitment. The update was said to have been the result of a decrease in the average age of the residents of Sun City Center, Cypress' proposed primary service area, from 73 to 70. But the percentage was calculated by first estimating 60 percent private pay and "backing down" to a Medicare percentage of 25 percent, leaving 15 percent Medicaid. The evidence was persuasive that this attempted update was not due to extrinsic factors. See Conclusions of Law 20 to 25, below. Forum has committed only to have 50 percent of its beds Medicaid- certified and to meet the requirements of Priority/Policy 2. Although Priority/Policy 2 is written as a minimum Medicaid percentage, no evidence was presented from which to determine how high a percentage of Medicaid commitment is desirable. There was, e.g., no evidence on which to find that a Medicaid percentage as high as four times the elderly poverty rate is more desirable than a percentage approximately equal to or perhaps just a bit higher than the elderly poverty rate. To the contrary, the only evidence on the subject was that DHRS does not now consider the Medicaid percentage to be as important as it was considered to be in the past and that DHRS now just checks to see that the percentage approximates the elderly poor rate in the County. NEED FOR ALZHEIMER'S DISEASE PROGRAMS. Description Of The Disease And The Need. There is a need in Hillsborough County for additional nursing home beds and services for Alzheimer's Disease and related disorder victims. There is no known nursing home in Hillsborough County which provides a distinct care unit for Alzheimer's Disease and related disorder victims. There is an estimated unmet need by Alzheimer's patients for nursing home care in Hillsborough County of approximately 1,271 by July, 1989. DHRS has recommended that "preference should be given to applicants for new nursing home beds which propose the development of special Alzheimer's units" and "greater preference should be given to units that will also provide adult day care and/or respite care." Alzheimer's Disease is a brain disorder that was discovered at the turn of the century. It primarily affects persons over the age of 60. The term "related disorders" is used because some non-Alzheimer's disorders mimic Alzheimer's Disease symptoms and create many of the same needs for specialized care. Typically, Alzheimer's Disease results in gradual memory loss and, as memory loss progresses, results in the need for ever- increasing personal care. In the earlier stages, the victim is often in reasonably good physical condition and simply exhibits signs of recent memory loss. However, as memory loss increases, various activities of daily living are disrupted. Victims encounter more serious physical problems and exhibit symptoms such as wandering, significant weight loss, clumsiness, incontinence and antisocial behavior. In the last stages of the disease, the victim requires increasingly intense medical attention, becomes totally dependent on others, and may eventually require total skilled nursing care. The intensity of care required for the Alzheimer's Disease and related disorder victim increases as the disease progresses. In early stages, the victims are typically cared for at home by a family member. The nature of care required for an Alzheimer's Disease or related disorders victim is very exhausting for the care giver. Toward the end of the first stage of the disease when the victim requires increasing supervision, the victim can be maintained longer in the home if there is available to the care giver some form of occasional rest, such as adult day care or respite care. Adult day care and respite care provide opportunities for the primary care giver to "take a break". See Findings of Fact 133 to 135, below. An Alzheimer's Disease patient usually requires inpatient nursing home care late in the second stage of the disease. If the patient is ambulatory, he often exhibits a wandering behavior. Approximately 50 percent of the Alzheimer's victims admitted to a nursing home have the potential to wander. Ultimately, Alzheimer's victims become bed-ridden and require skilled or sub- acute nursing home care, including tube feedings, cathethers, and artificial life support. Historically, ambulatory Alzheimer's patients in nursing homes have been mixed with other patients. The Alzheimer's victim has often disrupted life in the nursing home because of the victim's wandering, incontinence, confusion, and socially unacceptable behavior. Because of these characteristics, some nursing homes avoid admitting Alzheimer's patients and others control problem behavior with sedation and physical restraint. A separate Alzheimer's care unit enables the nursing home to utilize special techniques to manage the Alzheimer's disease victim and allows the victim to maintain his cognitive capabilities for as long as possible, without restraint and sedation. Nursing home patients who do not suffer from Alzheimer's and related diseases are often agitated and disrupted by the Alzheimer's patients' unacceptable social behavior. A separate unit for Alzheimer's Disease victims accommodates the needs of the non-Alzheimer's patient by eliminating unpleasant, often violent encounters between dementia victims and other patients. Distinct Alzheimer's special care units provide better care for Alzheimer's disease and related disorder victims for several reasons. A separate unit eliminates the tendency of the Alzheimer's disease patient to disrupt the remainder of the nursing home. A separate unit provides a smaller, safer, specially designed area with specially trained staff to address the unique needs of the Alzheimer's disease victim. A separate unit is preferable to mixing Alzheimer's patients with non- Alzheimer's patients. Traditional nursing home programs and activities are often inappropriate and counterproductive for the Alzheimer's patient. HCR's Proposal. The 120-bed nursing home proposed by HCR will help meet the needs in Hillsborough County for adult day care, respite care, sub-acute care and a special care unit for Alzheimer's Disease and related disorder victims. The programs and services will enable the HCR nursing home to provide at one location a complete continuum of care from the least intense level of care in adult day care to total (sub-acute) care. HCR's Alzheimer's special care unit will incorporate special design features, special patient activities and programs and higher staffing levels to meet the unique needs cf Alzheimer's disease victims. These features are intended to compensate for memory loss and provide a safe environment where cognitive capabilities can be maintained for as long as possible while patients enjoy personal freedom without the use of restraints and sedation which have typified the treatment of unmanageable Alzheimer's and dementia patients. The architectural design of the HCR nursing home will accommodate the tendency of Alzheimer's victims to wander by allowing the victims to ambulate in circular patterns through the facility and the adjacent court yard and by providing an electronic warning system to prevent inadvertent exit from the nursing home. Patient bathrooms are specially designed to avoid fright and confusion through the use of automatic lighting fixtures, appropriate coloring and distinctly shaped fixtures and waste baskets. Calming colors, color coding, carefully selected art work, special floor coverings and labeling are provided. Separate dining and activities areas enable the nursing home to provide programs and activities for Alzheimer's disease victims in a more effective and efficient manner than would be possible if the same areas also had to be used for non- Alzheimer's Disease victims. The proposed HCR nursing home includes a discreet area designed for an adult day care center, which will share some resources with the nursing home. The program will accommodate 12 persons and be operated in accordance with adult day care regulations. The physical spaces include an entry separate from the main nursing home entry, a lobby, an office, a therapeutic kitchen for use by the patients, toilet facilities, an activities center, and a lounge with an adjacent covered porch. The adult day care program will be staffed by a nurse director, an assistant and volunteers. The participants in this program will be provided with various activities of daily living in an environment developed for Alzheimer's Disease victiMs. This program is intended to provide placement for persons not yet in need of in-patient care and will provide an alternative to premature nursing home admission. Manor Care's Proposal. Manor Care proposes a dedicated 30-bed specialized unit for persons suffering from Alzheimer's disease and related disorders. In 1985, Manor Care perceived the need to treat Alzheimer's patients in a manner different than patients in the general nursing home population. Manor Care's task force of nurses, administrators, architects, and designers developed an Alzheimer's program which recognizes the special needs of the patient. Manor Care now operates 21 special dedicated Alzheimer's units throughout the country and is planning 16 additional Alzheimer's units. Manor Care's comprehensive Alzheimer's program encompasses five components: (1) environment, (2) staffing and training, (3) programming, (4) specialized medical services, and (5) family support. Environment. The proposed 30-bed Alzheimer's unit will be separate from the rest of the facility and self-contained, with its own dining room, activities room, lounge, quiet/privacy room, nurses sub-station, director's office, and outdoor courtyard. A separate dining room for Alzheimer's residents enables staff to provide individualized attention and special assistance. By providing a simple and separate dining environment, residents are no longer embarrassed by confusion and agitation displayed in the presence of non-Alzheimer's residents during mealtime. A separate lounge area is provided for families to visit with residents. In a typical nursing center, the family must visit a confused resident in the presence of other families; families of Alzheimer's residents can find this embarrassing. A separate lounge makes visitation more desirable for Alzheimer's residents and families. The quiet/privacy room can be used by families as a quiet area to visit with a family member, by residents who want to spend time alone, or by staff persons and residents for individualized programming away from the activity on the unit. The outdoor courtyard, which is enclosed and accessible to the unit through the activities room and hallway door, allows Alzheimer's residents to walk outside freely without wandering off. The Manor Care Alzheimer's unit is specially designed with features which reduce environmental stress by minimizing glare (using parabolic lenses), noise and bold patterns which increase agitation in Alzheimer's residents. Throughout the unit, a residential, uncluttered atmosphere is emphasized, using soft, contrasting colors and textures. The unit also contains visual cues to increase orientation. Furnishings are functional, durable and easy to maintain. Staffing and Training. The Alzheimer's unit has its own specialized staff including a Unit Director, Activities Director, and nursing staff. The unit is staffed at a higher "nurse to resident" ratio than the rest of the facility. Staffing patterns emphasizu continuity to ensure that residents receive individualized care. The nurses become f;i1iar with the behavior and abilities of each resident and are able to render care appropriately. Programming. The goal of programming and activities in the Alzheimer's unit is to improve the quality of life of the Alzheimer's resident. This specialized programming results in reducing the use of medications and restraints necessary to manage the Alzheimer's resident. The Manor Care Alzheimer's activity program is success-oriented; staff provide activities designed to allow Alzheimer's residents to succeed more frequently. (They usually fail when mixed in with the general nursing home population.) specialized Medical Services. The use of consultant medical specialists is an integral part of Manor Care's Alzheimer's Program. Specialists provide diagnostic and treatment services for Alzheimer's residents upon admission to the unit, and thereafter when deemed medically appropriate. Family support. Family support is another important aspect of the Manor Care Alzheimer's program. Families are very supportive of the unit's programming and have benef itted from the understanding and support available to them. The Others' Proposals. None of the other applicants propose specialized units for the care of patients with Alzheimer's disease and related disorders. Alzheimer's sufferers will be treated in an "open unit" at the HHL facility and will be placed as compatibly as possible with other residents. Although these residents will be able to intermingle with other residents, their movements will be monitored by the "wander guard" system and all doors will be equipped with buzzers connected to the nurse's stations. The HHL facility will be designed to incorporate secure courtyards and other areas where residents will be free to wander safely throughout the living areas. The facility's nursing personnel will be specially trained to provide services to Alzheimer's sufferers. The proposed HHL facility will also offer an adult Alzheimer's day care program. Although the program will be small (accommodating between four to six individuals) it will interface with the Alzheimer's program offered to the in-house residents. As with the respite program, the Alzheimer's adult day care program will give the families of Alzheimer's disease sufferers an opportunity to take a breather during the day, and the participants will benefit from the special Alzheimer's programs and activities offered. With its proposed 60-bed addition, Palm Court plans to add a program directed specifically at persons suffering from Alzheimers and related brain disorders. Currently, it does not have one. Neither FCP nor Forum make any particular provision for the care of Alzheimer's patients. FCP points out that its facilities in other states historically have cared for this special category of patient, primarily through use of high quality, thereapy-oriented programs, especially at the earlier stages of the disease. Cypress proposes to locate off of a central core: a 60-bed nursing home, offering both intermediate and skilled care, with its own recreation area and dining, serviced from the central kitchen; (2) a 20-bed assisted living unit (which Cypress also calls "supportive care") for mentally frail and physically strong individuals which has its own outdoor recreation area and dining area; and (3) another 40 assisted living beds broken into two 20-unit wings for mentally strong and physically frail individuals, with their own dining and recreation area, including outdoor recreation. The various levels of care are separate since each of the levels have different needs and methods of treatment. However, Cypress will only accept in the mentally frail, physically strong wing, Alzheimer's-type patients who are in the earlier stages of the disease. QUALITY OF CARE. Priority/Policy 9 of the 1985 Local Health Plan states: "Applicants should be evaluated as to their achievement of superior quality ratings by DHRS and other indications of quality as available." Track Record. At the time of application, three of the nursing homes operated by HCR in Florida had superior licenses and the remaining homes had standard licenses. FCP has one nursing home in Florida. It is rated standard by DHRS. None of the facilities operated by FCP's principals, the Phillipses, has ever been in receivership or had a Medicaid or Medicare certification revoked. The Phillipses have an excellent reputation in Ohio for their operation and management of nursing homes and have remained in positive standing with federal and state certification agencies. Manor Care's proposed 60-bed addition will be owned by Manor Care of Florida, Inc., a wholly-owned subsidiary of Manor HealthCare Corporation. Manor HealthCare Corporation is a publicly-held corporation which owns and operates about 130 nursing homes in various states. Manor Care owns and operates nine nursing homes and three adult congregate living facilities (ACLFs) in Florida. All nine Florida nursing homes exceed DHRS licensure standards; the majority of Manor Care's Florida facilities hold a superior license rating. Manor Care has never had a license denied, revoked, or suspended in Florida. Manor Care has opened three nursing homes in Florida in recent years. All three are superior rated. Palm Court Nursing Home has a superior license, with zero deficiencies, from DHRS' Office of Licensure and Certification with the most recent inspection having occurred between May 2 and May 4 immediately preceding the beginning of the final hearing. It is managed by National Health Corp., Murpheesboro, Tennessee. National Health Corp is an owner-operator of other facilities and either owns or operates some 19 facilities in Florida. It has managed Palm Court Nursing Home since its inception and, if the 60 bed addition is approved, will manage the addition. Forum has never had a license denied, revoked or suspended, nor had a facility placed in receivership. Forum has never had any nursing home placed in receivership at any time during its ownership, management or leasing. Forum has a history of providing quality of care and owns and operates facilities in other states which hold superior ratings. Forum has a corporate policy of seeking to attain a superior rating in those states which have such a system. Forum presently owns and operates one facility in Florida. That facility is rated standard and was acquired by Forum within the past two years. That facility, which only has 35 nursing beds, is not a prototype of what Forum proposes in this case. Seventeen (17) of the twenty-one (21) nursing homes currently managed by CSI are located in states which utilize a superior rating system. Of the facilities that are eligible to receive superior licenses, CSI maintains superior ratings in over 80 percent of its beds. CSI's Sun Terrace in Sun City Center was the subject of an extensive survey issued by the Office of Licensure and Certification, an arm of DHRS, in April, 1988, that cited numerous deficiencies in the areas of quality of care, staffing, and programs at the Sun Terrace facility. The licensure survey also cited violations of state and federal laws in the handling of controlled substances and problems with resident care plans at the facility. The findings of DHRS in its licensure survey of Sun Terrace appear to be serious matters, the resolution of which is clearly within the control of CSI. Following the opening of the second 60 beds at Sun Terrace in September, 1987, the facility experienced a shortage of nursing personnel which necessitated a greater use of agency personnel to staff the facility. The problems cited by DHRS at Sun Terrace were largely the result of the increased use of agency personnel, lack of documentation, a newly licensed administrator, and the unexpected resignation of the director of nursing. Even before the DHRS licensure survey, CSI had taken affirmative action to address the problems at Sun Terrace, including a voluntary moratorium on new admissions. In response to the recent problems at Sun Terrac, CSI has moved toward more centralized management of its facilities. CSI now requires administrators to adhere very closely to the corporate policies and procedures. Further, the addition of a second full-time nurse/consultant will double the frequency of quality of care monitoring visits at CSI facilities. The problems experienced at Sun Terrace are atypical of CSI-managed facilities. When CSI's policies and procedures are properly followed, the result is excellent nursing care and services. But the problems at Sun Terrace are examples of what can happen when an organization attempts to expand operations more rapidly than it should. In this connection, CSI has received seven CONs since July 1984. Two of the seven are preliminary approvals that have been challenged and have not yet gone to hearing. One was the 60-bed addition to Sun Terrace which is now licensed. Another is a 73-bed nursing home in Brevard County which is expected to open within the next several months, and another is a 21-bed addition project in Collier County. Cypress has never operated a nursing home and has no track record. Staffing. Staffing arrangments are important considerations in assessing the quality of care to be expected from a proposal, but there is not necessarily a proportional correlation between staffing and quality. How staffing affects quality also depends on the breadth and types of programs to be offered. For example, Alzheimer's programs and sub-acute care will require higher staffing ratios. HCR, FCP, Manor Care, Palm Court and Forum all propose staffing arrangments that meet or exceed state requirements. See Findings Of Fact 1-5, above. Cypress' application, on the other hand, leaves much to be desired in its proposed staffing. The staffing plan presented by Cypress on its Updated Table 11 fails to meet the requirements of Rule 10D-29, F.A.C. Specifically, no provision has been made for an activity director (10D-29.116), a medical director (10D-29.107), a pharmacy consultant (10D-29.112), or a medical records consultant (10D-29.118), all of which are required by rule. (Cypress attempted to explain that it would have a pharmacy consultant on contract who would bill patients separately.) Further, no provision has been made for utilization review to monitor the appropriateness of the placement of residents, as required by Rule 10D-29. Cypress' Updated Table 11 provides for LPNs of 1.5 FTEs on the first shift and night shift and 6.0 FTEs on the second shift. The second shift LPN coverage is over-staffed by 4 1/2 FTEs which will result in inefficiency. Rule 10D-29.108, F.A.C., requires staffing of nursing assistants on all shifts. The Cypress staffing plan makes no provision for nursing assistants on the second shift. In testimony, Cypress attempted to explain that Table 11 was wrong and that the second shift LPNs should have been aides. The proposes Cypress nursing home will not offer 24-hour RN coverage. The third shift has no RN coverage. Based upon the proposed staffing pattern appearing in Cypress' Updated Table 11, its proposed facililty would not qualify for licensure under Florida regulations, much less qualify for a superior rating. Cypress has not secured or identified the day-to-day management of the proposed nursing home. No medical director has been secured or identified. Quality Assurance programs. All of the applicants except Cypress have existing quality assurance (QA) programs that are adequate to assL're quality of care. From the evidence HCR's, Manor Care's, HHL's and Forum's QA programs are comparable and are the best among the applicants. Palm Court has had results comparable to or better than the others , which is itself evidence of an adequate QA program. Meanwhile, CSI, despite an evidently superior QA program, has experienced quality programs due to rapid fill-up of its 60 additiional beds at Sun Terrace. Cypress has no experience operating a nursing home. Not surprisingly, it professes to desire quality and to plan to implement stringent QA programs. But its plans at this stage are not as developed and detailed as the existing QA programs being used by the other applicants at other facilities. Other Factors. Whether Therapies Are In-House or Contracted. Assuming a need for it, and reasonable cost of providing it, provision of therapies--e.g., physical therapy, occupational therapy and speech therapy-- in-house generally is preferable to providing them by contracts with third parties. From an operational and administrative perspective, there are advantages to providing physical therapy services (PT) on an in- house basis. Contracted physical therapy staff tend to be available only for scheduled treatments; in-house staff are always available to assist staff and perform unscheduled maintenance therapy. In-house physical therapy staff work regularly with the nursing home staff. They are present within the facility anc learn the operation of the nursing home facility better than outside agencies. Manor Care proposes to provide in-house physical therapy staff, as opposed to employing outside physical therapy staff on a contract basis. The evidence was that the other applicants plan to provide all of these therapies through third- party contracts. Palm Court has one full-time PT assistant who works under the direction of a licensed physical therapist who now divides time among three 120- bed nursing homes managed by National Health Corp. The service of this licensed physical therapist is provided as part of National Health Corp's management services. Having to cover another 60 beds at Palm Court will spread the service even thinner. In addition, Palm Court's administrator conceded that the single PT assistant in Palm Court's application will not be enough once 60-beds are added to the facility; two will be required. Of course, the trade-off (implied in Finding of Fact 102, above) for providing in-house therapy is that it is less efficient if full use of the services is not required. De-institutionalization. FCP, Forum and Cypress have made special efforts to "de- institutionalize" nursing home care at their proposed facilities. All three proposals emphasize the provision of nursing care within aresidential development--a combination of retirement apartments, assisted living accommodations and nursing home. (See also this concept's impact on Continuum of Care concerns, Findings of Fact 114-127, below.) FCP's proposed facility is designed with a residential appearance to facilitate and implement the philosophy of de-institutionalization co:tained in its application. It reflects FCP's modular approach to care with residential units in wings tied to a common area of support services. The support services are extensive. There are activities areas, craft areas, exercise rooms, therapy areas, a beauty salon and barber shop, men's and women's recreational areas, private dining rooms, a community dining room, screened patios and porches, a newsstand, a bank, a post office, a library, a chapel, a screened-in gazebo, and a swimming pool. The exterior amenities of the design include a pond, an exercise course, a sitting deck, and a putting green. The center core and its recreation and therapy programs are designed to encourage interact ion among the residents in all the different levels of care. Although the third floor, where the nursing home is located, also has a secondary lounge and supplemental dining area, the primary dining area, as well as all of the other amenities, are on the first floor to enhance the interaction. The 30-bed size of FCP's proposed nursing home unit is a part of the original Phillips concept of a de- institutionalized setting, enabling the provision of more personalized care. Where there are fewer residents to care for, a better rapport between the residents and the care givers and a more family-type, personal atmosphere are achieved. This 30-bed concept previously has been approved by the Department in Lee and Polk Counties. Those projects are operationally, structurally, and physically identical to this proposed project. The symmetrical, 3-story design minimizes the amount of travel distance for the resident at the farthest unit to the amenities of the center core and its services. The nursing unit is on the third and smallest floor so that the distance by elevator to the central core for the nursing home iesidents is at a minimum'while still providing those residents with the greatest opportunity for quiet time. Privacy is an essential element in achieving high quality of care. The semi-private room plan utilized in this proposal is a unique approach to maximizing privacy for each resident. A permanent partial partition separating the two beds in each room effectively creates two private rooms. This provides a private space for each resident with his or her own thermostat, window, storage space, television, and telephone accommodation, and heightened auditory privacy. There will be equal access to and control of the vestibule and bathroom for each resident. The 585 gross square feet per bed in the FCP proposal is approximately one-third greater than standard nursing home room configuration. Forum's proposal's chief effort in furtherance of the goal of deinstitutiona1izationother than the continuum of care concept and overall residential appearance--is in the relatively large and "up-scale" living areas. The Cypress facility will include a central core dividing the two 60- bed portions of the project. The central core will include an administrative area, a chapel, a beauty and barber shop, enclosed courtyard, physical and occupational therapy, dining, a central kitchen, and a laundry area. One trade-off for de-institutionalization is cost. Both FCP and Forum generally cost more than the others. Cypress claims not to, but its projected construction cost of $49 per square foot is unrealistically low. See Findings of Fact 147 and 149, below. PROGRAMS (OTHER THAN ALZHEIMER'S). Continnum of Care. As just alluded to, several of the proposals emphasize the placement of their nursing home within a larger community of persons needing different levels of care. FCP. FCP proposes the construction of a 30-bed nursing unit as part of a family owned and operated, 120-unit, full continuum of care facility for the elderly. The facility also contains 60 independent living apartments and 30 adult congregate living units. The full continuum of care is proposed in a uniquely designed, de-institutionalized, home-like atmosphere. FCP offers a therapeutic community offering individualized, personalIzed care in small self- contained units, each specializing in various levels of care ranging from day care and respite care, through apartments for the elderly and assisted living, to skilled, post-hospital rehabilitation. The continuum of care will provide a homogeneous environment through which residents can move as their medical and personal needs change. Forum. Forum Group, Inc., is a national company which owns, develops and operates retirement living centers in a number of states. Forum's proposed nursing home will be part of a total retirement living center containing two other levels of care, assisted living (or ACLF units) and independent apartment units. Forum's proposal calls for provision of a continuum of care, from independent living to assisted living to nursing care, all on the same campus. Cypress. Cypress Total Care would be part of an overall medical project known as Cypress Park. The corporation was formed and a master plan was created, to be developed in two phases. Phase I is a 120-bed nursing facility consisting of 60 skilled and intermediate nursing beds, the subject of these proceedings, and 60 personal care units. Phase II would consist of a 290-unit adult congregate living facility (ACLF) and 143 units of independent villa housing on a golf course with nature trails and other amenities. Also proposed in Phase II would be units of medical offices and commercial health-related facilities to support the community. The area selected by Cypress is adjacent to the Sun Hill Medical Arts Building and the Community Arts Building, as well as a hospital owned by Hospital Corporation of America known as Sun City Hospital. These components would be worked into the overall master plan proposed by Cypress. Cypress proposes a multi-level assessment program. The 120-bed Cypress Park Community facility will have an independent level one facility in Sun City Center which will admit healthy elderly residents. These elderly may have canes, but no walkers or wheelchairs, and they will function normally in their activities of daily living. These individuals may prepare two meals a day in their apartments, or have them in the dining room. The main meal will be in the dining room. Social services and activities will be provided and recommended to the independent living residents to enhance their lifestyles. A home health agency is planned as a part of the center so that house calls can be made to insure that any necessary medications are taken and that residents receive the services they might need from time to time. (Cypress has not yet applied for a CON for its home health agency.) The next level of living is for patients who need more assistance. These are residents who require 24-hour companion service. These patients do not require skilled nursing care and do not require the institutional environment of a nursing home. Some of these paients may be in the first stage of Alzheimer's, or they may be physically frail, but not enough to require skilled nursing care. This level is primarily for those individuals who are physically frail and mentally strong or mentally frail and physically strong. The physically frail and mentally strong may have limited ambulatory capabilities, need assistance in activities of daily living, need medication, or need all their meals prepared. As noted above, this level of services also will be provided to individuals who are physically strong but mentally frail. The majority of these people will be Alzheimer's residents, they must be carefully monitored 24 hours a day and receive strong psychological support. The next level of care offered is for individuals who require some nursing care and no longer qualify for the level two care described above. This will be intermediate nursing care and will consist of care from certified nursing aides and licensed practical nurses. These individuals do not require skilled nursing care. Rehabilitation is the key to this portion of the plan, and the rehabilitative center will be involved to constantly push these individuals to the point of rehabilitation where they can reenter an independent lifestyle. If individuals progress further, they can move into the skilled nursing care center in which they will receive care not only from nursing aides and licensed practical nurses, but also from registered nurses. The final level would be acute hospital care which would be provided by the existing Sun City Hospital. The medical staff who are involved in the Cypress project also are on the medical staff of the Sun City Hospital and will be working and consulting with individuals both in the acute hospital care and the nursing home setting to provide appropriate levels of care to the individuals who need it. The nursing home will share IV teams, work with tracheotomy patients, A.D.A. dieticians, accounting services, and other services with the existing hospital in Sun City Center. Palm Court. Palm Court, while currently a free-standing 120- bed nursing home, is located on property where construction of a 360-bed adult congregate living facility (ACLF) is now starting. In addition, Palm Court has transfer agreements with area hospitals including Plant City Hospital, South Florida Baptist Hospital, Brandon Humana Hospital and Lakeland Regional Medical Center. It also has formal working relationships with home health agencies and with elderly programs in the area. The Others. The other applicants--HCR, Manor Care and HHL-- propose free-standing nursing homes. But all can be expected to make efforts to achieve transfer and other agreements with local hospitals, home health agencies and providers of care for the elderly where reasonable and appropriate. Sub-Acute Care. The HCR nursing home will be staffed and equipped to provide sub- acute care. The sub-acute care services provided by HCR will include high tech services such as ventilator care, IV therapy, pulmonary aids, tube feeding, hyperalimentation, and short and long term rehabilitation. HCR currently provides a wide variety of these sub-acute services in its existing nursing homes. CSI currently provides sub-acute nursing services at its existing Florida facilities. Those services include ventilators, hyperalimentation, intravenous therapy, Clinitron beds, heparin pumps, nosogastric and Jejunoscopy tube feedings, subclavian lines, and Hickman catheters. These service will be provided at HHL's proposed facility. Forum will provide skilled and intermediate care, and the following services will be offered at the proposed facility: Sterile dressing changes for decubitus care. Brittle diabetics on sliding scale insulin. Continuous administration of oxygen. Sterile case of tracheotomies. Ventilators. Continuous bladder irrigation. Hyper-alimentation or N-G feeding. IV treatment. Special medication monitoring (e.g. heparin, comadin). New post-operative cases facing hospital discharge as a result of D.R.G. reimbursement. The skilled nursing services to be provided by FCP include parenteral nutrition, internal nutrition, tracheostomy care, respirator care, skin wound decubitus care, ostomy care, and head trauma care. Palm Court also will provide sub-acute care. Adult Day Care Adult day care is a part of the specialized Azfleimer's program HCR proposes. In addition, HHL, FCP and Forum offer adult day care. Respite Care. HCR and Manor Care offer respite care as part of their Alzheimer's programs. Both will have no minimum length of stay and no extra charge over the regular daily rate for nursing home care. All the others except Palm Court also offer respite care, but Cypress' proposal for respite care is sketchy. HHL says it will offer respite care at no extra charge. D. Hospice. Only HCR, Forum and HHL offer hospice care as part of their nursing home programs. F. Rehabilitation and Community Outreach. All of the applicants propose rehabilitative (or restorative) care and some kind of community outreach programs. The distinctions among the ideas expressed by the applicants are not particularly competitively significant. However, the manner in which the therapies are delivered can be significant. See Finding of Facts 102 to 105, above. HOW SOON THE PROJECT BECOMES OPERATIONAL. Because there is a shortage of nursing home beds in Hillsborough County, there is a valid concern how long it would take for the holder of a CON to get its facility operational. Priority/Policy 3 of the 1985 Local Health Plan gives expression to this concern as follows: In competitive reviews, preference should be given to applicants with a documented history of implementing certificates of need within the statutory time frames. Of the applicants who have developed nursing homes in the past (i.e., excluding Cypress), all but Palm Court have a history of timely implementing their CONs. Palm Court had to request an extension of time in implementing its existing 120-bed facility. But Palm Court bought the CON for that project from the original owners in 1982 or 1983. Palm Court then had to secure another, more suitable location, re-design the facility, get construction financing and enter into a construction contract before construction could begin. This delayed the project and resulted in administrative litigation to decide whether Palm Court should lose the CON for failure to timely implement it or be given an extension of time. Palm Court prevailed, and the facility opened in September, 1985. HHL, through CSI, also has a history of timely implementing CONs but recent expansion in Florida raises some question whether it can continue to be as timely in implementing this CON, along with the others. See Findings of Fact 82-87,98, and 100, above. Generally, an addition of beds to an existing nursing home can be constructed more quickly than a new facility, giving Palm Court an advantage in potential speed of implementation. similarly, Manor Care, which is prepared to begin construction on its finally approved 60-bed CON, has an advantage over the others, as well as a potential construction cost savings over Palm Court. See Findings of Fact 146, below. COST OF CARE. Cost of Construction And Development. Advantage of Additions. Within limits placed on recovery of capital costs under the Medicaid and Medicare reimbursement programs now in place (which, to some extent, are emulated by private health care insurers and employers' health benefit plans), construction and development costs generally are reflected in the charges patients pay for nursing home care. Additions, such as Palm Court's and Manor Care's proposals, have a cost advantage over the other proposals. Construction sites already have been prepared, and it is not ncessary to duplicate some features already incorporated in the original structure, such as the kitchen, laundry and building plant. Due to delays in finalization of its approved CON for 60 beds, Manor Care has the fortuitous additional potential cost advantage of being able to construct both the "original facility" and the 60-bed "addition" at the same time. Quality vs. Cost Trade-Off. Other than the cost advantage of adding on, and of saving the contractor's fee by using an in-house construction team (as HCR does), reduced cost of construction generally will reflect reduced quality. For example, some of the quality features incorporated in the proposals of Forum, FCP and Cypress will cost more. See Finding of Fact 113, above. Put another way, lower costs may result in lower patient charges but also may result in lower quality, everything else being equal. The costs of construction of the various proposals may be found in Findings of Fact 1 to 7, above. It should also be noted at this point that Cypress' facility design has features--primarily unusual wall and roof angles and one water heater requiring larger pipe sizing-- which make its construction costs appear lower than they should be. Cost Overruns. The applicants' respective records for cost overruns in implementing CONs mirror their records for timeliness. See Findings of Fact 138-143, above. Cypress has no track record; all the others except Palm Court have experienced no cost overruns; Palm Court's $1.3 million cost overrun was precipitated by the need to secure another site and re-design the facility after it acquired the CON for 120 beds; and CSI, which would be responsible for implementing HHL's proposal, is involved in recent expansion which could affect its ability to bring all of its' CONs on line within budget. Cost of Operations. Economies of Scale--Size of Facility. In addition to construction and development costs, cost of operations are reflected in patient charges. It generally is accepted that a 120-bed nursing home is the optimal size for operational efficiencies. In this respect, the proposals by HCR, Forum and HHL have an advantage over the others. Manor Care has the advantage of proposing to expand a less efficient 60-bed nursing home to an optimally efficient 120-bed facility. To some extent, the generally accepted principle that 120-bed nursing homes are more desirable may have become dated. Two of the proposals--FCP's and Cypress'--combine some of the operating efficiencies of a 120-bed nursing home with the continuum of care and quality of care that can be achieved in a 120-bed living complex that incorporates a smaller nursing unit with other living units of different levels of care. By c(Jmparison, these type facilities are less institutionalized than a 120-bed nursing home, whether free-standing or incorporated within a larger complex with other living units. See Findings of Fact 106 to 113, above. Economies of Scale--Size of Organization. Economies of scale also can be realized from the size of the organization that owns or manages a nursing home. The proposals of all of the applicants except Cypress benefit from this principle, Palm Court to a lesser extent than the others, including in the area of quality assurance, nurse training and nurse recruiting. At the time of hearing, HCR operated nine nursing homes in Florida. HCR has approximately twelve nursing homes scheduled to begin construction in Florida within the next year. Nationwide, HCR operates more than 125 facilities containing approximately 16,000 beds. HCR has designed and built over 200 nursing homes and related health care facilities. HCR realizes substantial savings by using national contracts for the purchase of furniture, equipment, hardware and other operating supplies. Forum, as a national company, has the experience and purchasing power to cut operational costs through national purchase contracts and through economies and improvements experienced at the local level with a total retirement facility all on one campus. The Manor Care Florida Regional Office offers the services of a Regional Director, a Regional Nurse, a Nurse Recruiter, and a Comptroller to work with the corresponding departments of the Manor Care Florida nursing homes. FCP's long term plans are to develop homes in clusters, currently concentrating on the central west coast area of Florida. FCP has previously been granted certificates of need in Lee County and Polk County and has been recommended by the Department for a certificate of need in Hillsborough County. This cluster will operate under a unified local administration and share rehabilitative, medical, social, dietary and transportation personnel, enhancing economies of operation. CSI was formed in 1978 for the purpose of operating extended care facilities, including nursing homes and retirement centers. Since that time, the company has grown to its current operations of twenty-one (21) nursing homes, two (2) retirement centers and one (1) home for the aged located in seven states. Historically, much of this growth has occurred through the acquisition of existing facilities, although more recently the focus has shifted to the development of new facilities. Because CSI has established "national accounts" for the acquisition of movable equipment CSI can purchase nursing home equipment and furnishings and other operating supplies for HHL at reduced prices. (3) Patient Charges. The applicants propose the following room charges for semi-private rooms. Applicant Medicaid Medicare Private Pay HCR 60.94 76.00 75.00 FCP 60.00 65.00 80.00 Manor Care 1/ 69.37 ---- 72.57 HHL 66.30 109.33 2/ 72.76 Forum 67.18 80.67 79.50 Palm Court 77.00 100.00 77.00 Cypress 58.00 65.00 69.00 However, Cypress' charges are suspect; they probably are unrealistically low. Palm Court's charges also are suspect. It is difficult to understand from the evidence whether they are charges or Medicaid reimbursements. It also is difficult to tell if they are current or projected. In any event, they do not relate to the information in Palm Court's pro forma. As previously alluded to, patient charges do not necessarily proportionately reflect construction and development and operating efficiencies. They also are affected by programs and quality. BUILDING DESIGN AND ENERGY FEATURES. Patient Care and Safety. Overall, HCR's design is excellent. Functional elements are effectively inter-related, the building is designed to be open to landscaping, sunlight and court yards, and there is a wide range of amenities. Cypress' patient rooms are smaller than allowed under state requirments. The state minimum in Chapter 10D-29, Florida Administrative Code, is 80 net square feet per bed for multi-bed and 100 net square feet in a single room. Cypress' proposal only has approximately 65.58 gross square feet per bed. Cypress' building design also has rooms that are approximately 130 feet from the nurses' stations and clean utility and soiled utility rooms, 10 feet over the state maximum under Rule 10D-29.121(24), Florida Administrative Code. Forum's :4 floor plan also violates this standard. Rule 10D-29.121(6), Florida Administrative Code, requires a 20 foot clear view out room windows. Cypress' design also violates this standard. Manor Care's floorplan is the most compact one- story design. It has four compact wings off a central core. Forum proposes a two-story structure, creating a potential increased hazard for patients with reduced mobility. But DHRS rules provide for nursing homes of more than one floor, and required safety features, which Forum will provide, keep the potential to an insignificant minimum. FCP proposes a three-story facility with the nursing home on the third floor adjacent to the elevators connecting it to the first floor central core and amenities. FCP, too, adequately addresses DHRS safety concerns and actually could be more convenient to more nursing home patients than a one-story structure. Energy Conservation Features. All of the applicants propose to insulate their facilities for energy efficiency, some, e.q., HHL, somewhat better than others. Building design itself also affects energy consumption. Cypress' high exterior building surface area makes it a less energy-efficient design; Manor Care's compact design aces it a more energy-efficient design. FCP's three-story design also is a more energy-efficient design. Cypress' design incorporates only one water heater. This will produce line loss and lower energy efficiency, as well as potential total loss of hot water. (Cypress also has only one electrical plant.) Other Unique Design Features. Several unique features in FCP's room design helps "de- institutionalize" the facility and contributes to overall quality of care. Similarly, residents at FCP will be able to offer their guests refreshments from the kitchen at any time of the day or nights and children, spouses, and entire families will be encouraged to join residents for meals as often as they wish, assisting in the maintenance of ties with the community. Dining may be either communal or in the several lounge areas and private dining rooms. One of Cypress' unique design features is of the bizarre and morbid variety--a room designed to store deceased residents. FINANCIAL FEASIBILITY. The short-term and long-term feasibility of the proposals of HCR, FCP, Manor Care, Forum and HHL was never seriously questioned and was easily proven. Not so with Palm Court and Cypress. Palm Court. The duty to defend the immediate and long term financial feasibility of Palm Court's project rested with Steve Jones. Mr. Jones, who was not involved in the preparation of the application, offered his opinion that the Palm Court 60-bed addition would be feasible in the immediate and long terms. In giving his opinion of the project's financial feasibility, Mr. Jones stated he believed the pro forma in years 1 and 2 relate back to the corresponding tables in the application; but acknowledged he performed no analysis of his own, but rather he took the information provided him at face value. The pro forma is one of the key components of an application, as literally the heart of the application ties directly or indirectly into developing the pro forma, including Tables 1, 2, 3, 7, 8, 10, 11 and 25, as well as the amortization schedule. It is a required component of the application. Section 381.494(4)(e), F.S. (1985). Mr. Jones was asked to render an opinion on the reasonableness of Tables 8, 10, 11 and 25, which he did. On cross examination, however, Mr. Jones acknowledged he did not evaluate existing staff at Palm Court to determine the reasonableness of the pro forma. He did not verify the projected management fee and, in fact, stated he didn't know if it was included as a line item under "administration and general" on the pro forma nor how the management fee was computed. Mr. Jones, who has never prepared all the financial information in a CON application, also admitted he didn't know what current nursing salaries were in Hillsborough County, or any other salaries for that matter. He further acknowledged that he could not testify that the application's hourly wage times the number of working hours in a year would give you the stated nursing salaries. In sum, Mr. Jones admitted his opinion of the project's feasibility was based solely on his review of Tables 8, 11, 20 and 25 and his firm's involvement in the preparation of Palm Court's two most recent cost reports and not on the pro forma filed with Palm Court's application. Mr. Jones' accounting firm, in preparing Palm Court's cost reports, does not conduct an audit or express any opinion relating to the reasonableness of the statement of revenues and expenses. Joseph Lennartz, an expert in financial feasibility analysis, gave persuasive testimony outlining the inconsistencies in Palm Court's application. Palm Court's total revenue projections appearing in Table 7 for years 1 and 2 do correspond to the daily room and board revenues appearing in the pro forma, yet none of the Table 7 revenue projections correspond to the projected charges on Table 8. Assuming the salaries on Table 11 do not include fringe benefits, all FTE's and salaries on Table 11 are not accounted for in the pro forma. The pro forma salaries are significantly lower than on Table 11: RNs ,- understated by $12,426 LPNs - understated by $30,518 CNAS -understated by $239,541 Social Worker - understated by $2,983 Dietary - understated by $3,009 Maintenance - understated by $10,165 Activities - understated by $4,486 Housekeeping - understated by $6,365 Laundry & Linen - understated by $6,498 Admin & General - understated by $2,560 Palm Court's salary information on Table 11 is in 1987 dollars and needs to be inflated forward at least two to three years. Palm Court's current average salaries exceeded the proposed salaries on Table 11--including the administrator's salary, proposed at an annual salary of just over $31,000 when it actually was over $50,000 in 1987. Based on Palm Court's answers to interrogatories, Palm Court's management fee is not accurately reflected in the pro forma and is $44,559 too low in year 2; the projected dietary expense is understated by $112,386 in year 2; the projected housekeeping expense is understated by $46,609 in year 2; the projected laundry expense is understated by $35,308 in year 2; and plant expenses are understated by $100,116 in year 2. The terms of debt financing appearing on Table 2 of Palm Court's application do not conform to the amortization table, causing the interest expense line item on the pro forma to be understated. Cypress. As previously alluded to, the reasonableness of Cypress' projected Medicaid and Medicare rates appearing on its Updated Table 8 has not been established by competent substantial evidence. The Cypress pro forma fails to make provision for interest expense, depreciation, and property tax expense. These omissions represent an understatement of expenses as follows: YEAR ONE YEAR TWO INTEREST $177,818 $176,186 DEPRECIATION $110,000 $100,000 PROPERTY TAXES 2,200 25,000 (at assessed value 75 percent of market) TOTAL $290,018 $301,186 When interest, depreciation, and property taxes are included in the Cypress pro forma, the result is a loss of $90,000 in year one and $80,000 in year two. Furthermore, from a cash flow perspective, Cypress will incur a cash loss of $2,037 in year one and a cash gain of just $6,342 in year two. If property taxes are based on an assessed value at 100 percent of fair market value, there would be a $2,000 cash loss even in year two. It is not unusual for a nursing home to experience a negative cash flow in its first year of operation due to its low occupancy. However, it is unusual for a nursing home to experience a negative cash flow, as the Cypress facility will, while operating at optimal occupancy (95 percent). Cypress' owner/investors are willing to proceed with the project because they expect to be able to use some of the approximately $90,000 per year tax loss in years one and two to offset personal income, resulting in a cash on cash return of approximately $23,000 or 5.4 percent. Cypress' Table 1, "source of funds" states that the applicant has $425,000 "in hand". In fact, Cypress does not have those funds in hand. They are in the hands of the Cypress owner/investors. So far they have contributed $90,000 to the venture and will have to contribute not only an additional $425,000 to fund the nursing home but also an unspecified larger sum to fund Cypress planned ACLF and other projects. The evidence suggests that at least $425,000 more of equity contribution would be required for the rest of the project. Cypress did not prove that its proposed facility is financially feasible, either in the immediate or long term. BALANCED CONSIDERATION. Giving a balanced consideration to all of the statutory and rule factors addressed in the preceding findings, it is found that there is a net need for 231 community nursing home beds in Hillsborough County, that the applications of HCR, FCP and Manor Care should be granted and that the other applications should be denied.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Department of Health and Rehabilitative Services enter a final order granting the applications of HCR (CON Action No. 5000), FCP (CON Action No. 4993) and Manor Care (CON Action No. 5006) and denying the applications of Forum (CON Action No. 4999), HHL (CON Action No. 4978) Palm Court (CON Action No. 4987) and Cypress (CON Action No. 5004). RECOMMENDED this 14th day of November, 1988, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 1988.
The Issue At issue in this proceeding is whether respondent committed the offense alleged in the administrative complaint and, if so, what disciplinary action should be taken.
Findings Of Fact Respondent, Adele "Nikki" Leon, holds Florida teaching certificate number 413436, covering the area of emotional disturbances and special learning disabilities. Such certificate is valid through June 30, 1996. At all times material hereto, respondent was employed by the Dade County Public Schools, Palmetto Adult Education Center, as a part-time teacher, and was assigned to teach Adult Basic Education for the Elderly (ABE) at Snapper Creek Nursing Home. Pertinent to this case, respondent's assignment during September and October 1992, included the teaching of an ABE class at Snapper Creek Nursing Home each Tuesday from 3:00 p.m. to 5:00 p.m. According to respondent's attendance reports for that period, twenty-five residents were enrolled in the class. On September 15, 1992, Ivette Morgan, assistant principal of Palmetto Adult Education Center, at the request of Edward Gehret, principal of Palmetto Adult Education Center, visited Snapper Creek Nursing Home to evaluate the adult education program. During the course of that visit, as well as visits on September 22, September 29, and October 20, 1992, Dr. Morgan had an opportunity to observe respondent's Tuesday class. On those occasions, Dr. Morgan noted only four to six residents in the classroom. 4/ Dr. Morgan reported her observations regarding class attendance to Dr. Gehret who, at the time, had been involved with enrollment and attendance review for, inter alia, Snapper Creek Nursing Home. Based on that review, Dr. Gehret observed that respondent had routinely marked all twenty-five residents in her class as "present," which did not square with Dr. Morgan's observations. On October 22, 1992, Dr. Gehret met with respondent to review the discrepancies he perceived in her attendance report procedures. At that time, it was the School Board's policy to mark residents "present" for an ABE class if they appeared at any time during the class period, no matter how briefly; but if they never appeared, to mark them as "absent." 5/ Respondent advised Dr. Gehret that she was of a different perception, and understood that nursing home residents enrolled in an ABE class were not to be marked as "absent" but, rather as "present," whether attending or not, so long as they were still in the facility. Notwithstanding, following the meeting, respondent agreed to conform her attendance procedure to the policy Dr. Gehret outlined. Regarding the discrepancies in respondent's attendance reports, when measured against the School Board's policy, the proof demonstrates that for the attendance reporting periods of September 14-27, September 28-October 11, and October 12-25, 1992, respondent completed and signed the attendance report for her Tuesday class on which she marked as "present" nursing home residents Helen Ambler and Gertrude Monge. Ms. Ambler and Ms. Monge were not, however "present" during such periods since they had died September 2, 1992, and June 15, 1992, respectively. The proof further demonstrated that for the same reporting periods, respondent had marked as "present" nursing home residents Agaton Bolanio, Nazario Lopez, and Martin Ruiz. Mr. Bolanio, Mr. Lopez and Mr. Ruiz were not, however, "present" during such periods since they had been discharged from the nursing home on June 19, 1992, July 20, 1992, and May 14, 1992, respectively. Finally, based on Dr. Morgan's observations of respondent's Tuesday class on September 15, September 22, September 29, and October 20, 1992, wherein she observed no more than four to six residents in attendance, it is reasonable to conclude that a significant number of residents who were marked as "present," other than the residents heretofore mentioned, were likewise not "present" on those dates. Which residents and why they were not present was not, however, established of record. 6/ Regarding the ABE program and the preparation of enrollment and attendance reports at Snapper Creek Nursing Home, the proof demonstrates that the ABE program was under the direction of the nursing home activities director who, without the participation of the instructors, prepared the enrollment for each class. 7/ Accordingly, respondent would not necessarily have known the residents assigned to her class, and reasonably assumed that the list of residents she received from the activities director contained current residents of the nursing home. Likewise, respondent relied on the activities director to advise her when residents died, were discharged or were otherwise no longer able or interested in attending before removing them from the roll; however, such information was rarely provided by the activities director. Finally, absent advice to the contrary from the activities director, respondent did not consider a resident's failure to attend on a given day an absence, as in the traditional classroom setting, and routinely marked them "present." Such practice in the ABE program was reflective of the voluntary nature of the program, as opposed to compulsory attendence in the traditional school setting, and the unavailability of information, except from the activities director, as to the reason a resident did not attend. Notably, residents frequently did not attend because, inter alia, nurses aides failed to bring them to class or they were too ill to attend, as opposed to not wanting to attend the course any longer. That such was the procedure at Snapper Creek Nursing Home, and perhaps other adult education centers in Dade County, finds other support in the record apart from respondent's testimony. For example, another instructor, Evelyn Foster, during the times in question, carried Francies Lambrou as "present" on her attendance record until July 27, 1992, although she was discharged July 2, 1992; and carried Maria Diaz, Carmen Morela, and Lorenzo Legundo as "present" until at least October 9, 1992, although Ms. Diaz and Ms. Morela were discharged September 5, 1992, and Mr. Segundo was discharged September 24, 1992. Moreover, Dr. Morgan found it necessary, at sometime between September 15 and October 26, 1992, to give the activities director specific instructions on how attendance was to be recorded, and Dr. Gehret found it necessary to conduct a "rollbook workshop" at Snapper Creek Nursing Home for all instructors, as well as agreeing to urge the nurses aides to bring the residents who desired to attend to class. [Petitioner's exhibit 1, pages 17 and 21, and respondent's exhibit 12.] Finally, there is of record a memorandum of July 8, 1993, almost one year after the events at issue in this case, from Connie Gilbert, District Director, Division of Adult Education, Dade County Schools, to all adult education center principals, which suggests continued confusion in attendance procedures for off- campus classes and that the practice at Snapper Creek Nursing Home was not an isolated occurance. That memorandum provided, in part, as follows: SUBJECT: ATTENDANCE PROCEDURES Off-campus visitations have revealed problems and confusion about attendance procedures. Please inform all teachers of the following procedures: Students must be present in a teacher's class and participate in the class activities in order for the teacher to mark this student present in that class. * * * Please make sure that off-campus teachers understand that students present "someplace in the facility" can not be considered present in a particular class. Students must be physically present in a class in order to be marked present in that class. Given the proof, it must be concluded that respondent's failure to record attendance in accordance with school board policy was, more likely than not, a consequence of a misunderstanding of, or ignorance of, that policy. In this regard, it is observed that no state policy for recording ABE attendance was established of record, and no proof that any policy established by the school board had been reduced to writing or imparted to respondent, or any other adult education instructor, prior to the events giving rise to the issues in this case. Accordingly, it follows that there was no compelling proof that respondent, by completing the attendance reports in the manner she did, had any intent to deceive the school board.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be rendered dismissing the administrative compliant. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 18th day of May 1995. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of May 1995.
Findings Of Fact In April, 1984, the Petitioner, Health Care and Retirement Corporation of America d/b/a Heartland of Palm Beach, applied for a certificate of need for 120 community nursing home beds in Palm Beach County, Florida. In July, 1984, the Respondent, the Department of Health and Rehabilitative Services (HRS) gave notice of initial intention to deny the application. HRS Exhibit 5. The instant proceedings are the result of the request of the Petitioner for a formal administrative hearing from that denial. On January 22, 1986, the parties jointly moved for a continuance of the final hearing in this case then scheduled to commence on February 3, 1986, and in paragraphs 3 through 6, represented that the purpose of the requested continuance was to allow the Petitioner to gather data as to two alleged underserved groups: patients suffering from Alzheimer's disease and sub-acute care patients. The Petitioner asserted that such data would support an amended, updated application for certificate of need to be filed by the Petitioner for the purpose of showing need pursuant to the special exception allowed in the rules. In paragraph 8 of the motion, HRS agreed to give serious consideration to the updated application and supporting documents. The motion was granted by order dated February 3, 1986, and at the request of both parties, the final hearing was reset for April 3, 1986. The parties have agreed that all statutory and rule criteria have been satisfied by the Petitioner in this case except for the issue of need as determined by rule 10-5.11(21), Florida Administrative Code, and that question is the sole issue in this case. T. 5; Hearing Officer Exhibit 1. Petitioner's initial application did not mention the intention to provide special services for victims of Alzheimer's disease, and the Petitioner did not amend or update its application with HRS in that respect, except to the extent that it presented such testimony in the formal administrative hearing. T. 104. The application is not in evidence. The initial review of Petitioner's application by HRS did not consider special services to Alzheimer's patients. T. 117; HRS Exhibit 5. HRS has adopted rule 10-5.11(21), Florida Administrative Code, to determine need for additional community nursing home beds. Using a planning horizon of 1987, which is 3 years after the date of application, the rule calculates a net surplus of 511 community nursing home beds for Palm Beach County. Even using the 1989 planning horizon, there is still a net zero bed need using the rule formula for Palm Beach County. T. 100; HRS Exhibit 2; T. 97 and 102. Alzheimer's disease is a degenerative process of the brain characterized primarily by loss of memory and impairment of a variety of routine functions. T. 160-161. Diagnosis of the disease is difficult since there are related degenerative mental disorders. Moreover, positive diagnosis typically requires examination of brain tissue, and the process of obtaining brain tissue is intrusive. T. 162-163. For these reasons, the diagnosis is typically of "senile dementia of the Alzheimer-type," or Alzheimer's disease or related disorders. T. 163. The cause of the condition is not known, although research into possible surgical techniques to ameliorate the effects is being conducted in the Jupiter, Florida, area. T. 73. Alzheimer's disease primarily afflicts elderly persons, although some younger persons may also be victims. T. 163. Person suffering from Alzheimer's disease typically have memory loss, communicative problems, aphasia, trouble understanding, confusion, disorientation, inability to recognize care givers, waking at night, interrupting the care giver's sleep, wandering, mealtime problems, inappropriate sexual activity, incontinence, and social disfunctions. T. 184. Such persons exhibit negative behavior such as resistence to care, demanding, aggression, anger, emotional outbursts due to inability to perform routine tasks, and delusions. Id. Four stages of progressive degeneration are expected with Alzheimer's disease. The first is forgetfulness and loss of ability to perform complex tasks which formerly could be performed. In the second stage, communication problems occur and also loss of memory as to the names of common objects. Wandering and becoming lost also may occur. Stage three is characterized by physical deterioration such as loss of weight, incontinence, and loss of control of other bodily functions. In the fourth stage, a patient will become unable to communicate at all, and may become comatose and bedridden. The course of the disease is from 12 to 16 years or longer and can involve many of the problems described above. T. 217-218. A family member is usually the person first required to provide care for an Alzheimer's victim. T. 165. The responsibilities caused by such care, and the manner in which the symptoms of Alzheimer's disease are exhibited, cause the family care-giver to feel trapped, fatigued, depressed, angry, resentful, and frustrated. T. 167. At times, the family care-giver is elderly and can suffer health problems from the responsibility. T. 82-83. The burden upon the family member can be alleviated by day care, which involves care only during the day, and respite care, which can involve overnight care for several days. T. 167, 147-148. Day care and respite care can also serve the function of establishing a relationship with staff and collection of data and records, both of which become useful for the time when the patient's disease progresses to the point that continuous inpatient care is required. T. 83, 220-223. Alzheimer's patients in a nursing home need special care directed toward their particular disability described above. Of primary concern is that the nursing home be structured to provide an environment that minimizes confusion and compensates for the disabilities of the Alzheimer's disease victim. Separation from other elderly residents, who are not cognitively impaired, is important to prevent confusion of the Alzheimer's patient and to protect the other residents from disruptive intrusions. The physical facility should be constructed and furnished so as to minimize confusion and stimulation. Colors should be subdued, flooring should not mute the sound of footsteps, patterns should not be used, and common appliances should have distinguishing shapes and be clearly identified or labeled. Spaces for quiet and for wandering should be provided. Features to compensate for forgetfulness, such as lights which automatically turn on when a door is opened, should be provided. T. 219- 227, 57-58, 63-64, 81. Staffing must be trained to recognize and help alleviate problems that arise from behavior caused by Alzheimer's disease. T. 74-75, 234- 235, 80, 83-84. Finally, since Alzheimer's disease patients become upset with change due to recognition and memory impairment, continuity of care (staffing and physical surroundings) becomes important. T. 221, 223, 78, 82-83. Alzheimer's disease victims who need inpatient care also need all of the normal forms of skilled nursing care that other elderly persons need. This may occur over a course of years, or may be the results of a sudden injury, such as a broken hip. T. 220-223, 147-148, 79. As discussed above, it is important to be able to provide such care in the same facility since continuity of care is so important, and transfers to new surroundings are disruptive. Any current holder of a certificate of need for community nursing home beds in Palm Beach County may, if it wishes, provide special services to persons suffering from Alzheimer's disease. T. 122. Existing nursing homes in Palm Beach County accept Alzheimer's disease victims, but none provide special services for these patients except perhaps Darcy Hall, which provides adult day care. T. 143, 76, 82, 168-169, 171, 200-201, 210-211. Existing adult congregate living centers and adult day care centers in Palm Beach County similarly do not have special services or programs for victims of Alzheimer's disease. T. 145. Existing nursing homes could provide such services to Alzheimer's patients, though approval of HRS by expedited review to change substructure might be required, but none has done so. T. 154. Alzheimer's patients are often inappropriately restrained, or mixed with non-Alzheimer's disease patients. T. 77. Dr. Eugene Loeser is a physician, board certified in neurology, and is in private practice in Jupiter, Florida. T. 157-158. Dr. Loeser created a list of questions to ask physicians in Palm Beach County to explore the need for special nursing home programs for Alzheimer's disease patients, and that list of questions is HRS Exhibit 8. T. 169, 186-189. Using these questions Dr. Loeser conducted a survey of 36 physicians in Palm Beach County, which included 8 family practitioners, 10 internists, 14 neurologists, 2 neurosurgeons, and 2 psychiatrists. T. 170. There are approximately 1,000 physicians in Palm Beach County, T. 31, and Dr. Loeser admitted that his survey was only of a small percentage. T. 170. Dr. Loeser did not attempt to make the survey statistically valid. T. 178. The physicians contacted were selected from the telephone book from Jupiter in the north to Lake Worth in the south. T. 171, 183. Dr. Loeser attempted to contact representatives of several specialities. T. 181. The specialities were selected as those likely to see Alzheimer's patients. T. 170. Of the 36 physicians contacted, 35 had seen patients having Alzheimer's disease. Petitioner's Exhibit 5. Of these, 27 physicians had "difficulty in finding appropriate placement" for these patients in terms of supervision, care and treatment. Petitioner's Exhibit 5; HRS Exhibit 8. The same number of physicians felt that facilities with appropriate programs for placement of Alzheimer's disease or similar disorder patients were not presently available in Palm Beach County. Id. From the responses, Dr. Loeser estimated that these physicians had seen somewhat more than 600 patients suffering from Alzheimer's disease or related disorders in the last year. T. 171. Dr. Loeser personally estimated that he typically had difficulty finding a treatment and care facility for about 10 Alzheimer's disease patients annually. T. 185. He then estimated from responses received that the physicians surveyed were unable to find an appropriate program for about 135 patients annually. Petitioner's Exhibit 5. Dr. Loeser further estimated that among his own patients, about one or two per week needed some form of day care, T. 185, and from the responses of the physicians in the survey, estimated that such physicians annually had 150 patients needing day care. T. 175. Determination of placement problems for Alzheimer's disease patients from actual patient records or placement orders from physicians would be difficult because these records are confidential. Consent from the patient would be needed, and consent from an Alzheimer patient would be difficult due to the nature of the mental impairment caused by the disease. T. 173. The survey conducted by Dr. Loeser was not unreasonable for failure to contact more physicians. The survey accurately reflects a group of Alzheimer's disease patients treated by the physicians contacted, and does not purport to account for Alzheimer's disease patients treated by other physicians. Thus, the need identified by Dr. Loeser's survey, while underinclusive of total need, is reasonably accurate for the need identified. Palm Beach County currently has at least an estimated 16,597 persons suffering from Alzheimer's disease, and this number is expected to be 18,172 by 1988. T. 24. HRS itself estimates that the number of Alzheimer's victims in Palm Beach County in 1986 to be 27,200. Petitioner's Exhibit 6. It is further estimated that approximately 80 percent of such patients will require some sort of custodial care in the future. T. 76. Based upon the foregoing statistics, as well as the fact that existing Palm Beach County nursing homes do not provide special services or care for Alzheimer's disease patients, there is a need for the Alzheimer facility proposed by the Petitioner. The Petitioner proposes to establish a 120 bed nursing home in Palm Beach County designed and staffed to provide care and treatment to meet the special needs of persons suffering from Alzheimer's disease and related disorders. T. 45. The Petitioner, Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, is willing to have any certificate of need issued in this case to be conditioned upon it building, developing, and operating the proposed nursing home limited as it has proposed in this formal administrative hearing. T. 48-49. Thus, findings of fact 18 through 21 which follow relate to the manner in which the Petitioner proposes that a certificate of need may be conditioned and limited. The proposed physical design of the nursing facility is set forth in Petitioner's Exhibit 1. T. 49. The cost is estimated to be $3.7 million. T. The design includes a courtyard to allow patients to wander safely. T. 41. It also includes a shaded porch, an outdoor patio, and a lounge off the patio. Id. Security from wandering is proposed to be provided by a "Wanderguard" system of wristbands and sensing devices that sound an alarm as a patient passes an exit point. Id. Additionally, the proposed facility would have a therapeutic residential kitchen for patients still able to use a residential kitchen. Id. One room would be set aside as a quiet room. T. 42. It is contemplated that such a room will minimize the need for calming drugs. T. 224. Also to be provided are separate dining areas, areas for therapy, and separate nursing wings and sub-acute care wings. T. 42-43. Alzheimer patients would be separated from non-Alzheimer patients, fixtures would have shapes, colors, and labels to facilitate identification; wall and floor coverings would not use patterns, and the flooring would be vinyl or tile instead of carpet. T. 42, 225-228. The proposed plan of the facility contemplates that there be space for all stages of care for Alzheimer's patients: day care, respite care, nursing care, and sub-acute care. Petitioner's Exhibit 1; T. 221-222, 39-40, 56. The Petitioner also proposes to provide individual treatment plans, to include physical therapy, occupational therapy, social work, and recreational therapy. T. 230-231. Support groups for family members of the patient will be provided. T. 233. The Petitioner states that the staff for the proposed facility must be appropriately trained to know Alzheimer's disease and the special needs of these patients. T. 234. Ongoing education for staff is viewed as being imperative. Id. The Petitioner recognizes the need to provide greater staffing for peak periods. T. 235. Monthly in-service training will be provided by the parent corporation. T. 236. Moreover, the parent corporation, Health Care and Retirement Corporation of America, will develop and implement a program of staff training specifically for Alzheimer's disease. T. 237. Staff for the proposed facility will be adequately trained to properly deal with the problems of Alzheimer's patients. For a 24 hour period, a staff to patient ratio of 1 to 2.5 will be provided. T. 238. This ratio includes only nursing staff, aides, and activities and occupational rehabilitation staff. Id. The Petitioner proposes to designate and commit its entire facility to Alzheimer's patients. T. 60. But from a fiscal point of view, the Petitioner proposes to not deny admission to persons not having Alzheimer's disease. T. 66-68. At least 60 beds will be dedicated to patients with Alzheimer's disease, and these are expected to fill with persons in stages two and three of the disease. T. 67-68. When these patients reach more advanced stages of their disease, it is expected that they will be treated in the other 60 bed section, which is skilled nursing and sub-acute care. T. 68; Petitioner's Exhibit 1. Thus, the Petitioner expects ultimately to fill its entire facility with Alzheimer's disease patients consistent with its dedication and purpose. The facility proposed by the Petitioner would meet the unique needs of Alzheimer's disease patients and their families, and would be the only facility in Palm Beach County to provide a wide spectrum of care for Alzheimer's disease patients. Petitioner's proposal is consistent with priorities IV, V 3 and 4, and VI, Long Term Care section, District IX Health Plan (1985). T. 150-152. On March 6, 1986, the General Counsel of the Department of Health and Rehabilitative Services sent a memorandum to "all attorneys" construing and implementing the decision in the Gulf Court case, Gulf Court Nursing Center v. DHRS, 10 F.L.W. 1983 (Fla. 1st DCA 1985). On the next day, Robert E. Maryanski, Administrator, Community Medical Facilities, Officer of Health Planning and Development, sent the memorandum to his staff and told them to use the opinion as a guideline for the initial review of a CON application settlement and preparation for hearings. HRS Exhibit 6. HRS recognizes that there are three ways that an applicant for a certificate of need for nursing home beds can show need even though the rule shows a zero bed need. The third way is for "equivalent assessments" to be submitted by "attending physician." T. 113; HRS Exhibit 4, rule 10- 5.11(21)(b)10, F.A.C. HRS staff construes rule 10-5.11(21)(b)10, F.A.C., as requiring that each attending physician of each Alzheimer's patient document that his or her patient is in need of specialized services and that the patient is without access to those special services. T. 124. The issuance of certificate of need 4194 to the Joseph L. Morse Geriatric Center was issued pursuant to the special circumstances exception of rule 10-5.11(21)(b)10, F.A.C., since the rule did not show bed need. T. 127. There was nothing in the application in that case to show that elderly Jewish persons were denied access to existing nursing home facilities in Palm Beach County. Id. See also T. 130. There was, however, evidence that a large group of elderly Jewish persons were not being provided kosher dietary services at existing nursing homes. T. 129, 134. This evidence was not presented by attending physicians, however. T. 136. The certificate of need 4194 to the Joseph L. Morse Geriatric Center was also approved using priority VI, long term care section, District 9 local health plan, which provides in the second sentence for consideration of "ethnic- type services including special dietary requirements . . . ." HRS Exhibit 7; T. 134. Due to changes in federal funding, patients needing sub-acute care (less than hospital care, but more than an ordinary nursing home) do not qualify for cost reimbursement. T. 85-88. It appears that about one-half of all nursing home admissions in Palm Beach County are for three months or less. This may be a pool of persons needing sub-acute care. Petitioner's Exhibit 3, Long Term Care Section, page 4; T. 27-28. There was other general testimony that there was a "need for sub-acute care in Palm Beach County, T. 88, 146, and the local health plan, priority V 4, page 31, supports the grant of a certificate of need to an applicant that will provide such care. Petitioner Exhibit 3. There is also a need for sub-acute care in the final stages of Alzheimer's disease to provide continuity of care. T. 221. See also finding of fact 10. No one has petitioned to intervene in this case.
Recommendation Based upon the foregoing, it is recommended that the Department of Health and Rehabilitative Services, pursuant to Rule 10-5.11(21)(b)10, Florida Administrative Code, and Section 381.494(8)(c), Florida Statutes, issue a certificate of need to Health Care and Retirement Corporation of American, d/b/a Heartland of Palm Beach, for 120 community nursing home beds limited and conditioned upon all such beds being dedicated only to the provision of such services and facilities for victims of Alzheimer's disease as described by the Petitioner in this case and set forth in findings of fact 18 through 21 of this order, with 30 of such beds established for sub-acute care needs of Alzheimer's disease patients. It is further recommended that the certificate of need not contain approval for general community nursing home beds, but be limited to Alzheimer's disease patients. DONE and ORDERED this 8th day of July, 1986, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of July, 1986. APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-3337 Pursuant to section 120.59(2), Fla. Stat., the following are specific rulings upon all proposed findings of fact submitted by the parties which have been rejected in this Recommended Order. Findings of Fact Proposed by the PETITIONER: 7. Sentences 3 and 4 have been rejected because the evidence was not sufficiently complete to describe nursing homes in Florida in general, and because the issue in this case is the need in Palm Beach County, thus making these proposed facts not relevant. 10. Sentence 3 is rejected since the testimony did not clearly show that therapeutic kitchens "should be available." 13. Sentences 9 and 10 are rejected because the evidence did not categorically show that it "would not be possible" to use actual physician orders, or that "physicians do not typically arrange their records so that orders of that kind could be extracted from their records." Similarly sentence 12 is rejected for lack of categorical evidence to prove impossibility. 17. Evidence that the entire facility is "completely fenced and enclosed" cannot be located in the record, and thus sentence 7 is rejected. The bulk of the discussion in proposed finding of fact 20 has been rejected because it is argument or conclusions of law. Those portions of this proposed finding which propose a finding that the Respondent's interpretation of rule 10-5.11(21)(b)10, Florida Administrative Code, is wrong or unreasonable are rejected as argument or conclusions of law. Most of the factual statements were adopted. Findings of Fact Proposed by the RESPONDENT: All proposed findings of fact by the Respondent have been adopted in substance. COPIES FURNISHED: Harden King, Esquire Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32301 Kenneth A. Hoffman, Esquire G. Steven Pfeiffer, Esquire Laramore & Clark, P.A. 325 North Calhoun Street Tallahassee, Florida 32301 William Page, Jr. Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 =================================================================
The Issue The parties have stipulated that Petitioner is a "prevailing small business party" as defined in Section 57.111, F.S., and that the attorney fees requested are reasonable, up to the $15,000.00 statutory limit. The issue remaining for resolution is whether the expungement proceeding had a "reasonable basis in law and fact at the time it was initiated by [the] state agency", as provided in Section 57.111, F.S.
Findings Of Fact The following findings are adduced from the record, consisting of the transcript and exhibits in cases number 89-4151C/89-6087C, from the stipulations of the parties, and from the final order of the agency adopting the recommended order of Hearing Officer, K.N. Ayers, dated March 20, 1990. Petitioners are sole proprietors of Forest Haven, an unincorporated adult congregate living facility (ACLF) licensed by the State of Florida pursuant to Chapter 400, Part II, F.S., and located at 8207 Forest City Road, Orlando, Florida. Petitioners and Forest Haven have their principal office in Orlando, Florida and are domiciled in Orlando, Florida. They have less than 25 full-time employees and a net worth of less than $2 million. On March 17, 1989, a Department of Health and Rehabilitative Services (HRS) survey team visited Forest Haven to conduct an annual survey of the facility. The survey team was comprised of 10 persons, enlarged due to a training exercise. Several of the team members were registered nurses; several members were Office of Licensure and Certification supervisors. During the course of the visit and observations of the residents, members of the team determined that eight residents required a higher level of care than could be provided at the ACLF. As found in the recommended order adopted by the agency, the basis for this determination was, As to T.M., age 81, the need for a restraining vest, and the existence of bruises and gashes on the face and head; As to H.L., age 89, the presence of a foley catheter, total disorientation, low weight and poor skin turgor (brittle skin); As to F.W., age 72, the presence of a foley catheter, observation of fresh blood in the catheter bag, and low body weight; As to M.B., age 81, incontinence and nonambulatory status; As to R.T., age 84, a foley catheter and contraction of both legs; As to L.O., age 94, edema of lower extremities, contracture of both knees, low body weight, skin tear on left buttocks, and possible bed sore on right buttocks; As to P.B., age 88, incontinence, low body weight, and inability to transfer from wheelchair to bed without assistance; and As to F.H., age 89, one-half inch bed sore on coccyx, pitting edema of legs, incontinence and somewhat confused state. An adult protective services investigator was summoned, as well as law enforcement personnel, and the above residents were removed from the facility on an emergency basis and were placed in a nursing home. They were evaluated at the nursing home the following day by Carolyn Lyons, a Registered Nurse Specialist with HRS, who found that intermediate or skilled nursing home services were required. A ninth resident, C.K., was evaluated by a medical review team nurse and an adult protective services worker at the ACLF on March 20, 1989, and was removed from the facility and placed in a nursing home the same day. C.K., age 89, was found to be confused, incontinent, with bruises, a swollen foot, non- ambulatory, and with a red rash on the trunk of her body. HRS obtained orders from the Circuit Court to provide protective services for seven of the above-mentioned residents. Of the remaining two, one was competent to consent to the nursing home placement and another was returned to his own home by relatives. On March 22, 1989, HRS Protective Services worker, Annette Hair, classified the report in her investigation as "confirmed" medical neglect by S.G. and J.G. of the eight residents who had been removed from the ACLF. She relied on her own observations of the individuals, on the medical assessments performed by the survey team nurses at the ACLF, and the subsequent assessment of Carolyn Lyons, the HRS staff person responsible for making an evaluation of the level of care required for medicaid nursing home placement. The narrative "investigative conclusion" of Ms. Hair's report provides, in pertinent part: * * * Based on the facts obtained during the course of this investigation this case is being classified as CONFIRMED. In accordance with F.S. Section 415.102(4) it is clearly estab- lished that [S. and J.G.] were the caregivers of the eight alleged victims of this report as they had been entrusted with the care of said individuals. The allegation of neglect is verified for each of the eight alleged victims in that [S. and J.G.] failed to provide the care and service necessary to maintain the physical and mental health of an aged person that a prudent person would deem essential for the well-being of an aged person (F.S. Section 415.102(13)). Specifically each of the eight alleged victims has a medical condition which required twenty-four hour skilled nursing care and supervision which the caregivers, [S. and J.G.] failed to provide for said individuals. Five of the eight alleged victims, [H.L., L.O., T.M., F.H. and P.B.] had Scabies (a highly contagious disease caused by parasitic mites that burrow under the skin. This disease is associated with unsanitary conditions and causes a painful itch). [S. and J.G.] failed to provide the supervision necessary to detect this disease and in so doing jeopardized the health and well-being of the other residents in the facility. [H.L.] in addition to having Scabies, was semi-comatose, had bed sores on her buttocks and pelvic area and had a foley catheter. [T.M.] had open lacerations on her face, was extremely mentally confused and was known to wander and fall which required her to be physically restrained. [L.O.] had two open skin areas and Edema. [M.B.] has an excoriated area on her buttocks, Edema of the feet, and her right knee was swollen. [R.T.] had a cough of unknown origin, contraction of both legs, and an in-dwelling catheter. [F.W.] had an in-dwelling catheter which was draining bloody urine and appeared malnourished. [P.B.] appeared malnourished and was incontinent of both bowels and bladder, was extremely confused, and had an open draining wound. [F.H.] had bed sores, and Pitting Edema in addition to Scabies. [S. and J.G.], in addition to being negligent for failing to provide the care and services necessary to maintain the physical and mental health of the alleged victims, were in direct violation of F.S. Section 400.426(1) as they did not perform their responsibility of determining the appropriateness of residence of said individuals in their facility. (Petitioner's exhibit 2, in cases number 89-4151C/89-6087C) On April 4, 1989, HRS Protective Services worker, Kathleen C. Schirhman, classified the report in her investigation as "confirmed" medical neglect by S.G. and J.G. She relied on her own assessment of the resident, and on the medical assessments by Nurse Lyons, and by medical staff at the receiving nursing home, including a physician, Dr. Parsons. The narrative "investigative conclusion" of Ms. Schirhman's report provides: Based upon the facts obtained during the course of this investigation, both alle- gations of medical neglect and other neglect were determined to be verified, and the case is being classified as CONFIRMED. [J.G. and S.G.] assumed the responsibility of care for [C.K.] and, therefore, became her caregivers. They did not provide the care and services necessary to maintain the physical and mental health of [C.K.] that a prudent person would deem essential for her well-being. She required medical services and nursing supervision in a skilled nursing facility. Pursuant to F.S. 400.426 "the owner or Admini- strator of a facility is responsible for determining the appropriateness of admission of an individual to the facility and for deter- mining the continued appropriateness of resi- dence of an individual in the facility." The assessment by the CARES nurse determined that [C.K.] was being medically neglected, because she required 24 hour nursing care, which she was not receiving. She had Scabies, for which she was not being treated. The CARES nurse believed that the alleged victim was at risk and requiring immediate nursing home placement. Allegation of "other neglect" was added to the original report. [C.K.] was being neglected, because she was a total transfer patient, who required restraints, which were not used and cannot be used in an ACLF. Furthermore, the potential for harm to her was great: She was blind, confused, and unable to self-preserve. (Petitioner's exhibit number 1 in cases number 89-4151C/89-6087C) S.G. and J.G. requested expungement of the reports but the request was denied on July 10, 1989. Thereafter, through counsel, they made a timely request for a formal evidentiary hearing. The hearing was conducted on February 14 and 15, 1990, by DOAH Hearing Officer, K.N. Ayers. Depositions of David J. Parsons, M.D. and Gideon Lewis, M.D. were filed after the hearing, by leave of the Hearing Officer. In his recommended order issued on March 20, 1990, Hearing Officer Ayers found that the HRS investigators did not contact the physicians who had signed the admissions forms when each of the residents at issue had been admitted to the ACLF. Nor did the HRS staff obtain records from the home health agency which, at the treating physicians' direction, was providing, or had provided, home health care to most of the residents at Forest Haven. Skin lesions (decubitus) and scabies were found to be frequently present in nursing home and ACLF residents. Edema and underweight conditions are also common in these residents. Dr. Lewis, the treating physician for most of the residents at Forest Haven, had ordered the vest restraint for T.M.'s protection. He had also written to HRS about a year prior to the survey, recommending that efforts be made to relocate H.L. to a skilled nursing facility. The recommended order found that no evidence of exploitation or neglect, other than medical neglect, was presented at the hearing. The order also found that evidence of medical neglect by S.G. and J.G. was not presented, but rather, "[t]o the contrary, the evidence was unrebutted that Respondents [Petitioners in this proceeding] promptly reported to the resident's physician all changes in the resident's physical condition." The agency's final order was filed on May 29, 1990, adopting the findings of fact and conclusions of law recommended by Hearing Officer Ayers, and granting J.G. and S.G.'s requests for expungement. The Final Order addressed the department's exceptions to the recommended order, as follows: RULING ON EXCEPTIONS FILED BY THE DEPARTMENT The dispositive issue is whether retention of a resident (or residents) in an ACLF whose medical condition is more serious than the established criteria for residence in an ACLF (see Section 10A-5.0181, Florida Administra- tive Code for the criteria) constitutes per se neglect under Chapter 415. Inappropriate retention of a resident may constitute grounds for disciplinary sanctions under the licensure rules, but it does not automatically consti- tute abuse under Chapter 415. See State vs. E. N. G., Case Number 89-3306C (HRS 2/13/90). The evidence of medical neglect was based on the inappropriate retention of certain resi- dents. The Hearing Officer's finding that these residents were not medically neglected is based on competent, substantial evidence; therefore, the department is obligated to accept this finding. Johnson vs. Department of Professional Regulation, 456 So2d 939 (Fla. 1st DCA 1981), B. B. vs. Department of Health and Rehabilitative Services, 542 So2d 1362 (Fla. 3rd DCA 1989). In pursuing expungement, Petitioners incurred fees, costs and interest in the total amount of $22,772.49. The amount of interest included in that total is $1,000.91. As stipulated, the fees, up to the $15,000.00 statutory maximum, are reasonable.
Findings Of Fact Procedural history In July, 1985, each Petitioner submitted an application for a certificate of need to build a 120 bed community nursing home in Manatee County, Florida. Manatee County is subdistrict 2 of Department of Health and Rehabilitative Services District VI. The application of Meridian was assigned certificate of need number 4154, the application of Manor Care was assigned certificate of need number 4153, and the application of Forum Group was assigned certificate of need number 4159. The applications were comparatively reviewed by HRS. After initial review, all applicants were denied. The state agency action report does not discuss the availability, accessibility or adequacy of existing licensed community nursing homes in Manatee County. Each applicant requested a formal administrative hearing upon the proposed denials of their applications, and those cases were assigned the above cases numbers and consolidated for comparative review and formal administrative hearing. Prior to the hearing, each applicant filed an updated application. M Ex. 1; MC Ex. 1; FG Ex. 2. HRS objected to admission of evidence concerning updated applications, and particularly objected to evidence from Manor Care concerning services to Alzheimer's disease patients, but did not ask that the applications be remanded for further consideration by HRS. The Petitioners' letters of intent, applications, and requests for formal administrative hearing were all timely filed. T. 16-17. The Petitioners agreed that if need exists for 180 beds or more, each applicant would agree to receive certificates of need for one-third of such need. Need The applications of the Petitioners were received in the July, 1985, batching cycle, and the correct planning horizon for determining bed need pursuant to rule 10-5.0011(1)(k), the community nursing home bed rule, is July, 1988. T. 856. Craig Thornton testified as to need on behalf of the Petitioners. Mr. Thornton's calculation of need pursuant to the numeric need rule resulted in a net need of 187 community nursing home beds by July, 1988, in subdistrict 2 (Manatee County) of District VI. T. 814. Mr. Thornton's calculation of need used the following statistics (using the same abbreviations as used in the rule): Licensed beds in the District (LB) of 5,557 as of June 1, 1986, rather than 1985. T. 837. Licensed beds in the subdistrict 2 (LBD) of 1,005 as of June 1, 1986. T. 840. Approved beds in the District (AB) of 508 was as of August 1, 1986. T. 838. Approved beds in subdistrict 2 (AB) as June 1, 1986, was zero. T. 840-41. POPE of 243,978 was July I, 1986 estimates of July 1, 1986 population of persons age 65 and older in District VI. T. 838, 840. The poverty rate in District VI for persons age 65 and older (PBD) is higher than the poverty rate for the same age group for the state (PBS). T. 811. Using these statistics, Mr. Thornton made the following calculations: He calculated the second portion of the test in subparagraph e of the rule to determine whether the poverty adjustment should apply. That calculation, (LB + AB)/POPE, results in 0.02486, rounded. Since the last calculation was less than 27/1000, and since the poverty rate in District VI is higher than the rate statewide, Mr. Thornton next calculated PA, which is the poverty-adjusted number of beds in the District. This calculation pursuant to the rule is (27 X POPE)/1000. The result is 6,587 beds using Mr. Thornton's statistics. Following the next step in the rule, Mr. Thornton calculated SPA, which is the final subdistrict community nursing home allocation where a poverty adjustment is made. SPA pursuant to the rule is (LSD/LB) X PA. Using the above figures already obtained from Mr. Thornton's statistics, SPA is 1,192. T. 813. Finally, Mr. Thornton calculated net bed need by subtracting LSD and 90% of AB in the subdistrict (which was 1,005, using his statistics) from SPA. The result is a net bed need of 187 beds in subdistrict 2. The calculation of net bed need performed by Mr. Thornton is not correct as a matter of law, which will be discussed in the conclusions of law. There were 5,270 licensed community nursing home beds (LB) in District VI as of June 1, 1985. HRS Ex. 3 and 4; T. 863, 866. There were 765 licensed community nursing home beds (LBD) in subdistrict 2 of District VI (Manatee County) as of June 1, 1985. HRS Ex. 3 and 4; T. 866. The July 1, 1985, estimate of population of persons in District VI who were 65 to 74 years of age on July 1, 1985, (POPC) was 126,792, and the July 1, 1985, estimate of population of persons in District VI who were 75 years of age and above on July 1, 1985 (POPD) was 84,723. HRS Ex. 3 and 6; T. 872-73. The total of these two populations is 211,515 (POPE). HRS Ex. 3. The July 1, 1985, estimate of population of persons in District VI who were 65 to 74 years of age on July 1, 1988, (POPA) was 135,921, and the July 1, 1985, estimate of population of persons in District VI who were 75 years of age and above on July 1, 1988 (POPB) was 94,434. HRS Ex. 3 and 6; T. 873. The occupancy rate (OR) for subdistrict 2 (Manatee County) for the period from October, 1984, to March, 1985, was 94.6%. T. 866; HRS Ex. 3 and 4. HRS has a policy of counting beds as approved if approved before the supervisor signs the State Agency Action Report (SAAR) initially determining whether to grant or deny an application. This policy is not applicable to this case since no such beds were approved in the period between June 1, 1985, and the date of signature upon the state agency action report. Additionally, HRS has a policy of counting as approved all beds licensed after the cutoff date for counting licensed beds (here, June 1, 1985) but before the date the supervisor signs the SAAR. HRS Ex. 3, explanation on P. 2; T. 869. Pursuant to the above policy, there were 755 approved beds (AB) in District VI and 240 approved beds (AB) in subdistrict 2. Id. It should be noted that these numbers would be the same if these beds had been counted as approved if approved on June 1, 1985. Thus, application of the policy in this case is unnecessary. Based upon the statistics set forth above, the preliminary subdistrict allocation (5A) of community nursing home beds for July, 1988, is 889. HRS Ex. 3. Based upon the statistics set forth above, the poverty adjustment contained in subparagraph e of the rule does not apply, even though the District VI poverty rate is higher than the statewide rate, because licensed beds (LB) plus approved beds (AS) in District VI divided by the July 1, 1985 estimate of population in the District on July 1, 1985, of age 65 and above (POPE) is more than 27/1000. HRS Ex. 3, step 5. Based upon the statistics set forth above, there is no need for any portion of any of the projections proposed by the Petitioners. The final net bed need for subdistrict 2, pursuant to subparagraph i of the rule, is a surplus of 92 beds. HRS Ex. 3, step 6; T. 862. Suncoast Nursing Center is the former name of the Center at Manatee Springs. T. 879. Suncoast Nursing Center had 120 approved community nursing home beds on March 24, 1984, and these 120 beds became licensed on July 17, 1985. HRS Ex. 5; T. 868. It is located in Bradenton (Manatee County), Florida, J. Ex. 1, pp. and 6, and opened in September, 1985. Id. at p. 6. The Center at Manatee Springs currently provides services only to patients suffering from traumatic brain injury. J. Ex. 1, P. 7. The current operational goal of the Center at Manatee Springs is to seek out patients suffering from traumatic brain injury and that diagnosis is currently one of the Center's admission criteria. Id. at p. 9, 10, 16; J. Ex. 2, p. 10. The Center has expanded its marketing efforts to the entire nation. Id. at p. 26. It recently ordered new brochures to advertise itself for the purposes discussed above. Id. at p. 27. Traumatic brain injury is caused by trauma to the head from the outside, and does not include injuries originating internally, such as due to stroke. J. Ex. 2, pp. 5-6. On December 1, 1986, the Center had 36 traumatic brain injured patients in its 120 beds, and the average age of these patients was 26. Id. None of the patients were over age 65. Id. at p. 7. The Center at Manatee Springs does not currently consider itself to be in competition with community nursing homes in the area. J. Ex. 1, p. 16. The Center has purchased certain kinds of equipment specifically for treatment of traumatic brain injured patients (such as a brain atlas, ventilators for comatose patients, and special audiology equipment for speech pathology and memory loss). J. Ex. 1, p. 10-11. A lot of new equipment is in the process of being ordered. Id. This equipment is usually not found in a community nursing home. Purchase of certain new equipment is in the planning stage, Id. at p. 9, but has been delayed because the census has not yet been that strong. Id. at p. 12. The facility has not been remodeled in any way. Id. at p. 23. The Center is specially staffed to care for patients having traumatic brain injury. J. Ex. 1, p. 13. The Center has a high percentage of nurses on its staff, and has therapists of all types, speech pathologists, and neuropsychologists. Id. at p. 14. The Center informally contacted HRS and obtained approval from HRS to try to increase its occupancy by admitting traumatic brain injured patients. T. 901; J. Ex. 1, p. 22. HRS apparently views the practice of the Center of not taking conventional community nursing home patients as a "problem," and HRS's expert witness was of the opinion that absent permission from HRS, the Center would have to provide services to conventional community nursing home patients. T. 900-01. HRS does not have a rule governing the procedure to be followed in this situation, however, and has proceeded on informal policy. Id. If the Center were to continue indefinitely to refuse to provide services to conventional community nursing home patients, HRS would view that as a significant problem. T. 903. For the long term, the Center has not decided what the patient mix should be, and is still studying the question whether it can continue to provide services only to traumatic brain injured patients. Id. at p. 15. The Center is not limited by its license to treat only traumatic brain injured patients, and could admit community nursing home patients. T. 900. If the census of the Center does not improve, it is possible that it will then broaden its marketing efforts and admit more usual nursing home patients. Id. at p. 23. That has not yet happened, however. The current marketing intent of the Center is to admit only traumatic brain injured patients. The Center at Manatee Springs is currently not operated as a community nursing home, and is currently not accessible to persons needing conventional community nursing home services. The statewide licensed nursing home bed to population ratio was 23.18 beds per 1,000 persons as of the summer of 1986. The ratio in District VI is 24.44, and is higher than the statewide ratio. But the ratio in Manatee County is 20.47, lower than both the District and statewide ratios. T. 54. If 120 additional community nursing home beds were added to Manatee County, its ratio would be 22.92, and thus would still be lower than both the District and statewide ratios. Id. In the planning horizon (the summer of 1988), accounting for both licensed beds and all beds currently approved, the statewide ratio would be 25.46, the District ratio would be 24.86, and the Manatee County ratio would be 19.26, which would increase to 21.56 if 120 additional beds were added to Manatee County. M. Ex. 7; T. 55. HRS has previously granted a certificate of need for a nursing home where the existing numeric need rule showed little or no need and one licensed nursing home in the county was not generally accessible to conventional nursing home patients due to restrictive admission policies and low occupancy rates. T. 1018, 1032-33. The applicability of this as precedent in the case at bar is clouded by the fact that in that case the local health plan explicitly mentioned the problem, and recommended approval of new beds in that county as the first priority. T. 1030. That circumstance does not exist in this case. Moreover, it is unknown in that case pursuant to the then existing rule whether disregarding the nonaccessible beds resulted in a net numeric need sufficient to justify approval of the certificate of need. See T. 1020. The vast majority of persons using community nursing home beds in Florida are age 65 or more. Persons younger than 65 years of age using nursing home services in Florida recently constituted 7.36 percent of the total, and 8.25 percent of the total in District VI. T. 992. Since the 120 licensed community nursing home beds at the Center of Manatee Springs are not available to conventional community nursing home patients in Manatee County, or in District VI, and there is no evidence in this record to conclude that they will be available to such persons in the near future, those 120 beds should be treated as not available for purposes of determining the net bed need in the horizon year. It should be noted that the 120 beds at the Center of Manatee Springs appears in the numeric need rule only as approved beds, not as licensed beds. Thus, deletion of these beds within the context of the numeric rule would not involve deletion from either LB or LBD, and therefore would not give rise to an opportunity to witness the rather bizarre inverse mathematical relationship in the rule between the number of existing beds and "need." If the 120 approved beds at the Center at Manatee Springs are disregarded in the numeric rule, the following consequences occur: The 120 approved beds would be subtracted from the 755 approved beds in the District in step 5, concerning the poverty adjustment, but the result would still be more than 27/1000. The result would be 5,905/211,515 = 0.0279. Thus, the poverty adjustment still would not apply. Ninety percent of the 120 approved beds in the subdistrict would be deleted from the amount to be subtracted in step 6, resulting a net bed need of 16 beds, instead of a net bed surplus of 92 beds. HRS Ex. 3; T. 880-81. Sixteen beds would not be sufficient need to grant any portion of any Petitioner's application. T. 881. Petitioners argue that the 120 beds at the Center should be disregarded in another way external to the numeric need formula. Mr. Nelson, testifying as an expert for the Petitioners, was of the opinion that the problem of the 120 beds at the Center at Manatee Springs was solely an accessibility issue, and not an issue giving rise to an alteration within the numeric need calculation. T. 81-2. He reasoned that since the Center was presumptively needed at one time (because it was approved for a certificate of need for a community nursing home) but is now in fact not accessible to persons needing it, the 120 beds it represents should be replaced. Id. Mr. Nelson's method has been rejected in the conclusions of law. There is no need for any portion of any of the projects proposed by any Petitioner. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need.
Recommendation For these reasons, it is recommended that the Department of Health and Rehabilitative Services enter its final order denying the applications of Meridian, Inc., Meridian Nursing Centers, Inc., and Manatee Meridian Limited Partnership, Manor Care of Manatee County, and Forum Group, Inc., sponsor of Retirement Living of Manatee County, for certificate of need numbers 4154, 4153, and 4159, respectively. DONE and ORDERED this 12th day of May, 1987, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of May, 1987. APPENDIX The following are rulings upon proposed findings of fact which have been rejected in this Recommended Order. The numbers used correspond to the numbers of the findings of fact proposed. Findings of fact proposed by Meridian Inc.: Subordinate to primary findings of fact, and not needed. The second sentence is not relevant. 4. That last sentence is not relevant. The second sentence is not supported by the record. The witness was testifying to his current census, not historical experience. Irrelevant. Irrelevant. The words "intensely" and "full-time" are not supported by the record cited. The words "sole purpose" are not supported by the record cite. The witness only testified that its was necessary for that purpose. Subordinate. The word "exclusively" is not supported by the record cited. Cumulative. Cumulative. Cumulative and subordinate. 20. An issue of law, not fact. The words "demographically similar" are not supported by the record cited. The first sentence and last sentence are rejected because, due to lack of numerical need and lack of other legally relevant evidence of a "not normal" condition, reference to only the bed ratios cited is not a sufficient basis for concluding that it would not be unreasonable to add 120 more beds to Manatee County. The numeric need rule already accounts for population growth, so this finding of fact is legally irrelevant. Subordinate. The second sentence is irrelevant. The third and fourth sentences are issues of law, and have been rejected in the conclusions of law. The example provided by M. Ex. 18 is not relevant because the 120 beds at the Center at Manatee Springs appear in the numeric need formula as approved beds, not licensed beds. While this proposed finding of fact is true, it is legally irrelevant since the applicant has the burden of proof of showing a "not normal" condition in Manatee County, and has the burden of proof of showing need for the proposed project. The third sentence is not relevant because it stops short of the relevant issue: whether the deletion of the Moose Haven Health Center beds resulted in sufficient net bed need to grant the beds to Beverly. It is very probable that the "miniscule amount of numerical need" plus the Moose Haven beds resulted in sufficient net beds to grant Beverly's application. 35-77. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need. Findings of fact proposed by Manor Care: Irrelevant. The fact that the Department published a rule change to calculate the poverty adjustment on populations that are "projected three years into the future," instead of as now in the rule, "current," and stated that the proposed amendment "clarifies" the existing provisions of the rule, and then withdrew the proposed amendment, is too ambiguous to rely upon as argued by the Manor Care. One cannot tell from this whether the Department was carelessly using the word "clarify," as agencies often do in a euphemistic way, or actually thought that the word "current" was unclear. Moreover, the fact that the proposed amendment was withdrawn raises another set of unknowns: whether the Department withdrew the amendment because it had second thoughts and decided the word "current" was clear, or because it affirmatively rejected the adoption of a poverty adjustment as the Petitioners would have it on this record. Rejected as explained in the last paragraph. The Department does not rely upon its actions with respect to the proposed amendment to the rule as a basis for its decision in this case, and thus does not have to explicate it on this record. Rejected as more fully explained in the conclusions of law. 11-42. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need. Findings of fact proposed by Forum Group: 1-21. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need. 22-23. The lack of a need calculation in the state agency action report has no relevance to the correctness of the need calculation now offered by HRS. 24. The word "authoritative" must be rejected since the method was not legally correct. 27. Irrelevant since the error was corrected at the formal hearing, and the result of lack of need would not change, in any event. 30. Irrelevant. The prior policy contravened the rule. 34. Irrelevant. Growth in population is already contained in the numeric need rule as a factor. 38-66. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need. Findings of fact proposed by HRS: 4-5. Issues of law, not fact. 7. The first sentence is an issue of law, not fact. The first sentence is an issue of law, not fact. An issue of law, not fact. The second sentence is an issue of law, not fact. No findings of fact have been made with respect to the comparative aspects of the three projects since there is no need. Manor Care has presented evidence concerning its plan to treat Alzheimer's disease patients only in support of the comparative aspects of its project in relation to the projects of the other two applicants. It has not presented such evidence to show need, i.e., evidence that patients having Alzheimer's disease (either specifically or generally) need the services that Manor Care proposes. See proposed findings of fact 14-19 by Manor Care. Thus, it is unnecessary to reach the factual and legal issue raised by HRS as to whether Manor Care may present evidence concerning services to Alzheimer's disease patients. COPIES FURNISHED: Robert D. Newell, Jr. Robert D. Newell, Jr., P.A. 102 South Monroe Street Tallahassee, Florida 32301 Donna H. Stinson, Esquire Moyle, Flanigan, Katz Fitzgerald and Sheehan, P.A. The Perkins House, Suite 100 118 North Gadsden St. Tallahassee, Florida 32301 R. Terry Rigsby, Esquire Moffitt, Hart, Rigsby & Herron, P.A. 215 S. Monroe St. Suite 800 Tallahassee, Florida 32301 Richard A. Patterson, Esquire Department of Health and Rehabilitative Services 1323 Winewood Blvd. Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller 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
The Issue The issues for consideration in these cases are: as to Case Number 00-3497, whether the Agency for Health Care Administration should impose an administrative fine against the Respondent's license to operate Beverly Savana Cay Manor, a nursing home in Lakeland; and, as to Case Number 00-2465, whether the Agency should issue a conditional license to the Respondent's facility effective April 28, 2000.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Agency for Health Care Administration, was the state agency in Florida responsible for the licensing of nursing homes and the regulation of the nursing home industry in this state. It is also the agency responsible for conducting surveys to monitor the compliance of nursing homes with the conditions of Medicare and Medicaid participation. Respondents, Beverly Savana Cay Manor, Inc., d/b/a Beverly Healthcare Lakeland, and Beverly Enterprises - Lakeland, are licensed by the Agency to operate a skilled nursing home at 1010 Carpenter's Way in Lakeland. On August 31, 1999, the Agency conducted an investigation into a complaint that Savana Cay had failed to provide sufficient nursing service and related services to allow residents to attain or maintain the highest practicable physical, mental, and psychosocial well-being as required by Federal rules governing Medicare and Medicaid. The Agency surveyor, Patricia Mills, observed several residents who did not have their call buttons within reach so that they could summon help if needed. Ms. Mills also talked with residents and family members and from these interviews determined that even when the resident could reach the call button and summon help, the response time was excessively long or, in some instances, the call went unheeded. This sometimes resulted in resident's suffering from the results of their incontinence because the staff did not timely respond to the help calls. Ms. Mills concluded, based on her extensive experience in surveying nursing homes, that the number of staff on duty was not sufficient to meet the residents' needs. It did not allow for the best possible well-being of the residents. Though the information related by Ms. Mills came from her interviews with residents and their families and was clearly hearsay testimony, it was admissible and considered as corroborative of her direct observation. The parties stipulated that a follow-up survey of the facility was conducted on October 13, 1999, at which time the deficiency described was deemed to have been timely corrected. The Respondent, by stipulation, does not concede the validity of this discrepancy on the August 19, 1999, survey, and the Agency does not rely on it to support the administrative fine sought to be imposed herein. Another survey of the facility was conducted by the Agency on April 26-28, 2000. On this occasion, surveyor Patricia Gold interviewed residents regarding the everyday life of the facility and reviewed resident council reports to follow up on any resident or family concerns which did not appear to have been addressed by the facility staff. During the resident interviews, Ms. Gold was advised that call lights were not answered in a timely fashion. In that connection, early on the morning of April 28, 2000, Ms. Gold observed a resident request a nurse to bring something to drink. The nurse was overheard to tell the resident the request would have to wait until she finished her report. Ms. Gold also noted on April 28, 2000, that dirty dishes were left uncollected over night in the facility common corridor and that one resident had two dirty trays left in the room. The dishes in the corridor were also seen by surveyors Donna Edwards and Marie Maisel. Based on their observations, the interviews, and the review of the council reports, the surveyors concluded that the staff on duty were insufficient in number. Another surveyor, Joanne Stewart, reviewed the resident files and medical reports of several of the residents and determined that in several cases the facility had failed to provide adequate supervision and assistive devices to prevent falls and inconsistently applied the interventions that were put in place. For example, Ms. Stewart observed Resident 12 on the floor at 2:40 p.m. on April 27, 2000. This resident, a cognitively impaired individual, had been placed in the facility from the hospital after he had sustained a fracture to his right hip and, at the time of the fall, still had staples in his hip. Ms. Stewart's review of the kardexes maintained by the certified nursing assistant (CNA) revealed there were no entries thereon indicating a need for special care to prevent this resident from falling. Although he was supposed to wear a tab alarm at all times, the facility staff knew the resident would periodically remove it, and when Ms. Stewart saw him prior to the fall, he was not wearing it. No other interventions, such as quick-release seat belts or Velcro belts, had been implemented to prevent his falls. It was just the kind of fall that he had which caused his placement in the facility and which gave rise to the need for supervision adequate to prevent further injury. He did not get the needed supervision. In fact, though the resident sustained a skin tear and bleeding of the arm as a result of the fall, the nurse who came to the scene of the fall went back to her desk and did some paperwork for between twenty and twenty-five minutes before the resident was provided any treatment for his injury. Ms. Stewart concluded the facility did not provide adequate supervision and assistance to Resident 12, and it is so found. Due to a cognitive impairment and an inability to ambulate due to an intracerebral hemorrhage, diabetes, and a cardio-vascular accident, Resident 9 was assessed at high risk for falls, and a determination was made that the resident should wear a tab alarm while in bed and in the wheelchair. During the course of her survey, Ms. Stewart observed this resident on several occasions without the tab alarm when she should have been wearing it. The resident had previously sustained falls, one of which occurred while the resident was on leave, on March 31 and April 1, 2000, but the only caveat on the CNA kardex for the resident was the caution not to leave her on the toilet alone. Ms. Stewart did not consider the supervision and assistance rendered Resident 9 to be adequate. It is so found. Ms. Edwards focused her review on the records of Resident 22 who was not at the facility at the time of the survey. The records indicated the resident had been assessed at a high risk for falls at the time of her admission and a tab alarm was used. However, according to the nurse's notes, on April 10, 2000, the alarm went off causing the resident to lose her balance and fall while in the merry walker. She lacerated her scalp and sustained a large swelling in the occipital area. The only fall assessment of this resident was done when she was admitted to the facility. The evidence does not indicate when this was, but presumably, it was not done timely. There is a requirement that fall assessments be done quarterly, but it cannot be determined when it was done here. Even when, on April 11, 2000, the day after the fall, the physical therapy staff re-screened this resident for a merry walker, no change in care notation was noted in her record or implemented. Resident 22 sustained another fall on April 16, 2000. On this occasion, the resident was found on the floor of the day room, out of the merry walker. There was no indication she was being supervised or monitored at the time of her fall. This time she sustained another head injury just above the old one. After this fall, the facility staff ordered a new merry walker even though there was no indication a different one would provide additional protection. The resident sustained a third fall on April 18, 2000, sustaining another injury to the head which resulted in substantial blood loss. As a result of this fall, she was taken to the hospital. Because of this, she was not present when the survey was done, but based on her review of the resident records, Ms. Edwards concluded that the facility did not provide sufficient supervision or assistive devices to this resident. During the period of the survey, Ms. Gold observed Resident 3 on five separate occasions. On none of them was the resident wearing a Tabs alarm even though the facility's care plan called for one to be used. A falls assessment had been started on the resident but not completed. The record also revealed that the resident fell on March 29, 2000, resulting in a skin tear to the right arm. Based on the above, Ms. Gold concluded that the resident was not provided with adequate care and assistive devices. Resident 10 was a resident with a history of falls both before and after admission to the facility. The resident's care plan called for chair alarms, a merry walker, a safety seat belt, a low bed, and a bike horn. Though Ms. Maisel, the surveyor, observed that the resident had a chair alarm, she did not see that any of the other interventions called for in the plan were provided. She did not ever see the resident with a merry walker, and on at least two occasions, she saw the resident when the chair alarm was not in use. In her opinion, the use of one intervention does not make the use of other interventions unnecessary, and she considers the facility's supervision and assistive device provision to be inadequate. Resident 4 was an individual who had sustained a hip fracture, was senile, and was taking pain medications. The resident required help in getting out of bed or a chair. The care plan for the resident called for the use of a Tabs alarm, but on none of the occasions that Ms. Stewart observed this resident was the tabs alarm in use. She considered the supervision and assistive devices provided by the facility to this resident to be inadequate. Respondent does not contest that the incidents cited by the Agency took place. Rather, it contends that the interventions implemented by it were sufficient. It also disputes the effectiveness of some interventions called for, specifically the Tabs alarms, suggesting that the alarm does not prevent falls and often contributes to them by startling the wearer. There is some evidence to support that claim. Respondent further contends that the safety provided by the use of an intervention device, such as the Tabs alarm, straps, bed rails, or the merry walker, restrictive as they are, must be weighed and evaluated against the loss of dignity of the resident caused by their use. It is also urged by the facility that the use of certain interventions such as Tabs alarms is made unnecessary when the resident is immobile and safety is provided by the use of other interventions such as bed rails, which are more pertinent to the condition of the resident. In the case of Resident 9, the failure to provide for the use of a Tabs alarm when the resident was on leave with her husband was off-set by the one-on-one supervision she received during that period. Respondent contends that falls will occur among residents of the type in issue here regardless of the planning to identify the risks of fall, the efforts made to prevent them, and the implementation and use of interventions designed to avoid them. While this may be so, the facility nonetheless has a duty to provide necessary and adequate supervision and assistive devices to minimize to the greatest extent possible, the risk of injury as the result of falls. In some cases, this was not done here. In support of its position, Respondent presented the testimony of Theresa Vogelspohl, a nursing home consultant and an agreed expert on falls, issues of the elderly, issues of care of the elderly, and nursing practices and standards in nursing homes. Ms. Vogelspohl indicated that as a general practice when patients are admitted to a nursing home they are considered at risk for falls until the facility staff gets to know them. Each facility sets its own standard as to the length of the observation period, during which the residents are studied for their gait and safety awareness. In addition, the residents are evaluated for safety awareness by the staff of the physical and occupational therapy departments. Ordinarily, the assessment includes only the minimum data set (MDS) criteria, but increasingly during the last few years, a separate falls assessment has become common. In addition to the initial assessment, the attending nurses do an independent admissions assessment, and Ms. Vogelspohl found that such an assessment process was followed as to each of the residents in issue here. Ms. Vogelspohl found that an incomplete falls assessment had been done on Resident 3. Based upon her own review of the resident's records, however, had the full assessment been completed, other than the fact that she was a new resident, the resident would have been classified as a low risk for falls. She opines that the failure to complete the falls assessment did not deny the resident any care or a care plan for falls. Ms. Vogelspohl determined that the facility had opted, instead, for a more cautious approach to this resident in the care plan which, in her opinion, was appropriate for a new admission. A care plan is a map for the staff to be made aware of the care being provided and the specific interventions pertinent to the resident. If the resident is at increased risk for falls, the care plan would list the interventions designed to decrease the risk of falls. One of the most significant risk factors for falls is increase in age. Others are disease conditions, medications, cognitive functioning levels, eyesight, and other impairments. The interventions available to a facility to address the issue of risk of falls depend upon the condition of the resident. The first consideration should be the need to maintain a safe physical environment for the resident. Appropriate footwear is important as is the availability of assistive devices such as a cane or walker. If the resident has a history of falls, consideration should be given to changing those factors which were related to the prior falls. Included in that is consideration of different seating or a more frequent toileting schedule. According to Ms. Vogelspohl, the last thing one would want to do is to apply physical restraint, but, if all else has failed, the least restrictive physical or chemical restraint may be necessary to decrease the likelihood of falls. Ms. Vogelspohl emphasizes that only the likelihood of falls can be reduced. It is not possible to prevent all falls. Room cleanliness is not something which should appear in a care plan. It is a given, and nurses know to place furniture in such a way and to reduce clutter to the extent that the resident can safely navigate the room either with a walker or a wheelchair. Obviously, in this case the survey staff concluded the placement of the dirty trays in the hallway and in the resident's room constituted a hazard. In Ms. Vogelspohl's opinion, supervision and monitoring of residents in a nursing home is a basic. That is generally the reason for the resident's being admitted in the first place. While they should be done on a routine basis, supervision and monitoring are still sometimes placed in a care plan, but the failure to have the requirements in black and white is not a discrepancy so long as the appropriate supervision and monitoring are accomplished. The residents most at risk for falls, and those who are the most difficult to manage, are those who have full physical functioning yet who have almost nonexistent cognitive functioning. Ms. Vogelspohl is of the opinion that for these residents, the best intervention is the merry walker. This is better than a regular walker because the resident cannot leave it behind. If the resident is one who falls from bed, then a low bed, with rails if appropriate, is the primary option. A low bed was called for for Resident 10 but was not provided. Ms. Vogelspohl does not have a high opinion of the Tabs alarm because it can cause as many falls as it prevents. It has a place with the cognitively aware resident who will sit back down if she or he hears the alarm sound. More often than not, however, the routine resident will automatically react by trying to get away from the noise, and, thus, be more likely to engage in rapid, impulsive behavior that can lead to a fall. Ms. Vogelspohl considers the use of the Tabs alarm as only one factor in assessing the degree of supervision provided. She looks at the care plan to see if the Tabs alarm even meets the needs of the resident. If the resident is cognitively alert and at no risk of falls, a Tabs alarm is not appropriate. There are other interventions which can be used such as quick release, velcro seat belts which better prevent falls because they provide a resistance when the resident attempts to stand up. To determine whether a care plan has been developed and implemented, Ms. Vogelspohl reviews the record. She looks at the nurse's notes and those of the social services personnel. She evaluates the records of the physical, occupational, and recreational therapy staff. Finally, she reads the resident's chart to see what staff is actually doing to implement the interventions called for in the care plan. However, on the issue of supervision, she does not expect the notes or the record to affirmatively reflect every incident of supervision. There is no standard of nursing practice that she is aware of that calls for that degree of record keeping. What she would expect to see is a record of any kind of unsafe behavior that was observed. By the same token, Ms. Vogelspohl would not expect a facility to document every time it placed an alarm unit on a resident. The units are applied and removed several times a day for bathing, clothing changes, incontinence care, and the like, and it would be unreasonable, she opines, to expect each change to be documented. Further, she considers it inappropriate and insulting to the resident to require him or her to wear an alarm when cognizant and not displaying any unsafe behavior. If a resident who is not cognitively impaired declines intervention, it would, in her opinion, be a violation of that resident's rights to put one on. In that regard, generally, interventions are noted in the resident records when initiated. Usually, however, they are not removed until the quarterly assessment, even though the intervention may be discontinued shortly after implementation. Ms. Vogelspohl took exception to Ms. Edwards' finding fault with the facility for the three falls experienced by Resident 22. The resident was under observation when the first fall occurred, but the staff member was not able to get to the resident quickly enough to catch her when she stood up and immediately toppled over in her merry walker. The resident had been properly assessed and proper interventions had been called for in the care plan. Ms. Vogelspohl attributes the fall to the resident's being frightened by the Tabs alarm going off when she stood up and believes she probably would not have fallen had she not had the tab unit on. The second fall took place while the resident got out of her marry walker in the day room. Though the day room was visible to anyone out in the hallway, the fall was not witnessed, but Ms. Vogelspohl is of the opinion that it is not reasonably possible to keep every resident under constant visual supervision unless an aide can be assigned on a one-on-one basis to every resident. On the third fall, which occurred at about 10 p.m., the staff had put the resident to bed and had put a Tabs unit on her at that time, but the resident had detached the unit and gotten out of bed. There was nothing the staff could do to prevent that. The resident was able to remove the unit no matter how it was affixed to her. Taken together, the actions taken by the facility with regard to this resident were, to Ms. Vogelspohl, appropriate. Some things could have been done differently, such as perhaps using a heavier merry walker, but she did not consider these matters as defects in the care plan, in assessment, in design, or in application. Further, she concluded that the actions taken by the facility subsequent to the first fall on April 10, 2000, wherein the resident's medications were adjusted to compensate for their effect on the resident, constituted a recognition of a change in the resident's condition which was properly addressed. Too much supervision becomes a dignity issue. There is no formula for determining how much supervision is adequate. It is a question of nursing discretion based on the individual resident. An unofficial standard in place within the industry calls for a resident to be checked on every two hours, but rarely will this be documented. Staff, mostly nurses and CNAs, are in and out of the residents' rooms on a regular basis, administering medications and giving treatments. Those visits are documented, but not every visit to a resident's room is. Resident 12, a relatively young man of 62 with several severe medical problems, sustained a fall which resulted in a fractured hip just two weeks after admission to the facility and two weeks before the survey. He was far more mobile than expected. According to the records, he was mostly cognitive intact and had been assessed for falls. As a result of this assessment, the facility developed a care plan to address his risk for falls. Implementation of the plan was difficult, however, because he was aware and could make up his own mind as to what interventions he would accept. As to the resident's April 27, 2000 fall, the only evidence in the file shows that he was found on the floor of his room in front of a straight chair, having sustained a small skin tear in addition to the fracture. From Ms. Vogelspohl's review of the record she could find no indication that the facility had failed to do something that it should have done to prevent the fall. The staff had put a Tabs alarm on the resident, and he removed it. They tried to keep his wheel chair as close to him as possible. They tried to restrict his water intake by giving him thickened liquids to reduce his trips to the rest room. He would pour out the thickened fluids and replace them with water. Because of this resident's mobility, Ms. Vogelspohl does not accept the surveyor's conclusion that the facility did not use Tabs alarms. He was able to get out of them by himself and frequently did. She is also of the opinion, in light of the way the resident behaved, that the blank kardex observed by the surveyor in no way contributed to the resident's fall. The CNA's were aware that the Tabs units were supposed to be used, and Ms. Vogelspohl has concluded that there were no more aggressive interventions that could have been used with this resident. To attempt the use of restraints, either belt or vest, would have been futile because he could have gotten out of them easily. The only other thing Ms. Vogelspohl feels could have been done was to put him in a geriatric psychiatric unit, and this was ultimately done, but not in the Respondent facility. Ms. Vogelpohl also addressed the surveyors' write- ups as they related to Residents 9, 4, 3, and 10. Resident 4 was bed-ridden as a result of Parkinson's Disease and did not need a Tabs alarm, the deficiency cited, while in bed. When seated in a wheel chair, his postural deficits were compensated for by lateral supports and a padded cushion, and she was of the opinion that a Tabs alarm was not required. She opines its absence would not have addressed his risk for falls. His January 2000 fall apparently did not relate to the failure to use a Tabs unit. Resident 3, also the subject of a write-up for failure to use a Tabs alarm, was not, in Ms. Vogelspohl's opinion, at risk for falls because she did not move around a lot due to her physical condition. Nonetheless, she experienced a fall in late March 2000 and shortly thereafter, the facility placed a Tabs alarm on her and made the appropriate entry in her care plan. Resident 9 was ambulatory only with assistance and had a special seating device to keep her in her wheel chair. After the resident sustained two falls close together, a Tabs alarm was placed on her, and from that time until the time of the survey she had no further falls. Ms. Vogelspohl contends that it was an appropriate nursing decision not to place a Tabs unit on her. The rationale for this position is not at all clear. The care plan for Resident 10, also one of the residents observed without a Tabs alarm in place, was described as "somewhat cluttered." It showed multiple interventions initiated as early as April 1999. The initial care plan was crossed through and a new one substituted in September 1999 with the family's concurrence. Nonetheless, Ms. Vogelspohl did not find it too cluttered to be understood. The evidence shows that the resident's chair was outfitted with a soft seat belt and a pressure-sensitive alarm, both of which are considered to be more effective than the Tabs alarm. Ms. Vogelspohl contends that the facility did not ignore the requirement to assess the residents for falls or the requirement to address that issue in care planning. She admits that in some cases, the plan addressing falls prevention was covered in another assessment than the one wherein it might most likely be expected, but it is her contention that if the subject is properly and thoroughly addressed somewhere in the resident's care record, that is sufficient. She considers placing it in several areas to be a redundancy and though it is frequently done so, it is done to meet a paper compliance without having any impact on the quality of care provided.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a final order sustaining the Conditional license for the Respondent effective April 28, 2000, and, based only on the conditions observed at the facility on that date, imposing an administrative fine of $700.00. DONE AND ENTERED this 22nd day of March, 2001, in Tallahassee, Leon County, Florida. ___________________________________ ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of March, 2001. COPIES FURNISHED: Christine T. Messana, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 R. Davis Thomas, Jr., Qualified Representative Broad and Cassel 215 South Monroe Street, Suite 400 Post office Box 11300 Tallahassee, Florida 32302-1300 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308
Findings Of Fact The controversy Forum Group, Inc. (Forum Group), Hillsborough Healthcare, Ltd. (Hillsborough Healthcare), Health Quest Corporation (Health Quest), and Careage House Healthcare Center (Careage) filed applications for certificates of need for community nursing homes in Hillsborough County, which is a subdistrict of HRS district VI. The applications were filed in the July, 1986, batching cycle, for need in July, 1989, known as the planning horizon. As amended prior to being deemed complete by HRS, Hillsborough Healthcare and Careage sought 120 beds, Health Quest sought 88 beds, and Forum Group sought 60 beds. All of the applications satisfy and are consistent with state and local health plans. The Department's free form preliminary action Ordinarily, the Department's preliminary decision on these applications would have been issued in November or December of 1986. In these cases, the parties were orally advised of the Department's preliminary action in January, 1987, but the state agency action report containing that preliminary decision was not issued until August, 1987. The delay in decision making in this case occurred due to the altered process of free form decision making that was used in this case. Careage filed a number of applications in the July, 1986, batching cycle, in a number of subdistricts. The preliminary review conducted by HRS determined there to be bed need in four of the counties in which Careage had applications: Hillsborough, Polk, Pinellas, and Lee. During free form agency decision making on the applications in this batching cycle, Ms. Marta Hardy was the Deputy Assistant of Regulation and Health Facilities for the Department. T. 1024. Her duties included responsibility to oversee the issuance of certificates of need and develop health planning policies. Id. Ms. Hardy was the direct supervisor of Robert Maryanski, who was the head of the office of community medical facilities, and Robert Sharp, who was the head of the office of comprehensive health planning. T. 1024. Mr. Maryanski was the direct supervisor of Mr. Reid Jaffe who reviewed the applications in Hillsborough county. Preliminary decisions on the applications in this batch were normally due in November, 1986. It was the normal procedure at the Department to review applications for certificates of need in the following manner. First, an employee in the position entitled "medical facilities consultant" reviewed all applications in the batching cycle for a particular district or subdistrict and made recommendations on each application. These recommendations were then reviewed by his supervisor, the medical facilities consultant supervisor. The recommendations of the medical facilities consultant supervisor upon each application then went to Mr. Maryanski. In Hillsborough, Polk, Pinellas, and Lee Counties in the July, 1986, batching cycle, all reviewers found there to be a bed need. In the normal course of business, all reviewers forwarded through Mr. Maryanski and to Ms. Hardy recommendations that did not recommend the award of a certificate of need to Careage in any of these four counties. T. 1057, 1055, 1281-82. Mr. Maryanski told Mr. Jaffe to "find a way" to approve the Careage application in Pinellas County. T. 1283-84. The time of this communication is not in the record. At about the time that Careage applied for certificates of need (August or September, 1986), Ms. Hardy had dinner with the owner of Careage, Mr. Gene Lynn, Mr. Lynn's wife, and Mr. Ralph Haben. T. 1040. At that meeting, the representatives of Careage told Ms. Hardy that Careage operated nursing homes in other states in which care of good quality was provided. T. 1060. Mr. Haben is an attorney, and was then representing Careage. T. 1059. Mr. Haben and Ms. Hardy had been friends since the late 1970's, and in August and September, 1986, they had had lunch or dinner together socially four or five times. T. 1041- 49. In December, 1986, after Departmental staff had preliminarily recommended that Careage's applications be disapproved in the four counties in which was there was need, Ms. Hardy determined to ask Robert Sharp to review applications in the four counties. The result of Mr. Sharp's review was to recommend approval of the Careage application in the four counties. That recommendation was approved by Ms. Hardy. Mr. Sharp was responsible for health planning. He normally had nothing to do with review of certificate of need applications, although he had reviewed some hospital applications in the past. T. 1054. Ms. Hardy had come to the conclusion that Careage provided care of good quality. T. 1063. At the time she formed that opinion, Careage did not operate any nursing homes, and had not done so since 1982. Mr. Sharp understood that Ms. Hardy was impressed with Careage, but did not know the basis for such favorable impression. T. 940. Ms. Hardy told Mr. Sharp that she did not believe that the current method of comparative review of applications was adequate, and used Careage as an example of a best qualified applicant that was overlooked by the current method. T. 940. Mr. Sharp developed a method for comparative review of the applications in the batch for Hillsborough County and the other counties. The method has been referred to in the record as a matrix. Mr. Sharp simply selected certain aspects of the applications for comparison. Two types of information were selected: numerically quantified information, and "program characteristics," which called for a determination whether the selected item existed or did not exist in the proposal. The "matrix" also had a narrative for some of the applicants. Mr. Sharp used Careage as the standard of comparison for all other applicants in the comments section. There was no evidence that the items selected by Mr. Sharp were unreasonable or unfair. The items selected appear to be reasonably related to the task of comparing the virtues of the applicants. The items, for the most part, simply are based on information required by the Department in the application form. The matrix was found in September, 1987, to contain numerous factual errors, and the Department issued a revision. H.Q. Ex. 27. Need pursuant to rule 10-5.011(1)(k) Licensed beds in the district (LB) The number of licensed beds in the district (LB) as of June 1, 1986, was at least 5,964. T. 1706. This figure is derived by adding the 5,557 licensed beds shown on the August 25, 1986, semi-annual nursing home census report, H.Q. Ex. 16, to the 407 additional community nursing home beds that has been erroneously classified as sheltered nursing home beds. None of the other testimony credibly establishes this base figure. There is a dispute as to whether 96 additional beds at the Home Association should be considered licensed community nursing home beds as of June 1, 1986. The Home Association was founded in 1899. It is officially recognized that there was no certificate of need requirement in 1899. The Home Association has never received a certificate of need. Thus, it is inferred that the Home Association was never "issued" beds for "nonrestrictive use." At the time that the Home Association was licensed, there was no license category of "sheltered bed. Prior to 1982, there was no statute defining a "sheltered bed." T 1721-22. Thus, prior to 1979, the Home Association was not 1,issued" beds as "sheltered beds" or "for restrictive use". The Home Association is in the district and in the subdistrict, Hillsborough County. The Home Association had 96 beds in 1972, and had the same number on June 1, 1986. On or about August 20, 1986, HRS sent a letter to the Home Association. HQ Ex. 9. The letter stated that HRS records currently identified the Home Association as a "sheltered nursing home/continuing care facility licensed under Chapter 651, F. S.," but that HRS records did not indicate the date of the initial CON. The letter stated that the specific number of beds allocated to community and sheltered nursing home beds were listed below. At the bottom of the letter, HRS listed 96 beds in the column and line identified as current number of sheltered nursing home beds. The Home Association was told to review the data and make changes and return the letter to HRS. It further stated that a failure to respond would be interpreted as approval of the HRS listed bed allocations. The letter then provided four blanks for the Home Association to respond. The first two provided places to show the "corrected number of beds" both on a line identifying such beds as "community nursing home beds," and a line identify such beds as "sheltered nursing home beds." The Home Association left these lines blank. The third blank asked for the certificate of need number and date. The Home Association typed in: "The Home was founded in 1899; no certificate of need was issued." The fourth blank stated: "Sign Here if Corrections Requested." Initials appear in handwriting in that blank. H.Q. Ex. 9. The response of the Home Association was ambiguous. Having signed the fourth blank, thus seemingly communicating a desire to "correct" the form, the Home Association failed to tell HRS whether it wanted to correct the number of beds or the classification of the beds, or some combination thereof. HRS's need expert admitted that the only way one could settle the question would be to call the Home Association. T. 1724. The problem is further compounded by the way in which the letter from HRS was drafted. The letter did not ask the Home Association to provide information concerning the "historical utilization" of the 96 beds at the Home Association, and thus did not collect any information as to "historical utilization." See the last sentence of section 651.118(8), Fla. Stat. (1987). Instead, it told the Home Association that HRS records identified the Home Association as a sheltered nursing home/continuing care facility licensed under chapter 651. It also told the Home Association that "any nursing home bed located in a continuing care facility and not approved specifically as a sheltered nursing home bed and any nursing home bed located in a life care facility prior to 1979 shall be classified as a community nursing home bed." And the letter appeared to allow the Home Association an opportunity to request a "change in status" only if it had been issued a certificate of need as a community nursing home bed after 1979 and before 1982. It may be that when the Home Association wrote back that it had no certificate of need issued, and that it had been in existence since 1899, the Home Association was simply telling HRS that its beds fell in the category of automatically being community nursing home beds because "located in a life care facility prior to 1979." If the Home Association beds are counted as community nursing home beds, then those 96 beds are added to 5,964, and LB is 6,060. Licensed beds in the subdistrict (LBD) On June 1, 1986, there were 2,612 licensed beds (LBD) in the subdistrict, Hillsborough County. If the 96 beds at the Home Association are counted as community nursing home beds, then LBD is 2,708. Current populations (POPC and POPD) Whether POPC and POPD are the populations on January 1, 1986, or July 1, 1986 HRS divides the regulatory function with respect to certificates of need into two program offices. The office of comprehensive health planning (OCMF) is ordinarily responsible for writing the rules and developing the methodologies for the certificate of need program. It is also responsible for writing the state health plan. The office of community medical facilities (OCMF), which is now called the office of community health services and facilities, is normally responsible for making decisions upon applications for certificates of need. T. 929 (The transcript is in error on line 11; it should read OCMF), 930, 936, 1748, 1251. There are exceptions. T. 937 From 1984 through 1986, the office of comprehensive health planning routinely issued semiannual reports in which it calculated the need for community nursing home beds. H.Q. Exs. 12-18. T. 970-971, 1251. In each of these reports, bed need was projected for an established date. In each of these reports, the "current populations" (the base populations from which the need projection was made) were 3.5 years earlier than the date upon which need was projected. H.Q. Exs. 12-18; T. 1253. From 1984 through 1986, notwithstanding the fact that the semiannual report was based upon a 3.5 year period of need projection, the office of community medical facilities sometimes used a 3.0 year period of projection to actually issue certificates of need. T. 1254. That practice was not uniform within the office of community medical facilities. A number of certificate of need applications were issued based upon the calculations of need in the semiannual nursing home report, which used a 3.5 year period of projection. T. 560-561. It is officially recognized that several formal administrative hearings were settled using a 3.5 year period of projection of need. Health Quest Realty d/b/a Regents Park of Sarasota v. Department of Health and Rehabilitative Services, Final Order issued October 25, 1985 (CON number 3278), DOAH case number 84-3389, which was an exhibit in DOAH case number 86-0050, both cases which were before this Hearing Officer; Health Quest Corporation d/b/a Regents Park of Broward v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 2485, DOAH case number 84- 3297. But even that deviation was not uniform. It is officially recognized that in Manor Care of Hillsborough County v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1102, DOAH case number 86-0051, HRS proposed at the formal administrative hearing to use a 2 year period of projection, using 1986 populations as "current" populations, although the applications were filed in 1985, and need was being projected in 1988. See paragraph 18, findings of fact, of that recommended order, which was written by this Hearing Officer. See also T. 1290. It is also officially recognized that in Forum Group, Inc., et al. v. Department of Health and Rehabilitative Services, et al., 8 F.A.L.R. 5438, 5445, para. 15, the Department used January 1986, as the starting date for a projection to July, 1987, an 18 month period of projection. It would serve no useful purpose to review all the other orders in the files of the Division of Administrative Hearings. It may be concluded from the foregoing that the way in which HRS has interpreted the meaning of "current" populations in its nursing home rule in the period from 1984 to 1986 was inconsistent. In fact HRS did not uniformly use a 3.5 year period of projection as now urged by the Petitioners. Since it has been concluded as a matter of law that the values of POPC and POPD must be determined as of July 1, 1986, no findings of fact will be made as to the populations on January 1, 1986. Whether POPC and POPD are determined from the July 1, 1986, or the May 12, 1987 release of Governor's estimates and projections The Governor's estimates and projections of population are prepared by the Bureau of Economic and Business Research and the University of Florida. T. 240. The Governor's estimates are released twice a year. T. 241. A population estimate, such as POPC or POPD, is an educated guess as to current population size. T. 239. A population projection, such as POPA or POPB, is a mathematical prediction of what a future population size will be. T. 240. The Governor's population estimates are based primarily upon actual data collected with respect to residential electric hookups combined with local information about housing mixes and national data about household size, persons per household, and institutional or group populations. T. 240, 242. The information is gathered each year. T. 242. The Governor's population projections are based upon the most recent population estimate projected forward using assumptions about future migration, mortality, and fertility. T. 240, 242. The May 12, 1987, Governor's population estimates and projections were the official Governor's release on the date of the formal administrative hearing, and were then the most current release. T. 241. The May 12, 1987, Governor's population estimates and projections for July 1, 1986, and July 1, 1989, were more accurate than the release by the Governor on July 1, 1986 for the following reasons: The May 12, 1987, projection of populations on July 1, 1989, is more accurate because the projection only attempts to project two years into the future. The July 1, 1986, release tries to project three years into the future. Extrapolation is more accurate over a shorter period of time because the underlying assumptions upon which the extrapolation is based will be assumed to remain constant for a shorter period of time. Stated another way, fewer things typically go wrong with the assumption that assumptions will remain constant over a short period of time rather than a longer period of time. T. 243-244. The May 12, 1987, projection of populations on July 1, 1989, are based upon actual hard data (electric hookups) for July 1, 1986, projected forward. The July 1, 1986, projection of populations for July 1, 1989, was not based upon a population estimate, but was based upon a population projection as to the population on July 1, 1986, which itself was based upon electric hookup data from an earlier period. T. 244. (This is also the reason that the May 12, 1987, estimate of July 1, 1986, populations, is more accurate than the projection of that population released on July 1, 1986.) The May 12, 1987, projection of populations on July 1, 1989, are based more current (actual 1986) figures upon which the extrapolation is made: actual levels of fertility, mortality, and migration for 1986, as well as 1980 through 1985. The July 1, 1986, release did not have this better data available, and had to rely on figures for only 1980 through 1985. T. 244. The district has grown at about 2.9 percent a year from 1980 to 1986. The July 1, 1986, release projects a rate of growth in each year from July 1, 1986, to July 1, 1989 of only 1.6 percent, or only one-half of the actual observed rate. There is no basis to conclude that the district growth rate in the period 1986-1989 will be one-half the rate observed in the prior six years. T. 245. The July 1, 1986, release bases its projection of July 1, 1989, populations upon an extrapolation based in part upon mortality rates from 1980 mortality tables. However, the mortality rates for the age groups involved, ages 65-74 and 75+, have substantially declined since the 1980 tables were compiled. T. 247-248. Elfie Stamm is Supervisor of the HRS Health Care Facilities and Services office. That office is responsible for all HRS health planning activities, including development of regulations for the certificate of need program, issuance of health policies governing the certificate of need program, and development of the state health plan. Ms. Stamm thought that the May 12, 1987, release of Governor's estimates and projections of populations was more accurate than the July 1, 1986, release because it was based on more up-to-date data. F.G. Ex. 15. The effect of selecting the May 12, 1987, release of populations, rather than the July 1, 1986, release upon the net need projected for the subdistrict in July, 1989, by HRS's rule is exceptionally dramatic: if the July 1, 1986, release is used, the net bed need is 143, and if the May 12, 1987, release is used, the net bed need is 300, assuming other factors are held constant (the projection period and the Home Association beds). HQ Ex. 4. Thus, use of the May 12, 1987, release of populations reveals 100 percent more bed need in 1989 than use of the July 1, 1986, release. HRS presented only one justification or basis for its policy of using the July 1, 1986, release of population estimates and projections: those were the most current estimates and projections at the time the applicants filed their applications and subsequently when the agency conducted its review of the applications in the batching cycle and developed its proposed agency action. T. 1709. The July 1, 1986, release of population estimates and projections was not available, however, when the applicants in this batch had to file their letters of intent. T. 1286. Based upon the Governor's estimates of population released on May 12, 1987, the estimated population on July 1, 1986, for age 65-74 (POPC) was 134,968, and for age 75+ (POPD) was 94,402. H.H. Ex. 6. Projected populations on July 1, 1989, POPA and POPB Based upon the Governor's projections of population released on May l2, 1987, the projected population on July 1, 1989, for age 65-74 (POPA) was 149,771, and for age 75+ (POPB) was 108,400. H.H. Ex. 6. The occupancy rate The occupancy rate for the 2,612 licensed community nursing homes within the subdistrict for October, 1985, through March, 1986, was 94.18 percent. T. 1707. If the 96 nursing home beds at the Home Association are counted as licensed community nursing home beds within the subdistrict, the occupancy rate within the subdistrict for October, 1985, through March, 1986, was 94.29 percent for these 2,708 beds. This is derived by averaging the occupancy rate of the Home Association for the six month period, which is 97.225 percent, see T. 1725, and then factoring the two rates together as follows: (97.225 X 96/2708)) + (94.18 X 2612/2708)= 94.29. The date for determining licensed beds and approved beds for purposes of determining net need in the final calculation The number of approved beds was 368 whether one relies upon the date that the supervisor signed the state agency action report, T. 1708, or August 25, 1986, which is the date of the semiannual nursing home census report and bed need allocations, H.Q. Ex. 16. It appears that all parties agree to use of 368 for AB in the formula. See T. 1708, 437; F.G. Ex. 8. Since that is the case, the following findings of fact are made in the event that the Hearing Officer has overlooked evidence on this point in this voluminous record. HRS relies again on incipient policy for the date of determination of the number of approved beds. That policy is to determine the number of approved beds in the subdistrict on the date that the supervisor signs the state agency action report, a date different from the date that licensed beds are determined. T. 1708, 1716. Pursuant to this policy, the date for determining approved beds will vary, but will always be later than the date of determining licensed beds. T. 1291. The basis for this incipient policy was not explained in this record. T. 1698-1711, 1711-1728, 1291-1295, 1746-1764. Mr. Jaffe, the supervisor in this case, first signed the state agency action report in mid-November, 1986. T. 1295. Subsequently, however there were several superseding state agency action reports, and the report signed originally by Mr. Jaffe was never issued. As a result, the last state agency action report in this case was not issued until August 18, 1987, over one year after the initial applications were filed. This was an irregular procedure, and not the way state agency action reports normally are issued. T. 1714. Moreover, the state agency action report issued in August, 1987, did not have a line or signature for the supervisor, Mr. Jaffe, to sign. T. 1292; F.G. Ex. 5. Changes to the application of Forum Group Forum Group's original application for certificate of need in this case is F.G. Ex. 3. It should be noted that this exhibit contains some revisions to tables that were filed by Forum Group before HRS deemed application to be complete, and thus superseded earlier tables in the same exhibit. At the formal administrative hearing, Forum Group submitted an "update" of its application for certificate of need which was prepared about a year after the initial application, as amended, was filed. The update is F.G. Ex. 6. T. 43. Table 7 of both applications contains Forum Group's plan for utilization by class of pay. Table 7 in the original application was for the first year of operation. Table 7 of the update is for the second year of operation. Table 8 of the application is a list of projected patient charges by reimbursement or charge type. Table 8 of the update is significantly different from the original application. Table 8 of the original application, F.G. Ex. 3, listed charges that were consistent with then current charges at other Forum Group facilities. T. 185. The update is for an effective date two years later. Although Forum Group presented evidence that the charges in the updated table 8 were reasonable, T. 189, it claimed that the above increases were solely due to the two year difference in the tables. T. 195. There is also evidence that the revised charges in table 8 was based upon a telephone survey conducted of subdistrict nursing homes three months prior to the formal administrative hearing. Forum Group was unable to provide any evidence as to whether the charges in the updated table 8 were based upon data that was not available to Forum Group when the original table 8 was prepared; moreover, Forum Group did not prove that the data was such that Forum Group could not, and reasonably should not, have been expected to have gathered for its original application. T. 198. The revisions of table 8 were not based upon ordinary inflation. Forum Group assumed in both the original table 8 and the revised table 8 that the inflation rate impact on charges between the first and second year of operation would be only 3.5 percent, T. 199. Forum Group's expert on charges was of the opinion that the inflation rate for expenses would be about 3.5 percent. T. 200-201. The increases in charges shown on table 8 of the update are much greater than expected inflation. For example, the charge for Medicaid ICF semiprivate rooms increased from $50 to $63, an increase of 26 percent. The charge for private pay ICF private rooms increased from $75 to $115, an increase of 53 percent. Table 10 of the application is a projection of patient days and occupancy percentages for each month over the first two years of occupancy. The revision to table 10, F.G. Ex. 6, were prompted by the delay in the case, resulting in an initial opening date two years later. The revisions to table 10 in the update were also based upon the prior experience of Forum Group and a telephone survey of subdistrict nursing homes to obtain more current fillup and occupancy rates. T. 39, 79-80, 84-87. The telephone survey was conducted after the initial application was deemed to be complete. Table 11 of the application sets forth the "manpower" requirements, specifying full time equivalents and annual salaries. Revised table 11 in F.G. Ex. 6 contains changes both in annual salary levels and in FTE's. The dietary supervisor and maintenance supervisor are new positions in the revised table 11, and would be shared with the retirement living facility. These positions could have been reported in the original table 11. T. 164; F.G. Ex. 6. The revised table 11 reports positions for utility workers, positions not in the original application but which could have been reported in the original table 11. T. 166. The revised table 11 has fewer registered nurses and licensed practical nurses than the original application. This change was based upon Forum Group's decision that this new staffing pattern would be more efficient. While the testimony attributed this to a difference in projected occupancy in the first year (95 percent instead of 74.4 percent), this is not a plausible reason for changing the number of RN FTE's from 5.3 to 4.3, or the number of LPN FTE'S from 3.6 to 2.8, since one would expect a need for more nursing at higher occupancy. The revised staffing pattern could have been contained in the original application. T. 166, 170. The increases in salaries reported in the revised table 11 were caused in part by inflation (a later opening date). T. 161-62. The revision in salaries was based upon a survey of salaries conducted a year after the application was filed, T. 162. Considered in the new survey was new information concerning federal requirements for professionals that was estimated to make the professional hiring shortage even worse. Id. It is concluded that the basis for the revisions to the salaries was market data that could not have been available to Forum Group when it filed its original application. Table 25 of the application covers estimated project costs. Revised table 25, F.G. Ex. 6, contains changes of two types: shifts of costs from one accounting line to another, and new estimates of costs based upon a later date of construction. T. 66-67, 91-94. The new estimates of costs were based upon inflation and the current construction experience off Forum Group, both of which would not have been available to Forum Group when it filed its initial application. T. 66-67. The shifts in costs by accounting line (even though one shift was to operating costs), considered alone, did not substantially change the total project cost. T. 91-94. The construction costs contained in the revised table 25, F.G. Ex. 6, are projected to be $1,654,826, which is 12 percent greater than the $1,466,500 originally projected. This new estimate is based upon inflation, current construction experience, and a decision to reduce some less essential space to lower costs. T. 66-67, 1461-65. The inflation rate is estimated to be higher than 3.5 percent in 1990, and the date of commencement of construction is inferred to be two years later than the date assumed in the original application. The revised projection is also more conservative, based upon Forum Group's analysis of current market data. The revised construction cost is thus adequately based upon new data that was not available to Forum Group when it filed its original application. As a result of inflation, Forum Group decided to reduce some space that was less essential. The reduction of space is reflected in revised tables 17 through 20 of F.G. Ex. 6. Forum Group's initial application (F.G. Ex. 3) did not mention or discuss patient treatment plans, patient rights, patient councils, or Alzheimer's programs. It did, however, list 10 special areas of nursing that it would provide, many of which are in the subacute area. See, e.g., ventilator care and compare T. 150. The revised pro forma of operating expenses projects total operating expenses in the first year of $923,153 and $1,256,991 in the second year. F.G. Ex. 6. The original application, as revised before deemed complete, reported total operating expenses of $659,900 and $740,693, respectively, for these same projected years. The new information in the revised pro forma was explained as based upon a projection of higher use by private pay patients and faster fillup, as well as some inflation. T. 202. The change clearly is not explained as a simple matter of inflation, since the increases are about 50 percent in each of the years. T. 201-202. Changes to the application of Health Quest The original Health Quest application is H.Q. Ex. 1, as amended by H.Q. Ex. 2, and is for an 88 bed community nursing home facility. Health Quest submitted a revised application for 60 beds dated a year later, in September, 1987. H.Q. Ex. 3. Table 8 of the application is the list of projected charges by patient type. The revised application, H.Q. Ex. 3, increased charges from 25 to 34 percent. This new information was not based solely upon inflation assumptions, but was based upon increased assumptions about operating costs, and a decision to make a more conservative projection. T. 629, 690-91. Health Quest did not prove that these assumptions were based upon data not available when the original application was filed. Table 11 of the application lists manpower by position and projected annual salary. The revised table 11, H.Q. Ex. 3, increases the numbers of registered nurses and licensed practical nurses from the original application. The new data is based upon the experience of Health Quest in the year following the filing of the original application. T. 630. The testimony on pages 688-89 of the transcript is not inconsistent with the testimony on page 630. It is evident that a change in planning took place, and that the change in planning was based upon new experience. Table 17 of the revised Health Quest application, H.Q. Ex. 3, does not have six 3 bed rooms which had been planned for the facility in table 17 of the original application, as amended, H.Q. Ex. 2. This new information was not caused by the reduction of the application from 88 beds to 60 beds. Health Quest did not credibly prove that its decision to delete 3 bed rooms from its project was based upon data that it could not have had when it filed its original application. T. 630-31. Table 18 of the revised application, H.Q. Ex. 3, changes the square footage of 1 bed rooms from 150 to 216. Health Quest did not credibly prove that its decision to make this change was based upon data that it could not have obtained when it filed its original application. T. 632-33. Changes to the application of Careage Careage presented new information at the hearing which consisted of Careage Exhibits 18-22 and 24-25. The changes to these exhibits were based solely upon a small (3 percent) inflation rate or a different starting date. T. 1570-85. There was also a decrease in utility rates of an apparent few thousand dollars. Compare C. Ex 25 to C. Ex. 3, attachment 12. T. 1583-85. The new projection of utility rates was shown to be based upon new information from the utility company, and new heating and cooling technology. T. 1584. Changes to the application of Hillsborough Healthcare Hillsborough Healthcare did not submit any changes to its application. The merits of the Careage application Credibility of the Careage application Credibility of Mr. Gentle Russell Gentle is Careage's Vice President for nursing home operations, and is responsible for development of the nursing home at issue in this case, and operation of the facility after it opens, as well as development and operations of other Careage nursing homes. T. 1487. The application filed by Careage in this case was prepared by Mr. Gentle, with the exception of the section on need. T. 1491. Mr. Gentle was called as an expert witness for Careage to provide opinion testimony to substantiate the Careage application and to prove the nature of the facility that Careage states it would build and operate if granted a certificate of need. T. 1491-93. Mr. Gentle testified twice that he had a bachelor's degree with a major in accounting from the Alaska Methodist University. T. 1487, 1493. This testimony was presented in order to have Mr. Gentle qualified as an expert witness. Mr. Gentle was tendered as an expert in several areas, including nursing home finance. T. 1493. Upon voir dire examination, and after it became obvious that counsel conducting the examination had investigated Mr. Gentle's academic credentials, 1493, Mr. Gentle admitted that he did not have a degree in accounting, but that his degree had been in science. T. 1496. A motion was made to have Mr. Gentle precluded from testifying as a witness due to his untruthful testimony. T. 1497-98. The motion for the sanction of preclusion of testimony was denied, but the tender of expertise was denied for lack of credible evidence in the record as to expert credentials. T. 1499, 1504, 1512-13, 1514-16. Since the witness had intentionally lied about his college education, a matter of importance in determining expertise, the remainder of the witness's testimony as to his experience and expert credentials was tainted and not credible. There was no independent evidence of the training and experience of the witness, other than from his own testimony. The tender of expertise thus was denied for lack of credible evidence of expertise in the record. If Mr. Gentle's testimony concerning his experience in nursing home development had been credible, the evidence of such experience was not sufficient to qualify Mr. Gentle as an expert in nursing home development. Since 1985, he had been fully responsible for development of only two nursing homes, and assisted in the development of five others. T. 1509, 1489, 1514-15. If Mr. Gentle's testimony concerning his experience in nursing home operation and administration had been credible, the evidence of such experience was not sufficiently detailed to qualify him as an expert in nursing home operation and administration. T. 1513-15. Mr. Gentle had never served as a nursing home administrator. T. 1494. Mr. Gentle testified that in 1972 he went to work for the State of Alaska as an auditor in the Department of Health and Social Services. He further testified that he worked his way up through the sections and became chief Medicaid auditor for the state of Alaska. T. 1487. The employment record for Mr. Gentle, however, from the State of Alaska was admitted into evidence without objection. H.H. Ex. 33. That record shows a starting date of work in 1973, not 1972. More important, it does not show continuous employment consistent with the claim of having worked "up through the sections." The record shows no employment of Mr. Gentle by the State of Alaska for 2 and 1/2 years, from July, 1973, through March, 1976, and the only employment is in temporary positions, not in permanent positions expected to have been in the "sections" Mr. Gentle "worked up through." Finally, the employment record only shows Mr. Gentle in a position as an accountant IV (temporary) for a 9 month period in 1976. Mr. Gentle's testimony that he obtained the position of chief Medicaid auditor for the State of Alaska after working his way up through the sections is not credible. Mr. Gentle testified that C. Ex. 15 was an excerpt from the magazine "Contemporary Long-Term Care," and that this excerpt was the section of the magazine that included an award. T. 1541-42. He testified that all of the narrative in the exhibit was part of the magazine and the award. T. 1542. This is testimony was incorrect. The last page of the exhibit contains narrative that is advertisement prepared by Careage. The typeset is identical to that in the interior pages as well. Thus, pages 2-4 of the exhibit are not excerpts from the magazine. Mr. Gentle did not choose his words with care as he testified. Table 11 (projected salaries and FTE's) is a part she original application filed with HRS in July of 1986. Mr. Gentle testified that in part the projected salaries were based upon salaries that "Careage is paying to its existing staff." T. 1557. At that time, Careage did not operate any nursing home. Mr. Gentle could have meant that these were salaries in nursing homes leased out by Careage, but his choice of words was misleading. Whether Careage will operate the facility Careage was started in 1962, and since that time it has constructed more than 270 new hospitals, nursing homes, and related facilities. Generally, Careage has built facilities for others to operate. T. 1516-17. A few of these (seven were named, T. 1520) may have been operated by Careage, but the vast majority were not. T. 1591-1520. In 1982, Careage ceased all nursing home operations. T. 1592. From 1982 through 1985, Careage did nothing but hospital development. T. 1519. In 1985, Careage decided to build and operate nursing homes, and in March 1985, hired Mr. Gentle to set up the operating arm of the corporation with respect to nursing homes. T 1513, 1518. In July, 1986, when Careage filed its application for a certificate of need, Careage did not operate any nursing homes in the country. T. 1595. It appears that the first nursing home now operated by Careage was opened in December, 1986. T. 1610. At the time of the formal hearing, Careage operated and managed three nursing homes on its own, and jointly managed three others. (Another was said to be "jointly operated by others.") T. 1519-20. All of these facilities are in western states. In the letter of intent, Gene D. Lynn, the proposed owner of the proposed facility, and the sole owner of Careage, stated his intent to operate the proposed nursing home in Hillsborough County. C. Ex. 3, attachment 8. The application, C. Ex. 3, asserts on page 4-24: Each community and situation is unique. There are times in which we operate directly through Healthco Management (a wholly owned subsidiary). In all cases, we establish the operating procedures and pro forma and closely monitor each facility. This strategy has generated such a successful program that, in twenty-four years of business, we can boast at never having missed a debt service payment nor have we had a single incident of governmental intervention into our operations. (E.S.) The clearly intended implication of the foregoing portion of the application is that for 24 years, Careage has either operated its nursing homes (which in the majority of cases was untrue) or, if it did not operate its nursing homes, it "closely monitored each facility." The statement in the application that Careage closely monitors each facility is not true, at least with respect to currently leased facilities. Mr. Gentle, who is in charge of nursing home operations for Careage, does not routinely review state licensure survey reports for leased facilities. T. 1842. Leased facility reports may be reviewed by the Careage leasing section, which is separate from nursing home operations. T. 1842. The only monitoring that Careage does with respect to leased facilities is to step in if there is government intervention. T. 1843. Careage has retained the contractual right to intervene in the operations of a leased facility only "in cases of severe problems in a facility." (E.S.) T. 1518. The statement in the application, P. 4-24, concerning the history of Careage as to operation or supervision of nursing homes is misleading. As will be discussed ahead, Careage representatives were either confused about the operation of nursing homes by Careage (Dr. Etten) or used words in a manner that misrepresented the operational status of Careage (Mr. Gentle and representatives of Careage at a dinner meeting with Ms. Hardy). These misleading statements, coupled with the prior history generally of not operating nursing homes, lead to the conclusion that Careage has not proved that it will operate the proposed nursing home in Hillsborough County by a preponderance of the credible evidence. Substantive aspects of the application General provisions Careage's original application proposed to construct 120 beds, 10 of which would be a subacute unit, 21 of which would be an Alzheimer's unit, and the remaining 89 beds would be general SNC/ICF (skilled/intermediate) nursing care beds. C. Ex. 3, P. 2-1. Four of the ten subacute unit beds would be designated for neonates and technology dependent children. C. Ex. 3, P. 3-6; T. 1522. The 10 bed subacute unit is proposed to provide 24 hour nursing care patients who are recovering from strokes, craniotomy patients, comatose victims of accidents, and others suffering serious chronic maladies. T. 1212. Nursing services to be provided include tube feedings, ventilators, tracheostomies, continuous intravenous infusion, hyperalimentation, total parenteral nutritional care, and inhalation therapy. T. 1213. The program proposed by Careage conforms to professional standards for such a program. Id. The 21 bed Alzheimer's disease unit is designed and intended to provide an environment adapted for the special needs of those patients. The design and program emphasizes low stimulation, safe ambulation, and simplicity to minimize confusion. The design is considerably more therapeutic for such patients than commingling such patients among other patients in an ordinary nursing home setting. T. 1206-12, 1432, 1474-75. The precise number of skilled and intermediate care nursing beds is unclear. At least 39 beds will be skilled nursing, and 21 beds for the Alzheimer's patients. T. 1136. Careage intends to concentrate on skilled nursing care rather than intermediate care. T. 1523, 1678. Careage does not intend to serve the market for intermediate care. Id.; C. Ex. 3, attachment 8. Careage did not include adult day care in its application, T. 1142, 1592, because it takes the position that adult day care does not require a certificate of need. T. 1592. Careage in fact will not offer adult day care. T. 1192. Careage intends to provide respite care at the facility. T. 1531. Careage estimates that 37 percent of its patients will be Medicaid patients. T. 1361. Quality assurance The nursing quality assurance programs described in the application of Careage are adequate, and would be adequate if implemented by Careage. T. 1221. Dr. Etten testified for Careage concerning her visit to two nursing homes owned by Careage. She did not express an opinion that the Careage quality assurance program in fact would be implemented based upon these visits. She did not describe the current operation of any Careage quality assurance program. She simply stated that she was favorably impressed by the physical environment in those two nursing homes. T. 1221-26. One of the facilities was in Salt Lake City, Utah, and there is no evidence in the record that Careage operates that facility. See T. 1519-20. Indeed, Dr. Etten later admitted on cross examination that she knew the Utah facility was not operated by Careage. T. 1234. Throughout the application process, Careage tended to misrepresent its status as an existing operator of nursing homes providing care of good quality. As discussed above, in the meeting in August or September, 1986, attended by Mr. and Mrs. Lynn, Mr. Haben, and Ms. Hardy, Careage's representatives told Ms. Hardy that Careage operated nursing homes in other states in which care of good quality was provided. T. 1060. The application, at page 4-24, appeared to assert that Careage had 24 years of experience operating nursing homes. Mr. Gentle represented that proposed salaries were based upon salaries in nursing homes currently operated by Careage. These statements were not true. Careage leased facilities, but did not operate any facilities at that time of the application, and its history had been primarily in the development of health care facilities for operation by others. Careage did not exercise close operational control of the leased facilities. And Dr. Etten seemed unconcerned as to what entity was operating the Utah nursing home that she visited. Her failure to do so caused her testimony to appear to be representative of the quality of care actually provided at Careage operated nursing homes. For these reasons, Careage did not prove by a preponderance of the credible evidence that it has had a history of operation of nursing homes, that it has had a significant history of providing nursing care of good quality, that it has had substantial experience in management of quality assurance programs, or that it would in fact implement the quality assurance program reviewed by Dr. Etten. Staffing Staffing, particularly nursing staffing, is established based upon the assumption that most of the beds at the Careage facility will be at least skilled nursing care beds, and some will be Alzheimer's disease beds or subacute beds, including beds for technology dependent children. Attachment 14, Ex. 3. The nursing staffing proposed by Careage is adequate. T. 1216. Other staffing proposed by Careage is based upon staffing at other facilities owned by Careage and standards in HRS rules. T. 1557, 1559. It is concluded that other staffing is adequate. The projected annual salaries for staff are reasonable. T. 1648, 1656, 1680-81. The objection to this testimony, taken under advisement, was overruled. T. 1687. The witness amply demonstrated expertise with regard salary levels. Construction and facility design The building proposed by Careage would be one story and have 45,500 square feet for 120 residents, or a total of 379.17 gross square feet per bed. T. 1133. The application represents that the net square foot area for living space in 2 bed (semiprivate) rooms is 283 to 295 square feet. C. Ex. 3, table This was an exaggeration. The actual square footage was shown to be substantially less upon cross examination: 213.75 square feet of living space for semiprivate rooms. This figure is based upon the fact revealed upon cross examination that the length of the room for purposes of calculating gross square feet is 23.5 feet instead of 24 feet, 4 inches. This correction reduces gross living square footage for the living area to 305.5, and net to 213.75. The floor plan, site plan, and space programs in the proposed design are adequate and will meet or exceed all requirements of Florida law. T. 1137. The nursing home floor plan does not include a space for adult day care. T. 1142. Careage projects that construction costs will be $56.77 per square foot. This estimate is in line with estimates of other applicants and is reasonable. T. 1176-78. Construction costs equate to $21,526 per bed. Careage did not include an estimate of costs for equipment for technology dependent children, but plans to cover this with funds estimated for contingencies. T. 1195. The amount of such costs is not in evidence. Id. The estimate of overall project costs, table 25 of the application, Ex. 3, is reasonable. T. 1171-76. Total project costs are estimated to be $4,150,000, or $34,583 per bed. The project cost includes $515,000 for 3 to 5 acres of land. T. 1546. The adequacy and appropriateness of the proposed equipment for the facility was not established by expert testimony. See T. 1179. Availability of resources Gene D. Lynn has an extensive history in successfully financing and constructing health care facilities, including nursing homes. T. 1516-17. Gene D. Lynn has more than adequate lines of credit to obtain complete financing for this project. T. 157 6- /7 Existing lines of credit, including SeaFirst, are available up to at least $9 million. T. 1576. The objection as to hearsay, which was sustained, was sustained only as to what unnamed persons with Washington Mutual "indicated." The remainder is not hearsay. It is testimony of the existing state of facts within the personal knowledge of the witness. The foregoing findings of fact are based upon testimony of Mr. Gentle, whose credibility as a witness was partially impeached as discussed in findings of fact above. Mr. Gentle's credibility problems, however, are not sufficient to compel the disregard of his testimony as to the general financial condition of the Lynns and Careage. Mr. Gentle demonstrated that his testimony as to his own expert qualifications was unworthy of belief, and he demonstrated that some portions of his testimony concerning the features of the proposed facility were exaggerated or incorrect. But this is not sufficient evidence to conclude that his testimony as to general financial resources of Careage is an untruth. It is noted that there is no evidence in this record to suggest in any manner that Gene Lynn does not have the net worth set presented in his unaudited financial statement. That net worth is over $45 million. If this were a substantial untruth, surely one of these highly competitive applicants would have presented evidence on the point. Financial feasibility The proposed project is financially feasible in the short term. T. 1632-39, 1686. Careage's projections as to patient mix (by payor type) and expected fillup (utilization) are reasonable. T. 1640- 42 The charges proposed by Careage are reasonable. T. 1642-45. Careage's projections as to operating expenses are reasonable. T. 1648, 1656-57. The proposed project is financially feasible in the long term. T. 1647, 1649-50, 1686. The Forum Group application General provisions Forum Group is a national company which owns and operates 11 retirement living centers and 22 nursing homes in a number of states. The retirement living centers are independent rental apartments which do not require entry fees. T. 20; F.G. Ex. 3. The Forum Group proposal is to construct and operate a 60 bed community nursing home in conjunction with a retirement living facility of 120 apartments and an adult congregate living facility of 30 units. F.G. Ex. 3, attachment 1. The community nursing home section would offer all services required for provision of skilled nursing care, intermediate nursing care, respite care, and adult daycare. T. 27. Forum Group does not propose to provide a separate Alzheimer's disease unit. The estimated total cost of the nursing home portion of the project is $2,673,084. F.G. Ex. 6, table 25. This is $44,551 per nursing bed. Forum Group will accept Medicare and Medicaid patients. T. 27, 210. Quality assurance Forum Group has never had a license denied, revoked, or suspended, and it has never had one of its facilities placed into receivership. T. 158. The proposed facility would provide 24 hour supervision by either a registered nurse or a licensed practical nurse, or by both. T. 140. The staffing levels proposed in the original application are adequate. T. 153. Staffing levels would vary according to the needs of the residents. T. 134. Medications would be distributed by unit dose. T. 139. Forum Group would implement an adequate plan for quality assurance audits. T. 141-43. The plan is in writing, is in use in other Forum Group nursing homes, and covers all aspects of the operation of the nursing home that are relevant to the quality of care received by nursing home residents. Forum Group would check staff qualifications prior to employment and would provide ongoing staff training. T. 149. Forum Group would provide residents with written statements of patients' rights upon admission to the facility, and would have an independent patients' rights council. T. 147- 48 Forum Group provides reasonably adequate nursing care in its existing nursing homes, and would do so in the proposed nursing home. T. 31-32, 158. Staffing The staffing proposed for the facility, and projected salaries, are reasonable and adequate. T. 151-154. Forum Group reviews the qualifications of applicants to insure that applicants are qualified for the job. T. 149. Construction and facility design Forum Group's community nursing home facility will have about 24,500 square feet. This is reduced from the original 27,000 due to inflation in costs. Patient room areas were not changed. T. 1453. This is 408 total gross square feet per bed. The net living area square footage allocated to semiprivate 2 bed rooms is 228 square feet. F.G. Ex. 3. The square footage allocated in both versions is reasonable. T. 1445, 1453. The building would be wood frame with brick veneer. It would have heavy roof insulation, double glazed windows, and a heat pump to conserve energy and to operate with less utility expense. T. 1454. The construction costs, including equipment costs, estimated for the revised project, F.G. Ex. 6, table 25, paragraph d., are reasonable. T. 1453. The costs as originally projected were also reasonable. T. 1446. The proposed facility would comply with state and federal standards for construction. T. 1456. The 60 bed community nursing home would require two to three acres of land. T. 1455. The $400,000 estimated to be needed to acquire a suitable site is reasonable for location in the northwest portion of Hillsborough County. T. 54, 59. Availability of resources Forum Group will attract suitable health care professionals, despite the shortage in Hillsborough County, by offering attractive fringe benefits, including attractive work schedules and continuing education. T. 156-57. Forum Group has the financial resources to construct and begin the initial operation of the facility. T. 182-84. Financial feasibility The project is financially feasible in the short term. T. 182-84. Due to its corporate size and current operation of a number of nursing facilities, as well as the size of the combined planned facility in Hillsborough County, Forum Group will be able to purchase supplies and other operational necessities at a favorable low cost, thus saving on operational expenses. T. 156. The estimated fillup rate in the original application was about 75 percent occupancy after the first year and about 86 percent occupancy after the second year. T. 37. Given the recent experience in Hillsborough County of occupancy around 95 percent and very fast fillup rates for new nursing homes, T. 116-18, a projection of 86 percent occupancy in the second year is probably too low. For purposes of determining financial feasibility, it is reasonable but conservative. T. 37. The project is financially feasible in the long term based upon the pro forma contained in the original application. T. 186-88; F.G. Ex. 3. The merits of the Hillsborough Healthcare application General provisions Hillsborough Healthcare, Ltd., is a Georgia limited partnership owned by Stiles A. Kellett, Jr. and Samuel B. Kellett. Hillsborough Healthcare, Ltd., would own the proposed facility. T. 419. The facility would be managed by Convalescent Services, Inc., (CSI) which is also owned by Stiles A. Kellett, Jr. and Samuel B. Kellett. CSI was formed in 1978 to own and operate extended care facilities owned or controlled by the Kelletts. T. 420. CSI currently operates 21 nursing homes and 3 retirement homes in 7 states. Six of the nursing homes and 2 retirement centers are in Florida. Id. Centralized management is provided by regional offices in Sarasota, Houston, Texas, and Huntsville, Alabama. T. 420. The long range plan of CSI is to acquire and develop nursing facilities in locations where CSI already has a management structure nearby. T. 421. Hillsborough Healthcare proposes to construct and operate a single story combination nursing home, consisting of 120 beds, and an adult congregate living facility, consisting of 60 beds. H.H. Ex. 1; T. 423. The 120 nursing beds would consist of 60 skilled nursing beds and 60 intermediate care beds. The 60 skilled nursing beds includes a distinct 24 bed unit for Alzheimer's disease patients. Id. The application estimates the total project cost to be $5,032,475, with $3,367,668 of that cost attributed to the nursing facility portion of the project. H.H. Ex. 1. This is $28,063.90 per nursing bed for 120 beds. The facility would have a rehabilitation program, activities, and social services programs. T. 423. The Hillsborough Healthcare facility intends to make its facility available as a training facility for medical and nursing schools. T. 461. The facility would participate in both the Medicare and Medicaid programs, and estimates about 30 percent Medicaid utilization. T. 423. Hillsborough Healthcare would accept partial approval of only 60 nursing home beds. T. 490. In that event, the 60 bed nursing facility (combined with the 60 bed adult congregate living facility) would offer the same services, including the 24 bed Alzheimer's disease unit. T. 390, 473. Access as a patient to the facility will be on an equal basis, without distinction as to race, religion, or sex. The facility will be constructed to provide handicapped access. T. 462-63. At least 30 percent of the patients served by the Hillsborough Healthcare facility would be Medicaid patients, and the percentage may well be higher. Currently, 17 of the 21 CSI nursing homes participate in state Medicaid programs, and all of the Florida nursing homes have Medicaid patients. All new nursing homes developed by CSI participate in both Medicaid and Medicare. Many of the 17 nursing homes were not Medicaid certified prior to acquisition by Hillsborough Healthcare, but are now certified and participate. CSI has never decertified one of its nursing homes as a Medicaid provider. T. 424. Existing CSI managed facilities in Florida are currently experiencing a 40 percent Medicaid utilization, which includes at least one in Hillsborough County. T. 1798. B. Quality assurance Sixteen of the 21 CSI managed nursing homes are in states that use a licensure rating system, and of these, 14 are have achieved the highest rating. T. 422. No CSI facility has ever had its licensed revoked or has ever been fined. Id. One-half (three) of CSI managed Florida facilities are rated superior. T. 319. Centralized management and location of facilities so that management resources can be shared should enhance the quality of care at the proposed nursing facility. The quality assurance program will be guided by a lengthy policies and procedures manual that is in use in other Florida CSI managed nursing homes. H.H. Ex. 11; T. 313. CSI employs a full time Florida registered nurse to make visits at least once a month to CSI facilities in Florida as a part of the quality assurance program. T. 316. The nurse conducts quality of care inspections, using measuring instruments developed by the CSI quality assurance program, and teaches new methods to improve the quality of health care. T. 317. Hillsborough Healthcare will have an adequate quality assurance program. T. 310. C. Services and programs CSI would provide programs for care of Alzheimer's disease patients, respite care, and adult day care. Respite care is temporary nursing care, for 16 days or less, to give the family a temporary rest from home care, and to improve the condition of the patient. T. 300. Adult day care is care only during the day to enable a family member to work. T. 301. Both types of care provide an opportunity for the elderly patient to receive nursing services, including the programs and medical care available at the nursing home, while giving home care providers a rest or needed free time. The Alzheimer's disease unit of 24 intensive care nursing beds would have operational and design features to meet the special needs of those patient. The medical director is to be board certified with a specialty in geriatrics and training with respect to Alzheimer's disease. Activities will be altered to accommodate the limitations of those patients. Staffing will be at a higher level, and staff will be specially trained to meet the needs of those patients. The facility will be designed with a secure courtyard, special dining room, and wander guard, to allow movement without physical or chemical intervention or restraints. T. 299, 289. CSI varies the activities programs at its facilities to match the needs of patients. T. 270. Activities for Alzheimer's patients, adult day care and respite care residents are designed within the limitations of those patients. T. 289-90. CSI typically provides activities that provide small and large group interaction, socialization, mental and physical activity, recreation, and religious activities. T. 270. The activities that have been implemented or suggested for CSI facilities are innovative, varied, and appear to be the result of much thoughtful work. T. 273-74; H.H. Ex. 1, pp. 115-123 H.H. Ex. 8. Some of CSI staff involved in activities have received awards for their work. T. 288. The proposed facility would provide activities similar to the activities provided at other CSI facilities. T. 274. CSI has employed an expert in community relations and activities programming to coordinate community relations, activities, and the volunteer program at all CSI nursing homes, including the proposed facility. That expert is the author of pp. 114-121 of the application, H.H. Ex. 1. The expert would recruit and train activities and community relations directors at the proposed facility. T. 287. CSI publishes a newsletter containing an exchange of program information, and encourages each nursing home to publish its own newsletter. Some do. H.H. Ex. 10; T. 284-85. Volunteers are encouraged to participate in nursing home activities. 272. CSI has compiled a package of volunteer information for use in development of a volunteer program at each nursing home. H.H. Ex. 9. Volunteers increase resident participation in programs, bring fresh ideas, and causes there to be a greater variety of activities and programs for residents. T. 281. Association of the nursing facility with an adult congregate living facility is a useful way to provide continuity of care and lessens the trauma to the resident of the initial move into a nursing facility. In some cases, a spouse may live in the adult congregate living facility and thus be closer to the spouse who must be in a nursing facility. CSI currently manages Sun Terrace Nursing Center, a 120 bed nursing home, and Lake Towers Retirement Center, both in Hillsborough County. Consequently, CSI has already in existence a network of relationships that would benefit residents at the proposed facility. Existing relationships include a system for patient referrals from local hospitals, transfer agreements with local hospitals for acute and emergency care, and agreements with local providers for ancillary services, such as physical therapy, diet therapy, occupational therapy, speech therapy, opthalmology, dental care, podiatry, x- ray, and pharmacy services. T. 302-304. Similar agreements for the proposed facility could be established. Such agreements are cost effective because used only as needed. T. 304. CSI would provide all the ancillary services listed in figure 1, page 14, H.H. Ex. 1. T. 304. Staffing The proposed staffing of the facility, including the 24 bed Alzheimer's disease unit, is adequate. T. 308. The proposed salaries are reasonable and adequate. T. 309. Hillsborough Healthcare will be able to recruit adequate staff. T. 309. Hillsborough Healthcare will provide a reasonable staff development program. T. 309. This program will aid in the retention of staff. T. 310. Construction and facility design The 120 bed nursing section is designed to include 4 private rooms and 58 semiprivate (double occupancy) 4 rooms. T. 355. The design includes the services and departments listed on table 12 of H.H. Ex. 1. It is proposed that the total gross square feet will be 33,996, or 283 square feet per bed. H.H. Ex. 1 The square footage allocated by the design to net living space in patient bedrooms and gross area of the nursing unit, tables 18 and 19, H.H. Ex 1, are reasonable. T. 355. Semiprivate (2 bed) rooms would have 185 net square feet of living space. The Hillsborough Healthcare design has several cost saving features. Sharing ancillary services and spaces (kitchen, administrative areas, and laundry) with the adult congregate living facility of 60 beds reduces the overall construction and equipment cost and operational cost per bed. Use of a modular "T" configuration, with straight line walls and corridors for units, results in a savings in construction cost. T. 360-61. The compact design, accompanied by extensive roof over hangs and insulating materials, will reduce energy requirements. T. 357 The floor plan could easily be altered by alteration of the arrangement of the modular wings to fit on different sites. T. 358. Nurses' stations are located in the middle of wings, giving good visibility down corridors, but no visibility into rooms. The nurses' station is 7 rooms from the most distant room on any wing. H.H. Ex. 1, p. 103. The Alzheimer's disease unit is in a separate portion of one wing, and is contiguous to an interior space that will be fenced to make a secure courtyard. T. 357; H.H. Ex. 1, p. 103. The construction cost includes additional wheelchairs and walkers, and includes $4,500 for a wander guard system for the 24 bed Alzheimer's disease unit. T. 364. The projected construction cost includes fixed equipment. T. 356. The construction cost of $2,331,418 is reasonable. T. 356. All of the costs estimated in table 25, H.H. Ex. 1, p. 33 (estimated project costs) are reasonable. T. 345-466, 356, 455-56. Availability of resources Through available equity and long term debt, adequate resources exist for Hillsborough Healthcare to construct and initially operate the proposed facility. T. 396-402. Financial feasibility The proposed facility is financially feasible in the short term. T. 396-402; H.H. Exs. 15, 16, 1. The projected charge rates, table 8, H.H. Ex. 1, are reasonable. T. 379-80, 400, 452. The projected percentages of patient utilization by payor class, table 7, H.H. Ex. 1, are reasonable. T. 450, 393. The projected number of expected patient days in the first two years of operation, tables 10 and 7, H.H. Ex. 1, reasonable. T. 488-49. The projections of total revenue, table 7, H.H. Ex. 1, are reasonable. T. 400-01. The projections of expenses and net income for the first two years of operation are reasonable. H.H. Ex. 1, pp. 100-01; T. 401-02. The 120 community nursing home bed version of Hillsborough Healthcare's application is financially feasible in the long term. T. 402. If the Department partially approves the Hillsborough Healthcare application for 60 beds, to be operated in conjunction with the 60 bed adult congregate living facility, the projection will be financially feasible in both the short and long term. T. 402. The project would be financially feasible with a higher Medicaid participation. T. 424. The merits of the Health Quest application General provisions Since critical portions of the 60 bed application, H.Q. Ex. 3, were impermissible changes to the 88 bed application, and thus not admitted into evidence, only the 88 bed application will be discussed. Health Quest proposes to construct and operate 88 community nursing home beds in conjunction with an adult congregate living facility of 124 units. H.Q. Ex. 2. The total cost of the nursing portion of the facility is estimated to be $3,054,466, or $34,719 per bed. H.Q. Ex. 2. Health Quest has entered into an agreement with a group of 129 physicians, organized as the University Community Physicians Association of Tampa. That association comprises the bulk of the physicians who practice at University Community Hospital in northern Tampa. T. 585. The agreement is that Health Quest would build and manage the nursing home, and the physicians would provide medical oversight and referrals. T. 579. The physicians would contribute to equity and share in operating profits and losses. T. 624. The share is 25 percent. T. 694-95. Other details are not in evidence. The negotiations for the agreement with the University Community Physicians Association of Tampa took several months, and the agreement itself did not come into being until August, 1987. T. 581. The University Community Physicians Association of Tampa is not named as an applicant in the original application since the agreement came into being after the application was filed. Health Quest intends to construct the proposed nursing home and adult congregate living facility near the present location of the University Community Hospital. T. 583. Health Quest intends to serve approximately 30 percent Medicaid patients. T. 841, 1102. Quality Assurance Health Quest has nursing homes in Florida, Indiana, and Illinois. Health Quest has a reputation in Indiana and Illinois for providing good health care. T. 599-609. Health Quest has three nursing homes in Florida. Of those three, two had been open long enough at the time of the hearing to have received a Florida rating. Both were rated superior. T. 610. Health Quest has a nursing home in Jacksonville, Florida, and the quality assurance program and services at that facility are representative of the type of care and services at other Health Quest facilities, as well as what is intended for the proposed Health Quest facility in Hillsborough County. T. 1077, 1102. All findings of fact which follow that reference the quality of care or scope and nature of services at the Jacksonville facility are thus also findings of fact that these quality assurance programs and services are intended to exist at the Hillsborough facility. The Jacksonville facility maintains a resident care plan on each resident. Health Quest would provide health care of good quality at its proposed facility. Services and programs The Jacksonville facility provides a number of services that require skilled nursing or arguably fall within the category of "subacute" care. The term "subacute" care is not a formal definition, and there is no Florida licensure category for that phrase. The Jacksonville facility provides intravenous therapy, parenteral nutrition, and tracheostomy care. T. 848-51. It also provides care for comatose patients (accident or stroke victims) regardless of age, and care of post-craniotomy patients. T. 851-53, 855-56. Health Quest does not intend to care for neonates (sick infants less than two weeks old). Neonates require care that is distinct from the care required for the elderly, thus requiring staff with different training. Neonates also can be at substantial risk from respiratory and urinary infections commonly present among the elderly in a nursing home. T. 859-61. The Jacksonville facility provides physical therapy, speech therapy, and occupational therapy. The physical therapist is a full time position. T. 871. The Jacksonville facility provides counseling to residents and families with a full time social worker on staff. T. 864. The Jacksonville facility provides music therapy, outside trips, and other activities, such as family night, the artist in residence program, and use of the facility for community programs. T. 866, 888, 892. Some of these programs are conducted jointly with the adult congregate living facility. Volunteers are used in the activities programs as well. T. 869. The quality of the activities program is directly related to the numbers of staff persons involved in the program. T. 871. The Jacksonville facility provides respite care of about two weeks in duration, although it could be longer. T 872. The adult congregate living facility that would be a part of the Health Quest facility would have tee same beneficial consequences as the adult congregate living facility proposed by Hillsborough Healthcare. T. 902-04. The Jacksonville facility is often used as a place for continuing nursing education for high schools or the local nursing association. T. 906-07. Staffing Health Quest proposes a total of 59.75 FTE's or .679 FTE per bed. H.Q. Ex. 2, table 11. Health Quest acknowledged that the staffing proposed for the 88 bed facility was adequate in 1986 when prepared, but by 1987, it was experiencing the need for more licensed personnel, and that it would increase licensed personnel for the 88 bed facility now. T. 630. No evidence was presented as to the specific changes that would be made. T. 632. Construction and facility design Health Quest proposed in its application to construct 34 two bed rooms, 6 three bed rooms, and 2 one bed rooms. H.Q. Ex. 2, table 17. Health Quest wants to change its design, if built, to make the three bed rooms into two bed rooms. T. 631. Health Quest proposes to provide 240 square feet of net living space for semiprivate two bed rooms. H.Q. Ex. 2. Health Quest proposes to provide a total of 37,263 square feet for the 88 bed facility, or 423 square feet per bed. H.Q. Ex. 2. Health Quest estimates that the project will need 3 to 4 acres of land, and projects that it can acquire the land for about $320,000. H.Q. Ex. 2; 634. This estimate is reasonable in comparison to the estimates of all other applicants. Health Quest has constructed three nursing homes in Florida, and others in Indiana and Illinois, and thus has substantial experience in construction. Photographs of the nursing homes constructed and now operated by Health Quest show that those nursing homes are reasonably attractive and appear to be hospitable places in which to live. H.Q. Ex. 22. Availability of resources Health Quest has access to sufficient funds to construct the project and initially operate it. T. 586-87. Financial feasibility The Health Quest proposal is financially feasible in the short term and the long term. T. 593 Summary of comparative data The space and costs associated with the four proposals may be compared as follows: Appl. Cost/Bed NetFt/Bed TotFt/bed Cost/NetFtBed Cost/TotFtBed Careage $34,583 214 306 $162 $113 Forum $44,551 228 408 $195 $109 HealthQ $34,719 240 423 $147 $ 82 HillsH $28,063 185 283 $152 $ 99 The proposed staffing of the four proposals may be compared as follows: Applicant Total FTE RN FTE LPN FTE RN Asst FTE No. Beds Careage 96.0 11.9 7.4 42.1 120 Forum 37.6 5.3 3.6 14.00 60 HealthQ 60.75 4.8 2.2 25.00 88 HillsH 64.65 2.92 8.78 36.61 120 Staffing per proposed bed may further be compared as follows: TotalFTE Applicant Per Bed PN FTE Per Bed RN & LPN FTE Per Bed Total Nursing FTE Per Bed Careage .80 .10 .16 .51 Forum .63 .08 .15 .38 HealthQ .69 .05 .08 .36 HillsH .54 .02 .10 .40 Comparison of the Careage staffing to other applicants is difficult because Careage proposes primarily to serve patients needing skilled nursing care who thus require more nursing staff per bed. Forum Group, Hillsborough Healthcare, and Health Quest are relatively the same with respect to anticipated efficiencies and continuity of care due to the association of adult congregate living facility beds with the proposed nursing home. Forum Group plans only 30 ACLF beds, but also plans 120 independent living apartments. Hillsborough proposes to provide 60 ACLF beds, and Health Quest proposes to have 124 ACLF beds. There is no evidence in the record to determine the optimum mix of ACLF beds to nursing home beds. Conclusions of Law The Division of Administrative hearings has jurisdiction of the parties and subject matter of this proceeding. The Department's free form preliminary decision The free form decision of the agency is ordinarily not dispositive since a formal administrative hearing is intended to formulate agency action, and is not intended to review prior action. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). The reasoning of the agency in its free form decision, however, ordinarily is a significant matter to be considered in the formal hearing. Findings of fact with respect to the free form decision-making upon the applications in this batching cycle have been made for two reasons: the assertion that the free form decision was influenced by considerations other than objective merit of the applications, and therefore not entitled to any persuasive effect upon this formal hearing, and representations in the free form stage made by Careage relevant to evaluation of the application of Careage. The free form decision in this case had the appearance of having been influenced in part by considerations other than the objective merit of the applications. For this reason, the free form decision with respect to these applicants has been disregarded as having no persuasive weight. Need calculated pursuant to rule 10-5.001(1)(k)2 Need for community nursing home beds is calculated pursuant to the need methodology set forth in rule 10- 5.011(1)(k)2, Fla. Admin. Code. The text of the rule is not in evidence, but comparison of the text of the rule referenced in proposed recommended orders indicates that the parties appear to agree that the rule promulgated on November 24, 1986, should govern this case. It is that rule that will be used in this recommended order. All parties agree that July 1, 1989, is the date upon which subdistrict need for community nursing home beds is to be determined. The first step in the need calculation pursuant to the rule is to determine BA. BA is defined by subparagraph 2a of the rule as the estimated bed rate for the population age 65-74 years in the relevant district. Subparagraph 2b of the rule provides: BA= LB/(POPC + (6 X POPD)) Where: LB is the number of licensed community nursing home beds in the relevant district. POPC is the current population age 65-74 years. POPD is the current population age 75 years and over. LB is at least 5,964, and is 6,060 if the 96 beds at the Home Association are, on this record, classified as community nursing home beds. Section 651.118(8), Fla. Stat. (1987) provides in part: This section shall not preclude a continuing care provider form applying to the Department of Health and Rehabilitative Services for a certificate of need for community nursing home beds or a combination of community and sheltered nursing home beds. Any nursing home bed located in a continuing care facility that is or has been issued for nonrestrictive use shall retain its legal status as a community nursing home bed unless the provider requests a change in status. Any nursing home bed located in a continuing care facility and not issued as a sheltered nursing home bed prior to 1979 shall be classified as a community bed. The Department of Health and Rehabilitative Services may require continuing care facilities to submit bed utilization reports for the purpose of determining community and sheltered nursing home bed inventories based on historical utilization by residents and nonresidents. (E.S.) The first sentence of this statutory section does not apply to the Home Association because it has not applied for a certificate of need. The second sentence does not apply because there is no evidence in the record that the nursing home beds at the Home Association were "issued" by anyone. The third sentence applies because the 96 nursing home beds at the Home Association were "not issued as a sheltered nursing home bed prior to 1979." The Home Association has existed since 1899 with its 96 nursing home beds, and never had a certificate of need. There was no statutory authority or definition for the issuance of a "sheltered nursing home" prior to 1979. By operation of law (the third sentence quoted above), the 96 beds are community nursing home beds. The fourth sentence appears to be directly in conflict with the third sentence. The fourth sentence states that HRS can conduct a study of historical utilization "for the purpose of determining community and sheltered nursing home bed inventories based on historical utilization by residents and nonresidents." The third sentence automatically confers community nursing home bed status upon certain beds based solely upon three criteria (located in a continuing care facility, located there before 1979, and not "issued" as a sheltered nursing home bed). Community nursing home bed status is thus conferred solely upon the three criteria, and historical utilization is irrelevant to the third sentence. If that is so, the fourth sentence, which allows HRS to "determine" community nursing home status based only upon historical utilization, is in direct conflict with the third sentence. This seemingly irreconcilable dilemma is not at issue in this case, however, because there is insufficient credible evidence in the record as to the "historical utilization" of the 96 beds at the Home Association. As discussed in the findings of fact, there is no credible evidence in this record as to how the 96 beds at the Home Association have in fact been "utilized" since 1899. Indeed, the only logical inference on this ambiguous record is that the Home Association has not felt itself constrained by any definitional categories, given its longevity in the Tampa Bay area. It thus is concluded as a matter of law, pursuant to the third sentence of section 651.118(8), Fla. Stat. (1987), that the 96 beds at the Home Association are community nursing home beds, and thus should be counted in the licensed beds in the district and subdistrict, LB and LBD. Thus, the correct value for LB in this case as of June 1, 1986, is 6,060. Next, the values of POPC and POPD must be determined Two issues arise with respect to ascertainment of the values of POPC and POPD. The first is whether the values of POPC and POPD should be determined on January 1, 1986, or on July 1, 1986. The second is whether the values of POPC and POPD should be determined based upon the Governor's estimates and projections of populations released on July 1, 1986, or on May 12, 1987. The first issue is governed by the clear language of the existing rule. The second issue has no clear guidance in the existing rule, and thus depends upon analysis of the record basis of the agency's incipient policy. With respect to the first issue, the parties urge that POPC and POPD are the populations on January 1, 1986, rather than on July 1, 1986. The basis of this argument is the inconsistent behavior of HRS over the last three years and in the January, 1987, batching cycle, wherein the values of POPC and POPD were often effectively determined on a date six months prior to the commencement of the batching cycle, a date which was the midpoint in the occupancy rate months. Notwithstanding the inconsistent manner in which HRS has interpreted its rules, a fundamental principle of law is that if the rule is clear, the agency must follow it. Kearse v. Department of Health and Rehabilitative Services, 474 So.2d 819, 820 (Fla. 1st DCA 1985); Woodley v. Department of Health and Rehabilitative Services, 505 So.2d 676, 678 (Fla. 1st DCA 1987);. There is no deference to the agency's interpretation of law (in this case, the conflicting interpretation of the office of comprehensive health planning) where the construction is based upon common meanings. Schoettle v. State of Florida, Department of Administration, Division of Retirement, 513 So.2d 1299, 1301 (Fla. 1st DCA 1987); Roberts v. Department of Professional Regulation, Construction Industry Licensing Board, 509 So.2d 1227 (Fla. 1st DCA 1987). In this case the Department has elected to follow the clear mandate of its own rule. This is not an occasion where the inconsistency of the agency with respect to incipient policy implicates questions of fairness to those regulated. Here, despite the arguable unfairness to the applicants in this batching cycle, the agency should follow its own clear rules. The populations POPC and POPD are clearly intended by the rule to be determined as of the date of the applications for certificate of need and the date of commencement of the batching cycle. The rule unequivocally calls for a projection of need "three years" into the future. T. 1254, 1250. There is no disagreement that the end date of that projection is July 1, 1989. What ends must have had a beginning. A three year period that ends on June 1, 1989, begins on July 1, 1986. Moreover, the rule clearly establishes the value of LB, licensed beds, as of June 1, 1986. The bedrate, the driving force in determining need, is the ratio of licensed beds as of June 1, 1986, to POPC and POPD, populations of elderly persons assumed to be using the beds. If LB was determined on June 1, 1986, but POPC and POPD determined on January 1, 1986, the ratio would be incongruent. The Department undoubtedly intended there to be a correlation between beds and people in existence at the same time since the result is supposed to be a model of need. Selection of the numerator from one date and the denominator for another date results in a fractured reality having little bearing upon the issue of whether the elderly in Hillsborough County will have enough or too may nursing home beds in July, 1989. Finally, the definition "current" populations POPC and POPD was established by the final order in Manor Care of Hillsborough County v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1102, DOAH case number 86-0051. The final order in that case, entered on February 7, 1987, determined that POPC and POPD must be the populations current on the date of application for the certificate of need. For these reasons, POPC and POPD should be the populations on July 1, 1986. The next issue is the source of those population estimates. HRS argues that POPC and POPD must be derived from the July 1, 1986, release of the Governor's estimates and projections of populations. HRS has failed to establish guidance in this area by rule, and instead has chosen to rely upon evolving agency policy as the basis for selecting the source off POPC and POPD. An agency need not adopt all policy as a rule, but to the extent that it relies upon non-rule incipient policy as a basis for decision and that decision is challenged in a formal administrative hearing, the agency has the burden to establish in the record "adequate support for its decision." Florida Cities Water Company v. Florida Public Service Commission, 384 So.2d 1280, 1281 (Fla. 1980); Baxter's Asphalt and Concrete, Inc. v. Department of Transportation, et al., 475 So.2d 1284, 1286 (Fla. 1st DCA 1985); McDonald v. Department of Banking and Finance, 346 So.2d 569, 582-584 (Fla. 1st DCA 1977). The only support offered by HRS for its incipient policy to use population releases available at the time of certificate of need application was that those releases were the only ones available at such time, and thus necessarily the agency's preliminary decision had to be based upon the earlier release. This may be a permissible construction of the enabling statutes, and might pass muster as an agency rule, but HRS has in this case elected to defend its policy on a case by case basis. On this record, it is clear that the policy has not been adequately supported and is unreasonable. While reliance upon the population release available at this time of preliminary agency action is obviously reasonable at that time, since it is then the most current release, the mere fact that it is the only release-then available is an inadequate reason for continuing to use that release at the de novo formal administrative hearing that follows. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). Moreover, the inadequacy of HRS's basis for its incipient policy has been demonstrated in this record. The May 12, 1987, release is substantially more accurate than the release a year earlier. The May 12, 1987, release is much closer to observed population growth in the subdistrict than the earlier release. These facts were not rebutted. To underscore the inadequacy of HRS's incipient policy, it bears repeating that use of the July 1, 1986, population release underestimates the net need for community nursing home beds in Hillsborough County in July, 1989, by 100 percent. This indicates that something is dramatically wrong with the incipient policy. For these reasons, the values of POPC and POPD should be taken from the May 12, 1987, release of population estimates. POPC is 134,968 and POPD is 94,402. The calculation of the bed rate, BA, thus is as follows: BA= LB/(POPC + (6 X POPD)) BA= 6,060/134,968 + (6 X 94,402)) BA= 0.0086401 The next step in the calculation is to calculate BB, which is defined as the estimated bed rate for the population age 75 years and over in the relevant district. The calculation is provided in subparagraph 2c of the rule: BB= 6 X BA BB= 6 X 0.0086401 BB= 0.0518406 Subparagraph 2a of the rule then requires calculation of A, which is gross need for the horizon year: A= (POPA X BA) + (POPB X BB) Where: A is the district's projected age-adjusted total number of community nursing home beds for the review cycle for which a projection is being made. POPA is the population age 65-74 years in the relevant departmental district projected three years into the future. POPB is the population age 75 years and older in the relevant departmental district projected three years into the future. For the reasons discussed with respect to selection of the date of the proper release of Governor's population estimates and projections with respect to POPC and POPD, POPA and POPB should be obtained from the May 12, 1987, Governor's release. POPA is 149,771 and POPB is 108,400. Therefore, continuing the calculation: A= (POPA X BA) + (POPB X BB) A= (149,771 X 0.0086401) + (108,400 X 0.0518406) A= 1,294.0364 + 5,619.521 A= 6,913.5574 The next step is to calculate SA, which is the preliminary subdistrict allocation of community nursing home beds pursuant to paragraph 2d of the rule: SA A X (LBD/LB) x (OR/.90) Where: * * * LBD is the number of licensed community nursing home beds in the relevant subdistrict. OR is the average occupancy rate for all licensed community nursing home beds within the subdistrict of the relevant district. Review of the applications submitted for the July batching cycle shall be based upon occupancy rate data for the months October- March preceding that cycle . . . * * * LBD is 2,708 since the 96 beds at the Home Association were community nursing home beds in Hillsborough County on June 1, 1986. OR is 94.29 Therefore, SA is calculated: SA= A X (LBD/LB) x (OR/.90) SA= 6,913.5574 x (2,708/6,060) x (.9429/.90) SA= 6,913.5574 X 0.4468646 X 1.0476666 SA= 3,236.6863 SA= 3,237 In the last sentence of subparagraph 2 of the rule, the "poverty adjustment" is described as follows: "In districts with a high proportion of elderly residents living in poverty, the methodology specifies a minimum bed rate." In this case, all parties agree that when the numbers are assigned to the values in the formula contained in subparagraph 2e of the rule, the poverty adjustment operates to reduce rather than enlarge the net bed need. Thus, in this case, strict application of the A formula found in subparagraph 2e fails to produce the intended "minimum" bed rate. HRS construes the rule, in this instance, to mean that the poverty adjustment does not apply, T. 1280, and all parties agree. This will be treated as a stipulation by all parties that the poverty adjustment is not an issue in this case. For this reason, the poverty adjustment will not be used in the calculations in this recommended order. The final step in the need calculation is defined by subparagraph 2i of the rule, and that is to calculate the net bed allocation for the subdistrict. Subparagraph 2i provides: The net bed allocation for a subdistrict, which is the number of beds available for Certificate of Need approval, is determined by subtracting the total number of licensed and 90 percent of the approved beds within the relevant departmental subdistrict from the bed allocation determined under subparagraphs through I. unless the subdistrict's average estimated occupancy rate for the most recent six months is less than 80 percent, in which case the net bed allocation is zero. All parties agree that the number of licensed beds within the subdistrict is determined as of June 1, 1986, for this batching cycle. That number for purposes of determining net need is 2,708. The number of approved beds for purposes of determining net need is 368. Net need for community nursing home beds in the subdistrict for July 1, 1989, is thus determined: Net Need = SA - (LBD + (.9 X AB)) Net Need = 3,237 - (2,708 + (.9 X 368)) Net Need = 3,237 - 3,039.2 Net Need = 197.8 Net Need = 198 Thus, on July 1, 1989, the subdistrict, Hillsborough County, will need 198 community nursing home beds. Evidence of "not normal" need Rule 10-5.011(k)2.j. provides criteria for approval of community nursing home certificates of need "in the event that the net bed allocation [pursuant to the rule formula] is zero . . ." The net bed allocation pursuant to the rule method is not zero in this case. Subparagraph 2j thus does not apply. The Petitioners did not present any evidence of need pursuant to the special criteria of subparagraph 2j of the rule. Rule 10-5.011(k)1. Provides: 1. Department Goal. The Department will consider applications for community nursing home beds in context with applicable statutory and rule criteria. The Department will not normally approve applications for new or additional community nursing home beds in any departmental service district if approval of an application would cause the number of community nursing home beds in that departmental service district to exceed the number of community nursing home beds in the subdistricts designated by local health councils. (E.S.) Many other HRS need rules have the same "not normal" loophole, and in all of these other cases, the applicants are thereby given the opportunity to show exceptional circumstances justifying the grant of additional beds by consideration of various aspects of the statutory criteria. Since subparagraph 2j does not apply, the provisions of subparagraph 1 do apply to grant a similar opportunity. The only other credible or competent evidence presented by the Petitioners as to a "not normal" condition of need was evidence concerning the numbers of elderly residents in the subdistrict and the occupancy rates of existing community nursing homes. These factors have already been accounted for in the rule formula, and cannot be counted again. Health Quest Realty, XII v. Department of Health and Rehabilitative Services, 477 So.2d 576, 578-79 (Fla. 1st DCA 1985) Amendment or update of applications Rule 10-5.008(3), Fla. Admin. Code, provides that "[s]ubsequent to an application being deemed complete by the Office of Health Planning and Development, no further information or amendment will be accepted by the Department." (E.S.) The rule states that the Department will accept no information after the application is deemed complete. The words used are not ambiguous or unclear. Thus, if normal rules of construction were to be followed, the conclusion would be drawn that the Department is bound by its own clear rule, and cannot, by interpretation, add exceptions. But an equally valid rule of construction is that absurd results must be avoided. Certificate of need cases, particular ones like the case at bar, are highly competitive and complicated. The review of these applications by HRS was delayed for months beyond the normal review period. Further delay has occurred in discovery and preparation for the lengthy formal administrative hearing. Time changes all, and over this period of time, new data has come to the attention of all parties. It would be absurd `to require the applicants to prove applications that have become erroneous due to the passage of time. It is highly probable that rule 10-5.008(3) was originally drafted with only the free form review of an application for a certificate of need in mind, and that the application (or non-application) of the rule to an administrative hearing a year or more later was not considered by those who drafted the rule. Indeed, prior to August, 1985, the Department and all litigants uniformly followed the McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977) principle of Florida administrative law that formal administrative hearings are de novo, and that new information pertaining to the application is admissible. In August, 1985, the case of Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, et al., 483 So.2d 700 (Fla. 1st DCA 1986) was decided. While the Gulf Court decision was concerned only with the competitive status of applicants with respect to bed need, in the aftermath of that decision, the Department elected to construe rule 10- 5.008(3) as forbidding practically all new information, even information that had nothing to do with bed need. This undoubtedly was an overreaction to the Gulf Court decision, but the Department, after all, has always had the authority to establish rules governing the processing of applications for certificates of need, including the number and timing of amendments to such applications. McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977). Given the fact that the rule is so clear, the better route would have been to amend the rule. As discussed above, conventional rules of statutory construction could easily support the legal conclusion that the rule must be applied as it is written, without further interpretation. Nonetheless, the Department for this case has chosen the other route, to interpret rather than to amend its rule. While the question is a close one, the Hearing Officer has concluded that it would be better to ignore the clear words of the rule, and attempt to apply the evolving interpretative policy of the Department to avoid an absurd result. The following appear to be the existing final orders of the Department interpreting rule 10-5.008(3), and its predecessor, published in the Florida Administrative Law Reports. Health Care and Retirement Corporation of America, d/b/a Heartland of Palm Beach, 8 F.A.L.R. 4650 (September 24, 1986); Arbor Health Care Company, Inc., d/b/a Martin Health Center, Inc., v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 709 (October 13, 1986); Mease Hospital and Clinic v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 159 (October 13, 1986); Health Care and Retirement Corporation of America, d/b/a Heartland of Collier County v. Department of Health and Rehabilitative Services, 8 F.A.L.R. 5883 (December 8, 1986); Health Care and Retirement Corporation of America, d/b/a Nursing Center of Highlands County, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1081 (December 8, 1986); Manatee Mental Health Center, Inc. d/b/a Manatee Crisis Center v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1430 (February 2, 1987); Health Care and Retirement Corporation of America, d/b/a Heartland of Hillsborough, v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1630 (February 5, 1987); Manor Care, Inc. v. Department of Health and Rehabilitative Services, 9 F.A.L.R. 1628 (March 2, 1987); Psychiatric Institutes of America, Inc., d/b/a Psychiatric Institute of Orlando v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 1626a (March 5, 1987); Manor Care, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2139 (March 24, 1987); Wuesthoff Health Services, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2110 (April 17, 1987); Hialeah Hospital, Inc. v. Department of Health and Rehabilitative Services, et al., 9 F.A.L.R. 2363 (May 1, 1987); Palms Residential Treatment Center, Inc., d/b/a Manatee Palms Residential Treatment Center v. Department of Health and Rehabilitative Services, et al., 10 F.A.L.R. 1425 (February 15, 1988) These final orders contain the following statements concerning the Department's interpretation of rule 10-5.008(3) and its evolving policy with respect to changes to applications for certificates of need during section proceedings and admissibility of new information not contained in the original applications: Health Care and Retirement, supra, 8 F.A.L.R. at 4651: During 120.57 proceedings, an application may be updated to address facts extrinsic to the application such as interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories. An applicant is not allowed to update by adding additional services, beds, construction, or other concepts not initially reviewed by HRS. Manatee Mental Health Center, supra, 9 F.A.L.R. at 1431: . . . HRS has authority by statute to issue a CON for an identifiable portion of project. Section 381.494(8)(c), Florida Statutes. MMHC's "amended" proposal reduced the number of beds sought, and was properly considered during the 120.57 proceedings. Manor Care. Inc., supra, 9 F.A.L.R. at 2141-42: The amended applications [amended to address needs of Alzheimer's disease patients] changed the scope and character of the proposed facilities and services and thus, must be reviewed initially at HRS . . . [Gulf Court] . . . limited the de novo concept by requiring that evidence of changed circumstances be considered only if relevant to the application. Hialeah Hospital, Inc., 9 F.A.L.R. at 2366: It is recognized that more than a year may pass between the free form decision by HRS and the final 120.57 hearing and this passage of time may require updating an application by evidence of changed circumstances such as the effect of inflation on interest and construction costs. For the sake of clarity HRS would avoid the use of the word "amendment" to describe such updating. Such evidence of changed circumstances beyond the control of the applicant is relevant to the original application and is admissible at the 120.57 hearing. Taking the easiest first, those items explicitly listed by the Department in the first Health Care and Retirement case, "interest rates, inflation of construction costs, current occupancies, compliance with new state or local health plans, and changes in bed or service inventories," which change after the application is initially filed, are permitted. Not permitted are "additional services, beds, construction, or other concepts not initially reviewed by HRS." The remainder of the Department's incipient policy, as presently articulated, is extremely obscure. The word "extrinsic" without the list of examples is of little guidance. The application is only an idea on paper. Anything new, other than the bare words on the paper as originally filed, is literally "extrinsic" thereto. The concept of whether the new information changes the "scope and character of the facilities and services" originally reviewed in free form action by the Department is similarly of little guidance because the phrase "scope and character" can mean practically anything. Of fundamental difficulty is whether this phrase is intended to select substantial changes to the original application, or all changes. For example, if the original application proposes separate shower stalls and tubs for double rooms, but the amended application proposes a combination shower and tub, has the "scope and character" of the "facilities and services" changed? The phrase "additional services, beds, construction, or other concepts not initially reviewed by HRS" is similarly vague. What is a service or construction or a concept not originally reviewed? Would this include the change in bathing equipment discussed above? The concept of "control" of the applicant over the information that goes into the original application is the only phrase that gives applicants any guidance. The word "control" probably is intended as a "knew or reasonably should have known" standard. If the applicant reasonably should have known about the information and should have provided the Department with the information as a part of its original application, then the new information cannot be considered during the formal administrative hearing. The Hearing Officer will be guided, thus, by the explicit list of items provided by the Department in the Health Care and Retirement case, and by the concept of "control" provided by the Hialeah case. New information submitted by Forum Group Table 7 of the Forum Group update is for the second year of operation. There was no projection of utilization by class of pay for the second year of operation in Forum Group's original application, and Forum Group presented no evidence to explain why its original application did not or could not forecast utilization by class of pay for the second year of operation. Table 7 of the update, F.G. Ex. 6, thus constitutes an attempt to add matters to the original application which could have been a part of the original application as filed. Pursuant to rule 10-5.008(3), Fla. Admin. Code, it is now excluded from evidence because it is irrelevant. Table 8 of the Forum Group update was not proven by Forum Group to be based upon ordinary inflation. It appears that the revised charges in table 8 were based in part upon a telephone survey of subdistrict nursing homes conducted after Forum Group filed its original application. Forum Group did not prove that it could not reasonably have conducted such a telephone survey before it filed its original application. Thus, table 8 of F.G. Ex. 6 contravenes rule 10-5.008(3) and now is excluded from evidence because it is irrelevant to the original application. Table 10 of the Forum Group update was precisely the kind of new information allowed by the incipient policy of the Department. The old table 10 had an opening date of January, 1988, a date that was obviously in error due to the delay in decision in these cases. The new information was simply the old information altered by current occupancy and fillup rates in the subdistrict, data that could not have been acquired when the original application was filed. "Current occupancies" is explicitly listed by HRS as permissible new data in the Health Care and Retirement case, supra. Table 10, F.G. Ex. 6, is admitted into evidence. The revised table 11 contains positions for a dietary supervisor, maintenance supervisor, and utility workers, all of which could have been reported in the original table 11. These portions of table 11 are excluded from evidence. The revised table 11 contains changes in the FTE's for registered nurses and licensed practical nurses. These changes could have been in the original table 11 and are excluded from evidence. The revised table 11 contains changes in salaries that were adequately shown to be the result of inflation and new market data not available at the time the application was deemed complete. These portions of revised table 11 are admitted into evidence. Table 25 of the revised application, F.G. Ex. 6, which summarizes estimated project costs, including construction costs, contains new information permitted by the Department's evolving policy. The new table contains no changes of substance except changes caused by inflation and current construction experience. The bottom line, except to that extent, has not changed in substance. Table 25 of F.G. Ex. 6 is admitted into evidence in its entirety. Revisions to tables 17-20, F.G. Ex. 6, were driven entirely by inflation in construction costs. Surely if the Department allows an applicant to respond to inflation by projections of new costs, the Department's policy would also allow the applicant to respond to inflation by projections of new methods to reduce new costs caused by inflation. These revisions are admitted into evidence. The revised pro forma statement of total operating expenses has not been proven by a preponderance of the evidence. First, the revision was explained as being based upon changes in utilization by class of pay, but that data, table 7 of the revision, was not admitted into evidence. Moreover, the changes in total operating expenses resulted from impermissible changes in the numbers of FTE's which have been excluded from evidence. It is not possible on this record to determine how much of the revised pro forma statement of total operating expenses has been shown to be a credible projection, given the lack of these fundamental sources of the projection. Moreover, the revision to total operating expenses in the revised pro forma, F.G. Ex. 6, has not been credibly shown to be based upon matters that Forum Group could not have known at the time it originally filed its application. This conclusion flows from the fact that the original application did not project utilization by class of pay in year 2. Absent this projection, the revision of total operating expenses must necessarily be based upon data that was absent from the original application. The same is true with respect to changes in FTE's in the revision. For these reasons, the revision to total operating expenses in the revised pro forma, F.G. Ex. 6, constitutes an impermissible offer of new data precluded by rule 10-5.008(3). New information submitted by Health Quest Table 8 of the revised application of Health Quest, H.Q. Ex. 3, was based upon information that Health Quest could have obtained when it filed its original application. Table 8 of H.Q. Ex. 3 is thus excluded from evidence. Table 11 of the revised application was based upon the actual experience acquired after the original application was filed. Table 11 of H.Q. Ex. 3 is admitted into evidence. Table 17 of the original application projected that the facility would have six three-bed rooms, but the revised application deleted all 3 bed rooms. Since Health Quest failed to show that this new information would have been unavailable to it when it filed its original application, the change as to 3 rooms is not admissible. The ineluctable result, therefore, is that all of revised table 17 is inadmissible since the proper mix of beds has not been proven. The change of square footage of 1 bed room to 216 in the revised table 18 is inadmissible because it contravenes rule 10-5.008(3). Evidence as to the agreement with the University Community Physicians Association of Tampa is admissible as matters which did not exist and could not have been a part of the original application. The objections to that testimony, T. 579- 80, are overruled. New information submitted by Careage The changes to the Careage application, C. Exs. 18-23 and 24-25, were shown to be based upon information not reasonably obtainable by Careage when it filed its original application, and thus are admitted into evidence over the objections made that these exhibits were barred by rule 10-5.008(3). New information submitted by Hillsborough Healthcare Hillsborough Healthcare did not submit any changes to its application. Comparative review of the applications Careage failed to prove two essential portions of its application. It did not prove by a preponderance of the credible evidence that it would in fact operate the proposed facility if the certificate of need were granted, and it did not prove by credible evidence that it would provide care of good quality. For these reasons, the Careage application should be denied. The other applicants proved by credible evidence all essential portions of their applications. The only remaining task, therefore, is to determine the proper allocation of the 198 beds needed in July, 1989, among these three applicants. The space and costs associated with the remaining proposals may be compared as follows: Appli Cost/Bed NetFt/Bed TotFt/Bed Cost/NetFtBed Cost/TotFtBed Forum $44,551 228 408 $195 $109 HealthQ $34,719 240 423 $147 $ 82 HillsH $28,063 185 283 $152 $ 99 The cost per net square foot per bed (Cost/NetFtBed) is derived by dividing the cost per bed by the net square feet of living space per bed. Likewise, the cost by total square feet (gross) per bed (Cost/TotFtBed) is derived by the same division. Health Quest is preferable to the other two applicants when these cost and space figures are considered. It provides more space at a lower cost per square foot. The differences between Hillsborough Healthcare and Forum Group are not sufficiently significant to give one preference over the other. Hillsborough Healthcare is the less expensive proposal, but suffers from being the least spacious proposal in comparison to Forum Group. Moreover, the record does not contain guiding policies to determine whether there is a need in Hillsborough County for cheaper, less spacious, nursing homes, or for more expensive, more spacious nursing homes. The proposed staffing of the remaining proposals may be compared as follows: Applicant TotalFTE RN FTE LPN FTE RN Asst FTE No. Bed Forum 37.6 5.3 3.6 14.00 60 HealthQ 60.75 4.8 2.2 25.00 88 HillsH 64.65 2.92 8.78 36.61 120 Staffing per proposed bed may further be compared as follows: Total FTE Applicant Per Bed RN FTE Per Bed RN & LPN FTE Per Bed Total Nursing FTE Per Bed Forum .63 .08 .15 .38 HealthQ .69 .05 .08 .36 HillsH .54 .02 .10 .40 The total nursing FTE per bed for each applicant is relatively equal, with Hillsborough Healthcare having the highest ratio and Health Quest the lowest. Forum Group has significantly more RN's and LPN's per bed than Health Quest, but the overall nursing staffing is comparable. Hillsborough Healthcare is the lowest when only RN's and LPN's are considered, and the lowest total FTE per bed. The differences noted in staffing do not appear to be sufficient to draw meaningful conclusions. Hillsborough Healthcare's facility may be staffed at a less costly level, but whether this is due to substitution of nursing assistants for RN's and LPN's, or a result of efficiencies due to the larger number of beds (120), or reflects less than optimum staffing cannot be determined on this record. Hillsborough did not present evidence as to staffing patterns for a 60 bed facility. Other features of the proposals of the three applicants provide little to distinguish or rank them in priority. All three propose to associate the nursing facility with an adult congregate living facility, resulting in cost efficiencies and better continuity of care. All three have a substantial track record in the operation of a nursing homes, and can be expected to provide care of good quality. All three have very substantial resources and prior experience in the development and initial operation of a nursing home. If any distinction were to be made, perhaps it would be to favor the Hillsborough Healthcare application over the Forum Group application. Hillsborough Healthcare plans to serve the needs of Alzheimer's patients, and Forum Group does not. Hillsborough Healthcare's application is, relative to the Forum Group proposal, less expensive. On the other hand, the Alzheimer's disease unit is only a marginal factor since there is no qualified evidence in this record of need for that type of unit in 1989 in Hillsborough County. One can only infer that the need is probably going to be there, and it might be better to prefer Hillsborough over Forum Group for that reason. The "luxury" vs. "austerity" comparison is similarly not of ultimate persuasive weight since, as discussed above, there is no credible evidence in the record as to what the proper mix should be. Of course, it is safe to conclude that the need for less expensive nursing care is greater than the need for care that only a few can afford, but that conclusion does not necessarily result in the total denial of the Forum Group application. In summary, with respect to the question as to which applicant should be favored with approval of the most number of beds from the projected bed need, there is no major issue to adequately distinguish between the three applicants. For this reason, each applicant should be treated as equally as possible consistent with the application it submitted and the evidence it presented in support of that application. The Department appears to have several relatively reasonable ways to allocate bed need among the three applicants. It might simply divide the beds equally among the three. This alternative is less reasonable because it would ignore the detailed proof that has been presented by both Forum Group and Health Quest in support of proposed facilities of 60 beds and 88 beds respectively, and would result in implementation of facilities having staffing and design configuration that would be altered from that proof. A second alternative would be to award partial approval to Health Quest for 78 beds, to award full approval to Hillsborough Healthcare for 120 beds, and to deny the application of Forum Group. A third alternative would be to award partial approval to Health Quest for 78 beds, to award partial approval to Hillsborough Healthcare for 60 beds, and to award full approval to Forum Group for 60 beds. This third alternative is more reasonable and will be recommended by this order. This alternative has the advantage of fostering the most future competition in Hillsborough County by approving three competitors rather than two. Of the three applicants, Health Quest proposed the most space, relatively speaking, for the least cost. The staffing proposed by Health Quest is reasonable in comparison to the other two applicants. Reduction of the Health Quest proposal to 78 beds from 88 beds is a relatively minor reduction; stated another way, the proof provided by Health Quest as to the specifics of an 88 bed facility is likely to be changed only slightly for a 78 bed facility. Forum Group proved all of the details of its 60 bed proposal, and thus approval of those beds would be entirely consistent with its application and proof in this record. Hillsborough Healthcare did not prove the specifics of a 60 bed partially approved facility except that such a facility would contain the full sized Alzheimer's patient unit proposed in its 120 bed facility. It would be fairer to approve Hillsborough for that 60 bed facility than to approve Hillsborough for 120 beds, leaving Forum Group with denial of its application, given the lack of a compelling clear choice between the two applicants. Recommendation It is therefore recommended that the Department of Health and Rehabilitative Services enter its final order partially granting the application of Health Quest for 78 community nursing home beds, partially granting the application of Hillsborough Healthcare for 60 community nursing home beds, fully granting the application of Forum Group for 60 community nursing home beds, and denying the application of Careage. DONE and ORDERED this 30th day of June, 1988, in Tallahassee, Florida. WILLIAM C. SHERRILL, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of June, 1988. APPENDIX TO RECOMMENDED ORDER IN CASE NOS. 87-0670, 87-0671, and 87-0774 The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used by the parties. Statements of fact contained in this appendix are adopted as findings of fact. Findings of fact proposed by HRS: 1-2. These proposed findings of fact are' subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The classification of the Home Association beds has been thoroughly discussed in the findings of fact and conclusions of law. The correct population figures are discussed in the findings of fact. 9-13. These are matters of law, and thus not appropriate as proposed findings of fact. 15. The changes to table 7 were not the result of a telephone survey. T. 51. 17. Defining "extrinsic circumstances" as not inclusive of economic or market changes that occurred after the original application was deemed to have been complete, or otherwise not reasonably obtainable or knowable by the applicant when the original application was filed, is contrary to HRS policy embodied in final orders, sketchy as it may be. 18, 23-25. Rejected as explained in the findings of fact. 26, 28. Rejected with respect to table 11 as explained in the findings of fact. 30. This finding of fact, while true, is not made because Health Quest made no such change to its 88 bed application. Rule 10-5.008(1) simply states that the application for a certificate of need must be filed on form 1455. Table 12 of the form has no instructions for what must be contained therein. Since HRS has not demonstrated on this record that table 12 in the original application was supposed to have listed these items, it cannot be said that the listing of these items in the new table 12 is a change. It is noted that spaces to take showers, baths, store linen, and for nursing stations would be assumed for any nursing home, and ought not be presumed to have been excluded by the failure of an applicant to list them. Moreover, it is further noted that from a review of the original application H.Q. Ex. 1 that table 12 does include nursing administrative space, patient lounges, a central supply space, general storage, housekeeping, and laundry. Moreover, the amendment, H.Q. Ex. 2, shows the following spaces on the space diagram: laundry, shower, patient lounge, and medication room (med). Any bed room could be used for isolation. Table 20 does include a chapel. H.Q. Ex. 1. Not supported by the record cited. Findings of fact proposed by Forum Group: 1-4, 9, 13. These are matters of law, and thus not appropriate as proposed findings of fact. 5. LB of 5,964, as proposed by the Department, is most credible as the beginning figure, without considering the beds at the Home Association. 7-8, 10. Incorrect value for LB. 11. OR should be 94.29 with the Home Association beds. 18. Incorrect values for LB and OR. 21. The denial occurred orally in January, 1987. The update has been discussed in findings of fact and conclusions of law. These are matters of law, and thus not appropriate as proposed findings of fact. It is true that there is need and the need must be satisfied. 29-33. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 34. The phrase "homelike atmosphere" is too vague to be a finding of fact. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The record does not contain sufficient evidence to make a finding as to the history of Forum Group with respect to the quality of care provided at Forum Group facilities. 49-50. The update with respect to financial feasibility is not relevant since essential parts of the update with respect to financial feasibility were not admitted into evidence. 60, 65, 67, 68, 74, and 80. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 66. This is not relevant. Ms. Kennedy testified that she had authority from Hillsborough Healthcare to accept a certificate of need for a 60 bed nursing home. There is no credible evidence to contradict this statement under oath. The lack of a written partnership authorization in evidence does not negate this statement. 76. Had there been any credible evidence in theme cases that the amount of need in Hillsborough County was minimal and that, consequently, the pro formas for 60 bed nursing-homes must be closely scrutinized for long term financial feasibility, then it would be relevant that CSI did not explain in detail the pro forma for a 60 bed nursing home. CSI did, however, present expert opinion that a 60 bed nursing home would be financially feasible, and on this record, the opinion is very credible. Forum Group and Health Quest have shown the long term financial feasibility of a 60 bed nursing home, and there is a large amount of need. Moreover, existing nursing homes are experiencing very high occupancy rates and fill up rates. For these reasons, this proposed finding of fact, while true, is not relevant. Hillsborough did show that its design was modular. Scaling down the project simply means deletion of one wing. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The witness specifically addressed two portions of the state health plan. T. 777. The testimony was competent and substantial evidence. The inference that the certificate of need was "about to expire" is inappropriate since the witness's testimony leads to the inference that Health Quest intends to proceed with that project. T. 641. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 98-99. These proposed findings of fact are true, but insufficient to support a finding that Health Quest lacks the resources to construct and operate this project in the short term. 101, 105-07. These proposed findings of fact are true, but do not lead to the conclusion that the construction cost estimates are unreasonable. See T. 590. Mr. Krisher had sufficient expertise in health planning, nursing home development, and financial feasibility, to testify generally as to these matters. T. 501-516. No party presented any independent evidence to seriously question these estimates. 102. This proposed finding of fact is incorrect since the expected Medicaid rate in Boca Raton is different from the expected rate in Tampa. T. 785. 111. Not supported by the record cited. 114-116, 118-120. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. True, but insufficient to show lack of resources to make the project financially feasible in the short term. Irrelevant. The existence of lines of credit was proved by Mr. Gentle. Irrelevant. The staffing was shown to be reasonable by the testimony of other competent witnesses. 125-27. True, but insufficient to show back of financial feasibility. 129. True, but irrelevant. It would be unreasonable and a waste of health care resources for an applicant to have to buy five expensive acres of urban land to be qualified to apply for a certificate of need. 130-31. Irrelevant. The delay and inflation rates are negligible. Findings of fact proposed by Hillsborough Healthcare: 1. This is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 5. The phrasing of the first and second sentences is rejected for lack of evidence. 7. The evidence is not sufficient to show actual bias by a preponderance of the evidence. 8-9, 19-20, 22-23. These proposed findings of fact are subordinate to findings of fact that have been adopted. These proposed findings of fact are true, however, and are adopted by reference. 21. Irrelevant. 24. True, but not relevant. These matters are covered by the numeric need rule. 29. The evidence does not show that CSI managed facilities offer "superior" activities. 32, 33 (fifth and sixth sentences), 35 (last sentence), 38(a)-(i), 40,42 (first sentence), 39, 45 (second and third sentences), 46 (all but the first sentence), 49 (first two sentences), 53, 56 (all but the first two sentences), and 60-72. These proposed findings of fact are subordinate to findings of fact that have been adopted. These proposed findings of fact ace true, however, and are adopted by reference. 51. The preponderance of the evidence does not credibly show that the floor plan promotes patient safety and convenience, or that travel distances are minimal. 54. Not supported by the record cited. These proposed findings of fact are irrelevant. A finding of fact that the criminal offense of perjury was committed cannot be made since there is no evidence of a criminal conviction by a court of competent jurisdiction. The testimony of Ms. Etten was not limited to those programs. The documents used in cross examination were never properly authenticated, and are hearsay. Thus, a finding of fact that the documents are in fact surveys of Careage facilities by other agencies in other states cannot be made based upon the documents. For this reason, the remainder of the proposed finding is not relevant. Ms. Etten credibly testified that nursing staffing was generally adequate. Her opinion was not ultimately limited to special programs. T. 1216. The inability of other witnesses to testify on this point is not relevant. The ability of Careage to recruit staff was adequately proved by other parties. There is no credible evidence in this record to believe that any applicant fail to recruit adequate staff. The recruitment plans of Careage appear to be quite reasonable. T. 1562-64. On pages 1686-87 of the transcript, the Hearing Officer ruled that the expert opinion of Ms. Krueger would be allowed even though it was based on hearsay. This was a correct ruling. Section 90.704, Fla. Stat. (1987). The sentence immediately following that ruling is incorrect as stated, and directly contradicts the initial correct ruling. That is, an expert opinion is admissible and may be relied upon even though based upon evidence, such as hearsay, which in itself may not be admissible. Further, the opinion of an expert in an administrative proceeding is a proper basis for a finding of fact even though the opinion is based upon hearsay, and even though hearsay alone in an administrative hearing, absent nonhearsay evidence on the point, is not sufficient as a basis for a finding of fact. The second sentence in the transcript was intended to state that hearsay evidence alone will not be the basis of a finding of fact, setting aside for the moment the issue of expert opinion. For these reasons, these proposed findings of fact are rejected to the extent that they urge that short term financial feasibility was not established because the opinion was premised upon hearsay evidence. With respect to the unaudited financial statement question, Ms. Krueger was not asked whether experts in her field reasonably rely upon unaudited financial statements. She was only asked which type was more worthy of belief and whether her profession feels they can rely on audited statements. She was never asked whether her profession feels it cannot rely upon unaudited statements. Ms. Krueger stated that she was aware of the existence of fraudulent audited statements, implying that the question leads to answers that are not that useful. T. 1652. In fact, Ms. Krueger, who was a thoroughly credible witness, explaining her opinions in a lucid and reasonable manner, relied upon unaudited statements, as well as her conversations with several of the chief executive officers of Careage. Based on this record, a finding cannot be made that experts in this field do not reasonably rely from time to time upon unaudited financial statements. The authenticity of the letter from SeaFirst is irrelevant since that line of credit was established by the direct testimony of Mr. Gentle. T. 1576. Ms. Krueger's lack of personal knowledge as to the existence of a binding commitment for a loan for this project is irrelevant due to Mr. Gentle's direct testimony. The evidence in the record from all parties indicates that land is generally available in Hillsborough County in the 3 to 5 acre range, that 3 to 5 acres is about what is needed for any of the projects, and that the cost is from $300,000 to $600,000. The Careage facility will bring in over $3 million in gross revenue per year in all years beyond the first few. A few hundred thousand dollars can be amortized over the life of a nursing home, and will not be a significant factor in long range financial feasibility. All of the applicants have access to credit to buy land at market rates. There is essentially no reasonable dispute as to land acquisition and cost in this case. The testimony related to equipment , not floor space, for technology dependent children. Those children would be served in the subacute beds. Space for Alzheimer's patients was included in the floor plan and the 45,500 square feet. T. 1136-37. Mr. Cushing testified that the Means reference book might project a cost per square foot in the "60's." He did not adopt that as his opinion. T. 1185-86. Delay in construction for 8 months is not such delay as to necessarily result in substantial increases in construction cost. The last sentence is true but does not account for the fact that Mr. Cushing consulted the Means reference book for labor rates. That is sufficient. The remainder of the reasoning of this proposed finding of fact was rejected in paragraph 85 above. Rejected as described in the preceding paragraphs. Ms. Krueger's expertise with respect to salaries was established perhaps more completely than any other expert witness. She not only had first hand knowledge from her work reviewing salaries in nearby counties, but she consulted expert reference materials. Her inability to remember the name of the book referenced does not seriously undermine her expertise. The ruling at T. 1324 sustained an objection to a question. It was not a ruling upon the admissibility of portions of the document. Ms. Krueger prepared the long range plan section of C. Ex. 3, P. 3-7, and the under served groups section, p. 3-8, in conjunction with Mr. Gentle. T. 1322. This is sufficient predicate for her testimony as to these matters. 91-92. The telephone survey was not a needs survey. It only surveyed existing services. The survey has essentially been discounted because of lack of response and lack of statistical reliability. These proposed findings ace adopted by reference. Since none of this testimony has been relied upon in this recommended order, the proposed findings of fact are irrelevant. These proposed findings of fact are irrelevant. The testimony as to lines of credit and resources of the Lynns was enough to establish the availability of working capital. These proposed findings of fact are irrelevant. Rejected as explained in the findings of fact. These proposed findings of fact are irrelevant. 101. The continuing objection was allowed, not granted. T. 595-96. Otherwise, these proposed findings of fact are true and are adopted by reference. 102-103. These proposed findings of fact are true and are adopted by reference. 104. Essentially irrelevant as explained with respect to proposed findings of fact concerning the land acquisition and preparation costs of other applicants. 105-107. These proposed findings of fact are true and are adopted by reference, except the last clause of the last sentence of proposed finding of fact 105. Absent quantitative data and a study of salaries showing the estimates to be substantially in error, the foregoing proposed findings of fact are not sufficient to show an error affecting financial feasibility. 108-109. These proposed findings of fact are irrelevant since the 60 bed application was not a permissible amendment. These proposed findings of fact are true and are adopted by reference. These proposed findings of fact are irrelevant since these are different health districts having different patient payor mixes. Findings of fact proposed by Health Quest: 4, 5, 7-10. These are matters of law, and thus not appropriate as proposed findings of fact. 11-17. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. The rationality of the OCHP's policy is irrelevant since it conflicts with the rule and other policies are also rational. A finding of a consistent pattern with respect to base date populations in the award of certificates of need cannot be made as discussed in the findings of fact. Mr. Sharp understood his position, and Mr. Jaffe well understood the inconsistencies. 22-23. True but irrelevant. Disadvantage often occurs to some person when the law is correctly applied. 24-28. Rejected as discussed at length elsewhere in this order. 33. Not supported by the record cited. 36.a. Mr. Gentle did not work with Careage in these years and could not be expected to have detailed memory on these points. He named seven such facilities. 38. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 40.b. (ii). There is no evidence that CHP is the same as Careage. 40.c.(v). Health Quest has operated since 1969. 42. Both could be true. 43.a.(ii). Mr. Gentle was not sure because this was not within his area of responsibility. T. 1603. 44. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Dr. Etten's unfamiliarity with the fact that the Health Quest facility in Jacksonville provides IV therapy and total parenteral nutrition does not demonstrate exaggeration or lack of expertise. The record does not clearly demonstrate that other Health Quest nursing homes provide these specific services. The evidence is only that services are generally the same. T. 1077. The testimony concerning Medicaid patients in the subacute unit was elicited on cross examination, and was not presented by the witness as an intended representation by Careage on direct. Ms. Krueger's understanding simply was wrong, not misleading. T. 1367. The remainder of this proposed finding of fact is similarly a red herring. Careage did not project anything more than 37 percent Medicaid utilization. C. Ex. 3, table 7B. It is one thing to expect 37 percent utilization, and another thing to represent that the facility will not discriminate. A promise to not discriminate inherently contains the caveat that a facility will not pursue that noble goal to bankruptcy. The Hearing Officer would not find that to be the case with respect to Careage any more than with respect to Health Quest. Mr. Gentle did not testify that the number of nurses aides in the Alzheimer's unit would be higher in comparison to other sections of the facility. He testified that the number would be "higher" in comparison to professional licensed staff, which would be lesser. T. 1525. 54. Irrelevant. Mr. Gentle said that day care would probably be at a location nearby. T. 1593. 57. None of the parties addressed site size with the specificity proposed by these findings of fact. Lack of such specificity has no real bearing on credibility. The record cited, T. 1526, does not support the proposed finding that equipment for technology dependent children is "substantial and expensive." Thus, the remainder of these proposed findings are rejected. It is true, however, that the application fails to itemize such equipment, and that the contingency is relied upon. There is no evidence that Careage proposes to employ a gerontological nurse practitioner. C. Ex. 3, table 11. The testimony of Dr. Etten simply describe the skills of that form of nurse practitioner. She was never asked whether such professional would be employed by Careage. T. 1217-19. The failure to tie in the testimony is only a human error, and does not show a lack of credibility. Proposed finding of fact 62.a. is not supported by the record. Dr. Etten was not asked to describe the care given an Alzheimer's patient in an ACLF. She was asked to describe the care given a "resident" of an adult congregate living facility. Her comment about such residents not being "bed patients for any period of time" is not a dodge of a question about an Alzheimer's disease patient. Moreover, she credibly and directly testified that Alzheimer's disease manifests itself so many different ways she could not say whether it would be appropriate to have such patients living in an adult congregate living facility. Next, Mr. Gentle's testimony as to the medical characteristics and needs of Alzheimer's patients is insufficient as a basis for findings of fact because Mr. Gentle was not accepted as a medical expert. Health Quest presented no credible evidence to show that an Alzheimer's patient can be treated either in an adult congregate living facility or a conventional nursing home. Absent such evidence, the failure of other parties to rebut the nonexistent negative, given the clear affirmative evidence that Alzheimer's disease patients greatly benefit from special care, is unpersuasive. These proposed findings of fact are irrelevant. These children would be served as subacute care patients. Precise identification of the area set aside for these children would have been only of marginal relevance. To the extent not adopted elsewhere in this recommended order, these proposed findings are adopted by reference. Careage's expert was clearly aware of the need to review site specific conditions in the preparation of construction plans. T. 1177. He has built nursing homes in many states. His competence to prepare adequate construction plans for Hillsborough County conditions was clearly established in the record. It is true that he had not yet prepared the final construction plans. But no party has presented final construction plans, and thus the lack of such plans is irrelevant on this record. Irrelevant on this record. Irrelevant. The amount of working capital is well within the resources available to Careage. There is no evidence in the record that a variation one way or the other by $100,000 would make the project not financially feasible. Careage's credibility was not discredited by the fact that Ms. Krueger was not aware of the mix of skilled and intermediate beds. True, but irrelevant. There is no evidence that such expenses were not accounted for, or if missing, the amount and importance. The staffing was shown by expert opinion to be adequate. T. 1216. One presumes that adequacy refers to adequate health care since the witness was only qualified in that area of expertise. The Careage design was not unique. The Careage use of the word "unique" to describe its design has been disregarded in this order. 78.c.(i)-(iii). These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 78.c.(vi). Not supported by the record cited. 78.c.(vii). The testimony cited is not competent opinion. There was no predicate for testimony as to the knowledge of Mr. Haben, and the objection to a similar question just preceding was sustained on that basis. 87-96, 100-101, 103-128. These proposed findings of fact are irrelevant for the reasons stated in Health Quest's proposed finding of fact 76. 135. These are matters of law, and thus not appropriate as proposed findings of fact. 146. Not relevant since the 60 bed proposal is not in evidence. 149. Without evidence as to what is included in the definition of "subacute" care, a finding as to "virtually all" cannot be made. 151 and 158. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 166, 169, 170 and 172. Not relevant since the 60 bed proposal is not in evidence. 168. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Findings of fact proposed by Careage: The first sentence implies that Careage has operated nursing homes for 25 years. Careage has built nursing homes fob that length of time for operation by others, for the most part. The second sentence is true, but subordinate, and is adopted by reference. Mr. Griffin testified that the decision to adhere to the recommendations made by staff before he assumed his duties at HRS was not his decision. T. 705-06, 703. His testimony reflect very little personal participation in the evaluation of the competing applications. T. 697-705. 6. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 8. There was no credible evidence in this record as to how many Alzheimer's patients need specialized services. The evidence was simply that if such patients exist, such patients need specialized services. Thus, the first sentence is rejected. 8 (second sentence) -12. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. A comparison of staffing is not possible since Careage intends to serve primarily persons in need of skilled nursing care, and hence it cannot be determined if Careage in fact has proposed nursing staff that is more generous relative to patient need than Hillsborough. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. Since insufficient credible evidence has been presented to conclude that Careage will operate the proposed facility, this finding of fact is rejected. The proposed finding concerning intent to provide adult day care is not supported by the record cited. 19-20. Irrelevant since insufficient credible evidence has been presented to conclude that Careage will operate the proposed facility. 21. The first sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference. 22-23, 25 (all but first sentence), 26, 17 (third, fourth, and seventh sentences), 29. These proposed findings of fact are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 24. It is concluded that associating a nursing home with an adult congregate living facility will in fact result in cost efficiencies. The remainder of this proposed finding of fact, noting the relatively higher costs of Health Quest compared to Careage, is true, but does not disprove the conclusion that cost efficiencies would exist. It is true that the Hillsborough Healthcare Medicare mix projection may be somewhat high, but the fiscal consequences of that conclusion was not demonstrated. The second sentence is rejected because Ms. Krueger was not accepted as an expert with respect to appropriate levels of staffing. T. 1686-88. 31. The second sentence is based upon hearsay. It is also based upon the opinion of Mr. Gentle which was inadmissible. T. 1577. The fourth and fifth sentences are subordinate to findings of fact that have been adopted. They are true, however, and are adopted by reference. 32-33. These portions of the Forum Group amended application, F.G. EX. 6, were not admitted into evidence, and thus these proposed findings of fact are not relevant. 36. Irrelevant since the Health Quest 60 bed application is an impermissible amended application. COPIES FURNISHED: Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Suite 407 Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 DEPARTMENT OF HRS Edgar Lee Elzie, Jr., Esquire Guyte P. McCord, III, Esquire McFarlane, Ferguson, Allison & Kelly Post Office Box 82 Tallahassee, Florida 32302 CAREAGE HOUSE HEALTH Robert S. Cohen, Esquire Haben and Associates Post Office Box 10095 Tallahassee, Florida 32302 FORUM GROUP, INC. R. Terry Rigsby, Esquire Post Office Box 11188 Tallahassee, Florida 32302 HILLSBOROUGH HEALTHCARE LTD. W. David Watkins, Esquire Oertel & Hoffman, P. A. Post Office Box 6507 Tallahassee, Florida 32314-6507 HEALTH QUEST CORP. Charles N. Loeser, Esquire Assistant General Counsel 315 W. Jefferson Blvd. South Bend, IN 46601 Steven W. Huss, Esquire 1017 Thomasville Road Suite C Tallahassee, Florida 32303 HEALTH CARE AND RETIREMENT CORPORATION OF AMERICA Alfred W. Clark, Esquire Post Office Box 623 Tallahassee, Florida 32302
The Issue The issue presented is whether Section V. B. 7. of the Florida Title XIX Long-Term Care Reimbursement Plan which is incorporated in Florida Administrative Code Rule 59G-6.010 is an invalid exercise of delegated legislative authority.
Findings Of Fact Petitioner, Manor Pines Convalescent Center, LLC, operates a skilled nursing home located in Ft. Lauderdale, Broward County, Florida, known as Manor Pines Convalescent Center. Manor Pines currently participates in the Medicaid program and has been issued provider number 25417700. Respondent, Agency for Health Care Administration, administers the Florida Title XIX Long-Term Care Reimbursement Plan (hereinafter "the Plan") which is incorporated by reference into Florida Administrative Code Rule 59G-6.010 and which establishes the methodology for determining reimbursement to nursing homes for the care provided to Medicaid beneficiaries. In accordance with the Plan, nursing homes participating in the Medicaid program are reimbursed by Medicaid on a per diem basis. The Medicaid per diem rate consists of four cost components: the operating costs component, the indirect patient care component, the direct patient care component, and a property component. Rates are calculated by following the provisions of the Plan and are cost-based in nature. Medicaid rates are normally set twice per year, once in January and again in July. The Plan contains numerous cost-saving mechanisms that are employed to limit a provider's actual costs. Examples of the cost-saving measures are class ceilings, cost ceilings, and targets. Each of those cost-saving measures uses a "lesser of" mechanism to ensure that a provider's Medicaid rate does not exceed the various mechanisms regardless of the actual costs to the provider. The class ceiling limits the amount that any facility in a particular class of providers can be reimbursed in an affected cost component. The class ceilings are based upon the size of the facility and the facility's geographic location. The cost ceiling caps the amount of costs that Medicaid will reimburse in any given component. The target limits check the amount of growth that Medicaid will reimburse a provider in any one component between rate semesters. Additionally, the Plan also contains a provision that is commonly referred to as the "low occupancy adjustment." According to Section V. B. 7. of the Plan, nursing homes are penalized in their reimbursement rates if they do not meet occupancy thresholds. In the version of the Plan in effect on January 1, 2006 (Version XXIX), the low occupancy adjustment provision reduced the reimbursement rate established for nursing homes for each of the reimbursement components (except the property component under the fair rental value system) that make up the nursing homes' Medicaid reimbursement rate. The Agency amended the low occupancy adjustment on July 1, 2006 (Version XXX). The effect of the amendment was that the adjustment no longer affected the direct patient care component and only affected the operating and indirect patient care components of the Medicaid per diem. The low occupancy adjustment is calculated by determining a low occupancy threshold and then reducing the established Medicaid per diem of any provider that does not meet that threshold. The low occupancy adjustment is a statement of general applicability that applies to all nursing homes in Florida that participate in the Medicaid program. In the January 1, 2006, rate-setting semester, Manor Pines' Medicaid per diem was limited by the low occupancy adjustment. Manor Pines was penalized $11.30 per patient day in the operating component, $25.40 per patient day in the direct patient care component, and $15.90 per patient day in the indirect patient care component. In the July 1, 2006, rate-setting semester, Manor Pines' Medicaid per diem was also limited by the low occupancy adjustment. At that time, Manor Pines was penalized $7.61 per patient day in the operating component and $10.23 per patient day in the indirect patient care component. It is illogical to adjust any component of the Medicaid nursing home per diem due to occupancy because the Medicaid per diem is determined based upon an allocation of costs that already factors Medicaid utilization in the methodology. Simply put, Medicaid's share of costs is limited in the per diem rate by a facility's Medicaid utilization. Further limiting those costs based upon occupancy creates a penalty that has no basis in law or fact. At the time of the final hearing in this cause, Manor Pines had been participating in the Medicaid program for four or five years after 35 years as a private-pay facility. Nearly two-thirds of all residents in nursing homes in Florida and in Broward County are Medicaid recipients. However, the low occupancy adjustment creates a disincentive to accept Medicaid residents because a nursing home affected by the adjustment loses reimbursement on each Medicaid resident in its facility. The low occupancy adjustment is illogical because it creates this disincentive to admit Medicaid residents. The adjustment is illogical because a facility attempting to increase its occupancy to escape the adjustment must admit two Medicaid-eligible individuals for every individual that is not Medicaid-eligible. Yet, each Medicaid-eligible patient causes the facility affected by this adjustment to lose more money. The effect, therefore, of this adjustment is that it actually and illogically hampers the facility's ability to increase its occupancy and ultimately escape the penalty. The Legislature has created five different diversion programs that are designed to divert people eligible for nursing home care from nursing homes to home- and community-based services. One of the major diversion projects has helped to reduce nursing home occupancies in Broward County. It has created a reduction in the overall need for nursing home beds in Broward County despite increasing population and, therefore, has created increased competition for nursing home residents among the nursing home community. The low occupancy adjustment forces nursing homes to recruit and retain residents in their facilities, contrary to the legislative intent enumerated in the various diversion statutes. The low occupancy adjustment illogically imposes a penalty based upon occupancy when the Legislature is actively creating programs designed to reduce nursing home occupancies. Nursing homes are required to provide minimum staffing hours to their residents. During the January 1 and the July 1, 2006, rate semesters, Manor Pines complied with those minimum staffing requirements. The costs, as stated in the direct care component of the January 1, 2006, rate sheets, accurately reflect the costs associated with complying with the minimum staffing requirements. The low occupancy adjustment has created a situation at Manor Pines where in order to meet the minimum staffing requirements, Manor Pines has had to reduce staff in other areas, has had to forego completing certain repairs brought on by recent hurricanes, and has cancelled numerous projects at the facility that were intended to improve and enhance the facility in the eyes of prospective nursing home residents, such as replacing crank beds with electric beds. The addition of new nursing home beds in Florida has been under a moratorium for years and will be for, minimally, four more years unless modified by law. Despite increasing population, there has been no corollary increase in nursing home residents. The statistics demonstrate the success of the legislative programs to divert residents from nursing homes, and they render the Agency's low occupancy adjustment a penalty, unsupported by reason.
